F I N A N C I A L
HIGHLIGHTS
Continuing Operations
Year End December 31,
(Dollars in millions, except share data)
2015
2016
2017
Net Sales
(In millions of U.S. dollars)
Consolidated Statement of Operations Data
Net Sales
Adjusted EBIT
% ROS
$979.9
$941.5
$887.7
$839.7 $887.7 $941.5
$107.9
$92.6 $1
$121.9
$103.0
07 9 $121 9
.
.
11.0%
12.9%
12.2%
$123.6 $141.9
12.2% 12.9%
10.5%
$157.8
Earnings per Diluted Common Share
Adjusted Earnings from Continuing Operations
$3.70
$3.21
$4.54
$3.70
$4.32
$4.54
Weighted-Average Shares Outstanding (in thousands)
17,087
17,012
16,872 17,012
17,052
17,087
Consolidated Balance Sheet Data
Total Assets
Total Stockholders’ Equity
Total Debt
Cash and Cash Equivalents
Debt to Adjusted EBITDA
Debt to Capital
Other Financial Data
Net Cash Flow Provided by (used for):
Operating Activities
Capital Expenditures
Free Cash Flow
Stock Price Year-End
Cash Dividends Paid
GAAP Reconciliation
$751.4
$724.5
$765.6
$751.4
$904.4
$765.6
$311.6
$288.7
$338.3
$311.6
$399.9
$338.3
$228.7
$229.4
$229.4
$220.9
$220.9
$255.5
$4.2
$72.6
$3.1
$4.2
$4.5
$3.1
1.6x
1.8x
44%
42%
1.4x
1.6x
42%
40%
1.8x
1.4x
40%
39%
$94.5 $111.2
$115.8
$111.2
$115.8
$100.0
$(27.9)
$(48.1)
$(48.1)
$(68.5)
$(68.5)
$(42.7)
$63.1 $47.3 $57.3
$60.27
$62.43
$62.43
$85.20
$85.20
$90.65
$ 1.
02
$1.20
$1.20
$1.32
$1.32
$1.48
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)
Acquisition/Integration/Restructuring Costs
Insurance Settlement
Pension & SERP Settlement Charge
Adjusted EBIT
Depreciation & Amortization
Amortization Equity-Based Compensation
Adjusted EBITDA
2015
2016
2017
$101.4
$114.1
$104.3
6.5
–
–
7.0
–
1.3
(3.2)
0.8
0.6
107.9
121.9
103.0
27.5
6.5
30.1
32.1
5.8
6.4
$141.9
$157.8 $141.5
Diluted Earnings per Share
$3.53
$4.26
$4.68
Acquisition/Integration/Restructuring Costs
Prior Period R&D Tax Credits
Tax Adjustments
Insurance Settlement
Pension & SERP Settlement Charge
0.24
(0.07)
–
–
–
0.25
0.06
–
–
–
–
(0.32)
(0.12)
0.03
0.02
Diluted Adjusted Earnings per Share
$3.70
$4.54
$4.32
$941.5
$23.0
452.1
$
$452.1
$887.7
$
15.8
$442.7
$442.7
$4 .
29 2
$429.2
$4 .
$
66 4
466.4
$979.9
$22.5
$
455.3
$
502.1
2015
2016
2017
Technical
Products
Fine Paper
& Packaging
Other
Adjusted EBIT
(In millions of U.S. dollars)
$121.9
$107.9
$103.0
12%
13%
%
1 %
2.9
%11
2015
2016
2017
Adjusted EBIT
% of Sales
Adjusted Earnings
Per Share
$4.54
$4.32
$
3.70
2015
2016
2017
Neenah, Inc. 2017 Annual Report
T O O U R
SHAREHOLDERS
In 2017, we continued to reshape Neenah to
2012 was a highly successful year for Neenah.
accelerate our growth trajectory and global reach.
At the front and center of our efforts was the
We expanded our size and capabilities in Technical
disciplined execution of our strategy, motivated
Products and advanced the transformation of our
by a clear and consistent vision: To create value for
Fine Paper & Packaging business. Importantly, as we
our customers and shareholders by improving the
continue to evolve, we also delivered another year of
image and performance of everything we touch.
attractive shareholder returns.
Our continuing efforts to implement that vision led
to substantial growth in 2012, both top-line and
Among our 2017 performance highlights, we
bottom-line, and allowed us to deliver returns to our
• grew net sales to a record $980 million, led by 8
shareholders of 30%, more than twice that of the
percent growth in Technical Products and 1 percent in
broad markets.
Fine Paper & Packaging
As you will see in the segment overviews that follow,
including new initiatives in specialized market niches,
Neenah continues to move ahead as a true 21st
which we achieved despite challenging economic
century company that brings together manufacturing,
headwinds in Europe throughout most of the year.
technology, intellectual property, design, as well as
% Change 2012 vs 2011
research and development – a company that has a
Operating
passion for enabling our customers’ success and for
36% over 2011
being successful in our own right.
income increased
6%
TECHNICAL PRODUCTS
4%
5%
after adjusting
for acquisition
integration
In Technical Products, our largest and fastest-growing
Net Sales
segment, we delivered another strong year of growth in
time costs. Our
Adj. EBIT
Adj. EPS
and other one-
• successfully started and began to ramp up our
OUR STRATEGY IS BUILT ON A PLATFORM OF
higher sales and disciplined approach to managing
2017, with net sales now exceeding a half-billion dollars,
THREE IMPERATIVES:
transportation filtration investment in Appleton,
overhead and other costs allowed us to leverage
driven by 6 percent organic growth. We see a great deal
Wisconsin; acquired Coldenhove, a Technical Products
Focus on profitable, specialty niche markets
(cid:127)
business based in the Netherlands; and purchased
where we can establish
market
Neenah’s infrastructure, and helped boost operating
of momentum in Technical Products, as we continue
margins to 9.9% versus 8.5% in 2011.
to gain market share, expand in scope and scale, and
laminating assets in the U.S. to further growth in
positions based on our core strengths.
become more global.
During the year, we also actively managed our
premium packaging
(cid:127)
Increase our size, growth rate and portfolio
• maintained strong free cash flow and a healthy
diversification in both Fine Paper and Technical
balance sheet, giving us financial flexibility to make
Products through organic means and
additional strategic investments that can add value
complementary acquisitions.
• delivered another year of double-digit Return on
(cid:127) Deliver consistent, attractive returns to our
Invested Capital (ROIC), and
• provided shareholder returns that outperformed
shareholders through disciplined
management.
the Russell 2000 for the ninth consecutive year and
included an eighth consecutive double-digit dividend
is evidence of our progress in each of these areas.
increase.
DELIVERING PROFITABLE GROWTH AND
CONSISTENCY IN STRATEGY AND EXECUTION
SHAREHOLDER VALUE
capital structure, redeeming $68 million of bonds
% of Change
Net Sales ($ Million)
2016 vs. 2015
Adj. EBIT Margins
23%
$466
entered into a new lending facility and improved the
$429
23%
$502
terms and extended the maturity of our revolver—
13%
14%
11%
450.0
18%
400.0
350.0
13%
13%
300.0
250.0
8%
6%
200.0
150.0
3%
These factors combined to drive a 50% increase in
-2%
adjusted net income, which reached $46 million, or
2015 2016 2017
Net Sales Adj. EBIT Adj. EPS
$2.78 per share. This was our highest level ever.
Within Technical Products, Filtration is our largest
Increased income levels along with our continued
category. Our transportation filtration products include
air, fuel, oil, and cabin filters for automobiles, trucks
and heavy-duty equipment. We also see significant
Invested Capital (ROIC) of over 11% for 2012, up
25%
20%
15%
10%
5%
Sales increased 16% from 2011 and exceeded
Simply put, in 2017, we continued executing our
opportunity in other filtration markets, including water,
sharply from 9% in 2011. This remains a key metric
$800 million. This was mainly due to our successful
strategy to enhance our position as a global leader in
industrial and beverage, which contributed to an overall
guiding our investment decisions.
acquisition of the Wausau premium paper brands
high value core categories. The considerable progress
6 percent increase in filtration net sales year over year.
we’ve made in our journey to become a faster-growing
specialty materials company is underscored by our
recent corporate name change from Neenah Paper,
Inc. to Neenah, Inc.
execution enabled us to deliver on our commitment
We added capacity to serve the growing transportation
to enhance shareholder value. Our total shareholder
filtration market as we began to ramp up our operation
return for the past year was 30%, anchored by a
Neenah Paper, Inc. 2016 Annual Report
Neenah, Inc. 2017 Annual Report
1.5
0.5
1
0
Annual Dividends
$/Share
$1.32
$1.20
$1.02
$0.70
$0.44 $0.48
2011 2012 2013 2014 2015 2016
T O O U R
SHAREHOLDERS
2012 was a highly successful year for Neenah.
in Appleton, Wisconsin. We now have what we believe
including new initiatives in specialized market niches,
coatings; and world-class manufacturing capabilities,
At the front and center of our efforts was the
to be the best and most advanced transportation
which we achieved despite challenging economic
and we further add value to customer supply chains by
disciplined execution of our strategy, motivated
filtration assets in the world, with manufacturing plants
headwinds in Europe throughout most of the year.
offering tailored product solutions, design expertise and
by a clear and consistent vision: To create value for
and research and development capabilities in both
rapid prototyping.
% Change 2012 vs 2011
our customers and shareholders by improving the
Germany and the U.S. While start-up costs for a large
image and performance of everything we touch.
expansion like Appleton are significant, and in 2017
Our continuing efforts to implement that vision led
were higher than originally planned, we are confident
to substantial growth in 2012, both top-line and
that this organic investment will deliver the future
bottom-line, and allowed us to deliver returns to our
profitable growth and the attractive returns we expect.
shareholders of 30%, more than twice that of the
broad markets.
Our global Technical Products portfolio also includes
Performance Materials, such as backings for tapes and
OUR STRATEGY IS BUILT ON A PLATFORM OF
abrasives; media for digital image transfer on clothing,
THREE IMPERATIVES:
sportswear and other materials; labels; protective
Focus on profitable, specialty niche markets
(cid:127)
covers; and other defensible specialty materials. Sales
of Performance Materials grew by 9 percent in 2017,
where we can establish
market
Net Sales ($ Million)
Adj. EBIT Margins
450.0
400.0
4%
350.0
300.0
250.0
Net Sales
200.0
150.0
$443
6%
16%
$452
5%
16%
Adj. EBIT
Adj. EPS
Operating
income increased
36% over 2011
after adjusting
for acquisition
$455
integration
15%
and other one-
time costs. Our
25.0%
20.0%
15.0%
10.0%
5.0%
2015 2016 2017
higher sales and disciplined approach to managing
overhead and other costs allowed us to leverage
In 2017, we continued to transform our Fine Paper &
Neenah’s infrastructure, and helped boost operating
Packaging business through our focus on growing in
margins to 9.9% versus 8.5% in 2011.
premium packaging. In this category, we delivered a 17
fueled by sales and share gains for backings outside
positions based on our core strengths.
During the year, we also actively managed our
percent sales gain, with growth in our targeted verticals
the U.S., as well as increased demand for our labels
(cid:127)
Increase our size, growth rate and portfolio
capital structure, redeeming $68 million of bonds
of beauty, alcohol and high-end retail. We also extended
that can withstand harsh environments.
diversification in both Fine Paper and Technical
our premium packaging capabilities by acquiring a
Products through organic means and
In 2017, we expanded our digital image transfer
complementary acquisitions.
platform and global customer base with the acquisition
(cid:127) Deliver consistent, attractive returns to our
of Coldenhove, which has annual sales of $45
shareholders through disciplined
million. The acquisition significantly enhances our
management.
ability to serve the fast-growing, $200 million digital
transfer market, providing us with capabilities in dye
is evidence of our progress in each of these areas.
sublimation media that complement our existing
capabilities in heat transfer media. It also provides
DELIVERING PROFITABLE GROWTH AND
SHAREHOLDER VALUE
synergies in sales and distribution to support our
expansion globally and accelerate growth.
Sales increased 16% from 2011 and exceeded
$800 million. This was mainly due to our successful
FINE PAPER & PACKAGING
acquisition of the Wausau premium paper brands
entered into a new lending facility and improved the
laminating operation in Great Barrington, Massachusetts
terms and extended the maturity of our revolver—
to serve the paper-based gift card market. We see an
opportunity to accelerate our growth in this market as
many companies look for an environmentally preferable
alternative to plastic cards.
These factors combined to drive a 50% increase in
adjusted net income, which reached $46 million, or
Additionally, we had another record year of sales in
$2.78 per share. This was our highest level ever.
the retail channel, where we launched new products,
Increased income levels along with our continued
expanded distribution, and grew revenues at retailers
such as Amazon, Wal-Mart and Target. Growth in
Invested Capital (ROIC) of over 11% for 2012, up
premium packaging and retail helped offset ongoing
sharply from 9% in 2011. This remains a key metric
secular pressures in the commercial print category.
guiding our investment decisions.
ACTING TO ADDRESS HEADWINDS
In a niche market for premium textured and colored
execution enabled us to deliver on our commitment
paper valued at approximately $650 million, we are
to enhance shareholder value. Our total shareholder
In addition to start-up costs for our Appleton filtration
the clear leader. We differentiate ourselves from the
return for the past year was 30%, anchored by a
asset, 2017 operating income was pressured in the
competition by bringing together top brands; a broad
second half by sustained and significant increases in
array of best-in-class products, specialty textures and
Neenah Paper, Inc. 2016 Annual Report
costs, notably pulp and freight, both of which continued
Neenah, Inc. 2017 Annual Report
T O O U R
SHAREHOLDERS
2012 was a highly successful year for Neenah.
to rise in 2018. Changes in input costs are part of doing
including new initiatives in specialized market niches,
Our capital deployment strategies include returning
At the front and center of our efforts was the
business, and we are taking the necessary actions to
which we achieved despite challenging economic
a meaningful part of our cash flow to shareholders.
disciplined execution of our strategy, motivated
address them through pricing and cost management.
headwinds in Europe throughout most of the year.
We are particularly proud of the 20 percent compound
by a clear and consistent vision: To create value for
While recent increases in costs have been unusually
annual growth rate of our cash returns to shareholders
% Change 2012 vs 2011
Operating
our customers and shareholders by improving the
persistent, our businesses have proven to be successful
over the past five-years.
image and performance of everything we touch.
over time in overcoming them.
Our continuing efforts to implement that vision led
WINNING: A RIGHT TO BE EARNED
income increased
36% over 2011
after adjusting
for acquisition
to substantial growth in 2012, both top-line and
To address increases in freight costs, we are finding
bottom-line, and allowed us to deliver returns to our
ways to become more efficient in how we go to
shareholders of 30%, more than twice that of the
market. Because these changes are structural, they
broad markets.
take some time to fully implement. As always, we
have an ongoing focus on increasing efficiencies
OUR STRATEGY IS BUILT ON A PLATFORM OF
throughout our value chain to deliver the savings and
THREE IMPERATIVES:
improvements required to maintain our attractive
(cid:127)
profit margins.
Focus on profitable, specialty niche markets
where we can establish
market
positions based on our core strengths.
A STRONG FIVE-YEAR TRACK RECORD
(cid:127)
Increase our size, growth rate and portfolio
6%
In addition to consistency in our strategy and
integration
4%
5%
execution, we are consistent in our mindset that
and other one-
Adj. EPS
Net Sales
Adj. EBIT
winning must be earned each and every day.
time costs. Our
For Neenah, this means staying true to our vision
higher sales and disciplined approach to managing
of creating value by improving the image and
overhead and other costs allowed us to leverage
performance of everything we touch. It also means
Neenah’s infrastructure, and helped boost operating
supporting the sustainability of our business and
margins to 9.9% versus 8.5% in 2011.
communities through efforts to reduce waste and water
During the year, we also actively managed our
consumption, use of renewable energy sources, and
capital structure, redeeming $68 million of bonds
initiatives to offer responsibly-sourced paper as well as
The success we have had to date in executing our
diversification in both Fine Paper and Technical
paper made with recycled content.
strategy to reshape Neenah has resulted in a strong
Products through organic means and
track record of profitable growth. Over the last five
complementary acquisitions.
years, we have achieved a net sales compound annual
(cid:127) Deliver consistent, attractive returns to our
growth rate of 6 percent and an earnings per share
shareholders through disciplined
compound annual growth rate of 10 percent.
management.
During this same period, we’ve maintained a double-
is evidence of our progress in each of these areas.
digit ROIC, supported by an unwavering focus on
asset efficiency, footprint optimization and value-
DELIVERING PROFITABLE GROWTH AND
SHAREHOLDER VALUE
adding capital deployment. This includes a disciplined
approach to organic capital spending, which we look
Sales increased 16% from 2011 and exceeded
to maintain at 3 to 5 percent of net sales, with the
$800 million. This was mainly due to our successful
majority of spending for projects that deliver attractive
acquisition of the Wausau premium paper brands
financial returns.
entered into a new lending facility and improved the
terms and extended the maturity of our revolver—
Equally important, earning the right to win also means
upholding our financial principles of consistent,
profitable growth; high returns on capital; a flexible
and prudent capital structure; and attractive
These factors combined to drive a 50% increase in
shareholder returns.
adjusted net income, which reached $46 million, or
$2.78 per share. This was our highest level ever.
Increased income levels along with our continued
Invested Capital (ROIC) of over 11% for 2012, up
sharply from 9% in 2011. This remains a key metric
guiding our investment decisions.
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, Inc. 2017 Annual Report
T O O U R
SHAREHOLDERS
2012 was a highly successful year for Neenah.
A NOTE OF GRATITUDE
including new initiatives in specialized market niches,
At the front and center of our efforts was the
which we achieved despite challenging economic
disciplined execution of our strategy, motivated
I want to express my gratitude to our employees for
headwinds in Europe throughout most of the year.
% Change 2012 vs 2011
Operating
by a clear and consistent vision: To create value for
their leadership and teamwork in reshaping Neenah
our customers and shareholders by improving the
and enabling us to serve as a meaningful, positive
image and performance of everything we touch.
presence in the communities where we operate.
Our continuing efforts to implement that vision led
Our employees are outstanding stewards of our
to substantial growth in 2012, both top-line and
company’s culture, in which we challenge ourselves
bottom-line, and allowed us to deliver returns to our
and each other to innovate and perform at our best,
shareholders of 30%, more than twice that of the
while supporting one another and continuously
6%
5%
4%
income increased
36% over 2011
after adjusting
for acquisition
integration
and other one-
time costs. Our
broad markets.
working to improve safety.
Net Sales
Adj. EBIT
Adj. EPS
OUR STRATEGY IS BUILT ON A PLATFORM OF
I’m also grateful to our Board of Directors for the
THREE IMPERATIVES:
guidance they provide in our strategy to enhance our
(cid:127)
leadership as a global specialty materials company.
Focus on profitable, specialty niche markets
where we can establish
market
higher sales and disciplined approach to managing
overhead and other costs allowed us to leverage
Neenah’s infrastructure, and helped boost operating
margins to 9.9% versus 8.5% in 2011.
And, of course, I want to thank you, our shareholders,
positions based on our core strengths.
During the year, we also actively managed our
for your investment and support, which we seek to
(cid:127)
Increase our size, growth rate and portfolio
reward by building on our track record of attractive
diversification in both Fine Paper and Technical
shareholder returns.
Products through organic means and
complementary acquisitions.
Sincerely,
(cid:127) Deliver consistent, attractive returns to our
shareholders through disciplined
management.
is evidence of our progress in each of these areas.
John P. O’Donnell
DELIVERING PROFITABLE GROWTH AND
President and Chief Executive Officer
SHAREHOLDER VALUE
capital structure, redeeming $68 million of bonds
entered into a new lending facility and improved the
terms and extended the maturity of our revolver—
These factors combined to drive a 50% increase in
adjusted net income, which reached $46 million, or
$2.78 per share. This was our highest level ever.
Increased income levels along with our continued
Sales increased 16% from 2011 and exceeded
sharply from 9% in 2011. This remains a key metric
$800 million. This was mainly due to our successful
guiding our investment decisions.
acquisition of the Wausau premium paper brands
Invested Capital (ROIC) of over 11% for 2012, up
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, Inc. 2017 Annual Report
TECHNICAL PRODUCTS
TECHNICAL PRODUCTS
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,
that employ saturation, coating and other function-
using various substrates to produce specialized materials
enhancing processes
that employ saturation, coating and other function-
Neenah is a leading producer of Technical Products,
enhancing processes
using various substrates to produce specialized materials
Neenah is a leading producer of Technical Products,
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-
enhancing processes
and abrasive backings, labels and other
industrial applications,
The Technical Products group serves customers in
transportation,
medical packaging, image transfer papers and
transportation and water filtration, industrial applications,
transportation,
industrial applications,
many others.
medical packaging, digital transfer and many others.
medical packaging, digital transfer papers, publishing, and
many others.
industrial applications,
transportation,
The Technical Products group serves customers in more
more than 70 countries through manufacturing facilities
medical packaging, digital transfer papers, publishing, and
industrial applications,
transportation,
The Technical Products group serves customers in
than 80 countries through manufacturing facilities in the U.S.,
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
Germany, the Netherlands, and the U.K., supported by R&D
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
efforts focused on developing new products that will deliver
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
the performance our customers require and drive our growth.
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
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
that will meet customers’ needs and drive our growth.
and abrasive backings, labels and other
and abrasive backings, labels and other
OUR PRODUCTS DELIVER HIGH-PERFORMANCE SOLUTIONS:
OUR PRODUCTS DELIVER HIGH-PERFORMANCE SOLUTIONS:
sepat dna sevisarba sa hcus snoitacilppa lairtsudni rof stcudorp ni ecnamrofrep roirepus gnilbane
• 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
(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
(cid:127) meeting specialized needs for strength, durability resistance to water and contamination in products
(cid:127)
as abrasives, tapes and digital image transfer
sepat dna sevisarba sa hcus snoitacilppa lairtsudni rof stcudorp ni ecnamrofrep roirepus gnilbane
(cid:127)
as diverse as medical packaging, labels, and outdoor advertising
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
(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
covering materials
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
FILTRATION
FILTRATION
FILTRATION
FILTRATION
High-performance filtration media for transportation, industrial water and other markets
FILTRATION
BACKINGS
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
BACKINGS
PERFORMANCE MATERIALS
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, tapes, and products for a variety of other end markets
Saturated and coated papers used for backing of specialty abrasives and tapes to enhance their performance, and
including digital transfer, labels, durable printing, and medical packaging applications
SPECIALTIES
products for a variety of other end markets including labels, durable printing, and medical packaging applications
SPECIALTIES
products for a variety of other end markets including labels, durable printing, and medical packaging applications
SPECIALTIES
products for a variety of other end markets including labels, durable printing, and medical packaging applications
SPECIALTIES
products for a variety of other end markets including labels, durable printing, and medical packaging applications
Neenah Paper, Inc. 2016 Annual Report
Neenah Paper, Inc. 2016 Annual Report
Neenah, Inc. 2017 Annual Report
Neenah Paper, Inc. 2016 Annual Report
Neenah Paper, Inc. 2016 Annual Report
FINE PAPER
FINE PAPER & PACKAGING
FINE PAPER
Neenah is the leader in the North American premium
Neenah is the leader in the North American premium
Neenah is the market leader in North America in
e paper market. Built on a tradition of quality
the 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,
with distinguished brands including CLASSIC®,
CLASSIC®, ENVIRONMENT®, ROYAL SUNDANCE®,
with distinguished brands including CLASSIC®,
ASTROBRIGHTS®,
ASTROBRIGHTS® and Southworth®. With multiple
ASTROBRIGHTS®,
Southworth®, and ENVIRONMENT®, the premier
U.S. manufacturing facilities specializing in color,
Southworth®, and ENVIRONMENT®, the premier
texture and specialty features, there is an
offering of recycled content papers in the market.
offering of recycled content papers in the market.
endless combination of paper, packaging and
envelopes available.
ROYAL SUNDANCE®,
ROYAL SUNDANCE®,
Our products are also used in premium packaging
Neenah Premium Packaging provides unique,
Our products are also used in premium packaging
and label applications for goods such as spirits, jewelry,
sustainable and custom solutions for many of the world’s
and label applications for goods such as spirits, jewelry,
cosmetics and electronics.
cosmetics and electronics.
leading brands in cosmetics and fragrances; wine,
Neenah’s leadership role is supported by our
spirits and craft beer; and retail. Our offering includes
Neenah’s leadership role is supported by our
broad range of colors, textures and other product
packaging materials for bags, box wraps, gift cards,
broad range of colors, textures and other product
features and world-class manufacturing, with
gift card carriers, hangtags, labels, folding board and
features and world-class manufacturing, with
four facilities located in Wisconsin.
fragrance strips. We provide captivating colors and
four facilities located in Wisconsin.
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:
OUR PRODUCTS ARE IN DEMAND WHEREVER IMAGE MATTERS:
for high-end traditional / digital printing for graphic imaging needs
(cid:127)
• high-end offset/digital printing of marketing and advertising collateral and
(cid:127)
for high-end traditional / digital printing for graphic imaging needs
business identity systems
and writing papers
and writing papers
• upscale packaging and labels in the beauty, alcohol and retail markets
for specialized uses such as upscale packaging and labels
(cid:127)
(cid:127)
for specialized uses such as upscale packaging and labels
(cid:127)
for unique brightly colored papers for home, school or organization
• brightly colored papers for home, school or business
(cid:127)
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
PREMIUM PACKAGING
Image-enhancing colors and textures for premium folding board, box wrap, bags and hang tags, and labels for, cosmetics;
Image-enhancing colors and textures of premium folded cartons, box wrap, bags, premium wine, beverage,
Image-enhancing colors and textures of premium folded cartons, box wrap, bags, premium wine, beverage,
wine, spirits, and craft beer; and retail
spirit and food labels and hang tags
spirit and food labels and hang tags
Neenah Paper, Inc. 2014 Annual Report
Neenah Paper, Inc. 2014 Annual Report
Neenah, Inc. 2017 Annual Report
NEENAH, INC. 2017 ANNUAL REPORT
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NOTICE OF 2018 ANNUAL MEETING
AND
PROXY STATEMENT
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April 13, 2018
Dear Stockholder:
On behalf of the Board of Directors, it is my pleasure to invite you to attend the 2018 Annual
Meeting of Stockholders of Neenah, Inc. to be held at the Company’s headquarters located at Preston
Ridge III, 3460 Preston Ridge Road, Suite 600, Alpharetta, Georgia 30005 on Wednesday, May 23,
2018 at 10:00 a.m., Eastern Time.
2017 was an important year for Neenah. We delivered record sales with volume-driven organic
increases across our businesses, and completed a number of strategic activities to enhance our future
growth. The largest of these was the successful start-up of a new, world-class filtration operation in
Appleton, Wisconsin, to support our historic high single-digit growth rate of this global business. While
the ramp up of a large, complex operation like this has a short term negative impact on profits, we
remain confident and excited about the long term returns this investment provides. Further supporting
our future growth was the purchase of a U.S. laminating operation to add to our premium packaging
capabilities, and the acquisition of a European digital image transfer company which adds to our
presence in this growing market. As always, we remain committed to deploying capital efficiently as we
grow and to providing a meaningful cash return to our shareholders. In November, our Board
authorized a 12 percent increase in our dividend, marking an eighth consecutive double digit increase
in the past six years.
We appreciate the contributions of Neenah’s dedicated employees around the world and the
confidence and support of our stockholders as we continue to become a faster-growing global specialty
materials company known for its ability to create value for its shareholders. Reinforcing our progress in
this regard was a change in our company name to Neenah, Inc. at year end.
The formal business to be transacted at the 2018 Annual Meeting includes:
(cid:127) The election of the two nominees detailed in this Proxy Statement as Class II directors for a
three-year term;
(cid:127) Approval of an advisory vote on the Company’s executive compensation;
(cid:127) Approval of the 2018 Neenah, Inc. Omnibus Stock and Incentive Compensation Plan to, among
other things, increase the amount of common stock reserved for issuance under our equity
incentive plans by 800,000 shares; and
(cid:127) 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, 2018.
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
15MAR201217460616
JOHN P. O’DONNELL
President and Chief Executive Officer
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Preston Ridge III
3460 Preston Ridge Road, Suite 600
Alpharetta, Georgia 30005
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 23, 2018
NOTICE HEREBY IS GIVEN that the 2018 Annual Meeting of Stockholders of Neenah, Inc. will
be held at the Company’s headquarters located at Preston Ridge III, 3460 Preston Ridge Road,
Suite 600, Alpharetta, Georgia 30005 on Wednesday, May 23, 2018 at 10:00 a.m., Eastern time, for the
purpose of considering and voting upon:
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1. A proposal to elect the two nominees named as Class II directors in the attached Proxy
Statement to serve until the 2021 Annual Meeting of Stockholders;
2. A proposal to approve, on an advisory basis, the Company’s executive compensation;
3. A proposal to approve the 2018 Neenah, Inc. Omnibus Stock and Incentive Compensation
Plan to, among other things, increase the amount of common stock reserved for issuance
under our equity incentive plans by 800,000 shares; and;
4. A proposal to ratify the appointment of Deloitte & Touche LLP as the independent registered
public accounting firm of Neenah, Inc. for the fiscal year ending December 31, 2018;
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 29, 2018 are entitled to receive notice of and
to vote at the Annual Meeting and any adjournments thereof.
This Proxy Statement and the 2017 Annual Report to Stockholders are available at
www.neenah.com/proxydocs.
By order of the Board of Directors.
29APR200510193718
STEVEN S. HEINRICHS
Senior Vice President, General Counsel and
Secretary
Alpharetta, Georgia
April 13, 2018
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 DIRECTOR COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
COMPENSATION COMMITTEE REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ADVISORY VOTE ON EXECUTIVE COMPENSATION (ITEM 2) . . . . . . . . . . . . . . . . . . . . .
APPROVAL OF 2018 NEENAH, INC. OMNIBUS STOCK AND INCENTIVE PLAN (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 2019 ANNUAL MEETING . . . . . . . . . . . . . . . . . . . . . .
OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING . . . . . . . . . . . . .
HOUSEHOLDING OF NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS .
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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, Inc. and its consolidated subsidiaries. This Proxy Statement
and our 2017 Annual Report are first being mailed to stockholders who requested copies, and made
available on April 13, 2018.
Effective January 1, 2018, Neenah Paper, Inc. changed its name to Neenah, Inc. The Company’s
ticker symbol on the New York Stock Exchange remains ‘‘NP’’ and the names of subsidiaries were not
affected.
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 2017 financial
performance, please review the Company’s Annual Report on Form 10-K for the year ended
December 31, 2017.
Stockholders are being asked to vote on the following matters at the 2018 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 two Class II 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 17 and the Executive Compensation
Tables section beginning on page 29. 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. Approval of the Company’s 2018 Stock and Incentive Compensation
Plan (page 30)
The Company seeks approval of the 2018 Neenah, Inc. Omnibus Stock and
Incentive Compensation Plan (a copy of which is attached to this Proxy
Statement as an Appendix). The Board believes approval of the 2018
Neenah, Inc. Omnibus Stock and Incentive Compensation Plan to, among
other things, increase the amount of common stock reserved for issuance
under our equity compensation plans by 800,000 shares is appropriate and in
the best interest of the Company and its stockholders; and.
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, 2018 is in the best interest of the Company and its
stockholders. 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
FOR
FOR
Neenah Paper, Inc. DEF 14A
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Questions and Answers about the Annual Meeting and Voting
When and where is the Annual Meeting?
When: Wednesday, May 23, 2018, 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 29, 2018 (the ‘‘Record Date’’), with each share entitling its
owner to one vote on each matter submitted to the stockholders. On the record date, 16,823,111 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:
(cid:127) Via the Internet: Go to http://www.proxyvote.com and follow the instructions.
(cid:127) By Telephone: Call toll-free 1-800-690-6903 and follow the instructions.
(cid:127) 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
Secretary of Neenah, at Preston Ridge III, 3460 Preston Ridge Road, Suite 600, Alpharetta,
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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 II directors; Proposal 2 the approval, in a non-binding advisory vote, of Neenah’s executive
compensation; Proposal 3 the approval of the Company’s Omnibus Plan; 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 Proposals 2, 3 and 4 you may vote in favor of each proposal, against each
proposal, or may abstain from voting. The vote required to approve Proposals 2, 3 and 4 is majority of
the shares of common stock represented and entitled to vote, provided a quorum is present.
Abstentions will be considered in determining the number of votes required to obtain the necessary
majority vote for each proposal, and therefore will have the same legal effect as votes against such
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
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 II director nominees
described herein, FOR the approval of the Company’s executive compensation, FOR the approval of
the Company’s 2018 Stock and Incentive Compensation Plan, and FOR the ratification of the
appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the
year ending December 31, 2018.
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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 13, 2018.
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 29, 2018 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, 2018, 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Matthew L. Duncan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Julie A. Schertell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stephen M. Wood . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All directors and executive officers as a group (15 persons) . . . . . . . . . . . . . . .
2,881(3)
3,778(4)
20,563(5)
24,085(6)
27,867(7)
15,693(8)
4,155
20,927(9)
86,353(10)
217(11)
4,691(12)
44,113(13)
287,822(14)
*
*
*
*
*
*
*
*
*
*
*
*
1.5
(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 1,318 shares of common stock issuable upon conversion of restricted stock units that are
vested or will vest within 60 days of March 29, 2018.
(4) Includes 1,318 shares of common stock issuable upon conversion of restricted stock units that are
vested or will vest within 60 days of March 29, 2018.
(5) Includes 1,318 shares of common stock issuable upon conversion of restricted stock units that are
vested or will vest within 60 days of March 29, 2018. This total does not include 3,500 vested Stock
Appreciation Rights.
(6) This total does not include 8,044 vested Stock Appreciation Rights.
(7) This total does not include 11,462 vested Stock Appreciation Rights.
(8) Includes 1,318 shares of common stock issuable upon conversion of restricted stock units that are
vested or will vest within 60 days of March 29, 2018. This total does not include 7,310 vested Stock
Appreciation Rights.
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(9) Includes 1,318 shares of common stock issuable upon conversion of restricted stock units that are
vested or will vest within 60 days of March 29, 2018.
(10) This total does not include 31,125 vested Stock Appreciation Rights.
(11) This total does not include 2,429 vested Stock Appreciation Rights.
(12) This total does not include 23,007 vested Stock Appreciation Rights.
(13) Includes 1,318 shares of common stock issuable upon conversion of restricted stock units that are
vested or will vest within 60 days of March 29, 2018.
(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 2017 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, 2017 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.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,134,590(1)
12.7%
55 East 52nd Street
New York, NY 10055
The Vanguard Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
960,913(2)
5.7%
100 Vanguard Blvd.
Malverne, PA 19355
Wells Fargo & Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
939,227(3)
5.6%
420 Montgomery St.
San Francisco, CA 94163
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Wells Capital Management Incorporated . . . . . . . . . . . . . . . . . . . . . .
878,915(4)
5.23%
525 Market Street, 10th Floor
San Francisco, CA 94105
(1) The amount shown and the following information is derived from the Schedule 13G filed by
Blackrock, Inc. on January 19, 2018, reporting beneficial ownership as of December 31, 2017. Of
the 2,134,590 shares shown, BlackRock, Inc. has sole dispositive power over all of the shares and
sole voting power over 2,098,929 shares.
(2) The amount shown and the following information is derived from the Schedule 13G filed by The
Vanguard Group, on February 9, 2018, reporting beneficial ownership as of December 31, 2017. Of
the 960,913 shares shown The Vanguard Group has sole dispositive power over 928,796 of the
shares, , shared voting power with respect to 3,500 shares, shared dispositive power with respect to
32,117 shares and sole voting power over 30,032 shares.
(3) The amount shown and the following information is derived from the Schedule 13G filed by Wells
Fargo and Company, on behalf of itself and certain subsidiaries named therein, on January 30,
2018, reporting beneficial ownership as of December 31, 2017. Of the 939,227 shares shown Wells
Fargo and Company has sole dispositive power over 14,721 of the shares, shared voting power with
respect to 239,143 shares, shared dispositive power with respect to 924,506 shares and sole voting
power over 14,721 shares.
(4) The amount shown and the following information is derived from the Schedule 13G filed by Wells
Capital Management Incorporated, on January 30, 2018, reporting beneficial ownership as of
December 31, 2017. Of the 878,915 shares shown Wells Capital Management Incorporated has
shared voting power with respect to 791,658 shares and shared dispositive power with respect to all
of the shares.
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ELECTION OF DIRECTORS (ITEM 1)
The Board unanimously recommends that the stockholders vote ‘‘FOR’’ the proposal to elect
Margaret S. Dano and Stephen M. Wood as Class II directors for a three-year term expiring at the
2021 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 II
directors expiring at the 2018 Annual Meeting. The Board has nominated Margaret S. Dano and
Stephen M. Wood, each a current director of Neenah, for re-election as Class II directors at the 2018
Annual Meeting. If elected, the nominees will serve a three-year term expiring at the 2021 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 29, 2018, 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
Margaret S. Dano, born in 1959, is the former 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 served as a
director for Superior from 2007 to 2017. 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, where she chairs the Governance committee and serves on
both the compensation and audit committees. 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 received a BS in mechanical engineering from Kettering
University (formerly the General Motors Institute). Ms. Dano was appointed to Neenah’s Board in
2015. 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.
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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
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 and a Fellow of the Institute of Directors. Dr. Wood
has served as a director of Neenah since November 30, 2004. Dr. Wood’s experience as the senior
executive of global chemical manufacturing companies, his international and previous board experience
and his educational background 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, retired as an independent consultant on financial reporting issues
in December of 2017; he had been 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
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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, consulting
experience, and his educational background make him an effective member of Neenah’s Board.
Class I Directors—Term Expiring at the 2020 Annual Meeting
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
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 is also currently a Director of IDEX Corporation and was a director of Valspar Corporation
from 2010 to 2017. 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 director.
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. Mr. Cook’s educational background, financial expertise and extensive experience in the
filtration industry makes him an effective member of Neenah’s Board.
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.
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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 five meetings in 2017. 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 2017 our directors
attended 100% 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 2017 Annual Meeting.
The following table describes the membership of each of the committees as of the 2018 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
X
4
X
X
Chair
X
5
*
The Board has determined 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:
(cid:127) the quality and integrity of our financial statements;
(cid:127) 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;
(cid:127) the independence, qualification and performance of our registered public accounting firm;
(cid:127) the performance of our internal auditors; and
(cid:127) 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:
(cid:127) oversees the process by which individuals are nominated to our Board;
(cid:127) reviews the qualifications, performance and independence of members of our Board;
(cid:127) reviews and recommends policies with respect to composition, organization, processes and
practices of our Board, including diversity; and
(cid:127) 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:
(cid:127) reviews and approves corporate goals and objectives relevant to the compensation of our Chief
Executive Officer and sets such compensation;
(cid:127) approves, in consultation with our Chief Executive Officer, the compensation of our officers who
are elected by our Board;
(cid:127) makes recommendations to our Board with respect to our equity-based plans and executive
incentive compensation plans; and
(cid:127) 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, 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:
(cid:127) the name and address of the stockholder and a representation that the stockholder is a holder of
record of shares of our common stock;
(cid:127) 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;
(cid:127) a description of all arrangements or understandings between the stockholder and each nominee;
and
(cid:127) 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, 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, 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, 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 interested
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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 2017 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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2017 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 . . . . . . . . . . . . . . . . . .
$60,000
Additional cash retainers for Committee and
Board Chairs:
(cid:127) Board Chairman . . . . . . . . . . . . . . . .
(cid:127) Audit Committee Chairman . . . . . . . .
(cid:127) Compensation Committee Chairman . .
(cid:127) Nominating Committee Chairman . . . .
