12.2% $ $ $4.54 $3.21 $1.91 $941.5 $887.7 $839.7 $121.9 $ $92.6. Continued Operations Year End December 31,

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2 FINA N CIA LHIGHLIGHTS Ctinued Operatis End December 31, (Dollars in millis, except share data) Csolidated Statement Operatis Data Net Sales $839.7 $887.7 $941.5 Adjusted EBIT $92.6 $ $ % ROS 11.0% 12.2% 12.9% Adjusted EBITDA $123.6 $141.9 $157.8 Earnings per Diluted Comm Share Adjusted Earnings from Ctinuing Operatis $3.21 $3.70 $4.54 Weighted-Average Shares Outsting (in thouss) 16,872 17,012 17,087 Csolidated Balance Sheet Data Total Assets $724.5 $751.4 $765.6 Total Stockholders Equity $288.7 $311.6 $338.3 Total Debt $228.7 $229.4 $220.9 Cash Cash Equivalents $72.6 $4.2 $3.1 Debt to EBITDA 1.8x 1.6x 1.4x Debt to Capital 44% 42% 40% Or Financial Data Net Cash Flow Provided by (used for): Operating Activities $94.5 $111.2 $115.8 Capital Expenditures $(27.9) $(48.1) $(68.5) Net Sales (In millis U.S. dollars) $839.7 $436.1 $ Technical Products $887.7 $ 15.8 $442.7 $ Adjusted EBIT (In millis U.S. dollars) $92.6 $941.5 $23.0 $ $ Fine Paper Or & Packaging 6 $ $121.9 Stock Price -End $60.27 $62.43 $85.20 Cash Dividends Paid $1. 02 $1.20 $1.32 GAAP Recciliati A recciliati adjusted income measures to comparable GAAP measures is shown below: End December 31, 11.0% 12.2% 12.9% (Dollars in millis, except share data) EBIT (Operating Income) $86.6 $101.4 $114.1 Integrati/Restructuring Costs Pensi Settlement Charge Cost for Early Redempti Debt 0.2 Adjusted EBIT Depreciati & Amortizati Amortizati Equity-Based Compensati Adjusted EBITDA $123.6 $141.9 $ Adjusted EBIT % Sales Adjusted Earnings Per Share $3.21 $ 3.70 $4.54 Diluted Earnings per Share $3.99 $3.53 $4.26 Integrati/Restructuring Costs $1.91 Pensi Settlement Charge Cost for Early Redempti Debt 0.01 Prior Period R&D Tax Credits (1.00) (0.07) Diluted Adjusted Earnings per Share $3.21 $3.70 $ Annual Report

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7 TTECHNICAL O O U R SHAREHOLDERS PRODUCTS 2012 was is a a highly leading successful producer year for Technical. Products, including transportati, new initiatives in specialized industrial market niches, applicatis, using various substrates to produce specialized materials medical packaging, digital transfer papers, publishing, At frt center our efforts was which we achieved despite challenging ecomic that employ saturati, coating or functienhancing processes many ors. disciplined executi our strategy, motivated headwinds in Europe throughout most year. using various substrates to produce specialized materials The Technical Products group serves customers in by a clear csistent visi: To create value for % more Change than countries vs 2011 through manufacturing Operating facilities our customers shareholders by improving in U.S., Germany, U.K., supported supported by R&D by R&D efforts efforts income increased image abrasive performance backings, labels everything or we touch. focused developing new processes products that will that meet will customers meet customers needs needs drive our 36% drive growth. over our growth Our ctinuing efforts to implement that visi led after adjusting to substantial growth in 2012, both top-line for acquisiti OUR PRODUCTS OUR PRODUCTS DELIVER HIGH-PERFORMANCE DELIVER HIGH-PERFORMANCE SOLUTIONS: SOLUTIONS: 6% bottom-line, allowed us to deliver returns to our 5% providing essential filtrati capabilities 4% for transportati, water integrati shareholders 30%, more or than uses twice that enabling superior performance in products for industrial applicatis such as abrasives or tapee- in costs. products Our s broad markets. meeting specialized enabling superior needs for performance strength, durability in products Net Sales resistance for industrial Adj. EBIT to water applicatis, Adj. EPS ctaminati suchtime as diverse as medical abrasives packaging, tapeslabels, outdoor advertising OUR STRATEGY IS BUILT ON A PLATFORM OF higher sales disciplined approach to managing THREE IMPERATIVES: meeting specialized needs for strength, overhead durability resistance or costs to water allowed us to leverage ctaminati in products as diverse as medical packaging, labels Focus pritable, outdoor specialty advertising s infrastructure, helped boost operating niche markets where we can establish market margins to 9.9% versus 8.5% in FILTRATION positis based our core strengths. During year, we also actively managed our High-performance filtrati media for transportati, industrial water or markets capital structure, redeeming $68 milli bds Increase our size, growth rate portfolio diversificati in both Fine Paper Technical Products through organic means entered into a new lending facility improved complementary acquisitis. terms extended maturity our revolver Deliver csistent, attractive returns to our shareholders through disciplined BACKINGS PERFORMANCE management. MATERIALS These factors combined to drive a 50% increase in Saturated Saturated coated coated papers papers used used for for backing backing specialty specialty abrasives abrasives tapes to enhance ir performance, adjusted net tapes income, to enhance which reached ir performance, $46 milli, or products for a variety or end markets including labels, durable printing, medical packaging applicatis is evidence our progress in each se areas. $2.78 per share. This was our highest level ever. Increased income levels alg with our ctinued DELIVERING PROFITABLE GROWTH AND SHAREHOLDER VALUE Invested Capital (ROIC) over 11% for 2012, up Sales increased 16% from 2011 exceeded sharply from 9% in This remains a key metric $800 milli. This was mainly due to our successful guiding our investment decisis. acquisiti products for a variety Wausau or premium end markets paper including brs labels, durable printing, medical packaging applicatis executi enabled us to deliver our commitment to enhance shareholder value. Our total shareholder return for past year was 30%, anchored by a 2016 Annual Report

8 FINE PAPER & PACKAGING leads is leader North in American North American market in premium creati e paper market. manufacturing Built a traditi premium paper quality packaging. service, we The market some Fine Paper most portfolio recognized includes preferred recognizable premium papers distinguished in North America, brs like CLASSIC with distinguished, ENVIRONMENT brs including, ROYAL SUNDANCE CLASSIC,, ASTROBRIGHTS, TOUCHE, Southworth. ASTROBRIGHTS, ROYAL SUNDANCE, With multiple U.S. manufacturing facilities specializing in Southworth color, texture, ENVIRONMENT specialty features, re premier is an endless fering combinati recycled ctent paper, papers packaging market. envelopes available. Our Premium products Packaging are also used provides in premium unique, packaging sustainable label applicatis custom for solutis goods such for many as spirits, jewelry, world s cosmetics leading electrics. emerging brs in cosmetics fragrances; s wine, leadership spirits role craft is supported beer; by retail. our Our fering broad range includes colors, packaging textures papers or for bags, product box wraps, gift cards, gift card carriers, hangtags, labels, folding features world-class manufacturing, with board fragrance strips. We provide captivating four facilities located in Wiscsin. colors textures, customized for brs or readymade, as well as high-performance products hs customer service. OUR PRODUCTS ARE IN DEMAND WHEREVER IMAGE MATTERS: high-end for high-end fset/digital traditial printing / digital printing marketing for graphic advertising imaging collateral needs business identity systems writing papers specialized uses such as upscale packaging labels in beauty, alcohol for specialized retail uses markets such as upscale packaging labels for unique brightly colored papers for home, school or organizati unique, brightly colored papers for home, school or organizati GRAPHIC IMAGING Unique colors, textures finishes for identity systems, invitatis, advertising marketing collateral, envelopes PREMIUM PACKAGING Image-enhancing colors textures for premium folded carts, box wrap, bags, premium hang wine, tags, beverage, labels for wine, spirit spirits food labels craft beer hang tags 2016 Annual Report

9 NEENAH PAPER, INC ANNUAL REPORT

10 NOTICE OF 2017 ANNUAL MEETING AND PROXY STATEMENT Proxy

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12 April 11, 2017 Dear Stockholder: On behalf Board Directors, it is my pleasure to invite you to attend 2017 Annual Meeting Stockholders to be held at Company s headquarters located at Prest Ridge III, 3460 Prest Ridge Road, Suite 600, Alpharetta, Georgia Tuesday, May 23, 2017 at 10:00 a.m., Eastern Time. In 2016, we ctinued in our evoluti to become a premier specialty materials company delivered record sales, earnings operating cash flows, alg with attractive returns for our stockholders. In additi, we completed two important strategic initiatives that provide us with a growth platform for years to come. First, we ccluded an organic capital investment exping our transportati filtrati manufacturing base outside Europe, furr solidifying our positi with customers as a premium global transportati filtrati player. Secd, we finished our integrati FiberMark, which broadened our product portfolio, adding coating finishing capabilities in both Technical Products Fine Paper & Packaging almost doubling size our premium packaging business. Guiding all our activities is an going commitment to deploy capital efficiently, maintaining an attractive Return Invested Capital a meaningful return cash to shareholders. In 2016, we returned $39 milli to shareholders through dividends share repurchases, up from $29 milli in 2015, announced for 2017 our seventh csecutive double-digit dividend increase over past five years. We are proud our results ctributis s dedicated employees around world that helped to create this value appreciate cfidence going support our stockholders. The formal business to be transacted at 2017 Annual Meeting includes: The electi three nominees detailed in this Proxy Statement as Class I directors for a three-year term; Approval an advisory vote Company s executive compensati; Approval an advisory vote frequency future advisory votes Company s executive compensati; The ratificati appointment Deloitte & Touche LLP as Company s independent registered public accounting firm for fiscal year ending December 31, At meeting, we will provide a brief report our results strategies. Our directors executive ficers, as well as representatives from Deloitte & Touche LLP, will be in attendance to answer any questis you may have. Regardless wher you choose to attend or not, please eir vote electrically using Internet, vote by telephe, or follow procedures for requesting written copies proxy materials described in attached Proxy Statement mark, date, sign return proxy card included with those materials at your earliest cvenience. This will assure your shares will be represented voted at Annual Meeting. Proxy Sincerely, 15MAR JOHN P. O DONNELL President Chief Executive Officer

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14 Prest Ridge III 3460 Prest Ridge Road, Suite 600 Alpharetta, Georgia NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 23, 2017 NOTICE HEREBY IS GIVEN that 2017 Annual Meeting Stockholders will be held at Company s headquarters located at Prest Ridge III, 3460 Prest Ridge Road, Suite 600, Alpharetta, Georgia Tuesday, May 23, 2017 at 10:00 a.m., Eastern time, for purpose csidering voting up: 1. A proposal to elect three nominees named as Class I directors in attached Proxy Statement to serve until 2020 Annual Meeting Stockholders; 2. A proposal to approve, an advisory basis, Company s executive compensati; 3. A proposal to approve an advisory vote frequency future advisory votes Company s executive compensati; 4. A proposal to ratify appointment Deloitte & Touche LLP as independent registered public accounting firm for fiscal year ending December 31, 2017; 5. Such or business as properly may come before Annual Meeting or any adjournments re. The Board Directors is not aware any or business to be presented to a vote stockholders at Annual Meeting. Informati relating to above matters is set forth in attached Proxy Statement. Stockholders record at close business March 31, 2017 are entitled to receive notice to vote at Annual Meeting any adjournments re. The Proxy Statement 2016 Annual Report to Stockholders are available at By order Board Directors. Proxy 29APR STEVEN S. HEINRICHS Senior Vice President, General Counsel Secretary Alpharetta, Georgia April 11, 2017 PLEASE READ THE ATTACHED PROXY STATEMENT AND THEN VOTE ELECTRONICALLY, BY TELEPHONE, OR REQUEST PRINTED PROXY MATERIALS AND PROMPTLY COMPLETE, EXECUTE AND RETURN THE PROXY CARD INCLUDED WITH THE PROXY MATERIALS IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE.

15 Table Ctents ANNUAL MEETING... 4 VOTING... 4 BENEFICIAL OWNERSHIP... 7 ELECTION OF DIRECTORS (ITEM 1) MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS CORPORATE GOVERNANCE DIRECTOR COMPENSATION EXECUTIVE COMPENSATION COMPENSATION COMMITTEE REPORT ADVISORY VOTE ON EXECUTIVE COMPENSATION (ITEM 2) ADVISORY VOTE ON FREQUENCY OF ADVISORY VOTE ON EXECUTIVE COMPENSATION (ITEM 3) ADDITIONAL EXECUTIVE COMPENSATION INFORMATION COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE AUDIT COMMITTEE REPORT RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (ITEM 4) INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES AND SERVICES STOCKHOLDERS PROPOSALS FOR 2018 ANNUAL MEETING OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING HOUSEHOLDING OF NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS. 49

16 PROXY STATEMENT General Informati Our Board Directors is soliciting proxies from our stockholders in cnecti with s Annual Meeting Stockholders. When used in this Proxy Statement, terms we, us, our, Company refer to This Proxy Statement our 2016 Annual Report are first being mailed to stockholders who requested copies, made available April 11, SUMMARY This summary highlights informati ctained in Proxy Statement. It does not include all informati that you should csider prior to voting we encourage you to read entire document prior to voting. For more complete informati regarding s 2016 financial performance, please review Company s Annual Report Form 10-K for year ended December 31, Stockholders are being asked to vote following matters at 2017 Annual Meeting Stockholders: Our Board s Recommendati ITEM 1. Electi Directors (page 10) The Board Nominating Corporate Governance Committee FOR each believe that three Class I Director nominees possess necessary Director Nominee qualificatis, attributes, skills experiences to provide quality advice counsel to Company s management effectively oversee business lg-term interests stockholders. ITEM 2. Advisory Vote to Approve Executive Compensati (page 29) The Company seeks a n-binding advisory vote to approve compensati FOR its named executive ficers as described in Compensati Discussi Analysis secti beginning page 19 Executive Compensati Tables secti beginning page 31. The Board values stockholders opinis, Compensati Committee will take into account outcome advisory vote when csidering future executive compensati decisis. ITEM 3. Approve Frequency Future Advisory Votes Company s Executive Compensati (page 30) The Company seeks a n-binding advisory vote to approve frequency ANNUAL advisory vote executive compensati. The Board values stockholders opinis believes an annual advisory vote to approve executive compensati provides appropriate opportunity for stockholders to communicate with Board regarding Company s executive compensati plans. ITEM 4. Ratificati Appointment Deloitte & Touche, LLP, as Independent Auditors (page 42) The Audit Committee Board believe that retenti Deloitte & FOR Touche, LLP, to serve as Independent Auditors for fiscal year ending December 31, 2017 is in best interest Company its shareowners. As a matter good corporate governance, stockholders are being asked to ratify Audit Committee s selecti Independent Auditors. Proxy 3

17 Questis Answers about Annual Meeting Voting When where is Annual Meeting? When: Tuesday, May 23, 2017, at 10:00 A.M. Eastern Daylight Time Where: Company headquarters located at Prest Ridge III, 3460 Prest Ridge Road, Suite 600, Alpharetta, Georgia Who is entitled to vote at Annual Meeting? You are entitled to vote at Annual Meeting if you owned our comm stock, par value $0.01 per share, as close business March 31, 2017 ( Record Date ), with each share entitling its owner to e vote each matter submitted to stockholders. On record date 16,787,202 shares comm stock were outsting eligible to be voted at Annual Meeting. The presence, in pers or by proxy, holders a majority issued outsting shares our comm stock is necessary to cstitute a quorum at Annual Meeting. How do I vote at Annual Meeting? You may vote in pers at Annual Meeting or by proxy. We recommend you vote by proxy even if you plan to attend Annual Meeting. You can always change your vote at meeting. Giving us your proxy means you authorize us to vote your shares at Annual Meeting in manner you direct. If you plan to attend meeting in pers you must provide pro your ownership our comm stock as record date, such as an account statement, a form persal identificati for admissi to meeting. If you hold your shares in street name you also wish to be able to vote at annual meeting, you are required to obtain a proxy from your bank or broker, executed in your favor. If your shares are held in your name, you can vote by proxy in three cvenient ways: Via Internet: Go to follow instructis. By Telephe: Call toll-free follow instructis. By Mail: Request a printed copy proxy materials disclosed in this Proxy Statement complete, sign, date return your proxy card in envelope included with your printed proxy materials. If your shares are held in street name, availability telephe internet voting will depend voting processes applicable bank or brokerage firm; refore, it is recommended that you follow voting instructis form you receive from your bank or brokerage firm. All properly executed proxies received by in time to be voted at Annual Meeting not revoked will be voted at Annual Meeting in accordance with directis noted proxy card. If any or matters properly come before Annual Meeting, perss named as proxies will vote up such matters according to ir judgment. We are also sending Notice voting materials to participants in various employee benefit plans. The trustee each plan, as stockholder record shares comm stock held in plan, will vote whole shares stock attributable to each participant s interest in plan in accordance with directis participant gives or, if no directis are given by participant, in accordance with directis received from applicable plan committees. Can I change my vote? Any stockholder record delivering a proxy has power to revoke it at any time before it is voted: (i) by giving written notice to Steven S. Heinrichs, Senior Vice President, General Counsel 4

18 Secretary, at Prest Ridge III, 3460 Prest Ridge Road, Suite 600, Alpharetta, Georgia, 30005; (ii) by submitting a proxy card bearing a later date, including a proxy submitted via Internet or by telephe; or (iii) by voting in pers at Annual Meeting. Please note, however, that any beneficial owner our comm stock whose shares are held in street name may (a) revoke his or her proxy (b) attend vote his or her shares in pers at Annual Meeting ly in accordance with applicable rules procedures as n may be employed by such beneficial owner s brokerage firm or bank. What Proposals am I being asked to vote at Annual Meeting what is required to approve each proposal? You are being asked to vote four proposals: Proposal 1 electi proposed nominees as Class I directors; Proposal 2 approval, in a n-binding advisory vote, s executive compensati; Proposal 3 approval, in a n-binding advisory vote, frequency future advisory votes Company s executive compensati; Proposal 4 ratificati appointment our independent public accounting firm. In voting with regard to Proposal 1, you may vote in favor each nominees, against each nominee, or may abstain from voting. A majority shares comm stock represented entitled to vote Proposal 1 is required for electi each director, provided a quorum is present. Abstentis will be csidered in determining number votes required to obtain necessary majority vote for proposal, refore will have same legal effect as votes against proposal. In voting with regard to Proposal 2, you may vote in favor proposal, against proposal, or may abstain from voting. The vote required to approve Proposal 2 is majority shares comm stock represented entitled to vote Proposal 2, provided a quorum is present. Abstentis will be csidered in determining number votes required to obtain necessary majority vote for proposal, refore will have same legal effect as votes against proposal. In voting with regard to Proposal 3, stockholders may vote for a frequency e, two or three years. The frequency (every e, two or three years) receiving greatest number votes shares represented entitled to vote at Annual Meeting, provided a quorum is present, will be csidered frequency preferred by stockholders. As a result, abstentis will refore have no effect such vote. In voting with regard to Proposal 4, you may vote in favor proposal, against proposal, or may abstain from voting. The vote required to approve Proposal 4 is a majority shares comm stock represented entitled to vote at Annual Meeting, provided a quorum is present. Abstentis will be csidered in determining number votes required to obtain necessary majority vote for proposal, refore will have same legal effect as votes against proposal. is not aware, as date here, any matters to be voted up at Annual Meeting or than those stated in this Proxy Statement. If any or matters are properly brought before Annual Meeting, your proxy gives discretiary authority to perss named as proxies to vote shares represented reby in ir discreti. Proxy What happens if I d t return my proxy card or vote my shares? If you hold your shares directly your shares will not be voted if you do not return your proxy card or vote in pers at Annual Meeting. If your shares are held in name a bank or brokerage firm (in street name ) you do not vote your shares, your bank or brokerage firm can ly vote your shares in ir discreti for proposals which are csidered discretiary proposals. We believe 5

19 that Proposal 4 is a discretiary proposal. Brokers are prohibited from exercising discretiary authority for beneficial owners who have not provided voting instructis to broker for proposals which are csidered n-discretiary (a broker n-vote ). We believe Proposals 1, 2 3 are n-discretiary proposals. As such, broker n-votes will be counted for purpose determining if a quorum is present, but will not be csidered as shares entitled to vote Proposals 1, 2 3, refore will have no effect outcome se proposals. What happens if I sign, date return my proxy card but do not specify how to vote my shares? If a signed proxy card is received which does not specify a vote or an abstenti, n shares represented by that proxy card will be voted FOR electi all Class I director nominees described herein, FOR approval Company s executive compensati, FOR annual n-binding approvals executive compensati, FOR ratificati appointment Deloitte & Touche LLP as our independent registered public accounting firm for year ending December 31, Why haven t I received a printed copy Proxy Statement or annual report? We are choosing to follow Securities Exchange Commissi ( SEC ) rules that allow companies to furnish proxy materials to stockholders via Internet. If you received a Notice Internet Availability Proxy Materials, or Notice, by mail, you will not receive a printed copy proxy materials, unless you specifically request e. The Notice instructs you how to access review all important informati ctained in proxy statement annual report as well as how to submit your proxy over Internet. If you received Notice would still like to receive a printed copy our proxy materials, you should follow instructis for requesting se materials included in Notice. We plan to mail Notice to stockholders by April 11, Who pays for cost this proxy solicitati? We will bear cost preparing, printing filing Proxy Statement related proxy materials. In additi to soliciting proxies through mail, we may solicit proxies through our directors, ficers employees, in pers by telephe or facsimile. We expect to retain Okapi Partners LLC to aid in solicitati at a cost approximately $8,500, plus reimbursement out--pocket expenses. Brokerage firms, nominees, custodians fiduciaries also may be requested to forward proxy materials to beneficial owners shares held record by m. We will pay all expenses incurred in cnecti with solicitati proxies. When will voting results be made available? We will announce final results our web site at shortly after meeting Form 8-K immediately following meeting. 6

20 BENEFICIAL OWNERSHIP DIRECTORS AND EXECUTIVE OFFICERS The following table sets forth informati regarding beneficial ownership our comm stock as March 31, 2017 with respect to: (i) each our directors; (ii) each named executive ficers appearing elsewhere herein; (iii) all executive ficers directors as a group, based in each case informati furnished to us by such perss. As used in this Proxy Statement, beneficial ownership means that a pers has, as March 31, 2017, or may have within 60 days reafter, sole or shared power to vote or direct voting a security /or sole or shared investment power to dispose or direct dispositi a security. Shares Beneficially Percent Name Owned(1) Class(2) William M. Cook... 1,563(3) * Margaret S. Dano... 2,460(4) * Sean T. Erwin... 19,245(5) * Steven S. Heinrichs... 22,303(6) * Bnie C. Lind... 31,574(7) * Timothy S. Lucas... 16,375(8) * John F. McGovern... 4,155 * Philip C. Moore... 19,580(9) * John P. O Dnell... 78,502(10) * James R. Piedmte... 38,927(11) * Julie A. Schertell... 7,008(12) * Stephen M. Wood... 45,995(13) * All directors executive ficers as a group (15 perss) ,592(14) 2.0 Proxy (1) Except as orwise noted, directors executive ficers, all directors executive ficers as a group, have sole voting power sole investment power over shares listed. Shares comm stock held by trustee s 401(k) Retirement Plan for benefit, which are attributable to our executive ficers are included in table. (2) An asterisk indicates that percentage comm stock beneficially owned by named individual does not exceed 1% total outsting shares our comm stock. (3) Includes 1,063 shares comm stock issuable up cversi restricted stock units that are vested or will vest within 60 days March 31, (4) Includes 1,170 shares comm stock issuable up cversi restricted stock units that are vested or will vest within 60 days March 31, (5) Includes 1,170 shares comm stock issuable up cversi restricted stock units that are vested or will vest within 60 days March 31, This total does not include 3,500 vested Stock Appreciati Rights. (6) This total does not include 9,850 vested Stock Appreciati Rights. (7) This total does not include 5,385 vested Stock Appreciati Rights. (8) Includes 1,170 shares comm stock issuable up cversi restricted stock units that are vested or will vest within 60 days March 31, This total does not include 9,310 vested Stock Appreciati Rights. 7

21 (9) Includes 1,186 shares comm stock issuable up cversi restricted stock units that are vested or will vest within 60 days March 31, (10) This total does not include 41,811 vested Stock Appreciati Rights. (11) This total does not include 6,287 vested Stock Appreciati Rights. (12) This total does not include 18,788 vested Stock Appreciati Rights. (13) Includes 1,170 shares comm stock issuable up cversi restricted stock units that are vested or will vest within 60 days March 31, (14) On July 1, 2014 Company cverted all outsting Stock Optis to Stock Appreciati Rights which are not included in calculati beneficial ownership. Stock Appreciati Rights are disclosed in detail under Outsting Equity at End 2015 secti this Proxy Statement. 8

22 THIRD PARTIES The following table sets forth informati regarding beneficial ownership our comm stock as December 31, 2016 for each pers known to us to be beneficial owner more than 5% our outsting comm stock. Comm Stock Beneficially Owned Name Address Beneficial Owner Number Shares Percent Class Blackrock,... 1,867,930(1) 11.2% 55 East 52 nd Street New York, NY Royce & Associates LP ,545(2) 5.6% 745 Fifth Ave. New York, NY FMR LLC ,538(3) 5.3% 245 Summer Street Bost, MA Proxy The Vanguard Group ,855(4) 5.0% 100 Vanguard Blvd. Malverne, PA (1) The amount shown following informati is derived from Schedule 13G filed by Blackrock, January 17, 2017, reporting beneficial ownership as December 31, Of 1,607,005 shares shown, BlackRock, has sole dispositive power over all shares sole voting power over 1,830,038 shares. (2) The amount shown following informati is derived from Schedule 13G filed by Royce & Associates LP January 11, 2017, reporting beneficial ownership as December 31, Royce & Associates, LP has sole dispositive power over all shares sole voting power over all shares. (3) The amount shown following informati is derived from Schedule 13G filed by FMR LLC, February 14, 2017, reporting beneficial ownership as December 31, Of 892,538 shares shown FMR LLC has sole dispositive power over all shares, sole voting power over 2,238 shares. (4) The amount shown following informati is derived from Schedule 13G filed by The Vanguard Group, February 10, 2017, reporting beneficial ownership as December 31, Of 843,855 shares shown The Vanguard Group has sole dispositive power over 808,542 shares, sole voting power over 33,228 shares. 9

23 ELECTION OF DIRECTORS (ITEM 1) The Board unanimously recommends that stockholders vote FOR proposal to elect John P. O Dnell, William M. Cook, Philip C. Moore as Class I directors for a three-year term expiring at 2020 Annual Meeting Stockholders until ir successors have been duly elected qualified. The Board currently csists eight members divided into two classes three directors e class two directors. The directors in each class serve three year terms, with terms Class I directors expiring at 2017 Annual Meeting. The Board has nominated John P. O Dnell, William M. Cook, Philip C. Moore, each a current director, for re-electi as Class I directors at 2017 Annual Meeting. If elected, nominees will serve a three-year term expiring at 2020 Annual Meeting Stockholders until his or her successor has been duly elected qualified. Each nominees has csented to serve anor term as a director if re-elected. If any nominees should be unavailable to serve for any reas (which is not anticipated), Board may designate a substitute nominee or nominees (in which event perss named enclosed proxy card will vote shares represented by all valid proxy cards for electi such substitute nominee or nominees), allow vacancies to remain open until a suitable cidate or cidates are located, or by resoluti provide for a lesser number directors. If any incumbent nominee for director in an unctested electi should fail to receive required affirmative vote holders a majority shares represented entitled to vote at Annual Meeting, under Delaware law director remains in fice as a holdover director until his or her successor is elected qualified or until his or her earlier resignati, retirement, disqualificati, removal from fice or death. In event a holdover director, Board Directors in its discreti may request director to resign from Board. If director resigns, Board Directors may immediately fill resulting vacancy, allow vacancy to remain open until a suitable cidate is located appointed or adopt a resoluti to decrease authorized number directors. Set forth below is certain informati as March 31, 2017, regarding nominees each director ctinuing in fice, including ir ages, principal occupatis (which have ctinued for at least past five years unless orwise noted), current Board experience participati, how background, experience qualificati each nominee director make m well suited to serve s Board. Informati Regarding Directors Nominated for Reelecti John P. O Dnell, born in 1960, is President Chief Executive Officer Company. Prior to being CEO, Mr. O Dnell served as Chief Operating Officer Company President, Fine Paper. Mr. O Dnell was employed by Georgia Pacific Corporati from 1985 until 2007 held increasingly senior management positis in Csumer Products divisi. Mr. O Dnell served as President North American Retail Business from 2004 through 2007, as President North American Commercial Tissue business from 2002 through Mr. O Dnell received his BS from Iowa State University. Mr. O Dnell has served as a director since November Mr. O Dnell has also served as a Director for Clearwater Paper since April Mr. O Dnell s extensive experience in paper csumer products industries, his leadership positis in Company, makes him an effective member s Board. William M. Cook, born 1953, is retired Executive Chairman ( ) Dalds Company a technology-driven global company that manufacturers filtrati systems to remove ctaminants from air liquids. Mr. Cook is also former Chairman, President Chief 10

24 Executive Officer ( ) Dalds. Prior to that, Mr. Cook held various roles at Dalds increasing respsibility, including service as Senior Vice President, Internatial ( ); Chief Financial Officer ( ); Senior Vice President, Commercial Industrial ( ). Mr. Cook has served as a director since July 21, Mr. Cook brings to Board his filtrati industry operatis experience financial expertise for past 35 years at Dalds where he held a wide range financial business positis with global respsibilities. Mr. Cook is an experienced public company Board member having served Dalds Board from as an independent public company Director for IDEX since 2008 Valspar since Mr. Cook also has valuable Board experience from his past service to various private charitable organizatis. Mr. Cook holds a B.S. degree in Business Management an M.B.A. degree from Virginia Tech. Philip C. Moore, born in 1953, retired as Senior Vice President, Deputy General Counsel Corporate Secretary TD Bank Group, Torto, Canada December 31, Mr. Moore joined TD Bank Group in May 2013, prior to which he had been a partner at McCarthy Tétrault LLP, Canada s natial law firm where he practiced corporate securities law in Torto Sydney, Australia, with particular emphasis corporate governance finance, mergers acquisitis or business law issues. He has been involved in many corporate mergers, acquisitis, dispositis reorganizatis, as well as capital markets transactis in a variety industries geographies. Mr. Moore has extensive experience in corporate transactis involving pulp paper industries. Mr. Moore has been awarded designati Chartered Director from Directors College, Canada s leading director educati program run by McMaster University Cference Board Canada. He has advised design implementati numerous executive compensati plans, as well as executive compensati governance matters. From 1994 until 2000, he was a director Imax Corporati is currently a director a number private corporatis. Mr. Moore has served as a director since November 30, Mr. Moore received his BA from McMaster University his LLB from Queen s University. Mr. Moore s educatial background extensive experience in corporate governance business law makes him an effective member s Board. Proxy Class II Directors Term Expiring at 2018 Annual Meeting Margaret S. Dano, born in 1959, is Chairman Board for Superior Industries Internatial, a leading manufacturer aluminum road wheels for use in automobile light truck industry. Ms. Dano was appointed as Chairman Board in 2014 has served as a director for Superior since In additi, Ms. Dano currently serves as a director Douglas Dynamics, a manufacturer snow ice ctrol equipment for global light truck market, a positi she has held since From 2002 to 2005, Ms. Dano served as Vice President, Worldwide Integrated Supply Chain Operatis for Heywell Corporati. Prior to that she served as Vice President, Worldwide Supply Chain Office Products & GM Printer Papers for Avery Dennis Corporati from 1999 to 2002 Vice President Corporate Manufacturing & Engineering from Ms. Dano has served as a director since March 24, Ms. Dano received a BS in mechanical engineering from Kettering University (formerly General Motors Institute). Ms. Dano s senior executive experience in global manufacturing supply chain her public board experience leadership with manufacturing companies makes her an effective member s Board. Stephen M. Wood, Ph.D., born in 1946, is an Operating Partner with Snow Phipps Group LLC, an internatially diversified investment company. Prior to this, he served as Chairman Board for FiberVisis Corporati, which is a leading global manufacturer syntic fibers for csumer products, cstructi industrial applicatis. Dr. Wood was President Chief Executive Officer FiberVisis from 2006 to Dr. Wood was also Chairman Board ESFV which is a 11

25 global joint Venture with JNC Corporati, a leading Japanese chemical company. From 2001 to 2004, Dr. Wood served as President Chief Executive Officer Krat Polymers, a specialties chemical company, Chairman Representative Director JSR Krat Elastomers, a Japanese joint venture company. Prior to this, Dr. Wood was President Global Elastomers business Shell Chemicals, Ltd., a Vice President that company. Dr. Wood was also elected Internatial President Internatial Institute Syntic Rubber Producers. Dr. Wood has a BSc in Chemistry a Ph.D. in Chemical Engineering from Nottingham University, United Kingdom is a graduate Institute Chemical Engineers. Dr. Wood has served as a director since November 30, Dr. Wood s educatial background his experience as a senior executive a chemical manufacturing company provides knowledge base experience to make him an effective member s Board. Class III Directors Term Expiring at 2019 Annual Meeting Sean T. Erwin, born in 1951, is Chairman our Board Directors. Mr. Erwin served as Company s President Chief Executive Officer from 2004 through May Prior to spin-f from Kimberly Clark Corporati November 30, 2004 ( spin-f ), Mr. Erwin had been an employee Kimberly Clark since 1978, had held increasingly senior positis in both finance business management. In January 2004, Mr. Erwin was named President Kimberly Clark s Pulp Paper Sector, which comprised businesses transferred to us by Kimberly Clark in spin-f. He served as President Global Nwoven business from early He has also served as President European Csumer Tissue business, Managing Director Kimberly Clark Australia, as well as previously serving as President Pulp Paper Sector, President Technical Paper business. Mr. Erwin received his BS in Accounting Finance from Norrn Illinois University. Mr. Erwin served as a director Carmike Cinemas, from Mr. Erwin has served as a director since November 30, Mr. Erwin s extensive experience as former CEO Company his vast industry experience leadership positis make him an effective member s Board. John F. McGovern, born in 1946, is founder, since 1999 a partner, Aurora Capital LLC, a private investment csulting firm based in Atlanta, Georgia. Prior to founding Aurora Capital, Mr. McGovern served in a number positis increasing respsibility at Georgia Pacific Corporati from 1981 to 1999, including Executive Vice President/Chief Financial Officer from 1994 to Previously, Mr. McGovern had been Vice President Director, Forest Products Package Divisi Chase Manhattan Bank. He currently serves as a director Xerium Technologies, where he serves as audit committee chairman. Mr. McGovern also served as a director GenTek, from 2003 to 2009, Maxim Crane Works Holdings, from 2005 to 2008, Collective Brs from 2003 to From 2006 to 2010, Mr. McGovern served as lead director s Board for all executive sessis n-management directors. Mr. McGovern has served as a director since January 10, Mr. McGovern received his BS from Fordham University. Mr. McGovern s extensive experience as senior financial executive a multinatial paper products company his experience as an executive in financial services industry as well as his experience or public company boards make him an effective member s Board. Timothy S. Lucas, born in 1946, has served as an independent csultant financial reporting issues practicing as Lucas Financial Reporting since From 1988 to 2002, Mr. Lucas worked at Financial Accounting Stards Board ( FASB ), where he was Director Research Technical Activities, Chairman FASB s Emerging Issues Task Force. Mr. Lucas has served as a director since November 30, Mr. Lucas received his BA in Ecomics BS in Accounting from Rice University his Master Accounting from Jesse H. Jes Graduate School, Rice University. Mr. Lucas experience at FASB his educatial background make him an effective member s Board. 12

26 MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS The Board Directors cducts its business through meetings full Board through committees Board, csisting an Audit Committee, a Compensati Committee a Nominating Corporate Governance Committee, which we refer to as Nominating Committee. The Board Directors held four meetings in The Company s Corporate Governance Policies provide that all directors are expected to regularly attend participate in Board Committee meetings encourage directors to attend Company s Annual Meeting. In 2016 all our directors attended at least 75% meetings Board meetings committees which he or she is a member. holds regularly scheduled executive sessis independent directors at each Board meeting. As Chairman Board Mr. Erwin presides at all executive sessis or than meetings n-affiliated independent directors, at which Mr. McGovern presides. All Company s directors were in attendance at 2016 Annual Meeting. The following table describes membership each committees as 2017 Annual Meeting: Nominating Corporate Audit Committee Governance Committee Compensati Committee Philip C. Moore... X X Timothy S. Lucas... Chair* John F. McGovern... Chair X Stephen M. Wood... X Chair Margaret S. Dano... X X William M. Cook... X* Number meetings Proxy * The Board has determined, based his experience at FASB, that Mr. Lucas Mr. Cook are audit committee financial experts within meaning SEC s rules. Audit Committee The Audit Committee is comprised solely directors who meet independence requirements New York Stock Exchange ( NYSE ) Securities Exchange Act 1934, as amended ( Exchange Act ), are financially literate, as required by NYSE rules. At least e member Audit Committee is an audit committee financial expert, as defined by rules regulatis SEC. The Audit Committee has been established in accordance with applicable rules promulgated by NYSE SEC. The Audit Committee assists Board in mitoring: quality integrity our financial statements; our compliance with ethical policies ctained in our Code Business Cduct Ethics legal regulatory requirements as well as administrati our policy regarding related party transactis; independence, qualificati performance our registered public accounting firm; performance our internal auditors; related party transactis. The Audit Committee is governed by Audit Committee Charter approved by Board. The charter is available our website at 13

27 Nominating Corporate Governance Committee The Nominating Committee is comprised solely directors who meet NYSE independence requirements. The Nominating Committee: oversees process by which individuals are nominated to our Board; reviews qualificatis, performance independence members our Board; reviews recommends policies with respect to compositi, organizati, processes practices our Board, including diversity; identifies investigates emerging corporate governance issues trends that may affect us. The Nominating Committee is governed by Nominating Corporate Governance Committee Charter approved by Board. The charter is available our website at Compensati Committee The Compensati Committee is comprised solely directors who meet NYSE independence requirements, meet requirements for a nemployee director under Exchange Act, meet requirements for an outside director under Secti 162(m) Internal Revenue Code 1986, as amended ( Code ). The Compensati Committee: reviews approves corporate goals objectives relevant to compensati our Chief Executive Officer sets such compensati; approves, in csultati with our Chief Executive Officer, compensati our ficers who are elected by our Board; makes recommendatis to our Board with respect to our equity-based plans executive incentive compensati plans; reviews with management approves awards under our lg-term incentive-compensati plans equity-based plans. The Compensati Committee is governed by Compensati Committee Charter approved by Board. The charter is available our website at Additial informati regarding Compensati Committee s processes procedures for csiderati executive compensati is provided in Compensati Discussi Analysis below. 14

28 CORPORATE GOVERNANCE Board Leadership The Board selects from amg its members Chairman Board. The Board also elects Chief Executive Officer Company. The current Board Leadership is as Follows: Chairman Board: Chief Executive Officer: Sean T. Erwin John P. O Dnell The Board believes that at this time it is appropriate for Mr. Erwin to serve as independent Chairman while Mr. O Dnell serves as Chief Executive Officer a member Board. Mr. O Dnell s positi as both CEO a Director provides a ctinuity leadership between senior executive team Board enhances corporate governance envirment Board. Independent Directors Our Amended Restated Bylaws provide that a majority directors our Board shall be independent currently seven out eight directors are independent. In additi, Corporate Governance Policies adopted by Board, described furr below, provide for independence stards csistent with NYSE listing stards. Generally, a director does not qualify as an independent director if director (or in some cases, members director s immediate family) has, or in past three years has had, certain material relatiships or affiliatis with Company, its external or internal auditors, or or companies that do business with Company. Having seven out eight independent directors provides with a sufficient level oversight, governance independence without unduly limiting senior executives from acting in best interest Company its shareholders. Even though Mr. Erwin is csidered independent according to NYSE listing stards SEC regulatis, Board appointed John F. McGovern to serve as Presiding Director for meetings n-affiliated independent directors. In evaluating independence our independent directors, Board also csidered wher any independent directors had any material relatiships with ccluded that no such material relatiship existed that would impair ir independence. See Approval Related Party Transactis below. In making this determinati, Board relied both informati provided by our directors as well as informati developed internally by. As is currently case, immediately after electi nominees to Board Directors, a majority all directors holding fice will be independent directors. The Nominating Committee Board have affirmatively determined that seven Company s eight directors do not have any relatiship that would interfere with exercise independent judgment in carrying out ir respsibilities as directors are independent in accordance with NYSE listing stards, rules regulatis our Corporate Governance Policies. s independent directors are Sean T. Erwin, Margaret S. Dano, Stephen M. Wood, John F. McGovern, Timothy S. Lucas, Philip C. Moore William M. Cook. Proxy Nominati Directors The Board Directors is respsible for approving cidates for Board membership. The Board has delegated screening recruitment process to Nominating Committee, in csultati with Chairman Board Chief Executive Officer. More specifically, our Nominating Committee has adopted, Board has ratified, Policy Regarding Qualificati Nominati Director Cidates. 15

29 The Nominating Committee seeks to create a Board that is as a whole strg in its collective knowledge, diversity skills experience with respect to, accounting finance, management leadership, visi strategy, business operatis, business judgment, crisis management, risk assessment, industry knowledge, corporate governance, educati, background global markets. Qualified cidates for director are those who, in judgment Nominating Committee, possess all following persal attributes a sufficient mix following experience attributes to assure effective service Board. Persal attributes a Board cidate csidered by Nominating Committee include: leadership, ethical nature, ctributing nature, independence, interpersal skills, effectiveness. Experience attributes a Board cidate csidered by Nominating Committee include: financial acumen, general business experience, industry knowledge, diversity view-points, special business experience expertise. When Nominating Committee reviews a potential new cidate, Nominating Committee looks specifically at cidate s qualificatis in light needs Board our company at that time, given n current mix director attributes. Although Company does not have a specific Board diversity policy, Nominating Committee looks at diversity experience, background Board compositi in recommending director cidates as required by Nominating Committee s charter. The Nominating Committee utilizes a variety methods for identifying evaluating nominees for director. The Nominating Committee periodically assesses appropriate size Board wher any vacancies Board are expected. In event that vacancies are anticipated or orwise arise, Nominating Committee will seek to identify director cidates based input provided by a number sources, including: (i) Nominating Committee members; (ii) or directors ; (iii) management ; (iv) stockholders. The Nominating Committee also has authority to csult with or retain advisors or search firms to assist in identificati qualified director cidates. The Nominating Committee will csider nominees recommended by stockholders as cidates for electi to Board. A stockholder wishing to nominate a cidate for electi to Board at Annual Meeting is required to give written notice to Secretary his or her intenti to make a nominati. Pursuant to our Amended Restated Bylaws, notice nominati must be received by not less than 50 days nor more than 75 days prior to Annual Meeting, or if gives less than 60 days notice meeting date, notice nominati must be received within 10 days after Annual Meeting date is announced. To recommend a nominee, a stockholder should write to Steven S. Heinrichs, Senior Vice President, General Counsel Secretary, at 3460 Prest Ridge Road, Prest Ridge III, Suite 600, Alpharetta, Georgia Any such recommendati must include: name address stockholder a representati that stockholder is a holder record shares our comm stock; a brief biographical descripti for nominee, including his or her name, age, business residence addresses, occupati for at least last five years, a statement qualificatis cidate, taking into account qualificati requirements set forth above; a descripti all arrangements or understings between stockholder each nominee; cidate s csent to serve as a director if elected. Once director cidates have been identified, Nominating Committee will n evaluate each cidate in light his or her qualificatis credentials any additial factors that 16

30 Nominating Committee deems necessary or appropriate, including those set forth above. Qualified prospective cidates will be interviewed by Chairman Board, Chief Executive Officer at least e member Nominating Committee. The full Board will be kept informed cidate s progress. Using input from such interviews or informati obtained by Nominating Committee, Nominating Committee will evaluate wher a prospective cidate is qualified to serve as a director, if so qualified, will seek full Board approval nominati cidate or electi such cidate to fill a vacancy Board. Existing directors who are being csidered for re-nominati will be re-evaluated by Nominating Committee based each director s satisfacti qualificatis described above his or her performance as a director during preceding year. All cidates submitted by stockholders will be evaluated in same manner as cidates recommended from or sources, provided that procedures set forth above have been followed. All current nominees for director are current members Board. Based Nominating Committee s evaluati each nominee s satisfacti qualificatis described above, Nominating Committee determined to recommend three directors for re-electi. The Nominating Committee has not received any nominatis from stockholders for Annual Meeting. Proxy Corporate Governance Policies We have adopted Corporate Governance Policies that guide Company Board matters corporate governance, including director respsibilities, Board committees ir charters, director independence, director qualificatis, director evaluatis, director orientati educati, director access to management, Board access to independent advisors, management development successi planning. Copies Corporate Governance Policies are available our website at Code Business Cduct Ethics We have adopted Code Business Cduct Ethics, which applies to all our directors, ficers employees. The Code Business Cduct Ethics meets requirements a code ethics as defined by SEC rules regulatis. The Code Business Cduct Ethics also meets requirements a code cduct under NYSE listing stards. The Code Business Cduct Ethics is available our website at Risk Oversight The Board participates in risk oversight through Company s Enterprise Risk Evaluati cducted by our Chief Financial Officer General Counsel, in cjuncti with Company s senior management team. Annual findings are reported to Audit Committee pursuant to requirements its charter full Board reviews an annual report findings as required by our Corporate Governance Policies. Communicatis with Board Directors We have established a process for interested parties to communicate with members Board, including n-management members Board. If you have any ccern, questi or complaint regarding any accounting, auditing or internal ctrols matter, or any issue with regard to our Code Business Cduct Ethics or or matters that you wish to communicate to our Board or nmanagement directors, send se matters in writing to c/o General Counsel, Prest Ridge III, 3460 Prest Ridge Road, Suite 600, Alpharetta, Georgia Informati about our Board communicatis policy procedures for processing Board communicatis for all 17

31 interested parties can be found our website at under link Investor Relatis Corporate Governance Board Directors Board Communicatis Policy. Approval Related Party Transactis The charter Audit Committee requires that Audit Committee review approve any transactis that would require disclosure under SEC rules regulatis. To help identify related party transactis relatiships, each director named executive ficer, as such term is used is Additial Executive Compensati Informati Summary Compensati Table, completes a questinaire an annual basis that requires disclosure any transacti or relatiships that pers, or any member his or her immediate family, has or will have with Company. Additially, Company s Code Business Cduct Ethics prohibits related party transactis requires that any employee with knowledge such a transacti provide written notice relatiship or transacti to Company s General Counsel. Neir nor Board is aware any matter in 2016 that required review approval Audit Committee in accordance with terms charter. Shareholder Rights Plan The Company s stockholder Rights Agreement expired November 30, The Company has decided at this time to not put a new plan in place. We will evaluate need for such a plan in future as such need may arise. 18

32 2016 DIRECTOR COMPENSATION The Compensati Committee has respsibility for evaluating making recommendatis to Board Directors regarding compensati for our nemployee directors. Each our directors who are not employees receives following compensati: Item Annual cash retainer... $36,000 Board committee meeting fee... Additial cash retainers for Committee Board Chairs: Board Chairman... $30,000 Audit Committee Chairman... $15,000 Compensati Committee Chairman.. $15,000 Nominating Committee Chairman... $10,000 Annual value equity grant... Amount $1,500 per meeting $80,000 (choice 100% restricted stock units or 50% restricted stock units / 50% n-qualified stock optis) s director compensati program is intended to align with market level compensati to attract, motivate, retain high-performing diverse quality director talent. bi-annually cducts a director pay study to ensure alignment with market level compensati. In 2016 directors all received 100% RSUs, which grant was a total 1,170 shares (except for Mr. Cook who received 1,063 shares based Company s stock price July 21, 2017). The number stock optis RSUs granted to nemployee directors is calculated annually using a modified Black Scholes formula used to provide a total equity value equal to annual equity grant target in same manner as used to calculate grants for Company employees under Lg-Term Compensati Plan ( LTCP ). Stock Optis, when granted, become fully vested exercisable first anniversary date grant. The RSUs become fully vested cvert to shares our comm stock first anniversary date grant. Employee directors receive no additial compensati no perquisites for serving our Board. also established Paper Directors Deferred Compensati Plan ( Directors Plan ), which enables each our nemployee directors to defer a porti ir cash compensati RSU awards. In 2016 Mr. McGovern participated in Director s Plan. Each our nemployee directors are required to own Company stock equal to two times ir annual cash retainer. The valuati restricted stock optis owned by our directors is calculated pursuant to same guidelines detailed in this Proxy Statement for our named executive ficers. All our nemployee directors met or exceeded guidelines as December 31, Proxy 19

