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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, 2017
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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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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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Emerging growth 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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•
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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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•
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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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•
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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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•
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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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•
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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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•
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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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•
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changes in market demand for our products due to global economic and political conditions;
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•
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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 loss of current customers or the inability to obtain new customers;
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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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our ability to control costs, including transportation, and implement measures designed to enhance operating efficiencies;
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the availability of raw materials and energy;
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•
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the enactment of adverse state, federal or foreign tax or other legislation or changes in government policy or regulation, including the recent Tax Act;
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unanticipated expenditures related to the cost of compliance with environmental and other governmental regulations;
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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 the funding requirements for our pension and postretirement liabilities;
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our ability to successfully integrate acquired businesses into our existing operations;
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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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loss of key personnel;
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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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our existing and future indebtedness;
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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, packaging 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, packaging 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, packaging and other specialty papers
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Great Barrington Mill
Great Barrington, Massachusetts
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Paper finishing equipment
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Owned; leased facility
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Laminated specialty papers and toll converting services
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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, specialty paper, and coated substrates
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Eerbeek Mill
Eerbeek, Netherlands
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Two paper machines; paper finishing equipment
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Owned
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Digital dye sublimation and image transfer printing 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, packaging, and other specialty papers
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Brattleboro Mill
Brattleboro, Vermont
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One paper machine; coating and paper finishing equipment
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Owned
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Printing, packaging, specialty paper board, and coated substrates
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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, packaging, 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, packaging, 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, packaging, and specialty paper
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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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Eerbeek, Netherlands
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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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2017
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2016
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2015
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Technical Products
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88
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%
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87
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%
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84
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%
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Fine Paper and Packaging
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81
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%
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80
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%
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80
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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 2017
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—
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$
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—
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—
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$
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25,000,000
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November 2017
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—
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$
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—
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—
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$
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25,000,000
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December 2017
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24,127
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$
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90.65
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—
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$
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25,000,000
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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
2017
, our Board of Directors authorized a program for the purchase of up to $25 million of outstanding common stock which was in effect till December 31, 2017. In November 2017, our Board of Directors authorized a program for the purchase of up to $25 million of outstanding common stock effective January 1, 2018. The program does not require the Company to purchase any specific number of shares and may be suspended or discontinued at any time.
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(c)
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Average price paid per share for shares purchased as part of our program.
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Plan Category
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(a)
Number of securities to be issued upon exercise of outstanding options, warrants, and rights |
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(b)
Weighted- average exercise price of outstanding options, warrants, and rights (1) |
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(c)
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
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Equity compensation plans approved by security holders
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310,176
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(2)(3)
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$
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55.60
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680,000
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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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310,176
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$
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55.60
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680,000
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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) 180,000 shares issuable upon the exercise of outstanding options and stock appreciation rights ("SARs"), (ii) 41,377 shares issuable following the vesting and conversion of outstanding performance share unit awards, and (iii) 88,799 shares issuable upon the vesting and conversion of outstanding restricted stock units, all as of
December 31, 2017
. As of
December 31, 2017
, we had an aggregate of
464,958
stock options and SARs outstanding. The weighted average exercise price of the stock options and SARs was $
55.6
per share and the remaining contractual life of such awards was
6.6
years.
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(3)
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Includes 159,200 shares that would be issued upon the assumed exercise of 425,200 SARs at the $90.65 per share closing price of our common stock on
December 31, 2017
.
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Year Ended December 31,
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2017
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2016
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2015
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2014
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2013
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Consolidated Statement of Operations Data
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Net sales
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$
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979.9
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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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Cost of products sold
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781.2
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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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Gross profit
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198.7
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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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Selling, general and administrative expenses
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96.5
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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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Acquisition/integration/restructuring costs (a)
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1.3
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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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Insurance settlement (b)
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(3.2
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—
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—
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—
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—
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Pension plan settlement charge (c)
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0.6
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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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Loss on early extinguishment of debt (d)
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—
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—
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—
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0.2
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0.5
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Other (income) expense — net
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(0.8
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)
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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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Operating income
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104.3
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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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Interest expense — net
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12.6
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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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Income from continuing operations before income taxes
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91.7
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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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Provision for income taxes (i)
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11.4
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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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Income from continuing operations
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80.3
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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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Income (loss) from discontinued operations, net of taxes (f)
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—
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(0.4
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)
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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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Net income
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$
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80.3
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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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Earnings from continuing operations per basic share
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$
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4.74
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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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Earnings from continuing operations per diluted share
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$
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4.68
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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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Cash dividends per common share
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$
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1.48
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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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Other Financial Data
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Net cash flow provided by (used for):
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Operating activities (i)
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$
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100.0
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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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Capital expenditures (h)
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(42.7
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)
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(68.5
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)
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(48.1
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)
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(27.9
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)
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(28.7
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)
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Other investing activities (g)
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(52.3
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)
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0.3
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(112.0
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)
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(77.0
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)
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(4.6
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)
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Financing activities (d)(i)
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(3.8
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)
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(48.4
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)
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(18.8
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)
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10.2
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15.0
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Ratio of earnings to fixed charges (e)
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7.1x
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8.7x
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7.7x
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6.9x
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6.9x
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|
|
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December 31,
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||||||||||||||||||
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2017
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2016
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2015
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2014
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2013
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||||||||||
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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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4.5
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|
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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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$
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72.6
|
|
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$
|
73.4
|
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Working capital, less cash and cash equivalents
|
|
156.1
|
|
|
125.2
|
|
|
136.3
|
|
|
129.5
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|
|
123.9
|
|
|||||
Total assets (i)
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904.4
|
|
|
765.6
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|
|
751.4
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|
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724.5
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|
|
670.9
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|||||
Long-term debt (d)(i)
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254.1
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|
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219.7
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|
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228.2
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|
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226.8
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|
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185.5
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|||||
Total liabilities (i)
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504.5
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|
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427.3
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|
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439.8
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435.8
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403.4
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Total stockholders' equity
|
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399.9
|
|
|
338.3
|
|
|
311.6
|
|
|
288.7
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|
|
267.5
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(a)
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For the year ended
December 31, 2017
, we incurred of $1.3 million of acquisition costs related to the Coldenhove Acquisition and $0.6 million of pension settlement charges. For the year ended
December 31, 2016
, we incurred $4.1 million of integration costs related to the FiberMark Acquisition, $2.7 million of non-capitalized trial costs related to the U.S. filtration project, $0.2 million of other one-time costs and $0.8 million of pension settlement charges. For the year ended
December 31, 2015
, we incurred $5.3 million of integration costs related to the FiberMark Acquisition and $1.2 million of restructuring costs. For the year ended
December 31, 2014
, we incurred $1.0 million of integration costs related to the acquisition of the Crane technical materials business and $1.3 million of restructuring costs. For the year ended December 31,
2013
, we incurred $0.4 million of integration costs related to the acquisition of the Southworth brands.
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(b)
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For the year ended
December 31, 2017
, we recorded a representations and warranties insurance settlement of
$3.2 million
related to the FiberMark acquisition.
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(c)
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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
and
2013
, 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 and $0.2 million, respectively.
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(d)
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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.
|
(e)
|
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.
|
(f)
|
The following table presents the results of discontinued operations:
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
2017
|
|
2016 (1)
|
|
2015 (2)
|
|
2014
|
|
2013 (3)
|
||||||||||
Discontinued operations: (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Income from operations
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.2
|
|
|
$
|
0.9
|
|
|
$
|
5.4
|
|
Loss on sale of the Lahnstein Mill (4)
|
|
—
|
|
|
(0.6
|
)
|
|
(13.6
|
)
|
|
—
|
|
|
—
|
|
|||||
Income (loss) before income taxes
|
|
—
|
|
|
(0.6
|
)
|
|
(13.4
|
)
|
|
0.9
|
|
|
5.4
|
|
|||||
Provision (benefit) for income taxes
|
|
—
|
|
|
(0.2
|
)
|
|
(4.0
|
)
|
|
0.2
|
|
|
1.9
|
|
|||||
Income (loss) from discontinued operations, net of taxes
|
|
$
|
—
|
|
|
$
|
(0.4
|
)
|
|
$
|
(9.4
|
)
|
|
$
|
0.7
|
|
|
$
|
3.5
|
|
(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)
|
On October 31, 2015, we sold the Lahnstein Mill. For the year ended
December 31, 2017
,
2016
,
2015
,
2014
and
2013
, 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.
|
(g)
|
In November 2017, we purchased all of the outstanding equity of Coldenhove for approximately $45 million. 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.
|
(h)
|
During the year ended December 31, 2016, we completed our U.S. Filtration project.
|
(i)
|
At December 31, 2017, financial statements reflect the adjustments arising from the U.S. tax reform signed on December 22, 2017. See Note 6 of Notes to Consolidated Financial Statements, "Income Taxes." 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.
|
•
|
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 freight and 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
|
|
2017
|
|
2017
|
|
2016
|
|
2016
|
|
2015
|
|
2015
|
|||||||||
Technical Products
|
|
$
|
502.1
|
|
|
52
|
%
|
|
$
|
466.4
|
|
|
50
|
%
|
|
$
|
429.2
|
|
|
48
|
%
|
Fine Paper and Packaging
|
|
455.3
|
|
|
46
|
%
|
|
452.1
|
|
|
48
|
%
|
|
442.7
|
|
|
50
|
%
|
|||
Other
|
|
22.5
|
|
|
2
|
%
|
|
23.0
|
|
|
2
|
%
|
|
15.8
|
|
|
2
|
%
|
|||
Consolidated
|
|
$
|
979.9
|
|
|
100
|
%
|
|
$
|
941.5
|
|
|
100
|
%
|
|
$
|
887.7
|
|
|
100
|
%
|
|
|
|
|
|
|
Change in Net Sales Compared to the
Prior Year |
||||||||||||||||||
|
|
For the Year
Ended December 31, |
|
|
|
Change Due To
|
||||||||||||||||||
|
|
|
Total
Change |
|
|
|
Net Price
|
|
|
|||||||||||||||
|
|
2017
|
|
2016
|
|
|
Volume
|
|
|
Currency
|
||||||||||||||
Technical Products
|
|
$
|
502.1
|
|
|
$
|
466.4
|
|
|
$
|
35.7
|
|
|
$
|
22.9
|
|
|
$
|
10.0
|
|
|
$
|
2.8
|
|
Fine Paper and Packaging
|
|
455.3
|
|
|
452.1
|
|
|
3.2
|
|
|
7.2
|
|
|
(4.0
|
)
|
|
—
|
|
||||||
Other
|
|
22.5
|
|
|
23.0
|
|
|
(0.5
|
)
|
|
—
|
|
|
(0.5
|
)
|
|
—
|
|
||||||
Consolidated
|
|
$
|
979.9
|
|
|
$
|
941.5
|
|
|
$
|
38.4
|
|
|
$
|
30.1
|
|
|
$
|
5.5
|
|
|
$
|
2.8
|
|
•
|
Net sales in our technical products business increased
$35.7 million
(
8%
) from the prior year
due to higher volumes in backings, label and other filtration, as well as higher priced mix, acquired volume and favorable currency effects.
Excluding the Coldenhove Acquisition, technical product sales increased $28.2 million (6%).
