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: January 13, 2016

(Date of earliest event reported: October 28, 2015)

_____________________________________________

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
(Address of principal executive offices)	(Zip code)

1-800-514-0186

(Registrant’s telephone number, including area code)

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:

o  Written communications pursuant to Rule 425 under the Securities Act. (17 CFR 230.425)

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

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

o  Pre-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 October 28, 2015, Schweitzer-Mauduit International Inc. (the "Company" or "SWM") filed a Current Report on Form 8-K (the "8-K") to report its acquisition of Argotec Intermediate Holdings LLC ("Argotec"). The purpose of this amendment to the Form 8-K is to include the historical and unaudited pro forma condensed consolidated financial statements required by Items 9.01(a) and 9.01(b) of Form 8-K that were excluded from the 8-K in reliance on the instructions to such items.

Item 7.01 Regulation FD Disclosure.

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.

Item 9.01 Financial Statements and Exhibits.

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

The audited consolidated financial statements of Argotec Intermediate Holdings Two LLC and Subsidiaries as of December 31, 2014 and for the year then ended are filed as Exhibit 99.1 and incorporated herein by reference. The audited financial statements are of Argotec’s parent company. SEC regulations allow the use of audited financial statements of an entire consolidated entity where only selected parts of an entity are acquired and those acquired parts represent substantially all of the selling entity.

The unaudited condensed consolidated financial statements of Argotec Intermediate Holdings LLC and Subsidiaries as of September 30, 2015 and for the nine months ended September 30, 2015 and 2014 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, 2015 and the unaudited pro forma condensed consolidated statements of income for the nine months ended September 30, 2015 and for the year ended December 31, 2014, 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 Greenberg, Rosenblatt, Kull & Bitsoli, P.C.
99.1	Argotec Intermediate Holdings Two LLC and Subsidiaries Consolidated Financial Statements as of December 31, 2014 and for the year then ended.
99.2	Unaudited pro forma condensed consolidated balance sheet as of September 30, 2015 and the unaudited pro forma condensed consolidated statements of income for the nine months ended September 30, 2015 and year ended December 31, 2014, and the accompanying notes.
99.3	Unaudited financial statements of Argotec Intermediate Holdings LLC and Subsidiaries as of and for the nine months ended September 30 2015 and 2014, and the accompanying notes.

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 January 13, 2016.

SCHWEITZER-MAUDUIT INTERNATIONAL, INC.

(Registrant)

By:	/s/ Allison Aden
	Allison Aden
	Executive Vice President, Finance and
	Chief Financial Officer

SCHWEITZER-MAUDUIT INTERNATIONAL, INC.

Current Report on Form 8-K

Dated January 13, 2016

INDEX TO EXHIBITS

Exhibit Number	Description of Exhibit
23.1	Consent of Greenberg, Rosenblatt, Kull & Bitsoli, P.C.
99.1	Argotec Intermediate Holdings Two LLC and Subsidiaries Consolidated Financial Statements as of December 31, 2014 and for the year then ended.
99.2	Unaudited pro forma condensed consolidated balance sheet as of September 30, 2015 and the unaudited pro forma condensed consolidated statements of income for the nine months ended September 30, 2015 and year ended December 31, 2014, and the accompanying notes.
99.3	Unaudited financial statements of Argotec Intermediate Holdings LLC and Subsidiaries as of and for the nine months ended September 30 2015 and 2014, and the accompanying notes.

EX-23.1

Exhibit 23.1

Consent of Independent Auditors

We consent to the use of our reports dated April 2, 2015, included in the Consolidated Financial Statements of Argotec Intermediate Holdings Two LLC and Subsidiaries for the year ended December 31, 2014, with respect to the consolidated financial statements and the consolidated supplemental information of Argotec Intermediate Holdings LLC and Subsidiaries included in this Schweitzer-Mauduit International Inc. (the “Company”) Form 8-K/A dated January 13, 2016 and the incorporation of such reports by reference in Registration Statements on Form S-8 (Nos. 333-74634, 333-105986, 333-105998, 333-161988, 333-179933, and 333-204120) of the Company.

/s/ Greenberg, Rosenblatt, Kull & Bitsoli, P.C.

Worcester Massachusetts

January 13, 2016

EX-99.1

Exhibit 99.1

ARGOTEC INTERMEDIATE HOLDINGS TWO LLC AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013

ARGOTEC INTERMEDIATE HOLDINGS TWO LLC AND SUBSIDIARIES

TABLE OF CONTENTS

DECEMBER 31, 2014 AND 2013

	PAGE
Independent Auditors' Report	1 - 2
Consolidated Financial Statements:
Balance Sheets	3
Statements of Income and Comprehensive Income	4
Statements of Members' Equity	5
Statements of Cash Flows	6
Notes to Financial Statements	7 - 18
Independent Auditors' Report on Supplemental Information	19
Consolidated Supplemental Information:
Schedules of Cost of Sales	20
Schedules of Operating Expenses	21 - 22

Independent Auditors' Report

To the Board of Directors and Members

Argotec Intermediate Holdings Two LLC and Subsidiaries

Greenfield, Massachusetts

We have audited the accompanying consolidated financial statements of Argotec Intermediate Holdings Two LLC (a Delaware Limited Liability Company) and Subsidiaries, which comprise the consolidated balance sheets as of December 31, 2014 and 2013, and the related consolidated statements of income and comprehensive income, members' equity, and cash flows for the year ended December 31, 2014 and the period from inception (May 31, 2013) to December 31, 2013, and the related notes to the consolidated financial statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the Company's preparation and fair presentation of the consolidated financial statements in order to design 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. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Greenberg,Rosenblatt,Kull &Bitsoli,P.C.

CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Members

Argotec Intermediate Holdings Two LLC and Subsidiaries

Page 2

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Argotec Intermediate Holdings Two LLC and Subsidiaries as of December 31, 2014 and 2013, and the results of their operations and their cash flows for the year ended December 31, 2014 and the initial period ended from May 31, 2013 through December 31, 2013 in accordance with accounting principles generally accepted in the United States of America.

/s/ GREENBERG, ROSENBLATT, KULL & BITSOLI, P.C.

Worcester, Massachusetts

April 2, 2015

ARGOTEC INTERMEDIATE HOLDINGS TWO LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31,

ASSETS	2014		2013
Current assets:
Cash and equivalents	$	38,532,087	$	2,153,652
Accounts receivable, net	13,317,019		7,229,266
Inventories	12,368,834		7,366,975
Other receivables	113,163		241,858
Prepaid expenses	272,177		106,371
Total current assets	64,603,280		17,098,122
Property and equipment, net	15,266,454		18,379,675
Other assets:
Goodwill	65,490,456		52,664,498
Noncompete agreement, net	173,333		—
Financing costs, net	287,087		789,931
Deposits on property and equipment	449,135		775,178
Deferred loss on sale-leaseback	162,588		—
Total other assets	66,562,599		54,229,607
Total assets	$	146,432,333	$	89,707,404
LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
Note payable	$	—	$	1,250,000
Current maturities of long-term debt	1,743,750		2,000,000
Accounts payable	4,480,481		3,699,906
Accrued liabilities	1,701,977		1,179,392
Total current liabilities	7,926,208		8,129,298
Long-term debt, net of current maturities
and unamortized discount	89,641,738		37,500,000
Members' equity:
Members' equity	48,864,044		44,078,106
Accumulated other comprehensive income	343		—
Total members' equity	48,864,387		44,078,106
Total liabilities and members' equity	$	146,432,333	$	89,707,404

The accompanying notes are an integral part

of the consolidated financial statements

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ARGOTEC INTERMEDIATE HOLDINGS TWO LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

YEAR ENDED DECEMBER 31, 2014 AND THE PERIOD

MAY 31, 2013 (DATE OF INCEPTION) TO DECEMBER 31, 2013

	2014			2013
Sales	$	101,893,812		$	44,791,966
Cost of goods sold	77,712,838			32,464,231
Gross profit	24,180,974			12,327,735
Operating expenses:
Selling	3,762,195			1,342,506
Research and development	492,894			221,635
General and administrative	6,345,507			3,146,000
Total operating expenses	10,600,596			4,710,141
Income from operations	13,580,378			7,617,594
Other expense:
Interest expense	(3,581,388		)	(1,508,507		)
Business acquisitions costs (Note 3)	(675,479		)	(2,629,941		)
Loss on extinguishment of debt (Note 7)	(1,538,681		)	—
Other	(12,943		)	—
Total other expense, net	(5,808,491		)	(4,138,448		)
Net income	7,771,887			3,479,146
Other comprehensive income:
Foreign currency translation adjustment	343			—
Comprehensive income	$	7,772,230		$	3,479,146

The accompanying notes are an integral part

of the consolidated financial statements

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ARGOTEC INTERMEDIATE HOLDINGS TWO LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF MEMBERS' EQUITY

