x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to |
Large accelerated filer x | Accelerated filer o | |
Non-accelerated filer o | Smaller reporting company o |
Item | Page | ||
Part I — Financial Information | |||
1. | |||
2. | |||
3. | |||
4. | |||
Part II — Other Information | |||
1. | |||
1A. | |||
6. | |||
Part I. | Financial Information |
Item 1. | Financial Statements |
Three Months Ended | Six Months Ended | ||||||||||||||
June 27, 2015 | June 28, 2014 | June 27, 2015 | June 28, 2014 | ||||||||||||
Net Sales | $ | 220,892 | $ | 212,531 | $ | 442,240 | $ | 456,031 | |||||||
Cost of Sales | 175,871 | 160,217 | 360,347 | 348,936 | |||||||||||
Gross Margin | 45,021 | 52,314 | 81,893 | 107,095 | |||||||||||
Selling and general expenses | 9,771 | 9,010 | 22,067 | 17,237 | |||||||||||
Other operating expense, net (Note 8) | 26,665 | 37,094 | 27,295 | 40,284 | |||||||||||
Operating Income | 8,585 | 6,210 | 32,531 | 49,574 | |||||||||||
Interest expense | 9,299 | 3,225 | 18,623 | 3,225 | |||||||||||
Interest and miscellaneous expense (income), net | (50 | ) | 5 | (78 | ) | 4 | |||||||||
Income (Loss) Before Income Taxes | (664 | ) | 2,980 | 13,986 | 46,345 | ||||||||||
Income tax expense (benefit) (Note 9) | (352 | ) | (1,581 | ) | 3,778 | 10,836 | |||||||||
Net Income (Loss) | $ | (312 | ) | $ | 4,561 | $ | 10,208 | $ | 35,509 | ||||||
Earnings Per Share of Common Stock (Note 7) | |||||||||||||||
Basic earnings per share | $ | (0.01 | ) | $ | 0.11 | $ | 0.24 | $ | 0.84 | ||||||
Diluted earnings per share | $ | (0.01 | ) | $ | 0.11 | $ | 0.24 | $ | 0.84 | ||||||
Dividends Declared Per Share | $ | 0.07 | $ | — | $ | 0.14 | $ | — |
Comprehensive Income (Loss): | |||||||||||||||
Net Income (Loss) | $ | (312 | ) | $ | 4,561 | $ | 10,208 | $ | 35,509 | ||||||
Other Comprehensive Income (Loss) | |||||||||||||||
Amortization of pension and postretirement plans, net of income tax (expense) benefit of ($1,348), $3,756, ($2,646) and $3,279 | 2,396 | (6,535 | ) | 4,704 | (5,705 | ) | |||||||||
Total other comprehensive income (loss) | 2,396 | (6,535 | ) | 4,704 | (5,705 | ) | |||||||||
Comprehensive Income (Loss) | $ | 2,084 | $ | (1,974 | ) | $ | 14,912 | $ | 29,804 |
June 27, 2015 | December 31, 2014 | ||||||
Assets | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 73,348 | $ | 65,977 | |||
Accounts receivable, less allowance for doubtful accounts of $151 and $151 | 43,449 | 69,263 | |||||
Inventory (Note 2) | 124,794 | 140,209 | |||||
Deferred tax assets | 8,555 | 8,275 | |||||
Prepaid and other current assets | 58,514 | 36,267 | |||||
Total current assets | 308,660 | 319,991 | |||||
Property, Plant and Equipment, Gross | 2,011,939 | 2,010,644 | |||||
Less — Accumulated Depreciation | (1,198,800 | ) | (1,167,269 | ) | |||
Property, Plant and Equipment, Net | 813,139 | 843,375 | |||||
Deferred Tax Assets | 79,179 | 78,547 | |||||
Other Assets | 60,006 | 61,967 | |||||
Total Assets | $ | 1,260,984 | $ | 1,303,880 | |||
Liabilities and Stockholders’ Deficit | |||||||
Current Liabilities | |||||||
Accounts payable | $ | 61,713 | $ | 64,697 | |||
Current maturities of long-term debt (Note 3) | 8,225 | 8,400 | |||||
Accrued income and other taxes | 3,200 | 4,643 | |||||
Accrued payroll and benefits | 14,517 | 23,124 | |||||
Accrued interest | 2,718 | 2,684 | |||||
Accrued customer incentives | 11,243 | 12,743 | |||||
Other current liabilities | 6,557 | 7,913 | |||||
Dividends payable | 2,954 | — | |||||
Current liabilities for disposed operations (Note 5) | 8,899 | 7,241 | |||||
Total current liabilities | 120,026 | 131,445 | |||||
Long-Term Debt (Note 3) | 899,603 | 936,416 | |||||
Non-Current Liabilities for Disposed Operations (Note 5) | 145,061 | 149,488 | |||||
Pension and Other Postretirement Benefits (Note 11) | 139,629 | 141,338 | |||||
