UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2014~~2015

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-32240

NEENAH PAPER, INC.

(Exact name of registrant as specified in its charter)

Delaware		20-1308307
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

3460 Preston Ridge Road Alpharetta, Georgia		30005
(Address of principal executive offices)		(Zip Code)

(678) 566-6500

(Registrant’s telephone number, including area code)

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 x No o

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 for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ox		Accelerated filer xo

Non-accelerated filer o		Smaller reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of October ~~24, 2014,~~23, 2015, there were approximately ~~16,630,000~~16,745,000 shares of the Company’s common stock outstanding.

Table of Contents

TABLE OF CONTENTS

Part I — Financial Information

Item 1. Financial Statements	F-1

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	~~F-19~~F-23

Item 3. Quantitative and Qualitative Disclosure About Market Risk	~~F-25~~F-30

Item 4. Controls and Procedures	~~F-25~~F-30

Part II — Other Information

Item 1. Legal Proceedings	~~F-26~~F-30

Item 1A. Risk Factors	~~F-26~~F-30

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	~~F-26~~F-31

Item 6. Exhibits	~~F-27~~F-31

Table of Contents

Part I—FINANCIAL INFORMATION

Item 1. Financial Statements

NEENAH PAPER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except share and per share data)

(Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended Ended September 30,					Nine Months Ended September 30,
	2014		2013		2014		2013		2015			2014		2015			2014
Net sales	$	230.6	$	214.1	$	686.1	$	639.6	$	231.6		$	215.3	$	657.3		$	636.1
Cost of products sold	187.8		177.0		552.7		516.2		183.2			174.0		511.4			508.2
Gross profit	42.8		37.1		133.4		123.4		48.4			41.3		145.9			127.9
Selling, general and administrative expenses	19.8		19.8		60.1		60.0		21.2			18.7		61.6			56.4
Integration/restructuring costs	0.9		0.4		1.9		0.6
Pension plan settlement charge	—		—		—		0.2
Loss on early extinguishment of debt	—		—		—		0.5
Other expense - net	—		0.5		0.4		0.9
Acquisition and restructuring costs									2.9			0.9		2.9			1.4
Other (income) expense - net									(0.1		)	—		0.9			0.5
Operating income	22.1		16.4		71.0		61.2		24.4			21.7		80.5			69.6
Interest expense - net	2.7		2.6		8.4		8.3		2.9			2.7		8.7			8.4
Income from continuing operations before income taxes	19.4		13.8		62.6		52.9		21.5			19.0		71.8			61.2
Provision for income taxes	5.8		2.4		20.8		16.6		8.0			5.6		25.8			20.4
Income from continuing operations	13.6		11.4		41.8		36.3		13.5			13.4		46.0			40.8
Income from discontinued operations, net of income taxes (Note 11)	—		—		—		2.6
Income (loss) from discontinued operations									(0.2		)	0.3		0.4			1.4
Loss on sale									(6.9		)	—		(6.9		)	—
Income (loss) from discontinued operations before income taxes									(7.1		)	0.3		(6.5		)	1.4
Income tax provision									0.3			0.1		0.4			0.4
Income (loss) from discontinued operations, net of income taxes (Note 11)									(7.4		)	0.2		(6.9		)	1.0
Net income	$	13.6	$	11.4	$	41.8	$	38.9	$	6.1		$	13.6	$	39.1		$	41.8

Earnings Per Common Share
Earnings (Loss) Per Common Share
Basic
Continuing operations	$	0.81	$	0.69	$	2.49	$	2.22	$	0.79		$	0.79	$	2.72		$	2.43
Discontinued operations	—		—		—		0.16		(0.43		)	0.02		(0.41		)	0.06
	$	0.81	$	0.69	$	2.49	$	2.38
Basic									$	0.36		$	0.81	$	2.31		$	2.49
Diluted
Continuing operations	$	0.80	$	0.68	$	2.45	$	2.18	$	0.78		$	0.78	$	2.68		$	2.39
Discontinued operations	—		—		—		0.16		(0.43		)	0.02		(0.40		)	0.06
	$	0.80	$	0.68	$	2.45	$	2.34
Diluted									$	0.35		$	0.80	$	2.28		$	2.45

Weighted Average Common Shares Outstanding (in thousands)
Basic	16,627		16,089		16,543		16,016		16,738			16,627		16,737			16,543
Diluted	16,913		16,469		16,831		16,338		16,949			16,913		16,991			16,831

Cash Dividends Declared Per Share of Common Stock	$	0.27	$	0.20	$	0.75	$	0.50	$	0.30		$	0.27	$	0.90		$	0.75

See Notes to Condensed Consolidated Financial Statements

~~F-1~~F-1

Table of Contents

NEENAH PAPER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)

	Three Months Ended September 30,					Nine Months Ended September 30,						Three Months Ended Ended September 30,					Nine Months Ended September 30,
	2014			2013		2014			2013			2015		2014			2015			2014
Net income	$	13.6		$	11.4	$	41.8		$	38.9		$	6.1	$	13.6		$	39.1		$	41.8
Unrealized foreign currency translation gain (loss)	(14.0		)	7.2		(15.7		)	4.8			1.8		(14.0		)	(9.1		)	(15.7		)
Net gain from adjustments to pension and other postretirement benefit liabilities	—			—		—			6.6
Reclassification of amortization of adjustments to pension and other postretirement benefit liabilities recognized in net periodic benefit cost (Note 6)	1.1			1.6		3.4			4.9			1.8		1.1			5.4			3.4
Pension plan settlement charge	—			—		—			0.2
Unrealized gain (loss) on “available-for-sale” securities	—			—		0.1			(0.1		)
Unrealized gain on “available-for-sale” securities												—		—			—			0.1
Income (loss) from other comprehensive income items	(12.9		)	8.8		(12.2		)	16.4			3.6		(12.9		)	(3.7		)	(12.2		)
Provision for income taxes	0.4			0.6		1.3			4.4			0.7		0.4			2.0			1.3
Other comprehensive income (loss)	(13.3		)	8.2		(13.5		)	12.0			2.9		(13.3		)	(5.7		)	(13.5		)
Comprehensive income	$	0.3		$	19.6	$	28.3		$	50.9		$	9.0	$	0.3		$	33.4		$	28.3

See Notes to Condensed Consolidated Financial Statements

~~F-2~~F-2

Table of Contents

NEENAH PAPER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)

	September 30, 2014		December 31, 2013		September 30, 2015		December 31, 2014
ASSETS
Current Assets
Cash and cash equivalents	$	24.0	$	73.4	$	5.5	$	72.6
Accounts receivable (less allowances of $2.0 million and $1.5 million)	107.7		90.5
Accounts receivable (less allowances of $2.1 million and $1.5 million)					115.4		84.7
Inventories	109.0		101.1		119.8		101.2
Income taxes receivable	—		0.6
Deferred income taxes	18.4		22.8		19.9		15.8
Prepaid and other current assets	14.4		17.0		15.6		14.3
Assets held for sale (Note 11)					38.1		46.3
Total Current Assets	273.5		305.4		314.3		334.9
Property, Plant and Equipment
Property, Plant and Equipment, at cost	649.8		637.1		677.4		598.9
Less accumulated depreciation	382.0		375.4		366.7		357.2
Property, plant and equipment—net	267.8		261.7		310.7		241.7
Deferred Income Taxes	3.8		13.3		5.8		29.9
Goodwill	53.1		43.1		74.4		50.5
Intangible Assets—net	60.1		38.5		80.6		56.6
Other Assets	15.9		13.9		15.7		17.0
TOTAL ASSETS	$	674.2	$	675.9	$	801.5	$	730.6

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Debt payable within one year	$	1.4	$	21.4	$	1.3	$	1.4
Accounts payable	49.4		36.4		56.1		44.5
Accrued expenses	50.1		45.8		53.7		43.8
Liabilities related to facilities held for sale (Note 11)					27.4		27.3
Total Current Liabilities	100.9		103.6		138.5		117.0
Long-term Debt	185.0		190.5		244.9		232.9
Deferred Income Taxes	14.7		15.6		23.8		9.9
Noncurrent Employee Benefits	79.4		97.7		84.4		80.9
Other Noncurrent Obligations	0.9		1.0		2.5		1.2
TOTAL LIABILITIES	380.9		408.4		494.1		441.9
Contingencies and Legal Matters (Note 10)
Contingencies and Legal Matters (Note 10)
TOTAL STOCKHOLDERS’ EQUITY	293.3		267.5		307.4		288.7
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	674.2	$	675.9	$	801.5	$	730.6

See Notes to Condensed Consolidated Financial Statements

~~F-3~~F-3

Table of Contents

NEENAH PAPER, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

	Nine Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2015			2014
OPERATING ACTIVITIES
Net income	$	41.8		$	38.9		$	39.1		$	41.8
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	22.4			21.8			23.1			22.4
Stock-based compensation	4.1			4.0			4.5			4.1
Excess tax benefits from stock-based compensation (Note 7)	(3.0		)	(0.4		)	(1.1		)	(3.0		)
Deferred income tax provision	18.0			13.7			12.3			18.0
Inventory acquired in acquisitions (Note 3)	—			(1.8		)
Pension plan payment, net of settlement charge	—			(0.2		)
Loss on retirement of bonds	—			0.5
Asset impairment related to discontinued operations							5.5			—
Non-cash effects of changes in liabilities for uncertain income tax positions	(2.3		)	(0.2		)	(0.1		)	(2.3		)
Loss on asset dispositions	0.1			0.4
Decrease (increase) in working capital, net of the effect of acquisitions	2.2			(5.3		)
(Gain) loss on asset dispositions							(0.1		)	0.1
(Increase) decrease in working capital, net of effect of acquisitions							(8.1		)	2.2
Pension and other postretirement benefits	(10.4		)	(5.9		)	3.9			(10.4		)
Other	(0.3		)	(1.0		)	0.5			(0.3		)
NET CASH PROVIDED BY OPERATING ACTIVITIES	72.6			64.5			79.5			72.6
INVESTING ACTIVITIES
Capital expenditures	(15.2		)	(20.4		)	(25.7		)	(15.2		)
Purchase of Crane Technical Materials (Note 3)	(72.4		)	—
Purchase of brands (Note 3)	—			(5.2		)
Acquisitions (Note 3)							(118.2		)	(72.4		)
Purchase of equity investment	(2.9		)	—			—			(2.9		)
Purchase of marketable securities	(0.4		)	—			(0.1		)	(0.4		)
Proceeds from sale of property, plant and equipment	—			0.6
Other	(0.1		)	0.2			0.5			(0.1		)
NET CASH USED IN INVESTING ACTIVITIES	(91.0		)	(24.8		)	(143.5		)	(91.0		)
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt	—			218.7
Debt issuance costs	—			(3.4		)
Long-term borrowings							44.0			—
Repayments of long-term debt	(5.2		)	(208.3		)	(27.2		)	(5.2		)
Short-term borrowings	6.5			0.2			—			6.5
Repayments of short-term debt	(25.4		)	(0.2		)	—			(25.4		)
Shares purchased (Note 9)	(0.5		)	(0.7		)	(6.0		)	(0.5		)
Proceeds from exercise of stock options	3.5			2.4			0.9			3.5
Excess tax benefits from stock-based compensation (Note 7)	3.0			0.4			1.1			3.0
Cash dividends paid	(12.6		)	(8.2		)	(15.2		)	(12.6		)
Other	—			(0.5		)
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES	(30.7		)	0.4
NET CASH USED IN FINANCING ACTIVITIES							(2.4		)	(30.7		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	(0.3		)	0.3			(0.7		)	(0.3		)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(49.4		)	40.4
NET DECREASE IN CASH AND CASH EQUIVALENTS							(67.1		)	(49.4		)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	73.4			7.8			72.6			73.4
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	24.0		$	48.2		$	5.5		$	24.0

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during period for interest, net of interest expense capitalized	$	5.5		$	5.3		$	5.8		$	5.5
Cash paid during period for income taxes	$	5.1		$	4.2		$	12.2		$	5.1
Non-cash investing activities:
Liability for equipment acquired	$	1.9		$	1.9		$	6.0		$	1.9
Liability related to acquisition							$	0.3		$	—

See Notes to Condensed Consolidated Financial Statements

~~F-4~~F-4

Table of Contents

NEENAH PAPER, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in millions, except as noted)

Note 1. Background and Basis of Presentation

Background

Neenah Paper, Inc. (“Neenah” or the “Company”), is a Delaware corporation incorporated in April 2004. The Company has two primary operations: its technical products business and its fine paper and packaging business.

On January 1, 2015, we changed the name of our fine paper business to fine paper and packaging. The name change better reflects the increasing importance, and plans for continued growth, of our premium packaging products. The technical products business is an international producer of ~~transportation~~fiber-formed, coated and/or saturated specialized media that delivers high performance benefits to customers. Included in this segment are filtration media, tape and ~~other filter media~~abrasives backings products, and durable ~~saturated~~label and ~~coated substrates for industrial products backings and a variety of other end markets.~~specialty substrate products. The fine paper and packaging business is a supplier of branded premium ~~writing, text~~printing, packaging and ~~cover papers, bright papers 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.

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. In addition, as part of the FiberMark acquisition, the Company acquired certain product lines composed of non-strategic papers sold to converters for end uses such as covering materials for datebooks, diaries, yearbooks and traditional photo albums. Due to the non-strategic nature of these products, management decided that they would not be managed as part of either the existing Fine Paper and Packaging or Technical Material businesses. As a result, effective August 1, 2015, these product lines represent an operating segment which does not meet the quantitative threshold for a reportable segment and are accordingly reported as an Other operating segment. See Note 12, “Business Segment Information.”

On September 7, 2015, the Company reached an agreement for the sale of its paper mill located in Lahnstein, Germany (the “Lahnstein Mill”) to the Kajo Neukirchen Group (the “Buyer”) for cash proceeds of approximately $9 million. The sale was completed on October 31, 2015. For the three and nine months ended September 30, 2015, discontinued operations reported on the condensed consolidated statements of operations reflect the results of operations and the estimated loss on sale of the Lahnstein Mill. The condensed consolidated statements of operations for the three and nine months ended September 30, 2014 have been restated to report results of the Lahnstein Mill as discontinued operations. As of September 30, 2015 and December 31, 2014, the assets and liabilities of the Lahnstein Mill are classified as assets held for sale on the condensed consolidated balance sheet. See Note 11, “Discontinued Operations and Assets Held for Sale.”

On August 1, 2015, the Company purchased all of the outstanding equity of ASP FiberMark, LLC (“FiberMark”) from ASP FiberMark Holdings, LLC (“American Securities”) for a purchase price of approximately $120 million (the “FiberMark Acquisition”). The purchase price of $120 million, subject to adjustments for acquired cash and a working capital true up, resulted in a cash payment of $123 million at closing, and was financed through $80 million of cash on hand and the balance from available borrowing capacity on the Company’s revolving credit facility. FiberMark is a specialty coatings and finishing company with a strong presence in luxury packaging and technical products. In September 2015, the Company announced the planned closure of the acquired Fitchburg, Massachusetts mill (the “Fitchburg Mill”) in the fourth quarter of 2015 to consolidate its manufacturing footprint. As of September 30, 2015, the assets and liabilities of the Fitchburg Mill are classified as Assets Held for Sale on the condensed consolidated balance sheet. See Note 3, “Acquisitions” and Note 11, “Discontinued Operations and Assets Held for Sale.”