YEAR ENDED DECEMBER 31, 2014 AND THE PERIOD

MAY 31, 2013 (DATE OF INCEPTION) TO DECEMBER 31, 2013

	Members' Equity			Accumulated Other Comprehensive Income		Total
Balance - May 31, 2013 (Date of Inception)	$	—		$	—	$	—
Contributions from members	41,931,410			—		41,931,410
Net income	3,479,146			—		3,479,146
Distributions to members	(1,332,450)			—		(1,332,450		)
Balance - December 31, 2013	44,078,106			—		44,078,106
Net income	7,771,887			—		7,771,887
Other comprehensive income:
Foreign currency translation adjustments	—			343		343
Distributions to members	(2,985,949		)	—		(2,985,949		)
Balance - December 31, 2014	$	48,864,044		$	343	$	48,864,387

The accompanying notes are an integral part

of the consolidated financial statements

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ARGOTEC INTERMEDIATE HOLDINGS TWO LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31, 2014 AND THE PERIOD

MAY 31, 2013 (DATE OF INCEPTION) TO DECEMBER 31, 2013

	2014			2013
Operating activities:
Net income	$	7,771,887		$	3,479,146
Adjustments to reconcile net income to   net cash provided by operating activities:
Provision for bad debts	(141,534)			(25,000)
Loss on extinguishment of debt	1,366,181			—
Depreciation and amortization	2,822,094			876,992
Change in assets and liabilities net of effect of
business acquisitions (Note 3):
Accounts receivable	(2,124,341)			1,863,187
Inventories	(1,085,359)			(998,528)
Other receivables	128,695			(240,689)
Prepaid expenses	(124,511)			(5,391)
Accounts payable	238,947			1,118,938
Accrued liabilities	311,009			242,206
Net cash provided by operating activities	9,163,068			6,310,861
Investing activities:
Deposits on property and equipment	326,043			(443,389		)
Purchase of property and equipment	(5,008,940		)	(2,149,214		)
Proceeds from sale-leaseback of buildings	9,735,493			—
Goodwill purchase price adjustment (Note 3)	425,580			—
Business acquisitions (Note 3)	(25,046,541		)	(82,038,566		)
Net cash used in investing activities	(19,568,365		)	(84,631,169		)
Financing activities:
Proceeds from long-term debt	119,000,000			40,000,000
Repayment of long-term debt	(65,500,000		)	(500,000		)
Proceeds from (repayment of) note payable, net	(1,250,000		)	1,250,000
Long-term debt issue costs, net	(1,614,512		)	—
Financing costs	(865,750		)	(875,000		)
Contributions from members	—			41,931,410
Distributions to members	(2,985,949		)	(1,332,450		)
Net cash provided by financing activities	46,783,789			80,473,960
Net increase in cash and equivalents	36,378,492			2,153,652
Effect of exchange rates on cash and equivalents	(57		)	—
Cash and equivalents - beginning	2,153,652			—
Cash and equivalents - ending	$	38,532,087		$	2,153,652

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid for interest $ 3,284,820 $ 1,470,899

The accompanying notes are an integral part

of the consolidated financial statements

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ARGOTEC INTERMEDIATE HOLDINGS TWO LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013

(1) ORGANIZATION AND NATURE OF BUSINESS

Organization:

Argotec Intermediate Holdings Two LLC (Intermediate Holdings 2) and its wholly owned subsidiaries, Argotec Intermediate Holdings LLC (Intermediate Holdings), Argotec LLC, Argotec Deutschland GmbH (Deutschland), Argotec International Sales Corporation (Argotec International), Argotec Asia Pacific Limited (Argotec Asia), and Argotec Stevens LLC (Stevens LLC) (collectively, the Company) are owned 99.9% by Argotec Holdings LLC (Holdings).

The limited liability companies (LLCs) were organized in the State of Delaware in connection with the May 31, 2013 acquisition of the net business assets of Argotec, Inc., the predecessor of Argotec LLC (Note 3); and, the April 2014 formation of Stevens LLC, as described below. The terms of the LLCs' operating agreements limit the members' liability for losses, debts and obligations to their equity contributions. The LLCs have no termination date under the terms of the operating agreements.

As the wholly owned subsidiary of Argotec Inc., Argotec International, a Massachusetts corporation, was acquired in the acquisition of net assets May 31, 2013.

Deutschland was organized as a German limited liability company (GmbH), wholly owned by Argotec LLC, on December 9, 2013. Deutshland operations began in 2014.

The Company formed Stevens LLC on April 17, 2014, to acquire the land and building in connection with the April 30, 2014 business acquisition of Stevens Urethane, a division of JPS Elastomerics Corp. (JPS) (Note 3).

Argotec Asia was organized as a Hong Kong limited liability company, wholly owned by Argotec LLC, on June 17, 2014. Argotec Asia operations began in 2015.

Nature of Business:

The Company is engaged in the manufacture, distribution and sale of polyurethane film and sheets and other urethane products to customers in the aeronautical, transportation, graphics, medical and industrial markets located principally throughout the United States as well as internationally. Argotec International transacts certain foreign sales activities on behalf of the Company.

Principles of Consolidation:

The accompanying consolidated financial statements include the accounts of Intermediate Holdings 2, Intermediate Holdings, Argotec LLC, Deutschland, Argotec International, Argotec Asia, and Stevens LLC. The accounts of the parent company, Holdings, are not included in these consolidated financial statements. All significant intercompany transactions and balances have been eliminated.

The period from inception (May 31, 2013) through December 31, 2013 include Intermediate Holdings 2, Intermediate Holdings, Argotec LLC and Argotec International. Deutschland was included in operations on December 9, 2013. In 2014, the consolidated financial statements include the accounts of these entities plus Stevens LLC as of April 17, 2014 and Argotec Asia as of June 17, 2014.

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ARGOTEC INTERMEDIATE HOLDINGS TWO LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Equivalents:

The Company places its cash and equivalents on deposit with financial institutions. At times, cash on deposit is in excess of Federal Deposit Insurance Corporation (FDIC) limits. Cash equivalents consist of money market funds.

Comprehensive Income:

Comprehensive income and its components are reported in these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). Comprehensive income is the change in equity during a period from transactions and other events from nonowner sources. It is the total of net income and other comprehensive income items. The Company's other comprehensive income is comprised entirely of foreign currency translation adjustments.

Accounts Receivable:

The Company carries its accounts receivable at cost less an allowance for doubtful accounts. The Company periodically evaluates the outstanding accounts receivable balances, the history of past write-offs and collections, and current credit conditions to establish an allowance for doubtful accounts. At December 31, 2014 and 2013, accounts receivable are presented net of an allowance for doubtful accounts of approximately $75,000.

A receivable is considered past due if payments have not been received by the Company for 90 days. At that time, management will contact customers for collection. Accounts are written off as uncollectible if no payments are received 90 days after customers have been contacted.

The Company does not charge interest on past due accounts.

Inventories:

Inventories, comprised of raw materials and finished goods, are stated at the lower of cost, determined using the first-in, first-out or average cost methods, or market.

Property and Equipment:

Property and equipment are recorded at cost and depreciated using straight-line and accelerated methods over their estimated useful lives. Expenditures for additions, improvements and major maintenance are capitalized while routine repairs and maintenance are expensed as incurred.

The Company reviews its long-lived assets for impairment when events or circumstances indicate that the carrying amount of the assets may not be recoverable. If impairment indicators are present and the estimated future undiscounted cash flows related to the assets are less than the carrying value, the carrying value is reduced to the estimated fair value.

There were no asset impairments at December 31, 2014 and 2013.

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ARGOTEC INTERMEDIATE HOLDINGS TWO LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)

Goodwill and Intangible Assets:

Goodwill resulting from a business acquisition is not subject to amortization and is evaluated annually for potential impairment.

Other intangible assets subject to amortization include financing costs and a noncompete agreement. Financing costs are being amortized using the straight-line method over the term of the related debt (Note 7). The noncompete agreement is being amortized on a straight-line basis over its five year life (Note 3). Other intangible assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amounts may not be recoverable.

There were no impairment losses at December 31, 2014 and 2013.

Revenue Recognition:

Sales are recorded upon shipment to customers.

Foreign Currency Translation and Transactions:

The financial records of Deutschland and Argotec Asia are maintained in Euros and Hong Kong Dollars. Assets and liabilities are translated into U.S. dollars at the exchange rate in effect at the balance sheet date. Revenues and expenses are translated at the weighted average exchange rates in effect during the year. Adjustments resulting from these translation changes are included in other comprehensive income. There were no foreign currency translations in 2013.

Amounts realized by conversion of other currencies into U.S. dollars through receipts or payments during the year are reflected as current income or expense. Aggregate foreign currency transaction losses of approximately $25,000 have been included in other expense in 2014.

Research and Development Costs:

Research and development costs related to both future and present products are expensed as incurred.

Advertising:

Advertising costs are expensed as incurred and totaled approximately $193,000 and

$117,000, for the year ended December 31, 2014 and the period from inception (May 31, 2013) to December 31, 2013, respectively.

Shipping and Handling Costs:

Shipping and handling costs billed to customers are included in net sales with the related expense recorded in cost of sales.

