Table of Contents

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 SeptemberJune 30, 20172021

OR


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


For the transition period from _______ to _______

Commission File Number: 001-32240

NEENAH PAPER, INC.np-20210630_g1.jpg
(Exact name of registrant as specified in its charter)
Delaware
20-1308307
Delaware
20-1308307
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
f
3460 Preston Ridge Road
Alpharetta, Georgia
30005
Alpharetta,Georgia30005
(Address of principal executive offices)(Zip Code)offices, including zip code)
(678) 566-6500
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common StockNPNew York Stock Exchange
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 ¨
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 ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company and emerging growth company in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filerx
Accelerated filer¨
Non-accelerated filer¨
Smaller reporting company¨
(Do not check if a smaller reporting company)
Emerging growth company¨
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ¨ No x

As of November 2, 2017,August 3, 2021, there were approximately 16,818,39016,862,597 shares of the Company’s common stockCommon Stock outstanding.



Table of Contents
TABLE OF CONTENTS






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,
'[ 2017 2016 2017 2016
Net sales $245.1
 $232.9
 $735.9
 $721.0
Cost of products sold 197.1
 183.7
 582.3
 553.0
Gross profit 48.0
 49.2
 153.6
 168.0
Selling, general and administrative expenses 21.4
 21.0
 70.9
 71.8
Acquisition/integration/restructuring costs 0.9
 1.2
 0.9
 3.7
Insurance settlement (3.2) 
 (3.2) 
Other (income) expense - net (0.1) 0.1
 (0.2) 0.3
Operating income 29.0
 26.9
 85.2
 92.2
Interest expense - net 3.2
 2.7
 9.4
 8.3
Income from continuing operations before income taxes 25.8
 24.2
 75.8
 83.9
Provision for income taxes 7.0
 7.8
 14.4
 26.9
Income from continuing operations 18.8
 16.4
 61.4
 57.0
Loss from discontinued operations, net of income taxes 
 
 
 (0.4)
Net income $18.8
 $16.4
 $61.4
 $56.6
         
Earnings Per Common Share  
  
    
Basic  
  
    
Continuing operations $1.11
 $0.97
 $3.63
 $3.36
Discontinued operations 
 
 
 (0.02)
Basic $1.11
 $0.97
 $3.63
 $3.34
Diluted  
  
    
Continuing operations $1.10
 $0.95
 3.58
 3.30
Discontinued operations 
 
 
 (0.02)
Diluted $1.10
 $0.95
 3.58
 3.28
         
Weighted Average Common Shares Outstanding (in thousands)  
  
    
Basic 16,811
 16,771
 16,794
 16,774
Diluted 16,974
 17,088
 17,034
 17,068
         
Cash Dividends Declared Per Share of Common Stock $0.37
 $0.33
 $1.11
 $0.99
 Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Net Sales$269.3 $161.4 $496.3 $395.0 
Cost of products sold230.9 140.0 408.3 319.6 
Gross Profit38.4 21.4 88.0 75.4 
Selling, general and administrative expenses27.5 20.8 51.8 47.4 
Impairment and asset restructuring costs (Note 11)34.4 55.3 34.4 55.3 
Acquisition and integration costs (Note 4)0.1 0.1 12.1 1.1 
Loss on debt extinguishment (Note 6)7.2 1.9 7.2 1.9 
Pension settlement losses (Note 7)1.0 1.0 
Other restructuring and non-routine costs0.9 1.3 0.9 2.7 
COVID-19 costs0.2 0.4 0.7 1.5 
Other (income) expense - net(0.3)0.1 (1.1)0.4 
Operating Loss(32.6)(58.5)(19.0)(34.9)
Interest expense - net4.8 3.0 7.9 5.9 
Loss Before Income Taxes(37.4)(61.5)(26.9)(40.8)
Benefit for income taxes(7.7)(11.4)(5.5)(7.1)
Net Loss$(29.7)$(50.1)$(21.4)$(33.7)
Loss Per Common Share  
Basic$(1.76)$(2.98)$(1.27)$(2.01)
Diluted$(1.76)$(2.98)$(1.27)$(2.01)
Weighted Average Common Shares Outstanding (in thousands)  
Basic16,851 16,797 16,844 16,812 
Diluted16,851 16,797 16,844 16,812 
Cash Dividends Declared Per Share of Common Stock$0.47 $0.47 $0.94 $0.94 
 
See Notes to Condensed Consolidated Financial Statements

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NEENAH, PAPER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In millions)
(Unaudited)
 
  Three Months Ended September 30, Nine Months Ended September 30,
  2017 2016 2017 2016
Net income $18.8
 $16.4
 $61.4
 $56.6
Unrealized foreign currency translation gain 5.0
 0.7
 16.1
 0.9
Reclassification of amortization of adjustments to pension and other postretirement benefit liabilities recognized in net periodic benefit cost (Note 5) 1.4
 1.9
 4.6
 5.5
Net gain (loss) from pension and other postretirement benefit plans (Note 3) 0.2
 
 (1.0) 
Unrealized gain on “available-for-sale” securities 
 
 0.1
 0.1
Income from other comprehensive income items 6.6
 2.6
 19.8
 6.5
Provision for income taxes 0.5
 0.7
 1.4
 2.1
Other comprehensive income 6.1
 1.9
 18.4
 4.4
Comprehensive income $24.9
 $18.3
 $79.8
 $61.0
 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Net Loss$(29.7)$(50.1)$(21.4)$(33.7)
Reclassification of amounts recognized in the condensed consolidated statements of operations:
Amortization of adjustments to pension and other postretirement benefit liabilities (Note 7)1.3 1.5 3.0 3.1 
Pension settlement and curtailment losses (Notes 7 and 11)1.3 1.3 
Amounts recognized in the condensed consolidated statements of operations2.6 1.5 4.3 3.1 
Unrealized foreign currency translation gain (loss)4.6 3.6 (4.5)(0.4)
Net gain from pension plans (Note 3)16.0 16.0 
Income From Other Comprehensive Income Items23.2 5.1 15.8 2.7 
Provision for income taxes4.8 0.4 4.8 0.6 
Other Comprehensive Income18.4 4.7 11.0 2.1 
Comprehensive Loss$(11.3)$(45.4)$(10.4)$(31.6)
 
See Notes to Condensed Consolidated Financial Statements

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NEENAH, PAPER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
 
 September 30, 2017 December 31, 2016 June 30, 2021December 31, 2020
ASSETS  
  
ASSETS  
Current Assets  
  
Current Assets  
Cash and cash equivalents $24.2
 $3.1
Cash and cash equivalents$36.7 $37.1 
Accounts receivable (less allowances of $1.7 million and $1.5 million) 122.7
 96.5
Accounts receivable (less allowances of $1.8 million and $1.5 million)Accounts receivable (less allowances of $1.8 million and $1.5 million)155.6 100.2 
Inventories 124.3
 116.3
Inventories136.0 108.9 
Prepaid and other current assets 17.4
 20.4
Prepaid and other current assets32.4 25.1 
Total Current Assets 288.6
 236.3
Total Current Assets360.7 271.3 
Property, Plant and Equipment  
  
Property, Plant and Equipment  
Property, Plant and Equipment, at cost 800.1
 755.6
Property, plant and equipment, at costProperty, plant and equipment, at cost835.0 812.8 
Less accumulated depreciation 418.7
 391.0
Less accumulated depreciation526.4 483.4 
Property, plant and equipment—net 381.4
 364.6
Property, Plant and Equipment—netProperty, Plant and Equipment—net308.6 329.4 
Finance Lease Right-of-Use Assets (Note 1)Finance Lease Right-of-Use Assets (Note 1)22.3 0 
Operating Lease Right-of-Use Assets (Note 1)Operating Lease Right-of-Use Assets (Note 1)18.9 20.2 
Deferred Income Taxes 10.1
 6.1
Deferred Income Taxes25.1 18.3 
Goodwill 74.3
 70.4
Goodwill204.8 87.4 
Intangible Assets—net 73.5
 74.0
Intangible Assets—net164.0 62.6 
Other Noncurrent Assets 18.9
 14.2
Other Noncurrent Assets13.1 17.4 
TOTAL ASSETS $846.8
 $765.6
TOTAL ASSETS$1,117.5 $806.6 
    
LIABILITIES AND STOCKHOLDERS’ EQUITY  
  
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current Liabilities  
  
Current Liabilities  
Debt payable within one year $1.3
 $1.2
Debt payable within one year (Note 6)Debt payable within one year (Note 6)$7.3 $4.9 
Finance lease liabilities payable within one yearFinance lease liabilities payable within one year1.0 
Operating lease liabilities payable within one yearOperating lease liabilities payable within one year3.3 3.2 
Accounts payable 60.9
 55.6
Accounts payable98.0 46.0 
Accrued expenses 52.2
 51.2
Accrued expenses70.8 61.9 
Total Current Liabilities 114.4
 108.0
Total Current Liabilities180.4 116.0 
Long-term Debt 221.6
 219.7
Long-term Debt (Note 6)Long-term Debt (Note 6)435.8 189.5 
Finance Lease Liabilities, Noncurrent (Note 1)Finance Lease Liabilities, Noncurrent (Note 1)21.5 
Operating Lease Liabilities, Noncurrent (Note 1)Operating Lease Liabilities, Noncurrent (Note 1)17.0 18.4 
Noncurrent Employee BenefitsNoncurrent Employee Benefits74.9 96.8 
Deferred Income Taxes 20.8
 10.1
Deferred Income Taxes38.9 12.3 
Noncurrent Employee Benefits 86.3
 86.7
Other Noncurrent Obligations 6.8
 2.8
Other Noncurrent Obligations5.5 6.0 
TOTAL LIABILITIES 449.9
 427.3
TOTAL LIABILITIES774.0 439.0 
Contingencies and Legal Matters (Note 8)
 
 
Contingencies and Legal Matters (Note 10)Contingencies and Legal Matters (Note 10)
TOTAL STOCKHOLDERS’ EQUITY 396.9
 338.3
TOTAL STOCKHOLDERS’ EQUITY343.5 367.6 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $846.8
 $765.6
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$1,117.5 $806.6 
 
See Notes to Condensed Consolidated Financial Statements

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NEENAH, PAPER,INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(In millions, shares in thousands)
(Unaudited)

2021 Activity
 Common Stock
 SharesAmountTreasury
Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Balance, December 31, 202018,746 $0.2 $(87.6)$338.3 $220.4 $(103.7)$367.6 
Net income— — — — 8.3 — 8.3 
Other comprehensive loss, including income taxes— — — — — (7.4)(7.4)
Dividends declared— — — — (8.0)— (8.0)
Stock options exercised— — — — — — 
Restricted stock vesting (Note 9)16 — (0.4)— — — (0.4)
Stock-based compensation— — — 1.5 — — 1.5 
Balance, March 31, 202118,765 0.2 (88.0)339.8 220.7 (111.1)361.6 
Net loss— — — — (29.7)— (29.7)
Other comprehensive income, net of income taxes— — — — — 18.4 18.4 
Dividends declared— — — — (8.1)— (8.1)
Stock options exercised— — — — — — 
Restricted stock vesting (Note 9)22 — (0.1)— — — (0.1)
Stock-based compensation— — — 1.3 — — 1.3 
Other— — — 0.1 — — 0.1 
Balance, June 30, 202118,788 $0.2 $(88.1)$341.2 $182.9 $(92.7)$343.5 


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2020 Activity
 Common Stock
 SharesAmountTreasury StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive LossTotal
Balance, December 31, 201918,678 $0.2 $(82.8)$334.1 $268.1 $(113.3)$406.3 
Net income— — — — 16.4 — 16.4 
Other comprehensive loss, including income taxes— — — — — (2.6)(2.6)
Dividends declared— — — — (8.0)— (8.0)
Shares purchased (Note 9)— — (3.6)— — — (3.6)
Stock options exercised— — — — — — 
Restricted stock vesting (Note 9)— (0.2)— — — (0.2)
Stock-based compensation— — — 1.5 — — 1.5 
Balance, March 31, 202018,689 0.2 (86.6)335.6 276.5 (115.9)409.8 
Net loss— — — — (50.1)— (50.1)
Other comprehensive income, net of income taxes— — — — — 4.7 4.7 
Dividends declared— — — — (8.0)— (8.0)
Stock options exercised— — — — — — 
Restricted stock vesting (Note 9)— — — — — — 
Stock-based compensation— — — 1.6 — — 1.6 
Balance, June 30, 202018,700 $0.2 $(86.6)$337.2 $218.4 $(111.2)$358.0 


See Notes to Condensed Consolidated Financial Statements
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NEENAH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
 Six Months Ended June 30,
 20212020
OPERATING ACTIVITIES  
Net loss$(21.4)$(33.7)
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization20.5 19.7 
Stock-based compensation2.8 3.1 
Deferred income tax benefit(12.3)(10.3)
Impairment loss (Note 11)32.4 52.3 
Loss on debt extinguishment (Note 6)7.2 1.9 
Loss on foreign currency forward contracts (Note 1)5.1 
Pension settlement and curtailment losses (Notes 7 and 11)1.3 
Provision for uncollectible accounts receivable1.1 
Loss on asset dispositions0.3 0.1 
Decrease (increase) in working capital(6.1)7.9 
Pension and other postretirement benefits(6.4)(0.1)
Long-term payroll taxes1.7 
Other(0.1)
Net Cash Provided By Operating Activities23.4 43.6 
INVESTING ACTIVITIES  
Capital expenditures(11.3)(8.0)
Acquisition of Itasa (Note 4)(240.2)
Sale (purchase) of marketable securities3.7 (0.1)
Other0.2 (0.2)
Net Cash Used in Investing Activities(247.6)(8.3)
FINANCING ACTIVITIES  
Long-term borrowings (Note 6)457.4 291.0 
Repayments of long-term debt (Note 6)(207.8)(107.5)
Debt issuance costs(8.9)(5.2)
Cash dividends paid(15.9)(16.0)
Shares purchased (Note 9)(0.5)(3.8)
Other(0.3)
Net Cash Provided by Financing Activities224.0 158.5 
Effect of Exchange Rate Changes on Cash and Cash Equivalents(0.2)(0.1)
Net Increase (Decrease) in Cash and Cash Equivalents(0.4)193.7 
Cash and Cash Equivalents, Beginning of Year37.1 9.0 
Cash and Cash Equivalents, End of Period (Including Restricted Cash as of June 30, 2020, Note 6)$36.7 $202.7 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:  
Cash paid during period for interest, net of interest costs capitalized$6.7 $5.4 
Cash paid during period for income taxes$4.0 $3.0 
Non-cash investing activities:  
Liability for equipment acquired$3.1 $2.1 

 
  Nine Months Ended September 30,
  2017 2016
OPERATING ACTIVITIES  
  
Net income $61.4
 $56.6
Adjustments to reconcile net income to net cash provided by operating activities:  
  
Depreciation and amortization 24.3
 24.0
Stock-based compensation 4.3
 4.4
Deferred income tax provision 4.4
 10.4
Non-cash effects of changes in liabilities for uncertain income tax positions 0.2
 
Loss on asset dispositions 0.2
 0.1
(Increase) decrease in working capital (12.2) 4.7
Pension and other postretirement benefits (1.1) (2.3)
Other 0.1
 (0.2)
NET CASH PROVIDED BY OPERATING ACTIVITIES 81.6
 97.7
     
INVESTING ACTIVITIES  
  
Capital expenditures (27.2) (49.4)
Asset acquisition (8.0) 
Purchase of marketable securities 
 (0.1)
Other (0.3) 
NET CASH USED IN INVESTING ACTIVITIES (35.5) (49.5)
     
FINANCING ACTIVITIES  
  
Long-term borrowings (Note 4) 212.3
 185.9
Repayments of long-term debt (Note 4) (212.1) (206.3)
Cash dividends paid (18.9) (16.8)
Shares purchased (Note 7) (7.0) (8.0)
Proceeds from exercise of stock options 0.4
 0.3
NET CASH USED IN FINANCING ACTIVITIES (25.3) (44.9)
     
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 0.3
 (0.2)
NET INCREASE IN CASH AND CASH EQUIVALENTS 21.1
 3.1
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 3.1
 4.2
CASH AND CASH EQUIVALENTS, END OF PERIOD $24.2
 $7.3
     
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:  
  
Cash paid during period for interest, net of interest expense capitalized $6.1
 $5.2
Cash paid during period for income taxes $6.4
 $14.1
Non-cash investing activities:  
  
Liability for equipment acquired $3.0
 $10.0
See Notes to Condensed Consolidated Financial Statements

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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”("Neenah" or the “Company”"Company"), is a Delaware corporation incorporated in April 2004. The Company has two2 primary operations: its technical products business and its fine paper and packaging business. See Note 9, “Business12, "Business Segment Information."

