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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2016
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OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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Commission file number 001-32240
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Delaware
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20-1308307
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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3460 Preston Ridge Road
Alpharetta, Georgia
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30005
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(Address of principal executive offices)
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(Zip Code)
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Registrant's telephone number, including area code:
(678) 566-6500
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock — $0.01 Par Value
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New York Stock Exchange
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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(Do not check if a smaller
reporting company)
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Smaller reporting company
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•
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our debt holders could declare all outstanding principal and interest to be due and payable;
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our senior secured lenders could terminate their commitments and commence foreclosure proceedings against our assets; and
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we could be forced into bankruptcy or liquidation.
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make it difficult for us to satisfy our financial obligations, including making scheduled principal and interest payments on the 2021 Senior Notes and our other indebtedness;
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place us at a disadvantage to our competitors;
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require us to dedicate a substantial portion of our cash flow from operations to service payments on our indebtedness, thereby reducing funds available for other purposes;
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increase our vulnerability to a downturn in general economic conditions or the industry in which we operate;
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limit our ability to obtain additional financing for working capital, capital expenditures, acquisitions and general corporate and other purposes; and
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limit our ability to plan for and react to changes in our business and the industry in which we operate.
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changes in market demand for our products due to global economic and political conditions;
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the impact of competition, both domestic and international, changes in industry production capacity, including the construction of new mills or new machines, the closing of mills and incremental changes due to capital expenditures or productivity increases;
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the enactment of adverse state, federal or foreign tax or other legislation or changes in government policy or regulation;
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fluctuations in (i) exchange rates (in particular changes in the U.S. dollar/Euro currency exchange rates) and (ii) interest rates;
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increases in commodity prices, (particularly for pulp, energy and latex) due to constrained global supplies or unexpected supply disruptions;
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the availability of raw materials and energy;
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strikes, labor stoppages and changes in our collective bargaining agreements and relations with our employees and unions;
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capital and credit market volatility and fluctuations in global equity and fixed-income markets;
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unanticipated expenditures related to the cost of compliance with environmental and other governmental regulations;
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our ability to control costs and implement measures designed to enhance operating efficiencies;
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the loss of current customers or the inability to obtain new customers;
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loss of key personnel;
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increases in the funding requirements for our pension and postretirement liabilities;
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changes in asset valuations including write-downs of assets including property, plant and equipment; inventory, accounts receivable, deferred tax assets or other assets for impairment or other reasons;
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our existing and future indebtedness;
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our ability to successfully integrate acquired businesses into our existing operations;
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our net operating losses may not be available to offset our tax liability and other tax planning strategies may not be effective;
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other risks that are detailed from time to time in reports we file with the SEC; and
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other factors described under "Risk Factors."
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Location
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Equipment/Resources
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Owned or Leased
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Products
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Fine Paper and Packaging Segment
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Neenah Mill
Neenah, Wisconsin
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Two paper machines; paper finishing equipment
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Owned
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Printing and writing, text, cover and other specialty papers
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Whiting Mill
Whiting, Wisconsin
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Four paper machines; paper finishing equipment
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Owned
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Printing and writing, text, cover and other specialty papers
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Converting Center
Neenah, Wisconsin
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Paper finishing equipment
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Owned
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Printing and writing, text, cover and other specialty papers
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Technical Products Segment
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Munising Mill
Munising, Michigan
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Two paper machines; two off line saturators; two off line coaters; specialty finishing equipment
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Owned
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Tapes, abrasives, premask, medical packaging and other durable, saturated and coated substrates
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Pittsfield Mill
Pittsfield, Massachusetts
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Three paper machines; paper finishing equipment
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Owned
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Reverse osmosis filtration and glass applications
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Bruckmühl Mill
Bruckmühl, Germany
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One paper machine; two saturator/coaters; finishing equipment
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Owned
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Masking tape backings and abrasive backings
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Weidach Mill
Feldkirchen-Westerham, Germany
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Two paper machines; three saturators; one laminator; three meltblown machines; specialty finishing equipment
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Owned
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Transportation filtration and other industrial filter media
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Red Bridge Mill
Bolton, England
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Saturating, coating, and finishing equipment
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Owned
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Durable printing and specialty paper
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Shared Facilities
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Appleton Mill
Appleton, Wisconsin
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Two paper machines; saturating equipment; paper finishing equipment
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Owned
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Transportation filtration, printing and writing, text, cover and other specialty papers
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Brattleboro Mill
Brattleboro, Vermont
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One paper machine;paper finishing equipment
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Owned
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Printing and specialty paper board
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Brownville Mill
Brownville, New York
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One paper machine; one off-line coater
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Owned
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Durable printing and specialty paper
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Lowville Mill
Lowville, New York
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Saturating, coating, embossing and finishing equipment
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Owned
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Durable printing and specialty paper
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Quakertown Mill
Quakertown, Pennsylvania
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Saturating, coating, embossing and finishing equipment
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Owned
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Durable printing and specialty paper
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Reading Mill (1)
Reading, Pennsylvania |
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Embossing and finishing equipment
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Leased
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Durable printing and specialty paper
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(1)
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In December 2016, we ceased manufacturing operations at the Reading, Pennsylvania, facility. The facility is leased and the lease will expire June 30, 2017.
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Administrative Location
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Office/Other Space
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Function
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Alpharetta, Georgia
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Leased Office Space
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Corporate Headquarters, Administration and Design Center
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Neenah and Appleton, Wisconsin
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Owned Office Space
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Administration
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Munising, Michigan
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Owned Office and Laboratory Space
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Administration and Research and Development for our technical products businesses
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Pittsfield, Massachusetts
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Owned Office and Laboratory Space
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Administration and Research and Development for our technical products businesses
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West Springfield, Massachusetts
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Owned Office and Laboratory Space
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Administration and Research and Development for our technical products and fine paper and packaging businesses
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Feldkirchen-Westerham, Germany
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Owned Office and Laboratory Space
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Administration and Research and Development for our technical product businesses
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Year Ended December 31,
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2016
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2015
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2014
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Technical Products
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87
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%
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84
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%
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85
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%
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Fine Paper and Packaging
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80
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%
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80
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%
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77
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%
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Period
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Total Number
of Shares
Purchased (a)
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Average Price
Paid Per
Share (c)
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Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs (b)
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Approximate Dollar Value
of Shares that May Yet
Be Purchased Under
Publicly Announced
Plans or Programs
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October 2016
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19,497
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$
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80.15
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19,497
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$
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20,815,812
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November 2016
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20,439
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$
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81.78
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20,439
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$
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19,151,525
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December 2016
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61,746
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$
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86.91
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17,945
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$
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17,591,939
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(a)
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Transactions include the purchase of vested restricted shares from employees to satisfy minimum tax withholding requirements upon vesting of stock-based awards. See Note 9 of Notes to Consolidated Financial Statements, "Stock Compensation Plans."
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(b)
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In May
2016
, our Board of Directors authorized a program that would allow for the purchase of up to $25 million of outstanding common stock through May 21,
2017
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(c)
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Average price paid per share for shares purchased as part of our program.
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Plan Category
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(a)
Number of securities to be issued upon exercise of outstanding options, warrants, and rights |
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(b)
Weighted- average exercise price of outstanding options, warrants, and rights (1) |
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(c)
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
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Equity compensation plans approved by security holders
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380,820
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(2)(3)
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$
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38.35
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950,000
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Equity compensation plans not approved by security holders
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—
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—
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—
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Total
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380,820
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$
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38.35
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950,000
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(1)
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The weighted-average exercise price of outstanding options, warrants and rights does not take into account restricted stock units since they do not have an exercise price.
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(2)
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Includes (i) 226,000 shares issuable upon the exercise of outstanding options and stock appreciation rights ("SARs"), (ii) 74,100 shares issuable following the vesting and conversion of outstanding performance share unit awards, and (iii) 80,720 shares issuable upon the vesting and conversion of outstanding restricted stock units, all as of
December 31, 2016
. As of
December 31, 2016
, we had an aggregate of
530,462
stock options and SARs outstanding. The weighted average exercise price of the stock options and SARs was $
38.35
per share and the remaining contractual life of such awards was
6.3
years.
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(3)
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Includes 218,400 shares that would be issued upon the assumed exercise of 307,518 SARs at the $85.20 per share closing price of our common stock on
December 31, 2016
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Year Ended December 31,
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2016
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2015
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2014
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2013
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2012
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Consolidated Statement of Operations Data
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Net sales
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$
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941.5
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$
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887.7
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$
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839.7
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$
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781.7
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$
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738.3
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Cost of products sold
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727.0
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692.3
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668.9
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621.8
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588.6
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Gross profit
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214.5
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195.4
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170.8
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159.9
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149.7
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Selling, general and administrative expenses
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92.2
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86.5
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78.0
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74.7
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71.3
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Integration/restructuring costs (a)
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7.0
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6.5
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2.3
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0.4
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5.8
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Pension plan settlement charge (b)
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0.8
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—
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3.5
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0.2
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3.5
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Loss on early extinguishment of debt (c)
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—
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—
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0.2
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0.5
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0.6
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Other (income) expense — net
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0.4
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1.0
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0.2
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1.5
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1.6
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Operating income
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114.1
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101.4
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86.6
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82.6
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66.9
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Interest expense — net
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11.1
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11.5
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11.1
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11.0
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13.4
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Income from continuing operations before income taxes
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103.0
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89.9
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75.5
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71.6
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53.5
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Provision for income taxes (h)
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29.6
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29.4
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7.5
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23.1
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16.1
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Income from continuing operations
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73.4
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60.5
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68.0
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48.5
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37.4
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Income (loss) from discontinued operations, net of taxes (e)
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(0.4
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(9.4
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)
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0.7
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3.5
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6.9
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Net income
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$
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73.0
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$
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51.1
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$
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68.7
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$
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52.0
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$
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44.3
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Earnings from continuing operations per basic share
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$
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4.33
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$
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3.58
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$
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4.05
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$
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2.97
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$
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2.30
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Earnings from continuing operations per diluted share
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$
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4.26
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$
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3.53
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$
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3.99
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$
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2.91
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$
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2.26
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Cash dividends per common share
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$
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1.32
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$
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1.20
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$
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1.02
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$
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0.70
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$
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0.48
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Other Financial Data
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Net cash flow provided by (used for):
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Operating activities (h)
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$
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115.8
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$
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111.2
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$
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94.5
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$
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83.5
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$
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40.1
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Capital expenditures (g)
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(68.5
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)
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(48.1
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(27.9
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(28.7
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)
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(25.1
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)
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Other investing activities (f)
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0.3
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(112.0
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(77.0
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(4.6
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(7.2
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)
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Financing activities (c)(h)
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(48.4
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(18.8
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10.2
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15.0
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(13.0
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Ratio of earnings to fixed charges (d)
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8.7x
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7.7x
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6.9x
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6.7x
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4.6x
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December 31,
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2016
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2015
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2014
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2013
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2012
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(Dollars in millions)
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Consolidated Balance Sheet Data
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Cash and cash equivalents
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$
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3.1
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$
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4.2
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$
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72.6
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$
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73.4
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$
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7.8
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Working capital, less cash and cash equivalents
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125.2
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136.3
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129.5
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123.9
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132.0
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Total assets (h)
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765.6
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751.4
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724.5
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670.9
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608.0
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Long-term debt (c)(h)
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219.7
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228.2
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226.8
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185.5
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174.9
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Total liabilities (h)
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427.3
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439.8
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435.8
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403.4
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410.2
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Total stockholders' equity
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338.3
|
|
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311.6
|
|
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288.7
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267.5
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197.8
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(a)
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For the year ended
December 31, 2016
, we incurred $7.0 million of integration and restructuring costs and $0.8 million of pension settlement charges. For the year ended
December 31, 2015
, we incurred $5.3 million of integration
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(b)
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For the year ended December 31, 2016, we elected settlement accounting even though the benefit payments did not exceed the sum of expected service cost and interest costs of the affected plans, and recognized a settlement loss of $0.8 million. For the years ended
December 31, 2014
,
2013
and
2012
, benefit payments under certain pension plans exceeded the sum of expected service cost and interest costs for the plan for the respective calendar years. In accordance with ASC Topic 715,
Compensation — Retirement Benefits
("ASC Topic 715"), we measured the liabilities of the post-retirement benefit plans and recognized settlement losses of $3.5 million, $0.2 million and $3.5 million, respectively.
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(c)
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For the year ended
December 31, 2014
, we amended and restated our existing bank credit facility and recognized a pre-tax loss of $0.2 million for the write-off of unamortized debt issuance costs. For the year ended December 31, 2013, we redeemed $90 million of 2014 Senior Notes and repaid all outstanding term loan borrowings ($29.3 million). In connection with the early extinguishment of debt we recognized a pre-tax loss of $0.5 million for the write-off of unamortized debt issuance costs. For the year ended December 31, 2012, we completed an early redemption of $68 million in aggregate principal amount of the 2014 Senior Notes. In connection with the early redemption we recognized a pre-tax loss of $0.6 million, including a call premium and the write-off of unamortized debt issuance costs.
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(d)
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For purposes of determining the ratio of earnings to fixed charges, earnings consist of income before income taxes (less interest) plus fixed charges. Fixed charges consist of interest expense, including amortization of debt issuance costs, and the estimated interest portion of rental expense.
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(e)
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The following table presents the results of discontinued operations:
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Year Ended December 31,
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2016 (1)
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2015 (2)
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2014
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2013 (3)
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2012 (4)
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Discontinued operations: (5)
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|
|
|
|
|
|
|
|
|
|
|||||
Income from operations
|
|
$
|
—
|
|
|
$
|
0.2
|
|
|
$
|
0.9
|
|
|
$
|
5.4
|
|
|
$
|
(0.1
|
)
|
Loss on sale of the Lahnstein Mill (5)
|
|
(0.6
|
)
|
|
(13.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Income (loss) before income taxes
|
|
(0.6
|
)
|
|
(13.4
|
)
|
|
0.9
|
|
|
5.4
|
|
|
(0.1
|
)
|
|||||
Provision (benefit) for income taxes
|
|
(0.2
|
)
|
|
(4.0
|
)
|
|
0.2
|
|
|
1.9
|
|
|
(4.5
|
)
|
|||||
Income (loss) from discontinued operations, net of taxes
|
|
$
|
(0.4
|
)
|
|
$
|
(9.4
|
)
|
|
$
|
0.7
|
|
|
$
|
3.5
|
|
|
$
|
4.4
|
|
(1)
|
The loss in 2016 was due to the final adjustment of the sales price of the Lahnstein Mill.
|
(2)
|
The loss on sale of the Lahnstein Mill includes a net curtailment gain related to the divesture of the pension plan of $15.8 million, including a $5.5 million write-off of deferred actuarial losses in 2015.
|
(3)
|
During the first quarter of 2013, we received a refund of excess pension contributions from the terminated Terrace Bay pension plan. As a result, we recorded income before income taxes from discontinued operations of $4.2 million and a related provision for income taxes of $1.6 million.
|
(4)
|
In November 2012, audits of the 2007 and 2008 tax years were finalized with a finding of no additional taxes due. As a result, we recognized a non-cash tax benefit of $4.5 million related to the reversal of certain liabilities for uncertain income tax positions.
|
(5)
|
On October 31, 2015, we sold the Lahnstein Mill. For the year ended
December 31, 2016
,
2015
,
2014
,
2013
and
2012
, the results of operations and the loss on sale of the Lahnstein Mill are reported as discontinued operations in the Consolidated Statement of Operations Data.
|
(f)
|
In August 2015, we purchased all of the outstanding equity of FiberMark for approximately $118 million. In July 2014, we purchased all of the outstanding equity of Crane for approximately $72 million.
|
(g)
|
During the year ended December 31, 2016, we completed our U.S. Filtration project.
|
(h)
|
At December 31, 2016, we adopted ASC Topic No. 2016-09 and applied the guidance retroactively to January 1, 2016. At December 31, 2015, we adopted ASC Topic No. 2015-03 and ASC Topic No. 2015-17 and elected to apply the guidance retroactively to all periods presented. See Note 2 of Notes to Consolidated Financial Statements, "Summary of Significant Accounting Policies — Recently Adopted Accounting Standards."
|
•
|
Overview of Business;
|
•
|
Business Segments;
|
•
|
Results of Operations and Related Information;
|
•
|
Liquidity and Capital Resources;
|
•
|
Adoption of New Accounting Pronouncements; and
|
•
|
Critical Accounting Policies and Use of Estimates.
|
•
|
Competitive Environment — Our past results have been and our future prospects will be significantly affected by the competitive environment in which we operate. While our businesses are oriented to premium performance and quality, they may also face competitive pressures from lower value products and in most of our markets our businesses compete directly with well-known competitors, some of which are larger and more diversified.
|
•
|
Economic Conditions and Input Costs — The markets for all of our products are affected to a significant degree by economic conditions, including rapid changes in input costs, particularly for pulp, latex and natural gas that may not be recovered immediately through pricing or other actions. Our results are also affected by fluctuations in exchange rates, particularly for the Euro.
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
Net sales
|
|
2016
|
|
2016
|
|
2015
|
|
2015
|
|
2014
|
|
2014
|
|||||||||
Technical Products
|
|
$
|
466.4
|
|
|
50
|
%
|
|
$
|
429.2
|
|
|
48
|
%
|
|
$
|
403.6
|
|
|
48
|
%
|
Fine Paper and Packaging
|
|
452.1
|
|
|
48
|
%
|
|
442.7
|
|
|
50
|
%
|
|
436.1
|
|
|
52
|
%
|
|||
Other
|
|
23.0
|
|
|
2
|
%
|
|
15.8
|
|
|
2
|
%
|
|
—
|
|
|
—
|
%
|
|||
Consolidated
|
|
$
|
941.5
|
|
|
100
|
%
|
|
$
|
887.7
|
|
|
100
|
%
|
|
$
|
839.7
|
|
|
100
|
%
|
|
|
|
|
|
|
Change in Net Sales Compared to the
Prior Year |
||||||||||||||||||
|
|
For the Year
Ended December 31, |
|
|
|
Change Due To
|
||||||||||||||||||
|
|
|
Total
Change |
|
|
|
Net Price
|
|
|
|||||||||||||||
|
|
2016
|
|
2015
|
|
|
Volume
|
|
|
Currency
|
||||||||||||||
Technical Products
|
|
$
|
466.4
|
|
|
$
|
429.2
|
|
|
$
|
37.2
|
|
|
$
|
49.8
|
|
|
$
|
(11.0
|
)
|
|
$
|
(1.6
|
)
|
Fine Paper and Packaging
|
|
452.1
|
|
|
442.7
|
|
|
9.4
|
|
|
18.2
|
|
|
(8.8
|
)
|
|
—
|
|
||||||
Other
|
|
23.0
|
|
|
15.8
|
|
|
7.2
|
|
|
7.2
|
|
|
—
|
|
|
—
|
|
||||||
Consolidated
|
|
$
|
941.5
|
|
|
$
|
887.7
|
|
|
$
|
53.8
|
|
|
$
|
75.2
|
|
|
$
|
(19.8
|
)
|
|
$
|
(1.6
|
)
|
•
|
Net sales in our technical products business increased
$37.2 million
(
9%
) from the prior year
due to acquired volume and organic volume growth, which were partially offset by lower net selling prices.
Excluding currency exchange effects, technical product sales increased
$38.8 million
(
9%
).