Net selling prices increased due to a higher-priced mix of products sold and increased selling prices.
|
•
|
Net sales in our fine paper and packaging business increased
$3.2 million
(
1%
) from the prior year due to higher volumes largely offset by lower priced mix. Increased volumes reflected double digit growth in premium packaging as well as more direct sales of non-branded products, which more than offset the decline in commercial print.
|
•
|
Net sales in our other business segment decreased
$0.5 million
from the prior year period due to lower priced mix.
|
|
|
|
|
|
|
Change in Net Sales Compared to the
Prior Year |
||||||||||||||||||
|
|
For the Years Ended
December 31, |
|
|
|
Change Due To
|
||||||||||||||||||
|
|
2016
|
|
2015
|
|
Total
Change |
|
Volume
|
|
Net Price
|
|
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.
|
|
|
Year Ended December 31,
|
|||||||
|
|
2017
|
|
2016
|
|
2015
|
|||
Net sales
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of products sold
|
|
79.7
|
%
|
|
77.2
|
%
|
|
78.0
|
%
|
Gross profit
|
|
20.3
|
%
|
|
22.8
|
%
|
|
22.0
|
%
|
Selling, general and administrative expenses
|
|
9.8
|
%
|
|
9.8
|
%
|
|
9.8
|
%
|
Integration costs and settlement charges
|
|
(0.1
|
)%
|
|
0.8
|
%
|
|
0.7
|
%
|
Other (income) expense — net
|
|
—
|
%
|
|
0.1
|
%
|
|
0.1
|
%
|
Operating income
|
|
10.6
|
%
|
|
12.1
|
%
|
|
11.4
|
%
|
Interest expense — net
|
|
1.2
|
%
|
|
1.2
|
%
|
|
1.3
|
%
|
Income from continuing operations before income taxes
|
|
9.4
|
%
|
|
10.9
|
%
|
|
10.1
|
%
|
Provision for income taxes
|
|
1.2
|
%
|
|
3.1
|
%
|
|
3.3
|
%
|
Income from continuing operations
|
|
8.2
|
%
|
|
7.8
|
%
|
|
6.8
|
%
|
|
|
|
|
|
|
Change in Operating Income (Loss) Compared to the Prior Year
|
||||||||||||||||||||||||||
|
|
|
|
|
Change Due To
|
|||||||||||||||||||||||||||
|
|
2017
|
|
2016
|
|
Total
Change |
|
Volume
|
|
Net Price (a)
|
|
Input Costs (b)
|
|
Currency
|
|
Other (c)
|
||||||||||||||||
Technical Products
|
|
$
|
55.3
|
|
|
$
|
65.6
|
|
|
$
|
(10.3
|
)
|
|
$
|
5.9
|
|
|
$
|
1.9
|
|
|
$
|
(5.6
|
)
|
|
$
|
0.4
|
|
|
$
|
(13.0
|
)
|
Fine Paper and Packaging
|
|
69.5
|
|
|
70.7
|
|
|
(1.2
|
)
|
|
2.9
|
|
|
(3.4
|
)
|
|
(2.5
|
)
|
|
—
|
|
|
1.8
|
|
||||||||
Other
|
|
(0.4
|
)
|
|
(1.1
|
)
|
|
0.7
|
|
|
(0.3
|
)
|
|
(0.5
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
1.6
|
|
||||||||
Unallocated corporate costs
|
|
(20.1
|
)
|
|
(21.1
|
)
|
|
1.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.8
|
|
||||||||
Consolidated
|
|
$
|
104.3
|
|
|
$
|
114.1
|
|
|
$
|
(9.8
|
)
|
|
$
|
8.5
|
|
|
$
|
(2.0
|
)
|
|
$
|
(8.2
|
)
|
|
$
|
0.4
|
|
|
$
|
(7.8
|
)
|
(a)
|
Includes price changes, net of changes in product mix.
|
(b)
|
Includes price changes for raw materials and energy.
|
(c)
|
Includes other manufacturing costs, over (under) absorption of fixed costs, distribution and SG&A expenses, start-up and other costs for the U.S. transportation filtration business, insurance settlement and acquisition/integration/restructuring costs.
|
•
|
Operating income for our technical products business decreased
$10.3 million
(
16%
) from the prior year primarily due to higher costs from the U.S. transportation filtration start-up. Excluding the higher costs from the U.S. transportation filtration business, operating income for technical products increased due to higher sales volumes, manufacturing efficiencies, and lower integration and restructuring costs. These items were partially offset by unfavorable impacts from higher material and transportation costs. Results for the year ended
December 31, 2016
include $
1.4 million
for integration/restructuring costs. Excluding integration/restructuring costs, operating income for the technical products business decreased $
11.7 million
(
17%
).
|
•
|
Operating income for our fine paper and packaging business decreased $
1.2 million
(
2%
) from the prior year period primarily due to higher material and transportation costs and a lower priced product mix, that were partly offset by higher sales volume, increased selling prices, lower integration costs, and an insurance settlement of $2.9 million. Results for the year ended
December 31, 2016
include
$1.8 million
for integration costs related to the FiberMark Acquisition. Excluding the insurance settlement and integration costs, operating income for the fine paper and packaging business decreased $
5.9 million
(
8%
).
|
•
|
Unallocated corporate costs for the year ended
December 31, 2017
were $
20.1 million
, or $
1.0 million
less than the prior year. Excluding charges of $
1.3 million
for acquisition and integration, and
$0.6 million
of pension and SERP settlement charges in 2017, and
$0.8 million
for a pension plan settlement charge and $
2.7 million
of restructuring costs in 2016, unallocated corporate expenses were
$0.6 million
unfavorable to the prior year.
|
|
|
|
|
|
|
Change in Operating Income (Loss) Compared to the Prior Year
|
||||||||||||||||||||||||||
|
|
|
|
|
Change Due To
|
|||||||||||||||||||||||||||
|
|
2016
|
|
2015
|
|
Total Change
|
|
Volume
|
|
Net Price (a)
|
|
Input Costs (b)
|
|
Currency
|
|
Other (c)
|
||||||||||||||||
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.
|
(c)
|
Includes other manufacturing costs, over (under) absorption of fixed costs, distribution and SG&A expenses, start-up and other costs for the U.S. filtration business, insurance settlement, and acquisition/integration/restructuring costs.
|
•
|
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.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Operating income
|
|
|
|
|
|
|
|
|
|
|||
Technical Products
|
|
$
|
55.3
|
|
|
$
|
65.6
|
|
|
$
|
54.1
|
|
Fine Paper and Packaging
|
|
69.5
|
|
|
70.7
|
|
|
67.3
|
|
|||
Other
|
|
(0.4
|
)
|
|
(1.1
|
)
|
|
(2.0
|
)
|
|||
Unallocated corporate costs
|
|
(20.1
|
)
|
|
(21.1
|
)
|
|
(18.0
|
)
|
|||
Operating Income as Reported
|
|
104.3
|
|
|
114.1
|
|
|
101.4
|
|
|||
Non-GAAP Adjustments
|
|
|
|
|
|
|
|
|
|
|||
Technical Products
|
|
|
|
|
|
|
|
|
|
|||
Integration/restructuring costs
|
|
—
|
|
|
1.4
|
|
|
1.8
|
|
|||
Fine Paper and Packaging
|
|
|
|
|
|
|
|
|
|
|||
Insurance settlement
|
|
(2.9
|
)
|
|
—
|
|
|
—
|
|
|||
Integration/Restructuring costs
|
|
—
|
|
|
1.8
|
|
|
1.5
|
|
|||
Total
|
|
(2.9
|
)
|
|
1.8
|
|
|
1.5
|
|
|||
Other
|
|
|
|
|
|
|
|
|
|
|||
Insurance settlement
|
|
(0.3
|
)
|
|
—
|
|
|
—
|
|
|||
Integration/restructuring costs
|
|
—
|
|
|
1.1
|
|
|
2.4
|
|
|||
Total
|
|
(0.3
|
)
|
|
1.1
|
|
|
2.4
|
|
|||
Unallocated corporate costs
|
|
|
|
|
|
|
|
|
|
|||
Pension plan settlement charge
|
|
0.6
|
|
|
0.8
|
|
|
—
|
|
|||
Acquisition/integration/restructuring costs
|
|
1.3
|
|
|
2.7
|
|
|
0.8
|
|
|||
Total
|
|
1.9
|
|
|
3.5
|
|
|
0.8
|
|
|||
Total non-GAAP Adjustments
|
|
(1.3
|
)
|
|
7.8
|
|
|
6.5
|
|
|||
Operating Income as Adjusted
|
|
$
|
103.0
|
|
|
$
|
121.9
|
|
|
$
|
107.9
|
|
•
|
SG&A expense of
$96.5 million
for the year ended
December 31, 2017
was
$4.3 million
higher than the prior year due to increased SG&A associated with U.S. transportation filtration business, incremental costs related to the Coldenhove Acquisition, and higher spending due to increased sales in Technical Products. SG&A expense as a percentage of net sales for the year ended
December 31, 2017
, was approximately
9.8
percent and was comparable to the prior year.
|
•
|
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 year ended December 31, 2015.
|
•
|
For the years ended
December 31, 2017
,
2016
and
2015
, we incurred
$12.7 million
,
$11.2 million
and
$11.7 million
of interest expense, respectively. The increase in interest expense in 2017 was primarily due to capitalization of interest of $0.8 million for the U.S. filtration project in 2016, higher interest rates in 2017 and higher borrowing related to the Coldenhove Acquisition.
|
•
|
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, the mix of pre-tax income in jurisdictions with marginal tax rates that differ from the U.S. statutory tax rate and changes in federal and state tax rates. For the year ended
December 31, 2017
, our effective income tax rate related to continuing operations was
12
percent, primarily due to the reduction in the U.S. federal tax rate. On December 22, 2017, the U.S. government enacted comprehensive tax legislation, commonly referred to as the "Tax Act". The Tax Act significantly revises the U.S. corporate income tax by, among other things, lowering the statutory corporate tax rate from 35% to 21%, eliminating certain deductions, imposing a mandatory one-time tax on accumulated earnings of foreign subsidiaries, introducing new tax regimes and changing how foreign earnings are subject to U.S. tax. The Tax Act also enhanced and extended through 2026 the option to claim accelerated depreciation deductions on qualified property. The Company has not completed our determination of the accounting implications of the Tax Act on its tax accruals. However, the Company reasonably estimated the effects of the Tax Act and recorded provisional amounts in the financial statements as of December 31, 2017. Consistent with guidance issued by the SEC, which provides for a measurement period of one year from the enactment date to finalize the accounting for effects of the Tax Act, the Company provisionally recorded an income tax benefit of
$6.5 million
related to the Tax Act. This amount is comprised of a
$10.3 million
tax benefit from the remeasurement of federal net deferred tax liabilities resulting from the reduction in the U.S. statutory corporate tax rate to 21% from 35%, less
$3.8 million
of tax expense from the mandatory one-time tax on the accumulated earnings of its foreign subsidiaries. As the Company completes its analysis of the Tax Act, collects and prepares necessary data and interprets any additional guidance issued by the U.S. Treasury Department, the IRS and other standard-setting bodies, adjustments to the provisional amounts may be required. In addition, adjustments to the provisional amounts may be needed to reflect legislative actions by the various U.S. states related to application of the Tax Act provisions on 2017 state tax returns. These adjustments could significantly impact the Company’s provision for income taxes in the period in which the adjustments are made.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Net cash flow provided by (used in):
|
|
|
|
|
|
|
|
|
|
|||
Operating activities
|
|
$
|
100.0
|
|
|
$
|
115.8
|
|
|
$
|
111.2
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
|
|||
Capital expenditures
|
|
(42.7
|
)
|
|
(68.5
|
)
|
|
(48.1
|
)
|
|||
Acquisitions
|
|
(43.1
|
)
|
|
—
|
|
|
(118.2
|
)
|
|||
Asset acquisition
|
|
(8.0
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds on sale of discontinued operations
|
|
—
|
|
|
—
|
|
|
5.4
|
|
|||
Other investing activities
|
|
(1.2
|
)
|
|
0.3
|
|
|
0.8
|
|
|||
Total
|
|
(95.0
|
)
|
|
(68.2
|
)
|
|
(160.1
|
)
|
|||
Financing activities
|
|
(3.8
|
)
|
|
(48.4
|
)
|
|
(18.8
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
|
0.2
|
|
|
(0.3
|
)
|
|
(0.7
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
|
$
|
1.4
|
|
|
$
|
(1.1
|
)
|
|
$
|
(68.4
|
)
|
•
|
Cash provided by operating activities of
$100 million
for the year ended
December 31, 2017
was
$15.8 million
less than cash provided by operating activities of
$115.8 million
in the prior year. The unfavorable comparison was primarily due to a
$9.8 million
decrease in operating income and an increase of $10.6 million in our investment in working capital for the year ended
December 31, 2017
. These items were offset by lower cash tax payments and lower contributions and benefit payments for post-retirement benefit obligations in 2017.
|
•
|
Cash provided by operating activities of $
115.8 million
for the year ended
December 31, 2016
was $16.7 million favorable to cash provided by operating activities of $
111.2 million
in the prior year. The favorable comparison was primarily due to a
a
$12.7 million increase in operating income and the benefits of higher utilization of U.S. federal R&D Credits. These favorable variances were partially offset by higher post-retirement benefit contributions in 2016 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.
|
•
|
For the years ended
December 31, 2017
and
2016
, cash used by investing activities was
$95.0 million
and $
68.2 million
, respectively. Capital expenditures for the year ended
December 31, 2017
were
$42.7 million
compared to spending of $
68.5 million
in the prior year. The capital expenditures were higher than normal in the prior year, due to the U.S. transportation filtration project which was completed in 2016.
|
•
|
For the year ended
December 31, 2017
, cash used by investing activities includes
$43.1 million
for the Coldenhove Acquisition and
$8.0 million
for acquisition of a laminating asset. 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, 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, 2016
were $
68.5 million
compared to spending of $
48.1 million
in the prior year. The capital expenditures were higher than normal due to the U.S. Filtration project which was completed in 2016.
