10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q 

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
	For the quarterly period ended	September 30, 2019

  OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
	For the transition period from __________________to __________________

1-13948

(Commission file number)

SCHWEITZER-MAUDUIT INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter) 

Delaware		62-1612879
(State or other jurisdiction of incorporation or organization)		(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)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock, $0.10 par value	SWM	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒   No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   ☒     No   ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer," “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No  ☒

The Company had 30,896,661 shares of common stock issued and outstanding as of November 4, 2019.

SCHWEITZER-MAUDUIT INTERNATIONAL, INC.

TABLE OF CONTENTS

		Page
	Part I. - Financial Information
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4.	Controls and Procedures	43
	Part II. - Other Information
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3.	Defaults Upon Senior Securities	44
Item 4.	Mine Safety Disclosures	44
Item 5.	Other Information	44
Item 6.	Exhibits	45
Signatures		46
Glossary of Terms		47

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(dollars in millions, except per share amounts)

(Unaudited)

	Three Months Ended					Nine Months Ended
	September 30, 2019		September 30, 2018			September 30, 2019			September 30, 2018
Net sales	$	256.4	$	260.3		$	784.3		$	792.6
Cost of products sold	184.2		195.0			565.2			577.9
Gross profit	72.2		65.3			219.1			214.7
Selling expense	8.6		8.9			25.8			27.2
Research expense	3.1		3.6			10.1			11.8
General expense	24.3		21.3			72.0			66.1
Total nonmanufacturing expenses	36.0		33.8			107.9			105.1
Restructuring and impairment expense	1.6		0.4			2.0			1.4
Operating profit	34.6		31.1			109.2			108.2
Interest expense	6.7		7.3			29.6			20.1
Other income (expense), net	1.7		11.2			(1.6		)	10.4
Income from continuing operations before income taxes and income from equity affiliates	29.6		35.0			78.0			98.5
Provision (benefit) for income taxes	3.2		(5.6		)	12.8			10.4
Income (loss) from equity affiliates, net of   income taxes	1.3		0.3			0.4			(0.5		)
Income from continuing operations	27.7		40.9			65.6			87.6
Income (loss) from discontinued operations	—		0.1			—			(0.3		)
Net income	$	27.7	$	41.0		$	65.6		$	87.3
Net income per share - basic:
Income per share from continuing operations	$	0.90	$	1.33		$	2.13		$	2.85
(Loss) per share from discontinued   operations	—		—			—			(0.01		)
Net income per share – basic	$	0.90	$	1.33		$	2.13		$	2.84
Net income per share – diluted:
Income per share from continuing operations	$	0.90	$	1.33		$	2.12		$	2.84
(Loss) per share from discontinued   operations	—		—			—			(0.01		)
Net income per share – diluted	$	0.90	$	1.33		$	2.12		$	2.83
Weighted average shares outstanding:
Basic	30,662,800		30,569,600			30,648,400			30,541,600
Diluted	30,831,900		30,722,800			30,804,700			30,683,100

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

1

SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(dollars in millions)

(Unaudited) 

	Three Months Ended						Nine Months Ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
Net income	$	27.7		$	41.0		$	65.6		$	87.3
Other comprehensive (loss), net of tax:
Foreign currency translation adjustments	(10.2		)	(2.8		)	(7.1		)	(24.8		)
Less: Reclassification adjustment for realized translation adjustments	(0.3		)	(0.2		)	(0.7		)	(0.6		)
Unrealized (losses) gains on derivative instruments	(0.6		)	0.4			0.7			0.7
Less: Reclassification adjustment for gains on derivative instruments included in net income	(2.4		)	(0.8		)	(5.1		)	(2.4		)
Reclassification adjustment for amortization of postretirement benefit plans' costs included in net periodic benefit cost	0.1			0.8			1.6			2.3
Other comprehensive (loss)	(13.4		)	(2.6		)	(10.6		)	(24.8		)
Comprehensive income	$	14.3		$	38.4		$	55.0		$	62.5

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

2

SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in millions, except per share amounts)

(Unaudited)

	September 30, 2019			December 31, 2018
ASSETS
Current assets
Cash and cash equivalents	$	84.9		$	93.8
Accounts receivable, net	156.9			154.6
Inventories	149.4			151.5
Income taxes receivable	10.2			12.2
Assets held for sale	12.0			12.0
Other current assets	5.5			5.1
Total current assets	418.9			429.2
Property, plant and equipment, net	320.0			340.3
Deferred income tax benefits	4.1			0.3
Investment in equity affiliates	47.3			51.9
Goodwill	335.8			338.1
Intangible assets	254.5			272.8
Other assets	69.6			33.9
Total assets	$	1,450.2		$	1,466.5
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current debt	$	1.9		$	3.3
Accounts payable	64.1			65.7
Income taxes payable	1.1			1.6
Accrued expenses and other current liabilities	77.4			72.9
Total current liabilities	144.5			143.5
Long-term debt	559.7			618.8
Long-term income tax payable	25.6			27.0
Pension and other postretirement benefits	28.0			28.2
Deferred income tax liabilities	46.9			48.0
Other liabilities	70.7			43.1
Total liabilities	875.4			908.6
Stockholders’ equity:
Preferred stock, $0.10 par value; 10,000,000 shares authorized; none issued or outstanding	—			—
Common stock, $0.10 par value; 100,000,000 shares authorized; 30,896,000 and 30,771,244 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively	3.1			3.1
Additional paid-in-capital	75.1			71.1
Retained earnings	631.7			608.2
Accumulated other comprehensive loss, net of tax	(135.1		)	(124.5		)
Total stockholders’ equity	574.8			557.9
Total liabilities and stockholders’ equity	$	1,450.2		$	1,466.5

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

3

SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(dollars in millions, except per share amounts)

(Unaudited)

	Common Stock Issued
	Shares		Amount		Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance, June 30, 2018	30,754,759		$	3.1	$	68.8	$	582.2		$	(111.6	)	$	542.5
Net income	—		—		—		41.0			—			41.0
Other comprehensive (loss), net of tax	—		—		—		—			(2.6		)	(2.6		)
Dividends declared ($0.43 per share)	—		—		—		(13.3		)	—			(13.3		)
Restricted stock issuances, net	14,663		—		—		—			—			—
Stock-based employee compensation expense	—		—		1.1		—			—			1.1
Stock issued to directors as compensation	972		—		0.1		—			—			0.1
Purchases and retirement of common stock	(2,421	)	—		—		(0.1		)	—			(0.1		)
Balance, September 30, 2018	30,767,973		$	3.1	$	70.0	$	609.8		$	(114.2	)	$	568.7
Balance, June 30, 2019	30,894,598		$	3.1	$	73.6	$	617.6		$	(121.7	)	$	572.6
Net income	—		—		—		27.7			—			27.7
Other comprehensive (loss), net of tax	—		—		—		—			(13.4		)	(13.4		)
Dividends declared ($0.44 per share)	—		—		—		(13.6		)	—			(13.6		)
Restricted stock issuances, net	914		—		—		—			—			—
Stock-based employee compensation expense	—		—		1.5		—			—			1.5
Stock issued to directors as compensation	640		—		—		—			—			—
Purchases and retirement of common stock	(152	)	—		—		—			—			—
Balance, September 30, 2019	30,896,000		$	3.1	$	75.1	$	631.7		$	(135.1	)	$	574.8

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

4

	Common Stock Issued
	Shares		Amount		Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance, December 31, 2017	30,711,299		$	3.1	$	66.3	$	566.7		$	(89.4	)	$	546.7
Cumulative effects of changes in accounting standards	—		—		—		(1.7		)	—			(1.7		)
Net income	—		—		—		87.3			—			87.3
Other comprehensive (loss), net of tax	—		—		—		—			(24.8		)	(24.8		)
Dividends declared ($1.29 per share)	—		—		—		(39.7		)	—			(39.7		)
Restricted stock issuances, net	122,817		—		—		—			—			—
Stock-based employee compensation expense	—		—		3.5		—			—			3.5
Stock issued to directors as compensation	3,615		—		0.2		—			—			0.2
Purchases and retirement of common stock	(69,758	)	—		—		(2.8		)	—			(2.8		)
Balance, September 30, 2018	30,767,973		$	3.1	$	70.0	$	609.8		$	(114.2	)	$	568.7
Balance, December 31, 2018	30,771,244		$	3.1	$	71.1	$	608.2		$	(124.5	)	$	557.9
Cumulative effects of changes in accounting standards	—		—		—		(0.3		)	—			(0.3		)
Net income	—		—		—		65.6			—			65.6
Other comprehensive (loss), net of tax	—		—		—		—			(10.6		)	(10.6		)
Dividends declared ($1.32 per share)	—		—		—		(40.8		)	—			(40.8		)
Restricted stock issuances, net	147,019		—		—		—			—			—
Stock-based employee compensation expense	—		—		3.9		—			—			3.9
Stock issued to directors as compensation	3,034		—		0.1		—			—			0.1
Purchases and retirement of common stock	(25,297	)	—		—		(1.0		)	—			(1.0		)
Balance, September 30, 2019	30,896,000		$	3.1	$	75.1	$	631.7		$	(135.1	)	$	574.8

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

5

SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(dollars in millions)

(Unaudited) 

	Nine Months Ended
	September 30, 2019			September 30, 2018
Operating
Net income	$	65.6		$	87.3
Less: Loss from discontinued operations	—			(0.3		)
Income from continuing operations	65.6			87.6
Non-cash items included in net income:
Depreciation and amortization	43.4			46.8
Restructuring-related impairment	—			0.2
Deferred income tax	(2.2		)	3.0
Pension and other postretirement benefits	2.1			2.8
Stock-based compensation	4.0			3.7
(Income) loss from equity affiliates	(0.4		)	0.5
Brazil tax assessment accruals, net (Note 13)	10.9			—
Long-term income tax payable	—			(12.0		)
Change in fair value of contingent consideration	—			(10.2		)
Cash dividends received from equity affiliates	2.6			2.0
Other items	2.0			(0.1		)
Changes in operating working capital, net of assets acquired:
Accounts receivable	(4.6		)	(23.7		)
Inventories	(1.8		)	(3.2		)
Prepaid expenses	(0.4		)	(0.3		)
Accounts payable	2.3			1.7
Accrued expenses and other current liabilities	(1.4		)	(4.3		)
Accrued income taxes	(3.2		)	(1.5		)
Net changes in operating working capital	(9.1		)	(31.3		)
Net cash provided by operating activities of:
Continuing operations	118.9			93.0
Discontinued operations	—			0.2
Net cash provided by operations	118.9			93.2
Investing
Capital spending	(20.0		)	(19.8		)
Capitalized software costs	(3.9		)	(1.1		)
Other investing	1.1			2.6
Net cash used in investing	(22.8		)	(18.3		)

6

SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(dollars in millions)

(Unaudited) 

	Nine Months Ended
	September 30, 2019			September 30, 2018
Financing
Cash dividends paid to SWM stockholders	(40.8		)	(39.7		)
Changes in short-term debt	(0.1		)	(1.4		)
Proceeds from issuances of long-term debt	0.1			636.1
Payments on long-term debt	(60.9		)	(676.9		)
Purchases of common stock	(1.0		)	(2.8		)
Payments for debt issuance costs	—			(3.4		)
Net cash used in financing	(102.7		)	(88.1		)
Effect of exchange rate changes on cash and cash equivalents	(2.3		)	(3.2		)
Decrease in cash and cash equivalents	(8.9		)	(16.4		)
Cash and cash equivalents at beginning of period	93.8			106.9
Cash and cash equivalents at end of period	$	84.9		$	90.5
Supplemental Cash Flow Disclosures
Cash paid for interest, net	$	17.6		$	20.6
Cash paid for taxes, net	$	17.1		$	20.6
Change in capital spending in accounts payable and accrued liabilities	$	2.9		$	0.5

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

7

SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. General

Nature of Business

Schweitzer-Mauduit International, Inc. ("SWM," "we," or the "Company"), headquartered in the United States of America, is a multinational diversified producer of highly engineered solutions and advanced materials for a variety of industries. The Company maintains two operating product line segments: Advanced Materials & Structures and Engineered Papers.

The Advanced Materials & Structures ("AMS") segment produces mostly resin-based rolled goods such as nets, films and meltblown materials, typically through an extrusion process or other non-woven technologies. These products are used in a variety of specialty applications across the filtration, construction and infrastructure, transportation, industrial and medical end-markets.

The Engineered Papers ("EP") segment primarily serves the tobacco industry with production of various cigarette papers and reconstituted tobacco products ("Recon"). Traditional reconstituted tobacco leaf ("RTL") is used as a blend with virgin tobacco in cigarettes and used as wrappers and binders for cigars. Recon, as well as low ignition propensity ("LIP") cigarette paper, a specialty product with fire-safety features, are two key profit drivers, which together account for more than half of segment net sales. The EP segment also produces non-tobacco papers for both premium applications, such as energy storage and industrial commodity paper grades.

We conduct business in over 90 countries and operate 22 production locations worldwide, with locations in the U.S., Canada, United Kingdom, France, Luxembourg, Belgium, Russia, Brazil, China and Poland. We also have a 50% equity interest in two joint ventures in China. The first, China Tobacco Mauduit (Jiangmen) Paper Industry Ltd. ("CTM"), produces cigarette and porous plug wrap papers and the second, China Tobacco Schweitzer (Yunnan) Reconstituted Tobacco Co. Ltd. ("CTS"), produces RTL.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements and the notes thereto have been prepared in accordance with the instructions of Form 10-Q and Rule 10-01 of Regulation S-X of the Securities and Exchange Commission ("SEC") and do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America ("U.S. GAAP"). However, such information reflects all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim periods including the results of a business reclassified as a discontinued operation which is more fully described in Note 5. Discontinued Operations.

The results of operations for the three or nine months ended September 30, 2019 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 consolidated financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC on March 1, 2019.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned, majority-owned and controlled subsidiaries. The Company’s share of the net income of its 50%-owned joint ventures in China is included in the condensed consolidated statements of income as Income from equity affiliates, net of income taxes. Intercompany balances and transactions have been eliminated.

8

SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities in the condensed consolidated financial statements and accompanying notes. Estimates are used for, but not limited to, inventory valuation, useful lives of tangible and intangible assets, fair values, sales returns and rebates, receivables valuation, pension, postretirement and other benefits, restructuring and impairment, taxes and contingencies. Actual results could differ materially from those estimates.

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842): Amendments to the FASB Accounting Standards Codification." The new standard establishes a right-of-use model that requires a lessee to record a right-of-use asset and a lease liability on the balance sheet for all leases with terms longer than twelve months. Leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition in the income statement. This guidance was effective for annual reporting periods beginning after December 15, 2018, and interim periods thereafter. In July 2018, the FASB issued ASU 2018-11, "Leases (Topic 842) - Targeted Improvements," providing companies with the option to adopt the provisions of the standard prospectively without adjusting comparative periods; the Company has elected this option for transition and adopted the standard on January 1, 2019. The Company adopted the transition package of practical expedients permitted within the new standard, which among other things, allows the Company to carryforward historical lease classifications. In addition, the Company elected the hindsight practical expedient to determine the reasonably certain lease term for existing leases. The Company made an accounting policy election that will keep leases with an initial term of 12 months or less off of the balance sheet and will result in recognition of those lease payments in the consolidated statements of income on a straight-line basis over the lease term. The impact of the adoption of this standard to the consolidated balance sheets resulted in approximately $25 million in right-of-use assets and corresponding lease obligation liabilities of approximately $27 million as of January 1, 2019. Adoption resulted in an immaterial cumulative-effect adjustment to the opening balance of retained earnings and did not materially impact the consolidated statements of income. Additionally, the adoption of the new lease standard did not have an impact on the Company's debt covenant compliance under its current debt and indenture agreements.

In January 2017, the FASB issued ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment." The amendment eliminates the second step of the analysis that required the measurement of a goodwill impairment by comparing the implied value of a reporting unit’s goodwill and the goodwill’s carrying amount. This guidance is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company is currently in the process of evaluating the impact of the pronouncement and does not expect the adoption of this guidance to have a material impact on the consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurements." The new standard modifies the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, based on the concepts in the Concepts Statement, including the consideration of costs and benefits. The provisions of this ASU are effective for years beginning after December 15, 2019, with early adoption permitted. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The Company is currently finalizing the analysis on the impact of the pronouncement and does not expect the adoption of this guidance to have a material impact on the consolidated financial statements.

In August 2018, the FASB issued ASU 2018-14, "Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans." The new standard modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The provisions of this ASU are effective for years beginning after December 15, 2020, with early adoption permitted. The new standard requires the amendments to be applied on a retrospective basis for all

9

SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

periods presented. The Company is currently in the process of evaluating the impact of the pronouncement and does not expect the adoption of this guidance to have a material impact on the consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract." The new standard provides updated guidance surrounding implementation costs associated with cloud computing arrangements that are service contracts. The provisions of this ASU are effective for years beginning after December 15, 2020, with early adoption permitted. The Company is currently in the process of evaluating the impact of the pronouncement and does not expect the adoption of this guidance to have a material impact on the consolidated financial statements.

Note 2. Revenue Recognition

The Company has two main sources of revenue: product sales and materials conversion. The Company recognizes product sales revenues when control of a product is transferred to the customer. For the majority of product sales, transfer of control occurs when the products are shipped from one of the Company’s manufacturing facilities to the customer. The cost of delivering finished goods to the Company’s customers is recorded as a component of cost of products sold. Those costs include the amounts paid to a third party to deliver the finished goods. Any freight costs billed to and paid by a customer are included in net sales. The Company also provides services to customers through the conversion of customer-owned raw materials into processed finished goods. In these transactions, the Company generally recognizes revenue as processing is completed.

Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied, which generally occurs when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Generally, the Company considers collectability of amounts due under a contract to be probable upon inception of a sale based on an evaluation of the credit worthiness of each customer. If collectability is not considered to be probable, the Company defers recognition of revenue on satisfied performance obligations until the uncertainty is resolved. Any variable consideration, such as discounts or price concessions, is set forth in the terms of the contract at inception, and is included in the assessment of the transaction price at the outset of the arrangement. The transaction price is allocated to the individual performance obligations due under the contract based on the relative stand-alone fair value of the performance obligations identified in the contract. The Company typically uses an observable price to determine the stand-alone selling price for separate performance obligations.

The Company does not typically include extended payment terms or significant financing components in its contracts with customers. Certain product sales contracts may include cash-based incentives (volume rebates or credits), which are accounted for as variable consideration.  We estimate these amounts at least quarterly based on the expected forecast quantities to be provided to customers and reduce revenues recognized accordingly. Incidental items that are immaterial in the context of the contract are recognized as expense in the period incurred. The Company generally expenses sales commissions when incurred because the amortization period is one year or less. These costs are recorded within sales and marketing expenses. The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. As a practical expedient, the Company treats shipping and handling activities that occur after control of the good transfers as fulfillment activities, and therefore, does not account for shipping and handling costs as a separate performance obligation.

10

SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Following is the Company’s net sales disaggregated by revenue source ($ in millions). Sales and usage-based taxes are excluded from net sales.

	Three Months Ended
	September 30, 2019						September 30, 2018
	AMS		EP		Total		AMS		EP		Total
Product revenues	$	122.7	$	116.0	$	238.7	$	117.9	$	124.2	$	242.1
Materials conversion revenues	2.3		12.9		15.2		1.9		13.9		15.8
Other revenues	1.1		1.4		2.5		1.0		1.4		2.4
Total revenues (1)	$	126.1	$	130.3	$	256.4	$	120.8	$	139.5	$	260.3

(1) Revenues include net hedging gains and losses for the three months ended September 30, 2019 and 2018.

	Nine Months Ended
	September 30, 2019						September 30, 2018
	AMS		EP		Total		AMS		EP		Total
Product revenues	$	362.9	$	365.5	$	728.4	$	346.9	$	378.6	$	725.5
Materials conversion revenues	6.2		41.6		47.8		10.3		50.1		60.4
Other revenues	4.2		3.9		8.1		2.9		3.8		6.7
Total revenues (1)	$	373.3	$	411.0	$	784.3	$	360.1	$	432.5	$	792.6

(1) Revenues include net hedging gains and losses for the nine months ended September 30, 2019 and 2018.

Net sales are attributed to the following geographic locations based on the location of the Company’s direct customers ($ in millions):

	Three Months Ended
	September 30, 2019						September 30, 2018
	AMS		EP		Total		AMS		EP		Total
United States	$	87.8	$	44.1	$	131.9	$	84.7	$	47.0	$	131.7
Europe and the former Commonwealth of Independent States	12.1		39.0		51.1		10.0		51.0		61.0
Asia/Pacific (including China)	20.7		22.4		43.1		20.3		17.9		38.2
Latin America	1.8		11.2		13.0		2.1		11.0		13.1
Other foreign countries	3.7		13.6		17.3		3.7		12.6		16.3
Total revenues (1)	$	126.1	$	130.3	$	256.4	$	120.8	$	139.5	$	260.3

(1) Revenues include net hedging gains and losses for the three months ended September 30, 2019 and 2018.

	Nine Months Ended
	September 30, 2019						September 30, 2018
	AMS		EP		Total		AMS		EP		Total
United States	$	258.5	$	142.4	$	400.9	$	247.6	$	146.7	$	394.3
Europe and the former Commonwealth of Independent States	38.7		125.1		163.8		36.5		168.6		205.1
Asia/Pacific (including China)	58.4		70.3		128.7		56.9		57.1		114.0
Latin America	5.3		34.6		39.9		7.8		33.0		40.8
Other foreign countries	12.4		38.6		51.0		11.3		27.1		38.4
Total revenues (1)	$	373.3	$	411.0	$	784.3	$	360.1	$	432.5	$	792.6

(1) Revenues include net hedging gains and losses for the nine months ended September 30, 2019 and 2018.

11

SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 3. Other Comprehensive Income

Comprehensive income includes net income, as well as certain items charged and credited directly to stockholders' equity, which are excluded from net income. The Company has presented comprehensive income in the condensed consolidated statements of comprehensive income (loss). Reclassification adjustments of derivative instruments are presented in Net sales, Other (expense) income, net, or Interest expense in the condensed consolidated statements of income. See Note 12. Derivatives for additional information. Amortization of accumulated pension and other post-employment benefit ("OPEB"), liabilities are included in the computation of net periodic pension and OPEB costs, which are more fully discussed in Note 14. Postretirement and Other Benefits.

Components of Accumulated other comprehensive loss, net of tax, were as follows ($ in millions):

	September 30, 2019			December 31, 2018
Accumulated pension and OPEB liability adjustments, net of income tax benefit of $12.1 million and $11.4 million at September 30, 2019 and December 31, 2018, respectively	$	(26.6	)	$	(28.2	)
Accumulated unrealized loss on derivative instruments, net of income tax benefit of $2.8 million and $1.6 million at September 30, 2019 and December 31, 2018, respectively	(5.0		)	(0.6		)
Accumulated unrealized foreign currency translation adjustments, net of income tax benefit of $2.6 million and $1.7 million at September 30, 2019 and December 31, 2018, respectively	(103.5		)	(95.7		)
Accumulated other comprehensive loss	$	(135.1	)	$	(124.5	)

Changes in the components of Accumulated other comprehensive loss were as follows ($ in millions):

	Three Months Ended
	September 30, 2019									September 30, 2018
	Pre-tax			Tax			Net of Tax			Pre-tax			Tax			Net of Tax
Net gain (loss) on pension and OPEB liability adjustments	$	0.7		$	(0.6	)	$	0.1		$	1.0		$	(0.2	)	$	0.8
Unrealized (loss) gain on derivative instruments	(4.1		)	1.1			(3.0		)	(0.4		)	—			(0.4		)
Unrealized (loss) gain on foreign currency translation	(9.0		)	(1.5		)	(10.5		)	(3.1		)	0.1			(3.0		)
Total	$	(12.4	)	$	(1.0	)	$	(13.4	)	$	(2.5	)	$	(0.1	)	$	(2.6	)

	Nine Months Ended
	September 30, 2019								September 30, 2018
	Pre-tax			Tax		Net of Tax			Pre-tax			Tax			Net of Tax
Unrealized gain (loss) on pension and OPEB liability adjustments	$	0.9		$	0.7	$	1.6		$	3.2		$	(0.9	)	$	2.3
Unrealized (loss) gain on derivative instruments	(5.6		)	1.2		(4.4		)	(3.0		)	1.3			(1.7		)
Unrealized (loss) gain on foreign currency translation	(8.7		)	0.9		(7.8		)	(23.6		)	(1.8		)	(25.4		)
Total	$	(13.4	)	$	2.8	$	(10.6	)	$	(23.4	)	$	(1.4	)	$	(24.8	)

12

SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 4. Leases

The Company adopted the guidance contained in ASC 842, Leases, on January 1, 2019 using the modified retrospective approach permitted by ASU 2018-11, Leases (Topic 842): Targeted Improvements. Under this method, the Company applied the new leases standard at the adoption date and recognized a cumulative-effect adjustment to the opening balance of retained earnings as of January 1, 2019. The comparative period presented in the condensed consolidated financial statements for 2018 continue to be presented in accordance with previous GAAP as codified in ASC 840, Leases.

The Company leases certain office space, warehouses, manufacturing facilities, land, and equipment. The Company elected the practical expedient which allows that leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. For leases without lease terms (i.e. month-to-month leases), lease expense is recognized as incurred and no asset or liability is recorded for these leases.

The Company accounts for lease components (e.g., fixed payments including rent, real estate taxes and insurance costs) separately from non-lease components (e.g., common-area maintenance costs). Most leases include one or more options to renew, with renewal terms that can extend the lease term. The exercise of lease renewal options is at our sole discretion. Lease assets and liabilities are determined based on the lease term including those periods for which renewal options are considered reasonably certain to be exercised. Certain leases also include options to purchase the leased property, although we are unlikely to do so in most cases. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of the Company's leases do not provide a readily determinable implicit rate. Therefore, the Company must estimate its incremental borrowing rate to discount the lease payments based on information available at lease commencement.

Components of right-of-use assets and lease liabilities presented in the balance sheet are as follows ($ in million):

Assets	Classification	September 30, 2019
Operating lease right-of-use assets	Other assets	$	22.0
Finance lease right-of-use assets	Property, plant and equipment, net	2.9
Liabilities	Classification	September 30, 2019
Current operating lease obligation	Accrued expenses and other current liabilities	$	4.7
Long-term operating lease obligation	Other liabilities	18.5
Total operating lease obligation		$	23.2
Current finance lease obligation	Current debt	$	0.4
Long-term finance lease obligation	Long-term debt	2.9
Total finance lease obligation		$	3.3

13

SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

	September 30, 2019
Assets	Finance			Operating			Total
Land and improvements	$	—		$	0.1		$	0.1
Buildings and improvements	2.9			21.7			24.6
Machinery and equipment	0.6			4.6			5.2
Gross property, plant and equipment	3.5			26.4			29.9
Less: Accumulated depreciation	(0.6		)	(4.4		)	(5.0		)
Right-of-use assets	$	2.9		$	22.0		$	24.9

Components of lease expense incurred by the Company are as follow ($ in millions):

Lease Cost	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Finance lease cost (cost resulting from lease payments)
Interest expense on lease liabilities	$	—	$	0.1
Amortization of right-of-use assets	0.1		0.3
Operating lease cost	1.6		4.7
Short-term lease expense	—		0.2
Total Lease Cost	$	1.7	$	5.3

The following table represents future contractual lease liabilities for the next five years and thereafter for finance and operating leases ($ in millions):

Maturity of Lease Liabilities	Finance		Operating		Total
Remainder of 2019	$	0.1	$	1.6	$	1.7
2020	0.5		5.8		6.3
2021	0.5		5.1		5.6
2022	0.5		4.0		4.5
2023	0.5		2.8		3.3
2024	0.4		2.3		2.7
Thereafter	1.6		7.1		8.7
Total Lease Payments	$	4.1	$	28.7	$	32.8
Less: Interest	0.8		5.5		6.3
Present Value of Lease Liabilities	$	3.3	$	23.2	$	26.5

Lease Term and Discount Rate	September 30, 2019
Weighted-average remaining lease term (years)
Operating leases	6.9
Finance leases	7.7
Weighted-average discount rate
Operating leases	6.49	%
Finance leases	5.28	%

14

SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Other Information (millions)	Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	4.7
Operating cash flows from finance leases	0.3
Leased assets obtained in exchange for new finance lease liabilities	0.5
Leased assets obtained in exchange for new operating lease liabilities	3.2

Future minimum obligations under non-cancelable operating leases having an initial or remaining term in excess of one year as of December 31, 2018 were as follows ($ in millions):

2019	$	5.8
2020	5.0
2021	4.4
2022	3.6
2023	3.0
Thereafter	8.1
Total	$	29.9

15

SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 5. Discontinued Operations

The Company's former paper mill in San Pedro, Philippines has been reported as a discontinued operation since 2013. This operation was previously presented as a component of the EP segment. The physical assets at the Philippines paper mill were sold during the fourth quarter of 2013, and the Company is currently exploring options to sell or lease its remaining net assets. For all periods presented, results of this operation have been removed from each individual line within the statements of income and the operating activities section of the statements of cash flow. In each case, a separate line has been added for the net results of discontinued operations.

Included in Other current assets, Other assets and Accrued expenses and Other current liabilities within the condensed consolidated balance sheet are the following major classes of assets and liabilities, respectively, associated with the discontinued operations ($ in millions):

	September 30, 2019		December 31, 2018
Assets of discontinued operations:
Current assets	$	0.8	$	0.8
Other assets	1.2		1.2
Liabilities of discontinued operations:
Current liabilities	0.1		0.1

Summary financial results of discontinued operations were as follows ($ in millions):

	Three Months Ended				Nine Months Ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
Net sales	$	—	$	—	$	—	$	—
Other income (expense)	—		0.1		—		(0.3		)
Loss from discontinued operations before income taxes	—		0.1		—		(0.3		)
Income tax (provision) benefit	—		—		—		—
Loss from discontinued operations	—		0.1		—		(0.3		)

16

SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 6. Net Income Per Share

The Company uses the two-class method to calculate earnings per share. The Company has granted restricted stock that contains non-forfeitable rights to dividends on unvested shares. Since these unvested shares are considered participating securities under the two-class method, the Company allocates earnings per share to common stock and participating securities according to dividends declared and participation rights in undistributed earnings.

