F I N A N C I A L
HIGHLIGHTS
Continued Operations
Year End December 31,
(Dollars in millions, except share data)
2014
2015
2016
Consolidated Statement of Operations Data
Net Sales
Adjusted EBIT
% ROS
Adjusted EBITDA
$839.7 $887.7 $941.5
$92.6 $1
07 9 $121 9
.
.
11.0%
12.2% 12.9%
$123.6 $141.9
$157.8
Earnings per Diluted Common Share
Adjusted Earnings from Continuing Operations
$3.21
$3.70
$4.54
Weighted-Average Shares Outstanding (in thousands)
16,872 17,012
17,087
Consolidated Balance Sheet Data
Total Assets
Total Stockholders’ Equity
Total Debt
Cash and Cash Equivalents
Debt to EBITDA
Debt to Capital
Other Financial Data
Net Cash Flow Provided by (used for):
Operating Activities
Capital Expenditures
Stock Price Year-End
Cash Dividends Paid
$724.5
$751.4
$765.6
$288.7
$311.6
$338.3
$228.7
$229.4
$220.9
$72.6
$4.2
$3.1
1.8x
44%
1.6x
42%
1.4x
40%
$94.5 $111.2
$115.8
$(27.9)
$(48.1)
$(68.5)
$60.27
$62.43
$85.20
$ 1.
02
$1.20
$1.32
GAAP Reconciliation
A reconciliation of adjusted income measures to comparable GAAP measures
is shown below:
Year End December 31,
(Dollars in millions, except share data)
EBIT (Operating Income)
Integration/Restructuring Costs
Pension Settlement Charge
Cost for Early Redemption of Debt
Adjusted EBIT
Depreciation & Amortization
Amortization Equity-Based Compensation
2014
2015
2016
$86.6
$101.4
$114.1
2.3
3.5
0.2
6.5
–
–
7.0
0.8
–
92.6
107.9
121.9
25.0
6.0
27.5
30.1
6.5
5.8
Adjusted EBITDA
$123.6
$141.9 $157.8
Diluted Earnings per Share
$3.99
$3.53
$4.26
Integration/Restructuring Costs
Pension Settlement Charge
Cost for Early Redemption of Debt
Prior Period R&D Tax Credits
0.08
0.13
0.01
0.24
–
–
(1.00)
(0.07)
0.25
0.03
–
–
Net Sales
(In millions of U.S. dollars)
$887.7
$
15.8
$839.7
$436.1
$442.7
$941.5
$23.0
$
452.1
$403.6
$4 .
29 2
$
466.4
2014
2015
2016
Technical Fine Paper
Products
& Packaging
6
Other
Adjusted EBIT
(In millions of U.S. dollars)
$107.
9
$121.9
$92.6
12.2%
2.9
1 %
11.0
%
2014
2015
2016
Adjusted EBIT
% of Sales
Adjusted Earnings
Per Share
$4.54
$
3.70
$3.21
$1.91
Diluted Adjusted Earnings per Share
$3.21
$3.70
$4.54
2014
2015
2016
Neenah Paper, Inc. 2016 Annual Report
T O O U R
TECHNICAL PRODUCTS
TECHNICAL PRODUCTS
SHAREHOLDERS
TECHNICAL PRODUCTS
TECHNICAL PRODUCTS
Neenah is a leading producer of Technical Products,
using various substrates to produce specialized materials
Neenah is a leading producer of Technical Products,
2012 was a highly successful year for Neenah.
that employ saturation, coating and other function-
using various substrates to produce specialized materials
At the front and center of our efforts was the
enhancing processes
that employ saturation, coating and other function-
Neenah is a leading producer of Technical Products,
disciplined execution of our strategy, motivated
enhancing processes
using various substrates to produce specialized materials
Neenah is a leading producer of Technical Products,
by a clear and consistent vision: To create value for
using various substrates to produce specialized materials
that employ saturation, coating and other function-
and abrasive backings, labels and other
enhancing processes
that employ saturation, coating and other function-
our customers and shareholders by improving the
enhancing processes
and abrasive backings, labels and other
image and performance of everything we touch.
industrial applications,
The Technical Products group serves customers in
transportation,
medical packaging, image transfer papers and
transportation,
industrial applications,
including new initiatives in specialized market niches,
many others.
medical packaging, digital transfer papers, publishing, and
which we achieved despite challenging economic
many others.
industrial applications,
transportation,
headwinds in Europe throughout most of the year.
more than 70 countries through manufacturing facilities
medical packaging, digital transfer papers, publishing, and
industrial applications,
transportation,
The Technical Products group serves customers in
in the U.S., Germany, and the supported by R&D efforts
many others.
medical packaging, image transfer papers and
more than 80 countries through manufacturing facilities
% Change 2012 vs 2011
Operating
focused on developing new processes and products
many others.
in the U.S., Germany, and the U.K., supported by R&D efforts
in the U.S., Germany, and the supported by R&D efforts
The Technical Products group serves customers in
income increased
that will meet customers’ needs and drive our growth.
focused on developing new processes and products that will
focused on developing new processes and products
more than 80 countries through manufacturing facilities
The Technical Products group serves customers in
36% over 2011
meet customers’ needs and drive our growth.
that will meet customers’ needs and drive our growth.
in the U.S., Germany, and the supported by R&D efforts
more than 70 countries through manufacturing facilities
after adjusting
focused on developing new processes and products
in the U.S., Germany, and the supported by R&D efforts
that will meet customers’ needs and drive our growth.
focused on developing new processes and products
for acquisition
that will meet customers’ needs and drive our growth.
Our continuing efforts to implement that vision led
and abrasive backings, labels and other
to substantial growth in 2012, both top-line and
and abrasive backings, labels and other
OUR PRODUCTS DELIVER HIGH-PERFORMANCE SOLUTIONS:
broad markets.
shareholders of 30%, more than twice that of the
bottom-line, and allowed us to deliver returns to our
6%
OUR PRODUCTS DELIVER HIGH-PERFORMANCE SOLUTIONS:
sepat dna sevisarba sa hcus snoitacilppa lairtsudni rof stcudorp ni ecnamrofrep roirepus gnilbane
integration
• providing essential filtration capabilities for transportation, water and
other uses
(cid:127)
OUR PRODUCTS DELIVER HIGH-PERFORMANCE SOLUTIONS:
(cid:127)
(cid:127)
OUR PRODUCTS DELIVER HIGH-PERFORMANCE SOLUTIONS:
(cid:127) meeting specialized needs for strength, durability resistance to water and contamination in products
and other one-
(cid:127)
sepat dna sevisarba sa hcus snoitacilppa lairtsudni rof stcudorp ni ecnamrofrep roirepus gnilbane
OUR PRODUCTS DELIVER HIGH-PERFORMANCE SOLUTIONS:
as diverse as medical packaging, labels, and outdoor advertising
(cid:127)
• enabling superior performance in products for industrial applications, such
time costs. Our
(cid:127) meeting specialized needs for strength, durability resistance to water and contamination in products
(cid:127)
as abrasives and tapes
sepat dna sevisarba sa hcus snoitacilppa lairtsudni rof stcudorp ni ecnamrofrep roirepus gnilbane
(cid:127)
as diverse as medical packaging, labels, and outdoor advertising
higher sales and disciplined approach to managing
sepat dna sevisarba sa hcus snoitacilppa lairtsudni rof stcudorp ni ecnamrofrep roirepus gnilbane
(cid:127)
(cid:127) meeting specialized needs for strength, durability resistance to water and contamination in products
THREE IMPERATIVES:
overhead and other costs allowed us to leverage
(cid:127) meeting specialized needs for strength, durability resistance to water and contamination in products
and contamination in products as diverse as medical packaging, labels and
FILTRATION
outdoor advertising
as diverse as medical packaging, labels, and outdoor advertising
as diverse as medical packaging, labels, and outdoor advertising
• meeting specialized needs for strength, durability resistance to water
OUR STRATEGY IS BUILT ON A PLATFORM OF
Neenah’s infrastructure, and helped boost operating
Net Sales
Adj. EBIT
Adj. EPS
5%
4%
(cid:127)
FILTRATION
Focus on profitable, specialty niche markets
margins to 9.9% versus 8.5% in 2011.
where we can establish
market
positions based on our core strengths.
FILTRATION
FILTRATION
High-performance filtration media for transportation, industrial water and other markets
FILTRATION
(cid:127)
Increase our size, growth rate and portfolio
During the year, we also actively managed our
capital structure, redeeming $68 million of bonds
diversification in both Fine Paper and Technical
Products through organic means and
complementary acquisitions.
BACKINGS
entered into a new lending facility and improved the
terms and extended the maturity of our revolver—
Saturated and coated papers used for backing of specialty abrasives and tapes to enhance their performance, and
(cid:127) Deliver consistent, attractive returns to our
BACKINGS
Saturated and coated papers used for backing of specialty abrasives and tapes to enhance their performance, and
shareholders through disciplined
BACKINGS
PERFORMANCE MATERIALS
management.
Saturated and coated papers used for backing of specialty abrasives and tapes to enhance their performance, and
BACKINGS
Saturated and coated papers used for backing of specialty abrasives and tapes to enhance their performance, and
adjusted net income, which reached $46 million, or
Saturated and coated papers used for backing of specialty abrasives and tapes to enhance their performance, and
products for a variety of other end markets including labels, durable printing, and medical packaging applications
These factors combined to drive a 50% increase in
$2.78 per share. This was our highest level ever.
Increased income levels along with our continued
is evidence of our progress in each of these areas.
DELIVERING PROFITABLE GROWTH AND
SHAREHOLDER VALUE
SPECIALTIES
products for a variety of other end markets including labels, durable printing, and medical packaging applications
SPECIALTIES
Sales increased 16% from 2011 and exceeded
sharply from 9% in 2011. This remains a key metric
products for a variety of other end markets including labels, durable printing, and medical packaging applications
$800 million. This was mainly due to our successful
SPECIALTIES
Invested Capital (ROIC) of over 11% for 2012, up
guiding our investment decisions.
products for a variety of other end markets including labels, durable printing, and medical packaging applications
acquisition of the Wausau premium paper brands
SPECIALTIES
products for a variety of other end markets including labels, durable printing, and medical packaging applications
execution enabled us to deliver on our commitment
to enhance shareholder value. Our total shareholder
return for the past year was 30%, anchored by a
Neenah Paper, Inc. 2016 Annual Report
Neenah Paper, Inc. 2016 Annual Report
Neenah Paper, Inc. 2016 Annual Report
Neenah Paper, Inc. 2016 Annual Report
Neenah Paper, Inc. 2016 Annual Report
FINE PAPER
FINE PAPER
& PACKAGING
Neenah is the leader in the North American premium
Neenah is the leader in the North American premium
Neenah leads the North American market in the
Fine Paper market. Built on a tradition of quality
creation and manufacturing of premium paper
e paper market. Built on a tradition of quality
and service, we market some of the most recognized
and packaging. The Neenah Fine Paper portfolio
and service, we market some of the most recognized
and preferred premium papers in North America,
includes recognizable and distinguished brands like
and preferred premium papers in North America,
CLASSIC®, ENVIRONMENT®, ROYAL SUNDANCE®,
with distinguished brands including CLASSIC®,
with distinguished brands including CLASSIC®,
ASTROBRIGHTS®, TOUCHE®, and Southworth®.
ASTROBRIGHTS®,
ASTROBRIGHTS®,
With multiple U.S. manufacturing facilities specializing
Southworth®, and ENVIRONMENT® Papers.
Southworth®, and ENVIRONMENT®, the premier
in color, texture and specialty features there is an
offering of recycled content papers in the market.
endless combination of paper, packaging and
envelopes available.
ROYAL SUNDANCE®,
ROYAL SUNDANCE®,
Neenah’s leadership role is supported by our
Neenah Premium Packaging provides unique,
Our products are also used in premium packaging
broad range of colors, textures and other product
sustainable and custom solutions for many of the
and label applications for goods such as spirits, jewelry,
features and we have world-class manufacturing,
cosmetics and electronics.
world’s leading and emerging brands in cosmetics and
with three facilities located in Wisconsin.
fragrances; wine, spirits and craft beer; and retail. Our
Neenah’s leadership role is supported by our
offering includes packaging papers for bags, box wraps,
broad range of colors, textures and other product
We are also a pioneer in eco-friendly paper
gift cards, gift card carriers, hangtags, labels, folding
features and world-class manufacturing, with
products. Our ENVIRONMENT® Paper is the premier
board and fragrance strips. We provide captivating
four facilities located in Wisconsin.
offering of recycled content papers in the market.
colors and textures, customized for brands or ready-
made, as well as high-performance products and hands-
on customer service.
OUR PRODUCTS ARE IN DEMAND WHEREVER IMAGE MATTERS:
(cid:127)
OUR PRODUCTS ARE IN DEMAND WHEREVER IMAGE MATTERS:
for high-end traditional / digital printing for graphic imaging needs,
• high-end offset/digital printing of marketing and advertising collateral and
(cid:127)
for high-end traditional / digital printing for graphic imaging needs
and writing papers
business identity systems
for specialized uses such as upscale packaging and labels
(cid:127)
and writing papers
• specialized uses such as upscale packaging and labels in the beauty,
for unique brightly colored papers for home, school or organization
(cid:127)
(cid:127)
for specialized uses such as upscale packaging and labels
alcohol and retail markets
(cid:127)
• unique, brightly colored papers for home, school or organization
for unique brightly colored papers for home, school or organization
GRAPHIC IMAGING
GRAPHIC IMAGING
GRAPHIC IMAGING
Unique colors, textures and finishes for identity systems, invitations, advertising and marketing collateral, and envelopes
PREMIUM PACKAGING & LABEL
Image enhancing colors and textures of premium folded cartons, box wrap, bags, premium wine, beverage and
PREMIUM PACKAGING
spirit labels, food labels and hang tags
Image-enhancing colors and textures for premium folded cartons, box wrap, bags and hang tags, and labels for
Image-enhancing colors and textures of premium folded cartons, box wrap, bags, premium wine, beverage,
wine, spirits and craft beer
spirit and food labels and hang tags
BRIGHTS
Neenah Paper, Inc. 2016 Annual Report
Neenah Paper, Inc. 2014 Annual Report
NEENAH PAPER, INC. 2016 ANNUAL REPORT
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NOTICE OF 2017 ANNUAL MEETING
AND
PROXY STATEMENT
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April 11, 2017
Dear Stockholder:
On behalf of the Board of Directors, it is my pleasure to invite you to attend the 2017 Annual
Meeting of Stockholders of Neenah Paper, Inc. to be held at the Company’s headquarters located at
Preston Ridge III, 3460 Preston Ridge Road, Suite 600, Alpharetta, Georgia 30005 on Tuesday,
May 23, 2017 at 10:00 a.m., Eastern Time.
In 2016, we continued in our evolution to become a premier specialty materials company and
delivered record sales, earnings and operating cash flows, along with attractive returns for our
stockholders. In addition, we completed two important strategic initiatives that provide us with a
growth platform for years to come. First, we concluded an organic capital investment expanding our
transportation filtration manufacturing base outside of Europe, further solidifying our position with
customers as a premium global transportation filtration player. Second, we finished our integration of
FiberMark, which broadened our product portfolio, adding coating and finishing capabilities in both
Technical Products and Fine Paper & Packaging and almost doubling the size of our premium
packaging business. Guiding all of our activities is an ongoing commitment to deploy capital efficiently,
maintaining an attractive Return on Invested Capital and a meaningful return of cash to shareholders.
In 2016, we returned $39 million to shareholders through dividends and share repurchases, up from
$29 million in 2015, and announced for 2017 our seventh consecutive double-digit dividend increase
over the past five years.
We are proud of our results and of the contributions of Neenah’s dedicated employees around the
world that helped to create this value and appreciate the confidence and ongoing support of our
stockholders.
The formal business to be transacted at the 2017 Annual Meeting includes:
• The election of the three nominees detailed in this Proxy Statement as Class I directors for a
three-year term;
• Approval of an advisory vote on the Company’s executive compensation;
• Approval of an advisory vote on the frequency of future advisory votes on the Company’s
executive compensation; and
• The ratification of the appointment of Deloitte & Touche LLP as the Company’s independent
registered public accounting firm for the fiscal year ending December 31, 2017.
At the meeting, we will provide a brief report on our results and strategies. Our directors and
executive officers, as well as representatives from Deloitte & Touche LLP, will be in attendance to
answer any questions you may have.
Regardless of whether you choose to attend or not, please either vote electronically using the
Internet, vote by telephone, or follow the procedures for requesting written copies of the proxy
materials described in the attached Proxy Statement and mark, date, sign and return the proxy card
included with those materials at your earliest convenience. This will assure your shares will be
represented and voted at the Annual Meeting.
Sincerely,
15MAR201217460616
JOHN P. O’DONNELL
President and Chief Executive Officer
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Neenah Paper, Inc.
Preston Ridge III
3460 Preston Ridge Road, Suite 600
Alpharetta, Georgia 30005
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 23, 2017
NOTICE HEREBY IS GIVEN that the 2017 Annual Meeting of Stockholders of Neenah
Paper, Inc. will be held at the Company’s headquarters located at Preston Ridge III, 3460 Preston
Ridge Road, Suite 600, Alpharetta, Georgia 30005 on Tuesday, May 23, 2017 at 10:00 a.m., Eastern
time, for the purpose of considering and voting upon:
P
r
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y
1. A proposal to elect the three nominees named as Class I directors in the attached Proxy
Statement to serve until the 2020 Annual Meeting of Stockholders;
2. A proposal to approve, on an advisory basis, the Company’s executive compensation;
3. A proposal to approve an advisory vote on the frequency of future advisory votes on the
Company’s executive compensation;
4. A proposal to ratify the appointment of Deloitte & Touche LLP as the independent registered
public accounting firm of Neenah Paper, Inc. for the fiscal year ending December 31, 2017;
and
5.
Such other business as properly may come before the Annual Meeting or any adjournments
thereof. The Board of Directors is not aware of any other business to be presented to a vote
of the stockholders at the Annual Meeting.
Information relating to the above matters is set forth in the attached Proxy Statement.
Stockholders of record at the close of business on March 31, 2017 are entitled to receive notice of and
to vote at the Annual Meeting and any adjournments thereof.
The Proxy Statement and the 2016 Annual Report to Stockholders are available at
www.neenah.com/proxydocs.
By order of the Board of Directors.
29APR200510193718
29APR200510193718
STEVEN S. HEINRICHS
Senior Vice President, General Counsel and
Secretary
Alpharetta, Georgia
April 11, 2017
PLEASE READ THE ATTACHED PROXY STATEMENT AND THEN VOTE
ELECTRONICALLY, BY TELEPHONE, OR REQUEST PRINTED PROXY MATERIALS AND
PROMPTLY COMPLETE, EXECUTE AND RETURN THE PROXY CARD INCLUDED WITH
THE PROXY MATERIALS IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE.
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Table of Contents
ANNUAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
VOTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
BENEFICIAL OWNERSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ELECTION OF DIRECTORS (ITEM 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . .
CORPORATE GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016 DIRECTOR COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
COMPENSATION COMMITTEE REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ADVISORY VOTE ON EXECUTIVE COMPENSATION (ITEM 2) . . . . . . . . . . . . . . . . . . . . .
ADVISORY VOTE ON FREQUENCY OF ADVISORY VOTE ON EXECUTIVE
COMPENSATION (ITEM 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ADDITIONAL EXECUTIVE COMPENSATION INFORMATION . . . . . . . . . . . . . . . . . . . . . .
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION . . . . . . . . .
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE . . . . . . . . . . . . . . .
AUDIT COMMITTEE REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM (ITEM 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES AND SERVICES . . . . .
STOCKHOLDERS’ PROPOSALS FOR 2018 ANNUAL MEETING . . . . . . . . . . . . . . . . . . . . . .
OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING . . . . . . . . . . . . .
HOUSEHOLDING OF NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS .
4
4
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PROXY STATEMENT
General Information
Our Board of Directors is soliciting proxies from our stockholders in connection with Neenah’s
Annual Meeting of Stockholders. When used in this Proxy Statement, the terms ‘‘we,’’ ‘‘us,’’ ‘‘our,’’ ‘‘the
Company’’ and ‘‘Neenah’’ refer to Neenah Paper, Inc. This Proxy Statement and our 2016 Annual Report
are first being mailed to stockholders who requested copies, and made available on April 11, 2017.
SUMMARY
This summary highlights information contained in the Proxy Statement. It does not include all of
the information that you should consider prior to voting and we encourage you to read the entire
document prior to voting. For more complete information regarding Neenah’s 2016 financial
performance, please review the Company’s Annual Report on Form 10-K for the year ended
December 31, 2016.
Stockholders are being asked to vote on the following matters at the 2017 Annual Meeting of
Stockholders:
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ITEM 1. Election of Directors (page 10)
The Board and the Nominating and Corporate Governance Committee
believe that the three Class I Director nominees possess the necessary
qualifications, attributes, skills and experiences to provide quality advice and
counsel to the Company’s management and effectively oversee the business
and the long-term interests of stockholders.
ITEM 2. Advisory Vote to Approve Executive Compensation (page 29)
The Company seeks a non-binding advisory vote to approve the compensation
of its named executive officers as described in the Compensation Discussion
and Analysis section beginning on page 19 and the Executive Compensation
Tables section beginning on page 31. The Board values stockholders’ opinions,
and the Compensation Committee will take into account the outcome of the
advisory vote when considering future executive compensation decisions.
ITEM 3. Approve the Frequency of Future Advisory Votes on the Company’s
Executive Compensation (page 30)
The Company seeks a non-binding advisory vote to approve the frequency of
the advisory vote on executive compensation. The Board values stockholders’
opinions and believes an annual advisory vote to approve executive
compensation provides the appropriate opportunity for stockholders to
communicate with the Board regarding the Company’s executive
compensation plans.
ITEM 4. Ratification of the Appointment of Deloitte & Touche, LLP, as
Independent Auditors (page 42)
The Audit Committee and the Board believe that the retention of Deloitte &
Touche, LLP, to serve as the Independent Auditors for the fiscal year ending
December 31, 2017 is in the best interest of the Company and its
shareowners. As a matter of good corporate governance, stockholders are
being asked to ratify the Audit Committee’s selection of the Independent
Auditors.
3
Our Board’s Recommendation
FOR each
Director Nominee
FOR
ANNUAL
FOR
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Questions and Answers about the Annual Meeting and Voting
When and where is the Annual Meeting?
When:
Tuesday, May 23, 2017, at 10:00 A.M. Eastern Daylight Time
Where: Company headquarters located at Preston Ridge III, 3460 Preston Ridge Road, Suite 600,
Alpharetta, Georgia 30005
Who is entitled to vote at the Annual Meeting?
You are entitled to vote at the Annual Meeting if you owned our common stock, par value $0.01
per share, as of the close of business March 31, 2017 (the ‘‘Record Date’’), with each share entitling its
owner to one vote on each matter submitted to the stockholders. On the record date 16,787,202
shares of common stock were outstanding and eligible to be voted at the Annual Meeting.
The presence, in person or by proxy, of the holders of a majority of the issued and outstanding
shares of our common stock is necessary to constitute a quorum at the Annual Meeting.
How do I vote at the Annual Meeting?
You may vote in person at the Annual Meeting or by proxy. We recommend you vote by proxy
even if you plan to attend the Annual Meeting. You can always change your vote at the meeting.
Giving us your proxy means you authorize us to vote your shares at the Annual Meeting in the manner
you direct. If you plan to attend the meeting in person you must provide proof of your ownership of
our common stock as of the record date, such as an account statement, and a form of personal
identification for admission to the meeting. If you hold your shares in street name and you also wish to
be able to vote at the annual meeting, you are required to obtain a proxy from your bank or broker,
executed in your favor.
If your shares are held in your name, you can vote by proxy in three convenient ways:
• Via the Internet: Go to http://www.proxyvote.com and follow the instructions.
• By Telephone: Call toll-free 1-800-690-6903 and follow the instructions.
• By Mail: Request a printed copy of the proxy materials disclosed in this Proxy Statement and
complete, sign, date and return your proxy card in the envelope included with your printed proxy
materials.
If your shares are held in street name, the availability of telephone and internet voting will depend
on the voting processes of the applicable bank or brokerage firm; therefore, it is recommended that
you follow the voting instructions on the form you receive from your bank or brokerage firm. All
properly executed proxies received by Neenah in time to be voted at the Annual Meeting and not
revoked will be voted at the Annual Meeting in accordance with the directions noted on the proxy
card. If any other matters properly come before the Annual Meeting, the persons named as proxies will
vote upon such matters according to their judgment.
We are also sending the Notice and voting materials to participants in various employee benefit
plans of Neenah. The trustee of each plan, as the stockholder of record of the shares of common stock
held in the plan, will vote whole shares of stock attributable to each participant’s interest in the plan in
accordance with the directions the participant gives or, if no directions are given by the participant, in
accordance with the directions received from the applicable plan committees.
Can I change my vote?
Any stockholder of record delivering a proxy has the power to revoke it at any time before it is
voted: (i) by giving written notice to Steven S. Heinrichs, Senior Vice President, General Counsel and
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Secretary of Neenah, at Preston Ridge III, 3460 Preston Ridge Road, Suite 600, Alpharetta, Georgia,
30005; (ii) by submitting a proxy card bearing a later date, including a proxy submitted via the Internet
or by telephone; or (iii) by voting in person at the Annual Meeting. Please note, however, that any
beneficial owner of our common stock whose shares are held in street name may (a) revoke his or her
proxy and (b) attend and vote his or her shares in person at the Annual Meeting only in accordance
with applicable rules and procedures as then may be employed by such beneficial owner’s brokerage
firm or bank.
What Proposals am I being asked to vote on at the Annual Meeting and what is required to approve
each proposal?
You are being asked to vote on four proposals: Proposal 1 the election of the proposed nominees
as Class I directors; Proposal 2 the approval, in a non-binding advisory vote, of Neenah’s executive
compensation; Proposal 3 the approval, in a non-binding advisory vote, on the frequency of future
advisory votes on the Company’s executive compensation; and Proposal 4 the ratification of the
appointment of our independent public accounting firm.
In voting with regard to Proposal 1, you may vote in favor of each nominees, against each
nominee, or may abstain from voting. A majority of the shares of common stock represented and
entitled to vote on Proposal 1 is required for the election of each director, provided a quorum is
present. Abstentions will be considered in determining the number of votes required to obtain the
necessary majority vote for the proposal, and therefore will have the same legal effect as votes against
the proposal.
In voting with regard to Proposal 2, you may vote in favor of the proposal, against the proposal, or
may abstain from voting. The vote required to approve Proposal 2 is majority of the shares of common
stock represented and entitled to vote on Proposal 2, provided a quorum is present. Abstentions will be
considered in determining the number of votes required to obtain the necessary majority vote for the
proposal, and therefore will have the same legal effect as votes against the proposal.
In voting with regard to Proposal 3, stockholders may vote for a frequency of one, two or three
years. The frequency (every one, two or three years) receiving the greatest number of votes of the
shares represented and entitled to vote at the Annual Meeting, provided a quorum is present, will be
considered the frequency preferred by stockholders. As a result, abstentions will therefore have no
effect on such vote.
In voting with regard to Proposal 4, you may vote in favor of the proposal, against the proposal, or
may abstain from voting. The vote required to approve Proposal 4 is a majority of the shares of
common stock represented and entitled to vote at the Annual Meeting, provided a quorum is present.
Abstentions will be considered in determining the number of votes required to obtain the necessary
majority vote for the proposal, and therefore will have the same legal effect as votes against the
proposal.
Neenah is not aware, as of the date hereof, of any matters to be voted upon at the Annual
Meeting other than those stated in this Proxy Statement. If any other matters are properly brought
before the Annual Meeting, your proxy gives discretionary authority to the persons named as proxies to
vote the shares represented thereby in their discretion.
What happens if I don’t return my proxy card or vote my shares?
If you hold your shares directly your shares will not be voted if you do not return your proxy card
or vote in person at the Annual Meeting. If your shares are held in the name of a bank or brokerage
firm (in ‘‘street name’’) and you do not vote your shares, your bank or brokerage firm can only vote
your shares in their discretion for proposals which are considered ‘‘discretionary’’ proposals. We believe
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that Proposal 4 is a discretionary proposal. Brokers are prohibited from exercising discretionary
authority for beneficial owners who have not provided voting instructions to the broker for proposals
which are considered ‘‘non-discretionary’’ (a ‘‘broker non-vote’’). We believe Proposals 1, 2 and 3 are
non-discretionary proposals. As such, broker non-votes will be counted for the purpose of determining
if a quorum is present, but will not be considered as shares entitled to vote on Proposals 1, 2 and 3,
and therefore will have no effect on the outcome of these proposals.
What happens if I sign, date and return my proxy card but do not specify how to vote my shares?
If a signed proxy card is received which does not specify a vote or an abstention, then the shares
represented by that proxy card will be voted FOR the election of all Class I director nominees
described herein, FOR the approval of the Company’s executive compensation, FOR annual
non-binding approvals of executive compensation, and FOR the ratification of the appointment of
Deloitte & Touche LLP as our independent registered public accounting firm for the year ending
December 31, 2017.
Why haven’t I received a printed copy of the Proxy Statement or annual report?
We are choosing to follow the Securities and Exchange Commission (‘‘SEC’’) rules that allow
companies to furnish proxy materials to stockholders via the Internet. If you received a Notice of
Internet Availability of Proxy Materials, or ‘‘Notice,’’ by mail, you will not receive a printed copy of the
proxy materials, unless you specifically request one. The Notice instructs you on how to access and
review all of the important information contained in the proxy statement and annual report as well as
how to submit your proxy over the Internet. If you received the Notice and would still like to receive a
printed copy of our proxy materials, you should follow the instructions for requesting these materials
included in the Notice. We plan to mail the Notice to stockholders by April 11, 2017.
Who pays for the cost of this proxy solicitation?
We will bear the cost of preparing, printing and filing the Proxy Statement and related proxy
materials. In addition to soliciting proxies through the mail, we may solicit proxies through our
directors, officers and employees, in person and by telephone or email and facsimile. We expect to
retain Okapi Partners LLC to aid in the solicitation at a cost of approximately $8,500, plus
reimbursement of out-of-pocket expenses. Brokerage firms, nominees, custodians and fiduciaries also
may be requested to forward proxy materials to the beneficial owners of shares held of record by them.
We will pay all expenses incurred in connection with the solicitation of proxies.
When will voting results be made available?
We will announce the final results on our web site at www.neenah.com shortly after the meeting
and on Form 8-K immediately following the meeting.
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BENEFICIAL OWNERSHIP
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information regarding the beneficial ownership of our common stock
as of March 31, 2017 with respect to: (i) each of our directors; (ii) each of the named executive officers
appearing elsewhere herein; and (iii) all executive officers and directors as a group, based in each case
on information furnished to us by such persons. As used in this Proxy Statement, ‘‘beneficial
ownership’’ means that a person has, as of March 31, 2017, or may have within 60 days thereafter, the
sole or shared power to vote or direct the voting of a security and/or the sole or shared investment
power to dispose of or direct the disposition of a security.
Name
Shares
Beneficially
Owned(1)
Percent of
Class(2)
William M. Cook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Margaret S. Dano . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sean T. Erwin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Steven S. Heinrichs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bonnie C. Lind . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Timothy S. Lucas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
John F. McGovern . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Philip C. Moore . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
John P. O’Donnell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
James R. Piedmonte . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Julie A. Schertell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stephen M. Wood . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All directors and executive officers as a group (15 persons) . . . . . . . . . . . . . . .
1,563(3)
2,460(4)
19,245(5)
22,303(6)
31,574(7)
16,375(8)
4,155
19,580(9)
78,502(10)
38,927(11)
7,008(12)
45,995(13)
317,592(14)
*
*
*
*
*
*
*
*
*
*
*
*
2.0
(1) Except as otherwise noted, the directors and executive officers, and all directors and executive
officers as a group, have sole voting power and sole investment power over the shares listed.
Shares of common stock held by the trustee of Neenah’s 401(k) Retirement Plan for the benefit of,
and which are attributable to our executive officers are included in the table.
(2) An asterisk indicates that the percentage of common stock beneficially owned by the named
individual does not exceed 1% of the total outstanding shares of our common stock.
(3) Includes 1,063 shares of common stock issuable upon conversion of restricted stock units that are
vested or will vest within 60 days of March 31, 2017.
(4) Includes 1,170 shares of common stock issuable upon conversion of restricted stock units that are
vested or will vest within 60 days of March 31, 2017.
(5) Includes 1,170 shares of common stock issuable upon conversion of restricted stock units that are
vested or will vest within 60 days of March 31, 2017. This total does not include 3,500 vested Stock
Appreciation Rights.
(6) This total does not include 9,850 vested Stock Appreciation Rights.
(7) This total does not include 5,385 vested Stock Appreciation Rights.
(8) Includes 1,170 shares of common stock issuable upon conversion of restricted stock units that are
vested or will vest within 60 days of March 31, 2017. This total does not include 9,310 vested Stock
Appreciation Rights.
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(9) Includes 1,186 shares of common stock issuable upon conversion of restricted stock units that are
vested or will vest within 60 days of March 31, 2017.
(10) This total does not include 41,811 vested Stock Appreciation Rights.
(11) This total does not include 6,287 vested Stock Appreciation Rights.
(12) This total does not include 18,788 vested Stock Appreciation Rights.
(13) Includes 1,170 shares of common stock issuable upon conversion of restricted stock units that are
vested or will vest within 60 days of March 31, 2017.
(14) On July 1, 2014 the Company converted all outstanding Stock Options to Stock Appreciation
Rights which are not included in the calculation of beneficial ownership. Stock Appreciation Rights
are disclosed in detail under the Outstanding Equity at the End of 2015 section of this Proxy
Statement.
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THIRD PARTIES
The following table sets forth information regarding the beneficial ownership of our common stock
as of December 31, 2016 for each person known to us to be the beneficial owner of more than 5% of
our outstanding common stock.
Name and Address of Beneficial Owner
Common Stock Beneficially Owned
Number of Shares
Percent of Class
Blackrock, Inc.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,867,930(1)
11.2%
55 East 52nd Street
New York, NY 10055
Royce & Associates LP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
941,545(2)
5.6%
745 Fifth Ave.
New York, NY 10151
FMR LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
892,538(3)
5.3%
245 Summer Street
Boston, MA 02210
The Vanguard Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
843,855(4)
5.0%
100 Vanguard Blvd.
Malverne, PA 19355
(1) The amount shown and the following information is derived from the Schedule 13G filed by
Blackrock, Inc. on January 17, 2017, reporting beneficial ownership as of December 31, 2016. Of
the 1,607,005 shares shown, BlackRock, Inc. has sole dispositive power over all of the shares and
sole voting power over 1,830,038 shares.
(2) The amount shown and the following information is derived from the Schedule 13G filed by
Royce & Associates LP on January 11, 2017, reporting beneficial ownership as of December 31,
2016. Royce & Associates, LP has sole dispositive power over all shares and sole voting power over
all shares.
(3) The amount shown and the following information is derived from the Schedule 13G filed by
FMR LLC, on February 14, 2017, reporting beneficial ownership as of December 31, 2016. Of the
892,538 shares shown FMR LLC has sole dispositive power over all of the shares, and sole voting
power over 2,238 shares.
(4) The amount shown and the following information is derived from the Schedule 13G filed by The
Vanguard Group, on February 10, 2017, reporting beneficial ownership as of December 31, 2016.
Of the 843,855 shares shown The Vanguard Group has sole dispositive power over 808,542 of the
shares, and sole voting power over 33,228 shares.
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ELECTION OF DIRECTORS (ITEM 1)
The Board unanimously recommends that the stockholders vote ‘‘FOR’’ the proposal to elect John
P. O’Donnell, William M. Cook, and Philip C. Moore as Class I directors for a three-year term
expiring at the 2020 Annual Meeting of Stockholders and until their successors have been duly elected
and qualified.
The Board currently consists of eight members divided into two classes of three directors and one
class of two directors. The directors in each class serve three year terms, with the terms of the Class I
directors expiring at the 2017 Annual Meeting. The Board has nominated John P. O’Donnell,
William M. Cook, and Philip C. Moore, each a current director of Neenah, for re-election as Class I
directors at the 2017 Annual Meeting. If elected, the nominees will serve a three-year term expiring at
the 2020 Annual Meeting of Stockholders and until his or her successor has been duly elected and
qualified.
Each of the nominees has consented to serve another term as a director if re-elected. If any of the
nominees should be unavailable to serve for any reason (which is not anticipated), the Board may
designate a substitute nominee or nominees (in which event the persons named on the enclosed proxy
card will vote the shares represented by all valid proxy cards for the election of such substitute nominee
or nominees), allow the vacancies to remain open until a suitable candidate or candidates are located,
or by resolution provide for a lesser number of directors.
If any incumbent nominee for director in an uncontested election should fail to receive the
required affirmative vote of the holders of a majority of the shares represented and entitled to vote at
the Annual Meeting, under Delaware law the director remains in office as a ‘‘holdover’’ director until
his or her successor is elected and qualified or until his or her earlier resignation, retirement,
disqualification, removal from office or death. In the event of a holdover director, the Board of
Directors in its discretion may request the director to resign from the Board. If the director resigns, the
Board of Directors may immediately fill the resulting vacancy, allow the vacancy to remain open until a
suitable candidate is located and appointed or adopt a resolution to decrease the authorized number of
directors.
Set forth below is certain information as of March 31, 2017, regarding the nominees and each
director continuing in office, including their ages, principal occupations (which have continued for at
least the past five years unless otherwise noted), current Board experience and participation, and how
the background, experience and qualification of each nominee and director make them well suited to
serve on Neenah’s Board.
Information Regarding Directors Nominated for Reelection
John P. O’Donnell, born in 1960, is President and Chief Executive Officer of the Company. Prior to
being CEO, Mr. O’Donnell served as Chief Operating Officer of the Company and President, Fine
Paper. Mr. O’Donnell was employed by Georgia Pacific Corporation from 1985 until 2007 and held
increasingly senior management positions in the Consumer Products division. Mr. O’Donnell served as
President of the North American Retail Business from 2004 through 2007, and as President of the
North American Commercial Tissue business from 2002 through 2004. Mr. O’Donnell received his BS
from Iowa State University. Mr. O’Donnell has served as a director of Neenah since November 2010.
Mr. O’Donnell has also served as a Director for Clearwater Paper since April 2016. Mr. O’Donnell’s
extensive experience in the paper and consumer products industries, and his leadership positions in the
Company, makes him an effective member of Neenah’s Board.
William M. Cook, born 1953, is the retired Executive Chairman (2015-2016) of Donaldson
Company Inc., a technology-driven global company that manufacturers filtration systems to remove
contaminants from air and liquids. Mr. Cook is also the former Chairman, President and Chief
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Executive Officer (2004-2015) of Donaldson. Prior to that, Mr. Cook held various roles at Donaldson
of increasing responsibility, including service as Senior Vice President, International (2000-2004); Chief
Financial Officer (2001-2004); and Senior Vice President, Commercial and Industrial (1994-2000).
Mr. Cook has served as a director of Neenah since July 21, 2016. Mr. Cook brings to the Neenah
Board his filtration industry and operations experience and financial expertise for the past 35 years at
Donaldson where he held a wide range of financial and business positions with global responsibilities.
Mr. Cook is an experienced public company Board member having served on the Donaldson Board
from 2004-2016 and as an independent public company Director for IDEX since 2008 and Valspar
since 2010. Mr. Cook also has valuable Board experience from his past service to various private and
charitable organizations. Mr. Cook holds a B.S. degree in Business Management and an M.B.A. degree
from Virginia Tech.
Philip C. Moore, born in 1953, retired as Senior Vice President, Deputy General Counsel and
Corporate Secretary of TD Bank Group, Toronto, Canada on December 31, 2016. Mr. Moore joined
TD Bank Group in May 2013, prior to which he had been a partner at McCarthy T´etrault LLP,
Canada’s national law firm where he practiced corporate and securities law in Toronto and Sydney,
Australia, with particular emphasis on corporate governance and finance, mergers and acquisitions and
other business law issues. He has been involved in many corporate mergers, acquisitions, dispositions
and reorganizations, as well as capital markets transactions in a variety of industries and geographies.
Mr. Moore has extensive experience in corporate transactions involving the pulp and paper industries.
Mr. Moore has been awarded the designation ‘‘Chartered Director’’ from the Directors College,
Canada’s leading director education program run by McMaster University and the Conference Board of
Canada. He has advised on the design and implementation of numerous executive compensation plans,
as well as on executive compensation governance matters. From 1994 until 2000, he was a director of
Imax Corporation and is currently a director of a number of private corporations. Mr. Moore has
served as a director of Neenah since November 30, 2004. Mr. Moore received his BA from McMaster
University and his LLB from Queen’s University. Mr. Moore’s educational background and extensive
experience in corporate governance and business law makes him an effective member of Neenah’s
Board.
Class II Directors—Term Expiring at the 2018 Annual Meeting
Margaret S. Dano, born in 1959, is Chairman of the Board for Superior Industries
International, Inc., a leading manufacturer of aluminum road wheels for use in the automobile and
light truck industry. Ms. Dano was appointed as Chairman of the Board in 2014 and has served as a
director for Superior since 2007. In addition, Ms. Dano currently serves as a director of Douglas
Dynamics, Inc., a manufacturer of snow and ice control equipment for the global light truck market, a
position she has held since 2012. From 2002 to 2005, Ms. Dano served as Vice President, Worldwide
Integrated Supply Chain and Operations for Honeywell Corporation. Prior to that she served as Vice
President, Worldwide Supply Chain Office Products & GM Printer Papers for Avery Dennison
Corporation from 1999 to 2002 and Vice President of Corporate Manufacturing & Engineering from
1996-1999. Ms. Dano has served as a director of Neenah since March 24, 2015. Ms. Dano received a
BS in mechanical engineering from Kettering University (formerly the General Motors Institute).
Ms. Dano’s senior executive experience in global manufacturing and supply chain and her public board
experience and leadership with manufacturing companies makes her an effective member of Neenah’s
Board.
Stephen M. Wood, Ph.D., born in 1946, is an Operating Partner with Snow Phipps Group LLC, an
internationally diversified investment company. Prior to this, he served as Chairman of the Board for
FiberVisions Corporation, which is a leading global manufacturer of synthetic fibers for consumer
products, construction and industrial applications. Dr. Wood was President and Chief Executive Officer
of FiberVisions from 2006 to 2012. Dr. Wood was also Chairman of the Board of ESFV which is a
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global joint Venture with JNC Corporation, a leading Japanese chemical company. From 2001 to 2004,
Dr. Wood served as President and Chief Executive Officer of Kraton Polymers, a specialties chemical
company, and Chairman and Representative Director of JSR Kraton Elastomers, a Japanese joint
venture company. Prior to this, Dr. Wood was President of the Global Elastomers business of Shell
Chemicals, Ltd., and a Vice President of that company. Dr. Wood was also elected International
President of the International Institute of Synthetic Rubber Producers. Dr. Wood has a BSc in
Chemistry and a Ph.D. in Chemical Engineering from Nottingham University, United Kingdom and is a
graduate of the Institute of Chemical Engineers. Dr. Wood has served as a director of Neenah since
November 30, 2004. Dr. Wood’s educational background and his experience as a senior executive of a
chemical manufacturing company provides the knowledge base and experience to make him an effective
member of Neenah’s Board.
Class III Directors—Term Expiring at the 2019 Annual Meeting
Sean T. Erwin, born in 1951, is the Chairman of our Board of Directors. Mr. Erwin served as the
Company’s President and Chief Executive Officer from 2004 through May 2011. Prior to the spin-off of
Neenah from Kimberly Clark Corporation on November 30, 2004 (the ‘‘spin-off’’), Mr. Erwin had been
an employee of Kimberly Clark since 1978, and had held increasingly senior positions in both finance
and business management. In January 2004, Mr. Erwin was named President of Kimberly Clark’s Pulp
and Paper Sector, which comprised the businesses transferred to us by Kimberly Clark in the spin-off.
He served as the President of the Global Nonwoven business from early 2001. He has also served as
the President of the European Consumer Tissue business, Managing Director of Kimberly Clark
Australia, as well as previously serving as President of the Pulp and Paper Sector, and President of the
Technical Paper business. Mr. Erwin received his BS in Accounting and Finance from Northern Illinois
University. Mr. Erwin served as a director of Carmike Cinemas, Inc. from 2012-2016. Mr. Erwin has
served as a director of Neenah since November 30, 2004. Mr. Erwin’s extensive experience as former
CEO of the Company and his vast industry experience and leadership positions make him an effective
member of Neenah’s Board.
John F. McGovern, born in 1946, is the founder, and since 1999 a partner, of Aurora Capital LLC,
a private investment and consulting firm based in Atlanta, Georgia. Prior to founding Aurora Capital,
Mr. McGovern served in a number of positions of increasing responsibility at Georgia Pacific
Corporation from 1981 to 1999, including Executive Vice President/Chief Financial Officer from 1994
to 1999. Previously, Mr. McGovern had been Vice President and Director, Forest Products and Package
Division of Chase Manhattan Bank. He currently serves as a director of Xerium Technologies, Inc.
where he serves as audit committee chairman. Mr. McGovern also served as a director of GenTek, Inc.
from 2003 to 2009, Maxim Crane Works Holdings, Inc. from 2005 to 2008, and Collective Brands Inc.
from 2003 to 2012. From 2006 to 2010, Mr. McGovern served as lead director of Neenah’s Board for
all executive sessions of non-management directors. Mr. McGovern has served as a director of Neenah
since January 10, 2006. Mr. McGovern received his BS from Fordham University. Mr. McGovern’s
extensive experience as the senior financial executive of a multinational paper products company and
his experience as an executive in the financial services industry as well as his experience on other public
company boards make him an effective member of Neenah’s Board.
Timothy S. Lucas, born in 1946, has served as an independent consultant on financial reporting
issues practicing as Lucas Financial Reporting since 2002. From 1988 to 2002, Mr. Lucas worked at the
Financial Accounting Standards Board (‘‘FASB’’), where he was the Director of Research and Technical
Activities, and Chairman of the FASB’s Emerging Issues Task Force. Mr. Lucas has served as a director
of Neenah since November 30, 2004. Mr. Lucas received his BA in Economics and BS in Accounting
from Rice University and his Master of Accounting from the Jesse H. Jones Graduate School, Rice
University. Mr. Lucas’ experience at FASB and his educational background make him an effective
member of Neenah’s Board.
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MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors conducts its business through meetings of the full Board and through
committees of the Board, consisting of an Audit Committee, a Compensation Committee and a
Nominating and Corporate Governance Committee, which we refer to as the Nominating Committee.
The Board of Directors held four meetings in 2016. The Company’s Corporate Governance Policies
provide that all directors are expected to regularly attend and participate in Board and Committee
meetings and encourage the directors to attend the Company’s Annual Meeting. In 2016 all of our
directors attended at least 75% of the meetings of the Board and meetings of the committees of which
he or she is a member. Neenah holds regularly scheduled executive sessions of the independent
directors at each Board meeting. As Chairman of the Board Mr. Erwin presides at all the executive
sessions other than meetings of the non-affiliated independent directors, at which Mr. McGovern
presides. All of the Company’s directors were in attendance at the 2016 Annual Meeting.
The following table describes the membership of each of the committees as of the 2017 Annual
Meeting:
Audit Committee
Nominating and Corporate
Governance Committee
Compensation Committee
Philip C. Moore . . . . . . . . . . . . . . . . .
Timothy S. Lucas . . . . . . . . . . . . . . . .
John F. McGovern . . . . . . . . . . . . . . .
Stephen M. Wood . . . . . . . . . . . . . . . .
Margaret S. Dano . . . . . . . . . . . . . . . .
William M. Cook . . . . . . . . . . . . . . . .
Number of meetings . . . . . . . . . . . . . .
X
Chair*
X
X*
8
X
Chair
X
6
X
Chair
X
6
*
The Board has determined, based on his experience at the FASB, that Mr. Lucas and Mr. Cook
are audit committee financial experts within the meaning of the SEC’s rules.
Audit Committee
The Audit Committee is comprised solely of directors who meet the independence requirements of
the New York Stock Exchange (‘‘NYSE’’) and the Securities Exchange Act of 1934, as amended
(‘‘Exchange Act’’), and are financially literate, as required by NYSE rules. At least one member of the
Audit Committee is an audit committee financial expert, as defined by the rules and regulations of
SEC. The Audit Committee has been established in accordance with applicable rules promulgated by
the NYSE and SEC. The Audit Committee assists the Board in monitoring:
• the quality and integrity of our financial statements;
• our compliance with ethical policies contained in our Code of Business Conduct and Ethics and
legal and regulatory requirements as well as the administration of our policy regarding related
party transactions;
• the independence, qualification and performance of our registered public accounting firm;
• the performance of our internal auditors; and
• related party transactions.
The Audit Committee is governed by the Audit Committee Charter approved by the Board. The
charter is available on our website at www.neenah.com.
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Nominating and Corporate Governance Committee
The Nominating Committee is comprised solely of directors who meet the NYSE independence
requirements. The Nominating Committee:
• oversees the process by which individuals are nominated to our Board;
• reviews the qualifications, performance and independence of members of our Board;
• reviews and recommends policies with respect to composition, organization, processes and
practices of our Board, including diversity; and
• identifies and investigates emerging corporate governance issues and trends that may affect us.
The Nominating Committee is governed by the Nominating and Corporate Governance Committee
Charter approved by the Board. The charter is available on our website at www.neenah.com.
Compensation Committee
The Compensation Committee is comprised solely of directors who meet NYSE independence
requirements, meet the requirements for a ‘‘nonemployee director’’ under the Exchange Act, and meet
the requirements for an ‘‘outside director’’ under Section 162(m) of the Internal Revenue Code of
1986, as amended (the ‘‘Code’’). The Compensation Committee:
• reviews and approves corporate goals and objectives relevant to the compensation of our Chief
Executive Officer and sets such compensation;
• approves, in consultation with our Chief Executive Officer, the compensation of our officers who
are elected by our Board;
• makes recommendations to our Board with respect to our equity-based plans and executive
incentive compensation plans; and
• reviews with management and approves awards under our long-term incentive-compensation
plans and equity-based plans.
The Compensation Committee is governed by the Compensation Committee Charter approved by
the Board. The charter is available on our website at www.neenah.com.
Additional information regarding the Compensation Committee’s processes and procedures for
consideration of executive compensation is provided in the Compensation Discussion and Analysis
below.
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CORPORATE GOVERNANCE
Board Leadership
The Board selects from among its members the Chairman of the Board. The Board also elects the
Chief Executive Officer of the Company. The current Board Leadership is as Follows:
Chairman of the Board:
Chief Executive Officer:
Sean T. Erwin
John P. O’Donnell
The Board believes that at this time it is appropriate for Mr. Erwin to serve as independent
Chairman while Mr. O’Donnell serves as Chief Executive Officer and a member of the Board.
Mr. O’Donnell’s position as both CEO and a Director provides a continuity of leadership between the
senior executive team and the Board and enhances the corporate governance environment of the
Board.
Independent Directors
Our Amended and Restated Bylaws provide that a majority of the directors on our Board shall be
independent and currently seven out of the eight directors are independent. In addition, the Corporate
Governance Policies adopted by the Board, described further below, provide for independence
standards consistent with NYSE listing standards. Generally, a director does not qualify as an
independent director if the director (or in some cases, members of the director’s immediate family)
has, or in the past three years has had, certain material relationships or affiliations with the Company,
its external or internal auditors, or other companies that do business with the Company. Having seven
out of eight independent directors provides Neenah with a sufficient level of oversight, governance and
independence without unduly limiting the senior executives from acting in the best interest of the
Company and its shareholders. Even though Mr. Erwin is considered independent according to NYSE
listing standards and SEC regulations, the Board appointed John F. McGovern to serve as Presiding
Director for meetings of the non-affiliated independent directors.
In evaluating the independence of our independent directors, the Board also considered whether
any of the independent directors had any material relationships with Neenah and concluded that no
such material relationship existed that would impair their independence. See ‘‘Approval of Related
Party Transactions’’ below. In making this determination, the Board relied both on information
provided by our directors as well as information developed internally by Neenah. As is currently the
case, immediately after the election of the nominees to the Board of Directors, a majority of all
directors holding office will be independent directors. The Nominating Committee and the Board have
affirmatively determined that seven of the Company’s eight directors do not have any relationship that
would interfere with the exercise of independent judgment in carrying out their responsibilities as
directors and are independent in accordance with NYSE listing standards, rules and regulations and
our Corporate Governance Policies. Neenah’s independent directors are Sean T. Erwin, Margaret S.
Dano, Stephen M. Wood, John F. McGovern, Timothy S. Lucas, Philip C. Moore and William M.
Cook.
Nomination of Directors
The Board of Directors is responsible for approving candidates for Board membership. The Board
has delegated the screening and recruitment process to the Nominating Committee, in consultation
with the Chairman of the Board and Chief Executive Officer. More specifically, our Nominating
Committee has adopted, and the Board has ratified, the ‘‘Neenah Paper, Inc. Policy Regarding
Qualification and Nomination of Director Candidates.’’
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The Nominating Committee seeks to create a Board that is as a whole strong in its collective
knowledge of, and diversity of skills and experience with respect to, accounting and finance,
management and leadership, vision and strategy, business operations, business judgment, crisis
management, risk assessment, industry knowledge, corporate governance, education, background and
global markets.
Qualified candidates for director are those who, in the judgment of the Nominating Committee,
possess all of the following personal attributes and a sufficient mix of the following experience
attributes to assure effective service on the Board. Personal attributes of a Board candidate considered
by the Nominating Committee include: leadership, ethical nature, contributing nature, independence,
interpersonal skills, and effectiveness. Experience attributes of a Board candidate considered by the
Nominating Committee include: financial acumen, general business experience, industry knowledge,
diversity of view-points, special business experience and expertise. When the Nominating Committee
reviews a potential new candidate, the Nominating Committee looks specifically at the candidate’s
qualifications in light of the needs of the Board and our company at that time, given the then current
mix of director attributes. Although the Company does not have a specific Board diversity policy, the
Nominating Committee looks at the diversity of experience, background and Board composition in
recommending director candidates as required by the Nominating Committee’s charter.
The Nominating Committee utilizes a variety of methods for identifying and evaluating nominees
for director. The Nominating Committee periodically assesses the appropriate size of the Board and
whether any vacancies on the Board are expected. In the event that vacancies are anticipated or
otherwise arise, the Nominating Committee will seek to identify director candidates based on input
provided by a number of sources, including: (i) Nominating Committee members; (ii) other directors of
Neenah; (iii) management of Neenah; and (iv) stockholders of Neenah. The Nominating Committee
also has the authority to consult with or retain advisors or search firms to assist in the identification of
qualified director candidates.
The Nominating Committee will consider nominees recommended by stockholders as candidates
for election to the Board. A stockholder wishing to nominate a candidate for election to the Board at
the Annual Meeting is required to give written notice to the Secretary of Neenah of his or her
intention to make a nomination. Pursuant to our Amended and Restated Bylaws, the notice of
nomination must be received by Neenah not less than 50 days nor more than 75 days prior to the
Annual Meeting, or if Neenah gives less than 60 days’ notice of the meeting date, the notice of
nomination must be received within 10 days after the Annual Meeting date is announced.
To recommend a nominee, a stockholder should write to Steven S. Heinrichs, Senior Vice
President, General Counsel and Secretary of Neenah, at 3460 Preston Ridge Road, Preston Ridge III,
Suite 600, Alpharetta, Georgia 30005. Any such recommendation must include:
• the name and address of the stockholder and a representation that the stockholder is a holder of
record of shares of our common stock;
• a brief biographical description for the nominee, including his or her name, age, business and
residence addresses, occupation for at least the last five years, and a statement of the
qualifications of the candidate, taking into account the qualification requirements set forth
above;
• a description of all arrangements or understandings between the stockholder and each nominee;
and
• the candidate’s consent to serve as a director if elected.
Once director candidates have been identified, the Nominating Committee will then evaluate each
candidate in light of his or her qualifications and credentials and any additional factors that the
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Nominating Committee deems necessary or appropriate, including those set forth above. Qualified
prospective candidates will be interviewed by the Chairman of the Board, the Chief Executive Officer
and at least one member of the Nominating Committee. The full Board will be kept informed of the
candidate’s progress. Using input from such interviews and other information obtained by the
Nominating Committee, the Nominating Committee will evaluate whether a prospective candidate is
qualified to serve as a director and, if so qualified, will seek full Board approval of the nomination of
the candidate or the election of such candidate to fill a vacancy on the Board.
Existing directors who are being considered for re-nomination will be re-evaluated by the
Nominating Committee based on each director’s satisfaction of the qualifications described above and
his or her performance as a director during the preceding year. All candidates submitted by
stockholders will be evaluated in the same manner as candidates recommended from other sources,
provided that the procedures set forth above have been followed.
All of the current nominees for director are current members of the Board. Based on the
Nominating Committee’s evaluation of each nominee’s satisfaction of the qualifications described
above, the Nominating Committee determined to recommend the three directors for re-election. The
Nominating Committee has not received any nominations from stockholders for the Annual Meeting.
Corporate Governance Policies
We have adopted the Neenah Paper, Inc. Corporate Governance Policies that guide the Company
and the Board on matters of corporate governance, including director responsibilities, Board
committees and their charters, director independence, director qualifications, director evaluations,
director orientation and education, director access to management, Board access to independent
advisors, and management development and succession planning. Copies of the Corporate Governance
Policies are available on our website at www.neenah.com.
Code of Business Conduct and Ethics
We have adopted the Neenah Paper, Inc. Code of Business Conduct and Ethics, which applies to
all of our directors, officers and employees. The Code of Business Conduct and Ethics meets the
requirements of a ‘‘code of ethics’’ as defined by SEC rules and regulations. The Code of Business
Conduct and Ethics also meets the requirements of a code of conduct under NYSE listing standards.
The Code of Business Conduct and Ethics is available on our website at www.neenah.com.
Risk Oversight
The Board participates in risk oversight through the Company’s Enterprise Risk Evaluation
conducted by our Chief Financial Officer and General Counsel, in conjunction with the Company’s
senior management team. Annual findings are reported to the Audit Committee pursuant to the
requirements of its charter and the full Board reviews an annual report of the findings as required by
our Corporate Governance Policies.
Communications with the Board of Directors
We have established a process for interested parties to communicate with members of the Board,
including non-management members of the Board. If you have any concern, question or complaint
regarding any accounting, auditing or internal controls matter, or any issue with regard to our Code of
Business Conduct and Ethics or other matters that you wish to communicate to our Board or non-
management directors, send these matters in writing to c/o General Counsel, Neenah Paper, Inc.,
Preston Ridge III, 3460 Preston Ridge Road, Suite 600, Alpharetta, Georgia 30005. Information about
our Board communications policy and procedures for processing Board communications for all
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interested parties can be found on our website at www.neenah.com under the link ‘‘Investor Relations—
Corporate Governance—Board of Directors—Board Communications Policy.’’
Approval of Related Party Transactions
The charter of the Audit Committee requires that the Audit Committee review and approve any
transactions that would require disclosure under SEC rules and regulations. To help identify related
party transactions and relationships, each director and named executive officer, as such term is used is
‘‘Additional Executive Compensation Information—Summary Compensation Table,’’ completes a
questionnaire on an annual basis that requires the disclosure of any transaction or relationships that
the person, or any member of his or her immediate family, has or will have with the Company.
Additionally, the Company’s Code of Business Conduct and Ethics prohibits related party transactions
and requires that any employee with knowledge of such a transaction provide written notice of the
relationship or transaction to the Company’s General Counsel. Neither Neenah nor the Board is aware
of any matter in 2016 that required the review and approval of the Audit Committee in accordance
with the terms of the charter.
Shareholder Rights Plan
The Company’s stockholder Rights Agreement expired on November 30, 2014. The Company has
decided at this time to not put a new plan in place. We will evaluate the need for such a plan in the
future as such need may arise.
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2016 DIRECTOR COMPENSATION
The Compensation Committee has responsibility for evaluating and making recommendations to
the Board of Directors regarding compensation for our nonemployee directors.
Each of our directors who are not employees receives the following compensation:
Item
Amount
Annual cash retainer . . . . . . . . . . . . . . . . . .
$36,000
Board and committee meeting fee . . . . . . . . .
$1,500 per meeting
Additional cash retainers for Committee and
Board Chairs:
• Board Chairman . . . . . . . . . . . . . . . .
• Audit Committee Chairman . . . . . . . .
• Compensation Committee Chairman . .
• Nominating Committee Chairman . . . .
Annual value of equity grant . . . . . . . . . . . . .
$30,000
$15,000
$15,000
$10,000
$80,000 (choice of 100% restricted
stock units or 50% restricted
stock units / 50% non-qualified
stock options)
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Neenah’s director compensation program is intended to align with market level compensation to
attract, motivate, and retain high-performing and diverse quality director talent. Neenah bi-annually
conducts a director pay study to ensure alignment with market level compensation. In 2016 the
directors all received 100% RSUs, which grant was a total of 1,170 shares (except for Mr. Cook who
received 1,063 shares based on the Company’s stock price on July 21, 2017). The number of stock
options and RSUs granted to nonemployee directors is calculated annually using a modified Black
Scholes formula used to provide a total equity value equal to the annual equity grant target in the same
manner as used to calculate grants for Company employees under the Long-Term Compensation Plan
(‘‘LTCP’’). Stock Options, when granted, become fully vested and exercisable on the first anniversary of
the date of grant. The RSUs become fully vested and convert to shares of our common stock on the
first anniversary of the date of grant. Employee directors receive no additional compensation and no
perquisites for serving on our Board. Neenah also established the Neenah Paper Directors’ Deferred
Compensation Plan (the ‘‘Directors’ Plan’’), which enables each of our nonemployee directors to defer
a portion of their cash compensation and RSU awards. In 2016 Mr. McGovern participated in the
Director’s Plan.
Each of our nonemployee directors are required to own Company stock equal to two times their
annual cash retainer. The valuation of restricted stock and options owned by our directors is calculated
pursuant to the same guidelines detailed in this Proxy Statement for our named executive officers. All
of our nonemployee directors met or exceeded the guidelines as of December 31, 2016.
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The following table shows the total compensation paid to each of our nonemployee directors in
2016.
Name
Sean T. Erwin . . . . . . . . . . . . . . . . . . . . . . . . . .
William M. Cook . . . . . . . . . . . . . . . . . . . . . . .
Margaret S. Dano . . . . . . . . . . . . . . . . . . . . . . .
Timothy S. Lucas . . . . . . . . . . . . . . . . . . . . . . .
John F. McGovern . . . . . . . . . . . . . . . . . . . . . .
