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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Xerium Technologies New (delisted) | NYSE:XRM | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 13.49 | 0 | 01:00:00 |
ý
|
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
¨
|
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
DELAWARE
|
42-1558674
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(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
|
|
14101 Capital Boulevard
Youngsville, North Carolina
|
27596
|
(Address of principal executive offices)
|
(Zip Code)
|
Large accelerated filer
|
|
£
|
|
Accelerated filer
|
|
x
|
|
Smaller reporting company
|
|
£
|
Non-accelerated filer
|
|
£
|
|
(Do not check if a smaller reporting company)
|
|
|
|
Emerging growth company
|
|
£
|
|
|
|
Page
|
Item 1.
|
Unaudited
Financial Statements
|
|
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
||
|
|
|
Item 1.
|
||
|
|
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Item 1A.
|
||
|
|
|
Item 5.
|
Other Information
|
|
|
|
|
Item 6.
|
ITEM 1.
|
UNAUDITED FINANCIAL STATEMENTS
|
|
June 30, 2017
|
|
December 31,
2016 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
11,059
|
|
|
$
|
12,808
|
|
Accounts receivable, net
|
76,245
|
|
|
68,667
|
|
||
Inventories, net
|
76,497
|
|
|
70,822
|
|
||
Prepaid expenses
|
6,892
|
|
|
6,325
|
|
||
Other current assets
|
17,022
|
|
|
15,784
|
|
||
Total current assets
|
187,715
|
|
|
174,406
|
|
||
Property and equipment, net
|
284,884
|
|
|
284,101
|
|
||
Goodwill
|
60,598
|
|
|
56,783
|
|
||
Intangible assets
|
7,426
|
|
|
7,330
|
|
||
Non-current deferred tax asset
|
12,776
|
|
|
10,737
|
|
||
Other assets
|
8,105
|
|
|
8,556
|
|
||
Total assets
|
$
|
561,504
|
|
|
$
|
541,913
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Notes payable
|
$
|
7,837
|
|
|
$
|
7,328
|
|
Accounts payable
|
37,989
|
|
|
36,158
|
|
||
Accrued expenses
|
65,144
|
|
|
64,532
|
|
||
Current maturities of long-term debt
|
10,780
|
|
|
8,600
|
|
||
Total current liabilities
|
121,750
|
|
|
116,618
|
|
||
Long-term debt, net of current maturities
|
479,773
|
|
|
472,923
|
|
||
Liabilities under capital leases
|
17,464
|
|
|
19,236
|
|
||
Non-current deferred tax liability
|
8,661
|
|
|
7,157
|
|
||
Pension, other post-retirement and post-employment obligations
|
64,217
|
|
|
65,026
|
|
||
Other long-term liabilities
|
8,671
|
|
|
7,858
|
|
||
Commitments and contingencies
|
|
|
|
|
|
||
Stockholders’ deficit
|
|
|
|
||||
Preferred stock, $0.001 par value, 1,000,000 shares authorized; no shares outstanding as of June 30, 2017 and December 31, 2016
|
—
|
|
|
—
|
|
||
Common stock, $0.001 par value, 20,000,000 shares authorized; 16,341,266 and 16,152,946 shares outstanding as of June 30, 2017 and December 31, 2016, respectively
|
16
|
|
|
16
|
|
||
Paid-in capital
|
432,036
|
|
|
430,823
|
|
||
Accumulated deficit
|
(449,311
|
)
|
|
(443,066
|
)
|
||
Accumulated other comprehensive loss
|
(121,773
|
)
|
|
(134,678
|
)
|
||
Total stockholders’ deficit
|
(139,032
|
)
|
|
(146,905
|
)
|
||
Total liabilities and stockholders’ deficit
|
$
|
561,504
|
|
|
$
|
541,913
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net Sales
|
$
|
120,339
|
|
|
$
|
123,973
|
|
|
$
|
240,205
|
|
|
$
|
238,938
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of products sold
|
71,454
|
|
|
75,782
|
|
|
143,824
|
|
|
147,210
|
|
||||
Selling
|
15,936
|
|
|
15,735
|
|
|
31,610
|
|
|
31,456
|
|
||||
General and administrative
|
15,460
|
|
|
13,427
|
|
|
28,114
|
|
|
24,934
|
|
||||
Research and development
|
1,666
|
|
|
1,545
|
|
|
3,410
|
|
|
3,486
|
|
||||
Restructuring
|
874
|
|
|
2,777
|
|
|
4,038
|
|
|
5,609
|
|
||||
|
105,390
|
|
|
109,266
|
|
|
210,996
|
|
|
212,695
|
|
||||
Income from operations
|
14,949
|
|
|
14,707
|
|
|
29,209
|
|
|
26,243
|
|
||||
Interest expense, net
|
(13,281
|
)
|
|
(10,658
|
)
|
|
(26,544
|
)
|
|
(20,999
|
)
|
||||
Loss on extinguishment of debt
|
(7
|
)
|
|
—
|
|
|
(32
|
)
|
|
—
|
|
||||
Foreign exchange loss
|
(1,246
|
)
|
|
(72
|
)
|
|
(2,371
|
)
|
|
(47
|
)
|
||||
Income before provision for income taxes
|
415
|
|
|
3,977
|
|
|
262
|
|
|
5,197
|
|
||||
Provision for income taxes
|
(3,826
|
)
|
|
(1,867
|
)
|
|
(6,507
|
)
|
|
(4,532
|
)
|
||||
Net (loss) income
|
$
|
(3,411
|
)
|
|
$
|
2,110
|
|
|
$
|
(6,245
|
)
|
|
$
|
665
|
|
Comprehensive (loss) income
|
$
|
(146
|
)
|
|
$
|
6,508
|
|
|
$
|
6,660
|
|
|
$
|
13,881
|
|
Net (loss) income per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.21
|
)
|
|
$
|
0.13
|
|
|
$
|
(0.39
|
)
|
|
$
|
0.04
|
|
Diluted
|
$
|
(0.21
|
)
|
|
$
|
0.13
|
|
|
$
|
(0.39
|
)
|
|
$
|
0.04
|
|
Shares used in computing net (loss) income per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