Organic volumes increased from the prior year period due to growth in transportation filtration and backings for tapes and abrasives. Net selling prices were down primarily due to a lower-priced mix of products sold but also for reduced selling prices on products with contractual adjusters for certain input costs.
|
•
|
Net sales in our fine paper and packaging business increased
$9.4 million
(
2%
) from the prior year due to acquired volume, which was partially offset by lower net selling prices. Net selling prices were down from the prior year due to a lower-priced mix of products sold in 2016, which reflected a higher proportion of sales of non-branded products.
|
•
|
Net sales in our other business segment increased
$7.2 million
from the prior year period due to acquired volume.
|
|
|
|
|
|
|
Change in Net Sales Compared to the
Prior Year |
||||||||||||||||||
|
|
For the Years Ended
December 31, |
|
|
|
Change Due To
|
||||||||||||||||||
|
|
2015
|
|
2014
|
|
Total
Change |
|
Volume
|
|
Net Price
|
|
Currency
|
||||||||||||
Technical Products
|
|
$
|
429.2
|
|
|
$
|
403.6
|
|
|
$
|
25.6
|
|
|
$
|
66.5
|
|
|
$
|
(2.4
|
)
|
|
$
|
(38.5
|
)
|
Fine Paper and Packaging
|
|
442.7
|
|
|
436.1
|
|
|
6.6
|
|
|
(4.5
|
)
|
|
11.1
|
|
|
—
|
|
||||||
Other
|
|
15.8
|
|
|
—
|
|
|
15.8
|
|
|
15.8
|
|
|
—
|
|
|
—
|
|
||||||
Consolidated
|
|
$
|
887.7
|
|
|
$
|
839.7
|
|
|
$
|
48.0
|
|
|
$
|
77.8
|
|
|
$
|
8.7
|
|
|
$
|
(38.5
|
)
|
•
|
Net sales in our technical products business increased
$25.6 million
(6%) from the prior year as organic volume growth, incremental sales from the FiberMark Acquisition and higher selling prices were only partially offset by unfavorable currency exchange effects. Unfavorable currency exchange effects resulted from the Euro weakening by approximately 16 percent relative to the U.S. dollar in the year ended
December 31, 2015
as compared to the prior year. Excluding currency exchange effects and incremental FiberMark sales, technical product sales increased $40.7 million (10%) and
|
•
|
Net sales in our fine paper and packaging business increased
$6.6 million
(2%) from the prior year due to higher average net prices and incremental FiberMark sales. Excluding acquired revenues, fine paper and packaging sales decreased $12.3 million (3%) as higher average net price was more than offset by a four percent decrease in sales volumes. Sales volumes were unfavorable to the prior year as increases in premium packaging and retail products were more than offset by lower sales of other grades; including lower margin special make business. Average net price improved from the prior year due to a two percent increase in average selling prices and a more favorable product mix.
|
|
|
Year Ended December 31,
|
|||||||
|
|
2016
|
|
2015
|
|
2014
|
|||
Net sales
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of products sold
|
|
77.2
|
%
|
|
78.0
|
%
|
|
79.7
|
%
|
Gross profit
|
|
22.8
|
%
|
|
22.0
|
%
|
|
20.3
|
%
|
Selling, general and administrative expenses
|
|
9.8
|
%
|
|
9.8
|
%
|
|
9.3
|
%
|
Integration costs and settlement charges
|
|
0.8
|
%
|
|
0.7
|
%
|
|
0.7
|
%
|
Other (income) expense — net
|
|
0.1
|
%
|
|
0.1
|
%
|
|
—
|
%
|
Operating income
|
|
12.1
|
%
|
|
11.4
|
%
|
|
10.3
|
%
|
Interest expense — net
|
|
1.2
|
%
|
|
1.3
|
%
|
|
1.3
|
%
|
Income from continuing operations before income taxes
|
|
10.9
|
%
|
|
10.1
|
%
|
|
9.0
|
%
|
Provision for income taxes
|
|
3.1
|
%
|
|
3.3
|
%
|
|
0.9
|
%
|
Income from continuing operations
|
|
7.8
|
%
|
|
6.8
|
%
|
|
8.1
|
%
|
|
|
|
|
|
|
Change in Operating Income (Loss) Compared to the Prior Year
|
||||||||||||||||||||||||||
|
|
For the Years Ended
December 31, |
|
|
|
Change Due To
|
||||||||||||||||||||||||||
|
|
2016
|
|
2015
|
|
Total
Change |
|
Volume
|
|
Net Price (a)
|
|
Input Costs (b)
|
|
Currency
|
|
Other
|
||||||||||||||||
Technical Products
|
|
$
|
65.6
|
|
|
$
|
54.1
|
|
|
$
|
11.5
|
|
|
$
|
9.1
|
|
|
$
|
(5.5
|
)
|
|
$
|
11.0
|
|
|
$
|
(0.5
|
)
|
|
$
|
(2.6
|
)
|
Fine Paper and Packaging
|
|
70.7
|
|
|
67.3
|
|
|
3.4
|
|
|
0.2
|
|
|
(4.1
|
)
|
|
10.4
|
|
|
—
|
|
|
(3.1
|
)
|
||||||||
Other
|
|
(1.1
|
)
|
|
(2.0
|
)
|
|
0.9
|
|
|
0.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
||||||||
Unallocated corporate costs
|
|
(21.1
|
)
|
|
(18.0
|
)
|
|
(3.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.1
|
)
|
||||||||
Consolidated
|
|
$
|
114.1
|
|
|
$
|
101.4
|
|
|
$
|
12.7
|
|
|
$
|
10.0
|
|
|
$
|
(9.6
|
)
|
|
$
|
21.4
|
|
|
$
|
(0.5
|
)
|
|
$
|
(8.6
|
)
|
(a)
|
Includes price changes, net of changes in product mix.
|
(b)
|
Includes price changes for raw materials and energy.
|
•
|
Operating income for our technical products business increased
$11.5 million
(
21%
) from the prior year primarily due to lower manufacturing input costs and operational efficiencies, organic and acquired volume growth, and lower integration and restructuring costs. These favorable variances were partially offset by added SG&A from the acquisition, lower net selling prices and currency effects. Results for the years ended
December 31, 2016
and
2015
include $
1.4 million
and $
1.8 million
for integration/restructuring costs, respectively. Excluding integration/restructuring costs, operating income for the technical products business increased $
11.1 million
(
20%
).
|
•
|
Operating income for our fine paper and packaging business increased $
3.4 million
(
5%
) from the prior year period primarily due to lower manufacturing material prices and increased volume, partially offset by a lower-priced mix of products sold and added SG&A from the acquisition. Results for the years ended
December 31, 2016
and
2015
include $
1.8 million
and
1.5 million
for integration costs related to the FiberMark Acquisition, respectively. Excluding integration costs, operating income for the fine paper and packaging business increased $
3.7 million
(
5%
).
|
•
|
Unallocated corporate costs for the year ended
December 31, 2016
were $
21.1 million
, or $
3.1 million
unfavorable to the prior year. The unfavorable comparison to the prior year period is primarily due to pre-operating costs related to conversion of a fine paper machine to filtration, which went into production in early 2017. Excluding charges of $
2.7 million
of restructuring costs and a pension plan settlement charge of
$0.8 million
in 2016, and $
0.8 million
of restructuring costs in 2015, unallocated corporate expenses were
$0.4 million
unfavorable to the prior year.
|
|
|
|
|
|
|
Change in Operating Income (Loss) Compared to the Prior Year
|
||||||||||||||||||||||||||
|
|
For the Years Ended
December 31, |
|
|
|
Change Due To
|
||||||||||||||||||||||||||
|
|
2015
|
|
2014
|
|
Total Change
|
|
Volume
|
|
Net Price (a)
|
|
Input Costs (b)
|
|
Currency
|
|
Other
|
||||||||||||||||
Technical Products
|
|
$
|
54.1
|
|
|
$
|
46.0
|
|
|
$
|
8.1
|
|
|
$
|
10.8
|
|
|
$
|
0.6
|
|
|
$
|
4.4
|
|
|
$
|
(4.9
|
)
|
|
$
|
(2.8
|
)
|
Fine Paper and Packaging
|
|
67.3
|
|
|
60.8
|
|
|
6.5
|
|
|
(7.2
|
)
|
|
8.5
|
|
|
8.7
|
|
|
—
|
|
|
(3.5
|
)
|
||||||||
Other
|
|
(2.0
|
)
|
|
—
|
|
|
(2.0
|
)
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.2
|
)
|
||||||||
Unallocated corporate costs
|
|
(18.0
|
)
|
|
(20.2
|
)
|
|
2.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.2
|
|
||||||||
Consolidated
|
|
$
|
101.4
|
|
|
$
|
86.6
|
|
|
$
|
14.8
|
|
|
$
|
3.8
|
|
|
$
|
9.1
|
|
|
$
|
13.1
|
|
|
$
|
(4.9
|
)
|
|
$
|
(6.3
|
)
|
(a)
|
Includes price changes, net of changes in product mix.
|
(b)
|
Includes price changes for raw materials and energy.
|
•
|
Operating income for our technical products business increased $8.1 million (18%) from the prior year primarily due to lower manufacturing input costs, organic volume growth and higher selling prices. These favorable variances were partially offset by unfavorable currency exchange effects and higher manufacturing costs. Results for the years ended
December 31, 2015
and
2014
include $1.8 million and $1.6 million for integration/restructuring costs, respectively.
|
•
|
Operating income for our fine paper and packaging business increased $6.5 million (11%) from the prior year period primarily due to lower manufacturing input costs principally as a result of lower natural gas prices and higher net price. Extreme winter weather conditions during the first quarter of 2014 resulted in a temporary increase in natural gas prices. These favorable variances were partially offset by lower shipment volume and higher manufacturing costs. Results for the ended
December 31, 2015
include $1.5 million for acquisition related integration costs. Excluding incremental volume from the FiberMark Acquisition and acquisition integration costs, operating income for the fine paper and packaging business increased $8.8 million (14%).
|
•
|
Unallocated corporate costs for the year ended
December 31, 2015
were $18.0 million, or $2.2 million favorable to the prior year. Excluding charges of $0.8 million in 2015 for restructuring costs and aggregate charges of $4.4 million in 2014 for a pension plan settlement charge, restructuring costs and costs related to the early extinguishment of debt, unallocated corporate expenses were $1.4 million unfavorable to the prior year primarily due to increased employee compensation costs.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Operating income
|
|
|
|
|
|
|
|
|
|
|||
Technical Products
|
|
$
|
65.6
|
|
|
$
|
54.1
|
|
|
$
|
46.0
|
|
Fine Paper and Packaging
|
|
70.7
|
|
|
67.3
|
|
|
60.8
|
|
|||
Other
|
|
(1.1
|
)
|
|
(2.0
|
)
|
|
—
|
|
|||
Unallocated corporate costs
|
|
(21.1
|
)
|
|
(18.0
|
)
|
|
(20.2
|
)
|
|||
Operating Income as Reported
|
|
114.1
|
|
|
101.4
|
|
|
86.6
|
|
|||
Non-GAAP Adjustments
|
|
|
|
|
|
|
|
|
|
|||
Technical Products
|
|
|
|
|
|
|
|
|
|
|||
Acquisition/integration/restructuring costs
|
|
1.4
|
|
|
1.8
|
|
|
1.6
|
|
|||
Fine Paper and Packaging
|
|
|
|
|
|
|
|
|
|
|||
Acquisition/integration costs
|
|
1.8
|
|
|
1.5
|
|
|
—
|
|
|||
Other
|
|
|
|
|
|
|
|
|
|
|||
Acquisition/integration costs
|
|
1.1
|
|
|
2.4
|
|
|
—
|
|
|||
Unallocated corporate costs
|
|
|
|
|
|
|
|
|
|
|||
Pension plan settlement charge
|
|
0.8
|
|
|
—
|
|
|
3.5
|
|
|||
Restructuring costs
|
|
2.7
|
|
|
0.8
|
|
|
0.7
|
|
|||
Loss on early extinguishment of debt
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|||
Total
|
|
3.5
|
|
|
0.8
|
|
|
4.4
|
|
|||
Total non-GAAP Adjustments
|
|
7.8
|
|
|
6.5
|
|
|
6.0
|
|
|||
Operating Income as Adjusted
|
|
$
|
121.9
|
|
|
$
|
107.9
|
|
|
$
|
92.6
|
|
•
|
SG&A expense of
$92.2 million
for the year ended
December 31, 2016
was
$5.7 million
higher than the prior year due to incremental selling and administrative costs related to the FiberMark Acquisition. SG&A expense as a percentage of net sales for the year ended
December 31, 2016
, was approximately
9.8
percent and was comparable to the prior year.
|
•
|
SG&A expense of $86.5 million for the year ended
December 31, 2015
was $8.5 million higher than the prior year due to incremental selling and administrative costs related to the FiberMark Acquisition. SG&A expense as a percentage of net sales for the year ended
December 31, 2015
, was approximately 9.8 percent and was 0.5 percentage points higher than the prior year as the increase in net sales in the current year was more than offset by higher SG&A expenses.
|
•
|
For the years ended
December 31, 2016
,
2015
and
2014
, we incurred
$11.2 million
,
$11.7 million
and
$11.4 million
of interest expense, respectively.
|
•
|
In general, our effective tax rate differs from the U.S. statutory tax rate of 35 percent primarily due to impacts of our corporate tax structure, benefits from R&D credits earned, and the mix of pre-tax income in jurisdictions with marginal tax rates that differ from the U.S. statutory tax rate. For the years ended
December 31, 2016
and
2015
, our effective income tax rate related to continuing operations was
29
percent and
33
percent, respectively. For 2016, the adoption of ASU 2016-09, as discussed in Note 2 of Notes to Consolidated Financial Statements, "Summary of Significant Accounting Policies — Recently Adopted Accounting Standards", allowed excess tax benefits from share-based payments to be shown as a reduction to income tax expense and reduced the rate for the year by 3 percent. For the year ended
December 31, 2014
, our effective income tax rate related to continuing operations was
10 percent
and included the benefit from recognizing R&D credits earned in prior periods. Excluding the benefit of R&D Credits related to prior year activities, our effective income tax rate for the year ended December 31, 2014 would be approximately 33 percent. For a reconciliation of effective tax rate to the U.S. federal statutory tax rate, see Note 6 of Notes to Consolidated Financial Statements, "Income Taxes."
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net cash flow provided by (used in):
|
|
|
|
|
|
|
|
|
|
|||
Operating activities
|
|
$
|
115.8
|
|
|
$
|
111.2
|
|
|
$
|
94.5
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
|
|||
Capital expenditures
|
|
(68.5
|
)
|
|
(48.1
|
)
|
|
(27.9
|
)
|
|||
Acquisitions
|
|
—
|
|
|
(118.2
|
)
|
|
(72.4
|
)
|
|||
Purchase of equity investment
|
|
—
|
|
|
—
|
|
|
(2.9
|
)
|
|||
Proceeds on sale of discontinued operations
|
|
—
|
|
|
5.4
|
|
|
—
|
|
|||
Other investing activities
|
|
0.3
|
|
|
0.8
|
|
|
(1.7
|
)
|
|||
Total
|
|
(68.2
|
)
|
|
(160.1
|
)
|
|
(104.9
|
)
|
|||
Financing activities
|
|
(48.4
|
)
|
|
(18.8
|
)
|
|
10.2
|
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
|
(0.3
|
)
|
|
(0.7
|
)
|
|
(0.6
|
)
|
|||
Net decrease in cash and cash equivalents
|
|
$
|
(1.1
|
)
|
|
$
|
(68.4
|
)
|
|
$
|
(0.8
|
)
|
•
|
Cash provided by operating activities of
$115.8 million
for the year ended
December 31, 2016
was
$4.6 million
favorable to cash provided by operating activities of
$111.2 million
in the prior year. The favorable comparison was primarily due to a
$12.7 million
increase in operating income and the benefits of higher utilization of federal research and development tax credits. These favorable variances were partially offset by higher post-retirement benefit contributions in the current year and a decrease of $
1.8 million
in our investment in working capital in the prior year compared to an increase of $
1.2 million
in our investment in working capital for the year ended
December 31, 2016
.
|
•
|
Cash provided by operating activities of $
111.2 million
for the year ended
December 31, 2015
was $16.7 million favorable to cash provided by operating activities of $
94.5 million
in the prior year. The favorable comparison was primarily due to a $16.1 million increase in operating income and lower contributions and benefit payments for post-retirement benefit obligations. These favorable variances were partially offset by a decrease of $9.0 million in our investment in working
|
•
|
For the years ended
December 31, 2016
and
2015
, cash used by investing activities was
$68.2 million
and $
160.1 million
, respectively. Capital expenditures for the year ended
December 31, 2016
were
$68.5 million
compared to spending of $
48.1 million
in the prior year. In general, we expect aggregate annual capital expenditures of approximately 3 to 5 percent of net sales. For the year ended
December 31, 2016
, annual capital expenditures were above that range due to incremental investment in filtration assets in the U.S. We expect capital spending in 2017 to return to the normal range. We believe that the level of our capital spending can be more than adequately funded from cash provided from operating activities and allows us to maintain the efficiency and cost effectiveness of our assets and also invest in expanded manufacturing capabilities to successfully pursue strategic initiatives and deliver attractive returns.
|
•
|
For the year ended
December 31, 2015
, cash used by investing activities includes $118.2 million for the FiberMark Acquisition. For the year ended
December 31, 2014
, cash used by investing activities includes $72.4 million for the purchase of the Crane Technical Materials business and $2.9 million for the acquisition of a non-controlling equity investment in a joint venture in India.
|
•
|
For the year ended
December 31, 2015
, we received net cash proceeds of $5.4 million from the sale of the Lahnstein Mill.
|
•
|
Capital expenditures for the year ended
December 31, 2015
were $
48.1 million
compared to spending of $
27.9 million
in the prior year.
|
•
|
For the year ended
December 31, 2016
, cash used by financing activities was
$48.4 million
compared to cash used by financing activities of
$18.8 million
for the prior year. The increase was due to higher net debt repayments, as well as higher share repurchases and dividends paid in 2016. For the year ended
December 31, 2015
, cash used by financing activities was
$18.8 million
compared to cash provided by financing activities of
$10.2 million
for the prior year. The change was due to lower net borrowings, and higher share repurchases and dividends paid in 2015.
|
•
|
We have the following short- and long-term borrowings:
|
•
|
Availability under our revolving credit facility varies over time depending on the value of our inventory, receivables and various capital assets. As of
December 31, 2016
, we had
$42.9 million
outstanding under our Revolver and
$125.2 million
of available credit (based on exchange rates at
December 31, 2016
).
|
•
|
We have required debt payments through December 31, 2017 of
$1.2 million
on the Second German Loan Agreement.
|
•
|
For the year ended
December 31, 2016
, cash and cash equivalents decreased
$1.1 million
to
$3.1 million
at
December 31, 2016
from
$4.2 million
at
December 31, 2015
. Total debt decreased
$8.5 million
to
$220.9 million
at
December 31, 2016
from
$229.4 million
at
December 31, 2015
. Net debt (total debt minus cash and cash equivalents) decreased by
$7.4 million
primarily due to cash flow from operations.
|
•
|
As of
December 31, 2016
, our cash balance consists of $1.1 million in the U.S. and $2.0 million held at entities outside of the U.S. As of
December 31, 2016
, there were no restrictions regarding the repatriation of our non-U.S. cash and, we believe, the repatriation of these cash balances to the U.S. would not materially increase our income tax provision.
|
•
|
For the years ended
December 31, 2016
and
2015
, we paid cash dividends of $1.32 per common share or
$22.4 million
and $1.20 per common share or
$20.3 million
, respectively.