|
•
|
For 2018, we expect aggregate annual capital expenditures to be within our target range of approximately 3 to 5 percent of net sales. We believe that the level of our capital spending can be more than adequately funded from cash
|
•
|
For the year ended
December 31, 2017
, cash used by financing activities was
$3.8 million
compared to cash used by financing activities of
$48.4 million
for the prior year. The decrease was due to higher net debt borrowings and lower share repurchases, offset by higher dividends paid in 2017. 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 change was due to higher net debt repayments, and higher share repurchases and dividends paid in 2016.
|
•
|
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, 2017
, we had
$76.9 million
outstanding under our Revolver and
$91.9 million
of available credit (based on exchange rates at
December 31, 2017
).
|
•
|
We have required debt payments through December 31, 2017 of
$1.4 million
on the Second German Loan Agreement.
|
•
|
For the year ended
December 31, 2017
, cash and cash equivalents increased
$1.4 million
to
$4.5 million
at
December 31, 2017
from
$3.1 million
at
December 31, 2016
. Total debt increased
$34.6 million
to
$255.5 million
at
December 31, 2017
from
$220.9 million
at
December 31, 2016
. Net debt (total debt minus cash and cash equivalents) increased by
$33.2 million
primarily due to the Coldenhove Acquisition.
|
•
|
As of
December 31, 2017
, majority of our cash balance was held at entities outside of the U.S. As of
December 31, 2017
, there were no restrictions regarding the repatriation of our non-U.S. cash.
|
•
|
For the years ended
December 31, 2017
and
2016
, we paid quarterly cash dividends of $0.37 per common share or
$25.1 million
annually and $0.33 per common share or
$22.4 million
annually, respectively.
|
•
|
In November 2017, our Board of Directors approved an 11 percent increase in the quarterly dividend rate on our common stock to $0.41 per share, scheduled to be paid in March
2018
.
|
•
|
In May 2017, our Board of Directors authorized the 2017 Stock Purchase Plan which was in effect till December 31, 2017. In November 2017, our Board of Directors authorized a program for the purchase of up to $25 million of outstanding common stock effective January 1, 2018 ("2018 Stock Purchase Plan"). The program does not require the Company to purchase any specific number of shares and may be suspended or discontinued at any time. Purchases under the 2018 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. For the year ended
December 31, 2017
, we acquired approximately
85,354
shares of Common Stock at a cost of
$6.8 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, 2017
and
2016
, we acquired approximately
28,000
and
46,000
of Common Stock, respectively, at a cost of
$2.5 million
and
$3.8 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
in proceeds from the exercise of employee stock options for each of the years ended
December 31, 2017
and
2016
.
|
•
|
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, 2017, 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, 2017, 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, 2017
, we had
$44.0 million
of state NOLs. Our state NOLs may be used to offset approximately $
2.6 million
in state income taxes. If not used, substantially all of the state NOLs will expire in various amounts between
2018 and 2036
. In addition, we had
$15.5 million
of U.S. federal and
$6.9 million
of U.S. state R&D Credits which, if not used, will expire between
2030 and 2037
for the U.S. federal R&D Credits and between
2020 and 2032
for the state R&D Credits.
|
(In millions)
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
Beyond
2022 |
|
Total
|
||||||||||||||
Long-term debt payments
|
|
$
|
1.4
|
|
|
$
|
78.2
|
|
|
$
|
1.3
|
|
|
$
|
176.4
|
|
|
$
|
1.0
|
|
|
$
|
—
|
|
|
$
|
258.3
|
|
Interest payments on long-term debt (a)
|
|
11.4
|
|
|
11.3
|
|
|
9.3
|
|
|
4.3
|
|
|
—
|
|
|
—
|
|
|
36.3
|
|
|||||||
Open purchase orders (b)
|
|
67.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
67.0
|
|
|||||||
Other post-employment benefit obligations (c)
|
|
5.3
|
|
|
4.3
|
|
|
4.6
|
|
|
4.9
|
|
|
4.8
|
|
|
18.1
|
|
|
42.0
|
|
|||||||
Contributions to pension trusts
|
|
14.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14.7
|
|
|||||||
Minimum purchase commitments (d)
|
|
12.3
|
|
|
6.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18.4
|
|
|||||||
Operating leases
|
|
4.0
|
|
|
2.6
|
|
|
2.1
|
|
|
1.8
|
|
|
1.6
|
|
|
3.7
|
|
|
15.8
|
|
|||||||
Total contractual obligations
|
|
$
|
116.1
|
|
|
$
|
102.5
|
|
|
$
|
17.3
|
|
|
$
|
187.4
|
|
|
$
|
7.4
|
|
|
$
|
21.8
|
|
|
$
|
452.5
|
|
(a)
|
Interest payments on long-term debt includes interest on variable rate debt at
December 31, 2017
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 2018 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.
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
Pension plans
|
|
|
|
|
|
|
|||
Weighted average discount rate for benefit expense
|
|
4.18
|
%
|
|
4.54
|
%
|
|
3.91
|
%
|
Weighted average discount rate for benefit obligation
|
|
3.49
|
%
|
|
4.16
|
%
|
|
4.54
|
%
|
Expected long-term rate on plan assets
|
|
6.31
|
%
|
|
6.20
|
%
|
|
6.50
|
%
|
Rate of compensation increase
|
|
2.49
|
%
|
|
2.18
|
%
|
|
2.92
|
%
|
Postretirement benefit plans
|
|
|
|
|
|
|
|||
Weighted average discount rate for benefit expense
|
|
3.89
|
%
|
|
4.07
|
%
|
|
4.05
|
%
|
Weighted average discount rate for benefit obligation
|
|
3.27
|
%
|
|
3.69
|
%
|
|
4.07
|
%
|
Health care cost trend rate assumed for next year
|
|
6.80
|
%
|
|
7.00
|
%
|
|
7.30
|
%
|
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
|
Julie A. Schertell
|
|
Senior Vice President — President, Fine Paper and Packaging
|
Byron J. Racki
|
|
Senior Vice President — President, Performance Materials
|
Armin 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
|
|
2.2
|
*
|
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, 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 23, 2018
|
|
|
/s/ JOHN P. O'DONNELL
|
|
President, Chief Executive Officer and Director (Principal Executive Officer)
|
|
|
|
|
John P. O'Donnell
|
|
|
February 23, 2018
|
|
|
|
|
|
|
|
|
|
|
/s/ BONNIE C. LIND
|
|
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)
|
|
|
|
|
Bonnie C. Lind
|
|
|
February 23, 2018
|
|
|
|
|
|
|
|
|
|
|
/s/ LARRY N. BROWNLEE
|
|
Vice President — Controller (Principal Accounting Officer)
|
|
|
|
|
Larry N. Brownlee
|
|
|
February 23, 2018
|
|
|
|
|
|
|
|
|
|
|
/s/ SEAN T. ERWIN*
|
|
Chairman of the Board and Director
|
|
|
|
|
Sean T. Erwin
|
|
|
February 23, 2018
|
|
|
|
|
|
|
|
|
|
|
/s/ WILLIAM M. COOK*
|
|
Director
|
|
|
|
|
William M. Cook
|
|
|
February 23, 2018
|
|
|
|
|
|
|
|
|
|
|
/s/ MARGARET S. DANO*
|
|
Director
|
|
|
|
|
Margaret S. Dano
|
|
|
February 23, 2018
|
|
|
|
|
|
|
|
|
|
|
/s/ TIMOTHY S. LUCAS*
|
|
Director
|
|
|
|
|
Timothy S. Lucas
|
|
|
February 23, 2018
|
|
|
|
|
|
|
|
|
|
|
/s/ JOHN F. MCGOVERN*
|
|
Director
|
|
|
|
|
John F. McGovern
|
|
|
February 23, 2018
|
|
|
|
|
|
|
|
|
|
|
/s/ PHILIP C. MOORE*
|
|
Director
|
|
|
|
|
Philip C. Moore
|
|
|
February 23, 2018
|
|
|
|
|
|
|
|
|
|
|
/s/ STEPHEN M. WOOD*
|
|
Director
|
|
|
|
|
Stephen M. Wood
|
|
|
February 23, 2018
|
|
|
|
|
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*By:
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/s/ STEVEN S. HEINRICHS
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Steven S. Heinrichs
Senior Vice President, General
Counsel and Secretary
Attorney-in-fact
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Page
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Year Ended December 31,
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||||||||||
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2017
|
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2016
|
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2015
|
||||||
Net sales
|
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$
|
979.9
|
|
|
$
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941.5
|
|
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$
|
887.7
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Cost of products sold
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781.2
|
|
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727.0
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|
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692.3
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|||
Gross profit
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198.7
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|
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214.5
|
|
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195.4
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|||
Selling, general and administrative expenses
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96.5
|
|
|
92.2
|
|
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86.5
|
|
|||
Acquisition/integration/restructuring costs
|
|
1.3
|
|
|
7.0
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|
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6.5
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|
|||
Insurance settlement
|
|
(3.2
|
)
|
|
—
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|
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—
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|||
Pension and SERP plan settlement charges
|
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0.6
|
|
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0.8
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—
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|||
Other (income) expense — net
|
|
(0.8
|
)
|
|
0.4
|
|
|
1.0
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|||
Operating income
|
|
104.3
|
|
|
114.1
|
|
|
101.4
|
|
|||
Interest expense
|
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12.7
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|
|
11.2
|
|
|
11.7
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|
|||
Interest income
|
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(0.1
|
)
|
|
(0.1
|
)
|
|
(0.2
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)
|
|||
Income from continuing operations before income taxes
|
|
91.7
|
|
|
103.0
|
|
|
89.9
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|
|||
Provision for income taxes
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|
11.4
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|
|
29.6
|
|
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29.4
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|||
Income from continuing operations
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80.3
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73.4
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|
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60.5
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|
|||
Loss from discontinued operations, net of taxes (Note 13)
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—
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(0.4
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)
|
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(9.4
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)
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|||
Net income
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$
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80.3
|
|
|
$
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73.0
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|
$
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51.1
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|
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||||||
Earnings (Loss) Per Common Share
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Basic
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|
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Continuing operations
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$
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4.74
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$
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4.33
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$
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3.58
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Discontinued operations
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—
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(0.02
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)
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(0.56
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)
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|||
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$
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4.74
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$
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4.31
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$
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3.02
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||||||
Diluted
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Continuing operations
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$
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4.68
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|
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$
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4.26
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|
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$
|
3.53
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|
Discontinued operations
|
|
—
|
|
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(0.02
|
)
|
|
(0.55
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)
|
|||
|
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$
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4.68
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$
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4.24
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$
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2.98
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|
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||||||
Weighted Average Common Shares Outstanding (in thousands)
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|||
Basic
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16,805
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16,773
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16,754
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|||
Diluted
|
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17,052