On July 1, 2014, the Company purchased all of the outstanding equity of Crane Technical Materials, Inc. from Crane & Co., Inc. for approximately $72 million. The acquired ~~Crane Technical Materials~~technical materials business provides performance-oriented wet laid nonwovens media for filtration end markets as well as environmental, energy and industrial uses. ~~This~~The technical materials business has two manufacturing facilities in Pittsfield, Massachusetts. The results of this business are reported in the Technical Products segment from the date of acquisition. See Note 3, “Acquisitions.”

Basis of Consolidation and Presentation

These statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and, in accordance with those rules and regulations, do not include all information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Management believes that the disclosures made are adequate for a fair presentation of the Company’s results of operations, financial position and cash flows. In the opinion of management, the condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the results of operations, financial position and cash flows for the interim periods presented herein. The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make extensive use of estimates and assumptions that affect the reported amounts and disclosures. Actual results may vary from these estimates.

F-5

Table of Contents

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s most recent Annual Report on Form 10-K. The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for the full year.

The condensed consolidated financial statements of Neenah and its subsidiaries included herein are ~~unaudited, except for the December 31, 2013 condensed consolidated balance sheet, which was derived from audited financial statements.~~unaudited. The condensed consolidated financial statements include the financial statements of the Company and its wholly owned and majority owned subsidiaries. All significant intercompany balances and transactions have been eliminated from the condensed consolidated financial statements.

~~F-5~~

~~Table of Contents~~

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, 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 used in computing basic EPS. For the computation of basic EPS, weighted average RSUs outstanding have been excluded from the calculation of weighted average shares outstanding.

Diluted EPS ~~was calculated~~has been computed by dividing net income allocated to ~~give effect~~common stock by the weighted average number of common shares used in computing basic EPS, further adjusted to ~~all potentially~~include the dilutive ~~non-participating~~impact of the exercise or conversion of common ~~share~~stock equivalents, ~~using the “Treasury Stock” method. Outstanding~~such as stock options, stock appreciation rights (“SARs”) and target awards of Restricted Stock Units ~~(“RSUs”)~~ with performance conditions (“Performance Units”) ~~represent~~, into shares of common stock as if those securities were exercised or converted. For the ~~only~~three and nine months ended September 30, 2015, approximately 90,000 and 45,000 potentially dilutive ~~non-participating security effects on~~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 ~~weighted-average shares.~~common stock for the respective three month and nine month periods during which the options were outstanding. For the three and nine months ended September 30, 2014, approximately 5,000 and 20,000 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 three ~~and nine~~ month periods during which the options were outstanding. For the three and nine months ended September 30, 2013 approximately 10,000 and 600,000 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 three and nine month periods during which the options were outstanding.

The following table presents the computation of basic and diluted EPS (dollars in millions except per share amounts, shares in thousands):

Earnings (Loss) Per Basic Common Share

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013			2015			2014			2015			2014
Income from continuing operations	$	13.6		$	11.4		$	41.8		$	36.3		$	13.5		$	13.4		$	46.0		$	40.8
Distributed and undistributed amounts allocated to participating securities	(0.2		)	(0.2		)	(0.5		)	(0.7		)	(0.2		)	(0.2		)	(0.5		)	(0.5		)
Income from continuing operations available to common stockholders	13.4			11.2			41.3			35.6			13.3			13.2			45.5			40.3
Income from discontinued operations, net of income taxes	—			—			—			2.6
Income (loss) from discontinued operations, net of income taxes													(7.4		)	0.2			(6.9		)	1.0
Undistributed amounts allocated to participating securities													0.1			—			0.1			—
Net income available to common stockholders	$	13.4		$	11.2		$	41.3		$	38.2		$	6.0		$	13.4		$	38.7		$	41.3

Weighted-average basic shares outstanding	16,627			16,089			16,543			16,016			16,738			16,627			16,737			16,543
Basic
Basic earnings (loss) per share
Continuing operations	$	0.81		$	0.69		$	2.49		$	2.22		$	0.79		$	0.79		$	2.72		$	2.43
Discontinued operations	—			—			—			0.16			(0.43		)	0.02			(0.41		)	0.06
	$	0.81		$	0.69		$	2.49		$	2.38		$	0.36		$	0.81		$	2.31		$	2.49

~~F-6~~F-6

Table of Contents

Earnings (Loss) Per Diluted Common Share

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013			2015			2014			2015			2014
Income from continuing operations	$	13.6		$	11.4		$	41.8		$	36.3		$	13.5		$	13.4		$	46.0		$	40.8
Distributed and undistributed amounts allocated to participating securities	(0.2		)	(0.2		)	(0.5		)	(0.6		)	(0.2		)	(0.2		)	(0.5		)	(0.5		)
Income from continuing operations available to common stockholders	13.4			11.2			41.3			35.7			13.3			13.2			45.5			40.3
Income from discontinued operations, net of income taxes	—			—			—			2.6
Income (loss) from discontinued operations, net of income taxes													(7.4		)	0.2			(6.9		)	1.0
Undistributed amounts allocated to participating securities													0.1			—			0.1			—
Net income available to common stockholders	$	13.4		$	11.2		$	41.3		$	38.3		$	6.0		$	13.4		$	38.7		$	41.3

Weighted-average basic shares outstanding	16,627			16,089			16,543			16,016			16,738			16,627			16,737			16,543
Add: Assumed incremental shares under stock compensation plans	286			380			288			322			211			286			254			288

Weighted-average diluted shares	16,913			16,469			16,831			16,338			16,949			16,913			16,991			16,831
Diluted
Diluted earnings (loss) per share
Continuing operations	$	0.80		$	0.68		$	2.45		$	2.18		$	0.78		$	0.78		$	2.68		$	2.39
Discontinued operations	—			—			—			0.16			(0.43		)	0.02			(0.40		)	0.06
	$	0.80		$	0.68		$	2.45		$	2.34		$	0.35		$	0.80		$	2.28		$	2.45

Fair Value of Financial Instruments

The Company measures the fair value of financial instruments in accordance with Accounting Standards Codification (“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). The asset’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques attempt to maximize the use of observable inputs and minimize the use of unobservable inputs.

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 condensed consolidated balance sheet and temporary unrealized holding gains and losses are reported in other comprehensive income until realized upon sale. As of September 30, ~~2014,~~2015, the ~~cost and fair value of the Company’s~~Company had $3.2 million in marketable securities ~~were $3.1 million and $3.0 million, respectively.~~classified as “Other Assets” on the condensed consolidated balance sheet. The cost of such marketable securities was $3.2 million. Fair value for the Company’s marketable securities was estimated from Level 1 inputs. ~~These~~The Company’s marketable securities ~~are classified as “Other Assets” on the condensed consolidated balance sheet and~~ are restricted to the payment of ~~benefits under the Company’s Supplemental Executive Retirement Plan (“SERP”).~~

~~F-7~~

~~Table of Contents~~certain post-retirement benefits.

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.

	September 30, 2014				December 31, 2013				September 30, 2015				December 31, 2014
	Carrying Value		Fair Value (a)		Carrying Value		Fair Value (a)		Carrying Value		Fair Value (a)		Carrying Value		Fair Value (a)
2021 Senior Notes (5.25% fixed rate)	$	175.0	$	166.8	$	175.0	$	163.7	$	175.0	$	173.8	$	175.0	$	169.6
Global Revolving Credit Facilities (variable rates)									62.3		62.3		48.7		48.7
Second German Loan Agreement (2.5% fixed rate)	11.4		11.8		12.4		10.9		8.9		8.7		10.6		9.0
Neenah Germany revolving line of credit (variable rates)	—		—		19.3		19.3
Neenah Germany project financing (3.8% fixed rate)	—		—		5.2		5.1
Total debt	$	186.4	$	178.6	$	211.9	$	199.0	$	246.2	$	244.8	$	234.3	$	227.3

(a) The fair value for all debt instruments was estimated from Level 2 measurements.

F-7

Table of Contents

Note 2. Accounting Standard Changes

In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers (“ASC Topic 606”). ASU 2014-09 supersedes the revenue recognition guidance in ASC Topic 605, Revenue Recognition. The core principle of the guidance in ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in the exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016; however, in August 2015, the FASB issued ASU No. 2015-14, Revenue From Contracts With Customers (Topic 606) (“ASU No. 2015-14”) which affirmed its previously proposed one year deferral of the effective date for ASU 2014-09 to annual reporting periods and the interim periods within those years beginning after December 15, 2017. The Company is still evaluating the impact of adopting ASU 2014-09, but the adoption of ASU 2014-09 is not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

In April 2015, the FASB issued ASU No. 2015-03, Interest-Imputation of Interest (“ASU 2015-03”). ASU 2015-03 requires that unamortized debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts or premiums. ASU 2015-03 is effective for fiscal years, and the interim periods within those years, beginning after December 15, 2015. In August 2015, the FASB issued ASU No. 2015-15, Imputation of Interest (Subtopic 835-30) (“ASU No. 2015-15”). ASU No. 2015-15 updates the changes in ASU No. 2015-03 based on an announcement of the staff of the U.S. Securities and Exchange Commission. ASU No. 2015-15 provides an exception to ASU No. 2015-03 allowing debt issuance costs related to line-of-credit arrangements to continue to be presented as an asset regardless of whether there are any outstanding borrowings under such arrangement. The adoption of ASU 2015-03 and ASU No. 2015-15 is not expected to have a material impact on the Company’s consolidated financial position.

In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330) (“ASU No. 2015-11”). ASU No. 2015-11 makes changes to the subsequent measurement of inventory. Currently, an entity is required to measure its inventory at the lower of cost or market, whereby market can be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. ASU No. 2015-11 requires that inventory be measured at the lower of cost and net realizable value, thereby eliminating the use of the other two market methodologies. Net realizable value is defined as the estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation. These changes do not apply to inventories measured using LIFO (last-in, first-out) or the retail inventory method. Currently, the Company applies the net realizable value market option to measure non-LIFO inventories at the lower of cost or market. ASU No. 2015-11 is effective for fiscal years, and the interim periods within those years, beginning after December 15, 2016. The adoption of ASU No. 2015-11 is not expected to have a material impact on the Company’s consolidated financial position.

In September 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805) - Simplifying the Accounting for Measurement-Period Adjustments (“ASU No. 2015-16”). ASU No. 2015-16 changes the accounting for measurement-period adjustments related to business combinations. Currently, an acquiring entity is required to retrospectively adjust the balance sheet amounts of the acquiree recognized at the acquisition date with a corresponding adjustment to goodwill during the measurement period, as well as revise comparative information for prior periods presented within financial statements as needed, including revising income effects, such as depreciation and amortization, as a result of changes made to the balance sheet amounts of the acquiree. Such adjustments are required when new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts initially recognized or would have resulted in the recognition of additional assets or liabilities. The measurement period is the period after the acquisition date during which the acquirer may adjust the balance sheet amounts recognized for a business combination (generally up to one year from the date of acquisition). ASU No. 2015-16 eliminates the requirement to make such retrospective adjustments, and, instead requires the acquiring entity to record these adjustments in the reporting period they are determined. Additionally, the changes require the acquiring entity to present separately on the face of the income statement or disclose in the notes to the financial statements the portion of the amount recorded in current-period income by line item that would have been recorded in previous reporting periods if the adjustment to the balance sheet amounts had been recognized as of the acquisition date. ASU No. 2015-16 is effective for fiscal years, and the interim periods within those years, beginning after December 15, 2015. The Company is still evaluating the impact of adopting ASU 2015-16 on its consolidated financial position, results of operations and cash flows.

As of September 30, ~~2014,~~2015, no other amendments to the ASC had been issued that will have or are reasonably likely to have a material effect on the Company’s financial position, results of operations or cash ~~flows.~~flows.

F-8

Table of Contents

Note 3. Acquisitions

Acquisition of ~~Crane Technical Materials~~FiberMark

On ~~July~~August 1, ~~2014,~~2015, the Company purchased all of the outstanding equity of ~~the Crane Technical Materials business~~ASP FiberMark, LLC (“FiberMark”) from ASP FiberMark Holdings, LLC (“American Securities”) for approximately ~~$72~~$123 million. ~~The~~FiberMark is a specialty coatings and finishing company with a strong presence in luxury packaging and technical products. In September 2015, the Company announced the planned closure of the acquired ~~business provides performance-oriented wet laid nonwovens media for filtration end markets as well as environmental, energy and industrial uses. The results of this business are reported~~Fitchburg Mill in the ~~Technical Products segment from~~fourth quarter of 2015 to consolidate its manufacturing footprint. As of September 30, 2015, the ~~date~~assets and liabilities of ~~acquisition.~~the Fitchburg Mill are classified as Assets Held for Sale on the condensed consolidated balance sheet. See Note 11, “Discontinued Operations and Assets Held for Sale.”

The Company accounted for the transaction using the acquisition method in accordance with ASC Topic 805 “Business Combinations.” The preliminary allocation of the purchase price is based on estimates of the fair value of assets acquired and liabilities assumed as of ~~July~~August 1, ~~2014~~2015 and 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 assets and liabilities acquired may result in adjustments to the carrying value of assets and liabilities acquired or goodwill. The Company has not identified any material unrecorded pre-acquisition contingencies. 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 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 assets and liabilities acquired or goodwill. The Company did not ~~acquire~~recognize any in-process research and development assets as part of the acquisition.

~~F-8~~

~~Table of Contents~~

The following table summarizes the preliminary allocation of the purchase price to the estimated fair value of the assets acquired and liabilities, ~~assumed~~including $0.3 million of estimated amounts to be paid as part of ~~September 30, 2014:~~the true-up of working capital, assumed:

Assets Acquired
Cash and cash equivalents			$	4.8
Accounts receivable	$	5.8	13.7
Inventories	8.3		25.6
Deferred income taxes			2.3
Prepaid and other current assets	0.8		1.9
Property, plant and equipment	23.5		68.9
Non-amortizable intangible assets	11.1		1.4
Amortizable intangible assets	13.3		25.5
Deferred income taxes	0.1
Acquired goodwill	13.4		26.7
Total assets acquired	76.3		170.8

Liabilities Assumed
Accounts payable	2.8		8.0
Accrued expenses	1.1		6.1
Deferred income taxes			23.6
Noncurrent employee benefits			9.8
Total liabilities assumed	3.9		47.5

Net assets acquired	$	72.4	$	123.3

The Company estimated the preliminary fair value of the assets and liabilities acquired in accordance with ASC Topic 820, Fair Value Measurements and ~~Disclosures~~.Disclosures. The preliminary fair value of amortizable and non-amortizable intangible assets was estimated by applying a royalty rate to projected revenue, net of tax impacts and adjusted for present value considerations. The Company estimated the preliminary fair value of acquired property, plant and equipment using a combination of cost and market approaches. In general, the preliminary fair value of other acquired assets and liabilities was estimated using the cost basis of the acquired ~~technical materials~~FiberMark business.