Philip C. Moore . . . . . . . . . . . . . . . . . . . . . . . .
Stephen M. Wood . . . . . . . . . . . . . . . . . . . . . . .
Fees Earned or
Paid in Cash ($)
72,000
18,000(2)
57,000
70,000
70,000
58,500
68,000
Stock Awards Option Awards
($)(1)
79,946
79,969
79,946
79,946
79,946
79,946
79,946
($)
—
—
—
—
—
—
—
Total ($)
151,946
97,969
136,946
149,946
149,946
138,446
147,946
(1) Amounts reported in this column represent the grant date fair value of the 2016 RSU award
granted to each director, calculated in accordance with Financial Accounting Standards Board
Statement ASC Topic 718 (‘‘ASC 718’’). Due to restrictions imposed by Canadian law, Mr. Moore
is not able to receive a quarterly cash dividend on his RSUs. In lieu of receiving such dividends,
Mr. Moore is granted additional RSUs on the date of each dividend payment and in value to the
cash dividend that he would have received. Mr. Moore received 25 of these RSUs in 2016.
(2) Mr. Cook became a director on July 21, 2016.
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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
The following section presents an analysis, summary and overview of our compensation policies
and programs, including material decisions made under those policies and programs in setting the
compensation levels for 2016 for our ‘‘named executive officers’’ (‘‘NEO’’). Decisions made concerning
the total compensation package for our executives take into consideration the individual executive’s
level of responsibility within Neenah, the performance of Neenah relative to internal targets and peer
companies, and the creation of long term shareholder value. We strive to achieve a balanced and
competitive compensation package through a mix of base salary, performance-based cash bonuses,
long-term equity based incentives and awards, deferred compensation plans, pension plans and welfare
benefits.
Compensation Objectives and Philosophy
Neenah’s compensation policies are designed to incorporate the following attributes:
Included
Excluded
Significant component of pay based on
performance achievement; more senior positions
have a higher percentage of performance-based
pay. Maximum payment limit on incentive plans
Measures are based on achievement of financial
targets, attainment of strategic objectives and
enhancement of stockholder value, with a
clawback policy
Policies validated through independent consultant
reporting to Compensation Committee,
comparison to independent peer companies and
stockholder ‘‘say on pay’’ votes
Competitive mix of short term and long term
performance performance-based incentives
Strict insider trading policy
2016 Key Strategic and Financial Achievements
Guaranteed variable compensation and/or open
ended payments
Single trigger change-in-control arrangements
Re-pricing or cash buyout of underwater stock
appreciation rights without shareholder approval
Market timing of equity awards
Excise tax gross-ups
• Delivered record sales, earnings and cash generated from operations.
• Net sales of $942 million increased 6% versus 2015 and earnings per share of $4.26
increased 21% versus 2015
• Deployed cash in a disciplined fashion to maintain a strong Return on Capital and support
attractive shareholder returns
• Return on Invested Capital increased from 11.8% to 12.7%
• Direct cash returns to shareholders increased from $25 to $38 million, reflecting a double
digit increase in dividend payouts and increased share buybacks
• Debt was reduced from $229 to $221 million during the year, and the company maintained
its good credit ratings and metrics
• Completed important strategic initiatives
• Organic capital project to add transportation filtration capacity in the US
• Integration of FiberMark acquisition and delivery of end of curve synergies ahead of
schedule
• Total shareholder return of 39.3%
• Neenah stock price increase of 36% in 2016 compares to 29% increase in Russell 2000
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Following this section under the heading ‘‘Additional Executive Compensation Information’’ we
have included certain tables where you will find detailed compensation information for the named
executive officers. This section is intended to provide additional details regarding Neenah’s
compensation practices, as well as the information and process used to create and implement our
compensation program for our named executive officers and our other executive officers.
Named Executive Officers
• John P. O’Donnell, President and Chief Executive Officer
• Bonnie C. Lind, Senior Vice President, Chief Financial Officer and Treasurer
• Steven S. Heinrichs, Senior Vice President, General Counsel and Secretary
• Julie A. Schertell, Senior Vice President, President Fine Paper & Packaging
• James R. Piedmonte, Senior Vice President, Global Operations
Our Compensation-Setting Process
Role of Compensation Committee
The Compensation Committee is responsible for carrying out the Board’s responsibilities for
determining the compensation for our named executive officers. In that capacity, the Compensation
Committee (1) annually reviews and approves the corporate goals and objectives relating to our
executive compensation programs; (2) evaluates performance against those goals and objectives; and
(3) approves the compensation payable to our named executive officers.
The Role of Shareholder Say-on-Pay Votes
The Company provides its shareholders with the opportunity to cast an annual advisory vote on
executive compensation (a ‘‘say-on-pay proposal’’). At the Company’s annual meeting of shareholders
held on May 26, 2016, greater than 98% of the votes cast on the say-on-pay proposal at that meeting
were voted in favor of the proposal. The Compensation Committee considered these results and
believes the voting results reflect strong shareholder support for the Company’s approach to executive
compensation. The Compensation Committee will continue to consider the outcome of the Company’s
say-on-pay votes in order to understand the environment of future compensation decisions for the
named executive officers.
Use of Compensation Consultants
The Compensation Committee charter grants the Compensation Committee authority to
independently retain compensation consultants, and in 2016 the Compensation Committee again
engaged Hugessen Consulting Inc. (‘‘Hugessen’’) to provide it with independent advice and assistance
in its deliberations regarding compensation matters. At the Committee’s request, Hugessen originated
certain analyses, reviewed the information provided by management and assisted the Compensation
Committee in assessing 2016 compensation for Neenah’s named executive officers. In addition,
Hugessen provided input to assist the Compensation Committee in establishing the 2016 targeted
compensation levels and performance criteria under the Company’s incentive plans.
The Compensation Committee must pre-approve any additional work of a material nature assigned
to its consultant and will not approve any such work that, in its view, could compromise Hugessen’s
independence as advisor to the Committee. Hugessen does not provide any other services to Neenah.
Decisions made by the Compensation Committee are the responsibility of the Committee and reflect
factors and considerations in addition to the information and recommendations provided by Hugessen.
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In 2016, the Compensation Committee, in accordance with SEC rules, considered the
independence factors having to do with consultant conflicts of interest and determined that the work of
the compensation consultant did not raise any conflicts of interest.
Role of Executive Officers
At the request of the Compensation Committee, our President and Chief Executive Officer, along
with our Senior Vice President and Chief Human Resources Officer, make recommendations to our
Compensation Committee regarding base salary and target levels for our annual performance bonuses
and long-term equity compensation for our executive officers. Mr. O’Donnell is not involved in setting
or approving his own compensation levels. These recommendations are based on the philosophy and
analysis described in this Compensation Discussion and Analysis section of this Proxy Statement.
Peer Comparison
To assist in evaluating and determining levels of compensation in 2016 for each element of pay, the
Compensation Committee reviewed various sources of data prepared by management including:
• Proxy data collected and analyzed from a peer group of companies in the paper, packaging, and
base materials and specialty chemical industries similar in size to Neenah (the ‘‘Peer Group’’). In
2016 the Peer Group consisted of the following companies:
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— AEP Industries Inc.
—Omnova Solutions, Inc.
—Clearwater Paper Corporation
—P.H. Glatfelter Company
—Innophos Holdings Inc.
—Quaker Chemical Corp
—Innospec, Inc.
—Rayonier Advanced Materials Inc.
—Kraton Corporation
—Schweitzer-Mauduit International, Inc.
—Mercer International, Inc.
—Tredegar Corporation
• Data collected from Equilar’s database using a broad industry cut of manufacturing companies
with revenues between $500 million and $2.0 billion.
• The only Peer Group change in 2016 was the elimination of OM Group, Inc. due to the
company being taken private in 2015.
To develop market figures, compensation opportunities for the named executive officers were
compared to the compensation opportunities for similarly situated executives in comparable positions.
Hugessen reviewed the results of these analyses and provided feedback to the Compensation
Committee in connection with their review of competitive pay practices.
Neenah’s management and the Compensation Committee do not believe that it is appropriate to
establish compensation levels based solely on peer comparisons or benchmarking; however, marketplace
information is one of the many factors that we consider in assessing the reasonableness of
compensation. Management and the Compensation Committee believe that information regarding pay
practices at other companies is useful to confirm that our compensation practices are competitive in the
marketplace.
Targeted Compensation Levels
The Compensation Committee establishes targeted total compensation levels based upon
performance objectives for our executive officers eligible to receive an annual cash bonus opportunity
under the Management Incentive Plan (‘‘MIP’’) and the equity awards under the Long-Term
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Compensation Plan (‘‘LTCP’’) as authorized by the Amended and Restated Neenah Paper, Inc. 2004
Omnibus Stock and Incentive Plan (the ‘‘Omnibus Plan’’). In making these determinations, our
Compensation Committee is guided by the compensation philosophy described below. Our
Compensation Committee also considers historical compensation levels, pay practices at companies in
the Peer Group and the relative compensation among Neenah’s senior executive officers. The
Compensation Committee also considers industry conditions, corporate performance versus peer
companies and the overall effectiveness of Neenah’s compensation program in achieving desired
performance levels.
As targeted total compensation levels are determined, our Compensation Committee also
determines the portion of total compensation that will be contingent, performance-based pay.
Performance-based pay includes cash awards under our MIP program and equity awards under our
LTCP, which may be earned based on the Company’s achievement of performance goals and whose
value depends upon long-term appreciation in stock price.
Neenah’s compensation philosophy is intended to provide competitive pay within the relevant
market by targeting the total compensation opportunities and to reward the executives for short term
and long term performance through an overall compensation mix that is targeted to include a minimum
of 50% performance-based compensation for named executive officers. Our Chief Executive Officer’s
compensation in 2016 was approximately 71% performance-based at target levels and our other NEOs
compensation was approximately 55% performance-based at target.
CEO @ Target
Other NEOs @ Target
Perf.-
Equity
48%
Base
Salary
29%
Perf.-
Cash
23%
Perf.-
Equity
31%
Perf.-
Cash
24%
Base
Salary
45%
22MAR201707242476
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Compensation Components
Our executive compensation includes the base components described below, each of which is
designed to accomplish specific goals of our compensation philosophy described above. In connection
with our discussion of each of such base components, the following questions will be addressed:
• Why Neenah chooses to pay each of the base components;
• How Neenah determines the amount of the various base components;
• How each component fits into Neenah’s overall compensation scheme and supports Neenah’s
compensation philosophy.
Base Salary
Base salary is a critical element of executive compensation because it provides our executives with
a base level of monthly income and also sets the base level for performance compensation. Individual
base salaries for our named executive officers are generally reviewed by comparing total compensation
opportunities within the Peer Group as discussed above. Salary increases, if any, are reviewed and
approved by the Compensation Committee on an annual basis. Factors considered in base salary
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increases include the Company’s performance over the past year, changes in individual executive
responsibility and the position of base salary together with all other compensation as indicated by our
analysis of the Peer Group.
This approach to base salary supports our compensation philosophy. The Compensation
Committee has determined that setting NEO base salaries at this level allows Neenah to be competitive
in attracting and retaining talent, while at the same time a substantial portion of the executive’s overall
compensation is performance based, thus aligning the executive’s and stockholders’ interests.
2016 Base Salary Decisions
After discussing the individual performance, experience, scope of responsibilities, and
Mr. O’Donnell’s recommendations for the other NEOs, the Compensation Committee established the
base salaries for each NEO in January of 2016. In general, any increases in base pay are intended to be
competitive with the market and take into consideration the individual performance and scope of
responsibilities of each NEO.
The following table provides the base salary received by each named executive officer for 2016.
2015 Base Salary
2016 Base Salary % Increase
O’Donnell . . . . . . . . . . . . . . . . . . . . . . .
Lind . . . . . . . . . . . . . . . . . . . . . . . . . . .
Heinrichs . . . . . . . . . . . . . . . . . . . . . . .
Schertell . . . . . . . . . . . . . . . . . . . . . . . .
Piedmonte . . . . . . . . . . . . . . . . . . . . . .
$625,000
$346,000
$310,000
$336,000
$280,000
$750,000
$370,000
$330,000
$360,000
$280,000
20%
7%
6%
7%
0%
Annual Performance Bonuses
Annual cash incentive bonus opportunities are awarded under the MIP, and are based on our
achievement of performance goals established in the beginning of each calendar year. MIP target
bonuses are established as a percentage of base salary with a target bonus ranging from 45% to 80%
for NEOs. The Compensation Committee annually approves the target bonus range based on data
provided from the market surveys as previously described and based on the experience and knowledge
of the executive and the quality and effectiveness of their leadership within Neenah as determined by
the Compensation Committee. The amount of the actual MIP bonus may be adjusted up or down from
the target bonus based on Neenah’s year-end results (as measured by the objective and subjective
criteria set forth in the MIP plan for the applicable year, as previously approved by the Compensation
Committee). Actual MIP payments can range from 0-200% of the target bonus for our chief executive,
legal, operations and financial officers, and 0-250% for the business unit leaders, depending on whether
the results fall short of, achieve or exceed the identified performance goals.
Under the MIP, the Compensation Committee generally sets a range of possible payments from
zero to a maximum percentage of the target award based on its belief that no bonus should be earned
if performance is below established thresholds and its determination that the top end of the range
should provide an appropriate incentive for management to achieve exceptional performance. Under
the MIP, specific performance measures and thresholds are determined by the Compensation
Committee in consultation with Mr. O’Donnell, based on key metrics that support the achievement of
Neenah’s short-term and long-term strategic objectives.
Annual performance bonuses support our compensation philosophy in that they: (i) reward
Neenah’s executives for meeting and exceeding goals that contribute to Neenah’s short-term and
long-term strategic plan and growth; (ii) promote a performance-based work environment; and
(iii) serve as a material financial incentive to attract and retain executive talent.
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2016 Annual Performance Bonus Awards
For 2016, the Compensation Committee approved target bonuses for our named executive officers
as a percentage of base salary with a target bonus ranging from 45% to 80%. The performance goals
for the 2016 MIP program were set based on the following performance criteria and the relative
weighting set forth below: (i) adjusted corporate earnings before interest, income taxes, depreciation
and amortization (‘‘Corporate EBITDA’’), which is calculated as net income plus income tax expenses,
plus depreciation expense and amortization expense for intangibles, plus amortization expense for stock
options and restricted stock units adjusted for any one time events outside of the ordinary course of
business and (ii) business unit earnings before interest and taxes (‘‘EBIT’’) for our Fine Paper and
Technical Products business units, and (iii) progress achieved in implementing the Company’s strategic
plan:
2016 TARGET MIP
(% of Base Salary)
Corporate
EBITDA
Business Unit
EBIT
Strategic
Initiatives
Performance Criteria
O’Donnell . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lind . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Heinrichs . . . . . . . . . . . . . . . . . . . . . . . . . . .
Schertell . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Piedmonte . . . . . . . . . . . . . . . . . . . . . . . . . . .
80%
55%
50%
55%
45%
75%
75%
75%
25%
75%
—
—
—
50%
—
25%
25%
25%
25%
25%
Each goal was set at levels that both the Compensation Committee and management believed to
be challenging but attainable, and achievements would reflect significant performance by the Company.
On a stand-alone basis, Corporate EBITDA could have yielded a payout from 0% at threshold, 100%
at target and 200% at outstanding, and business unit EBIT could have yielded a payout from 0% at
threshold, 100% at target and 300% at maximum, based on year-end results. These targets are
consistent with our desire to incentivize and reward significant growth in profits.
The strategic plan objective was paid out at 100% of target reflecting performance in achieving a
set of strategic objectives considered critical for long-term growth. Results included the successful
completion of an organic capital project to add filtration capacity in the US, finishing the integration of
FiberMark and delivering end of curve synergies ahead of schedule, driving organic growth of targeted
categories, and other strategic corporate initiatives.
The performance goals and results for each of the financial metrics in 2016 were as follows:
Metric ($MM)
Threshold
(0%)
Target
(100%)
Outstanding Maximum
(200%)
(300%)
2016 Results
Payout %
Corporate EBITDA . . . . . . . . . . . . .
Fine Paper & Packaging EBIT . . . . . .
135
63
160
74
172
81
N/A
85
158
73
95%
87%
Based on the process described above, MIP payments were awarded as follows:
2016 MIP
at Target
2016 MIP
at Actual
% of Target
Earned
O’Donnell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lind . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Heinrichs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Schertell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Piedmonte . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$600,000
$203,500
$165,000
$198,000
$126,000
$577,500
$195,869
$158,813
$182,655
$121,275
96%
96%
96%
92%
96%
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Long-Term Equity Compensation
Long-term equity incentives under the LTCP consist of performance share units and stock
appreciation rights (‘‘SARs’’) granted on an annual basis, with stock appreciation rights representing
approximately 30% of the total value of the equity incentive awards and performance shares
representing approximately 70% of the total value of the equity award granted to an executive officer
for that year. This reflects the Company’s desire to emphasize the performance based incentives in the
LTCP. The total target LTCP grants are set at the beginning of the year for each named executive
officer at a minimum of 55% of the executive’s base salary. The Company typically grants 100% of the
SARs in conjunction with the first Board meeting of each fiscal year. Each year the Compensation
Committee reviews and approves a target number of performance share units for each of our named
executive officers and each other participant in the LTCP plan. The number of units actually earned by
each participant is determined by the Company’s corporate performance. The range of possible awards
is set by the Compensation Committee based on its: (i) belief that a minimal award shall be granted if
the performance measures are significantly below target levels; and (ii) determination that the top end
of the range provided an appropriate incentive for management to achieve exceptional performance.
The combination of SARs and performance share units focuses our executives on Neenah’s
financial performance and increasing shareholder value. It is aligned with and supports our stock
ownership policy. Long-term incentives also help retain employees during the performance periods.
2016 LTCP Awards
For 2016, the Compensation Committee approved equity grants under the LTCP for our named
executive officers with target values ranging from 55% to 170% of base salary pay as follows:
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2016 LTCP
(% of base Salary)
O’Donnell . . . . . . . . . . . . . . . .
Lind . . . . . . . . . . . . . . . . . . . .
Heinrichs . . . . . . . . . . . . . . . .
Schertell . . . . . . . . . . . . . . . . .
Piedmonte . . . . . . . . . . . . . . .
170%
75%
65%
75%
55%
For each of our named executive officers, the value was divided into awards of SARs and a target
number of performance share units, with 70% of the value in performance share units and 30% of the
value in SARs. The range of possible awards under the LTCP was selected to tie a substantial
percentage of their compensation to Neenah’s performance.
The number of SARs to be awarded to each named executive officer in 2016 was determined by
dividing the value of the portion of the LTCP award to be awarded as SARs (determined by the
Compensation Committee as described above) by the fair value of one stock option (determined using
a modified Black- Scholes formula), and then rounded to the nearest tens to produce the number of
shares subject to the applicable option award. Each grant of SARs made in 2016 vests in increments of
33.34%, 33.33% and 33.33% over a three year period, with vesting occurring on each anniversary of the
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applicable grant and a ten year term to exercise. The process described above resulted in grants of
SARs in 2016 to purchase the following options:
O’Donnell . . . . . . . . . . . . . . . . . . . .
Lind . . . . . . . . . . . . . . . . . . . . . . . .
Heinrichs . . . . . . . . . . . . . . . . . . . .
Schertell . . . . . . . . . . . . . . . . . . . . .
Piedmonte . . . . . . . . . . . . . . . . . . . .
2016 SARs
28,312
6,162
4,763
5,996
3,420
The target number of performance share units to be awarded to each named executive officer in
2016 was determined by dividing the value of the portion of the LTCP award to be awarded as
performance share units (determined by the Compensation Committee as described above) using fair
market value of the stock price as of the date of grant, and then rounded to the nearest ten shares.
The target number of performance share units are increased or decreased (to an amount equal to
between 40% to 200% of the target number) after a one year performance period. The units are then
subject to a two year holding period. After the end of the performance period, the adjustment of the
target number of shares will be calculated based on the Company’s achievement of performance goals
relative to the following equally weighted criteria: year over year growth in sales (constant currency),
year over year growth in return on invested capital, and relative total shareholder return (‘‘Relative
TSR’’). The Relative TSR (including dividend yield), is compared against the Russell 2000 Value Index.
The specific targets and results in 2016 were as follows:
Outstanding
2016 Results
Payout %
Metric
Threshold
Payout (as a % of Target) . . . .
40%
Target
100%
Return on Capital . . . . . . . . . . No increase
Increase of
37 basis points
Constant Currency Sales . . . . .
0% growth
9.1% growth
200%
Increase of
> 75 basis
points
> 11%
growth
Total Shareholder Return . . . . . 3rd Quartile
Median
Top Quartile
Overall Payout Percentage . . . .
Increase of
64 basis points
170%
6.4%
70 %
39.3%
2nd Quartile
190%
138%
Based on the process described above and our performance against the targets noted, performance
share unit (‘‘PSU’’) grants were awarded as follows:
O’Donnell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lind . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Heinrichs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Schertell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Piedmonte . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016 PSUs
at Target
15,401
3,352
2,591
3,261
1,860
2016 PSUs % of Target
Earned
21,254
4,626
3,576
4,501
2,567
Earned
138%
138%
138%
138%
138%
The earned shares are now in a two year hold period and are still subject to forfeiture based on
continued employment. All shares are scheduled to be released to active participants on December 31,
2018.
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Retirement Benefits
We maintain the Neenah Paper 401(k) Retirement Plan (the ‘‘401(k) Plan’’), which is a
tax-qualified defined contribution plan for employees. The 401(k) Plan is available to all Neenah’s U.S.
employees, but includes a special company profit-sharing contribution feature that is only applicable for
certain employees who are ineligible to participate in the Pension Plan. Further, we maintain a
supplemental retirement contribution plan (the ‘‘Supplemental RCP’’) which is a non-qualified defined
contribution plan which is intended to provide a tax-deferred retirement savings alternative for amounts
exceeding Internal Revenue Code limitations on qualified plans. Additional information regarding the
Supplemental RCP can be found in the 2016 Nonqualified Deferred Compensation table later in this
Proxy Statement. We also maintain the Deferred Compensation Plan, which is a non- qualified deferred
compensation plan for our executive officers. The Deferred Compensation Plan enables our executive
officers to defer a portion of annual cash compensation (base salary and non-equity awards under our
MIP). This plan is intended to assist our executive officers in maximizing the value of the compensation
they receive from the Company and assist in their retention. Additional information regarding the
Deferred Compensation Plan can be found in the 2016 Nonqualified Deferred Compensation table
later in this Proxy Statement.
We also maintain the Neenah Paper Pension Plan, a tax-qualified defined benefit plan (the
‘‘Pension Plan’’) and the Neenah Paper Supplemental Pension Plan, a non-qualified defined benefit
plan (the ‘‘Supplemental Pension Plan’’) which provide tax-deferred retirement benefits for certain of
our employees, including Ms. Lind and Mr. Piedmonte, who were employed by Kimberly-Clark (our
predecessor company prior to being spun-off) prior to December 31, 1996. Mr. O’Donnell,
Mr. Heinrichs, and Ms. Schertell do not participate in these plans. Additional information regarding
the Pension Plan and the Supplemental Pension Plan can be found in the 2016 Pension Benefits table
later in this Proxy Statement.
Neenah and the Compensation Committee believe that the Pension Plan, Supplemental Pension
Plan, Retirement Contribution Plan, Supplemental RCP, Deferred Compensation Plan and 401(k) Plan
are core components of our compensation program. The plans are competitive with plans maintained
by our peer companies and are necessary to attract and retain top level executive talent. Additionally,
the plans support the long-term retention of key executives by providing a strong incentive for the
executive to remain with Neenah over an extended number of years.
Severance Payments
The Neenah Paper Executive Severance Plan (the ‘‘Executive Severance Plan’’) covers designated
officers, including all of our named executive officers, and provides certain severance benefits upon
termination of employment following a change in control of Neenah. Upon termination of the officer’s
employment by Neenah without ‘‘cause’’ or by the officer for ‘‘good reason’’ (as defined in the
Executive Severance Plan) within the two-year period following a change in control or a termination by
us without ‘‘cause’’ during the one-year period preceding such a change in control, the Executive
Severance Plan as in effect as of December 31, 2016 provided that the officer would be entitled to a
cash payment equal to the sum of: (i) two times the sum of his annual base salary and targeted annual
bonus; (ii) any qualified retirement plan benefits forfeited as a result of such termination; (iii) the
amount of retirement benefits such officer would have received under the qualified and supplemental
retirement plans but for his or her termination for the two-year period following his or her termination;
(iv) the cost of medical and dental COBRA premiums for a period of two years; and (v) a cash
settlement of any accrued retiree welfare benefits. In addition, the officer will be eligible to receive
outplacement services for a period of two years (up to a maximum cost to us of $50,000).
In March 2017, the Compensation Committee amended the Executive Severance Plan (the ‘‘2017
Executive Severance Plan’’), effective April 1, 2017, to provide named officers certain severance
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benefits both upon termination of employment following a change in control of Neenah and outside of
a change in control. The 2017 revisions also categorize the participating officers as either ‘‘Tier 1,’’
‘‘Tier 2’’ or ‘‘Tier 3’’ participants in order to provide varying benefit amounts to the different officers.
All NEOs are Tier 1 participants.
Upon termination of the officer’s employment by Neenah without ‘‘cause’’ or by the officer for
‘‘good reason’’ (as defined in the 2017 Executive Severance Plan) outside of a change in control of
Neenah each NEO will be entitled to an amount equal to one and one-half times his or her base
salary. Upon termination of the officer’s employment by Neenah without ‘‘cause’’ or by the officer for
‘‘good reason’’ within the two-year period following a change in control, the 2017 Executive Severance
Plan provides that each NEO will be entitled to the sum of (i) two times the sum of his or her annual
base salary, (ii) the amount of bonus under Neenah’s Management Incentive Plan that he or she has
earned through the date of the change in control plus two times his or her targeted annual bonus;
(iii) any profit-sharing contributions or pension plan benefits forfeited as a result of such termination;
(iv) the amount of profit-sharing contributions and pension plan benefits such participant would have
received under the qualified and supplemental retirement plans but for his or her termination for the
two-year period following his or her termination; and (v) the cost of medical and dental COBRA
premiums for a period of two years. In addition, each NEOs will be fully vested in his or her account
under the Deferred Compensation Plan and any awards granted to him or her under the Omnibus
Plan.
In addition, upon termination of an NEO’s employment by Neenah without ‘‘cause’’ or by the
officer for ‘‘good reason’’ the NEO will be eligible to receive reimbursement for outplacement service
costs for a period of two years for an amount not to exceed $50,000.
Payment of the benefits under the Executive Severance Plan is subject to the applicable executive
executing an agreement that includes restrictive covenants and a general release of claims against us.
These benefits are intended to recruit and retain key executives and provide continuity in Neenah’s
management in the event of a change in control. We believe the Executive Severance Plan is consistent
with similar plans maintained by our peer companies and therefore is a core component of our
compensation program necessary to attract and retain key executives.
Timing of Compensation
Base salary adjustments, if any, are made by our Compensation Committee at the first meeting of
each fiscal year (with the adjustments effective as of January 1 of that same year). Stock option grants
and performance share unit target levels and awards are made in the manner described above. We do
not coordinate the timing of equity awards with the release of non-public information. The exercise
price of the stock options is established at the fair market value of the closing price of our stock on the
date of the grant.
Tax and Accounting Consideration
In general, the tax and accounting treatment of compensation for our named executive officers has
not been a core component used in setting compensation. In limited circumstances we do consider such
treatment and attempt to balance the cost to Neenah against the overall goals we intend to achieve
through our compensation philosophy. In particular, our intent is to maximize deductibility of our
named executive officers’ compensation under Code Section 162(m) while maintaining the flexibility
necessary to appropriately compensate our executives based on performance and the existing
competitive environment. The MIP and LTCP programs are performance based and are designed to be
fully deductible under Code Section 162(m).
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Stock Ownership Guidelines
The Compensation Committee has adopted stock ownership guidelines to foster long-term stock
holdings by company leadership. These guidelines create a strong link between stockholders’ and
management’s interests. Named executive officers are required to own a designated multiple of their
respective annual salaries. The multiples are as follow:
Stock Ownership
Multiple of Salary
O’Donnell . . . . . . . . . . . . . . . .
Lind . . . . . . . . . . . . . . . . . . . .
Heinrichs . . . . . . . . . . . . . . . .
Schertell . . . . . . . . . . . . . . . . .
Piedmonte . . . . . . . . . . . . . . .
6x
4x
4x
4x
4x
Each of the named executive officers is required to hold at least 50% of their annual performance
share grants until they reach the ownership guidelines. The following holdings are counted toward
fulfilling guidelines, with each being valued using our stock price as of December 31 of each year;
(i) stock held in the 401(k) plan, other deferral plans, outright or in brokerage accounts;
(ii) performance share units or restricted stock units earned but not vested or not paid out; and (iii) ‘in
the money’ value of vested or unvested stock options and SARs. Penalties for continued failure to meet
the guidelines include payment of MIP compensation in Neenah stock and reduction of LTCP
compensation. All of our named executive officers met or exceeded the guidelines as of December 31,
2016.
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Clawback Policy
The Compensation Committee adopted a ‘‘clawback policy’’ for all executives and other employees
participating in our MIP program concerning the future payment of MIP payments and long term
equity grants under the LTCP program. This policy gives the Board the authority to reclaim certain
overstated payments made to Neenah employees due to materially inaccurate results presented in the
Company’s audited financial statements.
Policies against Hedging and Pledging Securities
Our insider trading policy provides that directors, officers and employees are prohibited from
engaging in short sales and buying or selling puts or calls or other derivative securities of Neenah.
Directors and officers are also prohibited from holding Neenah securities in a margin account or
pledging Neenah securities as collateral for a loan.
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COMPENSATION COMMITTEE REPORT
The Compensation Committee oversees Neenah’s compensation policies and programs on behalf
of the Board. In fulfilling this responsibility, the Compensation Committee has reviewed and discussed
with Neenah’s management the Compensation Discussion and Analysis included in this Proxy
Statement. In reliance on such review and discussions, the Compensation Committee recommended to
Neenah’s Board of Directors that the Compensation Discussion and Analysis be included in this Proxy
Statement and in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.
Compensation Committee:
Stephen M. Wood, Chairman
John F. McGovern
Margaret S. Dano
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ADVISORY VOTE ON EXECUTIVE COMPENSATION (ITEM 2)
The Board of Directors unanimously recommends that the stockholders vote ‘‘FOR’’ the approval
of the Company’s executive compensation.
Section 14A of the Securities Exchange Act of 1934, as amended (the ‘‘Exchange Act’’) requires
that we include in this proxy statement a non-binding stockholder vote on our executive compensation
as described in this proxy statement (commonly referred to as ‘‘Say-on-Pay’’).
We encourage stockholders to review the Compensation Discussion and Analysis (‘‘CD&A’’)
section of this proxy statement. Our executive compensation program has been designed to pay for
performance and align our compensation programs with business strategies focused on long-term
growth and creating value for stockholders while also paying competitively and focusing on total
compensation. The Company’s executive compensation programs are designed to attract, motivate and
retain highly qualified executive officers who are able to achieve corporate objectives and create
stockholder value. The Compensation Committee believes the Company’s executive compensation
programs reflect a strong pay-for-performance philosophy and are well aligned with the stockholders’
long-term interests without promoting excessive risk. We feel this design is evidenced by the following:
• A majority of our executives’ compensation is directly linked to our performance and the
creation of stockholder value. The overall compensation mix is targeted to include at least 50%
performance based compensation for the named executive officers with a higher percentage of
our CEO’s compensation being performance based. In 2016 70% of our CEO’s compensation
was performance based at target levels.
• Our long-term incentive awards are exclusively in the form of performance share units, stock
options and stock appreciation rights and all of our incentive plans have capped payouts.
• LTCP grants are split with 70% of the total value of the awards granted as performance share
units with a three-year vesting period, and 30% as stock appreciation rights with annual vesting
over a three-year period. This reflects the Company’s desire to emphasize performance based
incentives. For our performance share units, we use objective performance metrics closely tied to
financial performance and shareholder value, such as increasing return on invested capital,
revenue growth, cash flow generation and relative total shareholder return. In 2016 LTCP grants
were awarded at 138% of target based on achieved growth in sales, return on invested capital
and total shareholder return.
• Our short-term incentive plan (MIP) also is based on a pay-for-performance philosophy, with
target bonus opportunities ranging from 45% to 80% of base salary based on improvements in
corporate and business unit profits and successful execution of strategic objectives. In 2016,
executives received a payment of 92% to 96% of target as a result of performance in corporate
EBITDA, business unit EBIT and the successful execution of strategic objectives.
• We have meaningful stock ownership requirements for our named executive officers.
• We do not have employment agreements or other individual arrangements with our named
executive officers that provide for a specified term of employment, compensation terms or
specific benefits upon a termination of employment.
• Benefits under our Executive Severance Plan in connection with a change-in-control are payable
only on a double trigger basis (i.e., following both a change in control and a qualifying
termination of employment).
• The Compensation Committee is advised by an independent compensation consultant who keeps
the Compensation Committee apprised of developments and best practices.
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• The Company has a clawback policy which allows the Company to recoup awards if payment or
vesting was based on financial criteria that are later deemed to be materially inaccurate.
• In 2017 the Compensation Committee amended the Executive Severance Plan to remove the
excise tax gross up provision.
The Board strongly endorses the Company’s executive compensation program and recommends
that stockholders vote in favor of the following resolution:
RESOLVED, that the stockholders approve the compensation of the Company’s named
executive officers as described in this proxy statement under ‘‘Executive Compensation’’,
including the Compensation Discussion and Analysis and the tabular and narrative
disclosure contained in this proxy statement.
Because the vote is advisory, it will not be binding upon the Board of Directors or the
Compensation Committee and neither the Board of Directors nor the Compensation Committee will be
required to take any action as a result of the outcome of the vote on this proposal. The Compensation
Committee will consider the outcome of the vote when considering future executive compensation
arrangements.
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ADVISORY VOTE ON FREQUENCY OF ADVISORY VOTE ON
EXECUTIVE COMPENSATION (ITEM 3)
The Board of Directors unanimously recommends that the stockholders vote to conduct an
advisory vote on executive compensation every ‘‘One Year.’’
Enacted legislation requires that we include in this proxy statement a separate non-binding
stockholder vote to advise on whether the frequency of the Say-on-Pay vote should occur every one,
two or three years. You have the option to vote for any one of the three options, or to abstain on the
matter.
The Board has determined that an advisory vote on executive compensation every one year is the
best approach for the Company based on a number of considerations, including the following:
• An advisory vote on executive compensation every year will provide our stockholders the
opportunity to provide us with their direct input on our compensation policies, philosophy and
practices as disclosed in our proxy statement every year.
• An annual vote cycle will maximize stockholder communication by providing a direct, clear
means for the Company to receive and evaluate investor sentiment concerning our executive
compensation philosophy.
• Without annual stockholder input it could be difficult to understand whether a stockholder vote
pertains to the compensation year being discussed in the current proxy, or pay practices from
previous years. An annual vote enables the Compensation Committee to better understand the
implications of each vote and to respond accordingly.
Although the vote is non-binding, our Board of Directors will take into account the outcome of
the vote when making future decisions about the Company’s executive compensation policies and
procedures. The Company’s stockholders also have the opportunity to provide additional feedback on
important matters involving executive compensation. As discussed under ‘‘Corporate Governance—
Communications with the Board’’ the Company provides stockholders an opportunity to communicate
directly with the Board, including on issues of executive compensation. In addition, the rules of NYSE
require the Company to seek stockholder approval for new employee equity compensation plans and
material revisions thereto.
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ADDITIONAL EXECUTIVE COMPENSATION INFORMATION
Summary Compensation Table
The following table reflects compensation paid to or earned by our named executive officers for
services rendered during 2016, 2015 and 2014:
Change in
Pension
Value and
Non-Qualified
Deferred
Non-Equity
Name and Principal Position
Year
Salary
($)
Stock
Awards
($)(1)
Option Incentive Plan Compensation
Awards Compensation
($)(2)
Earnings
($)(4)
($)(3)
John P. O’Donnell . . . . . . . . . . . . 2016 750,000 1,103,789 382,495
2015 625,000
878,890 287,237
2014 625,000 1,144,078 236,502
President and
Chief Executive Officer
Bonnie C. Lind . . . . . . . . . . . . . . 2016 370,000
2015 346,000
2014 346,000
Senior Vice President, Chief
Financial Officer and Treasurer
Steven S. Heinrichs . . . . . . . . . . . 2016 330,000
2015 310,000
2014 310,000
Senior Vice President, General
Counsel and Secretary
Julie A. Schertell
. . . . . . . . . . . . 2016 360,000
Senior Vice President,
2015 336,000
President Fine Paper & Packaging 2014 336,000
James R. Piedmonte . . . . . . . . . . 2016 280,000
2015 280,000
2014 267,883
Senior Vice President,
Global Operations
240,238
242,340
315,685
185,697
188,753
245,533
233,716
220,745
266,430
133,307
144,764
179,859
83,249
79,221
65,268
64,348
61,763
50,778
81,006
72,139
55,062
46,204
47,269
37,170
577,500
850,000
827,500
195,869
322,575
314,036
158,813
263,500
256,525
182,655
416,724
233,251
121,275
214,200
199,506
—
—
—
386,467
410,095
695,665
—
—
—
—
—
—
230,979
291,444
504,763
All Other
Compensation
($)(5)
150,573
133,766
101,590
10,150
9,930
13,079
54,315
52,517
41,951
68,477
53,623
46,385
12,950
11,183
12,800
Total
($)
2,964,357
2,774,893
2,934,670
1,285,973
1,410,161
1,749,733
793,173
876,533
904,787
925,854
1,009,231
937,128
824,715
988,860
1,201,981
(1) Amounts shown reflect the aggregate grant date fair value with respect to performance share units, restricted stock units
and restricted stock granted pursuant to our Omnibus Plan. The amounts represent the grant date fair value of the awards
in accordance with ASC 718. The grant date fair value of the stock awards is equal to the fair market value of the
underlying common stock on the date of grant. See Note 9 to the audited Financial Statement included in our 2016 Annual
Report on Form 10-K for the assumptions used in valuing the performance share units.
(2) Amounts shown reflect the aggregate grant date fair value with respect to stock options and stock appreciation rights
(‘‘SAR’’) granted pursuant to our Omnibus Plan. The amounts represent grant date fair value of the SARs in accordance
with ASC 718. The grant date fair value of the SAR awards is determined using the Black-Scholes option valuation model.
See Note 9 to the audited Financial Statement included in our 2016 Annual Report on Form 10-K for the assumptions used
in valuing the SARs.
(3) Amounts shown reflect annual performance bonuses earned in the fiscal year and paid in the following year, and are
described in detail in the portion of our Compensation Discussion and Analysis, captioned ‘‘2016 Annual Performance
Bonus Awards.’’
(4) Amounts shown reflect the aggregate change during the year in the actuarial present value of accumulated benefit under
our Pension Plan and Supplemental Pension Plan. The large variability in value year-to-year is caused, for the most part, by
changes in the discount rates used to calculate the value from year to year, and not any increase or change in the pension
plan for any individual named executive officer. Messrs. Heinrichs, O’Donnell and Ms. Schertell do not participate in any of
the defined pension plans.
(5)
‘‘All Other Compensation’’ includes Neenah’s contribution to the 401(k) account of each of our named executive officers.
The amounts shown for Messrs. Heinrichs, O’Donnell and Ms. Schertell also include Neenah’s special company profit-
sharing contribution to their accounts in the 401(k) Plan and Supplemental Retirement Contribution Plan. The amounts
shown for Ms. Lind, Mr. Heinrichs and Ms. Schertell include expenses for an annual physical. The totals shown for
Messrs. O’Donnell, Heinrichs, Piedmonte and Ms. Schertell in 2016, 2015, and 2014 include expenses for tax preparation
and financial planning.
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2016 Grants of Plan Based Awards
The following table contains information relating to the plan based awards grants made in 2016 to
our named executive officers under the Omnibus Plan and is intended to supplement the 2016
Summary Compensation Table listed above.
Name and
Principal Position
Plan
Grant
Date
John P. O’Donnell .
.
President and Chief
Executive Officer
.
.
.
.
MIP 01/26/2016
Performance Units 01/26/2016
SAR 01/26/2016
.
.
.
Bonnie C. Lind .
.
Senior Vice President,
Chief Financial Officer
and Treasurer
.
.
MIP 01/26/2016
Performance Units 01/26/2016
SAR 01/26/2016
Steven S. Heinrichs .
.
Senior Vice President,
General Counsel and
Secretary
.
.
.
MIP 01/26/2016
Performance Units 01/26/2016
SAR 01/26/2016
.
.
Julie A. Schertell
.
Senior Vice President,
President Fine
Paper & Packaging
.
.
.
MIP 01/26/2016
Performance Units 01/26/2016
SAR 01/26/2016
James R. Piedmonte
.
Senior Vice President,
Global Operations
.
.
.
MIP 01/26/2016
Performance Units 01/26/2016
SAR 01/26/2016
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards(1)
Estimated Future Payouts
Under Equity Incentive
Plan Awards(2)
Threshold Target Maximum Threshold Target Maximum Options
(#)
(#)
(#)
(#)
($)
($)
($)
All Other
Option
Awards
(3)
Grant Date
Fair
Exercise
Number of or Base
Value of
Securities Price of Stock and
Underlying Option
Award
($/SH)
Option
Awards
($)
0
0
0
0
0
600,000 1,200,000
6,160
15,401
30,802
203,500
407,000
1,341
3,352
6,704
165,000
330,000
1,036
2,591
5,182
198,000
495,000
1,304
3,261
6,522
28,312
57.95
6,162
57.95
4,763
57.95
5,996
57.95
126,000
252,000
744
1,860
3,720
3,420
57.95
1,103,789
382,495
240,238
83,249
185,697
64,348
233,716
81,006
133,307
46,204
P
r
o
x
y
(1)
(2)
Reflects the range of potential annual incentive bonus payments that could have been earned by each named executive officer under
Neenah’s MIP in 2016. The actual bonuses earned in 2016 are reflected in the Summary Compensation Table above under the caption
‘‘Non-Equity Incentive Plan Compensation.’’ For more information regarding annual incentive bonus opportunities, see the discussion in the
Compensation Discussion and Analysis.
Reflects the range of potential performance share units that may be earned by each named executive officer, based on the Company’s level
of achievement of performance goals in 2016 and total shareholder return relative to a peer group for the performance period ending
December 31, 2016. For more information regarding the performance share units, including how the number of performance share units
awarded was determined and the vesting terms applicable to such units, see the discussion in the Compensation Discussion and Analysis.
Outstanding restricted share units receive dividends at the same rate as other stockholders.
(3)
The SARs vest as to one-third of the shares on each of the first three anniversaries of the grant date.
37
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3 C Cs: 13486
Outstanding Equity Awards at 2016 Fiscal Year-End
The following table sets forth information concerning outstanding equity awards for our named
executive officers as of December 31, 2016.
Option Awards
Stock Awards
Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised Option
Number of
Number of
Securities
Securities
Underlying
Underlying
Unexercised Unexercised
Options (#) Options (#)
Exercisable Unexercisable Options (#) Price ($)
Number of
Shares or Market
Value of
Units or
shares or Rights That
Option
Stock That
Units of
Exercise Expiration Have Not
Stock
Date
Have Not
Vested
Unearned
or Other
Vested
or Other
Rights That
Have Not
Vested ($)
Equity
Incentive
Equity
Incentive
Plan Awards:
Plan Awards: Market or
Number of
Unearned
Payout Value
of Unearned
Shares, Units Shares, Units
Name and Principal
Position
John P. O’Donnell
.
President and Chief
Executive Officer
.
.
.
.
.
125,000
8,234
6,256
5,813
.
.
.
Bonnie C. Lind .
.
Senior Vice President,
Chief Financial Officer
and Treasurer
.
.
.
0
1,603
.
Steven S. Heinrichs
.
Senior Vice President,
General Counsel and
Secretary
.
.
Julie A. Schertell .
.
Senior Vice President,
President Fine
Paper & Packaging
.
.
.
.
.
.
1,734
2,686
1,250
1,601
3,000
4,900
2,912
1,460
James R. Piedmonte .
.
Senior Vice President,
Global Operations
.
.
.
1,268
984
956
0
0
6,258
11,627
28,312
1,728
3,207
6,162
0
1,344
2,500
4,763
0
0
0
1,458
2,220
5,996
0
983
1,914
3,420
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
24.09(1)
31.23(4)
42.82(5)
59.72(6)
57.95(7)
01/24/2022
01/28/2023
01/27/2024
01/26/2025
01/25/2026
42.82(5)
59.72(6)
57.95(7)
01/27/2024
01/26/2025
01/25/2026
31.23(4)
42.82(5)
59.72(6)
57.95(7)
01/28/2023
01/27/2024
01/26/2025
01/25/2026
19.25(2)
24.09(3)
31.23(4)
42.82(5)
59.72(6)
57.95(7)
01/27/2021
01/24/2022
01/28/2023
01/27/2024
01/26/2025
01/25/2026
31.23(4)
42.82(5)
59.72(6)
57.95(7)
01/28/2023
01/27/2024
01/26/2025
01/25/2026
10,990(8)
15,401(9)
878,980
1,103,789
3,030(8)
3,352(9)
242,340
240,238
2,360(8)
2,591(9)
188,753
185,697
2,760(8)
3,261(9)
220,745
233,716
1,810(8)
1,860(9)
144,764
133,307
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
These options were granted to Mr. O’Donnell on January 25, 2013, and fully vested on December 31, 2016. These options were converted to
stock appreciation rights on July 1, 2014.
These options were granted on January 28, 2011 and vested as follows: 33.34% on January 28, 2012 and 33.33% on both January 28, 2013 and
January 28, 2014. These options were converted to stock appreciation rights on July 1, 2014.
These options were granted on January 25, 2012 and vested as follows: 33.34% on January 25, 2013 and 33.33% on both January 25, 2014 and
January 25, 2015. These options were converted to stock appreciation rights on July 1, 2014.
These options were granted on January 29, 2013, and vest as follows: 33.34% on January 29, 2014 and 33.33% on both January 29, 2015 and
January 29, 2016. These options were converted to stock appreciation rights on July 1, 2014.
These options were granted on January 28, 2014, and vest as follows: 33.34% on January 28, 2015 and 33.33% on both January 28, 2016 and
January 28, 2017. These options were converted to stock appreciation rights on July 1, 2014.
These stock appreciation rights were granted on January 27, 2015, and vest as follows: 33.34% on January 27, 2016 and 33.33% on both
January 27, 2017 and January 27, 2018.
These stock appreciation rights were granted on January 26, 2016, and vest as follows: 33.34% on January 26, 2017 and 33.33% on both
January 26, 2018 and January 26, 2019.
These performance share units target levels were set on January 27, 2015 and were earned on December 31, 2015, based on the Company’s
achievement of performance goals relating to return on invested capital and total shareholder return during the performance period ending
December 31, 2015. The awards were granted at 146% of target as disclosed in the CD&A Section of the 2016 Proxy Statement and the market
38
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value disclosed in this table reflects the sizing of these awards. These performance share units are subject to a two year continued service
requirement after the one year performance period, subject to certain exceptions.
(9)
These performance share units target levels were set on January 16, 2016 and were earned and vested on December 31, 2016, based on the
Company’s achievement of performance goals relating to return on invested capital and total shareholder return during the performance period
ending December 31, 2016. The awards were granted at 138% of target as disclosed in the CD&A Section of this Proxy Statement and the
market value disclosed in this table reflects the sizing of these awards. These performance share units are subject to a two year continued service
requirement after the one year performance period, subject to certain exceptions.
P
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39
Neenah Paper, Inc. DEF 14A
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3 C Cs: 39690
Option Exercises and Stock Vested in 2016
The following table sets forth information regarding options exercised and stock awards vested for
our named executive officers in 2016.
Option Awards
Stock Awards(2)
Name
Number of
Shares
Acquired on
Exercise (#)
Value Realized
on Exercise ($)
. . . . . . . . . . . . . . . . . . . . . .
John P. O’Donnell
Bonnie C. Lind . . . . . . . . . . . . . . . . . . . . . . . .
Steven S. Heinrichs . . . . . . . . . . . . . . . . . . . . . .
Julie A. Schertell
. . . . . . . . . . . . . . . . . . . . . . .
James R. Piedmonte . . . . . . . . . . . . . . . . . . . . .
—
10,187
—
—
7,215
—
365,668
—
—
284,894
(1) Reflects the market value of the shares on the vesting date.
Number of
Shares
Acquired on
Vesting (#)
28,207
7,783
6,054
6,569
4,434
Value Realized
on Vesting ($)(1)
2,403,236
663,112
515,801
559,679
377,777
(2) These shares represent the vesting of the Performance Share Units granted to each of our named
executive officer in January of 2014, which vested on December 31, 2016, after a one year performance
and two year holding period.
Pension Plans
The Neenah Paper Pension Plan is a broad-based, tax-qualified defined benefit pension plan, which
provides a benefit upon retirement to eligible employees of the Company. The Neenah Paper
Supplemental Pension Plan is a non-qualified defined benefit pension plan which covers pay and
benefits above the qualified limits in the Pension Plan. The compensation covered by these defined
benefit plans includes the salary and non-equity incentive payments set forth above in the Summary
Compensation Table. Under our Pension Plan an employee is entitled to receive an annual standard
benefit based on years of service and integrated with social security benefits. The Code generally places
limits on the amount of pension benefits that may be paid from the tax qualified Pension Plan.
However, we will pay any participant in our Supplemental Pension Plan the amount of the benefit
payable under the Pension Plan that is limited by the Code.
Retirement benefits for participants in the Pension Plan who have at least five years of service may
begin on a reduced basis at age 55 or on an unreduced basis at the normal retirement age of 65.
Unreduced benefits also are available (i) for participants with ten years of service at age 62 or as early
as age 60 with thirty years of service and (ii) as described below, for certain involuntary terminations.
Ms. Lind and Mr. Piedmonte are eligible for early retirement on a reduced basis. None of our other
named executive officers currently is eligible for retirement under our Pension Plan or Supplemental
Pension Plan.
The normal form of benefit is a single-life annuity payable monthly and other optional forms of
benefit are available including a joint and survivor benefit. Accrued benefits under our Supplemental
Pension Plan will, at the participant’s option, either be paid as monthly payments in the same form as
the retirement payments from the Pension Plan or as an actuarially determined lump sum payment
upon retirement after age 55.
For a discussion of how we value these obligations and the assumption we use in that valuation,
see Note 8 to our financial statements included in our 2016 Annual Report on Form 10-K. For
purposes of determining the present value of accumulated benefits, we have used the normal
retirement age under the plans, which is 65.
40
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2016 Pension Benefits
The following table sets forth information as of December 31, 2016 regarding accumulated benefits
to our named executive officers under our Pension Plan, Supplemental Pension Plan and German
Pension Plans.
Name
Plan Name
Number of Years
Credited Service(1)
Present Value of
Accumulated Benefit ($)(2)
Bonnie C. Lind . . . . . . . . . . . Neenah Paper Pension Plan
Neenah Paper Supplemental
Pension Plan
James R. Piedmonte . . . . . . . Neenah Paper Pension Plan
Neenah Paper Supplemental
Pension Plan
35.0
35.0
38.6
38.6
1,705,500
2,504,698
1,905,022
1,625,385
(1) Includes years of service credited for employment with Kimberly-Clark prior to Neenah’s spin-off
for Ms. Lind and Mr. Piedmonte.
(2) For a description of the assumptions applied in determining the present value of accumulated
benefits reported above, see Note 8 to the audited Financial Statements included in our 2016
Annual Report on Form 10-K.
P
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y
2016 Nonqualified Deferred Compensation
The Supplemental RCP is a nonqualified excess benefit and supplemental retirement plan pursuant
to which the Company provides additional retirement benefits to certain highly compensated
employees. These Company contributions are intended to provide contributions to those individuals
whose benefits under tax-qualified programs are restricted by the limitations permitted by the Internal
Revenue Code. Contributions are held for each participant in either an excess benefit or supplemental
benefit unfunded separate account. Participant accounts are credited with earnings, gains and losses
based on the rate of return of investment funds selected by the participant, which the participant may
elect to change in accordance with the participant’s elections under the Supplemental RCP. Payments
can be tied to termination of employment, including retirement, and would be paid in lump sum. If a
participant dies before receiving the full value of their account balance, the participant’s beneficiary
would receive the remainder of the benefit in one lump sum payment. All accounts would be
distributed promptly following a change in control, subject to a 10% reduction in a current participant’s
account and a 5% reduction in an account for a retired participant. The Deferred Compensation Plan
enables our executive officers to defer a portion of annual cash compensation (base salary and
non-equity awards under our MIP). This plan is intended to assist our executive officers in maximizing
the value of the compensation they receive from the Company and assist in their retention. Named
41
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executive officer participation in the Supplemental RCP and the Deferred Compensation Plan in 2016
is as follows:
Name
John P. O’Donnell . . . . . . . . . . . . . . . .
President and Chief
Executive Officer
Steven S. Heinrichs . . . . . . . . . . . . . . .
Senior Vice President,
General Counsel and Secretary
Julie A. Schertell . . . . . . . . . . . . . . . . .
Senior Vice President,
President Fine Paper & Packaging
Executive
Contributions
in last
Fiscal Year(1)
Company
Contributions
in last
Fiscal Year(1)
Aggregate
Earnings
in last
Fiscal Year
Aggregate
Withdrawal/
Distributions
0
0
0
$116,812
$15,581
$ 24,637
$11,769
$ 38,379
$ 8,065
0
0
0
Aggregate
Balance
at Last
Fiscal Year
$571,395
$202,253
$167,117
(1) None of our named executive officers elected to defer compensation in 2016 under the Deferred
Compensation Plan
(2) Amounts are reported as 2016 compensation in the ‘‘All Other Compensation’’ column of the
Summary Compensation Table.
Potential Payments Upon Termination
We do not have employment agreements or other individual arrangements with our named
executive officers that provide for specific benefits upon a termination of employment. In general, upon
termination of employment, an executive officer will receive compensation and benefits for which he or
she has already vested. This includes accrued but unpaid salary, accrued and unused vacation pay, and
payments and benefits accrued under our broad-based benefit programs. The following section
describes certain payments and benefits that would be payable to our named executive officers in the
event of their involuntary termination in connection with a change-in-control of Neenah, or other
involuntary termination.
Involuntary Termination in Connection with a Change in Control
The Executive Severance Plan as in effect as of December 31, 2016 provided certain severance
benefits upon termination of employment of designated officers, including all of our named executive
officers, following a change in control of Neenah. Upon termination of the officer’s employment by
Neenah without ‘‘cause’’ or by the officer for ‘‘good reason’’ (as defined in the Executive Severance
Plan) within the two year period following a change in control or a termination by us without ‘‘cause’’
during the one year period preceding such a change in control, the Executive Severance Plan as in
effect as of December 31, 2016 provided that the officer would be entitled to a lump sum cash payment
equal to the sum of: (i) two times the sum of his annual base salary and targeted annual bonus; (ii) any
qualified retirement plan benefits forfeited as a result of such termination; (iii) the amount of
retirement benefits such officer would have received under the qualified and supplemental retirement
plans but for his or her termination for the two year period following his or her termination; (iv) the
cost of medical and dental COBRA premiums for a period of two years; and (v) a cash settlement of
any accrued retiree welfare benefits. In addition, the officer will be eligible to receive outplacement
services for a period of two years (up to a maximum cost to us of $50,000). Payment of the benefits
under the Executive Severance Plan is subject to the applicable executive executing an agreement that
includes restrictive covenants and a general release of claims against us. The Executive Severance Plan
42
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P
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y
has been designed to limit exposure for any ‘‘parachute’’ excise taxes; but if such excise taxes apply, we
will reimburse the officer on an after-tax basis for any excise taxes incurred by that executive due to
payments received under the Executive Severance Plan.
The following table shows the payments that would be made to each of our named executive
officers under the Executive Severance Plan in connection with a change-in-control termination as of
December 31, 2016, without giving effect to the revisions effected by the 2017 Executive Severance
Plan.
Payments(8)
Severance(1) . . . . . . . . . . . . . . . . . . .
Prorated Non-Equity Incentive
Payment(2) . . . . . . . . . . . . . . . . . .
Unvested Stock Option Spread(3) . . . .
Unvested Restricted Stock(4) . . . . . . .
LTCP Payment
. . . . . . . . . . . . . . . . .
Retirement Benefit Payment(5) . . . . .
Welfare Benefit Values(6) . . . . . . . . .
Outplacement . . . . . . . . . . . . . . . . . .
Excise Tax & Gross-Up(7) . . . . . . . . .
Aggregate Payments . . . . . . . . . . . . . .
John P.
O’Donnell
Bonnie C.
Lind
Steven S.
Heinrichs
Julie A.
Schertell
James R.
Piedmonte
$2,700,000
$1,147,000
$ 990,000
$1,116,000
$ 812,000
$ 600,000
$1,332,930
$3,177,960
$
0
$ 272,159
41,408
$
50,000
$
$
0
$8,174,457
$ 203,500
$ 322,820
$ 771,060
$
0
$1,014,770
39,813
$
50,000
$
$
0
$3,548,963
$ 165,000
$ 250,451
$ 598,274
$
0
78,309
$
54,231
$
50,000
$
$
0
$2,186,265
$ 198,000
$ 299,542
$ 383,485
$
0
89,184
$
41,408
$
50,000
$
$
0
$2,177,619
$ 126,000
$ 183,665
$ 443,892
$
0
$ 196,879
35,630
$
50,000
$
$
0
$1,848,066
(1) Severance payment equal to two times the sum of the executive’s annual base salary at the time of
the termination plus the target bonus.
(2) The Target Non-Equity Incentive Payment is prorated for the number of days in the calendar year
prior to termination due to assumed termination on December 31, 2016.
(3) Total value of unvested stock option spread and unvested restricted stock that would become
vested upon a change in control assuming a share price of $85.20 and a change-in-control date of
December 31, 2016.
(4) All unearned target performance share units vest upon a change-in-control event. Amounts are
based on target 2015 and 2016 performance share unit grants.
(5) Actuarial value attributable to retirement benefits.
(6) Estimated value associated with the continuation of life insurance, medical, dental, and disability
benefits for two years post-termination.
(7) Gross-up payments covering the full cost of applicable excise taxes under Code sections 280G and
4999. In 2011 the Compensation Committee closed the plan to new participants and determined
that it would phase out the excise tax gross up provision in the Executive Severance Plan for the
current named executive officers.
(8) Reflects payments under the Executive Severance Plan as in effect on December 31, 2016. See
below for a discussion of revisions to the Executive Severance Plan effective April 1, 2017.
Other Involuntary Termination
The Neenah Paper Severance Pay Plan (the ‘‘Severance Pay Plan’’) provides regular severance to
our executive officers until the effectiveness of the 2017 Executive Severance Plan. Participation in the
Severance Pay Plan is conditioned upon each participant’s execution of a non-compete agreement. In
the event of a qualifying termination of employment without ‘‘Cause’’ (as defined in the Severance Pay
Plan), the Severance Pay Plan generally provides officers (including named executive officers) severance
equal to one year of base salary.
43
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2017 Executive Severance Plan
The 2017 Executive Severance plan (effective April 1, 2017) provides named officers certain
severance benefits both upon termination of employment following a change in control of Neenah and
outside of a change in control. The 2017 revisions also categorize the participating officers as either
‘‘Tier 1,’’ ‘‘Tier 2’’ or ‘‘Tier 3’’ participants in order to provide varying benefit amounts to the different
officers. All NEOs are Tier 1 participants in the 2017 Executive Severance Plan. After April 1, 2017,
officers covered by 2017 Executive Severance Plan will not be eligible to receive benefits under the
Severance Play Plan.
Upon termination of the officer’s employment by Neenah without ‘‘cause’’ or by the officer for
‘‘good reason’’ (as defined in the 2017 Executive Severance Plan) outside of a change in control of
Neenah each NEO will be entitled to an amount equal to one and one-half times his or her base
salary. Upon termination of the officer’s employment by Neenah without ‘‘cause’’ or by the officer for
‘‘good reason’’ within the two-year period following a change in control, the 2017 Executive Severance
Plan provides that each NEO will be entitled to the sum of (i) two times the sum of his or her annual
base salary, (ii) the amount of bonus under Neenah’s Management Incentive Plan that he or she has
earned through the date of the change in control plus two times his or her targeted annual bonus;
(iii) any profit-sharing contributions or pension plan benefits forfeited as a result of such termination;
(iv) the amount of profit-sharing contributions and pension plan benefits such participant would have
received under the qualified and supplemental retirement plans but for his or her termination for the
two-year period following his or her termination; and (v) the cost of medical and dental COBRA
premiums for a period of two years. In addition, each NEOs will be fully vested in his or her account
under the Deferred Compensation Plan and any awards granted to him or her under the Omnibus
Plan. Excise tax gross up payments are not included as a part of this plan.
In addition, upon termination of an NEO’s employment by Neenah without ‘‘cause’’ or by the
officer for ‘‘good reason’’ the NEO will be eligible to receive reimbursement for outplacement service
costs for a period of two years for an amount not to exceed $50,000.
44
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
The following directors served on the Compensation Committee during 2016: Ms. Dano,
Mr. McGovern and Dr. Wood. None of the members of the Compensation Committee was an officer
or employee of Neenah during 2016 or any time prior thereto, and none of the members had any
relationship with Neenah during 2016 that required disclosure under Item 404 of Regulation S-K. None
of our executive officers serves as a member of the board of directors or compensation committee of
any entity that has one or more of its executive officers serving as a member of our Board of Directors
or Compensation Committee.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act and rules and regulations of the SEC thereunder require our
directors, officers and persons who beneficially own more than 10% of our common stock, as well as
certain affiliates of such persons, to file initial reports of their ownership of our common stock and
subsequent reports of changes in such ownership with the SEC. Directors, officers and persons owning
more than 10% of our common stock are required by SEC rules and regulations to furnish us with
copies of all Section 16(a) reports they file. Based solely on our review of the copies of such reports
received by us and on information provided by the reporting persons, we believe that during 2016, our
directors, officers and owners of more than 10% of our common stock complied with all applicable
filing requirements, except that Mr. Moore filed a Form 4 late on March 30, 2017 representing
restricted stock units granted in lieu of a quarterly cash dividend granted in 2016 and 2017.
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AUDIT COMMITTEE REPORT
The Audit Committee assists the Board of Directors in fulfilling its oversight responsibilities
relating to the accuracy and integrity of Neenah’s financial reporting, including the performance and
the independence of Neenah’s independent registered public accounting firm, Deloitte & Touche LLP
(‘‘Deloitte’’). Our Board of Directors adopted an Audit Committee Charter, which sets forth the
responsibilities of the Audit Committee. The charter is available on our website at www.neenah.com.
