Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
ý
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2016
or
¨
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from                      to                     
Commission File Number: 001-34146
CLEARWATER PAPER CORPORATION
(Exact name of registrant as specified in its charter)
 
 
 
 
Delaware
 
20-3594554
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
601 West Riverside, Suite 1100
Spokane, Washington
 
99201
(Address of principal executive offices)
 
(Zip Code)
(509) 344-5900
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  ý     No  ¨    
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 
ý
  
Accelerated filer
 
¨
Non-accelerated filer
 
¨  (Do not check if a smaller reporting company)
  
Smaller reporting company
 
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ¨    No  ý    
The number of shares of common stock of the registrant outstanding as of July 22, 2016 was 16,992,902.



CLEARWATER PAPER CORPORATION
Index to Form 10-Q
 
 
 
 
 
 
Page Number
 
 
 
PART I.
 
 
 
 
ITEM 1.
 
 
 
Consolidated Statements of Operations for the three and six months ended June 30, 2016 and 2015
 
 
Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2016 and 2015
 
 
Consolidated Balance Sheets at June 30, 2016 and December 31, 2015
 
 
Consolidated Statements of Cash Flows for the six months ended June 30, 2016 and 2015
 
 
6 - 20
 
 
 
ITEM 2.
21 - 32
 
 
 
ITEM 3.
 
 
 
ITEM 4.
 
 
 
PART II.
 
 
 
 
ITEM 1.
 
 
 
ITEM 1A.
 
 
 
ITEM 2.
 
 
 
ITEM 6.
 
 
 
 



Part I
ITEM 1.
 
Consolidated Financial Statements
Clearwater Paper Corporation
Consolidated Statements of Operations
Unaudited (Dollars in thousands - except per-share amounts)
 
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2016
 
2015
 
2016
 
2015
Net sales
$
436,671

 
$
444,558

 
$
873,875

 
$
878,584

Costs and expenses:
 
 
 
 
 
 
 
Cost of sales
(361,851
)
 
(384,347
)
 
(730,498
)
 
(774,179
)
Selling, general and administrative expenses
(34,655
)
 
(28,138
)
 
(65,450
)
 
(57,095
)
Total operating costs and expenses
(396,506
)
 
(412,485
)
 
(795,948
)
 
(831,274
)
Income from operations
40,165

 
32,073

 
77,927

 
47,310

Interest expense, net
(7,396
)
 
(7,774
)
 
(15,039
)
 
(15,556
)
Earnings before income taxes
32,769

 
24,299

 
62,888

 
31,754

Income tax provision
(11,905
)
 
(8,702
)
 
(23,578
)
 
(10,400
)
Net earnings
$
20,864

 
$
15,597

 
$
39,310

 
$
21,354

Net earnings per common share:
 
 
 
 
 
 
 
Basic
$
1.22

 
$
0.82

 
$
2.27

 
$
1.11

Diluted
1.21

 
0.81

 
2.26

 
1.10

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

2


Clearwater Paper Corporation
Consolidated Statements of Comprehensive Income
Unaudited (Dollars in thousands)
 
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2016
 
2015
 
2016
 
2015
Net earnings
$
20,864

 
$
15,597

 
$
39,310

 
$
21,354

Other comprehensive income:
 
 
 
 
 
 
 
Defined benefit pension and other postretirement employee benefits:
 
 
 
 
 
 
 
Amortization of actuarial loss included in net periodic
  cost, net of tax of $276, $1,261, $865, and $2,467
427

 
1,965

 
1,339

 
3,842

Amortization of prior service credit included in net periodic cost,
net of tax of $(166), $(204), $(332), and $(411)
(256
)
 
(321
)
 
(513
)
 
(641
)
Other comprehensive income, net of tax
171

 
1,644

 
826

 
3,201

Comprehensive income
$
21,035

 
$
17,241

 
$
40,136

 
$
24,555

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


3


Clearwater Paper Corporation
Consolidated Balance Sheets
Unaudited (Dollars in thousands – except per-share amounts)
 
 
June 30,
2016
 
December 31,
2015
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
9,395

 
$
5,610

Restricted cash
2,270

 
2,270

Short-term investments
—

 
250

Receivables, net
143,061

 
139,052

Taxes receivable
744

 
14,851

Inventories
248,934

 
255,573

Other current assets
7,659

 
9,331

Total current assets
412,063

 
426,937

Property, plant and equipment, net
881,975

 
866,538

Goodwill
209,087

 
209,087

Intangible assets, net
17,517

 
19,990

Pension assets
1,555

 
596

Other assets, net
4,535

 
4,221

TOTAL ASSETS
$
1,526,732

 
$
1,527,369

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable and accrued liabilities
$
208,292

 
$
220,368

Current liability for pensions and other postretirement employee benefits
7,559

 
7,559

Total current liabilities
215,851

 
227,927

Long-term debt
569,371

 
568,987

Liability for pensions and other postretirement employee benefits
86,465

 
89,057

Other long-term obligations
42,873

 
46,738

Accrued taxes
1,516

 
1,676

Deferred tax liabilities
127,762

 
118,118

Stockholders’ equity:
 
 
 
Preferred stock, par value $0.0001 per share, 5,000,000 authorized shares, no shares
  issued
—

 
—

Common stock, par value $0.0001 per share, 100,000,000 authorized
  shares-24,208,242 and 24,193,098 shares issued
2

 
2

Additional paid-in capital
343,155

 
340,095

Retained earnings
559,617

 
520,307

Treasury stock, at cost, common shares-7,215,340 and 6,380,309 shares repurchased
(365,158
)
 
(329,990
)
Accumulated other comprehensive loss, net of tax
(54,722
)
 