Additional cash retainers for Committee
Members:
(cid:127) Audit Committee . . . . . . . . . . . . . . . .
(cid:127) Compensation Committee Chairman . .
(cid:127) Nominating Committee Chairman . . . .
Annual value of equity grant . . . . . . . . . . . . .
$40,000
$30,000
$30,000
$17,500
$9,000
$7,000
$5,000
$100,000 (100% restricted stock
units)
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Neenah’s director compensation program is intended to align with market level compensation to
attract, motivate, and retain high-performing and diverse quality director talent. Neenah bi-annually
conducts a director pay study to ensure alignment with market level compensation, the latest of which
was undertaken in 2017 and resulted in an adjustment to better align with the market and evolving
director work load as shown in the table above. In 2017 the directors each received a total of 1,318
RSUs. The number of RSUs granted to nonemployee directors is calculated annually by dividing the
total value of the equity grant by the grant date fair value of the Company’s stock on the day of the
grant. in the same manner as used to calculate grants for Company employees under the Long-Term
Compensation Plan (‘‘LTCP’’). The RSUs become fully vested and convert to shares of our common
stock on the first anniversary of the date of grant. Employee directors receive no additional
compensation and no perquisites for serving on our Board. Neenah also established the Neenah Paper
Directors’ Deferred Compensation Plan (the ‘‘Directors’ Plan’’), which enables each of our
nonemployee directors to defer a portion of their cash compensation and RSU awards. In 2017
Mr. McGovern participated in the Director’s Plan.
Each of our nonemployee directors is required to own Company stock equal to four times their
annual cash retainer. The valuation of restricted stock and options owned by our directors is calculated
pursuant to the same guidelines detailed in this Proxy Statement for our named executive officers. All
of our nonemployee directors met or exceeded the guidelines as of December 31, 2017.
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The following table shows the total compensation paid to each of our nonemployee directors in
2017.
Name
Fees Earned or
Paid in Cash ($)
Stock Awards
($)(1)
Sean T. Erwin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
William M. Cook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Margaret S. Dano . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Timothy S. Lucas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
John F. McGovern . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Philip C. Moore . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stephen M. Wood . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
87,500
64,250
66,000
85,500
79,750
67,000
93,500
99,970
99,970
99,970
99,970
99,970
99,970
99,970
Total ($)
187,470
164,220
165,970
185,470
179,720
166,970
193,470
(1) Amounts reported in this column represent the grant date fair value of the 2017 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 22 of these RSUs in 2017.
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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 2017 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
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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
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
Strict insider trading policy
Excise tax gross-ups
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 and other executive officers.
Named Executive Officers
(cid:127) John P. O’Donnell, President and Chief Executive Officer
(cid:127) Bonnie C. Lind, Senior Vice President, Chief Financial Officer and Treasurer
(cid:127) Steven S. Heinrichs, Senior Vice President, General Counsel and Secretary
(cid:127) Julie A. Schertell, Senior Vice President, President Fine Paper & Packaging
(cid:127) Matthew L Duncan, Senior Vice President, Chief Human Resources Officer
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2017 Key Strategic and Financial Achievements
(cid:127) Delivered record sales in each of our businesses.
(cid:127) Consolidated net sales of $980 million increased 4% versus 2016
(cid:127) Technical Products sales of $502 million, increased 8%
(cid:127) Fine Paper & Packaging sales of $455 million, increased 1%
(cid:127) Double-digit growth in targeted categories of premium packaging, synthetic filtration and
performance labels
(cid:127) Strategic initiatives to drive future growth
(cid:127) Started up a world-class transportation filtration operation in the U.S. to meet growing
global demand for our products after consumming our existing capacity in Europe
(cid:127) Purchased a small U.S. laminating operation to support premium packaging growth with
demand for our paper gift cards as an environmentally-preferred choice versus plastic
(cid:127) Acquired Coldenhove, a Netherlands-based leader in digital transfer media, to complement
our existing business and provide scale and additional capabilities in this growing market
(cid:127) Deployed cash in a disciplined fashion to maintain a double-digit Return on Capital and
provide attractive direct returns of cash to shareholders
(cid:127) Free cash flow increased from $47 to $57 million, with reduced capital spending for the U.S.
filtration investment
(cid:127) Return on Invested Capital was maintained at a double digit level, though down from the
prior year due to costs for the start-up of the new U.S. filtration operation
(cid:127) Credit ratings and metrics remained strong, with ample borrowing capacity providing
flexibility to pursue attractive opportunities
(cid:127) Cash returned to shareholders was $34 million, including a 12 percent increase in dividends
(cid:127) Total shareholder return ahead of Russell 2000 for 9th consecutive year
(cid:127) Total shareholder return of 8.3% compared to 7.8% for the Russell 2000 Value Index.
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 23, 2017, greater than 96% 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
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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 2017 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 2017 compensation for Neenah’s named executive officers. In addition,
Hugessen provided input to assist the Compensation Committee in establishing the 2017 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 2017, 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
Hugessen did not raise any conflicts of interest.
In addition, in 2017 Neenah retained Aon Hewitt, Inc. (‘‘AON’’) to advise management on
developments relating to executive compensation in general andprovide support to management and
the Compensation Committee in their ongoing analysis and assessment of the effectiveness of Neenah’s
compensation policies and programs. AON also assisted in the preparation and review of materials
prepared by management related to benchmarking and plan designs.
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.
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Peer Comparison
To assist in evaluating and determining levels of compensation in 2017 for each element of pay, the
Compensation Committee reviewed various sources of data prepared by management including:
(cid:127) Proxy data collected and analyzed from a peer group of companies in the paper, packaging, and
performance materials and specialty chemical industries similar in size to Neenah (the ‘‘Peer
Group’’). In 2017 the Peer Group consisted of the following companies:
—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
—Omnova Solutions, Inc.
(cid:127) The only Peer Group change was the elimination of AEP Industries during 2017 due to the
company being acquired.
(cid:127) Data collected from Aon’s database using a broad industry cut of manufacturing companies with
revenues between $500 million and $2.0 billion.
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
Compensation Plan (‘‘LTCP’’) as authorized by the Amended and Restated Neenah Paper, Inc. 2004
Omnibus Stock and Incentive Compensation Plan (the ‘‘2004 Omnibus Plan’’), and if approved, the
Amended and Restated Neenah, Inc. 2018 Omnibus Stock and Incentive Compensation Plan (the ‘‘2018
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
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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 2017 was approximately 74% performance-based at target levels and our other NEOs
compensation was approximately 56% performance-based at target.
CEO @ Target
Other NEOs @ Target
Perf.-
Equity
51%
Base
Salary
26%
Perf.-
Cash
23%
Base
Salary
44%
Perf.-
Equity
32%
Perf.-
Cash
24%
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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:
(cid:127) Why Neenah chooses to pay each of the base components;
(cid:127) How Neenah determines the amount of the various base components;
(cid:127) How each component fits into Neenah’s overall compensation plan and supports Neenah’s
compensation philosophy.
Base Salary
Base salary is a critical element of executive compensation because it provides our executives with
a defined 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 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 and market data provided by Aon when peer data was not available.
This approach to base salary supports our compensation philosophy. The Compensation
Committee has determined that setting NEO base salaries in this manner allows Neenah to be
competitive in attracting and retaining talent, while at the same time, aligning the executive’s and
stockholders’ interest because a majority of the executive’s overall compensation is performance based..
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2017 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 2017. 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. Taking into account all these factors and a comparison relative to peers
the Committee approved the adjustments shown below to further align NEO base salary with the
market.
The following table provides the base salary received by each named executive officer for 2017.
2016 Base Salary
2017 Base Salary % Increase
O’Donnell . . . . . . . . . . . . . . . . . . . . . . .
Lind . . . . . . . . . . . . . . . . . . . . . . . . . . .
Heinrichs . . . . . . . . . . . . . . . . . . . . . . .
Schertell . . . . . . . . . . . . . . . . . . . . . . . .
Duncan . . . . . . . . . . . . . . . . . . . . . . . .
$750,000
$370,000
$330,000
$360,000
$280,000
$830,000
$410,000
$365,000
$400,000
$280,000
11%
11%
11%
11%
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 50% to 90%
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 is 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.
2017 Annual Performance Bonus Awards
For 2017, the Compensation Committee approved target bonuses for our named executive officers
as a percentage of base salary with a target bonus ranging from 50% to 90%. The performance goals
for the 2017 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,
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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 &
Packaging business unit, and (iii) progress achieved in implementing the Company’s strategic plan:
2017 TARGET MIP
(% of Base Salary)
Corporate
EBITDA
Business Unit
EBIT
Strategic
Initiatives
Performance Criteria
O’Donnell . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lind . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Heinrichs . . . . . . . . . . . . . . . . . . . . . . . . . . .
Schertell . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Duncan . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
90%
60%
50%
55%
50%
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 start
up of a major organic capital project to add filtration capacity in the US, the acquisition of (a) the
Coldenhove in the Netherlands to support growth in our Performance Materials business and (b) the
acquisition of a laminating asset in the U.S. to support our Fine Paper & Packaging business, organic
growth achieved in targeted categories, and other strategic initiatives.
The performance goals and results relative to the named executive officers for each of the financial
metrics in 2017 were as follows:
Metric ($MM)
Threshold
(0%)
Target
(100%)
Outstanding Maximum
(200%)
(300%)
2017 Results
Payout %
Corporate EBITDA . . . . . . . . . . . . .
Fine Paper & Packaging EBIT . . . . . .
132
62
158
73
170
79
N/A
84
145
70
51%
71%
Based on the process described above, MIP payments were awarded as follows:
2017 MIP
at Target
2017 MIP
at Actual
% of Target
Earned
O’Donnell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lind . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Heinrichs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Schertell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Duncan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$747,000
$246,000
$182,500
$220,000
$140,000
$472,478
$155,595
$115,431
$161,150
$ 88,550
63%
63%
63%
73%
63%
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
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officer at a minimum of 60% 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.
2017 LTCP Awards
For 2017, the Compensation Committee, consistent with our compensation philosophy, approved
equity grants under the LTCP for our named executive officers with target values ranging from 60% to
200% of base salary pay as follows:
2017 LTCP
(% of base Salary)
O’Donnell . . . . . . . . . . . . . . . .
Lind . . . . . . . . . . . . . . . . . . . .
Schertell . . . . . . . . . . . . . . . . .
Heinrichs . . . . . . . . . . . . . . . .
Duncan . . . . . . . . . . . . . . . . .
200%
80%
80%
70%
60%
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 2017 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 share to produce the number of
shares subject to the applicable option award. Each grant of SARs made in 2017 vests in increments of
33.34%, 33.33% and 33.33% over a three year period, with vesting occurring on each anniversary of the
applicable grant and a ten year term to exercise. The process described above resulted in grants of
SARs in 2017 as follows:
O’Donnell . . . . . . . . . . . . . . . . . . . .
Lind . . . . . . . . . . . . . . . . . . . . . . . .
Schertell . . . . . . . . . . . . . . . . . . . . .
Heinrichs . . . . . . . . . . . . . . . . . . . .
Duncan . . . . . . . . . . . . . . . . . . . . . .
2017 SARs
36,753
7,262
7,085
5,657
3,720
In 2017 the Compensation Committee approved an amendment to the performance share portion
of the LTCP program to incorporate a three year performance period for a portion of the incentive.
Twenty Five percent of the total award is measured over a three year period, further aligning senior
management of the Company with long term shareholder interests. The remaining seventy five percent
of the award retains a one-year performance period to focus on and reward annual growth in sales,
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earnings per share and return on invested capital. The target number of performance share units to be
awarded to each named executive officer in 2017 was determined by determining 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
the performance period for each component.
The first component (‘‘Component I’’), representing 75% of the award, is subject to 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 are calculated based on the
Company’s achievement of performance goals relative to the following equally weighted criteria:
adjusted year over year growth in sales (constant currency)(‘‘Constant Currency Sales’’), adjusted year
over year growth in return on invested capita (‘‘Return on Capital’’), and adjusted year over year
growth in earnings per share (‘‘Earnings Per Share’’). The earnings per share metric was added by the
Company in 2017 to strengthen alignment with long-term stockholder value. Each of the metrics are
adjusted for certain items as further described in the performance share award agreements for the
grant filed by the Company as Exhibit 10.1 to the Form 8-K filing dated February 3, 2017. The
threshold, target and outstanding levels for sales growth and return on capital were adjusted in 2017 to
reflect the Company’s continued plans for growth through strategic acquisitions and investments in
organic growth. The specific targets and results in 2017 for the first component were as follows:
Metric
Threshold
Payout (as a % of Target) .
40%
Target
100%
Outstanding
2017 Results
Payout %
200%
Return on Capital
. . . . . .
Increase of
(60) basis points
Increase of
Increase of
Increase of
188%
(25) basis points 10 basis points 6 basis points
Constant Currency Sales . .
3% growth
6% growth
9% growth
Earnings Per Share . . . . .
3% growth
7% growth
11% growth
Overall Payout Percentage
3.7%
7.5%
23 %
113%
108%
Based on the process described above and our performance against the targets noted, performance
share unit (‘‘PSU’’) grants for the first component were awarded as follows:
Component I
at Target
O’Donnell . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lind . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Heinrichs . . . . . . . . . . . . . . . . . . . . . . . . . . .
Schertell . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Duncan . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,609
2,096
1,633
2,045
1,074
Component I % of Target
Earned
11,458
2,264
1,764
2,209
1,160
Earned
108%
108%
108%
108%
108%
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,
2019.
The second component (‘‘Component II’’), representing 25% of the award, is subject to a three
year performance period. After the end of the performance period, the adjustment of the target
number of shares is calculated based on the Company’s achievement of the performance goal of
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relative total shareholder return (‘‘Relative TSR’’). The Relative TSR (including dividend yield), is
compared against the Russell 2000 Value Index over the performance period.
Metric
Threshold
Target
Outstanding
Payout %
Payout (as a % of Target) . . . . . . . . . . . . . . . . .
Total Shareholder Return . . . . . . . . . . . . . . . . .
40%
3rd Quartile
100%
2nd Quartile
200%
1st Quartile
TBD*
*
Subject to a 3 year performance period ending December 31, 2019
Retirement Benefits
We maintain the Neenah 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 2017 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 2017 Nonqualified Deferred Compensation table
later in this Proxy Statement.
We also maintain the Neenah Pension Plan, a tax-qualified defined benefit plan (the ‘‘Pension
Plan’’) and the Neenah 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, who were employed prior to December 31, 1996. Messrs. O’Donnell,
Heinrichs, Duncan 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 2017 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 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, 2017 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
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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
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
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through our compensation philosophy. In particular, we have historically sought 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
have historically been intended to be fully deductible under Code Section 162(m).
The exemption from Section 162(m)’s deduction limit for performance-based compensation has
been repealed, effective for taxable years beginning after December 31, 2017, such that compensation
paid to our covered executive officers in excess of $1 million will not be deductible unless it qualifies
for transition relief applicable to certain arrangements in place as of November 2, 2017.
Despite our efforts in the past to structure annual cash incentives in a manner intended to be
exempt from Section 162(m) and therefore not subject to its deduction limits, because of ambiguities
and uncertainties as to the application and interpretation of Section 162(m) and the regulations issued
thereunder, including the uncertain scope of the transition relief under the legislation repealing
Section 162(m)’s exemption from the deduction limit, no assurance can be given that compensation
intended to satisfy the requirements for exemption from Section 162(m) in fact will. Further, the
Compensation Committee reserves the right to modify compensation that was initially intended to be
exempt from Section 162(m) if it determines that such modifications are consistent with our business
needs.
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 . . . . . . . . . . . . . . . . .
Duncan . . . . . . . . . . . . . . . . .
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,
2017. Mr. Duncan was hired by the Company in 2016 and has five years in order to meet the stock
ownership requirements.
CEO Pay Ratio
Under Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and
Item 402(u) of Regulation S-K, the Company is required to provide the ratio of the annual total
compensation of Mr. O’Donnell to the annual total pay of the median employee of the Company (the
‘‘Pay Ratio Disclosure’’). For 2017 Neenah’s median compensation of all employees of the Company
and its consolidated subsidiaries (other than Mr. O’Donnell), including employees located in the United
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States, Germany and England, was $67,493. Mr. O’Donnell’s total compensation in 2017 for purposes
of the Pay Ratio Disclosure was $3,288,608. Based on this information, for 2017, the ratio of the
compensation of the Chief Executive Officer to the median annual total compensation of all other
employees was estimated to be 49 to 1.
The pay ratio disclosed above was calculated in accordance with SEC rules based upon the
Company’s reasonable judgement and assumptions using the methodology described below. The SEC
rules do not specify a single methodology for identification of the median employee or calculation of
the pay ratio, and other companies may use assumptions and methodologies that are different from
those used by the Company in calculating their pay ratio. Accordingly, the pay ratio disclosed by other
companies may not be comparable to the Company’s pay ratio as disclosed above. The Company’s
methodology for calculating the ratio included the following:
(cid:127) Reviewed total annual cash earnings of all employees on October 1, 2017, for our 2017 fiscal
year. This included both base pay and any overtime/premium pay earned by each employee in
2017.
(cid:127) Permanent employee hours were annualized if they didn’t work full year (i.e. someone working a
20 hour workweek would be annualized at 1040 hours a year, and someone full time would be
annualized at 2080 hours a year).
(cid:127) We identified the median employee based on total annualized earnings, and then captured all
pay components based on summary compensation table to compare to the CEO.
(cid:127) Currency used to convert pay was determined as of December 31, 2017, at 1.19786 USD to
1 EUR, and 1.34912 USD to 1 GBP.
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, 2017.
Compensation Committee:
Stephen M. Wood, Chairman
John F. McGovern
Margaret S. Dano
Timothy S. Lucas
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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:
(cid:127) 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 2017, 74% of our CEO’s compensation
was performance based at target levels.
(cid:127) 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.
(cid:127) LTCP grants are split with 70% of the total value of the awards granted as performance share
units with a three-year vesting and a combination of one-year and three-year performance
periods, and 30% as stock appreciation rights with annual vesting over a three-year period. 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 and
earnings per share growth, and relative total shareholder return. In 2017 component one of the
grants, representing 75% of the total grant, were awarded at 108% of target based on achieved
growth in sales, return on invested capital and earnings per share. Component two, representing
25% of the grant, using total shareholder return as the metric, is subject to a three year
performance period.
(cid:127) Our short-term incentive plan (MIP) also is based on a pay-for-performance philosophy, with
target bonus opportunities ranging from 50% to 90% of base salary based on improvements in
corporate and business unit profits and successful execution of strategic objectives. In 2017,
executives received a payment of 63% to 73% of target as a result of performance in corporate
EBITDA, business unit EBIT and the successful execution of strategic objectives.
(cid:127) We have meaningful stock ownership requirements for our named executive officers.
(cid:127) 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.
(cid:127) 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).
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(cid:127) The Compensation Committee is advised by an independent compensation consultant who keeps
the Compensation Committee apprised of developments and best practices.
(cid:127) 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.
(cid:127) 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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APPROVAL OF THE NEENAH, INC. 2018 OMNIBUS STOCK AND
INCENTIVE COMPENSATION PLAN (ITEM 3)
The Board of Directors unanimously recommends that the stockholders vote ‘‘FOR’’ the approval
of the Neenah, Inc. 2018 Omnibus Stock and Incentive Compensation Plan.
The Neenah, Inc. 2018 Omnibus Stock and Incentive Compensation Plan (the ‘‘2018 Omnibus
Plan’’) is a comprehensive incentive compensation plan that provides for various types of equity-based
compensation, including incentive and nonqualified stock options, stock appreciation rights, stock
awards, restricted stock units, performance share units, and performance units, in addition to dividend
equivalents rights and cash awards. The purpose of the 2018 Omnibus Plan is to encourage ownership
in our common stock by those employees, directors and consultants who have contributed, or are
determined to be in a position to contribute, materially to our success, thereby increasing their interest
in our long-term success. We believe that incentive compensation grants have been an important part of
our successful employee and independent director recruiting and retention efforts to date and we
expect such grants will remain a key part of this process going into the future.
The 2018 Omnibus Plan is an amendment and restatement of the Company’s 2004 Omnibus Stock
and Incentive Compensation Plan, as amended and restated May 30, 2013 (the ‘‘2004 Omnibus Plan’’).
In 2013, the Company’s shareholders approved an increase of 1,577,000 shares of our common
stock to be reserved for issuance under the 2004 Omnibus Plan. As of the Record Date, there remains
a total of only 471,889 shares reserved for issuance under the 2004 Omnibus Plan for future awards
that have not yet been awarded. In addition, as of the Record Date there are 537,246 outstanding
SARs issued under the 2004 Omnibus Plan, with a weighted average term of 7.16 years and a weighted
average exercise price of $63.85.
The number of shares of our common stock to be reserved for issuance for future awards under
the 2018 Omnibus Plan is comprised of the 471,889 remaining shares under the 2004 Omnibus Plan as
described above, plus an additional 800,000 shares of our common stock.
In addition to the 2018 Omnibus Plan providing for the above-described number of shares of
common stock available for future awards, the 2018 Omnibus Plan updates the 2004 Omnibus Plan to
more appropriately reflect current market practices. Accordingly, our Compensation Committee has
approved the 2018 Omnibus Plan to address our needs to be able to offer equity and cash incentives
going forward, subject to shareholder approval of the 2018 Omnibus Plan. NYSE listing requirements
require that we submit the 2018 Omnibus Plan to our shareholders for approval. In addition, Internal
Revenue Code rules require that we obtain shareholder approval of the 2018 Omnibus Plan in order to
be able to issue incentive stock options under the 2018 Omnibus Plan.
The Board of Directors unanimously approved the 2018 Omnibus Plan on March 26, 2018, subject
to shareholder approval. If the shareholders of the Company do not approve the 2018 Omnibus Plan,
the plan will be void, any grants made under the plan (if any) will be void, and the 2004 Omnibus Plan
will remain in full force and effect as prior to its amendment and restatement as the 2018 Omnibus
Plan.
If approved by stockholders, the 2018 Omnibus Plan will become effective as of May 23, 2018 (the
‘‘Effective Date’’), and will remain effective until terminated by the Company. This description of the
2018 Omnibus Plan below is qualified in its entirety by reference to the applicable provisions of the
plan document, which is attached as Annex A to this proxy statement.
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Material Changes in 2018 Omnibus Plan
The 2018 Omnibus Plan makes a number of changes to the 2004 Omnibus Plan. The primary
changes are summarized below:
(cid:127) The 2018 Omnibus Plan increases the number of shares of common stock that were previously
available for issuance under the 2004 Plan by 800,000 shares. After this change, the number of
shares available for issuance of future awards under the 2018 Omnibus Plan is the sum of the
number of shares available under the 2004 Omnibus Plan for issuance of future awards
immediately before the Effective Date 471,889, plus 800,000 shares. In addition, the number of
shares subject to outstanding awards under the 2004 Omnibus Plan immediately before the
Effective Date will remain subject to the terms of the 2004 Omnibus Plan, The maximum
number of shares that can be made subject to the grant of incentive stock options is the
maximum number of shares available under the 2018 Omnibus Plan. Except for the prohibition
on liberal share recycling as discussed in the next paragraph, shares attributable to awards
(including prior awards made under the 2004 Omnibus Plan) which expire, are forfeited or
canceled or are otherwise paid or settled in cash or otherwise without the issuance of shares are
again available for grant under the 2018 Omnibus Plan.
(cid:127) The 2018 Omnibus Plan prohibits liberal share recycling by expanding the categories of shares
that can not be recycled into the plan, consistent with best current practices. Specifically, under
the 2018 Omnibus Plan, shares that have been (i) tendered or withheld to pay the exercise price
of options or stock appreciation rights, (ii) withheld to satisfy tax withholding, (iii) repurchased
by the Company using cash proceeds from the exercise of options or (iv) subject to a stock
appreciation right or option and not issued upon net settlement or net exercise of the stock
appreciation right or option, are not again eligible for issuance under the 2018 Omnibus Plan. In
contrast, the 2004 Omnibus Plan provided that only in the case of options and stock
appreciation rights, shares tendered by a participant or withheld by the Company to pay the
option exercise price, the excess number of shares to which a stock appreciation right relates
over the number of shares that are issued upon exercise of the stock appreciation right, and
shares withheld or remitted by the Company to pay tax withholding, were not again available for
issuance..
(cid:127) The 2018 Omnibus Plan limits the amount of compensation payable to each non-employee
director of the Company for service in such capacity. Specifically, the sum of the grant date fair
value of awards under the plan, plus cash or other compensation that is not equity-based for any
fiscal year of the Company cannot exceed $700,000 per such director. In contrast, the 2004
Omnibus Plan contained limits that applied not to the overall value of compensation a
non-employee director could receive, but only to the number of shares of common stock,
capping the maximum for all non-employee directors at $500,000 and capping the maximum for
each non-employee director to awards per year of not more than 50,000 shares.
(cid:127) The 2018 Omnibus Plan provides in general that the term ‘‘change in control,’’ will (if used) be
defined in the applicable award agreement, but provides that a liberal change in control
definition cannot be used. Specifically, the plan provides that a change in control cannot be
triggered upon any event that does not result in an actual change in control of the Company,
such as an announcement or commencement of a tender offer or exchange offer, a potential
takeover, shareholder approval (as opposed to consummation) of a merger or other transaction,
acquisition of less than 15% or less of the outstanding voting securities of the Company, an
unapproved change in less than a majority of the Board or other similar provisions in which the
Committee determines that an actual change in control does not occur. Further, the 2018
Omnibus Plan prohibits the Committee from accelerating vesting of an award in connection with
a liberal change in control definition.
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(cid:127) The 2018 Omnibus Plan deletes many provisions that were previously in the 2004 Omnibus Plan
solely to qualify certain performance-based compensation payable to named executive officers
for a tax deduction under Section 162(m) of the Internal Revenue Code to the extent that the
compensation exceeded $1,000,000 per year per officer. This includes, for example, deleting the
incentive pool formula based on operating earnings and operating cash flow, deleting a specific
list of performance goals, and deleting per officer annual limits on awards under the plan. The
Compensation Committee of the Board of Directors (the ‘‘Committee’’) believes that these
provisions no longer need to be in the plan as the exemption from Section 162(m)’s deduction
limit for performance-based compensation has been repealed, effective for taxable years
beginning after December 31, 2017, such that compensation paid to any of our covered executive
officers in excess of $1 million will not be deductible unless it qualifies for transition relief
applicable to binding written contracts that were in effect on November 2, 2017. However, the
2018 Omnibus Plan preserves the ability of the Compensation Committee to make performance-
based grants, and the Committee plans to continue to do this.
(cid:127) The 2018 Omnibus Plan deletes the definition of ‘‘Retirement’’ to provide for flexibility to
specify the retirement criteria (if applicable) in an award agreement.
How the 2018 Omnibus Plan is Designed to Protect Shareholders’ Interests
The following features of the 2018 Omnibus Plan are intended to continue to protect the interests
of our shareholders:
(cid:127) Limits on terms of options and stock appreciation rights. The maximum terms of each stock
option and stock appreciation right that can be granted under the Plan is ten years.
(cid:127) Limits on share recycling. As discussed above, the 2018 Omnibus Plan does not allow liberal
share recycling.
(cid:127) No repricing of options or stock appreciation rights. The 2018 Omnibus Plan prohibits the
repricing of ‘‘underwater’’ options and stock appreciation rights, whether by amending an
existing award, substituting a new award at a lower price or executing a cash buyout, unless
specifically approved by the Company’s shareholders.
(cid:127) No discounted options or stock appreciation rights. The 2018 Omnibus Plan prohibits granting
options or stock appreciation rights with an exercise price less than the fair market value per
share of our common stock on the date of grant.
(cid:127) No automatic change in control benefits. The 2018 Omnibus Plan does not provide any
automatic benefits upon a change in control or any excise tax gross-ups.
(cid:127) No liberal change in control definition. As discussed under the preceding title, the 2018
Omnibus Plan does not allow the use of a liberal change in control definition and prohibits
accelerated vesting in connection with a liberal change in control definition.
(cid:127) Limits on non-employee director compensation. As discussed under the preceding title, the 2018
Omnibus Plan places a meaningful limit on each non-employee director’s annual compensation.
Summary of Other Provisions of 2018 Omnibus Plan
Eligibility. Participation in the 2018 Omnibus Plan is limited to employees, directors and
consultants of Neenah, its affiliates and/or its subsidiaries.
Administration. Awards under the 2018 Omnibus Plan will be determined by the Committee.
However, the Chief Executive Officer may grant awards to newly hired employees who are not officers
subject to Section 16 of the Exchange Act, not to exceed 300,000 shares of common stock per year.
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The 2018 Omnibus Plan allows for awards to be granted in the form of incentive and nonqualified
stock options, stock appreciation rights, stock awards, restricted stock units, performance share units,
performance units, dividend equivalents rights and cash awards.
Options. Options may be made exercisable at a price per share not less than the fair market
value, determined in accordance with the 2018 Omnibus Plan, per share of common stock on the date
that the option is awarded. Options may not be repriced without shareholder approval. The Committee
may permit an option exercise price to be paid in cash or by the delivery of previously-owned shares of
Company Common Stock, or to be satisfied through a cashless exercise executed through a broker or
by having a number of shares of Company Common Stock otherwise issuable at the time of exercise
withheld. The maximum term of any option is 10 years. The Committee is permitted under the 2018
Omnibus Plan to substitute stock appreciation rights for options on the same terms as the options with
an aggregate difference between the fair market value of the shares subject to the stock appreciation
right and the grant price of the stock appreciation right that is equal to the aggregate difference
between the fair market value of the shares subject to the option and the option exercise price. The
2018 Omnibus Plan permits the grant of both incentive and non-qualified stock options. Incentive stock
options cannot be granted more than 10 years after the earlier of the adoption of the 2018 Omnibus
Plan by the Board of Directors or the date the plan is approved by the shareholders of the Company.
Stock Appreciation Rights. Stock appreciation rights may have a grant price per share not less
than the fair market value, determined in accordance with the 2018 Omnibus Plan, per share of
common stock on the date that the option is awarded stock appreciation rights may not be repriced
without shareholder approval. The maximum term of any stock appreciation right is 10 years. Stock
appreciation rights may be granted separately or in connection with another award, and the Committee
may provide that they are exercisable at the discretion of the holder or that they will be paid at a time
or times certain or upon the occurrence or non-occurrence of certain events. Stock appreciation rights
may be settled in shares of common stock or in cash, according to terms established by the Committee
with respect to any particular award.
Stock Awards and Restricted Stock Units. The Committee may grant shares of common stock or
the right to receive common stock in the future to a participant, subject to such restrictions and
conditions, if any, as the Committee shall determine.
Performance Units and Performance Share Units. Performance units have an initial value
determined by the Committee on the date of grant and performance shares have an initial value per
share equal to the fair market value per share of common stock determined on the date of grant. The
Committee sets the performance goals to determine the value of the number of performance units or
performance shares that will be paid. Performance units and performance shares may be paid in shares
of common stock or in cash as determined by the Committee.
Other Incentives. Dividend equivalent rights and cash awards may be granted in such numbers and
may be subject to such conditions or restrictions as the Committee shall determine and shall be payable
in cash or shares of common stock, as the Committee may determine. However, dividend equivalent
rights may not be granted in connection with an option or a stock appreciation right.
Deferrals. The Committee may require or permit participants to defer the receipt of awards under
the 2018 Omnibus Plan.
Recapitalizations and Reorganizations. The number of shares of common stock reserved for
issuance in connection with the grant or settlement of awards or to which an award is subject, the
number of shares issuable by the Chief Executive Officer as provided above under the heading
‘‘Administration,’’ and the exercise price of each option and stock appreciation right are subject to
adjustment in the event of any recapitalization of the Company or similar event effected without
40
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P
r
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y
receipt of consideration by the Company. In the event of certain corporate reorganizations, awards may
be substituted, cancelled, accelerated, cashed-out or otherwise adjusted by the Committee, provided
such adjustment is not inconsistent with the express terms of the 2018 Omnibus Plan.
Transferability. Awards are not generally transferable or assignable, unless the Committee provides
otherwise, but in any case, transfers for value are not permitted.
Forfeiture and Clawbacks. Awards will be subject to forfeiture to the extent provided by the
Committee in the applicable award agreement. In addition, if the Company is required to prepare an
accounting restatement due to the material noncompliance of the Company, as a result of misconduct,
with any financial reporting requirement under the securities laws, if the participant knowingly or
grossly negligently engaged in the misconduct, or knowingly or grossly negligently failed to prevent the
misconduct, or if the participant is one of the individuals subject to automatic forfeiture under
Section 304 of the Sarbanes-Oxley Act of 2002, the participant is required to reimburse the Company
the amount of any payment in settlement of an award earned or accrued during the twelve-month
period following the first public issuance or filing of the financial document. Also, each Award is
subject to forfeiture to the extent provided in any applicable clawback policy adopted by the Company
or otherwise required pursuant to applicable law.
Fungible Share Pool. Shares issued in respect of any Full-Value Award (i.e., stock issued pursuant
to awards other than options or stock appreciation rights) granted under the 2018 Omnibus Plan shall
be counted against the share limit as 2.3 shares for every one share actually issued in connection with
such award. For example, if 100 shares are issued with respect to a Full-Value Award grantee, 230
shares will be counted against the share limit in connection with that award. Shares issued in respect of
any other award (i.e., options and stock appreciation rights) shall be counted against the share limit as
one share. Therefore, as noted previously, if stockholders approve the 2018 Omnibus Plan and all
1,271,889 shares available for future grants are granted as Full-Value Awards, the total number of
shares issued under the future grants under the 2018 Omnibus Plan will be 552,995.
Amendment or Termination. The 2018 Omnibus Plan may be amended by the Board of Directors,
but stockholder approval for any amendment shall be required that (except as provided above
regarding recapitalizations and reorganizations), increases the number of shares of common stock
available, materially expands the classes of individuals eligible to receive awards, materially expands the
type of awards available, would permit option repricing or stock appreciation rights repricing, or would
otherwise require stockholder approval under the rules of the applicable stock exchange. The
Committee may amend outstanding awards subject to the terms of the 2018 Omnibus Plan but in
general may not take away a participant’s rights.
Tax Consequences
The following discussion outlines generally the federal income tax consequences of participation in
the Amended Omnibus Plan. Individual circumstances may vary and each participant should rely on his
or her own tax counsel for advice regarding federal income tax treatment under the plan.
Non-Qualified Options. A participant will not recognize income upon the grant of an option or at
any time prior to the exercise of the option or a portion thereof. At the time the participant exercises a
non-qualified option or portion thereof, he or she will recognize compensation taxable as ordinary
income in an amount equal to the excess of the fair market value of the common stock on the date the
option is exercised over the price paid for the common stock, and the Company will then be entitled to
a corresponding deduction. Depending upon the period shares of common stock are held after exercise,
the sale or other taxable disposition of shares acquired through the exercise of a non-qualified option
generally will result in a short- or long- term capital gain or loss equal to the difference between the
41
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amount realized on such disposition and the fair market value of such shares when the non-qualified
option was exercised.
Incentive Stock Options. A participant who exercises an incentive stock option will not be taxed at
the time he or she exercises the option or a portion thereof. Instead, he or she will be taxed at the
time he or she sells the common stock purchased pursuant to the option. The participant will be taxed
on the difference between the price he or she paid for the stock and the amount for which he or she
sells the stock. If the participant does not sell the stock prior to two years from the date of grant of the
option and one year from the date the stock is transferred to him or her, the participant will be
entitled to capital gain or loss treatment based upon the difference between the amount realized on the
disposition and the aggregate exercise price and the Company will not get a corresponding deduction.
If the participant sells the stock at a gain prior to that time, the difference between the amount the
participant paid for the stock and the lesser of the fair market value on the date of exercise or the
amount for which the stock is sold, will be taxed as ordinary income and the Company will be entitled
to a corresponding deduction; if the stock is sold for an amount in excess of the fair market value on
the date of exercise, the excess amount is taxed as capital gain. If the participant sells the stock for less
than the amount he or she paid for the stock prior to the one or two year periods indicated, no
amount will be taxed as ordinary income and the loss will be taxed as a capital loss. Exercise of an
incentive option may subject a participant to, or increase a participant’s liability for, the alternative
minimum tax.
Restricted Stock. A participant will not be taxed upon the grant of a restricted stock award if such
award is not transferable by the participant or is subject to a ‘‘substantial risk of forfeiture,’’ as defined
in the Internal Revenue Code. However, when the shares of common stock that are subject to the
stock award are transferable by the participant and are no longer subject to a substantial risk of
forfeiture, the participant will recognize compensation taxable as ordinary income in an amount equal
to the fair market value of the stock subject to the stock award, less any amount paid for such stock,
and the Company will then be entitled to a corresponding deduction. However, if a participant so elects
at the time of receipt of a stock award, he or she may include the fair market value of the stock subject
to the stock award, less any amount paid for such stock, in income at that time and the Company also
will be entitled to a corresponding deduction at that time.
Other Stock Incentives. A participant will not recognize income upon the grant of any other stock-
based award. Generally, at the time a participant receives payment under any other stock-based award,
he or she will recognize compensation taxable as ordinary income in an amount equal to the cash or
the fair market value of the common stock received, and the Company will then be entitled to a
corresponding deduction.
Benefits under the 2018 Omnibus Plan
Future awards under the 2018 Omnibus Plan will be subject to the discretion of the Committee
and will depend on a variety of factors, including the value of the Company’s stock at the time of
grant, as well as Company, divisional, and individual performance. Accordingly, it is not possible to
determine the benefits that would be received under the 2018 Omnibus Plan.
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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, 2017.
(a)
Number of
securities
to be issued upon
exercise of
outstanding
options,
warrants, and
rights
(b)
Weighted-average
exercise price
of
outstanding
options,
warrants, and
rights(1)
(c)
Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in column
(a))
Plan Category
Equity compensation plans approved by security
holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
310,176(2)(3)
55.60
680,000(4)
Equity compensation plans not approved by
security holders . . . . . . . . . . . . . . . . . . . . . . . .
N/A
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
310,176
N/A
55.60
N/A
680,000
P
r
o
x
y
(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.
(2) Includes (i) 180,000 shares issuable upon the exercise of outstanding SARs, (ii) 41,377 shares
issuable following the vesting and conversion of outstanding performance unit awards, and
(iii) 88,799 shares issuable upon the vesting and conversion of outstanding RSUs, all as of
December 31, 2017. As of December 31, 2017, we had an aggregate of 464,958 stock options and
SARs outstanding. The weighted average exercise price of the stock options and SARs was $55.60
per share.
(3) Includes 159,200 shares that would be issued upon the assumed exercise of 425,200 SARs at the
price of $90.65 per share closing price of our common stock on December 31, 2017.
(4) Represents 680,000 shares available for future issuance under our 2004 Omnibus Plan as of
December 31, 2017.