Other Non-Current Liabilities | 7,769 | 7,605 | |||||
Commitments and Contingencies | |||||||
Stockholders’ Deficit | |||||||
Preferred stock, 10,000,000 shares authorized at $0.01 par value, 0 issued and outstanding as of June 27, 2015 and December 31, 2014 | — | — | |||||
Common stock, 140,000,000 shares authorized at $0.01 par value, 42,884,871 and 42,616,319 issued and outstanding, as of June 27, 2015 and December 31, 2014, respectively | 429 | 426 | |||||
Additional paid-in capital | 64,442 | 62,082 | |||||
Accumulated deficit | (17,235 | ) | (21,476 | ) | |||
Accumulated other comprehensive loss | (98,740 | ) | (103,444 | ) | |||
Total Stockholders’ Deficit | (51,104 | ) | (62,412 | ) | |||
Total Liabilities and Stockholders’ Deficit | $ | 1,260,984 | $ | 1,303,880 |
Six Months Ended | |||||||
June 27, 2015 | June 28, 2014 | ||||||
Operating Activities | |||||||
Net income | $ | 10,208 | $ | 35,509 | |||
Adjustments to reconcile net income to cash provided by operating activities: | |||||||
Depreciation and amortization | 42,442 | 38,182 | |||||
Stock-based incentive compensation expense | 5,061 | 3,562 | |||||
Amortization of capitalized debt costs | 1,213 | 90 | |||||
Deferred income taxes | (6,103 | ) | 5,110 | ||||
Increase in liabilities for disposed operations | 49 | 18,419 | |||||
Impairment charge | 28,462 | — | |||||
Amortization of losses and prior service costs from pension and postretirement plans | 7,351 | 2,550 | |||||
Loss from sale/disposal of property, plant and equipment | 647 | 717 | |||||
Other | 111 | — | |||||
Changes in operating assets and liabilities: | |||||||
Receivables | 25,814 | 5,811 | |||||
Inventories | 15,415 | 7,002 | |||||
Accounts payable | (2,179 | ) | 3,043 | ||||
Accrued liabilities | (12,932 | ) | 7,960 | ||||
All other operating activities | (23,982 | ) | (24,936 | ) | |||
Expenditures for disposed operations | (2,818 | ) | — | ||||
Cash Provided by Operating Activities | 88,759 | 103,019 | |||||
Investing Activities | |||||||
Capital expenditures | (41,343 | ) | (50,720 | ) | |||
Purchase of timber deeds | — | (12,677 | ) | ||||
Other | — | (482 | ) | ||||
Cash Used for Investing Activities | (41,343 | ) | (63,879 | ) | |||
Financing Activities | |||||||
Issuance of debt | — | 950,000 | |||||
Repayment of debt | (37,100 | ) | — | ||||
Dividends paid | (2,953 | ) | — | ||||
Proceeds from the issuance of common stock | 8 | — | |||||
Debt issuance costs | — | (12,928 | ) | ||||
Net payments to Rayonier | — | (956,579 | ) | ||||
Cash Used for Financing Activities | (40,045 | ) | (19,507 | ) | |||
Cash and Cash Equivalents | |||||||
Change in cash and cash equivalents | 7,371 | 19,633 | |||||
Balance, beginning of year | 65,977 | — | |||||
Balance, end of period | $ | 73,348 | $ | 19,633 | |||
Supplemental Disclosures of Cash Flow Information | |||||||
Cash paid during the period: | |||||||
Interest | $ | 19,017 | $ | — | |||
Income taxes | $ | 13,099 | $ | — | |||
Non-cash investing and financing activities: | |||||||
Capital assets purchased on account | $ | 15,831 | $ | 9,722 | |||
Accrued debt issuance costs | $ | — | $ | 1,877 |
June 27, 2015 | December 31, 2014 | ||||||
Finished goods | $ | 103,243 | $ | 120,221 | |||
Work-in-progress | 5,059 | 2,418 | |||||
Raw materials | 13,947 | 14,670 | |||||
Manufacturing and maintenance supplies | 2,545 | 2,900 | |||||
Total inventory | $ | 124,794 | $ | 140,209 |
June 27, 2015 | December 31, 2014 | ||||||
Term A-1 Loan Facility borrowings maturing through 2019 at a variable interest rate of 1.69% (a) | $ | 71,379 | $ | 106,973 | |||
Term A-2 Loan Facility borrowings maturing through 2021 at a variable interest rate of 1.27% (b) | 286,449 | 287,843 | |||||
Senior Notes due 2024 at a fixed interest rate of 5.50% | 550,000 | 550,000 | |||||