Diluted net income per common share is computed based on net income divided by the weighted average number of common and potential common shares outstanding. Potential common shares during the respective periods are those related to dilutive stock-based compensation, including long-term stock-based incentive compensation and directors’ accumulated deferred stock compensation, which may be received by the directors in the form of stock or cash. A reconciliation of the average number of common and potential common shares outstanding used in the calculations of basic and diluted net income per share follows ($ in millions, shares in thousands):

	Three Months Ended						Nine Months Ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
Numerator (basic and diluted):
Net income	$	27.7		$	41.0		$	65.6		$	87.3
Less: Dividends paid to participating securities	—			(0.1		)	(0.2		)	(0.2		)
Less: Undistributed earnings available to participating securities	(0.1		)	(0.2		)	(0.2		)	(0.4		)
Undistributed and distributed earnings available to common stockholders	$	27.6		$	40.7		$	65.2		$	86.7
Denominator:
Average number of common shares outstanding	30,662.8			30,569.6			30,648.4			30,541.6
Effect of dilutive stock-based compensation	169.1			153.2			156.3			141.5
Average number of common and potential common shares outstanding	30,831.9			30,722.8			30,804.7			30,683.1

Note 7. Inventories

Inventories are valued at the lower of cost (using the First-In, First-Out and weighted average methods) or net realizable value. The Company's costs included in inventory primarily include resins, pulp, chemicals, direct labor, utilities, maintenance, depreciation, finishing supplies and an allocation of certain overhead costs. Machine start-up costs or abnormal machine shut downs are expensed in the period incurred and are not reflected in inventory. The Company reviews inventories at least quarterly to determine the necessity of write-offs for excess, obsolete or unsalable inventory. The Company estimates write-offs for inventory obsolescence and shrinkage based on its judgment of future realization. These reviews require the Company to assess customer and market demand. The following schedule details inventories by major class ($ in millions):

	September 30, 2019		December 31, 2018
Raw materials	$	53.2	$	50.2
Work in process	24.8		22.4
Finished goods	62.3		69.9
Supplies and other	9.1		9.0
Total	$	149.4	$	151.5

17

SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 8. Goodwill

The changes in the carrying amount of goodwill by segment for the nine months ended September 30, 2019 were as follows ($ in millions):

	AMS			EP			Total
Goodwill as of December 31, 2018	$	333.1		$	5.0		$	338.1
Foreign currency translation adjustments	(2.1		)	(0.2		)	(2.3		)
Goodwill as of September 30, 2019	$	331.0		$	4.8		$	335.8

Note 9. Intangible Assets

The gross carrying amount and accumulated amortization for intangible assets consisted of the following ($ in millions):

	September 30, 2019
	Gross Carrying Amount		Accumulated Amortization		Accumulated Impairments		Accumulated Foreign Exchange		Net Carrying Amount
Amortized Intangible Assets (AMS)
Customer relationships	$	276.3	$	63.4	$	—	$	3.1	$	209.8
Developed technology	34.0		10.3		—		0.6		23.1
Trade names	21.8		0.8		20.7		0.3		—
Non-compete agreements	2.9		2.2		—		—		0.7
Patents	1.5		0.4		—		—		1.1
Total	$	336.5	$	77.1	$	20.7	$	4.0	$	234.7
Unamortized Intangible Assets (AMS)
Trade names	$	20.0	$	—	$	0.1	$	0.1	$	19.8

18

SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

	December 31, 2018
	Gross Carrying Amount		Accumulated Amortization		Accumulated Impairments		Accumulated Foreign Exchange			Net Carrying Amount
Amortized Intangible Assets (AMS)
Customer relationships	$	276.3	$	50.4	$	—	$	0.7		$	225.2
Developed technology	34.0		8.5		—		0.2			25.3
Trade names	21.8		0.8		20.7		0.3			—
Non-compete agreements	2.9		1.7		—		—			1.2
Patents	1.5		0.4		—		—			1.1
Total	$	336.5	$	61.8	$	20.7	$	1.2		$	252.8
Unamortized Intangible Assets (AMS)
Trade names	$	20.0	$	—	$	0.1	$	(0.1	)	$	20.0

Amortization expense of intangible assets was $5.1 million and $5.2 million for the three months ended September 30, 2019 and 2018, respectively, and $15.3 million and $15.6 million for the nine months ended September 30, 2019 and 2018, respectively. Finite-lived intangibles in the AMS segment are expensed using the straight-line amortization method. The estimated average aggregate amortization expense is $19.7 million in each of the next five years.

Note 10. Restructuring and Impairment Activities

The Company incurred restructuring and impairment expense of $1.6 million and $0.4 million in the three months ended September 30, 2019 and 2018, respectively, and $2.0 million and $1.4 million in the nine months ended September 30, 2019 and 2018, respectively.

In the AMS segment, restructuring and impairment expense was $0.0 million and $0.4 million for the three months ended September 30, 2019 and 2018, respectively, and $0.0 million and $1.2 million in the nine months ended September 30, 2019 and 2018, respectively. In the nine months ended September 30, 2018, restructuring and impairment expense consisted of $0.9 million in severance accruals for employees at our U.S. manufacturing operations, as well as $0.3 million in impairment charges at our U.S. manufacturing operations.

In the EP segment, restructuring and impairment expense was $1.6 million and $0.0 million for the three months ended September 30, 2019 and 2018, respectively, and $2.0 million and $0.2 million in the nine months ended September 30, 2019 and 2018, respectively. In the nine months ended September 30, 2019, restructuring and impairment expense consisted of $2.0 million in consulting fees and severance accruals for employees at our manufacturing facilities in the U.S., Brazil and France. In the nine months ended September 30, 2018, restructuring and impairment expense consisted of $0.2 million in severance accruals for employees at our manufacturing facilities in France.

19

SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Restructuring liabilities were classified within Accrued expenses and other current liabilities in each of the condensed consolidated balance sheets as of September 30, 2019 and December 31, 2018. Changes in the restructuring liabilities, substantially all of which are employee-related, during the periods ended September 30, 2019 and December 31, 2018 are summarized as follows ($ in millions):

	Nine Months Ended			Year Ended
	September 30, 2019			December 31, 2018
Balance at beginning of year	$	1.4		$	1.7
Accruals for announced programs	2.0			1.3
Cash payments	(2.7		)	(3.3		)
Other	—			1.8
Exchange rate impacts	(0.1		)	(0.1		)
Balance at end of period	$	0.6		$	1.4

Long-lived assets to be sold are classified as held for sale in the period in which all of the following criteria are met: management, having the authority to approve the action, commits to a plan to sell the assets; the assets are available for immediate sale in present condition subject only to terms that are usual and customary for sales of such assets; an active program to locate a buyer and other actions required to complete the plan to sell the assets have been initiated; the sale of the assets is probable, and transfer of the assets is expected to qualify for recognition as a completed sale within one year, except if events or circumstances beyond our control extend the period of time required to sell the assets beyond one year; the assets are being actively marketed for sale at a price that is reasonable in relation to current fair value; and actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

A long-lived asset that is classified as held for sale is initially measured at the lower of its carrying value or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Conversely, gains are not recognized on the sale of a long-lived asset until the date of sale. The fair value of a long-lived asset less any costs to sell is assessed each reporting period it remains classified as held for sale and any reduction in fair value is reported as an adjustment to the carrying value of the asset. Upon being classified as held for sale, depreciation is ceased. Long-lived assets to be disposed of other than by sale continue to be depreciated. Upon determining that a long-lived asset meets the criteria to be classified as held for sale, the assets and liabilities of the disposal group, if material, are reported in the line item Assets held for sale in our condensed consolidated balance sheets.

In early 2015, the Company made the decision to dispose of the Company's mothballed RTL facility and related equipment in the Philippines. These assets are included in the EP segment. During 2015, the Company reclassified the balance of the equipment, along with the land and building associated with the property, at this location from Property, plant and equipment, net, to Assets held for sale on the condensed consolidated balance sheets. The reclassifications were made for all assets that are expected to be sold within one year of the balance sheet date and, as of September 30, 2019, all of the physical assets of this entity are classified as Assets held for sale, and the Company is currently exploring options to sell or lease its remaining net assets. The Company incurred no impairment charges related to these assets during the nine months ended September 30, 2019 or 2018.

20

SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 11. Debt

The components of total debt are summarized in the following table ($ in millions):

 

	September 30, 2019			December 31, 2018
Revolving credit facility - U.S. dollar borrowings	$	19.0		$	76.0
Term loan facility	198.0			199.5
6.875% senior unsecured notes due October 1, 2026, net of discount of $7.1 million and $7.6 million at September 30, 2019 and December 31, 2018, respectively	342.9			342.4
French employee profit sharing	4.6			6.6
Finance lease and capital lease obligations, respectively	3.3			4.7
Other	—			0.1
Debt issuance costs	(6.2		)	(7.2		)
Total debt	561.6			622.1
Less: Current debt	(1.9		)	(3.3		)
Long-term debt	$	559.7		$	618.8

Credit Facility

On September 25, 2018, the Company entered into a $700.0 million credit agreement (the “New Credit Agreement”), which replaced the Company’s previous senior secured credit facilities and provides for a five year $500.0 million revolving line of credit (the “Revolving Credit Facility”) and a seven year $200.0 million bank term loan facility (the “Term Loan Facility”). Subject to certain conditions, including the absence of a default or event of default under the New Credit Agreement, the Company may request incremental loans to be extended under the Revolving Credit Facility or the Term Loan Facility so long as the Company is in pro forma compliance with the financial covenants set forth in the New Credit Agreement and the aggregate of such increases does not exceed $400.0 million.

Borrowings under the Revolving Credit Facility will initially bear interest, at the Company’s option, at either (i) 1.75% in excess of a reserve adjusted London Interbank Offered Rate (“LIBOR”) or (ii) 0.75% in excess of an alternative base rate. Borrowings under the Term Loan Facility will initially bear interest, at the Company’s option, at either (i) 2.00% in excess of a reserve adjusted LIBOR rate or (ii) 1.00% in excess of an alternative base rate. The Term Loan amortizes at the rate of 1.0% per year and will mature on September 25, 2025.

Under the terms of the New Credit Agreement, the Company is required to maintain certain financial ratios and comply with certain financial covenants, including maintaining a net debt to EBITDA ratio, as defined in the New Credit Agreement, calculated on a trailing four fiscal quarter basis, not greater than 4.50 and an interest coverage ratio, also as defined in the New Credit Agreement, of not less than 3.00. In addition, borrowings and loans made under the New Credit Agreement are secured by substantially all of the Company’s and the guarantors’ personal property, excluding certain customary items of collateral, and will be guaranteed by the Company’s existing and future wholly-owned material domestic subsidiaries and by SWM Luxembourg. The Company was in compliance with all of its covenants under the New Credit Agreement at September 30, 2019.

Indenture for 6.875% Senior Unsecured Notes Due 2026

On September 25, 2018, the Company closed a private offering of $350.0 million of 6.875% senior unsecured notes due 2026 (the “Notes”). The Notes were sold in a private placement in reliance on Rule 144A and Regulation S under the Securities Act of 1933, as amended, pursuant to a purchase agreement between the Company, certain subsidiaries of the Company and J.P. Morgan Securities LLC, as representative of the initial purchasers. The Notes are guaranteed on a senior unsecured basis by each of the Company’s existing and future wholly-owned subsidiaries that is a borrower under or that guarantees obligations under the New Credit Agreement (as defined below) or that guarantees certain other indebtedness, subject to certain exceptions.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The Notes were issued pursuant to an Indenture (the “Indenture”), dated as of September 25, 2018, by and among the Company, the guarantors listed therein and Wilmington Trust, National Association, as trustee. The Indenture provides that interest on the Notes will accrue from September 25, 2018 and is payable semi-annually in arrears on April 1 and October 1 of each year, beginning on April 1, 2019, and the Notes mature on October 1, 2026.

The Company may redeem some or all of the Notes at any time on or after October 1, 2021, at the redemption prices set forth in the Indenture, together with accrued and unpaid interest, if any, to, but excluding, the redemption date. Prior to October 1, 2021, the Company may redeem some or all of the Notes at a price equal to 100% of the principal amount thereof, plus a “make-whole” premium as set forth in the Indenture. The Company may redeem up to 35% of the original aggregate principal amount of the Notes on or prior to October 1, 2021 with the proceeds of certain equity offerings at a redemption price equal to 106.875% of the principal amount of the Notes. If the Company sells certain assets or consummates certain change of control transactions, the Company will be required to make an offer to repurchase the Notes, subject to certain conditions.

The Indenture contains certain covenants that, among other things, limit the Company’s ability and the ability of its restricted subsidiaries to incur additional indebtedness, make certain dividends, repurchase Company stock or make other distributions, make certain investments, create liens, transfer or sell assets, merge or consolidate and enter into transactions with the Company’s affiliates. Such covenants are subject to a number of exceptions and qualifications set forth in the Indenture. The Indenture also contains certain customary events of default, including failure to make payments in respect of the principal amount of the Notes, failure to make payments of interest on the Notes when due and payable, failure to comply with certain covenants and agreements and certain events of bankruptcy or insolvency. The Company was in compliance with all of its covenants under the Indenture at September 30, 2019.

As of September 30, 2019, the average interest rate was 3.81% on outstanding US Revolving Credit Facility borrowings and 4.06% on outstanding Term Loan Facility borrowings. The effective rate on the 6.875% senior unsecured notes due 2026 was 7.248%. The weighted average effective interest rate on the Company's debt facilities, including the impact of interest rate hedges, was approximately 4.43% and 4.01% for the nine months ended September 30, 2019 and 2018, respectively.

As of September 30, 2019 and December 31, 2018, the Company's total deferred debt issuance costs, net of accumulated amortization, were $6.2 million and $7.2 million, respectively. Amortization expense of $0.9 million and $1.4 million was recorded during the nine months ended September 30, 2019 and 2018, respectively, and has been included as a component of Interest expense in the accompanying condensed consolidated statements of income.

Principal Repayments

Under the New Credit Agreement, the Company selects an "interest period" for each of its borrowings from the Revolving Credit Facility. The Company can repay such borrowings and borrow again at a subsequent date if it chooses to do so, providing it flexibility and efficient use of any excess cash. The Company currently has the intent and ability to allow its debt balances to remain outstanding and expects to continue to file notices of continuation related to its borrowings outstanding at September 30, 2019 such that those amounts are not expected to be repaid prior to the September 2023 expiration of the Revolving Credit Facility. Following are the expected maturities for the Company's debt obligations as of September 30, 2019 ($ in millions):

2019	$	0.6
2020	3.2
2021	3.8
2022	3.7
2023	22.2
Thereafter	541.4
Total	$	574.9

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Fair Value of Debt

At September 30, 2019 and December 31, 2018, the fair market value of the Company's 6.875% senior unsecured notes was $371.0 million and $331.6 million, respectively. The fair market value for the senior unsecured notes was determined using quoted market prices, which are directly observable Level 1 inputs. The fair market value of all other debt as of September 30, 2019 and December 31, 2018 approximated the respective carrying amounts as the interest rates are variable and based on current market indices.

Note 12. Derivatives

In the normal course of business, the Company is exposed to foreign currency exchange rate risk and interest rate risk on its variable-rate debt. To manage these risks, the Company utilizes a variety of practices including, where considered appropriate, derivative instruments. The Company has no derivative instruments for trading or speculative purposes or derivatives with credit risk-related contingent features. All derivative instruments used by the Company are either exchange traded or are entered into with major financial institutions in order to reduce credit risk and risk of nonperformance by third parties. The fair values of the Company’s derivative instruments are determined using observable inputs and are considered Level 2 assets or liabilities.

The Company utilizes currency forward, swap and, to a lesser extent, option contracts to selectively hedge its exposure to foreign currency risk when it is practical and economical to do so. The use of these contracts minimizes transactional exposure to exchange rate changes. We designate certain of our foreign currency hedges as cash flow hedges. Changes in the fair value of cash flow hedges are reported as a component of Accumulated other comprehensive income (loss) and reclassified into earnings when the forecasted transaction affects earnings. For foreign exchange contracts not designated as cash flow hedges, changes in the contracts’ fair values are recorded to net income each period.

The Company selectively hedges its exposure to interest rate increases on variable-rate, long-term debt when it is practical and economical to do so. Changes in the fair value of interest rate contracts considered cash flow hedges are reported as a component of Accumulated other comprehensive income (loss) and reclassified into earnings when the forecasted transaction affects earnings.

On January 20, 2017, the Company entered into an interest rate swap transaction with a major financial institution for a three year term on a notional amount of $315 million. The interest rate swap is intended to manage the Company's interest rate risk by fixing the interest rate on a portion of the Company's debt currently outstanding under its credit facility that was previously subject to a floating interest rate equal to 1-month LIBOR plus a credit spread. The swap provides for the Company to pay a fixed rate of 1.65% per annum in addition to the credit spread on such portion of its outstanding debt in exchange for receiving a variable interest rate based on 1-month LIBOR. On September 25, 2018, in conjunction with the debt refinancing discussed in Note 11. Debt, the Company settled a notional amount of $130 million which resulted in a gain of $1.8 million as of the settlement date. This gain will be amortized on a ratable basis from Accumulated other comprehensive income (loss) into income as interest expense over the remaining term of the interest rate swap. On September 11, 2019, the Company terminated this interest rate swap. Concurrently, on September 11, 2019, the Company entered into a pay-fixed, receive-variable interest rate swap with a maturity date of January 31, 2027. The instrument is a hedge on a portion of the Company’s debt facility through the existing credit agreement. Under the terms of the interest rate swap, SWM will pay a fixed amount of interest each period in an amount equal to 1.724% on a notional amount of $185 million and receive interest payments monthly in an amount equal to the One-Month USD-LIBOR rate on the notional amount. The notional amount will reduce throughout the term of the swap as follows:

• September 13, 2019 - December 31, 2020    $185 million notional

• December 31, 2020 - December 31, 2021    $150 million notional

• December 31, 2021 - January 31, 2027    $100 million notional

As with the previous interest rate swap, the terms of the swap mirror the terms of the underlying debt, including timing of the payments and interest rates.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

On January 20, 2017, the Company entered into a three year cross-currency swap with a major financial institution designated as a hedge of a portion of the Company's net investment in certain Euro-denominated subsidiaries. The terms of the cross-currency swap provide for an exchange of principal on a notional amount of $100 million swapped to €93.7 million at maturity. The Company will receive from our swap counterparty U.S. dollar interest at a fixed rate of 1.65% per annum and pay to our swap counterparty Euro interest at a fixed rate of -0.18% per annum. On September 11, 2019, SWM entered into an offsetting swap with a major financial institution whose terms perfectly mirrored the January 20, 2017 swap and which economically offset the previous cross-currency swap. At the maturity date of the new swap and the previous swap, January 20, 2020, there will be no cash impact to the Company to settle these instruments as they will perfectly offset each other.

On October 24, 2018, the Company entered into a three year cross-currency swap with a major financial institution designated as a hedge of a portion of the Company's net investment in certain Euro-denominated subsidiaries. The terms of the cross-currency swap provide for an exchange of principal on a notional amount of $75 million swapped to €65.4 million at maturity. The Company will receive from our swap counterparty U.S. dollar interest at a fixed rate of 6.875% per annum and pay to our swap counterparty Euro interest at a fixed rate of 3.6725% per annum. The cross-currency swap will mature on October 1, 2021.

On January 29, 2019, the Company entered into a cross-currency swap with a major financial institution designated as a hedge of a portion of the Company's net investment in certain Euro-denominated subsidiaries. The terms of the cross-currency swap provide for an exchange of principal on a notional amount of $75 million swapped to €66.0 million at maturity. The Company will receive from our swap counterparty U.S. dollar interest at a fixed rate of 6.875% per annum and pay to our swap counterparty Euro interest at a fixed rate of 4.0525% per annum. The cross-currency swap will mature on October 1, 2021.

On September 11, 2019, the Company entered into a new pay-EUR, receive-USD cross-currency swap arrangement with a major financial institution having a maturity date of April 1, 2023. The terms of the cross-currency swap provide for an exchange of principal on a notional amount of $100 million swapped to €90.9 million at maturity. Under the terms of the new cross-currency swap, SWM will pay a fixed amount of Euro-denominated interest at a rate of 5.638% semiannually and receive USD denominated payments at a rate of 6.875% semiannually on the notional amount of the swap.

The following table presents the fair value of asset and liability derivatives and the respective condensed consolidated balance sheet locations at September 30, 2019 ($ in millions):

 

	Asset Derivatives			Liability Derivatives
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedges:
Foreign exchange contracts	Accounts receivable, net	$	4.0	Accrued expenses and other current liabilities	$	4.0
Foreign exchange contracts	Other assets	11.3		Other liabilities	3.7
Interest rate contracts	Accounts receivable, net	—		Other liabilities	1.9
Total derivatives designated as hedges		15.3			9.6
Derivatives not designated as hedges:
Foreign exchange contracts	Accounts receivable, net	0.1		Accrued expenses and other current liabilities	0.1
Total derivatives not designated as hedges		0.1			0.1
Total derivatives		$	15.4		$	9.7

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SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table presents the fair value of asset and liability derivatives and the respective condensed consolidated balance sheet locations at December 31, 2018 ($ in millions):

 

	Asset Derivatives			Liability Derivatives
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedges:
Foreign exchange contracts	Accounts receivable, net	$	2.0	Accrued expenses and other current liabilities	$	1.3
Foreign exchange contracts	Other assets	1.0		Other liabilities	8.8
Interest rate contracts	Other assets	1.8		Other liabilities	—
Total derivatives designated as hedges		4.8			10.1
Derivatives not designated as hedges:
Foreign exchange contracts	Accounts receivable, net	0.1		Accounts payable	—
Total derivatives not designated as hedges		0.1			—
Total derivatives		$	4.9		$	10.1

The following table provides the gross effect that derivative instruments in cash flow hedging relationships had on Accumulated other comprehensive income (loss) and results of operations ($ in millions):

Derivatives Designated as Cash Flow Hedging Relationships	Unrealized Gain (Loss) Recognized in AOCI on Derivatives, Net of Tax												Location of Gain (Loss) Reclassified from AOCI	Gain (Loss) Reclassified from AOCI
	Three Months Ended						Nine Months Ended							Three Months Ended						Nine Months Ended
	September 30,						September 30,							September 30,						September 30,
	2019			2018			2019			2018				2019			2018			2019			2018
Foreign exchange contracts	$	(1.3	)	$	(0.4	)	$	(1.5	)	$	(3.1	)	Net sales	$	(0.3	)	$	(0.1	)	$	(0.9	)	$	0.6
Foreign exchange contracts	—			(0.4		)	0.1			(0.4		)	Other income (expense), net	(0.4		)	0.1			(0.3		)	0.1
Interest rate contracts	0.1			1.2			1.5			4.2			Interest expense	2.5			0.8			5.7			1.7
Total	$	(1.2	)	$	0.4		$	0.1		$	0.7			$	1.8		$	0.8		$	4.5		$	2.4

The Company's designated derivative instruments are highly effective. As such, related to the hedge ineffectiveness or amounts excluded from hedge effectiveness testing, there were no gains or losses recognized immediately in income for the three and nine months ended September 30, 2019 or 2018, other than those related to the cross-currency swap, noted below.

In January 2018, the Company early adopted the guidance in ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities." Upon adoption of this standard, the Company elected to de-designate the original hedging relationship of its pay-EUR, receive-USD cross currency swap and re-designate the cross currency swap with the terms based on the spot rate of the EUR. Prospectively, future changes in the components related to the spot change on the notional will be recorded in OCI and remain there until the hedged subsidiaries are substantially liquidated. Starting with the adoption date, all coupon payments will be recorded in earnings and the initial value of excluded components currently recorded in Accumulated other comprehensive income (loss) as an unrealized translation adjustment will be amortized into interest expense over the remaining 25 months of the swap, resulting in a positive impact to Net income. As of September 30, 2019, the gain, net of taxes, recognized in Other comprehensive loss on all cross currency swap derivatives was $6.7 million. For the three months ended September 30, 2019 and 2018, respectively, $0.2 million and $0.2 million was reclassified from Accumulated other comprehensive

25

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

income (loss) into income as interest expense and $0.3 million and $0.5 million was recognized in income as derivative amounts excluded from effectiveness testing as Interest expense. For the nine months ended September 30, 2019 and 2018, respectively, $0.6 million and $0.6 million was reclassified from Accumulated other comprehensive loss into income as interest expense and $1.2 million and $1.4 million was recognized in income as derivative amounts excluded from effectiveness testing as Interest expense.

The following table provides the effect that derivative instruments not designated as cash flow hedging instruments had on net income ($ in millions):

Derivatives Not Designated as Cash Flow Hedging Instruments	Location of Gain (Loss) Recognized in Income	Amount of Gain (Loss) Recognized in Income
		Three Months Ended					Nine Months Ended
		September 30, 2019			September 30, 2018		September 30, 2019			September 30, 2018
Foreign exchange contracts	Other income (expense), net	$	(0.1	)	$	—	$	(0.1	)	$	(2.1	)

Note 13. Commitments and Contingencies

Litigation

Brazil

Imposto sobre Circulação de Mercadorias e Serviços ("ICMS"), a form of value-added tax in Brazil, was assessed to SWM-B in December of 2000. SWM-B received two assessments from the tax authorities of the State of Rio de Janeiro (the "State") for unpaid ICMS taxes on certain raw materials from January 1995 through October 1998 and from November 1998 through November 2000 (collectively, the "Raw Materials Assessments"). The Raw Materials Assessments concerned the accrual and use by SWM-B of ICMS tax credits generated from the production and sale of certain non-tobacco related grades of paper sold domestically. SWM-B contested the Raw Materials Assessments based on Article 150, VI of the Brazilian Federal Constitution of 1988, which grants immunity from ICMS taxes to papers intended for printing books, newspapers and periodicals, on the ground that tax immunity extends to the raw material inputs used to produce such papers. In 2015, the first chamber of the Federal Supreme Court decided the first Raw Materials Assessment in favor of SWM-B.  On May 24, 2019, the second chamber of the Federal Supreme Court decided Assessment 2 against SWM-B in the amount of approximately $11.6 million. SWM-B, with assistance of outside counsel, is currently evaluating the decision and exploring its options and other defenses to partially satisfy or reduce the judgment and SWM-B plans to pursue these avenues vigorously. However, because the outcome of any reductions and defenses is uncertain, SWM-B recorded an expense sufficient to satisfy this amount in the second quarter of 2019. In the third quarter of 2019, SWM-B reclassified $0.6 million associated with the Raw Materials Assessment to Cost of products sold from interest expense based on additional information received from the Brazilian government. This judgment may be settled over the course of 60 months; however, we have requested that the Court clarify its decision. Until a decision is rendered on our request, we are not obligated to initiate payments. Interest and penalties will continue to accrue until a decision on our request is rendered.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The amounts recorded in the accompanying condensed consolidated statement of income for the nine months ended September 30, 2019 related to the above two assessments consist of the following:

	Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019
Income Statement Classification	(Expense) Benefit			(Expense) Benefit
Cost of products sold1	$	(0.6	)	$	(1.5	)
Operating profit1	(0.6		)	(1.5		)
Other expense2	—			(2.2		)
Interest expense2	0.6			(7.1		)
Income from continuing operations before income taxes	—			(10.8		)
Income tax benefit3	1.0			4.1
Net income	$	1.0		$	(6.7	)

¹Cost of products sold reflects the net of $2.6 million of expense associated with the Raw Materials Assessment and $1.1 million benefit associated with separate litigation against the Brazilian Instituto Nacional do Seguro Social ("INSS"), the Brazilian Social Security Administration, regarding additional assessments of social security contributions charged to the Company in the early 1990s. This benefit is expected to be received in tax credits to be applied against future payments of social security taxes over the following ten to twelve months. Amounts are reflected in Engineered Papers reporting segment in segment disclosures.

²Other expense includes penalties and fees associated with the Raw Materials Assessment. Interest expense relates to the Raw Materials Assessment.

³The Income tax benefit increased as a result of additional information received during the third quarter of 2019.

SWM-B received assessments from the tax authorities of the State for unpaid ICMS and Fundo Estadual de Combate à Pobreza ("FECP", a value-added tax similar to ICMS) taxes on interstate purchases of electricity.  The State issued four sets of assessments against SWM-B, one for May 2006 - November 2007, a second for January 2008 - December 2010, a third for September 2011 - September 2013, which was replaced by a smaller assessment for January - June 2013, and a fourth for July 2013 - December 2017 (collectively the "Electricity Assessments").  SWM-B challenged all Electricity Assessments in administrative proceedings before the State tax council (in the first-level court Junta de Revisão Fiscal and the appellate court (the "Conselho de Contribuintes")) based on Resolution 1.610/89, which defers these taxes on electricity purchased by an "electricity-intensive consumer."  In 2014, a majority of the Conselho de Contribuintes sitting en banc ruled against SWM-B in each of the first and second electricity assessments ($4.4 million and $8.0 million, respectively, based on the foreign currency exchange rate at September 30, 2019), and SWM-B is now pursuing challenges to these assessments in the State judicial system. Different chambers of the judicial court granted SWM-B preliminary injunctions against enforcement of these two assessments in the State judicial system. The Conselho de Contribuintes unanimously upheld SWM-B's challenge to the third Electricity Assessment and dismissed this Electricity Assessment on technical grounds after the State admitted the tax did not apply as it had asserted. Instead, in August 2018, the State filed a revised Electricity Assessment in the amount of $0.6 million for ICMS on electricity purchased during part of 2013. In August 2018, the State filed a fourth Electricity Assessment in the amount of $9.1 million pertaining to ICMS and FECP on electricity purchased from July 2013 to December 2017. SWM-B filed challenges to these recent assessments in the first-level administrative court on the same grounds as the older cases. Both the Junta de Revisão Fiscal and the Conselho de Contribuintes ruled against SWM-B in the last two Electricity Assessments. SWM-B plans to appeal these rulings to the full bench of the Conselho de Contribuintes.  The State issued a new regulation effective January 1, 2018 that only specific industries are “electricity-intensive consumers,” a list that excludes paper manufacturers. SWM-B contends this regulation shows that paper manufacturers were electricity-intensive consumers eligible to defer ICMS before 2018.