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17,087
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17,012
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|
|
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Year Ended December 31,
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||||||||||
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2017
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2016
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2015
|
||||||
Net income
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$
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80.3
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$
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73.0
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$
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51.1
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|
Reclassification of amounts recognized in the consolidated statement of operations:
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Amortization of adjustments to pension and other postretirement benefit liabilities
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5.9
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7.2
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7.1
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|
|||
Pension plan settlement/curtailment charge (2015 amount in discontinued operations)
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0.6
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|
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0.8
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|
|
5.5
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|
|||
Amounts recognized in the consolidated statement of operations
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6.5
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|
|
8.0
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|
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12.6
|
|
|||
Unrealized foreign currency translation gain (loss)
|
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20.0
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(7.1
|
)
|
|
(15.0
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)
|
|||
Net loss from pension and other postretirement benefit plans
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|
(20.3
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)
|
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(18.0
|
)
|
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(6.3
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)
|
|||
Deferred loss on "available-for-sale" securities
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|
(0.4
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)
|
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—
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—
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|||
Income (loss) from other comprehensive income items before income taxes
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5.8
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(17.1
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)
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(8.7
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)
|
|||
(Benefit) provision for income taxes
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(3.0
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)
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(3.4
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)
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1.2
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|
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Other comprehensive income (loss)
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8.8
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(13.7
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)
|
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(9.9
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)
|
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Comprehensive income
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$
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89.1
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$
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59.3
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$
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41.2
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|
|
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December 31,
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||||||
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2017
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2016
|
||||
ASSETS
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Current Assets
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Cash and cash equivalents
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$
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4.5
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$
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3.1
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Accounts receivable, net
|
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115.7
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96.5
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Inventories
|
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143.5
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116.3
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||
Prepaid and other current assets
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21.5
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|
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20.4
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Total Current Assets
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285.2
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|
|
236.3
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|
||
Property, Plant and Equipment — net
|
|
425.2
|
|
|
364.6
|
|
||
Deferred Income Taxes
|
|
10.1
|
|
|
6.1
|
|
||
Goodwill (Note 5)
|
|
85.3
|
|
|
70.4
|
|
||
Intangible Assets — net (Note 5)
|
|
78.7
|
|
|
74.0
|
|
||
Other Assets
|
|
19.9
|
|
|
14.2
|
|
||
TOTAL ASSETS
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$
|
904.4
|
|
|
$
|
765.6
|
|
|
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|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
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|
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|
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Current Liabilities
|
|
|
|
|
|
|
||
Debt payable within one year
|
|
$
|
1.4
|
|
|
$
|
1.2
|
|
Accounts payable
|
|
65.7
|
|
|
55.6
|
|
||
Accrued expenses
|
|
57.5
|
|
|
51.2
|
|
||
Total Current Liabilities
|
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124.6
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|
|
108.0
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|
||
Long-Term Debt
|
|
254.1
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|
|
219.7
|
|
||
Deferred Income Taxes
|
|
15.0
|
|
|
10.1
|
|
||
Noncurrent Employee Benefits
|
|
100.3
|
|
|
86.7
|
|
||
Other Noncurrent Obligations
|
|
10.5
|
|
|
2.8
|
|
||
TOTAL LIABILITIES
|
|
504.5
|
|
|
427.3
|
|
||
Commitments and Contingencies (Notes 11 and 12)
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|
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|
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Stockholders' Equity
|
|
|
|
|
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|
||
Common stock, par value $0.01 — authorized: 100,000,000 shares; issued and outstanding: 16,870,000 shares and 16,771,000 shares
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|
0.2
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|
|
0.2
|
|
||
Treasury stock, at cost: 1,588,000 shares and 1,475,000 shares
|
|
(65.8
|
)
|
|
(56.5
|
)
|
||
Additional paid-in capital
|
|
323.9
|
|
|
317.0
|
|
||
Retained earnings
|
|
235.7
|
|
|
169.6
|
|
||
Accumulated other comprehensive loss
|
|
(94.1
|
)
|
|
(92.0
|
)
|
||
Total Stockholders' Equity
|
|
399.9
|
|
|
338.3
|
|
||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
$
|
904.4
|
|
|
$
|
765.6
|
|
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
Shares
|
|
Amount
|
|
Treasury
Stock |
|
Additional
Paid-In Capital |
|
Retained
Earnings |
|
Accumulated
Other Comprehensive Loss |
|||||||||||
Balance, December 31, 2014
|
|
17,849
|
|
|
$
|
0.2
|
|
|
$
|
(31.7
|
)
|
|
$
|
300.4
|
|
|
$
|
88.2
|
|
|
$
|
(68.4
|
)
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
51.1
|
|
|
—
|
|
|||||
Other comprehensive loss, after 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 tax benefit
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13.7
|
)
|
|||||
Dividends declared
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22.4
|
)
|
|
—
|
|
|||||
Excess tax benefits from stock-based compensation
|
|
—
|
|
|
—
|
|
|
(12.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Shares purchased (Note 10)
|
|
71
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|||||
Stock options exercised
|
|
111
|
|
|
—
|
|
|
(3.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Restricted stock vesting (Note 10)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.8
|
|
|
—
|
|
|
—
|
|
|||||
Balance, December 31, 2016
|
|
18,245
|
|
|
0.2
|
|
|
(56.5
|
)
|
|
317.0
|
|
|
169.6
|
|
|
(92.0
|
)
|
|||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
80.3
|
|
|
—
|
|
|||||
Other comprehensive income, after income tax benefit
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8.8
|
|
|||||
Reclassification of the stranded tax effects related to the Tax Act (Note 10)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10.9
|
|
|
(10.9
|
)
|
|||||
Dividends declared
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(25.1
|
)
|
|
—
|
|
|||||
Shares purchased (Note 10)
|
|
—
|
|
|
—
|
|
|
(6.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock options exercised
|
|
140
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|||||
Restricted stock vesting (Note 10)
|
|
73
|
|
|
—
|
|
|
(2.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.4
|
|
|
—
|
|
|
—
|
|
|||||
Other/Currency
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|||||
Balance, December 31, 2017
|
|
18,458
|
|
|
$
|
0.2
|
|
|
$
|
(65.8
|
)
|
|
$
|
323.9
|
|
|
$
|
235.7
|
|
|
$
|
(94.1
|
)
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|||
Net income
|
|
$
|
80.3
|
|
|
$
|
73.0
|
|
|
$
|
51.1
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization
|
|
33.3
|
|
|
32.0
|
|
|
31.5
|
|
|||
Stock-based compensation
|
|
6.4
|
|
|
5.8
|
|
|
6.5
|
|
|||
Excess tax benefit from stock-based compensation (Note 9)
|
|
—
|
|
|
—
|
|
|
(2.6
|
)
|
|||
Deferred income tax provision
|
|
(0.2
|
)
|
|
16.9
|
|
|
8.3
|
|
|||
Non-cash effects of changes in liabilities for uncertain income tax positions
|
|
(0.1
|
)
|
|
(1.5
|
)
|
|
(0.1
|
)
|
|||
Pension settlement charge, net of plan payments
|
|
0.6
|
|
|
0.8
|
|
|
—
|
|
|||
Non-cash loss on discontinued operations
|
|
—
|
|
|
—
|
|
|
12.0
|
|
|||
Loss (gain) on asset dispositions
|
|
0.2
|
|
|
0.1
|
|
|
(0.1
|
)
|
|||
Net cash (used in) provided by changes in operating working capital, net of effect of acquisitions (Note 15)
|
|
(11.8
|
)
|
|
(1.2
|
)
|
|
1.8
|
|
|||
Pension and other post-employment benefits
|
|
(8.0
|
)
|
|
(10.9
|
)
|
|
2.9
|
|
|||
Other
|
|
(0.7
|
)
|
|
0.8
|
|
|
(0.1
|
)
|
|||
NET CASH PROVIDED BY OPERATING ACTIVITIES
|
|
100.0
|
|
|
115.8
|
|
|
111.2
|
|
|||
|
|
|
|
|
|
|
||||||
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|||
Capital expenditures
|
|
(42.7
|
)
|
|
(68.5
|
)
|
|
(48.1
|
)
|
|||
Purchases of marketable securities
|
|
(0.6
|
)
|
|
(0.1
|
)
|
|
(0.2
|
)
|
|||
Asset acquisition
|
|
(8.0
|
)
|
|
—
|
|
|
—
|
|
|||
Net proceeds from sale of discontinued operations
|
|
—
|
|
|
—
|
|
|
5.4
|
|
|||
Proceeds from sale of property, plant and equipment
|
|
—
|
|
|
0.1
|
|
|
0.5
|
|
|||
Acquisitions (Note 4)
|
|
(43.1
|
)
|
|
—
|
|
|
(118.2
|
)
|
|||
Other
|
|
(0.6
|
)
|
|
0.3
|
|
|
0.5
|
|
|||
NET CASH USED IN INVESTING ACTIVITIES
|
|
(95.0
|
)
|
|
(68.2
|
)
|
|
(160.1
|
)
|
|||
|
|
|
|
|
|
|
||||||
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|||
Proceeds from issuance of long-term debt (Note 7)
|
|
323.7
|
|
|
243.0
|
|
|
151.6
|
|
|||
Debt issuance costs
|
|
(0.3
|
)
|
|
(0.1
|
)
|
|
—
|
|
|||
Repayments of long-term debt (Note 7)
|
|
(293.3
|
)
|
|
(252.9
|
)
|
|
(145.6
|
)
|
|||
Proceeds from exercise of stock options
|
|
0.4
|
|
|
0.4
|
|
|
1.2
|
|
|||
Excess tax benefit from stock-based compensation (Note 9)
|
|
—
|
|
|
—
|
|
|
2.6
|
|
|||
Cash dividends paid
|
|
(25.1
|
)
|
|
(22.4
|
)
|
|
(20.3
|
)
|
|||
Shares purchased (Note 10)
|
|
(9.3
|
)
|
|
(16.4
|
)
|
|
(8.4
|
)
|
|||
Other
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|||
NET CASH USED IN FINANCING ACTIVITIES
|
|
(3.8
|
)
|
|
(48.4
|
)
|
|
(18.8
|
)
|
|||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
|
|
0.2
|
|
|
(0.3
|
)
|
|
(0.7
|
)
|
|||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
1.4
|
|
|
(1.1
|
)
|
|
(68.4
|
)
|
|||
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
|
|
3.1
|
|
|
4.2
|
|
|
72.6
|
|
|||
CASH AND CASH EQUIVALENTS, END OF YEAR
|
|
$
|
4.5
|
|
|
$
|
3.1
|
|
|
$
|
4.2
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||
|
|
Carrying
Value |
|
Fair
Value (a) |
|
Carrying
Value |
|
Fair
Value (a) |
||||||||
2021 Senior Notes (5.25% fixed rate)
|
|
$
|
175.0
|
|
|
$
|
170.2
|
|
|
$
|
175.0
|
|
|
$
|
169.5
|
|
Global Revolving Credit Facilities (variable rates)
|
|
76.9
|
|
|
76.9
|
|
|
42.9
|
|
|
42.9
|
|
||||
Second German Loan Agreement (2.5% fixed rate)
|
|
6.4
|
|
|
6.4
|
|
|
6.8
|
|
|
6.8
|
|
||||
Total debt
|
|
$
|
258.3
|
|
|
$
|
253.5
|
|
|
$
|
224.7
|
|
|
$
|
219.2
|
|
(a)
|
Fair value for all debt instruments was estimated from Level 2 measurements.
|
•
|
Cash and cash equivalents (
$1.6 million
and
$1.5 million
at
December 31, 2017
and
2016
, respectively).
|
•
|
U.S and non-U.S. Equities (
$123.2 million
and
$112.2 million
at
December 31, 2017
and
2016
, respectively) — These proprietary collective funds have observable NAVs (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 (
$199.0 million
and
$181.1 million
at
December 31, 2017
and
2016
, respectively) — These proprietary collective funds have observable NAVs (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 Fund (
$28.2 million
and
$23.3 million
at
December 31, 2017
and
2016
, respectively) — This fund is valued using NAVs calculated by the underlying investment managers and allow for quarterly or more frequent redemptions.