The Audit Committee reviewed and discussed with management and Deloitte our audited financial
statements for the fiscal year ended December 31, 2016. The Audit Committee also discussed with
Deloitte the matters required to be discussed under Statement on Auditing Standards No. 1301,
Communications with Audit Committees, as adopted by the Public Company Accounting Oversight
Board (‘‘PCAOB’’).
The Audit Committee received the written disclosures and other communications from Deloitte
that are required by the applicable requirements of the PCAOB regarding Deloitte’s communications
with the Audit Committee, which included independence considerations. The Audit Committee
reviewed the audit and non-audit services provided by Deloitte for the fiscal year ended December 31,
2016 and determined to engage Deloitte as the independent registered public accounting firm of
Neenah for the fiscal year ending December 31, 2017. The Audit Committee also received and
reviewed a report by Deloitte outlining communications required by NYSE listing standards describing:
(1) the firm’s internal quality control procedures; (2) any material issue raised by a) the most recent
internal quality control review of the firm, b) peer review of the firm, or c) any inquiry or investigation
by governmental or professional authorities, within the preceding five years, respecting one or more
independent audits carried out by the firm, and any steps taken to deal with issues; and (3) (to assess
Deloitte’s independence) all relationships between Deloitte and us.
In reliance upon the Audit Committee’s review of the audited financial statements, the discussions
noted above, and Deloitte’s report, the Audit Committee recommended to the Board of Directors, and
the Board of Directors approved, that the audited financial statements be included in our Annual
Report on Form 10-K for the year ended December 31, 2016 for filing with the SEC.
Audit Committee:
Timothy S. Lucas, Chairman
Philip C. Moore
Stephen M. Wood
William M. Cook
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RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM (ITEM 4)
The Audit Committee and the Board unanimously recommend that the stockholders vote ‘‘FOR’’
the proposal to ratify the appointment of Deloitte & Touche, LLP as our independent registered public
accounting firm.
The Audit Committee of our Board of Directors, in accordance with its charter and authority
delegated to it by the Board, has appointed the firm of Deloitte & Touche LLP to serve as our
independent registered public accounting firm for the fiscal year ending December 31, 2017. As a
matter of good corporate practice, the Board has directed that such appointment be submitted to our
stockholders for ratification at the Annual Meeting. Deloitte & Touche LLP has served as our
independent registered public accounting firm since our spin-off from Kimberly-Clark Corporation in
November 2004 and is considered by our Audit Committee to be well qualified. If the stockholders do
not ratify the appointment of Deloitte & Touche LLP, the Audit Committee will reconsider the
appointment. Even if the stockholders ratify the appointment, the Audit Committee, in its discretion,
may appoint a different independent auditor at any time during the year if the Audit Committee
determines that such a change would be in the best interests of Neenah and its stockholders.
Representatives of Deloitte & Touche LLP will be present at the Annual Meeting and will have an
opportunity to make a statement if they desire to do so. They also will be available to respond to
appropriate questions from stockholders.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES AND
SERVICES
Audit Fees
Aggregate fees for professional services rendered for us by Deloitte & Touche LLP, the member
firms of Deloitte Touche and Tohmatsu and their respective affiliates (‘‘Deloitte & Touche’’) as of or
for the fiscal years ended December 31, 2016 and December 31, 2015 are set forth below. The
aggregate fees included in the Audit category are fees billed for the fiscal year for the integrated audit
of our annual financial statements and review of statutory and regulatory filings. The aggregate fees
included in each of the other categories are fees billed in the fiscal years.
Audit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Audit-Related Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All Other Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,737,150
0
0
0
$1,766,132
0
56,100
0
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,737,150
$1,822,232
2016
2015
Audit Fees were for professional services rendered for the audit of our annual consolidated
financial statements including the audit of our internal control over financial reporting and review of
quarterly reports on Form 10-Q filed by us with the SEC.
Tax Fees were for professional services rendered to assist us with compliance with the revised
Tangible Property Regulations of the Internal Revenue Service.
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Policy on Audit Committee Pre-Approval
To avoid potential conflicts of interest in maintaining auditor independence, the law prohibits a
publicly-traded company from obtaining certain non-audit services from its independent registered
public accounting firm. The law also requires the audit committee of a publicly traded company to
pre-approve other services provided by the independent registered public accounting firm. Pursuant to
its charter, the Audit Committee’s policy is to pre-approve all audit and permissible non-audit services
provided by the independent registered public accounting firm. These services may include audit
services, audit-related services, tax services and other services. In its pre-approval of non-audit services,
the Audit Committee considers, among other factors, the possible effect of the performance of such
services on the auditor’s independence. The Audit Committee may delegate pre-approval authority to a
member of the Audit Committee. The decisions of any Audit Committee member to whom
pre-approval authority is delegated shall be presented to the full Audit Committee at its next scheduled
meeting. The Audit Committee pre-approved all services performed by the independent registered
public accounting firm in fiscal 2016 and fiscal 2015, including those services described in the table
above under the captions ‘‘Audit Fees’’.
STOCKHOLDERS’ PROPOSALS FOR 2018 ANNUAL MEETING
Proposals of stockholders, excluding nominations for the Board, intended to be presented at the
2018 Annual Meeting should be submitted by certified mail, return receipt requested, and must be
received by us at our executive offices in Alpharetta, Georgia, on or before December 9, 2017, the date
that is 120 calendar days prior to the first anniversary of the date that this Proxy Statement is released
to stockholders, to be eligible for inclusion in our Proxy Statement and form of proxy relating to that
meeting and to be introduced for action at the 2018 Annual Meeting. In the event that the date of the
2018 Annual Meeting is changed more than thirty days from the date of this year’s meeting, notice by
stockholders should be received no later than the close of business on the later of the 150th calendar
day prior to the 2018 meeting or the 10th calendar day on which public announcement of the date of
such meeting is first made.
Any stockholder proposal must be in writing and must comply with Rule 14a-8 under the Exchange
Act and must set forth (i) a description of the business desired to be brought before the meeting and
the reasons for conducting the business at the meeting; (ii) the name and address, as they appear on
our books, of the stockholder submitting the proposal; (iii) the class and number of shares that are
beneficially owned by such stockholder; (iv) the dates on which the stockholder acquired the shares;
(v) documentary support for any claim of beneficial ownership as required by Rule 14a-8; (vi) any
material interest of the stockholder in the proposal; (vii) a statement in support of the proposal; and
(viii) any other information required by the rules and regulations of the SEC. Stockholder nominations
for the Board must comply with the procedures set forth above under ‘‘Corporate Governance—
Nomination of Directors.’’
The failure of a stockholder to deliver a proposal in accordance with the requirements of the
preceding paragraphs may result in it being excluded from our Proxy Statement and ineligible for
consideration at the 2018 Annual Meeting. Further, the submission of a proposal in accordance with
the requirements of the preceding paragraph does not guarantee that we will include it in our Proxy
Statement or that it will be eligible for consideration at the 2018 Annual Meeting. We strongly
encourage any stockholder interested in submitting a proposal to contact our Corporate Secretary in
advance of the submission deadline to discuss the proposal.
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OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL
MEETING
Our Board knows of no matters other than those referred to in the accompanying Notice of
Annual Meeting of Stockholders which may properly come before the Annual Meeting. However, if any
other matter should be properly presented for consideration and vote at the Annual Meeting or any
adjournment(s) thereof, it is the intention of the persons named as proxies on the enclosed form of
proxy card to vote the shares represented by all valid proxy cards in accordance with their judgment of
what is in the best interest of Neenah and its stockholders.
HOUSEHOLDING OF NOTICE OF INTERNET AVAILABILITY OF
PROXY MATERIALS
The SEC’s proxy rules permit companies and intermediaries, such as brokers and banks, to satisfy
delivery requirements for Notices, and if applicable, the proxy statements and annual reports, with
respect to two or more stockholders sharing the same address by delivering a single Notice to those
stockholders. This method of delivery, often referred to as householding, should reduce the amount of
duplicate information that stockholders receive and lower printing and mailing costs for companies.
Neenah and certain intermediaries are householding Notices, and if applicable, proxy statements and
annual reports, for shareholders of record in connection with its 2017 Annual Meeting. This means
that:
• Only one Notice, and if applicable, proxy statement and annual report, will be delivered to
multiple stockholders sharing an address unless you notify your broker or bank to the contrary;
• You can contact Neenah by calling 678-566-6500 or by writing to INVESTOR RELATIONS,
Neenah Paper, Inc., at 3460 Preston Ridge Road, Preston Ridge III, Suite 600, Alpharetta,
Georgia 30005 to request a separate copy of the Notice, and if applicable, proxy statement and
annual report, for the 2017 Annual Meeting and for future meetings or, if you are currently
receiving multiple copies, to receive only a single copy in the future or you can contact your
bank or broker to make a similar request; and
• You can request delivery of a single copy of the Notice, and if applicable, proxy statement and
annual report, from your bank or broker if you share the same address as another Neenah
shareholder and your bank or broker has determined to household proxy materials.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________
FORM 10-K
__________________________________________________
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2016
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 001-32240
NEENAH PAPER, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
3460 Preston Ridge Road
Alpharetta, Georgia
(Address of principal executive offices)
20-1308307
(I.R.S. Employer
Identification No.)
30005
(Zip Code)
Registrant's telephone number, including area code: (678) 566-6500
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Common Stock — $0.01 Par Value
Name of Each Exchange on Which Registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes
No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes
No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter
period that the registrant was required to submit and post such files). Yes
No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check
one):
Large accelerated filer
Accelerated filer
Non-accelerated filer
(Do not check if a smaller reporting company)
Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
No
The aggregate market value of the registrant's common stock held by non-affiliates on June 30, 2016 (based on the closing stock price on the New
York Stock Exchange) on such date was approximately $1,190,000,000.
As of February 21, 2017, there were 16,805,000 shares of the Company's common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Certain information contained in the definitive proxy statement for the Company's Annual Meeting of Stockholders to be held on May 23, 2017 is
incorporated by reference into Part III hereof.
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TABLE OF CONTENTS
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Selected Financial Data
Management's Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Directors and Executive Officers of the Registrant
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management
Certain Relationships and Related Transactions and Director Independence
Principal Accountant Fees and Services
Exhibits and Financial Statement Schedule
Form 10-K Summary
Page
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10
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40
41
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Part I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Part II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Part III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Part IV
Item 15.
Item 16.
Signatures
(This page has been left blank intentionally.)
PART I
In this report, unless the context requires otherwise, references to "we," "us," "our," "Neenah" or the "Company" are
intended to mean Neenah Paper, Inc., its consolidated subsidiaries and predecessor companies.
Item 1. Business
Overview
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We are organized into two primary businesses: a performance-based technical products business and a premium fine paper
and packaging business.
Our technical products business is a leading international producer of transportation, water and other filter media and
durable, saturated and coated substrates for a variety of end markets. We focus on categories where we believe we are, or
can be, a market leader. These categories include filtration media for transportation, water and other uses, backings for
specialty tapes and abrasives, performance labels and other specialty markets. Our dedicated technical products
manufacturing facilities are located near Munich, Germany, in Bolton, England, in Munising, Michigan and in Pittsfield,
Massachusetts. In addition, certain technical products are manufactured along with fine paper and packaging products in
shared facilities located in upstate New York and Quakertown, Pennsylvania. In 2017, a filtration machine (which was
converted from a fine paper machine) will begin production in Appleton, Wisconsin, a site also shared with the fine paper
and packaging business. For a description of the shared facilities, see Item 2, "Properties."
We believe our fine paper and packaging business is the leading supplier of premium printing and other high end specialty
papers in North America. Our products include some of the most recognized and preferred papers in North America, where
we enjoy leading market positions in many of our product categories. We sell our products primarily to authorized paper
distributors, as well as through converters, major national retailers and specialty businesses. Our primary fine paper and
packaging manufacturing facilities are located in Neenah and Whiting, Wisconsin and in Brattleboro, Vermont. In addition,
certain products are manufactured in shared facilities located in upstate New York and Quakertown, Pennsylvania, as well
as an existing site shared with technical products in 2017 in Appleton, Wisconsin. For a description of the shared facilities,
see Item 2, "Properties."
1
Company Structure
Our corporate structure consists of Neenah Paper, Inc. and seven direct wholly owned subsidiaries.
Neenah Paper, Inc. is a Delaware corporation that holds our trademarks and patents related to all of our U.S. businesses
(except Neenah Paper FVC, Inc), all of our U.S. fine paper and packaging inventory, the real estate, mills and
manufacturing assets associated with our fine paper and packaging operations in Neenah and Whiting, Wisconsin and all of
the equity in our subsidiaries listed below. The common stock of Neenah is publicly traded on the New York Stock
Exchange under the symbol "NP."
Neenah Paper Michigan, Inc. is a Delaware corporation and a wholly owned subsidiary of Neenah that owns the real estate,
mill and manufacturing assets associated with our U.S. technical products business in Munising, Michigan.
Neenah Paper FVC, LLC is a Delaware limited liability company and wholly owned subsidiary of Neenah that owns all of
the equity of Neenah Paper FR, LLC. Neenah Paper FR, LLC ("Fox River") is a Delaware limited liability company that
owns the real estate, mill and manufacturing assets associated with our fine paper and packaging operation in Appleton,
Wisconsin.
Neenah Paper International Holding Company, LLC is a Delaware limited liability company and wholly owned subsidiary
of Neenah that owns all of the equity of Neenah Paper International, LLC. Neenah Paper International, LLC is a Delaware
limited liability company that owns all of the equity of Neenah Germany GmbH and in conjunction with Neenah
Germany GmbH all of the equity of Neenah Services GmbH & Co. KG.
NPCC Holding Company LLC is a Delaware limited liability company and wholly owned subsidiary of Neenah that owns
all of the equity of Neenah Paper Company of Canada ("Neenah Canada"). Neenah Canada is a Nova Scotia unlimited
liability corporation that holds certain post-employment liabilities of our former Canadian operations.
Neenah Paper International Finance Company BV is a private company with limited liability organized under the laws of
the Netherlands and a wholly owned subsidiary of Neenah that facilitates the financing of our international operations.
Neenah Filtration, LLC is a Delaware limited liability company and wholly owned subsidiary of Neenah that owns all of
the equity of Neenah Technical Materials, Inc. ("NTM") and Neenah Filtration Appleton, LLC ("NFA"). NTM is a
Massachusetts corporation that owns all of the real estate, mills and manufacturing assets associated with our technical
materials business in Pittsfield, Massachusetts. NFA is a Delaware limited liability company that owns certain assets
associated with our filtration business in Appleton, Wisconsin. The filtration assets in Appleton, Wisconsin have started
production in January 2017. See "Management's Discussion and Analysis of Financial Condition and Results of
Operations — Liquidity and Capital Resources."
Neenah FMK Holdings, LLC is a Delaware limited liability company and a wholly owned subsidiary of Neenah that owns
all of the equity of ASP FiberMark, LLC ("ASP"). ASP is a Delaware limited liability company that owns all of the equity
of Neenah Northeast, LLC ("NNE") and Neenah International UK Limited, a United Kingdom corporation ("Neenah UK").
NNE is a Delaware limited liability company that owns certain real estate, mills and manufacturing assets associated with
our fine paper and packaging business and technical products business located in Brattleboro, Vermont, West Springfield,
Massachusetts, Quakertown and Reading, Pennsylvania, and Brownville and Lowville, New York. Neenah UK is a United
Kingdom corporation that owns all of the equity of Neenah Red Bridge International Limited ("Red Bridge"). Red Bridge
is a United Kingdom corporation that owns all of the real estate, manufacturing assets and inventory associated with our
technical products business in Bolton, England.
History of the Businesses
Neenah was incorporated in April 2004 in contemplation of the spin-off by Kimberly-Clark Corporation ("Kimberly-
Clark") of its technical products and fine paper businesses in the United States and its Canadian pulp business (collectively,
the "Pulp and Paper Business"). We had no material assets or activities until Kimberly-Clark's transfer to us of the Pulp and
Paper business on November 30, 2004. On that date, Kimberly-Clark completed the distribution of all of the shares of our
common stock to the stockholders of Kimberly-Clark (the "Spin-Off"). Following the Spin-Off, we are an independent
public company and Kimberly-Clark has no ownership interest in us.
2
Former Pulp Operations. At the Spin-Off, our pulp operations consisted of mills located in Terrace Bay, Ontario and
Pictou, Nova Scotia and approximately 975,000 acres of related woodlands. We disposed of these mills and woodlands in a
series of transactions from 2006 to 2010.
Technical Products. The Munising, Michigan mill was purchased by Kimberly-Clark in 1952. Subsequent to the purchase,
the mill was converted to produce durable, saturated and coated papers for sale and use in a variety of industrial
applications for our technical products business.
In October 2006, we purchased the outstanding interests of FiberMark Services GmbH & Co. KG and the outstanding
interests of FiberMark Beteiligungs GmbH (collectively "Neenah Germany"). At acquisition, the Neenah Germany assets
consisted of two mills located near Munich, Germany and a third mill near Frankfurt, Germany. These mills produced a
wide range of products, including transportation filter media, nonwoven wall coverings, masking and other tapes, abrasive
backings, and specialized printing and coating substrates.
In July 2014, we purchased all of the outstanding equity of Crane Technical Materials, Inc. from Crane & Co., Inc. The
acquired business provides performance-oriented wet laid nonwoven media for water filtration end markets as well as
environmental, energy and industrial uses. The business has two manufacturing facilities in Pittsfield, Massachusetts.
On October 31, 2015, we sold our paper mill located near Frankfurt, Germany (the "Lahnstein Mill") to the Kajo
Neukirchen Group (the "Buyer") for net cash proceeds of approximately $5.4 million. The Lahnstein Mill, which had
annual sales of approximately €50 million, had been operating as a stand-alone business, manufacturing non-woven
wallcoverings and various other specialty papers. See Note 13 of Notes to Consolidated Financial Statements,
"Discontinued Operations."
Fine Paper and Packaging. The fine paper and packaging business was incorporated in 1885 as Neenah Paper Company,
which initially operated a single paper mill in Neenah, Wisconsin. Kimberly-Clark acquired the mill in 1956. In 1981,
Kimberly-Clark purchased an additional mill located in Whiting, Wisconsin and in the late 1980s and early 1990s, the
capacity of the fine paper and packaging business was expanded by building two new paper machines at the Whiting mill
and completing a major expansion of the Neenah facility with the installation of a new paper machine, finishing center,
customer service center and an expanded distribution center.
In March 2007, we acquired the assets and brands of Fox River, which was a consolidating acquisition. In January 2012,
we purchased certain premium fine paper brands and other assets from Wausau Paper Mills, LLC, a subsidiary of Wausau
Paper Corp. ("Wausau") and in January 2013, we purchased certain premium business paper brands from the Southworth
Company ("Southworth").
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FiberMark Acquisition. On August 1, 2015, we purchased all of the outstanding equity of ASP FiberMark, LLC
("FiberMark") from ASP FiberMark Holdings, LLC ("American Securities") for approximately $118 million (the
"FiberMark Acquisition"). We added specialty coating and finishing capabilities with this acquisition, particularly in luxury
packaging and technical products. The results of operations and assets related to the FiberMark Acquisition are reflected in
each of our business segments.
Business Strategy
Our mission is to create value by improving the image and performance of everything we touch. We expect to create value
by growing in specialized niche markets that value performance or image and where we have competitive advantages. In
managing our businesses, we believe that achieving and maintaining a leadership position in our markets, responding
effectively to customer needs and competitive challenges, employing capital optimally, controlling costs and managing
risks are important to our long-term success. Strategies to deliver value include:
Leading in profitable, specialty niche markets — We will increase our participation in niche markets that can provide us
with leading positions and value our core competencies in performance-based fiber and non-woven media production,
coating and saturating. Key markets include filtration, specialty backings and technical products, and premium fine paper
and packaging.
Increasing our size, growth rate and portfolio diversification — We will invest and focus resources in higher growth
specialty markets to grow with customers in new geographies and to enter into adjacent markets that are growing and
profitable. We will do this both through organic initiatives that build on our technologies and capabilities, and through
acquisitions that fit with our competencies and provide attractive financial returns.
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Delivering consistent, attractive returns to our shareholders — We will continue to use Return on Invested Capital
("ROIC") as a key metric to evaluate investment decisions, measure our performance, maintain a prudent capital structure
and deploy cash flows in ways that can provide value, including direct cash returns to shareholders through a meaningful
dividend.
Products
Technical Products. Our technical products business is a leading international producer of performance-based substrates
such as filtration media for transportation, water and other filtration markets, and saturated and coated performance
materials used for industrial backings, labels and a variety of other end markets. In general, our technical products are sold
to other manufacturers as key components for their finished products. Several of our key market segments served,
including filtration and specialty backings for tape and abrasives, are global in scope. JET-PRO®SofStretchTM ,
KIMDURA®, PREVAILTM, NEENAH®, and GESSNER® are brands of our technical products business.
The following is a description of certain key products and markets:
Filtration media for transportation including induction air, fuel, oil, and cabin air applications. Transportation filtration
media are sold to suppliers of automotive companies as original equipment on new cars and trucks as well as to the
automotive aftermarket, which represents the large majority of sales.
Filtration media for water and other industrial end markets. Primary applications include reverse osmosis, catalytic
conversion, nanofiltration, ultrafiltration, pervaporation and vapor permeation, as well as other applications for specialty
markets.
Specialty backings including a) saturated and unsaturated crepe and flat paper tapes sold to manufacturers to produce
finished pressure sensitive products for sale in automotive, transportation, manufacturing, building construction, and
industrial general purpose applications, including sales in the consumer do-it-yourself retail channel and b) coated
lightweight abrasive paper used in the automotive, construction, metal and woodworking industries for both dry and wet
sanding applications.
Label and tag products made from both saturated base label stock and purchased synthetic base label stock, with coatings
applied to allow for high quality variable and digital printing. The synthetic label stock is recognized as a high quality, UV
(ultra-violet) stable product used for outdoor applications. Label and tag stock is sold to pressure sensitive coaters, who in
turn sell the coated label and tag stock to the label printing community.
Other latex saturated and coated papers for use by a wide variety of manufacturers. Premask paper is used as a protective
over wrap for products during the manufacturing process and for applying signs, labeling and other finished products.
Medical packaging paper is a polymer impregnated base sheet that provides a breathable sterilization barrier that provides
unique properties. Image transfer papers used to transfer an image from paper to tee shirts, hats, coffee mugs, and other
surfaces using a proprietary imaging coating for use in digital printing applications. Publishing and security papers used to
produce book covers, stationery, fancy packaging and passports. Other specialty products include clean room papers,
durable printing papers, release papers and furniture backers.
Fine Paper and Packaging. Our fine paper and packaging business manufactures and sells world-class branded premium
writing, text, cover and specialty papers and envelopes used in corporate identity packages, advertising collateral, premium
labels and packaging, and wide format applications. Often these papers are characterized by distinctive coating, finishing,
colors, and textures.
Commercial printing papers include premium writing, text and cover papers, and envelopes. Uses include advertising
collateral, stationery, corporate identity packages and brochures, pocket folders, annual reports, advertising inserts, direct
mail, business cards, scrapbooks, and a variety of other uses where colors, texture, coating, unique finishes or heavier
weight papers are desired. Our market leading brands in this category include CLASSIC®, CLASSIC CREST®, ESSE®,
ENVIRONMENT®, CAPITOL BOND®, ROYAL SUNDANCE®, SOUTHWORTH®, and TOUCHE® trademarks. Our
fine paper and packaging business has an exclusive agreement to manufacture, market and distribute Crane & Co.'s
CRANE'S CREST®, CRANE'S BOND®, and CRANE'S LETTRA®, branded fine papers in the commercial print
category. Our fine paper and packaging business has an exclusive agreement to market and distribute Gruppo Cordenons
SpA's SO...SILK®, PLIKE® and STARDREAM® branded fine papers in the U.S. and Canada. The fine paper and
packaging business also sells private watermarked paper and other specialty writing, text, and cover papers. Additionally,
the fine paper and packaging business provides leading solutions in the wide format arena, led by its Neenah Wide
Format® and CONVERD® brands.
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Premium packaging and label papers are used for wine, spirits and beer labels, folding cartons, box wrap, bags, hang tags,
and stored value cards servicing high-end retail, cosmetics, spirits, and electronics end-use markets. Our market leading
brands in these categories include NEENAH® Folding Board, "ESTATE LABEL®, Neenah® Box Wrap, PELLAQ®,
KIVAR®, SKIVERTEX®, ILLUSIO®, and SENZO®.
Bright papers are used in applications such as direct mail, advertising inserts, scrapbooks and marketing collateral. Our
brands in this category include ASTROBRIGHTS® and CREATIVE COLLECTIONTM. Additionally, business papers for
professionals and small businesses are sold under our Southworth® brand through major retailers.
The fine paper and packaging business also produces and sells other specialty papers that address a consumer's need for
enhanced image such as translucent papers, art papers, papers for optical scanning and other specialized applications.
Markets and Customers
Technical Products. The technical products business sells its products globally into product categories generally used as
base materials in the following applications: filtration, component backing materials for manufactured products such as
tape and abrasives, and other specialized product uses such as graphics and identification.
Several products (filtration media, abrasives, specialty tapes, labels) are used in markets that are directly affected by
economic business cycles. Other market segments such as image transfer papers used in small/home office and consumer
applications are relatively stable. Most products are performance-based and require qualification at customers; however,
certain categories may also be subject to price competition and the substitution of lower cost substrates in some less
demanding applications.
The technical products business relies on a team of direct sales representatives and customer service representatives to
market and sell approximately 95 percent of its sales volume directly to customers and converters.
The technical products business has more than 500 customers worldwide. The distribution of sales in 2016 was
approximately 43 percent in North America, 35 percent in Europe and 22 percent in Latin America and Asia. Customers
typically convert and transform base papers and film into finished rolls and sheets by adding adhesives, coatings, and
finishes. These transformed products are then sold to end-users.
Sales to the technical products business's three largest customers represented approximately 14 percent of total sales for the
segment in 2016. Although a complete loss of any of these customers would cause a temporary decline in the business's
sales volume, the decline could be partially offset by expanding sales to existing customers, and further offset over a
several month period with the addition of new customers.
Fine Paper and Packaging. We believe our fine paper and packaging business is the leading supplier of premium writing,
text and cover papers, bright papers and specialty papers in North America. These products are used in high-end collateral
material, business and legal professions, and corporate identity products. Our premium packaging business includes
products such as food and beverage labels and high-end packaging materials such as folding cartons and box wrap used for
luxury retail goods. Bright papers are generally used by consumers for flyers, direct mail and packaging.
The fine paper and packaging business sells its products in a variety of channels including authorized paper distributors,
converters, retailers, and direct to end users. Sales to distributors account for approximately 60 percent of revenue in the
fine paper and packaging business. During 2016, approximately 10 percent of the sales of our fine paper and packaging
business were exported to markets outside the United States.
Sales to the largest customer of the fine paper and packaging business represented approximately 15 percent of its total
sales in 2016. We practice limited sales distribution to improve our ability to control the marketing of our products.
Although a complete loss of this customer would cause a temporary decline in the business's sales volume, the decline
could be partially offset by expanding sales to existing customers, and further offset over a several month period with the
addition of new customers.
Concentration. In July 2014, Unisource Worldwide, Inc ("Unisource") and xpedx, formerly owned by International Paper
("xpedx") merged to form Veritiv Corporation ("Veritiv"). For the year ended December 31, 2016, sales to Veritiv
represented approximately 8 percent of consolidated net sales and approximately 15 percent of net sales of the fine paper
and packaging business. For the year ended December 31, 2015 and 2014 sales to Unisource and xpedx (and as merged
Veritiv) represented approximately 10 percent of consolidated net sales and approximately 20 percent of net sales of the
fine paper and packaging business.
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The following graphs present further information about our businesses by geographic area (dollars in millions):
Net Sales from Geographic Region
(in Millions)
Total Assets by Geographic Region
(in Millions)
Net sales and total assets are attributed to geographic areas based on the physical location of the selling entities and the
physical location of the assets. See Note 14 of Notes to Consolidated Financial Statements, "Business Segment and
Geographic Information", for information with respect to net sales, profits and total assets by business segment.
Raw Materials
Technical Products. Softwood pulp, specialty pulp and fibers, and latex are the primary raw materials consumed by our
technical products business. The technical products business purchases softwood pulp, specialty pulp and fibers, and latex
from various external suppliers. We believe that all of the raw materials for our technical products operations, except for
certain specialty latex grades and specialty softwood pulp, are readily available from several sources and that the loss of a
single supplier would not cause a shutdown of our manufacturing operations.
Our technical products business acquires all of its specialized pulp requirements from two global suppliers and certain
critical specialty latex grades from four suppliers. In general, these supply arrangements are not covered by formal
contracts, but represent multi-year business relationships that have historically been sufficient to meet our needs. We expect
these relationships to continue to operate in a satisfactory manner in the future. In the event of an interruption of production
at any one supplier, we believe that each of these suppliers individually would be able to satisfy our short-term
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requirements for specialized pulp or specialty latex. In the event of a long-term disruption in our supply of specialized pulp
or specialty latex, we believe we would be able to substitute other pulp grades or other latex grades that would allow us to
meet required product performance characteristics and incur only a limited disruption in our production. As a result, we do
not believe that the substitution of such alternative pulp or latex grades would have a material effect on our operations.
Fine Paper and Packaging. Hardwood pulp is the primary fiber used to produce products of the fine paper and packaging
business. Other significant raw material inputs in the production of fine paper and packaging products include softwood
pulp, recycled fiber, cotton fiber, dyes and fillers. The fine paper and packaging business purchases all of its raw materials
externally. We believe that all of the raw materials for our fine paper and packaging operations are readily available from
several sources and that the loss of a single supplier would not cause a shutdown of our manufacturing operations.
Energy and Water
The equipment used to manufacture the products of our technical products and fine paper and packaging businesses uses
significant amounts of energy, primarily electricity, natural gas, oil and coal. We generate substantially all of our electrical
energy at the Munising mill and approximately 25 percent of the electrical energy at our mills in Appleton, Wisconsin and
Bruckmühl, Germany. We also purchase electrical energy from external sources, including electricity generated from
renewable sources.
Availability of energy is not expected to be a problem in the foreseeable future, but the purchase price of such energy can
and likely will fluctuate significantly based on changes in demand and other factors.
An adequate supply of water is needed to manufacture our products. We believe that there is an adequate supply of water
for this purpose at each of our manufacturing locations.
Working Capital
Technical Products. The technical products business maintains approximately 25 to 30 days of raw materials and supplies
inventories to support its manufacturing operations and approximately 25 to 35 days of finished goods and semi-finished
goods inventory to support customer orders for its products. Sales terms in the technical products business vary depending
on the type of product sold and customer category. Extended credit terms of up to 120 days are offered to customers
located in certain international markets. In general, sales are collected in approximately 45 to 55 days and supplier invoices
are paid within 20 to 30 days.
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Fine Paper and Packaging. The fine paper and packaging business maintains approximately 10 days of raw material
inventories to support its paper making operations and about 55 days of finished goods inventory to fill customer orders.
Fine paper and packaging sales terms range between 20 and 30 days with discounts of zero to two percent for customer
payments, with discounts of one percent and 20-day terms used most often. Extended credit terms are offered to customers
located in certain international markets. Supplier invoices are typically paid within 60 days.
Competition
Technical Products. Our technical products business competes in global markets with a number of large multinational
competitors, including Ahlstrom Corporation, Munksjö, ArjoWiggins SAS and Hollingsworth & Vose Company. It also
competes in some, but not all, of these segments with smaller regional manufacturers, such as Monadnock Paper
Mills, Inc., Expera Specialty Solutions LLC., Potsdam Specialty Paper, Inc. and Paper Line S.p.A. We believe the basis of
competition in most of these segments are the ability to design and develop customized product features to meet customer
specifications while maintaining quality, customer service and price. We believe our research and development program
gives us an advantage in customizing base papers and developing advanced filter media to meet customer needs.
Fine Paper and Packaging. We believe our fine paper and packaging business is the leading supplier of premium printing
and other high end specialty papers in North America. Our fine paper and packaging business also competes in the
premium segment of the uncoated free sheet market. The fine paper and packaging business competes directly in North
America with Mohawk Fine Paper Inc. and other smaller companies. We believe the primary basis of competition for
premium fine papers are brand recognition, product quality, customer service, product availability, promotional support and
variety of colors and textures. Price also can be a factor particularly for lower quality printing needs that may compete with
opaque and offset papers. We have and will continue to invest in advertising and other programs aimed at graphic
designers, printers and corporate end-users in order to maintain a high level of brand awareness as well as communicate the
advantages of using our products. Our premium packaging business is focused on high-end packaging needs in end market
verticals like beauty products, spirits and retail. Primary bases of competition are similarly brand recognition, product
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quality, customer service, product availability, and a variety of colors and textures. Premium packaging is primarily a North
American business, but we also sell to customers in Asia and other markets outside the U.S. We believe the premium
packaging market to be highly fragmented, with multiple competitors, many of which produce premium packaging
products as a small subset of larger packaging operations.
Research and Development
Our technical products business maintains research and development laboratories in Feldkirchen-Westerham, Germany,
Munising, Michigan and Pittsfield, Massachusetts to support its strategy of developing new products and technologies, and
to support growth in its existing product lines and other strategically important markets. We also have a research and
development laboratory in West Springfield, Massachusetts that supports both our technical products and fine paper and
packaging businesses. We have continually invested in product research and development with spending of $9.4 million in
2016, $6.8 million in 2015 and $5.7 million in 2014.
Intellectual Property
We own more than 100 granted patents and have multiple pending patent applications in the United States, Canada, Europe
and certain other countries covering image transfer paper, abrasives and medical packaging, and other paper processing.
We also own more than 150 trademarks with registrations in approximately 80 countries. Our image transfer patents have
contributed to establishing the technical products business as a leading global supplier of image transfer papers through our
highly recognized JET-PRO®, 3G JET-OPAQUE®, TECHNIPRINT®, LASER-ONE OPAQUE® and IMAGE CLIP®
brands, and our global trademark collection demonstrates strong product brand recognition.
For more than 100 years, Neenah’s fine paper and packaging business has built its market leading reputation on creating
and manufacturing trademarked brands for premium writing, text, cover, digital, packaging, and specialty needs. The
Neenah Paper signature portfolio includes innovative, market leading brands such as ASTROBRIGHTS®, CLASSIC®
(including CLASSIC CREST®, CLASSIC® Linen, CLASSIC® Laid, CLASSIC COLUMNS®, CLASSIC® Stipple,
CLASSIC® Woodgrain, and CLASSIC® Techweave), ENVIRONMENT®, The Design Collection, ROYAL
SUNDANCE® Papers, and many more. Our fine paper and packaging business provides unique and sustainable packaging
papers and custom solutions for premium packaging needs. With brands that stand for consistency and quality such as
NEENAH® Folding Board, NEENAH® Box Wrap, ESTATE LABEL®, BELLA® Label, and NEENAH IMAGEMAX®
Paper Card, our fine paper and packaging business enables leading and emerging brands to deliver on their brand’s
promise. In 2012, we entered the retail channel by acquiring the brand portfolio of Wausau Paper including
ASTROBRIGHTS® Papers, the first brightly colored paper in the industry, followed by the SOUTHWORTH Brand, a
time-honored product for business professionals. Our fine paper and packaging business maintains a well-rounded and
well-respected portfolio of brands allowing us to be recognized as an industry leader setting standards for quality,
consistency, and dependability on press.
The 2015 acquisition of FiberMark added other trademarks recognized in both the publishing and packaging markets,
including SKIVERTEX®, KIVAR®, CORVON®, HYFLEX®, TOUCHE®, and MULTICOLOR®. Development work
after the acquisition added the MONTELENA® mark to our portfolio as well.
The KIMDURA® and MUNISING LP® trademarks have made a significant contribution to the marketing of synthetic
film and clean room papers of the technical products business. Finally, the GESSNER® trademark has played an important
role in the marketing of Neenah’s filtration product lines.
Backlog and Seasonality
Technical Products. In general, sales and profits for the technical products business have been relatively stronger in the
first half of the year with reductions in the third quarter due to reduced customer converting schedules and in the fourth
quarter due to a reduction in year-end inventory levels by our customers. The order flow for the technical products business
is subject to seasonal peaks for several of its products, such as the larger volume grades of specialty tape, abrasives,
premask, and label stock used primarily in the downstream finished goods manufacturing process. To assure timely
shipments during these seasonal peaks, the technical products business provides certain customers with finished goods
inventory on consignment. Historically, consignment sales have represented approximately 15 percent of the technical
products business's annual sales. Orders are typically shipped within six to eight weeks of receipt of the order. However,
the technical products business periodically experiences periods where order entry levels surge, and order backlogs can
increase substantially. Raw materials are purchased and manufacturing schedules are planned based on customer forecasts,
current market conditions and individual orders for custom products. The order backlog in the technical products business
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on December 31, 2016 was approximately $101 million and represented approximately 22 percent of prior year sales. The
order backlog in the technical products business on December 31, 2015 was approximately $103 million and represented
approximately 25 percent of prior year sales. We previously filled the order backlog from December 31, 2015 and expect to
fill the order backlog from December 31, 2016 within the next year.
Fine Paper and Packaging. The fine paper and packaging business has historically not experienced seasonality. Orders
for stock products are typically shipped within two days, while custom orders are shipped within two to three weeks of
receipt. Raw material purchases and manufacturing schedules are planned based on a combination of historical trends,
customer forecasts and current market conditions. The order backlogs in the fine paper and packaging business on
December 31, 2016 and 2015 were $19.6 million and $19.2 million, respectively, which represent approximately 15 days
of sales. The order backlogs from December 31, 2016 and 2015 were filled in the respective following years.
The operating results at each of our businesses are influenced by the timing of our annual maintenance downs, which are
generally scheduled in the third quarter.
Employee and Labor Relations
As of December 31, 2016, we had approximately 2,303 regular full-time employees of whom 1,099 hourly and 526
salaried employees were located in the United States and 405 hourly and 273 salaried employees were located in Europe.
Approximately 50 percent of salaried employees and 80 percent of hourly employees of Neenah Germany are eligible to be
represented by the Mining, Chemicals and Energy Trade Union, Industriegewerkschaft Bergbau, Chemie and Energie (the
"IG BCE"). In June 2015, the IG BCE and a national trade association representing all employers in the industry signed a
collective bargaining agreement covering union employees of Neenah Germany that expires in June 2017. Under German
law 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 that expires in June 2017 cannot be
determined.
As of December 31, 2016, no employees are covered under collective bargaining agreements that expire in the next 12
months, with the exception of the employees covered by the collective bargaining arrangement with the IG BCE. We
believe we have satisfactory relations with our employees covered by collective bargaining agreements and do not expect
the negotiation of new collective bargaining agreements to have a material effect on our results of operations or cash flows.
See Note 12 of Notes to Consolidated Financial Statements, "Contingencies and Legal Matters — Employees and Labor
Relations."
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Environmental, Health and Safety Matters
Our operations are subject to federal, state and local laws, regulations and ordinances relating to various environmental,
health and safety matters. We believe our operations are in compliance with, or we are taking actions designed to ensure
compliance with, these laws, regulations and ordinances. However, the nature of our operations exposes us to the risk of
claims concerning non-compliance with environmental, health and safety laws or standards, and there can be no assurance
that material costs or liabilities will not be incurred in connection with those claims. Except for certain orders issued by
environmental, health and safety regulatory agencies with which we believe we are in compliance and which we believe
are immaterial to our financial condition, results of operations and liquidity, we are not currently named as a party in any
judicial or administrative proceeding relating to environmental, health and safety matters.
Greenhouse gas ("GHG") emissions have increasingly become the subject of political and regulatory focus. Concern over
potential climate change, including global warming, has led to legislative and regulatory initiatives directed at limiting
GHG emissions. In addition to certain federal proposals in the United States to regulate GHG emissions, Germany, the
United Kingdom (“U.K.”) and all the states in which we operate are currently considering GHG legislation or regulations,
either individually and/or as part of regional initiatives. While not all are likely to become law it is reasonably possible that
additional climate change related mandates will be forthcoming, and it is expected that they may adversely impact our
costs by increasing energy costs and raw material prices, requiring operational or equipment modifications to reduce
emissions and creating costs to comply with regulations or to mitigate the financial consequences of such compliance.
While we have incurred in the past several years, and will continue to incur, capital and operating expenditures in order to
comply with environmental, health and safety laws, regulations and ordinances, we believe that our future cost of
compliance with environmental, health and safety laws, regulations and ordinances, and our exposure to liability for
environmental, health and safety claims will not have a material effect on our financial condition, results of operations or
liquidity. However, future events, such as changes in existing laws and regulations, new legislation to limit GHG emissions
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or contamination of sites owned, operated or used for waste disposal by us (including currently unknown contamination
and contamination caused by prior owners and operators of such sites or other waste generators) may give rise to additional
costs which could have a material effect on our financial condition, results of operations or liquidity.
We have planned capital expenditures to comply with environmental, health and safety laws, regulations and ordinances
during the period 2017 through 2018 of approximately $1 million to $2 million annually. Our anticipated capital
expenditures for environmental projects are not expected to have a material effect on our financial condition, results of
operations or liquidity.
AVAILABLE INFORMATION
We are subject to the reporting requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934. As such, we
file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange
Commission ("SEC"). Our SEC filings are available to the public on the SEC's web site at www.sec.gov. You may also read
and copy any document we file at the SEC's Public Reference Room located at 100 F Street, N.E., Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference Room. Our common stock
is traded on the New York Stock Exchange under the symbol NP. You may inspect the reports, proxy statements and other
information concerning us at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005.
Our web site is www.neenah.com. Information on our web site is not incorporated by reference in this document. Our
reports on Form 10-K, Form 10-Q and Form 8-K, as well as amendments to those reports, are and will be available free of
charge on our web site as soon as reasonably practicable after we file or furnish such reports with the SEC. In addition, you
may request a copy of any of these reports (excluding exhibits) at no cost upon written request to us at: Investor Relations,
Neenah Paper, Inc., 3460 Preston Ridge Road, Suite 600, Alpharetta, Georgia 30005.
Item 1A. Risk Factors
You should carefully consider each of the following risks and all of the other information contained in this Annual Report
on Form 10-K. Some of the risks described below relate principally to our business and the industry in which we operate,
while others relate principally to our indebtedness. The remaining risks relate principally to the securities markets
generally and ownership of our common stock.
Our business, financial condition, results of operations or liquidity could be materially affected by any of these risks, and,
as a result, the trading price of our common stock could decline. The risks described below are not the only ones we face.
Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations.
Risks Related to Our Business and Industry
Our business will suffer if we are unable to effectively respond to decreased demand for some of our products due to
conditions in the global economy or secular pressures in some markets.
We have experienced and may experience in the future decreased demand for some of our products due to slowing or
negative global economic growth, uncertainty in credit markets, declining consumer and business confidence, fluctuating
commodity prices, increased unemployment and other challenges affecting the global economy. Parts of our fine paper and
packaging business are subject to electronic substitution. In addition, our customers may experience deterioration of their
businesses, cash flow shortages, and difficulty obtaining financing. If we are unable to implement business strategies to
effectively respond to decreased demand for our products, our financial position, cash flows and results of operations
would be adversely affected.
Changes in international geopolitical and macro economic conditions generally, and particularly in Germany, could
adversely affect our business and results of operations. Fluctuations in the prices of and the demand for products could
result in smaller profit margins and lower sales volumes.
Our operating results and business prospects could be adversely affected by risks related to the countries outside the United
States in which we have manufacturing facilities or sell our products, including Germany, the Eurozone and elsewhere.
Downturns in economic activity, adverse tax consequences, fluctuations in the value of local currency versus the U.S.
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dollar, or any change in social, political, macro economic or labor conditions in any of these countries or regions could
negatively affect our financial results.
On June 23, 2016, the U.K. voted by referendum to exit the European Union (“E.U.”); this vote is commonly referred to as
“Brexit.” The referendum is non-binding and the exit from the E.U. is not immediate. Once the U.K. invokes E.U. Article
50, there is a two-year window in which the U.K. and European Commission can negotiate the future terms for imports,
exports, taxes, employment, immigration and other areas. Brexit has caused volatility in global stock markets and currency
exchange rates, affecting the markets in which we operate. The implications of Brexit could adversely affect demand for
our products, our financial results and operations, and our relationships with customers, suppliers and employees in the
short- or long-term.
Historically, economic and market shifts, and fluctuations in capacity have created cyclical changes in prices, sales volume
and margins for products in the paper, packaging and related industries. The length and magnitude of industry cycles have
varied over time and by product, but generally reflect changes in macroeconomic conditions and levels of industry
capacity. The overall levels of demand for many of our products reflect fluctuations in levels of end-user demand, which
depend in large part on general macroeconomic conditions in North America and regional economic conditions in our
markets (including Europe, Asia, and Central and South America), as well as foreign currency exchange rates. The
foregoing factors could materially and adversely impact our sales, cash flows, profitability and results of operations.
The availability of and prices for raw materials and energy will significantly impact our business.
We purchase a substantial portion of the raw materials and energy necessary to produce our products on the open market,
and, as a result, the price and other terms of those purchases are subject to change based on factors such as worldwide
supply and demand and government regulation. We do not have significant influence over our raw material or energy
prices and our ability to pass increases in those prices along to purchasers of our products may be challenged, unless those
increases coincide with increased demand for the product. Therefore, raw material or energy prices could increase at the
same time that prices for our products are steady or decreasing. In addition, we may not be able to recoup other cost
increases we may experience, such as those resulting from inflation or from increases in wages or salaries or increases in
health care, pension or other employee benefits costs, insurance costs or other costs.
Our technical products business acquires all of its specialized pulp requirements from two global suppliers and certain
critical specialty latex grades from four suppliers. In general, these supply arrangements are not covered by formal
contracts, but represent multi-year business relationships that have historically been sufficient to meet our needs. We expect
these relationships to continue to operate in a satisfactory manner in the future. In the event of an interruption of production
at any one supplier, we believe that each of these suppliers individually would be able to satisfy our short-term
requirements for specialized pulp or specialty latex. In the event of a long-term disruption in our supply of specialized pulp
or specialty latex, we believe we would be able to substitute other pulp grades or other latex grades that would allow us to
meet required product performance characteristics and incur only a limited disruption in our production.
Our fine paper and packaging business acquires a substantial majority of the cotton fiber used in the production of certain
branded bond paper products pursuant to annual agreements with two North American producers. The balance of our
cotton fiber requirements are acquired through "spot market" purchases from a variety of other producers. We believe that a
partial or total disruption in the production of cotton fibers at our two primary suppliers would increase our reliance on
"spot market" purchases with a likely corresponding increase in cost.
Our operating results are likely to fluctuate.
Our operating results are subject to substantial quarterly and annual fluctuations due to a number of factors, many of which
are beyond our control. Operating results could be adversely affected by general economic conditions causing a downturn
in the market for paper products. Additional factors that could affect our results include, among others, changes in the
market price of pulp, the effects of competitive pricing pressures, production capacity levels and manufacturing yields,
availability and cost of products from our suppliers, the gain or loss of significant customers, our ability to develop,
introduce and market new products and technologies on a timely basis, changes in the mix of products produced and sold,
seasonal customer demand, the relative strength of the Euro versus the U.S. dollar, increasing interest rates and
environmental costs. The timing and effect of the foregoing factors are difficult to predict, and these or other factors could
materially adversely affect our quarterly or annual operating results.
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We face many competitors, several of which have greater financial and other resources.
We face competition in each of our business segments from companies that produce the same type of products that we
produce or that produce lower priced alternative products that customers may use instead of our products. Some of our
competitors have greater financial, sales and marketing, or research and development resources than we do. Greater
financial resources and product development capabilities may also allow our competitors to respond more quickly to new
opportunities or changes in customer requirements.
Our businesses are significantly dependent on sales to their largest customers.
Sales to the largest customer of the fine paper and packaging business represented approximately 15 percent of total sales
for the segment in 2016. Sales to the three largest customers of the technical products business represented approximately
14 percent of total sales for the segment in 2016. A significant loss of business from any of our major fine paper and
packaging or technical products customers may have a material adverse effect on our financial condition, results of
operations and liquidity. We are also subject to credit risk associated with our customer concentration. If one or more of our
largest fine paper and packaging or technical products customers were to become bankrupt, insolvent or otherwise were
unable to pay for services provided, we may incur significant write-offs of accounts receivable.
We cannot be certain that our tax planning strategies will be effective and that our research and development tax credits
will continue to be available to offset our tax liability.
We are continuously undergoing examination by the Internal Revenue Service (the "IRS") as well as taxing authorities in
various state and foreign jurisdictions in which we operate. The IRS and other taxing authorities routinely challenge certain
deductions and credits reported on our income tax returns.
As of December 31, 2016, we had $25.2 million of U.S. federal and state research and development credits ("R&D
Credits") which, if not used, will expire between 2027 and 2035 for the U.S. federal R&D Credits and between 2017 and
2031 for the state R&D Credits. The availability of state NOLs and state credits to offset taxable income and income tax,
respectively, could also be substantially reduced if we were to undergo an "ownership change" as defined within certain
state tax codes.
In accordance with Accounting Standards Codification ("ASC") Topic 740, Income Taxes ("ASC Topic 740"), as of
December 31, 2016, we have recorded a liability of $10.3 million for uncertain tax positions where we believe it is "more
likely than not" that the benefit reported on our income tax return will not be realized. There can be no assurance, however,
that the actual amount of unrealized deductions will not exceed the amounts we have recognized for uncertain tax
positions.
We have significant obligations for pension and other postretirement benefits.
We have significant obligations for pension and other postretirement benefits which could require future funding beyond
that which we have funded in the past or which we currently anticipate. At December 31, 2016, our projected pension
benefit obligations were $370.9 million and exceeded the fair value of pension plan assets by $52.8 million. In 2016, we
made total contributions to qualified pension trusts of $17.8 million. In addition, during 2016 we paid pension benefits for
unfunded qualified and supplemental retirement plans of $0.6 million. At December 31, 2016, our projected other
postretirement benefit obligations were $40.7 million. No assets have been set aside to satisfy our other postretirement
benefit obligations. In 2016, we made payments for postretirement benefits other than pensions of $3.8 million. A material
increase in funding requirements or benefit payments could have a material effect on our cash flows.
We may be required to pay material amounts under multiemployer pension plans.
We contribute to The PACE Industry Union-Management Pension Fund ("the PIUMPF"), a multiemployer pension plan.
The amount of our annual contributions to the PIUMPF is negotiated with the plan and the bargaining unit representing our
employees covered by the plan. In 2016, we contributed approximately $0.1 million to the PIUMPF. In addition, in the
event of a partial or complete withdrawal by us from the PIUMPF at a time when the plan is underfunded, we would be
liable for a proportionate share of such plan's unfunded vested benefits, referred to as a withdrawal liability. In the event
that any other contributing employer withdrew from the PIUMPF at a time when the plan is underfunded, and such
employer cannot satisfy its obligations to the plan at the time of withdrawal, then the proportionate share of the plan's
unfunded vested benefits that would be allocable to us and to the other remaining contributing employers, would increase
and there could be an increase to our required annual contributions. In future negotiations of collective bargaining
agreements with the labor union that participates in the PIUMPF, we may decide to discontinue participation in the plan.
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The PIUMPF was certified to be in "critical status" for the plan year beginning January 1, 2010, and continued to be in
critical status for the plan year beginning January 1, 2016. In 2013, two large employers withdrew from the PIUMPF.
Further withdrawals by other contributing employers could cause a "mass withdrawal" from, or effectively a termination
of, the PIUMPF or alternatively we could elect to withdraw. Although we have no current intention to withdraw from the
PIUMPF, if we were to withdraw, either completely or partially, we would incur a withdrawal liability based on our share
of the PIUMPF's unfunded vested benefits. Based on information as of December 31, 2015 provided by the PIUMPF and
reviewed by our actuarial consultant, we estimate that, as of December 31, 2016, the payments that we would be required
to make to PIUMPF in the event of our complete withdrawal would be approximately $0.1 million per year on a pre-tax
basis. These payments would continue for 20 years, unless we were deemed to be included in a "mass withdrawal" from
the PIUMPF, in which case these payments would continue in perpetuity. However, we are not able to determine the exact
amount of our withdrawal liability because the amount could be higher or lower depending on the nature and timing of any
triggering event, the funded status of the plan and our level of contributions to the plan prior to the triggering event. These
withdrawal liability payments would be in addition to pension contributions to any new pension plan adopted or
contributed to by us to replace the PIUMPF and could have a material effect on our cash flows. Adverse changes to pension
laws and regulations could increase the likelihood and amount of our liabilities arising under the PIUMPF.
The outcome of legal actions and claims may adversely affect us.
We are involved in legal actions and claims arising in the ordinary course of our business. The outcome of such legal
actions and claims against us cannot be predicted with certainty. Legal actions and claims against us could have a material
effect on our financial condition, results of operations and liquidity.
Labor interruptions would adversely affect our business.
Except for our Pittsfield, Massachusetts, Brownville, New York and Quakertown, Pennsylvania manufacturing facilities
which are non-union, substantially all of our hourly employees are unionized. In addition, some key customers and
suppliers are also unionized. Strikes, lockouts or other work stoppages or slowdowns involving our unionized employees
could have a material effect on us.
If we are unable to continue to implement our business strategies, our financial conditions and operating results could
be materially affected.
Our future operating results will depend, in part, on the extent to which we can successfully implement our business
strategies in a cost effective manner. However, our strategies are subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond our control. If we are unable to successfully implement our
business strategies, our business, financial condition and operating results could be materially adversely affected.
We may not successfully integrate acquisitions and may be unable to achieve anticipated cost savings or other synergies.
The integration of the operations of acquired companies involves a number of risks and presents financial, managerial,
legal and operational challenges. We may have difficulty, and may incur unanticipated expenses related to, integrating
information systems, financial reporting activities, and integrating and retaining management and personnel from acquired
companies. We may not be able to achieve anticipated cost savings or commercial or growth synergies, for a number of
reasons, including contractual constraints and obligations or an inability to take advantage of expected commercial
opportunities, increased operating efficiencies or commercial expansion of key technologies. Failure to successfully
integrate acquired companies may have an adverse effect on our business, financial condition, results of operations, and
cash flows.
We may not be able to adequately protect our intellectual property and proprietary rights, which could harm our future
success and competitive position.
Our future success and competitive position also depends, in part, upon our ability to obtain and maintain protection for our
intellectual property and proprietary rights. Failure to protect our existing intellectual property rights may result in the loss
of valuable technologies or may require us to license other companies' intellectual property rights. It is possible that any of
our patents may be invalidated, rendered unenforceable, circumvented, challenged or licensed to others or any of our
pending or future patent applications may not be issued within the scope of the claims sought by us, if at all. Further, others
may develop technologies that are similar or superior to our technologies, duplicate our technologies or design around our
patents, and steps taken by us to protect our technologies may not prevent misappropriation of such technologies.
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Future dividends on our common stock may be restricted or eliminated.
Dividends are declared at the discretion of our Board of Directors, and future dividends will depend on our future earnings,
cash flow, financial requirements and other factors. Our ability to pay cash dividends on our common stock is limited under
the terms of both our bank credit agreement and the indenture for our $175 million of senior notes due November 2021 (the
"2021 Senior Notes"). As of December 31, 2016, under the most restrictive terms of our bank credit agreement and the
indenture for the 2021 Senior Notes, our ability to pay cash dividends on our common stock is limited, as described under
"Risks Relating to Our Indebtedness." There can be no assurance that we will continue to pay dividends in the future.
We may be required to record a charge to our earnings if our goodwill or intangible assets become impaired.
As of December 31, 2016, we had goodwill of $70.4 million and other intangible assets of $74.0 million. Goodwill and
other intangible assets are recorded at fair value on the date of acquisition. In accordance with applicable accounting
guidance, we review goodwill and other indefinite-lived intangible assets at least annually for impairment, and long-lived
intangible assets when facts and circumstances warrant an impairment review. Impairment may result from, among other
things, deterioration in performance, adverse market conditions, adverse changes in applicable laws or regulations, and a
variety of other factors. The amount of any non-cash impairment would be recognized immediately through our
consolidated statement of operations. Any future goodwill or other intangible asset impairment could have a material
adverse effect on our results of operations and financial position.
If we have a catastrophic loss or unforeseen or recurring operational problems at any of our facilities, we could suffer
significant lost production and/or cost increases.
Our technical products and fine paper and packaging businesses may suffer catastrophic loss due to fire, flood, terrorism,
mechanical failure, or other natural or man-made events. If any of our facilities were to experience a catastrophic loss, it
could disrupt our operations, delay production, delay or reduce shipments, reduce revenue, and result in significant
expenses to repair or replace the facility. These expenses and losses may not be adequately covered by property or business
interruption insurance. Even if covered by insurance, our inability to deliver our products to customers, even on a short-
term basis, may cause us to lose market share on a more permanent basis.
Fluctuations in currency exchange rates could adversely affect our results.
Exchange rate fluctuations for the Euro do not have a material effect on the operations or cash flows of our German
technical products business. Our German technical products business incurs most of its costs and sells most of its
production in Europe and, therefore, its operations and cash flows are not materially affected by changes in the exchange
rate of the Euro relative to the U.S. dollar. Changes in the Euro exchange rate relative to the U.S. dollar will, however, have
an effect on our balance sheet and reported results of operations. See Item 7A, "Quantitative and Qualitative Disclosures
About Market Risk — Foreign Currency Risk."
In addition, because we transact business in other foreign countries, some of our revenues and expenses are denominated in
a currency other than the local currency of our operations. As a result, changes in exchange rates between the currency in
which the transaction is denominated and the local currency of our operations into which the transaction is being recorded
can impact the amount of local currency recorded for such transaction. This can result in more or less local currency
revenues or costs related to such transaction, and thus have an effect on our reported sales and income before income taxes.
Our activities are subject to extensive government regulation, which could increase our costs, cause us to incur
liabilities and adversely affect the manufacturing and marketing of our products.
Our operations are subject to federal, state and local laws, regulations and ordinances in the United States and Germany
relating to various environmental, health and safety matters. The nature of our operations requires that we invest capital
and incur operating costs to comply with those laws, regulations and ordinances and exposes us to the risk of claims
concerning non-compliance with environmental, health and safety laws or standards. We cannot assure that significant
additional expenditures will not be required to maintain compliance with, or satisfy potential claims arising from, such
laws, regulations and ordinances. Future events, such as changes in existing laws and regulations or contamination of sites
owned, operated or used for waste disposal by us (including currently unknown contamination and contamination caused
by prior owners and operators of such sites or other waste generators) may give rise to additional costs that could require
significantly higher capital expenditures and operating costs, which would reduce the funds otherwise available for
operations, capital expenditures, future business opportunities or other purposes.
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We are subject to risks associated with possible climate change legislation and various cost and manufacturing issues
associated with such legislation.
GHG emissions have increasingly become the subject of political and regulatory focus. Concern over potential climate
change, including global warming, has led to legislative and regulatory initiatives directed at limiting GHG emissions. In
addition to certain federal proposals in the United States to regulate GHG emissions, Germany, the U.K. and all the states
in which we operate are currently considering GHG legislation or regulations, either individually and/or as part of regional
initiatives. While not all are likely to become law it is reasonably possible that additional climate change related mandates
will be forthcoming, and it is expected that they may adversely impact our costs by increasing energy costs and raw
material prices, requiring operational or equipment modifications to reduce emissions and creating costs to comply with
regulations or to mitigate the financial consequences of compliance.
We are subject to cybersecurity risks related to breaches of security pertaining to sensitive company, customer, employee
and vendor information as well as breaches in the technology that manages operations and other business processes.
We use information technologies to securely manage operations and various business functions. We rely on various
technologies to process, store and report on our business and interact with customers, vendors and employees. The secure
processing, maintenance and transmission of this information is critical to our operations and business strategy. Despite our
security design and controls, and those of our third party providers, our information technology and infrastructure may be
vulnerable to cyber attacks by hackers or breaches due to employee error, malfeasance or other disruptions. Any such
breach could result in operational disruptions or the misappropriation of sensitive data that could subject us to civil and
criminal penalties, litigation or have a negative impact on our reputation. There can be no assurance that such disruptions
or misappropriations and the resulting repercussions will not negatively impact our cash flows and materially affect our
results of operations or financial condition. The U.S. Congress is considering cybersecurity legislation that, if enacted,
could impose additional obligations on us and could expand our potential liability in the event of a cyber-security incident.
Our business may suffer if we do not retain our senior management.
We depend on our senior management. The loss of services of members of our senior management team could adversely
affect our business until suitable replacements can be found. There may be a limited number of persons with the requisite
skills to serve in these positions and we may be unable to locate or employ qualified personnel on acceptable terms. In
addition, our future success requires us to continue to attract and retain competent personnel.
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Risks Relating to Our Indebtedness
We may not be able to fund our future capital requirements internally or obtain third-party financing.
We may be required or choose to obtain additional debt or equity financing to meet our future working capital
requirements, as well as to fund capital expenditures and acquisitions. To the extent we must obtain financing from external
sources to fund our capital requirements, we cannot guarantee financing will be available on favorable terms, if at all. As of
December 31, 2016, we have required debt payments of $1.2 million during the year ending December 31, 2017.
We may not be able to generate sufficient cash flow to meet our debt obligations, including the 2021 Senior Notes.
Our ability to make scheduled payments or to refinance our obligations with respect to the 2021 Senior Notes, our other
debt and our other liabilities will depend on our financial and operating performance, which, in turn, is subject to prevailing
economic conditions and to certain financial, business and other factors beyond our control. If our cash flow and capital
resources are insufficient to fund our debt obligations and other liabilities, we could face substantial liquidity problems and
may be forced to reduce or delay scheduled expansions and capital expenditures, sell material assets or operations, obtain
additional capital or restructure our debt. We cannot assure that our operating performance, cash flow and capital resources
will be sufficient to repay our debt in the future. In the event that we are required to dispose of material assets or operations
or restructure our debt to meet our debt and other obligations, we can make no assurances as to the terms of any such
transaction or how quickly any such transaction could be completed.
If we cannot make scheduled payments on our debt, we will be in default and, as a result:
•
•
our debt holders could declare all outstanding principal and interest to be due and payable;
our senior secured lenders could terminate their commitments and commence foreclosure proceedings against our
assets; and
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• we could be forced into bankruptcy or liquidation.