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ARGOTEC INTERMEDIATE HOLDINGS TWO LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)

Income Taxes:

Intermediate Holdings 2 is treated as a partnership for federal and state income tax purposes. It's wholly owned LLC’s are disregarded for Federal income, and often state, tax purposes and are included on Intermediate Holdings 2's partnership return. As a partnership, the members are responsible for reporting their share of income, loss, deductions and credits on their respective income tax returns. Argotec International is an IC-DISC and it generally does not incur corporate income taxes. Accordingly, no provision for income taxes is provided in the consolidated financial statements.

The Company files income tax returns in the U.S. federal jurisdiction and in various state and foreign jurisdictions. There are no tax returns currently under examination. However, the periods ended December 31, 2014 and 2013 remain open for examination by tax authorities.

Deutschland is liable to Germany for corporate and trade taxes. Due to its limited activity, there is no provision for income taxes in 2014 or 2013.

Argotec Asia is liable to Hong Kong for corporate income taxes. Due to its limited activity, there is no provision for income taxes in 2014.

The Company evaluates any uncertain tax positions to assess whether the tax positions are “more likely than not” to be sustained upon examination by tax authorities or whether they would result in an excess tax benefit. A liability would be recognized for any entity level tax on an excess benefit claimed, or expected to be claimed, along with any related interest and penalties on the excess. Management believes that there are no such excess benefits, interest, or penalties to be recorded in the consolidated financial statements as of

December 31, 2014.

Business Acquisitions:

The Company allocates the purchase price of business acquisitions under asset purchase agreements based on the fair value of the identifiable assets acquired and liabilities assumed on the date of acquisition. Goodwill resulting from these acquisitions are expected to be fully deductible for tax purposes. The costs associated with these business acquisitions are expensed as incurred.

Use of Estimates:

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Although these estimates are based on management's knowledge of current events and actions it may undertake in the future, they may ultimately differ from actual results.

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ARGOTEC INTERMEDIATE HOLDINGS TWO LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013

(3) BUSINESS ACQUISITIONS

On May 31, 2013, the Company acquired substantially all of the business assets of Argotec, Inc. and began operations as reported in these consolidated financial statements.

The total purchase price was comprised as follows:

Cash consideration	$	82,039,000
Assumption of current liabilities of predecessor	3,542,000
	$	85,581,000

The purchase price was allocated to property and equipment based on fair value determined by independent appraisal and to the fair value of the other assets and the liabilities based on the amounts expected to be realized or paid. The allocation resulted in goodwill of approximately $52,664,000, which is attributed to future economic benefits. In October 2014, the Company received approximately $426,000, which is net of accounting fees of approximately $23,000, from a tax escrow account funded at the date of acquisition and accordingly reduced goodwill.

The following table summarizes allocation of the purchase price as recorded:

Assets acquired:
	Accounts receivable	$	9,092,000
	Inventories	6,369,000
	Prepaid expenses and other assets	434,000
	Construction in process	324,000
	Property and equipment	16,698,000
	Goodwill	52,664,000
	Total assets acquired	85,581,000
Liabilities assumed:
	Accounts payable and accrued liabilities	(3,542,000)
Cash consideration		$	82,039,000

On April 30, 2014, the Company acquired substantially all of the business assets of Stevens Urethane, a division of JPS, a manufacturer of thermoplastic polyurethane film and sheets, as well as urethane products.

The total purchase price was comprised as follows:

Cash consideration	$	25,047,000
Assumption of current liabilities of predecessor	755,000
	$	25,802,000

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ARGOTEC INTERMEDIATE HOLDINGS TWO LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013

(3) BUSINESS ACQUISITIONS(Continued)

The purchase price was allocated to property and equipment based on fair value determined by independent appraisal and to the fair value of the other assets and the liabilities based on the amounts expected to be realized or paid. The allocation resulted in goodwill of approximately

$13,252,000, which is attributed to future economic benefits.

The following table summarizes the allocation of the purchase price as recorded:

Assets acquired:
	Accounts receivable	$	3,822,000
	Inventories	3,916,000
	Prepaid expenses	75,000
	Property and equipment	3,677,000
	Construction in progress	860,000
	Noncompete agreement	200,000
	Goodwill	13,252,000
	Total assets acquired	25,802,000
Liabilities assumed:
	Accounts payable and accrued liabilities	(755,000)
Cash consideration		$	25,047,000

Business acquisition costs in the consolidated statements of income includes legal, accounting and consulting fees and other acquisition costs related to these transactions of approximately

$675,000 and $2,630,000, for the year ended December 31, 2014 and the period from inception (May 31, 2013) to December 31, 2013, respectively.

The noncompete agreement is presented net of accumulated amortization of approximately

$27,000 at December 31, 2014. Annual amortization expense will be approximately $40,000 each year through 2018 and $13,000 in 2019.

(4) INVENTORIES

Inventories consist of the following:

	2014		2013
Raw materials	$	8,506,786	$	5,365,355
Finished goods	3,862,048		2,001,620
	$	12,368,834	$	7,366,975

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ARGOTEC INTERMEDIATE HOLDINGS TWO LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013

(5) PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

	2014			2013
Buildings and improvements	$	1,312,500		$	9,136,359
Machinery and equipment	11,249,889			7,723,802
Land and improvements	147,500			1,008,000
Office furniture and equipment	499,235			188,786
Construction in progress	5,235,071			1,114,651
	18,444,195			19,171,598
Accumulated depreciation	(3,177,741		)	(791,923		)
	$	15,266,454		$	18,379,675

Depreciation expense totaled approximately $2,761,000 and $792,000 for the year ended December 31, 2014 and the period from inception (May 31, 2013) to December 31, 2013, respectively.

(6) NOTES PAYABLE

The Company has available a $10,000,000 demand revolving line of credit under the terms of a new credit facility (Note 7). Advances, which bear interest at the greater of prime plus 3.0% or LIBOR plus 4.0% (subject to a 5.0% floor), are secured by all assets of the Company. The Company is required to pay a quarterly unused commitment fee of .05% of the average unused amount of the line of credit and an annual administrative fee. There was no outstanding balance at December 31, 2014.

(7) LONG-TERM DEBT

On December 16, 2014, the Company entered in a new credit agreement with a commercial lender that provides for a term note of $93,000,000 and a $10,000,000 revolving line of credit (Note 6). The proceeds of the term note were used to retire the existing debt facility with a total outstanding balance of $65,774,000, which had been increased in April 2014 in connection with the acquisition (Note 3), and to fund the member distribution in January 2015 of approximately

$36,083,000 (Note 15).

- 13 -

ARGOTEC INTERMEDIATE HOLDINGS TWO LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013

(7) LONG-TERM DEBT(Continued)

The Company must comply with covenants regarding financial reporting and certain financial ratios, the most restrictive of which relate to maximum leverage and fixed-charge coverage. The Company is in compliance with these covenants at December 31, 2014.

The new term note bears interest at the greater of prime plus 5.5% or LIBOR plus 6.5% (subject to a 7.5% floor) and is secured by all assets of the Company. Principal payments of

$581,250 are due quarterly beginning April 1, 2015, with a final balloon payment due on December 16, 2019. Interest is payable monthly and was 7.5% at December 31, 2014.

Annual maturities of long-term debt are as follows:

2015	$	1,744,000
2016	2,325,000
2017	2,325,000
2018	2,325,000
2019	84,281,000
	$	93,000,000

The term note is presented net of debt origination fees of $1,627,500. These fees are being amortized using the effective interest method producing a rate of 7.95%. Amortization of these fees totaled $13,000 in 2014 and is included in interest expense.

Annual amortization of debt origination fees is as follows:

2015	$	221,000
2016	307,000
2017	321,000
2018	337,000
2019	429,000
	$	1,615,000

Financing costs are presented net of accumulated amortization of approximately $2,000 and

$85,000 at December 31, 2014 and 2013, respectively. Annual amortization expense will be approximately $58,000 for each of the next five years. Financing and other costs related to the retired debt, net of accumulated amortization, are reported in other expenses as a loss on extinguishment of debt in 2014.

- 14 -

ARGOTEC INTERMEDIATE HOLDINGS TWO LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013

(8) ASSETS AND LIABILITIES MEASURED AT FAIR VALUE

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The carrying value of financial instruments including cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate fair value due to their short- term maturities.

Based on the borrowing rates currently available to the Company for loans with similar terms, variable rates and average maturities, the carrying amount of long-term debt, net of debt origination fees, approximates fair value (Note 7).

(9) RELATED PARTY TRANSACTIONS

Argotec LLC has a professional service agreement with a limited partnership that has an indirect ownership interest in Holdings. The agreement provides for annual management fees equal to the greater of $850,000 or 2% of the limited partnership's investment in Holdings ($751,000 at December 31, 2014 and 2013), payable in quarterly installments. These management fees totaled approximately $850,000 and $496,000 for the year ended December 31, 2014 and the period from inception (May 31, 2013) to December 31, 2013, respectively. At December 31, 2013, approximately $213,000 of these management fees are included in accrued liabilities. In connection with the 2013 business acquisition (Note 3), the Company also paid this limited partnership fees totaling $775,000 that are included in the business acquisition costs at December 31, 2013.

