As filed with the Securities and Exchange Commission on February 9, 2015.

Registration No. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

PGI Specialty Materials, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware	2221	27-4132779
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

9335 Harris Corners Parkway, Suite 300

Charlotte, North Carolina 28269

(704) 697-5100

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

General Counsel

PGI Specialty Materials, Inc.

9335 Harris Corners Parkway, Suite 300

Charlotte, North Carolina 28269

(704) 697-5100

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Igor Fert, Esq.

Simpson Thacher & Bartlett LLP

425 Lexington Avenue New York, NY 10017

Telephone: (212) 455-2000

Facsimile: (212) 455-2502

Michael Kaplan, Esq.

Richard D. Truesdell, Jr., Esq.

Davis Polk & Wardwell LLP

450 Lexington Avenue New York, NY 10017

Phone: (212) 450-4000

Fax: (212) 701-5800

Approximate date of commencement of the proposed sale of the securities to the public: As soon as practicable after the Registration Statement is declared effective.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ¨

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

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.

CALCULATION OF REGISTRATION FEE



Title Of Each Class Of Securities To Be Registered	Proposed Maximum Aggregate Offering Price(1)(2)	Amount of Registration Fee
Common Stock, par value $0.01 per share	$100,000,000	$11,620

(1)	Estimated solely for the purpose of determining the amount of the registration fee in accordance with Rule 457(o) under the Securities Act of 1933.

(2)	Includes shares of common stock subject to the underwriters’ option to purchase additional shares of common stock.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion. Dated February 9, 2015.

Shares

LOGO

PGI Specialty Materials, Inc.

Common Stock

This is an initial public offering of shares of common stock of PGI Specialty Materials, Inc.

Prior to this offering, there has been no public market for the common stock. It is currently estimated that the initial public offering price per share will be between $ and $ . PGI Specialty Materials, Inc. intends to list the common stock on (the “ ”) under the symbol “ .”

After the completion of this offering, affiliates of The Blackstone Group L.P. will continue to own a majority of the voting power of all outstanding shares of the common stock. As a result, we will be a “controlled company” within the meaning of the corporate governance standards of the . See “Principal Stockholders.”

We have granted the underwriters a 30-day option to purchase up to additional shares at the initial public offering price less the underwriting discount and commissions.

Investing in our common stock involves risk. See “Risk Factors” beginning on page 27 to read about factors you should consider before buying shares of our common stock.

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.


	Per Share	Total
Initial public offering price	$	$
Underwriting discounts and commissions(1)	$	$
Proceeds, before expenses, to us	$	$

(1)	See “Underwriting” for additional information regarding underwriting compensation.

The underwriters expect to deliver the shares against payment in New York, New York on or about , 2015.


BofA Merrill Lynch		Citigroup

Goldman, Sachs & Co.	Jefferies	RBC Capital Markets

Prospectus dated , 2015.

TABLE OF CONTENTS


	Page
Market, Ranking and Other Industry Data		ii
Trademarks, Service Marks and Tradenames		ii
Basis of Presentation		ii
Summary		1
The Offering		17
Summary Historical and Pro Forma Condensed Combined Financial Information		19
Risk Factors		27
Forward-Looking Statements		46
Use of Proceeds		47
Dividend Policy		48
Capitalization		49
Dilution		51
Unaudited Pro Forma Condensed Combined Financial Information		53
Selected Historical Consolidated Financial Data		76


	Page
Management’s Discussion and Analysis of Financial Condition and Results of Operations		78
Industry		124
Business		127
Organizational Structure		142
Management		143
Certain Relationships and Related Party Transactions		171
Principal Stockholders		174
Description of Capital Stock		176
Shares Eligible for Future Sale		184
Material U.S. Federal Income and Estate Tax Consequences to Non-U.S. Holders of Our Common Stock		186
Underwriting		189
Legal Matters		195
Experts		195
Where You Can Find More Information		195

Unless otherwise indicated or the context otherwise requires, financial data in this prospectus reflects the consolidated business and operations of PGI Specialty Materials, Inc. and its consolidated subsidiaries.

Neither we nor the underwriters have authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses we have prepared. Neither we nor the underwriters take responsibility for, nor can provide any assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.

MARKET, RANKING AND OTHER INDUSTRY DATA

The data included in this prospectus regarding the markets and the industry in which we operate, including the size of certain markets and our position and the position of our competitors within these markets, are based on reports of government agencies, independent industry sources (including Smithers Pira and Nonwovens Industry) and our own estimates relying on our management’s knowledge and experience in the markets in which we operate. Our management’s knowledge and experience, in turn, are based on information obtained from our customers, distributors, suppliers, trade and business organizations and other contacts in the markets in which we operate. We believe these reports, sources and estimates to be accurate as of their respective dates. However, this information may prove to be inaccurate because of the method by which we obtained some of the data for our estimates or because this information cannot always be verified with complete certainty due to the limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties. Unless otherwise specified in this prospectus, all references to market size and our market positions are based on our pro forma net sales for the specified periods.

Although we believe market, ranking and other industry data included in this prospectus is generally reliable, we cannot guarantee the accuracy and completeness of the information and have not independently verified it. We have not independently verified any of the data from other third party sources, nor have we ascertained the underlying assumptions relied upon therein. As a result, you should be aware that market, ranking and other industry data included in this prospectus, and our estimates and beliefs based on that data, may not be reliable. Neither we nor the underwriters can guarantee the accuracy or completeness of any such information contained in this prospectus. While we are not aware of any misstatements regarding the industry data presented herein, our estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading “Risk Factors,” “Forward-Looking Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this prospectus.

TRADEMARKS, SERVICE MARKS AND TRADENAMES

This prospectus contains some of our trademarks, trade names and service marks, including the following: APEX, Chicopee, Chix, Chux, Durawipe, Fiberweb, KAMI, Masslinn, PGI, Polymer Group, Inc., Providência, REEMAY, Spinlace, S-Tex, TYPAR and Worxwell. Each one of these trademarks, trade names or service marks is either (i) our registered trademark, (ii) a trademark for which we have a pending application, (iii) a trade name or service mark for which we claim common law rights or (iv) a registered trademark or application for registration which we have been licensed by a third party to use.

Solely for convenience, the trademarks, service marks, and trade names referred to in this prospectus are without the ^® and ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks, and trade names. This prospectus contains additional trademarks, service marks and trade names of others, which are the property of their respective owners. All trademarks, service marks and trade names appearing in this prospectus are, to our knowledge, the property of their respective owners.

BASIS OF PRESENTATION

As used in this prospectus, unless otherwise noted or the context otherwise requires:

•

references to the “Issuer” are to PGI Specialty Materials, Inc., exclusive of its subsidiaries;

•

references to “we,” “us,” “our,” “PGI,” and “the Company” are to PGI Specialty Materials, Inc. and its subsidiaries;

•

references to “PGI Group” are to Polymer Group, Inc., an indirect subsidiary of the Issuer, exclusive of its subsidiaries;

•

references to “Holdings” are to Scorpio Acquisition Corporation, the direct subsidiary of the Issuer, exclusive of its subsidiaries;

•

references to “Blackstone” and the “Sponsor” are to certain investment funds affiliated with Blackstone Capital Partners V L.P.;

•

references to the “Investor Group” are, collectively, to Blackstone and the management investors (as defined below);

•

references to the “management investors” are to certain members of our management team and employees who have made investments in the Issuer;

•

references to “Providência” are to Companhia Providência Indústria e Comércio, a Brazilian corporation (sociedade anônima);

•

references to “Acquisition Co.” are to our wholly-owned subsidiary, PGI Polímeros do Brasil S.A., a Brazilian corporation (sociedade anônima);

•

references to the “Providência Acquisition” are to the acquisition of approximately 71.25% of the outstanding capital stock of Providência by Acquisition Co.;

•

references to “Providência Refinancing” are to the borrowings under the Incremental Amendment (as defined below), the Senior Unsecured Notes (as defined below) and the use of proceeds therefrom;

•

references to the “Mandatory Tender Offer” are to the mandatory tender offer registration request filed by Acquisition Co., our wholly-owned subsidiary, with the Securities Commission of Brazil (Comissão de Valores Mobiliários or “CVM”) in order to launch as required by Brazilian law, after the CVM’s approval, a tender offer to acquire the remaining approximately 28.75% of the outstanding capital stock of Providência that is currently held by minority shareholders;

•

references to “Fiberweb” are to Fiberweb Limited (formerly known as Fiberweb plc);

•

references to the “Fiberweb Acquisition” are to the completion of the acquisition of the entire issued ordinary share capital of Fiberweb, the borrowings under the Bridge Facilities and the use of proceeds therefrom;

•

references to the “Fiberweb Refinancing” are to the Equity Contribution (as defined below), the borrowings under the Term Loans (as defined below) and the use of proceeds therefrom;

•

references to “Terram Geosynthetics” are to Terram Geosynthetics Private Limited, a joint venture we acquired as part of the Fiberweb Acquisition in which we maintain a 65% interest;

•

references to the “ABL Facility” are to the Credit Agreement, dated as of January 28, 2011, among Holdings, PGI Group, as lead borrower, the lenders from time to time party thereto, Citibank, N.A., as administrative agent and collateral agent, Morgan Stanley Senior Funding, Inc., as syndication agent, Barclays Bank PLC and RBC Capital Markets, as co-documentation agents, and Citigroup Global Markets Inc., Morgan Stanley Senior Funding, Inc., Barclays Capital Inc. and RBC Capital Markets LLC, as joint lead arrangers and joint book runners, as further amended or supplemented from time to time;

•

references to the “Secured Bridge Facility” are to the $268.0 million secured bridge credit facility, dated as of September 17, 2013, among PGI Group, Holdings, the lenders from time to time party thereto, Citicorp North America, Inc., as administrative agent, Barclays Bank PLC, as syndication agent and Citigroup Global Markets Inc. and Barclays Bank PLC, as joint lead arrangers and joint bookrunners, as further amended or supplemented from time to time;

•

references to the “Unsecured Bridge Facility” are to the $50.0 million unsecured bridge credit facility, dated as of November 26, 2013, among PGI Group, Holdings, the lenders from time to time party thereto, Citicorp North America, Inc., as administrative agent, Barclays Bank PLC, as syndication

iii

agent and Citigroup Global Markets Inc. and Barclays Bank PLC, as joint lead arrangers and joint bookrunners, as further amended or supplemented from time to time;

•

references to the “Bridge Facilities” are to the Secured Bridge Facility and the Unsecured Bridge Facility, collectively;

•

references to the “Term Loans” are to the $295.0 million of term loans outstanding pursuant to the Senior Secured Credit Agreement (the “Term Loan Facility”), dated as of December 19, 2013, among PGI Group, Holdings, the lenders from time to time party thereto, Citicorp North America, Inc., as administrative agent, Barclays Bank PLC, as syndication agent, RBC Capital Markets and HSBC Bank USA, N.A., as co-documentation agents, Citigroup Global Markets Inc. and Barclays Bank PLC, as joint lead arrangers and Citigroup Global Markets Inc., Barclays Bank PLC, RBC Capital Markets and HSBC Securities (USA) Inc., as joint bookrunners, as further amended or supplemented from time to time;

•

references to “Additional Term Loans” are to the $415.0 million of incremental term loans outstanding pursuant to an incremental term loan amendment, dated as of June 10, 2014 (the “Incremental Amendment”), to our existing Term Loan Facility;

•

references to “Equity Contribution” are to an equity investment by the Sponsor of approximately $30.7 million in the Issuer, the proceeds of which were contributed as a capital contribution to Holdings, which in turn contributed such proceeds to PGI Group as a capital contribution;

•

references to “pro forma” give pro forma effect to the Fiberweb Acquisition, the Fiberweb Refinancing, the Providência Acquisition and the Providência Refinancing and the Offering (as defined herein), for the period indicated;

•

references to the “Senior Unsecured Notes” are to the $210.0 million aggregate principal amount of 6.875% senior unsecured notes due 2019 issued by PGI Group on June 11, 2014;

•

references to the “Senior Secured Notes” are to the $560.0 million aggregate principal amount of 7.75% notes due 2019 issued by PGI Group on January 13, 2011;

•

reference to “spunmelt” are to spunmelt technology, which uses thermoplastic polymers that are melt-spun to manufacture continuous-filament products;

•

references to “Smithers Pira” are to Smithers Information Ltd., a market research firm. All information included herein that is attributed to Smithers Pira is based on Smithers Pira’s Consultancy Report on Global Nonwovens Market, dated December 20, 2014;

•

references to “nonwovens industry” are to industry size, as measured by either volume (in metric tons) or value (in U.S. Dollars), based on information by Smithers Pira. The nonwovens industry, as defined by Smithers Pira, encompasses nonwovens used for various products that serve the hygiene, healthcare filtration, dryer sheets, industrial and wipes applications. The industry also includes geocomposites products, which are an adjacent technology used in industrial applications that can utilize nonwovens;

•

references to “Nonwovens Industry” are to the information publicly available at http://www.nonwovens-industry.com, a website dedicated to the worldwide business of nonwovens;

•

references to “markets” or “regions” generally refers to the four geographic regions in which we operate: North America, South America, Europe (including our India operations), and Asia;

•

references to “applications” generally are to the various customer end-use applications which our products serve. While our products serve a diverse range of applications, for convenience, we group these applications into three primary categories: Personal Care, Infection Prevention and High Performance Solutions. Personal Care includes hygiene applications (such as baby diapers, adult incontinence products, and feminine hygiene products), personal care wipes, and fabric-softening dryer sheets. Infection Prevention includes healthcare applications (such as surgical gowns and drapes, face

masks and wound care products), filtration products (including blood filters, pool and spa filters, and Hepa filtration), and disinfectant wipes (including patient care wipes and hard surface disinfectant wipes). High Performance Solutions includes building, construction and geosynthetics (including house wrap, road underlayment and industrial cable wrap), along with air filtration, home and bedding and industrial wiping applications, among others; and

•

references to the “underwriters” are to the firms listed on the cover page of this prospectus.

On January 28, 2011, pursuant to an Agreement and Plan of Merger, dated as of October 4, 2010, we were acquired by affiliates of Blackstone, along with certain members of our management (the “Merger”). Periods prior to January 28, 2011 reflect the financial position, results of operations, and changes in financial position of the Company prior to the Merger (the “Predecessor”). The fiscal year ended December 31, 2011 reflects the financial position, results of operations, and changes in financial position of the Company after the Merger (the “Successor”). The Successor had no operating activities between its November 22, 2010 inception date and the closing date of the Merger. The audited financial statements of the Successor for the period from November 22, 2010 to January 2, 2011, and as of January 2, 2011, have been omitted from this prospectus because we believe the Successor qualified as a “business combination related shell company” within the meaning of relevant SEC guidance during such period, as it was formed for the sole purpose of completing the Merger and did not have any assets as of January 2, 2011.

The Merger was recorded using the acquisition method of accounting in accordance with the accounting guidance for business combinations and non-controlling interest. The guidance prescribes that the purchase price be allocated to assets acquired and liabilities assumed based on the estimated fair market value of such assets and liabilities at the date of acquisition. As a result, periods prior to the Merger are not comparable to subsequent periods due to the difference in the basis of presentation of purchase accounting as compared to historical cost.

The audited financial statements of Fiberweb as of and for the years ended December 31, 2012, 2011 and 2010 and the unaudited interim financial statements as of and for the nine months ended September 30, 2013 included in this prospectus have been prepared in pounds sterling and in accordance with applicable International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). IFRS differs in certain significant respects from U.S. Generally Accepted Accounting Principles (“GAAP”). See “Unaudited Pro Forma Condensed Combined Financial Information” for a discussion of significant differences between IFRS and GAAP as they relate to Fiberweb.

The audited financial statements of Providência as of and for the years ended December 31, 2013 and 2012 and the unaudited condensed interim financial statements as of and for the three months ended March 31, 2014 included in this prospectus have been prepared in Brazilian Reais and in accordance with applicable IFRS as issued by the IASB. IFRS differs in certain significant respects from GAAP. See “Unaudited Pro Forma Condensed Combined Financial Information” for a discussion of significant differences between IFRS and GAAP as they relate to Providência.

The Company’s fiscal year is based on a 52 week period ending on the Saturday closest to each December 31. The one month ended January 28, 2011 for the Predecessor contains four weeks. The fiscal year ended December 31, 2011 for the Successor contains 48 weeks. The fiscal years ended December 29, 2012 and December 28, 2013 for the Successor contain operating results for 52 weeks. References herein to “2011,” “2012,” and “2013” generally refer to fiscal 2011, fiscal 2012 and fiscal 2013, respectively, unless the context indicates otherwise. In fiscal year 2014, the Company changed its year-end date to December 31. The Company’s 2014 fiscal year commenced on December 29, 2013 and concluded on December 31, 2014.

SUMMARY

This summary highlights certain significant aspects of our business and this offering. This is a summary of information contained elsewhere in this prospectus, is not complete, and does not contain all of the information that you should consider before making your investment decision. You should carefully read the entire prospectus, including the information presented under the section entitled “Risk Factors” and the consolidated financial statements and the notes thereto, before making an investment decision. This summary contains forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from future results contemplated in the forward-looking statements as a result of certain factors such as those set forth in “Risk Factors” and “Forward-Looking Statements.” When making an investment decision, you should also read the discussion under “Basis of Presentation” for the definition of certain terms used in this prospectus and a description of certain transactions and other matters described in this prospectus.

Company Overview

We are a leading global innovator and manufacturer of specialty materials for use in a broad range of products that make the world safer, cleaner and healthier. We design and manufacture versatile high performance materials that can be engineered to possess specific value-added characteristics, including absorbency, tensile strength, softness and barrier properties. We serve customers focused on personal care, infection prevention, and high performance solutions, where our products are critical components used in a broad array of consumer and commercial products. For personal care applications, we supply specialty materials essential to the performance and feel of disposable baby diapers, feminine hygiene products, adult incontinence products, personal wipes and fabric softening dryer sheets. For infection prevention applications, our materials are utilized in products designed to ensure a clean environment, including disinfectant wipes, surgical gowns and drapes, face masks, wound care sponges, and water, air and blood filters. For high performance solutions, we supply protective house wrap, industrial cable wrap, construction and agricultural geosynthetics, as well as components for home and bedding products, industrial cleaning wipes, and various other applications.

We primarily manufacture nonwovens, which are fabric-like, value-added materials produced from polypropylene and other resins, along with natural and synthetic fibers and other components. The total nonwovens industry size is estimated to be worth in excess of $30 billion globally in 2013 and is expected to grow at a compounded annual growth rate (“CAGR”) by volume of 6.6% from 2013 to 2018, according to Smithers Pira.

We are the largest global manufacturer of nonwovens based on our 2013 pro forma net sales, according to Nonwovens Industry. Over the past five years, we have undertaken a series of investments and acquisitions, including the Fiberweb Acquisition in November 2013 and the Providência Acquisition in June 2014, that have expanded our global presence, increased our product portfolio and broadened our technology base. As a result, we estimate that we generated approximately 70% of our 2013 pro forma net sales from applications for which we believe we have either the #1 or #2 position. We believe we have one of the largest global platforms in the nonwovens industry, with 22 manufacturing and converting facilities in 14 countries, including a significant presence in high-growth emerging markets such as South America and Asia. We have manufacturing capabilities in each of North America, South America, Europe and Asia, which we believe is a competitive advantage in serving our multi-national, blue-chip customers. Our manufacturing facilities are strategically located near the production facilities of many of our key customers in order to increase our effectiveness in addressing regional demand for our products, many of which do not ship economically over long distances.

For the fiscal year ended December 28, 2013 and the nine months ended September 27, 2014, on a pro forma basis, we generated net sales of $1,973 million and $1,506 million and net loss attributable to PGI Specialty Materials, Inc. of $31 million and $87 million, respectively. For the year ended December 28, 2013, we

generated pro forma Adjusted EBITDA of $280 million. For information about how we calculate Adjusted EBITDA, please see “Summary Historical and Pro Forma Condensed Combined Financial Information.” Our sales are geographically diversified, with 43% of our pro forma net sales generated in North America, 22% generated in South America, 26% generated in Europe and 9% generated in Asia, each for the year ended December 28, 2013.

Segment Overview

We manage our business through four reportable operating segments organized by geographic region: North America, South America, Europe and Asia. Each of our regional manufacturing facilities has a diverse range of capabilities and technologies to serve local demand trends and our customers’ specific requirements, which vary by region. Consequently, each of our regions serves a unique mix of customer applications; however, certain of our applications and customers are consistent across our regions. We believe that our ability to provide consistent, high-quality products across a variety of geographies is a strong competitive advantage in serving our global customers. In addition, our geographic breadth and broad range of applications reduce exposure to any one region, manufacturing facility, application, or customer.

North America

Our North America segment includes five manufacturing and converting facilities in the United States, one in Canada and one in Mexico. Our North America segment includes a broad array of product technologies, including our proprietary Reemay, Spinlace, Apex and TYPAR technologies, that collectively serve a wide spectrum of product applications. Within personal care, we believe we are the leading manufacturer of nonwovens for hygiene applications, such as baby diapers and feminine hygiene products, and substrates for fabric-softening dryer sheets. Within infection prevention, we believe we are the largest provider of substrates for household cleaning wipes and a leading supplier of specialty materials for use in various medical garments, such as surgical gowns and drapes. Within high performance solutions, we believe we are the largest provider of filtration media for pool and spa filters, as well as the #1 provider of protective house wrap in Canada and the #2 provider in the United States.

South America

Our South America segment includes two manufacturing facilities in Brazil, one in Argentina and one in Colombia. This footprint enables us to efficiently serve the Caribbean and Central America, the Andean Community (CAN) and the Southern Common Market (MERCOSUR) economic trade zones. All of our facilities in the region utilize leading-edge spunmelt technology and specialize in serving personal care applications, such as baby diapers and feminine hygiene products. We believe consumer adoption of these products is expected to grow rapidly with disposable incomes rising towards the levels of developed economies. We believe we are the leading provider of nonwovens for personal care applications in South America. Within high performance solutions, we also serve certain specialty agriculture and industrial customers in this region.

Europe

Our Europe segment includes two manufacturing facilities in the United Kingdom, two in France, and one in each of Germany, Italy, Spain and the Netherlands. Our Europe segment also includes our India joint venture with one manufacturing facility located in India. Our European segment includes our most diverse set of technologies, such as our proprietary S-tex spunmelt and hydroentanglement technologies, and serves a broad array of personal care, infection prevention and high performance solutions applications. We believe we are the leading global provider of industrial cable wrap and have significant positions in geosynthetics for civil engineering, landscape and military use. We also have meaningful positions in hygiene applications, such as baby diapers and adult incontinence products, and healthcare products, such as surgical drapes, blood filtration and face masks.

Asia

Our Asia segment consists of two manufacturing facilities in China. Infection prevention applications currently represent approximately 59% of our pro forma net sales in Asia, with personal care applications accounting for 34% and high performance solutions applications accounting for the remaining 7%, for the fiscal year ended December 28, 2013. Our Asia region is the primary manufacturing base for servicing our global healthcare customers. For these applications, we supply our specialty materials to regional converters in Asia who cut and sew our products into finished goods for sale primarily in Europe and North America. In addition, we plan to utilize our leading-edge spunmelt technologies to participate in the rapid growth expected in the Asia region from rising disposable incomes and consumer adoption of personal care products.


2013 Pro Forma Net Sales by Geography		2013 Pro Forma Adjusted EBITDA by Geography(1)(2)

(1)

For information about how we calculate pro forma Adjusted EBITDA, please see “Summary Historical and Pro Forma Condensed Combined Financial Information.”

(2)

Percentages in chart are presented before unallocated corporate expenses.

Overview of Key Applications

We design and manufacture specialty materials, which are critical components used in various personal care, infection prevention and high performance solutions products that make the world safer, cleaner and healthier. Our customers include global manufacturers such as Procter & Gamble (diapers, feminine sanitary protection and dryer sheets), Kimberly-Clark (diapers, surgical drapes and face masks) and Cardinal Health (surgical drapes and medical accessories) and a number of regional manufacturers.

While we manufacture specialty materials both for disposable applications (such as hygiene, healthcare, wipes and filtration) and durable applications (such as house wrap and geosynthetics), we believe we are the industry leader in serving disposable applications—which we believe are attractive due to the recurring nature of product sales, long-term secular growth trends driven by higher global incomes, and lower cyclicality with macroeconomic cycles. Disposable applications represented approximately 70% of our pro forma net sales in 2013.

2013 Pro Forma Net Sales by Application

The table below outlines our key product applications.

Key

Applications

% of 2013
Pro Forma
Net Sales(1)

Representative End Products

Representative
Purchasers(2)

Product
Application
Estimated
2013 Size

Product
Application
Projected
Volume
Growth
2013-2018(3)

(dollars in millions)

Personal Care

51%

Hygiene

Baby diapers, feminine hygiene products, adult incontinence products, and training pants

Kimberly-Clark, Procter & Gamble, SCA

$8,549

6.3%

Dryer

Sheets/Personal Wipes

Dryer sheets and Personal wipes

Procter & Gamble, SC Johnson

$1,689

5.1%

Infection Prevention

17%

Healthcare

Surgical gowns and drapes, disposable surgical packs, face masks, shoe covers and wound care sponges and dressings

Cardinal Healthcare, Halyard Health,

Medline

$1,148

5.1%

Filtration

Air, water and blood filters

3M, Pall

$541

6.6%

Disinfectant

Wipes

Patient care & skin disinfectant wipes, hard surface wipes, sanitizer-compatible wipes

Clorox, SC Johnson, Sysco

$387

7.0%

Key

Applications

% of 2013
Pro Forma
Net Sales(1)

Representative End Products

Representative
Purchasers(2)

Product
Application
Estimated
2013 Size

Product
Application
Projected
Volume
Growth
2013-2018(3)

(dollars in millions)

High Performance Solutions

32%

Building & Construction/

Geosynthetics &

Agriculture

House wrap, cable wrap, road underlayment liners, geo cells, tree protection

Regional

Home-builders, CanSave, GAF, Suprema

$4,058

7.4%

Industrial Wipes

Auto/aero wipes, graphic arts, industrial general purpose wipes

3M, Cintas

$849

7.0%

Filtration

Air, structure, and liquid filters, pool and spa filters

Meissner, PALL

$2,309

6.6%

Technical specialties and other

Furniture and bedding, composites, other industrial applications

Hanes, Simmons

$13,540

7.0%

Source: Smithers Pira.

(1)

Gives pro forma effect to the Fiberweb Acquisition and the Providência Acquisition, as if each event had occurred on December 30, 2012.

(2)

Represents key participants in the applications indicated. Certain of such participants are not PGI customers.

(3)

Represents Smithers Pira’s projected compounded annual growth rate in volumes for global nonwoven demand for the indicated product applications from 2013 to 2018.

Personal Care

We manufacture specialty materials that are essential to the performance and feel of hygiene, dryer sheets and personal wipes applications. For hygiene applications, our products are engineered to provide critical performance characteristics including superior absorbency, barrier properties, strength, fit and softness in baby diapers, feminine hygiene products, adult incontinence products and training pants. Our broad product offering and global manufacturing base provides hygiene customers with a full range of these specialized components for their manufacturing facilities around the globe. We believe we are the leading global manufacturer of nonwovens for hygiene applications.

To serve fabric-softening dryer sheet applications we sell products made with our proprietary Reemay technology that provides superior heat resistance and scent retention, which are critical to product performance and customer demands. We believe we are the primary supplier of these products to the two largest dryer sheet manufacturers in the United States.

Within wipes applications, our products serve as the key substrate for facial wipes and other personal cleansing wipes. Wipes producers rely on our specialty materials to enhance the durability, softness and liquid dispensability of their products.

We frequently partner with industry leaders to jointly develop innovative products to meet changing consumer demands. We believe our ability to serve global manufacturers and provide specialty material consistently across geographical regions differentiates us from our competition.