Basis of Consolidation and Presentation
These statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”"SEC") and, in accordance with those rules and regulations, do not include all information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”("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.
 
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. The condensed consolidated financial statements include the financial statements of the Company and its wholly owned and majority owned subsidiaries. Intercompany balances and transactions have been eliminated.



Earnings per Share (“EPS”("EPS")
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,
  2017 2016 2017 2016
Income from continuing operations $18.8
 $16.4
 $61.4
 $57.0
Amounts attributable to participating securities (0.2) (0.2) (0.5) (0.6)
Income from continuing operations available to common stockholders 18.6
 16.2
 60.9
 56.4
Loss from discontinued operations, net of income taxes 
 
 
 (0.4)
Net income available to common stockholders $18.6
 $16.2
 $60.9
 $56.0
         
Weighted-average basic shares outstanding 16,811
 16,771
 16,794
 16,774
   
  
    
Continuing operations $1.11
 $0.97
 $3.63
 $3.36
Discontinued operations 
 
 
 (0.02)
Basic earnings per share $1.11
 $0.97
 $3.63
 $3.34
 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Loss from continuing operations$(29.7)$(50.1)$(21.4)$(33.7)
Amounts attributable to participating securities(0.1)(0.1)
Net loss available to common stockholders$(29.7)$(50.1)$(21.5)$(33.8)
Weighted-average basic shares outstanding16,851 16,797 16,844 16,812 
  
Basic loss per share$(1.76)$(2.98)$(1.27)$(2.01)
 





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Earnings (Loss) Per Diluted Common Share
  Three Months Ended September 30, Nine Months Ended September 30,
  2017 2016 2017 2016
Income from continuing operations $18.8
 $16.4
 $61.4
 $57.0
Amounts attributable to participating securities (0.2) (0.2) (0.5) (0.6)
Income from continuing operations available to common stockholders 18.6
 16.2
 60.9
 56.4
Loss from discontinued operations, net of income taxes 
 
 
 (0.4)
Net income available to common stockholders $18.6
 $16.2
 $60.9
 $56.0
         
Weighted-average basic shares outstanding 16,811
 16,771
 16,794
 16,774
Add: Assumed incremental shares under stock compensation plans (a) 163
 317
 240
 294
Weighted-average diluted shares 16,974
 17,088
 17,034
 17,068
   
  
  
  
Continuing operations $1.10
 $0.95
 $3.58
 $3.30
Discontinued operations 
 
 
 (0.02)
Diluted earnings per share $1.10
 $0.95
 $3.58
 $3.28
 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Loss from continuing operations$(29.7)$(50.1)$(21.4)$(33.7)
Amounts attributable to participating securities(0.1)(0.1)
Net loss available to common stockholders$(29.7)$(50.1)$(21.5)$(33.8)
Weighted-average basic shares outstanding16,851 16,797 16,844 16,812 
Add: Assumed incremental shares under stock compensation plans (a)
Weighted-average diluted shares16,851 16,797 16,844 16,812 
    
Diluted loss per share$(1.76)$(2.98)$(1.27)$(2.01)
 
(a)For the three months ended SeptemberJune 30, 2017,2021 and 2020, there were 144,000 potentially dilutive options 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 three months ended September 30, 2016, there were no antidilutive options. For the nine months ended September 30, 2017324,182 and 2016, there were 72,000 and 47,000338,690 potentially dilutive options, respectively, 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 six months ended June 30, 2021 and 2020, there were 324,189 and 340,886 potentially dilutive options, respectively, similarly excluded from the computation of dilutive common stock.shares. In addition, as a result of the loss from continuing operations for the three and six months ended June 30, 2021, incremental shares of 51,000 and 49,000, respectively, resulting from the dilutive options and performance share units, were excluded from the diluted earnings per share calculation as the effect would have been anti-dilutive. Similarly, as a result of the loss from continuing operations for the three and six months ended June 30, 2020, incremental shares of 23,000 and 28,000, respectively, resulting from the dilutive options and performance share units, were excluded from the diluted earnings per share calculation as the effect would have been anti-dilutive.

Fair Value of Financial Instruments
The Company measures the fair value of financial instruments in accordance with Accounting Standards Codification (“ASC”("ASC") Topic 820, Fair Value Measurements and Disclosures (“ ("ASC Topic 820”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 following table presentsAs of June 30, 2021, the carrying value and the fair valuevalues of the Company’s debt. 
  September 30, 2017 December 31, 2016
  
Carrying
Value
 Fair Value (a)(b) 
Carrying
Value
 Fair Value (a)(b)
2021 Senior Notes (5.25% fixed rate) $175.0
 $171.0
 $175.0
 $169.5
Global Revolving Credit Facilities (variable rates) 43.9
 43.9
 42.9
 42.9
German loan agreement (2.45% fixed rate) 7.0
 7.0
 6.8
 6.8
Total debt $225.9
 $221.9
 $224.7
 $219.2

(a)debt approximated fair value. The fair value for all debt instruments was estimated from Level 2 measurements.
(b)The fair value of short and long-term debt is estimatedmeasurements using rates currently available to the Company for debt of the same remaining maturities.

During the three months ended March 31, 2021, in anticipation of the Itasa acquisition (as further defined and discussed in Note 4, "Acquisition"), the Company entered into foreign currency forward contracts to purchase €205.9 million at a weighted average exchange rate of $1.203 per euro on April 6, 2021. These contracts were designed to act as economic hedges for the pending Itasa acquisition and were settled on that date with a loss of $5.1 million.

As of SeptemberJune 30, 2017,2021, the Company had $3.6$0.7 million in marketable securities in the U.S. classified as “Other Assets”"Other Noncurrent Assets" on the condensed consolidated balance sheet.Condensed Consolidated Balance Sheet. The cost of such marketable securities was $3.4$0.7 million. Fair value for the Company’s marketable securities was estimated from Level 1 inputs. The Company’s U.S. marketable securities are designated for the payment of benefits under its supplemental employee retirement plan (“SERP”("SERP"). As of SeptemberJune 30, 2017,2021, Neenah Germany had investments of $1.7$2.2 million that were restricted to the payment of certain post-retirement employee benefits of which $0.6

$0.8 million and $1.1$1.4 million are classified as “Prepaid"Prepaid and other current assets”assets" and “Other Assets”"Other Noncurrent Assets", respectively, on the condensed consolidated balance sheet.Condensed Consolidated Balance Sheet. The cost of these investments approximated market.


Income Taxes
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PriorRevenue from Contracts with Customers
The Company recognizes sales revenue at a point in time following the transfer of control of the product to the customer, which typically occurs upon shipment or delivery depending on the terms of the underlying contracts. Sales are reported net of allowable discounts and estimated returns. Reserves for cash discounts, trade allowances and sales returns are estimated using historical experience. The Company accounts for shipping and handling activities related to contracts with customers as costs to fulfill our promise to transfer the associated products. Accordingly, the Company records customer payments of shipping and handling costs as a component of net sales and classifies such costs as a component of cost of sales. The Company excludes tax amounts assessed by governmental authorities that are both (i) imposed on and concurrent with a specific revenue-producing transaction and (ii) collected from customers from our measurement of transaction prices. Accordingly, such tax amounts are not included as a component of net sales or cost of sales.

The Company considers each transaction/shipment as a separate performance obligation. Neenah recognizes revenue when the title transfers to the customer. As such, the remaining performance obligations at period end are not considered significant.

Refer to Note 12, "Business Segment Information" for disaggregation of segment revenue from contracts with customers for the three and six months ended June 30, 2017,2021 and 2020.


Allowance for Uncollectible Accounts Receivable
Losses on receivables are estimated based on known troubled accounts and historical experience of losses incurred. Receivables are considered impaired and written-off when it is expected that contractual payments due will not be collected in accordance with the terms of the agreement. The allowance for uncollectible accounts receivable was $1.8 million and $1.5 million as of June 30, 2021 and December 31, 2020, respectively. The Company recorded a $1.0 million provision for uncollectible accounts receivable from the impacts of COVID-19 for the six months ended June 30, 2020. There were no significant adjustments for the three and six months ended June 30, 2021.


Leases
As of June 30, 2021, the Company had not asserted under ASC 740, Income Taxes, that unremitted earningshas $22.5 million of our Germanfinance leases, primarily for manufacturing facilities in Spain and Mexico as a result of the Itasa acquisition. The finance lease Right-of-Use ("ROU") assets acquired were valued at $22.1 million, with corresponding lease liabilities, with a weighted-average term of approximately 19.5 years and weighted-average discount rate of 4.3%. Finance leases with terms greater than 12 months are included in "Finance Lease Right-of-Use Assets", "Finance lease liabilities payable within one year" and "Noncurrent Finance Lease Liabilities" on the Condensed Consolidated Balance Sheets.

The Company has operating leases for corporate offices, warehouses, converting operations, were indefinitely reinvested. Therefore, deferred U.S. income taxes were accruedand certain equipment, with remaining lease terms of up to 10 years, some of which include options to extend the leases for up to five years. The Company determines if an arrangement is a lease at inception. Operating leases with terms greater than 12 months are included in "Operating Lease Right-of-Use Assets", "Operating lease liabilities payable within one year" and "Noncurrent Operating Lease Liabilities" on those earnings which we plannedthe Condensed Consolidated Balance Sheets.


Impacts of COVID-19
The Company recorded incremental and direct costs of responding to repatriate in the future. Innovel coronavirus pandemic (“COVID-19”) of $0.2 million and $0.7 million for the three and six months ended June 2017, as part of our annual strategic plan review,30, 2021, respectively. For the three and six months ended June 30, 2020, the Company reassessed its intentions regarding the indefinite reinvestment of undistributed earnings of our German operationsrecorded $0.4 million and asserted its intent$1.5 million, respectively, related to indefinitely reinvest them. As a result, the Company is no longer providing deferred income taxes on the 2017 unremitted earnings of our German operations and such taxes provided in the first quarter of 2017 of $2.3 million were reversed in the second quarter of 2017. In addition, the $4.1 million deferred income tax liability on unremitted German earnings for 2016 was eliminated in the second quarter of 2017.COVID-19.



Note 2.  Accounting StandardStandards Changes
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This guidance specifies how and when an entity will recognize revenue arising from contracts with customers and requires entities to disclose information about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has subsequently issued additional, clarifying standards to address issues arising from implementation of the new revenue recognition standard. The Company has substantially completed its assessment of the new standards and does not believe there will be a material impact from adoption on its consolidated financial statements. The Company will adopt the new standards using the modified retrospective method as of January 1, 2018. The new standards also require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 requires lessees to put most leases on their balance sheets but recognize expenses on their income statements in a manner similar to current lease accounting. The guidance also eliminates current real estate-specific provisions for all entities. The Company plans to implement ASU 2016-09 as of January 1, 2019. The Company is currently assessing the impact of the adoption of ASU 2016-02 on its consolidated financial statements.

In March 2017, the FASB issued ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (Topic 715). ASU 2017-07 requires entities to (1) disaggregate the current-service-cost component from the other components of net benefit cost (the “other components”) and present it with other current compensation costs for related employees in the income statement and (2) present the other components elsewhere in the income statement and outside of income from operations if such a subtotal is presented. In addition, only the service-cost component of net benefit cost is eligible for capitalization. This ASU will be implemented by the Company as of January 1, 2018. The Company does not expect the adoption of ASU 2017-07 to have a material impact on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805), Clarifying the Definition of a Business. The amendments in this ASU provide guidance in evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill and consolidation. The amendments are effective for the Company as of January 1, 2018, on a prospective basis. The Company early adopted ASU 2017-01 in the third quarter of 2017. There was no material impact on the consolidated financial statements as a result of the adoption.

As of SeptemberJune 30, 2017,2021, there were no other amendments to the ASC have 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 upon adoption.




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Note 3.  Supplemental Balance Sheet Data
 
The following table presents inventories by major class:
 June 30, 2021December 31, 2020
Raw materials$46.7 $28.9 
Work in progress26.5 20.1 
Finished goods70.8 61.0 
Supplies and other4.0 5.3 
 148.0 115.3 
Adjust FIFO inventories to LIFO cost(12.0)(6.4)
Total$136.0 $108.9 
  September 30, 2017 December 31, 2016
Raw materials $32.5
 $31.6
Work in progress 36.7
 26.8
Finished goods 61.6
 63.0
Supplies and other 3.6
 3.1
  134.4
 124.5
Adjust FIFO inventories to LIFO cost (10.1) (8.2)
Total $124.3
 $116.3

The FIFO values of inventories valued on the LIFO method were $117.9$97.1 million and $106.8$88.5 million as of SeptemberJune 30, 20172021 and December 31, 2016,2020, respectively. For the three and ninesix months ended SeptemberJune 30, 2017,2021, income from continuing operations before income taxes was increasedreduced by less than $0.1 million due to a decrease in certain LIFO inventory quantities. Inventories at June 30, 2021 included an additional $24.6 million from the Itasa acquisition (see Note 4, "Acquisition").