16,262,867
|
|
|
15,995,071
|
|
|
16,208,293
|
|
|
15,891,309
|
|
||||
Diluted
|
16,262,867
|
|
|
16,619,082
|
|
|
16,208,293
|
|
|
16,787,087
|
|
|
Six Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
Operating activities
|
|
|
|
||||
Net (loss) income
|
$
|
(6,245
|
)
|
|
$
|
665
|
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
|
|
|
|
||||
Stock-based compensation
|
2,046
|
|
|
1,426
|
|
||
Depreciation
|
15,662
|
|
|
16,082
|
|
||
Amortization of intangible assets
|
546
|
|
|
304
|
|
||
Deferred financing cost amortization
|
1,810
|
|
|
1,542
|
|
||
Foreign exchange loss on revaluation of debt
|
534
|
|
|
151
|
|
||
Deferred taxes
|
312
|
|
|
(797
|
)
|
||
Asset impairment
|
55
|
|
|
—
|
|
||
(Gain) loss on disposition of property and equipment
|
(85
|
)
|
|
78
|
|
||
Loss on extinguishment of debt
|
32
|
|
|
—
|
|
||
Provision (benefit) for doubtful accounts
|
142
|
|
|
(16
|
)
|
||
Change in assets and liabilities which (used) provided cash:
|
|
|
|
||||
Accounts receivable
|
(5,400
|
)
|
|
1,003
|
|
||
Inventories
|
(3,213
|
)
|
|
2,353
|
|
||
Prepaid expenses
|
(441
|
)
|
|
(851
|
)
|
||
Other current assets
|
(1,179
|
)
|
|
71
|
|
||
Accounts payable and accrued expenses
|
528
|
|
|
(5,413
|
)
|
||
Deferred and other long-term liabilities
|
(2,106
|
)
|
|
533
|
|
||
Net cash provided by operating activities
|
2,998
|
|
|
17,131
|
|
||
Investing activities
|
|
|
|
||||
Capital expenditures
|
(8,517
|
)
|
|
(5,972
|
)
|
||
Proceeds from disposals of property and equipment
|
290
|
|
|
117
|
|
||
Acquisition costs
|
—
|
|
|
(16,225
|
)
|
||
Net cash used in investing activities
|
(8,227
|
)
|
|
(22,080
|
)
|
||
Financing activities
|
|
|
|
||||
Proceeds from borrowings
|
66,578
|
|
|
39,864
|
|
||
Principal payments on debt
|
(59,282
|
)
|
|
(29,703
|
)
|
||
Payment of financing fees
|
(393
|
)
|
|
(24
|
)
|
||
Payment of obligations under capital leases
|
(2,794
|
)
|
|
(1,726
|
)
|
||
Employee taxes paid on equity awards
|
(832
|
)
|
|
(1,031
|
)
|
||
Net cash provided by financing activities
|
3,277
|
|
|
7,380
|
|
||
Effect of exchange rate changes on cash flows
|
203
|
|
|
(1,679
|
)
|
||
Net (decrease) increase in cash
|
(1,749
|
)
|
|
752
|
|
||
Cash and cash equivalents at beginning of period
|
12,808
|
|
|
9,839
|
|
||
Cash and cash equivalents at end of period
|
$
|
11,059
|
|
|
$
|
10,591
|
|
|
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
Raw materials
|
$
|
14,791
|
|
|
$
|
14,089
|
|
Work in process
|
27,486
|
|
|
25,879
|
|
||
Finished goods (includes consigned inventory of $7,580 at June 30, 2017 and $6,673 at December 31, 2016)
|
40,963
|
|
|
37,155
|
|
||
Inventory allowances
|
(6,743
|
)
|
|
(6,301
|
)
|
||
|
$
|
76,497
|
|
|
$
|
70,822
|
|
|
Beginning Balance
|
|
Charged to
Cost
of Sales
|
|
Effect of Foreign
Currency
Translation
|
|
Deduction
from
Reserves
|
|
Ending Balance
|
||||||||||
Six Months Ended June 30, 2017:
|
$
|
2,203
|
|
|
$
|
271
|
|
|
$
|
29
|
|
|
$
|
(501
|
)
|
|
$
|
2,002
|
|
Six Months Ended June 30, 2016:
|
$
|
2,175
|
|
|
$
|
796
|
|
|
$
|
56
|
|
|
$
|
(431
|
)
|
|
$
|
2,596
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Weighted-average common shares outstanding–basic
|
16,262,867
|
|
|
15,995,071
|
|
|
16,208,293
|
|
|
15,891,309
|
|
Dilutive effect of stock-based compensation awards outstanding
|
—
|
|
|
624,011
|
|
|
—
|
|
|
895,778
|
|
Weighted-average common shares outstanding–diluted
|
16,262,867
|
|
|
16,619,082
|
|
|
16,208,293
|
|
|
16,787,087
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Anti-dilutive securities
|
988,100
|
|
|
637,621
|
|
|
988,100
|
|
|
365,854
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
Fair value of derivative liability
|
$
|
(836
|
)
|
|
$
|
(1,461
|
)
|
|
Three Months Ended June 30, 2017
|
|
Three Months Ended June 30, 2016
|
||||
Change in fair value of derivative included in foreign exchange loss
|
$
|
(1,169
|
)
|
|
$
|
(1,101
|
)
|
|
Six Months Ended June 30, 2017
|
|
Six Months Ended June 30, 2016
|
||||
Change in fair value of derivative included in foreign exchange (loss) gain
|
$
|
(1,023
|
)
|
|
$
|
69
|
|
|
Notional Sold
|
|
Notional Purchased
|
|
|||
Non-designated hedges of foreign exchange risk
|
$
|
20,864
|
|
|
$
|
(24,096
|
)
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
Notes (Secured), payable semi-annually–U.S. Dollar denominated interest rate fixed at 9.50%. Sold at a price equal to 98.54% of their face value. Matures August of 2021.
|
$
|
480,000
|
|
|
$
|
480,000
|
|
Notes payable, working capital loan, variable interest rate at 1.60%. Matures June 30, 2017, with one-year rollover option.
|
7,837
|
|
|
7,328
|
|
||
Fixed asset loan contract, variable interest rate of 5.23%. Matures June of 2020.