F-9

Table of Contents

The excess of the purchase price over the preliminary 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 ~~the technical materials business.~~FiberMark. These benefits include entry into ~~growing and~~ profitable ~~global~~new markets for ~~water filtration, environmental/emissions control,~~premium packaging, performance materials and ~~energy management~~specialty papers with ~~defensible technologies~~new capabilities and recognized brands, synergies from combining the business with Neenah’s existing infrastructure, and the opportunity to accelerate sales growth through synergies with the Company’s existing European-based filtration business. In addition, the acquisition of brands and complementary offerings facilitates the Company’s expansion into non- woven product lines containing fiberglass, polymer fibers and carbon fibers. Substantially allin areas like premium packaging. None of the goodwill ~~is expected to~~recognized as part of the FiberMark acquisition will be deductible for income tax ~~purposes~~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 $19.7 million, $6.5 million and $0.5 million of the goodwill acquired in the FiberMark acquisition is ~~entirely~~ allocated to the Technical Products, ~~segment.~~Fine Paper and Packaging and Other segments, respectively.

For the three and nine months ended September 30, ~~2014,~~2015, the Company incurred ~~$0.6~~$2.0 million ~~and $0.8 million, respectively,~~ of ~~acquisition-related~~acquisition and integration costs. The Company expects to incur an additional ~~$1.2~~$3.2 million ~~in acquisition-related~~of integration costs during the fourth ~~quarter, including approximately $1.1 in capital costs for IT systems and infrastructure projects.~~quarter. For the three months ended September 30, ~~2014,~~2015, net sales and income from operations before income taxes for the acquired ~~technical materials business~~businesses were ~~$11.6~~$24.1 million and ~~$0.4~~$0.8 million ~~(including~~(excluding the acquisition related costs described above), respectively.

The following selected pro forma consolidated statements of operations data for the nine months ended September 30, ~~2014~~2015 and ~~2013~~2014 was prepared as though the FiberMark acquisition ~~of the technical materials business~~ had occurred on January 1, ~~2013.~~2014. The information does not reflect future events that may occur after September 30, ~~2014~~2015 or any operating efficiencies or inefficiencies that may result from the ~~acquisition of the technical materials business.~~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.

	Nine Months Ended September 30,
	2015			2014
Net sales	$	753.6		$	761.8
Operating income	82.8			77.8
Income from continuing operations	47.2			45.3
Income (loss) from discontinued operations	(6.9		)	1.0
Net income	40.3			46.3

Earnings (Loss) Per Common Share
Basic
Continuing operations	$	2.79		$	2.70
Discontinued Operations	(0.41		)	0.06
	$	2.38		$	2.76

Diluted
Continuing operations	$	2.75		$	2.65
Discontinued Operations	(0.40		)	0.06
	$	2.35		$	2.71

Acquisition of Crane Technical Materials

On July 1, 2014, the Company purchased all of the outstanding equity of the Crane Technical Materials business for approximately $72 million. The acquired technical materials business provides performance-oriented wet laid nonwovens media for filtration end markets as well as environmental, energy and industrial uses. The results of this business are reported in the Technical Products segment from the date of acquisition.

~~F-9~~The Company accounted for the transaction using the acquisition method in accordance with ASC Topic 805 “Business Combinations.” The allocation of the purchase price is based on the fair value of assets acquired and liabilities assumed as of July 1, 2014. The Company did not identify any material unrecorded pre-acquisition contingencies. The Company did not acquire any in-process research and development assets as part of the acquisition.

F-10

Table of Contents

Nine Months Ended September 30,

2014

2013

Net sales

$
708.7

$
675.3

Operating income

73.8

61.8

Income from continuing operations

43.5

36.7

Income from discontinued operations

—

2.6

Net income

43.5

39.3

Earnings Per Common Share

Basic

Continuing operations

$
2.60

$
2.24

Discontinued Operations

—

0.16

$
2.60

$
2.40

Diluted

Continuing operations

$
2.55

$
2.20

Discontinued Operations

—

0.16

$
2.55

$
2.36

~~Acquisition of Southworth~~

On January 31, 2013, the Company purchased certain premium paper brands and other assets from Southworth. The Company made a payment of $7.0 million for (i) certain premium fine paper brands including Southworth®, (ii) approximately one month of finished goods inventory valued at $1.8 million and (iii) certain converting equipment used for retail grades. The results of the Southworth brands are reported in the Fine Paper segment from the date of acquisition. For the three and nine months ended September 30, 2013, the Company incurred $0.2 million and $0.4 million, respectively of acquisition-related integration costs.

Note 4. Supplemental Balance Sheet Data

The following table presents inventories by major class:

	September 30, 2014			December 31, 2013			September 30, 2015			December 31, 2014
Raw materials	$	30.0		$	20.3		$	31.0		$	26.1
Work in progress	21.2			22.9			34.2			16.8
Finished goods	68.1			67.3			61.7			65.8
Supplies and other	4.3			4.5			4.5			6.5
	123.6			115.0			131.4			115.2
Adjust FIFO inventories to LIFO cost	(14.6		)	(13.9		)	(11.6		)	(14.0		)
Total	$	109.0		$	101.1		$	119.8		$	101.2

The FIFO values of inventories valued on the LIFO method were ~~$90.7~~$117.4 million and ~~$86.6~~$95.7 million as of September 30, ~~2014~~2015 and December 31, ~~2013,~~2014, respectively.

~~F-10~~

~~Table of Contents~~

The following table presents changes in accumulated other comprehensive income (“AOCI”) for the nine months ended September 30, ~~2014:~~2015:

Unrealized foreign
currency translation
gain (loss)

Net gain (loss) from
pension and other
postretirement
liabilities

Unrealized gain on
“available-for-sale”
securities

Accumulated other
comprehensive income
(loss)

AOCI — December 31, 2013

$
17.9

$
(45.2
)
$
—

$
(27.3
)
Other comprehensive income before reclassifications

(15.7
)
—

0.1

(15.6
)
Amounts reclassified from AOCI

—

3.4

—

3.4

Income from other comprehensive income items

(15.7
)
3.4

0.1

(12.2
)
Provision for income taxes

—

1.3

—

1.3

Other comprehensive income

(15.7
)
2.1

0.1

(13.5
)
AOCI — September 30, 2014

$
2.2

$
(43.1
)
$
0.1

$
(40.8
)

	Unrealized foreign currency translation loss			Net gain (loss) from pension and other postretirement liabilities			Accumulated other comprehensive income (loss)
AOCI — December 31, 2014	$	(5.8	)	$	(62.6	)	$	(68.4	)

Other comprehensive loss before reclassifications	(9.1		)	—			(9.1		)
Amounts reclassified from AOCI	—			5.4			5.4
Income (loss) from other comprehensive income items	(9.1		)	5.4			(3.7		)
Provision for income taxes	—			2.0			2.0
Other comprehensive income (loss)	(9.1		)	3.4			(5.7		)
AOCI — September 30, 2015	$	(14.9	)	$	(59.2	)	$	(74.1	)

For the three and nine months ended September 30, 2015, the Company reclassified $1.8 million and $5.4 million of costs, respectively, from accumulated other comprehensive income to cost of products sold and selling, general and administrative expenses on the condensed consolidated statements of operations. For the three and nine months ended September 30, 2015, the Company recognized an income tax benefit of $0.7 million and $2.0 million, respectively, related to such reclassifications classified as Provision for income taxes on the condensed consolidated statements of operations.

For the three and nine months ended September 30, 2014, the Company reclassified $1.1 million and $3.4 million, respectively, of costs from accumulated other comprehensive income to cost of products sold and selling, general and administrative expenses on the ~~Condensed Consolidated Statements~~condensed consolidated statements of ~~Operations.~~operations. For the three and nine months ended September 30, 2014, the Company recognized an income tax benefit of $0.4 million and $1.3 million, respectively, related to such reclassifications classified as Provision for income taxes on the ~~Condensed Consolidated Statements~~condensed consolidated statements of ~~Operations.~~operations.

~~For the three and nine months ended September 30, 2013, the Company reclassified $1.6 million and $4.9 million, respectively,~~F-11

Table of costs from accumulated other comprehensive income to cost of products sold and selling, general and administrative expenses on the Condensed Consolidated Statements of Operations. In addition, for the nine months ended September 30, 2013, $0.2 million was reclassified from accumulated other comprehensive income to SERP settlement charge on the Condensed Consolidated Statements of Operations. For the three and nine months ended September 30, 2013, the Company recognized an income tax benefit of $0.6 million and $1.9 million, respectively, related to such reclassifications classified as Provision for income taxes on the Condensed Consolidated Statements of Operations.Contents

Note 5. Debt

Long-term debt consisted of the following:

September 30, 2014

December 31, 2013

2021 Senior Notes (5.25% fixed rate) due May 2021

$
175.0

$
175.0

Neenah Germany revolving lines of credit (variable rates)

—

19.3

German Loan Agreement (3.8% fixed rate)

—

5.2

Second German Loan Agreement (2.5% fixed rate) due in 32 equal quarterly installments ending September 2022

11.4

12.4

Total debt

186.4

211.9

Less: Debt payable within one year

1.4

21.4

Long-term debt

$
185.0

$
190.5

~~F-11~~

~~Table of Contents~~

	September 30, 2015		December 31, 2014
2021 Senior Notes (5.25% fixed rate) due May 2021	$	175.0	$	175.0
Global Revolving Credit Facilities (variable rates) due December 2019	62.3		48.7
Second German Loan Agreement (2.5% fixed rate) due in 32 equal quarterly installments ending September 2022	8.9		10.6
Total debt	246.2		234.3
Less: Debt payable within one year	1.3		1.4
Long-term debt	$	244.9	$	232.9

~~Unsecured~~2021 Senior Notes

~~2021 Senior Notes~~

In May 2013, the Company completed an underwritten offering of eight-year senior unsecured notes (the “2021 Senior Notes”) at a face amount of $175 million. The 2021 Senior Notes bear interest at a rate of 5.25%, payable in arrears on May 15 and November 15 of each year, commencing on November 15, 2013, and mature on May 15, 2021. The 2021 Senior Notes are fully and unconditionally guaranteed by substantially all of the Company’s domestic ~~subsidiaries (the “Guarantors”).~~subsidiaries. The 2021 Senior Notes were sold in a private placement transaction, have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold absent registration or an applicable exemption from registration requirements.

The 2021 Senior Notes 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. As of September 30, ~~2014,~~2015, the Company was in compliance with all terms of the indenture for the 2021 Senior Notes.

Amended and Restated Secured ~~Bank~~Revolving Credit Facility

In ~~June 2013,~~December 2014, the Company amended and restated its ~~bank~~existing credit ~~agreement (as amended,~~facility by entering into the ~~“Bank~~Third Amended and Restated Credit Agreement (the “Third Amended and Restated Credit Agreement”) by and among the Company and certain of its domestic subsidiaries as the “Domestic Borrowers”, Neenah Services GmbH & Co. KG (“Neenah Services”) and certain of its German subsidiaries as the “German Borrowers”, certain other subsidiaries as the “German Guarantors”, the financial institutions signatory to the Third Amended and Restated Credit Agreement as lenders (the “Lenders”), and JPMorgan Chase Bank, N.A., as agent for the Lenders.

The Third Amended and Restated Credit Agreement, among other ~~things; (i)~~ ~~modify the Bank Credit Agreement’s accordion feature to permit the Company, subject to certain conditions, to increase the aggregate~~things: (1) provides for a secured revolving credit facility ~~commitments by up to $30 million, to a~~for the Domestic Borrowers in the maximum principal amount of ~~$180~~$125 million ~~(ii) increase~~(the “U.S. Revolving Credit Facility”); (2) provides 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) causes 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.

Availability under the Global Revolving Credit Facilities varies over time depending on the value of the Company’s allowable dividends paid to shareholders in any period of 12 consecutive months to $25 million, (iii) allow the Company to repurchase up to $30 million of its own common stock on or before December 31, 2014,inventory, receivables and ~~(iv) make certain definitional and administrative changes.~~

various capital assets. As of September 30, 2015, the Company had $62.3 million outstanding under the Global Revolving Credit Facilities and $126.6 million of available credit (based on exchange rates at September 30, 2015). As of September 30, 2015, the weighted-average interest rate on outstanding Global Revolving Credit Facility borrowings was 1.90 percent per annum As of December 31, 2014, the Company had ~~a $105~~$48.7 million ~~revolving credit facility (the “Revolver”) pursuant to the Bank Credit Agreement of which no amounts were outstanding. As of September 30, 2014, the Company had $103.9 million of available credit~~outstanding under the ~~Revolver.~~Global Revolving Credit Facilities at a weighted-average interest rate of 1.8 percent per annum.

F-12

Table of Contents

Terms, Covenants and Events of Default. ~~If borrowing~~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 ~~Revolver~~Third Amended and Restated 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:

	Applicable Margin
	U.S. Revolving Credit Facility	German Revolving Credit Facility
Prime rate	0.00% - 0.50%	Not applicable
Federal funds rate +0.50%	0.00% - 0.50%	Not applicable
Monthly LIBOR (which cannot be less than zero percent) +1.00%	1.50% - 2.00%	Not applicable
Overnight LIBOR (which cannot be less than zero percent)	Not applicable	1.50% - 2.00%

The Company is also required to pay a monthly commitment fee on the unused amounts available under the Global Revolving Credit Facilities at a per annum rate of 0.25%.

Subject to certain conditions, the Third Amended and Restated Credit Agreement permits the Company to make up to $10 million in cash repurchases of its outstanding common stock during each fiscal year, beginning in 2015, and to pay up to $25 million in cash dividends to its stockholders during any period of 12 consecutive months; however, such stock repurchases can be made, and such cash dividends can be paid, on an unlimited basis if pro forma aggregate availability under the Global Revolving Credit Facilities is greater than or equal to the greater of (i) $25 million and (ii) 12.5% of the aggregate commitment under the Global Revolving Credit Facilities, at all times during the 60-day period ending on the date of such repurchase or dividend payment.

The Third Amended and Restated Credit Agreement contains covenants with which the Company and its subsidiaries must comply during the term of the agreement, which the Company believes are ordinary and standard for agreements of this nature. 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.

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 ~~achieve~~comply with a fixed charge coverage ratio (as defined in the ~~Bank~~Third Amended Credit ~~Agreement)~~agreement) of not less than 1.1 to 1.0 for the preceding four-quarter period, tested as of the end of each quarter. As of September 30, ~~2014,~~2015, aggregate availability under the Global Revolving Credit Facilities exceeded the minimum required amount, and the Company ~~was in compliance~~is not required to comply with ~~all terms of the Bank Credit Agreement.~~such fixed charge coverage ratio.

The Company’s ability to pay cash dividends on its common stock is limited under the terms of both the ~~Bank~~Third Amended and Restated Credit Agreement and the 2021 Senior Notes. As of September 30, ~~2014,~~2015, the Company’s ability to pay cash dividends on its common stock under the most restrictive terms of its debt agreements was limited to a total of $25 million in a 12-month period. However, the Company can pay dividends in excess of $25 million in a 12-month period by utilizing “restricted payment baskets” as defined in the indenture for the 2021 Senior Notes and the Third Amended and Restated Credit Agreement.

