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Delaware
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20-1308307
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock
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NP
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New York Stock Exchange
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|
Large accelerated filer
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☒
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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(Do not check if a smaller reporting company)
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Emerging growth company
|
☐
|
|
|
|
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|
|
|
|
|
|
|
|
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Three Months Ended June 30,
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Six Months Ended June 30,
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||||||||||||
'[
|
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2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net sales
|
|
$
|
253.4
|
|
|
$
|
271.3
|
|
|
$
|
493.1
|
|
|
$
|
537.8
|
|
Cost of products sold
|
|
202.7
|
|
|
216.2
|
|
|
398.7
|
|
|
430.3
|
|
||||
Gross profit
|
|
50.7
|
|
|
55.1
|
|
|
94.4
|
|
|
107.5
|
|
||||
Selling, general and administrative expenses
|
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26.9
|
|
|
25.2
|
|
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52.2
|
|
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52.0
|
|
||||
Impairment loss (Note 12)
|
|
—
|
|
|
32.0
|
|
|
—
|
|
|
32.0
|
|
||||
Restructuring and other non-routine costs (Note 13)
|
|
3.5
|
|
|
0.3
|
|
|
3.5
|
|
|
0.3
|
|
||||
Pension settlement and other benefit costs (Note 7)
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—
|
|
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1.0
|
|
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—
|
|
|
1.8
|
|
||||
Other expense - net
|
|
0.5
|
|
|
0.9
|
|
|
1.5
|
|
|
1.6
|
|
||||
Operating income (loss)
|
|
19.8
|
|
|
(4.3
|
)
|
|
37.2
|
|
|
19.8
|
|
||||
Interest expense - net
|
|
3.0
|
|
|
3.3
|
|
|
6.2
|
|
|
6.6
|
|
||||
Income (loss) from continuing operations before income taxes
|
|
16.8
|
|
|
(7.6
|
)
|
|
31.0
|
|
|
13.2
|
|
||||
Provision (benefit) for income taxes
|
|
3.2
|
|
|
(2.8
|
)
|
|
5.6
|
|
|
1.8
|
|
||||
Net income (loss)
|
|
$
|
13.6
|
|
|
$
|
(4.8
|
)
|
|
$
|
25.4
|
|
|
$
|
11.4
|
|
|
|
|
|
|
|
|
|
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||||||||
Earnings (Loss) Per Common Share
|
|
|
|
|
|
|
|
|
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|
||||||
Basic
|
|
$
|
0.80
|
|
|
$
|
(0.29
|
)
|
|
$
|
1.50
|
|
|
$
|
0.67
|
|
Diluted
|
|
$
|
0.80
|
|
|
$
|
(0.29
|
)
|
|
$
|
1.49
|
|
|
$
|
0.66
|
|
|
|
|
|
|
|
|
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|
||||||||
Weighted Average Common Shares Outstanding (in thousands)
|
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
|
16,863
|
|
|
16,827
|
|
|
16,861
|
|
|
16,842
|
|
||||
Diluted
|
|
16,910
|
|
|
16,827
|
|
|
16,914
|
|
|
16,989
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Cash Dividends Declared Per Share of Common Stock
|
|
$
|
0.45
|
|
|
$
|
0.41
|
|
|
$
|
0.90
|
|
|
$
|
0.82
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income (loss)
|
|
$
|
13.6
|
|
|
$
|
(4.8
|
)
|
|
$
|
25.4
|
|
|
$
|
11.4
|
|
Reclassification of amounts recognized in the condensed consolidated statements of operations:
|
|
|
|
|
|
|
|
|
||||||||
Amortization of adjustments to pension and other postretirement benefit liabilities (Note 7)
|
|
1.4
|
|
|
1.4
|
|
|
3.1
|
|
|
3.0
|
|
||||
SERP settlement loss (Note 7)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.8
|
|
||||
Amounts recognized in the condensed consolidated statements of operations
|
|
1.4
|
|
|
1.4
|
|
|
3.1
|
|
|
3.8
|
|
||||
Unrealized foreign currency translation gain (loss)
|
|
1.5
|
|
|
(9.7
|
)
|
|
(1.7
|
)
|
|
(4.2
|
)
|
||||
Net gain from pension and other postretirement benefit plans
|
|
4.9
|
|
|
—
|
|
|
4.9
|
|
|
0.4
|
|
||||
Income (loss) from other comprehensive income items
|
|
7.8
|
|
|
(8.3
|
)
|
|
6.3
|
|
|
—
|
|
||||
Provision for income taxes
|
|
1.6
|
|
|
0.1
|
|
|
1.8
|
|
|
1.1
|
|
||||
Other comprehensive income (loss)
|
|
6.2
|
|
|
(8.4
|
)
|
|
4.5
|
|
|
(1.1
|
)
|
||||
Comprehensive income (loss)
|
|
$
|
19.8
|
|
|
$
|
(13.2
|
)
|
|
$
|
29.9
|
|
|
$
|
10.3
|
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
ASSETS
|
|
|
|
|
|
|
||
Current Assets
|
|
|
|
|
|
|
||
Cash and cash equivalents
|
|
$
|
8.1
|
|
|
$
|
9.9
|
|
Accounts receivable (less allowances of $1.1 million and $1.3 million)
|
|
123.6
|
|
|
114.8
|
|
||
Inventories
|
|
127.7
|
|
|
131.6
|
|
||
Prepaid and other current assets
|
|
15.8
|
|
|
21.6
|
|
||
Total Current Assets
|
|
275.2
|
|
|
277.9
|
|
||
Property, Plant and Equipment
|
|
|
|
|
|
|
||
Property, plant and equipment, at cost
|
|
843.0
|
|
|
840.2
|
|
||
Less accumulated depreciation
|
|
457.1
|
|
|
444.0
|
|
||
Property, Plant and Equipment—net
|
|
385.9
|
|
|
396.2
|
|
||
Lease Right-of-Use Assets (Note 11)
|
|
15.2
|
|
|
—
|
|
||
Deferred Income Taxes
|
|
12.6
|
|
|
16.4
|
|
||
Goodwill
|
|
83.7
|
|
|
84.0
|
|
||
Intangible Assets—net
|
|
68.7
|
|
|
70.7
|
|
||
Other Noncurrent Assets
|
|
16.4
|
|
|
16.0
|
|
||
TOTAL ASSETS
|
|
$
|
857.7
|
|
|
$
|
861.2
|
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
||
Current Liabilities
|
|
|
|
|
|
|
||
Debt payable within one year
|
|
$
|
2.7
|
|
|
$
|
2.3
|
|
Lease liabilities payable within one year (Note 11)
|
|
2.8
|
|
|
—
|
|
||
Accounts payable
|
|
59.4
|
|
|
63.3
|
|
||
Accrued expenses
|
|
50.5
|
|
|
55.2
|
|
||
Total Current Liabilities
|
|
115.4
|
|
|
120.8
|
|
||
Long-term Debt
|
|
221.0
|
|
|
236.8
|
|
||
Deferred Income Taxes
|
|
14.2
|
|
|
14.4
|
|
||
Noncurrent Employee Benefits
|
|
83.4
|
|
|
92.9
|
|
||
Noncurrent Lease Liabilities (Note 11)
|
|
13.2
|
|
|
—
|
|
||
Other Noncurrent Obligations
|
|
4.0
|
|
|
6.1
|
|
||
TOTAL LIABILITIES
|
|
451.2
|
|
|
471.0
|
|
||
Contingencies and Legal Matters (Note 10)
|
|
—
|
|
|
—
|
|
||
TOTAL STOCKHOLDERS’ EQUITY
|
|
406.5
|
|
|
390.2
|
|
||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
$
|
857.7
|
|
|
$
|
861.2
|
|
|
|
Three Months Ended June 30, 2019 and March 31, 2019
|
|
|
|||||||||||||||||||||||
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
Shares
|
|
Amount
|
|
Treasury
Stock |
|
Additional
Paid-In Capital |
|
Retained
Earnings |
|
Accumulated
Other Comprehensive Loss |
|
Total
|
|||||||||||||
Balance, December 31, 2018
|
|
18,597
|
|
|
$
|
0.2
|
|
|
$
|
(76.6
|
)
|
|
$
|
328.5
|
|
|
$
|
243.2
|
|
|
$
|
(105.1
|
)
|
|
$
|
390.2
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11.8
|
|
|
—
|
|
|
11.8
|
|
||||||
Other comprehensive loss, including income taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.7
|
)
|
|
(1.7
|
)
|
||||||
Dividends declared
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7.6
|
)
|
|
—
|
|
|
(7.6
|
)
|
||||||
Shares purchased (Note 9)
|
|
—
|
|
|
—
|
|
|
(0.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.3
|
)
|
||||||
Stock options exercised
|
|
9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Restricted stock vesting (Note 9)
|
|
3
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.9
|
|
|
—
|
|
|
—
|
|
|
1.9
|
|
||||||
Other/currency
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Balance, March 31, 2019
|
|
18,609
|
|
|
0.2
|
|
|
(77.0
|
)
|
|
330.4
|
|
|
247.4
|
|
|
(106.8
|
)
|
|
394.2
|
|
||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13.6
|
|
|
—
|
|
|
13.6
|
|
||||||
Other comprehensive income, net of income taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.2
|
|
|
6.2
|
|
||||||
Dividends declared
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7.6
|
)
|
|
—
|
|
|
(7.6
|
)
|
||||||
Shares purchased (Note 9)
|
|
—
|
|
|
—
|
|
|
(1.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.6
|
)
|
||||||
Stock options exercised
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Restricted stock vesting (Note 9)
|
|
21
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.7
|
|
|
—
|
|
|
—
|
|
|
1.7
|
|
||||||
Other/currency
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Balance, June 30, 2019
|
|
18,631
|
|
|
$
|
0.2
|
|
|
$
|
(78.6
|
)
|
|
$
|
332.1
|
|
|
$
|
253.4
|
|
|
$
|
(100.6
|
)
|
|
$
|
406.5
|
|
|
|
Three Months Ended June 30, 2018 and March 31, 2018
|
|
|
|||||||||||||||||||||||
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
Shares
|
|
Amount
|
|
Treasury Stock
|
|
Additional Paid-In Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Total