|
6,789
|
|
|
7,511
|
|
||
Other debt
|
18,710
|
|
|
10,448
|
|
||
Total debt (excluding long-term capital leases and deferred finance fees)
|
513,336
|
|
|
505,287
|
|
||
Less deferred financing costs and debt discount
|
(14,946
|
)
|
|
(16,436
|
)
|
||
Less current maturities of long term debt and notes payable
|
(18,617
|
)
|
|
(15,928
|
)
|
||
Total long term debt
|
$
|
479,773
|
|
|
$
|
472,923
|
|
•
|
declare dividends or redeem or repurchase equity interests;
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Service cost
|
$
|
320
|
|
|
$
|
418
|
|
|
$
|
696
|
|
|
$
|
823
|
|
Interest cost
|
1,079
|
|
|
1,531
|
|
|
2,346
|
|
|
3,016
|
|
||||
Expected return on plan assets
|
(1,273
|
)
|
|
(1,596
|
)
|
|
(2,769
|
)
|
|
(3,144
|
)
|
||||
Amortization of net loss
|
501
|
|
|
575
|
|
|
1,091
|
|
|
1,133
|
|
||||
Net periodic benefit cost
|
$
|
627
|
|
|
$
|
928
|
|
|
$
|
1,364
|
|
|
$
|
1,828
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net (loss) income
|
$
|
(3,411
|
)
|
|
$
|
2,110
|
|
|
$
|
(6,245
|
)
|
|
$
|
665
|
|
Foreign currency translation adjustments
|
3,250
|
|
|
1,268
|
|
|
13,015
|
|
|
9,728
|
|
||||
Pension liability changes under Topic 715
|
15
|
|
|
3,130
|
|
|
(110
|
)
|
|
3,488
|
|
||||
Comprehensive (loss) income
|
$
|
(146
|
)
|
|
$
|
6,508
|
|
|
$
|
6,660
|
|
|
$
|
13,881
|
|
|
Foreign
Currency
Translation
Adjustment
|
|
Pension
Liability
Changes Under
Topic 715
|
|
Accumulated
Other
Comprehensive
(Loss) Income
|
||||||
Balance at March 31, 2017
|
$
|
(85,467
|
)
|
|
$
|
(39,571
|
)
|
|
$
|
(125,038
|
)
|
Other comprehensive income (loss) before reclassifications
|
3,250
|
|
|
(486
|
)
|
|
2,764
|
|
|||
Amounts reclassified from other comprehensive loss:
|
|
|
|
|
|
||||||
Amortization of actuarial losses
|
—
|
|
|
501
|
|
|
501
|
|
|||
Net current period other comprehensive income
|
3,250
|
|
|
15
|
|
|
3,265
|
|
|||
Balance at June 30, 2017
|
$
|
(82,217
|
)
|
|
$
|
(39,556
|
)
|
|
$
|
(121,773
|
)
|
|
|
|
|
|
|
|
Foreign
Currency
Translation
Adjustment
|
|
Pension
Liability
Changes Under
Topic 715
|
|
Accumulated
Other
Comprehensive
(Loss) Income
|
||||||
Balance at December 31, 2016
|
$
|
(95,232
|
)
|
|
$
|
(39,446
|
)
|
|
$
|
(134,678
|
)
|
Other comprehensive (loss) income before reclassifications
|
13,015
|
|
|
(1,201
|
)
|
|
11,814
|
|
|||
Amounts reclassified from other comprehensive loss
|
|
|
|
|
|
||||||
Amortization of actuarial losses
|
—
|
|
|
1,091
|
|
|
1,091
|
|
|||
Net current period other comprehensive income (loss)
|
13,015
|
|
|
(110
|
)
|
|
12,905
|
|
|||
Balance at June 30, 2017
|
$
|
(82,217
|
)
|
|
$
|
(39,556
|
)
|
|
$
|
(121,773
|
)
|
|
Balance at December 31, 2016
|
|
Charges
|
|
Currency
Effects |
|
Cash
Payments |
|
Balance at
June 30, 2017 |
||||||||||
Severance and other benefits
|
$
|
3,805
|
|
|
$
|
2,626
|
|
|
$
|
311
|
|
|
$
|
(3,316
|
)
|
|
$
|
3,426
|
|
Facility costs and other
|
392
|
|
|
1,412
|
|
|
32
|
|
|
(1,581
|
)
|
|
255
|
|
|||||
Total
|
$
|
4,197
|
|
|
$
|
4,038
|
|
|
$
|
343
|
|
|
$
|
(4,897
|
)
|
|
$
|
3,681
|
|
|
Balance at December 31, 2015
|
|
Charges
|
|
Currency
Effects |
|
Cash
Payments |
|
Balance at
June 30, 2016 |
||||||||||
Severance and other benefits
|
$
|
5,308
|
|
|
$
|
3,416
|
|
|
$
|
58
|
|
|
$
|
(3,681
|
)
|
|
$
|
5,101
|
|
Facility costs and other
|
903
|
|
|
2,193
|
|
|
10
|
|
|
(2,797
|
)
|
|
309
|
|
|||||
Total
|
$
|
6,211
|
|
|
$
|
5,609
|
|
|
$
|
68
|
|
|
$
|
(6,478
|
)
|
|
$
|
5,410
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Clothing
|
$
|
162
|
|
|
$
|
1,674
|
|
|
$
|
2,638
|
|
|
$
|
3,126
|
|
Roll Covers
|
681
|
|
|
950
|
|
|
1,308
|
|
|
1,841
|
|
||||
Corporate
|
31
|
|
|
153
|
|
|
92
|
|
|
642
|
|
||||
Total
|
$
|
874
|
|
|
$
|
2,777
|
|
|
$
|
4,038
|
|
|
$
|
5,609
|
|
|
Clothing
|
|
Roll
Covers |
|
Corporate
|
|
Total
|
||||||||
Three months ended June 30, 2017
|
|
|
|
|
|
|
|
||||||||
Net Sales
|
$
|
72,425
|
|
|
$
|
47,914
|
|
|
$
|
—
|
|
|
$
|
120,339
|
|
Segment Earnings (Loss)
|
$
|
20,906
|
|
|
$
|
10,566
|
|
|
$
|
(4,292
|
)
|
|
$
|
27,180
|
|
Three months ended June 30, 2016
|
|
|
|
|
|
|
|
||||||||
Net Sales
|
$
|
74,819
|
|
|
$
|
49,154
|
|
|
$
|
—
|
|
|
$
|
123,973
|
|
Segment Earnings (Loss)
|
$
|
21,186
|
|
|
$
|
10,594
|
|
|
$
|
(4,088
|
)
|
|
$
|
27,692
|
|
|
|
|
|
|
|
|
|
||||||||
Six months ended June 30, 2017
|
|
|
|
|
|
|
|
||||||||
Net Sales
|
$
|
144,920
|
|
|
$
|
95,285
|
|
|
$
|
—
|
|
|
$
|
240,205
|
|
Segment Earnings (Loss)
|
$
|
41,704
|
|
|
$
|
20,361
|
|
|
$
|
(8,329
|
)
|
|
$
|
53,736
|
|
Six months ended June 30, 2016
|
|
|
|
|
|
|
|
||||||||
Net Sales
|
$
|
146,156
|
|
|
$
|
92,782
|
|
|
$
|
—
|
|
|
$
|
238,938
|
|
Segment Earnings (Loss)
|
$
|
39,803
|
|
|
$
|
19,786
|
|
|
$
|
(7,995
|
)
|
|
$
|
51,594
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Segment Earnings (Loss):
|
|
|
|
|
|
|
|
||||||||
Clothing
|
$
|
20,906
|
|
|
$
|
21,186
|
|
|
$
|
41,704
|
|
|
$
|
39,803
|
|
Roll Covers
|
10,566
|
|
|
10,594
|
|
|
20,361
|
|
|
19,786
|
|
||||
Corporate
|
(4,292
|
)
|
|
(4,088
|
)
|
|
(8,329
|
)
|
|
(7,995
|
)
|
||||
Stock-based compensation
|
(328
|
)
|
|
(834
|
)
|
|
(859
|
)
|
|
(1,426
|
)
|
||||
CEO transition expense
|
(3,039
|
)
|
|
—
|
|
|
(3,039
|
)
|
|
—
|
|
||||
Interest expense, net
|
(13,281
|
)
|
|
(10,658
|
)
|
|
(26,544
|
)
|
|
(20,999
|
)
|
||||
Depreciation and amortization
|
(8,115
|
)
|
|
(8,392
|
)
|
|
(16,208
|
)
|
|
(16,386
|
)
|
||||
Loss on extinguishment of debt
|
(7
|
)
|
|
—
|
|
|
(32
|
)
|
|
—
|
|
||||
Restructuring expense
|
(874
|
)
|
|
(2,777
|
)
|
|
(4,038
|
)
|
|
(5,609
|
)
|
||||
Other non-recurring expense
|
(69
|
)
|
|
(433
|
)
|
|
(114
|
)
|
|
(668
|
)
|
||||
Plant startup costs
|
(166
|
)
|
|
(539
|
)
|
|
(646
|
)
|
|
(1,285
|
)
|
||||
Unrealized foreign exchange loss
|
(886
|
)
|
|
(82
|
)
|
|
$
|
(1,994
|
)
|
|
$
|
(24
|
)
|
||
Income before provision for income taxes
|
$
|
415
|
|
|
$
|
3,977
|
|
|
$
|
262
|
|
|
$
|
5,197
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
RSU, Options and DSU Awards
(1)
|
|
$
|
1,515
|
|
|
$
|
834
|
|
|
$
|
2,046
|
|
|
$
|
1,426
|
|
(1)
|
Related to RSUs, Options and DSUs awarded to certain employees and non-employee directors. Q2 2017 includes approx.