SWM-B believes that the Electricity Assessments will ultimately be resolved in its favor. No liability has been recorded in our condensed consolidated financial statements for these assessments based on our evaluation of these matters under the facts and law as presently understood. The Company can give no assurance as to the ultimate outcome of such proceedings.

Europe

The Company's European subsidiaries are parties from time to time to litigation, usually (but not always) related to labor matters. There are approximately 19 such cases pending. In accordance with US GAAP, the Company has recorded

27

SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

on its balance sheet an amount that it believes is adequate as a contingency against probable future losses. There can be no assurance, however, that any losses that might be incurred will be in an amount equal to or less than the amount recorded or that the Company will not have losses in respect of litigation in which no reserve has been taken.

Environmental Matters

The Company's operations are subject to various nations' federal, state and local laws, regulations and ordinances relating to environmental matters. The nature of the Company's operations exposes it to the risk of claims with respect to various environmental matters, and there can be no assurance that material costs or liabilities will not be incurred in connection with such claims. While the Company has incurred in the past several years, and will continue to incur, capital and operating expenditures in order to comply with environmental laws and regulations, it believes that its future cost of compliance with environmental laws, regulations and ordinances, and its exposure to liability for environmental claims and its obligation to participate in the remediation and monitoring of certain hazardous waste disposal sites, will not have a material effect on its financial condition, results of operations or cash flows. However, future events, such as changes in existing laws and regulations (including the enforcement thereof), or unknown contamination of sites owned, operated or used for waste disposal by the Company (including contamination caused by prior owners and operators of such sites or other waste generators), or similar circumstances arising at our unconsolidated joint ventures, may give rise to additional costs which could have a material effect on the Company's financial condition or results of operations.

General Matters

In the ordinary course of its business activities, the Company and its subsidiaries are involved in certain other judicial, administrative and regulatory proceedings involving both private parties and governmental authorities. These proceedings include insured and uninsured regulatory, employment, general and commercial liability, environmental, intellectual property rights and other matters. At this time, the Company does not expect any of these proceedings to have a material adverse effect on its reputation, business, financial condition, results of operations or cash flows. However, as the outcomes of such proceedings are unpredictable, the Company can give no assurance that the results of any such proceedings will not materially affect its reputation, business, financial condition, results of operations or cash flows.

28

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 14. Postretirement and Other Benefits

The Company sponsors pension benefits in the United States, France and Canada and OPEB benefits related to postretirement healthcare and life insurance in the United States and Canada. The Company’s Canadian pension and OPEB benefits are not material and therefore are not included in the following disclosures.

Pension and OPEB Benefits

The components of net pension and OPEB benefit costs for U.S. employees and net pension benefit costs for French employees during the three or nine months ended September 30, 2019 and 2018 were as follows ($ in millions):

	Three Months Ended September 30,
	U.S. Pension Benefits						French Pension Benefits					U.S. OPEB Benefits
	2019			2018			2019			2018		2019		2018
Service cost	$	—		$	—		$	0.3		$	0.2	$	—	$	—
Interest cost	1.2			1.0			0.1			0.1		—		—
Expected return on plan assets	(1.5		)	(1.5		)	(0.1		)	—		—		—
Amortizations and other	0.5			0.7			0.2			0.2		—		0.1
Net periodic benefit cost	$	0.2		$	0.2		$	0.5		$	0.5	$	—	$	0.1

	Nine Months Ended September 30,
	U.S. Pension Benefits						French Pension Benefits						U.S. OPEB Benefits
	2019			2018			2019			2018			2019		2018
Service cost	$	—		$	—		$	0.8		$	0.8		$	—	$	—
Interest cost	3.5			3.2			0.3			0.3			—		—
Expected return on plan assets	(4.4		)	(4.4		)	(0.1		)	(0.1		)	—		—
Amortizations and other	1.5			2.4			0.6			0.6			—		0.2
Net periodic benefit cost	$	0.6		$	1.2		$	1.6		$	1.6		$	—	$	0.2

The components of net periodic benefit cost other than the service cost component are included in Other income (expense), net in the condensed consolidated statements of income. During the fiscal year ending December 31, 2019, the Company expects to recognize approximately $2.0 million of amortization in Accumulated other comprehensive income (loss) related to its U.S. pension and OPEB plans and approximately $0.8 million for its French pension plans.

Note 15. Income Taxes

For interim financial reporting, the Company estimates the annual tax rate based on projected taxable income for the full year and records a quarterly income tax provision in accordance with ASC No. 740-270 "Accounting for Income Taxes in Interim Periods." These interim estimates are subject to variation due to several factors, including the ability of the Company to accurately forecast pre-tax and taxable income and loss by jurisdiction, changes in laws or regulations, and expenses or losses for which tax benefits are not recognized. Jurisdictions with a projected loss for the year or an actual year-to-date loss where no tax benefit can be recognized are excluded from the estimated annual effective tax rate. The impact of including these jurisdictions on the quarterly effective tax rate calculations could result in a higher or lower effective tax rate during a particular quarter, based upon the mix and timing of actual earnings versus annual projections.

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 ("Tax Act") was enacted into law effective January 1, 2018. The new legislation contains several key tax provisions that affected the Company, which include but are not limited to a one-time deemed repatriation tax on post-1986 accumulated earnings and profits of the undistributed earnings of foreign subsidiaries (“transition tax”), a reduction of the federal corporate income tax rate from 35% to 21%, and other U.S. reform items. Due to the timing and significance of the Tax Act, the Securities and Exchange Commission issued

29

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”), which provided a measurement period of up to one year through December 31, 2018 to report the impact of the new US tax law. In 2018, the Company decreased its provisional estimates of transition tax, related currency implications, state taxes and deferred tax rate change effect of the new law by $13.9 million, of which $13.0 million was recorded during the three months ended September 30, 2018. The reduction from the provisional 2017 amounts were primarily due to further transition tax analysis of accumulated earnings and foreign taxes paid. As of December 31, 2018, the Company had completed its accounting for the tax effects of the Tax Act.

Prior to the passage of the Tax Act, the Company asserted that substantially all of the undistributed earnings of its foreign subsidiaries were considered indefinitely reinvested and accordingly, no deferred taxes were provided. As a result of the Tax Act, the Company has significant previously taxed income from its foreign subsidiaries, as a result of transition tax, that is generally able to be repatriated free of U. S. federal tax. In addition, future earnings of foreign subsidiaries are generally expected to be able to be repatriated free of U.S. federal income tax because these earnings were taxed in the U.S. under the GILTI regime or would be eligible for a dividends received deduction. Therefore, the Company does not intend to assert indefinite reinvestment on future cash earnings. While the Company will have to provide for withholding taxes and U.S. state taxes on the future earnings, these amounts are not expected to be significant.

All unrecognized tax positions could impact the Company's effective tax rate if recognized. With respect to penalties and interest incurred from income tax assessments or related to unrecognized tax benefits, the Company’s policy is to classify penalties as provision for income taxes and interest as interest expense in its condensed consolidated statement of income. There were no material income tax penalties or interest accrued during the three or nine months ended September 30, 2019 or 2018.

The Company's effective tax rate from continuing operations was 10.8% and (16.0)% for the three months ended September 30, 2019 and 2018, respectively. The 10.8% in the three months ended September 30, 2019, was lower than our full year rate primarily due to favorable discrete adjustments recorded in the period, while the prior-year (16.0%) rate included a favorable one-time transition tax adjustment. The Company's effective tax rate from continuing operations was 16.4% and 10.6% for the nine months ended September 30, 2019 and 2018, respectively. The 16.4% rate in the current nine-month period was impacted by favorable discrete items, while the prior-year 10.6% rate included a favorable one-time transition tax adjustment.

30

SCHWEITZER-MAUDUIT INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 16. Segment Information

The Company's two operating product line segments are also the Company's reportable segments: Advanced Materials & Structures and Engineered Papers. The AMS segment primarily produces engineered resin-based rolled goods such as nets, films and other non-wovens for use in high-performance applications in the filtration, infrastructure and construction, transportation, medical and industrial end-markets. It consists of the operations of various acquisitions. The EP segment primarily produces various cigarette papers and Recon for sale to cigarette manufacturers. The EP segment also includes non-tobacco paper for battery separators, printing and writing, drinking straw wrap and furniture laminates.

Information about Net Sales and Operating Profit

The accounting policies of these segments are the same as those described in Note 2. Summary of Significant Accounting Policies in the notes to the consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2018. The Company primarily evaluates segment performance and allocates resources based on operating profit. Expense amounts not associated with segments are referred to as unallocated expenses.

($ in millions)	Net Sales
	Three Months Ended								Nine Months Ended
	September 30, 2019				September 30, 2018				September 30, 2019				September 30, 2018
Advanced Materials & Structures	$	126.1	49.2	%	$	120.8	46.4	%	$	373.3	47.6	%	$	360.1	45.4	%
Engineered Papers	130.3		50.8		139.5		53.6		411.0		52.4		432.5		54.6
Total Consolidated	$	256.4	100.0	%	$	260.3	100.0	%	$	784.3	100.0	%	$	792.6	100.0	%

($ in millions)	Operating Profit
	Three Months Ended										Nine Months Ended
	September 30, 2019					September 30, 2018					September 30, 2019					September 30, 2018
Advanced Materials & Structures	$	19.3		55.8	%	$	11.9		38.3	%	$	54.6		50.0	%	$	39.5		36.5	%
Engineered Papers	27.3			78.9		27.5			88.4		88.5			81.0		94.7			87.5
Unallocated	(12.0		)	(34.7	)	(8.3		)	(26.7	)	(33.9		)	(31.0	)	(26.0		)	(24.0	)
Total Consolidated	$	34.6		100.0	%	$	31.1		100.0	%	$	109.2		100.0	%	$	108.2		100.0	%

($ in millions)	Segment Assets
	September 30, 2019		December 31, 2018
Advanced Materials & Structures	$	765.3	$	796.1
Engineered Papers	502.5		527.4
Unallocated	182.4		143.0
Total Consolidated	$	1,450.2	$	1,466.5

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Item 2.   Management's Discussion and Analysis of Financial Condition and Results of Operations

The following is a discussion of our financial condition and results of operations. This discussion should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this report and the audited consolidated financial statements and related notes and the selected financial data included in our Annual Report on Form 10-K for the year ended December 31, 2018. The discussion of our financial condition and results of operations includes various forward-looking statements about our markets, the demand for our products, our future prospects and other matters. These statements are based on certain assumptions and estimates that we consider reasonable. For information about risks and exposures relating to us and our business, you should read the section entitled "Risk Factors" in Part 1, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2018 and the sections entitled "Forward-Looking Statements" at the end of this Item 2 and "Risk Factors" in Part II, Item 1A of this report. Unless the context indicates otherwise, references to "SWM", "we", "us", "our", the "Company" or similar terms include Schweitzer-Mauduit International, Inc. and our consolidated subsidiaries.

This Management's Discussion and Analysis of Financial Condition and Results of Operations is designed to provide a reader of our financial statements with an understanding of our recent performance, our financial condition and our prospects.

SUMMARY

($ in millions, except per share amounts)	Three Months Ended								Nine Months Ended
	September 30,				Percent of Net Sales				September 30,					Percent of Net Sales
	2019		2018		2019		2018		2019		2018			2019		2018
Net sales	$	256.4	$	260.3	100.0	%	100.0	%	$	784.3	$	792.6		100.0	%	100.0	%
Gross profit	72.2		65.3		28.2		25.1		219.1		214.7			27.9		27.1
Restructuring & impairment expense	1.6		0.4		0.6		0.2		2.0		1.4			0.3		0.2
Operating profit	34.6		31.1		13.5		11.9		109.2		108.2			13.9		13.7
Interest expense	6.7		7.3		2.6		2.8		29.6		20.1			3.8		2.5
Income from continuing operations	27.7		40.9		10.8		15.7		65.6		87.6			8.4		11.1
Income (loss) from discontinued operations	—		0.1		—		—		—		(0.3		)	—		—
Net income	$	27.7	$	41.0	10.8	%	15.8	%	$	65.6	$	87.3		8.4	%	11.0	%
Diluted earnings per share from continuing operations	$	0.90	$	1.33					$	2.12	$	2.84
Diluted earnings per share	$	0.90	$	1.33					$	2.12	$	2.83
Cash provided by operations	$	63.9	$	37.1					$	118.9	$	93.2
Capital spending	$	4.8	$	6.1					$	20.0	$	19.8

32

RESULTS OF OPERATIONS

Three Months Ended September 30, 2019 Compared with the Three Months Ended September 30, 2018

Net Sales

($ in millions)

	Three Months Ended
	September 30, 2019		September 30, 2018		Change			Percent Change
Advanced Materials & Structures	$	126.1	$	120.8	$	5.3		4.4	%
Engineered Papers	130.3		139.5		(9.2		)	(6.6	)
Total	$	256.4	$	260.3	$	(3.9	)	(1.5	)%

Net sales were $256.4 million in the three months ended September 30, 2019 compared with $260.3 million in the prior-year period. The decrease in net sales consisted of the following ($ in millions):

	Amount			Percent
Changes due to net foreign currency impacts	$	(3.4	)	(1.3	)%
Changes in volume, product mix and selling prices	(0.5		)	(0.2	)
Total	$	(3.9	)	(1.5	)%

AMS segment net sales were $126.1 million for the three months ended September 30, 2019 compared to $120.8 million during the prior-year period. The increase of $5.3 million or 4.4% was primarily due to strong growth in transportation and filtration products.

EP segment net sales during the three months ended September 30, 2019 of $130.3 million decreased by $9.2 million, or 6.6%, versus net sales of $139.5 million in the prior-year quarter.  Compared to the prior-year period, the decrease in net sales was primarily the result of lower sales volume and the negative impact of unfavorable foreign currency movements, offset by the combined improvement in average selling prices and mix of products sold.

Gross Profit

($ in millions)

	Three Months Ended							Percent Change		Percent of Net Sales
	September 30, 2019		September 30, 2018		Change					2019		2018
Net sales	$	256.4	$	260.3	$	(3.9	)	(1.5	)%	100.0	%	100.0	%
Cost of products sold	184.2		195.0		(10.8		)	(5.5	)	71.8		74.9
Gross profit	$	72.2	$	65.3	$	6.9		10.6	%	28.2	%	25.1	%

Gross profit increased by $6.9 million during the three months ended September 30, 2019 to $72.2 million versus the prior-year period of $65.3 million. AMS gross profit increased by $6.8 million, primarily due to higher sales, lower resin input costs, reduced fixed costs and improved manufacturing efficiencies. In the EP segment, gross profit increased by $0.1 million, primarily due to positive price/mix movements within the portfolio, improved manufacturing performance, and lower wood pulp input costs, offset by the negative impact of lower volumes and unfavorable foreign currency movements.

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Nonmanufacturing Expenses

($ in millions)

	Three Months Ended							Percent Change		Percent of Net Sales
	September 30, 2019		September 30, 2018		Change					2019		2018
Selling expense	$	8.6	$	8.9	$	(0.3	)	(3.4	)%	3.4	%	3.4	%
Research expense	3.1		3.6		(0.5		)	(13.9	)	1.2		1.4
General expense	24.3		21.3		3.0			14.1		9.4		8.2
Nonmanufacturing expenses	$	36.0	$	33.8	$	2.2		6.5	%	14.0	%	13.0	%

Nonmanufacturing expenses in the three months ended September 30, 2019 increased by $2.2 million to $36.0 million from $33.8 million in the prior-year period, primarily due to higher deferred compensation expense and higher IT expense.

Restructuring and Impairment Expense

($ in millions)

	Three Months Ended							Percent Change		Percent of Net Sales
	September 30, 2019		September 30, 2018		Change					2019		2018
Advanced Materials & Structures	$	—	$	0.4	$	(0.4	)	(100.0	)%	—	%	0.3	%
Engineered Papers	1.6		—		1.6			N/A		1.2		—
Unallocated expenses	—		—		—			N/A
Total	$	1.6	$	0.4	$	1.2		300.0	%	0.6	%	0.2	%

The Company incurred total restructuring and impairment expense of $1.6 million and $0.4 million in the three months ended September 30, 2019 and 2018, respectively. In the 2019 period, the restructuring expense primarily related to $1.6 million in consulting fees and severance accruals for employees at our EP manufacturing operations in the U.S., Brazil and France.

In the 2018 period, the restructuring expense primarily related to $0.3 million in severance accruals for employees at our AMS manufacturing operations in the U.S.

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Operating Profit

($ in millions)

	Three Months Ended									Percent Change		Return on Net Sales
	September 30, 2019			September 30, 2018			Change					2019		2018
Advanced Materials & Structures	$	19.3		$	11.9		$	7.4		62.2	%	15.3	%	9.9	%
Engineered Papers	27.3			27.5			(0.2		)	(0.7	)	21.0		19.7
Unallocated expenses	(12.0		)	(8.3		)	(3.7		)	(44.6	)
Total	$	34.6		$	31.1		$	3.5		11.3	%	13.5	%	11.9	%

Operating profit was $34.6 million in the three months ended September 30, 2019 compared with $31.1 million during the prior-year period.

The AMS segment's operating profit in the three months ended September 30, 2019 was $19.3 million compared to $11.9 million in the prior-year period. The increase of $7.4 million, or 62.2%, was primarily due to higher sales, lower raw materials costs, and improved manufacturing efficiencies.

The EP segment's operating profit in the three months ended September 30, 2019 was $27.3 million, a decrease of $0.2 million, or 0.7%, from $27.5 million in the prior-year period.  The decrease was primarily due to lower volumes and higher restructuring costs, partially offset by the combination of favorable pricing and mix of products sold, improved manufacturing performance, SG&A reductions, and lower wood pulp input costs.

Unallocated expenses in the three months ended September 30, 2019 were $12.0 million compared to $8.3 million in the prior-year period, an increase of $3.7 million, or 44.6%, primarily due to higher deferred compensation expense and higher IT expense.

Non-Operating Expenses

Interest expense was $6.7 million in the three months ended September 30, 2019, a decrease from $7.3 million in the prior-year period and included a $0.6 million reclassification related to a tax accrual in Brazil as discussed in Note 13, Commitments and Contingencies.  The decrease in interest expense was due to the reclassification of the Brazilian tax accrual at the end of the third quarter in 2019 compared to the same period last year. The weighted average effective interest rate on our debt facilities was approximately 4.43% and 5.01% for the three months ended September 30, 2019 and 2018, respectively.

Other income, net, was $1.7 million during the three months ended September 30, 2019, a decrease of $9.5 million compared to $11.2 million during the three months ended September 30, 2018. The decrease from the prior year is primarily due to the $10.2 million decrease in the fair value of the contingent consideration liability, recorded in the third quarter of 2018, related to the Conwed acquisition in 2018.

Income Taxes

A $3.2 million provision for income taxes in the three months ended September 30, 2019 resulted in an effective tax rate of 10.8%, which included favorable discrete items to bring the Company's year-to-date effective tax rate to 16.4%. The 10.8% compares with (16.0)% in the prior-year quarter, when the Company recorded a favorable one-time transition tax adjustment.  

Income from Equity Affiliates

Income from equity affiliates, which reflects the results of operations of CTM and CTS, was $1.3 million in the three months ended September 30, 2019 compared with income of $0.3 million during the prior-year period.

35

Net Income and Income per Share

Net income in the three months ended September 30, 2019 was $27.7 million, or $0.90 per diluted share, compared with $41.0 million, or $1.33 per diluted share, during the prior-year period.  The decrease in net income was primarily due to a $13.0 million, or $0.43 per diluted share favorable transition tax adjustment and a $10.2 million, or $0.25 per diluted share benefit as a result of the decrease in fair value of the Conwed contingent liability in the same period in the prior year. Net income in the three months ended September 30, 2019 includes higher deferred compensation expenses and higher IT expenses compared to the same period in the prior year. These items were partially offset by the increase in AMS segment net sales and by operating profit growth of $3.5 million.

Nine Months Ended September 30, 2019 Compared with the Nine Months Ended September 30, 2018

Net Sales

($ in millions)

	Nine Months Ended
	September 30, 2019		September 30, 2018		Change			Percent Change
Advanced Materials & Structures	$	373.3	$	360.1	$	13.2		3.7	%
Engineered Papers	411.0		432.5		(21.5		)	(5.0	)
Total	$	784.3	$	792.6	$	(8.3	)	(1.0	)%

Net sales were $784.3 million in the nine months ended September 30, 2019 compared with $792.6 million in the prior-year period. The decrease in net sales consisted of the following ($ in millions):

	Amount			Percent
Changes in volume, product mix and selling prices	$	8.8		1.1	%
Changes due to net foreign currency impacts	(17.2		)	(2.1	)
Changes due to royalties	0.1			—
Total	$	(8.3	)	(1.0	)%

AMS segment net sales were $373.3 million for the nine months ended September 30, 2019 compared to $360.1 million during the prior-year period. The increase of $13.2 million or 3.7% was due primarily to strong growth in transportation, filtration, and medical products.

EP segment net sales during the nine months ended September 30, 2019 of $411.0 million decreased by $21.5 million versus net sales of $432.5 million in the prior-year period.  The decrease in net sales was primarily the result of the negative impact of unfavorable foreign currency movements and lower sales volume, partially offset by the combined improvement in average selling prices and mix of products sold.

Gross Profit

($ in millions)

	Nine Months Ended							Percent Change		Percent of Net Sales
	September 30, 2019		September 30, 2018		Change					2019		2018
Net sales	$	784.3	$	792.6	$	(8.3	)	(1.0	)%	100.0	%	100.0	%
Cost of products sold	565.2		577.9		(12.7		)	(2.2	)	72.1		72.9
Gross profit	$	219.1	$	214.7	$	4.4		2.0	%	27.9	%	27.1	%

Gross profit increased by $4.4 million during the nine months ended September 30, 2019 to $219.1 million versus the prior-year period of $214.7 million. AMS gross profit increased by $11.9 million, primarily due to higher sales, lower

36

resin input costs, reduced fixed costs and improved manufacturing efficiencies. In the EP segment, gross profit decreased by $7.5 million, primarily due to the unfavorable impact of foreign currency effects, lower sales volumes and higher input costs, partially offset by the combined effect of higher average selling prices and mix of products sold.

Nonmanufacturing Expenses

($ in millions)

	Nine Months Ended							Percent Change		Percent of Net Sales
	September 30, 2019		September 30, 2018		Change					2019		2018
Selling expense	$	25.8	$	27.2	$	(1.4	)	(5.1	)%	3.3	%	3.4	%
Research expense	10.1		11.8		(1.7		)	(14.4	)	1.3		1.5
General expense	72.0		66.1		5.9			8.9		9.2		8.4
Nonmanufacturing expenses	$	107.9	$	105.1	$	2.8		2.7	%	13.8	%	13.3	%

Nonmanufacturing expenses in the nine months ended September 30, 2019 increased by $2.8 million to $107.9 million from $105.1 million in the prior-year period, primarily due to higher deferred compensation expense and higher IT expense.

Restructuring and Impairment Expense

($ in millions)

	Nine Months Ended							Percent Change		Percent of Net Sales
	September 30, 2019		September 30, 2018		Change					2019		2018
Advanced Materials & Structures	$	—	$	1.2	$	(1.2	)	(100.0	)%	—	%	0.3	%
Engineered Papers	2.0		0.2		1.8			900.0		0.5		—
Unallocated expenses	—		—		—			N/A
Total	$	2.0	$	1.4	$	0.6		42.9	%	0.3	%	0.2	%

The Company incurred total restructuring and impairment expense of $2.0 million in the nine months ended September 30, 2019 compared with $1.4 million in the nine months ended September 30, 2018. In the 2019 period, the restructuring expense primarily related to $2.0 million in consulting fees and severance accruals for employees at our manufacturing operations in the U.S., Brazil and France.

In the comparable 2018 period, the restructuring expense primarily related to $1.1 million in severance accruals for employees at our EP and AMS manufacturing operations in the U.S. and France, as well as an asset impairment charge of $0.3 million on equipment in our U.S. AMS manufacturing operations.

37

Operating Profit

($ in millions)

	Nine Months Ended									Percent Change		Return on Net Sales
	September 30, 2019			September 30, 2018			Change					2019		2018
Advanced Materials & Structures	$	54.6		$	39.5		$	15.1		38.2	%	14.6	%	11.0	%
Engineered Papers	88.5			94.7			(6.2		)	(6.5	)	21.5		21.9
Unallocated expenses	(33.9		)	(26.0		)	(7.9		)	(30.4	)
Total	$	109.2		$	108.2		$	1.0		0.9	%	13.9	%	13.7	%

Operating profit was $109.2 million in the nine months ended September 30, 2019 compared with $108.2 million during the prior-year period.

The AMS segment's operating profit in the nine months ended September 30, 2019 was $54.6 million compared to $39.5 million in the prior-year period. The increase of $15.1 million, or 38.2%, was primarily due to higher sales, lower resin input costs, reduced fixed costs and improvements in SG&A.

The EP segment's operating profit in the nine months ended September 30, 2019 was $88.5 million, a decrease of $6.2 million, or 6.5%, from $94.7 million in the prior-year period.  The decrease was primarily due to lower sales volume, expenses related to the Brazilian ICMS tax assessment, the unfavorable impact of foreign currency effects and higher input costs, partially offset by the combined effect of higher average selling prices and mix of products sold and lower SG&A expenses within the segment.

Unallocated expenses in the nine months ended September 30, 2019 were $33.9 million compared to $26.0 million in the prior-year period, an increase of $7.9 million, or 30.4%, primarily the result of higher deferred compensation expense and higher IT expense.

Non-Operating Expenses

Interest expense was $29.6 million in the nine months ended September 30, 2019, an increase from $20.1 million in the prior-year period and included $7.1 million of interest related to a tax accrual in Brazil as discussed in more detail in Note 13, Commitments and Contingencies. The weighted average effective interest rate on our debt facilities was approximately 4.43% and 4.01% for the nine months ended September 30, 2019 and 2018, respectively. As of September 30, 2019 compared to the prior-year period, the interest accrual in Brazil and a higher average interest rate as a result of the bond issuance in the third quarter of 2018 were primarily responsible for the increase.

Other expense, net, was $1.6 million during the nine months ended September 30, 2019, a decrease of $12.0 million compared to $10.4 million in Other income, net, during the nine months ended September 30, 2018. This decrease was primarily due to the $10.2 million decrease in the fair value of the contingent liability related to the Conwed acquisition during the nine months ended September 30, 2018 and the $2.2 million accrual in the nine months ended September 30, 2019 related to penalties and fees associated with the Brazilian ICMS Tax Assessment, as discussed in Note 13. Commitments and Contingencies.

Income Taxes

A $12.8 million provision for income taxes in the nine months ended September 30, 2019 resulted in an effective tax rate of 16.4% compared with 10.6% in the prior-year period.  The prior-year period included significant net favorable impacts of the one-time transition tax adjustment.

Income (loss) from Equity Affiliates

Income from equity affiliates was $0.4 million in the nine months ended September 30, 2019 compared with a loss of $0.5 million during the prior-year period.

38

Net Income and Income per Share

Net income in the nine months ended September 30, 2019 was $65.6 million, or $2.12 per diluted share, compared with $87.3 million, or $2.83 per diluted share, during the prior-year period.  The decrease in net income was primarily due to a $13.0 million, or $0.43 per diluted share favorable transition tax adjustment and a $10.2 million, or $0.25 per diluted share benefit as a result of the decrease in fair value of the Conwed contingent liability in the same period in the prior year. Net income in the nine months ended September 30, 2019 includes higher deferred compensation expenses and higher IT expenses compared to the same period in the prior year. These items were partially offset by the increase in AMS segment net sales and by a slight increase in operating profit.

39

LIQUIDITY AND CAPITAL RESOURCES

A major factor in our liquidity and capital resource planning is our generation of cash flow from operations, which is sensitive to changes in the mix of products sold, sales volume and selling prices of our products, as well as changes in our production volumes, costs, foreign currency exchange rates and working capital. Our liquidity is supplemented by funds available under our New Credit Agreement with a syndicate of banks that is used as either operating conditions or strategic opportunities warrant.

As of September 30, 2019, $65.1 million of the Company's $84.9 million of cash and cash equivalents was held by foreign subsidiaries. We believe that our sources of liquidity and capital, including cash on-hand, cash generated from operations and our existing credit facilities, will be sufficient to finance our continued operations and growth strategy.

Cash Requirements

As of September 30, 2019, we had net operating working capital of $191.4 million and cash and cash equivalents of $84.9 million, compared with net operating working capital of $195.2 million and cash and cash equivalents of $93.8 million as of December 31, 2018.  These changes primarily reflect the impacts of changes in currency exchange rates, net repayments of debt and changes in operating working capital presented on the condensed consolidated statements of cash flow contained in this report.

Net cash provided by operations was $118.9 million in the nine months ended September 30, 2019 compared with $93.2 million in the prior-year period. Net cash provided by operations increased primarily due to a $22.2 million improvement in working capital related cash flows, primarily favorable changes in accounts receivable balances compared to prior year.

In the nine months ended September 30, 2019, net changes in operating working capital used cash of $9.1 million compared to the prior-year period, in which net changes in operating working capital used cash of $31.3 million. This change in working capital outflows compared to the nine months ended September 30, 2018 was primarily driven by increased cash flows related to lower Accounts receivable and Accrued expenses and other current liabilities.

Cash used for investing activities during the nine months ended September 30, 2019 was $22.8 million, compared to $18.3 million in the prior-year period, and consisted primarily of capital spending in both periods. The Company has increased its investments in capacity in AMS as well as IT systems to support growth initiatives.

During the nine months ended September 30, 2019, financing activities consisted of $60.9 million in net repayments on short-term and long-term debt, $40.8 million in cash paid for dividends declared to SWM stockholders in the first nine months of 2019 and share repurchases of $1.0 million. In the prior-year period, financing activities consisted of $42.2 million in net repayments on short-term and long-term debt, $39.7 million in cash paid for dividends declared to SWM stockholders in the first nine months of 2018, $3.4 million in payments for debt issuance costs and share repurchases of $2.8 million.

The Company presently believes that the sources of liquidity discussed above are sufficient to meet its anticipated funding needs for the foreseeable future.

