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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Neenah Inc | NYSE:NP | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 32.00 | 0 | 01:00:00 |
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☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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20-1308307
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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3460 Preston Ridge Road
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Alpharetta
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Georgia
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30005
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(Address of Principal Executive Offices)
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(Zip Code)
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Title of Each Class
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Trading Symbol
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Name of Each Exchange on Which Registered
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Common Stock — $0.01 Par Value
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NP
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New York Stock Exchange
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Large accelerated filer
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☒
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Accelerated filer
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☐
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Non-accelerated filer
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Smaller reporting company
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☐
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Emerging growth company
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☐
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•
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our debt holders could declare all outstanding principal and interest to be due and payable;
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•
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our senior secured lenders could terminate their commitments and commence foreclosure proceedings against our assets; and
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•
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we could be forced into bankruptcy or liquidation.
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•
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make it difficult for us to satisfy our financial obligations, including making scheduled principal and interest payments on the 2021 Senior Notes and our other indebtedness;
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•
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place us at a disadvantage to our competitors;
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•
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require us to dedicate a substantial portion of our cash flow from operations to service payments on our indebtedness, thereby reducing funds available for other purposes;
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•
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increase our vulnerability to a downturn in general economic conditions or the industry in which we operate;
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•
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limit our ability to obtain additional financing for working capital, capital expenditures, acquisitions and general corporate and other purposes; and
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•
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limit our ability to plan for and react to changes in our business and the industry in which we operate.
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•
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changes in market demand for our products due to global economic and political conditions;
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•
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the impact of competition, both domestic and international, changes in industry production capacity, including the construction of new mills or new machines, the closing of mills and incremental changes due to capital expenditures or productivity increases;
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•
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the loss of current customers or the inability to obtain new customers;
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•
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increases in commodity prices, (particularly for pulp, energy and latex);
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•
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our ability to control costs, including transportation, and implement measures designed to enhance operating efficiencies;
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•
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the availability of raw materials and energy;
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•
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the enactment of adverse state, federal or foreign tax or other legislation or changes in government policy or regulation;
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•
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the impact of increased trade protectionism and tariffs on our business, results of operations and financial condition;
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•
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unanticipated expenditures related to the cost of compliance with environmental and other governmental regulations;
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•
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fluctuations in (i) exchange rates (in particular changes in the U.S. dollar/Euro currency exchange rates) and (ii) interest rates;
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•
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increases in the funding requirements for our pension and postretirement liabilities;
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•
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our ability identify attractive acquisition targets and to successfully integrate acquired businesses into our existing operations;
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•
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changes in asset valuations including write-downs of assets including property, plant and equipment; inventory, accounts receivable, deferred income tax assets or other assets for impairment or other reasons;
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•
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loss of key personnel;
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•
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strikes, labor stoppages and changes in our collective bargaining agreements and relations with our employees and unions;
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•
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capital and credit market volatility and fluctuations in global equity and fixed-income markets;
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•
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our existing and future indebtedness;
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•
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our net operating losses may not be available to offset our tax liability and other tax planning strategies may not be effective;
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•
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other risks that are detailed from time to time in reports we file with the SEC; and
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•
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other factors described under "Risk Factors."
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Location
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Equipment/Resources
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Owned or Leased
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Products
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Fine Paper and Packaging Segment
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Neenah Mill
Neenah, Wisconsin
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Two paper machines; paper finishing equipment
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Owned
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Printing and writing, text, cover, packaging and other specialty papers
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Whiting Mill
Whiting, Wisconsin
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Four paper machines; paper finishing equipment
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Owned
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Printing and writing, text, cover, packaging and other specialty papers
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Converting Center
Neenah, Wisconsin
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Paper finishing equipment
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Owned
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Printing and writing, text, cover, packaging and other specialty papers
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Great Barrington Mill
Great Barrington, Massachusetts
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Paper finishing equipment
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Owned; leased facility
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Laminated specialty papers and toll converting services
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Technical Products Segment
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Munising Mill
Munising, Michigan
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Two paper machines; two off line saturators; two off line coaters; specialty finishing equipment
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Owned
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Tapes, abrasives, premask, medical packaging and other durable, saturated and coated substrates
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Pittsfield Mill
Pittsfield, Massachusetts
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Three paper machines; paper finishing equipment
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Owned
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Reverse osmosis filtration and glass applications
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Bruckmühl Mill
Bruckmühl, Germany
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One paper machine; two saturator/coaters; finishing equipment
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Owned
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Masking tape backings and abrasive backings
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Weidach Mill
Feldkirchen-Westerham, Germany
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Two paper machines; three saturators; one laminator; three meltblown machines; specialty finishing equipment
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Owned
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Transportation filtration and other filter media
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Bolton Mill
Bolton, England
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Saturating, coating, and finishing equipment
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Owned
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Durable printing, specialty paper, and coated substrates
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Eerbeek Mill
Eerbeek, Netherlands
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Two paper machines; paper finishing equipment
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Owned
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Digital dye sublimation and image transfer printing paper
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Shared Facilities
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Appleton Mill
Appleton, Wisconsin
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Two paper machines; saturating equipment; paper finishing equipment
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Owned
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Transportation filtration, printing and writing, text, cover, packaging, and other specialty papers
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Brownville Mill
Brownville, New York
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One paper machine; one off-line coater
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Owned
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Durable printing, packaging, and specialty paper
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Lowville Mill
Lowville, New York
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Saturating, coating, embossing and finishing equipment
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Owned
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Durable printing, packaging, and specialty paper
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Quakertown Mill
Quakertown, Pennsylvania
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Saturating, coating, embossing and finishing equipment
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Owned
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Durable printing, packaging, and specialty paper
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Administrative Location
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Office/Other Space
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Function
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Alpharetta, Georgia
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Leased Office Space
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Corporate Headquarters, Administration and Design Center
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Neenah, Wisconsin
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Owned Office Space
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Administration
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Appleton, Wisconsin
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Owned and Leased Office and Laboratory Space
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Administration and Research and Development for our technical products businesses
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Munising, Michigan
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Owned Office and Laboratory Space
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Administration and Research and Development for our technical products businesses
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Pittsfield, Massachusetts
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Owned Office and Laboratory Space
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Administration and Research and Development for our technical products businesses
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East Longmeadow, Massachusetts
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Leased Office and Laboratory Space
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Administration and Research and Development for our technical products and fine paper and packaging businesses
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Feldkirchen-Westerham, Germany
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Owned Office and Laboratory Space
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Administration and Research and Development for our technical product businesses
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Eerbeek, Netherlands
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Owned Office and Laboratory Space
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Administration and Research and Development for our technical product businesses
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Year Ended December 31,
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|||||||
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2019
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2018
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2017
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Technical Products
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66
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%
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74
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%
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78
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%
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Fine Paper and Packaging
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86
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%
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78
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%
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81
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%
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Period
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Total Number
of Shares
Purchased (a)
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Average Price
Paid Per
Share (c)
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Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs (b)
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Approximate Dollar Value
of Shares that May Yet
Be Purchased Under
Publicly Announced
Plans or Programs in 2019
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||||||
October 2019
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88
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$
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—
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—
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$
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20,092,060
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November 2019
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—
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$
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—
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—
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$
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20,092,060
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December 2019
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15,254
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$
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—
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—
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$
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20,092,060
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(a)
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Transactions include the purchase of vested restricted shares from employees to satisfy minimum tax withholding requirements upon vesting of stock-based awards. See Note 9 of Notes to Consolidated Financial Statements, "Stock Compensation Plans."
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(b)
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In November 2018, our Board of Directors authorized a program for the purchase of up to $25 million of outstanding common stock which was in effect till December 31, 2019. In November 2019, our Board of Directors authorized a program for the purchase of up to $25 million of outstanding common stock effective January 1, 2020. The program does not require the Company to purchase any specific number of shares and may be suspended or discontinued at any time.
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(c)
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Average price paid per share for shares purchased as part of our program.
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Plan Category
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(a)
Number of securities to be issued upon exercise of outstanding options, warrants, and rights |
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(b)
Weighted- average exercise price of outstanding options, warrants, and rights (1) |
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(c)
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
||||
Equity compensation plans approved by security holders
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166,790
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(2)(3)
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$
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70.08
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1,091,000
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Equity compensation plans not approved by security holders
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—
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—
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—
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Total
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166,790
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$
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70.08
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1,091,000
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(1)
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The weighted-average exercise price of outstanding options, warrants and rights does not take into account restricted stock units since they do not have an exercise price.
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(2)
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Includes (i) 55,937 shares issuable upon the exercise of outstanding options and stock appreciation rights ("SARs") for which the exercise price of outstanding options and SARs exceeds closing price of our common stock of $70.43, (ii) 66,191 shares issuable following the vesting and conversion of outstanding performance share unit awards, and (iii) 44,662 shares issuable upon the vesting and conversion of outstanding restricted stock units, all as of December 31, 2019. As of December 31, 2019, we had an aggregate of 416,548 stock options and SARs outstanding. The weighted average exercise price of the stock options and SARs was $70.08 per share and the remaining contractual life of such awards was 6.3 years.
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(3)
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Includes 53,259 shares that would be issued upon the assumed exercise of 177,062 SARs at the $70.43 per share closing price of our common stock on December 31, 2019.
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Year Ended December 31,
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||||||||||||||||||
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2019
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2018
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2017
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2016
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2015
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Consolidated Statement of Operations Data
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Net sales
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$
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938.5
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$
|
1,034.9
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$
|
979.9
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$
|
941.5
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$
|
887.7
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Cost of products sold (f)
|
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755.1
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851.5
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779.7
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724.2
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690.9
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Gross profit (f)
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183.4
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183.4
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200.2
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217.3
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|
196.8
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Selling, general and administrative expenses
|
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98.6
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|
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95.9
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95.3
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90.0
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85.3
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Acquisition/integration/restructuring and other costs (b)
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6.2
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2.1
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1.3
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7.0
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6.5
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|||||
Pension and SERP-related adjustments (c)
|
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(1.4
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)
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1.8
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0.6
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0.8
|
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—
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Impairment loss (a)
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—
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31.1
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—
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—
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|
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—
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|
|||||
Acquisition-related adjustments (d)
|
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—
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(3.9
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)
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—
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|
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—
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|
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—
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Insurance settlement (e)
|
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—
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|
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(0.4
|
)
|
|
(3.2
|
)
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—
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|
|
—
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|
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Other expense, net
|
|
1.7
|
|
|
2.7
|
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|
1.9
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5.4
|
|
|
3.6
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|
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Operating income
|
|
78.3
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|
|
54.1
|
|
|
104.3
|
|
|
114.1
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|
|
101.4
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Interest expense, net
|
|
11.8
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|
|
13.0
|
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|
12.6
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11.1
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|
|
11.5
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Income from continuing operations before income taxes
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66.5
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41.1
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91.7
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103.0
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89.9
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Provision for income taxes (k)
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11.1
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3.9
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11.4
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29.6
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29.4
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Income from continuing operations
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55.4
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37.2
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80.3
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73.4
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60.5
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Loss from discontinued operations, net of taxes (g)
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—
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(0.8
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)
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—
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(0.4
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)
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(9.4
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)
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Net income
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$
|
55.4
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|
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$
|
36.4
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|
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$
|
80.3
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|
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$
|
73.0
|
|
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$
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51.1
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Earnings from continuing operations per basic share
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$
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3.27
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$
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2.20
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$
|
4.74
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|
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$
|
4.33
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|
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$
|
3.58
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Earnings from continuing operations per diluted share
|
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$
|
3.26
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$
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2.17
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$
|
4.68
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|
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$
|
4.26
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|
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$
|
3.53
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Cash dividends per common share
|
|
$
|
1.80
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|
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$
|
1.64
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|
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$
|
1.48
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|
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$
|
1.32
|
|
|
$
|
1.20
|
|
|
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Other Financial Data
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|
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Net cash flow provided by (used for):
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|||||
Operating activities (j)
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|
$
|
97.6
|
|
|
$
|
92.7
|
|
|
$
|
100.0
|
|
|
$
|
115.8
|
|
|
$
|
111.2
|
|
Capital expenditures (i)
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(21.4
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)
|
|
(38.1
|
)
|
|
(42.7
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)
|
|
(68.5
|
)
|
|
(48.1
|
)
|
|||||
Other investing activities (h)
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(1.9
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)
|
|
3.8
|
|
|
(52.3
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)
|
|
0.3
|
|
|
(112.0
|
)
|
|||||
Financing activities (j)
|
|
(75.2
|
)
|
|
(52.6
|
)
|
|
(3.8
|
)
|
|
(48.4
|
)
|
|
(18.8
|
)
|
|
|
December 31,
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||||||||||||||||||
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2019
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|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
|
(Dollars in millions)
|
||||||||||||||||||
Consolidated Balance Sheet Data
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents
|
|
$
|
9.0
|
|
|
$
|
9.9
|
|
|
$
|
4.5
|
|
|
$
|
3.1
|
|
|
$
|
4.2
|
|
Working capital, less cash and cash equivalents
|
|
143.3
|
|
|
147.2
|
|
|
156.1
|
|
|
125.2
|
|
|
136.3
|
|
|||||
Total assets (j)(k)
|
|
827.8
|
|
|
861.2
|
|
|
904.4
|
|
|
765.6
|
|
|
751.4
|
|
|||||
Long-term debt
|
|
198.2
|
|
|
236.8
|
|
|
254.1
|
|
|
219.7
|
|
|
228.2
|
|
|||||
Total liabilities (j)(k)
|
|
421.5
|
|
|
471.0
|
|
|
504.5
|
|
|
427.3
|
|
|
439.8
|
|
|||||
Total stockholders' equity
|
|
406.3
|
|
|
390.2
|
|
|
399.9
|
|
|
338.3
|
|
|
311.6
|
|
(a)
|
For the year ended December 31, 2018, we recorded a non-cash impairment loss of $31.1 million related to our Brattleboro mill and associated research and office facilities. See Note 13 of Notes to Consolidated Financial Statements, "Sale of Brattleboro Mill and Impairment Loss."
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(b)
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For the year ended December 31, 2019, we incurred $6.2 million of non-routine costs primarily related to the accelerated depreciation and other costs related to the consolidation of the fine paper manufacturing footprint with an idling of a paper machine. For the year ended December 31, 2018, we incurred $0.5 million of integration costs related to the acquisition of Neenah Coldenhove ("Coldenhove Acquisition") and $1.6 million of restructuring and other one-time costs. For the year ended December 31, 2017, we incurred of $1.3 million of acquisition costs related to the Coldenhove Acquisition. For the year ended December 31, 2016, we incurred $4.1 million of integration costs related to the FiberMark Acquisition, $2.7 million of non-capitalized trial costs related to the U.S. filtration project, and $0.2 million of other one-time costs. For the year ended December 31, 2015, we incurred $5.3 million of integration costs related to the FiberMark Acquisition and $1.2 million of restructuring costs.