|
•
|
In November 2016, our Board of Directors approved a 12 percent increase in the annual dividend rate on our common stock to $1.48 per share. The dividend is scheduled to be paid in four equal quarterly installments beginning in March 2017.
|
•
|
In May 2016, our Board of Directors authorized the 2016 Stock Purchase Plan. The 2016 Stock Purchase Plan allows us to repurchase up to $25 million of our outstanding Common Stock through May 2017. Purchases under the 2016 Stock Purchase Plan will be made from time to time in the open market or in privately negotiated transactions in accordance with the requirements of applicable law. The timing and amount of any purchases will depend on share price, market conditions and other factors. The 2016 Stock Purchase Plan does not require us to purchase any specific number of shares and may be suspended or discontinued at any time. For the year ended
December 31, 2016
, we acquired approximately 185,200 shares of Common Stock at a cost of $12.6 million. For further details on our Stock Purchase Plans refer to Note 10 of Notes to Consolidated Financial Statements, "Stockholders' Equity."
|
•
|
For the years ended
December 31, 2016
and
2015
, we acquired approximately 46,000 and 40,000 of Common Stock, respectively, at a cost of $3.8 million and $2.5 million, respectively, for shares surrendered by employees to pay taxes due on vested restricted stock awards and stock appreciation rights exercised. In addition, we received
$0.4 million
and
$1.2 million
in proceeds from the exercise of employee stock options for the years ended
December 31, 2016
and
2015
, respectively.
|
•
|
Under the most restrictive terms of the Third Amended and Restated Credit Agreement, we are permitted to pay cash dividends on or repurchase shares of our common stock up to the amount available under the Third Amended and Restated Credit Agreement, as long as the availability under the Third Amended and Restated Credit Agreement exceeds $25 million. If the availability is below $25 million, we are restricted from paying dividends or repurchasing shares. As of December 31, 2016, our availability exceeded $25 million, so this restriction did not apply. See our availability under the Third Amended and Restated Credit Agreement in Note 7 of Notes to Consolidated Financial Statements, "Debt." Under the most restrictive terms of the 2021 Senior Notes, we are permitted to pay cash dividends of up to $25 million in a calendar year, but not permitted to repurchase shares of our common stock. However, as long as the net leverage ratio (net debt/EBITDA) under the 2021 Senior Notes is below 2.5x, we can pay dividends or repurchase shares without limitation. In the event the net leverage ratio exceeds 2.5x, we may still pay dividends in excess of $25 million or repurchase shares by utilizing "restricted payment baskets" as defined in the indenture for the 2021 Senior Notes. As of December 31, 2016, since our leverage ratio was less than 2.5x, none of these covenants were restrictive to our ability to pay dividends on or repurchase shares of our common stock.
|
•
|
As of
December 31, 2016
, we had
$48.8 million
of state NOLs. Our state NOLs may be used to offset approximately $
2.3 million
in state income taxes. If not used, substantially all of the state NOLs will expire in various amounts between 2017 and 2035. In addition, we had
$25.2 million
of U.S. federal and state R&D Credits which, if not used, will expire between 2027 and 2036 for the U.S. federal R&D Credits and between 2017 and 2031 for the state R&D Credits. As of
December 31, 2016
, we recorded a valuation allowance of
$3.1 million
against a portion of the R&D Credits.
|
(In millions)
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Beyond
2021 |
|
Total
|
||||||||||||||
Long-term debt payments
|
|
$
|
1.2
|
|
|
$
|
1.2
|
|
|
$
|
44.1
|
|
|
$
|
1.2
|
|
|
$
|
176.2
|
|
|
$
|
0.8
|
|
|
$
|
224.7
|
|
Interest payments on long-term debt (a)
|
|
10.5
|
|
|
10.5
|
|
|
10.4
|
|
|
9.3
|
|
|
4.2
|
|
|
—
|
|
|
44.9
|
|
|||||||
Open purchase orders (b)
|
|
69.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
69.4
|
|
|||||||
Other post-employment benefit obligations (c)
|
|
4.3
|
|
|
3.5
|
|
|
3.8
|
|
|
4.1
|
|
|
4.1
|
|
|
16.9
|
|
|
36.7
|
|
|||||||
Contributions to pension trusts
|
|
14.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14.0
|
|
|||||||
Minimum purchase commitments (d)
|
|
14.3
|
|
|
2.2
|
|
|
1.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17.8
|
|
|||||||
Operating leases
|
|
3.1
|
|
|
2.4
|
|
|
1.3
|
|
|
1.0
|
|
|
1.0
|
|
|
4.0
|
|
|
12.8
|
|
|||||||
Total contractual obligations
|
|
$
|
116.8
|
|
|
$
|
19.8
|
|
|
$
|
60.9
|
|
|
$
|
15.6
|
|
|
$
|
185.5
|
|
|
$
|
21.7
|
|
|
$
|
420.3
|
|
(a)
|
Interest payments on long-term debt includes interest on variable rate debt at
December 31, 2016
weighted average interest rates.
|
(b)
|
The open purchase orders displayed in the table represent amounts we anticipate will become payable within the next 12 months for goods and services that we have negotiated for delivery.
|
(c)
|
The above table includes future payments that we will make for postretirement benefits other than pensions. Those amounts are estimated using actuarial assumptions, including expected future service, to project the future obligations.
|
(d)
|
The minimum purchase commitments in 2017 are primarily for coal and corn starch contracts. Although we are primarily liable for payments on the above operating leases and minimum purchase commitments, based on historic operating performance and forecasted future cash flows, we believe our exposure to losses, if any, under these arrangements is not material.
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
Pension plans
|
|
|
|
|
|
|
|||
Weighted average discount rate for benefit expense
|
|
4.54
|
%
|
|
3.91
|
%
|
|
4.88
|
%
|
Weighted average discount rate for benefit obligation
|
|
4.16
|
%
|
|
4.54
|
%
|
|
3.91
|
%
|
Expected long-term rate on plan assets
|
|
6.20
|
%
|
|
6.50
|
%
|
|
6.50
|
%
|
Rate of compensation increase
|
|
2.18
|
%
|
|
2.92
|
%
|
|
2.96
|
%
|
Postretirement benefit plans
|
|
|
|
|
|
|
|||
Weighted average discount rate for benefit expense
|
|
4.07
|
%
|
|
4.05
|
%
|
|
4.84
|
%
|
Weighted average discount rate for benefit obligation
|
|
3.69
|
%
|
|
4.07
|
%
|
|
4.05
|
%
|
Health care cost trend rate assumed for next year
|
|
7.00
|
%
|
|
7.30
|
%
|
|
7.00
|
%
|
Ultimate cost trend rate
|
|
4.50
|
%
|
|
4.50
|
%
|
|
4.50
|
%
|
Year that the ultimate cost trend rate is reached
|
|
2037
|
|
|
2037
|
|
|
2027
|
|
|
|
|
Name
|
|
Position
|
John P. O'Donnell
|
|
President, Chief Executive Officer and Director
|
Matthew L. Duncan
|
|
Senior Vice President, Chief Human Resource Officer
|
Steven S. Heinrichs
|
|
Senior Vice President, General Counsel and Secretary
|
Bonnie C. Lind
|
|
Senior Vice President, Chief Financial Officer and Treasurer
|
James R. Piedmonte
|
|
Senior Vice President — Operations
|
Julie A. Schertell
|
|
Senior Vice President — President, Fine Paper and Packaging
|
Armin S. Schwinn
|
|
Senior Vice President — Managing Director of Neenah Germany
|
Larry N. Brownlee
|
|
Vice President — Controller and Principal Accounting Officer
|
|
|
Page
|
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
Exhibit
Number
|
Exhibit
|
2.1
|
Interest Purchase Agreement by and among ASP FiberMark Holdings, LLC, ASP FiberMark, LLC, Neenah FMK Holdings, LLC and Neenah Paper, Inc. dated as of July 16, 2015 (filed as Exhibit 2.1 to the Neenah Paper, Inc. Quarterly Report on Form 10-Q for the three months ended September 30, 2015, filed November 9, 2015 and incorporated herein by reference).
|
2.2
|
Asset Purchase Agreement, by and among Neenah Paper, Inc., Wausau Paper Corp. and Wausau Paper Mills, LLC, dated as of December 7, 2011 (filed as Exhibit 2.1 to the Neenah Paper, Inc. Current Report on Form 8-K filed January 31, 2012 and incorporated herein by reference).
|
2.30
|
Securities Purchase Agreement by and among Crane Technical Materials, Inc., Crane & Co., Inc., Neenah Paper, Inc. and Neenah Filtration, LLC dated as of June 2, 2014 (filed as Exhibit 2.1 to the Neenah Paper, Inc. Quarterly Report on Form 10-Q for the three months ended June 30, 2014, filed August 7, 2014) (confidential treatment has been granted for certain portions of this exhibit pursuant to a Confidential Treatment Request filed with the Securities Exchange Commission).
|
Exhibit
Number
|
Exhibit
|
3.1
|
Amended and Restated Certificate of Incorporation of Neenah Paper, Inc. (filed as Exhibit 3.1 to the Neenah Paper, Inc. Current Report on Form 8-K filed November 30, 2004 and incorporated herein by reference).
|
3.2
|
Amended and Restated Bylaws of Neenah Paper, Inc. (filed as Exhibit 3.2 to the Neenah Paper, Inc. Current Report on Form 8-K filed November 30, 2004 and incorporated herein by reference).
|
4.1
|
Indenture dated as of May 23, 2013, by and among the Company, the Guarantors named therein, and the 2021 Notes Trustee filed as Exhibit 4.1 to the Neenah Paper, Inc. Current Report on Form 8-K, filed May 24, 2013 and incorporated herein by reference).
|
4.2
|
Form of Notation of Subsidiary Guarantee (included as Exhibit E to Exhibit 4.1).
|
10.1
|
Tax Sharing Agreement dated as of November 30, 2004 by and between Kimberly-Clark Corporation and Neenah Paper, Inc. (filed as Exhibit 10.2 to the Neenah Paper, Inc. Current Report on Form 8-K filed November 30, 2004 and incorporated herein by reference).
|
10.2
|
Lease Agreement dated June 29, 2004 between Neenah Paper, Inc. and Germania Property Investors XXXIV, L.P. (filed as Exhibit 10.3 to the Neenah Paper, Inc. Current Report on Form 8-K filed November 30, 2004 and incorporated herein by reference).
|
10.3*
|
Neenah Paper Supplemental Pension Plan (filed as Exhibit 10.5 to the Neenah Paper, Inc. Annual Report on Form 10-K for the year ended December 31, 2012, filed March 7, 2013 and incorporated herein by reference).
|
10.4*
|
First Amendment to Neenah Paper Supplemental Pension Plan (filed as Exhibit 10.31 to the Neenah Paper, Inc. Annual Report on Form 10-K for the year ended December 31, 2013, filed on March 4, 2014 and incorporated herein by reference).
|
10.5*
|
Neenah Paper Amended and Restated Supplemental Retirement Contribution Plan, effective as of January 1, 2016 (filed herewith).
|
10.6*
|
Neenah Paper Executive Severance Plan (filed as Exhibit 10.7 to the Neenah Paper, Inc. Annual Report on Form 10-K for the year ended December 31, 2012, filed March 7, 2013 and incorporated herein by reference).
|
10.7*
|
First Amendment to Neenah Paper Executive Severance Plan (filed as Exhibit 10.33 to the Neenah Paper, Inc. Annual Report on Form 10-K for the year ended December 31, 2013, filed on March 4, 2014 and incorporated herein by reference).
|
10.8*
|
Neenah Paper, Inc. Amended and Restated 2004 Omnibus Stock and Incentive Compensation Plan (filed as Annex A to the Neenah Paper, Inc. Definitive Proxy Statement on Schedule 14A for the year ended December 31, 2013, filed April 12, 2013 and incorporated herein by reference).
|
10.9*
|
Neenah Paper Deferred Compensation Plan approved on December 11, 2006 (filed as Exhibit 10.21 to the Neenah Paper, Inc. Annual Report on Form 10-K for the year ended December 31, 2012, filed March 7, 2013 and incorporated herein by reference).
|
10.10*
|
Neenah Paper Directors' Deferred Compensation Plan approved on December 11, 2006. (filed as Exhibit 10.7 to the Neenah Paper, Inc. Annual Report on Form 10-K for the year ended December 31, 2012, filed March 7, 2013 and incorporated herein by reference).
|
10.11
|
Third Amended and Restated Credit Agreement dated December 18, 2014 by and among Neenah Paper, Inc., certain of its subsidiaries, the lenders listed therein and JPMorgan Chase Bank, N.A., as agent for the Lenders (filed as Exhibit 10.31 to the Neenah Paper, Inc. Annual Report on Form 10-K for the year ended December 31, 2014, filed February 27, 2015 and incorporated herein by reference) (confidential treatment has been granted for certain portions of this exhibit pursuant to a Confidential Treatment Request filed with the Securities Exchange Commission).
|
10.12
|
First Amendment, dated as of July 28, 2016, to the Third Amended and Restated Credit Agreement dated December 18, 2014 by and among Neenah Paper, Inc., certain of its subsidiaries, the lenders listed therein and JPMorgan Chase Bank, N.A., as agent for the Lenders (filed as Exhibit 99.1 to the Neenah Paper, Inc. Current Report on Form 8-K, filed August 2, 2016 and incorporated herein by reference).
|
10.13
|
Second Amendment, dated as of December 13, 2016, to the Third Amended and Restated Credit Agreement dated December 18, 2014 by and among Neenah Paper, Inc., certain of its subsidiaries, the lenders listed therein and JPMorgan Chase Bank, N.A., as agent for the Lenders (filed as Exhibit 99.1 to the Neenah Paper, Inc. Current Report on Form 8-K, filed December 16, 2016 and incorporated herein by reference).
|
10.14*
|
Form of Performance Share Award as of 2017 (filed as Exhibit 10.1 to Neenah Paper, Inc. Current Report on Form 8-K filed February 3, 2017 and incorporated by reference herein).
|
12
|
Statement Regarding Computation of Ratio of Earnings to Fixed Charges (filed herewith)
|
21
|
List of Subsidiaries of Neenah Paper, Inc. (filed herewith).
|
23
|
Consent of Deloitte & Touche LLP (filed herewith)
|
*
|
Indicates management contract or compensatory plan or arrangement.
|
+
|
Pursuant to a confidential treatment request portions of this exhibit have been furnished separately to the Securities and Exchange Commission.
|
(c)
|
Financial Statement Schedule
|
NEENAH PAPER, INC.