Dividend Payments

We have declared and paid cash dividends on our common stock every fiscal quarter since the second quarter of 1996. On November 4, 2019, we announced a cash dividend of $0.44 per share payable on December 20, 2019 to stockholders of record as of November 29, 2019. The covenants contained in our Indenture and New Credit Agreement (as defined below) require that we maintain certain financial ratios, as disclosed in Note 11. Debt, of the notes to the unaudited condensed consolidated financial statements, none of which under normal business conditions we would expect to materially limit our ability to pay such dividends. We plan to continue to assess our dividend policy in light of our capital allocation strategy, cash generation, debt levels and ongoing requirements for cash to fund operations and to pursue possible strategic opportunities.

40

Share Repurchases

In the nine months ended September 30, 2019, we repurchased and retired 25,297 shares of our common stock at a cost of $1.0 million for the value of employees' stock-based compensation share awards surrendered to satisfy their personal statutory income tax withholding obligations. See Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

In the nine months ended September 30, 2018, we repurchased and retired 69,758 shares of our common stock for $2.8 million for the value of employees' stock-based compensation share awards surrendered to satisfy their personal statutory income tax withholding obligations.

Debt Instruments and Related Covenants

Debt Instruments ($ in millions)	Nine Months Ended
	September 30, 2019			September 30, 2018
Changes in short-term debt	$	(0.1	)	$	(1.4	)
Proceeds from issuances of long-term debt	0.1			636.1
Payments on long-term debt	(60.9		)	(676.9		)
Net repayments of borrowings	$	(60.9	)	$	(42.2	)

Net repayments on borrowings were $60.9 million during the nine months ended September 30, 2019. 

Unused borrowing capacity under the New Credit Agreement was $476.8 million as of September 30, 2019. We also had availability under our bank overdraft facilities of $6.1 million as of September 30, 2019.

The Company was in compliance with all of its covenants under the Indenture and New Credit Agreement at September 30, 2019. With the current level of borrowing and forecasted results, we expect to remain in compliance with our credit agreement financial covenants.

Our total debt to capital ratios, as calculated under the New Credit Agreement, at September 30, 2019 and December 31, 2018 were 49.4% and 52.7%, respectively.

Off-Balance Sheet Arrangements

As of September 30, 2019, we did not have any significant off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

OTHER FACTORS AFFECTING LIQUIDITY AND CAPITAL RESOURCES

Our pension obligations are funded by our separate pension trusts, which held $115.2 million in assets at December 31, 2018. The combined projected benefit obligation of our U.S. and French pension plans was underfunded by $26.6 million as of December 31, 2018. We make contributions to our pension trusts based on many factors, including regulatory guidelines, investment returns of the trusts and availability of cash for pension contributions compared to other priorities. The Company is not required to contribute during 2019 to its U.S. and French pension plans although, it may make discretionary contributions dependent on market conditions to remain aligned with its investment policy statement.

The EP segment's PDM Industries plant has a minimum annual commitment of approximately $1.5 million per year for calcium carbonate purchases, a raw material used in the manufacturing of some paper products, which totals approximately $9.1 million through 2024. Future purchases are expected to be at levels that exceed such minimum levels under these contracts.

The Company has agreements with an energy co-generation supplier in France whereby the supplier constructed and operates a co-generation facility at certain plants and supplies steam that is used in the operation of these plants. The

41

Company is committed to purchasing minimum annual amounts of steam generated by these facilities under the agreements through 2030. These minimum annual commitments total approximately $7.5 million. The Company's current and expected requirements for steam at these facilities are at levels that exceed the minimum levels under the contracts.

The EP segment's Brazilian plant, SWM-B, has an agreement for the transmission and distribution of energy that covers all of the plant's consumption of electrical energy valued at approximately $3.1 million annually through 2020. Additionally, SWM-B has an agreement for natural gas valued at approximately $7.0 million annually through 2020. The French plants have contracts for natural gas to be distributed to and consumed at PdM, LTRI and St. Girons. The value of the natural gas and distribution to be provided under these contracts is estimated at approximately $3.1 million annually through 2021. Additionally, the French plants have contracts for electricity to be distributed to and consumed at PdM, LTRI and St. Girons. The value of the electricity and distribution to be provided under these contracts is estimated at approximately $6.4 million in 2019. The Spay, France plant has a contract to consume biomass at approximately $1.7 million in 2019.

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of Private Securities Litigation Reform Act of 1995 that are subject to the safe harbor created by that Act and other legal protections.  Forward-looking statements, include, without limitation, those regarding 2019 outlook and future performance, mergers and acquisitions, future market trends, future RTL sales and volume trends, smoking attrition rates, synergies or growth from acquisitions, incurrence of additional debt, adoption of LIP standards in new regions, reverse osmosis water filtration and global drinking water demands, integration, and growth prospects (including international growth), the deductibility of goodwill associated with the Conwed acquisition, impact of our restructuring actions, post-retirement healthcare and life insurance payments, impact of the LIP intellectual property litigation and opposition proceedings, the amount of capital spending and/or common stock repurchases, the profitability of CTS, pricing pressures (including related to LIP), future cash flows, benefits associated with our global asset realignment (including possible non-recurrence of one-time tax benefits, lower or higher effective tax rates), purchase accounting impacts, impacts of our ongoing operational excellence and other cost-reduction initiatives, increasing revenues coming from our non-tobacco operations, and other statements generally identified by words such as "believe," "expect," "intend," "plan," "potential," "anticipate," "project," "appear," "should," "could," "may," "will," "typically" and similar words. These statements are not guarantees of future performance and involve certain risks and uncertainties that may cause actual results to differ materially from our expectations as of the date of this report. These risks include, among other things, those set forth in Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2018.

All forward-looking statements made in this document are qualified by these cautionary statements. Forward-looking statements herein are made only as of the date of this document, and we do not undertake any obligation, other than as may be required by law, to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, or changes in future operating results over time or otherwise.

Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance unless expressed as such, and should only be viewed as historical data.

42

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our market risk exposure at September 30, 2019 is consistent with, and not materially different than, the market risk and discussion of exposure presented under the caption “Quantitative and Qualitative Disclosures about Market Risk” in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2018.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We currently have in place systems relating to disclosure controls and procedures designed to ensure the timely recording, processing, summarizing and reporting of information required to be disclosed in periodic reports under the Securities Exchange Act of 1934, as amended. These disclosure controls and procedures include those designed to ensure that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions about required disclosure. Upon completing our review and evaluation of the effectiveness of our disclosure controls and procedures as of September 30, 2019, our Chief Executive Officer and Chief Financial Officer have concluded that these controls and procedures were effective as of September 30, 2019.

Changes in Internal Control Over Financial Reporting

No changes in our internal control over financial reporting were identified as having occurred in the fiscal quarter ended September 30, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

The Company is involved in various legal proceedings and disputes. See Note 20. Commitments and Contingencies of the notes to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2018 and Note 13. Commitments and Contingencies of the notes to the unaudited condensed consolidated financial statements included in this report. Except as may have been referenced elsewhere in this report, there have been no material developments with regard to these matters.

Item 1A. Risk Factors

As of September 30, 2019, there were no material changes in the risk factors previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2018.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of Equity Securities By the Issuer and Affiliated Purchasers

The following table indicates the cost of and number of shares of the Company's common stock it repurchased during 2019:

Issuer Purchases of Equity Securities
Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs			Approximate Dollar Value of Shares that May Yet be Purchased Under the Programs
				(# shares)	($ in millions)		($ in millions)
January 1 - March 31, 2019	24,372	$	37.59	—	$	—	$	—
April 1 - June 30, 2019	773	34.84
July 1-31, 2019	152	33.33
August 1-31, 2019	—	—		—	—		—
September 1-30, 2019	—	—		—	—		—
Total Year-to-Date 2019	25,297	$	37.48	—	$	—	$	—

From time to time, the Company uses corporate 10b5-1 plans to allow for share repurchases to be made at predetermined stock price levels, without restricting such repurchases to specific windows of time.  Any future common stock repurchases will be dependent upon various factors, including the Company's stock price, strategic opportunities and cash availability.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

44

Item 6. Exhibits

Exhibit Number	Exhibit
3.1	Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 10-Q for the quarter ended September 30, 2009).
3.2	Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on February 22, 2019).
31.1	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/15(d)-14(a) of the Securities Exchange Act of 1934, as amended.
31.2	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/15(d)-14(a) of the Securities Exchange Act of 1934, as amended.
32	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following materials from the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the condensed consolidated statements of income, (ii) the condensed consolidated statements of comprehensive income (loss), (iii) the condensed consolidated balance sheets, (iv) the condensed consolidated statements of changes in stockholders' equity, (v) the condensed consolidated statements of cash flow, and (vi) notes to condensed consolidated financial statements.

45

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Schweitzer-Mauduit International, Inc.

(Registrant)

By:	/s/ Andrew Wamser
	Andrew Wamser Executive Vice President and Chief Financial Officer (duly authorized officer and principal financial officer)
	November 4, 2019

By:	/s/ Michael Schmit
	Michael Schmit Corporate Controller and Chief Accounting Officer (principal accounting officer)
	November 4, 2019

46

GLOSSARY OF TERMS

The following are definitions of certain terms that may be used in this Quarterly Report on Form 10-Q filing:

• "Flax" is a cellulose fiber from a flax plant used as a raw material in the production of certain cigarette papers.

• "Net debt to Adjusted EBITDA ratio" is a financial measurement used in bank covenants where "Net Debt" is defined as consolidated total debt minus unrestricted cash and cash equivalents and "Adjusted EBITDA" is defined as net income plus the sum of interest expense, income tax expense, depreciation and amortization, restructuring and impairment charges, income or loss from discontinued operations, and certain other non-cash charges less amortization of deferred revenue and interest in the earnings of equity affiliates to the extent such earnings are not distributed to the Company.

• "Total debt to capital ratio" is total debt divided by the sum of total debt and total stockholders' equity.

• "Net operating working capital" is accounts receivable, inventory, income taxes receivable assets held for sale and prepaid expense, less accounts payable, accrued expenses and other current liabilities and income taxes payable.

• "Polyurethane" is a polymer composed of organic units joined by carbamate (urethane) links.

• "Reconstituted tobacco" is produced in two forms: leaf, or reconstituted tobacco leaf, and wrapper and binder products. Reconstituted tobacco leaf is blended with virgin tobacco as a design aid to achieve certain attributes of finished cigarettes. Wrapper and binder are reconstituted tobacco products used by manufacturers of cigars.

• "Reverse osmosis" is a water purification technology that uses a semipermeable membrane to remove larger particles from drinking water.

• "Thermoplastics" are a plastic material, polymer, that becomes pliable or moldable above a specific temperature and solidifies upon cooling.

• "Tobacco paper" includes cigarette paper which wraps the column of tobacco within a cigarette and has varying properties such as basis weight, porosity, opacity, tensile strength, texture and burn rate, as well as plug wrap paper which wraps the outer layer of a cigarette filter and is used to hold the filter materials in a cylindrical form, and tipping paper which joins the filter element to the tobacco-filled column of the cigarette and is both printable and glueable at high speeds.

47

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Dr. Jeffrey Kramer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Schweitzer-Mauduit International, Inc. (the “Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: November 4, 2019

/s/ Dr. Jeffrey Kramer

Dr. Jeffrey Kramer

Chief Executive Officer and Director

A signed original of this written statement required by Section 302 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Andrew Wamser, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Schweitzer-Mauduit International, Inc. (the “Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: November 4, 2019

/s/ Andrew Wamser

Andrew Wamser

Executive Vice President and

Chief Financial Officer

A signed original of this written statement required by Section 302 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32

Exhibit 32

CERTIFICATION OF PERIODIC FINANCIAL REPORTS

UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, in their respective capacities as chief executive officer and chief financial officer of Schweitzer-Mauduit International, Inc. (the “Company”), hereby certify to the best of their knowledge following reasonable inquiry that the Quarterly Report of the Company on Form 10-Q for the period ended September 30, 2019, which accompanies this certification, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such periodic report fairly presents, in all material respects, the financial condition of the Company at the end of such period and the results of operations of the Company for such period.  The foregoing certification is made pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) and no purchaser or seller of securities or any other person shall be entitled to rely upon the foregoing certification for any purpose.  The undersigned expressly disclaim any obligation to update the foregoing certification except as required by law.

By:	/s/ Dr. Jeffrey Kramer	By:	/s/ Andrew Wamser
	Dr. Jeffrey Kramer Chief Executive Officer and Director		Andrew Wamser Executive Vice President and Chief Financial Officer
	November 4, 2019		November 4, 2019

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

The foregoing certification is being furnished as an exhibit to the Report pursuant to Item 601(b)(32) of Regulation S-K and Section 1350 of Title 18 of the United States Code and, accordingly, is not being filed with the Securities and Exchange Commission as part of the Report and is not incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934 (whether made before or after the date of the Report, irrespective of any general incorporation language contained in such filing).

XML

Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Unamortized Intangible Assets

The gross carrying amount and accumulated amortization for intangible assets consisted of the following ($ in millions):

	September 30, 2019
	Gross Carrying Amount		Accumulated Amortization		Accumulated Impairments		Accumulated Foreign Exchange		Net Carrying Amount
Amortized Intangible Assets (AMS)
Customer relationships	$	276.3	$	63.4	$	—	$	3.1	$	209.8
Developed technology	34.0		10.3		—		0.6		23.1
Trade names	21.8		0.8		20.7		0.3		—
Non-compete agreements	2.9		2.2		—		—		0.7
Patents	1.5		0.4		—		—		1.1
Total	$	336.5	$	77.1	$	20.7	$	4.0	$	234.7
Unamortized Intangible Assets (AMS)
Trade names	$	20.0	$	—	$	0.1	$	0.1	$	19.8

	December 31, 2018
	Gross Carrying Amount		Accumulated Amortization		Accumulated Impairments		Accumulated Foreign Exchange			Net Carrying Amount
Amortized Intangible Assets (AMS)
Customer relationships	$	276.3	$	50.4	$	—	$	0.7		$	225.2
Developed technology	34.0		8.5		—		0.2			25.3
Trade names	21.8		0.8		20.7		0.3			—
Non-compete agreements	2.9		1.7		—		—			1.2
Patents	1.5		0.4		—		—			1.1
Total	$	336.5	$	61.8	$	20.7	$	1.2		$	252.8
Unamortized Intangible Assets (AMS)
Trade names	$	20.0	$	—	$	0.1	$	(0.1	)	$	20.0

Schedule of Amortized Intangible Assets

The gross carrying amount and accumulated amortization for intangible assets consisted of the following ($ in millions):

	September 30, 2019
	Gross Carrying Amount		Accumulated Amortization		Accumulated Impairments		Accumulated Foreign Exchange		Net Carrying Amount
Amortized Intangible Assets (AMS)
Customer relationships	$	276.3	$	63.4	$	—	$	3.1	$	209.8
Developed technology	34.0		10.3		—		0.6		23.1
Trade names	21.8		0.8		20.7		0.3		—
Non-compete agreements	2.9		2.2		—		—		0.7
Patents	1.5		0.4		—		—		1.1
Total	$	336.5	$	77.1	$	20.7	$	4.0	$	234.7
Unamortized Intangible Assets (AMS)
Trade names	$	20.0	$	—	$	0.1	$	0.1	$	19.8

	December 31, 2018
	Gross Carrying Amount		Accumulated Amortization		Accumulated Impairments		Accumulated Foreign Exchange			Net Carrying Amount
Amortized Intangible Assets (AMS)
Customer relationships	$	276.3	$	50.4	$	—	$	0.7		$	225.2
Developed technology	34.0		8.5		—		0.2			25.3
Trade names	21.8		0.8		20.7		0.3			—
Non-compete agreements	2.9		1.7		—		—			1.2
Patents	1.5		0.4		—		—			1.1
Total	$	336.5	$	61.8	$	20.7	$	1.2		$	252.8
Unamortized Intangible Assets (AMS)
Trade names	$	20.0	$	—	$	0.1	$	(0.1	)	$	20.0

XML

Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Schedule of Loss Contingencies by Contingency

The amounts recorded in the accompanying condensed consolidated statement of income for the nine months ended September 30, 2019 related to the above two assessments consist of the following:

	Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019
Income Statement Classification	(Expense) Benefit			(Expense) Benefit
Cost of products sold1	$	(0.6	)	$	(1.5	)
Operating profit1	(0.6		)	(1.5		)
Other expense2	—			(2.2		)
Interest expense2	0.6			(7.1		)
Income from continuing operations before income taxes	—			(10.8		)
Income tax benefit3	1.0			4.1
Net income	$	1.0		$	(6.7	)

¹Cost of products sold reflects the net of $2.6 million of expense associated with the Raw Materials Assessment and $1.1 million benefit associated with separate litigation against the Brazilian Instituto Nacional do Seguro Social ("INSS"), the Brazilian Social Security Administration, regarding additional assessments of social security contributions charged to the Company in the early 1990s. This benefit is expected to be received in tax credits to be applied against future payments of social security taxes over the following ten to twelve months. Amounts are reflected in Engineered Papers reporting segment in segment disclosures.

²Other expense includes penalties and fees associated with the Raw Materials Assessment. Interest expense relates to the Raw Materials Assessment.

³The Income tax benefit increased as a result of additional information received during the third quarter of 2019.

XML

Restructuring and Impairment Activities

9 Months Ended

Sep. 30, 2019

Restructuring and Related Activities [Abstract]

Restructuring and Impairment Activities

Restructuring and Impairment Activities

The Company incurred restructuring and impairment expense of $1.6 million and $0.4 million in the three months ended September 30, 2019 and 2018, respectively, and $2.0 million and $1.4 million in the nine months ended September 30, 2019 and 2018, respectively.

In the AMS segment, restructuring and impairment expense was $0.0 million and $0.4 million for the three months ended September 30, 2019 and 2018, respectively, and $0.0 million and $1.2 million in the nine months ended September 30, 2019 and 2018, respectively. In the nine months ended September 30, 2018, restructuring and impairment expense consisted of $0.9 million in severance accruals for employees at our U.S. manufacturing operations, as well as $0.3 million in impairment charges at our U.S. manufacturing operations.

In the EP segment, restructuring and impairment expense was $1.6 million and $0.0 million for the three months ended September 30, 2019 and 2018, respectively, and $2.0 million and $0.2 million in the nine months ended September 30, 2019 and 2018, respectively. In the nine months ended September 30, 2019, restructuring and impairment expense consisted of $2.0 million in consulting fees and severance accruals for employees at our manufacturing facilities in the U.S., Brazil and France. In the nine months ended September 30, 2018, restructuring and impairment expense consisted of $0.2 million in severance accruals for employees at our manufacturing facilities in France.

Restructuring liabilities were classified within Accrued expenses and other current liabilities in each of the condensed consolidated balance sheets as of September 30, 2019 and December 31, 2018. Changes in the restructuring liabilities, substantially all of which are employee-related, during the periods ended September 30, 2019 and December 31, 2018 are summarized as follows ($ in millions):

	Nine Months Ended			Year Ended
	September 30, 2019			December 31, 2018
Balance at beginning of year	$	1.4		$	1.7
Accruals for announced programs	2.0			1.3
Cash payments	(2.7		)	(3.3		)
Other	—			1.8
Exchange rate impacts	(0.1		)	(0.1		)
Balance at end of period	$	0.6		$	1.4

Long-lived assets to be sold are classified as held for sale in the period in which all of the following criteria are met: management, having the authority to approve the action, commits to a plan to sell the assets; the assets are available for immediate sale in present condition subject only to terms that are usual and customary for sales of such assets; an active program to locate a buyer and other actions required to complete the plan to sell the assets have been initiated; the sale of the assets is probable, and transfer of the assets is expected to qualify for recognition as a completed sale within one year, except if events or circumstances beyond our control extend the period of time required to sell the assets beyond one year; the assets are being actively marketed for sale at a price that is reasonable in relation to current fair value; and actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

A long-lived asset that is classified as held for sale is initially measured at the lower of its carrying value or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Conversely, gains are not recognized on the sale of a long-lived asset until the date of sale. The fair value of a long-lived asset less any costs to sell is assessed each reporting period it remains classified as held for sale and any reduction in fair value is reported as an adjustment to the carrying value of the asset. Upon being classified as held for sale, depreciation is ceased. Long-lived assets to be disposed of other than by sale continue to be depreciated. Upon determining that a long-lived asset meets the criteria to be classified as held for sale, the assets and liabilities of the disposal group, if material, are reported in the line item Assets held for sale in our condensed consolidated balance sheets.

In early 2015, the Company made the decision to dispose of the Company's mothballed RTL facility and related equipment in the Philippines. These assets are included in the EP segment. During 2015, the Company reclassified the balance of the equipment, along with the land and building associated with the property, at this location from Property, plant and equipment, net, to Assets held for sale on the condensed consolidated balance sheets. The reclassifications were made for all assets that are expected to be sold within one year of the balance sheet date and, as of September 30, 2019, all of the physical assets of this entity are classified as Assets held for sale, and the Company is currently exploring options to sell or lease its remaining net assets. The Company incurred no impairment charges related to these assets during the nine months ended September 30, 2019 or 2018.

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Net Income Per Share

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Net Income Per Share

Net Income Per Share

The Company uses the two-class method to calculate earnings per share. The Company has granted restricted stock that contains non-forfeitable rights to dividends on unvested shares. Since these unvested shares are considered participating securities under the two-class method, the Company allocates earnings per share to common stock and participating securities according to dividends declared and participation rights in undistributed earnings.

Diluted net income per common share is computed based on net income divided by the weighted average number of common and potential common shares outstanding. Potential common shares during the respective periods are those related to dilutive stock-based compensation, including long-term stock-based incentive compensation and directors’ accumulated deferred stock compensation, which may be received by the directors in the form of stock or cash. A reconciliation of the average number of common and potential common shares outstanding used in the calculations of basic and diluted net income per share follows ($ in millions, shares in thousands):

	Three Months Ended						Nine Months Ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
Numerator (basic and diluted):
Net income	$	27.7		$	41.0		$	65.6		$	87.3
Less: Dividends paid to participating securities	—			(0.1		)	(0.2		)	(0.2		)
Less: Undistributed earnings available to participating securities	(0.1		)	(0.2		)	(0.2		)	(0.4		)
Undistributed and distributed earnings available to common stockholders	$	27.6		$	40.7		$	65.2		$	86.7
Denominator:
Average number of common shares outstanding	30,662.8			30,569.6			30,648.4			30,541.6
Effect of dilutive stock-based compensation	169.1			153.2			156.3			141.5
Average number of common and potential common shares outstanding	30,831.9			30,722.8			30,804.7			30,683.1

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Other Comprehensive Income

9 Months Ended

Sep. 30, 2019

Equity [Abstract]

Other Comprehensive Income

Other Comprehensive Income

Comprehensive income includes net income, as well as certain items charged and credited directly to stockholders' equity, which are excluded from net income. The Company has presented comprehensive income in the condensed consolidated statements of comprehensive income (loss). Reclassification adjustments of derivative instruments are presented in Net sales, Other (expense) income, net, or Interest expense in the condensed consolidated statements of income. See Note 12. Derivatives for additional information. Amortization of accumulated pension and other post-employment benefit ("OPEB"), liabilities are included in the computation of net periodic pension and OPEB costs, which are more fully discussed in Note 14. Postretirement and Other Benefits.

Components of Accumulated other comprehensive loss, net of tax, were as follows ($ in millions):

	September 30, 2019			December 31, 2018
Accumulated pension and OPEB liability adjustments, net of income tax benefit of $12.1 million and $11.4 million at September 30, 2019 and December 31, 2018, respectively	$	(26.6	)	$	(28.2	)
Accumulated unrealized loss on derivative instruments, net of income tax benefit of $2.8 million and $1.6 million at September 30, 2019 and December 31, 2018, respectively	(5.0		)	(0.6		)
Accumulated unrealized foreign currency translation adjustments, net of income tax benefit of $2.6 million and $1.7 million at September 30, 2019 and December 31, 2018, respectively	(103.5		)	(95.7		)
Accumulated other comprehensive loss	$	(135.1	)	$	(124.5	)

Changes in the components of Accumulated other comprehensive loss were as follows ($ in millions):

	Three Months Ended
	September 30, 2019									September 30, 2018
	Pre-tax			Tax			Net of Tax			Pre-tax			Tax			Net of Tax
Net gain (loss) on pension and OPEB liability adjustments	$	0.7		$	(0.6	)	$	0.1		$	1.0		$	(0.2	)	$	0.8
Unrealized (loss) gain on derivative instruments	(4.1		)	1.1			(3.0		)	(0.4		)	—			(0.4		)
Unrealized (loss) gain on foreign currency translation	(9.0		)	(1.5		)	(10.5		)	(3.1		)	0.1			(3.0		)
Total	$	(12.4	)	$	(1.0	)	$	(13.4	)	$	(2.5	)	$	(0.1	)	$	(2.6	)

	Nine Months Ended
	September 30, 2019								September 30, 2018
	Pre-tax			Tax		Net of Tax			Pre-tax			Tax			Net of Tax
Unrealized gain (loss) on pension and OPEB liability adjustments	$	0.9		$	0.7	$	1.6		$	3.2		$	(0.9	)	$	2.3
Unrealized (loss) gain on derivative instruments	(5.6		)	1.2		(4.4		)	(3.0		)	1.3			(1.7		)
Unrealized (loss) gain on foreign currency translation	(8.7		)	0.9		(7.8		)	(23.6		)	(1.8		)	(25.4		)
Total	$	(13.4	)	$	2.8	$	(10.6	)	$	(23.4	)	$	(1.4	)	$	(24.8	)

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Restructuring and Impairment Activities (Details) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Restructuring Cost and Reserve [Line Items]
Restructuring and impairment expense	$ 1,600,000	$ 400,000	$ 2,000,000.0	$ 1,400,000
Restructuring Reserve [Roll Forward]
Balance at beginning of year			1,400,000	1,700,000	$ 1,700,000
Accruals for announced programs			2,000,000.0		1,300,000
Cash payments			(2,700,000)		(3,300,000)
Other			0		1,800,000
Exchange rate impacts			(100,000)		(100,000)
Balance at end of period	600,000		600,000		$ 1,400,000
AMS
Restructuring Cost and Reserve [Line Items]
Restructuring and impairment expense	0.0	400,000	0.0	1,200,000
AMS | UNITED STATES | Asset Impairment Charge
Restructuring Cost and Reserve [Line Items]
Restructuring and impairment expense				300,000
AMS | UNITED STATES | Employee Severance
Restructuring Cost and Reserve [Line Items]
Restructuring and impairment expense				900,000
EP
Restructuring Cost and Reserve [Line Items]
Restructuring and impairment expense	$ 1,600,000	$ 0.0	2,000,000.0	200,000
EP | France and United States | Employee Severance
Restructuring Cost and Reserve [Line Items]
Restructuring and impairment expense				200,000
EP | Philippines | Asset Impairment Charge
Restructuring Cost and Reserve [Line Items]
Restructuring and impairment expense			0	$ 0
EP | FRANCE | Employee Severance
Restructuring Cost and Reserve [Line Items]
Restructuring and impairment expense			$ 2,000,000.0

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Net Income Per Share (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Numerator (basic and diluted):
Net income	$ 27.7	$ 41.0	$ 65.6	$ 87.3
Less: Dividends paid to participating securities	0.0	(0.1)	(0.2)	(0.2)
Less: Undistributed earnings available to participating securities	(0.1)	(0.2)	(0.2)	(0.4)
Undistributed and distributed earnings available to common stockholders	$ 27.6	$ 40.7	$ 65.2	$ 86.7
Denominator:
Average number of common shares outstanding (in shares)	30,662,800	30,569,600	30,648,400	30,541,600
Effect of dilutive stock-based compensation (in shares)	169,100	153,200	156,300	141,500
Average number of common and potential common shares outstanding (in shares)	30,831,900	30,722,800	30,804,700	30,683,100

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Condensed Consolidated Statements of Income - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Income Statement [Abstract]
Net sales	$ 256.4	$ 260.3	$ 784.3	$ 792.6
Cost of products sold	184.2	195.0	565.2	577.9
Gross profit	72.2	65.3	219.1	214.7
Selling expense	8.6	8.9	25.8	27.2
Research expense	3.1	3.6	10.1	11.8
General expense	24.3	21.3	72.0	66.1
Total nonmanufacturing expenses	36.0	33.8	107.9	105.1
Restructuring and impairment expense	1.6	0.4	2.0	1.4
Operating profit	34.6	31.1	109.2	108.2
Interest expense	6.7	7.3	29.6	20.1
Other income (expense), net	1.7	11.2	(1.6)	10.4
Income from continuing operations before income taxes and income from equity affiliates	29.6	35.0	78.0	98.5
Provision (benefit) for income taxes	3.2	(5.6)	12.8	10.4
Income (loss) from equity affiliates, net of income taxes	1.3	0.3	0.4	(0.5)
Income from continuing operations	27.7	40.9	65.6	87.6
Income (loss) from discontinued operations	0.0	0.1	0.0	(0.3)
Net income	$ 27.7	$ 41.0	$ 65.6	$ 87.3
Net income per share - basic:
Income per share from continuing operations (in dollars per share)	$ 0.90	$ 1.33	$ 2.13	$ 2.85
Income (loss) per share from discontinued operations (in dollars per share)	0	0	0	(0.01)
Net income per share - basic (in dollars per share)	0.90	1.33	2.13	2.84
Net income per share – diluted:
Income per share from continuing operations (in dollars per share)	0.90	1.33	2.12	2.84
Income (loss) per share from discontinued operations (in dollars per share)	0	0	0	(0.01)
Net income per share - diluted (in dollars per share)	$ 0.90	$ 1.33	$ 2.12	$ 2.83
Weighted average shares outstanding:
Diluted (in shares)	30,831,900	30,722,800	30,804,700	30,683,100
Basic (in shares)	30,662,800	30,569,600	30,648,400	30,541,600