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(c)
|
For the year ended December 31, 2019, we recorded a curtailment gain of $1.6 million related to the Neenah Coldenhove pension plan. For the years ended December 31, 2019, 2018, 2017, and 2016, we recorded $0.1 million, $0.8 million, $0.6 million, and $0.8 million of pension settlement charges, respectively. For the year ended December 31, 2018, we also recorded an estimated withdrawal liability of $1.0 million related to our withdrawal from PIUMPF. See Note 8 of Notes to Consolidated Financial Statements, "Pension and Other Postretirement Benefits."
|
(d)
|
For the year ended December 31, 2018, we recorded $3.9 million of acquisition-related adjustments arising from the operating results of Neenah Coldenhove subsequent to the acquisition. See Note 4 of Notes to Consolidated Financial Statements, "Acquisitions."
|
(e)
|
For the years ended December 31, 2018 and 2017, we recorded a representations and warranties insurance settlement of $0.4 million and $3.2 million, respectively, related to the FiberMark acquisition.
|
(f)
|
In March 2017, the FASB issued ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (Topic 715). The Company adopted this ASU as of January 1, 2018. As a result of the adoption, the Company reclassified $1.5 million and $1.2 million of net cost for the year ended December 31, 2017, $2.8 million and $2.2 million of net cost for the year ended December 31, 2016, and $1.4 million and $1.2 million of net cost for the year ended December 31, 2015, respectively, of other components of net benefit cost from "Cost of products sold" and "Selling, general and administrative expenses" to "Other expense - net" on the consolidated statements of operations. There was no other material impact on its consolidated financial statements due to the adoption.
|
(g)
|
The following table presents the results of discontinued operations:
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
2019
|
|
2018 (1)
|
|
2017
|
|
2016 (1)
|
|
2015 (2)
|
||||||||||
Discontinued operations: (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Income from operations
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.2
|
|
Loss on sale of the Lahnstein Mill (3)
|
|
—
|
|
|
(0.8
|
)
|
|
—
|
|
|
(0.6
|
)
|
|
(13.6
|
)
|
|||||
(Loss) income before income taxes
|
|
—
|
|
|
(0.8
|
)
|
|
—
|
|
|
(0.6
|
)
|
|
(13.4
|
)
|
|||||
(Benefit) provision for income taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
(4.0
|
)
|
|||||
(Loss) income from discontinued operations, net of taxes
|
|
$
|
—
|
|
|
$
|
(0.8
|
)
|
|
$
|
—
|
|
|
$
|
(0.4
|
)
|
|
$
|
(9.4
|
)
|
(1)
|
The losses in 2018 and 2016 were due to the final adjustments of the sales price of the Lahnstein Mill.
|
(2)
|
The loss on sale of the Lahnstein Mill includes a net curtailment gain related to the divestiture of the pension plan of $15.8 million, including a $5.5 million write-off of deferred actuarial losses in 2015.
|
(3)
|
On October 31, 2015, we sold the Lahnstein Mill. For the years ended December 31, 2018, 2016, and 2015, the results of operations and the loss on sale of the Lahnstein Mill are reported as discontinued operations in the Consolidated Statements of Operations Data.
|
(h)
|
In December 2018, we sold the Brattleboro mill for $5 million. In November 2017, we purchased all of the outstanding equity of Neenah Coldenhove for approximately $45 million. In August 2015, we purchased all of the outstanding equity of FiberMark for approximately $118 million.
|
(i)
|
During the year ended December 31, 2016, we completed our U.S. Filtration project.
|
(j)
|
In January 2019, we adopted ASU 2016-02, Leases (Topic 842) and recorded right-of-use ("ROU") assets of $16 million and lease liabilities of $17 million as of January 1, 2019. See Note 11 of Notes to Consolidated Financial Statements, "Leases."
|
(k)
|
At December 31, 2017, financial statements reflect the adjustments arising from the U.S. tax reform signed on December 22, 2017. See Note 6 of Notes to Consolidated Financial Statements, "Income Taxes." At December 31, 2016, we adopted ASC Topic No. 2016-09 and applied the guidance retroactively to January 1, 2016. At December 31, 2015, we adopted ASC Topic No. 2015-03 and ASC Topic No. 2015-17 and elected to apply the guidance retroactively to all periods presented.
|
•
|
Overview of Business;
|
•
|
Business Segments;
|
•
|
Results of Operations and Related Information;
|
•
|
Liquidity and Capital Resources;
|
•
|
Adoption of New Accounting Pronouncements; and
|
•
|
Critical Accounting Policies and Use of Estimates.
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
Net sales
|
|
2019
|
|
2019
|
|
2018
|
|
2018
|
|
2017
|
|
2017
|
|||||||||
Technical Products
|
|
$
|
541.6
|
|
|
58
|
%
|
|
$
|
583.2
|
|
|
56
|
%
|
|
$
|
518.6
|
|
|
53
|
%
|
Fine Paper and Packaging
|
|
396.9
|
|
|
42
|
%
|
|
445.8
|
|
|
43
|
%
|
|
455.3
|
|
|
46
|
%
|
|||
Other
|
|
—
|
|
|
—
|
%
|
|
5.9
|
|
|
1
|
%
|
|
6.0
|
|
|
1
|
%
|
|||
Consolidated
|
|
$
|
938.5
|
|
|
100
|
%
|
|
$
|
1,034.9
|
|
|
100
|
%
|
|
$
|
979.9
|
|
|
100
|
%
|
|
|
|
|
|
|
Change in Net Sales Compared to the
Prior Year |
||||||||||||||||||
|
|
For the Year
Ended December 31, |
|
|
|
Change Due To
|
||||||||||||||||||
|
|
|
Total
Change |
|
|
|
Net Price
|
|
|
|||||||||||||||
|
|
2019
|
|
2018
|
|
|
Volume
|
|
|
Currency
|
||||||||||||||
Technical Products
|
|
$
|
541.6
|
|
|
$
|
583.2
|
|
|
$
|
(41.6
|
)
|
|
$
|
(48.5
|
)
|
|
$
|
21.9
|
|
|
$
|
(15.0
|
)
|
Fine Paper and Packaging
|
|
396.9
|
|
|
445.8
|
|
|
(48.9
|
)
|
|
(53.6
|
)
|
|
4.7
|
|
|
—
|
|
||||||
Other
|
|
—
|
|
|
5.9
|
|
|
(5.9
|
)
|
|
(5.9
|
)
|
|
—
|
|
|
—
|
|
||||||
Consolidated
|
|
$
|
938.5
|
|
|
$
|
1,034.9
|
|
|
$
|
(96.4
|
)
|
|
$
|
(108.0
|
)
|
|
$
|
26.6
|
|
|
$
|
(15.0
|
)
|
•
|
Net sales in our technical products business decreased $41.6 million (7%) from the prior year due to volume declines (primarily due to lower backings sales in Asia) and negative foreign currency impacts. These items were partially offset by increased selling prices and a higher value mix.
|
•
|
Net sales in our fine paper and packaging business decreased $48.9 million (11%) from the prior year. Half of the decline was due to the sale of Brattleboro, with the remainder mostly due to lower commercial print volume (including impacts from a change in the relationship with a major distributor). These items were partly offset by higher selling prices.
|
|
|
|
|
|
|
Change in Net Sales Compared to the
Prior Year |
||||||||||||||||||
|
|
For the Years Ended
December 31, |
|
|
|
Change Due To
|
||||||||||||||||||
|
|
2018
|
|
2017
|
|
Total
Change |
|
Volume
|
|
Net Price
|
|
Currency
|
||||||||||||
Technical Products (a)
|
|
$
|
583.2
|
|
|
$
|
518.6
|
|
|
$
|
64.6
|
|
|
$
|
34.9
|
|
|
$
|
18.7
|
|
|
$
|
11.0
|
|
Fine Paper and Packaging
|
|
445.8
|
|
|
455.3
|
|
|
(9.5
|
)
|
|
(21.6
|
)
|
|
12.1
|
|
|
—
|
|
||||||
Other (a)
|
|
5.9
|
|
|
6.0
|
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
||||||
Consolidated
|
|
$
|
1,034.9
|
|
|
$
|
979.9
|
|
|
$
|
55.0
|
|
|
$
|
13.2
|
|
|
$
|
30.8
|
|
|
$
|
11.0
|
|
(a)
|
As a result of the Brattleboro mill sale in 2018, we recast the comparable 2018 and 2017 information and presented the $15.6 million and $16.5 million of net sales for the years ended December 31, 2018 and 2017, respectively, of the remaining portion of the Other business segment within the Technical Products business segment. See Note 13 of Notes to Consolidated Financial Statements, "Sale of Brattleboro Mill and Impairment Loss" where a realignment of this segment in 2019 is described.
|
•
|
Net sales in our technical products business increased $64.6 million (12%) from the prior year due to acquired volume, organic increases in filtration sales, as well as a higher-priced mix and favorable currency effects due to a stronger euro in the first half of the year.
|
•
|
Net sales in our fine paper and packaging business decreased $9.5 million (2%) from the prior year. Volume declines in commercial print products were partly offset by higher selling prices and volume increases in premium packaging.
|
•
|
Net sales in our other business segment decreased $0.1 million from the prior year period due to lower volumes.
|
|
|
Year Ended December 31,
|
||||
|
|
2019
|
|
2018
|
||
Net sales
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of products sold
|
|
80.5
|
%
|
|
82.3
|
%
|
Gross profit
|
|
19.5
|
%
|
|
17.7
|
%
|
Selling, general and administrative expenses
|
|
10.5
|
%
|
|
9.3
|
%
|
Restructuring, integration and other costs
|
|
0.6
|
%
|
|
0.2
|
%
|
Pension and SERP related adjustments
|
|
(0.1
|
)%
|
|
0.2
|
%
|
Impairment loss
|
|
—
|
%
|
|
3.0
|
%
|
Acquisition-related adjustments
|
|
—
|
%
|
|
(0.4
|
)%
|
Other expense, net
|
|
0.2
|
%
|
|
0.2
|
%
|
Operating income
|
|
8.3
|
%
|
|
5.2
|
%
|
Interest expense, net
|
|
1.2
|
%
|
|
1.2
|
%
|
Income from continuing operations before income taxes
|
|
7.1
|
%
|
|
4.0
|
%
|
Provision for income taxes
|
|
1.2
|
%
|
|
0.4
|
%
|
Income from continuing operations
|
|
5.9
|
%
|
|
3.6
|
%
|
|
|
|
|
|
|
Change in Operating Income (Loss) Compared to the Prior Year
|
||||||||||||||||||||||||||
|
|
|
|
|
Change Due To
|
|||||||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
Total
Change |
|
Volume
|
|
Net Price (a)
|
|
Input Costs (b)
|
|
Currency
|
|
Other (c)
|
||||||||||||||||
Technical Products
|
|
$
|
44.6
|
|
|
$
|
50.9
|
|
|
$
|
(6.3
|
)
|
|
$
|
(13.5
|
)
|
|
$
|
15.1
|
|
|
$
|
1.6
|
|
|
$
|
(1.9
|
)
|
|
$
|
(7.7
|
)
|
Fine Paper and Packaging
|
|
53.2
|
|
|
29.4
|
|
|
23.8
|
|
|
(7.4
|
)
|
|
11.2
|
|
|
1.4
|
|
|
—
|
|
|
18.7
|
|
||||||||
Other
|
|
—
|
|
|
(6.4
|
)
|
|
6.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.4
|
|
||||||||
Unallocated corporate costs
|
|
(19.5
|
)
|
|
(19.8
|
)
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
||||||||
Consolidated
|
|
$
|
78.3
|
|
|
$
|
54.1
|
|
|
$
|
24.2
|
|
|
$
|
(20.9
|
)
|
|
$
|
26.3
|
|
|
$
|
3.0
|
|
|
$
|
(1.9
|
)
|
|
$
|
17.7
|
|
(a)
|
Includes price changes, net of changes in product mix.
|
(b)
|
Includes price changes for raw materials and energy.
|
(c)
|
Includes other manufacturing costs, over (under) absorption of fixed costs, distribution and selling, general and administrative ("SG&A") expenses. In addition, 2018 results include $35.0 million of unfavorable adjustments primarily related to the divestiture of the Brattleboro mill and restructuring costs, and $4.3 million of favorable adjustments related to the Coldenhove Acquisition and an insurance-related settlement. In 2019, it includes non-routine costs of $6.2 million primarily related to the accelerated depreciation and other costs related to the consolidation of the fine paper manufacturing footprint with an idling of a paper machine, and $1.4 million of favorable adjustments primarily related to the curtailment gain for the Neenah Coldenhove pension plan. See the breakdown by segment and the reconciliation table on page 37 for further detail.
|
•
|
Operating income for our technical products business decreased $6.3 million (12%) from the prior year. The decrease in income resulted from lower sales and production volumes and associated manufacturing fixed cost inefficiencies, higher SG&A and unfavorable foreign currency impacts, partially offset by increased selling prices, a higher-value mix and lower input and distribution costs. Excluding the previously noted favorable adjustments of $1.2 million in 2019 and $1.4 million in 2018, adjusted operating income for the technical products business decreased $6.1 million (12%).
|
•
|
Operating income for our fine paper and packaging business increased $23.8 million (81%) from the prior year period The increase was mainly due to adjustments in 2018 of $24.3 million for impairment related to the divestiture of the Brattleboro mill and other one-time items referenced above, partly offset by $5.7 million of non-routine costs in 2019 primarily due to the idling of a paper machine. Excluding these costs, adjusted operating income for the fine paper and packaging business increased $5.2 million (10%) as a result of higher selling prices and slightly lower input, SG&A and distribution costs that more than offset the lower sales volumes.
|
•
|
Unallocated corporate costs for the year ended December 31, 2019 were $19.5 million, or $0.3 million lower than the prior year. 2019 included adjusting items of $0.3 million for restructuring costs and pension settlement. These costs compared to $1.9 million of pension settlement, restructuring and other non-routine costs in 2018.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD
|
||||||
|
|
2019
|
|
2018
|
||||
Technical Products
|
|
|
|
|
|
|
||
GAAP Operating Income
|
|
$
|
44.6
|
|
|
$
|
50.9
|
|
Restructuring, integration, and other costs
|
|
0.3
|
|
|
1.0
|
|
||
Pension and SERP-related adjustments
|
|
(1.5
|
)
|
|
0.4
|
|
||
Impairment loss
|
|
—
|
|
|
1.1
|
|
||
Acquisition-related adjustments
|
|
—
|
|
|
(3.9
|
)
|
||
Adjusted operating income
|
|
$
|
43.4
|
|
|
$
|
49.5
|
|
|
|
|
|
|
||||
Fine Paper and Packaging
|
|
|
|
|
|
|
||
GAAP Operating Income
|
|
$
|
53.2
|
|
|
$
|
29.4
|
|
Idled paper machine costs
|
|
4.7
|
|
|
—
|
|
||
2012-15 indirect tax audit costs
|
|
0.7
|
|
|
—
|
|
||
Restructuring and other non-routine costs
|
|
0.3
|
|
|
(0.2
|
)
|
||
Pension and SERP-related adjustments
|
|
—
|
|
|
0.4
|
|
||
Impairment loss
|
|
—
|
|
|
24.4
|
|
||
Insurance settlement
|
|
—
|
|
|
(0.3
|
)
|
||
Adjusted operating income
|
|
$
|
58.9
|
|
|
$
|
53.7
|
|
|
|
|
|
|
||||
Other/Unallocated Corporate
|
|
|
|
|
|
|
||
GAAP Operating Income
|
|
$
|
(19.5
|
)
|
|
$
|
(26.2
|
)
|
Restructuring and other non-routine costs
|
|
0.2
|
|
|
1.3
|
|
||
Pension and SERP-related adjustments
|
|
0.1
|
|
|
1.0
|
|
||
Impairment loss
|
|
—
|
|
|
5.6
|
|
||
Insurance settlement
|
|
—
|
|
|
(0.1
|
)
|
||
Adjusted operating income
|
|
$
|
(19.2
|
)
|
|
$
|
(18.4
|
)
|
|
|
|
|
|
||||
Consolidated
|
|
|
|
|
|
|
||
GAAP Operating Income
|
|
$
|
78.3
|
|
|
$
|
54.1
|
|
Idled paper machine costs
|
|
4.7
|
|
|
—
|
|
||
2012-15 indirect tax audit costs
|
|
0.7
|
|
|
—
|
|
||
Restructuring, integration, and other costs
|
|
0.8
|
|
|
2.1
|
|
||
Pension and SERP-related adjustments
|
|
(1.4
|
)
|
|
1.8
|
|
||
Impairment loss
|
|
—
|
|
|
31.1
|
|
||
Acquisition-related adjustments
|
|
—
|
|
|
(3.9
|
)
|
||
Insurance settlement
|
|
—
|
|
|
(0.4
|
)
|
||
Adjusted operating income
|
|
$
|
83.1
|
|
|
$
|
84.8
|
|
•
|
SG&A expense of $98.6 million for the year ended December 31, 2019 was $2.7 million higher than 2018, as a result of timing of certain costs. SG&A expense as a percentage of net sales for the year ended December 31, 2019 increased to 10.5 percent from 9.3 percent in 2018 due to lower sales.
|
•
|
For the years ended December 31, 2019 and 2018, we incurred $11.8 million and $13.0 million of interest expense, respectively. During the year ended December 31, 2019, we made net repayments of $36.3 million under our Global Revolving Credit Facilities resulting in only Euro-denominated borrowings (with lower interest rates compared to USD-denominated borrowings) outstanding under these facilities as of December 31, 2019.