|
|
|
|
|
Return on plan assets
|
|
|
||||||||||||||||||||||
|
|
Fair Value at January 1
|
|
Attributable to Assets Held at December 31
|
|
Attributable to Assets Sold
|
|
Net Purchases/ (Settlements)
|
|
Transfers into/ (out of) Level 3
|
|
Foreign currency effects
|
|
Fair
Value at December 31 |
||||||||||||||
Insurance contract
|
|
$
|
—
|
|
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
46.8
|
|
|
$
|
1.3
|
|
|
$
|
48.4
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Income from continuing operations
|
|
$
|
80.3
|
|
|
$
|
73.4
|
|
|
$
|
60.5
|
|
Amounts attributable to participating securities
|
|
(0.6
|
)
|
|
(0.7
|
)
|
|
(0.6
|
)
|
|||
Income from continuing operations available to common stockholders
|
|
79.7
|
|
|
72.7
|
|
|
59.9
|
|
|||
Income (loss) from discontinued operations, net of income taxes
|
|
—
|
|
|
(0.4
|
)
|
|
(9.4
|
)
|
|||
Amounts attributable to participating securities
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|||
Net income available to common stockholders
|
|
$
|
79.7
|
|
|
$
|
72.3
|
|
|
$
|
50.6
|
|
Weighted-average basic shares outstanding
|
|
16,805
|
|
|
16,773
|
|
|
16,754
|
|
|||
Basic earnings (loss) per share
|
|
|
|
|
|
|
|
|
|
|||
Continuing operations
|
|
$
|
4.74
|
|
|
$
|
4.33
|
|
|
$
|
3.58
|
|
Discontinued operations
|
|
—
|
|
|
(0.02
|
)
|
|
(0.56
|
)
|
|||
|
|
$
|
4.74
|
|
|
$
|
4.31
|
|
|
$
|
3.02
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Income from continuing operations
|
|
$
|
80.3
|
|
|
$
|
73.4
|
|
|
$
|
60.5
|
|
Amounts attributable to participating securities
|
|
(0.5
|
)
|
|
(0.6
|
)
|
|
(0.5
|
)
|
|||
Income from continuing operations available to common stockholders
|
|
79.8
|
|
|
72.8
|
|
|
60.0
|
|
|||
Income (loss) from discontinued operations, net of income taxes
|
|
—
|
|
|
(0.4
|
)
|
|
(9.4
|
)
|
|||
Amounts attributable to participating securities
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|||
Net income available to common stockholders
|
|
$
|
79.8
|
|
|
$
|
72.4
|
|
|
$
|
50.7
|
|
Weighted-average basic shares outstanding
|
|
16,805
|
|
|
16,773
|
|
|
16,754
|
|
|||
Add: Assumed incremental shares under stock-based compensation plans
|
|
247
|
|
|
314
|
|
|
258
|
|
|||
Weighted average diluted shares
|
|
17,052
|
|
|
17,087
|
|
|
17,012
|
|
|||
Diluted earnings (loss) per share
|
|
|
|
|
|
|
|
|
|
|||
Continuing operations
|
|
$
|
4.68
|
|
|
$
|
4.26
|
|
|
$
|
3.53
|
|
Discontinued operations
|
|
—
|
|
|
(0.02
|
)
|
|
(0.55
|
)
|
|||
|
|
$
|
4.68
|
|
|
$
|
4.24
|
|
|
$
|
2.98
|
|
|
|
December 31, 2017
|
||
Assets Acquired
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
4.9
|
|
Accounts receivable
|
|
4.7
|
|
|
Inventories
|
|
12.7
|
|
|
Deferred income taxes
|
|
0.4
|
|
|
Prepaid and other current assets
|
|
0.2
|
|
|
Property, plant and equipment
|
|
31.2
|
|
|
Non-amortizable intangible assets
|
|
1.2
|
|
|
Amortizable intangible assets
|
|
4.7
|
|
|
Acquired goodwill
|
|
10.0
|
|
|
Other assets
|
|
0.1
|
|
|
Total assets acquired
|
|
70.1
|
|
|
Liabilities Assumed
|
|
|
|
|
Accounts payable
|
|
4.1
|
|
|
Accrued expenses
|
|
5.4
|
|
|
Contingent liability (1)
|
|
2.3
|
|
|
Deferred income taxes
|
|
3.5
|
|
|
Noncurrent employee benefits
|
|
4.9
|
|
|
Long-term debt
|
|
1.8
|
|
|
Other noncurrent obligations
|
|
0.1
|
|
|
Total liabilities assumed
|
|
22.1
|
|
|
Net assets acquired
|
|
$
|
48.0
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Net sales
|
|
$
|
1,019.8
|
|
|
$
|
986.9
|
|
Operating income
|
|
108.9
|
|
|
116.7
|
|
||
Income from continuing operations
|
|
83.0
|
|
|
74.8
|
|
||
Income (loss) from discontinued operations
|
|
—
|
|
|
(0.4
|
)
|
||
Net income
|
|
83.0
|
|
|
74.4
|
|
||
Earnings (Loss) Per Common Share
|
|
|
|
|
|
|||
Basic
|
|
|
|
|
|
|||
Continuing operations
|
|
$
|
4.90
|
|
|
$
|
4.42
|
|
Discontinued Operations
|
|
—
|
|
|
(0.02
|
)
|
||
|
|
$
|
4.90
|
|
|
$
|
4.40
|
|
Diluted
|
|
|
|
|
|
|||
Continuing operations
|
|
$
|
4.84
|
|
|
$
|
4.34
|
|
Discontinued Operations
|
|
—
|
|
|
(0.02
|
)
|
||
|
|
$
|
4.84
|
|
|
$
|
4.32
|
|
|
|
Year Ended December 31,
|
||
|
|
2015
|
||
Net sales
|
|
$
|
984.0
|
|
Operating income
|
|
103.7
|
|
|
Income from continuing operations
|
|
61.7
|
|
|
Income (loss) from discontinued operations
|
|
(9.4
|
)
|
|
Net income
|
|
52.3
|
|
|
Earnings (Loss) Per Common Share
|
|
|
|
|
Basic
|
|
|
|
|
Continuing operations
|
|
$
|
3.65
|
|
Discontinued Operations
|
|
(0.56
|
)
|
|
|
|
$
|
3.09
|
|
Diluted
|
|
|
|
|
Continuing operations
|
|
$
|
3.60
|
|
Discontinued Operations
|
|
(0.55
|
)
|
|
|
|
$
|
3.05
|
|
|
|
Technical Products
|
|
Fine Paper and
Packaging |
|
Other
|
|
|
||||||||||||||||
|
|
Gross
Amount |
|
Accumulated
Impairment Losses |
|
|
|
|
Gross
Amount |
|
|
|||||||||||||
|
|
|
|
Net
|
|
Gross Amount
|
|
|
Net
|
|||||||||||||||
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
|
|
||||||
Goodwill acquired in the Coldenhove Acquisition
|
|
10.0
|
|
|
—
|
|
|
10.0
|
|
|
—
|
|
|
—
|
|
|
10.0
|
|
||||||
Foreign currency translation
|
|
10.9
|
|
|
(6.0
|
)
|
|
4.9
|
|
|
—
|
|
|
—
|
|
|
4.9
|
|
||||||
Balance at December 31, 2017
|
|
$
|
128.3
|
|
|
$
|
(49.6
|
)
|
|
$
|
78.7
|
|
|
$
|
6.2
|
|
|
$
|
0.4
|
|
|
$
|
85.3
|
|
(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, 2017
|
|
December 31, 2016
|
||||||||||||
|
|
Gross
Amount |
|
Accumulated
Amortization |
|
Gross
Amount |
|
Accumulated
Amortization |
||||||||
Amortizable intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Customer based intangibles
|
|
$
|
39.2
|
|
|
$
|
(14.7
|
)
|
|
$
|
34.4
|
|
|
$
|
(11.1
|
)
|
Trade names and trademarks
|
|
5.2
|
|
|
(2.3
|
)
|
|
6.8
|
|
|
(4.2
|
)
|
||||
Acquired technology
|
|
17.2
|
|
|
(3.9
|
)
|
|
14.6
|
|
|
(2.7
|
)
|
||||
Total amortizable intangible assets
|
|
61.6
|
|
|
(20.9
|
)
|
|
55.8
|
|
|
(18.0
|
)
|
||||
Trade names
|
|
38.0
|
|
|
—
|
|
|
36.2
|
|
|
—
|
|
||||
Total
|
|
$
|
99.6
|
|
|
$
|
(20.9
|
)
|
|
$
|
92.0
|
|
|
$
|
(18.0
|
)
|
|
|
Intangibles
|
|
Estimated Useful
Lives (Years) |
||
Intangible assets — definite lived
|
|
|
|
|
|
|
Trade names and trademarks
|
|
$
|
0.5
|
|
|
10
|
Customer based intangibles
|
|
2.9
|
|
|
15
|
|
Acquired technology
|
|
1.3
|
|
|
4
|
|
Total
|
|
4.7
|
|
|
|
|
Non-amortizable trade names
|
|
1.2
|
|
|
|
|
Total intangible assets
|
|
$
|
5.9
|
|
|
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
|
2017
|
|
2017
|
|
2016
|
|
2016
|
|
2015
|
|
2015
|
|||||||||
U.S. federal statutory income tax rate
|
|
35.0
|
%
|
|
$
|
32.1
|
|
|
35.0
|
%
|
|
$
|
36.1
|
|
|
35.0
|
%
|
|
$
|
31.5
|
|
U.S. state income taxes, net of federal income tax benefit
|
|
1.9
|
%
|
|
1.7
|
|
|
1.9
|
%
|
|
2.0
|
|
|
2.1
|
%
|
|
1.9
|
|
|||
Tax on foreign dividends (a)
|
|
(0.3
|
)%
|
|
(0.3
|
)
|
|
4.5
|
%
|
|
4.6
|
|
|
3.6
|
%
|
|
3.2
|
|
|||
Foreign tax rate differences (b)
|
|
(3.4
|
)%
|
|
(3.1
|
)
|
|
(2.7
|
)%
|
|
(2.8
|
)
|
|
(2.2
|
)%
|
|
(2.0
|
)
|
|||
Foreign financing structure (c)
|
|
(2.2
|
)%
|
|
(2.0
|
)
|
|
(1.6
|
)%
|
|
(1.7
|
)
|
|
(1.3
|
)%
|
|
(1.2
|
)
|
|||
Excess tax benefits from stock compensation
|
|
(4.9
|
)%
|
|
(4.5
|
)
|
|
(3.0
|
)%
|
|
(3.1
|
)
|
|
—
|
|
|
—
|
|
|||
Research and development and other tax credits (d)
|
|
(3.3
|
)%
|
|
(3.0
|
)
|
|
(2.8
|
)%
|
|
(2.9
|
)
|
|
(3.9
|
)%
|
|
(3.5
|
)
|
|||
Domestic production activities deduction
|
|
(0.6
|
)%
|
|
(0.5
|
)
|
|
(1.5
|
)%
|
|
(1.5
|
)
|
|
(2.2
|
)%
|
|
(2.0
|
)
|
|||
Uncertain income tax positions
|
|
0.8
|
%
|
|
0.7
|
|
|
(0.4
|
)%
|
|
(0.4
|
)
|
|
1.3
|
%
|
|
1.2
|
|
|||
Change in statutory tax rates (e)
|
|
(10.6
|
)%
|
|
(9.7
|
)
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|||
Other differences — net
|
|
—
|
%
|
|
—
|
|
|
(0.7
|
)%
|
|
(0.7
|
)
|
|
0.3
|
%
|
|
0.3
|
|
|||
Effective income tax rate
|
|
12.4
|
%
|
|
$
|
11.4
|
|
|
28.7
|
%
|
|
$
|
29.6
|
|
|
32.7
|
%
|
|
$
|
29.4
|
|
(a)
|
For 2017, the amount reflects the net benefit of the indefinite reinvestment assertion of
$4.1 million
, less the
$3.8
mandatory one-time tax on the accumulated earnings of foreign subsidiaries from the Tax Act.
|
(b)
|
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.
|
(c)
|
Represents the impact on the Company's effective tax rate of the Company's financing strategies.
|
(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.
|
(e)
|
Represents the net benefit from remeasurement of the net deferred tax liabilities, including a tax benefit of
$10.3 million
from the Tax Act, less
$0.6 million
of tax expense from a state tax rate change in Germany.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Income from continuing operations before income taxes:
|
|
|
|
|
|
|
|
|
|
|||
U.S.
