x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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Securities registered pursuant to Section 12(b) of the Act:
|
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Title of each class
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Name of exchange on which registered
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Common stock, par value $0.01 per share
|
New York Stock Exchange
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8.00% Series A Mandatory Convertible Preferred Stock, par value $0.01 per share
|
New York Stock Exchange
|
Securities to be registered pursuant to Section 12(g) of the Act:
None
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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|
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Emerging growth company
o
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Item
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Page
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Part I
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1.
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1A.
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1B.
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2.
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3.
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4.
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Part II
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5.
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6.
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7.
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7A.
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8.
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9.
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9A.
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9B.
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Part III
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10.
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11.
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12.
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13.
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14.
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Part IV
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15.
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16.
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•
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The businesses we operate are highly competitive and many of them are cyclical, which may result in fluctuations in pricing and volume that can adversely impact our business, financial condition and results of operations.
|
•
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Our ten largest customers represent approximately
35
percent of our 2018 sales, and the loss of all or a substantial portion of our revenue from these large customers could have a material adverse effect on our business.
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•
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A material disruption at one of our major manufacturing facilities could prevent us from meeting customer demand, reduce our sales and profitability, increase our cost of production and capital needs, or otherwise adversely affect our business, financial condition and results of operation.
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•
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Changes in raw material and energy availability and prices could affect our business, financial condition and results of operations.
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•
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The availability of, and prices for, wood fiber could materially impact our business, results of operations and financial condition.
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•
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We are subject to risks associated with doing business outside of the United States.
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•
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Our operations require substantial capital.
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•
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Currency fluctuations may have a negative impact on our business, financial condition and results of operations.
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•
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Restrictions on trade through tariffs, countervailing and anti-dumping duties, quotas and other trade barriers, in the United States and internationally, especially with respect to China, Canada and as a result of “Brexit”, could adversely affect our ability to access certain markets and otherwise impact our results of operations.
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•
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We depend on third parties for transportation services and increases in costs and the availability of transportation could adversely affect our business.
|
•
|
Our business is subject to extensive environmental laws, regulations and permits that may restrict or adversely affect our financial results and how we conduct business.
|
•
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The potential impacts of climate change and climate-related initiatives, remain uncertain at this time.
|
•
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Our failure to maintain satisfactory labor relations could have a material adverse effect on our business.
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•
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We are dependent upon attracting and retaining key personnel, the loss of whom could adversely affect our business.
|
•
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Failure to develop new products or discover new applications for our existing products, or our inability to protect the intellectual property underlying such new products or applications, could have a negative impact on our business.
|
•
|
The risk of loss of the Company’s intellectual property and sensitive business information, or disruption of its manufacturing operations, in each case due to cyberattacks or cybersecurity breaches, could adversely impact the Company.
|
•
|
We may need to make significant additional cash contributions to our retirement benefit plans if investment returns on pension assets are lower than expected or interest rates decline, and/or due to changes to regulatory, accounting and actuarial requirements.
|
•
|
We have significant debt obligations that could adversely affect our business and our ability to meet our obligations.
|
•
|
The phase-out of the London Inter Bank Office Rate (“LIBOR”) as an interest rate benchmark could result in an increase to our borrowing costs.
|
•
|
Challenges in the commercial and credit environments may materially adversely affect our future access to capital.
|
•
|
We may need additional financing in the future to meet our capital needs or to make acquisitions, and such financing may not be available on favorable terms, if at all, and may be dilutive to existing stockholders.
|
•
|
The inability to effectively integrate the Tembec Inc. (“Tembec”) acquisition and meet our financial objectives therefrom, and any future acquisitions we may make, may affect our results.
|
•
|
Your percentage of ownership in the Company may be diluted in the future.
|
•
|
Our common stock ranks junior to our Mandatory Convertible Preferred Stock, Series A (the “Preferred Stock”) with respect to dividends and amounts payable in the event of our liquidation.
|
•
|
Certain provisions of the Preferred Stock could prevent or delay an acquisition of the Company, which could decrease the price of our common stock.
|
•
|
Certain provisions in our amended and restated certificate of incorporation and bylaws, and of Delaware law, could prevent or delay an acquisition of the Company, which could decrease the price of our common stock.
|
Item 1.
|
Business
|
•
|
New Products - expanding our business by developing next generation cellulose fibers and other value-added products utilizing our cellulose processing technology, expertise and co-products. We have made significant progress in developing and applying proprietary technologies to new products in many of the end-market segments we serve.
|
•
|
Market Optimization - maximizing the profitability of our existing products and assets by optimizing the intersection of our customers’ needs, our manufacturing capabilities and transportation costs to drive higher value for our customers and our Company.
|
•
|
Investments - delivering a capital allocation strategy that maximizes our risk adjusted returns. We intend to de-lever our balance sheet through EBITDA growth and repayment of indebtedness with a target net leverage ratio of 2.5 times EBITDA. In conjunction with this de-leveraging, we will allocate capital across high return investments in our facilities, acquisitions and other external investments to grow profitability, as well as return capital to stockholders through stock buybacks and dividends.
|
•
|
Paperboard, produced in the Temiscaming plant, is used for packaging, printing documents, brochures, promotional materials, paperback book or catalog covers, file folders, tags and tickets.
|
•
|
Newsprint, produced in the Kapuskasing plant, is a paper grade used to print newspapers, advertising materials and other publications.
|
Item 1A.
|
Risk Factors
|
•
|
unscheduled outages or downtime due to the need for unexpected maintenance or equipment failure, such as for portions of our facilities that produce steam and electricity (such as boilers and turbines), pollution control equipment, and equipment directly used to manufacture our products;
|
•
|
prolonged power interruptions or failures;
|
•
|
explosion of a boiler or other pressure vessel;
|
•
|
interruptions in the supply of raw materials, including chemicals and wood fiber;
|
•
|
disruptions to or failures of the transportation infrastructure, such as roads, bridges, railroad tracks and tunnels, as well as lack of availability of rail, trucking and ocean shipping equipment and service from third party transportation providers;
|
•
|
interruption or material reduction of water supply;
|
•
|
a chemical spill or release or other event causing risks to the environment or human health and safety;
|
•
|
information technology system failures and cybersecurity incidents;
|
•
|
fires, floods, windstorms, earthquakes, hurricanes or other similar catastrophes, such as the hurricanes which impacted our Jesup, Georgia and Fernandina Beach, Florida plants in 2017;
|
•
|
labor interruptions, such as the strike at our Temiscaming, Quebec facility in 2014;
|
•
|
terrorism or threats of terrorism; and
|
•
|
other operational problems resulting from these and other risks.
|
•
|
maintaining and governing international subsidiaries and managing international operations;
|
•
|
the need to comply with, changes in and reinterpretations of, the laws, regulations and enforcement priorities of the countries in which we manufacture and sell our products;
|
•
|
responsibility to comply with anti-bribery laws such as the U.S. Foreign Corrupt Practices Act and similar anti-bribery laws in other jurisdictions;
|
•
|
trade protection laws, policies and measures and other regulatory requirements affecting trade and investment, including loss or modification of exemptions for taxes and tariffs, imposition of new tariffs and duties and import and export licensing requirements, as discussed below in more detail;
|
•
|
repatriating cash from foreign countries to the United States;
|
•
|
changes in tax laws and their interpretations in the countries in which we do business, including the potential impact on the value of recorded or future deferred tax assets and liabilities;
|
•
|
product damage or losses incurred during shipping;
|
•
|
political instability and actual or anticipated military or political conflicts;
|
•
|
economic instability, inflation, recessions and interest rate and currency exchange rate fluctuations, as discussed below in more detail;
|
•
|
uncertainties regarding non-U.S. judicial systems, rules and procedures; and
|
•
|
minimal or limited protection of intellectual property in some countries.
|
•
|
requiring a substantial portion of our cash flows from operations to make interest payments on this debt;
|
•
|
making it more difficult to satisfy debt service and other obligations;
|
•
|
increasing the risk of a future credit ratings downgrade of our debt, which could increase future debt costs and limit the future availability of debt financing;
|
•
|
increasing our vulnerability to general adverse economic and industry conditions;
|
•
|
reducing the cash flows available to fund capital expenditures and other corporate purposes and to grow our business;
|
•
|
limiting our flexibility in planning for, or reacting to, market or other changes in our businesses and industry;
|
•
|
placing us at a competitive disadvantage to our competitors that may not be as highly leveraged with debt; and
|
•
|
limiting our ability to borrow additional funds as needed or take advantage of business opportunities as they arise, pay cash dividends or repurchase common stock.
|
Item 1B.
|
Unresolved Staff Comments
|
Item 2.
|
Properties
|
Segment/Location
|
|
Annual Production Capacity
|
|
Owned/Leased
|
|
High Purity Cellulose Facilities (a):
|
|||||
|
Jesup, Georgia, United States
|
|
330,000 metric tons of cellulose specialties or commodity products
245,000 metric tons of commodity products
|
|
Owned
|
|
Fernandina Beach, Florida, United States
|
|
155,000 metric tons of cellulose specialties or commodity products
|
|
Owned
|
|
Temiscaming, Quebec, Canada
|
|
150,000 metric tons of cellulose specialties or commodity products
|
|
Owned
|
|
Tartas, France
|
|
140,000 metric tons of cellulose specialties or commodity products
|
|
Owned
|
Forest Products Group Facilities (b):
|
|||||
|
La Sarre, Quebec, Canada
|
|
135,000 thousand board feet of lumber
|
|
Owned
|
|
Bearn, Quebec, Canada
|
|
110,000 thousand board feet of lumber
|
|
Owned
|
|
Chapleau, Ontario, Canada
|
|
135,000 thousand board feet of lumber
|
|
Owned
|
|
Cochrane, Ontario, Canada
|
|
160,000 thousand board feet of lumber
|
|
Owned
|
|
Hearst, Ontario, Canada
|
|
110,000 thousand board feet of lumber
|
|
Owned
|
|
Huntsville, Ontario, Canada
|
|
15,000 thousand board feet of lumber
|
|
Owned
|
|
Kapuskasing, Ontario, Canada
|
|
105,000 thousand board feet of lumber
|
|
Owned
|
Pulp Facilities (a):
|
|||||
|
Temiscaming, Quebec, Canada
|
|
300,000 metric tons of high-yield pulp
|
|
Owned
|
|
Matane, Quebec, Canada
|
|
270,000 metric tons of high-yield pulp
|
|
Owned
|
Paper Facilities (a):
|
|
|
|
|
|
|
Kapuskasing, Ontario, Canada
|
|
205,000 metric tons of newspaper
|
|
Owned
|
|
Temiscaming, Quebec, Canada
|
|
180,000 metric tons of paperboard
|
|
Owned
|
Wood Chipping Facilities (a):
|
|||||
|
Offerman, Georgia, United States
|
|
880,000 short green tons of wood chips
|
|
Owned
|
|
Collins, Georgia, United States
|
|
780,000 short green tons of wood chips
|
|
Owned
|
|
Eastman, Georgia, United States
|
|
350,000 short green tons of wood chips
|
|
Owned
|
|
Barnesville, Georgia, United States
|
|
350,000 short green tons of wood chips
|
|
Owned
|
|
Quitman, Georgia, United States
|
|
200,000 short green tons of wood chips
|
|
Owned
|
Corporate and Other:
|
|||||
|
Jacksonville, Florida, United States
|
|
Corporate Headquarters
|
|
Leased
|
(a)
|
During
2018
, these facilities produced at or near capacity levels for most of the year.
|
(b)
|
Capacity represents targeted production for these facilities. On average, these facilities produce at approximately 80 percent of capacity due to economic conditions, wood availability, and downtime.
|
Item 3.
|
Legal Proceedings
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
Period
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
|
||||||
September 30 to November 3
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
85,294,000
|
|
November 4 to December 1 (a)
|
1,768,409
|
|
|
$
|
14.14
|
|
|
1,768,409
|
|
|
$
|
60,294,000
|
|
December 2 to December 31
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
60,294,000
|
|
Total
|
1,768,409
|
|
|
|
|
1,768,409
|
|
|
|
(a)
|
The shares were repurchased under the accelerated share repurchase ("ASR") agreement entered into on November 8, 2018 with JPMorgan Chase Bank, National Association ("JPMorgan"), for the repurchase of an aggregate of $25 million of the Company's common stock. The ASR was implemented under the Company's share repurchase authorization of up to $100 million, which was declared by the Board of Directors on January 29, 2018. As of
December 31, 2018
, there was approximately $60 million of share repurchase authorization remaining under the program. Refer to
Note 12
—
Stockholders' Equity (Deficit)
for additional information.
|
|
|
6/27/2014
|
|
12/31/2014
|
|
12/31/2015
|
|
12/31/2016
|
|
12/31/2017
|
|
12/31/2018
|
||||||||||||
Rayonier Advanced Materials
|
|
$
|
100
|
|
|
$
|
61
|
|
|
$
|
27
|
|
|
$
|
44
|
|
|
$
|
60
|
|
|
$
|
32
|
|
S&P Small Cap 600
|
|
$
|
100
|
|
|
$
|
103
|
|
|
$
|
101
|
|
|
$
|
128
|
|
|
$
|
144
|
|
|
$
|
132
|
|
S&P 500 Materials Index
|
|
$
|
100
|
|
|
$
|
99
|
|
|
$
|
91
|
|
|
$
|
106
|
|
|
$
|
131
|
|
|
$
|
112
|
|
Item 6.