2013 Personal Care Pro Forma Net Sales by Application

Infection Prevention

Our specialty materials are integral to many healthcare products that ensure a sterile environment by enhancing key performance characteristics such as barrier performance, breathability, strength and softness. Our healthcare products are used for the manufacture of disposable surgical packs, surgical gowns and drapes, face masks, shoe covers and wound care sponges. For these applications, our customers predominantly convert our specialty materials into their products in lower labor cost countries, such as China, for export to Western markets. We believe that our high-quality nonwoven manufacturing capabilities in China, strategically located near the manufacturing and converting operations of our customers, combined with our global position, provide a competitive advantage in serving these customers. We believe we are the leading global supplier of nonwovens for healthcare applications.

We also provide substrates with superior absorbency, strength, softness or abrasiveness, durability and liquid dispensability for use in hard surface disinfectant wipes, patient care wipes and other infection prevention wipes. Our infection prevention wipes products include our Chicopee-branded converted wipes sold into foodservice channels to sanitize eating surfaces, as well as substrates sold to leading consumer products companies for conversion into hard surface disinfectant wipes for consumer use. We believe we are the leading North American supplier of materials for use in consumer disinfectant wipes.

Additionally, our specialty materials are critical to many filtration applications including blood, water and air filtration. We believe there are significant opportunities to expand our existing business in the areas of air filtration for HVAC applications, HEPA air filtration, as well as blood and water filtration.

2013 Infection Prevention Pro Forma Net Sales by Application

High Performance Solutions

Numerous industrial and other applications make use of our specialty materials due to our ability to engineer characteristics such as strength and durability, barrier protection, breathability and insulation properties. High performance solutions applications include protective house wrap, industrial cable wrap, geosynthetics, products for agricultural uses, industrial wipes and various other specialty materials used in home furnishings and bedding, road underlayment, liners and railroad materials.

We believe we are a leading supplier of house wrap to home-builders in the United States and Canada. House wrap is a protective layer used to prevent moisture-related damage and enhance energy efficiency. Through our Typar brand, we believe that we are the #1 provider of house wrap in Canada and the #2 provider in the United States. As this application is linked both to new construction and renovation spending, we expect continued growth in this segment to the extent the housing market recovery continues.

We believe that we are also a leading supplier of industrial cable wrap in Europe. Cable wrap is a protective cover used for pipelines and cables to prevent damage to these critical infrastructure assets. In addition, we believe we are the leading provider of nonwoven substrates for pool and spa filtration applications in North America through our proprietary Reemay-branded technology.

Geosynthetics products include various specialty materials used to improve the performance and mitigate the environmental impact of civil engineering and construction projects. Geosynthetics also include products for military, forestry, agriculture and landscaping applications. Key brands in this category include Terram, Tubex, DefenCell and Agryl.

Our high performance solutions also include converted wipes sold under our Chicopee brand name for use in automotive, graphics arts and cleanroom wipes, materials for household and bedding applications, industrial filtration media and various other technical products.

2013 High Performance Solutions Pro Forma Net Sales by Category

(1)

Includes materials for protective apparel, furniture and bedding, composites and other industrial durable and infrastructure applications.

Our Competitive Strengths

Global Leader with Strong Competitive Positions

We are a leading global supplier of specialty materials and the largest global manufacturer of nonwovens based on our 2013 pro forma net sales, according to Nonwovens Industry. The nonwovens industry has experienced significant consolidation in recent years, including our own acquisitions of Fiberweb and Providência, which we believe has improved our competitive position and enhanced our opportunities for growth across each of our geographic regions.

2013 Nonwovens Sales (in billions of $)

Source: Nonwovens Industry.

(1)

Includes $1.2 billion of revenue from PGI, $398 million of revenue from Fiberweb and $360 million of revenue from Providência.

(2)

Production is primarily for internal consumption.

(3)

Represents companies primarily focused on nonwovens for disposable applications, such as hygiene, healthcare and wipes.

We estimate that we generated approximately 70% of our 2013 pro forma net sales from applications for which we believe we have either the #1 or #2 position. Specifically, we believe that we are the industry leader in serving disposable applications, which accounted for approximately 70% of our 2013 pro forma net sales. We also believe we are the leading global supplier of nonwovens for applications in personal care and healthcare.

In addition, we believe that we have leading positions in a number of niche applications. We believe that we hold a leading position in pool and spa filtration in the United States through our Reemay branded products, which are sold to filter manufacturers. We also believe that we are the leading manufacturer of substrates for dryer sheets in the United States. Through our Typar brand, we believe that we are the #1 provider of house wrap in Canada and the #2 provider in the United States. As we continue to evolve to higher value specialty materials, we believe there is meaningful opportunity to grow in each of the key applications which we serve: personal care, infection prevention and high performance solutions. We believe that our innovative and differentiated technology platforms position us well to gain share in these applications as we work to broaden the use of our products.

Our market positions in numerous applications are a reflection of our differentiated technologies, customer service and global footprint. These capabilities enable us to effectively serve global customers, such as Procter & Gamble and Cardinal Health, who are among the industry leaders in their respective product applications. Our marketing and research and development teams collaborate closely with customers to develop new products through the application of new technologies, as well as meet our customers’ stringent product qualifications and process standards. These factors encourage customer loyalty, leading to an average relationship length of approximately 15 years with our key customers.

Attractive Long-Term Industry Growth Outlook Driven by Socio-Economic Trends

According to Smithers Pira, global demand for nonwovens is projected to grow at a CAGR of 6.6% by volume from 2013 to 2018 driven by several socio-economic trends, including overall population growth, a growing middle class in emerging markets, an aging population, increasing health standards, product innovation and agricultural efficiency. These trends favorably impact the various applications which we serve. For example, population growth and rising incomes impact the consumption of personal care products, such as baby diapers and wipes. In addition, increasing life expectancy and an aging population in many developed countries present a growing opportunity for adult incontinence and healthcare products. For example, the market for adult incontinence products, which uses up to 60% more of our specialty materials than baby diapers, was estimated at $2.4 billion in 2013 and is expected to grow to $3.4 billion in 2018. Increasingly stringent health standards and consumer focus on infection prevention are also driving greater consumption of disposable medical gowns, drapes, face masks, sanitary wipes and disinfectant wipes. Our specialty materials also serve a number of attractive niche applications, such as house wrap, industrial cable wrap and geosynthetics, which could benefit from a recovery in construction spending.

Our specialty materials are primarily used to manufacture disposable products, which accounted for approximately 70% of our pro forma net sales for the fiscal year ended December 28, 2013. We believe disposable products, such as baby diapers and medical gowns, have attractive long-term growth trends and are less cyclical than durable products, strengthening our financial profile through economic cycles (as demonstrated in the table below by the sale volumes of disposable products from 2008 to 2012). We believe that this resilience, combined with the diversification of our revenues across regions and applications, enhance our long-term financial profile and mitigates the risk of disruptions within any region, application, facility or customer.

Historical Disposable Application Growth

Expected Nonwoven Application Growth

LOGO

Source: Smithers Pira.

(1)

Wipes end market comprises personal wipes, dryer sheets, disinfectant wipes and industrial wipes.

(2)

Filtration end market includes medical and industrial filtration applications.

Significant Exposure to Attractive Emerging Markets

We believe that emerging markets represent a significant long-term secular growth opportunity for our specialty materials, especially in personal care applications. In many emerging markets, penetration rates for personal care products that utilize specialty nonwoven materials, such as disposable baby diapers, are significantly lower relative to developed markets. For example, the penetration of baby diapers is only 27% in China and 62% in Central and South America, compared to 98% in the United States and Canada, according to Price Hanna Consultants estimates. We believe growth will be driven by increasing disposable product penetration resulting from rising per capita incomes as well as population growth. According to Smithers Pira, total nonwovens volume demand in South America and Asia is projected to grow at a CAGR of 6.4% and 9.2%, respectively, from 2013 to 2018.

The chart below contrasts the high penetration rates in developed regions in diaper consumption with the significantly lower current penetration rates seen in developing markets, which present a sizable growth opportunity. According to Smithers Pira, a 1% increase in the penetration rate of disposable diapers in China in 2013 would result in approximately $30 million of incremental materials market value, assuming current product design and pricing. Additionally, under-developed regions, such as India, Africa, and other emerging markets in Asia, represent additional longer-term growth opportunities.

2012 Actual and Estimated Potential Diaper Consumption by Region (in Billions of Diapers)

Source: Price Hanna Consultants estimates.

*	Represents potential market size if these regions achieve a penetration rate of 100%. Actual future penetration rates will vary.

We believe that we are well-positioned to capitalize on this anticipated demand. The Providência Acquisition strengthened our presence in South America, providing us with the #1 nonwovens position in the region on a pro forma basis and two attractive manufacturing assets in Brazil to complement our existing production facilities in Colombia and Argentina. Pro forma for the Providência Acquisition, we are the leading manufacturer of nonwovens for hygiene and medical products in the region. Additionally, recent capacity expansions in Nanhai, China (expected to be completed in 2015) and Suzhou, China (completed in mid-2013) have enhanced our manufacturing capabilities in Asia. In 2013, we derived approximately 31% of our pro forma net sales and 36% of our Adjusted EBITDA from our South America and Asia segments.

Scalable Cost Structure and Operational Excellence To Drive Margin Expansion

Our scalable global infrastructure and focus on operational excellence position us to reduce our costs and increase our operating margins as we expand both organically and through acquisitions. We have increased our gross profit margin and Adjusted EBITDA margin from 15.5% and 11.8%, respectively, in 2011 on a stand alone basis to 18.5% and 14.2%, respectively, for the year ended December 28, 2013, on a pro forma basis. We have achieved this margin expansion through a combination of annual productivity and cost saving initiatives as well as realization of cost synergies associated with our recent acquisitions. For example, as of the third quarter of 2014, we have fully implemented initiatives at Fiberweb accounting for approximately $37.0 million of

annualized savings (above our initial estimates of $28 million) and we continue to pursue initiatives aimed at achieving additional savings. Likewise, we have also identified initiatives that are estimated to generate meaningful synergies in connection with the Providência Acquisition.

In addition to executing on the identified acquisition synergies, we have recently implemented a robust business excellence program designed to generate annual productivity savings, achieve a low-cost position and prolong the useful life of our assets through product and process innovation. These initiatives have included continuous improvement programs focused on procurement, manufacturing, and distribution costs, facility consolidation and optimization, and optimization of our fixed cost structure. For example, in 2012, we restructured our global operations in order to consolidate our global footprint, align resources and capabilities with future growth opportunities, and provide a more efficient structure to serve existing customers. We believe we have the opportunity to continue to accelerate our annual productivity savings, which would serve to offset inflation in our business and benefit our margins.

Strong Free Cash Flow Generation

For the years ended December 31, 2011, December 29, 2012 and December 28, 2013, we have consistently generated strong free cash flow, which we define as Adjusted EBITDA minus capital expenditures, of $62.1 million, $78.0 million and $155.8 million, respectively. For the same periods, our net cash provided by operating activities was $24.1 million, $75.5 million and $16.9 million, respectively. Our strong cash flow generation has benefited from pass-through pricing mechanisms in many of our customer contracts, which allow us to pass through increases in certain raw material costs by changing our prices, thereby mitigating the potential impact of fluctuations in raw material costs on our profitability.

Our cash flow generation also benefits from our disciplined approach to capital investments. We believe our maintenance capital requirements (defined as investments required to maintain current production capabilities) range from 2.0% to 2.5% of our annual net sales, enabling us to deploy a meaningful portion of our capital investments toward projects designed to expand our capacity and/or capabilities or to reduce our operating costs. For instance, over the past five years, we have commercialized four new state-of-the-art spunmelt lines to expand our capacity to meet growing demand as well as realize their lower relative production cost per unit and their ability to produce lower basis weight products suited for certain hygiene applications. Additionally, we have invested in commercializing proprietary technologies, such as our Spinlace and Arium platforms, that provide differentiated product capability and cost performance. Our cash flow generation in the future may also benefit from our significant net operating losses, which were $320.2 million for the year ended December 28, 2013 and may result in reduced U.S. tax payments in the future.

Successful Track Record of Value-Enhancing Acquisitions

We have completed two significant acquisitions, Providência and Fiberweb, which enhanced our competitive position by expanding our capabilities in existing regions (like the US and Europe) and new regions (such as Brazil). These acquisitions also enhanced our technology positions in several new applications, such as filtration, where we believe there are significant growth opportunities. Additionally, given our scalable global infrastructure, we believe these acquisitions will result in meaningful cost savings and enhance our operating margins.

The Providência Acquisition was completed in June 2014 and strengthened our competitive position in North and South America. With three well-invested manufacturing facilities (two in Brazil and one in the United States) focused on hygiene applications, Providência’s operations were highly complementary with our existing operations. In particular, as a result of the acquisition, we are the largest producer of nonwovens in South

America, with facilities in Brazil, Argentina and Colombia that enable us to cost-effectively serve customers across the continent. We have begun the integration of Providência into our existing regional operations and expect to generate meaningful cost savings from the elimination of duplicative costs, implementation of best practices, and by leveraging our enhanced scale.

The Fiberweb Acquisition was completed in November 2013. With operations in North America and Europe, Fiberweb improved our capabilities in several existing applications (such as hygiene and healthcare) but also meaningfully expanded our positions in several complementary applications, such as filtration, dryer sheets and house wrap. Fiberweb also provided access to several new technologies such as S-Tex (hygiene) and Nano fiber (filtration), which offer differentiated products to address our customers’ needs for innovation and customized solutions. Fiberweb has been fully integrated into our European and North American regions and we believe will generate significant cost savings, in excess of our initial estimates. As of the third quarter of 2014, we have fully implemented initiatives at Fiberweb accounting for approximately $37.0 million of annualized savings (above our initial estimates of $28 million).

Experienced Management Team

Our senior management team has extensive industry and operational experience and has been instrumental in developing and executing our growth strategy. Our nine person senior management team has an average of over 20 years of experience, including significant experience with specialty materials and similar businesses, and has successfully integrated numerous acquisitions. Our Chief Executive Officer, J. Joel Hackney Jr., who joined us in 2013 after holding a variety of senior executive roles with General Electric, Nortel and Avaya, has 21 years of relevant experience, including significant experience with leading global organizations and executing organic and acquisition-driven growth programs. Since mid-2012, we have successfully implemented an enhanced business strategy designed to significantly expand our business, both organically and through acquisitions, and to improve our cost structure and capital efficiency. We believe the proven abilities of our senior management team will allow us to continue to execute on our strategy, grow our global business, and deliver value to our stakeholders.

Our Strategy

Our mission is to provide superior products and services to enable our customers to create a safer, cleaner and healthier world. By leveraging our global team and broad portfolio of assets and technologies, we engineer customized solutions to meet our customers’ needs. We are focused on supplying consistent high quality products from our global manufacturing footprint, supported by knowledgeable local sales and technical service teams. We believe that our global presence and breadth of application expertise (further enhanced by the recent acquisitions of Fiberweb and Providência) provide a strong foundation for us to grow with our existing customers across the globe as well as for enhanced access to new customers across an array of highly specialized applications. As a result, we strive to grow our revenues consistent with the demand growth of the applications which we serve, while enhancing our operating efficiencies to improve our margins. To accomplish our mission and drive continued success, we are focused on the following strategies:

Support Continued Growth of Our Existing Customers Globally

We will invest to support the continued growth of our existing customers across the globe. As previously discussed, many of our customers’ products benefit from attractive growth trends and, consequently, our customers demand an increasing amount of our specialty materials. We will seek to enhance our competitive positions by providing cutting edge innovations, high quality and cost-effective products, and dedicated customer service. We will do so through initiatives to expand the production capacity of our current asset base as well as prudent capital investments to expand our capabilities. Many of our customers are increasingly growing their business globally, and we believe we are well positioned to gain share with these customers given our global presence and ability to reliably deliver consistent products across the globe.

Further Strengthen our Positions in Emerging Markets

We intend to establish stronger positions in emerging markets through partnerships with new customers, as well as by accelerating growth with existing accounts where we are viewed as a strategic supplier. For example, the Providência Acquisition enhanced our position in South America, particularly Brazil, where we are now the leading supplier of hygiene products to a broad and long standing customer base. Additionally, in China, we have recently made significant capital investments in new production capacity designed to meet the growing demand for our products. In 2013, we generated 31% of our net sales and 36% of our Adjusted EBITDA in South America and Asia, respectively, on a pro forma basis. We believe there will be significant growth in our existing markets in South America and Asia. Additionally, in the future, we believe there may be growth opportunities in currently under-developed regions, where current penetration rates for many of the applications we serve are lower compared to other regions. As these emerging markets develop, we will continue to make careful, disciplined investments to expand our global capabilities and operations.

Pursue Growth in Complementary Businesses

We intend to use our industry expertise and capabilities to pursue growth opportunities in complementary products that share one or more key characteristics with our core businesses, including customers, products, manufacturing technologies or supply chain. We will prioritize opportunities in higher value applications with greater product differentiation, higher margins and lower capital intensity. For example, the Fiberweb Acquisition resulted in a significant improvement in our standing in several complementary applications, including filtration, dryer sheets and house wrap. By leveraging Fiberweb’s position and certain of our existing technologies and capabilities, we believe there may be opportunities to expand in these adjacent applications. We may pursue these opportunities organically or through targeted acquisitions depending on the specific industry dynamics and required capabilities.

Drive Business Excellence to Pursue Economic Leadership and Enhance Margins

Our success is dependent upon our ability to offer an attractive value proposition to our customers and to maximize customer satisfaction through our innovation, product quality and reliability. Consequently, we will seek to use our global platform and capabilities to offer solutions which maximize customers’ value and streamline their operations. We will also seek to improve our supply chain management to improve our cost position. We will seek to accelerate our business excellence initiatives to generate recurring annual productivity savings to offset inflation, enable reinvestment in growth, and improve our margins. These initiatives are focused on procurement savings, manufacturing yield optimization, lean initiatives, preventative maintenance and logistics savings. Over the past two years, we have increased our gross profit margin and Adjusted EBITDA margin from 15.5% and 11.8%, respectively, in 2011 on a stand alone basis to 18.5% and 14.2%, respectively, for the year ended December 28, 2013, on a pro forma basis. Through the realization of acquisition-related cost savings and our business excellence initiatives, we plan to continue to pursue improved cost positions and operating margins in the future.

Opportunistically Pursue Value-Enhancing Acquisitions

The nonwovens industry has experienced significant consolidation in recent years, including our acquisitions of Fiberweb and Providência. However, the industry remains relatively fragmented with many smaller regional players. In the future, we will continue to opportunistically evaluate potential acquisitions that enhance our business. We will prioritize transactions that complement our existing businesses, offer a potential for meaningful cost savings, enhance our capabilities in complementary products or regions or improve our growth profile by leveraging our existing customer relationships, technologies, global manufacturing and distribution network, and expertise in engineered materials.

Develop and Attract Top Talent

We strive to attract and develop the best talent in the industry. We work as a team to make a positive impact to our organization, our customers and suppliers, and the community. We believe that our history of growth and innovation coupled with our strong global position will highlight the Company as an attractive career opportunity for talented business leaders. Over the past several years, we have redesigned our global organization structure and significantly enhanced the senior leadership team adding resources and capabilities in several key areas to address our strategic growth priorities.

Recent Acquisitions

We have recently completed two significant acquisitions. On June 11, 2014, Acquisition Co., our wholly-owned subsidiary, completed the acquisition of approximately 71.25% of the outstanding capital stock of Providência and on November 15, 2013, PGI Acquisition Limited, our indirect wholly-owned subsidiary, completed the acquisition of the entire issued ordinary share capital of Fiberweb. As required by Brazilian law, we intend to launch, subject to CVM approval, the Mandatory Tender Offer to acquire the remaining outstanding capital stock of Providência from the minority shareholders. See “Business—Expansion and Optimization—Providência Acquisition.”

Providência is a leading manufacturer of spunmelt nonwoven products based in Brazil, with a presence throughout the Americas, offering nonwoven fabrics under the KAMI brand. Its products are primarily used in hygienic and personal care applications, such as disposable diapers, sanitary pads, cleansing tissues and adult incontinence products. Providência operates state-of-the-art spunmelt technology, utilizing 13 Reicofil lines situated in three sites in North and South America. Providência was founded in 1963 and is based in São José dos Pinhais, Brazil. Following the completion of the Providência acquisition, Herminio Vicente Smania de Freitas joined PGI as President—South America & Global Hygiene. He continues to serve as chief executive officer of Providência.

The Providência Acquisition strengthened our competitive position in North and South America. With three well-invested manufacturing facilities (two in Brazil and one in the United States) focused on hygiene applications, Providência’s operations were highly complementary with our existing operations. In particular, as a result of the acquisition, we became the largest producer of nonwovens in South America, with facilities in Brazil, Argentina and Colombia that enable us to cost-effectively serve customers across the continent. We have begun the integration of Providência into our existing regional operations and expect to generate meaningful cost savings from the elimination of duplicative costs, implementation of best practices, and by leveraging our enhanced scale.

Fiberweb is one of the largest global manufacturers of specialized technical fabrics with eight production sites in six countries. Fiberweb creates specialty materials that are found in many critical applications, including hygiene and healthcare, as well as house wrap, filtration, dryer sheets, and several other specialized niche applications. In each area, Fiberweb helps its customers meet a range of technical challenges from precise filtration to reducing the energy demands of housing.

With operations in North America and Europe, Fiberweb improved our capabilities in several existing applications (such as hygiene and healthcare) but also meaningfully expanded our positions in several complementary applications, such as filtration, dryer sheets, and house wrap. Fiberweb also provided access to several new technologies such as S-Tex (hygiene) and Nano fiber (filtration), which offer differentiated products to address our customers’ needs for innovation and customized solutions. Fiberweb has been fully integrated into our European and North American regions and we believe will generate significant cost savings, in excess of our initial estimates. As of the third quarter of 2014, we have fully implemented initiatives at Fiberweb accounting for approximately $37.0 million of annualized savings (above our initial estimates of $28 million).

Risks Related to Our Business

Investing in our common stock involves substantial risks, and our ability to successfully operate our business and execute our growth plan is subject to numerous risks. Some of the more significant challenges and risks include the following:

•

the specialized markets in which we sell our products are highly competitive and we may therefore have difficulty growing our business and maintaining profit margins;

•

we must continue to invest significant resources in developing innovative products in order to maintain a competitive edge in the highly specialized markets in which we operate;

•

increases in prices for raw materials and energy, as well as a reduction of our selling prices to customers could reduce our profit margins;

•

a material disruption at one of our manufacturing facilities could prevent us from meeting customer demand, reduce our sales or negatively affect our results of operation and financial condition;

•

we rely on a limited number of suppliers to provide raw materials, significant machinery and components used in our production facilities. A material interruption in supply or delivery could prevent or limit our ability to accept and fill orders for our products;

•

we generate most of our revenue from the sale of manufactured products that are used in a wide variety of consumer and industrial applications and the potential for product liability exposure could be significant;

•

goodwill and other identifiable intangible assets represent a significant portion of our total assets, and we may never realize the full value of our intangible assets;

•

our substantial indebtedness could adversely affect our financial condition and prevent us from fulfilling our obligations under our indebtedness;

•

affiliates of our Sponsor control us and have the ability to elect all of the members of our Board of Directors; the Sponsor’s interests may conflict with ours or yours in the future; and

•

other factors set forth under “Risk Factors” in this prospectus.

Corporate Information

PGI Specialty Materials, Inc. was incorporated under the laws of the State of Delaware in November 22, 2010. PGI Specialty Materials, Inc.’s only material asset is the equity of Holdings, sole equityholder of PGI Group, through which we conduct our operations. Our principal executive office is located at 9335 Harris Corners Parkway, Suite 300, Charlotte, North Carolina. Our telephone number is (704) 697-5100.

Our Sponsor

Blackstone (NYSE: BX) is one of the world’s leading investment firms. Blackstone’s asset management businesses, with approximately $290 billion in assets under management as of December 31, 2014, include investment vehicles focused on private equity, real estate, public debt and equity, non-investment grade credit, real assets and secondary funds, all on a global basis. Blackstone also provides various financial advisory services, including financial and strategic advisory, restructuring and reorganization advisory and fund placement services.

Immediately after the offering of our common stock, affiliates of Blackstone will beneficially own approximately % of our common stock or approximately % if the underwriters exercise in full their option to purchase additional shares.

THE OFFERING

Common stock offered by us

shares.

Option to purchase additional shares

The underwriters have an option to purchase up to additional shares of our common stock from us. The underwriters can exercise this option at any time within 30 days from the date of this prospectus.

Common stock outstanding after giving effect to this offering

shares ( shares if the underwriters exercise their option to purchase additional shares in full).

Use of proceeds

We estimate that the net proceeds to us from this offering, after deducting estimated underwriting discounts and estimated offering expenses payable by us, will be approximately $ , based on an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus.

We intend to use the net proceeds from this offering to redeem a portion of the Senior Secured Notes and to pay a $ million one-time Advisory Agreement termination fee to our Sponsor, with any remaining balance to be used for general corporate purposes. See “Use of Proceeds.”

Dividend policy

Risk factors

See “Risk Factors” for a discussion of risks you should carefully consider before deciding to invest in our common stock.

Proposed trading symbol

“ ”

The number of shares of our common stock to be outstanding immediately after the consummation of this offering is based on shares of common stock outstanding as of , and excludes:

•

shares of common stock issuable upon the exercise of options to purchase shares outstanding as of , at a weighted average exercise of $ per share;

•

shares of common stock issuable pursuant to restricted stock units as of , ; and

•

shares of common stock reserved for future issuance following this offering under our equity plans.

Unless we indicate otherwise or the context otherwise requires, all information in this prospectus:

•

assumes (1) no exercise of the underwriters’ option to purchase additional shares and (2) an initial public offering price of $ per share, which is the mid-point of the range set forth on the cover page of this prospectus;

•

reflects a for one stock split of our common stock, to be effected prior to the consummation of this offering; and

•

assumes the filing and effectiveness of our amended and restated certificate of incorporation immediately prior to the consummation of this offering.

SUMMARY HISTORICAL AND PRO FORMA CONDENSED COMBINED

FINANCIAL INFORMATION

The following summary historical and pro forma condensed combined financial information and other data set forth below should be read in conjunction with “Summary—Recent Acquisitions,” “Basis of Presentation,” “Unaudited Pro Forma Condensed Combined Financial Information” and the historical financial statements of the Company, Providência and Fiberweb, including the related notes, included elsewhere in this prospectus.

The summary historical financial information presented below as of and for the fiscal years ended December 28, 2013, December 29, 2012 and December 31, 2011 for the Successor, and the one month ended January 28, 2011, for the Predecessor, has been derived from our audited consolidated financial statements included elsewhere in this prospectus. The summary historical financial information presented below is not necessarily indicative of the results to be expected for any future period. The summary historical financial information and other data presented below for, and as of the end of, the nine months ended September 27, 2014 and September 28, 2013 has been derived from our unaudited consolidated financial statements included elsewhere in this prospectus. Operating results for the nine months ended September 27, 2014 are not necessarily indicative of the results that may be expected for the fiscal year ended December 31, 2014.

The summary unaudited pro forma condensed combined financial information presented below is based upon the historical consolidated financial statements of the Company, Fiberweb and Providência and has been prepared to illustrate the effects of the Fiberweb Acquisition, the Fiberweb Refinancing, the Providência Acquisition and the Providência Refinancing (collectively, the “Transactions”) as well as the effects of the completion of this offering and the use of proceeds therefrom, after deducting estimated underwriting discounts and estimated offering expenses payable by us (the “Offering”). The summary unaudited pro forma condensed combined statements of operations data for the nine months ended September 27, 2014 and September 28, 2013 and the fiscal year ended December 28, 2013 have been prepared to give pro forma effect to the Transactions and the Offering as if they had occurred on December 30, 2012.