(55,548
)
Total stockholders’ equity
482,894

 
474,866

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
1,526,732

 
$
1,527,369

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

4


Clearwater Paper Corporation
Consolidated Statements of Cash Flows
Unaudited (Dollars in thousands)
 
 
Six Months Ended
 
June 30,
 
2016
 
2015
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
Net earnings
$
39,310

 
$
21,354

Adjustments to reconcile net earnings to net cash flows from operating activities:
 
 
 
Depreciation and amortization
43,174

 
41,640

Equity-based compensation expense
7,716

 
2,019

Deferred tax provision (benefit)
8,674

 
(2,480
)
Employee benefit plans
(2,561
)
 
1,438

Deferred issuance costs on long-term debt
419

 
446

Disposal of plant and equipment, net
—

 
272

Non-cash adjustments to unrecognized taxes
(160
)
 
(979
)
Changes in working capital, net
(13,394
)
 
29,309

Changes in taxes receivable, net
14,107

 
1,255

Excess tax benefits from equity-based payment arrangements
(148
)
 
(1,459
)
Funding of qualified pension plans
—

 
(3,179
)
Other, net
(722
)
 
(1,726
)
Net cash flows from operating activities
96,415

 
87,910

CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
Changes in short-term investments, net
250

 
(10,000
)
Additions to plant and equipment
(57,394
)
 
(55,538
)
Proceeds from sale of assets
—

 
507

Net cash flows from investing activities
(57,144
)
 
(65,031
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
Purchase of treasury stock
(35,168
)
 
(37,148
)
Borrowings on revolving credit facility
477,169

 
—

Repayments of revolving credit facility borrowings
(477,169
)
 
—

Payment of tax withholdings on equity-based payment arrangements
(466
)
 
(3,048
)
Excess tax benefits from equity-based payment arrangements
148

 
1,459

Other, net
—

 
(8
)
Net cash flows from financing activities
(35,486
)
 
(38,745
)
Increase (decrease) in cash and cash equivalents
3,785

 
(15,866
)
Cash and cash equivalents at beginning of period
5,610

 
27,331

Cash and cash equivalents at end of period
$
9,395

 
$
11,465

 
 
 
 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
 
 
 
Cash paid for interest, net of amounts capitalized
$
13,368

 
$
14,280

Cash paid for income taxes
10,885

 
8,030

Cash received from income tax refunds
10,506

 
2,029

SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING
  ACTIVITIES
 
 
 
Changes in accrued plant and equipment
$
(2,841
)
 
$
(5,187
)
The accompanying condensed notes are an integral part of these consolidated financial statements.

5


Clearwater Paper Corporation
Condensed Notes to Consolidated Financial Statements
Unaudited
NOTE 1 Nature of Operations and Basis of Presentation
GENERAL
Clearwater Paper manufactures quality consumer tissue, away-from-home tissue, parent roll tissue, bleached paperboard and pulp at manufacturing facilities across the nation. The company is a premier supplier of private label tissue to major retailers and wholesale distributors, including grocery, drug, mass merchants and discount stores. In addition, the company produces bleached paperboard used by quality-conscious printers and packaging converters.
FINANCIAL STATEMENT PREPARATION AND PRESENTATION
The accompanying Consolidated Balance Sheets at June 30, 2016 and December 31, 2015, the related Consolidated Statements of Operations and Comprehensive Income for the three and six months ended June 30, 2016 and 2015, and the Consolidated Statements of Cash Flows for the six months ended June 30, 2016 and 2015, have been prepared in conformity with accounting principles generally accepted in the United States of America, or GAAP. We believe that all adjustments necessary for a fair statement of the results of the interim periods presented have been included. The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for the full year.
This Quarterly Report on Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the Securities and Exchange Commission, or SEC, on February 22, 2016.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ESTIMATES
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses during the reporting periods. Significant areas requiring the use of estimates and measurement of uncertainty include determination of net realizable value for deferred tax assets, uncertain tax positions, assessment of impairment of long-lived assets, goodwill and intangibles, assessment of environmental matters, equity-based compensation and pension and postretirement obligation assumptions. Actual results could differ from those estimates and assumptions.
CASH AND CASH EQUIVALENTS
We consider all highly liquid instruments with maturities of three months or less to be cash equivalents.
SHORT-TERM INVESTMENTS AND RESTRICTED CASH
Our short-term investments are invested primarily in demand deposits, which have very short maturity periods, and therefore earn an interest rate commensurate with low-risk instruments. We do not attempt to hedge our exposure to interest rate risk for our short-term investments. Our restricted cash in which the underlying instrument has a term of greater than twelve months from the balance sheet date is classified as non-current and is included in “Other assets, net” on our Consolidated Balance Sheet. As of both June 30, 2016 and December 31, 2015, we had $2.3 million classified as current on our Consolidated Balance Sheet.
TRADE ACCOUNTS RECEIVABLE
Trade accounts receivable are stated at the amount we expect to collect. Trade accounts receivable do not bear interest. The allowance for doubtful accounts is our best estimate of the losses we expect will result from the inability of our customers to make required payments. We generally determine the allowance based on a combination of actual historical write-off experience and an analysis of specific customer accounts. As of both June 30, 2016 and December 31, 2015, we had allowances for doubtful accounts of $1.4 million.