|
|
$
|
53.6
|
|
|
$
|
68.3
|
|
|
$
|
62.2
|
|
Foreign
|
|
38.1
|
|
|
34.7
|
|
|
27.7
|
|
|||
Total
|
|
$
|
91.7
|
|
|
$
|
103.0
|
|
|
$
|
89.9
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Provision (benefit) for income taxes:
|
|
|
|
|
|
|
|
|
|
|||
Current:
|
|
|
|
|
|
|
|
|
|
|||
Federal
|
|
$
|
4.7
|
|
|
$
|
7.1
|
|
|
$
|
12.7
|
|
State
|
|
0.5
|
|
|
(0.5
|
)
|
|
1.3
|
|
|||
Foreign
|
|
6.4
|
|
|
5.9
|
|
|
5.1
|
|
|||
Total current tax provision
|
|
11.6
|
|
|
12.5
|
|
|
19.1
|
|
|||
Deferred:
|
|
|
|
|
|
|
|
|
|
|||
Federal
|
|
(1.8
|
)
|
|
14.8
|
|
|
7.7
|
|
|||
State
|
|
(0.1
|
)
|
|
1.8
|
|
|
2.3
|
|
|||
Foreign
|
|
1.7
|
|
|
0.5
|
|
|
0.3
|
|
|||
Total deferred tax provision
|
|
(0.2
|
)
|
|
17.1
|
|
|
10.3
|
|
|||
Total provision for income taxes
|
|
$
|
11.4
|
|
|
$
|
29.6
|
|
|
$
|
29.4
|
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Deferred income tax assets (liabilities)
|
|
|
|
|
|
|
||
Research and development tax credits
|
|
$
|
6.6
|
|
|
$
|
15.0
|
|
Net operating losses and credits
|
|
4.2
|
|
|
10.5
|
|
||
Employee benefits
|
|
1.1
|
|
|
26.0
|
|
||
Inventories
|
|
0.2
|
|
|
(0.5
|
)
|
||
Accrued liabilities
|
|
0.1
|
|
|
3.2
|
|
||
Intangibles
|
|
(0.5
|
)
|
|
(10.8
|
)
|
||
Accelerated depreciation
|
|
(1.6
|
)
|
|
(34.0
|
)
|
||
Undistributed foreign earnings
|
|
—
|
|
|
(4.4
|
)
|
||
Other
|
|
—
|
|
|
1.1
|
|
||
Net deferred income tax assets
|
|
$
|
10.1
|
|
|
$
|
6.1
|
|
|
|
|
|
|
||||
Deferred income tax assets (liabilities)
|
|
|
|
|
|
|
||
Accelerated depreciation
|
|
$
|
(45.1
|
)
|
|
$
|
(12.3
|
)
|
Intangibles
|
|
(11.4
|
)
|
|
(2.8
|
)
|
||
Interest limitation
|
|
—
|
|
|
(0.3
|
)
|
||
Other
|
|
1.3
|
|
|
—
|
|
||
Inventories
|
|
1.8
|
|
|
0.3
|
|
||
Accrued liabilities
|
|
1.9
|
|
|
—
|
|
||
Net operating losses
|
|
5.0
|
|
|
—
|
|
||
Research and development tax credits
|
|
8.6
|
|
|
—
|
|
||
Employee benefits
|
|
22.9
|
|
|
5.0
|
|
||
Net deferred income tax liabilities
|
|
$
|
(15.0
|
)
|
|
$
|
(10.1
|
)
|
|
|
For the Years Ended
December 31, |
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Balance at January 1,
|
|
$
|
10.3
|
|
|
$
|
12.9
|
|
|
$
|
7.0
|
|
Increases in prior period tax positions
|
|
0.4
|
|
|
—
|
|
|
0.5
|
|
|||
Decreases in prior period tax positions
|
|
(1.0
|
)
|
|
(2.6
|
)
|
|
—
|
|
|||
Increases in current period tax positions
|
|
0.7
|
|
|
0.6
|
|
|
5.5
|
|
|||
Decreases due to lapse of statute of limitations
|
|
(1.0
|
)
|
|
(0.3
|
)
|
|
—
|
|
|||
Increases due to change in tax rates
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|||
Increases (decreases) from foreign exchange rate changes
|
|
0.2
|
|
|
(0.3
|
)
|
|
(0.1
|
)
|
|||
Balance at December 31,
|
|
$
|
10.0
|
|
|
$
|
10.3
|
|
|
$
|
12.9
|
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
2021 Senior Notes (5.25% fixed rate) due May 2021
|
|
$
|
175.0
|
|
|
$
|
175.0
|
|
Global Revolving Credit Facilities (variable rates) due December 2019
|
|
76.9
|
|
|
42.9
|
|
||
Second German Loan Agreement (2.45% fixed rate) due in 32 equal quarterly installments ending September 2022
|
|
6.4
|
|
|
6.8
|
|
||
Deferred financing costs
|
|
(2.8
|
)
|
|
(3.8
|
)
|
||
Total Debt
|
|
255.5
|
|
|
220.9
|
|
||
Less: Debt payable within one year
|
|
1.4
|
|
|
1.2
|
|
||
Long-term debt
|
|
$
|
254.1
|
|
|
$
|
219.7
|
|
|
|
|
|
|
|
|
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%
|
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
Thereafter
|
|
Total
|
||||||||||||||
Debt payments
|
|
$
|
1.4
|
|
|
$
|
78.2
|
|
|
$
|
1.3
|
|
|
$
|
176.4
|
|
|
$
|
1.0
|
|
|
$
|
—
|
|
|
$
|
258.3
|
|
Pension Fund
|
EIN/Pension
Plan Number
|
|
Pension
Zone
Status
2016
|
|
FIP/RP Status
Pending or
Implemented
|
|
Contributions
2017
|
|
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,
|
||||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Change in Benefit Obligation:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Benefit obligation at beginning of year
|
|
$
|
370.9
|
|
|
$
|
360.1
|
|
|
$
|
40.7
|
|
|
$
|
40.5
|
|
Service cost
|
|
5.5
|
|
|
4.9
|
|
|
1.2
|
|
|
1.3
|
|
||||
Interest cost
|
|
15.0
|
|
|
15.9
|
|
|
1.4
|
|
|
1.6
|
|
||||
Currency
|
|
6.8
|
|
|
(3.1
|
)
|
|
0.6
|
|
|
0.1
|
|
||||
Actuarial (gain) loss
|
|
33.3
|
|
|
18.2
|
|
|
3.9
|
|
|
(1.2
|
)
|
||||
Benefit payments from plans
|
|
(18.1
|
)
|
|
(17.1
|
)
|
|
(3.8
|
)
|
|
(3.8
|
)
|
||||
Settlement payments
|
|
(1.5
|
)
|
|
(8.1
|
)
|
|
—
|
|
|
—
|
|
||||
Net transfer in (1)
|
|
51.7
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
||||
Other
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
2.2
|
|
||||
Benefit obligation at end of year
|
|
$
|
463.9
|
|
|
$
|
370.9
|
|
|
$
|
44.0
|
|
|
$
|
40.7
|
|
Change in Plan Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fair value of plan assets at beginning of year
|
|
$
|
318.1
|
|
|
$
|
308.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Actual gain (loss) on plan assets
|
|
38.5
|
|
|
17.6
|
|
|
—
|
|
|
—
|
|
||||
Employer contributions
|
|
14.3
|
|
|
17.8
|
|
|
—
|
|
|
—
|
|
||||
Currency
|
|
2.2
|
|
|
(1.7
|
)
|
|
—
|
|
|
—
|
|
||||
Benefit payments
|
|
(18.1
|
)
|
|
(15.8
|
)
|
|
—
|
|
|
—
|
|
||||
Settlement payments
|
|
(1.5
|
)
|
|
(8.1
|
)
|
|
—
|
|
|
—
|
|
||||
Net transfers in (1)
|
|
46.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Other
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Fair value of plan assets at end of year
|
|
$
|
400.4
|
|
|
$
|
318.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Reconciliation of Funded Status
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fair value of plan assets
|
|
$
|
400.4
|
|
|
$
|
318.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Projected benefit obligation
|
|
463.9
|
|
|
370.9
|
|
|
44.0
|
|
|
40.7
|
|
||||
Net liability recognized in statement of financial position
|
|
$
|
(63.5
|
)
|
|
$
|
(52.8
|
)
|
|
$
|
(44.0
|
)
|
|
$
|
(40.7
|
)
|
Amounts recognized in statement of financial position consist of:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Current liabilities
|
|
$
|
(3.7
|
)
|
|
$
|
(3.8
|
)
|
|
$
|
(5.3
|
)
|
|
$
|
(4.3
|
)
|
Noncurrent liabilities
|
|
(59.8
|
)
|
|
(49.0
|
)
|
|
(38.7
|
)
|
|
(36.4
|
)
|
||||
Net amount recognized
|
|
$
|
(63.5
|
)
|
|
$
|
(52.8
|
)
|
|
$
|
(44.0
|
)
|
|
$
|
(40.7
|
)
|
(1)
|
For the year ended
December 31, 2017
, the Company acquired
$51.7 million
of pension liabilities and
$46.8 million
of pension assets in conjunction with the Coldenhove Acquisition.
|
|
|
Pension
Benefits |
|
Postretirement
Benefits Other than Pensions |
||||||||||||
|
|
December 31,
|
||||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Accumulated actuarial loss
|
|
$
|
105.9
|
|
|
$
|
95.8
|
|
|
$
|
8.6
|
|
|
$
|
4.9
|
|
Prior service cost
|
|
0.8
|
|
|
0.9
|
|
|
(0.2
|
)
|
|
(0.4
|
)
|
||||
Total recognized in accumulated other comprehensive income
|
|
$
|
106.7
|
|
|
$
|
96.7
|
|
|
$
|
8.4
|
|
|
$
|
4.5
|
|
|
|
December 31,
|
||||||||||||||||||||||
|
|
Assets Exceed
ABO
|
|
ABO Exceed
Assets
|
|
Total
|
||||||||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||||||
Projected benefit obligation
|
|
$
|
—
|
|
|
$
|
291.3
|
|
|
$
|
463.9
|
|
|
$
|
79.6
|
|
|
$
|
463.9
|
|
|
$
|
370.9
|
|
Accumulated benefit obligation
|
|
—
|
|
|
281.5
|
|
|
451.4
|
|
|
79.4
|
|
|
451.4
|
|
|
360.9
|
|
||||||
Fair value of plan assets
|
|
—
|
|
|
284.2
|
|
|
400.4
|
|
|
33.9
|
|
|
400.4
|
|
|
318.1
|
|
|
|
Pension Benefits
|
|
Postretirement Benefits
Other than Pensions |
||||||||||||||||||||
|
|
Year Ended December 31,
|
||||||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||
Service cost
|
|
$
|
5.5
|
|
|
$
|
4.9
|
|
|
$
|
5.5
|
|
|
$
|
1.2
|
|
|
$
|
1.3
|
|
|
$
|
1.7
|
|
Interest cost
|
|
15.0
|
|
|
15.9
|
|
|
13.8
|
|
|
1.4
|
|
|
1.6
|
|
|
1.6
|
|
||||||
Expected return on plan assets (a)
|
|
(19.9
|
)
|
|
(18.9
|
)
|
|
(19.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Recognized net actuarial loss
|
|
5.6
|
|
|
6.6
|
|
|
6.3
|
|
|
0.3
|
|
|
0.6
|
|
|
0.3
|
|
||||||
Amortization of prior service cost (credit)
|
|
0.2
|
|
|
0.2
|
|
|
0.2
|
|
|
(0.2
|
)
|
|
(0.2
|
)
|
|
(0.2
|
)
|
||||||
Amount of settlement loss recognized
|
|
0.6
|
|
|
0.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net periodic benefit cost (credit)
|
|
7.0
|
|
|
9.5
|
|
|
6.5
|
|
|
2.7
|
|
|
3.3
|
|
|
3.4
|
|
||||||
Amounts related to discontinued operations
|
|
—
|
|
|
—
|
|
|
(14.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net periodic benefit cost
|
|
$
|
7.0
|
|
|
$
|
9.5
|
|
|
$
|
(8.4
|
)
|
|
$
|
2.7
|
|
|
$
|
3.3
|
|
|
$
|
3.4
|
|
(a)
|
The expected return on plan assets, excluding the Dutch 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. The Dutch pension plan is funded through an insurance contract, and the expected return on plan assets is calculated based on the discount rate of the insured obligations.
|
|
|
Pension Benefits
|
|
Postretirement Benefits
Other than Pensions |
||||||||||||||||||||
|
|
Year Ended December 31,
|
||||||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||
Net periodic benefit expense
|
|
$
|
7.0
|
|
|
$
|
9.5
|
|
|
$
|
(8.4
|
)
|
|
$
|
2.7
|
|
|
$
|
3.3
|
|
|
$
|
3.4
|
|
Accumulated actuarial gain (loss)
|
|
10.1
|
|
|
11.7
|
|
|
(7.1
|
)
|
|
3.7
|
|
|
(0.9
|
)
|
|
1.1
|
|
||||||
Prior service cost (credit)
|
|
(0.1
|
)
|
|
(0.3
|
)
|
|
(0.3
|
)
|
|
0.2
|
|
|
0.1
|
|
|
0.2
|
|
||||||
Total recognized in other comprehensive income
|
|
10.0
|
|
|
11.4
|
|
|
(7.4
|
)
|
|
3.9
|
|
|
(0.8
|
)
|
|
1.3
|
|
||||||
Total recognized in net periodic benefit cost and other comprehensive income
|
|
$
|
17.0
|
|
|
$
|
20.9
|
|
|
$
|
(15.8
|
)
|
|
$
|
6.6
|
|
|
$
|
2.5
|
|
|
$
|
4.7
|
|
|
|
Pension
Benefits
|
|
Postretirement
Benefits
Other than
Pensions
|
||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Discount rate
|
|
3.49
|
%
|
|
4.16
|
%
|
|
3.27
|
%
|
|
3.69
|
%
|
Rate of compensation increase
|
|
2.40
|
%
|
|
2.22
|
%
|
|
—
|
%
|
|
—
|
%
|
|
|
Pension Benefits
|
|
Postretirement
Benefits Other than
Pensions
|
||||||||||||||
|
|
Year Ended December 31,
|
||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
||||||
Discount rate
|
|
4.18
|
%
|
|
4.54
|
%
|
|
3.91
|
%
|
|
3.89
|
%
|
|
4.07
|
%
|
|
4.05
|
%
|
Expected long-term return on plan assets (a)
|
|
6.31
|
%
|
|
6.20
|
%
|
|
6.50
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Rate of compensation increase
|
|
2.49
|
%
|
|
2.18
|
%
|
|
2.92
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
(a)
|
The expected long-term return on plan assets does not include the Dutch plan assets. The Dutch pension plan is funded through an insurance contract, and the expected return on plan assets is calculated based on the discount rate of the insured obligations.
