8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K/A

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES

EXCHANGE ACT OF 1934

Date of Report: February 26, 2014

(Date of earliest event reported: December 12, 2013)

SCHWEITZER-MAUDUIT INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Delaware	62-1612879
(State or other jurisdiction of incorporation)	(I.R.S. Employer Identification No.)

100 North Point Center East, Suite 600

Alpharetta, Georgia 30022

1-800-514-0186

(Address, including zip code, and telephone number, including

area code, of registrant’s principal executive offices)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.01 Completion of Acquisition or Disposition of Assets.

On December 13, 2013, Schweitzer-Mauduit International Inc. (the "Company" or "SWM") filed a Current Report on Form 8-K to report its acquisition of DelStar, Inc. (or "DelStar"). The purpose of this amendment is to include the historical and unaudited pro forma condensed combined financial statements required by Items 9.01(a) and 9.01(b) of Form 8-K that were excluded from the original filing in reliance on the instructions to such items.

Item 7.01 Regulation FD Disclosure.

The information contained in Item 7.01 of this Form 8-K/A, including the supplemental information included in Exhibit 99.1 hereto, is being furnished and, as a result, such information shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

The supplemental information furnished as Exhibit 99.3 to this Form 8-K/A is incorporated by reference in this Item 7.01 and sets forth certain unaudited historical data for DelStar relating to periods prior to the Company’s acquisition of DelStar. The information is not necessarily indicative of the operating results of DelStar following the acquisition and the Company undertakes no duty or obligation to publicly update or revise this information.

Item 9.01 Financial Statements and Exhibits.

(a) Financial statements and supplemental information of business acquired.

The audited consolidated financial statements of DelStar, Inc. and Subsidiaries as of September 30, 2012 and for the year then ended are filed as Exhibit 99.1 and incorporated herein by reference.

The unaudited consolidated supplemental financial information of DelStar, Inc. as of June 30, 2013 and for the nine months then ended are filed as Exhibit 99.3 and incorporated herein by reference.

(b) Pro forma financial information.

The unaudited pro forma condensed combined balance sheet as of September 30, 2013 and the unaudited pro forma combined statements of income for the nine months ended September 30, 2013 and for the year ended December 31, 2012, and the accompanying notes, are attached as Exhibit 99.2 to this Form 8-K/A.

(d) Exhibits.

Exhibit Number	Description of Exhibit
23.1	Consent of Ernst & Young LLP.
99.1	DelStar, Inc. and Subsidiaries Consolidated Financial Statements as of September 30, 2012 and for the year then ended.
99.2	Unaudited Pro forma Condensed Combined Balance Sheet as of September 30, 2013 and the the year ended December 31, 2012, and the accompanying notes.
99.3	Unaudited supplemental financial information of DelStar, Inc. as of June 30, 2013 and for the nine months then ended.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized on February 26, 2014.

SCHWEITZER-MAUDUIT INTERNATIONAL, INC.

(Registrant)

By:	/s/ Jeffrey A. Cook
	Jeffrey A. Cook
	Executive Vice President,
	Chief Financial Officer & Treasurer

SCHWEITZER-MAUDUIT INTERNATIONAL, INC.

Current Report on Form 8-K

Dated February 26, 2014

INDEX TO EXHIBITS

Exhibit Number	Description of Exhibit
23.1	Consent of Ernst & Young LLP.
99.1	DelStar, Inc. and Subsidiaries Consolidated Financial Statements as of September 30, 2012 and for the year then ended.
99.2	Unaudited Pro forma Condensed Combined Balance Sheet as of September 30, 2013 and the the year ended December 31, 2012, and the accompanying notes.
99.3	Unaudited supplemental financial information of DelStar, Inc. as of June 30, 2013 and for the nine months then ended.

EX-23.1

Exhibit 23.1

Consent of Independent Auditors

We consent to the use of our report dated January 28, 2013, included in the Consolidated Financial Statements of Delstar, Inc. and Subsidiaries for the year ended September 30, 2012, with respect to the consolidated financial statements of Delstar, Inc. and Subsidiaries included in this Schweitzer-Mauduit International Inc. (the “Company”) Form 8-K/A dated February 26, 2014 and the incorporation of such report by reference in Registration Statements on Form S-8 (Nos. 333-74634, 333-105986, 333-105998, 333-161988 and 333-179933) and Form S-3 (No. 333-162991) of the Company.

/s/ Ernst & Young LLP

Philadelphia, Pennsylvania

February 26, 2014

EX-99.1

Exhibit 99.1

DelStar, Inc. and Subsidiaries

Consolidated Financial Statements

Year Ended September 30, 2012

Contents
Report of Independent Auditors	1
Audited Financial Statements
Consolidated Balance Sheet	2
Consolidated Statement of Income	3
Consolidated Statement of Shareholders’ Equity	4
Consolidated Statement of Cash Flows	5
Notes to Consolidated Financial Statements	6

Report of Independent Auditors

To the Board of Directors and Shareholders of

DelStar, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheet of DelStar, Inc. and Subsidiaries (the “Company”) as of September 30, 2012, and the related consolidated statements of income, shareholders’ equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of the Company for the year ended September 30, 2011, were audited by other auditors whose report dated January 27, 2012, expressed an unqualified opinion on those statements.

We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the 2012 financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company at September 30, 2012, and the consolidated results of their operations and their cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

January 28, 2013

1

DelStar, Inc. and Subsidiaries

Consolidated Balance Sheet

September 30, 2012

Assets
Current assets:
Cash and cash equivalents	$	1,864,325
Accounts receivable (less allowance for doubtful accounts of $346,963)	20,448,059
Other receivables	55,262
Inventories	14,305,209
Prepaid expenses and other current assets	1,077,584
Deferred income taxes	1,013,886
Income taxes receivable	597,721
Total current assets	39,362,046
Property, plant and equipment, net	27,353,282
Goodwill	52,170,455
Intangible assets, net	8,023,633
Deferred financing costs (net of accumulated amortization of $216,532)	433,265
Other assets	1,169,203
	$	128,511,884
Liabilities and shareholders’ equity
Current liabilities:
Current portion of long-term debt	$	5,610,000
Accounts payable	5,790,495
Accrued expenses	4,469,169
Total current liabilities	15,869,664
Long-term debt, less current portion	36,388,240
Deferred income taxes	9,280,311
Derivative financial instruments	302,017
Warrant obligation	6,150,000
Other long-term obligations	1,260,373
	69,250,605
Commitments and contingencies
Shareholders’ equity:
Series A Redeemable Payment-In-Kind Preferred Stock, $.001 par value; authorized 2,300 shares; issued and outstanding 2,075 shares (liquidation value of $3,592,211)	2
Series B Redeemable Payment-In-Kind Preferred Stock, $.001 par value; authorized 46,000 shares; issued and outstanding 45,650 shares (liquidation value of $76,649,097)	46
Series C Convertible Preferred Stock, $.001 par value; authorized 50,800 shares; issued and outstanding 50,722 shares (liquidation value of $6,683,077)	51
Common stock, $0.001 par value; authorized 250,000 shares; issued and outstanding 10,228 shares	10
Additional paid-in capital	39,207,078
Retained earnings	19,415,703
Accumulated other comprehensive income	638,389
	59,261,279
	$	128,511,884

See accompanying notes.

2

DelStar, Inc. and Subsidiaries

Consolidated Statement of Income

Year Ended September 30, 2012

Net sales	$	110,468,333
Cost of goods sold	82,085,840
Gross profit	28,382,493
Operating expenses:
Selling and marketing	4,722,519
General and administrative	10,462,720
Research and development	1,180,721
Income from operations	12,016,533
Other income (expense):
Gain on interest rate swap agreements	92,358
Change in fair value of warrants	(2,650,000		)
Interest expense, net	(2,384,979		)
Income before income taxes	7,073,912
Provision for income taxes	3,706,998
Net income	$	3,366,914

See accompanying notes.