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Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Millions	Total	Common Stock Issued	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)
Beginning Balance at Dec. 31, 2017	$ 546.7	$ 3.1	$ 66.3	$ 566.7	$ (89.4)
Beginning Balance (in shares) at Dec. 31, 2017		30,711,299
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	87.3			87.3
Other comprehensive (loss), net of tax	(24.8)				(24.8)
Dividends declared	(39.7)			(39.7)
Restricted stock issuances, net (in shares)		122,817
Stock-based employee compensation expense	3.5		3.5
Stock issued to directors as compensation	0.2		0.2
Stock issued to directors as compensation (in shares)		3,615
Purchases and retirement of common stock	(2.8)			(2.8)
Purchases and retirement of common stock (in shares)		(69,758)
Ending Balance at Sep. 30, 2018	568.7	$ 3.1	70.0	609.8	(114.2)
Ending Balance (in shares) at Sep. 30, 2018		30,767,973
Beginning Balance at Jun. 30, 2018	542.5	$ 3.1	68.8	582.2	(111.6)
Beginning Balance (in shares) at Jun. 30, 2018		30,754,759
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	41.0			41.0
Other comprehensive (loss), net of tax	(2.6)				(2.6)
Dividends declared	(13.3)			(13.3)
Restricted stock issuances, net (in shares)		14,663
Stock-based employee compensation expense	1.1		1.1
Stock issued to directors as compensation (in shares)		972
Purchases and retirement of common stock	(0.1)			(0.1)
Purchases and retirement of common stock (in shares)		(2,421)
Ending Balance at Sep. 30, 2018	568.7	$ 3.1	70.0	609.8	(114.2)
Ending Balance (in shares) at Sep. 30, 2018		30,767,973
Beginning Balance at Dec. 31, 2018	557.9	$ 3.1	71.1	608.2	(124.5)
Beginning Balance (in shares) at Dec. 31, 2018		30,771,244
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	65.6			65.6
Other comprehensive (loss), net of tax	(10.6)				(10.6)
Dividends declared	(40.8)			(40.8)
Restricted stock issuances, net (in shares)		147,019
Stock-based employee compensation expense	3.9		3.9
Stock issued to directors as compensation	0.1		0.1
Stock issued to directors as compensation (in shares)		3,034
Purchases and retirement of common stock	(1.0)			(1.0)
Purchases and retirement of common stock (in shares)		(25,297)
Ending Balance at Sep. 30, 2019	574.8	$ 3.1	75.1	631.7	(135.1)
Ending Balance (in shares) at Sep. 30, 2019		30,896,000
Beginning Balance at Jun. 30, 2019	572.6	$ 3.1	73.6	617.6	(121.7)
Beginning Balance (in shares) at Jun. 30, 2019		30,894,598
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	27.7			27.7
Other comprehensive (loss), net of tax	(13.4)				(13.4)
Dividends declared	(13.6)			(13.6)
Restricted stock issuances, net (in shares)		914
Stock-based employee compensation expense	1.5		1.5
Stock issued to directors as compensation	0.0		0.0
Stock issued to directors as compensation (in shares)		640
Purchases and retirement of common stock	0.0			0.0
Purchases and retirement of common stock (in shares)		(152)
Ending Balance at Sep. 30, 2019	$ 574.8	$ 3.1	$ 75.1	$ 631.7	$ (135.1)
Ending Balance (in shares) at Sep. 30, 2019		30,896,000

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Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Income Tax Disclosure [Abstract]
Update to provisional estimate for transition tax liability					$ 13.9
Effective income tax rate from continuing operations	10.80%	(16.00%)	16.40%	10.60%

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Derivatives - Derivatives by Balance Sheet Location (Details) - USD ($) $ in Millions	Sep. 30, 2019	Dec. 31, 2018
Derivatives, Fair Value [Line Items]
Asset Derivatives	$ 15.4	$ 4.9
Liability Derivatives	9.7	10.1
Derivatives designated as hedges
Derivatives, Fair Value [Line Items]
Asset Derivatives	15.3	4.8
Liability Derivatives	9.6	10.1
Derivatives not designated as hedges
Derivatives, Fair Value [Line Items]
Asset Derivatives	0.1	0.1
Liability Derivatives	0.1	0.0
Foreign exchange contracts | Derivatives designated as hedges | Accounts receivable, net
Derivatives, Fair Value [Line Items]
Asset Derivatives	4.0	2.0
Foreign exchange contracts | Derivatives designated as hedges | Other assets
Derivatives, Fair Value [Line Items]
Asset Derivatives	11.3	1.0
Foreign exchange contracts | Derivatives designated as hedges | Accrued expenses
Derivatives, Fair Value [Line Items]
Liability Derivatives	4.0	1.3
Foreign exchange contracts | Derivatives designated as hedges | Other liabilities
Derivatives, Fair Value [Line Items]
Liability Derivatives	3.7	8.8
Foreign exchange contracts | Derivatives not designated as hedges | Accounts receivable, net
Derivatives, Fair Value [Line Items]
Asset Derivatives	0.1	0.1
Foreign exchange contracts | Derivatives not designated as hedges | Accrued expenses
Derivatives, Fair Value [Line Items]
Liability Derivatives	0.1	0.0
Interest rate contracts | Derivatives designated as hedges | Other assets
Derivatives, Fair Value [Line Items]
Asset Derivatives	0.0	1.8
Interest rate contracts | Derivatives designated as hedges | Other liabilities
Derivatives, Fair Value [Line Items]
Liability Derivatives	$ 1.9	$ 0.0

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Other Comprehensive Income - Changes in Components of Other Comprehensive Income (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Accumulated Other Comprehensive Income (Loss) [Line Items]
Pre-tax	$ (12.4)	$ (2.5)	$ (13.4)	$ (23.4)
Tax	(1.0)	(0.1)	2.8	(1.4)
Other comprehensive (loss)	(13.4)	(2.6)	(10.6)	(24.8)
Net gain (loss) on pension and OPEB liability adjustments
Accumulated Other Comprehensive Income (Loss) [Line Items]
Pre-tax	0.7	1.0	0.9	3.2
Tax	(0.6)	(0.2)	0.7	(0.9)
Other comprehensive (loss)	0.1	0.8	1.6	2.3
Unrealized (loss) gain on derivative instruments
Accumulated Other Comprehensive Income (Loss) [Line Items]
Pre-tax	(4.1)	(0.4)	(5.6)	(3.0)
Tax	1.1	0.0	1.2	1.3
Other comprehensive (loss)	(3.0)	(0.4)	(4.4)	(1.7)
Unrealized (loss) gain on foreign currency translation
Accumulated Other Comprehensive Income (Loss) [Line Items]
Pre-tax	(9.0)	(3.1)	(8.7)	(23.6)
Tax	(1.5)	0.1	0.9	(1.8)
Other comprehensive (loss)	$ (10.5)	$ (3.0)	$ (7.8)	$ (25.4)

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Leases - Maturity of Lease Liabilities (Details) $ in Millions	Sep. 30, 2019 USD ($)
Finance
Remainder of 2019	$ 0.1
2020	0.5
2021	0.5
2022	0.5
2023	0.5
2024	0.4
Thereafter	1.6
Total Lease Payments	4.1
Less: Interest	0.8
Present Value of Lease Liabilities	3.3
Operating
Remainder of 2019	1.6
2020	5.8
2021	5.1
2022	4.0
2023	2.8
2024	2.3
Thereafter	7.1
Total Lease Payments	28.7
Less: Interest	5.5
Present Value of Lease Liabilities	23.2
Total
Remainder of 2019	1.7
2020	6.3
2021	5.6
2022	4.5
2023	3.3
2024	2.7
Thereafter	8.7
Total Lease Payments	32.8
Less: Interest	6.3
Total lease obligation	$ 26.5

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Other Comprehensive Income (Tables)

9 Months Ended

Sep. 30, 2019

Equity [Abstract]

Components of Accumulated Other Comprehensive Income

Components of Accumulated other comprehensive loss, net of tax, were as follows ($ in millions):

	September 30, 2019			December 31, 2018
Accumulated pension and OPEB liability adjustments, net of income tax benefit of $12.1 million and $11.4 million at September 30, 2019 and December 31, 2018, respectively	$	(26.6	)	$	(28.2	)
Accumulated unrealized loss on derivative instruments, net of income tax benefit of $2.8 million and $1.6 million at September 30, 2019 and December 31, 2018, respectively	(5.0		)	(0.6		)
Accumulated unrealized foreign currency translation adjustments, net of income tax benefit of $2.6 million and $1.7 million at September 30, 2019 and December 31, 2018, respectively	(103.5		)	(95.7		)
Accumulated other comprehensive loss	$	(135.1	)	$	(124.5	)

Changes in Components of Other Comprehensive Income

Changes in the components of Accumulated other comprehensive loss were as follows ($ in millions):

	Three Months Ended
	September 30, 2019									September 30, 2018
	Pre-tax			Tax			Net of Tax			Pre-tax			Tax			Net of Tax
Net gain (loss) on pension and OPEB liability adjustments	$	0.7		$	(0.6	)	$	0.1		$	1.0		$	(0.2	)	$	0.8
Unrealized (loss) gain on derivative instruments	(4.1		)	1.1			(3.0		)	(0.4		)	—			(0.4		)
Unrealized (loss) gain on foreign currency translation	(9.0		)	(1.5		)	(10.5		)	(3.1		)	0.1			(3.0		)
Total	$	(12.4	)	$	(1.0	)	$	(13.4	)	$	(2.5	)	$	(0.1	)	$	(2.6	)

	Nine Months Ended
	September 30, 2019								September 30, 2018
	Pre-tax			Tax		Net of Tax			Pre-tax			Tax			Net of Tax
Unrealized gain (loss) on pension and OPEB liability adjustments	$	0.9		$	0.7	$	1.6		$	3.2		$	(0.9	)	$	2.3
Unrealized (loss) gain on derivative instruments	(5.6		)	1.2		(4.4		)	(3.0		)	1.3			(1.7		)
Unrealized (loss) gain on foreign currency translation	(8.7		)	0.9		(7.8		)	(23.6		)	(1.8		)	(25.4		)
Total	$	(13.4	)	$	2.8	$	(10.6	)	$	(23.4	)	$	(1.4	)	$	(24.8	)

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Postretirement and Other Benefits

9 Months Ended

Sep. 30, 2019

Retirement Benefits [Abstract]

Postretirement and Other Benefits

Postretirement and Other Benefits

The Company sponsors pension benefits in the United States, France and Canada and OPEB benefits related to postretirement healthcare and life insurance in the United States and Canada. The Company’s Canadian pension and OPEB benefits are not material and therefore are not included in the following disclosures.

Pension and OPEB Benefits

The components of net pension and OPEB benefit costs for U.S. employees and net pension benefit costs for French employees during the three or nine months ended September 30, 2019 and 2018 were as follows ($ in millions):

	Three Months Ended September 30,
	U.S. Pension Benefits						French Pension Benefits					U.S. OPEB Benefits
	2019			2018			2019			2018		2019		2018
Service cost	$	—		$	—		$	0.3		$	0.2	$	—	$	—
Interest cost	1.2			1.0			0.1			0.1		—		—
Expected return on plan assets	(1.5		)	(1.5		)	(0.1		)	—		—		—
Amortizations and other	0.5			0.7			0.2			0.2		—		0.1
Net periodic benefit cost	$	0.2		$	0.2		$	0.5		$	0.5	$	—	$	0.1

	Nine Months Ended September 30,
	U.S. Pension Benefits						French Pension Benefits						U.S. OPEB Benefits
	2019			2018			2019			2018			2019		2018
Service cost	$	—		$	—		$	0.8		$	0.8		$	—	$	—
Interest cost	3.5			3.2			0.3			0.3			—		—
Expected return on plan assets	(4.4		)	(4.4		)	(0.1		)	(0.1		)	—		—
Amortizations and other	1.5			2.4			0.6			0.6			—		0.2
Net periodic benefit cost	$	0.6		$	1.2		$	1.6		$	1.6		$	—	$	0.2

The components of net periodic benefit cost other than the service cost component are included in Other income (expense), net in the condensed consolidated statements of income. During the fiscal year ending December 31, 2019, the Company expects to recognize approximately $2.0 million of amortization in Accumulated other comprehensive income (loss) related to its U.S. pension and OPEB plans and approximately $0.8 million for its French pension plans.

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Segment Information (Details) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($) segment	Sep. 30, 2018 USD ($)	Dec. 31, 2018 USD ($)
Segment Reporting Information [Line Items]
Number of operating segments | segment			2
Number of reportable segments | segment			2
Net Sales [Abstract]
Net Sales	$ 256.4	$ 260.3	$ 784.3	$ 792.6
Percentage of Net Sales (in hundredths)	100.00%	100.00%	100.00%	100.00%
Operating Profit [Abstract]
Operating Profit	$ 34.6	$ 31.1	$ 109.2	$ 108.2
Operating Profit (in hundredths)	100.00%	100.00%	100.00%	100.00%
Assets	$ 1,450.2		$ 1,450.2		$ 1,466.5
Advanced Materials & Structures
Net Sales [Abstract]
Net Sales	$ 126.1	$ 120.8	$ 373.3	$ 360.1
Percentage of Net Sales (in hundredths)	49.20%	46.40%	47.60%	45.40%
Engineered Papers
Net Sales [Abstract]
Net Sales	$ 130.3	$ 139.5	$ 411.0	$ 432.5
Percentage of Net Sales (in hundredths)	50.80%	53.60%	52.40%	54.60%
Operating Segments | Advanced Materials & Structures
Operating Profit [Abstract]
Operating Profit	$ 19.3	$ 11.9	$ 54.6	$ 39.5
Operating Profit (in hundredths)	55.80%	38.30%	50.00%	36.50%
Assets	$ 765.3		$ 765.3		796.1
Operating Segments | Engineered Papers
Operating Profit [Abstract]
Operating Profit	$ 27.3	$ 27.5	$ 88.5	$ 94.7
Operating Profit (in hundredths)	78.90%	88.40%	81.00%	87.50%
Assets	$ 502.5		$ 502.5		527.4
Unallocated
Operating Profit [Abstract]
Operating Profit	$ (12.0)	$ (8.3)	$ (33.9)	$ (26.0)
Operating Profit (in hundredths)	(34.70%)	(26.70%)	(31.00%)	(24.00%)
Assets	$ 182.4		$ 182.4		$ 143.0

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Derivatives - Derivative Instruments Effect on AOCI and Results of Operations (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Derivatives Designated as Cash Flow Hedging Relationships
Derivative Instruments, Gain (Loss) [Line Items]
Unrealized Gain (Loss) Recognized in AOCI on Derivatives, Net of Tax	$ (1.2)	$ 0.4	$ 0.1	$ 0.7
Gain (Loss) Reclassified from AOCI	1.8	0.8	4.5	2.4
Net sales | Derivatives Designated as Cash Flow Hedging Relationships | Foreign exchange contracts
Derivative Instruments, Gain (Loss) [Line Items]
Unrealized Gain (Loss) Recognized in AOCI on Derivatives, Net of Tax	(1.3)	(0.4)	(1.5)	(3.1)
Gain (Loss) Reclassified from AOCI	(0.3)	(0.1)	(0.9)	0.6
Other income, net | Derivatives Designated as Cash Flow Hedging Relationships | Foreign exchange contracts
Derivative Instruments, Gain (Loss) [Line Items]
Unrealized Gain (Loss) Recognized in AOCI on Derivatives, Net of Tax	0.0	(0.4)	0.1	(0.4)
Gain (Loss) Reclassified from AOCI	(0.4)	0.1	(0.3)	0.1
Interest expense | Derivatives Designated as Cash Flow Hedging Relationships | Interest rate contracts
Derivative Instruments, Gain (Loss) [Line Items]
Unrealized Gain (Loss) Recognized in AOCI on Derivatives, Net of Tax	0.1	1.2	1.5	4.2
Gain (Loss) Reclassified from AOCI	2.5	0.8	5.7	1.7
Derivatives not designated as hedges | Other income, net | Foreign exchange contracts
Derivative Instruments, Gain (Loss) [Line Items]
Gain (Loss) Reclassified from AOCI	$ (0.1)	$ 0.0	$ (0.1)	$ (2.1)

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Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Statement of Comprehensive Income [Abstract]
Net income	$ 27.7	$ 41.0	$ 65.6	$ 87.3
Other comprehensive income, net of tax:
Foreign currency translation adjustments	(10.2)	(2.8)	(7.1)	(24.8)
Less: Reclassification adjustment for realized translation adjustments	(0.3)	(0.2)	(0.7)	(0.6)
Unrealized (losses) gains on derivative instruments	(0.6)	0.4	0.7	0.7
Less: Reclassification adjustment for gains on derivative instruments included in net income	(2.4)	(0.8)	(5.1)	(2.4)
Reclassification adjustment for amortization of postretirement benefit plans' costs included in net periodic benefit cost	0.1	0.8	1.6	2.3
Other comprehensive (loss)	(13.4)	(2.6)	(10.6)	(24.8)
Comprehensive income	$ 14.3	$ 38.4	$ 55.0	$ 62.5

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Condensed Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Statement of Stockholders' Equity [Abstract]
Common Stock, Dividends, Per Share, Declared	$ 0.44	$ 0.43	$ 1.32	$ 1.29

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Revenue Recognition (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Revenue from External Customer [Line Items]
Total revenues	$ 256.4	$ 260.3	$ 784.3	$ 792.6
United States
Revenue from External Customer [Line Items]
Total revenues	131.9	131.7	400.9	394.3
Europe and the former Commonwealth of Independent States
Revenue from External Customer [Line Items]
Total revenues	51.1	61.0	163.8	205.1
Asia/Pacific (including China)
Revenue from External Customer [Line Items]
Total revenues	43.1	38.2	128.7	114.0
Latin America
Revenue from External Customer [Line Items]
Total revenues	13.0	13.1	39.9	40.8
Other foreign countries
Revenue from External Customer [Line Items]
Total revenues	17.3	16.3	51.0	38.4
Product revenues
Revenue from External Customer [Line Items]
Total revenues	238.7	242.1	728.4	725.5
Materials conversion revenues
Revenue from External Customer [Line Items]
Total revenues	15.2	15.8	47.8	60.4
Other revenues
Revenue from External Customer [Line Items]
Total revenues	2.5	2.4	8.1	6.7
AMS
Revenue from External Customer [Line Items]
Total revenues	126.1	120.8	373.3	360.1
AMS | United States
Revenue from External Customer [Line Items]
Total revenues	87.8	84.7	258.5	247.6
AMS | Europe and the former Commonwealth of Independent States
Revenue from External Customer [Line Items]
Total revenues	12.1	10.0	38.7	36.5
AMS | Asia/Pacific (including China)
Revenue from External Customer [Line Items]
Total revenues	20.7	20.3	58.4	56.9
AMS | Latin America
Revenue from External Customer [Line Items]
Total revenues	1.8	2.1	5.3	7.8
AMS | Other foreign countries
Revenue from External Customer [Line Items]
Total revenues	3.7	3.7	12.4	11.3
AMS | Product revenues
Revenue from External Customer [Line Items]
Total revenues	122.7	117.9	362.9	346.9
AMS | Materials conversion revenues
Revenue from External Customer [Line Items]
Total revenues	2.3	1.9	6.2	10.3
AMS | Other revenues
Revenue from External Customer [Line Items]
Total revenues	1.1	1.0	4.2	2.9
EP
Revenue from External Customer [Line Items]
Total revenues	130.3	139.5	411.0	432.5
EP | United States
Revenue from External Customer [Line Items]
Total revenues	44.1	47.0	142.4	146.7
EP | Europe and the former Commonwealth of Independent States
Revenue from External Customer [Line Items]
Total revenues	39.0	51.0	125.1	168.6
EP | Asia/Pacific (including China)
Revenue from External Customer [Line Items]
Total revenues	22.4	17.9	70.3	57.1
EP | Latin America
Revenue from External Customer [Line Items]
Total revenues	11.2	11.0	34.6	33.0
EP | Other foreign countries
Revenue from External Customer [Line Items]
Total revenues	13.6	12.6	38.6	27.1
EP | Product revenues
Revenue from External Customer [Line Items]
Total revenues	116.0	124.2	365.5	378.6
EP | Materials conversion revenues
Revenue from External Customer [Line Items]
Total revenues	12.9	13.9	41.6	50.1
EP | Other revenues
Revenue from External Customer [Line Items]
Total revenues	$ 1.4	$ 1.4	$ 3.9	$ 3.8

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Leases - Components of Lease Expense (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019
Lease Cost
Interest expense on lease liabilities	$ 0.0	$ 0.1
Amortization of right-of-use assets	0.1	0.3
Operating Lease, Cost	1.6	4.7
Short-term Lease, Cost	0.0	0.2
Lease, Cost	$ 1.7	$ 5.3

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Label	Element	Value
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ (1,700,000)
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	(300,000)
Retained Earnings [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	(300,000)
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ (1,700,000)

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Revenue Recognition (Tables)

9 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

Following is the Company’s net sales disaggregated by revenue source ($ in millions). Sales and usage-based taxes are excluded from net sales.

	Three Months Ended
	September 30, 2019						September 30, 2018
	AMS		EP		Total		AMS		EP		Total
Product revenues	$	122.7	$	116.0	$	238.7	$	117.9	$	124.2	$	242.1
Materials conversion revenues	2.3		12.9		15.2		1.9		13.9		15.8
Other revenues	1.1		1.4		2.5		1.0		1.4		2.4
Total revenues (1)	$	126.1	$	130.3	$	256.4	$	120.8	$	139.5	$	260.3

(1) Revenues include net hedging gains and losses for the three months ended September 30, 2019 and 2018.

	Nine Months Ended
	September 30, 2019						September 30, 2018
	AMS		EP		Total		AMS		EP		Total
Product revenues	$	362.9	$	365.5	$	728.4	$	346.9	$	378.6	$	725.5
Materials conversion revenues	6.2		41.6		47.8		10.3		50.1		60.4
Other revenues	4.2		3.9		8.1		2.9		3.8		6.7
Total revenues (1)	$	373.3	$	411.0	$	784.3	$	360.1	$	432.5	$	792.6

(1) Revenues include net hedging gains and losses for the nine months ended September 30, 2019 and 2018.

Net sales are attributed to the following geographic locations based on the location of the Company’s direct customers ($ in millions):

	Three Months Ended
	September 30, 2019						September 30, 2018
	AMS		EP		Total		AMS		EP		Total
United States	$	87.8	$	44.1	$	131.9	$	84.7	$	47.0	$	131.7
Europe and the former Commonwealth of Independent States	12.1		39.0		51.1		10.0		51.0		61.0
Asia/Pacific (including China)	20.7		22.4		43.1		20.3		17.9		38.2
Latin America	1.8		11.2		13.0		2.1		11.0		13.1
Other foreign countries	3.7		13.6		17.3		3.7		12.6		16.3
Total revenues (1)	$	126.1	$	130.3	$	256.4	$	120.8	$	139.5	$	260.3

(1) Revenues include net hedging gains and losses for the three months ended September 30, 2019 and 2018.

	Nine Months Ended
	September 30, 2019						September 30, 2018
	AMS		EP		Total		AMS		EP		Total
United States	$	258.5	$	142.4	$	400.9	$	247.6	$	146.7	$	394.3
Europe and the former Commonwealth of Independent States	38.7		125.1		163.8		36.5		168.6		205.1
Asia/Pacific (including China)	58.4		70.3		128.7		56.9		57.1		114.0
Latin America	5.3		34.6		39.9		7.8		33.0		40.8
Other foreign countries	12.4		38.6		51.0		11.3		27.1		38.4
Total revenues (1)	$	373.3	$	411.0	$	784.3	$	360.1	$	432.5	$	792.6

(1) Revenues include net hedging gains and losses for the nine months ended September 30, 2019 and 2018.

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Income Taxes

9 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

For interim financial reporting, the Company estimates the annual tax rate based on projected taxable income for the full year and records a quarterly income tax provision in accordance with ASC No. 740-270 "Accounting for Income Taxes in Interim Periods." These interim estimates are subject to variation due to several factors, including the ability of the Company to accurately forecast pre-tax and taxable income and loss by jurisdiction, changes in laws or regulations, and expenses or losses for which tax benefits are not recognized. Jurisdictions with a projected loss for the year or an actual year-to-date loss where no tax benefit can be recognized are excluded from the estimated annual effective tax rate. The impact of including these jurisdictions on the quarterly effective tax rate calculations could result in a higher or lower effective tax rate during a particular quarter, based upon the mix and timing of actual earnings versus annual projections.

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 ("Tax Act") was enacted into law effective January 1, 2018. The new legislation contains several key tax provisions that affected the Company, which include but are not limited to a one-time deemed repatriation tax on post-1986 accumulated earnings and profits of the undistributed earnings of foreign subsidiaries (“transition tax”), a reduction of the federal corporate income tax rate from 35% to 21%, and other U.S. reform items. Due to the timing and significance of the Tax Act, the Securities and Exchange Commission issued

Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”), which provided a measurement period of up to one year through December 31, 2018 to report the impact of the new US tax law. In 2018, the Company decreased its provisional estimates of transition tax, related currency implications, state taxes and deferred tax rate change effect of the new law by $13.9 million, of which $13.0 million was recorded during the three months ended September 30, 2018. The reduction from the provisional 2017 amounts were primarily due to further transition tax analysis of accumulated earnings and foreign taxes paid. As of December 31, 2018, the Company had completed its accounting for the tax effects of the Tax Act.

Prior to the passage of the Tax Act, the Company asserted that substantially all of the undistributed earnings of its foreign subsidiaries were considered indefinitely reinvested and accordingly, no deferred taxes were provided. As a result of the Tax Act, the Company has significant previously taxed income from its foreign subsidiaries, as a result of transition tax, that is generally able to be repatriated free of U. S. federal tax. In addition, future earnings of foreign subsidiaries are generally expected to be able to be repatriated free of U.S. federal income tax because these earnings were taxed in the U.S. under the GILTI regime or would be eligible for a dividends received deduction. Therefore, the Company does not intend to assert indefinite reinvestment on future cash earnings. While the Company will have to provide for withholding taxes and U.S. state taxes on the future earnings, these amounts are not expected to be significant.

All unrecognized tax positions could impact the Company's effective tax rate if recognized. With respect to penalties and interest incurred from income tax assessments or related to unrecognized tax benefits, the Company’s policy is to classify penalties as provision for income taxes and interest as interest expense in its condensed consolidated statement of income. There were no material income tax penalties or interest accrued during the three or nine months ended September 30, 2019 or 2018.

The Company's effective tax rate from continuing operations was 10.8% and (16.0)% for the three months ended September 30, 2019 and 2018, respectively. The 10.8% in the three months ended September 30, 2019, was lower than our full year rate primarily due to favorable discrete adjustments recorded in the period, while the prior-year (16.0%) rate included a favorable one-time transition tax adjustment. The Company's effective tax rate from continuing operations was 16.4% and 10.6% for the nine months ended September 30, 2019 and 2018, respectively. The 16.4% rate in the current nine-month period was impacted by favorable discrete items, while the prior-year 10.6% rate included a favorable one-time transition tax adjustment.

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Goodwill (Tables)

9 Months Ended

Sep. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

The changes in the carrying amount of goodwill by segment for the nine months ended September 30, 2019 were as follows ($ in millions):

	AMS			EP			Total
Goodwill as of December 31, 2018	$	333.1		$	5.0		$	338.1
Foreign currency translation adjustments	(2.1		)	(0.2		)	(2.3		)
Goodwill as of September 30, 2019	$	331.0		$	4.8		$	335.8

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Derivatives (Tables)

9 Months Ended

Sep. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Fair Value of Asset and Liability Derivatives and the Respective Balance Sheet Locations

The following table presents the fair value of asset and liability derivatives and the respective condensed consolidated balance sheet locations at September 30, 2019 ($ in millions):

 

	Asset Derivatives			Liability Derivatives
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedges:
Foreign exchange contracts	Accounts receivable, net	$	4.0	Accrued expenses and other current liabilities	$	4.0
Foreign exchange contracts	Other assets	11.3		Other liabilities	3.7
Interest rate contracts	Accounts receivable, net	—		Other liabilities	1.9
Total derivatives designated as hedges		15.3			9.6
Derivatives not designated as hedges:
Foreign exchange contracts	Accounts receivable, net	0.1		Accrued expenses and other current liabilities	0.1
Total derivatives not designated as hedges		0.1			0.1
Total derivatives		$	15.4		$	9.7

The following table presents the fair value of asset and liability derivatives and the respective condensed consolidated balance sheet locations at December 31, 2018 ($ in millions):

 

	Asset Derivatives			Liability Derivatives
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedges:
Foreign exchange contracts	Accounts receivable, net	$	2.0	Accrued expenses and other current liabilities	$	1.3
Foreign exchange contracts	Other assets	1.0		Other liabilities	8.8
Interest rate contracts	Other assets	1.8		Other liabilities	—
Total derivatives designated as hedges		4.8			10.1
Derivatives not designated as hedges:
Foreign exchange contracts	Accounts receivable, net	0.1		Accounts payable	—
Total derivatives not designated as hedges		0.1			—
Total derivatives		$	4.9		$	10.1

Effect on Accumulated Other Comprehensive Income (Loss) and Results of Operations of Derivative Instruments in Cash Flow Hedging Relationships

The following table provides the gross effect that derivative instruments in cash flow hedging relationships had on Accumulated other comprehensive income (loss) and results of operations ($ in millions):

Derivatives Designated as Cash Flow Hedging Relationships	Unrealized Gain (Loss) Recognized in AOCI on Derivatives, Net of Tax												Location of Gain (Loss) Reclassified from AOCI	Gain (Loss) Reclassified from AOCI
	Three Months Ended						Nine Months Ended							Three Months Ended						Nine Months Ended
	September 30,						September 30,							September 30,						September 30,
	2019			2018			2019			2018				2019			2018			2019			2018
Foreign exchange contracts	$	(1.3	)	$	(0.4	)	$	(1.5	)	$	(3.1	)	Net sales	$	(0.3	)	$	(0.1	)	$	(0.9	)	$	0.6
Foreign exchange contracts	—			(0.4		)	0.1			(0.4		)	Other income (expense), net	(0.4		)	0.1			(0.3		)	0.1
Interest rate contracts	0.1			1.2			1.5			4.2			Interest expense	2.5			0.8			5.7			1.7
Total	$	(1.2	)	$	0.4		$	0.1		$	0.7			$	1.8		$	0.8		$	4.5		$	2.4

Effect on Net Income of Derivative Instruments Non Designated as Hedging

The following table provides the effect that derivative instruments not designated as cash flow hedging instruments had on net income ($ in millions):

Derivatives Not Designated as Cash Flow Hedging Instruments	Location of Gain (Loss) Recognized in Income	Amount of Gain (Loss) Recognized in Income
		Three Months Ended					Nine Months Ended
		September 30, 2019			September 30, 2018		September 30, 2019			September 30, 2018
Foreign exchange contracts	Other income (expense), net	$	(0.1	)	$	—	$	(0.1	)	$	(2.1	)

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Inventories

9 Months Ended

Sep. 30, 2019

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories are valued at the lower of cost (using the First-In, First-Out and weighted average methods) or net realizable value. The Company's costs included in inventory primarily include resins, pulp, chemicals, direct labor, utilities, maintenance, depreciation, finishing supplies and an allocation of certain overhead costs. Machine start-up costs or abnormal machine shut downs are expensed in the period incurred and are not reflected in inventory. The Company reviews inventories at least quarterly to determine the necessity of write-offs for excess, obsolete or unsalable inventory. The Company estimates write-offs for inventory obsolescence and shrinkage based on its judgment of future realization. These reviews require the Company to assess customer and market demand. The following schedule details inventories by major class ($ in millions):

	September 30, 2019		December 31, 2018
Raw materials	$	53.2	$	50.2
Work in process	24.8		22.4
Finished goods	62.3		69.9
Supplies and other	9.1		9.0
Total	$	149.4	$	151.5

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Revenue Recognition

9 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue Recognition

The Company has two main sources of revenue: product sales and materials conversion. The Company recognizes product sales revenues when control of a product is transferred to the customer. For the majority of product sales, transfer of control occurs when the products are shipped from one of the Company’s manufacturing facilities to the customer. The cost of delivering finished goods to the Company’s customers is recorded as a component of cost of products sold. Those costs include the amounts paid to a third party to deliver the finished goods. Any freight costs billed to and paid by a customer are included in net sales. The Company also provides services to customers through the conversion of customer-owned raw materials into processed finished goods. In these transactions, the Company generally recognizes revenue as processing is completed.

Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied, which generally occurs when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Generally, the Company considers collectability of amounts due under a contract to be probable upon inception of a sale based on an evaluation of the credit worthiness of each customer. If collectability is not considered to be probable, the Company defers recognition of revenue on satisfied performance obligations until the uncertainty is resolved. Any variable consideration, such as discounts or price concessions, is set forth in the terms of the contract at inception, and is included in the assessment of the transaction price at the outset of the arrangement. The transaction price is allocated to the individual performance obligations due under the contract based on the relative stand-alone fair value of the performance obligations identified in the contract. The Company typically uses an observable price to determine the stand-alone selling price for separate performance obligations.

The Company does not typically include extended payment terms or significant financing components in its contracts with customers. Certain product sales contracts may include cash-based incentives (volume rebates or credits), which are accounted for as variable consideration.  We estimate these amounts at least quarterly based on the expected forecast quantities to be provided to customers and reduce revenues recognized accordingly. Incidental items that are immaterial in the context of the contract are recognized as expense in the period incurred. The Company generally expenses sales commissions when incurred because the amortization period is one year or less. These costs are recorded within sales and marketing expenses. The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. As a practical expedient, the Company treats shipping and handling activities that occur after control of the good transfers as fulfillment activities, and therefore, does not account for shipping and handling costs as a separate performance obligation.

Following is the Company’s net sales disaggregated by revenue source ($ in millions). Sales and usage-based taxes are excluded from net sales.

	Three Months Ended
	September 30, 2019						September 30, 2018
	AMS		EP		Total		AMS		EP		Total
Product revenues	$	122.7	$	116.0	$	238.7	$	117.9	$	124.2	$	242.1
Materials conversion revenues	2.3		12.9		15.2		1.9		13.9		15.8
Other revenues	1.1		1.4		2.5		1.0		1.4		2.4
Total revenues (1)	$	126.1	$	130.3	$	256.4	$	120.8	$	139.5	$	260.3

(1) Revenues include net hedging gains and losses for the three months ended September 30, 2019 and 2018.

	Nine Months Ended
	September 30, 2019						September 30, 2018
	AMS		EP		Total		AMS		EP		Total
Product revenues	$	362.9	$	365.5	$	728.4	$	346.9	$	378.6	$	725.5
Materials conversion revenues	6.2		41.6		47.8		10.3		50.1		60.4
Other revenues	4.2		3.9		8.1		2.9		3.8		6.7
Total revenues (1)	$	373.3	$	411.0	$	784.3	$	360.1	$	432.5	$	792.6

(1) Revenues include net hedging gains and losses for the nine months ended September 30, 2019 and 2018.

Net sales are attributed to the following geographic locations based on the location of the Company’s direct customers ($ in millions):

	Three Months Ended
	September 30, 2019						September 30, 2018
	AMS		EP		Total		AMS		EP		Total
United States	$	87.8	$	44.1	$	131.9	$	84.7	$	47.0	$	131.7
Europe and the former Commonwealth of Independent States	12.1		39.0		51.1		10.0		51.0		61.0
Asia/Pacific (including China)	20.7		22.4		43.1		20.3		17.9		38.2
Latin America	1.8		11.2		13.0		2.1		11.0		13.1
Other foreign countries	3.7		13.6		17.3		3.7		12.6		16.3
Total revenues (1)	$	126.1	$	130.3	$	256.4	$	120.8	$	139.5	$	260.3

(1) Revenues include net hedging gains and losses for the three months ended September 30, 2019 and 2018.

	Nine Months Ended
	September 30, 2019						September 30, 2018
	AMS		EP		Total		AMS		EP		Total
United States	$	258.5	$	142.4	$	400.9	$	247.6	$	146.7	$	394.3
Europe and the former Commonwealth of Independent States	38.7		125.1		163.8		36.5		168.6		205.1
Asia/Pacific (including China)	58.4		70.3		128.7		56.9		57.1		114.0
Latin America	5.3		34.6		39.9		7.8		33.0		40.8
Other foreign countries	12.4		38.6		51.0		11.3		27.1		38.4
Total revenues (1)	$	373.3	$	411.0	$	784.3	$	360.1	$	432.5	$	792.6

(1) Revenues include net hedging gains and losses for the nine months ended September 30, 2019 and 2018.

XML

Debt

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Debt

Debt

The components of total debt are summarized in the following table ($ in millions):

 

	September 30, 2019			December 31, 2018
Revolving credit facility - U.S. dollar borrowings	$	19.0		$	76.0
Term loan facility	198.0			199.5
6.875% senior unsecured notes due October 1, 2026, net of discount of $7.1 million and $7.6 million at September 30, 2019 and December 31, 2018, respectively	342.9			342.4
French employee profit sharing	4.6			6.6
Finance lease and capital lease obligations, respectively	3.3			4.7
Other	—			0.1
Debt issuance costs	(6.2		)	(7.2		)
Total debt	561.6			622.1
Less: Current debt	(1.9		)	(3.3		)
Long-term debt	$	559.7		$	618.8

Credit Facility

On September 25, 2018, the Company entered into a $700.0 million credit agreement (the “New Credit Agreement”), which replaced the Company’s previous senior secured credit facilities and provides for a five year $500.0 million revolving line of credit (the “Revolving Credit Facility”) and a seven year $200.0 million bank term loan facility (the “Term Loan Facility”). Subject to certain conditions, including the absence of a default or event of default under the New Credit Agreement, the Company may request incremental loans to be extended under the Revolving Credit Facility or the Term Loan Facility so long as the Company is in pro forma compliance with the financial covenants set forth in the New Credit Agreement and the aggregate of such increases does not exceed $400.0 million.

Borrowings under the Revolving Credit Facility will initially bear interest, at the Company’s option, at either (i) 1.75% in excess of a reserve adjusted London Interbank Offered Rate (“LIBOR”) or (ii) 0.75% in excess of an alternative base rate. Borrowings under the Term Loan Facility will initially bear interest, at the Company’s option, at either (i) 2.00% in excess of a reserve adjusted LIBOR rate or (ii) 1.00% in excess of an alternative base rate. The Term Loan amortizes at the rate of 1.0% per year and will mature on September 25, 2025.

Under the terms of the New Credit Agreement, the Company is required to maintain certain financial ratios and comply with certain financial covenants, including maintaining a net debt to EBITDA ratio, as defined in the New Credit Agreement, calculated on a trailing four fiscal quarter basis, not greater than 4.50 and an interest coverage ratio, also as defined in the New Credit Agreement, of not less than 3.00. In addition, borrowings and loans made under the New Credit Agreement are secured by substantially all of the Company’s and the guarantors’ personal property, excluding certain customary items of collateral, and will be guaranteed by the Company’s existing and future wholly-owned material domestic subsidiaries and by SWM Luxembourg. The Company was in compliance with all of its covenants under the New Credit Agreement at September 30, 2019.

Indenture for 6.875% Senior Unsecured Notes Due 2026

On September 25, 2018, the Company closed a private offering of $350.0 million of 6.875% senior unsecured notes due 2026 (the “Notes”). The Notes were sold in a private placement in reliance on Rule 144A and Regulation S under the Securities Act of 1933, as amended, pursuant to a purchase agreement between the Company, certain subsidiaries of the Company and J.P. Morgan Securities LLC, as representative of the initial purchasers. The Notes are guaranteed on a senior unsecured basis by each of the Company’s existing and future wholly-owned subsidiaries that is a borrower under or that guarantees obligations under the New Credit Agreement (as defined below) or that guarantees certain other indebtedness, subject to certain exceptions.

The Notes were issued pursuant to an Indenture (the “Indenture”), dated as of September 25, 2018, by and among the Company, the guarantors listed therein and Wilmington Trust, National Association, as trustee. The Indenture provides that interest on the Notes will accrue from September 25, 2018 and is payable semi-annually in arrears on April 1 and October 1 of each year, beginning on April 1, 2019, and the Notes mature on October 1, 2026.

The Company may redeem some or all of the Notes at any time on or after October 1, 2021, at the redemption prices set forth in the Indenture, together with accrued and unpaid interest, if any, to, but excluding, the redemption date. Prior to October 1, 2021, the Company may redeem some or all of the Notes at a price equal to 100% of the principal amount thereof, plus a “make-whole” premium as set forth in the Indenture. The Company may redeem up to 35% of the original aggregate principal amount of the Notes on or prior to October 1, 2021 with the proceeds of certain equity offerings at a redemption price equal to 106.875% of the principal amount of the Notes. If the Company sells certain assets or consummates certain change of control transactions, the Company will be required to make an offer to repurchase the Notes, subject to certain conditions.

The Indenture contains certain covenants that, among other things, limit the Company’s ability and the ability of its restricted subsidiaries to incur additional indebtedness, make certain dividends, repurchase Company stock or make other distributions, make certain investments, create liens, transfer or sell assets, merge or consolidate and enter into transactions with the Company’s affiliates. Such covenants are subject to a number of exceptions and qualifications set forth in the Indenture. The Indenture also contains certain customary events of default, including failure to make payments in respect of the principal amount of the Notes, failure to make payments of interest on the Notes when due and payable, failure to comply with certain covenants and agreements and certain events of bankruptcy or insolvency. The Company was in compliance with all of its covenants under the Indenture at September 30, 2019.

As of September 30, 2019, the average interest rate was 3.81% on outstanding US Revolving Credit Facility borrowings and 4.06% on outstanding Term Loan Facility borrowings. The effective rate on the 6.875% senior unsecured notes due 2026 was 7.248%. The weighted average effective interest rate on the Company's debt facilities, including the impact of interest rate hedges, was approximately 4.43% and 4.01% for the nine months ended September 30, 2019 and 2018, respectively.

As of September 30, 2019 and December 31, 2018, the Company's total deferred debt issuance costs, net of accumulated amortization, were $6.2 million and $7.2 million, respectively. Amortization expense of $0.9 million and $1.4 million was recorded during the nine months ended September 30, 2019 and 2018, respectively, and has been included as a component of Interest expense in the accompanying condensed consolidated statements of income.

Principal Repayments

Under the New Credit Agreement, the Company selects an "interest period" for each of its borrowings from the Revolving Credit Facility. The Company can repay such borrowings and borrow again at a subsequent date if it chooses to do so, providing it flexibility and efficient use of any excess cash. The Company currently has the intent and ability to allow its debt balances to remain outstanding and expects to continue to file notices of continuation related to its borrowings outstanding at September 30, 2019 such that those amounts are not expected to be repaid prior to the September 2023 expiration of the Revolving Credit Facility. Following are the expected maturities for the Company's debt obligations as of September 30, 2019 ($ in millions):

2019	$	0.6
2020	3.2
2021	3.8
2022	3.7
2023	22.2
Thereafter	541.4
Total	$	574.9

Fair Value of Debt

At September 30, 2019 and December 31, 2018, the fair market value of the Company's 6.875% senior unsecured notes was $371.0 million and $331.6 million, respectively. The fair market value for the senior unsecured notes was determined using quoted market prices, which are directly observable Level 1 inputs. The fair market value of all other debt as of September 30, 2019 and December 31, 2018 approximated the respective carrying amounts as the interest rates are variable and based on current market indices.

XML

Debt - Schedule of Debt Summarized (Details) - USD ($) $ in Millions	Sep. 30, 2019	Dec. 31, 2018	Sep. 25, 2018
Debt Instrument [Line Items]
Long-term Debt, Gross	$ 574.9
Total debt	561.6	$ 622.1
Other	0.0	0.1
Debt issuance costs	(6.2)	(7.2)
Less: Current debt	(1.9)	(3.3)
Long-term debt	559.7	618.8
Long-term Debt, Maturities, Repayments of Principal in Next Twelve Months	0.6
Long-term Debt, Maturities, Repayments of Principal in Year Two	3.2
Long-term Debt, Maturities, Repayments of Principal in Year Three	3.8
Long-term Debt, Maturities, Repayments of Principal in Year Four	3.7
Long-term Debt, Maturities, Repayments of Principal in Year Five	22.2
Thereafter	541.4
Revolving credit facility | Revolving credit facility - U.S. dollar borrowings
Debt Instrument [Line Items]
Long-term Debt, Gross	19.0	76.0
Term loan facility | Term loan facility
Debt Instrument [Line Items]
Long-term Debt, Gross	198.0	199.5
Senior unsecured notes
Debt Instrument [Line Items]
Discount	7.1	7.6
Senior unsecured notes | 6.875% senior unsecured notes due October 1, 2026, net of discount of $7.1 million and $7.6 million at September 30, 2019 and December 31, 2018, respectively
Debt Instrument [Line Items]
Long-term Debt, Gross	342.9	342.4
Interest rate			6.875%
French employee profit sharing
Debt Instrument [Line Items]
Long-term Debt, Gross	4.6	6.6
Finance lease and capital lease obligations, respectively
Debt Instrument [Line Items]
Long-term Debt, Gross	$ 3.3	$ 4.7

XML

Inventories (Details) - USD ($) $ in Millions	Sep. 30, 2019	Dec. 31, 2018
Inventory Disclosure [Abstract]
Raw materials	$ 53.2	$ 50.2
Work in process	24.8	22.4
Finished goods	62.3	69.9
Supplies and other	9.1	9.0
Total	$ 149.4	$ 151.5

XML

General (Details) $ in Millions	9 Months Ended
	Sep. 30, 2019 USD ($) country joint_venture segment production_location	Jan. 01, 2019 USD ($)
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of operating segments | segment	2
Number of countries in which entity operates (more than) | country	90
Number of production locations | production_location	22
Nature of Business [Line Items]
Right-of-use assets	$ 22.0
Lease obligation liabilities	$ 23.2
Accounting Standards Update 2016-02
Nature of Business [Line Items]
Right-of-use assets		$ 25.0
Lease obligation liabilities		$ 27.0
CHINA
Nature of Business [Line Items]
Equity method investment, ownership percentage	50.00%
Number of joint ventures | joint_venture	2

XML

Leases - Components of Lease Liabilities (Details) $ in Millions	Sep. 30, 2019 USD ($)
Finance
Current lease obligation	$ 0.4
Long-term lease obligation	2.9
Total lease obligation	3.3
Finance Lease, Right-of-Use Asset	2.9
Operating
Current lease obligation	4.7
Long-term lease obligation	18.5
Total lease obligation	23.2
Operating Lease, Right-of-Use Asset	$ 22.0

XML

Leases - Lease Term and Discount Rate (Details)	Sep. 30, 2019
Weighted-average remaining lease term (years)
Operating leases	6 years 10 months 24 days
Finance leases	7 years 8 months 12 days
Weighted-average discount rate
Operating leases	6.49%
Finance leases	5.28%

XML

General

9 Months Ended

Sep. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

General

General

Nature of Business

Schweitzer-Mauduit International, Inc. ("SWM," "we," or the "Company"), headquartered in the United States of America, is a multinational diversified producer of highly engineered solutions and advanced materials for a variety of industries. The Company maintains two operating product line segments: Advanced Materials & Structures and Engineered Papers.

The Advanced Materials & Structures ("AMS") segment produces mostly resin-based rolled goods such as nets, films and meltblown materials, typically through an extrusion process or other non-woven technologies. These products are used in a variety of specialty applications across the filtration, construction and infrastructure, transportation, industrial and medical end-markets.

The Engineered Papers ("EP") segment primarily serves the tobacco industry with production of various cigarette papers and reconstituted tobacco products ("Recon"). Traditional reconstituted tobacco leaf ("RTL") is used as a blend with virgin tobacco in cigarettes and used as wrappers and binders for cigars. Recon, as well as low ignition propensity ("LIP") cigarette paper, a specialty product with fire-safety features, are two key profit drivers, which together account for more than half of segment net sales. The EP segment also produces non-tobacco papers for both premium applications, such as energy storage and industrial commodity paper grades.

We conduct business in over 90 countries and operate 22 production locations worldwide, with locations in the U.S., Canada, United Kingdom, France, Luxembourg, Belgium, Russia, Brazil, China and Poland. We also have a 50% equity interest in two joint ventures in China. The first, China Tobacco Mauduit (Jiangmen) Paper Industry Ltd. ("CTM"), produces cigarette and porous plug wrap papers and the second, China Tobacco Schweitzer (Yunnan) Reconstituted Tobacco Co. Ltd. ("CTS"), produces RTL.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements and the notes thereto have been prepared in accordance with the instructions of Form 10-Q and Rule 10-01 of Regulation S-X of the Securities and Exchange Commission ("SEC") and do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America ("U.S. GAAP"). However, such information reflects all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim periods including the results of a business reclassified as a discontinued operation which is more fully described in Note 5. Discontinued Operations.

The results of operations for the three or nine months ended September 30, 2019 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 consolidated financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC on March 1, 2019.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned, majority-owned and controlled subsidiaries. The Company’s share of the net income of its 50%-owned joint ventures in China is included in the condensed consolidated statements of income as Income from equity affiliates, net of income taxes. Intercompany balances and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities in the condensed consolidated financial statements and accompanying notes. Estimates are used for, but not limited to, inventory valuation, useful lives of tangible and intangible assets, fair values, sales returns and rebates, receivables valuation, pension, postretirement and other benefits, restructuring and impairment, taxes and contingencies. Actual results could differ materially from those estimates.

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842): Amendments to the FASB Accounting Standards Codification." The new standard establishes a right-of-use model that requires a lessee to record a right-of-use asset and a lease liability on the balance sheet for all leases with terms longer than twelve months. Leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition in the income statement. This guidance was effective for annual reporting periods beginning after December 15, 2018, and interim periods thereafter. In July 2018, the FASB issued ASU 2018-11, "Leases (Topic 842) - Targeted Improvements," providing companies with the option to adopt the provisions of the standard prospectively without adjusting comparative periods; the Company has elected this option for transition and adopted the standard on January 1, 2019. The Company adopted the transition package of practical expedients permitted within the new standard, which among other things, allows the Company to carryforward historical lease classifications. In addition, the Company elected the hindsight practical expedient to determine the reasonably certain lease term for existing leases. The Company made an accounting policy election that will keep leases with an initial term of 12 months or less off of the balance sheet and will result in recognition of those lease payments in the consolidated statements of income on a straight-line basis over the lease term. The impact of the adoption of this standard to the consolidated balance sheets resulted in approximately $25 million in right-of-use assets and corresponding lease obligation liabilities of approximately $27 million as of January 1, 2019. Adoption resulted in an immaterial cumulative-effect adjustment to the opening balance of retained earnings and did not materially impact the consolidated statements of income. Additionally, the adoption of the new lease standard did not have an impact on the Company's debt covenant compliance under its current debt and indenture agreements.

In January 2017, the FASB issued ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment." The amendment eliminates the second step of the analysis that required the measurement of a goodwill impairment by comparing the implied value of a reporting unit’s goodwill and the goodwill’s carrying amount. This guidance is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company is currently in the process of evaluating the impact of the pronouncement and does not expect the adoption of this guidance to have a material impact on the consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurements." The new standard modifies the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, based on the concepts in the Concepts Statement, including the consideration of costs and benefits. The provisions of this ASU are effective for years beginning after December 15, 2019, with early adoption permitted. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The Company is currently finalizing the analysis on the impact of the pronouncement and does not expect the adoption of this guidance to have a material impact on the consolidated financial statements.

In August 2018, the FASB issued ASU 2018-14, "Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans." The new standard modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The provisions of this ASU are effective for years beginning after December 15, 2020, with early adoption permitted. The new standard requires the amendments to be applied on a retrospective basis for all

periods presented. The Company is currently in the process of evaluating the impact of the pronouncement and does not expect the adoption of this guidance to have a material impact on the consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract." The new standard provides updated guidance surrounding implementation costs associated with cloud computing arrangements that are service contracts. The provisions of this ASU are effective for years beginning after December 15, 2020, with early adoption permitted. The Company is currently in the process of evaluating the impact of the pronouncement and does not expect the adoption of this guidance to have a material impact on the consolidated financial statements.

XML

Postretirement and Other Benefits (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
United States
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Amortization of accumulated other comprehensive loss related to benefit plans	$ 2.0		$ 2.0
United States | Pension Benefits
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Service cost	0.0	$ 0.0	0.0	$ 0.0
Interest cost	1.2	1.0	3.5	3.2
Expected return on plan assets	(1.5)	(1.5)	(4.4)	(4.4)
Amortizations and other	0.5	0.7	1.5	2.4
Net periodic benefit cost	0.2	0.2	0.6	1.2
United States | OPEB Benefits
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Service cost	0.0	0.0	0.0	0.0
Interest cost	0.0	0.0	0.0	0.0
Expected return on plan assets	0.0	0.0	0.0	0.0
Amortizations and other	0.0	0.1	0.0	0.2
Net periodic benefit cost	0.0	0.1	0.0	0.2
French
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Amortization of accumulated other comprehensive loss related to benefit plans	0.8		0.8
French | Pension Benefits
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Service cost	0.3	0.2	0.8	0.8
Interest cost	0.1	0.1	0.3	0.3
Expected return on plan assets	(0.1)	0.0	(0.1)	(0.1)
Amortizations and other	0.2	0.2	0.6	0.6
Net periodic benefit cost	$ 0.5	$ 0.5	$ 1.6	$ 1.6

XML

Cover Page - shares	9 Months Ended
	Sep. 30, 2019	Nov. 04, 2019
Cover page.
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2019
Document Transition Report	false
Entity File Number	1-13948
Entity Registrant Name	SCHWEITZER-MAUDUIT INTERNATIONAL, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	62-1612879
Entity Address, Address Line One	100 North Point Center East,
Entity Address, Address Line Two	Suite 600
Entity Address, City or Town	Alpharetta,
Entity Address, State or Province	GA
Entity Address, Postal Zip Code	30022
City Area Code	800
Local Phone Number	514-0186
Title of 12(b) Security	Common stock, $0.10 par value
Trading Symbol	SWM
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		30,896,661
Current Fiscal Year End Date	--12-31
Entity Central Index Key	0001000623
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.1	$ 0.1
Preferred shares authorized (in shares)	10,000,000	10,000,000
Preferred shares issued (in shares)	0	0
Preferred shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.1	$ 0.1
Common shares authorized (in shares)	100,000,000	100,000,000
Common shares issued (in shares)	30,896,000	30,771,244
Common stock outstanding (in shares)	30,896,000	30,771,244

XML

Discontinued Operations (Tables)

9 Months Ended

Sep. 30, 2019

Discontinued Operations and Disposal Groups [Abstract]

Schedule of Disposal Groups, Including Discontinued Operations

Included in Other current assets, Other assets and Accrued expenses and Other current liabilities within the condensed consolidated balance sheet are the following major classes of assets and liabilities, respectively, associated with the discontinued operations ($ in millions):

	September 30, 2019		December 31, 2018
Assets of discontinued operations:
Current assets	$	0.8	$	0.8
Other assets	1.2		1.2
Liabilities of discontinued operations:
Current liabilities	0.1		0.1

Summary financial results of discontinued operations were as follows ($ in millions):

	Three Months Ended				Nine Months Ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
Net sales	$	—	$	—	$	—	$	—
Other income (expense)	—		0.1		—		(0.3		)
Loss from discontinued operations before income taxes	—		0.1		—		(0.3		)
Income tax (provision) benefit	—		—		—		—
Loss from discontinued operations	—		0.1		—		(0.3		)

XML

General (Policies)

9 Months Ended

Sep. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements and the notes thereto have been prepared in accordance with the instructions of Form 10-Q and Rule 10-01 of Regulation S-X of the Securities and Exchange Commission ("SEC") and do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America ("U.S. GAAP"). However, such information reflects all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim periods including the results of a business reclassified as a discontinued operation which is more fully described in Note 5. Discontinued Operations.

The results of operations for the three or nine months ended September 30, 2019 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 consolidated financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC on March 1, 2019.

Principles of Consolidation

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned, majority-owned and controlled subsidiaries. The Company’s share of the net income of its 50%-owned joint ventures in China is included in the condensed consolidated statements of income as Income from equity affiliates, net of income taxes. Intercompany balances and transactions have been eliminated.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities in the condensed consolidated financial statements and accompanying notes. Estimates are used for, but not limited to, inventory valuation, useful lives of tangible and intangible assets, fair values, sales returns and rebates, receivables valuation, pension, postretirement and other benefits, restructuring and impairment, taxes and contingencies. Actual results could differ materially from those estimates.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842): Amendments to the FASB Accounting Standards Codification." The new standard establishes a right-of-use model that requires a lessee to record a right-of-use asset and a lease liability on the balance sheet for all leases with terms longer than twelve months. Leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition in the income statement. This guidance was effective for annual reporting periods beginning after December 15, 2018, and interim periods thereafter. In July 2018, the FASB issued ASU 2018-11, "Leases (Topic 842) - Targeted Improvements," providing companies with the option to adopt the provisions of the standard prospectively without adjusting comparative periods; the Company has elected this option for transition and adopted the standard on January 1, 2019. The Company adopted the transition package of practical expedients permitted within the new standard, which among other things, allows the Company to carryforward historical lease classifications. In addition, the Company elected the hindsight practical expedient to determine the reasonably certain lease term for existing leases. The Company made an accounting policy election that will keep leases with an initial term of 12 months or less off of the balance sheet and will result in recognition of those lease payments in the consolidated statements of income on a straight-line basis over the lease term. The impact of the adoption of this standard to the consolidated balance sheets resulted in approximately $25 million in right-of-use assets and corresponding lease obligation liabilities of approximately $27 million as of January 1, 2019. Adoption resulted in an immaterial cumulative-effect adjustment to the opening balance of retained earnings and did not materially impact the consolidated statements of income. Additionally, the adoption of the new lease standard did not have an impact on the Company's debt covenant compliance under its current debt and indenture agreements.

In January 2017, the FASB issued ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment." The amendment eliminates the second step of the analysis that required the measurement of a goodwill impairment by comparing the implied value of a reporting unit’s goodwill and the goodwill’s carrying amount. This guidance is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company is currently in the process of evaluating the impact of the pronouncement and does not expect the adoption of this guidance to have a material impact on the consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurements." The new standard modifies the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, based on the concepts in the Concepts Statement, including the consideration of costs and benefits. The provisions of this ASU are effective for years beginning after December 15, 2019, with early adoption permitted. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The Company is currently finalizing the analysis on the impact of the pronouncement and does not expect the adoption of this guidance to have a material impact on the consolidated financial statements.

In August 2018, the FASB issued ASU 2018-14, "Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans." The new standard modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The provisions of this ASU are effective for years beginning after December 15, 2020, with early adoption permitted. The new standard requires the amendments to be applied on a retrospective basis for all

periods presented. The Company is currently in the process of evaluating the impact of the pronouncement and does not expect the adoption of this guidance to have a material impact on the consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract." The new standard provides updated guidance surrounding implementation costs associated with cloud computing arrangements that are service contracts. The provisions of this ASU are effective for years beginning after December 15, 2020, with early adoption permitted. The Company is currently in the process of evaluating the impact of the pronouncement and does not expect the adoption of this guidance to have a material impact on the consolidated financial statements.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Litigation

Brazil

Imposto sobre Circulação de Mercadorias e Serviços ("ICMS"), a form of value-added tax in Brazil, was assessed to SWM-B in December of 2000. SWM-B received two assessments from the tax authorities of the State of Rio de Janeiro (the "State") for unpaid ICMS taxes on certain raw materials from January 1995 through October 1998 and from November 1998 through November 2000 (collectively, the "Raw Materials Assessments"). The Raw Materials Assessments concerned the accrual and use by SWM-B of ICMS tax credits generated from the production and sale of certain non-tobacco related grades of paper sold domestically. SWM-B contested the Raw Materials Assessments based on Article 150, VI of the Brazilian Federal Constitution of 1988, which grants immunity from ICMS taxes to papers intended for printing books, newspapers and periodicals, on the ground that tax immunity extends to the raw material inputs used to produce such papers. In 2015, the first chamber of the Federal Supreme Court decided the first Raw Materials Assessment in favor of SWM-B.  On May 24, 2019, the second chamber of the Federal Supreme Court decided Assessment 2 against SWM-B in the amount of approximately $11.6 million. SWM-B, with assistance of outside counsel, is currently evaluating the decision and exploring its options and other defenses to partially satisfy or reduce the judgment and SWM-B plans to pursue these avenues vigorously. However, because the outcome of any reductions and defenses is uncertain, SWM-B recorded an expense sufficient to satisfy this amount in the second quarter of 2019. In the third quarter of 2019, SWM-B reclassified $0.6 million associated with the Raw Materials Assessment to Cost of products sold from interest expense based on additional information received from the Brazilian government. This judgment may be settled over the course of 60 months; however, we have requested that the Court clarify its decision. Until a decision is rendered on our request, we are not obligated to initiate payments. Interest and penalties will continue to accrue until a decision on our request is rendered.