|
Selected Financial Data
|
(millions of dollars except per share amounts)
|
2018
|
|
2017 (d)
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
Statement of Income Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net Sales
|
$
|
2,134
|
|
|
$
|
961
|
|
|
$
|
869
|
|
|
$
|
941
|
|
|
$
|
958
|
|
Gross margin (a)
|
344
|
|
|
143
|
|
|
186
|
|
|
209
|
|
|
227
|
|
|||||
Operating income (a)
|
198
|
|
|
61
|
|
|
143
|
|
|
127
|
|
|
66
|
|
|||||
Net income
|
128
|
|
|
325
|
|
|
73
|
|
|
55
|
|
|
32
|
|
|||||
Diluted earnings per share of common stock (b)
|
$
|
1.96
|
|
|
$
|
5.81
|
|
|
$
|
1.55
|
|
|
$
|
1.30
|
|
|
$
|
0.75
|
|
Dividends declared per share of common stock
|
$
|
0.28
|
|
|
$
|
0.28
|
|
|
$
|
0.28
|
|
|
$
|
0.28
|
|
|
$
|
0.14
|
|
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
$
|
2,679
|
|
|
$
|
2,643
|
|
|
$
|
1,422
|
|
|
$
|
1,279
|
|
|
$
|
1,293
|
|
Property, plant and equipment, net
|
1,381
|
|
|
1,408
|
|
|
801
|
|
|
804
|
|
|
843
|
|
|||||
Total debt
|
1,188
|
|
|
1,241
|
|
|
783
|
|
|
858
|
|
|
934
|
|
|||||
Stockholders’ equity (deficit)
|
707
|
|
|
694
|
|
|
212
|
|
|
(17
|
)
|
|
(62
|
)
|
|||||
Statement of Cash Flows Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash provided by operating activities
|
$
|
247
|
|
|
$
|
130
|
|
|
$
|
232
|
|
|
$
|
202
|
|
|
$
|
188
|
|
Cash used for investing activities
|
(116
|
)
|
|
(277
|
)
|
|
(87
|
)
|
|
(78
|
)
|
|
(90
|
)
|
|||||
Cash provided by (used in) financing activities
|
(116
|
)
|
|
(84
|
)
|
|
80
|
|
|
(89
|
)
|
|
(31
|
)
|
|||||
Capital expenditures
|
(132
|
)
|
|
(75
|
)
|
|
(89
|
)
|
|
(78
|
)
|
|
(75
|
)
|
|||||
Non-GAAP Measures (c):
|
|
|
|
|
|
|
|
|
|
||||||||||
EBITDA
|
$
|
380
|
|
|
$
|
480
|
|
|
$
|
235
|
|
|
$
|
209
|
|
|
$
|
149
|
|
Adjusted EBITDA
|
$
|
364
|
|
|
$
|
212
|
|
|
$
|
226
|
|
|
$
|
238
|
|
|
$
|
267
|
|
Adjusted Free Cash Flows
|
$
|
152
|
|
|
$
|
65
|
|
|
$
|
147
|
|
|
$
|
124
|
|
|
$
|
113
|
|
(a)
|
The Company adopted Accounting Standards Update (“ASU”) No. 2017-07,
Compensation-Retirement Benefits
, on January 1, 2018 using the retrospective method. As a result, gross margin and operating income was restated to reflect a $4 million, $5 million, $7 million and $3 million decrease in cost of sales during the years ended December 31, 2017, 2016, 2015 and 2014, respectively. In addition, selling, general and administrative expenses decreased by $1 million for each of the years ended December 31, 2017, 2016 and 2015. The offsetting increases are reflected in non-operating income with no change to the previously reported net income.
|
(b)
|
For the years ended December 31, 2018, 2017 and 2016, basic and diluted earnings per share include the impact of dividends on the Company’s Preferred Stock. See
Note 12
—
Stockholders' Equity (Deficit)
of our consolidated financial statements for more information. In conjunction with the separation from Rayonier Inc., 42,176,565 shares of our common stock were distributed to Rayonier shareholders on June 27, 2014.
|
(c)
|
EBITDA, adjusted EBITDA and adjusted free cash flows are non-GAAP measures. See “Note about Non-GAAP Financial Measures” on page 2 for limitations associated with non-GAAP measures. Also see Item 7
— Management’s Discussion and Analysis of Financial Condition and Results of Operations — Performance and Liquidity Indicators
for definitions of these non-GAAP measures as well as a reconciliation of EBITDA, adjusted EBITDA and adjusted free cash flows to their most directly comparable GAAP financial measure.
|
(d)
|
On November 17, 2017, the Company acquired all of the outstanding common shares of Tembec for an aggregate purchase price of approximately
$317 million
Canadian dollars cash and
8.4 million
shares of the Company’s common stock, par value
$0.01
per share. See
Note 3
—
Tembec Acquisition
, for a summary of assets and liabilities assumed in the acquisition and the unaudited pro forma net income for the years ended December 31, 2017 and 2016.
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
New Products - expanding our business by developing next generation cellulose fibers and other value-added products utilizing our cellulose processing technology, expertise and co-products. We have made significant progress in developing and applying proprietary technologies to new products in many of the end-market segments we serve.
|
•
|
Market Optimization - maximizing the profitability of our existing products and assets by optimizing the intersection of our customers’ needs, our manufacturing capabilities and transportation costs to drive higher value for our customers and our Company.
|
•
|
Investments - delivering a capital allocation strategy that maximizes our risk adjusted returns. We intend to de-lever our balance sheet through EBITDA growth and repayment of indebtedness with a target net leverage ratio of 2.5 times EBITDA. In conjunction with this de-leveraging, we will allocate capital across high return investments in our facilities, acquisitions and other external investments to grow profitability, as well as return capital to stockholders through stock buybacks and dividends.
|
Financial Information
(in millions, except percentages)
|
2018
|
|
2017
|
|
2016
|
||||||
Net Sales
|
$
|
2,134
|
|
|
$
|
961
|
|
|
$
|
869
|
|
Cost of Sales
|
(1,790
|
)
|
|
(818
|
)
|
|
(683
|
)
|
|||
Gross Margin
|
344
|
|
|
143
|
|
|
186
|
|
|||
Selling, general and administrative expenses
|
(108
|
)
|
|
(79
|
)
|
|
(37
|
)
|
|||
Duties
|
(26
|
)
|
|
(1
|
)
|
|
—
|
|
|||
Other operating expense, net
|
(12
|
)
|
|
(2
|
)
|
|
(6
|
)
|
|||
Operating Income
|
198
|
|
|
61
|
|
|
143
|
|
|||
Interest expense
|
(60
|
)
|
|
(40
|
)
|
|
(35
|
)
|
|||
Interest income and other, net
|
4
|
|
|
2
|
|
|
1
|
|
|||
Other components of net periodic benefit costs
|
9
|
|
|
(3
|
)
|
|
(6
|
)
|
|||
Gain on bargain purchase
|
20
|
|
|
317
|
|
|
—
|
|
|||
Gain on derivative instrument
|
—
|
|
|
8
|
|
|
—
|
|
|||
Gain on debt extinguishment
|
1
|
|
|
—
|
|
|
9
|
|
|||
Income Before Income Taxes
|
172
|
|
|
345
|
|
|
112
|
|
|||
Income Tax Expense
|
(44
|
)
|
|
(20
|
)
|
|
(39
|
)
|
|||
Net Income
|
$
|
128
|
|
|
$
|
325
|
|
|
$
|
73
|
|
|
|
|
|
|
|
||||||
Gross Margin %
|
16.1
|
%
|
|
14.9
|
%
|
|
21.4
|
%
|
|||
Operating Margin %
|
9.3
|
%
|
|
6.4
|
%
|
|
16.5
|
%
|
|||
Effective Tax Rate %
|
25.4
|
%
|
|
5.7
|
%
|
|
34.9
|
%
|
|
2018
|
|
2017
|
||||
Net Sales (in millions)
|
|
|
|
||||
High Purity Cellulose
|
$
|
1,192
|
|
|
$
|
867
|
|
Forest Products
|
356
|
|
|
34
|
|
||
Pulp
|
346
|
|
|
38
|
|
||
Paper
|
310
|
|
|
29
|
|
||
Eliminations
|
(70
|
)
|
|
(7
|
)
|
||
Total Net Sales
|
$
|
2,134
|
|
|
$
|
961
|
|
($ in million)
|
|
2018
|
|
2017
|
||||
Net Sales
|
|
$
|
1,192
|
|
|
$
|
867
|
|
Operating Income
|
|
$
|
112
|
|
|
$
|
120
|
|
Average Sales Prices ($ per metric ton):
|
|
|
|
|
||||
Cellulose Specialties
|
|
$
|
1,334
|
|
|
$
|
1,460
|
|
Commodity Products
|
|
$
|
818
|
|
|
$
|
733
|
|
Sales Volumes (thousands of metric tons):
|
|
|
|
|
||||
Cellulose Specialties
|
|
624
|
|
|
453
|
|
||
Commodity Products
|
|
298
|
|
|
250
|
|
(in millions)
|
|
2018
|
|
2017
|
||||
Net Sales
|
|
$
|
356
|
|
|
$
|
34
|
|
Operating income
|
|
$
|
25
|
|
|
$
|
—
|
|
Average Sales Prices ($ per thousand board feet):
|
|
|
|
|
||||
Lumber
|
|
$
|
471
|
|
|
$
|
460
|
|
Sales Volumes (millions of board feet):
|
|
|
|
|
||||
Lumber
|
|
604
|
|
|
56
|
|
(in millions)
|
|
2018
|
|
2017
|
||||
Net Sales
|
|
$
|
346
|
|
|
$
|
38
|
|
Operating income
|
|
$
|
95
|
|
|
$
|
4
|
|
Average Sales Prices ($ per metric tons) (a):
|
|
|
|
|
||||
High-yield pulp
|
|
$
|
665
|
|
|
$
|
616
|
|
Sales Volumes (in thousands of metric tons) (a):
|
|
|
|
|
||||
High-yield pulp
|
|
482
|
|
|
58
|
|
||
(a) Average sales prices and volumes for external sales only. The Pulp segment sold approximately 65 thousand MTs of high-yield pulp for $26 million to the Paper segment for the production of paperboard during 2018.
|
Net Sales (in millions)
|
2017
|
|
Changes Attributable to:
|
|
2018
|
||||||||||||||
|
Price
|
|
Volume/Mix
|
|
Acquisition
|
|
|||||||||||||
High-yield pulp
|
$
|
38
|
|
|
$
|
4
|
|
|
$
|
(2
|
)
|
|
$
|
306
|
|
|
$
|
346
|
|
(in millions)
|
|
2018
|
|
2017
|
||||
Net Sales
|
|
$
|
310
|
|
|
$
|
29
|
|
Operating income
|
|
$
|
31
|
|
|
$
|
(1
|
)
|
Average Sales Prices ($ per metric ton):
|
|
|
|
|
||||
Paperboard
|
|
$
|
1,130
|
|
|
$
|
1,132
|
|
Newsprint
|
|
$
|
592
|
|
|
$
|
513
|
|
Sales Volumes (in metric tons):
|
|
|
|
|
||||
Paperboard
|
|
174
|
|
|
17
|
|
||
Newsprint
|
|
191
|
|
|
21
|
|
Net Sales (in millions)
|
2017
|
|
Changes Attributable to:
|
|
2018
|
||||||||||||||
|
Price
|
|
Volume/Mix
|
|
Acquisition
|
|
|||||||||||||
Paperboard
|
$
|
19
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
176
|
|
|
$
|
197
|
|
Newsprint
|
10
|
|
|
2
|
|
|
(1
|
)
|
|
101
|
|
|
113
|
|
|||||
Total Net Sales
|
$
|
29
|
|
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
277
|
|
|
$
|
310
|
|
(in millions)
|
|
2018
|
|
2017
|
||||
Operating loss
|
|
$
|
(65
|
)
|
|
$
|
(62
|
)
|
|
|
2017
|
|
2016
|
||||
Net Sales (in millions)
|
|
|
|
|
||||
High Purity Cellulose
|
|
$
|
867
|
|
|
$
|
869
|
|
Forest Products
|
|
34
|
|
|
—
|
|
||
Pulp
|
|
38
|
|
|
—
|
|
||
Paper
|
|
29
|
|
|
—
|
|
||
Eliminations
|
|
(7
|
)
|
|
—
|
|
||
Total Net Sales
|
|
$
|
961
|
|
|
$
|
869
|
|
|
2016
|
|
Changes Attributable to:
|
|
2017
|
||||||||||||||
Net Sales (in millions)
|
Price
|
|
Volume/Mix
|
|
Acquisition
|
|
|||||||||||||
High Purity Cellulose:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cellulose specialties
|
$
|
695
|
|
|
$
|
(28
|
)
|
|
$
|
(30
|
)
|
|
$
|
25
|
|
|
$
|
662
|
|
Commodity products and other
|
174
|
|
|
16
|
|
|
(5
|
)
|
|
20
|
|
|
205
|
|
|||||
Forest Products
|
—
|
|
|
—
|
|
|
—
|
|
|
34
|
|
|
34
|
|
|||||
Pulp
|
—
|
|
|
—
|
|
|
—
|
|
|
38
|
|
|
38
|
|
|||||
Paper
|
—
|
|
|
—
|
|
|
—
|
|
|
29
|
|
|
29
|
|
|||||
Eliminations
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
(7
|
)
|
|||||
Total Net Sales
|
$
|
869
|
|
|
$
|
(12
|
)
|
|
$
|
(35
|
)
|
|
$
|
139
|
|
|
$
|
961
|
|
Operating Income (in millions)
|
|
Gross Margin Changes Attributable to:
|
|
|
|
|
|||||||||||||||||||||
|
2016
|
Price
|
|
Volume/ Sales Mix (a)
|
|
Cost
|
|
Acquisition
|
|
SG&A and other
|
|
2017
|
|||||||||||||||
Operating Income
|
$
|
143
|
|
|
$
|
(12
|
)
|
|
$
|
(21
|
)
|
|
$
|
(17
|
)
|
|
$
|
—
|
|
|
$
|
(32
|
)
|
|
$
|
61
|
|
Operating Margin %
|
16.5
|
%
|
|
(1.2
|
)%
|
|
(1.9
|
)%
|
|
(2.1
|
)%
|
|
(1.6
|
)%
|
|
(3.4
|
)%
|
|
6.3
|
%
|
(a)
|
Computed based on contribution margin.
|
|
As of December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Cash and cash equivalents (a)
|
$
|
109
|
|
|
$
|
96
|
|
|
$
|
326
|
|
Availability under the Revolving Credit Facility (b)
|
217
|
|
|
216
|
|
|
229
|
|
|||
Total debt (c)
|
1,188
|
|
|
1,241
|
|
|
783
|
|
|||
Stockholders’ equity
|
707
|
|
|
694
|
|
|
212
|
|
|||
Total capitalization (total debt plus equity)
|
1,895
|
|
|
1,935
|
|
|
995
|
|
|||
Debt to capital ratio
|
63
|
%
|
|
64
|
%
|
|
79
|
%
|
(a)
|
Cash and cash equivalents consisted of cash, money market deposits and time deposits with original maturities of 90 days or less.
|
(b)
|
Amounts available under the revolving credit facility has been reduced by standby letters of credit of approximately
$33 million
, $34 million and $21 million at
December 31, 2018
,
2017
and
2016
, respectively. See
Note 20
—
Commitments and Contingencies
of our consolidated financial statements for additional information.