3

DelStar, Inc. and Subsidiaries

Consolidated Statement of Shareholders’ Equity

Year Ended September 30, 2012

	Series A			Series B			Series C										Accumulated
	Preferred Stock			Preferred Stock			Preferred Stock			Common Stock			Additional				Other		Total
	Number			Number			Number			Number			Paid-in		Retained		Comprehensive		Shareholders’		Comprehensive
	of Shares	Amount		of Shares	Amount		of Shares	Amount		of Shares	Amount		Capital		Earnings		Income		Equity		Income
Balance, October 1, 2011	2,075	$	2	45,650	$	46	50,722	$	51	9,897	$	10	$	39,162,916	$	16,048,789	$	612,948	$	55,824,762
Issuance of Common Stock	—	—		—	—		—	—		331	—		34,408		—		—		34,408
Stock option expense	—	—		—	—		—	—		—	—		9,754		—		—		9,754
Foreign currency translation	—	—		—	—		—	—		—	—		—		—		25,441		25,441		$	25,441
Net income	—	—		—	—		—	—		—	—		—		3,366,914		—		3,366,914		3,366,914
Comprehensive income - total																					$	3,392,355
Balance, September 30, 2012	2,075	$	2	45,650	$	46	50,722	$	51	10,228	$	10	$	39,207,078	$	19,415,703	$	638,389	$	59,261,279

See accompanying notes.

4

DelStar, Inc. and Subsidiaries

Consolidated Statement of Cash Flows

Year Ended September 30, 2012

Cash flows from operating activities
Net income	$	3,366,914
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	4,200,072
Amortization of intangible assets and deferred financing costs	995,135
Deferred income taxes	106,342
Gain on interest rate swap agreement	(92,358		)
Change in fair value of warrants	2,650,000
Stock based compensation expense	9,754
Other long-term assets and liabilities	26,166
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable	(1,670,278		)
Other receivables	50,877
Inventories	2,047,608
Prepaid expenses and other current assets	51,295
Increase (decrease) in:
Accounts payable	(2,953,870		)
Accrued expenses	1,796,705
Income taxes receivable	830,610
Net cash provided by operating activities	11,414,972
Cash flows from investing activities
Acquisitions of property, plant and equipment	(4,714,227		)
Net cash used in investing activities	(4,714,227		)
Cash flows from financing activities
Repayment of long-term debt	(7,125,000		)
Proceeds from exercise of common stock options	34,408
Net cash used in financing activities	(7,090,592		)
Effects of exchange rate on cash	7,107
Net decrease in cash	(382,740		)
Cash and cash equivalents, beginning of year	2,247,065
Cash and cash equivalents, end of year	$	1,864,325
Supplemental disclosure of cash flow information
Cash paid for interest	$	2,376,680
Cash paid for income taxes	$	3,083,160

See accompanying notes.

5

DelStar, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2012

1. Nature of Business and Summary of Significant Accounting Policies

Nature of Business

DelStar, Inc. (the “Company”) is a leading developer and manufacturer of highly specialized thermoplastic netting, nonwovens, laminates, and extruded components for various uses in the filtration, industrial, and health care industries as well as other markets. Revenues are generated from sales in both domestic and foreign markets. During fiscal 2012, the Company’s United Kingdom and China facilities accounted for approximately 9% and 13%, respectively, of the Company’s consolidated sales.

Principles of Consolidation

The consolidated financial statements include the financial statements of DelStar, Inc., its wholly owned subsidiary DelStar Holding Corp. and its three wholly owned subsidiaries, US Netting, Inc., Coretec Tubing Corp, and DelStar Technologies, Inc. and its three wholly owned subsidiaries, DelStar International, Ltd., DelStar Technologies (Suzhou) Co. Ltd., and DelStar Technologies Inc. (Shanghai). All significant intercompany balances and transactions have been eliminated in consolidation.

Reclassification Adjustments

Certain amounts in the prior year’s financial statements have been reclassified to conform to the current-year presentation. The Company determined the opening balance classification and presentation of its Series A and B redeemable payment-in-kind (“PiK”) preferred stock were not accounted for in a manner consistent with the Company’s Series C convertible preferred stock, all in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 480, Distinguishing Liabilities from Equity. The Company has therefore reclassified equity balances for Series A and B redeemable payment-in-kind preferred stock, additional paid-in capital, and retained earnings to consistently show the par value of each class of preferred stock, and disclose the liquidation preference of each class of preferred stock.

Use of Estimates

The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and highly liquid investments with maturities of three months or less at the date of purchase.

Accounts Receivable

Accounts receivable are carried at original invoice amount less any customer down payments and estimates made for doubtful receivables. Accounts receivable are considered past due if not paid within the stated terms. Credit limits are established on a customer-by-customer basis and evaluated periodically based upon the financial condition of the individual customer. The Company does not enter into master netting agreements or require collateral from its customers. Interest is not charged on past due accounts. The Company determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history, and current economic conditions. Accounts receivable are written off when deemed uncollectible. Recoveries of accounts receivable previously written off are recorded when received.

6

DelStar, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

1. Nature of Business and Summary of Significant Accounting Policies (continued)

Inventories

Inventories, consisting of raw materials and packaging supplies, subassembly units and finished goods, are stated at the lower of cost or market value with costs being determined using the first‑in, first-out (“FIFO”) method.

The Company maintained an inventory reserve for obsolescence and other estimated losses of $1,508,400 at September 30, 2012.

Property, Plant and Equipment

Property, plant and equipment, and any additions are stated at cost, less accumulated depreciation. Depreciation is computed over the estimated useful lives of the related assets using the straight-line method. Leasehold improvements made to leased property are amortized over the shorter of the estimated lives of the improvements or the remaining lease term. Maintenance and repairs are charged to expense as incurred. Upon sale or retirement, the cost of the assets and the related accumulated depreciation are removed from the accounts and the resultant gain or loss, if any, is included in other income. The estimated useful life of property, plant and equipment is 3 to 38 years.

Goodwill

Goodwill represents the excess of the purchase price of the acquired business over the estimated fair value of the net tangible and intangible assets acquired. In accordance with financial accounting standards, goodwill is not subject to amortization, rather it is subject to at least an annual assessment for impairment by applying a fair value based test. The Company evaluates the carrying value of goodwill at September 30 each year and between annual evaluations if events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. Such circumstances could include, but are not limited to: 1) a significant adverse change in legal factors or in business climate, 2) unanticipated competition, or 3) an adverse action or assessment by a regulator. The impairment test for goodwill is a two-step test. Under the first step, the fair value of the reporting unit is compared with its carrying value (including goodwill). If the fair value of the reporting unit is less than its carrying value, an indication of impairment exists for the reporting unit and the enterprise must perform step two of the impairment test (measurement). Under step two, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill. Fair value of the Company, which was determined to consist of a single reporting unit, is determined using a weighting of a discounted cash flow analysis, public company comparison, and recent public transactions. In previous fiscal years, the Company has recorded $8 million in cumulative goodwill impairment charges. The Company’s evaluation of goodwill completed during fiscal 2012 resulted in no additional impairment loss.

There were no changes in the carrying amount of goodwill for the year ended September 30, 2012.

Intangible Assets

The Company accounts for its intangible assets in accordance with the applicable accounting guidance for intangible assets. Intangible assets consist of trademarks and tradenames, patents, proprietary know-how, and customer relationships. Patents and proprietary know-how are amortized over their estimated useful lives of 20 years, trademarks and tradenames are amortized over their estimated useful life of 15 years, and customer relationships are amortized over their estimated useful life of 10 years.

7

DelStar, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

1. Nature of Business and Summary of Significant Accounting Policies (continued)

Deferred Financing Costs

The Company incurred certain debt financing costs including costs paid directly to the lenders which have been capitalized as deferred financing costs. Deferred financing costs are being amortized over the life of the respective debt using the effective interest method. Amortization of deferred financing costs, which is included in interest expense, was $129,979 for the year ended September 30, 2012.

Impairment of Long-Lived Assets

The Company reviews long-lived assets, including property, plant and equipment for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be recoverable. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition is less than the carrying amount. No impairments have occurred for the year ended September 30, 2012.

Income Taxes

The Company accounts for income taxes in accordance with the asset and liability method prescribed under the financial accounting standards. Under this method, deferred tax assets and liabilities are recorded for future tax consequences related to the differences between the financial statement carrying amounts of an asset or liability and their tax basis. Deferred tax assets and liabilities are measured using the enacted tax rate in the year in which the temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period in which the rates are enacted.

The Company accounts for uncertain tax positions in accordance with the applicable accounting guidance for income taxes. Accordingly, the Company reports a liability for unrecognized tax benefits resulting from uncertain tax positions taken, or expected to be taken, in an income tax return. At September 30, 2012, the Company had no unrecognized income tax benefits. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense. The Company accrues for interest and penalties in other noncurrent liabilities within the consolidated balance sheet.

With few exceptions, the Company is no longer subject to income tax examinations by the U.S. federal, state, or local authorities for years before 2008.

Comprehensive Income

The Company reports comprehensive income in its consolidated statement of shareholders’ equity. Comprehensive income represents changes in shareholders’ equity from non-owner sources. For fiscal 2012, comprehensive income of the Company included foreign currency translation adjustments.