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ADDITIONAL EXECUTIVE COMPENSATION INFORMATION
Summary Compensation Table
The following table reflects compensation paid to or earned by our named executive officers for
services rendered during 2017, 2016 and 2015:
Change in
Pension
Value and
Non-Qualified
Deferred
Non-Equity
Name and Principal Position
Year
Salary
($)
Stock
Awards
($)(1)
Option Incentive Plan Compensation
Awards Compensation
($)(2)
Earnings
($)(4)
($)(3)
John P. O’Donnell . . . . . . . . . . . . 2017 830,000 1,351,979 498,003
2016 750,000 1,103,789 382,495
878,890 287,237
2015 625,000
President and
Chief Executive Officer
Bonnie C. Lind . . . . . . . . . . . . . . 2017 410,000
2016 370,000
2015 346,000
Senior Vice President, Chief
Financial Officer and Treasurer
Steven S. Heinrichs . . . . . . . . . . . 2017 365,000
2016 330,000
2015 310,000
Senior Vice President, General
Counsel and Secretary
Julie A. Schertell
. . . . . . . . . . . . 2017 400,000
Senior Vice President,
2016 360,000
President Fine Paper & Packaging 2015 336,000
Matthew L. Duncan(6) . . . . . . . . . 2017 280,000
2016 234,444
Senior Vice President, Chief
Human Resources Officer
267,146
240,238
242,340
208,078
185,697
188,753
260,647
233,716
220,745
136,871
245,482
98,400
83,249
79,221
76,652
64,348
61,763
96,002
81,006
72,139
50,406
50,394
472,478
577,500
850,000
155,595
195,869
322,575
115,431
158,813
263,500
161,150
182,655
416,724
88,550
101,725
0
0
0
695,393
386,467
410,095
0
0
0
0
0
0
0
0
All Other
Compensation
($)(5)
136,148
150,573
133,766
10,300
10,150
9,930
47,128
54,315
52,517
53,152
68,477
53,623
32,943
23,841
Total
($)
3,288,608
2,964,357
2,774,893
1,636,834
1,285,973
1,410,161
812,289
793,173
876,533
970,951
925,854
1,009,231
588,770
655,886
(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 2017 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 2017 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 ‘‘2017 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, Duncan, O’Donnell and Ms. Schertell do not participate
in any of the defined pension plans.
(5)
‘‘All Other Compensation’’ only includes the following items: Neenah’s contribution to the 401(k) account of each of our
named executive officers. The amounts shown for Messrs. Heinrichs, O’Donnell, Duncan 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 as disclosed on page 49 of this Proxy Statement. The amounts shown for Ms. Lind, Mr. Heinrichs,
Duncan, and Ms. Schertell in 2017, 2016, and 2015 include expenses for tax preparation and financial planning.
(6) Mr. Duncan was hired by the Company on February 29, 2016.
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2017 Grants of Plan Based Awards
The following table contains information relating to the plan based awards grants made in 2017 to
our named executive officers under the Omnibus Plan and is intended to supplement the 2017
Summary Compensation Table listed above.
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards(1)
Estimated Future Payouts
Under Equity Incentive
Plan Awards(2)
All Other
Option
Awards
(3)
Exercise
or Base
Number of
Securities
Price of
Underlying Option
Award
($/SH)
(#)
Name and
Principal Position
John P. O’Donnell
.
President and Chief
Executive Officer
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
Bonnie C. Lind .
.
Senior Vice President,
Chief Financial Officer
and Treasurer
Plan
Grant
Date
. MIP 01/30/2017
PSU 01/30/2017
SAR 01/30/2017
. MIP 01/30/2017
PSU 01/30/2017
SAR 01/30/2017
.
Steven S. Heinrichs .
.
Senior Vice President,
General Counsel and
Secretary
.
.
.
Julie A. Schertell
.
Senior Vice President,
President Fine
Paper & Packaging
.
.
.
.
.
. MIP 01/30/2017
PSU 01/30/2017
SAR 01/30/2017
.
.
.
.
.
. MIP 01/30/2017
PSU 01/30/2017
SAR 01/30/2017
Matthew L. Duncan .
.
Senior Vice President,
Chief Human Resources Officer
.
.
.
.
.
. MIP 01/30/2017
PSU 01/30/2017
SAR 01/30/2017
Threshold Target Maximum Threshold Target Maximum Options
(#)
(#)
(#)
($)
($)
($)
0
0
0
0
0
747,000
1,494,000
5,658
14,145
28,290
246,000
492,000
1,118
2,795
5,590
36,753
82.15
7,262
82.15
182,500
365,000
871
2,177
4,354
5,657
82.15
220,000
550,000
1,091
2,727
5,454
7,085
82.15
140,000
280,000
573
1,432
2,864
3,720
82.15
Grant Date
Fair
Value of
Stock and
Option
Awards
($)
1,351,979
498,003
267,146
98,400
208,078
76,652
260,647
96,002
136,871
50,406
P
r
o
x
y
(1)
(2)
Reflects the range of potential annual incentive bonus payments that could have been earned by each named executive officer under
Neenah’s MIP in 2017. The actual bonuses earned in 2017 are reflected in the Summary Compensation Table above under the caption
‘‘Non-Equity Incentive Plan Compensation.’’ For more information regarding annual incentive bonus opportunities, see the discussion in the
Compensation Discussion and Analysis.
Reflects the range of potential performance share units that may be earned by each named executive officer, based on the Company’s level
of achievement of performance goals in 2017 and total shareholder return relative to a peer group for the performance period ending
December 31, 2017. After the performance period the shares remain subject to a two year holding period. For more information regarding
the performance share units, including how the number of performance share units awarded was determined and the vesting terms applicable
to such units, see the discussion in the Compensation Discussion and Analysis. Outstanding restricted share units receive dividends at the
same rate as other stockholders.
(3)
The SARs vest as to one-third of the shares on each of the first three anniversaries of the grant date.
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Outstanding Equity Awards at 2017 Fiscal Year-End
The following table sets forth information concerning outstanding equity awards for our named
executive officers as of December 31, 2017.
Option Awards
Stock Awards
Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Number of
Securities
Underlying
Number of
Securities
Underlying
Unexercised Unexercised Unexercised Option
Options (#) Options (#)
Exercise
Exercisable Unexercisable Options (#) Price ($)
Unearned
Name and Principal
Position
Equity
Incentive
Equity
Incentive
Plan Awards:
Plan Awards: Market or
Number of
Unearned
Payout Value
of Unearned
Shares, Units Shares, Units
Number of
Shares or Market
Value of
Units or
shares or Rights That
Stock That
Units of
Expiration Have Not
Stock
Have Not
Vested
or Other
Option
Vested
Date
or Other
Rights That
Have Not
Vested ($)
John P. O’Donnell
.
President and Chief
Executive Officer
.
.
.
.
.
.
11,627
9,437
0
5,813
18,875
36,753
.
.
.
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
.
.
.
.
.
.
.
.
.
.
.
.
Matthew L. Duncan .
.
Senior Vice President,
Chief Human Resources
Officer
.
.
.
.
1,728
1,603
2,054
0
1,734
0
1,588
0
3,000
4,900
4,370
2,920
1,999
0
793
0
0
1,604
4,108
7,262
0
1,251
3,175
5,657
0
0
0
1,460
3,997
7,085
1,587
3,720
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
59.72(4)
57.95(5)
82.15(6)
01/26/2025
01/25/2026
01/29/2027
42.82(3)
59.72(4)
57.95(5)
82.15(6)
01/27/2024
01/26/2025
01/25/2026
01/29/2027
31.23(2)
59.72(4)
57.95(5)
82.15(6)
01/28/2023
01/26/2025
01/25/2026
01/29/2027
24.09(1)
31.23(2)
42.82(3)
59.72(4)
57.95(5)
82.15(6)
01/24/2022
01/28/2023
01/27/2024
01/26/2025
01/25/2026
01/29/2027
60.56(7)
82.15(6)
02/28/2026
01/29/2027
15,401(8)
14,145(9)
1,103,789
1,351,979
3,352(8)
2,795(9)
240,238
267,146
2,591(8)
2,177(9)
185,697
208,078
3,261(8)
2,727(9)
233,716
260,647
1,942(8)
1,432(9)
145,437
136,871
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
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 stock appreciation rights were granted on January 30, 2017, and vest as follows: 33.34% on January 30, 2018 and 33.33% on both January 30,
2019 and January 30, 2020.
These stock appreciation rights were granted to Mr. Duncan on February 29, 2016 and vest as follows: 33.34% on February 28, 2017, and 33.33% on
both February 28, 2018 and February 28, 2019.
These performance share units target levels were set on January 16, 2016 and were earned on December 31, 2016, based on the Company’s
achievement of performance goals during the performance period ending December 31, 2016. The awards were granted at 138% of target 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.
These performance share units target levels were set on January 30, 2017 and 75% of the award was earned on December 31, 2017, based on the
Company’s achievement of performance goals during the performance period ending December 31, 2017. This component of the awards were granted
at 108% of target as disclosed in the CD&A Section of the 2017 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. The remaining 25% of the grant is subject to a three year performance period ending December 31, 2019.
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Option Exercises and Stock Vested in 2017
The following table sets forth information regarding options exercised and stock awards vested for
our named executive officers in 2017.
Option Awards
Stock Awards(2)
Name
Number of
Shares
Acquired on
Exercise (#)
. . . . . . . . . . . . . . . . . . . . . .
John P. O’Donnell
Bonnie C. Lind . . . . . . . . . . . . . . . . . . . . . . . .
Steven S. Heinrichs . . . . . . . . . . . . . . . . . . . . . .
Julie A. Schertell
. . . . . . . . . . . . . . . . . . . . . . .
Matthew L. Duncan . . . . . . . . . . . . . . . . . . . . .
145,748
1,603
6,529
1,601
1,189
(1) Reflects the market value of the shares on the vesting date.
Value Realized
on Exercise ($)
8,747,566
41,650
233,240
98,323
25,502
Number of
Shares
Acquired on
Vesting (#)
16,046
4,424
3,446
4,030
1,652
Value Realized
on Vesting ($)(1)
1,454,570
401,036
312,380
365,320
121,009
(2) These shares represent the vesting of the Performance Share Units granted to each of our named
executive officer in January of 2015, which vested on December 31, 2017, after a one year performance
and two year holding period.
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Pension Plans
The Neenah 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 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 is 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 2017 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.
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2017 Pension Benefits
The following table sets forth information as of December 31, 2017 regarding accumulated benefits
to our named executive officers under our Pension Plan, Supplemental Pension Plan and German
Pension Plans.
Name
Plan Name
Bonnie C. Lind . . . . . Neenah Pension Plan
Neenah Supplemental Pension Plan
Number of Years
Credited Service(1)
Present Value of
Accumulated Benefit ($)(2)
36.0
36.0
1,964,349
2,941,242
(1) Includes years of service credited for employment with Kimberly-Clark prior to Neenah’s spin-off
for Ms. Lind
(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 2017
Annual Report on Form 10-K.
2017 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. Ms. Lind
does not participate in the Supplemental RCP due to her participation in the Pension Plan and
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Supplemental Pension Plan. Named executive officer participation in the Supplemental RCP and the
Deferred Compensation Plan in 2017 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
Matthew L. Duncan . . . . . . . . . . . . . .
Senior Vice President,
Chief Human Resources Officer
Executive
Contributions
in last
Fiscal Year(1)
Company
Contributions
in last
Fiscal Year(2)
Aggregate
Earnings
in last
Fiscal Year
Aggregate
Withdrawal/
Distributions
0
0
0
0
$99,531
$90,617
$19,036
$28,388
$23,449
$28,728
$ 7,541
$
276
0
0
0
0
Aggregate
Balance
at Last
Fiscal Year
$778,958
$254,156
$223,938
$
7,850
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(1) None of our named executive officers elected to defer compensation in 2017 under the Deferred
Compensation Plan
(2) Amounts are reported as 2017 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 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 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 Executive Severance Plan provides that
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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.
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, 2017.
Payments
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 . . . . . . . . . . . . . . . . . .
Aggregate Payments . . . . . . . . . . . . . .
John P.
O’Donnell
Bonnie C.
Lind
Steven S.
Heinrichs
Julie A.
Schertell
Matthew L.
Duncan
$3,154,000
$1,312,000
$1,095,000
$1,240,000
$ 840,000
$
0
$1,109,442
$2,965,343
$ 320,538
$ 272,123
38,588
$
$
50,000
$7,910,034
$
0
$ 245,672
$ 624,579
$
63,364
$ 808,436
36,956
$
$
50,000
$3,141,007
$
0
$ 190,604
$ 484,071
49,314
$
86,486
$
50,446
$
$
50,000
$2,005,921
$
0
$ 236,115
$ 608,262
61,823
$
89,184
$
38,588
$
$
50,000
$2,323,936
0
$
$
79,372
$ 348,096
32,453
$
59,148
$
50,446
$
$
50,000
$1,459,515
(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. Since the assumed termination is December 31, 2017 the Non-Equity
Incentive Payment for 2017 would have been earned and paid to the executives and would not be
payable under the Executive Severence Plan.
(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 $90.65 and a change-in-control date of
December 31, 2017.
(4) All unearned target performance share units vest upon a change-in-control event. Amounts are
based on target 2016 and 2017 performance share unit grants.
(5) Actuarial value attributable to retirement benefits.
(6) Estimated value associated with the continuation of medical and dental for two years
post-termination.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
The following directors served on the Compensation Committee during 2017: Ms. Dano,
Mr. McGovern, Mr. Lucas and Dr. Wood. None of the members of the Compensation Committee was
an officer or employee of Neenah during 2017 or any time prior thereto, and none of the members had
any relationship with Neenah during 2017 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 2017, 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 April 10, 2018 representing restricted
stock units granted in lieu of a quarterly cash dividend granted in 2017 and 2018. Ms. Schertell filed a
Form 4 late on September 7, 2017 representing a gift of shares transaction on August 29, 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, 2017. 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,
2017 and determined to engage Deloitte as the independent registered public accounting firm of
Neenah for the fiscal year ending December 31, 2018. 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, 2017 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, 2018. 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, 2017 and December 31, 2016 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
$1,934,000
0
0
0
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,737,150
$1,934,000
2016
2017
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.
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
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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 2017 and fiscal 2016, including those services described in the table
above under the captions ‘‘Audit Fees’’.
STOCKHOLDERS’ PROPOSALS FOR 2019 ANNUAL MEETING
Proposals of stockholders, excluding nominations for the Board, intended to be presented at the
2019 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, 2018, 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 2019 Annual Meeting. In the event that the date of the
2019 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 2019 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 2019 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 2019 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.
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.
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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 2018 Annual Meeting. This means
that:
(cid:127) 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;
(cid:127) 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 2018 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
(cid:127) 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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Page Dim: 8.500� X 11.000� Copy Dim: 38. X 54.3
File: DY44001A.;9
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APPENDIX A
Neenah Paper, Inc. DEF 14A
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NEENAH, INC.
2018 OMNIBUS STOCK AND INCENTIVE COMPENSATION PLAN
Neenah Paper, Inc. DEF 14A
Proj: P2940ATA18 Job: 18ZAG44001 (18-2940-1)
Page Dim: 8.500� X 11.000� Copy Dim: 38. X 54.3
File: LC44001A.;7
v6.8
MERRILL CORPORATION CHE109576// 2-APR-18 14:00 DISK126:[18ZAG1.18ZAG44001]LE44001A.;21
mrll_1116.fmt Free: 50D*/120D Foot: 0D/ 0D VJ RSeq: 1 Clr: 0
DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;141
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NEENAH, INC.
2018 OMNIBUS STOCK AND INCENTIVE COMPENSATION PLAN
TABLE OF CONTENTS
ARTICLE 1. ESTABLISHMENT AND PURPOSE OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . . .
1.1
1.2
Establishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purpose of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE 2. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE 3. ELIGIBILITY, SHARES AVAILABLE AND ADMINISTRATION . . . . . . . . . . . . . . . .
3.1
3.2
3.3
3.4
3.5
3.6
3.7
Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock Subject to the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share Usage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Administration of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Delegation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Limits on Incentive Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Limits on Non-Employee Director Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE 4. TERMS OF AWARDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.1
4.2
4.3
4.4
4.5
4.6
Terms and Conditions of All Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(a) Number of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) Award Agreement or Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c) Date of Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(d) Tandem Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(e) Non-Transferability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(f) Deferrals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(g) Alterations to Awards after Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(h) Awards Granted under Prior Plan and Code Section 162(m) Transition Rule . . . . .
Terms and Conditions of Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(a) Option Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) Option Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c)
Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(d) Conditions to the Exercise of an Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(e) Termination of Incentive Stock Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Special Provisions for Certain Substitute Options . . . . . . . . . . . . . . . . . . . . . . . . .
(f)
(g)
Substituting Stock Appreciation Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Terms and Conditions of Stock Appreciation Rights . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(a)
(b)
Stock Appreciation Right Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c) Conditions to Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Terms and Conditions of Stock Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(a)
Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Terms and Conditions of Restricted Stock Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(a)
(b) Conditions to Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Terms and Conditions of Performance Unit Awards . . . . . . . . . . . . . . . . . . . . . . . . . . .
(a)
Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) Conditions to Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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4.7
4.8
4.9
Terms and Conditions of Dividend Equivalent Rights . . . . . . . . . . . . . . . . . . . . . . . . . .
(a)
Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) Conditions to Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Terms and Conditions of Deferrals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(a)
(b) Conditions to Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE 5. RESTRICTIONS ON STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.1
5.2
Escrow of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restrictions on Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE 6. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.1
6.2
6.3
6.4
6.5
6.6
6.7
6.8
6.9
6.10
6.11
6.12
6.13
6.14
6.15
6.16
Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in Capitalization; Merger; Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(a) Equity Restructuring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) Other Changes in Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Substitution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c)
(d) Plan is not a Limit on Company Powers
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compliance with Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
No Representations or Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Right to Terminate Employment or Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-Alienation of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Conditions and Restrictions upon Stock subject to Awards . . . . . . . . . . . . . . . . . . . . . .
Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restrictions on Delivery and Sale of Shares; Legends . . . . . . . . . . . . . . . . . . . . . . . . . .
Listing and Legal Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Clawback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Awards to Non-U.S. Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Termination and Amendment of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Choice of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Neenah Paper, Inc. DEF 14A
Proj: P2940ATA18 Job: 18ZAG44001 (18-2940-1)
Page Dim: 8.500� X 11.000� Copy Dim: 38. X 54.3
File: LE44001A.;21
v6.8
MERRILL CORPORATION CHE109576// 2-APR-18 14:01 DISK126:[18ZAG1.18ZAG44001]LG44001A.;9
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DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;141
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NEENAH, INC.
2018 OMNIBUS STOCK AND INCENTIVE COMPENSATION PLAN
ARTICLE 1. ESTABLISHMENT AND PURPOSE OF THE PLAN
1.1 Establishment. Neenah, Inc., a Delaware corporation (the ‘‘Company’’) previously established
the Neenah Paper, Inc. 2004 Omnibus Stock and Incentive Plan maintained under an amended and
restated plan document effective May 30, 2013 (the ‘‘Prior Plan’’). The Neenah, Inc. 2018 Omnibus
Stock and Incentive Compensation Plan (the ‘‘Plan’’) is an amendment and restatement of the Prior
Plan. The Plan will become effective May 23, 2018, the date of annual meeting of the Company’s
stockholders (the ‘‘Effective Date’’), subject to approval of the Plan by the Company’s stockholders.
1.2 Purpose of the Plan. The Plan is intended to (a) provide incentive to officers, employees,
directors and consultants of the Company and its Affiliates to stimulate their efforts toward the
continued success of the Company and to operate and manage the business in a manner that will
provide for the long-term growth and profitability of the Company; (b) encourage Stock ownership by
officers, employees, directors and consultants by providing them with a means to acquire a proprietary
interest in the Company, acquire shares of Stock, or to receive compensation which is based upon
appreciation in the value of Stock; and (c) provide a means of obtaining, rewarding and retaining
officers, employees, directors, and consultants.
ARTICLE 2. DEFINITIONS
Whenever used herein, the masculine pronoun will be deemed to include the feminine, and the
singular to include the plural, unless the context clearly indicates otherwise, and the following
capitalized words and phrases are used herein with the meaning thereafter ascribed:
2.1 ‘‘Affiliate’’ means:
(a) Any Subsidiary,
(b) An entity that directly or through one or more intermediaries controls, is controlled by,
or is under common control with the Company, as determined by the Company, or
(c) Any entity in which the Company has such a significant interest that the Company
determines it should be deemed an ‘‘Affiliate,’’ as determined in the sole discretion of the
Company.
2.2 ‘‘Award’’ means, individually and collectively, Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights, Stock Awards (including Performance Stock Awards), Restricted
Stock Units (including Performance Share Unit Awards), Performance Unit Awards, Dividend
Equivalent Rights and Cash Awards.
2.3 ‘‘Award Agreement’’ means an agreement between the Company and a Participant or other
documentation evidencing any Award granted under the Plan.
2.4 ‘‘Award Program’’ means a written program established by the Committee, pursuant to which
Awards are granted under the Plan under uniform terms, conditions and restrictions set forth in such
written program.
2.5 ‘‘Beneficial Owner’’ or ‘‘Beneficial Ownership’’ shall have the meaning ascribed to such term in
Rule 13d-3 of the General Rules and Regulations under the Exchange Act.
2.6 ‘‘Board of Directors’’ means the board of directors of the Company.
2.7 ‘‘Cash Awards’’ means rights to receive cash payments as described in Section 4.8.
2.8 ‘‘Change in Control’’ shall have the meaning provided in the applicable Award Agreement;
provided, however (a) if required to avoid an Award being subject to tax under Code Section 409A, a
Change in Control shall not be deemed to have occurred unless the event qualifies as a change in the
ownership or effective control of the Company or in the ownership of a substantial portion of its assets
Neenah Paper, Inc. DEF 14A
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under Code Section 409A(a)(2)(A)(v) and (ii) such definition must be determined by the Committee to
result in an actual change in control of the Company and shall not include provisions such as
announcement or commencement of a tender or exchange offer, a potential takeover, shareholder
approval (as opposed to consummation) of a merger or other transaction, acquisition of 15% or less of
the Outstanding Company Voting Securities, an unapproved change in less than a majority of the
Board or other similar provisions in which the Committee determines an actual change in control does
not occur.
2.9 ‘‘Code’’ means the Internal Revenue Code of 1986, as amended.
2.10 ‘‘Committee’’ means the Compensation Committee of the Board of Directors.
2.11 ‘‘Deferral(s)’’ refers to the rights described in Section 4.9.
2.12 ‘‘Disability’’ has the meaning provided in the applicable Award Agreement, or if defined by
reference to the Plan, means a physical or mental illness, injury or impairment which causes a
Participant to meet the requirements to receive long-term disability benefits under a plan sponsored by
the Company or an Affiliate, or if no such plan is applicable, a Participant’s inability to engage in the
essential functions of his duties due to a medically determinable physical or mental impairment, which
can be expected to result in death or to be of long-continued and indefinite duration. Notwithstanding
the foregoing, Disability means, as to an Incentive Stock Option, a ‘‘permanent and total disability’’
within the meaning of Code Section 22(e)(3). In the event of a dispute, the determination of Disability
will be made by the Committee and will be supported by advice of a physician competent in the area to
which such Disability relates. Notwithstanding the foregoing, if specified in an Award Agreement or
otherwise required to avoid an Award being subject to tax under Code Section 409A, a Disability shall
not be deemed to have occurred unless the event also qualifies as a disability under Code
Section 409A(a)(2)(C).
2.13 ‘‘Dividend Equivalent Rights’’ means certain rights to receive cash payments as described in
Section 4.7.
2.14 ‘‘Exchange Act’’ means the Securities Exchange Act of 1934, as amended from time to time, or
any successor act thereto.
2.15 ‘‘Fair Market Value’’ with regard to a date means:
(a) If the shares of Stock are actively traded on any national securities system or any
nationally recognized quotation or market system, the price at which Stock shall have been sold as
reported by the exchange or system selected by the Committee on which the shares of Stock are
then actively traded;
(b) if the shares of Stock are not actively traded on any such exchange or system but are
reported by such exchange or system, the price of Stock as reported by such exchange or system;
or
(c)
if the shares of Stock are not actively traded or reported on any such exchange or system,
the fair market value of the Stock as determined by the Committee determined by the reasonable
application of a reasonable valuation method as most recently determined (but in no event more
than twelve (12) months earlier), but taking into account the facts and circumstances as of such
date.
For purposes of Subsection (a), (b), or (c) above, the Committee may use the closing price as of
the applicable date or the last trading or business day before that date, the average of the high
and low prices as of the applicable date, the last trading or business day before that date or for a
period certain ending on either such date, the price determined at the time, or immediately before
or immediately after, the transaction is processed, the tender offer price for shares of Stock, or any
2
Neenah Paper, Inc. DEF 14A
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Page Dim: 8.500� X 11.000� Copy Dim: 38. X 54.3
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other method which the Committee determines is reasonably indicative of fair market value;
provided, however, that for purposes of granting Nonqualified Stock Options or Stock
Appreciation Rights, Fair Market Value of Stock shall be determined in accordance with the
requirements of Code Section 409A, and for purposes of granting Incentive Stock Options, Fair
Market Value of Stock shall be determined in accordance with the requirements of Code
Section 422.
2.16 ‘‘Incentive Stock Option’’ means an incentive stock option within the meaning of Section 422 of
the Internal Revenue Code.
2.17 ‘‘Non-employee Director’’ means a member of the Board of Directors who is not an employee
of the Company or a Subsidiary.
2.18 ‘‘Non-Qualified Stock Option’’ means a stock option that is not an Incentive Stock Option.
2.19 ‘‘Option’’ means a Non-Qualified Stock Option or an Incentive Stock Option.
2.20 ‘‘Over 10% Owner’’ means an individual who at the time an Incentive Stock Option is granted
owns Stock possessing more than 10% of the total combined voting power of the Company or one of
its Subsidiaries, determined by applying the attribution rules of Code Section 424(d).
2.21 ‘‘Participant’’ means an individual who receives an Award hereunder.
2.22 ‘‘Performance Unit Award’’ refers to a performance unit award as described in Section 4.6.
2.23 ‘‘Performance Goals’’ means any one or more performance goals established by the
Committee, including without limitation, goals, either individually, alternatively or in any combination,
applied to the Company as a whole or to a business unit or Affiliate, either individually, alternatively or
in combination, and measured over a Performance Period established by the Committee, on an
absolute basis or relative to a pre-established target, to prior period results or to a designated
comparison group or index, in each case as specified by the Committee in the Award. The Committee
may adjust any evaluation of performance under a Performance Goal in its discretion at any time.
2.24 ‘‘Performance Period’’ means, with respect to an Award, a period of time within which the
Performance Goals relating to such Award are to be measured. The Performance Period will be
established by the Committee.
2.25 ‘‘Performance Stock Awards’’ means Stock Awards containing Performance Goals.
2.26 ‘‘Performance Share Unit Awards’’ means Restricted Stock Unit awards containing Performance
Goals.
2.27 ‘‘Person’’ shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act
and used in Sections 13(d) and 14(d) thereof, including a ‘‘group’’ as defined in Section 13(d) thereof.
2.28 ‘‘Restricted Stock Unit’’ refers to the rights described in Section 4.5.
2.29 ‘‘Stock’’ means Company’s common stock.
2.30 ‘‘Stock Appreciation Right’’ means a stock appreciation right described in Section 4.3.
2.31 ‘‘Stock Award’’ means a stock award described in Section 4.4.
2.32 ‘‘Subsidiary’’ means any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company if, at the relevant time, each of the corporations other than
the last corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other corporations in the chain. A
‘‘Subsidiary’’ shall include any entity other than a corporation to the extent permissible under Code
Section 424(f) or regulations or rulings thereunder.
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ARTICLE 3. ELIGIBILITY, SHARES AVAILABLE AND ADMINISTRATION
3.1 Eligibility. Awards may be granted only to officers, employees, directors, and consultants of
the Company, or any Affiliate of the Company; provided, however, that an Incentive Stock Option may
only be granted to an employee of the Company or any Subsidiary.
3.2 Stock Subject to the Plan. Subject to adjustment in accordance with Section 6.2, a number of
shares of Stock equal to the sum of (a) the number of shares of Stock subject to outstanding Awards
under the Prior Plan immediately before the Effective Date, (b) the number of shares of Stock
authorized and available for issuance of future Awards under the Prior Plan immediately before the
Effective Date, and (c) eight hundred thousand (800,000) shares of Stock are hereby reserved
exclusively for issuance upon exercise or payment pursuant to Awards.
3.3 Share Usage. Stock issued pursuant to Options or Stock Appreciation Rights shall reduce the
number of shares of Stock available under Section 3.2 by one (1) share with respect to each share
issued pursuant to such Award. Stock issued pursuant to Awards other than Options or Stock
Appreciation Rights shall reduce the number of shares of Stock available under Section 3.2 by two and
3/10’s (2.3) shares of Stock with respect to each share of Stock issued pursuant to such Award. The
shares of Stock attributable to any portion of an Award that is forfeited, cancelled, expired, terminated
or paid or settled in cash or otherwise without the issuance of shares of Stock for any reason without
becoming vested, paid, exercised, converted or otherwise settled in full in shares of Stock will again be
available for issuance under Section 3.2, provided, however, that shares of Stock subject to an Award
under the Plan shall not again be available for issuance if such Shares have been (a) tendered or
withheld to pay the exercise price of Options or Stock Appreciation Rights, (b) withheld or remitted to
satisfy the tax withholding on Awards, (c) repurchased by the Company using the cash proceeds
received by the Company from the exercise of Options granted under the Plan or (d) subject to a Stock
Appreciation Right or Option settled in Stock and not issued upon net settlement or net exercise of
the Stock Appreciation Right or Option.
3.4 Administration of the Plan. The Plan is administered by the Committee. The Committee has
full authority in its discretion to determine the officers, employees, directors and consultants of the
Company or its Affiliates to whom Awards will be granted and the terms and provisions of Awards,
subject to the Plan. Subject to the provisions of the Plan, the Committee has full and conclusive
authority to interpret the Plan; to prescribe, amend and rescind rules and regulations relating to the
Plan; to determine the terms and provisions of the respective Award Agreements and to make all other
determinations necessary or advisable for the proper administration of the Plan. The Committee’s
determinations under the Plan need not be uniform and may be made by it selectively among persons
who receive, or are eligible to receive, Awards under the Plan (whether or not such persons are
similarly situated). The Committee’s decisions are final and binding on all Participants.
3.5 Delegation. The Committee may authorize individuals other than its members to carry out its
policies and directives subject to the limitations and guidelines set by the Committee, and may delegate
its authority under the Plan, provided, however, the delegation of authority to grant Awards shall be
limited to grants by the Chief Executive Officer of the Company to newly hired employees, or to
respond to special recognition or retention needs, and any such grants shall be limited to eligible
Participants who are not subject to Section 16 of the Exchange Act. The delegation of authority shall
be limited as follows: (a) with respect to individuals who are subject to Section 16 of the Exchange Act,
the authority to grant Awards, the selection for participation, decisions concerning the timing, pricing
and amount of a grant or Award and authority to administer Awards shall not be delegated by the
Committee; (b) the maximum number of Shares covered by Awards which may be granted by the Chief
Executive Officer within any calendar year period shall not exceed three hundred thousand (300,000);
and (c) any delegation shall satisfy all applicable requirements of Rule 16b-3 of the Exchange Act, or
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any successor provision. Any individual to whom such authority is granted shall continue to be eligible
to receive Awards under the Plan.
3.6 Limits on Incentive Stock Options. Up to one hundred percent (100%) of the shares of Stock
reserved for issuance pursuant to Awards are permitted (but are not required) to be issued pursuant to
Incentive Stock Options. In the case of Incentive Stock Options, the aggregate Fair Market Value
(determined as at the date an Incentive Stock Option is granted) of stock with respect to which stock
options intended to meet the requirements of Code Section 422 become exercisable for the first time
by an individual during any calendar year under all plans of the Company and its Subsidiaries may not
exceed $100,000; provided further, that if the limitation is exceeded, the Incentive Stock Option(s)
which cause the limitation to be exceeded will be treated as Non-Qualified Stock Option(s).
3.7 Limits on Non-Employee Director Compensation. With respect to any Participant who is a
Non-employee Director, the aggregate dollar value of (a) any Awards granted under the Plan (based on
the grant date fair value of Awards as determined for financial reporting purposes) and (b) any cash or
other compensation that is not equity-based and that is paid by the Company with respect to the
Non-employee Director’s service as a member of the Board of Directors or any committees thereof for
any fiscal year of the Company shall not exceed $700,000.
4.1 Terms and Conditions of All Awards.
ARTICLE 4. TERMS OF AWARDS
(a) Number of Shares. The number of shares of Stock as to which an Award may be
granted will be determined by the Committee in its sole discretion, subject to the provisions of
Section 3.2 as to the total number of shares available for grants under the Plan and subject to the
limits in Sections 3.6 and 3.7.
(b) Award Agreement or Program. Each Award will be evidenced either by an Award
Agreement in such form and containing such terms, conditions and restrictions as the Committee
may determine to be appropriate, including without limitation, Performance Goals or other
criteria, if any, that must be achieved as a condition to vesting or settlement of the Award, or be
made subject to the terms of an Award Program, containing such terms, conditions and restrictions
as the Committee may determine to be appropriate, including without limitation, Performance
Goals or other criteria, if any, that must be achieved as a condition to vesting or settlement of the
Award; provided, however the Committee shall not be permitted to provide for vesting in
connection with a change in control of the Company that does not meet the requirements of the
definition of Change in Control hereunder. Each Award Agreement or Award Program is subject
to the terms of the Plan and any provisions contained in the Award Agreement or Award Program
that are inconsistent with the Plan are null and void.
(c) Date of Grant. The date as of which an Award is granted will be the date on which the
Committee has approved the terms and conditions of the Award and has determined the recipient
of the Award and the number of shares of Stock covered by the Award (or formula for
determining the same), and has taken all such other actions necessary to complete the grant of the
Award or such later date as may be specified in the approval of the Award.
(d) Tandem Awards. Any Award may be granted in connection with all or any portion of a
previously or contemporaneously granted Award, subject to the other requirements of the Plan.
Exercise or vesting of an Award granted in connection with another Award may result in a pro
rata surrender or cancellation of any related Award, as specified in the applicable Award
Agreement or Award Program.
(e) Non-Transferability. Awards and rights under Awards are not saleable, transferable,
alienable or assignable except by will or by the laws of descent and distribution, and each Award
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and each Award and right under an Award is exercisable, during the Participant’s lifetime, only by
the Participant; or in the event of the Disability of the Participant, by the legal representative of
the Participant; or in the event of death of the Participant, by the legal representative of the
Participant’s estate, or if no legal representative has been appointed within ninety (90) days of the
Participant’s death, by the person(s) taking under the laws of descent and distribution applicable to
the Participant; provided, however, that the Committee may allow a Participant to designate a
beneficiary or beneficiaries in the manner determined by the Committee to exercise the rights of a
Participant with respect to an Award upon the death of a Participant; provided, further, the
Committee may waive any of the provisions of this Section or provide otherwise as to any Awards
other than Incentive Stock Options, but the Committee may not allow a Participant to transfer an
Award prior to its full settlement for value.
(f) Deferrals. The Committee may establish rules and procedures to permit or require a
holder of an Award to defer recognition of taxable income upon the exercise or vesting of an
Award.
(g) Alterations to Awards after Grant. After the date of grant of an Award, the Committee
may, in its sole discretion, waive, modify or amend the terms and conditions of an Award
(including without limitation, accelerating vesting and/or the time for payment or exercise, or
curtailing the period for exercise upon a Change in Control) or terminate an Award, except to the
extent that such alteration would be inconsistent with other provisions of the Plan or would,
without the Participant’s consent, adversely affect the rights of a Participant under the Award in a
manner not permitted by the Plan; provided, however, that no such consent shall be required if the
Committee determines in its sole discretion that such alteration either (A) is required or advisable
for the Company, the Plan or an Award to satisfy or conform to any law or regulation or to meet
the requirements of any accounting standard or (B) is not reasonably likely to significantly
diminish the benefits provided under such Award; provided, further, that the Committee shall not
be permitted to accelerate vesting in connection with a change in control of the Company that
does not meet the requirements of the definition of Change in Control hereunder.
(h) Awards Granted under Prior Plan and Code Section 162(m) Transition Rule. Awards
granted under the Prior Plan before the Effective Date shall be subject to the terms and conditions
of the Plan, except (A) if an Award granted under the Prior Plan incorporates a definition by
reference to the Prior Plan (other than the definition of Plan), the definition in the Prior Plan
shall govern if different from the definition in the Plan or if no such definition appears in the
Plan, (B) no termination, amendment, suspension, or modification of the Prior Plan or an Award
granted under the Prior Plan shall adversely affect in any material way any Award granted under
the Prior Plan, without the written consent of the Participant holding such Award, and (C) solely
to the extent required to preserve the availability of a tax deduction for the Company under Code
Section 162(m), the terms of the Prior Plan shall govern each Award granted or to be granted
under the Prior Plan (i) that constitutes remuneration pursuant to a binding written contract that
was in effect on November 2, 2017 or (ii) as to which transition relief from the changes made to
Code Section 162(m) by the Tax Cuts and Jobs Act of 2017 is otherwise available.
4.2 Terms and Conditions of Options. Each Option granted under the Plan must be evidenced by
an Award Agreement. At the time any Option is granted, the Committee will determine whether the
Option is to be an Incentive Stock Option described in Code Section 422 or a Non-Qualified Stock
Option, and the Option must be clearly identified as to its status as an Incentive Stock Option or a
Non-Qualified Stock Option. Incentive Stock Options may only be granted to employees of the
Company or any Subsidiary. At the time any Incentive Stock Option granted under the Plan is
exercised, the Company will be entitled to legend the certificates (if any) representing the shares of
Stock purchased pursuant to the Option to clearly identify them as representing the shares purchased
upon the exercise of an Incentive Stock Option. An Incentive Stock Option may only be granted within
ten (10) years from the earlier of the date the Plan is adopted or approved by the Company’s
stockholders.
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(a) Option Price. Subject to adjustment in accordance with Section 6.2 and the other
provisions of this Section, the exercise price (the ‘‘Exercise Price’’) per share of Stock purchasable
under any Option must be as set forth in the applicable Award Agreement, but in no event may it
be less than the Fair Market Value on the date the Option is granted. Except for adjustments as
contemplated by Section 6.2 hereof, unless approved by the stockholders of the Company, in no
event will the Exercise Price per share of Stock of any Option be reduced after the date of grant
of the Option and no Option may be cancelled or surrendered in exchange for an Option with a
lower Exercise Price per share of Stock or in exchange for cash or other consideration (‘‘Option
Repricing’’). With respect to each grant of an Incentive Stock Option to a Participant who is an
Over 10% Owner, the Exercise Price may not be less than 110% of the Fair Market Value on the
date the Option is granted.
(b) Option Term. Any Option granted to a Participant shall not be exercisable after the
expiration of ten (10) years after the date the Option is granted; provided, however that any
Incentive Stock Option granted to an Over 10% Owner shall not be exercisable after the
expiration of five (5) years after the date the Option is granted. The term of any Option shall be
specified in the applicable Award Agreement.
(c) Payment. Payment for all shares of Stock purchased pursuant to exercise of an Option
will be made in any form or manner authorized by the Committee in the Award Agreement or by
amendment thereto, including, but not limited to, cash or, if the Award Agreement provides:
(1) by delivery to the Company of a number of shares of Stock having an aggregate Fair
Market Value of not less than the product of the Exercise Price multiplied by the number of
shares the Participant intends to purchase upon exercise of the Option on the date of delivery;
(2) in a cashless exercise through a broker; or
(3) by having a number of shares of Stock withheld, the Fair Market Value of which as
of the date of exercise is sufficient to satisfy the Exercise Price.
In its discretion, and except to the extent precluded by the Sarbanes-Oxley Act of 2002, as
amended, the Committee also may authorize (at the time an Option is granted or thereafter)
Company financing to assist the Participant as to payment of the Exercise Price on such terms as
may be offered by the Committee in its discretion. Payment must be made at the time that the
Option or any part thereof is exercised, and no shares may be issued or delivered upon exercise of
an Option until full payment has been made by the Participant. The holder of an Option, as such,
has none of the rights of a stockholder.
(d) Conditions to the Exercise of an Option. Each Option granted under the Plan is
exercisable by the Participant or any other designated person, at such time or times, or upon the
occurrence of such event or events, and in such amounts, as the Committee specifies in the Award
Agreement, subject to Section 4.1(g).