The following table presents changes in accumulated other comprehensive income (loss) (“AOCI”("AOCI") for the ninesix months ended SeptemberJune 30, 2017:2021: 
 Net Unrealized Foreign
Currency Translation
Loss
Net Loss from
Pension and Other
Postretirement
Liabilities
Accumulated Other
Comprehensive Loss
AOCI — December 31, 2020$(1.7)$(102.0)$(103.7)
Other comprehensive income (loss) before reclassifications (a)(4.5)17.3 12.8 
Amounts reclassified from AOCI3.0 3.0 
Income (loss) from other comprehensive income items(4.5)20.3 15.8 
Provision (benefit) for income taxes(0.2)5.0 4.8 
Other comprehensive income (loss)(4.3)15.3 11.0 
AOCI — June 30, 2021$(6.0)$(86.7)$(92.7)
  
Net unrealized foreign
currency translation
gain (loss)
 
Net gain (loss) from
pension and other
postretirement
liabilities (a)
 
Unrealized gain (loss) on
“available-for-sale”
securities
 
Accumulated other
comprehensive income
(loss)
AOCI — December 31, 2016 $(27.4) $(64.5) $(0.1) $(92.0)
Other comprehensive income (loss) before reclassifications 16.1
 (1.0) 0.1
 15.2
Amounts reclassified from AOCI 
 4.6
 
 4.6
Income from other comprehensive income items 16.1
 3.6
 0.1
 19.8
Provision for income taxes 0.1
 1.3
 
 1.4
Other comprehensive income 16.0
 2.3
 0.1
 18.4
AOCI — September 30, 2017 $(11.4) $(62.2) $
 $(73.6)

(a)    ForDuring the ninethree months ended SeptemberJune 30, 2017,2021, the Company recorded a $1.2net $16.0 million increasedecrease in the employee benefit obligation relatedpension plan obligations due to remeasurements in conjunction with a pension remeasurement resulting from the redistribution of active and inactive participants intobetween the separate pension plans. The Company also recorded a $0.2 million settlement loss in SERP forplans and the Appleton Mill closure. For the three months ended SeptemberJune 30, 2017.2021, a $0.3 million pension plan curtailment loss was recorded in conjunction with the mill closure (see Note 11, "Impairment and Asset Restructuring Costs"). In addition, the Company recorded a $1.0 million loss related to a SERP settlement.


For the ninesix months ended SeptemberJune 30, 20172021 and 2016,2020, the Company reclassified $4.6$3.0 million and $5.5$3.1 million respectively, of costs, respectively, from accumulated other comprehensive incomeAOCI to cost of products sold and selling, general and administrative expenses"Other expense - net" on the condensed consolidated statementsCondensed Consolidated Statements of operations.Operations. For the ninesix months ended SeptemberJune 30, 20172021 and 2016,2020, the Company recognized an income tax benefit of $1.7$0.7 million and $2.1$0.8 million, respectively, related to such reclassifications classified as "Provision for income taxes" on the condensed consolidated statementsCondensed Consolidated Statements of operations.Operations.




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Note 4.  DebtAcquisition
Acquisition of Itasa
On April 6, 2021, the Company completed the acquisition (the “Acquisition”) of all of the outstanding capital stock of Global Release Liners, S.L., a Spanish limited company (“Itasa”), from Magnum Capital and other minority shareholders for approximately $240.2 million in cash, net of cash on hand and debt extinguishment, and including a loss on foreign currency forward contracts. Itasa, through its subsidiaries, is a leading global coater and converter of release liners used in hygiene, tapes, industrial, labels, composites and various other end markets. The Acquisition was funded with available cash-on-hand and the net proceeds of the Term Loan B discussed in Note 6, "Debt." The Company incurred $12.1 million of costs related to the Acquisition, including a realized loss of $5.1 million related to the foreign currency forward contracts negotiated to fund the purchase price in euros. See Note 1, "Background and Basis of Presentation," for further discussion on these contracts. The Itasa business is now part of the Company's Technical Products segment.

The Company accounted for the transaction using the acquisition method in accordance with ASC Topic 805, Business Combinations ("ASC Topic 805"). The preliminary allocation of the purchase price was based on estimates of the fair value of assets acquired and liabilities assumed as of April 6, 2021, and certain inventory and income tax balances are subject to adjustment as additional information is obtained. We may further revise the preliminary allocation of the purchase price during the remainder of the measurement period, which will not exceed twelve months from the closing of the acquisition, and such revisions may be material.

The following table summarizes the preliminary allocation of the purchase price to the estimated fair value of the assets acquired and liabilities assumed as of April 6, 2021.

As of April 6, 2021
Assets Acquired
Cash and cash equivalents$34.0 
Accounts receivable20.7 
Inventories24.6 
Prepaid and other current assets2.1 
Property, plant and equipment19.6 
Finance lease Right-of-Use assets22.1 
Operating lease Right-of-Use assets0.1 
Deferred income taxes0.7 
Non-amortizable intangible assets4.1 
Amortizable intangible assets100.3 
Other assets0.3 
Goodwill119.1 
Total assets acquired347.7 
Liabilities Assumed
Accounts payable22.3 
Accrued expenses6.1 
Long-term debt26.4 
Lease liabilities - Finance22.1 
Lease liabilities - Operating0.1 
Deferred income taxes28.1 
Total liabilities assumed105.1 
Net assets acquired$242.6

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The Company estimated the preliminary fair value of the assets and liabilities acquired in accordance with ASC Topic 820, Fair Value Measurements and Disclosures ("ASC Topic 820"). 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 Itasa.

The excess of the purchase price over the estimated fair value of the tangible net assets and identifiable intangible assets acquired was recorded as 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 Itasa. These benefits include entry into profitable new markets for silicone release liners with new capabilities and recognized brands and synergies from combining the business with Neenah's existing infrastructure. None of the goodwill recognized as part of the Itasa acquisition will be deductible for income tax purposes. All of the acquired goodwill was allocated to the Technical Products segment.
For three months ended June 30, 2021, the Company recorded net sales of $33.2 million and a loss from operations before income taxes of $2.2 million for the acquired business. Such loss included a $5.1 million one-time cost resulting from the step-up in inventory to fair value on the date of acquisition.

The following selected unaudited pro forma consolidated statement of operations data for the six months ended June 30, 2021 and 2020, was prepared as though the Acquisition had occurred as of the beginning of 2020. The information does not reflect events that occurred after April 6, 2021 or any operating efficiencies or inefficiencies that may result from the Acquisition. The pro forma information below includes $17.2 million of non-recurring transaction costs directly attributable to the Acquisition. Therefore, the information is not necessarily indicative of results that would have been achieved had the businesses been combined during the period presented or the results that the Company will experience going forward.

Six Months Ended June 30,
 20212020
Net Sales$528.9 $451.2 
Operating Income (Loss)8.5 (55.2)
Net Loss(2.0)(51.8)
Loss Per Common Share:
Basic$(0.12)$(3.09)
Diluted$(0.12)$(3.09)



Note 5. Income Taxes
The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. Income tax benefit represented (21)% and (19)% of pre-tax book loss for the three months ended June 30, 2021 and 2020, respectively, and (20)% and (17)% of pre-tax book loss for the six months ended June 30, 2021 and 2020, respectively. The effective income tax benefit rates in 2021 and 2020, were significantly impacted by the effects of the $32.4 million and $52.3 million, respectively, of impairment losses of the Appleton Mill (see Note 11, "Impairment and Asset Restructuring Costs") which resulted in consolidated pre-tax book losses in each period. During the three months ended June 30, 2021, the Company recorded $2.9 million of income tax expense to reflect the elimination of certain deferred tax benefits due to the mill closure. In addition, during this period, the Company recorded an income tax benefit of $1.4 million upon filing income tax returns to utilize the NOL carryback provisions of the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"). Combined with the estimated benefit recorded as of December 31, 2020, the Company has recorded an income tax benefit of $2.3 million and a corresponding tax receivable of $9.1 million for the tax refund.

As of June 30, 2020, the Company evaluated its ability to utilize its deferred tax assets, including research and development and other tax credits and net operating losses ("NOLs"), before they expire. As a result of the impacts of COVID-19 and other factors, a $4.0 million tax expense was recorded to increase the valuation allowance against certain state tax credits and NOLs. In determining the need for a valuation allowance, the Company considered many factors, including specific taxing jurisdictions, sources of taxable income and income tax strategies. A valuation allowance is recognized if, based on the weight of available evidence, the Company concludes that it is more likely than not that some portion or all of the deferred income tax asset will not be realized.

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The following table presents the principal reasons for the difference between the Company's effective income tax (benefit) rate and the U.S. federal statutory income tax (benefit) rate:
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
U.S. federal statutory income tax rate(21)%(21)%(21)%(21)%
U.S. state income taxes, net of federal income tax effect(5)%(4)%(8)%(5)%
Impact of Appleton Mill closure on deferred tax benefits%%11 %%
Benefit of CARES Act NOL carryback(4)%%(5)%%
Foreign tax rate differences and financing structure%%%%
U.S. taxes on foreign earnings%%%%
Research and development and other tax credits(1)%%(5)%(3)%
Uncertain income tax positions%%%%
Valuation allowances%%%10 %
Other differences - net%(2)%%%
Effective income tax rate(21)%(19)%(20)%(17)%



Note 6.  Debt
Long-term debt consisted of the following:
 June 30, 2021December 31, 2020
2021 Term Loan B (variable rates) due April 2028$450.0 $
2020 Term Loan B (variable rates) extinguished April 2021199.0 
Global Revolving Credit Facility (variable rates) due December 2023
German loan agreement (2.45% fixed rate) due in quarterly installments ending September 20221.7 2.4 
German loan agreement (1.45% fixed rate) due in quarterly installments ending September 20221.7 2.6 
Debt discounts and deferred financing costs(10.3)(9.6)
Total debt443.1 194.4 
Less: Debt payable within one year7.3 4.9 
Long-term debt$435.8 $189.5 

 
Term Loan B Credit Facility
  September 30, 2017 December 31, 2016
2021 Senior Notes (5.25% fixed rate) due May 2021 $175.0
 $175.0
Global Revolving Credit Facilities (variable rates) due December 2019 43.9
 42.9
German loan agreement (2.45% fixed rate) due in 32 equal quarterly installments ending September 2022 7.0
 6.8
Deferred financing costs (3.0) (3.8)
Total debt 222.9
 220.9
Less: Debt payable within one year 1.3
 1.2
Long-term debt $221.6
 $219.7
2021 Senior Notes
In May 2013,On June 30, 2020, the Company completed an underwritten offeringentered into a Term Loan Credit Agreement (the “2020 Term Loan Credit Agreement”) which provides a seven-year Term Loan B credit facility (the "Term B Facility") in the initial principal amount of eight-year$200 million (the "2020 Term Loan B".) The 2020 Term Loan B was executed in a single $200 million draw on the closing date. Proceeds under the Term B Facility were used to redeem in full $175 million of senior unsecured notes due May 2021, repay borrowings under the Company’s senior secured revolving credit facility, pay fees and expenses of the transaction and for general corporate purposes. In connection with this transaction, the Company had restricted cash of $176.5 million as of June 30, 2020.

On April 6, 2021, in connection with the acquisition of Itasa, the Company entered into an Amendment and Restatement Agreement (the “2021 Senior Notes”"Term Loan Credit Agreement") at, which provides a faceseven-year term loan B facility in the initial principal amount of $175 million.$450 million (the “Term Loan B”), which replaces the 2020 Term Loan B. The Term Loan B is repayable in equal quarterly installments commencing on September 30, 2021 Senior Notes contain terms, covenantsin an aggregate annual amount equal to 1% of the original principal amount of the Term Loan B (subject to certain reductions in connection with debt prepayments and eventsdebt buybacks). Cash proceeds of default with whichborrowings on the closing date under the Term Loan B were used by the Company must comply, whichto pay the cash consideration for the Acquisition, including the repayment of certain existing debt of Itasa, and to pay fees and expenses in connection with the Acquisition, the Term Loan B and the amendment of the ABL Credit Agreement. The Company will use any remaining
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proceeds of the Term Loan B for general corporate purposes of the Company believes are ordinary and standard for notesits subsidiaries. The Company recognized $7.2 million of this nature. As of September 30, 2017,loss on debt extinguishment in connection with the Company was in compliance with alltransaction.

Under the terms of the indenture for the 2021 Senior Notes.
Amended and Restated Secured Revolving Credit Facility
In December 2014, the Company amended and restated its existing credit facility by entering into the Third Amended and RestatedTerm Loan Credit Agreement, (the “Third Amended Credit Agreement”)borrowings under the Term Loan B will bear interest at a per annum rate equal to either (a) the reserve-adjusted LIBOR rate for interest periods of one, two or three months, plus an applicable rate of 3.00% per annum, or (b) the Alternate Base Rate, plus an applicable rate of 2.00% per annum. “Alternate Base Rate” will be equal to the greatest of (1) the prime rate as quoted from time to time in The Wall Street Journal or published by the Federal Reserve Board, (2) the overnight bank funding rate established by the Federal Reserve Bank of New York, plus 50 basis points, and (3) one-month reserve-adjusted LIBOR plus 100 basis points. The Alternate Base Rate is subject to a “floor” of 1.5%, and the adjusted LIBOR rate is subject to a “floor” of 0.5%. The applicable interest rate under the Term Loan B was 3.50% as of June 30, 2021.

The Third AmendedTerm Loan 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. As of SeptemberJune 30, 2017,2021, the Company was in compliance with all terms of the Third AmendedTerm Loan Credit Agreement.


Secured Revolving Credit Facility
In December 2018, the Company amended its existing global secured revolving credit facility (the “Global Revolving Credit Facility”) by entering into a Fourth Amended and Restated Credit Agreement, dated December 10, 2018 (the “ABL Credit Agreement”). The Global Revolving Credit Facility will mature on December 10, 2023.

On August 30, 2017,April 6, 2021, in connection with the acquisition of Itasa, the Company amended the ThirdABL Credit Agreement by entering into a Fourth Amendment to Fourth Amended and Restated Credit Agreement (the "Fourth Amendment"). The Fourth Amendment, among other things, adds provisions (a) specifically permitting the consummation of the Acquisition, (b) permitting the incurrence of the Term Loan B, and (c) permitting certain indebtedness, liens and other transactions to make certain definitionalfacilitate consummation of the Acquisition and administrative changes to address definitionthe financing of EBITDA, Inter-Company Loans and Permitted Offshore Acquisitions, as further defined in the Third Amended Credit Agreement, in order to enable the Company to more efficiently operate and grow in international markets.working capital for Itasa.