At September 30, 2012, accumulated other comprehensive income in the consolidated balance sheet related entirely to foreign currency translation adjustments of the Company’s China operations.

Revenue Recognition

The Company recognizes revenue when products are shipped and the customer takes title and assumes risk of loss, collection of the relevant receivable is probable, persuasive evidence of an arrangement exists, and the sales price is fixed or determinable.

Shipping and Handling Costs

Shipping and handling costs billed to customers are classified as revenues. The cost of shipping products to the customer is recognized at the time the products are shipped and is included in cost of goods sold.

8

DelStar, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

1. Nature of Business and Summary of Significant Accounting Policies (continued)

Stock Options

The Company accounts for stock compensation under ASC 718, Compensation - Stock Compensation, which requires the Company to expense the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. This expense is recognized ratably over the requisite service period following the date of grant.

The fair value of the stock options was estimated at the date of grant using the Black-Scholes option pricing model, which requires management to make certain assumptions. The risk-free interest rate was based on the United States Treasury spot rate with an equal term to the expected life assumed at the date of grant. Expected volatility was estimated based on the historical volatility of comparable public companies over the expected life of the options at the grant date. There is no expected dividend yield since the Company has not paid any cash dividends on its common stock and since the Company intends to retain all of its earnings to pay down debt. The weighted-average expected life was based on the contractual term of the stock options and the expected employee exercise dates. Forfeitures are estimated at the date of grant based on historical experience and the estimate is evaluated based on future experience.

Foreign Currency Translation

The accounts of all of the Company’s subsidiaries are measured using the U.S. dollar as the functional currency, except for DelStar Suzhou and DelStar Shanghai, which are measured using the Chinese RMB as the functional currency. The assets and liabilities of DelStar Suzhou and DelStar Shanghai are translated into U.S. dollars at exchange rates in effect at the balance sheet date, and revenues and expenses are translated at average rates of exchange in effect during the year. The resulting cumulative translation adjustment, if any, is recorded to accumulated other comprehensive income in shareholders’ equity.

Transaction gains and losses resulting from exchange rate changes on transactions denominated in currencies other than the functional currency are included in other income (expense), net, in the period in which the change occurs.

Interest Rate Swap Agreements

The financial accounting standards require an entity to recognize all derivatives instruments as either assets or liabilities and to measure them at fair value. The accounting for changes in fair value depends upon the purpose of the derivative instrument and whether it qualifies for hedge accounting. The Company is exposed to market risk from changes in interest rates. To mitigate this risk, the Company entered into an interest rate swap.

Concentrations of Credit Risk

The Company maintains cash balances for its US operations at a financial institution which, at various times during the year exceeded the threshold for insurance coverage provided by the Federal Deposit Insurance Corporation (“FDIC”). The Company mitigates their risk relative to cash by maintaining relationships with what management believes to be is a high credit quality financial institution.

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of trade receivables. Concentrations of credit risk with respect to trade receivables are limited due to the dispersion of the Company’s customers over different geographic regions. The Company performs ongoing credit evaluations of its customers’ financial condition and requires no collateral from its customers. Accounts receivable are written-off when they are deemed to be uncollectible.

Research and Development Costs

Research and development costs are expensed as incurred.

9

DelStar, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

1. Nature of Business and Summary of Significant Accounting Policies (continued)

Fair Value of Financial Instruments

At September 30, 2012, the Company had the following financial instruments: cash and cash equivalents, accounts and other receivables, accounts payable, revolving line of credit borrowings, long-term debt, and warrants. The carrying value of cash and cash equivalents, accounts and other receivables and accounts payable approximate their fair value because of their short-term nature. The carrying amount of the long-term debt and the revolving line of credit borrowings approximate fair value because the interest rates fluctuate with market interest rates and is reflective of rates the Company would likely be able to obtain on debt with similar terms and conditions. The warrants are carried at fair value based on management estimates, using a model to determine probabilities of fair value based on a range of share prices in the future.

2. Inventories

Inventories consist of the following at September 30, 2012:

Raw materials and packaging supplies	$	5,421,260
Subassembly units	1,398,166
Finished goods	7,485,783
	$	14,305,209

3. Property, Plant and Equipment

Property, plant and equipment consist of the following at September 30, 2012:

Land	$	815,000
Buildings and leasehold improvements	6,789,399
Machinery and equipment	40,010,911
Furniture, fixtures, and computer equipment	3,488,331
Construction in progress	1,607,964
	52,711,605
Less: accumulated depreciation	(25,358,323		)
	$	27,353,282

4. Intangible Assets

Amortizable intangible assets consist of the following at September 30, 2012:

	Cost		Accumulated Amortization		Net Book Value
Trademarks/trade names	$	2,791,323	$	1,271,603	$	1,519,720
Patents	71,681		24,491		47,190
Proprietary know-how	8,635,389		2,950,426		5,684,963
Customer relationships	2,437,137		1,665,377		771,760
	$	13,935,530	$	5,911,897	$	8,023,633

Amortization of intangible assets was $865,156 for the year ended September 30, 2012.

10

DelStar, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

4. Intangible Assets (continued)

Aggregate amortization expense for intangible assets is estimated to be for the:

Year ended September 30,
2013	$	865,156
2014	865,156
2015	865,156
2016	662,061
2017	621,442
Thereafter	4,144,662
	$	8,023,633

5. Long-Term Debt and Interest Rate Swap Agreements

Long-term debt consists of the following at September 30, 2012:

Term loan	$	39,525,000
Revolving line of credit	2,473,240
Total debt	41,998,240
(Less) current portion of debt	5,610,000
Total long-term debt	$	36,388,240

Principal payments on long-term debt are as follows:

Year ended September 30,
2013	$	5,610,000
2014	4,650,000
2015	4,650,000
2016	27,088,240
	$	41,998,240

On February 1, 2011, the Company entered into an agreement with RBS Citizens, N.A. (“Citizens”) effectively repaying and replacing the Company’s previous debt agreements. The agreement with Citizens provided for a term loan of $46,500,000, which matures on February 1, 2016. Interest is payable quarterly on any outstanding balance at a rate of either LIBOR plus 3.50% for LIBOR based loans (4.21% at September 30, 2012) or Base Rate plus 3.0% for Base Rate loans, where the Base Rate is the greater of the Prime Rate or the Federal Funds Rate plus 0.5%. Remaining principal is due quarterly in amounts of $1,162,500 with one final payment of the remaining outstanding amount due at maturity on February 1, 2016.

11

DelStar, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

5. Long-Term Debt and Interest Rate Swap Agreements (continued)

The term loan agreement provides for a mandatory prepayment to be determined each year, based on excess cash flow, as defined in the agreement. As of September 30, 2012, the amount of mandatory prepayment calculated was $960,000 and is reflected within the current portion of long-term debt.

On February 1, 2011, the Company also entered into an agreement with Citizens for a $12,000,000 revolving line of credit (“Revolving Facility”), and a $750,000 line of credit for letters of credit (“Letter of Credit Facility”), both of which mature on February 1, 2016.

Borrowings under the Revolving Facility are limited to the lesser of $12,000,000 or the qualified borrowing base, which is the sum of: (a) 85% of eligible amounts of accounts receivable; and (b) 50% of eligible amounts of inventories. Interest is payable quarterly on any outstanding balance at a rate of either LIBOR plus 3.50% for LIBOR based loans (3.98% at September 30, 2012) or Base Rate plus 3.0% for Base Rate loans, where the Base Rate is the greater of the Prime Rate or the Federal Funds Rate plus 0.5%. The annual commitment fee on the unused portion of the line is 0.5%. As of September 30, 2012, approximately $9,500,000 was available under the Revolving Facility.

Borrowings under the debt agreements are collateralized by substantially all assets of the Company, and require the maintenance of a minimum fixed charge coverage ratio, and a maximum debt to EBITDA ratio, both calculated as defined under the agreement. As of and for the year ended September 30, 2012, the Company was in compliance with all debt covenants.

Interest Rate Swap Agreements

At September 30, 2012, the Company had an outstanding interest rate swap agreement with a bank, having a notional principal amount of $16,275,000 that reduces as debt principal payments are made, with a maturity of April 2014. Under the swap agreements, the Company pays interest at a fixed rate of 1.70% and receives interest at a variable rate equal to LIBOR, based on a notional amount. As of September 30, 2012, both the carrying value and estimated fair value of the swap agreement was a liability of $302,017. Changes in fair value of the swap agreement are recorded as part of gain (loss) on interest rate swap agreements within the consolidated statement of income.

