Acquisitions

Acquisition of FiberMark

On August 1, 2015, the Company purchased all of the outstanding equity of FiberMark from American Securities for approximately $118 million. FiberMark is a specialty coatings and finishing company with a strong presence in luxury packaging and technical products. In September 2015, the Company announced the planned closure of the Fitchburg Mill, acquired in the FiberMark Acquisition to consolidate its manufacturing footprint. Manufacturing operations at the Fitchburg Mill ceased in December 2015. See Note 13, "Discontinued Operations."

The Company accounted for the transaction using the acquisition method in accordance with ASC Topic 805, Business Combinations ("ASC Topic 805"). The allocation of the purchase price was based on estimates of the fair value of assets acquired and liabilities assumed as of August 1, 2015. The Company has not identified any material unrecorded pre-acquisition contingencies. The Company did not recognize any in-process research and development assets as part of the acquisition.

The following table summarizes the allocation of the purchase price to the estimated fair value of the assets acquired and liabilities assumed as of December 31, 2015.



	December 31, 2015
Assets Acquired
Cash and cash equivalents	$	4.8
Accounts receivable	13.7
Inventories	27.5
Deferred income taxes	2.3
Prepaid and other current assets	3.6
Property, plant and equipment	68.9
Non-amortizable intangible assets	1.3
Amortizable intangible assets	25.6
Acquired goodwill	25.5
Total assets acquired	173.2
Liabilities Assumed
Accounts payable	8.0
Accrued expenses	5.6
Deferred income taxes	24.1
Noncurrent employee benefits	9.1
Other noncurrent obligations	3.1
Total liabilities assumed	49.9
Net assets acquired	$	123.3

(1) As a result of finalizing the acquisition accounting for Fibermark in the first quarter of 2016, an adjustment of $0.4 million was recorded as a reduction to the net deferred tax liability and to goodwill.

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

The excess of the purchase price over the estimated fair value of the tangible net assets and identifiable intangible assets acquired was recorded as acquired goodwill. The factors contributing to the amount of goodwill recognized are based on several strategic and synergistic benefits that are expected to be realized from the acquisition of FiberMark. These benefits include entry into profitable new markets for premium packaging, performance materials and specialty papers with new capabilities and recognized brands, synergies from combining the business with Neenah's existing infrastructure, and the opportunity to accelerate sales growth in areas like premium packaging. None of the goodwill recognized as part of the FiberMark acquisition will be deductible for income tax purposes. However, the Company did acquire all of the tax attributes associated with the FiberMark assets and liabilities, including an insignificant amount of tax deductible goodwill.

Approximately $18.9 million, $6.2 million and $0.4 million of the goodwill acquired in the FiberMark acquisition was allocated to the Technical Products, Fine Paper and Packaging and Other segments, respectively.

For the year ended December 31, 2016, the Company incurred $4.3 million of integration and restructuring costs. For the year ended December 31, 2015, the Company incurred $5.3 million of acquisition and integration costs. For the year ended December 31, 2015, net sales and income from operations before income taxes for the acquired businesses were $58.1 million and $1.5 million (excluding the acquisition related costs described above), respectively.

In conjunction with the FiberMark acquisition, the Company identified various uncertain tax positions totaling $4.7 million. Such amount was reflected in the purchase price allocation as $3.7 million of goodwill and $1.0 million of other current assets.

The following selected unaudited pro forma consolidated statements of operations data for the year ended December 31, 2015 and 2014 was prepared as though the FiberMark acquisition had occurred on January 1, 2014. The information does not reflect future events that may occur after December 31, 2015 or any operating efficiencies or inefficiencies that may result from the FiberMark acquisition. Therefore, the information is not necessarily indicative of results that would have been achieved had the businesses been combined during the periods presented or the results that the Company will experience going forward.



	Year Ended December 31,
	2015			2014
Net sales	$	984.0		$	1,003.8
Operating income	103.7			95.6
Income from continuing operations	61.7			72.8
Income (loss) from discontinued operations	(9.4		)	0.7
Net income	52.3			73.5
Earnings (Loss) Per Common Share
Basic
Continuing operations	$	3.65		$	4.34
Discontinued Operations	(0.56		)	0.04
	$	3.09		$	4.38
Diluted
Continuing operations	$	3.60		$	4.27
Discontinued Operations	(0.55		)	0.04
	$	3.05		$	4.31

Acquisition of Crane Technical Materials

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

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

The excess of the purchase price over the estimated fair value of the tangible net assets and identifiable intangible assets acquired was recorded as acquired goodwill. The factors contributing to the amount of goodwill recognized are based on several long-term strategic benefits that are expected to be realized from the acquisition of the technical materials business. These benefits include entry into growing and profitable global markets for water filtration, environmental/emissions control, and energy management with defensible technologies and brands, and the opportunity to accelerate sales growth through synergies with the Company's existing European-based filtration business. In addition, the acquisition of brands and complementary offerings facilitates the Company's expansion into non-woven product lines containing fiberglass, polymer fibers and carbon fibers. Substantially all of the acquired goodwill will be deductible for income tax purposes and is entirely allocated to the Technical Products segment.

For the year ended December 31, 2014, the Company incurred $1.0 million of acquisition-related integration costs. In addition, the Company incurred approximately $1.1 in capital costs for IT systems and infrastructure projects. For the year ended December 31, 2014, net sales and income from operations before income taxes for the acquired technical materials business were $24.1 million and $3.1 million (excluding the acquisition related integration costs described above), respectively.

The following selected unaudited pro forma consolidated statements of operations data for the year ended December 31, 2014 was prepared as though the acquisition of the technical materials business had occurred on January 1, 2013. The information does not reflect future events that may occur after December 31, 2014 or any operating efficiencies or inefficiencies that may result from the acquisition of the technical materials business. Therefore, the information is not necessarily indicative of results that would have been achieved had the businesses been combined during the periods presented or the results that the Company will experience going forward.



	Year Ended December 31,
	2014
Net sales	$	862.3
Operating income	89.2
Income from continuing operations	69.6
Income from discontinued operations	0.7
Net income	70.3
Earnings Per Common Share
Basic
Continuing operations	$	4.15
Discontinued Operations	0.04
	$	4.19
Diluted
Continuing operations	$	4.08
Discontinued Operations	0.04
	$	4.12