6


PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost, including any interest costs capitalized, less accumulated depreciation. Depreciation of buildings, equipment and other depreciable assets is determined using the straight-line method. Assets we acquire through business combinations have estimated lives that are typically shorter than the assets we construct or buy new. Accumulated depreciation totaled $1,552.4 million and $1,512.1 million at June 30, 2016 and December 31, 2015, respectively.
Consistent with authoritative guidance, we assess the carrying amount of long-lived assets with definite lives that are held-for-use and evaluate them for recoverability whenever events or changes in circumstances indicate that we may be unable to recover the carrying amount of the assets.
STOCKHOLDERS’ EQUITY
On December 15, 2015, we announced that our Board of Directors had approved a new stock repurchase program authorizing the repurchase of up to $100 million of our common stock. The repurchase program authorizes purchases of our common stock from time to time through open market purchases, negotiated transactions or other means, including accelerated stock repurchases and 10b5-1 trading plans in accordance with applicable securities laws and other restrictions. We have no obligation to repurchase stock under this program and may suspend or terminate the program at any time. In total, we have repurchased 835,031 shares of our outstanding common stock as of June 30, 2016, pursuant to this repurchase program, of which 125,665 shares were repurchased during the second quarter of 2016 at an average price of $59.75 per share. As of June 30, 2016, we had up to $64.8 million of authorization remaining pursuant to this stock repurchase program.
On December 15, 2014, we announced that our Board of Directors had approved a stock repurchase program authorizing the repurchase of up to $100 million of our common stock. We completed that program during the fourth quarter of 2015. In total, we repurchased 1,881,921 shares of our outstanding common stock under that program at an average price of $53.13 per share.
DERIVATIVES
We had no activity during the six months ended June 30, 2016 and 2015 that required hedge or derivative accounting treatment. However, to help mitigate our exposure to market risk for changes in utility commodity pricing, we use firm price contracts to supply a portion of the natural gas requirements for our manufacturing facilities. As of June 30, 2016, these contracts covered approximately 44% of our expected average monthly natural gas requirements for the remainder of 2016. Historically, these contracts have qualified for treatment as “normal purchases or normal sales” under authoritative guidance and thus required no mark-to-market adjustment.


7


NOTE 2 Recently Adopted and New Accounting Standards
In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718). Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). ASU 2016-09 simplifies several aspects related to the accounting for share-based payment transactions, including the accounting for income taxes, statutory tax withholding requirements and classification on the statement of cash flows. The standard requires all excess tax benefits and deficiencies to be recognized as income tax expenses or benefits discretely in the reporting period in which they occur. The standard is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with early adoption permitted. We will adopt ASU 2016-09 in the first quarter of 2017 and, based on our preliminary assessment, currently believe the most significant impact of our adoption of ASU 2016-09 to our consolidated financial statements will be to recognize in our provision for income taxes line of our consolidated statement of operations, instead of to consolidated equity, certain tax benefits or tax shortfalls upon a restricted stock award vesting, performance share award settlement, or stock option exercise relative to the deferred tax asset position established.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. Based on our preliminary assessment, we determined the adoption will increase both our assets and liabilities presented on our consolidated balance sheets to reflect the ROU assets and corresponding lease liabilities. We are continuing our assessment, which may identify other impacts.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The core principle of the new standard is for companies to recognize revenue in a manner that depicts the transfer of goods or services to customers in amounts that reflect the consideration, or payment, to which the company expects to be entitled in exchange for those goods or services. The standard will also result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively, such as service revenue and contract modifications, and clarify guidance for multiple-element arrangements. This standard was originally issued as effective for fiscal years and interim periods within those years beginning after December 15, 2016, with early adoption prohibited. However, in July 2015, the FASB approved deferring the effective date by one year to December 15, 2017 for annual reporting periods beginning after that date. In its approval, the FASB also permitted the early adoption of the standard, but not before the original effective date of fiscal years beginning after December 15, 2016. The standard may be applied under either a retrospective or cumulative effect adoption method. We plan on adopting the standard under the deferred effective date. Additionally, the new guidance requires enhanced disclosures, including revenue recognition policies to identify performance obligations to customers and significant judgments in measurement and recognition. Based on our preliminary assessment, we do not anticipate the adoption of this standard will have a material impact on our consolidated financial statements. We anticipate enhancing our disclosures upon the adoption of this standard. We plan to adopt this standard under the cumulative effect adoption method. We are continuing our assessment, which may identify other impacts.
We reviewed all other new accounting pronouncements issued in the period and concluded that they are not applicable to our business.
NOTE 3 Inventories
Inventories at the balance sheet dates consist of:

(In thousands)
June 30, 2016
 
December 31, 2015
Pulp, paperboard and tissue products
$
157,054

 
$
156,055

Materials and supplies
79,782

 
80,020

Logs, pulpwood, chips and sawdust
12,098

 
19,498

 
$
248,934

 
$
255,573


8


NOTE 4 Intangible Assets
Intangible assets at the balance sheet dates are comprised of the following:

 
June 30, 2016
(Dollars in thousands, lives in years)
Useful
Life
 
Historical
Cost
 
Accumulated
Amortization
 
Net
Balance
Customer relationships
9.0
 
$
41,001

 
$
(25,056
)
 
$
15,945

Trade names and trademarks
10.0
 
3,286

 
(1,807
)
 
1,479

Non-compete agreements
5.0
 
574

 
(481
)
 
93

 
 
 
$
44,861

 
$
(27,344
)
 
$
17,517

 
 
 
 
 
 
 
 
  
December 31, 2015
(Dollars in thousands, lives in years)
Useful
Life
 
Historical
Cost
 
Accumulated
Amortization
 
Net
Balance
Customer relationships
9.0
 
$
41,001

 
$
(22,778
)
 
$
18,223

Trade names and trademarks
10.0
 
3,286

 
(1,643
)
 
1,643

Non-compete agreements
5.0
 
574

 
(450
)
 
124

 
 
 
$
44,861

 
$
(24,871
)
 