Availability under the Global Revolving Credit FacilitiesFacility varies over time depending on the value of the Company’s inventory, receivables and various capital assets. As of SeptemberJune 30, 2017,2021, the Company had $43.9 million of0 borrowings and $0.9$0.3 million in letters of credit outstanding under the Global Revolving Credit FacilitiesFacility and $125.9$159.6 million of available credit (based on exchange rates at SeptemberJune 30, 2017)2021). As of SeptemberJune 30, 2017, the weighted-average interest rate on outstanding Global Revolving Credit Facility borrowings was 3.2 percent per annum. As of December 31, 2016,2021, the weighted-average interest rate under the Global Revolving Credit FacilitiesFacility was 2.81.3 percent per annum.
 
The ABL 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. As of June 30, 2021, the Company was in compliance with all terms of the ABL Credit Agreement.

Under the terms of the 2021 Senior NotesTerm Loan Credit Agreement and the Third AmendedABL Credit Agreement, the Company has limitations on its ability to repurchase shares of and pay dividends on its Common Stock. These limitations are triggered depending on the Company’s credit availability under the Third AmendedABL Credit Agreement and leverage levels under the Senior Notes.Term Loan Credit Agreement. As of SeptemberJune 30, 2017,2021, none of these covenants were restrictive to the Company’s ability to repurchase shares of and pay dividends on its Common Stock.


For additional information about our debt agreements, see Note 7 of the Notes to Consolidated Financial Statements in our 2016 Form 10-K.


Borrowings and Repayments of Long-Term Debt
The condensed consolidated statements of cash flows present borrowings and repayments under the Global Revolving Credit Facilities using a gross approach. This approach presents not only discrete borrowings for transactions such as a business acquisition, but also reflects all borrowings and repayments that occur as part of daily management of cash receipts and disbursements. For the nine months ended September 30, 2017, the Company made scheduled debt repayments of $0.6 million, $8.0 million of borrowings for an asset acquisition, and the remaining amounts of borrowings and repayments related to daily cash management activities. For the nine months ended September 30, 2016, the Company made scheduled debt repayments of $0.9 million and net long-term debt repayments of $19.5 million related to daily cash management activities.

Note 5.7.  Pension and Other Postretirement Benefits
Pension Plans
Substantially all active employees of the Company’s U.S. operations participate in defined benefit pension plans and/or defined contribution retirement plans. The Company has defined benefit plans for substantially all its employees in Germany and the United Kingdom. In addition, the Company maintains a SERP, which is a non-qualified defined benefit plan, and a supplemental retirement contribution plan (the “SRCP”"SRCP"), which is a non-qualified, unfunded defined contribution plan. The Company provides benefits under the non-qualified SERP and SRCP plans to the extent necessary to fulfill the intent of its retirement plans without regard to the limitations set by the Internal Revenue Code on qualified and non-qualified retirement benefit plans.

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The following table presents the components of net periodic benefit cost for the Company’s defined benefit plans and postretirement plans other than pensions:
 
Components of Net Periodic Benefit Cost for Defined Benefit Plans
 Pension BenefitsPostretirement Benefits
Other than Pensions
 Three Months Ended June 30,
 2021202020212020
Service cost$1.0 $1.2 $0.2 $0.3 
Interest cost3.1 3.5 0.2 0.2 
Expected return on plan assets (a)(4.9)(5.2)
Recognized net actuarial loss1.0 1.3 0.3 0.1 
Amortization of prior service benefit0.1 
Amount of settlement and curtailment losses recognized (b)1.3 
Net periodic benefit cost$1.5 $0.9 $0.7 $0.6 

 Pension Benefits 
Postretirement Benefits
Other than Pensions
Pension BenefitsPostretirement Benefits
Other than Pensions
 Three Months Ended September 30, Six Months Ended June 30,
 2017 2016 2017 2016 2021202020212020
Service cost $1.3
 $1.2
 $0.3
 $0.3
Service cost$2.1 $2.4 $0.5 $0.6 
Interest cost 3.6
 4.0
 0.3
 0.4
Interest cost6.1 7.0 0.3 0.4 
Expected return on plan assets (a) (5.0) (4.7) 
 
Expected return on plan assets (a)(9.8)(10.4)
Recognized net actuarial loss 1.4
 1.6
 
 0.1
Recognized net actuarial loss2.4 2.6 0.5 0.3 
Amortization of prior service benefit 0.1
 0.1
 
 (0.1)Amortization of prior service benefit0.1 0.2 
Amount of settlement and curtailment losses recognized (b)Amount of settlement and curtailment losses recognized (b)1.3 
Net periodic benefit cost $1.4
 $2.2
 $0.6
 $0.7
Net periodic benefit cost$2.2 $1.8 $1.3 $1.3 

  Pension Benefits 
Postretirement Benefits
Other than Pensions
  Nine Months Ended September 30,
  2017 2016 2017 2016
Service cost $4.0
 $3.6
 $0.9
 $0.9
Interest cost 11.0
 12.0
 1.1
 1.2
Expected return on plan assets (a) (14.8) (14.2) 
 
Recognized net actuarial loss 4.5
 4.9
 0.1
 0.2
Amortization of prior service benefit 0.2
 0.2
 (0.1) (0.2)
Net periodic benefit cost $4.9
 $6.5
 $2.0
 $2.1

(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. The Dutch pension plan is funded through an insurance contract, and the expected return on plan assets is calculated based on the discount rate of the insured obligations.
(b)    For the three months ended June 30, 2021, the Company recognized a settlement loss of $1.0 million related to the SERP and a curtailment loss of $0.3 million related to the Appleton Mill closure. See Note 11, "Impairment and Asset Restructuring Costs," for further discussion of the Appleton Mill closure.

The Company expects to makerecords the service cost component of net periodic benefit cost as part of cost of sales and selling, general and administrative ("SG&A") expenses; and the non-service cost components of net periodic benefit cost (i.e., interest cost, expected return on plan assets, net actuarial gains or losses, and amortization of prior service cost or credits) as part of "Other expense - net" on the Condensed Consolidated Statements of Operations.

For the six months ended June 30, 2021, the Company made $7.5 million of aggregate contributions to qualified and nonqualified defined benefit pension trusts and to paypayments of pension benefits for unfunded pension and other postretirement benefit plans of approximately $16 million in calendar 2017.  For the nine months ended September 30, 2017, theplans. The Company made $9.0expects to make $11.0 million of such payments.payments in calendar 2021. The Company made similar payments of $5.6$3.5 million and $18.4$11.5 million for the ninesix months ended SeptemberJune 30, 20162020 and for the year ended December 31, 2016,2020, respectively.





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Note 6.8.  Stock Compensation Plan
Stock Options and Stock Appreciation Rights (“Options”("Options")
The following table presents information regardingThere were 0 Options awarded during the ninesix months ended SeptemberJune 30, 2017:2021.
Options granted144,089
Per share weighted average exercise price$82.11
Per share weighted average grant date fair value$13.54
The weighted-average grant date fair value for Options granted during the nine months ended September 30, 2017 was estimated using the Black-Scholes option valuation model with the following assumptions:
Expected term in years5.8
Risk free interest rate2.1%
Volatility22.9%
Dividend yield3.0%

The following table presents information regarding Options that vested during the ninesix months ended SeptemberJune 30, 2017:2021: 
Options vested15,869 
Aggregate grant date fair value of Options vested (in millions)$0.2 
 
Options vested113,581
Aggregate grant date fair value of Options vested (in millions)$1.6

The following table presents information regarding outstanding Options:
 September 30, 2017 December 31, 2016 June 30, 2021December 31, 2020
Options outstanding 502,595
 530,462
Options outstanding373,068 380,844 
Aggregate intrinsic value (in millions) $15.7
 $25.0
Aggregate intrinsic value (in millions)$0.7 $1.2 
Per share weighted average exercise price $54.36
 $38.35
Per share weighted average exercise price$71.75 $70.99 
Exercisable Options 279,581
 336,336
Exercisable Options372,053 362,651 
Aggregate intrinsic value (in millions) $12.6
 $19.3
Aggregate intrinsic value (in millions)$0.7 $1.2 
Unvested Options 223,014
 194,126
Unvested Options1,015 18,193 
Per share weighted average grant date fair value $14.65
 $15.15
Per share weighted average grant date fair value$10.32 $14.48 
 

Performance Share Units (“PSUs”("PSUs") and Restricted Share Units (“RSUs”("RSUs")
For the ninesix months ended SeptemberJune 30, 2017,2021, the Company granted target awards of 41,88386,278 PSUs. The measurement period for three fourths of the PSUs is January 1, 20172021 through December 31, 2017, and for the remaining fourth of the PSUs is January 1, 2017 through December 31, 2019.2023. The PSUs vest on December 31, 2019.the third anniversary from the date of grant. Common Stock equal to not less than 40 percentof an amount between 0 and not more than 200 percent of the PSUs target will be awarded based on the Company’s return on invested capital, consolidated revenue growth, EPSfree cash flow as a percentage of net sales, and total return to shareholders relative to the companies in the Russell 2000® Value small cap index. The Company’s return on invested capital, consolidated revenue growth, and EPSfree cash flow as a percentage of net sales are adjusted for certain items as further described in the Performance Share Award Agreement. The marketaverage price on the datedates of grant for the PSUs was $82.12$54.35 per share.


For the ninesix months ended SeptemberJune 30, 2017,2021, the Company awarded 9,22642,044 RSUs to certain employees. The weighted average grant date fair value of such awards was $53.21 per share and one third of the shares will vest on each of the first three anniversaries of the grant date, with certain exceptions for retiring employees. For the six months ended June 30, 2021, the Company also awarded 11,119 RSUs to non-employee members of the Board of Directors. The weighted average grant date fair value of such awards was $75.85$54.06 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 rightsrights.

Generally, the RSUs and PSUs are forfeited in the event the holder is no longer a member ofworking for the Board of DirectorsCompany on the vesting date.

However, under specific circumstances, vesting may be accelerated or reflect pro-rata vesting.




Note 7.  Stockholders’9.  Stockholders' Equity
Common Stock
As of SeptemberJune 30, 20172021 and December 31, 2016,2020, the Company had 16,818,00516,862,000 shares and 16,771,00016,829,000 shares of Common Stock outstanding, respectively.


In May 2017,November 2020, the Company’sCompany's Board of Directors authorized aan evergreen program that would allowfor the Company to repurchasepurchase of up to $25 million of its outstanding Common Stock overeffective January 1, 2021 (the "Stock Purchase Plan"). The program does not require the next 12 months (the “2017Company to purchase any specific number of shares and may be suspended or discontinued at any time. Purchases under the Stock Purchase Plan”).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 Company also had $25 million repurchase programs in place during the preceding two years that expired in May 2017December 2020 (the “2016“2020 Stock Purchase Plan”) and May 2016December 2019 (the “2015“2019 Stock Purchase Plan”), respectively.

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The following table shows shares purchased and value ($ in millions) under the respective stock purchase plans:
  Nine Months Ended September 30,
  2017 2016
  Shares $ Shares $
2017 Stock Purchase Plan 
 $
 
 $
2016 Stock Purchase Plan 85,354
 6.8
 33,800
 2.6
2015 Stock Purchase Plan 
 
 93,600
 5.2
 Six Months Ended June 30,
 20212020
 SharesAmountSharesAmount
Stock Purchase Plan$$
2020 Stock Purchase Plan59,577 3.6 
 
For the six months ended June 30, 2021 and 2020, the Company acquired 8,766 and 3,476 shares of Common Stock, respectively, at a cost of $0.5 million and $0.2 million, respectively for shares surrendered by employees to pay taxes due on vested restricted stock awards.


Note 8.10.  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 periodically undergoes examination by the Internal Revenue Service (the “IRS”)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
The Company’s U.S. union employees are represented by the United Steelworkers Union (the “USW”).USW. 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”"IG BCE"). In Spain and Mexico, most of our employees are eligible to be represented by the local workers' unions: Confederacion Sindical de Comisiones Obreras ("CCOO") and Langile Abertzaalen Batzordeak ("LAB") in Spain; and Federacion de Trabajadores del Estado de Queretaro ("CTM") in Mexico. In the Netherlands, most of our employees are eligible to be represented by the Christelijke Nationale Vakbond ("CNV") and the Federatie Nederlandse Vakvereniging ("FNV"). As of SeptemberJune 30, 2017,2021, the Company had approximately 653554 U.S. employees covered under collective bargaining agreements that will expire in the next 12 months.

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The following table shows the expiration dates of the Company’s various bargaining agreements and the number of employees covered under each of these agreements.
agreements:
Contract Expiration
Date
LocationUnion
Number of

Employees
January 2018April 2021Whiting, WI (b)Eerbeek, NetherlandsUSWCNV, FNV199
(a)
June 2018November 2021Neenah, WI (b)Lowville, NYUSW25185 
July 2018December 2021Munising, MI (b)Andoain, SpainUSWCCOO, LAB203
(a)
February 2019January 2022Neenah GermanyWhiting, WIIG BCEUSW(a)192 
May 20192022 (b)Appleton, WI (b)USW9683 
August 2021June 2022Brattleboro, VTNeenah, WIUSW90194 
November 2021July 2022Lowville, NYMunising, MIUSW111191 
September 2022Neenah GermanyIG BCE(a)
March 2023Queretaro, MexicoCTM(a)

(a)Under German lawthe local laws of international subsidiaries, 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, CCOO and LAB, CTM, and the CNV and FNV cannot be determined. The Company is currently in negotiations with the CNV and FNV. Until new contracts are signed, the terms of the previous contracts still apply.
(b)    The Whiting, Neenah, Munising andOn June 28, 2021, the Company's Board of Directors approved the permanent closure of the Appleton mills have bargained jointly with the USW on pension matters. The current agreements will remain in effect until September 2019.Mill.


The Company’s United Kingdom salaried and hourly employees are eligible to participate in Unite the Union (“UNITE”("UNITE") on an individual basis, but not under a collective bargaining agreement.



Note 11.  Impairment and Asset Restructuring Costs
2021 Appleton Mill Closure
On June 28, 2021, the Company's Board of Directors approved the permanent closure of the manufacturing facility in Appleton, Wisconsin (the “Appleton Mill”) used in the Technical Products segment. The closure of the facility is expected to be substantially complete by the end of the third quarter of 2021. In connection with the closure, the Company reduced the carrying value of these assets from the net book value of $43.0 million to an estimated salvage value of $10.6 million, which resulted in a non-cash impairment loss of $32.4 million ($24.3 million, net of tax). The salvage value was determined using third-party appraisal estimates based on observable market inputs (Level 2). In addition, the Company recorded $5.0 million of other restructuring charges, including reserves for obsolescence of inventory and environmental exposure, severance costs and a curtailment loss on the pension obligations of the terminated workers. Further, the Company incurred a charge of $2.9 million relating to the loss of certain deferred income tax benefits.

The Company updated the qualitative review of goodwill and other indefinite-lived intangibles, noting that there were 0 impairment indicators triggered as of June 30, 2021.