|
|
|
Percentage of Plan
Assets At December 31, |
||||
|
|
2017
|
|
2016
|
||
Asset Category (a)
|
|
|
|
|
|
|
Equity securities
|
|
35
|
%
|
|
36
|
%
|
Hedge fund
|
|
8
|
%
|
|
7
|
%
|
Debt securities
|
|
57
|
%
|
|
57
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
|
Strategic Target
|
|
Permitted Range
|
|
Asset Category
|
|
|
|
|
|
Equity securities
|
|
35
|
%
|
|
30-40%
|
Hedge fund
|
|
8
|
%
|
|
3-12%
|
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
|
||||
2018
|
|
$
|
22.7
|
|
|
$
|
5.3
|
|
2019
|
|
24.4
|
|
|
4.3
|
|
||
2020
|
|
21.7
|
|
|
4.6
|
|
||
2021
|
|
23.4
|
|
|
4.9
|
|
||
2022
|
|
23.3
|
|
|
4.8
|
|
||
Years 2023-2027
|
|
128.1
|
|
|
18.1
|
|
|
|
One Percentage-
Point
|
||||||
|
|
Increase
|
|
Decrease
|
||||
Effect on total of service and interest cost components
|
|
$
|
—
|
|
|
$
|
—
|
|
Effect on post-retirement benefit other than pension obligation
|
|
0.2
|
|
|
(0.3
|
)
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Stock-based compensation expense
|
|
$
|
6.4
|
|
|
$
|
5.8
|
|
|
$
|
6.5
|
|
Income tax benefit
|
|
(2.5
|
)
|
|
(2.2
|
)
|
|
(2.5
|
)
|
|||
Stock-based compensation, net of income tax benefit
|
|
$
|
3.9
|
|
|
$
|
3.6
|
|
|
$
|
4.0
|
|
|
|
Stock Options
|
|
Performance
Shares and RSUs |
||||
Unrecognized compensation cost — December 31, 2016
|
|
$
|
0.6
|
|
|
$
|
1.7
|
|
Grant date fair value current year grants
|
|
1.9
|
|
|
5.1
|
|
||
Compensation expense recognized
|
|
(1.9
|
)
|
|
(4.5
|
)
|
||
Unrecognized compensation cost — December 31, 2017
|
|
$
|
0.6
|
|
|
$
|
2.3
|
|
Expected amortization period (in years)
|
|
1.8
|
|
|
1.7
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Nonqualified stock options granted
|
|
144,089
|
|
|
113,935
|
|
|
87,930
|
|
|||
Per share weighted-average exercise price
|
|
$
|
82.11
|
|
|
$
|
58.03
|
|
|
$
|
59.72
|
|
Per share weighted-average grant date fair value
|
|
$
|
13.54
|
|
|
$
|
13.51
|
|
|
$
|
16.47
|
|
|
|
2017
|
|
2016
|
|
2015
|
|||
Expected term in years
|
|
5.8
|
|
|
5.8
|
|
|
5.8
|
|
Risk free interest rate
|
|
2.1
|
%
|
|
1.8
|
%
|
|
1.4
|
%
|
Volatility
|
|
22.9
|
%
|
|
32.1
|
%
|
|
34.4
|
%
|
Dividend yield
|
|
3.0
|
%
|
|
3.0
|
%
|
|
2.0
|
%
|
|
|
Number of
Stock Options |
|
Weighted-Average
Exercise Price |
|||
Options outstanding — December 31, 2016
|
|
530,462
|
|
|
$
|
38.35
|
|
Add: Options granted
|
|
144,089
|
|
|
$
|
82.11
|
|
Less: Options exercised
|
|
207,973
|
|
|
$
|
29.88
|
|
Less: Options forfeited/cancelled
|
|
1,620
|
|
|
$
|
65.60
|
|
Options outstanding — December 31, 2017
|
|
464,958
|
|
|
$
|
55.60
|
|
|
|
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 — $19.25
|
|
52,727
|
|
|
1.9
|
|
$
|
13.06
|
|
|
$
|
4.1
|
|
|
52,727
|
|
|
$
|
13.06
|
|
|
$
|
4.1
|
|
$21.13 — $31.23
|
|
58,490
|
|
|
3.9
|
|
$
|
27.56
|
|
|
3.7
|
|
|
58,490
|
|
|
$
|
27.56
|
|
|
3.7
|
|
||
$42.82 — $51.99
|
|
37,526
|
|
|
6.0
|
|
$
|
43.49
|
|
|
1.8
|
|
|
37,526
|
|
|
$
|
43.49
|
|
|
1.8
|
|
||
$55.49 — $60.56
|
|
172,626
|
|
|
7.5
|
|
$
|
58.68
|
|
|
5.5
|
|
|
76,141
|
|
|
$
|
58.93
|
|
|
2.4
|
|
||
>$60.56
|
|
143,589
|
|
|
8.5
|
|
$
|
82.11
|
|
|
1.2
|
|
|
17,060
|
|
|
$
|
82.15
|
|
|
0.1
|
|
||
|
|
464,958
|
|
|
6.6
|
|
$
|
55.60
|
|
|
$
|
16.3
|
|
|
241,944
|
|
|
$
|
40.59
|
|
|
$
|
12.1
|
|
(a)
|
Represents the total pre-tax intrinsic value as of
December 31, 2017
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
$90.65
on
December 31, 2017
.
|
|
|
Number of
Stock Options |
|
Weighted-Average
Grant Date Fair Value |
|||
Outstanding — December 31, 2016
|
|
194,126
|
|
|
$
|
15.15
|
|
Add: Options granted
|
|
144,089
|
|
|
$
|
13.54
|
|
Less: Options vested
|
|
115,201
|
|
|
$
|
14.06
|
|
Outstanding — December 31, 2017
|
|
223,014
|
|
|
$
|
13.87
|
|
|
|
RSUs
|
|
Weighted-Average
Grant Date Fair Value |
|
PSUs
|
|
Weighted-Average
Grant Date Fair Value |
||||||
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
|
|
80,719
|
|
|
$
|
54.91
|
|
|
53,506
|
|
|
$
|
73.79
|
|
Shares granted (a)
|
|
10,318
|
|
|
$
|
76.84
|
|
|
41,883
|
|
|
$
|
81.85
|
|
Shares vested
|
|
(72,451
|
)
|
|
$
|
55.26
|
|
|
—
|
|
|
$
|
—
|
|
Performance Shares vested
|
|
73,838
|
|
|
$
|
52.11
|
|
|
(53,506
|
)
|
|
$
|
73.79
|
|
Shares expired or cancelled
|
|
(3,625
|
)
|
|
$
|
50.48
|
|
|
(506
|
)
|
|
$
|
81.85
|
|
Outstanding — December 31, 2017 (b)
|
|
88,799
|
|
|
$
|
53.33
|
|
|
41,377
|
|
|
$
|
81.85
|
|
(a)
|
For the years ended
December 31, 2017
,
2016
and
2015
, includes
226
RSUs,
312
RSUs and
495
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, 2017
was
$8.0 million
.
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||
|
|
Shares
|
|
$
|
|
Shares
|
|
$
|
|
Shares
|
|
$
|
|||||||||
2017 Stock Purchase Plan
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||
2016 Stock Purchase Plan
|
|
85,354
|
|
|
$
|
6.8
|
|
|
91,542
|
|
|
$
|
7.4
|
|
|
|
|
|
|
|
|
2015 Stock Purchase Plan
|
|
|
|
|
|
|
|
93,600
|
|
|
$
|
5.2
|
|
|
42,100
|
|
|
$
|
2.4
|
|
|
2014 Stock Purchase Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,900
|
|
|
$
|
3.5
|
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Unrealized foreign currency translation losses, net of income tax benefit of $0.4 and $0.4, respectively
|
|
$
|
(7.5
|
)
|
|
$
|
(27.5
|
)
|
Unrealized loss on "available-for-sale" securities, net of income tax benefit of $0.1 million
|
|
(0.3
|
)
|
|
—
|
|
||
Net loss from pension and other postretirement benefit liabilities, net of income tax benefits of $28.8 million and $36.8 million, respectively (a)
|
|
(86.3
|
)
|
|
(64.5
|
)
|
||
Accumulated other comprehensive loss
|
|
$
|
(94.1
|
)
|
|
$
|
(92.0
|
)
|
|
|
Year Ended December 31,
|
||||||||||||||||||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||||||||||||||||||||
|
|
Pretax
Amount |
|
Tax
Effect |
|
Net
Amount |
|
Pretax
Amount |
|
Tax
Effect |
|
Net
Amount |
|
Pretax
Amount |
|
Tax
Effect |
|
Net
Amount |
||||||||||||||||||
Unrealized foreign currency translation gains (losses)
|
|
$
|
20.0
|
|
|
$
|
—
|
|
|
$
|
20.0
|
|
|
$
|
(7.1
|
)
|
|
$
|
0.4
|
|
|
$
|
(6.7
|
)
|
|
$
|
(15.0
|
)
|
|
$
|
—
|
|
|
$
|
(15.0
|
)
|
Unrealized loss on "available-for-sale" securities
|
|
(0.4
|
)
|
|
0.1
|
|
|
(0.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Adjustment to pension and other benefit liabilities
|
|
(13.8
|
)
|
|
2.9
|
|
|
(10.9
|
)
|
|
(10.0
|
)
|
|
3.0
|
|
|
(7.0
|
)
|
|
6.3
|
|
|
(1.2
|
)
|
|
5.1
|
|
|||||||||
Other comprehensive income (loss)
|
|
$
|
5.8
|
|
|
$
|
3.0
|
|
|
$
|
8.8
|
|
|
$
|
(17.1
|
)
|
|
$
|
3.4
|
|
|
$
|
(13.7
|
)
|
|
$
|
(8.7
|
)
|
|
$
|
(1.2
|
)
|
|
$
|
(9.9
|
)
|
2018
|
|
$
|
4.0
|
|
2019
|
|
2.6
|
|
|
2020
|
|
2.1
|
|
|
2021
|
|
1.8
|
|
|
2022
|
|
1.6
|
|
|
Thereafter
|
|
3.7
|
|
|
Future minimum lease obligations
|
|
$
|
15.8
|
|
Contract Expiration Date
|
|
Location
|
|
Union
|
|
Number of Employees
|
January 2018 (c)
|
|
Whiting, WI (b)
|
|
USW
|
|
201
|
June 2018
|
|
Neenah, WI (b)
|
|
USW
|
|
264
|
July 2018
|
|
Munising, MI (b)
|
|
USW
|
|
203
|
February 2019
|
|
Neenah Germany
|
|
IG BCE
|
|
(a)
|
May 2019
|
|
Appleton, WI (b)
|
|
USW
|
|
103
|
August 2021
|
|
Brattleboro, VT
|
|
USW
|
|
94
|
November 2021
|
|
Lowville, NY
|
|
USW
|
|
108
|
(c)
|
The Company is currently in negotiations with the USW and a new contract is expected to be signed in 2018. Until a new contract is signed, the terms of the previous contract still apply.
|
|
|
For the Year ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Net sales
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
43.2
|
|
Cost of products sold
|
|
—
|
|
|
—
|
|
|
39.7
|
|
|||
Gross Profit
|
|
—
|
|
|
—
|
|
|
3.5
|
|
|||
Selling, general and administrative expenses
|
|
—
|
|
|
—
|
|
|
3.5
|
|
|||
Restructuring costs
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|||
Other income — net
|
|
—
|
|
|
—
|
|
|
(0.3
|
)
|
|||
Income (Loss) From Discontinued Operations Before Income Taxes
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|||
Loss on sale (a)
|
|
—
|
|
|
(0.6
|
)
|
|
(13.6
|
)
|
|||
Income (loss) before income taxes
|
|
—
|
|
|
(0.6
|
)
|
|
(13.4
|
)
|
|||
Income tax provision (benefit) (a)
|
|
—
|
|
|
(0.2
|
)
|
|
(4.0
|
)
|
|||
Income (loss) from discontinued operations
|
|
$
|
—
|
|
|
$
|
(0.4
|
)
|
|
$
|
(9.4
|
)
|
|
|
For the Year ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Depreciation and amortization
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2.7
|
|
Capital expenditures
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.6
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Net sales
|
|
|
|
|
|
|
|
|
|
|||
Technical Products
|
|
$
|
502.1
|
|
|
$
|
466.4
|
|
|
$
|
429.2
|
|
Fine Paper and Packaging
|
|
455.3
|
|
|
452.1
|
|
|
442.7
|
|
|||
Other
|
|
22.5
|
|
|
23.0
|
|
|
15.8
|
|
|||
Consolidated
|
|
$
|
979.9
|
|
|
$
|
941.5
|
|
|
$
|
887.7
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Operating income (loss)
|
|
|
|
|
|
|
|
|
|
|||
Technical Products (a)
|
|
$
|
55.3
|
|
|
$
|
65.6
|
|
|
$
|
54.1
|
|
Fine Paper and Packaging (b)
|
|
69.5
|
|
|
70.7
|
|
|
67.3
|
|
|||
Other (c)
|
|
(0.4
|
)
|
|
(1.1
|
)
|
|
(2.0
|
)
|
|||
Unallocated corporate costs (d)
|
|
(20.1
|
)
|
|
(21.1
|
)
|
|
(18.0
|
)
|
|||
Consolidated
|
|
$
|
104.3
|
|
|
$
|
114.1
|
|
|
$
|
101.4
|
|
(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
.