Other Debt

~~German Project Financing~~

~~German Loan Agreement.~~ As of September 30, ~~2014,~~2015, Neenah Germany had no amounts outstanding under a 10-year agreement with HypoVereinsbank and IKB Deutsche Industriebank AG (the “German Loan Agreement”). In May 2014, the Company terminated the German Loan Agreement by repaying the remaining €3.7€7.9 million ($~~5.2 million) in outstanding German Loan Agreement borrowings.~~

~~Second German Loan Agreement. As of September 30, 2014, Neenah Germany had €9.0 million ($11.4~~8.9 million, based on exchange rates at September 30, ~~2014)~~2015) outstanding under a project financing agreement (the “Second German Loan Agreement”). The Second German Loan Agreement matures in September 2022 and principal is repaid in equal quarterly installments beginning in December 2014.

~~German Lines of Credit~~F-

HypoVereinsbank Line of Credit. Neenah Germany has a revolving line of credit with HypoVereinsbank (the “HypoVereinsbank Line of Credit”) that provides for borrowings of up to €15 million for general corporate purposes. As of September 30, 2014, no amounts were outstanding and €15.0 million ($19.0 million, based on exchange rates at September 30, 2014) of credit was available under the HypoVereinsbank Line of Credit.

Commerzbank Line of Credit. Neenah Germany has a revolving line of credit with Commerzbank AG (“Commerzbank”) that provides for borrowings of up to €5 million for general corporate purposes (the “Commerzbank Line of Credit. As of September 30, 2014, no amounts were outstanding and €5.0 million ($6.4 million, based on exchange rates at September 30, 2014) of credit was available under the Commerzbank Line of Credit.

~~F-12~~13

Table of Contents

~~Restrictions under German Credit Facilities~~

The terms of the HypoVereinsbank and Commerzbank lines of credit require Neenah Germany to maintain a ratio of stockholders’ equity to total assets equal to or greater than 45 percent. The Company was in compliance with all provisions of the HypoVereinsbank and Commerzbank lines of credit as of September 30, 2014.

Note 6. Pension and Other Postretirement Benefits

Pension Plans

~~Substantially~~Except as described below for the FiberMark acquisition, substantially all active employees of the Company’s U.S. operations participate in defined benefit pension plans and/or defined contribution retirement plans. In addition, the Company maintains a ~~SERP~~supplemental retirement pension plan (“SERP”) which is a non-qualified defined benefit plan and a supplemental retirement contribution plan (“SRCP”) which is a non-qualified defined contribution benefit plan. The Company provides benefits under the SERP and the SRCP to the extent necessary to fulfill the intent of its defined benefit and defined contribution retirement plans without regard to the limitations set by the Internal Revenue Code on qualified defined benefit and defined contribution plans. Neenah Germany has defined benefit plans designed to provide a monthly pension upon retirement for substantially all its employees in Germany. 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 September 30, ~~2014,~~2015, Neenah Germany had investments of ~~$2.0~~$1.7 million that were restricted to the payment of certain post-retirement employee benefits. As of September 30, ~~2014, $0.7~~2015, $0.6 million and ~~$1.3~~$1.1 million of such investments are classified as prepaid and other current assets and other assets, respectively, on the condensed consolidated balance sheet.

FiberMark Acquisition

Defined benefit plans

FiberMark sponsors a qualified defined benefit plan covering certain U.S. employees. During 2009, FiberMark fully froze this plan so that additional benefits cannot be earned as a result of additional years of service or increases in annual earnings. Plan assets are invested principally in equity, government, corporate debt securities and other fixed income mutual funds. FiberMark sponsors a defined benefit plan covering all U.K. employees, which is designed to provide a monthly pension upon retirement. This plan became fully frozen during 2011 and plan assets are primarily invested in equity mutual funds.

Multi-Employer plan

The hourly employees at the Lowville, New York facility are covered by a multi-employer defined benefit plan. FiberMark’s expense under this plan was $0.1 million for the year ended December 31, 2014.

FiberMark contributes to the multi-employer pension plan under a collective bargaining agreement which provides retirement benefits for its various union employees. The risks of participating in multi-employer plans are different from single employer plans as assets contributed are available to provide benefits to employees of other employers and unfunded obligations from an employer that discontinues contributions are the responsibility of all remaining employers. In ~~February 2013,~~addition, in the event of a plan’s termination or FiberMark’s withdrawal from the plan, FiberMark may be liable for a portion of the plan’s unfunded vested benefits. FiberMark does not anticipate withdrawal from the plan, nor is it aware of any expected plan terminations.

The most recent Pension Protection Act zone status available in 2014 is for the plan’s year-end at December 31, 2014. The zone status is based on information that the Company ~~reached agreement~~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 FiberMark participates is shown below. The “FIP/RP Status Pending/Implemented” column indicates plans for which a financial improvement plan (“FIP”) or a rehabilitation plan (“RP”) is either pending or has been implemented. For the year ended December 31, 2014, FiberMark’s contributions to this plan were less than 5% of total plan contributions.

Pension

FIP/RP

Date of

Zone

Status

Collective

Pension

EIN/Pension

Status

Pending or

Contributions

Surcharge

Bargaining

Fund

Plan Number

2014

Implemented

2014

Imposed

Agreement

PACE Industry Union Management Pension Fund

11-6166763

Red

Implemented

$0.1 million

Yes

11/9/16

Defined contribution plans

FiberMark has several qualified defined contribution plans covering certain hourly and salaried employees. The plans permit employee salary deferrals, with the ~~United Steelworkers Union~~Company match ranging from 0% to 3% of salary, depending on ~~new collective bargaining agreements for all~~the plan and the level of its U.S. paper mills. The agreements resulted in a net reduction in the Company’s liability for post-retirement benefits. In accordance with ASC Topic 715, Compensation — Retirement Benefits (“ASC Topic 715”), the Company measured the assets and liabilities of its U.S. post-retirement benefit plans as of February 28, 2013 and recorded a curtailment gain in OCI of $6.6 million less a provision for income taxes of $2.5 million.employee deferral.

The following table presents the components of net periodic benefit cost:

Components of Net Periodic Benefit Cost for Defined Benefit Plans

	Pension Benefits						Postretirement Benefits Other than Pensions					Pension Benefits						Postretirement Benefits Other than Pensions
	Three Months Ended September 30,											Three Months Ended Ended September 30,
	2014			2013			2014		2013			2015			2014			2015			2014
Service cost	$	1.3		$	1.4		$	0.4	$	0.4		$	1.5		$	1.3		$	0.5		$	0.4
Interest cost	3.8			3.4			0.4		0.5			3.7			3.8			0.4			0.4
Expected return on plan assets (a)	(4.1		)	(4.3		)	—		—			(5.0		)	(4.1		)	—			—
Recognized net actuarial loss	1.0			1.4			—		0.1			1.6			1.0			—			—
Amortization of prior service cost	0.1			0.1			—		(0.1		)
Amortization of prior service cost (benefit)												0.1			0.1			(0.1		)	—
Net periodic benefit cost	$	2.1		$	2.0		$	0.8	$	0.9		1.9			2.1			0.8			0.8
Less: Costs related to discontinued operations												0.2			0.2			0.1			0.1
Net periodic benefit cost related to continuing operations												$	1.7		$	1.9		$	0.7		$	0.7

Pension Benefits

Postretirement Benefits
Other than Pensions

Nine Months Ended September 30,

2014

2013

2014

2013

Service cost

$
4.0

$
4.0

$
1.2

$
1.3

Interest cost

11.5

10.2

1.4

1.4

Expected return on plan assets (a)

(12.6
)
(12.8
)
—

—

Recognized net actuarial loss

3.2

4.3

0.1

0.4

Amortization of prior service cost

0.2

0.2

(0.1
)
(0.2
)
SERP settlement charge

—

0.2

—

—

Net periodic benefit cost

$
6.3

$
6.1

$
2.6

$
2.9

F-14

Table of Contents

	Pension Benefits						Postretirement Benefits Other than Pensions
	Nine Months Ended September 30,
	2015			2014			2015			2014
Service cost	$	4.4		$	4.0		$	1.3		$	1.2
Interest cost	10.4			11.5			1.2			1.4
Expected return on plan assets (a)	(14.1		)	(12.6		)	—			—
Recognized net actuarial loss	5.0			3.2			0.1			0.1
Amortization of prior service cost (benefit)	0.2			0.2			(0.2		)	(0.1		)
Net periodic benefit cost	5.9			6.3			2.4			2.6
Less: Costs related to discontinued operations	0.7			0.6			0.2			0.3
Net periodic benefit cost related to continuing operations	$	5.2		$	5.7		$	2.2		$	2.3

(a) The expected return on plan assets is determined by multiplying the fair value of plan assets at the prior year-end (adjusted for estimated current year cash benefit payments and contributions) by the expected long-term rate of return.

~~F-13~~

~~Table of Contents~~

The Company expects to make aggregate contributions to qualified and nonqualified defined benefit pension trusts and to pay pension benefits for unfunded pension plans of approximately ~~$25~~$5 million (based on exchange rates at September 30, ~~2014)~~2015) in calendar ~~2014.~~2015. For the nine months ended September 30, ~~2014,~~2015, the Company made ~~$16.4~~$1.3 million of such payments.

Note 7. Stock Compensation Plan

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, restricted stock units, restricted stock units with performance conditions and performance units, in addition to certain cash-based awards.

At the 2013 Annual Meeting of Stockholders, the Company’s stockholders approved an amendment and restatement of the ~~Neenah Paper, Inc.~~ 2004 Omnibus ~~Stock and Incentive Compensation~~ Plan (as amended and restated the “Omnibus Plan”). The amendment and restatement authorized the Company to reserve an additional 1,577,000 shares of ~~$0.01 par value common stock (“~~Common ~~Stock”)~~Stock for future issuance. As of September 30, ~~2014,~~2015, the Company had ~~1,750,000~~1,295,000 shares of Common Stock reserved for future issuance under the Omnibus Plan. The Company accounts for stock-based compensation pursuant to the fair value recognition provisions of ASC Topic 718, Compensation—Stock Compensation (“(“ASC Topic 718”).

Valuation and Expense Information

Substantially all stock-based compensation expense is recorded in selling, general and administrative expenses on the condensed consolidated statements of operations. The following table summarizes stock-based compensation expense and related income tax benefits.

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013			2015			2014			2015			2014
Stock-based compensation expense	$	1.1		$	0.8		$	4.1		$	4.0		$	1.0		$	1.1		$	4.5		$	4.1
Income tax benefit	(0.5		)	(0.3		)	(1.6		)	(1.5		)	(0.5		)	(0.5		)	(1.8		)	(1.6		)
Stock-based compensation, net of Income tax benefit	$	0.6		$	0.5		$	2.5		$	2.5
Stock-based compensation, net of income tax benefit													$	0.5		$	0.6		$	2.7		$	2.5

F-15

Table of Contents

The following table summarizes total compensation costs related to the Company’s equity awards and amounts recognized in the nine months ended September 30, ~~2014.~~2015.

	Stock Options and SARs			Performance Shares and RSUs			Stock Options and SARs			Performance Shares and Restricted Stock
Unrecognized compensation cost — December 31, 2013	$	1.3		$	2.0
Unrecognized compensation cost — December 31, 2014							$	1.1		$	2.2
Grant date fair value of current year grants	1.2			4.0			1.4			3.5
Compensation expense recognized	(1.1		)	(3.0		)	(1.5		)	(3.0		)
Estimated forfeitures for awards granted in prior years	—			(0.2		)
Unrecognized compensation cost —September 30, 2014	$	1.4		$	2.8
Unrecognized compensation cost —September 30, 2015							$	1.0		$	2.7

Expected amortization period (in years)	2.1			1.8			1.7			1.5

Stock Options and SARs (“Options”)

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 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 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 SARs are unchanged from those of the non-qualified stock options converted. 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 additional compensation expense due to the conversion.

~~F-14~~

~~Table of Contents~~

The following tables present information regarding ~~stock options~~Options awarded during the nine months ended September 30, ~~2014:~~2015:

Nonqualified stock options granted	95,700
Options granted			87,900
Per share weighted average exercise price	$	43.17	$	59.72
Per share weighted average grant date fair value	$	12.72	$	16.47

The weighted-average grant date fair value for ~~stock options~~Options granted during the nine months ended September 30, ~~2014~~2015 was estimated using the Black-Scholes option valuation model with the following assumptions:

Expected term in years	~~5.9~~5.8
Risk free interest rate	~~1.9~~1.4	%
Volatility	~~36.5~~34.4	%
Dividend yield	~~2.2~~2.0	%

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~~Option awards, respectively. The risk-free interest rate was based on the yield on U.S. Treasury bonds with a remaining term approximately equivalent to the expected term of the ~~stock option~~Option awards. Forfeitures were estimated at the date of grant.

The following table presents information regarding ~~stock options and SARs~~Options that vested during the nine months ended September 30, ~~2014:~~2015:

Nonqualified stock options and SARs vested

108,100

Aggregate grant date fair value of stock options and SARs vested

$
0.9

Options vested	96,100
Aggregate grant date fair value of Options vested	$	1.0

For the three and nine months ended September 30, 2015, the aggregate pre-tax intrinsic value of Options exercised was $0.8 million and $3.7 million, respectively. For the three and nine months ended September 30, 2014, the aggregate pre-tax intrinsic value of ~~stock options and SARs~~Options exercised was $1.9 million and $10.3 million, respectively. ~~For the three and nine months ended September 30, 2013, the aggregate pre-tax intrinsic value of stock options and SARs exercised was $4.4 million and $5.8 million, respectively.~~

As of September 30, ~~2014,~~2015, certain participants met age and service requirements that allowed their ~~stock options and SARs~~Options to qualify for accelerated vesting upon retirement. As of September 30, ~~2014,~~2015, such participants held ~~options~~Options to purchase approximately ~~50,000~~90,000 shares of common stock that would have been exercisable if they had retired as of such date. The aggregate grant date fair value of ~~options~~Options subject to accelerated vesting was ~~$0.5~~$1.3 million. ~~Stock options~~Options subject to accelerated vesting for expense recognition become exercisable according to the contract terms of the stock-based awards.

~~The following table presents information regarding outstanding stock options and SARs:~~

September 30, 2014

December 31, 2013

Stock options and SARs vested or expected to vest

668,800

946,000

Aggregate intrinsic value

$
29.9

$
18.4

Per share weighted average grant date fair value

$
8.75

$
8.40

Exercisable stock options and SARs

358,200

622,000

Aggregate intrinsic value

$
16.3

$
12.9

Unvested stock options and SARs

315,700

328,000

Per share weighted average grant date fair value

$
10.38

$
9.11

~~F-15~~F-16

Table of Contents

The following table presents information regarding outstanding Options:

	September 30, 2015		December 31, 2014
Options vested or expected to vest	568,600		601,100
Aggregate intrinsic value	$	15.6	$	20.3
Per share weighted average exercise price	$	31.09	$	26.46
Exercisable Options	270,200		292,900
Aggregate intrinsic value	$	9.6	$	11.4
Unvested Options	302,900		311,100
Per share weighted average grant date fair value	$	12.14	$	10.37

Performance ~~Units~~Units/RSUs

For the nine months ended September 30, ~~2014,~~2015, the Company granted target awards of ~~60,900~~approximately 45,100 Performance Units. The measurement period for the Performance Units is January 1, ~~2014~~2015 through December 31, ~~2014.~~2015. The Performance Units vest on December 31, ~~2016.~~2017. Common Stock equal to not less than 40 percent and not more than 200 percent of the Performance Unit target will be awarded based on the Company’s return on invested capital, consolidated revenue growth, the percentage of consolidated free cash flow to revenue and total return to shareholders relative to the companies in the Russell 2000® Value small cap index. As of September 30, ~~2014,~~2015, the Company expects that Common Stock equal to approximately ~~135~~150 percent of the Performance Unit targets will be earned. The market price on the date of grant for the Performance Units was ~~$42.82~~$59.72 per share. Based on the expected achievement of performance targets, the Company is recognizing stock-based compensation expense pro-rata over the vesting term of the Performance Units.