The summary unaudited pro forma condensed combined financial information includes only adjustments that are directly attributable to the Transactions and the Offering, factually supportable and with respect to the statements of operations, expected to have a continuing impact on the combined results. The Fiberweb Acquisition and the Providência Acquisition have been accounted for using the acquisition method of accounting in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”). ASC 805 requires, among other things, that the assets acquired and liabilities assumed be recognized at their acquisition date fair values, with any excess of the consideration transferred over the estimated fair values of the identifiable net assets acquired recorded as goodwill. As of the date of this prospectus, the Company has not completed the detailed valuation work necessary to arrive at the required estimates of the fair value of the Providência assets acquired and the liabilities assumed and the related allocation of purchase price. Accordingly, the summary unaudited pro forma condensed combined financial statements are based on preliminary estimates and assumptions. The preliminary allocation reflects management’s best estimates of fair value, which are based on certain assumptions relating to the Providência Acquisition, including prior acquisition experience, benchmarking of similar acquisitions and historical data. In addition, portions of the preliminary allocation are dependent upon certain valuations and other studies that have yet to commence or progress to a stage where there is sufficient information for a definitive measurement. Upon completion of detailed valuation studies and the final determination of fair value, the Company may make additional adjustments to the fair value allocation, which may differ significantly from the valuations set forth in the unaudited pro forma condensed combined financial information.

The summary unaudited pro forma condensed combined financial information has been presented for informational purposes only and is not necessarily indicative of what the combined company’s results of operations actually would have been had the Transactions and the Offering, as applicable, been completed as of the dates indicated, nor is it necessarily indicative of future operating results of the combined company. As a result, the summary pro forma condensed combined statements of operations have not been adjusted to reflect future events that may have occurred since the date of acquisition and/or are expected to occur after the Transactions and the Offering, including, but not limited to, the anticipated realization of ongoing savings from operating synergies and certain one-time charges we expect to incur in connection with the Fiberweb Acquisition and Providência Acquisition, including but not limited to, costs in connection with the integration of the operations of the Company, Fiberweb, and Providência.


(in thousands except for per share data)	Pro Forma Nine Months Ended September 27, 2014 (Successor)			Pro Forma Nine Months Ended September 28, 2013 (Successor)			Pro Forma Fiscal Year Ended December 28, 2013 (Successor)			Nine Months Ended September 27, 2014 (Successor)			Nine Months Ended September 28, 2013 (Successor)			Fiscal Year Ended December 28, 2013 (Successor)			Fiscal Year Ended December 29, 2012 (Successor)			Fiscal Year Ended December 31, 2011 (Successor)			One Month Ended January 28, 2011 (Predecessor)
	(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)
Statement of Operations Data:
Net sales	$	1,506,259		$	1,473,968		$	1,972,714		$	1,360,495		$	867,599		$	1,214,862		$	1,155,163		$	1,102,929		$	84,606
Cost of goods sold		(1,236,835	)		(1,193,954	)		(1,607,094	)		(1,118,952	)		(723,143	)		(1,018,806	)		(957,917	)		(932,523	)		(68,531	)

Gross profit		269,424			280,014			365,620			241,543			144,456			196,056			197,246			170,406			16,075
Selling, general and administrative expenses		(211,601	)		(211,627	)		(282,232	)		(185,499	)		(107,176	)		(153,188	)		(140,776	)		(134,483	)		(11,564	)
Special charges, net		(31,724	)		(13,140	)		(27,186	)		(47,868	)		(10,647	)		(33,188	)		(19,592	)		(41,345	)		(20,824	)
Other operating, net		(4,159	)		504			(634	)		(2,658	)		(1,975	)		(2,512	)		287			(2,634	)		564

Operating income (loss)		21,940			55,751			55,568			5,518			24,658			7,168			37,165			(8,056	)		(15,749	)
Other income (expense):
Interest expense		(82,629	)		(78,440	)		(106,410	)		(67,605	)		(37,592	)		(55,974	)		(50,414	)		(46,409	)		(1,922	)
Debt modification and extinguishment costs		(2,587	)		—			—			(15,725	)		—			(3,334	)		—			—			—
Foreign currency and other, net		(27,547	)		(6,806	)		(19,210	)		(11,626	)		(22	)		(8,851	)		(5,134	)		(18,636	)		(82	)

Loss before income taxes		(90,823	)		(29,495	)		(70,052	)		(89,438	)		(12,956	)		(60,991	)		(18,383	)		(73,101	)		(17,753	)
Income tax (provision) benefit		(6,232	)		(5,524	)		34,653			850			(9,444	)		36,024			(7,655	)		3,272			(549	)

Loss from continuing operations		(97,055	)		(35,019	)		(35,399	)		(88,588	)		(22,400	)		(24,967	)		(26,038	)		(69,829	)		(18,302	)


(in thousands except for per share data)	Pro Forma Nine Months Ended September 27, 2014 (Successor)			Pro Forma Nine Months Ended September 28, 2013 (Successor)			Pro Forma Fiscal Year Ended December 28, 2013 (Successor)			Nine Months Ended September 27, 2014 (Successor)			Nine Months Ended September 28, 2013 (Successor)			Fiscal Year Ended December 28, 2013 (Successor)			Fiscal Year Ended December 29, 2012 (Successor)			Fiscal Year Ended December 31, 2011 (Successor)			One Month Ended January 28, 2011 (Predecessor)
	(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)
Discontinued operations, net of tax		—			—			—			—			—			—			—			(6,283	)		182
Net loss		(97,055	)		(35,019	)		(35,399	)		(88,588	)		(22,400	)		(24,967	)		(26,038	)		(76,112	)		(18,120	)
Earnings attributable to noncontrolling interest and redeemable noncontrolling interest		(9,895	)		(2,577	)		(4,547	)		(4,216	)		—			(34	)		—			59			83
Net loss attributable to PGI Specialty Materials, Inc.	$	(87,160	)	$	(32,442	)	$	(30,852	)	$	(84,372	)	$	(22,400	)	$	(24,933	)	$	(26,038	)	$	(76,171	)	$	(18,203	)

Per Share Data:
Basic and diluted loss per share	$			$			$			$	(304.10	)	$	(85.79	)	$	(94.09	)	$	(99.99	)	$	(268.91	)	$	(0.85	)
Loss from discontinued operations											—			—			—			—			(24.18	)		0.01
Basic and diluted net loss per share	$			$			$			$	(304.10	)	$	(85.79	)	$	(94.09	)	$	(99.99	)	$	(293.09	)	$	(0.84	)


	As of
(in thousands)	September 27, 2014 (as Adjusted)(2)		September 27, 2014		December 28, 2013		December 29, 2012		December 31, 2011
	(unaudited)		(unaudited)
Balance Sheet Data:
Cash and cash equivalents		$	$	182,683	$	86,064	$	97,879	$	72,742
Operating working capital(1)	$		$	132,939	$	43,170	$	29,628	$	54,567
Total assets	$		$	2,127,616	$	1,464,520	$	1,022,069	$	1,060,578
Short-term borrowings and long-term debt, including current portion	$		$	1,491,379	$	896,668	$	599,689	$	600,445
Redeemable noncontrolling interest	$		$	93,645	$	—	$	—	$	—
Total PGI Specialty Materials, Inc. shareholders’ equity	$		$	45,057	$	158,896	$	139,202	$	187,297

(1)	Operating working capital is defined as accounts receivable plus inventories less trade accounts payable and accrued liabilities.

(2)	As adjusted to reflect this Offering.


(in thousands)	Nine Months Ended September 27, 2014 (Successor)			Nine Months Ended September 28, 2013 (Successor)			Fiscal Year Ended December 28, 2013 (Successor)			Fiscal Year Ended December 29, 2012 (Successor)			Fiscal Year Ended December 31, 2011 (Successor)			One Month Ended January 28, 2011 (Predecessor)
	(unaudited)			(unaudited)
Statement of Cash Flows Data:
Net cash provided by (used in) operating activities	$	12,058		$	4,106		$	16,850		$	75,471		$	24,117		$	(25,270	)
Net cash (used in) investing activities		(407,395	)		(39,960	)		(337,759	)		(50,233	)		(767,882	)		(8,305	)
Net cash provided by (used in) financing activities		495,860			12,405			308,190			(42	)		815,795			31,442


(in thousands) (unaudited)	Pro Forma Nine Months Ended September 27, 2014 (Successor)		Pro Forma Nine Months Ended September 28, 2013 (Successor)		Pro Forma Fiscal Year Ended December 28, 2013 (Successor)		Nine Months Ended September 27, 2014 (Successor)		Nine Months Ended September 28, 2013 (Successor)		Fiscal Year Ended December 28, 2013 (Successor)		Fiscal Year Ended December 29, 2012 (Successor)		Fiscal Year Ended December 31, 2011 (Successor)		One Month Ended January 28, 2011 (Predecessor)
Other Financial Data:
Adjusted EBITDA(1)		N/A(4)		N/A(4)	$	279,656		N/A(4)		N/A(4)	$	210,411	$	129,671	$	130,562	$	10,334
Depreciation and amortization(2)		97,856		90,785		123,529		84,318		49,821		71,497		64,041		54,664		3,460
Total capital expenditures(3)		60,840		62,957		87,790		53,809		35,499		54,642		51,625		68,428		8,405

(1)

Our management uses Adjusted EBITDA, defined as net income (loss) before interest expense (net of interest income), income and franchise taxes and depreciation and amortization, further adjusted to exclude certain unusual, noncash, non-recurring or other items permitted in calculating covenant compliance under our credit agreements and the indentures governing our Senior Secured Notes and Senior Unsecured Notes. Under our credit agreements and indentures governing our Senior Secured Notes and our Senior Unsecured Notes, our ability to engage in certain activities such as incurring certain additional indebtedness, making certain investments, and making restricted payments is tied to ratios based on Adjusted EBITDA. In addition, targets based on Adjusted EBITDA are among the measures we use to evaluate our management’s performance for purposes of determining their compensation under our incentive plans as further described under “Management—Executive Compensation.”

Pro forma Adjusted EBITDA incorporates the adjustments described above and also gives pro forma effect to the Transactions and the Offering as if they had occurred on December 30, 2012. We present pro forma Adjusted EBITDA, in addition to Adjusted EBITDA, to provide a more complete understanding of our results of operations that gives effect to the Transactions and the Offering. The pro forma financial information we present is based on estimates and assumptions regarding the Transactions and Offering and our actual results may differ materially from such assumptions and estimates.

Adjusted EBITDA and pro forma Adjusted EBITDA are not recognized terms under GAAP, should not be considered in isolation or as a substitute for a measure of our liquidity or performance prepared in accordance with GAAP and are not indicative of income from operations or pro forma income of operations as determined under GAAP. Adjusted EBITDA, pro forma Adjusted EBITDA and other non-GAAP financial measures have important limitations which should be considered before using these measures to evaluate the Company’s liquidity or financial performance. Adjusted EBITDA and pro forma Adjusted EBITDA eliminate the effect of non-cash depreciation of tangible assets and amortization of intangible assets, much of which results from acquisitions accounted for under the purchase method of accounting. Adjusted EBITDA and pro forma Adjusted EBITDA also eliminate the effects of interest rates and changes in capitalization which management believes may not necessarily be indicative of a company’s underlying operating performance. Adjusted EBITDA and pro forma Adjusted EBITDA, as presented by us, may not be comparable to similarly titled measures of other companies due to varying methods of calculation. We believe that Adjusted EBITDA and pro forma Adjusted EBITDA provide useful information about flexibility under our covenants to investors, lenders, financial analysts and rating agencies since these groups have historically used EBITDA-related measures in our industry, along with other measures, to estimate the value of a company, to make informed investment decisions, and to evaluate a company’s ability to meet its debt service requirements. Adjusted EBITDA and pro forma Adjusted EBITDA should be read in conjunction with “Unaudited Pro Forma Condensed Combined Financial Information” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of this prospectus.

(2)

Depreciation and amortization excludes the amortization of loan acquisition costs that is included in interest expense. Pro forma depreciation and amortization for the nine months ended September 27, 2014 includes Providência results for the pre-acquisition period from January 1, 2014 through June 10, 2014. Pro forma depreciation and amortization for the nine months ended September 28, 2013 includes pre-acquisition results of Fiberweb and Providência for the nine months ended September 28, 2013. Pro forma depreciation and amortization for the fiscal year ended December 28, 2013 includes pre-acquisition results of Fiberweb for the period from January 1, 2013 through November 14, 2013 and pre-acquisition results of Providência for the fiscal year ended December 28, 2013.

(3)

Total capital expenditures for the Issuer represent purchases of property, plant and equipment included within the Statement of Cash Flow. Pro forma total capital expenditures for the nine months ended September 27, 2014 include capital expenditures of Providência for the pre-acquisition period from January 1, 2014 through June 10, 2014. Pro forma total capital expenditures for the nine months ended September 28, 2013 include pre-acquisition capital expenditures of Fiberweb and Providência for the nine months ended September 28, 2013. Pro forma total capital expenditures for the fiscal year ended December 28, 2013 includes pre-acquisition capital expenditures of Fiberweb for the period from January 1, 2013 through November 14, 2013 and Providência for the fiscal year ended December 28, 2013.

(4)	Under our credit agreements and indentures governing our Senior Secured Notes and our Senior Unsecured Notes, estimated synergies are only calculated on an annualized basis and therefore we do not present Adjusted EBITDA for interim periods.

We believe that the most directly comparable GAAP measure to Adjusted EBITDA is net income (loss). The following table reconciles net income (loss) to Adjusted EBITDA for the periods presented:


	Successor									Predecessor
(in thousands) (unaudited)	Fiscal Year Ended December 28, 2013			Fiscal Year Ended December 29, 2012			Fiscal Year Ended December 31, 2011			One Month Ended January 28, 2011
Net income (loss) attributable to PGI Specialty Materials, Inc.	$	(24,933	)	$	(26,038	)	$	(76,171	)	$	(18,203	)
Discontinued operations, net of tax		—			—			6,283			(182	)
Net income (loss) attributable to noncontrolling interest and redeemable noncontrolling interest		(34	)		—			59			83
Interest expense		55,974			50,414			46,409			1,922
Income and franchise tax		(35,658	)		8,025			(2,827	)		549
Depreciation and amortization(a)		71,497			64,041			54,664			3,460
Purchase accounting adjustments(b)		7,288			936			16,878			(1,005	)
Non-cash compensation(c)		4,329			842			1,787			—
Special charges, net(d)		33,188			19,592			41,345			20,824
Foreign currency and other non-operating, net(e)		11,689			4,982			21,935			(421	)
Loss on debt modification		3,334			—			—			—
Severance and relocation expenses(f)		4,943			1,657			2,272			131
Business optimization expenses(g)		319			979			522			—
Management, monitoring and advisory fees(h)		3,855			3,361			3,000			—
Annualized incremental contribution from Cali, Colombia spunmeltlines(i)		—			—			12,991			2,701
Other(j)		958			880			1,415			56

Adjusted EBITDA before contribution from acquisitions and contribution from estimated synergies	$	136,749		$	129,671		$	130,562		$	9,915
Contribution from acquisitions(k)		37,946			—			—			419
Contribution from estimated synergies(l)		35,716			—			—			—

Adjusted EBITDA	$	210,411		$	129,671		$	130,562		$	10,334

(a)	Excludes amortization of loan acquisition costs that are included in interest expense.

(b)

Represents primarily the impact of the step-up in inventory value, which was amortized into earnings over the period of the Company’s normal inventory turns, which approximated two months. The adjustments for the fiscal years ended December 31, 2011 and December 29, 2012 pertain to the fair value step-up related to the Merger. The adjustment for the fiscal year ended December 28, 2013 pertains to the Fiberweb Acquisition.

(c)	Reflects non-cash compensation costs related to employee and director restricted stock, restricted stock units and stock options.

(d)

Reflects costs associated with non-cash asset impairment charges, the restructuring and realignment of manufacturing operations and management organizational structures, pursuit of certain transaction opportunities, including expenses related to the Fiberweb and Providência acquisitions as well as the Merger, and other charges included in Special charges, net in our consolidated statement of operations.

(e)

Reflects (gains) losses from foreign currency translation of intercompany loans, unrealized (gains) losses on interest rate and foreign currency hedging transactions, (gains) losses on sales of assets outside the ordinary course of business, factoring costs and certain other non-operating (gains) losses recorded in Foreign Currency and Other, net above as well as (gains) losses from foreign currency transactions recorded in Other Operating, net above.

(f)	Reflects severance and relocation expenses not included under Special charges, net as well as costs incurred with the CEO transition in 2013.

(g)	Reflects costs incurred to improve IT and accounting functions, costs associated with establishing new facilities and certain other expenses.

(h)	Reflects management, monitoring and advisory fees paid under the Sponsor management agreement. We intend to terminate the Advisory Agreement in connection with this offering. See “Certain Relationships and Related Party Transactions—Advisory Agreement.”

(i)	Pursuant to the indentures governing our Senior Secured Notes and our Senior Unsecured Notes and the credit agreements governing our Term Loans and our ABL Facility, we are permitted to include an estimate of the

annualized earnings of our spunmelt lines in Cali, Colombia for the period the plant was not fully operational due to flooding in 2010. The adjustment is based on the actual earnings of the spunmelt lines in Colombia during the third quarter of 2010.

(j)	Reflects charges such as gain/loss on disposals, start-up costs and other add-backs permitted under our debt agreements.

(k)

Pursuant to the indentures governing our Senior Secured Notes and our Senior Unsecured Notes and the credit agreements governing our Term Loans and our ABL Facility, we are permitted to include in our Adjusted EBITDA calculation the Adjusted EBITDA contributions from acquisitions for the portion of the fiscal year prior to the closing of the acquisition. The fiscal year ended December 28, 2013 reflects Adjusted EBITDA contributions of the Fiberweb Acquisition for the period from January 1, 2013 through November 15, 2013.

(l)

Pursuant to the indentures governing our Senior Secured Notes and our Senior Unsecured Notes and the credit agreements governing our Term Loans and our ABL Facility, we are permitted to include in our calculation of Adjusted EBITDA contributions from estimated synergies resulting from acquisitions (subject to certain limitations). The adjustment represents management’s estimate of synergies expected to be realized within 12 months following the applicable acquisitions. The fiscal year ended December 28, 2013 includes the Adjusted EBITDA contribution from estimated synergies from the Fiberweb Acquisition.

The credit agreement governing our Term Loans limits the amount of estimated synergies included in the calculation of Adjusted EBITDA for any consecutive four quarter period to 20% of Adjusted EBITDA, while the indenture governing our Senior Secured Notes and the credit agreement governing our ABL Facility limits such amount to the greater of $20 million or 10% of Adjusted EBITDA. The indenture governing our Senior Unsecured Notes does not include such limitation. Accordingly, Adjusted EBITDA for the fiscal year ended December 28, 2013 presented in the table above includes $14.7 million of estimated synergies that exceed the limitations in our Senior Secured Notes and ABL Facility. Therefore, we are not permitted to include that portion of estimated synergies in Adjusted EBITDA for purposes of determining our compliance with certain covenants in the Senior Secured Notes and ABL Facility.

We present these synergy adjustments as they are permitted under the terms of our debt instruments, but you should not view these adjustments as a projection of future results. Our ability to realize these anticipated synergies is subject to significant uncertainties and you should not place undue reliance on the adjustments.

The following table reconciles pro forma net income (loss) to pro forma Adjusted EBITDA for the fiscal year ended December 28, 2013:


(in thousands) (unaudited)	Pro Forma Fiscal Year Ended December 28, 2013
Net income (loss) attributable to PGI Specialty Materials, Inc.(a)	$	(30,852	)
Net income (loss) attributable to noncontrolling interest and redeemable noncontrolling interest		(4,547	)
Interest expense		106,410
Income and franchise tax		(34,287	)
Depreciation and amortization(b)		123,529
Non-cash compensation(c)		5,028
Special charges, net(d)		27,186
Foreign currency and other non-operating, net(e)		21,332
Severance and relocation expenses(f)		4,944
Business optimization expenses(g)		1,972
Management, monitoring and advisory fees(h)		3,855
Other(i)		3,370

Pro forma Adjusted EBITDA before contribution from estimated synergies	$	227,940

Contribution from estimated synergies(j)		51,716

Pro forma Adjusted EBITDA	$	279,656

(a)	Refer to “Unaudited Pro Forma Condensed Combined Financial Information”, included elsewhere in this prospectus, for more information related to pro forma net income (loss).

(b)	Excludes amortization of loan acquisition costs that are included in interest expense.

(c)	Reflects non-cash compensation costs related to employee and director restricted stock, restricted stock units and stock options.

(d)

Reflects costs associated with non-cash asset impairment charges, the restructuring and realignment of manufacturing operations and management organizational structures, pursuit of certain transaction opportunities, including expenses related to the Fiberweb and Providência acquisitions, and other charges included in Special charges, net in our consolidated statement of operations.

(e)

(f)	Reflects severance and relocation expenses not included under Special charges, net as well as costs incurred with the CEO transition in 2013.

(g)	Reflects costs incurred to improve IT and accounting functions, costs associated with establishing new facilities and certain other expenses.

(h)	Reflects management, monitoring and advisory fees paid under the Sponsor management agreement. We intend to terminate the Advisory Agreement in connection with this offering. See “Certain Relationships and Related Party Transactions—Advisory Agreement.”

(i)	Reflects charges such as gain/loss on disposals and start-up costs.

(j)

Pursuant to the indentures governing our Senior Secured Notes and our Senior Unsecured Notes and the credit agreements governing our Term Loans and our ABL Facility, we are permitted to include in our calculation of pro forma Adjusted EBITDA contributions from estimated synergies resulting from acquisitions (subject to certain limitations described below). The adjustment represents management’s estimate of synergies expected to be realized within 12 months following the applicable acquisitions. The

fiscal year ended December 28, 2013 includes a pro forma Adjusted EBITDA contribution of $35.7 million from estimated synergies for the Fiberweb Acquisition. In addition, it includes the estimated synergies related to the Providência Acquisition (comprised of approximately $9.0 million in respect of procurement and manufacturing opportunities and approximately $7.0 million in respect of logistics and back office cost reductions) as if the Providência Acquisition had occurred in the fiscal year ended December 28, 2013.

The credit agreement governing our Term Loans limits the amount of estimated synergies included in the calculation of pro forma Adjusted EBITDA for any consecutive four quarter period to 20% of pro forma Adjusted EBITDA, while the indenture governing our Senior Secured Notes and the credit agreement governing our ABL Facility limit such amount to the greater of $20 million or 10% of pro forma Adjusted EBITDA. The indenture governing our Senior Unsecured Notes does not include such limitation. Accordingly, pro forma Adjusted EBITDA for the fiscal year ended December 28, 2013 includes approximately $23.7 million of estimated synergies that exceed the limitations in our Senior Secured Notes and ABL Facility. Therefore, we are not permitted to include that portion of estimated synergies in pro forma Adjusted EBITDA for purposes of determining our compliance with certain covenants in the Senior Secured Notes, and ABL Facility.

RISK FACTORS

Investing in our common stock involves a high degree of risk. You should consider carefully the risks and uncertainties described below and the other information contained in this prospectus, including our consolidated financial statements and the related notes, before you decide whether to purchase our common stock.

Risks Related To Our Business

The specialized markets in which we sell our products are highly competitive, as a result we may have difficulty growing our business and maintaining profit margins.

The markets for our products are highly competitive. The primary competitive factors include product innovation and performance, quality, service, cost, distribution and technical support. In addition, we compete against a number of competitors in each of our markets. Some of these competitors are larger companies that have greater financial, technological, manufacturing and marketing resources than we do. A reduction in overall demand, a significant increase in manufacturing capacity in excess of demand or increased costs to design and produce our products would likely further increase competition and that increased competition could lead to reduced sales or cause us to reduce our prices, which could lower our profit margins and impair our ability to grow.

The global nonwovens market has historically experienced stable growth. However, beginning in late 2010, several of our competitors, primarily in the hygiene markets, installed or announced an intent to install capacity in excess of what we believe to be then current market demand. Consequently, as this manufacturing capacity entered into commercial production, the short-term to mid-term excess supply created unfavorable market dynamics, resulting in a downward pressure on selling prices. In recent years, we believe growing demand has filled a portion of this excess capacity and we have observed fewer new capacity expansions, leading to improving capacity utilization in our view.

Increases in prices for raw materials and energy could reduce our profit margins.

The primary raw materials used to manufacture most of our products are polypropylene resins (accounting for approximately 75% of raw materials costs historically), polyester fiber, polyethylene resin and, to a lesser extent, rayon and tissue paper. In addition, energy-related costs are a significant expense for us (both directly and as inputs to our primary raw materials). The prices of raw materials and energy can be volatile and are susceptible to rapid and substantial changes due to factors beyond our control such as changing economic conditions, currency fluctuations, political unrest and instability in energy-producing nations, and supply and demand considerations. To the extent that we are able to pass along raw material price increases to some of our customers, there is often a delay between the time we are required to pay the increased raw material price and the time we are able to pass the increase on to our customers. To the extent we are not able to pass along all or a portion of such increased prices of raw materials, our cost of goods sold would increase and our operating income and margins would correspondingly decrease. There can be no assurance that the prices of raw materials and energy will not increase in the future or that we will be able to pass on any increases to our customers. In addition, volatility in the prices for raw materials could make it more difficult for us to pass along all or a portion of any increase to our customers. Material increases in raw material and energy prices that cannot be passed on to customers could have a material adverse effect on our profit margins, results of operations and financial condition.

The industries that we serve are subject to the overall economic environment and demand for end-use products.

Our net sales are affected by general economic conditions, and the development of demand for and prices of end-use products in the industries that we serve. Geographically, general economic conditions constitute important factors affecting the demand for our products. Our results may also be affected by the cyclicality of the end-uses applications and industries we serve, although these cycles vary across industries and geographic

regions. Demand for and prices of our products have fluctuated during the past years as demand by end-users and intermediate converters has changed. A substantial decline in general economic conditions combined with a consequent decline in the prices and/or demand for our products could have an adverse effect on our business, results of operations or financial condition.

The loss of any of our large volume customers could significantly reduce our revenues and profits.

A significant amount of our products are sold to large volume customers. We have one major customer that accounts for over 10% of our business and our 20 largest customers represented approximately 45% of our sales for the nine months ended September 27, 2014. We also do not have any long-term volume commitments with our customers and, as a result, the amount, and prices at which, our customers purchase from us may vary across periods. As a result, a decrease in business from, or the loss of any large volume customers, could materially reduce our product sales, lower our profits and impair our financial condition.

Our international operations pose risks to our business that may not be present with our domestic operations.

Our manufacturing facilities in the United States accounted for approximately 33% and 31% of net sales for the nine months ended September 27, 2014 and the fiscal year ended December 28, 2013, respectively, with facilities in Mexico, Canada, Europe, Asia and South America accounting for approximately 67% and 69% of net sales for the same periods, respectively. As a result of the Providência Acquisition, we have further strengthened our presence in South America and we expect a proportionate increase to our net sales in that region. As part of our growth strategy, we have expanded, and may continue to expand operations in foreign countries where we have an existing presence or enter new foreign markets and expect to increase sales of products as disposable income increases in developing markets. Our foreign operations are, and any future foreign operations will be, subject to certain risks that are unique to doing business in foreign countries. These risks include fluctuations in foreign currency exchange rates, inflation, economic or political instability, shipping delays in both our products and receiving delays of raw materials, changes in applicable laws, including assessments of income and non-income related taxes, reduced protection of intellectual property and regulatory policies and various trade restrictions including potential changes to export taxes or countervailing and anti-dumping duties for exported products from these countries. Any of these risks could have a negative impact on our ability to deliver products to customers on a competitive and timely basis. This could reduce or impair our net sales, profits, cash flows and financial position. We have not historically hedged our exposure to foreign currency risk except for risk associated with certain capital spending projects or acquisitions.

We may not realize certain productivity enhancements or improvements in costs.

As part of our business strategy, we must continuously identify opportunities to improve profitability by reducing costs and enhancing productivity to improve our results. Any cost savings or productivity enhancements that we realize from such efforts may differ materially from our estimates. We cannot assure you that these initiatives will be completed as anticipated or that the benefits we expect will be achieved on a timely basis or if they will be achieved at all. If we are unable to reduce costs or improve productivity, our competitive position and profitability could be adversely affected.