|
•
|
Income tax expense represented 17 percent and 9 percent of income from continuing operations before income taxes for the years ended December 31, 2019 and 2018, respectively. In general, our effective tax rate differs from the U.S. statutory tax rate primarily due to impacts of changes in the mix of earnings in taxing jurisdictions with differing statutory rates, the impact of R&D and other tax credits, changes in tax laws and changes in corporate structure as a result of business acquisitions and dispositions.
|
•
|
For the year ended December 31, 2019, our effective income tax rate related to continuing operations was 17 percent, primarily due to the tax benefit of R&D tax credits generated during the year. For the year ended December 31, 2018, our effective income tax rate related to continuing operations was 9 percent, primarily due to the reduction in the U.S. federal tax rate from 35% to 21%. In addition, the effective tax rate was significantly reduced by the effects of the $31.1 million impairment loss of the Brattleboro mill and associated research and office facilities (see Note 13 of Notes to Consolidated Financial Statements, "Sale of Brattleboro Mill and Impairment Loss"), as similar sized reconciling items had a larger percentage impact on lower pre-tax book income. Throughout 2018, we completed our analysis of the Tax Act and recorded additional adjustments to reflect a measurement-period tax benefit of $0.9 million related to the effects of the statutory corporate tax rate reduction and a measurement-period tax expense of $0.8 million from U.S. federal and state taxes on accumulated earnings and profits ("E&P") of its foreign subsidiaries.
|
|
|
Year Ended December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Net cash flow provided by (used in):
|
|
|
|
|
|
|
||
Operating activities
|
|
$
|
97.6
|
|
|
$
|
92.7
|
|
Investing activities:
|
|
|
|
|
|
|
||
Capital expenditures
|
|
(21.4
|
)
|
|
(38.1
|
)
|
||
Proceeds from sale of property, plant and equipment
|
|
—
|
|
|
5.0
|
|
||
Other investing activities
|
|
(1.9
|
)
|
|
(1.2
|
)
|
||
Total investing activities
|
|
(23.3
|
)
|
|
(34.3
|
)
|
||
Financing activities
|
|
(75.2
|
)
|
|
(52.6
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
|
—
|
|
|
(0.4
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
|
$
|
(0.9
|
)
|
|
$
|
5.4
|
|
•
|
Cash provided by operating activities of $97.6 million for the year ended December 31, 2019 was $4.9 million higher than cash provided by operating activities of $92.7 million in the prior year. The increase in cash flows resulted primarily from lower pension plan contributions, partly offset by lower cash earnings.
|
•
|
For the years ended December 31, 2019 and 2018, cash used by investing activities was $23.3 million and $34.3 million, respectively. The decrease was primarily due to reduced capital spending in 2019. In addition, 2018 included proceeds from the sale of Brattleboro mill.
|
•
|
Capital expenditures for the year ended December 31, 2019 were $21.4 million compared to spending of $38.1 million in the prior year. Spending was lower in 2019 as a result of a large environmental project completed in 2018 at the Company's filtration plant in Germany, and lower required spending in 2019 for most businesses.
|
•
|
Going forward, we expect aggregate annual capital expenditures to be within a range of approximately 2 to 4 percent of net sales. We believe that this level of capital spending can be more than adequately funded from cash provided from operating activities and allows us to maintain the efficiency and cost effectiveness of our assets while also investing in expanded capabilities to successfully pursue strategic initiatives and deliver attractive returns.
|
•
|
For the year ended December 31, 2019, cash used by financing activities was $75.2 million compared to cash used by financing activities of $52.6 million for the prior year. The increase was due to higher net debt repayments of $38.1 million in 2019 compared to $12.8 million in prior year and higher dividends paid in 2019.
|
•
|
We have the following short- and long-term borrowings:
|
•
|
Availability under our revolving credit facility varies over time depending on the value of our inventory, receivables and various capital assets. As of December 31, 2019, we had $21.6 million outstanding under our Revolver and $173.5 million of available credit (based on exchange rates at December 31, 2019).
|
•
|
We have required debt payments through December 31, 2020 of $2.6 million on the Second and Third German Loan Agreements.
|
•
|
For the year ended December 31, 2019, cash and cash equivalents decreased $0.9 million to $9.0 million at December 31, 2019 from $9.9 million at December 31, 2018. Total debt decreased $38.3 million to $200.8 million at December 31, 2019 from $239.1 million at December 31, 2018. Net debt (total debt minus cash and cash equivalents) decreased by $37.4 million. Total debt was higher at December 31, 2018 due to higher borrowings under our revolving credit facility.
|
•
|
As of December 31, 2019, our cash balance of $9.0 million consists of $2.7 million in the U.S. and $6.3 million held at entities outside of the U.S. As of December 31, 2019, there were no restrictions regarding the repatriation of our non-U.S. cash.
|
•
|
For the years ended December 31, 2019 and 2018, we paid quarterly cash dividends of $0.45 per common share or $30.5 million annually and $0.41 per common share or $27.8 million annually, respectively.
|
•
|
In November 2019, our Board of Directors approved a 4 percent increase in the quarterly dividend rate on our common stock to $0.47 per share, scheduled to be paid starting in March 2020.
|
•
|
In November 2019, our Board of Directors authorized a program for the purchase of up to $25 million of outstanding common stock effective January 1, 2020 ("2020 Stock Purchase Plan"). The program does not require the Company to purchase any specific number of shares and may be suspended or discontinued at any time. Purchases under the 2020 Stock Purchase Plan will be made from time to time in the open market or in privately negotiated transactions in accordance with the requirements of applicable law. The timing and amount of any purchases will depend on share price, market conditions and other factors. For the year ended December 31, 2019, we acquired approximately 79,676 shares of Common Stock at a cost of $4.9 million. For further details on our Stock Purchase Plans refer to Note 10 of Notes to Consolidated Financial Statements, "Stockholders' Equity."
|
•
|
For the years ended December 31, 2019 and 2018, we acquired approximately 17,774 and 25,890 shares of Common Stock, respectively, at a cost of $1.3 million and $1.5 million, respectively, for shares surrendered by employees to pay taxes due on vested restricted stock awards and stock appreciation rights exercised. In addition, we received $0.0 million and $0.6 million in proceeds from the exercise of employee stock options for the years ended December 31, 2019 and 2018, respectively.
|
•
|
Under the most restrictive terms of the Fourth Amended and Restated Credit Agreement, we are permitted to pay cash dividends on or repurchase shares of our common stock up to the amount available under the Fourth Amended and Restated Credit Agreement, as long as our specified excess availability under the Fourth Amended and Restated Credit
|
(In millions)
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Beyond
2024 |
|
Total
|
||||||||||||||
Long-term debt payments
|
|
$
|
2.6
|
|
|
$
|
177.8
|
|
|
$
|
1.8
|
|
|
$
|
21.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
203.8
|
|
Interest payments on long-term debt (a)
|
|
9.6
|
|
|
4.6
|
|
|
0.3
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|
14.7
|
|
|||||||
Open purchase orders (b)
|
|
79.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
79.7
|
|
|||||||
Other post-employment benefits (c)
|
|
5.6
|
|
|
5.0
|
|
|
4.6
|
|
|
4.2
|
|
|
3.9
|
|
|
13.7
|
|
|
37.0
|
|
|||||||
Contributions to pension trusts and other benefit obligations (d)
|
|
9.1
|
|
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|
1.2
|
|
|
10.7
|
|
|||||||
Minimum purchase commitments (e)
|
|
7.2
|
|
|
0.8
|
|
|
0.2
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|
8.4
|
|
|||||||
Operating leases (f)
|
|
2.8
|
|
|
2.6
|
|
|
2.3
|
|
|
2.0
|
|
|
1.7
|
|
|
7.4
|
|
|
18.8
|
|
|||||||
Total contractual obligations
|
|
$
|
116.6
|
|
|
$
|
190.9
|
|
|
$
|
9.3
|
|
|
$
|
28.3
|
|
|
$
|
5.7
|
|
|
$
|
22.3
|
|
|
$
|
373.1
|
|
(a)
|
Interest payments on long-term debt includes interest on variable rate debt at December 31, 2019 weighted average interest rates.
|
(b)
|
The open purchase orders displayed in the table represent amounts we anticipate will become payable within the next 12 months for goods and services that we have negotiated for delivery.
|
(c)
|
The above table includes future payments that we will make for postretirement benefits other than pensions. Those amounts are estimated using actuarial assumptions, including expected future service, to project the future obligations.
|
(d)
|
We expect to make aggregate contributions to qualified and nonqualified defined benefit pension trusts and to pay pension benefits for unfunded pension plans of $9 million in 2020. The amount also includes estimated payments of $0.1 million per year over 20 years for the withdrawal liability from PIUMPF. See Note 8 of Notes to Consolidated Financial Statements, "Pension and Other Postretirement Benefits."
|
(e)
|
The minimum purchase commitments in 2020 are primarily for raw material contracts. Although we are primarily liable for payments on the above minimum purchase commitments, based on historic operating performance and forecasted future cash flows, we believe our exposure to losses, if any, under these arrangements is not material.
|
(f)
|
We adopted the ASU 2016-02, Leases (Topic 842) accounting standard in 2019 by recognizing the present value of the lease payments above as right-of-use assets and corresponding lease liabilities on our consolidated balance sheet. See Note 11 of Notes to Consolidated Financial Statements, "Leases."
|
•
|
As of December 31, 2019, we had $21.0 million of U.S. federal and $7.5 million of U.S. state R&D Credits which, if not used, will expire between 2031 and 2039 for the U.S. federal R&D Credits and between 2020 and 2034 for the state R&D Credits. As of December 31, 2019, we had $44.1 million of state net operating losses (NOLs) which may be used to offset state taxable income. The NOLs are reflected in the consolidated financial statements as a deferred income tax asset of $2.7 million. If not used, substantially all of the NOLs will expire in various amounts between 2020 and 2039.
|
•
|
Management believes that our ability to generate cash from operations and our borrowing capacity are adequate to fund working capital, capital spending and other cash needs for the next 12 months. Our ability to generate adequate cash from operations beyond 2019 will depend on, among other things, our ability to successfully implement our business strategies, control costs in line with market conditions and manage the impact of changes in input prices and currencies. We can give no assurance we will be able to successfully implement these items.
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
Pension plans
|
|
|
|
|
|
|
|||
Weighted average discount rate for benefit expense
|
|
3.78
|
%
|
|
3.65
|
%
|
|
4.18
|
%
|
Weighted average discount rate for benefit obligation
|
|
2.98
|
%
|
|
3.94
|
%
|
|
3.49
|
%
|
Expected long-term rate on plan assets
|
|
5.91
|
%
|
|
5.78
|
%
|
|
6.31
|
%
|
Rate of compensation increase for benefit expense
|
|
2.33
|
%
|
|
2.44
|
%
|
|
2.49
|
%
|
Postretirement benefit plans
|
|
|
|
|
|
|
|||
Weighted average discount rate for benefit expense
|
|
3.84
|
%
|
|
3.42
|
%
|
|
3.89
|
%
|
Weighted average discount rate for benefit obligation
|
|
2.68
|
%
|
|
3.84
|
%
|
|
3.27
|
%
|
Health care cost trend rate assumed for next year
|
|
6.10
|
%
|
|
6.80
|
%
|
|
6.80
|
%
|
Ultimate cost trend rate
|
|
4.50
|
%
|
|
4.50
|
%
|
|
4.50
|
%
|
Year that the ultimate cost trend rate is reached
|
|
2037
|
|
|
2037
|
|
|
2037
|
|
|
|
|
Name
|
|
Position
|
John P. O'Donnell
|
|
President, Chief Executive Officer and Director
|
Julie A. Schertell
|
|
Senior Vice President, Chief Operating Officer
|
Bonnie C. Lind
|
|
Senior Vice President, Chief Financial Officer and Treasurer
|
Byron J. Racki
|
|
Senior Vice President, Sales and Marketing
|
Ronald J. Lane
|
|
Senior Vice President, Operations
|
Noah S. Benz
|
|
Senior Vice President, General Counsel and Secretary
|
Larry N. Brownlee
|
|
Vice President, Controller and Principal Accounting Officer
|
|
|
Page
|
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
Exhibit
Number
|
Exhibit
|
2.1
|
|
2.2
|
*
|
Indicates management contract or compensatory plan or arrangement.
|
+
|
Pursuant to a confidential treatment request portions of this exhibit have been furnished separately to the Securities and Exchange Commission.
|
(c)
|
Financial Statement Schedule
|
Neenah, Inc.
|
||
By:
|
/s/ JOHN P. O'DONNELL
|
|
|
Name:
|
John P. O'Donnell
|
|
Title:
|
President, Chief Executive Officer and Director (in his capacity as a duly authorized officer of the Registrant and in his capacity as Chief Executive Officer)
|
|
Date:
|
February 21, 2020
|
|
|
/s/ JOHN P. O'DONNELL
|
|
President, Chief Executive Officer and Director (Principal Executive Officer)
|
|
|
|
|
John P. O'Donnell
|
|
|
February 21, 2020
|
|
|
|
|
|
|
|
|
|
|
/s/ JULIE A. SCHERTELL
|
|
Senior Vice President, Chief Operating Officer and Director
|
|
|
|
|
Julie A. Schertell
|
|
|
February 21, 2020
|
|
|
|
|
|
|
|
|
|
|
/s/ BONNIE C. LIND
|
|
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)
|
|
|
|
|
Bonnie C. Lind
|
|
|
February 21, 2020
|
|
|
|
|
|
|
|
|
|
|
/s/ LARRY N. BROWNLEE
|
|
Vice President, Controller (Principal Accounting Officer)
|
|
|
|
|
Larry N. Brownlee
|
|
|
February 21, 2020
|
|
|
|
|
|
|
|
|
|
|
/s/ WILLIAM M. COOK*
|
|
Chairman of the Board and Director
|
|
|
|
|
William M. Cook
|
|
|
February 21, 2020
|
|
|
|
|
|
|
|
|
|
|
/s/ DONNA M. COSTELLO*
|
|
Director
|
|
|
|
|
Donna M. Costello
|
|
|
February 21, 2020
|
|
|
|
|
|
|
|
|
|
|
/s/ MARGARET S. DANO*
|
|
Director
|
|
|
|
|
Margaret S. Dano
|
|
|
February 21, 2020
|
|
|
|
|
|
|
|
|
|
|
/s/ TIMOTHY S. LUCAS*
|
|
Director
|
|
|
|
|
Timothy S. Lucas
|
|
|
February 21, 2020
|
|
|
|
|
|
|
|
|
|
|
/s/ PHILIP C. MOORE*
|
|
Director
|
|
|
|
|
Philip C. Moore
|
|
|
February 21, 2020
|
|
|
|
|
|
|
|
|
|
|
/s/ TONY R. THENE*
|
|
Director
|
|
|
|
|
Tony R. Thene
|
|
|
February 21, 2020
|
|
|
|
|
|
|
|
|
|
|
/s/ STEPHEN M. WOOD*
|
|
Director
|
|
|
|
|
Stephen M. Wood
|
|
|
February 21, 2020
|
|
|
|
|
|
|
|
|
|
*By:
|
/s/ NOAH S. BENZ
|
|
|
|
|
|
|
Noah S. Benz
Senior Vice President, General
Counsel and Secretary
Attorney-in-fact
|
|
|
|
|
|
|
Page
|
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
•
|
We tested the effectiveness of controls over the Company’s recognition and measurement of the uncertain tax positions, such as controls over the identification and evaluation of the relevant tax laws and regulations, the evaluation of subjective estimates of amounts to be realized and the supervision of third-party income tax specialists.
|
•
|
We evaluated, with the assistance of our tax specialists, a selection of underlying tax positions to evaluate the more likely than not principle as it applied to the specific underlying tax position.
|
•
|
We evaluated, with the assistance of our income tax specialists, including those with expertise in R&D tax credits, the appropriateness of the Company’s recognition of uncertain tax positions by performing the following:
|
◦
|
Obtaining management and third-party opinions or memoranda regarding the analysis of uncertain tax positions and identifying the key judgments and evaluating whether the analysis was consistent with our interpretation of the relevant laws and regulations.