|
|||||||||||||
Balance, December 31, 2017
|
|
18,458
|
|
|
$
|
0.2
|
|
|
$
|
(65.8
|
)
|
|
$
|
323.9
|
|
|
$
|
235.7
|
|
|
$
|
(94.1
|
)
|
|
$
|
399.9
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16.2
|
|
|
—
|
|
|
16.2
|
|
||||||
Other comprehensive income, net of income taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7.3
|
|
|
7.3
|
|
||||||
Reclassification of the unrealized loss on "available-for-sale" securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.3
|
)
|
|
0.3
|
|
|
—
|
|
||||||
Reclassification of deferred income taxes on intra-entity asset transfers
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.8
|
)
|
|
—
|
|
|
(0.8
|
)
|
||||||
Dividends declared
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7.0
|
)
|
|
—
|
|
|
(7.0
|
)
|
||||||
Shares purchased (Note 9)
|
|
—
|
|
|
—
|
|
|
(5.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5.3
|
)
|
||||||
Stock options exercised
|
|
20
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.8
|
|
|
—
|
|
|
—
|
|
|
1.8
|
|
||||||
Other/currency
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Balance, March 31, 2018
|
|
18,478
|
|
|
0.2
|
|
|
(71.1
|
)
|
|
325.8
|
|
|
243.8
|
|
|
(86.5
|
)
|
|
412.2
|
|
||||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4.8
|
)
|
|
—
|
|
|
(4.8
|
)
|
||||||
Other comprehensive loss, including income taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8.4
|
)
|
|
(8.4
|
)
|
||||||
Dividends declared
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6.9
|
)
|
|
—
|
|
|
(6.9
|
)
|
||||||
Shares purchased (Note 9)
|
|
—
|
|
|
—
|
|
|
(1.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.0
|
)
|
||||||
Stock options exercised
|
|
12
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
||||||
Restricted stock vesting (Note 9)
|
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.2
|
|
|
—
|
|
|
—
|
|
|
1.2
|
|
||||||
Other/currency
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
||||||
Balance, June 30, 2018
|
|
18,498
|
|
|
$
|
0.2
|
|
|
$
|
(72.1
|
)
|
|
$
|
327.2
|
|
|
$
|
232.1
|
|
|
$
|
(94.9
|
)
|
|
$
|
392.5
|
|
|
|
Six Months Ended June 30,
|
||||||
|
|
2019
|
|
2018
|
||||
OPERATING ACTIVITIES
|
|
|
|
|
|
|
||
Net income
|
|
$
|
25.4
|
|
|
$
|
11.4
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
||
Depreciation and amortization
|
|
19.0
|
|
|
18.5
|
|
||
Stock-based compensation
|
|
3.6
|
|
|
3.0
|
|
||
Deferred income tax provision (benefit)
|
|
1.9
|
|
|
(3.8
|
)
|
||
Impairment loss (Note 12)
|
|
—
|
|
|
32.0
|
|
||
Pension settlement and other benefit costs (Note 7)
|
|
—
|
|
|
1.8
|
|
||
Loss on asset dispositions
|
|
0.1
|
|
|
0.1
|
|
||
Non-cash effects of changes in liabilities for uncertain income tax positions
|
|
(0.4
|
)
|
|
0.1
|
|
||
Increase in working capital
|
|
(7.3
|
)
|
|
(18.6
|
)
|
||
Pension and other postretirement benefits
|
|
(0.9
|
)
|
|
(4.4
|
)
|
||
Other
|
|
(0.4
|
)
|
|
(0.3
|
)
|
||
NET CASH PROVIDED BY OPERATING ACTIVITIES
|
|
41.0
|
|
|
39.8
|
|
||
|
|
|
|
|
||||
INVESTING ACTIVITIES
|
|
|
|
|
|
|
||
Capital expenditures
|
|
(9.0
|
)
|
|
(15.8
|
)
|
||
Purchase of marketable securities
|
|
(0.3
|
)
|
|
—
|
|
||
Other
|
|
(0.3
|
)
|
|
(0.2
|
)
|
||
NET CASH USED IN INVESTING ACTIVITIES
|
|
(9.6
|
)
|
|
(16.0
|
)
|
||
|
|
|
|
|
||||
FINANCING ACTIVITIES
|
|
|
|
|
|
|
||
Long-term borrowings (Note 6)
|
|
124.3
|
|
|
150.5
|
|
||
Repayments of long-term debt (Note 6)
|
|
(139.9
|
)
|
|
(151.5
|
)
|
||
Debt issuance costs
|
|
(0.4
|
)
|
|
—
|
|
||
Cash dividends paid
|
|
(15.2
|
)
|
|
(13.9
|
)
|
||
Shares purchased (Note 9)
|
|
(2.0
|
)
|
|
(6.3
|
)
|
||
Proceeds from exercise of stock options
|
|
—
|
|
|
0.3
|
|
||
NET CASH USED IN FINANCING ACTIVITIES
|
|
(33.2
|
)
|
|
(20.9
|
)
|
||
|
|
|
|
|
||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
|
|
—
|
|
|
(0.2
|
)
|
||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
(1.8
|
)
|
|
2.7
|
|
||
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
|
|
9.9
|
|
|
4.5
|
|
||
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
|
$
|
8.1
|
|
|
$
|
7.2
|
|
|
|
|
|
|
||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
||
Cash paid during period for interest, net of interest costs capitalized
|
|
$
|
5.7
|
|
|
$
|
6.1
|
|
Cash paid during period for income taxes
|
|
$
|
9.3
|
|
|
$
|
6.2
|
|
Non-cash investing activities:
|
|
|
|
|
|
|
||
Liability for equipment acquired
|
|
$
|
1.7
|
|
|
$
|
2.9
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Income (loss) from continuing operations
|
|
$
|
13.6
|
|
|
$
|
(4.8
|
)
|
|
$
|
25.4
|
|
|
$
|
11.4
|
|
Amounts attributable to participating securities
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|
(0.2
|
)
|
|
(0.1
|
)
|
||||
Net income (loss) available to common stockholders
|
|
$
|
13.5
|
|
|
$
|
(4.9
|
)
|
|
$
|
25.2
|
|
|
$
|
11.3
|
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average basic shares outstanding
|
|
16,863
|
|
|
16,827
|
|
|
16,861
|
|
|
16,842
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||
Basic earnings (loss) per share
|
|
$
|
0.80
|
|
|
$
|
(0.29
|
)
|
|
$
|
1.50
|
|
|
$
|
0.67
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Income (loss) from continuing operations
|
|
$
|
13.6
|
|
|
$
|
(4.8
|
)
|
|
$
|
25.4
|
|
|
$
|
11.4
|
|
Amounts attributable to participating securities
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|
(0.2
|
)
|
|
(0.1
|
)
|
||||
Net income (loss) available to common stockholders
|
|
$
|
13.5
|
|
|
$
|
(4.9
|
)
|
|
$
|
25.2
|
|
|
$
|
11.3
|
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average basic shares outstanding
|
|
16,863
|
|
|
16,827
|
|
|
16,861
|
|
|
16,842
|
|
||||
Add: Assumed incremental shares under stock compensation plans (a)
|
|
47
|
|
|
—
|
|
|
53
|
|
|
147
|
|
||||
Weighted-average diluted shares
|
|
16,910
|
|
|
16,827
|
|
|
16,914
|
|
|
16,989
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted earnings (loss) per share
|
|
$
|
0.80
|
|
|
$
|
(0.29
|
)
|
|
$
|
1.49
|
|
|
$
|
0.66
|
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||
|
|
Carrying
Value
|
|
Fair Value (a)
|
|
Carrying
Value
|
|
Fair Value (a)
|
||||||||
2021 Senior Notes (5.25% fixed rate)
|
|
$
|
175.0
|
|
|
$
|
173.3
|
|
|
$
|
175.0
|
|
|
$
|
170.5
|
|
Global Revolving Credit Facilities (variable rates)
|
|
43.4
|
|
|
43.4
|
|
|
57.9
|
|
|
57.9
|
|
||||
German loan agreement (2.45% fixed rate)
|
|
4.2
|
|
|
4.3
|
|
|
4.8
|
|
|
5.1
|
|
||||
German loan agreement (1.45% fixed rate)
|
|
4.5
|
|
|
4.5
|
|
|
4.9
|
|
|
4.9
|
|
||||
Total debt
|
|
$
|
227.1
|
|
|
$
|
225.5
|
|
|
$
|
242.6
|
|
|
$
|
238.4
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Filtration
|
|
42
|
%
|
|
39
|
%
|
|
42
|
%
|
|
40
|
%
|
Backings
|
|
24
|
%
|
|
28
|
%
|
|
25
|
%
|
|
28
|
%
|
Specialty
|
|
34
|
%
|
|
33
|
%
|
|
33
|
%
|
|
32
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Graphic Imaging
|
|
78
|
%
|
|
76
|
%
|
|
79
|
%
|
|
77
|
%
|
Packaging
|
|
22
|
%
|
|
20
|
%
|
|
21
|
%
|
|
19
|
%
|
Filing/Office
|
|
—
|
%
|
|
4
|
%
|
|
—
|
%
|
|
4
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
United States
|
|
73
|
%
|
|
72
|
%
|
|
72
|
%
|
|
71
|
%
|
Germany
|
|
20
|
%
|
|
21
|
%
|
|
21
|
%
|
|
22
|
%
|
Rest of Europe
|
|
7
|
%
|
|
7
|
%
|
|
7
|
%
|
|
7
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Raw materials
|
|
$
|
32.3
|
|
|
$
|
35.6
|
|
Work in progress
|
|
27.6
|
|
|
30.1
|
|
||
Finished goods
|
|
77.4
|
|
|
78.3
|
|
||
Supplies and other
|
|
4.0
|
|
|
3.0
|
|
||
|
|
141.3
|
|
|
147.0
|
|
||
Adjust FIFO inventories to LIFO cost
|
|
(13.6
|
)
|
|
(15.4
|
)
|
||
Total
|
|
$
|
127.7
|
|
|
$
|
131.6
|
|
|
|
Net Unrealized Foreign
Currency Translation
Loss
|
|
Net Loss from
Pension and Other
Postretirement
Liabilities
|
|
Accumulated Other
Comprehensive Loss
|
||||||
AOCI — December 31, 2018
|
|
$
|
(15.5
|
)
|
|
$
|
(89.6
|
)
|
|
$
|
(105.1
|
)
|
Other comprehensive income (loss) before reclassifications (a)
|
|
(1.7
|
)
|
|
4.9
|
|
|
3.2
|
|
|||
Amounts reclassified from AOCI
|
|
—
|
|
|
3.1
|
|
|
3.1
|
|
|||
Income (loss) from other comprehensive income items
|
|
(1.7
|
)
|
|
8.0
|
|
|
6.3
|
|
|||
Provision (benefit) for income taxes
|
|
(0.2
|
)
|
|
2.0
|
|
|
1.8
|
|
|||
Other comprehensive income (loss)
|
|
(1.5
|
)
|
|
6.0
|
|
|
4.5
|
|
|||
AOCI — June 30, 2019
|
|
$
|
(17.0
|
)
|
|
$
|
(83.6
|
)
|
|
$
|
(100.6
|
)
|
(a)
|
For the three months ended June 30, 2019, the Company recorded a $4.9 million decrease in the employee benefit obligations related to a pension remeasurement in conjunction with the redistribution of active and inactive participants between separate pension plans.