$1.2 million
of expense related to the accelerated vesting on RSU's upon CEO transition. Upon transition
146,134
shares were issued to the former CEO.
|
|
Parent
|
|
Total
Guarantors |
|
Total Non
Guarantors |
|
Other
Eliminations |
|
The
Company |
||||||||||
Net sales
|
$
|
—
|
|
|
$
|
45,920
|
|
|
$
|
80,736
|
|
|
$
|
(6,317
|
)
|
|
$
|
120,339
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of products sold
|
58
|
|
|
29,637
|
|
|
48,033
|
|
|
(6,274
|
)
|
|
71,454
|
|
|||||
Selling
|
256
|
|
|
5,317
|
|
|
10,363
|
|
|
—
|
|
|
15,936
|
|
|||||
General and administrative
|
5,586
|
|
|
591
|
|
|
9,283
|
|
|
—
|
|
|
15,460
|
|
|||||
Research and development
|
200
|
|
|
1,017
|
|
|
449
|
|
|
—
|
|
|
1,666
|
|
|||||
Restructuring
|
31
|
|
|
207
|
|
|
636
|
|
|
—
|
|
|
874
|
|
|||||
|
6,131
|
|
|
36,769
|
|
|
68,764
|
|
|
(6,274
|
)
|
|
105,390
|
|
|||||
(Loss) income from operations
|
(6,131
|
)
|
|
9,151
|
|
|
11,972
|
|
|
(43
|
)
|
|
14,949
|
|
|||||
Interest expense, net
|
(12,289
|
)
|
|
(436
|
)
|
|
(556
|
)
|
|
—
|
|
|
(13,281
|
)
|
|||||
Foreign exchange (loss) gain
|
(1,296
|
)
|
|
152
|
|
|
(102
|
)
|
|
—
|
|
|
(1,246
|
)
|
|||||
Equity in subsidiaries income
|
6,289
|
|
|
19,453
|
|
|
—
|
|
|
(25,742
|
)
|
|
—
|
|
|||||
Loss on extinguishment of debt
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|||||
Dividend income (expense), net
|
9,966
|
|
|
(1,275
|
)
|
|
12,384
|
|
|
(21,075
|
)
|
|
—
|
|
|||||
(Loss) income before provision for income taxes
|
(3,468
|
)
|
|
27,045
|
|
|
23,698
|
|
|
(46,860
|
)
|
|
415
|
|
|||||
Benefit from (provision for) income taxes
|
57
|
|
|
(322
|
)
|
|
(3,561
|
)
|
|
—
|
|
|
(3,826
|
)
|
|||||
Net (loss) income
|
$
|
(3,411
|
)
|
|
$
|
26,723
|
|
|
$
|
20,137
|
|
|
$
|
(46,860
|
)
|
|
$
|
(3,411
|
)
|
Comprehensive (loss) income
|
$
|
(4,346
|
)
|
|
$
|
26,808
|
|
|
$
|
24,252
|
|
|
$
|
(46,860
|
)
|
|
$
|
(146
|
)
|
|
Parent
|
|
Total
Guarantors |
|
Total Non
Guarantors |
|
Other
Eliminations |
|
The
Company |
||||||||||
Net sales
|
$
|
—
|
|
|
$
|
46,080
|
|
|
$
|
85,386
|
|
|
$
|
(7,493
|
)
|
|
$
|
123,973
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of products sold
|
—
|
|
|
30,738
|
|
|
52,662
|
|
|
(7,618
|
)
|
|
75,782
|
|
|||||
Selling
|
197
|
|
|
5,131
|
|
|
10,407
|
|
|
—
|
|
|
15,735
|
|
|||||
General and administrative
|
3,479
|
|
|
1,047
|
|
|
8,901
|
|
|
—
|
|
|
13,427
|
|
|||||
Research and development
|
182
|
|
|
928
|
|
|
435
|
|
|
—
|
|
|
1,545
|
|
|||||
Restructuring
|
213
|
|
|
640
|
|
|
1,924
|
|
|
—
|
|
|
2,777
|
|
|||||
|
4,071
|
|
|
38,484
|
|
|
74,329
|
|
|
(7,618
|
)
|
|
109,266
|
|
|||||
(Loss) income from operations
|
(4,071
|
)
|
|
7,596
|
|
|
11,057
|
|
|
125
|
|
|
14,707
|
|
|||||
Interest (expense) income, net
|
(10,011
|
)
|
|
320
|
|
|
(967
|
)
|
|
—
|
|
|
(10,658
|
)
|
|||||
Foreign exchange (loss) gain
|
(134
|
)
|
|
19
|
|
|
43
|
|
|
—
|
|
|
(72
|
)
|
|||||
Equity in subsidiaries income
|
13,921
|
|
|
8,755
|
|
|
—
|
|
|
(22,676
|
)
|
|
—
|
|
|||||
Dividend income (expense), net
|
2,400
|
|
|
—
|
|
|
—
|
|
|
(2,400
|
)
|
|
—
|
|
|||||
Income (loss) before provision for income taxes
|
2,105
|
|
|
16,690
|
|
|
10,133
|
|
|
(24,951
|
)
|
|
3,977
|
|
|||||
Benefit from (provision for) income taxes
|
5
|
|
|
(261
|
)
|
|
(1,611
|
)
|
|
—
|
|
|
(1,867
|
)
|
|||||
Net income (loss)
|
$
|
2,110
|
|
|
$
|
16,429
|
|
|
$
|
8,522
|
|
|
$
|
(24,951
|
)
|
|
$
|
2,110
|
|
Comprehensive income (loss)
|
$
|
3,205
|
|
|
$
|
19,002
|
|
|
$
|
9,252
|
|
|
$
|
(24,951
|
)
|
|
$
|
6,508
|
|
|
Parent
|
|
Total Guarantors
|
|
Total Non Guarantors
|
|
Other Eliminations
|
|
The Company
|
||||||||||
Net sales
|
$
|
—
|
|
|
$
|
92,990
|
|
|
$
|
161,830
|
|
|
$
|
(14,615
|
)
|
|
$
|
240,205
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of products sold
|
57
|
|
|
60,711
|
|
|
97,628
|
|
|
(14,572
|
)
|
|
143,824
|
|
|||||
Selling
|
489
|
|
|
10,361
|
|
|
20,760
|
|
|
—
|
|
|
31,610
|
|
|||||
General and administrative
|
8,288
|
|
|
1,565
|
|
|
18,261
|
|
|
—
|
|
|
28,114
|
|
|||||
Research and development
|
499
|
|
|
1,948
|
|
|
963
|
|