|
(c)
|
See
Note 8
—
Debt and Capital Leases
of our consolidated financial statements for more information.
|
Cash Provided by (Used for):
|
2018
|
|
2017
|
|
2016
|
||||||
Operating activities
|
$
|
247
|
|
|
$
|
130
|
|
|
$
|
232
|
|
Investing activities
|
$
|
(116
|
)
|
|
$
|
(277
|
)
|
|
$
|
(87
|
)
|
Financing activities
|
$
|
(116
|
)
|
|
$
|
(84
|
)
|
|
$
|
80
|
|
Net Income to EBITDA and Adjusted EBITDA Reconciliations
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
Net Income
|
$
|
128
|
|
|
$
|
325
|
|
|
$
|
73
|
|
|
$
|
55
|
|
|
$
|
32
|
|
Depreciation and amortization
|
148
|
|
|
97
|
|
|
88
|
|
|
89
|
|
|
86
|
|
|||||
Interest expense, net
|
60
|
|
|
38
|
|
|
35
|
|
|
37
|
|
|
22
|
|
|||||
Income tax expense
|
44
|
|
|
20
|
|
|
39
|
|
|
28
|
|
|
9
|
|
|||||
EBITDA
|
380
|
|
|
480
|
|
|
235
|
|
|
209
|
|
|
149
|
|
|||||
Gain on bargain purchase
|
(20
|
)
|
|
(317
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Severance expense
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Acquisition related costs
|
—
|
|
|
34
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Inventory write-up to fair value
|
—
|
|
|
23
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Gain on derivative instrument
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Gain on debt extinguishment
|
—
|
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|||||
Non-cash impairment charge
|
—
|
|
|
—
|
|
|
—
|
|
|
28
|
|
|
—
|
|
|||||
One-time separation and legal costs
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
26
|
|
|||||
Insurance recovery
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(3
|
)
|
|||||
Environmental reserve adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
95
|
|
|||||
Adjusted EBITDA
|
$
|
364
|
|
|
$
|
212
|
|
|
$
|
226
|
|
|
$
|
238
|
|
|
$
|
267
|
|
Cash Flows from Operations to Adjusted Free Cash Flows Reconciliation
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
Cash flows from operations
|
$
|
247
|
|
|
$
|
130
|
|
|
$
|
232
|
|
|
$
|
202
|
|
|
$
|
188
|
|
Capital expenditures (a)
|
(95
|
)
|
|
(65
|
)
|
|
(85
|
)
|
|
(78
|
)
|
|
(75
|
)
|
|||||
Adjusted free cash flows
|
$
|
152
|
|
|
$
|
65
|
|
|
$
|
147
|
|
|
$
|
124
|
|
|
$
|
113
|
|
(a)
|
Capital expenditures exclude strategic capital expenditures which we deem discretionary. Strategic capital for the years ended
December 31, 2018
,
2017
and
2016
were
$37 million
,
$11 million
and
$4 million
, respectively. There was no strategic capital expenditures for the year ended December 31, 2015. Strategic capital totaled
$13 million
for the purchase of timber deeds and $2 million for the purchase of land for the year ended December 31, 2014.
|
Contractual Financial Obligations (in millions)
|
Total
|
|
Payments Due by Period
|
||||||||||||||||
2019
|
|
2020-2021
|
|
2022-2023
|
|
Thereafter
|
|||||||||||||
Long-term debt, including current maturities
|
$
|
1,190
|
|
|
$
|
14
|
|
|
$
|
32
|
|
|
$
|
200
|
|
|
$
|
944
|
|
Interest payments on long-term debt and capital lease obligations (a)
|
315
|
|
|
61
|
|
|
118
|
|
|
103
|
|
|
33
|
|
|||||
Purchase obligations (b)
|
503
|
|
|
171
|
|
|
128
|
|
|
100
|
|
|
104
|
|
|||||
Postretirement obligations (c)
|
27
|
|
|
3
|
|
|
6
|
|
|
5
|
|
|
13
|
|
|||||
Capital lease obligations
|
3
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|||||
Operating leases (d)
|
14
|
|
|
5
|
|
|
5
|
|
|
3
|
|
|
1
|
|
|||||
Total contractual cash obligations
|
$
|
2,052
|
|
|
$
|
254
|
|
|
$
|
290
|
|
|
$
|
412
|
|
|
$
|
1,096
|
|
(a)
|
Projected interest payments for variable-rate debt were calculated based on outstanding principal amounts and interest rates as of
December 31, 2018
. See
Note 8
—
Debt and Capital Leases
for additional information.
|
(b)
|
Purchase obligations primarily consist of payments expected to be made on natural gas, steam energy and wood chip purchase contracts. Purchase obligations exclude arrangements the Company can cancel without penalty.
|
(c)
|
Amounts include estimated postretirement benefit payments and do not include pension funding obligations. See Note 16 -
Employee Benefit Plans,
for additional information on our pension and postretirement benefit plans.
|
(d)
|
Operating leases primarily consist of the office lease for our corporate headquarters and machinery and equipment.
|
(in millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Boiler MACT (a)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10
|
|
(a)
|
Represents spending required as a result of a regulation originally promulgated in 2012 (and later re-promulgated after litigation), which imposes more stringent emissions limits on certain air pollutants from industrial boilers. This project was completed in 2016.
|
Item 7A.
|
Quantitative and Qualitative Disclosures about Market Risk
|
Item 8.
|
Financial Statements and Supplementary Data
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A.
|
Controls and Procedures
|
Item 9B.
|
Other Information
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
Item 11.
|
Executive Compensation
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
Item 14.
|
Principal Accounting Fees and Services
|
Item 15.
|
Exhibits, Financial Statement Schedules
|
Item 16.
|
Form 10-K Summary
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Rayonier Advanced Materials Inc.
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(Registrant)
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By:
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/s/ F
RANK
A. R
UPERTO
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Frank A. Ruperto
Chief Financial Officer and
Senior Vice President, Finance and Strategy
(Duly Authorized Officer and Principal Financial Officer)
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Signature
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Title
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Date
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/s/ PAUL G. BOYNTON
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Chairman of the Board, President and Chief Executive Officer
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March 1, 2019
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Paul G. Boynton
(Principal Executive Officer)
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/s/ FRANK A. RUPERTO
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Chief Financial Officer and Senior Vice President, Finance and Strategy
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March 1, 2019
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Frank A. Ruperto
(Principal Financial Officer)
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/s/ JOHN P. CARR
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Chief Accounting Officer and Vice President, Controller
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March 1, 2019
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John P. Carr
(Principal Accounting Officer)
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*
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Lead Director
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C. David Brown, II
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*
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Director
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Charles E. Adair
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*
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Director
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DeLyle W. Bloomquist
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*
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Director
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Julie A. Dill
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*
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Director
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Mark E. Gaumond
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*
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Director
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Matthew P. Hepler
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*
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Director
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James F. Kirsch
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*
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Director
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Thomas I. Morgan
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*
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Director
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Lisa M. Palumbo
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*By:
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/s/ F
RANK
A. R
UPERTO
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Frank A. Ruperto
(Attorney-In-Fact)
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March 1, 2019
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Page
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Index to Financial Statement Schedules
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All other financial statement schedules have been omitted because they are not applicable, the required matter is not present, or the required information has been otherwise supplied in the financial statements or the notes thereto.
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2018
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2017
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2016
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||||||
Net Sales
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$
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2,134,413
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$
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961,333
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$
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868,731
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Cost of Sales
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(1,790,244
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)
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(818,281
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)
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(682,573
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)
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|||
Gross Margin
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344,169
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143,052
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186,158
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||||||
Selling, general and administrative expenses
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(108,184
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)
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(79,387
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)
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(37,157
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)
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|||
Duties
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(25,921
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)
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(939
|
)
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—
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Other operating expense, net (Note 17)
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(12,422
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)
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(1,274
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)
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(5,684
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)
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|||
Operating Income
|
197,642
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|
61,452
|
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143,317
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|||
Interest expense
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(60,408
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)
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(40,447
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)
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(34,627
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)
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|||
Interest income and other, net
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5,017
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|
2,350
|
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|
737
|
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|||
Other components of net periodic benefit income (expense)
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8,723
|
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(2,995
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)
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(5,670
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)
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|||
Gain on bargain purchase (Note 3)
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20,449
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316,555
|
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—
|
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|||
Gain on derivative instrument (Note 10)
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—
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7,780
|
|
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—
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|||
Gain on debt extinguishment
|
786
|
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—
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8,844
|
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|||
Income Before Income Taxes
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172,209
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344,695
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112,601
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|
|||
Income tax expense (Note 18)
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(43,793
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)
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(19,731
|
)
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(39,315
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)
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|||
Net Income Attributable to Rayonier Advanced Materials Inc.
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128,416
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324,964
|
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73,286
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|
|||
Mandatory convertible stock dividends
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(13,800
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)
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(13,800
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)
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(5,404
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)
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|||
Net Income Available to Rayonier Advanced Materials Inc.
Common Stockholders
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$
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114,616
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$
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311,164
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$
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67,882
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||||||
Earnings Per Share of Common Stock (Note 14)
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||||||
Basic earnings per share
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$
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2.27
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$
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7.17
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$
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1.61
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Diluted earnings per share
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$
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1.96
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$
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5.81
|
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$
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1.55
|
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Comprehensive Income:
|
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||||||
Net Income
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$
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128,416
|
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$
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324,964
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$
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73,286
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Other Comprehensive Income (Loss), net of tax (Note 13)
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|
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||||||
Foreign currency translation adjustments
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(13,353
|
)
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4,868
|
|
|
—
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|
|||
Unrealized gain (loss) on derivative instruments
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(12,241
|
)
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619
|
|
|
—
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Net gain (loss) from pension and postretirement plans
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(31,527