Total debt | 907,828 | 944,816 | |||||
Less: Current maturities of long-term debt | (8,225 | ) | (8,400 | ) | |||
Long-term debt | $ | 899,603 | $ | 936,416 |
(a) | The Term A-1 Loan includes an unamortized issue discount of approximately $0.2 million at June 27, 2015. The face amount of the liability is $71.6 million. |
(b) | The Term A-2 Loan includes an unamortized issue discount of approximately $0.7 million at June 27, 2015. The face amount of the liability is $287.1 million. |
Remaining 2015 | $ | 4,200 | |
2016 | 8,400 | ||
2017 | 9,775 | ||
2018 | 11,150 | ||
2019 | 51,125 | ||
Thereafter | 824,050 | ||
Total principal payments | $ | 908,700 |
June 27, 2015 | December 31, 2014 | ||||||||||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||||||||||
Asset (liability) | Level 1 | Level 2 | Level 1 | Level 2 | |||||||||||||||||||
Cash and cash equivalents | $ | 73,348 | $ | 73,348 | $ | — | $ | 65,977 | $ | 65,977 | $ | — | |||||||||||
Current maturities of long-term debt | (8,225 | ) | — | (8,400 | ) | (8,400 | ) | — | (8,400 | ) | |||||||||||||
Fixed-rate long-term debt | (550,000 | ) | — | (493,625 | ) | (550,000 | ) | — | (453,063 | ) | |||||||||||||
Variable-rate long-term debt | (349,603 | ) | — | (350,300 | ) | (386,416 | ) | — | (387,400 | ) |
June 27, 2015 | |||
Balance, beginning of period | $ | 156,729 | |
Expenditures charged to liabilities | (2,818 | ) | |
Increase to liabilities | 49 | ||
Balance, end of period | 153,960 | ||
Less: Current portion | (8,899 | ) | |
Non-current portion | $ | 145,061 |
Six Months Ended | |||||||
Unrecognized components of employee benefit plans, net of tax | June 27, 2015 | June 28, 2014 | |||||
Balance, beginning of period | $ | (103,444 | ) | $ | (39,699 | ) | |
Amounts reclassified from accumulated other comprehensive loss (a) | 4,704 | 1,620 | |||||
Other comprehensive loss before reclassifications | — | (7,325 | ) | ||||
Net other comprehensive income (loss) | 4,704 | (5,705 | ) | ||||
Net transfer from Rayonier (b) | — | (35,419 | ) | ||||
Balance, end of period | $ | (98,740 | ) | $ | (80,823 | ) |
(a) | These accumulated other comprehensive loss components are included in the computation of net periodic pension cost. See Note 11 — Employee Benefit Plans for additional information. |
(b) | Prior to the Separation, certain of the Company’s employees participated in employee benefit plans sponsored by Rayonier. The Company did not record an asset, liability or accumulated other comprehensive loss to recognize the funded status of the Rayonier plans on the consolidated balance sheet until the Separation. |
Three Months Ended | Six Months Ended | ||||||||||||||
June 27, 2015 | June 28, 2014 | June 27, 2015 | June 28, 2014 | ||||||||||||
Net income (loss) | $ | (312 | ) | $ | 4,561 | $ | 10,208 | $ | 35,509 | ||||||
Shares used for determining basic earnings per share of common stock (a) | 42,192,913 | 42,176,565 | 42,189,598 | 42,176,565 | |||||||||||
Dilutive effect of: | |||||||||||||||
Stock options | — | 876 | 2,770 | 433 | |||||||||||
Performance and restricted shares | — | 1,021 | 108,754 | 505 | |||||||||||
Shares used for determining diluted earnings per share of common stock | 42,192,913 | 42,178,462 | 42,301,122 | 42,177,503 | |||||||||||
Basic earnings per share (not in thousands) | $ | (0.01 | ) | $ | 0.11 | $ | 0.24 | $ | 0.84 | ||||||
Diluted earnings per share (not in thousands) | $ | (0.01 | ) | $ | 0.11 | $ | 0.24 | $ | 0.84 |
(a) | On June 27, 2014, 42,176,565 shares of our common stock were distributed to Rayonier shareholders in conjunction with the Separation. For comparative purposes, and to provide a more meaningful calculation of weighted-average shares outstanding, this amount is assumed to be outstanding for the entire quarter and year-to-date periods ending June 28, 2014. |