|
◦
|
Reviewing relevant tax laws, regulations, interpretive guidance and the Company’s positions regarding its R&D tax credits. With respect to the measurement of the amount of uncertain tax positions to be recorded, our income tax specialists also assisted in evaluating the appropriateness of the Company’s estimates, including review of Company history and assumptions as well as data from external sources for relevance and consistency.
|
◦
|
Evaluating the matters raised by tax authorities in former and ongoing tax audits and considering the implications of these matters on open tax years.
|
◦
|
Assessing changes and interpretation of applicable tax law.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net sales
|
|
$
|
938.5
|
|
|
$
|
1,034.9
|
|
|
$
|
979.9
|
|
Cost of products sold
|
|
755.1
|
|
|
851.5
|
|
|
779.7
|
|
|||
Gross profit
|
|
183.4
|
|
|
183.4
|
|
|
200.2
|
|
|||
Selling, general and administrative expenses
|
|
98.6
|
|
|
95.9
|
|
|
95.3
|
|
|||
Restructuring, integration and other costs
|
|
6.2
|
|
|
2.1
|
|
|
1.3
|
|
|||
Pension and SERP-related adjustments (Note 8)
|
|
(1.4
|
)
|
|
1.8
|
|
|
0.6
|
|
|||
Impairment loss (Note 13)
|
|
—
|
|
|
31.1
|
|
|
—
|
|
|||
Acquisition-related adjustments (Note 4)
|
|
—
|
|
|
(3.9
|
)
|
|
—
|
|
|||
Insurance settlement
|
|
—
|
|
|
(0.4
|
)
|
|
(3.2
|
)
|
|||
Other expense, net
|
|
1.7
|
|
|
2.7
|
|
|
1.9
|
|
|||
Operating income
|
|
78.3
|
|
|
54.1
|
|
|
104.3
|
|
|||
Interest expense
|
|
11.8
|
|
|
13.0
|
|
|
12.7
|
|
|||
Interest income
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|||
Income from continuing operations before income taxes
|
|
66.5
|
|
|
41.1
|
|
|
91.7
|
|
|||
Provision for income taxes
|
|
11.1
|
|
|
3.9
|
|
|
11.4
|
|
|||
Income from continuing operations
|
|
55.4
|
|
|
37.2
|
|
|
80.3
|
|
|||
Loss from discontinued operations, net of taxes (Note 2)
|
|
—
|
|
|
(0.8
|
)
|
|
—
|
|
|||
Net income
|
|
$
|
55.4
|
|
|
$
|
36.4
|
|
|
$
|
80.3
|
|
|
|
|
|
|
|
|
||||||
Earnings (Loss) Per Common Share
|
|
|
|
|
|
|
|
|
|
|||
Basic
|
|
|
|
|
|
|
|
|
|
|||
Continuing operations
|
|
$
|
3.27
|
|
|
$
|
2.20
|
|
|
$
|
4.74
|
|
Discontinued operations
|
|
—
|
|
|
(0.05
|
)
|
|
—
|
|
|||
|
|
$
|
3.27
|
|
|
$
|
2.15
|
|
|
$
|
4.74
|
|
|
|
|
|
|
|
|
||||||
Diluted
|
|
|
|
|
|
|
|
|
|
|||
Continuing operations
|
|
$
|
3.26
|
|
|
$
|
2.17
|
|
|
$
|
4.68
|
|
Discontinued operations
|
|
—
|
|
|
(0.05
|
)
|
|
—
|
|
|||
|
|
$
|
3.26
|
|
|
$
|
2.12
|
|
|
$
|
4.68
|
|
|
|
|
|
|
|
|
||||||
Weighted Average Common Shares Outstanding (in thousands)
|
|
|
|
|
|
|
|
|
|
|||
Basic
|
|
16,848
|
|
|
16,850
|
|
|
16,805
|
|
|||
Diluted
|
|
16,906
|
|
|
16,968
|
|
|
17,052
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net income
|
|
$
|
55.4
|
|
|
$
|
36.4
|
|
|
$
|
80.3
|
|
Reclassification of amounts recognized in the consolidated statement of operations:
|
|
|
|
|
|
|
|
|
|
|||
Amortization of adjustments to pension and other postretirement benefit liabilities
|
|
6.0
|
|
|
6.0
|
|
|
5.9
|
|
|||
Pension plan settlement/curtailment losses
|
|
1.3
|
|
|
0.8
|
|
|
0.6
|
|
|||
Amounts recognized in the consolidated statement of operations
|
|
7.3
|
|
|
6.8
|
|
|
6.5
|
|
|||
Unrealized foreign currency translation (loss) gain
|
|
(3.5
|
)
|
|
(7.9
|
)
|
|
20.0
|
|
|||
Net loss from pension and other postretirement benefit plans
|
|
(13.7
|
)
|
|
(11.2
|
)
|
|
(20.3
|
)
|
|||
Deferred loss on "available-for-sale" securities
|
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
|||
(Loss) income from other comprehensive income items before income taxes
|
|
(9.9
|
)
|
|
(12.3
|
)
|
|
5.8
|
|
|||
Benefit for income taxes
|
|
(1.7
|
)
|
|
(1.0
|
)
|
|
(3.0
|
)
|
|||
Other comprehensive (loss) income
|
|
(8.2
|
)
|
|
(11.3
|
)
|
|
8.8
|
|
|||
Comprehensive income
|
|
$
|
47.2
|
|
|
$
|
25.1
|
|
|
$
|
89.1
|
|
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
ASSETS
|
|
|
|
|
|
|
||
Current Assets
|
|
|
|
|
|
|
||
Cash and cash equivalents
|
|
$
|
9.0
|
|
|
$
|
9.9
|
|
Accounts receivable, net
|
|
102.6
|
|
|
114.8
|
|
||
Inventories
|
|
122.8
|
|
|
131.6
|
|
||
Prepaid and other current assets
|
|
18.3
|
|
|
21.6
|
|
||
Total Current Assets
|
|
252.7
|
|
|
277.9
|
|
||
Property, Plant and Equipment, net
|
|
380.6
|
|
|
396.2
|
|
||
Lease Right-of-Use Assets
|
|
13.9
|
|
|
—
|
|
||
Deferred Income Taxes
|
|
13.4
|
|
|
16.4
|
|
||
Goodwill (Note 5)
|
|
83.1
|
|
|
84.0
|
|
||
Intangible Assets, net (Note 5)
|
|
66.7
|
|
|
70.7
|
|
||
Other Assets
|
|
17.4
|
|
|
16.0
|
|
||
TOTAL ASSETS
|
|
$
|
827.8
|
|
|
$
|
861.2
|
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
||
Current Liabilities
|
|
|
|
|
|
|
||
Debt payable within one year
|
|
$
|
2.6
|
|
|
$
|
2.3
|
|
Lease liabilities payable within one year
|
|
1.9
|
|
|
—
|
|
||
Accounts payable
|
|
48.9
|
|
|
63.3
|
|
||
Accrued expenses
|
|
47.0
|
|
|
55.2
|
|
||
Total Current Liabilities
|
|
100.4
|
|
|
120.8
|
|
||
Long-Term Debt
|
|
198.2
|
|
|
236.8
|
|
||
Noncurrent Lease Liabilities
|
|
13.0
|
|
|
—
|
|
||
Noncurrent Employee Benefits
|
|
93.1
|
|
|
92.9
|
|
||
Deferred Income Taxes
|
|
12.9
|
|
|
14.4
|
|
||
Other Noncurrent Obligations
|
|
3.9
|
|
|
6.1
|
|
||
TOTAL LIABILITIES
|
|
421.5
|
|
|
471.0
|
|
||
Commitments and Contingencies (Note 12)
|
|
|
|
|
|
|
||
Stockholders' Equity
|
|
|
|
|
|
|
||
Common stock, par value $0.01, authorized: 100,000,000 shares; issued and outstanding: 16,843,000 shares and 16,859,000 shares
|
|
0.2
|
|
|
0.2
|
|
||
Treasury stock, at cost: 1,835,000 shares and 1,738,000 shares
|
|
(82.8
|
)
|
|
(76.6
|
)
|
||
Additional paid-in capital
|
|
334.1
|
|
|
328.5
|
|
||
Retained earnings
|
|
268.1
|
|
|
243.2
|
|
||
Accumulated other comprehensive loss
|
|
(113.3
|
)
|
|
(105.1
|
)
|
||
Total Stockholders' Equity
|
|
406.3
|
|
|
390.2
|
|
||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
$
|
827.8
|
|
|
$
|
861.2
|
|
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
Shares
|
|
Amount
|
|
Treasury
Stock |
|
Additional
Paid-In Capital |
|
Retained
Earnings |
|
Accumulated
Other Comprehensive Loss |
|||||||||||
Balance, December 31, 2016
|
|
18,245
|
|
|
$
|
0.2
|
|
|
$
|
(56.5
|
)
|
|
$
|
317.0
|
|
|
$
|
169.6
|
|
|
$
|
(92.0
|
)
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
80.3
|
|
|
—
|
|
|||||
Other comprehensive income, net of income taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8.8
|
|
|||||
Reclassification of the stranded tax effects related to the Tax Act (Note 10)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10.9
|
|
|
(10.9
|
)
|
|||||
Dividends declared
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(25.1
|
)
|
|
—
|
|
|||||
Shares purchased (Note 10)
|
|
—
|
|
|
—
|
|
|
(6.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock options exercised
|
|
140
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|||||
Restricted stock vesting (Note 10)
|
|
73
|
|
|
—
|
|
|
(2.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.4
|
|
|
—
|
|
|
—
|
|
|||||
Other/Currency
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|||||
Balance, December 31, 2017
|
|
18,458
|
|
|
0.2
|
|
|
(65.8
|
)
|
|
323.9
|
|
|
235.7
|
|
|
(94.1
|
)
|
|||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
36.4
|
|
|
—
|
|
|||||
Other comprehensive loss, after income tax benefit
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11.3
|
)
|
|||||
Reclassification of the unrealized loss on "available-for-sale" securities (Note 10)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.3
|
)
|
|
0.3
|
|
|||||
Reclassification of deferred income taxes on intra-entity asset transfers (Note 6)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.8
|
)
|
|
—
|
|
|||||
Dividends declared
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27.8
|
)
|
|
—
|
|
|||||
Shares purchased (Note 10)
|
|
—
|
|
|
—
|
|
|
(9.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock options exercised
|
|
67
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
|
—
|
|
|
—
|
|
|||||
Restricted stock vesting (Note 10)
|
|
72
|
|
|
—
|
|
|
(1.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.0
|
|
|
—
|
|
|
—
|
|
|||||
Other/Currency
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|||||
Balance, December 31, 2018
|
|
18,597
|
|
|
0.2
|
|
|
(76.6
|
)
|
|
328.5
|
|
|
243.2
|
|
|
(105.1
|
)
|
|||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
55.4
|
|
|
—
|
|
|||||
Other comprehensive loss, after income tax benefit
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8.2
|
)
|
|||||
Dividends declared
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(30.5
|
)
|
|
—
|
|
|||||
Shares purchased (Note 10)
|
|
—
|
|
|
—
|
|
|
(4.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock options exercised
|
|
17
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Restricted stock vesting (Note 10)
|
|
64
|
|
|
—
|
|
|
(1.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.6
|
|
|
—
|
|
|
—
|
|
|||||
Balance, December 31, 2019
|
|
18,678
|
|
|
$
|
0.2
|
|
|
$
|
(82.8
|
)
|
|
$
|
334.1
|
|
|
$
|
268.1
|
|
|
$
|
(113.3
|
)
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|||
Net income
|
|
$
|
55.4
|
|
|
$
|
36.4
|
|
|
$
|
80.3
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization
|
|
38.9
|
|
|
36.1
|
|
|
33.3
|
|
|||
Impairment loss (Note 13)
|
|
—
|
|
|
31.1
|
|
|
—
|
|
|||
Stock-based compensation
|
|
5.6
|
|
|
4.0
|
|
|
6.4
|
|
|||
Deferred income tax provision
|
|
3.4
|
|
|
(1.9
|
)
|
|
(0.2
|
)
|
|||
Pension curtailment (gain)/settlement charge, net of plan payments (Note 8)
|
|
(1.4
|
)
|
|
1.8
|
|
|
0.6
|
|
|||
Loss on asset dispositions
|
|
0.1
|
|
|
0.3
|
|
|
0.2
|
|
|||
Non-cash effects of changes in liabilities for uncertain income tax positions
|
|
(0.7
|
)
|
|
0.1
|
|
|
(0.1
|
)
|
|||
Net cash used in changes in operating working capital, net of effect of acquisitions (Note 15)
|
|
(0.6
|
)
|
|
(1.0
|
)
|
|
(11.8
|
)
|
|||
Pension and other post-employment benefits
|
|
(3.7
|
)
|
|
(12.3
|
)
|
|
(8.0
|
)
|
|||
Other
|
|
0.6
|
|
|
(1.9
|
)
|
|
(0.7
|
)
|
|||
NET CASH PROVIDED BY OPERATING ACTIVITIES
|
|
97.6
|
|
|
92.7
|
|
|
100.0
|
|
|||
|
|
|
|
|
|
|
||||||
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|||
Capital expenditures
|
|
(21.4
|
)
|
|
(38.1
|
)
|
|
(42.7
|
)
|
|||
Business acquisition (Note 4)
|
|
—
|
|
|
—
|
|
|
(43.1
|
)
|
|||
Asset acquisition
|
|
—
|
|
|
—
|
|
|
(8.0
|
)
|
|||
Proceeds from sale of property, plant and equipment (Note 13)
|
|
—
|
|
|
5.0
|
|
|
—
|
|
|||
Sales (purchases) of marketable securities
|
|
(0.4
|
)
|
|
0.1
|
|
|
(0.6
|
)
|
|||
Other
|
|
(1.5
|
)
|
|
(1.3
|
)
|
|
(0.6
|
)
|
|||
NET CASH USED IN INVESTING ACTIVITIES
|
|
(23.3
|
)
|
|
(34.3
|
)
|
|
(95.0
|
)
|
|||
|
|
|
|
|
|
|
||||||
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|||
Proceeds from issuance of long-term debt (Note 7)
|
|
163.5
|
|
|
272.8
|
|
|
323.7
|
|
|||
Debt issuance costs (Note 7)
|
|
(0.4
|
)
|
|
(1.8
|
)
|
|
(0.3
|
)
|
|||
Repayments of long-term debt (Note 7)
|
|
(201.6
|
)
|
|
(285.6
|
)
|
|
(293.3
|
)
|
|||
Cash dividends paid
|
|
(30.5
|
)
|
|
(27.8
|
)
|
|
(25.1
|
)
|
|||
Shares purchased (Note 10)
|
|
(6.2
|
)
|
|
(10.8
|
)
|
|
(9.3
|
)
|
|||
Proceeds from exercise of stock options
|
|
—
|
|
|
0.6
|
|
|
0.4
|
|
|||
Other
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|||
NET CASH USED IN FINANCING ACTIVITIES
|
|
(75.2
|
)
|
|
(52.6
|
)
|
|
(3.8
|
)
|
|||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
|
|
—
|
|
|
(0.4
|
)
|
|
0.2
|
|
|||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
(0.9
|
)
|
|
5.4
|
|
|
1.4
|
|
|||
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
|
|
9.9
|
|
|
4.5
|
|
|
3.1
|
|
|||
CASH AND CASH EQUIVALENTS, END OF YEAR
|
|
$
|
9.0
|
|
|
$
|
9.9
|
|
|
$
|
4.5
|
|
|
|
12/31/2019
|
|
12/31/2018
|
||||||||||||
|
|
Carrying
Value |
|
Fair
Value (a) |
|
Carrying
Value |
|
Fair
Value (a) |
||||||||
2021 Senior Notes (5.25% fixed rate)
|
|
$
|
175.0
|
|
|
$
|
174.3
|
|
|
$
|
175.0
|
|
|
$
|
170.5
|
|
Global Revolving Credit Facilities (variable rates)
|
|
21.6
|
|
|
21.6
|
|
|
57.9
|
|
|
57.9
|
|
||||
Second German Loan Agreement (2.5% fixed rate)
|
|
3.5
|
|
|
3.6
|
|
|
4.8
|
|
|
5.1
|
|
||||
Third German Loan Agreement (1.45% fixed rate)
|
|
3.7
|
|
|
3.7
|
|
|
4.9
|
|
|
4.9
|
|
||||
Total debt
|
|
$
|
203.8
|
|
|
$
|
203.2
|
|
|
$
|
242.6
|
|
|
$
|
238.4
|
|
(a)
|
Fair value for all debt instruments was estimated from Level 2 measurements.