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)
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28,442
|
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(460
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)
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|||
Total other comprehensive income (loss)
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(57,121
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)
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33,929
|
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(460
|
)
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Comprehensive Income
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$
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71,295
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$
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358,893
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$
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72,826
|
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2018
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2017
|
||||
Assets
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|||||||
Current Assets
|
|
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||||
Cash and cash equivalents
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$
|
108,966
|
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$
|
96,235
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Accounts receivable, net (Note 4)
|
222,377
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181,298
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Inventory (Note 5)
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321,377
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302,086
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Prepaid and other current assets
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63,372
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66,918
|
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||
Total current assets
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716,092
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646,537
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||||
Property, Plant and Equipment, Net (Note 6)
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1,381,039
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1,407,762
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|
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Deferred Tax Assets (Note 18)
|
406,957
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|
402,846
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|
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Intangible Assets, Net
|
52,460
|
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|
59,869
|
|
||
Other Assets
|
122,538
|
|
|
125,597
|
|
||
Total Assets
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$
|
2,679,086
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$
|
2,642,611
|
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Liabilities and Stockholders’ Equity
|
|||||||
Current Liabilities
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|
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|
||||
Accounts payable
|
$
|
192,740
|
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$
|
157,925
|
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Accrued and other current liabilities (Note 7)
|
151,356
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|
127,040
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|
||
Current maturities of long-term debt (Note 8)
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15,012
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9,425
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|
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Current liabilities for disposed operations (Note 9)
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11,310
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|
13,181
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Total current liabilities
|
370,418
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307,571
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||
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|
||||
Long-Term Debt (Note 8)
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1,173,157
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1,232,179
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Non-Current Liabilities for Disposed Operations (Note 9)
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149,344
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150,905
|
|
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Pension and Other Postretirement Benefits (Note 16)
|
238,958
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212,810
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|
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Deferred Tax Liabilities (Note 18)
|
28,016
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32,607
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|
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Other Non-Current Liabilities
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12,322
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|
12,783
|
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||
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|
||||
Commitments and Contingencies (Note 20)
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|
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|
||||
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||||
Stockholders’ Equity (Note 12)
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||||
Preferred stock, 10,000,000 shares authorized at $0.01 par value, 1,725,000 and 1,725,000 issued and outstanding as of December 31, 2018 and 2017, respectively, aggregate liquidation preference $172,500
|
17
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17
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Common stock, 140,000,000 shares authorized at $0.01 par value, 49,291,130 and 51,717,142 issued and outstanding, as of December 31, 2018 and 2017, respectively
|
493
|
|
|
517
|
|
||
Additional paid-in capital
|
399,490
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|
392,353
|
|
||
Retained earnings
|
462,568
|
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|
377,020
|
|
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Accumulated other comprehensive income (loss) (Note 13)
|
(155,697
|
)
|
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(76,151
|
)
|
||
Total Stockholders’ Equity
|
706,871
|
|
|
693,756
|
|
||
Total Liabilities and Stockholders’ Equity
|
$
|
2,679,086
|
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$
|
2,642,611
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Operating Activities
|
|
|
|
|
|
||||||
Net income
|
$
|
128,416
|
|
|
$
|
324,964
|
|
|
$
|
73,286
|
|
Adjustments to reconcile net income to cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
148,416
|
|
|
96,963
|
|
|
88,274
|
|
|||
Stock-based incentive compensation expense
|
13,007
|
|
|
8,986
|
|
|
7,217
|
|
|||
Amortization of capitalized debt costs and debt discount
|
835
|
|
|
3,377
|
|
|
1,919
|
|
|||
Deferred income taxes
|
20,637
|
|
|
30,280
|
|
|
45,199
|
|
|||
Gain on bargain purchase
|
(19,071
|
)
|
|
(316,555
|
)
|
|
—
|
|
|||
Increase in liabilities for disposed operations
|
7,285
|
|
|
256
|
|
|
5,298
|
|
|||
Gain on debt extinguishment
|
(786
|
)
|
|
—
|
|
|
(8,844
|
)
|
|||
Net periodic benefit cost of pension and postretirement plans
|
5,460
|
|
|
10,264
|
|
|
11,702
|
|
|||
Loss from sale/disposal of property, plant and equipment
|
3,186
|
|
|
2,032
|
|
|
2,422
|
|
|||
Gain on foreign currency exchange
|
(12,170
|
)
|
|
(2,335
|
)
|
|
—
|
|
|||
Other
|
3,888
|
|
|
(1,303
|
)
|
|
(3,429
|
)
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Receivables
|
(40,738
|
)
|
|
(4,699
|
)
|
|
31,266
|
|
|||
Inventories
|
(22,861
|
)
|
|
3,033
|
|
|
7,041
|
|
|||
Accounts payable
|
34,610
|
|
|
16,215
|
|
|
(2,048
|
)
|
|||
Accrued liabilities
|
5,145
|
|
|
(2,865
|
)
|
|
167
|
|
|||
All other operating activities
|
(3,884
|
)
|
|
(19,324
|
)
|
|
(4,338
|
)
|
|||
Contributions to pension and other postretirement benefit plans
|
(12,579
|
)
|
|
(13,722
|
)
|
|
(13,135
|
)
|
|||
Expenditures for disposed operations
|
(11,852
|
)
|
|
(5,795
|
)
|
|
(9,772
|
)
|
|||
Cash Provided by Operating Activities
|
246,944
|
|
|
129,772
|
|
|
232,225
|
|
|||
Investing Activities
|
|
|
|
|
|
||||||
Acquisition of Tembec, net of cash acquired
|
—
|
|
|
(210,164
|
)
|
|
—
|
|
|||
Capital expenditures
|
(132,209
|
)
|
|
(75,042
|
)
|
|
(88,703
|
)
|
|||
Proceeds from sale of resins operations
|
16,233
|
|
|
—
|
|
|
—
|
|
|||
Realized gain on derivative instrument
|
—
|
|
|
7,780
|
|
|
—
|
|
|||
Other
|
10
|
|
|
—
|
|
|
2,143
|
|
|||
Cash Used for Investing Activities
|
(115,966
|
)
|
|
(277,426
|
)
|
|
(86,560
|
)
|
|||
Financing Activities
|
|
|
|
|
|
||||||
Issuance of mandatory convertible preferred stock
|
—
|
|
|
—
|
|
|
166,609
|
|
|||
Issuance of debt
|
—
|
|
|
680,000
|
|
|
—
|
|
|||
Repayment of debt
|
(45,270
|
)
|
|
(729,958
|
)
|
|
(71,031
|
)
|
|||
Dividends paid on common stock
|
(15,058
|
)
|
|
(12,693
|
)
|
|
(11,840
|
)
|
|||
Dividends paid on preferred stock
|
(13,800
|
)
|
|
(13,800
|
)
|
|
(3,641
|
)
|
|||
Proceeds from the issuance of common stock
|
451
|
|
|
14
|
|
|
388
|
|
|||
Repurchase of common stock
|
(42,780
|
)
|
|
(157
|
)
|
|
—
|
|
|||
Debt issuance costs
|
—
|
|
|
(7,025
|
)
|
|
—
|
|
|||
Other
|
—
|
|
|
—
|
|
|
(798
|
)
|
|||
Cash (Used for) Provided by Financing Activities
|
(116,457
|
)
|
|
(83,619
|
)
|
|
79,687
|
|
|||
|
|
|
|
|
|
||||||
Cash and Cash Equivalents
|
|
|
|
|
|
||||||
Change in cash and cash equivalents
|
14,521
|
|
|
(231,273
|
)
|
|
225,352
|
|
|||
Net effect of foreign exchange on cash and cash equivalents
|
(1,790
|
)
|
|
853
|
|
|
—
|
|
|||
Balance, beginning of year
|
96,235
|
|
|
326,655
|
|
|
101,303
|
|
|||
Balance, end of year
|
$
|
108,966
|
|
|
$
|
96,235
|
|
|
$
|
326,655
|
|
|
December 31, 2018
|
|||||||||
|
Gross Carrying Amount
|
Accumulated Amortization
|
Net Carrying Amount
|
Weighted-Average Remaining Life
|
||||||
Customer Lists
|
$
|
51,680
|
|
$
|
(7,179
|
)
|
$
|
44,501
|
|
6.9 years
|
Trade Names
|
8,604
|
|
(645
|
)
|
7,959
|
|
13.9 years
|
|||
Total Definite-Lived Intangibles
|
$
|
60,284
|
|
$
|
(7,824
|
)
|
$
|
52,460
|
|
8.0 years
|
|
|
|
|
|
||||||
|
December 31, 2017
|
|||||||||
|
Gross Carrying Amount
|
Accumulated Amortization
|
Net Carrying Amount
|
Weighted-Average Remaining Life
|
||||||
Customer Lists
|
$
|
51,680
|
|
$
|
(745
|
)
|
$
|
50,935
|
|
7.9 years
|
Trade Names
|
9,004
|
|
(70
|
)
|
8,934
|
|
14.9 years
|
|||
Total Definite-Lived Intangibles
|
$
|
60,684
|
|
$
|
(815
|
)
|
$
|
59,869
|
|
8.9 years
|
|
November 17, 2017
|
||
Total Tembec shares receiving stock consideration
|
33,200,000
|
|
|
Exchange ratio
|
0.2542
|
|
|
Total Company stock issued to Tembec shareholders
|
8,439,452
|
|
|
Company’s closing share price on November 17, 2017
|
$
|
16.73
|
|
Total value of Company shares issued
|
$
|
141,192
|
|
Total cash consideration paid to Tembec shareholders in U.S. dollars
|
249,233
|
|
|
Total purchase consideration to Tembec shareholders
|
$
|
390,425
|
|
|
November 17, 2017
|
|
Adjustments
|
|
November 17, 2018
|
||||||
Current assets
|
$
|
383,066
|
|
|
$
|
—
|
|
|
$
|
383,066
|
|
Property, plant and equipment
|
628,027
|
|
|
7,418
|
|
|
635,445
|
|
|||
Deferred tax assets
|
389,321
|
|
|
15,926
|
|
|
405,247
|
|
|||
Definite-life intangibles (a)
|
60,684
|
|
|
(400
|
)
|
|
60,284
|
|
|||
Other assets
|
70,868
|
|
|
—
|
|
|
70,868
|
|
|||
Current liabilities
|
(167,244
|
)
|
|
(668
|
)
|
|
(167,912
|
)
|
|||
Assumed long-term debt (b)
|
(508,531
|
)
|
|
—
|
|
|
(508,531
|
)
|
|||
Pension and other postretirement benefits
|
(96,278
|
)
|
|
—
|
|
|
(96,278
|
)
|
|||
Other long-term liabilities
|
(52,933
|
)
|
|
(1,827
|
)
|
|
(54,760
|
)
|
|||
Estimated fair value of net assets acquired
|
$
|
706,980
|
|
|
$
|
20,449
|
|
|
$
|
727,429
|
|
Gain on bargain purchase
|
$
|
316,555
|
|
|
$
|
20,449
|
|
|
$
|
337,004
|
|
(a)
|
The Company acquired definite-life intangibles of
$52 million
for customer lists and
$9 million
for trade-names which are being amortized over
8 years
and
15 years
, respectively.
|
|
Years Ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
Unaudited pro forma net revenue
|
$
|
2,122,000
|
|
|
$
|
2,044,000
|
|
Unaudited pro forma net income attributable to the Company
|
$
|
111,000
|
|
|
$
|
99,000
|
|
Unaudited pro forma basic net income per share
|
$
|
1.92
|
|
|
$
|
1.85
|
|
Unaudited pro forma diluted net income per share
|
$
|
1.76
|
|
|
$
|
1.78
|
|
|
2018
|
|
2017
|
||||
Accounts receivable, trade
|
$
|
169,496
|
|
|
$
|
134,523
|
|
Accounts receivable, other (a)
|
54,943
|
|
|
47,368
|
|
||
Allowance for doubtful accounts
|
(2,062
|
)
|
|
(593
|
)
|
||
Total accounts receivable, net
|
$
|
222,377
|
|
|
$
|
181,298
|
|
(a)
|
Accounts receivable, other consists primarily of value added/consumption taxes, grants receivable and accrued billings due from government agencies.
|
|
2018
|
|
2017
|
||||
Finished goods
|
$
|
215,233
|
|
|
$
|
190,140
|
|
Work-in-progress
|
21,478
|
|
|
18,889
|
|
||
Raw materials
|
73,715
|
|
|
82,940
|
|
||
Manufacturing and maintenance supplies
|
10,951
|
|
|
10,117
|
|
||
Total inventory
|
$
|
321,377
|
|
|
$
|
302,086
|
|
|
2018
|
|
2017
|
||||
Land and land improvements
|
$
|
23,225
|
|
|
$
|
18,336
|
|
Buildings
|
248,719
|
|
|
241,831
|
|
||
Machinery and equipment
|
2,406,523
|
|
|
2,377,210
|
|
||
Other
|
23,139
|
|
|
21,704
|
|
||
Construction in progress
|
67,667
|
|
|
57,873
|
|
||
Total property, plant and equipment, gross
|
2,769,273
|
|
|
2,716,954
|
|
||
Accumulated depreciation
|
(1,388,234
|
)
|
|
(1,309,192
|
)
|
||
Total property, plant and equipment, net
|
$
|
1,381,039
|
|
|
$
|
1,407,762
|
|
|
2018
|
|
2017
|
||||
Accrued customer incentives and prepayments
|
$
|
43,907
|
|
|
$
|
53,522
|
|
Accrued payroll and benefits
|
30,695
|
|
|
33,133
|
|
||
Accrued interest
|
3,170
|
|
|
3,188
|
|
||
Foreign currency forward contracts
|
16,767
|
|
|
—
|
|
||
Accrued property taxes
|
10,663
|
|
|
988
|
|
||
Other current liabilities
|
46,154
|
|
|
36,209
|
|
||
Total accrued and other current liabilities
|
$
|
151,356
|
|
|
$
|
127,040
|
|
|
2018
|
|
2017
|
||||
U.S. Revolver of $100 million maturing in November 2022, $91 million available after taking into account outstanding letters of credit, bearing interest at LIBOR plus 2.00% at December 31, 2018
|
$
|
—
|
|
|
$
|
—
|
|
Multi-currency Revolver of $150 million maturing in November 2022, $126 million available after taking into account outstanding letters of credit, bearing interest at LIBOR plus 2.00% at December 31, 2018
|
—
|
|
|
—
|
|
||
Term A-1 Loan Facility borrowings maturing through November 2022 bearing interest at LIBOR plus 2.00%, interest rate of 4.50% at December 31, 2018
|
160,000
|
|
|
180,000
|
|
||
Term A-2 Loan Facility borrowings maturing through November 2024 bearing interest at LIBOR plus 2.25% (after consideration of 0.60 patronage benefit), interest rate of 4.75% at December 31, 2018
|
438,875
|
|
|
450,000
|
|
||
Senior Notes due 2024 at a fixed interest rate of 5.50%
|
495,647
|
|
|
506,412
|
|
||
Canadian dollar, fixed interest rate term loans with rates ranging from 5.50% to 6.86% and maturity dates ranging from March 2020 through April 2028, secured by certain assets of the Temiscaming plant
|
91,304
|
|
|
100,881
|
|
||
Other loans
|
3,777
|
|
|
5,946
|
|
||
Capital Lease obligation
|
3,124
|
|
|
3,409
|
|
||
Total principal payments due
|
1,192,727
|
|
|
1,246,648
|
|
||
Less: debt premium, original issue discount and issuance costs
|
(4,558
|
)
|
|
(5,044
|
)
|
||
Total debt
|
1,188,169
|
|
|
1,241,604
|
|
||
Less: Current maturities of long-term debt
|
(15,012
|
)
|
|
(9,425
|
)
|
||
Long-term debt
|
$
|
1,173,157
|
|
|
$
|
1,232,179
|
|
|
Capital Lease
|
|
|
||||||||||||
|
Minimum Lease Payments
|
|
Less: Interest
|
|
Net Present Value
|
|
Debt Principal Payments
|
||||||||
2019
|
$
|
515
|
|
|
$
|
209
|
|
|
$
|
306
|
|
|
$
|
13,751
|
|
2020
|
515
|
|
|
187
|
|
|
328
|
|
|
19,690
|
|
||||
2021
|
515
|
|
|
163
|
|
|
352
|
|
|
12,358
|
|
||||
2022
|
515
|
|
|
138
|
|
|
377
|
|
|
189,095
|
|
||||
2023
|
515
|
|
|
110
|
|
|
405
|
|
|
10,513
|
|
||||
Thereafter
|
1,503
|
|
|
147
|
|
|
1,356
|
|
|
944,196
|
|
||||
Total payments
|
$
|
4,078
|
|
|
$
|
954
|
|
|
$
|
3,124
|
|
|
$
|
1,189,603
|
|
|
December 31, 2016 Liability
|
|
Liabilities Assumed in Acquisition
|
|
Payments
|
|
Increase (Decrease) to Liabilities
|
|
December 31, 2017 Liability
|
|
Payments
|
|
Increase (Decrease) to Liabilities (a)
|
|
December 31, 2018 Liability
|
||||||||||||||||
Port Angeles, Washington
|
$
|
39,310
|
|
|
$
|
—
|
|
|
$
|
(698
|
)
|
|
$
|
5,055
|
|
|
$
|
43,667
|
|
|
$
|
(935
|
)
|
|
$
|
2,067
|
|
|
$
|
44,799
|
|
Augusta, Georgia
|
22,887
|
|
|
—
|
|
|
(1,508
|
)
|
|
(204
|
)
|
|
21,175
|
|
|
(929
|
)
|
|
108
|
|
|
20,354
|
|
||||||||
Baldwin, Florida
|
26,772
|
|
|
—
|
|
|
(902
|
)
|
|
(4,700
|
)
|
|
21,170
|
|
|
(4,613
|
)
|
|
687
|
|
|
17,244
|
|
||||||||
All other sites
|
63,941
|
|
|
16,715
|
|
|
(2,687
|
)
|
|
105
|
|
|
78,074
|
|
|
(5,489
|
)
|
|
5,672
|
|
|
78,257
|
|
||||||||
Total
|
152,910
|
|
|
$
|
16,715
|
|
|
$
|
(5,795
|
)
|
|
$
|
256
|
|
|
164,086
|
|
|
$
|
(11,966
|
)
|
|
$
|
8,534
|
|
|
160,654
|
|
|||
Less: Current portion
|
(13,781
|
)
|
|
|
|
|
|
|
|
(13,181
|
)
|
|
|
|
|
|
(11,310
|
)
|
|||||||||||||
Non-Current portion
|
$
|
139,129
|
|
|
|
|
|
|
|
|
$
|
150,905
|
|
|
|
|
|
|
$
|
149,344
|
|
(a)
|
Included in the Increase (Decrease) to Liabilities during the year ended December 31, 2018 is a
$1 million
decrease of the liability due to foreign currency gain.