The Company paid directors fees totaling approximately $75,000 and $44,000 for the year ended December 31, 2014 and the period from inception (May 31, 2013) to December 31, 2013, respectively, to members of the Board of Directors. These directors have a minimal combined ownership interest in Holdings of less than 5%.

(10) FOREIGN OPERATIONS

Deutschland conducts operations in Germany and Argotec Asia conducts operations in Hong Kong. These operations subject the Company to risks associated with changes in foreign exchange rates. The net loss attributable to Deutschland totaled approximately $5,000 the year ended December 31, 2014, including net losses of approximately $25,000 from foreign currency transactions. There was limited activity for Deutschland in 2013 and for Argotec Asia in 2014.

Total assets reported in the consolidated balance sheets include Deutschland assets of approximately $32,000 at December 31, 2014.

- 15 -

ARGOTEC INTERMEDIATE HOLDINGS TWO LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013

(11) SALE-LEASEBACK TRANSACTION

On November 25, 2014, the Company entered into a sale-leaseback agreement under which buildings and land owned by the Company were sold to a third party on December 16, 2014 for

$9,875,000 and subsequently leased back to the Company pursuant to a 15 year operating master lease with four, five-year extension options. The lease provides for minimum monthly payments of approximately $66,000 that are subject to an annual increase, equal to the lesser of 2% or 1.25 times the change in the price index, and the payment of insurance, taxes, utilities and maintenance expenditures. The total minimum lease payments are being expensed in equal annual amounts over the life of the lease. At December 31, 2014, there is no difference between lease payments and amounts expensed of approximately $34,000. The transaction resulted in a deferred loss of approximately $163,000, which is included in other assets at December 31, 2014, and will be amortized over the initial 15 year lease term totaling approximately $11,000 each year, through 2029.

On January 16, 2015, the Company entered into another sale-leaseback agreement with the same third party to sell a building at its recently acquired cost to the Company of $1,410,000 (Note 15). The master lease agreement was amended on February 19, 2015, after the sale was completed, to include additional minimum monthly payments of approximately $9,000.

In accordance with U.S. GAAP, there is no continued involvement that precludes this sale-leaseback accounting.

Approximate future minimum lease payments under this master lease are as follows:

2015	$	903,000
2016	921,000
2017	939,000
2018	958,000
2019	977,000
Thereafter	10,914,000
	$	15,612,000

(12) CONCENTRATIONS AND CREDIT RISK

The Company has concentrations in customer sales and accounts receivable. Sales to a major customer represented approximately 15% and 22% of total sales in 2014 and for the period from inception (May 31, 2013) to December 31, 2013, respectively. Approximately 11% of accounts receivable are due from one customer at December 31, 2014 and approximately 41% of accounts receivable are due from two customers at December 31, 2013.

The Company also purchased approximately 64% and 78% of materials from two vendors for the year ended December 31, 2014 and the period from inception (May 31, 2013) to December 31, 2013, respectively.

- 16 -

ARGOTEC INTERMEDIATE HOLDINGS TWO LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013

(13) RETIREMENT PLAN

The Company offers a safe harbor 401(k) profit sharing plan. Under this plan, eligible employees may elect to make contributions pursuant to a salary reduction agreement. The Company makes matching contributions equal to 100% of the first 3% and 50% of the next 2% of eligible compensation. Additional Company profit sharing contributions are discretionary. Company matching contributions totaled approximately $263,000 and $146,000 for the year ended December 31, 2014 and the period from inception (May 31, 2013) to December 31, 2013, respectively.

(14) COMMITMENTS AND CONTINGENCIES

Lease Commitments:

The Company leases vehicles under operating lease agreements that expire at various dates through 2016. Lease expense under these agreements totaled approximately $30,000 and

$23,000 for the year ended December 31, 2014 and the period from inception (May 31, 2013) to December 31, 2013, respectively. Approximate future minimum payments required under these leases are $24,000 in 2015 and $10,000 in 2016.

Employee Separation Agreements:

Effective December 31, 2014, the Company entered into separation agreements with two former key employees. The agreements provide for a continuation of salary and health and dental insurance coverage through December 31, 2015. The former employees remain eligible to receive 2015 performance bonuses of up to 40% of the severance period salary, payable only if the Company sells substantially all of its assets. Pursuant to the employment agreements in place, the former employees are bound by noncompete covenants and provisions for non solicitation of Company employees for three years. Accrued expenses include approximately $554,000 at December 31, 2014 for salary payments due under the agreements through December 31, 2015.

Special Long Term Bonus:

The Company offers a "Special Bonus" plan to key employees to reward potential long-term commitment and contribution to Company success. The plan will provide incentive bonuses based on attainment of specific financial thresholds, the occurrence of certain triggering events, and compliance with noncompete covenants and provisions for non solicitation of Company employees, vendors and customers both while employed by the Company and for two years after termination of employment. There are no accruals related to this bonus plan because of its contingent nature.

- 17 -

ARGOTEC INTERMEDIATE HOLDINGS TWO LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013

(15) SUBSEQUENT EVENTS

Management has evaluated events from the balance sheet date through April 2, 2015, the date these consolidated financial statements were available to be issued, and has determined that there are no subsequent events requiring reporting or disclosure, except as disclosed below and in Note 11.

On January 2, 2015, the Company paid a distribution to their members totaling approximately

$36,083,000 (Note 7).

On February 19, 2015, the Company purchased a building in Greenfield, Massachusetts for approximately $1,410,000. The building was subsequently sold to a third party as part of a sale-leaseback transaction for the same amount (Note 11).

In March 2015, the Company announced their plan to close the operating plant in Easthampton, Massachusetts, purchased by Stevens LLC in connection with the Stevens Urethane acquisition (Note 3). The Company will move the existing Easthampton manufacturing operations to the Greenfield facilities and a significant portion of the employees from the Easthampton plant will continue their employment in Greenfield. The Easthampton building and land, with a net book value of approximately $1,438,000 at December 31, 2014, will be available for sale in 2015.

- 18 -

Independent Auditors’ Report on Supplemental Information

To the Board of Directors and Members

Argotec Intermediate Holdings Two LLC and Subsidiaries

Greenfield, Massachusetts

We have audited the consolidated financial statements of Argotec Intermediate Holdings Two LLC and Subsidiaries as of December 31, 2014 and 2013 and for the year ended and for period from inception (May 31, 2013) to December 31, 2013, and our report thereon dated April 2, 2015, which expressed an unmodified opinion on those consolidated financial statements, appears on pages 1 and 2. Our audits were conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The Consolidated Schedules of Cost of Sales and the Consolidated Schedules of Operating Expenses are presented for purposes of additional analysis and are not a required part of the consolidated financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the consolidated financial statements. The information has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the consolidated financial statements as a whole.

/s/ GREENBERG, ROSENBLATT, KULL & BITSOLI, P.C.

Worcester, Massachusetts

April 2, 2015

ARGOTEC INTERMEDIATE HOLDINGS TWO LLC AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF COST OF SALES

YEAR ENDED DECEMBER 31, 2014 AND THE PERIOD

MAY 31, 2013 (DATE OF INCEPTION) TO DECEMBER 31, 2013

	2014			2013
Inventories - beginning	$	7,366,975		$	6,368,447
Purchases and freight	62,983,607			25,610,605
Direct labor	9,446,489			3,717,601
	79,797,071			35,696,653
Factory overhead:
Indirect labor	634,182			581,756
Payroll taxes	855,653			337,391
Group insurance	1,506,187			648,724
Retirement plan	171,867			90,259
Depreciation	2,761,346			791,923
Utilities	1,654,700			698,739
Repairs and maintenance	1,528,336			522,275
Equipment rental	319,456			9,339
Other taxes	247,003			80,566
Rubbish removal	186,079			61,466
Safety supplies and expense	136,979			65,785
Travel and entertainment	112,953			59,064
Uniforms	76,432			38,463
Temporary labor	49,843			118,865
Quality control	43,585			29,938
	10,284,601			4,134,553
Inventories - ending	(12,368,834		)	(7,366,975		)
	$	77,712,838		$	32,464,231

See independent auditor's report on consolidated supplemental information

- 20 -

ARGOTEC INTERMEDIATE HOLDINGS TWO LLC AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF OPERATING EXPENSES

YEAR ENDED DECEMBER 31, 2014 AND THE PERIOD

MAY 31, 2013 (DATE OF INCEPTION) TO DECEMBER 31, 2013

	2014		2013
Selling:
Salaries and wages	$	1,739,606	$	593,134
Payroll taxes	107,271		23,233
Group insurance	99,251		23,965
Retirement plan	29,870		21,432
Commissions	944,537		352,366
Travel and entertainment	306,523		90,100
Consulting	237,930		72,000
Advertising	192,969		116,606
Trade shows	56,669		19,309
Auto expense	26,851		8,116
Samples	20,718		22,245
	$	3,762,195	$	1,342,506

Research and development:
Salaries and wages	$	209,998	$	111,235
Payroll taxes	18,399		8,551
Group insurance	10,346		12,980
Retirement plan	6,548		4,452
Materials and supplies	244,714		84,154
Travel and entertainment	2,889		263
	$	492,894	$	221,635