2020 Impairment and Asset Restructuring Costs
During the three months ended June 30, 2020, due to the adverse impacts of COVID-19, the Company recorded non-cash impairment and asset restructuring costs of $55.3 million, of which $52.3 million related to a non-cash impairment loss for long-lived assets of the Appleton Mill. The Company determined the fair value of the long-lived assets principally on a probability-weighting of the discounted cash flows expected under multiple operating scenarios, based in part on the Company's current and future evaluation of economic conditions, as well as current and future plans (Level 3). The Company used a credit-adjusted risk-free rate of 9.5% based on the expected rate of return from the highest and best use of similar assets by a market participant. The other charges of $3.0 million arose from accelerated depreciation due to the idling of assets and related employee termination benefits for a workforce reduction in the Fine Paper and Packaging segment.

The Company also tested its indefinite-lived intangible assets (brand names) for impairment using the applicable accounting guidance and as a result recorded an impairment loss of $0.9 million and $0.4 million in the Fine Paper and Packaging and Technical Products segments, respectively. The Company updated the qualitative review of goodwill and other indefinite-lived intangibles, noting that there were 0 impairment indicators triggered as of June 30, 2020.
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A summary of the asset restructuring and impairment costs incurred during the three and six months ended June 30, 2021 and 2020, is as follows:
 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Impairment loss$32.4 $52.3 $32.4 $52.3 
Inventory obsolescence charge (recorded in Cost of Products Sold)3.0 3.0 
Restructuring charges from idled assets2.6 2.6 
Other restructuring charges2.0 0.4 2.0 0.4 
Total$37.4  $55.3 $37.4  $55.3 


Note 9.12.  Business Segment Information
The Company’s reportable operating segments consist of Technical Products and Fine Paper and Packaging.

In January 2021, the Company realigned management of the publishing products component of the Technical Products segment to be part of the Fine Paper and Packaging segment. As a result, the Company recast the comparable 2020 information and Other.presented the $5.5 million and $15.4 million of net sales and $1.1 million and $0.2 million of operating loss for the three and six months ended June 30, 2020, respectively, formerly in the Technical Products segment as part of the Fine Paper and Packaging segment. The Company also recast the total assets by segment and presented the $21.0 million of total assets as of December 31, 2020 related to publishing products within the Fine Paper and Packaging segment.

The Technical Products segment is an aggregation of the Company’s filtration andfiber-formed, coated and/or saturated specialized media that deliver high performance materials businessesbenefits to customers, which are similar in terms of economic characteristics, nature of products, processes, customer class and product distribution methods andmethods. The segment is an international producer of fiber-formed, coated and/or saturated specializedfiltration media that delivers high performance benefits to customers. Included in this segment are filtration media,for transportation, water and other end uses; tape and abrasives backings products, and durable label and other specialty substrate products.substrates used for industrial solutions; and specialty coatings media used for digital image transfer, release liners and other applications.


During the three months ended March 31, 2021, the Company further disaggregated the former performance materials business into industrial solutions and specialty coatings components, and recast the prior year period disclosure. The increase in the specialty coatings component beginning with the three months ended June 30, 2021 was due to the Itasa acquisition (see Note 4, "Acquisition"). The following table presents sales by product category for the Technical Products businesses:
 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Filtration38 %45 %44 %45 %
Industrial solutions33 %45 %35 %43 %
Specialty coatings29 %10 %21 %12 %
Total100 %100 %100 %100 %

The Fine Paper and Packaging segment is a leading supplier of premium printing and other high-end specialty papers and premium packaging, and specialty office papers, primarily in North America.

During the three months ended March 31, 2021, the Company further disaggregated the former graphic imaging business into commercial and consumer components and recast the prior year disclosure to combine the consumer and packaging businesses based on the similarity of final customers and end markets they serve. The Other segment is composed of papers sold to convertersfollowing table presents sales by product category for end uses such as covering materials for datebooks, diaries, yearbooks and traditional photo albums. These product lines represent an operating segment which does not meet the quantitative threshold for a reportable segment, however, due to the dissimilar nature of these products, they are not managed as part of either the Fine Paper and Packaging or Technical Products segments.businesses:
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 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Commercial52 % 47 %53 %54 %
Consumer and packaging48 %53 %47 %46 %
Total100 % 100 %100 % 100 %

Each segment employs different technologies and marketing strategies. Disclosure of segment information is on the same basis that management uses internally for evaluating segment performance and allocating resources. Transactions between segments are eliminated in consolidation. The costs of shared services, and other administrative functions managed on a common basis, are allocated to the segments based on usage, where possible, or other factors based on the nature of the activity. General corporate expenses that do not directly support the operations of the business segments are shown as Unallocated corporate costs.
 

The following table summarizestables summarize the net sales, and operating income (loss), and total assets for each of the Company’s business segments.segments: 
 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Net sales  
Technical Products$179.6 $100.6 $324.8 $232.9 
Fine Paper and Packaging89.7 60.8 171.5 162.1 
Consolidated$269.3 $161.4 $496.3 $395.0 

 
 Three Months Ended June 30,Six Months Ended June 30,
 2021 (a)2020 (c)2021 (b)2020 (d)
Operating income (loss)  
Technical Products$(28.3)$(46.2)$(9.1)$(30.9)
Fine Paper and Packaging9.9 (5.2)22.6 10.5 
Unallocated corporate costs(14.2)(7.1)(32.5)(14.5)
Consolidated$(32.6)$(58.5)$(19.0)$(34.9)
  Three Months Ended September 30, Nine Months Ended September 30,
  2017 2016 2017 2016
Net sales  
  
    
Technical Products $125.9
 $114.1
 $375.1
 $362.1
Fine Paper and Packaging 113.3
 112.9
 343.3
 340.4
Other 5.9
 5.9
 17.5
 18.5
Consolidated $245.1
 $232.9
 $735.9
 $721.0

  Three Months Ended September 30, Nine Months Ended September 30,
  2017 2016 2017 2016
Operating income (loss)  
  
    
Technical Products $15.6
 $14.1
 $44.1
 $53.4
Fine Paper and Packaging 17.8
 17.3
 55.6
 53.2
Other 0.2
 0.1
 0.1
 0.1
Unallocated corporate costs (4.6) (4.6) (14.6) (14.5)
Consolidated $29.0
 $26.9
 $85.2
 $92.2

Note 10.  Subsequent Event

On November 1, 2017,(a)    Operating loss for the Company purchased allthree months ended June 30, 2021 included (1) $37.4 million of non-cash impairment and asset restructuring costs related to the Appleton Mill closure within Technical Products; (2) $5.2 million of acquisition related costs for Itasa ($5.1 million within Technical Products and $0.1 million within Unallocated corporate costs); (3) $7.2 million of loss on debt extinguishment due to upsizing of the outstanding equity of W.A. Sanders Coldenhove Holding B.V. ("Coldenhove") for approximately $45 million. The payment was funded with $14Term Loan B within Unallocated corporate costs; (4) a $1.0 million SERP settlement loss within Unallocated corporate costs; (5) $0.9 million of cashother restructuring and non-routine costs ($0.4 million within Technical Products, $0.1 million within Fine Paper and Packaging, and $0.4 million within Unallocated corporate costs); and (6) $0.2 million of incremental and direct costs of responding to COVID-19 ($0.1 million within Technical Products and $0.1 million within Unallocated corporate costs). Refer to Note 11, "Impairment and Asset Restructuring Costs", Note 4, "Acquisition", Note 6, "Debt", Note 7, "Pension and Other Postretirement Benefits", and Note 1, "Background and Basis of Presentation" for further discussion.

(b)    Operating income for the six months ended June 30, 2021 included (1) $37.4 million of non-cash impairment and asset restructuring costs related to the Appleton Mill closure within Technical Products; (2) $17.2 million of acquisition related costs for Itasa, $5.1 million within Technical Products and $12.1 million within Unallocated corporate costs; (3) $7.2 million of loss on handdebt extinguishment due to upsizing of the Term Loan B within Unallocated corporate costs; (4) a $1.0 million SERP settlement loss within Unallocated corporate costs; (5) $0.9 million of other restructuring and borrowingsnon-routine costs ($0.4 million within Technical Products, $0.1 million within Fine Paper and Packaging, and $0.4 million within Unallocated corporate costs); and (6) $0.7 million of $31incremental and direct costs of responding to COVID-19 ($0.2 million fromwithin Technical Products, $0.3 million within Fine Paper and Packaging, and $0.2 million within Unallocated corporate costs). Refer to Note 11, "Impairment and Asset Restructuring Costs", Note 4, "Acquisition", Note 6, "Debt", Note 7, "Pension and Other Postretirement Benefits", and Note 1, "Background and Basis of Presentation" for further discussion.
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(c)    Operating loss for the three months ended June 30, 2020 included (1) $55.3 million of asset restructuring and impairment costs ($51.6 million within Technical Products and $3.7 million within Fine Paper and Packaging) related to the impairment of certain long-lived assets, as well as the idling of a paper machine and other smaller assets and related severance costs; (2) $1.9 million of loss on debt extinguishment ($0.1 million within Technical Products and $1.8 million within Unallocated corporate costs) related to the redemption of the 2021 Senior Notes and resizing of the Global Revolving Credit Facilities. Coldenhove isFacility; (3) $0.4 million of incremental and direct costs of responding to COVID-19 ($0.1 million within Technical Products, $0.1 million within Fine Paper and Packaging and $0.2 million within Unallocated corporate costs); (4) $1.3 million of other restructuring and non-routine costs ($0.2 million within Technical Products, $0.8 million within Fine Paper and Packaging, and $0.3 million within Unallocated corporate costs); and (5) $0.1 million of due diligence and transaction costs of a specialty materials manufacturer basedterminated acquisition attempt within Unallocated corporate costs. Refer to Note 11, "Impairment and Asset Restructuring Costs", Note 6, "Debt", and Note 1, "Background and Basis of Presentation" for further discussion.

(d)    Operating income for the six months ended June 30, 2020 included (1) $55.3 million of impairment and asset restructuring costs ($51.6 million within Technical Products and $3.7 million within Fine Paper and Packaging) related to the impairment of certain long-lived assets, as well as the idling of a paper machine and other smaller assets and related severance costs; (2) $1.9 million of loss on debt extinguishment ($0.1 million within Technical Products and $1.8 million within Unallocated corporate costs) related to the redemption of the Company's eight-year senior unsecured notes in the Netherlands, with a leading position in digital transfer mediaface amount of $175 million (the "2021 Senior Notes") and other technical products. The Company assumed all rights, obligations and liabilities of Coldenhove, subject to certain representations, warranties, terms, conditions and indemnities typical in this type of transaction. The Company will account for this acquisition in accordance with ASC 805, Business Combinations, which requires the assets acquired and the liabilities assumed to be measured at fair value at the dateresizing of the acquisition. Global Revolving Credit Facility; (3) $1.5 million of incremental and direct costs of responding to COVID-19 ($0.7 million within Technical Products and $0.6 million within Fine Paper and Packaging and $0.2 million within Unallocated corporate costs); (4) $2.7 million of other restructuring and non-routine costs ($0.4 million within Technical Products, $1.7 million within Fine Paper and Packaging, and $0.6 million within Unallocated corporate costs); and (5) $1.1 million of due diligence and transaction costs of a terminated acquisition attempt within Unallocated corporate costs. Refer to Note 11, "Impairment and Asset Restructuring Costs", Note 6, "Debt", and Note 1, "Background and Basis of Presentation" for further discussion.

June 30, 2021December 31, 2020
Total Assets (a)
Technical Products$836.2 $531.0 
Fine Paper and Packaging223.6 213.4 
Corporate and other (b)57.7 62.2 
Consolidated$1,117.5  $806.6 

(a) Segment identifiable assets are those that are directly used in the segments operations.
(b) Corporate assets are primarily deferred income taxes, lease ROU assets, and cash.

The Company has not includedfollowing table represents a disaggregation of revenue from contracts with customers by location of the unaudited pro forma information in this filing, asselling entities for the Company has not yet finalized the acquisition accounting.three and six months ended June 30, 2021 and 2020:

 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
United States58 %70 %61 %72 %
Germany23 %24 %26 %21 %
Rest of the world19 %%13 %%
Total100 % 100 %100 % 100 %





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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 SeptemberJune 30, 20172021 and our results of operations for the three and ninesix months ended SeptemberJune 30, 20172021 and 2016.2020. 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”"Forward-Looking Statements" for a discussion of the uncertainties, risks and assumptions associated with these statements.



Executive Summary
For the three months ended SeptemberJune 30, 2017,2021, consolidated net sales of $245.1$269.3 million increased $12.2$107.9 million (67%) from the prior year period, as a result ofwhich was heavily impacted by COVID-19. The increase includes strong volume growth in Technical Products due to higher volumes andboth segments, with the impact from lower value sales mix mostly offset by favorable currency effects, and modest growth in Fine Paper and Packaging due mostly to higher priced mix.effects.

Consolidated operating income of $29.0loss decreased $25.9 million (44%) from the prior year period to $32.6 million for the three months ended SeptemberJune 30, 20172021. The operating loss of $32.6 million in 2021 resulted primarily from one-time charges of $51.9 million, including impairment and asset restructuring costs resulting from the Appleton Mill closure, loss on debt extinguishment, acquisition and integration costs, pension settlement losses, and other restructuring items as detailed in the GAAP reconciliation table. Operating loss of $58.5 million in 2020 resulted primarily from the $59.0 million of mostly non-cash costs for impairments and write-offs due to the Appleton Mill impairment and COVID-19 impacts. Excluding adjusting items in both years, adjusted operating income of $19.3 million increased $2.1$18.8 million from $0.5 million in the prior year period.year. The increase was primarily due todriven by strong sales volume growth in both segments and improved operationalhigher manufacturing efficiencies partly offset by higher input costs and lower value sales mix in Technical Products, as well as proceeds from an insurance settlement and benefits from currency effects. These favorable variances were partially offset by expected start-up losses inProducts. See the US filtration business and higher input and transportation costs.reconciliation table on F-27 for further detail.


Cash provided by operating activities of $81.6$23.4 million for the ninesix months ended SeptemberJune 30, 20172021 was $16.1$20.2 million lower than cash generated of $97.7$43.6 million in the prior year period, primarilyperiod. The decrease resulted from higher working capital due to higher sales and production volumes, and to a lesser extent from higher payments for pensions.

On April 6, 2021, we completed the acquisition of Itasa for approximately $240.2 million with available cash-on-hand and the net proceeds of the Term Loan B. Itasa is a leading global coater and converter of release liners used in hygiene, tapes, industrial, labels, composites and various other end markets. For the three months ended June 30, 2021, Itasa added $33.2 million of net sales and an increased investmentoperating loss of $2.2 million (including one-time acquisition adjustments of $5.1 million). See Note 4, "Acquisition" in working capital, largelythe Notes to the Condensed Consolidated Financial Statements.