(e) Termination of Incentive Stock Option. With respect to an Incentive Stock Option, in the
event of termination of employment of a Participant, the Option or portion thereof held by the
Participant which is unexercised will expire, terminate, and become unexercisable no later than the
expiration of three (3) months after the date of termination of employment; provided, however,
that in the case of a holder whose termination of employment is due to death or Disability, one
(1) year will be substituted for such three (3) month period; provided, further that such time limits
may be exceeded by the Committee under the terms of the grant, in which case, the Incentive
Stock Option will be a Non-Qualified Option if it is exercised after the time limits that would
otherwise apply. For purposes of this Subsection, termination of employment of the Participant will
not be deemed to have occurred if the Participant is employed by another corporation (or a parent
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or subsidiary corporation of such other corporation) which has assumed the Incentive Stock Option
of the Participant in a transaction to which Code Section 424(a) is applicable.
(f) Special Provisions for Certain Substitute Options. Notwithstanding anything to the
contrary in this Section 4.2, any Option issued in substitution for an option previously issued by
another entity, which substitution occurs in connection with a transaction to which Code
Section 424(a) is applicable, may provide for an exercise price computed in accordance with such
Code Section and the regulations thereunder and may contain such other terms and conditions as
the Committee may prescribe to cause such substitute Option to contain as nearly as possible the
same terms and conditions (including the applicable vesting and termination provisions) as those
contained in the previously issued option being replaced thereby.
(g) Substituting Stock Appreciation Rights. The Committee shall have the ability to
substitute, without receiving Participant permission, Stock Appreciation Rights paid only in Stock
(or Stock Appreciation Rights paid in Stock or cash at the Committee’s discretion) for outstanding
Options; provided, the number of shares of Stock subject to the substituted Stock Appreciation
Rights are the same as for the Options, the terms of the substituted Stock Appreciation Rights are
the same as the terms for the Options and the difference between the Fair Market Value per share
of the underlying Stock and the Threshold Price per share of the Stock Appreciation Rights is
equal to the difference between the Fair Market Value per share of the underlying Stock and the
Exercise Price per share of the Options. If, in the opinion of the Committee, this provision creates
adverse accounting consequences for the Company, it shall be considered null and void.
4.3 Terms and Conditions of Stock Appreciation Rights. Each Stock Appreciation Right granted
under the Plan must be evidenced by an Award Agreement. A Stock Appreciation Right entitles the
Participant to receive the excess of (1) the Fair Market Value of a specified or determinable number of
shares of Stock at the time of payment or exercise over (2) a specified or determinable price (the
‘‘Threshold Price’’) which, in the case of a Stock Appreciation Right granted in connection with an
Option, may not be less than the Exercise Price for that number of shares subject to that Option.
Subject to adjustment in accordance with Section 6.2, the Threshold Price per share of Stock
attributable to a Stock Appreciation Right must be as set forth in the applicable Award Agreement, but
in no event may it be less than the Fair Market Value on the date the Stock Appreciation Right is
granted. Except for adjustments as contemplated by Section 6.2 hereof, unless approved by the
stockholders of the Company, in no event will the Threshold Price per share of Stock attributable to a
Stock Appreciation Right be reduced after the date of grant of the Stock Appreciation Right and no
Stock Appreciation Right may be cancelled or surrendered in exchange for a Stock Appreciation Right
with a lower Threshold Price per share of Stock or in exchange for cash or other consideration (‘‘Stock
Appreciation Right Repricing’’). A Stock Appreciation Right granted in connection with an Award may
only be exercised to the extent that the related Award has not been exercised, paid or otherwise
settled.
(a) Settlement. Upon settlement of a Stock Appreciation Right, the Company must pay to
the Participant the excess of (1) the Fair Market Value of the number of shares of Stock
attributable to the Stock Appreciation Right over (2) the Threshold Price, in cash or shares of
Stock (valued at Fair Market Value per share on the date of payment or exercise) as provided in
the Award Agreement or, in the absence of such provision, as the Committee may determine.
(b) Stock Appreciation Right Term. Any Stock Appreciation Right granted to a Participant
shall not be exercisable after the expiration of ten (10) years after the date the Stock Appreciation
Right is granted. The term of any Stock Appreciation Right shall be specified in the applicable
Award Agreement.
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(c) Conditions to Exercise. Each Stock Appreciation Right granted under the Plan is
exercisable or payable at such time or times, or upon the occurrence of such event or events, and
in such amounts, as the Committee specifies in the Award Agreement, subject to Section 4.1(g).
4.4 Terms and Conditions of Stock Awards. A Stock Award shall entitle a Participant to receive a
designated number of shares of Stock. At the time of the grant, the Committee will determine the
factors which will govern the number of the Stock Award, including, at the discretion of the
Committee, any Performance Goals that must be satisfied as a condition to retention of the Award.
The Committee may require a cash payment from the Participant in an amount no greater than the
aggregate Fair Market Value of the shares of Stock awarded determined at the date of grant in
exchange for the grant of a Stock Award or may grant a Stock Award without the requirement of a
cash payment.
(a)
Issuance. Stock Awards shall be issued by the Company in shares of Stock.
(b) Conditions. The number of shares of Stock subject to a Stock Award and restrictions or
conditions on such shares of Stock, if any, will be as the Committee provides in the Award
Agreement, and the certificate (if any) for such shares will bear evidence of any restrictions or
conditions, subject to Section 4.1(g).
4.5 Terms and Conditions of Restricted Stock Units. Restricted Stock Units shall entitle the
Participant to receive, at a specified future date or event, payment of a specified number, or a
percentage or multiple of a specified number, of shares of Stock at the end of a specified period, or
the cash value thereof. At the time of the grant, the Committee will determine the factors which will
govern the number of the Restricted Stock Units so payable, including, at the discretion of the
Committee, any Performance Goals that must be satisfied as a condition to payment. The Committee
may provide for an alternative specified number, percentage or multiple under specified conditions.
(a) Payment. Payment in respect of Restricted Stock Units may be made by the Company in
shares of Stock or in cash (valued at the Fair Market Value per share of Stock as of the date
payment is owed) as provided in the applicable Award Agreement or Award Program, or, in the
absence of such provision, as the Committee may determine.
(b) Conditions to Payment. Each Restricted Stock Unit award granted under the Plan is
payable at such time or times, or upon the occurrence of such event or events, and in such
amounts, as the Committee may specify in the applicable Award Agreement or Award Program,
subject to Section 4.1(g) and intended compliance with or exemption from Code Section 409A.
4.6 Terms and Conditions of Performance Unit Awards. A Performance Unit Award shall entitle
the Participant to receive, at a specified future date, payment of an amount based, all or in part, upon
achievement of Performance Goals. The Performance Unit Award shall be equal to all or a portion of
either (i) the value of a specified or determinable number of units (stated in terms of a designated or
determinable dollar amount per unit) granted by the Committee, or (ii) a percentage or multiple of a
specified amount determined by the Committee. At the time of the grant, the Committee must
determine the base value of each unit; the number of units subject to a Performance Unit Award, the
specified amount and the percentage or multiple of the specified amount, as may be applicable; and
the Performance Goals applicable to the determination of the ultimate payment value of the
Performance Unit Award. The Committee may provide for an alternative base value for each unit or an
alternative percentage or multiple under certain specified conditions.
(a) Payment. Payment in respect of Performance Unit Awards may be made by the
Company in cash or shares of Stock (valued at Fair Market Value per share as of the date
payment is owed) as provided in the applicable Award Agreement or Award Program or, in the
absence of such provision, as the Committee may determine.
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(b) Conditions to Payment. Each Performance Unit Award granted under the Plan shall be
payable at such time or times, or upon the occurrence of such event or events, and in such
amounts, as the Committee may specify in the applicable Award Agreement or Award Program,
subject to Section 4.1(g) and intended compliance with or exemption from Code Section 409A.
4.7 Terms and Conditions of Dividend Equivalent Rights. A Dividend Equivalent Right entitles
the Participant to receive payments from the Company in an amount determined by reference to any
cash dividends paid on a specified number of shares of Stock to Company stockholders of record
during the period such rights are effective. Dividend Equivalent Rights may be granted in connection
with other Awards but may not be granted in connection with an Option or a Stock Appreciation
Right. The Committee may impose such restrictions and conditions on any Dividend Equivalent Right
as the Committee in its discretion shall determine, including the date any such right shall terminate and
may reserve the right to terminate, amend or suspend any such right at any time.
(a) Payment. Payment in respect of a Dividend Equivalent Right may be made by the
Company in cash or shares of Stock (valued at Fair Market Value per share on the date of
payment or exercise) as provided in the Award Agreement or Award Program, or, in the absence
of such provision, as the Committee may determine.
(b) Conditions to Payment. Each Dividend Equivalent Right granted under the Plan is
payable at such time or times, or upon the occurrence of such event or events, and in such
amounts, as the Committee specifies in the applicable Award Agreement or Award Program,
subject to Section 4.1(g) and intended compliance with or exemption from Code Section 409A.
4.8 Cash Awards.
In addition to Dividend Equivalent Rights, the Committee may, at any time
and in its discretion, grant to any Participant the right to receive a cash amount, at such time, in such
amount and subject to such terms and conditions as determined by the Committee in its discretion.
4.9 Terms and Conditions of Deferrals.
If permitted or required by the Committee, a Participant
may or shall defer the receipt of cash or Stock from the exercise or payment of an Award. If a
Participant defers receipt, the Company’s obligation to issue the cash or shares of Stock will be
reflected in a bookkeeping account. All such deferrals shall be subject to such terms and conditions as
the Committee may establish, subject to intended compliance with or exemption from Code
Section 409A.
(a) Payment. Payment in respect of Deferrals may be made by the Company in cash or
shares of Stock, whichever is provided for in the applicable Award Agreement or Award Program.
(b) Conditions to Payment. Each Deferral under the Plan shall be payable at such time or
times or on the occurrence of such event or events, and in such amounts as the Committee may
specify in the applicable Award Agreement or Award Program; provided, however, that subsequent
to the date of a Deferral, the Committee may accelerate the time or times at which the Deferral
will be paid in whole or in part, subject to intended compliance with or exemption from Code
Section 409A.
ARTICLE 5. RESTRICTIONS ON STOCK
5.1 Escrow of Shares. Any shares of Stock issued under the Plan may be evidenced in such
manner as the Committee may deem appropriate, including, without limitation, book-entry registration
or issuance of a Stock certificate. If a Stock certificate is issued with respect to Restricted Stock, such
certificate shall be registered in the name of the Participant and shall bear an appropriate legend
referring to the terms, conditions and restrictions applicable to such Restricted Stock. The Committee
may require that such certificate will be held by a custodian designated by the Committee (the
‘‘Custodian’’), who for the term specified in the applicable Award Agreement, will have the full power
and authority in the Participant’s name, place and stead to transfer, assign and convey to the Company
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any shares of Stock held by the Custodian for such Participant, if the Participant forfeits the shares
under the terms of the applicable Award Agreement. During the period that shares of Stock remain
subject to forfeiture, the Participant is entitled to all rights, except as provided in the applicable Award
Agreement, applicable to shares of Stock not so held.
5.2 Restrictions on Transfer. The Participant does not have the right to make or permit to exist
any disposition of the shares of Stock issued pursuant to the Plan until such shares are vested except as
provided in the Plan or the applicable Award Agreement or Award Program. Any disposition of the
shares of Stock issued under the Plan by the Participant not made in accordance with the Plan or the
applicable Award Agreement or Award Program will be void. The Company will not recognize, or have
the duty to recognize, any disposition not made in accordance with the Plan and the applicable Award
Agreement or Award Program, and the shares so transferred will continue to be bound by the Plan and
the applicable Award Agreement or Award Program.
ARTICLE 6. GENERAL PROVISIONS
6.1 Withholding. The Company shall deduct from all cash distributions under the Plan all taxes
required to be withheld by the applicable jurisdiction. Whenever the Company proposes or is required
to issue or transfer shares of Stock under the Plan or upon the vesting of any Stock Award, the
Company has the right to require the recipient to remit to the Company an amount sufficient to satisfy
the taxes required to be withheld by the applicable jurisdiction prior to the delivery of any certificate or
certificates for such shares or the vesting of such Stock Award. A Participant may pay the withholding
obligation in cash, or, if the applicable Award Agreement or Award Program provides, a Participant
may be permitted, or may be required, to have the number of shares of Stock the Participant is to
receive reduced by, or with respect to a Stock Award, by tendering back to the Company, a number of
whole shares of Stock which, when multiplied by the Fair Market Value of the shares of Stock, is
sufficient to satisfy the tax withholding obligation (after taking into account any withholding in cash
required because only whole shares of stock can be withheld or tendered), at tax withholding rates
determined by the Company to be required, or in the Company’s sole discretion, permitted, but not in
excess of the maximum statutory tax rates in the applicable jurisdiction.
6.2 Changes in Capitalization; Merger; Liquidation.
(a) Equity Restructuring. The number of shares of Stock reserved for the grant of Awards;
the number of shares of Stock reserved for issuance upon the exercise, settlement, or payment, as
applicable, of each outstanding Dividend Equivalent Right, Option, Performance Unit Award,
Restricted Stock Unit, and Stock Appreciation Right and upon vesting, settlement, or grant, as
applicable, of each Stock Award; the Exercise Price of each outstanding Option, the Threshold
Price of each outstanding Stock Appreciation Right, and the specified number of shares of Stock
to which each outstanding Dividend Equivalent Right, Option, Performance Unit Award,
Restricted Stock Unit, Stock Appreciation Right and Stock Award pertains, shall be
proportionately adjusted for any nonreciprocal transaction between the Company and the holders
of capital stock of the Company that causes the per share value of the shares of Stock underlying a
Stock Award to change, such as a stock dividend, stock split, spinoff, rights offering, or
recapitalization through a large, nonrecurring cash dividend (each, an ‘‘Equity Restructuring’’).
(b) Other Changes in Capital Structure.
In the event of a merger, consolidation,
reorganization, extraordinary dividend, spin-off, sale of substantially all of the Company’s assets,
other change in capital structure of the Company, tender offer for shares of Stock, or a Change in
Control that in each case does not constitute an Equity Restructuring, the Committee may make
such adjustments with respect to Awards and take such other action as it deems necessary or
appropriate to reflect such merger, consolidation, reorganization or tender offer, including, without
limitation, the substitution of new Awards, or the adjustment of outstanding Awards, the
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acceleration of Awards (other than an acceleration not permitted by Section 4.1(g)), the removal
of restrictions on outstanding Awards, or the termination of outstanding Awards in exchange for
the cash value determined in good faith by the Committee of the vested and/or unvested portion
of the Award. Any adjustment pursuant to this Section may provide, in the Committee’s discretion,
for the elimination without payment therefor of any fractional shares that might otherwise become
subject to any Award, but except as set forth in this Section and Section 4.1(g) may not otherwise
diminish the then value of the Award.
(c) Substitution. Any adjustment described in this Section may include a substitution in
whole or in part of other equity securities of the issuer and the class involved in such Equity
Restructuring in lieu of the shares of Stock that are subject to the Award.
(d) Plan is not a Limit on Company Powers. The existence of the Plan and the Awards
granted pursuant to the Plan shall not affect in any way the right or power of the Company to
make or authorize any adjustment, reclassification, reorganization or other change in its capital or
business structure, any merger or consolidation of the Company, any issue of debt or equity
securities having preferences or priorities as to the Stock or the rights thereof, the dissolution or
liquidation of the Company, any sale or transfer of all or any part of its business or assets, or any
other corporate act or proceeding.
6.3 Compliance with Code. All Incentive Stock Options to be granted hereunder are intended to
comply with Code Section 422, and all provisions of the Plan and all Incentive Stock Options granted
hereunder shall be construed in such manner as to effectuate that intent. All Awards under the Plan
are intended to be exempt from or in compliance with Code Section 409A and shall be construed in
such manner to effectuate that intent. If an Award, Award Agreement, Award Program, payment,
distribution, deferral election, transaction or any other action or arrangement contemplated by the
provisions of the Plan would cause an Award to fail to satisfy or be exempt from Code Section 409A,
then unless the Committee provides otherwise, such Award, Award Agreement, Award Program,
payment, distribution, deferral election, transaction or other action or arrangement shall not be given
effect to the extent it causes such result, and the related provisions of the Award Agreement, Award
Program or Plan will be deemed modified, or, if necessary, suspended to comply with or be exempt
from Code Section 409A to the extent determined appropriate by the Committee, in each case without
the consent of or notice to the Participant.
6.4 No Representations or Covenants. Although the Company may endeavor to structure an
Award to receive favorable U.S. or foreign tax treatment (e.g., under Code Section 422) or to avoid
adverse tax treatment (e.g., under Code Section 409A), the Company makes no representation or
covenant to that effect, makes no representation or covenant that such tax treatment will apply and
expressly disavows any covenant to maintain favorable tax treatment or avoid unfavorable tax
treatment.
6.5 Right to Terminate Employment or Service. Nothing in the Plan or in any Award confers upon
any Participant the right to continue as an employee, officer, director or consultant of the Company or
any of its Affiliates or affects the right of the Company or any of its Affiliates to terminate the
Participant’s employment or services at any time.
6.6 Non-Alienation of Benefits. Other than as provided herein, no Award under the Plan may be
subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge; and any attempt to do so shall be void. No such Award may, prior to settlement and receipt by
the Participant, be in any manner liable for or subject to the debts, contracts, liabilities, engagements or
torts of the Participant.
6.7 Conditions and Restrictions upon Stock subject to Awards. The Committee may provide that
shares of Stock issued under an Award shall be subject to such further restrictions, conditions and
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limitations as the Committee in its discretion may specify at the time of granting the Award. Without
limiting the foregoing, such restrictions may address the timing and manner of any resales by the
Participant of any Shares issued under an Award, including without limitation: (a) restrictions under an
insider trading policy or pursuant to applicable law, (b) restrictions designed to delay and/or coordinate
the timing and manner of sales by Participants and holders of other Company equity compensation
arrangements, (c) restrictions as to the use of a specified brokerage firm for such resales or other
transfers and (d) provisions requiring shares of Stock to be sold on the open market or to the
Company in order to satisfy tax withholding or other obligations.
6.8 Compliance with Laws. The granting of awards and the issuance of shares of Stock under
the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or stock exchanges on which the Company’s securities are listed as may be
required. The Company shall have no obligation to issue or deliver evidence of title for shares of Stock
issued under the Plan before:
(a) obtaining any approvals from governmental agencies that the Company determines are
necessary or advisable; and
(b) completion of any registration or other qualification of the shares of Stock under any
applicable national or foreign law or ruling of any governmental body that the Company
determines to be necessary or advisable or at a time when any such registration or qualification is
not current, has been suspended or otherwise has ceased to be effective.
The inability or impracticability of the Company to obtain or maintain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the
failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.
6.9 Restrictions on Delivery and Sale of Shares; Legends. Each Award is subject to the condition
that if at any time the Committee, in its discretion, shall determine that the listing, registration or
qualification of the shares covered by such Award upon any securities exchange or under any state or
federal law is necessary or desirable as a condition of or in connection with the granting of such Award
or the purchase or delivery of shares thereunder, the delivery of any or all shares pursuant to such
Award may be withheld unless and until such listing, registration or qualification shall have been
effected. If a registration statement is not in effect under the Securities Act of 1933 or any applicable
state securities laws with respect to the shares of Stock purchasable or otherwise deliverable under
Awards then outstanding, the Committee may require, as a condition of delivery of Stock pursuant to
an Award, that the Participant or other recipient of an Award represent, in writing, that the shares
received pursuant to the Award are being acquired for investment and not with a view to distribution
and agree that the shares will not be disposed of except pursuant to an effective registration statement,
unless the Company shall have received an opinion of counsel that such disposition is exempt from
such requirement under the Securities Act of 1933 and any applicable state securities laws. The
Company may include on certificates representing shares delivered pursuant to an Award such legends
referring to the foregoing representations or restrictions or any other applicable restrictions on resale
as the Company, in its discretion, shall deem appropriate.
6.10 Listing and Legal Compliance. The Committee may suspend the exercise or payment of any
Award so long as it determines that securities exchange listing or registration or qualification under any
securities laws is required in connection therewith and has not been completed on terms acceptable to
the Committee.
6.11 Clawback.
If the Company is required to prepare an accounting restatement due to the
material noncompliance of the Company, as a result of misconduct, with any financial reporting
requirement under the securities laws, if the Participant knowingly or grossly negligently engaged in the
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misconduct, or knowingly or grossly negligently failed to prevent the misconduct, or if the Participant is
one of the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of
2002, the Participant shall reimburse the Company the amount of any payment in settlement of an
Award earned or accrued during the twelve (12) month period following the first public issuance or
filing with the United States Securities and Exchange Commission (whichever just occurred) of the
financial document embodying such financial reporting requirement. The Plan will be administered in
accordance with Section 10D of the Exchange Act, any applicable rules and regulations promulgated by
the Securities Exchange Commission and any national securities exchange or national securities
association on which shares of Stock may be traded, and any Company policy regarding compensation
recoupment. In addition, each Award shall be subject to forfeiture to the extent provided in any
applicable clawback policy adopted by the Company or otherwise required pursuant to applicable law.
This Section will not be the Company’s exclusive remedy with respect to such matters.
6.12 Awards to Non-U.S. Employees. The Committee shall have the power and authority to
determine which Affiliates shall be covered by the Plan and which employees outside the U.S. shall be
eligible to participate in the Plan. The Committee may adopt, amend or rescind rules, procedures or
sub-plans relating to the operation and administration of the Plan to accommodate the specific
requirements of local laws, procedures, and practices. Without limiting the generality of the foregoing,
the Committee is specifically authorized to adopt rules, procedures and sub-plans with provisions that
limit or modify rights on death, disability or retirement or on termination of employment; available
methods or exercise or settlement of an award; payment of income, social insurance contributions and
payroll taxes; the withholding procedures and handling of any stock certificate or other indicia of
ownership which vary with local requirements. The Committee may also adopt rules, procedures or
sub-plans applicable to particular Affiliates or locations.
6.13
Indemnification. Subject to requirements of Delaware law, each person who is or shall have
been a member of the Board, or a committee appointed by the Board, or an officer of the Company to
whom authority was delegated in accordance with Section 3.5, shall be indemnified and held harmless
by the Company against and from any loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by such person in connection with or resulting from any claim, action, suit, or
proceeding to which such person may be a party or in which such person may be involved by reason of
any action taken or failure to act under the Plan and against and from any and all amounts paid by
such person in settlement thereof, with the Company’s approval, or paid by such person in satisfaction
of any judgment in any such action, suit, or proceeding against him, provided such person such person
shall give the Company an opportunity, at its own expense, to handle and defend the same before such
person undertakes to handle and defend it on such person’s own behalf, unless such loss, cost, liability,
or expense is a result of such person’s own willful misconduct or except as expressly provided by
Delaware law. The foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company’s Certificate of
Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to
indemnify them or hold them harmless.
6.14 Termination and Amendment of the Plan. The Board of Directors at any time may amend or
terminate the Plan without stockholder approval; provided, however, that the Board of Directors
(a) may condition any amendment on the approval of stockholders of the Company if such approval is
necessary or advisable with respect to tax, securities or other applicable laws, and (b) shall obtain
stockholder approval for any amendment to the Plan that, except as provided in Section 6.2, increases
the number of shares of Stock available under the Plan, materially expands the classes of individuals
eligible to receive Awards, materially expands the type of awards available under the Plan, would
permit Option Repricing or Stock Appreciation Right Repricing, or would otherwise require
stockholder approval under the rules of the applicable stock exchange. No such termination or
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amendment without the consent of the holder of an Award may adversely affect the rights of the
Participant under such Award.
6.15 Stockholder Approval. The Plan must be submitted to the stockholders of the Company for
their approval within twelve (12) months before or after the adoption of the Plan by the Board of
Directors of the Company. If such approval is not obtained, the Prior Plan shall remain in force and
effect and any Award granted hereunder will be void.
6.16 Choice of Law. The laws of the State of Delaware shall govern the Plan, to the extent not
preempted by federal law, without reference to the principles of conflict or choice of laws that might
otherwise refer to the laws of another jurisdiction.
NEENAH, INC.
By:
Title:
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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, 2017
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
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(Exact name of registrant as specified in its charter)
31OCT201109101132
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
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
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, 2017 (based on the closing stock price on the New York Stock
Exchange) on such date was approximately $1,175,000,000.
As of February 21, 2018, there were 16,883,000 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, 2018 is incorporated by reference
into Part III hereof.
(This page has been left blank intentionally.)
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
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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
Effective January 1, 2018, Neenah Paper, Inc. changed its name to Neenah, Inc. In this report, unless the context requires
otherwise, references to "we," "us," "our," "Neenah" or the "Company" are intended to mean Neenah, Inc., its consolidated
subsidiaries and predecessor companies. The Company's ticker symbol on the New York Stock Exchange remains "NP"
and names of subsidiaries were not affected.
Item 1. Business
Overview
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We are a specialty materials company 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, digital image transfer, and other specialty markets. Our dedicated
technical products manufacturing facilities are located near Munich, Germany, Eerbeek, Netherlands, Bolton, England,
Munising, Michigan, and Pittsfield, Massachusetts. In addition, certain technical products are manufactured along with fine
paper and packaging products in shared facilities located in upstate New York, Brattleboro, Vermont, and Quakertown,
Pennsylvania. In 2017, a filtration machine (which was converted from a fine paper machine) and adjacent saturating plant
began production in Appleton, Wisconsin, a site also shared with the fine paper and packaging business. On November 1,
2017, we completed the acquisition of W.A. Sanders Coldenhove Holding B.V. ("Coldenhove" and the "Coldenhove
Acquisition") for approximately $45 million. Coldenhove is a specialty materials manufacturer based in the Netherlands,
with a leading position in digital transfer media and other technical products.
We believe our fine paper and packaging business is the leading supplier of premium printing, packaging, and other high
end specialty papers in North America. Our products include some of the most recognized and preferred brands in North
America, where we enjoy leading market positions in many of our product categories. We sell our products primarily to
1
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. Certain products are manufactured in shared facilities located in upstate New York, Brattleboro, Vermont, and
Quakertown, Pennsylvania, as well as a site shared with technical products in 2017 in Appleton, Wisconsin. In August
2017, we purchased a laminating asset in Great Barrington, Massachusetts to support continued growth in our premium
packaging business.
For a description of the shared facilities, see Item 2, "Properties."
Company Structure
Our corporate structure consists of Neenah, Inc. and eight direct wholly owned subsidiaries.
Neenah, 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 and leases the real estate and owns the manufacturing assets associated with our fine paper and packaging
operations in Great Barrington, Massachusetts.
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.
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Neenah Global Holdings B.V. is a private company with limited liability organized under the laws of the Netherlands and a
wholly owned subsidiary of Neenah that owns all of the equity of W.A. Sanders Coldenhove Holding BV ("Coldenhove
Holding"). Coldenhove Holding is a private company with limited liability organized under the laws of the Netherlands
that owns all of the equity of W.A. Sanders Papierfabriek "Coldenhove" BV ("Neenah Coldenhove"). Neenah Coldenhove
a private company with limited liability organized under the laws of the Netherlands that owns substantially all of real
estate, manufacturing assets and inventory associated with our technical products business in Eerbeek, Netherlands.
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.
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 October 2015, we sold our paper mill located near Frankfurt,
Germany (the "Lahnstein Mill") to the Kajo Neukirchen Group (the "Buyer"). The Lahnstein Mill 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."
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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 November 1, 2017, we purchased all of the outstanding equity of Coldenhove. The acquired business is a specialty
materials manufacturer based in the Netherlands, with a leading position in digital transfer media and other technical
products. The business has one manufacturing facility in Eerbeek, Netherlands. See Note 4 of Notes to Consolidated
Financial Statements, "Acquisitions."
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 the first of the series of consolidating acquisitions, in March 2007, we acquired the assets and brands of Fox River. 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").
In August 2017, we purchased a laminating asset in Great Barrington, Massachusetts to support continued growth in our
premium packaging business.
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
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"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:
Enhance our leading positions in high value core categories — 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 transportation 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 such as filtration, digital image transfer, and premium packaging, to grow with customers in new
products and 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.
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 fiber-formed, coated and/or
saturated specialized media that delivers high performance benefits to customers, such as filtration media for
transportation, water and other filtration markets, and saturated and coated performance materials used for industrial
backings, labels, digital image transfer, and a variety of other end markets. In general, our technical products are sold to
other manufacturers as key components for their finished products. Many 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.
Digital image transfer media is used to transfer digital images onto clothing, sportswear, and other materials. A fiber-based
sheet undergoes various coatings to impart required performance.
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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.
Digital transfer papers used to transfer ink or images from paper to clothing, 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 high end commercial printing services, corporate identity
packages, and advertising collateral. In addition, we produce premium 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.
Premium packaging products 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 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 to other manufacturers who convert our
product for sale 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.
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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 2017 was
approximately 47 percent in North America, 36 percent in Europe and 17 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 combined represented approximately 15 percent of total
sales for the segment in 2017. 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 2017, approximately 10 percent of the sales of our fine paper and packaging
business were exported to markets outside the United States.
Sales to each of the two largest customers of the fine paper and packaging business represented approximately 15 percent
of its total sales in 2017. We practice limited sales distribution to improve our ability to control the marketing of our
products. Although a complete loss 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.
Concentration. For the year ended December 31, 2017, sales to each of Veritiv and CNG represented approximately 7
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, 2016 and 2015 sales to Veritiv represented approximately 8 percent and 10 percent,
respectively, of consolidated net sales and approximately 15 percent and 20 percent, respectively, 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 and product line (dollars in
millions):
Net Sales from Geographic Region
(in Millions)
Net Sales by Product Line
(in Millions)
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Net sales 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 long-lived 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 covered by formal contracts,
and 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.
Fine Paper and Packaging. Hardwood pulp is the primary raw material 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.
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.
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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-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 performance
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 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.
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Research and Development
Our technical products business maintains research and development laboratories in Feldkirchen-Westerham, Germany,
Eerbeek, Netherlands, 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 $8.9 million in 2017, $9.4 million in 2016 and $6.8 million in 2015.
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. The KIMDURA® and MUNISING LP® trademarks have also made a significant contribution to the marketing of
synthetic film and clean room papers of the technical products business. And with Neenah’s recent acquisition of
Coldenhove Papier, Neenah added more depth and strength to its technical products portfolio with the well-recognized dye-
sublimation and digital decor JETCOL® and DIGICOL® brands, which are also supported by patented technology.
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 signature portfolio includes innovative, market leading brands such as CLASSIC® (including CLASSIC
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CREST®, CLASSIC® Linen, CLASSIC® Laid, CLASSIC COLUMNS®, CLASSIC® Stipple, CLASSIC® Woodgrain,
and CLASSIC® Techweave), ASTROBRIGHTS®, ENVIRONMENT®, The Design Collection, ROYAL SUNDANCE®,
SOUTHWORTH® 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 promise. 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.
Our 2015 acquisition of FiberMark added additional 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.
Finally, the GESSNER® trademark has played an important role in the marketing of Neenah’s filtration product lines. With
the expansion of our newest filtration facility in Appleton, WI, Neenah expects increased recognition of this brand
domestically and internationally.
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
on December 31, 2017 was approximately $122.1 million and represented approximately 24 percent of current year sales.
The order backlog in the technical products business on December 31, 2016 was approximately $101 million and
represented approximately 22 percent of prior year sales. We previously filled the order backlog from December 31, 2016
and expect to fill the order backlog from December 31, 2017 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, 2017 and 2016 were $19.9 million and $19.6 million, respectively, which represent approximately 15 days
of sales. The order backlogs from December 31, 2017 and 2016 were filled in the respective following years.
The operating results for 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, 2017, we had approximately 2,612 regular full-time employees of whom 1,174 hourly and 578
salaried employees were located in the United States and 431 hourly and 429 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 2017, 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 February 2019. Under
German law union membership is voluntary and does not need to be disclosed to the Company. As a result, the number of
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employees covered by the collective bargaining agreement with the IG BCE that expires in February 2019 cannot be
determined.
As of December 31, 2017, 668 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."
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
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 2018 through 2019 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.
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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
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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, 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 and, for fine paper products in particular, are in secular decline.
Our efforts to offset these declines with new fine paper and packaging products and growth in existing fine paper and office
products categories are not certain to fully offset the market declines, and evaluation of scope our manufacturing footprint
may be required in the future. 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 the U.K.
Downturns in economic activity, adverse tax consequences, fluctuations in the value of local currency versus the U.S.
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.
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, energy and transportation services will significantly impact our
business.
We purchase a substantial portion of the raw materials, energy, transportation and distribution services (primarily over-the-
road freight) and other 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 raw material, energy or transportation prices and our ability to
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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, energy, transportation and other input 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, health care,
pension or other employee benefits costs, insurance costs and other costs.
Our technical products business acquires certain of its specialized pulp requirements from two global suppliers and certain
critical specialty latex grades from a limited number of suppliers. In general, these supply arrangements are covered by
formal contracts and 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, other raw materials and distribution/transportation services, 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 two largest customers of the fine paper and packaging business each represented approximately 15 percent of
total sales for the segment in 2017. Sales to the three largest customers of the technical products business combined
represented approximately 15 percent of total sales for the segment in 2017. 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, 2017, we had $15.5 million of U.S. federal and $6.9 million of U.S. state research and development
tax credits ("R&D Credits") which, if not used, will expire between 2030 and 2037 for the U.S. federal R&D Credits and
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between 2020 and 2032 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, 2017, we have recorded a liability of $10.0 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.
Federal income tax reform could have unforeseen effects on our financial condition and results of operations.
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts
and Jobs Act , hereafter referred to as the “Tax Act”. The Company is in the process of determining the impact to the
financial statements of all aspects of the Tax Act and will reflect the impact of such reform in the financial statements
during the period in which such amounts can be reasonably estimated. The Tax Act significantly changes how the U.S.
taxes corporations. The Tax Act requires complex computations to be performed that were not previously required in U.S.
tax law, significant judgments to be made in interpretation of the provisions of the Tax Act and significant estimates in
calculations, and the preparation and analysis of information not previously relevant or regularly produced. The U.S.
Treasury Department, the IRS, and other standard-setting bodies could interpret or issue guidance on how provisions of the
Tax Act will be applied or otherwise administered that is different from our interpretation. As we complete our analysis of
the Tax Act, collect and prepare necessary data, and interpret any additional guidance, we may make adjustments to
provisional amounts that we have recorded that may materially impact our provision for income taxes in the period in
which the adjustments are made.
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, 2017, our projected pension
benefit obligations were $463.9 million and exceeded the fair value of pension plan assets by $63.5 million. In 2017, we
made total contributions to qualified pension trusts of $14.3 million. In addition, during 2017 we paid pension benefits for
unfunded qualified and supplemental retirement plans of $2.6 million. At December 31, 2017, our projected other
postretirement benefit obligations were $44.0 million. No assets have been set aside to satisfy our other postretirement
benefit obligations. In 2017, 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 2017, 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
and we could incur additional costs associated with no longer participating in the plan.
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, 2017. 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, 2016 provided by the PIUMPF and
reviewed by our actuarial consultant, we estimate that, as of December 31, 2017, 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
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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,
and/or those of our suppliers and customers, 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, including expansion and growth of our technical products (filtration and performance materials) and packaging
businesses in a cost effective manner. Additionally, a slower than anticipated loading of our new filtration asset in
Appleton, Wisconsin could cause our results to be lower than expected in the future. 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.
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, 2017, under the most restrictive terms of our bank credit agreement and the
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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, 2017, we had goodwill of $85.3 million and other intangible assets of $78.7 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, acceleration of the secular decline in fine paper and office
products or a lack of success in our efforts to offset these declines with new fine paper and packaging products, which
could lead to a reduction in the size of our manufacturing footprint, 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 and
Dutch technical products businesses. Our German and Dutch 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, Germany, the
Netherlands and elsewhere in the world 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.
Additionally, in the U.S., portions of the Moving Ahead for Progress in the 21st Century Act (“MAP-21”, primarily, the
electronic logging device (ELD) rules under MAP-21) have created a decrease in levels of capacity in the over-the-road
freight sector which could have an adverse impact on our business. The current operating environment in the over-the-road
freight and transportation sector resulting from fluctuating fuel costs, industry-specific regulations (such as hours-of-
service and ELD rules), a shortage of qualified drivers, and other economic factors are causing a tightening of capacity and
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an increase in prices charged to shippers, such as us, in the over-the-road transportation and distribution sector generally,
and in our carrier networks specifically, which could have an adverse impact on our business.
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.
Additionally, we collect, process, store, use and transmit personal data for use in our business, most of which relates to our
global employees. Personal data is increasingly subject to legal and regulatory protections around the world, which vary
widely in approach and which possibly conflict with one another. As discussed above, in recent years, U.S. legislators and
regulatory agencies, such as the Federal Trade Commission, as well as U.S. states, have increased their focus on protecting
personal data by law and regulation, and have increased enforcement actions for violations of privacy and data protection
requirements. The European Commission also recently approved and adopted the General Data Protection Regulation
("GDPR") in the European Union, a new data protection law, which will apply beginning in May 2018. These data
protection laws and regulations are intended to protect the privacy and security of personal data, including credit card
information that is collected, processed and transmitted in or from the relevant jurisdiction. Implementation of and
compliance with these laws and regulations may be more costly or take longer than we anticipate, or could otherwise
adversely affect our business operations, which could negatively impact our financial position or cash flows. Additionally,
media coverage of data breaches has escalated, in part because of the increased number of enforcement actions,
investigations and lawsuits. As this focus and attention on privacy and data protection increases, we also risk exposure to
potential liabilities and costs resulting from the compliance with, or any failure to comply with applicable legal
requirements, conflicts among these legal requirements or differences in approaches to privacy and security of travel data.
Our business could be materially adversely affected by our inability, or the inability of our vendors who receive personal
data from us, to comply with legal obligations regarding the use of personal data, new data handling requirements that
conflict with or negatively impact our business practices.
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, 2017, we have required debt payments of $1.4 million during the year ending December 31, 2018.
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
• 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, 2017, we had $175 million of 2021 Senior Notes, $76.9 million in revolving credit borrowings and
$6.4 million of project financing outstanding. In addition, availability under our bank credit agreement was approximately
$92 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
18
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, 2017, 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, 2017, we had $76.9 million of revolving
credit borrowings outstanding which mature on December 18, 2019. 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 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.
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19
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.
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
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.
20
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 loss of current customers or the inability to obtain new customers;
increases in commodity prices, (particularly for pulp, energy and latex) due to constrained global supplies or
unexpected supply disruptions;
our ability to control costs, including transportation, and implement measures designed to enhance operating
efficiencies;
the availability of raw materials and energy;
the enactment of adverse state, federal or foreign tax or other legislation or changes in government policy or
regulation, including the recent Tax Act;
unanticipated expenditures related to the cost of compliance with environmental and other governmental regulations;
fluctuations in (i) exchange rates (in particular changes in the U.S. dollar/Euro currency exchange rates) and
(ii) interest rates;
increases in the funding requirements for our pension and postretirement liabilities;
our ability to successfully integrate acquired businesses into our existing operations;
changes in asset valuations including write-downs of assets including property, plant and equipment; inventory,
accounts receivable, deferred tax assets or other assets for impairment or other reasons;
loss of key personnel;
strikes, labor stoppages and changes in our collective bargaining agreements and relations with our employees and
unions;
capital and credit market volatility and fluctuations in global equity and fixed-income markets;
our existing and future indebtedness;
our net operating losses may not be available to offset our tax liability and other tax planning strategies may not be
effective;
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.