The amounts recorded in the accompanying condensed consolidated statement of income for the nine months ended September 30, 2019 related to the above two assessments consist of the following:

	Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019
Income Statement Classification	(Expense) Benefit			(Expense) Benefit
Cost of products sold1	$	(0.6	)	$	(1.5	)
Operating profit1	(0.6		)	(1.5		)
Other expense2	—			(2.2		)
Interest expense2	0.6			(7.1		)
Income from continuing operations before income taxes	—			(10.8		)
Income tax benefit3	1.0			4.1
Net income	$	1.0		$	(6.7	)

¹Cost of products sold reflects the net of $2.6 million of expense associated with the Raw Materials Assessment and $1.1 million benefit associated with separate litigation against the Brazilian Instituto Nacional do Seguro Social ("INSS"), the Brazilian Social Security Administration, regarding additional assessments of social security contributions charged to the Company in the early 1990s. This benefit is expected to be received in tax credits to be applied against future payments of social security taxes over the following ten to twelve months. Amounts are reflected in Engineered Papers reporting segment in segment disclosures.

²Other expense includes penalties and fees associated with the Raw Materials Assessment. Interest expense relates to the Raw Materials Assessment.

³The Income tax benefit increased as a result of additional information received during the third quarter of 2019.

SWM-B received assessments from the tax authorities of the State for unpaid ICMS and Fundo Estadual de Combate à Pobreza ("FECP", a value-added tax similar to ICMS) taxes on interstate purchases of electricity.  The State issued four sets of assessments against SWM-B, one for May 2006 - November 2007, a second for January 2008 - December 2010, a third for September 2011 - September 2013, which was replaced by a smaller assessment for January - June 2013, and a fourth for July 2013 - December 2017 (collectively the "Electricity Assessments").  SWM-B challenged all Electricity Assessments in administrative proceedings before the State tax council (in the first-level court Junta de Revisão Fiscal and the appellate court (the "Conselho de Contribuintes")) based on Resolution 1.610/89, which defers these taxes on electricity purchased by an "electricity-intensive consumer."  In 2014, a majority of the Conselho de Contribuintes sitting en banc ruled against SWM-B in each of the first and second electricity assessments ($4.4 million and $8.0 million, respectively, based on the foreign currency exchange rate at September 30, 2019), and SWM-B is now pursuing challenges to these assessments in the State judicial system. Different chambers of the judicial court granted SWM-B preliminary injunctions against enforcement of these two assessments in the State judicial system. The Conselho de Contribuintes unanimously upheld SWM-B's challenge to the third Electricity Assessment and dismissed this Electricity Assessment on technical grounds after the State admitted the tax did not apply as it had asserted. Instead, in August 2018, the State filed a revised Electricity Assessment in the amount of $0.6 million for ICMS on electricity purchased during part of 2013. In August 2018, the State filed a fourth Electricity Assessment in the amount of $9.1 million pertaining to ICMS and FECP on electricity purchased from July 2013 to December 2017. SWM-B filed challenges to these recent assessments in the first-level administrative court on the same grounds as the older cases. Both the Junta de Revisão Fiscal and the Conselho de Contribuintes ruled against SWM-B in the last two Electricity Assessments. SWM-B plans to appeal these rulings to the full bench of the Conselho de Contribuintes.  The State issued a new regulation effective January 1, 2018 that only specific industries are “electricity-intensive consumers,” a list that excludes paper manufacturers. SWM-B contends this regulation shows that paper manufacturers were electricity-intensive consumers eligible to defer ICMS before 2018.

SWM-B believes that the Electricity Assessments will ultimately be resolved in its favor. No liability has been recorded in our condensed consolidated financial statements for these assessments based on our evaluation of these matters under the facts and law as presently understood. The Company can give no assurance as to the ultimate outcome of such proceedings.

Europe

The Company's European subsidiaries are parties from time to time to litigation, usually (but not always) related to labor matters. There are approximately 19 such cases pending. In accordance with US GAAP, the Company has recorded

on its balance sheet an amount that it believes is adequate as a contingency against probable future losses. There can be no assurance, however, that any losses that might be incurred will be in an amount equal to or less than the amount recorded or that the Company will not have losses in respect of litigation in which no reserve has been taken.

Environmental Matters

The Company's operations are subject to various nations' federal, state and local laws, regulations and ordinances relating to environmental matters. The nature of the Company's operations exposes it to the risk of claims with respect to various environmental matters, and there can be no assurance that material costs or liabilities will not be incurred in connection with such claims. While the Company has incurred in the past several years, and will continue to incur, capital and operating expenditures in order to comply with environmental laws and regulations, it believes that its future cost of compliance with environmental laws, regulations and ordinances, and its exposure to liability for environmental claims and its obligation to participate in the remediation and monitoring of certain hazardous waste disposal sites, will not have a material effect on its financial condition, results of operations or cash flows. However, future events, such as changes in existing laws and regulations (including the enforcement thereof), or unknown contamination of sites owned, operated or used for waste disposal by the Company (including contamination caused by prior owners and operators of such sites or other waste generators), or similar circumstances arising at our unconsolidated joint ventures, may give rise to additional costs which could have a material effect on the Company's financial condition or results of operations.

General Matters

In the ordinary course of its business activities, the Company and its subsidiaries are involved in certain other judicial, administrative and regulatory proceedings involving both private parties and governmental authorities. These proceedings include insured and uninsured regulatory, employment, general and commercial liability, environmental, intellectual property rights and other matters. At this time, the Company does not expect any of these proceedings to have a material adverse effect on its reputation, business, financial condition, results of operations or cash flows. However, as the outcomes of such proceedings are unpredictable, the Company can give no assurance that the results of any such proceedings will not materially affect its reputation, business, financial condition, results of operations or cash flows.

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Intangible Assets

9 Months Ended

Sep. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

Intangible Assets

The gross carrying amount and accumulated amortization for intangible assets consisted of the following ($ in millions):

	September 30, 2019
	Gross Carrying Amount		Accumulated Amortization		Accumulated Impairments		Accumulated Foreign Exchange		Net Carrying Amount
Amortized Intangible Assets (AMS)
Customer relationships	$	276.3	$	63.4	$	—	$	3.1	$	209.8
Developed technology	34.0		10.3		—		0.6		23.1
Trade names	21.8		0.8		20.7		0.3		—
Non-compete agreements	2.9		2.2		—		—		0.7
Patents	1.5		0.4		—		—		1.1
Total	$	336.5	$	77.1	$	20.7	$	4.0	$	234.7
Unamortized Intangible Assets (AMS)
Trade names	$	20.0	$	—	$	0.1	$	0.1	$	19.8

	December 31, 2018
	Gross Carrying Amount		Accumulated Amortization		Accumulated Impairments		Accumulated Foreign Exchange			Net Carrying Amount
Amortized Intangible Assets (AMS)
Customer relationships	$	276.3	$	50.4	$	—	$	0.7		$	225.2
Developed technology	34.0		8.5		—		0.2			25.3
Trade names	21.8		0.8		20.7		0.3			—
Non-compete agreements	2.9		1.7		—		—			1.2
Patents	1.5		0.4		—		—			1.1
Total	$	336.5	$	61.8	$	20.7	$	1.2		$	252.8
Unamortized Intangible Assets (AMS)
Trade names	$	20.0	$	—	$	0.1	$	(0.1	)	$	20.0

Amortization expense of intangible assets was $5.1 million and $5.2 million for the three months ended September 30, 2019 and 2018, respectively, and $15.3 million and $15.6 million for the nine months ended September 30, 2019 and 2018, respectively. Finite-lived intangibles in the AMS segment are expensed using the straight-line amortization method. The estimated average aggregate amortization expense is $19.7 million in each of the next five years.

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Discontinued Operations

9 Months Ended

Sep. 30, 2019

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

The Company's former paper mill in San Pedro, Philippines has been reported as a discontinued operation since 2013. This operation was previously presented as a component of the EP segment. The physical assets at the Philippines paper mill were sold during the fourth quarter of 2013, and the Company is currently exploring options to sell or lease its remaining net assets. For all periods presented, results of this operation have been removed from each individual line within the statements of income and the operating activities section of the statements of cash flow. In each case, a separate line has been added for the net results of discontinued operations.

Included in Other current assets, Other assets and Accrued expenses and Other current liabilities within the condensed consolidated balance sheet are the following major classes of assets and liabilities, respectively, associated with the discontinued operations ($ in millions):

	September 30, 2019		December 31, 2018
Assets of discontinued operations:
Current assets	$	0.8	$	0.8
Other assets	1.2		1.2
Liabilities of discontinued operations:
Current liabilities	0.1		0.1

Summary financial results of discontinued operations were as follows ($ in millions):

	Three Months Ended				Nine Months Ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
Net sales	$	—	$	—	$	—	$	—
Other income (expense)	—		0.1		—		(0.3		)
Loss from discontinued operations before income taxes	—		0.1		—		(0.3		)
Income tax (provision) benefit	—		—		—		—
Loss from discontinued operations	—		0.1		—		(0.3		)

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Net Income Per Share (Tables)

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Reconciliation of the Common and Potential Common Shares Outstanding Used in Earnings Per Share Calculation

A reconciliation of the average number of common and potential common shares outstanding used in the calculations of basic and diluted net income per share follows ($ in millions, shares in thousands):

	Three Months Ended						Nine Months Ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
Numerator (basic and diluted):
Net income	$	27.7		$	41.0		$	65.6		$	87.3
Less: Dividends paid to participating securities	—			(0.1		)	(0.2		)	(0.2		)
Less: Undistributed earnings available to participating securities	(0.1		)	(0.2		)	(0.2		)	(0.4		)
Undistributed and distributed earnings available to common stockholders	$	27.6		$	40.7		$	65.2		$	86.7
Denominator:
Average number of common shares outstanding	30,662.8			30,569.6			30,648.4			30,541.6
Effect of dilutive stock-based compensation	169.1			153.2			156.3			141.5
Average number of common and potential common shares outstanding	30,831.9			30,722.8			30,804.7			30,683.1

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Restructuring and Impairment Activities (Tables)

9 Months Ended

Sep. 30, 2019

Restructuring and Related Activities [Abstract]

Changes in Restructuring Liabilities

Changes in the restructuring liabilities, substantially all of which are employee-related, during the periods ended September 30, 2019 and December 31, 2018 are summarized as follows ($ in millions):

	Nine Months Ended			Year Ended
	September 30, 2019			December 31, 2018
Balance at beginning of year	$	1.4		$	1.7
Accruals for announced programs	2.0			1.3
Cash payments	(2.7		)	(3.3		)
Other	—			1.8
Exchange rate impacts	(0.1		)	(0.1		)
Balance at end of period	$	0.6		$	1.4

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Postretirement and Other Benefits (Tables)

9 Months Ended

Sep. 30, 2019

Retirement Benefits [Abstract]

Net Pension Benefit Costs

The components of net pension and OPEB benefit costs for U.S. employees and net pension benefit costs for French employees during the three or nine months ended September 30, 2019 and 2018 were as follows ($ in millions):

	Three Months Ended September 30,
	U.S. Pension Benefits						French Pension Benefits					U.S. OPEB Benefits
	2019			2018			2019			2018		2019		2018
Service cost	$	—		$	—		$	0.3		$	0.2	$	—	$	—
Interest cost	1.2			1.0			0.1			0.1		—		—
Expected return on plan assets	(1.5		)	(1.5		)	(0.1		)	—		—		—
Amortizations and other	0.5			0.7			0.2			0.2		—		0.1
Net periodic benefit cost	$	0.2		$	0.2		$	0.5		$	0.5	$	—	$	0.1

	Nine Months Ended September 30,
	U.S. Pension Benefits						French Pension Benefits						U.S. OPEB Benefits
	2019			2018			2019			2018			2019		2018
Service cost	$	—		$	—		$	0.8		$	0.8		$	—	$	—
Interest cost	3.5			3.2			0.3			0.3			—		—
Expected return on plan assets	(4.4		)	(4.4		)	(0.1		)	(0.1		)	—		—
Amortizations and other	1.5			2.4			0.6			0.6			—		0.2
Net periodic benefit cost	$	0.6		$	1.2		$	1.6		$	1.6		$	—	$	0.2

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Derivatives - Additional Information (Details) $ in Thousands, € in Millions				1 Months Ended	3 Months Ended		9 Months Ended
	Oct. 24, 2018 USD ($)	Sep. 25, 2018 USD ($)	Jan. 20, 2017 USD ($)	Jan. 31, 2018	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Jan. 31, 2027 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)	Sep. 11, 2019 USD ($)	Sep. 11, 2019 EUR (€)	Jan. 29, 2019 USD ($)	Jan. 29, 2019 EUR (€)	Oct. 24, 2018 EUR (€)	Jan. 20, 2017 EUR (€)
Derivative [Line Items]
Document Period End Date							Sep. 30, 2019
Interest Rate Swap
Derivative [Line Items]
Derivative, term of contract			3 years
Derivative, notional amount			$ 315,000									$ 185,000
Derivative, fixed rate			1.65%									1.724%	1.724%				1.65%
Cross Currency Interest Rate Contract
Derivative [Line Items]
Derivative, term of contract	3 years		3 years
Derivative, notional amount	$ 75,000		$ 100,000									$ 100,000	€ 90.9	$ 75,000	€ 66.0	€ 65.4	€ 93.7
Cross Currency Interest Rate Contract | Long
Derivative [Line Items]
Derivative, fixed rate	6.875%		1.65%									5.638%	5.638%	6.875%	6.875%	6.875%	1.65%
Cross Currency Interest Rate Contract | Short
Derivative [Line Items]
Derivative, fixed rate	3.6725%		0.18%									6.875%	6.875%	4.0525%	4.0525%	3.6725%	0.18%
Cross Currency Interest Rate Contract | Derivatives Designated as Investment Hedging Relationships
Derivative [Line Items]
Derivative, term of contract				25 months
Cross Currency Interest Rate Contract | Derivatives Designated as Investment Hedging Relationships | Accounting Standards Update 2017-12
Derivative [Line Items]
Loss, net of taxes, recognized in other comprehensive income on cross currency swap derivative							$ (6,700)
Amount reclassified from accumulated other comprehensive income into income as interest expense					$ 200	$ 200	600	$ 600
Derivative amounts excluded from effectiveness testing as interest expense					$ 300	$ 500	$ 1,200	$ 1,400
Derivatives designated as hedges | Interest Rate Swap | Derivatives Designated as Cash Flow Hedging Relationships
Derivative [Line Items]
Derivative, notional amount		$ 130,000
Gain on settlement date		$ 1,800
Derivative, Settlement Amount												$ 220
Forecast [Member] | Interest Rate Swap
Derivative [Line Items]
Derivative, notional amount									$ 100,000	$ 150,000	$ 185,000

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Intangible Assets (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Unamortized Intangible Assets (Advanced Materials & Structures)
Amortization expense of intangible assets	$ 5.1	$ 5.2	$ 15.3	$ 15.6
Estimated average amortization, remainder of year	19.7		19.7
Estimated average amortization, year two	19.9		19.9
Estimated average amortization, year three	19.9		19.9
Estimated average amortization, year four	19.9		19.9
Estimated average amortization, year five	19.9		19.9
Advanced Materials & Structures
Amortized Intangible Assets
Gross Carrying Amount	336.5		336.5		$ 336.5
Accumulated Amortization	77.1		77.1		61.8
Accumulated Impairments	20.7		20.7		20.7
Accumulated Foreign Exchange	4.0		4.0		1.2
Net Carrying Amount	234.7		234.7		252.8
Advanced Materials & Structures | Trade names
Amortized Intangible Assets
Accumulated Impairments	0.1		0.1		0.1
Accumulated Foreign Exchange	0.1		0.1		(0.1)
Unamortized Intangible Assets (Advanced Materials & Structures)
Gross Carrying Amount	20.0		20.0		20.0
Net Carrying Amount	19.8		19.8		20.0
Advanced Materials & Structures | Customer relationships
Amortized Intangible Assets
Gross Carrying Amount	276.3		276.3		276.3
Accumulated Amortization	63.4		63.4		50.4
Accumulated Impairments	0.0		0.0		0.0
Accumulated Foreign Exchange	3.1		3.1		0.7
Net Carrying Amount	209.8		209.8		225.2
Advanced Materials & Structures | Developed technology
Amortized Intangible Assets
Gross Carrying Amount	34.0		34.0		34.0
Accumulated Amortization	10.3		10.3		8.5
Accumulated Impairments	0.0		0.0		0.0
Accumulated Foreign Exchange	0.6		0.6		0.2
Net Carrying Amount	23.1		23.1		25.3
Advanced Materials & Structures | Trade names
Amortized Intangible Assets
Gross Carrying Amount	21.8		21.8		21.8
Accumulated Amortization	0.8		0.8		0.8
Accumulated Impairments	20.7		20.7		20.7
Accumulated Foreign Exchange	0.3		0.3		0.3
Net Carrying Amount	0.0		0.0		0.0
Advanced Materials & Structures | Non-compete agreements
Amortized Intangible Assets
Gross Carrying Amount	2.9		2.9		2.9
Accumulated Amortization	2.2		2.2		1.7
Accumulated Impairments	0.0		0.0		0.0
Accumulated Foreign Exchange	0.0		0.0		0.0
Net Carrying Amount	0.7		0.7		1.2
Advanced Materials & Structures | Patents
Amortized Intangible Assets
Gross Carrying Amount	1.5		1.5		1.5
Accumulated Amortization	0.4		0.4		0.4
Accumulated Impairments	0.0		0.0		0.0
Accumulated Foreign Exchange	0.0		0.0		0.0
Net Carrying Amount	$ 1.1		$ 1.1		$ 1.1

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Discontinued Operations (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Document Period End Date			Sep. 30, 2019
Loss from discontinued operations	$ 0.0	$ 0.1	$ 0.0	$ (0.3)
Plant In San Pedro, Philippines | Discontinued Operations, Disposed of by Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net sales	0.0	0.0	0.0	0.0
Other expense	0.0		0.0	(0.3)
Disposal Group, Including Discontinued Operation, Other Income		0.1
Loss from discontinued operations before income taxes	0.0	0.1	0.0	(0.3)
Income tax (provision) benefit	0.0	0.0	0.0	0.0
Loss from discontinued operations	0.0	$ 0.1	0.0	$ (0.3)
Assets of discontinued operations:
Current assets	0.8		0.8		$ 0.8
Other assets	1.2		1.2		1.2
Liabilities of discontinued operations:
Current liabilities	$ 0.1		$ 0.1		$ 0.1

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Goodwill

9 Months Ended

Sep. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Goodwill

The changes in the carrying amount of goodwill by segment for the nine months ended September 30, 2019 were as follows ($ in millions):

	AMS			EP			Total
Goodwill as of December 31, 2018	$	333.1		$	5.0		$	338.1
Foreign currency translation adjustments	(2.1		)	(0.2		)	(2.3		)
Goodwill as of September 30, 2019	$	331.0		$	4.8		$	335.8

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Leases

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Leases

Leases

The Company adopted the guidance contained in ASC 842, Leases, on January 1, 2019 using the modified retrospective approach permitted by ASU 2018-11, Leases (Topic 842): Targeted Improvements. Under this method, the Company applied the new leases standard at the adoption date and recognized a cumulative-effect adjustment to the opening balance of retained earnings as of January 1, 2019. The comparative period presented in the condensed consolidated financial statements for 2018 continue to be presented in accordance with previous GAAP as codified in ASC 840, Leases.

The Company leases certain office space, warehouses, manufacturing facilities, land, and equipment. The Company elected the practical expedient which allows that leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. For leases without lease terms (i.e. month-to-month leases), lease expense is recognized as incurred and no asset or liability is recorded for these leases.

The Company accounts for lease components (e.g., fixed payments including rent, real estate taxes and insurance costs) separately from non-lease components (e.g., common-area maintenance costs). Most leases include one or more options to renew, with renewal terms that can extend the lease term. The exercise of lease renewal options is at our sole discretion. Lease assets and liabilities are determined based on the lease term including those periods for which renewal options are considered reasonably certain to be exercised. Certain leases also include options to purchase the leased property, although we are unlikely to do so in most cases. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of the Company's leases do not provide a readily determinable implicit rate. Therefore, the Company must estimate its incremental borrowing rate to discount the lease payments based on information available at lease commencement.

Components of right-of-use assets and lease liabilities presented in the balance sheet are as follows ($ in million):

Assets	Classification	September 30, 2019
Operating lease right-of-use assets	Other assets	$	22.0
Finance lease right-of-use assets	Property, plant and equipment, net	2.9
Liabilities	Classification	September 30, 2019
Current operating lease obligation	Accrued expenses and other current liabilities	$	4.7
Long-term operating lease obligation	Other liabilities	18.5
Total operating lease obligation		$	23.2
Current finance lease obligation	Current debt	$	0.4
Long-term finance lease obligation	Long-term debt	2.9
Total finance lease obligation		$	3.3

	September 30, 2019
Assets	Finance			Operating			Total
Land and improvements	$	—		$	0.1		$	0.1
Buildings and improvements	2.9			21.7			24.6
Machinery and equipment	0.6			4.6			5.2
Gross property, plant and equipment	3.5			26.4			29.9
Less: Accumulated depreciation	(0.6		)	(4.4		)	(5.0		)
Right-of-use assets	$	2.9		$	22.0		$	24.9

Components of lease expense incurred by the Company are as follow ($ in millions):

Lease Cost	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Finance lease cost (cost resulting from lease payments)
Interest expense on lease liabilities	$	—	$	0.1
Amortization of right-of-use assets	0.1		0.3
Operating lease cost	1.6		4.7
Short-term lease expense	—		0.2
Total Lease Cost	$	1.7	$	5.3

The following table represents future contractual lease liabilities for the next five years and thereafter for finance and operating leases ($ in millions):

Maturity of Lease Liabilities	Finance		Operating		Total
Remainder of 2019	$	0.1	$	1.6	$	1.7
2020	0.5		5.8		6.3
2021	0.5		5.1		5.6
2022	0.5		4.0		4.5
2023	0.5		2.8		3.3
2024	0.4		2.3		2.7
Thereafter	1.6		7.1		8.7
Total Lease Payments	$	4.1	$	28.7	$	32.8
Less: Interest	0.8		5.5		6.3
Present Value of Lease Liabilities	$	3.3	$	23.2	$	26.5

Lease Term and Discount Rate	September 30, 2019
Weighted-average remaining lease term (years)
Operating leases	6.9
Finance leases	7.7
Weighted-average discount rate
Operating leases	6.49	%
Finance leases	5.28	%

Other Information (millions)	Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	4.7
Operating cash flows from finance leases	0.3
Leased assets obtained in exchange for new finance lease liabilities	0.5
Leased assets obtained in exchange for new operating lease liabilities	3.2

Future minimum obligations under non-cancelable operating leases having an initial or remaining term in excess of one year as of December 31, 2018 were as follows ($ in millions):

2019	$	5.8
2020	5.0
2021	4.4
2022	3.6
2023	3.0
Thereafter	8.1
Total	$	29.9

Leases

Leases

The Company adopted the guidance contained in ASC 842, Leases, on January 1, 2019 using the modified retrospective approach permitted by ASU 2018-11, Leases (Topic 842): Targeted Improvements. Under this method, the Company applied the new leases standard at the adoption date and recognized a cumulative-effect adjustment to the opening balance of retained earnings as of January 1, 2019. The comparative period presented in the condensed consolidated financial statements for 2018 continue to be presented in accordance with previous GAAP as codified in ASC 840, Leases.

The Company leases certain office space, warehouses, manufacturing facilities, land, and equipment. The Company elected the practical expedient which allows that leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. For leases without lease terms (i.e. month-to-month leases), lease expense is recognized as incurred and no asset or liability is recorded for these leases.

The Company accounts for lease components (e.g., fixed payments including rent, real estate taxes and insurance costs) separately from non-lease components (e.g., common-area maintenance costs). Most leases include one or more options to renew, with renewal terms that can extend the lease term. The exercise of lease renewal options is at our sole discretion. Lease assets and liabilities are determined based on the lease term including those periods for which renewal options are considered reasonably certain to be exercised. Certain leases also include options to purchase the leased property, although we are unlikely to do so in most cases. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of the Company's leases do not provide a readily determinable implicit rate. Therefore, the Company must estimate its incremental borrowing rate to discount the lease payments based on information available at lease commencement.

Components of right-of-use assets and lease liabilities presented in the balance sheet are as follows ($ in million):

Assets	Classification	September 30, 2019
Operating lease right-of-use assets	Other assets	$	22.0
Finance lease right-of-use assets	Property, plant and equipment, net	2.9
Liabilities	Classification	September 30, 2019
Current operating lease obligation	Accrued expenses and other current liabilities	$	4.7
Long-term operating lease obligation	Other liabilities	18.5
Total operating lease obligation		$	23.2
Current finance lease obligation	Current debt	$	0.4
Long-term finance lease obligation	Long-term debt	2.9
Total finance lease obligation		$	3.3

	September 30, 2019
Assets	Finance			Operating			Total
Land and improvements	$	—		$	0.1		$	0.1
Buildings and improvements	2.9			21.7			24.6
Machinery and equipment	0.6			4.6			5.2
Gross property, plant and equipment	3.5			26.4			29.9
Less: Accumulated depreciation	(0.6		)	(4.4		)	(5.0		)
Right-of-use assets	$	2.9		$	22.0		$	24.9

Components of lease expense incurred by the Company are as follow ($ in millions):

Lease Cost	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Finance lease cost (cost resulting from lease payments)
Interest expense on lease liabilities	$	—	$	0.1
Amortization of right-of-use assets	0.1		0.3
Operating lease cost	1.6		4.7
Short-term lease expense	—		0.2
Total Lease Cost	$	1.7	$	5.3

The following table represents future contractual lease liabilities for the next five years and thereafter for finance and operating leases ($ in millions):

Maturity of Lease Liabilities	Finance		Operating		Total
Remainder of 2019	$	0.1	$	1.6	$	1.7
2020	0.5		5.8		6.3
2021	0.5		5.1		5.6
2022	0.5		4.0		4.5
2023	0.5		2.8		3.3
2024	0.4		2.3		2.7
Thereafter	1.6		7.1		8.7
Total Lease Payments	$	4.1	$	28.7	$	32.8
Less: Interest	0.8		5.5		6.3
Present Value of Lease Liabilities	$	3.3	$	23.2	$	26.5

Lease Term and Discount Rate	September 30, 2019
Weighted-average remaining lease term (years)
Operating leases	6.9
Finance leases	7.7
Weighted-average discount rate
Operating leases	6.49	%
Finance leases	5.28	%

Other Information (millions)	Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	4.7
Operating cash flows from finance leases	0.3
Leased assets obtained in exchange for new finance lease liabilities	0.5
Leased assets obtained in exchange for new operating lease liabilities	3.2

Future minimum obligations under non-cancelable operating leases having an initial or remaining term in excess of one year as of December 31, 2018 were as follows ($ in millions):

2019	$	5.8
2020	5.0
2021	4.4
2022	3.6
2023	3.0
Thereafter	8.1
Total	$	29.9

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2019

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segments

($ in millions)	Net Sales
	Three Months Ended								Nine Months Ended
	September 30, 2019				September 30, 2018				September 30, 2019				September 30, 2018
Advanced Materials & Structures	$	126.1	49.2	%	$	120.8	46.4	%	$	373.3	47.6	%	$	360.1	45.4	%
Engineered Papers	130.3		50.8		139.5		53.6		411.0		52.4		432.5		54.6
Total Consolidated	$	256.4	100.0	%	$	260.3	100.0	%	$	784.3	100.0	%	$	792.6	100.0	%

($ in millions)	Operating Profit
	Three Months Ended										Nine Months Ended
	September 30, 2019					September 30, 2018					September 30, 2019					September 30, 2018
Advanced Materials & Structures	$	19.3		55.8	%	$	11.9		38.3	%	$	54.6		50.0	%	$	39.5		36.5	%
Engineered Papers	27.3			78.9		27.5			88.4		88.5			81.0		94.7			87.5
Unallocated	(12.0		)	(34.7	)	(8.3		)	(26.7	)	(33.9		)	(31.0	)	(26.0		)	(24.0	)
Total Consolidated	$	34.6		100.0	%	$	31.1		100.0	%	$	109.2		100.0	%	$	108.2		100.0	%

($ in millions)	Segment Assets
	September 30, 2019		December 31, 2018
Advanced Materials & Structures	$	765.3	$	796.1
Engineered Papers	502.5		527.4
Unallocated	182.4		143.0
Total Consolidated	$	1,450.2	$	1,466.5

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Inventories (Tables)

9 Months Ended

Sep. 30, 2019

Inventory Disclosure [Abstract]

Schedule of Inventories by Major Class

The following schedule details inventories by major class ($ in millions):

	September 30, 2019		December 31, 2018
Raw materials	$	53.2	$	50.2
Work in process	24.8		22.4
Finished goods	62.3		69.9
Supplies and other	9.1		9.0
Total	$	149.4	$	151.5

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Debt (Tables)

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Schedule of Total Debt

The components of total debt are summarized in the following table ($ in millions):

 

	September 30, 2019			December 31, 2018
Revolving credit facility - U.S. dollar borrowings	$	19.0		$	76.0
Term loan facility	198.0			199.5
6.875% senior unsecured notes due October 1, 2026, net of discount of $7.1 million and $7.6 million at September 30, 2019 and December 31, 2018, respectively	342.9			342.4
French employee profit sharing	4.6			6.6
Finance lease and capital lease obligations, respectively	3.3			4.7
Other	—			0.1
Debt issuance costs	(6.2		)	(7.2		)
Total debt	561.6			622.1
Less: Current debt	(1.9		)	(3.3		)
Long-term debt	$	559.7		$	618.8