If our operating performance declines in the future or we breach our covenants under our revolving credit facility, we may
need to obtain waivers from the lenders under our revolving credit facility to avoid being in default. We may not be able to
obtain these waivers. If this occurs, we would be in default under our revolving credit facility.
We have significant indebtedness which subjects us to restrictive covenants relating to the operation of our business.
As of December 31, 2016, we had $175 million of 2021 Senior Notes, $42.9 million in revolving credit borrowings and
$6.8 million of project financing outstanding. In addition, availability under our bank credit agreement was approximately
$125 million. Our leverage could have important consequences. For example, it could:
• 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;
place us at a disadvantage to our competitors;
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;
increase our vulnerability to a downturn in general economic conditions or the industry in which we operate;
limit our ability to obtain additional financing for working capital, capital expenditures, acquisitions and general
corporate and other purposes; and
limit our ability to plan for and react to changes in our business and the industry in which we operate.
•
•
•
•
•
The terms of our indebtedness, including our bank credit agreement and the indenture governing the 2021 Senior Notes,
contain covenants restricting our ability to, among other things, incur certain additional debt, incur or create certain liens,
make specified restricted payments, pay dividends, authorize or issue capital stock, enter into transactions with our
affiliates, consolidate or merge with or acquire another business, sell certain of our assets or liquidate, dissolve or wind-up
our Company. Under the most restrictive terms of the Third Amended and Restated Credit Agreement, we are permitted to
pay cash dividends on or repurchase shares of our common stock up to the amount available under the Third Amended and
Restated Credit Agreement, as long as the availability under the Third Amended and Restated Credit Agreement exceeds
$25 million. If the availability is below $25 million, we are restricted from paying dividends or repurchasing shares. Under
the most restrictive terms of the 2021 Senior Notes, we are permitted to pay cash dividends of up to $25 million in a
calendar year, but not permitted to repurchase shares of our common stock. However, as long as the net leverage ratio (net
debt/EBITDA) under the 2021 Senior Notes is below 2.5x, we can pay dividends or repurchase shares without limitation.
Refer to Item 7A, "Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity
and Capital Resources" for the current limitations on our ability to pay dividends on or repurchase shares of our common
stock.
In addition, if the aggregate availability under our revolving credit facilities is less than the greater of (i) $25 million and
(ii) 12.5 percent of the maximum aggregate commitments under our revolving credit facilities as then in effect, we will be
subject to increased reporting obligations and controls until such time as availability is more than the greater of
(a) $35 million and (b) 17.5 percent of the maximum aggregate commitments under our revolving credit facilities as then in
effect for at least 60 consecutive days and no default or event of default has occurred or is continuing during such 60-day
period.
If aggregate availability under our revolving credit facilities is less than the greater of (i) $20 million and (ii) 10 percent of
the maximum aggregate commitments under our revolving credit facilities as then in effect, we are required to comply with
a fixed charge coverage ratio (as defined in our bank credit agreement) of not less than 1.1 to 1.0 for the preceding four-
quarter period, tested as of the end of each quarter. Such compliance, once required, would no longer be necessary once
(x) aggregate availability under our revolving credit facilities exceeds the greater of (i) 17.5 percent of the aggregate
commitment for our revolving credit facilities and (ii) $35 million for 60 consecutive days and (y) no default or event of
default has occurred and is continuing during such 60- day period. As of December 31, 2016, aggregate availability under
our revolving credit facilities exceeded the minimum required amount, and we are not required to comply with such fixed
charge coverage ratio.
Our revolving credit facilities accrue interest at variable rates. As of December 31, 2016, we had $42.9 million of revolving
credit borrowings outstanding. We may reduce our exposure to rising interest rates by entering into interest rate hedging
arrangements, although those arrangements may result in us incurring higher interest expenses than we would incur
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without the arrangements. If interest rates increase in the absence of such arrangements, we will need to dedicate more of
our cash flow from operations to make payments on our debt. For more information on our liquidity, see Item 7A,
"Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital
Resources."
Our failure to comply with the covenants contained in our revolving credit facility or the indenture governing the 2021
Senior Notes could result in an event of default that could cause acceleration of our indebtedness.
Our failure to comply with the covenants and other requirements contained in the indenture governing the 2021 Senior
Notes, our revolving credit facility or our other debt instruments could cause an event of default under the relevant debt
instrument. The occurrence of an event of default could trigger a default under our other debt instruments, prohibit us from
accessing additional borrowings and permit the holders of the defaulted debt to declare amounts outstanding with respect to
that debt to be immediately due and payable. Our assets or cash flows may not be sufficient to fully repay borrowings
under our outstanding debt instruments, and we may be unable to refinance or restructure the payments on indebtedness on
favorable terms, or at all.
Despite our indebtedness levels, we and our subsidiaries may be able to incur substantially more indebtedness, which
may increase the risks created by our substantial indebtedness.
Because the terms of our bank credit agreement and the indenture governing the 2021 Senior Notes do not fully prohibit us
or our subsidiaries from incurring additional indebtedness, we and our subsidiaries may be able to incur substantial
additional indebtedness in the future, some of which may be secured. If we or any of our subsidiaries incur additional
indebtedness, the related risks that we and they face may intensify.
Our bank credit agreement is secured by a majority of our assets.
Our bank credit agreement is secured by a majority of our assets. Availability under our bank credit agreement will
fluctuate over time depending on the value of our inventory, receivables and various capital assets. An extended work
stoppage or decline in sales volumes would result in a decrease in the value of the assets securing the bank credit
agreement. A reduction in availability under the bank credit agreement could have a material effect on our liquidity.
Changes in credit ratings issued by nationally recognized statistical rating organizations could adversely affect our cost
of financing and have an adverse effect on the market price of our securities.
Our debt currently has a non-investment grade rating, and there can be no assurance that any rating assigned by the rating
agencies will remain for any given period of time or that a rating will not be lowered or withdrawn entirely by a rating
agency if, in that rating agency's judgment, future circumstances relating to the basis of the rating, such as adverse changes,
so warrant. A lowering or withdrawal of the ratings assigned to our debt securities by rating agencies may increase our
future borrowing costs and reduce our access to capital, which could have a material adverse impact on our financial
condition and results of operations.
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We depend on our subsidiaries to generate cash flow to meet our debt service obligations.
We conduct a substantial portion of our business through our subsidiaries. Consequently, our cash flow and ability to
service our debt obligations depend upon the earnings of our subsidiaries and the distribution of those earnings to us, or
upon loans, advances or other payments made by these entities to us. The ability of these entities to pay dividends or make
other payments or advances to us will be subject to applicable laws and contractual restrictions contained in the instruments
governing their debt, including our revolving credit facility and the indenture governing the 2021 Senior Notes. These
limitations are also subject to important exceptions and qualifications.
The ability of our subsidiaries to generate sufficient cash flow from operations to allow us to make scheduled payments on
our debt will depend upon their future financial performance, which will be affected by a range of economic, competitive
and business factors, many of which are outside of our control as well as their ability to repatriate cash to us. If our
subsidiaries do not generate sufficient cash flow from operations to help us satisfy our debt obligations, including payments
on the 2021 Senior Notes, or if they are unable to distribute sufficient cash flow to us, we may have to undertake
alternative financing plans, such as refinancing or restructuring our debt, selling assets, reducing or delaying capital
expenditures or seeking to raise additional capital. Refinancing may not be possible, and any assets may not be saleable, or,
if sold, we may not realize sufficient amounts from those sales. Additional financing may not be available on acceptable
terms, if at all, or we may be prohibited from incurring it, if available, under the terms of our various debt instruments then
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in effect. Our inability to generate sufficient cash flow to satisfy our debt obligations or to refinance our obligations on
commercially reasonable terms would have an adverse effect on our business, financial condition and results of operations.
FORWARD-LOOKING STATEMENTS
Certain statements in this Annual Report on Form 10-K may constitute "forward-looking" statements as defined in
Section 27A of the Securities Act of 1933 (the "Securities Act"), Section 21E of the Securities Exchange Act of 1934 (the
"Exchange Act"), the Private Securities Litigation Reform Act of 1995 (the "PSLRA"), or in releases made by the SEC, all
as may be amended from time to time. Statements contained in this Annual Report on Form 10-K that are not historical
facts may be forward-looking statements within the meaning of the PSLRA. Any such forward-looking statements reflect
our beliefs and assumptions and are based on information currently available to us. Forward-looking statements are only
predictions and involve known and unknown risks, uncertainties and other factors that may cause our actual results,
performance or achievements, or industry results, to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. These cautionary statements are being made
pursuant to the Securities Act, the Exchange Act and the PSLRA with the intention of obtaining the benefits of the "safe
harbor" provisions of such laws. We caution investors that any forward-looking statements we make are not guarantees or
indicative of future performance. For additional information regarding factors that may cause our results of operations to
differ materially from those presented herein, please see "Risk Factors" contained in this Annual Report on Form 10-K and
as are detailed from time to time in other reports we file with the SEC.
You can identify forward-looking statements as those that are not historical in nature, particularly those that use
terminology such as "may," "will," "should," "expect," "anticipate," "contemplate," "estimate," "believe," "plan," "project,"
"predict," "potential" or "continue," or the negative of these, or similar terms. In evaluating these forward-looking
statements, you should consider the following factors, as well as others contained in our public filings from time to time,
which may cause our actual results to differ materially from any forward-looking statement:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
changes in market demand for our products due to global economic and political conditions;
the impact of competition, both domestic and international, changes in industry production capacity, including the
construction of new mills or new machines, the closing of mills and incremental changes due to capital expenditures or
productivity increases;
the enactment of adverse state, federal or foreign tax or other legislation or changes in government policy or
regulation;
fluctuations in (i) exchange rates (in particular changes in the U.S. dollar/Euro currency exchange rates) and
(ii) interest rates;
increases in commodity prices, (particularly for pulp, energy and latex) due to constrained global supplies or
unexpected supply disruptions;
the availability of raw materials and energy;
strikes, labor stoppages and changes in our collective bargaining agreements and relations with our employees and
unions;
capital and credit market volatility and fluctuations in global equity and fixed-income markets;
unanticipated expenditures related to the cost of compliance with environmental and other governmental regulations;
our ability to control costs and implement measures designed to enhance operating efficiencies;
the loss of current customers or the inability to obtain new customers;
loss of key personnel;
increases in the funding requirements for our pension and postretirement liabilities;
changes in asset valuations including write-downs of assets including property, plant and equipment; inventory,
accounts receivable, deferred tax assets or other assets for impairment or other reasons;
our existing and future indebtedness;
our ability to successfully integrate acquired businesses into our existing operations;
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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;
other risks that are detailed from time to time in reports we file with the SEC; and
other factors described under "Risk Factors."
You are cautioned not to unduly rely on such forward-looking statements, which speak only as of the date made, when
evaluating the information presented in this information statement. We undertake no duty to update these forward-looking
statements after the date of this Form 10-K, even though our situation may change in the future.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
Our principal executive offices are located in Alpharetta, Georgia, a suburb of Atlanta, Georgia. We operate 10
manufacturing facilities in the United States that produce printing and writing, text, cover, durable saturated and coated
substrates and other specialty papers for a variety of end uses. In 2016, we converted one of the two machines at the
Appleton, Wisconsin, mill into a machine that produces transportation and other filtration media, and the mill will now be a
shared facility with our fine paper and packaging business. We own and operate two manufacturing facilities in Germany
that produce transportation and other filter media, and durable and saturated substrates. We own and operate one
manufacturing facility in the U.K. that produces durable printing and specialty paper.
We believe that each of these facilities is adequately maintained and is suitable for conducting our operations and business.
We manage machine operating schedules at our manufacturing locations to fulfill customer orders in a timely manner and
control inventory levels.
As of December 31, 2016, following are the locations of our principal facilities and operating equipment and the products
produced at each location:
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Location
Fine Paper and Packaging
Segment
Neenah Mill
Neenah, Wisconsin
Whiting Mill
Whiting, Wisconsin
Converting Center
Neenah, Wisconsin
Technical Products Segment
Munising Mill
Munising, Michigan
Pittsfield Mill
Pittsfield, Massachusetts
Bruckmühl Mill
Bruckmühl, Germany
Weidach Mill
Feldkirchen-Westerham,
Germany
Red Bridge Mill
Bolton, England
Shared Facilities
Appleton Mill
Appleton, Wisconsin
Brattleboro Mill
Brattleboro, Vermont
Brownville Mill
Brownville, New York
Lowville Mill
Lowville, New York
Quakertown Mill
Quakertown, Pennsylvania
Reading Mill (1)
Reading, Pennsylvania
_______________________
Equipment/Resources
Owned or Leased
Products
Two paper machines; paper finishing
equipment
Owned
Four paper machines; paper
finishing equipment
Owned
Paper finishing equipment
Owned
Printing and writing, text, cover and other specialty
papers
Printing and writing, text, cover and other specialty
papers
Printing and writing, text, cover and other specialty
papers
Two paper machines; two off line
saturators; two off line coaters;
specialty finishing equipment
Three paper machines; paper
finishing equipment
One paper machine; two saturator/
coaters; finishing equipment
Two paper machines; three
saturators; one laminator; three
meltblown machines; specialty
finishing equipment
Saturating, coating, and finishing
equipment
Owned
Owned
Owned
Owned
Tapes, abrasives, premask, medical packaging and
other durable, saturated and coated substrates
Reverse osmosis filtration and glass applications
Masking tape backings and abrasive backings
Transportation filtration and other industrial filter
media
Owned
Durable printing and specialty paper
Two paper machines; saturating
equipment; paper finishing
equipment
One paper machine;paper finishing
equipment
One paper machine; one off-line
coater
Saturating, coating, embossing and
finishing equipment
Saturating, coating, embossing and
finishing equipment
Owned
Owned
Owned
Owned
Owned
Transportation filtration, printing and writing, text,
cover and other specialty papers
Printing and specialty paper board
Durable printing and specialty paper
Durable printing and specialty paper
Durable printing and specialty paper
Embossing and finishing equipment
Leased
Durable printing and specialty paper
(1) In December 2016, we ceased manufacturing operations at the Reading, Pennsylvania, facility. The facility is
leased and the lease will expire June 30, 2017.
See Note 7 of Notes to Consolidated Financial Statements, "Debt", for a description of the material encumbrances attached
to the properties described in the table above.
As of December 31, 2016, following are the locations of our owned and leased office and laboratory space and the
functions performed at each location.
20
Administrative Location
Administrative Location
Alpharetta, Georgia
Alpharetta, Georgia
Office/Other Space
Office/Other Space
Leased Office Space
Leased Office Space
Neenah and Appleton, Wisconsin
Neenah and Appleton, Wisconsin
Owned Office Space
Owned Office Space
Munising, Michigan
Munising, Michigan
Owned Office and Laboratory Space
Owned Office and Laboratory Space
Pittsfield, Massachusetts
Pittsfield, Massachusetts
Owned Office and Laboratory Space
Owned Office and Laboratory Space
West Springfield, Massachusetts
West Springfield, Massachusetts
Owned Office and Laboratory Space
Owned Office and Laboratory Space
Feldkirchen-Westerham, Germany
Feldkirchen-Westerham, Germany
Owned Office and Laboratory Space
Owned Office and Laboratory Space
Function
Function
Corporate Headquarters, Administration and
Corporate Headquarters, Administration and
Design Center
Design Center
Administration
Administration
Administration and Research and
Administration and Research and
Development for our technical products
Development for our technical products
businesses
businesses
Administration and Research and
Administration and Research and
Development for our technical products
Development for our technical products
businesses
businesses
Administration and Research and
Administration and Research and
Development for our technical products and
Development for our technical products and
fine paper and packaging businesses
fine paper and packaging businesses
Administration and Research and
Administration and Research and
Development for our technical product
Development for our technical product
businesses
businesses
Capacity Utilization
Capacity Utilization
Paper machines in our manufacturing facilities generally operate on a combination of five- or seven-day schedules to meet
Paper machines in our manufacturing facilities generally operate on a combination of five- or seven-day schedules to meet
demand. We are not constrained by input factors and the maximum operating capacity of our manufacturing facilities is
demand. We are not constrained by input factors and the maximum operating capacity of our manufacturing facilities is
calculated based on operating days to account for variations in mix and different units of measure between assets. Due to
calculated based on operating days to account for variations in mix and different units of measure between assets. Due to
required maintenance downtime and contract holidays, the maximum number of operating days is defined as 350 days per
required maintenance downtime and contract holidays, the maximum number of operating days is defined as 350 days per
year. We generally expect to utilize approximately 80 to 90 percent of our maximum operating capacity. The following
year. We generally expect to utilize approximately 80 to 90 percent of our maximum operating capacity. The following
table presents our percentage utilization of maximum operating capacity by segment:
table presents our percentage utilization of maximum operating capacity by segment:
Year Ended December 31,
Year Ended December 31,
Technical Products
Technical Products
Fine Paper and Packaging
Fine Paper and Packaging
Item 3. Legal Proceedings
Item 3. Legal Proceedings
Litigation
Litigation
2016
2016
87%
80%
87%
80%
2015
2015
84%
80%
84%
80%
2014
2014
85%
77%
85%
77%
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We are involved in certain legal actions and claims arising in the ordinary course of business. While the outcome of these
We are involved in certain legal actions and claims arising in the ordinary course of business. While the outcome of these
legal actions and claims cannot be predicted with certainty, it is the opinion of management that the outcome of any such
legal actions and claims cannot be predicted with certainty, it is the opinion of management that the outcome of any such
claim which is pending or threatened, either individually or on a combined basis, will not have a material effect on our
claim which is pending or threatened, either individually or on a combined basis, will not have a material effect on our
consolidated financial condition, results of operations or liquidity.
consolidated financial condition, results of operations or liquidity.
Income Taxes
Income Taxes
We periodically undergo examination by the IRS as well as various state and foreign jurisdictions. The IRS and other
taxing authorities routinely challenge certain deductions and credits we report on our income tax returns.
We periodically undergo examination by the IRS as well as various state and foreign jurisdictions. The IRS and other
taxing authorities routinely challenge certain deductions and credits we report on our income tax returns.
Item 4. Mine Safety Disclosures
Item 4. Mine Safety Disclosures
Not applicable.
Not applicable.
21
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Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
PART II
Neenah common stock is listed on the New York Stock Exchange and is traded under the ticker symbol NP. Trading, as
reported on the New York Stock Exchange, Inc. Composite Transactions Tape, and dividend information follows:
2016
Fourth quarter
Third quarter
Second quarter
First quarter
2015
Fourth quarter
Third quarter
Second quarter
First quarter
Common Stock
Market Price
High
Low
Dividends
Declared
$
$
$
$
$
$
$
$
90.23
82.24
74.15
64.10
69.63
62.75
62.88
63.87
$
$
$
$
$
$
$
$
75.50
70.62
61.77
63.37
57.68
54.90
58.23
55.14
$
$
$
$
$
$
$
$
0.33
0.33
0.33
0.33
0.30
0.30
0.30
0.30
For the year ended December 31, 2016 we paid cash dividends of $1.32 per common share or $22.4 million. For the year
ended December 31, 2015, we paid cash dividends of $1.20 per common share or $20.3 million. In November 2016, our
Board of Directors approved a 12 percent increase in the annual dividend rate on our common stock to $1.48 per share. The
dividend is scheduled to be paid in four equal quarterly installments beginning in March 2017.
Dividends are declared at the discretion of the Board of Directors, and future dividends will depend on our future earnings,
cash flow, financial requirements and other factors. Our ability to pay cash dividends on our common stock is limited under
the terms of both our bank credit agreement and our 2021 Senior Notes. Under the most restrictive terms of the Third
Amended and Restated Credit Agreement, we are permitted to pay cash dividends on or repurchase shares of our common
stock up to the amount available under the Third Amended and Restated Credit Agreement, as long as the availability under
the Third Amended and Restated Credit Agreement exceeds $25 million. If the availability is below $25 million, we are
restricted from paying dividends or repurchasing shares. As of December 31, 2016, our availability exceeded $25 million,
so this restriction did not apply. Under the most restrictive terms of the 2021 Senior Notes, we are permitted to pay cash
dividends of up to $25 million in a calendar year, but not permitted to repurchase shares of our common stock. However, as
long as the net leverage ratio (net debt/EBITDA) under the 2021 Senior Notes is below 2.5x, we can pay dividends or
repurchase shares without limitation. In the event the net leverage ratio exceeds 2.5x, we may still pay dividends in excess
of $25 million or repurchase shares by utilizing "restricted payment baskets" as defined in the indenture for the 2021 Senior
Notes. As of December 31, 2016, since our leverage ratio was less than 2.5x, none of these covenants were restrictive to
our ability to pay dividends on or repurchase shares of our common stock.
As of February 22, 2017, Neenah had approximately 1,400 holders of record of its common stock. The closing price of
Neenah's common stock on February 22, 2017 was $75.90.
Purchases of Equity Securities:
The following table sets forth certain information regarding purchases of our common stock during the fourth quarter of
2016.
22
Total Number
Total Number
of Shares
of Shares
Purchased (a)
Purchased (a)
19,497
20,439
61,746
19,497
20,439
61,746
Average Price
Average Price
Paid Per
Paid Per
Share (c)
Share (c)
$
$
$
$
$
$
80.15
81.78
86.91
80.15
81.78
86.91
Total Number of Shares
Total Number of Shares
Purchased as Part of
Purchased as Part of
Publicly Announced
Publicly Announced
Plans or Programs (b)
Plans or Programs (b)
Approximate Dollar Value
Approximate Dollar Value
of Shares that May Yet
of Shares that May Yet
Be Purchased Under
Be Purchased Under
Publicly Announced
Publicly Announced
Plans or Programs
Plans or Programs
19,497
20,439
17,945
19,497
20,439
17,945
$
$
$
$
$
$
20,815,812
19,151,525
17,591,939
20,815,812
19,151,525
17,591,939
Period
Period
October 2016
October 2016
November 2016
November 2016
December 2016
December 2016
_______________________
_______________________
(a) 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."
(a) 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."
(b) In May 2016, our Board of Directors authorized a program that would allow for the purchase of up to $25 million
(b) In May 2016, our Board of Directors authorized a program that would allow for the purchase of up to $25 million
of outstanding common stock through May 21, 2017.
of outstanding common stock through May 21, 2017.
(c) Average price paid per share for shares purchased as part of our program.
(c) Average price paid per share for shares purchased as part of our program.
Equity Compensation Plan Information
Equity Compensation Plan Information
The following table summarizes information about outstanding options, share appreciation rights and restricted stock units
and shares reserved for future issuance under our existing equity compensation plans as of December 31, 2016.
The following table summarizes information about outstanding options, share appreciation rights and restricted stock units
and shares reserved for future issuance under our existing equity compensation plans as of December 31, 2016.
(a)
(a)
Number of
Number of
securities
securities
to be issued upon
to be issued upon
exercise of
exercise of
outstanding
outstanding
options,
options,
warrants, and
warrants, and
rights
rights
(b)
(b)
Weighted-
Weighted-
average
average
exercise price
exercise price
of
of
outstanding
outstanding
options,
options,
warrants, and
warrants, and
rights (1)
rights (1)
(c)
(c)
Number of securities
Number of securities
remaining available
remaining available
for future issuance
for future issuance
under equity
under equity
compensation plans
compensation plans
(excluding securities
(excluding securities
reflected in
reflected in
column (a))
column (a))
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380,820 (2)(3) $
380,820 (2)(3) $
38.35
38.35
950,000
950,000
—
—
—
—
380,820
380,820
$
$
38.35
38.35
—
—
950,000
950,000
Plan Category
Plan Category
Equity compensation plans approved by security
holders
Equity compensation plans approved by security
holders
Equity compensation plans not approved by security
holders
Equity compensation plans not approved by security
holders
Total
Total
_______________________
_______________________
(1) The weighted-average exercise price of outstanding options, warrants and rights does not take into account
(1) 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.
restricted stock units since they do not have an exercise price.
(2) Includes (i) 226,000 shares issuable upon the exercise of outstanding options and stock appreciation rights
(2) Includes (i) 226,000 shares issuable upon the exercise of outstanding options and stock appreciation rights
("SARs"), (ii) 74,100 shares issuable following the vesting and conversion of outstanding performance share unit
("SARs"), (ii) 74,100 shares issuable following the vesting and conversion of outstanding performance share unit
awards, and (iii) 80,720 shares issuable upon the vesting and conversion of outstanding restricted stock units, all
awards, and (iii) 80,720 shares issuable upon the vesting and conversion of outstanding restricted stock units, all
as of December 31, 2016. As of December 31, 2016, we had an aggregate of 530,462 stock options and SARs
as of December 31, 2016. As of December 31, 2016, we had an aggregate of 530,462 stock options and SARs
outstanding. The weighted average exercise price of the stock options and SARs was $38.35 per share and the
outstanding. The weighted average exercise price of the stock options and SARs was $38.35 per share and the
remaining contractual life of such awards was 6.3 years.
remaining contractual life of such awards was 6.3 years.
(3) Includes 218,400 shares that would be issued upon the assumed exercise of 307,518 SARs at the $85.20 per share
(3) Includes 218,400 shares that would be issued upon the assumed exercise of 307,518 SARs at the $85.20 per share
closing price of our common stock on December 31, 2016.
closing price of our common stock on December 31, 2016.
Item 6. Selected Financial Data
Item 6. Selected Financial Data
The following table sets forth our selected historical financial and other data. You should read the information set forth
The following table sets forth our selected historical financial and other data. You should read the information set forth
below in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and
below in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and
our historical consolidated financial statements and the notes to those consolidated financial statements included elsewhere
our historical consolidated financial statements and the notes to those consolidated financial statements included elsewhere
in this Annual Report. The statement of operations data for the years ended December 31, 2016, 2015 and 2014 and the
in this Annual Report. The statement of operations data for the years ended December 31, 2016, 2015 and 2014 and the
balance sheet data as of December 31, 2016 and 2015 set forth below are derived from our audited historical consolidated
balance sheet data as of December 31, 2016 and 2015 set forth below are derived from our audited historical consolidated
financial statements included elsewhere in this Annual Report on Form 10-K. The balance sheet data as of December 31,
financial statements included elsewhere in this Annual Report on Form 10-K. The balance sheet data as of December 31,
23
23
2014, 2013 and 2012 and the statement of operations data for the years ended December 31, 2013 and 2012 set forth below
are derived from our historical consolidated financial statements not included in this Annual Report on Form 10-K.
On October 31, 2015, we sold the Lahnstein Mill for net cash proceeds of approximately $5.4 million. For the years ended
December 31, 2016 and December 31, 2015, discontinued operations reported on the consolidated statements of operations
reflect the results of operations and the estimated loss on sale of the Lahnstein Mill. The consolidated statements of
operations for the years ended December 31, 2014, 2013 and 2012 have been restated to report results of the Lahnstein Mill
as discontinued operations. As of December 31, 2015, 2014, 2013 and 2012, the assets and liabilities of the Lahnstein Mill
are classified as assets held for sale on the consolidated balance sheet. See Note 13 of Notes to Consolidated Financial
Statements, "Discontinued Operations."
Year Ended December 31,
2016
2015
2014
2013
2012
$ 941.5
$ 887.7
$ 839.7
$ 781.7
$ 738.3
727.0
214.5
92.2
7.0
0.8
—
0.4
114.1
11.1
103.0
29.6
73.4
(0.4)
73.0
692.3
195.4
86.5
6.5
—
—
1.0
101.4
11.5
89.9
29.4
60.5
(9.4)
$ 51.1
668.9
170.8
78.0
621.8
159.9
74.7
588.6
149.7
71.3
2.3
3.5
0.2
0.2
86.6
11.1
75.5
7.5
68.0
0.7
0.4
0.2
0.5
1.5
82.6
11.0
71.6
23.1
48.5
3.5
5.8
3.5
0.6
1.6
66.9
13.4
53.5
16.1
37.4
6.9
$ 68.7
$ 52.0
$ 44.3
4.33
4.26
1.32
$ 3.58
$ 4.05
$ 2.97
$ 2.30
$ 3.53
$ 3.99
$ 2.91
$ 2.26
$ 1.20
$ 1.02
$ 0.70
$ 0.48
$
$
$
$
$ 115.8
(68.5)
0.3
(48.4)
8.7x
$ 111.2
(48.1)
(112.0)
(18.8)
7.7x
$ 94.5
(27.9)
(77.0)
10.2
$ 83.5
(28.7)
(4.6)
15.0
6.9x
6.7x
$ 40.1
(25.1)
(7.2)
(13.0)
4.6x
Consolidated Statement of Operations Data
Net sales
Cost of products sold
Gross profit
Selling, general and administrative expenses
Integration/restructuring costs (a)
Pension plan settlement charge (b)
Loss on early extinguishment of debt (c)
Other (income) expense — net
Operating income
Interest expense — net
Income from continuing operations before income taxes
Provision for income taxes (h)
Income from continuing operations
Income (loss) from discontinued operations, net of taxes (e)
Net income
Earnings from continuing operations per basic share
Earnings from continuing operations per diluted share
Cash dividends per common share
Other Financial Data
Net cash flow provided by (used for):
Operating activities (h)
Capital expenditures (g)
Other investing activities (f)
Financing activities (c)(h)
Ratio of earnings to fixed charges (d)
24
Consolidated Balance Sheet Data
Cash and cash equivalents
Working capital, less cash and cash equivalents
Total assets (h)
Long-term debt (c)(h)
Total liabilities (h)
Total stockholders' equity
_______________________
December 31,
2016
2015
2014
2013
2012
(Dollars in millions)
$
3.1
$
4.2
$
72.6
$
73.4
$
125.2
765.6
219.7
427.3
338.3
136.3
751.4
228.2
439.8
311.6
129.5
724.5
226.8
435.8
288.7
123.9
670.9
185.5
403.4
267.5
7.8
132.0
608.0
174.9
410.2
197.8
(a) For the year ended December 31, 2016, we incurred $7.0 million of integration and restructuring costs and $0.8
million of pension settlement charges. For the year ended December 31, 2015, we incurred $5.3 million of
integration costs related to the FiberMark Acquisition and $1.2 million of restructuring costs. For the year ended
December 31, 2014, we incurred $1.0 million of integration costs related to the acquisition of the Crane technical
materials business and $1.3 million of restructuring costs. For the year ended December 31, 2013, we incurred
$0.4 million of integration costs related to the acquisition of the Southworth brands. For the year ended
December 31, 2012, we incurred $5.8 million integration costs related to the acquisition of the Wausau brands.
(b) For the year ended December 31, 2016, we elected settlement accounting even though the benefit payments did
not exceed the sum of expected service cost and interest costs of the affected plans, and recognized a settlement
loss of $0.8 million. For the years ended December 31, 2014, 2013 and 2012, benefit payments under certain
pension plans exceeded the sum of expected service cost and interest costs for the plan for the respective calendar
years. In accordance with ASC Topic 715, Compensation — Retirement Benefits ("ASC Topic 715"), we measured
the liabilities of the post-retirement benefit plans and recognized settlement losses of $3.5 million, $0.2 million
and $3.5 million, respectively.
(c) For the year ended December 31, 2014, we amended and restated our existing bank credit facility and recognized
a pre-tax loss of $0.2 million for the write-off of unamortized debt issuance costs. For the year ended
December 31, 2013, we redeemed $90 million of 2014 Senior Notes and repaid all outstanding term loan
borrowings ($29.3 million). In connection with the early extinguishment of debt we recognized a pre-tax loss of
$0.5 million for the write-off of unamortized debt issuance costs. For the year ended December 31, 2012, we
completed an early redemption of $68 million in aggregate principal amount of the 2014 Senior Notes. In
connection with the early redemption we recognized a pre-tax loss of $0.6 million, including a call premium and
the write-off of unamortized debt issuance costs.
(d) For purposes of determining the ratio of earnings to fixed charges, earnings consist of income before income taxes
(less interest) plus fixed charges. Fixed charges consist of interest expense, including amortization of debt
issuance costs, and the estimated interest portion of rental expense.
(e) The following table presents the results of discontinued operations:
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Discontinued operations: (5)
Income from operations
Loss on sale of the Lahnstein Mill (5)
Income (loss) before income taxes
Provision (benefit) for income taxes
Income (loss) from discontinued operations, net of taxes
_______________________
Year Ended December 31,
2016 (1)
2015 (2)
2014
2013 (3)
2012 (4)
$ — $
(0.6)
(0.6)
(0.2)
$ (0.4) $
$
0.2
(13.6)
(13.4)
(4.0)
(9.4) $
0.9
—
0.9
0.2
0.7
$
$
5.4
—
5.4
1.9
3.5
$ (0.1)
—
(0.1)
(4.5)
4.4
$
(1) The loss in 2016 was due to the final adjustment of the sales price of the Lahnstein Mill.
(2) The loss on sale of the Lahnstein Mill includes a net curtailment gain related to the divesture of the pension
plan of $15.8 million, including a $5.5 million write-off of deferred actuarial losses in 2015.
25
(3) During the first quarter of 2013, we received a refund of excess pension contributions from the terminated
Terrace Bay pension plan. As a result, we recorded income before income taxes from discontinued operations
of $4.2 million and a related provision for income taxes of $1.6 million.
(4) In November 2012, audits of the 2007 and 2008 tax years were finalized with a finding of no additional taxes
due. As a result, we recognized a non-cash tax benefit of $4.5 million related to the reversal of certain
liabilities for uncertain income tax positions.
(5) On October 31, 2015, we sold the Lahnstein Mill. For the year ended December 31, 2016, 2015, 2014, 2013
and 2012, the results of operations and the loss on sale of the Lahnstein Mill are reported as discontinued
operations in the Consolidated Statement of Operations Data.
(f) In August 2015, we purchased all of the outstanding equity of FiberMark for approximately $118 million. In July
2014, we purchased all of the outstanding equity of Crane for approximately $72 million.
(g) During the year ended December 31, 2016, we completed our U.S. Filtration project.
(h) 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. See Note 2 of Notes to Consolidated Financial
Statements, "Summary of Significant Accounting Policies — Recently Adopted Accounting Standards."
26
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis presents the factors that had a material effect on our results of operations during the
years ended December 31, 2016, 2015 and 2014. Also discussed is our financial position as of the end of those years. You
should read this discussion in conjunction with our consolidated financial statements and the notes to those consolidated
financial statements included elsewhere in this Annual Report on Form 10-K. This Management's Discussion and Analysis
of Financial Condition and Results of Operations contains forward-looking statements. See "Forward-Looking Statements"
for a discussion of the uncertainties, risks and assumptions associated with these statements.
Introduction
This Management's Discussion and Analysis of Financial Condition is intended to provide investors with an understanding
of the historical performance of our business, its financial condition and its prospects. We will discuss and provide our
analysis of the following:
• 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.
Overview of Business
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We are a leading producer of technical products and premium fine papers and packaging. We have two primary operations:
our technical products business and our fine paper and packaging business.
Our mission is to create value by improving the image and performance of everything we touch. We expect to create value
by growing in specialized niche markets that value performance or image and where we have competitive advantages. In
managing our businesses, we believe that achieving and maintaining a leadership position in our markets, responding
effectively to customer needs and competitive challenges, employing capital optimally, controlling costs and managing
risks are important to long-term success. Changes in input costs and general economic conditions can also impact our
results. In this discussion and analysis, we will refer to these factors.
• Competitive Environment — Our past results have been and our future prospects will be significantly affected by the
competitive environment in which we operate. While our businesses are oriented to premium performance and quality,
they may also face competitive pressures from lower value products and in most of our markets our businesses
compete directly with well-known competitors, some of which are larger and more diversified.
• Economic Conditions and Input Costs — The markets for all of our products are affected to a significant degree by
economic conditions, including rapid changes in input costs, particularly for pulp, latex and natural gas that may not be
recovered immediately through pricing or other actions. Our results are also affected by fluctuations in exchange rates,
particularly for the Euro.
Business Segments
Our reportable operating segments consist of Technical Products, Fine Paper and Packaging, and Other.
Our technical products business is a leading international producer of transportation, water and other filter media and
durable, saturated and coated substrates for a variety of end markets. We focus on categories where we believe we are, or
can be, a market leader. These categories include filtration media for transportation, water and other uses, backings for
specialty tapes and abrasives, performance labels and other specialty markets. Our dedicated technical products
manufacturing facilities are located near Munich, Germany, in Bolton, England, in Munising, Michigan and in Pittsfield,
Massachusetts. In addition, certain technical products are manufactured along with fine paper and packaging products in
shared facilities located in upstate New York and Quakertown, Pennsylvania. In 2017, a filtration machine (which was
27
converted from a fine paper machine) will begin production in Appleton, Wisconsin, a site also shared with the fine paper
and packaging business.
We believe our fine paper and packaging business is the leading supplier of premium printing and other high end specialty
papers in North America. Our products include some of the most recognized and preferred papers in North America, where
we enjoy leading market positions in many of our product categories. We sell our products primarily to authorized paper
distributors, as well as through converters, major national retailers and specialty businesses. Our primary fine paper and
packaging manufacturing facilities are located in Neenah and Whiting, Wisconsin and in Brattleboro, Vermont. In addition,
certain products are manufactured in shared facilities located in upstate New York and Quakertown, Pennsylvania, as well
as an existing site shared with technical products in 2017 in Appleton, Wisconsin.
Our other segment includes certain product lines composed of papers sold to converters for end uses such as covering
materials for datebooks, diaries, yearbooks and traditional photo albums. These products are primarily manufactured at our
mill in Brattleboro, Vermont that also makes fine paper and packaging.
Results of Operations and Related Information
In this section, we discuss and analyze our net sales, income before interest and income taxes (which we refer to as
"operating income") and other information relevant to an understanding of our results of operations.
Executive Summary
For the year ended December 31, 2016, consolidated net sales of $941.5 million increased $53.8 million, or 6 percent, from
$887.7 million in 2016. The increase reflects a full year of the acquired volume from the August 1, 2015 FiberMark
Acquisition and other incremental volume growth which more than offset lower net selling prices and currency effects.
Consolidated operating income of $114.1 million for the year ended December 31, 2016 increased $12.7 million, or 13
percent, from the prior year. The favorable comparison to the prior year was primarily due to lower manufacturing material
costs (including purchasing synergies resulting from the FiberMark Acquisition), and increased sales as a result of
incremental volume growth. These favorable variances were partially offset by incremental acquired selling, general and
administrative costs ("SG&A"), lower net selling prices, and higher integration and restructuring costs, primarily due to
costs related to the Appleton filtration machine conversion and a pension settlement charge. Excluding aggregate charges
of $7.8 million in 2016 for integration and restructuring costs and pension settlement losses, and aggregate charges of $6.5
million in 2015 for integration and restructuring costs, operating income for the year ended December 31, 2016 increased
$14.0 million from the prior year. See later in this section for further information regarding the presentation of operating
income, as adjusted.
Cash provided by operating activities of $115.8 million for the year ended December 31, 2016 was $4.6 million higher than
cash provided by operating activities of $111.2 million in the prior year primarily due to higher operating earnings with
commensurate benefits of increased utilization of federal research and development tax credits, partly offset by higher post-
retirement benefit plan contributions.
Capital expenditures for the year ended December 31, 2016 were $68.5 million compared to spending of $48.1 million in
the prior year. Higher spending in 2016 was due to an incremental investment in filtration assets in the U.S. that was
completed at the end of 2016.
Analysis of Net Sales — Years Ended December 31, 2016, 2015 and 2014
The following table presents net sales by segment and net sales expressed as a percentage of total net sales:
Net sales
Technical Products
Fine Paper and Packaging
Other
Consolidated
Year Ended December 31,
2016
2016
2015
2015
2014
2014
$ 466.4
50% $ 429.2
48% $ 403.6
452.1
23.0
48% 442.7
50% 436.1
2%
15.8
2%
—
48%
52%
—%
$ 941.5
100% $ 887.7
100% $ 839.7
100%
28
Commentary:
Year 2016 versus 2015
For the Year
Ended
December 31,
2016
2015
Change in Net Sales Compared to the
Prior Year
Change Due To
Total
Change
Volume
Net Price
Currency
Technical Products
Fine Paper and Packaging
Other
Consolidated
$
$
466.4
$
429.2
$
37.2
$
452.1
23.0
442.7
15.8
9.4
7.2
$
49.8
18.2
7.2
941.5
$
887.7
$
53.8
$
75.2
$
(11.0) $
(8.8)
—
(19.8) $
(1.6)
—
—
(1.6)
Consolidated net sales for the year ended December 31, 2016 were $53.8 million (6%) higher than the prior year. The
increase reflects a full year of the acquired volume from the August 1, 2015 FiberMark Acquisition and other incremental
volume growth which more than offset lower net selling prices and currency effects. Excluding currency exchange effects,
consolidated net sales increased $55.4 million from the prior year.
• Net sales in our technical products business increased $37.2 million (9%) from the prior year due to acquired volume
and organic volume growth, which were partially offset by lower net selling prices. Excluding currency exchange
effects, technical product sales increased $38.8 million (9%). Organic volumes increased from the prior year period
due to growth in transportation filtration and backings for tapes and abrasives. Net selling prices were down primarily
due to a lower-priced mix of products sold but also for reduced selling prices on products with contractual adjusters for
certain input costs.
• Net sales in our fine paper and packaging business increased $9.4 million (2%) from the prior year due to acquired
volume, which was partially offset by lower net selling prices. Net selling prices were down from the prior year due to
a lower-priced mix of products sold in 2016, which reflected a higher proportion of sales of non-branded products.
• Net sales in our other business segment increased $7.2 million from the prior year period due to acquired volume.
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Year 2015 versus 2014
Technical Products
Fine Paper and Packaging
Other
Consolidated
$
$
Change in Net Sales Compared to the
Prior Year
For the Years Ended
December 31,
2015
2014
Total
Change
Volume
Net Price
Currency
Change Due To
429.2
$
403.6
$
25.6
$
442.7
15.8
436.1
—
887.7
$
839.7
$
6.6
15.8
48.0
$
66.5
(4.5)
15.8
$
77.8
$
(2.4) $
11.1
—
8.7
$
(38.5)
—
—
(38.5)
Consolidated net sales for the year ended December 31, 2015 were $48.0 million (6%) higher than the prior year due to
organic technical products volume growth, incremental sales from the FiberMark Acquisition and higher average selling
prices, partially offset by unfavorable currency exchange effects. Excluding incremental FiberMark sales and currency
exchange effects, consolidated net sales increased $28.4 million from the prior year.
• Net sales in our technical products business increased $25.6 million (6%) from the prior year as organic volume
growth, incremental sales from the FiberMark Acquisition and higher selling prices were only partially offset by
unfavorable currency exchange effects. Unfavorable currency exchange effects resulted from the Euro weakening by
approximately 16 percent relative to the U.S. dollar in the year ended December 31, 2015 as compared to the prior
29
year. Excluding currency exchange effects and incremental FiberMark sales, technical product sales increased $40.7
million (10%) and volumes increased approximately 11% from the prior year period due to growth in shipments of
filtration and specialty performance products and incremental sales from the technical materials business acquired in
July 2014.
• Net sales in our fine paper and packaging business increased $6.6 million (2%) from the prior year due to higher
average net prices and incremental FiberMark sales. Excluding acquired revenues, fine paper and packaging sales
decreased $12.3 million (3%) as higher average net price was more than offset by a four percent decrease in sales
volumes. Sales volumes were unfavorable to the prior year as increases in premium packaging and retail products were
more than offset by lower sales of other grades; including lower margin special make business. Average net price
improved from the prior year due to a two percent increase in average selling prices and a more favorable product mix.
Analysis of Operating Income — Years Ended December 31, 2016, 2015 and 2014
The following table sets forth line items from our consolidated statements of operations as a percentage of net sales for the
periods indicated and is intended to provide a perspective of trends in our historical results:
Net sales
Cost of products sold
Gross profit
Selling, general and administrative expenses
Integration costs and settlement charges
Other (income) expense — net
Operating income
Interest expense — net
Income from continuing operations before income taxes
Provision for income taxes
Income from continuing operations
Commentary:
Year 2016 versus 2015
Year Ended December 31,
2016
2015
2014
100.0% 100.0% 100.0%
77.2%
22.8%
9.8%
0.8%
0.1%
12.1%
1.2%
10.9%
3.1%
7.8%
78.0%
22.0%
9.8%
0.7%
0.1%
11.4%
1.3%
10.1%
3.3%
6.8%
79.7%
20.3%
9.3%
0.7%
—%
10.3%
1.3%
9.0%
0.9%
8.1%
Change in Operating Income (Loss) Compared to the Prior Year
For the Years Ended
December 31,
2016
2015
Total
Change
Volume
Net Price (a)
Change Due To
Input Costs
(b)
Currency
Other
Technical Products
$
65.6
$
54.1
$
11.5
$
9.1
$
(5.5) $
11.0
$
(0.5) $ (2.6)
Fine Paper and
Packaging
Other
Unallocated corporate
costs
70.7
(1.1)
67.3
(2.0)
(21.1)
(18.0)
Consolidated
$
114.1
$
101.4
$
_______________________
3.4
0.9
(3.1)
12.7
0.2
0.7
—
$
10.0
$
(4.1)
—
—
(9.6) $
10.4
—
—
21.4
$
—
—
(3.1)
0.2
—
(3.1)
(0.5) $ (8.6)
(a) Includes price changes, net of changes in product mix.
(b) Includes price changes for raw materials and energy.
30
Consolidated operating income of $114.1 million for the year ended December 31, 2016 increased $12.7 million (13%)
from the prior year. The favorable comparison to the prior year was primarily due to lower manufacturing material costs
(including purchasing synergies resulting from the FiberMark Acquisition), and increased sales as a result of incremental
volume growth. These favorable variances were partially offset by incremental acquired SG&A, lower net selling prices,
and higher integration and restructuring costs, primarily due to costs related to the Appleton filtration machine conversion
and a pension settlement charge. Excluding aggregate charges of $7.8 million in 2016 for integration and restructuring
costs and pension settlement losses, and aggregate charges of $6.5 million in 2015 for integration and restructuring costs,
operating income for the year ended December 31, 2016 increased $14.0 million (13%) from the prior year.
• Operating income for our technical products business increased $11.5 million (21%) from the prior year primarily due
to lower manufacturing input costs and operational efficiencies, organic and acquired volume growth, and lower
integration and restructuring costs. These favorable variances were partially offset by added SG&A from the
acquisition, lower net selling prices and currency effects. Results for the years ended December 31, 2016 and 2015
include $1.4 million and $1.8 million for integration/restructuring costs, respectively. Excluding integration/
restructuring costs, operating income for the technical products business increased $11.1 million (20%).
• Operating income for our fine paper and packaging business increased $3.4 million (5%) from the prior year period
primarily due to lower manufacturing material prices and increased volume, partially offset by a lower-priced mix of
products sold and added SG&A from the acquisition. Results for the years ended December 31, 2016 and 2015 include
$1.8 million and 1.5 million for integration costs related to the FiberMark Acquisition, respectively. Excluding
integration costs, operating income for the fine paper and packaging business increased $3.7 million (5%).
• Unallocated corporate costs for the year ended December 31, 2016 were $21.1 million, or $3.1 million unfavorable to
the prior year. The unfavorable comparison to the prior year period is primarily due to pre-operating costs related to
conversion of a fine paper machine to filtration, which went into production in early 2017. Excluding charges of $2.7
million of restructuring costs and a pension plan settlement charge of $0.8 million in 2016, and $0.8 million of
restructuring costs in 2015, unallocated corporate expenses were $0.4 million unfavorable to the prior year.
Year 2015 versus 2014
Technical Products
Fine Paper and
Packaging
Other
Unallocated corporate
costs
Consolidated
For the Years Ended
December 31,
2015
2014
$
54.1
$
46.0
$
67.3
(2.0)
60.8
—
Total
Change
8.1
6.5
(2.0)
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Other
—
—
(3.5)
(2.2)
Change in Operating Income (Loss) Compared to the Prior Year
Volume
10.8
$
Net Price (a)
0.6
$
Currency
$
(4.9) $ (2.8)
Change Due To
Input Costs
(b)
4.4
8.7
—
(7.2)
0.2
—
3.8
$
8.5
—
—
9.1
$
$
(18.0)
101.4
$
(20.2)
86.6
$
2.2
14.8
$
$
—
13.1
$
—
2.2
(4.9) $ (6.3)
_______________________
(a) Includes price changes, net of changes in product mix.
(b) Includes price changes for raw materials and energy.
Consolidated operating income of $101.4 million for the year ended December 31, 2015 increased $14.8 million (17%)
from the prior year. The favorable comparison was primarily due to lower manufacturing input costs, higher net price for
the fine paper and packaging business, and organic technical products volume growth; partially offset by higher
manufacturing costs, increased SG&A, including amounts acquired as part of the FiberMark Acquisition; lower fine paper
and packaging volume and unfavorable currency effects. Excluding results of the FiberMark Acquisition, currency effects
and aggregate charges of $6.5 million in 2015 for integration and restructuring costs and aggregate charges of $6.0 million
in 2014 for integration and restructuring costs, costs related to the early extinguishment of debt and a pension plan
31
settlement charge, operating income for the year ended December 31, 2015 increased $18.8 million (20%) from the prior
year.
• Operating income for our technical products business increased $8.1 million (18%) from the prior year primarily due
to lower manufacturing input costs, organic volume growth and higher selling prices. These favorable variances were
partially offset by unfavorable currency exchange effects and higher manufacturing costs. Results for the years ended
December 31, 2015 and 2014 include $1.8 million and $1.6 million for integration/restructuring costs, respectively.
Excluding incremental volume from the FiberMark Acquisition, unfavorable currency exchange effects and acquisition
integration/restructuring costs, operating income for the technical products business increased $11.2 million (24%).
• Operating income for our fine paper and packaging business increased $6.5 million (11%) from the prior year period
primarily due to lower manufacturing input costs principally as a result of lower natural gas prices and higher net
price. Extreme winter weather conditions during the first quarter of 2014 resulted in a temporary increase in natural
gas prices. These favorable variances were partially offset by lower shipment volume and higher manufacturing costs.
Results for the ended December 31, 2015 include $1.5 million for acquisition related integration costs. Excluding
incremental volume from the FiberMark Acquisition and acquisition integration costs, operating income for the fine
paper and packaging business increased $8.8 million (14%).
• Unallocated corporate costs for the year ended December 31, 2015 were $18.0 million, or $2.2 million favorable to the
prior year. Excluding charges of $0.8 million in 2015 for restructuring costs and aggregate charges of $4.4 million in
2014 for a pension plan settlement charge, restructuring costs and costs related to the early extinguishment of debt,
unallocated corporate expenses were $1.4 million unfavorable to the prior year primarily due to increased employee
compensation costs.
The following table sets forth our operating income by segment for the periods indicated:
Operating income
Technical Products
Fine Paper and Packaging
Other
Unallocated corporate costs
Operating Income as Reported
Non-GAAP Adjustments
Technical Products
Acquisition/integration/restructuring costs
Fine Paper and Packaging
Acquisition/integration costs
Other
Acquisition/integration costs
Unallocated corporate costs
Pension plan settlement charge
Restructuring costs
Loss on early extinguishment of debt
Total
Total non-GAAP Adjustments
Operating Income as Adjusted
Year Ended December 31,
2016
2015
2014
$
65.6
$
54.1
$
70.7
(1.1)
(21.1)
114.1
67.3
(2.0)
(18.0)
101.4
46.0
60.8
—
(20.2)
86.6
1.4
1.8
1.1
0.8
2.7
—
3.5
7.8
1.8
1.5
2.4
—
0.8
—
0.8
6.5
1.6
—
—
3.5
0.7
0.2
4.4
6.0
$
121.9
$
107.9
$
92.6
In accordance with generally accepted accounting principles in the United States ("GAAP"), consolidated operating income
includes the pre-tax effects of integration and restructuring costs, pension plan settlement charges, and loss on early
extinguishment of debt. We believe that by adjusting reported operating income to exclude the effects of these items, the
resulting adjusted operating income is on a basis that reflects the results of our ongoing operations. We believe that
32
providing adjusted operating results will help investors gain an additional perspective of underlying business trends and
results. Adjusted operating income is not a recognized term under GAAP and should not be considered in isolation or as a
substitute for operating income derived in accordance with GAAP. Other companies may use different methodologies for
calculating their non-GAAP financial measures and, accordingly, our non-GAAP financial measures may not be
comparable to their measures.
Additional Statement of Operations Commentary:
•
•
•
•
SG&A expense of $92.2 million for the year ended December 31, 2016 was $5.7 million higher than the prior year due
to incremental selling and administrative costs related to the FiberMark Acquisition. SG&A expense as a percentage of
net sales for the year ended December 31, 2016, was approximately 9.8 percent and was comparable to the prior year.
SG&A expense of $86.5 million for the year ended December 31, 2015 was $8.5 million higher than the prior year due
to incremental selling and administrative costs related to the FiberMark Acquisition. SG&A expense as a percentage of
net sales for the year ended December 31, 2015, was approximately 9.8 percent and was 0.5 percentage points higher
than the prior year as the increase in net sales in the current year was more than offset by higher SG&A expenses.
For the years ended December 31, 2016, 2015 and 2014, we incurred $11.2 million, $11.7 million and $11.4 million of
interest expense, respectively.
In general, our effective tax rate differs from the U.S. statutory tax rate of 35 percent primarily due to impacts of our
corporate tax structure, benefits from R&D credits earned, and the mix of pre-tax income in jurisdictions with
marginal tax rates that differ from the U.S. statutory tax rate. For the years ended December 31, 2016 and 2015, our
effective income tax rate related to continuing operations was 29 percent and 33 percent, respectively. For 2016, the
adoption of ASU 2016-09, as discussed in Note 2 of Notes to Consolidated Financial Statements, "Summary of
Significant Accounting Policies — Recently Adopted Accounting Standards", allowed excess tax benefits from share-
based payments to be shown as a reduction to income tax expense and reduced the rate for the year by 3 percent. For
the year ended December 31, 2014, our effective income tax rate related to continuing operations was 10 percent and
included the benefit from recognizing R&D credits earned in prior periods. Excluding the benefit of R&D Credits
related to prior year activities, our effective income tax rate for the year ended December 31, 2014 would be
approximately 33 percent. For a reconciliation of effective tax rate to the U.S. federal statutory tax rate, see Note 6 of
Notes to Consolidated Financial Statements, "Income Taxes."
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Liquidity and Capital Resources
Net cash flow provided by (used in):
Operating activities
Investing activities:
Capital expenditures
Acquisitions
Purchase of equity investment
Proceeds on sale of discontinued operations
Other investing activities
Total
Financing activities
Effect of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents
$
33
Year Ended December 31,
2016
2015
2014
$
115.8
$
111.2
$
94.5
(68.5)
—
—
—
0.3
(68.2)
(48.4)
(0.3)
(1.1) $
(48.1)
(118.2)
—
5.4
0.8
(160.1)
(18.8)
(0.7)
(68.4) $
(27.9)
(72.4)
(2.9)
—
(1.7)
(104.9)
10.2
(0.6)
(0.8)
Operating Cash Flow Commentary
• Cash provided by operating activities of $115.8 million for the year ended December 31, 2016 was $4.6 million
favorable to cash provided by operating activities of $111.2 million in the prior year. The favorable comparison was
primarily due to a $12.7 million increase in operating income and the benefits of higher utilization of federal research
and development tax credits. These favorable variances were partially offset by higher post-retirement benefit
contributions in the current year and a decrease of $1.8 million in our investment in working capital in the prior year
compared to an increase of $1.2 million in our investment in working capital for the year ended December 31, 2016.
• Cash provided by operating activities of $111.2 million for the year ended December 31, 2015 was $16.7 million
favorable to cash provided by operating activities of $94.5 million in the prior year. The favorable comparison was
primarily due to a $16.1 million increase in operating income and lower contributions and benefit payments for post-
retirement benefit obligations. These favorable variances were partially offset by a decrease of $9.0 million in our
investment in working capital in the prior year compared to a decrease of $1.8 million in our investment in working
capital for the year ended December 31, 2015.
Investing Commentary:
•
•
•
For the years ended December 31, 2016 and 2015, cash used by investing activities was $68.2 million and $160.1
million, respectively. Capital expenditures for the year ended December 31, 2016 were $68.5 million compared to
spending of $48.1 million in the prior year. In general, we expect aggregate annual capital expenditures of
approximately 3 to 5 percent of net sales. For the year ended December 31, 2016, annual capital expenditures were
above that range due to incremental investment in filtration assets in the U.S. We expect capital spending in 2017 to
return to the normal range. We believe that the level of our 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
and also invest in expanded manufacturing capabilities to successfully pursue strategic initiatives and deliver attractive
returns.
For the year ended December 31, 2015, cash used by investing activities includes $118.2 million for the FiberMark
Acquisition. For the year ended December 31, 2014, cash used by investing activities includes $72.4 million for the
purchase of the Crane Technical Materials business and $2.9 million for the acquisition of a non-controlling equity
investment in a joint venture in India.
For the year ended December 31, 2015, we received net cash proceeds of $5.4 million from the sale of the Lahnstein
Mill.
• Capital expenditures for the year ended December 31, 2015 were $48.1 million compared to spending of $27.9 million
in the prior year.
Financing Commentary:
Our liquidity requirements are provided by cash generated from operations and short and long-term borrowings.
•
For the year ended December 31, 2016, cash used by financing activities was $48.4 million compared to cash used by
financing activities of $18.8 million for the prior year. The increase was due to higher net debt repayments, as well as
higher share repurchases and dividends paid in 2016. For the year ended December 31, 2015, cash used by financing
activities was $18.8 million compared to cash provided by financing activities of $10.2 million for the prior year. The
change was due to lower net borrowings, and higher share repurchases and dividends paid in 2015.
• We have the following short- and long-term borrowings:
Secured Bank Credit Facility
In December 2014, we entered into the Third Amended Credit Agreement. The Third Amended Credit Agreement,
among other things: (1) increased the maximum principal amount of our existing credit facility for the U.S. Revolving
Credit Facility to $125 million; (2) established the German Revolving Credit Facility in the maximum principal
amount of $75 million; (3) caused Neenah and the other domestic borrowers to guarantee, among other things, the
obligations arising under the German Revolving Credit Facility; (4) provides for the Global Revolving Credit Facilities
to mature on December 18, 2019; and (5) provides for an accordion feature permitting one or more increases in the
Global Revolving Credit Facilities in an aggregate principal amount not exceeding $50 million, such that the aggregate
commitments under the Global Revolving Credit Facilities do not exceed $250 million. In addition, domestic
borrowers may request letters of credit under the U.S. Revolving Credit Facility in an aggregate face amount not to
34
exceed $20 million outstanding at any time, and German borrowers may request letters of credit under the German
Revolving Credit Facility in an aggregate face amount not to exceed $2 million outstanding at any time. See Note 7 of
Notes to Consolidated Financial Statements, "Debt."
Unsecured Senior Notes
We have $175 million of 2021 Senior Notes. Proceeds from this offering were used to retire the remaining principal
amount of 2014 Senior Notes, to repay approximately $56 million in outstanding revolver borrowings under our bank
credit agreement and for general corporate purposes. See Note 7 of Notes to Consolidated Financial Statements,
"Debt."
Other Debt
In June 2014, we repaid the remaining €3.7 million ($5.2 million) in outstanding project financing borrowings under
the German Loan Agreement.
The Second German Loan Agreement provides for €9.0 million of construction financing which is secured by the melt
blown machine. The loan matures in September 2022 and principal is repaid in equal quarterly installments. At
December 31, 2016, €6.5 million ($6.8 million, based on exchange rates at December 31, 2016) was outstanding under
the Second German Loan Agreement.
• 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, 2016, we had $42.9 million outstanding under our
Revolver and $125.2 million of available credit (based on exchange rates at December 31, 2016).
• We have required debt payments through December 31, 2017 of $1.2 million on the Second German Loan
Agreement.
•
For the year ended December 31, 2016, cash and cash equivalents decreased $1.1 million to $3.1 million at
December 31, 2016 from $4.2 million at December 31, 2015. Total debt decreased $8.5 million to $220.9 million
at December 31, 2016 from $229.4 million at December 31, 2015. Net debt (total debt minus cash and cash
equivalents) decreased by $7.4 million primarily due to cash flow from operations.
• As of December 31, 2016, our cash balance consists of $1.1 million in the U.S. and $2.0 million held at entities
outside of the U.S. As of December 31, 2016, there were no restrictions regarding the repatriation of our non-U.S.
cash and, we believe, the repatriation of these cash balances to the U.S. would not materially increase our income
tax provision.
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Transactions with Shareholders
•
•
•
•
For the years ended December 31, 2016 and 2015, we paid cash dividends of $1.32 per common share or $22.4 million
and $1.20 per common share or $20.3 million, respectively.
In November 2016, our Board of Directors approved a 12 percent increase in the annual dividend rate on our common
stock to $1.48 per share. The dividend is scheduled to be paid in four equal quarterly installments beginning in March
2017.
In May 2016, our Board of Directors authorized the 2016 Stock Purchase Plan. The 2016 Stock Purchase Plan allows
us to repurchase up to $25 million of our outstanding Common Stock through May 2017. Purchases under the 2016
Stock Purchase Plan will be made from time to time in the open market or in privately negotiated transactions in
accordance with the requirements of applicable law. The timing and amount of any purchases will depend on share
price, market conditions and other factors. The 2016 Stock Purchase Plan does not require us to purchase any specific
number of shares and may be suspended or discontinued at any time. For the year ended December 31, 2016, we
acquired approximately 185,200 shares of Common Stock at a cost of $12.6 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, 2016 and 2015, we acquired approximately 46,000 and 40,000 of Common Stock,
respectively, at a cost of $3.8 million and $2.5 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 $0.4 million
and $1.2 million in proceeds from the exercise of employee stock options for the years ended December 31, 2016 and
2015, respectively.
35
• Under the most restrictive terms of the Third Amended and Restated Credit Agreement, we are permitted to pay cash
dividends on or repurchase shares of our common stock up to the amount available under the Third Amended and
Restated Credit Agreement, as long as the availability under the Third Amended and Restated Credit Agreement
exceeds $25 million. If the availability is below $25 million, we are restricted from paying dividends or repurchasing
shares. As of December 31, 2016, our availability exceeded $25 million, so this restriction did not apply. See our
availability under the Third Amended and Restated Credit Agreement in Note 7 of Notes to Consolidated Financial
Statements, "Debt." Under the most restrictive terms of the 2021 Senior Notes, we are permitted to pay cash dividends
of up to $25 million in a calendar year, but not permitted to repurchase shares of our common stock. However, as long
as the net leverage ratio (net debt/EBITDA) under the 2021 Senior Notes is below 2.5x, we can pay dividends or
repurchase shares without limitation. In the event the net leverage ratio exceeds 2.5x, we may still pay dividends in
excess of $25 million or repurchase shares by utilizing "restricted payment baskets" as defined in the indenture for the
2021 Senior Notes. As of December 31, 2016, since our leverage ratio was less than 2.5x, none of these covenants
were restrictive to our ability to pay dividends on or repurchase shares of our common stock.