33 The following table shows total compensati paid to each our nemployee directors in Fees Earned or Stock Awards Opti Awards Name Paid in Cash ($) ($)(1) ($) Total ($) Sean T. Erwin... 72,000 79, ,946 William M. Cook... 18,000(2) 79,969 97,969 Margaret S. Dano... 57,000 79, ,946 Timothy S. Lucas... 70,000 79, ,946 John F. McGovern... 70,000 79, ,946 Philip C. Moore... 58,500 79, ,446 Stephen M. Wood... 68,000 79, ,946 (1) Amounts reported in this column represent grant date fair value 2016 RSU award granted to each director, calculated in accordance with Financial Accounting Stards Board Statement ASC Topic 718 ( ASC 718 ). Due to restrictis imposed by Canadian law, Mr. Moore is not able to receive a quarterly cash dividend his RSUs. In lieu receiving such dividends, Mr. Moore is granted additial RSUs date each dividend payment in value to cash dividend that he would have received. Mr. Moore received 25 se RSUs in (2) Mr. Cook became a director July 21,

34 EXECUTIVE COMPENSATION Compensati Discussi Analysis The following secti presents an analysis, summary overview our compensati policies programs, including material decisis made under those policies programs in setting compensati levels for 2016 for our named executive ficers ( NEO ). Decisis made ccerning total compensati package for our executives take into csiderati individual executive s level respsibility within, performance relative to internal targets peer companies, creati lg term shareholder value. We strive to achieve a balanced competitive compensati package through a mix base salary, performance-based cash buses, lg-term equity based incentives awards, deferred compensati plans, pensi plans welfare benefits. Compensati Objectives Philosophy s compensati policies are designed to incorporate following attributes: Included Significant compent pay based performance achievement; more senior positis have a higher percentage performance-based pay. Maximum payment limit incentive plans Measures are based achievement financial targets, attainment strategic objectives enhancement stockholder value, with a clawback policy Policies validated through independent csultant reporting to Compensati Committee, comparis to independent peer companies stockholder say pay votes Competitive mix short term lg term performance performance-based incentives Strict insider trading policy Excluded Guaranteed variable compensati /or open ended payments Single trigger change-in-ctrol arrangements Re-pricing or cash buyout underwater stock appreciati rights without shareholder approval Market timing equity awards Excise tax gross-ups Proxy 2016 Key Strategic Financial Achievements Delivered record sales, earnings cash generated from operatis. Net sales $942 milli increased 6% versus 2015 earnings per share $4.26 increased 21% versus 2015 Deployed cash in a disciplined fashi to maintain a strg Return Capital support attractive shareholder returns Return Invested Capital increased from 11.8% to 12.7% Direct cash returns to shareholders increased from $25 to $38 milli, reflecting a double digit increase in dividend payouts increased share buybacks Debt was reduced from $229 to $221 milli during year, company maintained its good credit ratings metrics Completed important strategic initiatives Organic capital project to add transportati filtrati capacity in US Integrati FiberMark acquisiti delivery end curve synergies ahead schedule Total shareholder return 39.3% stock price increase 36% in 2016 compares to 29% increase in Russell

35 Following this secti under heading Additial Executive Compensati Informati we have included certain tables where you will find detailed compensati informati for named executive ficers. This secti is intended to provide additial details regarding s compensati practices, as well as informati process used to create implement our compensati program for our named executive ficers our or executive ficers. Named Executive Officers John P. O Dnell, President Chief Executive Officer Bnie C. Lind, Senior Vice President, Chief Financial Officer Treasurer Steven S. Heinrichs, Senior Vice President, General Counsel Secretary Julie A. Schertell, Senior Vice President, President Fine Paper & Packaging James R. Piedmte, Senior Vice President, Global Operatis Our Compensati-Setting Process Role Compensati Committee The Compensati Committee is respsible for carrying out Board s respsibilities for determining compensati for our named executive ficers. In that capacity, Compensati Committee (1) annually reviews approves corporate goals objectives relating to our executive compensati programs; (2) evaluates performance against those goals objectives; (3) approves compensati payable to our named executive ficers. The Role Shareholder Say--Pay Votes The Company provides its shareholders with opportunity to cast an annual advisory vote executive compensati (a say--pay proposal ). At Company s annual meeting shareholders held May 26, 2016, greater than 98% votes cast say--pay proposal at that meeting were voted in favor proposal. The Compensati Committee csidered se results believes voting results reflect strg shareholder support for Company s approach to executive compensati. The Compensati Committee will ctinue to csider outcome Company s say--pay votes in order to underst envirment future compensati decisis for named executive ficers. Use Compensati Csultants The Compensati Committee charter grants Compensati Committee authority to independently retain compensati csultants, in 2016 Compensati Committee again engaged Hugessen Csulting ( Hugessen ) to provide it with independent advice assistance in its deliberatis regarding compensati matters. At Committee s request, Hugessen originated certain analyses, reviewed informati provided by management assisted Compensati Committee in assessing 2016 compensati for s named executive ficers. In additi, Hugessen provided input to assist Compensati Committee in establishing 2016 targeted compensati levels performance criteria under Company s incentive plans. The Compensati Committee must pre-approve any additial work a material nature assigned to its csultant will not approve any such work that, in its view, could compromise Hugessen s independence as advisor to Committee. Hugessen does not provide any or services to. Decisis made by Compensati Committee are respsibility Committee reflect factors csideratis in additi to informati recommendatis provided by Hugessen. 22

36 In 2016, Compensati Committee, in accordance with SEC rules, csidered independence factors having to do with csultant cflicts interest determined that work compensati csultant did not raise any cflicts interest. Role Executive Officers At request Compensati Committee, our President Chief Executive Officer, alg with our Senior Vice President Chief Human Resources Officer, make recommendatis to our Compensati Committee regarding base salary target levels for our annual performance buses lg-term equity compensati for our executive ficers. Mr. O Dnell is not involved in setting or approving his own compensati levels. These recommendatis are based philosophy analysis described in this Compensati Discussi Analysis secti this Proxy Statement. Peer Comparis To assist in evaluating determining levels compensati in 2016 for each element pay, Compensati Committee reviewed various sources data prepared by management including: Proxy data collected analyzed from a peer group companies in paper, packaging, base materials specialty chemical industries similar in size to ( Peer Group ). In 2016 Peer Group csisted following companies: Proxy AEP Industries Omnova Solutis, Clearwater Paper Corporati Innophos Holdings Innospec, Krat Corporati Mercer Internatial, P.H. Glatfelter Company Quaker Chemical Corp Rayier Advanced Materials Schweitzer-Mauduit Internatial, Tredegar Corporati Data collected from Equilar s database using a broad industry cut manufacturing companies with revenues between $500 milli $2.0 billi. The ly Peer Group change in 2016 was eliminati OM Group, due to company being taken private in To develop market figures, compensati opportunities for named executive ficers were compared to compensati opportunities for similarly situated executives in comparable positis. Hugessen reviewed results se analyses provided feedback to Compensati Committee in cnecti with ir review competitive pay practices. s management Compensati Committee do not believe that it is appropriate to establish compensati levels based solely peer compariss or benchmarking; however, marketplace informati is e many factors that we csider in assessing reasableness compensati. Management Compensati Committee believe that informati regarding pay practices at or companies is useful to cfirm that our compensati practices are competitive in marketplace. Targeted Compensati Levels The Compensati Committee establishes targeted total compensati levels based up performance objectives for our executive ficers eligible to receive an annual cash bus opportunity under Management Incentive Plan ( MIP ) equity awards under Lg-Term 23

37 Compensati Plan ( LTCP ) as authorized by Amended Restated 2004 Omnibus Stock Incentive Plan ( Omnibus Plan ). In making se determinatis, our Compensati Committee is guided by compensati philosophy described below. Our Compensati Committee also csiders historical compensati levels, pay practices at companies in Peer Group relative compensati amg s senior executive ficers. The Compensati Committee also csiders industry cditis, corporate performance versus peer companies overall effectiveness s compensati program in achieving desired performance levels. As targeted total compensati levels are determined, our Compensati Committee also determines porti total compensati that will be ctingent, performance-based pay. Performance-based pay includes cash awards under our MIP program equity awards under our LTCP, which may be earned based Company s achievement performance goals whose value depends up lg-term appreciati in stock price. s compensati philosophy is intended to provide competitive pay within relevant market by targeting total compensati opportunities to reward executives for short term lg term performance through an overall compensati mix that is targeted to include a minimum 50% performance-based compensati for named executive ficers. Our Chief Executive Officer s compensati in 2016 was approximately 71% performance-based at target levels our or NEOs compensati was approximately 55% performance-based at target. Target Or Target Perf.- Equity 48% Base Salary 29% Perf.- Cash 23% Perf.- Equity 31% Perf.- Cash 24% Base Salary 45% 22MAR MAR Compensati Compents Our executive compensati includes base compents described below, each which is designed to accomplish specific goals our compensati philosophy described above. In cnecti with our discussi each such base compents, following questis will be addressed: Why chooses to pay each base compents; How determines amount various base compents; How each compent fits into s overall compensati scheme supports s compensati philosophy. Base Salary Base salary is a critical element executive compensati because it provides our executives with a base level mthly income also sets base level for performance compensati. Individual base salaries for our named executive ficers are generally reviewed by comparing total compensati opportunities within Peer Group as discussed above. Salary increases, if any, are reviewed approved by Compensati Committee an annual basis. Factors csidered in base salary 24

38 increases include Company s performance over past year, changes in individual executive respsibility positi base salary toger with all or compensati as indicated by our analysis Peer Group. This approach to base salary supports our compensati philosophy. The Compensati Committee has determined that setting NEO base salaries at this level allows to be competitive in attracting retaining talent, while at same time a substantial porti executive s overall compensati is performance based, thus aligning executive s stockholders interests Base Salary Decisis After discussing individual performance, experience, scope respsibilities, Mr. O Dnell s recommendatis for or NEOs, Compensati Committee established base salaries for each NEO in January In general, any increases in base pay are intended to be competitive with market take into csiderati individual performance scope respsibilities each NEO. The following table provides base salary received by each named executive ficer for Base Salary 2016 Base Salary % Increase O Dnell... $625,000 $750,000 20% Lind... $346,000 $370,000 7% Heinrichs... $310,000 $330,000 6% Schertell... $336,000 $360,000 7% Piedmte... $280,000 $280,000 0% Proxy Annual Performance Buses Annual cash incentive bus opportunities are awarded under MIP, are based our achievement performance goals established in beginning each calendar year. MIP target buses are established as a percentage base salary with a target bus ranging from 45% to 80% for NEOs. The Compensati Committee annually approves target bus range based data provided from market surveys as previously described based experience knowledge executive quality effectiveness ir leadership within as determined by Compensati Committee. The amount actual MIP bus may be adjusted up or down from target bus based s year-end results (as measured by objective subjective criteria set forth in MIP plan for applicable year, as previously approved by Compensati Committee). Actual MIP payments can range from 0-200% target bus for our chief executive, legal, operatis financial ficers, 0-250% for business unit leaders, depending wher results fall short, achieve or exceed identified performance goals. Under MIP, Compensati Committee generally sets a range possible payments from zero to a maximum percentage target award based its belief that no bus should be earned if performance is below established thresholds its determinati that top end range should provide an appropriate incentive for management to achieve exceptial performance. Under MIP, specific performance measures thresholds are determined by Compensati Committee in csultati with Mr. O Dnell, based key metrics that support achievement s short-term lg-term strategic objectives. Annual performance buses support our compensati philosophy in that y: (i) reward s executives for meeting exceeding goals that ctribute to s short-term lg-term strategic plan growth; (ii) promote a performance-based work envirment; (iii) serve as a material financial incentive to attract retain executive talent. 25

39 2016 Annual Performance Bus Awards For 2016, Compensati Committee approved target buses for our named executive ficers as a percentage base salary with a target bus ranging from 45% to 80%. The performance goals for 2016 MIP program were set based following performance criteria relative weighting set forth below: (i) adjusted corporate earnings before interest, income taxes, depreciati amortizati ( Corporate EBITDA ), which is calculated as net income plus income tax expenses, plus depreciati expense amortizati expense for intangibles, plus amortizati expense for stock optis restricted stock units adjusted for any e time events outside ordinary course business (ii) business unit earnings before interest taxes ( EBIT ) for our Fine Paper Technical Products business units, (iii) progress achieved in implementing Company s strategic plan: Performance Criteria 2016 TARGET MIP Corporate Business Unit Strategic (% Base Salary) EBITDA EBIT Initiatives O Dnell... 80% 75% 25% Lind... 55% 75% 25% Heinrichs... 50% 75% 25% Schertell... 55% 25% 50% 25% Piedmte... 45% 75% 25% Each goal was set at levels that both Compensati Committee management believed to be challenging but attainable, achievements would reflect significant performance by Company. On a st-ale basis, Corporate EBITDA could have yielded a payout from 0% at threshold, 100% at target 200% at outsting, business unit EBIT could have yielded a payout from 0% at threshold, 100% at target 300% at maximum, based year-end results. These targets are csistent with our desire to incentivize reward significant growth in prits. The strategic plan objective was paid out at 100% target reflecting performance in achieving a set strategic objectives csidered critical for lg-term growth. Results included successful completi an organic capital project to add filtrati capacity in US, finishing integrati FiberMark delivering end curve synergies ahead schedule, driving organic growth targeted categories, or strategic corporate initiatives. The performance goals results for each financial metrics in 2016 were as follows: Threshold Target Outsting Maximum Metric ($MM) (0%) (100%) (200%) (300%) 2016 Results Payout % Corporate EBITDA N/A % Fine Paper & Packaging EBIT % Based process described above, MIP payments were awarded as follows: 2016 MIP 2016 MIP % Target at Target at Actual Earned O Dnell... $600,000 $577,500 96% Lind... $203,500 $195,869 96% Heinrichs... $165,000 $158,813 96% Schertell... $198,000 $182,655 92% Piedmte... $126,000 $121,275 96% 26

40 Lg-Term Equity Compensati Lg-term equity incentives under LTCP csist performance share units stock appreciati rights ( SARs ) granted an annual basis, with stock appreciati rights representing approximately 30% total value equity incentive awards performance shares representing approximately 70% total value equity award granted to an executive ficer for that year. This reflects Company s desire to emphasize performance based incentives in LTCP. The total target LTCP grants are set at beginning year for each named executive ficer at a minimum 55% executive s base salary. The Company typically grants 100% SARs in cjuncti with first Board meeting each fiscal year. Each year Compensati Committee reviews approves a target number performance share units for each our named executive ficers each or participant in LTCP plan. The number units actually earned by each participant is determined by Company s corporate performance. The range possible awards is set by Compensati Committee based its: (i) belief that a minimal award shall be granted if performance measures are significantly below target levels; (ii) determinati that top end range provided an appropriate incentive for management to achieve exceptial performance. The combinati SARs performance share units focuses our executives s financial performance increasing shareholder value. It is aligned with supports our stock ownership policy. Lg-term incentives also help retain employees during performance periods. Proxy 2016 LTCP Awards For 2016, Compensati Committee approved equity grants under LTCP for our named executive ficers with target values ranging from 55% to 170% base salary pay as follows: 2016 LTCP (% base Salary) O Dnell % Lind... 75% Heinrichs... 65% Schertell... 75% Piedmte... 55% For each our named executive ficers, value was divided into awards SARs a target number performance share units, with 70% value in performance share units 30% value in SARs. The range possible awards under LTCP was selected to tie a substantial percentage ir compensati to s performance. The number SARs to be awarded to each named executive ficer in 2016 was determined by dividing value porti LTCP award to be awarded as SARs (determined by Compensati Committee as described above) by fair value e stock opti (determined using a modified Black- Scholes formula), n rounded to nearest tens to produce number shares subject to applicable opti award. Each grant SARs made in 2016 vests in increments 33.34%, 33.33% 33.33% over a three year period, with vesting occurring each anniversary 27

41 applicable grant a ten year term to exercise. The process described above resulted in grants SARs in 2016 to purchase following optis: 2016 SARs O Dnell... 28,312 Lind... 6,162 Heinrichs... 4,763 Schertell... 5,996 Piedmte... 3,420 The target number performance share units to be awarded to each named executive ficer in 2016 was determined by dividing value porti LTCP award to be awarded as performance share units (determined by Compensati Committee as described above) using fair market value stock price as date grant, n rounded to nearest ten shares. The target number performance share units are increased or decreased (to an amount equal to between 40% to 200% target number) after a e year performance period. The units are n subject to a two year holding period. After end performance period, adjustment target number shares will be calculated based Company s achievement performance goals relative to following equally weighted criteria: year over year growth in sales (cstant currency), year over year growth in return invested capital, relative total shareholder return ( Relative TSR ). The Relative TSR (including dividend yield), is compared against Russell 2000 Value Index. The specific targets results in 2016 were as follows: Metric Threshold Target Outsting 2016 Results Payout % Payout (as a % Target)... 40% 100% 200% Return Capital... No increase Increase Increase Increase 170% 37 basis points > 75 basis 64 basis points points Cstant Currency Sales... 0% growth 9.1% growth > 11% 6.4% 70 % growth Total Shareholder Return... 3 rd Quartile Median Top Quartile 39.3% 190% 2 nd Quartile Overall Payout Percentage % Based process described above our performance against targets noted, performance share unit ( PSU ) grants were awarded as follows: 2016 PSUs 2016 PSUs % Target at Target Earned Earned O Dnell... 15,401 21, % Lind... 3,352 4, % Heinrichs... 2,591 3, % Schertell... 3,261 4, % Piedmte... 1,860 2, % The earned shares are now in a two year hold period are still subject to forfeiture based ctinued employment. All shares are scheduled to be released to active participants December 31,

42 Retirement Benefits We maintain Paper 401(k) Retirement Plan ( 401(k) Plan ), which is a tax-qualified defined ctributi plan for employees. The 401(k) Plan is available to all s U.S. employees, but includes a special company prit-sharing ctributi feature that is ly applicable for certain employees who are ineligible to participate in Pensi Plan. Furr, we maintain a supplemental retirement ctributi plan ( Supplemental RCP ) which is a n-qualified defined ctributi plan which is intended to provide a tax-deferred retirement savings alternative for amounts exceeding Internal Revenue Code limitatis qualified plans. Additial informati regarding Supplemental RCP can be found in 2016 Nqualified Deferred Compensati table later in this Proxy Statement. We also maintain Deferred Compensati Plan, which is a n- qualified deferred compensati plan for our executive ficers. The Deferred Compensati Plan enables our executive ficers to defer a porti annual cash compensati (base salary n-equity awards under our MIP). This plan is intended to assist our executive ficers in maximizing value compensati y receive from Company assist in ir retenti. Additial informati regarding Deferred Compensati Plan can be found in 2016 Nqualified Deferred Compensati table later in this Proxy Statement. We also maintain Paper Pensi Plan, a tax-qualified defined benefit plan ( Pensi Plan ) Paper Supplemental Pensi Plan, a n-qualified defined benefit plan ( Supplemental Pensi Plan ) which provide tax-deferred retirement benefits for certain our employees, including Ms. Lind Mr. Piedmte, who were employed by Kimberly-Clark (our predecessor company prior to being spun-f) prior to December 31, Mr. O Dnell, Mr. Heinrichs, Ms. Schertell do not participate in se plans. Additial informati regarding Pensi Plan Supplemental Pensi Plan can be found in 2016 Pensi Benefits table later in this Proxy Statement. Compensati Committee believe that Pensi Plan, Supplemental Pensi Plan, Retirement Ctributi Plan, Supplemental RCP, Deferred Compensati Plan 401(k) Plan are core compents our compensati program. The plans are competitive with plans maintained by our peer companies are necessary to attract retain top level executive talent. Additially, plans support lg-term retenti key executives by providing a strg incentive for executive to remain with over an extended number years. Proxy Severance Payments The Paper Executive Severance Plan ( Executive Severance Plan ) covers designated ficers, including all our named executive ficers, provides certain severance benefits up terminati employment following a change in ctrol. Up terminati ficer s employment by without cause or by ficer for good reas (as defined in Executive Severance Plan) within two-year period following a change in ctrol or a terminati by us without cause during e-year period preceding such a change in ctrol, Executive Severance Plan as in effect as December 31, 2016 provided that ficer would be entitled to a cash payment equal to sum : (i) two times sum his annual base salary targeted annual bus; (ii) any qualified retirement plan benefits forfeited as a result such terminati; (iii) amount retirement benefits such ficer would have received under qualified supplemental retirement plans but for his or her terminati for two-year period following his or her terminati; (iv) cost medical dental COBRA premiums for a period two years; (v) a cash settlement any accrued retiree welfare benefits. In additi, ficer will be eligible to receive outplacement services for a period two years (up to a maximum cost to us $50,000). In March 2017, Compensati Committee amended Executive Severance Plan ( 2017 Executive Severance Plan ), effective April 1, 2017, to provide named ficers certain severance 29

43 benefits both up terminati employment following a change in ctrol outside a change in ctrol. The 2017 revisis also categorize participating ficers as eir Tier 1, Tier 2 or Tier 3 participants in order to provide varying benefit amounts to different ficers. All NEOs are Tier 1 participants. Up terminati ficer s employment by without cause or by ficer for good reas (as defined in 2017 Executive Severance Plan) outside a change in ctrol each NEO will be entitled to an amount equal to e e-half times his or her base salary. Up terminati ficer s employment by without cause or by ficer for good reas within two-year period following a change in ctrol, 2017 Executive Severance Plan provides that each NEO will be entitled to sum (i) two times sum his or her annual base salary, (ii) amount bus under s Management Incentive Plan that he or she has earned through date change in ctrol plus two times his or her targeted annual bus; (iii) any prit-sharing ctributis or pensi plan benefits forfeited as a result such terminati; (iv) amount prit-sharing ctributis pensi plan benefits such participant would have received under qualified supplemental retirement plans but for his or her terminati for two-year period following his or her terminati; (v) cost medical dental COBRA premiums for a period two years. In additi, each NEOs will be fully vested in his or her account under Deferred Compensati Plan any awards granted to him or her under Omnibus Plan. In additi, up terminati an NEO s employment by without cause or by ficer for good reas NEO will be eligible to receive reimbursement for outplacement service costs for a period two years for an amount not to exceed $50,000. Payment benefits under Executive Severance Plan is subject to applicable executive executing an agreement that includes restrictive covenants a general release claims against us. These benefits are intended to recruit retain key executives provide ctinuity in s management in event a change in ctrol. We believe Executive Severance Plan is csistent with similar plans maintained by our peer companies refore is a core compent our compensati program necessary to attract retain key executives. Timing Compensati Base salary adjustments, if any, are made by our Compensati Committee at first meeting each fiscal year (with adjustments effective as January 1 that same year). Stock opti grants performance share unit target levels awards are made in manner described above. We do not coordinate timing equity awards with release n-public informati. The exercise price stock optis is established at fair market value closing price our stock date grant. Tax Accounting Csiderati In general, tax accounting treatment compensati for our named executive ficers has not been a core compent used in setting compensati. In limited circumstances we do csider such treatment attempt to balance cost to against overall goals we intend to achieve through our compensati philosophy. In particular, our intent is to maximize deductibility our named executive ficers compensati under Code Secti 162(m) while maintaining flexibility necessary to appropriately compensate our executives based performance existing competitive envirment. The MIP LTCP programs are performance based are designed to be fully deductible under Code Secti 162(m). 30

44 Stock Ownership Guidelines The Compensati Committee has adopted stock ownership guidelines to foster lg-term stock holdings by company leadership. These guidelines create a strg link between stockholders management s interests. Named executive ficers are required to own a designated multiple ir respective annual salaries. The multiples are as follow: O Dnell... Lind... Heinrichs... Schertell... Piedmte... Stock Ownership Multiple Salary 6x 4x 4x 4x 4x Each named executive ficers is required to hold at least 50% ir annual performance share grants until y reach ownership guidelines. The following holdings are counted toward fulfilling guidelines, with each being valued using our stock price as December 31 each year; (i) stock held in 401(k) plan, or deferral plans, outright or in brokerage accounts; (ii) performance share units or restricted stock units earned but not vested or not paid out; (iii) in mey value vested or unvested stock optis SARs. Penalties for ctinued failure to meet guidelines include payment MIP compensati in stock reducti LTCP compensati. All our named executive ficers met or exceeded guidelines as December 31, Proxy Clawback Policy The Compensati Committee adopted a clawback policy for all executives or employees participating in our MIP program ccerning future payment MIP payments lg term equity grants under LTCP program. This policy gives Board authority to reclaim certain overstated payments made to employees due to materially inaccurate results presented in Company s audited financial statements. Policies against Hedging Pledging Securities Our insider trading policy provides that directors, ficers employees are prohibited from engaging in short sales buying or selling puts or calls or or derivative securities. Directors ficers are also prohibited from holding securities in a margin account or pledging securities as collateral for a loan. 31

45 COMPENSATION COMMITTEE REPORT The Compensati Committee oversees s compensati policies programs behalf Board. In fulfilling this respsibility, Compensati Committee has reviewed discussed with s management Compensati Discussi Analysis included in this Proxy Statement. In reliance such review discussis, Compensati Committee recommended to s Board Directors that Compensati Discussi Analysis be included in this Proxy Statement in Company s Annual Report Form 10-K for year ended December 31, Compensati Committee: Stephen M. Wood, Chairman John F. McGovern Margaret S. Dano 32

46 ADVISORY VOTE ON EXECUTIVE COMPENSATION (ITEM 2) The Board Directors unanimously recommends that stockholders vote FOR approval Company s executive compensati. Secti 14A Securities Exchange Act 1934, as amended ( Exchange Act ) requires that we include in this proxy statement a n-binding stockholder vote our executive compensati as described in this proxy statement (commly referred to as Say--Pay ). We encourage stockholders to review Compensati Discussi Analysis ( CD&A ) secti this proxy statement. Our executive compensati program has been designed to pay for performance align our compensati programs with business strategies focused lg-term growth creating value for stockholders while also paying competitively focusing total compensati. The Company s executive compensati programs are designed to attract, motivate retain highly qualified executive ficers who are able to achieve corporate objectives create stockholder value. The Compensati Committee believes Company s executive compensati programs reflect a strg pay-for-performance philosophy are well aligned with stockholders lg-term interests without promoting excessive risk. We feel this design is evidenced by following: A majority our executives compensati is directly linked to our performance creati stockholder value. The overall compensati mix is targeted to include at least 50% performance based compensati for named executive ficers with a higher percentage our CEO s compensati being performance based. In % our CEO s compensati was performance based at target levels. Our lg-term incentive awards are exclusively in form performance share units, stock optis stock appreciati rights all our incentive plans have capped payouts. LTCP grants are split with 70% total value awards granted as performance share units with a three-year vesting period, 30% as stock appreciati rights with annual vesting over a three-year period. This reflects Company s desire to emphasize performance based incentives. For our performance share units, we use objective performance metrics closely tied to financial performance shareholder value, such as increasing return invested capital, revenue growth, cash flow generati relative total shareholder return. In 2016 LTCP grants were awarded at 138% target based achieved growth in sales, return invested capital total shareholder return. Our short-term incentive plan (MIP) also is based a pay-for-performance philosophy, with target bus opportunities ranging from 45% to 80% base salary based improvements in corporate business unit prits successful executi strategic objectives. In 2016, executives received a payment 92% to 96% target as a result performance in corporate EBITDA, business unit EBIT successful executi strategic objectives. We have meaningful stock ownership requirements for our named executive ficers. We do not have employment agreements or or individual arrangements with our named executive ficers that provide for a specified term employment, compensati terms or specific benefits up a terminati employment. Benefits under our Executive Severance Plan in cnecti with a change-in-ctrol are payable ly a double trigger basis (i.e., following both a change in ctrol a qualifying terminati employment). The Compensati Committee is advised by an independent compensati csultant who keeps Compensati Committee apprised developments best practices. Proxy 33

47 The Company has a clawback policy which allows Company to recoup awards if payment or vesting was based financial criteria that are later deemed to be materially inaccurate. In 2017 Compensati Committee amended Executive Severance Plan to remove excise tax gross up provisi. The Board strgly endorses Company s executive compensati program recommends that stockholders vote in favor following resoluti: RESOLVED, that stockholders approve compensati Company s named executive ficers as described in this proxy statement under Executive Compensati, including Compensati Discussi Analysis tabular narrative disclosure ctained in this proxy statement. Because vote is advisory, it will not be binding up Board Directors or Compensati Committee neir Board Directors nor Compensati Committee will be required to take any acti as a result outcome vote this proposal. The Compensati Committee will csider outcome vote when csidering future executive compensati arrangements. 34

48 ADVISORY VOTE ON FREQUENCY OF ADVISORY VOTE ON EXECUTIVE COMPENSATION (ITEM 3) The Board Directors unanimously recommends that stockholders vote to cduct an advisory vote executive compensati every One. Enacted legislati requires that we include in this proxy statement a separate n-binding stockholder vote to advise wher frequency Say--Pay vote should occur every e, two or three years. You have opti to vote for any e three optis, or to abstain matter. The Board has determined that an advisory vote executive compensati every e year is best approach for Company based a number csideratis, including following: An advisory vote executive compensati every year will provide our stockholders opportunity to provide us with ir direct input our compensati policies, philosophy practices as disclosed in our proxy statement every year. An annual vote cycle will maximize stockholder communicati by providing a direct, clear means for Company to receive evaluate investor sentiment ccerning our executive compensati philosophy. Without annual stockholder input it could be difficult to underst wher a stockholder vote pertains to compensati year being discussed in current proxy, or pay practices from previous years. An annual vote enables Compensati Committee to better underst implicatis each vote to respd accordingly. Although vote is n-binding, our Board Directors will take into account outcome vote when making future decisis about Company s executive compensati policies procedures. The Company s stockholders also have opportunity to provide additial feedback important matters involving executive compensati. As discussed under Corporate Governance Communicatis with Board Company provides stockholders an opportunity to communicate directly with Board, including issues executive compensati. In additi, rules NYSE require Company to seek stockholder approval for new employee equity compensati plans material revisis reto. Proxy 35

49 ADDITIONAL EXECUTIVE COMPENSATION INFORMATION Summary Compensati Table The following table reflects compensati paid to or earned by our named executive ficers for services rendered during 2016, : Change in Pensi Value N-Qualified N-Equity Deferred Stock Opti Incentive Plan Compensati All Or Salary Awards Awards Compensati Earnings Compensati Total Name Principal Positi ($) ($)(1) ($)(2) ($)(3) ($)(4) ($)(5) ($) John P. O Dnell ,000 1,103, , , ,573 2,964,357 President , , , , ,766 2,774,893 Chief Executive Officer ,000 1,144, , , ,590 2,934,670 Bnie C. Lind , ,238 83, , ,467 10,150 1,285,973 Senior Vice President, Chief , ,340 79, , ,095 9,930 1,410,161 Financial Officer Treasurer , ,685 65, , ,665 13,079 1,749,733 Steven S. Heinrichs , ,697 64, ,813 54, ,173 Senior Vice President, General , ,753 61, ,500 52, ,533 Counsel Secretary , ,533 50, ,525 41, ,787 Julie A. Schertell , ,716 81, ,655 68, ,854 Senior Vice President, , ,745 72, ,724 53,623 1,009,231 President Fine Paper & Packaging , ,430 55, ,251 46, ,128 James R. Piedmte , ,307 46, , ,979 12, ,715 Senior Vice President, , ,764 47, , ,444 11, ,860 Global Operatis , ,859 37, , ,763 12,800 1,201,981 (1) Amounts shown reflect aggregate grant date fair value with respect to performance share units, restricted stock units restricted stock granted pursuant to our Omnibus Plan. The amounts represent grant date fair value awards in accordance with ASC 718. The grant date fair value stock awards is equal to fair market value underlying comm stock date grant. See Note 9 to audited Financial Statement included in our 2016 Annual Report Form 10-K for assumptis used in valuing performance share units. (2) Amounts shown reflect aggregate grant date fair value with respect to stock optis stock appreciati rights ( SAR ) granted pursuant to our Omnibus Plan. The amounts represent grant date fair value SARs in accordance with ASC 718. The grant date fair value SAR awards is determined using Black-Scholes opti valuati model. See Note 9 to audited Financial Statement included in our 2016 Annual Report Form 10-K for assumptis used in valuing SARs. (3) Amounts shown reflect annual performance buses earned in fiscal year paid in following year, are described in detail in porti our Compensati Discussi Analysis, captied 2016 Annual Performance Bus Awards. (4) Amounts shown reflect aggregate change during year in actuarial present value accumulated benefit under our Pensi Plan Supplemental Pensi Plan. The large variability in value year-to-year is caused, for most part, by changes in discount rates used to calculate value from year to year, not any increase or change in pensi plan for any individual named executive ficer. Messrs. Heinrichs, O Dnell Ms. Schertell do not participate in any defined pensi plans. (5) All Or Compensati includes s ctributi to 401(k) account each our named executive ficers. The amounts shown for Messrs. Heinrichs, O Dnell Ms. Schertell also include s special company pritsharing ctributi to ir accounts in 401(k) Plan Supplemental Retirement Ctributi Plan. The amounts shown for Ms. Lind, Mr. Heinrichs Ms. Schertell include expenses for an annual physical. The totals shown for Messrs. O Dnell, Heinrichs, Piedmte Ms. Schertell in 2016, 2015, 2014 include expenses for tax preparati financial planning. 36

50 2016 Grants Plan Based Awards The following table ctains informati relating to plan based awards grants made in 2016 to our named executive ficers under Omnibus Plan is intended to supplement 2016 Summary Compensati Table listed above. All Or Estimated Future Payouts Estimated Future Payouts Opti Under N-Equity Incentive Under Equity Incentive Awards Plan Awards(1) Plan Awards(2) (3) Grant Date Exercise Fair Number or Base Value Securities Price Stock Underlying Opti Opti Name Grant Threshold Target Maximum Threshold Target Maximum Optis Award Awards Principal Positi Plan Date ($) ($) ($) (#) (#) (#) (#) ($/SH) ($) John P. O Dnell MIP 01/26/ ,000 1,200,000 President Chief Performance Units 01/26/2016 6,160 15,401 30,802 1,103,789 Executive Officer SAR 01/26/ , ,495 Bnie C. Lind MIP 01/26/ , ,000 Senior Vice President, Performance Units 01/26/2016 1,341 3,352 6, ,238 Chief Financial Officer SAR 01/26/2016 6, ,249 Treasurer Steven S. Heinrichs..... MIP 01/26/ , ,000 Senior Vice President, Performance Units 01/26/2016 1,036 2,591 5, ,697 General Counsel SAR 01/26/2016 4, ,348 Secretary Proxy Julie A. Schertell MIP 01/26/ , ,000 Senior Vice President, Performance Units 01/26/2016 1,304 3,261 6, ,716 President Fine SAR 01/26/2016 5, ,006 Paper & Packaging James R. Piedmte.... MIP 01/26/ , ,000 Senior Vice President, Performance Units 01/26/ ,860 3, ,307 Global Operatis SAR 01/26/2016 3, ,204 (1) Reflects range potential annual incentive bus payments that could have been earned by each named executive ficer under s MIP in The actual buses earned in 2016 are reflected in Summary Compensati Table above under capti N-Equity Incentive Plan Compensati. For more informati regarding annual incentive bus opportunities, see discussi in Compensati Discussi Analysis. (2) Reflects range potential performance share units that may be earned by each named executive ficer, based Company s level achievement performance goals in 2016 total shareholder return relative to a peer group for performance period ending December 31, For more informati regarding performance share units, including how number performance share units awarded was determined vesting terms applicable to such units, see discussi in Compensati Discussi Analysis. Outsting restricted share units receive dividends at same rate as or stockholders. (3) The SARs vest as to e-third shares each first three anniversaries grant date. 37

51 Outsting Equity Awards at 2016 Fiscal -End The following table sets forth informati ccerning outsting equity awards for our named executive ficers as December 31, Opti Awards Stock Awards Equity Equity Incentive Equity Incentive Plan Awards: Incentive Plan Awards: Market or Plan Awards: Number Payout Value Number Number Number Number Unearned Unearned Securities Securities Securities Shares or Market Shares, Units Shares, Units Underlying Underlying Underlying Units or Value or Or or Or Unexercised Unexercised Unexercised Opti Opti Stock That shares or Rights That Rights That Name Principal Optis (#) Optis (#) Unearned Exercise Expirati Have Not Units Have Not Have Not Positi Exercisable Unexercisable Optis (#) Price ($) Date Vested Stock Vested Vested ($) John P. O Dnell , (1) 01/24/2022 President Chief 8, (4) 01/28/2023 Executive Officer 6,256 6, (5) 01/27/2024 5,813 11, (6) 01/26/ , (7) 01/25/ ,990(8) 878,980 15,401(9) 1,103,789 Bnie C. Lind , (5) 01/27/2024 Senior Vice President, 1,603 3, (6) 01/26/2025 Chief Financial Officer 6, (7) 01/25/2026 Treasurer 3,030(8) 242,340 3,352(9) 240,238 Steven S. Heinrichs , (4) 01/28/2023 Senior Vice President, 2,686 1, (5) 01/27/2024 General Counsel 1,250 2, (6) 01/26/2025 Secretary 4, (7) 01/25/2026 Julie A. Schertell , (2) 01/27/2021 Senior Vice President, 3, (3) 01/24/2022 President Fine 4, (4) 01/28/2023 Paper & Packaging 2,912 1, (5) 01/27/2024 1,460 2, (6) 01/26/2025 5, (7) 01/25/2026 James R. Piedmte , (4) 01/28/2023 Senior Vice President, (5) 01/27/2024 Global Operatis 956 1, (6) 01/26/2025 3, (7) 01/25/2026 2,360(8) 188,753 2,591(9) 185,697 2,760(8) 220,745 3,261(9) 233,716 1,810(8) 144,764 1,860(9) 133,307 (1) These optis were granted to Mr. O Dnell January 25, 2013, fully vested December 31, These optis were cverted to stock appreciati rights July 1, (2) These optis were granted January 28, 2011 vested as follows: 33.34% January 28, % both January 28, 2013 January 28, These optis were cverted to stock appreciati rights July 1, (3) These optis were granted January 25, 2012 vested as follows: 33.34% January 25, % both January 25, 2014 January 25, These optis were cverted to stock appreciati rights July 1, (4) These optis were granted January 29, 2013, vest as follows: 33.34% January 29, % both January 29, 2015 January 29, These optis were cverted to stock appreciati rights July 1, (5) These optis were granted January 28, 2014, vest as follows: 33.34% January 28, % both January 28, 2016 January 28, These optis were cverted to stock appreciati rights July 1, (6) These stock appreciati rights were granted January 27, 2015, vest as follows: 33.34% January 27, % both January 27, 2017 January 27, (7) These stock appreciati rights were granted January 26, 2016, vest as follows: 33.34% January 26, % both January 26, 2018 January 26, (8) These performance share units target levels were set January 27, 2015 were earned December 31, 2015, based Company s achievement performance goals relating to return invested capital total shareholder return during performance period ending December 31, The awards were granted at 146% target as disclosed in CD&A Secti 2016 Proxy Statement market 38

52 value disclosed in this table reflects sizing se awards. These performance share units are subject to a two year ctinued service requirement after e year performance period, subject to certain exceptis. (9) These performance share units target levels were set January 16, 2016 were earned vested December 31, 2016, based Company s achievement performance goals relating to return invested capital total shareholder return during performance period ending December 31, The awards were granted at 138% target as disclosed in CD&A Secti this Proxy Statement market value disclosed in this table reflects sizing se awards. These performance share units are subject to a two year ctinued service requirement after e year performance period, subject to certain exceptis. Proxy 39

53 Opti Exercises Stock Vested in 2016 The following table sets forth informati regarding optis exercised stock awards vested for our named executive ficers in Opti Awards Stock Awards(2) Number Number Shares Shares Acquired Value Realized Acquired Value Realized Name Exercise (#) Exercise ($) Vesting (#) Vesting ($)(1) John P. O Dnell... 28,207 2,403,236 Bnie C. Lind... 10, ,668 7, ,112 Steven S. Heinrichs... 6, ,801 Julie A. Schertell... 6, ,679 James R. Piedmte... 7, ,894 4, ,777 (1) Reflects market value shares vesting date. (2) These shares represent vesting Performance Share Units granted to each our named executive ficer in January 2014, which vested December 31, 2016, after a e year performance two year holding period. Pensi Plans The Paper Pensi Plan is a broad-based, tax-qualified defined benefit pensi plan, which provides a benefit up retirement to eligible employees Company. The Paper Supplemental Pensi Plan is a n-qualified defined benefit pensi plan which covers pay benefits above qualified limits in Pensi Plan. The compensati covered by se defined benefit plans includes salary n-equity incentive payments set forth above in Summary Compensati Table. Under our Pensi Plan an employee is entitled to receive an annual stard benefit based years service integrated with social security benefits. The Code generally places limits amount pensi benefits that may be paid from tax qualified Pensi Plan. However, we will pay any participant in our Supplemental Pensi Plan amount benefit payable under Pensi Plan that is limited by Code. Retirement benefits for participants in Pensi Plan who have at least five years service may begin a reduced basis at age 55 or an unreduced basis at normal retirement age 65. Unreduced benefits also are available (i) for participants with ten years service at age 62 or as early as age 60 with thirty years service (ii) as described below, for certain involuntary terminatis. Ms. Lind Mr. Piedmte are eligible for early retirement a reduced basis. Ne our or named executive ficers currently is eligible for retirement under our Pensi Plan or Supplemental Pensi Plan. The normal form benefit is a single-life annuity payable mthly or optial forms benefit are available including a joint survivor benefit. Accrued benefits under our Supplemental Pensi Plan will, at participant s opti, eir be paid as mthly payments in same form as retirement payments from Pensi Plan or as an actuarially determined lump sum payment up retirement after age 55. For a discussi how we value se obligatis assumpti we use in that valuati, see Note 8 to our financial statements included in our 2016 Annual Report Form 10-K. For purposes determining present value accumulated benefits, we have used normal retirement age under plans, which is

54 2016 Pensi Benefits The following table sets forth informati as December 31, 2016 regarding accumulated benefits to our named executive ficers under our Pensi Plan, Supplemental Pensi Plan German Pensi Plans. Number s Present Value Name Plan Name Credited Service(1) Accumulated Benefit ($)(2) Bnie C. Lind... Paper Pensi Plan ,705,500 Paper Supplemental Pensi Plan ,504,698 James R. Piedmte... Paper Pensi Plan ,905,022 Paper Supplemental Pensi Plan ,625,385 (1) Includes years service credited for employment with Kimberly-Clark prior to s spin-f for Ms. Lind Mr. Piedmte. (2) For a descripti assumptis applied in determining present value accumulated benefits reported above, see Note 8 to audited Financial Statements included in our 2016 Annual Report Form 10-K. Proxy 2016 Nqualified Deferred Compensati The Supplemental RCP is a nqualified excess benefit supplemental retirement plan pursuant to which Company provides additial retirement benefits to certain highly compensated employees. These Company ctributis are intended to provide ctributis to those individuals whose benefits under tax-qualified programs are restricted by limitatis permitted by Internal Revenue Code. Ctributis are held for each participant in eir an excess benefit or supplemental benefit unfunded separate account. Participant accounts are credited with earnings, gains losses based rate return investment funds selected by participant, which participant may elect to change in accordance with participant s electis under Supplemental RCP. Payments can be tied to terminati employment, including retirement, would be paid in lump sum. If a participant dies before receiving full value ir account balance, participant s beneficiary would receive remainder benefit in e lump sum payment. All accounts would be distributed promptly following a change in ctrol, subject to a 10% reducti in a current participant s account a 5% reducti in an account for a retired participant. The Deferred Compensati Plan enables our executive ficers to defer a porti annual cash compensati (base salary n-equity awards under our MIP). This plan is intended to assist our executive ficers in maximizing value compensati y receive from Company assist in ir retenti. Named 41

55 executive ficer participati in Supplemental RCP Deferred Compensati Plan in 2016 is as follows: Executive Company Aggregate Aggregate Ctributis Ctributis Earnings Aggregate Balance in last in last in last Withdrawal/ at Last Name Fiscal (1) Fiscal (1) Fiscal Distributis Fiscal John P. O Dnell... 0 $116,812 $15,581 0 $571,395 President Chief Executive Officer Steven S. Heinrichs... 0 $ 24,637 $11,769 0 $202,253 Senior Vice President, General Counsel Secretary Julie A. Schertell... 0 $ 38,379 $ 8,065 0 $167,117 Senior Vice President, President Fine Paper & Packaging (1) Ne our named executive ficers elected to defer compensati in 2016 under Deferred Compensati Plan (2) Amounts are reported as 2016 compensati in All Or Compensati column Summary Compensati Table. Potential Payments Up Terminati We do not have employment agreements or or individual arrangements with our named executive ficers that provide for specific benefits up a terminati employment. In general, up terminati employment, an executive ficer will receive compensati benefits for which he or she has already vested. This includes accrued but unpaid salary, accrued unused vacati pay, payments benefits accrued under our broad-based benefit programs. The following secti describes certain payments benefits that would be payable to our named executive ficers in event ir involuntary terminati in cnecti with a change-in-ctrol, or or involuntary terminati. Involuntary Terminati in Cnecti with a Change in Ctrol The Executive Severance Plan as in effect as December 31, 2016 provided certain severance benefits up terminati employment designated ficers, including all our named executive ficers, following a change in ctrol. Up terminati ficer s employment by without cause or by ficer for good reas (as defined in Executive Severance Plan) within two year period following a change in ctrol or a terminati by us without cause during e year period preceding such a change in ctrol, Executive Severance Plan as in effect as December 31, 2016 provided that ficer would be entitled to a lump sum cash payment equal to sum : (i) two times sum his annual base salary targeted annual bus; (ii) any qualified retirement plan benefits forfeited as a result such terminati; (iii) amount retirement benefits such ficer would have received under qualified supplemental retirement plans but for his or her terminati for two year period following his or her terminati; (iv) cost medical dental COBRA premiums for a period two years; (v) a cash settlement any accrued retiree welfare benefits. In additi, ficer will be eligible to receive outplacement services for a period two years (up to a maximum cost to us $50,000). Payment benefits under Executive Severance Plan is subject to applicable executive executing an agreement that includes restrictive covenants a general release claims against us. The Executive Severance Plan 42