|
||
By:
|
/s/ JOHN P. O'DONNELL
|
|
|
Name:
|
John P. O'Donnell
|
|
Title:
|
President, Chief Executive Officer and Director (in his capacity as a duly authorized officer of the Registrant and in his capacity as Chief Executive Officer)
|
|
Date:
|
February 24, 2017
|
|
|
/s/ JOHN P. O'DONNELL
|
|
President, Chief Executive Officer and Director (Principal Executive Officer)
|
|
|
|
|
John P. O'Donnell
|
|
|
February 24, 2017
|
|
|
|
|
|
|
|
|
|
|
/s/ BONNIE C. LIND
|
|
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)
|
|
|
|
|
Bonnie C. Lind
|
|
|
February 24, 2017
|
|
|
|
|
|
|
|
|
|
|
/s/ LARRY N. BROWNLEE
|
|
Vice President — Controller (Principal Accounting Officer)
|
|
|
|
|
Larry N. Brownlee
|
|
|
February 24, 2017
|
|
|
|
|
|
|
|
|
|
|
/s/ SEAN T. ERWIN*
|
|
Chairman of the Board and Director
|
|
|
|
|
Sean T. Erwin
|
|
|
February 24, 2017
|
|
|
|
|
|
|
|
|
|
|
/s/ WILLIAM M. COOK*
|
|
Director
|
|
|
|
|
William M. Cook
|
|
|
February 24, 2017
|
|
|
|
|
|
|
|
|
|
|
/s/ MARGARET S. DANO*
|
|
Director
|
|
|
|
|
Margaret S. Dano
|
|
|
February 24, 2017
|
|
|
|
|
|
|
|
|
|
|
/s/ TIMOTHY S. LUCAS*
|
|
Director
|
|
|
|
|
Timothy S. Lucas
|
|
|
February 24, 2017
|
|
|
|
|
|
|
|
|
|
|
/s/ JOHN F. MCGOVERN*
|
|
Director
|
|
|
|
|
John F. McGovern
|
|
|
February 24, 2017
|
|
|
|
|
|
|
|
|
|
|
/s/ PHILIP C. MOORE*
|
|
Director
|
|
|
|
|
Philip C. Moore
|
|
|
February 24, 2017
|
|
|
|
|
|
|
|
|
|
|
/s/ STEPHEN M. WOOD*
|
|
Director
|
|
|
|
|
Stephen M. Wood
|
|
|
February 24, 2017
|
|
|
|
|
|
|
|
|
|
*By:
|
/s/ STEVEN S. HEINRICHS
|
|
|
|
|
|
|
Steven S. Heinrichs
Senior Vice President, General
Counsel and Secretary
Attorney-in-fact
|
|
|
|
|
|
|
Page
|
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net sales
|
|
$
|
941.5
|
|
|
$
|
887.7
|
|
|
$
|
839.7
|
|
Cost of products sold
|
|
727.0
|
|
|
692.3
|
|
|
668.9
|
|
|||
Gross profit
|
|
214.5
|
|
|
195.4
|
|
|
170.8
|
|
|||
Selling, general and administrative expenses
|
|
92.2
|
|
|
86.5
|
|
|
78.0
|
|
|||
Integration/restructuring costs
|
|
7.0
|
|
|
6.5
|
|
|
2.3
|
|
|||
Pension plan settlement charge
|
|
0.8
|
|
|
—
|
|
|
3.5
|
|
|||
Loss on early extinguishment of debt
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|||
Other expense — net
|
|
0.4
|
|
|
1.0
|
|
|
0.2
|
|
|||
Operating income
|
|
114.1
|
|
|
101.4
|
|
|
86.6
|
|
|||
Interest expense
|
|
11.2
|
|
|
11.7
|
|
|
11.4
|
|
|||
Interest income
|
|
(0.1
|
)
|
|
(0.2
|
)
|
|
(0.3
|
)
|
|||
Income from continuing operations before income taxes
|
|
103.0
|
|
|
89.9
|
|
|
75.5
|
|
|||
Provision for income taxes
|
|
29.6
|
|
|
29.4
|
|
|
7.5
|
|
|||
Income from continuing operations
|
|
73.4
|
|
|
60.5
|
|
|
68.0
|
|
|||
(Loss) income from discontinued operations, net of taxes (Note 13)
|
|
(0.4
|
)
|
|
(9.4
|
)
|
|
0.7
|
|
|||
Net income
|
|
$
|
73.0
|
|
|
$
|
51.1
|
|
|
$
|
68.7
|
|
|
|
|
|
|
|
|
||||||
Earnings (Loss) Per Common Share
|
|
|
|
|
|
|
|
|
|
|||
Basic
|
|
|
|
|
|
|
|
|
|
|||
Continuing operations
|
|
4.33
|
|
|
3.58
|
|
|
4.05
|
|
|||
Discontinued operations
|
|
(0.02
|
)
|
|
(0.56
|
)
|
|
0.04
|
|
|||
|
|
$
|
4.31
|
|
|
$
|
3.02
|
|
|
$
|
4.09
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
|||
Continuing operations
|
|
4.26
|
|
|
3.53
|
|
|
3.99
|
|
|||
Discontinued operations
|
|
(0.02
|
)
|
|
(0.55
|
)
|
|
0.04
|
|
|||
|
|
$
|
4.24
|
|
|
$
|
2.98
|
|
|
$
|
4.03
|
|
|
|
|
|
|
|
|
||||||
Weighted Average Common Shares Outstanding (in thousands)
|
|
|
|
|
|
|
|
|
|
|||
Basic
|
|
16,773
|
|
|
16,754
|
|
|
16,584
|
|
|||
Diluted
|
|
17,087
|
|
|
17,012
|
|
|
16,872
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net income
|
|
$
|
73.0
|
|
|
$
|
51.1
|
|
|
$
|
68.7
|
|
Reclassification of amounts recognized in the consolidated statement of operations:
|
|
|
|
|
|
|
|
|
|
|||
Amortization of adjustments to pension and other postretirement benefit liabilities
|
|
7.2
|
|
|
7.1
|
|
|
4.7
|
|
|||
Pension plan settlement/curtailment charge (2015 amount in discontinued operations)
|
|
0.8
|
|
|
5.5
|
|
|
3.5
|
|
|||
Amounts recognized in the consolidated statement of operations
|
|
8.0
|
|
|
12.6
|
|
|
8.2
|
|
|||
Unrealized foreign currency translation loss
|
|
(7.1
|
)
|
|
(15.0
|
)
|
|
(23.7
|
)
|
|||
Net loss from pension and other postretirement benefit plans
|
|
(18.0
|
)
|
|
(6.3
|
)
|
|
(34.3
|
)
|
|||
Loss from other comprehensive income items before income taxes
|
|
(17.1
|
)
|
|
(8.7
|
)
|
|
(49.8
|
)
|
|||
(Benefit) provision for income taxes
|
|
(3.4
|
)
|
|
1.2
|
|
|
(8.7
|
)
|
|||
Other comprehensive loss
|
|
(13.7
|
)
|
|
(9.9
|
)
|
|
(41.1
|
)
|
|||
Comprehensive income
|
|
$
|
59.3
|
|
|
$
|
41.2
|
|
|
$
|
27.6
|
|
|
|
December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
ASSETS
|
|
|
|
|
|
|
||
Current Assets
|
|
|
|
|
|
|
||
Cash and cash equivalents
|
|
$
|
3.1
|
|
|
$
|
4.2
|
|
Accounts receivable, net
|
|
96.5
|
|
|
97.3
|
|
||
Inventories
|
|
116.3
|
|
|
120.6
|
|
||
Prepaid and other current assets
|
|
20.4
|
|
|
24.5
|
|
||
Total Current Assets
|
|
236.3
|
|
|
246.6
|
|
||
Property, Plant and Equipment — net
|
|
364.6
|
|
|
323.0
|
|
||
Deferred Income Taxes
|
|
6.1
|
|
|
20.0
|
|
||
Goodwill (Note 5)
|
|
70.4
|
|
|
72.2
|
|
||
Intangible Assets — net (Note 5)
|
|
74.0
|
|
|
79.1
|
|
||
Other Assets
|
|
14.2
|
|
|
10.5
|
|
||
TOTAL ASSETS
|
|
$
|
765.6
|
|
|
$
|
751.4
|
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
||
Current Liabilities
|
|
|
|
|
|
|
||
Debt payable within one year
|
|
$
|
1.2
|
|
|
$
|
1.2
|
|
Accounts payable
|
|
55.6
|
|
|
53.7
|
|
||
Accrued expenses
|
|
51.2
|
|
|
51.2
|
|
||
Total Current Liabilities
|
|
108.0
|
|
|
106.1
|
|
||
Long-Term Debt
|
|
219.7
|
|
|
228.2
|
|
||
Deferred Income Taxes
|
|
10.1
|
|
|
11.8
|
|
||
Noncurrent Employee Benefits
|
|
86.7
|
|
|
89.7
|
|
||
Other Noncurrent Obligations
|
|
2.8
|
|
|
4.0
|
|
||
TOTAL LIABILITIES
|
|
427.3
|
|
|
439.8
|
|
||
Commitments and Contingencies (Notes 11 and 12)
|
|
|
|
|
|
|
||
Stockholders' Equity
|
|
|
|
|
|
|
||
Common stock, par value $0.01 — authorized: 100,000,000 shares; issued and outstanding: 16,771,000 shares and 16,819,000 shares
|
|
0.2
|
|
|
0.2
|
|
||
Treasury stock, at cost: 1,475,000 shares and 1,244,000 shares
|
|
(56.5
|
)
|
|
(40.1
|
)
|
||
Additional paid-in capital
|
|
317.0
|
|
|
310.8
|
|
||
Retained earnings
|
|
169.6
|
|
|
119.0
|
|
||
Accumulated other comprehensive loss
|
|
(92.0
|
)
|
|
(78.3
|
)
|
||
Total Stockholders' Equity
|
|
338.3
|
|
|
311.6
|
|
||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
$
|
765.6
|
|
|
$
|
751.4
|
|
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
Shares
|
|
Amount
|
|
Treasury
Stock |
|
Additional
Paid-In Capital |
|
Retained
Earnings |
|
Accumulated
Other Comprehensive Loss |
|||||||||||
Balance, December 31, 2013
|
|
17,383
|
|
|
$
|
0.2
|
|
|
$
|
(27.2
|
)
|
|
$
|
285.2
|
|
|
$
|
36.6
|
|
|
$
|
(27.3
|
)
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
68.7
|
|
|
—
|
|
|||||
Other comprehensive income, net of income taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(41.1
|
)
|
|||||
Dividends declared
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17.1
|
)
|
|
—
|
|
|||||
Excess tax benefits from stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.6
|
|
|
—
|
|
|
—
|
|
|||||
Shares purchased (Note 10)
|
|
—
|
|
|
—
|
|
|
(1.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock options exercised
|
|
316
|
|
|
—
|
|
|
—
|
|
|
3.6
|
|
|
—
|
|
|
—
|
|
|||||
Restricted stock vesting (Note 10)
|
|
150
|
|
|
—
|
|
|
(3.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.0
|
|
|
—
|
|
|
—
|
|
|||||
Balance, December 31, 2014
|
|
17,849
|
|
|
0.2
|
|
|
(31.7
|
)
|
|
300.4
|
|
|
88.2
|
|
|
(68.4
|
)
|
|||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
51.1
|
|
|
—
|
|
|||||
Other comprehensive loss, net of income taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9.9
|
)
|
|||||
Dividends declared
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20.3
|
)
|
|
—
|
|
|||||
Excess tax benefits from stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.6
|
|
|
—
|
|
|
—
|
|
|||||
Shares purchased (Note 10)
|
|
—
|
|
|
—
|
|
|
(5.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock options exercised
|
|
108
|
|
|
—
|
|
|
—
|
|
|
1.2
|
|
|
—
|
|
|
—
|
|
|||||
Restricted stock vesting (Note 10)
|
|
106
|
|
|
—
|
|
|
(2.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.5
|
|
|
—
|
|
|
—
|
|
|||||
Other/Currency
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|||||
Balance, December 31, 2015
|
|
18,063
|
|
|
0.2
|
|
|
(40.1
|
)
|
|
310.8
|
|
|
119.0
|
|
|
(78.3
|
)
|
|||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
73.0
|
|
|
—
|
|
|||||
Other comprehensive loss, net of income taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13.7
|
)
|
|||||
Dividends declared
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22.4
|
)
|
|
—
|
|
|||||
Shares purchased (Note 10)
|
|
—
|
|
|
—
|
|
|
(12.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock options exercised
|
|
71
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|||||
Restricted stock vesting (Note 10)
|
|
111
|
|
|
—
|
|
|
(3.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.8
|
|
|
—
|
|
|
—
|
|
|||||
Balance, December 31, 2016
|
|
18,245
|
|
|
$
|
0.2
|
|
|
$
|
(56.5
|
)
|
|
$
|
317.0
|
|
|
$
|
169.6
|
|
|
$
|
(92.0
|
)
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|||
Net income
|
|
$
|
73.0
|
|
|
$
|
51.1
|
|
|
$
|
68.7
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization
|
|
32.0
|
|
|
31.5
|
|
|
30.0
|
|
|||
Stock-based compensation
|
|
5.8
|
|
|
6.5
|
|
|
6.0
|
|
|||
Excess tax benefit from stock-based compensation (Note 2 and 9)
|
|
—
|
|
|
(2.6
|
)
|
|
(5.6
|
)
|
|||
Deferred income tax provision
|
|
16.9
|
|
|
8.3
|
|
|
3.7
|
|
|||
Non-cash effects of changes in liabilities for uncertain income tax positions
|
|
(1.5
|
)
|
|
(0.1
|
)
|
|
(2.0
|
)
|
|||
Loss on early extinguishment of debt
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|||
Pension settlement charge, net of plan payments
|
|
0.8
|
|
|
—
|
|
|
3.5
|
|
|||
Non-cash loss on discontinued operations
|
|
—
|
|
|
12.0
|
|
|
—
|
|
|||
Loss (gain) on asset dispositions
|
|
0.1
|
|
|
(0.1
|
)
|
|
0.2
|
|
|||
Net cash (used in) provided by changes in operating working capital, net of effect of acquisitions (Note 15)
|
|
(1.2
|
)
|
|
1.8
|
|
|
9.0
|
|
|||
Pension and other post-employment benefits
|
|
(10.9
|
)
|
|
2.9
|
|
|
(18.3
|
)
|
|||
Other
|
|
0.8
|
|
|
(0.1
|
)
|
|
(0.9
|
)
|
|||
NET CASH PROVIDED BY OPERATING ACTIVITIES
|
|
115.8
|
|
|
111.2
|
|
|
94.5
|
|
|||
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|||
Capital expenditures
|
|
(68.5
|
)
|
|
(48.1
|
)
|
|
(27.9
|
)
|
|||
Purchases of marketable securities
|
|
(0.1
|
)
|
|
(0.2
|
)
|
|
(0.6
|
)
|
|||
Net proceeds from sale of discontinued operations
|
|
—
|
|
|
5.4
|
|
|
—
|
|
|||
Proceeds from sale of property, plant and equipment
|
|
0.1
|
|
|
0.5
|
|
|
—
|
|
|||
Acquisitions (Note 4)
|
|
—
|
|
|
(118.2
|
)
|
|
(72.4
|
)
|
|||
Purchase of equity investment
|
|
—
|
|
|
—
|
|
|
(2.9
|
)
|
|||
Other
|
|
0.3
|
|
|
0.5
|
|
|
(1.1
|
)
|
|||
NET CASH USED IN INVESTING ACTIVITIES
|
|
(68.2
|
)
|
|
(160.1
|
)
|
|
(104.9
|
)
|
|||
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|||
Proceeds from issuance of long-term debt (Note 7)
|
|
243.0
|
|
|
151.6
|
|
|
49.5
|
|
|||
Debt issuance costs
|
|
(0.1
|
)
|
|
—
|
|
|
(2.4
|
)
|
|||
Repayments of long-term debt (Note 7)
|
|
(252.9
|
)
|
|
(145.6
|
)
|
|
(5.6
|
)
|
|||
Short-term borrowings
|
|
—
|
|
|
—
|
|
|
6.5
|
|
|||
Repayments of short-term borrowings
|
|
—
|
|
|
—
|
|
|
(25.4
|
)
|
|||
Proceeds from exercise of stock options
|
|
0.4
|
|
|
1.2
|
|
|
3.6
|
|
|||
Excess tax benefit from stock-based compensation (Note 2 and 9)
|
|
—
|
|
|
2.6
|
|
|
5.6
|
|
|||
Cash dividends paid
|
|
(22.4
|
)
|
|
(20.3
|
)
|
|
(17.1
|
)
|
|||
Shares purchased (Note 10)
|
|
(16.4
|
)
|
|
(8.4
|
)
|
|
(4.5
|
)
|
|||
Other
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|||
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES
|
|
(48.4
|
)
|
|
(18.8
|
)
|
|
10.2
|
|
|||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
|
|
(0.3
|
)
|
|
(0.7
|
)
|
|
(0.6
|
)
|
|||
NET DECREASE IN CASH AND CASH EQUIVALENTS
|
|
(1.1
|
)
|
|
(68.4
|
)
|
|
(0.8
|
)
|
|||
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
|
|
4.2
|
|
|
72.6
|
|
|
73.4
|
|
|||
CASH AND CASH EQUIVALENTS, END OF YEAR
|
|
$
|
3.1
|
|
|
$
|
4.2
|
|
|
$
|
72.6
|
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||
|
|
Carrying
Value |
|
Fair
Value (a) |
|
Carrying
Value |
|
Fair
Value (a) |
||||||||
2021 Senior Notes (5.25% fixed rate)
|
|
$
|
175.0
|
|
|
$
|
169.5
|
|
|
$
|
175.0
|
|
|
$
|
169.9
|
|
Global Revolving Credit Facilities (variable rates)
|
|
42.9
|
|
|
42.9
|
|
|
51.1
|
|
|
51.1
|
|
||||
Second German Loan Agreement (2.5% fixed rate)
|
|
6.8
|
|
|
6.8
|
|
|
8.3
|
|
|
8.3
|
|
||||
Total debt
|
|
$
|
224.7
|
|
|
$
|
219.2
|
|
|
$
|
234.4
|
|
|
$
|
229.3
|
|
(a)
|
Fair value for all debt instruments was estimated from Level 2 measurements.
|
•
|
Cash and cash equivalents (
$1.5 million
and
$6.9 million
at
December 31, 2016
and
2015
, respectively).
|
•
|
U.S and non-U.S. Equities (
$112.2 million
and
$92.4 million
at
December 31, 2016
and
2015
, respectively) — These proprietary mutual funds have observable net asset values (based on the fair value of the underlying investments of the funds) that are provided to investors and provide for liquidity either immediately of within a few days.
|
•
|
U.S and non-U.S. Fixed Income Securities (
$181.1 million
and
$185.8 million
at
December 31, 2016
and
2015
, respectively) — These proprietary mutual funds have observable net asset values (based on the fair value of the underlying investments of the funds) that are provided to investors and provide for liquidity either immediately of within a few days.
|
•
|
Hedge Funds (
$23.3 million
and
$23.2 million
at
December 31, 2016
and
2015
, respectively) — These funds are valued using net asset values calculated by the fund managers and allow for quarterly or more frequent redemptions.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Income from continuing operations
|
|
$
|
73.4
|
|
|
$
|
60.5
|
|
|
$
|
68.0
|
|
Amounts attributable to participating securities
|
|
(0.7
|
)
|
|
(0.6
|
)
|
|
(0.8
|
)
|
|||
Income from continuing operations available to common stockholders
|
|
72.7
|
|
|
59.9
|
|
|
67.2
|
|
|||
Income (loss) from discontinued operations, net of income taxes
|
|
(0.4
|
)
|
|
(9.4
|
)
|
|
0.7
|
|
|||
Amounts attributable to participating securities
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|||
Net income available to common stockholders
|
|
$
|
72.3
|
|
|
$
|
50.6
|
|
|
$
|
67.9
|
|
Weighted-average basic shares outstanding
|
|
16,773
|
|
|
16,754
|
|
|
16,584
|
|
|||
Basic earnings (loss) per share
|
|
|
|
|
|
|
|
|
|
|||
Continuing operations
|
|
$
|
4.33
|
|
|
$
|
3.58
|
|
|
$
|
4.05
|
|
Discontinued operations
|
|
(0.02
|
)
|
|
(0.56
|
)
|
|
0.04
|
|
|||
|
|
$
|
4.31
|
|
|
$
|
3.02
|
|
|
$
|
4.09
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Income from continuing operations
|
|
$
|
73.4
|
|
|
$
|
60.5
|
|
|
$
|
68.0
|
|
Amounts attributable to participating securities
|
|
(0.6
|
)
|
|
(0.5
|
)
|
|
(0.8
|
)
|
|||
Income from continuing operations available to common stockholders
|
|
72.8
|
|
|
60.0
|
|
|
67.2
|
|
|||
Income (loss) from discontinued operations, net of income taxes
|
|
(0.4
|
)
|
|
(9.4
|
)
|
|
0.7
|
|
|||
Amounts attributable to participating securities
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|||
Net income available to common stockholders
|
|
$
|
72.4
|
|
|
$
|
50.7
|
|
|
$
|
67.9
|
|
Weighted-average basic shares outstanding
|
|
16,773
|
|
|
16,754
|
|
|
16,584
|
|
|||
Add: Assumed incremental shares under stock-based compensation plans
|
|
314
|
|
|
258
|
|
|
288
|
|
|||
Weighted average diluted shares
|
|
17,087
|
|
|
17,012
|
|
|
16,872
|
|
|||
Diluted earnings (loss) per share
|
|
|
|
|
|
|
|
|
|
|||
Continuing operations
|
|
$
|
4.26
|
|
|
$
|
3.53
|
|
|
$
|
3.99
|
|
Discontinued operations
|
|
(0.02
|
)
|
|
(0.55
|
)
|
|
0.04
|
|
|||
|
|
$
|
4.24
|
|
|
$
|
2.98
|
|
|
$
|
4.03
|
|
|
|
December 31, 2015
|
||
Assets Acquired
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
4.8
|
|
Accounts receivable
|
|
13.7
|
|
|
Inventories
|
|
27.5
|
|
|
Deferred income taxes
|
|
2.3
|
|
|
Prepaid and other current assets
|
|
3.6
|
|
|
Property, plant and equipment
|
|
68.9
|
|
|
Non-amortizable intangible assets
|
|
1.3
|
|
|
Amortizable intangible assets
|
|
25.6
|
|
|
Acquired goodwill
|
|
25.5
|
|
|
Total assets acquired
|
|
173.2
|
|
|
Liabilities Assumed
|
|
|
|
|
Accounts payable
|
|
8.0
|
|
|
Accrued expenses
|
|
5.6
|
|
|
Deferred income taxes
|
|
24.1
|
|
|
Noncurrent employee benefits
|
|
9.1
|
|
|
Other noncurrent obligations
|
|
3.1
|
|
|
Total liabilities assumed
|
|
49.9
|
|
|
Net assets acquired
|
|
$
|
123.3
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2015
|
|
2014
|
||||
Net sales
|
|
$
|
984.0
|
|
|
$
|
1,003.8
|
|
Operating income
|
|
103.7
|
|
|
95.6
|
|
||
Income from continuing operations
|
|
61.7
|
|
|
72.8
|
|
||
Income (loss) from discontinued operations
|
|
(9.4
|
)
|
|
0.7
|
|
||
Net income
|
|
52.3
|
|
|
73.5
|
|
||
Earnings (Loss) Per Common Share
|
|
|
|
|
|
|
||
Basic
|
|
|
|
|
|
|
||
Continuing operations
|
|
$
|
3.65
|
|
|
$
|
4.34
|
|
Discontinued Operations
|
|
(0.56
|
)
|
|
0.04
|
|
||
|
|
$
|
3.09
|
|
|
$
|
4.38
|
|
Diluted
|
|
|
|
|
|
|
||
Continuing operations
|
|
$
|
3.60
|
|
|
$
|
4.27
|
|
Discontinued Operations
|
|
(0.55
|
)
|
|
0.04
|
|
||
|
|
$
|
3.05
|
|
|
$
|
4.31
|
|
|
|
Year Ended December 31,
|
||
|
|
2014
|
||
Net sales
|
|
$
|
862.3
|
|
Operating income
|
|
89.2
|
|
|
Income from continuing operations
|
|
69.6
|
|
|
Income from discontinued operations
|
|
0.7
|
|
|
Net income
|
|
70.3
|
|
|
Earnings Per Common Share
|
|
|
|
|
Basic
|
|
|
|
|
Continuing operations
|
|
$
|
4.15
|
|
Discontinued Operations
|
|
0.04
|
|
|
|
|
$
|
4.19
|
|
Diluted
|
|
|
|
|
Continuing operations
|
|
$
|
4.08
|
|
Discontinued Operations
|
|
0.04
|
|
|
|
|
$
|
4.12
|
|
|
|
Technical Products
|
|
Fine Paper and
Packaging |
|
Other
|
|
|
||||||||||||||||
|
|
Gross
Amount |
|
Accumulated
Impairment Losses |
|
|
|
|
Gross
Amount |
|
|
|||||||||||||
|
|
|
|
Net
|
|
Gross Amount
|
|
|
Net
|
|||||||||||||||
Balance at December 31, 2014
|
|
$
|
100.8
|
|
|
$
|
(50.3
|
)
|
|
$
|
50.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
50.5
|
|
Goodwill acquired in the Fibermark Acquisition
|
|
18.9
|
|
|
—
|
|
|
18.9
|
|
|
6.2
|
|
|
0.4
|
|
|
25.5
|
|
||||||
Foreign currency translation
|
|
(9.0
|
)
|
|
5.2
|
|
|
(3.8
|
)
|
|
—
|
|
|
—
|
|
|
(3.8
|
)
|
||||||
Balance at December 31, 2015
|
|
110.7
|
|
|
(45.1
|
)
|
|
65.6
|
|
|
6.2
|
|
|
0.4
|
|
|
72.2
|
|
||||||
Adjustment of goodwill acquired in the Fibermark Acquisition
(1)
|
|
(0.4
|
)
|
|
—
|
|
|
(0.4
|
)
|
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
||||||
Foreign currency translation
|
|
(2.9
|
)
|
|
1.5
|
|
|
(1.4
|
)
|
|
—
|
|
|
—
|
|
|
(1.4
|
)
|
||||||
Balance at December 31, 2016
|
|
$
|
107.4
|
|
|
$
|
(43.6
|
)
|
|
$
|
63.8
|
|
|
$
|
6.2
|
|
|
$
|
0.4
|
|
|
$
|
70.4
|
|
(1)
|
As a result of finalizing the acquisition accounting for Fibermark in the first quarter of 2016, an adjustment of $
0.4 million
was recorded as a reduction to the net deferred tax liability and to goodwill.