Three Months Ended | Six Months Ended | ||||||||||
June 27, 2015 | June 28, 2014 | June 27, 2015 | June 28, 2014 | ||||||||
Stock options | 457,350 | — | 392,645 | — | |||||||
Restricted stock | 397,171 | — | 219,463 | — | |||||||
Performance shares | 357,659 | — | 142,166 | — | |||||||
Total | 1,212,180 | — | 754,274 | — |
Three Months Ended | Six Months Ended | ||||||||||||||
June 27, 2015 | June 28, 2014 | June 27, 2015 | June 28, 2014 | ||||||||||||
Non-cash impairment charge (a) | $ | 28,462 | $ | — | $ | 28,462 | $ | — | |||||||
Loss (gain) on sale or disposal of property, plant and equipment | (102 | ) | 185 | 280 | 717 | ||||||||||
Increase to liabilities for disposed operations resulting from separation from Rayonier (b) | — | 18,419 | — | 18,419 | |||||||||||
One-time separation and legal costs | (802 | ) | 17,914 | (802 | ) | 20,680 | |||||||||
Insurance settlement | (1,000 | ) | — | (1,000 | ) | — | |||||||||
Miscellaneous expense | 107 | 576 | 355 | 468 | |||||||||||
Total | $ | 26,665 | $ | 37,094 | $ | 27,295 | $ | 40,284 |
(a) | In light of the persistent imbalance of supply and demand in the cellulose specialties markets, the Company announced a strategic asset realignment at its Jesup, Georgia plant to better align its production assets to current market conditions, improve efficiency and restore commodity production throughput to approach historical levels. This realignment resulted in the abandonment of certain long-lived assets, primarily at the Jesup plant. As a result, the abandoned assets were written down to salvage value and a $28 million pre-tax, non-cash impairment charge was recorded during the second quarter of 2015. The abandonment led management to conduct an impairment analysis on all long-lived assets being held and used on a combined plant level. Based on the impairment analysis performed, management concluded the assets were recoverable. |
(b) | The Company is subject to certain legal requirements relating to the provision of annual financial assurance regarding environmental remediation and post closure care at certain disposed sites. To comply with these requirements, the Company purchased surety bonds from an insurer, with the Company’s repayment obligations (if the bonds are drawn upon) secured by the issuance of a letter of credit by the Company’s revolving credit facility lender. As a result of the Separation and the Company’s obligations to procure financial assurance annually for the foreseeable future, the Company recorded a corresponding increase to liabilities for disposed operations. See Note 5 — Liabilities for Disposed Operations and Note 13 — Guarantees for additional information. |
Stock Options | Restricted Stock | Performance Shares | Performance-Based Restricted Stock | ||||||||||||||||||||||||
Options | Weighted Average Exercise Price | Awards | Weighted Average Grant Date Fair Value | Awards | Weighted Average Grant Date Fair Value | Awards | Weighted Average Grant Date Fair Value | ||||||||||||||||||||
Outstanding at December 31, 2014 | 466,015 | $ | 31.73 | 145,085 | $ | 41.66 | 47,977 | $ | 42.27 | 143,369 | $ | 40.52 | |||||||||||||||
Granted | — | — | 265,551 | 21.43 | 214,403 | 17.51 | — | — | |||||||||||||||||||
Forfeited | (5,430 | ) | 38.41 | (265 | ) | 22.54 | (113 | ) | 18.56 | — | — | ||||||||||||||||
Exercised or settled | (460 | ) | 17.34 | (13,200 | ) | 38.43 | — | — | — | — | |||||||||||||||||
Expired or cancelled | (2,775 | ) | 26.33 | — | — | (47,977 | ) | 42.27 | — | — | |||||||||||||||||
Outstanding at June 27, 2015 | 457,350 | $ | 31.69 | 397,171 | $ | 28.95 | 214,290 | $ | 17.51 | 143,369 | $ | 40.52 |
Pension | Postretirement | ||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||