6. Leases and Commitments and Contingencies

Leases

The Company leases certain property and equipment under operating leases. The future minimum lease payments for all non-cancelable operating leases as of September 30 are as follows:

Year ended September 30,
2013	$	1,129,507
2014	1,015,742
2015	964,045
2016	943,701
2017	480,225
Thereafter	1,438,851
	$	5,972,071

Rent expense under all operating leases for the year ended September 30, 2012 was approximately $1,238,000.

Commitments and Contingencies

The Company is involved in certain litigation arising in the ordinary course of its business related to patent and certain employment matter disputes. It is at least reasonably possible a loss or an additional loss may have been incurred. While the ultimate outcome of these matters cannot be predicted with certainty, management does not anticipate that resolution of these matters will have a material adverse effect on the Company’s consolidated financial position or results of operations.

12

DelStar, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

7. Warrants and Stock Options

Warrants

The Company has issued to employees and shareholders warrants expiring December 2, 2015 to purchase an aggregate of 160,160 shares of common stock at an exercise price of $.01 per share. The warrants are 100% vested and have a cash settlement feature thus requiring liability accounting at fair value each reporting period. At September 30, 2012 there were 152,918 warrants outstanding, each with a fair value of approximately $40.00. As a result, the liability increased by approximately $2,650,000 during 2012 with corresponding change in fair value of warrants included in the consolidated statement of income. The aggregate carrying value and fair value of the warrants was $6,150,000 at September 30, 2012.

Stock Options

The Company has adopted a stock option plan (the “Plan”) pursuant to which the Company’s board of directors may grant stock options to officers, directors, and employees. The plan authorizes grants of options to purchase up to 35,000 shares of authorized but unissued common stock. Stock options can be granted with an exercise price determined by the Company’s Board of Directors at the date of grant. All stock options have 10-year terms, beginning with the date of grant. At September 30, 2012, there were 32,690 options outstanding, with an average exercise price of $89.27, of which 18,804 were vested with an additional 1,216 shares available for grant under the Plan.

During fiscal 2012, 4,600 options were granted with a weighted-average grant-date fair value of $12.52. Total compensation expense during fiscal year 2012 was $9,754. As of September 30, 2012, there was approximately $47,800 of total unrecognized compensation cost related to non‑vested share-based compensation arrangements granted under the Plan. The cost is expected to be recognized over the next four years.

8. Employee Benefit Plans

The Company sponsors a defined contribution 401(k) plan for all eligible employees. Discretionary contributions are made based on a specified percentage of employee contributions. Annual contributions were approximately $234,000 for 2012.

The Company also sponsors a defined contribution 409(a) plan for certain eligible employees. Under this plan, participants may elect to defer up to 75% of their compensation and any annual bonus. The Company invests the deferrals in participant selected marketable trading securities held in a rabbi trust. The assets of the rabbi trust and the liability to employees under the plan was approximately $384,000 at September 30, 2012. The assets of the rabbi trust are included in other assets and the liability to employees under the plan included within other long-term obligations within the consolidated balance sheet. Discretionary contributions are made based on a specified percentage of employee contributions. Annual company contributions were approximately $28,000 for 2012.

9. Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses valuation techniques that require significant management judgment or estimation based upon unobservable inputs due to limited or no market activity of the instrument.

The Company utilizes valuation techniques that maximize the use of observable inputs and minimizes the use of unobservable inputs. Based on the observability of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

• Level 1 - Quoted prices in active markets for identical assets or liabilities.

• Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

9. Fair Value Measurements (continued)

13

DelStar, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

• Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or other valuation techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

In determining the appropriate levels, the Company performs a detailed analysis of the assets and (liabilities) that are subject to fair value disclosures. At each reporting period, all assets and liabilities for which the fair value measurement is based on significant unobservable inputs are classified as Level 3.

Fair Value on a Recurring Basis

The table below presents the balances of assets and liabilities measured at fair value on a recurring basis by level within the hierarchy as of September 30, 2012:

	Total		Level 1		Level 2		Level 3
Assets
Rabbi trust assets	$	384,000	$	384,000	$	—	$	—
Liabilities
Warrants	6,150,000		—		—		6,150,000
Derivative interest rate swap	302,017		—		302,017		—

The Company values the rabbi trust assets based on quoted market prices of the underlying investment securities in an active market. The Company estimates the fair value of the derivatives using a market-based approach through confirmation with a third-party bank model and models that projected future cash flows and discounts the future amounts to a present value using market-based expectations for interest rates and the contractual terms of derivative agreements. The Company determined the fair value of the warrants using a discounted cash flow model that also considered public company comparables and private company transactions and therefore, they have been classified as a Level 3 item. The Company determines transfers between levels are recognized at the end of each fiscal reporting period. There were no transfers between Levels 1, 2, and 3 of the fair value hierarchy during fiscal 2012. There were also no purchases, sales, or settlements within Level 3.

The table below sets forth a summary of the changes in fair value of the Company’s Level 3 liabilities for the year ended September 30, 2012:

September 30, 2011 fair value	$	3,500,000
Change in fair value of warrants	2,650,000
September 30, 2012 fair value	$	6,150,000

Fair Value on a Non-Recurring Basis

Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the instruments were not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). There were no nonrecurring changes in fair value for the year ended September 30, 2012.

14

DelStar, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

10. Income Taxes

The components of the income tax provision for 2012 are as follows:

Current:
Federal	$	2,192,515
State	620,366
Foreign	1,106,630
	3,919,511
Deferred:
Federal	(393,748		)
State	51,036
Foreign	130,199
	(212,513		)
	$	3,706,998

The effective income tax rates for the year ended September 30, 2012 differed from the U.S. federal statutory rate of 34% as follows:

Federal income tax provision at U.S. corporate tax rate	$	2,405,129		34.0	%
State income taxes	450,078			6.4
Foreign earnings subject to different tax rates	14,501			0.2
Change in valuation allowance	121,200			1.7
Nondeductible expenses	24,582			0.3
Nondeductible warrant fair market revaluation	899,722			12.7
Other	(208,214		)	(2.9	)
	$	3,706,998		52.4	%

The tax effects of temporary differences that comprise the net deferred income tax liabilities at September 30, 2012 relate to the following:

Deferred tax assets and (liabilities):
Bad debt reserve	$	116,807
Inventory costs capitalized for tax purposes	878,460
Foreign net operating losses	210,825
Accruals and prepaid	232,090
Other assets	484,593
Property, plant and equipment	(5,686,733		)
Intangibles amortized for tax purposes	(3,762,767		)
Foreign repatriated earnings	(431,542		)
Other liabilities	(99,608		)
Total before valuation allowance	(8,057,875		)
Valuation allowance	(208,550		)
Net deferred tax liabilities	$	(8,266,425	)

15

DelStar, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

10. Income Taxes (continued)

The components giving rise to the net deferred tax liabilities described above have been included in the accompanying consolidated balance sheet as of September 30, 2012 as follows:

Current assets	$	1,013,886
Noncurrent liabilities	(9,280,311		)
	$	(8,266,425	)

At September 30, 2012, the Company had approximately $208,550 in foreign net operating losses which can be carried forward indefinitely. The financial accounting standards require deferred tax assets be reduced by a valuation allowance if it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences are deductible. In making this determination, management considers all available positive and negative evidence affecting specific deferred tax assets, including the Company’s past and anticipated future performance, the reversal of deferred tax liabilities, the length of carryback and carryforward periods and the implementation of tax planning strategies. Management has determined the Company is not likely to realize the income tax benefit related to its foreign net operating loss carryforwards in the United Kingdom and has recorded a full valuation allowance as a result of local cumulative losses to the extent of its net deferred tax assets related to foreign net operating losses.

Furthermore, approximately $389,000 of our other deferred tax assets relate to timing differences on stock-based compensation and if the tax benefit realized is ultimately less than the related U.S. GAAP expense for a grant, the related deferred tax asset would be written off.

11. Redeemable Preferred Stock

At September 30, 2012, the Company has authorized 48,300 shares of redeemable preferred stock, of which 2,300 shares are designated as Series A Redeemable Payment-In-Kind Preferred Stock (“Series A”) and 46,000 shares are designated as Series B Redeemable Payment-In-Kind Preferred Stock (“Series B”). The holders of the stock have various rights as described below:

Voting

The holders of shares of Series A stock and Series B stock have no voting rights.

Dividends and Other Distributions

The holders of Series A stock are entitled to receive cumulative dividends at a rate of 8% per annum, of the Series A Liquidation Preference which is initially determined to be $1,000 per share. All dividends not paid in cash when due shall accrue and increase the Series A Liquidation Preference of each share by the respective amount of the dividend. If the Company fails to redeem the Series A stock by the Shareholders Redemption Date, the Series A stock dividend rate will increase to 10% per annum from the Shareholders Redemption Date.