For the nine months ended September 30, 2015, the Company awarded 9,030 RSUs to non-employee members of the Board of Directors and 3,145 RSUs (net of forfeitures) to employees. The weighted average grant date fair value of such awards was $61.64 per share and the awards vest one year from the date of grant. During the vesting period, the holders of the RSUs are entitled to dividends, but the RSUs do not have voting rights and are forfeited in the event the holder is no longer an employee or member of the Board of Directors on the vesting date.

Excess Tax Benefits

ASC Topic 718 requires the reporting of excess tax benefits related to the exercise or vesting of stock-based awards as cash provided by financing activities within the statement of cash flows. Excess tax benefits represent the difference between the tax deduction the Company will receive on its tax return for compensation recognized by employees upon the vesting or exercise of stock-based awards and the tax benefit recognized for the grant date fair value of such awards. As of September 30, 2014 and December 31, 2013, because the Company had unused net operating losses (“NOLs”) its excess tax benefits did not result in a reduction in taxes paid and therefore a reduction in cash flow from operations is recorded to offset the amount of excess tax benefits reported in cash flows from financing activities. For the nine months ended September 30, ~~2014~~2015 and ~~2013,~~2014, the Company recognized excess tax benefits related to the exercise or vesting of stock-based awards of $1.1 million and $3.0 million, ~~and $0.4 million,~~ respectively.

F-17

Table of Contents

Note 8. Goodwill and Other Intangible Assets

The following table presents changes in the carrying amount of goodwill for the nine months ended September 30, ~~2014. All~~2015. As of September 30, 2015, $67.4 million, $6.5 million and $0.5 million of such goodwill is reported inwithin the Technical Products, ~~segment.~~Fine Paper and Packaging and Other segments, respectively.

Gross
Amount

Cumulative
Impairment Losses

Net

Balance at December 31, 2013

$
100.1

$
(57.0
)
$
43.1

Acquisition of Crane Technical Materials

13.4

—

13.4

Foreign currency translation

(7.9
)
4.5

(3.4
)

Balance at September 30, 2014

$
105.6

$
(52.5
)
$
53.1

	Gross Amount			Cumulative Impairment Losses			Net
Balance at December 31, 2014	$	100.8		$	(50.3	)	$	50.5
Acquisition of FiberMark	26.7			—			26.7
Foreign currency translation	(6.6		)	3.8			(2.8		)

Balance at September 30, 2015	$	120.9		$	(46.5	)	$	74.4

The following table presents the gross carrying amount of intangible assets and the related accumulated amortization for intangible assets subject to amortization.

	Weighted- Average	September 30, 2014					December 31, 2013					Weighted- Average	September 30, 2015					December 31, 2014
	Amortization Period (Years)	Gross Amount		Accumulated Amortization			Gross Amount		Accumulated Amortization			Amortization Period (Years)	Gross Amount		Accumulated Amortization			Gross Amount		Accumulated Amortization
Amortizable intangible assets
Customer based intangibles	15	$	23.3	$	(8.0	)	$	17.5	$	(7.6	)	15	$	35.9	$	(8.6	)	$	22.7	$	(8.1	)
Trade names and trademarks	10-15	5.4		(4.3		)	5.8		(4.2		)	10 - 15	4.4		(1.7		)	1.5		(1.3		)
Acquired technology	10-15	7.4		(0.9		)	1.1		(0.8		)	10 - 15	16.0		(1.3		)	7.5		(1.0		)
Total amortizable intangible assets		36.1		(13.2		)	24.4		(12.6		)		56.3		(11.6		)	31.7		(10.4		)
Non-amortizable trade names	Not amortized	37.2		—			26.7		—			Not amortized	35.9		—			35.3		—
Total		$	73.3	$	(13.2	)	$	51.1	$	(12.6	)		$	92.2	$	(11.6	)	$	67.0	$	(10.4	)

The following table presents intangible assets acquired in conjunction with the FiberMark acquisition:

			Estimated Useful
			Lives
	Intangibles		(Years)
Intangible assets—definite lived
Trademarks	$	2.7	15
Customer based intangibles	14.1		15
Acquired technology	8.7		13
Total	25.5
Trademarks—indefinite lived	1.4
Total intangible assets	$	26.9

~~F-16~~F-18

Table of Contents

In conjunction with the acquisition of the technical materials business, the Company recorded $11.1 million in non-amortizable intangible trade names and $6.9 million and $6.4 in amortizable customer based intangible assets and acquired technology, respectively. All other changes in the carrying value of the Company’s intangible assets not specifically identified are due to foreign currency translation effects. ~~The weighted average useful lives assigned to amortizable intangible trade names, trademarks~~As of September 30, 2015, $50.9 million, $28.6 million and ~~customer based~~$1.1 million of such intangible assets ~~was 15 years.~~are reported within the Technical Products, Fine Paper and Packaging and Other segments, respectively.

Note 9. Stockholders’ Equity

Common Stock

The Company has authorized 100 million shares of Common Stock. Holders of the Company’s Common Stock are entitled to one vote per share. As of September 30, ~~2014~~2015 and December 31, ~~2013,~~2014, the Company had ~~16,640,000~~16,730,000 shares and ~~16,361,000~~16,748,000 shares of Common Stock outstanding, respectively.

In May ~~2014,~~2015, 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 ~~“2014~~“2015 Stock Purchase ~~Program”~~Plan”). Purchases by the Company under the ~~2014~~2015 Stock Purchase ~~Program~~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 ~~2014~~2015 Stock Purchase ~~Program~~Plan does not require the Company to purchase any specific number of shares and may be suspended or discontinued at any time. The ~~2014 Stock Purchase Program replaced~~Company had a ~~$10~~substantially identical $25 million repurchase program in place during the preceding 12 months that expired in May ~~2014~~2015 (the ~~“2013~~“2014 Stock Purchase ~~Program”~~Plan”). For the nine months ended September 30, 2015, the Company acquired approximately 42,100 shares of Common Stock at a cost of $2.4 million and 60,900 shares of Common Stock at a cost of $3.4 million pursuant to the 2015 Stock Purchase Plan and the 2014 Stock Purchase Plan, respectively. For the nine months ended September 30, 2014, there were no Common Stock purchases under the 2014 Stock Purchase Plan.

As of September 30, 2015, under the terms of the 2021 Senior Notes the Company has limitations on its ability to repurchases shares of its Common Stock. The Company can repurchase shares of its Common Stock by utilizing “restricted payment baskets” as defined in the indenture for the 2021 Senior Notes and the Third Amended and Restated Credit Agreement.

For the nine months ended September 30, ~~2014~~2015, the Company acquired approximately ~~8,000~~2,200 shares of Common Stock at a cost of ~~$0.4~~$0.2 million pursuant to the 2014 Stock Purchase Program. For the nine months ended September 30, 2013, there were no purchases under the 2013 Stock Purchase Program. For the nine months ended September 30, 2014 and 2013, the Company acquired approximately 3,000 shares and 21,000 shares of Common Stock at a cost of $0.1 million and $0.7 million, respectively, for shares surrendered by employees to pay taxes due on vested restricted stock ~~awards and SARs exercised.~~awards. For the nine months ended September 30, 2014, the Company acquired approximately 3,000 shares of Common Stock at a cost of $0.1 million for shares surrendered by employees to pay taxes due on vested restricted stock awards.

Note 10. Contingencies and Legal Matters

Litigation

The Company is involved in certain legal actions and claims arising in the ordinary course of business. While the outcome of these legal actions and claims cannot be predicted with certainty, it is the opinion of management that the outcome of any such claim which is pending or threatened, either individually or on a combined basis, will not have a material effect on the consolidated financial condition, results of operations or cash flows of the Company.

Income Taxes

The Company is continuously undergoing examination by the Internal Revenue Service (the “IRS”) as well as various state and foreign jurisdictions. These tax authorities routinely challenge certain deductions and credits reported by the Company on its income tax returns. No significant tax audit findings are being contested at this time with either the IRS or any state or foreign tax authority.

Employees and Labor Relations

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 July 2015, the IG BCE and a national trade association representing all employers in the industry signed a collective bargaining agreement covering union employees of Neenah Germany that expires in June 2017. Under German law union membership is voluntary and does not need to be disclosed to the Company. As a result, the number of employees covered by the collective bargaining agreement with the IG BCE that expires in June 2017 cannot be determined. As of September 30, ~~2014,~~2015, the Company had no employees covered by collective bargaining agreements that will expire in the next 12-months. The Company believes it has satisfactory relations with its employees covered by collective bargaining agreements.

~~Note 11. Discontinued Operations~~F-

In March 2010, the Company concluded its operating activities in Canada; however, the Company has certain continuing post-employment benefit obligations related to its former Canadian pulp operations. In the first quarter of 2013, the Company received a refund of excess pension contributions, less withholding taxes, from the terminated Terrace Bay pension plan. As a result, the Company recorded income from discontinued operations of $2.6 million, net of income taxes of $1.6 million, on the Condensed Consolidated Statement of Operations.

~~F-17~~19

Table of Contents

FiberMark acquisition

In the U.S. and the U.K., approximately 72% of FiberMark’s hourly employees are union members and are covered under collective bargaining agreements which expire at various times from 2016 through 2017. The agreements at the Brattleboro, Vermont mill, the Reading, Pennsylvania mill and the Lowville, New York mill expire in August 2016, September 2016 and November 2016, respectively. The agreement at the Bolton, England mill expires in May 2016. As of September 30, 2015, employees covered under agreements that expire in the next 12-months represent approximately 38% of all hourly employees of the Company.

Note 11. Discontinued Operations and Assets Held for Sale

Discontinued Operations

On September 7, 2015, the Company reached an agreement for the sale of the Lahnstein Mill to the Buyer, a privately-owned enterprise specializing in equity holdings in German medium-sized companies, for cash proceeds of approximately $9 million. The sale was completed on October 31, 2015. The Buyer acquired all the assets and liabilities of the Lahnstein Mill, including pension and related liabilities of approximately $20 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 estimated impairment charge of $5.5 million to reduce the carrying value of the Lahnstein Mill assets to fair value. Such estimate will be subject to adjustment as a result of the true-up of the sales price to the October 31, 2015 values of cash and working capital and other differences in estimates of other balance sheet accounts as of that date. In addition, the Company recognized approximately $1.4 million of estimated transaction costs related to the sale. For the three and nine months ended September 30, 2015, discontinued operations reported on the condensed consolidated statements of operations include the results of operations and the estimated loss on sale of the Lahnstein Mill. The condensed consolidated statements of operations for the three and nine months ended September 30, 2014 have been restated to report results of the Lahnstein Mill as discontinued operations. The results of the Lahnstein Mill were previously reported in the Technical Products segment. As of September 30, 2015 and December 31, 2014, the assets and liabilities of the Lahnstein Mill are classified as assets held for sale on the condensed consolidated balance sheet.

The following table presents selected financial information for discontinued operations:

	Three Months Ended Ended September 30,					Nine Months Ended September 30,
	2015			2014		2015			2014
Net sales	$	12.2		$	15.2	$	38.8		$	50.0
Cost of products sold	11.5			13.7		35.5			44.5
Gross Profit	0.7			1.5		3.3			5.5
Selling, general and administrative expenses	1.0			1.1		3.2			3.7
Restructuring costs	0.1			0.1		0.1			0.6
Other income - net	(0.2		)	—		(0.4		)	(0.2		)
Income (Loss) From Discontinued Operations Before Income Taxes	(0.2		)	0.3		0.4			1.4
Loss on sale	(6.9		)	—		(6.9		)	—
Income (loss) before income taxes	(7.1		)	0.3		(6.5		)	1.4
Income tax provision	0.3			0.1		0.4			0.4
Income (loss) from discontinued operations	$	(7.4	)	$	0.2	$	(6.9	)	$	1.0

The following table presents selected cash flow information for discontinued operations:

	Nine Months Ended September 30,
	2015		2014
Depreciation and amortization	$	2.5	$	13.0

Capital expenditures	$	0.4	$	0.6

F-20

Table of Contents

Assets Held for Sale

The following table presents the major components of assets and liabilities of the Lahnstein Mill and the Fitchburg Mill classified as assets held for sale and liabilities related to facilities held for sale on the condensed consolidated balance sheet:

	September 30, 2015			December 31, 2014
Assets Held For Sale
Current Assets
Accounts receivable - net	$	4.9		$	2.4
Inventories	9.6			10.1
Prepaid and other current assets	1.2			1.4
Property, Plant and Equipment	24.3			28.3
Goodwill	0.9			1.0
Intangible Assets—net	1.9			2.3
Other Assets	0.8			0.9
Less, Asset Impairment	(5.5		)	—
Assets Held for Sale	$	38.1		$	46.3
Liabilities Related to Facilities Held for Sale
Current Liabilities
Accounts payable	$	2.6		$	2.4
Accrued expenses	3.3			2.0
Deferred Income Taxes	0.6			0.7
Noncurrent Employee Benefits	20.9			22.2
Liabilities related to facilities held for sale	$	27.4		$	27.3

As of September 30, 2015, assets held for sale less liabilities related to facilities held for sale of $10.7 million is composed of $8.8 million related to the Lahnstein Mill and $1.9 million related to the Fitchburg Mill.

Note 12. Business Segment 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 non-strategic papers sold to converters for end uses such as covering materials for datebooks, diaries, yearbooks and traditional photo albums. Due to the non-strategic nature of these products, management decided that they would not be managed as part of either the existing Fine Paper and Packaging or Technical Material businesses. As a result, effective August 1, 2015, these product lines represent an operating segment which does not meet the quantitative threshold for a reportable segment and are accordingly reported as an Other operating segment.

The ~~Company reports its operations in two primary segments:~~Company’s reportable operating segments now consist of Technical Products, Fine Paper and ~~Fine Paper.~~ Packaging and Other. The Technical Products segment is an aggregation of the Company’s Filtration and Performance Material businesses which are similar in terms of economic characteristics, nature of products, processes, customer class and product distribution methods.