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||
|
|
Gross
Amount |
|
Accumulated
Amortization |
|
Gross
Amount |
|
Accumulated
Amortization |
||||||||
Amortizable intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Customer based intangibles
|
|
$
|
34.4
|
|
|
$
|
(11.1
|
)
|
|
$
|
35.5
|
|
|
$
|
(9.2
|
)
|
Trade names and trademarks
|
|
6.8
|
|
|
(4.2
|
)
|
|
4.4
|
|
|
(1.8
|
)
|
||||
Acquired technology
|
|
14.6
|
|
|
(2.7
|
)
|
|
16.0
|
|
|
(1.4
|
)
|
||||
Total amortizable intangible assets
|
|
55.8
|
|
|
(18.0
|
)
|
|
55.9
|
|
|
(12.4
|
)
|
||||
Trade names
|
|
36.2
|
|
|
—
|
|
|
35.6
|
|
|
—
|
|
||||
Total
|
|
$
|
92.0
|
|
|
$
|
(18.0
|
)
|
|
$
|
91.5
|
|
|
$
|
(12.4
|
)
|
|
|
Intangibles
|
|
Estimated Useful
Lives (Years) |
||
Intangible assets — definite lived
|
|
|
|
|
|
|
Trade names and trademarks
|
|
$
|
2.3
|
|
|
15
|
Customer based intangibles
|
|
14.1
|
|
|
15
|
|
Acquired technology
|
|
8.7
|
|
|
13
|
|
Total
|
|
25.1
|
|
|
|
|
Non-amortizable trade names
|
|
1.8
|
|
|
|
|
Total intangible assets
|
|
$
|
26.9
|
|
|
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
|
2016
|
|
2016
|
|
2015
|
|
2015
|
|
2014
|
|
2014
|
|||||||||
U.S. federal statutory income tax rate
|
|
35.0
|
%
|
|
$
|
36.1
|
|
|
35.0
|
%
|
|
$
|
31.5
|
|
|
35.0
|
%
|
|
$
|
26.4
|
|
U.S. state income taxes, net of federal income tax benefit
|
|
1.9
|
%
|
|
2.0
|
|
|
2.1
|
%
|
|
1.9
|
|
|
2.1
|
%
|
|
1.6
|
|
|||
Tax on foreign dividends
|
|
4.5
|
%
|
|
4.6
|
|
|
3.6
|
%
|
|
3.2
|
|
|
3.0
|
%
|
|
2.3
|
|
|||
Foreign tax rate differences (a)
|
|
(2.7
|
)%
|
|
(2.8
|
)
|
|
(2.2
|
)%
|
|
(2.0
|
)
|
|
(2.8
|
)%
|
|
(2.1
|
)
|
|||
Foreign financing structure (b)
|
|
(1.6
|
)%
|
|
(1.7
|
)
|
|
(1.3
|
)%
|
|
(1.2
|
)
|
|
(2.5
|
)%
|
|
(1.9
|
)
|
|||
Excess tax benefits from stock compensation (c)
|
|
(3.0
|
)%
|
|
(3.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Research and development and other tax credits (d)
|
|
(2.8
|
)%
|
|
(2.9
|
)
|
|
(3.9
|
)%
|
|
(3.5
|
)
|
|
(31.9
|
)%
|
|
(24.1
|
)
|
|||
Domestic production activities deduction
|
|
(1.5
|
)%
|
|
(1.5
|
)
|
|
(2.2
|
)%
|
|
(2.0
|
)
|
|
—
|
%
|
|
—
|
|
|||
Uncertain income tax positions
|
|
(0.4
|
)%
|
|
(0.4
|
)
|
|
1.3
|
%
|
|
1.2
|
|
|
6.5
|
%
|
|
4.9
|
|
|||
Other differences — net
|
|
(0.7
|
)%
|
|
(0.7
|
)
|
|
0.3
|
%
|
|
0.3
|
|
|
0.5
|
%
|
|
0.4
|
|
|||
Effective income tax rate
|
|
28.7
|
%
|
|
$
|
29.6
|
|
|
32.7
|
%
|
|
$
|
29.4
|
|
|
9.9
|
%
|
|
$
|
7.5
|
|
(a)
|
Represents the impact on the Company's effective tax rate due to changes in the mix of earnings among taxing jurisdictions with differing statutory rates.
|
(b)
|
Represents the impact on the Company's effective tax rate of the Company's financing strategies.
|
(c)
|
In 2016, the Company adopted ASU 2016-09, Compensation — Stock Compensation (Topic 718). See Note 2, "Summary of Significant Accounting Policies — Recently Adopted Accounting Standards."
|
(d)
|
For 2015, the Company recognized a
$1.4 million
benefit related to research and development ("R&D") tax credits of FiberMark for the period 2012 through July 2015. For 2014, following an extensive study of the Company's R&D activities for the years 2005 through 2013 and a change in methodology, the Company recognized a
$21.9 million
net benefit related to R&D tax credits.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Income from continuing operations before income taxes:
|
|
|
|
|
|
|
|
|
|
|||
U.S.
|
|
$
|
68.3
|
|
|
$
|
62.2
|
|
|
$
|
46.5
|
|
Foreign
|
|
34.7
|
|
|
27.7
|
|
|
29.0
|
|
|||
Total
|
|
$
|
103.0
|
|
|
$
|
89.9
|
|
|
$
|
75.5
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Provision (benefit) for income taxes:
|
|
|
|
|
|
|
|
|
|
|||
Current:
|
|
|
|
|
|
|
|
|
|
|||
Federal
|
|
$
|
7.1
|
|
|
$
|
12.7
|
|
|
$
|
0.5
|
|
State
|
|
(0.5
|
)
|
|
1.3
|
|
|
—
|
|
|||
Foreign
|
|
5.9
|
|
|
5.1
|
|
|
3.4
|
|
|||
Total current tax provision
|
|
12.5
|
|
|
19.1
|
|
|
3.9
|
|
|||
Deferred:
|
|
|
|
|
|
|
|
|
|
|||
Federal
|
|
14.8
|
|
|
7.7
|
|
|
6.9
|
|
|||
State
|
|
1.8
|
|
|
2.3
|
|
|
(5.9
|
)
|
|||
Foreign
|
|
0.5
|
|
|
0.3
|
|
|
2.6
|
|
|||
Total deferred tax provision
|
|
17.1
|
|
|
10.3
|
|
|
3.6
|
|
|||
Total provision for income taxes
|
|
$
|
29.6
|
|
|
$
|
29.4
|
|
|
$
|
7.5
|
|
|
|
December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Net deferred income tax assets
|
|
|
|
|
|
|
||
Employee benefits
|
|
$
|
26.0
|
|
|
$
|
27.8
|
|
Research and development tax credits
|
|
15.0
|
|
|
20.9
|
|
||
Net operating losses and credits
|
|
10.5
|
|
|
10.7
|
|
||
Accrued liabilities
|
|
3.2
|
|
|
2.9
|
|
||
Inventories
|
|
(0.5
|
)
|
|
1.3
|
|
||
Accelerated depreciation
|
|
(34.0
|
)
|
|
(34.8
|
)
|
||
Intangibles
|
|
(10.8
|
)
|
|
(10.2
|
)
|
||
Undistributed foreign earnings
|
|
(4.4
|
)
|
|
—
|
|
||
Other
|
|
1.1
|
|
|
1.4
|
|
||
Net deferred income tax assets
|
|
$
|
6.1
|
|
|
$
|
20.0
|
|
Net deferred income tax liabilities
|
|
|
|
|
|
|
||
Accelerated depreciation
|
|
$
|
12.3
|
|
|
$
|
12.8
|
|
Intangibles
|
|
2.8
|
|
|
3.5
|
|
||
Employee benefits
|
|
(5.0
|
)
|
|
(3.9
|
)
|
||
Interest limitation
|
|
0.3
|
|
|
(0.5
|
)
|
||
Net operating losses
|
|
(0.3
|
)
|
|
(0.1
|
)
|
||
Net deferred income tax liabilities
|
|
$
|
10.1
|
|
|
$
|
11.8
|
|
|
|
For the Years Ended
December 31, |
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Balance at January 1,
|
|
$
|
12.9
|
|
|
$
|
7.0
|
|
|
$
|
4.3
|
|
Increases in prior period tax positions
|
|
—
|
|
|
0.5
|
|
|
—
|
|
|||
Decreases in prior period tax positions
|
|
(2.6
|
)
|
|
—
|
|
|
(2.2
|
)
|
|||
Increases in current period tax positions
|
|
0.6
|
|
|
5.5
|
|
|
5.3
|
|
|||
Decreases due to lapse of statute of limitations
|
|
(0.3
|
)
|
|
—
|
|
|
—
|
|
|||
Decreases due to settlements with tax authorities
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|||
Decreases from foreign exchange rate changes
|
|
(0.3
|
)
|
|
(0.1
|
)
|
|
(0.2
|
)
|
|||
Balance at December 31,
|
|
$
|
10.3
|
|
|
$
|
12.9
|
|
|
$
|
7.0
|
|
|
|
December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
2021 Senior Notes (5.25% fixed rate) due May 2021
|
|
$
|
175.0
|
|
|
$
|
175.0
|
|
Global Revolving Credit Facilities (variable rates) due December 2019
|
|
42.9
|
|
|
51.1
|
|
||
Second German Loan Agreement (2.45% fixed rate) due in 32 equal quarterly installments ending September 2022
|
|
6.8
|
|
|
8.3
|
|
||
Deferred financing costs
|
|
(3.8
|
)
|
|
(5.0
|
)
|
||
Total Debt
|
|
220.9
|
|
|
229.4
|
|
||
Less: Debt payable within one year
|
|
1.2
|
|
|
1.2
|
|
||
Long-term debt
|
|
$
|
219.7
|
|
|
$
|
228.2
|
|
|
|
|
|
|
|
|
Applicable Margin
|
||
|
|
U.S. Revolving
Credit Facility
|
|
German Revolving
Credit Facility
|
Prime rate
|
|
0.00%-0.50%
|
|
Not applicable
|
Federal funds rate +0.50%
|
|
0.00%-0.50%
|
|
Not applicable
|
Monthly LIBOR (which cannot be less than zero percent) +1.00%
|
|
0.00%-0.50%
|
|
Not applicable
|
Overnight LIBOR (which cannot be less than zero percent)
|
|
Not applicable
|
|
1.50%-2.00%
|
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Thereafter
|
|
Total
|
||||||||||||||
Debt payments
|
|
$
|
1.2
|
|
|
$
|
1.2
|
|
|
$
|
44.1
|
|
|
$
|
1.2
|
|
|
$
|
176.2
|
|
|
$
|
0.8
|
|
|
$
|
224.7
|
|
Pension Fund
|
EIN/Pension
Plan Number
|
|
Pension
Zone
Status
2015
|
|
FIP/RP Status
Pending or
Implemented
|
|
Contributions
2016
|
|
Surcharge
Imposed
|
|
ExpirationDate of
Collective
Bargaining
Agreement
|
||
PACE Industry Union Management Pension Fund
|
11-6166763
|
|
Red
|
|
Implemented
|
|
$
|
0.1
|
million
|
|
Yes
|
|
11/9/2021
|
|
|
Pension Benefits
|
|
Postretirement
Benefits Other than Pensions |
||||||||||||
|
|
Year Ended December 31,
|
||||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Change in Benefit Obligation:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Benefit obligation at beginning of year
|
|
$
|
360.1
|
|
|
$
|
330.2
|
|
|
$
|
40.5
|
|
|
$40.7
|
||
Service cost
|
|
4.9
|
|
|
5.5
|
|
|
1.3
|
|
|
1.7
|
|
||||
Interest cost
|
|
15.9
|
|
|
13.8
|
|
|
1.6
|
|
|
1.6
|
|
||||
Currency
|
|
(3.1
|
)
|
|
(4.0
|
)
|
|
0.1
|
|
|
(0.5
|
)
|
||||
Actuarial (gain) loss
|
|
18.2
|
|
|
(18.8
|
)
|
|
(1.2
|
)
|
|
1.5
|
|
||||
Benefit payments from plans
|
|
(17.1
|
)
|
|
(14.9
|
)
|
|
(3.8
|
)
|
|
(4.0
|
)
|
||||
Settlement payments
|
|
(8.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net transfer in/(out) (1)
|
|
0.1
|
|
|
48.3
|
|
|
—
|
|
|
(0.5
|
)
|
||||
Other
|
|
—
|
|
|
—
|
|
|
2.2
|
|
|
—
|
|
||||
Benefit obligation at end of year
|
|
$
|
370.9
|
|
|
$
|
360.1
|
|
|
$
|
40.7
|
|
|
$
|
40.5
|
|
Change in Plan Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fair value of plan assets at beginning of year
|
|
$
|
308.3
|
|
|
$
|
288.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Actual gain (loss) on plan assets
|
|
17.6
|
|
|
(6.0
|
)
|
|
—
|
|
|
—
|
|
||||
Employer contributions
|
|
17.8
|
|
|
1.0
|
|
|
—
|
|
|
—
|
|
||||
Currency
|
|
(1.7
|
)
|
|
(0.5
|
)
|
|
—
|
|
|
—
|
|
||||
Benefit payments
|
|
(15.8
|
)
|
|
(13.6
|
)
|
|
—
|
|
|
—
|
|
||||
Settlement payments
|
|
(8.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net transfers in (1)
|
|
—
|
|
|
39.1
|
|
|
—
|
|
|
—
|
|
||||
Fair value of plan assets at end of year
|
|
$
|
318.1
|
|
|
$
|
308.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Reconciliation of Funded Status
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fair value of plan assets
|
|
$
|
318.1
|
|
|
$
|
308.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Projected benefit obligation
|
|
370.9
|
|
|
360.1
|
|
|
40.7
|
|
|
40.5
|
|
||||
Net liability recognized in statement of financial position
|
|
$
|
(52.8
|
)
|
|
$
|
(51.8
|
)
|
|
$
|
(40.7
|
)
|
|
$
|
(40.5
|
)
|
Amounts recognized in statement of financial position consist of:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Current liabilities
|
|
$
|
(3.8
|
)
|
|
$
|
(1.5
|
)
|
|
$
|
(4.3
|
)
|
|
$
|
(3.8
|
)
|
Noncurrent liabilities
|
|
(49.0
|
)
|
|
(50.3
|
)
|
|
(36.4
|
)
|
|
(36.7
|
)
|
||||
Net amount recognized
|
|
$
|
(52.8
|
)
|
|
$
|
(51.8
|
)
|
|
$
|
(40.7
|
)
|
|
$
|
(40.5
|
)
|
(1)
|
For the year ended
December 31, 2015
, the Company acquired
$48.3 million
of pension liabilities and
$39.1 million
of pension assets in conjunction with the FiberMark Acquisition.
|
|
|
Pension
Benefits |
|
Postretirement
Benefits Other than Pensions |
||||||||||||
|
|
December 31,
|
||||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Accumulated actuarial loss
|
|
$
|
95.8
|
|
|
$
|
84.1
|
|
|
$
|
4.9
|
|
|
$
|
5.8
|
|
Prior service cost
|
|
0.9
|
|
|
1.2
|
|
|
(0.4
|
)
|
|
(0.5
|
)
|
||||
Total recognized in accumulated other comprehensive income
|
|
$
|
96.7
|
|
|
$
|
85.3
|
|
|
$
|
4.5
|
|
|
$
|
5.3
|
|
|
|
December 31,
|
||||||||||||||||||||||
|
|
Assets Exceed
ABO
|
|
ABO Exceed
Assets
|
|
Total
|
||||||||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||||||
Projected benefit obligation
|
|
$
|
291.3
|
|
|
$
|
280.1
|
|
|
$
|
79.6
|
|
|
$
|
80.0
|
|
|
$
|
370.9
|
|
|
$
|
360.1
|
|
Accumulated benefit obligation
|
|
281.5
|
|
|
269.1
|
|
|
79.4
|
|
|
79.8
|
|
|
360.9
|
|
|
348.9
|
|
||||||
Fair value of plan assets
|
|
284.2
|
|
|
270.4
|
|
|
33.9
|
|
|
37.9
|
|
|
318.1
|
|
|
308.3
|
|
|
|
Pension Benefits
|
|
Postretirement Benefits
Other than Pensions |
||||||||||||||||||||
|
|
Year Ended December 31,
|
||||||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2016
|
|
2015
|
|
2014
|
||||||||||||
Service cost
|
|
$
|
4.9
|
|
|
$
|
5.5
|
|
|
$
|
5.0
|
|
|
$
|
1.3
|
|
|
$
|
1.7
|
|
|
$
|
1.7
|
|
Interest cost
|
|
15.9
|
|
|
13.8
|
|
|
14.5
|
|
|
1.6
|
|
|
1.6
|
|
|
1.9
|
|
||||||
Expected return on plan assets (a)
|
|
(18.9
|
)
|
|
(19.3
|
)
|
|
(16.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Recognized net actuarial loss
|
|
6.6
|
|
|
6.3
|
|
|
4.2
|
|
|
0.6
|
|
|
0.3
|
|
|
0.4
|
|
||||||
Amortization of prior service cost (credit)
|
|
0.2
|
|
|
0.2
|
|
|
0.3
|
|
|
(0.2
|
)
|
|
(0.2
|
)
|
|
(0.2
|
)
|
||||||
Amount of settlement loss recognized
|
|
0.8
|
|
|
—
|
|
|
3.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net periodic benefit cost (credit)
|
|
9.5
|
|
|
6.5
|
|
|
10.8
|
|
|
3.3
|
|
|
3.4
|
|
|
3.8
|
|
||||||
Amounts related to discontinued operations
|
|
—
|
|
|
(14.9
|
)
|
|
1.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net periodic benefit cost
|
|
$
|
9.5
|
|
|
$
|
(8.4
|
)
|
|
$
|
11.8
|
|
|
$
|
3.3
|
|
|
$
|
3.4
|
|
|
$
|
3.8
|
|
(a)
|
The expected return on plan assets is determined by multiplying the fair value of plan assets at the prior year-end (adjusted for estimated current year cash benefit payments and contributions) by the expected long-term rate of return.