The holders of Series B stock are entitled to receive cumulative dividends at a rate of 7.55% per annum of the Series B Liquidation Preference which is initially determined to be $1,000 per share. All dividends not paid in cash when due shall accrue and increase the Series B Liquidation Preference of each share by the respective amount of the dividend. If the Company fails to redeem the Series B stock by the Shareholders Redemption Date, the Series B stock dividend rates will increase to 9.55% per annum from the Shareholders Redemption Date.

16

DelStar, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

11. Redeemable Preferred Stock (continued)

Dividends, whether or not earned or declared, shall be cumulative and shall accrue from the date of original issuance of such share. No dividend shall be declared and paid on any common stock or other equity security unless a dividend is declared and paid with respect to all outstanding shares of Series A stock and Series B stock at the same time such dividends are paid on the common stock or other equity securities.

As of September 30, 2012, cumulative dividends in arrears for both Series A and Series B preferred stock were $1,517,221 and $30,997,097, respectively. The Company has not declared or paid any such dividends or distributions.

Liquidation Preference

In the event of any liquidation, dissolution, or winding up of the Company, either voluntarily or involuntarily, the holders of the Series A stock and Series B stock are entitled to be paid the Series A Liquidation Preference and Series B Liquidation Preference, respectively, before any holders of the common stock or other equity security of the Company. After the payment or distribution to the holders of the Series A and Series B preferred stock of the full preferential amounts, the holders of the common stock or other equity security of the Company shall be entitled to receive ratably all the remaining assets of the Company.

Redemption

Series A stock may be redeemed in the event of a change in control of the Company, or upon redemption by the holder of Series B stock. Series B stock may be redeemed in the event of a change in control of the Company, or upon written notice to the Company by the holders of the majority of the outstanding shares of Series B stock at any time after December 15, 2025.

Put Option

The redeemable preferred stock is subject to a put option that allows the holders of the stock the option to sell to the Company, and the Company is obligated to purchase from the holder, all or such portion as is designated by the holder, of the subject securities owned by the holder at fair value, as determined by the Company and accepted by the majority of the shareholders.

12. Convertible Preferred Stock

At September 30, 2012, the Company has authorized a total of 50,800 shares of convertible preferred stock designated as Series C Convertible Preferred Stock (“Series C”). The holders of the stock have various rights as described below:

Voting

The holders of shares of Series C stock have no voting rights.

Dividends and Other Distributions

The holders of Series C stock are entitled to receive annual dividends of 4.0% per annum on $100 Original Issue Price. All dividends not paid in cash become Series C Accrual dividends and are applied pro rata to increase the Series C Liquidation Preference.

Dividends, whether or not earned or declared, shall be cumulative and shall accrue from the date of original issuance of such share. No dividend shall be declared and paid on any common stock or other equity security unless a dividend is declared and paid with respect to all outstanding shares of Series C stock at the same time such dividends are paid on the common stock or other equity securities.

As of September 30, 2012, cumulative dividends in arrears for Series C preferred stock was $1,610,877. The Company has not declared or paid any such dividends or distributions.

17

DelStar, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

12. Convertible Preferred Stock (continued)

Liquidation Preference

In the event of any liquidation, dissolution, or winding up of the Company, either voluntarily or involuntarily, the holders of the Series C stock and holders of any class or series of stock entitled to participate therewith (including Common Stock) are entitled to participate, pro rata, on an as-converted basis in the distribution of any assets of the Company remaining after providing for payment of all debts and liabilities of the Company and payment to the holders of any class of stock having preference over the Series C stock and Common Stock. If upon any such liquidation, the assets of the Company shall be insufficient to make payment in full to all holders of Series C stock and Common Stock of the liquidation preference, then such assets shall be distributed among the holders of the Series C stock at the time outstanding ratably in proportion of the full amounts to which they would otherwise be respectively entitled.

Conversion

Each share of Series C stock shall be convertible at the option of the holder, at any time from the date of issuance of such share, into such number of fully paid and nonassessable shares of common stock as determined by dividing $100 by the Series C stock conversion price then in effect. Initially, the conversion price is $100 for the Series C Stock, and may be subject to adjustment based upon certain events or circumstances described in the Amended and Restated Certificate of Incorporation of DelStar, Inc. Each share of Series C stock shall automatically be converted into fully paid and non-assessable shares of common stock upon the earlier of the (a) change of control, or (b) immediately prior to the closing of an underwritten public offering.

Put Option

The convertible preferred stock is subject to a put option that allows the holders of the stock the option to sell to the Company, and the Company is obligated to purchase from the holder, all or such portion as is designated by the holder, of the subject securities owned by the holder at fair value, as determined by the Company and accepted by the majority of the shareholders.

13. Common Stock

Each share of common stock is entitled to one vote. The holders of the common stock are also entitled to receive dividends whenever funds are legally available and when declared by the board of directors, subject to the prior rights of holders of all classes of stock outstanding. Common stock that is converted from Series C stock, warrants and shares issued subject to purchase rights, as defined, are subject to a put option that allows the holders of such stock the option to sell to the Company, and the Company is obligated to purchase from the holder, all or such portion as is designated by the holder, of the subject securities owned by the holder at fair value, as determined by the Company and accepted by the majority of the shareholders.

14. Related Party Transactions

The Company pays to the majority owner management fees totaling $500,000 per year. For 2012, the management fee paid was $500,000 and is recorded in general and administrative expenses in the consolidated statement of income. In addition the Company paid the majority owner approximately $7,000 for other professional fees for 2012.

The Company has an interest bearing liability to the majority owner totaling approximately $877,400 at September 30, 2012 which is recorded within other long-term obligations on the consolidated balance sheet.

The Company also has interest bearing loan receivables due from certain members of executive management totaling approximately $784,700 at September 30, 2012 which is recorded within other assets on the consolidated balance sheet.

18

DelStar, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (continued)

15. Recently Issued Pronouncements, Not Yet Effective

The FASB has issued Accounting Standards Updates impacting the presentation of comprehensive income, amending the guidance in ASC 220, Comprehensive Income, by eliminating the option to present components of other comprehensive income in the statement of shareholders’ equity. Instead, the new guidance now requires entities to present all nonowner changes in shareholders’ equity either as a single continuous statement of comprehensive income or as two separate but consecutive statements. The components of other comprehensive income have not changed, nor has the guidance on when items are reclassified to net income; however, the amendments require entities to present all reclassification adjustments from other comprehensive income to net income on the face of the statement of comprehensive income. The standard is effective for the Company from October 1, 2012 and is not expected to have a material impact on the Company’s consolidated financial statements upon adoption.

16. Subsequent Events

In December 2012, the Company submitted a non-binding Letter of Intent to acquire selected assets and liabilities of a manufacturing facility in the United Kingdom operating in a complementary line of business to the Company’s existing products. The non-binding proposed purchase price totals approximately £12 million. The signing of any asset purchase agreement is still contingent upon completion of due diligence, obtaining financing, and other internal and external approvals of the proposed transaction.

The Company’s management has evaluated its subsequent events (events occurring after September 30, 2012) through January 28, 2013 which represents the date the consolidated financial statements were made available for issuance.

19

EX-99.2

Exhibit 99.2

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

On December 12, 2013, Schweitzer-Mauduit International, Inc. (the “Company”) completed the acquisition of DelStar, Inc. (“DelStar”), pursuant to an Agreement and Plan of Merger (the “Merger Agreement”), entered into on November 18, 2013, by and among the Company, SWM Acquisition Corp. II, a Delaware corporation and indirect wholly-owned subsidiary of the Company (“SWM II”), SWM Acquisition Corp. I, a Delaware corporation and direct wholly-owned subsidiary of the Company, DelStar, certain security holders of DelStar listed on the signature pages of the Merger Agreement, and American Capital, Ltd. SWM II merged with and into DelStar (the “Acquisition”), with DelStar surviving the Acquisition. DelStar is now an indirect wholly-owned subsidiary of the Company.

The purchase price to acquire DelStar and its subsidiaries was $231.5 million in cash, subject to certain customary post-closing adjustments, in each case upon the terms and subject to the conditions contained in the Merger Agreement. The purchase was funded from the Company’s borrowings under its Revolving Credit Facility, as amended and restated.

The Company entered into a senior unsecured Revolving Credit Facility in an aggregate principal amount of $500 million, amending and restating the previous Revolving Credit Agreement of $225 million. The Company made a draw of $235.0 million on the amended and restated Revolving Credit Facility of which $231.3 million was used to fund the Acquisition as described in the preceding paragraph.