56 has been designed to limit exposure for any parachute excise taxes; but if such excise taxes apply, we will reimburse ficer an after-tax basis for any excise taxes incurred by that executive due to payments received under Executive Severance Plan. The following table shows payments that would be made to each our named executive ficers under Executive Severance Plan in cnecti with a change-in-ctrol terminati as December 31, 2016, without giving effect to revisis effected by 2017 Executive Severance Plan. John P. Bnie C. Steven S. Julie A. James R. Payments(8) O Dnell Lind Heinrichs Schertell Piedmte Severance(1)... $2,700,000 $1,147,000 $ 990,000 $1,116,000 $ 812,000 Prorated N-Equity Incentive Payment(2)... $ 600,000 $ 203,500 $ 165,000 $ 198,000 $ 126,000 Unvested Stock Opti Spread(3)... $1,332,930 $ 322,820 $ 250,451 $ 299,542 $ 183,665 Unvested Restricted Stock(4)... $3,177,960 $ 771,060 $ 598,274 $ 383,485 $ 443,892 LTCP Payment... $ 0 $ 0 $ 0 $ 0 $ 0 Retirement Benefit Payment(5)... $ 272,159 $1,014,770 $ 78,309 $ 89,184 $ 196,879 Welfare Benefit Values(6)... $ 41,408 $ 39,813 $ 54,231 $ 41,408 $ 35,630 Outplacement... $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 Excise Tax & Gross-Up(7)... $ 0 $ 0 $ 0 $ 0 $ 0 Aggregate Payments... $8,174,457 $3,548,963 $2,186,265 $2,177,619 $1,848,066 Proxy (1) Severance payment equal to two times sum executive s annual base salary at time terminati plus target bus. (2) The Target N-Equity Incentive Payment is prorated for number days in calendar year prior to terminati due to assumed terminati December 31, (3) Total value unvested stock opti spread unvested restricted stock that would become vested up a change in ctrol assuming a share price $85.20 a change-in-ctrol date December 31, (4) All unearned target performance share units vest up a change-in-ctrol event. Amounts are based target performance share unit grants. (5) Actuarial value attributable to retirement benefits. (6) Estimated value associated with ctinuati life insurance, medical, dental, disability benefits for two years post-terminati. (7) Gross-up payments covering full cost applicable excise taxes under Code sectis 280G In 2011 Compensati Committee closed plan to new participants determined that it would phase out excise tax gross up provisi in Executive Severance Plan for current named executive ficers. (8) Reflects payments under Executive Severance Plan as in effect December 31, See below for a discussi revisis to Executive Severance Plan effective April 1, Or Involuntary Terminati The Paper Severance Pay Plan ( Severance Pay Plan ) provides regular severance to our executive ficers until effectiveness 2017 Executive Severance Plan. Participati in Severance Pay Plan is cditied up each participant s executi a n-compete agreement. In event a qualifying terminati employment without Cause (as defined in Severance Pay Plan), Severance Pay Plan generally provides ficers (including named executive ficers) severance equal to e year base salary. 43

57 2017 Executive Severance Plan The 2017 Executive Severance plan (effective April 1, 2017) provides named ficers certain severance benefits both up terminati employment following a change in ctrol outside a change in ctrol. The 2017 revisis also categorize participating ficers as eir Tier 1, Tier 2 or Tier 3 participants in order to provide varying benefit amounts to different ficers. All NEOs are Tier 1 participants in 2017 Executive Severance Plan. After April 1, 2017, ficers covered by 2017 Executive Severance Plan will not be eligible to receive benefits under Severance Play Plan. Up terminati ficer s employment by without cause or by ficer for good reas (as defined in 2017 Executive Severance Plan) outside a change in ctrol each NEO will be entitled to an amount equal to e e-half times his or her base salary. Up terminati ficer s employment by without cause or by ficer for good reas within two-year period following a change in ctrol, 2017 Executive Severance Plan provides that each NEO will be entitled to sum (i) two times sum his or her annual base salary, (ii) amount bus under s Management Incentive Plan that he or she has earned through date change in ctrol plus two times his or her targeted annual bus; (iii) any prit-sharing ctributis or pensi plan benefits forfeited as a result such terminati; (iv) amount prit-sharing ctributis pensi plan benefits such participant would have received under qualified supplemental retirement plans but for his or her terminati for two-year period following his or her terminati; (v) cost medical dental COBRA premiums for a period two years. In additi, each NEOs will be fully vested in his or her account under Deferred Compensati Plan any awards granted to him or her under Omnibus Plan. Excise tax gross up payments are not included as a part this plan. In additi, up terminati an NEO s employment by without cause or by ficer for good reas NEO will be eligible to receive reimbursement for outplacement service costs for a period two years for an amount not to exceed $50,

58 COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The following directors served Compensati Committee during 2016: Ms. Dano, Mr. McGovern Dr. Wood. Ne members Compensati Committee was an ficer or employee during 2016 or any time prior reto, ne members had any relatiship with during 2016 that required disclosure under Item 404 Regulati S-K. Ne our executive ficers serves as a member board directors or compensati committee any entity that has e or more its executive ficers serving as a member our Board Directors or Compensati Committee. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Secti 16(a) Exchange Act rules regulatis SEC reunder require our directors, ficers perss who beneficially own more than 10% our comm stock, as well as certain affiliates such perss, to file initial reports ir ownership our comm stock subsequent reports changes in such ownership with SEC. Directors, ficers perss owning more than 10% our comm stock are required by SEC rules regulatis to furnish us with copies all Secti 16(a) reports y file. Based solely our review copies such reports received by us informati provided by reporting perss, we believe that during 2016, our directors, ficers owners more than 10% our comm stock complied with all applicable filing requirements, except that Mr. Moore filed a Form 4 late March 30, 2017 representing restricted stock units granted in lieu a quarterly cash dividend granted in Proxy 45

59 AUDIT COMMITTEE REPORT The Audit Committee assists Board Directors in fulfilling its oversight respsibilities relating to accuracy integrity s financial reporting, including performance independence s independent registered public accounting firm, Deloitte & Touche LLP ( Deloitte ). Our Board Directors adopted an Audit Committee Charter, which sets forth respsibilities Audit Committee. The charter is available our website at The Audit Committee reviewed discussed with management Deloitte our audited financial statements for fiscal year ended December 31, The Audit Committee also discussed with Deloitte matters required to be discussed under Statement Auditing Stards No. 1301, Communicatis with Audit Committees, as adopted by Public Company Accounting Oversight Board ( PCAOB ). The Audit Committee received written disclosures or communicatis from Deloitte that are required by applicable requirements PCAOB regarding Deloitte s communicatis with Audit Committee, which included independence csideratis. The Audit Committee reviewed audit n-audit services provided by Deloitte for fiscal year ended December 31, 2016 determined to engage Deloitte as independent registered public accounting firm for fiscal year ending December 31, The Audit Committee also received reviewed a report by Deloitte outlining communicatis required by NYSE listing stards describing: (1) firm s internal quality ctrol procedures; (2) any material issue raised by a) most recent internal quality ctrol review firm, b) peer review firm, or c) any inquiry or investigati by governmental or pressial authorities, within preceding five years, respecting e or more independent audits carried out by firm, any steps taken to deal with issues; (3) (to assess Deloitte s independence) all relatiships between Deloitte us. In reliance up Audit Committee s review audited financial statements, discussis noted above, Deloitte s report, Audit Committee recommended to Board Directors, Board Directors approved, that audited financial statements be included in our Annual Report Form 10-K for year ended December 31, 2016 for filing with SEC. Audit Committee: Timothy S. Lucas, Chairman Philip C. Moore Stephen M. Wood William M. Cook 46

60 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (ITEM 4) The Audit Committee Board unanimously recommend that stockholders vote FOR proposal to ratify appointment Deloitte & Touche, LLP as our independent registered public accounting firm. The Audit Committee our Board Directors, in accordance with its charter authority delegated to it by Board, has appointed firm Deloitte & Touche LLP to serve as our independent registered public accounting firm for fiscal year ending December 31, As a matter good corporate practice, Board has directed that such appointment be submitted to our stockholders for ratificati at Annual Meeting. Deloitte & Touche LLP has served as our independent registered public accounting firm since our spin-f from Kimberly-Clark Corporati in November 2004 is csidered by our Audit Committee to be well qualified. If stockholders do not ratify appointment Deloitte & Touche LLP, Audit Committee will recsider appointment. Even if stockholders ratify appointment, Audit Committee, in its discreti, may appoint a different independent auditor at any time during year if Audit Committee determines that such a change would be in best interests its stockholders. Representatives Deloitte & Touche LLP will be present at Annual Meeting will have an opportunity to make a statement if y desire to do so. They also will be available to respd to appropriate questis from stockholders. Proxy INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES AND SERVICES Audit Fees Aggregate fees for pressial services rendered for us by Deloitte & Touche LLP, member firms Deloitte Touche Tohmatsu ir respective affiliates ( Deloitte & Touche ) as or for fiscal years ended December 31, 2016 December 31, 2015 are set forth below. The aggregate fees included in Audit category are fees billed for fiscal year for integrated audit our annual financial statements review statutory regulatory filings. The aggregate fees included in each or categories are fees billed in fiscal years Audit Fees... $1,737,150 $1,766,132 Audit-Related Fees Tax Fees ,100 All Or Fees Total... $1,737,150 $1,822,232 Audit Fees were for pressial services rendered for audit our annual csolidated financial statements including audit our internal ctrol over financial reporting review quarterly reports Form 10-Q filed by us with SEC. Tax Fees were for pressial services rendered to assist us with compliance with revised Tangible Property Regulatis Internal Revenue Service. 47

61 Policy Audit Committee Pre-Approval To avoid potential cflicts interest in maintaining auditor independence, law prohibits a publicly-traded company from obtaining certain n-audit services from its independent registered public accounting firm. The law also requires audit committee a publicly traded company to pre-approve or services provided by independent registered public accounting firm. Pursuant to its charter, Audit Committee s policy is to pre-approve all audit permissible n-audit services provided by independent registered public accounting firm. These services may include audit services, audit-related services, tax services or services. In its pre-approval n-audit services, Audit Committee csiders, amg or factors, possible effect performance such services auditor s independence. The Audit Committee may delegate pre-approval authority to a member Audit Committee. The decisis any Audit Committee member to whom pre-approval authority is delegated shall be presented to full Audit Committee at its next scheduled meeting. The Audit Committee pre-approved all services performed by independent registered public accounting firm in fiscal 2016 fiscal 2015, including those services described in table above under captis Audit Fees. STOCKHOLDERS PROPOSALS FOR 2018 ANNUAL MEETING Proposals stockholders, excluding nominatis for Board, intended to be presented at 2018 Annual Meeting should be submitted by certified mail, return receipt requested, must be received by us at our executive fices in Alpharetta, Georgia, or before December 9, 2017, date that is 120 calendar days prior to first anniversary date that this Proxy Statement is released to stockholders, to be eligible for inclusi in our Proxy Statement form proxy relating to that meeting to be introduced for acti at 2018 Annual Meeting. In event that date 2018 Annual Meeting is changed more than thirty days from date this year s meeting, notice by stockholders should be received no later than close business later 150 th calendar day prior to 2018 meeting or 10 th calendar day which public announcement date such meeting is first made. Any stockholder proposal must be in writing must comply with Rule 14a-8 under Exchange Act must set forth (i) a descripti business desired to be brought before meeting reass for cducting business at meeting; (ii) name address, as y appear our books, stockholder submitting proposal; (iii) class number shares that are beneficially owned by such stockholder; (iv) dates which stockholder acquired shares; (v) documentary support for any claim beneficial ownership as required by Rule 14a-8; (vi) any material interest stockholder in proposal; (vii) a statement in support proposal; (viii) any or informati required by rules regulatis SEC. Stockholder nominatis for Board must comply with procedures set forth above under Corporate Governance Nominati Directors. The failure a stockholder to deliver a proposal in accordance with requirements preceding paragraphs may result in it being excluded from our Proxy Statement ineligible for csiderati at 2018 Annual Meeting. Furr, submissi a proposal in accordance with requirements preceding paragraph does not guarantee that we will include it in our Proxy Statement or that it will be eligible for csiderati at 2018 Annual Meeting. We strgly encourage any stockholder interested in submitting a proposal to ctact our Corporate Secretary in advance submissi deadline to discuss proposal. 48

62 OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING Our Board knows no matters or than those referred to in accompanying Notice Annual Meeting Stockholders which may properly come before Annual Meeting. However, if any or matter should be properly presented for csiderati vote at Annual Meeting or any adjournment(s) re, it is intenti perss named as proxies enclosed form proxy card to vote shares represented by all valid proxy cards in accordance with ir judgment what is in best interest its stockholders. HOUSEHOLDING OF NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS The SEC s proxy rules permit companies intermediaries, such as brokers banks, to satisfy delivery requirements for Notices, if applicable, proxy statements annual reports, with respect to two or more stockholders sharing same address by delivering a single Notice to those stockholders. This method delivery, ten referred to as householding, should reduce amount duplicate informati that stockholders receive lower printing mailing costs for companies. certain intermediaries are householding Notices, if applicable, proxy statements annual reports, for shareholders record in cnecti with its 2017 Annual Meeting. This means that: Only e Notice, if applicable, proxy statement annual report, will be delivered to multiple stockholders sharing an address unless you notify your broker or bank to ctrary; You can ctact by calling or by writing to INVESTOR RELATIONS, at 3460 Prest Ridge Road, Prest Ridge III, Suite 600, Alpharetta, Georgia to request a separate copy Notice, if applicable, proxy statement annual report, for 2017 Annual Meeting for future meetings or, if you are currently receiving multiple copies, to receive ly a single copy in future or you can ctact your bank or broker to make a similar request; You can request delivery a single copy Notice, if applicable, proxy statement annual report, from your bank or broker if you share same address as anor shareholder your bank or broker has determined to household proxy materials. Proxy 49

63

64 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washingt, D.C FORM 10-K (Mark One) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For fiscal year ended December 31, 2016 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR For transiti period from Commissi file number NEENAH PAPER, INC. (Exact name registrant as specified in its charter) Delaware (State or or jurisdicti incorporati or organizati) to (I.R.S. Employer Identificati No.) 3460 Prest Ridge Road Alpharetta, Georgia (Address principal executive fices) (Zip Code) Registrant's telephe number, including area code: (678) Securities registered pursuant to Secti 12(b) Act: Title Each Class Name Each Exchange Which Registered Comm Stock $0.01 Par Value New York Stock Exchange Securities registered pursuant to Secti 12(g) Act: Ne Form 10-K Indicate by check mark if registrant is a well-seased issuer, as defined in Rule 405 Securities Act. Yes No Indicate by check mark if registrant is not required to file reports pursuant to Secti 13 or Secti 15(d) Act. Yes No Indicate by check mark wher registrant (1) has filed all reports required to be filed by Secti 13 or 15(d) Securities Exchange Act 1934 during preceding 12 mths (or for such shorter period that registrant was required to file such reports), (2) has been subject to such filing requirements for past 90 days. Yes No Indicate by check mark wher registrant has submitted electrically posted its corporate Web site, if any, every Interactive Data File required to be submitted posted pursuant to Rule 405 Regulati S-T ( this chapter) during preceding 12 mths (or such shorter period that registrant was required to submit post such files). Yes No Indicate by check mark if disclosure delinquent filers pursuant to Item 405 Regulati S-K is not ctained herein, will not be ctained, to best registrant's knowledge, in definitive proxy or informati statements incorporated by reference in Part III this Form 10-K or any amendment to this Form 10-K. Indicate by check mark wher registrant is a large accelerated filer, an accelerated filer, a n-accelerated filer, or a smaller reporting company. See definitis "large accelerated filer," "accelerated filer," "smaller reporting company" in Rule 12b-2 Exchange Act. (Check e): Large accelerated filer Accelerated filer N-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Indicate by check mark wher registrant is a shell company (as defined in Rule 12b-2 Act). Yes No The aggregate market value registrant's comm stock held by n-affiliates June 30, 2016 (based closing stock price New York Stock Exchange) such date was approximately $1,190,000,000. As February 21, 2017, re were 16,805,000 shares Company's comm stock outsting. DOCUMENTS INCORPORATED BY REFERENCE Certain informati ctained in definitive proxy statement for Company's Annual Meeting Stockholders to be held May 23, 2017 is incorporated by reference into Part III here.

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66 TABLE OF CONTENTS Part I Item 1. Business Item 1A. Risk Factors Item 1B. Unresolved Staff Comments Item 2. Properties Item 3. Legal Proceedings Item 4. Mine Safety Disclosures Page Part II Item 5. Market for Registrant's Comm Equity, Related Stockholder Matters Issuer Purchases Equity Securities Item 6. Selected Financial Data Item 7. Management's Discussi Analysis Financial Cditi Results Operatis Item 7A. Quantitative Qualitative Disclosures About Market Risk Item 8. Financial Statements Supplementary Data Item 9. Changes in Disagreements with Accountants Accounting Financial Disclosure Item 9A. Ctrols Procedures Item 9B. Or Informati Part III Item 10. Directors Executive Officers Registrant Item 11. Executive Compensati Item 12. Security Ownership Certain Beneficial Owners Management Item 13. Certain Relatiships Related Transactis Director Independence Item 14. Principal Accountant Fees Services Form 10-K Part IV Item 15. Exhibits Financial Statement Schedule Item 16. Form 10-K Summary Signatures

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68 PART I In this report, unless ctext requires orwise, references to "we," "us," "our," "" or "Company" are intended to mean its csolidated subsidiaries predecessor companies. Item 1. Business Overview Form 10-K We are organized into two primary businesses: a performance-based technical products business a premium fine paper packaging business. Our technical products business is a leading internatial producer transportati, water or filter media durable, saturated coated substrates for a variety end markets. We focus categories where we believe we are, or can be, a market leader. These categories include filtrati media for transportati, water or uses, backings for specialty tapes abrasives, performance labels or specialty markets. Our dedicated technical products manufacturing facilities are located near Munich, Germany, in Bolt, Engl, in Munising, Michigan in Pittsfield, Massachusetts. In additi, certain technical products are manufactured alg with fine paper packaging products in shared facilities located in upstate New York Quakertown, Pennsylvania. In 2017, a filtrati machine (which was cverted from a fine paper machine) will begin producti in Applet, Wiscsin, a site also shared with fine paper packaging business. For a descripti shared facilities, see Item 2, "Properties." We believe our fine paper packaging business is leading supplier premium printing or high end specialty papers in North America. Our products include some most recognized preferred papers in North America, where we enjoy leading market positis in many our product categories. We sell our products primarily to authorized paper distributors, as well as through cverters, major natial retailers specialty businesses. Our primary fine paper packaging manufacturing facilities are located in Whiting, Wiscsin in Brattleboro, Vermt. In additi, certain products are manufactured in shared facilities located in upstate New York Quakertown, Pennsylvania, as well as an existing site shared with technical products in 2017 in Applet, Wiscsin. For a descripti shared facilities, see Item 2, "Properties." 1

69 Company Structure Our corporate structure csists seven direct wholly owned subsidiaries. is a Delaware corporati that holds our trademarks patents related to all our U.S. businesses (except Paper FVC, Inc), all our U.S. fine paper packaging inventory, real estate, mills manufacturing assets associated with our fine paper packaging operatis in Whiting, Wiscsin all equity in our subsidiaries listed below. The comm stock is publicly traded New York Stock Exchange under symbol "NP." Paper Michigan, is a Delaware corporati a wholly owned subsidiary that owns real estate, mill manufacturing assets associated with our U.S. technical products business in Munising, Michigan. Paper FVC, LLC is a Delaware limited liability company wholly owned subsidiary that owns all equity Paper FR, LLC. Paper FR, LLC ("Fox River") is a Delaware limited liability company that owns real estate, mill manufacturing assets associated with our fine paper packaging operati in Applet, Wiscsin. Paper Internatial Holding Company, LLC is a Delaware limited liability company wholly owned subsidiary that owns all equity Paper Internatial, LLC. Paper Internatial, LLC is a Delaware limited liability company that owns all equity Germany GmbH in cjuncti with Germany GmbH all equity Services GmbH & Co. KG. NPCC Holding Company LLC is a Delaware limited liability company wholly owned subsidiary that owns all equity Paper Company Canada (" Canada"). Canada is a Nova Scotia unlimited liability corporati that holds certain post-employment liabilities our former Canadian operatis. Paper Internatial Finance Company BV is a private company with limited liability organized under laws Nerls a wholly owned subsidiary that facilitates financing our internatial operatis. Filtrati, LLC is a Delaware limited liability company wholly owned subsidiary that owns all equity Technical Materials, ("NTM") Filtrati Applet, LLC ("NFA"). NTM is a Massachusetts corporati that owns all real estate, mills manufacturing assets associated with our technical materials business in Pittsfield, Massachusetts. NFA is a Delaware limited liability company that owns certain assets associated with our filtrati business in Applet, Wiscsin. The filtrati assets in Applet, Wiscsin have started producti in January See "Management's Discussi Analysis Financial Cditi Results Operatis Liquidity Capital Resources." FMK Holdings, LLC is a Delaware limited liability company a wholly owned subsidiary that owns all equity ASP FiberMark, LLC ("ASP"). ASP is a Delaware limited liability company that owns all equity Norast, LLC ("NNE") Internatial UK Limited, a United Kingdom corporati (" UK"). NNE is a Delaware limited liability company that owns certain real estate, mills manufacturing assets associated with our fine paper packaging business technical products business located in Brattleboro, Vermt, West Springfield, Massachusetts, Quakertown Reading, Pennsylvania, Brownville Lowville, New York. UK is a United Kingdom corporati that owns all equity Red Bridge Internatial Limited ("Red Bridge"). Red Bridge is a United Kingdom corporati that owns all real estate, manufacturing assets inventory associated with our technical products business in Bolt, Engl. History Businesses was incorporated in April 2004 in ctemplati spin-f by Kimberly-Clark Corporati ("Kimberly- Clark") its technical products fine paper businesses in United States its Canadian pulp business (collectively, "Pulp Paper Business"). We had no material assets or activities until Kimberly-Clark's transfer to us Pulp Paper business November 30, On that date, Kimberly-Clark completed distributi all shares our comm stock to stockholders Kimberly-Clark ( "Spin-Off"). Following Spin-Off, we are an independent public company Kimberly-Clark has no ownership interest in us. 2

70 Former Pulp Operatis. At Spin-Off, our pulp operatis csisted mills located in Terrace Bay, Ontario Pictou, Nova Scotia approximately 975,000 acres related woodls. We disposed se mills woodls in a series transactis from 2006 to Technical Products. The Munising, Michigan mill was purchased by Kimberly-Clark in Subsequent to purchase, mill was cverted to produce durable, saturated coated papers for sale use in a variety industrial applicatis for our technical products business. In October 2006, we purchased outsting interests FiberMark Services GmbH & Co. KG outsting interests FiberMark Beteiligungs GmbH (collectively " Germany"). At acquisiti, Germany assets csisted two mills located near Munich, Germany a third mill near Frankfurt, Germany. These mills produced a wide range products, including transportati filter media, nwoven wall coverings, masking or tapes, abrasive backings, specialized printing coating substrates. In July 2014, we purchased all outsting equity Crane Technical Materials, from Crane & Co., The acquired business provides performance-oriented wet laid nwoven media for water filtrati end markets as well as envirmental, energy industrial uses. The business has two manufacturing facilities in Pittsfield, Massachusetts. On October 31, 2015, we sold our paper mill located near Frankfurt, Germany ( "Lahnstein Mill") to Kajo Neukirchen Group ( "Buyer") for net cash proceeds approximately $5.4 milli. The Lahnstein Mill, which had annual sales approximately 50 milli, had been operating as a st-ale business, manufacturing n-woven wallcoverings various or specialty papers. See Note 13 Notes to Csolidated Financial Statements, "Disctinued Operatis." Fine Paper Packaging. The fine paper packaging business was incorporated in 1885 as Paper Company, which initially operated a single paper mill in, Wiscsin. Kimberly-Clark acquired mill in In 1981, Kimberly-Clark purchased an additial mill located in Whiting, Wiscsin in late 1980s early 1990s, capacity fine paper packaging business was exped by building two new paper machines at Whiting mill completing a major expansi facility with installati a new paper machine, finishing center, customer service center an exped distributi center. In March 2007, we acquired assets brs Fox River, which was a csolidating acquisiti. In January 2012, we purchased certain premium fine paper brs or assets from Wausau Paper Mills, LLC, a subsidiary Wausau Paper Corp. ("Wausau") in January 2013, we purchased certain premium business paper brs from Southworth Company ("Southworth"). Form 10-K FiberMark Acquisiti. On August 1, 2015, we purchased all outsting equity ASP FiberMark, LLC ("FiberMark") from ASP FiberMark Holdings, LLC ("American Securities") for approximately $118 milli ( "FiberMark Acquisiti"). We added specialty coating finishing capabilities with this acquisiti, particularly in luxury packaging technical products. The results operatis assets related to FiberMark Acquisiti are reflected in each our business segments. Business Strategy Our missi is to create value by improving image performance everything we touch. We expect to create value by growing in specialized niche markets that value performance or image where we have competitive advantages. In managing our businesses, we believe that achieving maintaining a leadership positi in our markets, respding effectively to customer needs competitive challenges, employing capital optimally, ctrolling costs managing risks are important to our lg-term success. Strategies to deliver value include: Leading in pritable, specialty niche markets We will increase our participati in niche markets that can provide us with leading positis value our core competencies in performance-based fiber n-woven media producti, coating saturating. Key markets include filtrati, specialty backings technical products, premium fine paper packaging. Increasing our size, growth rate portfolio diversificati We will invest focus resources in higher growth specialty markets to grow with customers in new geographies to enter into adjacent markets that are growing pritable. We will do this both through organic initiatives that build our technologies capabilities, through acquisitis that fit with our competencies provide attractive financial returns. 3

71 Delivering csistent, attractive returns to our shareholders We will ctinue to use Return Invested Capital ("ROIC") as a key metric to evaluate investment decisis, measure our performance, maintain a prudent capital structure deploy cash flows in ways that can provide value, including direct cash returns to shareholders through a meaningful dividend. Products Technical Products. Our technical products business is a leading internatial producer performance-based substrates such as filtrati media for transportati, water or filtrati markets, saturated coated performance materials used for industrial backings, labels a variety or end markets. In general, our technical products are sold to or manufacturers as key compents for ir finished products. Several our key market segments served, including filtrati specialty backings for tape abrasives, are global in scope. JET-PRO SStretch TM, KIMDURA, PREVAIL TM, NEENAH, GESSNER are brs our technical products business. The following is a descripti certain key products markets: Filtrati media for transportati including inducti air, fuel, oil, cabin air applicatis. Transportati filtrati media are sold to suppliers automotive companies as original equipment new cars trucks as well as to automotive aftermarket, which represents large majority sales. Filtrati media for water or industrial end markets. Primary applicatis include reverse osmosis, catalytic cversi, naniltrati, ultrafiltrati, pervaporati vapor permeati, as well as or applicatis for specialty markets. Specialty backings including a) saturated unsaturated crepe flat paper tapes sold to manufacturers to produce finished pressure sensitive products for sale in automotive, transportati, manufacturing, building cstructi, industrial general purpose applicatis, including sales in csumer do-it-yourself retail channel b) coated lightweight abrasive paper used in automotive, cstructi, metal woodworking industries for both dry wet sing applicatis. Label tag products made from both saturated base label stock purchased syntic base label stock, with coatings applied to allow for high quality variable digital printing. The syntic label stock is recognized as a high quality, UV (ultra-violet) stable product used for outdoor applicatis. Label tag stock is sold to pressure sensitive coaters, who in turn sell coated label tag stock to label printing community. Or latex saturated coated papers for use by a wide variety manufacturers. Premask paper is used as a protective over wrap for products during manufacturing process for applying signs, labeling or finished products. Medical packaging paper is a polymer impregnated base sheet that provides a breathable sterilizati barrier that provides unique properties. Image transfer papers used to transfer an image from paper to tee shirts, hats, cfee mugs, or surfaces using a proprietary imaging coating for use in digital printing applicatis. Publishing security papers used to produce book covers, statiery, fancy packaging passports. Or specialty products include clean room papers, durable printing papers, release papers furniture backers. Fine Paper Packaging. Our fine paper packaging business manufactures sells world-class bred premium writing, text, cover specialty papers envelopes used in corporate identity packages, advertising collateral, premium labels packaging, wide format applicatis. Often se papers are characterized by distinctive coating, finishing, colors, textures. Commercial printing papers include premium writing, text cover papers, envelopes. Uses include advertising collateral, statiery, corporate identity packages brochures, pocket folders, annual reports, advertising inserts, direct mail, business cards, scrapbooks, a variety or uses where colors, texture, coating, unique finishes or heavier weight papers are desired. Our market leading brs in this category include CLASSIC, CLASSIC CREST, ESSE, ENVIRONMENT, CAPITOL BOND, ROYAL SUNDANCE, SOUTHWORTH, TOUCHE trademarks. Our fine paper packaging business has an exclusive agreement to manufacture, market distribute Crane & Co.'s CRANE'S CREST, CRANE'S BOND, CRANE'S LETTRA, bred fine papers in commercial print category. Our fine paper packaging business has an exclusive agreement to market distribute Gruppo Cordens SpA's SO...SILK, PLIKE STARDREAM bred fine papers in U.S. Canada. The fine paper packaging business also sells private watermarked paper or specialty writing, text, cover papers. Additially, fine paper packaging business provides leading solutis in wide format arena, led by its Wide Format CONVERD brs. 4

72 Premium packaging label papers are used for wine, spirits beer labels, folding carts, box wrap, bags, hang tags, stored value cards servicing high-end retail, cosmetics, spirits, electrics end-use markets. Our market leading brs in se categories include NEENAH Folding Board, "ESTATE LABEL, Box Wrap, PELLAQ, KIVAR, SKIVERTEX, ILLUSIO, SENZO. Bright papers are used in applicatis such as direct mail, advertising inserts, scrapbooks marketing collateral. Our brs in this category include ASTROBRIGHTS CREATIVE COLLECTION TM. Additially, business papers for pressials small businesses are sold under our Southworth br through major retailers. The fine paper packaging business also produces sells or specialty papers that address a csumer's need for enhanced image such as translucent papers, art papers, papers for optical scanning or specialized applicatis. Markets Customers Technical Products. The technical products business sells its products globally into product categories generally used as base materials in following applicatis: filtrati, compent backing materials for manufactured products such as tape abrasives, or specialized product uses such as graphics identificati. Several products (filtrati media, abrasives, specialty tapes, labels) are used in markets that are directly affected by ecomic business cycles. Or market segments such as image transfer papers used in small/home fice csumer applicatis are relatively stable. Most products are performance-based require qualificati at customers; however, certain categories may also be subject to price competiti substituti lower cost substrates in some less deming applicatis. The technical products business relies a team direct sales representatives customer service representatives to market sell approximately 95 percent its sales volume directly to customers cverters. The technical products business has more than 500 customers worldwide. The distributi sales in 2016 was approximately 43 percent in North America, 35 percent in Europe 22 percent in Latin America Asia. Customers typically cvert transform base papers film into finished rolls sheets by adding adhesives, coatings, finishes. These transformed products are n sold to end-users. Sales to technical products business's three largest customers represented approximately 14 percent total sales for segment in Although a complete loss any se customers would cause a temporary decline in business's sales volume, decline could be partially fset by exping sales to existing customers, furr fset over a several mth period with additi new customers. Form 10-K Fine Paper Packaging. We believe our fine paper packaging business is leading supplier premium writing, text cover papers, bright papers specialty papers in North America. These products are used in high-end collateral material, business legal pressis, corporate identity products. Our premium packaging business includes products such as food beverage labels high-end packaging materials such as folding carts box wrap used for luxury retail goods. Bright papers are generally used by csumers for flyers, direct mail packaging. The fine paper packaging business sells its products in a variety channels including authorized paper distributors, cverters, retailers, direct to end users. Sales to distributors account for approximately 60 percent revenue in fine paper packaging business. During 2016, approximately 10 percent sales our fine paper packaging business were exported to markets outside United States. Sales to largest customer fine paper packaging business represented approximately 15 percent its total sales in We practice limited sales distributi to improve our ability to ctrol marketing our products. Although a complete loss this customer would cause a temporary decline in business's sales volume, decline could be partially fset by exping sales to existing customers, furr fset over a several mth period with additi new customers. Ccentrati. In July 2014, Unisource Worldwide, Inc ("Unisource") xpedx, formerly owned by Internatial Paper ("xpedx") merged to form Veritiv Corporati ("Veritiv"). For year ended December 31, 2016, sales to Veritiv represented approximately 8 percent csolidated net sales approximately 15 percent net sales fine paper packaging business. For year ended December 31, sales to Unisource xpedx ( as merged Veritiv) represented approximately 10 percent csolidated net sales approximately 20 percent net sales fine paper packaging business. 5

73 The following graphs present furr informati about our businesses by geographic area (dollars in millis): Net Sales from Geographic Regi (in Millis) Total Assets by Geographic Regi (in Millis) Net sales total assets are attributed to geographic areas based physical locati selling entities physical locati assets. See Note 14 Notes to Csolidated Financial Statements, "Business Segment Geographic Informati", for informati with respect to net sales, prits total assets by business segment. Raw Materials Technical Products. Stwood pulp, specialty pulp fibers, latex are primary raw materials csumed by our technical products business. The technical products business purchases stwood pulp, specialty pulp fibers, latex from various external suppliers. We believe that all raw materials for our technical products operatis, except for certain specialty latex grades specialty stwood pulp, are readily available from several sources that loss a single supplier would not cause a shutdown our manufacturing operatis. Our technical products business acquires all its specialized pulp requirements from two global suppliers certain critical specialty latex grades from four suppliers. In general, se supply arrangements are not covered by formal ctracts, but represent multi-year business relatiships that have historically been sufficient to meet our needs. We expect se relatiships to ctinue to operate in a satisfactory manner in future. In event an interrupti producti at any e supplier, we believe that each se suppliers individually would be able to satisfy our short-term 6

74 requirements for specialized pulp or specialty latex. In event a lg-term disrupti in our supply specialized pulp or specialty latex, we believe we would be able to substitute or pulp grades or or latex grades that would allow us to meet required product performance characteristics incur ly a limited disrupti in our producti. As a result, we do not believe that substituti such alternative pulp or latex grades would have a material effect our operatis. Fine Paper Packaging. Hardwood pulp is primary fiber used to produce products fine paper packaging business. Or significant raw material inputs in producti fine paper packaging products include stwood pulp, recycled fiber, cott fiber, dyes fillers. The fine paper packaging business purchases all its raw materials externally. We believe that all raw materials for our fine paper packaging operatis are readily available from several sources that loss a single supplier would not cause a shutdown our manufacturing operatis. Energy Water The equipment used to manufacture products our technical products fine paper packaging businesses uses significant amounts energy, primarily electricity, natural gas, oil coal. We generate substantially all our electrical energy at Munising mill approximately 25 percent electrical energy at our mills in Applet, Wiscsin Bruckmühl, Germany. We also purchase electrical energy from external sources, including electricity generated from renewable sources. Availability energy is not expected to be a problem in foreseeable future, but purchase price such energy can likely will fluctuate significantly based changes in dem or factors. An adequate supply water is needed to manufacture our products. We believe that re is an adequate supply water for this purpose at each our manufacturing locatis. Working Capital Technical Products. The technical products business maintains approximately 25 to 30 days raw materials supplies inventories to support its manufacturing operatis approximately 25 to 35 days finished goods semi-finished goods inventory to support customer orders for its products. Sales terms in technical products business vary depending type product sold customer category. Extended credit terms up to 120 days are fered to customers located in certain internatial markets. In general, sales are collected in approximately 45 to 55 days supplier invoices are paid within 20 to 30 days. Form 10-K Fine Paper Packaging. The fine paper packaging business maintains approximately 10 days raw material inventories to support its paper making operatis about 55 days finished goods inventory to fill customer orders. Fine paper packaging sales terms range between days with discounts zero to two percent for customer payments, with discounts e percent 20-day terms used most ten. Extended credit terms are fered to customers located in certain internatial markets. Supplier invoices are typically paid within 60 days. Competiti Technical Products. Our technical products business competes in global markets with a number large multinatial competitors, including Ahlstrom Corporati, Munksjö, ArjoWiggins SAS Hollingsworth & Vose Company. It also competes in some, but not all, se segments with smaller regial manufacturers, such as Madnock Paper Mills, Expera Specialty Solutis LLC., Potsdam Specialty Paper Line S.p.A. We believe basis competiti in most se segments are ability to design develop customized product features to meet customer specificatis while maintaining quality, customer service price. We believe our research development program gives us an advantage in customizing base papers developing advanced filter media to meet customer needs. Fine Paper Packaging. We believe our fine paper packaging business is leading supplier premium printing or high end specialty papers in North America. Our fine paper packaging business also competes in premium segment uncoated free sheet market. The fine paper packaging business competes directly in North America with Mohawk Fine Paper or smaller companies. We believe primary basis competiti for premium fine papers are br recogniti, product quality, customer service, product availability, promotial support variety colors textures. Price also can be a factor particularly for lower quality printing needs that may compete with opaque fset papers. We have will ctinue to invest in advertising or programs aimed at graphic designers, printers corporate end-users in order to maintain a high level br awareness as well as communicate advantages using our products. Our premium packaging business is focused high-end packaging needs in end market verticals like beauty products, spirits retail. Primary bases competiti are similarly br recogniti, product 7

75 quality, customer service, product availability, a variety colors textures. Premium packaging is primarily a North American business, but we also sell to customers in Asia or markets outside U.S. We believe premium packaging market to be highly fragmented, with multiple competitors, many which produce premium packaging products as a small subset larger packaging operatis. Research Development Our technical products business maintains research development laboratories in Feldkirchen-Westerham, Germany, Munising, Michigan Pittsfield, Massachusetts to support its strategy developing new products technologies, to support growth in its existing product lines or strategically important markets. We also have a research development laboratory in West Springfield, Massachusetts that supports both our technical products fine paper packaging businesses. We have ctinually invested in product research development with spending $9.4 milli in 2016, $6.8 milli in 2015 $5.7 milli in Intellectual Property We own more than 100 granted patents have multiple pending patent applicatis in United States, Canada, Europe certain or countries covering image transfer paper, abrasives medical packaging, or paper processing. We also own more than 150 trademarks with registratis in approximately 80 countries. Our image transfer patents have ctributed to establishing technical products business as a leading global supplier image transfer papers through our highly recognized JET-PRO, 3G JET-OPAQUE, TECHNIPRINT, LASER-ONE OPAQUE IMAGE CLIP brs, our global trademark collecti demstrates strg product br recogniti. For more than 100 years, s fine paper packaging business has built its market leading reputati creating manufacturing trademarked brs for premium writing, text, cover, digital, packaging, specialty needs. The Paper signature portfolio includes innovative, market leading brs such as ASTROBRIGHTS, CLASSIC (including CLASSIC CREST, CLASSIC Linen, CLASSIC Laid, CLASSIC COLUMNS, CLASSIC Stipple, CLASSIC Woodgrain, CLASSIC Techweave), ENVIRONMENT, The Design Collecti, ROYAL SUNDANCE Papers, many more. Our fine paper packaging business provides unique sustainable packaging papers custom solutis for premium packaging needs. With brs that st for csistency quality such as NEENAH Folding Board, NEENAH Box Wrap, ESTATE LABEL, BELLA Label, NEENAH IMAGEMAX Paper Card, our fine paper packaging business enables leading emerging brs to deliver ir br s promise. In 2012, we entered retail channel by acquiring br portfolio Wausau Paper including ASTROBRIGHTS Papers, first brightly colored paper in industry, followed by SOUTHWORTH Br, a time-hored product for business pressials. Our fine paper packaging business maintains a well-rounded well-respected portfolio brs allowing us to be recognized as an industry leader setting stards for quality, csistency, dependability press. The 2015 acquisiti FiberMark added or trademarks recognized in both publishing packaging markets, including SKIVERTEX, KIVAR, CORVON, HYFLEX, TOUCHE, MULTICOLOR. Development work after acquisiti added MONTELENA mark to our portfolio as well. The KIMDURA MUNISING LP trademarks have made a significant ctributi to marketing syntic film clean room papers technical products business. Finally, GESSNER trademark has played an important role in marketing s filtrati product lines. Backlog Seasality Technical Products. In general, sales prits for technical products business have been relatively strger in first half year with reductis in third quarter due to reduced customer cverting schedules in fourth quarter due to a reducti in year-end inventory levels by our customers. The order flow for technical products business is subject to seasal peaks for several its products, such as larger volume grades specialty tape, abrasives, premask, label stock used primarily in downstream finished goods manufacturing process. To assure timely shipments during se seasal peaks, technical products business provides certain customers with finished goods inventory csignment. Historically, csignment sales have represented approximately 15 percent technical products business's annual sales. Orders are typically shipped within six to eight weeks receipt order. However, technical products business periodically experiences periods where order entry levels surge, order backlogs can increase substantially. Raw materials are purchased manufacturing schedules are planned based customer forecasts, current market cditis individual orders for custom products. The order backlog in technical products business 8

76 December 31, 2016 was approximately $101 milli represented approximately 22 percent prior year sales. The order backlog in technical products business December 31, 2015 was approximately $103 milli represented approximately 25 percent prior year sales. We previously filled order backlog from December 31, 2015 expect to fill order backlog from December 31, 2016 within next year. Fine Paper Packaging. The fine paper packaging business has historically not experienced seasality. Orders for stock products are typically shipped within two days, while custom orders are shipped within two to three weeks receipt. Raw material purchases manufacturing schedules are planned based a combinati historical trends, customer forecasts current market cditis. The order backlogs in fine paper packaging business December 31, were $19.6 milli $19.2 milli, respectively, which represent approximately 15 days sales. The order backlogs from December 31, were filled in respective following years. The operating results at each our businesses are influenced by timing our annual maintenance downs, which are generally scheduled in third quarter. Employee Labor Relatis As December 31, 2016, we had approximately 2,303 regular full-time employees whom 1,099 hourly 526 salaried employees were located in United States 405 hourly 273 salaried employees were located in Europe. Approximately 50 percent salaried employees 80 percent hourly employees Germany are eligible to be represented by Mining, Chemicals Energy Trade Uni, Industriegewerkschaft Bergbau, Chemie Energie ( "IG BCE"). In June 2015, IG BCE a natial trade associati representing all employers in industry signed a collective bargaining agreement covering uni employees Germany that expires in June Under German law uni membership is voluntary does not need to be disclosed to Company. As a result, number employees covered by collective bargaining agreement with IG BCE that expires in June 2017 cannot be determined. As December 31, 2016, no employees are covered under collective bargaining agreements that expire in next 12 mths, with excepti employees covered by collective bargaining arrangement with IG BCE. We believe we have satisfactory relatis with our employees covered by collective bargaining agreements do not expect negotiati new collective bargaining agreements to have a material effect our results operatis or cash flows. See Note 12 Notes to Csolidated Financial Statements, "Ctingencies Legal Matters Employees Labor Relatis." Form 10-K Envirmental, Health Safety Matters Our operatis are subject to federal, state local laws, regulatis ordinances relating to various envirmental, health safety matters. We believe our operatis are in compliance with, or we are taking actis designed to ensure compliance with, se laws, regulatis ordinances. However, nature our operatis exposes us to risk claims ccerning n-compliance with envirmental, health safety laws or stards, re can be no assurance that material costs or liabilities will not be incurred in cnecti with those claims. Except for certain orders issued by envirmental, health safety regulatory agencies with which we believe we are in compliance which we believe are immaterial to our financial cditi, results operatis liquidity, we are not currently named as a party in any judicial or administrative proceeding relating to envirmental, health safety matters. Greenhouse gas ("GHG") emissis have increasingly become subject political regulatory focus. Ccern over potential climate change, including global warming, has led to legislative regulatory initiatives directed at limiting GHG emissis. In additi to certain federal proposals in United States to regulate GHG emissis, Germany, United Kingdom ( U.K. ) all states in which we operate are currently csidering GHG legislati or regulatis, eir individually /or as part regial initiatives. While not all are likely to become law it is reasably possible that additial climate change related mates will be forthcoming, it is expected that y may adversely impact our costs by increasing energy costs raw material prices, requiring operatial or equipment modificatis to reduce emissis creating costs to comply with regulatis or to mitigate financial csequences such compliance. While we have incurred in past several years, will ctinue to incur, capital operating expenditures in order to comply with envirmental, health safety laws, regulatis ordinances, we believe that our future cost compliance with envirmental, health safety laws, regulatis ordinances, our exposure to liability for envirmental, health safety claims will not have a material effect our financial cditi, results operatis or liquidity. However, future events, such as changes in existing laws regulatis, new legislati to limit GHG emissis 9

77 or ctaminati sites owned, operated or used for waste disposal by us (including currently unknown ctaminati ctaminati caused by prior owners operators such sites or or waste generators) may give rise to additial costs which could have a material effect our financial cditi, results operatis or liquidity. We have planned capital expenditures to comply with envirmental, health safety laws, regulatis ordinances during period 2017 through 2018 approximately $1 milli to $2 milli annually. Our anticipated capital expenditures for envirmental projects are not expected to have a material effect our financial cditi, results operatis or liquidity. AVAILABLE INFORMATION We are subject to reporting requirements Secti 13(a) or 15(d) Securities Exchange Act As such, we file annual, quarterly current reports, proxy statements or informati with Securities Exchange Commissi ("SEC"). Our SEC filings are available to public SEC's web site at You may also read copy any document we file at SEC's Public Reference Room located at 100 F Street, N.E., Washingt, D.C Please call SEC at SEC-0330 for furr informati Public Reference Room. Our comm stock is traded New York Stock Exchange under symbol NP. You may inspect reports, proxy statements or informati ccerning us at fices New York Stock Exchange, 20 Broad Street, New York, New York Our web site is Informati our web site is not incorporated by reference in this document. Our reports Form 10-K, Form 10-Q Form 8-K, as well as amendments to those reports, are will be available free charge our web site as so as reasably practicable after we file or furnish such reports with SEC. In additi, you may request a copy any se reports (excluding exhibits) at no cost up written request to us at: Investor Relatis, 3460 Prest Ridge Road, Suite 600, Alpharetta, Georgia Item 1A. Risk Factors You should carefully csider each following risks all or informati ctained in this Annual Report Form 10-K. Some risks described below relate principally to our business industry in which we operate, while ors relate principally to our indebtedness. The remaining risks relate principally to securities markets generally ownership our comm stock. Our business, financial cditi, results operatis or liquidity could be materially affected by any se risks,, as a result, trading price our comm stock could decline. The risks described below are not ly es we face. Additial risks not presently known to us or that we currently deem immaterial may also impair our business operatis. Risks Related to Our Business Industry Our business will suffer if we are unable to effectively respd to decreased dem for some our products due to cditis in global ecomy or secular pressures in some markets. We have experienced may experience in future decreased dem for some our products due to slowing or negative global ecomic growth, uncertainty in credit markets, declining csumer business cfidence, fluctuating commodity prices, increased unemployment or challenges affecting global ecomy. Parts our fine paper packaging business are subject to electric substituti. In additi, our customers may experience deteriorati ir businesses, cash flow shortages, difficulty obtaining financing. If we are unable to implement business strategies to effectively respd to decreased dem for our products, our financial positi, cash flows results operatis would be adversely affected. Changes in internatial geopolitical macro ecomic cditis generally, particularly in Germany, could adversely affect our business results operatis. Fluctuatis in prices dem for products could result in smaller prit margins lower sales volumes. Our operating results business prospects could be adversely affected by risks related to countries outside United States in which we have manufacturing facilities or sell our products, including Germany, Euroze elsewhere. Downturns in ecomic activity, adverse tax csequences, fluctuatis in value local currency versus U.S. 10