The technical products business is an international producer of ~~transportation~~fiber-formed, coated and/or saturated specialized media that delivers high performance benefits to customers. Included in this segment are filtration media, tape and ~~other filter media~~abrasives backings products, and durable ~~saturated~~label and ~~coated substrates for industrial products backings and a variety of other~~ specialty ~~end markets.~~substrate products. The fine paper and packaging business is a supplier of branded premium ~~writing, text and cover papers, bright papers, and luxury~~printing, packaging and ~~premium label~~other high end specialty papers primarily in North America. Each segment employs different technologies and marketing strategies. ~~In addition, the Company reports in the Other segment results for non-premium Index, Tag and~~ ~~Vellum Bristol product lines.~~ Disclosure of segment information is on the same basis that management uses internally for evaluating segment performance and allocating resources. Transactions between segments are eliminated in consolidation. The costs of shared services, and other administrative functions managed on a common basis, are allocated to the segments based on usage, where possible, or other factors based on the nature of the activity. General corporate expenses that do not directly support the operations of the business segments are shown as Unallocated corporate costs.

The following table summarizes the net sales, operating income and total assets for each of the Company’s business segments.

Three Months Ended September 30,

Nine Months Ended September 30,

2014

2013

2014

2013

Net sales

Technical Products

$
121.5

$
104.4

$
355.9

$
317.2

Fine Paper

101.4

102.6

309.5

302.0

Other

7.7

7.1

20.7

20.4

Consolidated

$
230.6

$
214.1

$
686.1

$
639.6

Three Months Ended September 30,

Nine Months Ended September 30,

2014

2013

2014

2013

Operating income (loss)

Technical Products

$
10.0

$
6.7

$
36.9

$
28.3

Fine Paper

15.2

13.3

45.8

45.1

Other

0.1

0.3

(0.2
)
—

Unallocated corporate costs

(3.2
)
(3.9
)
(11.5
)
(12.2
)
Consolidated

$
22.1

$
16.4

$
71.0

$
61.2

September 30, 2014

December 31, 2013

Total Assets

Technical Products

$
424.2

$
365.9

Fine Paper

207.3

206.9

Corporate and Other

42.7

103.1

Total

$
674.2

$
675.9

~~Concentrations~~

In July 2014, Unisource Worldwide, Inc (“Unisource”) and xpedx, a business of International Paper (“xpedx”) merged to form Veritiv Corporation. For the year ended December 31, 2013, sales to Unisource and xpedx represented approximately 10 percent of the Company’s consolidated net sales and 20 percent of net sales of the fine paper business.

	Three Months Ended Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Net sales
Technical Products	$	108.9	$	106.2	$	321.2	$	305.9
Fine Paper and Packaging	116.9		109.1		330.3		330.2
Other	5.8		—		5.8		—
Consolidated	$	231.6	$	215.3	$	657.3	$	636.1

~~F-18~~F-21

Table of Contents

	Three Months Ended Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Operating income (loss)
Technical Products	$	11.0		$	9.6		$	41.7		$	35.5
Fine Paper and Packaging	17.2			15.3			52.2			45.6
Other	(0.2		)	—			(0.2		)	—
Unallocated corporate costs	(3.6		)	(3.2		)	(13.2		)	(11.5		)
Consolidated	$	24.4		$	21.7		$	80.5		$	69.6

	September 30, 2015		December 31, 2014
Total Assets
Technical Products	$	450.2	$	372.8
Fine Paper and Packaging	262.5		228.8
Corporate and Other	50.7		82.7
Assets held for sale	38.1		46.3
Total	$	801.5	$	730.6

F-22

Table of Contents

Item 2. 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 financial position as of September 30, ~~2014~~2015 and our results of operations for the three and nine months ended September 30, ~~2014~~2015 and ~~2013.~~2014. You should read this discussion in conjunction with our consolidated financial statements and the notes to those consolidated financial statements included in our most recent 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.

Executive Summary

~~In July 2014,~~On August 1, 2015, we purchased all of the outstanding equity of ~~the Crane Technical Materials business~~FiberMark from ~~Crane & Co., Inc.~~American Securities for ~~$72.4~~a purchase price of $120 million. The ~~acquisition~~ purchase price of $120 million, subject to adjustments for acquired cash and a working capital true up, resulted in a cash payment of $123 million at closing, and was ~~paid from~~financed through $80 million of cash on ~~hand.~~hand and the balance from available borrowing capacity on our Global Revolving Credit Facilities.

On September 7, 2015, we reached an agreement for the sale of our Lahnstein Mill to the Kajo Neukirchen Group for cash proceeds of approximately $9 million. We completed the sale on October 31, 2015. For the three and nine months ended September 30, 2015, discontinued operations reported on the condensed consolidated statements of operations reflect the results of operations and the estimated loss on sale of the Lahnstein Mill. The ~~acquired technical materials business provides performance-oriented wet laid nonwovens media~~condensed consolidated statements of operations for ~~fast growing filtration end markets~~the three and nine months ended September 30, 2014 have been restated to report results of the Lahnstein Mill as ~~well as environmental, energy and industrial uses. This technical materials business has two manufacturing facilities~~discontinued operations. The results of the Lahnstein Mill were previously reported in ~~Pittsfield, Massachusetts.~~the Technical Products segment.

For the three months ended September 30, ~~2014,~~2015, consolidated net sales increased ~~$16.5~~$16.3 million from the prior year period to ~~$230.6~~$231.6 million ~~primarily due to~~as incremental technical products volume related to organic growth, the FiberMark acquisition ~~of the technical materials business~~ and higher average net prices for our heritage ~~businesses.~~businesses were partially offset by unfavorable currency exchange effects. Excluding currency exchange effects and incremental sales from ~~the acquired technical materials business,~~FiberMark, consolidated ~~net~~ sales increased ~~$4.9~~$1.7 million ~~or two percent~~(1%) from the prior ~~year primarily due to higher average selling prices for both businesses and growth in technical products volume.~~year.

Consolidated operating income of ~~$22.1~~$24.4 million for the three months ended September 30, ~~2014~~2015 increased ~~$5.7~~$2.7 million from the prior year period. The favorable comparison to the prior year was primarily due to higher net price for ~~both~~our heritage businesses, ~~increased sales volumes for~~lower manufacturing input costs and organic volume growth in our technical products ~~business and fine paper manufacturing efficiencies.~~business. These favorable variances were partially offset by ~~higher manufacturing input costs.~~lower fine paper and packaging shipment volume, the timing of scheduled annual maintenance downtime for our German filtration operation and unfavorable currency exchange effects.

Cash provided by operating activities of ~~$20.7~~$35.0 million for the three months ended September 30, ~~2014~~2015 was ~~$13.8~~$14.3 million ~~unfavorable~~favorable to cash provided by operating activities of ~~$34.5~~$20.7 million in the prior year ~~period. Cash flows from operations resulting from higher operating earnings in the current year~~ period ~~were more than offset by a larger year-over-year decrease in our investment~~primarily due to reduced investments in working capital and lower post-retirement benefit plan contributions.

On July 1, 2015, we reorganized our internal management structure and, accordingly, addressed our 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 ~~prior year period.~~current period presentation. In addition, as part of the FiberMark acquisition, we acquired certain product lines composed of non-strategic papers sold to converters for end uses such as covering materials for datebooks, diaries, yearbooks and traditional photo albums. Due to the non-strategic nature of these products, management decided that they would not be managed as part of either the existing Fine Paper and Packaging or Technical Material businesses. As a result, effective August 1, 2015, these product lines represent an operating segment which does not meet the quantitative threshold for a reportable segment and are accordingly reported as an Other operating segment. Our reportable operating segments now consist of Technical Products, Fine Paper and Packaging and Other.

Results of Operations and Related Information

In this section, we discuss and analyze our net sales, earnings before interest and taxes (which we refer to as “operating income”) and other information relevant to an understanding of our results of operations for the three ~~and nine~~ months ended September 30, ~~2014~~2015 and ~~2013.~~2014.

Analysis of Net ~~Sales—~~Sales — Three and nine months ended September 30, ~~2014~~2015 and ~~2013~~2014

The following table presents net sales by segment, expressed as a percentage of total net sales:

	Three Months Ended September 30,								Nine Months Ended September 30,								Three Months Ended Ended September 30,								Nine Months Ended September 30,
	2014				2013				2014				2013				2015				2014				2015				2014
Net sales
Technical Products	$	121.5	53	%	$	104.4	49	%	$	355.9	52	%	$	317.2	50	%	$	108.9	47	%	$	106.2	49	%	$	321.2	49	%	$	305.9	48	%
Fine Paper	101.4		44	%	102.6		48	%	309.5		45	%	302.0		47	%
Fine Paper and Packaging																	116.9		50	%	109.1		51	%	330.3		50	%	330.2		52	%
Other	7.7		3	%	7.1		3	%	20.7		3	%	20.4		3	%	5.8		3	%	—		0	%	5.8		1	%	—		0	%
Consolidated	$	230.6	100	%	$	214.1	100	%	$	686.1	100	%	$	639.6	100	%	$	231.6	100	%	$	215.3	100	%	$	657.3	100	%	$	636.1	100	%

~~F-19~~F-23

Table of Contents

Commentary:

The following table presents our net sales by segment for the three months ended September 30, ~~2014~~2015 and ~~2013:~~2014:

					Change in Net Sales Compared to Prior Period														Change in Net Sales Compared to Prior Period
	Three Months							Change Due To							Three Months						Change Due To
	Ended September 30,										Average				Ended September 30,								Average
	2014		2013		Total Change			Volume			Net Price		Currency		2015		2014		Total Change		Volume		Net Price			Currency
Technical Products	$	121.5	$	104.4	$	17.1		$	13.7		$	3.2	$	0.2	$	108.9	$	106.2	$	2.7	$	12.4	$	(0.2	)	$	(9.5	)
Fine Paper	101.4		102.6		(1.2		)	(2.3		)	1.1		—
Fine Paper and Packaging															116.9		109.1		7.8		5.8		2.0			—
Other	7.7		7.1		0.6			0.4			0.2		—		5.8		—		5.8		5.8		—			—
Consolidated	$	230.6	$	214.1	$	16.5		$	11.8		$	4.5	$	0.2	$	231.6	$	215.3	$	16.3	$	24.0	$	1.8		$	(9.5	)

Consolidated net sales for the three months ended September 30, ~~2014~~2015 were ~~$16.5~~$16.3 million ~~or eight percent~~(8%) higher than the prior year period ~~primarily due to~~as incremental technical products organic volume ~~related to~~growth, the ~~acquired technical materials business~~FiberMark acquisition and higher average selling prices more than offset unfavorable currency exchange effects and lower volumes for ~~both businesses.~~the heritage fine paper and packaging business. Excluding currency exchange effects and incremental FiberMark sales, consolidated sales increased $1.7 million (1%).

· Net sales in our technical products business increased ~~$17.1~~$2.7 million ~~or 16 percent~~(3%) from the prior ~~year~~period due to incremental ~~sales~~organic volume, ~~related~~the FiberMark acquisition and higher selling prices, partially offset by unfavorable currency exchange effects and a lower value product mix. Unfavorable currency exchange effects resulted from the Euro weakening by more than 15 percent relative to the ~~acquired technical materials business~~U.S. dollar in the third quarter of 2015 as compared to the prior year period. Excluding currency exchange effects and ~~higher average net prices. Excluding~~ incremental sales from ~~the acquisition,~~FiberMark, technical product sales increased ~~$5.5~~$2.1 million ~~or five percent. Average net price was favorable to the prior year due to a more favorable product mix and marginally higher average selling prices.~~(2%). Excluding incremental sales ~~volume from the acquisition,~~of FiberMark, sales volumes increased approximately two percent from the prior year period ~~due to~~as growth in filtration and ~~specialty products shipments.~~labels more than offset lower shipments of backing products.

· Net sales in our fine paper and packaging business ~~decreased $1.2~~increased $7.8 million ~~or one percent~~(7%) from the prior year period primarily due to incremental FiberMark sales. Excluding acquired revenues, fine paper and packaging sales decreased $0.4 million or less than one percent as higher average net ~~prices were more than~~price was offset by a two percent decrease in sales volumes. Sales volumes were unfavorable to the prior year as increases in premium packaging and retail products were more than offset by lower sales of other grades, including lower margin special make business. Average net price improved from the prior year due to ~~a more favorable product mix and~~both an increase in average selling ~~prices. Sales volume was unfavorable to the prior year as growth in shipments of core premium products was~~prices and a more ~~than offset by lower sales of unbranded writing, text and cover papers.~~favorable product mix.

The following table presents our net sales by segment for the nine months ended September 30, ~~2014~~2015 and ~~2013:~~2014:

					Change in Net Sales Compared to Prior Period													Change in Net Sales Compared to Prior Period
	Nine Months						Change Due To							Nine Months						Change Due To
	Ended September 30,									Average				Ended September 30,									Average
	2014		2013		Total Change		Volume			Net Price		Currency		2015		2014		Total Change		Volume			Net Price			Currency
Technical Products	$	355.9	$	317.2	$	38.7	$	30.0		$	1.9	$	6.8	$	321.2	$	305.9	$	15.3	$	47.8		$	(0.1	)	$	(32.4	)
Fine Paper	309.5		302.0		7.5		2.5			5.0		—
Fine Paper and Packaging														330.3		330.2		0.1		(7.5		)	7.6			—
Other	20.7		20.4		0.3		(0.3		)	0.6		—		5.8		—		5.8		5.8			—			—
Consolidated	$	686.1	$	639.6	$	46.5	$	32.2		$	7.5	$	6.8	$	657.3	$	636.1	$	21.2	$	46.1		$	7.5		$	(32.4	)

Consolidated net sales for the nine months ended September 30, ~~2014~~2015 were ~~$46.5~~$21.2 million ~~or seven percent~~ higher than the prior year period due to ~~increased volume for both businesses,~~ incremental technical products organic volume ~~related to~~growth, the ~~acquired technical materials business,~~FiberMark acquisition, and higher average selling prices, partially offset by unfavorable currency exchange effects. Excluding incremental FiberMark sales and ~~favorable~~ currency ~~effects.~~exchange effects, consolidated net sales increased $29.5 million (5%) from the prior year period.

· Net sales in our technical products business increased ~~$38.7~~$15.3 million ~~or 12 percent~~(5%) from the prior year due ~~to increased volume and favorable currency effects. Excluding~~as incremental sales volume related to organic growth, incremental FiberMark sales and higher selling prices were only partially offset by unfavorable currency exchange effects. Unfavorable currency exchange effects resulted from the ~~acquisition,~~Euro weakening by approximately 18 percent relative to the U.S. dollar in the first nine months of 2015 as compared to the prior year period. Excluding currency exchange effects and incremental FiberMark sales, technical product sales increased ~~$27.1~~$34.2 million ~~or nine percent. Excluding incremental sales volume from the acquisition, sales~~(11%) and volumes increased approximately ~~six~~12 percent from the prior year period due to growth in shipments ~~for all product categories led by transportation~~of filtration and specialty ~~products and backings. Favorable currency exchange effects resulted from the Euro strengthening by approximately three percent relative to the U.S. dollar during the first nine months~~performance products.

F-24

Table of ~~2014. Average net price was favorable to the prior year as a result of higher average selling prices and a more favorable product mix.~~Contents

· Net sales in our fine paper and packaging business ~~increased $7.5 million or two percent~~were essentially unchanged from the prior year period ~~due to~~as higher average net ~~prices~~price and ~~increased volume.~~incremental FiberMark sales were offset by a five percent decrease in sales volumes. Average net price improved from the prior year due to an increase in average selling prices and a more favorable product ~~mix and a one percent increase in average selling prices.~~mix. Sales ~~volumes increased approximately two percent from~~volume was unfavorable to the prior year ~~period primarily due to~~as growth in ~~luxury~~shipments of premium packaging and ~~core premium product shipments, and incremental volume~~retail products was more than offset by lower sales of ~~$1.5 million in the first quarter of 2014 from the acquisition of the Southworth brands (acquired on January 31, 2013).~~

~~F-20~~

~~Table of Contents~~other papers, including lower margin special make business.