We have experienced losses in the past, and we may experience similar losses in the future.

For each of the nine months ended September 27, 2014, the fiscal year ended December 28, 2013, the fiscal year ended December 29, 2012, the fiscal year ended December 31, 2011 and the one month ended January 28, 2011 we experienced net losses. Please see the section under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the notes thereto included elsewhere in this prospectus for a discussion of our operational history and the factors accounting for such losses. We cannot assure you that in the future we will be profitable.

We generate most of our revenue from the sale of manufactured products that are used in a wide variety of consumer and industrial applications and the potential for product liability exposure could be significant.

We manufacture a wide variety of products that are used in consumer and industrial applications, such as disposable diapers, baby wipes, surgical gowns, wound dressings, carpet backing and industrial packaging. As a

result, we may face exposure to product liability claims in the event that the failure of our products results, or is alleged to result, in property damage, bodily injury and/or death. In addition, if any of our products are, or are alleged to be, defective, we may be required to make warranty payments or to participate in a recall of those products.

The future costs associated with defending product liability claims or responding to product warranty claims could be material and we may experience significant losses in the future as a result. A successful product liability claim brought against us in excess of available insurance coverage or a requirement to participate in any product recall could substantially reduce our profitability and cash generated from operations.

Reductions in our selling prices to customers could reduce our profit margins.

In cases where changes in our selling prices to customers are determined via contract based on changes in an underlying raw material price index, such as the index for polypropylene, and the index decreases, sales would decrease and our operating income would correspondingly decrease if we are not able to obtain corresponding reductions in our raw material costs. Such decreases in operating income could be material. There can be no assurance that the index used in such contracts will not decrease in the future or that we will be able to obtain corresponding reductions in our raw material costs. Additionally, unfavorable competitive dynamics could cause us to lower our selling prices without a change in raw material cost.

Delay in the procurement of raw materials could reduce our revenues and profits.

In certain regions of the world, we may source certain key raw materials from a limited number of suppliers or on a sole source basis. To the extent that we cannot procure our raw material requirements from a local country supplier, we seek to import raw materials from outside refiners. The loss of any of our key suppliers or the delay in the import of raw materials could, in the short-term, adversely affect our business until alternative supply arrangements are secured and the respective suppliers are qualified with our customers, or until importation delays of raw material are resolved. Accordingly, a delay in the procurement of raw materials could reduce product sales, lower our profits and impair our financial condition.

A material disruption at one of our manufacturing facilities could prevent us from meeting customer demand, reduce our sales or negatively affect our results of operation and financial condition.

Any of our manufacturing facilities, or any of our machines or equipment within an otherwise operational facility, could cease operations unexpectedly due to a number of events, including:

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unscheduled maintenance outages;

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prolonged power failures;

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an equipment failure;

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a chemical spill or release;

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labor difficulties;

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disruptions in transportation infrastructure, including roads, bridges, railroad tracks and tunnels;

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fires, floods, windstorms, earthquakes, hurricanes or other catastrophes;

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terrorism or threats of terrorism;

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governmental regulations; and

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other operational problems.

For example, on May 15, 2014, Providência announced that production on three of its spunmelt lines at its São José dos Pinhais facility had been partially interrupted. The interruption was the result of an order by the

Brazilian Ministry of Labor, pending remedial action by Providência to bring the facility into compliance with applicable Brazilian workplace safety regulations. The shutdown impacted sales volumes in excess of 6,500 metric tons of nonwovens during the 2014 fiscal year. Any such future disruption could prevent us from meeting customer orders, reduce our sales or profits and negatively affect our results of operations and financial condition.

We must continue to invest significant resources in developing innovative products in order to maintain a competitive edge in the highly specialized markets in which we operate.

Our continued success depends, in part, upon our ability to maintain our technological capabilities and to continue to identify, develop and commercialize innovative products for the nonwoven and oriented polymer industries. We must also protect the intellectual property rights underlying our new products to realize the full benefits of our efforts. If we fail to continue to develop products or to keep pace with technological developments by our competitors, we may lose market share, reduce product sales and lower our margins, which would impair our results of operations and financial condition.

We may not be able to utilize our production capacity efficiently due to variability in customer demand or unexpected events.

Our ability to utilize our production capacity efficiently may be affected by variability in customer demand or interruptions in production. We have a relatively versatile production base with 22 production facilities worldwide, which facilitates effective use of capacity by, for example, allowing for the redirection of resources to reflect changes in demand. Any interruption in production at our production sites, whether due to lack of orders, labor action, environmental incidents, breakdown of major production machines, fire, accidents or other factors, has the potential to affect adversely our ability to meet production goals for the year and result in lost business opportunities in the future. Also, any failure to fill customer orders on schedule could lead customers to seek alternative sources of supply.

We typically only produce goods against orders received, rather than for stock. Although we believe that close customer relationships have helped us to make accurate estimates of future orders in the past, there could be significant or numerous reductions, delays or cancellations in anticipated or confirmed orders by a customer or group of customers in the future, which could cause us to incur downtime on our machines and thereby have an adverse effect on our business, results of operations or financial condition.

Because a significant number of our employees are represented by labor unions or trade councils and work under collective bargaining agreements, any employee slowdown or strikes or the failure to renew our collective bargaining agreements could disrupt our business.

As of December 28, 2013, approximately 40% of our employees were represented by labor unions or trade councils and worked under collective bargaining agreements, all of which expire within one year. We may not be able to maintain constructive relationships with these labor unions or trade councils. We may not be able to successfully negotiate new collective bargaining agreements on satisfactory terms in the future. The loss of a substantial number of these employees or a prolonged labor dispute could disrupt our business. Any such disruption could reduce our revenues, increase our costs and result in significant losses.

We rely on a limited number of suppliers to provide raw materials, significant machinery and components used in our production facilities. A material interruption in supply or delivery could prevent or limit our ability to accept and fill orders for our products.

We currently depend upon a limited number of outside unaffiliated suppliers for key machinery and components used in our manufacturing and converting facilities. We cannot produce most of our nonwoven and oriented polyolefin products within the specifications required by our customers without such key machinery and

components. If any of our suppliers cease to provide new machinery and components or replacement parts for existing machinery and components in sufficient quantity to meet our needs, there may not be adequate alternative sources of supply. To date, we have been able to obtain the required machinery and components to allow us to expand our business and supply products to our customers within their required specifications without any significant delays or interruptions. Obtaining alternative sources of such machinery and components could involve significant delays and other costs, and these supply sources may not be available to us on reasonable terms or at all. In some cases, we expect that it would take several months, or longer, for a new supplier to begin providing machinery and components to specification. Any disruption of machinery and component supplies could result in lost or deferred sales which could adversely affect our business and financial results.

We purchase raw materials from an array of suppliers, some of which supply a significant portion of our raw materials. Our top five suppliers of raw materials accounted for over 54% of our total purchases and our largest supplier represented approximately 29% of our total purchases, in each case for the nine months ended September 27, 2014. A loss of a significant supplier could cause us to experience substantial production delays and may impact our business and financial results. We use third-party transportation providers for our shipment of raw materials and our final products, including shipment tracking and freight dispatch services. Our use of transportation services for shipments is subject to risks, including increases in fuel prices, which would increase our shipping costs, and employee strikes and inclement weather, which may impact the ability of providers to provide delivery services that adequately meet our shipping needs. Any material shipping interruptions can adversely affect our ability to meet our production goals or result in significant additional costs.

We could be subject to substantial costs to comply with, and liabilities under, environmental laws, and violations of such laws may increase costs or require us to change certain business practices.

We use and generate a variety of chemicals in our manufacturing operations and we are subject to a broad range of federal, state, local and foreign environmental laws and regulations. These environmental laws govern, among other things, air emissions, wastewater discharges, the handling, storage, disposal and release of wastes and hazardous substances, cleanup of contaminated sites and human health and safety. We regularly incur costs to comply with environmental requirements, and such costs could increase significantly, or our business or operations could be materially affected, with changes in legal requirements or their interpretation or enforcement. For example, certain local governments have adopted ordinances prohibiting or restricting the use or disposal of certain plastic products, such as certain of the plastic wrapping materials that we produce. Widespread adoption of such prohibitions or restrictions could adversely affect demand for our products and thereby have a material adverse effect upon us. In addition, a decline in consumer preference for plastic or disposable products due to environmental considerations could have a material adverse effect upon us. We could incur substantial costs, including clean-up and capital costs, fines and sanctions and third-party property damage or personal injury claims, as a result of violations of environmental laws. Failure to comply with environmental requirements could also result in enforcement actions that materially limit or otherwise affect our operations. We are also subject to laws, such as the Comprehensive Environmental Response, Compensation, and Liability Act, or CERCLA, that may impose liability retroactively and without fault for releases or threatened releases of regulated materials at on-site or off-site locations.

Additionally, greenhouse gas (“GHG”) emissions have increasingly become the subject of a large amount of international, national, regional, state and local attention. Cap and trade initiatives to limit GHG emissions have been enacted in the European Union. Numerous bills related to climate change have been introduced in the U.S. Congress, and various states and federal agencies, including the U.S. Environmental Protection Agency, have taken or are considering actions to regulate GHG emissions, which could adversely impact us and many other industries including our suppliers or customers, which may result in higher costs or other impacts to our business. Within the U.S., most of these actions and proposals have resulted or would result in the regulation and/or taxation, in one fashion or another, of the production of carbon dioxide and other GHGs to facilitate the reduction of GHG emissions to the atmosphere, and provide tax and other incentives to produce and use more clean energy.

Our insurance policies may be insufficient to cover certain eventualities

We have extensive insurance policies that we believe provide coverage consistent with industry practice. However, there is a possibility that these insurance policies may not adequately cover all risks and catastrophic events, and that any particular claim may not be paid. For example, in December 2010, a severe rainy season impacted many parts of Colombia and caused us to temporarily cease manufacturing at our Cali, Colombia facility due to a breach of a levy and flooding at the industrial park where our manufacturing facility is located. Although we carried flood insurance, it was insufficient to cover all of our losses and we incurred additional liability for costs associated with the flood and restoration of the facility. A catastrophic event or multiple catastrophic events may cause large losses and could have a material adverse effect on our business, results of operations or financial condition. Natural catastrophic events to which we are exposed include fires, windstorms, hurricanes, earthquakes, tornadoes, severe hail, severe winter weather and floods, which are inherently unpredictable in terms of both their occurrence and severity. We are also exposed to man-made catastrophic events, which may have a significant adverse impact on the industry where we operate and our business.

If we are unable to adequately protect our intellectual property, we could lose a significant competitive advantage.

Our success depends, in part, on our ability to protect our technologies and products against competitive pressure and to defend our intellectual property rights. If we fail to adequately protect our intellectual property rights, competitors may manufacture and market similar products, which could adversely affect our market share and results of operations. We consider our patents and trademarks, in the aggregate, to be important to our business and seek to protect our proprietary know-how in part through United States and foreign patent and trademark registrations. We have a total of over 1,300 pending and approved trademark and domain name registrations worldwide and over 600 pending and approved patents worldwide, and maintain certain trade secrets. We may not receive patents for all our pending patent applications, and existing or future patents or licenses may not provide competitive advantages for our products. Our competitors may challenge, invalidate or avoid the application of any existing or future patents, trademarks, or other intellectual property rights that we receive or license. In addition, patent rights may not prevent our competitors from developing, using or selling products that are similar or functionally equivalent to our products. The loss of protection for our intellectual property could reduce the value of our products, reduce product sales, lower our profits, and impair our financial condition.

We may not be able to recover the carrying value of our long-lived assets, which could require us to record asset impairment charges and materially and adversely affect our results of operations.

Property, plant and equipment represent a significant portion of our assets. Restructuring initiatives and changing conditions can impact our ability to recover the carrying value of our long-lived assets. The continuing presence of these factors, as well as other factors, could require us to record asset impairment charges in future periods which could materially and adversely affect our results of operations.

Goodwill and other identifiable intangible assets represent a significant portion of our total assets, and we may never realize the full value of our intangible assets.

Goodwill and other intangible assets represent a significant portion of our assets. Goodwill is the excess of cost over the fair market value of net assets acquired in business combinations. In the future, goodwill and intangible assets may increase as a result of future acquisitions. We review goodwill and intangible assets at least annually for impairment. Impairment may result from, among other things, deterioration in performance, adverse competitive conditions, adverse changes in applicable laws or regulations, including changes that restrict the activities of or affect the products and services we sell, challenges to the validity of certain registered intellectual property, reduced sales of certain products incorporating registered intellectual property, and a variety of other factors. Any impairment of goodwill or other intangible assets would result in a non-cash charge against earnings, which would adversely affect our results of operations.

If we fail to maintain effective internal control over financial reporting at a reasonable assurance level, we may not be able to accurately report our financial results, and may require the restatement of previously

published financial information which could have a material adverse effect on our operations, investor confidence in our business and the trading prices of our securities.

We recently identified an error in the accounting for noncontrolling interest in the financial statements of our subsidiary, PGI Group, for the unaudited interim periods ended June 28, 2014 and September 27, 2014 relating to our Providencia Acquisition, which resulted in the restatement of PGI Group’s consolidated financial statements for such periods. The restatement only impacted the Consolidated Balance Sheets, the Consolidated Statement of Changes in Equity and certain footnote disclosures for such periods. The restatement has no impact on the Consolidated Statements of Comprehensive Income (Loss) or the Consolidated Statements of Cash Flows for such periods. As a result of the restatement, we concluded that we had a material weakness in internal controls over financial reporting. In addition, in the past we have identified and remediated material weaknesses and other deficiencies in our internal control over financial reporting.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

As of February 6, 2015, we implemented additional procedures that we believe are sufficient to remediate the existing material weakness. However, if we determine that these material weaknesses have not been fully remediated or if additional material weaknesses in our internal controls are discovered in the future, they may adversely affect our ability to record, process, summarize and report financial information timely and accurately and, as a result, we may fail to prevent or detect material misstatements in our annual or interim financial statements.

In addition, it is possible that control deficiencies could be identified by our management or by our independent registered public accounting firm in the future or may occur without being identified. Such a failure could result in regulatory scrutiny, cause investors to lose confidence in our reported results, lead to a default under our indebtedness or a decline in our stock price and otherwise materially adversely affect our business and financial condition.

The failure of our information technology systems could disrupt our business operations which could have a material adverse effect on our business, financial condition and/or results of operations.

The operation of our business depends on our information technology systems. The failure of our information technology systems to perform as we anticipate could disrupt our business and could result in, among other things, transaction errors, processing inefficiencies, loss of data and the loss of sales and customers, which could cause our business and results of operations to suffer. In addition, our information technology systems may be vulnerable to damage or interruption from circumstances beyond our control, including, without limitation, fire, natural disasters, power outages, systems failure, system conversions, security breaches, cyber-attacks, viruses and/or human error. In any such event, we could be required to make a significant investment to fix or replace information technology systems, and we could experience interruptions in our ability to service our customers. Any such damage or interruption could adversely affect our business, financial condition and/or results of operations.

The loss of our senior management could disrupt our business.

Our senior management is important to the success of our business. However, the specialty materials and nonwovens industries are characterized by significant competition for a limited pool of experienced executive personnel and, as a result, we may not be able to retain our existing senior management. In addition, we may not be able to fill new positions or vacancies created by expansion or turnover. The loss of any member of our senior management team without retaining a suitable replacement (either from inside or outside our existing management team) could restrict our ability to enhance existing products in a timely manner, sell products to our customers or manage the business effectively.

Risks Relating to Our Indebtedness

Our substantial indebtedness could adversely affect our financial condition and prevent us from fulfilling our obligations under our indebtedness.

We have a substantial amount of debt, which requires significant interest and principal payments. As of September 27, 2014, on an as adjusted basis giving effect to the Offering, our total debt would have been approximately $ million. Our high level of debt could have important consequences, including the following:

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making it more difficult for us to satisfy our obligations with respect to our debt;

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limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements;

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requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions and other general corporate purposes;

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increasing our vulnerability to general adverse economic and industry conditions;

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exposing us to the risk of increased interest rates as certain of our borrowings are at variable rates of interest;

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limiting our flexibility in planning for and reacting to changes in the industry in which we compete;

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placing us at a disadvantage compared to other, less leveraged competitors; and

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increasing our cost of borrowing.

Despite our current level of indebtedness, we may be able to incur substantially more debt. This could further exacerbate the risks to our financial condition described above.

We may be able to incur significant additional indebtedness in the future. Although the indentures governing the Senior Secured Notes and the Senior Unsecured Notes and the credit agreements governing the ABL Facility, the Term Loans and the Additional Term Loans contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions and additional indebtedness incurred in compliance with these restrictions could be substantial.

The restrictions contained in the indentures and the credit agreements also will not prevent us from incurring obligations, such as trade payables, that do not constitute indebtedness as defined under our debt instruments. In addition, as of September 27, 2014, on an as adjusted basis giving effect to the Offering, our ABL Facility would have provided for unused commitments of $ million (subject to availability under a borrowing base and after giving effect to $19.3 million of outstanding letters of credit). Furthermore, we may increase our commitments under our ABL Facility without the consent of lenders under our ABL Facility, other than those lenders who, in their discretion, issue a commitment to provide all or a portion of such increase, by up to an additional $75.0 million, subject to certain customary conditions, and available debt capacity under the indentures governing the Senior Secured Notes and the Senior Unsecured Notes and the credit agreement governing the Term Loans. To the extent new debt is added to our currently anticipated debt levels, the substantial leverage risks described in the previous risk factor would increase. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Indebtedness.”

Our variable rate indebtedness subjects us to interest rate risk, which could cause our indebtedness service obligations to increase significantly.

Borrowings under our ABL Facility, the Term Loans and the Additional Term Loans and certain of our foreign indebtedness are at variable rates of interest and expose us to interest rate risk. If interest rates increase,

our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income and cash flows, including cash available for servicing our indebtedness, would correspondingly decrease.

We may be unable to service our indebtedness.

Our ability to make scheduled payments on and to refinance our indebtedness depends on and is subject to our financial and operating performance, which in turn is affected by general and regional economic, financial, competitive, business and other factors beyond our control, including the availability of financing in the international banking and capital markets. We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us in an amount sufficient to enable us to service our debt, to refinance our debt or to fund our other liquidity needs. If we are unable to meet our debt service obligations or to fund our other liquidity needs, we will need to restructure or refinance all or a portion of our debt which could cause us to default on our debt obligations and impair our liquidity. Any refinancing of our indebtedness could be at higher interest rates and may require us to comply with more onerous covenants that could further restrict our business operations.

Moreover, in the event of a default, the holders of our indebtedness, including the Senior Secured Notes, the Senior Unsecured Notes, the ABL Facility, the Term Loans and the Additional Term Loans, could elect to declare all the funds borrowed to be due and payable, together with accrued and unpaid interest. The lenders under our ABL Facility could also elect to terminate their commitments thereunder and cease making further loans. The lenders and holders of our secured debt could institute foreclosure proceedings against their collateral, and we could be forced into bankruptcy or liquidation. If our operating performance declines, we may in the future need to obtain waivers from the required lenders under our ABL Facility to avoid being in default. If we breach our covenants under our ABL Facility, the lenders could exercise their rights, as described above, and we could be forced into bankruptcy or liquidation.

The agreements governing our indebtedness and the Lease Agreements (as defined below) impose significant operating and financial restrictions on us, which may prevent us from capitalizing on business opportunities.

The indentures governing the Senior Secured Notes and the Senior Unsecured Notes, the credit agreements governing our ABL Facility, the Term Loans and the Additional Term Loans, and the lease agreements associated with two of our U.S. spunmelt lines (the “Lease Agreements”) impose significant operating and financial restrictions on us. These restrictions limit our ability to, among other things:

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incur additional indebtedness, issue preferred stock or enter into sale and leaseback obligations;

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pay certain dividends or make certain distributions on our capital stock or repurchase or redeem our capital stock;

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make certain capital expenditures;

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make certain loans, investments or other restricted payments;

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place restrictions on the ability of subsidiaries to pay dividends or make other payments to us;

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engage in transactions with stockholders or affiliates;

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sell certain assets or engage in mergers, acquisitions and other business combinations;

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amend or otherwise alter the terms of our indebtedness;

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alter the business that we conduct;

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guarantee indebtedness or incur other contingent obligations; and

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create liens.

In addition, the restrictive covenants in our ABL Facility and Lease Agreements may require us to maintain a specified financial ratio and satisfy other financial condition tests. Our ability to comply with those financial

ratios and tests can be affected by factors beyond our control. As a result, we are limited as to how we conduct our business and we may be unable to raise additional debt or equity financing to compete effectively or to take advantage of new business opportunities. Our failure to comply with the terms of the Lease Agreements could result in a default thereunder which, if not cured or waived, could result in our being required to make substantial unscheduled payments in respect of the applicable Lease Agreement. The terms of any future indebtedness we may incur could include more restrictive covenants or could impact compliance with existing restrictive covenants.

We cannot assure you that we will be able to maintain compliance with these covenants in the future and, if we fail to do so, that we will be able to obtain waivers from the lenders and/or amend the covenants. Our failure to comply with the restrictive covenants described above as well as other terms of our existing indebtedness and/or the terms of any future indebtedness from time to time could result in an event of default, which, if not cured or waived, could result in our being required to repay these borrowings before their due date. If we are forced to refinance these borrowings on less favorable terms or cannot refinance these borrowings, our results of operations and financial condition could be adversely affected.

Our failure to comply with the agreements relating to our outstanding indebtedness, including as a result of events beyond our control, could result in an event of default that could materially and adversely affect our results of operations and our financial condition.

If there were an event of default under any of the agreements relating to our outstanding indebtedness, the holders of the defaulted debt could cause all amounts outstanding with respect to that debt to be due and payable immediately. We cannot assure you that our assets or cash flow would be sufficient to fully repay borrowings under our outstanding debt instruments if accelerated upon an event of default. Further, if we are unable to repay, refinance or restructure our indebtedness under our secured debt, the holders of such debt could proceed against the collateral securing that indebtedness. In addition, any event of default or declaration of acceleration under one debt instrument could also result in an event of default under one or more of our other debt instruments.

Risks Related to our Acquisitions

The success of our business depends, in part, on achieving our objectives for strategic acquisitions and dispositions.

We may pursue acquisitions or joint ventures as part of our long-term business strategy. In pursuing these transactions, we may encounter significant challenges and risks including that the transaction does not advance our business strategy, that we do not realize a satisfactory return on the investment made, that we increase our debt levels beyond what the acquired business can support, that we may incur unknown liabilities or that we experience difficulty in completing such transactions or in the integration of new operations, employees, business systems, and technology, or diversion of management’s attention from our other businesses. These factors could adversely affect our operating results or financial condition.

We may, as part of our long-term business strategy, evaluate the potential disposition of assets and businesses that may no longer be in alignment with our strategic direction. When we decide to sell assets or businesses, we may encounter difficulty finding buyers or alternative exit strategies on acceptable terms in a timely manner, which could delay the accomplishment of strategic objectives, or we may dispose of a business at a price or on terms which are less than optimal. In addition, there is a risk that we sell a business whose subsequent performance exceeds expectations, in which case the decision would have potentially sacrificed enterprise value. Alternatively, we may be too optimistic about a particular business’s prospects, in which case we may be unable to find a buyer at an acceptable price or sacrifice enterprise value by retaining such business.

Our recent acquisitions, including the Fiberweb Acquisition and Providência Acquisition, may not achieve their intended results, including anticipated cost savings.

Although we completed the Fiberweb Acquisition and Providência Acquisition with the expectation that each transaction will result in various benefits, including a significant amount of cost savings and other financial

and operational benefits, there can be no assurance regarding when or the extent to which we will be able to realize any of these benefits. Achieving the anticipated benefits of an acquisition, including cost savings, is subject to a number of uncertainties, including whether the businesses acquired can be operated in the manner we intend. The integration may be subject to delays or changed circumstances, and we can give no assurance that the acquired businesses will perform in accordance with our expectations or that our expectations with respect to integration or cost savings as a result of acquisitions will materialize. In addition, we expect to incur additional costs and charges in connection with integrating the acquired businesses, including severance payments and other restructuring and transitional charges. Additional unanticipated costs, expenses, liabilities, competitive responses, or loss of customer and supplier relationships may also arise during the integration process. The integration of acquired businesses, including the Fiberweb and Providência businesses, may place an additional burdens on our management and internal resources, and the diversion of management’s attention during the integration and restructuring process could have an adverse effect on our profit margins, results of operations and financial condition.

The Providência Acquisition exposes us to additional risks and uncertainties with respect to the acquired businesses and their operations.

We expect that the Providência Acquisition will rebalance our business mix to a greater percentage of international operations. The acquired businesses will generally be subject to risks similar to those that we are subject to in our existing international businesses. In addition, we will be subject to increased foreign currency exchange rate risks because a greater portion of our cash flows will be generated by our international business operations. These risks relate primarily to changes in the relative value of the Brazilian real and the U.S. dollar between the time we initially invest U.S. dollars in our Brazilian business and the time that cash is repatriated to the United States from Brazil. In addition, our consolidated reported earnings on a GAAP basis may be subject to increased currency translation risk, which is the result of the conversion of earnings as reported in our Brazilian businesses on a Brazilian real basis to a U.S. dollar basis in accordance with GAAP requirements. In addition, regulatory requirements, political and/or competitive conditions associated with aspects of the acquired businesses may differ from those of our existing business, which may increase our costs.

In connection with the Providência Acquisition, approximately R$106.9 million (or $47.9 million) of the total consideration due to the selling shareholders pursuant to the stock purchase agreement constitutes Deferred Purchase Price, payable to the selling shareholders to the extent the Providência Tax Claims are resolved in Providência’s favor. See “Business—Expansion and Optimization—Providência Acquisition.” In addition, to the extent minority shareholders participate in the Mandatory Tender Offer, a pro rata amount of the consideration due to such tendering shareholders will be treated as Deferred Purchase Price with respect to such tendering holders. Based on currently available information, we do not anticipate that the actual tax liability will materially exceed the Deferred Purchase Price. However, the actual tax liability will be determined according to applicable Brazilian law, and to the extent the actual tax liability is in excess of the Deferred Purchase Price, we will be responsible for such excess.

Our subsidiary Providência is a Brazilian company and may remain a public company following completion of the tender offer in Brazil.

We may not succeed in acquiring 100% of the share capital of Providência. If Providência remains a public company in Brazil, it will remain subject to Brazilian laws and regulations applicable to domestic public companies, including Brazilian Corporation Law and the Sao Paulo stock exchange listing requirements, some of which may differ from the legal principles and rules that would apply if Providência were incorporated in a jurisdiction in the United States. In addition, we will continue to incur costs and expenses associated with being a public company in Brazil.

The Providência business may also be adversely affected by any changes to Brazilian economic conditions. The Brazilian economy has historically been characterized by interventions by the Brazilian government and unstable economic cycles. The Brazilian government has often changed monetary, taxation, credit, tariff and

other policies. For example, the government’s actions to control inflation have at times involved setting wage and price controls, blocking access to bank accounts, imposing exchange controls and limiting imports into Brazil. We have no control over, and cannot predict, what policies or actions the Brazilian government may take in the future. Providência’s business, results of operations, financial condition and prospects may be adversely affected by, among others, the following factors:

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exchange rate movements;

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exchange control policies;

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expansion or contraction of the Brazilian economy;

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inflation;

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tax policies;

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other economic political, diplomatic and social developments in or affecting Brazil;

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interest rates;

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energy shortages or rationalization;

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liquidity of domestic capital and lending markets;

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changes in environmental regulation; and

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social and political instability, particularly in light of recent protests against public policy and related vandalism in major Brazilian cities.