Components of Net Periodic Benefit Cost | June 27, 2015 | June 28, 2014 | June 27, 2015 | June 28, 2014 | |||||||||||
Service cost | $ | 1,494 | $ | 526 | $ | 298 | $ | 157 | |||||||
Interest cost | 3,807 | 1,854 | 229 | 153 | |||||||||||
Expected return on plan assets | (5,809 | ) | (3,151 | ) | — | — | |||||||||
Amortization of prior service cost | 188 | 277 | 4 | 4 | |||||||||||
Amortization of losses | 3,358 | 972 | 211 | 122 | |||||||||||
Amortization of negative plan amendment | — | — | (17 | ) | (134 | ) | |||||||||
Total net periodic benefit cost | $ | 3,038 | $ | 478 | $ | 725 | $ | 302 |
Pension | Postretirement | ||||||||||||||
Six Months Ended | Six Months Ended | ||||||||||||||
Components of Net Periodic Benefit Cost | June 27, 2015 | June 28, 2014 | June 27, 2015 | June 28, 2014 | |||||||||||
Service cost | $ | 2,988 | $ | 1,079 | $ | 503 | $ | 314 | |||||||
Interest cost | 7,614 | 3,803 | 459 | 306 | |||||||||||
Expected return on plan assets | (11,617 | ) | (6,465 | ) | — | — | |||||||||
Amortization of prior service cost | 375 | 569 | 8 | 8 | |||||||||||
Amortization of losses | 6,717 | 1,997 | 338 | 244 | |||||||||||
Amortization of negative plan amendment | — | — | (87 | ) | (268 | ) | |||||||||
Total net periodic benefit cost | $ | 6,077 | $ | 983 | $ | 1,221 | $ | 604 |
Financial Commitments | Maximum Potential Payment | ||
Standby letters of credit (a) | $ | 15,158 | |
Surety bonds (b) | 57,151 | ||
Total financial commitments | $ | 72,309 |
(a) | The letters of credit primarily provide credit support for surety bonds issued to comply with financial assurance requirements relating to environmental remediation of disposed sites. The letters of credit will expire during 2015 and 2016 and will be renewed as required. |
(b) | Rayonier Advanced Materials purchases surety bonds primarily to comply with financial assurance requirements relating to environmental remediation and post closure care and to provide collateral for the Company’s workers’ compensation program. These surety bonds expire at various dates between 2015 and 2019. They are expected to be renewed annually as required. |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Three Months Ended | Six Months Ended | ||||||||||||||
Financial Information (in millions) | June 27, 2015 | June 28, 2014 | June 27, 2015 | June 28, 2014 | |||||||||||
Net Sales | |||||||||||||||
Cellulose specialties | $ | 183 | $ | 201 | $ | 362 | $ | 407 | |||||||
Commodity products and other | 38 | 12 | 80 | 49 | |||||||||||
Total Net Sales | 221 | 213 | 442 | 456 | |||||||||||
Cost of Sales | 176 | 161 | 360 | 349 | |||||||||||
Gross Margin | 45 | 52 | 82 | 107 | |||||||||||
Selling and general expenses | 10 | 9 | 22 | 17 | |||||||||||
Other operating expense, net | 27 | 37 | 27 | 40 | |||||||||||
Operating Income | 8 | 6 | 33 | 50 | |||||||||||
Interest expense, net | 9 | 3 | 19 | 3 | |||||||||||
Income (Loss) Before Income Taxes | (1 | ) | 3 | 14 | 47 | ||||||||||
Income Tax Expense (Benefit) | (1 | ) | (2 | ) | 4 | 11 | |||||||||
Net Income | $ | — | $ | 5 | $ | 10 | $ | 36 | |||||||
Other Data | |||||||||||||||
Sales Prices ($ per metric ton) | |||||||||||||||
Cellulose specialties | $ | 1,638 | $ | 1,768 | $ | 1,653 | $ | 1,796 | |||||||
Commodity products | 666 | 650 | 676 | 681 | |||||||||||
Sales Volumes (thousands of metric tons) | |||||||||||||||
Cellulose specialties | 111 | 113 | 219 | 227 | |||||||||||
Commodity products | 55 | 13 | 113 | 63 | |||||||||||
Gross Margin % | 20.4 | % | 24.4 | % | 18.6 | % | 23.5 | % | |||||||
Operating Margin % | 3.6 | % | 2.8 | % | 7.5 | % | 11.0 | % | |||||||
Effective Tax Rate % | 53.0 | % | (53.3 | )% | 27.0 | % | 23.4 | % |
Sales (in millions) | June 28, 2014 | Changes Attributable to: | June 27, 2015 | ||||||||||||