The following table sets forth line items from our condensed 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:

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013		2015		2014		2015		2014

Net sales	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Cost of products sold	81.4		82.7		80.6		80.7		79.1		80.8		77.8		79.9
Gross profit	18.6		17.3		19.4		19.3		20.9		19.2		22.2		20.1
Selling, general and administrative expenses	8.6		9.3		8.8		9.4		9.2		8.7		9.4		8.9
Integration/restructuring costs	0.4		0.2		0.3		0.1
Loss on early extinguishment of debt	—		—		—		0.1
Restructuring costs									1.2		0.4		0.4		0.2
Other expense - net	—		0.2		—		0.1		—		—		0.1		0.1
Operating income	9.6		7.6		10.3		9.6		10.5		10.1		12.2		10.9
Interest expense-net	1.2		1.2		1.2		1.3		1.2		1.3		1.3		1.3

Income from continuing operations before income taxes	8.4		6.4		9.1		8.3		9.3		8.8		10.9		9.6
Provision for income taxes	2.5		1.1		3.0		2.6		3.5		2.6		3.9		3.2
Income from continuing operations	5.9	%	5.3	%	6.1	%	5.7	%	5.8	%	6.2	%	7.0	%	6.4	%

Analysis of Operating Income—Three and nine months ended September 30, ~~2014~~2015 and ~~2013~~2014

Commentary:

The following table presents our operating income by segment for the three months ended September 30, ~~2014~~2015 and ~~2013:~~2014:

							Change in Operating Income Compared to Prior Period																						Change in Operating Income Compared to Prior Period
	Three Months									Change Due To													Three Months									Change Due To
	Ended September 30,						Total						Net		Material								Ended September 30,						Total						Net		Material
	2014			2013			Change			Volume			Price (a)		Costs (b)			Currency		Other (c)			2015			2014			Change			Volume			Price (a)		Costs (b)		Currency			Other (c)
Technical Products	$	10.0		$	6.7		$	3.3		$	1.4		$	2.9	$	(0.2	)	$	0.1	$	(0.9	)	$	11.0		$	9.6		$	1.4		$	2.3		$	1.7	$	0.9	$	(1.1	)	$	(2.4	)
Fine Paper	15.2			13.3			1.9			(0.6		)	1.9		(0.5		)	—		1.1
Fine Paper and Packaging																							17.2			15.3			1.9			(0.7		)	1.0		1.5		—			0.1
Other	0.1			0.3			(0.2		)	—			0.1		—			—		(0.3		)	(0.2		)	—			(0.2		)	0.1			—		—		—			(0.3		)
Unallocated corporate costs	(3.2		)	(3.9		)	0.7			—			—		—			—		0.7			(3.6		)	(3.2		)	(0.4		)	—			—		—		—			(0.4		)
Consolidated	$	22.1		$	16.4		$	5.7		$	0.8		$	4.9	$	(0.7	)	$	0.1	$	0.6		$	24.4		$	21.7		$	2.7		$	1.7		$	2.7	$	2.4	$	(1.1	)	$	(3.0	)

(a) Includes changes in selling price and product mix.

(b) Includes price changes for raw materials and energy.

(c) Includes other manufacturing costs, over (under) absorption of fixed costs, distribution and selling, general and administrative (“SG&A”) ~~expenses.~~expenses, and acquisition integration/restructuring costs.

Consolidated operating income of ~~$22.1~~$24.4 million for the three months ended September 30, ~~2014~~2015 increased ~~$5.7~~$2.7 million ~~or 35 percent~~(12%) from the prior year period. The favorable comparison was primarily due to higher net price for both businesses, lower manufacturing input costs and incremental technical products volume ~~related to the acquired technical materials business.~~

·~~Operating income for our technical products business increased $3.3 million or 49 percent from the prior year period primarily~~ due to higher net price and incremental volume related to the acquisition. Results for the three months ended September 30, 2014 and 2013 include $1.1 million and $0.2 million for integration/restructuring costs, respectively.

·Operating income for our fine paper business increased $1.9 million or 14 percent from the prior year period primarily due to higher net price and manufacturing efficiencies. These favorable variances wereorganic growth; partially offset by higher manufacturing ~~input~~costs in technical products, lower fine paper and packaging volume and unfavorable currency effects. Excluding results of the FiberMark acquisition, acquisition integration/restructuring costs and ~~lower shipment volume. Results for the three months ended September 30, 2013 include $0.2~~currency effects, consolidated operating income increased $5.8 million ~~for acquisition related integration costs.~~(26%).

~~F-21~~F-25

Table of Contents

· Operating income for our technical products business increased $1.4 million (15%) from the prior year period primarily due to higher selling prices, incremental volume from organic growth and lower manufacturing input costs. These favorable variances were partially offset by unfavorable currency exchange effects and higher manufacturing costs related to the timing of scheduled annual maintenance downtime at our German filtration operation that occurred in the third quarter of 2015 and the fourth quarter of 2014. Results for the three months ended September 30, 2015 and 2014 include $1.1 million for acquisition integration/restructuring costs. Excluding currency exchange effects and acquisition integration/restructuring costs, operating income for the technical products business increased $2.5 million (23%).

· Operating income for our fine paper and packaging business increased $1.9 million (12%) from the prior year period primarily due to lower input costs, higher net price and lower manufacturing costs. Excluding acquisition related integration costs, operating income increased $2.8 million (18%).

·Unallocated corporate expenses for the three months ended September 30, ~~2014~~2015 of ~~$3.2~~$3.6 million were ~~$0.7~~$0.4 million ~~favorable~~unfavorable to the prior year period. The ~~favorable~~unfavorable comparison to the prior year period is primarily due to ~~the timing of certain corporate spending~~restructuring and acquisition costs in the ~~prior~~current year period. ~~Costs~~Results for the three months ended September 30, 2014 include ~~a credit of~~ $0.2 million ~~for second quarter costs~~of income associated with acquisition related ~~to the acquisition of the technical materials business which were allocated to the Technical Products segment.~~activities.

The following table presents our operating income by segment for the nine months ended September 30, ~~2014~~2015 and ~~2013:~~2014:

							Change in Operating Income Compared to Prior Period																					Change in Operating Income Compared to Prior Period
	Nine Months									Change Due To												Nine Months									Change Due To
	Ended September 30,						Total					Net		Material								Ended September 30,						Total						Net		Material
	2014			2013			Change			Volume		Price (a)		Costs (b)			Currency		Other (c)			2015			2014			Change			Volume			Price (a)		Costs (b)		Currency			Other (c)
Technical Products	$	36.9		$	28.3		$	8.6		$	4.7	$	3.3	$	0.5		$	0.6	$	(0.5	)	$	41.7		$	35.5		$	6.2		$	7.3		$	3.5	$	3.3	$	(4.2	)	$	(3.7	)
Fine Paper	45.8			45.1			0.7			0.6		4.9		(6.6		)	—		1.8
Fine Paper and Packaging																						52.2			45.6			6.6			(5.0		)	6.3		6.8		(0.1		)	(1.4		)
Other	(0.2		)	—			(0.2		)	—		0.6		—			—		(0.8		)	(0.2		)	—			(0.2		)	(0.2		)	—		—		—			—
Unallocated corporate costs	(11.5		)	(12.2		)	0.7			—		—		—			—		0.7			(13.2		)	(11.5		)	(1.7		)	—			—		—		—			(1.7		)
Consolidated	$	71.0		$	61.2		$	9.8		$	5.3	$	8.8	$	(6.1	)	$	0.6	$	1.2		$	80.5		$	69.6		$	10.9		$	2.1		$	9.8	$	10.1	$	(4.3	)	$	(6.8	)

(a) Includes changes in selling price and 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.~~expenses, and acquisition integration/restructuring costs.

Consolidated operating income of ~~$71.0~~$80.5 million for the nine months ended September 30, ~~2014~~2015 increased ~~$9.8~~$10.9 million ~~or 16 percent~~(16%) from the prior year period. The favorable comparison iswas primarily due to lower manufacturing input costs and higher ~~average~~ selling prices for both businesses, ~~increased technical products shipment volume and lower manufacturing costs for fine paper. These favorable variances were~~ partially offset by higher manufacturing, ~~input~~acquisition and restructuring costs ~~for our fine paper business, primarily for natural gas~~ and ~~pulp.~~unfavorable currency effects.

· Operating income for our technical products business increased ~~$8.6~~$6.2 million ~~or 30 percent~~(17%) from the prior year period primarily due to ~~growth in shipments for all product categories,~~ higher ~~average~~ selling, ~~prices and~~ lower manufacturing input costs and incremental volume related to organic growth. These favorable variances were partially offset by unfavorable currency exchange effects and higher manufacturing costs. Results for the nine months ended September 30, 2015 and 2014 ~~and 2013~~ include ~~$1.9~~$1.1 million and ~~$0.2~~$1.3 million, respectively, for acquisition integration/restructuring costs. Excluding incremental volume from the FiberMark acquisition, unfavorable currency exchange effects and acquisition integration/restructuring costs, ~~respectively.~~operating income for the technical products business increased $10.2 million or 28 percent.

· Operating income for our fine paper and packaging business increased ~~$0.7~~$6.6 million ~~or 2 percent~~(14%) from the prior year period primarily due to lower manufacturing input costs principally as a result of lower natural gas prices and higher ~~average~~ net ~~selling prices, manufacturing operating efficiencies and increased shipment volume.~~price. Extreme winter weather conditions during the first quarter of 2014 resulted in a temporary increase in natural gas prices. These favorable variances were partially offset by ~~$6.6 million in~~lower shipment volume and higher manufacturing input costs, including more than $3.0 million for natural gas in the first quarter of 2014. Results for the nine months ended September 30, 2013 include $0.4 million for acquisition related integrationand SG&A costs.

· Unallocated corporate expenses for the nine months ended September 30, ~~2014~~2015 of ~~$11.5~~$13.2 million were ~~$0.7~~$1.7 million ~~favorable~~unfavorable to the prior year period. The unfavorable comparison to the prior year period is primarily due to the timing of certain corporate costs in the current year period. Results for the nine months ended September 30, ~~2013,~~2015 and 2014, include ~~a supplemental executive pension plan settlement charge~~acquisition integration/restructuring costs of ~~$0.2~~$0.6 million and ~~costs related to the early extinguishment~~$0.1 million, respectively.

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Table of ~~debt of $0.5 million.~~Contents

Additional Statement of Operations Commentary:

· SG&A expense of ~~$19.8~~$21.2 million for the three months ended September 30, ~~2014~~2015 was ~~unchanged from~~$2.5 million higher than SG&A expense of ~~$19.8~~$18.7 million in the prior year ~~period.~~period primarily due to incremental expenses related to the FiberMark acquisition. For the three months ended September 30, ~~2014 and 2013,~~2015, SG&A expense as a percent of sales ~~improved~~increased to ~~8.6~~9.2 percent from ~~9.3~~8.7 percent in the prior year period. ~~SG&A expense of $60.1 million for the nine months ended September 30, 2014 was essentially unchanged from the prior year period.~~

· For the three months ended September 30, ~~2014,~~2015, we incurred net interest expense of ~~$2.7~~$2.9 million which was ~~$0.1~~$0.2 million higher than the prior year ~~period.~~period primarily due to incremental borrowings under our Global Revolving Credit Facilities to partially fund the FiberMark acquisition.

· In general, our effective tax rate differs from the U.S. statutory tax rate of 35 percent primarily due to the proportion of pre-tax income in jurisdictions with marginal tax rates that differ from the U.S. statutory tax rate. For the three months ended September 30, ~~2014~~2015 and ~~2013,~~2014, we recorded an income tax provision ~~related to continuing operations~~ of ~~$5.8~~$8.0 million and ~~$2.4~~$5.6 million, respectively. The effective income tax rate for the three months ended September 30, 2015 and 2014 ~~and 2013~~ was 3037 percent and 1729 percent, respectively. The increase in our ~~consolidated~~ effective tax rate was primarily due to ~~a higher level~~the impact of federal and state research and development credits in(“R&D Credits”). In 2015, the FiberMark acquisition reduced the amount of state R&D Credits which are expected to be utilized prior ~~year period.~~

~~F-22~~

~~Table~~to expiration. In 2014, the effective income tax rate benefitted from recognition of ~~Contents~~2013 tax credits.

Liquidity and Capital Resources

Nine Months Ended September 30,

2014

2013

Net cash flow provided by (used in):

Operating activities

$
72.6

$
64.5

Investing activities:

Capital expenditures

(15.2
)
(20.4
)
Purchase of Neenah Technical Materials

(72.4
)
—

Purchase of brands

—

(5.2
)
Purchase of equity investment

(2.9
)
—

Other investing activities

(0.5
)
0.8

Total

(91.0
)
(24.8
)
Financing activities

(30.7
)
0.4

Net increase in cash and cash equivalents (a)

(49.4
)
40.4

	Nine Months Ended September 30,
	2015			2014
Net cash flow provided by (used in):
Operating activities	$	79.5		$	72.6
Investing activities:
Capital expenditures	$	(25.7	)	$	(15.2	)
Acquisitions	(118.2		)	(72.4		)
Purchase of equity investment	—			(2.9		)
Other investing activities	0.4			(0.5		)
Total	$	(143.5	)	$	(91.0	)
Financing activities	$	(2.4	)	$	(30.7	)
Net decrease in cash and cash equivalents (a)	$	(67.1	)	$	(49.4	)

(a) Includes the effect, if any, of exchange rate changes on cash and cash equivalents.

Operating Cash Flow Commentary

· Cash provided by operating activities of ~~$72.6~~$79.5 million for the nine months ended September 30, ~~2014~~2015 was ~~$8.1~~$6.9 million favorable to cash provided by operating activities of ~~$64.5~~$72.6 million in the prior year period. The favorable comparison ~~was~~ primarily due to higher operating income and a $2.2 million decrease in our investment in working capital for the nine months ended September 30, 2014 compared to an increase in our investment in working capital of $5.3 million in the prior year. These favorable variances were partially offset by increased contributions and benefit payments forresulted from lower post-retirement benefit ~~obligations.~~plan contributions.