|
•
|
Cash and cash equivalents ($0.8 million and $1.7 million at December 31, 2019 and 2018, respectively).
|
•
|
U.S and non-U.S. Equities ($122.5 million and $107.8 million at December 31, 2019 and 2018, respectively) — These proprietary collective funds have observable NAVs (based on the fair value of the underlying investments of the funds) that are provided to investors and provide for liquidity either immediately or within a few days.
|
•
|
U.S and non-U.S. Fixed Income Securities ($219.4 million and $192.7 million at December 31, 2019 and 2018, respectively) — These proprietary collective funds have observable NAVs (based on the fair value of the underlying investments of the funds) that are provided to investors and provide for liquidity either immediately or within a few days.
|
•
|
Hedge Fund/Other ($29.9 million and $27.9 million at December 31, 2019 and 2018, respectively) — This fund is valued using NAVs calculated by the underlying investment managers and allow for quarterly or more frequent redemptions.
|
|
|
|
|
Return on plan assets
|
|
|
|||||||||||||||||
|
|
Fair Value at January 1
|
|
Attributable to Assets Held at December 31
|
|
Attributable to Assets Sold
|
|
Net Purchases/ (Settlements)
|
|
Transfers into/ (out of) Level 3
|
|
Foreign currency effects
|
|
Fair
Value at December 31 |
|||||||||
For the year ended December 31, 2017
|
|
$
|
—
|
|
|
0.2
|
|
|
—
|
|
|
46.9
|
|
|
—
|
|
|
1.3
|
|
|
$
|
48.4
|
|
For the year ended December 31, 2018
|
|
$
|
48.4
|
|
|
(0.9
|
)
|
|
—
|
|
|
(0.3
|
)
|
|
—
|
|
|
(2.1
|
)
|
|
$
|
45.1
|
|
For the year ended December 31, 2019
|
|
$
|
45.1
|
|
|
7.5
|
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
(0.9
|
)
|
|
$
|
51.5
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Income from continuing operations
|
|
$
|
55.4
|
|
|
$
|
37.2
|
|
|
$
|
80.3
|
|
Amounts attributable to participating securities
|
|
(0.3
|
)
|
|
(0.2
|
)
|
|
(0.6
|
)
|
|||
Income from continuing operations available to common stockholders
|
|
55.1
|
|
|
37.0
|
|
|
79.7
|
|
|||
Loss from discontinued operations, net of income taxes
|
|
—
|
|
|
(0.8
|
)
|
|
—
|
|
|||
Amounts attributable to participating securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net income available to common stockholders
|
|
$
|
55.1
|
|
|
$
|
36.2
|
|
|
$
|
79.7
|
|
Weighted-average basic shares outstanding
|
|
16,848
|
|
|
16,850
|
|
|
16,805
|
|
|||
Basic earnings (loss) per share
|
|
|
|
|
|
|
|
|
|
|||
Continuing operations
|
|
$
|
3.27
|
|
|
$
|
2.20
|
|
|
$
|
4.74
|
|
Discontinued operations
|
|
—
|
|
|
(0.05
|
)
|
|
—
|
|
|||
|
|
$
|
3.27
|
|
|
$
|
2.15
|
|
|
$
|
4.74
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Income from continuing operations
|
|
$
|
55.4
|
|
|
$
|
37.2
|
|
|
$
|
80.3
|
|
Amounts attributable to participating securities
|
|
(0.3
|
)
|
|
(0.4
|
)
|
|
(0.5
|
)
|
|||
Income from continuing operations available to common stockholders
|
|
55.1
|
|
|
36.8
|
|
|
79.8
|
|
|||
Loss from discontinued operations, net of income taxes
|
|
—
|
|
|
(0.8
|
)
|
|
—
|
|
|||
Amounts attributable to participating securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net income available to common stockholders
|
|
$
|
55.1
|
|
|
$
|
36.0
|
|
|
$
|
79.8
|
|
Weighted-average basic shares outstanding
|
|
16,848
|
|
|
16,850
|
|
|
16,805
|
|
|||
Add: Assumed incremental shares under stock-based compensation plans
|
|
58
|
|
|
118
|
|
|
247
|
|
|||
Weighted average diluted shares
|
|
16,906
|
|
|
16,968
|
|
|
17,052
|
|
|||
Diluted earnings (loss) per share
|
|
|
|
|
|
|
|
|
|
|||
Continuing operations
|
|
$
|
3.26
|
|
|
$
|
2.17
|
|
|
$
|
4.68
|
|
Discontinued operations
|
|
—
|
|
|
(0.05
|
)
|
|
—
|
|
|||
|
|
$
|
3.26
|
|
|
$
|
2.12
|
|
|
$
|
4.68
|
|
|
|
December 31, 2017
|
||
Assets Acquired
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
4.9
|
|
Accounts receivable
|
|
4.7
|
|
|
Inventories (a)
|
|
12.7
|
|
|
Deferred income taxes
|
|
0.4
|
|
|
Prepaid and other current assets
|
|
0.2
|
|
|
Property, plant and equipment (a)
|
|
31.2
|
|
|
Non-amortizable intangible assets
|
|
1.2
|
|
|
Amortizable intangible assets
|
|
4.7
|
|
|
Acquired goodwill (a)
|
|
10.0
|
|
|
Other assets
|
|
0.1
|
|
|
Total assets acquired
|
|
70.1
|
|
|
Liabilities Assumed
|
|
|
|
|
Accounts payable
|
|
4.1
|
|
|
Accrued expenses
|
|
5.4
|
|
|
Contingent liability (b)
|
|
2.3
|
|
|
Deferred income taxes (a)
|
|
3.5
|
|
|
Noncurrent employee benefits
|
|
4.9
|
|
|
Long-term debt
|
|
1.8
|
|
|
Other noncurrent obligations
|
|
0.1
|
|
|
Total liabilities assumed
|
|
22.1
|
|
|
Net assets acquired
|
|
$
|
48.0
|
|
(a)
|
The Company had up to 12 months from the closing of the acquisition to finalize its valuations. Management evaluated additional information and determined that the preliminary valuation of inventory at the acquisition date should have been determined using fair value assumptions that would have resulted in the fair value of inventory being lower than originally estimated primarily due to changes in the assumptions related to inventory margins of the acquired business. In addition, management evaluated additional information related to fixed assets and updated the preliminary valuation of fixed assets at the acquisition date. Accordingly, during the nine months ended September 30, 2018, adjustments were made to reduce the carrying value of inventories and fixed assets by $1.5 million, with a corresponding increase to the value of goodwill of $1.1 million, net of income taxes.
|
(b)
|
In conjunction with the acquisition, the Company assumed a contingent liability of $2.3 million related to the acquisition of direct customer relationships by Neenah Coldenhove, which amount was contingent on the growth of sales from these customer relationships in 2018 and 2019. During the year ended December 31, 2018, the Company reduced the estimated liability to $0.8 million and recognized a receivable of $2.4 million from the former shareholders of Neenah Coldenhove related to a claim under an escrow arrangement. These two items
|
|
|
Year Ended December 31, 2017
|
||
Net sales
|
|
$
|
1,019.8
|
|
Operating income
|
|
108.9
|
|
|
Net income
|
|
$
|
83.0
|
|
|
|
|
|
|
Earnings Per Common Share
|
|
|
|
|
Basic
|
|
$
|
4.90
|
|
|
|
|
|
|
Diluted
|
|
$
|
4.84
|
|
|
|
Technical Products
|
|
Fine Paper and
Packaging |
|
Other
|
|
|
||||||||||||||||||||||||||||||||
|
|
Gross
Amount |
|
Accumulated
Impairment Losses |
|
|
|
Gross Amount
|
|
Accumulated
Impairment Losses |
|
|
|
Gross
Amount |
|
Accumulated
Impairment Losses |
|
|
|
|
||||||||||||||||||||
|
|
|
|
Net
|
|
|
|
Net
|
|
|
|
Net
|
|
Net
|
||||||||||||||||||||||||||
Balance at December 31, 2017
|
|
$
|
128.3
|
|
|
$
|
(49.6
|
)
|
|
$
|
78.7
|
|
|
$
|
6.2
|
|
|
—
|
|
|
6.2
|
|
|
$
|
0.4
|
|
|
—
|
|
|
0.4
|
|
|
$
|
85.3
|
|
||||
Adjustment of goodwill acquired in the Coldenhove Acquisition (a)
|
|
1.1
|
|
|
—
|
|
|
1.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.1
|
|
||||||||||
Impairment related to the Brattleboro mill and associated office and research facilities (b)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|
(0.1
|
)
|
||||||||||
Foreign currency translation
|
|
(4.5
|
)
|
|
2.2
|
|
|
(2.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.3
|
)
|
||||||||||
Balance at December 31, 2018
|
|
124.9
|
|
|
(47.4
|
)
|
|
77.5
|
|
|
6.2
|
|
|
—
|
|
|
6.2
|
|
|
0.4
|
|
|
(0.1
|
)
|
|
0.3
|
|
|
84.0
|
|
||||||||||
Realignment of Other segment (c)
|
|
0.4
|
|
|
(0.1
|
)
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
|
0.1
|
|
|
(0.3
|
)
|
|
—
|
|
||||||||||
Foreign currency translation
|
|
(1.9
|
)
|
|
1.0
|
|
|
(0.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.9
|
)
|
||||||||||
Balance at December 31, 2019
|
|
$
|
123.4
|
|
|
$
|
(46.5
|
)
|
|
$
|
76.9
|
|
|
$
|
6.2
|
|
|
$
|
—
|
|
|
$
|
6.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
83.1
|
|
(a)
|
As a result of finalizing the acquisition accounting for Neenah Coldenhove in 2018, an adjustment of $1.1 million, net of income taxes, was recorded as a reduction to inventory and fixed assets and increase to goodwill.
|
(b)
|
In conjunction with the sale of the Brattleboro mill, a goodwill impairment loss of $0.1 million was recognized in 2018.
|
(c)
|
In January 2019, the Company realigned the remaining products manufactured in the Other business segment to be managed as part of the Technical Products business segment. See Note 14, "Business Segment and Geographic Information."
|
|
|
12/31/2019
|
|
12/31/2018
|
||||||||||||
|
|
Gross
Amount |
|
Accumulated
Amortization |
|
Gross
Amount |
|
Accumulated
Amortization |
||||||||
Amortizable intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Customer based intangibles
|
|
$
|
38.2
|
|
|
$
|
(20.4
|
)
|
|
$
|
38.3
|
|
|
$
|
(18.2
|
)
|
Trade names and trademarks
|
|
5.1
|
|
|
(2.7
|
)
|
|
5.1
|
|
|
(2.5
|
)
|
||||
Acquired technology
|
|
16.9
|
|
|
(8.0
|
)
|
|
16.9
|
|
|
(6.7
|
)
|
||||
Total amortizable intangible assets
|
|
60.2
|
|
|
(31.1
|
)
|
|
60.3
|
|
|
(27.4
|
)
|
||||
Trade names
|
|
37.6
|
|
|
—
|
|
|
37.8
|
|
|
—
|
|
||||
Total
|
|
$
|
97.8
|
|
|
$
|
(31.1
|
)
|
|
$
|
98.1
|
|
|
$
|
(27.4
|
)
|
|
|
Intangibles
|
|
Estimated Useful
Lives (Years) |
||
Intangible assets — definite lived
|
|
|
|
|
|
|
Trade names and trademarks
|
|
$
|
0.5
|
|
|
10
|
Customer based intangibles
|
|
2.9
|
|
|
15
|
|
Acquired technology
|
|
1.3
|
|
|
4
|
|
Total
|
|
4.7
|
|
|
|
|
Non-amortizable trade names
|
|
1.2
|
|
|
|
|
Total intangible assets
|
|
$
|
5.9
|
|
|
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
|
2019
|
|
2019
|
|
2018
|
|
2018
|
|
2017
|
|
2017
|
|||||||||
U.S. federal statutory income tax rate
|
|
21.0
|
%
|
|
$
|
14.0
|
|
|
21.0
|
%
|
|
$
|
8.6
|
|
|
35.0
|
%
|
|
$
|
32.1
|
|
U.S. state income taxes, net of federal income tax benefit
|
|
1.4
|
%
|
|
0.9
|
|
|
(1.0
|
)%
|
|
(0.4
|
)
|
|
1.9
|
%
|
|
1.7
|
|
|||
Foreign tax rate differences (a)
|
|
3.6
|
%
|
|
2.4
|
|
|
6.8
|
%
|
|
2.8
|
|
|
(3.4
|
)%
|
|
(3.1
|
)
|
|||
Tax on foreign dividends (b)
|
|
0.9
|
%
|
|
0.6
|
|
|
3.6
|
%
|
|
1.5
|
|
|
(0.3
|
)%
|
|
(0.3
|
)
|
|||
Foreign financing structure (c)
|
|
(3.0
|
)%
|
|
(2.0
|
)
|
|
(5.1
|
)%
|
|
(2.1
|
)
|
|
(2.2
|
)%
|
|
(2.0
|
)
|
|||
Change in statutory tax rates (d)
|
|
—
|
%
|
|
—
|
|
|
(3.9
|
)%
|
|
(1.6
|
)
|
|
(10.6
|
)%
|
|
(9.7
|
)
|
|||
Research and development and other tax credits
|
|
(6.2
|
)%
|
|
(4.1
|
)
|
|
(10.5
|
)%
|
|
(4.3
|
)
|
|
(3.3
|
)%
|
|
(3.0
|
)
|
|||
Excess tax benefits from stock compensation
|
|
(0.2
|
)%
|
|
(0.1
|
)
|
|
(2.9
|
)%
|
|
(1.2
|
)
|
|
(4.9
|
)%
|
|
(4.5
|
)
|
|||
Uncertain income tax positions
|
|
(1.9
|
)%
|
|
(1.3
|
)
|
|
2.0
|
%
|
|
0.8
|
|
|
0.8
|
%
|
|
0.7
|
|
|||
Other differences, net
|
|
1.1
|
%
|
|
0.7
|
|
|
(0.5
|
)%
|
|
(0.2
|
)
|
|
(0.6
|
)%
|
|
(0.5
|
)
|
|||
Effective income tax rate
|
|
16.7
|
%
|
|
$
|
11.1
|
|
|
9.5
|
%
|
|
$
|
3.9
|
|
|
12.4
|
%
|
|
$
|
11.4
|
|
(a)
|
Represents the impact on the Company's effective tax rate due the mix of earnings among taxing jurisdictions with differing statutory rates. In 2019 and 2018, the U.S. federal tax rate is lower than the tax rate in Germany and the Netherlands.
|
(b)
|
For 2017, the amount reflects the net benefit of the indefinite reinvestment assertion of $4.1 million, less the $3.8 million mandatory one-time tax on the accumulated E&P of foreign subsidiaries from the Tax Act. For 2018, the amount reflects a measurement-period adjustment of $0.8 million to the mandatory one-time tax on the accumulated E&P of foreign subsidiaries, and in 2019 and 2018 includes federal GILTI impacts and state taxation of foreign E&P.
|
(c)
|
Represents the impact on the Company's effective tax rate of the Company's financing strategies.
|
(d)
|
Represents the net benefit from remeasurement of the net deferred income tax liabilities from tax rate changes. For 2017, the amount reflects a tax benefit of $10.3 million from the Tax Act, less $0.6 million of tax expense from a state tax rate change in Germany. For 2018, the amount reflects an additional measurement-period tax benefit adjustment of $0.9 million from the Tax Act, plus $0.7 million of tax benefit from a federal tax rate change in the Netherlands.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Income (loss) from continuing operations before income taxes:
|
|
|
|
|
|
|
|
|
|
|||
U.S.