Other Items:
• As of December 31, 2016, we had $48.8 million of state NOLs. Our state NOLs may be used to offset approximately
$2.3 million in state income taxes. If not used, substantially all of the state NOLs will expire in various amounts
between 2017 and 2035. In addition, we had $25.2 million of U.S. federal and state R&D Credits which, if not used,
will expire between 2027 and 2036 for the U.S. federal R&D Credits and between 2017 and 2031 for the state R&D
Credits. As of December 31, 2016, we recorded a valuation allowance of $3.1 million against a portion of the R&D
Credits.
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 2016 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.
Contractual Obligations
The following table presents the total contractual obligations for which cash flows are fixed or determinable as of
December 31, 2016:
(In millions)
2017
2018
2019
2020
2021
Beyond
2021
Total
Long-term debt payments
Interest payments on long-term
debt (a)
Open purchase orders (b)
Other post-employment benefit
obligations (c)
Contributions to pension trusts
Minimum purchase commitments
(d)
Operating leases
$
1.2
$
1.2
$
44.1
$
1.2
$
176.2
$
0.8
$
224.7
10.5
69.4
4.3
14.0
14.3
3.1
10.5
—
3.5
—
2.2
2.4
10.4
—
3.8
—
1.3
1.3
9.3
—
4.1
—
—
1.0
4.2
—
4.1
—
—
1.0
—
—
16.9
—
—
4.0
44.9
69.4
36.7
14.0
17.8
12.8
Total contractual obligations
$
116.8
$
19.8
$
60.9
$
15.6
$
185.5
$
21.7
$
420.3
_______________________
(a) Interest payments on long-term debt includes interest on variable rate debt at December 31, 2016 weighted
average interest rates.
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(b) The open purchase orders displayed in the table represent amounts we anticipate will become payable within the
next 12 months for goods and services that we have negotiated for delivery.
(c) The above table includes future payments that we will make for postretirement benefits other than pensions. Those
amounts are estimated using actuarial assumptions, including expected future service, to project the future
obligations.
(d) The minimum purchase commitments in 2017 are primarily for coal and corn starch contracts. Although we are
primarily liable for payments on the above operating leases and minimum purchase commitments, based on
historic operating performance and forecasted future cash flows, we believe our exposure to losses, if any, under
these arrangements is not material.
Adoption of New Accounting Pronouncements
See Note 2 of Notes to Consolidated Financial Statements, "Summary of Significant Accounting Policies — Recently
Adopted Accounting Standards" for a description of accounting standards adopted in the year ended December 31, 2016.
Critical Accounting Policies and Use of Estimates
The preparation of financial statements in conformity with GAAP in the United States requires estimates and assumptions
that affect the reported amounts and related disclosures of assets and liabilities at the date of the financial statements and
net sales and expenses during the reporting period. Actual results could differ from these estimates, and changes in these
estimates are recorded when known. The critical accounting policies used in the preparation of the consolidated financial
statements are those that are important both to the presentation of financial condition and results of operations and require
significant judgments with regard to estimates used. These critical judgments relate to the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities, and the reported amounts of expenses.
The following summary provides further information about the critical accounting policies and should be read in
conjunction with the notes to the consolidated financial statements. We believe that the consistent application of our
policies provides readers of our financial statements with useful and reliable information about our operating results and
financial condition.
We have discussed the application of these critical accounting policies with our Board of Directors and Audit Committee.
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Inventories
We value U.S. inventories at the lower of cost, using the Last-In, First-Out ("LIFO") method, or market. German
inventories are valued at the lower of cost, using a weighted-average cost method, or market. The First-In, First-Out value
of U.S. inventories valued on the LIFO method was $106.8 million and $118.2 million at December 31, 2016 and 2015,
respectively and exceeded such LIFO value by $8.2 million and $10.0 million, respectively. Cost includes labor, materials
and production overhead. Under the LIFO inventory valuation method, changes in the cost of raw materials and production
activities are recognized in cost of sales in the current period even though these materials and other costs may have been
incurred at significantly different values due to the length of time of our production cycle. Since we value most of our
inventory utilizing the LIFO inventory costing methodology, rapid changes in raw material costs have an impact on our
operating results.
Income Taxes
Significant judgment is required in determining our worldwide provision for income taxes and recording the related assets
and liabilities. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax
determination is less than certain. Our effective income tax rates include the tax effects of certain special items such as
foreign tax rate differences, inter-company financing structures, research and development credits, and domestic production
activities. While we believe that these judgments and estimates are appropriate and reasonable under the circumstances,
actual resolution of these matters may differ from recorded estimated amounts.
As of December 31, 2016, we have recorded aggregate deferred income tax assets of $6.1 million related to temporary
differences, net operating losses and research and development and other tax credits. As of December 31, 2015, our
aggregate deferred income tax assets were $20.0 million. As of December 31, 2016 and 2015, we recorded a valuation
allowance of $3.1 million and $2.9 million, respectively, against a portion of our R&D Credits. In determining the need for
a valuation allowance, we consider many factors, including specific taxing jurisdictions, sources of taxable income, income
37
tax strategies and forecasted earnings for the entities in each jurisdiction. A valuation allowance would be recognized if,
based on the weight of available evidence, we conclude that it is more likely than not that some portion or all of the
deferred income tax assets will not be realized.
As of December 31, 2016 and 2015, our liability for uncertain income taxes positions was $10.3 million and $12.9 million,
respectively. In evaluating and estimating tax positions and tax benefits, we consider many factors which may result in
periodic adjustments and which may not accurately anticipate actual outcomes.
Pension and Other Postretirement Benefits
Consolidated pension expense related to continuing operations for defined benefit pension plans was $9.5 million, $6.5
million and $10.8 million for the years ended December 31, 2016, 2015 and 2014, respectively. Accounting for defined
benefit pension plans requires various assumptions, including, but not limited to, discount rates, expected long-term rates
of return on plan assets, future compensation growth rates and mortality rates. Accounting for our postretirement benefit
plans also requires various assumptions, which include, but are not limited to, discount rates and annual rates of increase in
the per capita costs of health care benefits.
The following chart summarizes the more significant assumptions used in the actuarial valuation of our defined benefit
plans for each of the past three years:
Pension plans
Weighted average discount rate for benefit expense
Weighted average discount rate for benefit obligation
Expected long-term rate on plan assets
Rate of compensation increase
Postretirement benefit plans
Weighted average discount rate for benefit expense
Weighted average discount rate for benefit obligation
Health care cost trend rate assumed for next year
Ultimate cost trend rate
Year that the ultimate cost trend rate is reached
2016
2015
2014
4.54% 3.91% 4.88%
4.16% 4.54% 3.91%
6.20% 6.50% 6.50%
2.18% 2.92% 2.96%
4.07% 4.05% 4.84%
3.69% 4.07% 4.05%
7.00% 7.30% 7.00%
4.50% 4.50% 4.50%
2027
2037
2037
The expected long-term rate of return on pension fund assets held by our pension trusts was determined based on several
factors, including input from pension investment consultants and projected long-term returns of broad equity and bond
indices. We also considered the plans' historical 10-year and 15-year compounded annual returns. We evaluate our
investment strategy and long-term rate of return on pension asset assumptions at least annually.
The discount (or settlement) rate that is utilized for determining the present value of future pension obligations in the U.S.
is generally based on the yield for a theoretical basket of AA-rated corporate bonds currently available in the market place,
whose duration matches the timing of expected pension benefit payments. The discount (or settlement) rate that is utilized
for determining the present value of future pension obligations in Germany is generally based on the IBOXX index of AA-
rated corporate bonds adjusted to match the timing of expected pension benefit payments.
For the years ended December 31, 2016, 2015 and 2014, consolidated postretirement health care and life insurance plan
benefit expense was $3.3 million, $3.4 million and $3.8 million, respectively. The discount (or settlement) rate that is
utilized for determining the present value of future postretirement health care and life insurance plan benefit obligations in
the U.S. is generally based on the yield for a theoretical basket of AA-rated corporate bonds currently available in the
market place, whose duration matches the timing of expected postretirement health care and life insurance benefit
payments. The discount (or settlement) rate that is utilized for determining the present value of future postretirement health
care and life insurance obligations for our foreign benefit plans is generally based on an index of AA-rated corporate bonds
adjusted to match the timing of expected benefit payments.
We evaluate these assumptions at least once each year or as facts and circumstances dictate and we make changes as
conditions warrant. Changes to these assumptions will increase or decrease our reported net periodic benefit expense,
which will result in changes to the recorded benefit plan assets and liabilities.
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Useful Life and Impairment of Long-Lived Assets
Property, Plant and Equipment
For financial reporting purposes, depreciation is principally computed on the straight-line method over estimated useful
asset lives. The weighted average remaining useful lives for buildings, land improvements and machinery and equipment
are approximately 18 years, 13 years and 10 years, respectively. We also use units-of-production method of depreciation for
$68.6 million of production assets, which reflects the nature of the assets' utilization.
Property, plant and equipment are tested for impairment in accordance with ASC Topic 360, Property, Plant, and
Equipment("ASC Topic 360"), whenever events or changes in circumstances indicate that the carrying amounts of such
long-lived assets may not be recoverable from future net pre-tax cash flows. Impairment testing requires significant
management judgment including estimating the future success of product lines, future sales volumes, growth rates for
selling prices and costs, alternative uses for the assets and estimated proceeds from disposal of the assets. Impairment
testing is conducted at the lowest level where cash flows can be measured and are independent of cash flows of other
assets. An asset impairment would be indicated if the sum of the expected future net pre-tax cash flows from the use of the
asset (undiscounted and without interest charges) is less than the carrying amount of the asset. An impairment loss would
be measured based on the difference between the fair value of the asset and its carrying amount. We determine fair value
based on an expected present value technique using multiple cash flow scenarios that reflect a range of possible outcomes
and a risk free rate of interest are used to estimate fair value.
The estimates and assumptions used in the impairment analysis are consistent with the business plans and estimates we use
to manage our business operations. The use of different assumptions would increase or decrease the estimated fair value of
the asset and would increase or decrease the impairment charge. Actual outcomes may differ from the estimates.
Goodwill and Other Intangible Assets with Indefinite Lives
We test goodwill for impairment at least annually on November 30 in conjunction with preparation of Neenah's annual
business plan, or more frequently if events or circumstances indicate it might be impaired.
We tested goodwill for impairment as of November 30, 2016. We elected the option under ASC Topic 350, Intangibles —
Goodwill and Other, to perform a qualitative assessment of our reporting units to determine whether further impairment
testing is necessary. In this qualitative assessment, we considered the following items for each of the reporting units:
macroeconomic conditions, industry and market conditions, overall financial performance and other entity specific events.
In addition, for each of these reporting units, the most recent fair value determination results in an amount that exceeds the
carrying amount of the reporting units. Based on these assessments, we determined that the likelihood that a current fair
value determination would be less than the current carrying amount of the reporting unit is not more likely than not. As of
November 30, 2016 no impairment was indicated.
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Other Intangible Assets
Certain trade names are estimated to have indefinite useful lives and as such are not amortized. Intangible assets with
indefinite lives are annually reviewed for impairment in accordance with ASC Topic 350.
Acquired intangible assets with finite useful lives are amortized on a straight-line basis over their respective estimated
useful lives, and reviewed for impairment in accordance with ASC Topic 360. Intangible assets consist primarily of
customer relationships, trade names and acquired intellectual property. Such intangible assets are amortized using the
straight-line method over estimated useful lives of between 10 and 15 years.
Our annual test of other intangible assets for impairment at November 30, 2016, 2015 and 2014 indicated that the carrying
amount of such assets was recoverable.
Acquisition Accounting
We account for acquisitions under ASC Topic 805, which requires companies to record assets acquired and liabilities
assumed at their respective fair market values at the date of acquisition. The accounting for acquisitions involves a
considerable amount of judgment and estimate, including the fair value of certain forms of consideration; fair value of
acquired intangible assets involving projections of future revenues and cash flows that are then either discounted at an
estimated discount rate or measured at an estimated royalty rate; fair value of other acquired assets and assumed liabilities,
including potential contingencies; and the useful lives of the acquired assets. The assumptions used are determined at the
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time of the acquisition in accordance with accepted valuation models. Projections are developed using internal forecasts,
available industry and market data and estimates of long-term rates of growth for our business. The impact of prior or
future acquisitions on our financial position or results of operations may be materially impacted by the change in or initial
selection of assumptions and estimates. Refer to Note 4, “Acquisitions”, of Notes to Consolidated Financial Statements
included elsewhere in this Annual Report for further discussion of business combination accounting valuation methodology
and assumptions.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
As a multinational enterprise, we are exposed to risks such as changes in commodity prices, foreign currency exchange
rates, interest rates and environmental regulation. A variety of practices are employed to manage these risks, including
operating and financing activities and, where deemed appropriate, the use of derivative instruments. Derivative instruments
are used only for risk management purposes and not for speculation or trading.
Presented below is a description of our most significant risks.
Foreign Currency Risk
Our reported operating results are affected by changes in the exchange rates of the local currencies of our non-U.S.
operations relative to the U.S. dollar. For the year ended December 31, 2016, a hypothetical 10 percent strengthening of the
U.S dollar relative to the local currencies of our non-U.S. operations would have decreased our income before income
taxes by approximately $3.3 million. We do not hedge our exposure to exchange risk on reported operating results.
The translation of the balance sheets of our non-U.S. operations from their local currencies into U.S. dollars is also
sensitive to changes in the exchange rate of the U.S. dollar. Consequently, we performed a sensitivity test to determine if
changes in the exchange rate would have a significant effect on the translation of the balance sheets of our non-U.S.
operations into U.S. dollars. These translation gains or losses are recorded as unrealized translation adjustments ("UTA", a
component of accumulated other comprehensive income) within stockholders' equity. The hypothetical change in UTA is
calculated by multiplying the net assets of our non-U.S. operations by a 10 percent change in the exchange rate of their
local currencies compared to the U.S. dollar. As of December 31, 2016, the net assets of our non-U.S. operations exceeded
their net liabilities by approximately $113 million. As of December 31, 2016, a 10 percent strengthening of the U.S. dollar
relative to the local currencies of our non-U.S. operations would have decreased our stockholders' equity by approximately
$12 million.
Commodity Risk
Pulp
We purchase the wood pulp used to produce our products on the open market, and, as a result, the price and other terms of
those purchases are subject to change based on factors such as worldwide supply and demand and government regulation.
We do not have significant influence over the price paid for our wood pulp purchases. Therefore, an increase in wood pulp
prices could occur at the same time that prices for our products are decreasing and have an adverse effect on our results of
operations, financial position and cash flows.
Based on 2016 pulp purchases, a $100 per ton increase in the average market price for pulp would have increased our
annual costs for pulp purchases by approximately $23 million.
Other Manufacturing Inputs
We purchase a substantial portion of the other manufacturing inputs necessary to produce our products on the open market,
and, as a result, the price and other terms of those purchases are subject to change based on factors such as worldwide
supply and demand and government regulation. We do not have significant influence over our costs for such manufacturing
inputs. Therefore, an increase in other manufacturing inputs could occur at the same time that prices for our products are
decreasing and have an adverse effect on our results of operations, financial position and cash flows.
Our technical products business acquires certain of its specialized pulp requirements from two global suppliers and certain
critical specialty latex grades from four suppliers. In general, these supply arrangements are not covered by formal
40
contracts, but represent multi-year business relationships that have historically been sufficient to meet our needs. We expect
these relationships to continue to operate in a satisfactory manner in the future. In the event of an interruption of production
at any one supplier, we believe that each of these suppliers individually would be able to satisfy our short-term
requirements for specialized pulp or specialty latex. In the event of a long-term disruption in our supply of specialized pulp
or specialty latex, we believe we would be able to substitute other pulp grades or other latex grades that would allow us to
meet required product performance characteristics and incur only a limited disruption in our production. As a result, we do
not believe that the substitution of such alternative pulp or latex grades would have a material effect on our operations.
We generate substantially all of the electrical energy used by our Munising mill and approximately 25 percent of the
electrical energy at our Appleton and Bruckmühl mills. Availability of energy is not expected to be a problem in the
foreseeable future, but the purchase price of such energy can and likely will fluctuate significantly based on fluctuations in
demand and other factors. There is no assurance that that we will be able to obtain electricity or natural gas purchases on
favorable terms in the future.
Except for certain specialty latex grades and specialty softwood pulp used by our technical products business, we are not
aware of any significant concentration of business transacted with a particular supplier.
Interest Rate Risk
We are exposed to interest rate risk on our variable rate bank debt. At December 31, 2016, we had $42.9 million of variable
rate borrowings outstanding. A 100 basis point increase in interest rates would increase our annual interest expense on
outstanding variable rate borrowings by approximately $0.4 million.
Environmental Regulation/Climate Change Legislation
Our manufacturing operations are subject to extensive regulation primarily by U.S., German and other international
authorities. We have made significant capital expenditures to comply with environmental laws, rules and regulations. Due
to changes in environmental laws and regulations, including potential future legislation to limit GHG emissions, the
application of such regulations and changes in environmental control technology, we are not able to predict with certainty
the amount of future capital spending to be incurred for environmental purposes. Taking these uncertainties into account,
we have planned capital expenditures for environmental projects during the period 2017 through 2018 of approximately
$1 million to $2 million annually.
We believe these risks can be managed and will not have a material effect on our business or our consolidated financial
position, results of operations or cash flows.
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Item 8. Financial Statements and Supplementary Data
The information required in Item 8 is contained in and incorporated herein by reference from pages F-1 through F-5(cid:21) of
this Annual Report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
41
Item 9A. Controls and Procedures
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
Our management, with the participation of its Chief Executive Officer and Chief Financial Officer, has evaluated the
effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15
(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this
report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the
end of such period, the Company's disclosure controls and procedures are effective in recording, processing, summarizing
and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the
Exchange Act and are effective in ensuring that information required to be disclosed by us in the reports that we file or
submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Management's Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining effective internal control over financial reporting as
defined in Rules 13a-15(f) or 15a-15(f) under the Securities Exchange Act of 1934. The Company's internal control over
financial reporting is designed to provide reasonable assurance to our management and board of directors regarding the
preparation and fair presentation of published financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial
statement preparation and presentation.
Management assessed the effectiveness of the Company's internal control over financial reporting as of December 31,
2016. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO) in Internal Control — Integrated Framework (2013). Based upon its assessment,
management believes that as of December 31, 2016, the Company's internal controls over financial reporting were
effective.
The effectiveness of internal control over financial reporting as of December 31, 2016, has been audited by Deloitte &
Touche LLP, the independent registered public accounting firm who also audited our consolidated financial statements.
Deloitte & Touche's attestation report on the Company's internal control over financial reporting is included herein. See
"Item 15, Exhibits and Financial Statement Schedule."
Neenah Paper, Inc
February 24, 2017
Changes in Internal Control Over Financial Reporting
There has been no significant change in the Company's internal control over financial reporting during the three months
ended December 31, 2016 that has materially affected, or is reasonably likely to materially affect, the Company's internal
control over financial reporting.
Item 9B. Other Information
None.
42
PART III
Item 10. Directors and Executive Officers of the Registrant
The information required to be set forth herein, except for the information included under Executive Officers of the
Company, relating to nominees for director of Neenah and compliance with Section 16(a) of the Securities Exchange Act
of 1934 is set forth under the captions "Election of Directors", "Meetings and Committees of the Board of Directors",
"Corporate Governance" and "Section 16(a) Beneficial Ownership Reporting Compliance", respectively, in the Proxy
Statement for the Annual Meeting of Stockholders to be held on May 23, 2017. Such information is incorporated herein by
reference. The definitive Proxy Statement will be filed with the Securities and Exchange Commission no later than
120 days after December 31, 2016.
Executive Officers of the Company
Set forth below is information concerning our executive officers.
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Name
John P. O'Donnell
Matthew L. Duncan
Steven S. Heinrichs
Bonnie C. Lind
James R. Piedmonte
Julie A. Schertell
Armin S. Schwinn
Larry N. Brownlee
Position
President, Chief Executive Officer and Director
Senior Vice President, Chief Human Resource Officer
Senior Vice President, General Counsel and Secretary
Senior Vice President, Chief Financial Officer and Treasurer
Senior Vice President — Operations
Senior Vice President — President, Fine Paper and Packaging
Senior Vice President — Managing Director of Neenah Germany
Vice President — Controller and Principal Accounting Officer
John P. O'Donnell, born in 1960, is our President and Chief Executive Officer and serves as a Director. He has been in that
role since May 2011. Prior to becoming President and Chief Executive Office, Mr. O'Donnell served as our Senior Vice
President, Chief Operating Officer since June 2010. In November 2007, Mr. O'Donnell joined Neenah as President, Fine
Paper. Mr. O'Donnell was employed by Georgia-Pacific Corporation from 1985 until 2007 and held increasingly senior
roles in the Consumer Products division. Mr. O'Donnell served as President of the North America Retail Business from
2004 through 2007, and as President of the North American Commercial Tissue business from 2002 through 2004.
Matthew L. Duncan, born in 1973, is our Senior Vice President, Chief Human Resources Officer and has been in that role
since joining Neenah in March 2016. Prior to his employment with Neenah, Mr. Duncan served as Vice President Human
Resources for Coca-Cola Refreshments, the North American operating unit of The Coca-Cola Company. Before joining
The Coca-Cola Company in 2008, Mr. Duncan served in a variety of Human Resource leadership roles with The Home
Depot and Nestle.
Steven S. Heinrichs, born in 1968, is our Senior Vice President, General Counsel and Secretary and has been in that role
since June 2004 when he joined Kimberly-Clark as Chief Counsel, Pulp and Paper and General Counsel for Neenah
Paper, Inc. Prior to his employment with Kimberly-Clark, Mr. Heinrichs served as Associate General Counsel and Assistant
Secretary for Mariner Health Care, Inc., a nursing home and long-term acute care hospital company. Before joining
Mariner Health Care in 2003, Mr. Heinrichs served as Associate General Counsel and Assistant Secretary for American
Commercial Lines LLC, a leading inland barge and shipbuilding company from 1998 through 2003. Mr. Heinrichs engaged
in the private practice of law with Skadden, Arps, Slate, Meagher and Flom LLP and Shuttleworth, Smith, McNabb and
Williams PLLC from 1994 through 1998. Mr. Heinrichs received his MBA from the Kellogg School of Management at
Northwestern University in 2008.
Bonnie C. Lind, born in 1958, is our Senior Vice President, Chief Financial Officer and Treasurer and has been in that role
since June 2004. Ms. Lind was an employee of Kimberly-Clark from 1982 until 2004, holding a variety of increasingly
senior financial and operations positions. From 1999 until June 2004, Ms. Lind served as the Assistant Treasurer of
Kimberly-Clark and was responsible for managing Kimberly-Clark's global treasury operations. Prior to that, she was
43
Director of Kimfibers with overall responsibility for the sourcing and distribution of pulp to Kimberly-Clark's global
operations.
James R. Piedmonte, born in 1956, is our Senior Vice President — Operations and has been in that role since June 2004.
Mr. Piedmonte had been employed by Kimberly-Clark from 1978 until 2004, and held increasingly senior positions within
Kimberly-Clark's operations function. Mr. Piedmonte was responsible for Kimberly-Clark's pulp mill and forestry
operations in Pictou, Nova Scotia, from 2001 until 2004. Previously he was the Director of Operations for the fine paper
business operations, as well as mill manager at the Whiting, Wisconsin mill.
Julie A. Schertell, born in 1969, is our Senior Vice President — President, Fine Paper and Packaging and has been in that
role since January 2014. Ms. Schertell joined Neenah in 2008 and served as Vice President of Sales and Marketing for the
Fine Paper division through December 2010 and as a Senior Vice President and President, Fine Paper through December
2013. Ms. Schertell was employed by Georgia-Pacific Corporation in the Consumer Products Retail division, where she
served as Vice President of Sales Strategy from 2007-2008, and as Vice President of Customer Solutions from 2003
through 2007.
Armin S. Schwinn, born in 1959, has been our Senior Vice President — Managing Director of Neenah Germany since April
2010, and he is responsible for our filtration operating unit. Mr. Schwinn had been Vice President, Finance of Neenah
Germany since our acquisition of FiberMark Germany in October 2006. Mr. Schwinn joined FiberMark Germany in 1995
and held increasingly senior positions within FiberMark Germany's financial, purchasing and administrative functions.
Prior to this, Mr. Schwinn served in various leadership positions in other German manufacturing and service companies.
Larry N. Brownlee, born in 1956, is our Vice President — Controller and Principal Accounting Officer and has been in that
role since July 2004. From 1990 to 2004, Mr. Brownlee served as Controller of several public companies in the electric
utility, telephone and healthcare industries. From 1979 to 1990, Mr. Brownlee was with Arthur Andersen & Co. and
provided audit services to clients primarily in the manufacturing, utility and healthcare industries. Mr. Brownlee received
his Masters of Accountancy from the University of Georgia in 1979.
There are no family relationships among our directors or executive officers.
Code of Ethics
The Neenah Paper, Inc. Code of Business Conduct and Ethics, applies to all directors, officers and employees of Neenah.
The Code of Business Conduct and Ethics meets the requirements of a "code of ethics" as defined by Item 406 of
Regulation S-K, and applies to our Chief Executive Officer, Chief Financial Officer (our principal financial officer) and
Vice President — Controller (our principal accounting officer), as well as all other employees, as indicated above. The
Code of Business Conduct and Ethics also meets the requirements of a code of conduct under New York Stock Exchange
listing standards. The Code of Business Conduct and Ethics is posted on our web site at www.neenah.com under the links
"Investor Relations — Corporate Governance — Code of Ethics" and print copies are available upon request without
charge. You can request print copies by contacting our General Counsel in writing at Neenah Paper, Inc., 3460 Preston
Ridge Road, Suite 600, Alpharetta, Georgia 30005 or by telephone at 678-566-6500. We intend to disclose any
amendments to the Code of Business Conduct and Ethics, as well as any waivers for executive officers or directors, on our
web site at www.neenah.com. Information on our web site is not incorporated by reference in this document.
Item 11. Executive Compensation
Information relating to executive compensation and other matters is set forth under the captions "Compensation,
Discussion and Analysis", "Additional Executive Compensation", "Director Compensation", and "Compensation
Committee Report" in the Proxy Statement referred to in Item 10 above. Such information is incorporated herein by
reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information relating to ownership of common stock of Neenah by certain persons is set forth under the caption "Security
Ownership of Certain Beneficial Owners and Management" in the Proxy Statement referred to in Item 10 above. Such
information is incorporated herein by reference. Information regarding securities authorized for issuance under equity
compensation plans of Neenah is set forth under the caption "Equity Compensation Plan Information" in the Proxy
Statement referred to in Item 10 above. Such information is incorporated herein by reference.
44
Item 13. Certain Relationships and Related Transactions and Director Independence
Information relating to existing or proposed relationships or transactions between Neenah and any affiliate of Neenah is set
forth under the caption "Certain Relationships and Related Transactions" in the Proxy Statement referred to in Item 10
above. Such information is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services
Information relating to Neenah's principal accounting fees and services is set forth under the caption "Independent
Registered Public Accounting Firm Fees and Services" in the Proxy Statement referred to in Item 10 above. Such
information is incorporated herein by reference.
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PART IV
Item 15. Exhibits and Financial Statement Schedule
(a) Documents filed as part of this report:
1. Consolidated Financial Statements
The following reports and financial statements are filed herewith on the pages indicated:
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Operations
Consolidated Statements of Other Comprehensive Income
Consolidated Balance Sheets
Consolidated Statements of Changes in Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
2. Financial Statement schedule
The following schedule is filed herewith:
Page
F-2
F-3
F-4
F-5
F-6
F-7
F-8
F-9
Schedule II — Valuation and Qualifying Accounts
F-52
All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange
Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted.
3. Exhibits
See (b) below
(b) Exhibits
The following exhibits are filed with or incorporated by reference in this report. Where such filing is made by
incorporation by reference to a previously filed registration statement or report, such registration statement or report is
identified in parentheses. We will furnish any exhibit at no cost upon written request to us at: Investor Relations, Neenah
Paper, Inc., 3460 Preston Ridge Road, Suite 600, Alpharetta, Georgia 30005.
Exhibit
Number
2.1
Interest Purchase Agreement by and among ASP FiberMark Holdings, LLC, ASP FiberMark, LLC, Neenah
FMK Holdings, LLC and Neenah Paper, Inc. dated as of July 16, 2015 (filed as Exhibit 2.1 to the Neenah
Paper, Inc. Quarterly Report on Form 10-Q for the three months ended September 30, 2015, filed
November 9, 2015 and incorporated herein by reference).
Exhibit
2.2
Asset Purchase Agreement, by and among Neenah Paper, Inc., Wausau Paper Corp. and Wausau Paper
Mills, LLC, dated as of December 7, 2011 (filed as Exhibit 2.1 to the Neenah Paper, Inc. Current Report on
Form 8-K filed January 31, 2012 and incorporated herein by reference).
46
Exhibit
Number
2.30
3.1
3.2
4.1
4.2
10.1
10.2
10.3*
10.4*
10.5*
10.6*
10.7*
10.8*
10.9*
10.10*
10.11
10.12
10.13
Exhibit
Securities Purchase Agreement by and among Crane Technical Materials, Inc., Crane & Co., Inc., Neenah
Paper, Inc. and Neenah Filtration, LLC dated as of June 2, 2014 (filed as Exhibit 2.1 to the Neenah Paper, Inc.
Quarterly Report on Form 10-Q for the three months ended June 30, 2014, filed August 7, 2014) (confidential
treatment has been granted for certain portions of this exhibit pursuant to a Confidential Treatment Request
filed with the Securities Exchange Commission).
Amended and Restated Certificate of Incorporation of Neenah Paper, Inc. (filed as Exhibit 3.1 to the Neenah
Paper, Inc. Current Report on Form 8-K filed November 30, 2004 and incorporated herein by reference).
Amended and Restated Bylaws of Neenah Paper, Inc. (filed as Exhibit 3.2 to the Neenah Paper, Inc. Current
Report on Form 8-K filed November 30, 2004 and incorporated herein by reference).
Indenture dated as of May 23, 2013, by and among the Company, the Guarantors named therein, and the 2021
Notes Trustee filed as Exhibit 4.1 to the Neenah Paper, Inc. Current Report on Form 8-K, filed May 24, 2013
and incorporated herein by reference).
Form of Notation of Subsidiary Guarantee (included as Exhibit E to Exhibit 4.1).
Tax Sharing Agreement dated as of November 30, 2004 by and between Kimberly-Clark Corporation and
Neenah Paper, Inc. (filed as Exhibit 10.2 to the Neenah Paper, Inc. Current Report on Form 8-K filed
November 30, 2004 and incorporated herein by reference).
Lease Agreement dated June 29, 2004 between Neenah Paper, Inc. and Germania Property Investors
XXXIV, L.P. (filed as Exhibit 10.3 to the Neenah Paper, Inc. Current Report on Form 8-K filed November 30,
2004 and incorporated herein by reference).
Neenah Paper Supplemental Pension Plan (filed as Exhibit 10.5 to the Neenah Paper, Inc. Annual Report on
Form 10-K for the year ended December 31, 2012, filed March 7, 2013 and incorporated herein by reference).
First Amendment to Neenah Paper Supplemental Pension Plan (filed as Exhibit 10.31 to the Neenah Paper,
Inc. Annual Report on Form 10-K for the year ended December 31, 2013, filed on March 4, 2014 and
incorporated herein by reference).
Neenah Paper Amended and Restated Supplemental Retirement Contribution Plan, effective as of January 1,
2016 (filed herewith).
Neenah Paper Executive Severance Plan (filed as Exhibit 10.7 to the Neenah Paper, Inc. Annual Report on
Form 10-K for the year ended December 31, 2012, filed March 7, 2013 and incorporated herein by reference).
First Amendment to Neenah Paper Executive Severance Plan (filed as Exhibit 10.33 to the Neenah Paper, Inc.
Annual Report on Form 10-K for the year ended December 31, 2013, filed on March 4, 2014 and incorporated
herein by reference).
Neenah Paper, Inc. Amended and Restated 2004 Omnibus Stock and Incentive Compensation Plan (filed as
Annex A to the Neenah Paper, Inc. Definitive Proxy Statement on Schedule 14A for the year ended
December 31, 2013, filed April 12, 2013 and incorporated herein by reference).
Neenah Paper Deferred Compensation Plan approved on December 11, 2006 (filed as Exhibit 10.21 to the
Neenah Paper, Inc. Annual Report on Form 10-K for the year ended December 31, 2012, filed March 7, 2013
and incorporated herein by reference).
Neenah Paper Directors' Deferred Compensation Plan approved on December 11, 2006. (filed as Exhibit 10.7
to the Neenah Paper, Inc. Annual Report on Form 10-K for the year ended December 31, 2012, filed March 7,
2013 and incorporated herein by reference).
Third Amended and Restated Credit Agreement dated December 18, 2014 by and among Neenah Paper, Inc.,
certain of its subsidiaries, the lenders listed therein and JPMorgan Chase Bank, N.A., as agent for the Lenders
(filed as Exhibit 10.31 to the Neenah Paper, Inc. Annual Report on Form 10-K for the year ended
December 31, 2014, filed February 27, 2015 and incorporated herein by reference) (confidential treatment has
been granted for certain portions of this exhibit pursuant to a Confidential Treatment Request filed with the
Securities Exchange Commission).
First Amendment, dated as of July 28, 2016, to the Third Amended and Restated Credit Agreement dated
December 18, 2014 by and among Neenah Paper, Inc., certain of its subsidiaries, the lenders listed therein and
JPMorgan Chase Bank, N.A., as agent for the Lenders (filed as Exhibit 99.1 to the Neenah Paper, Inc. Current
Report on Form 8-K, filed August 2, 2016 and incorporated herein by reference).
Second Amendment, dated as of December 13, 2016, to the Third Amended and Restated Credit Agreement
dated December 18, 2014 by and among Neenah Paper, Inc., certain of its subsidiaries, the lenders listed
therein and JPMorgan Chase Bank, N.A., as agent for the Lenders (filed as Exhibit 99.1 to the Neenah Paper,
Inc. Current Report on Form 8-K, filed December 16, 2016 and incorporated herein by reference).
47
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Exhibit
Number
10.14*
12
21
23
24
31.1
31.2
32.1
32.2
Exhibit
Form of Performance Share Award as of 2017 (filed as Exhibit 10.1 to Neenah Paper, Inc. Current Report on
Form 8-K filed February 3, 2017 and incorporated by reference herein).
Statement Regarding Computation of Ratio of Earnings to Fixed Charges (filed herewith)
List of Subsidiaries of Neenah Paper, Inc. (filed herewith).
Consent of Deloitte & Touche LLP (filed herewith)
Power of Attorney (filed herewith)
Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (filed herewith).
Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act
(filed herewith).
Certification of Chief Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act
and Section 1350 of Chapter 63 of Title 18 of the United States Code (filed herewith).
Certification of Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act
and Section 1350 of Chapter 63 of Title 18 of the United States Code (filed herewith).
101.INS XBRL Instance Document (filed herewith).
101.SC
H
101.CA
L
101.DE
F
101.LA
B
XBRL Taxonomy Extension Schema Document (filed herewith).
XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith).
XBRL Taxonomy Extension Definition Linkbase Document (filed herewith).
XBRL Taxonomy Extension Label Linkbase Document (filed herewith).
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith).
_______________________
*
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
See Item 15(a) (2) above
Item 16. Form 10-K Summary
None.
48
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
NEENAH PAPER, INC.
By:
/s/ JOHN P. O'DONNELL
Name:
Title:
John P. O'Donnell
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)
February 24, 2017
Date:
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
/s/ JOHN P. O'DONNELL
John P. O'Donnell
/s/ BONNIE C. LIND
Bonnie C. Lind
/s/ LARRY N. BROWNLEE
Larry N. Brownlee
President, Chief Executive Officer and
Director (Principal Executive Officer)
Senior Vice President, Chief Financial
Officer and Treasurer (Principal Financial
Officer)
Vice President — Controller (Principal
Accounting Officer)
/s/ SEAN T. ERWIN*
Chairman of the Board and Director
Sean T. Erwin
/s/ WILLIAM M. COOK*
Director
William M. Cook
/s/ MARGARET S. DANO*
Director
Margaret S. Dano
/s/ TIMOTHY S. LUCAS*
Director
Timothy S. Lucas
/s/ JOHN F. MCGOVERN*
Director
John F. McGovern
/s/ PHILIP C. MOORE*
Director
Philip C. Moore
/s/ STEPHEN M. WOOD*
Director
Stephen M. Wood
*By:
/s/ STEVEN S. HEINRICHS
Steven S. Heinrichs
Senior Vice President, General
Counsel and Secretary
Attorney-in-fact
49
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February 24, 2017
February 24, 2017
February 24, 2017
February 24, 2017
February 24, 2017
February 24, 2017
February 24, 2017
February 24, 2017
February 24, 2017
February 24, 2017
(This page has been left blank intentionally.)
TABLE OF CONTENTS
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Operations
Consolidated Statements of Other Comprehensive Income
Consolidated Balance Sheets
Consolidated Statements of Changes in Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Page
F-2
F-3
F-4
F-5
F-6
F-7
F-8
F-9
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(cid:41)(cid:16)(cid:20)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Neenah Paper, Inc.
Alpharetta, Georgia
We have audited the internal control over financial reporting of Neenah Paper, Inc. and subsidiaries (the “Company”) as of
December 31, 2016 based on criteria established in Internal Control — Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for
maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control
over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial
Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on
our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material respects. Our audit included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our
opinion.
A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s
principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s
board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. A company’s internal control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts
and expenditures of the company are being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or
improper management override of controls, material misstatements due to error or fraud may not be prevented or detected
on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to
future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2016, based on the criteria established in Internal Control — Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), the consolidated financial statements and financial statement schedule as of and for the year ended December 31,
2016, of the Company and our report dated February 24, 2017, expressed an unqualified opinion on those financial
statements and financial statement schedule.
/s/ Deloitte & Touche LLP
Atlanta, Georgia
February 24, 2017
F-2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Neenah Paper, Inc.
Alpharetta, Georgia
We have audited the accompanying consolidated balance sheets of Neenah Paper, Inc. and subsidiaries (the “Company”) as
of December 31, 2016 and 2015, and the related consolidated statements of operations, comprehensive income, changes in
stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2016. Our audits also
included the financial statement schedule listed in the Index at Item 15. These consolidated financial statements and
financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an
opinion on the consolidated financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the consolidated financial
position of Neenah Paper Inc. and subsidiaries as of December 31, 2016 and 2015, and the results of their operations and
their cash flows for each of the three years in the period ended December 31, 2016, in conformity with accounting
principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule,
when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), the Company’s internal control over financial reporting as of December 31, 2016, based on the criteria established
in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission, and our report dated February 24, 2017 expressed an unqualified opinion on the Company’s internal control
over financial reporting.
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/s/ Deloitte & Touche LLP
Atlanta, Georgia
February 24, 2017
F-3
NEENAH PAPER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except share and per share data)
Net sales
Cost of products sold
Gross profit
Selling, general and administrative expenses
Integration/restructuring costs
Pension plan settlement charge
Loss on early extinguishment of debt
Other expense — net
Operating income
Interest expense
Interest income
Income from continuing operations before income taxes
Provision for income taxes
Income from continuing operations
(Loss) income from discontinued operations, net of taxes (Note 13)
Net income
Earnings (Loss) Per Common Share
Basic
Continuing operations
Discontinued operations
Diluted
Continuing operations
Discontinued operations
Year Ended December 31,
2016
2015
2014
$
941.5
$
887.7
$
727.0
214.5
92.2
7.0
0.8
—
0.4
114.1
11.2
(0.1)
103.0
29.6
73.4
(0.4)
73.0
4.33
(0.02)
4.31
4.26
(0.02)
4.24
$
$
$
692.3
195.4
86.5
6.5
—
—
1.0
101.4
11.7
(0.2)
89.9
29.4
60.5
(9.4)
51.1
3.58
(0.56)
3.02
3.53
(0.55)
2.98
$
$
$
$
$
$
839.7
668.9
170.8
78.0
2.3
3.5
0.2
0.2
86.6
11.4
(0.3)
75.5
7.5
68.0
0.7
68.7
4.05
0.04
4.09
3.99
0.04
4.03
Weighted Average Common Shares Outstanding (in thousands)
Basic
Diluted
16,773
17,087
16,754
17,012
16,584
16,872
See Notes to Consolidated Financial Statements
F-4
NEENAH PAPER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
Net income
Reclassification of amounts recognized in the consolidated statement of operations:
Amortization of adjustments to pension and other postretirement benefit liabilities
Pension plan settlement/curtailment charge (2015 amount in discontinued operations)
Amounts recognized in the consolidated statement of operations
Unrealized foreign currency translation loss
Net loss from pension and other postretirement benefit plans
Loss from other comprehensive income items before income taxes
(Benefit) provision for income taxes
Other comprehensive loss
Comprehensive income
See Notes to Consolidated Financial Statements
Year Ended December 31,
2016
2015
2014
$
73.0
$
51.1
$
68.7
7.2
0.8
8.0
(7.1)
(18.0)
(17.1)
(3.4)
(13.7)
59.3
$
7.1
5.5
12.6
(15.0)
(6.3)
(8.7)
1.2
(9.9)
41.2
$
4.7
3.5
8.2
(23.7)
(34.3)
(49.8)
(8.7)
(41.1)
27.6
$
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F-5
NEENAH PAPER, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
ASSETS
Current Assets
Cash and cash equivalents
Accounts receivable, net
Inventories
Prepaid and other current assets
Total Current Assets
Property, Plant and Equipment — net
Deferred Income Taxes
Goodwill (Note 5)
Intangible Assets — net (Note 5)
Other Assets
TOTAL ASSETS
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Debt payable within one year
Accounts payable
Accrued expenses
Total Current Liabilities
Long-Term Debt
Deferred Income Taxes
Noncurrent Employee Benefits
Other Noncurrent Obligations
TOTAL LIABILITIES
Commitments and Contingencies (Notes 11 and 12)
Stockholders' Equity
Common stock, par value $0.01 — authorized: 100,000,000 shares; issued and outstanding:
16,771,000 shares and 16,819,000 shares
Treasury stock, at cost: 1,475,000 shares and 1,244,000 shares
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total Stockholders' Equity
December 31,
2016
2015
$
3.1
$
96.5
116.3
20.4
236.3
364.6
6.1
70.4
74.0
14.2
4.2
97.3
120.6
24.5
246.6
323.0
20.0
72.2
79.1
10.5
$
765.6
$
751.4
$
1.2
$
55.6
51.2
108.0
219.7
10.1
86.7
2.8
1.2
53.7
51.2
106.1
228.2
11.8
89.7
4.0
427.3
439.8
0.2
(56.5)
317.0
169.6
(92.0)
338.3
0.2
(40.1)
310.8
119.0
(78.3)
311.6
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
765.6
$
751.4
See Notes to Consolidated Financial Statements
F-6
NEENAH PAPER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(In millions, shares in thousands)
Common Stock
Shares
Amount
Treasury
Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Balance, December 31, 2013
17,383
$
$
0.2
—
(27.2) $
—
Net income
Other comprehensive income, net of income
taxes
Dividends declared
Excess tax benefits from stock-based
compensation
Shares purchased (Note 10)
Stock options exercised
Restricted stock vesting (Note 10)
Stock-based compensation
Balance, December 31, 2014
Net income
Other comprehensive loss, net of income taxes
Dividends declared
Excess tax benefits from stock-based
compensation
Shares purchased (Note 10)
Stock options exercised
Restricted stock vesting (Note 10)
Stock-based compensation
Other/Currency
—
—
—
—
—
316
150
—
—
—
—
—
—
—
—
17,849
0.2
—
—
—
—
—
108
106
—
—
—
—
—
—
—
—
—
—
—
Balance, December 31, 2015
18,063
0.2
Net income
Other comprehensive loss, net of income taxes
Dividends declared
Shares purchased (Note 10)
Stock options exercised
Restricted stock vesting (Note 10)
Stock-based compensation
Balance, December 31, 2016
—
—
—
—
71
111
—
—
—
—
—
—
—
—
18,245
$
0.2
$
—
—
—
(1.1)
—
(3.4)
—
(31.7)
—
—
—
—
(5.9)
—
(2.5)
—
—
(40.1)
—
—
—
(12.6)
—
(3.8)
—
(56.5) $
285.2
$
—
—
—
5.6
—
3.6
—
6.0
300.4
—
—
—
2.6
—
1.2
—
6.5
0.1
310.8
—
—
—
—
0.4
—
5.8
$
36.6
68.7
—
(17.1)
—
—
—
—
—
88.2
51.1
—
(20.3)
—
—
—
—
—
—
119.0
73.0
—
(22.4)
—
—
—
—
317.0
$
169.6
$
(27.3)
—
(41.1)
—
—
—
—
—
—
(68.4)
—
(9.9)
—
—
—
—
—
—
—
(78.3)
—
(13.7)
—
—
—
—
—
(92.0)
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See Notes to Consolidated Financial Statements
F-7
NEENAH PAPER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Stock-based compensation
Excess tax benefit from stock-based compensation (Note 2 and 9)
Deferred income tax provision
Non-cash effects of changes in liabilities for uncertain income tax positions
Loss on early extinguishment of debt
Pension settlement charge, net of plan payments
Non-cash loss on discontinued operations
Loss (gain) on asset dispositions
Net cash (used in) provided by changes in operating working capital, net of effect of
acquisitions (Note 15)
Pension and other post-employment benefits
Other
NET CASH PROVIDED BY OPERATING ACTIVITIES
INVESTING ACTIVITIES
Capital expenditures
Purchases of marketable securities
Net proceeds from sale of discontinued operations
Proceeds from sale of property, plant and equipment
Acquisitions (Note 4)
Purchase of equity investment
Other
NET CASH USED IN INVESTING ACTIVITIES
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt (Note 7)
Debt issuance costs
Repayments of long-term debt (Note 7)
Short-term borrowings
Repayments of short-term borrowings
Proceeds from exercise of stock options
Excess tax benefit from stock-based compensation (Note 2 and 9)
Cash dividends paid
Shares purchased (Note 10)
Other
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
EQUIVALENTS
NET DECREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, END OF YEAR
$
See Notes to Consolidated Financial Statements
F-8
Year Ended December 31,
2016
2015
2014
$
73.0
$
51.1
$
68.7
32.0
5.8
—
16.9
(1.5)
—
0.8
—
0.1
(1.2)
(10.9)
0.8
115.8
(68.5)
(0.1)
—
0.1
—
—
0.3
(68.2)
243.0
(0.1)
(252.9)
—
—
0.4
—
(22.4)
(16.4)
—
(48.4)
(0.3)
(1.1)
4.2
3.1
31.5
6.5
(2.6)
8.3
(0.1)
—
—
12.0
(0.1)
1.8
2.9
(0.1)
111.2
(48.1)
(0.2)
5.4
0.5
(118.2)
—
0.5
(160.1)
151.6
—
(145.6)
—
—
1.2
2.6
(20.3)
(8.4)
0.1
(18.8)
(0.7)
(68.4)
72.6
$
4.2
$
30.0
6.0
(5.6)
3.7
(2.0)
0.2
3.5
—
0.2
9.0
(18.3)
(0.9)
94.5
(27.9)
(0.6)
—
—
(72.4)
(2.9)
(1.1)
(104.9)
49.5
(2.4)
(5.6)
6.5
(25.4)
3.6
5.6
(17.1)
(4.5)
—
10.2
(0.6)
(0.8)
73.4
72.6
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except as noted)
Note 1. Background and Basis of Presentation
Background
Neenah Paper, Inc. ("Neenah" or the "Company"), is a Delaware corporation incorporated in April 2004. The Company has
two primary operations: its technical products business and its fine paper and packaging business.
The technical products business is an international producer of fiber-formed, coated and/or saturated specialized media that
delivers high performance benefits to customers. Included in this segment are filtration media, tape and abrasives backings
products, and durable label and specialty substrate products. The fine paper and packaging business is a supplier of branded
premium printing, packaging and other high end specialty papers primarily in North America. The Company's premium
writing, text and cover papers, and specialty papers are used in commercial printing and imaging applications for corporate
identity packages, invitations, personal stationery and high-end advertising, as well as premium labels and luxury
packaging.
Basis of Presentation
The consolidated financial statements include the financial statements of the Company and its wholly owned and majority
owned subsidiaries. All inter-company balances and transactions have been eliminated in consolidation.
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Note 2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States
("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of net sales and expenses during the reporting
periods. Actual results could differ from these estimates, and changes in these estimates are recorded when known.
Significant management judgment is required in determining the accounting for, among other things, pension and
postretirement benefits, retained insurable risks, reserves for sales discounts and allowances, purchase price allocations,
useful lives for depreciation and amortization, future cash flows associated with impairment testing for tangible and
intangible long-lived assets, goodwill, income taxes, contingencies, inventory obsolescence and market reserves and the
valuation of stock-based compensation.
Revenue Recognition
The Company recognizes sales revenue when all of the following have occurred: (1) delivery has occurred, (2) persuasive
evidence of an agreement exists, (3) pricing is fixed or determinable, and (4) collection is reasonably assured. Delivery is
not considered to have occurred until the customer takes title and assumes the risks and rewards of ownership. The timing
of revenue recognition is largely dependent on shipping terms. Sales are reported net of allowable discounts and estimated
returns. Reserves for cash discounts, trade allowances and sales returns are estimated using historical experience.
Cash and Cash Equivalents
Cash and cash equivalents include all cash balances and highly liquid investments with an initial maturity of three months
or less. The Company places its temporary cash investments with high credit quality financial institutions. As of
December 31, 2016 and 2015, $0.3 million of the Company's cash and cash equivalents is restricted to the payment of
postretirement benefits for certain former Fox River executives.
Inventories
U.S. inventories are valued at the lower of cost, using the Last-In, First-Out (LIFO) method for financial reporting
purposes, or market. German inventories are valued at the lower of cost, using a weighted-average cost method, or market.
Cost includes labor, materials and production overhead.
F-9
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
Foreign Currency
Balance sheet accounts of the Company's operations in Germany, the United Kingdom (the "U.K.") and Canada are
translated from Euros, British Pounds and Canadian dollars, respectively, into U.S. dollars at period-end exchange rates,
and income and expense accounts are translated at average exchange rates during the period. Translation gains or losses
related to net assets located in Germany, the U.K. and Canada are recorded as unrealized foreign currency translation
adjustments within Accumulated other comprehensive loss in stockholders' equity. Gains and losses resulting from foreign
currency transactions (transactions denominated in a currency other than the entity's functional currency) are included in
Other expense — net in the consolidated statements of operations.
Property and Depreciation
Property, plant and equipment are stated at cost, less accumulated depreciation. Certain costs of software developed or
obtained for internal use are capitalized. When property, plant and equipment is sold or retired, the costs and the related
accumulated depreciation are removed from the accounts, and the gains or losses are recorded in other (income)
expense — net. For financial reporting purposes, depreciation is principally computed on the straight-line method over
estimated useful asset lives. The weighted average remaining useful lives for buildings, land improvements and machinery
and equipment are approximately 18 years, 13 years and 10 years, respectively. Units-of-production method of depreciation
is used for $68.6 million of production assets, which reflects the nature of the assets' utilization. For income tax purposes,
accelerated methods of depreciation are used.
The costs of major rebuilds and replacements of plant and equipment are capitalized, and the cost of maintenance
performed on manufacturing facilities, composed of labor, materials and other incremental costs, is expensed as incurred.
Start-up costs for new or expanded facilities, including costs related to trial production, are expensed as incurred.
The Company accounts for asset retirement obligations ("AROs") in accordance with ASC Topic 410, Asset Retirements
and Environmental Obligations, which requires companies to make estimates regarding future events in order to record a
liability for AROs in the period in which a legal obligation is created. Such liabilities are recorded at fair value, with an
offsetting increase to the carrying value of the related long-lived asset. As of December 31, 2016, the Company is unable to
estimate its AROs for environmental liabilities at its manufacturing facilities.
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with the fair value recognition provisions of ASC
Topic 718, Compensation — Stock Compensation ("ASC Topic 718"). The amount of stock-based compensation cost
recognized is based on the fair value of grants that are ultimately expected to vest and is recognized pro-rata over the
requisite service period for the entire award.
Research and Development Expense
Research and development costs are charged to expense as incurred and are recorded in "Selling, general and
administrative expenses" on the consolidated statement of operations. See Note 15, "Supplemental Data — Supplemental
Statement of Operations Data."
Fair Value Measurements
The Company measures the fair value of pension plan assets in accordance with ASC Topic 820, Fair Value Measurements
and Disclosures ("ASC Topic 820") which establishes a framework for measuring fair value. ASC Topic 820 provides a
fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the
highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and
the lowest priority to unobservable inputs (Level 3 measurements).
Fair Value of Financial Instruments
The carrying amounts reflected in the consolidated balance sheets for cash and cash equivalents, accounts receivable and
accounts payable approximate fair value due to their short maturities. The fair value of short and long-term debt is
F-10
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
estimated using rates currently available to the Company for debt of the same remaining maturities. The following table
presents the carrying value and the fair value of the Company's debt.
2021 Senior Notes (5.25% fixed rate)
Global Revolving Credit Facilities (variable rates)
Second German Loan Agreement (2.5% fixed rate)
Total debt
_______________________
December 31, 2016
December 31, 2015
Carrying
Value
Fair
Value (a)
Carrying
Value
Fair
Value (a)
$
175.0
$
169.5
$
175.0
$
169.9
42.9
6.8
42.9
6.8
51.1
8.3
51.1
8.3
$
224.7
$
219.2
$
234.4
$
229.3
(a) Fair value for all debt instruments was estimated from Level 2 measurements.
The Company's investments in marketable securities are accounted for as "available-for-sale securities" in accordance with
ASC Topic 320, Investments — Debt and Equity Securities ("ASC Topic 320"). Pursuant to ASC Topic 320, marketable
securities are reported at fair value on the consolidated balance sheet and unrealized holding gains and losses are reported
in other comprehensive income until realized upon sale. At December 31, 2016, the Company had $3.5 million in
marketable securities classified as Other assets on the consolidated balance sheet. The cost of such marketable securities
was $3.4 million. Fair value for the Company's marketable securities was estimated from Level 1 inputs. The Company's
marketable securities are designated for the payment of benefits under its supplemental employee retirement plan (the
"SERP").
Fair Value of Pension Plan Assets
With the exception of cash and cash equivalents which are considered Level 1, pension plan assets are measured at NAV
(or its equivalent) as an alternative to fair market value due to the absence of readily available market prices, and as such
are not subject to the fair value hierarchy. Following is the fair value of each investment category:
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• Cash and cash equivalents ($1.5 million and $6.9 million at December 31, 2016 and 2015, respectively).
• U.S and non-U.S. Equities ($112.2 million and $92.4 million at December 31, 2016 and 2015,
respectively) — These proprietary mutual funds have observable net asset values (based on the fair value of
the underlying investments of the funds) that are provided to investors and provide for liquidity either
immediately of within a few days.
• U.S and non-U.S. Fixed Income Securities ($181.1 million and $185.8 million at December 31, 2016 and
2015, respectively) — These proprietary mutual funds have observable net asset values (based on the fair
value of the underlying investments of the funds) that are provided to investors and provide for liquidity
either immediately of within a few days.
• Hedge Funds ($23.3 million and $23.2 million at December 31, 2016 and 2015, respectively) — These funds
are valued using net asset values calculated by the fund managers and allow for quarterly or more frequent
redemptions.
Recently Adopted Accounting Standards
In March 2016, the FASB issued ASU 2016-09, Compensation — Stock Compensation (Topic 718): Improvements to
Employee Share-Based Payment Accounting (“ASU 2016-09”). ASU 2016-09 modifies the accounting for excess tax
benefits and tax deficiencies associated with share-based payments and amends the associated cash flow presentation. ASU
2016-09 (i) eliminates the requirement to recognize excess tax benefits in additional paid-in capital (“APIC”), (ii)
eliminates the requirement to evaluate tax deficiencies for APIC or income tax expense classification and (iii) provides for
these benefits or deficiencies to be recorded as an income tax expense or benefit in the income statement. Additionally, the
tax benefits related to dividends paid on share-based payment awards will be reflected as an income tax benefit in the
F-11
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
income statement. With these changes, tax-related cash flows resulting from share-based payments will be classified as
operating activities as opposed to financing activities. ASU 2016-09 is effective for fiscal years beginning after December
15, 2016, although early adoption is permitted. The Company has elected to early adopt the standard in the three month
period ended September 30, 2016, effective as if adopted on the first day of the fiscal year, January 1, 2016. As of
December 31, 2015, there were no unrecognized deferred tax assets attributable to excess tax benefits. The adoption of the
new standard decreased the provision for income taxes and increased income from continuing operations by $0.4 million
and $1.8 million in the third quarter and the fourth quarter of 2016, respectively. In addition, the Company recast its
previously reported provision for income taxes and increased income from continuing operations by $0.2 million and $0.7
million for the first and second quarter of 2016, respectively. Further, as part of the adoption, the Company elected to
account for forfeitures in compensation cost as they occur. The cumulative impact for the change in election was not
material. The Company elected to adopt prospectively the classification of tax-related cash flows resulting from share-
based payments in operating cash flows.
Accounting Standards Changes
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This guidance
specifies how and when an entity will recognize revenue arising from contracts with customers and requires entities to
disclose information about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts
with customers. The FASB has subsequently issued additional, clarifying standards to address issues arising from
implementation of the new revenue recognition standard. The new revenue recognition standard and clarifying standards
are effective for interim and annual periods beginning on January 1, 2018, and may be adopted earlier, but not before
January 1, 2017. The Company has substantially completed its assessment of the new standards and does not believe there
will be a material impact from adoption on its consolidated financial statements. The Company will continue to evaluate
any additional changes, modifications or interpretations of the standard which may impact its current conclusions, and
believes it will adopt the new standards using the modified retrospective method as of January 1, 2018.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 requires lessees to
put most leases on their balance sheets but recognize expenses on their income statements in a manner similar to current
lease accounting. The guidance also eliminates current real estate-specific provisions for all entities. ASU 2016-09 is
effective for fiscal years beginning after December 15, 2018, although early adoption is permitted. The Company is
currently assessing the impact of the adoption of ASU 2016-09 on its consolidated financial statements.
As of December 31, 2016, no other amendments to the ASC had been issued and not adopted by the Company that will
have or are reasonably likely to have a material effect on the its financial position, results of operations or cash flows.
Note 3. Earnings per Share ("EPS")
The Company's restricted stock units ("RSUs") are paid non-forfeitable common stock dividends and thus meet the criteria
of participating securities. Accordingly, basic EPS has been calculated using the two-class method, under which earnings
are allocated to both common stock and participating securities. Basic EPS has been computed by dividing net income
allocated to common stock by the weighted average common shares outstanding. For the computation of basic EPS,
weighted average RSUs outstanding are excluded from the calculation of weighted average shares outstanding.
Accounting Standards Codification ("ASC") Topic 260, Earnings per Share ("ASC Topic 260") requires companies with
participating securities to calculate diluted earnings per share using the "Two Class" method. The "Two Class" method
requires first calculating diluted earnings per share using a denominator that includes the weighted average share
equivalents from the assumed conversion of dilutive securities. Diluted earnings per share is then calculated using net
income reduced by the amount of distributed and undistributed earnings allocated to participating securities calculated
using the "Treasury Stock" method and a denominator that includes the weighted average share equivalents from the
assumed conversion of dilutive securities excluding participating securities. Companies are required to report the lower of
the diluted earnings per share amounts under the two calculations subject to the anti-dilution provisions of ASC Topic 260.
Diluted EPS has been computed by dividing net income allocated to common stock by the weighted average number of
common shares used in computing basic EPS, further adjusted to include the dilutive impact of the exercise or conversion
F-12
NEENAH PAPER INC. AND SUBSIDIARIES
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
(Dollars in millions, except as noted)
of common stock equivalents, such as stock options, stock appreciation rights ("SARs") and target awards of Restricted
of common stock equivalents, such as stock options, stock appreciation rights ("SARs") and target awards of Restricted
Stock Units with performance conditions ("Performance Units"), into shares of common stock as if those securities were
Stock Units with performance conditions ("Performance Units"), into shares of common stock as if those securities were
exercised or converted. For the years ended December 31, 2016, 2015 and 2014, approximately 35,000, 45,000 and 15,000
exercised or converted. For the years ended December 31, 2016, 2015 and 2014, approximately 35,000, 45,000 and 15,000
potentially dilutive options, respectively, were excluded from the computation of dilutive common shares because the
potentially dilutive options, respectively, were excluded from the computation of dilutive common shares because the
exercise price of such options exceeded the average market price of the Company's common stock for the respective 12-
exercise price of such options exceeded the average market price of the Company's common stock for the respective 12-
month periods during which the options were outstanding.
month periods during which the options were outstanding.