Investing Commentary:

· For the nine months ended September 30, ~~2014~~2015 and ~~2013,~~2014, cash used by investing activities was $143.5 million and $91.0 million, ~~and $24.8 million,~~ respectively. For the nine months ended September 30, 2014, cash used by investing activities includes $72.4 million for the purchase of the Crane Technical Materials business and $2.9 million for the acquisition of a non-controlling equity investment in a joint venture in India. Cash used by investing activities for the nine months ended September 30, ~~2013 includes a payment~~2015 and 2014 include acquisition related spending of ~~$5.2~~$118.2 million ~~to acquire the Southworth brands.~~

and $72.4 million, respectively. Capital expenditures for the nine months ended September 30, ~~2014~~2015 were ~~$15.2~~$25.7 million compared to spending of ~~$20.4~~$15.2 million in the prior year period. In general, we expect aggregate annual capital expenditures of approximately 3 to 5 percent of net sales. For ~~2014,~~2015, we expect annual capital expenditures at the ~~lower~~upper end of that range or approximately ~~$30 million.~~$50 million due to incremental investments in filtration assets in the U.S. We believe that the level of our capital spending can be more than adequately funded from cash provided from operating activities and allows us to maintain the efficiency and cost effectiveness of our assets and also invest in expanded ~~capabilities for our~~ manufacturing ~~assets~~capabilities to successfully pursue strategic initiatives and deliver attractive returns.

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Table of Contents

Financing Commentary:

Our liquidity requirements are provided by cash generated from operations and short and long-term borrowings.

· For the nine months ended September 30, 2015 and 2014, cash used in financing activities was $2.4 million and $30.7 million, ~~compared to cash provided by financing activities of $0.4 million for the nine months ended September 30, 2013.~~respectively.

· Availability under our revolving credit facility varies over time depending on the value of our inventory, receivables and various capital assets. As of September 30, ~~2014,~~2015, we had no$62.3 million outstanding ~~borrowings~~ under our ~~Revolver~~Global Revolving Credit Facilities and ~~$103.9~~$126.6 million of available ~~credit. Under our German Lines of Credit we had no outstanding borrowings and €20.0 million ($25.4 million, based~~credit (based on ~~exchanges~~exchange rates at September 30, ~~2014) of available credit.~~2015).

· ~~In June 2014, we repaid the remaining €3.7 million ($5.2 million) in outstanding project financing borrowings.~~

·We have required debt principal payments through ~~September~~June 30, ~~2015~~2016 of ~~$1.4~~$1.3 million for principal payments on the Second German Loan Agreement.

~~F-23~~

~~Table of Contents~~

· For the nine months ended September 30, ~~2014,~~2015, cash and cash equivalents decreased ~~$49.4~~$67.1 million to ~~$24.0~~$5.5 million at September 30, ~~2014~~2015 from ~~$73.4~~$72.6 million at December 31, ~~2013.~~2014. Total debt ~~decreased $25.5~~increased $11.9 million to ~~$186.4~~$246.2 million at September 30, ~~2014~~2015 from ~~$211.9~~$234.3 million at December 31, ~~2013.~~2014. Net debt (total debt minus cash and cash equivalents) increased by ~~$23.9~~$79.0 million primarily due to spending related to the FiberMark acquisition ~~of the Crane Technical Materials business for $72.4 million~~ partially offset by cash flow from operations.

· As of September 30, ~~2014,~~2015, our cash balance of ~~$24.0~~$5.5 million consists of ~~$21.5~~$1.9 million in the U.S. and ~~$2.5~~$3.6 million held at entities outside of the U.S. As of September 30, ~~2014~~2015 there were no restrictions regarding the repatriation of our non-U.S. ~~cash; however, if~~cash and, we ~~repatriated~~believe, the repatriation of these cash balances to the U.S.~~, we~~ would ~~incur additional~~not materially increase our income tax ~~expense.~~provision.

Transactions With Shareholders

· In ~~May~~November 2014, our Board of Directors approved ~~a thirteen~~an eleven percent increase in the annual dividend rate on our common stock to ~~$1.08~~$1.20 per share. Effective ~~August 1, 2014,~~March 3, 2015, the dividend is being paid in four equal quarterly installments of ~~$0.27~~$0.30 per share. For the nine months ended September 30, ~~2014~~2015 and ~~2013,~~2014, we paid cash dividends of $0.90 per common share or $15.2 million and $0.75 per common share or $12.6 million, ~~and $0.50 per common share or $8.2 million,~~ respectively.

· In May ~~2014,~~2015, our Board of Directors authorized the ~~2014~~2015 Stock Purchase Plan. The ~~2014~~2015 Stock Purchase Plan allows us to repurchase up to $25 million of our outstanding Common Stock through May ~~2015.~~2016. Purchases under the ~~2014~~2015 Stock Purchase ~~Program~~Plan will be made from time to time in the open market or in privately negotiated transactions in accordance with the requirements of applicable law. The timing and amount of any purchases will depend on share price, market conditions and other factors. The ~~2014~~2015 Stock Purchase ~~Program~~Plan does not require us to purchase any specific number of shares and may be suspended or discontinued at any time. The 2015 Stock Purchase Plan replaced the 2014 Stock Purchase Plan that expired in May 2015. For the nine months ended September 30, ~~2014,~~2015, we acquired approximately ~~8,000~~42,100 shares of ~~common stock~~Common Stock at a cost of ~~$0.4~~$2.4 million and 60,900 shares of Common Stock at a cost of $3.4 million pursuant to the 2015 Stock Purchase Plan and the 2014 Stock Purchase ~~Program.~~Plan, respectively. As of September 30, 2015, we have made aggregate purchases of 125,500 shares of Common Stock at a cost of $7.0 million under the 2015 Stock Purchase Plan and 2014 Stock Purchase Plan.

Other Items:

· In 2015, all remaining U.S. federal NOLs have been utilized and we expect to pay approximately $10 million of U.S. federal income taxes. As of September 30, ~~2014,~~2015, we had ~~$19.4 million and $41.9~~$49.3 million of ~~U.S. federal and~~state NOLs. Our state NOLs ~~respectively.~~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 ~~2028~~2020 and 2030. In addition, we had ~~$2.4~~$27.1 million of U.S. federal and state ~~research and developments credits~~R&D Credits which, if not used, will expire ~~in 2017. We do not expect to pay~~between 2025 and 2034 for the U.S. federal R&D Credits and between 2017 and 2030 for the state R&D Credits. As of September 30, 2015, we recorded a valuation allowance of $3.3 million against a portion of the R&D Credits.

· In conjunction with the FiberMark acquisition, we acquired U.S. state NOLs of $31.3 million, which may be used to offset approximately $2.0 million in state income ~~taxes~~taxes. If not used, substantially all of these NOLs will expire in ~~2014; however,~~various amounts between 2015 and 2028. As of September 30, 2015, we ~~anticipate that~~reflected a valuation allowance of $1.6 million against a portion of the NOLs. In addition, we have state tax credits of approximately $0.8 million, of which approximately $0.2 million, if not used, will ~~substantially reduce~~expire in 2027. As of September 30, 2015, we recorded a valuation allowance of $0.2 million against a portion of the state tax credits.

· On September 7, 2015, we reached an agreement for the sale of our ~~U.S. federal NOLs.~~Lahnstein Mill to the Kajo Neukirchen Group (the “Buyer”) for cash proceeds of approximately $9 million. We completed the sale on October 31, 2015. The Buyer acquired all the assets and liabilities of the Lahnstein Mill, including pension and related liabilities of approximately $20 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 our portfolio on targeted growth markets such as filtration, premium fine papers and packaging and other performance materials.

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Table of Contents

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 ~~2014~~2015 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.

Critical Accounting Policies and Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires 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 period. We believe that the estimates, assumptions and judgments described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies” of our most recent Annual Report on Form 10-K have the greatest potential impact on our financial statements, so we consider these to be our critical accounting policies. 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 timing of recognizing sales revenue, the recoverability of deferred income tax assets, pension benefits and future cash flows associated with impairment testing of long-lived assets. Actual results could differ from these estimates and changes in these estimates are recorded when known. We believe that the consistent application of these policies enables us to provide readers of our financial statements with useful and reliable information about our operating results and financial condition. There have been no significant changes in these policies, or the estimates used in the application of the policies, since December 31, ~~2013.~~

~~F-24~~

~~Table of Contents~~2014.

Cautionary Note Regarding Forward-Looking Statements

Certain statements in this Quarterly Report on Form 10-Q 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 quarterly report that are not historical facts may be forward-looking statements within the meaning of the PSLRA and we caution investors that any forward-looking statements we make are not guarantees or indicative of future performance. These forward-looking statements rely on a number of assumptions concerning future events and are subject to risks, uncertainties and other factors, many of which are outside of our control, that could cause actual results to materially differ from such statements. Such risks, uncertainties and other factors include, but are not necessarily limited to, those set forth under the captions “Cautionary Note Regarding Forward-Looking Statements” and/or “Risk Factors” of our latest Form 10-K filed with the SEC as periodically updated by subsequently filed Form 10-Qs (these securities filings can be located on our website at www.neenah.com). Unless specifically required by law, we assume no obligation to update or revise these forward-looking statements to reflect new events or circumstances. 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.

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 conditions;

· the competitive environment;

· increases in commodity prices, (particularly for pulp, energy and latex) due to constrained global supplies or unexpected supply disruptions;

· ~~the availability of raw materials and energy;~~

·~~the loss of current customers or the inability to obtain new customers;~~

·~~our ability to control costs and implement measures designed to enhance operating efficiencies;~~

·~~strikes, labor stoppages and changes in our collective bargaining agreements and relations with our employees and unions;~~

·fluctuations in (i) exchange rates (in particular changes in the U.S. dollar/Euro currency exchange rates) and (ii) interest rates;

· the availability of raw materials and energy;

· the loss of current customers or the inability to obtain new customers;

· our ability to control costs and implement measures designed to enhance operating efficiencies;

· strikes, labor stoppages and changes in our collective bargaining agreements and relations with our employees and unions;

F-29

Table of Contents

·capital and credit market volatility and fluctuations in global equity and fixed-income markets;

· unanticipated expenditures related to the cost of compliance with environmental and other governmental regulations;

· increases in the funding requirements for our pension and postretirement liabilities;

· changes in asset valuations including write-downs of assets including property, plant and equipment; inventory, accounts receivable, deferred tax assets or other assets for impairment or other reasons;

· our existing and future indebtedness;

· our tax planning strategies may not be effective; and

· other risks that are detailed from time to time in reports we file with the SEC.

Any subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth or referred to above, as well as the risk factors contained in our most recent Annual Report on Form 10-K. Except as required by law, we disclaim any obligation to update such statements or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to the disclosure on this matter made in our Annual Report on Form 10-K for the year ended December 31, ~~2013.~~2014.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act, as amended, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management in a timely manner.

~~F-25~~

~~Table of Contents~~

As of September 30, ~~2014,~~2015, an evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. 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 Crane Technical Materials business acquired in July 2014. The acquired business constituted approximately 11 percent of total assets, five percent of revenues, and one percent of net income of the consolidated financial statement amounts as of and for the three months ended September 30, 2014. Further discussion of this acquisition can be found in Note 3 “Acquisitions” to our condensed consolidated financial statements. Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of September 30, ~~2014.~~2015.

Internal Controls over Financial Reporting

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated whether any change in our internal control over financial reporting occurred during the three months ended September 30, ~~2014.~~2015. Based on that evaluation, we have concluded that there has been no change in our internal control over financial reporting during the three months ended September 30, ~~2014~~2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

See Note 10, “Contingencies and Legal Matters” of Notes to Condensed Consolidated Financial Statements of Item 1 — Financial Statements.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our most recent Annual Report on Form 10-K, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of Equity Securities:

The following table contains information about our purchases of our equity securities for the three months ended September 30, ~~2014.~~2015.

Period

Total Number of
Shares Purchased

Average Price Paid
Per Share

Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs

Approximate Dollar
Value of Shares that May
Yet Be Purchased Under
Publicly Announced
Plans or Programs (a)

July 1, 2014 — July 31, 2014

2,000

$
49.80

2,000

24,900,000

August 1, 2014 — August 31, 2014

5,728

$
49.89

5,728

24,600,000

September 1, 2014 — September 30, 2014

—

$
—

—

24,600,000

Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under Publicly Announced Plans or Programs (a)
July 1, 2015 — July 31, 2015	—	$	—	—	$	24,700,000
August 1, 2015 — August 31, 2015	10,600	$	55.53	10,600	$	24,100,000
September 1, 2015 — September 30, 2015	—	$	—	—	$	24,100,000

(a) In May ~~2014,~~2015, our Board of Directors authorized a program that would allow us to repurchase up to $25 million of our outstanding Common Stock over the next 12 months (the “2015 Stock Purchase Plan”). The 2015 Stock Purchase Plan replaced an identical $25 million repurchase program that expired in May 2015 (the “2014 Stock Purchase ~~Program”~~Plan”). ~~The $10~~As of September 30, 2015, the Company has purchased approximately 125,500 shares of Common Stock at an aggregate cost of $7.0 million ~~2013~~under the 2015 Stock Purchase Plan ~~expired in May 2014. For the three~~ and ~~nine months ended September 30,~~ 2014 ~~there were no purchases of Common Stock made under the 2013~~ Stock Purchase Plan.

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Item 6. Exhibits

Exhibit Number		Exhibit

2.1		Interest Purchase Agreement by and among ASP FiberMark Holdings, LLC, ASP FiberMark, LLC, Neenah FMK Holdings, LLC and Neenah Paper, Inc. dated as of July 16, 2015 (filed herewith).

31.1		Certification of the CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of the CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32		Certification of CEO and CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		XBRL Instance Document ~~(furnished~~(filed herewith).

101.SCH		XBRL Taxonomy Extension Schema Document ~~(furnished~~(filed herewith).

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document ~~(furnished~~(filed herewith).

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document ~~(furnished~~(filed herewith).

101.LAB		XBRL Taxonomy Extension Label Linkbase Document ~~(furnished~~(filed herewith).

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document ~~(furnished~~(filed herewith).

~~F-27~~F-31

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		NEENAH PAPER, INC

	By:	/s/ John P. O’Donnell
		John P. O’Donnell
		President and Chief Executive Officer
		(Principal Executive Officer)

		/s/ Bonnie C. Lind
		Bonnie C. Lind
		Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)

		/s/ Larry N. Brownlee
		Larry N. Brownlee
		Vice President — Controller (Principal Accounting Officer)

November ~~6, 2014~~9, 2015

	Unrealized foreign currency translation gain (loss)			Net gain (loss) from pension and other postretirement liabilities			Unrealized gain on “available-for-sale” securities		Accumulated other comprehensive income (loss)
AOCI — December 31, 2013	$	17.9		$	(45.2	)	$	—	$	(27.3	)
Other comprehensive income before reclassifications	(15.7		)	—			0.1		(15.6		)
Amounts reclassified from AOCI	—			3.4			—		3.4
Income from other comprehensive income items	(15.7		)	3.4			0.1		(12.2		)
Provision for income taxes	—			1.3			—		1.3
Other comprehensive income	(15.7		)	2.1			0.1		(13.5		)
AOCI — September 30, 2014	$	2.2		$	(43.1	)	$	0.1	$	(40.8	)

Nonqualified stock options and SARs vested	108,100
Aggregate grant date fair value of stock options and SARs vested	$	0.9

	September 30, 2014		December 31, 2013
Stock options and SARs vested or expected to vest	668,800		946,000
Aggregate intrinsic value	$	29.9	$	18.4
Per share weighted average grant date fair value	$	8.75	$	8.40
Exercisable stock options and SARs	358,200		622,000
Aggregate intrinsic value	$	16.3	$	12.9
Unvested stock options and SARs	315,700		328,000
Per share weighted average grant date fair value	$	10.38	$	9.11