$
19,990


For each of the three months ended June 30, 2016 and 2015, intangible assets amortization expense was $1.2 million. For each of the six months ended June 30, 2016 and 2015, intangible assets amortization expense was $2.5 million.
NOTE 5 Income Taxes
Consistent with authoritative guidance, our estimated annual effective tax rate is used to allocate our expected annual income tax provision to interim periods. The rate is the ratio of our estimated annual income tax provision to estimated pre-tax ordinary income and excludes "discrete items," which are significant, unusual or infrequent items reported separately, net of their related tax effect. The estimated annual effective tax rate is applied to the current interim period’s ordinary income to determine the income tax provision allocated to the interim period. The income tax effects of discrete items are then determined separately and recognized in the interim period in which the income or expense items arise.
For the three and six months ended June 30, 2016 and 2015, the effective tax rates attributable to continuing operations were as follows:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Statutory federal income tax rate
35.0
 %
 
35.0
 %
 
35.0
 %
 
35.0
 %
State taxes, net of credits
3.6

 
2.2

 
3.6

 
2.2

Change in valuation allowances
(0.2
)
 
0.9

 
0.1

 
0.9

Federal manufacturing deduction
(1.7
)
 
(3.1
)
 
(1.7
)
 
(3.1
)
Change in uncertain tax positions
0.2

 
—

 
1.2

 
(3.1
)
Interest accrued on uncertain tax positions
—

 
—

 
—

 
0.1

Federal credits and audit adjustments
(0.7
)
 
(0.4
)
 
(0.7
)
 
(0.4
)
Return to provision adjustments
(0.2
)
 
—

 
(0.1
)
 
(0.1
)
Other
0.3

 
1.2

 
—

 
1.3

Effective tax rate
36.3
 %
 
35.8
 %
 
37.4
 %
 
32.8
 %
Our estimated annual effective tax rate for 2016 is approximately 37%, compared with approximately 35% for 2015.

9


NOTE 6 Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities at the balance sheet dates consist of:
(In thousands)
June 30, 2016
 
December 31, 2015
Trade accounts payable
$
116,909

 
$
128,045

Accrued wages, salaries and employee benefits
45,137

 
43,997

Accrued interest
11,930

 
11,981

Accrued discounts and allowances
9,819

 
8,954

Accrued taxes other than income taxes payable
6,282

 
5,112

Accrued utilities
6,202

 
7,536

Other
12,013

 
14,743

 
$
208,292

 
$
220,368

NOTE 7 Debt
REVOLVING CREDIT FACILITY
As of June 30, 2016 and December 31, 2015, there were no borrowings outstanding under the credit facility. As of June 30, 2016, $4.8 million of the credit facility was being used to support outstanding standby letters of credit. Loans under the credit facility bear interest (i) for LIBOR loans, at LIBOR plus between 1.25% and 1.75% and (ii) for base rate loans, a per annum rate equal to the greater of the following rates plus between 0.25% and 0.75%: (a) the rate of interest announced by Bank of America from time to time as its prime rate for such day; (b) the weighted average of interest rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers for such day, plus 0.50%; or (c) LIBOR for a 30-day interest period as determined on such day, plus 1.00%. The percentage margin on all loans is based on our fixed charge coverage ratio for the most recent four quarters. As of June 30, 2016, we would have been permitted to draw an additional $120.2 million under the credit facility at LIBOR plus 1.25%, or base rate plus 0.25%.
NOTE 8 Other Long-Term Obligations
Other long-term obligations at the balance sheet dates consist of:
 
(In thousands)
June 30, 2016
 
December 31, 2015
Long-term lease obligations, net of current portion
$
23,636

 
$
24,054

Deferred compensation
8,720

 
10,755

Deferred proceeds
8,235

 
9,386

Other
2,282

 
2,543

 
$
42,873

 
$
46,738


10


NOTE 9 Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss, net of tax, is comprised of the following:
(In thousands)
Pension and Other Post Retirement Employee Benefit Plan Adjustments
 
Total
Balance at December 31, 2015
$
(55,548
)
 
$
(55,548
)
Other comprehensive income, net of tax1
826

 
826

Balance at June 30, 2016
$
(54,722
)
 
$
(54,722
)
 
 
 
 
(In thousands)
Pension and Other Post Retirement Employee Benefit Plan Adjustments
 
Total
Balance at December 31, 2014
$
(70,863
)
 
$
(70,863
)
Other comprehensive income, net of tax1
3,201

 
3,201

Balance at June 30, 2015
$
(67,662
)
 
$
(67,662
)
1 
For the six months ended June 30, 2016 and 2015, net periodic costs associated with our pension and other postretirement employee benefit, or OPEB, plans included in other comprehensive income and reclassified from accumulated other comprehensive loss included $2.2 million and $6.3 million, respectively, of actuarial loss amortization, as well as $0.8 million and $1.1 million, respectively, of prior service credit amortization, all net of tax totaling $0.5 million and $2.1 million, respectively. These accumulated other comprehensive loss components are included in the computation of net periodic pension and OPEB costs in Note 10, “Pension and Other Postretirement Employee Benefit Plans.”
NOTE 10 Pension and Other Postretirement Employee Benefit Plans
The following table details the components of net periodic cost of our company-sponsored pension and OPEB plans for the periods presented:
 
Three Months Ended June 30,
(In thousands)
2016
 
2015
 
2016
 
2015
 
Pension Benefit Plans
 
Other Postretirement
Employee  Benefit Plans
Service cost
$
382

 
$
307

 
$
51

 
$
33

Interest cost
3,633

 
3,475

 
810

 
892

Expected return on plan assets
(4,878
)
 
(5,074
)
 
(1
)
 
—

Amortization of prior service cost (credit)
6

 
18

 
(428
)
 
(543
)
Amortization of actuarial loss (gain)
2,761

 
3,226

 
(2,058
)
 
—

Net periodic cost
$
1,904

 
$
1,952

 
$
(1,626
)
 