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
Interest rate swaps (a)
|
|
$
|
200,000
|
|
|
$
|
200,000
|
|
Foreign currency contracts (b)
|
|
$
|
388,930
|
|
|
$
|
240,591
|
|
Foreign cross-currency contracts (c)
|
|
$
|
125,979
|
|
|
$
|
—
|
|
|
|
Balance Sheet Location
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
Assets:
|
|
|
|
|
|
|
||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
||||
Interest rate swaps
|
|
Other current assets
|
|
$
|
1,194
|
|
|
$
|
—
|
|
Interest rate swaps
|
|
Other assets
|
|
937
|
|
|
749
|
|
||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
||||
Foreign exchange forward contracts
|
|
Other current assets
|
|
7
|
|
|
427
|
|
||
|
|
|
|
|
|
|
||||
Liabilities:
|
|
|
|
|
|
|
||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
||||
Foreign exchange forward contracts
|
|
Other current liabilities
|
|
(16,408
|
)
|
|
—
|
|
||
Foreign exchange forward contracts
|
|
Other non-current liabilities
|
|
(3,105
|
)
|
|
—
|
|
||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
||||
Foreign exchange forward contracts
|
|
Other current liabilities
|
|
(360
|
)
|
|
—
|
|
||
Total derivatives
|
|
|
|
$
|
(17,735
|
)
|
|
$
|
1,176
|
|
Derivatives in Cash Flow Hedging Relationships
|
|
Gain (Loss) Recognized in OCI on Derivative (Effective Portion)
|
|
Gain (Loss) Reclassified from AOCI into Income
(Effective Portion)
|
|
Gain (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
|
||||||||||
|
|
December 31, 2018
|
||||||||||||||
Interest rate swaps
|
|
$
|
1,446
|
|
|
Interest expense
|
|
$
|
64
|
|
|
|
|
$
|
—
|
|
Foreign currency contracts
|
|
$
|
(23,603
|
)
|
|
Other operating expense, net
|
|
$
|
752
|
|
|
|
|
—
|
|
|
Foreign currency contracts
|
|
$
|
3,843
|
|
|
Cost of sales
|
|
$
|
(3,843
|
)
|
|
|
|
—
|
|
|
Foreign currency contracts
|
|
$
|
(4,672
|
)
|
|
Interest income and other, net
|
|
$
|
(3,599
|
)
|
|
|
|
—
|
|
|
|
|
December 31, 2017
|
||||||||||||||
Interest rate swaps
|
|
$
|
749
|
|
|
Interest expense
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
Derivatives Not Designated as
Hedging Instruments
|
|
Location of Gain (Loss) Recognized in Income on Derivative
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
Foreign exchange contracts
|
|
Other operating income (expense), net
|
|
$
|
(3,009
|
)
|
|
$
|
427
|
|
Foreign currency collar
|
|
Interest income and other income (expense), net
|
|
$
|
—
|
|
|
$
|
7,780
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
Unrealized gains from interest rate cash flow hedges
|
|
$
|
1,663
|
|
|
$
|
619
|
|
Unrealized gains from foreign currency cash flow hedges
|
|
$
|
(13,285
|
)
|
|
$
|
—
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
Carrying Amount
|
|
Fair Value (c)
|
|
Carrying Amount
|
|
Fair Value (c)
|
||||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
|
Level 1
|
|
Level 2
|
||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and cash equivalents
|
$
|
108,966
|
|
|
$
|
108,966
|
|
|
$
|
—
|
|
|
$
|
96,235
|
|
|
$
|
96,235
|
|
|
$
|
—
|
|
Interest rate swaps (a)
|
$
|
2,131
|
|
|
$
|
—
|
|
|
$
|
2,131
|
|
|
$
|
749
|
|
|
$
|
—
|
|
|
$
|
749
|
|
Foreign currency forward contracts (a)
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
427
|
|
|
$
|
—
|
|
|
$
|
427
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Liabilities (b):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency forward contracts (a)
|
$
|
19,873
|
|
|
$
|
—
|
|
|
$
|
19,873
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Fixed-rate long-term debt
|
$
|
585,824
|
|
|
$
|
—
|
|
|
$
|
541,267
|
|
|
$
|
606,529
|
|
|
$
|
—
|
|
|
$
|
611,308
|
|
Variable-rate long-term debt
|
$
|
599,221
|
|
|
$
|
—
|
|
|
$
|
602,652
|
|
|
$
|
631,666
|
|
|
$
|
—
|
|
|
$
|
635,946
|
|
|
Common Stock
|
|
Preferred Stock
|
|
Additional Paid in Capital
|
|
Retained
Earnings (Accumulated Deficit)
|
|
Accumulated Other Comprehensive Loss
|
|
Total Stockholders’
Equity (Deficit)
|
||||||||||||||||||
|
Shares
|
|
Par Value
|
|
Shares
|
|
Par Value
|
|
|
||||||||||||||||||||
Balance, December 31, 2015
|
42,872,435
|
|
|
$
|
429
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
70,213
|
|
|
$
|
21,839
|
|
|
$
|
(109,620
|
)
|
|
$
|
(17,139
|
)
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
73,286
|
|
|
—
|
|
|
73,286
|
|
||||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(460
|
)
|
|
(460
|
)
|
||||||
Issuance of preferred stock
|
—
|
|
|
—
|
|
|
1,725,000
|
|
|
17
|
|
|
166,592
|
|
|
—
|
|
|
—
|
|
|
166,609
|
|
||||||
Issuance of common stock under incentive stock plans
|
422,941
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,217
|
|
|
—
|
|
|
—
|
|
|
7,217
|
|
||||||
Excess tax deficit on stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,228
|
)
|
|
—
|
|
|
—
|
|
|
(1,228
|
)
|
||||||
Repurchase of common stock
|
(33,471
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(388
|
)
|
|
—
|
|
|
—
|
|
|
(388
|
)
|
||||||
Common stock dividends ($0.28 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,507
|
)
|
|
—
|
|
|
(12,507
|
)
|
||||||
Preferred stock dividends ($2.11 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,641
|
)
|
|
—
|
|
|
(3,641
|
)
|
||||||
Balance, December 31, 2016
|
43,261,905
|
|
|
433
|
|
|
1,725,000
|
|
|
17
|
|
|
$
|
242,402
|
|
|
$
|
78,977
|
|
|
$
|
(110,080
|
)
|
|
$
|
211,749
|
|
||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
324,964
|
|
|
—
|
|
|
324,964
|
|
||||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33,929
|
|
|
33,929
|
|
||||||
Common stock issued at Acquisition
|
8,439,452
|
|
|
84
|
|
|
|
|
|
|
|
141,108
|
|
|
—
|
|
|
—
|
|
|
141,192
|
|
|||||||
Issuance of common stock under incentive stock plans
|
27,131
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
14
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,986
|
|
|
—
|
|
|
—
|
|
|
8,986
|
|
||||||
Repurchase of common stock
|
(11,346
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(157
|
)
|
|
—
|
|
|
—
|
|
|
(157
|
)
|
||||||
Common stock dividends ($0.28 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13,121
|
)
|
|
—
|
|
|
(13,121
|
)
|
||||||
Preferred stock dividends ($8.00 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13,800
|
)
|
|
—
|
|
|
(13,800
|
)
|
||||||
Balance, December 31, 2017
|
51,717,142
|
|
|
517
|
|
|
1,725,000
|
|
|
17
|
|
|
$
|
392,353
|
|
|
$
|
377,020
|
|
|
$
|
(76,151
|
)
|
|
$
|
693,756
|
|
||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
128,416
|
|
|
—
|
|
|
128,416
|
|
||||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(57,121
|
)
|
|
(57,121
|
)
|
||||||
Issuance of common stock under incentive stock plans
|
301,560
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
448
|
|
|
—
|
|
|
—
|
|
|
451
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,007
|
|
|
—
|
|
|
—
|
|
|
13,007
|
|
||||||
Repurchase of common stock
|
(2,727,572
|
)
|
|
(27
|
)
|
|
—
|
|
|
—
|
|
|
(6,318
|
)
|
|
(36,435
|
)
|
|
—
|
|
|
(42,780
|
)
|
||||||
ASU 2018-02 adoption
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22,425
|
|
|
(22,425
|
)
|
|
—
|
|
||||||
Common stock dividends ($0.28 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,058
|
)
|
|
—
|
|
|
(15,058
|
)
|
||||||
Preferred stock dividends ($8.00 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13,800
|
)
|
|
—
|
|
|
(13,800
|
)
|
||||||
Balance, December 31, 2018
|
49,291,130
|
|
|
$
|
493
|
|
|
1,725,000
|
|
|
$
|
17
|
|
|
$
|
399,490
|
|
|
$
|
462,568
|
|
|
$
|
(155,697
|
)
|
|
$
|
706,871
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Unrecognized components of employee benefit plans, net of tax:
|
|
|
|
|
|
||||||
Balance, beginning of year
|
$
|
(81,638
|
)
|
|
$
|
(110,080
|
)
|
|
$
|
(109,620
|
)
|
Other comprehensive gain (loss) before reclassifications
|
(53,278
|
)
|
|
26,050
|
|
|
(12,917
|
)
|
|||
Income tax on other comprehensive loss
|
12,160
|
|
|
(5,731
|
)
|
|
—
|
|
|||
Reclassifications to earnings: (a)
|
|
|
|
|
|
||||||
Amortization of losses
|
11,877
|
|
|
11,984
|
|
|
11,581
|
|
|||
Amortization of prior service costs
|
572
|
|
|
763
|
|
|
775
|
|
|||
Amortization of negative plan amendment
|
(153
|
)
|
|
(153
|
)
|
|
(153
|
)
|
|||
Income tax on reclassifications
|
(2,705
|
)
|
|
(4,471
|
)
|
|
254
|
|
|||
Net comprehensive gain (loss) on employee benefit plans, net of tax
|
(31,527
|
)
|
|
28,442
|
|
|
(460
|
)
|
|||
ASU 2018-02 adoption (c)
|
(22,425
|
)
|
|
—
|
|
|
—
|
|
|||
Balance, end of year
|
(135,590
|
)
|
|
(81,638
|
)
|
|
(110,080
|
)
|
|||
|
|
|
|
|
|
||||||
Unrealized gain on derivative instruments, net of tax:
|
|
|
|
|
|
||||||
Balance, beginning of year
|
619
|
|
|
—
|
|
|
—
|
|
|||
Other comprehensive income before reclassifications
|
(22,985
|
)
|
|
749
|
|
|
—
|
|
|||
Income tax on other comprehensive income
|
5,372
|
|
|
(130
|
)
|
|
—
|
|
|||
Reclassifications to earnings: (b)
|
|
|
|
|
|
||||||
Interest rate contracts
|
(64
|
)
|
|
—
|
|
|
—
|
|
|||
Foreign exchange contracts
|
6,690
|
|
|
—
|
|
|
—
|
|
|||
Income tax on reclassifications
|
(1,254
|
)
|
|
—
|
|
|
—
|
|
|||
Net comprehensive gain on derivative instruments, net of tax
|
(12,241
|
)
|
|
619
|
|
|
—
|
|
|||
Balance, end of year (b)
|
(11,622
|
)
|
|
619
|
|
|
—
|
|
|||
|
|
|
|
|
|
||||||
Foreign currency translation:
|
|
|
|
|
|
||||||
Balance, beginning of year
|
4,868
|
|
|
—
|
|
|
—
|
|
|||
Foreign currency translation, net of tax effects of $0, $0, and $0
|
(13,353
|
)
|
|
4,868
|
|
|
—
|
|
|||
Balance, end of year
|
(8,485
|
)
|
|
4,868
|
|
|
—
|
|
|||
|
|
|
|
|
|
||||||
Accumulated other comprehensive income (loss), end of year
|
$
|
(155,697
|
)
|
|
$
|
(76,151
|
)
|
|
$
|
(110,080
|
)
|
|
(a)
|
The AOCI components for defined benefit pension and post-retirement plans are included in the computation of net periodic pension cost. See
Note 16
—
Employee Benefit Plans
for additional information.
|
(b)
|
Reclassifications of interest rate contracts are recorded in interest expense, and reclassifications of foreign currency exchange contracts are recorded in other operating income. Additional details about the reclassifications related to derivative instruments is included in
Note 10
—
Derivative Instruments
. There were
no
reclassifications to earnings for derivative instruments during the year ended December 31, 2017.
|
(c)
|
Represents a reclassification to retained earnings from the adoption of ASU No. 2018-02. See
Note 2
—
Summary of Significant Accounting Policies and New Accounting Pronouncements
for additional information.