These factors, as well as uncertainty over whether the Brazilian government may implement changes in policy or regulations relating to these factors, may adversely affect Providência and its business and financial performance. The Brazilian government has considerable power to determine governmental policies and actions that relate to the Brazilian economy and, consequently, affect the operations and financial performance of businesses in Brazil. The government may face domestic pressure to retreat from the current macroeconomic policies in an attempt to achieve higher rates of economic growth. We cannot predict what policies will be adopted by the Brazilian government and whether these policies will negatively affect the economy or Providência’s business or financial performance. In addition, uncertainty leading up to and after the election over whether the Brazilian government may implement changes in policy or regulations may contribute to economic uncertainty in Brazil.

The market for securities issued by Brazilian public companies is influenced, to varying degrees, by economic and market conditions in other emerging market countries, especially other Latin American countries. Accordingly, developments in one country may cause capital and credit markets in other countries to fluctuate and such fluctuations may be significant. Developments or adverse economic conditions in other emerging market countries have at times resulted in significant outflows of funds from, and declines in the amount of foreign currency invested in, Brazil. The Brazilian economy also is affected by international economic and market conditions generally, especially economic and market conditions in the United States. Share prices on the São Paulo Stock Exchange, for example, have historically been sensitive to fluctuations in U.S. interest rates, as well as movements of the major U.S. stocks indexes.

Following the Providência Acquisition, we have minority shareholders, who may interfere with our business plans and adversely affect our business strategy, or our future operating performance, financial condition, cash flows or results of operations.

Following the completion of the Providência Acquisition, we indirectly own approximately 71.25% of the outstanding capital stock of Providência, and other shareholders unrelated to us own approximately the remaining 28.75%. While we filed the Mandatory Tender Offer registration request with the CVM, as required

under Brazilian law, completion of the Mandatory Tender offer may be delayed due to the ongoing approval process of the CVM, certain minority shareholders may choose not to participate and/or we may incur additional costs in connection with the acquisition of the minority shareholders’ shares. In the event we own less than 100% of Providência, any such minority shareholders may have interests that are contrary to our business plans with respect to Providência, which may include de-listing of Providência’s common stock. In addition, minority shareholders may seek to assert certain rights that they may purport to have under Brazilian law. If we are not able to implement our business plan with respect to Providência, we may incur additional costs. In addition, it could also adversely affect our business strategy, or our future operating performance, financial condition, cash flows or results of operations.

We may not receive dividends from Providência.

According to the bylaws of Providência, the company must pay to its shareholders, including us, at least 25% of its annual net income as dividends, calculated and adjusted pursuant to Brazilian Law No. 6,404 of December 15, 1976, as amended. Providência’s net income may be used to absorb losses or otherwise retained as allowed by Brazilian law, and may not be available to be paid as dividends. In addition, Providência is allowed to suspend the mandatory distribution of dividends in any particular fiscal year if its Board of Directors decides and informs its shareholders that such distribution would negatively impact its financial condition. While we indirectly own approximately 71.25% of the outstanding capital stock of Providência following the completion of the Providência Acquisition, 20% of the Board of Directors will be independent from us, pursuant to applicable Brazilian law.

Risks Related to this Offering and Ownership of Our Common Stock

No market currently exists for our common stock, and an active, liquid trading market for our common stock may not develop, which may cause our common stock to trade at a discount from the initial offering price and make it difficult for you to sell the common stock you purchase.

Prior to this offering, there has not been a public market for our common stock. We cannot predict the extent to which investor interest in the Company will lead to the development of an active trading market on the or otherwise or how active and liquid that market may become. If an active and liquid trading market does not develop or continue, you may have difficulty selling any of our common stock that you purchase. The initial public offering price for the shares will be determined by negotiations between us and the underwriters and may not be indicative of prices that will prevail in the open market following this offering. The market price of our common stock may decline below the initial offering price, and you may not be able to sell your shares of our common stock at or above the price you paid in this offering, or at all.

You will incur immediate and substantial dilution in the net tangible book value of the shares you purchase in this offering.

Prior stockholders have paid substantially less per share of our common stock than the price in this offering. The initial public offering price of our common stock will be substantially higher than the net tangible book value per share of outstanding common stock prior to completion of the offering. Based on our net tangible book value as of September 27, 2014 and upon the issuance and sale of shares of common stock by us at an assumed initial public offering price of $ per share, which is the mid-point of the range set forth on the cover page of this prospectus, if you purchase our common stock in this offering, you will pay more for your shares than the amounts paid by our existing stockholders for their shares and you will suffer immediate dilution of approximately $ per share in net tangible book value. Dilution is the amount by which the offering price paid by purchasers of our common stock in this offering will exceed the pro forma net tangible book value per share of our common stock upon completion of this offering. A total of shares of common stock has been reserved for future issuance under the 2015 Omnibus Incentive Plan. You may experience additional dilution upon future equity issuances or the exercise of stock options to purchase common stock granted to our employees, executive officers and directors under our current and future stock incentive plans, including our 2015 Omnibus Incentive Plan. See “Dilution.”

Our stock price may change significantly following the offering, and you may not be able to resell shares of our common stock at or above the price you paid or at all, and you could lose all or part of your investment as a result.

The trading price of our common stock is likely to be volatile. The stock market recently has experienced extreme volatility. This volatility often has been unrelated or disproportionate to the operating performance of particular companies. We and the underwriters will negotiate to determine the initial public offering price. You may not be able to resell your shares at or above the initial public offering price due to a number of factors such as those listed in “—Risks Related to Our Business” and the following:

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results of operations that vary from the expectations of securities analysts and investors;

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results of operations that vary from those of our competitors;

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changes in expectations as to our future financial performance, including financial estimates and investment recommendations by securities analysts and investors;

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declines in the market prices of stocks generally, particularly those of food distribution companies;

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strategic actions by us or our competitors;

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announcements by us or our competitors of significant contracts, new products, acquisitions, joint marketing relationships, joint ventures, other strategic relationships or capital commitments;

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changes in general economic or market conditions or trends in our industry;

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changes in business or regulatory conditions;

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future sales of our common stock or other securities;

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investor perceptions or the investment opportunity associated with our common stock relative to other investment alternatives;

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the public’s response to press releases or other public announcements by us or third parties, including our filings with the Securities and Exchange Commission (the “SEC”);

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announcements relating to litigation;

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guidance, if any, that we provide to the public, any changes in this guidance or our failure to meet this guidance;

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the development and sustainability of an active trading market for our stock;

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changes in accounting principles; and

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other events or factors, including those resulting from natural disasters, war, acts of terrorism or responses to these events.

These broad industry fluctuations may adversely affect the market price of our common stock, regardless of our actual operating performance. In addition, price volatility may be greater if the public float and trading volume of our common stock is low.

In the past, following periods of market volatility, stockholders have instituted securities class action litigation. If we were involved in securities litigation, it could have a substantial cost and divert resources and the attention of executive management from our business regardless of the outcome of such litigation.

Because we have no current plans to pay cash dividends on our common stock for the foreseeable future, you may not receive any return on investment unless you sell your common stock for a price greater than that which you paid for it.

We intend to retain future earnings, if any, for future operations, expansion, and debt repayment and have no current plans to pay any cash dividends for the foreseeable future. The declaration, amount, and payment of any

future dividends on shares of common stock will be at the sole discretion of our Board of Directors. Our Board of Directors may take into account general and economic conditions, our financial condition, and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax, and regulatory restrictions, implications on the payment of dividends by us to our stockholders or by our subsidiaries to us, and such other factors as our Board of Directors may deem relevant. In addition, our ability to pay dividends is limited by covenants of our existing and outstanding indebtedness and may be limited by covenants of any future indebtedness we or our subsidiaries incur. As a result, you may not receive any return on an investment in our common stock unless you sell our common stock for a price greater than that which you paid for it.

If securities analysts do not publish research or reports about our business or if they downgrade our stock or our sector, our stock price and trading volume could decline.

The trading market for our common stock will rely in part on the research and reports that industry or financial analysts publish about us or our business. We do not control these analysts. Furthermore, if one or more of the analysts who do cover us downgrade our stock or our industry, or the stock of any of our competitors, or publish inaccurate or unfavorable research about our business, the price of our stock could decline. If one or more of these analysts ceases coverage of the Company or fail to publish reports on us regularly, we could lose visibility in the market, which in turn could cause our stock price or trading volume to decline.

Future sales, or the perception of future sales, by us or our existing stockholders in the public market following this offering could cause the market price for our common stock to decline.

After this offering, the sale of shares of our common stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of our common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

Upon consummation of this offering we will have a total of shares of common stock outstanding. All shares sold in this offering will be freely tradable without registration under the Securities Act, and without restriction by persons other than our “affiliates” (as defined under Rule 144 of the Securities Act (“Rule 144”)), including our directors, executive officers and other affiliates (including affiliates of the Sponsor) whose shares may be sold only in compliance with the limitations described in “Shares Eligible for Future Sale.”

The remaining shares, representing % of our total outstanding shares of common stock following this offering based on the number of shares outstanding as of September 27, 2014, will be “restricted securities” within the meaning of Rule 144 and subject to certain restrictions on resale following the consummation of this offering. Restricted securities may be sold in the public market only if they are registered under the Securities Act or are sold pursuant to an exemption from registration such as Rule 144, as described in “Shares Eligible for Future Sale.”

In connection with this offering, we, our directors and executive officers, and holders of substantially all of our common stock have each agreed with the underwriters, subject to certain exceptions, not to dispose of or hedge any of our or their common stock or securities convertible into or exchangeable for shares of common stock during the period from the date of this prospectus continuing through the date 180 days after the date of this prospectus, except with the prior written consent of the representatives of the underwriters. See “Underwriting” for a description of these lock-up agreements.

Upon the expiration of the lock-up agreements described above, shares held by the Investor Group and certain of our directors, officers and employees will be eligible for resale, subject to volume, manner of sale and other limitations under Rule 144. In addition, pursuant to a registration rights agreement, our existing owners have the right, subject to certain conditions, to require us to register the sale of their shares of our common stock

under the Securities Act. By exercising their registration rights and selling a large number of shares, our existing owners could cause the prevailing market price of our common stock to decline. Following completion of this offering, the shares covered by registration rights would represent approximately % of our outstanding common stock (or %, if the underwriters exercise in full their option to purchase additional shares). Registration of any of these outstanding shares of common stock would result in such shares becoming freely tradable without compliance with Rule 144 upon effectiveness of the registration statement. See “Shares Eligible for Future Sale.”

As restrictions on resale end or if these stockholders exercise their registration rights, the market price of our shares of common stock could drop significantly if the holders of these shares sell them or are perceived by the market as intending to sell them. These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of common stock or other securities.

In addition, the shares of our common stock reserved for future issuance under the 2015 Omnibus Incentive Plan will become eligible for sale in the public market once those shares are issued, subject to provisions relating to various vesting agreements, lock-up agreements and Rule 144, as applicable. A total of shares of common stock has been reserved for future issuance under the 2015 Omnibus Incentive Plan. The special pricing committee of the Board of Directors may determine the exact number of shares to be reserved for future issuance under the 2015 Omnibus Incentive Plan at its discretion.

In the future, we may also issue our securities in connection with investments or acquisitions. The amount of shares of our common stock issued in connection with an investment or acquisition could constitute a material portion of our then-outstanding shares of our common stock. Any issuance of additional securities in connection with investments or acquisitions may result in additional dilution to you.

Anti-takeover provisions in our organizational documents could delay or prevent a change of control.

Certain provisions of our amended and restated certificate of incorporation and amended and restated bylaws may have an anti-takeover effect and may delay, defer or prevent a merger, acquisition, tender offer, takeover attempt or other change of control transaction that a stockholder might consider in its best interest, including those attempts that might result in a premium over the market price for the shares held by our stockholders.

These provisions provide for, among other things:

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a classified Board of Directors with staggered three-year terms;

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the ability of our Board of Directors to issue one or more series of preferred stock;

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advance notice for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings;

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certain limitations on convening special stockholder meetings;

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the removal of directors only for cause and only upon the affirmative vote of holders of at least % of the shares of common stock entitled to vote generally in the election of directors if the Sponsor and its affiliates hold less than % of our outstanding shares of common stock; and

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that certain provisions may be amended only by the affirmative vote of at least % of the shares of common stock entitled to vote generally in the election of directors if the Sponsor and its affiliates hold less than % of our outstanding shares of common stock.

These anti-takeover provisions could make it more difficult for a third party to acquire us, even if the third-party’s offer may be considered beneficial by many of our stockholders. As a result, our stockholders may be limited in their ability to obtain a premium for their shares. See “Description of Capital Stock.”

Our amended and restated certificate of incorporation will designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our amended and restated certificate of incorporation will provide that, subject to limited exceptions, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for any (i) derivative action or proceeding brought on behalf of our Company, (ii) action asserting a claim of breach of a fiduciary duty owed by any director or officer of our Company to the Company or the Company’s stockholders, creditors, or other constituents, (iii) action asserting a claim against the Company or any director or officer of the Company arising pursuant to any provision of the General Corporation Law of the State of Delaware (the “DGCL”) or our amended and restated certificate of incorporation or our amended and restated bylaws, or (iv) action asserting a claim against the Company or any director or officer of the Company governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and to have consented to the provisions of our amended and restated certificate of incorporation described above. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and employees. Alternatively, if a court were to find these provisions of our amended and restated certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition.

Affiliates of the Sponsor control us and their interests may conflict with ours or yours in the future.

Immediately following this offering of common stock, affiliates of the Sponsor will beneficially own approximately % of our common stock, or approximately % if the underwriters exercise in full their option to purchase additional shares. As a result, investment funds associated with or designated by affiliates of the Sponsor will have the ability to elect all of the members of our Board of Directors and thereby control our policies and operations, including the appointment of management, future issuances of our common stock or other securities, the payment of dividends, if any, on our common stock, the incurrence or modification of debt by us, amendments to our amended and restated certificate of incorporation and amended and restated bylaws and the entering into of extraordinary transactions, and their interests may not in all cases be aligned with your interests. In addition, the Sponsor may have an interest in pursuing acquisitions, divestitures and other transactions that, in its judgment, could enhance its investment, even though such transactions might involve risks to you. For example, the Sponsor could cause us to make acquisitions that increase our indebtedness or cause us to sell revenue-generating assets.

The Sponsor is in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us.

Our amended and restated certificate of incorporation will provide that none of the Sponsor, any of its affiliates or any director who is not employed by us (including any non-employee director who serves as one of our officers in both his director and officer capacities) or his or her affiliates will have any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which we operate. The Sponsor also may pursue acquisition opportunities that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to us. So long as the Sponsor continues to own a significant amount of our combined voting power, even if such amount is less than 50%, the Sponsor will continue to be able to strongly influence or effectively control our decisions and, so long as the Sponsor and its affiliates collectively own at least 5% of all outstanding shares of our stock entitled to vote generally in the election of directors, it will be able to appoint individuals to our Board of Directors under a stockholders agreement which we expect to adopt in connection with this offering. In addition, the Sponsor will be able to determine the outcome of all matters requiring stockholder approval and will be able to cause or prevent a change of control of the Company or a change in the composition of our Board of Directors and could

preclude any unsolicited acquisition of the Company. The concentration of ownership could deprive you of an opportunity to receive a premium for your shares of common stock as part of a sale of the Company and ultimately might affect the market price of our common stock.

We will be a “controlled company” within the meaning of the rules of the and the rules of the SEC. As a result, we will qualify for, and intend to rely on, exemptions from certain corporate governance requirements that would otherwise provide protection to stockholders of other companies.

After completion of this offering, the Sponsor will continue to control a majority of the voting power of our outstanding common stock. As a result, we will be a “controlled company” within the meaning of the corporate governance standards of the . Under these rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including:

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the requirement that a majority of our Board of Directors consist of “independent directors” as defined under the rules of the ;

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the requirement that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities;

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the requirement that we have a nominating and corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and

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the requirement for an annual performance evaluation of the compensation and nominating and corporate governance committees.

Following this offering, we intend to utilize these exemptions. As a result, we may not have a majority of independent directors, our nominating/corporate governance committee, if any, and compensation committee may not consist entirely of independent directors and such committees will not be subject to annual performance evaluations. Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the .

In addition, on June 20, 2012, the SEC passed final rules implementing provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 pertaining to compensation committee independence and the role and disclosure of compensation consultants and other advisers to the compensation committee. The SEC’s rules direct each of the national securities exchanges (including the on which we intend to list our common stock) to develop listing standards requiring, among other things, that:

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compensation committees be composed of fully independent directors, as determined pursuant to new independence requirements;

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compensation committees be explicitly charged with hiring and overseeing compensation consultants, legal counsel and other committee advisors; and

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compensation committees be required to consider, when engaging compensation consultants, legal counsel or other advisors, certain independence factors, including factors that examine the relationship between the consultant or advisor’s employer and us.

As a “controlled company,” we will not be subject to these compensation committee independence requirements.

Our ability to use our net operating loss carryforwards to offset future taxable income for U.S. federal income tax purposes may be limited as a result of future changes in the ownership of our stock and the absence of taxable income in the United States.

As of December 28, 2013, we had U.S. federal net operating loss carryforwards (“NOLs”), of approximately $320.2 million available to offset future taxable income. A significant portion of these NOLs is currently subject to an annual limitation under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”) and these NOLs have been and will continue to be subject to a valuation allowance in our financial statements. Furthermore, our ability to use our NOLs may be limited if we undergo a future “ownership change,” as defined in Section 382 of the Code, that causes the NOLs to be subject to a greater limitation than the current limitation.

An ownership change could be triggered by substantial changes in the ownership of our outstanding stock. For example, an ownership change would occur if certain shareholders increase their aggregate percentage ownership of our stock by more than 50 percentage points over their lowest percentage ownership at any time during the testing period, which is generally the three-year period preceding any potential ownership change. Although this offering is not expected to cause a change of control for purposes of Section 382 of the Code, future changes in the ownership of our stock could cause an ownership change for purposes of Section 382 of the Code.

The amount of our NOLs has not been audited or otherwise validated by the Internal Revenue Service. The Internal Revenue Service could challenge the amount of our NOLs and other tax assets, which could result in an increase in our liability for income taxes in the future. Further, our NOLs only have value to the extent we generate taxable income in the United States. If we are unable to generate sufficient taxable income prior to the expiration of the NOLs or to the extent our earnings are subject to non-U.S. tax, we will be limited in our ability to utilize the tax benefits related to our NOLs. There can be no assurance that we will have sufficient taxable income to be able to utilize our NOLs prior to their expiration.

We will incur increased costs and obligations as a result of being a public company.

As a public company, we will incur significant legal, accounting, insurance, and other expenses that we have not incurred as a private company, including costs associated with public company reporting requirements. We also will incur costs associated with complying with the requirements of the Sarbanes-Oxley Act of 2002 and related rules implemented by the SEC and . The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. We expect these rules and regulations to increase our legal and financial compliance costs and to make certain activities more time-consuming and costly, although we are currently unable to estimate these costs with any degree of certainty. These laws and regulations could also make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our Board of Directors, our board committees, or as our executive officers. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our common stock, fines, sanctions, other regulatory action, and potentially civil litigation.

FORWARD-LOOKING STATEMENTS

This prospectus contains “forward-looking statements” within the meaning of the federal securities laws. All statements, other than statements of historical facts included in this prospectus, including statements concerning our plans, objectives, goals, beliefs, business strategies, future events, business conditions, our results of operations, financial position and our business outlook, business trends and other information referred to under “Prospectus Summary,” “Risk Factors,” “Dividend Policy,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” are forward-looking statements. When used in this prospectus, the words “anticipate”, “believe”, “estimate”, “expect”, “forecast”, “intend”, “may”, “plans”, “predict”, “project”, “schedule”, “seeks”, “should”, “target” and variations of such words or similar expressions are intended to identify forward-looking statements. The forward-looking statements are not historical facts, and are based upon our current expectations, beliefs, estimates and projections, and various assumptions, many of which, by their nature, are inherently uncertain and beyond our control. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs, estimates and projections will result or be achieved and actual results may vary materially from what is expressed in or indicated by the forward-looking statements.

There are a number of risks, uncertainties and other important factors, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking statements contained in this prospectus. Such risks, uncertainties and other important factors include, among others, the risks, uncertainties and factors set forth above under “Risk Factors,” and the following risks, uncertainties and factors:

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general economic factors including, but not limited to, changes in interest rates, foreign currency translation rates, consumer confidence, trends in disposable income, changes in consumer demand for goods produced, and cyclical or other downturns;

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cost and availability of raw materials, labor and natural and other resources, and our ability to pass raw material cost increases along to customers

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changes to selling prices to customers which are based, by contract, on an underlying raw material index;

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ability to meet existing debt covenants or obtain necessary waivers;

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achievement of objectives for strategic acquisitions and dispositions;

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ability to achieve successful or timely start-up of new or modified production lines;

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reliance on major customers and suppliers;

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domestic and foreign competition;

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information and technological advances;

•

risks related to operations in foreign jurisdictions; and

•

changes in, compliance with, and liabilities under, environmental laws and regulations, including climate change-related legislation and regulation.

USE OF PROCEEDS

We estimate that the net proceeds from our sale of shares of common stock in this offering based on an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, will be approximately $ million (or $ million if the underwriters exercise in full their option to purchase additional shares).

We intend to use a portion of the net proceeds received by us from this offering to redeem a portion of the Senior Secured Notes, which bear interest at 7.75% per annum and mature on February 1, 2019. As of September 27, 2014, the aggregate principal amount outstanding of the Senior Secured Notes was $504.0 million. On and after February 1, 2015 and until February 1, 2016, PGI Group may redeem any or all of the Senior Secured Notes at a redemption price of 103.875%, plus accrued and unpaid interest to the redemption date.

In connection with this offering, we intend to terminate the Advisory Agreement. We will use approximately $ million of the net proceeds to us from this offering to pay a one-time termination fee to affiliates of the Sponsor in connection with the termination of the Advisory Agreement. See “Certain Relationships and Related Party Transactions—Advisory Agreement.”

We intend to use any remaining proceeds received by us from this offering for general corporate purposes.

A $1.00 increase or decrease in the assumed initial public offering price of $ per share would increase or decrease, as applicable, the net proceeds to us from this offering by approximately $ million (or $ million if the underwriters exercise in full their option to purchase additional shares), assuming the number of shares offered by us remains the same as set forth on the cover page of this prospectus and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

DIVIDEND POLICY

We have no current plans to pay dividends on our common stock. Any decision to declare and pay dividends in the future will be made at the sole discretion of our Board of Directors and will depend on, among other things, our results of operations, cash requirements, financial condition, contractual restrictions, and other factors that our Board of Directors may deem relevant. Because we are a holding company and have no direct operations, we will only be able to pay dividends from funds we receive from our subsidiaries. In addition, our ability to pay dividends will be limited by covenants in our existing indebtedness and may be limited by the agreements governing other indebtedness we or our subsidiaries incur in the future. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Indebtedness.”

CAPITALIZATION

The following table sets forth our consolidated cash and cash equivalents and capitalization as of September 27, 2014 on:

•

an actual basis; and

•

an as adjusted basis to give effect to:

•

the sale by us of shares of common stock in this offering at an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus; and

•

the application of net proceeds from this offering as described under “Use of Proceeds,” as if this offering and the application of the net proceeds therefrom had occurred on September 27, 2014.

You should read this table in conjunction with the information contained in “Use of Proceeds,” “Selected Historical Consolidated Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as our audited and unaudited consolidated financial statements included elsewhere in this prospectus and the notes thereto included elsewhere in this prospectus.


	As of September 27, 2014
	Actual			As Adjusted(1)
	(dollars in thousands)* (unaudited)
Cash and cash equivalents	$	182,683		$

Short-term borrowings(2)	$	15,802
Long-term debt, including current portion:
ABL Facility(3)		—
Term Loans		706,510
Senior Secured Notes		504,000
Senior Unsecured Notes		210,000
Other existing debt and capital lease obligations(4)		55,067

Total short-term borrowings and long-term debt, including current portion		1,491,379
Deferred Purchase Price(5)		44,791
Redeemable noncontrolling interest(6)		93,645
Equity:
Common stock, $0.01 par value, 1,000,000 shares authorized, actual; 292,491 shares issued and outstanding, actual; shares authorized, as adjusted; and shares issued and outstanding, as adjusted)(7)		3
Additional paid-in capital		293,714
Retained earnings (deficit)		(211,514	)
Accumulated other comprehensive income (loss)		(37,146	)

Total PGI Specialty Materials, Inc. shareholders’ equity		45,057
Noncontrolling interest(8)		641

Total equity		45,698

Total capitalization(9)	$	1,675,513		$

*	Amounts may reflect rounding.

(1)	Each $1.00 increase or decrease in the assumed initial public offering price of $ per share would increase or decrease, as applicable, cash and cash equivalents, additional paid-in capital and total

shareholders’ equity by approximately $ million, assuming the number of shares offered by us remains the same as set forth on the cover page of this prospectus and after deducting the estimated underwriting discounts and commissions and estimated offering expenses that we must pay.

(2)	Represents $15.4 million under short-term credit facilities used to finance short-term working capital needs and $0.4 million of short-term indebtedness of Terram Geosynthetics.

(3)	As of September 27, 2014, we had $42.6 million of availability under our ABL Facility, after giving effect to $19.3 million issued but undrawn letters of credit. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Indebtedness—ABL Facility.”

(4)

Actual column represents (i) $5.8 million outstanding under our Argentina—Nacion facility; (ii) $2.4 million outstanding under our Argentina—Galicia facility; (iii) $22.4 million outstanding under our China Hygiene facility; (iv) $2.8 million indebtedness of Terram Geosynthetics; (v) $0.9 million of capital lease obligations; and (vi) $20.7 million of indebtedness of Providência that remains outstanding after the completion of the Providência Acquisition, comprised of (a) $0 million in respect of a U.S. dollar-denominated export credit facility and (b) $20.7 million in respect of a Brazilian real-denominated export credit facility.

(5)

Reflects $44.8 million in respect of the Deferred Purchase Price for Providência (see “Business—Expansion and Optimization—Providência Acquisition”), which is treated as “Indebtedness” under the indentures governing the Senior Secured Notes and the Senior Unsecured Notes and the credit agreements governing our ABL Facility and Term Loan Facility.

(6)

(7)

The number of shares of our common stock to be outstanding immediately after the consummation of this offering is based on 292,491 shares of common stock outstanding as of September 27, 2014, plus shares of common stock to be sold by the Company in this offering, and does not give effect to shares of common stock reserved for future issuance under the 2015 Omnibus Incentive Plan or shares of common stock issued in connection with our long-term incentive compensation program after September 27, 2014.

(8)	Noncontrolling interest represent the minority partners’ interest in the income or loss of Terram Geosynthetics Private Limited, a joint venture located in Gujarat, India, in which we maintain a 65% controlling interest.

(9)

Does not reflect (i) our future minimum rental payments required under operating lease obligations, (ii) our financing obligation related to the Old Hickory facility acquired in the Fiberweb Acquisition, which had an outstanding balance as of September 27, 2014 of $18.9 million or (iii) $12.2 million of undrawn letters of credit to raw material vendors outstanding as of September 27, 2014. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Indebtedness.”

DILUTION

If you invest in shares of our common stock in this offering, your investment will be immediately diluted to the extent of the difference between the initial public offering price per share of common stock and the net tangible book value per share of common stock after this offering. Dilution results from the fact that the per share offering price of the shares of common stock is substantially in excess of the net tangible book value per share attributable to the shares of common stock held by existing owners.

Our net tangible book value as of September 27, 2014 was a deficit of approximately $234.4 million, or $ per share of common stock. We calculate net tangible book value per share by taking the amount of our total tangible assets, reduced by the amount of our total liabilities, and then dividing that amount by the total number of shares of common stock outstanding.

Dilution is determined by subtracting pro forma net tangible book value per share of common stock, as adjusted to give effect to this offering, from the initial public offering price per share of common stock.