$
382

 
Six Months Ended June 30,
(In thousands)
2016
 
2015
 
2016
 
2015
 
Pension Benefit Plans
 
Other Postretirement
Employee  Benefit Plans
Service cost
$
780

 
$
623

 
$
125

 
$
181

Interest cost
7,261

 
6,965

 
1,576

 
1,940

Expected return on plan assets
(9,761
)
 
(10,058
)
 
(1
)
 
—

Amortization of prior service cost (credit)
11

 
36

 
(856
)
 
(1,088
)
Amortization of actuarial loss (gain)
5,645

 
6,309

 
(3,441
)
 
—

Net periodic cost
$
3,936

 
$
3,875

 
$
(2,597
)
 
$
1,033

During the six months ended June 30, 2016, we made no contributions to our qualified pension plans. During the six months ended June 30, 2015, we made contributions of $3.2 million to our qualified pension plans. We do not expect to make contributions in 2016.
During the six months ended June 30, 2016, we made contributions of $0.2 million to our company-sponsored non-qualified pension plan. We estimate contributions will total $0.4 million in 2016. We do not anticipate funding our OPEB plans in 2016 except to pay benefit costs as incurred during the year by plan participants.

11


During the three and six months ended June 30, 2016, $0.1 million and $0.8 million, respectively, of net periodic pension and OPEB costs were charged to "Cost of sales," and $0.1 million and $0.5 million, respectively, were charged to "Selling, general and administrative expenses" in the accompanying Consolidated Statements of Operations. During the three and six months ended June 30, 2015, $1.6 million and $3.4 million, respectively, of net periodic pension and OPEB costs were charged to "Cost of sales" and $0.7 million and $1.5 million, respectively, were charged to "Selling, general and administrative expenses" in the accompanying Consolidated Statements of Operations.
NOTE 11 Earnings per Common Share
Basic earnings per share are based on the weighted average number of shares of common stock outstanding. Diluted earnings per share are based upon the weighted average number of shares of common stock outstanding plus all potentially dilutive securities that were assumed to be converted into common shares at the beginning of the period under the treasury stock method.
The following table reconciles the number of common shares used in calculating the basic and diluted net earnings per share:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Basic average common shares outstanding1
17,065,663

 
19,081,848

 
17,293,091

 
19,205,254

Incremental shares due to:
 
 
 
 
 
 
 
Restricted stock units
53,108

 
93,459

 
32,355

 
74,324

Performance shares
89,783

 
118,868

 
60,617

 
104,330

Stock options
25,441

 
79

 
—

 
459

Diluted average common shares outstanding
17,233,995

 
19,294,254

 
17,386,063

 
19,384,367

 
 
 
 
 
 
 
 
Basic net earnings per common share
$
1.22

 
$
0.82

 
$
2.27

 
$
1.11

Diluted net earnings per common share
1.21

 
0.81

 
2.26

 
1.10

 
 
 
 
 
 
 
 
Anti-dilutive shares excluded from calculation
222,026

 
265,149

 
665,605

 
326,085

1 
Basic average common shares outstanding include restricted stock awards that are fully vested, but are deferred for future issuance.


12


NOTE 12 Equity-Based Compensation
We recognize equity-based compensation expense for all equity-based payment awards made to employees and directors, including restricted stock units, or RSUs, performance shares and stock options, based on estimated fair values.
EMPLOYEE AWARDS
Employee equity-based compensation expense was recognized as follows:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(In thousands)
2016
 
2015
 
2016
 
2015
Restricted stock units
$
367

 
$
552

 
$
660

 
$
963

Performance shares
819

 
1,164

 
1,436

 
2,043

Stock options
748

 
592

 
1,284

 
941

Total employee equity-based compensation
$
1,934

 
$
2,308

 
$
3,380

 
$
3,947

During the first six months of 2016, 3,000 restricted stock units were settled and distributed in the first quarter, and an additional 20,000 restricted stock units were settled and distributed in the second quarter. After adjusting for minimum tax withholdings, a net 1,892 shares and 13,252 shares were issued during each respective period. For the six months ended June 30, 2016, the minimum tax withholding payments made totaled $0.5 million.
The following table summarizes the number of share-based awards granted under the Clearwater Paper Corporation 2008 Stock Incentive Plan during the six months ended June 30, 2016 and the grant-date fair value of the awards:
 
 
Six Months Ended
 
June 30, 2016
 
Number of
Shares Subject to Award
 
Average Fair
Value of Award Per Share
Restricted stock units
44,627

 
$
39.10

Performance shares
93,397

 
39.70

Stock options
280,191

 
14.42

DIRECTOR AWARDS
Annually, each outside member of our Board of Directors receives deferred equity-based awards that are measured in units of our common stock and ultimately settled in cash at the time of payment. Accordingly, the compensation expense associated with these awards is subject to fluctuations each quarter based on mark-to-market adjustments at each reporting period in line with changes in the market price of our common stock. As a result of the mark-to-market adjustment, we recorded director equity-based compensation expense of $3.6 million and a benefit of $1.5 million for the three months ended June 30, 2016 and 2015, respectively. For the six months ended June 30, 2016 and 2015, we recorded director equity-based compensation expense of $4.3 million and a benefit of $1.9 million, respectively.
As of June 30, 2016, the liability amounts associated with director equity-based compensation included in "Other long-term obligations" and "Accounts payable and accrued liabilities" on the accompanying Consolidated Balance Sheet were $7.5 million and $3.2 million, respectively. At December 31, 2015, liability amounts associated with director equity-based compensation included in "Other long-term obligations" totaled $9.4 million.