Three Months Ended | Price | Volume/Mix | |||||||||||||
Cellulose specialties | $ | 201 | $ | (15 | ) | $ | (3 | ) | $ | 183 | |||||
Commodity products and other | 12 | 1 | 25 | 38 | |||||||||||
Total Sales | $ | 213 | $ | (14 | ) | $ | 22 | $ | 221 |
Sales (in millions) | June 28, 2014 | Changes Attributable to: | June 27, 2015 | ||||||||||||
Six Months Ended | Price | Volume/Mix | |||||||||||||
Cellulose specialties | $ | 407 | $ | (31 | ) | $ | (14 | ) | $ | 362 | |||||
Commodity products and other | 49 | (1 | ) | 32 | 80 | ||||||||||
Total Sales | $ | 456 | $ | (32 | ) | $ | 18 | $ | 442 |
Operating Income (in millions) | June 28, 2014 | Changes Attributable to (a): | June 27, 2015 | ||||||||||||||||
Three Months Ended | Price | Volume/Sales Mix | Cost | ||||||||||||||||
Operating Income | $ | 6 | $ | (14 | ) | $ | 2 | $ | 14 | $ | 8 | ||||||||
Operating Margin % | 2.8 | % | (6.8 | )% | 1.3 | % | 6.3 | % | 3.6 | % |
(a) | Computed based on contribution margin. |
Operating Income (in millions) | June 28, 2014 | Changes Attributable to (a): | June 27, 2015 | ||||||||||||||||
Six Months Ended | Price | Volume/Sales Mix | Cost | ||||||||||||||||
Operating Income | $ | 50 | $ | (32 | ) | $ | (1 | ) | $ | 16 | $ | 33 | |||||||
Operating Margin % | 11.0 | % | (6.7 | )% | (0.4 | )% | 3.6 | % | 7.5 | % |
(a) | Computed based on contribution margin. |
June 27, 2015 | December 31, 2014 | ||||||
Cash and cash equivalents (a) | $ | 73 | $ | 66 | |||
Availability under the Revolving Credit Facility (b) | 235 | 222 | |||||
Total debt (c) | 908 | 945 | |||||
Stockholders’ deficit | (51 | ) | (62 | ) | |||
Total capitalization (total debt plus equity) | 857 | 883 | |||||
Debt to capital ratio | 106 | % | 107 | % |
(a) | Cash and cash equivalents consisted of cash, money market deposits, and time deposits with original maturities of 90 days or less. |
(b) | Availability under the revolving credit facility is reduced by standby letters of credit of approximately $15 million and $28 million at June 27, 2015 and December 31, 2014, respectively. |
(c) | See Note 3 — Debt for additional information. |
Cash provided by (used for): | June 27, 2015 | June 28, 2014 | |||||
Operating activities | $ | 88 | $ | 103 | |||
Investing activities | (41 | ) | (64 | ) | |||
Financing activities | (40 | ) | (19 | ) |
Three Months Ended | Six Months Ended | ||||||||||||||
Net Income to EBITDA Reconciliation | June 27, 2015 | June 28, 2014 | June 27, 2015 | June 28, 2014 | |||||||||||
Net Income | $ | — | $ | 5 | $ | 10 | $ | 36 | |||||||
Depreciation and amortization | 21 | 18 | 42 | 38 | |||||||||||
Interest, net | 9 | 3 | 19 | 3 | |||||||||||
Income tax expense | (1 | ) | (2 | ) | 4 | 11 | |||||||||
EBITDA | 29 | 24 | 75 | 88 | |||||||||||
Non-cash impairment charge | 28 | — | 28 | — | |||||||||||
One-time separation and legal costs | (1 | ) | 36 | (1 | ) | 39 | |||||||||
Insurance settlement | (1 | ) | — | (1 | ) | — | |||||||||
Pro Forma EBITDA | $ | 55 | $ | 60 | $ | 101 | $ | 127 |
Six Months Ended | |||||||
Cash Flow from Operations to Adjusted Free Cash Flow Reconciliation | June 27, 2015 | June 28, 2014 | |||||
Cash flow from operations | $ | 88 | $ | 103 | |||
Capital expenditures (a) | (41 | ) | (51 | ) | |||
Adjusted Free Cash Flow | $ | 47 | $ | 52 |
Cash used for investing activities | $ | (41 | ) | $ | (64 | ) | |
Cash used for financing activities | $ | (40 | ) | $ | (19 | ) |
(a) | Capital expenditures exclude strategic capital expenditures which are deemed discretionary by management. There was no strategic capital for the six months ended June 27, 2015. Strategic capital totaled $13 million for the purchase of timber deeds for the six months ended June 28, 2014. |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Item 4. | Controls and Procedures |