|
|
|
Pension Benefits
|
|
Postretirement Benefits
Other than Pensions |
||||||||||||||||||||
|
|
Year Ended December 31,
|
||||||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2016
|
|
2015
|
|
2014
|
||||||||||||
Net periodic benefit expense
|
|
$
|
9.5
|
|
|
$
|
(8.4
|
)
|
|
$
|
11.8
|
|
|
$
|
3.3
|
|
|
$
|
3.4
|
|
|
$
|
3.8
|
|
Accumulated actuarial gain (loss)
|
|
11.7
|
|
|
(7.1
|
)
|
|
26.4
|
|
|
(0.9
|
)
|
|
1.1
|
|
|
—
|
|
||||||
Prior service cost (credit)
|
|
(0.3
|
)
|
|
(0.3
|
)
|
|
(0.3
|
)
|
|
0.1
|
|
|
0.2
|
|
|
0.2
|
|
||||||
Total recognized in other comprehensive income
|
|
11.4
|
|
|
(7.4
|
)
|
|
26.1
|
|
|
(0.8
|
)
|
|
1.3
|
|
|
0.2
|
|
||||||
Total recognized in net periodic benefit cost and other comprehensive income
|
|
$
|
20.9
|
|
|
$
|
(15.8
|
)
|
|
$
|
37.9
|
|
|
$
|
2.5
|
|
|
$
|
4.7
|
|
|
$
|
4.0
|
|
|
|
Pension
Benefits
|
|
Postretirement
Benefits
Other than
Pensions
|
||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
Discount rate
|
|
4.16
|
%
|
|
4.54
|
%
|
|
3.69
|
%
|
|
4.07
|
%
|
Rate of compensation increase
|
|
2.22
|
%
|
|
2.18
|
%
|
|
—
|
%
|
|
—
|
%
|
|
|
Pension Benefits
|
|
Postretirement
Benefits Other than
Pensions
|
||||||||||||||
|
|
Year Ended December 31,
|
||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2016
|
|
2015
|
|
2014
|
||||||
Discount rate
|
|
4.54
|
%
|
|
3.91
|
%
|
|
4.88
|
%
|
|
4.07
|
%
|
|
4.05
|
%
|
|
4.84
|
%
|
Expected long-term return on plan assets
|
|
6.20
|
%
|
|
6.50
|
%
|
|
6.50
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Rate of compensation increase
|
|
2.18
|
%
|
|
2.92
|
%
|
|
2.96
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
|
Percentage of Plan
Assets At December 31, |
|||||||
|
|
2016
|
|
2015
|
|
2014
|
|||
Asset Category
|
|
|
|
|
|
|
|
|
|
Equity securities
|
|
43
|
%
|
|
34
|
%
|
|
35
|
%
|
Debt securities
|
|
57
|
%
|
|
64
|
%
|
|
65
|
%
|
Cash and money-market funds
|
|
—
|
%
|
|
2
|
%
|
|
—
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
Strategic Target
|
|
Permitted Range
|
|
Asset Category
|
|
|
|
|
|
Equity securities
|
|
43
|
%
|
|
38-48%
|
Debt securities / Fixed Income
|
|
57
|
%
|
|
52-62%
|
(a)
|
The plan should be substantially fully invested in debt and equity securities at all times because substantial cash holdings will reduce long-term rates of return;
|
(b)
|
Equity investments will provide greater long-term returns than fixed income investments, although with greater short-term volatility;
|
(c)
|
It is prudent to diversify plan investments across major asset classes;
|
(d)
|
Allocating a portion of plan assets to foreign equities will increase portfolio diversification, decrease portfolio risk and provide the potential for long-term returns;
|
(e)
|
Investment managers with active mandates can reduce portfolio risk below market risk and potentially add value through security selection strategies, and a portion of plan assets should be allocated to such active mandates;
|
(f)
|
A component of passive, indexed management can benefit the plans through greater diversification and lower cost, and a portion of the plan assets should be allocated to such passive mandates, and
|
(g)
|
It is appropriate to retain more than one investment manager, given the size of the plans, provided that such managers offer asset class or style diversification.
|
|
|
Pension Plans
|
|
Postretirement Benefits
Other than Pensions
|
||||
2017
|
|
$
|
20.7
|
|
|
$
|
4.3
|
|
2018
|
|
19.3
|
|
|
3.5
|
|
||
2019
|
|
22.1
|
|
|
3.8
|
|
||
2020
|
|
20.0
|
|
|
4.1
|
|
||
2021
|
|
21.4
|
|
|
4.1
|
|
||
Years 2022-2026
|
|
113.2
|
|
|
16.9
|
|
|
|
One Percentage-
Point
|
||||||
|
|
Increase
|
|
Decrease
|
||||
Effect on total of service and interest cost components
|
|
$
|
—
|
|
|
$
|
—
|
|
Effect on post-retirement benefit other than pension obligation
|
|
0.3
|
|
|
(0.3
|
)
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Stock-based compensation expense
|
|
$
|
5.8
|
|
|
$
|
6.5
|
|
|
$
|
6.0
|
|
Income tax benefit
|
|
(2.2
|
)
|
|
(2.5
|
)
|
|
(2.3
|
)
|
|||
Stock-based compensation, net of income tax benefit
|
|
$
|
3.6
|
|
|
$
|
4.0
|
|
|
$
|
3.7
|
|
|
|
Stock Options
|
|
Performance
Shares and RSUs |
||||
Unrecognized compensation cost — December 31, 2015
|
|
$
|
0.8
|
|
|
$
|
1.6
|
|
Grant date fair value current year grants
|
|
1.5
|
|
|
4.2
|
|
||
Compensation expense recognized
|
|
(1.7
|
)
|
|
(4.1
|
)
|
||
Unrecognized compensation cost — December 31, 2016
|
|
$
|
0.6
|
|
|
$
|
1.7
|
|
Expected amortization period (in years)
|
|
1.7
|
|
|
1.5
|
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
Nonqualified stock options granted
|
|
113,935
|
|
|
87,930
|
|
|
95,670
|
|
|||
Per share weighted-average exercise price
|
|
$
|
58.03
|
|
|
$
|
59.72
|
|
|
$
|
43.17
|
|
Per share weighted-average grant date fair value
|
|
$
|
13.51
|
|
|
$
|
16.47
|
|
|
$
|
12.72
|
|
|
|
2016
|
|
2015
|
|
2014
|
|||
Expected term in years
|
|
5.8
|
|
|
5.8
|
|
|
5.9
|
|
Risk free interest rate
|
|
1.8
|
%
|
|
1.4
|
%
|
|
1.9
|
%
|
Volatility
|
|
32.1
|
%
|
|
34.4
|
%
|
|
36.5
|
%
|
Dividend yield
|
|
3.0
|
%
|
|
2.0
|
%
|
|
2.2
|
%
|
|
|
Number of
Stock Options |
|
Weighted-Average
Exercise Price |
|||
Options outstanding — December 31, 2015
|
|
526,611
|
|
|
$
|
31.94
|
|
Add: Options granted
|
|
113,935
|
|
|
$
|
58.03
|
|
Less: Options exercised
|
|
105,806
|
|
|
$
|
27.29
|
|
Less: Options forfeited/cancelled
|
|
4,278
|
|
|
$
|
46.89
|
|
Options outstanding — December 31, 2016
|
|
530,462
|
|
|
$
|
38.35
|
|
|
|
Options Vested or Expected to Vest
|
|
Options Exercisable
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Exercise Price
|
|
Number of
Options |
|
Weighted-
Average Remaining Contractual Life (Years) |
|
Weighted-
Average Exercise Price |
|
Aggregate
Intrinsic Value (a) |
|
Number of
Options |
|
Weighted-
Average Exercise Price |
|
Aggregate
Intrinsic Value (a) |
||||||||||
$7.41 — $19.42
|
|
65,095
|
|
|
3.1
|
|
$
|
13.15
|
|
|
$
|
4.7
|
|
|
65,095
|
|
|
$
|
13.15
|
|
|
$
|
4.7
|
|
$21.13 — $32.84
|
|
202,695
|
|
|
5.2
|
|
$
|
25.67
|
|
|
12.1
|
|
|
202,695
|
|
|
$
|
25.67
|
|
|
12.1
|
|
||
$32.87 — $42.82
|
|
66,550
|
|
|
6.4
|
|
$
|
42.26
|
|
|
2.9
|
|
|
39,699
|
|
|
$
|
41.88
|
|
|
1.7
|
|
||
$50.60 — $59.72
|
|
192,553
|
|
|
8.6
|
|
$
|
58.45
|
|
|
5.2
|
|
|
28,847
|
|
|
$
|
58.09
|
|
|
0.8
|
|
||
>$60.55
|
|
3,569
|
|
|
9.2
|
|
$
|
60.56
|
|
|
0.1
|
|
|
—
|
|
|
$
|
60.56
|
|
|
—
|
|
||
|
|
530,462
|
|
|
6.3
|
|
$
|
38.35
|
|
|
$
|
25.0
|
|
|
336,336
|
|
|
$
|
27.94
|
|
|
$
|
19.3
|
|
(a)
|
Represents the total pre-tax intrinsic value as of
December 31, 2016
that option holders would have received had they exercised their options as of such date. The pre-tax intrinsic value is based on the closing market price for the Company's common stock of
$85.20
on
December 31, 2016
.
|
|
|
Number of
Stock Options |
|
Weighted-Average
Grant Date Fair Value |
|||
Outstanding — December 31, 2015
|
|
294,017
|
|
|
$
|
12.09
|
|
Add: Options granted
|
|
113,935
|
|
|
$
|
13.51
|
|
Less: Options vested
|
|
213,826
|
|
|
$
|
10.07
|
|
Outstanding — December 31, 2016
|
|
194,126
|
|
|
$
|
15.15
|
|
|
|
RSUs
|
|
Weighted-Average
Grant Date Fair Value |
|
Performance
Units |
|
Weighted-Average
Grant Date Fair Value |
||||||
Outstanding — December 31, 2013
|
|
152,191
|
|
|
$
|
24.36
|
|
|
77,000
|
|
|
$
|
49.28
|
|
Shares granted (a)
|
|
11,492
|
|
|
$
|
49.78
|
|
|
60,900
|
|
|
$
|
74.79
|
|
Shares vested
|
|
(150,270
|
)
|
|
$
|
22.60
|
|
|
—
|
|
|
$
|
—
|
|
Performance Shares vested
|
|
94,710
|
|
|
$
|
29.15
|
|
|
(77,000
|
)
|
|
$
|
35.85
|
|
Shares expired or cancelled
|
|
(2,829
|
)
|
|
$
|
29.15
|
|
|
(2,630
|
)
|
|
$
|
74.79
|
|
Outstanding — December 31, 2014
|
|
105,294
|
|
|
$
|
31.15
|
|
|
58,270
|
|
|
$
|
74.79
|
|
Shares granted (a)
|
|
13,415
|
|
|
$
|
61.41
|
|
|
45,060
|
|
|
$
|
78.32
|
|
Shares vested
|
|
(105,564
|
)
|
|
$
|
32.12
|
|
|
(810
|
)
|
|
$
|
78.32
|
|
Performance Shares vested
|
|
107,219
|
|
|
$
|
40.65
|
|
|
(58,270
|
)
|
|
$
|
74.79
|
|
Shares expired or cancelled
|
|
(1,526
|
)
|
|
$
|
51.14
|
|
|
(1,200
|
)
|
|
$
|
78.32
|
|
Outstanding — December 31, 2015
|
|
118,838
|
|
|
$
|
43.29
|
|
|
43,050
|
|
|
$
|
78.32
|
|
Shares granted (a)
|
|
10,047
|
|
|
$
|
68.25
|
|
|
54,364
|
|
|
$
|
73.82
|
|
Shares vested
|
|
(110,749
|
)
|
|
$
|
42.96
|
|
|
—
|
|
|
$
|
—
|
|
Performance Shares vested
|
|
62,874
|
|
|
$
|
53.63
|
|
|
(43,050
|
)
|
|
$
|
78.32
|
|
Shares expired or cancelled
|
|
(291
|
)
|
|
$
|
40.65
|
|
|
(858
|
)
|
|
$
|
75.98
|
|
Outstanding — December 31, 2016 (b)
|
|
80,719
|
|
|
$
|
54.91
|
|
|
53,506
|
|
|
$
|
73.79
|
|
(a)
|
For the years ended
December 31, 2016
,
2015
and
2014
, includes
312
RSUs,
495
RSUs and
622
RSUs, respectively, that were granted in lieu of cash dividends. Such dividends-in-kind vest concurrently with the underlying RSUs.
|
(b)
|
The aggregate pre-tax intrinsic value of outstanding RSUs as of December 31, 2016 was
$6.9 million
.
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||
|
|
Shares
|
|
$
|
|
Shares
|
|
$
|
|
Shares
|
|
$
|
|||||||||
2016 Stock Purchase Plan
|
|
91,542
|
|
|
$
|
7.4
|
|
|
|
|
|
|
|
|
|
||||||
2015 Stock Purchase Plan
|
|
93,600
|
|
|
$
|
5.2
|
|
|
42,100
|
|
|
$
|
2.4
|
|
|
—
|
|
|
$
|
—
|
|
2014 Stock Purchase Plan
|
|
|
|
|
|
|
|
60,900
|
|
|
$
|
3.5
|
|
|
22,600
|
|
|
$
|
1.2
|
|
|
2013 Stock Purchase Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Unrealized foreign currency translation losses, net of income tax benefit of $0.4 and $0.0, respectively
|
|
$
|
(27.5
|
)
|
|
$
|
(20.8
|
)
|
Net loss from pension and other postretirement benefit liabilities (net of income tax benefits of $36.8 million and $33.8 million, respectively)
|
|
(64.5
|
)
|
|
(57.5
|
)
|
||
Accumulated other comprehensive loss
|
|
$
|
(92.0
|
)
|
|
$
|
(78.3
|
)
|
|
|
Year Ended December 31,
|
||||||||||||||||||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||||||||||||||||||||||||||
|
|
Pretax
Amount |
|
Tax
Effect |
|
Net
Amount |
|
Pretax
Amount |
|
Tax
Effect |
|
Net
Amount |
|
Pretax
Amount |
|
Tax
Effect |
|
Net
Amount |
||||||||||||||||||
Unrealized foreign currency translation gains (losses)
|
|
$
|
(7.1
|
)
|
|
$
|
0.4
|
|
|
$
|
(6.7
|
)
|
|
$
|
(15.0
|
)
|
|
$
|
—
|
|
|
$
|
(15.0
|
)
|
|
$
|
(23.7
|
)
|
|
$
|
—
|
|
|
$
|
(23.7
|
)
|
Adjustment to pension and other benefit liabilities
|
|
(10.0
|
)
|
|
3.0
|
|
|
(7.0
|
)
|
|
6.3
|
|
|
(1.2
|
)
|
|
5.1
|
|
|
(26.1
|
)
|
|
8.7
|
|
|
(17.4
|
)
|
|||||||||
Other comprehensive income (loss)
|
|
$
|
(17.1
|
)
|
|
$
|
3.4
|
|
|
$
|
(13.7
|
)
|
|
$
|
(8.7
|
)
|
|
$
|
(1.2
|
)
|
|
$
|
(9.9
|
)
|
|
$
|
(49.8
|
)
|
|
$
|
8.7
|
|
|
$
|
(41.1
|
)
|
2017
|
|
$
|
3.1
|
|
2018
|
|
2.4
|
|
|
2019
|
|
1.3
|
|
|
2020
|
|
1.0
|
|
|
2021
|
|
1.0
|
|
|
Thereafter
|
|
4.0
|
|
|
Future minimum lease obligations
|
|
$
|
12.8
|
|
|
|
|
|
|
|
|
Contract Expiration Date
|
|
Location
|
|
Union
|
|
Number of Employees
|
June 2017
|
|
Neenah Germany
|
|
IG BCE
|
|
(a)
|
January 2018
|
|
Whiting, WI (b)
|
|
USW
|
|
201
|
June 2018
|
|
Neenah, WI (b)
|
|
USW
|
|
267
|
July 2018
|
|
Munising, MI (b)
|
|
USW
|
|
198
|
May 2019
|
|
Appleton, WI (b)
|
|
USW
|
|
75
|
August 2021
|
|
Brattleboro, VT
|
|
USW
|
|
69
|
November 2021
|
|
Lowville, NY
|
|
USW
|
|
98
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net sales
|
|
$
|
—
|
|
|
$
|
43.2
|
|
|
$
|
63.0
|
|
Cost of products sold
|
|
—
|
|
|
39.7
|
|
|
56.6
|
|
|||
Gross Profit
|
|
—
|
|
|
3.5
|
|
|
6.4
|
|
|||
Selling, general and administrative expenses
|
|
—
|
|
|
3.5
|
|
|
5.2
|
|
|||
Restructuring costs
|
|
—
|
|
|
0.1
|
|
|
0.6
|
|
|||
Other income — net
|
|
—
|
|
|
(0.3
|
)
|
|
(0.3
|
)
|
|||
Income (Loss) From Discontinued Operations Before Income Taxes
|
|
—
|
|
|
0.2
|
|
|
0.9
|
|
|||
Loss on sale (a)
|
|
(0.6
|
)
|
|
(13.6
|
)
|
|
—
|
|
|||
Income (loss) before income taxes
|
|
(0.6
|
)
|
|
(13.4
|
)
|
|
0.9
|
|
|||
Income tax provision (benefit) (a)
|
|
(0.2
|
)
|
|
(4.0
|
)
|
|
0.2
|
|
|||
Income (loss) from discontinued operations
|
|
$
|
(0.4
|
)
|
|
$
|
(9.4
|
)
|
|
$
|
0.7
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2015
|
|
2014
|
||||
Depreciation and amortization
|
|
$
|
2.7
|
|
|
$
|
3.9
|
|
Capital expenditures
|
|
$
|
0.6
|
|
|
$
|
0.7
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net sales
|
|
|
|
|
|
|
|
|
|
|||
Technical Products
|
|
$
|
466.4
|
|
|
$
|
429.2
|
|
|
$
|
403.6
|
|
Fine Paper and Packaging
|
|
452.1
|
|
|
442.7
|
|
|
436.1
|
|
|||
Other
|
|
23.0
|
|
|
15.8
|
|
|
—
|
|
|||
Consolidated
|
|
$
|
941.5
|
|
|
$
|
887.7
|
|
|
$
|
839.7
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Operating income (loss)
|
|
|
|
|
|
|
|
|
|
|||
Technical Products (a)
|
|
$
|
65.6
|
|
|
$
|
54.1
|
|
|
$
|
46.0
|
|
Fine Paper and Packaging (b)
|
|
70.7
|
|
|
67.3
|
|
|
60.8
|
|
|||
Other (c)
|
|
(1.1
|
)
|
|
(2.0
|
)
|
|
—
|
|
|||
Unallocated corporate costs (d)
|
|
(21.1
|
)
|
|
(18.0
|
)
|
|
(20.2
|
)
|
|||
Consolidated
|
|
$
|
114.1
|
|
|
$
|
101.4
|
|
|
$
|
86.6
|
|
(a)
|
Operating income for the year ended
December 31, 2016
included integration costs of
$1.4 million
. Operating income for the year ended December 31, 2015 included acquisition, integration and restructuring costs of
$1.7 million
. Operating income for the year ended December 31, 2014 includes integration and restructuring costs of
$1.6 million
.