DelStar manufactures plastic netting, nonwovens, films, and extruded components used in a range of industries, including filtration, healthcare, and industrial. DelStar is headquartered in Middletown, Delaware.

The unaudited pro forma condensed combined financial statements were prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) Regulation S-X and should not be considered indicative of the consolidated financial position or results of operations that would have occurred if the Acquisition had been completed on the dates indicated, nor are they indicative of the future consolidated financial position or results of operations of Schweitzer-Mauduit International, Inc. and DelStar following the completion of the Acquisition.

The unaudited pro forma condensed combined financial statements do not reflect the potential realization of cost savings, restructuring or other costs relating to the integration of DelStar. The historical consolidated financial statements of the Company and DelStar have been adjusted in the unaudited pro forma condensed combined financial statements to give effect to pro forma events that are (1) directly attributable to the Acquisition, (2) factually supportable and (3) with respect to the statement of income, expected to have a continuing impact on the consolidated results.

The unaudited pro forma condensed combined financial statements are based on the preliminary information available and management’s preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed. The finalization of the Company’s purchase accounting assessment may result in changes to the valuation of assets acquired and liabilities assumed, particularly in regards to indefinite and definite-lived intangible assets and deferred tax assets and liabilities, which could be material. The Company will finalize the accounting for the business combination as soon as practicable within the measurement period in accordance with Accounting Standards Codification Topic 805 “Business Combinations” (“ASC 805”), but in no event later than one year from December 12, 2013, (the “Acquisition Date”).

The unaudited pro forma condensed combined financial statements should be read in conjunction with the accompanying notes thereto and were based on and should be read in conjunction with:

• Schweitzer-Mauduit International, Inc.’s audited financial statements and related notes thereto contained in its Annual Report on Form 10-K for the year ended December 31, 2012 filed with the SEC on March 1, 2013;

• Schweitzer-Mauduit International, Inc.’s unaudited financial statements and related notes thereto contained in its Quarterly Report on Form 10-Q as of and for the nine months ended September 30, 2013 filed with the SEC on November 6, 2013;

• DelStar’s audited financial statements and related notes for the year ended September 30, 2012 which are attached to this Form 8-K/A as Exhibit 99.1; and

• DelStar’s unaudited financial statements as of and for the nine months ended June 30, 2013, which are attached to this Form 8-K/A as Exhibit 99.3.

SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

(dollars in millions)

	Historical						Pro Forma
	Schweitzer-Mauduit International, Inc. September 30, 2013			DelStar, Inc. June 30, 2013			Adjustments				Condensed Combined
ASSETS
Current Assets
Cash and cash equivalents	$	222.5		$	2.4		$	(3.3	)	(a)	$	221.6
Accounts receivable, net	100.7			20.0			—				120.7
Inventories	111.0			15.3			4.0			(b)	130.3
Income taxes receivable	4.5			—			5.7			(c)	10.2
Current deferred income tax benefits	9.3			1.2			0.3			(c)	10.8
Other current assets	8.1			0.7			—				8.8
Total Current Assets	456.1			39.6			6.7				502.4
Property, Plant and Equipment, net	384.6			28.5			11.0			(d)	424.1
Deferred Income Tax Benefits	7.0			—			—				7.0
Investment in Equity Affiliates	61.7			—			—				61.7
Goodwill and Intangible Assets, net	6.0			59.5			137.8			(e)	203.3
Other Assets	25.4			1.8			0.9			(f)	28.1
Total Assets	$	940.8		$	129.4		$	156.4			$	1,226.6
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Current debt	$	4.6		$	4.6		$	(4.6	)	(g)	$	4.6
Accounts payable	35.8			6.0			—				41.8
Income taxes payable	—			0.9			(0.9		)	(c)	—
Accrued expenses	81.7			4.3			4.6			(h)	90.6
Total Current Liabilities	122.1			15.8			(0.9		)		137.0
Long-Term Debt	146.6			31.0			200.2			(g)	377.8
Pension and Other Postretirement Benefits	38.4			—			—				38.4
Deferred Income Tax Liabilities	37.1			9.5			30.9			(c)	77.5
Derivative Financial Instruments	—			0.2			(0.2		)	(i)	—
Warrant Obligation	—			45.8			(45.8		)	(j)	—
Other Liabilities	29.6			1.5			(0.9		)	(k)	30.2
Total Liabilities	373.8			103.8			183.3				660.9
Stockholders’ Equity:
Preferred stock	—			—			—			(l)	—
Common stock	3.1			—			—			(l)	3.1
Additional paid-in-capital	41.9			39.2			(39.2		)	(l)	41.9
Retained Earnings (Accumulated Deficit)	540.9			(14.5		)	14.5			(l)	540.9
							(1.3		)	(a)	(1.3		)
Accumulated other comprehensive loss, net of tax	(18.9		)	0.9			(0.9		)	(l)	(18.9		)
Total Stockholders’ Equity	567.0			25.6			(26.9		)		565.7
Total Liabilities and Stockholders’ Equity	$	940.8		$	129.4		$	156.4			$	1,226.6

See accompanying notes to unaudited pro forma condensed combined financial statements.

SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

(dollars in millions, except per share amounts)

	Historical					Pro Forma
	Schweitzer-Mauduit International, Inc. Continuing Operations Nine months ended September 30, 2013		DelStar, Inc. Nine months ended June 30, 2013			Adjustments				Condensed Combined
Net Sales	$	576.3	$	86.1		$	—			$	662.4
Cost of products sold	385.5		61.8			(0.3		)	(d)	447.0
Gross Profit	190.8		24.3			0.3				215.4
Selling expense	15.2		3.6			—				18.8
Research expense	11.1		0.9			—				12.0
General expense	36.0		9.0			1.0			(d), (e), (m)	46.0
Total nonmanufacturing expenses	62.3		13.5			1.0				76.8
Restructuring and impairment expense	2.9		—			—				2.9
Operating Profit	125.6		10.8			(0.7		)		135.7
Interest expense	2.0		1.4			1.4			(g)	4.8
Other income (expense), net	3.0		(39.5		)	39.5			(n)	3.0
Income from Continuing Operations before Income Taxes and Income from Equity Affiliates	126.6		(30.1		)	37.4				133.9
Provision for income taxes	40.0		3.8			(0.8		)	(c)	43.0
Income from equity affiliates	3.1		—			—				3.1
Net Income (Loss) from Continuing Operations	$	89.7	$	(33.9	)	$	38.2			$	94.0
Net Income per Share
Basic	$	2.86								$	3.00
Diluted	$	2.84								$	2.98
Weighted Average Shares Outstanding:
Basic	31,042,200									31,042,200
Diluted	31,213,300									31,213,300

See accompanying notes to unaudited pro forma condensed combined financial statements.

SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

(dollars in millions, except per share amounts)

	Historical		As Adjusted					Historical			Pro Forma
	Schweitzer-Mauduit International, Inc. Continuing Operations Year ended December 31, 2012		Discontinued Operations			Schweitzer-Mauduit International, Inc. Continuing Operations Year ended December 31, 2012		DelStar, Inc. Year ended September 30, 2012			Adjustments				Condensed Combined
Net Sales	$	788.1	$	9.6		$	778.5	$	110.5		—				$	889.0
Cost of products Sold	537.2		18.2			519.0		82.1			(0.4		)	(d)	600.7
Gross Profit	250.9		(8.6		)	259.5		28.4			0.4				288.3
Selling expense	22.4		0.5			21.9		4.7			—				26.6
Research expense	10.0		0.1			9.9		1.2			—				11.1
General expense	55.0		0.4			54.6		10.5			1.5			(d), (e), (m)	66.6
Total nonmanufacturing expenses	87.4		1.0			86.4		16.4			1.5				104.3
Provision for losses on business tax credits	2.1		2.1			—		—			—				—
Restructuring and impairment expense	28.0		6.6			21.4		—			—				21.4
Operating Profit	133.4		(18.3		)	151.7		12.0			(1.1		)		162.6
Interest expense	3.4		0.1			3.3		2.4			1.3			(g)	7.0
Other income (expense), net	1.6		0.4			1.2		(2.6		)	2.6			(n)	1.2
Income from Continuing Operations before Income Taxes and Income from Equity Affiliates	131.6		(18.0		)	149.6		7.0			0.2				156.8
Provision for income taxes	51.9		2.4			49.5		3.7			(0.9		)	(c)	52.3
Income from equity affiliates	4.0		—			4.0		—			—				4.0
Net Income (Loss)	$	83.7	$	(20.4	)	$	104.1	$	3.3		$	1.1			$	108.5
Net Income per Share:
Basic	$	2.67				$	3.33								$	3.47
Diluted	$	2.64				$	3.29								$	3.43
Weighted Average Shares Outstanding:
Basic	30,986,200					30,986,200									30,986,200
Diluted	31,341,900					31,341,900									31,341,900

See accompanying notes to unaudited pro forma condensed combined financial statements.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

1.DESCRIPTION OF TRANSACTION AND BASIS OF PRESENTATION

On December 12, 2013, the Company completed its acquisition of DelStar for $231.5 million in cash. The cash payment is subject to certain customary post-closing adjustments. The transaction was accounted for under the acquisition method of accounting in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), with the Company treated as the accounting acquirer. Under the acquisition method of accounting, substantially all of DelStar’s assets acquired and liabilities assumed in the transaction were recorded by the Company at their acquisition date fair values while transaction costs associated with the transaction were expensed as incurred.