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
U.S. federal statutory income tax (benefit) rate
|
|
21
|
%
|
|
(21
|
)%
|
|
21
|
%
|
|
21
|
%
|
U.S. state income taxes (benefit), net of federal income tax effect
|
|
2
|
%
|
|
(12
|
)%
|
|
1
|
%
|
|
(6
|
)%
|
Excess tax benefits from stock compensation
|
|
—
|
%
|
|
(3
|
)%
|
|
—
|
%
|
|
(4
|
)%
|
Foreign tax rate differences and financing structure
|
|
—
|
%
|
|
4
|
%
|
|
1
|
%
|
|
5
|
%
|
Research and development and other tax credits
|
|
(7
|
)%
|
|
(16
|
)%
|
|
(6
|
)%
|
|
(15
|
)%
|
Uncertain income tax positions
|
|
1
|
%
|
|
3
|
%
|
|
(1
|
)%
|
|
3
|
%
|
U.S. taxes on foreign earnings
|
|
—
|
%
|
|
9
|
%
|
|
1
|
%
|
|
14
|
%
|
Other differences - net
|
|
2
|
%
|
|
(1
|
)%
|
|
1
|
%
|
|
(4
|
)%
|
Effective income tax (benefit) rate
|
|
19
|
%
|
|
(37
|
)%
|
|
18
|
%
|
|
14
|
%
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
2021 Senior Notes (5.25% fixed rate) due May 2021
|
|
$
|
175.0
|
|
|
$
|
175.0
|
|
Global Revolving Credit Facilities (variable rates) due December 2023
|
|
43.4
|
|
|
57.9
|
|
||
German loan agreement (2.45% fixed rate) due in quarterly installments ending September 2022
|
|
4.2
|
|
|
4.8
|
|
||
German loan agreement (1.45% fixed rate) due in quarterly installments from June 2019 through March 2023
|
|
4.5
|
|
|
4.9
|
|
||
Deferred financing costs
|
|
(3.4
|
)
|
|
(3.5
|
)
|
||
Total debt
|
|
223.7
|
|
|
239.1
|
|
||
Less: Debt payable within one year
|
|
2.7
|
|
|
2.3
|
|
||
Long-term debt
|
|
$
|
221.0
|
|
|
$
|
236.8
|
|
|
|
Pension Benefits
|
|
Postretirement Benefits
Other than Pensions
|
||||||||||||
|
|
Three Months Ended June 30,
|
||||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Service cost
|
|
$
|
1.3
|
|
|
$
|
1.7
|
|
|
$
|
0.3
|
|
|
$
|
0.3
|
|
Interest cost
|
|
4.1
|
|
|
3.9
|
|
|
0.4
|
|
|
0.3
|
|
||||
Expected return on plan assets (a)
|
|
(5.3
|
)
|
|
(5.2
|
)
|
|
—
|
|
|
—
|
|
||||
Recognized net actuarial loss
|
|
1.1
|
|
|
1.3
|
|
|
0.2
|
|
|
0.1
|
|
||||
Amortization of prior service benefit
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Amount of settlement loss recognized
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net periodic benefit cost
|
|
$
|
1.3
|
|
|
$
|
1.7
|
|
|
$
|
0.9
|
|
|
$
|
0.7
|
|
|
|
Pension Benefits
|
|
Postretirement Benefits
Other than Pensions
|
||||||||||||
|
|
Six Months Ended June 30,
|
||||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Service cost
|
|
$
|
2.6
|
|
|
$
|
3.4
|
|
|
$
|
0.6
|
|
|
$
|
0.6
|
|
Interest cost
|
|
8.2
|
|
|
7.9
|
|
|
0.8
|
|
|
0.6
|
|
||||
Expected return on plan assets (a)
|
|
(10.3
|
)
|
|
(10.5
|
)
|
|
—
|
|
|
—
|
|
||||
Recognized net actuarial loss
|
|
2.6
|
|
|
2.6
|
|
|
0.4
|
|
|
0.3
|
|
||||
Amortization of prior service benefit
|
|
0.1
|
|
|
0.1
|
|
|
—
|
|
|
(0.1
|
)
|
||||
Amount of settlement loss recognized (b)
|
|
—
|
|
|
0.8
|
|
|
—
|
|
|
—
|
|
||||
Net periodic benefit cost
|
|
$
|
3.2
|
|
|
$
|
4.3
|
|
|
$
|
1.8
|
|
|
$
|
1.4
|
|
Options granted
|
1,338
|
|
|
Per share weighted average exercise price
|
$
|
69.20
|
|
Per share weighted average grant date fair value
|
$
|
11.50
|
|
Expected term in years
|
5.0
|
|
Risk free interest rate
|
2.6
|
%
|
Volatility
|
22.9
|
%
|
Dividend yield
|
3.0
|
%
|
Options vested
|
108,676
|
|
|
Aggregate grant date fair value of Options vested (in millions)
|
$
|
1.5
|
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Options outstanding
|
|
435,692
|
|
|
451,081
|
|
||
Aggregate intrinsic value (in millions)
|
|
$
|
3.9
|
|
|
$
|
2.7
|
|
Per share weighted average exercise price
|
|
$
|
68.96
|
|
|
$
|
67.46
|
|
Exercisable Options
|
|
335,487
|
|
|
240,903
|
|
||
Aggregate intrinsic value (in millions)
|
|
$
|
3.9
|
|
|
$
|
2.6
|
|
Unvested Options
|
|
100,205
|
|
|
210,178
|
|
||
Per share weighted average grant date fair value
|
|
$
|
14.43
|
|
|
$
|
14.21
|
|
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2019
|
|
2018
|
||||||||||
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
||||||
2019 Stock Purchase Plan
|
|
31,268
|
|
|
$
|
1.9
|
|
|
—
|
|
|
$
|
—
|
|
2018 Stock Purchase Plan
|
|
—
|
|
|
—
|
|
|
79,179
|
|
|
6.3
|
|
Contract Expiration Date
|
Location
|
Union
|
Number of
Employees
|
|
May 2019 (b)
|
Appleton, WI
|
USW
|
115
|
|
April 2020
|
Eerbeek, Netherlands
|
CNV, FNV
|
(a)
|
|
August 2020
|
Neenah Germany
|
IG BCE
|
(a)
|
|
January 2021
|
Whiting, WI
|
USW
|
218
|
|
June 2021
|
Neenah, WI
|
USW
|
276
|
|
July 2021
|
Munising, MI
|
USW
|
197
|
|
November 2021
|
Lowville, NY
|
USW
|
103
|
|
|
|
Three Months Ended June 30, 2019
|
|
Six Months Ended June 30, 2019
|
||||
|
|
|
||||||
Operating lease cost
|
|
$
|
0.7
|
|
|
$
|
1.6
|
|
Short-term lease cost
|
|
0.4
|
|
|
0.9
|
|
||
Variable lease cost (a)
|
|
0.7
|
|
|
1.1
|
|
(a)
|
The variable lease costs consist mainly of a warehouse lease where the cost is determined based on the square footage used each month.
|
Year Ending December 31,
|
|
Operating Leases
|
||
Remainder of 2019
|
|
$
|
1.8
|
|
2020
|
|
2.6
|
|
|
2021
|
|
2.4
|
|
|
2022
|
|
2.2
|
|
|
2023
|
|
2.0
|
|
|
Thereafter
|
|
9.0
|
|
|
Total lease payments
|
|
20.0
|
|
|
Less: Imputed interest
|
|
4.0
|
|
|
Total lease liabilities
|
|
$
|
16.0
|
|
•
|
The Technical Products segment is an aggregation of the Company’s filtration and performance materials businesses which are similar in terms of economic characteristics, nature of products, processes, customer class and product distribution methods. The segment is an international producer of fiber-formed, coated and/or saturated specialized media that delivers high performance benefits to customers. Included in this segment are transportation and other filtration media, tape and abrasives backings products, digital image transfer, durable label and other specialty substrate products.
|
•
|
The Fine Paper and Packaging segment is a leading supplier of premium printing and other high-end specialty papers, and premium packaging, primarily in North America.
|
•
|
The former Other segment was composed of papers sold to converters for end uses such as archival products and stencil board. These product lines represented an operating segment which did not meet the quantitative threshold for a reportable segment, however, due to the dissimilar nature of these products, they were previously not managed as part of either the Fine Paper and Packaging or Technical Products segments.
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net sales
|
|
|
|
|
|
|
|
|
|
|
||||||
Technical Products
|
|
$
|
146.4
|
|
|
$
|
153.9
|
|
|
$
|
286.4
|
|
|
$
|
307.4
|
|
Fine Paper and Packaging
|
|
107.0
|
|
|
115.8
|
|
|
206.7
|
|
|
227.4
|
|
||||
Other
|
|
—
|
|
|
1.6
|
|
|
—
|
|
|
3.0
|
|
||||
Consolidated
|
|
$
|
253.4
|
|
|
$
|
271.3
|
|
|
$
|
493.1
|
|
|
$
|
537.8
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2019 (a)
|
|
2018 (b)
|
|
2019
|
|
2018
|
||||||||
Operating income (loss)
|
|
|
|
|
|
|
|
|
|
|
||||||
Technical Products
|
|
$
|
12.5
|
|
|
$
|
15.8
|
|
|
$
|
23.8
|
|
|
$
|
33.3
|
|
Fine Paper and Packaging
|
|
12.9
|
|
|
(8.8
|
)
|
|
24.8
|
|
|
4.0
|
|
||||
Other
|
|
—
|
|
|
(6.2
|
)
|
|
—
|
|
|
(6.2
|
)
|
||||
Unallocated corporate costs
|
|
(5.6
|
)
|
|
(5.1
|
)
|
|
(11.4
|
)
|
|
(11.3
|
)
|
||||
Consolidated
|
|
$
|
19.8
|
|
|
$
|
(4.3
|
)
|
|
$
|
37.2
|
|
|
$
|
19.8
|
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Total Assets (a)
|
|
|
|
|
|
|
||
Technical Products
|
|
$
|
591.0
|
|
|
$
|
599.3
|
|
Fine Paper and Packaging
|
|
229.1
|
|
|
234.7
|
|
||
Corporate (b)
|
|
37.6
|
|
|
27.2
|
|
||
Consolidated
|
|
$
|
857.7
|
|
|
$
|
861.2
|
|
(a)
|
Segment identifiable assets are those that are directly used in the segments operations.
|
(b)
|
Corporate assets are primarily deferred income taxes and lease ROU assets.
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||||||||
Net sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Technical Products
|
|
$
|
146.4
|
|
|
58
|
%
|
|
$
|
153.9
|
|
|
57
|
%
|
|
$
|
286.4
|
|
|
58
|
%
|
|
$
|
307.4
|
|
|
57
|
%
|
Fine Paper and Packaging
|
|
107.0
|
|
|
42
|
%
|
|
115.8
|
|
|
43
|
%
|
|
206.7
|
|
|
42
|
%
|
|
227.4
|
|
|
42
|
%
|
||||
Other
|
|
—
|
|
|
—
|
%
|
|
1.6
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
3.0
|
|
|
1
|
%
|
||||
Consolidated
|
|
$
|
253.4
|
|
|
100
|
%
|
|
$
|
271.3
|
|
|
100
|
%
|
|
$
|
493.1
|
|
|
100
|
%
|
|
$
|
537.8
|
|
|
100
|
%
|
|
|
Three Months Ended June 30,
|
|
Change in Net Sales Compared to Prior Period
|
||||||||||||||||||||
|
|
|
|
|
Change Due To
|
|||||||||||||||||||
|
|
2019
|
|
2018
|
|
Total Change
|
|
Volume
|
|
Net Price (a)
|
|
Currency
|
||||||||||||
Technical Products
|
|
$
|
146.4
|
|
|
$
|
153.9
|
|
|
$
|
(7.5
|
)
|
|
$
|
(11.2
|
)
|
|
$
|
8.1
|
|
|
$
|
(4.4
|
)
|
Fine Paper and Packaging
|
|
107.0
|
|
|
115.8
|
|
|
(8.8
|
)
|
|
(8.9
|
)
|
|
0.1
|
|
|
—
|
|
||||||
Other
|
|
—
|
|
|
1.6
|
|
|
(1.6
|
)
|
|
(1.6
|
)
|
|
—
|
|
|
—
|
|
||||||
Consolidated
|
|
$
|
253.4
|
|
|
$
|
271.3
|
|
|
$
|
(17.9
|
)
|
|
$
|
(21.7
|
)
|
|
$
|
8.2
|
|
|
$
|
(4.4
|
)
|
•
|
Net sales in our technical products business decreased $7.5 million (5%) from the prior year period. The revenue decline resulted from lower backings volumes and $4.4 million of unfavorable foreign currency effects, partly offset by volume growth in filtration, higher selling prices and a higher value sales mix.