Schedule of Maturities of Long-term Debt

Following are the expected maturities for the Company's debt obligations as of September 30, 2019 ($ in millions):

2019	$	0.6
2020	3.2
2021	3.8
2022	3.7
2023	22.2
Thereafter	541.4
Total	$	574.9

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Goodwill (Details) $ in Millions	9 Months Ended
	Sep. 30, 2019 USD ($)
Goodwill [Roll Forward]
Goodwill, beginning of period	$ 338.1
Foreign currency translation adjustments	(2.3)
Goodwill, end of period	335.8
Advanced Materials & Structures
Goodwill [Roll Forward]
Goodwill, beginning of period	333.1
Foreign currency translation adjustments	(2.1)
Goodwill, end of period	331.0
Engineered Papers
Goodwill [Roll Forward]
Goodwill, beginning of period	5.0
Foreign currency translation adjustments	(0.2)
Goodwill, end of period	$ 4.8

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Leases - Future Minimum Obligations Under Non-Cancelable Operating Leases (Details) $ in Millions	Dec. 31, 2018 USD ($)
Leases [Abstract]
2019	$ 5.8
2020	5.0
2021	4.4
2022	3.6
2023	3.0
Thereafter	8.1
Total	$ 29.9

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Debt - Additional Information (Details)		9 Months Ended
	Sep. 25, 2018 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Dec. 31, 2018 USD ($)
Debt Instrument [Line Items]
Long-term Debt, Maturities, Repayments of Principal in Next Twelve Months		$ 600,000
Amount borrowed		561,600,000		$ 622,100,000
Deferred debt issuance costs		6,200,000		7,200,000
Long-term Debt, Fiscal Year Maturity [Abstract]
2020		3,200,000
2021		3,800,000
2022		3,700,000
2023		22,200,000
Thereafter		541,400,000
Total		574,900,000
Interest expense
Debt Instrument [Line Items]
Amortization of debt issuance costs		900,000	$ 1,400,000
Senior unsecured notes
Long-term Debt, Fiscal Year Maturity [Abstract]
Fair market value		$ 371,000,000.0		331,600,000
New Credit Facility
Debt Instrument [Line Items]
Maximum borrowings under credit facility	$ 700,000,000.0
EBITDA ratio	4.50
Interest coverage ratio	3.00
Effective interest rate on debt facilities		4.43%	4.01%
6.875% Senior Unsecured Notes Due 2026 | Senior unsecured notes
Debt Instrument [Line Items]
Debt instrument, face amount	$ 350,000,000.0
Interest rate	6.875%
Effective rate		7.248%
Redemption price, percentage	100.00%
Amount to be redeemed, percentage	35.00%
Redemption price for equity offerings, percentage	106.875%
Long-term Debt, Fiscal Year Maturity [Abstract]
Total		$ 342,900,000		342,400,000
Revolving credit facility - U.S. dollar borrowings | Revolving credit facility
Long-term Debt, Fiscal Year Maturity [Abstract]
Total		$ 19,000,000.0		76,000,000.0
Term loan facility | Term loan facility
Debt Instrument [Line Items]
Debt instrument term	7 years
Debt instrument, face amount	$ 200,000,000.0
Amortization rate		1.00%
Average interest rate on outstanding borrowings		4.06%
Long-term Debt, Fiscal Year Maturity [Abstract]
Total		$ 198,000,000.0		$ 199,500,000
Revolving Credit Facility | New Credit Facility and Bond Indenture
Debt Instrument [Line Items]
Maximum borrowings under credit facility	$ 400,000,000.0
Debt instrument term	5 years
Revolving line of credit	$ 500,000,000.0
Revolving Credit Facility | Revolving credit facility - U.S. dollar borrowings
Debt Instrument [Line Items]
Average interest rate on outstanding borrowings		3.81%
LIBOR | Revolving Credit Facility | New Credit Facility and Bond Indenture
Debt Instrument [Line Items]
Basis spread on variable interest rate		1.75%
LIBOR | Term loan facility | New Credit Facility and Bond Indenture
Debt Instrument [Line Items]
Basis spread on variable interest rate		2.00%
Base Rate | Revolving Credit Facility | New Credit Facility and Bond Indenture
Debt Instrument [Line Items]
Basis spread on variable interest rate		0.75%
Base Rate | Term loan facility | New Credit Facility and Bond Indenture
Debt Instrument [Line Items]
Basis spread on variable interest rate		1.00%

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Leases - Other Information (Details) $ in Millions	9 Months Ended
	Sep. 30, 2019 USD ($)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$ 4.7
Operating cash flows from finance leases	0.3
Leased assets obtained in exchange for new finance lease liabilities	0.5
Leased assets obtained in exchange for new operating lease liabilities	$ 3.2

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Other Comprehensive Income - Components of Accumulated Comprehensive Income (Details) - USD ($) $ in Millions	Sep. 30, 2019	Jun. 30, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Dec. 31, 2017
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive loss	$ 574.8	$ 572.6	$ 557.9	$ 568.7	$ 542.5	$ 546.7
Accumulated other comprehensive loss
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive loss	(135.1)	$ (121.7)	(124.5)	$ (114.2)	$ (111.6)	$ (89.4)
Net gain (loss) on pension and OPEB liability adjustments
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive loss	(26.6)		(28.2)
Accumulated other comprehensive loss, tax benefit	12.1		11.4
Unrealized (loss) gain on derivative instruments
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive loss	(5.0)		(0.6)
Accumulated other comprehensive loss, tax benefit	2.8		1.6
Unrealized (loss) gain on foreign currency translation
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive loss	(103.5)		(95.7)
Accumulated other comprehensive loss, tax benefit	$ 2.6		$ 1.7

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Leases - Components of Right-of-Use Assets (Details) $ in Millions	Sep. 30, 2019 USD ($)
Finance
Gross property, plant and equipment	$ 3.5
Less: Accumulated depreciation	(0.6)
Right-of-use assets	2.9
Operating
Gross property, plant and equipment	26.4
Less: Accumulated depreciation	(4.4)
Right-of-use assets	22.0
Total
Gross property, plant and equipment	29.9
Less: Accumulated depreciation	(5.0)
Right-of-use assets	24.9
Land and improvements
Finance
Gross property, plant and equipment	0.0
Operating
Gross property, plant and equipment	0.1
Total
Gross property, plant and equipment	0.1
Buildings and improvements
Finance
Gross property, plant and equipment	2.9
Operating
Gross property, plant and equipment	21.7
Total
Gross property, plant and equipment	24.6
Machinery and equipment
Finance
Gross property, plant and equipment	0.6
Operating
Gross property, plant and equipment	4.6
Total
Gross property, plant and equipment	$ 5.2

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Condensed Consolidated Balance Sheets - USD ($) $ in Millions	Sep. 30, 2019	Dec. 31, 2018
Current assets
Cash and cash equivalents	$ 84.9	$ 93.8
Accounts receivable, net	156.9	154.6
Inventories	149.4	151.5
Income taxes receivable	10.2	12.2
Assets held for sale	12.0	12.0
Other current assets	5.5	5.1
Total current assets	418.9	429.2
Property, plant and equipment, net	320.0	340.3
Deferred income tax benefits	4.1	0.3
Investment in equity affiliates	47.3	51.9
Goodwill	335.8	338.1
Intangible assets	254.5	272.8
Other assets	69.6	33.9
Total assets	1,450.2	1,466.5
Current liabilities
Current debt	1.9	3.3
Accounts payable	64.1	65.7
Income taxes payable	1.1	1.6
Accrued expenses	77.4	72.9
Total current liabilities	144.5	143.5
Long-term debt	559.7	618.8
Long-term income tax payable	25.6	27.0
Pension and other postretirement benefits	28.0	28.2
Deferred income tax liabilities	46.9	48.0
Other liabilities	70.7	43.1
Total liabilities	875.4	908.6
Stockholders’ equity:
Preferred stock, $0.10 par value; 10,000,000 shares authorized; none issued or outstanding	0.0	0.0
Common stock, $0.10 par value; 100,000,000 shares authorized; 30,896,000 and 30,771,244 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively	3.1	3.1
Additional paid-in-capital	75.1	71.1
Retained earnings	631.7	608.2
Accumulated other comprehensive loss, net of tax	(135.1)	(124.5)
Total stockholders’ equity	574.8	557.9
Total liabilities and stockholders’ equity	$ 1,450.2	$ 1,466.5

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Condensed Consolidated Statements of Cash Flow - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Operating
Net income	$ 65.6	$ 87.3
Less: Loss from discontinued operations	0.0	(0.3)
Income from continuing operations	65.6	87.6
Non-cash items included in net income:
Depreciation and amortization	43.4	46.8
Restructuring-related impairment	0.0	0.2
Deferred income tax	(2.2)	3.0
Pension and other postretirement benefits	2.1	2.8
Stock-based compensation	4.0	3.7
Loss from equity affiliates	(0.4)	0.5
Brazil tax assessment accruals, net (Note 13)	10.9	0.0
Other items	2.0	(0.1)
Changes in operating working capital, net of assets acquired:
Accounts receivable	(4.6)	(23.7)
Inventories	(1.8)	(3.2)
Prepaid expenses	(0.4)	(0.3)
Accounts payable	2.3	1.7
Accrued expenses	(1.4)	(4.3)
Accrued income taxes	(3.2)	(1.5)
Net changes in operating working capital	(9.1)	(31.3)
Net cash provided by operating activities of:
Continuing operations	118.9	93.0
Discontinued operations	0.0	0.2
Net cash provided by operations	118.9	93.2
Investing
Capital spending	(20.0)	(19.8)
Capitalized software costs	(3.9)	(1.1)
Other investing	1.1	2.6
Net cash used in investing	(22.8)	(18.3)
Financing
Cash dividends paid to SWM stockholders	(40.8)	(39.7)
Changes in short-term debt	(0.1)	(1.4)
Proceeds from issuances of long-term debt	0.1	636.1
Payments on long-term debt	(60.9)	(676.9)
Purchases of common stock	(1.0)	(2.8)
Payments of Debt Issuance Costs	0.0	3.4
Net cash used in financing	(102.7)	(88.1)
Effect of exchange rate changes on cash and cash equivalents	(2.3)	(3.2)
Decrease in cash and cash equivalents	(8.9)	(16.4)
Cash and cash equivalents at beginning of period	93.8	106.9
Cash and cash equivalents at end of period	84.9	90.5
Supplemental Cash Flow Disclosures
Cash paid for interest, net	17.6	20.6
Cash paid for taxes, net	17.1	20.6
Change in capital spending in accounts payable and accrued liabilities	2.9	0.5
Increase (Decrease) In Income Tax Payable, Noncurrent	0.0	12.0
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability	0.0	(10.2)
Proceeds from Equity Method Investment, Distribution	$ 2.6	$ 2.0

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Commitments and Contingencies (Details)	3 Months Ended	9 Months Ended
	Sep. 30, 2019 USD ($) claim	Sep. 30, 2019 USD ($) claim	Sep. 30, 2018 USD ($)	Dec. 31, 2000 assessment
Loss Contingencies [Line Items]
Document Period End Date		Sep. 30, 2019
(Expense) Benefit		$ (10,900,000)	$ 0
Raw Materials Assessment | Unfavorable Regulatory Action
Loss Contingencies [Line Items]
Number of assessments from the tax authorities regarding ICMS taxes | assessment				2
Raw Materials Assessment 2 | Unfavorable Regulatory Action
Loss Contingencies [Line Items]
Settlement period		60 months
Electricity Assessment | Unfavorable Regulatory Action
Loss Contingencies [Line Items]
Number of assessments from the tax authorities regarding ICMS taxes | assessment				4
Raw Materials Assessment And Remaining Electricity Assessments | Unfavorable Regulatory Action
Loss Contingencies [Line Items]
Liability recorded	$ 0	$ 0
Maximum | Raw Materials Assessment 2 | Unfavorable Regulatory Action
Loss Contingencies [Line Items]
Loss contingency, range of possible loss	11,600,000	11,600,000
Maximum | Electricity Assessment One | Unfavorable Regulatory Action
Loss Contingencies [Line Items]
Loss contingency, range of possible loss	4,400,000	4,400,000
Maximum | Second Electricity Assessment | Unfavorable Regulatory Action
Loss Contingencies [Line Items]
Loss contingency, range of possible loss	8,000,000.0	8,000,000.0
Maximum | Electricity Assessment Three | Unfavorable Regulatory Action
Loss Contingencies [Line Items]
Loss contingency, range of possible loss	600,000	600,000
Maximum | Electricity Assessment Four | Unfavorable Regulatory Action
Loss Contingencies [Line Items]
Loss contingency, range of possible loss	9,100,000	9,100,000
Cost of products sold1 | Unfavorable Regulatory Action
Loss Contingencies [Line Items]
(Expense) Benefit	(600,000)	(1,500,000)
Cost of products sold1 | Raw Materials Assessment 2 | Unfavorable Regulatory Action
Loss Contingencies [Line Items]
(Expense) Benefit		(2,600,000)
Operating profit1 | Unfavorable Regulatory Action
Loss Contingencies [Line Items]
(Expense) Benefit	(600,000)	(1,500,000)
Other expense2 | Unfavorable Regulatory Action
Loss Contingencies [Line Items]
(Expense) Benefit	0	(2,200,000)
Interest expense2 | Unfavorable Regulatory Action
Loss Contingencies [Line Items]
(Expense) Benefit	600,000	(7,100,000)
Income from continuing operations before income taxes | Unfavorable Regulatory Action
Loss Contingencies [Line Items]
(Expense) Benefit	0	(10,800,000)
Provision for income taxes | Unfavorable Regulatory Action
Loss Contingencies [Line Items]
(Expense) Benefit	1,000,000.0	4,100,000
Net income | Unfavorable Regulatory Action
Loss Contingencies [Line Items]
(Expense) Benefit	1,000,000.0	(6,700,000)
Positive Outcome of Litigation | Cost of products sold1 | Social Security Assessment
Loss Contingencies [Line Items]
Tax credits	$ 1,100,000	$ 1,100,000
Pending Litigation | Cases Against European Subsidiaries
Loss Contingencies [Line Items]
Loss Contingency, Pending Claims, Number | claim	19	19

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Segment Information

9 Months Ended

Sep. 30, 2019

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company's two operating product line segments are also the Company's reportable segments: Advanced Materials & Structures and Engineered Papers. The AMS segment primarily produces engineered resin-based rolled goods such as nets, films and other non-wovens for use in high-performance applications in the filtration, infrastructure and construction, transportation, medical and industrial end-markets. It consists of the operations of various acquisitions. The EP segment primarily produces various cigarette papers and Recon for sale to cigarette manufacturers. The EP segment also includes non-tobacco paper for battery separators, printing and writing, drinking straw wrap and furniture laminates.

Information about Net Sales and Operating Profit

The accounting policies of these segments are the same as those described in Note 2. Summary of Significant Accounting Policies in the notes to the consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2018. The Company primarily evaluates segment performance and allocates resources based on operating profit. Expense amounts not associated with segments are referred to as unallocated expenses.

($ in millions)	Net Sales
	Three Months Ended								Nine Months Ended
	September 30, 2019				September 30, 2018				September 30, 2019				September 30, 2018
Advanced Materials & Structures	$	126.1	49.2	%	$	120.8	46.4	%	$	373.3	47.6	%	$	360.1	45.4	%
Engineered Papers	130.3		50.8		139.5		53.6		411.0		52.4		432.5		54.6
Total Consolidated	$	256.4	100.0	%	$	260.3	100.0	%	$	784.3	100.0	%	$	792.6	100.0	%

($ in millions)	Operating Profit
	Three Months Ended										Nine Months Ended
	September 30, 2019					September 30, 2018					September 30, 2019					September 30, 2018
Advanced Materials & Structures	$	19.3		55.8	%	$	11.9		38.3	%	$	54.6		50.0	%	$	39.5		36.5	%
Engineered Papers	27.3			78.9		27.5			88.4		88.5			81.0		94.7			87.5
Unallocated	(12.0		)	(34.7	)	(8.3		)	(26.7	)	(33.9		)	(31.0	)	(26.0		)	(24.0	)
Total Consolidated	$	34.6		100.0	%	$	31.1		100.0	%	$	109.2		100.0	%	$	108.2		100.0	%

($ in millions)	Segment Assets
	September 30, 2019		December 31, 2018
Advanced Materials & Structures	$	765.3	$	796.1
Engineered Papers	502.5		527.4
Unallocated	182.4		143.0
Total Consolidated	$	1,450.2	$	1,466.5

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Derivatives

9 Months Ended

Sep. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives

Derivatives

In the normal course of business, the Company is exposed to foreign currency exchange rate risk and interest rate risk on its variable-rate debt. To manage these risks, the Company utilizes a variety of practices including, where considered appropriate, derivative instruments. The Company has no derivative instruments for trading or speculative purposes or derivatives with credit risk-related contingent features. All derivative instruments used by the Company are either exchange traded or are entered into with major financial institutions in order to reduce credit risk and risk of nonperformance by third parties. The fair values of the Company’s derivative instruments are determined using observable inputs and are considered Level 2 assets or liabilities.

The Company utilizes currency forward, swap and, to a lesser extent, option contracts to selectively hedge its exposure to foreign currency risk when it is practical and economical to do so. The use of these contracts minimizes transactional exposure to exchange rate changes. We designate certain of our foreign currency hedges as cash flow hedges. Changes in the fair value of cash flow hedges are reported as a component of Accumulated other comprehensive income (loss) and reclassified into earnings when the forecasted transaction affects earnings. For foreign exchange contracts not designated as cash flow hedges, changes in the contracts’ fair values are recorded to net income each period.

The Company selectively hedges its exposure to interest rate increases on variable-rate, long-term debt when it is practical and economical to do so. Changes in the fair value of interest rate contracts considered cash flow hedges are reported as a component of Accumulated other comprehensive income (loss) and reclassified into earnings when the forecasted transaction affects earnings.

On January 20, 2017, the Company entered into an interest rate swap transaction with a major financial institution for a three year term on a notional amount of $315 million. The interest rate swap is intended to manage the Company's interest rate risk by fixing the interest rate on a portion of the Company's debt currently outstanding under its credit facility that was previously subject to a floating interest rate equal to 1-month LIBOR plus a credit spread. The swap provides for the Company to pay a fixed rate of 1.65% per annum in addition to the credit spread on such portion of its outstanding debt in exchange for receiving a variable interest rate based on 1-month LIBOR. On September 25, 2018, in conjunction with the debt refinancing discussed in Note 11. Debt, the Company settled a notional amount of $130 million which resulted in a gain of $1.8 million as of the settlement date. This gain will be amortized on a ratable basis from Accumulated other comprehensive income (loss) into income as interest expense over the remaining term of the interest rate swap. On September 11, 2019, the Company terminated this interest rate swap. Concurrently, on September 11, 2019, the Company entered into a pay-fixed, receive-variable interest rate swap with a maturity date of January 31, 2027. The instrument is a hedge on a portion of the Company’s debt facility through the existing credit agreement. Under the terms of the interest rate swap, SWM will pay a fixed amount of interest each period in an amount equal to 1.724% on a notional amount of $185 million and receive interest payments monthly in an amount equal to the One-Month USD-LIBOR rate on the notional amount. The notional amount will reduce throughout the term of the swap as follows:

• September 13, 2019 - December 31, 2020    $185 million notional

• December 31, 2020 - December 31, 2021    $150 million notional

• December 31, 2021 - January 31, 2027    $100 million notional

As with the previous interest rate swap, the terms of the swap mirror the terms of the underlying debt, including timing of the payments and interest rates.

On January 20, 2017, the Company entered into a three year cross-currency swap with a major financial institution designated as a hedge of a portion of the Company's net investment in certain Euro-denominated subsidiaries. The terms of the cross-currency swap provide for an exchange of principal on a notional amount of $100 million swapped to €93.7 million at maturity. The Company will receive from our swap counterparty U.S. dollar interest at a fixed rate of 1.65% per annum and pay to our swap counterparty Euro interest at a fixed rate of -0.18% per annum. On September 11, 2019, SWM entered into an offsetting swap with a major financial institution whose terms perfectly mirrored the January 20, 2017 swap and which economically offset the previous cross-currency swap. At the maturity date of the new swap and the previous swap, January 20, 2020, there will be no cash impact to the Company to settle these instruments as they will perfectly offset each other.

On October 24, 2018, the Company entered into a three year cross-currency swap with a major financial institution designated as a hedge of a portion of the Company's net investment in certain Euro-denominated subsidiaries. The terms of the cross-currency swap provide for an exchange of principal on a notional amount of $75 million swapped to €65.4 million at maturity. The Company will receive from our swap counterparty U.S. dollar interest at a fixed rate of 6.875% per annum and pay to our swap counterparty Euro interest at a fixed rate of 3.6725% per annum. The cross-currency swap will mature on October 1, 2021.

On January 29, 2019, the Company entered into a cross-currency swap with a major financial institution designated as a hedge of a portion of the Company's net investment in certain Euro-denominated subsidiaries. The terms of the cross-currency swap provide for an exchange of principal on a notional amount of $75 million swapped to €66.0 million at maturity. The Company will receive from our swap counterparty U.S. dollar interest at a fixed rate of 6.875% per annum and pay to our swap counterparty Euro interest at a fixed rate of 4.0525% per annum. The cross-currency swap will mature on October 1, 2021.

On September 11, 2019, the Company entered into a new pay-EUR, receive-USD cross-currency swap arrangement with a major financial institution having a maturity date of April 1, 2023. The terms of the cross-currency swap provide for an exchange of principal on a notional amount of $100 million swapped to €90.9 million at maturity. Under the terms of the new cross-currency swap, SWM will pay a fixed amount of Euro-denominated interest at a rate of 5.638% semiannually and receive USD denominated payments at a rate of 6.875% semiannually on the notional amount of the swap.

The following table presents the fair value of asset and liability derivatives and the respective condensed consolidated balance sheet locations at September 30, 2019 ($ in millions):

 

	Asset Derivatives			Liability Derivatives
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedges:
Foreign exchange contracts	Accounts receivable, net	$	4.0	Accrued expenses and other current liabilities	$	4.0
Foreign exchange contracts	Other assets	11.3		Other liabilities	3.7
Interest rate contracts	Accounts receivable, net	—		Other liabilities	1.9
Total derivatives designated as hedges		15.3			9.6
Derivatives not designated as hedges:
Foreign exchange contracts	Accounts receivable, net	0.1		Accrued expenses and other current liabilities	0.1
Total derivatives not designated as hedges		0.1			0.1
Total derivatives		$	15.4		$	9.7

The following table presents the fair value of asset and liability derivatives and the respective condensed consolidated balance sheet locations at December 31, 2018 ($ in millions):

 

	Asset Derivatives			Liability Derivatives
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedges:
Foreign exchange contracts	Accounts receivable, net	$	2.0	Accrued expenses and other current liabilities	$	1.3
Foreign exchange contracts	Other assets	1.0		Other liabilities	8.8
Interest rate contracts	Other assets	1.8		Other liabilities	—
Total derivatives designated as hedges		4.8			10.1
Derivatives not designated as hedges:
Foreign exchange contracts	Accounts receivable, net	0.1		Accounts payable	—
Total derivatives not designated as hedges		0.1			—
Total derivatives		$	4.9		$	10.1

The following table provides the gross effect that derivative instruments in cash flow hedging relationships had on Accumulated other comprehensive income (loss) and results of operations ($ in millions):

Derivatives Designated as Cash Flow Hedging Relationships	Unrealized Gain (Loss) Recognized in AOCI on Derivatives, Net of Tax												Location of Gain (Loss) Reclassified from AOCI	Gain (Loss) Reclassified from AOCI
	Three Months Ended						Nine Months Ended							Three Months Ended						Nine Months Ended
	September 30,						September 30,							September 30,						September 30,
	2019			2018			2019			2018				2019			2018			2019			2018
Foreign exchange contracts	$	(1.3	)	$	(0.4	)	$	(1.5	)	$	(3.1	)	Net sales	$	(0.3	)	$	(0.1	)	$	(0.9	)	$	0.6
Foreign exchange contracts	—			(0.4		)	0.1			(0.4		)	Other income (expense), net	(0.4		)	0.1			(0.3		)	0.1
Interest rate contracts	0.1			1.2			1.5			4.2			Interest expense	2.5			0.8			5.7			1.7
Total	$	(1.2	)	$	0.4		$	0.1		$	0.7			$	1.8		$	0.8		$	4.5		$	2.4

The Company's designated derivative instruments are highly effective. As such, related to the hedge ineffectiveness or amounts excluded from hedge effectiveness testing, there were no gains or losses recognized immediately in income for the three and nine months ended September 30, 2019 or 2018, other than those related to the cross-currency swap, noted below.

In January 2018, the Company early adopted the guidance in ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities." Upon adoption of this standard, the Company elected to de-designate the original hedging relationship of its pay-EUR, receive-USD cross currency swap and re-designate the cross currency swap with the terms based on the spot rate of the EUR. Prospectively, future changes in the components related to the spot change on the notional will be recorded in OCI and remain there until the hedged subsidiaries are substantially liquidated. Starting with the adoption date, all coupon payments will be recorded in earnings and the initial value of excluded components currently recorded in Accumulated other comprehensive income (loss) as an unrealized translation adjustment will be amortized into interest expense over the remaining 25 months of the swap, resulting in a positive impact to Net income. As of September 30, 2019, the gain, net of taxes, recognized in Other comprehensive loss on all cross currency swap derivatives was $6.7 million. For the three months ended September 30, 2019 and 2018, respectively, $0.2 million and $0.2 million was reclassified from Accumulated other comprehensive

income (loss) into income as interest expense and $0.3 million and $0.5 million was recognized in income as derivative amounts excluded from effectiveness testing as Interest expense. For the nine months ended September 30, 2019 and 2018, respectively, $0.6 million and $0.6 million was reclassified from Accumulated other comprehensive loss into income as interest expense and $1.2 million and $1.4 million was recognized in income as derivative amounts excluded from effectiveness testing as Interest expense.

The following table provides the effect that derivative instruments not designated as cash flow hedging instruments had on net income ($ in millions):

Derivatives Not Designated as Cash Flow Hedging Instruments	Location of Gain (Loss) Recognized in Income	Amount of Gain (Loss) Recognized in Income
		Three Months Ended					Nine Months Ended
		September 30, 2019			September 30, 2018		September 30, 2019			September 30, 2018
Foreign exchange contracts	Other income (expense), net	$	(0.1	)	$	—	$	(0.1	)	$	(2.1	)

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Leases (Tables)

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Components of Right-of-Use Assets and Lease Liabilities

Components of right-of-use assets and lease liabilities presented in the balance sheet are as follows ($ in million):

Assets	Classification	September 30, 2019
Operating lease right-of-use assets	Other assets	$	22.0
Finance lease right-of-use assets	Property, plant and equipment, net	2.9
Liabilities	Classification	September 30, 2019
Current operating lease obligation	Accrued expenses and other current liabilities	$	4.7
Long-term operating lease obligation	Other liabilities	18.5
Total operating lease obligation		$	23.2
Current finance lease obligation	Current debt	$	0.4
Long-term finance lease obligation	Long-term debt	2.9
Total finance lease obligation		$	3.3

	September 30, 2019
Assets	Finance			Operating			Total
Land and improvements	$	—		$	0.1		$	0.1
Buildings and improvements	2.9			21.7			24.6
Machinery and equipment	0.6			4.6			5.2
Gross property, plant and equipment	3.5			26.4			29.9
Less: Accumulated depreciation	(0.6		)	(4.4		)	(5.0		)
Right-of-use assets	$	2.9		$	22.0		$	24.9

Components of Lease Expense, Lease Term and Discount Rate, and Other Information

Components of lease expense incurred by the Company are as follow ($ in millions):

Lease Cost	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Finance lease cost (cost resulting from lease payments)
Interest expense on lease liabilities	$	—	$	0.1
Amortization of right-of-use assets	0.1		0.3
Operating lease cost	1.6		4.7
Short-term lease expense	—		0.2
Total Lease Cost	$	1.7	$	5.3

Lease Term and Discount Rate	September 30, 2019
Weighted-average remaining lease term (years)
Operating leases	6.9
Finance leases	7.7
Weighted-average discount rate
Operating leases	6.49	%
Finance leases	5.28	%

Other Information (millions)	Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	4.7
Operating cash flows from finance leases	0.3
Leased assets obtained in exchange for new finance lease liabilities	0.5
Leased assets obtained in exchange for new operating lease liabilities	3.2

Maturity of Lease Liabilities, Finance Leases

The following table represents future contractual lease liabilities for the next five years and thereafter for finance and operating leases ($ in millions):

Maturity of Lease Liabilities	Finance		Operating		Total
Remainder of 2019	$	0.1	$	1.6	$	1.7
2020	0.5		5.8		6.3
2021	0.5		5.1		5.6
2022	0.5		4.0		4.5
2023	0.5		2.8		3.3
2024	0.4		2.3		2.7
Thereafter	1.6		7.1		8.7
Total Lease Payments	$	4.1	$	28.7	$	32.8
Less: Interest	0.8		5.5		6.3
Present Value of Lease Liabilities	$	3.3	$	23.2	$	26.5

Maturity of Lease Liabilities, Operating Leases

The following table represents future contractual lease liabilities for the next five years and thereafter for finance and operating leases ($ in millions):

Maturity of Lease Liabilities	Finance		Operating		Total
Remainder of 2019	$	0.1	$	1.6	$	1.7
2020	0.5		5.8		6.3
2021	0.5		5.1		5.6
2022	0.5		4.0		4.5
2023	0.5		2.8		3.3
2024	0.4		2.3		2.7
Thereafter	1.6		7.1		8.7
Total Lease Payments	$	4.1	$	28.7	$	32.8
Less: Interest	0.8		5.5		6.3
Present Value of Lease Liabilities	$	3.3	$	23.2	$	26.5

Future Minimum Obligations Under Non-Cancelable Operating Leases

Future minimum obligations under non-cancelable operating leases having an initial or remaining term in excess of one year as of December 31, 2018 were as follows ($ in millions):

2019	$	5.8
2020	5.0
2021	4.4
2022	3.6
2023	3.0
Thereafter	8.1
Total	$	29.9