After giving effect to our sale of the shares in this offering at an assumed initial public offering price of $ per share, the midpoint range described on the cover of this prospectus, and after deducting estimated underwriting discounts and commissions and offering expenses payable by us, our net tangible book value as of September 27, 2014 would have been $ , or $ per share of common stock. This represents an immediate increase in net tangible book value of $ per share of common stock to our existing owners and an immediate and substantial dilution in net tangible book value of $ per share of common stock to investors in this offering at the assumed initial public offering price.

The following table illustrates this dilution on a per share of common stock basis assuming the underwriters do not exercise their option to purchase additional shares of common stock:


Assumed initial public offering price per share of common stock		$
Net tangible book value per share of common stock as of September 27, 2014		$
Increase in net tangible book value per share of common stock attributable to investors in this offering		$

As adjusted net tangible book value per share of common stock after the offering		$

Dilution per share of common stock to investors in this offering		$

A $1.00 increase in the assumed initial public offering price of $ per share of our common stock would increase our net tangible book value after giving to the offering by $ million, or by $ per share of our common stock, assuming the number of shares offered by us remains the same and after deducting the underwriting discount and the estimated offering expenses payable by us. A $1.00 decrease in the assumed initial public offering price per share would result in equal changes in the opposite direction.

The following table summarizes, as of September 27, 2014, the total number of shares of common stock purchased from us, the total cash consideration paid to us, and the average price per share paid by existing owners and by new investors. As the table shows, new investors purchasing shares in this offering will pay an average price per share substantially higher than our existing owners paid. The table below assumes an initial public offering price of $ per share, the midpoint of the range set forth on the cover of this prospectus, for shares purchased in this offering and excludes underwriting discounts and commissions and estimated offering expenses payable by us:

Shares of Common
Stock Purchased

Total
Consideration

Average
Price Per
Share of
Common
Stock

Number

Percent

Amount

Percent

(Dollar amounts in thousands,
except per share amounts)

Existing owners

Investors in this offering

Total

Each $1.00 increase in the assumed offering price of $ per share would increase total consideration paid by investors in this offering and total consideration paid by all stockholders by $ million, assuming the number of shares offered by us remains the same and after deducting the underwriting discount and the estimated offering expenses payable by us. A $1.00 decrease in the assumed initial public offering price per share would result in equal changes in the opposite direction.

The dilution information above is for illustration purposes only. Our net tangible book value following the consummation of this offering is subject to adjustment based on the actual initial public offering price of our shares and other terms of this offering determined at pricing.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The unaudited pro forma condensed combined financial information herein is based upon the historical consolidated financial statements and/or financial information of the Company, Fiberweb and Providência and has been prepared to illustrate the effects of the Transactions as well as the effects of the Offering.

The accompanying unaudited pro forma condensed combined statements of operations for the nine months ended September 27, 2014, the year ended December 28, 2013 and the nine months ended September 28, 2013 have been prepared to give pro forma effect to the Transactions and the Offering as if they had occurred on December 30, 2012. Since the most recent balance sheet presented in this prospectus as of September 27, 2014 includes the impact of the Transactions, a pro forma balance sheet as of September 27, 2014 has not been presented.

The following unaudited pro forma condensed combined financial information includes only adjustments that are directly attributable to the Transactions and the Offering, factually supportable and, with respect to the statements of operations, expected to have a continuing impact on the combined results. The Fiberweb Acquisition and the Providência Acquisition have been accounted using the acquisition method of accounting in accordance with ASC 805. ASC 805 requires, among other things, that the assets acquired and liabilities assumed be recognized at their acquisition date fair values, with any excess of the consideration transferred over the estimated fair values of the identifiable net assets acquired recorded as goodwill. As of the date of this prospectus, the Company has not completed the detailed valuation work necessary to arrive at the required estimates of the fair value of the Providência assets acquired and the liabilities assumed and the related allocation of purchase price. Accordingly, the unaudited pro forma condensed combined financial statements are based on preliminary estimates and assumptions. The preliminary allocation reflects management’s best estimates of fair value, which are based on certain assumptions relating to the Providência Acquisition, including prior acquisition experience, benchmarking of similar acquisitions and historical data. In addition, portions of the preliminary allocation are dependent upon certain valuations and other studies that have yet to commence or progress to a stage where there is sufficient information for a definitive measurement. Upon completion of detailed valuation studies and the final determination of fair value, the Company may make additional adjustments to the fair value allocation, which may differ significantly from the valuations set forth in the unaudited pro forma condensed combined financial information.

The unaudited pro forma condensed combined financial information has been presented for informational purposes only and is not necessarily indicative of what the combined company’s results of operations actually would have been had the Transactions and the Offering, as applicable, been completed as of the dates indicated, nor is it necessarily indicative of future operating results of the combined company. As a result, the pro forma condensed combined statements of operations have not been adjusted to reflect future events that may have occurred after the Transactions and/ or that are expected to occur after the Offering, including, but not limited to, the anticipated realization of ongoing savings from operating synergies and certain one-time charges we expect to incur in connection with the Fiberweb Acquisition and Providência Acquisition, including but not limited to, costs in connection with the integration of the operations of the Company, Fiberweb, and Providência.

The information presented below should be read in conjunction with information included under the headings “Summary,” “Capitalization,” “Selected Historical Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical financial statements of the Company, Fiberweb, and Providência, including the related notes, included elsewhere in this prospectus. All pro forma adjustments and their underlying assumptions are described more fully in the notes to our unaudited pro forma condensed combined financial information.

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Nine Months Ended September 27, 2014


	PGI Specialty Materials, Inc.			Fiberweb Pro Forma Adjustments (Note 2 (b))			Providência GAAP (Note 3 (a) (i))			Providência Pro Forma Adjustments (Note 3 (b))			Offering Adjustments (Note 4)	Pro Forma, Combined
	in thousands, except share and per share data
Net sales	$	1,360,495		$	—		$	145,764		$	—		$	$	1,506,259
Cost of goods sold		(1,118,952	)		2,429			(123,550	)		3,238				(1,236,835	)

Gross profit		241,543			2,429			22,214			3,238				269,424
Selling, general and administrative expenses		(185,499	)		—			(26,754	)		652				(211,601	)
Special charges, net		(47,868	)		378			(8,728	)		24,494				(31,724	)
Other operating, net		(2,658	)		—			(1,501	)		—				(4,159	)

Operating income (loss)		5,518			2,807			(14,769	)		28,384				21,940
Other income (expense):
Interest expense		(67,605	)		—			(5,782	)		(9,242	)			(82,629	)
Debt modification and extinguishment costs		(15,725	)		—			—			13,138				(2,587	)
Foreign currency and other, net		(11,626	)		—			631			(16,552	)			(27,547	)

Income (loss) before income taxes		(89,438	)		2,807			(19,920	)		15,728				(90,823	)
Income tax (provision) benefit		850			(251	)		(1,307	)		(5,524	)			(6,232	)

Net income (loss)		(88,588	)		2,556			(21,227	)		10,204				(97,055	)
Less:
Earnings attributable to noncontrolling interest and redeemable noncontrolling interest		(4,216	)		—			(6,103	)		424				(9,895	)

Net income (loss) attributable to PGI Specialty Materials, Inc.	$	(84,372	)	$	2,556		$	(15,124	)	$	9,780		$	$	(87,160	)

Basic and diluted income (loss) per share	$	(304.10	)

Weighted average common shares outstanding, basic and diluted		292,074

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

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Fiscal Year Ended December 28, 2013


	PGI Specialty Materials, Inc.			Fiberweb GAAP (Note 2 (a) (i))			Fiberweb Pro Forma Adjustments (Note 2 (b))			Providência GAAP (Note 3 (a) (ii))			Providência Pro Forma Adjustments (Note 3 (b))			Offering Adjustments (Note 4)	Pro Forma, Combined
				in thousands, except share and per share data
Net sales	$	1,214,862		$	397,647		$	—		$	360,205		$	—		$	$	1,972,714
Cost of goods sold		(1,018,806	)		(312,262	)		7,366			(279,780	)		(3,612	)			(1,607,094	)

Gross profit		196,056			85,385			7,366			80,425			(3,612	)			365,620
Selling, general and administrative expenses		(153,188	)		(70,532	)		(3,021	)		(56,689	)		1,198				(282,232	)
Special charges, net		(33,188	)		(15,538	)		21,540			—			—				(27,186	)
Other operating, net		(2,512	)		2,009			—			(131	)		—				(634	)

Operating income (loss)		7,168			1,324			25,885			23,605			(2,414	)			55,568
Other income (expense):
Interest expense		(55,974	)		(3,126	)		(13,194	)		(15,068	)		(19,048	)			(106,410	)
Debt modification and extinguishment costs		(3,334	)		—			3,334			—			—				—
Foreign currency and other, net		(8,851	)		—			—			(3,838	)		(6,521	)			(19,210	)

Income (loss) before income taxes		(60,991	)		(1,802	)		16,025			4,699			(27,983	)			(70,052	)
Income tax (provision) benefit		36,024			(3,501	)		(5,899	)		(1,799	)		9,828				34,653

Net income (loss)		(24,967	)		(5,303	)		10,126			2,900			(18,155	)			(35,399	)
Less: Earnings attributable to noncontrolling interest and redeemable noncontrolling interest		(34	)		(127	)		—			834			(5,220	)			(4,547	)

Net income (loss) attributable to PGI Specialty Materials, Inc.	$	(24,933	)	$	(5,176	)	$	10,126		$	2,066		$	(12,935	)	$	$	(30,852	)

Basic and diluted income (loss) per share	$	(94.09	)

Weighted average common shares outstanding, basic and diluted		264,998

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

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Nine Months Ended September 28, 2013


	PGI Specialty Materials, Inc.			Fiberweb GAAP (Note 2 (a) (ii))			Fiberweb Pro Forma Adjustments (Note 2 (b))			Providência GAAP (Note 3 (a) (iii))			Providência Pro Forma Adjustments (Note 3 (b))			Offering Adjustments (Note 4)	Pro Forma, Combined
				in thousands, except share and per share data
Net sales	$	867,599		$	340,906		$	—		$	265,463		$	—		$	$	1,473,968
Cost of goods sold		(723,143	)		(265,140	)		66			(203,028	)		(2,709	)			(1,193,954	)

Gross profit		144,456			75,766			66			62,435			(2,709	)			280,014
Selling, general and administrative expenses		(107,176	)		(59,857	)		(2,566	)		(42,932	)		904				(211,627	)
Special charges, net		(10,647	)		(9,936	)		7,443			—			—				(13,140	)
Other operating, net		(1,975	)		2,084			—			395			—				504

Operating income (loss)		24,658			8,057			4,943			19,898			(1,805	)			55,751
Other income (expense):
Interest expense		(37,592	)		(2,153	)		(13,056	)		(9,214	)		(16,425	)			(78,440	)
Debt modification and extinguishment costs		—			—			—			—			—				—
Foreign currency and other, net		(22	)		—			—			(3,568	)		(3,216	)			(6,806	)

Income (loss) before income taxes		(12,956	)		5,904			(8,113	)		7,116			(21,446	)			(29,495	)
Income tax (provision) benefit		(9,444	)		(4,167	)		3,024			(2,469	)		7,532				(5,524	)

Net income (loss)		(22,400	)		1,737			(5,089	)		4,647			(13,914	)			(35,019	)
Less: Earnings attributable to noncontrolling interest and redeemable noncontrolling interest		—			87			—			1,336			(4,000	)			(2,577	)

Net income (loss) attributable to PGI Specialty Materials, Inc.	$	(22,400	)	$	1,650		$	(5,089	)	$	3,311		$	(9,914	)	$	$	(32,442	)

Basic and diluted income (loss) per share	$	(85.79	)

Weighted average common shares outstanding, basic and diluted		261,111

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

Notes to Unaudited Pro Forma Condensed Combined Financial Information

Note 1. Basis of Presentation

The unaudited pro forma condensed combined financial information herein is based upon the historical consolidated financial statements of the Company, Fiberweb and Providência and has been prepared to illustrate the effects of the Transactions and the Offering in accordance with GAAP and pursuant to Article 11 of Regulation S-X as if they had occurred on December 30, 2012.

The following unaudited pro forma condensed combined financial statements give effect to the Fiberweb Acquisition and the Providência Acquisition under the acquisition method of accounting in accordance with ASC 805. ASC 805 requires, among other things, that the assets acquired and liabilities assumed be recognized at their acquisition date fair values, with any excess of the consideration transferred over the estimated fair values of the identifiable net assets acquired recorded as goodwill. As of the date of this prospectus, the Company has not completed the detailed valuation work necessary to arrive at the required estimates of the fair value of the Providência assets acquired and the liabilities assumed and the related allocation of purchase price. Accordingly, the unaudited pro forma condensed combined financial statements are based on preliminary estimates and assumptions. The preliminary allocation reflects management’s best estimates of fair value, which are based on certain assumptions relating to the Providência Acquisition, including prior acquisition experience, benchmarking of similar acquisitions and historical data. In addition, portions of the preliminary allocation are dependent upon certain valuations and other studies that have yet to commence or progress to a stage where there is sufficient information for a definitive measurement. Upon completion of detailed valuation studies and the final determination of fair value, the Company may make additional adjustments to the fair value allocation, which may differ significantly from the valuations set forth in the unaudited pro forma condensed combined financial information.

For purposes of measuring the estimated fair value, where applicable, of the assets acquired and the liabilities assumed as reflected in the unaudited pro forma condensed combined financial information, the Company has applied the guidance in ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), which establishes a framework for measuring fair value. In accordance with ASC 820, fair value is an exit price and is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” Under ASC 805, acquisition-related transaction costs and acquisition-related restructuring charges are not included as components of consideration transferred but are accounted for as expenses in the period in which the costs are incurred.

Following the Providência Acquisition, we indirectly own approximately 71.25% of the outstanding capital stock of Providência. As required by Brazilian law, we intend to launch, subject to CVM approval, the Mandatory Tender Offer. While we intend to acquire the remaining outstanding capital stock of Providência pursuant to the Mandatory Tender Offer, there is no assurance that we will be able to do so. If we do acquire more shares, our combined statements of operations will reflect lower earnings attributable to noncontrolling interest and to redeemable noncontrolling interest for the percentage of Providência capital stock that we acquire. For the purposes of the following unaudited pro forma condensed combined financial information, we have assumed that we only own approximately 71.25% of the outstanding capital stock of Providência.

The historical financial statements of Fiberweb and Providência have been prepared in accordance with IFRS as issued by the IASB. Any measurement differences in accounting principles between IFRS and GAAP as they apply to Fiberweb or Providência have been adjusted to reflect such results in accordance with GAAP. Adjustments have also been made to conform Fiberweb and Providência’s accounting policies to the Company’s. In addition, Fiberweb and Providência have historically reported their financial statements in their local currency, the British pounds sterling (“GBP” or £) and the Brazilian Real (“BRL” or R$), respectively. In order to present the pro forma condensed combined financial statements in U.S. dollars, each of Fiberweb and Providência’s statement of operations have been translated using the weighted-average exchange rate for the applicable currency and for the applicable period.

The unaudited pro forma condensed combined financial information does not reflect ongoing cost savings that the Company expects to achieve as a result of the Fiberweb and Providência acquisitions or the costs necessary to achieve these costs savings or synergies.

Note 2. Fiberweb Acquisition

(a) Fiberweb GAAP

Financial information reported under the column heading “Fiberweb GAAP” represents Fiberweb’s unaudited historical financial information prepared in accordance with IFRS (“Fiberweb As Reported”) prior to the Fiberweb Acquisition, translated from Fiberweb’s local currency, the British pounds sterling, to the U.S. dollar (“Fiberweb Translated”) and adjusted to reflect Fiberweb’s financial information on a GAAP basis and in accordance with the Company’s accounting policies (“Fiberweb GAAP Adjustments”). These Fiberweb GAAP Adjustments are unaudited. A reconciliation of Fiberweb’s As Reported financial information to amounts presented in the unaudited pro forma condensed combined statement of operations under the column heading “Fiberweb GAAP” is as follows:

(i)

Period Ended November 14, 2013

A reconciliation of Fiberweb’s As Reported financial information to amounts presented in the unaudited pro forma condensed combined statement of operations under the column heading “Fiberweb GAAP Adjustments” for the period January 1, 2013 through November 14, 2013 is as follows:

Fiberweb

Consolidated Statement of Operations

IFRS to GAAP Reconciliation

For the Period Ended November 14, 2013


	Fiberweb As Reported (GBP)(A)			Fiberweb Translated (USD)(B)			Fiberweb GAAP Adjustments (USD)				Fiberweb GAAP (USD)
	in thousands
Net sales	£	253,997		$	397,404		$	243		F	$	397,647
Cost of goods sold		(199,985	)		(312,897	)		635		C, D, F		(312,262	)

Gross profit		54,012			84,507			878				85,385
Selling, general and administrative expenses		(45,274	)		(70,836	)		304		D, F		(70,532	)
Special charges, net		(31,870	)		(49,864	)		34,326		E		(15,538	)
Other operating, net		1,459			2,283			(274	)	F		2,009

Operating income (loss)		(21,673	)		(33,910	)		35,234				1,324
Other income (expense):
Interest expense		(1,128	)		(1,765	)		(1,361	)	C, D		(3,126	)
Foreign currency and other, net		—			—			—				—

Income (loss) before income taxes		(22,801	)		(35,675	)		33,873				(1,802	)
Income tax (provision) benefit		(2,347	)		(3,672	)		171		G		(3,501	)

Net income (loss)		(25,148	)		(39,347	)		34,044				(5,303	)
Less: Noncontrolling interest		(81	)		(127	)		—				(127	)

Net income (loss) attributable to Fiberweb	£	(25,067	)	$	(39,220	)	$	34,044			$	(5,176	)

The following is a summary of the adjustments reflected in the above IFRS to GAAP Reconciliation:

Represents historical financial information of Fiberweb prepared in accordance with IFRS for the period January 1, 2013 through November 14, 2013, the date of the Fiberweb Acquisition, and presented on a consistent format with the Company’s financial statement presentation.

Historical financial information of Fiberweb has been translated to U.S. dollars using the weighted-average rate of £1.00 to $1.5646 for the period January 1, 2013 through November 14, 2013.

The Company has adjusted Property, plant and equipment for a transaction historically recorded by Fiberweb as a sale/leaseback under IFRS whereby the assets were excluded from Fiberweb’s balance sheet and monthly lease payment were recorded as rent expense. However, under GAAP the transaction would not qualify as a sale leaseback, due to continuing involvement with the property; accordingly, the Company recognized the asset and a related financing obligation. As such, the related impacts resulted in a $1.2 million decrease to Cost of goods sold and a $1.6 million increase to Interest expense.

Under IFRS, actuarial gains and losses related to employee benefit plans are recognized immediately in other comprehensive income, whereas these gains and losses are deferred in Accumulated other comprehensive income (loss) using a corridor approach under GAAP and amortized into the statement of operations in a systematic fashion. The related impacts increased Cost of goods sold by $0.2 million and decreased Selling, general and administrative expenses and Interest expense by $1.8 million and $0.2 million, respectively.

During the period ended November 14, 2013, Fiberweb recorded a goodwill impairment charge in accordance with IFRS. However, due to the differences in the impairment testing methodology, under GAAP, an impairment charge would not have been recognized and therefore an adjustment in the amount of $34.3 million was recorded within Special charges, net to reverse the impairment charge recorded under IFRS.

The historical financial information of Fiberweb presented has been adjusted by reclassifying certain line items in order to conform to the Company’s financial statement presentation and by recording certain adjustments to align accounting policies. Specifically, reclassifications were made to increase Net sales by $0.2 million, decrease Cost of goods sold by $0.1 million and increase Other operating, net by $0.3 million. In addition, adjustments were made to align Fiberweb’s accounting policies to the Company’s as it relates to thresholds for capitalizing expenditures, policies for warranties, inventory and bad debt reserves, and accounting for spare parts inventory. The aggregate impact of aligning accounting policies resulted in an increase in Cost of goods sold and Selling, general and administrative expenses by $0.5 million and $1.5 million, respectively.

Adjustment reflects the tax effects of the Fiberweb GAAP Adjustments calculated at the statutory rates in effect in each significant jurisdiction for the time periods presented. This rate does not reflect Fiberweb’s effective tax rate, which includes other tax items, such as state and foreign taxes, as well as other tax charges or benefits, and does not take into account any historical or possible future tax events that may impact Fiberweb.

(ii)

Nine Months Ended September 28, 2013

Fiberweb

Consolidated Statement of Operations

IFRS to GAAP Reconciliation

For the Nine Months Ended September 28, 2013


	Fiberweb As Reported (GBP)(A)			Fiberweb Translated (USD)(B)			Fiberweb GAAP Adjustments (USD)				Fiberweb GAAP (USD)
	in thousands
Net sales	£	220,344		$	340,663		$	243		F	$	340,906
Cost of goods sold		(171,792	)		(265,599	)		459		C, D, F		(265,140	)

Gross profit		48,552			75,064			702				75,766
Selling, general and administrative expenses		(38,913	)		(60,161	)		304		D, F		(59,857	)
Special charges, net		(28,366	)		(43,855	)		33,919		E		(9,936	)
Other operating, net		1,525			2,358			(274	)	F		2,084

Operating income (loss)		(17,202	)		(26,594	)		34,651				8,057
Other income (expense):
Interest expense		(659	)		(1,019	)		(1,134	)	C, D		(2,153	)
Foreign currency and other, net		—			—			—				—

Income (loss) before income taxes		(17,861	)		(27,613	)		33,517				5,904
Income tax (provision) benefit		(2,793	)		(4,318	)		152		G		(4,167	)

Net income (loss)		(20,654	)		(31,931	)		33,669				1,738
Less: Noncontrolling interest		56			87			—				87

Net income (loss) attributable to Fiberweb	£	(20,710	)	$	(32,018	)	$	33,669			$	1,651

The following is a summary of the adjustments reflected in the above IFRS to GAAP Reconciliation:

Represents historical financial information of Fiberweb prepared in accordance with IFRS for the period January 1, 2013 through September 28, 2013, the date of the Fiberweb Acquisition, and presented on a consistent format with the Company’s financial statement presentation.

Historical financial information of Fiberweb has been translated to U.S. dollars using the weighted-average rate of £1.00 to $1.5461 for the period January 1, 2013 through September 28, 2013.

The Company has adjusted Property, plant and equipment for a transaction historically recorded by Fiberweb as a sale/leaseback under IFRS whereby the assets were excluded from Fiberweb’s balance sheet and monthly lease payment were recorded as rent expense. However, under GAAP the transaction would not qualify as a sale leaseback, due to continuing involvement with the property; accordingly, the Company recognized the asset and a related financing obligation. As such, the related impacts resulted in a $1.1 million decrease to Cost of goods sold and a $1.4 million increase to Interest expense.

Under IFRS, actuarial gains and losses related to employee benefit plans are recognized immediately in other comprehensive income, whereas these gains and losses are deferred in Accumulated other comprehensive income (loss) using a corridor approach under GAAP and amortized into the statement of operations in a systematic fashion. The related impacts increased Cost of goods sold by $0.2 million and decreased Selling, general and administrative expenses and Interest expense by $1.8 million and $0.3 million, respectively.

During the period ended September 28, 2013, Fiberweb recorded a goodwill impairment charge in accordance with IFRS. However, due to the differences in the impairment testing methodology, under GAAP, an impairment charge would not have been recognized and therefore an adjustment in the amount of $33.9 million was recorded within Special charges, net to reverse the impairment charge recorded under IFRS.

The historical financial information of Fiberweb presented has been adjusted by reclassifying certain line items in order to conform to the Company’s financial statement presentation and by recording certain adjustments to align accounting policies. Specifically, reclassifications were made to increase Net sales by $0.2 million, decrease Cost of goods sold by $0.1 million and increase Other operating, net by $0.3 million. In addition, adjustments were made to align Fiberweb’s accounting policies to the Company’s as it relates to thresholds for capitalizing expenditures, policies for warranties, inventory and bad debt reserves, and accounting for spare parts inventory. The aggregate impact of aligning accounting policies resulted in an increase in Cost of goods sold and Selling, general and administrative expenses by $0.5 million and $1.5 million, respectively.

(b) Fiberweb Pro Forma Adjustments

The allocation of the purchase price of the Fiberweb Acquisition is as follows:


In thousands	November 15, 2013
Cash	$	8,792
Accounts receivable		49,967
Inventory		71,081
Other current assets		29,889

Total current assets		159,729

Property, plant and equipment		187,529
Goodwill		33,699
Intangible assets		85,996
Other noncurrent assets		1,403

Total assets acquired	$	468,356

Current liabilities	$	84,255
Debt		19,391
Financing obligation		20,300
Deferred income taxes		45,974
Other noncurrent liabilities		9,825
Noncontrolling interest		849

Total liabilities assumed	$	180,594

Net assets acquired	$	287,762

The following is a summary of the material adjustments for amounts reported in the unaudited pro forma condensed combined statements of operations under the “Fiberweb Pro Forma Adjustments” column heading for the nine months ended September 27, 2014, the year ended December 28, 2013 and the nine months ended September 28, 2013:

Cost of goods sold—The net adjustment to Cost of goods sold is calculated as follows (dollars in millions):


	Nine Months Ended September 27, 2014		Fiscal Year Ended December 28, 2013		Nine Months Ended September 28, 2013
Reversal of inventory step-up impact(1)	$	2.4	$	7.3	$	—
Pro forma adjustment to depreciation expense of property, plant and equipment(2)		—		0.1		0.1

Pro forma adjustment to *Cost of goods sold*	$	2.4	$	7.4	$	0.1

(1)

At acquisition, assets and liabilities of an acquired business are recognized at fair value. Inventory is valued at net realizable value which is the estimated selling price, less the sum of (a) cost of completion and (b) a reasonable profit margin for the selling effort. Based upon a valuation analysis, the fair value of acquired inventory related to the Fiberweb Acquisition was $71.1 million resulting in a $9.7 million step-up in inventory value, which was amortized into earnings over the period of the Company’s normal inventory turns, which approximated two months. This adjustment reverses the impact of the purchase accounting adjustment, which was recorded in the historical amounts, as this amount is directly related to the Fiberweb Acquisition and not expected to have a continuing impact on the Company.

(2)

Adjustment represents the depreciation expense for the period prior to the date of the Fiberweb Acquisition, associated with the change in fair value of the property, plant and equipment recorded in relation to the Fiberweb Acquisition. Based upon a valuation analysis, the fair value of acquired property, plant and equipment was $187.5 million.

For the period ended November 14, 2013, and the nine months ended September 28, 2013, a pro forma adjustment to decrease depreciation expense of $0.1 million was recorded and calculated as follows (dollars in millions):


Property, plant and equipment, net	Estimated Useful Lives (Years)	Estimated Fair Value		Depreciation Expense for the Period Ended November 14, 2013			Depreciation Expense for the Nine Months Ended September 28, 2013
Land	Indefinite	$	22.8	$	—		$	—
Buildings and land improvements	5-37		40.5		4.7			4.0
Machinery, equipment and other	2-18		113.2		13.9			12.0
Construction in progress	NA		11.0		—			—

Total		$	187.5	$	18.6		$	16.0

Less: Fiberweb historical depreciation expense					18.7			16.1

Pro forma adjustment to depreciation expense of property, plant and equipment				$	(0.1	)	$	(0.1	)

Selling, general and administrative expense—Adjustment represents the amortization expense for the period prior to the date of the Fiberweb Acquisition associated with the change in fair value of the intangible assets recorded in relation to the Fiberweb Acquisition. Based upon a valuation analysis, the fair value of acquired intangible assets was $86 million. For the period ended November 14, 2013, and the nine months ended September 28, 2013, a pro forma adjustment for amortization expense represented approximately $3.0 million and $2.6 million respectively, which was calculated as follows (dollars in millions):


Intangible assets, net	Estimated Useful Lives (Years)	Estimated Fair Value		Amortization Expense for the Period Ended November 14, 2013			Amortization Expense for the Nine Months Ended September 28, 2013
Technology	15	$	31.8	$	1.8		$	1.6
Trade names	Indefinite		11.4		—			—
Customer relationships	20		42.8		1.9			1.6

Total		$	86.0	$	3.7		$	3.2

Less: Fiberweb historical amortization expense					0.7			0.6

Pro forma adjustment to amortization expense of intangible assets				$	(3.0	)	$	(2.6	)

Special charges—The net adjustment to Special charges is calculated as follows (dollars in millions):


	Nine Months Ended September 27, 2014		Fiscal Year Ended December 28, 2013		Nine Months Ended September 28, 2013
Acquisition-related costs associated with the Fiberweb Acquisition incurred by the Company(1)	$	0.4	$	15.4	$	5.2
Acquisition-related costs associated with the Fiberweb Acquisition incurred by Fiberweb(2)		—		6.1		2.2

Pro forma adjustment to *Special charges*	$	0.4	$	21.5	$	7.4

(1)

Adjustment represents the removal of $0.4 million, $15.4 million and $5.2 million of acquisition-related costs incurred by the Company associated with the Fiberweb Acquisition during the nine months ended September 27, 2014, for the year ended December 28, 2013, and during the nine months ended September 28, 2013, respectively, as such amounts are directly attributable to the Fiberweb Acquisition and will not have a continuing impact on the combined results.