The following table presents the computation of basic and diluted shares of common stock used in the calculation of EPS
(amounts in millions, except share and per share amounts):
The following table presents the computation of basic and diluted shares of common stock used in the calculation of EPS
(amounts in millions, except share and per share amounts):
Earnings per basic common share
Earnings per basic common share
Income from continuing operations
Income from continuing operations
Amounts attributable to participating securities
Amounts attributable to participating securities
Income from continuing operations available to common stockholders
Income from continuing operations available to common stockholders
Income (loss) from discontinued operations, net of income taxes
Income (loss) from discontinued operations, net of income taxes
Amounts attributable to participating securities
Amounts attributable to participating securities
Net income available to common stockholders
Net income available to common stockholders
Weighted-average basic shares outstanding
Weighted-average basic shares outstanding
Basic earnings (loss) per share
Basic earnings (loss) per share
Continuing operations
Continuing operations
Discontinued operations
Discontinued operations
Year Ended December 31,
Year Ended December 31,
2016
2016
2015
2015
2014
2014
$
$
$
73.4
73.4
$
(0.7)
(0.7)
72.7
72.7
(0.4)
(0.4)
—
—
$
60.5
(0.6)
59.9
(9.4)
0.1
60.5
$
(0.6)
59.9
(9.4)
0.1
68.0
(0.8)
67.2
68.0
(0.8)
67.2
0.7
0.7
—
—
$
$
72.3
72.3
$
$
50.6
50.6
$
$
67.9
67.9
16,773
16,773
16,754
16,754
16,584
16,584
$
$
$
$
4.33
(0.02)
4.31
4.33
$
(0.02)
4.31
$
$
$
3.58
(0.56)
3.02
3.58
$
(0.56)
3.02
$
$
$
4.05
4.05
0.04
0.04
4.09
4.09
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Earnings per diluted common share
Earnings per diluted common share
Income from continuing operations
Income from continuing operations
Amounts attributable to participating securities
Amounts attributable to participating securities
Income from continuing operations available to common stockholders
Income from continuing operations available to common stockholders
Income (loss) from discontinued operations, net of income taxes
Income (loss) from discontinued operations, net of income taxes
Amounts attributable to participating securities
Amounts attributable to participating securities
Net income available to common stockholders
Net income available to common stockholders
Weighted-average basic shares outstanding
Weighted-average basic shares outstanding
Year Ended December 31,
Year Ended December 31,
2016
2016
2015
2015
2014
2014
$
$
$
73.4
73.4
$
(0.6)
(0.6)
72.8
72.8
(0.4)
(0.4)
—
—
$
60.5
(0.5)
60.0
(9.4)
0.1
60.5
$
(0.5)
60.0
(9.4)
0.1
68.0
(0.8)
67.2
68.0
(0.8)
67.2
0.7
0.7
—
—
$
$
72.4
72.4
$
$
50.7
50.7
$
$
67.9
67.9
16,773
16,773
16,754
16,754
16,584
16,584
Add: Assumed incremental shares under stock-based compensation plans
Add: Assumed incremental shares under stock-based compensation plans
314
314
258
258
288
288
Weighted average diluted shares
Weighted average diluted shares
Diluted earnings (loss) per share
Diluted earnings (loss) per share
Continuing operations
Continuing operations
Discontinued operations
Discontinued operations
17,087
17,087
17,012
17,012
16,872
16,872
$
$
$
$
4.26
(0.02)
4.24
4.26
$
(0.02)
4.24
$
$
$
3.53
(0.55)
2.98
3.53
$
(0.55)
2.98
$
$
$
3.99
3.99
0.04
0.04
4.03
4.03
F-13
F-13
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
Note 4. Acquisitions
Acquisition of FiberMark
On August 1, 2015, the Company purchased all of the outstanding equity of FiberMark from American Securities for
approximately $118 million. FiberMark is a specialty coatings and finishing company with a strong presence in luxury
packaging and technical products. In September 2015, the Company announced the planned closure of the Fitchburg Mill,
acquired in the FiberMark Acquisition to consolidate its manufacturing footprint. Manufacturing operations at the
Fitchburg Mill ceased in December 2015. See Note 13, "Discontinued Operations."
The Company accounted for the transaction using the acquisition method in accordance with ASC Topic 805, Business
Combinations ("ASC Topic 805"). The allocation of the purchase price was based on estimates of the fair value of assets
acquired and liabilities assumed as of August 1, 2015. The Company has not identified any material unrecorded pre-
acquisition contingencies. The Company did not recognize any in-process research and development assets as part of the
acquisition.
The following table summarizes the allocation of the purchase price to the estimated fair value of the assets acquired and
liabilities assumed as of December 31, 2015.
Assets Acquired
Cash and cash equivalents
Accounts receivable
Inventories
Deferred income taxes
Prepaid and other current assets
Property, plant and equipment
Non-amortizable intangible assets
Amortizable intangible assets
Acquired goodwill
Total assets acquired
Liabilities Assumed
Accounts payable
Accrued expenses
Deferred income taxes
Noncurrent employee benefits
Other noncurrent obligations
Total liabilities assumed
Net assets acquired
December 31,
2015
$
$
4.8
13.7
27.5
2.3
3.6
68.9
1.3
25.6
25.5
173.2
8.0
5.6
24.1
9.1
3.1
49.9
123.3
(1) As a result of finalizing the acquisition accounting for Fibermark in the first quarter of 2016, an adjustment of $0.4
million was recorded as a reduction to the net deferred tax liability and to goodwill.
The Company estimated the fair value of the assets and liabilities acquired in accordance with ASC Topic 820, Fair Value
Measurements and Disclosures ("ASC Topic 820"). The fair value of amortizable and non-amortizable intangible assets
was estimated by applying a royalty rate to projected revenue, net of tax impacts and adjusted for present value
F-14
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
considerations. The Company estimated the fair value of acquired property, plant and equipment using a combination of
cost and market approaches. In general, the fair value of other acquired assets and liabilities was estimated using the cost
basis of FiberMark.
The excess of the purchase price over the estimated fair value of the tangible net assets and identifiable intangible assets
acquired was recorded as acquired goodwill. The factors contributing to the amount of goodwill recognized are based on
several strategic and synergistic benefits that are expected to be realized from the acquisition of FiberMark. These benefits
include entry into profitable new markets for premium packaging, performance materials and specialty papers with new
capabilities and recognized brands, synergies from combining the business with Neenah's existing infrastructure, and the
opportunity to accelerate sales growth in areas like premium packaging. None of the goodwill recognized as part of the
FiberMark acquisition will be deductible for income tax purposes. However, the Company did acquire all of the tax
attributes associated with the FiberMark assets and liabilities, including an insignificant amount of tax deductible goodwill.
Approximately $18.9 million, $6.2 million and $0.4 million of the goodwill acquired in the FiberMark acquisition was
allocated to the Technical Products, Fine Paper and Packaging and Other segments, respectively.
For the year ended December 31, 2016, the Company incurred $4.3 million of integration and restructuring costs. For the
year ended December 31, 2015, the Company incurred $5.3 million of acquisition and integration costs. For the year ended
December 31, 2015, net sales and income from operations before income taxes for the acquired businesses were $58.1
million and $1.5 million (excluding the acquisition related costs described above), respectively.
In conjunction with the FiberMark acquisition, the Company identified various uncertain tax positions totaling $4.7
million. Such amount was reflected in the purchase price allocation as $3.7 million of goodwill and $1.0 million of other
current assets.
The following selected unaudited pro forma consolidated statements of operations data for the year ended December 31,
2015 and 2014 was prepared as though the FiberMark acquisition had occurred on January 1, 2014. The information does
not reflect future events that may occur after December 31, 2015 or any operating efficiencies or inefficiencies that may
result from the FiberMark acquisition. Therefore, the information is not necessarily indicative of results that would have
been achieved had the businesses been combined during the periods presented or the results that the Company will
experience going forward.
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Net sales
Operating income
Income from continuing operations
Income (loss) from discontinued operations
Net income
Earnings (Loss) Per Common Share
Basic
Continuing operations
Discontinued Operations
Diluted
Continuing operations
Discontinued Operations
F-15
Year Ended December 31,
2015
2014
$
984.0
$ 1,003.8
103.7
61.7
(9.4)
52.3
$
$
$
$
3.65
(0.56)
3.09
3.60
(0.55)
3.05
$
$
$
$
95.6
72.8
0.7
73.5
4.34
0.04
4.38
4.27
0.04
4.31
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
Acquisition of Crane Technical Materials
On July 1, 2014, the Company purchased all of the outstanding equity of the Crane Technical Materials business for
approximately $72 million. The acquired business provides performance-oriented wet laid nonwoven media for filtration
end markets as well as environmental, energy and industrial uses. The results of this business are reported in the Technical
Products segment from the date of acquisition.
The Company accounted for the transaction using the acquisition method in accordance with ASC Topic 805. The
allocation of the purchase price is based on estimates of the fair value of assets acquired and liabilities assumed as of
July 1, 2014. The Company did not identify any material unrecorded pre-acquisition contingencies. The Company did not
acquire any in-process research and development assets as part of the acquisition.
The excess of the purchase price over the estimated fair value of the tangible net assets and identifiable intangible assets
acquired was recorded as acquired goodwill. The factors contributing to the amount of goodwill recognized are based on
several long-term strategic benefits that are expected to be realized from the acquisition of the technical materials business.
These benefits include entry into growing and profitable global markets for water filtration, environmental/emissions
control, and energy management with defensible technologies and brands, and the opportunity to accelerate sales growth
through synergies with the Company's existing European-based filtration business. In addition, the acquisition of brands
and complementary offerings facilitates the Company's expansion into non-woven product lines containing fiberglass,
polymer fibers and carbon fibers. Substantially all of the acquired goodwill will be deductible for income tax purposes and
is entirely allocated to the Technical Products segment.
For the year ended December 31, 2014, the Company incurred $1.0 million of acquisition-related integration costs. In
addition, the Company incurred approximately $1.1 in capital costs for IT systems and infrastructure projects. For the year
ended December 31, 2014, net sales and income from operations before income taxes for the acquired technical materials
business were $24.1 million and $3.1 million (excluding the acquisition related integration costs described above),
respectively.
The following selected unaudited pro forma consolidated statements of operations data for the year ended December 31,
2014 was prepared as though the acquisition of the technical materials business had occurred on January 1, 2013. The
information does not reflect future events that may occur after December 31, 2014 or any operating efficiencies or
inefficiencies that may result from the acquisition of the technical materials business. Therefore, the information is not
necessarily indicative of results that would have been achieved had the businesses been combined during the periods
presented or the results that the Company will experience going forward.
F-16
NEENAH PAPER INC. AND SUBSIDIARIES
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
(Dollars in millions, except as noted)
Net sales
Net sales
Operating income
Operating income
Income from continuing operations
Income from continuing operations
Income from discontinued operations
Income from discontinued operations
Net income
Net income
Earnings Per Common Share
Earnings Per Common Share
Basic
Basic
Continuing operations
Continuing operations
Discontinued Operations
Discontinued Operations
Diluted
Diluted
Continuing operations
Continuing operations
Discontinued Operations
Discontinued Operations
Year Ended
December 31,
Year Ended
December 31,
2014
2014
$
$
862.3
862.3
89.2
89.2
69.6
69.6
0.7
0.7
70.3
70.3
4.15
4.15
0.04
0.04
4.19
4.19
4.08
4.08
0.04
0.04
4.12
4.12
$
$
$
$
$
$
$
$
F
o
r
m
1
0
-
K
Note 5. Goodwill and Other Intangible Assets
Note 5. Goodwill and Other Intangible Assets
The Company follows the guidance of ASC Topic 805, Business Combinations ("ASC Topic 805"), in recording goodwill
arising from a business combination as the excess of purchase price over the fair value of identifiable assets acquired and
liabilities assumed.
The Company follows the guidance of ASC Topic 805, Business Combinations ("ASC Topic 805"), in recording goodwill
arising from a business combination as the excess of purchase price over the fair value of identifiable assets acquired and
liabilities assumed.
The Company tests goodwill for impairment at least annually on November 30 in conjunction with preparation of its
annual business plan, or more frequently if events or circumstances indicate it might be impaired.
The Company tests goodwill for impairment at least annually on November 30 in conjunction with preparation of its
annual business plan, or more frequently if events or circumstances indicate it might be impaired.
The Company tested goodwill for impairment as of November 30, 2016. The Company elected the option under ASC Topic
The Company tested goodwill for impairment as of November 30, 2016. The Company elected the option under ASC Topic
350, Intangibles — Goodwill and Other, to perform a qualitative assessment of the Company's reporting units to determine
350, Intangibles — Goodwill and Other, to perform a qualitative assessment of the Company's reporting units to determine
whether further impairment testing is necessary. In this qualitative assessment, the Company considered the following
whether further impairment testing is necessary. In this qualitative assessment, the Company considered the following
items for each of the reporting units: macroeconomic conditions, industry and market conditions, overall financial
items for each of the reporting units: macroeconomic conditions, industry and market conditions, overall financial
performance and other entity specific events. In addition, for each of these reporting units, the most recent fair value
performance and other entity specific events. In addition, for each of these reporting units, the most recent fair value
determination results in an amount that exceeds the carrying amount of the reporting units. Based on these assessments, the
determination results in an amount that exceeds the carrying amount of the reporting units. Based on these assessments, the
Company determined that the likelihood that a current fair value determination would be less than the current carrying
Company determined that the likelihood that a current fair value determination would be less than the current carrying
amount of the reporting unit is not more likely than not. There was no impairment in the carrying value of goodwill for the
amount of the reporting unit is not more likely than not. There was no impairment in the carrying value of goodwill for the
years ended December 31, 2016, 2015 and 2014 .
years ended December 31, 2016, 2015 and 2014 .
Intangible assets with finite useful lives are amortized on a straight-line basis over their respective estimated useful lives to
Intangible assets with finite useful lives are amortized on a straight-line basis over their respective estimated useful lives to
their estimated residual values, and reviewed for impairment in accordance with ASC Topic 360, Property, Plant, and
their estimated residual values, and reviewed for impairment in accordance with ASC Topic 360, Property, Plant, and
Equipment. Intangible assets consist primarily of customer relationships, trade names and acquired intellectual property.
Equipment. Intangible assets consist primarily of customer relationships, trade names and acquired intellectual property.
Such intangible assets are amortized using the straight-line method over estimated useful lives of between 10 and 15 years.
Such intangible assets are amortized using the straight-line method over estimated useful lives of between 10 and 15 years.
Certain trade names are estimated to have indefinite useful lives and as such are not amortized. Intangible assets with
Certain trade names are estimated to have indefinite useful lives and as such are not amortized. Intangible assets with
indefinite lives are reviewed for impairment at least annually.
indefinite lives are reviewed for impairment at least annually.
F-17
F-17
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
The following table presents the carrying value of goodwill by business segment and changes in the carrying value of
goodwill.
Technical Products
Gross
Amount
Accumulated
Impairment
Losses
Fine Paper and
Packaging
Net
Gross Amount
Other
Gross
Amount
Net
Balance at December 31, 2014
$
100.8
$
(50.3) $
50.5
$
— $ — $
50.5
Goodwill acquired in the Fibermark
Acquisition
Foreign currency translation
Balance at December 31, 2015
Adjustment of goodwill acquired in the
Fibermark Acquisition (1)
Foreign currency translation
18.9
(9.0)
110.7
(0.4)
(2.9)
Balance at December 31, 2016
$
107.4
$
______________________________________________________________________
—
5.2
(45.1)
—
1.5
(43.6) $
18.9
(3.8)
65.6
(0.4)
(1.4)
63.8
6.2
—
6.2
—
—
0.4
—
0.4
—
—
$
6.2
$
0.4
$
25.5
(3.8)
72.2
(0.4)
(1.4)
70.4
(1) As a result of finalizing the acquisition accounting for Fibermark in the first quarter of 2016, an adjustment of
$0.4 million was recorded as a reduction to the net deferred tax liability and to goodwill.
Other Intangible Assets
As of December 31, 2016, the Company had net identifiable intangible assets of $74.0 million. All such intangible assets
were acquired in the acquisitions of Neenah Germany, Fox River, FiberMark and the Crane technical materials business,
and the acquisition of the Wausau and Southworth brands. The following table details amounts related to those assets.
Amortizable intangible assets
Customer based intangibles
Trade names and trademarks
Acquired technology
Total amortizable intangible assets
Trade names
Total
December 31, 2016
December 31, 2015
Gross
Amount
Accumulated
Amortization
Gross
Amount
Accumulated
Amortization
$
34.4
$
6.8
14.6
55.8
36.2
92.0
$
$
(11.1) $
(4.2)
(2.7)
(18.0)
—
(18.0) $
35.5
$
4.4
16.0
55.9
35.6
91.5
$
(9.2)
(1.8)
(1.4)
(12.4)
—
(12.4)
F-18
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
The following table presents intangible assets acquired in conjunction with the FiberMark acquisition:
Intangible assets — definite lived
Trade names and trademarks
Customer based intangibles
Acquired technology
Total
Non-amortizable trade names
Total intangible assets
Intangibles
Estimated Useful
Lives
(Years)
15
15
13
$
$
2.3
14.1
8.7
25.1
1.8
26.9
As of December 31, 2015, $49.8 million, $28.3 million and $1.0 million of such intangible assets are reported within the
Technical Products, Fine Paper and Packaging and Other segments, respectively. See Note 14, "Business Segment and
Geographic Information." Aggregate amortization expense of acquired intangible assets for the years ended December 31,
2016, 2015 and 2014 was $3.9 million, $2.9 million and $2.3 million, respectively and was reported in Cost of products
sold on the Consolidated Statement of Operations. Estimated amortization expense for the years ended December 31, 2017,
2018, 2019, 2020 and 2021 is $3.6 million, $3.6 million, $3.6 million, $3.6 million and $3.3 million, respectively.
Note 6. Income Taxes
The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. Income tax expense
represented 28.7 percent, 32.7 percent and 9.9 percent of income from continuing operations before income taxes for the
years ended December 31, 2016, 2015 and 2014, respectively. The following table presents the principal reasons for the
difference between the Company's effective income tax rate and the U.S. federal statutory income tax rate:
U.S. federal statutory income tax rate
35.0 % $ 36.1
35.0 % $ 31.5
35.0 % $ 26.4
Year Ended December 31,
2016
2016
2015
2015
2014
2014
F
o
r
m
1
0
-
K
U.S. state income taxes, net of federal income tax benefit
1.9 %
2.0
Tax on foreign dividends
Foreign tax rate differences (a)
Foreign financing structure (b)
Excess tax benefits from stock compensation (c)
Research and development and other tax credits (d)
Domestic production activities deduction
Uncertain income tax positions
Other differences — net
Effective income tax rate
_______________________
4.5 %
(3.0)%
(1.6)%
(2.7)%
4.6
(2.8)
(1.7)
(3.1)
(2.9)
(1.5)
(0.4)
(0.7)
28.7 % $ 29.6
(1.5)%
(0.4)%
(0.7)%
(2.8)%
2.1 %
3.6 %
(2.2)%
(1.3)%
—
(3.9)%
(2.2)%
1.3 %
0.3 %
1.9
3.2
(2.0)
(1.2)
—
(3.5)
(2.0)
1.2
0.3
2.1 %
3.0 %
(2.8)%
(2.5)%
—
(31.9)%
— %
6.5 %
0.5 %
32.7 % $ 29.4
9.9 % $
1.6
2.3
(2.1)
(1.9)
—
(24.1)
—
4.9
0.4
7.5
(a) Represents the impact on the Company's effective tax rate due to changes in the mix of earnings among taxing
jurisdictions with differing statutory rates.
F-19
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
(b) Represents the impact on the Company's effective tax rate of the Company's financing strategies.
(c) In 2016, the Company adopted ASU 2016-09, Compensation — Stock Compensation (Topic 718). See Note 2,
"Summary of Significant Accounting Policies — Recently Adopted Accounting Standards."
(d) For 2015, the Company recognized a $1.4 million benefit related to research and development ("R&D") tax
credits of FiberMark for the period 2012 through July 2015. For 2014, following an extensive study of the
Company's R&D activities for the years 2005 through 2013 and a change in methodology, the Company
recognized a $21.9 million net benefit related to R&D tax credits.
The Company's effective income tax rate can be affected by many factors, including but not limited to, changes in the mix
of earnings in taxing jurisdictions with differing statutory rates, the availability of R&D and other tax credits, changes in
corporate structure as a result of business acquisitions and dispositions, changes in the valuation of deferred tax assets and
liabilities, the results of audit examinations of previously filed tax returns and changes in tax laws. The Company or one of
its subsidiaries files income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions and foreign
jurisdictions. The Company is no longer subject to U.S. federal examination for years before 2013, to state and local
examinations for years before 2012 and to non-U.S. income tax examinations for years before 2012.
The following table presents the U.S. and foreign components of income from continuing operations before income taxes:
Income from continuing operations before income taxes:
U.S.
Foreign
Total
The following table presents the components of the provision (benefit) for income taxes:
Provision (benefit) for income taxes:
Current:
Federal
State
Foreign
Total current tax provision
Deferred:
Federal
State
Foreign
Total deferred tax provision
Total provision for income taxes
Year Ended December 31,
2016
2015
2014
$
68.3
34.7
$ 103.0
$
$
62.2
27.7
89.9
$
$
46.5
29.0
75.5
Year Ended December 31,
2016
2015
2014
$
$
7.1
(0.5)
5.9
12.5
14.8
1.8
0.5
17.1
29.6
$
12.7
$
1.3
5.1
19.1
7.7
2.3
0.3
10.3
29.4
$
$
0.5
—
3.4
3.9
6.9
(5.9)
2.6
3.6
7.5
The Company has elected to treat its Canadian operations as a branch for U.S. income tax purposes. Therefore, the amount
of income (loss) before income taxes from Canadian operations are included in the Company's consolidated U.S. income
tax returns and such amounts are subject to U.S. income taxes.
F-20
NEENAH PAPER INC. AND SUBSIDIARIES
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
(Dollars in millions, except as noted)
The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax
The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. The
consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. The
components of deferred tax assets and liabilities, net of reserves for uncertain tax positions and valuation allowances, are as
components of deferred tax assets and liabilities, net of reserves for uncertain tax positions and valuation allowances, are as
follows:
follows:
Net deferred income tax assets
Net deferred income tax assets
Employee benefits
Employee benefits
Research and development tax credits
Research and development tax credits
Net operating losses and credits
Net operating losses and credits
Accrued liabilities
Accrued liabilities
Inventories
Inventories
Accelerated depreciation
Accelerated depreciation
Intangibles
Intangibles
Undistributed foreign earnings
Undistributed foreign earnings
Other
Other
Net deferred income tax assets
Net deferred income tax assets
Net deferred income tax liabilities
Net deferred income tax liabilities
Accelerated depreciation
Accelerated depreciation
Intangibles
Intangibles
Employee benefits
Employee benefits
Interest limitation
Interest limitation
Net operating losses
Net operating losses
Net deferred income tax liabilities
Net deferred income tax liabilities
December 31,
December 31,
2016
2016
2015
2015
$
$
26.0
26.0
$
$
27.8
27.8
15.0
15.0
10.5
10.5
3.2
3.2
(0.5)
(0.5)
(34.0)
(34.0)
(10.8)
(10.8)
(4.4)
(4.4)
1.1
1.1
20.9
20.9
10.7
10.7
2.9
2.9
1.3
1.3
(34.8)
(34.8)
(10.2)
(10.2)
—
—
1.4
1.4
$
$
6.1
6.1
$
$
20.0
20.0
$
$
12.3
12.3
$
$
12.8
12.8
2.8
(5.0)
0.3
(0.3)
10.1
2.8
(5.0)
0.3
(0.3)
$
10.1
$
3.5
(3.9)
(0.5)
(0.1)
11.8
3.5
(3.9)
(0.5)
(0.1)
11.8
$
$
F
o
r
m
1
0
-
K
The net deferred tax assets relate to U.S. federal and state jurisdictions and the net deferred tax liabilities relate to
operations of Germany and the U.K. As of December 31, 2016, the Company had $12.5 million of undistributed earnings
(net of foreign taxes) of foreign subsidiaries. There were no undistributed earnings of foreign subsidiaries as of
December 31, 2015.
The net deferred tax assets relate to U.S. federal and state jurisdictions and the net deferred tax liabilities relate to
operations of Germany and the U.K. As of December 31, 2016, the Company had $12.5 million of undistributed earnings
(net of foreign taxes) of foreign subsidiaries. There were no undistributed earnings of foreign subsidiaries as of
December 31, 2015.
As of December 31, 2016, the Company had $25.2 million of U.S. federal and state R&D credits which, if not used, will
As of December 31, 2016, the Company had $25.2 million of U.S. federal and state R&D credits which, if not used, will
expire between 2029 and 2036 for the U.S. federal R&D credits and between 2017 and 2031 for the state R&D credits. As
expire between 2029 and 2036 for the U.S. federal R&D credits and between 2017 and 2031 for the state R&D credits. As
of December 31, 2016, we had $48.8 million of state NOLs which may be used to offset state taxable income. The NOLs
of December 31, 2016, we had $48.8 million of state NOLs which may be used to offset state taxable income. The NOLs
are reflected in the consolidated financial statements as a deferred tax asset of $2.3 million. If not used, substantially all of
are reflected in the consolidated financial statements as a deferred tax asset of $2.3 million. If not used, substantially all of
the NOLs will expire in various amounts between 2017 and 2035. The Company also had pre-acquisition and recognized
the NOLs will expire in various amounts between 2017 and 2035. The Company also had pre-acquisition and recognized
built-in loss carryovers of $10.2 million, reflected as a deferred tax asset of $3.6 million. In addition, the Company had
built-in loss carryovers of $10.2 million, reflected as a deferred tax asset of $3.6 million. In addition, the Company had
$3.4 million of federal Alternative Minimum Tax Credit carryovers, which can be carried forward indefinitely.
$3.4 million of federal Alternative Minimum Tax Credit carryovers, which can be carried forward indefinitely.
F-21
F-21
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
The following is a tabular reconciliation of the total amounts of uncertain tax positions as of and for the years ended
December 31, 2016, 2015 and 2014:
Balance at January 1,
Increases in prior period tax positions
Decreases in prior period tax positions
Increases in current period tax positions
Decreases due to lapse of statute of limitations
Decreases due to settlements with tax authorities
Decreases from foreign exchange rate changes
Balance at December 31,
For the Years Ended
December 31,
2016
2015
2014
$
12.9
$
—
(2.6)
0.6
(0.3)
—
(0.3)
10.3
$
$
$
7.0
0.5
—
5.5
—
—
(0.1)
12.9
$
4.3
—
(2.2)
5.3
—
(0.2)
(0.2)
7.0
The $10.3 million of reserves for uncertain tax positions as of December 31, 2016 were reflected on the consolidated
balance sheets as follows: $7.6 million netted against deferred tax assets, $1.2 million netted against (added to) deferred tax
liabilities and $1.5 million in other noncurrent obligations. The $12.9 million of reserves for uncertain tax positions as of
December 31, 2015 were reflected on the consolidated balance sheets as follows: $8.9 million netted against deferred tax
assets, $1.2 million netted against (added to) deferred tax liabilities and $2.8 million in other noncurrent obligations.
If recognized, $9.3 million of the benefit for uncertain tax positions at December 31, 2016 would favorably affect the
Company's effective tax rate in future periods. The Company does not expect that the expiration of the statute of limitations
or the settlement of audits in the next 12 months will result in liabilities for uncertain income tax positions that are
materially different than the amounts that were accrued as of December 31, 2016.
The Company recognizes accrued interest and penalties related to uncertain income tax positions in the Provision for
income taxes on the consolidated statements of operations. As of December 31, 2016 and 2015, the Company had $0.2
million and $0.4 million, respectively, accrued for interest and penalties related to uncertain income tax positions.
As of December 31, 2016, the Company had a valuation allowance of $3.1 million against its state R&D credits and $0.4
million against its other state tax credits. As of December 31, 2015, the Company had a valuation allowance of $2.9 million
against its state R&D credits and $0.1 million against its state NOLs. In determining the need for a valuation allowance, the
Company considers many factors, including specific taxing jurisdictions, sources of taxable income, income tax strategies
and forecasted earnings for the entities in each jurisdiction. A valuation allowance is recognized if, based on the weight of
available evidence, the Company concludes that it is more likely than not that some portion or all of the deferred income
tax asset will not be realized.
F-22
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
Note 7. Debt
Long-term debt consisted of the following:
2021 Senior Notes (5.25% fixed rate) due May 2021
Global Revolving Credit Facilities (variable rates) due December 2019
Second German Loan Agreement (2.45% fixed rate) due in 32 equal quarterly installments ending
September 2022
Deferred financing costs
Total Debt
Less: Debt payable within one year
Long-term debt
Unsecured Senior Notes
2021 Senior Notes
December 31,
2016
2015
$
175.0
$
175.0
42.9
51.1
6.8
(3.8)
220.9
1.2
8.3
(5.0)
229.4
1.2
$
219.7
$
228.2
F
o
r
m
1
0
-
K
In May 2013, the Company completed an underwritten offering of eight-year senior unsecured notes (the "2021 Senior
Notes") at a face amount of $175 million. The 2021 Senior Notes bear interest at a rate of 5.25%, payable in arrears on
May 15 and November 15 of each year, commencing on November 15, 2013, and mature on May 15, 2021. Proceeds from
this offering were used to redeem the remaining $70 million outstanding principal amount of ten-year 7.375% senior
unsecured notes, originally issued on November 30, 2004, to repay approximately $56 million in outstanding revolving
credit agreement borrowings and for general corporate purposes. The 2021 Senior Notes are fully and unconditionally
guaranteed by substantially all of the Company's domestic subsidiaries (the "Guarantors"). The 2021 Senior Notes were
sold in a private placement transaction, have not been registered under the Securities Act of 1933, as amended, and may not
be offered or sold absent registration or an applicable exemption from registration requirements.
The 2021 Senior Notes rank equally in right of payment with all the Company's existing and future senior unsecured
indebtedness. The guarantees of the 2021 Senior Notes are senior unsecured obligations of the Guarantors and rank equally
in right of payment with all existing and future senior unsecured indebtedness of the Guarantors. The 2021 Senior Notes
and the guarantees of the 2021 Senior Notes are effectively subordinated to the Company's and the Guarantors' existing and
future secured indebtedness (to the extent of the value of the collateral) and are structurally subordinated to all
indebtedness and other obligations of the Company's subsidiaries that do not guarantee the 2021 Senior Notes, including
the trade creditors of such non-guarantor subsidiaries.
The 2021 Senior Notes contain terms, covenants and events of default with which the Company must comply, which the
Company believes are ordinary and standard for notes of this nature. Among other things, the 2021 Senior Notes contain
covenants restricting the Company's ability to incur certain additional debt, make specified restricted payments, pay
dividends, authorize or issue capital stock, enter into transactions with the Company's affiliates, consolidate or merge with
or acquire another business, sell certain of the Company's assets or liquidate, dissolve or wind-up the Company. As of
December 31, 2016, the Company was in compliance with all terms of the indenture for the 2021 Senior Notes.
Amended and Restated Secured Revolving Credit Facility
In December 2014, the Company amended and restated its existing credit facility by entering into the Third Amended and
Restated Credit Agreement (the "Third Amended Credit Agreement") by and among the Company and certain of its
domestic subsidiaries as the "Domestic Borrowers", Neenah Services GmbH & Co. KG ("Neenah Services") and certain of
its German subsidiaries as the "German Borrowers", certain other subsidiaries as the "German Guarantors", the financial
F-23
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
institutions signatory to the Third Amended Credit Agreement as lenders (the "Lenders"), and JPMorgan Chase Bank,
N.A., as agent for the Lenders (the "Administrative Agent").
The Third Amended Credit Agreement, among other things: (1) increased the maximum principal amount of the existing
credit facility for the Domestic Borrowers to $125 million (the "U.S. Revolving Credit Facility"); (2) established a secured,
multicurrency, revolving credit facility for the German Borrowers in the maximum principal amount of $75 million (the
"German Revolving Credit Facility," and together with the U.S. Revolving Credit Facility, the "Global Revolving Credit
Facilities"); (3) caused the Company and the other Domestic Borrowers to guarantee, among other things, the obligations
of the German Borrowers arising under the German Revolving Credit Facility; (4) provides for the Global Revolving
Credit Facilities to mature on December 18, 2019; and (5) provides for an accordion feature permitting one or more
increases in the Global Revolving Credit Facilities in an aggregate principal amount not exceeding $50 million, such that
the aggregate commitments under the Global Revolving Credit Facilities do not exceed $250 million. In addition, the
Domestic Borrowers may request letters of credit under the U.S. Revolving Credit Facility in an aggregate face amount not
to exceed $20 million outstanding at any time, and the German Borrowers may request letters of credit under the German
Revolving Credit Facility in an aggregate face amount not to exceed $2 million outstanding at any time.
Proceeds of borrowings under the Global Revolving Credit Facilities may be used to finance working capital needs,
permitted acquisitions, permitted investments (including certain inter-company loans), certain dividends, distributions and
other restricted payments, and for other general corporate purposes.
The consolidated statements of cash flows present borrowings and repayments under the Global Revolving Credit Facilities
and the predecessor revolving bank credit facility using a gross approach. This approach presents not only discrete
borrowings for transactions such as a business acquisition, but also reflects all borrowings and repayments that occur as
part of daily management of cash receipts and disbursements. For the year ended December 31, 2016, all of the borrowings
related to daily cash management. For the year ended December 31, 2015, $38.0 million was borrowed in conjunction with
the FiberMark Acquisition and the remaining $113.6 million included borrowings for daily cash management. For the year
ended December 31, 2014, all of the borrowings related to daily cash management.
The right of the Domestic Borrowers to borrow and obtain letters of credit under the U.S. Revolving Credit Facility is
subject to, among other things, the borrowing base of the Domestic Borrowers on a consolidated basis (the "Domestic
Borrowing Base"). The right of the German Borrowers to borrow and obtain letters of credit under the German Revolving
Credit Facility is similarly subject to a borrowing base requirement (the "German Borrowing Base"). The German
Borrowing Base is initially determined on a combined basis for all German Borrowers. Under certain circumstances
(including the occurrence of an event of default resulting from an act or omission of any German Borrower or German
Guarantor), the Administrative Agent may require the German Borrowing Base to be determined separately for each of the
German Borrowers. At its option the Company may, from time to time, allocate a portion of the Domestic Borrowing Base
to the German Borrowing Base (resulting in a corresponding reduction of the Domestic Borrowing Base); however, the
principal amount of borrowings and the outstanding letter of credit exposure under the German Revolving Credit Facility
may not at any time exceed the German Revolving Credit Facility commitment amount then in effect.
The guarantees of the German Guarantors are limited solely to the German Revolving Credit Facility obligations. Under
the terms of the Third Amended Credit Agreement and related loan documentation, neither the German Borrowers nor the
German Guarantors (collectively, the "German Loan Parties") will be liable for any obligations relating to the U.S.
Revolving Credit Facility. The Global Revolving Credit Facilities are secured by liens on all or substantially all of the
assets of the Domestic Borrowers. The German Revolving Credit Facility is secured by liens on all or substantially all of
the assets of the German Borrowers and certain assets of the German Guarantors. Any liens granted by the German Loan
Parties secure only the German Revolving Credit Facility obligations.
Terms, Covenants and Events of Default. In general, borrowings under the Global Revolving Credit Facilities will bear
interest at LIBOR (which cannot be less than zero percent) plus an applicable margin ranging from 1.50% to 2.00%,
depending on the amount of availability under the Third Amended Credit Agreement. In addition, the Company may elect
an Alternate Borrowing Rate ("ABR") for borrowings under the Global Revolving Credit Facilities. ABR borrowings under
the Global Revolving Credit Facilities will bear interest at the highest interest rate shown in the following table:
F-24
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
Prime rate
Federal funds rate +0.50%
Monthly LIBOR (which cannot be less than zero percent) +1.00%
Overnight LIBOR (which cannot be less than zero percent)
Applicable Margin
U.S. Revolving
Credit Facility
0.00%-0.50%
0.00%-0.50%
0.00%-0.50%
Not applicable
German Revolving
Credit Facility
Not applicable
Not applicable
Not applicable
1.50%-2.00%
The Company is also required to pay a monthly commitment fee on the unused amounts available under the Global
Revolving Credit Facilities at a per annum rate of 0.25%.
If aggregate availability under the Global Revolving Credit Facilities is less than the greater of (i) $20 million and (ii) 10%
of the maximum aggregate commitments under the Global Revolving Credit Facilities as then in effect, the Company is
required to comply with a fixed charge coverage ratio (as defined in the Third Amended Credit Agreement) of not less than
1.1 to 1.0 for the preceding four-quarter period, tested as of the end of each quarter. Such compliance, once required, would
no longer be necessary once (x) aggregate availability under the Global Revolving Credit Facilities exceeds the greater of
(i) 17.5% of the aggregate commitment for the Global Revolving Credit Facilities and (ii) $35 million for 60 consecutive
days and (y) no default or event of default has occurred and is continuing during such 60-day period. As of December 31,
2016, aggregate availability under the Global Revolving Credit Facilities exceeded the minimum required amount, and the
Company is not required to comply with such fixed charge coverage ratio.
The Third Amended Credit Agreement contains covenants, which the Company believes are ordinary and standard for
agreements of this nature, with which the Company and its subsidiaries must comply during the term of the agreement.
Among other things, such covenants restrict the ability of the Company and its subsidiaries to incur certain debt, incur or
create certain liens, make specified restricted payments, authorize or issue capital stock, enter into transactions with their
affiliates, consolidate, merge with or acquire another business, sell certain of their assets, or dissolve or wind up. In
addition, if the aggregate availability under the Global Revolving Credit Facilities is less than the greater of (i) $25 million
and (ii) 12.5% of the maximum aggregate commitments under the Global Revolving Credit Facilities as then in effect, the
Company will be subject to increased reporting obligations and controls until such time as availability is more than the
greater of (a) $35 million and (b) 17.5% of the maximum aggregate commitments under the Global Revolving Credit
Facilities as then in effect.
Under the most restrictive terms of the Third Amended and Restated Credit Agreement, we are permitted to pay cash
dividends on or repurchase shares of our common stock up to the amount available under the Third Amended and Restated
Credit Agreement, as long as the availability under the Third Amended and Restated Credit Agreement exceeds $25
million. If the availability is below $25 million, we are restricted from paying dividends or repurchasing shares. As of
December 31, 2016, the Company's availability exceeded $25 million, so this restriction did not apply.
The Third Amended Credit Agreement also contains events of default customary for financings of this type, including
failure to pay principal or interest, materially false representations or warranties, failure to observe covenants and certain
other terms of the Third Amended Credit Agreement, cross-defaults to certain other indebtedness, bankruptcy, insolvency,
various ERISA and foreign pension violations, the incurrence of material judgments and changes in control.
Availability under the Global Revolving Credit Facilities varies over time depending on the value of the Company's
inventory, receivables and various capital assets. As of December 31, 2016, the Company had $42.9 million of borrowings
and $1.2 million in letters of credit outstanding under the Global Revolving Credit Facilities and $125.2 million of
available credit (based on exchanges rates at December 31, 2016). As of December 31, 2016 and 2015, the weighted-
average interest rate on outstanding Revolver borrowings was 2.8 percent and 1.8 percent per annum, respectively.
Under the most restrictive terms of the 2021 Senior Notes, the Company is permitted to pay cash dividends of up to $25
million in a calendar year, but not permitted to repurchase shares of the Company's common stock. However, as long as the
F-25
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NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
net leverage ratio (net debt/EBITDA) under the 2021 Senior Notes is below 2.5x, the Company can pay dividends or
repurchase shares without limitation. In the event the net leverage ratio exceeds 2.5x, the Company may still pay dividends
in excess of $25 million or repurchase shares by utilizing "restricted payment baskets" as defined in the indenture for the
2021 Senior Notes. As of December 31, 2016, since the Company's leverage ratio was less than 2.5x, none of these
covenants were restrictive to the Company's ability to pay dividends on or repurchase shares of the Company's common
stock.
Other Debt
In January 2013, Neenah Germany entered into a project financing agreement for the construction of a melt blown machine
(the "Second German Loan Agreement"). The agreement provides for €9.0 million of construction financing which is
secured by the melt blown machine. The loan matures in September 2022 and principal is repaid in equal quarterly
installments beginning in December 2014. The interest rate on amounts outstanding is 2.45% based on actual days elapsed
in a 360-day year and is payable quarterly. At December 31, 2016, €6.5 million ($6.8 million, based on exchange rates at
December 31, 2016) was outstanding under the Second German Loan Agreement.
Principal Payments
The following table presents the Company's required debt payments:
Debt payments
2017
2018
$
1.2
$
1.2
2019
$ 44.1
2020
$
1.2
2021
$ 176.2
$
Thereafter
Total
0.8
$
224.7
Note 8. Pension and Other Postretirement Benefits
Pension Plans
Except as described below for FiberMark, substantially all active employees of the Company's U.S. operations participate
in defined benefit pension plans and/or defined contribution retirement plans. Neenah Germany has defined benefit plans
designed to provide a monthly pension upon retirement for substantially all its employees in Germany. In addition, the
Company maintains a SERP which is a non-qualified defined benefit plan. The Company provides benefits under the SERP
to the extent necessary to fulfill the intent of its defined benefit retirement plans without regard to the limitations set by the
Internal Revenue Code on qualified defined benefit plans.
During 2016, the Company offered a lump sum payout option to all eligible U.S. participants in the Neenah Paper Pension
Plan and the FiberMark Pension Plan with a deferred vested pension benefit (the participant had a vested pension benefit
but was no longer an employee of the Company). For the year ended December 31, 2016, 265 individuals elected the
option and the Company paid a total of $8.1 million in lump-sum payments. For the year ended December 31, 2016, as
allowed under ASC Topic 715, Compensation — Retirement Benefits ("ASC Topic 715"), the Company adopted a policy to
recognize settlement losses for deferred vested pension benefit payments regardless of whether the amount exceeded the
sum of expected service cost and interest costs of the pension plan for the respective calendar year. In accordance with
ASC Topic 715, for the year ended December 31, 2016, the Company measured the liabilities of the post-retirement benefit
plans and recognized a settlement loss of $0.8 million.
During 2014, the Company offered a lump sum payout option to all eligible U.S. participants in the Neenah Paper Pension
Plan with a deferred vested pension benefit (the participant had a vested pension benefit but was no longer an employee of
the Company). For the year ended December 31, 2014, 425 individuals elected the option and the Company paid a total of
$14.0 million in lump-sum payments. For the year ended December 31, 2014, benefit payments under certain post-
retirement benefit plans exceeded the sum of expected service cost and interest costs for these plans. In accordance with
ASC Topic 715, for the year ended December 31, 2014, the Company measured the liabilities of the post-retirement benefit
plans and recognized a settlement loss of $3.5 million.
The Company's funding policy for its U.S. qualified defined benefit plan and its U.K. defined benefit plan is to contribute
assets to fully fund the projected benefit obligation. Subject to regulatory and tax deductibility limits, any funding shortfall
F-26
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
is to be eliminated over a reasonable number of years. Nonqualified plans providing pension benefits in excess of
limitations imposed by taxing authorities are not funded. There is no legal or governmental obligation to fund Neenah
Germany's benefit plans and as such the Neenah Germany defined benefit plans are currently unfunded. As of
December 31, 2016, Neenah Germany had investments of $1.6 million that were restricted to the payment of certain post-
retirement employee benefits. As of December 31, 2016, $0.6 million and $1.0 million of such investments are classified as
Prepaid and other current assets and Other assets, respectively, on the consolidated balance sheet. The Company also holds
$3.5 million of marketable securities that are designated for the payment of benefits under the SERP as of December 31,
2016, classified as Other assets on the consolidated balance sheet.
The Company uses the fair value of pension plan assets to determine pension expense, rather than averaging gains and
losses over a period of years. Investment gains or losses represent the difference between the expected return calculated
using the fair value of the assets and the actual return based on the fair value of assets. The Company's pension obligations
are measured annually as of December 31.
FiberMark
Defined benefit plans
FiberMark has a qualified defined benefit plan covering certain U.S. employees. During 2009, FiberMark fully froze this
plan so that additional benefits cannot be earned as a result of additional years of service or increases in annual earnings.
Plan assets are principally invested in equity, government and corporate debt securities and fixed income mutual funds.
FiberMark has a defined benefit plan covering all U.K. employees, which is designed to provide a monthly pension upon
retirement. This plan was fully frozen during 2011 and plan assets are primarily invested in equity mutual funds.
Multi-Employer plan
The hourly employees of the Lowville, New York facility are covered by a multi-employer defined benefit plan. The
Company's expense under this plan was less than $0.1 million for the year ended December 31, 2016. The Company
contributes to the multi-employer pension plan under a collective bargaining agreement which provides retirement benefits
for certain union employees. The risks of participating in a multi-employer plan are different from single employer plans as
assets contributed are available to provide benefits to employees of other employers and unfunded obligations from an
employer that discontinues contributions are the responsibility of all remaining employers. In addition, in the event of a
plan's termination or the Company's withdrawal from the plan, the Company may be liable for a portion of the plan's
unfunded vested benefits. The Company does not anticipate withdrawing from the plan, nor is it aware of any expected
plan terminations.
The most recent Pension Protection Act zone status available is for the plan's year-end at December 31, 2015. The zone
status in the following table is based on information that the Company received from the plan and is certified by the plan's
actuary. Among other factors, plans in the red zone are generally less than 65% funded, plans in the yellow zone are less
than 80% funded, and plans in the green zone are at least 80% funded. Information for the multi-employer pension plan in
which the Company participates is shown in the table below. The "FIP/RP Status Pending/Implemented" column indicates
a financial improvement plan ("FIP") or a rehabilitation plan ("RP") is either pending or has been implemented for the
plan. For the year ended December 31, 2015, FiberMark's contributions to the plan were less than 5% of total plan
contributions.
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Pension Fund
PACE Industry Union Management
Pension Fund
EIN/Pension
Plan Number
Pension
Zone
Status
2015
FIP/RP Status
Pending or
Implemented
Contributions
2016
Surcharge
Imposed
Expiration
Date of
Collective
Bargaining
Agreement
11-6166763 Red
Implemented
$
0.1 million Yes
11/9/2021
F-27
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
Other Postretirement Benefit Plans
The Company maintains postretirement health care and life insurance benefit plans for active employees of the Company
and former employees of the Canadian pulp operations. The plans are generally noncontributory for employees who were
eligible to retire on or before December 31, 1992 and contributory for most employees who became eligible to retire on or
after January 1, 1993. The Company does not provide a subsidized benefit to most employees hired after 2003.
The Company's obligations for postretirement benefits other than pensions are measured annually as of December 31. At
December 31, 2016, the assumed inflationary health care cost trend rates used to determine obligations at December 31,
2016 and costs for the year ended December 31, 2017 is 7.0 percent gradually decreasing to an ultimate rate of 4.5 percent
in 2037. The assumed inflationary health care cost trend rates used to determine obligations at December 31, 2015 and
costs for the year ended December 31, 2016 were 7.3 percent gradually decreasing to an ultimate rate of 4.5 percent in
2037.
F-28
NEENAH PAPER INC. AND SUBSIDIARIES
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
(Dollars in millions, except as noted)
The following table reconciles the benefit obligations, plan assets, funded status and net liability information of the
Company's pension and other postretirement benefit plans.
The following table reconciles the benefit obligations, plan assets, funded status and net liability information of the
Company's pension and other postretirement benefit plans.
Change in Benefit Obligation:
Change in Benefit Obligation:
Benefit obligation at beginning of year
Benefit obligation at beginning of year
Service cost
Service cost
Interest cost
Interest cost
Currency
Currency
Actuarial (gain) loss
Actuarial (gain) loss
Benefit payments from plans
Benefit payments from plans
Settlement payments
Settlement payments
Net transfer in/(out) (1)
Net transfer in/(out) (1)
Other
Other
Benefit obligation at end of year
Benefit obligation at end of year
Change in Plan Assets:
Change in Plan Assets:
Pension Benefits
Pension Benefits
Postretirement
Benefits Other
than Pensions
Postretirement
Benefits Other
than Pensions
Year Ended December 31,
Year Ended December 31,
2016
2016
2015
2015
2016
2016
2015
2015
$
$
360.1
360.1
$
$
330.2
330.2
$
$
40.5
40.5
$40.7
$40.7
4.9
4.9
15.9
15.9
(3.1)
(3.1)
18.2
18.2
(17.1)
(17.1)
(8.1)
(8.1)
0.1
0.1
—
—
5.5
5.5
13.8
13.8
(4.0)
(4.0)
(18.8)
(18.8)
(14.9)
(14.9)
—
—
48.3
48.3
—
—
1.3
1.3
1.6
1.6
0.1
0.1
(1.2)
(1.2)
(3.8)
(3.8)
—
—
—
—
2.2
2.2
1.7
1.7
1.6
1.6
(0.5)
(0.5)
1.5
1.5
(4.0)
(4.0)
—
—
(0.5)
(0.5)
—
—
$
$
370.9
370.9
$
$
360.1
360.1
$
$
40.7
40.7
$
$
40.5
40.5
Fair value of plan assets at beginning of year
Fair value of plan assets at beginning of year
$
$
308.3
308.3
$
$
Actual gain (loss) on plan assets
Actual gain (loss) on plan assets
Employer contributions
Employer contributions
Currency
Currency
Benefit payments
Benefit payments
Settlement payments
Settlement payments
Net transfers in (1)
Net transfers in (1)
17.6
17.6
17.8
17.8
(1.7)
(1.7)
(15.8)
(15.8)
(8.1)
(8.1)
—
—
288.3
$
288.3
(6.0)
(6.0)
1.0
1.0
(0.5)
(0.5)
(13.6)
(13.6)
—
—
39.1
39.1
$
— $
— $
—
—
—
—
—
—
—
—
—
—
—
—
Fair value of plan assets at end of year
Fair value of plan assets at end of year
$
$
318.1
318.1
$
$
308.3
308.3
$
$
— $
— $
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—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Reconciliation of Funded Status
Reconciliation of Funded Status
Fair value of plan assets
Fair value of plan assets
Projected benefit obligation
Projected benefit obligation
Net liability recognized in statement of financial position
Net liability recognized in statement of financial position
Amounts recognized in statement of financial position consist of:
Amounts recognized in statement of financial position consist of:
Current liabilities
Current liabilities
Noncurrent liabilities
Noncurrent liabilities
Net amount recognized
Net amount recognized
_______________________
_______________________
$
$
318.1
318.1
$
$
308.3
308.3
$
$
— $
— $
—
—
370.9
370.9
(52.8) $
(52.8) $
360.1
360.1
(51.8) $
(51.8) $
40.7
40.7
(40.7) $
(40.7) $
40.5
(40.5)
40.5
(40.5)
(3.8) $
(3.8) $
(49.0)
(49.0)
(52.8) $
(52.8) $
(1.5) $
(1.5) $
(50.3)
(50.3)
(51.8) $
(51.8) $
(4.3) $
(4.3) $
(36.4)
(36.4)
(40.7) $
(40.7) $
(3.8)
(3.8)
(36.7)
(36.7)
(40.5)
(40.5)
$
$
$
$
$
$
(1) For the year ended December 31, 2015, the Company acquired $48.3 million of pension liabilities and $39.1
(1) For the year ended December 31, 2015, the Company acquired $48.3 million of pension liabilities and $39.1
million of pension assets in conjunction with the FiberMark Acquisition.
million of pension assets in conjunction with the FiberMark Acquisition.
F-29
F-29
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
Amounts recognized in accumulated other comprehensive income consist of:
Accumulated actuarial loss
Prior service cost
Total recognized in accumulated other comprehensive income
Summary disaggregated information about the pension plans follows:
Pension
Benefits
Postretirement
Benefits Other
than Pensions
December 31,
2016
2015
2016
2015
$
$
95.8
0.9
96.7
$
$
84.1
1.2
85.3
$
$
4.9
(0.4)
4.5
$
$
5.8
(0.5)
5.3
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
Components of Net Periodic Benefit Cost
Service cost
Interest cost
Expected return on plan assets (a)
Recognized net actuarial loss
Amortization of prior service cost (credit)
Amount of settlement loss recognized
Net periodic benefit cost (credit)
Amounts related to discontinued operations
Net periodic benefit cost
_______________________
Assets Exceed
ABO
December 31,
ABO Exceed
Assets
Total
2016
2015
2016
2015
2016
2015
$
291.3
$
280.1
$
281.5
284.2
269.1
270.4
$
79.6
79.4
33.9
80.0
79.8
37.9
$
370.9
$
360.9
318.1
360.1
348.9
308.3
Pension Benefits
Postretirement Benefits
Other than Pensions
Year Ended December 31,
2016
2015
2014
2016
2015
2014
$ 4.9
$ 5.5
$ 5.0
$ 1.3
$ 1.7
$ 1.7
15.9
(18.9)
6.6
0.2
0.8
13.8
(19.3)
6.3
0.2
—
1.6
14.5
(16.7) —
0.6
(0.2)
—
4.2
3.5
0.3
10.8
6.5
9.5
— (14.9)
1.0
$ (8.4) $ 11.8
$ 9.5
3.3
—
1.6
—
0.3
(0.2)
—
3.4
—
1.9
—
0.4
(0.2)
—
3.8
—
$ 3.3
$ 3.4
$ 3.8
(a) The expected return on 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.
F-30
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income
Net periodic benefit expense
Accumulated actuarial gain (loss)
Prior service cost (credit)
Total recognized in other comprehensive income
Total recognized in net periodic benefit cost and other comprehensive
income
Pension Benefits
Postretirement Benefits
Other than Pensions
Year Ended December 31,
2016
2015
2014
2016
2015
2014
$ 9.5
11.7
(0.3)
11.4
$ (8.4) $ 11.8
26.4
(0.3)
26.1
(7.1)
(0.3)
(7.4)
$ 3.3
(0.9)
0.1
(0.8)
$ 3.4
$ 3.8
1.1
0.2
1.3
—
0.2
0.2
$ 20.9
$ (15.8) $ 37.9
$ 2.5
$ 4.7
$ 4.0
The estimated net actuarial loss and prior service cost for the defined benefit pension plans expected to be amortized from
accumulated other comprehensive income into net periodic benefit cost over the next fiscal year are $7.3 million and $0.2
million, respectively. The estimated net actuarial loss and prior service (credit) for postretirement benefits other than
pensions expected to be amortized from accumulated other comprehensive income into net periodic benefit cost over the
next fiscal year is $0.2 million and $(0.2) million, respectively.
Weighted-Average Assumptions Used to Determine Benefit Obligations at December 31
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Discount rate
Rate of compensation increase
Pension
Benefits
Postretirement
Benefits
Other than
Pensions
2016
2015
2016
2015
4.16% 4.54% 3.69% 4.07%
2.22% 2.18%
—%
—%
Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost for Years Ended December 31
Pension Benefits
Postretirement
Benefits Other than
Pensions
Year Ended December 31,
2016
2015
2014
2016
2015
2014
Discount rate
4.54% 3.91% 4.88% 4.07% 4.05% 4.84%
Expected long-term return on plan assets
6.20% 6.50% 6.50%
—%
—%
—%
Rate of compensation increase
2.18% 2.92% 2.96%
—%
—%
—%
F-31
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
Expected Long-Term Rate of Return and Investment Strategies
The expected long-term rate of return on pension fund assets held by the Company's pension trusts was determined based
on several factors, including input from pension investment consultants and projected long-term returns of broad equity
and bond indices. Also considered were the plans' historical 10-year and 15-year compounded annual returns. It is
anticipated that, on average, actively managed U.S. pension plan assets will generate annual long-term rates of return of at
least 6.20 percent. The expected long-term rate of return on the assets in the plans was based on an asset allocation
assumption of approximately 43 percent with equity managers, with expected long-term rates of return of approximately 8
to 10 percent, and 57 percent with fixed income managers, with an expected long-term rate of return of about 4 to 6
percent. The actual asset allocation is regularly reviewed and periodically rebalanced to the targeted allocation when
considered appropriate.
Plan Assets
Pension plan asset allocations are as follows:
Asset Category
Equity securities
Debt securities
Cash and money-market funds
Total
Percentage of Plan
Assets At
December 31,
2016
2015
2014
43%
57%
—%
34%
64%
2%
35%
65%
—%
100% 100% 100%
The Company's investment objective for pension plan assets are to ensure, over the long-term life of the pension plans, an
adequate pool of assets to support the benefit obligations to participants, retirees, and beneficiaries. Specifically, these
objectives include the desire to: (a) invest assets in a manner such that future assets are available to fund liabilities,
(b) maintain liquidity sufficient to pay current benefits when due and (c) diversify, over time, among asset classes so assets
earn a reasonable return with acceptable risk to capital.
The target investment allocation and permissible allocation range for plan assets by category are as follows:
Asset Category
Equity securities
Debt securities / Fixed Income
Strategic Target
Permitted Range
43%
57%
38-48%
52-62%
As of December 31, 2016, no company or group of companies in a single industry represented more than five percent of
plan assets.
The Company's investment assumptions are established by an investment committee composed of members of senior
management and are validated periodically against actual investment returns. As of December 31, 2016, the Company's
investment assumptions are as follows:
(a) The plan should be substantially fully invested in debt and equity securities at all times because substantial cash
holdings will reduce long-term rates of return;
(b) Equity investments will provide greater long-term returns than fixed income investments, although with greater
short-term volatility;
(c) It is prudent to diversify plan investments across major asset classes;
F-32
NEENAH PAPER INC. AND SUBSIDIARIES
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
(Dollars in millions, except as noted)
(d) Allocating a portion of plan assets to foreign equities will increase portfolio diversification, decrease portfolio risk
(d) Allocating a portion of plan assets to foreign equities will increase portfolio diversification, decrease portfolio risk
and provide the potential for long-term returns;
and provide the potential for long-term returns;
(e) Investment managers with active mandates can reduce portfolio risk below market risk and potentially add value
(e) Investment managers with active mandates can reduce portfolio risk below market risk and potentially add value
through security selection strategies, and a portion of plan assets should be allocated to such active mandates;
through security selection strategies, and a portion of plan assets should be allocated to such active mandates;
(f) A component of passive, indexed management can benefit the plans through greater diversification and lower
(f) A component of passive, indexed management can benefit the plans through greater diversification and lower
cost, and a portion of the plan assets should be allocated to such passive mandates, and
cost, and a portion of the plan assets should be allocated to such passive mandates, and
(g) It is appropriate to retain more than one investment manager, given the size of the plans, provided that such
(g) It is appropriate to retain more than one investment manager, given the size of the plans, provided that such
managers offer asset class or style diversification.
managers offer asset class or style diversification.
For the years ended December 31, 2016, 2015 and 2014, no plan assets were invested in the Company's securities.
For the years ended December 31, 2016, 2015 and 2014, no plan assets were invested in the Company's securities.
Cash Flows
Cash Flows
At December 31, 2016, the Company expects to make aggregate contributions to qualified pension trusts and payments of
pension benefits for unfunded pension plans in 2017 of approximately $14.0 million (based on exchange rates at
December 31, 2016).
At December 31, 2016, the Company expects to make aggregate contributions to qualified pension trusts and payments of
pension benefits for unfunded pension plans in 2017 of approximately $14.0 million (based on exchange rates at
December 31, 2016).
Future Benefit Payments
Future Benefit Payments
The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:
The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:
2017
2018
2019
2020
2021
Years 2022-2026
2017
2018
2019
2020
2021
Years 2022-2026
Health Care Cost Trends
Health Care Cost Trends
$
Pension Plans
$
Pension Plans
20.7
20.7
19.3
19.3
22.1
22.1
20.0
20.0
21.4
21.4
113.2
113.2
Postretirement
Postretirement
Benefits
Benefits
Other than
Other than
Pensions
Pensions
$
$
4.3
4.3
3.5
3.5
3.8
3.8
4.1
4.1
4.1
4.1
16.9
16.9
F
o
r
m
1
0
-
K
Assumed health care cost trend rates affect the amounts reported for postretirement health care benefit plans. A one
percentage-point change in assumed health care cost trend rates would have the following effects:
Assumed health care cost trend rates affect the amounts reported for postretirement health care benefit plans. A one
percentage-point change in assumed health care cost trend rates would have the following effects:
Effect on total of service and interest cost components
Effect on total of service and interest cost components
Effect on post-retirement benefit other than pension obligation
Effect on post-retirement benefit other than pension obligation
One Percentage-
Point
One Percentage-
Point
Increase
Increase
Decrease
Decrease
$
$
— $
— $
0.3
0.3
—
—
(0.3)
(0.3)
Defined Contribution Retirement Plans
Defined Contribution Retirement Plans
Company contributions to defined contribution retirement plans are primarily based on the age and compensation of
Company contributions to defined contribution retirement plans are primarily based on the age and compensation of
covered employees. Contributions to these plans, all of which were charged to expense, were $2.7 million in 2016, $2.5
covered employees. Contributions to these plans, all of which were charged to expense, were $2.7 million in 2016, $2.5
million in 2015 and $1.9 million in 2014. In addition, the Company maintains a supplemental retirement contribution plan
million in 2015 and $1.9 million in 2014. In addition, the Company maintains a supplemental retirement contribution plan
(the "SRCP") which is a non-qualified, unfunded defined contribution plan. The Company provides benefits under the
(the "SRCP") which is a non-qualified, unfunded defined contribution plan. The Company provides benefits under the
SRCP to the extent necessary to fulfill the intent of its defined contribution retirement plans without regard to the
SRCP to the extent necessary to fulfill the intent of its defined contribution retirement plans without regard to the
F-33
F-33
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
limitations set by the Internal Revenue Code on qualified defined contribution plans. For the years ended December 31,
2016, 2015 and 2014, the Company recognized expense related to the SRCP of $0.4 million, $0.2 million and $0.1 million,
respectively. At December 31, 2016 and December 31, 2015, the unfunded obligation of the SRCP was $1.3 million and
$0.9 million, respectively.
Investment Plans
The Company provides voluntary contribution investment plans to substantially all North American employees. Under the
plans, the Company matches a portion of employee contributions. For the years ended December 31, 2016, 2015 and 2014,
costs charged to expense for Company matching contributions under these plans were $3.1 million, $2.7 million and $1.9
million, respectively.
Note 9. Stock Compensation Plans
The Company established the 2004 Omnibus Stock and Incentive Plan (the "2004 Omnibus Plan") in December 2004 and
reserved 3,500,000 shares of $0.01 par value common stock ("Common Stock") for issuance under the Omnibus Plan.
Pursuant to the terms of the 2004 Omnibus Plan, the compensation committee of the Company's Board of Directors may
grant various types of equity-based compensation awards, including incentive and nonqualified stock options, SARs,
restricted stock, RSUs, RSUs with performance conditions and performance units, in addition to certain cash-based awards.
All grants under the Omnibus Plan will be made at fair market value and no grant may be repriced. In general, the options
expire 10 years from the date of grant and vest over a 3-year service period.
At the 2013 Annual Meeting of Stockholders, the Company's stockholders approved an amendment and restatement of the
2004 Omnibus Plan (as amended and restated the "2013 Omnibus Plan"). The amendment and restatement authorized the
Company to reserve an additional 1,577,000 shares of Common Stock for future issuance. As of December 31, 2016, the
Company had 950,000 shares of Common Stock reserved for future issuance under the 2013 Omnibus Plan. As of
December 31, 2016, the number of shares available for future issuance was reduced by approximately 17,000 shares for
outstanding SARs where the closing market price for the Company's common stock was greater than the exercise price of
the SAR. The Company accounts for stock-based compensation pursuant to the fair value recognition provisions of ASC
Topic 718, Compensation — Stock Compensation ("ASC Topic 718").
Valuation and Expense Information Under ASC Topic 718
Substantially all stock-based compensation expense has been recorded in selling, general and administrative expenses. The
following table summarizes stock-based compensation costs and related income tax benefits.
Stock-based compensation expense
Income tax benefit
Stock-based compensation, net of income tax benefit
Year Ended December 31,
2016
2015
2014
$
$
5.8
(2.2)
3.6
$
$
6.5
(2.5)
4.0
$
$
6.0
(2.3)
3.7
F-34
NEENAH PAPER INC. AND SUBSIDIARIES
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
(Dollars in millions, except as noted)
The following table summarizes total compensation costs related to the Company's equity awards and amounts recognized
in the year ended December 31, 2016.