|
(b)
|
Operating income for the year ended December 31, 2017 included a representations and warranties insurance settlement of
$2.9 million
. 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, 2017 included a representations and warranties insurance settlement of
$0.3 million
. Operating income for the years 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, 2017 included acquisition and integration costs of
$1.3 million
and
$0.6 million
from pension plan and SERP settlement costs. 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.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|||
Technical Products
|
|
$
|
19.4
|
|
|
$
|
18.1
|
|
|
$
|
16.5
|
|
Fine Paper and Packaging
|
|
11.0
|
|
|
11.1
|
|
|
9.8
|
|
|||
Other
|
|
1.2
|
|
|
1.3
|
|
|
0.6
|
|
|||
Corporate
|
|
1.7
|
|
|
1.5
|
|
|
1.9
|
|
|||
Total Continuing Operations
|
|
33.3
|
|
|
32.0
|
|
|
28.8
|
|
|||
Discontinued operations
|
|
—
|
|
|
—
|
|
|
2.7
|
|
|||
Consolidated
|
|
$
|
33.3
|
|
|
$
|
32.0
|
|
|
$
|
31.5
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Capital expenditures
|
|
|
|
|
|
|
|
|
|
|||
Technical Products
|
|
$
|
28.6
|
|
|
$
|
57.9
|
|
|
$
|
36.0
|
|
Fine Paper and Packaging
|
|
12.5
|
|
|
7.6
|
|
|
10.3
|
|
|||
Other
|
|
1.1
|
|
|
0.3
|
|
|
0.4
|
|
|||
Corporate
|
|
0.5
|
|
|
2.7
|
|
|
0.8
|
|
|||
Total Continuing Operations
|
|
42.7
|
|
|
68.5
|
|
|
47.5
|
|
|||
Discontinued operations
|
|
—
|
|
|
—
|
|
|
0.6
|
|
|||
Consolidated
|
|
$
|
42.7
|
|
|
$
|
68.5
|
|
|
$
|
48.1
|
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Total Assets (a)
|
|
|
|
|
|
|
||
Technical Products
|
|
$
|
613.0
|
|
|
$
|
487.6
|
|
Fine Paper and Packaging
|
|
261.6
|
|
|
248.9
|
|
||
Corporate and other (b)
|
|
29.8
|
|
|
29.1
|
|
||
Total
|
|
$
|
904.4
|
|
|
$
|
765.6
|
|
(a)
|
Segment identifiable assets are those that are directly used in the segments operations.
|
(b)
|
Corporate assets are primarily cash and income taxes.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Net sales
|
|
|
|
|
|
|
|
|
|
|||
United States
|
|
$
|
748.9
|
|
|
$
|
727.6
|
|
|
$
|
687.3
|
|
Europe
|
|
231.0
|
|
|
213.9
|
|
|
200.4
|
|
|||
Consolidated
|
|
$
|
979.9
|
|
|
$
|
941.5
|
|
|
$
|
887.7
|
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Long-Lived Assets
|
|
|
|
|
|
|
||
United States
|
|
$
|
393.1
|
|
|
$
|
377.4
|
|
Europe
|
|
226.1
|
|
|
151.9
|
|
||
Total
|
|
$
|
619.2
|
|
|
$
|
529.3
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Advertising expense
|
|
$
|
6.0
|
|
|
$
|
6.2
|
|
|
$
|
6.8
|
|
Research and development expense
|
|
8.9
|
|
|
9.4
|
|
|
6.8
|
|
(a)
|
Advertising expense and research and development expense are recorded in selling, general and administrative expenses on the consolidated statements of operations.
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
From customers
|
|
$
|
117.0
|
|
|
$
|
98.0
|
|
Less allowance for doubtful accounts and sales discounts
|
|
(1.3
|
)
|
|
(1.5
|
)
|
||
Total
|
|
$
|
115.7
|
|
|
$
|
96.5
|
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Inventories by Major Class:
|
|
|
|
|
|
|
||
Raw materials
|
|
$
|
36.2
|
|
|
$
|
31.6
|
|
Work in progress
|
|
35.0
|
|
|
26.8
|
|
||
Finished goods
|
|
79.2
|
|
|
63.0
|
|
||
Supplies and other
|
|
3.6
|
|
|
3.1
|
|
||
|
|
154.0
|
|
|
124.5
|
|
||
Excess of FIFO over LIFO cost
|
|
(10.5
|
)
|
|
(8.2
|
)
|
||
Total
|
|
$
|
143.5
|
|
|
$
|
116.3
|
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Prepaid and other current assets
|
|
$
|
11.3
|
|
|
$
|
10.5
|
|
Spare parts
|
|
6.9
|
|
|
5.8
|
|
||
Receivable for income taxes
|
|
3.3
|
|
|
4.1
|
|
||
Total
|
|
$
|
21.5
|
|
|
$
|
20.4
|
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Land and land improvements
|
|
$
|
20.2
|
|
|
$
|
18.3
|
|
Buildings
|
|
157.7
|
|
|
126.1
|
|
||
Machinery and equipment
|
|
650.8
|
|
|
597.5
|
|
||
Construction in progress
|
|
21.8
|
|
|
13.7
|
|
||
|
|
850.5
|
|
|
755.6
|
|
||
Less accumulated depreciation
|
|
425.3
|
|
|
391.0
|
|
||
Net Property, Plant and Equipment
|
|
$
|
425.2
|
|
|
$
|
364.6
|
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Accrued salaries and employee benefits
|
|
$
|
29.6
|
|
|
$
|
26.3
|
|
Amounts due to customers
|
|
7.2
|
|
|
7.3
|
|
||
Accrued interest
|
|
1.3
|
|
|
1.3
|
|
||
Accrued income taxes
|
|
4.2
|
|
|
2.0
|
|
||
Other
|
|
15.2
|
|
|
14.3
|
|
||
Total
|
|
$
|
57.5
|
|
|
$
|
51.2
|
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Pension benefits
|
|
$
|
59.8
|
|
|
$
|
49.0
|
|
Post-employment benefits other than pensions (a)
|
|
40.5
|
|
|
37.7
|
|
||
Total
|
|
$
|
100.3
|
|
|
$
|
86.7
|
|
(a)
|
Includes
$1.8 million
of SRCP benefits as of December 31, 2017 and
$1.3 million
of SRCP benefits as of December 31, 2016.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Cash paid during the year for interest, net of interest expense capitalized
|
|
$
|
11.3
|
|
|
$
|
10.0
|
|
|
$
|
10.6
|
|
Cash paid during the year for income taxes, net of refunds
|
|
7.6
|
|
|
15.0
|
|
|
16.2
|
|
|||
Non-cash investing activities:
|
|
|
|
|
|
|
|
|
|
|||
Liability for equipment acquired
|
|
5.4
|
|
|
11.1
|
|
|
6.6
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Accounts receivable
|
|
$
|
(10.2
|
)
|
|
$
|
1.5
|
|
|
$
|
(5.2
|
)
|
Inventories
|
|
(11.7
|
)
|
|
4.3
|
|
|
7.7
|
|
|||
Income taxes receivable/payable
|
|
4.5
|
|
|
(1.5
|
)
|
|
1.0
|
|
|||
Prepaid and other current assets
|
|
(0.4
|
)
|
|
—
|
|
|
(4.8
|
)
|
|||
Accounts payable
|
|
10.6
|
|
|
(2.7
|
)
|
|
(0.5
|
)
|
|||
Accrued expenses
|
|
(4.2
|
)
|
|
(2.8
|
)
|
|
3.2
|
|
|||
Other
|
|
(0.4
|
)
|
|
—
|
|
|
0.4
|
|
|||
Total
|
|
$
|
(11.8
|
)
|
|
$
|
(1.2
|
)
|
|
$
|
1.8
|
|
|
|
2017 Quarters
|
||||||||||||||||||
|
|
First
|
|
Second (a)
|
|
Third (b)
|
|
Fourth (c)
|
|
Year
|
||||||||||
Net Sales
|
|
$
|
242.1
|
|
|
$
|
248.7
|
|
|
$
|
245.1
|
|
|
$
|
244.0
|
|
|
$
|
979.9
|
|
Gross Profit
|
|
52.0
|
|
|
53.6
|
|
|
48.0
|
|
|
45.1
|
|
|
198.7
|
|
|||||
Operating Income
|
|
27.0
|
|
|
29.2
|
|
|
29.0
|
|
|
19.1
|
|
|
104.3
|
|
|||||
Income From Continuing Operations
|
|
17.6
|
|
|
25.0
|
|
|
18.8
|
|
|
18.9
|
|
|
80.3
|
|
|||||
Earnings Per Common Share From Continuing Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic
|
|
$
|
1.04
|
|
|
$
|
1.47
|
|
|
$
|
1.11
|
|
|
$
|
1.11
|
|
|
$
|
4.74
|
|
Diluted
|
|
$
|
1.03
|
|
|
$
|
1.46
|
|
|
$
|
1.10
|
|
|
$
|
1.10
|
|
|
$
|
4.68
|
|
(a)
|
Income from continuing operations includes a prior year tax adjustment of
$4.1 million
related to the Company's assertion of indefinite reinvestment of undistributed earnings of foreign subsidiaries.
|
(b)
|
Includes proceeds of a representations and warranties insurance settlement related to the FiberMark acquisition of $
3.2 million
, less acquisition costs of
$0.7 million
and SERP settlement charges of
$0.2 million
.
|
(c)
|
Includes acquisition/integration costs of
$0.6 million
and pension/SERP settlement charges of
$0.4 million
. Also, income from continuing operations includes net tax benefits of
$5.9 million
, primarily from the Tax Act.
|
|
|
2016 Quarters
|
||||||||||||||||||
|
|
First
|
|
Second
|
|
Third
|
|
Fourth (e)
|
|
Year (d)(e)
|
||||||||||
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
|
|
(d)
|
Includes integration/restructuring costs of
$7.0 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, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Allowances deducted from assets to which they apply
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Allowance for doubtful accounts
|
|
$
|
1.0
|
|
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
(0.4
|
)
|
|
$
|
0.8
|
|
Allowance for sales discounts
|
|
0.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.5
|
|
|||||
Valuation allowance — deferred income taxes
|
|
3.5
|
|
|
—
|
|
|
—
|
|
|
(3.1
|
)
|
|
0.4
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
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
|
|
|
NEENAH PAPER, INC.
|
|
|
|
By:
/s/ Steven S. Heinrichs
Steven S. Heinrichs
Senior Vice President, General Counsel and Secretary
|
|
|
|
/s/ Sean T. Erwin
|
|
|
By: Sean T. Erwin
|
|
|
Its: Chairman of the Board, Chief Executive
Officer and President
|
By:
|
/s/ Jennifer Heard
|
By:
|
/s/ Kennedy A. Capin
|
By:
|
/s/ Kennedy A. Capin
|
By:
|
/s/ Dennis S. Losin
|
By:
|
/s/ Dennis S. Losin
|
By:
|
/s/ Marie Duflos
|
By:
|
/s/ Michael Ravelo
|
By:
|
/s/ Jason Hoefler
|
By:
|
/s/ Jason Hoefler
|
By:
|
/s/ Chris Lam
|
By:
|
/s/ Chris Lam
|
|
|
Year ended December 31,
|
|||||||||||||
|
|
2016
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|||||
Income from continuing operations before taxes
|
|
91.7
|
|
|
103.0
|
|
|
89.9
|
|
|
75.5
|
|
|
71.6
|
|
Plus fixed charges
|
|
15.0
|
|
|
13.3
|
|
|
13.5
|
|
|
12.9
|
|
|
12.6
|
|
Numerator
|
|
106.7
|
|
|
116.3
|
|
|
103.4
|
|
|
88.4
|
|
|
84.2
|
|
Interest expense (including amortization of debt issuance costs)
|
|
12.7
|
|
|
11.2
|
|
|
11.7
|
|
|
11.4
|
|
|
11.2
|
|
Interest portion of rent expense (a)
|
|
2.3
|
|
|
2.1
|
|
|
1.8
|
|
|
1.5
|
|
|
1.4
|
|
Fixed charges
|
|
15.0
|
|
|
13.3
|
|
|
13.5
|
|
|
12.9
|
|
|
12.6
|
|
Ratio of earnings to fixed charges
|
|
7.1x
|
|
|
8.7x
|
|
|
7.7x
|
|
|
6.9x
|
|
|
6.7x
|
|
|
/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, 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 23, 2018
|
1.
|
I have reviewed this Annual Report on Form 10-K of Neenah, 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 23, 2018
|
(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 23, 2018
|
(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 23, 2018
|