Part II. | Other Information |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 6. | Exhibits |
10.1 | Description of Rayonier Advanced Materials Inc. 2015 Performance Share Award Program* | Filed herewith | |
31.1 | Chief Executive Officer’s Certification Pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Filed herewith | |
31.2 | Chief Financial Officer’s Certification Pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Filed herewith | |
32 | Certification of Periodic Financial Reports Under Section 906 of the Sarbanes-Oxley Act of 2002 | Furnished herewith | |
101 | The following financial information from our Quarterly Report on Form 10-Q for the fiscal quarter ended June 27, 2015, formatted in Extensible Business Reporting Language (“XBRL”), includes: (i) the Condensed Consolidated Statements of Income and Comprehensive Income for the Three and Six Months Ended June 27, 2015 and June 28, 2014; (ii) the Condensed Consolidated Balance Sheets as of June 27, 2015 and December 31, 2014; (iii) the Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 27, 2015 and June 28, 2014; and (iv) the Notes to Condensed Consolidated Financial Statements | Filed herewith |
Rayonier Advanced Materials Inc. | ||
(Registrant) | ||
By: | /s/ FRANK A. RUPERTO | |
Frank A. Ruperto Chief Financial Officer and Senior Vice President, Finance and Strategy (Duly Authorized Officer and Principal Financial Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Rayonier Advanced Materials Inc.; |
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(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 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(s) 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. |
/s/ PAUL G. BOYNTON | |
Paul G. Boynton Chairman, President and Chief Executive Officer | |
Rayonier Advanced Materials Inc. |
1. | I have reviewed this quarterly report on Form 10-Q of Rayonier Advanced Materials Inc.; |
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(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 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(s) 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. |
/s/ FRANK A. RUPERTO | |
Frank A. Ruperto Chief Financial Officer and Senior Vice President, Finance and Strategy | |
Rayonier Advanced Materials Inc. |
1. | The quarterly report on Form 10-Q of Rayonier Advanced Materials Inc. (the "Company") for the period ended June 27, 2015 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ PAUL G. BOYNTON | /s/ FRANK A. RUPERTO | |
Paul G. Boynton | Frank A. Ruperto | |
Chairman, President and Chief Executive Officer | Chief Financial Officer and Senior Vice President, Finance and Strategy | |
Rayonier Advanced Materials Inc. | Rayonier Advanced Materials Inc. |
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ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) - USD ($) $ in Thousands |
6 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Jun. 27, 2015 |
Jun. 28, 2014 |
||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||||||
Balance, beginning of period | $ (103,444) | ||||||
Net other comprehensive income (loss) | 4,704 | $ (5,705) | |||||
Balance, end of period | (98,740) | ||||||
Accumulated Defined Benefit Plans Adjustment [Member] | |||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |||||||
Balance, beginning of period | (103,444) | (39,699) | |||||
Amounts reclassified from accumulated other comprehensive loss | [1] | 4,704 | 1,620 | ||||
Other comprehensive loss before reclassifications | 0 | (7,325) | |||||
Net transfers (to) from Rayonier | [2] | 0 | (35,419) | ||||
Balance, end of period | $ (98,740) | $ (80,823) | |||||
|
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