|
—
|
|
|
3,410
|
|
|||||
Restructuring
|
92
|
|
|
848
|
|
|
3,098
|
|
|
—
|
|
|
4,038
|
|
|||||
|
9,425
|
|
|
75,433
|
|
|
140,710
|
|
|
(14,572
|
)
|
|
210,996
|
|
|||||
(Loss) income from operations
|
(9,425
|
)
|
|
17,557
|
|
|
21,120
|
|
|
(43
|
)
|
|
29,209
|
|
|||||
Interest expense, net
|
(24,627
|
)
|
|
(784
|
)
|
|
(1,133
|
)
|
|
—
|
|
|
(26,544
|
)
|
|||||
Foreign exchange (loss) gain
|
(1,767
|
)
|
|
218
|
|
|
(822
|
)
|
|
—
|
|
|
(2,371
|
)
|
|||||
Equity in subsidiaries income
|
15,003
|
|
|
11,451
|
|
|
—
|
|
|
(26,454
|
)
|
|
—
|
|
|||||
Loss on extinguishment of debt
|
(32
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(32
|
)
|
|||||
Dividend income (expense), net
|
14,229
|
|
|
6,846
|
|
|
—
|
|
|
(21,075
|
)
|
|
—
|
|
|||||
(Loss) income before provision for income taxes
|
(6,619
|
)
|
|
35,288
|
|
|
19,165
|
|
|
(47,572
|
)
|
|
262
|
|
|||||
Benefit from (provision for) income taxes
|
374
|
|
|
(463
|
)
|
|
(6,418
|
)
|
|
—
|
|
|
(6,507
|
)
|
|||||
Net (loss) income
|
$
|
(6,245
|
)
|
|
$
|
34,825
|
|
|
$
|
12,747
|
|
|
$
|
(47,572
|
)
|
|
$
|
(6,245
|
)
|
Comprehensive (loss) income
|
$
|
(8,031
|
)
|
|
$
|
34,918
|
|
|
$
|
27,345
|
|
|
$
|
(47,572
|
)
|
|
$
|
6,660
|
|
|
Parent
|
|
Total
Guarantors |
|
Total Non
Guarantors |
|
Other
Eliminations |
|
The
Company |
||||||||||
Net sales
|
$
|
—
|
|
|
$
|
86,668
|
|
|
$
|
166,986
|
|
|
$
|
(14,716
|
)
|
|
$
|
238,938
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of products sold
|
—
|
|
|
59,034
|
|
|
102,921
|
|
|
(14,745
|
)
|
|
147,210
|
|
|||||
Selling
|
501
|
|
|
10,142
|
|
|
20,813
|
|
|
—
|
|
|
31,456
|
|
|||||
General and administrative
|
6,170
|
|
|
1,970
|
|
|
16,794
|
|
|
—
|
|
|
24,934
|
|
|||||
Research and development
|
563
|
|
|
2,019
|
|
|
904
|
|
|
—
|
|
|
3,486
|
|
|||||
Restructuring
|
642
|
|
|
1,668
|
|
|
3,299
|
|
|
—
|
|
|
5,609
|
|
|||||
|
7,876
|
|
|
74,833
|
|
|
144,731
|
|
|
(14,745
|
)
|
|
212,695
|
|
|||||
(Loss) income from operations
|
(7,876
|
)
|
|
11,835
|
|
|
22,255
|
|
|
29
|
|
|
26,243
|
|
|||||
Interest (expense) income, net
|
(19,725
|
)
|
|
837
|
|
|
(2,111
|
)
|
|
—
|
|
|
(20,999
|
)
|
|||||
Foreign exchange (loss) gain
|
(117
|
)
|
|
(35
|
)
|
|
105
|
|
|
—
|
|
|
(47
|
)
|
|||||
Equity in subsidiaries income
|
23,023
|
|
|
16,559
|
|
|
—
|
|
|
(39,582
|
)
|
|
—
|
|
|||||
Dividend income (expense), net
|
5,545
|
|
|
—
|
|
|
—
|
|
|
(5,545
|
)
|
|
—
|
|
|||||
Income (loss) before provision for income taxes
|
850
|
|
|
29,196
|
|
|
20,249
|
|
|
(45,098
|
)
|
|
5,197
|
|
|||||
Provision for income taxes
|
(185
|
)
|
|
(263
|
)
|
|
(4,084
|
)
|
|
—
|
|
|
(4,532
|
)
|
|||||
Net income (loss)
|
$
|
665
|
|
|
$
|
28,933
|
|
|
$
|
16,165
|
|
|
$
|
(45,098
|
)
|
|
$
|
665
|
|
Comprehensive income (loss)
|
$
|
2,599
|
|
|
$
|
31,496
|
|
|
$
|
24,884
|
|
|
$
|
(45,098
|
)
|
|
$
|
13,881
|
|
|
Parent
|
|
Total
Guarantors |
|
Total Non
Guarantors |
|
Other
Eliminations |
|
The
Company |
||||||||||
Operating activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Net (loss) income
|
$
|
(6,245
|
)
|
|
$
|
34,825
|
|
|
$
|
12,747
|
|
|
$
|
(47,572
|
)
|
|
$
|
(6,245
|
)
|
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Stock-based compensation
|
2,046
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,046
|
|
|||||
Depreciation
|
1,157
|
|
|
4,136
|
|
|
10,369
|
|
|
—
|
|
|
15,662
|
|
|||||
Amortization of intangible assets
|
—
|
|
|
492
|
|
|
54
|
|
|
—
|
|
|
546
|
|
|||||
Deferred financing cost amortization
|
1,762
|
|
|
—
|
|
|
48
|
|
|
—
|
|
|
1,810
|
|
|||||
Foreign exchange gain on revaluation of debt
|
819
|
|
|
—
|
|
|
(285
|
)
|
|
—
|
|
|
534
|
|
|||||
Deferred taxes
|
(438
|
)
|
|
—
|
|
|
750
|
|
|
—
|
|
|
312
|
|
|||||
Asset impairment
|
—
|
|
|
49
|
|
|
6
|
|
|
—
|
|
|
55
|
|
|||||
Loss on disposition of property and equipment
|
—
|
|
|
(72
|
)
|
|
(13
|
)
|
|
—
|
|
|
(85
|
)
|
|||||
Loss on extinguishment of debt
|
32
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
32
|
|
|||||
Provision for doubtful accounts
|
—
|
|
|
(12
|
)
|
|
154
|
|
|
—
|
|
|
142
|
|
|||||