On June 28, 2021, our Board of Directors approved the permanent closure of the Appleton Mill used in accounts receivable.the Technical Products segment. The closure of the facility is expected to be substantially complete by the end of the third quarter of 2021. See Note 11, "Impairment and Asset Restructuring Costs" in the Notes to the Condensed Consolidated Financial Statements.




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”"operating income") and other information relevant to an understanding of our results of operations for the three and ninesix months ended SeptemberJune 30, 20172021 and 2016.2020.

In January 2021, the Company realigned management of the publishing products component of the Technical Products segment to be part of the Fine Paper and Packaging segment. As a result, the Company recast the comparable 2020 information and presented the $5.5 million and $15.4 million of net sales and $1.1 million and $0.2 million of operating loss for the three and six months ended June 30, 2020, respectively, formerly in the Technical Products segment as part of the Fine Paper and Packaging segment.
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Analysis of Net Sales — threeThree and nine months ended SeptemberSix Months Ended June 30, 20172021 and 2016
2020
The following table presents net sales by segment, expressed as a percentage of total net sales:
 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Net sales    
Technical Products$179.6 67 %$100.6 62 %$324.8 65 %$232.9 59 %
Fine Paper and Packaging89.7 33 %60.8 38 %171.5 35 %162.1 41 %
Consolidated$269.3 100 %$161.4 100 %$496.3 100 %$395.0 100 %

  Three Months Ended September 30, Nine Months Ended September 30,
  2017 2016 2017 2016
Net sales  
  
  
  
        
Technical Products $125.9
 52% $114.1
 49% $375.1
 51% $362.1
 50%
Fine Paper and Packaging 113.3
 46% 112.9
 48% 343.3
 47% 340.4
 47%
Other 5.9
 2% 5.9
 3% 17.5
 2% 18.5
 3%
Consolidated $245.1
 100% $232.9
 100% $735.9
 100% $721.0
 100%

Commentary:

The following table presents our net sales by segment for the three months ended SeptemberJune 30, 20172021 and 2016:2020:
 Three Months Ended June 30,Change in Net Sales Compared to Prior Period
  Change Due To
 20212020Total ChangeVolumeNet Price (a)Currency
Technical Products$179.6 $100.6 $79.0 $79.6 $(7.5)$6.9 
Fine Paper and Packaging89.7 60.8 28.9 26.9 2.0 — 
Consolidated$269.3 $161.4 $107.9 $106.5 $(5.5)$6.9 
 
  Three Months Ended September 30, Change in Net Sales Compared to Prior Period
     Change Due To
  2017 2016 Total Change Volume Net Price (a) Currency
Technical Products $125.9
 $114.1
 $11.8
 $8.3
 $0.7
 $2.8
Fine Paper and Packaging 113.3
 112.9
 $0.4
 (1.8) 2.2
 
Other 5.9
 5.9
 $
 
 
 
Consolidated $245.1
 $232.9
 $12.2
 $6.5
 $2.9
 $2.8
(a)Includes changes in selling price and product mix.



Consolidated net sales of $245.1$269.3 million for the three months ended SeptemberJune 30, 20172021 increased $12.2$107.9 million (67%) from the prior year period, as a resultwhich was heavily impacted by COVID-19. The increase includes strong organic volume growth, plus net sales from the Itasa acquisition of growth in Technical Products due to higher volumes and$33.2 million. The impact from lower value sales mix was mostly offset by favorable currency effects. Excluding the effects and modest growth in Fine Paper and Packaging due mostlyof the Itasa acquisition, net sales grew 4% compared to higher priced mix.the first quarter of 2021.
Net sales in our technical products business increased $11.8$79.0 million (79%) from the prior year period. The revenue increase was primarily driven by a rebound in all product categories compared to the lowest point of the pandemic in the second quarter of 2020, the acquisition of Itasa, and favorable currency effects from a stronger euro. These increases were partly offset by lower value sales mix in 2021. Net sales also continued to grow sequentially from the first quarter of 2021 and were 1% higher, excluding net sales of $33.2 million from the prior period due to increased volumes for backings, label and filtration, as well as higher average selling prices and favorable currency exchange effects.Itasa acquisition.
Net sales in our fine paper and packaging business increased $0.4$28.9 million (48%) from the prior year period due to higher averageperiod. The increase also reflects a continued rebound in all product categories, especially in commercial print. In addition, net selling prices which offset lower shipping volumes. Volumes declined primarily for lower-priced, non-branded grades, which also contributedwere higher in 2021 due to a higher priced mix and input cost recoveries. Net sales mix.also continued to grow sequentially and were 10% higher than the first quarter of 2021, driven by growth in premium packaging and consumer products.



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The following table presents our net sales by segment for the ninesix months ended SeptemberJune 30, 20172021 and 2016:2020:



 Nine Months Ended September 30, Change in Net Sales Compared to Prior Period Six Months Ended June 30,Change in Net Sales Compared to Prior Period
   Change Due To  Change Due To
 2017 2016 Total Change Volume Net Price (a) Currency 20212020Total ChangeVolumeNet Price (a)Currency
Technical Products $375.1
 $362.1
 $13.0
 $8.3
 $6.2
 $(1.5)Technical Products$324.8 $232.9 $91.9 $90.0 $(11.9)$13.8 
Fine Paper and Packaging 343.3
 340.4
 $2.9
 8.5
 (5.6) ��
Fine Paper and Packaging171.5 162.1 9.4 10.8 (1.4)— 
Other 17.5
 18.5
 $(1.0) (1.0) 
 
Consolidated $735.9
 $721.0
 $14.9
 $15.8
 $0.6
 $(1.5)Consolidated$496.3 $395.0 $101.3 $100.8 $(13.3)$13.8 


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



Consolidated net sales of $735.9$496.3 million for the ninesix months ended SeptemberJune 30, 20172021 increased $14.9$101.3 million (26%) from the prior year period, asperiod. Strong organic volume growth was realized in both Fine Papersegments, coupled with net sales from the Itasa acquisition of $33.2 million and Packaging and Technical Productsfavorable currency effects. The increase was only partiallypartly offset by lower price mix in Fine Paper and Packaging, unfavorable currency effects, and a decline innet selling prices, driven by lower value mix. Excluding the Itasa acquisition, net sales of Other products, primarily related to datebooks, diaries and yearbooks.grew 17% from prior year.
Net sales in our technical products business increased $13.0$91.9 million (39%) from the prior period due to higher volumesperiod. The revenue increase reflects a rebound in backings, labelall product categories, led by sales growth in filtration, incremental sales from the acquisition of Itasa, and filtration, as well as higher priced mix.favorable currency effects from a stronger euro. These itemsincreases were partly offset by unfavorable currency effects.lower value sales mix in 2021. Excluding net sales of $33.2 million from the Itasa acquisition, technical products net sales increased 25% from the prior year.
Net sales in our fine paper and packaging business increased $2.9$9.4 million (6%) from the prior year period due to higher volumes mostlyperiod. The rebound was achieved in all product categories, especially in packaging and consumer print. The increase in net sales was slightly offset by a lower priced mix. Increased volumes reflected more direct sales of non-branded products as well as double digit growthvalue mix in premium packaging.2021.



Analysis of Operating Income — Three and nine months ended SeptemberSix Months Ended June 30, 20172021 and 2016
2020
The following table sets forth line items from our condensed consolidated statementsCondensed Consolidated Statements of operationsOperations 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 June 30,Six Months Ended June 30,
 2017 2016 2017 2016 2021202020212020
Net sales 100.0 % 100.0% 100.0 % 100.0%Net sales100.0 %100.0 %100.0 %100.0 %
Cost of products sold 80.4
 78.9
 79.1
 76.7
Cost of products sold85.7 86.7 82.3 80.9 
Gross profit 19.6
 21.1
 20.9
 23.3
Gross profit14.3 13.3 17.7 19.1 
Selling, general and administrative expenses 8.7
 9.0
 9.6
 10.0
Selling, general and administrative expenses10.2 12.9 10.4 12.0 
Acquisition/integration/restructuring costs 0.4
 0.5
 0.1
 0.5
Insurance settlement (1.3) 
 (0.4) 
Impairment and asset restructuring costs (Note 11)Impairment and asset restructuring costs (Note 11)12.8 34.3 6.9 14.0 
Acquisition and integration costs (Note 4)Acquisition and integration costs (Note 4)— 0.2 2.4 0.3 
Loss on debt extinguishment (Note 6)Loss on debt extinguishment (Note 6)2.7 1.2 1.5 0.5 
Pension settlement losses (Note 7)Pension settlement losses (Note 7)0.4 — 0.2 — 
Other restructuring and non-routine costs (Note 12)Other restructuring and non-routine costs (Note 12)0.3 0.8 0.2 0.7 
COVID-19 costs (Note 1)COVID-19 costs (Note 1)0.1 0.1 0.1 0.4 
Other (income) expense - net 
 
 
 
Other (income) expense - net(0.1)0.1 (0.2)0.1 
Operating income 11.8
 11.6
 11.6
 12.8
Operating lossOperating loss(12.1)(36.2)(3.8)(8.8)
Interest expense - net 1.3
 1.2
 1.3
 1.2
Interest expense - net1.8 1.9 1.6 1.5 
Income from continuing operations before income taxes 10.5
 10.4
 10.3
 11.6
Provision for income taxes 2.8
 3.4
 2.0
 3.7
Income from continuing operations 7.7 % 7.0% 8.3 % 7.9%
Loss before income taxesLoss before income taxes(13.9)(38.1)(5.4)(10.3)
Benefit for income taxesBenefit for income taxes(2.9)(7.1)(1.1)(1.8)
Net lossNet loss(11.0)%(31.0)%(4.3)%(8.5)%
 
Commentary:
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The following table presents our operating income by segment for the three months ended SeptemberJune 30, 20172021 and 2016:2020:
   Change in Operating Income Compared to Prior Period
 Three Months Ended June 30, Change Due To
 Total NetInput  
 20212020ChangeVolumePrice (a)Costs (b)CurrencyOther (c)
Technical Products$(28.3)$(46.2)$17.9 $16.1 $(6.5)$(4.6)$0.9 $11.9 
Fine Paper and Packaging9.9 (5.2)15.1 8.3 2.7 (0.9)— 5.1 
Unallocated corporate costs(14.2)(7.1)(7.1)— — — — (7.1)
Consolidated$(32.6)$(58.5)$25.9 $24.4 $(3.8)$(5.5)$0.9 $9.9 
 
      Change in Operating Income Compared to Prior Period
  Three Months Ended September 30,   Change Due To
   Total   Net Input    
  2017 2016 Change Volume Price (a) Costs (b) Currency Other (c)
Technical Products $15.6
 $14.1
 $1.5
 $2.3
 $0.5
 $(1.0) $0.4
 $(0.7)
Fine Paper and Packaging 17.8
 17.3
 0.5
 (0.1) 0.1
 (1.1) 
 1.6
Other 0.2
 0.1
 0.1
 
 
 
 
 0.1
Unallocated corporate costs (4.6) (4.6) 
 
 
 
 
 
Consolidated $29.0
 $26.9
 $2.1
 $2.2
 $0.6
 $(2.1) $0.4
 $1.0
(a)Includes changes in selling price and product mix.
(b)Includes price changes for raw materials and energy.
(c) Includes the net favorable effects of other manufacturing costs, over (under) absorption of fixed costs, distribution and SG&A expenses. In addition, these amounts include the net change in non-GAAP adjustments of $9.0 million, $4.5 million, and $(6.4) million in Technical Products, Fine Paper and Packaging, and Unallocated corporate costs, respectively. See the reconciliation table on F-27 for further detail by segment and type of cost.

Consolidated operating loss decreased $25.9 million from the prior year period to $32.6 million for the three months ended June 30, 2021. The operating loss of $32.6 million in 2021 resulted primarily from non-routine charges of $51.9 million, including asset restructuring costs resulting from the Appleton Mill closure, loss on debt extinguishment, acquisition and integration costs, pension settlement losses and other restructuring items as detailed in the GAAP reconciliation table. Operating loss of $58.5 million in 2020 resulted primarily from the $59.0 million of mostly non-cash costs for impairments and write-offs due to Appleton impairment and COVID-19 impacts. Excluding adjusting items in both years, adjusted operating income of $19.3 million increased $18.8 million from $0.5 million in the prior year. The increase was driven by strong sales volume growth in both segments, including the effects of the Itasa acquisition and higher manufacturing efficiencies, partly offset by higher input costs and lower value sales mix in Technical Products. See the reconciliation table on F-27 for further detail.
Operating loss for our technical products business decreased $17.9 million from the prior year period to $28.3 million. Excluding adjusting items discussed above and shown on the reconciliation table on F-27, adjusted operating income increased $8.9 million from $5.8 million to $14.7 million, primarily as a result of increased volume, including the acquisition of Itasa, higher operating efficiencies due to increased production volume, and favorable foreign currency, partly offset by lower value sales mix and higher input costs.
Operating income for our fine paper and packaging business increased $15.1 million from the prior year period to $9.9 million, primarily as a result of higher sales and production volume and more favorable sales mix, partly offset by higher input costs. The prior year period also had $4.5 million of higher costs related to impairment and asset restructuring costs, and other restructuring and non-routine costs. Excluding unfavorable adjusting items of $0.1 million in 2021 and $4.6 million in 2020 shown on the reconciliation table on F-27, adjusted operating income of $10.0 million in 2021 increased $10.6 million from a loss of $0.6 million in the prior year.
Unallocated corporate expenses of $14.2 million increased $7.1 million from the prior year. Excluding unfavorable adjustments in 2021 and 2020 of $8.8 million and $2.4 million, respectively, shown on the reconciliation table on F-27, adjusted unallocated corporate expenses of $5.4 million increased $0.7 million from prior year due to timing of certain expenses. The adjustments for both years related primarily to loss on debt extinguishment.

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The following table presents our operating income (loss) by segment for the six months ended June 30, 2021 and 2020:

   Change in Operating Income Compared to Prior Period
 Six Months Ended June 30, Change Due To
 Total NetInput  
 20212020ChangeVolumePrice (a)Costs (b)CurrencyOther (c)
Technical Products$(9.1)$(30.9)$21.8 $18.3 $(10.9)$(5.1)$2.2 $17.2 
Fine Paper and Packaging22.6 10.5 12.1 3.2 0.7 (0.1)— 8.4 
Unallocated corporate costs(32.5)(14.5)(18.0)— — — — (18.0)
Consolidated$(19.0)$(34.9)$15.9 $21.5 $(10.2)$(5.2)$2.2 $7.6 

(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, start-upexpenses. In addition, these amounts include the net change in non-GAAP adjustments of $9.4 million, $5.9 million, and other$(17.2) million in Technical Products, Fine Paper and Packaging, and Unallocated corporate costs, respectively. See the reconciliation table on F-27 for the U.S. filtration business, insurance settlement,further detail by segment and acquisition/integration/restructuring costs.type of cost.