|
|
$
|
30.1
|
|
|
$
|
(1.7
|
)
|
|
$
|
53.6
|
|
Foreign
|
|
36.4
|
|
|
42.8
|
|
|
38.1
|
|
|||
Total
|
|
$
|
66.5
|
|
|
$
|
41.1
|
|
|
$
|
91.7
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Provision (benefit) for income taxes:
|
|
|
|
|
|
|
|
|
|
|||
Current:
|
|
|
|
|
|
|
|
|
|
|||
Federal
|
|
$
|
0.3
|
|
|
$
|
(3.0
|
)
|
|
$
|
4.7
|
|
State
|
|
(0.2
|
)
|
|
0.1
|
|
|
0.5
|
|
|||
Foreign
|
|
7.6
|
|
|
8.7
|
|
|
6.4
|
|
|||
Total current income tax provision
|
|
7.7
|
|
|
5.8
|
|
|
11.6
|
|
|||
Deferred:
|
|
|
|
|
|
|
|
|
|
|||
Federal
|
|
3.0
|
|
|
(0.6
|
)
|
|
(1.8
|
)
|
|||
State
|
|
0.8
|
|
|
(0.2
|
)
|
|
(0.1
|
)
|
|||
Foreign
|
|
(0.4
|
)
|
|
(1.1
|
)
|
|
1.7
|
|
|||
Total deferred income tax provision
|
|
3.4
|
|
|
(1.9
|
)
|
|
(0.2
|
)
|
|||
Total provision for income taxes
|
|
$
|
11.1
|
|
|
$
|
3.9
|
|
|
$
|
11.4
|
|
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Deferred income tax assets (liabilities)
|
|
|
|
|
|
|
||
Research and development tax credits
|
|
$
|
21.5
|
|
|
$
|
20.0
|
|
Employee benefits
|
|
15.9
|
|
|
16.5
|
|
||
Net operating losses and other tax credits
|
|
6.4
|
|
|
7.4
|
|
||
Lease liabilities
|
|
3.1
|
|
|
—
|
|
||
Accrued liabilities
|
|
2.1
|
|
|
2.3
|
|
||
Interest limitation
|
|
—
|
|
|
1.7
|
|
||
Inventories
|
|
(0.6
|
)
|
|
1.0
|
|
||
Lease right-of-use assets
|
|
(2.8
|
)
|
|
—
|
|
||
Intangibles
|
|
(4.7
|
)
|
|
(4.2
|
)
|
||
Accelerated depreciation
|
|
(28.0
|
)
|
|
(28.8
|
)
|
||
Other
|
|
0.5
|
|
|
0.5
|
|
||
Net deferred income tax assets
|
|
$
|
13.4
|
|
|
$
|
16.4
|
|
|
|
|
|
|
||||
Deferred income tax assets (liabilities)
|
|
|
|
|
|
|
||
Accelerated depreciation
|
|
$
|
(16.7
|
)
|
|
$
|
(16.6
|
)
|
Intangibles
|
|
(3.0
|
)
|
|
(3.2
|
)
|
||
Inventories
|
|
(0.9
|
)
|
|
(1.0
|
)
|
||
Lease right-of-use assets
|
|
(0.7
|
)
|
|
—
|
|
||
Net operating losses
|
|
0.2
|
|
|
0.2
|
|
||
Lease liabilities
|
|
0.7
|
|
|
—
|
|
||
Employee benefits
|
|
7.5
|
|
|
6.3
|
|
||
Other
|
|
—
|
|
|
(0.1
|
)
|
||
Net deferred income tax liabilities
|
|
$
|
(12.9
|
)
|
|
$
|
(14.4
|
)
|
|
|
For the Years Ended
December 31, |
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Balance at January 1,
|
|
$
|
10.1
|
|
|
$
|
10.0
|
|
|
$
|
10.3
|
|
Increases in prior period tax positions
|
|
0.7
|
|
|
0.1
|
|
|
0.4
|
|
|||
Decreases in prior period tax positions
|
|
(1.2
|
)
|
|
—
|
|
|
(1.0
|
)
|
|||
Increases in current period tax positions
|
|
0.6
|
|
|
0.8
|
|
|
0.7
|
|
|||
Decreases due to lapse of statutes of limitations
|
|
(1.5
|
)
|
|
(0.6
|
)
|
|
(1.0
|
)
|
|||
Increases due to change in tax rates
|
|
—
|
|
|
0.1
|
|
|
0.4
|
|
|||
Decreases due to settlements with tax authorities
|
|
(0.9
|
)
|
|
(0.2
|
)
|
|
—
|
|
|||
Increases (decreases) from foreign exchange rate changes
|
|
—
|
|
|
(0.1
|
)
|
|
0.2
|
|
|||
Balance at December 31,
|
|
$
|
7.8
|
|
|
$
|
10.1
|
|
|
$
|
10.0
|
|
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
2021 Senior Notes (5.25% fixed rate) due May 2021
|
|
$
|
175.0
|
|
|
$
|
175.0
|
|
Global Revolving Credit Facilities (variable rates) due December 2023
|
|
21.6
|
|
|
57.9
|
|
||
Second German Loan Agreement (2.45% fixed rate) due in quarterly installments ending September 2022
|
|
3.5
|
|
|
4.8
|
|
||
Third German Loan Agreement (1.45% fixed rate) due in quarterly installments ending September 2022
|
|
3.7
|
|
|
4.9
|
|
||
Deferred financing costs
|
|
(3.0
|
)
|
|
(3.5
|
)
|
||
Total Debt
|
|
200.8
|
|
|
239.1
|
|
||
Less: Debt payable within one year
|
|
2.6
|
|
|
2.3
|
|
||
Long-term debt
|
|
$
|
198.2
|
|
|
$
|
236.8
|
|
|
|
|
|
|
|
|
Applicable Margin
|
||
|
|
U.S. Revolving
Credit Facility
|
|
German Revolving
Credit Facility
|
Prime rate
|
|
0.00%-0.25%
|
|
Not applicable
|
Federal funds rate +0.50%
|
|
0.00%-0.25%
|
|
Not applicable
|
Monthly LIBOR (which cannot be less than zero percent) +1.00%
|
|
0.00%-0.25%
|
|
Not applicable
|
Overnight LIBOR (which cannot be less than zero percent)
|
|
Not applicable
|
|
1.25%-1.75%
|
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
|
Total
|
||||||||||||||
Debt payments
|
|
$
|
2.6
|
|
|
$
|
177.8
|
|
|
$
|
1.8
|
|
|
$
|
21.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
203.8
|
|
|
|
Pension Benefits
|
|
Postretirement
Benefits Other than Pensions |
||||||||||||
|
|
Year Ended December 31,
|
||||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Change in Benefit Obligation:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Benefit obligation at beginning of year
|
|
$
|
430.7
|
|
|
$
|
463.9
|
|
|
$
|
42.4
|
|
|
$
|
44.0
|
|
Service cost
|
|
5.0
|
|
|
6.7
|
|
|
1.2
|
|
|
1.1
|
|
||||
Interest cost
|
|
16.2
|
|
|
15.8
|
|
|
1.5
|
|
|
1.4
|
|
||||
Currency
|
|
(1.2
|
)
|
|
(4.6
|
)
|
|
0.1
|
|
|
(0.3
|
)
|
||||
Actuarial (gain) loss
|
|
55.0
|
|
|
(29.3
|
)
|
|
(0.7
|
)
|
|
1.1
|
|
||||
Benefit payments from plans
|
|
(21.1
|
)
|
|
(20.3
|
)
|
|
(4.8
|
)
|
|
(4.9
|
)
|
||||
Plan curtailment (a)
|
|
(2.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Settlement payments
|
|
(0.5
|
)
|
|
(2.2
|
)
|
|
—
|
|
|
—
|
|
||||
Other
|
|
1.1
|
|
|
0.7
|
|
|
—
|
|
|
—
|
|
||||
Benefit obligation at end of year
|
|
$
|
482.4
|
|
|
$
|
430.7
|
|
|
$
|
39.7
|
|
|
$
|
42.4
|
|
Change in Plan Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fair value of plan assets at beginning of year
|
|
$
|
375.2
|
|
|
$
|
400.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Actual gain (loss) on plan assets
|
|
62.1
|
|
|
(18.9
|
)
|
|
—
|
|
|
—
|
|
||||
Employer contributions
|
|
8.3
|
|
|
18.2
|
|
|
—
|
|
|
—
|
|
||||
Currency
|
|
(0.5
|
)
|
|
(2.7
|
)
|
|
—
|
|
|
—
|
|
||||
Benefit payments
|
|
(21.1
|
)
|
|
(20.3
|
)
|
|
—
|
|
|
—
|
|
||||
Settlement payments
|
|
(0.5
|
)
|
|
(2.2
|
)
|
|
—
|
|
|
—
|
|
||||
Other
|
|
0.6
|
|
|
0.7
|
|
|
—
|
|
|
—
|
|
||||
Fair value of plan assets at end of year
|
|
$
|
424.1
|
|
|
$
|
375.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Reconciliation of Funded Status
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fair value of plan assets
|
|
$
|
424.1
|
|
|
$
|
375.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Projected benefit obligation
|
|
482.4
|
|
|
430.7
|
|
|
39.7
|
|
|
42.4
|
|
||||
Net liability recognized in statement of financial position
|
|
$
|
(58.3
|
)
|
|
$
|
(55.5
|
)
|
|
$
|
(39.7
|
)
|
|
$
|
(42.4
|
)
|
Amounts recognized in statement of financial position consist of:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Current liabilities
|
|
$
|
(1.2
|
)
|
|
$
|
(1.7
|
)
|
|
$
|
(5.6
|
)
|
|
$
|
(5.2
|
)
|
Noncurrent liabilities
|
|
(57.1
|
)
|
|
(53.8
|
)
|
|
(34.1
|
)
|
|
(37.2
|
)
|
||||
Net amount recognized
|
|
$
|
(58.3
|
)
|
|
$
|
(55.5
|
)
|
|
$
|
(39.7
|
)
|
|
$
|
(42.4
|
)
|
(a)
|
For the year ended December 31, 2019, the Company recognized a curtailment gain of $1.6 million related to the Neenah Coldenhove pension plan. See discussion earlier in this Note.
|
|
|
Pension
Benefits |
|
Postretirement
Benefits Other than Pensions |
||||||||||||
|
|
December 31,
|
||||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Accumulated actuarial loss
|
|
$
|
117.8
|
|
|
$
|
110.1
|
|
|
$
|
7.2
|
|
|
$
|
8.7
|
|
Prior service cost
|
|
0.9
|
|
|
0.7
|
|
|
—
|
|
|
—
|
|
||||
Total recognized in AOCI
|
|
$
|
118.7
|
|
|
$
|
110.8
|
|
|
$
|
7.2
|
|
|
$
|
8.7
|
|
|
|
December 31,
|
||||||||||||||||||||||
|
|
Assets Exceed
ABO
|
|
ABO Exceed
Assets
|
|
Total
|
||||||||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||
Projected benefit obligation
|
|
$
|
—
|
|
|
$
|
130.3
|
|
|
$
|
482.4
|
|
|
$
|
300.4
|
|
|
$
|
482.4
|
|
|
$
|
430.7
|
|
Accumulated benefit obligation
|
|
—
|
|
|
125.4
|
|
|
478.3
|
|
|
298.5
|
|
|
478.3
|
|
|
423.9
|
|
||||||
Fair value of plan assets
|
|
—
|
|
|
128.8
|
|
|
424.1
|
|
|
246.4
|
|
|
424.1
|
|
|
375.2
|
|
|
|
Pension Benefits
|
|
Postretirement Benefits
Other than Pensions |
||||||||||||||||||||
|
|
Year Ended December 31,
|
||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||
Service cost
|
|
$
|
5.0
|
|
|
$
|
6.7
|
|
|
$
|
5.5
|
|
|
$
|
1.2
|
|
|
$
|
1.1
|
|
|
$
|
1.2
|
|
Interest cost
|
|
16.2
|
|
|
15.8
|
|
|
15.0
|
|
|
1.5
|
|
|
1.4
|
|
|
1.4
|
|
||||||
Expected return on plan assets (a)
|
|
(21.1
|
)
|
|
(21.0
|
)
|
|
(19.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Recognized net actuarial loss
|
|
4.9
|
|
|
5.2
|
|
|
5.6
|
|
|
0.9
|
|
|
0.8
|
|
|
0.3
|
|
||||||
Amortization of prior service cost (credit)
|
|
0.2
|
|
|
0.2
|
|
|
0.2
|
|
|
—
|
|
|
(0.2
|
)
|
|
(0.2
|
)
|
||||||
Curtailment gain
|
|
(1.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amount of settlement loss recognized
|
|
0.1
|
|
|
0.8
|
|
|
0.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net periodic benefit cost
|
|
$
|
3.7
|
|
|
$
|
7.7
|
|
|
$
|
7.0
|
|
|
$
|
3.6
|
|
|
$
|
3.1
|
|
|
$
|
2.7
|
|
(a)
|
The expected return on plan assets, excluding the Neenah Coldenhove plan assets, is determined by multiplying the fair value of plan assets at the prior year-end (adjusted for estimated current year cash benefit payments and contributions) by the expected long-term rate of return. The Neenah Coldenhove pension plan is funded through an insurance contract, and the expected return on plan assets is calculated based on the discount rate of the insured obligations.
|
|
|
Pension Benefits
|
|
Postretirement Benefits
Other than Pensions |
||||||||||||||||||||
|
|
Year Ended December 31,
|
||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||
Net periodic benefit expense
|
|
$
|
3.7
|
|
|
$
|
7.7
|
|
|
$
|
7.0
|
|
|
$
|
3.6
|
|
|
$
|
3.1
|
|
|
$
|
2.7
|
|
Accumulated actuarial gain (loss)
|
|
7.7
|
|
|
4.2
|
|
|
10.1
|
|
|
(1.5
|
)
|
|
0.1
|
|
|
3.7
|
|
||||||
Prior service cost (credit)
|
|
0.2
|
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
0.2
|
|
|
0.2
|
|
||||||
Total recognized in other comprehensive income (loss)
|
|
7.9
|
|
|
4.1
|
|
|
10.0
|
|
|
(1.5
|
)
|
|
0.3
|
|
|
3.9
|
|
||||||
Total recognized in net periodic benefit cost and other comprehensive income (loss)
|
|
$
|
11.6
|
|
|
$
|
11.8
|
|
|
$
|
17.0
|
|
|
$
|
2.1
|
|
|
$
|
3.4
|
|
|
$
|
6.6
|
|
|
|
Pension
Benefits
|
|
Postretirement
Benefits
Other than
Pensions
|
||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Discount rate
|
|
2.98
|
%
|
|
3.94
|
%
|
|
2.68
|
%
|
|
3.84
|
%
|
Rate of compensation increase
|
|
2.05
|
%
|
|
2.34
|
%
|
|
—
|
%
|
|
—
|
%
|
Initial healthcare cost trend rate
|
|
—
|
%
|
|
—
|
%
|
|
6.10
|
%
|
|
6.80
|
%
|
Ultimate healthcare cost trend rate
|
|
—
|
%
|
|
—
|
%
|
|
4.50
|
%
|
|
4.50
|
%
|
Ultimate year
|
|
—
|
|
|
—
|
|
|
2037
|
|
|
2037
|
|
|
|
Pension Benefits
|
|
Postretirement
Benefits Other than
Pensions
|
||||||||||||||
|
|
Year Ended December 31,
|
||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
||||||
Discount rate
|
|
3.78
|
%
|
|
3.65
|
%
|
|
4.18
|
%
|
|
3.84
|
%
|
|
3.42
|
%
|
|
3.89
|
%
|
Expected long-term return on plan assets (a)
|
|
5.91
|
%
|
|
5.78
|
%
|
|
6.31
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Rate of compensation increase
|
|
2.33
|
%
|
|
2.44
|
%
|
|
2.49
|
%
|
|
2.50
|
%
|
|
2.50
|
%
|
|
—
|
%
|
Initial healthcare cost trend rate
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
6.50
|
%
|
|
6.80
|
%
|
|
7.00
|
%
|
Ultimate healthcare cost trend rate
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
4.50
|
%
|
|
4.50
|
%
|
|
4.50
|
%
|
Ultimate year
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2037
|
|
|
2037
|
|
|
2037
|
|
(a)
|
The expected long-term return on plan assets does not include the Neenah Coldenhove plan assets. The Neenah Coldenhove pension plan is funded through an insurance contract, and the expected return on plan assets is calculated based on the discount rate of the insured obligations.