Undistributed equity in earnings of subsidiaries
|
(15,003
|
)
|
|
(11,451
|
)
|
|
—
|
|
|
26,454
|
|
|
—
|
|
|||||
Change in assets and liabilities which provided (used) cash:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Accounts receivable
|
40
|
|
|
(3,705
|
)
|
|
(1,735
|
)
|
|
—
|
|
|
(5,400
|
)
|
|||||
Inventories
|
—
|
|
|
(490
|
)
|
|
(2,766
|
)
|
|
43
|
|
|
(3,213
|
)
|
|||||
Prepaid expenses
|
(904
|
)
|
|
402
|
|
|
61
|
|
|
—
|
|
|
(441
|
)
|
|||||
Other current assets
|
—
|
|
|
(39
|
)
|
|
(1,140
|
)
|
|
—
|
|
|
(1,179
|
)
|
|||||
Accounts payable and accrued expenses
|
(1,800
|
)
|
|
1,229
|
|
|
1,099
|
|
|
—
|
|
|
528
|
|
|||||
Deferred and other long-term liabilities
|
(71
|
)
|
|
337
|
|
|
(2,372
|
)
|
|
—
|
|
|
(2,106
|
)
|
|||||
Intercompany loans
|
21,928
|
|
|
(20,713
|
)
|
|
(1,215
|
)
|
|
—
|
|
|
—
|
|
|||||
Net cash provided by (used in) operating activities
|
3,323
|
|
|
4,988
|
|
|
15,762
|
|
|
(21,075
|
)
|
|
2,998
|
|
|||||
Investing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital expenditures
|
(407
|
)
|
|
(568
|
)
|
|
(7,542
|
)
|
|
—
|
|
|
(8,517
|
)
|
|||||
Intercompany property and equipment transfers, net
|
(3
|
)
|
|
32
|
|
|
(29
|
)
|
|
—
|
|
|
—
|
|
|||||
Proceeds from disposals of property and equipment
|
—
|
|
|
258
|
|
|
32
|
|
|
—
|
|
|
290
|
|
|||||
Net cash used in investing activities
|
(410
|
)
|
|
(278
|
)
|
|
(7,539
|
)
|
|
—
|
|
|
(8,227
|
)
|
|||||
Financing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from borrowings
|
55,213
|
|
|
—
|
|
|
11,365
|
|
|
—
|
|
|
66,578
|
|
|||||
Principal payments on debt
|
(49,556
|
)
|
|
—
|
|
|
(9,726
|
)
|
|
—
|
|
|
(59,282
|
)
|
|||||
Dividends paid
|
—
|
|
|
(7,238
|
)
|
|
(13,837
|
)
|
|
21,075
|
|
|
—
|
|
|||||
Payment of obligations under capital leases
|
(1,322
|
)
|
|
(1,296
|
)
|
|
(176
|
)
|
|
—
|
|
|
(2,794
|
)
|
|||||
Payment of financing fees
|
(427
|
)
|
|
—
|
|
|
34
|
|
|
—
|
|
|
(393
|
)
|
|||||
Intercompany loans
|
(6,003
|
)
|
|
3,557
|
|
|
2,446
|
|
|
—
|
|
|
—
|
|
|||||
Employee taxes paid on equity awards
|
(832
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(832
|
)
|
|||||
Net cash (used in) provided by financing activities
|
(2,927
|
)
|
|
(4,977
|
)
|
|
(9,894
|
)
|
|
21,075
|
|
|
3,277
|
|
|||||
Effect of exchange rate changes on cash flows
|
—
|
|
|
(1
|
)
|
|
204
|
|
|
—
|
|
|
203
|
|
|||||
Net decrease in cash
|
(14
|
)
|
|
(268
|
)
|
|
(1,467
|
)
|
|
—
|
|
|
(1,749
|
)
|
|||||
Cash and cash equivalents at beginning of period
|
$
|
1,368
|
|
|
$
|
279
|
|
|
$
|
11,161
|
|
|
$
|
—
|
|
|
$
|
12,808
|
|
Cash and cash equivalents at end of period
|
$
|
1,354
|
|
|
$
|
11
|
|
|
$
|
9,694
|
|
|
$
|
—
|
|
|
$
|
11,059
|
|
|
Parent
|
|
Total
Guarantors |
|
Total Non
Guarantors |
|
Other
Eliminations |
|
The
Company |
||||||||||
Operating activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss)
|
$
|
665
|
|
|
$
|
28,933
|
|
|
$
|
16,165
|
|
|
$
|
(45,098
|
)
|
|
$
|
665
|
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Stock-based compensation
|
1,426
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,426
|
|
|||||
Depreciation
|
1,121
|
|
|
4,128
|
|
|
10,833
|
|
|
—
|
|
|
16,082
|
|
|||||
Amortization of intangible assets
|
—
|
|
|
256
|
|
|
48
|
|
|
—
|
|
|
304
|
|
|||||
Deferred financing cost amortization
|
1,493
|
|
|
—
|
|
|
49
|
|
|
—
|
|
|
1,542
|
|
|||||
Foreign exchange loss on revaluation of debt
|
151
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
151
|
|
|||||
Deferred taxes
|
115
|
|
|
—
|
|
|
(912
|
)
|
|
—
|
|
|
(797
|
)
|
|||||
Loss on disposition of property and equipment
|
—
|
|
|
—
|
|
|
78
|
|
|
—
|
|
|
78
|
|
|||||
Provision for doubtful accounts
|
—
|
|
|
(17
|
)
|
|
1
|
|
|
—
|
|
|
(16
|
)
|
|||||
Undistributed equity in earnings of subsidiaries
|
(23,023
|
)
|
|
(16,559
|
)
|
|
—
|
|
|
39,582
|
|
|
—
|
|
|||||
Change in assets and liabilities which provided (used) cash:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts receivable
|
(8
|
)
|
|
(509
|
)
|
|
1,520
|
|
|
—
|
|
|
1,003
|
|
|||||
Inventories
|
—
|
|
|
956
|
|
|
1,426
|
|
|
(29
|
)
|