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net income
|
$
|
128,416
|
|
|
$
|
324,964
|
|
|
$
|
73,286
|
|
Less: Preferred Stock dividends
|
(13,800
|
)
|
|
(13,800
|
)
|
|
(5,404
|
)
|
|||
Net income available for common stockholders
|
$
|
114,616
|
|
|
$
|
311,164
|
|
|
$
|
67,882
|
|
|
|
|
|
|
|
||||||
Shares used for determining basic earnings per share of common stock
|
50,602,480
|
|
|
43,416,868
|
|
|
42,279,811
|
|
|||
Dilutive effect of:
|
|
|
|
|
|
||||||
Stock options
|
1,307
|
|
|
—
|
|
|
—
|
|
|||
Performance and restricted shares
|
1,431,794
|
|
|
1,113,866
|
|
|
422,962
|
|
|||
Preferred Stock
|
13,361,678
|
|
|
11,371,718
|
|
|
4,443,048
|
|
|||
Shares used for determining diluted earnings per share of common stock
|
65,397,259
|
|
|
55,902,452
|
|
|
47,145,821
|
|
|||
Basic earnings per share (not in thousands)
|
$
|
2.27
|
|
|
$
|
7.17
|
|
|
$
|
1.61
|
|
Diluted earnings per share (not in thousands)
|
$
|
1.96
|
|
|
$
|
5.81
|
|
|
$
|
1.55
|
|
|
2018
|
|
2017
|
|
2016
|
|||
Stock options
|
260,033
|
|
|
373,058
|
|
|
399,012
|
|
Performance and restricted shares
|
398,004
|
|
|
798
|
|
|
90,399
|
|
Preferred Stock
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
658,037
|
|
|
373,856
|
|
|
489,411
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Selling, general and administrative expenses
|
$
|
11,994
|
|
|
$
|
7,991
|
|
|
$
|
6,330
|
|
Cost of sales
|
1,013
|
|
|
995
|
|
|
887
|
|
|||
Total stock-based compensation expense
|
$
|
13,007
|
|
|
$
|
8,986
|
|
|
$
|
7,217
|
|
|
Stock Options
|
|||||||||||
|
Options
|
|
Weighted Average Exercise Price
|
|
Weighted Average Remaining Contractual Term (in years)
|
|
Aggregate Intrinsic Value
|
|||||
Outstanding at January 1, 2018
|
373,058
|
|
|
$
|
32.25
|
|
|
|
|
|
||
Forfeited
|
—
|
|
|
—
|
|
|
|
|
|
|||
Exercised
|
(26,045
|
)
|
|
17.34
|
|
|
|
|
|
|||
Expired
|
(60,400
|
)
|
|
29.77
|
|
|
|
|
|
|||
Outstanding at December 31, 2018
|
286,613
|
|
|
$
|
34.23
|
|
|
3.03
|
|
$
|
—
|
|
Options vested and expected to vest
|
286,613
|
|
|
$
|
34.23
|
|
|
3.0
|
|
$
|
—
|
|
Options exercisable at December 31, 2018
|
286,613
|
|
|
$
|
34.23
|
|
|
3.0
|
|
$
|
—
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Intrinsic value of options exercised
|
$
|
108
|
|
|
$
|
1
|
|
|
$
|
—
|
|
Fair value of options vested
|
$
|
—
|
|
|
$
|
210
|
|
|
$
|
444
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Restricted stock and stock units granted
|
301,384
|
|
|
285,506
|
|
|
598,219
|
|
|||
Weighted average price of restricted stock or units granted
|
$
|
19.73
|
|
|
$
|
13.37
|
|
|
$
|
8.03
|
|
Intrinsic value of restricted stock and units outstanding
|
$
|
9,767
|
|
|
$
|
17,349
|
|
|
$
|
10,326
|
|
Fair value of restricted stock and units vested
|
$
|
3,753
|
|
|
$
|
1,119
|
|
|
$
|
5,890
|
|
|
Restricted Stock and Stock Units
|
|||||
|
Awards
|
|
Weighted Average Grant Date Fair Value
|
|||
Outstanding at January 1, 2018
|
848,371
|
|
|
$
|
12.47
|
|
Granted
|
301,384
|
|
|
19.73
|
|
|
Forfeited
|
(16,279
|
)
|
|
12.05
|
|
|
Vested
|
(216,378
|
)
|
|
17.34
|
|
|
Outstanding at December 31, 2018
|
917,098
|
|
|
$
|
13.71
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Common shares of stock reserved for performance-based stock units
|
1,115,747
|
|
|
896,121
|
|
|
1,304,419
|
|
|||
Weighted average fair value of performance-based
stock units granted
|
$
|
22.75
|
|
|
$
|
14.60
|
|
|
$
|
7.79
|
|
Intrinsic value of outstanding performance-based stock units
|
$
|
4,774
|
|
|
$
|
7,408
|
|
|
$
|
8,169
|
|
|
Performance-Based Stock Units
|
|||||
|
Awards
|
|
Weighted Average Grant Date Fair Value
|
|||
Outstanding at January 1, 2018
|
1,080,067
|
|
|
$
|
11.58
|
|
Granted
|
449,838
|
|
|
22.75
|
|
|
Forfeited
|
(13,691
|
)
|
|
11.53
|
|
|
Vested
|
(190,320
|
)
|
|
17.50
|
|
|
Outstanding at December 31, 2018
|
1,325,894
|
|
|
$
|
14.69
|
|
|
2018
|
|
2017
|
|
2016
|
|||
Expected volatility
|
68.7
|
%
|
|
70.2
|
%
|
|
74.3
|
%
|
Risk-free rate
|
2.4
|
%
|
|
1.5
|
%
|
|
1.0
|
%
|
|
Pension
|
|
Postretirement
|
||||||||||||
Change in Projected Benefit Obligation
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Projected benefit obligation at beginning of year
|
$
|
1,139,177
|
|
|
$
|
414,479
|
|
|
$
|
45,449
|
|
|
$
|
26,838
|
|
Plans assumed in Acquisition
|
—
|
|
|
710,466
|
|
|
—
|
|
|
18,884
|
|
||||
Service cost
|
12,428
|
|
|
5,646
|
|
|
1,724
|
|
|
1,249
|
|
||||
Interest cost
|
36,365
|
|
|
15,926
|
|
|
1,332
|
|
|
827
|
|
||||
Actuarial loss (gain)
|
(46,755
|
)
|
|
6,852
|
|
|
(2,720
|
)
|
|
(1,639
|
)
|
||||
Participant contributions
|
1,106
|
|
|
96
|
|
|
360
|
|
|
396
|
|
||||
Benefits paid
|
(59,790
|
)
|
|
(23,192
|
)
|
|
(3,418
|
)
|
|
(1,386
|
)
|
||||
Effects of foreign currency exchange rates
|
(45,106
|
)
|
|
8,904
|
|
|
(1,484
|
)
|
|
280
|
|
||||
Projected benefit obligation at end of year
|
$
|
1,037,425
|
|
|
$
|
1,139,177
|
|
|
$
|
41,243
|
|
|
$
|
45,449
|
|
Change in Plan Assets
|
|
|
|
|
|
|
|
||||||||
Fair value of plan assets at beginning of year
|
$
|
1,000,200
|
|
|
$
|
275,955
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Plans assumed in Acquisition
|
—
|
|
|
668,463
|
|
|
—
|
|
|
—
|
|
||||
Actual return on plan assets
|
(44,639
|
)
|
|
57,618
|
|
|
—
|
|
|
—
|
|
||||
Employer contributions
|
9,520
|
|
|
12,732
|
|
|
3,059
|
|
|
990
|
|
||||
Participant contributions
|
1,106
|
|
|
96
|
|
|
360
|
|
|
396
|
|
||||
Benefits paid
|
(59,790
|
)
|
|
(23,192
|
)
|
|
(3,419
|
)
|
|
(1,386
|
)
|
||||
Effects of foreign currency exchange rates
|
(43,071
|
)
|
|
8,528
|
|
|
|
|
|
—
|
|
||||
Fair value of plan assets at end of year
|
$
|
863,326
|
|
|
$
|
1,000,200
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Funded Status at end of year:
|
$
|
(174,099
|
)
|
|
$
|
(138,977
|
)
|
|
$
|
(41,243
|
)
|
|
$
|
(45,449
|
)
|
|
Pension
|
|
Postretirement
|
||||||||||||
Amounts recognized in the Consolidated Balance Sheets consist of:
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Non-current assets
|
$
|
30,395
|
|
|
$
|
36,605
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Current liabilities
|
(3,767
|
)
|
|
(5,059
|
)
|
|
(3,012
|
)
|
|
(3,162
|
)
|
||||
Non-current liabilities
|
(200,727
|
)
|
|
(170,523
|
)
|
|
(38,231
|
)
|
|
(42,287
|
)
|
||||
Net amount recognized
|
$
|
(174,099
|
)
|
|
$
|
(138,977
|
)
|
|
$
|
(41,243
|
)
|
|
$
|
(45,449
|
)
|
|
Pension
|
|
Postretirement
|
||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
||||||||||||
Net gains (losses)
|
$
|
(55,918
|
)
|
|
$
|
24,411
|
|
|
$
|
(14,101
|
)
|
|
$
|
2,640
|
|
|
$
|
1,639
|
|
|
$
|
1,184
|
|
|
Pension
|
|
Postretirement
|
||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
||||||||||||
Amortization of losses
|
$
|
11,648
|
|
|
$
|
11,651
|
|
|
$
|
11,343
|
|
|
$
|
229
|
|
|
$
|
333
|
|
|
$
|
238
|
|
Amortization of prior service (credit) cost
|
572
|
|
|
761
|
|
|
761
|
|
|
(153
|
)
|
|
(151
|
)
|
|
(139
|
)
|
|
Pension
|
|
Postretirement
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Prior service cost
|
$
|
(1,681
|
)
|
|
$
|
(2,254
|
)
|
|
$
|
1,338
|
|
|
$
|
—
|
|
Net losses
|
(172,484
|
)
|
|
(128,215
|
)
|
|
(2,280
|
)
|
|
(5,149
|
)
|
||||
Plan amendment
|
—
|
|
|
—
|
|
|
—
|
|
|
1,491
|
|
||||
Deferred income tax benefit
|
38,779
|
|
|
50,907
|
|
|
183
|
|
|
1,582
|
|
||||
Accumulated other comprehensive income (loss)
|
$
|
(135,386
|
)
|
|
$
|
(79,562
|
)
|
|
$
|
(759
|
)
|
|
$
|
(2,076
|
)
|
|
2018
|
|
2017
|
||||
Projected benefit obligation
|
$
|
764,462
|
|
|
$
|
813,411
|
|
Accumulated benefit obligation
|
$
|
736,782
|
|
|
$
|
785,435
|
|
Fair value of plan assets
|
$
|
559,969
|
|
|
$
|
638,414
|
|
|
Pension
|
|
Postretirement
|
||||||||||||||||||||
Components of Net Periodic Benefit Cost
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
||||||||||||
Service cost
|
$
|
12,428
|
|
|
$
|
5,646
|
|
|
$
|
5,225
|
|
|
$
|
1,724
|
|
|
$
|
1,249
|
|
|
$
|
808
|
|
Interest cost
|
36,365
|
|
|
15,926
|
|
|
15,915
|
|
|
1,332
|
|
|
827
|
|
|
871
|
|
||||||
Expected return on plan assets
|
(58,685
|
)
|
|
(25,978
|
)
|
|
(23,320
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of prior service (credit) cost
|
572
|
|
|
761
|
|
|
761
|
|
|
(153
|
)
|
|
(151
|
)
|
|
(139
|
)
|
||||||
Amortization of losses
|
11,648
|
|
|
11,651
|
|
|
11,343
|
|
|
229
|
|
|
333
|
|
|
238
|
|
||||||
Net periodic benefit cost (a)
|
$
|
2,328
|
|
|
$
|
8,006
|
|
|
$
|
9,924
|
|
|
$
|
3,132
|
|
|
$
|
2,258
|
|
|
$
|
1,778
|
|
(a)
|
Service cost is included in cost of sales and selling, general and administrative expenses in the statements of income, as appropriate. Interest cost, expected return on plan assets, amortization of prior service cost, amortization of losses and amortization of negative plan amendment are included in non-operating income on the consolidated statement of income as a result of retrospectively adopting ASU No. 2017-07,
Compensation - Retirement Benefits
, during the first quarter of 2018. See Note 2 -
Summary of Significant Accounting Policies and New Accounting Pronouncements,
for additional information regarding the impact.
|
|
Pension
|
|
Postretirement
|
||||
Amortization of loss
|
$
|
14,283
|
|
|
$
|
81
|
|
Amortization of prior service cost
|
569
|
|
|
(153
|
)
|
||
Total amortization of accumulated other comprehensive income (loss)
|
$
|
14,852
|
|
|
$
|
(72
|
)
|
|
Pension
|
|
Postretirement
|
||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
||||||
Assumptions used to determine benefit obligations at December 31:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Discount rate
|
3.99
|
%
|
|
3.55
|
%
|
|
3.88
|
%
|
|
3.82
|
%
|
|
3.14
|
%
|
|
3.85
|
%
|
Rate of compensation increase
|
2.61
|
%
|
|
2.60
|
%
|
|
4.10
|
%
|
|
3.68
|
%
|
|
3.10
|
%
|
|
4.50
|
%
|
Assumptions used to determine net periodic benefit cost for years ended December 31:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Discount rate
|
3.42
|
%
|
|
3.77
|
%
|
|
4.03
|
%
|
|
3.40
|
%
|
|
3.64
|
%
|
|
3.98
|
%
|
Expected long-term return on plan assets
|
6.32
|
%
|
|
7.38
|
%
|
|
8.50
|
%
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
Rate of compensation increase
|
2.61
|
%
|
|
2.59
|
%
|
|
4.10
|
%
|
|
3.68
|
%
|
|
3.10
|
%
|
|
4.50
|
%
|
|
Postretirement
|
||||||||||
|
2018
|
|
2017
|
||||||||
|
U.S.
|
|
Canada
|
|
U.S.
|
|
Canada
|
||||
Health care cost trend rate assumed for next year
|
7.50
|
%
|
|
5.00
|
%
|
|
8.00
|
%
|
|
5.50
|
%
|
Rate to which the cost trend is assumed to decline (ultimate trend rate)
|
5.00
|
%
|
|
4.50
|
%
|
|
5.00
|
%
|
|
4.50
|
%
|
Year that ultimate trend rate is reached
|
2024
|
|
|
2019
|
|
|
2024
|
|
|
2019
|
|
|
1 Percent
|
||||||
Effect on:
|
Increase
|
|
Decrease
|
||||
Total of service and interest cost components
|
$
|
225
|
|
|
$
|
(190
|
)
|
Accumulated postretirement benefit obligation
|
1,842
|
|
|
(1,604
|
)
|
|
Fair Value at December 31, 2018
|
||||||||||||||
Asset Category
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Mutual funds
|
$
|
172,870
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
172,870
|
|
|
|
|
|
|
|
|
|
||||||||
Investments at net asset value:
|
|
|
|
|
|
|
|
||||||||
Common collective trust funds
|
|
|
|
|
|
|
690,456
|
|
|||||||
Total assets at fair value
|
|
|
|
|
|
|
$
|
863,326
|
|
|
Fair Value at December 31, 2017
|
||||||||||||||
Asset Category
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Mutual funds
|
$
|
161,424
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
161,424
|
|
|
|
|
|
|
|
|
|
||||||||
Investments at net asset value:
|
|
|
|
|
|
|
|
||||||||
Common collective trust funds
|
|
|
|
|
|
|
838,776
|
|
|||||||
Total assets at fair value
|
|
|
|
|
|
|
$
|
1,000,200
|
|
|
Pension Benefits
|
|
Postretirement Benefits
|
||||
2019
|
$
|
60,105
|
|
|
$
|
3,035
|
|
2020
|
58,726
|
|
|
2,878
|
|
||
2021
|
59,666
|
|
|
2,934
|
|
||
2022
|
60,527
|
|
|
2,769
|
|
||
2023
|
61,327
|
|
|
2,697
|
|
||
2024 — 2028
|
315,088
|
|
|
12,409
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Environmental liability adjustments and other costs for disposed operations (a)
|
$
|
(8,332
|
)
|
|
$
|
(1,451
|
)
|
|
$
|
(5,298
|
)
|
Loss on sale or disposal of property, plant and equipment
|
(3,186
|
)
|
|
(2,032
|
)
|
|
(2,422
|
)
|
|||
Gain on foreign exchange
|
1,114
|
|
|
2,335
|
|
|
—
|
|
|||
Equity income (loss) from joint venture
|
(4,359
|
)
|
|
(495
|
)
|
|
—
|
|
|||
Insurance settlement
|
—
|
|
|
(13
|
)
|
|
897
|
|
|||
Miscellaneous income (expense)
|
2,341
|
|
|
382
|
|
|
1,139
|
|
|||
Total other operating expense, net
|
$
|
(12,422
|
)
|
|
$
|
(1,274
|
)
|
|
$
|
(5,684
|
)
|
(a)
|
Environmental liability adjustments and other costs for disposed operations reflects the adjustments to the Company’s estimates for environmental liability for the assessment, remediation and long-term monitoring and maintenance of the disposed operations sites over the next
20 years
and other related costs. See
Note 9
—
Liabilities for Disposed Operations
for additional information.