(2)

Adjustment represents the removal of $6.1 million and $2.2 million of acquisition-related costs incurred by Fiberweb associated with the Fiberweb Acquisition during the period ended November 14, 2013, and during the nine months ended September 28, 2013, respectively, as such amounts are directly attributable to the Fiberweb Acquisition and will not have a continuing impact on the combined results.

Interest expense—Adjustment reflects the estimated interest expense that would have been incurred by the Company during the historical periods presented assuming the Transactions had occurred as of December 30, 2012 (dollars in millions):


	Fiscal Year Ended December 28, 2013			Nine Months Ended September 28, 2013
Reversal of Fiberweb’s historical interest expense, including amortization of debt issuance costs, related to debt not assumed for the period January 1, 2013 through November 14, 2013 and September 28, 2013, respectively	$	0.5		$	0.4
Reversal of interest expense, including amortization of debt issuance costs, related to the extinguishment of the Company’s Bridge Facilities for the period November 27, 2013 through December 19, 2013(1)		3.9			N/A
Amortization of capitalized debt issuance costs related to the Term Loans for the period December 30, 2012 through December 18, 2013 and September 28, 2013, respectively(2)		(2.6	)		(2.0	)
Estimated interest expense on Term Loans at 5.25% for the period December 30, 2012 through December 18, 2013 and September 28, 2013, respectively(1)		(15.0	)		(11.5	)

Pro forma adjustment to *Interest expense*	$	(13.2	)	$	(13.1	)

(1)

On November 27, 2013, we borrowed $318 million under the Bridge Facilities. On December 19, 2013, we entered into the Term Loans with a maturity date upon the earlier of (i) six years from the date of borrowing and (ii) the 91st day prior to the scheduled maturity of our 7.75% Senior Secured Notes; provided that on such 91st day, our 7.75% Senior Secured Notes have an outstanding aggregate principal amount in excess of $150.0 million. The Term Loans were borrowed in an aggregate amount of $295.0 million, the proceeds of which were used, together with the Equity Contribution, to repay in full the amounts outstanding under the Bridge Facilities.

The Term Loans bear interest at a fluctuating rate per annum equal to, at our option, (i) a base rate equal to the highest of (a) the federal funds rate plus 1/2 of 1%, (b) the rate of interest in effect for such day as publicly announced from time to time by Citicorp North America, Inc. as its “prime rate” and (c) the LIBOR rate for a one-month interest period plus 1.0% (provided that in no event shall such base rate with respect to the Term Loans be less than 2.0% per annum), in each case plus an applicable margin of 3.25% or (ii) a LIBOR rate for the applicable interest period (provided that in no event shall such LIBOR rate with respect to the Term Loans be less than 1.0% per annum) plus an applicable margin of 4.25%. The applicable margin in respect of the Term Loans is subject to one 25 basis point step down upon our achievement of a senior secured net leverage ratio of 3.50:1.00.

The Term Loans have a variable interest rate with a floor of 5.25%; however an increase of 1/8% (12.5 basis points) in the interest rate on the Company’s Term Loans would result in a $0.4 million increase in our annual interest expense. An increase of 1/8% (12.5 basis points) in the interest rate on all of the Company’s total variable rate debt (including the Term Loans) would result in a $0.8 million change in our annual interest expense.

(2)	The Company incurred $16.1 million in debt issuance costs in conjunction with the new borrowings; these debt issuance costs have been capitalized and will be amortized over six years, the life of the underlying debt instrument.

Debt modification and extinguishment costs—Adjustment represents the removal of $3.3 million of a loss on the extinguishment of debt associated with the refinancing of the Bridge Facilities with the Term Loans during the year ended December 28, 2013. This amount represented debt issuance costs that were previously capitalized and written off upon the refinancing; a pro forma adjustment has been recorded to eliminate this expense as the loss was directly attributable to the Fiberweb Acquisition and will not have a continuing impact on the combined results.

Note 3. Providência Acquisition

(a) Providência GAAP

Financial information reported under the column heading “Providência GAAP” represents unaudited Providência’s historical financial information prepared in accordance with IFRS (“Providência As Reported”) prior to the Providência Acquisition, translated from Providência’s local currency, the Brazilian real, to the U.S. dollar (“Providência Translated”) and adjusted to reflect Providência’s financial information on a GAAP basis and in accordance with the Company’s accounting policies (“Providência GAAP Adjustments”). These Providência GAAP Adjustments are unaudited. A reconciliation of Providência’s As Reported financial information to amounts presented in the unaudited pro forma condensed combined statement of operations under the column heading “Providência GAAP” is as follows:

(i)

Period Ended June 10, 2014

A reconciliation of Providência’s As Reported financial information to amounts presented in the unaudited pro forma condensed combined statement of operations under the column heading “Providência GAAP” for the period January 1, 2014 through June 10, 2014 is as follows:

Providência

Consolidated Statement of Operations

IFRS to GAAP Reconciliation

For the Period January 1, 2014 through June 10, 2014


	Providência, As Reported (BRL)(A)			Providência Translated (USD)(B)			Providência GAAP Adjustments (USD)				Providência GAAP (USD)
	in thousands
Net sales	R$	330,320		$	143,260		$	2,504		E	$	145,764
Cost of goods sold		(262,091	)		(113,669	)		(9,881	)	C, D, E		(123,550	)

Gross profit		68,229			29,591			(7,377	)			22,214
Selling, general and administrative expenses		(80,484	)		(34,906	)		8,152		C		(26,754	)
Special charges, net		—			—			(8,728	)	E		(8,728	)
Other operating, net		(311	)		(135	)		(1,366	)	E		(1,501	)

Operating income (loss)		(12,566	)		(5,450	)		(9,319	)			(14,769	)
Other income (expense):
Interest expense, net		(11,668	)		(5,060	)		(722	)	E		(5,782	)
Foreign currency and other, net		(2,773	)		(1,203	)		1,834		E		631

Income (loss) before income taxes		(27,007	)		(11,713	)		(8,207	)			(19,920	)
Income tax (provision) benefit		(9,455	)		(4,101	)		2,794		F		(1,307	)

Net income (loss)	R$	(36,462	)	$	(15,814	)	$	(5,413	)		$	(21,227	)

The following is a summary of the adjustments reflected in the above IFRS to GAAP Reconciliation for the period ended June 10, 2014:

Represents historical financial information of Providência’s prepared in accordance with IFRS for the period January 1, 2014 through June 10, 2014, the date of the Providência’s Acquisition, and presented on a consistent format with the Company’s financial statement presentation.

Historical financial information of Providência has been translated to U.S. dollars using the weighted-average rate of R$1.00 to $0.4337 for the period January 1, 2014 through June 10, 2014.

In 2007, Providência was acquired by a group of private investors for an aggregate purchase price of R$932 million. In addition, Providência acquired ISOFILME in 2007, which was purchased for an aggregate purchase price of R$43.0 million (together the “Historical Providência Transactions”). For the Historical Providência Transactions, in accordance with local generally accepted accounting principles (prior to Providência adopting IFRS), Providência did not reflect the step-up in basis of its property, plant and equipment to fair value, resulting in a GAAP adjustment to increase Cost of goods sold and Selling, general and administrative expenses by $1.4 million and $0.1 million, respectively, for additional depreciation on the step-up basis of the acquired property, plant and equipment.

Providência adopted IFRS during 2010. As part of the first time adoption, a retrospective revaluation adjustment was allowed to adjust the historical cost of property, plant and equipment to its current fair value with a corresponding adjustment to equity. Under GAAP, property, plant and equipment is recognized at historical cost and revaluation adjustments are not permitted. As such, a GAAP adjustment was recorded to reverse the revaluation adjustments recognized under IFRS, which resulted in a lower depreciation under GAAP, and a decrease to Cost of goods sold by $3.0 million.

The historical financial information of Providência presented has been adjusted by reclassifying certain line items in order to conform to the Company’s financial statement presentation and by recording certain adjustments to align accounting policies. Specifically, reclassifications were made to decrease Net sales and Foreign currency and other, net by $0.3 million and $2.4 million, respectively and to increase Other operating, net and Interest Expense, net by $1.4 million and $0.7 million, respectively. Additionally, as a result of reclassifying acquisition-related costs Selling, general and administrative expenses decreased by $8.7 million and Special charges, net increased by $8.7 million, respectively. In addition, adjustments were made to align Providência’s accounting policies to the Company’s as it relates to thresholds for capitalization expenditures, the useful lives of property, plant and equipment, policies for revenue recognition, inventory and bad debt reserves. The aggregate impact of aligning accounting policies resulted in an increase of Net sales, Cost of goods sold, Selling, general and administrative expenses and Foreign currency and other, net by $2.8 million, $6.8 million, $0.4 million and $0.6 million, respectively. Additionally, as a result of aligning the useful lives of property, plant and equipment, Cost of goods sold increased by $4.6 million.

Adjustment reflects the tax effects of the Providência GAAP Adjustments calculated at the statutory rates in effect in each significant jurisdiction for the time periods presented. This rate does not reflect Providência’s effective tax rate, which includes other tax items, such as foreign taxes, as well as other tax charges or benefits, and does not take into account any historical or possible future tax events that may impact Providência.

(ii)

Year Ended December 31, 2013

Providência

Consolidated Statement of Operations

IFRS to GAAP Reconciliation

For the Year Ended December 31, 2013


	Providência, As Reported (BRL)(A)			Providência Translated (USD)(B)			Providência GAAP Adjustments (USD)				Providência GAAP (USD)
	in thousands
Net sales	R$	782,002		$	362,458		$	(2,253	)	E	$	360,205
Cost of goods sold		(578,579	)		(268,171	)		(11,609	)	C, D, E		(279,780	)

Gross profit		203,423			94,287			(13,862	)			80,425
Selling, general and administrative expenses		(119,809	)		(55,531	)		(1,158	)	C		(56,689	)
Special charges, net		—			—			—				—
Other operating, net		(2,717	)		(1,259	)		1,128		E		(131	)

Operating income (loss)		80,897			37,497			(13,892	)			23,605
Other income (expense):
Interest expense, net		(27,811	)		(12,890	)		(2,178	)	E		(15,068	)
Foreign currency and other, net		(11,554	)		(5,355	)		1,517		E		(3,838	)

Income (loss) before income taxes		41,532			19,252			(14,553	)			4,699
Income tax (provision) benefit		(14,612	)		(6,773	)		4,974		F		(1,799	)

Net income (loss)	R$	26,920		$	12,479		$	(9,579	)		$	2,900

The following is a summary of the adjustments reflected in the above IFRS to GAAP Reconciliation for the year ended December 31, 2013:

Represents historical financial information of Providência’s prepared in accordance with IFRS for the year ended December 31, 2013 and presented on a consistent format with the Company’s financial statement presentation.

Historical financial information of Providência has been translated to U.S. dollars using the weighted-average rate R$01.00 to $0.4635 for the year ended December 31, 2013.

For the Historical Providência Transactions, in accordance with local generally accepted accounting principles (prior to Providência adopting IFRS), Providência did not reflect the step-up in basis of its property, plant and equipment to fair value, resulting in a GAAP adjustment to increase Cost of goods sold and Selling, general and administrative expenses by $3.6 million and $0.2 million, respectively, for additional depreciation on the step-up basis of the acquired property, plant and equipment.

$1.6 million, respectively and to increase Interest expense, net by $2.2 million. In addition, adjustments were made to align Providência’s accounting policies to the Company’s as it relates to thresholds for capitalization expenditures, the useful lives of property, plant and equipment, policies for revenue recognition, inventory and bad debt reserves. The aggregate impact of aligning accounting policies resulted in a decrease of Net sales by $1.8 million and in an increase of Cost of goods sold, Selling, general and administrative expenses and Foreign currency and other, net by $5.8 million, $1.0 million and $0.1 million, respectively. Additionally, as a result of aligning the useful lives of property, plant and equipment, Cost of goods sold increased by $9.4 million.

(iii)

Nine Months Ended September 28, 2013

A reconciliation of Providência’s As Reported financial information to amounts presented in the unaudited pro forma condensed combined statement of operations under the column heading “Providência GAAP” for the nine months ended September 28, 2013, is as follows:

Providência

Consolidated Statement of Operations

IFRS to GAAP Reconciliation

For the Nine Months Ended September 28, 2013


	Providência, As Reported (BRL)(A)			Providência Translated (USD)(B)			Providência GAAP Adjustments (USD)				Providência GAAP (USD)
	in thousands
Net sales	R$	564,812		$	266,648		$	(1,185	)	E	$	265,463
Cost of goods sold		(413,860	)		(195,383	)		(7,645	)	C, D, E		(203,028	)

Gross profit		150,952			71,265			(8,830	)			62,435
Selling, general and administrative expenses		(88,370	)		(41,720	)		(1,212	)	C		(42,932	)
Special charges, net		—			—			—				—
Other operating, net		(544	)		(257	)		652		E		395

Operating income (loss)		62,038			29,288			(9,390	)			19,898
Other income (expense):
Interest expense, net		(16,921	)		(7,988	)		(1,226	)	E		(9,214	)
Foreign currency and other, net		(9,681	)		(4,570	)		1,002		E		(3,568	)

Income (loss) before income taxes		35,436			16,730			(9,614	)			7,116
Income tax (provision) benefit		(12,197	)		(5,758	)		3,289		F		(2,469	)

Net income (loss)	R$	23,239		$	10,972		$	(6,325	)		$	4,647

The following is a summary of the adjustments reflected in the above IFRS to GAAP Reconciliation for the nine months ended September 28, 2013:

Represents historical financial information of Providência’s prepared in accordance with IFRS for the nine months ended September 28, 2013 and presented on a consistent format with the Company’s financial statement presentation.

Historical financial information of Providência has been translated to U.S. dollars using the weighted-average rate R$1.00 to $0.4721 for the nine months ended September 28, 2013.

For the Historical Providência Transactions, in accordance with local generally accepted accounting principles (prior to Providência adopting IFRS), Providência did not reflect the step-up in basis of its property, plant and equipment to fair value, resulting in a GAAP adjustment to increase Cost of goods sold and Selling, general and administrative expenses by $2.7 million and $0.1 million, respectively, for additional depreciation on the step-up basis of the acquired property, plant and equipment.

The historical financial information of Providência presented has been adjusted by reclassifying certain line items in order to conform to the Company’s financial statement presentation and by recording certain adjustments to align accounting policies. Specifically, reclassifications were made to decrease Net sales, Other operating, net and Foreign currency and other by $0.3 million, $0.6 million and $0.9 million, respectively and increase Interest expense, net by $1.2 million. In addition, adjustments were made to align Providência’s accounting policies to the Company’s as it relates to thresholds for capitalization expenditures, the useful lives of property, plant and equipment, policies for revenue recognition, inventory and bad debt reserves. The aggregate impact of aligning accounting policies resulted in a decrease of Net sales and Foreign currency and other, net by $0.9 million and $0.1 million, respectively, and an increase in Cost of goods sold and Selling, general and administrative expenses by $3.7 million and $1.1 million, respectively. Additionally, as a result of aligning the useful lives of property, plant and equipment, Cost of goods sold increased by $6.8 million.

(b) Providência Pro Forma Adjustments

The preliminary allocation of the purchase price of the Providência Acquisition is as follows:


In thousands	June 11, 2014
Cash	$	20,621
Accounts receivable		52,929
Inventory		34,451
Other current assets		31,848

Total current assets		139,849

Property, plant and equipment		400,000
Goodwill		107,497
Intangible assets		4,500
Other noncurrent assets		12,288

Total assets acquired	$	664,134

Current liabilities	$	31,605
Total debt		74,930
Deferred income taxes		38,027
Other noncurrent liabilities		1,992

Total liabilities assumed	$	146,554

Redeemable noncontrolling interest		92,990

Net assets acquired	$	424,590

As of the date of this prospectus, the Company has not completed the detailed valuation work necessary to arrive at the required estimates of the fair value of the Providência assets acquired and the liabilities assumed and the related allocation of the purchase price. Accordingly, the unaudited pro forma condensed combined financial statements are based on preliminary estimates and assumptions. The preliminary allocation reflects management’s best estimates of fair value, which are based on certain assumptions relating to the Providência Acquisition, including prior acquisition experience, benchmarking of similar acquisitions and historical data. In addition, portions of the preliminary allocation are dependent upon certain valuations and other studies that have yet to commence or progress to a stage where there is sufficient information for a definitive measurement. Upon completion of detailed valuation studies and the final determination of fair value, the Company may make additional adjustments to the fair value allocation, which may differ significantly from the valuations set forth in the unaudited pro forma condensed combined financial information. A decrease in the fair value of assets acquired or an increase in the fair value of liabilities assumed in the Providência Acquisition from those preliminary valuations presented in the Company’s unaudited condensed consolidated financial statements would result in a dollar-for-dollar corresponding increase in the amount of goodwill. In addition, if the value of the acquired assets is higher than the preliminary indication, it may result in higher amortization and depreciation expense than is presented in these unaudited pro forma condensed combined statements of operations.

The following is a summary of the material adjustments for amounts reported in the unaudited pro forma condensed combined statements of operations under the “Providência Pro Forma Adjustments” column heading for the nine months ended September 27, 2014, the year ended December 28, 2013 and the nine months ended September 28, 2013:

Cost of goods sold—The net adjustment to Cost of goods sold is calculated as follows (dollars in millions):


	Nine Months Ended September 27, 2014			Fiscal Year Ended December 28, 2013			Nine Months Ended September 28, 2013
Reversal of inventory step-up impact(1)	$	4.9		$	—		$	—
Pro forma adjustment to depreciation expense of property, plant and equipment(2)		(1.7	)		(3.6	)		(2.7	)

Pro forma adjustment to *Cost of goods sold*	$	3.2		$	(3.6	)	$	(2.7	)

(1)

At acquisition, assets and liabilities of an acquired business are recognized at fair value. Inventory is valued at net realizable value which is the estimated selling price, less the sum of (a) cost of completion and (b) a reasonable profit margin for the selling effort. Based upon a valuation analysis, the fair value of acquired inventory related to the Providência Acquisition was $34.5 million resulting in a $4.9 million step-up in inventory value, which was amortized into earnings over the period of Providência’s normal inventory turns, which approximated one month. This adjustment reverses the impact of the purchase accounting adjustment, which was recorded in the historical amounts, as this amount is directly related to the Providência Acquisition and not expected to have a continuing impact on the Company.

(2)

Adjustment represents the preliminary depreciation expense associated with the change in fair value of the property, plant and equipment recorded in relation to the Providência Acquisition. Based upon a preliminary valuation analysis, the fair value of acquired property, plant and equipment was $400 million. The estimated fair value of property, plant and equipment is expected to be amortized on a straight-line basis over the estimated average remaining useful life of 19 years. Depreciation expense has been estimated based upon the nature of activities associated with the property, plant and equipment acquired. Therefore, for purposes of this pro forma statement of operations, the Company has reflected $1.7 million, $3.6 million and $2.7 million of estimated additional depreciation expense for the period ended June 10, 2014, for the year ended December 28, 2013 and for the nine months ended September 28, 2013, respectively. The adjustment is net of the reversal of Providência historical depreciation expense of property, plant and equipment.

With other assumptions held constant, a change of 1 year in the useful life of the property, plant and equipment would result in a $1.2 million change in annual depreciation expense. With other assumptions held constant, a change of 10% in the fair value of the property, plant and equipment would result in a $2.1 million change in annual depreciation expense.

Selling, general and administrative expense—Adjustment represents the preliminary depreciation and amortization expense associated with the change in fair value of the property, plant and equipment and intangible assets recorded in relation to the Providência Acquisition. The net adjustments to Selling, general and administrative expenses is calculated as follows (dollars in millions):


	Nine Months Ended September 27, 2014			Fiscal Year Ended December 28, 2013			Nine Months Ended September 28, 2013
Pro Forma adjustment to depreciation expense of property, plant and equipment(1)	$	(0.2	)	$	(0.5	)	$	(0.4	)
Pro forma adjustment to amortization expense of intangible assets(2)		0.9			1.7			1.3

Pro forma adjustment to *Selling, general and administrative expenses*	$	0.7		$	1.2		$	0.9

(1)	For a discussion of Pro Forma adjustment to depreciation expense of property, plant and equipment see footnote to the Cost of goods sold Pro Forma adjustment described above.

(2)

The adjustment represents the preliminary amortization expense associated with the fair value of intangible assets recorded in relation to the Providência Acquisition. Based upon a preliminary valuation analysis, the fair value of acquired intangible assets, which consist of customer relationships, was $4.5 million. The estimated fair value of amortizable intangible assets is expected to be amortized on a straight-line basis over the estimated useful lives of 15 years.

Amortization expense has been estimated based upon the nature of activities associated with the intangible assets acquired. Therefore, for purposes of these pro forma statements of operations, the Company has reflected a reduction in the amount of $0.9 million, $1.7 million and $1.3 million for amortization expense for the period ended June 10, 2014, the year ended December 28, 2013 and the nine months ended September 28, 2013, respectively. The adjustment is net of the reversal of Providência historical amortization expense of intangible assets.

With other assumptions held constant, a change of 1 year in the useful life of the intangible assets would result in a $0.02 million change in annual amortization expense. With other assumptions held constant, a change of 10% in the fair value of the intangible assets would result in a $0.03 million change in annual amortization expense.

Special charges—The net adjustment to Special charges is calculated as follows (dollars in millions):


	Nine Months Ended September 27, 2014		Fiscal Year Ended December 28, 2013		Nine Months Ended September 28, 2013
Acquisition-related costs associated with the Providência Acquisition incurred by the Company(1)	$	15.8	$	—	$	—
Acquisition-related costs associated with the Providência Acquisition incurred by Providência(2)		8.7		—		—

Pro forma adjustment to *Special charges*	$	24.5	$	—	$	—

(1)

Adjustment represents the removal of $15.8 million of acquisition-related costs incurred by the Company associated with the Providência Acquisition during the nine months ended September 27, 2014 as such amounts are directly attributable to the Providência Acquisition and will not have a continuing impact on the combined results.

(2)

Adjustment represents the removal of $8.7 million of acquisition-related costs incurred by Providência associated with the Providência Acquisition during the period ended June 10, 2014 as such amounts are directly attributable to the Providência Acquisition and will not have a continuing impact on the combined results.


	Nine Months Ended September 27, 2014			Fiscal Year Ended December 28, 2013			Nine Months Ended September 28, 2013
Reversal of Providência’s historical interest expense, including amortization of debt issuance costs, related to debt not assumed for the period January 1, 2014 through June 10, 2014, for the year ended December 28, 2013 and for the nine months ended September 28, 2014, respectively	$	4.2		$	13.2		$	8.4
Reversal of Providência’s historical expense related to changes in the fair value of interest rate swaps not assumed for the period January 1, 2014 through June 10, 2014, for the year ended December 28, 2013 and for the nine months ended September 28, 2014, respectively(1)		1.0			0.7			(0.1	)
Amortization of capitalized debt issuance costs related to new borrowings for the period December 29, 2013 through June 10, 2014, for the year ended December 28, 2013 and for the nine months ended September 28, 2014, respectively(2)		(1.0	)		(2.2	)		(1.7	)
Estimated interest expense on senior unsecured notes at 6.875% for the period December 29, 2013 through June 10, 2014, for the year ended December 28, 2013 and for the nine months ended September 28, 2014, respectively(3)		(6.3	)		(14.4	)		(10.8	)
Estimated interest expense on Additional Term Loans at 5.25% for the period December 29, 2013 through June 10, 2014, for the year ended December 28, 2013 and for the nine months ended September 28, 2014, respectively(3)		(7.1	)		(16.3	)		(12.2	)

Pro forma adjustment to *Interest expense*	$	(9.2	)	$	(19.0	)	$	(16.4	)

(1)

Providência historically used derivative instruments to reduce the exposure to fluctuations in interest rates. The Company has eliminated the change in the fair value of such interest rate swaps not assumed as part of the Providência Acquisition; the respective impacts are reduced expenses of $1.0 million, $0.7 million and an additional expense of $0.1 million for the nine months ended September 27, 2014, the year ended December 28, 2013 and the nine months ended September 28, 2013, respectively.

(2)

The Company incurred in total $21.3 million in debt issuance costs in conjunction with the senior unsecured notes and the Additional Term Loans which comprises $10.6 million of capitalized debt issuance costs and $10.7 million of debt issuance costs expensed as incurred based on ASC Topic 470, Debt (“ASC 470”). For purposes of these pro forma statements of operations, the Company has reversed the $10.7 million debt issuance costs expensed as such expense are directly attributable to the Providência Acquisition and will not have a continuing impact on the combined results (see footnote to the Debt modification and extinguishment costs Pro Forma adjustments described below). The capitalized debt issuance costs of $10.6 million associated with the new borrowings will be amortized over approximately five years. Therefore, for purposes of this pro forma statement of operations, the Company has reflected $1.0 million, $2.2 million and $1.7 million of amortization expense of capitalized debt issuance costs related to new borrowings for the period ended June 10, 2014, for the year ended December 28, 2013 and for the nine months ended September 28, 2013, respectively.

(3)

On June 10, 2014, we entered into the Incremental Amendment, pursuant to which the Company obtained $415.0 million of commitments for incremental term loans from the existing lenders, of which the Company borrowed $310 million of Additional Term Loans. The remaining $105.0 million of commitments were

available for borrowing until December 31, 2014 and were used to repay existing indebtedness during the third quarter of 2014. Borrowings bear interest at a fluctuating rate per annum equal to, at our option, (i) a base rate equal to the highest of (a) the federal funds rate plus ¹⁄₂ of 1%, (b) the rate of interest in effect for such day as publicly announced from time to time by Citicorp North America, Inc. as its “prime rate” and (c) the LIBOR rate for a one-month interest period plus 1.0% (provided that in no event shall such base rate with respect to the Term Loans be less than 2.0% per annum), in each case plus an applicable margin of 3.25% or (ii) a LIBOR rate for the applicable interest period (provided that in no event shall such LIBOR rate with respect to the Term Loans be less than 1.0% per annum) plus an applicable margin of 4.25%. The applicable margin for the Term Loans is subject to one 25 basis point step-down upon the achievement of a senior secured net leverage ratio of 3.50:1.00. We are required to repay installments on the Term Loans in quarterly installments in aggregate amounts equal to 1.0% per annum of their funded total principal amount, with the remaining amount payable on the maturity date. In addition, in connection with the Providência Acquisition, we issued on June 11, 2014 $210.0 million aggregate principal amount of 6.875% senior unsecured notes due 2019.

The Additional Term Loans have a variable interest rate with a floor of 5.25%; however an increase of 1/8% (12.5 basis points) in the interest rate on the Company’s Additional Term Loans would result in a $0.4 million increase in our annual interest expense. An increase of 1/8% (12.5 basis points) in the interest rate on all of the Company’s total variable rate debt (including the Additional Term Loans) would result in a $0.8 million change in our annual interest expense.