|
2,353
|
|
|||||
Prepaid expenses
|
(118
|
)
|
|
33
|
|
|
(766
|
)
|
|
—
|
|
|
(851
|
)
|
|||||
Other current assets
|
—
|
|
|
329
|
|
|
(258
|
)
|
|
—
|
|
|
71
|
|
|||||
Accounts payable and accrued expenses
|
390
|
|
|
(1,623
|
)
|
|
(4,180
|
)
|
|
—
|
|
|
(5,413
|
)
|
|||||
Deferred and other long-term liabilities
|
(9
|
)
|
|
256
|
|
|
286
|
|
|
—
|
|
|
533
|
|
|||||
Intercompany loans
|
283,096
|
|
|
(287,521
|
)
|
|
4,425
|
|
|
—
|
|
|
—
|
|
|||||
Net cash provided by (used in) operating activities
|
265,299
|
|
|
(271,338
|
)
|
|
28,715
|
|
|
(5,545
|
)
|
|
17,131
|
|
|||||
Investing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital expenditures
|
(382
|
)
|
|
(1,459
|
)
|
|
(4,131
|
)
|
|
—
|
|
|
(5,972
|
)
|
|||||
Intercompany property and equipment transfers, net
|
(2
|
)
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Proceeds from disposals of property and equipment
|
—
|
|
|
5
|
|
|
112
|
|
|
—
|
|
|
117
|
|
|||||
Acquisition costs
|
—
|
|
|
(16,225
|
)
|
|
—
|
|
|
—
|
|
|
(16,225
|
)
|
|||||
Net cash used in investing activities
|
(384
|
)
|
|
(17,677
|
)
|
|
(4,019
|
)
|
|
—
|
|
|
(22,080
|
)
|
|||||
Financing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from borrowings
|
37,542
|
|
|
—
|
|
|
2,322
|
|
|
—
|
|
|
39,864
|
|
|||||
Principal payments on debt
|
(24,178
|
)
|
|
—
|
|
|
(5,525
|
)
|
|
—
|
|
|
(29,703
|
)
|
|||||
Dividends paid
|
—
|
|
|
(5,545
|
)
|
|
—
|
|
|
5,545
|
|
|
—
|
|
|||||
Payments of obligations under capitalized leases
|
(424
|
)
|
|
(1,123
|
)
|
|
(179
|
)
|
|
—
|
|
|
(1,726
|
)
|
|||||
Payment of deferred financing fees
|
(60
|
)
|
|
—
|
|
|
36
|
|
|
—
|
|
|
(24
|
)
|
|||||
Intercompany loans
|
(279,192
|
)
|
|
296,197
|
|
|
(17,005
|
)
|
|
—
|
|
|
—
|
|
|||||
Employee taxes paid on equity awards
|
(1,031
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,031
|
)
|
|||||
Net cash (used in) provided by financing activities
|
(267,343
|
)
|
|
289,529
|
|
|
(20,351
|
)
|
|
5,545
|
|
|
7,380
|
|
|||||
Effect of exchange rate changes on cash flows
|
—
|
|
|
—
|
|
|
(1,679
|
)
|
|
—
|
|
|
(1,679
|
)
|
|||||
Net (decrease) increase in cash
|
(2,428
|
)
|
|
514
|
|
|
2,666
|
|
|
—
|
|
|
752
|
|
|||||
Cash and cash equivalents at beginning of period
|
3,105
|
|
|
(2
|
)
|
|
6,736
|
|
|
—
|
|
|
9,839
|
|
|||||
Cash and cash equivalents at end of period
|
$
|
677
|
|
|
$
|
512
|
|
|
$
|
9,402
|
|
|
$
|
—
|
|
|
$
|
10,591
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
rate and magnitude of decline in graphical grade paper production;
|
•
|
fluctuations in interest rates and currency exchange rates;
|
•
|
over-capacity of certain grades of paper, leading to distressed profit situations;
|
•
|
execution risk related to the startup of new facilities;
|
•
|
local economic conditions in the areas around the world where we conduct business;
|
•
|
quality issues with new products that could lead to higher warranty and quality costs;
|
•
|
structural shifts in the demand for paper;
|
•
|
the effectiveness of our strategies and plans;
|
•
|
sudden increase or decrease in production capacity;
|
•
|
trend toward extended life in forming fabrics, leading to reduced market size;
|
•
|
our development and marketing of new technologies and our ability to compete against new technologies developed by competitors;
|
•
|
variations in demand for our products, including our new products;
|
•
|
fluctuations in the price of our component supply costs and energy costs;
|
•
|
our ability to generate substantial operating cash flow to service our debt and fund growth and unexpected cash needs;
|
•
|
occurrences of terrorist attacks or an armed conflict involving the United States or any other country in which we conduct business, or any other domestic or international calamity, including natural disasters;
|
•
|
changes in the policies, laws, regulations and practices of the United States and any foreign country in which we operate or conduct business, including changes regarding taxes and the repatriation of earnings; and
|
•
|
anti-takeover provisions in our charter documents.