See independent auditor's report on consolidated supplemental information

- 21 -

ARGOTEC INTERMEDIATE HOLDINGS TWO LLC AND SUBSIDIARIES

CONSOLIDATED SCHEDULES OF OPERATING EXPENSES

YEAR ENDED DECEMBER 31, 2014 AND THE PERIOD

MAY 31, 2013 (DATE OF INCEPTION) TO DECEMBER 31, 2013

	2014		2013
General and administrative:
Salaries and wages	$	3,030,513	$	1,566,793
Payroll taxes	116,641		51,308
Group insurance	123,586		55,214
Retirement plan	54,804		30,068
Consulting	999,044		506,010
Professional fees	801,135		352,159
General insurance	264,332		112,600
Employee training and development	218,175		90,466
Travel and entertainment	153,347		61,854
Computer	141,699		59,817
Cleaning and maintenance	136,739		51,190
Office	109,544		53,697
Auto	83,794		27,732
Telephone	76,221		39,626
Miscellaneous	62,623		13,416
Amortization	60,748		85,069
Rent	36,028		—
Dues and subscriptions	18,068		13,981
Provision for bad debts	(141,534)		(25,000)
	$	6,345,507	$	3,146,000

See independent auditor's report on consolidated supplemental information

- 22 -

EX-99.2

Exhibit 99.2

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

On October 28, 2015, Schweitzer-Mauduit International, Inc. (the “Company” or "SWM") completed the acquisition (the "Acquisition") of Argotec Intermediate Holdings, LLC (“Argotec”), pursuant to an Equity Interest Purchase Agreement (the “Purchase Agreement”), entered into on September 17, 2015, by and among the Company, SWM-Argotec, LLC, a Delaware limited liability company and indirect wholly-owned subsidiary of the Company (“Buyer”), Argotec Intermediate Holdings Two LLC, a Delaware limited liability company (“Seller”), Argotec, Argotec LLC, a Delaware limited liability company, Argotec Holdings LLC, a Delaware limited liability company (“Argotec Holdings”) and certain equity holders of Argotec Holdings LLC listed on the signature pages of the Purchase Agreement (the “Equity Holders”).

The consideration transferred to acquire Argotec and its subsidiaries was $282.7 million in cash, subject to certain customary post-closing adjustments, in each case upon the terms and subject to the conditions contained in the Purchase Agreement. The purchase price was funded from the Company’s borrowings under the Second Amended and Restated Credit Agreement as described below.

In order to finance the Acquisition, the Company entered into a Second Amended and Restated Credit Agreement providing for credit facilities in the aggregate principal amount of $1 billion, consisting of a $650 million revolving credit facility, or “Revolving Credit Facility,” available to the Company, a $100 million Term Loan A-1 made to the Company, or “Term Loan A-1,” and a $250 million Term Loan A-2 made to the Company, or “Term Loan A-2.” Term Loan A-1 and Term Loan A-2 are collectively referred to as the “Term Loans.” On October 28, 2015, the Company borrowed the Term Loans under the Amended Credit Agreement in the aggregate amount of $350 million. The Company used the proceeds in part to finance the acquisition of Argotec and in part to reduce amounts outstanding under the previously existing revolving credit facility of Schweitzer-Mauduit International, Inc.

Argotec manufactures highly engineered urethane films for demanding specialty applications in surface protection, glass lamination and medical products. Argotec is headquartered in Greenfield, Massachusetts.

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 Argotec 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 Argotec. The historical consolidated financial statements of the Company and Argotec 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 October 28, 2015, (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 consolidated financial statements and related notes thereto contained in its Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC on February 27, 2015;

• Schweitzer-Mauduit International, Inc.’s unaudited consolidated 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, 2015 filed with the SEC on November 4, 2015;

• The audited consolidated financial statements of Argotec's former parent entity, Seller, and related notes for the year ended December 31, 2014 which are attached to the Company's Current Report on Form 8-K/A as Exhibit 99.1; and

• Argotec’s unaudited condensed consolidated financial statements as of and for the nine months ended September 30, 2015 and 2014, which are attached to this Form 8-K/A dated January 13, 2016 as Exhibit 99.3.

1

SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

SEPTEMBER 30, 2015

(dollars in millions)

	Historical					Pro Forma
	Schweitzer-Mauduit International, Inc.			Argotec Intermediate Holdings LLC		Adjustments				Condensed Combined
ASSETS
Current Assets
Cash and cash equivalents	$	268.5		$	6.1	$	2.8		(a)	$	277.4
Accounts receivable, net	119.1			16.2		(1.0		)	(h)	134.3
Inventories	102.4			14.3		1.2			(b)	117.9
Current deferred income tax benefits	9.5			—		0.1			(c)	9.6
Other current assets	11.4			1.6		(0.3		)	(d)	12.7
Total Current Assets	510.9			38.2		2.8				551.9
Property, Plant and Equipment, net	313.4			14.8		—			(d)	328.2
Investment in Equity Affiliates	66.3			—		—				66.3
Goodwill	124.5			65.5		40.9			(e)	230.9
Intangible Assets, net	85.6			0.2		130.8			(e)	216.6
Other Assets	19.2			0.6		(0.4		)	(f)(h)	19.4
Total Assets	$	1,119.9		$	119.3	$	174.1			$	1,413.3
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Current debt	$	3.1		$	1.7	$	4.4		(f)(g)	$	9.2
Accounts payable	39.9			5.5		—				45.4
Income taxes payable	1.2			—		—				1.2
Accrued expenses	77.8			4.4		(2.1		)	(h)	80.1
Total Current Liabilities	122.0			11.6		2.3				135.9
Long-Term Debt	397.0			88.8		191.3			(a)(f)(g)	677.1
Pension and Other Postretirement Benefits	38.1			—		—				38.1
Deferred Income Tax Liabilities	68.3			—		—				68.3
Other Liabilities	34.5			—		—				34.5
Total Liabilities	659.9			100.4		193.6				953.9
Stockholders’ Equity:
Preferred Stock	—			—		—				—
Common Stock	3.0			—		—				3.0
Additional Paid-in-Capital	52.1			—		—				52.1
Retained Earnings (Accumulated Deficit)	543.1			18.9		(18.9		)	(j)	543.1
						(0.6		)	(a)(c)	(0.6		)
Accumulated Other Comprehensive Loss, net of tax	(138.2		)	—		—				(138.2		)
Total Stockholders’ Equity	460.0			18.9		(19.5		)		459.4
Total Liabilities and Stockholders’ Equity	$	1,119.9		$	119.3	$	174.1			$	1,413.3

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

2

SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

NINE MONTHS ENDED SEPTEMBER 30, 2015

(dollars in millions, except per share amounts)

	Historical				Pro Forma
	Schweitzer-Mauduit International, Inc. Continuing Operations		Argotec Intermediate Holdings, LLC		Adjustments				Condensed Combined
Net Sales	$	554.3	$	87.3	$	—			$	641.6
Cost of products sold	395.7		67.7		(1.4		)	(d)(k)	462.0
Gross Profit	158.6		19.6		1.4				179.6
Selling expense	16.0		3.2		—				19.2
Research expense	10.5		0.6		—				11.1
General expense	43.3		3.7		5.2			(e)(k)	52.2
Total nonmanufacturing expenses	69.8		7.5		5.2				82.5
Restructuring and impairment expense	10.5		0.5		—				11.0
Operating Profit (Loss)	78.3		11.6		(3.8		)		86.1
Interest expense	5.3		5.6		(0.9		)	(g)	10.0
Other income (expense), net	9.5		—		—				9.5
Income (loss) from Continuing Operations before Income Taxes and Income from Equity Affiliates	82.5		6.0		(2.9		)		85.6
Provision for income taxes	17.9		0.1		1.2			(c)	19.2
Income from equity affiliates	4.3		—		—				4.3
Income (Loss) from Continuing Operations	$	68.9	$	5.9	$	(4.1	)		$	70.7
Income per Share from Continuing Operations
Basic	$	2.26							$	2.32
Diluted	$	2.25							$	2.32
Weighted Average Shares Outstanding:
Basic	30,243,000								30,243,000
Diluted	30,366,600								30,366,600

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

3

SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

YEAR ENDED DECEMBER 31, 2014

(dollars in millions, except per share amounts)

	Historical					Pro Forma
	Schweitzer-Mauduit International, Inc. Continuing Operations		Argotec Intermediate Holdings Two, LLC			Adjustments				Condensed Combined
Net Sales	$	794.3	$	101.9		$	—			$	896.2
Cost of products sold	575.5		77.7			(1.3		)	(d)(k)	651.9
Gross Profit	218.8		24.2			1.3				244.3
Selling expense	22.0		3.8			—				25.8
Research expense	15.7		0.5			—				16.2
General expense	61.9		6.3			5.8			(e)(i)(k)	74.0
Total nonmanufacturing expenses	99.6		10.6			5.8				116.0
Restructuring and impairment expense	13.1		—			—				13.1
Operating Profit (Loss)	106.1		13.6			(4.5		)		115.2
Interest expense	7.2		3.6			2.9			(g)	13.7
Other income (expense), net	9.3		(2.2		)	1.5			(g)	8.6
Income (loss) from Continuing Operations before Income Taxes and Income from Equity Affiliates	108.2		7.8			(5.9		)		110.1
Provision for income taxes	20.5		—			0.9			(c)	21.4
Income from equity affiliates	2.0		—			—				2.0
Income (Loss) from Continuing Operations	$	89.7	$	7.8		$	(6.8	)		$	90.7
Income per Share from Continuing Operations
Basic	$	2.94								$	2.97
Diluted	$	2.93								$	2.96
Weighted Average Shares Outstanding:
Basic	30,238,000									30,238,000
Diluted	30,356,500									30,356,500

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

4

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

1.DESCRIPTION OF TRANSACTION AND BASIS OF PRESENTATION

On October 28, 2015, the Company completed its acquisition (the "Acquisition") of Argotec Intermediate Holdings LLC ("Argotec") for $282.7 million in cash, 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 Argotec’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 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 ("SEC") 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, Argotec, and Argotec's former parent company.