The Company's former paper mill in Medan, Indonesia and closed tipping mill in Malaucène, France were historically reported as discontinued operations in the Company’s Form 10-K for the year ended December 31, 2012. The Company’s closed paper mill in San Pedro, Philippines was reported as discontinued operations in the first quarter of 2013 and will be presented as discontinued in the unaudited pro forma condensed combined statement of income for the year ended December 31, 2012. The sale of the Indonesian mill was finalized in the second quarter of 2013. In accordance with Accounting Standards Codification ("ASC") 205-20, Presentation of Financial Statements - Discontinued Operations, the results of the discontinued operations have been excluded in determining the net income (loss) from continuing operations.

The unaudited pro forma condensed combined financial statements were prepared in accordance with US GAAP and pursuant to the rules and regulations of the Securities and Exchange Commission Regulation S-X, and present the pro forma financial position and results of operations of the consolidated companies based upon the historical information after giving effect to the Acquisition and adjustments described in these footnotes. The unaudited pro forma condensed combined financial statements have been derived from the audited and unaudited historical financial statements of the Company and DelStar.

The unaudited pro forma condensed combined statement of income for the year ended December 31, 2012 includes DelStar’s statement of income for the fiscal year ended September 30, 2012. The unaudited pro forma condensed combined statement of income for the nine months ended September 30, 2013 includes DelStar’s statement of income for the nine months ended June 30, 2013. SEC regulations allow the combining of statements of income with different year ends when the fiscal year ends for such statements of income differ by no more than 93 days.

The unaudited pro forma condensed combined balance sheet is presented as if the Acquisition had occurred on September 30, 2013 and the unaudited pro forma condensed combined statements of income for the year ended December 31, 2012, and nine months ended September 30, 2013, give effect to the Acquisition as if it occurred on January 1, 2012.

2. CONSIDERATION TRANSFERRED AND PRELIMINARY VALUE OF NET ASSETS ACQUIRED

The Acquisition has been accounted for using the acquisition method of accounting in accordance with ASC 805, which requires, among other things, that the assets acquired and liabilities assumed be recognized at their acquisition date fair values, with any excess of the consideration transferred over the estimated fair values of the identifiable net assets acquired recorded as goodwill.

The accounting for the business combination is based on currently available information and is considered preliminary. The final accounting for the business combination may differ materially from that presented in these unaudited pro forma condensed financial statements.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

The consideration transferred to acquire DelStar and its subsidiaries was $231.3 million in cash, subject to certain customary post-closing adjustments, in each case upon the terms and subject to the conditions contained in the Merger Agreement. The following table summarizes the preliminary accounting for the business combination for the DelStar acquisition ($ in millions):

	Fair value at acquisition date
Cash & cash equivalents	$	2.4
Accounts receivable	20.0
Inventory	19.4
Income tax receivable	5.7
Current deferred income taxes	1.5
Other current assets	0.7
Properties, plant and equipment	39.5
Other noncurrent assets	0.6
Identifiable intangible assets	80.9
Total Assets	170.6
Accounts payable and accrued expenses	14.7
Deferred income taxes	40.4
Other long-term liabilities	0.6
Net assets acquired	114.9
Goodwill	116.4
Consideration transferred	$	231.3

3.    PROFORMA ADJUSTMENTS

Reclassifications

Certain historical balance sheet line items have been reclassified to conform to the pro forma condensed combined presentation.

Adjustments

(a) Represents the preliminary net adjustment to cash in connection with the Acquisition ($ in millions):

	As of September 30, 2013
Proceeds received from amended and restated credit agreement (1)	$	231.3
Proceeds used for acquisition of DelStar (2)	(231.3		)
Payment of transaction costs (3)	(3.3		)
Net adjustment to cash	$	(3.3	)

(1) Represents the portion of proceeds from the Revolving Credit Facility, as amended and restated, with JP Morgan Chase Bank, N.A. and various other institutions used to finance the Acquisition.

(2) Represents the consideration transferred described in Note 2.

(3) Represents the payment of costs incurred after September 30, 2013 associated with the Acquisition. The amount represents $2.0 million of capitalized financing costs incurred related to the amended and restated credit facility and $1.3 million of direct and indirect acquisition-related costs, which were expensed.

(b) Inventory acquired in the Acquisition was adjusted to reflect the estimated fair value of inventory acquired. The unaudited pro forma condensed combined statements of income do not reflect the impact on cost of sales of the estimated purchase accounting adjustment; the adjustment is directly related to the Acquisition and is not expected to have a continuing impact on the Company’s operations.

(c) Reflects the estimated deferred taxes and income tax effect related to the pro forma adjustments based upon an estimated combined statutory tax rate of 38% and assumed utilization of deferred tax attributes. This rate does not reflect SWM’s effective tax rate, which includes other tax charges or benefits.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

(d) Represents the adjustment to property, plant and equipment (PP&E) to reflect the preliminary estimate of fair value and the depreciation expense related to the change in fair value of PP&E recorded in relation to the Acquisition. Depreciation expense has been estimated based upon the nature of activities associated with the PP&E acquired and therefore, for purposes of these unaudited pro forma condensed combined financial statements, SWM has reflected the estimated depreciation expense in cost of products sold and general expense.

The amounts assigned to PP&E, the estimated useful lives, and the estimated depreciation expense related to the PP&E acquired are as follows ($ in millions):

				Depreciation Expense for the:
	Preliminary Fair Value		Estimated weighted Average Life (years)	Nine Months Ended September 30, 2013			Year Ended December 31, 2012
Land Improvements	$	0.1	5.0	$	—		$	—
Buildings and improvements	4.4		15.0	0.2			0.3
Leasehold improvements	0.8		12.0	0.1			0.1
Machinery and equipment	28.1		10.0	2.1			2.8
Computer hardware and software	1.4		3.0	0.4			0.5
Furniture, fixtures, and computer equipment	0.2		5.0	—			—
Vehicles	0.2		3.0	—			0.1
Land	0.8		N/A	N/A			N/A
Construction in progress	3.4		N/A	N/A			N/A
Total	$	39.5		$	2.8		$	3.8
Less: DelStar historical PP&E, net and depreciation expense	28.5			3.2			4.2
Pro forma adjustments	$	11.0		$	(0.4	)	$	(0.4	)
N/A = Not Applicable

(e) Reflects the elimination of DelStar’s historical goodwill of $59.5 million and the preliminary estimated adjustment to goodwill of $116.4 million, the pro forma impact of the recognized identifiable intangible assets that are being acquired, and the related amortization expense related to the change in fair value of identifiable intangible assets acquired as a result of the Acquisition.

The preliminary amount assigned to goodwill represents the excess of the consideration transferred over the preliminary fair value of the assets acquired and liabilities assumed as well as the deferred taxes described in Note 2. The goodwill will not be amortized, but instead will be tested for impairment at least annually and whenever events or circumstances have occurred that may indicate a possible impairment exists. In the event management determines that the value of goodwill has become impaired, SWM will incur an accounting charge for the amount of the impairment during the period in which the determination is made. The goodwill is attributed primarily to DelStar’s revenue growth from combining the SWM and DelStar businesses and workforce as well as the benefits of access to different markets and customers. The goodwill is not expected to be deductible for tax purposes.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

The preliminary amounts assigned to the identifiable intangible assets, the estimated useful lives, and the estimated amortization expense related to these identifiable intangible assets are as follows ($ in millions):

				Amortization Expense for the:
	Preliminary Fair Value		Estimated Weighted Average Life (years)	Nine Months Ended September 30, 2013		Year Ended December 31, 2012
Developed technology	$	13.8	12.8	$	0.8	$	1.1
Customer relationships	45.3		23.0	1.5		2.0
Trade names	21.8		N/A	N/A		N/A
Total	$	80.9		$	2.3	$	3.1
Less: DelStar historical intangible assets, net and amortization expense	7.3			0.7		0.9
Pro forma adjustments	$	73.6		$	1.6	$	2.2
N/A = Not Applicable

Developed technology

Approximately $13.8 million, or 17% of the identified intangible assets, has been preliminarily assigned to developed technology with an estimated weighted average useful life of 12.8 years. The fair value of developed technology was estimated based on an income approach using the multi-period excess earnings method. The remaining useful life for the existing technology was based on the pattern of projected economic benefit of the asset.