78 dollar, or any change in social, political, macro ecomic or labor cditis in any se countries or regis could negatively affect our financial results. On June 23, 2016, U.K. voted by referendum to exit European Uni ( E.U. ); this vote is commly referred to as Brexit. The referendum is n-binding exit from E.U. is not immediate. Once U.K. invokes E.U. Article 50, re is a two-year window in which U.K. European Commissi can negotiate future terms for imports, exports, taxes, employment, immigrati or areas. Brexit has caused volatility in global stock markets currency exchange rates, affecting markets in which we operate. The implicatis Brexit could adversely affect dem for our products, our financial results operatis, our relatiships with customers, suppliers employees in short- or lg-term. Historically, ecomic market shifts, fluctuatis in capacity have created cyclical changes in prices, sales volume margins for products in paper, packaging related industries. The length magnitude industry cycles have varied over time by product, but generally reflect changes in macroecomic cditis levels industry capacity. The overall levels dem for many our products reflect fluctuatis in levels end-user dem, which depend in large part general macroecomic cditis in North America regial ecomic cditis in our markets (including Europe, Asia, Central South America), as well as foreign currency exchange rates. The foregoing factors could materially adversely impact our sales, cash flows, pritability results operatis. The availability prices for raw materials energy will significantly impact our business. We purchase a substantial porti raw materials energy necessary to produce our products open market,, as a result, price or terms those purchases are subject to change based factors such as worldwide supply dem government regulati. We do not have significant influence over our raw material or energy prices our ability to pass increases in those prices alg to purchasers our products may be challenged, unless those increases coincide with increased dem for product. Therefore, raw material or energy prices could increase at same time that prices for our products are steady or decreasing. In additi, we may not be able to recoup or cost increases we may experience, such as those resulting from inflati or from increases in wages or salaries or increases in health care, pensi or or employee benefits costs, insurance costs or or costs. Our technical products business acquires all its specialized pulp requirements from two global suppliers certain critical specialty latex grades from four suppliers. In general, se supply arrangements are not covered by formal ctracts, but represent multi-year business relatiships that have historically been sufficient to meet our needs. We expect se relatiships to ctinue to operate in a satisfactory manner in future. In event an interrupti producti at any e supplier, we believe that each se suppliers individually would be able to satisfy our short-term requirements for specialized pulp or specialty latex. In event a lg-term disrupti in our supply specialized pulp or specialty latex, we believe we would be able to substitute or pulp grades or or latex grades that would allow us to meet required product performance characteristics incur ly a limited disrupti in our producti. Form 10-K Our fine paper packaging business acquires a substantial majority cott fiber used in producti certain bred bd paper products pursuant to annual agreements with two North American producers. The balance our cott fiber requirements are acquired through "spot market" purchases from a variety or producers. We believe that a partial or total disrupti in producti cott fibers at our two primary suppliers would increase our reliance "spot market" purchases with a likely correspding increase in cost. Our operating results are likely to fluctuate. Our operating results are subject to substantial quarterly annual fluctuatis due to a number factors, many which are beyd our ctrol. Operating results could be adversely affected by general ecomic cditis causing a downturn in market for paper products. Additial factors that could affect our results include, amg ors, changes in market price pulp, effects competitive pricing pressures, producti capacity levels manufacturing yields, availability cost products from our suppliers, gain or loss significant customers, our ability to develop, introduce market new products technologies a timely basis, changes in mix products produced sold, seasal customer dem, relative strength Euro versus U.S. dollar, increasing interest rates envirmental costs. The timing effect foregoing factors are difficult to predict, se or or factors could materially adversely affect our quarterly or annual operating results. 11

79 We face many competitors, several which have greater financial or resources. We face competiti in each our business segments from companies that produce same type products that we produce or that produce lower priced alternative products that customers may use instead our products. Some our competitors have greater financial, sales marketing, or research development resources than we do. Greater financial resources product development capabilities may also allow our competitors to respd more quickly to new opportunities or changes in customer requirements. Our businesses are significantly dependent sales to ir largest customers. Sales to largest customer fine paper packaging business represented approximately 15 percent total sales for segment in Sales to three largest customers technical products business represented approximately 14 percent total sales for segment in A significant loss business from any our major fine paper packaging or technical products customers may have a material adverse effect our financial cditi, results operatis liquidity. We are also subject to credit risk associated with our customer ccentrati. If e or more our largest fine paper packaging or technical products customers were to become bankrupt, insolvent or orwise were unable to pay for services provided, we may incur significant write-fs accounts receivable. We cannot be certain that our tax planning strategies will be effective that our research development tax credits will ctinue to be available to fset our tax liability. We are ctinuously undergoing examinati by Internal Revenue Service ( "IRS") as well as taxing authorities in various state foreign jurisdictis in which we operate. The IRS or taxing authorities routinely challenge certain deductis credits reported our income tax returns. As December 31, 2016, we had $25.2 milli U.S. federal state research development credits ("R&D Credits") which, if not used, will expire between for U.S. federal R&D Credits between for state R&D Credits. The availability state NOLs state credits to fset taxable income income tax, respectively, could also be substantially reduced if we were to undergo an "ownership change" as defined within certain state tax codes. In accordance with Accounting Stards Codificati ("ASC") Topic 740, Income Taxes ("ASC Topic 740"), as December 31, 2016, we have recorded a liability $10.3 milli for uncertain tax positis where we believe it is "more likely than not" that benefit reported our income tax return will not be realized. There can be no assurance, however, that actual amount unrealized deductis will not exceed amounts we have recognized for uncertain tax positis. We have significant obligatis for pensi or postretirement benefits. We have significant obligatis for pensi or postretirement benefits which could require future funding beyd that which we have funded in past or which we currently anticipate. At December 31, 2016, our projected pensi benefit obligatis were $370.9 milli exceeded fair value pensi plan assets by $52.8 milli. In 2016, we made total ctributis to qualified pensi trusts $17.8 milli. In additi, during 2016 we paid pensi benefits for unfunded qualified supplemental retirement plans $0.6 milli. At December 31, 2016, our projected or postretirement benefit obligatis were $40.7 milli. No assets have been set aside to satisfy our or postretirement benefit obligatis. In 2016, we made payments for postretirement benefits or than pensis $3.8 milli. A material increase in funding requirements or benefit payments could have a material effect our cash flows. We may be required to pay material amounts under multiemployer pensi plans. We ctribute to The PACE Industry Uni-Management Pensi Fund (" PIUMPF"), a multiemployer pensi plan. The amount our annual ctributis to PIUMPF is negotiated with plan bargaining unit representing our employees covered by plan. In 2016, we ctributed approximately $0.1 milli to PIUMPF. In additi, in event a partial or complete withdrawal by us from PIUMPF at a time when plan is underfunded, we would be liable for a proportiate share such plan's unfunded vested benefits, referred to as a withdrawal liability. In event that any or ctributing employer withdrew from PIUMPF at a time when plan is underfunded, such employer cannot satisfy its obligatis to plan at time withdrawal, n proportiate share plan's unfunded vested benefits that would be allocable to us to or remaining ctributing employers, would increase re could be an increase to our required annual ctributis. In future negotiatis collective bargaining agreements with labor uni that participates in PIUMPF, we may decide to disctinue participati in plan. 12

80 The PIUMPF was certified to be in "critical status" for plan year beginning January 1, 2010, ctinued to be in critical status for plan year beginning January 1, In 2013, two large employers withdrew from PIUMPF. Furr withdrawals by or ctributing employers could cause a "mass withdrawal" from, or effectively a terminati, PIUMPF or alternatively we could elect to withdraw. Although we have no current intenti to withdraw from PIUMPF, if we were to withdraw, eir completely or partially, we would incur a withdrawal liability based our share PIUMPF's unfunded vested benefits. Based informati as December 31, 2015 provided by PIUMPF reviewed by our actuarial csultant, we estimate that, as December 31, 2016, payments that we would be required to make to PIUMPF in event our complete withdrawal would be approximately $0.1 milli per year a pre-tax basis. These payments would ctinue for 20 years, unless we were deemed to be included in a "mass withdrawal" from PIUMPF, in which case se payments would ctinue in perpetuity. However, we are not able to determine exact amount our withdrawal liability because amount could be higher or lower depending nature timing any triggering event, funded status plan our level ctributis to plan prior to triggering event. These withdrawal liability payments would be in additi to pensi ctributis to any new pensi plan adopted or ctributed to by us to replace PIUMPF could have a material effect our cash flows. Adverse changes to pensi laws regulatis could increase likelihood amount our liabilities arising under PIUMPF. The outcome legal actis claims may adversely affect us. We are involved in legal actis claims arising in ordinary course our business. The outcome such legal actis claims against us cannot be predicted with certainty. Legal actis claims against us could have a material effect our financial cditi, results operatis liquidity. Labor interruptis would adversely affect our business. Except for our Pittsfield, Massachusetts, Brownville, New York Quakertown, Pennsylvania manufacturing facilities which are n-uni, substantially all our hourly employees are uniized. In additi, some key customers suppliers are also uniized. Strikes, lockouts or or work stoppages or slowdowns involving our uniized employees could have a material effect us. If we are unable to ctinue to implement our business strategies, our financial cditis operating results could be materially affected. Our future operating results will depend, in part, extent to which we can successfully implement our business strategies in a cost effective manner. However, our strategies are subject to significant business, ecomic competitive uncertainties ctingencies, many which are beyd our ctrol. If we are unable to successfully implement our business strategies, our business, financial cditi operating results could be materially adversely affected. Form 10-K We may not successfully integrate acquisitis may be unable to achieve anticipated cost savings or or synergies. The integrati operatis acquired companies involves a number risks presents financial, managerial, legal operatial challenges. We may have difficulty, may incur unanticipated expenses related to, integrating informati systems, financial reporting activities, integrating retaining management persnel from acquired companies. We may not be able to achieve anticipated cost savings or commercial or growth synergies, for a number reass, including ctractual cstraints obligatis or an inability to take advantage expected commercial opportunities, increased operating efficiencies or commercial expansi key technologies. Failure to successfully integrate acquired companies may have an adverse effect our business, financial cditi, results operatis, cash flows. We may not be able to adequately protect our intellectual property proprietary rights, which could harm our future success competitive positi. Our future success competitive positi also depends, in part, up our ability to obtain maintain protecti for our intellectual property proprietary rights. Failure to protect our existing intellectual property rights may result in loss valuable technologies or may require us to license or companies' intellectual property rights. It is possible that any our patents may be invalidated, rendered unenforceable, circumvented, challenged or licensed to ors or any our pending or future patent applicatis may not be issued within scope claims sought by us, if at all. Furr, ors may develop technologies that are similar or superior to our technologies, duplicate our technologies or design around our patents, steps taken by us to protect our technologies may not prevent misappropriati such technologies. 13

81 Future dividends our comm stock may be restricted or eliminated. Dividends are declared at discreti our Board Directors, future dividends will depend our future earnings, cash flow, financial requirements or factors. Our ability to pay cash dividends our comm stock is limited under terms both our bank credit agreement indenture for our $175 milli senior notes due November 2021 ( "2021 Senior Notes"). As December 31, 2016, under most restrictive terms our bank credit agreement indenture for 2021 Senior Notes, our ability to pay cash dividends our comm stock is limited, as described under "Risks Relating to Our Indebtedness." There can be no assurance that we will ctinue to pay dividends in future. We may be required to record a charge to our earnings if our goodwill or intangible assets become impaired. As December 31, 2016, we had goodwill $70.4 milli or intangible assets $74.0 milli. Goodwill or intangible assets are recorded at fair value date acquisiti. In accordance with applicable accounting guidance, we review goodwill or indefinite-lived intangible assets at least annually for impairment, lg-lived intangible assets when facts circumstances warrant an impairment review. Impairment may result from, amg or things, deteriorati in performance, adverse market cditis, adverse changes in applicable laws or regulatis, a variety or factors. The amount any n-cash impairment would be recognized immediately through our csolidated statement operatis. Any future goodwill or or intangible asset impairment could have a material adverse effect our results operatis financial positi. If we have a catastrophic loss or unforeseen or recurring operatial problems at any our facilities, we could suffer significant lost producti /or cost increases. Our technical products fine paper packaging businesses may suffer catastrophic loss due to fire, flood, terrorism, mechanical failure, or or natural or man-made events. If any our facilities were to experience a catastrophic loss, it could disrupt our operatis, delay producti, delay or reduce shipments, reduce revenue, result in significant expenses to repair or replace facility. These expenses losses may not be adequately covered by property or business interrupti insurance. Even if covered by insurance, our inability to deliver our products to customers, even a shortterm basis, may cause us to lose market share a more permanent basis. Fluctuatis in currency exchange rates could adversely affect our results. Exchange rate fluctuatis for Euro do not have a material effect operatis or cash flows our German technical products business. Our German technical products business incurs most its costs sells most its producti in Europe, refore, its operatis cash flows are not materially affected by changes in exchange rate Euro relative to U.S. dollar. Changes in Euro exchange rate relative to U.S. dollar will, however, have an effect our balance sheet reported results operatis. See Item 7A, "Quantitative Qualitative Disclosures About Market Risk Foreign Currency Risk." In additi, because we transact business in or foreign countries, some our revenues expenses are denominated in a currency or than local currency our operatis. As a result, changes in exchange rates between currency in which transacti is denominated local currency our operatis into which transacti is being recorded can impact amount local currency recorded for such transacti. This can result in more or less local currency revenues or costs related to such transacti, thus have an effect our reported sales income before income taxes. Our activities are subject to extensive government regulati, which could increase our costs, cause us to incur liabilities adversely affect manufacturing marketing our products. Our operatis are subject to federal, state local laws, regulatis ordinances in United States Germany relating to various envirmental, health safety matters. The nature our operatis requires that we invest capital incur operating costs to comply with those laws, regulatis ordinances exposes us to risk claims ccerning n-compliance with envirmental, health safety laws or stards. We cannot assure that significant additial expenditures will not be required to maintain compliance with, or satisfy potential claims arising from, such laws, regulatis ordinances. Future events, such as changes in existing laws regulatis or ctaminati sites owned, operated or used for waste disposal by us (including currently unknown ctaminati ctaminati caused by prior owners operators such sites or or waste generators) may give rise to additial costs that could require significantly higher capital expenditures operating costs, which would reduce funds orwise available for operatis, capital expenditures, future business opportunities or or purposes. 14

82 We are subject to risks associated with possible climate change legislati various cost manufacturing issues associated with such legislati. GHG emissis have increasingly become subject political regulatory focus. Ccern over potential climate change, including global warming, has led to legislative regulatory initiatives directed at limiting GHG emissis. In additi to certain federal proposals in United States to regulate GHG emissis, Germany, U.K. all states in which we operate are currently csidering GHG legislati or regulatis, eir individually /or as part regial initiatives. While not all are likely to become law it is reasably possible that additial climate change related mates will be forthcoming, it is expected that y may adversely impact our costs by increasing energy costs raw material prices, requiring operatial or equipment modificatis to reduce emissis creating costs to comply with regulatis or to mitigate financial csequences compliance. We are subject to cybersecurity risks related to breaches security pertaining to sensitive company, customer, employee vendor informati as well as breaches in technology that manages operatis or business processes. We use informati technologies to securely manage operatis various business functis. We rely various technologies to process, store report our business interact with customers, vendors employees. The secure processing, maintenance transmissi this informati is critical to our operatis business strategy. Despite our security design ctrols, those our third party providers, our informati technology infrastructure may be vulnerable to cyber attacks by hackers or breaches due to employee error, malfeasance or or disruptis. Any such breach could result in operatial disruptis or misappropriati sensitive data that could subject us to civil criminal penalties, litigati or have a negative impact our reputati. There can be no assurance that such disruptis or misappropriatis resulting repercussis will not negatively impact our cash flows materially affect our results operatis or financial cditi. The U.S. Cgress is csidering cybersecurity legislati that, if enacted, could impose additial obligatis us could exp our potential liability in event a cyber-security incident. Our business may suffer if we do not retain our senior management. We depend our senior management. The loss services members our senior management team could adversely affect our business until suitable replacements can be found. There may be a limited number perss with requisite skills to serve in se positis we may be unable to locate or employ qualified persnel acceptable terms. In additi, our future success requires us to ctinue to attract retain competent persnel. Form 10-K Risks Relating to Our Indebtedness We may not be able to fund our future capital requirements internally or obtain third-party financing. We may be required or choose to obtain additial debt or equity financing to meet our future working capital requirements, as well as to fund capital expenditures acquisitis. To extent we must obtain financing from external sources to fund our capital requirements, we cannot guarantee financing will be available favorable terms, if at all. As December 31, 2016, we have required debt payments $1.2 milli during year ending December 31, We may not be able to generate sufficient cash flow to meet our debt obligatis, including 2021 Senior Notes. Our ability to make scheduled payments or to refinance our obligatis with respect to 2021 Senior Notes, our or debt our or liabilities will depend our financial operating performance, which, in turn, is subject to prevailing ecomic cditis to certain financial, business or factors beyd our ctrol. If our cash flow capital resources are insufficient to fund our debt obligatis or liabilities, we could face substantial liquidity problems may be forced to reduce or delay scheduled expansis capital expenditures, sell material assets or operatis, obtain additial capital or restructure our debt. We cannot assure that our operating performance, cash flow capital resources will be sufficient to repay our debt in future. In event that we are required to dispose material assets or operatis or restructure our debt to meet our debt or obligatis, we can make no assurances as to terms any such transacti or how quickly any such transacti could be completed. If we cannot make scheduled payments our debt, we will be in default, as a result: our debt holders could declare all outsting principal interest to be due payable; our senior secured lenders could terminate ir commitments commence foreclosure proceedings against our assets; 15

83 we could be forced into bankruptcy or liquidati. If our operating performance declines in future or we breach our covenants under our revolving credit facility, we may need to obtain waivers from lenders under our revolving credit facility to avoid being in default. We may not be able to obtain se waivers. If this occurs, we would be in default under our revolving credit facility. We have significant indebtedness which subjects us to restrictive covenants relating to operati our business. As December 31, 2016, we had $175 milli 2021 Senior Notes, $42.9 milli in revolving credit borrowings $6.8 milli project financing outsting. In additi, availability under our bank credit agreement was approximately $125 milli. Our leverage could have important csequences. For example, it could: make it difficult for us to satisfy our financial obligatis, including making scheduled principal interest payments 2021 Senior Notes our or indebtedness; place us at a disadvantage to our competitors; require us to dedicate a substantial porti our cash flow from operatis to service payments our indebtedness, reby reducing funds available for or purposes; increase our vulnerability to a downturn in general ecomic cditis or industry in which we operate; limit our ability to obtain additial financing for working capital, capital expenditures, acquisitis general corporate or purposes; limit our ability to plan for react to changes in our business industry in which we operate. The terms our indebtedness, including our bank credit agreement indenture governing 2021 Senior Notes, ctain covenants restricting our ability to, amg or things, incur certain additial debt, incur or create certain liens, make specified restricted payments, pay dividends, authorize or issue capital stock, enter into transactis with our affiliates, csolidate or merge with or acquire anor business, sell certain our assets or liquidate, dissolve or wind-up our Company. Under most restrictive terms Third Amended Restated Credit Agreement, we are permitted to pay cash dividends or repurchase shares our comm stock up to amount available under Third Amended Restated Credit Agreement, as lg as availability under Third Amended Restated Credit Agreement exceeds $25 milli. If availability is below $25 milli, we are restricted from paying dividends or repurchasing shares. Under most restrictive terms 2021 Senior Notes, we are permitted to pay cash dividends up to $25 milli in a calendar year, but not permitted to repurchase shares our comm stock. However, as lg as net leverage ratio (net debt/ebitda) under 2021 Senior Notes is below 2.5x, we can pay dividends or repurchase shares without limitati. Refer to Item 7A, "Management's Discussi Analysis Financial Cditi Results Operatis Liquidity Capital Resources" for current limitatis our ability to pay dividends or repurchase shares our comm stock. In additi, if aggregate availability under our revolving credit facilities is less than greater (i) $25 milli (ii) 12.5 percent maximum aggregate commitments under our revolving credit facilities as n in effect, we will be subject to increased reporting obligatis ctrols until such time as availability is more than greater (a) $35 milli (b) 17.5 percent maximum aggregate commitments under our revolving credit facilities as n in effect for at least 60 csecutive days no default or event default has occurred or is ctinuing during such 60-day period. If aggregate availability under our revolving credit facilities is less than greater (i) $20 milli (ii) 10 percent maximum aggregate commitments under our revolving credit facilities as n in effect, we are required to comply with a fixed charge coverage ratio (as defined in our bank credit agreement) not less than 1.1 to 1.0 for preceding fourquarter period, tested as end each quarter. Such compliance, ce required, would no lger be necessary ce (x) aggregate availability under our revolving credit facilities exceeds greater (i) 17.5 percent aggregate commitment for our revolving credit facilities (ii) $35 milli for 60 csecutive days (y) no default or event default has occurred is ctinuing during such 60- day period. As December 31, 2016, aggregate availability under our revolving credit facilities exceeded minimum required amount, we are not required to comply with such fixed charge coverage ratio. Our revolving credit facilities accrue interest at variable rates. As December 31, 2016, we had $42.9 milli revolving credit borrowings outsting. We may reduce our exposure to rising interest rates by entering into interest rate hedging arrangements, although those arrangements may result in us incurring higher interest expenses than we would incur 16

84 without arrangements. If interest rates increase in absence such arrangements, we will need to dedicate more our cash flow from operatis to make payments our debt. For more informati our liquidity, see Item 7A, "Management's Discussi Analysis Financial Cditi Results Operatis Liquidity Capital Resources." Our failure to comply with covenants ctained in our revolving credit facility or indenture governing 2021 Senior Notes could result in an event default that could cause accelerati our indebtedness. Our failure to comply with covenants or requirements ctained in indenture governing 2021 Senior Notes, our revolving credit facility or our or debt instruments could cause an event default under relevant debt instrument. The occurrence an event default could trigger a default under our or debt instruments, prohibit us from accessing additial borrowings permit holders defaulted debt to declare amounts outsting with respect to that debt to be immediately due payable. Our assets or cash flows may not be sufficient to fully repay borrowings under our outsting debt instruments, we may be unable to refinance or restructure payments indebtedness favorable terms, or at all. Despite our indebtedness levels, we our subsidiaries may be able to incur substantially more indebtedness, which may increase risks created by our substantial indebtedness. Because terms our bank credit agreement indenture governing 2021 Senior Notes do not fully prohibit us or our subsidiaries from incurring additial indebtedness, we our subsidiaries may be able to incur substantial additial indebtedness in future, some which may be secured. If we or any our subsidiaries incur additial indebtedness, related risks that we y face may intensify. Our bank credit agreement is secured by a majority our assets. Our bank credit agreement is secured by a majority our assets. Availability under our bank credit agreement will fluctuate over time depending value our inventory, receivables various capital assets. An extended work stoppage or decline in sales volumes would result in a decrease in value assets securing bank credit agreement. A reducti in availability under bank credit agreement could have a material effect our liquidity. Changes in credit ratings issued by natially recognized statistical rating organizatis could adversely affect our cost financing have an adverse effect market price our securities. Form 10-K Our debt currently has a n-investment grade rating, re can be no assurance that any rating assigned by rating agencies will remain for any given period time or that a rating will not be lowered or withdrawn entirely by a rating agency if, in that rating agency's judgment, future circumstances relating to basis rating, such as adverse changes, so warrant. A lowering or withdrawal ratings assigned to our debt securities by rating agencies may increase our future borrowing costs reduce our access to capital, which could have a material adverse impact our financial cditi results operatis. We depend our subsidiaries to generate cash flow to meet our debt service obligatis. We cduct a substantial porti our business through our subsidiaries. Csequently, our cash flow ability to service our debt obligatis depend up earnings our subsidiaries distributi those earnings to us, or up loans, advances or or payments made by se entities to us. The ability se entities to pay dividends or make or payments or advances to us will be subject to applicable laws ctractual restrictis ctained in instruments governing ir debt, including our revolving credit facility indenture governing 2021 Senior Notes. These limitatis are also subject to important exceptis qualificatis. The ability our subsidiaries to generate sufficient cash flow from operatis to allow us to make scheduled payments our debt will depend up ir future financial performance, which will be affected by a range ecomic, competitive business factors, many which are outside our ctrol as well as ir ability to repatriate cash to us. If our subsidiaries do not generate sufficient cash flow from operatis to help us satisfy our debt obligatis, including payments 2021 Senior Notes, or if y are unable to distribute sufficient cash flow to us, we may have to undertake alternative financing plans, such as refinancing or restructuring our debt, selling assets, reducing or delaying capital expenditures or seeking to raise additial capital. Refinancing may not be possible, any assets may not be saleable, or, if sold, we may not realize sufficient amounts from those sales. Additial financing may not be available acceptable terms, if at all, or we may be prohibited from incurring it, if available, under terms our various debt instruments n 17

85 in effect. Our inability to generate sufficient cash flow to satisfy our debt obligatis or to refinance our obligatis commercially reasable terms would have an adverse effect our business, financial cditi results operatis. FORWARD-LOOKING STATEMENTS Certain statements in this Annual Report Form 10-K may cstitute "forward-looking" statements as defined in Secti 27A Securities Act 1933 ( "Securities Act"), Secti 21E Securities Exchange Act 1934 ( "Exchange Act"), Private Securities Litigati Reform Act 1995 ( "PSLRA"), or in releases made by SEC, all as may be amended from time to time. Statements ctained in this Annual Report Form 10-K that are not historical facts may be forward-looking statements within meaning PSLRA. Any such forward-looking statements reflect our beliefs assumptis are based informati currently available to us. Forward-looking statements are ly predictis involve known unknown risks, uncertainties or factors that may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These cautiary statements are being made pursuant to Securities Act, Exchange Act PSLRA with intenti obtaining benefits "safe harbor" provisis such laws. We cauti investors that any forward-looking statements we make are not guarantees or indicative future performance. For additial informati regarding factors that may cause our results operatis to differ materially from those presented herein, please see "Risk Factors" ctained in this Annual Report Form 10-K as are detailed from time to time in or reports we file with SEC. You can identify forward-looking statements as those that are not historical in nature, particularly those that use terminology such as "may," "will," "should," "expect," "anticipate," "ctemplate," "estimate," "believe," "plan," "project," "predict," "potential" or "ctinue," or negative se, or similar terms. In evaluating se forward-looking statements, you should csider following factors, as well as ors ctained in our public filings from time to time, which may cause our actual results to differ materially from any forward-looking statement: changes in market dem for our products due to global ecomic political cditis; impact competiti, both domestic internatial, changes in industry producti capacity, including cstructi new mills or new machines, closing mills incremental changes due to capital expenditures or productivity increases; enactment adverse state, federal or foreign tax or or legislati or changes in government policy or regulati; fluctuatis in (i) exchange rates (in particular changes in U.S. dollar/euro currency exchange rates) (ii) interest rates; increases in commodity prices, (particularly for pulp, energy latex) due to cstrained global supplies or unexpected supply disruptis; availability raw materials energy; strikes, labor stoppages changes in our collective bargaining agreements relatis with our employees unis; capital credit market volatility fluctuatis in global equity fixed-income markets; unanticipated expenditures related to cost compliance with envirmental or governmental regulatis; our ability to ctrol costs implement measures designed to enhance operating efficiencies; loss current customers or inability to obtain new customers; loss key persnel; increases in funding requirements for our pensi postretirement liabilities; changes in asset valuatis including write-downs assets including property, plant equipment; inventory, accounts receivable, deferred tax assets or or assets for impairment or or reass; our existing future indebtedness; our ability to successfully integrate acquired businesses into our existing operatis; 18

86 our net operating losses may not be available to fset our tax liability or tax planning strategies may not be effective; or risks that are detailed from time to time in reports we file with SEC; or factors described under "Risk Factors." You are cautied not to unduly rely such forward-looking statements, which speak ly as date made, when evaluating informati presented in this informati statement. We undertake no duty to update se forward-looking statements after date this Form 10-K, even though our situati may change in future. Item 1B. Unresolved Staff Comments Ne. Item 2. Properties Our principal executive fices are located in Alpharetta, Georgia, a suburb Atlanta, Georgia. We operate 10 manufacturing facilities in United States that produce printing writing, text, cover, durable saturated coated substrates or specialty papers for a variety end uses. In 2016, we cverted e two machines at Applet, Wiscsin, mill into a machine that produces transportati or filtrati media, mill will now be a shared facility with our fine paper packaging business. We own operate two manufacturing facilities in Germany that produce transportati or filter media, durable saturated substrates. We own operate e manufacturing facility in U.K. that produces durable printing specialty paper. We believe that each se facilities is adequately maintained is suitable for cducting our operatis business. We manage machine operating schedules at our manufacturing locatis to fulfill customer orders in a timely manner ctrol inventory levels. As December 31, 2016, following are locatis our principal facilities operating equipment products produced at each locati: Form 10-K 19

87 Locati Equipment/Resources Owned or Leased Products Fine Paper Packaging Segment Mill, Wiscsin Whiting Mill Whiting, Wiscsin Cverting Center, Wiscsin Two paper machines; paper finishing equipment Four paper machines; paper finishing equipment Owned Printing writing, text, cover or specialty papers Owned Printing writing, text, cover or specialty papers Paper finishing equipment Owned Printing writing, text, cover or specialty papers Technical Products Segment Munising Mill Munising, Michigan Pittsfield Mill Pittsfield, Massachusetts Bruckmühl Mill Bruckmühl, Germany Weidach Mill Feldkirchen-Westerham, Germany Red Bridge Mill Bolt, Engl Two paper machines; two f line saturators; two f line coaters; specialty finishing equipment Three paper machines; paper finishing equipment One paper machine; two saturator/ coaters; finishing equipment Two paper machines; three saturators; e laminator; three meltblown machines; specialty finishing equipment Saturating, coating, finishing equipment Owned Tapes, abrasives, premask, medical packaging or durable, saturated coated substrates Owned Reverse osmosis filtrati glass applicatis Owned Masking tape backings abrasive backings Owned Transportati filtrati or industrial filter media Owned Durable printing specialty paper Shared Facilities Applet Mill Applet, Wiscsin Brattleboro Mill Brattleboro, Vermt Brownville Mill Brownville, New York Lowville Mill Lowville, New York Quakertown Mill Quakertown, Pennsylvania Reading Mill (1) Reading, Pennsylvania Two paper machines; saturating equipment; paper finishing equipment One paper machine;paper finishing equipment One paper machine; e f-line coater Saturating, coating, embossing finishing equipment Saturating, coating, embossing finishing equipment Owned Transportati filtrati, printing writing, text, cover or specialty papers Owned Printing specialty paper board Owned Durable printing specialty paper Owned Durable printing specialty paper Owned Durable printing specialty paper Embossing finishing equipment Leased Durable printing specialty paper (1) In December 2016, we ceased manufacturing operatis at Reading, Pennsylvania, facility. The facility is leased lease will expire June 30, See Note 7 Notes to Csolidated Financial Statements, "Debt", for a descripti material encumbrances attached to properties described in table above. As December 31, 2016, following are locatis our owned leased fice laboratory space functis performed at each locati. 20

88 Administrative Locati Office/Or Space Functi Alpharetta, Georgia Leased Office Space Corporate Headquarters, Administrati Design Center Applet, Wiscsin Owned Office Space Administrati Munising, Michigan Owned Office Laboratory Space Administrati Research Development for our technical products businesses Pittsfield, Massachusetts Owned Office Laboratory Space Administrati Research Development for our technical products businesses West Springfield, Massachusetts Owned Office Laboratory Space Administrati Research Development for our technical products fine paper packaging businesses Feldkirchen-Westerham, Germany Owned Office Laboratory Space Administrati Research Development for our technical product businesses Capacity Utilizati Paper machines in our manufacturing facilities generally operate a combinati five- or seven-day schedules to meet dem. We are not cstrained by input factors maximum operating capacity our manufacturing facilities is calculated based operating days to account for variatis in mix different units measure between assets. Due to required maintenance downtime ctract holidays, maximum number operating days is defined as 350 days per year. We generally expect to utilize approximately 80 to 90 percent our maximum operating capacity. The following table presents our percentage utilizati maximum operating capacity by segment: Ended December 31, Technical Products 87% 84% 85% Fine Paper Packaging 80% 80% 77% Form 10-K Item 3. Legal Proceedings Litigati We are involved in certain legal actis claims arising in ordinary course business. While outcome se legal actis claims cannot be predicted with certainty, it is opini management that outcome any such claim which is pending or threatened, eir individually or a combined basis, will not have a material effect our csolidated financial cditi, results operatis or liquidity. Income Taxes We periodically undergo examinati by IRS as well as various state foreign jurisdictis. The IRS or taxing authorities routinely challenge certain deductis credits we report our income tax returns. Item 4. Mine Safety Disclosures Not applicable. 21

89 PART II Item 5. Market for Registrant's Comm Equity, Related Stockholder Matters Issuer Purchases Equity Securities comm stock is listed New York Stock Exchange is traded under ticker symbol NP. Trading, as reported New York Stock Exchange, Composite Transactis Tape, dividend informati follows: Comm Stock Market Price High Low Dividends Declared 2016 Fourth quarter $ $ $ 0.33 Third quarter $ $ $ 0.33 Secd quarter $ $ $ 0.33 First quarter $ $ $ Fourth quarter $ $ $ 0.30 Third quarter $ $ $ 0.30 Secd quarter $ $ $ 0.30 First quarter $ $ $ 0.30 For year ended December 31, 2016 we paid cash dividends $1.32 per comm share or $22.4 milli. For year ended December 31, 2015, we paid cash dividends $1.20 per comm share or $20.3 milli. In November 2016, our Board Directors approved a 12 percent increase in annual dividend rate our comm stock to $1.48 per share. The dividend is scheduled to be paid in four equal quarterly installments beginning in March Dividends are declared at discreti Board Directors, future dividends will depend our future earnings, cash flow, financial requirements or factors. Our ability to pay cash dividends our comm stock is limited under terms both our bank credit agreement our 2021 Senior Notes. Under most restrictive terms Third Amended Restated Credit Agreement, we are permitted to pay cash dividends or repurchase shares our comm stock up to amount available under Third Amended Restated Credit Agreement, as lg as availability under Third Amended Restated Credit Agreement exceeds $25 milli. If availability is below $25 milli, we are restricted from paying dividends or repurchasing shares. As December 31, 2016, our availability exceeded $25 milli, so this restricti did not apply. Under most restrictive terms 2021 Senior Notes, we are permitted to pay cash dividends up to $25 milli in a calendar year, but not permitted to repurchase shares our comm stock. However, as lg as net leverage ratio (net debt/ebitda) under 2021 Senior Notes is below 2.5x, we can pay dividends or repurchase shares without limitati. In event net leverage ratio exceeds 2.5x, we may still pay dividends in excess $25 milli or repurchase shares by utilizing "restricted payment baskets" as defined in indenture for 2021 Senior Notes. As December 31, 2016, since our leverage ratio was less than 2.5x, ne se covenants were restrictive to our ability to pay dividends or repurchase shares our comm stock. As February 22, 2017, had approximately 1,400 holders record its comm stock. The closing price 's comm stock February 22, 2017 was $ Purchases Equity Securities: The following table sets forth certain informati regarding purchases our comm stock during fourth quarter

90 Period Total Number Shares Purchased (a) Average Price Paid Per Share (c) Total Number Shares Purchased as Part Publicly Announced Plans or Programs (b) Approximate Dollar Value Shares that May Yet Be Purchased Under Publicly Announced Plans or Programs October ,497 $ ,497 $ 20,815,812 November ,439 $ ,439 $ 19,151,525 December ,746 $ ,945 $ 17,591,939 (a) Transactis include purchase vested restricted shares from employees to satisfy minimum tax withholding requirements up vesting stock-based awards. See Note 9 Notes to Csolidated Financial Statements, "Stock Compensati Plans." (b) In May 2016, our Board Directors authorized a program that would allow for purchase up to $25 milli outsting comm stock through May 21, (c) Average price paid per share for shares purchased as part our program. Equity Compensati Plan Informati The following table summarizes informati about outsting optis, share appreciati rights restricted stock units shares reserved for future issuance under our existing equity compensati plans as December 31, Plan Category (a) Number securities to be issued up exercise outsting optis, warrants, rights (b) Weightedaverage exercise price outsting optis, warrants, rights (1) (c) Number securities remaining available for future issuance under equity compensati plans (excluding securities reflected in column (a)) Equity compensati plans approved by security holders 380,820 (2)(3) $ ,000 Equity compensati plans not approved by security holders Total 380,820 $ ,000 Form 10-K (1) The weighted-average exercise price outsting optis, warrants rights does not take into account restricted stock units since y do not have an exercise price. (2) Includes (i) 226,000 shares issuable up exercise outsting optis stock appreciati rights ("SARs"), (ii) 74,100 shares issuable following vesting cversi outsting performance share unit awards, (iii) 80,720 shares issuable up vesting cversi outsting restricted stock units, all as December 31, As December 31, 2016, we had an aggregate 530,462 stock optis SARs outsting. The weighted average exercise price stock optis SARs was $38.35 per share remaining ctractual life such awards was 6.3 years. (3) Includes 218,400 shares that would be issued up assumed exercise 307,518 SARs at $85.20 per share closing price our comm stock December 31, Item 6. Selected Financial Data The following table sets forth our selected historical financial or data. You should read informati set forth below in cjuncti with "Management's Discussi Analysis Financial Cditi Results Operatis" our historical csolidated financial statements notes to those csolidated financial statements included elsewhere in this Annual Report. The statement operatis data for years ended December 31, 2016, balance sheet data as December 31, set forth below are derived from our audited historical csolidated financial statements included elsewhere in this Annual Report Form 10-K. The balance sheet data as December 31, 23 23

91 2014, statement operatis data for years ended December 31, set forth below are derived from our historical csolidated financial statements not included in this Annual Report Form 10-K. On October 31, 2015, we sold Lahnstein Mill for net cash proceeds approximately $5.4 milli. For years ended December 31, 2016 December 31, 2015, disctinued operatis reported csolidated statements operatis reflect results operatis estimated loss sale Lahnstein Mill. The csolidated statements operatis for years ended December 31, 2014, have been restated to report results Lahnstein Mill as disctinued operatis. As December 31, 2015, 2014, , assets liabilities Lahnstein Mill are classified as assets held for sale csolidated balance sheet. See Note 13 Notes to Csolidated Financial Statements, "Disctinued Operatis." Ended December 31, Csolidated Statement Operatis Data Net sales $ $ $ $ $ Cost products sold Gross prit Selling, general administrative expenses Integrati/restructuring costs (a) Pensi plan settlement charge (b) Loss early extinguishment debt (c) Or (income) expense net Operating income Interest expense net Income from ctinuing operatis before income taxes Provisi for income taxes (h) Income from ctinuing operatis Income (loss) from disctinued operatis, net taxes (e) (0.4) (9.4) Net income $ 73.0 $ 51.1 $ 68.7 $ 52.0 $ 44.3 Earnings from ctinuing operatis per basic share $ 4.33 $ 3.58 $ 4.05 $ 2.97 $ 2.30 Earnings from ctinuing operatis per diluted share $ 4.26 $ 3.53 $ 3.99 $ 2.91 $ 2.26 Cash dividends per comm share $ 1.32 $ 1.20 $ 1.02 $ 0.70 $ 0.48 Or Financial Data Net cash flow provided by (used for): Operating activities (h) $ $ $ 94.5 $ 83.5 $ 40.1 Capital expenditures (g) (68.5) (48.1) (27.9) (28.7) (25.1) Or investing activities (f) 0.3 (112.0) (77.0) (4.6) (7.2) Financing activities (c)(h) (48.4) (18.8) (13.0) Ratio earnings to fixed charges (d) 8.7x 7.7x 6.9x 6.7x 4.6x 24

92 December 31, (Dollars in millis) Csolidated Balance Sheet Data Cash cash equivalents $ 3.1 $ 4.2 $ 72.6 $ 73.4 $ 7.8 Working capital, less cash cash equivalents Total assets (h) Lg-term debt (c)(h) Total liabilities (h) Total stockholders' equity (a) For year ended December 31, 2016, we incurred $7.0 milli integrati restructuring costs $0.8 milli pensi settlement charges. For year ended December 31, 2015, we incurred $5.3 milli integrati costs related to FiberMark Acquisiti $1.2 milli restructuring costs. For year ended December 31, 2014, we incurred $1.0 milli integrati costs related to acquisiti Crane technical materials business $1.3 milli restructuring costs. For year ended December 31, 2013, we incurred $0.4 milli integrati costs related to acquisiti Southworth brs. For year ended December 31, 2012, we incurred $5.8 milli integrati costs related to acquisiti Wausau brs. (b) For year ended December 31, 2016, we elected settlement accounting even though benefit payments did not exceed sum expected service cost interest costs affected plans, recognized a settlement loss $0.8 milli. For years ended December 31, 2014, , benefit payments under certain pensi plans exceeded sum expected service cost interest costs for plan for respective calendar years. In accordance with ASC Topic 715, Compensati Retirement Benefits ("ASC Topic 715"), we measured liabilities post-retirement benefit plans recognized settlement losses $3.5 milli, $0.2 milli $3.5 milli, respectively. (c) For year ended December 31, 2014, we amended restated our existing bank credit facility recognized a pre-tax loss $0.2 milli for write-f unamortized debt issuance costs. For year ended December 31, 2013, we redeemed $90 milli 2014 Senior Notes repaid all outsting term loan borrowings ($29.3 milli). In cnecti with early extinguishment debt we recognized a pre-tax loss $0.5 milli for write-f unamortized debt issuance costs. For year ended December 31, 2012, we completed an early redempti $68 milli in aggregate principal amount 2014 Senior Notes. In cnecti with early redempti we recognized a pre-tax loss $0.6 milli, including a call premium write-f unamortized debt issuance costs. (d) For purposes determining ratio earnings to fixed charges, earnings csist income before income taxes (less interest) plus fixed charges. Fixed charges csist interest expense, including amortizati debt issuance costs, estimated interest porti rental expense. (e) The following table presents results disctinued operatis: Form 10-K Ended December 31, 2016 (1) 2015 (2) (3) 2012 (4) Disctinued operatis: (5) Income from operatis $ $ 0.2 $ 0.9 $ 5.4 $ (0.1) Loss sale Lahnstein Mill (5) (0.6) (13.6) Income (loss) before income taxes (0.6) (13.4) (0.1) Provisi (benefit) for income taxes (0.2) (4.0) (4.5) Income (loss) from disctinued operatis, net taxes $ (0.4) $ (9.4) $ 0.7 $ 3.5 $ 4.4 (1) The loss in 2016 was due to final adjustment sales price Lahnstein Mill. (2) The loss sale Lahnstein Mill includes a net curtailment gain related to divesture pensi plan $15.8 milli, including a $5.5 milli write-f deferred actuarial losses in

93 (3) During first quarter 2013, we received a refund excess pensi ctributis from terminated Terrace Bay pensi plan. As a result, we recorded income before income taxes from disctinued operatis $4.2 milli a related provisi for income taxes $1.6 milli. (4) In November 2012, audits tax years were finalized with a finding no additial taxes due. As a result, we recognized a n-cash tax benefit $4.5 milli related to reversal certain liabilities for uncertain income tax positis. (5) On October 31, 2015, we sold Lahnstein Mill. For year ended December 31, 2016, 2015, 2014, , results operatis loss sale Lahnstein Mill are reported as disctinued operatis in Csolidated Statement Operatis Data. (f) In August 2015, we purchased all outsting equity FiberMark for approximately $118 milli. In July 2014, we purchased all outsting equity Crane for approximately $72 milli. (g) During year ended December 31, 2016, we completed our U.S. Filtrati project. (h) At December 31, 2016, we adopted ASC Topic No applied guidance retroactively to January 1, At December 31, 2015, we adopted ASC Topic No ASC Topic No elected to apply guidance retroactively to all periods presented. See Note 2 Notes to Csolidated Financial Statements, "Summary Significant Accounting Policies Recently Adopted Accounting Stards." 26

94 Item 7. Management's Discussi Analysis Financial Cditi Results Operatis The following discussi analysis presents factors that had a material effect our results operatis during years ended December 31, 2016, Also discussed is our financial positi as end those years. You should read this discussi in cjuncti with our csolidated financial statements notes to those csolidated financial statements included elsewhere in this Annual Report Form 10-K. This Management's Discussi Analysis Financial Cditi Results Operatis ctains forward-looking statements. See "Forward-Looking Statements" for a discussi uncertainties, risks assumptis associated with se statements. Introducti This Management's Discussi Analysis Financial Cditi is intended to provide investors with an understing historical performance our business, its financial cditi its prospects. We will discuss provide our analysis following: Overview Business; Business Segments; Results Operatis Related Informati; Liquidity Capital Resources; Adopti New Accounting Prouncements; Critical Accounting Policies Use Estimates. Overview Business We are a leading producer technical products premium fine papers packaging. We have two primary operatis: our technical products business our fine paper packaging business. Our missi is to create value by improving image performance everything we touch. We expect to create value by growing in specialized niche markets that value performance or image where we have competitive advantages. In managing our businesses, we believe that achieving maintaining a leadership positi in our markets, respding effectively to customer needs competitive challenges, employing capital optimally, ctrolling costs managing risks are important to lg-term success. Changes in input costs general ecomic cditis can also impact our results. In this discussi analysis, we will refer to se factors. Form 10-K Competitive Envirment Our past results have been our future prospects will be significantly affected by competitive envirment in which we operate. While our businesses are oriented to premium performance quality, y may also face competitive pressures from lower value products in most our markets our businesses compete directly with well-known competitors, some which are larger more diversified. Ecomic Cditis Input Costs The markets for all our products are affected to a significant degree by ecomic cditis, including rapid changes in input costs, particularly for pulp, latex natural gas that may not be recovered immediately through pricing or or actis. Our results are also affected by fluctuatis in exchange rates, particularly for Euro. Business Segments Our reportable operating segments csist Technical Products, Fine Paper Packaging, Or. Our technical products business is a leading internatial producer transportati, water or filter media durable, saturated coated substrates for a variety end markets. We focus categories where we believe we are, or can be, a market leader. These categories include filtrati media for transportati, water or uses, backings for specialty tapes abrasives, performance labels or specialty markets. Our dedicated technical products manufacturing facilities are located near Munich, Germany, in Bolt, Engl, in Munising, Michigan in Pittsfield, Massachusetts. In additi, certain technical products are manufactured alg with fine paper packaging products in shared facilities located in upstate New York Quakertown, Pennsylvania. In 2017, a filtrati machine (which was 27

95 cverted from a fine paper machine) will begin producti in Applet, Wiscsin, a site also shared with fine paper packaging business. We believe our fine paper packaging business is leading supplier premium printing or high end specialty papers in North America. Our products include some most recognized preferred papers in North America, where we enjoy leading market positis in many our product categories. We sell our products primarily to authorized paper distributors, as well as through cverters, major natial retailers specialty businesses. Our primary fine paper packaging manufacturing facilities are located in Whiting, Wiscsin in Brattleboro, Vermt. In additi, certain products are manufactured in shared facilities located in upstate New York Quakertown, Pennsylvania, as well as an existing site shared with technical products in 2017 in Applet, Wiscsin. Our or segment includes certain product lines composed papers sold to cverters for end uses such as covering materials for datebooks, diaries, yearbooks traditial photo albums. These products are primarily manufactured at our mill in Brattleboro, Vermt that also makes fine paper packaging. Results Operatis Related Informati In this secti, we discuss analyze our net sales, income before interest income taxes (which we refer to as "operating income") or informati relevant to an understing our results operatis. Executive Summary For year ended December 31, 2016, csolidated net sales $941.5 milli increased $53.8 milli, or 6 percent, from $887.7 milli in The increase reflects a full year acquired volume from August 1, 2015 FiberMark Acquisiti or incremental volume growth which more than fset lower net selling prices currency effects. Csolidated operating income $114.1 milli for year ended December 31, 2016 increased $12.7 milli, or 13 percent, from prior year. The favorable comparis to prior year was primarily due to lower manufacturing material costs (including purchasing synergies resulting from FiberMark Acquisiti), increased sales as a result incremental volume growth. These favorable variances were partially fset by incremental acquired selling, general administrative costs ("SG&A"), lower net selling prices, higher integrati restructuring costs, primarily due to costs related to Applet filtrati machine cversi a pensi settlement charge. Excluding aggregate charges $7.8 milli in 2016 for integrati restructuring costs pensi settlement losses, aggregate charges $6.5 milli in 2015 for integrati restructuring costs, operating income for year ended December 31, 2016 increased $14.0 milli from prior year. See later in this secti for furr informati regarding presentati operating income, as adjusted. Cash provided by operating activities $115.8 milli for year ended December 31, 2016 was $4.6 milli higher than cash provided by operating activities $111.2 milli in prior year primarily due to higher operating earnings with commensurate benefits increased utilizati federal research development tax credits, partly fset by higher postretirement benefit plan ctributis. Capital expenditures for year ended December 31, 2016 were $68.5 milli compared to spending $48.1 milli in prior year. Higher spending in 2016 was due to an incremental investment in filtrati assets in U.S. that was completed at end Analysis Net Sales s Ended December 31, 2016, The following table presents net sales by segment net sales expressed as a percentage total net sales: Ended December 31, Net sales Technical Products $ % $ % $ % Fine Paper Packaging % % % Or % % % Csolidated $ % $ % $ % 28