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Item 1B. Unresolved Staff Comments
None.
21
Item 2. Properties
Our principal executive offices are located in Alpharetta, Georgia, a suburb of Atlanta, Georgia. We operate 11
manufacturing facilities in the United States that produce printing and writing, text, cover, durable saturated and coated
substrates, premium packaging, filtration and other specialty papers for a variety of end uses. We 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 Netherlands that produces digital transfer media and other
technical products. 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, 2017, following are the locations of our principal facilities and operating equipment and the products
produced at each location:
Location
Equipment/Resources
Owned or Leased
Products
Fine Paper and Packaging
Segment
Neenah Mill
Neenah, Wisconsin
Whiting Mill
Whiting, Wisconsin
Converting Center
Neenah, Wisconsin
Great Barrington Mill
Great Barrington,
Massachusetts
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
Eerbeek Mill
Eerbeek, Netherlands
Shared Facilities
Appleton Mill
Appleton, Wisconsin
Brattleboro Mill
Brattleboro, Vermont
Brownville Mill
Brownville, New York
Lowville Mill
Lowville, New York
Two paper machines; paper
finishing equipment
Four paper machines; paper
finishing equipment
Owned
Owned
Paper finishing equipment
Owned
Paper finishing equipment
Owned; leased facility
Printing and writing, text, cover, packaging and
other specialty papers
Printing and writing, text, cover, packaging and
other specialty papers
Printing and writing, text, cover, packaging and
other specialty papers
Laminated specialty papers and toll converting
services
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
Two paper machines; paper
finishing equipment
Owned
Owned
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
Durable printing, specialty paper, and coated
substrates
Digital dye sublimation and image transfer printing
paper
Two paper machines; saturating
equipment; paper finishing
equipment
Owned
One paper machine; coating and
paper finishing equipment
Owned
Transportation filtration, printing and writing, text,
cover, packaging, and other specialty papers
Printing, packaging, specialty paper board, and
coated substrates
One paper machine; one off-line
Owned
Durable printing, packaging, and specialty paper
Durable printing, packaging, and specialty paper
Durable printing, packaging, and specialty paper
coater
Saturating, coating, embossing and
finishing equipment
Owned
Quakertown Mill
Quakertown, Pennsylvania
Saturating, coating, embossing and
finishing equipment
Owned
22
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, 2017, following are the locations of our owned and leased office and laboratory space and the
functions performed at each location.
Administrative Location
Alpharetta, Georgia
Leased Office Space
Office/Other Space
Function
Neenah and Appleton, Wisconsin
Owned Office Space
Munising, Michigan
Pittsfield, Massachusetts
West Springfield, Massachusetts
Owned Office and Laboratory
Space
Owned Office and Laboratory
Space
Owned Office and Laboratory
Space
Feldkirchen-Westerham, Germany
Owned Office and Laboratory
Space
Eerbeek, Netherlands
Owned Office and Laboratory
Space
Corporate Headquarters, Administration
and Design Center
Administration
Administration and Research and
Development for our technical products
businesses
Administration and Research and
Development for our technical products
businesses
Administration and Research and
Development for our technical products
and fine paper and packaging businesses
Administration and Research and
Development for our technical product
businesses
Administration and Research and
Development for our technical product
businesses
Capacity Utilization
Paper machines in our manufacturing facilities generally operate on a combination of three-shift 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 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 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:
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Technical Products
Fine Paper and Packaging
Item 3. Legal Proceedings
Litigation
Year Ended December 31,
2017
2016
2015
88%
81%
87%
80%
84%
80%
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
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.
23
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.
Item 4. Mine Safety Disclosures
Not applicable.
24
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:
2017
Fourth quarter
Third quarter
Second quarter
First quarter
2016
Fourth quarter
Third quarter
Second quarter
First quarter
Common Stock
Market Price
High
Low
Dividends
Declared
$
$
$
$
$
$
$
$
93.10
86.35
82.40
86.55
90.23
82.24
74.15
64.10
$
$
$
$
$
$
$
$
80.00
75.65
72.35
73.05
75.50
70.62
61.77
63.37
$
$
$
$
$
$
$
$
0.37
0.37
0.37
0.37
0.33
0.33
0.33
0.33
For the year ended December 31, 2017 we paid quarterly cash dividends of $0.37 per common share or $25.1 million
annually. For the year ended December 31, 2016, we paid quarterly cash dividends of $0.33 per common share or $22.4
million annually. In November 2017, our Board of Directors approved an 11 percent increase in the quarterly dividend rate
on our common stock to $0.41 per share, scheduled to be paid in March 2018.
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, 2017, 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, 2017, 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, 2018, Neenah had approximately 1,250 holders of record of its common stock. The closing price of
Neenah's common stock on February 22, 2018 was $79.25.
25
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Purchases of Equity Securities:
The following table sets forth certain information regarding purchases of our common stock during the fourth quarter of
2017.
Period
October 2017
November 2017
December 2017
_______________________
Total Number
of Shares
Purchased (a)
Average Price
Paid Per
Share (c)
— $
— $
$
24,127
—
—
90.65
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs (b)
Approximate Dollar Value
of Shares that May Yet
Be Purchased Under
Publicly Announced
Plans or Programs
— $
— $
— $
25,000,000
25,000,000
25,000,000
(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 2017, our Board of Directors authorized a program for the purchase of up to $25 million of outstanding
common stock which was in effect till December 31, 2017. In November 2017, our Board of Directors authorized
a program for the purchase of up to $25 million of outstanding common stock effective January 1, 2018. The
program does not require the Company to purchase any specific number of shares and may be suspended or
discontinued at any time.
(c) Average price paid per share for shares purchased as part of our program.
Equity Compensation Plan Information
The following table summarizes information about outstanding options (in this report, unless the context requires
otherwise, references to "options" are intended to include stock appreciation rights) and restricted stock units and shares
reserved for future issuance under our existing equity compensation plans as of December 31, 2017.
(a)
Number of
securities
to be issued upon
exercise of
outstanding
options,
warrants, and
rights
(b)
Weighted-
average
exercise price
of
outstanding
options,
warrants, and
rights (1)
(c)
Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in
column (a))
310,176 (2)(3) $
55.60
—
310,176
$
—
55.60
680,000
—
680,000
Plan Category
Equity compensation plans approved by security
holders
Equity compensation plans not approved by security
holders
Total
_______________________
(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.
(2) Includes (i) 180,000 shares issuable upon the exercise of outstanding options and stock appreciation rights
("SARs"), (ii) 41,377 shares issuable following the vesting and conversion of outstanding performance share unit
awards, and (iii) 88,799 shares issuable upon the vesting and conversion of outstanding restricted stock units, all
as of December 31, 2017. As of December 31, 2017, we had an aggregate of 464,958 stock options and SARs
outstanding. The weighted average exercise price of the stock options and SARs was $55.6 per share and the
remaining contractual life of such awards was 6.6 years.
(3) Includes 159,200 shares that would be issued upon the assumed exercise of 425,200 SARs at the $90.65 per share
closing price of our common stock on December 31, 2017.
26
Item 6. Selected Financial Data
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
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, 2017, 2016 and 2015 and the
balance sheet data as of December 31, 2017 and 2016 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,
2015, 2014 and 2013 and the statement of operations data for the years ended December 31, 2014 and 2013 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 loss on sale of the Lahnstein Mill. The consolidated statements of operations for the
years ended December 31, 2014 and 2013 have been restated to report results of the Lahnstein Mill as discontinued
operations. As of December 31, 2015, 2014 and 2013, 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."
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Consolidated Statement of Operations Data
Net sales
Cost of products sold
Gross profit
Selling, general and administrative expenses
Acquisition/integration/restructuring costs (a)
Insurance settlement (b)
Pension plan settlement charge (c)
Loss on early extinguishment of debt (d)
Other (income) expense — net
Operating income
Interest expense — net
Income from continuing operations before income taxes
Provision for income taxes (i)
Income from continuing operations
Income (loss) from discontinued operations, net of taxes (f)
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 (i)
Capital expenditures (h)
Other investing activities (g)
Financing activities (d)(i)
Ratio of earnings to fixed charges (e)
Year Ended December 31,
2017
2016
2015
2014
2013
$ 979.9
$ 941.5
$ 887.7
$ 839.7
$ 781.7
781.2
198.7
96.5
1.3
(3.2)
0.6
—
(0.8)
104.3
12.6
91.7
11.4
80.3
—
80.3
4.74
4.68
1.48
$
$
$
$
727.0
214.5
92.2
7.0
—
0.8
—
0.4
114.1
11.1
103.0
29.6
692.3
195.4
86.5
6.5
—
—
—
1.0
101.4
11.5
89.9
29.4
73.4
(0.4)
$ 73.0
60.5
(9.4)
$ 51.1
668.9
170.8
78.0
621.8
159.9
74.7
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
$ 68.7
$ 52.0
$ 4.33
$ 3.58
$ 4.05
$ 2.97
$ 4.26
$ 3.53
$ 3.99
$ 2.91
$ 1.32
$ 1.20
$ 1.02
$ 0.70
$ 100.0
(42.7)
(52.3)
(3.8)
7.1x
$ 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
6.9x
Consolidated Balance Sheet Data
Cash and cash equivalents
Working capital, less cash and cash equivalents
Total assets (i)
Long-term debt (d)(i)
Total liabilities (i)
Total stockholders' equity
_______________________
December 31,
2017
2016
2015
2014
2013
(Dollars in millions)
$
4.5
$
3.1
$
4.2
$
72.6
$
156.1
904.4
254.1
504.5
399.9
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
73.4
123.9
670.9
185.5
403.4
267.5
28
(a) For the year ended December 31, 2017, we incurred of $1.3 million of acquisition costs related to the Coldenhove
Acquisition and $0.6 million of pension settlement charges. For the year ended December 31, 2016, we incurred
$4.1 million of integration costs related to the FiberMark Acquisition, $2.7 million of non-capitalized trial costs
related to the U.S. filtration project, $0.2 million of other one-time 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.
(b) For the year ended December 31, 2017, we recorded a representations and warranties insurance settlement of $3.2
million related to the FiberMark acquisition.
(c) 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 and 2013, 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 and $0.2 million,
respectively.
(d) 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.
(e) 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.
(f) The following table presents the results of discontinued operations:
Year Ended December 31,
2017
2016 (1)
2015 (2)
2014
2013 (3)
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Discontinued operations: (4)
Income from operations
Loss on sale of the Lahnstein Mill (4)
Income (loss) before income taxes
Provision (benefit) for income taxes
Income (loss) from discontinued operations, net of taxes
_______________________
$ — $ — $
$
0.2
(13.6)
(13.4)
(4.0)
—
—
(0.6)
(0.6)
(0.2)
$ — $ (0.4) $ (9.4) $
—
0.9
—
0.9
0.2
0.7
$
$
5.4
—
5.4
1.9
3.5
(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.
(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) On October 31, 2015, we sold the Lahnstein Mill. For the year ended December 31, 2017, 2016, 2015, 2014
and 2013, 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.
(g) In November 2017, we purchased all of the outstanding equity of Coldenhove for approximately $45 million. 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.
29
(h) During the year ended December 31, 2016, we completed our U.S. Filtration project.
(i) At December 31, 2017, financial statements reflect the adjustments arising from the U.S. tax reform signed on
December 22, 2017. See Note 6 of Notes to Consolidated Financial Statements, "Income Taxes." At December 31,
2016, we adopted ASC Topic No. 2016-09 and applied the guidance retroactively to January 1, 2016. At
December 31, 2015, we adopted ASC Topic No. 2015-03 and ASC Topic No. 2015-17 and elected to apply the
guidance retroactively to all periods presented.
30
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, 2017, 2016 and 2015. 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
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 freight and 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, digital image transfer, and other specialty markets. Our dedicated
technical products manufacturing facilities are located near Munich, Germany, Eerbeek, Netherlands, Bolton, England,
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Munising, Michigan, and Pittsfield, Massachusetts. In addition, certain technical products are manufactured along with fine
paper and packaging products in shared facilities located in upstate New York, Brattleboro, Vermont, and Quakertown,
Pennsylvania. In 2017, a filtration machine (which was converted from a fine paper machine) and adjacent saturating plant
began 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, packaging, and other high
end specialty papers in North America. Our products include some of the most recognized and preferred brands 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. Certain products are manufactured in shared facilities located in upstate New York, Brattleboro, Vermont, and
Quakertown, Pennsylvania, as well as a site shared with technical products in 2017 in Appleton, Wisconsin. In August
2017, we purchased a laminating asset in Great Barrington, Massachusetts to support continued growth in our premium
packaging business.
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.
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, 2017, consolidated net sales of $979.9 million increased $38.4 million, or 4 percent, from
$941.5 million in 2016. The increase resulted from growth in both Technical Products and Fine Paper and Packaging, due
to higher volumes, higher priced mix and favorable currency effects in Technical Products, and due to growth in premium
packaging and higher selling prices, partly offset by lower priced mix in Fine Paper and Packaging. Excluding the
November 1, 2017, Coldenhove Acquisition, consolidated net sales increased 3 percent from the prior year.
Consolidated operating income of $104.3 million for the year ended December 31, 2017 decreased $9.8 million, or 9
percent, from the prior year. The decline was primarily due to higher costs from the U.S. transportation filtration business
start-up phase. Operating income benefited in 2017 from higher volumes and selling prices, proceeds from a
representations and warranties insurance settlement and improved operational efficiencies. In addition to filtration start-up
costs, operating income decreased due to higher input and freight costs, a lower value mix in Fine Paper and Packaging,
and acquisition costs related to the Coldenhove Acquisition. Excluding the insurance settlement of $3.2 million, acquisition
and integration costs of $1.3 million, and pension and SERP settlement charges of $0.6 million in 2017, and aggregate
charges of $7.8 million for integration and restructuring costs and pension settlement losses in 2016, operating income for
the year ended December 31, 2017 decreased $18.9 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 $100 million for the year ended December 31, 2017 was $15.8 million lower than
cash provided by operating activities of $115.8 million in the prior year primarily due to lower operating earnings and an
increased investment in working capital. These items were partly offset by lower cash tax payments and lower
contributions and benefit payments for post-retirement benefit obligations.
Capital expenditures for the year ended December 31, 2017 were $42.7 million compared to $68.5 million in the prior year.
Higher spending in 2016 was due to an investment in U.S. transportation filtration assets that was completed at the end of
2016.
32
Analysis of Net Sales — Years Ended December 31, 2017, 2016 and 2015
Analysis of Net Sales — Years Ended December 31, 2017, 2016 and 2015
The following table presents net sales by segment and net sales expressed as a percentage of total net sales:
The following table presents net sales by segment and net sales expressed as a percentage of total net sales:
Net sales
Net sales
Technical Products
Technical Products
Fine Paper and Packaging
Fine Paper and Packaging
Other
Other
Consolidated
Consolidated
Commentary:
Commentary:
Year 2017 versus 2016
Year 2017 versus 2016
Year Ended December 31,
Year Ended December 31,
2017
2017
2017
2017
2016
2016
2016
2016
2015
2015
2015
2015
$ 502.1
$ 502.1
52% $ 466.4
52% $ 466.4
50% $ 429.2
50% $ 429.2
48%
48%
455.3
455.3
46%
46%
452.1
452.1
48%
48%
442.7
442.7
50%
50%
22.5
22.5
2%
2%
23.0
23.0
2%
2%
15.8
15.8
2%
2%
$ 979.9
$ 979.9
100% $ 941.5
100% $ 941.5
100% $ 887.7
100% $ 887.7
100%
100%
For the Year
For the Year
Ended
Ended
December 31,
December 31,
2017
2017
2016
2016
Change in Net Sales Compared to the
Prior Year
Change in Net Sales Compared to the
Prior Year
Change Due To
Change Due To
Total
Change
Total
Change
Volume
Volume
Net Price
Net Price
Currency
Currency
Technical Products
Technical Products
$
$
502.1
502.1
$
$
466.4
466.4
$
$
35.7
35.7
$
$
22.9
22.9
$
$
Fine Paper and Packaging
Fine Paper and Packaging
Other
Other
Consolidated
Consolidated
455.3
455.3
22.5
22.5
452.1
452.1
23.0
23.0
$
$
979.9
979.9
$
$
941.5
941.5
$
$
3.2
(0.5)
38.4
3.2
(0.5)
38.4
$
7.2
7.2
—
—
$
30.1
30.1
$
$
10.0
(4.0)
(0.5)
5.5
10.0
$
(4.0)
(0.5)
5.5
$
$
$
2.8
2.8
—
—
—
—
2.8
2.8
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Consolidated net sales for the year ended December 31, 2017 were $38.4 million (4%) higher than the prior year. The
Consolidated net sales for the year ended December 31, 2017 were $38.4 million (4%) higher than the prior year. The
increase resulted from growth in both Technical Products and Fine Paper and Packaging, due to higher volumes, higher
increase resulted from growth in both Technical Products and Fine Paper and Packaging, due to higher volumes, higher
priced mix and favorable currency effects in Technical Products, and due to growth in premium packaging and higher
priced mix and favorable currency effects in Technical Products, and due to growth in premium packaging and higher
selling prices, partly offset by lower priced mix in Fine Paper and Packaging. Excluding the November 1, 2017,
selling prices, partly offset by lower priced mix in Fine Paper and Packaging. Excluding the November 1, 2017,
Coldenhove Acquisition, consolidated net sales increased 3 percent from the prior year.
Coldenhove Acquisition, consolidated net sales increased 3 percent from the prior year.
• Net sales in our technical products business increased $35.7 million (8%) from the prior year due to higher volumes in
• Net sales in our technical products business increased $35.7 million (8%) from the prior year due to higher volumes in
backings, label and other filtration, as well as higher priced mix, acquired volume and favorable currency effects.
backings, label and other filtration, as well as higher priced mix, acquired volume and favorable currency effects.
Excluding the Coldenhove Acquisition, technical product sales increased $28.2 million (6%). Net selling prices
Excluding the Coldenhove Acquisition, technical product sales increased $28.2 million (6%). Net selling prices
increased due to a higher-priced mix of products sold and increased selling prices.
increased due to a higher-priced mix of products sold and increased selling prices.
• Net sales in our fine paper and packaging business increased $3.2 million (1%) from the prior year due to higher
• Net sales in our fine paper and packaging business increased $3.2 million (1%) from the prior year due to higher
volumes largely offset by lower priced mix. Increased volumes reflected double digit growth in premium packaging as
well as more direct sales of non-branded products, which more than offset the decline in commercial print.
volumes largely offset by lower priced mix. Increased volumes reflected double digit growth in premium packaging as
well as more direct sales of non-branded products, which more than offset the decline in commercial print.
• Net sales in our other business segment decreased $0.5 million from the prior year period due to lower priced mix.
• Net sales in our other business segment decreased $0.5 million from the prior year period due to lower priced mix.
33
33
Year 2016 versus 2015
Technical Products
Fine Paper and Packaging
Other
Consolidated
Change in Net Sales Compared to the
Prior Year
For the Years Ended
December 31,
2016
2015
Total
Change
Volume
Net Price
Currency
Change Due To
$
$
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.
Analysis of Operating Income — Years Ended December 31, 2017, 2016 and 2015
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
34
Year Ended December 31,
2017
2016
2015
100.0 % 100.0% 100.0%
79.7 %
20.3 %
9.8 %
(0.1)%
— %
10.6 %
1.2 %
9.4 %
1.2 %
8.2 %
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%
Commentary:
Year 2017 versus 2016
Change in Operating Income (Loss) Compared to the Prior Year
For the Years Ended
December 31,
2017
2016
Total
Change
Volume
Net Price (a)
Input Costs
(b)
Currency
Other
(c)
Change Due To
Technical Products
$
55.3
$
65.6
$
(10.3) $
5.9
$
1.9
$
(5.6) $
0.4
$ (13.0)
Fine Paper and
Packaging
Other
Unallocated corporate
costs
69.5
(0.4)
70.7
(1.1)
(1.2)
0.7
2.9
(0.3)
(3.4)
(0.5)
(2.5)
(0.1)
Consolidated
$
104.3
$
114.1
$
_______________________
(20.1)
(21.1)
1.0
(9.8) $
—
8.5
$
—
(2.0) $
—
(8.2) $
—
—
—
0.4
1.8
1.6
1.8
$ (7.8)
(a) Includes price changes, net of changes in product mix.
(b) Includes price changes for raw materials and energy.
(c) Includes other manufacturing costs, over (under) absorption of fixed costs, distribution and SG&A expenses, start-
up and other costs for the U.S. transportation filtration business, insurance settlement and acquisition/integration/
restructuring costs.
Consolidated operating income of $104.3 million for the year ended December 31, 2017 decreased $9.8 million (9%) from
the prior year. The decline was primarily due to higher costs from the U.S. transportation filtration business start-up phase.
Operating income benefited in 2017 from higher volumes and selling prices, proceeds from a representations and
warranties insurance settlement and improved operational efficiencies. In addition to filtration start-up costs, operating
income decreased due to higher input and freight costs, a lower value mix in Fine Paper and Packaging, and acquisition
costs related to the Coldenhove Acquisition. Excluding the insurance settlement of $3.2 million, acquisition and integration
costs of $1.3 million, and pension and SERP settlement charges of $0.6 million in 2017, and aggregate charges of $7.8
million for integration and restructuring costs and pension settlement losses, operating income for the year ended
December 31, 2017 decreased $18.9 million (16%) from the prior year. See later in this section for further information
regarding the presentation of operating income, as adjusted.
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• Operating income for our technical products business decreased $10.3 million (16%) from the prior year primarily due
to higher costs from the U.S. transportation filtration start-up. Excluding the higher costs from the U.S. transportation
filtration business, operating income for technical products increased due to higher sales volumes, manufacturing
efficiencies, and lower integration and restructuring costs. These items were partially offset by unfavorable impacts
from higher material and transportation costs. Results for the year ended December 31, 2016 include $1.4 million for
integration/restructuring costs. Excluding integration/restructuring costs, operating income for the technical products
business decreased $11.7 million (17%).
• Operating income for our fine paper and packaging business decreased $1.2 million (2%) from the prior year period
primarily due to higher material and transportation costs and a lower priced product mix, that were partly offset by
higher sales volume, increased selling prices, lower integration costs, and an insurance settlement of $2.9 million.
Results for the year ended December 31, 2016 include $1.8 million for integration costs related to the FiberMark
Acquisition. Excluding the insurance settlement and integration costs, operating income for the fine paper and
packaging business decreased $5.9 million (8%).
• Unallocated corporate costs for the year ended December 31, 2017 were $20.1 million, or $1.0 million less than the
prior year. Excluding charges of $1.3 million for acquisition and integration, and $0.6 million of pension and SERP
settlement charges in 2017, and $0.8 million for a pension plan settlement charge and $2.7 million of restructuring
costs in 2016, unallocated corporate expenses were $0.6 million unfavorable to the prior year.
35
Year 2016 versus 2015
Technical Products
Fine Paper and
Packaging
Other
Unallocated corporate
costs
Consolidated
Change in Operating Income (Loss) Compared to the Prior Year
For the Years Ended
December 31,
2016
2015
Total
Change
$
65.6
$
54.1
$
11.5
Volume
9.1
$
Change Due To
Input Costs
(b)
Net Price (a)
$
(5.5) $
70.7
(1.1)
67.3
(2.0)
3.4
0.9
0.2
0.7
(4.1)
—
Other
(c)
Currency
$
(0.5) $ (2.6)
—
—
(3.1)
0.2
11.0
10.4
—
(21.1)
114.1
$
(18.0)
101.4
$
(3.1)
12.7
$
—
10.0
$
$
—
(9.6) $
—
21.4
$
—
(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.
(c) Includes other manufacturing costs, over (under) absorption of fixed costs, distribution and SG&A expenses, start-
up and other costs for the U.S. filtration business, insurance settlement, and acquisition/integration/restructuring
costs.
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.
36
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
Integration/restructuring costs
Fine Paper and Packaging
Insurance settlement
Integration/Restructuring costs
Total
Other
Insurance settlement
Integration/restructuring costs
Total
Unallocated corporate costs
Pension plan settlement charge
Acquisition/integration/restructuring costs
Total
Total non-GAAP Adjustments
Operating Income as Adjusted
Year Ended December 31,
2017
2016
2015
$
55.3
$
65.6
$
54.1
69.5
(0.4)
(20.1)
104.3
70.7
(1.1)
(21.1)
114.1
67.3
(2.0)
(18.0)
101.4
—
(2.9)
—
(2.9)
(0.3)
—
(0.3)
0.6
1.3
1.9
(1.3)
103.0
$
1.4
—
1.8
1.8
—
1.1
1.1
0.8
2.7
3.5
7.8
1.8
—
1.5
1.5
—
2.4
2.4
—
0.8
0.8
6.5
$
121.9
$
107.9
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In accordance with generally accepted accounting principles in the United States ("GAAP"), consolidated operating
income includes the pre-tax effects of the representations and warranties insurance settlement, acquisition, integration and
restructuring costs, and pension plan settlement charges. 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 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 $96.5 million for the year ended December 31, 2017 was $4.3 million higher than the prior year due
to increased SG&A associated with U.S. transportation filtration business, incremental costs related to the Coldenhove
Acquisition, and higher spending due to increased sales in Technical Products. SG&A expense as a percentage of net
sales for the year ended December 31, 2017, was approximately 9.8 percent and was comparable to the prior year.
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 year ended
December 31, 2015.
37
•
•
For the years ended December 31, 2017, 2016 and 2015, we incurred $12.7 million, $11.2 million and $11.7 million of
interest expense, respectively. The increase in interest expense in 2017 was primarily due to capitalization of interest
of $0.8 million for the U.S. filtration project in 2016, higher interest rates in 2017 and higher borrowing related to the
Coldenhove Acquisition.
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, the mix of pre-tax income in jurisdictions with marginal
tax rates that differ from the U.S. statutory tax rate and changes in federal and state tax rates. For the year ended
December 31, 2017, our effective income tax rate related to continuing operations was 12 percent, primarily due to the
reduction in the U.S. federal tax rate. On December 22, 2017, the U.S. government enacted comprehensive tax
legislation, commonly referred to as the "Tax Act". The Tax Act significantly revises the U.S. corporate income tax by,
among other things, lowering the statutory corporate tax rate from 35% to 21%, eliminating certain deductions,
imposing a mandatory one-time tax on accumulated earnings of foreign subsidiaries, introducing new tax regimes and
changing how foreign earnings are subject to U.S. tax. The Tax Act also enhanced and extended through 2026 the
option to claim accelerated depreciation deductions on qualified property. The Company has not completed our
determination of the accounting implications of the Tax Act on its tax accruals. However, the Company reasonably
estimated the effects of the Tax Act and recorded provisional amounts in the financial statements as of December 31,
2017. Consistent with guidance issued by the SEC, which provides for a measurement period of one year from the
enactment date to finalize the accounting for effects of the Tax Act, the Company provisionally recorded an income tax
benefit of $6.5 million related to the Tax Act. This amount is comprised of a $10.3 million tax benefit from the
remeasurement of federal net deferred tax liabilities resulting from the reduction in the U.S. statutory corporate tax
rate to 21% from 35%, less $3.8 million of tax expense from the mandatory one-time tax on the accumulated earnings
of its foreign subsidiaries. As the Company completes its analysis of the Tax Act, collects and prepares necessary data
and interprets any additional guidance issued by the U.S. Treasury Department, the IRS and other standard-setting
bodies, adjustments to the provisional amounts may be required. In addition, adjustments to the provisional amounts
may be needed to reflect legislative actions by the various U.S. states related to application of the Tax Act provisions
on 2017 state tax returns. These adjustments could significantly impact the Company’s provision for income taxes in
the period in which the adjustments are made.
In June 2017, as part of our annual strategic plan review, the Company reassessed its intentions regarding the
indefinite reinvestment of undistributed earnings of our German operations and asserted its intent to indefinitely
reinvest them. As a result, the Company did not provide deferred income taxes on the 2017 unremitted earnings of our
German operations. In addition, in the second quarter of 2017, the deferred tax liability of $4.1 million which was
recorded in 2016 on unremitted German earnings was eliminated with a reduction to income tax expense. As noted
above, the Tax Act includes a mandatory one-time tax on unremitted accumulated earnings of all foreign subsidiaries,
and as a result, all previously unremitted earnings are now subject to U.S. tax and a liability of $3.8 million was
recorded thereon as of December 31, 2017. Beginning in 2018, the Tax Act will generally provide a 100% deduction
for U.S. federal tax purposes of dividends received by the Company from its foreign subsidiaries. The Company is
currently evaluating the potential U.S. federal and state and foreign tax liabilities that would result from future
repatriations, if any, and how the Tax Act will affect the Company's existing accounting assertion with regard to the
indefinite reinvestment of undistributed foreign earnings. The Company will complete this evaluation and determine
the impacts, if any, of U.S. federal and state and foreign legislation on its indefinite reinvestment assertion within the
one-year measurement period.
For the year ended December 31, 2016, our effective income tax rate related to continuing operations was 29 percent.
The adoption of ASU 2016-09 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, 2015, our
effective income tax rate related to continuing operations was 33 percent and included the benefit from recognizing
R&D Credits earned in prior periods. 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."
38
Liquidity and Capital Resources
Net cash flow provided by (used in):
Operating activities
Investing activities:
Capital expenditures
Acquisitions
Asset acquisition
Proceeds on sale of discontinued operations
Other investing activities
Total
Financing activities
Effect of exchange rate changes on cash and cash equivalents
Year Ended December 31,
2017
2016
2015
$
100.0
$
115.8
$
111.2
(42.7)
(43.1)
(8.0)
—
(1.2)
(95.0)
(3.8)
0.2
(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)
Net increase (decrease) in cash and cash equivalents
$
1.4
$
Operating Cash Flow Commentary
• Cash provided by operating activities of $100 million for the year ended December 31, 2017 was $15.8 million less
than cash provided by operating activities of $115.8 million in the prior year. The unfavorable comparison was
primarily due to a $9.8 million decrease in operating income and an increase of $10.6 million in our investment in
working capital for the year ended December 31, 2017. These items were offset by lower cash tax payments and lower
contributions and benefit payments for post-retirement benefit obligations in 2017.
• Cash provided by operating activities of $115.8 million for the year ended December 31, 2016 was $16.7 million
favorable to cash provided by operating activities of $111.2 million in the prior year. The favorable comparison was
primarily due to a a $12.7 million increase in operating income and the benefits of higher utilization of U.S. federal
R&D Credits. These favorable variances were partially offset by higher post-retirement benefit contributions in 2016
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.
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Investing Commentary:
•
•
•
For the years ended December 31, 2017 and 2016, cash used by investing activities was $95.0 million and $68.2
million, respectively. Capital expenditures for the year ended December 31, 2017 were $42.7 million compared to
spending of $68.5 million in the prior year. The capital expenditures were higher than normal in the prior year, due to
the U.S. transportation filtration project which was completed in 2016.
For the year ended December 31, 2017, cash used by investing activities includes $43.1 million for the Coldenhove
Acquisition and $8.0 million for acquisition of a laminating asset. 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, 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, 2016 were $68.5 million compared to spending of $48.1 million
in the prior year. The capital expenditures were higher than normal due to the U.S. Filtration project which was
completed in 2016.
•
For 2018, we expect aggregate annual capital expenditures to be within our target range of approximately 3 to
5 percent of net sales. We believe that the level of our capital spending can be more than adequately funded from cash
39
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.
Financing Commentary:
Our liquidity requirements are provided by cash generated from operations and short and long-term borrowings.
•
For the year ended December 31, 2017, cash used by financing activities was $3.8 million compared to cash used by
financing activities of $48.4 million for the prior year. The decrease was due to higher net debt borrowings and lower
share repurchases, offset by higher dividends paid in 2017. 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 change was due to higher net debt repayments, and higher share repurchases and dividends paid in 2016.
• 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
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, 2017, €5.3 million ($6.4 million, based on exchange rates at December 31, 2017) 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, 2017, we had $76.9 million outstanding under our
Revolver and $91.9 million of available credit (based on exchange rates at December 31, 2017).
• We have required debt payments through December 31, 2017 of $1.4 million on the Second German Loan
Agreement.
•
For the year ended December 31, 2017, cash and cash equivalents increased $1.4 million to $4.5 million at
December 31, 2017 from $3.1 million at December 31, 2016. Total debt increased $34.6 million to $255.5 million
at December 31, 2017 from $220.9 million at December 31, 2016. Net debt (total debt minus cash and cash
equivalents) increased by $33.2 million primarily due to the Coldenhove Acquisition.
40
• As of December 31, 2017, majority of our cash balance was held at entities outside of the U.S. As of
December 31, 2017, there were no restrictions regarding the repatriation of our non-U.S. cash.
Transactions with Shareholders
•
•
•
•
For the years ended December 31, 2017 and 2016, we paid quarterly cash dividends of $0.37 per common share or
$25.1 million annually and $0.33 per common share or $22.4 million annually, respectively.
In November 2017, our Board of Directors approved an 11 percent increase in the quarterly dividend rate on our
common stock to $0.41 per share, scheduled to be paid in March 2018.
In May 2017, our Board of Directors authorized the 2017 Stock Purchase Plan which was in effect till December 31,
2017. In November 2017, our Board of Directors authorized a program for the purchase of up to $25 million of
outstanding common stock effective January 1, 2018 ("2018 Stock Purchase Plan"). The program does not require the
Company to purchase any specific number of shares and may be suspended or discontinued at any time. Purchases
under the 2018 Stock Purchase Plan will be made from time to time in the open market or in privately negotiated
transactions in accordance with the requirements of applicable law. The timing and amount of any purchases will
depend on share price, market conditions and other factors. For the year ended December 31, 2017, we acquired
approximately 85,354 shares of Common Stock at a cost of $6.8 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, 2017 and 2016, we acquired approximately 28,000 and 46,000 of Common Stock,
respectively, at a cost of $2.5 million and $3.8 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 in
proceeds from the exercise of employee stock options for each of the years ended December 31, 2017 and 2016.
• 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, 2017, 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, 2017, 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, 2017, we had $44.0 million of state NOLs. Our state NOLs may be used to offset approximately
$2.6 million in state income taxes. If not used, substantially all of the state NOLs will expire in various amounts
between 2018 and 2036. In addition, we had $15.5 million of U.S. federal and $6.9 million of U.S. state R&D Credits
which, if not used, will expire between 2030 and 2037 for the U.S. federal R&D Credits and between 2020 and 2032
for the state 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 2017 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.
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Contractual Obligations
The following table presents the total contractual obligations for which cash flows are fixed or determinable as of
December 31, 2017:
(In millions)
2018
2019
2020
2021
2022
Beyond
2022
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
$
1.4
$
78.2
$
1.3
$
176.4
$
1.0
$
— $
258.3
11.4
67.0
5.3
14.7
12.3
4.0
11.3
—
4.3
—
6.1
2.6
9.3
—
4.6
—
—
2.1
4.3
—
4.9
—
—
1.8
—
—
4.8
—
—
1.6
—
—
18.1
—
—
3.7
36.3
67.0
42.0
14.7
18.4
15.8
Total contractual obligations
$
116.1
$
102.5
$
17.3
$
187.4
$
7.4
$
21.8
$
452.5
_______________________
(a) Interest payments on long-term debt includes interest on variable rate debt at December 31, 2017 weighted
average interest rates.
(b) The open purchase orders displayed in the table represent amounts we anticipate will become payable within the
next 12 months for goods and services that we have negotiated for delivery.
(c) The above table includes future payments that we will make for postretirement benefits other than pensions. Those
amounts are estimated using actuarial assumptions, including expected future service, to project the future
obligations.
(d) The minimum purchase commitments in 2018 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, 2017.
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.
42
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.
Inventories
We value U.S. inventories at the lower of cost, using the Last-In, First-Out ("LIFO") method, or market. German and Dutch
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 $120.1 million and $106.8 million at December 31, 2017 and 2016,
respectively and exceeded such LIFO value by $10.5 million and $8.2 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 global provision for income taxes and recording the related tax 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, tax effects of foreign financing structures, R&D Credits and excess tax benefits from stock
compensation. 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, 2017, we have aggregate deferred income tax assets of $10.1 million related to temporary differences,
net operating losses and R&D Credits of the state of Wisconsin only. U.S. federal R&D Credits are netted against deferred
income tax liabilities. As of December 31, 2016, our aggregate deferred income tax assets were $6.1 million and included
all deferred attributes of U.S. federal and state jurisdictions. As of December 31, 2016, we recorded a valuation allowance
of $3.1 million against a portion of our U.S. state R&D Credits. In determining the need for a valuation allowance, we
consider 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 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, 2017 and 2016, our liability for uncertain income taxes positions was $10.0 million and $10.3 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.
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Pension and Other Postretirement Benefits
Consolidated pension expense related to continuing operations for defined benefit pension plans was $7.0 million, $9.5
million and $6.5 million for the years ended December 31, 2017, 2016 and 2015, 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:
43
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
2017
2016
2015
4.18% 4.54% 3.91%
3.49% 4.16% 4.54%
6.31% 6.20% 6.50%
2.49% 2.18% 2.92%
3.89% 4.07% 4.05%
3.27% 3.69% 4.07%
6.80% 7.00% 7.30%
4.50% 4.50% 4.50%
2027
2037
2037
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.
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.
For the years ended December 31, 2017, 2016 and 2015, consolidated postretirement health care and life insurance plan
benefit expense was $2.7 million, $3.3 million and $3.4 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.
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 20 years, 12 years and 9.5 years respectively. We also use units-of-production method of depreciation for
the U.S. transportation filtration production assets with a gross book value of $66.6 million, 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
44
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 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, 2017. 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, 2017 no impairment was indicated.
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, 2017, 2016 and 2015 indicated that the carrying
amount of such assets was recoverable.
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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
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.
45
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, 2017, 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 $3.9 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, 2017, the net assets of our non-U.S. operations exceeded
their net liabilities by approximately $214 million. As of December 31, 2017, 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
$22 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 2017 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 a limited number suppliers. In general, these supply arrangements are covered by formal
contracts and 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.
46
Interest Rate Risk
We are exposed to interest rate risk on our variable rate bank debt. At December 31, 2017, we had $76.9 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 $0.8 million.
Environmental Regulation/Climate Change Legislation
Our manufacturing operations are subject to extensive regulation primarily by U.S., German, Dutch 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 2018 through 2019 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.
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-55 of
this Annual Report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
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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,
2017. The scope of management's assessment of the effectiveness of internal control over financial reporting includes all of
the Company's businesses except for the Coldenhove business acquired in November 2017. The Coldenhove business
constituted approximately 8 percent of total assets and less than 1 percent of revenues and net income of the consolidated
financial statement amounts as of and for the year ended December 31, 2017. Further discussion of this acquisition can be
found in Note 4 "Acquisitions" to our consolidated financial statements. 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, 2017,
the Company's internal controls over financial reporting were effective.
The effectiveness of internal control over financial reporting as of December 31, 2017, 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, Inc.
February 23, 2018
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, 2017 that has materially affected, or is reasonably likely to materially affect, the Company's internal
control over financial reporting.
Item 9B. Other Information
None.
48
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, 2018. 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, 2017.
Executive Officers of the Company
Set forth below is information concerning our executive officers.
Name
John P. O'Donnell
Matthew L. Duncan
Steven S. Heinrichs
Bonnie C. Lind
Julie A. Schertell
Byron J. Racki
Armin Schwinn
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 — President, Fine Paper and Packaging
Senior Vice President — President, Performance Materials
Senior Vice President — Managing Director of Neenah Germany
Larry N. Brownlee
Vice President — Controller and Principal Accounting Officer
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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, 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, his law degree from Tulane University in 1994, and his Bachelor of Arts degree from the University of
Virginia.