The unaudited pro forma condensed combined balance sheet is presented as if the Acquisition had occurred on September 30, 2015 and the unaudited pro forma condensed combined statements of income for the year ended December 31, 2014, and nine months ended September 30, 2015, give effect to the Acquisition as if it occurred on January 1, 2014.

The unaudited proforma condensed combined statement of income for the year ended December 31, 2014 includes balances derived from the audited financial statements of Argotec's previous parent entity, Argotec Intermediate Holdings Two LLC, which was not a part of the entities acquired by SWM. These audited financial statements are attached to the Company's Current Report on Form 8-K/A dated January 13, 2016 as Exhibit 99.1. SEC regulations allow the use of audited financial statements of an entire consolidated entity where only selected parts of an entity are acquired and those acquired parts represent substantially all of the selling entity. The amounts which are attributable to this entity have been recorded as a proforma adjustment to the unaudited proforma condensed combined statement of income for the year ended December 31, 2014 and the details of the amounts adjusted are disclosed in Note 3(i).

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.

The consideration transferred to acquire Argotec and its subsidiaries was $282.7 million in cash, subject to certain customary post-closing adjustments, in each case upon the terms and subject to the conditions contained in the Purchase Agreement. The following table summarizes the preliminary accounting for the business combination for the Argotec acquisition ($ in millions):

	Fair value at acquisition date
Cash & cash equivalents	$	6.1
Accounts receivable	15.2
Inventory	15.5
Assets held for sale	1.4
Other current assets	0.2
Properties, plant and equipment	14.5
Other noncurrent assets	0.2
Identifiable intangible assets	131.0
Total Assets	184.1
Accounts payable and accrued expenses	7.8
Net assets acquired	176.3
Goodwill	106.4
Consideration transferred	$	282.7

5

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

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, 2015
Proceeds received from amended and restated credit agreement (1)	$	350.0
Proceeds used for acquisition of Argotec (2)	(282.7		)
Payment of transaction costs (3)	(8.1		)
Repayment of debt and accrued interest & fees associated with the Company's previous credit facility (4)	(56.4		)
Net adjustment to cash	$	2.8

(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, 2015 associated with the Acquisition. The amount represents $7.4 million of capitalized financing costs incurred related to the amended and restated credit facility and $0.7 million of direct and indirect acquisition-related costs.

(4) Represents repayment of $56.0 million of the outstanding balance of the previously existing revolving credit facility of Schweitzer-Mauduit International, Inc. as well as accrued interest and fees of $0.4 million using funds received from the Second Amended and Restated Revolving Credit Facility.

(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 (1) the income from continuing operations before income taxes of Argotec as incorporated into SWM's organizational structure and (2) pro forma adjustments recorded herein. Tax-related adjustments are 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.

(d) Represents the adjustment to property, plant and equipment (PP&E) and assets held for sale (included in Other Current Assets) to reflect the preliminary estimate of fair value and the depreciation expense related to the change in fair value of fixed assets 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.

6

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

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, 2015			Year Ended December 31, 2014
Land	$	0.1		N/A	$	—		$	—
Buildings and improvements	1.0			39.0	—			—
Machinery and equipment	14.8			10.0	1.1			1.5
Total	$	15.9			$	1.1		$	1.5
Less: Argotec historical PP&E, net and depreciation expense	16.2				2.4			2.8
Pro forma adjustments	$	(0.3	)		$	(1.3	)	$	(1.3	)
N/A = Not Applicable

Assets Held for Sale

Land, buildings and improvements per the schedule above, totaling $1.1 million, were reclassified in March 2015 as assets held for sale, which are included in Other Current Assets on the unaudited pro forma condensed combined balance sheet at September 30, 2015. These assets represent Argotec's Easthampton building and land, with a net book value of approximately $1.4 million at September 30, 2015. These assets were determined to have a fair value of $1.1 million as of the acquisition date.

(e) Reflects the elimination of Argotec’s historical goodwill of $65.5 million and intangible assets of $0.2 million and the preliminary estimated adjustment to goodwill of $106.4 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 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 Argotec’s revenue growth from combining the SWM and Argotec businesses and workforce as well as the benefits of access to different markets and customers. The goodwill is expected to be deductible for tax purposes.

7

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, 2015		Year Ended December 31, 2014
Customer relationships	$	115.3	15.0	$	5.8	$	7.7
Trade name	14.0		N/A	—		—
Non-competition agreements	1.7		4	0.3		0.4
Total	$	131.0		$	6.1	$	8.1
Less: Argotec historical intangible assets, net and amortization expense	0.2			0.1		0.1
Pro forma adjustments	$	130.8		$	6.0	$	8.0
N/A = Not Applicable

Customer Relationships

Approximately $115.3 million, or 88% of the identified intangible assets, has been preliminarily assigned to customer relationships with an estimated useful life of 15 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 Name

Approximately $14.0 million, or 11% 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.

Non-competition Agreements

Approximately $1.7 million, or 1% of the identified intangible assets, has been preliminarily assigned to non-competition agreements with certain employees of the Company. The fair value of the non-competition agreements was estimated based on an income approach using the probability of competition and success of the specified individuals.

(f) Represents the following components:

• The capitalization of $7.4 million of the Company’s deferred financing costs associated with the amended and restated credit agreement, of which $1.4 million and $6.0 million are recorded as current and long-term, respectively.

• The write-off of $0.2 million and $1.3 million of deferred debt costs included in Other Assets and Long-term Debt, respectively, recorded for Argotec’s unamortized deferred financing costs related to the elimination of the preexisting debt.

(g) Represents the following components:

• The elimination by Argotec of its current and long-term debt of $1.7 million and $90.1 million, respectively.

• The elimination of Argotec’s interest expense for the nine months ended September 30, 2015 and year ended December 31, 2014 in the amount of $5.6 million and $3.6 million, respectively.

• The elimination of a loss on extinguishment of debt recognized by Argotec in the year ended December 31, 2014 of $1.5 million.

8

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

• An increase in additional long-term debt incurred by SWM. As part of the Acquisition, SWM entered into a Second Amended and Restated Credit Agreement which consisted of a $650 million Revolving Credit Facility, of which none was drawn related to the Acquisition, a $100 million Term Loan A-1, and a $250 million Term Loan A-2. The full amount of the two term loans, totaling $350 million was drawn as part of the Acquisition; of this amount, $282.7 million was used to fund the Acquisition, $7.4 million was used to pay transaction costs associated with the new facility, and $56.4 million was used to repay the outstanding balance of the Company's previous Revolving Credit Facility and associated accrued interest and fees. The annual interest rate on the Revolving Credit Facility is LIBOR plus an applicable margin of 1.25%; for the Term Loan A-1 and Term Loan A-2, the annual interest rate is LIBOR plus an applicable margin of 1.25% and 1.50%, respectively. The adjustments to interest expense reflect the expected interest expense to be incurred by SWM as a result of the Acquisition. SWM incurred $7.4 million in refinancing costs in conjunction with the new credit facility, which was capitalized and is being amortized over the time between the date of Acquisition and the Credit Agreement's scheduled maturity. In addition, SWM wrote-off $0.2 million of previously recognized refinancing costs to interest expense. The adjustments related to the amortization of deferred financing costs are incremental to SWM’s historical amortization expense. The LIBOR that was in effect as of the date of the Acquisition was used in the following table ($ in millions):

New debt and related interest expense	Rate		Debt			For the Nine Months Ended September 30, 2015			For the Year Ended December 31, 2014
Revolving Credit Facility, amended and restated	1.45	%	$	(56.0	)	$	(0.6	)	$	(0.8	)
Term Loan A-1	1.45	%	100.0			1.1			1.4
Term Loan A-2	1.70	%	250.0			3.2			4.3
Amortization of deferred financing costs						1.0			1.6
Net adjustment to interest expense related to new debt (1)			$	294.0		$	4.7		$	6.5

(1) A hypothetical 0.125% change in interest rate would result in a $0.3 million and $0.4 million change in interest expense for the nine months ended September 30, 2015 and for the year ended December 31, 2014, respectively.