96 Commentary: 2016 versus 2015 For Ended December 31, Change in Net Sales Compared to Prior Change Due To Total Change Volume Net Price Currency Technical Products $ $ $ 37.2 $ 49.8 $ (11.0) $ (1.6) Fine Paper Packaging (8.8) Or Csolidated $ $ $ 53.8 $ 75.2 $ (19.8) $ (1.6) Csolidated net sales for year ended December 31, 2016 were $53.8 milli (6%) higher than prior year. The increase reflects a full year acquired volume from August 1, 2015 FiberMark Acquisiti or incremental volume growth which more than fset lower net selling prices currency effects. Excluding currency exchange effects, csolidated net sales increased $55.4 milli from prior year. Net sales in our technical products business increased $37.2 milli (9%) from prior year due to acquired volume organic volume growth, which were partially fset by lower net selling prices. Excluding currency exchange effects, technical product sales increased $38.8 milli (9%). Organic volumes increased from prior year period due to growth in transportati filtrati backings for tapes abrasives. Net selling prices were down primarily due to a lower-priced mix products sold but also for reduced selling prices products with ctractual adjusters for certain input costs. Net sales in our fine paper packaging business increased $9.4 milli (2%) from prior year due to acquired volume, which was partially fset by lower net selling prices. Net selling prices were down from prior year due to a lower-priced mix products sold in 2016, which reflected a higher proporti sales n-bred products. Net sales in our or business segment increased $7.2 milli from prior year period due to acquired volume. Form 10-K 2015 versus 2014 For s Ended December 31, Change in Net Sales Compared to Prior Change Due To Total Change Volume Net Price Currency Technical Products $ $ $ 25.6 $ 66.5 $ (2.4) $ (38.5) Fine Paper Packaging (4.5) 11.1 Or Csolidated $ $ $ 48.0 $ 77.8 $ 8.7 $ (38.5) Csolidated net sales for year ended December 31, 2015 were $48.0 milli (6%) higher than prior year due to organic technical products volume growth, incremental sales from FiberMark Acquisiti higher average selling prices, partially fset by unfavorable currency exchange effects. Excluding incremental FiberMark sales currency exchange effects, csolidated net sales increased $28.4 milli from prior year. Net sales in our technical products business increased $25.6 milli (6%) from prior year as organic volume growth, incremental sales from FiberMark Acquisiti higher selling prices were ly partially fset by unfavorable currency exchange effects. Unfavorable currency exchange effects resulted from Euro weakening by approximately 16 percent relative to U.S. dollar in year ended December 31, 2015 as compared to prior

97 year. Excluding currency exchange effects incremental FiberMark sales, technical product sales increased $40.7 milli (10%) volumes increased approximately 11% from prior year period due to growth in shipments filtrati specialty performance products incremental sales from technical materials business acquired in July Net sales in our fine paper packaging business increased $6.6 milli (2%) from prior year due to higher average net prices incremental FiberMark sales. Excluding acquired revenues, fine paper packaging sales decreased $12.3 milli (3%) as higher average net price was more than fset by a four percent decrease in sales volumes. Sales volumes were unfavorable to prior year as increases in premium packaging retail products were more than fset by lower sales or grades; including lower margin special make business. Average net price improved from prior year due to a two percent increase in average selling prices a more favorable product mix. Analysis Operating Income s Ended December 31, 2016, The following table sets forth line items from our csolidated statements operatis as a percentage net sales for periods indicated is intended to provide a perspective trends in our historical results: Ended December 31, Net sales 100.0% 100.0% 100.0% Cost products sold 77.2% 78.0% 79.7% Gross prit 22.8% 22.0% 20.3% Selling, general administrative expenses 9.8% 9.8% 9.3% Integrati costs settlement charges 0.8% 0.7% 0.7% Or (income) expense net 0.1% 0.1% % Operating income 12.1% 11.4% 10.3% Interest expense net 1.2% 1.3% 1.3% Income from ctinuing operatis before income taxes 10.9% 10.1% 9.0% Provisi for income taxes 3.1% 3.3% 0.9% Income from ctinuing operatis 7.8% 6.8% 8.1% Commentary: 2016 versus 2015 Change in Operating Income (Loss) Compared to Prior For s Ended December 31, Change Due To Total Change Volume Net Price (a) Input Costs (b) Currency Or Technical Products $ 65.6 $ 54.1 $ 11.5 $ 9.1 $ (5.5) $ 11.0 $ (0.5) $ (2.6) Fine Paper Packaging (4.1) 10.4 (3.1) Or (1.1) (2.0) Unallocated corporate costs (21.1) (18.0) (3.1) (3.1) Csolidated $ $ $ 12.7 $ 10.0 $ (9.6) $ 21.4 $ (0.5) $ (8.6) (a) Includes price changes, net changes in product mix. (b) Includes price changes for raw materials energy. 30

98 Csolidated operating income $114.1 milli for year ended December 31, 2016 increased $12.7 milli (13%) from prior year. The favorable comparis to prior year was primarily due to lower manufacturing material costs (including purchasing synergies resulting from FiberMark Acquisiti), increased sales as a result incremental volume growth. These favorable variances were partially fset by incremental acquired SG&A, lower net selling prices, higher integrati restructuring costs, primarily due to costs related to Applet filtrati machine cversi a pensi settlement charge. Excluding aggregate charges $7.8 milli in 2016 for integrati restructuring costs pensi settlement losses, aggregate charges $6.5 milli in 2015 for integrati restructuring costs, operating income for year ended December 31, 2016 increased $14.0 milli (13%) from prior year. Operating income for our technical products business increased $11.5 milli (21%) from prior year primarily due to lower manufacturing input costs operatial efficiencies, organic acquired volume growth, lower integrati restructuring costs. These favorable variances were partially fset by added SG&A from acquisiti, lower net selling prices currency effects. Results for years ended December 31, include $1.4 milli $1.8 milli for integrati/restructuring costs, respectively. Excluding integrati/ restructuring costs, operating income for technical products business increased $11.1 milli (20%). Operating income for our fine paper packaging business increased $3.4 milli (5%) from prior year period primarily due to lower manufacturing material prices increased volume, partially fset by a lower-priced mix products sold added SG&A from acquisiti. Results for years ended December 31, include $1.8 milli 1.5 milli for integrati costs related to FiberMark Acquisiti, respectively. Excluding integrati costs, operating income for fine paper packaging business increased $3.7 milli (5%). Unallocated corporate costs for year ended December 31, 2016 were $21.1 milli, or $3.1 milli unfavorable to prior year. The unfavorable comparis to prior year period is primarily due to pre-operating costs related to cversi a fine paper machine to filtrati, which went into producti in early Excluding charges $2.7 milli restructuring costs a pensi plan settlement charge $0.8 milli in 2016, $0.8 milli restructuring costs in 2015, unallocated corporate expenses were $0.4 milli unfavorable to prior year versus 2014 Change in Operating Income (Loss) Compared to Prior Form 10-K For s Ended December 31, Total Change Volume Net Price (a) Change Due To Input Costs (b) Currency Or Technical Products $ 54.1 $ 46.0 $ 8.1 $ 10.8 $ 0.6 $ 4.4 $ (4.9) $ (2.8) Fine Paper Packaging (7.2) (3.5) Or (2.0) (2.0) 0.2 (2.2) Unallocated corporate costs (18.0) (20.2) Csolidated $ $ 86.6 $ 14.8 $ 3.8 $ 9.1 $ 13.1 $ (4.9) $ (6.3) (a) Includes price changes, net changes in product mix. (b) Includes price changes for raw materials energy. Csolidated operating income $101.4 milli for year ended December 31, 2015 increased $14.8 milli (17%) from prior year. The favorable comparis was primarily due to lower manufacturing input costs, higher net price for fine paper packaging business, organic technical products volume growth; partially fset by higher manufacturing costs, increased SG&A, including amounts acquired as part FiberMark Acquisiti; lower fine paper packaging volume unfavorable currency effects. Excluding results FiberMark Acquisiti, currency effects aggregate charges $6.5 milli in 2015 for integrati restructuring costs aggregate charges $6.0 milli in 2014 for integrati restructuring costs, costs related to early extinguishment debt a pensi plan 31

99 settlement charge, operating income for year ended December 31, 2015 increased $18.8 milli (20%) from prior year. Operating income for our technical products business increased $8.1 milli (18%) from prior year primarily due to lower manufacturing input costs, organic volume growth higher selling prices. These favorable variances were partially fset by unfavorable currency exchange effects higher manufacturing costs. Results for years ended December 31, include $1.8 milli $1.6 milli for integrati/restructuring costs, respectively. Excluding incremental volume from FiberMark Acquisiti, unfavorable currency exchange effects acquisiti integrati/restructuring costs, operating income for technical products business increased $11.2 milli (24%). Operating income for our fine paper packaging business increased $6.5 milli (11%) from prior year period primarily due to lower manufacturing input costs principally as a result lower natural gas prices higher net price. Extreme winter wear cditis during first quarter 2014 resulted in a temporary increase in natural gas prices. These favorable variances were partially fset by lower shipment volume higher manufacturing costs. Results for ended December 31, 2015 include $1.5 milli for acquisiti related integrati costs. Excluding incremental volume from FiberMark Acquisiti acquisiti integrati costs, operating income for fine paper packaging business increased $8.8 milli (14%). Unallocated corporate costs for year ended December 31, 2015 were $18.0 milli, or $2.2 milli favorable to prior year. Excluding charges $0.8 milli in 2015 for restructuring costs aggregate charges $4.4 milli in 2014 for a pensi plan settlement charge, restructuring costs costs related to early extinguishment debt, unallocated corporate expenses were $1.4 milli unfavorable to prior year primarily due to increased employee compensati costs. The following table sets forth our operating income by segment for periods indicated: Ended December 31, Operating income Technical Products $ 65.6 $ 54.1 $ 46.0 Fine Paper Packaging Or (1.1) (2.0) Unallocated corporate costs (21.1) (18.0) (20.2) Operating Income as Reported N-GAAP Adjustments Technical Products Acquisiti/integrati/restructuring costs Fine Paper Packaging Acquisiti/integrati costs Or Acquisiti/integrati costs Unallocated corporate costs Pensi plan settlement charge Restructuring costs Loss early extinguishment debt 0.2 Total Total n-gaap Adjustments Operating Income as Adjusted $ $ $ 92.6 In accordance with generally accepted accounting principles in United States ("GAAP"), csolidated operating income includes pre-tax effects integrati restructuring costs, pensi plan settlement charges, loss early extinguishment debt. We believe that by adjusting reported operating income to exclude effects se items, resulting adjusted operating income is a basis that reflects results our going operatis. We believe that 32

100 providing adjusted operating results will help investors gain an additial perspective underlying business trends results. Adjusted operating income is not a recognized term under GAAP should not be csidered in isolati or as a substitute for operating income derived in accordance with GAAP. Or companies may use different methodologies for calculating ir n-gaap financial measures, accordingly, our n-gaap financial measures may not be comparable to ir measures. Additial Statement Operatis Commentary: SG&A expense $92.2 milli for year ended December 31, 2016 was $5.7 milli higher than prior year due to incremental selling administrative costs related to FiberMark Acquisiti. SG&A expense as a percentage net sales for year ended December 31, 2016, was approximately 9.8 percent was comparable to prior year. SG&A expense $86.5 milli for year ended December 31, 2015 was $8.5 milli higher than prior year due to incremental selling administrative costs related to FiberMark Acquisiti. SG&A expense as a percentage net sales for year ended December 31, 2015, was approximately 9.8 percent was 0.5 percentage points higher than prior year as increase in net sales in current year was more than fset by higher SG&A expenses. For years ended December 31, 2016, , we incurred $11.2 milli, $11.7 milli $11.4 milli interest expense, respectively. In general, our effective tax rate differs from U.S. statutory tax rate 35 percent primarily due to impacts our corporate tax structure, benefits from R&D credits earned, mix pre-tax income in jurisdictis with marginal tax rates that differ from U.S. statutory tax rate. For years ended December 31, , our effective income tax rate related to ctinuing operatis was 29 percent 33 percent, respectively. For 2016, adopti ASU , as discussed in Note 2 Notes to Csolidated Financial Statements, "Summary Significant Accounting Policies Recently Adopted Accounting Stards", allowed excess tax benefits from sharebased payments to be shown as a reducti to income tax expense reduced rate for year by 3 percent. For year ended December 31, 2014, our effective income tax rate related to ctinuing operatis was 10 percent included benefit from recognizing R&D credits earned in prior periods. Excluding benefit R&D Credits related to prior year activities, our effective income tax rate for year ended December 31, 2014 would be approximately 33 percent. For a recciliati effective tax rate to U.S. federal statutory tax rate, see Note 6 Notes to Csolidated Financial Statements, "Income Taxes." Form 10-K Liquidity Capital Resources Ended December 31, Net cash flow provided by (used in): Operating activities $ $ $ 94.5 Investing activities: Capital expenditures (68.5) (48.1) (27.9) Acquisitis (118.2) (72.4) Purchase equity investment (2.9) Proceeds sale disctinued operatis 5.4 Or investing activities (1.7) Total (68.2) (160.1) (104.9) Financing activities (48.4) (18.8) 10.2 Effect exchange rate changes cash cash equivalents (0.3) (0.7) (0.6) Net decrease in cash cash equivalents $ (1.1) $ (68.4) $ (0.8) 33

101 Operating Cash Flow Commentary Cash provided by operating activities $115.8 milli for year ended December 31, 2016 was $4.6 milli favorable to cash provided by operating activities $111.2 milli in prior year. The favorable comparis was primarily due to a $12.7 milli increase in operating income benefits higher utilizati federal research development tax credits. These favorable variances were partially fset by higher post-retirement benefit ctributis in current year a decrease $1.8 milli in our investment in working capital in prior year compared to an increase $1.2 milli in our investment in working capital for year ended December 31, Cash provided by operating activities $111.2 milli for year ended December 31, 2015 was $16.7 milli favorable to cash provided by operating activities $94.5 milli in prior year. The favorable comparis was primarily due to a $16.1 milli increase in operating income lower ctributis benefit payments for postretirement benefit obligatis. These favorable variances were partially fset by a decrease $9.0 milli in our investment in working capital in prior year compared to a decrease $1.8 milli in our investment in working capital for year ended December 31, Investing Commentary: For years ended December 31, , cash used by investing activities was $68.2 milli $160.1 milli, respectively. Capital expenditures for year ended December 31, 2016 were $68.5 milli compared to spending $48.1 milli in prior year. In general, we expect aggregate annual capital expenditures approximately 3 to 5 percent net sales. For year ended December 31, 2016, annual capital expenditures were above that range due to incremental investment in filtrati assets in U.S. We expect capital spending in 2017 to return to normal range. We believe that level our capital spending can be more than adequately funded from cash provided from operating activities allows us to maintain efficiency cost effectiveness our assets also invest in exped manufacturing capabilities to successfully pursue strategic initiatives deliver attractive returns. For year ended December 31, 2015, cash used by investing activities includes $118.2 milli for FiberMark Acquisiti. For year ended December 31, 2014, cash used by investing activities includes $72.4 milli for purchase Crane Technical Materials business $2.9 milli for acquisiti a n-ctrolling equity investment in a joint venture in India. For year ended December 31, 2015, we received net cash proceeds $5.4 milli from sale Lahnstein Mill. Capital expenditures for year ended December 31, 2015 were $48.1 milli compared to spending $27.9 milli in prior year. Financing Commentary: Our liquidity requirements are provided by cash generated from operatis short lg-term borrowings. For year ended December 31, 2016, cash used by financing activities was $48.4 milli compared to cash used by financing activities $18.8 milli for prior year. The increase was due to higher net debt repayments, as well as higher share repurchases dividends paid in For year ended December 31, 2015, cash used by financing activities was $18.8 milli compared to cash provided by financing activities $10.2 milli for prior year. The change was due to lower net borrowings, higher share repurchases dividends paid in We have following short- lg-term borrowings: Secured Bank Credit Facility In December 2014, we entered into Third Amended Credit Agreement. The Third Amended Credit Agreement, amg or things: (1) increased maximum principal amount our existing credit facility for U.S. Revolving Credit Facility to $125 milli; (2) established German Revolving Credit Facility in maximum principal amount $75 milli; (3) caused or domestic borrowers to guarantee, amg or things, obligatis arising under German Revolving Credit Facility; (4) provides for Global Revolving Credit Facilities to mature December 18, 2019; (5) provides for an accordi feature permitting e or more increases in Global Revolving Credit Facilities in an aggregate principal amount not exceeding $50 milli, such that aggregate commitments under Global Revolving Credit Facilities do not exceed $250 milli. In additi, domestic borrowers may request letters credit under U.S. Revolving Credit Facility in an aggregate face amount not to 34

102 exceed $20 milli outsting at any time, German borrowers may request letters credit under German Revolving Credit Facility in an aggregate face amount not to exceed $2 milli outsting at any time. See Note 7 Notes to Csolidated Financial Statements, "Debt." Unsecured Senior Notes We have $175 milli 2021 Senior Notes. Proceeds from this fering were used to retire remaining principal amount 2014 Senior Notes, to repay approximately $56 milli in outsting revolver borrowings under our bank credit agreement for general corporate purposes. See Note 7 Notes to Csolidated Financial Statements, "Debt." Or Debt In June 2014, we repaid remaining 3.7 milli ($5.2 milli) in outsting project financing borrowings under German Loan Agreement. The Secd German Loan Agreement provides for 9.0 milli cstructi financing which is secured by melt blown machine. The loan matures in September 2022 principal is repaid in equal quarterly installments. At December 31, 2016, 6.5 milli ($6.8 milli, based exchange rates at December 31, 2016) was outsting under Secd German Loan Agreement. Availability under our revolving credit facility varies over time depending value our inventory, receivables various capital assets. As December 31, 2016, we had $42.9 milli outsting under our Revolver $125.2 milli available credit (based exchange rates at December 31, 2016). We have required debt payments through December 31, 2017 $1.2 milli Secd German Loan Agreement. For year ended December 31, 2016, cash cash equivalents decreased $1.1 milli to $3.1 milli at December 31, 2016 from $4.2 milli at December 31, Total debt decreased $8.5 milli to $220.9 milli at December 31, 2016 from $229.4 milli at December 31, Net debt (total debt minus cash cash equivalents) decreased by $7.4 milli primarily due to cash flow from operatis. As December 31, 2016, our cash balance csists $1.1 milli in U.S. $2.0 milli held at entities outside U.S. As December 31, 2016, re were no restrictis regarding repatriati our n-u.s. cash, we believe, repatriati se cash balances to U.S. would not materially increase our income tax provisi. Form 10-K Transactis with Shareholders For years ended December 31, , we paid cash dividends $1.32 per comm share or $22.4 milli $1.20 per comm share or $20.3 milli, respectively. In November 2016, our Board Directors approved a 12 percent increase in annual dividend rate our comm stock to $1.48 per share. The dividend is scheduled to be paid in four equal quarterly installments beginning in March In May 2016, our Board Directors authorized 2016 Stock Purchase Plan. The 2016 Stock Purchase Plan allows us to repurchase up to $25 milli our outsting Comm Stock through May Purchases under 2016 Stock Purchase Plan will be made from time to time in open market or in privately negotiated transactis in accordance with requirements applicable law. The timing amount any purchases will depend share price, market cditis or factors. The 2016 Stock Purchase Plan does not require us to purchase any specific number shares may be suspended or disctinued at any time. For year ended December 31, 2016, we acquired approximately 185,200 shares Comm Stock at a cost $12.6 milli. For furr details our Stock Purchase Plans refer to Note 10 Notes to Csolidated Financial Statements, "Stockholders' Equity." For years ended December 31, , we acquired approximately 46,000 40,000 Comm Stock, respectively, at a cost $3.8 milli $2.5 milli, respectively, for shares surrendered by employees to pay taxes due vested restricted stock awards stock appreciati rights exercised. In additi, we received $0.4 milli $1.2 milli in proceeds from exercise employee stock optis for years ended December 31, , respectively. 35

103 Under most restrictive terms Third Amended Restated Credit Agreement, we are permitted to pay cash dividends or repurchase shares our comm stock up to amount available under Third Amended Restated Credit Agreement, as lg as availability under Third Amended Restated Credit Agreement exceeds $25 milli. If availability is below $25 milli, we are restricted from paying dividends or repurchasing shares. As December 31, 2016, our availability exceeded $25 milli, so this restricti did not apply. See our availability under Third Amended Restated Credit Agreement in Note 7 Notes to Csolidated Financial Statements, "Debt." Under most restrictive terms 2021 Senior Notes, we are permitted to pay cash dividends up to $25 milli in a calendar year, but not permitted to repurchase shares our comm stock. However, as lg as net leverage ratio (net debt/ebitda) under 2021 Senior Notes is below 2.5x, we can pay dividends or repurchase shares without limitati. In event net leverage ratio exceeds 2.5x, we may still pay dividends in excess $25 milli or repurchase shares by utilizing "restricted payment baskets" as defined in indenture for 2021 Senior Notes. As December 31, 2016, since our leverage ratio was less than 2.5x, ne se covenants were restrictive to our ability to pay dividends or repurchase shares our comm stock. Or Items: As December 31, 2016, we had $48.8 milli state NOLs. Our state NOLs may be used to fset approximately $2.3 milli in state income taxes. If not used, substantially all state NOLs will expire in various amounts between In additi, we had $25.2 milli U.S. federal state R&D Credits which, if not used, will expire between for U.S. federal R&D Credits between for state R&D Credits. As December 31, 2016, we recorded a valuati allowance $3.1 milli against a porti R&D Credits. Management believes that our ability to generate cash from operatis our borrowing capacity are adequate to fund working capital, capital spending or cash needs for next 12 mths. Our ability to generate adequate cash from operatis beyd 2016 will depend, amg or things, our ability to successfully implement our business strategies, ctrol costs in line with market cditis manage impact changes in input prices currencies. We can give no assurance we will be able to successfully implement se items. Ctractual Obligatis The following table presents total ctractual obligatis for which cash flows are fixed or determinable as December 31, 2016: (In millis) Beyd 2021 Total Lg-term debt payments $ 1.2 $ 1.2 $ 44.1 $ 1.2 $ $ 0.8 $ Interest payments lg-term debt (a) Open purchase orders (b) Or post-employment benefit obligatis (c) Ctributis to pensi trusts Minimum purchase commitments (d) Operating leases Total ctractual obligatis $ $ 19.8 $ 60.9 $ 15.6 $ $ 21.7 $ (a) Interest payments lg-term debt includes interest variable rate debt at December 31, 2016 weighted average interest rates. 36

104 (b) The open purchase orders displayed in table represent amounts we anticipate will become payable within next 12 mths for goods services that we have negotiated for delivery. (c) The above table includes future payments that we will make for postretirement benefits or than pensis. Those amounts are estimated using actuarial assumptis, including expected future service, to project future obligatis. (d) The minimum purchase commitments in 2017 are primarily for coal corn starch ctracts. Although we are primarily liable for payments above operating leases minimum purchase commitments, based historic operating performance forecasted future cash flows, we believe our exposure to losses, if any, under se arrangements is not material. Adopti New Accounting Prouncements See Note 2 Notes to Csolidated Financial Statements, "Summary Significant Accounting Policies Recently Adopted Accounting Stards" for a descripti accounting stards adopted in year ended December 31, Critical Accounting Policies Use Estimates The preparati financial statements in cformity with GAAP in United States requires estimates assumptis that affect reported amounts related disclosures assets liabilities at date financial statements net sales expenses during reporting period. Actual results could differ from se estimates, changes in se estimates are recorded when known. The critical accounting policies used in preparati csolidated financial statements are those that are important both to presentati financial cditi results operatis require significant judgments with regard to estimates used. These critical judgments relate to reported amounts assets liabilities, disclosure ctingent assets liabilities, reported amounts expenses. The following summary provides furr informati about critical accounting policies should be read in cjuncti with notes to csolidated financial statements. We believe that csistent applicati our policies provides readers our financial statements with useful reliable informati about our operating results financial cditi. We have discussed applicati se critical accounting policies with our Board Directors Audit Committee. Form 10-K Inventories We value U.S. inventories at lower cost, using Last-In, First-Out ("LIFO") method, or market. German inventories are valued at lower cost, using a weighted-average cost method, or market. The First-In, First-Out value U.S. inventories valued LIFO method was $106.8 milli $118.2 milli at December 31, , respectively exceeded such LIFO value by $8.2 milli $10.0 milli, respectively. Cost includes labor, materials producti overhead. Under LIFO inventory valuati method, changes in cost raw materials producti activities are recognized in cost sales in current period even though se materials or costs may have been incurred at significantly different values due to length time our producti cycle. Since we value most our inventory utilizing LIFO inventory costing methodology, rapid changes in raw material costs have an impact our operating results. Income Taxes Significant judgment is required in determining our worldwide provisi for income taxes recording related assets liabilities. In ordinary course our business, re are many transactis calculatis where ultimate tax determinati is less than certain. Our effective income tax rates include tax effects certain special items such as foreign tax rate differences, inter-company financing structures, research development credits, domestic producti activities. While we believe that se judgments estimates are appropriate reasable under circumstances, actual resoluti se matters may differ from recorded estimated amounts. As December 31, 2016, we have recorded aggregate deferred income tax assets $6.1 milli related to temporary differences, net operating losses research development or tax credits. As December 31, 2015, our aggregate deferred income tax assets were $20.0 milli. As December 31, , we recorded a valuati allowance $3.1 milli $2.9 milli, respectively, against a porti our R&D Credits. In determining need for a valuati allowance, we csider many factors, including specific taxing jurisdictis, sources taxable income, income 37

105 tax strategies forecasted earnings for entities in each jurisdicti. A valuati allowance would be recognized if, based weight available evidence, we cclude that it is more likely than not that some porti or all deferred income tax assets will not be realized. As December 31, , our liability for uncertain income taxes positis was $10.3 milli $12.9 milli, respectively. In evaluating estimating tax positis tax benefits, we csider many factors which may result in periodic adjustments which may not accurately anticipate actual outcomes. Pensi Or Postretirement Benefits Csolidated pensi expense related to ctinuing operatis for defined benefit pensi plans was $9.5 milli, $6.5 milli $10.8 milli for years ended December 31, 2016, , respectively. Accounting for defined benefit pensi plans requires various assumptis, including, but not limited to, discount rates, expected lg-term rates return plan assets, future compensati growth rates mortality rates. Accounting for our postretirement benefit plans also requires various assumptis, which include, but are not limited to, discount rates annual rates increase in per capita costs health care benefits. The following chart summarizes more significant assumptis used in actuarial valuati our defined benefit plans for each past three years: Pensi plans Weighted average discount rate for benefit expense 4.54% 3.91% 4.88% Weighted average discount rate for benefit obligati 4.16% 4.54% 3.91% Expected lg-term rate plan assets 6.20% 6.50% 6.50% Rate compensati increase 2.18% 2.92% 2.96% Postretirement benefit plans Weighted average discount rate for benefit expense 4.07% 4.05% 4.84% Weighted average discount rate for benefit obligati 3.69% 4.07% 4.05% Health care cost trend rate assumed for next year 7.00% 7.30% 7.00% Ultimate cost trend rate 4.50% 4.50% 4.50% that ultimate cost trend rate is reached The expected lg-term rate return pensi fund assets held by our pensi trusts was determined based several factors, including input from pensi investment csultants projected lg-term returns broad equity bd indices. We also csidered plans' historical 10-year 15-year compounded annual returns. We evaluate our investment strategy lg-term rate return pensi asset assumptis at least annually. The discount (or settlement) rate that is utilized for determining present value future pensi obligatis in U.S. is generally based yield for a oretical basket AA-rated corporate bds currently available in market place, whose durati matches timing expected pensi benefit payments. The discount (or settlement) rate that is utilized for determining present value future pensi obligatis in Germany is generally based IBOXX index AArated corporate bds adjusted to match timing expected pensi benefit payments. For years ended December 31, 2016, , csolidated postretirement health care life insurance plan benefit expense was $3.3 milli, $3.4 milli $3.8 milli, respectively. The discount (or settlement) rate that is utilized for determining present value future postretirement health care life insurance plan benefit obligatis in U.S. is generally based yield for a oretical basket AA-rated corporate bds currently available in market place, whose durati matches timing expected postretirement health care life insurance benefit payments. The discount (or settlement) rate that is utilized for determining present value future postretirement health care life insurance obligatis for our foreign benefit plans is generally based an index AA-rated corporate bds adjusted to match timing expected benefit payments. We evaluate se assumptis at least ce each year or as facts circumstances dictate we make changes as cditis warrant. Changes to se assumptis will increase or decrease our reported net periodic benefit expense, which will result in changes to recorded benefit plan assets liabilities. 38

106 Useful Life Impairment Lg-Lived Assets Property, Plant Equipment For financial reporting purposes, depreciati is principally computed straight-line method over estimated useful asset lives. The weighted average remaining useful lives for buildings, l improvements machinery equipment are approximately 18 years, 13 years 10 years, respectively. We also use units--producti method depreciati for $68.6 milli producti assets, which reflects nature assets' utilizati. Property, plant equipment are tested for impairment in accordance with ASC Topic 360, Property, Plant, Equipment("ASC Topic 360"), whenever events or changes in circumstances indicate that carrying amounts such lg-lived assets may not be recoverable from future net pre-tax cash flows. Impairment testing requires significant management judgment including estimating future success product lines, future sales volumes, growth rates for selling prices costs, alternative uses for assets estimated proceeds from disposal assets. Impairment testing is cducted at lowest level where cash flows can be measured are independent cash flows or assets. An asset impairment would be indicated if sum expected future net pre-tax cash flows from use asset (undiscounted without interest charges) is less than carrying amount asset. An impairment loss would be measured based difference between fair value asset its carrying amount. We determine fair value based an expected present value technique using multiple cash flow scenarios that reflect a range possible outcomes a risk free rate interest are used to estimate fair value. The estimates assumptis used in impairment analysis are csistent with business plans estimates we use to manage our business operatis. The use different assumptis would increase or decrease estimated fair value asset would increase or decrease impairment charge. Actual outcomes may differ from estimates. Goodwill Or Intangible Assets with Indefinite Lives We test goodwill for impairment at least annually November 30 in cjuncti with preparati 's annual business plan, or more frequently if events or circumstances indicate it might be impaired. We tested goodwill for impairment as November 30, We elected opti under ASC Topic 350, Intangibles Goodwill Or, to perform a qualitative assessment our reporting units to determine wher furr impairment testing is necessary. In this qualitative assessment, we csidered following items for each reporting units: macroecomic cditis, industry market cditis, overall financial performance or entity specific events. In additi, for each se reporting units, most recent fair value determinati results in an amount that exceeds carrying amount reporting units. Based se assessments, we determined that likelihood that a current fair value determinati would be less than current carrying amount reporting unit is not more likely than not. As November 30, 2016 no impairment was indicated. Form 10-K Or Intangible Assets Certain trade names are estimated to have indefinite useful lives as such are not amortized. Intangible assets with indefinite lives are annually reviewed for impairment in accordance with ASC Topic 350. Acquired intangible assets with finite useful lives are amortized a straight-line basis over ir respective estimated useful lives, reviewed for impairment in accordance with ASC Topic 360. Intangible assets csist primarily customer relatiships, trade names acquired intellectual property. Such intangible assets are amortized using straight-line method over estimated useful lives between years. Our annual test or intangible assets for impairment at November 30, 2016, indicated that carrying amount such assets was recoverable. Acquisiti Accounting We account for acquisitis under ASC Topic 805, which requires companies to record assets acquired liabilities assumed at ir respective fair market values at date acquisiti. The accounting for acquisitis involves a csiderable amount judgment estimate, including fair value certain forms csiderati; fair value acquired intangible assets involving projectis future revenues cash flows that are n eir discounted at an estimated discount rate or measured at an estimated royalty rate; fair value or acquired assets assumed liabilities, including potential ctingencies; useful lives acquired assets. The assumptis used are determined at 39

107 time acquisiti in accordance with accepted valuati models. Projectis are developed using internal forecasts, available industry market data estimates lg-term rates growth for our business. The impact prior or future acquisitis our financial positi or results operatis may be materially impacted by change in or initial selecti assumptis estimates. Refer to Note 4, Acquisitis, Notes to Csolidated Financial Statements included elsewhere in this Annual Report for furr discussi business combinati accounting valuati methodology assumptis. Item 7A. Quantitative Qualitative Disclosures About Market Risk As a multinatial enterprise, we are exposed to risks such as changes in commodity prices, foreign currency exchange rates, interest rates envirmental regulati. A variety practices are employed to manage se risks, including operating financing activities, where deemed appropriate, use derivative instruments. Derivative instruments are used ly for risk management purposes not for speculati or trading. Presented below is a descripti our most significant risks. Foreign Currency Risk Our reported operating results are affected by changes in exchange rates local currencies our n-u.s. operatis relative to U.S. dollar. For year ended December 31, 2016, a hypotical 10 percent strengning U.S dollar relative to local currencies our n-u.s. operatis would have decreased our income before income taxes by approximately $3.3 milli. We do not hedge our exposure to exchange risk reported operating results. The translati balance sheets our n-u.s. operatis from ir local currencies into U.S. dollars is also sensitive to changes in exchange rate U.S. dollar. Csequently, we performed a sensitivity test to determine if changes in exchange rate would have a significant effect translati balance sheets our n-u.s. operatis into U.S. dollars. These translati gains or losses are recorded as unrealized translati adjustments ("UTA", a compent accumulated or comprehensive income) within stockholders' equity. The hypotical change in UTA is calculated by multiplying net assets our n-u.s. operatis by a 10 percent change in exchange rate ir local currencies compared to U.S. dollar. As December 31, 2016, net assets our n-u.s. operatis exceeded ir net liabilities by approximately $113 milli. As December 31, 2016, a 10 percent strengning U.S. dollar relative to local currencies our n-u.s. operatis would have decreased our stockholders' equity by approximately $12 milli. Commodity Risk Pulp We purchase wood pulp used to produce our products open market,, as a result, price or terms those purchases are subject to change based factors such as worldwide supply dem government regulati. We do not have significant influence over price paid for our wood pulp purchases. Therefore, an increase in wood pulp prices could occur at same time that prices for our products are decreasing have an adverse effect our results operatis, financial positi cash flows. Based 2016 pulp purchases, a $100 per t increase in average market price for pulp would have increased our annual costs for pulp purchases by approximately $23 milli. Or Manufacturing Inputs We purchase a substantial porti or manufacturing inputs necessary to produce our products open market,, as a result, price or terms those purchases are subject to change based factors such as worldwide supply dem government regulati. We do not have significant influence over our costs for such manufacturing inputs. Therefore, an increase in or manufacturing inputs could occur at same time that prices for our products are decreasing have an adverse effect our results operatis, financial positi cash flows. Our technical products business acquires certain its specialized pulp requirements from two global suppliers certain critical specialty latex grades from four suppliers. In general, se supply arrangements are not covered by formal 40

108 ctracts, but represent multi-year business relatiships that have historically been sufficient to meet our needs. We expect se relatiships to ctinue to operate in a satisfactory manner in future. In event an interrupti producti at any e supplier, we believe that each se suppliers individually would be able to satisfy our short-term requirements for specialized pulp or specialty latex. In event a lg-term disrupti in our supply specialized pulp or specialty latex, we believe we would be able to substitute or pulp grades or or latex grades that would allow us to meet required product performance characteristics incur ly a limited disrupti in our producti. As a result, we do not believe that substituti such alternative pulp or latex grades would have a material effect our operatis. We generate substantially all electrical energy used by our Munising mill approximately 25 percent electrical energy at our Applet Bruckmühl mills. Availability energy is not expected to be a problem in foreseeable future, but purchase price such energy can likely will fluctuate significantly based fluctuatis in dem or factors. There is no assurance that that we will be able to obtain electricity or natural gas purchases favorable terms in future. Except for certain specialty latex grades specialty stwood pulp used by our technical products business, we are not aware any significant ccentrati business transacted with a particular supplier. Interest Rate Risk We are exposed to interest rate risk our variable rate bank debt. At December 31, 2016, we had $42.9 milli variable rate borrowings outsting. A 100 basis point increase in interest rates would increase our annual interest expense outsting variable rate borrowings by approximately $0.4 milli. Envirmental Regulati/Climate Change Legislati Our manufacturing operatis are subject to extensive regulati primarily by U.S., German or internatial authorities. We have made significant capital expenditures to comply with envirmental laws, rules regulatis. Due to changes in envirmental laws regulatis, including potential future legislati to limit GHG emissis, applicati such regulatis changes in envirmental ctrol technology, we are not able to predict with certainty amount future capital spending to be incurred for envirmental purposes. Taking se uncertainties into account, we have planned capital expenditures for envirmental projects during period 2017 through 2018 approximately $1 milli to $2 milli annually. We believe se risks can be managed will not have a material effect our business or our csolidated financial positi, results operatis or cash flows. Form 10-K Item 8. Financial Statements Supplementary Data The informati required in Item 8 is ctained in incorporated herein by reference from pages F-1 through F-5 this Annual Report Form 10-K. Item 9. Changes in Disagreements with Accountants Accounting Financial Disclosure Ne. 41

109 Item 9A. Ctrols Procedures Cclusi Regarding Effectiveness Disclosure Ctrols Procedures Our management, with participati its Chief Executive Officer Chief Financial Officer, has evaluated effectiveness Company's disclosure ctrols procedures (as such term is defined in Rules 13a-15(e) 15d-15 (e) under Securities Exchange Act 1934, as amended ( Exchange Act)) as end period covered by this report. Based such evaluati, our Chief Executive Officer Chief Financial Officer have ccluded that, as end such period, Company's disclosure ctrols procedures are effective in recording, processing, summarizing reporting, a timely basis, informati required to be disclosed by us in reports that we file or submit under Exchange Act are effective in ensuring that informati required to be disclosed by us in reports that we file or submit under Exchange Act is accumulated communicated to our management, including our Chief Executive Officer Chief Financial Officer, as appropriate to allow timely decisis regarding required disclosure. Management's Annual Report Internal Ctrol Over Financial Reporting Our management is respsible for establishing maintaining effective internal ctrol over financial reporting as defined in Rules 13a-15(f) or 15a-15(f) under Securities Exchange Act The Company's internal ctrol over financial reporting is designed to provide reasable assurance to our management board directors regarding preparati fair presentati published financial statements. Because its inherent limitatis, internal ctrol over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide ly reasable assurance with respect to financial statement preparati presentati. Management assessed effectiveness Company's internal ctrol over financial reporting as December 31, In making this assessment, management used criteria set forth by Committee Spsoring Organizatis Treadway Commissi (COSO) in Internal Ctrol Integrated Framework (2013). Based up its assessment, management believes that as December 31, 2016, Company's internal ctrols over financial reporting were effective. The effectiveness internal ctrol over financial reporting as December 31, 2016, has been audited by Deloitte & Touche LLP, independent registered public accounting firm who also audited our csolidated financial statements. Deloitte & Touche's attestati report Company's internal ctrol over financial reporting is included herein. See "Item 15, Exhibits Financial Statement Schedule." Inc February 24, 2017 Changes in Internal Ctrol Over Financial Reporting There has been no significant change in Company's internal ctrol over financial reporting during three mths ended December 31, 2016 that has materially affected, or is reasably likely to materially affect, Company's internal ctrol over financial reporting. Item 9B. Or Informati Ne. 42

110 PART III Item 10. Directors Executive Officers Registrant The informati required to be set forth herein, except for informati included under Executive Officers Company, relating to nominees for director compliance with Secti 16(a) Securities Exchange Act 1934 is set forth under captis "Electi Directors", "Meetings Committees Board Directors", "Corporate Governance" "Secti 16(a) Beneficial Ownership Reporting Compliance", respectively, in Proxy Statement for Annual Meeting Stockholders to be held May 23, Such informati is incorporated herein by reference. The definitive Proxy Statement will be filed with Securities Exchange Commissi no later than 120 days after December 31, Executive Officers Company Set forth below is informati ccerning our executive ficers. Name Positi John P. O'Dnell President, Chief Executive Officer Director Matw L. Duncan Senior Vice President, Chief Human Resource Officer Steven S. Heinrichs Senior Vice President, General Counsel Secretary Bnie C. Lind Senior Vice President, Chief Financial Officer Treasurer James R. Piedmte Senior Vice President Operatis Julie A. Schertell Senior Vice President President, Fine Paper Packaging Armin S. Schwinn Senior Vice President Managing Director Germany Larry N. Brownlee Vice President Ctroller Principal Accounting Officer John P. O'Dnell, born in 1960, is our President Chief Executive Officer serves as a Director. He has been in that role since May Prior to becoming President Chief Executive Office, Mr. O'Dnell served as our Senior Vice President, Chief Operating Officer since June In November 2007, Mr. O'Dnell joined as President, Fine Paper. Mr. O'Dnell was employed by Georgia-Pacific Corporati from 1985 until 2007 held increasingly senior roles in Csumer Products divisi. Mr. O'Dnell served as President North America Retail Business from 2004 through 2007, as President North American Commercial Tissue business from 2002 through Form 10-K Matw L. Duncan, born in 1973, is our Senior Vice President, Chief Human Resources Officer has been in that role since joining in March Prior to his employment with, Mr. Duncan served as Vice President Human Resources for Coca-Cola Refreshments, North American operating unit The Coca-Cola Company. Before joining The Coca-Cola Company in 2008, Mr. Duncan served in a variety Human Resource leadership roles with The Home Depot Nestle. Steven S. Heinrichs, born in 1968, is our Senior Vice President, General Counsel Secretary has been in that role since June 2004 when he joined Kimberly-Clark as Chief Counsel, Pulp Paper General Counsel for Prior to his employment with Kimberly-Clark, Mr. Heinrichs served as Associate General Counsel Assistant Secretary for Mariner Health Care, a nursing home lg-term acute care hospital company. Before joining Mariner Health Care in 2003, Mr. Heinrichs served as Associate General Counsel Assistant Secretary for American Commercial Lines LLC, a leading inl barge shipbuilding company from 1998 through Mr. Heinrichs engaged in private practice law with Skadden, Arps, Slate, Meagher Flom LLP Shuttleworth, Smith, McNabb Williams PLLC from 1994 through Mr. Heinrichs received his MBA from Kellogg School Management at Northwestern University in Bnie C. Lind, born in 1958, is our Senior Vice President, Chief Financial Officer Treasurer has been in that role since June Ms. Lind was an employee Kimberly-Clark from 1982 until 2004, holding a variety increasingly senior financial operatis positis. From 1999 until June 2004, Ms. Lind served as Assistant Treasurer Kimberly-Clark was respsible for managing Kimberly-Clark's global treasury operatis. Prior to that, she was 43

111 Director Kimfibers with overall respsibility for sourcing distributi pulp to Kimberly-Clark's global operatis. James R. Piedmte, born in 1956, is our Senior Vice President Operatis has been in that role since June Mr. Piedmte had been employed by Kimberly-Clark from 1978 until 2004, held increasingly senior positis within Kimberly-Clark's operatis functi. Mr. Piedmte was respsible for Kimberly-Clark's pulp mill forestry operatis in Pictou, Nova Scotia, from 2001 until Previously he was Director Operatis for fine paper business operatis, as well as mill manager at Whiting, Wiscsin mill. Julie A. Schertell, born in 1969, is our Senior Vice President President, Fine Paper Packaging has been in that role since January Ms. Schertell joined in 2008 served as Vice President Sales Marketing for Fine Paper divisi through December 2010 as a Senior Vice President President, Fine Paper through December Ms. Schertell was employed by Georgia-Pacific Corporati in Csumer Products Retail divisi, where she served as Vice President Sales Strategy from , as Vice President Customer Solutis from 2003 through Armin S. Schwinn, born in 1959, has been our Senior Vice President Managing Director Germany since April 2010, he is respsible for our filtrati operating unit. Mr. Schwinn had been Vice President, Finance Germany since our acquisiti FiberMark Germany in October Mr. Schwinn joined FiberMark Germany in 1995 held increasingly senior positis within FiberMark Germany's financial, purchasing administrative functis. Prior to this, Mr. Schwinn served in various leadership positis in or German manufacturing service companies. Larry N. Brownlee, born in 1956, is our Vice President Ctroller Principal Accounting Officer has been in that role since July From 1990 to 2004, Mr. Brownlee served as Ctroller several public companies in electric utility, telephe healthcare industries. From 1979 to 1990, Mr. Brownlee was with Arthur Andersen & Co. provided audit services to clients primarily in manufacturing, utility healthcare industries. Mr. Brownlee received his Masters Accountancy from University Georgia in There are no family relatiships amg our directors or executive ficers. Code Ethics The Code Business Cduct Ethics, applies to all directors, ficers employees. The Code Business Cduct Ethics meets requirements a "code ethics" as defined by Item 406 Regulati S-K, applies to our Chief Executive Officer, Chief Financial Officer (our principal financial ficer) Vice President Ctroller (our principal accounting ficer), as well as all or employees, as indicated above. The Code Business Cduct Ethics also meets requirements a code cduct under New York Stock Exchange listing stards. The Code Business Cduct Ethics is posted our web site at under links "Investor Relatis Corporate Governance Code Ethics" print copies are available up request without charge. You can request print copies by ctacting our General Counsel in writing at 3460 Prest Ridge Road, Suite 600, Alpharetta, Georgia or by telephe at We intend to disclose any amendments to Code Business Cduct Ethics, as well as any waivers for executive ficers or directors, our web site at Informati our web site is not incorporated by reference in this document. Item 11. Executive Compensati Informati relating to executive compensati or matters is set forth under captis "Compensati, Discussi Analysis", "Additial Executive Compensati", "Director Compensati", "Compensati Committee Report" in Proxy Statement referred to in Item 10 above. Such informati is incorporated herein by reference. Item 12. Security Ownership Certain Beneficial Owners Management Informati relating to ownership comm stock by certain perss is set forth under capti "Security Ownership Certain Beneficial Owners Management" in Proxy Statement referred to in Item 10 above. Such informati is incorporated herein by reference. Informati regarding securities authorized for issuance under equity compensati plans is set forth under capti "Equity Compensati Plan Informati" in Proxy Statement referred to in Item 10 above. Such informati is incorporated herein by reference. 44

112 Item 13. Certain Relatiships Related Transactis Director Independence Informati relating to existing or proposed relatiships or transactis between any affiliate is set forth under capti "Certain Relatiships Related Transactis" in Proxy Statement referred to in Item 10 above. Such informati is incorporated herein by reference. Item 14. Principal Accountant Fees Services Informati relating to 's principal accounting fees services is set forth under capti "Independent Registered Public Accounting Firm Fees Services" in Proxy Statement referred to in Item 10 above. Such informati is incorporated herein by reference. Form 10-K 45

113 PART IV Item 15. Exhibits Financial Statement Schedule (a) Documents filed as part this report: 1. Csolidated Financial Statements The following reports financial statements are filed herewith pages indicated: Report Independent Registered Public Accounting Firm Internal Ctrol over Financial Reporting Report Independent Registered Public Accounting Firm Csolidated Statements Operatis Csolidated Statements Or Comprehensive Income Csolidated Balance Sheets Csolidated Statements Changes in Stockholders' Equity Csolidated Statements Cash Flows Notes to Csolidated Financial Statements Page F-2 F-3 F-4 F-5 F-6 F-7 F-8 F-9 2. Financial Statement schedule The following schedule is filed herewith: Schedule II Valuati Qualifying Accounts F-52 All or schedules for which provisi is made in applicable accounting regulatis Securities Exchange Commissi are not required under related instructis or are inapplicable, refore, have been omitted. 3. Exhibits See (b) below (b) Exhibits The following exhibits are filed with or incorporated by reference in this report. Where such filing is made by incorporati by reference to a previously filed registrati statement or report, such registrati statement or report is identified in parenses. We will furnish any exhibit at no cost up written request to us at: Investor Relatis, 3460 Prest Ridge Road, Suite 600, Alpharetta, Georgia Exhibit Number Exhibit 2.1 Interest Purchase Agreement by amg ASP FiberMark Holdings, LLC, ASP FiberMark, LLC, FMK Holdings, LLC dated as July 16, 2015 (filed as Exhibit 2.1 to Quarterly Report Form 10-Q for three mths ended September 30, 2015, filed November 9, 2015 incorporated herein by reference). 2.2 Asset Purchase Agreement, by amg Wausau Paper Corp. Wausau Paper Mills, LLC, dated as December 7, 2011 (filed as Exhibit 2.1 to Current Report Form 8-K filed January 31, 2012 incorporated herein by reference). 46

114 Exhibit Number Exhibit 2.30 Securities Purchase Agreement by amg Crane Technical Materials, Crane & Co., Filtrati, LLC dated as June 2, 2014 (filed as Exhibit 2.1 to Quarterly Report Form 10-Q for three mths ended June 30, 2014, filed August 7, 2014) (cfidential treatment has been granted for certain portis this exhibit pursuant to a Cfidential Treatment Request filed with Securities Exchange Commissi). 3.1 Amended Restated Certificate Incorporati (filed as Exhibit 3.1 to Current Report Form 8-K filed November 30, 2004 incorporated herein by reference). 3.2 Amended Restated Bylaws (filed as Exhibit 3.2 to Current Report Form 8-K filed November 30, 2004 incorporated herein by reference). 4.1 Indenture dated as May 23, 2013, by amg Company, Guarantors named rein, 2021 Notes Trustee filed as Exhibit 4.1 to Current Report Form 8-K, filed May 24, 2013 incorporated herein by reference). 4.2 Form Notati Subsidiary Guarantee (included as Exhibit E to Exhibit 4.1) Tax Sharing Agreement dated as November 30, 2004 by between Kimberly-Clark Corporati (filed as Exhibit 10.2 to Current Report Form 8-K filed November 30, 2004 incorporated herein by reference) Lease Agreement dated June 29, 2004 between Germania Property Investors XXXIV, L.P. (filed as Exhibit 10.3 to Current Report Form 8-K filed November 30, 2004 incorporated herein by reference). 10.3* Paper Supplemental Pensi Plan (filed as Exhibit 10.5 to Annual Report Form 10-K for year ended December 31, 2012, filed March 7, 2013 incorporated herein by reference). 10.4* First Amendment to Paper Supplemental Pensi Plan (filed as Exhibit to Annual Report Form 10-K for year ended December 31, 2013, filed March 4, 2014 incorporated herein by reference). 10.5* Paper Amended Restated Supplemental Retirement Ctributi Plan, effective as January 1, 2016 (filed herewith). 10.6* Paper Executive Severance Plan (filed as Exhibit 10.7 to Annual Report Form 10-K for year ended December 31, 2012, filed March 7, 2013 incorporated herein by reference). Form 10-K 10.7* First Amendment to Paper Executive Severance Plan (filed as Exhibit to Annual Report Form 10-K for year ended December 31, 2013, filed March 4, 2014 incorporated herein by reference). 10.8* Amended Restated 2004 Omnibus Stock Incentive Compensati Plan (filed as Annex A to Definitive Proxy Statement Schedule 14A for year ended December 31, 2013, filed April 12, 2013 incorporated herein by reference). 10.9* Paper Deferred Compensati Plan approved December 11, 2006 (filed as Exhibit to Annual Report Form 10-K for year ended December 31, 2012, filed March 7, 2013 incorporated herein by reference) * Paper Directors' Deferred Compensati Plan approved December 11, (filed as Exhibit 10.7 to Annual Report Form 10-K for year ended December 31, 2012, filed March 7, 2013 incorporated herein by reference) Third Amended Restated Credit Agreement dated December 18, 2014 by amg certain its subsidiaries, lenders listed rein JPMorgan Chase Bank, N.A., as agent for Lenders (filed as Exhibit to Annual Report Form 10-K for year ended December 31, 2014, filed February 27, 2015 incorporated herein by reference) (cfidential treatment has been granted for certain portis this exhibit pursuant to a Cfidential Treatment Request filed with Securities Exchange Commissi) First Amendment, dated as July 28, 2016, to Third Amended Restated Credit Agreement dated December 18, 2014 by amg certain its subsidiaries, lenders listed rein JPMorgan Chase Bank, N.A., as agent for Lenders (filed as Exhibit 99.1 to Current Report Form 8-K, filed August 2, 2016 incorporated herein by reference) Secd Amendment, dated as December 13, 2016, to Third Amended Restated Credit Agreement dated December 18, 2014 by amg certain its subsidiaries, lenders listed rein JPMorgan Chase Bank, N.A., as agent for Lenders (filed as Exhibit 99.1 to Current Report Form 8-K, filed December 16, 2016 incorporated herein by reference). 47

115 Exhibit Number Exhibit 10.14* Form Performance Share Award as 2017 (filed as Exhibit 10.1 to Current Report Form 8-K filed February 3, 2017 incorporated by reference herein). 12 Statement Regarding Computati Ratio Earnings to Fixed Charges (filed herewith) 21 List Subsidiaries (filed herewith). 23 Csent Deloitte & Touche LLP (filed herewith) 24 Power Attorney (filed herewith) 31.1 Certificati Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) Securities Exchange Act 1934, as amended ( "Exchange Act") (filed herewith) Certificati Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) Exchange Act (filed herewith) Certificati Chief Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) Exchange Act Secti 1350 Chapter 63 Title 18 United States Code (filed herewith) Certificati Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) Exchange Act Secti 1350 Chapter 63 Title 18 United States Code (filed herewith). 101.INS XBRL Instance Document (filed herewith). 101.SC XBRL Taxomy Extensi Schema Document (filed herewith). H 101.CA XBRL Taxomy Extensi Calculati Linkbase Document (filed herewith). L 101.DE XBRL Taxomy Extensi Definiti Linkbase Document (filed herewith). F 101.LA XBRL Taxomy Extensi Label Linkbase Document (filed herewith). B 101.PRE XBRL Taxomy Extensi Presentati Linkbase Document (filed herewith). * Indicates management ctract or compensatory plan or arrangement. + Pursuant to a cfidential treatment request portis this exhibit have been furnished separately to Securities Exchange Commissi. (c) Financial Statement Schedule See Item 15(a) (2) above Item 16. Form 10-K Summary Ne. 48

116 SIGNATURES Pursuant to requirements Secti 13 or 15(d) Securities Exchange Act 1934, registrant has duly caused this report to be signed its behalf by undersigned, reunto duly authorized. NEENAH PAPER, INC. By: /s/ JOHN P. O'DONNELL Name: John P. O'Dnell Title: President, Chief Executive Officer Director (in his capacity as a duly authorized ficer Registrant in his capacity as Chief Executive Officer) Date: February 24, 2017 Pursuant to requirements Securities Exchange Act 1934, this report has been signed below by following perss behalf registrant in capacities dates indicated. *By: /s/ JOHN P. O'DONNELL President, Chief Executive Officer John P. O'Dnell Director (Principal Executive Officer) February 24, 2017 /s/ BONNIE C. LIND Senior Vice President, Chief Financial Bnie C. Lind Officer Treasurer (Principal Financial Officer) February 24, 2017 /s/ LARRY N. BROWNLEE Vice President Ctroller (Principal Larry N. Brownlee Accounting Officer) February 24, 2017 /s/ SEAN T. ERWIN* Chairman Board Director Sean T. Erwin February 24, 2017 /s/ WILLIAM M. COOK* Director William M. Cook February 24, 2017 /s/ MARGARET S. DANO* Director Margaret S. Dano February 24, 2017 /s/ TIMOTHY S. LUCAS* Director Timothy S. Lucas February 24, 2017 /s/ JOHN F. MCGOVERN* Director John F. McGovern February 24, 2017 /s/ PHILIP C. MOORE* Director Philip C. Moore February 24, 2017 /s/ STEPHEN M. WOOD* Director Stephen M. Wood February 24, 2017 /s/ STEVEN S. HEINRICHS Steven S. Heinrichs Senior Vice President, General Counsel Secretary Attorney-in-fact Form 10-K 49

117 (This page has been left blank intentially.)