49
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
Director of Kimfibers with overall responsibility for the sourcing and distribution of pulp to Kimberly-Clark's global
operations.
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.
Byron J. Racki, born in 1977, is a Senior Vice President of the Company and President, Performance Materials, and had
been in that role since January 2017. Mr. Racki joined the Company in 2006 and has served in areas of increasing
responsibility including Vice President of Sales and Marketing, Specialty Products in 2014 and 2015 and Vice President of
Sales and Marketing for the Fine Paper division in 2012 and 2013. Prior to joining Neenah, Mr. Racki was employed by
Kimberly-Clark in the Family Care division in various finance positions. Mr. Racki earned an MBA from the University of
Texas at Austin and a Bachelor of Arts degree in Political Science and Economics from the University of Iowa.
Armin 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, 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, 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.
50
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.
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-55
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, Inc., 3460 Preston Ridge Road, Suite 600, Alpharetta, Georgia 30005.
Exhibit
Number
2.1
Exhibit
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).
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).
52
Exhibit
Number
2.30 +
3.1
3.2
3.3
4.1
4.2
10.1
10.3*
10.4*
10.5*
10.6*
10.7*
10.8*
10.9*
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).
Second Amended and Restated Bylaws of Neenah, Inc. (filed as Exhibit 3.2 to the Neenah, Inc. Current
Report on Form 8-K filed January 3, 2018 and incorporated herein by reference).
Certificate of Ownership & Merger merging Neenah, Inc. into Neenah Paper, Inc., dated December 11, 2017
(filed herewith)
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).
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 as Exhibit 10.5 to the Neenah Paper, Inc. Annual Report on Form 10-K for the year ended
December 31, 2016, filed on February 24, 2017 and incorporated herein by reference).
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).
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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).
10.10*
Neenah Paper Directors' Deferred Compensation Plan approved on December 11, 2006. (filed as
Exhibit 10.22 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).
10.11 + 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).
10.12
10.13
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).
53
Exhibit
Number
10.14*
10.15
10.16
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).
Third Amendment, dated as of August 30, 2017, 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 10.1 to the Neenah Paper, Inc.
Quarterly Report on Form 10-Q, filed November 8, 2017 and incorporated herein by reference).
Fourth Amendment, dated as of December 14, 2017, 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 herewith).
Statement Regarding Computation of Ratio of Earnings to Fixed Charges (filed herewith)
List of Subsidiaries of Neenah, 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.
54
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, 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 23, 2018
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
55
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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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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of Neenah, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Neenah, Inc. and subsidiaries (the "Company") as of
December 31, 2017 and 2016, 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, 2017, and the related
notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion,
the financial statements present fairly, in all material respects, the financial position of the Company as of December 31,
2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December
31, 2017, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2017, based on criteria
established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of
the Treadway Commission and our report dated February 23, 2018, expressed an unqualified opinion on the Company's
internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion
on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the
financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits
also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our
opinion.
/s/ Deloitte & Touche LLP
Atlanta, Georgia
February 23, 2018
We have served as the Company's auditor since 2003.
F-2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of Neenah, Inc.
To the stockholders and the Board of Directors of Neenah, Inc.
Opinion on Internal Control over Financial Reporting
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Neenah, Inc. and subsidiaries (the “Company”) as of
We have audited the internal control over financial reporting of Neenah, Inc. and subsidiaries (the “Company”) as of
December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the
December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained,
Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained,
in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria
in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria
established in Internal Control - Integrated Framework (2013) issued by COSO.
established in Internal Control - Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated financial statements and financial statement schedule as of and for the year ended
States) (PCAOB), the consolidated financial statements and financial statement schedule as of and for the year ended
December 31, 2017, of the Company and our report dated February 23, 2018, expressed an unqualified opinion on those
December 31, 2017, of the Company and our report dated February 23, 2018, expressed an unqualified opinion on those
consolidated financial statements and financial statement schedule.
consolidated financial statements and financial statement schedule.
As described in Management's Annual Report on Internal Control Over Financial Reporting, management excluded from
As described in Management's Annual Report on Internal Control Over Financial Reporting, management excluded from
its assessment the internal control over financial reporting at W.A. Sanders Coldenhove Holding B.V., which was acquired
its assessment the internal control over financial reporting at W.A. Sanders Coldenhove Holding B.V., which was acquired
on November 1, 2017 and whose financial statements constitute approximately eight percent of total assets and less than
on November 1, 2017 and whose financial statements constitute approximately eight percent of total assets and less than
one percent of revenues and net income of the consolidated financial statement amounts as of and for the year ended
one percent of revenues and net income of the consolidated financial statement amounts as of and for the year ended
December 31, 2017. Accordingly, our audit did not include the internal control over financial reporting at W.A. Sanders
December 31, 2017. Accordingly, our audit did not include the internal control over financial reporting at W.A. Sanders
Coldenhove Holding B.V.
Coldenhove Holding B.V.
Basis for Opinion
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
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
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
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 are a public accounting firm registered with the PCAOB
internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform
We conducted our audit in accordance with the standards of the PCAOB. 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
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
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
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
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.
believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
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
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
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
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
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
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
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.
acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
/s/ Deloitte & Touche LLP
Atlanta, Georgia
Atlanta, Georgia
February 23, 2018
February 23, 2018
F-3
F-3
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NEENAH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except share and per share data)
Year Ended December 31,
2017
2016
2015
$
979.9
$
941.5
$
Net sales
Cost of products sold
Gross profit
Selling, general and administrative expenses
Acquisition/integration/restructuring costs
Insurance settlement
Pension and SERP plan settlement charges
Other (income) expense — net
Operating income
Interest expense
Interest income
Income from continuing operations before income taxes
Provision for income taxes
Income from continuing operations
Loss from discontinued operations, net of taxes (Note 13)
781.2
198.7
96.5
1.3
(3.2)
0.6
(0.8)
104.3
12.7
(0.1)
91.7
11.4
80.3
—
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
$
$
$
$
$
887.7
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
Net income
$
80.3
$
Earnings (Loss) Per Common Share
Basic
Continuing operations
Discontinued operations
Diluted
Continuing operations
Discontinued operations
$
$
$
$
4.74
—
4.74
4.68
—
4.68
$
$
$
$
Weighted Average Common Shares Outstanding (in thousands)
Basic
Diluted
16,805
17,052
16,773
17,087
16,754
17,012
See Notes to Consolidated Financial Statements
F-4
NEENAH, 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 gain (loss)
Net loss from pension and other postretirement benefit plans
Deferred loss on "available-for-sale" securities
Income (loss) from other comprehensive income items before income taxes
(Benefit) provision for income taxes
Other comprehensive income (loss)
Comprehensive income
See Notes to Consolidated Financial Statements
Year Ended December 31,
2017
2016
2015
$
80.3
$
73.0
$
51.1
5.9
0.6
6.5
20.0
(20.3)
(0.4)
5.8
(3.0)
8.8
$
89.1
$
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
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F-5
NEENAH, 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:
16,870,000 shares and 16,771,000 shares
Treasury stock, at cost: 1,588,000 shares and 1,475,000 shares
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total Stockholders' Equity
December 31,
2017
2016
$
4.5
$
115.7
143.5
21.5
285.2
425.2
10.1
85.3
78.7
19.9
3.1
96.5
116.3
20.4
236.3
364.6
6.1
70.4
74.0
14.2
$
904.4
$
765.6
$
1.4
$
65.7
57.5
124.6
254.1
15.0
100.3
10.5
504.5
0.2
(65.8)
323.9
235.7
(94.1)
399.9
1.2
55.6
51.2
108.0
219.7
10.1
86.7
2.8
427.3
0.2
(56.5)
317.0
169.6
(92.0)
338.3
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
904.4
$
765.6
See Notes to Consolidated Financial Statements
F-6
NEENAH, 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, 2014
17,849
$
Net income
Other comprehensive loss, after 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
—
—
—
—
—
108
106
—
—
Balance, December 31, 2015
18,063
Net income
Other comprehensive loss, net of income tax
benefit
Dividends declared
Excess tax benefits from stock-based
compensation
Shares purchased (Note 10)
Stock options exercised
Restricted stock vesting (Note 10)
Balance, December 31, 2016
Net income
Other comprehensive income, after income
tax benefit
Reclassification of the stranded tax effects
related to the Tax Act (Note 10)
Dividends declared
Shares purchased (Note 10)
Stock options exercised
Restricted stock vesting (Note 10)
Stock-based compensation
Other/Currency
—
—
—
—
71
111
—
18,245
—
—
—
—
—
140
73
—
—
0.2
—
$ (31.7) $
—
—
—
—
—
—
—
—
—
0.2
—
—
—
—
—
—
—
0.2
—
—
—
—
—
—
—
—
—
—
—
—
(5.9)
—
(2.5)
—
—
(40.1)
—
—
—
(12.6)
—
(3.8)
—
(56.5)
—
—
—
—
(6.8)
—
(2.5)
—
—
$ (65.8) $
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300.4
$
—
—
—
2.6
—
1.2
—
6.5
0.1
310.8
—
—
—
—
0.4
—
5.8
317.0
—
—
—
—
—
0.4
—
6.4
0.1
$
88.2
51.1
—
(20.3)
—
—
—
—
—
—
119.0
73.0
—
(22.4)
—
—
—
—
169.6
80.3
—
10.9
(25.1)
—
—
—
—
—
323.9
$
235.7
$
(68.4)
—
(9.9)
—
—
—
—
—
—
—
(78.3)
—
(13.7)
—
—
—
—
—
(92.0)
—
8.8
(10.9)
—
—
—
—
—
—
(94.1)
Balance, December 31, 2017
18,458
$
0.2
See Notes to Consolidated Financial Statements
F-7
NEENAH, 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 9)
Deferred income tax provision
Non-cash effects of changes in liabilities for uncertain income tax positions
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
Asset acquisition
Net proceeds from sale of discontinued operations
Proceeds from sale of property, plant and equipment
Acquisitions (Note 4)
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)
Proceeds from exercise of stock options
Excess tax benefit from stock-based compensation (Note 9)
Cash dividends paid
Shares purchased (Note 10)
Other
NET CASH USED IN FINANCING ACTIVITIES
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
EQUIVALENTS
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, END OF YEAR
Year Ended December 31,
2017
2016
2015
$
80.3
$
73.0
$
51.1
33.3
6.4
—
(0.2)
(0.1)
0.6
—
0.2
(11.8)
(8.0)
(0.7)
100.0
(42.7)
(0.6)
(8.0)
—
—
(43.1)
(0.6)
(95.0)
323.7
(0.3)
(293.3)
0.4
—
(25.1)
(9.3)
0.1
(3.8)
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)
0.2
1.4
3.1
4.5
$
(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
See Notes to Consolidated Financial Statements
F-8
NEENAH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except as noted)
Note 1. Background and Basis of Presentation
Background
Neenah, 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, digital image transfer, durable label, and other 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.
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, asset retirement obligations ("AROs"), 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.
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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. The
Company has completed its assessment of the ASU 2014-09, Revenue from Contracts with Customers, and does not believe
there will be a material impact from adoption on its consolidated financial statements. The Company will adopt the new
standards using the modified retrospective method as of January 1, 2018. See "Recently Adopted Accounting Standards"
later in this Note for further discussion.
F-9
NEENAH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
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, 2017 and 2016, $0.1 million and $0.3 million, respectively, 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. European inventories are valued at the lower of cost, using a weighted-average cost method, or
market. Cost includes labor, materials and production overhead.
Foreign Currency
Balance sheet accounts of the Company's operations in Germany and the Netherlands, 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 Netherlands, 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 20 years, 12 years and 9.5 years, respectively. The units-of-production method of
depreciation is used for the U.S. transportation filtration production assets with a gross book value of $66.6 million, 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 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, 2017, 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
F-10
NEENAH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
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
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.
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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, 2017
December 31, 2016
Carrying
Value
Fair
Value (a)
Carrying
Value
Fair
Value (a)
$
175.0
$
170.2
$
175.0
$
169.5
76.9
6.4
76.9
6.4
42.9
6.8
42.9
6.8
$
258.3
$
253.5
$
224.7
$
219.2
(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, 2017, the Company had $3.6 million in
marketable securities classified as Other assets on the consolidated balance sheet. The cost of such marketable securities
was $4.1 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").
F-11
NEENAH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
Fair Value of Pension Plan Assets
With the exception of cash and cash equivalents which are considered Level 1, and the annuity contracts which are
considered Level 3, pension plan assets are measured at Net Asset Value ("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:
• Cash and cash equivalents ($1.6 million and $1.5 million at December 31, 2017 and 2016, respectively).
• U.S and non-U.S. Equities ($123.2 million and $112.2 million at December 31, 2017 and 2016,
respectively) — These proprietary collective funds have observable NAVs (based on the fair value of the
underlying investments of the funds) that are provided to investors and provide for liquidity either
immediately of within a few days.
• U.S and non-U.S. Fixed Income Securities ($199.0 million and $181.1 million at December 31, 2017 and
2016, respectively) — These proprietary collective funds have observable NAVs (based on the fair value of
the underlying investments of the funds) that are provided to investors and provide for liquidity either
immediately of within a few days.
• Hedge Fund ($28.2 million and $23.3 million at December 31, 2017 and 2016, respectively) — This fund is
valued using NAVs calculated by the underlying investment managers and allow for quarterly or more
frequent redemptions.
In conjunction with the Coldenhove Acquisition, there were transfers in of $46.8 million into Level 3 plan assets, as the
defined benefit plan for Coldenhove is administered through an insurance contract.
The following table summarizes the changes in Level 3 defined benefit pension plan assets measured at fair value on a
recurring basis for the year ended December 31, 2017:
Return on plan assets
Fair Value
at January 1
Attributable
to Assets
Held at
December 31
Attributable
to Assets
Sold
Net Purchases/
(Settlements)
Transfers into/
(out of) Level 3
Foreign
currency
effects
Fair
Value at
December 31
Insurance contract
$
— $
0.2
$
— $
0.1
$
46.8
$
1.3
$
48.4
Recently Adopted Accounting Standards
In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805), Clarifying the Definition of a
Business. The amendments in this ASU provide guidance in evaluating whether transactions should be accounted for as
acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including
acquisitions, disposals, goodwill and consolidation. The amendments are effective for the Company as of January 1, 2018,
on a prospective basis. The Company early adopted ASU 2017-01 in the third quarter of 2017. There was no material
impact on the consolidated financial statements as a result of the adoption.
In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects From Accumulated Other
Comprehensive Income (Topic 740), to address issues related to the application of ASC 740 to certain provisions of the Tax
Cuts and Jobs Act (the "Tax Act"). This ASU provides an option for entities to make a one-time reclassification from
Accumulated Other Comprehensive Income (“AOCI”) to retained earnings for stranded tax effects resulting from the
newly enacted tax rates for deferred tax liabilities and assets related to items within AOCI. The Company early adopted
ASU 2018-02 in the fourth quarter of 2017 and accordingly reclassified $10.9 million related to stranded tax effects
resulting from the Tax Act from AOCI to retained earnings. See Note 10, "Stockholders' Equity."
F-12
NEENAH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
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 Company has 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 adopt the new standards using the modified retrospective method as of January 1, 2018. The new standards also
require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from
customer contracts, including significant judgments and changes in judgments.
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, 2017, 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.
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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
of common stock equivalents, such as stock options, stock appreciation rights ("SARs") and target awards of RSUs with
performance conditions ("Performance Share Units" or "PSUs"), into shares of common stock as if those securities were
exercised or converted. For the years ended December 31, 2017, 2016 and 2015, approximately 72,000, 35,000 and 45,000
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-
month periods during which the options were outstanding.
F-13
NEENAH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
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
Income from continuing operations
Amounts attributable to participating securities
Income from continuing operations available to common stockholders
Income (loss) from discontinued operations, net of income taxes
Amounts attributable to participating securities
Net income available to common stockholders
Weighted-average basic shares outstanding
Basic earnings (loss) per share
Continuing operations
Discontinued operations
Earnings per diluted common share
Income from continuing operations
Amounts attributable to participating securities
Income from continuing operations available to common stockholders
Income (loss) from discontinued operations, net of income taxes
Amounts attributable to participating securities
Net income available to common stockholders
Weighted-average basic shares outstanding
Add: Assumed incremental shares under stock-based compensation plans
Weighted average diluted shares
Diluted earnings (loss) per share
Continuing operations
Discontinued operations
Note 4. Acquisitions
Acquisition of Coldenhove
$
$
$
$
$
Year Ended December 31,
2017
2016
2015
$
80.3
(0.6)
79.7
—
—
$
73.4
(0.7)
72.7
(0.4)
—
79.7
$
72.3
$
60.5
(0.6)
59.9
(9.4)
0.1
50.6
16,805
16,773
16,754
4.74
—
4.74
$
$
4.33
(0.02)
4.31
$
$
3.58
(0.56)
3.02
Year Ended December 31,
2017
2016
2015
$
80.3
(0.5)
79.8
—
—
$
73.4
(0.6)
72.8
(0.4)
—
$
79.8
$
72.4
$
16,805
247
17,052
16,773
314
17,087
60.5
(0.5)
60.0
(9.4)
0.1
50.7
16,754
258
17,012
$
$
4.68
—
4.68
$
$
4.26
(0.02)
4.24
$
$
3.53
(0.55)
2.98
On November 1, 2017, the Company purchased all of the outstanding equity of Coldenhove for approximately $45 million.
The Company also paid approximately $3 million to extinguish Coldenhove's existing debt and certain other liabilities. The
payment was funded with $17 million of cash on hand and borrowings of $31 million from the Global Revolving Credit
F-14
NEENAH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
Facilities. Coldenhove is a specialty materials manufacturer based in the Netherlands, with a leading position in digital
transfer media and other technical products.
The Company accounted for the transaction using the acquisition method in accordance with ASC Topic 805, Business
Combinations ("ASC Topic 805"). The preliminary allocation of the purchase price was based on estimates of the fair value
of assets acquired and liabilities assumed as of November 1, 2017, and certain tax balances are subject to adjustment as
additional information is obtained. The Company has up to 12 months from the closing of the acquisition to finalize its
valuations. Changes to the valuation of tax assets and liabilities acquired may result in adjustments to the carrying value of
tax assets and liabilities acquired or goodwill. Prior to the end of the one-year purchase price allocation period, if
information becomes available which would indicate it is probable that such events attributable to these items had occurred
as of the acquisition date and the amounts can be reasonably estimated, such items will be included in the final purchase
price allocation and may result in an adjustment to the carrying value of tax assets and liabilities acquired or goodwill.
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, 2017.
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
Other assets
Total assets acquired
Liabilities Assumed
Accounts payable
Accrued expenses
Contingent liability (1)
Deferred income taxes
Noncurrent employee benefits
Long-term debt
Other noncurrent obligations
Total liabilities assumed
Net assets acquired
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December 31,
2017
$
$
4.9
4.7
12.7
0.4
0.2
31.2
1.2
4.7
10.0
0.1
70.1
4.1
5.4
2.3
3.5
4.9
1.8
0.1
22.1
48.0
(1) In conjunction with the acquisition, the Company assumed a contingent liability of $2.3 million related to the
acquisition of direct customer relationships by Coldenhove, which amount is contingent on the growth of sales from these
customer relationships. As of December 31, 2017, the liability amount is unchanged.
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
F-15
NEENAH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
was estimated by applying a royalty rate to projected revenue, net of tax impacts and adjusted for present value
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 Coldenhove.
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 Coldenhove. These
benefits include entry into profitable new markets for performance materials and specialty papers with new capabilities and
recognized brands and synergies from combining the business with Neenah's existing infrastructure. None of the goodwill
recognized as part of the Coldenhove acquisition will be deductible for income tax purposes. All of the acquired goodwill
was allocated to the Technical Products segment.
For the year ended December 31, 2017, the Company incurred $1.3 million of acquisition and restructuring costs. For the
year ended December 31, 2017, the Company recorded net sales of $7.5 million and insignificant loss from operations
before income taxes (excluding the acquisition related costs described above) for the acquired business.
The following selected unaudited pro forma consolidated statements of operations data for the year ended December 31,
2017 and 2016 was prepared as though the Coldenhove acquisition had occurred on January 1, 2016. The information does
not reflect future events that may occur after December 31, 2017 or any operating efficiencies or inefficiencies that may
result from the Coldenhove 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.
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
Acquisition of FiberMark
Year Ended December 31,
2017
2016
$
1,019.8
$
108.9
83.0
—
83.0
$
$
$
$
$
$
4.90
—
4.90
$
4.84
—
4.84
$
986.9
116.7
74.8
(0.4)
74.4
4.42
(0.02)
4.40
4.34
(0.02)
4.32
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.
F-16
NEENAH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
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 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,
2016 and 2015 was prepared as though the FiberMark acquisition had occurred on January 1, 2015. The information does
not reflect future events that may occur after December 31, 2016 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-17
Year Ended
December 31,
2015
984.0
103.7
61.7
(9.4)
52.3
3.65
(0.56)
3.09
3.60
(0.55)
3.05
$
$
$
$
$
NEENAH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
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 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, 2017. 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
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
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
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
years ended December 31, 2017, 2016 and 2015 .
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
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.
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.
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, 2015
$
110.7
$
(45.1) $
65.6
$
6.2
$
0.4
$
72.2
Adjustment of goodwill acquired in the
Fibermark Acquisition (1)
Foreign currency translation
Balance at December 31, 2016
Goodwill acquired in the Coldenhove
Acquisition
Foreign currency translation
(0.4)
(2.9)
107.4
10.0
10.9
Balance at December 31, 2017
$
128.3
$
___________________________
—
1.5
(43.6)
—
(6.0)
(49.6) $
(0.4)
(1.4)
63.8
10.0
4.9
—
—
6.2
—
—
—
—
0.4
—
—
(0.4)
(1.4)
70.4
10.0
4.9
78.7
$
6.2
$
0.4
$
85.3
(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.
Other Intangible Assets
As of December 31, 2017, the Company had net identifiable intangible assets of $78.7 million. All such intangible assets
were acquired in the acquisitions of Neenah Germany, Fox River, FiberMark, Coldenhove and the Crane technical
F-18
NEENAH, INC. AND SUBSIDIARIES
NEENAH, 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)
materials business, and the acquisition of the Wausau and Southworth brands. The following table details amounts related
to those assets.
materials business, and the acquisition of the Wausau and Southworth brands. The following table details amounts related
to those assets.
Amortizable intangible assets
Amortizable intangible assets
Customer based intangibles
Customer based intangibles
Trade names and trademarks
Trade names and trademarks
Acquired technology
Acquired technology
Total amortizable intangible assets
Total amortizable intangible assets
Trade names
Trade names
Total
Total
December 31, 2017
December 31, 2017
December 31, 2016
December 31, 2016
Gross
Amount
Gross
Amount
Accumulated
Amortization
Accumulated
Amortization
Gross
Amount
Gross
Amount
Accumulated
Amortization
Accumulated
Amortization
$
$
39.2
39.2
$
$
5.2
5.2
17.2
17.2
61.6
61.6
38.0
38.0
$
$
99.6
99.6
$
$
(14.7) $
(14.7) $
(2.3)
(2.3)
(3.9)
(3.9)
(20.9)
(20.9)
—
—
(20.9) $
(20.9) $
34.4
34.4
$
$
6.8
6.8
14.6
14.6
55.8
55.8
36.2
36.2
92.0
92.0
$
$
(11.1)
(11.1)
(4.2)
(4.2)
(2.7)
(2.7)
(18.0)
(18.0)
—
—
(18.0)
(18.0)
The following table presents intangible assets acquired in conjunction with the Coldenhove acquisition:
The following table presents intangible assets acquired in conjunction with the Coldenhove acquisition:
Intangible assets — definite lived
Intangible assets — definite lived
Trade names and trademarks
Trade names and trademarks
Customer based intangibles
Customer based intangibles
Acquired technology
Acquired technology
Total
Total
Non-amortizable trade names
Non-amortizable trade names
Total intangible assets
Total intangible assets
Intangibles
Intangibles
Estimated Useful
Lives
(Years)
Estimated Useful
Lives
(Years)
10
10
15
15
4
4
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K
$
$
$
$
0.5
0.5
2.9
2.9
1.3
1.3
4.7
4.7
1.2
1.2
5.9
5.9
As of December 31, 2017, all of such intangible assets are reported within the Technical Products segment. See Note 14,
As of December 31, 2017, all of such intangible assets are reported within the Technical Products segment. See Note 14,
"Business Segment and Geographic Information." Aggregate amortization expense of acquired intangible assets for the
"Business Segment and Geographic Information." Aggregate amortization expense of acquired intangible assets for the
years ended December 31, 2017, 2016 and 2015 was $3.7 million, $3.9 million and $2.9 million, respectively and was
years ended December 31, 2017, 2016 and 2015 was $3.7 million, $3.9 million and $2.9 million, respectively and was
reported in Cost of products sold on the Consolidated Statement of Operations. Estimated amortization expense for the
reported in Cost of products sold on the Consolidated Statement of Operations. Estimated amortization expense for the
years ended December 31, 2018, 2019, 2020, 2021 and 2022 is $3.9 million, $3.9 million, $3.9 million, $3.7 million and
years ended December 31, 2018, 2019, 2020, 2021 and 2022 is $3.9 million, $3.9 million, $3.9 million, $3.7 million and
$3.0 million, respectively.
$3.0 million, respectively.
Note 6. Income Taxes
Note 6. Income Taxes
The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. Income tax expense
represented 12.4 percent, 28.7 percent and 32.7 percent of income from continuing operations before income taxes for the
years ended December 31, 2017, 2016 and 2015, respectively.
The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. Income tax expense
represented 12.4 percent, 28.7 percent and 32.7 percent of income from continuing operations before income taxes for the
years ended December 31, 2017, 2016 and 2015, respectively.
On December 22, 2017, the U.S. government enacted comprehensive tax legislation, commonly referred to as the "Tax
On December 22, 2017, the U.S. government enacted comprehensive tax legislation, commonly referred to as the "Tax
Act". The Tax Act significantly revises the U.S. corporate income tax by, among other things, lowering the statutory
Act". The Tax Act significantly revises the U.S. corporate income tax by, among other things, lowering the statutory
corporate tax rate from 35% to 21%, eliminating certain deductions, imposing a mandatory one-time tax on accumulated
corporate tax rate from 35% to 21%, eliminating certain deductions, imposing a mandatory one-time tax on accumulated
earnings of foreign subsidiaries, introducing new tax regimes and changing how foreign earnings are subject to U.S. tax.
earnings of foreign subsidiaries, introducing new tax regimes and changing how foreign earnings are subject to U.S. tax.
The Tax Act also enhanced and extended through 2026 the option to claim accelerated depreciation deductions on qualified
The Tax Act also enhanced and extended through 2026 the option to claim accelerated depreciation deductions on qualified
F-19
F-19
NEENAH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
property. The Company has not completed our determination of the accounting implications of the Tax Act on its tax
accruals. However, the Company reasonably estimated the effects of the Tax Act and recorded provisional amounts in the
financial statements as of December 31, 2017. Consistent with guidance issued by the Securities Exchange Commission
("SEC"), which provides for a measurement period of one year from the enactment date to finalize the accounting for
effects of the Tax Act, the Company provisionally recorded an income tax benefit of $6.5 million related to the Tax Act.
This amount is comprised of a $10.3 million tax benefit from the remeasurement of federal net deferred tax liabilities
resulting from the reduction in the U.S. statutory corporate tax rate to 21% from 35%, less $3.8 million of tax expense from
the mandatory one-time tax on the accumulated earnings of its foreign subsidiaries. As the Company completes its analysis
of the Tax Act, collects and prepares necessary data and interprets any additional guidance issued by the U.S. Treasury
Department, the IRS and other standard-setting bodies, adjustments to the provisional amounts may be required. In
addition, adjustments to the provisional amounts may be needed to reflect legislative actions by the various U.S. states
related to application of the Tax Act provisions on 2017 state tax returns. These adjustments could significantly impact the
Company’s provision for income taxes in the period in which the adjustments are made.
In conjunction with the Tax Act, The Company early adopted ASU 2018-02 in the fourth quarter of 2017 and accordingly
reclassified $10.9 million related to stranded tax effects resulting from the Tax Act from AOCI to retained earnings. See
Note 10, "Stockholders' Equity."
For the Global Intangible Low-Taxed Income ("GILTI") provisions of the Tax Act, a provisional estimate could not be
made as the Company has not yet completed its assessment or elected an accounting policy to either recognize deferred
taxes for basis differences expected to reverse as GILTI or to record GILTI as period costs if and when incurred. In
accordance with SEC guidance, provisional amounts may be refined as a result of additional guidance from, and
interpretations by, U.S. regulatory and standard-setting bodies and changes in assumptions.
In June 2017, as part of our annual strategic plan review, the Company reassessed its intentions regarding the indefinite
reinvestment of undistributed earnings of our German operations and asserted its intent to indefinitely reinvest them. As a
result, the Company did not provide deferred income taxes on the 2017 unremitted earnings of our German operations. In
addition, in the second quarter of 2017, the deferred tax liability of $4.1 million which was recorded in 2016 on unremitted
German earnings was eliminated with a reduction to income tax expense. As noted above, the Tax Act includes a
mandatory one-time tax on unremitted accumulated earnings of all foreign subsidiaries, and as a result, all previously
unremitted earnings are now subject to U.S. tax and a liability of $3.8 million was recorded thereon as of December 31,
2017. Beginning in 2018, the Tax Act will generally provide a 100% deduction for U.S. federal tax purposes of dividends
received by the Company from its foreign subsidiaries. The Company is currently evaluating the potential U.S. federal and
state and foreign tax liabilities that would result from future repatriations, if any, and how the Tax Act will affect the
Company's existing accounting assertion with regard to the indefinite reinvestment of undistributed foreign earnings. The
Company will complete this evaluation and determine the impacts, if any, of U.S. federal and state and foreign legislation
on its indefinite reinvestment assertion within the one-year measurement period.
F-20
NEENAH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
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
U.S. state income taxes, net of federal income tax
benefit
Tax on foreign dividends (a)
Foreign tax rate differences (b)
Foreign financing structure (c)
Excess tax benefits from stock compensation
Research and development and other tax credits (d)
Domestic production activities deduction
Uncertain income tax positions
Change in statutory tax rates (e)
Other differences — net
Effective income tax rate
_______________________
Year Ended December 31,
2017
2017
2016
2016
2015
2015
35.0 % $ 32.1
35.0 % $ 36.1
35.0 % $ 31.5
1.9 %
(0.3)%
(3.4)%
(2.2)%
(4.9)%
(3.3)%
(0.6)%
0.8 %
(10.6)%
— %
1.7
(0.3)
(3.1)
(2.0)
(4.5)
(3.0)
(0.5)
0.7
(9.7)
—
12.4 % $ 11.4
1.9 %
2.0
4.5 %
(1.6)%
(2.8)%
(3.0)%
(2.7)%
4.6
(2.8)
(1.7)
(3.1)
(2.9)
(1.5)
(0.4)
—
(0.7)
28.7 % $ 29.6
(0.4)%
(0.7)%
(1.5)%
— %
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
32.7 % $ 29.4
(a) For 2017, the amount reflects the net benefit of the indefinite reinvestment assertion of $4.1 million, less the $3.8
mandatory one-time tax on the accumulated earnings of foreign subsidiaries from the Tax Act.
(b) 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.
(c) Represents the impact on the Company's effective tax rate of the Company's financing strategies.
(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.
(e) Represents the net benefit from remeasurement of the net deferred tax liabilities, including a tax benefit of $10.3
million from the Tax Act, less $0.6 million of tax expense from a state tax rate change in Germany.
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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 2014, to state and local
examinations for years before 2013 and to non-U.S. income tax examinations for years before 2012.
F-21
NEENAH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
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,
2017
2016
2015
$
$
53.6
38.1
91.7
$
68.3
34.7
$ 103.0
$
$
62.2
27.7
89.9
Year Ended December 31,
2017
2016
2015
$
$
4.7
0.5
6.4
11.6
(1.8)
(0.1)
1.7
(0.2)
11.4
$
$
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
$
The federal deferred tax provision was reduced by a net $8.1 million as a result of the Tax Act and the German tax rate
increase. This amount includes $10.3 million of tax rate reduction from the Tax Act, less $0.6 million from the German tax
rate increase, less $1.6 million of impact of the mandatory one-time tax on the accumulated earnings of foreign subsidiaries
from the Tax Act. The remaining $2.2 million of impact of the mandatory one-time tax on foreign earnings increased the
federal current tax provision.
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-22
NEENAH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(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
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
follows:
Deferred income tax assets (liabilities)
Research and development tax credits
Net operating losses and credits
Employee benefits
Inventories
Accrued liabilities
Intangibles
Accelerated depreciation
Undistributed foreign earnings
Other
Net deferred income tax assets
Deferred income tax assets (liabilities)
Accelerated depreciation
Intangibles
Interest limitation
Other
Inventories
Accrued liabilities
Net operating losses
Research and development tax credits
Employee benefits
Net deferred income tax liabilities
December 31,
2017
2016
$
$
6.6
4.2
1.1
0.2
0.1
(0.5)
(1.6)
—
—
15.0
10.5
26.0
(0.5)
3.2
(10.8)
(34.0)
(4.4)
1.1
$
10.1
$
6.1
$
(45.1) $
(11.4)
—
1.3
1.8
1.9
5.0
8.6
(12.3)
(2.8)
(0.3)
—
0.3
—
—
—
22.9
(15.0) $
5.0
(10.1)
$
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As of December 31, 2017, the net deferred tax assets relate to the state of Wisconsin and the net deferred tax liabilities
relate to U.S. federal and all other U.S. state jurisdictions, and operations of Germany, the Netherlands and the U.K. The
presentation as of December 31, 2016 reflected net deferred tax assets of U.S. federal and state jurisdictions and the net
deferred tax liabilities related to operations of Germany and the U.K. As of December 31, 2017, the Company had $37.3
million of undistributed earnings (net of foreign taxes) of foreign subsidiaries. There were $12.5 million undistributed
earnings (net of foreign taxes) of foreign subsidiaries as of December 31, 2016.
As of December 31, 2017, the Company had $15.5 million of U.S. federal and $6.9 million of U.S. state R&D tax credits
which, if not used, will expire between 2030 and 2037 for the U.S. federal R&D tax credits and between 2020 and 2032 for
the state R&D tax credits. As of December 31, 2017, we had $44.0 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 $2.6 million. If
not used, substantially all of the NOLs will expire in various amounts between 2018 and 2036. The Company also had pre-
acquisition and recognized built-in loss carryovers of $9.3 million, reflected as a deferred tax asset of $2.0 million. In
addition, the Company had $3.1 million of federal Alternative Minimum Tax Credit carryovers, which under the Tax Act
are fully refundable by no later than 2021.
F-23
NEENAH, 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, 2017, 2016 and 2015:
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
Increases due to change in tax rates
Increases (decreases) from foreign exchange rate changes
For the Years Ended
December 31,
2017
2016
2015
$
10.3
$
12.9
$
0.4
(1.0)
0.7
(1.0)
0.4
0.2
—
(2.6)
0.6
(0.3)
—
(0.3)
10.3
$
7.0
0.5
—
5.5
—
—
(0.1)
12.9
Balance at December 31,
$
10.0
$
The $10.0 million of reserves for uncertain tax positions as of December 31, 2017 were reflected on the consolidated
balance sheets as follows: $2.3 million netted against deferred tax assets, $5.3 million added to deferred tax liabilities and
$2.4 million in other noncurrent obligations. 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.
If recognized, $9.6 million of the benefit for uncertain tax positions at December 31, 2017 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, 2017.
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, 2017 and 2016, the Company had $0.1
million and $0.2 million, respectively, accrued for interest and penalties related to uncertain income tax positions.
As of December 31, 2017, the Company had a valuation allowance of $0.4 million against its state NOLs. As of
December 31, 2016, the Company had a valuation allowance of $3.1 million against its state R&D tax credits and $0.4
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-24
NEENAH, INC. AND SUBSIDIARIES
NEENAH, 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 7. Debt
Note 7. Debt
Long-term debt consisted of the following:
Long-term debt consisted of the following:
2021 Senior Notes (5.25% fixed rate) due May 2021
2021 Senior Notes (5.25% fixed rate) due May 2021
Global Revolving Credit Facilities (variable rates) due December 2019
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
Second German Loan Agreement (2.45% fixed rate) due in 32 equal quarterly installments ending
September 2022
Deferred financing costs
Deferred financing costs
Total Debt
Total Debt
Less: Debt payable within one year
Less: Debt payable within one year
Long-term debt
Long-term debt
Unsecured Senior Notes
Unsecured Senior Notes
2021 Senior Notes
2021 Senior Notes
December 31,
December 31,
2017
2017
2016
2016
$
$
175.0
175.0
$
$
175.0
175.0
76.9
76.9
42.9
42.9
6.4
6.4
(2.8)
(2.8)
255.5
255.5
6.8
6.8
(3.8)
(3.8)
220.9
220.9
1.4
1.4
1.2
1.2
$
$
254.1
254.1
$
$
219.7
219.7
In May 2013, the Company completed an underwritten offering of eight-year senior unsecured notes (the "2021 Senior
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
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
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
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
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
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
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
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.
be offered or sold absent registration or an applicable exemption from registration requirements.
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The 2021 Senior Notes rank equally in right of payment with all the Company's existing and future senior unsecured
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
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
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
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
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
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 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
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
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
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
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
or acquire another business, sell certain of the Company's assets or liquidate, dissolve or wind-up the Company. As of
December 31, 2017, the Company was in compliance with all terms of the indenture for the 2021 Senior Notes.
December 31, 2017, the Company was in compliance with all terms of the indenture for the 2021 Senior Notes.
Amended and Restated Secured Revolving Credit Facility
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
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
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
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
its German subsidiaries as the "German Borrowers", certain other subsidiaries as the "German Guarantors", the financial
F-25
F-25
NEENAH, 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").
On August 30, 2017, the Company amended the Third Amended Credit Agreement, among other things, to make certain
definitional and administrative changes to address definition of EBITDA, Inter-Company Loans and Permitted Offshore
Acquisitions, as further defined in the Third Amended Credit Agreement, in order to enable the Company to more
efficiently operate and grow in international markets.
On December 14, 2017, the Company amended the Third Amended and Restated Credit Agreement, among other things, to
make certain definitional and administrative changes to the definition of Fixed Charge Coverage Ratio and amend certain
restrictive covenants to reflect the financing structure of the Company's acquisition of Coldenhove.
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, 2017, $31 million was
borrowed in conjunction with the Coldenhove Acquisition and the remaining $293 million included borrowings for daily
cash management. 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.
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
F-26
NEENAH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
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:
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%
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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,
2017, 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, 2017, 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.
F-27
NEENAH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
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, 2017, the Company had $76.9 million of borrowings
and $0.9 million in letters of credit outstanding under the Global Revolving Credit Facilities and $91.9 million of available
credit (based on exchanges rates at December 31, 2017). As of December 31, 2017 and 2016, the weighted-average interest
rate on outstanding Revolver borrowings was 2.7 percent and 2.8 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
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, 2017, 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, 2017, €5.3 million ($6.4 million, based on exchange rates at
December 31, 2017) was outstanding under the Second German Loan Agreement.
Principal Payments
The following table presents the Company's required debt payments:
Debt payments
2018
$
1.4
2019
$ 78.2
2020
$
1.3
2021
$ 176.4
2022
Thereafter
Total
$
1.0
$
— $
258.3
Note 8. Pension and Other Postretirement Benefits
Pension Plans
Substantially all active employees of the Company's U.S. operations participate in defined benefit pension plans and/or
defined contribution retirement plans. The Company also has defined benefit plans and/or alternative retirement plans for
substantially all its employees in Germany, the U.K, and the Netherlands. 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 2017, the Company recorded a $0.6 million settlement loss in SERP for a total payment of $1.3 million.