(h) Represents the following components:

• A decrease of $1.8 million related to the elimination of accrued interest from the elimination of Argotec’s outstanding debt.

• The elimination of receivables of $1.0 million from and accrued management fees payable of $0.3 million to the predecessor investor of Argotec no longer owed as part of the Acquisition closing.

• The elimination of $0.2 million of deferred loss on a sale-leaseback transaction entered into by Argotec which has a fair value of $0 as of the acquisition date.

(i) Represents the elimination of $1.2 million in general and administrative expenses attributable to Argotec Intermediate Holdings Two, LLC, an entity which owned Argotec prior to the Acquisition and which was included in the audited financial statements included herein as Exhibit 99.1. This entity was not acquired by the Company as part of the Acquisition and this entity is not included in the Argotec historical financial statements for the nine months ended September 30, 2015.

(j) Represents the elimination of Argotec’s historical equity.

(k) Represents the following components:

• The elimination of management fees with Argotec’s predecessor investor for the nine months ended September 30, 2015 and the year ended December 31, 2014 in the amount of $0.7 million and $0.9 million, respectively.

• The elimination of expenses primarily related to Argotec’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 September 30, 2015 and the year ended December 31, 2014, respectively.

9

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

• The elimination of $0.1 million in professional service fees incurred by Argotec for the nine months ended September 30, 2015.

10

EX-99.3

Exhibit 99.3

ARGOTEC INTERMEDIATE HOLDINGS LLC AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
As of September 30, 2015 and 2014
(dollars in millions)
	September 30,
	2015		2014
Assets
Current assets:
Cash and cash equivalents	$	6.1	$	2.5
Accounts receivable, net	16.2		17.5
Inventories	14.3		12.5
Other current assets	1.6		0.3
Total current assets	38.2		32.8
Property, plant and equipment, net	14.8		24.1
Goodwill	65.5		65.9
Intangible assets, net	0.2		0.2
Other assets	0.6		1.8
Total assets	$	119.3	$	124.8
Liabilities and members’ equity
Current liabilities:
Current portion of long-term debt	$	1.7	$	3.3
Note payable	—		3.8
Accounts payable	5.5		4.9
Accrued expenses	4.4		2.8
Total current liabilities	11.6		14.8
Long-term debt, less current portion	88.8		60.4
Total liabilities	$	100.4	$	75.2
Members’ equity:
Members' equity	$	18.9	$	49.6
Total Members' Equity	18.9		49.6
Total Liabilities and Members' Equity	$	119.3	$	124.8

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

ARGOTEC INTERMEDIATE HOLDINGS LLC AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the nine months ended September 30, 2015 and 2014
(dollars in millions)
	Nine Months Ended September 30,
	2015		2014
Net sales	$	87.3	$	76.2
Cost of goods sold	67.7		57.1
Gross profit	19.6		19.1
Operating expenses:
Selling and marketing	3.2		3.1
General and administrative	3.7		3.4
Research and development	0.6		0.3
Total nonmanufacturing expenses	7.5		6.8
Restructuring and impairment expense	0.5		—
Operating profit	11.6		12.3
Interest expense, net	5.6		2.5
Other expense, net	—		0.6
Income before income taxes	6.0		9.2
Provision for income taxes	0.1		—
Net income	$	5.9	$	9.2

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

ARGOTEC INTERMEDIATE HOLDINGS LLC AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF MEMBERS' EQUITY
As of September 30, 2015 and 2014
(dollars in millions)
	Members' Equity
Balance, December 31, 2013	$	43.1
Net Income	9.2
Distributions to Members	(2.7		)
Balance, September 30, 2014	$	49.6
Balance, December 31, 2014	$	48.9
Net Income	5.9
Distributions to Members	(35.9		)
Balance, September 30, 2015	$	18.9

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

ARGOTEC INTERMEDIATE HOLDINGS LLC AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
For the nine months ended September 30, 2015 and 2014
(dollars in millions)
	Nine Months Ended September 30,
	2015			2014
Operating activities:
Net income	$	5.9		$	9.2
Adjustments to reconcile net income to   net cash provided by operating activities:
Provision for bad debts	—			(0.1		)
Depreciation and amortization	2.7			2.4
Change in assets and liabilities net of effect of   business acquisitions (Note 3):
Accounts receivable	(2.8		)	(6.1		)
Inventories	(1.9		)	(1.2		)
Other current assets	0.1			(0.1		)
Accounts payable	1.0			0.5
Accrued liabilities	2.7			1.8
Net cash provided by operating activities	7.7			6.4
Investing activities:
Deposits on property and equipment	0.2			0.2
Purchase of property and equipment	(4.7		)	(3.4		)
Proceeds from sale-leaseback of buildings	1.4			—
Business acquisitions (Note 3)	—			(25.0		)
Net cash used in investing activities	(3.1		)	(28.2		)
Financing activities:
Proceeds from long-term debt	—			26.0
Repayment of long-term debt	(1.1		)	(1.8		)
Proceeds from (repayment of) note payable, net	—			2.5
Long-term debt issue costs, net	—			(0.6		)
Financing costs	—			—
Contributions from members	—			—
Distributions to members	(35.9		)	(2.7		)
Net cash provided by financing activities	(37.0		)	23.4
Net increase in cash and equivalents	(32.4		)	1.6
Effect of exchange rates on cash and equivalents	—			—
Cash and equivalents - beginning	38.5			0.9
Cash and equivalents - ending	6.1			2.5

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

ARGOTEC INTERMEDIATE HOLDINGS LLC AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014

(dollars in millions)

(1) ORGANIZATION AND NATURE OF BUSINESS

Organization:

Argotec Intermediate Holdings LLC (Intermediate Holdings) and its wholly owned subsidiaries, Argotec LLC, Argotec Deutschland GmbH (Deutschland), Argotec International Sales Corporation (Argotec International), Argotec Asia Pacific Limited (Argotec Asia), and Argotec Stevens LLC (Stevens LLC) (collectively, the Company) are owned 100.0% by Argotec Intermediate Holdings Two LLC (Holdings Two).

Deutschland was organized as a German limited liability company (GmbH), wholly owned by Argotec LLC, on December 9, 2013 and began operations in 2014.

The Company formed Stevens LLC on April 17, 2014, to acquire the land and building in connection with the April 30, 2014 business acquisition of Stevens Urethane, a division of JPS Elastomerics Corp. (JPS) (Note 2).

Argotec Asia was organized as a Hong Kong limited liability company, wholly owned by Argotec LLC, on June 17, 2014. Argotec Asia operations began in 2015.

Nature of Business:

The Company is engaged in the manufacture, distribution and sale of highly engineered urethane film and sheets and other urethane products to customers in the aeronautical, transportation, graphics, medical and industrial markets located principally throughout the United States as well as internationally. Argotec International transacts certain foreign sales activities on behalf of the Company.

Principles of Consolidation:

The accompanying consolidated financial statements include the accounts of Intermediate Holdings, Argotec LLC, Deutschland, Argotec International, Argotec Asia, and Stevens LLC. The accounts of the parent company, Holdings Two, are not included in these consolidated financial statements. All significant intercompany transactions and balances have been eliminated.

Basis of Presentation:

These accompanying condensed financial statements are unaudited. The condensed financial statements are prepared on the basis of accounting policies as set forth in Holdings Two's consolidated financial statements as of and for the year ended December 31, 2014. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) have been condensed or omitted in accordance with U.S. GAAP applicable to interim financial statements as set out by Accounting Standards Codification 270 “Interim Reporting”. However, such information reflects all adjustments (consisting or normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim periods.

The results of operations are not necessarily indicative of the results to be expected for the full year. The unaudited condensed consolidated financial statements and these notes thereto included herein should be read in conjunction with the audited Argotec Intermediate Holdings Two LLC and Subsidiaries Consolidated Financial Statements as of December 31, 2014 and for the year then ended attached in Exhibit 99.1.

(2) BUSINESS ACQUISITIONS AND DISPOSALS

On April 30, 2014, the Company acquired substantially all of the business assets of Stevens Urethane, a division of JPS, a manufacturer of thermoplastic polyurethane film and sheets, as well as urethane products.

ARGOTEC INTERMEDIATE HOLDINGS LLC AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014

(dollars in millions)

The total purchase price was comprised as follows:

Cash consideration	$	25.0
Assumption of current liabilities of predecessor	0.8
	$	25.8

The purchase price was allocated to property and equipment based on fair value determined by independent appraisal and to the fair value of the other assets and the liabilities based on the amounts expected to be realized or paid. The allocation resulted in goodwill of approximately $13.2 million, which is attributed to future economic benefits.

The following table summarizes the allocation of the purchase price as recorded:

Assets acquired:
	Accounts receivable	$	3.8
	Inventories	3.9
	Prepaid expenses	0.1
	Property and equipment	3.7
	Construction in progress	0.9
	Noncompete agreement	0.2
	Goodwill	13.2
	Total assets acquired	25.8
Liabilities assumed:
	Accounts payable and accrued liabilities	(0.8		)
Cash consideration		$	25.0

Business acquisition costs in the consolidated statements of income includes legal, accounting and consulting fees and other acquisition costs related to these transactions of approximately $0.7 million for the nine months ended September 30, 2014.