|
|
|
Percentage of Plan
Assets At December 31, |
||||
|
|
2019
|
|
2018
|
||
Asset Category (a)
|
|
|
|
|
|
|
Equity securities
|
|
33
|
%
|
|
33
|
%
|
Hedge fund / Other
|
|
8
|
%
|
|
8
|
%
|
Debt securities / Fixed Income
|
|
59
|
%
|
|
58
|
%
|
Cash and money-market funds
|
|
—
|
%
|
|
1
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
(a)
|
The asset categories do not include the insurance contract related to the Neenah Coldenhove pension plan.
|
|
|
Strategic Target
|
|
Permitted Range
|
|
Asset Category
|
|
|
|
|
|
Equity securities
|
|
33
|
%
|
|
28-38%
|
Hedge fund / Other
|
|
8
|
%
|
|
3-13%
|
Debt securities / Fixed Income
|
|
59
|
%
|
|
54-64%
|
(1)
|
The plan should be substantially fully invested in debt and equity securities at all times because substantial cash holdings will reduce long-term rates of return;
|
(2)
|
Equity investments will provide greater long-term returns than fixed income investments, although with greater short-term volatility;
|
(3)
|
It is prudent to diversify plan investments across major asset classes;
|
(4)
|
Allocating a portion of plan assets to foreign equities will increase portfolio diversification, decrease portfolio risk and provide the potential for long-term returns;
|
(5)
|
Investment managers with active mandates can reduce portfolio risk below market risk and potentially add value through security selection strategies, and a portion of plan assets should be allocated to such active mandates;
|
(6)
|
A component of passive, indexed management can benefit the plans through greater diversification and lower cost, and a portion of the plan assets should be allocated to such passive mandates, and
|
(7)
|
It is appropriate to retain more than one investment manager, given the size of the plans, provided that such managers offer asset class or style diversification.
|
|
|
Pension Plans
|
|
Postretirement Benefits
Other than Pensions
|
||||
2020
|
|
$
|
22.3
|
|
|
$
|
5.6
|
|
2021
|
|
27.1
|
|
|
5.0
|
|
||
2022
|
|
23.3
|
|
|
4.6
|
|
||
2023
|
|
24.2
|
|
|
4.2
|
|
||
2024
|
|
25.0
|
|
|
3.9
|
|
||
Years 2025-2029
|
|
129.3
|
|
|
13.7
|
|
|
|
One Percentage-
Point
|
||||||
|
|
Increase
|
|
Decrease
|
||||
Effect on total of service and interest cost components
|
|
$
|
—
|
|
|
$
|
—
|
|
Effect on post-retirement benefit other than pension obligation
|
|
0.2
|
|
|
(0.2
|
)
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Stock-based compensation expense
|
|
$
|
5.6
|
|
|
$
|
4.0
|
|
|
$
|
6.4
|
|
Income tax benefit
|
|
(1.4
|
)
|
|
(1.0
|
)
|
|
(2.5
|
)
|
|||
Stock-based compensation, net of income tax benefit
|
|
$
|
4.2
|
|
|
$
|
3.0
|
|
|
$
|
3.9
|
|
|
|
Stock Options
|
|
Performance
Shares and RSUs |
||||
Unrecognized compensation cost — December 31, 2018
|
|
$
|
0.6
|
|
|
$
|
2.1
|
|
Grant date fair value current year grants
|
|
—
|
|
|
5.5
|
|
||
Compensation expense recognized
|
|
(0.4
|
)
|
|
(5.2
|
)
|
||
Unrecognized compensation cost — December 31, 2019
|
|
$
|
0.2
|
|
|
$
|
2.4
|
|
Expected amortization period (in years)
|
|
1.1
|
|
|
1.6
|
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Stock options granted
|
|
1,272
|
|
|
108,420
|
|
|
144,089
|
|
|||
Per share weighted-average exercise price
|
|
$
|
66.59
|
|
|
$
|
93.22
|
|
|
$
|
82.11
|
|
Per share weighted-average grant date fair value
|
|
$
|
10.32
|
|
|
$
|
15.00
|
|
|
$
|
13.54
|
|
|
|
2019
|
|
2018
|
|
2017
|
|||
Expected term in years
|
|
5.0
|
|
|
5.7
|
|
|
5.8
|
|
Risk free interest rate
|
|
1.8
|
%
|
|
2.5
|
%
|
|
2.1
|
%
|
Volatility
|
|
23.1
|
%
|
|
21.5
|
%
|
|
22.9
|
%
|
Dividend yield
|
|
3.0
|
%
|
|
3.0
|
%
|
|
3.0
|
%
|
|
|
Number of
Stock Options |
|
Weighted-Average
Exercise Price |
|||
Options outstanding — December 31, 2018
|
|
451,081
|
|
|
$
|
67.46
|
|
Add: Options granted
|
|
1,272
|
|
|
$
|
66.59
|
|
Less: Options exercised
|
|
34,073
|
|
|
$
|
35.26
|
|
Less: Options forfeited/cancelled
|
|
1,732
|
|
|
$
|
71.89
|
|
Options outstanding — December 31, 2019
|
|
416,548
|
|
|
$
|
70.08
|
|
|
|
Options Vested or Expected to Vest
|
|
Options Exercisable
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Exercise Price
|
|
Number of
Options |
|
Weighted-
Average Remaining Contractual Life (Years) |
|
Weighted-
Average Exercise Price |
|
Aggregate
Intrinsic Value (a) |
|
Number of
Options |
|
Weighted-
Average Exercise Price |
|
Aggregate
Intrinsic Value (a) |
||||||||||
$13.38 — $22.44
|
|
8,745
|
|
|
0.8
|
|
$
|
18.72
|
|
|
$
|
0.4
|
|
|
8,745
|
|
|
$
|
18.72
|
|
|
$
|
0.4
|
|
$24.09 — $42.82
|
|
56,380
|
|
|
3.3
|
|
$
|
34.28
|
|
|
2.0
|
|
|
56,380
|
|
|
$
|
34.28
|
|
|
2.0
|
|
||
$48.19 — $74.20
|
|
121,703
|
|
|
5.8
|
|
$
|
58.45
|
|
|
1.5
|
|
|
120,347
|
|
|
$
|
58.35
|
|
|
1.5
|
|
||
$74.70 — $93.35
|
|
229,720
|
|
|
7.5
|
|
$
|
86.93
|
|
|
—
|
|
|
132,557
|
|
|
$
|
85.35
|
|
|
—
|
|
||
|
|
416,548
|
|
|
6.3
|
|
$
|
70.08
|
|
|
$
|
3.9
|
|
|
318,029
|
|
|
$
|
64.36
|
|
|
$
|
3.9
|
|
(a)
|
Represents the total pre-tax intrinsic value as of December 31, 2019 that option holders would have received had they exercised their options as of such date. The pre-tax intrinsic value is based on the closing market price for the Company's common stock of $70.43 on December 31, 2019.
|
|
|
Number of
Stock Options |
|
Weighted-Average
Grant Date Fair Value |
|||
Outstanding — December 31, 2018
|
|
210,178
|
|
|
$
|
14.21
|
|
Add: Options granted
|
|
1,272
|
|
|
$
|
10.32
|
|
Less: Options vested
|
|
111,615
|
|
|
$
|
14.04
|
|
Less: Options forfeited
|
|
1,316
|
|
|
$
|
13.73
|
|
Outstanding — December 31, 2019
|
|
98,519
|
|
|
$
|
14.41
|
|
|
|
RSUs
|
|
Weighted-Average
Grant Date Fair Value |
|
PSUs
|
|
Weighted-Average
Grant Date Fair Value |
||||||
Outstanding — December 31, 2016
|
|
80,719
|
|
|
$
|
54.91
|
|
|
53,506
|
|
|
$
|
73.79
|
|
Shares granted (a)
|
|
10,318
|
|
|
$
|
76.84
|
|
|
41,883
|
|
|
$
|
81.85
|
|
Shares vested
|
|
(72,451
|
)
|
|
$
|
55.26
|
|
|
—
|
|
|
$
|
—
|
|
Performance Shares vested
|
|
73,838
|
|
|
$
|
52.11
|
|
|
(53,506
|
)
|
|
$
|
73.79
|
|
Shares expired or cancelled
|
|
(3,625
|
)
|
|
$
|
50.48
|
|
|
(506
|
)
|
|
$
|
81.85
|
|
Outstanding — December 31, 2017
|
|
88,799
|
|
|
$
|
53.33
|
|
|
41,377
|
|
|
$
|
81.85
|
|
Shares granted (a)
|
|
10,618
|
|
|
$
|
82.29
|
|
|
40,747
|
|
|
$
|
93.21
|
|
Shares vested
|
|
(72,190
|
)
|
|
$
|
60.24
|
|
|
—
|
|
|
$
|
—
|
|
Performance Shares vested
|
|
33,928
|
|
|
$
|
88.40
|
|
|
(31,421
|
)
|
|
$
|
81.85
|
|
Shares expired or cancelled
|
|
(7,695
|
)
|
|
$
|
84.45
|
|
|
(3,482
|
)
|
|
$
|
84.45
|
|
Outstanding — December 31, 2018
|
|
53,460
|
|
|
$
|
67.53
|
|
|
47,221
|
|
|
$
|
93.21
|
|
Shares granted (a)
|
|
46,556
|
|
|
$
|
67.04
|
|
|
49,730
|
|
|
$
|
69.05
|
|
Shares vested
|
|
(63,595
|
)
|
|
$
|
72.91
|
|
|
—
|
|
|
$
|
—
|
|
Performance Shares vested
|
|
10,354
|
|
|
$
|
93.21
|
|
|
(25,833
|
)
|
|
$
|
93.21
|
|
Shares expired or cancelled
|
|
(2,113
|
)
|
|
$
|
69.35
|
|
|
(4,927
|
)
|
|
$
|
85.67
|
|
Outstanding — December 31, 2019 (b)
|
|
44,662
|
|
|
$
|
65.23
|
|
|
66,191
|
|
|
$
|
75.62
|
|
(a)
|
For the years ended December 31, 2019, 2018 and 2017, includes 43 RSUs, 132 RSUs and 226 RSUs, respectively, that were granted in lieu of cash dividends. Such dividends-in-kind vest concurrently with the underlying RSUs.
|
(b)
|
The aggregate pre-tax intrinsic value of outstanding RSUs as of December 31, 2019 was $3.1 million.
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
|
|
Shares
|
|
$
|
|
Shares
|
|
$
|
|
Shares
|
|
$
|
|||||||||
2019 Stock Purchase Plan
|
|
79,676
|
|
|
$
|
4.9
|
|
|
|
|
|
|
|
|
|
||||||
2018 Stock Purchase Plan
|
|
|
|
|
|
|
|
124,434
|
|
|
$
|
9.3
|
|
|
|
|
|
|
|
||
2017 Stock Purchase Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|||
2016 Stock Purchase Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
85,354
|
|
|
$
|
6.8
|
|
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Net loss from pension and other postretirement benefit liabilities, net of income tax benefits of $31.6 million and $29.9 million, respectively
|
|
$
|
(94.3
|
)
|
|
$
|
(89.6
|
)
|
Unrealized foreign currency translation losses, net of income tax benefits of $0.3 and $0.3, respectively
|
|
(19.0
|
)
|
|
(15.5
|
)
|
||
AOCI
|
|
$
|
(113.3
|
)
|
|
$
|
(105.1
|
)
|
|
|
Year Ended December 31,
|
||||||||||||||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||||||||||||||||||||
|
|
Pretax
Amount |
|
Tax
Effect |
|
Net
Amount |
|
Pretax
Amount |
|
Tax
Effect |
|
Net
Amount |
|
Pretax
Amount |
|
Tax
Effect |
|
Net
Amount |
||||||||||||||||||
Unrealized foreign currency translation gains (losses)
|
|
$
|
(3.5
|
)
|
|
$
|
—
|
|
|
$
|
(3.5
|
)
|
|
$
|
(7.9
|
)
|
|
$
|
(0.1
|
)
|
|
$
|
(8.0
|
)
|
|
$
|
20.0
|
|
|
$
|
—
|
|
|
$
|
20.0
|
|
Adjustment to pension and other benefit liabilities (a)
|
|
(6.4
|
)
|
|
1.7
|
|
|
$
|
(4.7
|
)
|
|
(4.4
|
)
|
|
1.1
|
|
|
(3.3
|
)
|
|
(13.8
|
)
|
|
2.9
|
|
|
(10.9
|
)
|
||||||||
Unrealized loss on "available-for-sale" securities (b)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
|
0.1
|
|
|
(0.3
|
)
|
|||||||||
Other comprehensive income (loss)
|
|
$
|
(9.9
|
)
|
|
$
|
1.7
|
|
|
$
|
(8.2
|
)
|
|
$
|
(12.3
|
)
|
|
$
|
1.0
|
|
|
$
|
(11.3
|
)
|
|
$
|
5.8
|
|
|
$
|
3.0
|
|
|
$
|
8.8
|
|
(a)
|
In conjunction with the Tax Act, the Company early adopted in the fourth quarter of 2017 ASU 2018-02, Reclassification of Certain Tax Effects From Accumulated Other Comprehensive Income (Topic 740) and accordingly reclassified $10.9 million from AOCI to retained earnings to address the stranded tax effects resulting from the effect of lower tax rates in the Tax Act on items with AOCI.
|
(b)
|
The Company adopted ASU 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities as of January 1, 2018. As a result of the adoption, the Company reclassified $0.3 million of unrealized losses (net of $0.1 million income tax effect) on "available-for-sale" securities to beginning retained earnings.
|
|
|
Year Ended December 31, 2019
|
||
Operating lease cost
|
|
$
|
3.1
|
|
Short-term lease cost
|
|
1.5
|
|
|
Variable lease cost (a)
|
|
2.1
|
|
(a)
|
The variable lease costs consist mainly of a warehouse lease where the cost is determined based on the square footage used each month.
|
Year Ending December 31,
|
|
Operating Leases
|
||
2020
|
|
$
|
2.8
|
|
2021
|
|
2.6
|
|
|
2022
|
|
2.3
|
|
|
2023
|
|
2.0
|
|
|
2024
|
|
1.7
|
|
|
Thereafter
|
|
7.4
|
|
|
Total lease payments
|
|
18.8
|
|
|
Less: Imputed interest
|
|
3.9
|
|
|
Total lease liabilities
|
|
$
|
14.9
|
|
Contract Expiration Date
|
|
Location
|
|
Union
|
|
Number of Employees
|
April 2020
|
|
Eerbeek, Netherlands
|
|
CNV, FNV
|
|
(a)
|
August 2020
|
|
Weidach and Bruckmühl, Germany
|
|
IG BCE
|
|
(a)
|
January 2021
|
|
Whiting, WI
|
|
USW
|
|
203
|
June 2021
|
|
Neenah, WI
|
|
USW
|
|
244
|
July 2021
|
|
Munising, MI
|
|
USW
|
|
177
|
November 2021
|
|
Lowville, NY
|
|
USW
|
|
98
|
May 2022
|
|
Appleton, WI
|
|
USW
|
|
89
|
(a)
|
Under Germany and Netherlands laws, union membership is voluntary and does not need to be disclosed to the Company. As a result, the number of employees covered by the collective bargaining agreement with the IG BCE, and the CNV and FNV cannot be determined.