|
•
|
Net sales in our fine paper and packaging business decreased $8.8 million (8%) from the prior year period. Approximately 75 percent of the revenue decline was due to the sale of Brattleboro, with the remainder due to lower commercial print volume and a less favorable sales mix that was only partly offset by higher selling prices and growth in premium packaging.
|
|
|
Six Months Ended June 30,
|
|
Change in Net Sales Compared to Prior Period
|
||||||||||||||||||||
|
|
|
|
|
Change Due To
|
|||||||||||||||||||
|
|
2019
|
|
2018
|
|
Total Change
|
|
Volume
|
|
Net Price (a)
|
|
Currency
|
||||||||||||
Technical Products
|
|
$
|
286.4
|
|
|
$
|
307.4
|
|
|
$
|
(21.0
|
)
|
|
$
|
(24.2
|
)
|
|
$
|
13.3
|
|
|
$
|
(10.1
|
)
|
Fine Paper and Packaging
|
|
206.7
|
|
|
227.4
|
|
|
(20.7
|
)
|
|
(22.7
|
)
|
|
2.0
|
|
|
—
|
|
||||||
Other
|
|
—
|
|
|
3.0
|
|
|
(3.0
|
)
|
|
(3.0
|
)
|
|
—
|
|
|
—
|
|
||||||
Consolidated
|
|
$
|
493.1
|
|
|
$
|
537.8
|
|
|
$
|
(44.7
|
)
|
|
$
|
(49.9
|
)
|
|
$
|
15.3
|
|
|
$
|
(10.1
|
)
|
•
|
Net sales in our technical products business decreased $21.0 million (7%) from the prior period. The revenue decline resulted from volume declines primarily in backings and negative foreign currency impacts partially offset by higher net selling prices and a higher value mix.
|
•
|
Net sales in our fine paper and packaging business decreased $20.7 million (9%) from the prior year period. Slightly more than half of the decline was due to the sale of Brattleboro, with the remainder mostly due to lower commercial print and consumer volumes. These items were partly offset by higher selling prices.
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Net sales
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of products sold
|
|
80.0
|
|
|
79.7
|
|
|
80.9
|
|
|
80.0
|
|
Gross profit
|
|
20.0
|
|
|
20.3
|
|
|
19.1
|
|
|
20.0
|
|
Selling, general and administrative expenses
|
|
10.6
|
|
|
9.3
|
|
|
10.6
|
|
|
9.7
|
|
Impairment loss
|
|
—
|
|
|
11.8
|
|
|
—
|
|
|
6.0
|
|
Restructuring and other non-routine costs
|
|
1.4
|
|
|
0.1
|
|
|
0.7
|
|
|
0.1
|
|
Pension settlement and other benefit costs
|
|
—
|
|
|
0.4
|
|
|
—
|
|
|
0.3
|
|
Other expense - net
|
|
0.2
|
|
|
0.3
|
|
|
0.3
|
|
|
0.3
|
|
Operating income (loss)
|
|
7.8
|
|
|
(1.6
|
)
|
|
7.5
|
|
|
3.7
|
|
Interest expense - net
|
|
1.2
|
|
|
1.2
|
|
|
1.2
|
|
|
1.2
|
|
Income (loss) from continuing operations before income taxes
|
|
6.6
|
|
|
(2.8
|
)
|
|
6.3
|
|
|
2.5
|
|
Provision (benefit) for income taxes
|
|
1.3
|
|
|
(1.1
|
)
|
|
1.1
|
|
|
0.4
|
|
Income (loss) from continuing operations
|
|
5.4
|
%
|
|
(1.8
|
)%
|
|
5.2
|
%
|
|
2.1
|
%
|
|
|
|
|
|
|
Change in Operating Income Compared to Prior Period
|
||||||||||||||||||||||||||
|
|
Three Months Ended June 30,
|
|
|
|
Change Due To
|
||||||||||||||||||||||||||
|
|
|
Total
|
|
|
|
Net
|
|
Input
|
|
|
|
|
|||||||||||||||||||
|
|
2019
|
|
2018
|
|
Change
|
|
Volume
|
|
Price (a)
|
|
Costs (b)
|
|
Currency
|
|
Other (c)
|
||||||||||||||||
Technical Products
|
|
$
|
12.5
|
|
|
$
|
15.8
|
|
|
$
|
(3.3
|
)
|
|
$
|
(3.0
|
)
|
|
$
|
4.7
|
|
|
$
|
(2.2
|
)
|
|
$
|
(0.5
|
)
|
|
$
|
(2.3
|
)
|
Fine Paper and Packaging
|
|
12.9
|
|
|
(8.8
|
)
|
|
21.7
|
|
|
(0.5
|
)
|
|
2.1
|
|
|
(1.9
|
)
|
|
—
|
|
|
22.0
|
|
||||||||
Other
|
|
—
|
|
|
(6.2
|
)
|
|
6.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.2
|
|
||||||||
Unallocated corporate costs
|
|
(5.6
|
)
|
|
(5.1
|
)
|
|
(0.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.5
|
)
|
||||||||
Consolidated
|
|
$
|
19.8
|
|
|
$
|
(4.3
|
)
|
|
$
|
24.1
|
|
|
$
|
(3.5
|
)
|
|
$
|
6.8
|
|
|
$
|
(4.1
|
)
|
|
$
|
(0.5
|
)
|
|
$
|
25.4
|
|
•
|
Operating income for our technical products business decreased $3.3 million from the prior year period. Excluding adjusting items of $1.8 million in 2018 and $0.4 million in 2019, adjusted operating income decreased $4.7 million (27%) from $17.6 million to $12.9 million. Operating income decreased as a result of lower sales and production volumes and associated manufacturing cost inefficiencies, as well as higher SG&A expense and $0.5 million of unfavorable currency translation impacts. Increased selling prices and a higher value mix more than offset $2.2 million of higher input costs.
|
•
|
Operating income for our fine paper and packaging business increased $21.7 million from the prior year period, as 2018 included $25.5 million of costs primarily related to the Brattleboro mill impairment loss whereas 2019 included $3.0 million of non-routine costs. Excluding these items, adjusted operating income of $15.9 million in 2019 decreased $0.8 million (5%) from $16.7 million in the prior year as a result of lower volume and a less favorable sales mix. Increased selling prices in the quarter were mostly able to offset $1.9 million of higher input costs.
|
•
|
An operating loss of $6.2 million for our Other segment in 2018 was due to costs of $6.0 million for impairment and pension settlement costs assigned to this segment. The Other segment was discontinued following the sale of the Brattleboro mill in December 2018.
|
•
|
Unallocated corporate expenses for the three months ended June 30, 2019 of $5.6 million increased $0.5 million from the prior year period primarily due to timing of certain expenditures.
|
|
|
|
|
|
|
Change in Operating Income Compared to Prior Period
|
||||||||||||||||||||||||||
|
|
Six Months Ended June 30,
|
|
|
|
Change Due To
|
||||||||||||||||||||||||||
|
|
|
Total
|
|
|
|
Net
|
|
Input
|
|
|
|
|
|||||||||||||||||||
|
|
2019
|
|
2018
|
|
Change
|
|
Volume
|
|
Price (a)
|
|
Costs (b)
|
|
Currency
|
|
Other (c)
|
||||||||||||||||
Technical Products
|
|
$
|
23.8
|
|
|
$
|
33.3
|
|
|
$
|
(9.5
|
)
|
|
$
|
(6.6
|
)
|
|
$
|
9.2
|
|
|
$
|
(5.8
|
)
|
|
$
|
(1.2
|
)
|
|
$
|
(5.1
|
)
|
Fine Paper and Packaging
|
|
24.8
|
|
|
4.0
|
|
|
20.8
|
|
|
(1.1
|
)
|
|
4.9
|
|
|
(6.0
|
)
|
|
—
|
|
|
23.0
|
|
||||||||
Other
|
|
—
|
|
|
(6.2
|
)
|
|
6.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.2
|
|
||||||||
Unallocated corporate costs
|
|
(11.4
|
)
|
|
(11.3
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
||||||||
Consolidated
|
|
$
|
37.2
|
|
|
$
|
19.8
|
|
|
$
|
17.4
|
|
|
$
|
(7.7
|
)
|
|
$
|
14.1
|
|
|
$
|
(11.8
|
)
|
|
$
|
(1.2
|
)
|
|
$
|
24.0
|
|
•
|
Operating income for our technical products business decreased $9.5 million from the prior year period. The decrease in income resulted from lower sales volumes, higher input costs, SG&A and unfavorable foreign currency impacts, partially offset by increased selling prices, a higher-value mix and lower distribution costs. Excluding 2019 adjustments of $0.4 million and 2018 adjustments of $1.8 million, adjusted operating income decreased $10.9 million (31%).
|
•
|
Operating income for our fine paper and packaging business increased $20.8 million from the prior year period. The increase was mainly due to adjustments in 2018 of $25.5 million for impairment related to the potential sale of the Brattleboro mill and associated research and office facilities, pension settlement costs related to withdrawing from a multi-employer pension plan, restructuring costs, and insurance settlement, partly offset by $2.0 million in 2019 for accelerated depreciation and related expenses on a paper machine scheduled to be idled by the end of the third quarter, $0.4 million of other restructuring costs and $0.6 million for costs due to a 2012-15 indirect tax audit. In addition, higher input costs, lower sales volumes and associated manufacturing cost inefficiencies, were only partly offset by higher selling prices, and lower SG&A and distribution costs. Excluding cost adjustments of $3.0 million in 2019 and $25.5 million in 2018, adjusted operating income decreased $1.7 million (6%).
|
•
|
Operating loss for our Other segment was $6.2 million in 2018 due to costs of $6.0 million for impairment and pension settlement costs assigned to the Other segment.
|
•
|
Unallocated corporate expenses for the six months ended June 30, 2019 of $11.4 million were $0.1 million higher than the prior year period.
