Condensed Consolidating Financial Information

12 Months Ended

Dec. 31, 2011

Condensed Consolidating Financial Information

Condensed Consolidating Financial Information

Note 15.  Condensed Consolidating Financial Information

Neenah Paper Company of Canada, Neenah Paper Michigan, Inc. and Neenah Paper Sales, Inc. (the "Guarantor Subsidiaries") guarantee the Company's Senior Notes. The Guarantor Subsidiaries are 100 percent owned by the Company and all guarantees are full and unconditional. The following condensed consolidating financial information is presented in lieu of consolidated financial statements for the Guarantor Subsidiaries as of December 31, 2011 and 2010 and for the years ended December 31, 2011, 2010 and 2009. Certain deferred tax assets presented in the Guarantor Subsidiaries column as of December 31, 2009 were presented in the Neenah Paper, Inc. column as of December 31, 2011 and 2010 as such assets will ultimately be realized by Neenah Paper, Inc. due to the substantially complete liquidation of Neenah Canada.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Year Ended December 31, 2011

	Neenah Paper, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Amounts
Net sales	$	272.7		$	143.4		$	279.9		$	—		$	696.0
Cost of products sold		207.6			116.6			246.4			—			570.6
Gross profit		65.1			26.8			33.5			—			125.4
Selling, general and administrative expenses		42.3			10.1			15.8			—			68.2
Loss on retirement of bonds		2.4			—			—			—			2.4
Other (income) expense — net		(0.6	)		0.4			(1.6	)		—			(1.8	)
Operating income		21.0			16.3			19.3			—			56.6
Equity in earnings of subsidiaries		(27.3	)		—			—			27.3			—
Interest expense — net		14.1			0.1			1.1			—			15.3
Income from continuing operations before income taxes		34.2			16.2			18.2			(27.3	)		41.3
Provision for income taxes		5.1			5.5			1.4			—			12.0
Income from continuing operations		29.1			10.7			16.8			(27.3	)		29.3
Loss from discontinued operations, net of income tax benefit		—			(0.2	)		—			—			(0.2	)
Net income	$	29.1		$	10.5		$	16.8		$	(27.3	)	$	29.1

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Year Ended December 31, 2010

	Neenah Paper, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Amounts
Net sales	$	269.4		$	144.2		$	244.1		$	—		$	657.7
Cost of products sold		204.9			117.1			215.7			—			537.7
Gross profit		64.5			27.1			28.4			—			120.0
Selling, general and administrative expenses		44.2			10.7			14.4			—			69.3
Gain on sale of the Ripon Mill		—			(3.4	)		—			—			(3.4	)
Other (income) expense — net		(0.4	)		0.6			(1.2	)		—			(1.0	)
Operating income		20.7			19.2			15.2			—			55.1
Equity in earnings of subsidiaries		(157.5	)		—			—			157.5			—
Interest expense-net		19.0			0.3			1.0			—			20.3
Income from continuing operations before income taxes		159.2			18.9			14.2			(157.5	)		34.8
Provision for income taxes		0.1			7.9			1.8			—			9.8
Income from continuing operations		159.1			11.0			12.4			(157.5	)		25.0
Income from discontinued operations, net of income tax provision		—			134.1			—			—			134.1
Net income	$	159.1		$	145.1		$	12.4		$	(157.5	)	$	159.1

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Year Ended December 31, 2009

	Neenah Paper, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Amounts
Net sales	$	248.2		$	112.4		$	213.3		$	—		$	573.9
Cost of products sold		186.2			92.6			193.5			—			472.3
Gross profit		62.0			19.8			19.8			—			101.6
Selling, general and administrative expenses		45.4			10.0			13.7			—			69.1
Restructuring costs		(0.4	)		17.1			0.4			—			17.1
Other (income) expense — net		0.1			0.9			(2.0	)		—			(1.0	)
Operating income (loss)		16.9			(8.2	)		7.7			—			16.4
Equity in earnings of subsidiaries		(2.5	)		—			—			2.5			—
Interest expense — net		21.4			0.8			1.0			—			23.2
Income (loss) from continuing operations before income taxes		(2.0	)		(9.0	)		6.7			(2.5	)		(6.8	)
Benefit for income taxes		(0.8	)		(4.0	)		(0.2	)		—			(5.0	)
Income (loss) from continuing operations		(1.2	)		(5.0	)		6.9			(2.5	)		(1.8	)
Income from discontinued operations, net of income tax provision		—			0.6			—			—			0.6
Net income (loss)	$	(1.2	)	$	(4.4	)	$	6.9		$	(2.5	)	$	(1.2	)