Consolidated operating income of $29.0 million for the three months ended September 30, 2017 increased $2.1 million from the prior year period. The increase was primarily due to volume growth and improved operational efficiencies in Technical Products, as well as proceeds from an insurance settlement and benefits from currency effects. These favorable variances were partially offset by expected start-up losses in the US filtration business and higher input and transportation costs. Excluding an insurance settlement of $3.2 million for 2017 and acquisition, integration, and restructuring costs of $0.9 million and $1.2 million for 2017 and 2016, respectively, operating incomeloss decreased $1.4 million.
Operating income for our technical products business increased $1.5$15.9 million from the prior year period loss of $34.9 million to a loss of $19.0 million for the six months ended June 30, 2021. Excluding adjusting items noted below, operating income increased $17.8 million to $45.4 million due primarily due to higher sales and related manufacturing cost efficiencies. The impact of higher volumes, improved operational efficiencies,including the acquisition of Itasa, was only partly offset by lower value sales mix in Technical Products and higher average selling prices and favorable currency effects.input costs. In addition, costs were lower due toas presented on the annual filtration maintenance down in Germany being deferred to the fourth quarter. These items more than offset costs during the U.S. filtration start-up phasereconciliation table on F-27, we recorded $64.4 million of impairment and rising input prices. Excluding integration andasset restructuring costs of $0.1the Appleton Mill closure, acquisition and integration costs, loss on extinguishment of debt, pension settlement losses, other restructuring and non-routine costs, and incremental costs of responding to COVID-19. Adjusting items of $62.5 million in 2020 included non-cash impairment and asset restructuring costs for 2016, operating income increased $1.4long-lived assets, loss on extinguishment of debt, incremental costs of responding to COVID-19, other restructuring and non-routine costs, and acquisition and due diligence costs.
Operating loss for our technical products business decreased $21.8 million from the prior year.year period loss of $30.9 million to a loss of $9.1 million. Excluding unfavorable adjusting items discussed above and shown on the reconciliation table on F-27, adjusted operating income increased $12.4 million (57%) from $21.8 million to $34.2 million, primarily as a result of higher sales and production volumes, including the Itasa acquisition, and related manufacturing cost efficiencies, and favorable foreign currency, partly offset by lower value sales mix and higher input costs.


Operating income for our fine paper and packaging business increased $0.5 million from the prior year period. Operating income in 2017 included benefits from an insurance settlement of $2.9 million that was largely offset by increased transportation and input costs, and lower operating efficiencies. Excluding the insurance settlement of $2.9 million for 2017 and integration and restructuring costs of $0.3 million for 2016, operating income decreased $2.7 million.
Unallocated corporate expenses for the three months ended September 30, 2017 of $4.6 million were consistent with the prior year period. Excluding acquisition and integration costs of $0.9 million and $0.8 million for 2017 and 2016, respectively, operating income increased $0.1 million.

 The following table presents our operating income by segment for the nine months ended September 30, 2017 and 2016:

      Change in Operating Income Compared to Prior Period
  Nine Months Ended September 30,   Change Due To
   Total   Net Input    
  2017 2016 Change Volume Price (a) Costs (b) Currency Other (c)
Technical Products $44.1
 $53.4
 $(9.3) $2.8
 $0.8
 $(4.9) $(0.3) $(7.7)
Fine Paper and Packaging 55.6
 53.2
 2.4
 2.9
 (3.2) (1.2) 
 3.9
Other 0.1
 0.1
 
 (1.0) 
 
 
 1.0
Unallocated corporate costs (14.6) (14.5) (0.1) 
 
 
 
 (0.1)
Consolidated $85.2
 $92.2
 $(7.0) $4.7
 $(2.4) $(6.1) $(0.3) $(2.9)

(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, start-up and other costs for the U.S. filtration business, insurance settlement, and integration/restructuring costs.
Consolidated operating income of $85.2 million for the nine months ended September 30, 2017 decreased $7.0 million from the prior year period. The decline was primarily due to higher losses resulting from the U.S. filtration business start-up phase, as well as increased input and transportation costs, and a lower value mix in Fine Paper & Packaging. These items were only partially offset by higher volumes and selling prices, proceeds from an insurance settlement, improved operational efficiencies and lower SG&A spending. Excluding an insurance settlement of $3.2 million and integration and restructuring costs of $0.9 million and $3.7 million for 2017 and 2016, respectively, operating income decreased $13.0 million.
Operating income for our technical products business decreased $9.3$12.1 million from the prior year period primarily due to higher manufacturing costs, including losses from$22.6 million. Excluding unfavorable adjusting items discussed above and shown on the U.S. filtration business start-up phase, and other unfavorable impacts from higher material and transportation costs, additional downtime in Germany and unfavorable currency effects. These items were partially offset by benefits from higher sales mix, manufacturing efficiencies, and lower integration and restructuring costs. Excluding integration and restructuring costs of $0.6 million for 2016,reconciliation table on F-27, adjusted operating income decreased $9.9of $22.8 million in 2021 increased $6.2 million (37%) from the prior year.

Operating income for our fine paper and packaging business increased $2.4$16.6 million fromin the prior year periodprimarily as a result of higher sales volume,and production volumes and related manufacturing efficiencies and lower integration costs, and an insurance settlementcost efficiencies. The impact of $2.9 million, that were partiallyhigher volumes was only partly offset by lower priced product mix, unplanned downtime and higher material and transportationinput costs. Excluding the insurance settlement of $2.9 million for 2017 and integration and restructuring costs of $1.1 million for 2016, operating income decreased $1.6 million.
Unallocated corporate expenses for the ninesix months ended SeptemberJune 30, 20172021 of $14.6$32.5 million was $0.1were $18.0 million higher than the prior year period. Excludingperiod due to costs of $20.9 million including loss on debt extinguishment, acquisition and integration costs, pension settlement losses, restructuring and other non-routine costs, and COVID-19 costs. These costs compared to $3.7 million of $0.9 million and $1.4 million for 2017 and 2016, respectively,one-time costs in 2020. Excluding these items, adjusted unallocated corporate expenses increased $0.6 million.were $0.8 million higher than the prior year period due to higher SG&A spending.

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The following table sets forth our operating income (loss) by segment, adjusted for the effects of integration and restructuringnon-routine certain costs, for the periods indicated:
 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Technical Products    
GAAP operating loss$(28.3)$(46.2)$(9.1)$(30.9)
Impairment and asset restructuring costs37.4 51.6 37.4 51.6 
Acquisition and integration costs5.1 — 5.1 — 
Loss on debt extinguishment— 0.1 — 0.1 
Other restructuring and non-routine0.4 0.2 0.6 0.3 
COVID-19 costs0.1 0.1 0.2 0.7 
Adjusted operating income14.7 5.8 34.2 21.8 
Fine Paper and Packaging    
GAAP operating income (loss)9.9 (5.2)22.6 10.5 
Asset restructuring costs— 3.7 — 3.7 
Other restructuring and non-routine0.1 0.8 (0.1)1.8 
COVID-19 costs— 0.1 0.3 0.6 
Adjusted operating income (loss)10.0 (0.6)22.8 16.6 
Unallocated Corporate Costs    
GAAP operating loss(14.2)(7.1)(32.5)(14.5)
Acquisition and integration costs0.1 0.1 12.1 1.1 
Loss on debt extinguishment7.2 1.8 7.2 1.8 
Pension settlement costs1.0 — 1.0 — 
Other restructuring and non-routine0.4 0.3 0.4 0.6 
COVID-19 costs0.1 0.2 0.2 0.2 
Adjusted operating loss(5.4)(4.7)(11.6)(10.8)
Consolidated    
GAAP operating loss(32.6)(58.5)(19.0)(34.9)
Impairment and asset restructuring costs (a)37.4 55.3 37.4 55.3 
Acquisition and integration costs (a)5.2 0.1 17.2 1.1 
Loss on debt extinguishment7.2 1.9 7.2 1.9 
Pension settlement costs1.0 — 1.0 — 
Other restructuring and non-routine0.9 1.3 0.9 2.7 
COVID-19 costs0.2 0.4 0.7 1.5 
Adjusted operating income$19.3 $0.5 $45.4 $27.6 

(a) Each of these non-routine items is reflected on the Condensed Consolidated Statements of Operations as a separate line, with the exception of $3.0 million of "Impairment and asset restructuring costs" and $5.1 million of "Acquisition and integration costs" which are reflected in "Cost of products sold".


F-27

  Three Months Ended September 30, Nine Months Ended September 30,
  2017 2016 2017 2016
Operating income  
  
  
  
Technical Products $15.6
 $14.1
 $44.1
 $53.4
Fine Paper and Packaging 17.8
 17.3
 55.6
 53.2
Other 0.2
 0.1
 0.1
 0.1
Unallocated corporate costs (4.6) (4.6) (14.6) (14.5)
Operating Income as Reported $29.0
 $26.9
 $85.2
 $92.2
Adjustments to Reported Operating Income  
  
  
  
Technical Products  
  
  
  
Integration/Restructuring costs 
 0.1
 
 0.6
Fine Paper and Packaging  
  
  
  
Insurance settlement (2.9) 
 (2.9) 
Integration/Restructuring costs 
 0.3
 
 1.1
Other    
  
  
Insurance settlement (0.3) 
 (0.3) 
Integration/Restructuring costs 
 
 
 0.6
Unallocated corporate costs  
  
  
  
Acquisition/Restructuring costs 0.9
 0.8
 0.9
 1.4
Total Adjustments to Reported Operating Income (2.3) 1.2
 (2.3) 3.7
Operating Income as Adjusted $26.7
 $28.1
 $82.9
 $95.9
Table of Contents
In accordance with generally accepted accounting principles in the United States (“GAAP”("GAAP"), consolidated operating income (loss) includes the pre-tax effects of insuranceimpairment and asset restructuring costs, acquisition and integration costs, loss on debt extinguishment, pension settlement acquisition, integration,losses, other restructuring and restructuringnon-routine costs, and COVID-19 costs. We believe that by adjusting reported operating income to exclude the effects of thesesuch items, the resulting adjusted operating income is on a basis that reflects the results of our ongoing operations. In assessing COVID-19 impacts, we excluded only costs which were unusual, incremental and directly attributable to mitigating the effects COVID-19 on our operations. We believe that providing adjusted operating results will help investors gain an additional perspective of underlying business trends and results. Adjusted operating income is not a recognized term under GAAP and should not be considered in isolation or as a substitute for operating income derived in accordance with GAAP. Other companies may use different methodologies for calculating their non-GAAP financial measures and, accordingly, our non-GAAP financial measures may not be comparable to their measures.


Additional Statement of Operations Commentary:
SG&A expense of $21.4$27.5 million for the three months ended SeptemberJune 30, 20172021 was $0.4$6.7 million higher than SG&A expense of $21.0$20.8 million in the prior year period. ForThe majority of the three months ended September 30, 2017,increase was due to additional SG&A expensefrom the Itasa acquisition. Costs in 2020 were lower due to the significant actions taken to manage spending and temporarily reduce costs in areas such as a percent of sales decreased to 8.7 percent from 9.0 percent in the prior year period.

marketing, travel and payroll.
SG&A expense of $70.9$51.8 million for the ninesix months ended SeptemberJune 30, 20172021 was $0.9$4.4 million lowerhigher than SG&A expense of $71.8$47.4 million in the prior year period. ForMost of the nine months ended September 30, 2017,increase was due to additional SG&A expense as a percent of sales decreased to 9.6 percent from 10.0 percent in the prior year period.Itasa acquisition.
For the three months ended SeptemberJune 30, 2017, we incurred2021, net interest expense of $3.2$4.8 million which was higher than the $2.7$3.0 million in the second quarter of 2020, due to the higher borrowing under the upsized Term Loan B and amortization of the associated deferred financing costs.
For the six months ended June 30, 2021, net interest expense of $7.9 million increased compared to $5.9 million for prior year period, primarilylikewise due to capitalization of interest of $0.3 million for the U.S. filtration project in 2016higher Term Loan B borrowing and higher interest rates.associated deferred financing cost amortization.

For the nine months ended September 30, 2017, we incurred net interest expense of $9.4 million which was higher than the $8.3 million for prior year period, primarily due to capitalization of interest of $0.7 million for the U.S. filtration project in 2016 and higher interest rates.
Historically, our effective tax rate has differed 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, research and development and other tax credits and excess tax benefits from stock compensation. In June 2017, as part of our annual strategic plan review, we reassessed our intentions regarding the indefinite reinvestment of undistributed

earnings of our German operations and asserted our intent to indefinitely reinvest them under ASC 740, Income Taxes. Accordingly, we are no longer providing deferred income taxes on the 2017 unremitted earnings of our German operations. For the three months ended SeptemberJune 30, 20172021 and 2016,2020, we recorded an income tax provisionbenefit of $7.0$7.7 million and $7.8$11.4 million, respectively. The effective income tax rate was (21)% and (19)% for those periods, respectively. For the six months ended June 30, 2021 and 2020, we recorded an income tax benefit of 27 percent$5.5 million and $7.1 million, respectively. The effective income tax rate was (20)% and (17)% for those periods, respectively. See Note 5, "Income Taxes" of Notes to Condensed Consolidated Financial Statements for a reconciliation of the effective income tax (benefit) rate to the U.S. federal statutory income tax (benefit) rate. The effective income tax benefit rates in 2021 and 2020, were significantly impacted by the effects of the $32.4 million and $52.3 million, respectively, of impairment losses of the Appleton Mill (see Note 11, "Impairment and Asset Restructuring Costs") which resulted in consolidated pre-tax book losses in each period. During the three months ended SeptemberJune 30, 2017 was lower than2021, the Company recorded $2.9 million of income tax rateexpense to reflect the elimination of 32 percent for the three months ended September 30, 2016certain deferred tax assets due to the indefinite reinvestment assertion. For further detail refermill closure. In addition, during this period, the Company recorded an income tax benefit of $1.4 million upon filing income tax returns to Note 1, "Backgroundutilize the NOL carryback provisions of the Coronavirus Aid, Relief and BasisEconomic Security Act ("CARES Act"). Combined with the estimated benefit recorded as of Presentation - Income Taxes".December 31, 2020, the Company has recorded an income tax benefit of $2.3 million and a corresponding tax receivable of $9.1 million for the tax refund.
In addition, as of June 30, 2020, we evaluated our ability to utilize our deferred tax assets, including research and development and other tax credits and NOLs, before they expire. As a result of the impacts of COVID-19 and other factors, a $4.0 million tax expense was recorded to increase the valuation allowance against our state tax credits and NOLs.