The noncompete agreement is presented net of accumulated amortization of approximately $0 at September 30, 2015 and 2014. Annual amortization expense will be approximately $0.1 million each year through 2018 and less than $0.1 million in 2019.

In July 2015 the Company ceased operations at the operating plant in Easthampton, Massachusetts, which was purchased in connection with the Stevens Urethane acquisition. Production along with a significant portion of the equipment was relocated to the Company's Greenfield facilities, and a majority of the employees continued their employment in Greenfield. The Easthampton building and land, with a net book value of approximately $1.4 million at September 30, 2015, is classified as assets held for sale.

(3) INVENTORIES

Inventories consist of the following:

	2015		2014
Raw materials	$	9.7	$	9.0
Finished goods	4.6		3.5
	$	14.3	$	12.5

ARGOTEC INTERMEDIATE HOLDINGS LLC AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014

(dollars in millions)

(4) PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

	2015			2014
Buildings and improvements	$	—		10.5
Machinery and equipment	12.0			11.3
Land and improvements	—			1.1
Office furniture and equipment	0.5			0.3
Construction in progress	7.9			3.9
	20.4			27.1
Accumulated depreciation	(5.6		)	(3.0		)
	$	14.8		$	24.1

Depreciation expense totaled approximately $2.4 million and $2.3 million for the nine months ended September 30, 2015 and 2014, respectively.

(5) NOTES PAYABLE

The Company has available a $10.0 million demand revolving line of credit under the terms of a new credit facility (Note 7). Advances, which bear interest at the greater of prime plus 3.0% or LIBOR plus 4.0% (subject to a 5.0% floor), are secured by all assets of the Company. The Company is required to pay a quarterly unused commitment fee of .05% of the average unused amount of the line of credit and an annual administrative fee. There was no outstanding balance at September 30, 2015 or 2014.

(6) LONG-TERM DEBT

On December 16, 2014, the Company entered in a new credit agreement with a commercial lender that provides for a term note of $93.0 million and a $10.0 million revolving line of credit (Note 5). The proceeds of the term note were used to retire the existing debt facility with a total outstanding balance of $65.8 million, which had been increased in April 2014 in connection with the acquisition (Note 2), and to fund a member distribution in January 2015 of approximately $36.1 million.

The Company must comply with covenants regarding financial reporting and certain financial ratios, the most restrictive of which relate to maximum leverage and fixed-charge coverage. The Company was in compliance with these covenants at September 30, 2015 and 2014.

The new term note bears interest at the greater of prime plus 5.5% or LIBOR plus 6.5% (subject to a 7.5% floor) and is secured by all assets of the Company. Principal payments of $0.6 million are due quarterly beginning April 1, 2015, with a final balloon payment due on December 16, 2019. Interest is payable monthly and was 7.5% at September 31, 2015.

ARGOTEC INTERMEDIATE HOLDINGS LLC AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014

(dollars in millions)

Remaining annual maturities of long-term debt are as follows:

2015	$	0.6
2016	2.4
2017	2.3
2018	2.3
2019	84.2
	$	91.8

The term note is presented net of debt origination fees of $1.6 million. These fees are being amortized using the effective interest method producing a rate of 7.95%. Amortization of these fees totaled $0.1 million and $0 in 2015 and 2014, respectively, and is included in interest expense.

Remaining annual amortization of debt origination fees is as follows:

2015	$	0.1
2016	0.3
2017	0.3
2018	0.3
2019	0.3
	$	1.3

Financing costs are presented net of accumulated amortization of approximately $0.1 at September 30, 2015. Annual amortization expense related to these costs will be less than $0.1 million for each of the next five years. Financing and other costs related to the retired debt, net of accumulated amortization, are reported in other expenses as a loss on extinguishment of debt in 2014.

(7) ASSETS AND LIABILITIES MEASURED AT FAIR VALUE

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The carrying value of financial instruments including cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate fair value due to their short-term maturities.

Based on the borrowing rates currently available to the Company for loans with similar terms, variable rates and average maturities, the carrying amount of long-term debt, net of debt origination fees, approximates fair value (Note 6).

(8) RELATED PARTY TRANSACTIONS

Argotec LLC has a professional service agreement with a limited partnership that has an indirect ownership interest in the parent of Holdings Two. The agreement provides for annual management fees equal to the greater of $0.9 million or 2% of the limited partnership's investment in the parent of Holdings Two ($0.8 million at September 30, 2015 and 2014), payable in quarterly installments. These management fees totaled approximately $0.7 million for each of the nine months ended September 30, 2015 and 2014. At September 30, 2015 and 2014, approximately $0.2 million of these management fees are included in accrued liabilities.

The Company paid directors fees totaling less than $0.1 million for each of the nine months ended September 30, 2015 and 2014 to members of the Board of Directors. These directors have a minimal combined ownership interest in the parent of Holdings Two of less than 5%.

ARGOTEC INTERMEDIATE HOLDINGS LLC AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014

(dollars in millions)

(9) SALE-LEASEBACK TRANSACTION

On November 25, 2014, the Company entered into a sale-leaseback agreement under which buildings and land owned by the Company were sold to a third party on December 16, 2014 for $9.9 million and subsequently leased back to the Company pursuant to a 15 year operating master lease with four, five-year extension options. The lease provides for minimum monthly payments of approximately $0.1 million that are subject to an annual increase, equal to the lesser of 2% or 1.25 times the change in the price index, and the payment of insurance, taxes, utilities and maintenance expenditures. The total minimum lease payments are being expensed in equal annual amounts over the life of the lease. At September 30, 2015 and 2014, the difference between lease payments and amounts expensed was less than $0.1 million. The transaction resulted in a deferred loss of approximately $0.2 million, which is included in other assets at September 30, 2015, and will be amortized over the initial 15 year lease term through 2029.

On January 16, 2015, the Company entered into another sale-leaseback agreement with the same third party to sell a building at its recently acquired cost to the Company of $1.4 million. The master lease agreement was amended on February 19, 2015, after the sale was completed, to include additional minimum monthly payments of less than $0.1 million.

In accordance with U.S. GAAP, there is no continued involvement that precludes this sale-leaseback accounting.

Approximate future minimum lease payments under this master lease are as follows:

2015	$	0.2
2016	0.9
2017	0.9
2018	1.0
2019	1.0
Thereafter	10.9
	$	14.9

(10) CONCENTRATIONS AND CREDIT RISK

The Company has concentrations in customer sales and accounts receivable. Sales to a major customer represented approximately 13% and 14% of total sales in 2015 and 2014, respectively. Approximately 18% of accounts receivable are due from one customer at September 30, 2015 and approximately 14% of accounts receivable are due from one customer at September 30, 2014.

The Company also purchased approximately 66% and 68% of materials from two vendors for the nine months ended September 30, 2015 and 2014, respectively.

(11) RETIREMENT PLAN

The Company offers a safe harbor 401(k) profit sharing plan. Under this plan, eligible employees may elect to make contributions pursuant to a salary reduction agreement. The Company makes matching contributions equal to 100% of the first 3% and 50% of the next 2% of eligible compensation. Additional Company profit sharing contributions are discretionary. Company matching contributions totaled approximately $0.3 million and $0.2 million for the nine months ended September 30, 2015 and 2014, respectively.

ARGOTEC INTERMEDIATE HOLDINGS LLC AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014

(dollars in millions)

(12) COMMITMENTS AND CONTINGENCIES

Lease Commitments:

The Company leases vehicles under operating lease agreements that expire at various dates through 2016. Lease expense under these agreements totaled less than $0.1 million for the nine months ended September 30, 2015 and 2014, respectively. Approximate future minimum payments required under these leases are less than $0.1 million in 2015 and 2016.

Employee Separation Agreements:

Effective December 31, 2014, the Company entered into separation agreements with two former key employees. The agreements provide for a continuation of salary and health and dental insurance coverage through December 31, 2015. The former employees remain eligible to receive 2015 performance bonuses of up to 40% of the severance period salary, payable only if the Company sells substantially all of its assets. Pursuant to the employment agreements in place, the former employees are bound by noncompete covenants and provisions for non solicitation of Company employees for three years. Accrued expenses include approximately $0.4 million at September 30, 2015 for salary payments due under the agreements through December 31, 2015.

Special Long Term Bonus:

The Company offers a "Special Bonus" plan to key employees to reward potential long-term commitment and contribution to Company success. The plan will provide incentive bonuses based on attainment of specific financial thresholds, the occurrence of certain triggering events, and compliance with noncompete covenants and provisions for non solicitation of Company employees, vendors and customers both while employed by the Company and for two years after termination of employment. There are no accruals related to this bonus plan because of its contingent nature.

(13) SUBSEQUENT EVENTS

On October 28, 2015 the Company was acquired by SWM-Argotec LLC a Delaware limited liability company and indirect wholly-owned subsidiary of Schweitzer-Mauduit International, Inc.

In December 2015, the Company entered into an agreement to sell the Easthampton property for $1.1 million.