The following table summarizes total compensation costs related to the Company's equity awards and amounts recognized
in the year ended December 31, 2016.
Stock Options
Stock Options
Performance
Performance
Shares and RSUs
Shares and RSUs
Unrecognized compensation cost — December 31, 2015
Unrecognized compensation cost — December 31, 2015
$
$
0.8
0.8
$
$
Grant date fair value current year grants
Grant date fair value current year grants
Compensation expense recognized
Compensation expense recognized
Unrecognized compensation cost — December 31, 2016
Unrecognized compensation cost — December 31, 2016
$
$
Expected amortization period (in years)
Expected amortization period (in years)
Stock Options/SARs
Stock Options/SARs
1.5
(1.7)
0.6
1.5
(1.7)
$
0.6
1.7
1.7
$
1.6
1.6
4.2
(4.1)
1.7
4.2
(4.1)
1.7
1.5
1.5
In August 2014, the Compensation Committee of the Board of Directors approved the conversion of approximately
In August 2014, the Compensation Committee of the Board of Directors approved the conversion of approximately
545,000 outstanding non-qualified stock options held by U.S. employees and U.S. non-employee directors to an equal
545,000 outstanding non-qualified stock options held by U.S. employees and U.S. non-employee directors to an equal
number of SARs. Upon exercise, the holder of an SAR will receive common shares equal to the number of SARs exercised
number of SARs. Upon exercise, the holder of an SAR will receive common shares equal to the number of SARs exercised
multiplied by a fraction where the numerator is equal to the market price at the time of exercise minus the exercise price of
multiplied by a fraction where the numerator is equal to the market price at the time of exercise minus the exercise price of
the SAR and the denominator is equal to the market price at the time of exercise. The SARs can only be settled for shares
the SAR and the denominator is equal to the market price at the time of exercise. The SARs can only be settled for shares
of Common Stock and the Company will not receive any cash proceeds upon exercise. All other contractual terms of the
of Common Stock and the Company will not receive any cash proceeds upon exercise. All other contractual terms of the
SARs are unchanged from those of the converted non-qualified stock options. At the date of conversion the fair value of
SARs are unchanged from those of the converted non-qualified stock options. At the date of conversion the fair value of
the SARs was equal to the fair value of the stock options exchanged. As a result, the Company did not recognize any
the SARs was equal to the fair value of the stock options exchanged. As a result, the Company did not recognize any
additional compensation expense due to the conversion.
additional compensation expense due to the conversion.
The following tables present information regarding stock options awarded during the years ended December 31, 2016,
2015 and 2014.
The following tables present information regarding stock options awarded during the years ended December 31, 2016,
2015 and 2014.
Nonqualified stock options granted
Nonqualified stock options granted
Per share weighted-average exercise price
Per share weighted-average exercise price
Per share weighted-average grant date fair value
Per share weighted-average grant date fair value
2016
2016
2015
2015
2014
2014
113,935
113,935
87,930
87,930
95,670
95,670
$
$
$
$
58.03
58.03
$
13.51
13.51
$
$
$
59.72
59.72
$
16.47
16.47
$
$
$
43.17
43.17
12.72
12.72
The weighted-average grant date fair value for stock options granted for the years ended December 31, 2016, 2015 and
2014 was estimated using the Black-Scholes option valuation model with the following assumptions:
The weighted-average grant date fair value for stock options granted for the years ended December 31, 2016, 2015 and
2014 was estimated using the Black-Scholes option valuation model with the following assumptions:
F
o
r
m
1
0
-
K
Expected term in years
Expected term in years
Risk free interest rate
Risk free interest rate
Volatility
Volatility
Dividend yield
Dividend yield
2016
2016
2015
2015
2014
2014
5.8
5.8
5.8
5.8
5.9
5.9
1.8%
1.8%
1.4%
1.4%
1.9%
1.9%
32.1% 34.4% 36.5%
32.1% 34.4% 36.5%
3.0%
3.0%
2.0%
2.0%
2.2%
2.2%
Expected volatility and the expected term were estimated by reference to the historical stock price performance of the
Expected volatility and the expected term were estimated by reference to the historical stock price performance of the
Company and historical data for the Company's stock option awards, respectively. The risk-free interest rate was based on
Company and historical data for the Company's stock option awards, respectively. The risk-free interest rate was based on
the yield on U.S. Treasury bonds with a remaining term approximately equal to the expected term of the stock option
the yield on U.S. Treasury bonds with a remaining term approximately equal to the expected term of the stock option
awards. Forfeitures were estimated at the date of grant.
awards. Forfeitures were estimated at the date of grant.
During the year ended December 31, 2012, the Company awarded nonqualified stock options to its President and Chief
During the year ended December 31, 2012, the Company awarded nonqualified stock options to its President and Chief
Executive Officer to purchase 125,000 shares of Common Stock (subject to forfeiture due to termination of employment
Executive Officer to purchase 125,000 shares of Common Stock (subject to forfeiture due to termination of employment
and other conditions). The exercise price of such nonqualified stock option awards was $24.09 per share and the options
and other conditions). The exercise price of such nonqualified stock option awards was $24.09 per share and the options
expire in ten years. As of December 31, 2016, 100 percent of the option award had been earned. The grant date fair value of
expire in ten years. As of December 31, 2016, 100 percent of the option award had been earned. The grant date fair value of
such stock options was $9.55 per share and was estimated using a "Monte Carlo" simulation valuation model.
such stock options was $9.55 per share and was estimated using a "Monte Carlo" simulation valuation model.
F-35
F-35
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
The following table summarizes stock option activity under the Omnibus Plan for the year ended December 31, 2016:
Options outstanding — December 31, 2015
Add: Options granted
Less: Options exercised
Less: Options forfeited/cancelled
Options outstanding — December 31, 2016
Number of
Stock Options
Weighted-Average
Exercise Price
526,611
113,935
105,806
4,278
530,462
$
$
$
$
$
31.94
58.03
27.29
46.89
38.35
The status of outstanding and exercisable stock options as of December 31, 2016, summarized by exercise price follows:
Options Vested or Expected to Vest
Options Exercisable
Exercise Price
$7.41 — $19.42
$21.13 — $32.84
$32.87 — $42.82
$50.60 — $59.72
>$60.55
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)
3.1
5.2
6.4
8.6
9.2
6.3
$
$
$
$
$
$
13.15
$
25.67
42.26
58.45
60.56
4.7
12.1
2.9
5.2
0.1
65,095
202,695
39,699
28,847
$
$
$
$
— $
13.15
$
25.67
41.88
58.09
60.56
4.7
12.1
1.7
0.8
—
38.35
$
25.0
336,336
$
27.94
$
19.3
Number of
Options
65,095
202,695
66,550
192,553
3,569
530,462
_______________________
(a) Represents the total pre-tax intrinsic value as of December 31, 2016 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 $85.20 on December 31, 2016.
The aggregate pre-tax intrinsic value of stock options exercised for the years ended December 31, 2016, 2015 and 2014
was $4.7 million, $5.5 million and $12.7 million, respectively.
The following table summarizes the status of the Company's unvested stock options as of December 31, 2016 and activity
for the year then ended:
Outstanding — December 31, 2015
Add: Options granted
Less: Options vested
Outstanding — December 31, 2016
Number of
Stock Options
Weighted-Average
Grant Date
Fair Value
294,017
113,935
213,826
194,126
$
$
$
$
12.09
13.51
10.07
15.15
As of December 31, 2016, certain participants met age and service requirements that allowed their options to qualify for
accelerated vesting upon retirement. As of December 31, 2016, there were approximately 114,000 stock options subject to
accelerated vesting that such participants would have been eligible to exercise if they had retired as of such date. The
F-36
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
aggregate grant date fair value of options subject to accelerated vesting was $1.6 million. For the year ended December 31,
2016, stock-based compensation expense for such options was $0.9 million. For the year ended December 31, 2016, the
aggregate grant date fair value of options vested, including options subject to accelerated vesting, was $2.1 million. Stock
options that reflect accelerated vesting for expense recognition become exercisable according to the contract terms of the
stock option grant.
Performance Units/RSUs
For the year ended December 31, 2016, the Company granted target awards of 54,364 Performance Units. The
measurement period for the Performance Units is January 1, 2016 through December 31, 2016. The Performance Units vest
on December 31, 2018. Common Stock equal to not less than 40 percent and not more than 200 percent of the Performance
Unit target will be awarded based on the Company's return on invested capital, consolidated revenue growth and total
return to shareholders relative to the companies in the Russell 2000® Value small cap index. As of December 31, 2016, the
Company expects that Common Stock equal to approximately 138 percent of the Performance Unit targets will be earned.
The market price on the date of grant for the Performance Units was $57.95 per share. The Company is recognizing stock-
based compensation expense pro-rata over the vesting term of the RSUs.
For the year ended December 31, 2016, the Company awarded 8,083 RSUs to non-employee members of the Board of
Directors and 1,652 RSUs (net of forfeitures) to employees. The weighted-average grant date fair value of such awards was
$67.77 per share and the awards vest one year from the date of grant. During the vesting period, the holders of the RSUs
are entitled to dividends, but the RSUs do not have voting rights and are forfeited in the event the holder is no longer an
employee or member of the Board of Directors on the vesting date.
The following table summarizes the activity of the Company's unvested stock-based awards (other than stock options) for
the years ended December 31, 2016, 2015 and 2014:
F
o
r
m
1
0
-
K
Outstanding — December 31, 2013
Shares granted (a)
Shares vested
Performance Shares vested
Shares expired or cancelled
Outstanding — December 31, 2014
Shares granted (a)
Shares vested
Performance Shares vested
Shares expired or cancelled
Outstanding — December 31, 2015
Shares granted (a)
Shares vested
Performance Shares vested
Shares expired or cancelled
Outstanding — December 31, 2016 (b)
Weighted-Average
Grant Date
Fair Value
Performance
Units
Weighted-Average
Grant Date
Fair Value
RSUs
152,191
$
$
11,492
(150,270) $
94,710
$
(2,829) $
$
105,294
13,415
$
(105,564) $
$
107,219
(1,526) $
$
118,838
$
10,047
(110,749) $
$
62,874
(291) $
$
80,719
24.36
49.78
22.60
29.15
29.15
31.15
61.41
32.12
40.65
51.14
43.29
68.25
42.96
53.63
40.65
54.91
77,000
60,900
$
$
— $
(77,000) $
(2,630) $
$
58,270
45,060
$
(810) $
(58,270) $
(1,200) $
$
43,050
54,364
$
— $
(43,050) $
(858) $
$
53,506
49.28
74.79
—
35.85
74.79
74.79
78.32
78.32
74.79
78.32
78.32
73.82
—
78.32
75.98
73.79
F-37
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
______________________________________________________________________
(a) For the years ended December 31, 2016, 2015 and 2014, includes 312 RSUs, 495 RSUs and 622 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, 2016 was $6.9 million.
The aggregate pre-tax intrinsic value of restricted stock and RSUs that vested for the years ended December 31, 2016, 2015
and 2014 was $9.3 million, $6.6 million and $8.9 million, respectively.
Excess Tax Benefits
Excess tax benefits represent the difference between the tax deduction the Company will receive on its tax return for
compensation recognized by employees upon the vesting or exercise of stock-based awards and the tax benefit recognized
for the grant date fair value of such awards. For the years ended December 31, 2016, 2015 and 2014, the Company
recognized excess tax benefits related to the exercise or vesting of stock-based awards of $3.1 million, $2.6 million and
$5.6 million, respectively. In 2016, the Company adopted ASC Topic No. 2016-09. See Note 2, "Summary of Significant
Accounting Policies — Recently Adopted Accounting Standards."
Note 10. Stockholders' Equity
Common Stock
The Company has authorized 100 million shares of Common Stock. Holders of the Company's Common Stock are entitled
to one vote per share.
In May 2016, the Company's Board of Directors authorized a program that would allow the Company to repurchase up to
$25 million of its outstanding Common Stock over the next 12 months (the "2016 Stock Purchase Plan"). Purchases by the
Company under the 2016 Stock Purchase Plan would be made from time to time in the open market or in privately
negotiated transactions in accordance with the requirements of applicable law. The timing and amount of any purchases
will depend on share price, market conditions and other factors. The 2016 Stock Purchase Plan does not require the
Company to purchase any specific number of shares and may be suspended or discontinued at any time. The 2016 Stock
Purchase Plan is expected to be funded using cash on hand or borrowings under the Company's bank credit facility. The
Company had a substantially identical $25 million repurchase program in place during the preceding 12 months that
expired in May 2016 (the "2015 Stock Purchase Plan"). The Company had a $10 million share repurchase program in place
during the preceding 12 months that expired in May 2014 (the "2013 Stock Purchase Plan"). The following table shows
shares purchased under the respective stock purchase plans:
2016 Stock Purchase Plan
2015 Stock Purchase Plan
2014 Stock Purchase Plan
2013 Stock Purchase Plan
Year Ended December 31,
2016
2015
2014
Shares
$
Shares
$
Shares
$
91,542
93,600
$
$
7.4
5.2
42,100
60,900
$
$
2.4
3.5
— $ —
22,600
$ 1.2
F-38
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
As of December 31, 2016, under the terms of the Third Amended and Restated Credit Agreement and the 2021 Senior
Notes, the Company has limitations on its ability to repurchase shares of its Common Stock, as further discussed in Note 7,
"Debt."
For the years ended December 31, 2016, 2015 and 2014, the Company acquired 46,000 shares, 40,000 shares and 56,000
shares of Common Stock, respectively, at a cost of $3.8 million, $2.5 million and $3.4 million, respectively, for shares
surrendered by employees to pay taxes due on vested restricted stock awards and SARs exercised.
Each share of Common Stock contains a preferred stock purchase right that is associated with the share. These preferred
stock purchase rights are transferred only with shares of Common Stock. The preferred stock purchase rights become
exercisable and separately certificated only upon a "Rights Distribution Date" as that term is defined in the stockholder
rights agreement adopted by the Company at the time of the Spin-Off. In general, a Rights Distribution Date occurs 10
business days following either of these events: (i) a person or group has acquired or obtained the right to acquire beneficial
ownership of 15 percent or more of the outstanding shares of the Company's Common Stock then outstanding or (ii) a
tender offer or exchange offer is commenced that would result in a person or group acquiring 15 percent or more of the
outstanding shares of Common Stock then outstanding.
Preferred Stock
The Company has authorized 20 million shares of $0.01 par value preferred stock. The preferred stock may be issued in
one or more series and with such designations and preferences for each series as shall be stated in the resolutions providing
for the designation and issue of each such series adopted by the Board of Directors of the Company. The Board of
Directors is authorized by the Company's articles of incorporation to determine the voting, dividend, redemption and
liquidation preferences pertaining to each such series. No shares of preferred stock have been issued by the Company.
Other Comprehensive Income (Loss)
Comprehensive income (loss) includes, in addition to net income (loss), gains and losses recorded directly into
stockholders' equity on the consolidated balance sheet. These gains and losses are referred to as other comprehensive
income items. Accumulated other comprehensive income (loss) consists of foreign currency translation gains and (losses),
deferred gains and (losses) on "available-for-sale" securities, and adjustments related to pensions and other post-retirement
benefits. The Company does not provide income taxes for foreign currency translation adjustments related to indefinite
investments in foreign subsidiaries.
The components of accumulated other comprehensive income (loss), net of applicable income taxes are as follows:
Unrealized foreign currency translation losses, net of income tax benefit of $0.4 and $0.0,
respectively
Net loss from pension and other postretirement benefit liabilities (net of income tax benefits of
$36.8 million and $33.8 million, respectively)
Accumulated other comprehensive loss
December 31,
2016
2015
$
(27.5) $
(20.8)
(64.5)
(92.0) $
(57.5)
(78.3)
$
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NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
The following table presents changes in accumulated other comprehensive income ("AOCI"):
Year Ended December 31,
Pretax
Amount
2016
Tax
Effect
Net
Amount
Pretax
Amount
2015
Tax
Effect
Net
Amount
Pretax
Amount
2014
Tax
Effect
Net
Amount
Unrealized foreign currency
translation gains (losses)
Adjustment to pension and other
benefit liabilities
Other comprehensive income
(loss)
$
(7.1) $ 0.4
$
(6.7) $ (15.0) $ — $ (15.0) $ (23.7) $ — $ (23.7)
(10.0)
3.0
(7.0)
6.3
(1.2)
5.1
(26.1)
8.7
(17.4)
$
(17.1) $ 3.4
$ (13.7) $
(8.7) $ (1.2) $
(9.9) $ (49.8) $ 8.7
$ (41.1)
For the years ended December 31, 2016, 2015 and 2014, the Company reclassified $7.2 million, $7.1 million and $4.7
million, respectively, of costs from accumulated other comprehensive income to cost of products sold and selling, general
and administrative expenses on the Consolidated Statements of Operations. For the years ended December 31, 2016, 2015
and 2014, the Company recognized an income tax benefit of $2.8 million, $2.7 million and $1.7 million, respectively,
related to such reclassifications classified as Provision for income taxes on the Consolidated Statements of Operations.
For the year ended December 31, 2016, the Company reclassified $0.8 million of costs from accumulated other
comprehensive income to pension plan settlement charge on the Consolidated Statements of Operations. For the year ended
December 31, 2015, the Company reclassified $5.5 million of costs from accumulated other comprehensive income to loss
from discontinued operations on the Consolidated Statements of Operations. For the year ended December 31, 2014, the
Company reclassified $3.5 million of costs from accumulated other comprehensive income to pension plan settlement
charge on the Consolidated Statements of Operations. For the years ended December 31, 2016 and 2014, the Company
recognized an income tax benefit of $0.2 million and $1.3 million, respectively, related to such reclassifications classified
as Provision for income taxes on the Consolidated Statements of Operations. For the year ended December 31, 2015, the
Company recognized an income tax benefit of $2.1 million, related to reclassifications classified as Loss from discontinued
operations, net of income taxes on the Consolidated Statements of Operations.
Note 11. Commitments
Leases
The future minimum obligations under operating leases having a noncancelable term in excess of one year as of
December 31, 2016, are as follows:
2017
2018
2019
2020
2021
Thereafter
Future minimum lease obligations
$
3.1
2.4
1.3
1.0
1.0
4.0
$
12.8
For the years ended December 31, 2016, 2015 and 2014 rent expense under operating leases was $6.4 million, $5.4 million
and $4.5 million, respectively.
F-40
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
Purchase Commitments
The Company has certain minimum purchase commitments that extend beyond December 31, 2016. Commitments under
these contracts are approximately $14.3 million, $2.2 million and $1.3 million for the years ended December 31, 2017,
2018 and 2019, respectively. Such purchase commitments for the year ended December 31, 2017 are primarily for coal and
corn starch contracts. Although the Company is primarily liable for payments on the above-mentioned leases and purchase
commitments, management believes exposure to losses, if any, under these arrangements is not material.
Note 12. Contingencies and Legal Matters
Litigation
The Company is involved in certain legal actions and claims arising in the ordinary course of business. While the outcome
of these legal actions and claims cannot be predicted with certainty, it is the opinion of management that the outcome of
any such claim which is pending or threatened, either individually or on a combined basis, will not have a material effect
on the consolidated financial condition, results of operations or liquidity of the Company.
Income Taxes
The Company periodically undergoes examination by the Internal Revenue Service (the "IRS") as well as various state and
foreign jurisdictions. These tax authorities routinely challenge certain deductions and credits reported by the Company on
its income tax returns. No significant tax audit findings are being contested at this time with either the IRS or any state or
foreign tax authority.
Environmental, Health and Safety Matters
The Company is subject to federal, state and local laws, regulations and ordinances relating to various environmental,
health and safety matters. The Company is in compliance with, or is taking actions designed to ensure compliance with,
these laws, regulations and ordinances. However, the nature of the Company's business exposes it to the risk of claims with
respect to environmental, health and safety matters, and there can be no assurance that material costs or liabilities will not
be incurred in connection with such claims. Except for certain orders issued by environmental, health and safety regulatory
agencies, with which management believes the Company is in compliance and which management believes are immaterial
to the results of operations of the Company's business, Neenah is not currently named as a party in any judicial or
administrative proceeding relating to environmental, health and safety matters.
While the Company has incurred in the past several years, and will continue to incur, capital and operating expenditures in
order to comply with environmental, health and safety laws, regulations and ordinances, management believes that the
Company's future cost of compliance with environmental, health and safety laws, regulations and ordinances, and its
exposure to liability for environmental, health and safety claims will not have a material effect on its financial condition,
results of operations or liquidity. However, future events, such as changes in existing laws and regulations or contamination
of sites owned, operated or used for waste disposal by the Company (including currently unknown contamination and
contamination caused by prior owners and operators of such sites or other waste generators) may give rise to additional
costs which could have a material effect on the Company's financial condition, results of operations or liquidity.
The Company incurs capital expenditures necessary to meet legal requirements and otherwise relating to the protection of
the environment at its facilities in the United States and internationally. The Company's anticipated capital expenditures for
environmental projects are not expected to have a material effect on the Company's financial condition, results of
operations or liquidity.
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NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
Employees and Labor Relations
As of December 31, 2016, the Company had approximately 2,303 regular full-time employees of whom 1,099 hourly and
526 salaried employees were located in the United States and 405 hourly and 273 salaried employees were located in
Europe. All of the Company's U.S. hourly union employees are represented by the United Steelworkers Union (the
"USW"). Hourly union employees at the Company's Bolton, England manufacturing facility are represented by Unite the
Union ("UNITE"). The following table shows the status of the Company's bargaining agreements as of December 31, 2016.
Contract Expiration Date
June 2017
January 2018
June 2018
July 2018
May 2019
August 2021
November 2021
_______________________
Location
Neenah Germany
Whiting, WI (b)
Neenah, WI (b)
Munising, MI (b)
Appleton, WI (b)
Brattleboro, VT
Lowville, NY
Union
IG BCE
USW
USW
USW
USW
USW
USW
Number of
Employees
(a)
201
267
198
75
69
98
(a) Under German law 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 cannot be determined.
(b) On pension matters the Whiting, Neenah, Munising and Appleton paper mills have bargained jointly with the
USW. The current agreement on pension matters will remain in effect until September 2019.
Approximately 50 percent of salaried employees and 80 percent of hourly employees of Neenah Germany are eligible to be
represented by the Mining, Chemicals and Energy Trade Union, Industriegewerkschaft Bergbau, Chemie and Energie (the
"IG BCE"). In June 2015, the IG BCE and a national trade association representing all employers in the industry signed a
collective bargaining agreement covering union employees of Neenah Germany that expires in June 2017. Under German
law 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 that expires in June 2017 cannot be
determined. As of December 31, 2016, no employees are covered under collective bargaining agreements that expire in the
next 12 months, with the exception of the employees covered by the collective bargaining arrangement with the IG BCE.
F-42
NEENAH PAPER INC. AND SUBSIDIARIES
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
(Dollars in millions, except as noted)
Note 13. Discontinued Operations
Note 13. Discontinued Operations
Discontinued Operations
Discontinued Operations
On October 31, 2015, the Company sold the Lahnstein Mill to a privately-owned enterprise specializing in equity holdings
On October 31, 2015, the Company sold the Lahnstein Mill to a privately-owned enterprise specializing in equity holdings
in German medium-sized companies, for net cash proceeds of approximately $5.4 million. The buyer acquired all the assets
in German medium-sized companies, for net cash proceeds of approximately $5.4 million. The buyer acquired all the assets
and liabilities of the Lahnstein Mill, including pension and related liabilities of approximately $21 million. The Lahnstein
and liabilities of the Lahnstein Mill, including pension and related liabilities of approximately $21 million. The Lahnstein
Mill, which had annual sales of approximately €50 million, had been operating as a stand-alone business, manufacturing
Mill, which had annual sales of approximately €50 million, had been operating as a stand-alone business, manufacturing
non-woven wallcoverings and various other specialty papers. The sale focuses the Company's portfolio on targeted growth
non-woven wallcoverings and various other specialty papers. The sale focuses the Company's portfolio on targeted growth
markets such as filtration, premium fine papers and packaging and other performance materials.
markets such as filtration, premium fine papers and packaging and other performance materials.
Upon reaching an agreement for the sale of the Lahnstein Mill, the Company compared the carrying value of the Lahnstein
Upon reaching an agreement for the sale of the Lahnstein Mill, the Company compared the carrying value of the Lahnstein
Mill assets to the fair value of such assets reflected in the sales agreement. As a result, the Company recognized an
Mill assets to the fair value of such assets reflected in the sales agreement. As a result, the Company recognized an
impairment charge of $12.0 million to reduce the carrying value of the Lahnstein Mill assets to fair value. In addition, the
impairment charge of $12.0 million to reduce the carrying value of the Lahnstein Mill assets to fair value. In addition, the
Company recognized approximately $1.7 million of transaction costs related to the sale in 2015. For the year ended
Company recognized approximately $1.7 million of transaction costs related to the sale in 2015. For the year ended
December 31, 2016, discontinued operations reported on the consolidated statements of operations includes an additional
December 31, 2016, discontinued operations reported on the consolidated statements of operations includes an additional
loss on sale arising from final adjustments to the transaction price.
loss on sale arising from final adjustments to the transaction price.
The following table presents selected financial information for discontinued operations:
The following table presents selected financial information for discontinued operations:
Net sales
Net sales
Cost of products sold
Cost of products sold
Gross Profit
Gross Profit
Selling, general and administrative expenses
Selling, general and administrative expenses
Restructuring costs
Restructuring costs
Other income — net
Other income — net
Income (Loss) From Discontinued Operations Before Income Taxes
Income (Loss) From Discontinued Operations Before Income Taxes
Loss on sale (a)
Loss on sale (a)
Income (loss) before income taxes
Income (loss) before income taxes
Income tax provision (benefit) (a)
Income tax provision (benefit) (a)
Income (loss) from discontinued operations
Income (loss) from discontinued operations
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Year Ended December 31,
Year Ended December 31,
2016
2016
2015
2015
2014
2014
$
$
— $
— $
43.2
43.2
$
$
63.0
63.0
—
—
—
—
—
—
—
—
—
—
—
—
(0.6)
(0.6)
(0.6)
(0.6)
(0.2)
(0.2)
(0.4) $
(0.4) $
$
$
39.7
39.7
56.6
56.6
3.5
3.5
3.5
3.5
0.1
0.1
(0.3)
(0.3)
0.2
0.2
(13.6)
(13.6)
(13.4)
(13.4)
(4.0)
(4.0)
(9.4) $
(9.4) $
6.4
6.4
5.2
5.2
0.6
(0.3)
0.9
0.6
(0.3)
0.9
—
—
0.9
0.9
0.2
0.2
0.7
0.7
_______________________
_______________________
(a) For 2015, this amount includes a net curtailment gain related to the divesture of the pension plan of $15.8
(a) For 2015, this amount includes a net curtailment gain related to the divesture of the pension plan of $15.8
million, including a $5.5 million write-off of deferred actuarial losses.
million, including a $5.5 million write-off of deferred actuarial losses.
The following table presents selected cash flow information for discontinued operations for the years ended December 31,
2015 and 2014:
The following table presents selected cash flow information for discontinued operations for the years ended December 31,
2015 and 2014:
Depreciation and amortization
Depreciation and amortization
Capital expenditures
Capital expenditures
F-43
F-43
Year Ended
December 31,
Year Ended
December 31,
2015
2015
2014
2014
$
$
$
$
2.7
2.7
$
0.6
0.6
$
$
$
3.9
3.9
0.7
0.7
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
Note 14. Business Segment and Geographic Information
On July 1, 2015, the Company reorganized its internal management structure and, accordingly, addressed its segment
reporting structure. As a result of this reorganization, the Other operating segment (composed of the non-premium Index,
Tag and Vellum Bristol product lines acquired as part of the purchase of the Wausau brands) was combined with the Fine
Paper and Packaging operating segment to reflect the manner in which this business is managed. Segment information for
prior periods has been restated to conform to the current period presentation. In addition, as part of the FiberMark
acquisition, the Company acquired certain product lines composed of papers sold to converters for end uses such as
covering materials for datebooks, diaries, yearbooks and traditional photo albums. Due to the dissimilar nature of these
products, management decided that they would not be managed as part of either the existing Fine Paper and Packaging or
Technical Products businesses. These product lines represent an operating segment which does not meet the quantitative
threshold for a reportable segment.
The Company's reportable operating segments now consist of Technical Products, Fine Paper and Packaging and Other.
The Technical Products segment is an aggregation of the Company's filtration and performance materials businesses which
are similar in terms of economic characteristics, nature of products, processes, customer class and product distribution
methods.
The technical products business is an international producer of fiber-formed, coated and/or saturated specialized media that
delivers high performance benefits to customers. Included in this segment are filtration media ("Filtration"), tape and
abrasives backings products ("Backings"), and durable label and specialty substrate products ("Specialty"). The following
table presents sales by product category for the technical products business:
Filtration
Backings
Specialty
Total
For the Year ended
December 31,
2016
2015
2014
42%
31%
27%
100%
45%
30%
25%
100%
42%
29%
29%
100%
The fine paper and packaging business is a leading supplier of premium printing and other high end specialty papers
("Graphic Imaging"), premium packaging ("Packaging") and specialty office papers ("Filing/Office") primarily in North
America. The following table presents sales by product category for the fine paper and packaging business:
Graphic Imaging
Packaging
Filing/Office
Total
For the Year ended
December 31,
2016
2015
2014
81%
14%
5%
80%
15%
5%
100%
100%
91%
9%
—%
100%
Each segment employs different technologies and marketing strategies. Disclosure of segment information is on the same
basis that management uses internally for evaluating segment performance and allocating resources. Transactions between
segments are eliminated in consolidation. The costs of shared services, and other administrative functions managed on a
common basis, are allocated to the segments based on usage, where possible, or other factors based on the nature of the
activity. General corporate expenses that do not directly support the operations of the business segments are shown as
F-44
NEENAH PAPER INC. AND SUBSIDIARIES
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
(Dollars in millions, except as noted)
Unallocated corporate costs. The accounting policies of the reportable operating segments are the same as those described
in Note 2, "Summary of Significant Accounting Policies."
Unallocated corporate costs. The accounting policies of the reportable operating segments are the same as those described
in Note 2, "Summary of Significant Accounting Policies."
Business Segments
Business Segments
Net sales
Net sales
Technical Products
Technical Products
Fine Paper and Packaging
Fine Paper and Packaging
Other
Other
Consolidated
Consolidated
Operating income (loss)
Operating income (loss)
Technical Products (a)
Technical Products (a)
Fine Paper and Packaging (b)
Fine Paper and Packaging (b)
Other (c)
Other (c)
Unallocated corporate costs (d)
Unallocated corporate costs (d)
Consolidated
Consolidated
_______________________
_______________________
Year Ended December 31,
Year Ended December 31,
2016
2016
2015
2015
2014
2014
$
$
466.4
466.4
$
$
429.2
429.2
$
$
403.6
403.6
452.1
452.1
23.0
23.0
442.7
442.7
15.8
15.8
436.1
436.1
—
—
$
$
941.5
941.5
$
$
887.7
887.7
$
$
839.7
839.7
Year Ended December 31,
Year Ended December 31,
2016
2016
2015
2015
2014
2014
$
$
65.6
65.6
$
$
54.1
54.1
$
$
46.0
46.0
70.7
70.7
(1.1)
(1.1)
(21.1)
(21.1)
$
114.1
114.1
$
67.3
67.3
(2.0)
(2.0)
(18.0)
(18.0)
$
101.4
101.4
$
60.8
60.8
—
—
(20.2)
(20.2)
86.6
86.6
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$
$
(a) Operating income for the year ended December 31, 2016 included integration costs of $1.4 million. Operating
(a) Operating income for the year ended December 31, 2016 included integration costs of $1.4 million. Operating
income for the year ended December 31, 2015 included acquisition, integration and restructuring costs of $1.7
income for the year ended December 31, 2015 included acquisition, integration and restructuring costs of $1.7
million. Operating income for the year ended December 31, 2014 includes integration and restructuring costs of
million. Operating income for the year ended December 31, 2014 includes integration and restructuring costs of
$1.6 million.
$1.6 million.
(b) Operating income for the years ended December 31, 2016 and 2015 included acquisition and integration costs of
(b) Operating income for the years ended December 31, 2016 and 2015 included acquisition and integration costs of
$1.8 million and $1.5 million, respectively.
$1.8 million and $1.5 million, respectively.
(c) Operating income for the year ended December 31, 2016 and 2015 included acquisition and integration costs of
(c) Operating income for the year ended December 31, 2016 and 2015 included acquisition and integration costs of
$1.1 million and $2.4 million, respectively.
$1.1 million and $2.4 million, respectively.
(d) Unallocated corporate costs for the year ended December 31, 2016 included $2.7 million of pre-operating costs
(d) Unallocated corporate costs for the year ended 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.
related to conversion of a fine paper machine to filtration and $0.8 million for a pension plan settlement charge.
December 31, 2015 included $0.8 million of costs related to this filtration project. Unallocated corporate costs for
December 31, 2015 included $0.8 million of costs related to this filtration project. Unallocated corporate costs for
the year ended December 31, 2014 included a pension plan settlement charge of $3.5 million, a loss on the early
the year ended December 31, 2014 included a pension plan settlement charge of $3.5 million, a loss on the early
extinguishment of debt of $0.2 million and $0.7 million of restructuring costs.
extinguishment of debt of $0.2 million and $0.7 million of restructuring costs.
F-45
F-45
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
Depreciation and amortization
Technical Products
Fine Paper and Packaging
Other
Corporate
Total Continuing Operations
Discontinued operations
Consolidated
Capital expenditures
Technical Products
Fine Paper and Packaging
Other
Corporate
Total Continuing Operations
Discontinued operations
Consolidated
Total Assets (a)
Technical Products
Fine Paper and Packaging
Corporate and other (b)
Total
_______________________
Year Ended December 31,
2016
2015
2014
$
18.1
11.1
1.3
1.5
32.0
—
$
16.5
$
14.6
9.8
0.6
1.9
28.8
2.7
8.6
—
2.9
26.1
3.9
$
32.0
$
31.5
$
30.0
Year Ended December 31,
2016
2015
2014
$
57.9
$
7.6
0.3
2.7
68.5
—
$
36.0
10.3
0.4
0.8
47.5
0.6
16.1
10.0
—
1.1
27.2
0.7
$
68.5
$
48.1
$
27.9
December 31,
2016
2015
$
487.6
$
248.9
29.1
483.4
261.9
6.1
$
765.6
$
751.4
(a) Segment identifiable assets are those that are directly used in the segments operations.
(b) Corporate assets are primarily cash and deferred income taxes.
Geographic Information
Net sales
United States
Europe
Consolidated
Year Ended December 31,
2016
2015
2014
$
$
727.6
213.9
941.5
$
$
687.3
200.4
887.7
$
$
612.0
227.7
839.7
F-46
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
Net sales are attributed to geographic areas based on the physical location of the selling entities.
Total Assets
United States
Europe
Canada
Total
Long-Lived Assets
United States
Europe
Total
December 31,
2016
2015
$
$
563.6
201.9
0.1
765.6
$
$
533.2
218.1
0.1
751.4
December 31,
2016
2015
$
$
377.4
151.9
529.3
$
$
342.0
162.8
504.8
Long-lived assets consist principally of property and equipment, intangibles, goodwill and other assets.
Concentrations
In July 2014, Unisource Worldwide, Inc ("Unisource") and xpedx, formerly owned by International Paper ("xpedx")
merged to form Veritiv Corporation ("Veritiv"). For the year ended December 31, 2016, sales to Veritiv represented
approximately 8 percent of consolidated net sales and approximately 15 percent of net sales of the fine paper and
packaging business. For the years ended December 31, 2015 and 2014 sales to Unisource and xpedx (and as merged
Veritiv) represented approximately 10 percent of consolidated net sales and approximately 20 percent of net sales of the
fine paper and packaging business. Except for certain specialty latex grades and specialty softwood pulp used by Technical
Products, management is not aware of any significant concentration of business transacted with a particular supplier that
could, if suddenly eliminated, have a material effect on its operations.
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Note 15. Supplemental Data
Supplemental Statement of Operations Data
Summary of Advertising and Research and Development Expenses
Advertising expense
Research and development expense
_______________________
Year Ended December 31,
2016
2015
2014
$
$
6.2
9.4
$
6.8
6.8
7.0
5.7
(a) Adverting expense and research and development expense are recorded in selling, general and administrative
expenses on the consolidated statements of operations.
F-47
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
Supplemental Balance Sheet Data
Summary of Accounts Receivable — net
From customers
Less allowance for doubtful accounts and sales discounts
Total
Summary of Inventories
Inventories by Major Class:
Raw materials
Work in progress
Finished goods
Supplies and other
Excess of FIFO over LIFO cost
Total
December 31,
2016
2015
$
$
98.0
(1.5)
96.5
$
$
99.0
(1.7)
97.3
December 31,
2016
2015
$
$
31.6
26.8
63.0
3.1
124.5
(8.2)
116.3
$
$
30.4
28.9
67.2
4.1
130.6
(10.0)
120.6
The FIFO value of inventories valued on the LIFO method was $106.8 million and $118.2 million at December 31, 2016
and 2015, respectively. For the year ended December 31, 2016 and 2015, income from continuing operations before
income taxes was reduced by approximately $0.1 million due to a decrease in certain LIFO inventory quantities.
Summary of Prepaid and Other Current Assets
Prepaid and other current assets
Spare parts
Receivable for income taxes
Total
December 31,
2016
2015
$
$
10.5
5.8
4.1
20.4
$
$
13.5
9.9
1.1
24.5
F-48
NEENAH PAPER INC. AND SUBSIDIARIES
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
(Dollars in millions, except as noted)
Summary of Property, Plant and Equipment — Net
Summary of Property, Plant and Equipment — Net
Land and land improvements
Land and land improvements
Buildings
Buildings
Machinery and equipment
Machinery and equipment
Construction in progress
Construction in progress
Less accumulated depreciation
Less accumulated depreciation
Net Property, Plant and Equipment
Net Property, Plant and Equipment
December 31,
December 31,
2016
2016
2015
2015
$
$
18.3
18.3
$
$
19.6
19.6
126.1
126.1
597.5
597.5
13.7
13.7
755.6
755.6
391.0
391.0
121.4
121.4
512.2
512.2
41.3
41.3
694.5
694.5
371.5
371.5
$
$
364.6
364.6
$
$
323.0
323.0
Depreciation expense for the years ended December 31, 2016, 2015 and 2014 was $27.1 million, $24.8 million and $23.2
million, respectively. Interest expense capitalized as part of the costs of capital projects was $0.8 million, $0.2 million and
$0.1 million, respectively, for the years ended December 31, 2016, 2015 and 2014.
Depreciation expense for the years ended December 31, 2016, 2015 and 2014 was $27.1 million, $24.8 million and $23.2
million, respectively. Interest expense capitalized as part of the costs of capital projects was $0.8 million, $0.2 million and
$0.1 million, respectively, for the years ended December 31, 2016, 2015 and 2014.
Summary of Accrued Expenses
Summary of Accrued Expenses
Accrued salaries and employee benefits
Accrued salaries and employee benefits
Amounts due to customers
Amounts due to customers
Accrued interest
Accrued interest
Accrued income taxes
Accrued income taxes
Other
Other
Total
Total
Summary of Noncurrent Employee Benefits
Summary of Noncurrent Employee Benefits
Pension benefits
Pension benefits
Post-employment benefits other than pensions (a)
Post-employment benefits other than pensions (a)
Total
Total
_______________________
_______________________
F
o
r
m
1
0
-
K
December 31,
December 31,
2016
2016
2015
2015
$
$
26.3
26.3
$
$
25.2
25.2
7.3
7.3
1.3
1.3
2.0
2.0
9.5
9.5
1.2
1.2
0.7
0.7
14.3
14.3
14.6
14.6
$
$
51.2
51.2
$
$
51.2
51.2
December 31,
December 31,
2016
2016
2015
2015
$
$
49.0
49.0
$
$
51.2
51.2
37.7
37.7
38.5
38.5
$
$
86.7
86.7
$
$
89.7
89.7
(a) Includes $1.3 million of SRCP benefits as of December 31, 2016 and $2.7 million of long-term disability benefits
(a) Includes $1.3 million of SRCP benefits as of December 31, 2016 and $2.7 million of long-term disability benefits
due to Terrace Bay retirees and SRCP benefits as of December 31, 2015.
due to Terrace Bay retirees and SRCP benefits as of December 31, 2015.
F-49
F-49
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
Supplemental Cash Flow Data
Supplemental Disclosure of Cash Flow Information
Cash paid during the year for interest, net of interest expense capitalized
Cash paid during the year for income taxes, net of refunds
Non-cash investing activities:
Liability for equipment acquired
Year Ended December 31,
2016
2015
2014
$
$
10.0
15.0
10.6
16.2
11.1
6.6
$ 10.3
6.3
4.1
Net cash provided by (used in) changes in operating working capital, net of effect of acquisitions
Accounts receivable
Inventories
Income taxes receivable/payable
Prepaid and other current assets
Accounts payable
Accrued expenses
Other
Total
Note 16. Unaudited Quarterly Data
Year Ended December 31,
2016
2015
2014
$
1.5
$
4.3
(1.5)
—
(2.7)
(2.8)
—
(1.2) $
$
(5.2) $
7.7
1.0
(4.8)
(0.5)
3.2
0.4
1.8
$
4.7
(5.6)
(0.3)
1.2
6.8
2.0
0.2
9.0
Net Sales
Gross Profit
Operating Income
Income From Continuing Operations
Earnings Per Common Share From Continuing Operations:
Basic
Diluted
_______________________
First (c)
Second (c)
Third
Fourth
Year (a)(b)
2016 Quarters
$ 242.1
$
246.0
$ 232.9
$ 220.5
$
58.8
31.4
19.2
60.0
33.9
21.4
49.2
26.9
16.4
46.5
21.9
16.4
$
$
1.13
1.11
$
$
1.26
1.24
$ 0.97
$ 0.95
$
$
0.97
0.95
$
$
941.5
214.5
114.1
73.4
4.33
4.26
(a) Includes integration/restructuring costs of $7.0 million.
(b) Includes a pension plan settlement charge of $0.8 million.
(c) Includes recasting for excess tax benefits from stock compensation. See Note 2, "Summary of Significant
Accounting Policies — Recently Adopted Accounting Standards."
F-50
NEENAH PAPER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
Net Sales
Gross Profit
Operating Income
Income From Continuing Operations
Earnings Per Common Share From Continuing Operations:
Basic
Diluted
_______________________
(a) Includes integration/restructuring costs of $6.5 million.
First
Second
Third
Fourth
Year (a)
2015 Quarters
$ 214.4
$ 211.3
$ 231.6
$
230.4
$
49.5
28.4
16.1
48.0
27.7
16.4
48.4
24.4
13.5
49.5
20.9
14.5
$ 0.95
$ 0.97
$ 0.79
$ 0.94
$ 0.96
$ 0.78
$
$
0.86
0.85
$
$
887.7
195.4
101.4
60.5
3.58
3.53
F
o
r
m
1
0
-
K
F-51
SCHEDULE II
NEENAH PAPER, INC. AND SUBSIDIARIES
SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS
(Dollars in millions)
Balance at
Beginning
of Period
Charged to
Costs and
Expenses
Charged
to Other
Accounts
Write-offs
and
Reclassifications
Balance at
End of Period
Description
December 31, 2016
Allowances deducted from assets to
which they apply
Allowance for doubtful accounts
$
Allowance for sales discounts
Valuation allowance — deferred
income taxes
December 31, 2015
Allowances deducted from assets to
which they apply
Allowance for doubtful accounts
$
Allowance for sales discounts
Valuation allowance — deferred
income taxes
December 31, 2014
Allowances deducted from assets to
which they apply
$
$
1.1
0.6
3.0
0.9
0.6
—
(0.1) $
(0.1)
0.1
— $
— $
—
—
—
0.4
(0.4) $
—
3.0
$
1.0
—
—
(0.4) $
—
—
1.0
0.5
3.5
1.1
0.6
3.0
0.9
0.6
Allowance for doubtful accounts
$
Allowance for sales discounts
$
0.8
0.6
$
0.3
—
— $
—
(0.2) $
—
F-52
NEENAH PAPER, INC. 2016 ANNUAL REPORT
S H A R E H O L D E R
INFORMATION
CORPORATE HEADQUARTERS
TRADEMARKS
2012
2009
2007
2008
2010
STOCK EXCHANGE
S H A R E H O L D E R
FINANCIAL AND OTHER COMPANY INFORMATION
Neenah Paper’s common stock is traded on the
New York Stock Exchange under the symbol NP.
As of March 31, 2017, Neenah had approximately
1,340 holders of record of its common s tock.
Brand names mentioned in this report are trademarks
of Neenah Paper, Inc. Crane is a registered trademark
of Crane & Co. Inc.
ANNUAL MEETING OF SHAREHOLDERS
The 2017 annual meeting of the shareholders of
Neenah Paper, Inc. will be held Tuesday,
May 23, 2017 at 10:00 a.m., Eastern time at
Neenah’s headquarters in Alpharetta, Georgia.
INFORMATION
INFORMATION
INFORMATION
INFORMATION
INFORMATION
INFORMATION
INFORMATION
INFORMATION
INFORMATION
INFORMATION
INFORMATION
INFORMATION
INFORMATION
INFORMATION
INFORMATION
INFORMATION
INFORMATION
INFORMATION
INFORMATION
INFORMATION
INFORMATION
INFORMATION
INFORMATION
Neenah Paper, Inc.
S H A R E H O L D E R
S H A R E H O L D E R
S H AR E H O L D E R
S H A R E H O L D E R
3460 Preston Ridge Road
S H A R E H O L D E R
S H A R E H O L D E R
S H A R E H O L D E R
S H A R E H O L D E R
S H A R E H O L D E R
S H A R E H O L D E R
Suite 600
S H A R E H O L D E R
S H A R E H O L D E R
S H A R E H O L D E R
Alpharetta, GA 30005
678.566.6500
S H A R E H O L D E R
S H A R E H O L D E R
TRADEMARKS
CORPORATE HEADQUARTERS
TRADEMARKS
TRADEMARKS
TRADEMARKS
CORPORATE HEADQUARTERS
CORPORATE HEADQUARTERS
CORPORATE HEADQUARTERS
www.neenah.com
S H A R E H O L D E R
S H A R E H O L D E R
S H A R E H O L D E R
Brand names mentioned in this report are trademarks
Brand names mentioned in this report are trademarks
Brand names mentioned in this report are trademarks
Brand names mentioned in this report are trademarks
Neenah Paper, Inc.
Neenah Paper, Inc.
Neenah Paper, Inc.
Neenah Paper, Inc.
TRADEMARKS
CORPORATE HEADQUARTERS
TRADEMARKS
TRADEMARKS
CORPORATE HEADQUARTERS
CORPORATE HEADQUARTERS
TRADEMARKS
TRADEMARKS
TRADEMARKS
CORPORATE HEADQUARTERS
CORPORATE HEADQUARTERS
CORPORATE HEADQUARTERS
S H A R E H O L D E R
of Neenah Paper, Inc. Crane is a registered trademark
Brand names mentioned in this report are trademarks
of Neenah Paper, Inc. Crane is a registered trademark
of Neenah Paper, Inc. Crane is a registered trademark
of Neenah Paper, Inc. Crane is a registered trademark
Brand names mentioned in this report are trademarks
Brand names mentioned in this report are trademarks
Neenah Paper, Inc.
Neenah Paper, Inc.
Neenah Paper, Inc.
3460 Preston Ridge Road
3460 Preston Ridge Road
3460 Preston Ridge Road
3460 Preston Ridge Road
Brand names mentioned in this report are trademarks
Brand names mentioned in this report are trademarks
Brand names mentioned in this report are trademarks
Neenah Paper, Inc.
Neenah Paper, Inc.
Neenah Paper, Inc.
TRADEMARKS
TRADEMARKS
TRADEMARKS
CORPORATE HEADQUARTERS
CORPORATE HEADQUARTERS
CORPORATE HEADQUARTERS
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
of Crane & Co. Inc.
of Neenah Paper, Inc. Crane is a registered trademark
of Crane & Co. Inc.
of Crane & Co. Inc.
of Crane & Co. Inc.
of Neenah Paper, Inc. Crane is a registered trademark
of Neenah Paper, Inc. Crane is a registered trademark
3460 Preston Ridge Road
3460 Preston Ridge Road
3460 Preston Ridge Road
Suite 600
Suite 600
Suite 600
Suite 600
of Neenah Paper, Inc. Crane is a registered trademark
of Neenah Paper, Inc. Crane is a registered trademark
of Neenah Paper, Inc. Crane is a registered trademark
Brand names mentioned in this report are trademarks
Brand names mentioned in this report are trademarks
Brand names mentioned in this report are trademarks
S H AR E H O L D E R
S H A R E H O L D E R
Neenah Paper, Inc.
Neenah Paper, Inc.
Neenah Paper, Inc.
3460 Preston Ridge Road
3460 Preston Ridge Road
3460 Preston Ridge Road
Deloitte & Touche LLP
of Crane & Co. Inc.
of Crane & Co. Inc.
of Crane & Co. Inc.
TRADEMARKS
CORPORATE HEADQUARTERS
Suite 600
Suite 600
Suite 600
of Crane & Co. Inc.
of Crane & Co. Inc.
of Crane & Co. Inc.
of Neenah Paper, Inc. Crane is a registered trademark
of Neenah Paper, Inc. Crane is a registered trademark
of Neenah Paper, Inc. Crane is a registered trademark
Alpharetta, GA 30005
Alpharetta, GA 30005
Alpharetta, GA 30005
Alpharetta, GA 30005
TRADEMARKS
CORPORATE HEADQUARTERS
S H A R E H O L D E R
3460 Preston Ridge Road
3460 Preston Ridge Road
3460 Preston Ridge Road
191 Peachtree Street
Suite 600
Suite 600
Suite 600
STOCK EXCHANGE
STOCK EXCHANGE
STOCK EXCHANGE
STOCK EXCHANGE
Brand names mentioned in this report are trademarks
Neenah Paper, Inc.
Brand names mentioned in this report are trademarks
Neenah Paper, Inc.
of Crane & Co. Inc.
of Crane & Co. Inc.
of Crane & Co. Inc.
Alpharetta, GA 30005
Alpharetta, GA 30005
Alpharetta, GA 30005
TRADEMARKS
CORPORATE HEADQUARTERS
TRADEMARKS
CORPORATE HEADQUARTERS
678.566.6500
678.566.6500
678.566.6500
678.566.6500
TRADEMARKS
CORPORATE HEADQUARTERS
Suite 1500
Suite 600
Suite 600
Suite 600
Alpharetta, GA 30005
Alpharetta, GA 30005
Alpharetta, GA 30005
Neenah Paper’s common stock is traded on the
Neenah Paper’s common stock is traded on the
Neenah Paper’s common stock is traded on the
Neenah Paper’s common stock is traded on the
STOCK EXCHANGE
STOCK EXCHANGE
STOCK EXCHANGE
STOCK EXCHANGE
STOCK EXCHANGE
STOCK EXCHANGE
TRADEMARKS
CORPORATE HEADQUARTERS
of Neenah Paper, Inc. Crane is a registered trademark
3460 Preston Ridge Road
Brand names mentioned in this report are trademarks
of Neenah Paper, Inc. Crane is a registered trademark
Brand names mentioned in this report are trademarks
Neenah Paper, Inc.
Neenah Paper, Inc.
Brand names mentioned in this report are trademarks
3460 Preston Ridge Road
Neenah Paper, Inc.
678.566.6500
678.566.6500
678.566.6500
www.neenah.com
www.neenah.com
www.neenah.com
www.neenah.com
Atlanta, GA 30303
Alpharetta, GA 30005
Alpharetta, GA 30005
Alpharetta, GA 30005
New York Stock Exchange under the symbol NP.
Neenah Paper’s common stock is traded on the
678.566.6500
678.566.6500
678.566.6500
New York Stock Exchange under the symbol NP.
New York Stock Exchange under the symbol NP.
New York Stock Exchange under the symbol NP.
Neenah Paper’s common stock is traded on the
Neenah Paper’s common stock is traded on the
Neenah Paper’s common stock is traded on the
Neenah Paper’s common stock is traded on the
Neenah Paper’s common stock is traded on the
Brand names mentioned in this report are trademarks
Neenah Paper, Inc.
STOCK EXCHANGE
STOCK EXCHANGE
STOCK EXCHANGE
of Crane & Co. Inc.
of Neenah Paper, Inc. Crane is a registered trademark
of Crane & Co. Inc.
of Neenah Paper, Inc. Crane is a registered trademark
Suite 600
of Neenah Paper, Inc. Crane is a registered trademark
3460 Preston Ridge Road
3460 Preston Ridge Road
Suite 600
3460 Preston Ridge Road
www.neenah.com
www.neenah.com
www.neenah.com
New York Stock Exchange under the symbol NP.
678.566.6500
678.566.6500
678.566.6500
New York Stock Exchange under the symbol NP.
New York Stock Exchange under the symbol NP.
www.neenah.com
www.neenah.com
www.neenah.com
TRADEMARKS
TRADEMARKS
CORPORATE HEADQUARTERS
CORPORATE HEADQUARTERS
New York Stock Exchange under the symbol NP.
New York Stock Exchange under the symbol NP.
New York Stock Exchange under the symbol NP.
Neenah Paper’s common stock is traded on the
Neenah Paper’s common stock is traded on the
Neenah Paper’s common stock is traded on the
of Neenah Paper, Inc. Crane is a registered trademark
3460 Preston Ridge Road
ANNUAL MEETING OF SHAREHOLDERS
ANNUAL MEETING OF SHAREHOLDERS
ANNUAL MEETING OF SHAREHOLDERS
ANNUAL MEETING OF SHAREHOLDERS
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
of Crane & Co. Inc.
of Crane & Co. Inc.
of Crane & Co. Inc.
Alpharetta, GA 30005
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Suite 600
Suite 600
Alpharetta, GA 30005
Suite 600
Brand names mentioned in this report are trademarks
Brand names mentioned in this report are trademarks
www.neenah.com
www.neenah.com
www.neenah.com
Neenah Paper, Inc.
Neenah Paper, Inc.
TRADEMARKS
CORPORATE HEADQUARTERS
STOCK EXCHANGE
New York Stock Exchange under the symbol NP.
New York Stock Exchange under the symbol NP.
New York Stock Exchange under the symbol NP.
of Crane & Co. Inc.
STOCK EXCHANGE
TRADEMARKS
CORPORATE HEADQUARTERS
Suite 600
Among Neenah Paper, Inc., the Russell 2000 Value Index and a Peer Group
The 2015 annual meeting of the shareholders of
The 2015 annual meeting of the shareholders of
The 2015 annual meeting of the shareholders of
The 2015 annual meeting of the shareholders of
ANNUAL MEETING OF SHAREHOLDERS
ANNUAL MEETING OF SHAREHOLDERS
ANNUAL MEETING OF SHAREHOLDERS
Deloitte & Touche LLP
Deloitte & Touche LLP
Deloitte & Touche LLP
Deloitte & Touche LLP
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
678.566.6500
ANNUAL MEETING OF SHAREHOLDERS
ANNUAL MEETING OF SHAREHOLDERS
ANNUAL MEETING OF SHAREHOLDERS
Alpharetta, GA 30005
Alpharetta, GA 30005
678.566.6500
Alpharetta, GA 30005
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
of Neenah Paper, Inc. Crane is a registered trademark
of Neenah Paper, Inc. Crane is a registered trademark
Brand names mentioned in this report are trademarks
Neenah Paper’s common stock is traded on the
Neenah Paper, Inc.
3460 Preston Ridge Road
3460 Preston Ridge Road
Brand names mentioned in this report are trademarks
Neenah Paper’s common stock is traded on the
Neenah Paper, Inc.
STOCK EXCHANGE
STOCK EXCHANGE
STOCK EXCHANGE
The 2015 annual meeting of the shareholders of
The 2015 annual meeting of the shareholders of
The 2015 annual meeting of the shareholders of
Alpharetta, GA 30005
Neenah Paper, Inc. will be held Thursday,
Neenah Paper, Inc. will be held Thursday,
Neenah Paper, Inc. will be held Thursday,
Neenah Paper, Inc. will be held Thursday,
191 Peachtree Street
Deloitte & Touche LLP
191 Peachtree Street
191 Peachtree Street
191 Peachtree Street
Deloitte & Touche LLP
Deloitte & Touche LLP
The 2015 annual meeting of the shareholders of
The 2015 annual meeting of the shareholders of
The 2015 annual meeting of the shareholders of
ANNUAL MEETING OF SHAREHOLDERS
ANNUAL MEETING OF SHAREHOLDERS
ANNUAL MEETING OF SHAREHOLDERS
www.neenah.com
$180
Deloitte & Touche LLP
Deloitte & Touche LLP
Deloitte & Touche LLP
678.566.6500
678.566.6500
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
STOCK EXCHANGE
www.neenah.com
of Neenah Paper, Inc. Crane is a registered trademark
of Crane & Co. Inc.
of Crane & Co. Inc.
of Neenah Paper, Inc. Crane is a registered trademark
678.566.6500
New York Stock Exchange under the symbol NP.
3460 Preston Ridge Road
3460 Preston Ridge Road
Neenah Paper’s common stock is traded on the
New York Stock Exchange under the symbol NP.
Neenah Paper’s common stock is traded on the
Suite 600
Suite 600
Neenah Paper’s common stock is traded on the
Neenah Paper, Inc. will be held Thursday,
Neenah Paper, Inc. will be held Thursday,
Neenah Paper, Inc. will be held Thursday,
Suite 1500
191 Peachtree Street
Suite 1500
Suite 1500
Suite 1500
191 Peachtree Street
191 Peachtree Street
678.566.6500
REGISTRAR AND TRANSFER AGENT
May 21, 2015 at 10:00 a.m., Eastern time at
May 21, 2015 at 10:00 a.m., Eastern time at
May 21, 2015 at 10:00 a.m., Eastern time at
May 21, 2015 at 10:00 a.m., Eastern time at
The 2015 annual meeting of the shareholders of
The 2015 annual meeting of the shareholders of
The 2015 annual meeting of the shareholders of
Neenah Paper, Inc. will be held Thursday,
Neenah Paper, Inc. will be held Thursday,
Neenah Paper, Inc. will be held Thursday,
191 Peachtree Street
191 Peachtree Street
191 Peachtree Street
Deloitte & Touche LLP
Deloitte & Touche LLP
Deloitte & Touche LLP
Neenah Paper’s common stock is traded on the
of Crane & Co. Inc.
$160
www.neenah.com
www.neenah.com
of Crane & Co. Inc.
Suite 600
www.neenah.com
New York Stock Exchange under the symbol NP.
New York Stock Exchange under the symbol NP.
Suite 600
New York Stock Exchange under the symbol NP.
Alpharetta, GA 30005
Alpharetta, GA 30005
Computershare
ANNUAL MEETING OF SHAREHOLDERS
Atlanta, GA 30303
Suite 1500
Atlanta, GA 30303
Atlanta, GA 30303
Atlanta, GA 30303
Suite 1500
Suite 1500
May 21, 2015 at 10:00 a.m., Eastern time at
May 21, 2015 at 10:00 a.m., Eastern time at
May 21, 2015 at 10:00 a.m., Eastern time at
www.neenah.com
Neenah’s headquarters in Alpharetta, Georgia.
Neenah’s headquarters in Alpharetta, Georgia.
Neenah’s headquarters in Alpharetta, Georgia.
Neenah’s headquarters in Alpharetta, Georgia.
ANNUAL MEETING OF SHAREHOLDERS
STOCK EXCHANGE
STOCK EXCHANGE
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Neenah Paper, Inc. will be held Thursday,
Neenah Paper, Inc. will be held Thursday,
Neenah Paper, Inc. will be held Thursday,
Suite 1500
Suite 1500
Suite 1500
191 Peachtree Street
191 Peachtree Street
191 Peachtree Street
New York Stock Exchange under the symbol NP.
May 21, 2015 at 10:00 a.m., Eastern time at
May 21, 2015 at 10:00 a.m., Eastern time at
May 21, 2015 at 10:00 a.m., Eastern time at
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
$140
Alpharetta, GA 30005
Alpharetta, GA 30005
STOCK EXCHANGE
678.566.6500
678.566.6500
The 2017 annual meeting of the shareholders of
Atlanta, GA 30303
Atlanta, GA 30303
Atlanta, GA 30303
Neenah Paper’s common stock is traded on the
Neenah Paper’s common stock is traded on the
Deloitte & Touche LLP
P.O. Box 30170
The 2017 annual meeting of the shareholders of
Neenah’s headquarters in Alpharetta, Georgia.
Neenah’s headquarters in Alpharetta, Georgia.
Neenah’s headquarters in Alpharetta, Georgia.
ANNUAL MEETING OF SHAREHOLDERS
ANNUAL MEETING OF SHAREHOLDERS
STOCK EXCHANGE
Deloitte & Touche LLP
ANNUAL MEETING OF SHAREHOLDERS
Atlanta, GA 30303
Atlanta, GA 30303
Atlanta, GA 30303
Suite 1500
Suite 1500
Suite 1500
May 21, 2015 at 10:00 a.m., Eastern time at
May 21, 2015 at 10:00 a.m., Eastern time at
May 21, 2015 at 10:00 a.m., Eastern time at
678.566.6500
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Neenah’s headquarters in Alpharetta, Georgia.
Neenah’s headquarters in Alpharetta, Georgia.
Neenah’s headquarters in Alpharetta, Georgia.
$120
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Neenah Paper’s common stock is traded on the
678.566.6500
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
ANNUAL MEETING OF SHAREHOLDERS
www.neenah.com
www.neenah.com
Neenah Paper, Inc. will be held Tuesday,
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
As of February 28, 2015, Neenah had approximately
As of February 28, 2015, Neenah had approximately
As of February 28, 2015, Neenah had approximately
As of February 28, 2015, Neenah had approximately
New York Stock Exchange under the symbol NP.
New York Stock Exchange under the symbol NP.
Neenah Paper’s common stock is traded on the
191 Peachtree Street
The 2015 annual meeting of the shareholders of
The 2017 annual meeting of the shareholders of
College Station, TX 77842
Neenah Paper, Inc. will be held Tuesday,
The 2016 annual meeting of the shareholders of
Deloitte & Touche LLP
191 Peachtree Street
Deloitte & Touche LLP
www.neenah.com
Atlanta, GA 30303
Atlanta, GA 30303
Atlanta, GA 30303
Deloitte & Touche LLP
Neenah’s headquarters in Alpharetta, Georgia.