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Technical Products
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
GAAP Operating Income
|
|
$
|
12.5
|
|
|
$
|
15.8
|
|
|
$
|
23.8
|
|
|
$
|
33.3
|
|
Impairment loss
|
|
—
|
|
|
1.1
|
|
|
—
|
|
|
1.1
|
|
||||
Restructuring and other non-routine costs
|
|
0.4
|
|
|
0.3
|
|
|
0.4
|
|
|
0.3
|
|
||||
Pension settlement and other benefit costs
|
|
—
|
|
|
0.4
|
|
|
—
|
|
|
0.4
|
|
||||
Adjusted Operating Income
|
|
12.9
|
|
|
17.6
|
|
|
24.2
|
|
|
35.1
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Fine Paper and Packaging
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
GAAP Operating Income (Loss)
|
|
12.9
|
|
|
(8.8
|
)
|
|
24.8
|
|
|
4.0
|
|
||||
Impairment loss
|
|
—
|
|
|
25.1
|
|
|
—
|
|
|
25.1
|
|
||||
Idled paper machine costs
|
|
2.0
|
|
|
—
|
|
|
2.0
|
|
|
—
|
|
||||
2012-15 indirect tax audit costs
|
|
0.6
|
|
|
—
|
|
|
0.6
|
|
|
—
|
|
||||
Restructuring and other non-routine costs
|
|
0.4
|
|
|
—
|
|
|
0.4
|
|
|
—
|
|
||||
Pension settlement and other benefit costs
|
|
—
|
|
|
0.4
|
|
|
—
|
|
|
0.4
|
|
||||
Adjusted Operating Income
|
|
15.9
|
|
|
16.7
|
|
|
27.8
|
|
|
29.5
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other/Unallocated Corporate
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
GAAP Operating Loss
|
|
(5.6
|
)
|
|
(11.3
|
)
|
|
(11.4
|
)
|
|
(17.5
|
)
|
||||
Impairment loss
|
|
—
|
|
|
5.8
|
|
|
—
|
|
|
5.8
|
|
||||
Restructuring and other non-routine costs
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
||||
Pension settlement and other benefit costs
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
1.0
|
|
||||
Adjusted Operating Loss
|
|
(5.5
|
)
|
|
(5.3
|
)
|
|
(11.3
|
)
|
|
(10.7
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
GAAP Operating Income (Loss)
|
|
19.8
|
|
|
(4.3
|
)
|
|
37.2
|
|
|
19.8
|
|
||||
Impairment loss
|
|
—
|
|
|
32.0
|
|
|
—
|
|
|
32.0
|
|
||||
Idled paper machine costs
|
|
2.0
|
|
|
—
|
|
|
2.0
|
|
|
—
|
|
||||
2012-15 indirect tax audit costs
|
|
0.6
|
|
|
—
|
|
|
0.6
|
|
|
—
|
|
||||
Restructuring and other non-routine costs
|
|
0.9
|
|
|
0.3
|
|
|
0.9
|
|
|
0.3
|
|
||||
Pension settlement and other benefit costs
|
|
—
|
|
|
1.0
|
|
|
—
|
|
|
1.8
|
|
||||
Adjusted Operating Income
|
|
$
|
23.3
|
|
|
$
|
29.0
|
|
|
$
|
40.7
|
|
|
$
|
53.9
|
|
|
|
|
|
|
|
|
|
|
•
|
SG&A expense of $26.9 million for the three months ended June 30, 2019 was $1.7 million higher than SG&A expense of $25.2 million in the prior year period due in part to timing of items. For the three months ended June 30, 2019, SG&A expense as a percent of sales increased to 10.6% from 9.3% in the prior year period due to lower sales and timing of SG&A costs. SG&A expense of $52.2 million for the six months ended June 30, 2019 was $0.2 million higher than SG&A expense of $52.0 million in the prior year period. For the six months ended June 30, 2019, SG&A expense as a percent of sales increased to 10.6% from 9.7% in the prior year period.
|
•
|
For the three months ended June 30, 2019, net interest expense of $3.0 million decreased compared with $3.3 million in the prior year period, primarily due to lower debt in 2019. For the six months ended June 30, 2019, net interest expense of $6.2 million decreased compared to $6.6 million for prior year period.
|
•
|
Historically, our effective tax rate has differed from the U.S. statutory tax rate primarily due to the proportion of pre-tax income in jurisdictions with marginal tax rates that differ from the U.S. statutory tax rate, research and development and other tax credits and excess tax benefits from stock compensation. For the three months ended June 30, 2019 and 2018, we recorded an income tax expense (benefit) of $3.2 million and $(2.8) million, respectively. The effective income tax (benefit) rate was 19% for the three months ended June 30, 2019 and (37)% for the three months ended June 30, 2018. For the six months ended June 30, 2019 and 2018, we recorded an income tax provision of $5.6 million and $1.8 million, respectively. The effective income tax rate was 18% for the six months ended June 30, 2019 and 14% for the six months ended June 30, 2018. The effective income tax (benefit) rates for the three and six months ended June 30, 2018 were significantly impacted by the effects of the $32 million impairment loss of the Brattleboro mill and associated research and office facilities, as similar sized reconciling items had a larger percentage impact on lower pre-tax book income. See Note 5, "Income Taxes" of Notes to Condensed Consolidated Financial Statements for a reconciliation of the effective income tax (benefit) rate to the U.S. federal statutory income tax (benefit) rate for each period.
|
|
|
Six Months Ended June 30,
|
||||||
|
|
2019
|
|
2018
|
||||
Net cash flow provided by (used in):
|
|
|
|
|
|
|
||
Operating activities
|
|
$
|
41.0
|
|
|
$
|
39.8
|
|
|
|
|
|
|
||||
Investing activities:
|
|
|
|
|
|
|
||
Capital expenditures
|
|
(9.0
|
)
|
|
(15.8
|
)
|
||
Other investing activities
|
|
(0.6
|
)
|
|
(0.2
|
)
|
||
Total
|
|
(9.6
|
)
|
|
(16.0
|
)
|
||
|
|
|
|
|
||||
Financing activities:
|
|
|
|
|
||||
Net borrowing of long-term debt
|
|
(15.6
|
)
|
|
(1.0
|
)
|
||
Cash dividends paid
|
|
(15.2
|
)
|
|
(13.9
|
)
|
||
Shares purchased
|
|
(2.0
|
)
|
|
(6.3
|
)
|
||
Other financing activities
|
|
(0.4
|
)
|
|
0.3
|
|
||
Total
|
|
(33.2
|
)
|
|
(20.9
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
|
—
|
|
|
(0.2
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
|
$
|
(1.8
|
)
|
|
$
|
2.7
|
|
•
|
Cash provided by operating activities of $41.0 million for the six months ended June 30, 2019 was $1.2 million higher than cash provided by operating activities of $39.8 million in the prior year period.
|
•
|
For the six months ended June 30, 2019 and 2018, cash used by investing activities was $9.6 million and $16.0 million, respectively. The decrease was primarily due to reduced capital spending in 2019. For the full year 2019, we expect aggregate annual capital expenditures to be at the lower end of our targeted range of 3% to 5% of net sales.
|
•
|
For the six months ended June 30, 2019 and 2018, cash used in financing activities was $33.2 million and $20.9 million, respectively. Cash related to financing activities consists primarily of net borrowings of long-term debt, dividends paid and share repurchases.
|
•
|
Availability under our revolving credit facility varies over time depending on the value of our inventory, receivables and various capital assets. As of June 30, 2019, we had $43.4 million outstanding under our Global Revolving Credit Facilities and $176.5 million of available credit (based on exchange rates at June 30, 2019).
|
•
|
We have required debt principal payments through June 30, 2020 of $2.7 million for principal payments on the two German loan agreements.
|
•
|
For the six months ended June 30, 2019, cash and cash equivalents decreased $1.8 million to $8.1 million at June 30, 2019 from $9.9 million at December 31, 2018. Total debt decreased $15.4 million to $223.7 million at June 30, 2019 from $239.1 million at December 31, 2018.
|
•
|
As of June 30, 2019, our cash balance of $8.1 million consists of $0.1 million in the U.S. and $8.0 million held at entities outside of the U.S. As of June 30, 2019, there were no restrictions regarding the repatriation of our non-U.S. cash.
|
•
|
In November 2018, our Board of Directors approved a 10% increase in the quarterly dividend on our Common Stock, to $0.45 per share, effective with the March 2019 dividend payment. For the six months ended June 30, 2019 and 2018, we paid cash dividends of $15.2 million ($0.90 per common share) and $13.9 million ($0.82 per common share), respectively.
|
•
|
Purchases under the 2019 Stock Purchase Plan will be made from time to time in the open market or in privately negotiated transactions in accordance with the requirements of applicable law. The timing and amount of any purchases will depend on share price, market conditions and other factors. The 2019 Stock Purchase Plan does not require us to purchase any specific number of shares and may be suspended or discontinued at any time. For the six months ended June 30, 2019 and 2018, we repurchased 31,268 shares of Common Stock at a cost of $1.9 million and 79,179 shares of Common Stock at a cost of $6.3 million, respectively. For further details on our Stock Purchase Plans refer to Note 9, "Stockholders' Equity" of Notes to Condensed Consolidated Financial Statements.
|
•
|
As of June 30, 2019, we had $45.1 million of state net operating losses ("NOLs"). Our state NOLs may be used to offset $2.8 million in state income taxes. If not used, substantially all of the state NOLs will expire in various amounts between 2019 and 2039. In addition, as of June 30, 2019, we had $21.3 million of U.S. federal and $7.2 million of U.S. state research and development tax credits ("R&D Credits") which, if not used, will expire between 2029 and 2039 for the U.S. federal R&D Credits and between 2020 and 2034 for the state R&D Credits.
|
•
|
We adopted the new accounting standards for leases effective January 1, 2019 by recognizing $16.2 million of lease right-of-use assets and $17.0 million of lease liabilities on our Condensed Consolidated Balance Sheets. The new standard did not have an impact on our results of operations or cash flows. See Note 11, "Leases" of Notes to Condensed Consolidated Financial Statements for further discussion as of June 30, 2019.
|
•
|
changes in market demand for our products due to global economic and political conditions;
|
•
|
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;
|
•
|
the loss of current customers or the inability to obtain new customers;
|
•
|
increases in commodity prices, (particularly for pulp, energy and latex);
|
•
|
our ability to control costs, including transportation, and implement measures designed to enhance operating efficiencies;
|
•
|
the availability of raw materials and energy;
|
•
|
the enactment of adverse federal, state or foreign tax or other legislation or changes in government policy or regulation;
|
•
|
the impact of increased trade protectionism and tariffs on our business, results of operations and financial condition;
|
•
|
unanticipated expenditures related to the cost of compliance with environmental and other governmental regulations;
|
•
|
fluctuations in (i) exchange rates (in particular changes in the U.S. dollar/Euro currency exchange rates) and (ii) interest rates;
|
•
|
increases in the funding requirements for our pension and postretirement liabilities;
|
•
|
our ability to identify attractive acquisition targets and to successfully integrate acquired businesses into our existing operations;
|
•
|
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;
|
•
|
loss of key personnel;
|
•
|
strikes, labor stoppages and changes in our collective bargaining agreements and relations with our employees and unions;
|
•
|
capital and credit market volatility and fluctuations in global equity and fixed-income markets;
|
•
|
our existing and future indebtedness;
|
•
|
our net operating losses may not be available to offset our tax liability and other tax planning strategies may not be effective; and
|
•
|
other risks that are detailed from time to time in reports we file with the SEC.
|
Month
|
|
Total Number of
Shares Purchased
|
|
Average Price Paid
Per Share
|
|
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs (a)
|
|
Approximate Dollar
Value of Shares that May
Yet Be Purchased Under
Publicly Announced
Plans or Programs (a)
|
April
|
|
268
|
|
$66.28
|
|
—
|
|
$24,745,942
|
May
|
|
19,923
|
|
$59.20
|
|
19,263
|
|
$23,610,095
|
June
|
|
7,720
|
|
$59.48
|
|
7,720
|
|
$23,150,883
|
Exhibit
Number
|
|
Exhibit
|
|
|
|
|
|
10.1
|
|
|
|
|
|
|
|
10.2
|
|
|
|
|
|
|
|
10.3
|
|
|
|
|
|
|
|
31.1
|
|
|
|
|
|
|
|
31.2
|
|
|
|
|
|
|
|
32.1
|
|
|
|
|
|
|
|
32.2
|
|
|
|
|
|
|
|
101.INS
|
|
|
XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
|
|
|
|
101.SCH
|
|
|
Inline XBRL Taxonomy Extension Schema Document (filed herewith).