|
|
2018
|
|
2017
|
|
2016
|
||||||
Current
|
|
|
|
|
|
|
|
|
|||
Federal
|
$
|
(12,384
|
)
|
|
$
|
10,871
|
|
|
$
|
5,516
|
|
Foreign
|
(10,115
|
)
|
|
(121
|
)
|
|
—
|
|
|||
State and other
|
(657
|
)
|
|
(201
|
)
|
|
368
|
|
|||
|
(23,156
|
)
|
|
10,549
|
|
|
5,884
|
|
|||
Deferred
|
|
|
|
|
|
||||||
Federal
|
4,238
|
|
|
(34,635
|
)
|
|
(44,488
|
)
|
|||
Foreign
|
(24,901
|
)
|
|
4,065
|
|
|
—
|
|
|||
State and other
|
26
|
|
|
290
|
|
|
(711
|
)
|
|||
|
(20,637
|
)
|
|
(30,280
|
)
|
|
(45,199
|
)
|
|||
Changes in valuation allowance
|
—
|
|
|
—
|
|
|
—
|
|
|||
Income tax expense
|
$
|
(43,793
|
)
|
|
$
|
(19,731
|
)
|
|
$
|
(39,315
|
)
|
|
2018
|
|
2017
|
|
2016
|
|||
U.S. federal statutory income tax rate
|
21.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
Nontaxable bargain purchase gain (a)
|
(3.1
|
)
|
|
(32.1
|
)
|
|
—
|
|
U.S. federal rate change (b)
|
—
|
|
|
3.2
|
|
|
—
|
|
Difference in foreign statutory rates
|
5.8
|
|
|
—
|
|
|
—
|
|
Global Intangible Low Taxed Income (Net of FTC)(c)
|
5.4
|
|
|
—
|
|
|
—
|
|
Book tax differences related to joint venture
|
1.5
|
|
|
—
|
|
|
—
|
|
Favorable resolutions of uncertain tax positions
|
(3.1
|
)
|
|
—
|
|
|
—
|
|
Domestic manufacturing production deduction
|
—
|
|
|
(0.3
|
)
|
|
—
|
|
State credits
|
—
|
|
|
—
|
|
|
(0.8
|
)
|
Nondeductible executive compensation
|
0.7
|
|
|
0.4
|
|
|
0.6
|
|
Adjustment to previously filed tax returns
|
(3.4
|
)
|
|
(1.1
|
)
|
|
—
|
|
Nondeductible transaction costs (d)
|
—
|
|
|
1.0
|
|
|
—
|
|
Change in state rate
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
Other
|
0.6
|
|
|
(0.3
|
)
|
|
0.1
|
|
Income tax rate as reported
|
25.4
|
%
|
|
5.7
|
%
|
|
34.9
|
%
|
(a)
|
The bargain purchase gain from the acquisition of Tembec of
$20 million
and
$317 million
during the years ended December 31, 2018 and 2017, respectively, was not taxable resulting in a decrease in the income tax rate (see
Note 3
—
Tembec Acquisition
).
|
(b)
|
The income tax rate for the year ended
December 31, 2017
was impacted by the Tax Cuts and Jobs Act through a decrease in the federal tax rate from
35 percent
to
21 percent
. Income tax expense for the re-measurement of the deferred tax assets of
$11 million
was recorded during the year ended
December 31, 2017
. This expense is the result of previously recorded deferred tax deductions which will now result in a lower after-tax benefit due to the reduced rate.
|
(c)
|
The Company has the option to either treat taxes due on future Global Intangible Low-Taxed Income (“GILTI”) income as a current period expense when incurred (the “period cost method”) or factor in such amounts in the Company’s measurement
|
(d)
|
The Company incurred significant costs associated with the acquisition of Tembec. Certain costs incurred are considered facilitative to the transaction and were not deductible in 2017, resulting in an unfavorable adjustment to the income tax rate.
|
|
2018
|
|
2017
|
||||
Gross deferred tax assets:
|
|
|
|
||||
Pension, postretirement and other employee benefits
|
$
|
58,088
|
|
|
$
|
49,669
|
|
Tax credit carryforwards (a)
|
76,467
|
|
|
77,897
|
|
||
Property, plant and equipment basis differences
|
78,550
|
|
|
97,242
|
|
||
Canadian pool of scientific research and experimentation deductions ("SR&ED") (a)
|
87,253
|
|
|
79,349
|
|
||
Environmental liabilities
|
36,583
|
|
|
36,791
|
|
||
Capitalized costs
|
5,275
|
|
|
6,347
|
|
||
U.S. federal and Canadian net operating losses (a)
|
211,939
|
|
|
212,904
|
|
||
State net operating losses (a)
|
2,942
|
|
|
2,946
|
|
||
Interest carryforwards (a)
|
5,820
|
|
|
11,635
|
|
||
Other
|
9,737
|
|
|
1,868
|
|
||
Total gross deferred tax assets
|
572,654
|
|
|
576,648
|
|
||
Less: valuation allowance
|
(82,223
|
)
|
|
(92,081
|
)
|
||
Total deferred tax assets after valuation allowance
|
490,431
|
|
|
484,567
|
|
||
Gross deferred tax liabilities:
|
|
|
|
||||
Property, plant and equipment basis differences
|
(92,857
|
)
|
|
(95,754
|
)
|
||
Intangible assets
|
(15,579
|
)
|
|
(15,948
|
)
|
||
Other
|
(3,054
|
)
|
|
(2,626
|
)
|
||
Total gross deferred tax liabilities
|
(111,490
|
)
|
|
(114,328
|
)
|
||
Net deferred tax asset
|
$
|
378,941
|
|
|
$
|
370,239
|
|
|
|
|
|
||||
Included in:
|
|
|
|
|
|||
Deferred tax assets
|
$
|
406,957
|
|
|
$
|
402,846
|
|
Deferred tax liabilities
|
(28,016
|
)
|
|
(32,607
|
)
|
||
|
$
|
378,941
|
|
|
$
|
370,239
|
|
|
|
|
|
(a)
|
The following relates to tax credit carryforwards and net operating losses as of
December 31, 2018
:
|
|
Gross Amount
|
|
Tax Effected
|
|
Valuation Allowance
|
|
Expiration
|
||||||
State tax credit carryforwards
|
$
|
21,328
|
|
|
$
|
21,328
|
|
|
$
|
21,074
|
|
|
2019-2026
|
Foreign R&D credit carryforwards
|
$
|
55,139
|
|
|
$
|
55,139
|
|
|
$
|
55,139
|
|
|
2018-2037
|
State net operating losses
|
$
|
63,404
|
|
|
$
|
2,942
|
|
|
$
|
2,942
|
|
|
2018-2032
|
Canada non-capital losses
|
$
|
932,363
|
|
|
$
|
211,939
|
|
|
$
|
3,068
|
|
|
2025-2037
|
Interest limitation carryforward
|
$
|
26,457
|
|
|
$
|
5,820
|
|
|
$
|
—
|
|
|
None
|
Canadian pool of SR&ED
|
$
|
405,088
|
|
|
$
|
87,253
|
|
|
$
|
—
|
|
|
None
|
|
2018
|
|
2017
|
|
2016
|
||||||
Balance at January 1,
|
$
|
23,804
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Decreases related to prior year tax positions
|
(17,872
|
)
|
|
—
|
|
|
—
|
|
|||
Increases related to prior year tax positions
|
1,137
|
|
|
11,171
|
|
|
|
||||
Decreases related to current year tax positions
|
—
|
|
|
—
|
|
|
|
||||
Increases related to current year tax positions
|
1,775
|
|
|
12,633
|
|
|
—
|
|
|||
Balance at December 31,
|
$
|
8,844
|
|
|
$
|
23,804
|
|
|
$
|
—
|
|
|
2018
|
|
2017 (a)
|
|
2016 (a)
|
||||||
Operating income:
|
|
|
|
|
|
||||||
High Purity Cellulose
|
$
|
112,308
|
|
|
$
|
120,356
|
|
|
$
|
175,737
|
|
Forest Products
|
24,850
|
|
|
(4
|
)
|
|
—
|
|
|||
Pulp
|
95,071
|
|
|
4,411
|
|
|
—
|
|
|||
Paper
|
31,047
|
|
|
(1,155
|
)
|
|
—
|
|
|||
Corporate
|
(65,634
|
)
|
|
(62,156
|
)
|
|
(32,420
|
)
|
|||
Total operating income
|
$
|
197,642
|
|
|
$
|
61,452
|
|
|
$
|
143,317
|
|
|
2018
|
|
2017
|
||||
Identifiable assets:
|
|
|
|
||||
High Purity Cellulose
|
$
|
1,643,092
|
|
|
$
|
1,671,107
|
|
Forest Products
|
166,801
|
|
|
154,258
|
|
||
Pulp
|
103,308
|
|
|
83,081
|
|
||
Paper
|
240,427
|
|
|
245,746
|
|
||
Corporate
|
525,458
|
|
|
488,419
|
|
||
Total identifiable assets
|
$
|
2,679,086
|
|
|
$
|
2,642,611
|
|
|
2018
|
|
2017
|
||||
Long-life assets:
|
|
|
|
||||
United States
|
$
|
829,153
|
|
|
$
|
840,315
|
|
Canada
|
920,503
|
|
|
926,774
|
|
||
France
|
213,338
|
|
|
228,985
|
|
||
Total long-life assets
|
$
|
1,962,994
|
|
|
$
|
1,996,074
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Depreciation and amortization:
|
|
|
|
|
|
||||||
High Purity Cellulose
|
$
|
119,231
|
|
|
$
|
93,177
|
|
|
$
|
87,837
|
|
Forest Products
|
6,683
|
|
|
728
|
|
|
—
|
|
|||
Pulp
|
4,581
|
|
|
590
|
|
|
—
|
|
|||
Paper
|
17,263
|
|
|
2,154
|
|
|
—
|
|
|||
Corporate
|
658
|
|
|
314
|
|
|
437
|
|
|||
Total depreciation and amortization
|
$
|
148,416
|
|
|
$
|
96,963
|
|
|
$
|
88,274
|
|
|
|
|
|
|
|
||||||
Capital expenditures (a):
|
|
|
|
|
|
||||||
High Purity Cellulose
|
$
|
92,980
|
|
|
$
|
65,691
|
|
|
$
|
85,835
|
|
Forest Products
|
26,691
|
|
|
4,409
|
|
|
—
|
|
|||
Pulp
|
4,983
|
|
|
326
|
|
|
—
|
|
|||
Paper
|
4,966
|
|
|
1,125
|
|
|
—
|
|
|||
Corporate
|
2,827
|
|
|
19
|
|
|
—
|
|
|||
Total capital expenditures
|
$
|
132,447
|
|
|
$
|
71,570
|
|
|
$
|
85,835
|
|
|
Sales by Destination
|
||||||||||||||||
|
2018
|
|
%
|
|
2017
|
|
%
|
|
2016
|
|
%
|
||||||
United States
|
$
|
779,699
|
|
|
36
|
|
$
|
336,943
|
|
|
35
|
|
$
|
348,570
|
|
|
40
|
China
|
360,862
|
|
|
17
|
|
253,275
|
|
|
26
|
|
250,044
|
|
|
29
|
|||
Japan
|
143,577
|
|
|
7
|
|
123,850
|
|
|
13
|
|
136,817
|
|
|
16
|
|||
Europe
|
364,024
|
|
|
17
|
|
114,049
|
|
|
12
|
|
88,191
|
|
|
10
|
|||
Latin America
|
11,868
|
|
|
1
|
|
11,576
|
|
|
1
|
|
9,876
|
|
|
1
|
|||
Other Asia
|
208,878
|
|
|
10
|
|
78,538
|
|
|
8
|
|
27,280
|
|
|
3
|
|||
Canada
|
260,448
|
|
|
12
|
|
41,178
|
|
|
4
|
|
—
|
|
|
—
|
|||
All other
|
5,057
|
|
|
—
|
|
1,924
|
|
|
1
|
|
7,953
|
|
|
1
|
|||
Total sales
|
$
|
2,134,413
|
|
|
100
|
|
$
|
961,333
|
|
|
100
|
|
$
|
868,731
|
|
|
100
|
|
Percentage of Sales
|
||
|
2017
|
|
2016
|
Eastman Chemical Company
|
20%
|
|
25%
|
Nantong Cellulose Fibers, Co., Ltd.
|
15%
|
|
17%
|
Daicel Corporation
|
10%
|
|
14%
|
|
Operating Leases (a)
|
|
Purchase Obligations (b)
|
||||
2019
|
$
|
4,669
|
|
|
$
|
170,868
|
|
2020
|
3,019
|
|
|
70,771
|
|
||
2021
|
2,299
|
|
|
57,702
|
|
||
2022
|
1,641
|
|
|
47,288
|
|
||
2023
|
1,081
|
|
|
52,431
|
|
||
Thereafter
|
1,016
|
|
|
104,048
|
|
||
Total
|
$
|
13,725
|
|
|
$
|
503,108
|
|
(a)
|
Operating leases include leases on buildings, machinery and equipment under various operating leases.
|
(b)
|
Purchase obligations primarily consist of payments expected to be made on natural gas, steam energy and wood chips purchase contracts. Obligations reported in the table are estimates and may vary based on changes in actual price and volumes terms.