|
(b)
|
Operating income for the years ended December 31, 2016 and 2015 included acquisition and integration costs of
$1.8 million
and
$1.5 million
, respectively.
|
(c)
|
Operating income for the year ended December 31, 2016 and 2015 included acquisition and integration costs of
$1.1 million
and
$2.4 million
, respectively.
|
(d)
|
Unallocated corporate costs for the year ended December 31, 2016 included
$2.7 million
of pre-operating costs related to conversion of a fine paper machine to filtration and
$0.8 million
for a pension plan settlement charge. December 31, 2015 included
$0.8 million
of costs related to this filtration project. Unallocated corporate costs for the year ended December 31, 2014 included a pension plan settlement charge of
$3.5 million
, a loss on the early extinguishment of debt of
$0.2 million
and
$0.7 million
of restructuring costs.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|||
Technical Products
|
|
$
|
18.1
|
|
|
$
|
16.5
|
|
|
$
|
14.6
|
|
Fine Paper and Packaging
|
|
11.1
|
|
|
9.8
|
|
|
8.6
|
|
|||
Other
|
|
1.3
|
|
|
0.6
|
|
|
—
|
|
|||
Corporate
|
|
1.5
|
|
|
1.9
|
|
|
2.9
|
|
|||
Total Continuing Operations
|
|
32.0
|
|
|
28.8
|
|
|
26.1
|
|
|||
Discontinued operations
|
|
—
|
|
|
2.7
|
|
|
3.9
|
|
|||
Consolidated
|
|
$
|
32.0
|
|
|
$
|
31.5
|
|
|
$
|
30.0
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Capital expenditures
|
|
|
|
|
|
|
|
|
|
|||
Technical Products
|
|
$
|
57.9
|
|
|
$
|
36.0
|
|
|
$
|
16.1
|
|
Fine Paper and Packaging
|
|
7.6
|
|
|
10.3
|
|
|
10.0
|
|
|||
Other
|
|
0.3
|
|
|
0.4
|
|
|
—
|
|
|||
Corporate
|
|
2.7
|
|
|
0.8
|
|
|
1.1
|
|
|||
Total Continuing Operations
|
|
68.5
|
|
|
47.5
|
|
|
27.2
|
|
|||
Discontinued operations
|
|
—
|
|
|
0.6
|
|
|
0.7
|
|
|||
Consolidated
|
|
$
|
68.5
|
|
|
$
|
48.1
|
|
|
$
|
27.9
|
|
|
|
December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Total Assets (a)
|
|
|
|
|
|
|
||
Technical Products
|
|
$
|
487.6
|
|
|
$
|
483.4
|
|
Fine Paper and Packaging
|
|
248.9
|
|
|
261.9
|
|
||
Corporate and other (b)
|
|
29.1
|
|
|
6.1
|
|
||
Total
|
|
$
|
765.6
|
|
|
$
|
751.4
|
|
(a)
|
Segment identifiable assets are those that are directly used in the segments operations.
|
(b)
|
Corporate assets are primarily cash and deferred income taxes.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net sales
|
|
|
|
|
|
|
|
|
|
|||
United States
|
|
$
|
727.6
|
|
|
$
|
687.3
|
|
|
$
|
612.0
|
|
Europe
|
|
213.9
|
|
|
200.4
|
|
|
227.7
|
|
|||
Consolidated
|
|
$
|
941.5
|
|
|
$
|
887.7
|
|
|
$
|
839.7
|
|
|
|
December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Long-Lived Assets
|
|
|
|
|
|
|
||
United States
|
|
$
|
377.4
|
|
|
$
|
342.0
|
|
Europe
|
|
151.9
|
|
|
162.8
|
|
||
Total
|
|
$
|
529.3
|
|
|
$
|
504.8
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Advertising expense
|
|
$
|
6.2
|
|
|
$
|
6.8
|
|
|
$
|
7.0
|
|
Research and development expense
|
|
9.4
|
|
|
6.8
|
|
|
5.7
|
|
(a)
|
Adverting expense and research and development expense are recorded in selling, general and administrative expenses on the consolidated statements of operations.
|
|
|
December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
From customers
|
|
$
|
98.0
|
|
|
$
|
99.0
|
|
Less allowance for doubtful accounts and sales discounts
|
|
(1.5
|
)
|
|
(1.7
|
)
|
||
Total
|
|
$
|
96.5
|
|
|
$
|
97.3
|
|
|
|
December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Inventories by Major Class:
|
|
|
|
|
|
|
||
Raw materials
|
|
$
|
31.6
|
|
|
$
|
30.4
|
|
Work in progress
|
|
26.8
|
|
|
28.9
|
|
||
Finished goods
|
|
63.0
|
|
|
67.2
|
|
||
Supplies and other
|
|
3.1
|
|
|
4.1
|
|
||
|
|
124.5
|
|
|
130.6
|
|
||
Excess of FIFO over LIFO cost
|
|
(8.2
|
)
|
|
(10.0
|
)
|
||
Total
|
|
$
|
116.3
|
|
|
$
|
120.6
|
|
|
|
December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Prepaid and other current assets
|
|
$
|
10.5
|
|
|
$
|
13.5
|
|
Spare parts
|
|
5.8
|
|
|
9.9
|
|
||
Receivable for income taxes
|
|
4.1
|
|
|
1.1
|
|
||
Total
|
|
$
|
20.4
|
|
|
$
|
24.5
|
|
|
|
December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Land and land improvements
|
|
$
|
18.3
|
|
|
$
|
19.6
|
|
Buildings
|
|
126.1
|
|
|
121.4
|
|
||
Machinery and equipment
|
|
597.5
|
|
|
512.2
|
|
||
Construction in progress
|
|
13.7
|
|
|
41.3
|
|
||
|
|
755.6
|
|
|
694.5
|
|
||
Less accumulated depreciation
|
|
391.0
|
|
|
371.5
|
|
||
Net Property, Plant and Equipment
|
|
$
|
364.6
|
|
|
$
|
323.0
|
|
|
|
December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Accrued salaries and employee benefits
|
|
$
|
26.3
|
|
|
$
|
25.2
|
|
Amounts due to customers
|
|
7.3
|
|
|
9.5
|
|
||
Accrued interest
|
|
1.3
|
|
|
1.2
|
|
||
Accrued income taxes
|
|
2.0
|
|
|
0.7
|
|
||
Other
|
|
14.3
|
|
|
14.6
|
|
||
Total
|
|
$
|
51.2
|
|
|
$
|
51.2
|
|
|
|
December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Pension benefits
|
|
$
|
49.0
|
|
|
$
|
51.2
|
|
Post-employment benefits other than pensions (a)
|
|
37.7
|
|
|
38.5
|
|
||
Total
|
|
$
|
86.7
|
|
|
$
|
89.7
|
|
(a)
|
Includes
$1.3 million
of SRCP benefits as of December 31, 2016 and
$2.7 million
of long-term disability benefits due to Terrace Bay retirees and SRCP benefits as of December 31, 2015.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Cash paid during the year for interest, net of interest expense capitalized
|
|
$
|
10.0
|
|
|
$
|
10.6
|
|
|
$
|
10.3
|
|
Cash paid during the year for income taxes, net of refunds
|
|
15.0
|
|
|
16.2
|
|
|
6.3
|
|
|||
Non-cash investing activities:
|
|
|
|
|
|
|
|
|
|
|||
Liability for equipment acquired
|
|
11.1
|
|
|
6.6
|
|
|
4.1
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Accounts receivable
|
|
$
|
1.5
|
|
|
$
|
(5.2
|
)
|
|
$
|
4.7
|
|
Inventories
|
|
4.3
|
|
|
7.7
|
|
|
(5.6
|
)
|
|||
Income taxes receivable/payable
|
|
(1.5
|
)
|
|
1.0
|
|
|
(0.3
|
)
|
|||
Prepaid and other current assets
|
|
—
|
|
|
(4.8
|
)
|
|
1.2
|
|
|||
Accounts payable
|
|
(2.7
|
)
|
|
(0.5
|
)
|
|
6.8
|
|
|||
Accrued expenses
|
|
(2.8
|
)
|
|
3.2
|
|
|
2.0
|
|
|||
Other
|
|
—
|
|
|
0.4
|
|
|
0.2
|
|
|||
Total
|
|
$
|
(1.2
|
)
|
|
$
|
1.8
|
|
|
$
|
9.0
|
|
|
|
2016 Quarters
|
||||||||||||||||||
|
|
First (c)
|
|
Second (c)
|
|
Third
|
|
Fourth
|
|
Year (a)(b)
|
||||||||||
Net Sales
|
|
$
|
242.1
|
|
|
$
|
246.0
|
|
|
$
|
232.9
|
|
|
$
|
220.5
|
|
|
$
|
941.5
|
|
Gross Profit
|
|
58.8
|
|
|
60.0
|
|
|
49.2
|
|
|
46.5
|
|
|
214.5
|
|
|||||
Operating Income
|
|
31.4
|
|
|
33.9
|
|
|
26.9
|
|
|
21.9
|
|
|
114.1
|
|
|||||
Income From Continuing Operations
|
|
19.2
|
|
|
21.4
|
|
|
16.4
|
|
|
16.4
|
|
|
73.4
|
|
|||||
Earnings Per Common Share From Continuing Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic
|
|
$
|
1.13
|
|
|
$
|
1.26
|
|
|
$
|
0.97
|
|
|
$
|
0.97
|
|
|
$
|
4.33
|
|
Diluted
|
|
$
|
1.11
|
|
|
$
|
1.24
|
|
|
$
|
0.95
|
|
|
$
|
0.95
|
|
|
$
|
4.26
|
|
(a)
|
Includes integration/restructuring costs of
$7.0 million
.
|
(b)
|
Includes a pension plan settlement charge of $
0.8 million
.
|
(c)
|
Includes recasting for excess tax benefits from stock compensation. See Note 2, "Summary of Significant Accounting Policies — Recently Adopted Accounting Standards."
|
|
|
2015 Quarters
|
||||||||||||||||||
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Year (a)
|
||||||||||
Net Sales
|
|
$
|
214.4
|
|
|
$
|
211.3
|
|
|
$
|
231.6
|
|
|
$
|
230.4
|
|
|
$
|
887.7
|
|
Gross Profit
|
|
49.5
|
|
|
48.0
|
|
|
48.4
|
|
|
49.5
|
|
|
195.4
|
|
|||||
Operating Income
|
|
28.4
|
|
|
27.7
|
|
|
24.4
|
|
|
20.9
|
|
|
101.4
|
|
|||||
Income From Continuing Operations
|
|
16.1
|
|
|
16.4
|
|
|
13.5
|
|
|
14.5
|
|
|
60.5
|
|
|||||
Earnings Per Common Share From Continuing Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic
|
|
$
|
0.95
|
|
|
$
|
0.97
|
|
|
$
|
0.79
|
|
|
$
|
0.86
|
|
|
$
|
3.58
|
|
Diluted
|
|
$
|
0.94
|
|
|
$
|
0.96
|
|
|
$
|
0.78
|
|
|
$
|
0.85
|
|
|
$
|
3.53
|
|
(a)
|
Includes integration/restructuring costs of
$6.5 million
.
|
Description
|
|
Balance at
Beginning
of Period
|
|
Charged to
Costs and
Expenses
|
|
Charged
to Other
Accounts
|
|
Write-offs
and
Reclassifications
|
|
Balance at
End of Period
|
||||||||||
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Allowances deducted from assets to which they apply
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Allowance for doubtful accounts
|
|
$
|
1.1
|
|
|
$
|
(0.1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1.0
|
|
Allowance for sales discounts
|
|
0.6
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
0.5
|
|
|||||
Valuation allowance — deferred income taxes
|
|
3.0
|
|
|
0.1
|
|
|
—
|
|
|
0.4
|
|
|
3.5
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Allowances deducted from assets to which they apply
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Allowance for doubtful accounts
|
|
$
|
0.9
|
|
|
$
|
(0.4
|
)
|
|
$
|
1.0
|
|
|
$
|
(0.4
|
)
|
|
$
|
1.1
|
|
Allowance for sales discounts
|
|
0.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.6
|
|
|||||
Valuation allowance — deferred income taxes
|
|
—
|
|
|
3.0
|
|
|
—
|
|
|
—
|
|
|
3.0
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Allowances deducted from assets to which they apply
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Allowance for doubtful accounts
|
|
$
|
0.8
|
|
|
$
|
0.3
|
|
|
$
|
—
|
|
|
$
|
(0.2
|
)
|
|
$
|
0.9
|
|
Allowance for sales discounts
|
|
0.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.6
|
|
1.
|
Establishment of the Plan
. Neenah Paper, Inc. (the "Company") established a supplemental retirement benefit plan for certain Employees, to be known as the Neenah Paper Supplemental Retirement Contribution Plan (the "Plan"), effective December 1, 2004. The Plan is hereby amended and restated effective January 1, 2016.
|
2.
|
Purpose
. In recognition of the valuable services provided to the Company, and its Affiliates, by its employees, the Board wishes to provide additional retirement benefits to those individuals whose benefits under the Retirement Contribution feature (the "RC Feature") of the Neenah Paper 40l (k) Retirement Plan (the "40l(k) Plan") are restricted by the operation of the provisions of the Code.
It
is the intent of the Company to provide these benefits under the terms and conditions hereinafter set forth.
|
3.
|
Type of Plan
. This Plan is deemed to be two separate plans, consisting of (i) an "excess benefit plan" within the meaning of Section 3(36) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and, as such, exempt from all of the provisions of ERISA pursuant to Section 4(b)(5) thereof; and (ii) a nonqualified supplemental retirement plan, which is unfunded and maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees of the Company, pursuant to Sections 201, 301 and
|
4.
|
Effective Date
. The effective date of this amendment and restatement of the Plan is January 1, 2016. The original effective date of the Plan is December 1, 2004.
|
1.
|
401(k) Plan
. This term has the meaning ascribed to it in Section 1.2.
|
2.
|
Account
. The individual account established pursuant to Article IV of this Plan to credit Excess Contributions and Supplemental Contributions and earnings, gains and losses thereon.
|
3.
|
Affiliate
. Any company, person or organization which, on the date of determination,
|
4.
|
Beneficiary
. The person or persons who, under this Plan, become entitled to receive a Participant's interest in the event of the Participant's death.
|
5.
|
Board
. The Board of Directors of the Company.
|
6.
|
Change of Control
. A Change of Control shall be deemed to have taken place if a "change in the ownership of the Company," a "change in the effective control of the Company," or a "change in the ownership of a substantial portion of the Company's assets" (as such terms are defined below) occurs.
|
(A)
|
A change in the ownership of the Company
. A "change in ownership of the Company" shall occur on the date that any one person, or more than one person acting as a "Group" (as defined below), acquires ownership of stock of the Company that, together with stock held by such person or Group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Company; provided, however, that, if any one person or more than one person acting as a Group, is considered to own more than 50% of the total fair market value or total voting power of the stock of the Company, the acquisition of additional stock by the same person or persons is not considered to cause a change in the ownership of the Company. In addition, the following shall not constitute a change in ownership of the Company: (i) any acquisition by any one person, or more than one person acting as a Group, who on the Effective Date is the "beneficial owner" (within the meaning of Rule 13d-3 of the Rules and Regulations under the Securities Exchange Act of 1934, as amended) (a "Beneficial Owner") of thirty percent (30%) or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"), (ii) any acquisition directly from the Company, including without limitation, a public offering of securities,
|
(B)
|
A change in the effective control of the Company
. A "change in the effective control of the Company" occurs on the date that:
|
(1)
|
Any one person, or more than one person acting as a Group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing thirty-five percent (35%) or more of the total voting power of the stock of the Company; provided, however, if any one person, or more than one person acting as a group, is considered to own thirty-five percent (35%) or more of the total voting power of the stock of the Company, the acquisition of additional stock
|
(2)
|
A majority of the members of the Board is replaced during any 12- month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election; provided, however, that this subparagraph
|
(C)
|
A change in the ownership of a substantial portion of the Company's assets. A "change in the
|
(1)
|
a shareholder of the Company (immediately before the asset transfer)
in
|
(2)
|
an entity, 50% or more of the total value or voting power of which is owned, directly or indirectly, by the Company;
|
(3)
|
a person, or more than one person acting as a Group, that owns, directly or indirectly, 50% or more of the total value or voting power of all the outstanding stock of the Company;
|
(4)
|
an entity, at least 50% of the total value or voting power of which is owned, directly or indirectly, by a person described in subparagraph (C)(3) hereof); or
|
(5)
|
a Successor Entity pursuant to a transaction described in Section 2.S(D).
|
(D)
|
Consummation of a reorganization, merger, or consolidation to which the Company is a party, or a sale or other disposition of all or substantially all of the assets of the Company (a "Business Combination") shall not constitute a change in ownership of the Company, a change in the effective control of the Company, or a change in the ownership of a substantial portion of the Company's assets, if following such Business Combination: (i) all or substantially all the individuals or entities who were the Beneficial Owners of Outstanding Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than sixty percent (60%) of the combined voting power of the outstanding voting securities entitled to vote generally in the election of the members of the board of directors of the company resulting from the Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or
|
(E)
|
For purposes of the definition of Change of Control:
|
(1)
|
"Group" means persons acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase, or acquisition of stock of the Company or assets of the Company, or a similar business transaction with the Company (the "Transaction"); provided, however, that with respect to any person
|
(2)
|
"Gross Fair Market Value" means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets; and
|
(3)
|
Notwithstanding any other provision hereof, stock ownership shall be determined under Code Section 409A, and no Change of Control shall be deemed to have occurred hereunder unless such event constitutes a change in the ownership or effective control of the Company or in a substantial portion of the assets of the Company under Code Section 409A.
|
7.
|
Code
. The Internal Revenue Code for 1986, as amended from time to time, and as construed and interpreted by valid regulations and rulings issued thereunder.
|
8.
|
Company
. Neenah Paper, Inc., a Delaware corporation.
|
9.
|
Compensation Committee
. The Compensation Committee of the Board.
|
10.
|
Earnings. This term shall have the meaning ascribed to it with respect to "Retirement Contributions" (as defined in the 40l (k) Plan) under the 40l (k) Plan; provided; however, that for the purposes of determining the Supplemental Contribution under this Plan, the limitations on compensation provided under Code Section 401(a)(l7) shall not apply.
|
11.
|
Effective Date
. January 1, 2016, or with respect to a particular Affiliate, such later date as of which the Compensation Committee deems such Affiliate to be a Participating Employer in the Plan.
|
12.
|
Employee
. A common law employee of an Employer, as reflected in the payroll records of the Employer.
|
13.
|
Employer
. The Company and each Affiliate that the Compensation Committee shall from time to time designate as a Participating Employer for purposes of the Plan.
|
14.
|
ERISA
. The Employee Retirement Income Security Act of 1974, as amended from time to time, and as construed and interpreted by valid regulations and rulings issued thereunder.
|
15.
|
Excess Contribution
. The excess of (A) the amount that would have been contributed by the Employer for such a Participant at a given time under the RC Feature (calculated using Earnings as defined in this Plan), determined without regard to the limitation on benefits imposed by Section 415 of the Code, over (B) the amount that
|
16.
|
Excess Benefit
. The benefit provided under this Plan for Participants attributable to Excess Contributions, plus any earnings or minus losses credited thereon under Article IV.
|
17.
|
Investment Funds
. The phantom investment funds established under this Plan which will accrue earnings and losses as if the Participant's Account were invested in the actual Investment Funds as offered under the 401(k) Plan from time to time.
|
18.
|
Participant
. Any Employee who satisfies the eligibility requirements set forth in Article III for participation in the Plan. In the event of the death or incompetency of a Participant, the term shall
|
19.
|
Participating Employer
. An Affiliate that has been approved by the Compensation Committee as an Employer participating in the Plan.
|
20.
|
Plan
. The Neenah Paper Supplemental Retirement Contribution Plan as set forth herein and as amended from time to time.
|
21.
|
Plan Administrative Committee
. The committee appointed by the Board to administer and regulate the Plan as provided in Article VI.
|
22.
|
Plan Year
. The twelve (12) calendar month period beginning on January 1 and ending the following December 31.
|
23.
|
RC Feature
. This term has the meaning ascribed to it in Section 1.2.
|
24.
|
Specified Employee
. A Participant who is a key employee (as defined in Code Section 416(i) without regard to Code Section 416(i)(5)) of the Company (or an Affiliate)
|
25.
|
Spouse
. The Employee's spouse pursuant to a legal marriage according to the laws of the State or other jurisdiction in which such marriage occurred.
|
26.
|
Supplemental Benefit
. The benefit provided under this Plan for Participants attributable to Supplemental Contributions, plus any earnings or minus losses credited thereon under Article IV.
|
27.
|
Supplemental Contribution
. The excess of (A) the amount that would have been contributed by the Employer for a Participant at a given time under the RC Feature
|
28.
|
Termination of Employment
.
|
(A)
|
The Participant's "separation from service" (within the meaning of Treasury Regulations Section l.409A-l (h)) with the "employer" (within the meaning of Treasury Regulations Section l.409A- l(h)(3)).
|
(B)
|
The employment relationship of a Participant is considered to remain intact while the Participant is on military leave, sick leave or other bona fide leave of absence if the period of such leave does not exceed six months, or, if longer, so long as the Participant retains a right to reemployment with the Employer or Affiliate under applicable statute or by contract.