|
•
|
advances in technology of our products, which can provide value to our customers by improving the efficiency of paper-making machines and reduce their manufacturing costs;
|
Currency
|
|
Six Months Ended June 30, 2017
|
|
Six Months Ended June 30, 2016
|
Euro
|
|
$1.08 = 1 Euro
|
|
$1.12 = 1 Euro
|
Canadian Dollar
|
|
$0.75 = 1 Canadian Dollar
|
|
$0.75 = 1 Canadian Dollar
|
Chinese Renminbi
|
|
$0.15 = 1 Chinese Renminbi
|
|
$0.15 = 1 Chinese Renminbi
|
Japanese Yen
|
|
$0.01 = 1 Japanese Yen
|
|
$0.01 = 1 Japanese Yen
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Domestic income from operations
|
$
|
3,020
|
|
|
$
|
3,525
|
|
|
$
|
8,132
|
|
|
$
|
3,959
|
|
Foreign income from operations
|
11,929
|
|
|
11,182
|
|
|
21,077
|
|
|
22,284
|
|
||||
Total income from operations
|
$
|
14,949
|
|
|
$
|
14,707
|
|
|
$
|
29,209
|
|
|
$
|
26,243
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||
Net sales
|
$
|
120,339
|
|
|
$
|
123,973
|
|
|
$
|
240,205
|
|
|
$
|
238,938
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of products sold
|
71,454
|
|
|
75,782
|
|
|
143,824
|
|
|
147,210
|
|
||||
Selling
|
15,936
|
|
|
15,735
|
|
|
31,610
|
|
|
31,456
|
|
||||
General and administrative
|
15,460
|
|
|
13,427
|
|
|
28,114
|
|
|
24,934
|
|
||||
Research and development
|
1,666
|
|
|
1,545
|
|
|
3,410
|
|
|
3,486
|
|
||||
Restructuring
|
874
|
|
|
2,777
|
|
|
4,038
|
|
|
5,609
|
|
||||
|
105,390
|
|
|
109,266
|
|
|
210,996
|
|
|
212,695
|
|
||||
Income from operations
|
14,949
|
|
|
14,707
|
|
|
29,209
|
|
|
26,243
|
|
||||
Interest expense, net
|
(13,281
|
)
|
|
(10,658
|
)
|
|
(26,544
|
)
|
|
(20,999
|
)
|
||||
Loss on extinguishment of debt
|
(7
|
)
|
|
—
|
|
|
(32
|
)
|
|
—
|
|
||||
Foreign exchange loss
|
(1,246
|
)
|
|
(72
|
)
|
|
(2,371
|
)
|
|
(47
|
)
|
||||
Income before provision for income taxes
|
415
|
|
|
3,977
|
|
|
262
|
|
|
5,197
|
|
||||
Provision for income taxes
|
(3,826
|
)
|
|
(1,867
|
)
|
|
(6,507
|
)
|
|
(4,532
|
)
|
||||
Net (loss) income
|
$
|
(3,411
|
)
|
|
$
|
2,110
|
|
|
$
|
(6,245
|
)
|
|
$
|
665
|
|
Comprehensive (loss) income
|
$
|
(146
|
)
|
|
$
|
6,508
|
|
|
$
|
6,660
|
|
|
$
|
13,881
|
|
•
|
declare dividends or redeem or repurchase equity interests;
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net (loss) income
|
$
|
(3,411
|
)
|
|
$
|
2,110
|
|
|
$
|
(6,245
|
)
|
|
$
|
665
|
|
Stock-based compensation
|
328
|
|
|
834
|
|
|
859
|
|
|
1,426
|
|
||||
CEO transition stock-based compensation
|
1,187
|
|
|
—
|
|
|
1,187
|
|
|
—
|
|
||||
Depreciation
|
7,843
|
|
|
8,182
|
|
|
15,662
|
|
|
16,082
|
|
||||
Amortization of intangible assets
|
272
|
|
|
210
|
|
|
546
|
|
|
304
|
|
||||
Deferred financing cost amortization
|
911
|
|
|
785
|
|
|
1,810
|
|
|
1,542
|
|
||||
Foreign exchange (gain) loss on revaluation of debt
|
(93
|
)
|
|
(968
|
)
|
|
534
|
|
|
151
|
|
||||
Deferred tax expense
|
302
|
|
|
(953
|
)
|
|
312
|
|
|
(797
|
)
|
||||
Asset impairment
|
55
|
|
|
—
|
|
|
55
|
|
|
—
|
|
||||
(Gain) loss on disposition of property and equipment
|
(36
|
)
|
|
62
|
|
|
(85
|
)
|
|
78
|
|
||||
Loss on extinguishment of debt
|
7
|
|
|
—
|
|
|
32
|
|
|
—
|
|
||||
Net change in operating assets and liabilities
|
2,855
|
|
|
(8,234
|
)
|
|
(11,669
|
)
|
|
(2,320
|
)
|
||||
Net cash provided by operating activities
|
10,220
|
|
|
2,028
|
|
|
2,998
|
|
|
17,131
|
|
||||
Interest expense, excluding amortization
|
12,370
|
|
|
9,873
|
|
|
24,734
|
|
|
19,457
|
|
||||
Net change in operating assets and liabilities
|
(2,855
|
)
|
|
8,234
|
|
|
11,669
|
|
|
2,320
|
|
||||
Current portion of income tax expense
|
3,524
|
|
|
2,820
|
|
|
6,195
|
|
|
5,329
|
|
||||
Stock-based compensation
|
(328
|
)
|
|
(834
|
)
|
|
(859
|
)
|
|
(1,426
|
)
|
||||
CEO transition stock-based compensation
|
(1,187
|
)
|
|
—
|
|
|
(1,187
|
)
|
|
—
|
|
||||
Asset impairment
|
(55
|
)
|
|
—
|
|
|
(55
|
)
|
|
—
|
|
||||
Foreign exchange gain (loss) on revaluation of debt
|
93
|
|
|
968
|
|
|
(534
|
)
|
|
(151
|
)
|
||||
Gain (loss) on disposition of property and equipment
|
36
|
|
|
(62
|
)
|
|
85
|
|
|
(78
|
)
|
||||
Loss on extinguishment of debt
|
(7
|
)
|
|
—
|
|
|
(32
|
)
|
|
—
|
|
||||
EBITDA
|
21,811
|
|
|
23,027
|
|
|
43,014
|
|
|
42,582
|
|
||||
Loss on extinguishment of debt
|
7
|
|
|
—
|
|
|
32
|
|
|
—
|
|
||||
Stock-based compensation
|
328
|
|
|
834
|
|
|
859
|
|
|
1,426
|
|
||||
CEO transition expenses
|
3,039
|
|
|
—
|
|
|
3,039
|
|
|
—
|
|
||||
Operational restructuring expenses
|
874
|
|
|
2,777
|
|
|
4,038
|
|
|
5,609
|
|
||||
Other non-recurring expenses
|
69
|
|
|
433
|
|
|
114
|
|
|
668
|
|
||||
Plant startup costs
|
166
|
|
|
539
|
|
|
646
|
|
|
1,285
|
|
||||
Unrealized foreign exchange loss
|
886
|
|
|
82
|
|
|
1,994
|
|
|
24
|
|
||||
Adjusted EBITDA
|
$
|
27,180
|
|
|
$
|
27,692
|
|
|
$
|
53,736
|
|
|
$
|
51,594
|
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
|
|
|
|
XERIUM TECHNOLOGIES, INC.
|
|
|
(Registrant)
|
|
|
|
|
July 31, 2017
|
By:
|
/s/Clifford E. Pietrafitta
|
|
|
Clifford E. Pietrafitta
|
|
|
Executive Vice President and CFO
|
|
|
(Principal Financial Officer)
|
Exhibit
Number
|
|
Description of Exhibits
|
|
|
|
|
|
|
31.1
|
|
Certification Statement of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
31.2
|
|
Certification Statement of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
32.1
|
|
Certification Statement of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
32.2
|
|
Certification Statement of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
1 Year Xerium Chart |
1 Month Xerium Chart |
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