CONDENSED CONSOLIDATING BALANCE SHEET
As of December 31, 2011

	Neenah Paper, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated Amounts
ASSETS
Current assets
Cash and cash equivalents	$	9.7	$	2.0	$	1.1	$	—		$	12.8
Restricted cash		7.0		—		—		—			7.0
Accounts receivable, net		22.9		18.1		30.4		—			71.4
Inventories		33.4		9.4		26.0		—			68.8
Income taxes receivable		—		—		1.9		—			1.9
Deferred income taxes		15.4		2.2		—		—			17.6
Intercompany amounts receivable		18.1		42.4		—		(60.5	)		—
Prepaids and othe current assets		5.6		2.0		6.4		—			14.0
Total current assets		112.1		76.1		65.8		(60.5	)		193.5
Property, plant and equipment at cost		269.2		100.4		209.6		—			579.2
Less accumulated depreciation		198.5		66.8		61.6		—			326.9
Property, plant and equipment — net		70.7		33.6		148.0		—			252.3
Investments in subsidiaries		225.0		—		—		(225.0	)		—
Deferred Income Taxes		38.7		6.8		—		—			45.5
Goodwill		—		—		40.5		—			40.5
Intangible Assets — net		2.8		—		19.1		—			21.9
Other Assets		5.8		0.1		5.5		—			11.4
TOTAL ASSETS	$	455.1	$	116.6	$	278.9	$	(285.5	)	$	565.1
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Debt payable within one year	$	—	$	—	$	21.7	$	—		$	21.7
Accounts payable		16.0		6.6		7.6		—			30.2
Intercompany amounts payable		42.4		18.1		—		(60.5	)		—
Accrued expenses		32.4		7.5		11.7		—			51.6
Total current liabilities		90.8		32.2		41.0		(60.5	)		103.5
Long-Term Debt		158.0		—		6.5		—			164.5
Deferred Income Taxes		—		—		16.0		—			16.0
Noncurrent Employee Benefits and Other Obligations		39.6		37.7		37.1		—			114.4
TOTAL LIABILITIES		288.4		69.9		100.6		(60.5	)		398.4
STOCKHOLDERS' EQUITY		166.7		46.7		178.3		(225.0	)		166.7
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	455.1	$	116.6	$	278.9	$	(285.5	)	$	565.1

CONDENSED CONSOLIDATING BALANCE SHEET
As of December 31, 2010

	Neenah Paper, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated Amounts
ASSETS
Current assets
Cash and cash equivalents	$	45.0	$	2.4	$	0.9	$	—		$	48.3
Accounts receivable, net		24.2		16.5		30.0		—			70.7
Inventories		33.7		9.0		26.7		—			69.4
Deferred income taxes		17.1		2.4		—		—			19.5
Intercompany amounts receivable		17.3		47.5		—		(64.8	)		—
Prepaid and other current assets		5.1		1.8		7.2		—			14.1
Total current assets		142.4		79.6		64.8		(64.8	)		222.0
Property, plant and equipment at cost		266.0		101.5		201.0		—			568.5
Less accumulated depreciation		189.5		66.3		50.8		—			306.6
Property, plant and equipment — net		76.5		35.2		150.2		—			261.9
Investments in subsidiaries		237.1		—		—		(237.1	)		—
Deferred Income Taxes		39.3		3.8		—		—			43.1
Goodwill		—		—		41.5		—			41.5
Intangible Assets — net		2.8		—		21.2		—			24.0
Other Assets		8.4		0.1		5.7		—			14.2
TOTAL ASSETS	$	506.5	$	118.7	$	283.4	$	(301.9	)	$	606.7
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Debt payable within one year	$	—	$	—	$	13.6	$	—		$	13.6
Accounts payable		14.5		5.2		10.7		—			30.4
Intercompany amounts payable		47.5		17.3		—		(64.8	)		—
Accrued expenses		27.5		7.7		12.9		—			48.1
Total current liabilities		89.5		30.2		37.2		(64.8	)		92.1
Long-term Debt		223.0		—		8.3		—			231.3
Deferred Income Taxes		—		—		19.4		—			19.4
Noncurrent Employee Benefits and Other Obligations		34.8		34.2		35.7		—			104.7
TOTAL LIABILITIES		347.3		64.4		100.6		(64.8	)		447.5
STOCKHOLDERS' EQUITY		159.2		54.3		182.8		(237.1	)		159.2
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	506.5	$	118.7	$	283.4	$	(301.9	)	$	606.7