If
the period of leave exceeds six months and the Participant does not retain a right to reemployment under applicable statute or by contract, the employment relationship is deemed
|
29.
|
Year of Service
. This term has the meaning ascribed to it
in
the 401(k) Plan.
|
1.
|
Eligibility for Excess Benefit
. An Employee shall participate in the Excess Benefit
|
(A)
|
such Employee is a Retirement Contribution Participant (as defined in the 40l(k) Plan); and
|
(B)
|
such Employee's RC Feature contributions are limited solely by Code Section 415.
|
2.
|
Eligibility for Supplemental Benefit
. An Employee shall participate in the Supplemental Benefit under the Plan only if:
|
(A)
|
such Employee is a Retirement Contribution Participant (as defined in the 40l (k) Plan);
|
(B)
|
such Employee's RC Feature contributions are limited by the application of Code Section 401(a)(l 7); and
|
(C)
|
such Employee is a member of a select group of management or highly compensated Employees of the Employer.
|
3.
|
Exception
. Notwithstanding the foregoing, no Employee will be eligible to receive contributions under this Plan if he is entitled to receive a company matching contribution under the Neenah Paper Deferred Compensation Plan.
|
1.
|
Establishment of Accounts
. The Company shall create and maintain an unfunded
|
2.
|
Employer Contributions
. Excess Contributions and Supplemental Contributions, as applicable, shall be made for each Participant on the same terms and conditions, at the same times, and pursuant to the same elections made by the Participant as they would have been if paid under the RC Feature were it not for Code limitations on contributions or Earnings.
|
3.
|
Investment Elections
. Each Participant's Excess Contributions, Supplemental Contributions, and Accounts under this Plan shall be considered allocated among the Investment Funds in accordance with the Participant's actual investment elections with respect to contributions under the RC Feature.
|
4.
|
Investment Changes
. Reallocations between Investment Funds in this Plan shall be considered made according to the Participant's elections with respect to contributions under the RC Feature.
|
5.
|
Account Credit
. The Company shall credit each Participant's Account with earnings, gains and
|
6.
|
Valuation of Accounts
. Each Participant's Account shall be valued and adjusted each business day as if such Participant's Account was actually invested in the applicable Investment Funds according to the Participant's elections with respect to contributions under the RC Feature.
|
7.
|
Vesting
. The balance of a Participant's Account shall become 100% vested at the same time as if the amounts had been credited as RC Feature contributions to the Participant's Account under the 401(k) Plan. Notwithstanding the foregoing, the previously unforfeited balance of a Participant's Account shall also become 100% vested upon a Change of Control.
|
8.
|
Forfeitures
.
If
a Participant incurs a Termination of Employment prior to becoming vested in his Account, the balance of his Account shall be immediately forfeited.
|
1.
|
Eligibility to Receive a Distribution
.
|
(A)
|
Termination Benefit
: Upon the Termination of Employment of a Participant for any reason other than death, the Participant shall be entitled to receive a benefit equal to the amount of his vested Account. The form of benefit payment, and the time of commencement of such benefit, shall be as provided in Sections 5
.2
and 5.3.
|
(B)
|
Death Benefit
:
If
a Participant dies before receiving payment, the Beneficiary of such Participant shall be entitled to receive a benefit equal to the amount of the Participant's vested Account. The form of benefit payment, and the time of commencement of such benefit, shall be as provided in Sections 5.2 and 5.3.
|
(C)
|
Change of Control
:
If
there is a Change of Control, notwithstanding any other provision of this Plan, each Participant (or Beneficiary if the Participant dies before receiving payment) shall, following the Change of Control, receive a benefit equal to the amount of the Participant's vested Account. The form of benefit payment, and the time of commencement of such benefit, shall be as provided in Sections 5.2 and 5
.3.
|
2.
|
Form of Benefit Payment
. The Company shall pay to the Participant (or Beneficiary if the Participant dies before receiving payment) the amount specified in Section 5.1 in a lump sum cash distribution.
|
3.
|
Time of Payment
.
|
(A)
|
Payment under Sections 5.l (A) and (B) of this Plan of a Participant's vested Account shall be made as soon as administratively feasible, but not more than ninety (90) days, after the Participant incurs a Termination of Employment from the Employer for any reason.
|
(B)
|
Notwithstanding subsection (A), payment under Section 5.l(A) of this Plan to a Participant who is a Specified Employee shall be suspended and paid to the Participant as soon as administratively feasible, but not more than ninety (90) days, following the expiration of such six-month period.
|
(C)
|
Notwithstanding subsection (A) or (B), payment under Section 5.l(C) of this Plan of a Participant's vested Account shall be made as soon as administratively feasible, but not more than thirty (30) days, following the Change of Control.
|
4.
|
Limitations on the Annual Amount Paid to a Participant
. Notwithstanding any other provisions of this Plan to the contrary, if the Employer reasonably anticipates that the Employer's deduction with respect to any distribution from this Plan would be limited or eliminated by application of Section
|
5.
|
Tax Withholding
. To the extent required by law, the Employer shall withhold any taxes required to be withheld by any Federal, State or local government.
|
6.
|
Recipient of Payment; Designation of Beneficiary
.
If
the Participant dies before receiving payment, then payment under the Plan shall be made to the Beneficiary determined in accordance with this Section. The Participant may designate a Beneficiary by filing a written notice of such designation with the Plan Administrative Committee in such form as the Plan Administrative Committee requires and may include contingent Beneficiaries. The Participant may from time to time change the designated Beneficiary by filing a new designation in writing with the Plan Administrative Committee.
If
a married Participant designates a Beneficiary or Beneficiaries other than his Spouse at the time of such designation, such designation shall not be effective (and the Participant's Spouse shall be the Beneficiary) unless:
|
(A)
|
the Spouse consents in writing
to
such designation;
|
(B)
|
the Spouse's consent acknowledges the effect of such designation, which consent shall be irrevocable; and
|
(C)
|
the Spouse executes the consent in the presence of either a Plan representative designated by the Plan Administrative Committee or a notary public.
|
1.
|
Plan Administrative Committee
. The Company may designate one or more persons to serve on the Plan Administrative Committee to carry out its fiduciary responsibility and authority under the Plan (other than to manage and control Plan assets and investment of the assets) and its duties as the plan administrator. The members of the Plan Administrative Committee for this Plan shall be the same as the members of the Plan Administrative Committee for the 401(k) Plan.
|
2.
|
Committee Membership
.
|
(A)
|
The Plan Administrative Committee shall consist of at least three (3) persons who shall be appointed by and serve at the pleasure of the Board.
|
(B)
|
The Board shall have the right to remove any member of the Plan Administrative Committee at any time. A member may resign at any time by written resignation to the
|
3.
|
Powers
. The Plan Administrative Committee shall have all powers specified in the Plan in addition to all others as may be necessary to discharge its duties hereunder, including, but not by way of limitation, the power to construe or interpret the Plan, to determine all questions of eligibility hereunder, to determine the method of payment of any Account hereunder, to adopt rules relating to the giving of timely notice, and to perform such other duties as may from time to time be delegated to it by the Board.
|
4.
|
Organization and Procedures
. The Plan Administrative Committee shall elect one of its members as chairman. Its members shall serve as such without compensation. Plan Administrative Committee expenses shall be paid by the Company. A majority of the Plan Administrative Committee members shall constitute a quorum. The Plan Administrative Committee may take any action upon a majority vote at any meeting at which a quorum is present, and may take any action without a meeting upon the unanimous written consent of all members. All action by the Plan Administrative Committee shall be evidenced by a certificate signed by a member of the Plan Administrative Committee. The Plan Administrative Committee shall appoint a secretary to the Plan Administrative Committee who need not be a member of the Plan Administrative Committee, and all acts and determinations of the Plan Administrative Committee shall be recorded by the secretary, or under his supervision. All such records, together with such other documents as may be necessary for the
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5.
|
Rules and Decisions
. The Plan Administrative Committee shall have absolute discretion in carrying out its duties under the Plan and its decisions shall be final and binding.
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6.
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Authorization of Payments
. If
the Board authorizes the establishment of a trust to serve as the funding vehicle for the benefits described herein, subject to the provisions hereof, it shall be the duty of the Plan Administrative Committee to furnish the trustee of such trust with all facts and directions necessary or pertinent to the proper disbursement of the trust funds.
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7.
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Books and Records
. The records of the Employers shall be conclusive evidence as to all information contained therein with respect to the basis for participation in the Plan and for the calculation of Excess Contributions and Supplemental Contributions. The Plan Administrative Committee shall keep all individual and group records relating to Participants and Beneficiaries and all other records necessary for the proper operation of the Plan. Such records shall be made available to the Employers and to each Participant and Beneficiary for examination during normal business hours except that a Participant or Beneficiary shall examine only such records as pertain exclusively to the examining Participant or Beneficiary and the Plan. The Plan Administrative Committee shall prepare and shall file as required by law or regulation all reports, forms, documents and other items required by ERISA,
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8.
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Perpetuation of the Plan Administrative Committee
. In the event that the Company shall for any reason cease to exist, then, unless the Plan is adopted and continued by a successor, the members of the Plan Administrative Committee at that time shall remain in office until the final termination of the Plan, and any vacancies in the membership of the Plan Administrative Committee caused by death, resignation, disability or other
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9.
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Claims Procedure
.
|
(A)
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Authorized Representative
. A Participant or Beneficiary under the Plan may name an authorized representative to act on his behalf under the claims procedures of the Plan, by providing written documentation of such authorization in such form as is acceptable to the Plan Administrative Committee.
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(B)
|
Procedure for Making Initial Claims
. Claims for benefits under the Plan may
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(C)
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Review of Claims for Benefits
.
|
(I)
|
Determination Regarding Initial Claims.
If
a claim for Plan benefits is denied, the Plan Administrative Committee shall provide a written notice within 90 days to the claimant that contains (i) specific reasons for the denial, (ii) specific references to Plan provisions on which the Plan Administrative Committee based its denial, (iii) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary and (iv) a description of the Plan's review procedures and time limits applicable to such procedures, including a statement of the claimant's right to bring a civil action under Section 502(a) of ERISA following an adverse benefit determination on review.
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(2)
|
Appeals
. The claimant may appeal a denied claim by submitting a written request for an appeal review to the Plan Administrative
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10.
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Allocation or Reallocation of Responsibilities
. The Plan Administrative Committee may allocate their responsibilities under the Plan among themselves. Any such allocation, reallocation, or designation shall be in writing and shall be filed with and retained by the secretary of the Plan Administrative Committee with the records of the Plan Administrative Committee. If
applicable, notwithstanding the foregoing, no reallocation of the responsibilities provided in a trust to manage or control the trust assets shall be made other than by an amendment to the trust.
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11.
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Service of Process
. The Company shall be the designated recipient of service of process with respect to legal actions regarding the Plan.
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1.
|
Unfunded Obligation
. The obligation to make payments hereunder shall constitute a
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2.
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Amendment and Termination
. The Company, by action of the Board, shall have the right at any time to amend this Plan in any respect, or to terminate this Plan and may permit or require the acceleration of payment of Accounts in connection therewith to the extent permitted under Code Section 409A and the regulations thereunder, and the Plan Administrative Committee may amend the Plan, but may not amend the Plan in a manner that would materially affect the Company's cost, the Company's contributions to the Plan, or eligibility for participation in the Plan or that would determine compensation for any executive officer; provided, however, that no such amendment or termination shall operate to reduce the benefit that has accrued for any Participant who is participating in the Plan nor the payment due to a terminated Participant at the time the amendment or termination is adopted. Continuance of the Plan is completely voluntary and is not assumed as a contractual obligation of the Company or any Participating Employer.
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3.
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Effect of Plan
. Nothing contained herein (a) shall be deemed to exclude a Participant from any compensation, bonus, pension, insurance, termination pay or other benefit to which he otherwise is or might become entitled to as an Employee or (b) shall be construed as conferring upon an Employee the right to continue in the employ of the Company as an executive or in any other capacity.
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4.
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Offset
.
If
at the time payment is to be made hereunder, the Participant or the Beneficiary is indebted or obligated to the Employer, then the payment to be made to the Participant or the Beneficiary may, at the discretion of the Employer, be reduced by the amount of such indebtedness or obligation, provided, however, that an election by
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5.
|
Amounts Payable
. Any amounts payable by the Employer hereunder shall not be deemed salary or other compensation
to
a Participant for the purposes of computing benefits to which the Participant may be entitled under any other arrangement established by the Employer for the benefit of its Employees.
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6.
|
Rights and Obligations
. The rights and obligations created hereunder shall be binding on a Participant's heirs, executors and administrators and on the successors and assigns of the Employer.
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7.
|
Notice
. Any notice required or permitted to be given under the Plan shall be sufficient if in writing and hand delivered, or sent by registered or certified mail, and if given to the Company, delivered to the principal office of the Company, directed to the attention of the Plan Administrative Committee. Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark or the receipt for registration or certification.
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8.
|
Governing Law
. The Plan shall be construed and governed by the laws of the State of Georgia.
|
9.
|
Assignment of R
ights. The rights of any Participant under this Plan are personal and may not be assigned, transferred, pledged or encumbered. Any attempt to do so shall be void.
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10.
|
Liability
. Neither the Employer, its Employees, agents, any member of the Board, the plan administrator nor the Plan Administrative Committee shall be responsible or liable in any manner to any Participant, Beneficiary, or any person claiming through them for any benefit or action taken or omitted in connection with the granting of benefits, the continuation of benefits or the interpretation and administration of this Plan.
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11.
|
Plan Sponsor
. The Company is the plan sponsor within the meaning of ERISA. All actions shall be taken by the Company in its sole discretion, not as a fiduciary, and need not be applied
|
12.
|
Construction
. Where appearing in the Plan, the masculine shall include the feminine and the plural shall include the singular, unless the context clearly indicates otherwise. The words "hereof," "herein," "hereunder" and other similar compounds of the word "here" shall mean and refer to the entire Plan and not to any particular Section or subsection.
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|
|
Year ended December 31,
|
|||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|||||
Income from continuing operations before taxes
|
|
103.0
|
|
|
89.9
|
|
|
75.5
|
|
|
71.6
|
|
|
53.5
|
|
Plus fixed charges
|
|
13.3
|
|
|
13.5
|
|
|
12.9
|
|
|
12.6
|
|
|
14.8
|
|
Numerator
|
|
116.3
|
|
|
103.4
|
|
|
88.4
|
|
|
84.2
|
|
|
68.3
|
|
Interest expense (including amortization of debt issuance costs)
|
|
11.2
|
|
|
11.7
|
|
|
11.4
|
|
|
11.2
|
|
|
13.5
|
|
Interest portion of rent expense (a)
|
|
2.1
|
|
|
1.8
|
|
|
1.5
|
|
|
1.4
|
|
|
1.3
|
|
Fixed charges
|
|
13.3
|
|
|
13.5
|
|
|
12.9
|
|
|
12.6
|
|
|
14.8
|
|
Ratio of earnings to fixed charges
|
|
8.7x
|
|
|
7.7x
|
|
|
6.9x
|
|
|
6.7x
|
|
|
4.6x
|
|
|
/s/ SEAN T. ERWIN
|
|
Sean T. Erwin
|
|
Chairman of the Board and Director
|
|
|
|
/s/ WILLIAM M. COOK
|
|
William M. Cook
|
|
Director
|
|
|
|
/s/ MARGERET S. DANO
|
|
Margaret S. Dano
|
|
Director
|
|
|
|
/s/ TIMOTHY S. LUCAS
|
|
Timothy S. Lucas
|
|
Director
|
|
|
|
/s/ JOHN F. MCGOVERN
|
|
John F. McGovern
|
|
Director
|
|
|
|
/s/ PHILIP C. MOORE
|
|
Philip C. Moore
|
|
Director
|
|
|
|
/s/ STEPHEN M. WOOD
|
|
Stephen M. Wood
|
1.
|
I have reviewed this Annual Report on Form 10-K of Neenah Paper, Inc.;
|
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:
|
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):
|
|
/s/ JOHN P. O’DONNELL
|
|
John P. O’Donnell
President, Chief Executive Officer and Director
(Principal Executive Officer)
Date: February 24, 2017
|
1.
|
I have reviewed this Annual Report on Form 10-K of Neenah Paper, Inc.;
|
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:
|
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):
|
|
/s/ BONNIE C. LIND
|
|
Bonnie C. Lind
Senior Vice President, Chief Financial Officer and
Treasurer (Principal Financial Officer)
Date: February 24, 2017
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ JOHN P. O’DONNELL
|
|
John P. O’Donnell
|
|
President, Chief Executive Officer and Director
|
|
(Principal Executive Officer)
|
|
Date: February 24, 2017
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
/s/ BONNIE C. LIND
|
|
|
Bonnie C. Lind
|
|
|
Senior Vice President, Chief Financial Officer and Treasurer
|
|
|
(Principal Financial Officer)
|
|
|
Date: February 24, 2017
|