118 TABLE OF CONTENTS Report Independent Registered Public Accounting Firm Internal Ctrol over Financial Reporting Report Independent Registered Public Accounting Firm Csolidated Statements Operatis Csolidated Statements Or Comprehensive Income Csolidated Balance Sheets Csolidated Statements Changes in Stockholders' Equity Csolidated Statements Cash Flows Notes to Csolidated Financial Statements Page F-2 F-3 F-4 F-5 F-6 F-7 F-8 F-9 Form 10-K

119 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To Board Directors Stockholders Alpharetta, Georgia We have audited internal ctrol over financial reporting subsidiaries ( Company ) as December 31, 2016 based criteria established in Internal Ctrol Integrated Framework (2013) issued by Committee Spsoring Organizatis Treadway Commissi. The Company s management is respsible for maintaining effective internal ctrol over financial reporting for its assessment effectiveness internal ctrol over financial reporting, included in accompanying Management s Annual Report Internal Ctrol Over Financial Reporting. Our respsibility is to express an opini Company s internal ctrol over financial reporting based our audit. We cducted our audit in accordance with stards Public Company Accounting Oversight Board (United States). Those stards require that we plan perform audit to obtain reasable assurance about wher effective internal ctrol over financial reporting was maintained in all material respects. Our audit included obtaining an understing internal ctrol over financial reporting, assessing risk that a material weakness exists, testing evaluating design operating effectiveness internal ctrol based assessed risk, performing such or procedures as we csidered necessary in circumstances. We believe that our audit provides a reasable basis for our opini. A company s internal ctrol over financial reporting is a process designed by, or under supervisi, company s principal executive principal financial ficers, or perss performing similar functis, effected by company s board directors, management, or persnel to provide reasable assurance regarding reliability financial reporting preparati financial statements for external purposes in accordance with generally accepted accounting principles. A company s internal ctrol over financial reporting includes those policies procedures that (1) pertain to maintenance records that, in reasable detail, accurately fairly reflect transactis dispositis assets company; (2) provide reasable assurance that transactis are recorded as necessary to permit preparati financial statements in accordance with generally accepted accounting principles, that receipts expenditures company are being made ly in accordance with authorizatis management directors company; (3) provide reasable assurance regarding preventi or timely detecti unauthorized acquisiti, use, or dispositi company s assets that could have a material effect financial statements. Because inherent limitatis internal ctrol over financial reporting, including possibility collusi or improper management override ctrols, material misstatements due to error or fraud may not be prevented or detected a timely basis. Also, projectis any evaluati effectiveness internal ctrol over financial reporting to future periods are subject to risk that ctrols may become inadequate because changes in cditis, or that degree compliance with policies or procedures may deteriorate. In our opini, Company maintained, in all material respects, effective internal ctrol over financial reporting as December 31, 2016, based criteria established in Internal Ctrol Integrated Framework (2013) issued by Committee Spsoring Organizatis Treadway Commissi. We have also audited, in accordance with stards Public Company Accounting Oversight Board (United States), csolidated financial statements financial statement schedule as for year ended December 31, 2016, Company our report dated February 24, 2017, expressed an unqualified opini those financial statements financial statement schedule. /s/ Deloitte & Touche LLP Atlanta, Georgia February 24, 2017 F-2

120 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To Board Directors Stockholders Alpharetta, Georgia We have audited accompanying csolidated balance sheets subsidiaries ( Company ) as December 31, , related csolidated statements operatis, comprehensive income, changes in stockholders equity, cash flows for each three years in period ended December 31, Our audits also included financial statement schedule listed in Index at Item 15. These csolidated financial statements financial statement schedule are respsibility Company s management. Our respsibility is to express an opini csolidated financial statements financial statement schedule based our audits. We cducted our audits in accordance with stards Public Company Accounting Oversight Board (United States). Those stards require that we plan perform audit to obtain reasable assurance about wher financial statements are free material misstatement. An audit includes examining, a test basis, evidence supporting amounts disclosures in financial statements. An audit also includes assessing accounting principles used significant estimates made by management, as well as evaluating overall financial statement presentati. We believe that our audits provide a reasable basis for our opini. In our opini, such csolidated financial statements present fairly, in all material respects, csolidated financial positi Paper subsidiaries as December 31, , results ir operatis ir cash flows for each three years in period ended December 31, 2016, in cformity with accounting principles generally accepted in United States America. Also, in our opini, such financial statement schedule, when csidered in relati to basic csolidated financial statements taken as a whole, presents fairly, in all material respects, informati set forth rein. We have also audited, in accordance with stards Public Company Accounting Oversight Board (United States), Company s internal ctrol over financial reporting as December 31, 2016, based criteria established in Internal Ctrol Integrated Framework (2013) issued by Committee Spsoring Organizatis Treadway Commissi, our report dated February 24, 2017 expressed an unqualified opini Company s internal ctrol over financial reporting. Form 10-K /s/ Deloitte & Touche LLP Atlanta, Georgia February 24, 2017 F-3

121 NEENAH PAPER, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In millis, except share per share data) Ended December 31, Net sales $ $ $ Cost products sold Gross prit Selling, general administrative expenses Integrati/restructuring costs Pensi plan settlement charge Loss early extinguishment debt 0.2 Or expense net Operating income Interest expense Interest income (0.1) (0.2) (0.3) Income from ctinuing operatis before income taxes Provisi for income taxes Income from ctinuing operatis (Loss) income from disctinued operatis, net taxes (Note 13) (0.4) (9.4) 0.7 Net income $ 73.0 $ 51.1 $ 68.7 Earnings (Loss) Per Comm Share Basic Ctinuing operatis Disctinued operatis (0.02) (0.56) 0.04 $ 4.31 $ 3.02 $ 4.09 Diluted Ctinuing operatis Disctinued operatis (0.02) (0.55) 0.04 $ 4.24 $ 2.98 $ 4.03 Weighted Average Comm Shares Outsting (in thouss) Basic 16,773 16,754 16,584 Diluted 17,087 17,012 16,872 See Notes to Csolidated Financial Statements F-4

122 NEENAH PAPER, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millis) Ended December 31, Net income $ 73.0 $ 51.1 $ 68.7 Reclassificati amounts recognized in csolidated statement operatis: Amortizati adjustments to pensi or postretirement benefit liabilities Pensi plan settlement/curtailment charge (2015 amount in disctinued operatis) Amounts recognized in csolidated statement operatis Unrealized foreign currency translati loss (7.1) (15.0) (23.7) Net loss from pensi or postretirement benefit plans (18.0) (6.3) (34.3) Loss from or comprehensive income items before income taxes (17.1) (8.7) (49.8) (Benefit) provisi for income taxes (3.4) 1.2 (8.7) Or comprehensive loss (13.7) (9.9) (41.1) Comprehensive income $ 59.3 $ 41.2 $ 27.6 See Notes to Csolidated Financial Statements Form 10-K F-5

123 NEENAH PAPER, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In millis, except share data) December 31, ASSETS Current Assets Cash cash equivalents $ 3.1 $ 4.2 Accounts receivable, net Inventories Prepaid or current assets Total Current Assets Property, Plant Equipment net Deferred Income Taxes Goodwill (Note 5) Intangible Assets net (Note 5) Or Assets TOTAL ASSETS $ $ LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Debt payable within e year $ 1.2 $ 1.2 Accounts payable Accrued expenses Total Current Liabilities Lg-Term Debt Deferred Income Taxes Ncurrent Employee Benefits Or Ncurrent Obligatis TOTAL LIABILITIES Commitments Ctingencies (Notes 11 12) Stockholders' Equity Comm stock, par value $0.01 authorized: 100,000,000 shares; issued outsting: 16,771,000 shares 16,819,000 shares Treasury stock, at cost: 1,475,000 shares 1,244,000 shares (56.5) (40.1) Additial paid-in capital Retained earnings Accumulated or comprehensive loss (92.0) (78.3) Total Stockholders' Equity TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ $ See Notes to Csolidated Financial Statements F-6

124 NEENAH PAPER, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (In millis, shares in thouss) Comm Stock Shares Amount Treasury Stock Additial Paid-In Capital Retained Earnings Accumulated Or Comprehensive Loss Balance, December 31, ,383 $ 0.2 $ (27.2) $ $ 36.6 $ (27.3) Net income 68.7 Or comprehensive income, net income taxes (41.1) Dividends declared (17.1) Excess tax benefits from stock-based compensati 5.6 Shares purchased (Note 10) (1.1) Stock optis exercised Restricted stock vesting (Note 10) 150 (3.4) Stock-based compensati 6.0 Balance, December 31, , (31.7) (68.4) Net income 51.1 Or comprehensive loss, net income taxes (9.9) Dividends declared (20.3) Excess tax benefits from stock-based compensati 2.6 Shares purchased (Note 10) (5.9) Stock optis exercised Restricted stock vesting (Note 10) 106 (2.5) Stock-based compensati 6.5 Or/Currency 0.1 Balance, December 31, , (40.1) (78.3) Net income 73.0 Or comprehensive loss, net income taxes (13.7) Dividends declared (22.4) Shares purchased (Note 10) (12.6) Stock optis exercised Restricted stock vesting (Note 10) 111 (3.8) Stock-based compensati 5.8 Balance, December 31, ,245 $ 0.2 $ (56.5) $ $ $ (92.0) Form 10-K See Notes to Csolidated Financial Statements F-7

125 NEENAH PAPER, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In millis) OPERATING ACTIVITIES Ended December 31, Net income $ 73.0 $ 51.1 $ 68.7 Adjustments to reccile net income to net cash provided by operating activities: Depreciati amortizati Stock-based compensati Excess tax benefit from stock-based compensati (Note 2 9) (2.6) (5.6) Deferred income tax provisi N-cash effects changes in liabilities for uncertain income tax positis (1.5) (0.1) (2.0) Loss early extinguishment debt 0.2 Pensi settlement charge, net plan payments N-cash loss disctinued operatis 12.0 Loss (gain) asset dispositis 0.1 (0.1) 0.2 Net cash (used in) provided by changes in operating working capital, net effect acquisitis (Note 15) (1.2) Pensi or post-employment benefits (10.9) 2.9 (18.3) Or 0.8 (0.1) (0.9) NET CASH PROVIDED BY OPERATING ACTIVITIES INVESTING ACTIVITIES Capital expenditures (68.5) (48.1) (27.9) Purchases marketable securities (0.1) (0.2) (0.6) Net proceeds from sale disctinued operatis 5.4 Proceeds from sale property, plant equipment Acquisitis (Note 4) (118.2) (72.4) Purchase equity investment (2.9) Or (1.1) NET CASH USED IN INVESTING ACTIVITIES (68.2) (160.1) (104.9) FINANCING ACTIVITIES Proceeds from issuance lg-term debt (Note 7) Debt issuance costs (0.1) (2.4) Repayments lg-term debt (Note 7) (252.9) (145.6) (5.6) Short-term borrowings 6.5 Repayments short-term borrowings (25.4) Proceeds from exercise stock optis Excess tax benefit from stock-based compensati (Note 2 9) Cash dividends paid (22.4) (20.3) (17.1) Shares purchased (Note 10) (16.4) (8.4) (4.5) Or 0.1 NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (48.4) (18.8) 10.2 EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (0.3) (0.7) (0.6) NET DECREASE IN CASH AND CASH EQUIVALENTS (1.1) (68.4) (0.8) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR CASH AND CASH EQUIVALENTS, END OF YEAR $ 3.1 $ 4.2 $ 72.6 See Notes to Csolidated Financial Statements F-8

126 NEENAH PAPER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in millis, except as noted) Note 1. Background Basis Presentati Background ("" or "Company"), is a Delaware corporati incorporated in April The Company has two primary operatis: its technical products business its fine paper packaging business. The technical products business is an internatial producer fiber-formed, coated /or saturated specialized media that delivers high performance benefits to customers. Included in this segment are filtrati media, tape abrasives backings products, durable label specialty substrate products. The fine paper packaging business is a supplier bred premium printing, packaging or high end specialty papers primarily in North America. The Company's premium writing, text cover papers, specialty papers are used in commercial printing imaging applicatis for corporate identity packages, invitatis, persal statiery high-end advertising, as well as premium labels luxury packaging. Basis Presentati The csolidated financial statements include financial statements Company its wholly owned majority owned subsidiaries. All inter-company balances transactis have been eliminated in csolidati. Note 2. Summary Significant Accounting Policies Use Estimates The preparati financial statements in cformity with accounting principles generally accepted in United States ("GAAP") requires management to make estimates assumptis that affect reported amounts assets liabilities at date financial statements reported amounts net sales expenses during reporting periods. Actual results could differ from se estimates, changes in se estimates are recorded when known. Significant management judgment is required in determining accounting for, amg or things, pensi postretirement benefits, retained insurable risks, reserves for sales discounts allowances, purchase price allocatis, useful lives for depreciati amortizati, future cash flows associated with impairment testing for tangible intangible lg-lived assets, goodwill, income taxes, ctingencies, inventory obsolescence market reserves valuati stock-based compensati. Form 10-K Revenue Recogniti The Company recognizes sales revenue when all following have occurred: (1) delivery has occurred, (2) persuasive evidence an agreement exists, (3) pricing is fixed or determinable, (4) collecti is reasably assured. Delivery is not csidered to have occurred until customer takes title assumes risks rewards ownership. The timing revenue recogniti is largely dependent shipping terms. Sales are reported net allowable discounts estimated returns. Reserves for cash discounts, trade allowances sales returns are estimated using historical experience. Cash Cash Equivalents Cash cash equivalents include all cash balances highly liquid investments with an initial maturity three mths or less. The Company places its temporary cash investments with high credit quality financial institutis. As December 31, , $0.3 milli Company's cash cash equivalents is restricted to payment postretirement benefits for certain former Fox River executives. Inventories U.S. inventories are valued at lower cost, using Last-In, First-Out (LIFO) method for financial reporting purposes, or market. German inventories are valued at lower cost, using a weighted-average cost method, or market. Cost includes labor, materials producti overhead. F-9

127 NEENAH PAPER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in millis, except as noted) Foreign Currency Balance sheet accounts Company's operatis in Germany, United Kingdom ( "U.K.") Canada are translated from Euros, British Pounds Canadian dollars, respectively, into U.S. dollars at period-end exchange rates, income expense accounts are translated at average exchange rates during period. Translati gains or losses related to net assets located in Germany, U.K. Canada are recorded as unrealized foreign currency translati adjustments within Accumulated or comprehensive loss in stockholders' equity. Gains losses resulting from foreign currency transactis (transactis denominated in a currency or than entity's functial currency) are included in Or expense net in csolidated statements operatis. Property Depreciati Property, plant equipment are stated at cost, less accumulated depreciati. Certain costs stware developed or obtained for internal use are capitalized. When property, plant equipment is sold or retired, costs related accumulated depreciati are removed from accounts, gains or losses are recorded in or (income) expense net. For financial reporting purposes, depreciati is principally computed straight-line method over estimated useful asset lives. The weighted average remaining useful lives for buildings, l improvements machinery equipment are approximately 18 years, 13 years 10 years, respectively. Units--producti method depreciati is used for $68.6 milli producti assets, which reflects nature assets' utilizati. For income tax purposes, accelerated methods depreciati are used. The costs major rebuilds replacements plant equipment are capitalized, cost maintenance performed manufacturing facilities, composed labor, materials or incremental costs, is expensed as incurred. Start-up costs for new or exped facilities, including costs related to trial producti, are expensed as incurred. The Company accounts for asset retirement obligatis ("AROs") in accordance with ASC Topic 410, Asset Retirements Envirmental Obligatis, which requires companies to make estimates regarding future events in order to record a liability for AROs in period in which a legal obligati is created. Such liabilities are recorded at fair value, with an fsetting increase to carrying value related lg-lived asset. As December 31, 2016, Company is unable to estimate its AROs for envirmental liabilities at its manufacturing facilities. Stock-Based Compensati The Company accounts for stock-based compensati in accordance with fair value recogniti provisis ASC Topic 718, Compensati Stock Compensati ("ASC Topic 718"). The amount stock-based compensati cost recognized is based fair value grants that are ultimately expected to vest is recognized pro-rata over requisite service period for entire award. Research Development Expense Research development costs are charged to expense as incurred are recorded in "Selling, general administrative expenses" csolidated statement operatis. See Note 15, "Supplemental Data Supplemental Statement Operatis Data." Fair Value Measurements The Company measures fair value pensi plan assets in accordance with ASC Topic 820, Fair Value Measurements Disclosures ("ASC Topic 820") which establishes a framework for measuring fair value. ASC Topic 820 provides a fair value hierarchy that prioritizes inputs to valuati techniques used to measure fair value. The hierarchy gives highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) lowest priority to unobservable inputs (Level 3 measurements). Fair Value Financial Instruments The carrying amounts reflected in csolidated balance sheets for cash cash equivalents, accounts receivable accounts payable approximate fair value due to ir short maturities. The fair value short lg-term debt is F-10

128 NEENAH PAPER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in millis, except as noted) estimated using rates currently available to Company for debt same remaining maturities. The following table presents carrying value fair value Company's debt. December 31, 2016 December 31, 2015 Carrying Value Fair Value (a) Carrying Value Fair Value (a) 2021 Senior Notes (5.25% fixed rate) $ $ $ $ Global Revolving Credit Facilities (variable rates) Secd German Loan Agreement (2.5% fixed rate) Total debt $ $ $ $ (a) Fair value for all debt instruments was estimated from Level 2 measurements. The Company's investments in marketable securities are accounted for as "available-for-sale securities" in accordance with ASC Topic 320, Investments Debt Equity Securities ("ASC Topic 320"). Pursuant to ASC Topic 320, marketable securities are reported at fair value csolidated balance sheet unrealized holding gains losses are reported in or comprehensive income until realized up sale. At December 31, 2016, Company had $3.5 milli in marketable securities classified as Or assets csolidated balance sheet. The cost such marketable securities was $3.4 milli. Fair value for Company's marketable securities was estimated from Level 1 inputs. The Company's marketable securities are designated for payment benefits under its supplemental employee retirement plan ( "SERP"). Fair Value Pensi Plan Assets With excepti cash cash equivalents which are csidered Level 1, pensi plan assets are measured at NAV (or its equivalent) as an alternative to fair market value due to absence readily available market prices, as such are not subject to fair value hierarchy. Following is fair value each investment category: Form 10-K Cash cash equivalents ($1.5 milli $6.9 milli at December 31, , respectively). U.S n-u.s. Equities ($112.2 milli $92.4 milli at December 31, , respectively) These proprietary mutual funds have observable net asset values (based fair value underlying investments funds) that are provided to investors provide for liquidity eir immediately within a few days. U.S n-u.s. Fixed Income Securities ($181.1 milli $185.8 milli at December 31, , respectively) These proprietary mutual funds have observable net asset values (based fair value underlying investments funds) that are provided to investors provide for liquidity eir immediately within a few days. Hedge Funds ($23.3 milli $23.2 milli at December 31, , respectively) These funds are valued using net asset values calculated by fund managers allow for quarterly or more frequent redemptis. Recently Adopted Accounting Stards In March 2016, FASB issued ASU , Compensati Stock Compensati (Topic 718): Improvements to Employee Share-Based Payment Accounting ( ASU ). ASU modifies accounting for excess tax benefits tax deficiencies associated with share-based payments amends associated cash flow presentati. ASU (i) eliminates requirement to recognize excess tax benefits in additial paid-in capital ( APIC ), (ii) eliminates requirement to evaluate tax deficiencies for APIC or income tax expense classificati (iii) provides for se benefits or deficiencies to be recorded as an income tax expense or benefit in income statement. Additially, tax benefits related to dividends paid share-based payment awards will be reflected as an income tax benefit in F-11

129 NEENAH PAPER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in millis, except as noted) income statement. With se changes, tax-related cash flows resulting from share-based payments will be classified as operating activities as opposed to financing activities. ASU is effective for fiscal years beginning after December 15, 2016, although early adopti is permitted. The Company has elected to early adopt stard in three mth period ended September 30, 2016, effective as if adopted first day fiscal year, January 1, As December 31, 2015, re were no unrecognized deferred tax assets attributable to excess tax benefits. The adopti new stard decreased provisi for income taxes increased income from ctinuing operatis by $0.4 milli $1.8 milli in third quarter fourth quarter 2016, respectively. In additi, Company recast its previously reported provisi for income taxes increased income from ctinuing operatis by $0.2 milli $0.7 milli for first secd quarter 2016, respectively. Furr, as part adopti, Company elected to account for forfeitures in compensati cost as y occur. The cumulative impact for change in electi was not material. The Company elected to adopt prospectively classificati tax-related cash flows resulting from sharebased payments in operating cash flows. Accounting Stards Changes In May 2014, FASB issued ASU , Revenue from Ctracts with Customers (Topic 606). This guidance specifies how when an entity will recognize revenue arising from ctracts with customers requires entities to disclose informati about nature, amount, timing uncertainty revenue cash flows arising from ctracts with customers. The FASB has subsequently issued additial, clarifying stards to address issues arising from implementati new revenue recogniti stard. The new revenue recogniti stard clarifying stards are effective for interim annual periods beginning January 1, 2018, may be adopted earlier, but not before January 1, The Company has substantially completed its assessment new stards does not believe re will be a material impact from adopti its csolidated financial statements. The Company will ctinue to evaluate any additial changes, modificatis or interpretatis stard which may impact its current cclusis, believes it will adopt new stards using modified retrospective method as January 1, In February 2016, FASB issued ASU , Leases (Topic 842) ( ASU ). ASU requires lessees to put most leases ir balance sheets but recognize expenses ir income statements in a manner similar to current lease accounting. The guidance also eliminates current real estate-specific provisis for all entities. ASU is effective for fiscal years beginning after December 15, 2018, although early adopti is permitted. The Company is currently assessing impact adopti ASU its csolidated financial statements. As December 31, 2016, no or amendments to ASC had been issued not adopted by Company that will have or are reasably likely to have a material effect its financial positi, results operatis or cash flows. Note 3. Earnings per Share ("EPS") The Company's restricted stock units ("RSUs") are paid n-forfeitable comm stock dividends thus meet criteria participating securities. Accordingly, basic EPS has been calculated using two-class method, under which earnings are allocated to both comm stock participating securities. Basic EPS has been computed by dividing net income allocated to comm stock by weighted average comm shares outsting. For computati basic EPS, weighted average RSUs outsting are excluded from calculati weighted average shares outsting. Accounting Stards Codificati ("ASC") Topic 260, Earnings per Share ("ASC Topic 260") requires companies with participating securities to calculate diluted earnings per share using "Two Class" method. The "Two Class" method requires first calculating diluted earnings per share using a denominator that includes weighted average share equivalents from assumed cversi dilutive securities. Diluted earnings per share is n calculated using net income reduced by amount distributed undistributed earnings allocated to participating securities calculated using "Treasury Stock" method a denominator that includes weighted average share equivalents from assumed cversi dilutive securities excluding participating securities. Companies are required to report lower diluted earnings per share amounts under two calculatis subject to anti-diluti provisis ASC Topic 260. Diluted EPS has been computed by dividing net income allocated to comm stock by weighted average number comm shares used in computing basic EPS, furr adjusted to include dilutive impact exercise or cversi F-12

130 NEENAH PAPER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in millis, except as noted) comm stock equivalents, such as stock optis, stock appreciati rights ("SARs") target awards Restricted Stock Units with performance cditis ("Performance Units"), into shares comm stock as if those securities were exercised or cverted. For years ended December 31, 2016, , approximately 35,000, 45,000 15,000 potentially dilutive optis, respectively, were excluded from computati dilutive comm shares because exercise price such optis exceeded average market price Company's comm stock for respective 12- mth periods during which optis were outsting. The following table presents computati basic diluted shares comm stock used in calculati EPS (amounts in millis, except share per share amounts): Earnings per basic comm share Ended December 31, Income from ctinuing operatis $ 73.4 $ 60.5 $ 68.0 Amounts attributable to participating securities (0.7) (0.6) (0.8) Income from ctinuing operatis available to comm stockholders Income (loss) from disctinued operatis, net income taxes (0.4) (9.4) 0.7 Amounts attributable to participating securities 0.1 Net income available to comm stockholders $ 72.3 $ 50.6 $ 67.9 Weighted-average basic shares outsting 16,773 16,754 16,584 Basic earnings (loss) per share Ctinuing operatis $ 4.33 $ 3.58 $ 4.05 Disctinued operatis (0.02) (0.56) 0.04 $ 4.31 $ 3.02 $ 4.09 Form 10-K Earnings per diluted comm share Ended December 31, Income from ctinuing operatis $ 73.4 $ 60.5 $ 68.0 Amounts attributable to participating securities (0.6) (0.5) (0.8) Income from ctinuing operatis available to comm stockholders Income (loss) from disctinued operatis, net income taxes (0.4) (9.4) 0.7 Amounts attributable to participating securities 0.1 Net income available to comm stockholders $ 72.4 $ 50.7 $ 67.9 Weighted-average basic shares outsting 16,773 16,754 16,584 Add: Assumed incremental shares under stock-based compensati plans Weighted average diluted shares 17,087 17,012 16,872 Diluted earnings (loss) per share Ctinuing operatis $ 4.26 $ 3.53 $ 3.99 Disctinued operatis (0.02) (0.55) 0.04 $ 4.24 $ 2.98 $ 4.03 F-13 F-13

131 NEENAH PAPER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in millis, except as noted) Note 4. Acquisitis Acquisiti FiberMark On August 1, 2015, Company purchased all outsting equity FiberMark from American Securities for approximately $118 milli. FiberMark is a specialty coatings finishing company with a strg presence in luxury packaging technical products. In September 2015, Company announced planned closure Fitchburg Mill, acquired in FiberMark Acquisiti to csolidate its manufacturing footprint. Manufacturing operatis at Fitchburg Mill ceased in December See Note 13, "Disctinued Operatis." The Company accounted for transacti using acquisiti method in accordance with ASC Topic 805, Business Combinatis ("ASC Topic 805"). The allocati purchase price was based estimates fair value assets acquired liabilities assumed as August 1, The Company has not identified any material unrecorded preacquisiti ctingencies. The Company did not recognize any in-process research development assets as part acquisiti. The following table summarizes allocati purchase price to estimated fair value assets acquired liabilities assumed as December 31, December 31, 2015 Assets Acquired Cash cash equivalents $ 4.8 Accounts receivable 13.7 Inventories 27.5 Deferred income taxes 2.3 Prepaid or current assets 3.6 Property, plant equipment 68.9 N-amortizable intangible assets 1.3 Amortizable intangible assets 25.6 Acquired goodwill 25.5 Total assets acquired Liabilities Assumed Accounts payable 8.0 Accrued expenses 5.6 Deferred income taxes 24.1 Ncurrent employee benefits 9.1 Or ncurrent obligatis 3.1 Total liabilities assumed 49.9 Net assets acquired $ (1) As a result finalizing acquisiti accounting for Fibermark in first quarter 2016, an adjustment $0.4 milli was recorded as a reducti to net deferred tax liability to goodwill. The Company estimated fair value assets liabilities acquired in accordance with ASC Topic 820, Fair Value Measurements Disclosures ("ASC Topic 820"). The fair value amortizable n-amortizable intangible assets was estimated by applying a royalty rate to projected revenue, net tax impacts adjusted for present value F-14

132 NEENAH PAPER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in millis, except as noted) csideratis. The Company estimated fair value acquired property, plant equipment using a combinati cost market approaches. In general, fair value or acquired assets liabilities was estimated using cost basis FiberMark. The excess purchase price over estimated fair value tangible net assets identifiable intangible assets acquired was recorded as acquired goodwill. The factors ctributing to amount goodwill recognized are based several strategic synergistic benefits that are expected to be realized from acquisiti FiberMark. These benefits include entry into pritable new markets for premium packaging, performance materials specialty papers with new capabilities recognized brs, synergies from combining business with 's existing infrastructure, opportunity to accelerate sales growth in areas like premium packaging. Ne goodwill recognized as part FiberMark acquisiti will be deductible for income tax purposes. However, Company did acquire all tax attributes associated with FiberMark assets liabilities, including an insignificant amount tax deductible goodwill. Approximately $18.9 milli, $6.2 milli $0.4 milli goodwill acquired in FiberMark acquisiti was allocated to Technical Products, Fine Paper Packaging Or segments, respectively. For year ended December 31, 2016, Company incurred $4.3 milli integrati restructuring costs. For year ended December 31, 2015, Company incurred $5.3 milli acquisiti integrati costs. For year ended December 31, 2015, net sales income from operatis before income taxes for acquired businesses were $58.1 milli $1.5 milli (excluding acquisiti related costs described above), respectively. In cjuncti with FiberMark acquisiti, Company identified various uncertain tax positis totaling $4.7 milli. Such amount was reflected in purchase price allocati as $3.7 milli goodwill $1.0 milli or current assets. The following selected unaudited pro forma csolidated statements operatis data for year ended December 31, was prepared as though FiberMark acquisiti had occurred January 1, The informati does not reflect future events that may occur after December 31, 2015 or any operating efficiencies or inefficiencies that may result from FiberMark acquisiti. Therefore, informati is not necessarily indicative results that would have been achieved had businesses been combined during periods presented or results that Company will experience going forward. Form 10-K Ended December 31, Net sales $ $ 1,003.8 Operating income Income from ctinuing operatis Income (loss) from disctinued operatis (9.4) 0.7 Net income Earnings (Loss) Per Comm Share Basic Ctinuing operatis $ 3.65 $ 4.34 Disctinued Operatis (0.56) 0.04 $ 3.09 $ 4.38 Diluted Ctinuing operatis $ 3.60 $ 4.27 Disctinued Operatis (0.55) 0.04 $ 3.05 $ 4.31 F-15

133 NEENAH PAPER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in millis, except as noted) Acquisiti Crane Technical Materials On July 1, 2014, Company purchased all outsting equity Crane Technical Materials business for approximately $72 milli. The acquired business provides performance-oriented wet laid nwoven media for filtrati end markets as well as envirmental, energy industrial uses. The results this business are reported in Technical Products segment from date acquisiti. The Company accounted for transacti using acquisiti method in accordance with ASC Topic 805. The allocati purchase price is based estimates fair value assets acquired liabilities assumed as July 1, The Company did not identify any material unrecorded pre-acquisiti ctingencies. The Company did not acquire any in-process research development assets as part acquisiti. The excess purchase price over estimated fair value tangible net assets identifiable intangible assets acquired was recorded as acquired goodwill. The factors ctributing to amount goodwill recognized are based several lg-term strategic benefits that are expected to be realized from acquisiti technical materials business. These benefits include entry into growing pritable global markets for water filtrati, envirmental/emissis ctrol, energy management with defensible technologies brs, opportunity to accelerate sales growth through synergies with Company's existing European-based filtrati business. In additi, acquisiti brs complementary ferings facilitates Company's expansi into n-woven product lines ctaining fiberglass, polymer fibers carb fibers. Substantially all acquired goodwill will be deductible for income tax purposes is entirely allocated to Technical Products segment. For year ended December 31, 2014, Company incurred $1.0 milli acquisiti-related integrati costs. In additi, Company incurred approximately $1.1 in capital costs for IT systems infrastructure projects. For year ended December 31, 2014, net sales income from operatis before income taxes for acquired technical materials business were $24.1 milli $3.1 milli (excluding acquisiti related integrati costs described above), respectively. The following selected unaudited pro forma csolidated statements operatis data for year ended December 31, 2014 was prepared as though acquisiti technical materials business had occurred January 1, The informati does not reflect future events that may occur after December 31, 2014 or any operating efficiencies or inefficiencies that may result from acquisiti technical materials business. Therefore, informati is not necessarily indicative results that would have been achieved had businesses been combined during periods presented or results that Company will experience going forward. F-16

134 NEENAH PAPER INC. INC. AND AND SUBSIDIARIES NOTES TO TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in in millis, except as as noted) Ended Ended December 31, 31, Net Net sales sales $ $ Operating income Income from from ctinuing operatis Income from from disctinued operatis Net Net income Earnings Per Per Comm Share Basic Basic Ctinuing operatis $ $ Disctinued Operatis $ $ Diluted Ctinuing operatis $ $ Disctinued Operatis $ $ Note Note Goodwill Or Intangible Assets The The Company follows guidance ASC ASC Topic 805, 805, Business Combinatis ("ASC Topic 805"), in recording goodwill arising from from a business a combinati as as excess purchase price price over over fair fair value value identifiable assets acquired liabilities assumed. Form 10-K The The Company tests tests goodwill for for impairment at at least least annually November in in cjuncti with with preparati its its annual business plan, plan, or more more frequently if events if or or circumstances indicate it might it be be impaired. The The Company tested goodwill for for impairment as as November 30, 30, The The Company elected opti under ASC ASC Topic 350, 350, Intangibles Goodwill Or, to to perform a qualitative a assessment Company's reporting units units to to determine wher furr impairment testing is is necessary. In In this this qualitative assessment, Company csidered following items items for for each each reporting units: units: macroecomic cditis, industry market cditis, overall financial performance or or entity specific events. In In additi, for for each each se se reporting units, units, most most recent fair fair value value determinati results in in an an amount that that exceeds carrying amount reporting units. units. Based se se assessments, Company determined that that likelihood that that a current a fair fair value value determinati would be be less less than than current carrying amount reporting unit unit is is not not more more likely than than not. not. There was was no no impairment in in carrying value value goodwill for for years years ended December 31, 31, 2016, Intangible assets with with finite finite useful lives lives are are amortized a straight-line a basis basis over over ir ir respective estimated useful lives lives to to ir ir estimated residual values, reviewed for for impairment in in accordance with with ASC ASC Topic 360, 360, Property, Plant, Equipment. Intangible assets csist primarily customer relatiships, trade trade names acquired intellectual property. Such Such intangible assets are are amortized using using straight-line method over over estimated useful lives lives between years. Certain trade trade names are are estimated to to have have indefinite useful lives lives as as such such are are not not amortized. Intangible assets with with indefinite lives lives are are reviewed for for impairment at at least least annually. F-17

135 NEENAH PAPER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in millis, except as noted) The following table presents carrying value goodwill by business segment changes in carrying value goodwill. Technical Products Or Fine Paper Accumulated Packaging Gross Impairment Gross Amount Losses Net Gross Amount Amount Net Balance at December 31, 2014 $ $ (50.3) $ 50.5 $ $ $ 50.5 Goodwill acquired in Fibermark Acquisiti Foreign currency translati (9.0) 5.2 (3.8) (3.8) Balance at December 31, (45.1) Adjustment goodwill acquired in Fibermark Acquisiti (1) (0.4) (0.4) (0.4) Foreign currency translati (2.9) 1.5 (1.4) (1.4) Balance at December 31, 2016 $ $ (43.6) $ 63.8 $ 6.2 $ 0.4 $ 70.4 (1) As a result finalizing acquisiti accounting for Fibermark in first quarter 2016, an adjustment $0.4 milli was recorded as a reducti to net deferred tax liability to goodwill. Or Intangible Assets As December 31, 2016, Company had net identifiable intangible assets $74.0 milli. All such intangible assets were acquired in acquisitis Germany, Fox River, FiberMark Crane technical materials business, acquisiti Wausau Southworth brs. The following table details amounts related to those assets. Gross Amount December 31, 2016 December 31, 2015 Accumulated Amortizati Gross Amount Accumulated Amortizati Amortizable intangible assets Customer based intangibles $ 34.4 $ (11.1) $ 35.5 $ (9.2) Trade names trademarks 6.8 (4.2) 4.4 (1.8) Acquired technology 14.6 (2.7) 16.0 (1.4) Total amortizable intangible assets 55.8 (18.0) 55.9 (12.4) Trade names Total $ 92.0 $ (18.0) $ 91.5 $ (12.4) F-18

136 NEENAH PAPER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in millis, except as noted) The following table presents intangible assets acquired in cjuncti with FiberMark acquisiti: Intangible assets definite lived Intangibles Estimated Useful Lives (s) Trade names trademarks $ Customer based intangibles Acquired technology Total 25.1 N-amortizable trade names 1.8 Total intangible assets $ 26.9 As December 31, 2015, $49.8 milli, $28.3 milli $1.0 milli such intangible assets are reported within Technical Products, Fine Paper Packaging Or segments, respectively. See Note 14, "Business Segment Geographic Informati." Aggregate amortizati expense acquired intangible assets for years ended December 31, 2016, was $3.9 milli, $2.9 milli $2.3 milli, respectively was reported in Cost products sold Csolidated Statement Operatis. Estimated amortizati expense for years ended December 31, 2017, 2018, 2019, is $3.6 milli, $3.6 milli, $3.6 milli, $3.6 milli $3.3 milli, respectively. Note 6. Income Taxes The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. Income tax expense represented 28.7 percent, 32.7 percent 9.9 percent income from ctinuing operatis before income taxes for years ended December 31, 2016, , respectively. The following table presents principal reass for difference between Company's effective income tax rate U.S. federal statutory income tax rate: Form 10-K Ended December 31, U.S. federal statutory income tax rate 35.0 % $ % $ % $ 26.4 U.S. state income taxes, net federal income tax benefit 1.9 % % % 1.6 Tax foreign dividends 4.5 % % % 2.3 Foreign tax rate differences (a) (2.7)% (2.8) (2.2)% (2.0) (2.8)% (2.1) Foreign financing structure (b) (1.6)% (1.7) (1.3)% (1.2) (2.5)% (1.9) Excess tax benefits from stock compensati (c) (3.0)% (3.1) Research development or tax credits (d) (2.8)% (2.9) (3.9)% (3.5) (31.9)% (24.1) Domestic producti activities deducti (1.5)% (1.5) (2.2)% (2.0) % Uncertain income tax positis (0.4)% (0.4) 1.3 % % 4.9 Or differences net (0.7)% (0.7) 0.3 % % 0.4 Effective income tax rate 28.7 % $ % $ % $ 7.5 (a) Represents impact Company's effective tax rate due to changes in mix earnings amg taxing jurisdictis with differing statutory rates. F-19

137 NEENAH PAPER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in millis, except as noted) (b) Represents impact Company's effective tax rate Company's financing strategies. (c) In 2016, Company adopted ASU , Compensati Stock Compensati (Topic 718). See Note 2, "Summary Significant Accounting Policies Recently Adopted Accounting Stards." (d) For 2015, Company recognized a $1.4 milli benefit related to research development ("R&D") tax credits FiberMark for period 2012 through July For 2014, following an extensive study Company's R&D activities for years 2005 through 2013 a change in methodology, Company recognized a $21.9 milli net benefit related to R&D tax credits. The Company's effective income tax rate can be affected by many factors, including but not limited to, changes in mix earnings in taxing jurisdictis with differing statutory rates, availability R&D or tax credits, changes in corporate structure as a result business acquisitis dispositis, changes in valuati deferred tax assets liabilities, results audit examinatis previously filed tax returns changes in tax laws. The Company or e its subsidiaries files income tax returns in U.S. federal jurisdicti, various U.S. state jurisdictis foreign jurisdictis. The Company is no lger subject to U.S. federal examinati for years before 2013, to state local examinatis for years before 2012 to n-u.s. income tax examinatis for years before The following table presents U.S. foreign compents income from ctinuing operatis before income taxes: Ended December 31, Income from ctinuing operatis before income taxes: U.S. $ 68.3 $ 62.2 $ 46.5 Foreign Total $ $ 89.9 $ 75.5 The following table presents compents provisi (benefit) for income taxes: Ended December 31, Provisi (benefit) for income taxes: Current: Federal $ 7.1 $ 12.7 $ 0.5 State (0.5) 1.3 Foreign Total current tax provisi Deferred: Federal State (5.9) Foreign Total deferred tax provisi Total provisi for income taxes $ 29.6 $ 29.4 $ 7.5 The Company has elected to treat its Canadian operatis as a branch for U.S. income tax purposes. Therefore, amount income (loss) before income taxes from Canadian operatis are included in Company's csolidated U.S. income tax returns such amounts are subject to U.S. income taxes. F-20

138 NEENAH PAPER INC. INC. AND AND SUBSIDIARIES NOTES TO TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in in millis, except as as noted) The The asset asset liability approach is is used used to to recognize deferred tax tax assets liabilities for for expected future tax tax csequences temporary differences between carrying amounts tax tax basis basis assets liabilities. The The compents deferred tax tax assets liabilities, net net reserves for for uncertain tax tax positis valuati allowances, are are as as follows: December 31, 31, Net Net deferred income tax tax assets Employee benefits $ $ $ $ Research development tax tax credits Net Net operating losses credits Accrued liabilities Inventories (0.5) (0.5) Accelerated depreciati (34.0) (34.8) Intangibles (10.8) (10.2) Undistributed foreign earnings (4.4) (4.4) Or Net Net deferred income tax tax assets $ $ $ $ Net Net deferred income tax tax liabilities Accelerated depreciati $ $ $ $ Intangibles Employee benefits (5.0) (5.0) (3.9) (3.9) Interest limitati (0.5) (0.5) Net Net operating losses (0.3) (0.3) (0.1) (0.1) Net Net deferred income tax tax liabilities $ $ $ $ Form 10-K The The net net deferred tax tax assets relate relate to to U.S. U.S. federal state state jurisdictis net net deferred tax tax liabilities relate relate to to operatis Germany U.K. U.K. As As December 31, 31, 2016, Company had had $12.5 milli undistributed earnings (net (net foreign taxes) foreign subsidiaries. There were were no no undistributed earnings foreign subsidiaries as as December 31, 31, As As December 31, 31, 2016, Company had had $25.2 milli U.S. U.S. federal state state R&D R&D credits which, if not if not used, used, will will expire between for for U.S. U.S. federal R&D R&D credits between for for state state R&D R&D credits. As As December 31, 31, 2016, we we had had $48.8 milli state state NOLs which may may be be used used to to fset state state taxable income. The The NOLs are are reflected in in csolidated financial statements as as a deferred a tax tax asset asset $2.3 $2.3 milli. If If not not used, used, substantially all all NOLs will will expire in in various amounts between The The Company also also had had pre-acquisiti recognized built-in loss loss carryovers $10.2 milli, reflected as as a deferred a tax tax asset asset $3.6 $3.6 milli. In In additi, Company had had $3.4 $3.4 milli federal Alternative Minimum Tax Tax Credit carryovers, which can can be be carried forward indefinitely. F-21