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2011

	Neenah Paper, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Amounts
OPERATING ACTIVITIES
Net income	$	29.1		$	10.5		$	16.8		$	(27.3	)	$	29.1
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization		12.0			4.2			14.8			—			31.0
Stock-based compensation		4.1			—			0.2			—			4.3
Excess tax benefit from stock-based compensation		(1.0	)		—			—			—			(1.0	)
Deferred income tax provision (benefit)		5.1			4.9			(2.6	)		—			7.4
Loss on retirement of bonds		2.4			—			—			—			2.4
Loss on other asset dispositions		0.1			—			—			—			0.1
Net cash used in changes in operating working capital		(0.4	)		(1.1	)		(5.7	)		—			(7.2	)
Equity in earnings of subsidiaries		(27.3	)		—			—			27.3			—
Pension and other post-employment benefits		0.6			(8.8	)		0.5			—			(7.7	)
Other		—			(1.3	)		0.1			—			(1.2	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		24.7			8.4			24.1			—			57.2
INVESTING ACTIVITIES
Capital expenditures		(5.2	)		(2.2	)		(15.7	)		—			(23.1	)
Increase in restricted cash		(7.0	)		—			—			—			(7.0	)
Sale of marketable securities		7.0			—			—			—			7.0
Purchase of marketable securities		(5.8	)		—			—			—			(5.8	)
Other		0.6			(0.4	)		(0.2	)		—			—
NET CASH USED IN INVESTING ACTIVITIES		(10.4	)		(2.6	)		(15.9	)		—			(28.9	)
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt		30.3			—			—			—			30.3
Debt issuance costs		(0.4	)		—			—			—			(0.4	)
Repayments of long-term debt		(97.0	)		—			(1.7	)		—			(98.7	)
Short-term borrowings		—			—			16.4			—			16.4
Repayments of short-term borrowings		—			—			(7.8	)		—			(7.8	)
Proceeds from exercise of stock options		2.6			—			—			—			2.6
Excess tax benefit from stock-based compensation		1.0			—			—			—			1.0
Cash dividends paid		(6.7	)		—			—			—			(6.7	)
Shares purchased		(0.5	)		—			—			—			(0.5	)
Intercompany transfers — net		21.1			(6.2	)		(14.9	)		—			—
NET CASH USED IN FINANCING ACTIVITIES		(49.6	)		(6.2	)		(8.0	)		—			(63.8	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(35.3	)		(0.4	)		0.2			—			(35.5	)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		45.0			2.4			0.9			—			48.3
CASH AND CASH EQUIVALENTS, END OF YEAR	$	9.7		$	2.0		$	1.1		$	—		$	12.8

