Acquisitions

9 Months Ended

Sep. 30, 2012

Acquisitions

Acquisitions

Note 3.  Acquisitions

On January 31, 2012, the Company purchased certain premium paper brands and other assets from Wausau. The Company paid approximately $21 million for (i) the premium fine paper brands ASTROBRIGHTS®, ASTROPARCHE® and ROYAL, (ii) exclusive, royalty free and perpetual license rights for a portion of the EXACT® brand specialty business, including Index, Tag and Vellum Bristol, (iii) approximately one month of finished goods inventory and (iv) certain converting equipment used for retail grades.  In addition, the parties entered into a supply agreement under which Wausau will manufacture and supply certain products to the Company during a transition period. The acquisition was financed through the Company’s existing credit facility and cash on hand. The results of the Index, Tag and Vellum Bristol brands are reported in the Other segment from the date of acquisition.  The results of all other brands acquired from Wausau are reported in the Fine Paper segment from the date of acquisition.

The Company accounted for the acquisition of the Wausau brands as an asset purchase.  The Company measured the fair value of the acquired assets in accordance with ASC Topic 820, Fair Value Measurements and Disclosures (“ASC Topic 820”) which establishes a framework for measuring fair value. ASC Topic 820 provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under ASC Topic 820 are described below:

Level 1  Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.

Level 2  Inputs to the valuation methodology include:

·Quoted prices for similar assets or liabilities in active markets;

·Quoted prices for identical or similar assets or liabilities in inactive markets;

·Inputs other than quoted prices that are observable for the asset or liability;

·Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

Level 3  Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The asset’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques attempt to maximize the use of observable inputs and minimize the use of unobservable inputs.

The following table sets forth by level, within the fair value hierarchy, the fair value of the assets acquired from Wausau:

	Acquired Assets at Fair Value
	Level 1		Level 2		Level 3		Total
Amortizable intangible assets
Customer based intangibles	$	—	$	—	$	2.0	$	2.0
Trade names and trademarks	—		—		0.2		0.2
Non-amortizable intangible assets
Trade names	—		—		11.5		11.5
Finished goods inventory	—		6.6		—		6.6
Property, plant and equipment	—		—		0.9		0.9
Total assets at fair value	$	—	$	6.6	$	14.6	$	21.2

The Company expects to incur approximately $5 million to $6 million in acquisition integration costs.  For the three and nine months ended September 30, 2012, the Company incurred $0.3 million and $4.7 million of such costs.