Liquidity and Capital Resources
We believe that our financial position and liquidity remain strong, considering as of June 30, 2021, we had:
no near-term debt maturities, as the Global Revolving Credit Facility matures in December 2023 and the Term Loan B matures in April 2028;
significant remaining availability of $159.6 million on our Global Revolving Credit Facility, with no outstanding borrowings;
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$36.7 million of cash and cash equivalents on hand;
On April 6, 2021, in connection with the acquisition of Itasa, we successfully completed the upsizing of our Term Loan B facility from $200 million to $450 million and lowered the initial interest rate by 150 basis points. See Note 6, "Debt" of Notes to Condensed Consolidated Financial Statements, for further discussion.

 Six Months Ended June 30,
 20212020
Net cash flow provided by (used in):  
Operating activities$23.4 $43.6 
Investing activities:  
Capital expenditures(11.3)(8.0)
Acquisition of Itasa(240.2)— 
Other investing activities3.9 (0.3)
Total(247.6)(8.3)
Financing activities:
Net borrowings (repayments) of long-term debt249.6 183.5 
Cash dividends paid(15.9)(16.0)
Shares purchased(0.5)(3.8)
Other financing activities(9.2)(5.2)
Total224.0 158.5 
Effect of exchange rate changes on cash and cash equivalents(0.2)(0.1)
Net increase in cash and cash equivalents and restricted cash$(0.4)$193.7 
 
  Nine Months Ended September 30,
  2017 2016
Net cash flow provided by (used in):  
  
Operating activities $81.6
 $97.7
     
Investing activities:  
  
Capital expenditures (27.2) (49.4)
Asset acquisition (8.0) 
Other investing activities (0.3) (0.1)
Total (35.5) (49.5)
     
Financing activities:    
Net repayments of long-term debt 0.2
 (20.4)
Other financing activities (25.5) (24.5)
Total (25.3) (44.9)
Effect of exchange rate changes on cash and cash equivalents 0.3
 (0.2)
Net increase in cash and cash equivalents $21.1
 $3.1

Operating Cash Flow Commentary
Cash provided by operating activities of $81.6$23.4 million for the ninesix months ended SeptemberJune 30, 20172021 was $16.1$20.2 million lower than cash provided by operating activities of $97.7$43.6 million in the prior year period. The unfavorable comparison was primarilydecrease resulted from higher working capital due to an increased investment in working capital, largelyhigher sales and production volumes, and to a lesser extent from higher payments for pensions. The significant increases in accounts receivable.
receivable, accounts payable and inventory during the six months ended June 30, 2021 resulted from the robust growth in business activity.


Investing Commentary:
We acquired Itasa on April 6, 2021, for $240.2 million, net of cash on hand and repayment of existing debt, and including a loss on foreign currency forward contracts.
For the ninesix months ended SeptemberJune 30, 20172021, and 2016, cash used by investing activities was $35.52020, capital expenditures were $11.3 million and $49.5$8.0 million, respectively, primarily duerespectively. We expect aggregate annual capital expenditures to return to a range of approximately 2 to 4 percent of net sales. We believe that this level of capital spending can be funded from cash provided from operating activities and allows us to maintain the U.S. Filtration project, which was completedefficiency and cost effectiveness of our assets while also investing in 2016. We acquired a laminating asset for $8.0expanded capabilities to successfully pursue strategic initiatives and deliver attractive returns.


Financing Commentary:
For the six months ended June 30, 2021, cash and cash equivalents decreased slightly to $36.7 million from $37.1 million at December 31, 2020. As of June 30, 2021, our cash balance consisted of $4.8 million in the third quarterU.S. and $31.9 million held at entities outside of 2017 to support continued growth inthe U.S. As of June 30, 2021, there were no restrictions regarding the repatriation of our premium packaging business. non-U.S. cash.
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For the full year 2017, we expect capital expenditures of approximately $45 million, which is within our normal range of approximately 3 to 5 percent of net sales.
Financing Commentary:
Our liquidity requirements are provided by cash generated from operations and short and long-term borrowings.
For the ninesix months ended SeptemberJune 30, 2017 and 2016,2021, cash usedprovided in financing activities was $25.3 million and $44.9 million, respectively.$224.0 million. Cash used inflows related to financing activities consists primarilyconsisted of net borrowings of long-term debt, dividends paid, debt issuance costs, and share repurchases,repurchases. We made net borrowings of $249.6 million by upsizing our Term Loan B from $200 million to $450 million as the source of financing the Itasa acquisition.
In the prior year period, we made net borrowings of $183.5 million due to the timing of the 2020 Term Loan B and the redemption of the 2021 Senior Notes. On June 30, 2020, we entered into the 2020 Term Loan Credit Agreement for the 2020 Term Loan B for $200 million. Also on June 30, 2020, using the proceeds from the 2020 Term Loan B, we deposited $176.5 million of principal and accrued interest on the 2021 Senior Notes with the trustee and initiated the process to redeem in full the 2021 Senior Notes. As a result, for the six months ended June 30, 2020, cash and cash equivalents and restricted cash increased $193.7 million to $202.7 million from $9.0 million at December 31, 2019. The 2020 Term Loan B proceeds of $200 million, offset by transaction costs and net repayments of long-term debt.under the Global Revolving Credit Facility, led to increase in total debt by $180.6 million to $381.4 million at June 30, 2020 from $200.8 million at December 31, 2019.

Availability under our revolving credit facilityGlobal Revolving Credit Facility varies over time depending on the value of our inventory, receivables and various capital assets. As of SeptemberJune 30, 2017,2021, we had $43.9 millionno outstanding borrowings under our Global Revolving Credit FacilitiesFacility and $125.9$159.6 million of available credit (based on exchange rates at SeptemberJune 30, 2017)2021).


We haveAs of June 30, 2021, we had required debt principal payments through SeptemberJune 30, 20182022 of $1.3$2.8 million for principal payments on the two German loan agreement.agreements and $4.5 million for the Term Loan B payable in equal quarterly installments.


For the nine months ended September 30, 2017, cash and cash equivalents increased $21.1 million to $24.2 million at September 30, 2017 from $3.1 million at December 31, 2016. Total debt increased $2.0 million to $222.9 million at September 30, 2017 from $220.9 million at December 31, 2016. Net debt (total debt minus cash and cash equivalents) decreased by $19.1 million.

As of September 30, 2017, our cash balance of $24.2 million consists of $4.8 million in the U.S. and $19.4 million held at entities outside of the U.S. As of September 30, 2017, there were no restrictions regarding the repatriation of our non-U.S. cash. However, the repatriation of these cash balances to the U.S. would increase our income tax provision since the earnings are asserted to be indefinitely reinvested.


Transactions With Shareholders
In November 2016, our Board of Directors approved a 12 percent increase in the quarterly dividend rate on our common stock, to $0.37 per share, effective with the March 2017 dividend payment. For the ninesix months ended SeptemberJune 30, 20172021 and 2016,2020, we paid cash dividends of $1.11$15.9 million and $16.0 million ($0.94 per common share or $18.9share).
In November 2020, the Board of Directors authorized an evergreen program for the repurchase of up to $25 million and $0.99 per common share or $16.8 million, respectively.

Purchases under the 2017 Stock Purchase Plan will be made from time to time in the open market or in privately negotiated transactions in accordance with the requirements of applicable law. The timing and amount of any purchases will depend on share price, market conditions and other factors. The 2017 Stock Purchase Planoutstanding Common Stock. This plan does not require us to purchase any specific number of shares and may be suspended or discontinued at any time. For the ninesix months ended SeptemberJune 30, 2017 and 2016,2021, we did not purchase any shares. For the six months ended June 30, 2020, we repurchased approximately 85,40059,577 shares of Common Stock at a cost of $6.8 million and 127,400 shares of Common Stock at a cost of $7.8 million, respectively. We did not repurchase shares during the three months ended September 30, 2017.$3.6 million. For further details on our Stock Purchase Plans, refer to Note 7.9, "Stockholders' Equity" of Notes to Condensed Consolidated Financial Statements.
 

Other Items:
As of SeptemberJune 30, 2017,2021, we had $25.0 million of U.S. federal and state research and development ("R&D") Credits which, if not used, will expire between 2030 and 2037 for the U.S. federal R&D Credits and between 2017 and 2032 for the state R&D Credits. We reflected a valuation allowance of $3.4 million against a portion of the R&D Credits. In addition, as of September 30, 2017, we had $43.6$71.6 million of state net operating losses ("NOLs").NOLs. Our state NOLs may be used to offset approximately $2.1$4.4 million in state income taxes. If not used, substantially all of the state NOLs will expire in various amounts between 20172021 and 2037.2041. In addition, as of June 30, 2021, we had $29.3 million of U.S. federal and $7.5 million of U.S. state research and development tax credits ("R&D Credits") which, if not used, will expire between 2029 and 2041 for the U.S. federal R&D Credits and between 2021 and 2036 for the state R&D Credits.

Management believes that our ability to generate cash from operations and our borrowing capacity are adequate to fund working capital, capital spending and other cash needs for the next 12 months. Our ability to generate adequate cash from operations beyond 20172021 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.the impact and duration of COVID-19. We can give no assurance we will be able to successfully implement these items.




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Table of Contents
Critical Accounting Policies and Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United StatesGAAP 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"Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies”Policies and Use of Estimates" 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.assets and acquisition accounting which requires companies to record assets acquired and liabilities assumed at their respective fair value at the date of acquisition. Actual results could differ from these fair value measurements and 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. ThereOther than the acquisition accounting related to Itasa, there have been no significant changes in these policies or the estimates used in the application of the policies since December 31, 2016.2020.





Cautionary Note Regarding Forward-Looking Statements
Certain statements in this Quarterly Report on Form 10-Q may constitute “forward-looking”"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.under federal securities laws. Statements contained in this quarterly report that are not historical facts may be forward-looking statements within the meaning of the PSLRAunder federal securities laws 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"Cautionary Note Regarding Forward-Looking Statements”Statements" and/or “Risk Factors”"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 PSLRAfederal securities laws with the intention of obtaining the benefits of the “safe harbor”"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”"may," "will," "should," "expect," "anticipate," "contemplate," "estimate," "believe," "plan," "project," "predict," "potential" or “continue,”"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;and political conditions or our inability to execute product innovation strategies;
the impact of competition, both domestic and international, changes in industry production capacity, including the construction of new mills or new machines, the closing of mills and incremental changes due to capital expenditures or productivity increases;
the loss of current customers or the inability to obtain new customers;
increases in commodity prices (particularly for pulp, energy and latex);
our ability to control costs, including transportation, and implement measures designed to enhance operating efficiencies;
the availability of raw materials and energy;
the impact of cybersecurity risks related to breaches of security pertaining to sensitive Company, customer or vendor information, as well as breaches in the technology that manages operations and other business processes;
loss and replacement of key personnel;
our ability to identify attractive acquisition targets and to successfully integrate acquired businesses into our existing operations;
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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;
the enactment of adverse federal, state federal or foreign tax or other legislation or changes in government policy or regulation;
the impact of increased trade protectionism and tariffs on our business, results of operations and financial condition;
unanticipated expenditures related to the cost of compliance with environmental and other governmental regulations;
fluctuations in (i)foreign currency exchange rates (in particular, changes in the U.S. dollar/Euro currency exchange rates) and (ii) interest rates;rates on long-term debt;
increases in commodity prices, (particularlythe funding requirements for pulp, energyour pension and latex) due to constrained global supplies or unexpected supply disruptions;postretirement liabilities;
the availability of raw materials and energy;
strikes, labor stoppages and changes in our collective bargaining agreements and relations with our employees and unions;
capital and credit market volatility and fluctuations in global equity and fixed-income markets;
unanticipated expenditures related to the cost of compliance with environmental and other governmental regulations;
our ability to control costs and implement measures designed to enhance operating efficiencies;
the loss of current customers or the inability to obtain new customers;
loss of key personnel;
increases in the funding requirements for our pension and postretirement liabilities;
changes in asset valuations including write-downs of assets including property, plant and equipment, inventory, accounts receivable, deferred tax assets or other assets for impairment or other reasons;
our existing and future indebtedness;
our ability to successfully integrate acquired businesses into our existing operations;
our NOLs may expire before we are ablenot be available to offset our tax liabilities;liabilities and other 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, 2016.2020.


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.


As of SeptemberJune 30, 2017,2021, 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. 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 SeptemberJune 30, 2017.2021.

 
Internal ControlsControl 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 ninesix months ended SeptemberJune 30, 2017.2021. Based on that evaluation, we have concluded that there has been no change in our internal control over financial reporting during the ninesix months ended SeptemberJune 30, 20172021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

F-32


PART II—OTHER INFORMATION


Item 1.  Legal Proceedings
See Note 8, “Contingencies10, "Contingencies and Legal Matters”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"Item 1A, "Risk Factors" of 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.




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 SeptemberJune 30, 2017.2021:
Shares Purchased as Part of Publicly Announced Plans or Programs in 2021 (b)
MonthTotal Number of
Shares Purchased (a)
Average Price Paid
Per Share
Total Number of Shares
Purchased 
Approximate Dollar
Value of Shares that May
Yet Be Purchased
April323$—$25,000,000
May1,562$—$25,000,000
June$—$25,000,000
 
(a) Transactions include the purchase of vested restricted shares from employees to satisfy minimum tax withholding requirements upon vesting of stock-based awards. See Note 9, "Stockholders' Equity" of Notes to Condensed Consolidated Financial Statements.
Months in 2017 
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 
 $
 
 $25,000,000
August 492
 $80.25
 
 $25,000,000
September 2,583
 $77.25
 
 $25,000,000

(a)As(b) In November 2020, our Board of September 30, 2017,Directors authorized a program for the purchase of up to $25 million of outstanding common stock effective January 1, 2021. The program does not require the Company has purchased approximately 176,896to purchase any specific number of shares of Common Stockand may be suspended or discontinued at an aggregate cost of $14.2 millionany time. For the six months ended June 30, 2021, there were no purchases under the 2017 Stock Purchase Plan and 2016 Stock Purchase Plan.  For further discussion on the share repurchase plans refer to Note 7.this program.





F-33


Item 6.  Exhibits
Exhibit

Number
Exhibit
31.1 
10.1
31.1
31.2
32.1
32.2
101.INS
XBRL Instance Document (filed herewith).- The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

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

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

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

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

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






F-34


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, INCINC.
By:/s/ John P. O'DonnellJulie A. Schertell
John P. O’DonnellJulie A. Schertell
President, Chief Executive Officer and Director

(Principal Executive Officer)
/s/ Bonnie C. LindPaul F. DeSantis
Bonnie C. LindPaul F. DeSantis
SeniorExecutive Vice President, Chief Financial Officer and Treasurer

(Principal Financial Officer)
/s/ Larry N. Brownlee
Larry N. Brownlee
Vice President, Controller (Principal
(Principal
Accounting Officer)
November 8, 2017
August 5, 2021