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2010

	Neenah Paper, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Amounts
OPERATING ACTIVITIES
Net income	$	159.1		$	145.1		$	12.4		$	(157.5	)	$	159.1
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		13.1			4.4			13.8			—			31.3
Stock-based compensation		4.8			—			0.1			—			4.9
Deferred income tax provision (benefit)		2.2			36.5			(1.7	)		—			37.0
Gain on sale of the Woodlands		—			(74.1	)		—			—			(74.1	)
Reclassification of cumulative translation adjustments related to investments in Canada		—			(87.9	)		—			—			(87.9	)
Gain on sale of the Ripon Mill		—			(3.4	)		—			—			(3.4	)
Loss on other asset dispositions		0.2			—			—			—			0.2
Net cash provided by (used in) changes in operating working capital		(0.3	)		1.0			(4.6	)		—			(3.9	)
Equity in earnings of subsidiaries		(157.5	)		—			—			157.5			—
Pension and other post-employment benefits		(0.9	)		(6.9	)		—			—			(7.8	)
Other		0.8			(1.6	)		(0.1	)		—			(0.9	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		21.5			13.1			19.9			—			54.5
INVESTING ACTIVITIES
Capital expenditures		(6.7	)		(2.6	)		(8.1	)		—			(17.4	)
Net proceeds from sale of the Woodlands		—			78.0			—			—			78.0
Purchase of marketable securities		(3.5	)		—			—			—			(3.5	)
Proceeds from asset sales		8.7			—			—			—			8.7
Other		(0.3	)		—			1.0			—			0.7
NET CASH USED IN INVESTING ACTIVITIES		(1.8	)		75.4			(7.1	)		—			66.5
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt		0.1			—			—			—			0.1
Repayments of long-term debt		(69.9	)		—			(1.6	)		—			(71.5	)
Short-term borrowings		—			—			13.3			—			13.3
Repayments of short-term borrowings		(1.0	)		—			(13.8	)		—			(14.8	)
Cash dividends paid		(5.9	)		—			—			—			(5.9	)
Proceeds from exercise of stock options		0.7			—			—			—			0.7
Shares purchased		(0.2	)		—			—			—			(0.2	)
Intercompany transfers — net		99.4			(88.1	)		(11.3	)		—			—
NET CASH USED IN FINANCING ACTIVITIES		23.2			(88.1	)		(13.4	)		—			(78.3	)
NET INCREASE IN CASH AND CASH EQUIVALENTS		42.9			0.4			(0.6	)		—			42.7
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		2.1			2.0			1.5			—			5.6
CASH AND CASH EQUIVALENTS, END OF YEAR	$	45.0		$	2.4		$	0.9		$	—		$	48.3

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2009

	Neenah Paper, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Amounts
OPERATING ACTIVITIES
Net income (loss)	$	(1.2	)	$	(4.4	)	$	6.9		$	(2.5	)	$	(1.2	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization		15.2			4.6			14.7			—			34.5
Stock-based compensation		4.7			—			—			—			4.7
Deferred income tax benefit		(2.8	)		(4.4	)		(2.2	)		—			(9.4	)
Ripon Mill non-cash charges		—			6.3			—			—			6.3
Loss on other asset dispositions		0.2			—			—			—			0.2
Net cash provided by changes in operating working capital		19.9			4.7			2.8			—			27.4
Equity in earnings of subsidiaries		(2.5	)		—			—			2.5			—
Pension and other post-employment benefits		4.5			(2.9	)		0.8			—			2.4
Other		(0.9	)		1.0			(0.1	)		—			—
NET CASH PROVIDED BY OPERATING ACTIVITIES		37.1			4.9			22.9			—			64.9
INVESTING ACTIVITIES
Capital expenditures		(3.4	)		(1.4	)		(3.6	)		—			(8.4	)
Proceeds from asset sales		—			0.8			—			—			0.8
Other		0.8			(0.3	)		(1.2	)		—			(0.7	)
NET CASH USED IN INVESTING ACTIVITIES		(2.6	)		(0.9	)		(4.8	)		—			(8.3	)
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt		45.5			—			—			—			45.5
Debt issuance costs		(2.9	)		—			—			—			(2.9	)
Repayments of long-term debt		(85.8	)		—			(1.8	)		—			(87.6	)
Short-term borrowings		0.9			—			11.3			—			12.2
Repayments of short-term borrowings		—			—			(15.4	)		—			(15.4	)
Cash dividends paid		(5.9	)		—			—			—			(5.9	)
Shares purchased		(0.1	)		—			—			—			(0.1	)
Intercompany transfers — net		14.0			(3.1	)		(10.9	)		—			—
NET CASH USED IN FINANCING ACTIVITIES		(34.3	)		(3.1	)		(16.8	)		—			(54.2	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		—			—			(0.1	)		—			(0.1	)
NET INCREASE IN CASH AND CASH EQUIVALENTS		0.2			0.9			1.2			—			2.3
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		1.9			1.1			0.3			—			3.3
CASH AND CASH EQUIVALENTS, END OF YEAR	$	2.1		$	2.0		$	1.5		$	—		$	5.6