|
|
|
|
|
101.CAL
|
|
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith).
|
|
|
|
|
101.DEF
|
|
|
Inline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith).
|
|
|
|
|
101.LAB
|
|
|
Inline XBRL Taxonomy Extension Label Linkbase Document (filed herewith).
|
|
|
|
|
101.PRE
|
|
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith).
|
|
|
NEENAH, INC.
|
|
|
|
|
By:
|
/s/ John P. O'Donnell
|
|
|
John P. O’Donnell
|
|
|
President, Chief Executive Officer and Director
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
/s/ Bonnie C. Lind
|
|
|
Bonnie C. Lind
|
|
|
Senior Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer)
|
|
|
|
|
|
/s/ Larry N. Brownlee
|
|
|
Larry N. Brownlee
|
|
|
Vice President, Controller (Principal Accounting Officer)
|
|
|
|
|
|
|
August 7, 2019
|
|
|
1.
|
Performance Period: The Performance Period for Component I commences on January 1, 20__ and ends on December 31, 20__.
|
2.
|
Performance Metrics:
|
(a)
|
“Return on Invested Capital” (“ROIC”) is defined as the difference expressed in basis points (with 100 equal to 1 percentage point) between ROIC for the Company for the Performance Period and ROIC for the Company for the prior calendar year. “ROIC” is defined as After-tax Adjusted EBIT from continuing operations divided by Average Net Invested Capital. “Adjusted EBIT” is earnings before interest and taxes, excluding the effects of gains/losses on sale of assets, goodwill impairment, facility/asset closure, integration or restructuring costs, and other material non-recurring items. Tax rates are based on the statutory effective tax rates of each business entity adjusted for permanent differences impacting these rates. “Average Net Invested Capital” is the straight average for the twelve months of total assets less cash and short-term non-interest bearing liabilities, all expressed in constant currency.
|
(b)
|
“Corporate Revenue Growth” is defined as the percentage change in the Company’s Net Sales for the Performance Period, excluding translation impacts from changes in foreign exchange rates, as compared with the prior calendar year.
|
(c)
|
“Net Sales” means net sales for Technical Products and Fine Paper and excludes revenues from non-strategic products reported as part of the Other segment.
|
(d)
|
“Adjusted Earnings per Share Growth” is defined as the percentage change in the Company’s Adjusted Earnings per Share for the Performance Period, as compared with the prior calendar year. “Adjusted Earnings per Share” is defined as the Company’s earnings per fully diluted common share from continuing operations, excluding the effects of gains/losses on sale of assets, goodwill impairment, facility/asset closure, integration or restructuring costs, and other material non-recurring items.
|
3.
|
Percentage Weighting for each Performance Metric: The following percentage weighting for each performance metric will apply for purposes of determining the number of Performance Shares earned under Component I:
|
Performance Metric
|
Weighting
|
ROIC
|
__%
|
Corporate Revenue Growth
|
__%
|
Adjusted Earnings per Share Growth
|
__%
|
4.
|
Percentage Attained based on each Performance Metric: The payout percentage attained based on each performance metric, which will be used for determining the number of Performance Shares earned under Component I, is as follows:
|
|
Performance Metric Weighting
|
Threshold
|
Target
|
Maximum
|
Payout Percentage Attained
|
|
___%
|
___%
|
___%
|
ROIC
|
__%
|
___ bps
|
___ bps
|
___ bps
|
Corporate Revenue Growth
|
__%
|
__%
|
__%
|
__%
|
Adjusted Earnings per Share Growth
|
__%
|
__%
|
__%
|
__%
|
5.
|
Number of Performance Shares Earned: The number of Performance Shares earned under Component I is determined as follows:
|
(a)
|
Step 1: multiply the percentage weighting for each performance metric by the payout percentage attained based on such performance metric to arrive at the percentage of Target Performance Shares earned based on such performance metric;
|
(b)
|
Step 2: add the sum of the percentages of Target Performance Shares earned based on each performance metric;
|
(c)
|
Step 3: multiply the sum of the percentages of Target Performance Shares earned based on each performance metric by the total number of Target Performance Shares and
|
(d)
|
Step 4: increase or reduce the award calculated in Step 3 by the percentage that the Compensation Committee determines in its discretion.
|
|
Percentage Weighting
|
x
|
Payout Percentage Attained
|
Percentage Target Shares Earned
|
ROIC
|
__%
|
x
|
___%
|
= __%
|
Corporate Revenue Growth
|
__%
|
x
|
___%
|
= __%
|
Adjusted Earnings per Share Growth
|
__%
|
x
|
___%
|
= __%
|
6.
|
Dividend Equivalents: The Performance Shares under Component I do not accrue dividend equivalents during the Performance Period, except if a Change in Control occurs during the Performance Period, in which case, they accrue dividend equivalents beginning on the date of the Change in Control. Beginning on the earlier of (a) the first day following the end of the Performance Period, or (b) the date of the Change in Control, the Performance Shares shall accrue dividend equivalents. The dividend equivalents shall be paid to the Participant in cash or shares of Stock, as determined by the authorized officers as designated by the Committee, within thirty (30) days following the end of each calendar quarter. The dividend equivalents paid for such calendar quarter will be equal to the dividend per Share (if any) declared by the Company during such calendar quarter, multiplied by the number of Performance Shares held by the Participant. If dividend equivalents for a calendar quarter are paid in shares of Stock, the number of shares of Stock will be equal to the dividend equivalents for the calendar quarter, divided by the Fair Market Value per share of stock as of the date the dividend is payable as declared by the Company. After the Performance Shares have been settled or forfeited, no further dividend equivalents shall accrue.
|
7.
|
Vesting and Payment of the Performance Shares: One hundred percent (100%) of the earned Performance Shares under Component I will vest on the earliest of the dates specified below and will be paid when specified below (with the vesting date listed first in each Subsection, followed by payment date):
|
(a)
|
December 31, 20__ provided the Participant has continued in the employment of the Company, its Affiliates, or its Subsidiaries through such date, in which case the Performance Shares will be paid on December 31, 20__;
|
(b)
|
On the date the Participant incurs a “Separation from Service” (within the meaning of Code Section 409A), if that occurs on or after July 1, 20__ and before December 31, 20__ due to death, “Retirement” or “Disability” (as defined in the Plan) (but in the case of Disability determined without regard to the length of any elimination period under the long term disability benefits plan), in which case the number of Performance Shares earned during Performance Period will be prorated based upon the ratio that the number of calendar months served during the Component I Performance Period (full credit given for partial months) bears to 12 months and will be paid upon the later of 20__, by February 28, 20__, or within thirty (30) days following the date of the Participant’s Separation from Service provided, however, if the Participant is a “Specified Employee” within the meaning of Code Section 409A, the Performance Shares will be paid six (6) months following such Separation from Service to the extent required to comply with Code Section 409A (but not before 20__, by February 28, 20__ or later than December 31, 20__ to the extent permissible under Code Section 409A);
|
(c)
|
On the date of a “Change in Control” (as defined in Section 15 of “Provisions Applicable to all Performance Shares”), if that occurs on or after January 1, 2019 and before December 31, ____, with respect to which Neenah, Inc. is not the surviving entity, provided the Participant has continued in the employment of the Company, its Affiliates, or its Subsidiaries through such occurrence; provided, however, that if the Change in Control occurs on or after January 1, 2019 and before December 31, ____, the Participant shall be deemed to earn 75% of the Target Performance Shares. The Performance Shares will be paid within thirty (30) days following the Change in Control; or
|
(d)
|
On the date the Participant incurs a Separation from Service if a Change in Control occurs on or after January 1, 20__ and before December 31, 20__, with respect to which Neenah, Inc. is the surviving entity, and within two years after the date of the Change in Control and before December 31, 20__, the Participant incurs a Separation from Service as a result of the Participant’s employment being terminated by the Company, its Affiliates, and/or Subsidiaries other than for Cause, or being terminated by the Participant for Good Reason; provided, however, that if the Change in Control occurs on or after January 1, 20__ and before December 31, 20__, the Participant shall be deemed to earn 75% of the Target Performance Shares. For the purposes of this Agreement, the terms “Cause” and “Good Reason” shall have the same meaning as provided in the Executive Severance Plan. The Performance Shares shall be paid within thirty (30) days following Separation from Service, but not later than December 31, 20__; provided, however, that in the case of a Participant who is a Specified Employee, the Performance Shares will be paid six (6) months following Separation from Service to the extent required to comply with Code Section 409A, but not later than December 31, 20__ to the extent permissible under Code Section 409A.
|
1.
|
Performance Period: The Performance Period for Component II commences on January 1, 20__ and ends on December 31, 20__.
|
2.
|
Performance Measure: Relative Total Shareholder Return (“Relative TSR”) is defined as the Company’s Total Shareholder Return (“TSR”) relative to the TSR of the companies in the Russell 2000 Value Index.
|
3.
|
Percentage Weighting for Relative TSR: The Relative TSR percentage weighting is __% and will apply for determining the number of Performance Shares earned under Component II.
|
4.
|
Percentage Attained based on Relative TSR: The payout percentage attained based on Relative TSR, which will be used for purposes of determining the number of Performance Shares earned under Component II, is as follows:
|
|
Performance Metric Weighting
|
Threshold
|
Target
|
High
|
Payout Percentage Attained
|
|
___%
|
____%
|
___%
|
Relative TSR
|
___%
|
3rd Quartile Russell 2000 Value Index
|
2nd Quartile Russell 2000 Value Index
|
1st Quartile Russell 2000 Value Index
|
5.
|
Number of Performance Shares Earned: The number of Performance Shares earned based on Relative TSR performance is determined as follows:
|
(a)
|
Step 1: multiply ___% (i.e., the percentage weighting for Relative TSR) by the payout percentage attained based on Relative TSR to arrive at the percentage of Target Performance Shares earned based on Relative TSR;
|
(b)
|
Step 2: multiply the percentage of Target Performance Shares earned based on Relative TSR by the total number of Target Performance Shares; and
|
(c)
|
Step 3: increase or reduce the award calculated in Step 3 by the percentage that the Compensation Committee determines in its discretion.
|
|
Percentage Weighting
|
x
|
Payout Percentage Attained
|
Percentage Target Shares Earned
|
Relative TSR
|
___%
|
x
|
___%
|
= ___%
|
6.
|
Dividend Equivalents: The Performance Shares actually earned under Component II accrue dividend equivalents during the Performance Period. The dividend equivalents shall be paid to the Participant in cash or shares of Stock, as determined by the authorized officers as designated by the Committee. The dividend equivalents will be equal to the dividend per Share (if any) declared by the Company during the Performance Period, multiplied by the number of Performance Shares held by the Participant. If dividend equivalents are paid in shares of Stock, the number of shares of Stock will be equal to the dividend equivalents for each given date during the Performance Period, divided by the Fair Market Value per share of Stock as of the date the dividend is payable as declared by the Company. The dividend equivalents will be paid on the same date as the Award is paid pursuant to Section 7 of Component II. After the Performance Shares have been settled or forfeited, no further dividend equivalents shall accrue.
|
7.