|
|
2018
|
|
2017
|
|
2016
|
||||||
Cash paid (received) during the period:
|
|
|
|
|
|
||||||
Interest
|
$
|
59,720
|
|
|
$
|
35,879
|
|
|
$
|
35,160
|
|
Income taxes
|
$
|
12,558
|
|
|
$
|
5,992
|
|
|
$
|
(4,727
|
)
|
Non-cash investing and financing activities:
|
|
|
|
|
|
||||||
Capital assets purchased on account
|
$
|
16,864
|
|
|
$
|
12,083
|
|
|
$
|
10,155
|
|
Property, plant and equipment acquired under capital leases
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,697
|
|
Value of stock issued for Acquisition
|
$
|
—
|
|
|
$
|
141,192
|
|
|
$
|
—
|
|
|
Quarter Ended
|
|
|
||||||||||||||||
|
March 31
|
|
June 30
|
|
September 29
|
|
December 31
|
|
Total Year
|
||||||||||
2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Net Sales
|
$
|
521,992
|
|
|
$
|
541,720
|
|
|
$
|
544,339
|
|
|
$
|
526,362
|
|
|
$
|
2,134,413
|
|
Gross Margin
|
$
|
80,352
|
|
|
$
|
101,478
|
|
|
$
|
95,913
|
|
|
$
|
66,426
|
|
|
$
|
344,169
|
|
Operating Income
|
$
|
46,257
|
|
|
$
|
66,222
|
|
|
$
|
56,150
|
|
|
$
|
29,013
|
|
|
$
|
197,642
|
|
Net Income
|
$
|
24,455
|
|
|
$
|
53,389
|
|
|
$
|
37,936
|
|
|
$
|
12,636
|
|
|
$
|
128,416
|
|
Basic earnings per share
|
$
|
0.41
|
|
|
$
|
0.97
|
|
|
$
|
0.68
|
|
|
$
|
0.18
|
|
|
$
|
2.27
|
|
Diluted earnings per share (a)
|
$
|
0.38
|
|
|
$
|
0.83
|
|
|
$
|
0.60
|
|
|
$
|
0.18
|
|
|
$
|
1.96
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Quarter Ended
|
|
|
||||||||||||||||
|
March 25
|
|
June 24
|
|
September 23
|
|
December 31 (c)
|
|
Total Year
|
||||||||||
2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Net Sales
|
$
|
201,415
|
|
|
$
|
201,226
|
|
|
$
|
209,717
|
|
|
$
|
348,975
|
|
|
$
|
961,333
|
|
Gross Margin
|
$
|
37,369
|
|
|
$
|
34,297
|
|
|
$
|
32,119
|
|
|
$
|
39,267
|
|
|
$
|
143,052
|
|
Operating Income
|
$
|
27,081
|
|
|
$
|
14,470
|
|
|
$
|
18,774
|
|
|
$
|
1,127
|
|
|
$
|
61,452
|
|
Net Income
|
$
|
9,642
|
|
|
$
|
4,573
|
|
|
$
|
15,672
|
|
|
$
|
295,077
|
|
|
$
|
324,964
|
|
Basic earnings per share
|
$
|
0.15
|
|
|
$
|
0.03
|
|
|
$
|
0.29
|
|
|
$
|
6.31
|
|
|
$
|
7.17
|
|
Diluted earnings per share (b)
|
$
|
0.15
|
|
|
$
|
0.03
|
|
|
$
|
0.28
|
|
|
$
|
5.01
|
|
|
$
|
5.81
|
|
(a)
|
Basic and diluted earnings per share for the second, third, and fourth quarters of 2018 and year ended December 31, 2018 included the impact of the repurchase and retirement of common stock as part of the Board of Directors authorized share buyback program. See
Note 14
—
Earnings per Share of Common Stock
for additional information.
|
(b)
|
Basic and diluted earnings per share may include the impact of dividends on the Company’s Preferred Stock. As a result, quarterly EPS does not crossfoot to full-year EPS. See
Note 14
—
Earnings per Share of Common Stock
for additional information.
|
(c)
|
On November 17, 2017, the Company acquired all the outstanding common shares of Tembec Inc. for an aggregate purchase price of
$317 million
Canadian dollars and
8.4 million
shares of the Company’s common stock. The acquisition was accounted for as a business combination. See Note 3—
Tembec Acquisition
for additional information.
|
|
|
|
Additions
|
|
|
|
|
||||||||||||||||
Description
|
Balance at Beginning of Year
|
|
Charged to Cost and Expenses
|
|
Charged to Other Accounts
|
|
Acquisition
|
|
Deductions
|
|
Balance at End of Year
|
||||||||||||
Allowance for doubtful accounts:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Year ended December 31, 2018
|
$
|
593
|
|
|
$
|
1,743
|
|
|
$
|
(55
|
)
|
|
$
|
—
|
|
|
$
|
(219
|
)
|
|
$
|
2,062
|
|
Year ended December 31, 2017
|
151
|
|
|
437
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
593
|
|
||||||
Year ended December 31, 2016
|
151
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
151
|
|
||||||
Allowance for sales returns:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Year ended December 31, 2018
|
$
|
1,121
|
|
|
$
|
969
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(831
|
)
|
|
$
|
1,259
|
|
Year ended December 31, 2017
|
523
|
|
|
598
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,121
|
|
||||||
Year ended December 31, 2016
|
—
|
|
|
523
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
523
|
|
||||||
Deferred tax asset valuation allowance:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Year ended December 31, 2018
|
$
|
92,081
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(9,858
|
)
|
|
$
|
82,223
|
|
Year ended December 31, 2017
|
20,821
|
|
|
—
|
|
|
873
|
|
|
71,722
|
|
|
(1,335
|
)
|
|
92,081
|
|
||||||
Year ended December 31, 2016
|
19,702
|
|
|
1,119
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,821
|
|
||||||
Self-insurance liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Year ended December 31, 2018
|
$
|
1,289
|
|
|
$
|
348
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(626
|
)
|
|
$
|
1,011
|
|
Year ended December 31, 2017
|
428
|
|
|
1,660
|
|
|
—
|
|
|
—
|
|
|
(799
|
)
|
|
1,289
|
|
||||||
Year ended December 31, 2016
|
589
|
|
|
291
|
|
|
—
|
|
|
—
|
|
|
(452
|
)
|
|
428
|
|
i.
|
in connection with the performance of your duties on behalf of the Company, committing an illegal act, including, but not limited to, embezzlement or misappropriation of Company funds, or willfully failing to comply with the policies and procedures of the Company as determined by the Committee;
|
ii.
|
except for actions taken on behalf of the Company, directly or indirectly, engaging in or assisting others in soliciting, persuading, hiring, recruiting, or attempting to solicit, persuade, hire or recruit, any person employed by or under contract with the Company (or who was employed by or under contract with the Company in the six-month period preceding the date of such prohibited contact); or
|
iii.
|
engaging in any business, services or activities whatsoever, whether as an employee, director, consultant, advisor, agent, partner, joint venturer, sole proprietor, investor or stockholder, for or on behalf of, a business or enterprise engaged in researching, developing, manufacturing, distributing, marketing and/or selling dissolving wood pulp, including specialty fibers used in chemical applications, anywhere in the world (the foregoing being referred to as the “
Non-Competition Restriction
”). You agree and understand the Company competes on a worldwide basis, having sales offices internationally that cover geographic areas all over the world, sells the majority of its volume outside the United States, and has multiple foreign competitors, and that this Non-Competition Restriction shall apply worldwide because, for all of these and other reasons, the disclosure of the Company’s Confidential Information would be competitively harmful to the Company. The Non-Competition Restriction shall not apply, in each case, (1) to the extent of your
|
(i)
|
with respect to Award Shares received by you, in the case of shares of stock, (x) the return of all Award Shares received and continued to be held by you, less any Award Shares you have previously sold to pay taxes on such award, plus (y) if some or all of such Award Shares have been sold by you (exclusive of the amount sold to pay taxes on such reward), an amount equal to (a) the number of Award Shares you have sold (exclusive of the amount sold to pay taxes on such award) multiplied by the selling price per share (and, only in the case of the “buy and hold” exercise of an option awarded under the Plan,
less
the option strike price), plus (b) the Associated Return, and
|
(ii)
|
in the case of cash received by you as a result of the “cashless” exercise of options awarded under the Plan, an amount equal to the cash actually received by you before taxes in respect of the options exercised;
|
ROIC Level for 2019
|
Award (Expressed as a Percent of Target)
|
12.1% or greater
|
200%
|
Greater than 10.5%, but less than 12.1%
|
100%, plus 6.25% for each incremental
0.1% ROIC over 10.5%
|
Greater than or equal to 9.5%, but less than 10.5%
|
100%
|
Greater than 7.9%, but less than 9.5%
|
30%, plus 4.38% for each incremental
0.1% ROIC over 7.9%
|
Equal to 7.9%
|
30%
|
Less than 7.9%
|
0%
|
•
|
The ROIC performance will be calculated and payout levels will be determined by the Board and communicated separately.
|
•
|
Payment, if any, will be made in RYAM stock, and may be reduced, to the extent allowed under applicable regulations, by the number of shares of stock equal in value to the amount needed to cover associated tax liabilities.
|
•
|
Dividend equivalents and interest will be paid in cash on the number of RYAM shares of stock earned under the Program.
|
•
|
Dividend equivalents and interest will be calculated by taking the dividends paid on one share of RYAM stock during the performance period times the number of shares of stock awarded at the end of the period. Interest on such dividends will be earned at a rate equal to the prime rate as reported in the Wall Street Journal, adjusted and compounded annually; from the date such cash dividends were paid by the Company.
|
•
|
Total awards will be valued on March 1, 2022, following the end of the three-year performance period, using the average of the closing price of the ten trading days preceding this date. Awards, including dividends and interest, will be distributed to participants as soon as practicable following the valuation dates.
|
•
|
Target awards will be prorated in cases of retirement, death, or disability in accordance with Plan provisions.
|
•
|
The following will be excluded from the ROIC calculation:
|
◦
|
Additional impact of accounting expense associated with the plan.
|
◦
|
Unusual non-recurring income and expense items defined as below.
|
▪
|
one-time costs associated with the cost to achieve synergies
|
▪
|
foreign exchange gains or losses associated with the revaluation of long-term assets or liabilities
|
▪
|
environmental liability adjustments in excess of Long Range Plan (“LRP”) amounts
|
▪
|
restructuring and impairment charges
|
▪
|
gains or losses due to bond repurchases
|
▪
|
financing issuance costs
|
▪
|
changes in accounting methods or principals different than those assumed in the LRP
|
◦
|
Results of material business acquisitions not included in the calculation of the target ROIC amounts above will be excluded in the year of the acquisition but included in the calculations for the remaining years of the program.
|
TSR Ranking
|
Modifier
|
Below the 25
th
percentile
|
Results are reduced by 25%
|
Greater than or equal to the 25
th
percentile but less than the 75
th
percentile
|
Results are not modified
|
Greater than or equal to the 75
th
percentile
|
Results are increased by 25%
|
Name of Subsidiary
|
|
Place of Incorporation
|
Rayonier A.M. Canada Energy LP
|
|
Canada
|
Rayonier A.M. Canada Enterprises Inc.
|
|
Canada
|
Rayonier A.M. Canada General Partnership
|
|
Canada
|
Rayonier A.M. Canada Industries Inc.
|
|
Canada
|
Rayonier A.M. Global Holdings Luxembourg SCS
|
|
Luxembourg
|
Rayonier A.M. Global Investments Luxembourg SARL
|
|
Luxembourg
|
Rayonier A.M. Luxembourg SARL
|
|
Luxembourg
|
Rayonier Performance Fibers, LLC
|
|
Delaware
|
Rayonier A.M. Products Inc.
|
|
Delaware
|
Rayonier A.M. Tartas SAS
|
|
France
|
Rayonier A.M. France SAS
|
|
France
|
/s/ Grant Thornton LLP
|
|
Jacksonville, Florida
|
|
March 1, 2019
|
|
Dated:
|
January 26, 2019
|
|
/s/ CHARLES E. ADAIR
|
|
|
|
Charles E. Adair
|
Dated:
|
January 26, 2019
|
|
/s/ DE LYLE W. BLOOMQUIST
|
|
|
|
De Lyle W. Bloomquist
|
Dated:
|
January 31, 2019
|
|
/s/ C. DAVID BROWN, II
|
|
|
|
C. David Brown, II
|
Dated:
|
January 29, 2019
|
|
/s/ JULIE A. DILL
|
|
|
|
Julie A. Dill
|
Dated:
|
January 29, 2019
|
|
/s/ MARK E. GAUMOND
|
|
|
|
Mark E. Gaumond
|
Dated:
|
January 25, 2019
|
|
/s/ MATTHEW P. HEPLER
|
|
|
|
Matthew P. Hepler
|
Dated:
|
January 26, 2019
|
|
/s/ JAMES F. KIRSCH
|
|
|
|
James F. Kirsch
|
Dated:
|
January 25, 2019
|
|
/s/ THOMAS I. MORGAN
|
|
|
|
Thomas I. Morgan
|
Dated:
|
January 28, 2019
|
|
/s/ LISA M. PALUMBO
|
|
|
|
Lisa M. Palumbo
|
1.
|
I have reviewed this annual report on Form 10-K of Rayonier Advanced Materials Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
/s/ P
AUL
G. B
OYNTON
|
|
Paul G. Boynton
Chairman, President and Chief Executive Officer
|
|
Rayonier Advanced Materials Inc.
|
1.
|
I have reviewed this annual report on Form 10-K of Rayonier Advanced Materials Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
/s/ F
RANK
A. R
UPERTO
|
|
Frank A. Ruperto
Chief Financial Officer and
Senior Vice President, Finance and Strategy
|
|
Rayonier Advanced Materials Inc.
|
1.
|
The annual report on Form 10-K of Rayonier Advanced Materials Inc. (the "Company") for the period ended
December 31, 2018
(the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ P
AUL
G. B
OYNTON
|
|
/s/ F
RANK
A. R
UPERTO
|
Paul G. Boynton
|
|
Frank A. Ruperto
|
Chairman, President and Chief Executive Officer
Rayonier Advanced Materials Inc.
|
|
Chief Financial Officer and
Senior Vice President, Finance and Strategy
Rayonier Advanced Materials Inc.
|