Neenah’s headquarters in Alpharetta, Georgia.
Neenah’s headquarters in Alpharetta, Georgia.
New York Stock Exchange under the symbol NP.
$100
Among Neenah Paper, Inc., the Russell 2000 Value Index and a Peer Group
Among Neenah Paper, Inc., the Russell 2000 Value Index and a Peer Group
Among Neenah Paper, Inc., the Russell 2000 Value Index and a Peer Group
Among Neenah Paper, Inc., the Russell 2000 Value Index and a Peer Group
The 2017 annual meeting of the shareholders of
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
www.neenah.com
Deloitte & Touche LLP
As of February 28, 2015, Neenah had approximately
As of February 28, 2015, Neenah had approximately
As of February 28, 2015, Neenah had approximately
New York Stock Exchange under the symbol NP.
Suite 1500
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
May 23, 2017 at 10:00 a.m., Eastern time at
Neenah Paper, Inc. will be held Thursday,
Neenah Paper, Inc. will be held Tuesday,
Contact Center:
191 Peachtree Street
Suite 1500
191 Peachtree Street
May 23, 2017 at 10:00 a.m., Eastern time at
Neenah Paper, Inc. will be held Thursday,
As of February 28, 2015, Neenah had approximately
As of February 28, 2015, Neenah had approximately
As of February 28, 2015, Neenah had approximately
191 Peachtree Street
$80
ANNUAL MEETING OF SHAREHOLDERS
ANNUAL MEETING OF SHAREHOLDERS
Among Neenah Paper, Inc., the Russell 2000 Value Index and a Peer Group
Among Neenah Paper, Inc., the Russell 2000 Value Index and a Peer Group
Among Neenah Paper, Inc., the Russell 2000 Value Index and a Peer Group
ANNUAL MEETING OF SHAREHOLDERS
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Neenah Paper, Inc. will be held Tuesday,
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
191 Peachtree Street
Among Neenah Paper, Inc., the Russell 2000 Value Index and a Peer Group
Among Neenah Paper, Inc., the Russell 2000 Value Index and a Peer Group
Among Neenah Paper, Inc., the Russell 2000 Value Index and a Peer Group
$180
$180
$180
$180
Atlanta, GA 30303
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
Neenah’s headquarters in Alpharetta, Georgia.
Suite 1500
Atlanta, GA 30303
Suite 1500
May 21, 2015 at 10:00 a.m., Eastern time at
May 23, 2017 at 10:00 a.m., Eastern time at
Toll Free U.S. and Canada: 877-498-8847
As of February 28, 2015, Neenah had approximately
As of February 28, 2015, Neenah had approximately
As of February 28, 2015, Neenah had approximately
Suite 1500
Neenah’s headquarters in Alpharetta, Georgia.
May 26, 2016 at 10:00 a.m., Eastern time at
The 2015 annual meeting of the shareholders of
The 2015 annual meeting of the shareholders of
$60
The 2014 annual meeting of the shareholders of
ANNUAL MEETING OF SHAREHOLDERS
Deloitte & Touche LLP
Deloitte & Touche LLP
Deloitte & Touche LLP
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
REGISTRAR AND TRANSFER AGENT
REGISTRAR AND TRANSFER AGENT
REGISTRAR AND TRANSFER AGENT
REGISTRAR AND TRANSFER AGENT
Suite 1500
May 23, 2017 at 10:00 a.m., Eastern time at
Among Neenah Paper, Inc., the Russell 2000 Value Index and a Peer Group
Among Neenah Paper, Inc., the Russell 2000 Value Index and a Peer Group
Among Neenah Paper, Inc., the Russell 2000 Value Index and a Peer Group
$180
$180
$180
$160
$160
$160
$160
Atlanta, GA 30303
Atlanta, GA 30303
$180
$180
$180
Neenah’s headquarters in Alpharetta, Georgia.
Atlanta, GA 30303
Neenah’s headquarters in Alpharetta, Georgia.
TDD for hearing impaired: 800-231-5469
Neenah’s headquarters in Alpharetta, Georgia.
Neenah Paper, Inc. will be held Thursday,
191 Peachtree Street
The 2015 annual meeting of the shareholders of
$40
Neenah Paper, Inc. will be held Thursday,
Neenah Paper, Inc. will be held Thursday,
191 Peachtree Street
191 Peachtree Street
Deloitte & Touche LLP
Computershare
Computershare
Computershare
Computershare
REGISTRAR AND TRANSFER AGENT
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
REGISTRAR AND TRANSFER AGENT
REGISTRAR AND TRANSFER AGENT
Atlanta, GA 30303
Neenah’s headquarters in Alpharetta, Georgia.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
As of March 31, 2017, Neenah had approximately
REGISTRAR AND TRANSFER AGENT
REGISTRAR AND TRANSFER AGENT
REGISTRAR AND TRANSFER AGENT
$160
$160
$160
$140
$140
$140
$140
As of March 31, 2017, Neenah had approximately
$180
$180
$180
$160
$160
$160
Suite 1500
May 22, 2014 at 10:00 a.m., Eastern time at
Foreign Shareowners: 201-680-6578
Neenah Paper, Inc. will be held Thursday,
$20
Suite 1500
Suite 1500
191 Peachtree Street
May 21, 2015 at 10:00 a.m., Eastern time at
May 21, 2015 at 10:00 a.m., Eastern time at
Among Neenah Paper, Inc., the Russell 2000 Value Index and a Peer Group
Computershare
Computershare
Computershare
P.O. Box 30170
P.O. Box 30170
P.O. Box 30170
P.O. Box 30170
Among Neenah Paper, Inc., the Russell 2000 Value Index and a Peer Group
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
Computershare
Computershare
Computershare
1,340 holders of record of its common s tock.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
REGISTRAR AND TRANSFER AGENT
REGISTRAR AND TRANSFER AGENT
REGISTRAR AND TRANSFER AGENT
$140
$140
$140
$120
$120
$120
$120
As of February 28, 2015, Neenah had approximately
Atlanta, GA 30303
As of March 31, 2017, Neenah had approximately
1,340 holders of record of its common stock.
Neenah’s headquarters in Alpharetta, Georgia.
As of March 31, 2016, Neenah had approximately
$160
$160
$160
$140
$140
$140
TDD Foreign Shareowners: 201-680-6610
Atlanta, GA 30303
Atlanta, GA 30303
Suite 1500
$0
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
May 21, 2015 at 10:00 a.m., Eastern time at
Neenah’s headquarters in Alpharetta, Georgia.
Neenah’s headquarters in Alpharetta, Georgia.
P.O. Box 30170
P.O. Box 30170
P.O. Box 30170
Among Neenah Paper, Inc., the Russell 2000 Value Index and a Peer Group
Among Neenah Paper, Inc., the Russell 2000 Value Index and a Peer Group
As of March 31, 2017, Neenah had approximately
College Station, TX 77842
College Station, TX 77842
College Station, TX 77842
College Station, TX 77842
Among Neenah Paper, Inc., the Russell 2000 Value Index and a Peer Group
Computershare
Computershare
Computershare
$180
P.O. Box 30170
P.O. Box 30170
P.O. Box 30170
$120
$120
$120
$100
$100
$100
$100
$180
1,340 holders of record of its common stock.
1,450 holders of record of its common stock.
$140
$140
$140
$120
$120
$120
2011
Among Neenah Paper, Inc., the Russell 2000 Value Index and a Peer Group
www.computershare.com/investor
Atlanta, GA 30303
Neenah’s headquarters in Alpharetta, Georgia.
REGISTRAR AND TRANSFER AGENT
College Station, TX 77842
College Station, TX 77842
College Station, TX 77842
1,340 holders of record of its common stock.
As of February 28, 2014, Neenah had approximately
Contact Center:
Contact Center:
Contact Center:
Contact Center:
REGISTRAR AND TRANSFER AGENT
P.O. Box 30170
P.O. Box 30170
P.O. Box 30170
$160
College Station, TX 77842
College Station, TX 77842
College Station, TX 77842
$100
$100
$100
$180
$180
$80
$80
$80
$80
$160
$450
$180
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
$120
$120
$120
$100
$100
$100
As of February 28, 2015, Neenah had approximately
As of February 28, 2015, Neenah had approximately
Computershare
$180
Computershare
Contact Center:
Contact Center:
Contact Center:
REGISTRAR AND TRANSFER AGENT
REGISTRAR AND TRANSFER AGENT
Toll Free U.S. and Canada: 877-498-8847
Toll Free U.S. and Canada: 877-498-8847
Toll Free U.S. and Canada: 877-498-8847
Toll Free U.S. and Canada: 877-498-8847
REGISTRAR AND TRANSFER AGENT
$140
College Station, TX 77842
College Station, TX 77842
College Station, TX 77842
Contact Center:
Contact Center:
Contact Center:
$80
$80
$80
$160
$160
Among Neenah Paper, Inc., the Russell 2000 Value Index and a Peer Group
Among Neenah Paper, Inc., the Russell 2000 Value Index and a Peer Group
$60
$60
$60
$60
$400
$140
$160
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
$100
$100
$100
$80
$80
$80
As of February 28, 2015, Neenah had approximately
REGISTRAR AND TRANSFER AGENT
P.O. Box 30170
Computershare
Computershare
$160
P.O. Box 30170
Computershare
Toll Free U.S. and Canada: 877-498-8847
Toll Free U.S. and Canada: 877-498-8847
Toll Free U.S. and Canada: 877-498-8847
TDD for hearing impaired: 800-231-5469
TDD for hearing impaired: 800-231-5469
TDD for hearing impaired: 800-231-5469
TDD for hearing impaired: 800-231-5469
$120
Contact Center:
Contact Center:
Contact Center:
Among Neenah Paper, Inc., the Russell 2000 Value Index and a Peer Group
Toll Free U.S. and Canada: 877-498-8847
Toll Free U.S. and Canada: 877-498-8847
Toll Free U.S. and Canada: 877-498-8847
$60
$60
$60
$140
REGISTRAR AND TRANSFER AGENT
$140
$40
$40
$40
$40
$350
$120
$140
$80
$80
$80
$60
$60
$60
Computershare
$180
$180
College Station, TX 77842
$140
P.O. Box 30170
P.O. Box 30170
College Station, TX 77842
P.O. Box 30170
TDD for hearing impaired: 800-231-5469
TDD for hearing impaired: 800-231-5469
TDD for hearing impaired: 800-231-5469
Computershare
ended December 31, 2016 is available on our website
Foreign Shareowners: 201-680-6578
Foreign Shareowners: 201-680-6578
Foreign Shareowners: 201-680-6578
Foreign Shareowners: 201-680-6578
$100
Toll Free U.S. and Canada: 877-498-8847
Toll Free U.S. and Canada: 877-498-8847
Toll Free U.S. and Canada: 877-498-8847
$40
$40
$40
$120
$120
TDD for hearing impaired: 800-231-5469
TDD for hearing impaired: 800-231-5469
TDD for hearing impaired: 800-231-5469
$20
$20
$20
$20
$100
REGISTRAR AND TRANSFER AGENT
REGISTRAR AND TRANSFER AGENT
$120
$300
$60
$60
$60
$40
$40
$40
$180
P.O. Box 30170
$160
$160
Contact Center:
$120
P.O. Box 43006
College Station, TX 77842
College Station, TX 77842
Contact Center:
College Station, TX 77842
Foreign Shareowners: 201-680-6578
Foreign Shareowners: 201-680-6578
Foreign Shareowners: 201-680-6578
TDD Foreign Shareowners: 201-680-6610
TDD Foreign Shareowners: 201-680-6610
TDD Foreign Shareowners: 201-680-6610
TDD Foreign Shareowners: 201-680-6610
$80
TDD for hearing impaired: 800-231-5469
TDD for hearing impaired: 800-231-5469
TDD for hearing impaired: 800-231-5469
Computershare
Computershare
$20
$20
$20
$100
$100
$0
$0
$0
$0
REGISTRAR AND TRANSFER AGENT
Foreign Shareowners: 201-680-6578
Foreign Shareowners: 201-680-6578
Foreign Shareowners: 201-680-6578
$80
$100
$250
$40
$40
$40
$20
$20
$20
$160
$140
$140
College Station, TX 77842
Providence, RI 02940-3006
Toll Free U.S. and Canada: 877-498-8847
$100
Contact Center:
Contact Center:
Toll Free U.S. and Canada: 877-498-8847
Contact Center:
TDD Foreign Shareowners: 201-680-6610
TDD Foreign Shareowners: 201-680-6610
TDD Foreign Shareowners: 201-680-6610
$60
www.computershare.com/investor
www.computershare.com/investor
www.computershare.com/investor
www.computershare.com/investor
Computershare
$0
$0
$0
Foreign Shareowners: 201-680-6578
Foreign Shareowners: 201-680-6578
Foreign Shareowners: 201-680-6578
P.O. Box 30170
P.O. Box 30170
$80
$80
$60
TDD Foreign Shareowners: 201-680-6610
TDD Foreign Shareowners: 201-680-6610
TDD Foreign Shareowners: 201-680-6610
$80
$200
$20
$20
$20
$0
$0
$0
$140
$120
$120
Contact Center:
Commision (SEC), news releases and other information.
Contact Center:
$80
TDD for hearing impaired: 800-231-5469
2009
2008
2007
2008
2009
2008
2007
2007
Toll Free U.S. and Canada: 877-498-8847
Toll Free U.S. and Canada: 877-498-8847
* $100 invested on December 31, 2011 in stock or index, including
TDD for hearing impaired: 800-231-5469
Toll Free U.S. and Canada: 877-498-8847
www.computershare.com/investor
www.computershare.com/investor
www.computershare.com/investor
$40
P.O. Box 30170
2008
2009
2008
2009
2008
2007
2007
2007
$60
$60
TDD Foreign Shareowners: 201-680-6610
TDD Foreign Shareowners: 201-680-6610
TDD Foreign Shareowners: 201-680-6610
College Station, TX 77842
College Station, TX 77842
$40
$60
www.computershare.com/investor
www.computershare.com/investor
www.computershare.com/investor
$0
$0
$0
$150
For a printed copy of our Form 10-K and Annual Report
Neenah Paper, Inc.
Nee nah Paper, Inc.
Neenah Paper, Inc.
Neenah Paper, Inc.
$120
Toll Free U.S. and Canada: 877-498-8847
$100
$100
reinvestment of dividends.
Toll Free U.S. and Canada: 877-498-8847
FINANCIAL AND OTHER COMPANY INFORMATION
FINANCIAL AND OTHER COMPANY INFORMATION
FINANCIAL AND OTHER COMPANY INFORMATION
FINANCIAL AND OTHER COMPANY INFORMATION
$60
Foreign Shareowners: 201-680-6578
TDD for hearing impaired: 800-231-5469
TDD for hearing impaired: 800-231-5469
Foreign Shareowners: 201-680-6578
TDD for hearing impaired: 800-231-5469
$20
Russell 2000 Value
Russ ell 200 0 Value
Russell 2000 Value
Russell 2000 Value
2008
2009
2009
2008
2008
2012
2012
2012
2007
2007
2007
College Station, TX 77842
$40
$40
$20
www.computershare.com/investor
www.computershare.com/investor
www.computershare.com/investor
Contact Center:
Contact Center:
materials, without charge, please contact:
TDD for hearing impaired: 800-231-5469
Neenah Paper, Inc.
Neenah Paper, Inc.
Neenah Paper, Inc.
$100
$100
$80
$80
TDD for hearing impaired: 800-231-5469
Our Annual Report on Form 10-K for the fiscal year
Our Annual Report on Form 10-K for the fiscal year
Our Annual Report on Form 10-K for the fiscal year
Our Annual Report on Form 10-K for the fiscal year
Neenah Paper, Inc.
Neenah Paper, Inc.
Neenah Paper, Inc.
FINANCIAL AND OTHER COMPANY INFORMATION
FINANCIAL AND OTHER COMPANY INFORMATION
FINANCIAL AND OTHER COMPANY INFORMATION
Peer Group: AEP Industries Inc., Boise Inc., Buckeye Technologies Inc.,
Peer Group: AEP Industries Inc., Boise Inc., Buckeye Technologies Inc.,
Peer Group: AEP Industries Inc., Boise Inc., Buckeye Technologies Inc.,
Peer Group: AEP Industries Inc., Boise Inc., Buckeye Technologies Inc.,
$40
TDD Foreign Shareowners: 201-680-6610
FINANCIAL AND OTHER COMPANY INFORMATION
FINANCIAL AND OTHER COMPANY INFORMATION
FINANCIAL AND OTHER COMPANY INFORMATION
Foreign Shareowners: 201-680-6578
Foreign Shareowners: 201-680-6578
Russell 2000 Value
Russell 2000 Value
Russell 2000 Value
TDD Foreign Shareowners: 201-680-6610
$0
Foreign Shareowners: 201-680-6578
$20
$20
Contact Center:
$0
Toll Free U.S. and Canada: 877-498-8847
Toll Free U.S. and Canada: 877-498-8847
Foreign Shareowners: 201-680-6578
$20
Russell 2000 Value
Russell 2000 Value
Russell 2000 Value
CSS Industries, Inc., P.H. Glatfelter Company, KapStone Paper and
CSS In dustrie s, In c., P.H. Glatfelter Company, KapS tone Paper and
CSS Industries, Inc., P.H. Glatfelter Company, KapStone Paper and
CSS Industries, Inc., P.H. Glatfelter Company, KapStone Paper and
$ 50
$80
$60
$60
ended December 31, 2014, is available on our website
ended December 31, 2014, is available on our website
ended December 31, 2014, is available on our website
ended December 31, 2014, is available on our website
Our Annual Report on Form 10-K for the fiscal year
Our Annual Report on Form 10-K for the fiscal year
Our Annual Report on Form 10-K for the fiscal year
Neenah Paper, Inc.
Neenah Paper, Inc.
Neenah Paper, Inc.
Foreign Shareowners: 201-680-6578
Peer Group: AEP Industries Inc., Boise Inc., Buckeye Technologies Inc.,
Peer Group: AEP Industries Inc., Boise Inc., Buckeye Technologies Inc.,
Peer Group: AEP Industries Inc., Boise Inc., Buckeye Technologies Inc.,
Neenah Paper, Inc.
2009
2012
$20
Our Annual Report on Form 10-K for the fiscal year
Our Annual Report on Form 10-K for the fiscal year
Our Annual Report on Form 10-K for the fiscal year
FINANCIAL AND OTHER COMPANY INFORMATION
FINANCIAL AND OTHER COMPANY INFORMATION
FINANCIAL AND OTHER COMPANY INFORMATION
Peer Group: AEP Industries Inc., Boise Inc., Buckeye Technologies Inc.,
Peer Group: AEP Industries Inc., Boise Inc., Buckeye Technologies Inc.,
Peer Group: AEP Industries Inc., Boise Inc., Buckeye Technologies Inc.,
Packaging Corporation, Minerals Technologies Inc., OMNOVA Solutions Inc.,
Packaging Corporation, Minerals Technologies Inc., OMNOVA Solutions Inc.,
Packaging Corporation, Minerals Technologies Inc., OMNOVA Solutions Inc.,
Packaging Corporation, Minerals Technologies Inc., OMNOVA Solutions Inc.,
www.computershare.com/investor
2009
2012
TDD Foreign Shareowners: 201-680-6610
TDD Foreign Shareowners: 201-680-6610
www.computershare.com/investor
TDD Foreign Shareowners: 201-680-6610
TDD Foreign Shareowners: 201-680-6610
$0
$0
Toll Free U.S. and Canada: 877-498-8847
Russell 2000 Value
Russell 2000 Value
Russell 2000 Value
CSS Industries, Inc., P.H. Glatfelter Company, KapStone Paper and
CSS Industries, Inc., P.H. Glatfelter Company, KapStone Paper and
CSS Industries, Inc., P.H. Glatfelter Company, KapStone Paper and
$0
$0
TDD for hearing impaired: 800-231-5469
TDD for hearing impaired: 800-231-5469
at www.neenah.com. In addition, financial reports,
at www.neenah.com. In addition, financial reports,
at www.neenah.com. In addition, financial reports,
at www.neenah.com. In addition, financial reports,
$60
ended December 31, 2014, is available on our website
ended December 31, 2014, is available on our website
ended December 31, 2014, is available on our website
CSS Industries, Inc., P.H. Glatfelter Company, KapStone Paper and
CSS Industries, Inc., P.H. Glatfelter Company, KapStone Paper and
CSS Industries, Inc., P.H. Glatfelter Company, KapStone Paper and
$40
$40
Polypore International, Inc., Schweitzer-Mauduit International, Inc., Verso
Poly pore Interna tional, Inc. , Schwe itzer-Mauduit In terna tio nal, Inc., Verso
Polypore International, Inc., Schweitzer-Mauduit In ternational, Inc., Verso
Polypore International, Inc., Schweitzer-Mauduit International, Inc., Verso
Year
TDD Foreign Shareowners: 201-680-6610
ended December 31, 2014, is available on our website
ended December 31, 2014, is available on our website
ended December 31, 2014, is available on our website
Attn: Stockholder Services
Our Annual Report on Form 10-K for the fiscal year
Our Annual Report on Form 10-K for the fiscal year
Our Annual Report on Form 10-K for the fiscal year
$0
Peer Group: AEP Industries Inc., Boise Inc., Buckeye Technologies Inc.,
Peer Group: AEP Industries Inc., Boise Inc., Buckeye Technologies Inc.,
Peer Group: AEP Industries Inc., Boise Inc., Buckeye Technologies Inc.,
Packaging Corporation, Minerals Technologies Inc., OMNOVA Solutions Inc.,
Packaging Corporation, Minerals Technologies Inc., OMNOVA Solutions Inc.,
Packaging Corporation, Minerals Technologies Inc., OMNOVA Solutions Inc.,
2015
2013
2016
2011
2009
2012
2011
2009
2012
www.computershare.com/investor
2009
2011
2012
www.computershare.com/investor
www.computershare.com/investor
Packaging Corporation, Minerals Technologies Inc., OMNOVA Solutions Inc.,
Packaging Corporation, Minerals Technologies Inc., OMNOVA Solutions Inc.,
Packaging Corporation, Minerals Technologies Inc., OMNOVA Solutions Inc.,
Paper Corp. and Wausau Paper Corp. The peer group average is weighted
Pape r Corp. and Wau sau Paper Corp . Th e peer group avera ge is weigh ted
Paper Corp. and Wausau Paper Corp. The peer group average is weighted
Paper Corp. and Wausau Paper Corp. The peer group average is weighted
www.computershare.com/investor
Neenah
recent filings with the Securities and Exchange
TDD for hearing impaired: 800-231-5469
recent filings with the Securities and Exchange
recent filings with the Securities and Exchange
recent filings with the Securities and Exchange
on Year
Foreign Shareowners: 201-680-6578
Foreign Shareowners: 201-680-6578
Neenah Paper, Inc.
at www.neenah.com. In addition, financial reports,
at www.neenah.com. In addition, financial reports,
at www.neenah.com. In addition, financial reports,
CSS Industries, Inc., P.H. Glatfelter Company, KapStone Paper and
CSS Industries, Inc., P.H. Glatfelter Company, KapStone Paper and
CSS Industries, Inc., P.H. Glatfelter Company, KapStone Paper and
$40
Polypore International, Inc., Schweitzer-Mauduit International, Inc., Verso
Polypore International, Inc., Schweitzer-Mauduit International, Inc., Verso
Polypore International, Inc., Schweitzer-Mauduit International, Inc., Verso
Neenah Paper, Inc.
$20
$20
FINANCIAL AND OTHER COMPANY INFORMATION
at www.neenah.com. In addition, financial reports,
at www.neenah.com. In addition, financial reports,
at www.neenah.com. In addition, financial reports,
2011
2009
2012
ended December 31, 2014, is available on our website
ended December 31, 2014, is available on our website
ended December 31, 2014, is available on our website
www.computershare.com/investor
Polypore International, Inc., Schweitzer-Mauduit International, Inc., Verso
Polypore International, Inc., Schweitzer-Mauduit International, Inc., Verso
Polypore International, Inc., Schweitzer-Mauduit International, Inc., Verso
FINANCIAL AND OTHER COMPANY INFORMATION
by market capitalization.
by market c apitalization.
by market capitalization.
by market capitalization.
3460 Preston Ridge Road
Paper, Inc
% Change
Russell 2000 Value
Packaging Corporation, Minerals Technologies Inc., OMNOVA Solutions Inc.,
Packaging Corporation, Minerals Technologies Inc., OMNOVA Solutions Inc.,
Packaging Corporation, Minerals Technologies Inc., OMNOVA Solutions Inc.,
Peer Group: AEP Industries, Inc., Clearwater Paper Corporation, Innophos
Paper Corp. and Wausau Paper Corp. The peer group average is weighted
Paper Corp. and Wausau Paper Corp. The peer group average is weighted
Paper Corp. and Wausau Paper Corp. The peer group average is weighted
Russell 2000 Value
Commision (SEC), news releases and other information
Commision (SEC), news releases and other information
Commision (SEC), news releases and other information
Commision (SEC), news releases and other information
recent filings with the Securities and Exchange
recent filings with the Securities and Exchange
recent filings with the Securities and Exchange
Foreign Shareowners: 201-680-6578
Paper Corp. and Wausau Paper Corp. The peer group average is weighted
Paper Corp. and Wausau Paper Corp. The peer group average is weighted
Paper Corp. and Wausau Paper Corp. The peer group average is weighted
TDD Foreign Shareowners: 201-680-6610
TDD Foreign Shareowners: 201-680-6610
Neenah Paper, Inc.
FINANCIAL AND OTHER COMPANY INFORMATION
Neenah Paper, Inc.
recent filings with the Securities and Exchange
recent filings with the Securities and Exchange
recent filings with the Securities and Exchange
$20
$0
$0
Neenah Paper, Inc.
Peer Group: AEP Industries Inc., Boise Inc., Buckeye Technologies Inc.,
at www.neenah.com. In addition, financial reports,
at www.neenah.com. In addition, financial reports,
at www.neenah.com. In addition, financial reports,
Holdings, Inc., Innospec, Inc., Kraton Performance Polymers, Inc., Mercer
Polypore International, Inc., Schweitzer-Mauduit International, Inc., Verso
Polypore International, Inc., Schweitzer-Mauduit International, Inc., Verso
Polypore International, Inc., Schweitzer-Mauduit International, Inc., Verso
FINANCIAL AND OTHER COMPANY INFORMATION
FINANCIAL AND OTHER COMPANY INFORMATION
by market capitalization.
by market capitalization.
by market capitalization.
Peer Group: AEP Industries Inc., Boise Inc., Buckeye Technologies Inc.,
FINANCIAL AND OTHER COMPANY INFORMATION
* $100 invested on December 31, 2009 in stock or index, including
* $100 invested on December 31, 2009 in stock or index, including
* $100 invested on December 31, 2009 in stock or index, including
* $100 invested on December 31, 2009 in stock or index, including
Suite 600
by market capitalization.
by market capitalization.
by market capitalization.
are available on our website. For a printed copy of our
are available on our website. For a printed copy of our
are available on our website. For a printed copy of our
are available on our website. For a printed copy of our
Russell 2000 Value
Russell 2000 Value
Commision (SEC), news releases and other information
Commision (SEC), news releases and other information
Commision (SEC), news releases and other information
Neenah Paper, Inc.
Russell 2000 Value
CSS Industries, Inc., P.H. Glatfelter Company, KapStone Paper and
2009
2011
2009
2011
2012
2012
International, Omnova Solutions, Inc., P.H. Glatfelter Co., Quaker Chemical
Paper Corp. and Wausau Paper Corp. The peer group average is weighted
Paper Corp. and Wausau Paper Corp. The peer group average is weighted
Paper Corp. and Wausau Paper Corp. The peer group average is weighted
TDD Foreign Shareowners: 201-680-6610
CSS Industries, Inc., P.H. Glatfelter Company, KapStone Paper and
Commision (SEC), news releases and other information
Commision (SEC), news releases and other information
Commision (SEC), news releases and other information
FINANCIAL AND OTHER COMPANY INFORMATION
www.computershare.com/investor
www.computershare.com/investor
ended December 31, 2016 is available on our website
recent filings with the Securities and Exchange
recent filings with the Securities and Exchange
recent filings with the Securities and Exchange
reinvestment of dividends.
reinvestment of dividends.
reinvestment of dividends.
reinvestment of dividends.
$0
ended December 31, 2016 is available on our website
Peer Group: AEP Industries Inc., Boise Inc., Buckeye Technologies Inc.,
Peer Group: AEP Industries Inc., Boise Inc., Buckeye Technologies Inc.,
Russell 2000 Value
$42.77
2013
Peer Group: AEP Industries Inc., Boise Inc., Buckeye Technologies Inc.,
Packaging Corporation, Minerals Technologies Inc., OMNOVA Solutions Inc.,
* $100 invested on December 31, 2009 in stock or index, including
* $100 invested on December 31, 2009 in stock or index, including
* $100 invested on December 31, 2009 in stock or index, including
Form 10-K and Annual Report materials, without
Form 10-K and Annual Report materials, without
Form 10-K and Annual Report materials, without
Form 10-K and Annual Report materials, without
Corp., Rayonier Advanced Materials, Inc., Schweitzer-Mauduit International, Inc.,
Alpharetta, GA 30005
by market capitalization.
by market capitalization.
by market capitalization.
Packaging Corporation, Minerals Technologies Inc., OMNOVA Solutions Inc.,
are available on our website. For a printed copy of our
are available on our website. For a printed copy of our
are available on our website. For a printed copy of our
* $100 invested on December 31, 2009 in stock or index, including
* $100 invested on December 31, 2009 in stock or index, including
* $100 invested on December 31, 2009 in stock or index, including
are available on our website. For a printed copy of our
are available on our website. For a printed copy of our
are available on our website. For a printed copy of our
2010
2011
2009
2012
CSS Industries, Inc., P.H. Glatfelter Company, KapStone Paper and
CSS Industries, Inc., P.H. Glatfelter Company, KapStone Paper and
Commision (SEC), news releases and other information
Commision (SEC), news releases and other information
Commision (SEC), news releases and other information
Peer Group: AEP Industries Inc., Boise Inc., Buckeye Technologies Inc.,
www.computershare.com/investor
CSS Industries, Inc., P.H. Glatfelter Company, KapStone Paper and
Paper Corp. and Wausau Paper
Polypore International, Inc., SWM , Verso
reinvestment of dividends.
reinvestment of dividends.
reinvestment of dividends.
Tredegar Corp. The peer group average is weighted by market capitalization.
ended December 31, 2014, is available on our website
ended December 31, 2016 is available on our website
Paper Corp. and Wausau Paper
Polypore International, Inc., SWM , Verso
ended December 31, 2015 is available on our website
reinvestment of dividends.
reinvestment of dividends.
reinvestment of dividends.
charge, please contact:
charge, please contact:
charge, please contact:
charge, please contact:
Nee nah Paper, Inc.
Neenah Paper, Inc.
Form 10-K and Annual Report materials, without
Form 10-K and Annual Report materials, without
Form 10-K and Annual Report materials, without
Packaging Corporation, Minerals Technologies Inc., OMNOVA Solutions Inc.,
Packaging Corporation, Minerals Technologies Inc., OMNOVA Solutions Inc.,
2012
CSS Industries, Inc., P.H. Glatfelter Company, KapStone Paper and
866.548.6569
Packaging Corporation, Minerals Technologies Inc., OMNOVA Solutions Inc.,
$28.47
1,130.98
Corp. The peer group average is weighted by market capitalization.
STOCK PRICE PERFORMANCE
STOCK PRICE PERFORMANCE
STOCK PRICE PERFORMANCE
STOCK PRICE PERFORMANCE
* $100 invested on December 31, 2009 in stock or index, including
* $100 invested on December 31, 2009 in stock or index, including
* $100 invested on December 31, 2009 in stock or index, including
FINANCIAL AND OTHER COMPANY INFORMATION
FINANCIAL AND OTHER COMPANY INFORMATION
Form 10-K and Annual Report materials, without
Form 10-K and Annual Report materials, without
Form 10-K and Annual Report materials, without
ended December 31, 2016 is available on our website
Corp. The peer group average is weighted by market capitalization.
are available on our website. For a printed copy of our
are available on our website. For a printed copy of our
are available on our website. For a printed copy of our
Russ ell 200 0 Value
Russell 2000 Value
at www.neenah.com along with financial reports,
Polypore International, Inc., SWM , Verso
Polypore International, Inc., Schweitzer-Mauduit International, Inc., Verso
Packaging Corporation, Minerals Technologies Inc., OMNOVA Solutions Inc.,
Paper Corp. and Wausau Paper
Polypore International, Inc., SWM, Verso
reinvestment of dividends.
reinvestment of dividends.
reinvestment of dividends.
charge, please contact:
charge, please contact:
charge, please contact:
Neenah Paper, Inc.
or via email to investors@neenah.com
charge, please contact:
charge, please contact:
charge, please contact:
STOCK PRICE PERFORMANCE
STOCK PRICE PERFORMANCE
STOCK PRICE PERFORMANCE
Our Annual Report on Form 10-K for the fiscal year
Our Annual Report on Form 10-K for the fiscal year
Commision (SEC), news releases and other information.
FINANCIAL AND OTHER COMPANY INFORMATION
Peer Group: AEP Industries Inc., Boise Inc., Buckeye Technologies Inc.,
Peer Group: AEP Industries Inc., Boise Inc., Buckeye Technologies Inc.,
Form 10-K and Annual Report materials, without
Form 10-K and Annual Report materials, without
Form 10-K and Annual Report materials, without
Year
Year
Year
Year
Year
Year
Year
Year
Paper Corp. and Wausau Paper Corp. The peer group average is weighted
Corp. The peer group average is weighted by market capitalization.
Polypore International, Inc., SWM , Verso
Commision (SEC), news releases and other information.
$22.32
979.25
2011
Corp. The peer group average is weighted by market capitalization.
STOCK PRICE PERFORMANCE
STOCK PRICE PERFORMANCE
STOCK PRICE PERFORMANCE
Neenah Paper, Inc.
Neenah Paper, Inc.
Neenah Paper, Inc.
Neenah Paper, Inc.
Russell
Russell
Russell
Russell
Russell 2000 Value
* $100 invested on December 31, 2011 in stock or index, including
* $100 invested on December 31, 2011 in stock or index, including
CSS In dustrie s, In c., P.H. Glatfelter Company, KapS tone Paper and
CSS Industries, Inc., P.H. Glatfelter Company, KapStone Paper and
by market capitalization.
Corp. The peer group average is weighted by market capitalization.
(SEC), news releases and other information are
ended December 31, 2014, is available on our website
ended December 31, 2014, is available on our website
For a printed copy of our Form 10-K and Annual Report
charge, please contact:
charge, please contact:
charge, please contact:
Our Annual Report on Form 10-K for the fiscal year
2000
2000
2000
2000
Peer Group: AEP Industries Inc., Boise Inc., Buckeye Technologies Inc.,
reinvestment of dividends.
For a printed copy of our Form 10-K and Annual Report
Year
Year
Year
Year
Year
Year
Commision (SEC), news releases and other information
Commision (SEC), news releases and other information.
on Year
on Year
on Year
on Year
on Year
on Year
on Year
on Year
reinvestment of dividends.
STOCK PRICE PERFORMANCE
STOCK PRICE PERFORMANCE
STOCK PRICE PERFORMANCE
Neenah Paper, Inc.
Neenah Paper, Inc.
Neenah Paper, Inc.
Commision (SEC), news releases and other information.
Packaging Corporation, Minerals Technologies Inc., OMNOVA Solutions Inc.,
Packaging Corporation, Minerals Technologies Inc., OMNOVA Solutions Inc.,
Russell
Russell
Russell
Attn: Stockholder Services
Attn: Stockholder Services
Attn: Stockholder Services
Attn: Stockholder Services
Year
Year
Year
Year
Year
Year
CERTIFICATIONS
$19.68
1,058.10
2010
Neenah Paper, Inc.
Neenah Paper, Inc.
Neenah Paper, Inc.
Russell
Russell
Russell
* $100 invested on December 31, 2011 in stock or index, including
CSS Industries, Inc., P.H. Glatfelter Company, KapStone Paper and
* $100 invested on December 31, 2010 in stock or index, including
available on our website. For a printed copy of our
at www.neenah.com. In addition, financial reports,
at www.neenah.com. In addition, financial reports,
materials, without charge, please contact:
Commision (SEC), news releases and other information.
ended December 31, 2014, is available on our website
* $100 invested on December 31, 2009 in stock or index, including
Poly pore Interna tional, Inc. , Schwe itzer-Mauduit In terna tio nal, Inc., Verso
Polypore International, Inc., Schweitzer-Mauduit International, Inc., Verso
materials, without charge, please contact:
2000
2000
2000
are available on our website. For a printed copy of our
For a printed copy of our Form 10-K and Annual Report
Value
Value
Value
Value
For a printed copy of our Form 10-K and Annual Report
on Year
on Year
on Year
on Year
on Year
on Year
reinvestment of dividends.
* $100 invested on December 31, 2011 in stock or index, including
2000
2000
2000
% Change
% Change
% Change
% Change
% Change
% Change
% Change
% Change
Packaging Corporation, Minerals Technologies Inc., OMNOVA Solutions Inc.,
reinvestment of dividends.
Attn: Stockholder Services
Attn: Stockholder Services
Attn: Stockholder Services
Year
Year
Year
Year
Year
Year
3460 Preston Ridge Road
3460 Preston Ridge Road
3460 Preston Ridge Road
3460 Preston Ridge Road
on Year
on Year
on Year
on Year
on Year
on Year
Neenah Paper, Inc.
Neenah Paper, Inc.
Neenah Paper, Inc.
reinvestment of dividends.
Russell
Russell
Russell
Pape r Corp. and Wau sau Paper Corp . Th e peer group avera ge is weigh ted
Paper Corp. and Wausau Paper Corp. The peer group average is weighted
Attn: Stockholder Services
Attn: Stockholder Services
Attn: Stockholder Services
STOCK PRICE PERFORMANCE
recent filings with the Securities and Exchange
recent filings with the Securities and Exchange
For a printed copy of our Form 10-K and Annual Report
$60.27
1,523.45
2014
at www.neenah.com. In addition, financial reports,
STOCK PRICE PERFORMANCE
STOCK PRICE PERFORMANCE
reinvestment of dividends.
Polypore International, Inc., Schweitzer-Mauduit International, Inc., Verso
Form 10-K and Annual Report materials, without
materials, without charge, please contact:
materials, without charge, please contact:
Value
Value
Value
by market c apitalization.
by market capitalization.
2000
2000
2000
% Change
% Change
% Change
% Change
% Change
% Change
Value
Value
Value
Neenah Paper, Inc.
3460 Preston Ridge Road
3460 Preston Ridge Road
3460 Preston Ridge Road
on Year
on Year
on Year
on Year
on Year
on Year
Suite 600
Suite 600
Suite 600
Suite 600
Neenah Paper, Inc.
% Change
% Change
% Change
% Change
% Change
% Change
Paper Corp. and Wausau Paper Corp. The peer group average is weighted
Neenah Paper, Inc.
Attn: Stockholder Services
Attn: Stockholder Services
Attn: Stockholder Services
Commision (SEC), news releases and other information
Commision (SEC), news releases and other information
3460 Preston Ridge Road
3460 Preston Ridge Road
3460 Preston Ridge Road
materials, without charge, please contact:
recent filings with the Securities and Exchange
50%
32%
1,491.42
2013
50%
32%
50%
32%
50%
32%
1,491.42
2013
1,491.42
2013
1,491.42
2013
Year
STOCK PRICE PERFORMANCE
charge, please contact:
STOCK PRICE PERFORMANCE
Russell
Year
Year
Russell
STOCK PRICE PERFORMANCE
our public disclosure have been included as exhibits
by market capitalization.
Year
Year
Russell
* $100 invested on December 31, 2009 in stock or index, including
* $100 invested on December 31, 2009 in stock or index, including
Value
Value
Value
Attn: Stockholder Services
Suite 600
Suite 600
Suite 600
Attn: Stockholder Services
STOCK PRICE PERFORMANCE
are available on our website. For a printed copy of our
are available on our website. For a printed copy of our
Neenah Paper, Inc.
Alpharetta, GA 30005
Alpharetta, GA 30005
Alpharetta, GA 30005
Alpharetta, GA 30005
% Change
% Change
% Change
% Change
% Change
% Change
2000
Attn: Stockholder Services
Commision (SEC), news releases and other information
Neenah Paper, Inc.
3460 Preston Ridge Road
3460 Preston Ridge Road
3460 Preston Ridge Road
Suite 600
Suite 600
Suite 600
on Year
50%
32%
1,491.42
2013
50%
32%
50%
32%
2013
1,491.42
2013
1,491.42
2000
on Year
on Year
of the year indicated.
reinvestment of dividends.
reinvestment of dividends.
2012
2012
2012
2012
2000
50%
32%
50%
32%
50%
32%
1,491.42
2013
1,491.42
2013
1,491.42
2013
on Year
on Year
28%
15%
1,130.98
28%
15%
1,130.98
28%
15%
1,130.98
28%
15%
1,130.98
Neenah Paper, Inc.
Year
Year
Year
Year
Russell
* $100 invested on December 31, 2009 in stock or index, including
Year
Year
Russell
Form 10-K and Annual Report materials, without
Form 10-K and Annual Report materials, without
3460 Preston Ridge Road
Neenah Paper, Inc.
Russell
3460 Preston Ridge Road
are available on our website. For a printed copy of our
Value
Value
Alpharetta, GA 30005
Alpharetta, GA 30005
Alpharetta, GA 30005
% Change
% Change
Attn: Stockholder Services
866.548.6569
866.548.6569
866.548.6569
866.548.6569
3460 Preston Ridge Road
Attn: Stockholder Services
% Change
Value
% Change
% Change
Suite 600
Suite 600
Suite 600
Alpharetta, GA 30005
Alpharetta, GA 30005
Alpharetta, GA 30005
Year
Year
reinvestment of dividends.
Russell
2012
2012
2012
2000
50%
32%
50%
32%
50%
32%
2013
2013
1,491.42
1,491.42
2013
1,491.42
on Year
on Year
28%
15%
1,130.98
28%
15%
1,130.98
28%
15%
1,130.98
2000
on Year
on Year
2000
2012
2012
2012
Attn: Stockholder Services
13%
-7%
979.25
13%
-7%
979.25
13%
-7%
979.25
13%
-7%
979.25
2011
2011
2011
2011
charge, please contact:
charge, please contact:
28%
15%
1,130.98
28%
15%
1,130.98
28%
15%
1,130.98
Suite 600
on Year
on Year
Form 10-K and Annual Report materials, without
Attn: Stockholder Services
Suite 600
STOCK PRICE PERFORMANCE
STOCK PRICE PERFORMANCE
or via email to investors@neenah.com
or via email to investors@neenah.com
or via email to investors@neenah.com
or via email to investors@neenah.com
866.548.6569
866.548.6569
866.548.6569
3460 Preston Ridge Road
2000
Value
on Year
% Change
on Year
% Change
Suite 600
3460 Preston Ridge Road
Value
Alpharetta, GA 30005
Alpharetta, GA 30005
Alpharetta, GA 30005
% Change
% Change
866.548.6569
866.548.6569
866.548.6569
1491.42
2013
2012
2012
2012
Alpharetta, GA 30005
Value
13%
-7%
979.25
13%
-7%
979.25
13%
-7%
979.25
2011
2011
2011
charge, please contact:
28%
15%
1,130.98
28%
15%
1,130.98
28%
15%
1,130.98
3460 Preston Ridge Road
Value
% Change
% Change
50%
32%
1,491.42
2013
% Change
% Change
13%
-7%
979.25
13%
-7%
979.25
13%
-7%
979.25
2011
2011
2011
3460 Preston Ridge Road
41%
22%
1,058.10
41%
22%
1,058.10
41%
22%
1,058.10
41%
22%
1,058.10
STOCK PRICE PERFORMANCE
or via email to investors@neenah.com
2010
or via email to investors@neenah.com
or via email to investors@neenah.com
2010
2010
2010
50%
32%
1,491.42
2013
Alpharetta, GA 30005
2299%%
3366%%
11,,777799..8877
22001166
36%
29%
1,779.87
2016
2016
Year
Year
Year
Year
Suite 600
Alpharetta, GA 30005
Suite 600
or via email to investors@neenah.com
or via email to investors@neenah.com
or via email to investors@neenah.com
866.548.6569
866.548.6569
866.548.6569
Neenah Paper, Inc.
Neenah Paper, Inc.
Russell
Russell
2012
1130.98
CERTIFICATIONS
CERTIFICATIONS
CERTIFICATIONS
CERTIFICATIONS
866.548.6569
Suite 600
13%
-7%
13%
979.25
13%
-7%
979.25
-7%
979.25
2011
2011
2011
41%
22%
1,058.10
41%
22%
1,058.10
1,058.10
41%
22%
2010
2010
2010
2000
2000
50%
32%
1,491.42
2013
Suite 600
2012
866.548.6569
32%
50%
2013
1,491.42
Year
Year
28%
15%
1,130.98
Alpharetta, GA 30005
on Year
on Year
on Year
on Year
2012
22%
1,058.10
41%
22%
1,058.10
41%
22%
1,058.10
41%
or via email to investors@neenah.com
or via email to investors@neenah.com
or via email to investors@neenah.com
2010
2010
2010
Neenah Paper, Inc.
866.548.6569
Alpharetta, GA 30005
4%
-9%
4%
-9%
4%
-9%
4%
-9%
4%
-9%
1,380.60
2015
1,380.60
2015
2015
1,380.60
2015
1,380.60
1,380.60
2015
2015
Russell
28%
15%
1,130.98
Attn: Stockholder Services
Attn: Stockholder Services
50%
32%
1,491.42
2013
Certifications of Neenah’s Chief Executive Officer
Certifications of Neenah’s Chief Executive Officer
Certifications of Neenah’s Chief Executive Officer
Certifications of Neenah’s Chief Executive Officer
or via email to investors@neenah.com
-7%
979.25
2011
CERTIFICATIONS
CERTIFICATIONS
CERTIFICATIONS
32%
50%
1,491.42
2013
CERTIFICATIONS
CERTIFICATIONS
CERTIFICATIONS
Alpharetta, GA 30005
2000
or via email to investors@neenah.com
Value
Value
Alpharetta, GA 30005
on Year
on Year
2012
41%
22%
1,058.10
41%
22%
1,058.10
41%
22%
1,058.10
2010
2010
2010
or via email to investors@neenah.com
866.548.6569
4%
-9%
% Change
% Change
% Change
% Change
4%
-9%
4%
-9%
1,380.60
2015
1,380.60
1,380.60
2015
2015
28%
15%
1,130.98
2012
Attn: Stockholder Services
866.548.6569
13%
-7%
979.25
2011
and Chief Financial Officer regarding the quality of
and Chief Financial Officer regarding the quality of
and Chief Financial Officer regarding the quality of
and Chief Financial Officer regarding the quality of
3460 Preston Ridge Road
3460 Preston Ridge Road
28%
15%
1,130.98
Certifications of Neenah’s Chief Executive Officer
Certifications of Neenah’s Chief Executive Officer
Certifications of Neenah’s Chief Executive Officer
41%
2%
1,523.45
2014
2014
13%
-7%
979.25
2011
41%
2%
41%
2%
41%
2%
1,523.45
1,523.45
1,523.45
2014
2014
2014
2012
1,058.10
2010
28%
15%
1,130.98
Certifications of Neenah’s Chief Executive Officer
Certifications of Neenah’s Chief Executive Officer
Certifications of Neenah’s Chief Executive Officer
CERTIFICATIONS
CERTIFICATIONS
CERTIFICATIONS
2012
866.548.6569
CERTIFICATIONS
1,130.98
15%
28%
Value
866.548.6569
or via email to investors@neenah.com
our public disclosure have been included as exhibits
our public disclosure have been included as exhibits
our public disclosure have been included as exhibits
our public disclosure have been included as exhibits
% Change
% Change
or via email to investors@neenah.com
and Chief Financial Officer regarding the quality of
and Chief Financial Officer regarding the quality of
and Chief Financial Officer regarding the quality of
3460 Preston Ridge Road
Suite 600
Suite 600
of the year indicated.
of the year indicated.
of the year indicated.
of the year indicated.
Neenah Paper, Inc. 2015 Annual Report
13%
-7%
979.25
2011
41%
2%
41%
2%
41%
2%
1,523.45
1,523.45
1,523.45
2014
2014
2014
13%
979.25
-7%
2011
CERTIFICATIONS
and Chief Financial Officer regarding the quality of
and Chief Financial Officer regarding the quality of
and Chief Financial Officer regarding the quality of
41%
22%
1,058.10
2010
Certifications of Neenah’s Chief Executive Officer
Certifications of Neenah’s Chief Executive Officer
Certifications of Neenah’s Chief Executive Officer
50%
32%
1,491.42
2013
2013
865.82
2009
50%
32%
50%
32%
Neenah has included as exhibits to its Annual Report on
1,491.42
2013
1,491.42
2013
CERTIFICATIONS
41%
22%
1,058.10
2010
13%
-7%
979.25
2011
or via email to investors@neenah.com
or via email to investors@neenah.com
to its Annual Report on Form 10-K for the fiscal
to its Annual Report on Form 10-K for the fiscal
to its Annual Report on Form 10-K for the fiscal
to its Annual Report on Form 10-K for the fiscal
13%
-7%
979.25
2011
our public disclosure have been included as exhibits
our public disclosure have been included as exhibits
our public disclosure have been included as exhibits
Suite 600
of the year indicated.
of the year indicated.
of the year indicated.
Alpharetta, GA 30005
Alpharetta, GA 30005
our public disclosure have been included as exhibits
our public disclosure have been included as exhibits
our public disclosure have been included as exhibits
and Chief Financial Officer regarding the quality of
and Chief Financial Officer regarding the quality of
and Chief Financial Officer regarding the quality of
of the year indicated.
of the year indicated.
of the year indicated.
50%
32%
1,491.42
2013
CERTIFICATIONS
41%
22%
1,058.10
2010
CERTIFICATIONS
41%
1,058.10
22%
2010
41%
2%
28%
15%
1,523.45
2014
1,130.98
2012
2012
2012
2012
28%
15%
1,130.98
28%
15%
1,130.98
year ended December 31, 2014 filed with the SEC.
year ended December 31, 2014 filed with the SEC.
year ended December 31, 2014 filed with the SEC.
year ended December 31, 2014 filed with the SEC.
41%
2%
1,523.45
2014
41%
22%
1,058.10
2010
to its Annual Report on Form 10-K for the fiscal
to its Annual Report on Form 10-K for the fiscal
to its Annual Report on Form 10-K for the fiscal
to its Annual Report on Form 10-K for the fiscal
to its Annual Report on Form 10-K for the fiscal
to its Annual Report on Form 10-K for the fiscal
CERTIFICATIONS
41%
1,058.10
22%
2010
Alpharetta, GA 30005
our public disclosure have been included as exhibits
our public disclosure have been included as exhibits
our public disclosure have been included as exhibits
866.548.6569
866.548.6569
of the year indicated.
CERTIFICATIONS
of the year indicated.
of the year indicated.
of the year indicated.
2012
28%
15%
1,130.98
year ended December 31, 2014 filed with the SEC.
year ended December 31, 2014 filed with the SEC.
year ended December 31, 2014 filed with the SEC.
2%
41%
1,523.45
2014
41%
2%
1,523.45
2014
13%
-7%
979.25
13%
-7%
979.25
2011
2011
year ended December 31, 2014 filed with the SEC.
year ended December 31, 2014 filed with the SEC.
year ended December 31, 2014 filed with the SEC.
our public disclosure have been included as exhibits
to its Annual Report on Form 10-K for the fiscal
to its Annual Report on Form 10-K for the fiscal
to its Annual Report on Form 10-K for the fiscal
41%
2%
1,523.45
2014
our public disclosure have been included as exhibits
or via email to investors@neenah.com
or via email to investors@neenah.com
866.548.6569
2%
41%
1,523.45
2014
of the year indicated.
13%
-7%
979.25
2011
of the year indicated.
year ended December 31, 2014 filed with the SEC.
year ended December 31, 2014 filed with the SEC.
year ended December 31, 2014 filed with the SEC.
the quality of our public disclosure.
our public disclosure have been included as exhibits
41%
22%
1,058.10
41%
22%
1,058.10
or via email to investors@neenah.com
2010
2010
our public disclosure have been included as exhibits
CERTIFICATIONS
CERTIFICATIONS
our public disclosure have been included as exhibits
of the year indicated.
of the year indicated.
our public disclosure have been included as exhibits
1,058.10
2010
of the year indicated.
1,523.45
1,523.45
2014
2014
of the year indicated.
Certifications of Neenah’s Chief Executive Officer
Certifications of Neenah’s Chief Executive Officer
CERTIFICATIONS
Neenah Paper, Inc. 2015 Annual Report
Neenah Paper, Inc. 2015 Annual Report
1,523.45
and Chief Financial Officer regarding the quality of
and Chief Financial Officer regarding the quality of
Certifications of Neenah’s Chief Executive Officer
Neenah Paper, Inc. 2015 Annual Report
Neenah Paper, Inc. 2015 Annual Report
Neenah Paper, Inc. 2015 Annual Report
Neenah Paper, Inc. 2015 Annual Report
Neenah Paper, Inc. 2015 Annual Report
our public disclosure have been included as exhibits
our public disclosure have been included as exhibits
and Chief Financial Officer regarding the quality of
Neenah Paper, Inc. 2015 Annual Report
Neenah Paper, Inc. 2015 Annual Report
Neenah Paper, Inc. 2015 Annual Report
to its Annual Report on Form 10-K for the fiscal
to its Annual Report on Form 10-K for the fiscal
our public disclosure have been included as exhibits
year ended December 31, 2014 filed with the SEC.
year ended December 31, 2014 filed with the SEC.
to its Annual Report on Form 10-K for the fiscal
Neenah Paper, Inc. 2015 Annual Report
Neenah Paper, Inc. 2015 Annual Report
year ended December 31, 2014 filed with the SEC.
Neenah Paper, Inc. 2016 Annual Report
Neenah Paper, Inc. 2015 Annual Report
Neenah Paper, Inc. 2015 Annual Report
Neenah Paper, Inc. 2015 Annual Report
Neenah Paper, Inc.
Russell 2000 Value
Peer Group: AEP Industries Inc., Boise Inc., Buckeye Technologies Inc.,
CSS Industries, Inc., P.H. Glatfelter Company, KapStone Paper and
Packaging Corporation, Minerals Technologies Inc., OMNOVA Solutions Inc.,
Polypore International, Inc., SWM , Verso
Corp. The peer group average is weighted by market capitalization.
2010
2010
$42.77
$42.77
$42.77
Neenah
Neenah
$42.77
$42.77
$42.77
$28.47
$28.47
$28.47
$28.47
Paper, Inc
Paper, Inc
Neenah
Neenah
$42.77
$42.77
$42.77
$28.47
$28.47
$28.47
Neenah
$22.32
$22.32
$22.32
$22.32
$28.47
$28.47
$28.47
Neenah
Paper, Inc
Paper, Inc.
Paper, Inc
$22.32
$22.32
$22.32
$28.47
$28.47
$28.47
Paper, Inc
$42.77
$22.32
$22.32
$22.32
$19.68
$19.68
$19.68
$19.68
$42.77
$$8855..2200
$85.20
Neenah
Neenah
$22.32
$22.32
$22.32
$19.68
$19.68
$19.68
$42.77
$42.77
$28.47
$19.68
$19.68
$19.68
$62.43
$62.43
$62.43
$62.43
$62.43
$28.47
$42.77
Paper, Inc.
Paper, Inc.
$42.77
Neenah
$19.68
$19.68
$19.68
$62.43
$62.43
$62.43
$28.47
$22.32
$28.47
$60.27
$22.32
$60.27
$60.27
$60.27
Paper, Inc.
$28.47
$28.47
$22.32
$60.27
$60.27
$60.27
$22.32
$19.68
$42.77
$42.77
$42.77
$19.68
$22.32
$22.32
$42.77
$19.68
$19.68
$60.27
$28.47
$28.47
$28.47
$60.27
$19.68
$19.68
$28.47
$60.27
$60.27
$22.32
$22.32
$60.27
$60.27
$22.32
$19.68
$19.68
Paper Corp. and Wausau Paper
Paper Corp. and Wausau Paper
Neenah
Neenah
Neenah
Neenah
Paper, Inc.
Paper, Inc.
Paper, Inc.
Paper, Inc.
Neenah
Neenah
Neenah
Neenah
Neenah
Neenah
Paper, Inc.
Paper, Inc.
Paper, Inc.
2%
Paper, Inc.
Paper, Inc.
Paper, Inc.
Neenah
Neenah
Neenah
$42.77
$42.77
$42.77
$42.77
Paper, Inc.
Paper, Inc.
Paper, Inc.
STOCK PRICE PERFORMANCE
2007
2007
6
Neenah Paper, Inc. 2013 Annual Report
Year
2010
2010
on Year
2010
% Change
Neenah Paper, Inc. 2015 Annual Report
Neenah Paper, Inc. 2015 Annual Report
Neenah Paper, Inc. 2015 Annual Report
Russell
2000
Value
of the year indicated.
of the year indicated.
of the year indicated.
Paper Corp. and Wausau Paper
Neenah
Paper, Inc.
$19.68
$60.27
$60.27
1,491.42
41%
41%
41%
$60.27
22%
2%
2%
2012
2008
2008
2008
2007
2007
2007
% Change
$42.77
$28.47
$19.68
$13.95
2011
2011
2011
2011
2010
2010
2010
2010
2012
2012
2012
2012
2014
$22.32
50%
32%
on Year
22%
41%
41%
28%
2009
2009
15%
13%
41%
-7%
2%
50%
32%
2011
2011
2008
2008
2010
2010
2007
2007
2007
22%
58%
28%
18%
15%
13%
2014
2010
41%
2009
2009
2011
2011
2010
2010
2010
2010
2007
2007
2012
2012
Year
2008
2008
2008
2008
2011
2011
2011
2007
2011
2012
2011
2007
2008
2010
2010
2008
2008
2010
2008
2007
2009
2012
2009
2011
2012
2010
2009
2010
2012
2011
2011
$40
Neenah Paper, Inc. 2015 Annual Report
Neenah Paper, Inc. 2015 Annual Report
Neenah Paper, Inc. 2015 Annual Report
LEADERSHIP
S H A R E H O L D E R
INFORMATION
EXECUTIVE TEAM
BOARD OF DIRECTORS
William M. Cook
Retired Executive
Chairman of Donaldson
Company Inc.
Margaret S. Dano
Former Vice President,
Honeywell International
Inc., Worldwide
Operations of Garrett
Engine Boosting Systems
Sean T. Erwin
Chairman of the Board,
Former President and
Neenah Paper, Inc.
Timothy S. Lucas, CPA
Independent Consultant,
Lucas Financial Reporting
and Former Director of
Research, FASB
John P. O’Donnell
President and
Bonnie C. Lind
Senior Vice President,
and Treasurer
Steven S. Heinrichs
Senior Vice President,
General Counsel
and Secretary
Julie A. Schertell
Senior Vice President,
President Fine Paper
and Packaging
Armin G. Schwinn
Senior Vice President,
Managing Director,
Neenah Germany
Matt L. Duncan
Senior Vice President
and Chief Human
Resources Officer
CORPORATE HEADQUARTERS
Neenah Paper, Inc.
3460 Preston Ridge Road
Suite 600
John F. McGovern
Alpharetta, GA 30005
678.566.6500
www.neenah.com
Partner, Aurora Capital LLC
and Former Executive
Vice President and
ANNUAL MEETING OF SHAREHOLDERS
The 2015 annual meeting of the shareholders of
Neenah Paper, Inc. will be held Thursday,
May 21, 2015 at 10:00 a.m., Eastern time at
Neenah’s headquarters in Alpharetta, Georgia.
Philip C. Moore
As of February 28, 2015, Neenah had approximately
Senior Vice President,
Deputy General Counsel
and Corporate Secretary,
TD Bank Group
TRADEMARKS
Brand names mentioned in this report are trademarks
of Neenah Paper, Inc. Crane is a registered trademark
of Crane & Co. Inc.
STOCK EXCHANGE
Neenah Paper’s common stock is traded on the
New York Stock Exchange under the symbol NP.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
191 Peachtree Street
Suite 1500
Atlanta, GA 30303
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
Among Neenah Paper, Inc., the Russell 2000 Value Index and a Peer Group
John P. O’Donnell
REGISTRAR AND TRANSFER AGENT
Computershare
P.O. Box 30170
College Station, TX 77842
Contact Center:
Toll Free U.S. and Canada: 877-498-8847
TDD for hearing impaired: 800-231-5469
Foreign Shareowners: 201-680-6578
TDD Foreign Shareowners: 201-680-6610
www.computershare.com/investor
Neenah Paper, Inc.
President and
,
FINANCIAL AND OTHER COMPANY INFORMATION
Stephen M. Wood, Ph.D.
Former President and
Neenah Paper, Inc.
Russell 2000 Value
ended December 31, 2014, is available on our website
FiberVisions Corporation
Commision (SEC), news releases and other information
are available on our website. For a printed copy of our
Form 10-K and Annual Report materials, without
charge, please contact:
Neenah Paper, Inc.
Attn: Stockholder Services
3460 Preston Ridge Road
Suite 600
Alpharetta, GA 30005
866.548.6569
or via email to investors@neenah.com
CERTIFICATIONS
our public disclosure have been included as exhibits
of the year indicated.
Neenah Paper, Inc. 2016 Annual Report
Neenah Paper, Inc. 2013 Annual Report
$180
$160
$140
$120
$100
$80
$60
$40
$20
$0
2007
2008
2009
2010
2011
2012
Peer Group: AEP Industries Inc., Boise Inc., Buckeye Technologies Inc.,
CSS Industrie s, Inc., P.H. Glatfelter Company, KapStone Paper and
Packaging Corporation, Minerals Technologies Inc., OMNOVA Solutions Inc.,
Polypore International, Inc., Schweitzer-Mauduit International, Inc., Verso
Paper Corp. and Wausau Paper Corp. The peer group average is weighted
by market capitalization.
* $100 invested on December 31, 2009 in stock or index, including
reinvestment of dividends.
STOCK PRICE PERFORMANCE
Russell
2000
Value
Year
on Year
% Change
Neenah
Paper, Inc.
Year
on Year
% Change
1,491.42
32%
$42.77
50%
2013
2012
2011
1,130.98
979.25
2010
1,058.10
2014
1,523.45
15%
-7%
22%
2%
$28.47
$22.32
$19.68
$60.27
28%
13%
41%
41%
NEENAH PAPER, INC. 2016 ANNUAL REPORT