|
Vesting and Payment of the Performance Shares: One hundred percent (100%) of the earned Performance Shares under Component II will vest on the earliest of the dates specified below and will be paid when specified below (with the vesting date listed first in each Subsection, followed by payment date):
|
(a)
|
December 31, 20__, provided the Participant has continued in the employment of the Company, its Affiliates, or its Subsidiaries through such date, in which case the Performance Shares will be paid in 20__ by February 28, 20__;
|
(b)
|
On the date the Participant incurs a Separation from Service that occurs on or after July 1, 20__and before December 31, 20__due to death, Retirement or Disability (but in the case of Disability determined without regard to the length of any elimination period under the long term disability benefits plan), in which case the number of Performance Shares earned during the Performance Period will be prorated based upon the ratio that the number of calendar months served during the Component II Performance Period (full credit given for partial months) bears to 12 months (provided such ratio shall not exceed 100%) and will be paid in 20__by February 28, 20__, provided, however, if the Participant is a Specified Employee within the meaning of Code Section 409A, the Performance Shares will be paid six (6) months following such Separation from Service to the extent required to comply with Code Section 409A;
|
(c)
|
On the date of a Change in Control with respect to which Neenah, Inc. is not the surviving entity, provided the Participant has continued in the employment of the Company, its Affiliates, or its Subsidiaries through such occurrence; provided, however, that the Participant shall be deemed to earn 25% of the Target Performance Shares. The Performance Shares will be paid within thirty (30) days following the Change in Control; or
|
(d)
|
On the date the Participant incurs a Separation from Service if a Change in Control occurs with respect to which Neenah, Inc. is the surviving entity, and within two years after the date of the Change in Control and before December 31, 20__, the Participant incurs a Separation from Service as a result of the Participant’s employment being terminated by the Company, its Affiliates, and/or Subsidiaries other than for Cause, or by the Participant for Good Reason; provided, however, that the Participant shall be deemed to earn __% of the Target Performance Shares. The Performance Shares will be paid within thirty (30) days following Separation from Service; provided, however, that in the case of a Participant who is a Specified Employee, the Performance Shares will be paid six (6) months following Separation from Service to the extent required to comply with Code Section 409A, but not later than February 28, 20__ to the extent permissible under Code Section 409A.
|
1.
|
Settlement of Award: The Company shall issue to the Participant one share of Stock (as defined in the Plan) for each Performance Share earned by the Participant that becomes vested in accordance with the provisions of Section 7 of Component I or Section 7 of Component II. Notwithstanding the forgoing or any other provision hereof, the Committee reserves the sole and unfettered discretion to reduce the number of shares of Stock that would otherwise be issuable pursuant to this Agreement. Any fractional share of Stock payable to the Participant in accordance with this Section shall be rounded up to the nearest whole share of Stock. Notwithstanding the foregoing, pursuant to Section 4.4 or Article 18 of the Plan, the Company may adjust the number or kind of shares or substitute cash.
|
2.
|
Termination of Employment for Other Reasons: In the event that the Participant’s employment with the Company terminates before December 31, 20__, then except as set forth in Section 7 of Component I or Section 7 of Component II, this Award and all Performance Shares hereunder shall be forfeited and no payment shall be made to the Participant.
|
3.
|
Nontransferability: Performance Shares awarded pursuant to this Agreement may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated (“Transfer”), other than by will or by the laws of descent and distribution. If any Transfer, whether voluntary or involuntary, of Performance Shares is made, or if any attachment, execution, garnishment, or lien shall be issued against or placed upon the Performance Shares, the Participant’s right to such Performance Shares shall be immediately forfeited to the Company, and this Agreement shall lapse.
|
4.
|
Requirements of Law: The granting of Performance Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.
|
5.
|
Inability to Obtain Authorization: The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance of any shares of Stock hereunder, shall relieve the Company of any liability with respect to the failure to issue such shares of Stock as to which such requisite authority shall not have been obtained.
|
6.
|
Tax Withholding: The Company will have the power and the right to deduct or withhold, or require the Participant or the Participant’s beneficiary to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of this Agreement.
|
7.
|
Stock Withholding: With respect to withholding required upon any taxable event arising as a result of Performance Shares granted hereunder, the Company, unless notified otherwise by the Participant in writing within thirty (30) days prior to the taxable event, will have the right to satisfy the tax withholding requirement by withholding shares of Stock having a Fair Market Value equal to the total statutory tax required to be withheld on the transaction. The Participant agrees to pay to the Company, its Affiliates, and/or its Subsidiaries any amount of tax that the Company, its Affiliates, and/or its Subsidiaries may be required to withhold as a result of the Participant’s participation in the Plan that are not satisfied by the means previously described.
|
8.
|
Administration: This Agreement and the Participant’s rights hereunder are subject to all the terms and conditions of the Plan, as the same may be amended from time to time, as well as to such rules and regulations as the Committee may adopt for administration of the Plan. It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and this Agreement, all of which will be binding upon the Participant.
|
9.
|
Continuation of Employment: This Agreement will not confer upon the Participant any right to continuation of employment by the Company, its Affiliates, and/or its Subsidiaries, nor will this Agreement interfere in any way with the Company’s, its Affiliates’, and/or its Subsidiaries’ right to terminate the Participant’s employment at any time.
|
10.
|
Amendment to the Plan: The Plan is discretionary in nature and the Committee may terminate, amend, or modify the Plan; provided, however, that no such termination, amendment, or modification of the Plan may adversely affect the Participant’s rights under this Agreement, without the Participant’s written approval.
|
11.
|
Amendment to This Agreement: The Committee may terminate, amend, or modify this Agreement. No such termination, amendment, or modification of the Agreement may adversely affect the Participant’s rights under this Agreement, without the Participant’s written approval.
|
12.
|
Successor: All obligations of the Company under the Plan and this Agreement, with respect to the Performance Shares, will be binding on any legal successor to or assigns of the Company.
|
13.
|
Severability: The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions will nevertheless be binding and enforceable.
|
14.
|
Applicable Laws and Consent to Jurisdiction: The validity, construction, interpretation, and enforceability of this Agreement will be determined and governed by the laws of the state of Delaware without giving effect to the principles of conflicts of law. For the purpose of litigating any dispute that arises under this Agreement, the parties hereby consent to exclusive jurisdiction and agree that such litigation will be conducted in the federal or state courts of the state of Georgia.
|
15.
|
Definition of Change in Control: “Change in Control” means the occurrence of a “change in the ownership of the Company,” a “change in the effective control of the Company,” or a “change in the ownership of a substantial portion of the Company’s assets” (as such terms are defined below).
|
(a)
|
A “change in ownership of the Company” shall occur on the date that any one person, or more than one person acting as a “Group” (as defined below), acquires ownership of stock of the Company that, together with stock held by such person or Group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Company; provided, however, that, if any one person or more than one person acting as a Group, is considered to own more than 50% of the total fair market value or total voting power of the stock of the Company, the acquisition of additional stock by the same person or persons is not considered to cause a change in the ownership of the Company. In addition, the following shall not constitute a change in ownership of the Company: (i) any acquisition by any one person, or more than one person acting as a Group, who on December 1, 2004 is the “beneficial owner” (within the meaning of Rule 13d-3 of the Rules and Regulations under the Securities Exchange Act of 1934, as amended) (a “Beneficial Owner”) of thirty percent (30%) or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”), (ii) any acquisition directly from the Company, including without limitation, a public offering of securities, (iii) any acquisition by the Company, (iv) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its Affiliates, or (v) any transaction described in Subsection (d) below.
|
(b)
|
A “change in the effective control of the Company” occurs on the date that:
|
(i)
|
Any one person, or more than one person acting as a Group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing thirty-five percent (35%) or more of the total voting power of the stock of the Company; provided, however, if any one person, or more than one person acting as a group, is considered to own thirty-five percent (35%) or more of the total voting power of the stock of the Company, the acquisition of additional stock by the same person or persons is not considered to cause a change in the effective control of the Company. Notwithstanding the foregoing, the following shall not constitute a change in the effective control of the Company: (A) any acquisition by any one person, or more than one person acting as a Group, who on December 1, 2004 is the Beneficial Owner of thirty percent (30%) or more of the Outstanding Company Voting Securities, (B) any acquisition directly from the Company, including without limitation, a public offering of securities, (C) any acquisition by the Company, (iv) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its Affiliates, or (D) any transaction described in Subsection (d) below; or
|
(ii)
|
A majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election; provided, however, that this Paragraph (ii) shall apply only to the Company if no other corporation is a majority shareholder of the Company.
|
(c)
|
A “change in the ownership of a substantial portion of the Company’s assets” occurs on the date that any one person, or more than one person acting as a Group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total “Gross Fair Market Value” (as defined below) equal to or more than 90% of the total Gross Fair Market Value of all of the assets of the Company immediately prior to such acquisition or acquisitions; provided, however, that, a transfer of assets by the Company is not treated as a change in the ownership of such assets if the assets are transferred to:
|
(i)
|
a shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to its stock;
|
(ii)
|
an entity, 50% or more of the total value or voting power of which is owned, directly or indirectly, by the Company;
|
(iii)
|
a person, or more than one person acting as a Group, that owns, directly or indirectly, 50% or more of the total value or voting power of all the outstanding stock of the Company;
|
(iv)
|
an entity, at least 50% of the total value or voting power of which is owned, directly or indirectly, by a person described in Paragraph (iii) hereof); or
|
(v)
|
a Successor Entity pursuant to a transaction described in Subsection (d) below.
|
(d)
|
Consummation of a reorganization, merger, or consolidation to which the Company is a party, or a sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”) shall not constitute a change in ownership of the Company, a change in the effective control of the Company, or a change in the ownership of a substantial portion of the Company’s assets, if following such Business Combination: (i) all or substantially all the individuals or entities who were the Beneficial Owners of Outstanding Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than sixty percent (60%) of the combined voting power of the outstanding voting securities entitled to vote generally in the election of the members of the board of directors of the company resulting from the Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) (the “Successor Entity”) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Voting Securities; (ii) no person or Group (excluding any Successor Entity or any employee benefit plan, or related trust, of the Company or such Successor Entity) beneficially owns, directly or indirectly, thirty percent (30%) or more of the combined voting power of the then outstanding voting securities of the Successor Entity, except to the extent that such ownership existed prior to the Business Combination; and (iii) at least a majority of the members of the board of directors of the Successor Entity were members of the incumbent Board (including members of the Board whose appointment or election is endorsed by a majority of the Board prior to the date of the appointment or election) at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination.
|
(e)
|
For purposes of the definition of Change in Control:
|
(i)
|
“Group” means persons acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase, or acquisition of stock of the Company or assets of the Company, or a similar business transaction with the Company (the “Transaction”); provided, however, that with respect to any person who owns stock of both the Company and the other corporation in a Transaction, such person will only be treated as acting as a group with respect to his or her interest in the other corporation prior to the Transaction;
|
(ii)
|
“Gross Fair Market Value” means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets; and
|
(iii)
|
Notwithstanding any other provision hereof, stock ownership shall be determined under Code Section 409A, and no Change in Control shall be deemed to have occurred hereunder unless such event constitutes a change in the ownership or effective control of the Company or in a substantial portion of the assets of the Company under Code Section 409A.
|
16.