139 NEENAH PAPER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in millis, except as noted) The following is a tabular recciliati total amounts uncertain tax positis as for years ended December 31, 2016, : For s Ended December 31, Balance at January 1, $ 12.9 $ 7.0 $ 4.3 Increases in prior period tax positis 0.5 Decreases in prior period tax positis (2.6) (2.2) Increases in current period tax positis Decreases due to lapse statute limitatis (0.3) Decreases due to settlements with tax authorities (0.2) Decreases from foreign exchange rate changes (0.3) (0.1) (0.2) Balance at December 31, $ 10.3 $ 12.9 $ 7.0 The $10.3 milli reserves for uncertain tax positis as December 31, 2016 were reflected csolidated balance sheets as follows: $7.6 milli netted against deferred tax assets, $1.2 milli netted against (added to) deferred tax liabilities $1.5 milli in or ncurrent obligatis. The $12.9 milli reserves for uncertain tax positis as December 31, 2015 were reflected csolidated balance sheets as follows: $8.9 milli netted against deferred tax assets, $1.2 milli netted against (added to) deferred tax liabilities $2.8 milli in or ncurrent obligatis. If recognized, $9.3 milli benefit for uncertain tax positis at December 31, 2016 would favorably affect Company's effective tax rate in future periods. The Company does not expect that expirati statute limitatis or settlement audits in next 12 mths will result in liabilities for uncertain income tax positis that are materially different than amounts that were accrued as December 31, The Company recognizes accrued interest penalties related to uncertain income tax positis in Provisi for income taxes csolidated statements operatis. As December 31, , Company had $0.2 milli $0.4 milli, respectively, accrued for interest penalties related to uncertain income tax positis. As December 31, 2016, Company had a valuati allowance $3.1 milli against its state R&D credits $0.4 milli against its or state tax credits. As December 31, 2015, Company had a valuati allowance $2.9 milli against its state R&D credits $0.1 milli against its state NOLs. In determining need for a valuati allowance, Company csiders many factors, including specific taxing jurisdictis, sources taxable income, income tax strategies forecasted earnings for entities in each jurisdicti. A valuati allowance is recognized if, based weight available evidence, Company ccludes that it is more likely than not that some porti or all deferred income tax asset will not be realized. F-22

140 NEENAH PAPER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in millis, except as noted) Note 7. Debt Lg-term debt csisted following: December 31, Senior Notes (5.25% fixed rate) due May 2021 $ $ Global Revolving Credit Facilities (variable rates) due December Secd German Loan Agreement (2.45% fixed rate) due in 32 equal quarterly installments ending September Deferred financing costs (3.8) (5.0) Total Debt Less: Debt payable within e year Lg-term debt $ $ Unsecured Senior Notes 2021 Senior Notes In May 2013, Company completed an underwritten fering eight-year senior unsecured notes ( "2021 Senior Notes") at a face amount $175 milli. The 2021 Senior Notes bear interest at a rate 5.25%, payable in arrears May 15 November 15 each year, commencing November 15, 2013, mature May 15, Proceeds from this fering were used to redeem remaining $70 milli outsting principal amount ten-year 7.375% senior unsecured notes, originally issued November 30, 2004, to repay approximately $56 milli in outsting revolving credit agreement borrowings for general corporate purposes. The 2021 Senior Notes are fully uncditially guaranteed by substantially all Company's domestic subsidiaries ( "Guarantors"). The 2021 Senior Notes were sold in a private placement transacti, have not been registered under Securities Act 1933, as amended, may not be fered or sold absent registrati or an applicable exempti from registrati requirements. Form 10-K The 2021 Senior Notes rank equally in right payment with all Company's existing future senior unsecured indebtedness. The guarantees 2021 Senior Notes are senior unsecured obligatis Guarantors rank equally in right payment with all existing future senior unsecured indebtedness Guarantors. The 2021 Senior Notes guarantees 2021 Senior Notes are effectively subordinated to Company's Guarantors' existing future secured indebtedness (to extent value collateral) are structurally subordinated to all indebtedness or obligatis Company's subsidiaries that do not guarantee 2021 Senior Notes, including trade creditors such n-guarantor subsidiaries. The 2021 Senior Notes ctain terms, covenants events default with which Company must comply, which Company believes are ordinary stard for notes this nature. Amg or things, 2021 Senior Notes ctain covenants restricting Company's ability to incur certain additial debt, make specified restricted payments, pay dividends, authorize or issue capital stock, enter into transactis with Company's affiliates, csolidate or merge with or acquire anor business, sell certain Company's assets or liquidate, dissolve or wind-up Company. As December 31, 2016, Company was in compliance with all terms indenture for 2021 Senior Notes. Amended Restated Secured Revolving Credit Facility In December 2014, Company amended restated its existing credit facility by entering into Third Amended Restated Credit Agreement ( "Third Amended Credit Agreement") by amg Company certain its domestic subsidiaries as "Domestic Borrowers", Services GmbH & Co. KG (" Services") certain its German subsidiaries as "German Borrowers", certain or subsidiaries as "German Guarantors", financial F-23

141 NEENAH PAPER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in millis, except as noted) institutis signatory to Third Amended Credit Agreement as lenders ( "Lenders"), JPMorgan Chase Bank, N.A., as agent for Lenders ( "Administrative Agent"). The Third Amended Credit Agreement, amg or things: (1) increased maximum principal amount existing credit facility for Domestic Borrowers to $125 milli ( "U.S. Revolving Credit Facility"); (2) established a secured, multicurrency, revolving credit facility for German Borrowers in maximum principal amount $75 milli ( "German Revolving Credit Facility," toger with U.S. Revolving Credit Facility, "Global Revolving Credit Facilities"); (3) caused Company or Domestic Borrowers to guarantee, amg or things, obligatis German Borrowers arising under German Revolving Credit Facility; (4) provides for Global Revolving Credit Facilities to mature December 18, 2019; (5) provides for an accordi feature permitting e or more increases in Global Revolving Credit Facilities in an aggregate principal amount not exceeding $50 milli, such that aggregate commitments under Global Revolving Credit Facilities do not exceed $250 milli. In additi, Domestic Borrowers may request letters credit under U.S. Revolving Credit Facility in an aggregate face amount not to exceed $20 milli outsting at any time, German Borrowers may request letters credit under German Revolving Credit Facility in an aggregate face amount not to exceed $2 milli outsting at any time. Proceeds borrowings under Global Revolving Credit Facilities may be used to finance working capital needs, permitted acquisitis, permitted investments (including certain inter-company loans), certain dividends, distributis or restricted payments, for or general corporate purposes. The csolidated statements cash flows present borrowings repayments under Global Revolving Credit Facilities predecessor revolving bank credit facility using a gross approach. This approach presents not ly discrete borrowings for transactis such as a business acquisiti, but also reflects all borrowings repayments that occur as part daily management cash receipts disbursements. For year ended December 31, 2016, all borrowings related to daily cash management. For year ended December 31, 2015, $38.0 milli was borrowed in cjuncti with FiberMark Acquisiti remaining $113.6 milli included borrowings for daily cash management. For year ended December 31, 2014, all borrowings related to daily cash management. The right Domestic Borrowers to borrow obtain letters credit under U.S. Revolving Credit Facility is subject to, amg or things, borrowing base Domestic Borrowers a csolidated basis ( "Domestic Borrowing Base"). The right German Borrowers to borrow obtain letters credit under German Revolving Credit Facility is similarly subject to a borrowing base requirement ( "German Borrowing Base"). The German Borrowing Base is initially determined a combined basis for all German Borrowers. Under certain circumstances (including occurrence an event default resulting from an act or omissi any German Borrower or German Guarantor), Administrative Agent may require German Borrowing Base to be determined separately for each German Borrowers. At its opti Company may, from time to time, allocate a porti Domestic Borrowing Base to German Borrowing Base (resulting in a correspding reducti Domestic Borrowing Base); however, principal amount borrowings outsting letter credit exposure under German Revolving Credit Facility may not at any time exceed German Revolving Credit Facility commitment amount n in effect. The guarantees German Guarantors are limited solely to German Revolving Credit Facility obligatis. Under terms Third Amended Credit Agreement related loan documentati, neir German Borrowers nor German Guarantors (collectively, "German Loan Parties") will be liable for any obligatis relating to U.S. Revolving Credit Facility. The Global Revolving Credit Facilities are secured by liens all or substantially all assets Domestic Borrowers. The German Revolving Credit Facility is secured by liens all or substantially all assets German Borrowers certain assets German Guarantors. Any liens granted by German Loan Parties secure ly German Revolving Credit Facility obligatis. Terms, Covenants Events Default. In general, borrowings under Global Revolving Credit Facilities will bear interest at LIBOR (which cannot be less than zero percent) plus an applicable margin ranging from 1.50% to 2.00%, depending amount availability under Third Amended Credit Agreement. In additi, Company may elect an Alternate Borrowing Rate ("ABR") for borrowings under Global Revolving Credit Facilities. ABR borrowings under Global Revolving Credit Facilities will bear interest at highest interest rate shown in following table: F-24

142 NEENAH PAPER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in millis, except as noted) U.S. Revolving Credit Facility Applicable Margin German Revolving Credit Facility Prime rate 0.00%-0.50% Not applicable Federal funds rate +0.50% 0.00%-0.50% Not applicable Mthly LIBOR (which cannot be less than zero percent) +1.00% 0.00%-0.50% Not applicable Overnight LIBOR (which cannot be less than zero percent) Not applicable 1.50%-2.00% The Company is also required to pay a mthly commitment fee unused amounts available under Global Revolving Credit Facilities at a per annum rate 0.25%. If aggregate availability under Global Revolving Credit Facilities is less than greater (i) $20 milli (ii) 10% maximum aggregate commitments under Global Revolving Credit Facilities as n in effect, Company is required to comply with a fixed charge coverage ratio (as defined in Third Amended Credit Agreement) not less than 1.1 to 1.0 for preceding four-quarter period, tested as end each quarter. Such compliance, ce required, would no lger be necessary ce (x) aggregate availability under Global Revolving Credit Facilities exceeds greater (i) 17.5% aggregate commitment for Global Revolving Credit Facilities (ii) $35 milli for 60 csecutive days (y) no default or event default has occurred is ctinuing during such 60-day period. As December 31, 2016, aggregate availability under Global Revolving Credit Facilities exceeded minimum required amount, Company is not required to comply with such fixed charge coverage ratio. The Third Amended Credit Agreement ctains covenants, which Company believes are ordinary stard for agreements this nature, with which Company its subsidiaries must comply during term agreement. Amg or things, such covenants restrict ability Company its subsidiaries to incur certain debt, incur or create certain liens, make specified restricted payments, authorize or issue capital stock, enter into transactis with ir affiliates, csolidate, merge with or acquire anor business, sell certain ir assets, or dissolve or wind up. In additi, if aggregate availability under Global Revolving Credit Facilities is less than greater (i) $25 milli (ii) 12.5% maximum aggregate commitments under Global Revolving Credit Facilities as n in effect, Company will be subject to increased reporting obligatis ctrols until such time as availability is more than greater (a) $35 milli (b) 17.5% maximum aggregate commitments under Global Revolving Credit Facilities as n in effect. Form 10-K Under most restrictive terms Third Amended Restated Credit Agreement, we are permitted to pay cash dividends or repurchase shares our comm stock up to amount available under Third Amended Restated Credit Agreement, as lg as availability under Third Amended Restated Credit Agreement exceeds $25 milli. If availability is below $25 milli, we are restricted from paying dividends or repurchasing shares. As December 31, 2016, Company's availability exceeded $25 milli, so this restricti did not apply. The Third Amended Credit Agreement also ctains events default customary for financings this type, including failure to pay principal or interest, materially false representatis or warranties, failure to observe covenants certain or terms Third Amended Credit Agreement, cross-defaults to certain or indebtedness, bankruptcy, insolvency, various ERISA foreign pensi violatis, incurrence material judgments changes in ctrol. Availability under Global Revolving Credit Facilities varies over time depending value Company's inventory, receivables various capital assets. As December 31, 2016, Company had $42.9 milli borrowings $1.2 milli in letters credit outsting under Global Revolving Credit Facilities $125.2 milli available credit (based exchanges rates at December 31, 2016). As December 31, , weightedaverage interest rate outsting Revolver borrowings was 2.8 percent 1.8 percent per annum, respectively. Under most restrictive terms 2021 Senior Notes, Company is permitted to pay cash dividends up to $25 milli in a calendar year, but not permitted to repurchase shares Company's comm stock. However, as lg as F-25

143 NEENAH PAPER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in millis, except as noted) net leverage ratio (net debt/ebitda) under 2021 Senior Notes is below 2.5x, Company can pay dividends or repurchase shares without limitati. In event net leverage ratio exceeds 2.5x, Company may still pay dividends in excess $25 milli or repurchase shares by utilizing "restricted payment baskets" as defined in indenture for 2021 Senior Notes. As December 31, 2016, since Company's leverage ratio was less than 2.5x, ne se covenants were restrictive to Company's ability to pay dividends or repurchase shares Company's comm stock. Or Debt In January 2013, Germany entered into a project financing agreement for cstructi a melt blown machine ( "Secd German Loan Agreement"). The agreement provides for 9.0 milli cstructi financing which is secured by melt blown machine. The loan matures in September 2022 principal is repaid in equal quarterly installments beginning in December The interest rate amounts outsting is 2.45% based actual days elapsed in a 360-day year is payable quarterly. At December 31, 2016, 6.5 milli ($6.8 milli, based exchange rates at December 31, 2016) was outsting under Secd German Loan Agreement. Principal Payments The following table presents Company's required debt payments: Thereafter Total Debt payments $ 1.2 $ 1.2 $ 44.1 $ 1.2 $ $ 0.8 $ Note 8. Pensi Or Postretirement Benefits Pensi Plans Except as described below for FiberMark, substantially all active employees Company's U.S. operatis participate in defined benefit pensi plans /or defined ctributi retirement plans. Germany has defined benefit plans designed to provide a mthly pensi up retirement for substantially all its employees in Germany. In additi, Company maintains a SERP which is a n-qualified defined benefit plan. The Company provides benefits under SERP to extent necessary to fulfill intent its defined benefit retirement plans without regard to limitatis set by Internal Revenue Code qualified defined benefit plans. During 2016, Company fered a lump sum payout opti to all eligible U.S. participants in Paper Pensi Plan FiberMark Pensi Plan with a deferred vested pensi benefit ( participant had a vested pensi benefit but was no lger an employee Company). For year ended December 31, 2016, 265 individuals elected opti Company paid a total $8.1 milli in lump-sum payments. For year ended December 31, 2016, as allowed under ASC Topic 715, Compensati Retirement Benefits ("ASC Topic 715"), Company adopted a policy to recognize settlement losses for deferred vested pensi benefit payments regardless wher amount exceeded sum expected service cost interest costs pensi plan for respective calendar year. In accordance with ASC Topic 715, for year ended December 31, 2016, Company measured liabilities post-retirement benefit plans recognized a settlement loss $0.8 milli. During 2014, Company fered a lump sum payout opti to all eligible U.S. participants in Paper Pensi Plan with a deferred vested pensi benefit ( participant had a vested pensi benefit but was no lger an employee Company). For year ended December 31, 2014, 425 individuals elected opti Company paid a total $14.0 milli in lump-sum payments. For year ended December 31, 2014, benefit payments under certain postretirement benefit plans exceeded sum expected service cost interest costs for se plans. In accordance with ASC Topic 715, for year ended December 31, 2014, Company measured liabilities post-retirement benefit plans recognized a settlement loss $3.5 milli. The Company's funding policy for its U.S. qualified defined benefit plan its U.K. defined benefit plan is to ctribute assets to fully fund projected benefit obligati. Subject to regulatory tax deductibility limits, any funding shortfall F-26

144 NEENAH PAPER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in millis, except as noted) is to be eliminated over a reasable number years. Nqualified plans providing pensi benefits in excess limitatis imposed by taxing authorities are not funded. There is no legal or governmental obligati to fund Germany's benefit plans as such Germany defined benefit plans are currently unfunded. As December 31, 2016, Germany had investments $1.6 milli that were restricted to payment certain postretirement employee benefits. As December 31, 2016, $0.6 milli $1.0 milli such investments are classified as Prepaid or current assets Or assets, respectively, csolidated balance sheet. The Company also holds $3.5 milli marketable securities that are designated for payment benefits under SERP as December 31, 2016, classified as Or assets csolidated balance sheet. The Company uses fair value pensi plan assets to determine pensi expense, rar than averaging gains losses over a period years. Investment gains or losses represent difference between expected return calculated using fair value assets actual return based fair value assets. The Company's pensi obligatis are measured annually as December 31. FiberMark Defined benefit plans FiberMark has a qualified defined benefit plan covering certain U.S. employees. During 2009, FiberMark fully froze this plan so that additial benefits cannot be earned as a result additial years service or increases in annual earnings. Plan assets are principally invested in equity, government corporate debt securities fixed income mutual funds. FiberMark has a defined benefit plan covering all U.K. employees, which is designed to provide a mthly pensi up retirement. This plan was fully frozen during 2011 plan assets are primarily invested in equity mutual funds. Multi-Employer plan The hourly employees Lowville, New York facility are covered by a multi-employer defined benefit plan. The Company's expense under this plan was less than $0.1 milli for year ended December 31, The Company ctributes to multi-employer pensi plan under a collective bargaining agreement which provides retirement benefits for certain uni employees. The risks participating in a multi-employer plan are different from single employer plans as assets ctributed are available to provide benefits to employees or employers unfunded obligatis from an employer that disctinues ctributis are respsibility all remaining employers. In additi, in event a plan's terminati or Company's withdrawal from plan, Company may be liable for a porti plan's unfunded vested benefits. The Company does not anticipate withdrawing from plan, nor is it aware any expected plan terminatis. Form 10-K The most recent Pensi Protecti Act ze status available is for plan's year-end at December 31, The ze status in following table is based informati that Company received from plan is certified by plan's actuary. Amg or factors, plans in red ze are generally less than 65% funded, plans in yellow ze are less than 80% funded, plans in green ze are at least 80% funded. Informati for multi-employer pensi plan in which Company participates is shown in table below. The "FIP/RP Status Pending/Implemented" column indicates a financial improvement plan ("FIP") or a rehabilitati plan ("RP") is eir pending or has been implemented for plan. For year ended December 31, 2015, FiberMark's ctributis to plan were less than 5% total plan ctributis. Pensi Fund EIN/Pensi Plan Number Pensi Ze Status 2015 FIP/RP Status Pending or Implemented Ctributis 2016 Surcharge Imposed Expirati Date Collective Bargaining Agreement PACE Industry Uni Management Pensi Fund Red Implemented $ 0.1 milli Yes 11/9/2021 F-27

145 NEENAH PAPER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in millis, except as noted) Or Postretirement Benefit Plans The Company maintains postretirement health care life insurance benefit plans for active employees Company former employees Canadian pulp operatis. The plans are generally nctributory for employees who were eligible to retire or before December 31, 1992 ctributory for most employees who became eligible to retire or after January 1, The Company does not provide a subsidized benefit to most employees hired after The Company's obligatis for postretirement benefits or than pensis are measured annually as December 31. At December 31, 2016, assumed inflatiary health care cost trend rates used to determine obligatis at December 31, 2016 costs for year ended December 31, 2017 is 7.0 percent gradually decreasing to an ultimate rate 4.5 percent in The assumed inflatiary health care cost trend rates used to determine obligatis at December 31, 2015 costs for year ended December 31, 2016 were 7.3 percent gradually decreasing to an ultimate rate 4.5 percent in F-28

146 NEENAH PAPER INC. INC. AND AND SUBSIDIARIES NOTES TO TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in in millis, except as as noted) The The following table table recciles benefit obligatis, plan plan assets, funded status net net liability informati Company's pensi or or postretirement benefit plans. Postretirement Benefits Or Or Pensi Benefits than than Pensis Ended Ended December 31, 31, Change in in Benefit Obligati: Benefit obligati at at beginning year year $ $ $ $ $ $ $40.7 Service cost cost Interest cost cost Currency (3.1) (3.1) (4.0) (4.0) (0.5) (0.5) Actuarial (gain) loss loss (18.8) (1.2) (1.2) Benefit payments from from plans plans (17.1) (14.9) (3.8) (3.8) (4.0) (4.0) Settlement payments (8.1) (8.1) Net Net transfer in/(out) (1) (1) (0.5) (0.5) Or Benefit obligati at at end end year year $ $ $ $ $ $ $ $ Change in in Plan Plan Assets: Fair Fair value value plan plan assets at at beginning year year $ $ $ $ $ $ $ $ Actual gain gain (loss) (loss) plan plan assets (6.0) (6.0) Employer ctributis Currency (1.7) (1.7) (0.5) (0.5) Benefit payments (15.8) (13.6) Settlement payments (8.1) (8.1) Net Net transfers in in (1) (1) Fair Fair value value plan plan assets at at end end year year $ $ $ $ $ $ $ $ Recciliati Funded Status Fair Fair value value plan plan assets $ $ $ $ $ $ $ $ Projected benefit obligati Net Net liability recognized in in statement financial positi $ $ (52.8) $ $ (51.8) $ $ (40.7) $ $ (40.5) Amounts recognized in in statement financial positi csist : : Current liabilities $ $ (3.8) (3.8) $ $ (1.5) (1.5) $ $ (4.3) (4.3) $ $ (3.8) (3.8) Ncurrent liabilities (49.0) (50.3) (36.4) (36.7) Net Net amount recognized $ $ (52.8) $ $ (51.8) $ $ (40.7) $ $ (40.5) Form 10-K (1) (1) For For year year ended December 31, 31, 2015, Company acquired $48.3 milli pensi liabilities $39.1 milli pensi assets in in cjuncti with with FiberMark Acquisiti. F-29

147 NEENAH PAPER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in millis, except as noted) Amounts recognized in accumulated or comprehensive income csist : Pensi Benefits December 31, Postretirement Benefits Or than Pensis Accumulated actuarial loss $ 95.8 $ 84.1 $ 4.9 $ 5.8 Prior service cost (0.4) (0.5) Total recognized in accumulated or comprehensive income $ 96.7 $ 85.3 $ 4.5 $ 5.3 Summary disaggregated informati about pensi plans follows: Assets Exceed ABO December 31, ABO Exceed Assets Total Projected benefit obligati $ $ $ 79.6 $ 80.0 $ $ Accumulated benefit obligati Fair value plan assets Compents Net Periodic Benefit Cost Pensi Benefits Ended December 31, Postretirement Benefits Or than Pensis Service cost $ 4.9 $ 5.5 $ 5.0 $ 1.3 $ 1.7 $ 1.7 Interest cost Expected return plan assets (a) (18.9) (19.3) (16.7) Recognized net actuarial loss Amortizati prior service cost (credit) (0.2) (0.2) (0.2) Amount settlement loss recognized Net periodic benefit cost (credit) Amounts related to disctinued operatis (14.9) 1.0 Net periodic benefit cost $ 9.5 $ (8.4) $ 11.8 $ 3.3 $ 3.4 $ 3.8 (a) The expected return plan assets is determined by multiplying fair value plan assets at prior year-end (adjusted for estimated current year cash benefit payments ctributis) by expected lg-term rate return. F-30

148 NEENAH PAPER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in millis, except as noted) Or Changes in Plan Assets Benefit Obligatis Recognized in Or Comprehensive Income Pensi Benefits Ended December 31, Postretirement Benefits Or than Pensis Net periodic benefit expense $ 9.5 $ (8.4) $ 11.8 $3.3 $ 3.4 $ 3.8 Accumulated actuarial gain (loss) 11.7 (7.1) 26.4 (0.9) 1.1 Prior service cost (credit) (0.3) (0.3) (0.3) Total recognized in or comprehensive income 11.4 (7.4) 26.1 (0.8) Total recognized in net periodic benefit cost or comprehensive income $ 20.9 $ (15.8) $ 37.9 $ 2.5 $ 4.7 $ 4.0 The estimated net actuarial loss prior service cost for defined benefit pensi plans expected to be amortized from accumulated or comprehensive income into net periodic benefit cost over next fiscal year are $7.3 milli $0.2 milli, respectively. The estimated net actuarial loss prior service (credit) for postretirement benefits or than pensis expected to be amortized from accumulated or comprehensive income into net periodic benefit cost over next fiscal year is $0.2 milli $(0.2) milli, respectively. Weighted-Average Assumptis Used to Determine Benefit Obligatis at December 31 Form 10-K Pensi Benefits Postretirement Benefits Or than Pensis Discount rate 4.16% 4.54% 3.69% 4.07% Rate compensati increase 2.22% 2.18% % % Weighted-Average Assumptis Used to Determine Net Periodic Benefit Cost for s Ended December 31 Pensi Benefits Ended December 31, Postretirement Benefits Or than Pensis Discount rate 4.54% 3.91% 4.88% 4.07% 4.05% 4.84% Expected lg-term return plan assets 6.20% 6.50% 6.50% % % % Rate compensati increase 2.18% 2.92% 2.96% % % % F-31

149 NEENAH PAPER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in millis, except as noted) Expected Lg-Term Rate Return Investment Strategies The expected lg-term rate return pensi fund assets held by Company's pensi trusts was determined based several factors, including input from pensi investment csultants projected lg-term returns broad equity bd indices. Also csidered were plans' historical 10-year 15-year compounded annual returns. It is anticipated that, average, actively managed U.S. pensi plan assets will generate annual lg-term rates return at least 6.20 percent. The expected lg-term rate return assets in plans was based an asset allocati assumpti approximately 43 percent with equity managers, with expected lg-term rates return approximately 8 to 10 percent, 57 percent with fixed income managers, with an expected lg-term rate return about 4 to 6 percent. The actual asset allocati is regularly reviewed periodically rebalanced to targeted allocati when csidered appropriate. Plan Assets Pensi plan asset allocatis are as follows: Percentage Plan Assets At December 31, Asset Category Equity securities 43% 34% 35% Debt securities 57% 64% 65% Cash mey-market funds % 2% % Total 100% 100% 100% The Company's investment objective for pensi plan assets are to ensure, over lg-term life pensi plans, an adequate pool assets to support benefit obligatis to participants, retirees, beneficiaries. Specifically, se objectives include desire to: (a) invest assets in a manner such that future assets are available to fund liabilities, (b) maintain liquidity sufficient to pay current benefits when due (c) diversify, over time, amg asset classes so assets earn a reasable return with acceptable risk to capital. The target investment allocati permissible allocati range for plan assets by category are as follows: Strategic Target Permitted Range Asset Category Equity securities 43% 38-48% Debt securities / Fixed Income 57% 52-62% As December 31, 2016, no company or group companies in a single industry represented more than five percent plan assets. The Company's investment assumptis are established by an investment committee composed members senior management are validated periodically against actual investment returns. As December 31, 2016, Company's investment assumptis are as follows: (a) The plan should be substantially fully invested in debt equity securities at all times because substantial cash holdings will reduce lg-term rates return; (b) Equity investments will provide greater lg-term returns than fixed income investments, although with greater short-term volatility; (c) It is prudent to diversify plan investments across major asset classes; F-32

150 NEENAH PAPER INC. INC. AND AND SUBSIDIARIES NOTES TO TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in in millis, except as as noted) (d) (d) Allocating a porti a plan plan assets to to foreign equities will will increase portfolio diversificati, decrease portfolio risk risk provide potential for for lg-term returns; (e) (e) Investment managers with with active mates can can reduce portfolio risk risk below market risk risk potentially add add value value through security selecti strategies, a porti a plan plan assets should be be allocated to to such such active mates; (f) (f) A A compent passive, indexed management can can benefit plans plans through greater diversificati lower cost, cost, a porti a plan plan assets should be be allocated to to such such passive mates, (g) (g) It is It is appropriate to to retain more more than than e e investment manager, given given size size plans, provided that that such such managers fer fer asset asset class class or or style style diversificati. For For years years ended December 31, 31, 2016, 2016, , 2014, no no plan plan assets were were invested in in Company's securities. Cash Cash Flows At At December 31, 31, 2016, 2016, Company expects to to make make aggregate ctributis to to qualified pensi trusts trusts payments pensi benefits for for unfunded pensi plans plans in in approximately $14.0 $14.0 milli (based exchange rates rates at December 31, 31, 2016). Future Benefit Payments The The following benefit payments, which reflect expected future service, as as appropriate, are are expected to to be be paid: paid: Postretirement Benefits Or Or than than Pensi Plans Plans Pensis $ $ $ $ s Form 10-K Health Care Care Cost Cost Trends Assumed health care care cost cost trend trend rates rates affect amounts reported for for postretirement health care care benefit plans. A A e e percentage-point change in in assumed health care care cost cost trend trend rates rates would have have following effects: One One Percentage- Point Point Increase Decrease Effect total total service interest cost cost compents $ $ $ $ Effect post-retirement benefit or or than than pensi obligati (0.3) (0.3) Defined Ctributi Retirement Plans Company ctributis to to defined ctributi retirement plans plans are are primarily based age age compensati covered employees. Ctributis to to se se plans, all all which were were charged to to expense, were were $2.7 $2.7 milli in in 2016, $2.5 $2.5 milli in in $1.9 $1.9 milli in in In In additi, Company maintains a supplemental a retirement ctributi plan plan ( ( "SRCP") which is is a n-qualified, a unfunded defined ctributi plan. plan. The The Company provides benefits under SRCP to to extent necessary to to fulfill intent its its defined ctributi retirement plans plans without regard to to F-33 F-33

151 NEENAH PAPER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in millis, except as noted) limitatis set by Internal Revenue Code qualified defined ctributi plans. For years ended December 31, 2016, , Company recognized expense related to SRCP $0.4 milli, $0.2 milli $0.1 milli, respectively. At December 31, 2016 December 31, 2015, unfunded obligati SRCP was $1.3 milli $0.9 milli, respectively. Investment Plans The Company provides voluntary ctributi investment plans to substantially all North American employees. Under plans, Company matches a porti employee ctributis. For years ended December 31, 2016, , costs charged to expense for Company matching ctributis under se plans were $3.1 milli, $2.7 milli $1.9 milli, respectively. Note 9. Stock Compensati Plans The Company established 2004 Omnibus Stock Incentive Plan ( "2004 Omnibus Plan") in December 2004 reserved 3,500,000 shares $0.01 par value comm stock ("Comm Stock") for issuance under Omnibus Plan. Pursuant to terms 2004 Omnibus Plan, compensati committee Company's Board Directors may grant various types equity-based compensati awards, including incentive nqualified stock optis, SARs, restricted stock, RSUs, RSUs with performance cditis performance units, in additi to certain cash-based awards. All grants under Omnibus Plan will be made at fair market value no grant may be repriced. In general, optis expire 10 years from date grant vest over a 3-year service period. At 2013 Annual Meeting Stockholders, Company's stockholders approved an amendment restatement 2004 Omnibus Plan (as amended restated "2013 Omnibus Plan"). The amendment restatement authorized Company to reserve an additial 1,577,000 shares Comm Stock for future issuance. As December 31, 2016, Company had 950,000 shares Comm Stock reserved for future issuance under 2013 Omnibus Plan. As December 31, 2016, number shares available for future issuance was reduced by approximately 17,000 shares for outsting SARs where closing market price for Company's comm stock was greater than exercise price SAR. The Company accounts for stock-based compensati pursuant to fair value recogniti provisis ASC Topic 718, Compensati Stock Compensati ("ASC Topic 718"). Valuati Expense Informati Under ASC Topic 718 Substantially all stock-based compensati expense has been recorded in selling, general administrative expenses. The following table summarizes stock-based compensati costs related income tax benefits. Ended December 31, Stock-based compensati expense $ 5.8 $ 6.5 $ 6.0 Income tax benefit (2.2) (2.5) (2.3) Stock-based compensati, net income tax benefit $ 3.6 $ 4.0 $ 3.7 F-34

152 NEENAH PAPER INC. INC. AND AND SUBSIDIARIES NOTES TO TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in in millis, except as as noted) The The following table table summarizes total total compensati costs costs related to to Company's equity awards amounts recognized in in year year ended December 31, 31, Performance Stock Stock Optis Shares RSUs RSUs Unrecognized compensati cost cost December 31, 31, $ $ $ $ Grant date date fair fair value value current year year grants Compensati expense recognized (1.7) (1.7) (4.1) (4.1) Unrecognized compensati cost cost December 31, 31, $ $ $ $ Expected amortizati period (in (in years) Stock Stock Optis/SARs In In August 2014, Compensati Committee Board Directors approved cversi approximately 545,000 outsting n-qualified stock stock optis held held by by U.S. U.S. employees U.S. U.S. n-employee directors to to an an equal equal number SARs. Up Up exercise, holder an an SAR SAR will will receive comm shares equal equal to to number SARs exercised multiplied by by a fracti a where numerator is is equal equal to to market price price at at time time exercise minus exercise price price SAR SAR denominator is is equal equal to to market price price at at time time exercise. The The SARs can can ly ly be be settled for for shares Comm Stock Company will will not not receive any any cash cash proceeds up up exercise. All All or or ctractual terms terms SARs are are unchanged from from those those cverted n-qualified stock stock optis. At At date date cversi fair fair value value SARs was was equal equal to to fair fair value value stock stock optis exchanged. As As a result, a Company did did not not recognize any any additial compensati expense due due to to cversi. The The following tables present informati regarding stock stock optis awarded during years years ended December 31, 31, 2016, 2016, Form 10-K Nqualified stock stock optis granted 113,935 87,930 95,670 Per Per share share weighted-average exercise price price $ $ $ $ $ $ Per Per share share weighted-average grant grant date date fair fair value value $ $ $ $ $ $ The The weighted-average grant grant date date fair fair value value for for stock stock optis granted for for years years ended December 31, 31, 2016, was was estimated using using Black-Scholes opti valuati model with with following assumptis: Expected term term in in years years Risk Risk free free interest rate rate 1.8% 1.8% 1.4% 1.4% 1.9% 1.9% Volatility 32.1% 34.4% 36.5% Dividend yield yield 3.0% 3.0% 2.0% 2.0% 2.2% 2.2% Expected volatility expected term term were were estimated by by reference to to historical stock stock price price performance Company historical data data for for Company's stock stock opti awards, respectively. The The risk-free interest rate rate was was based yield yield U.S. U.S. Treasury bds with with a remaining a term term approximately equal equal to to expected term term stock stock opti awards. Forfeitures were were estimated at at date date grant. During year year ended December 31, 31, 2012, Company awarded nqualified stock stock optis to to its its President Chief Chief Executive Officer to to purchase 125,000 shares Comm Stock (subject to to forfeiture due due to to terminati employment or or cditis). The The exercise price price such such nqualified stock stock opti awards was was $24.09 per per share share optis expire in in ten ten years. As As December 31, 31, 2016, percent opti award had had been been earned. The The grant grant date date fair fair value value such such stock stock optis was was $9.55 per per share share was was estimated using using a "Mte a Carlo" simulati valuati model. F-35

153 NEENAH PAPER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in millis, except as noted) The following table summarizes stock opti activity under Omnibus Plan for year ended December 31, 2016: Number Stock Optis Weighted-Average Exercise Price Optis outsting December 31, ,611 $ Add: Optis granted 113,935 $ Less: Optis exercised 105,806 $ Less: Optis forfeited/cancelled 4,278 $ Optis outsting December 31, ,462 $ The status outsting exercisable stock optis as December 31, 2016, summarized by exercise price follows: Optis Vested or Expected to Vest Optis Exercisable Exercise Price Number Optis Weighted- Average Remaining Ctractual Life (s) Weighted- Average Exercise Price Aggregate Intrinsic Value (a) Number Optis Weighted- Average Exercise Price Aggregate Intrinsic Value (a) $7.41 $ , $ $ ,095 $ $ 4.7 $21.13 $ , $ ,695 $ $32.87 $ , $ ,699 $ $50.60 $ , $ ,847 $ >$ , $ $ , $ $ ,336 $ $ 19.3 (a) Represents total pre-tax intrinsic value as December 31, 2016 that opti holders would have received had y exercised ir optis as such date. The pre-tax intrinsic value is based closing market price for Company's comm stock $85.20 December 31, The aggregate pre-tax intrinsic value stock optis exercised for years ended December 31, 2016, was $4.7 milli, $5.5 milli $12.7 milli, respectively. The following table summarizes status Company's unvested stock optis as December 31, 2016 activity for year n ended: Number Stock Optis Weighted-Average Grant Date Fair Value Outsting December 31, ,017 $ Add: Optis granted 113,935 $ Less: Optis vested 213,826 $ Outsting December 31, ,126 $ As December 31, 2016, certain participants met age service requirements that allowed ir optis to qualify for accelerated vesting up retirement. As December 31, 2016, re were approximately 114,000 stock optis subject to accelerated vesting that such participants would have been eligible to exercise if y had retired as such date. The F-36

154 NEENAH PAPER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in millis, except as noted) aggregate grant date fair value optis subject to accelerated vesting was $1.6 milli. For year ended December 31, 2016, stock-based compensati expense for such optis was $0.9 milli. For year ended December 31, 2016, aggregate grant date fair value optis vested, including optis subject to accelerated vesting, was $2.1 milli. Stock optis that reflect accelerated vesting for expense recogniti become exercisable according to ctract terms stock opti grant. Performance Units/RSUs For year ended December 31, 2016, Company granted target awards 54,364 Performance Units. The measurement period for Performance Units is January 1, 2016 through December 31, The Performance Units vest December 31, Comm Stock equal to not less than 40 percent not more than 200 percent Performance Unit target will be awarded based Company's return invested capital, csolidated revenue growth total return to shareholders relative to companies in Russell 2000 Value small cap index. As December 31, 2016, Company expects that Comm Stock equal to approximately 138 percent Performance Unit targets will be earned. The market price date grant for Performance Units was $57.95 per share. The Company is recognizing stockbased compensati expense pro-rata over vesting term RSUs. For year ended December 31, 2016, Company awarded 8,083 RSUs to n-employee members Board Directors 1,652 RSUs (net forfeitures) to employees. The weighted-average grant date fair value such awards was $67.77 per share awards vest e year from date grant. During vesting period, holders RSUs are entitled to dividends, but RSUs do not have voting rights are forfeited in event holder is no lger an employee or member Board Directors vesting date. The following table summarizes activity Company's unvested stock-based awards (or than stock optis) for years ended December 31, 2016, : Form 10-K RSUs Weighted-Average Grant Date Fair Value Performance Units Weighted-Average Grant Date Fair Value Outsting December 31, ,191 $ ,000 $ Shares granted (a) 11,492 $ ,900 $ Shares vested (150,270) $ $ Performance Shares vested 94,710 $ (77,000) $ Shares expired or cancelled (2,829) $ (2,630) $ Outsting December 31, ,294 $ ,270 $ Shares granted (a) 13,415 $ ,060 $ Shares vested (105,564) $ (810) $ Performance Shares vested 107,219 $ (58,270) $ Shares expired or cancelled (1,526) $ (1,200) $ Outsting December 31, ,838 $ ,050 $ Shares granted (a) 10,047 $ ,364 $ Shares vested (110,749) $ $ Performance Shares vested 62,874 $ (43,050) $ Shares expired or cancelled (291) $ (858) $ Outsting December 31, 2016 (b) 80,719 $ ,506 $ F-37

155 NEENAH PAPER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in millis, except as noted) (a) For years ended December 31, 2016, , includes 312 RSUs, 495 RSUs 622 RSUs, respectively, that were granted in lieu cash dividends. Such dividends-in-kind vest ccurrently with underlying RSUs. (b) The aggregate pre-tax intrinsic value outsting RSUs as December 31, 2016 was $6.9 milli. The aggregate pre-tax intrinsic value restricted stock RSUs that vested for years ended December 31, 2016, was $9.3 milli, $6.6 milli $8.9 milli, respectively. Excess Tax Benefits Excess tax benefits represent difference between tax deducti Company will receive its tax return for compensati recognized by employees up vesting or exercise stock-based awards tax benefit recognized for grant date fair value such awards. For years ended December 31, 2016, , Company recognized excess tax benefits related to exercise or vesting stock-based awards $3.1 milli, $2.6 milli $5.6 milli, respectively. In 2016, Company adopted ASC Topic No See Note 2, "Summary Significant Accounting Policies Recently Adopted Accounting Stards." Note 10. Stockholders' Equity Comm Stock The Company has authorized 100 milli shares Comm Stock. Holders Company's Comm Stock are entitled to e vote per share. In May 2016, Company's Board Directors authorized a program that would allow Company to repurchase up to $25 milli its outsting Comm Stock over next 12 mths ( "2016 Stock Purchase Plan"). Purchases by Company under 2016 Stock Purchase Plan would be made from time to time in open market or in privately negotiated transactis in accordance with requirements applicable law. The timing amount any purchases will depend share price, market cditis or factors. The 2016 Stock Purchase Plan does not require Company to purchase any specific number shares may be suspended or disctinued at any time. The 2016 Stock Purchase Plan is expected to be funded using cash h or borrowings under Company's bank credit facility. The Company had a substantially identical $25 milli repurchase program in place during preceding 12 mths that expired in May 2016 ( "2015 Stock Purchase Plan"). The Company had a $10 milli share repurchase program in place during preceding 12 mths that expired in May 2014 ( "2013 Stock Purchase Plan"). The following table shows shares purchased under respective stock purchase plans: Ended December 31, Shares $ Shares $ Shares $ 2016 Stock Purchase Plan 91,542 $ Stock Purchase Plan 93,600 $ ,100 $ 2.4 $ 2014 Stock Purchase Plan 60,900 $ ,600 $ Stock Purchase Plan F-38

156 NEENAH PAPER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in millis, except as noted) As December 31, 2016, under terms Third Amended Restated Credit Agreement 2021 Senior Notes, Company has limitatis its ability to repurchase shares its Comm Stock, as furr discussed in Note 7, "Debt." For years ended December 31, 2016, , Company acquired 46,000 shares, 40,000 shares 56,000 shares Comm Stock, respectively, at a cost $3.8 milli, $2.5 milli $3.4 milli, respectively, for shares surrendered by employees to pay taxes due vested restricted stock awards SARs exercised. Each share Comm Stock ctains a preferred stock purchase right that is associated with share. These preferred stock purchase rights are transferred ly with shares Comm Stock. The preferred stock purchase rights become exercisable separately certificated ly up a "Rights Distributi Date" as that term is defined in stockholder rights agreement adopted by Company at time Spin-Off. In general, a Rights Distributi Date occurs 10 business days following eir se events: (i) a pers or group has acquired or obtained right to acquire beneficial ownership 15 percent or more outsting shares Company's Comm Stock n outsting or (ii) a tender fer or exchange fer is commenced that would result in a pers or group acquiring 15 percent or more outsting shares Comm Stock n outsting. Preferred Stock The Company has authorized 20 milli shares $0.01 par value preferred stock. The preferred stock may be issued in e or more series with such designatis preferences for each series as shall be stated in resolutis providing for designati issue each such series adopted by Board Directors Company. The Board Directors is authorized by Company's articles incorporati to determine voting, dividend, redempti liquidati preferences pertaining to each such series. No shares preferred stock have been issued by Company. Or Comprehensive Income (Loss) Comprehensive income (loss) includes, in additi to net income (loss), gains losses recorded directly into stockholders' equity csolidated balance sheet. These gains losses are referred to as or comprehensive income items. Accumulated or comprehensive income (loss) csists foreign currency translati gains (losses), deferred gains (losses) "available-for-sale" securities, adjustments related to pensis or post-retirement benefits. The Company does not provide income taxes for foreign currency translati adjustments related to indefinite investments in foreign subsidiaries. Form 10-K The compents accumulated or comprehensive income (loss), net applicable income taxes are as follows: December 31, Unrealized foreign currency translati losses, net income tax benefit $0.4 $0.0, respectively $ (27.5) $ (20.8) Net loss from pensi or postretirement benefit liabilities (net income tax benefits $36.8 milli $33.8 milli, respectively) (64.5) (57.5) Accumulated or comprehensive loss $ (92.0) $ (78.3) F-39

157 NEENAH PAPER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in millis, except as noted) The following table presents changes in accumulated or comprehensive income ("AOCI"): Pretax Amount Ended December 31, Tax Effect Net Amount Pretax Amount Tax Effect Net Amount Pretax Amount Tax Effect Net Amount Unrealized foreign currency translati gains (losses) $ (7.1) $ 0.4 $ (6.7) $ (15.0) $ $ (15.0) $ (23.7) $ $ (23.7) Adjustment to pensi or benefit liabilities (10.0) 3.0 (7.0) 6.3 (1.2) 5.1 (26.1) 8.7 (17.4) Or comprehensive income (loss) $ (17.1) $ 3.4 $ (13.7) $ (8.7) $ (1.2) $ (9.9) $ (49.8) $ 8.7 $ (41.1) For years ended December 31, 2016, , Company reclassified $7.2 milli, $7.1 milli $4.7 milli, respectively, costs from accumulated or comprehensive income to cost products sold selling, general administrative expenses Csolidated Statements Operatis. For years ended December 31, 2016, , Company recognized an income tax benefit $2.8 milli, $2.7 milli $1.7 milli, respectively, related to such reclassificatis classified as Provisi for income taxes Csolidated Statements Operatis. For year ended December 31, 2016, Company reclassified $0.8 milli costs from accumulated or comprehensive income to pensi plan settlement charge Csolidated Statements Operatis. For year ended December 31, 2015, Company reclassified $5.5 milli costs from accumulated or comprehensive income to loss from disctinued operatis Csolidated Statements Operatis. For year ended December 31, 2014, Company reclassified $3.5 milli costs from accumulated or comprehensive income to pensi plan settlement charge Csolidated Statements Operatis. For years ended December 31, , Company recognized an income tax benefit $0.2 milli $1.3 milli, respectively, related to such reclassificatis classified as Provisi for income taxes Csolidated Statements Operatis. For year ended December 31, 2015, Company recognized an income tax benefit $2.1 milli, related to reclassificatis classified as Loss from disctinued operatis, net income taxes Csolidated Statements Operatis. Note 11. Commitments Leases The future minimum obligatis under operating leases having a ncancelable term in excess e year as December 31, 2016, are as follows: 2017 $ Thereafter 4.0 Future minimum lease obligatis $ 12.8 For years ended December 31, 2016, rent expense under operating leases was $6.4 milli, $5.4 milli $4.5 milli, respectively. F-40