13


NOTE 13 Fair Value Measurements
The estimated fair values of our financial instruments at the dates presented below are as follows:
 
 
June 30,
 
December 31,
 
2016
 
2015
 
Carrying
 
Fair
 
Carrying
 
Fair
(In thousands)
Amount
 
Value
 
Amount
 
Value
Cash and cash equivalents, restricted cash and short-term investments (Level 1)
$
11,665

 
$
11,665

 
$
8,130

 
$
8,130

Long-term debt (Level 1)
575,000

 
569,500

 
575,000

 
558,250

Accounting guidance establishes a framework for measuring the fair value of financial instruments, providing a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities, or “Level 1” measurements, followed by quoted prices of similar assets or observable market data, or “Level 2” measurements, and the lowest priority to unobservable inputs, or “Level 3” measurements.
The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used should seek to maximize the use of observable inputs and minimize the use of unobservable inputs.
NOTE 14 Segment Information
The table below presents information about our reportable segments:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(In thousands)
2016
 
2015
 
2016
 
2015
Segment net sales:
 
 
 
 
 
 
 
Consumer Products
$
247,912

 
$
239,391

 
$
492,930

 
$
474,567

Pulp and Paperboard
188,759

 
205,167

 
380,945

 
404,017

Total segment net sales
$
436,671

 
$
444,558

 
$
873,875

 
$
878,584

 
 
 
 
 
 
 
 
Operating income (loss):
 
 
 
 
 
 
 
Consumer Products
$
18,544

 
$
17,032

 
$
36,934

 
$
29,427

Pulp and Paperboard
40,032

 
27,754

 
75,195

 
43,948

 
58,576

 
44,786

 
112,129

 
73,375

Corporate
(18,411
)
 
(12,713
)
 
(34,202
)
 
(26,065
)
Income from operations
$
40,165

 
$
32,073

 
$
77,927

 
$
47,310

 
 
 
 
 
 
 
 
Depreciation and amortization:
 
 
 
 
 
 
 
Consumer Products
$
14,203

 
$
13,438

 
$
27,962

 
$
26,415

Pulp and Paperboard
6,449

 
6,737

 
12,816

 
14,048

Corporate
1,372

 
457

 
2,396

 
1,177

Total depreciation and amortization
$
22,024

 
$
20,632

 
$
43,174

 
$
41,640


14


NOTE 15 Supplemental Guarantor Financial Information
All of our direct and indirect subsidiaries guarantee our $300 million aggregate principal amount of 5.375% senior notes issued in 2014 and due 2025, which we refer to as the 2014 Notes, and our $275 million aggregate principal amount of 4.5% senior notes issued in January 2013 and due 2023, which we refer to as the 2013 Notes, on a joint and several basis. There are no significant restrictions on the ability of the guarantor subsidiaries to make distributions to Clearwater Paper, the issuer of the 2014 Notes and 2013 Notes. The following tables present the results of operations, financial position and cash flows of Clearwater Paper and its subsidiaries, the guarantor and non-guarantor entities, and the eliminations necessary to arrive at the information for Clearwater Paper on a consolidated basis.
Clearwater Paper Corporation
Consolidating Statement of Operations and Comprehensive Income (Loss)
Three Months Ended June 30, 2016
 
 
 
Guarantor
 
 
 
 
(In thousands)
Issuer
 
Subsidiaries
 
Eliminations
 
Total
Net sales
$
425,637

 
$
67,824

 
$
(56,790
)
 
$
436,671

Cost and expenses:
 
 
 
 
 
 
 
Cost of sales
(356,698
)
 
(61,943
)
 
56,790

 
(361,851
)
Selling, general and administrative expenses
(30,817
)
 
(3,838
)
 
—

 
(34,655
)
Total operating costs and expenses
(387,515
)
 
(65,781
)
 
56,790

 
(396,506
)
Income from operations
38,122

 
2,043

 
—

 
40,165

Interest expense, net
(7,373
)
 
(23
)
 
—

 
(7,396
)
Earnings before income taxes
30,749

 
2,020

 
—

 
32,769

Income tax provision
(11,124
)
 
(781
)
 
—

 
(11,905
)
Equity in income of subsidiary
1,239

 
—

 
(1,239
)
 
—

Net earnings
$
20,864

 
$
1,239

 
$
(1,239
)
 
$
20,864

Other comprehensive income, net of tax
171

 
—

 
—

 
171

Comprehensive income
$
21,035

 
$
1,239

 
$
(1,239
)
 
$
21,035

Clearwater Paper Corporation
Consolidating Statement of Operations and Comprehensive Income (Loss)
Six Months Ended June 30, 2016
 
 
 
Guarantor
 
 
 
 
(In thousands)
Issuer
 
Subsidiaries
 
Eliminations
 
Total
Net sales
$
844,683

 
$
145,449

 
$
(116,257
)
 
$
873,875

Cost and expenses:
 
 
 
 
 
 
 
Cost of sales
(713,412
)
 
(133,343
)
 
116,257

 
(730,498
)
Selling, general and administrative expenses
(57,654
)
 
(7,796
)
 
—

 
(65,450
)
Total operating costs and expenses
(771,066
)
 
(141,139
)
 
116,257

 
(795,948
)
Income from operations
73,617

 
4,310

 
—

 
77,927

Interest expense, net
(15,016
)
 
(23
)
 
—

 
(15,039
)
Earnings before income taxes
58,601

 
4,287

 
—

 
62,888

Income tax provision
(21,594
)
 
(1,984
)
 
—

 
(23,578
)
Equity in loss of subsidiary
2,303

 
—

 
(2,303
)
 
—

Net earnings
$
39,310

 
$
2,303

 
$
(2,303
)
 
$
39,310

Other comprehensive income, net of tax
826

 
—

 
—

 
826

Comprehensive income
$
40,136

 
$
2,303

 
$
(2,303
)
 
$
40,136


15


Clearwater Paper Corporation
Consolidating Statement of Operations and Comprehensive Income (Loss)
Three Months Ended June 30, 2015
 
 
 
 
 
 
 
 
 