During 2016, the Company offered a lump sum payout option to all eligible U.S. participants 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
F-28
NEENAH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
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.
The Company's funding policy for its U.S. qualified defined benefit plans and its U.K. defined benefit plan is to contribute
assets in compliance with regulatory requirements to fund the projected benefit obligation. 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, 2017, Neenah Germany had investments of $1.7 million that were restricted to the payment
of certain post-retirement employee benefits. As of December 31, 2017, $0.6 million and $1.1 million of such investments
are classified as Prepaid and other current assets and Other assets, respectively, on the consolidated balance sheet. Neenah
Coldenhove retirement benefit obligations are administered by a third-party insurance company, and funding for these
benefits comes from premiums paid. The Company also holds $3.6 million of marketable securities that are designated for
the payment of benefits under the SERP as of December 31, 2017, 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.
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, 2017. 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 all participants of the plan (including employees of other
employers) and unfunded obligations are the responsibility of all remaining employers. In the event the Company ceases
participation or in the event of the multi-employer plan's termination, the Company may be liable for a portion of the multi-
employer plan’s unfunded benefits.
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The most recent Pension Protection Act zone status available is for the plan's year-end at December 31, 2016. 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, 2016, the Company's contributions to the plan were less than 5% of total plan
contributions.
EIN/Pension
Plan Number
Pension
Zone
Status
2016
FIP/RP Status
Pending or
Implemented
Contributions
2017
Surcharge
Imposed
Expiration
Date of
Collective
Bargaining
Agreement
11-6166763
Red
Implemented
$0.1 million
Yes
11/9/2021
Pension Fund
PACE Industry Union Management
Pension Fund
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 Canadian 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
F-29
NEENAH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
retire on or after January 1, 1993. The Company does not provide a subsidized benefit to non-union U.S. employees hired
after 2003 or collectively bargained employees after 2005.
The Company's obligations for postretirement benefits other than pensions are measured annually as of December 31. At
December 31, 2017, the assumed inflationary health care cost trend rates used to determine obligations at December 31,
2017 and costs for the year ended December 31, 2018 is 6.8 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, 2016 and
costs for the year ended December 31, 2017 were 7.0 percent gradually decreasing to an ultimate rate of 4.5 percent in
2037.
F-30
NEENAH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(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.
Change in Benefit Obligation:
Benefit obligation at beginning of year
Service cost
Interest cost
Currency
Actuarial (gain) loss
Benefit payments from plans
Settlement payments
Net transfer in (1)
Other
Benefit obligation at end of year
Change in Plan Assets:
Fair value of plan assets at beginning of year
Actual gain (loss) on plan assets
Employer contributions
Currency
Benefit payments
Settlement payments
Net transfers in (1)
Other
Fair value of plan assets at end of year
Reconciliation of Funded Status
Fair value of plan assets
Projected benefit obligation
Net liability recognized in statement of financial position
Amounts recognized in statement of financial position consist of:
Current liabilities
Noncurrent liabilities
Net amount recognized
_______________________
Pension Benefits
Postretirement
Benefits Other
than Pensions
Year Ended December 31,
2017
2016
2017
2016
$
370.9
$
360.1
$
40.7
$
40.5
5.5
15.0
6.8
33.3
(18.1)
(1.5)
51.7
0.3
463.9
318.1
38.5
14.3
2.2
(18.1)
(1.5)
46.8
0.1
400.4
400.4
$
$
$
$
4.9
15.9
(3.1)
18.2
(17.1)
(8.1)
0.1
—
370.9
308.3
17.6
17.8
(1.7)
(15.8)
(8.1)
—
—
318.1
318.1
$
$
$
$
463.9
(63.5) $
370.9
(52.8) $
1.2
1.4
0.6
3.9
(3.8)
—
—
—
1.3
1.6
0.1
(1.2)
(3.8)
—
—
2.2
44.0
$
40.7
— $
—
—
—
—
—
—
—
— $
— $
44.0
(44.0) $
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—
—
—
—
—
—
—
—
—
—
40.7
(40.7)
(4.3)
(36.4)
(40.7)
(3.7) $
(59.8)
(63.5) $
(3.8) $
(49.0)
(52.8) $
(5.3) $
(38.7)
(44.0) $
$
$
$
$
$
$
$
(1) For the year ended December 31, 2017, the Company acquired $51.7 million of pension liabilities and $46.8
million of pension assets in conjunction with the Coldenhove Acquisition.
F-31
NEENAH, 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,
2017
2016
2017
2016
$ 105.9
0.8
$ 106.7
$
$
95.8
0.9
96.7
$
$
8.6
(0.2)
8.4
$
$
4.9
(0.4)
4.5
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
2017
2016
2017
2016
2017
2016
$
— $
291.3
$ 463.9
$
—
—
281.5
284.2
451.4
400.4
79.6
79.4
33.9
$
463.9
$
451.4
400.4
370.9
360.9
318.1
Pension Benefits
Postretirement Benefits
Other than Pensions
Year Ended December 31,
2017
2016
2015
2017
2016
2015
$ 5.5
$ 4.9
$ 5.5
$ 1.2
$ 1.3
$ 1.7
15.0
(19.9)
5.6
0.2
0.6
7.0
—
$ 7.0
15.9
(18.9)
6.6
0.2
0.8
1.4
13.8
(19.3) —
0.3
(0.2)
—
6.3
0.2
—
9.5
2.7
6.5
— (14.9) —
$ (8.4) $ 2.7
$ 9.5
1.6
—
0.6
(0.2)
—
3.3
—
1.6
—
0.3
(0.2)
—
3.4
—
$ 3.3
$ 3.4
(a) The expected return on plan assets, excluding the Dutch plan assets, is determined by multiplying the fair value of
plan assets at the prior year-end (adjusted for estimated current year cash benefit payments and contributions) by
the expected long-term rate of return. The Dutch pension plan is funded through an insurance contract, and the
expected return on plan assets is calculated based on the discount rate of the insured obligations.
F-32
NEENAH, INC. AND SUBSIDIARIES
NEENAH, 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)
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income
Pension Benefits
Pension Benefits
Postretirement Benefits
Other than Pensions
Postretirement Benefits
Other than Pensions
Year Ended December 31,
Year Ended December 31,
2017
2017
2016
2016
2015
2015
2017
2017
2016
2016
2015
2015
Net periodic benefit expense
Net periodic benefit expense
Accumulated actuarial gain (loss)
Accumulated actuarial gain (loss)
Prior service cost (credit)
Prior service cost (credit)
Total recognized in other comprehensive income
Total recognized in other comprehensive income
Total recognized in net periodic benefit cost and other comprehensive
income
Total recognized in net periodic benefit cost and other comprehensive
income
$ 7.0
$ 7.0
$
$
9.5
9.5
10.1
(0.1)
10.0
10.1
(0.1)
10.0
11.7
(0.3)
11.4
11.7
(0.3)
11.4
$ (8.4) $ 2.7
(7.1)
3.7
(0.3)
(7.4)
$ (8.4) $ 2.7
(7.1)
3.7
(0.3)
(7.4)
3.9
0.2
0.2
3.9
$ 3.3
(0.9)
0.1
(0.8)
$ 3.3
(0.9)
0.1
(0.8)
$ 3.4
$ 3.4
1.1
1.1
0.2
0.2
1.3
1.3
$ 17.0
$ 17.0
$ 20.9
$ 20.9
$(15.8) $ 6.6
$(15.8) $ 6.6
$ 2.5
$ 2.5
$ 4.7
$ 4.7
The estimated net actuarial loss and prior service cost for the defined benefit pension plans expected to be amortized from
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 $5.4 million and $0.2
accumulated other comprehensive income into net periodic benefit cost over the next fiscal year are $5.4 million and $0.2
million, respectively. The estimated net actuarial loss and prior service (credit) for postretirement benefits other than
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
pensions expected to be amortized from accumulated other comprehensive income into net periodic benefit cost over the
next fiscal year is $0.6 million and $(0.2) million, respectively.
next fiscal year is $0.6 million and $(0.2) million, respectively.
Weighted-Average Assumptions Used to Determine Benefit Obligations at December 31
Weighted-Average Assumptions Used to Determine Benefit Obligations at December 31
Discount rate
Discount rate
Rate of compensation increase
Rate of compensation increase
Pension
Benefits
Pension
Benefits
Postretirement
Postretirement
Benefits
Benefits
Other than
Other than
Pensions
Pensions
2017
2017
2016
2016
2017
2017
2016
2016
3.49% 4.16% 3.27% 3.69%
3.49% 4.16% 3.27% 3.69%
2.40% 2.22%
2.40% 2.22%
—%
—%
—%
—%
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Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost for Years Ended December 31
Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost for Years Ended December 31
Pension Benefits
Pension Benefits
Postretirement
Postretirement
Benefits Other than
Benefits Other than
Pensions
Pensions
Year Ended December 31,
Year Ended December 31,
2017
2017
2016
2016
2015
2015
2017
2017
2016
2016
2015
2015
Discount rate
Discount rate
4.18% 4.54% 3.91% 3.89% 4.07% 4.05%
4.18% 4.54% 3.91% 3.89% 4.07% 4.05%
Expected long-term return on plan assets (a)
Expected long-term return on plan assets (a)
6.31% 6.20% 6.50%
6.31% 6.20% 6.50%
—%
—%
—%
—%
—%
—%
Rate of compensation increase
Rate of compensation increase
_______________________
_______________________
2.49% 2.18% 2.92%
2.49% 2.18% 2.92%
—%
—%
—%
—%
—%
—%
(a) The expected long-term return on plan assets does not include the Dutch plan assets. The Dutch pension plan is
(a) The expected long-term return on plan assets does not include the Dutch plan assets. The Dutch pension plan is
funded through an insurance contract, and the expected return on plan assets is calculated based on the discount
funded through an insurance contract, and the expected return on plan assets is calculated based on the discount
rate of the insured obligations.
rate of the insured obligations.
F-33
F-33
NEENAH, 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 compounded annual returns. It is anticipated that, on average,
the managed pension plan assets will generate annual long-term rates of return of 6.30 percent. The expected long-term rate
of return on the assets in the plans was based on an asset allocation assumption of approximately 35 percent with equity
managers, with expected long-term rates of return of approximately 8 to 10 percent, 8 percent with hedge funds, with
expected long-term rates of return of approximately 6 to 8 percent, and 57 percent with fixed income managers, with an
expected long-term rate of return of about 3 to 5 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 (a)
Equity securities
Hedge fund
Debt securities
Total
Percentage of Plan
Assets At
December 31,
2017
2016
35%
8%
57%
36%
7%
57%
100% 100%
(a) The asset categories do not include the insurance contract related to the Dutch pension plan.
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 weighted average target investment allocation and permissible allocation range for plan assets by category are as
follows:
Asset Category
Equity securities
Hedge fund
Debt securities / Fixed Income
Strategic Target
Permitted Range
35%
8%
57%
30-40%
3-12%
52-62%
As of December 31, 2017, no company or group of companies in a single industry represented more than five percent of
plan assets.
F-34
NEENAH, INC. AND SUBSIDIARIES
NEENAH, 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 Company's investment assumptions are established by an investment committee composed of members of senior
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, 2017, the Company's
management and are validated periodically against actual investment returns. As of December 31, 2017, the Company's
investment assumptions are as follows:
investment assumptions are as follows:
(a) The plan should be substantially fully invested in debt and equity securities at all times because substantial cash
(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;
holdings will reduce long-term rates of return;
(b) Equity investments will provide greater long-term returns than fixed income investments, although with greater
(b) Equity investments will provide greater long-term returns than fixed income investments, although with greater
short-term volatility;
short-term volatility;
(c) It is prudent to diversify plan investments across major asset classes;
(d) Allocating a portion of plan assets to foreign equities will increase portfolio diversification, decrease portfolio risk
(c) It is prudent to diversify plan investments across major asset classes;
(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, 2017, 2016 and 2015, no plan assets were invested in the Company's securities.
For the years ended December 31, 2017, 2016 and 2015, no plan assets were invested in the Company's securities.
Cash Flows
Cash Flows
At December 31, 2017, the Company expects to make aggregate contributions to qualified pension trusts and payments of
pension benefits for unfunded pension plans in 2018 of approximately $14.7 million (based on exchange rates at
December 31, 2017).
At December 31, 2017, the Company expects to make aggregate contributions to qualified pension trusts and payments of
pension benefits for unfunded pension plans in 2018 of approximately $14.7 million (based on exchange rates at
December 31, 2017).
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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:
2018
2019
2020
2021
2022
Years 2023-2027
2018
2019
2020
2021
2022
Years 2023-2027
$
Pension Plans
$
Pension Plans
22.7
22.7
24.4
24.4
21.7
21.7
23.4
23.4
23.3
23.3
128.1
128.1
Postretirement
Postretirement
Benefits
Benefits
Other than
Other than
Pensions
Pensions
$
$
5.3
5.3
4.3
4.3
4.6
4.6
4.9
4.9
4.8
4.8
18.1
18.1
F-35
F-35
NEENAH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
Health Care Cost Trends
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 post-retirement benefit other than pension obligation
One Percentage-
Point
Increase
Decrease
$
— $
0.2
—
(0.3)
Defined Contribution Retirement Plans
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 $2.5 million in 2017, $2.7
million in 2016 and $2.5 million in 2015. 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
SRCP to the extent necessary to fulfill the intent of its defined contribution retirement plans without regard to the
limitations set by the Internal Revenue Code on qualified defined contribution plans. For the years ended December 31,
2017, 2016 and 2015, the Company recognized expense related to the SRCP of $0.4 million, $0.4 million and $0.2 million,
respectively. At December 31, 2017 and December 31, 2016, the unfunded obligation of the SRCP was $1.7 million and
$1.3 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, 2017, 2016 and 2015,
costs charged to expense for Company matching contributions under these plans were $3.7 million, $3.1 million and $2.7
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, 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, 2017, the
Company had 680,000 shares of Common Stock reserved for future issuance under the 2013 Omnibus Plan. As of
December 31, 2017, the number of shares available for future issuance was reduced by approximately 134,000 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").
F-36
NEENAH, INC. AND SUBSIDIARIES
NEENAH, 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)
Valuation and Expense Information Under 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.
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
Stock-based compensation expense
Income tax benefit
Income tax benefit
Stock-based compensation, net of income tax benefit
Stock-based compensation, net of income tax benefit
Year Ended December 31,
Year Ended December 31,
2017
2017
2016
2016
2015
2015
$
$
$
$
6.4
(2.5)
3.9
$
6.4
(2.5)
$
3.9
$
$
5.8
(2.2)
3.6
$
5.8
(2.2)
$
3.6
$
$
6.5
(2.5)
4.0
6.5
(2.5)
4.0
The following table summarizes total compensation costs related to the Company's equity awards and amounts recognized
in the year ended December 31, 2017.
The following table summarizes total compensation costs related to the Company's equity awards and amounts recognized
in the year ended December 31, 2017.
Unrecognized compensation cost — December 31, 2016
Unrecognized compensation cost — December 31, 2016
$
$
0.6
0.6
$
$
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, 2017
Unrecognized compensation cost — December 31, 2017
$
$
Expected amortization period (in years)
Expected amortization period (in years)
1.9
(1.9)
0.6
1.9
(1.9)
$
0.6
1.8
1.8
$
1.7
1.7
5.1
(4.5)
2.3
5.1
(4.5)
2.3
1.7
1.7
F
o
r
m
1
0
-
K
Stock Options
Stock Options
Performance
Performance
Shares and RSUs
Shares and RSUs
Stock Options/SARs
Stock Options/SARs
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, 2017,
2016 and 2015.
The following tables present information regarding stock options awarded during the years ended December 31, 2017,
2016 and 2015.
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
2017
2017
2016
2016
2015
2015
144,089
144,089
113,935
113,935
87,930
87,930
$
$
$
$
82.11
82.11
$
13.54
13.54
$
$
$
58.03
58.03
$
13.51
13.51
$
$
$
59.72
59.72
16.47
16.47
F-37
F-37
NEENAH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NEENAH, INC. AND SUBSIDIARIES
NEENAH, INC. AND SUBSIDIARIES
(Dollars in millions, except as noted)
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 weighted-average grant date fair value for stock options granted for the years ended December 31, 2017, 2016 and
2015 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, 2017, 2016 and
The weighted-average grant date fair value for stock options granted for the years ended December 31, 2017, 2016 and
2015 was estimated using the Black-Scholes option valuation model with the following assumptions:
2015 was estimated using the Black-Scholes option valuation model with the following assumptions:
Expected term in years
Risk free interest rate
Expected term in years
Expected term in years
Volatility
Risk free interest rate
Risk free interest rate
Dividend yield
Volatility
Volatility
Dividend yield
Dividend yield
2017
5.8
2017
2017
2016
5.8
2016
2016
2015
5.8
2015
2015
2.1%
5.8
5.8
1.4%
1.8%
5.8
5.8
5.8
5.8
22.9% 32.1% 34.4%
1.4%
1.4%
1.8%
1.8%
2.1%
2.1%
2.0%
3.0%
3.0%
22.9% 32.1% 34.4%
22.9% 32.1% 34.4%
3.0%
3.0%
3.0%
3.0%
2.0%
2.0%
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
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
the yield on U.S. Treasury bonds with a remaining term approximately equal to the expected term of the stock option
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
awards. Forfeitures were estimated at the date of grant.
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.
The following table summarizes stock option activity under the Omnibus Plan for the year ended December 31, 2017:
The following table summarizes stock option activity under the Omnibus Plan for the year ended December 31, 2017:
The following table summarizes stock option activity under the Omnibus Plan for the year ended December 31, 2017:
Number of
Stock Options
Weighted-Average
Exercise Price
Options outstanding — December 31, 2016
Add: Options granted
Options outstanding — December 31, 2016
Options outstanding — December 31, 2016
Less: Options exercised
Add: Options granted
Add: Options granted
Less: Options forfeited/cancelled
Less: Options exercised
Less: Options exercised
Options outstanding — December 31, 2017
Less: Options forfeited/cancelled
Less: Options forfeited/cancelled
Options outstanding — December 31, 2017
Options outstanding — December 31, 2017
530,462
Number of
Number of
Stock Options
Stock Options
144,089
530,462
530,462
207,973
144,089
144,089
1,620
207,973
207,973
464,958
1,620
1,620
464,958
464,958
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Weighted-Average
Weighted-Average
Exercise Price
Exercise Price
38.35
82.11
38.35
38.35
29.88
82.11
82.11
65.60
29.88
29.88
55.60
65.60
65.60
55.60
55.60
The status of outstanding and exercisable stock options as of December 31, 2017, summarized by exercise price follows:
The status of outstanding and exercisable stock options as of December 31, 2017, summarized by exercise price follows:
The status of outstanding and exercisable stock options as of December 31, 2017, summarized by exercise price follows:
Options Vested or Expected to Vest
Options Exercisable
Exercise Price
$7.41 — $19.25
Exercise Price
Exercise Price
$21.13 — $31.23
$7.41 — $19.25
$7.41 — $19.25
$42.82 — $51.99
$21.13 — $31.23
$21.13 — $31.23
$55.49 — $60.56
$42.82 — $51.99
$42.82 — $51.99
>$60.56
$55.49 — $60.56
$55.49 — $60.56
>$60.56
>$60.56
_______________________
Options Vested or Expected to Vest
Options Vested or Expected to Vest
Weighted-
Average
Exercise
Weighted-
Weighted-
Price
Average
Average
Exercise
Exercise
Price
Price
$
13.06
$
Aggregate
Intrinsic
Value (a)
Aggregate
Aggregate
Intrinsic
Intrinsic
Value (a)
Value (a)
4.1
Options Exercisable
Options Exercisable
Weighted-
Average
Exercise
Weighted-
Weighted-
Price
Average
Average
Exercise
Exercise
Price
Price
13.06
$
Number of
Options
52,727
Number of
Number of
Options
Options
Number of
Options
52,727
Number of
Number of
Options
Options
$
$
58,490
52,727
52,727
37,526
58,490
58,490
172,626
37,526
37,526
143,589
172,626
172,626
464,958
143,589
143,589
$
$
$
$
$
$
$
$
$
$
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
$
$
$
$
$
3.7
4.1
4.1
1.8
3.7
3.7
NEENAH, INC. AND SUBSIDIARIES
5.5
1.8
1.8
1.2
5.5
5.5
16.3
1.2
1.2
(Dollars in millions, except as noted)
16.3
16.3
58,490
52,727
52,727
37,526
58,490
58,490
76,141
37,526
37,526
17,060
76,141
76,141
241,944
17,060
17,060
27.56
13.06
13.06
43.49
27.56
27.56
58.68
43.49
43.49
82.11
58.68
58.68
55.60
82.11
82.11
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
464,958
464,958
55.60
55.60
6.6
6.6
$
$
$
$
$
27.56
13.06
13.06
43.49
27.56
27.56
58.93
43.49
43.49
82.15
58.93
58.93
40.59
82.15
82.15
241,944
241,944
$
$
40.59
40.59
Weighted-
Average
Remaining
Weighted-
Weighted-
Contractual
Average
Average
Life (Years)
Remaining
Remaining
1.9
Contractual
Contractual
Life (Years)
Life (Years)
3.9
1.9
1.9
6.0
3.9
3.9
7.5
6.0
6.0
8.5
7.5
7.5
6.6
8.5
8.5
Aggregate
Intrinsic
Value (a)
Aggregate
Aggregate
Intrinsic
Intrinsic
Value (a)
Value (a)
4.1
3.7
4.1
4.1
1.8
3.7
3.7
2.4
1.8
1.8
0.1
2.4
2.4
12.1
0.1
0.1
12.1
12.1
$
$
$
$
$
$
_______________________
_______________________
(a) Represents the total pre-tax intrinsic value as of December 31, 2017 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 $90.65 on December 31, 2017.
F-38
The aggregate pre-tax intrinsic value of stock options exercised for the years ended December 31, 2017, 2016 and 2015
was $11.5 million, $4.7 million and $5.5 million, respectively.
The following table summarizes the status of the Company's unvested stock options as of December 31, 2017 and activity
for the year then ended:
F-38
F-38
Number of
Stock Options
Weighted-Average
Grant Date
Fair Value
194,126
144,089
115,201
223,014
$
$
$
$
15.15
13.54
14.06
13.87
Outstanding — December 31, 2016
Add: Options granted
Less: Options vested
Outstanding — December 31, 2017
stock option grant.
PSUs/RSUs
As of December 31, 2017, certain participants met age and service requirements that allowed their options to qualify for
accelerated vesting upon retirement. As of December 31, 2017, there were approximately 155,000 stock options subject to
accelerated vesting that such participants would have been eligible to exercise if they had retired as of such date. The
aggregate grant date fair value of options subject to accelerated vesting was $2.1 million. For the year ended December 31,
2017, stock-based compensation expense for such options was $1.2 million. For the year ended December 31, 2017, the
aggregate grant date fair value of options vested, including options subject to accelerated vesting, was $1.9 million. Stock
options that reflect accelerated vesting for expense recognition become exercisable according to the contract terms of the
For the year ended December 31, 2017, the Company granted target awards of 41,883 PSUs. The measurement period for
three fourths of the PSUs is January 1, 2017 through December 31, 2017, and for the remaining fourth of the PSUs is
January 1, 2017 through December 31, 2019. The PSUs vest on December 31, 2019. Common Stock equal to not less than
40 percent and not more than 200 percent of the PSUs target will be awarded based on the Company’s return on invested
capital, consolidated revenue growth, EPS and total return to shareholders relative to the companies in the Russell 2000®
Value small cap index. The Company’s return on invested capital, consolidated revenue growth and EPS are adjusted for
certain items as further described in the Performance Share Award Agreement.
As of December 31, 2017, the Company expects that Common Stock equal to approximately 101 percent of the PSU
targets will be earned. The market price on the date of grant for the PSUs was $82.12 per share. At the end of the
measurement period, the PSUs convert into RSUs, at the determined rate mentioned above, that are entitled to dividends
but do not have voting rights. The Company is recognizing stock-based compensation expense pro-rata over the vesting
term of the PSUs/RSUs. For further discussion on participating securities refer to Note 3. "Earnings Per Share".
For the year ended December 31, 2017, the Company awarded 9,226 RSUs to non-employee members of the Board of
Directors and 866 RSUs to employees. The weighted-average grant date fair value of such awards was $76.78 per share
and the awards vest one year from the date of grant for the Board of Directors grants and three years from the date of grant
for the employee grants. 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.
F-39
NEENAH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
NEENAH, INC. AND SUBSIDIARIES
NEENAH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(a) Represents the total pre-tax intrinsic value as of December 31, 2017 that option holders would have received had
(Dollars in millions, except as noted)
(Dollars in millions, except as noted)
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 $90.65 on December 31, 2017.
(a) Represents the total pre-tax intrinsic value as of December 31, 2017 that option holders would have received had
(a) Represents the total pre-tax intrinsic value as of December 31, 2017 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
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 $90.65 on December 31, 2017.
Company's common stock of $90.65 on December 31, 2017.
The aggregate pre-tax intrinsic value of stock options exercised for the years ended December 31, 2017, 2016 and 2015
was $11.5 million, $4.7 million and $5.5 million, respectively.
The following table summarizes the status of the Company's unvested stock options as of December 31, 2017 and activity
The aggregate pre-tax intrinsic value of stock options exercised for the years ended December 31, 2017, 2016 and 2015
The aggregate pre-tax intrinsic value of stock options exercised for the years ended December 31, 2017, 2016 and 2015
for the year then ended:
was $11.5 million, $4.7 million and $5.5 million, respectively.
was $11.5 million, $4.7 million and $5.5 million, respectively.
Weighted-Average
The following table summarizes the status of the Company's unvested stock options as of December 31, 2017 and activity
The following table summarizes the status of the Company's unvested stock options as of December 31, 2017 and activity
Grant Date
for the year then ended:
for the year then ended:
Fair Value
Number of
Stock Options
Outstanding — December 31, 2016
Add: Options granted
Less: Options vested
Outstanding — December 31, 2016
Outstanding — December 31, 2016
Outstanding — December 31, 2017
Add: Options granted
Add: Options granted
Less: Options vested
Less: Options vested
194,126
144,089
Number of
Number of
Stock Options
Stock Options
115,201
194,126
194,126
223,014
144,089
144,089
115,201
115,201
$
$
$
$
$
$
$
$
$
$
15.15
Weighted-Average
Weighted-Average
Grant Date
Grant Date
Fair Value
Fair Value
13.54
14.06
15.15
15.15
13.87
13.54
13.54
14.06
14.06
223,014
223,014
Outstanding — December 31, 2017
Outstanding — December 31, 2017
As of December 31, 2017, certain participants met age and service requirements that allowed their options to qualify for
accelerated vesting upon retirement. As of December 31, 2017, there were approximately 155,000 stock options subject to
accelerated vesting that such participants would have been eligible to exercise if they had retired as of such date. The
aggregate grant date fair value of options subject to accelerated vesting was $2.1 million. For the year ended December 31,
As of December 31, 2017, certain participants met age and service requirements that allowed their options to qualify for
As of December 31, 2017, certain participants met age and service requirements that allowed their options to qualify for
2017, stock-based compensation expense for such options was $1.2 million. For the year ended December 31, 2017, the
accelerated vesting upon retirement. As of December 31, 2017, there were approximately 155,000 stock options subject to
accelerated vesting upon retirement. As of December 31, 2017, there were approximately 155,000 stock options subject to
aggregate grant date fair value of options vested, including options subject to accelerated vesting, was $1.9 million. Stock
accelerated vesting that such participants would have been eligible to exercise if they had retired as of such date. The
accelerated vesting that such participants would have been eligible to exercise if they had retired as of such date. The
options that reflect accelerated vesting for expense recognition become exercisable according to the contract terms of the
aggregate grant date fair value of options subject to accelerated vesting was $2.1 million. For the year ended December 31,
aggregate grant date fair value of options subject to accelerated vesting was $2.1 million. For the year ended December 31,
stock option grant.
2017, stock-based compensation expense for such options was $1.2 million. For the year ended December 31, 2017, the
2017, stock-based compensation expense for such options was $1.2 million. For the year ended December 31, 2017, the
aggregate grant date fair value of options vested, including options subject to accelerated vesting, was $1.9 million. Stock
aggregate grant date fair value of options vested, including options subject to accelerated vesting, was $1.9 million. Stock
options that reflect accelerated vesting for expense recognition become exercisable according to the contract terms of the
options that reflect accelerated vesting for expense recognition become exercisable according to the contract terms of the
PSUs/RSUs
stock option grant.
stock option grant.
$
$
13.87
13.87
F
o
r
m
1
0
-
K
For the year ended December 31, 2017, the Company granted target awards of 41,883 PSUs. The measurement period for
three fourths of the PSUs is January 1, 2017 through December 31, 2017, and for the remaining fourth of the PSUs is
PSUs/RSUs
PSUs/RSUs
January 1, 2017 through December 31, 2019. The PSUs vest on December 31, 2019. Common Stock equal to not less than
40 percent and not more than 200 percent of the PSUs target will be awarded based on the Company’s return on invested
For the year ended December 31, 2017, the Company granted target awards of 41,883 PSUs. The measurement period for
For the year ended December 31, 2017, the Company granted target awards of 41,883 PSUs. The measurement period for
capital, consolidated revenue growth, EPS and total return to shareholders relative to the companies in the Russell 2000®
three fourths of the PSUs is January 1, 2017 through December 31, 2017, and for the remaining fourth of the PSUs is
three fourths of the PSUs is January 1, 2017 through December 31, 2017, and for the remaining fourth of the PSUs is
Value small cap index. The Company’s return on invested capital, consolidated revenue growth and EPS are adjusted for
January 1, 2017 through December 31, 2019. The PSUs vest on December 31, 2019. Common Stock equal to not less than
January 1, 2017 through December 31, 2019. The PSUs vest on December 31, 2019. Common Stock equal to not less than
certain items as further described in the Performance Share Award Agreement.
40 percent and not more than 200 percent of the PSUs target will be awarded based on the Company’s return on invested
40 percent and not more than 200 percent of the PSUs target will be awarded based on the Company’s return on invested
capital, consolidated revenue growth, EPS and total return to shareholders relative to the companies in the Russell 2000®
capital, consolidated revenue growth, EPS and total return to shareholders relative to the companies in the Russell 2000®
As of December 31, 2017, the Company expects that Common Stock equal to approximately 101 percent of the PSU
Value small cap index. The Company’s return on invested capital, consolidated revenue growth and EPS are adjusted for
Value small cap index. The Company’s return on invested capital, consolidated revenue growth and EPS are adjusted for
targets will be earned. The market price on the date of grant for the PSUs was $82.12 per share. At the end of the
certain items as further described in the Performance Share Award Agreement.
certain items as further described in the Performance Share Award Agreement.
measurement period, the PSUs convert into RSUs, at the determined rate mentioned above, that are entitled to dividends
but do not have voting rights. The Company is recognizing stock-based compensation expense pro-rata over the vesting
As of December 31, 2017, the Company expects that Common Stock equal to approximately 101 percent of the PSU
As of December 31, 2017, the Company expects that Common Stock equal to approximately 101 percent of the PSU
term of the PSUs/RSUs. For further discussion on participating securities refer to Note 3. "Earnings Per Share".
targets will be earned. The market price on the date of grant for the PSUs was $82.12 per share. At the end of the
targets will be earned. The market price on the date of grant for the PSUs was $82.12 per share. At the end of the
measurement period, the PSUs convert into RSUs, at the determined rate mentioned above, that are entitled to dividends
measurement period, the PSUs convert into RSUs, at the determined rate mentioned above, that are entitled to dividends
For the year ended December 31, 2017, the Company awarded 9,226 RSUs to non-employee members of the Board of
but do not have voting rights. The Company is recognizing stock-based compensation expense pro-rata over the vesting
but do not have voting rights. The Company is recognizing stock-based compensation expense pro-rata over the vesting
Directors and 866 RSUs to employees. The weighted-average grant date fair value of such awards was $76.78 per share
term of the PSUs/RSUs. For further discussion on participating securities refer to Note 3. "Earnings Per Share".
term of the PSUs/RSUs. For further discussion on participating securities refer to Note 3. "Earnings Per Share".
and the awards vest one year from the date of grant for the Board of Directors grants and three years from the date of grant
for the employee grants. During the vesting period, the holders of the RSUs are entitled to dividends, but the RSUs do not
For the year ended December 31, 2017, the Company awarded 9,226 RSUs to non-employee members of the Board of
For the year ended December 31, 2017, the Company awarded 9,226 RSUs to non-employee members of the Board of
have voting rights and are forfeited in the event the holder is no longer an employee or member of the Board of Directors
Directors and 866 RSUs to employees. The weighted-average grant date fair value of such awards was $76.78 per share
Directors and 866 RSUs to employees. The weighted-average grant date fair value of such awards was $76.78 per share
on the vesting date.
and the awards vest one year from the date of grant for the Board of Directors grants and three years from the date of grant
and the awards vest one year from the date of grant for the Board of Directors grants and three years from the date of grant
for the employee grants. During the vesting period, the holders of the RSUs are entitled to dividends, but the RSUs do not
for the employee grants. During the vesting period, the holders of the RSUs are entitled to dividends, but the RSUs do not
F-39
have voting rights and are forfeited in the event the holder is no longer an employee or member of the Board of Directors
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.
on the vesting date.
F-39
F-39
NEENAH, INC. AND SUBSIDIARIES
NEENAH, 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 the activity of the Company's unvested stock-based awards (other than stock options) for
The following table summarizes the activity of the Company's unvested stock-based awards (other than stock options) for
the years ended December 31, 2017, 2016 and 2015:
the years ended December 31, 2017, 2016 and 2015:
Outstanding — December 31, 2014
Outstanding — December 31, 2014
Shares granted (a)
Shares granted (a)
Shares vested
Shares vested
Performance Shares vested
Performance Shares vested
Shares expired or cancelled
Shares expired or cancelled
Outstanding — December 31, 2015
Outstanding — December 31, 2015
Shares granted (a)
Shares granted (a)
Shares vested
Shares vested
Performance Shares vested
Performance Shares vested
Shares expired or cancelled
Shares expired or cancelled
Outstanding — December 31, 2016
Outstanding — December 31, 2016
Shares granted (a)
Shares granted (a)
Shares vested
Shares vested
Performance Shares vested
Performance Shares vested
Shares expired or cancelled
Shares expired or cancelled
Outstanding — December 31, 2017 (b)
Outstanding — December 31, 2017 (b)
___________________________
___________________________
Weighted-Average
Weighted-Average
Grant Date
Grant Date
Fair Value
Fair Value
RSUs
RSUs
PSUs
PSUs
Weighted-Average
Weighted-Average
Grant Date
Grant Date
Fair Value
Fair Value
105,294
105,294
$
$
13,415
$
$
13,415
(105,564) $
(105,564) $
$
$
107,219
107,219
(1,526) $
(1,526) $
$
$
118,838
118,838
10,047
$
$
10,047
(110,749) $
(110,749) $
$
$
62,874
62,874
(291) $
(291) $
$
$
80,719
80,719
10,318
$
$
10,318
(72,451) $
(72,451) $
$
$
73,838
73,838
(3,625) $
(3,625) $
$
$
88,799
88,799
31.15
31.15
61.41
61.41
32.12
32.12
40.65
40.65
51.14
51.14
43.29
43.29
68.25
68.25
42.96
42.96
53.63
53.63
40.65
40.65
54.91
54.91
76.84
76.84
55.26
55.26
52.11
52.11
50.48
50.48
53.33
53.33
58,270
58,270
$
$
45,060
45,060
$
$
(810) $
(810) $
(58,270) $
(58,270) $
(1,200) $
(1,200) $
$
$
43,050
43,050
54,364
54,364
$
$
— $
— $
(43,050) $
(43,050) $
(858) $
(858) $
$
$
53,506
53,506
41,883
41,883
$
$
— $
— $
(53,506) $
(53,506) $
(506) $
(506) $
$
$
41,377
41,377
74.79
74.79
78.32
78.32
78.32
78.32
74.79
74.79
78.32
78.32
78.32
78.32
73.82
73.82
—
—
78.32
78.32
75.98
75.98
73.79
73.79
81.85
81.85
—
—
73.79
73.79
81.85
81.85
81.85
81.85
(a) For the years ended December 31, 2017, 2016 and 2015, includes 226 RSUs, 312 RSUs and 495 RSUs,
(a) For the years ended December 31, 2017, 2016 and 2015, includes 226 RSUs, 312 RSUs and 495 RSUs,
respectively, that were granted in lieu of cash dividends. Such dividends-in-kind vest concurrently with the
respectively, that were granted in lieu of cash dividends. Such dividends-in-kind vest concurrently with the
underlying RSUs.
underlying RSUs.
(b) The aggregate pre-tax intrinsic value of outstanding RSUs as of December 31, 2017 was $8.0 million.
(b) The aggregate pre-tax intrinsic value of outstanding RSUs as of December 31, 2017 was $8.0 million.
The aggregate pre-tax intrinsic value of restricted stock and RSUs that vested for the years ended December 31, 2017, 2016
The aggregate pre-tax intrinsic value of restricted stock and RSUs that vested for the years ended December 31, 2017, 2016
and 2015 was $6.3 million, $9.3 million and $6.6 million, respectively.
and 2015 was $6.3 million, $9.3 million and $6.6 million, respectively.
Excess Tax Benefits
Excess Tax Benefits
Excess tax benefits represent the difference between the tax deduction the Company will receive on its tax return for
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
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, 2017, 2016 and 2015, the Company
for the grant date fair value of such awards. For the years ended December 31, 2017, 2016 and 2015, the Company
recognized excess tax benefits related to the exercise or vesting of stock-based awards of $4.5 million, $3.1 million and
recognized excess tax benefits related to the exercise or vesting of stock-based awards of $4.5 million, $3.1 million and
$2.6 million, respectively.
$2.6 million, respectively.
Note 10. Stockholders' Equity
Note 10. Stockholders' Equity
Common Stock
Common Stock
The Company has authorized 100 million shares of Common Stock. Holders of the Company's Common Stock are entitled
The Company has authorized 100 million shares of Common Stock. Holders of the Company's Common Stock are entitled
to one vote per share.
to one vote per share.
F-40
F-40
NEENAH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
In May 2017, 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 "2017 Stock Purchase Plan"). Purchases by the
Company under the 2017 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 2017 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 2017 Stock
Purchase Plan is expected to be funded using cash on hand or borrowings under the Company's bank credit facility. The
Company also had $25 million repurchase programs in place during the preceding two years that expired in May 2017 (the
“2016 Stock Purchase Plan”) and May 2016 (the “2015 Stock Purchase Plan”), respectively.
The following table shows shares purchased under the respective stock purchase plans:
2017 Stock Purchase Plan
2016 Stock Purchase Plan
2015 Stock Purchase Plan
2014 Stock Purchase Plan
Year Ended December 31,
2017
2016
2015
Shares
$
Shares
$
Shares
$
— $ —
85,354
$
6.8
91,542
93,600
$
$
7.4
5.2
42,100
$ 2.4
60,900
$ 3.5
As of December 31, 2017, 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, 2017, 2016 and 2015, the Company acquired 28,000 shares, 46,000 shares and 40,000
shares of Common Stock, respectively, at a cost of $2.5 million, $3.8 million and $2.5 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.