Customer Relationships

Approximately $45.3 million, or 56% of the identified intangible assets, has been preliminarily assigned to customer relationships with an estimated useful life of 23 years. The fair value of the customer relationships was estimated based on an income approach using the multi-period excess earnings method. The remaining useful life of customer relationships was estimated based on historical customer attrition, new customer acquisition and the expected future economic benefit of the asset.

Trade Names

Approximately $21.8 million, or 27% of the identified intangible assets, has been preliminarily assigned to trade names with an indefinite useful life. The fair value of the trade names was estimated based on an income approach using the relief from royalty method.

(f) Represents the following components:

• The capitalization of $2.0 million of the Company’s deferred financing costs associated with the amended and restated credit agreement.

• The write-off of $0.3 million of DelStar’s unamortized deferred financing costs related to the elimination of the preexisting debt.

• The elimination of $0.8 million DelStar officer loan receivables repaid as part of the Acquisition.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

(g) Represents the following components:

• The elimination by DelStar of its current and long-term debt of $4.6 million and $31.0 million, respectively.

• The elimination of DelStar’s interest expense for the nine months ended June 30, 2013 and year ended September 30, 2012 in the amount of $1.4 million and $2.4 million, respectively.

• An increase in additional long-term debt incurred by SWM in the form of an amended and restated credit agreement, which consisted of a Revolving Credit Facility, as amended and restated, of $500 million, of which $235 million was drawn and $231.3 was used to fund the Acquisition, with an annual interest rate of LIBOR plus an applicable margin of 1.25%. The adjustments to interest expense reflect the expected interest expense to be incurred by SWM as a result of the Acquisition and the fees related to the amended and restated Revolving Credit Facility. SWM incurred $2.0 million in refinancing costs in conjunction with the new credit facility, which was paid with existing cash on hand, and capitalized and amortized over the time between the date of Acquisition and the credit facilities scheduled maturity. The adjustments related to the amortization of deferred financing costs are incremental to SWM’s historical amortization expense. The LIBOR that was in effect as of the date of the Acquisition was used in the following table ($ in millions):

New debt and related interest expense	Rate		Debt		For the Nine Months Ended September 30, 2013		For the Year Ended December 31, 2012
Revolving Credit Facility, amended and restated	1.4	%	$	231.3	$	2.5	$	3.3
Amortization of deferred financing costs					0.3		0.4
Net adjustment to interest expense related to new debt (1)					$	2.8	$	3.7

(1) A hypothetical 0.125 % change in interest rate would result in a $0.2 million and $0.3 million change in interest expense for the nine months ended September 30, 2013 and for the year ended December 31, 2012, respectively.

(h) Represents the following components:

• A decrease of $0.5 million related to the elimination of accrued interest from the elimination of DelStar’s outstanding debt.

• The elimination of accrued management fee of $0.1 million to predecessor investor of DelStar no longer owed as part of the Acquisition closing.

• An accrued liability of $5.1 million owed to the predecessor investor of DelStar.

(i) Represents the elimination of DelStar’s interest rate swaps liability settled as part of the Acquisition closing.

(j) Represents the elimination of DelStar issued employee and shareholder warrants settled as part of the Acquisition closing.

(k) Represents the elimination of liability balances related to officer loans funded by the predecessor investor of DelStar repaid as part of the Acquisition.

(l) Represents the elimination of DelStar’s historical equity.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

(m) Represents the following components:

• The elimination of DelStar’s historical amortization expense related to their intangible assets, as presented at note 3(e), for the nine months ended June 30, 2013 and the year ended September 30, 2012 in the amount of $0.7 million and $0.9 million, respectively.

• The elimination of management fees with DelStar’s predecessor investor for the nine months ended June 30, 2013 and the year ended September 30, 2012 in the amount of $0.4 million and $0.5 million, respectively.

• The elimination of expenses primarily related to the DelStar’s Board of Directors that will not have continuing impact on SWM’s operations. The expenses were approximately $0.1 million and $0.1 for the nine months ended June 30, 2013 and the year ended September 30, 2012, respectively.

(n)    Represents the following components:

• The elimination of DelStar’s gain on interest rate swap agreements in the amount of $0.1 million for both the nine months ended June 30, 2013 and the year ended September 30, 2012.

• The elimination of other expenses related to change in the value of DelStar’s employee and shareholder warrants for the nine months ended June 30, 2013 and the year ended September 30, 2012 in the amount of $39.6 million and $2.7 million, respectively.

EX-99.3

Exhibit 99.3

This Exhibit 99.3 presents historical data for DelStar, Inc. (or "DelStar") relating solely to periods prior to the completion of the Acquisition on December 12, 2013, is provided as supplemental summary information only, and does not purport to be a complete presentation of the financial or operational results of DelStar for the periods indicated. The following information has been derived from the books and records of DelStar, is presented on an unaudited basis, and is not intended to be an indicator of future results of DelStar or results of the combined Company. The supplemental information furnished in this Exhibit 99.3 should be read in conjunction with DelStar's most recent audited consolidated financial statements attached in Exhibit 99.1

.

DELSTAR, INC. AND SUBSIDIARIES
UNAUDITED SUPPLEMENTAL FINANCIAL INFORMATION
As of June 30, 2013
	DelStar, Inc.
	June 30, 2013
Assets
Current assets:
Cash and cash equivalents	$	2,383,047
Accounts receivable, net	19,950,814
Other receivables	139,983
Inventories	15,329,497
Prepaid expenses and other current assets	546,030
Deferred income taxes	1,223,496
Total current assets	39,572,867
Property, plant and equipment, net	28,526,576
Goodwill	52,170,455
Intangible assets, net	7,342,062
Deferred financing costs, net	335,780
Other assets	1,409,351
Total assets	$	129,357,091
Liabilities and shareholders’ equity
Current liabilities:
Current portion of long-term debt	$	4,650,000
Accounts payable	5,982,081
Accrued expenses	4,266,328
Income taxes payable	867,796
Total current liabilities	15,766,205
Long-term debt, less current portion	31,060,740
Deferred income taxes	9,501,614
Derivative financial instruments	161,038
Warrant obligation	45,787,500
Other long-term obligations	1,499,935
Total liabilities	$	103,777,033
Shareholders’ equity:
Series A Redeemable Payment-In-Kind Preferred Stock $.001 par value; authorized 2,300 shares; issued and outstanding 2,075 shares (liquidation value of $3,892,572)	2
Series B Redeemable Payment-In-Kind Preferred Stock, $.001 par value; authorized 46,000 shares; issued and outstanding 45,650 shares (liquidation value of $82,687,061)	46
Series C Convertible Preferred Stock, $.001 par value; authorized 50,800 shares; issued and outstanding 50,722 shares (liquidation value of $6,958,263)	51
Common stock, $0.001 par value; authorized 250,000 shares; issued and outstanding 10,288 shares	10
Additional paid-in capital	39,213,078
Retained earnings (Accumulated Deficit)	(14,492,973		)
Accumulated other comprehensive income	859,844
Total Shareholders' Equity	25,580,058
Total Liabilities and Shareholders' Equity	$	129,357,091

DELSTAR, INC. AND SUBSIDIARIES
UNAUDITED SUPPLEMENTAL FINANCIAL INFORMATION
For the nine months ended June 30, 2013
	DelStar, Inc
	Nine Months Ended
	June 30, 2013
Net sales	$	86,145,106
Cost of goods sold	61,834,824
Gross profit	24,310,282
Operating expenses:
Selling and marketing	3,639,159
General and administrative	8,984,086
Research and development	882,935
Income from operations	10,804,102
Other income (expense):
Gain on interest rate swap agreements	140,979
Change in fair value of warrants	(39,637,500		)
Interest expense, net	(1,447,485		)
Income before income taxes	(30,139,904		)
Provision for income taxes	3,768,772
Net income	$	(33,908,676	)