158 NEENAH PAPER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in millis, except as noted) Purchase Commitments The Company has certain minimum purchase commitments that extend beyd December 31, Commitments under se ctracts are approximately $14.3 milli, $2.2 milli $1.3 milli for years ended December 31, 2017, , respectively. Such purchase commitments for year ended December 31, 2017 are primarily for coal corn starch ctracts. Although Company is primarily liable for payments above-mentied leases purchase commitments, management believes exposure to losses, if any, under se arrangements is not material. Note 12. Ctingencies Legal Matters Litigati The Company is involved in certain legal actis claims arising in ordinary course business. While outcome se legal actis claims cannot be predicted with certainty, it is opini management that outcome any such claim which is pending or threatened, eir individually or a combined basis, will not have a material effect csolidated financial cditi, results operatis or liquidity Company. Income Taxes The Company periodically undergoes examinati by Internal Revenue Service ( "IRS") as well as various state foreign jurisdictis. These tax authorities routinely challenge certain deductis credits reported by Company its income tax returns. No significant tax audit findings are being ctested at this time with eir IRS or any state or foreign tax authority. Envirmental, Health Safety Matters The Company is subject to federal, state local laws, regulatis ordinances relating to various envirmental, health safety matters. The Company is in compliance with, or is taking actis designed to ensure compliance with, se laws, regulatis ordinances. However, nature Company's business exposes it to risk claims with respect to envirmental, health safety matters, re can be no assurance that material costs or liabilities will not be incurred in cnecti with such claims. Except for certain orders issued by envirmental, health safety regulatory agencies, with which management believes Company is in compliance which management believes are immaterial to results operatis Company's business, is not currently named as a party in any judicial or administrative proceeding relating to envirmental, health safety matters. Form 10-K While Company has incurred in past several years, will ctinue to incur, capital operating expenditures in order to comply with envirmental, health safety laws, regulatis ordinances, management believes that Company's future cost compliance with envirmental, health safety laws, regulatis ordinances, its exposure to liability for envirmental, health safety claims will not have a material effect its financial cditi, results operatis or liquidity. However, future events, such as changes in existing laws regulatis or ctaminati sites owned, operated or used for waste disposal by Company (including currently unknown ctaminati ctaminati caused by prior owners operators such sites or or waste generators) may give rise to additial costs which could have a material effect Company's financial cditi, results operatis or liquidity. The Company incurs capital expenditures necessary to meet legal requirements orwise relating to protecti envirment at its facilities in United States internatially. The Company's anticipated capital expenditures for envirmental projects are not expected to have a material effect Company's financial cditi, results operatis or liquidity. F-41

159 NEENAH PAPER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in millis, except as noted) Employees Labor Relatis As December 31, 2016, Company had approximately 2,303 regular full-time employees whom 1,099 hourly 526 salaried employees were located in United States 405 hourly 273 salaried employees were located in Europe. All Company's U.S. hourly uni employees are represented by United Steelworkers Uni ( "USW"). Hourly uni employees at Company's Bolt, Engl manufacturing facility are represented by Unite Uni ("UNITE"). The following table shows status Company's bargaining agreements as December 31, Ctract Expirati Date Locati Uni Number Employees June 2017 Germany IG BCE (a) January 2018 Whiting, WI (b) USW 201 June 2018, WI (b) USW 267 July 2018 Munising, MI (b) USW 198 May 2019 Applet, WI (b) USW 75 August 2021 Brattleboro, VT USW 69 November 2021 Lowville, NY USW 98 (a) Under German law uni membership is voluntary does not need to be disclosed to Company. As a result, number employees covered by collective bargaining agreement with IG BCE cannot be determined. (b) On pensi matters Whiting,, Munising Applet paper mills have bargained jointly with USW. The current agreement pensi matters will remain in effect until September Approximately 50 percent salaried employees 80 percent hourly employees Germany are eligible to be represented by Mining, Chemicals Energy Trade Uni, Industriegewerkschaft Bergbau, Chemie Energie ( "IG BCE"). In June 2015, IG BCE a natial trade associati representing all employers in industry signed a collective bargaining agreement covering uni employees Germany that expires in June Under German law uni membership is voluntary does not need to be disclosed to Company. As a result, number employees covered by collective bargaining agreement with IG BCE that expires in June 2017 cannot be determined. As December 31, 2016, no employees are covered under collective bargaining agreements that expire in next 12 mths, with excepti employees covered by collective bargaining arrangement with IG BCE. F-42

160 NEENAH PAPER INC. INC. AND AND SUBSIDIARIES NOTES TO TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in in millis, except as as noted) Note Note Disctinued Operatis Disctinued Operatis On On October 31, 31, 2015, Company sold sold Lahnstein Mill Mill to to a privately-owned a enterprise specializing in in equity holdings in in German medium-sized companies, for for net net cash cash proceeds approximately $5.4 $5.4 milli. The The buyer acquired all all assets liabilities Lahnstein Mill, Mill, including pensi related liabilities approximately $21 $21 milli. The The Lahnstein Mill, Mill, which had had annual sales sales approximately milli, had had been been operating as as a st-ale a business, manufacturing n-woven wallcoverings various or or specialty papers. The The sale sale focuses Company's portfolio targeted growth markets such such as as filtrati, premium fine fine papers packaging or or performance materials. Up Up reaching an an agreement for for sale sale Lahnstein Mill, Mill, Company compared carrying value value Lahnstein Mill Mill assets to to fair fair value value such such assets reflected in in sales sales agreement. As As a result, a Company recognized an an impairment charge $12.0 milli to to reduce carrying value value Lahnstein Mill Mill assets to to fair fair value. In In additi, Company recognized approximately $1.7 $1.7 milli transacti costs costs related to to sale sale in in For For year year ended December 31, 31, 2016, 2016, disctinued operatis reported csolidated statements operatis includes an an additial loss loss sale sale arising from from final final adjustments to to transacti price. price. The The following table table presents selected financial informati for for disctinued operatis: Ended Ended December 31, 31, Net Net sales sales $ $ $ $ $ $ Cost Cost products sold sold Gross Prit Selling, general administrative expenses Restructuring costs costs Or income net net (0.3) (0.3) (0.3) (0.3) Income (Loss) From Disctinued Operatis Before Income Taxes Loss Loss sale sale (a) (a) (0.6) (0.6) (13.6) Income (loss) (loss) before income taxes taxes (0.6) (0.6) (13.4) Income tax tax provisi (benefit) (a) (a) (0.2) (0.2) (4.0) (4.0) Income (loss) (loss) from from disctinued operatis $ $ (0.4) (0.4) $ $ (9.4) (9.4) $ $ Form 10-K (a) (a) For For 2015, this this amount includes a net a net curtailment gain gain related to to divesture pensi plan plan $15.8 milli, including a $5.5 a $5.5 milli write-f deferred actuarial losses. The The following table table presents selected cash cash flow flow informati for for disctinued operatis for for years years ended December 31, 31, : Ended Ended December 31, 31, Depreciati amortizati $ $ $ $ Capital expenditures $ $ $ $ F-43

161 NEENAH PAPER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in millis, except as noted) Note 14. Business Segment Geographic Informati On July 1, 2015, Company reorganized its internal management structure, accordingly, addressed its segment reporting structure. As a result this reorganizati, Or operating segment (composed n-premium Index, Tag Vellum Bristol product lines acquired as part purchase Wausau brs) was combined with Fine Paper Packaging operating segment to reflect manner in which this business is managed. Segment informati for prior periods has been restated to cform to current period presentati. In additi, as part FiberMark acquisiti, Company acquired certain product lines composed papers sold to cverters for end uses such as covering materials for datebooks, diaries, yearbooks traditial photo albums. Due to dissimilar nature se products, management decided that y would not be managed as part eir existing Fine Paper Packaging or Technical Products businesses. These product lines represent an operating segment which does not meet quantitative threshold for a reportable segment. The Company's reportable operating segments now csist Technical Products, Fine Paper Packaging Or. The Technical Products segment is an aggregati Company's filtrati performance materials businesses which are similar in terms ecomic characteristics, nature products, processes, customer class product distributi methods. The technical products business is an internatial producer fiber-formed, coated /or saturated specialized media that delivers high performance benefits to customers. Included in this segment are filtrati media ("Filtrati"), tape abrasives backings products ("Backings"), durable label specialty substrate products ("Specialty"). The following table presents sales by product category for technical products business: For ended December 31, Filtrati 42% 45% 42% Backings 31% 30% 29% Specialty 27% 25% 29% Total 100% 100% 100% The fine paper packaging business is a leading supplier premium printing or high end specialty papers ("Graphic Imaging"), premium packaging ("Packaging") specialty fice papers ("Filing/Office") primarily in North America. The following table presents sales by product category for fine paper packaging business: For ended December 31, Graphic Imaging 81% 80% 91% Packaging 14% 15% 9% Filing/Office 5% 5% % Total 100% 100% 100% Each segment employs different technologies marketing strategies. Disclosure segment informati is same basis that management uses internally for evaluating segment performance allocating resources. Transactis between segments are eliminated in csolidati. The costs shared services, or administrative functis managed a comm basis, are allocated to segments based usage, where possible, or or factors based nature activity. General corporate expenses that do not directly support operatis business segments are shown as F-44

162 NEENAH PAPER INC. INC. AND AND SUBSIDIARIES NOTES TO TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in in millis, except as as noted) Unallocated corporate costs. costs. The The accounting policies reportable operating segments are are same same as as those those described in in Note Note 2, 2, "Summary Significant Accounting Policies." Business Segments Ended Ended December 31, 31, Net Net sales sales Technical Products $ $ $ $ $ $ Fine Fine Paper Packaging Or Csolidated $ $ $ $ $ $ Ended Ended December 31, 31, Operating income (loss) (loss) Technical Products (a) (a) $ $ $ $ $ $ Fine Fine Paper Packaging (b) (b) Or (c) (c) (1.1) (1.1) (2.0) (2.0) Unallocated corporate costs costs (d) (d) (21.1) (18.0) (20.2) Csolidated $ $ $ $ $ $ Form 10-K (a) (a) Operating income for for year year ended December 31, 31, included integrati costs costs $1.4 $1.4 milli. Operating income for for year year ended December 31, 31, included acquisiti, integrati restructuring costs costs $1.7 $1.7 milli. Operating income for for year year ended December 31, 31, includes integrati restructuring costs costs $1.6 $1.6 milli. (b) (b) Operating income for for years years ended December 31, 31, included acquisiti integrati costs costs $1.8 $1.8 milli $1.5 $1.5 milli, respectively. (c) (c) Operating income for for year year ended December 31, 31, included acquisiti integrati costs costs $1.1 $1.1 milli $2.4 $2.4 milli, respectively. (d) (d) Unallocated corporate costs costs for for year year ended December 31, 31, included $2.7 $2.7 milli pre-operating costs costs related to to cversi a fine a fine paper paper machine to to filtrati $0.8 $0.8 milli for for a pensi a plan plan settlement charge. December 31, 31, included $0.8 $0.8 milli costs costs related to to this this filtrati project. Unallocated corporate costs costs for for year year ended December 31, 31, included a pensi a plan plan settlement charge $3.5 $3.5 milli, a loss a loss early early extinguishment debt debt $0.2 $0.2 milli $0.7 $0.7 milli restructuring costs. costs. F-45

163 NEENAH PAPER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in millis, except as noted) Ended December 31, Depreciati amortizati Technical Products $ 18.1 $ 16.5 $ 14.6 Fine Paper Packaging Or Corporate Total Ctinuing Operatis Disctinued operatis Csolidated $ 32.0 $ 31.5 $ 30.0 Ended December 31, Capital expenditures Technical Products $ 57.9 $ 36.0 $ 16.1 Fine Paper Packaging Or Corporate Total Ctinuing Operatis Disctinued operatis Csolidated $ 68.5 $ 48.1 $ 27.9 Total Assets (a) December 31, Technical Products $ $ Fine Paper Packaging Corporate or (b) Total $ $ (a) Segment identifiable assets are those that are directly used in segments operatis. (b) Corporate assets are primarily cash deferred income taxes. Geographic Informati Ended December 31, Net sales United States $ $ $ Europe Csolidated $ $ $ F-46

164 NEENAH PAPER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in millis, except as noted) Net sales are attributed to geographic areas based physical locati selling entities. December 31, Total Assets United States $ $ Europe Canada Total $ $ December 31, Lg-Lived Assets United States $ $ Europe Total $ $ Lg-lived assets csist principally property equipment, intangibles, goodwill or assets. Ccentratis Form 10-K In July 2014, Unisource Worldwide, Inc ("Unisource") xpedx, formerly owned by Internatial Paper ("xpedx") merged to form Veritiv Corporati ("Veritiv"). For year ended December 31, 2016, sales to Veritiv represented approximately 8 percent csolidated net sales approximately 15 percent net sales fine paper packaging business. For years ended December 31, sales to Unisource xpedx ( as merged Veritiv) represented approximately 10 percent csolidated net sales approximately 20 percent net sales fine paper packaging business. Except for certain specialty latex grades specialty stwood pulp used by Technical Products, management is not aware any significant ccentrati business transacted with a particular supplier that could, if suddenly eliminated, have a material effect its operatis. Note 15. Supplemental Data Supplemental Statement Operatis Data Summary Advertising Research Development Expenses Ended December 31, Advertising expense $ 6.2 $ 6.8 $ 7.0 Research development expense (a) Adverting expense research development expense are recorded in selling, general administrative expenses csolidated statements operatis. F-47

165 NEENAH PAPER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in millis, except as noted) Supplemental Balance Sheet Data Summary Accounts Receivable net December 31, From customers $ 98.0 $ 99.0 Less allowance for doubtful accounts sales discounts (1.5) (1.7) Total $ 96.5 $ 97.3 Summary Inventories December 31, Inventories by Major Class: Raw materials $ 31.6 $ 30.4 Work in progress Finished goods Supplies or Excess FIFO over LIFO cost (8.2) (10.0) Total $ $ The FIFO value inventories valued LIFO method was $106.8 milli $118.2 milli at December 31, , respectively. For year ended December 31, , income from ctinuing operatis before income taxes was reduced by approximately $0.1 milli due to a decrease in certain LIFO inventory quantities. Summary Prepaid Or Current Assets December 31, Prepaid or current assets $ 10.5 $ 13.5 Spare parts Receivable for income taxes Total $ 20.4 $ 24.5 F-48

166 NEENAH PAPER INC. INC. AND AND SUBSIDIARIES NOTES TO TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in in millis, except as as noted) Summary Property, Plant Equipment Net Net December 31, 31, L L l l improvements $ $ $ $ Buildings Machinery equipment Cstructi in in progress Less Less accumulated depreciati Net Net Property, Plant Plant Equipment $ $ $ $ Depreciati expense for for years years ended December 31, 31, 2016, was was $27.1 milli, $24.8 milli $23.2 milli, respectively. Interest expense capitalized as as part part costs costs capital projects was was $0.8 $0.8 milli, $0.2 $0.2 milli $0.1 $0.1 milli, respectively, for for years years ended December 31, 31, 2016, Summary Accrued Expenses December 31, 31, Accrued salaries employee benefits $ $ $ $ Amounts due due to customers Accrued interest Accrued income taxes taxes Or Total Total $ $ $ $ Form 10-K Summary Ncurrent Employee Benefits December 31, 31, Pensi benefits $ $ $ $ Post-employment benefits or or than than pensis (a) (a) Total Total $ $ $ $ (a) (a) Includes $1.3 $1.3 milli SRCP benefits as as December 31, 31, $2.7 $2.7 milli lg-term disability benefits due due to to Terrace Bay Bay retirees SRCP benefits as as December 31, 31, F-49

167 NEENAH PAPER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in millis, except as noted) Supplemental Cash Flow Data Supplemental Disclosure Cash Flow Informati Ended December 31, Cash paid during year for interest, net interest expense capitalized $ 10.0 $ 10.6 $ 10.3 Cash paid during year for income taxes, net refunds N-cash investing activities: Liability for equipment acquired Net cash provided by (used in) changes in operating working capital, net effect acquisitis Ended December 31, Accounts receivable $ 1.5 $ (5.2) $ 4.7 Inventories (5.6) Income taxes receivable/payable (1.5) 1.0 (0.3) Prepaid or current assets (4.8) 1.2 Accounts payable (2.7) (0.5) 6.8 Accrued expenses (2.8) Or Total $ (1.2) $ 1.8 $ 9.0 Note 16. Unaudited Quarterly Data 2016 Quarters First (c) Secd (c) Third Fourth (a)(b) Net Sales $ $ $ $ $ Gross Prit Operating Income Income From Ctinuing Operatis Earnings Per Comm Share From Ctinuing Operatis: Basic $ 1.13 $ 1.26 $ 0.97 $ 0.97 $ 4.33 Diluted $ 1.11 $ 1.24 $ 0.95 $ 0.95 $ 4.26 (a) Includes integrati/restructuring costs $7.0 milli. (b) Includes a pensi plan settlement charge $0.8 milli. (c) Includes recasting for excess tax benefits from stock compensati. See Note 2, "Summary Significant Accounting Policies Recently Adopted Accounting Stards." F-50

168 NEENAH PAPER INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Ctinued) (Dollars in millis, except as noted) 2015 Quarters First Secd Third Fourth (a) Net Sales $ $ $ $ $ Gross Prit Operating Income Income From Ctinuing Operatis Earnings Per Comm Share From Ctinuing Operatis: Basic $ 0.95 $ 0.97 $ 0.79 $ 0.86 $ 3.58 Diluted $ 0.94 $ 0.96 $ 0.78 $ 0.85 $ 3.53 (a) Includes integrati/restructuring costs $6.5 milli. Form 10-K F-51

169 SCHEDULE II NEENAH PAPER, INC. AND SUBSIDIARIES SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS (Dollars in millis) Descripti December 31, 2016 Balance at Beginning Period Charged to Costs Expenses Charged to Or Accounts Write-fs Reclassificatis Balance at End Period Allowances deducted from assets to which y apply Allowance for doubtful accounts $ 1.1 $ (0.1) $ $ $ 1.0 Allowance for sales discounts 0.6 (0.1) 0.5 Valuati allowance deferred income taxes December 31, 2015 Allowances deducted from assets to which y apply Allowance for doubtful accounts $ 0.9 $ (0.4) $ 1.0 $ (0.4) $ 1.1 Allowance for sales discounts Valuati allowance deferred income taxes December 31, 2014 Allowances deducted from assets to which y apply Allowance for doubtful accounts $ 0.8 $ 0.3 $ $ (0.2) $ 0.9 Allowance for sales discounts F-52

170 NEENAH PAPER, INC ANNUAL REPORT

171 INFORMATION INFORMATION INFORMATION INFORMATION INFORMATION INFORMATION INFORMATION INFORMATION INFORMATION INFORMATION INFORMATION INFORMATION INFORMATION INFORMATION INFORMATION INFORMATION INFORMATION INFORMATION AA EEH HHO EERR SH SSH A SHH A R3460 E RRRH EPrest O LO OLRidge DLLDED DERRoad HAA ARR REE EHH HO OLO DE SS SSSHH H A RA ER H O LLLDD D EEERER RRRR H S H A R E E H H O O L L D D E Suite 600 SSSHH HAA A R R R E E E H H H O O O L L L D D D E E E R R Alpharetta, GA 30005R Br names mentied in this report are trademarks Crane is a registered trademark Crane & Co. STOCK EXCHANGE SCORPORATE H A RE HOLDER HEADQUARTERS TRADEMARKS Paper s comm stock is traded CORPORATE CORPORATE CORPORATE HEADQUARTERS HEADQUARTERS HEADQUARTERS TRADEMARKS TRADEMARKS TRADEMARKS New York Stock Exchange under symbol NP. CORPORATE HEADQUARTERS TRADEMARKS Br names mentied inthis this report are trademarks CORPORATE CORPORATE HEADQUARTERS Br TRADEMARKS Br TRADEMARKS Br names names names mentied mentied mentied inin inthis this report report report areare trademarks trademarks trademarks S HCORPORATE AA R E H O S H RHEADQUARTERS E H OLLDDEERR CORPORATE CORPORATE HEADQUARTERS HEADQUARTERS HEADQUARTERS TRADEMARKS TRADEMARKS TRADEMARKS S H A R E H O L D E R Crane isareport areport registered trademark Br names mentied in this report are trademarks Crane Crane Crane isthis is is areport registered areport registered registered trademark trademark trademark Br Br names names mentied mentied inin this are are trademarks trademarks 3460 Prest Ridge Road Prest 3460 Prest Prest Ridge Ridge Ridge Road Road Road ANNUAL MEETING OF SHAREHOLDERS CORPORATE CORPORATE CORPORATE HEADQUARTERS HEADQUARTERS HEADQUARTERS TRADEMARKS TRADEMARKS Br Br TRADEMARKS Br names names names mentied mentied mentied in in in this this this report are are are trademarks trademarks trademarks INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Crane & Co. Crane is a registered trademark Crane Crane Crane & & & Co. Co. Crane Crane is is a a registered registered trademark trademark 3460 Prest Ridge Road Prest Prest Ridge Ridge Road Road Suite 600 Suite Suite 600 Suite Crane Crane Crane isthis is aisregistered aareport registered registered trademark trademark trademark Br Br Br names names names mentied mentied mentied inin inthis this report report are are are trademarks trademarks trademarks The annual meeting Prest Prest Ridge Ridge Deloitte & Touche LLP S S HH3460 APrest A R R E2017 EHRidge H O OL Road LRoad DRoad D EERR shareholders Crane & Co. Crane Crane & Co. Co. CORPORATE HEADQUARTERS TRADEMARKS CORPORATE HEADQUARTERS TRADEMARKS Suite 600 Suite Suite Crane Crane Crane && && Co. Co. Co. Crane Crane Craneisisisaaaregistered registered registeredtrademark trademark trademark Alpharetta, GA Alpharetta, Alpharetta, Alpharetta, GA GA willrbe held Tuesday, Prest Prest Prest Ridge Ridge Ridge Road Road 191 Peachtree Street Suite Suite S HSuite A R EGA H O LRoad DE STOCK EXCHANGE STOCK STOCK STOCK EXCHANGE EXCHANGE EXCHANGE Br names mentied in this this report report are are trademarks trademarks CORPORATE HEADQUARTERS TRADEMARKS Br names mentied in Crane Crane Crane & & & Co. Co. Co. CORPORATE HEADQUARTERS TRADEMARKS Alpharetta, GA Alpharetta, Alpharetta, GA GA SH A30005 R30005 E H 10:00 O L Da.m., E REastern time at Suite 1500 May 23, 2017 at Suite Suite Suite Alpharetta, Alpharetta, Alpharetta, GA GA GA STOCK EXCHANGE Paper s comm stock traded STOCK STOCK EXCHANGE EXCHANGE Paper s Paper s Paper s comm comm comm stock stock stock is traded isistraded STOCK STOCK STOCK EXCHANGE EXCHANGE EXCHANGE CORPORATE HEADQUARTERS TRADEMARKS Crane Crane is a areport registered trademark 3460 Prest Ridge Road Br names mentied ininthis are trademarks is registered trademark Br names mentied this report are trademarks 3460 Prest Ridge Road Atlanta, GA s headquarters in Alpharetta, Georgia. Alpharetta, Alpharetta, Alpharetta, GA GA GA New York Stock Exchange under symbol NP. Paper s comm stock is traded New New New York York York Stock Stock Stock Exchange Exchange Exchange under under symbol symbol symbol NP. NP. NP. Paper s Paper s comm comm stock stock is isare traded traded STOCK STOCK STOCK EXCHANGE EXCHANGE EXCHANGE Paper s Paper s Paper s comm comm comm stock stock stock is traded is is traded traded Br names mentied in this report trademarks Crane & Co. Crane isisaaregistered trademark Crane & Co. Suite 600 Exchange Crane registered trademark 3460 Prest Ridge Suite Prest RidgeRoad Road New York Stock Exchange under symbol NP New New York York Stock Stock Exchange under under symbol symbol NP. NP. CORPORATE CORPORATE HEADQUARTERS HEADQUARTERS TRADEMARKS TRADEMARKS New New New York York York Stock Stock Stock Exchange Exchange Exchange under under under symbol symbol symbol NP. NP. NP. Paper s Paper s Paper s comm comm comm stock stock stock is is is traded traded traded Crane is a registered trademark 3460 Prest Ridge Road ANNUAL MEETING OF SHAREHOLDERS ANNUAL ANNUAL ANNUAL MEETING MEETING MEETING OF OF SHAREHOLDERS OF SHAREHOLDERS SHAREHOLDERS COMPARISON YEAR CUMULATIVE TOTAL INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMRETURN* Crane &&Co. INDEPENDENT INDEPENDENT REGISTERED REGISTERED REGISTERED PUBLIC PUBLIC PUBLIC ACCOUNTING ACCOUNTING ACCOUNTING FIRM FIRM FIRM Crane Co. OF FIVE Alpharetta, GA Suite As HEADQUARTERS March 31, 2017, had approximately INDEPENDENT Alpharetta, GA Suite CORPORATE Br TRADEMARKS Br names names mentied mentied in in this this report report are are trademarks trademarks STOCK EXCHANGE STOCK EXCHANGE CORPORATE HEADQUARTERS TRADEMARKS New New New York York York Stock Stock Stock Exchange Exchange Exchange under under under symbol symbol symbol NP. NP. NP. Crane & Co. Amg Russell 2000 Value Index a Peer Group ANNUAL MEETING OF SHAREHOLDERS ANNUAL ANNUAL MEETING MEETING OF OF SHAREHOLDERS SHAREHOLDERS Suite 600 The 2015 annual meeting shareholders The The 2015 The annual annual annual meeting meeting meeting shareholders shareholders shareholders INDEPENDENT Deloitte Touche REGISTERED LLP PUBLIC PUBLIC ACCOUNTING FIRM Deloitte INDEPENDENT Deloitte INDEPENDENT Deloitte & &&& Touche Touche Touche REGISTERED REGISTERED LLP LLP LLP PUBLIC PUBLIC ACCOUNTING ACCOUNTING FIRM FIRM ANNUAL ANNUAL ANNUAL MEETING MEETING MEETING OF OF OF SHAREHOLDERS SHAREHOLDERS SHAREHOLDERS ,340 holders INDEPENDENT INDEPENDENT INDEPENDENT REGISTERED REGISTERED REGISTERED PUBLIC PUBLIC ACCOUNTING ACCOUNTING FIRM FIRM FIRM Alpharetta, GA Alpharetta, GA in Crane Crane is isaccounting aareport registered registered trademark trademark Br names mentied in this trademarks Paper s comm stock isare traded Br names mentied this report are trademarks record its comm stock Prest Prest Ridge Ridge Road Road STOCK EXCHANGE Paper s comm stock is traded STOCK EXCHANGE The 2015 annual meeting shareholders The The annual annual meeting meeting shareholders shareholders Alpharetta, GA will be held Thursday, will will be will be held be held held Thursday, Thursday, Thursday, 191 Peachtree Street Deloitte & Touche LLP PUBLIC Peachtree Peachtree Peachtree Street Street Street Deloitte Deloitte &&& Touche Touche LLP LLP $180 ANNUAL ANNUAL ANNUAL MEETING MEETING MEETING OF OF OF SHAREHOLDERS SHAREHOLDERS SHAREHOLDERS The The The annual annual annual meeting meeting meeting shareholders shareholders shareholders INDEPENDENT INDEPENDENT Deloitte Deloitte INDEPENDENT Deloitte & & Touche Touche Touche REGISTERED REGISTERED REGISTERED LLP LLP LLP PUBLIC ACCOUNTING ACCOUNTING FIRM FIRM FIRM NP. STOCK EXCHANGE Crane ispublic a registered trademark Crane Crane & & Co. Crane is aaccounting registered trademark New York Stock Exchange under symbol 3460 Prest Ridge Road 3460 Prest Ridge Road Paper s comm stock isis traded New York Stock Exchange under symbol NP. Suite Suite Paper s comm stock traded REGISTRAR AND TRANSFER AGENT will be held Thursday, will will be be held held Thursday, Thursday, Suite Peachtree Street Suite Suite Suite Peachtree Peachtree Street Street May 21, 2015 at 10:00 a.m., Eastern time at May May 21, May 21, , at 10:00 at at 10:00 10:00 a.m., a.m., a.m., Eastern Eastern Eastern time time time at at at $160 The The The annual annual annual meeting meeting meeting shareholders shareholders shareholders Crane Co. will will will be be be held held held Thursday, Thursday, Thursday, Peachtree Peachtree Peachtree Street Street Street Deloitte Deloitte Deloitte & & & Touche Touche Touche LLP LLP LLP Paper s comm stock is traded Suite Crane & Co. New York Stock Exchange under symbol NP. Suite 600 New York Stock Exchange under symbol NP. Alpharetta, Alpharetta, GA GA ANNUAL MEETING OF SHAREHOLDERS Computershare ANNUAL MEETING OF SHAREHOLDERS Atlanta, GA Suite Atlanta, Atlanta, Atlanta, GA GA GA Suite Suite STOCK STOCK EXCHANGE EXCHANGE INDEPENDENT REGISTERED PUBLIC ACCOUNTING ACCOUNTING FIRM NP. May 21, 2015 at 10:00 a.m., Eastern time at May May 21, 21, atat 10:00 10:00 a.m., a.m., Eastern Eastern time time atat s headquarters in Alpharetta, Georgia. s s s headquarters headquarters headquarters in in Alpharetta, inalpharetta, Alpharetta, Georgia. Georgia. Georgia. $140 INDEPENDENT REGISTERED PUBLIC FIRM will will will be be be held held held Thursday, Thursday, Thursday, Suite Suite Suite Peachtree Peachtree Peachtree Street Street Street New York Stock Exchange under symbol May May May 21, 21, 21, at at 10:00 at 10:00 10:00 a.m., a.m., a.m., Eastern Eastern Eastern time time time at at at Alpharetta, GA STOCK EXCHANGE Alpharetta, GA The 2017 annual meeting shareholders ANNUAL MEETING OF Atlanta, GA Atlanta, Atlanta, GA GA STOCK EXCHANGE Paper s comm stock stock isistraded traded Deloitte & Touche LLP comm P.O. Box The 2017 annual meeting shareholders ANNUAL MEETING OFSHAREHOLDERS SHAREHOLDERS s headquarters in Alpharetta, Georgia. s s headquarters headquarters inin in Alpharetta, Alpharetta, Georgia. Georgia. $120 INDEPENDENT REGISTERED PUBLIC FIRM Deloitte & Touche LLP Atlanta, Atlanta, Atlanta, GA GA GA Suite Suite Suite INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM May May May 21, 21, 21, at at at10:00 10:00 10:00 a.m., a.m., a.m., Eastern Eastern Eastern time time time atat at s s s headquarters headquarters headquarters in in Alpharetta, Alpharetta, Alpharetta, Georgia. Georgia. Georgia. Paper s comm stockaccounting is traded COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN* COMPARISON COMPARISON COMPARISON OF OF FIVE FIVE FIVE YEAR YEAR YEAR CUMULATIVE CUMULATIVE CUMULATIVE TOTAL TOTAL RETURN* RETURN* RETURN* ANNUAL MEETING OF SHAREHOLDERS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM will be held Tuesday, As February 28, 2015, had approximately As As As February February February 28, 28, 2015, 28, 2015, 2015, had had approximately approximately approximately New New York Stock Exchange Exchange under under symbol symbol NP. NP. Paper s comm stock is traded 191 Peachtree Street The 2015 annual meeting shareholders 2017 College Stati, TX will in be held Tuesday, The 2016 annual meeting shareholders Deloitte & Touche LLP 191 Peachtree Street $100 Atlanta, Atlanta, Atlanta, GA GA GA Deloitte & Touche LLP New York Stock Exchange under symbol NP.Group s s s headquarters headquarters headquarters in inalpharetta, Alpharetta, Alpharetta, Georgia. Georgia. Georgia. Amg Russell 2000 Value Index apeer Peer Group Amg Amg Amg Russell Russell Russell Value Value Value Index Index Index a Peer a RETURN* Peer Group Group COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN* COMPARISON COMPARISON OF OF FIVE FIVE YEAR YEAR CUMULATIVE CUMULATIVE TOTAL TOTAL RETURN* The 2017 annual meeting shareholders Deloitte & Touche LLP COMPARISON COMPARISON COMPARISON OF OF OF FIVE FIVE FIVE YEAR YEAR YEAR CUMULATIVE CUMULATIVE CUMULATIVE TOTAL TOTAL TOTAL RETURN* RETURN* RETURN* As February 28, 2015, had approximately As As February February 28, 28, 2015, 2015, had had approximately approximately New York Stock Exchange under symbol NP. Suite 1500 May 23, 2017 at 10:00 a.m., Eastern time at will be held Thursday, Tuesday, Ctact 191 Peachtree Street Suite 1500 May 23, 2017 atcenter: 10:00 a.m., Eastern time at will be held Thursday, $80 As As As February February MEETING February 28, 28, 28, 2015, 2015, 2015, had had had approximately approximately approximately 191 Peachtree Street ANNUAL ANNUAL MEETING OF OF SHAREHOLDERS SHAREHOLDERS Amg Russell 2000 Value Index a Peer Group Amg Amg Russell Russell Value Value Index Index aa apeer Peer Group Group ANNUAL MEETING SHAREHOLDERS INDEPENDENT INDEPENDENT REGISTERED REGISTERED PUBLIC PUBLIC ACCOUNTING ACCOUNTING FIRM FIRM INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Amg Amg Amg Russell Russell Russell Value Value Value Index Index Index a Peer areturn* Peer Peer Group Group Group $180 Peachtree $180 $180 $180 will OF be held Tuesday, 191 Street COMPARISON COMPARISON COMPARISON OF OF OF FIVE FIVE FIVE YEAR YEAR YEAR CUMULATIVE CUMULATIVE CUMULATIVE TOTAL TOTAL TOTAL RETURN* RETURN* Atlanta, GA s headquarters in Alpharetta, Georgia. Suite 1500 Atlanta, GA May 21, 2015 at 10:00 a.m., Eastern time at 23, 2017 Toll Free U.S. Canada: As As As February February February 28, 28, 28, 2015, 2015, 2015, had had had approximately approximately approximately $60 Suite 1500 s headquarters in Alpharetta, Georgia. May 26, 2016 at 10:00 a.m., Eastern time at The 2014 annual meeting shareholders ANNUAL MEETING OF SHAREHOLDERS The The annual annual meeting meeting shareholders shareholders Deloitte & Touche LLP Deloitte INDEPENDENT Deloitte & & Touche REGISTERED LLP PUBLIC ACCOUNTING FIRM REGISTRAR AND TRANSFER AGENT REGISTRAR REGISTRAR REGISTRAR AND AND TRANSFER AND TRANSFER TRANSFER AGENT AGENT AGENT Amg Amg Amg Russell Russell Russell Value Value Value Index Index Index a a Peer a Peer Peer Group Group Group $ $180 $180 $160 $160 $160 $160 Suite May 23, 2017 at 10:00 a.m., Eastern time at $180 $180 Atlanta, GA s headquarters inin Alpharetta, Georgia. Atlanta, TDD for hearing impaired: $40 will bethursday, held Thursday, s headquarters Alpharetta, Georgia. 191 Peachtree Street The 2015 annual meeting shareholders will will bebe held held Thursday, Peachtree Street Deloitte &GA Touche REGISTRAR AND TRANSFER AGENT COMPARISON OF FIVELLP YEAR CUMULATIVE CUMULATIVE TOTAL TOTAL RETURN* RETURN* REGISTRAR REGISTRAR AND AND TRANSFER TRANSFER AGENT AGENT Computershare Computershare Computershare Computershare COMPARISON OF FIVE YEAR $160Peachtree $160 $160 Atlanta, GA $140 $140 $140 $140 REGISTRAR REGISTRAR REGISTRAR AND AND AND TRANSFER TRANSFER TRANSFER AGENT AGENT AGENT s headquarters in Alpharetta, Georgia. As March 31, 2017, had approximately $180 $180 $180 $160 $160 As March 31, 2017, had approximately Suite 1500 May 22, 2014 at 10:00 a.m., Eastern time at $20 Foreign Shareowners: Amg Street Russell Russell Value Value Index Index a a Peer Peer Group Group will be held Thursday, Suite Suite Peachtree May May 21, 21, at at 10:00 10:00 a.m., a.m., Eastern Eastern time time at at Amg Computershare Computershare Computershare P.O. Box P.O. P.O. Box P.O. Box Box COMPARISON OF $140 $140 $140 COMPARISON OFFIVE FIVEYEAR YEARCUMULATIVE CUMULATIVETOTAL TOTALRETURN* RETURN* REGISTRAR REGISTRAR REGISTRAR AND AND AND TRANSFER TRANSFER TRANSFER AGENT AGENT AGENT $120 $120 $120 $120 Computershare Computershare Computershare 1,340 holders record comm stock. $160 $160 $160 Atlanta, GA $140 $140 s headquarters inhad Alpharetta, Georgia. As February 28, 2015, had approximately March 31, 2017, approximately 1,340 holders record its its comm stock. As March 31, 2016, had approximately $0 TDD Foreign Shareowners: COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN* Atlanta, Atlanta, GA GA Suite May 21, 2015 at 10:00 a.m., Eastern time at Amg Russell 2000 Value Index a Peer Group s s headquarters headquarters in in Alpharetta, Alpharetta, Georgia. Georgia. Amg Russell 2000 Value Index a Peer Group P.O. Box P.O. P.O. Box Box $180 As March 31, 2017, had approximately College Stati, TX College College College Stati, Stati, Stati, TX TX TX $120 $120 $120 $100 $100 $100 $100 $180 Computershare Computershare Computershare P.O. P.O. P.O. Box Box Box $140 $140 $140 $120 $ ,340 holders record 1,450 holders recordits itscomm commstock. stock. Amg Russell Value Index 2010 a Peer Group Atlanta, GA REGISTRAR AND TRANSFER AGENT s headquarters in Alpharetta, Georgia. As February 28, 2014, had approximately REGISTRAR AND TRANSFER AGENT $160 College Stati, TX College College Stati, Stati, TX TX ,340 holders record its comm stock. Ctact Center: Ctact Ctact Ctact Center: Center: Center: $100 $100 $100 $180 $450 $80 $80 $80 $80 $160 P.O. P.O. P.O. Box Box Box $180 College College College Stati, Stati, Stati, TX TX TX $120 $120 $120 $100 $100 COMPARISON COMPARISON OF FIVE YEAR YEAR CUMULATIVE CUMULATIVETOTAL TOTALRETURN* RETURN* As As February February 28, 28, 2015, 2015, had hadapproximately approximately $180 Computershare REGISTRAR AND TRANSFER AGENT $140 Computershare REGISTRAR AND TRANSFER AGENT Ctact Center: Ctact Ctact Center: Center: $400 Toll Free U.S. Canada: $80 Toll Toll Free Toll Free Free U.S. U.S. U.S. Canada: Canada: Canada: $80 $80 $160 $60 $60 $60 $60 Amg Amg Russell Russell Value ValueIndex Index aapeer Peer Group Group $140 FINANCIAL AND OTHER COMPANY INFORMATION $160 College College College Stati, Stati, Stati, TX TX TX Ctact Ctact Ctact Center: Center: Center: $100 $100 $100 COMPARISON OF2000 FIVE YEAR CUMULATIVE TOTAL RETURN* $80 $80 Russell Value REGISTRAR AND TRANSFER AGENT As February 28, 2015, had approximately $160 P.O. Box Computershare $120 P.O. Box Computershare Toll Free U.S. Canada: Toll Toll Free Free U.S. U.S. Canada: Canada: Peer Group: AEP Industries Boise Buckeye Technologies $350 $60 $60 $60 $140 Amg Russell 2000 Value Index a Peer Group TDD for hearing impaired: TDD TDD for TDD for hearing for hearing hearing impaired: impaired: impaired: $40 $40 $40 $40 REGISTRAR AND TRANSFER AGENT $120 $140 Ctact Ctact Ctact Center: Center: Toll TollCenter: Toll Free Free Free U.S. U.S. U.S. Canada: Canada: Canada: $80 $80 $80 $60 $60 $180 $180 Computershare CSS Industries, P.H. Glatfelter Company, KapSte Paper $140 College Stati, TX $100 P.O. Box Computershare College Stati, TX P.O. Box TDD for hearing impaired: TDD TDD for for hearing hearing impaired: impaired: $40 $40 $40 $120 ended December 31, 2016 is available our website $20 $20 $20 $20 Foreign Shareowners: Foreign Foreign Foreign Shareowners: Shareowners: Shareowners: $100 $300 $120 Toll Toll Toll Free Free Free U.S. U.S. U.S. Canada: Canada: Canada: REGISTRAR REGISTRAR AND AND TRANSFER TRANSFER AGENT AGENT $60 $60 $60 Packaging Corporati, Minerals Technologies OMNOVA Solutis TDD TDD TDD for for for hearing hearing hearing impaired: impaired: impaired: $40 $40 $180 $160 $160 P.O. Box $120 P.O. Box Polypore Internatial, SWM, Verso Paper Corp. Wausau Paper Ctact Center: $80 College Stati, TX Ctact Center: $20 $20 $20 College Stati, TX Foreign Shareowners: $100 Foreign Foreign Shareowners: Shareowners: $0 $0 $0 $0 $80 $250 TDD Foreign Shareowners: TDD TDD Foreign TDD Foreign Foreign Shareowners: Shareowners: Shareowners: $100 REGISTRAR AND TRANSFER AGENT TDD TDD for for for hearing hearing hearing impaired: impaired: impaired: Computershare Computershare $40 $40 $40 $20 $20 Foreign Foreign Foreign Shareowners: Shareowners: Shareowners: $160 $140 $140 Corp. The peer group average is weighted by market capitalizati. College Stati, TX $100 Providence, RI Toll Free U.S. Canada: $60 Ctact Center: $0 $0 $0 $80 Toll Free U.S.Shareowners: Canada: Ctact Center: TDD Foreign Shareowners: TDD TDD Foreign Foreign Shareowners: $60 $ $200 Computershare $20 $20 $20 Foreign Foreign Foreign Shareowners: Shareowners: Shareowners: P.O. P.O. Box Box $0 $0 TDD TDD TDD Foreign Foreign Foreign Shareowners: Shareowners: Shareowners: $140 $120 $120 Ctact Center: Ctact Center: Commisi (SEC), news releases or informati. $ * $100 invested December 31, 2011 in stock or index, including TDD for hearing impaired: $40 Toll Free U.S. Canada: $60 TDD for hearing impaired: $40 Toll Free U.S. Canada: $60 P.O. Box $150 $0 $0 $0 TDD TDD TDD Foreign Foreign Foreign Shareowners: Shareowners: Shareowners: College College Stati, Stati, TX TX $120 dividends $100 $100 Toll Free U.S reinvestment For aand printed copy Canada: our Form 10-K Annual Report Toll Free U.S. Canada: FINANCIAL OTHER COMPANY INFORMATION FINANCIAL FINANCIAL FINANCIAL AND AND OTHER AND OTHER OTHER COMPANY COMPANY COMPANY INFORMATION INFORMATION INFORMATION $60 $20 Foreign Shareowners: Russell 2000 Value Russell Russell Russell Value Value Value TDD for hearing impaired: $40 $20 Foreign Shareowners: TDD for hearing impaired: $40 College Stati, TX $ Ctact Ctact Center: Center: $100 $80 $80 TDD for hearing impaired: materials, without charge, please ctact: Peer Group: AEP Industries Boise Buckeye Technologies Peer Peer Group: Group: Group: AEP AEP AEP Industries Industries Industries Boise Boise Boise Buckeye Buckeye Buckeye Technologies Technologies Technologies FINANCIAL AND OTHER COMPANY INFORMATION FINANCIAL FINANCIAL AND AND OTHER OTHER COMPANY COMPANY INFORMATION INFORMATION TDD for hearing impaired: $40Peer Our Annual Report Form 10-K for fiscal year Our Our Annual Our Annual Annual Report Report Report Form Form Form 10-K 10-K 10-K for for fiscal fiscal fiscal year year year FINANCIAL FINANCIAL FINANCIAL AND AND AND OTHER OTHER OTHER COMPANY COMPANY COMPANY INFORMATION INFORMATION INFORMATION Russell 2000 Value PERFORMANCE Russell Russell Value Value $0 TDD Foreign Shareowners: $20 Foreign Shareowners: STOCK PRICE $0 $20 TDD Foreign Shareowners: Foreign Shareowners: Russell Russell Russell Value Value Value CSS Industries, P.H. Glatfelter Company, KapSte Paper CSS CSS CSS Industries, Industries, Industries, P.H. P.H. P.H. Glatfelter Glatfelter Glatfelter Company, Company, Company, KapSte KapSte KapSte Paper Paper Paper $ 50 Foreign Shareowners: Ctact Center: Toll Toll Free Free U.S. U.S. Canada: Canada: $80 $60 $60 Peer Group: AEP Industries Boise Buckeye Technologies Peer Peer Group: Group: AEP AEP Industries Industries Boise Boise Buckeye Buckeye Technologies Technologies ended December 31, 2014, is available our website ended ended ended December December December 31, 31, 2014, 31, 2014, 2014, is available is10-k is available available our our our website website website Our Annual Report Form 10-K for fiscal year Our Our Annual Annual Report Report Form Form 10-K for for fiscal fiscal year year $20Packaging Foreign Shareowners: Peer Peer Peer Group: Group: Group: AEP AEP AEP Industries Industries Industries Boise Boise Boise Buckeye Buckeye Buckeye Technologies Technologies Technologies Packaging Corporati, Minerals Technologies OMNOVA Solutis Packaging Packaging Corporati, Corporati, Corporati, Minerals Minerals Minerals Technologies Technologies Technologies OMNOVA OMNOVA Solutis Solutis Solutis FINANCIAL FINANCIAL FINANCIAL AND AND AND OTHER OTHER OTHER COMPANY COMPANY COMPANY INFORMATION INFORMATION INFORMATION Our Our Our Annual Annual Annual Report Report Report Form Form Form 10-K 10-K 10-K for for for fiscal fiscal fiscal year year year $0$0 TDD Foreign Shareowners: $0 Russell Russell Russell Value Value Value CSS Industries, P.H. Glatfelter Company, KapSte Paper CSS CSS Industries, Industries, P.H. P.H. Glatfelter Glatfelter Company, Company, KapSte KapSte Paper Paper TDD Foreign Shareowners: TDD Foreign Shareowners: Toll Free U.S. Canada: $60 TDD TDD for for hearing hearing impaired: impaired: $40 $40 CSS CSS CSS Industries, Industries, Industries, P.H. P.H. P.H. Glatfelter Glatfelter Glatfelter Company, Company, Company, KapSte KapSte KapSte Paper Paper Paper Polypore Internatial, Schweitzer-Mauduit Internatial, Verso Polypore Polypore Polypore Internatial, Internatial, Internatial, Schweitzer-Mauduit Schweitzer-Mauduit Schweitzer-Mauduit Internatial, Internatial, Internatial, Verso Verso Verso at In additi, financial reports, atended at at In In additi, In additi, additi, financial financial financial reports, reports, reports, Russell ended December 31, 2014, is available our website ended December December 31, 31, 2014, 2014, is is available available our our website website $0 Peer Peer Peer Group: Group: Group: AEP AEP AEP Industries Industries Industries Boise Boise Boise Buckeye Buckeye Buckeye Technologies Technologies Technologies TDD Foreign Shareowners: Packaging Corporati, Minerals Technologies OMNOVA Solutis Packaging Packaging Corporati, Corporati, Minerals Minerals Technologies Technologies OMNOVA OMNOVA Solutis Solutis ended ended ended December December December 31, 31, 31, 2014, 2014, 2014, is is is available available available our our our website website website Attn: Stockholder Services Our Our Our Annual Annual Annual Report Report Report Form Form Form10-K 10-K 10-K for for for fiscal fiscal fiscalyear year year Packaging Packaging Packaging Corporati, Corporati, Corporati, Minerals Minerals Minerals Technologies Technologies Technologies OMNOVA OMNOVA OMNOVA Solutis Solutis Paper Corp. 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172 LEADERSHIP EXECUTIVE TEAM BOARD OF DIRECTORS John P. O Dnell President William M. Cook Retired Executive Chairman Dalds Company John F. McGovern Partner, Aurora Capital LLC Former Executive Vice President Bnie C. Lind Senior Vice President, Treasurer Margaret S. Dano Former Vice President, Heywell Internatial Worldwide Operatis Garrett Engine Boosting Systems Philip C. Moore Senior Vice President, Deputy General Counsel Corporate Secretary, TD Bank Group Steven S. Heinrichs Senior Vice President, General Counsel Secretary Sean T. Erwin Chairman Board, Former President John P. O Dnell President, Julie A. Schertell Senior Vice President, President Fine Paper Packaging Timothy S. Lucas, CPA Independent Csultant, Lucas Financial Reporting Former Director Research, FASB Stephen M. Wood, Ph.D. Former President FiberVisis Corporati Armin G. Schwinn Senior Vice President, Managing Director, Germany Matt L. Duncan Senior Vice President Chief Human Resources Officer Annual Report