F
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K
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
F-41
NEENAH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
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:
December 31,
2017
2016
Unrealized foreign currency translation losses, net of income tax benefit of $0.4 and $0.4,
respectively
$
(7.5) $
(27.5)
Unrealized loss on "available-for-sale" securities, net of income tax benefit of $0.1 million
(0.3)
—
Net loss from pension and other postretirement benefit liabilities, net of income tax benefits of
$28.8 million and $36.8 million, respectively (a)
Accumulated other comprehensive loss
_________________
(86.3)
(94.1) $
(64.5)
(92.0)
$
(a) In conjunction with the Tax Act, The Company early adopted ASU 2018-02 in the fourth quarter of 2017 and
accordingly reclassified $10.9 million related to stranded tax effects resulting from the Tax Act from AOCI to retained
earnings. The Company’s policy is to release stranded tax effects for “available-for-sale” securities using the portfolio
approach.
The following table presents changes in comprehensive income:
Year Ended December 31,
Pretax
Amount
2017
Tax
Effect
Net
Amount
Pretax
Amount
2016
Tax
Effect
Net
Amount
Pretax
Amount
2015
Tax
Effect
Net
Amount
Unrealized foreign currency
translation gains (losses)
Unrealized loss on "available-
for-sale" securities
Adjustment to pension and other
benefit liabilities
Other comprehensive income
(loss)
$
20.0
$ — $ 20.0
$
(7.1) $ 0.4
$ (6.7) $ (15.0) $ — $ (15.0)
(0.4)
0.1
(0.3)
—
—
—
—
—
—
(13.8)
2.9
(10.9)
(10.0)
3.0
(7.0)
6.3
(1.2)
5.1
$
5.8
$ 3.0
$
8.8
$ (17.1) $ 3.4
$ (13.7) $
(8.7) $ (1.2) $ (9.9)
For the years ended December 31, 2017, 2016 and 2015, the Company reclassified $5.9 million, $7.2 million and $7.1
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, 2017, 2016
and 2015, the Company recognized an income tax benefit of $2.3 million, $2.8 million and $2.7 million, respectively,
related to such reclassifications classified as Provision for income taxes on the Consolidated Statements of Operations.
For the year ended December 31, 2017 and 2016, the Company reclassified $0.6 million and $0.8 million, respectively, 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 both of the
F-42
NEENAH, INC. AND SUBSIDIARIES
NEENAH, 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)
years ended December 31, 2017 and 2016, the Company recognized an income tax benefit of $0.2 million related to such
years ended December 31, 2017 and 2016, the Company recognized an income tax benefit of $0.2 million related to such
reclassifications classified as Provision for income taxes on the Consolidated Statements of Operations. For the year ended
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
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.
as Loss from discontinued operations, net of income taxes on the Consolidated Statements of Operations.
Note 11. Commitments
Note 11. Commitments
Leases
Leases
The future minimum obligations under operating leases having a noncancelable term in excess of one year as of
December 31, 2017, are as follows:
The future minimum obligations under operating leases having a noncancelable term in excess of one year as of
December 31, 2017, are as follows:
F
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2018
2018
2019
2019
2020
2020
2021
2021
2022
2022
Thereafter
Thereafter
Future minimum lease obligations
Future minimum lease obligations
$
$
4.0
4.0
2.6
2.6
2.1
2.1
1.8
1.8
1.6
1.6
3.7
3.7
$
$
15.8
15.8
For the years ended December 31, 2017, 2016 and 2015 rent expense under operating leases was $6.8 million, $6.4 million
and $5.4 million, respectively.
For the years ended December 31, 2017, 2016 and 2015 rent expense under operating leases was $6.8 million, $6.4 million
and $5.4 million, respectively.
Purchase Commitments
Purchase Commitments
The Company has certain minimum purchase commitments that extend beyond December 31, 2017. Commitments under
The Company has certain minimum purchase commitments that extend beyond December 31, 2017. Commitments under
these contracts are approximately $12.3 million and $6.1 million for the years ended December 31, 2018 and 2019,
these contracts are approximately $12.3 million and $6.1 million for the years ended December 31, 2018 and 2019,
respectively. Such purchase commitments for the year ended December 31, 2018 are primarily for coal and corn starch
respectively. Such purchase commitments for the year ended December 31, 2018 are primarily for coal and corn starch
contracts. Although the Company is primarily liable for payments on the above-mentioned leases and purchase
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.
commitments, management believes exposure to losses, if any, under these arrangements is not material.
Note 12. Contingencies and Legal Matters
Note 12. Contingencies and Legal Matters
Litigation
Litigation
The Company is involved in certain legal actions and claims arising in the ordinary course of business. While the outcome
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
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
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.
on the consolidated financial condition, results of operations or liquidity of the Company.
Income Taxes
Income Taxes
The Company periodically undergoes examination by the Internal Revenue Service (the "IRS") as well as various state and
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
foreign jurisdictions. These tax authorities routinely challenge certain deductions and credits reported by the Company on
F-43
F-43
NEENAH, INC. AND SUBSIDIARIES
NEENAH, 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)
its income tax returns. No significant tax audit findings are being contested at this time with either the IRS or any state or
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.
foreign tax authority.
Environmental, Health and Safety Matters
Environmental, Health and Safety Matters
The Company is subject to federal, state and local laws, regulations and ordinances relating to various environmental,
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,
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
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
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
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
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
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.
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
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
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
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,
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
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
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
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.
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 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
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
environmental projects are not expected to have a material effect on the Company's financial condition, results of
operations or liquidity.
operations or liquidity.
Employees and Labor Relations
Employees and Labor Relations
As of December 31, 2017, the Company had approximately 2,612 regular full-time employees of whom 1,174 hourly and
As of December 31, 2017, the Company had approximately 2,612 regular full-time employees of whom 1,174 hourly and
578 salaried employees were located in the United States and 431 hourly and 429 salaried employees were located in
578 salaried employees were located in the United States and 431 hourly and 429 salaried employees were located in
Europe. All of the Company's U.S. hourly union employees are represented by the United Steelworkers Union (the
Europe. All of the Company's U.S. hourly union employees are represented by the United Steelworkers Union (the
"USW"). In Netherlands, most of our employees are eligible to be represented by the Christelijke Nationale Vakbond
"USW"). In Netherlands, most of our employees are eligible to be represented by the Christelijke Nationale Vakbond
("CNV") and the Federatie Nederlandse Vakvereniging ("FNV"). Under Dutch law the union membership is voluntary and
("CNV") and the Federatie Nederlandse Vakvereniging ("FNV"). Under Dutch law the union membership is voluntary and
does not need to be disclosed to the Company. The collective bargaining arrangement with CNV and FNV will expire in
does not need to be disclosed to the Company. The collective bargaining arrangement with CNV and FNV will expire in
April 2018. Hourly union employees at the Company's Bolton, England manufacturing facility are represented by Unite the
April 2018. Hourly union employees at the Company's Bolton, England manufacturing facility are represented by Unite the
Union ("UNITE").
Union ("UNITE").
The following table shows the status of the Company's bargaining agreements as of December 31, 2017.
The following table shows the status of the Company's bargaining agreements as of December 31, 2017.
Contract Expiration Date
Contract Expiration Date
January 2018 (c)
January 2018 (c)
June 2018
June 2018
July 2018
July 2018
February 2019
February 2019
May 2019
May 2019
August 2021
August 2021
November 2021
November 2021
_______________________
_______________________
F-44
F-44
Location
Location
Whiting, WI (b)
Whiting, WI (b)
Neenah, WI (b)
Neenah, WI (b)
Munising, MI (b)
Munising, MI (b)
Neenah Germany
Neenah Germany
Appleton, WI (b)
Appleton, WI (b)
Brattleboro, VT
Brattleboro, VT
Lowville, NY
Lowville, NY
Union
Union
USW
USW
USW
USW
USW
USW
IG BCE
IG BCE
USW
USW
USW
USW
USW
USW
Number of
Number of
Employees
Employees
201
201
264
264
203
203
(a)
(a)
103
103
94
94
108
108
NEENAH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
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.
Employees and Labor Relations
As of December 31, 2017, the Company had approximately 2,612 regular full-time employees of whom 1,174 hourly and
578 salaried employees were located in the United States and 431 hourly and 429 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"). In Netherlands, most of our employees are eligible to be represented by the Christelijke Nationale Vakbond
("CNV") and the Federatie Nederlandse Vakvereniging ("FNV"). Under Dutch law the union membership is voluntary and
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
does not need to be disclosed to the Company. The collective bargaining arrangement with CNV and FNV will expire in
April 2018. Hourly union employees at the Company's Bolton, England manufacturing facility are represented by Unite the
(Dollars in millions, except as noted)
(Dollars in millions, except as noted)
Union ("UNITE").
NEENAH, INC. AND SUBSIDIARIES
NEENAH, INC. AND SUBSIDIARIES
The following table shows the status of the Company's bargaining agreements as of December 31, 2017.
Union
Location
Until a new contract is signed, the terms of the previous contract still apply.
Until a new contract is signed, the terms of the previous contract still apply.
The current agreement on pension matters will remain in effect until September 2019.
The current agreement on pension matters will remain in effect until September 2019.
(a) Under German law union membership is voluntary and does not need to be disclosed to the Company. As a result,
(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.
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 mills have bargained jointly with the USW.
(b) On pension matters, the Whiting, Neenah, Munising and Appleton mills have bargained jointly with the USW.
NEENAH, INC. AND SUBSIDIARIES
(c) The Company is currently in negotiations with the USW and a new contract is expected to be signed in 2018.
(c) The Company is currently in negotiations with the USW and a new contract is expected to be signed in 2018.
USW
USW
USW
IG BCE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
USW
USW
USW
Contract Expiration Date
January 2018 (c)
June 2018
July 2018
February 2019
May 2019
August 2021
(Dollars in millions, except as noted)
November 2021
Approximately 50 percent of salaried employees and 80 percent of hourly employees of Neenah Germany are eligible to be
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
represented by the Mining, Chemicals and Energy Trade Union, Industriegewerkschaft Bergbau, Chemie and Energie (the
_______________________
"IG BCE"). In June 2017, the IG BCE and a national trade association representing all employers in the industry signed a
"IG BCE"). In June 2017, the IG BCE and a national trade association representing all employers in the industry signed a
F-44
collective bargaining agreement covering union employees of Neenah Germany that expires in February 2019. Under
collective bargaining agreement covering union employees of Neenah Germany that expires in February 2019. Under
(a) Under German law union membership is voluntary and does not need to be disclosed to the Company. As a result,
German law union membership is voluntary and does not need to be disclosed to the Company. As a result, the number of
German law union membership is voluntary and does not need to be disclosed to the Company. As a result, the number of
the number of employees covered by the collective bargaining agreement with the IG BCE cannot be determined.
employees covered by the collective bargaining agreement with the IG BCE that expires in February 2019 cannot be
employees covered by the collective bargaining agreement with the IG BCE that expires in February 2019 cannot be
determined. As of December 31, 2017, 668 employees are covered under collective bargaining agreements that have
determined. As of December 31, 2017, 668 employees are covered under collective bargaining agreements that have
already expired or will expire in the next 12 months, with the exception of the employees covered by the collective
already expired or will expire in the next 12 months, with the exception of the employees covered by the collective
bargaining arrangement with the IG BCE.
bargaining arrangement with the IG BCE.
Whiting, WI (b)
Neenah, WI (b)
Munising, MI (b)
Neenah Germany
Appleton, WI (b)
Brattleboro, VT
Lowville, NY
(b) On pension matters, the Whiting, Neenah, Munising and Appleton mills have bargained jointly with the USW.
Number of
Employees
201
264
203
(a)
103
94
108
The current agreement on pension matters will remain in effect until September 2019.
(c) The Company is currently in negotiations with the USW and a new contract is expected to be signed in 2018.
Until a new contract is signed, the terms of the previous contract still apply.
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Note 13. Discontinued Operations
Note 13. Discontinued Operations
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
Discontinued Operations
Discontinued Operations
"IG BCE"). In June 2017, the IG BCE and a national trade association representing all employers in the industry signed a
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
collective bargaining agreement covering union employees of Neenah Germany that expires in February 2019. Under
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
German law union membership is voluntary and does not need to be disclosed to the Company. As a result, the number of
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
employees covered by the collective bargaining agreement with the IG BCE that expires in February 2019 cannot be
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
determined. As of December 31, 2017, 668 employees are covered under collective bargaining agreements that have
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
already expired or will expire in the next 12 months, with the exception of the employees covered by the collective
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.
bargaining arrangement with the IG BCE.
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
Note 13. Discontinued Operations
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
Discontinued Operations
loss on sale arising from final adjustments to the transaction price.
loss on sale arising from final adjustments to the transaction price.
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
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
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.
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
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
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.
F-45
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NEENAH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
The following table presents selected financial information for discontinued operations:
For the Year ended December 31,
2016
2015
2017
Net sales
Cost of products sold
Gross Profit
Selling, general and administrative expenses
Restructuring costs
Other income — net
Income (Loss) From Discontinued Operations Before Income Taxes
Loss on sale (a)
Income (loss) before income taxes
Income tax provision (benefit) (a)
Income (loss) from discontinued operations
_______________________
$
$
— $
—
—
—
—
—
—
—
—
—
— $
— $
—
—
—
—
—
—
(0.6)
(0.6)
(0.2)
(0.4) $
43.2
39.7
3.5
3.5
0.1
(0.3)
0.2
(13.6)
(13.4)
(4.0)
(9.4)
(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.
The following table presents selected cash flow information for discontinued operations for the year ended December 31,
2015:
For the Year ended December 31,
2016
2015
2017
Depreciation and amortization
Capital expenditures
$
$
— $
— $
— $
— $
2.7
0.6
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.
F-46
NEENAH, INC. AND SUBSIDIARIES
NEENAH, 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 technical products business is an international producer of fiber-formed, coated and/or saturated specialized media that
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
delivers high performance benefits to customers. Included in this segment are filtration media ("Filtration"), tape and
abrasives backings products ("Backings"), digital image transfer, durable label, and other specialty substrate products
abrasives backings products ("Backings"), digital image transfer, durable label, and other specialty substrate products
("Specialty"). The following table presents sales by product category for the technical products business:
("Specialty"). The following table presents sales by product category for the technical products business:
Filtration
Filtration
Backings
Backings
Specialty
Specialty
Total
Total
Year Ended
December 31,
Year Ended
December 31,
2017
2017
2016
2016
2015
2015
44%
44%
32%
32%
24%
24%
100%
100%
42%
42%
31%
31%
27%
27%
100%
100%
45%
45%
30%
30%
25%
25%
100%
100%
The fine paper and packaging business is a leading supplier of premium printing and other high end specialty papers
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
("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:
America. The following table presents sales by product category for the fine paper and packaging business:
Graphic Imaging
Graphic Imaging
Packaging
Packaging
Filing/Office
Filing/Office
Total
Total
Year Ended
December 31,
Year Ended
December 31,
2017
2017
2016
2016
2015
2015
80%
80%
16%
16%
4%
4%
81%
81%
14%
14%
5%
5%
80%
80%
15%
15%
5%
5%
100%
100%
100%
100%
100%
100%
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Each segment employs different technologies and marketing strategies. Disclosure of segment information is on the same
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
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
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
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
activity. General corporate expenses that do not directly support the operations of the business segments are shown as
Unallocated corporate costs. The accounting policies of the reportable operating segments are the same as those described
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."
in Note 2, "Summary of Significant Accounting Policies."
F-47
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NEENAH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
Business Segments
Net sales
Technical Products
Fine Paper and Packaging
Other
Consolidated
Operating income (loss)
Technical Products (a)
Fine Paper and Packaging (b)
Other (c)
Unallocated corporate costs (d)
Consolidated
_______________________
Year Ended December 31,
2017
2016
2015
$
502.1
$
466.4
$
455.3
22.5
452.1
23.0
429.2
442.7
15.8
$
979.9
$
941.5
$
887.7
Year Ended December 31,
2017
2016
2015
$
55.3
$
65.6
$
54.1
69.5
(0.4)
(20.1)
104.3
$
70.7
(1.1)
(21.1)
114.1
$
67.3
(2.0)
(18.0)
101.4
$
(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
million.
(b) Operating income for the year ended December 31, 2017 included a representations and warranties insurance
settlement of $2.9 million. 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.
(c) Operating income for the year ended December 31, 2017 included a representations and warranties insurance
settlement of $0.3 million. Operating income for the years ended December 31, 2016 and 2015 included
acquisition and integration costs of $1.1 million and $2.4 million, respectively.
(d) Unallocated corporate costs for the year ended December 31, 2017 included acquisition and integration costs of
$1.3 million and $0.6 million from pension plan and SERP settlement costs. December 31, 2016 included $2.7
million of pre-operating costs related to conversion of a fine paper machine to filtration and $0.8 million for a
pension plan settlement charge. December 31, 2015 included $0.8 million of costs related to this filtration project.
Depreciation and amortization
Technical Products
Fine Paper and Packaging
Other
Corporate
Total Continuing Operations
Discontinued operations
Consolidated
F-48
Year Ended December 31,
2017
2016
2015
$
$
19.4
11.0
1.2
1.7
33.3
—
18.1
11.1
1.3
1.5
32.0
—
$
16.5
9.8
0.6
1.9
28.8
2.7
$
33.3
$
32.0
$
31.5
NEENAH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
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,
2017
2016
2015
$
28.6
12.5
1.1
0.5
42.7
—
$
57.9
$
7.6
0.3
2.7
68.5
—
36.0
10.3
0.4
0.8
47.5
0.6
$
42.7
$
68.5
$
48.1
December 31,
2017
2016
$
613.0
$
261.6
29.8
487.6
248.9
29.1
$
904.4
$
765.6
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(a) Segment identifiable assets are those that are directly used in the segments operations.
(b) Corporate assets are primarily cash and income taxes.
Geographic Information
Net sales
United States
Europe
Consolidated
Year Ended December 31,
2017
2016
2015
$
$
748.9
231.0
979.9
$
$
727.6
213.9
941.5
$
$
687.3
200.4
887.7
Net sales are attributed to geographic areas based on the physical location of the selling entities.
F-49
NEENAH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
Long-Lived Assets
United States
Europe
Total
December 31,
2017
2016
$
$
393.1
226.1
619.2
$
$
377.4
151.9
529.3
Long-lived assets consist of property and equipment, deferred income taxes, goodwill, intangibles and other assets.
Concentrations
For the year ended December 31, 2017, sales to Veritiv and CNG each represented approximately 7 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, 2016 and 2015 sales to Veritiv represented approximately 8 percent and 10 percent, respectively, of
consolidated net sales and approximately 15 percent and 20 percent, respectively, 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.
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,
2017
2016
2015
$
$
6.0
8.9
$
6.2
9.4
6.8
6.8
(a) Advertising expense and research and development expense are recorded in selling, general and administrative
expenses on the consolidated statements of operations.
Supplemental Balance Sheet Data
Summary of Accounts Receivable — net
From customers
Less allowance for doubtful accounts and sales discounts
Total
F-50
December 31,
2017
2016
$ 117.0
(1.3)
$ 115.7
$
$
98.0
(1.5)
96.5
NEENAH, INC. AND SUBSIDIARIES
NEENAH, 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 Inventories
Summary of Inventories
Inventories by Major Class:
Inventories by Major Class:
Raw materials
Raw materials
Work in progress
Work in progress
Finished goods
Finished goods
Supplies and other
Supplies and other
Excess of FIFO over LIFO cost
Excess of FIFO over LIFO cost
Total
Total
December 31,
December 31,
2017
2017
2016
2016
$
$
36.2
36.2
$
$
31.6
31.6
35.0
35.0
79.2
79.2
3.6
3.6
26.8
26.8
63.0
63.0
3.1
3.1
154.0
(10.5)
143.5
154.0
(10.5)
$
143.5
$
124.5
124.5
(8.2)
(8.2)
116.3
116.3
$
$
The FIFO value of inventories valued on the LIFO method was $120.1 million and $106.8 million at December 31, 2017
The FIFO value of inventories valued on the LIFO method was $120.1 million and $106.8 million at December 31, 2017
and 2016, respectively. For the year ended December 31, 2017 and 2016, income from continuing operations before
and 2016, respectively. For the year ended December 31, 2017 and 2016, income from continuing operations before
income taxes was reduced by less than $0.5 million and $0.1 million, respectively, due to a decrease in certain LIFO
income taxes was reduced by less than $0.5 million and $0.1 million, respectively, due to a decrease in certain LIFO
inventory quantities.
inventory quantities.
Summary of Prepaid and Other Current Assets
Summary of Prepaid and Other Current Assets
Prepaid and other current assets
Spare parts
Receivable for income taxes
Total
Prepaid and other current assets
Spare parts
Receivable for income taxes
Total
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
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December 31,
December 31,
2017
2017
2016
2016
$
$
$
$
11.3
11.3
6.9
6.9
3.3
3.3
21.5
21.5
$
$
$
$
10.5
10.5
5.8
5.8
4.1
4.1
20.4
20.4
December 31,
December 31,
2017
2017
2016
2016
$
$
20.2
20.2
$
$
18.3
18.3
157.7
157.7
650.8
650.8
21.8
21.8
850.5
850.5
425.3
425.3
126.1
126.1
597.5
597.5
13.7
13.7
755.6
755.6
391.0
391.0
$
$
425.2
425.2
$
$
364.6
364.6
NEENAH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
Depreciation expense for the years ended December 31, 2017, 2016 and 2015 was $28.3 million, $27.1 million and $24.8
million, respectively. Interest expense capitalized as part of the costs of capital projects was zero, $0.8 million and $0.2
million, respectively, for the years ended December 31, 2017, 2016 and 2015.
Summary of Accrued Expenses
Accrued salaries and employee benefits
Amounts due to customers
Accrued interest
Accrued income taxes
Other
Total
Summary of Noncurrent Employee Benefits
Pension benefits
Post-employment benefits other than pensions (a)
Total
_______________________
December 31,
2017
2016
$
29.6
$
26.3
7.2
1.3
4.2
15.2
57.5
$
7.3
1.3
2.0
14.3
51.2
$
December 31,
2017
2016
$
59.8
40.5
$ 100.3
$
$
49.0
37.7
86.7
(a) Includes $1.8 million of SRCP benefits as of December 31, 2017 and $1.3 million of SRCP benefits as of
December 31, 2016.
Supplemental Cash Flow Data
Supplemental Disclosure of Cash Flow Information
Cash paid during the year for interest, net of interest expense capitalized
$
11.3
$
Cash paid during the year for income taxes, net of refunds
Non-cash investing activities:
Liability for equipment acquired
7.6
5.4
10.0
15.0
$ 10.6
16.2
11.1
6.6
Year Ended December 31,
2017
2016
2015
F-52
NEENAH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in millions, except as noted)
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,
2017
2016
2015
$ (10.2) $
(11.7)
4.5
(0.4)
10.6
(4.2)
(0.4)
$ (11.8) $
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
Net Sales
Gross Profit
Operating Income
Income From Continuing Operations
Earnings Per Common Share From Continuing Operations:
Basic
Diluted
_______________________
2017 Quarters
First
Second (a)
Third (b)
Fourth (c)
Year
$
242.1
$
248.7
$
245.1
$
244.0
$
52.0
27.0
17.6
53.6
29.2
25.0
48.0
29.0
18.8
45.1
19.1
18.9
979.9
198.7
104.3
80.3
F
o
r
m
1
0
-
K
$
$
1.04
1.03
$
$
1.47
1.46
$
$
1.11
1.10
$
$
1.11
1.10
$
$
4.74
4.68
(a) Income from continuing operations includes a prior year tax adjustment of $4.1 million related to the Company's
assertion of indefinite reinvestment of undistributed earnings of foreign subsidiaries.
(b) Includes proceeds of a representations and warranties insurance settlement related to the FiberMark acquisition of
$3.2 million, less acquisition costs of $0.7 million and SERP settlement charges of $0.2 million.
(c) Includes acquisition/integration costs of $0.6 million and pension/SERP settlement charges of $0.4 million. Also,
income from continuing operations includes net tax benefits of $5.9 million, primarily from the Tax Act.
F-53
NEENAH, 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
_______________________
(d) Includes integration/restructuring costs of $7.0 million.
(e) Includes a pension plan settlement charge of $0.8 million.
2016 Quarters
First
Second
Third
Fourth (e)
Year (d)(e)
$ 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
941.5
214.5
114.1
73.4
$ 1.13
$ 1.26
$ 0.97
$ 1.11
$ 1.24
$ 0.95
$
$
0.97
0.95
$
$
4.33
4.26
F-54
SCHEDULE II
NEENAH, INC. AND SUBSIDIARIES
SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS
(Dollars in millions)
Description
December 31, 2017
Allowances deducted from assets to
which they apply
Allowance for doubtful accounts
$
Allowance for sales discounts
Valuation allowance — deferred
income taxes
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
Balance at
Beginning
of Period
Charged to
Costs and
Expenses
Charged
to Other
Accounts
Write-offs
and
Reclassifications
Balance at
End of Period
$
$
$
1.0
0.5
3.5
1.1
0.6
3.0
0.9
0.6
—
0.2
—
—
$
— $
—
—
(0.4) $
—
(3.1)
(0.1) $
(0.1)
0.1
— $
— $
—
—
—
0.4
(0.4) $
—
3.0
$
1.0
—
—
(0.4) $
—
—
0.8
0.5
0.4
1.0
0.5
3.5
1.1
0.6
3.0
F
o
r
m
1
0
-
K
F-55
(This page has been left blank intentionally.)
NEENAH, INC. 2017 ANNUAL REPORT
S H A R E H O L D E R
INFORMATION
CORPORATE HEADQUARTERS
TRADEMARKS
2011
2012
2010
2007
2009
STOCK EXCHANGE
S H A R E H O L D E R
FINANCIAL AND OTHER COMPANY INFORMATION
Neenah common stock is traded on the
New York Stock Exchange under the symbol NP.
As of March 31, 2018, Neenah had approximately
1,240 holders of record of its common stock.
Brand names mentioned in this report are trademarks
of Neenah, Inc. Crane is a registered trademark
of Crane & Co. Inc.
ANNUAL MEETING OF SHAREHOLDERS
The 2018 annual meeting of the shareholders of
Neenah, Inc. will be held Wednesday,
May 23, 2018 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
Neenah, Inc.
S H AR E H O L D E R
S H AR E H O L D E R
S H AR E H O L D E R
S H AR E H O L D E R
3460 Preston Ridge Road
S H AR E H O L D E R
S H AR E H O L D E R
S H AR E H O L D E R
S H AR E H O L D E R
S H AR E H O L D E R
S H AR E H O L D E R
Suite 600
S H AR E H O L D E R
S H AR E H O L D E R
S H AR 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
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 AR 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 AR 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 EXCHANG E
STOCK EXCHANGE
STOCK EXCHANGE
Brand names mentioned in this report are trademarks
Neenah, Inc.
Brand names mentioned in this report are trademarks
Neenah, 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
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, Inc. Crane is a registered trademark
3460 Preston Ridge Road
of Neenah, Inc. Crane is a registered trademark
Brand names mentioned in this report are trademarks
Neenah, 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, Inc.
STOCK EXCHANGE
STOCK EXCHANGE
STOCK EXCHANGE
of Crane & Co. Inc.
of Crane & Co. Inc.
of Neenah, Inc. Crane is a registered trademark
Suite 600
of Neenah Paper, Inc. Crane is a registered trademark
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, 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.
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
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, 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
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 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 common stock is traded on the
Neenah Paper, Inc.
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
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
New York Stock Exchange under the symbol NP.
Neenah common stock is traded on the
Suite 600
Suite 600
Neenah’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 common stock is traded on the
of Crane & Co. Inc.
$160
www.neenah.com
of Crane & Co. Inc.
Suite 600
www.neenah.com
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 2018 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 2018 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
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
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, Inc. will be held Wednesday,
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 2018 annual meeting of the shareholders of
College Station, TX 77842
Neenah, Inc. will be held Wednesday,
The 2016 annual meeting of the shareholders of
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 2018 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, 2018 at 10:00 a.m., Eastern time at
Neenah, Inc. will be held Wednesday,
Contact Center:
Suite 1500
191 Peachtree Street
May 23, 2018 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, Inc. will be held Wednesday,
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.
Atlanta, GA 30303
Suite 1500
May 23, 2018 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, 2018 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
$180
$180
$180
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, 2018, 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, 2018, 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, 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, Inc., the Russell 2000 Value Index and a Peer Group
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
Computershare
Computershare
Computershare
1,240 holders of record of its common stock.
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
Atlanta, GA 30303
As of March 31, 2018, Neenah had approximately
1,240 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, Inc., the Russell 2000 Value Index and a Peer Group
As of March 31, 2018, 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
1,240 holders of record of its common stock.
1,450 holders of record of its common stock.
$140
$140
$140
$120
$120
$120
2008
Among Neenah, 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
1,240 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
$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
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
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
$160
Computershare
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
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 505000
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, 2017 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
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
Louisville, KY 40233
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
$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:
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
$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
* $100 invested on December 31, 2012 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
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 Pap er, 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
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
$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
Russell 2000 Value
Russell 2000 Value
Russell 2000 Value
TDD Foreign Shareowners: 201-680-6610
$0
Foreign Shareowners: 201-680-6578
$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 Comp any, KapS ton e 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, 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
www.computershare.com/investor
TDD Foreign Shareowners: 201-680-6610
TDD Foreign Shareowners: 201-680-6610
$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, In c., Sch weitze r-Mauduit In terna tio nal, Inc., Verso
Polypore International, Inc., Schweitzer-Mauduit International, 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.,
2014
2016
2017
2009
2011
2012
2007
www.computershare.com/investor
2009
2012
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 Wausau 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
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, 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, 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
2007
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
Neenah, 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
FINANCIAL AND OTHER COMPANY INFORMATION
Neenah, 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
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
Commision (SEC), news releases and other information
Commision (SEC), news releases and other information
Commision (SEC), news releases and other information
Neenah, Inc.
Russell 2000 Value
CSS Industries, Inc., P.H. Glatfelter Company, KapStone Paper and
2009
2011
2009
2011
2012
2012
2007
2007
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, 2017 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, 2017 is available on our website
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
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, 2017 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 Pap er, 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.,
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 mar ket capitalizati on.
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, 2017 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
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
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, 2012 in stock or index, including
* $100 invested on December 31, 2012 in stock or index, including
CSS In dustrie s, In c., P.H. Glatfelter Comp any, KapS ton e Paper and
CSS Industries, Inc., P.H. Glatfelter Company, KapStone Paper and
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.
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, 2012 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
Poly pore Interna tional, In c., Sch weitze r-Mauduit In terna tio nal, Inc., Verso
Polypore International, Inc., Schweitzer-Mauduit International, Inc., Verso
materials, without charge, please contact:
2000
2000
2000
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, 2012 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.
Russell
Russell
Russell
Pape r Corp. and Wausau 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
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, 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, 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
STOCK PRICE PERFORMANCE
Russell
Year
Year
Russell
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, 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, Inc.
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
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
1,491.42
2013
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
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
Form 10-K and Annual Report materials, without
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
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
13%
-7%
979.25
13%
-7%
979.25
13%
-7%
979.25
2011
2011
2011
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
6%
6%
1,883.34
2017
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
41%
22%
1,058.10
2010
2010
2010
2000
2000
50%
32%
1,491.42
2013
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%
1,380.60
2015
36%
29%
1,779.87
2016
2015
1,380.60
1,380.60
1,380.60
2015
2015
2015
Russell
28%
15%
1,130.98
Attn: Stockholder Services
Attn: Stockholder Services
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
on Year
on Year
2012
1,058.10
41%
22%
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
4%
-9%
1,380.60
2015
2014
13%
-7%
979.25
2011
41%
2%
41%
2%
41%
2%
1,523.45
1,523.45
1,523.45
2014
2014
2014
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
CERTIFICATIONS
CERTIFICATIONS
CERTIFICATIONS
2012
866.548.6569
CERTIFICATIONS
1,130.98
15%
28%
Value
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
41%
2%
1,523.45
2014
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
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%
1,523.45
2014
50%
32%
1,491.42
2013
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
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.
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
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.
1,058.10
2010
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, Inc. 2017 Annual Report
Neenah Paper, Inc. 2015 Annual Report
Neenah Paper, Inc. 2015 Annual Report
Neenah Paper, Inc. 2015 Annual Report
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.
$42.77
$42.77
$42.77
$42.77
$42.77
$42.77
$28.47
$28.47
$28.47
$28.47
Neenah, Inc
Neenah, Inc
Neenah, Inc.
$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, Inc
Paper, Inc
50%
$22.32
$22.32
$22.32
$28.47
$28.47
$28.47
Neenah, Inc
$42.77
$22.32
$22.32
$22.32
$19.68
$19.68
$19.68
$19.68
$42.77
$90.65
28%
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
$85.20
$28.47
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
$62.43
$22.32
$60.27
$60.27
$60.27
Paper, Inc.
$28.47
$22.32
$60.27
$60.27
$60.27
$22.32
$19.68
$60.27
$42.77
$42.77
$19.68
$22.32
$42.77
$19.68
$19.68
$60.27
$42.77
$28.47
$28.47
$60.27
$19.68
$28.47
$60.27
$60.27
$22.32
$22.32
$60.27
$22.32
$19.68
$19.68
Neenah, 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 capitalizati on.
2010
2010
STOCK PRICE PERFORMANCE
2007
2007
7
Neenah Paper, Inc. 2013 Annual Report
Year
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%
2013
2008
2008
% Change
$42.77
$28.47
$19.68
$13.95
2010
2010
2010
2010
2011
2011
2011
2011
2012
2012
2012
2012
2014
$22.32
50%
32%
on Year
22%
41%
41%
28%
2009
2009
15%
13%
41%
-7%
2%
32%
2010
2010
2011
2011
2008
2008
2007
2007
2007
22%
58%
18%
15%
13%
2015
2010
41%
2009
2009
2010
2010
2011
2011
2010
2010
2012
2012
Year
2008
2008
2008
2008
2011
2011
2010
2007
2010
2007
2010
2008
2011
2011
2009
2008
2008
2011
2007
2009
2011
2008
2012
2012
2012
2010
2011
2009
2012
2011
2010
2012
$40
Neenah Paper, Inc. 2015 Annual Report
Neenah Paper, Inc. 2015 Annual Report
Neenah Paper, Inc. 2015 Annual Report
2016 1,779.87 29% $85.20 36%2016 1,779.87 29% $85.20 36%2016 1,779.87 29% $85.20 36%2016 1,779.87 29% $85.20 36%2016 1,779.87 29% $85.20 36%Compensation GroupStart12/31/12End12/31/1712/31/1212/31/1312/31/1412/31/1512/30/1612/29/17CAGRNPNeenah, Inc.$100$153$220$233$324$35128.5%IYBBKRussell 2000 Value (TR)$100$135$140$130$171$18413.0%Peer Group Average$100$123$132$106$155$1559.2%Mkt Cap @ StartWeight1aepiAEP Industries, Inc.1008998130198327.33.95%2omnOMNOVA Solutions, Inc.10013011687143143327.63.95%3gltP.H. Glatfelter Co.100161152112149136749.19.03%4swmSchweitzer-Mauduit International, Inc.1001351151191351401211.314.61%5clwClearwater Paper Corp.100134175116167116908.710.96%6iphsInnophos Holdings, Inc.100108134691311221010.012.18%7iospInnospec, Inc.100135127163208217802.99.68%8kraKraton Corp.100968769119200775.59.35%9mercMercer International, Inc.100139172129160224399.64.82%10kwrQuaker Chemical Corp.100145176150252300704.68.50%11ryamRayonier Advanced Materials, Inc.100457398419.75.06%12tgTredegar Corp.10014311370127104655.97.91%Avg8292.3$0$50$100$150$200$250$300$350$40012/31/1212/31/1312/31/1412/31/1512/30/1612/29/17Neenah, Inc.Russell 2000 Value (TR)Peer Group Average
LEADERSHIP
LEADERSHIP
EXECUTIVE TEAM
EXECUTIVE TEAM
BOARD OF DIRECTORS
BOARD OF DIRECTORS
LEADERSHIP
EXECUTIVE TEAM
John P. O’Donnell
John P. O’Donnell
President and
President and
William M. Cook
William M. Cook
Retired Executive
Retired Executive
Chairman of Donaldson
Chairman of Donaldson
Company Inc.
Company Inc.
BOARD OF DIRECTORS
Margaret S. Dano
Margaret S. Dano
Former Vice President,
William M. Cook
Former Vice President,
Honeywell International
Honeywell International
Retired Executive
Inc., Worldwide
Inc., Worldwide
Operations of Garrett
Chairman of Donaldson
Operations of Garrett
Engine Boosting Systems
Company Inc.
Engine Boosting Systems
Margaret S. Dano
Sean T. Erwin
Sean T. Erwin
Former Vice President,
Chairman of the Board,
Honeywell International
Chairman of the Board,
Former President and
Inc., Worldwide
Former President and
Operations of Garrett
Neenah, Inc.
Engine Boosting Systems
Neenah, Inc.
Timothy S. Lucas, CPA
Sean T. Erwin
Timothy S. Lucas, CPA
Independent Consultant,
Chairman of the Board,
Retired Independent
Independent Consultant,
Lucas Financial Reporting
Former President and
Consultant, Lucas Financial
Lucas Financial Reporting
and Former Director of
Reporting and Former
and Former Director of
Director of Research, FASB
Research, FASB
Neenah, Inc.
Research, FASB
Timothy S. Lucas, CPA
Independent Consultant,
Lucas Financial Reporting
and Former Director of
Research, FASB
Bonnie C. Lind
Bonnie C. Lind
John P. O’Donnell
Senior Vice President,
Senior Vice President,
President and
and Treasurer
and Treasurer
Steven S. Heinrichs
Bonnie C. Lind
Steven S. Heinrichs
Senior Vice President,
Senior Vice President,
Senior Vice President,
General Counsel
General Counsel
and Secretary
and Treasurer
and Secretary
Julie A. Schertell
Steven S. Heinrichs
Julie A. Schertell
Senior Vice President,
Senior Vice President,
Senior Vice President,
President Fine Paper
General Counsel
President Fine Paper
and Packaging
and Secretary
and Packaging
Byron J. Racki
Armin G. Schwinn
Julie A. Schertell
Armin G. Schwinn
Senior Vice President,
Senior Vice President,
Senior Vice President,
Senior Vice President,
President Performance
Managing Director,
President Fine Paper
Managing Director,
Materials
Neenah Germany
and Packaging
Neenah Germany
Armin G. Schwinn
Matt L. Duncan
Matt L. Duncan
Senior Vice President,
Senior Vice President
Senior Vice President
Managing Director,
and Chief Human
and Chief Human
Neenah Germany
Resources Officer
Resources Officer
Matt L. Duncan
Senior Vice President
and Chief Human
Resources Officer
John F. McGovern
John F. McGovern
Partner, Aurora Capital LLC
Partner, Aurora Capital LLC
and Former Executive
and Former Executive
Vice President and
Vice President and
John F. McGovern
Philip C. Moore
Philip C. Moore
Partner, Aurora Capital LLC
Retired Senior Vice President,
and Former Executive
Retired Senior Vice President,
Deputy General Counsel
Vice President and
Deputy General Counsel
and Corporate Secretary,
and Corporate Secretary,
TD Bank Group
TD Bank Group
Philip C. Moore
John P. O’Donnell
John P. O’Donnell
Retired Senior Vice President,
President and
Deputy General Counsel
President and
,
and Corporate Secretary,
,
Neenah, Inc.
TD Bank Group
Neenah, Inc.
Stephen M. Wood, Ph.D.
John P. O’Donnell
Stephen M. Wood, Ph.D.
Former President and
President and
Former President and
,
FiberVisions Corporation
Neenah, Inc.
FiberVisions Corporation
Stephen M. Wood, Ph.D.
Former President and
FiberVisions Corporation
Neenah, Inc. 2017 Annual Report
NEENAH, INC. 2017 ANNUAL REPORT