|
“Retirement” means voluntary resignation of employment by a Participant, who is also an employee of the Company or an Affiliate (as defined in the Plan),after (i) the later of attaining age sixty-five (65) or the fifth anniversary of the Participant’s date of hire, or (ii) attaining age fifty-five (55) with at least five (5) Years of Vesting Service; provided, however, that if a Participant is a participant under the Company’s Pension Plan or Retirement Contribution Plan, “Retirement” shall mean satisfying the requirements for “retirement” or “early retirement” as defined in the applicable plan. For purposes of the definition of “Retirement,” “Years of Vesting Service” shall be determined in the same manner as years of vesting service are determined pursuant to the Company’s Pension Plan or Retirement Contribution Plan, whichever is applicable to the Participant; however, if such plan is subsequently terminated, the “Committee” (as defined in the Plan) shall determine the meaning of such term in its sole discretion.
|
17.
|
Compensation Recovery Policy: The Board has adopted this compensation recovery policy (the “Clawback Policy”) for “named executive officers,” other senior officers and participants (each hereinafter referred to individually as an “Executive” and collectively as “Executives”) in the Company’s Management Incentive Plan (“MIP”) and the Company’s Long-term Compensation Plan (“LTCP”), and the Performance Shares granted under this Agreement shall be deemed to be components of the MIP and/or the LTCP. Under the Clawback Policy, the Board may, to the extent permitted by governing law, require reimbursement of any MIP bonus or LTCP stock grants paid to an individual Executive, a group of Executives or all Executives if: (i) the payment was predicated upon the achievement of certain financial results that were subsequently the subject of a material restatement, (ii) the Board reasonably determines that the Executive engaged in conduct that caused or partially caused the need for the restatement or that the restatement is of such a nature as to warrant seeking recovery of compensation from all or some larger group of Executives, and (iii) a lower payment would have been made to the Executive (or group of Executives) based upon the restated financial results. In each such instance, the Board may seek to recover the relevant overpayment amount of the MIP bonus or LTCP grant for the period at issue. In applying the Clawback Policy, the Board will have sole discretion in determining whether an Executive’s conduct has or has not met any particular standard of conduct under law or Company policy and whether the compensation recovery should apply to an individual Executive or a larger group of Executives and the extent of the amount of recovery sought. Further, following a restatement of the Company’s financial statements, the Company will recover any compensation received by (a) the Chief Executive Officer and Chief Financial Officer that is required to be recovered by Section 304 of the Sarbanes-Oxley Act of 2002 (Section 304 of the Sarbanes-Oxley Act of 2002 requires the Chief Executive Officer and Chief Financial Officer of a company to disgorge their bonuses and other incentive compensation where (i) the company must prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the securities laws and (ii) the noncompliance results from misconduct), or (b) an executive officer, to the extent required under Section 954 of the Dodd-Frank Wall Street Reform Act and Consumer Protection Act.
|
18.
|
The Plan Governs; Capitalized Terms: The Plan provides a complete description of the terms and conditions governing the Performance Shares. If there is any inconsistency between the terms of this Agreement and the terms of the Plan, the Plan’s terms will completely supersede and replace the conflicting terms of this Agreement. All capitalized terms will have the meanings ascribed to them in the Plan, unless specifically defined otherwise herein.
|
(a)
|
A “change in ownership of the Company” shall occur on the date that any one person, or more than one person acting as a “Group” (as defined below), acquires ownership of stock of the Company that, together with stock held by such person or Group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Company; provided, however, that, if any one person or more than one person acting as a Group, is considered to own more than 50% of the total fair market value or total voting power of the stock of the Company, the acquisition of additional stock by the same person or persons is not considered to cause a change in the ownership of the Company. In addition, the following shall not constitute a change in ownership of the Company: (i) any acquisition by any one person, or more than one person acting as a Group, who on December 1, 2004 is the “beneficial owner” (within the meaning of Rule 13d-3 of the Rules and Regulations under the Securities Exchange Act of 1934, as amended) (a “Beneficial Owner”) of thirty percent (30%) or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”), (ii) any acquisition directly from the Company, including without limitation, a public offering of securities, (iii) any acquisition by the Company, (iv) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its Affiliates, or (v) any transaction described in Clause (d) below.
|
(b)
|
A “change in the effective control of the Company” occurs on the date that:
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(1)
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Any one person, or more than one person acting as a Group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing thirty-five percent (35%) or more of the total voting power of the stock of the Company; provided, however, if any one person, or more than one person acting as a group, is considered to own thirty-five percent (35%) or more of the total voting power of the stock of the Company, the acquisition of additional stock by the same person or persons is not considered to cause a
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(2)
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A majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election; provided, however, that this Subclause (2) shall apply only to the Company if no other corporation is a majority shareholder of the Company.
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(c)
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A “change in the ownership of a substantial portion of the Company’s assets” occurs on the date that any one person, or more than one person acting as a Group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total “Gross Fair Market Value” (as defined below) equal to or more than 90% of the total Gross Fair Market Value of all of the assets of the Company immediately prior to such acquisition or acquisitions; provided, however, that, a transfer of assets by the Company is not treated as a change in the ownership of such assets if the assets are transferred to:
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(1)
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a shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to its stock;
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(2)
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an entity, 50% or more of the total value or voting power of which is owned, directly or indirectly, by the Company;
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(3)
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a person, or more than one person acting as a Group, that owns, directly or indirectly, 50% or more of the total value or voting power of all the outstanding stock of the Company;
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(4)
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an entity, at least 50% of the total value or voting power of which is owned, directly or indirectly, by a person described in Subclause (3) hereof); or
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(5)
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a Successor Entity pursuant to a transaction described in Clause (d) below.
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(d)
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Consummation of a reorganization, merger, or consolidation to which the Company is a party, or a sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”) shall not constitute a change in ownership of the Company, a change in the effective control of the Company, or a change in the ownership of a substantial portion of the Company’s assets, if following such
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(e)
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For purposes of the definition of Change in Control:
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(1)
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“Group” means persons acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase, or acquisition of stock of the Company or assets of the Company, or a similar business transaction with the Company (the “Transaction”); provided, however, that with respect to any person who owns stock of both the Company and the other corporation in a Transaction, such person will only be treated as acting as a group with respect to his or her interest in the other corporation prior to the Transaction;
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(2)
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“Gross Fair Market Value” means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets; and
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(3)
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Notwithstanding any other provision hereof, stock ownership shall be determined under Code Section 409A, and no Change in Control shall be deemed to have occurred hereunder unless such event constitutes a change in the ownership or effective control of the Company or in a substantial portion of the assets of the Company under Code Section 409A.
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(a)
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A “change in ownership of the Company” shall occur on the date that any one person, or more than one person acting as a “Group” (as defined below), acquires ownership of stock of the Company that, together with stock held by such person or Group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Company; provided, however, that, if any one person or more than one person acting as a Group, is considered to own more than 50% of the total fair market value or total voting power of the stock of the Company, the acquisition of additional stock by the same person or persons is not considered to cause a change in the ownership of the Company. In addition, the following shall not constitute a change in ownership of the Company: (i) any acquisition by any one person, or more than one person acting as a Group, who on December 1, 2004 is the “beneficial owner” (within the meaning of Rule 13d-3 of the Rules and Regulations under the Securities Exchange Act of 1934, as amended) (a “Beneficial Owner”) of thirty percent (30%) or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”), (ii) any acquisition directly from the Company, including without limitation, a public offering of securities, (iii) any acquisition by the Company, (iv) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its Affiliates, or (v) any transaction described in Clause (d) below.
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(b)
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A “change in the effective control of the Company” occurs on the date that:
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(1)
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Any one person, or more than one person acting as a Group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing thirty-five percent (35%) or more of the total voting power of the stock of the Company; provided, however, if any one person, or more than one person acting as a group, is considered to own thirty-five percent (35%) or more of the total voting power of the stock of the Company, the acquisition of additional stock by the same person or persons is not considered to cause a change in the effective control of the Company. Notwithstanding the foregoing, the following shall not constitute a change in the effective control of the Company: (A) any acquisition by any one person, or more than one person acting as a Group, who on December 1, 2004 is the Beneficial Owner of thirty percent (30%) or more of the Outstanding Company Voting Securities, (B) any acquisition directly from the Company, including without limitation, a public offering of securities, (C) any acquisition by the Company, (iv) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its Affiliates, or (D) any transaction described in Clause (d) below; or
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(2)
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A majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or
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(c)
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A “change in the ownership of a substantial portion of the Company’s assets” occurs on the date that any one person, or more than one person acting as a Group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total “Gross Fair Market Value” (as defined below) equal to or more than 90% of the total Gross Fair Market Value of all of the assets of the Company immediately prior to such acquisition or acquisitions; provided, however, that, a transfer of assets by the Company is not treated as a change in the ownership of such assets if the assets are transferred to:
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(1)
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a shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to its stock;
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(2)
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an entity, 50% or more of the total value or voting power of which is owned, directly or indirectly, by the Company;
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(3)
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a person, or more than one person acting as a Group, that owns, directly or indirectly, 50% or more of the total value or voting power of all the outstanding stock of the Company;
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(4)
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an entity, at least 50% of the total value or voting power of which is owned, directly or indirectly, by a person described in Subclause (3) hereof); or
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(5)
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a Successor Entity pursuant to a transaction described in Clause (d) below.
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(d)
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Consummation of a reorganization, merger, or consolidation to which the Company is a party, or a sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”) shall not constitute a change in ownership of the Company, a change in the effective control of the Company, or a change in the ownership of a substantial portion of the Company’s assets, if following such Business Combination: (i) all or substantially all the individuals or entities who were the Beneficial Owners of Outstanding Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than sixty percent (60%) of the combined voting power of the outstanding voting securities entitled to vote generally in the election of the members of the board of directors of the company resulting from the Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) (the “Successor Entity”) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Voting Securities; (ii) no person or Group (excluding any Successor Entity or any employee benefit plan, or related trust, of the Company or such Successor Entity) beneficially owns, directly or indirectly, thirty percent (30%) or more of the combined voting power of the then outstanding voting securities of the Successor
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(e)
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For purposes of the definition of Change in Control:
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(1)
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“Group” means persons acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase, or acquisition of stock of the Company or assets of the Company, or a similar business transaction with the Company (the “Transaction”); provided, however, that with respect to any person who owns stock of both the Company and the other corporation in a Transaction, such person will only be treated as acting as a group with respect to his or her interest in the other corporation prior to the Transaction;
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(2)
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“Gross Fair Market Value” means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets; and
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(3)
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Notwithstanding any other provision hereof, stock ownership shall be determined under Code Section 409A, and no Change in Control shall be deemed to have occurred hereunder unless such event constitutes a change in the ownership or effective control of the Company or in a substantial portion of the assets of the Company under Code Section 409A.
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Date: August 7, 2019
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/s/ John P. O’Donnell
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John P. O’Donnell
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President, Chief Executive Officer, and Director (Principal Executive Officer)
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Date: August 7, 2019
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/s/ Bonnie C. Lind
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Bonnie C. Lind
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Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)
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/s/ John P. O’Donnell
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John P. O’Donnell
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President, Chief Executive Officer and Director
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(Principal Executive Officer)
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Date: August 7, 2019
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/s/ Bonnie C. Lind
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Bonnie C. Lind
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Senior Vice President, Chief Financial Officer and Treasurer
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(Principal Financial Officer)
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Date: August 7, 2019
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