|
|
|
Year Ended
December 31,
|
|||||||
|
|
2019
|
|
2018
|
|
2017
|
|||
Filtration
|
|
42
|
%
|
|
40
|
%
|
|
42
|
%
|
Backings
|
|
24
|
%
|
|
28
|
%
|
|
31
|
%
|
Specialty
|
|
34
|
%
|
|
32
|
%
|
|
27
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
Year Ended
December 31,
|
|||||||
|
|
2019
|
|
2018
|
|
2017
|
|||
Graphic Imaging
|
|
79
|
%
|
|
78
|
%
|
|
80
|
%
|
Packaging
|
|
21
|
%
|
|
18
|
%
|
|
16
|
%
|
Filing/Office
|
|
—
|
%
|
|
4
|
%
|
|
4
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net sales
|
|
|
|
|
|
|
|
|
|
|||
Technical Products
|
|
$
|
541.6
|
|
|
$
|
583.2
|
|
|
$
|
518.6
|
|
Fine Paper and Packaging
|
|
396.9
|
|
|
445.8
|
|
|
455.3
|
|
|||
Other
|
|
—
|
|
|
5.9
|
|
|
6.0
|
|
|||
Consolidated
|
|
$
|
938.5
|
|
|
$
|
1,034.9
|
|
|
$
|
979.9
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Operating income (loss)
|
|
|
|
|
|
|
|
|
|
|||
Technical Products (a)
|
|
$
|
44.6
|
|
|
$
|
50.9
|
|
|
$
|
55.3
|
|
Fine Paper and Packaging (b)
|
|
53.2
|
|
|
29.4
|
|
|
69.5
|
|
|||
Other (c)
|
|
—
|
|
|
(6.4
|
)
|
|
(0.4
|
)
|
|||
Unallocated corporate costs (d)
|
|
(19.5
|
)
|
|
(19.8
|
)
|
|
(20.1
|
)
|
|||
Consolidated
|
|
$
|
78.3
|
|
|
$
|
54.1
|
|
|
$
|
104.3
|
|
(a)
|
Operating income for the year ended December 31, 2019 included restructuring and other non-routine costs of $0.3 million and a curtailment gain of $1.6 million related to the Neenah Coldenhove pension plan. Operating income for the year ended December 31, 2018 included non-cash impairment loss, restructuring and integration costs, and pension settlement charges of $2.5 million, offset by favorable acquisition adjustments of $3.9 million.
|
(b)
|
Operating income for the year ended December 31, 2019 included $5.7 million of non-routine costs, primarily related to idled paper machine costs due to the consolidation of the fine paper manufacturing footprint. Operating income for the year ended December 31, 2018 included non-cash impairment loss, restructuring costs, and pension settlement charges of $24.6 million, offset by favorable insurance settlement of $0.3 million. Operating income for the year ended December 31, 2017 included a favorable insurance settlement of $2.9 million. Operating income for the year ended December 31, 2016 included integration costs of $1.8 million.
|
(c)
|
Operating income for the year ended December 31, 2018 included non-cash impairment loss, restructuring costs, and a pension settlement charge of $6.0 million, offset by favorable insurance settlement of $0.1 million. Operating income for the year ended December 31, 2017 included a favorable insurance settlement of $0.3 million. Operating income for the years ended December 31, 2016 included integration costs of $1.1 million.
|
(d)
|
Unallocated corporate costs for the year ended December 31, 2019 included costs of $0.3 million, consisting of restructuring and other non-routine costs and a SERP settlement charge. Unallocated corporate costs for the year ended December 31, 2018 included restructuring costs and pension settlement charge of $1.9 million. Unallocated corporate costs for the year ended December 31, 2017 included acquisition and integration costs of $1.3 million and $0.6 million from pension plan and SERP settlement costs. December 31, 2016 included $2.7 million of pre-operating costs related to conversion of a fine paper machine to filtration and $0.8 million for a pension plan settlement charge.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|||
Technical Products
|
|
$
|
24.1
|
|
|
$
|
24.4
|
|
|
$
|
20.3
|
|
Fine Paper and Packaging
|
|
13.2
|
|
|
9.9
|
|
|
11.0
|
|
|||
Other
|
|
—
|
|
|
0.2
|
|
|
0.3
|
|
|||
Corporate
|
|
1.6
|
|
|
1.6
|
|
|
1.7
|
|
|||
Consolidated
|
|
$
|
38.9
|
|
|
$
|
36.1
|
|
|
$
|
33.3
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Capital expenditures
|
|
|
|
|
|
|
|
|
|
|||
Technical Products
|
|
$
|
13.1
|
|
|
$
|
28.0
|
|
|
$
|
29.7
|
|
Fine Paper and Packaging
|
|
7.7
|
|
|
8.7
|
|
|
12.5
|
|
|||
Corporate
|
|
0.6
|
|
|
1.4
|
|
|
0.5
|
|
|||
Consolidated
|
|
$
|
21.4
|
|
|
$
|
38.1
|
|
|
$
|
42.7
|
|
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Total Assets (a)
|
|
|
|
|
|
|
||
Technical Products
|
|
$
|
573.8
|
|
|
$
|
599.3
|
|
Fine Paper and Packaging
|
|
217.7
|
|
|
234.7
|
|
||
Corporate and other (b)
|
|
36.3
|
|
|
27.2
|
|
||
Total
|
|
$
|
827.8
|
|
|
$
|
861.2
|
|
(a)
|
Segment identifiable assets are those that are directly used in the segments operations.
|
(b)
|
Corporate assets are primarily deferred income taxes and lease ROU assets.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net sales
|
|
|
|
|
|
|
|
|
|
|||
United States
|
|
$
|
673.0
|
|
|
$
|
744.4
|
|
|
$
|
748.9
|
|
Germany
|
|
196.3
|
|
|
216.5
|
|
|
210.3
|
|
|||
Rest of Europe
|
|
69.2
|
|
|
74.0
|
|
|
20.7
|
|
|||
Consolidated
|
|
$
|
938.5
|
|
|
$
|
1,034.9
|
|
|
$
|
979.9
|
|
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Long-Lived Assets
|
|
|
|
|
|
|
||
United States
|
|
$
|
364.2
|
|
|
$
|
366.3
|
|
Germany
|
|
153.3
|
|
|
157.9
|
|
||
Rest of Europe
|
|
57.6
|
|
|
59.1
|
|
||
Total
|
|
$
|
575.1
|
|
|
$
|
583.3
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Advertising expense (a)
|
|
$
|
4.9
|
|
|
$
|
4.7
|
|
|
$
|
6.0
|
|
Research and development expense
|
|
8.7
|
|
|
9.2
|
|
|
8.9
|
|
(a)
|
Advertising expense and research and development expense are recorded in Selling, general and administrative expenses on the consolidated statements of operations.
|
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
From customers
|
|
$
|
104.1
|
|
|
$
|
116.1
|
|
Less allowance for doubtful accounts and sales discounts
|
|
(1.5
|
)
|
|
(1.3
|
)
|
||
Total
|
|
$
|
102.6
|
|
|
$
|
114.8
|
|
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Inventories by Major Class:
|
|
|
|
|
|
|
||
Raw materials
|
|
$
|
32.8
|
|
|
$
|
35.6
|
|
Work in progress
|
|
26.4
|
|
|
30.1
|
|
||
Finished goods
|
|
67.3
|
|
|
78.3
|
|
||
Supplies and other
|
|
5.2
|
|
|
3.0
|
|
||
|
|
131.7
|
|
|
147.0
|
|
||
Excess of FIFO over LIFO cost
|
|
(8.9
|
)
|
|
(15.4
|
)
|
||
Total
|
|
$
|
122.8
|
|
|
$
|
131.6
|
|
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Prepaid and other current assets
|
|
$
|
9.9
|
|
|
$
|
12.2
|
|
Spare parts
|
|
6.4
|
|
|
6.6
|
|
||
Receivable for income taxes
|
|
2.0
|
|
|
2.8
|
|
||
Total
|
|
$
|
18.3
|
|
|
$
|
21.6
|
|
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Land and land improvements
|
|
$
|
19.4
|
|
|
$
|
19.0
|
|
Buildings
|
|
165.4
|
|
|
156.0
|
|
||
Machinery and equipment
|
|
651.0
|
|
|
650.3
|
|
||
Construction in progress
|
|
14.8
|
|
|
14.9
|
|
||
|
|
850.6
|
|
|
840.2
|
|
||
Less accumulated depreciation
|
|
470.0
|
|
|
444.0
|
|
||
Net Property, Plant and Equipment
|
|
$
|
380.6
|
|
|
$
|
396.2
|
|
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Accrued salaries and employee benefits
|
|
$
|
26.2
|
|
|
$
|
23.9
|
|
Amounts due to customers
|
|
8.9
|
|
|
9.6
|
|
||
Accrued income taxes
|
|
0.5
|
|
|
5.3
|
|
||
Accrued utilities
|
|
3.0
|
|
|
3.9
|
|
||
Accrued interest
|
|
1.2
|
|
|
1.2
|
|
||
Other
|
|
7.2
|
|
|
11.3
|
|
||
Total
|
|
$
|
47.0
|
|
|
$
|
55.2
|
|
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Pension benefits
|
|
$
|
57.1
|
|
|
$
|
54.0
|
|
Post-employment benefits other than pensions (a)
|
|
36.0
|
|
|
38.9
|
|
||
Total
|
|
$
|
93.1
|
|
|
$
|
92.9
|
|
(a)
|
Post-employment benefits other than pensions included $1.7 million of SRCP benefits, $0.7 million of Canadian long-term disability benefits, and $0.2 million of other long-term benefits as of December 31, 2019. As of December 31, 2018, $1.7 million of SRCP benefits and $0.8 million of Canadian long-term disability benefits were included.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Cash paid during the year for interest, net of interest expense capitalized
|
|
$
|
10.9
|
|
|
$
|
11.9
|
|
|
$
|
11.3
|
|
Cash paid during the year for income taxes, net of refunds
|
|
13.3
|
|
|
7.6
|
|
|
7.6
|
|
|||
Non-cash investing activities:
|
|
|
|
|
|
|
|
|
|
|||
Liability for equipment acquired
|
|
3.2
|
|
|
3.4
|
|
|
5.4
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Accounts receivable
|
|
$
|
11.6
|
|
|
$
|
(0.9
|
)
|
|
$
|
(10.2
|
)
|
Inventories
|
|
8.2
|
|
|
3.8
|
|
|
(11.7
|
)
|
|||
Income taxes receivable/payable
|
|
(5.4
|
)
|
|
(1.8
|
)
|
|
4.5
|
|
|||
Prepaid and other current assets
|
|
2.4
|
|
|
(1.8
|
)
|
|
(0.4
|
)
|
|||
Accounts payable
|
|
(14.0
|
)
|
|
0.3
|
|
|
10.6
|
|
|||
Accrued expenses
|
|
(3.4
|
)
|
|
(0.6
|
)
|
|
(4.2
|
)
|
|||
Other
|
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
|||
Total
|
|
$
|
(0.6
|
)
|
|
$
|
(1.0
|
)
|
|
$
|
(11.8
|
)
|
|
|
2019 Quarters
|
||||||||||||||||||
|
|
First
|
|
Second (a)
|
|
Third (b)
|
|
Fourth (c)
|
|
Year
|
||||||||||
Net Sales
|
|
$
|
239.7
|
|
|
$
|
253.4
|
|
|
$
|
231.8
|
|
|
$
|
213.6
|
|
|
$
|
938.5
|
|
Gross Profit
|
|
43.7
|
|
|
50.7
|
|
|
44.7
|
|
|
44.3
|
|
|
183.4
|
|
|||||
Operating Income (Loss)
|
|
17.4
|
|
|
19.8
|
|
|
19.0
|
|
|
22.1
|
|
|
78.3
|
|
|||||
Income (Loss) From Continuing Operations
|
|
11.8
|
|
|
13.6
|
|
|
14.4
|
|
|
15.6
|
|
|
55.4
|
|
|||||
Earnings (Loss) Per Common Share From Continuing Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
0.70
|
|
|
$
|
0.80
|
|
|
$
|
0.85
|
|
|
$
|
0.92
|
|
|
$
|
3.27
|
|
Diluted
|
|
$
|
0.69
|
|
|
$
|
0.80
|
|
|
$
|
0.84
|
|
|
$
|
0.92
|
|
|
$
|
3.26
|
|
(a)
|
Operating income includes idled paper machine costs of $2.0 million, indirect tax audit costs for 2012-15 of $0.6 million, and restructuring and other non-routine costs of $0.9 million.
|
(b)
|
Operating income includes idled paper machine costs of $2.4 million, indirect tax audit costs for 2012-15 of $0.1 million, a favorable adjustment to restructuring and other non-routine costs of $0.2 million, and a SERP settlement charge of $0.1 million.
|
(c)
|
Operating income includes idled paper machine costs of $0.3 million, a pension plan curtailment gain of $1.6 million, and a pension plan curtailment charge of $0.1 million.
|
|
|
2018 Quarters
|
||||||||||||||||||
|
|
First (d)
|
|
Second (e)
|
|
Third (f)
|
|
Fourth (g)
|
|
Year
|
||||||||||
Net Sales
|
|
$
|
266.5
|
|
|
$
|
271.3
|
|
|
$
|
256.2
|
|
|
$
|
240.9
|
|
|
$
|
1,034.9
|
|
Gross Profit
|
|
52.4
|
|
|
55.1
|
|
|
41.3
|
|
|
34.6
|
|
|
183.4
|
|
|||||
Operating Income
|
|
24.1
|
|
|
(4.3
|
)
|
|
16.5
|
|
|
17.8
|
|
|
54.1
|
|
|||||
Income From Continuing Operations
|
|
16.2
|
|
|
(4.8
|
)
|
|
12.9
|
|
|
12.9
|
|
|
37.2
|
|
|||||
Earnings Per Common Share From Continuing Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic
|
|
$
|
0.96
|
|
|
$
|
(0.29
|
)
|
|
$
|
0.76
|
|
|
$
|
0.77
|
|
|
$
|
2.20
|
|
Diluted
|
|
$
|
0.95
|
|
|
$
|
(0.29
|
)
|
|
$
|
0.75
|
|
|
$
|
0.76
|
|
|
$
|
2.17
|
|
(d)
|
Income from continuing operations includes an unfavorable prior year tax adjustment of $0.9 million related to one-time taxes on foreign earnings under the Tax Act and an after-tax SERP settlement charge of $0.6 million.
|
(e)
|
Operating loss includes an impairment loss of $32.0 million, pension settlement charges of $1.0 million and integration and restructuring charges of $0.3 million.
|
(f)
|
Operating income includes a favorable acquisition-related adjustment of $3.1 million, a favorable insurance settlement of $0.4 million, and unfavorable adjustments to the impairment loss of $2.0 million and $2.2 million of integration and restructuring charges.
|
(g)
|
Operating income includes favorable adjustments to the impairment loss of $2.9 million and $0.4 million to integration and restructuring costs and a favorable acquisition-related adjustment of $0.8 million. Income from continuing operations includes a favorable tax adjustment related to a Netherlands tax rate change of $0.7 million.
|
Description
|
|
Balance at
Beginning
of Period
|
|
Charged to
Costs and
Expenses
|
|
Charged
to Other
Accounts
|
|
Write-offs
and
Reclassifications
|
|
Balance at
End of Period
|
||||||||||
December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Allowances deducted from assets to which they apply
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Allowance for doubtful accounts
|
|
$
|
0.8
|
|
|
$
|
0.5
|
|
|
$
|
—
|
|
|
$
|
(0.3
|
)
|
|
$
|
1.0
|
|
Allowance for sales discounts
|
|
0.5
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
0.4
|
|
|||||
Valuation allowance – deferred income taxes
|
|
2.7
|
|
|
—
|
|
|
3.1
|
|
|
—
|
|
|
5.8
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Allowances deducted from assets to which they apply
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Allowance for doubtful accounts
|
|
$
|
0.8
|
|
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
(0.1
|
)
|
|
$
|
0.8
|
|
Allowance for sales discounts
|
|
0.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.5
|
|
|||||
Valuation allowance – deferred income taxes
|
|
0.4
|
|
|
0.1
|
|
|
2.2
|
|
|
—
|
|
|
2.7
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Allowances deducted from assets to which they apply
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Allowance for doubtful accounts
|
|
$
|
1.0
|
|
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
(0.4
|
)
|
|
$
|
0.8
|
|
Allowance for sales discounts
|
|
0.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.5
|
|
|||||
Valuation allowance – deferred income taxes
|
|
3.5
|
|
|
—
|
|
|
—
|
|
|
(3.1
|
)
|
|
0.4
|
|
1 Year Neenah Chart |
1 Month Neenah Chart |
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