 
 
Guarantor
 
 
 
 
(In thousands)
Issuer
 
Subsidiaries
 
Eliminations
 
Total
Net sales
$
401,444

 
$
70,271

 
$
(27,157
)
 
$
444,558

Cost and expenses:
 
 
 
 
 
 
 
Cost of sales
(342,714
)
 
(68,790
)
 
27,157

 
(384,347
)
Selling, general and administrative expenses
(25,431
)
 
(2,707
)
 
—

 
(28,138
)
Total operating costs and expenses
(368,145
)
 
(71,497
)
 
27,157

 
(412,485
)
Income (loss) from operations
33,299

 
(1,226
)
 
—

 
32,073

Interest expense, net
(7,715
)
 
(59
)
 
—

 
(7,774
)
Earnings (loss) before income taxes
25,584

 
(1,285
)
 
—

 
24,299

Income tax provision
(9,681
)
 
(841
)
 
1,820

 
(8,702
)
Equity in income of subsidiary
(2,126
)
 
—

 
2,126

 
—

Net earnings (loss)
$
13,777

 
$
(2,126
)
 
$
3,946

 
$
15,597

Other comprehensive income, net of tax
1,644

 
—

 
—

 
1,644

Comprehensive income (loss)
$
15,421

 
$
(2,126
)
 
$
3,946

 
$
17,241

Clearwater Paper Corporation
Consolidating Statement of Operations and Comprehensive Income (Loss)
Six Months Ended June 30, 2015
 
 
 
 
 
 
 
 
 
 
 
Guarantor
 
 
 
 
(In thousands)
Issuer
 
Subsidiaries
 
Eliminations
 
Total
Net sales
$
796,831

 
$
143,599

 
$
(61,846
)
 
$
878,584

Cost and expenses:
 
 
 
 
 
 
 
Cost of sales
(693,760
)
 
(142,265
)
 
61,846

 
(774,179
)
Selling, general and administrative expenses
(50,219
)
 
(6,876
)
 
—

 
(57,095
)
Total operating costs and expenses
(743,979
)
 
(149,141
)
 
61,846

 
(831,274
)
Income (loss) from operations
52,852

 
(5,542
)
 
—

 
47,310

Interest expense, net
(15,482
)
 
(74
)
 
—

 
(15,556
)
Earnings (loss) before income taxes
37,370

 
(5,616
)
 
—

 
31,754

Income tax provision
(12,909
)
 
(1,183
)
 
3,692

 
(10,400
)
Equity in loss of subsidiary
(6,799
)
 
—

 
6,799

 
—

Net earnings (loss)
$
17,662

 
$
(6,799
)
 
$
10,491

 
$
21,354

Other comprehensive income, net of tax
3,201

 
—

 
—

 
3,201

Comprehensive income (loss)
$
20,863

 
$
(6,799
)
 
$
10,491

 
$
24,555



16


Clearwater Paper Corporation
Consolidating Balance Sheet
At June 30, 2016
(In thousands)
Issuer
 
Guarantor
Subsidiaries
 
Eliminations
 
Total
ASSETS
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
Cash and cash equivalents
$
9,395

 
$
—

 
$
—

 
$
9,395

Restricted cash
2,270

 
—

 
—

 
2,270

Receivables, net
127,823

 
15,238

 
—

 
143,061

Taxes receivable
2,221

 
35

 
(1,512
)
 
744

Inventories
216,891

 
32,043

 
—

 
248,934

Other current assets
7,196

 
463

 
—

 
7,659

Total current assets
365,796

 
47,779

 
(1,512
)
 
412,063

Property, plant and equipment, net
740,687

 
141,288

 
—

 
881,975

Goodwill
209,087

 
—

 
—

 
209,087

Intangible assets, net
3,657

 
13,860

 
—

 
17,517

Intercompany receivable (payable)
(1,147
)
 
1,147

 
—

 
—

Investment in subsidiary
142,061

 
—

 
(142,061
)
 
—

Pension assets
1,555

 
—

 
—

 
1,555

Other assets, net
5,043

 
844

 
(1,352
)
 
4,535

TOTAL ASSETS
$
1,466,739

 
$
204,918

 
$
(144,925
)
 
$
1,526,732

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
Accounts payable and accrued
  liabilities
$
185,769

 
$
24,035

 
$
(1,512
)
 
$
208,292

Current liability for pensions and
  other postretirement employee benefits
7,559

 
—

 
—

 
7,559

Total current liabilities
193,328

 
24,035

 
(1,512
)
 
215,851

Long-term debt
569,371

 
—

 
—

 
569,371

Liability for pensions and other
  postretirement employee benefits
86,465

 
—

 
—

 
86,465

Other long-term obligations
42,458

 
415

 
—

 
42,873

Accrued taxes
705

 
811

 
—

 
1,516

Deferred tax liabilities
91,518

 
37,596

 
(1,352
)
 
127,762

Stockholders' equity excluding accumulated other comprehensive loss
537,616

 
142,061

 
(142,061
)
 
537,616

Accumulated other comprehensive loss,
net of tax
(54,722
)
 
—

 
—

 
(54,722
)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
1,466,739

 
$
204,918

 
$
(144,925
)
 
$
1,526,732



17


Clearwater Paper Corporation
Consolidating Balance Sheet
At December 31, 2015
(In thousands)
Issuer
 
Guarantor
Subsidiaries
 
Eliminations
 
Total
ASSETS
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
Cash
$
5,610

 
$
—

 
$
—

 
$
5,610

Restricted cash
2,270

 
—

 
—

 
2,270

Short-term investments
250

 
—

 
—

 
250

Receivables, net
123,131

 
15,921

 
—

 
139,052

Taxes receivable
16,221

 
(1,370
)
 
—

 
14,851

Inventories
219,130

 
36,443

 
—

 
255,573

Other current assets
8,838

 
493

 
—

 
9,331

Total current assets
375,450

 
51,487

 
—

 
426,937

Property, plant and equipment, net
719,436

 
147,102

 
—

 
866,538

Goodwill
209,087

 
—

 
—

 
209,087

Intangible assets, net
4,180

 
15,810

 
—

 
19,990

Intercompany receivable (payable)
14,013

 
(15,151
)
 
1,138

 
—

Investment in subsidiary
139,758

 
—

 
(139,758
)
 
—

Pension assets
596

 
—

 
—

 
596

Other assets, net
4,142

 
79

 
—

 
4,221

TOTAL ASSETS
$
1,466,662

 
$
199,327

 
$
(138,620
)
 
$
1,527,369

LIABILITIES AND STOCKHOLDERS’
  EQUITY
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
Accounts payable and accrued
  liabilities
$
196,891

 
$
23,477

 
$
—

 
$
220,368

Current liability for pensions and
  other postretirement employee benefits
7,559

 
—

 
—

 
7,559

Total current liabilities
204,450

 
23,477

 
—

 
227,927

Long-term debt
568,987

 
—

 
—

 
568,987

Liability for pensions and other
  postretirement employee benefits
89,057

 
—

 
—

 
89,057

Other long-term obligations
46,182

 
556

 
—

 
46,738

Accrued taxes
874

 
802

 
—

 
1,676

Deferred tax liabilities
82,246

 
34,734

 
1,138

 
118,118

Stockholders’ equity excluding
accumulated other comprehensive loss
530,414

 
139,758

 
(139,758
)
 
530,414

Accumulated other comprehensive loss,
  net of tax
(55,548
)
 
—

 
—

 
(55,548
)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
1,466,662

 
$
199,327

 
$
(138,620
)
 
$
1,527,369



18


Clearwater Paper Corporation
Consolidating Statement of Cash Flows
Six Months Ended June 30, 2016
(In thousands)
Issuer
 
Guarantor
Subsidiaries
 
Eliminations
 
Total
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
 
 
 
Net earnings
$
39,310

 
$
2,303

 
$
(2,303
)
 
$
39,310

Adjustments to reconcile net earnings to
  net cash flows from operating activities:
 
 
 
 
 
 
 
Depreciation and amortization
32,905

 
10,269

 
—

 
43,174

Equity-based compensation expense
7,716

 
—

 
—

 
7,716

Deferred tax provision
7,858

 
1,954

 
(1,138
)
 
8,674

Employee benefit plans
(2,561
)
 
—

 
—

 
(2,561
)
Deferred issuance costs on long-term debt
419

 
—

 
—

 
419

Non-cash adjustments to unrecognized taxes
(169
)
 
9

 
—

 
(160
)
Changes in working capital, net
(18,437
)
 
6,555

 
(1,512
)
 
(13,394
)
Changes in taxes receivable, net
14,000

 
(1,405
)
 
1,512

 
14,107

Excess tax benefits from equity-based payment arrangements
(148
)
 
—

 
—

 
(148
)
Other, net
(706
)
 
(16
)
 
—

 
(722
)
Net cash flows from operating activities
80,187

 
19,669

 
(3,441
)
 
96,415

CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
 
 
 
Changes in short-term investments, net
250

 
—

 
—

 
250

Additions to plant and equipment
(54,049
)
 
(3,345
)
 
—

 
(57,394
)
Net cash flows from investing activities
(53,799
)
 
(3,345
)
 
—

 
(57,144
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
 
 
 
Purchase of treasury stock
(35,168
)
 
—

 
—

 
(35,168
)
Investment from (to) parent
12,883

 
(16,324
)
 
3,441

 
—

Borrowings on revolving credit facility
477,169

 
—

 
—

 
477,169

Repayments of revolving credit facility borrowings
(477,169
)
 
—

 
—

 
(477,169
)
Payment of tax withholdings on equity-based
  payment arrangements
(466
)
 
—

 
—

 
(466
)
Excess tax benefits from equity-based
  payment arrangements
148

 
—

 
—

 
148

Net cash flows from financing activities
(22,603
)
 
(16,324
)
 
3,441

 
(35,486
)
Decrease in cash and cash equivalents
3,785

 
—

 
—

 
3,785

Cash and cash equivalents at beginning of period
5,610

 
—

 
—

 
5,610

Cash and cash equivalents at end of period
$
9,395

 
$
—

 
$
—

 
$
9,395


19


Clearwater Paper Corporation
Consolidating Statement of Cash Flows
Six Months Ended June 30, 2015
(In thousands)
Issuer
 
Guarantor Subsidiaries
 
Eliminations
 
Total
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
 
 
 
Net earnings (loss)
$
17,662

 
$
(6,799
)
 
$
10,491

 
$
21,354

Adjustments to reconcile net earnings (loss) to net
  cash flows from operating activities:
 
 
 
 
 
 
 
Depreciation and amortization
31,792

 
9,848

 
—

 
41,640

Equity-based compensation expense
2,019

 
—

 
—

 
2,019

Deferred tax (benefit) provision
(4,751
)
 
296

 
1,975

 
(2,480
)
Employee benefit plans
1,438

 
—

 
—

 
1,438

Deferred issuance costs on long-term debt
446

 
—

 
—

 
446

Disposal of plant and equipment, net
303

 
(31
)
 
—

 
272

Non-cash adjustments to unrecognized taxes
(977
)
 
(2
)
 
—

 
(979
)
Changes in working capital, net
23,859

 
5,450

 
—

 
29,309

Changes in taxes receivable, net
6,760

 
(15,758
)
 
10,253

 
1,255

Excess tax benefits from equity-based payment arrangements
(1,459
)
 
—