Debt modification and extinguishment costs—The net adjustment to Debt modification and extinguishment costs is calculated as follows (dollars in millions):


	Nine Months Ended September 27, 2014		Fiscal Year Ended December 28, 2013		Nine Months Ended September 28, 2013
Reversal of debt issuance costs expensed as incurred associated with the Providência Refinancing(1)	$	10.7	$	—	$	—
Reversal of debt extinguishment costs associated with the Providência Refinancing(2)		2.4		—		—

Pro forma adjustment to *Debt modification and extinguishment costs*	$	13.1	$	—	$	—

(1)

(2)

On September 22, 2014, the Company entered into an assignment agreement with Itaú Unibanco S.A in order to transfer its rights and obligations under the agreement to the Company. The purchase price was funded with a portion of the proceeds from the Incremental Amendment. Pursuant to ASC 470, we recognized a loss on debt extinguishment of $2.4 million during the nine months ended September 27, 2014. A pro forma adjustment has been recorded to eliminate the $2.4 million debt extinguishment costs expensed as such expense is directly attributable to the Providência Refinancing and will not have a continuing impact on the combined results.

Foreign currency and other, net—The net adjustment to Foreign currency and other, net is calculated as follows (dollars in millions):


	Nine Months Ended September 27, 2014			Fiscal Year Ended December 28, 2013			Nine Months Ended September 28, 2013
Reversal of foreign exchange gains associated with the Providência Acquisition(1)	$	(18.9	)	$	—		$	—
Reversal of Providência’s historical foreign currency impacts related interest rate swaps not assumed for the period January 1, 2014 through June 10, 2014, for the year ended December 28, 2013 and for the nine months ended September 28, 2014, respectively(2)		2.3			(6.5	)		(3.2	)

Pro forma adjustment to *Foreign currency and other, net*	$	(16.6	)	$	(6.5	)	$	(3.2	)

(1)

The Company entered into a series of financial instruments used to minimize foreign exchange risk on the future consideration to be paid for the Providência Acquisition and the Deferred Purchase Price. For purposes of these pro forma statements of operations, we have eliminated the $18.9 million foreign exchange gains associated with such financial instruments for the nine months ended September 27, 2014 as such gains will not have a continuing impact on the combined results.

(2)

Providência historically used derivative instruments to reduce the exposure to fluctuations in interest rates. Certain of these interest rate swaps were denominated in USD which resulted in foreign currency impacts recorded in the historical financial information of Providência. The Company has eliminated the historical foreign currency impacts of such interest rate swaps not assumed as part of the Providência’s acquisition. The respective impacts are a relief of $2.3 million and an additional expense of $6.5 million and $3.2 million for the period ended June 10, 2014, the year ended December 28, 2013 and the nine months ended September 28, 2013, respectively.

Income tax (provision) benefit—Adjustment reflects the tax effects of the pro forma adjustments made to the pro forma statements of operations calculated at the combined federal and state statutory rates in effect in each significant jurisdiction for the time periods presented. This rate, 35.1%, does not reflect the Company’s effective tax rate, which includes other tax items, such as foreign taxes, as well as other tax charges or benefits, and does not take into account any historical or possible future tax events that may impact the combined company. Fair value and other adjustments effective at the closing of the Providência Acquisition could be different based on factors including but not limited to tax rates, valuation differences, further information on taxes by jurisdiction, or other factors.

Earnings attributable to noncontrolling interest and to redeemable noncontrolling interest—Noncontrolling interest and redeemable noncontrolling interest represent the minority partners’ interest in the income or loss of consolidated subsidiaries which are not wholly-owned by the Company. For the purposes of the unaudited pro forma condensed combined financial information, we have assumed that we only own approximately 71.25% of the outstanding capital stock of Providência.

Note 4. The Offering

Reflects shares of common stock to be sold in this offering and the application of net proceeds of approximately $ therefrom to be received by us, assuming an initial public offering price of $ per share, the midpoint of the offering range set forth on the cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

We intend to use a portion of the net proceeds received by us from this offering to repay $ million of our outstanding indebtedness, resulting in a decrease in pro forma interest expense of $ and $ for the nine months ended September 27, 2014 and the fiscal year ended December 28, 2013, respectively. This pro forma interest expense adjustment is inclusive of the reversal of amortization of deferred financing fees

recognized during the nine months ended September 27, 2014 and the fiscal year ended December 28, 2013, respectively, related to the indebtedness being repaid. Additionally, as a result of extinguishing our borrowings as discussed above, we will write-off $ in deferred financing costs; however, this charge has not been reflected in the unaudited pro forma condensed combined statements of operations as it is not expected to have a continuing impact on our operations.

In connection with this offering, we intend to terminate the Advisory Agreement in accordance with its terms. We will use approximately $ million of the net proceeds to us from this offering to pay a one-time termination fee to affiliates of the Sponsor in connection with the termination of the Advisory Agreement. See “Certain Relationships and Related Party Transactions—Advisory Agreement.” The unaudited pro forma condensed combined statements of operations do not reflect the impacts on special charges, net of an increase of $ million related to this one-time termination fee as this amount is directly related to this offering and is not expected to have a continuing impact on our operations.

We intend to use any remaining proceeds received by us from this offering for general corporate purposes.

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

The selected historical consolidated financial data presented below for, and as of the end of, the fiscal years ended December 28, 2013, December 29, 2012 and December 31, 2011 for the Successor, and the one month ended January 28, 2011, for the Predecessor, has been derived from our audited consolidated financial statements included elsewhere in this prospectus. The summary historical financial information and other data presented below for, and as of the end of, the nine months ended September 27, 2014 and September 28, 2013 has been derived from our unaudited consolidated financial statements included elsewhere in this prospectus. The selected historical consolidated financial data presented below for, and as of the end of, the fiscal year ended January 1, 2011 and January 2, 2010 has been derived from our audited consolidated financial statements not included in this prospectus. Our historical results are not necessarily indicative of the results expected for any future period.

You should read the selected consolidated financial data below together with our audited consolidated financial statements included elsewhere in this prospectus including the related notes thereto appearing elsewhere in this prospectus, as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the other financial information included elsewhere in this prospectus.


(in thousands, except share data)	Nine Months Ended September 27, 2014 (Successor)			Nine Months Ended September 28, 2013 (Successor)			Fiscal Year Ended December 28, 2013 (Successor)			Fiscal Year Ended December 29, 2012 (Successor)			Fiscal Year Ended December 31, 2011 (Successor)			One Month Ended January 28, 2011 (Predecessor)			Fiscal Year Ended January 1, 2011 (Predecessor)			Fiscal Year January 2, 2010 (Predecessor)
	(unaudited)			(unaudited)
Statement of Operations Data:
Net sales	$	1,360,495		$	867,599		$	1,214,862		$	1,155,163		$	1,102,929		$	84,606		$	1,106,211		$	850,605
Cost of goods sold		(1,118,952	)		(723,143	)		(1,018,806	)		(957,917	)		(932,523	)		(68,531	)		(896,319	)		(667,255	)

Gross profit		241,543			144,456			196,056			197,246			170,406			16,075			209,892			183,350
Selling, general and administrative expenses		(185,499	)		(107,176	)		(153,188	)		(140,776	)		(134,483	)		(11,564	)		(141,461	)		(113,318	)
Special charges, net		(47,868	)		(10,647	)		(33,188	)		(19,592	)		(41,345	)		(20,824	)		(17,993	)		(20,763	)
Acquisition and integration expenses		—			—			—			—			—			—			(1,742	)		(1,789	)
Other operating, net		(2,658	)		(1,975	)		(2,512	)		287			(2,634	)		564			815			4,736

Operating income (loss)		5,518			24,658			7,168			37,165			(8,056	)		(15,749	)		49,511			52,216
Other income (expense):
Interest expense		(67,605	)		(37,592	)		(55,974	)		(50,414	)		(46,409	)		(1,922	)		(31,728	)		(26,712	)
Gain on reacquisition of debt		—			—			—			—			—			—			—			2,431
Debt modification and extinguishment costs		(15,725	)		—			(3,334	)		—			—			—			—			(5,088	)
Foreign currency and other, net		(11,626	)		(22	)		(8,851	)		(5,134	)		(18,636	)		(82	)		(1,454	)		(5,246	)

Income (loss) before income taxes		(89,438	)		(12,956	)		(60,991	)		(18,383	)		(73,101	)		(17,753	)		16,329			17,601
Income tax (provision) benefit		850			(9,444	)		36,024			(7,655	)		3,272			(549	)		(4,534	)		(8,578	)

Income (loss) from continuing operations	$	(88,588	)	$	(22,400	)	$	(24,967	)	$	(26,038	)	$	(69,829	)	$	(18,302	)	$	11,795		$	9,023


(in thousands, except share data)	Nine Months Ended September 27, 2014 (Successor)			Nine Months Ended September 28, 2013 (Successor)			Fiscal Year Ended December 28, 2013 (Successor)			Fiscal Year Ended December 29, 2012 (Successor)			Fiscal Year Ended December 31, 2011 (Successor)			One Month Ended January 28, 2011 (Predecessor)			Fiscal Year Ended January 1, 2011 (Predecessor)			Fiscal Year January 2, 2010 (Predecessor)
	(unaudited)			(unaudited)
Discontinued operations, net of tax		—			—			—			—			(6,283	)		182			(765	)		8,915

Net income (loss)		(88,588	)		(22,400	)		(24,967	)		(26,038	)		(76,112	)		(18,120	)		11,030			17,938
Earnings attributable to noncontrolling interest and redeemable noncontrolling interest		(4,216	)		—			(34	)		—			59			83			623			(2,137	)

Net income (loss) attributable to PGI Specialty Materials	$	(84,372	)	$	(22,400	)	$	(24,933	)	$	(26,038	)	$	(76,171	)	$	(18,203	)	$	10,407		$	20,075

Weighted average shares outstanding, basic		292,074			261,111			264,998			260,403			259,895			21,626,038			20,785,000			19,601,000
Basic Earnings (Loss) Per Share	$	(304.10	)	$	(85.79	)	$	(94.09	)	$	(99.99	)	$	(268.91	)	$	(0.85	)	$	0.54		$	0.57
Loss from discontinued operations		—			—			—			—			(24.18	)		0.01			(0.04	)		0.45
Basic Net Income (Loss) per Share	$	(304.10	)	$	(85.79	)	$	(94.09	)	$	(99.99	)	$	(293.09	)	$	(0.84	)	$	0.50		$	1.02
Weighted average shares outstanding, diluted		292,074			261,111			264,998			260,403			259,895			21,626,038			21,196,000			19,601,000
Diluted Earnings (Loss) Per Share	$	(304.10	)	$	(85.79	)	$	(94.09	)	$	(99.99	)	$	(268.91	)	$	(0.85	)	$	0.53		$	0.57
Loss from discontinued operations		—			—			—			—			(24.18	)		0.01			(0.04	)		0.45
Diluted Net Income (Loss) Per Share	$	(304.10	)	$	(85.79	)	$	(94.09	)	$	(99.99	)	$	(293.09	)	$	(0.84	)	$	0.49		$	1.02

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. The discussion should be read in conjunction with the “Summary—Summary Historical and Pro Forma Condensed Combined Financial Information,” “Selected Historical Consolidated Financial Data” and our consolidated financial statements and notes thereto incorporated by reference in this prospectus. It should be noted that our gross profit margins may not be comparable to other companies since some entities classify shipping and handling costs in cost of goods sold and others, including us, include such costs in selling, general and administrative expenses. Similarly, some entities, including us, include foreign currency gains and losses resulting from operating activities as a component of operating income, and some entities classify all foreign currency gains and losses outside of operating income. The following discussion may contain forward-looking statements that reflect our plans, estimates and beliefs. Out actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include those factors discussed below and elsewhere in this prospectus, particular in the “Risk Factors” and “Forward-Looking Statements.”

Overview

We primarily manufacture nonwovens, which are fabric-like, value-added materials produced from polypropylene and other resins, along with natural and synthetic fibers and other components. The total nonwovens industry size is estimated to be worth in excess of $30 billion globally in 2013 and is expected to grow at a CAGR by volume of 6.6% from 2013 to 2018, according to Smithers Pira.

Our Industry

We compete primarily in the global nonwovens industry, estimated to be worth in excess of $30 billion globally in 2013 and expected to grow at a CAGR by volume of 6.6% from 2013 to 2018, according to Smithers Pira. Nonwovens are broadly defined as engineered sheet or web structures, made from polymers and/or natural fibers that are bonded together by entangling fiber or filaments mechanically, thermally or chemically. Nonwovens are flat sheets that are made directly from separate fibers or from molten plastic or plastic film and, by definition, are not made by weaving or knitting and do not require converting the fibers to yarn. See “Industry.”

Recent Developments

European Restructuring

On March 7, 2014, we announced our plan to exit the European roofing business, which we acquired as part of the Fiberweb Acquisition, in an effort to optimize our portfolio. The plan included (1) the possible shutdown of selected manufacturing lines at our Berlin, Germany facility, (2) the possible closure of our manufacturing facility in Aschersleben, Germany with the consolidation of its converting activities to Berlin and (3) possible workforce reductions at both facilities.

In the second quarter of 2014, we commenced negotiations to sell selected equipment used to manufacture roofing materials at our Berlin, Germany location. In July 2014, we ceased production of roofing materials in Berlin and signed a contract to sell one manufacturing line for €1.6 million ($2.2 million) recognizing no gain or loss on the sale as the proceeds approximated the carrying value of the asset sold. We also commenced negotiations in the second quarter of 2014 to sell the remaining portion of the roofing business. In November 2014, we completed such negotiations and entered into a definitive asset purchase and transfer agreement to sell the remaining elements of the roofing business for approximately €2.4 million ($3.0 million). Included in the sale were the manufacturing operations in Aschersleben, Germany, which consisted of the land, buildings, inventory, machinery and equipment, intellectual property and certain existing contracts. The transaction closed on January 1, 2015. There was no significant gain or loss recognized on the sale of the business since it was determined the proceeds received for the tangible and intangible assets approximated the carrying value of the assets sold.

Providência Acquisition

On January 27, 2014, we announced that Acquisition Co. entered into a stock purchase agreement with Providência and certain shareholders named therein. Pursuant to the terms and subject to the conditions of the stock purchase agreement, Acquisition Co. agreed to acquire an approximately 71.25% controlling interest in Providência. Providência is a leading manufacturer of nonwovens primarily used in hygiene applications as well as industrial and healthcare applications. Based in Brazil, Providência has three manufacturing locations, including one in the United States.

The Providência Acquisition was completed on June 11, 2014 for an aggregate purchase price of $424.6 million and funded with the proceeds from borrowings under the Incremental Amendment as well as the proceeds from the issuance of the Senior Unsecured Notes. As required by Brazilian law, we intend to launch, subject to CVM approval, the Mandatory Tender Offer to acquire, on substantially the same terms and conditions as the stock purchase agreement, the remaining outstanding capital stock of Providência from the minority shareholders.

On January 27, 2014, we entered into a series of financial instruments with a third-party financial institution used to minimize foreign exchange risk on the future consideration to be paid for the Providência Acquisition and the Mandatory Tender Offer (the “Providência Contracts”). Each contract allows us to purchase a fixed amounts of Brazilian Reais (R$) in the future at specified U.S. dollar rates, coinciding with either the Providência Acquisition or the Mandatory Tender Offer. The primary financial instrument was related to the Providência

Acquisition and consisted of a foreign exchange forward contract settled upon consummation of the transaction. The remaining financial instruments relate to a series of options that expire between 1 year and 5 years associated with the Mandatory Tender Offer and the deferred portion of the consideration paid for the Providência Acquisition.

Prior to completing the Providência Acquisition, Providência announced that production on three spunmelt lines at its Sao Jose dos Pinhais manufacturing facility was partially interrupted. The interruption was the result of an order by the Brazilian Ministry of Labor, pending remedial action by Providência to bring the facility into compliance with applicable Brazilian workplace safety regulations. The three lines were shut down from April 1, 2014 until early July 2014 when clearance was received from the Brazilian Ministry of Labor and production resumed. During the shutdown period, the impact to sales volumes is estimated to have been in excess of 6,500 metrics tons during the 2014 fiscal year. In addition, the lines experienced certain start-up inefficiencies during the third quarter which continued as the facility began to resume more normalized operations near the end of the third quarter. During the shutdown and the subsequent ramp-up period through the end of 2014, Providência incurred additional costs to bring the manufacturing lines into compliance as well as incurred higher relative overhead costs and increased scrap rates, which negatively impacted operating profit.

Expansion and Optimization Initiatives

Over the past five years, we have undertaken a series of initiatives to expand our global capabilities as well as to focus on operational excellence. Initiatives include capacity expansion projects, plant consolidations, plant alignment, acquisitions and divestitures. We believe these initiatives will help drive performance in our businesses and improve our overall cost structure.

Expansion Initiatives

In order to address the growing demand for hygiene and healthcare products, we have completed four capacity expansions since 2009. In addition, we recently commenced the upgrade of manufacturing lines at our facilities located in Tarragona, Spain and Benson, North Carolina, and have completed an upgrade of a manufacturing line near Buenos Aires, Argentina, and our upgrade of machinery and the expansion of our manufacturing facility in Waynesboro, Virginia. A description of our completed expansion initiatives are as follows:

•

In the second quarter of 2013, our spunmelt hygiene line in Suzhou, China commenced commercial production. The plant expansion increased capacity to meet demand for nonwoven materials in hygiene applications in China.

•

In the third quarter of 2011, our spunmelt line in Waynesboro, Virginia commenced commercial production. The plant expansion increased capacity to meet demand for nonwoven materials in hygiene and healthcare applications in the U.S.

•

In the third quarter of 2011, our spunmelt healthcare line in Suzhou, China commenced commercial production. The plant expansion increased capacity to meet demand for nonwoven materials in healthcare applications in China.

•

In the second quarter of 2009, our spunmelt line in San Luis Potosi, Mexico commenced commercial production. The plant expansion increased capacity to meet demand for nonwoven materials in hygiene and healthcare applications in the U.S. and Mexico.

Our expansion projects are funded using a combination of existing cash balances, internal cash flows as well as financing arrangements with third-party financial institutions. We intend to continue to expand in markets we believe have attractive supply and demand characteristics as well as maintain and upgrade manufacturing lines to improve our global competitive position.

Optimization Initiatives

We actively and continuously pursue initiatives to prolong the useful life of our assets through product and process innovation. In some instances, we have determined that our fixed cost structure would be enhanced through consolidation. While investing in several new manufacturing lines in high-growth regions, we have simultaneously undertaken a number of initiatives to rationalize low-margin legacy operations and relocate certain assets to improve our cost structure. These initiatives are intended to result in lower working capital levels and improve operating performance and profitability. Our strategy with respect to past consolidation efforts in the U.S. and Europe was focused on the elimination of costs associated with underutilized legacy capacity, and we believe our current footprint reflects an appropriate asset base that will allow us to pursue profitable growth while better serving our customers’ needs.

Other Acquisitions and Divestitures

On September 17, 2013, PGI Acquisition Limited, a wholly-owned subsidiary of the Company, entered into an agreement with Fiberweb containing the terms of a cash offer to purchase 100% of the issued and to be issued ordinary share capital of Fiberweb at a cash price of £1.02 per share. The offer was effected by a court sanctioned scheme of arrangement of Fiberweb under Part 26 of the UK Companies Act 2006 and consummated on November 15, 2013, whereby Fiberweb became a wholly-owned subsidiary of the Company. The aggregate purchase price was valued at $287.8 million and funded on November 27, 2013 with the proceeds of borrowings under a $268.0 million Senior Secured Bridge Credit Agreement and a $50.0 million Senior Unsecured Bridge Credit Agreement. The Bridge Facilities were subsequently refinanced, along with transaction expenses, with the proceeds from a $295.0 million Senior Secured Credit Agreement and a $30.7 million equity investment from Blackstone. Fiberweb is one of the largest global manufacturers of specialized technical fabrics with eight production sites in six countries.

On April 29, 2011, we entered into an agreement to sell certain assets and the working capital of Difco Performance Fibers, Inc. (“Difco”) for cash proceeds of $10.9 million. The agreement provided that Difco would continue to produce goods during the three month manufacturing transition services agreement that expired in the third quarter of 2011. The sale was completed on May 10, 2011 and resulted in a loss of $0.7 million recognized during the fiscal year ended December 31, 2011.

The results of operations of Difco, previously included in the North America segment, have been segregated from continuing operations and included in Discontinued operations, net in the Consolidated Statements of Operations as the cash flows of Difco were eliminated from our ongoing operations and we had no continuing involvement in the operations of the business after the disposition.

On May 26, 2010, we signed an equity transfer agreement (the “Nanhai Agreement”) to purchase the remaining 20% interest in our Chinese subsidiary, Nanhai Nanxin Non-Woven Co. Ltd, subject to Chinese government approval. Pursuant to the Nanhai Agreement, we deposited $1.5 million into an escrow account with a bank to serve as a performance guarantee. On March 9, 2011, we received government approval and subsequently completed the noncontrolling interest acquisition for a purchase price of $7.2 million. The acquisition was accounted as an equity transaction in which no gain or loss was recognized.

On December 2, 2009, we completed an acquisition from Grupo Corinpa S.L (“Grupo Corinpa”) of certain assets and the operations of the nonwovens business of Tesalca-99, S.A. and Texnovo, S.A. located in Barcelona, Spain. Consideration for the acquired assets consisted of 1.049 million shares of the Predecessor’s Class A common stock which had a fair value of $14.5 million on the date of acquisition. The agreement contained a provision under which Grupo Corinpa was granted a put option on its land, building and equipment that were included in a lease under which we were provided full and exclusive use of the assets. In addition, the agreement contained a provision under which we were granted a call option for the same assets. On January 28, 2011, immediately prior to the Merger, we exercised our call option and purchased the remaining assets for an aggregate purchase price of $41.2 million.

Results of Operations

We operate our business on a regional basis with profit accountability aligned with our physical presence. This reflects how the overall business is currently managed by our senior management and reviewed by our Board of Directors. In light of the Providência Acquisition, we realigned our reportable segments during the third quarter of 2014 to more closely reflect our corporate and business strategies and to promote additional productivity and growth. Reportable segments are now as follows: North America, South America, Europe and Asia. The operations previously reported in the Oriented Polymers segment are now included within the North America segment, along with the operations in Mexico. The South America segment includes the Providência operations in Brazil in addition to our previously existing operations in Colombia and Argentina. The Europe and Asia segments remain unchanged.

Gross Profit Drivers

Our net sales are driven principally by the following factors:

•

Volumes sold, which are tied to our available production capacity and customer demand for our products;

•

Prices, which are tied to the quality of our products, the overall supply and demand dynamics in our regional markets, and the cost of our raw material inputs, as changes in input costs have historically been passed through to customers through either contractual mechanisms or business practices. This can result in significant increases in total net sales during periods of sustained raw material cost increases as well as significant declines in net sales during periods of raw material cost declines; and

•

Product mix, which is tied to demand from various markets and customers, along with the type of available capacity and technological capabilities of our facilities and equipment. Average selling prices can vary for different product types, which impacts our total revenue trends.

Our primary costs of goods sold (“COGS”) include:

•

Raw material costs (primarily polypropylene resins, which generally comprise over 75% of our raw material purchases) represent approximately 60% to 70% of COGS. We purchase raw materials, including polypropylene resins, from a number of qualified vendors located in the regions in which we operate. Polypropylene is a petroleum-based commodity material and its price historically has exhibited volatility. As discussed in the revenue factors above, we have historically been able to mitigate volatility in polypropylene prices through changes in our selling prices to customers, enabling us to maintain a more stable gross profit per kilogram;

•

Other variable costs include direct labor, utilities (primarily electricity), maintenance and variable overhead. Utility rates vary depending on the regional market and provider. Labor generally represents less than 10% of COGS and varies by region. Historically, we have been able to mitigate wage rate inflation with operating initiatives resulting in higher productivity and improvements in throughout and yield; and

•

Fixed overhead consists primarily of depreciation expense, which is impacted by our level of capital investments and structural costs related to our locations. We believe our strategically located manufacturing facilities provide sufficient scale to maintain competitive unit manufacturing costs.

The level of our revenue and COGS vary due to changes in raw material cost. As a result, our gross profit margin as a percent of net sales can vary significantly from period to period. As such, we believe total gross profit provides a clearer representation of our operating trends. Changes in raw material costs historically have not resulted in a significant sustained impact on gross profit, as we have generally been able to effectively mitigate changes in raw material costs through changes in our selling prices to customers in order to maintain a more steady gross profit per kilogram sold.

Comparability of Periods

Due to the Merger and related change in control, a new entity was created for accounting purposes as of January 28, 2011. Periods prior to January 28, 2011 reflect our results of operations prior to the Merger and periods after January 28, 2011 reflect our results of operations after the Merger. Furthermore, generally accepted accounting principles require us to present separately our operating results to the Predecessor and Successor periods. As a result, periods prior to the Merger are not comparable to subsequent periods due to the difference in the basis of presentation of purchase accounting as compared to historical cost.

On November 15, 2013, the Fiberweb Acquisition became effective pursuant to a court sanctioned scheme of arrangement under Part 26 of the UK Companies Act of 2006 whereby Fiberweb became an indirect wholly-owned subsidiary of the Company. As a result, the results of operations of Fiberweb have been included in the Consolidated Balance Sheet at December 28, 2013 and the Consolidated Statement of Operations since November 15, 2013.

On June 11, 2014, the Providência Acquisition was completed whereby Providência became an indirect subsidiary of the Company. Pursuant to the terms and subject to the conditions of the Providência Acquisition, the Company acquired an approximately 71.25% controlling interest in Providência. As a result, the results of operations of Providência have been included in the Consolidated Balance Sheet at September 27, 2014 and the Consolidated Statement of Operations since June 11, 2014.

In December 2010, a severe rainy season impacted many parts of Colombia and caused us to temporarily cease manufacturing at our Cali, Colombia facility due to a breach of a levy and flooding at the industrial park where our manufacturing facility is located. We established temporary offices away from the flooded area and worked with customers to meet their critical needs through the use of our global manufacturing base. The facility re-established manufacturing operations on April 4, 2011 and operations reached full run rates in third quarter 2011.

Our sales are impacted by our selling prices, which are influenced by the cost of our raw material inputs. Historically, changes in input costs have generally been passed through to customers either by contractual mechanisms or business practices. This can result in significant increases in total net sales during periods of sustained raw material cost increases as well as significant declines in net sales during periods of raw material cost declines. As a result, financial statement items that use percentage of net sales as an economic indicator are influenced by the changes in our selling prices. In general, average prices for polypropylene resin and other raw material costs increased during 2011 which negatively impacted our results. During 2012, these prices modestly trended downward throughout the year. However, we have seen overall raw material prices trend upwards throughout 2013 and the first three fiscal quarters of 2014. As a result, we continue to operate in a volatile raw material environment.

Nine Months Ended September 27, 2014 Compared to the Nine Months Ended September 28, 2013

The following table sets forth the period change for each category of the Statement of Comprehensive Income (Loss) for the nine months ended September 27, 2014 as compared to the nine months ended September 28, 2013, as well as each category as a percentage of net sales:


	Nine Months Ended September 27, 2014			Nine Months Ended September 28, 2013			Period Change Favorable (Unfavorable)			Percentage of Net Sales for the Respective Period End
In thousands	Nine Months Ended September 27, 2014			Nine Months Ended September 28, 2013			Period Change Favorable (Unfavorable)			September 27, 2014			September 28, 2013
Net sales	$	1,360,495		$	867,599		$	492,896			100.0	%		100.0	%
Cost of goods sold		(1,118,952	)		(723,143	)		(395,809	)		82.2	%		83.3	%
Gross profit		241,543			144,456			97,087			17.8	%		16.7	%
Selling, general and administrative expenses		(185,499	)		(107,176	)		(78,323	)		13.6	%		12.4	%
Special charges, net		(47,868	)		(10,647	)		(37,221	)		3.5	%		1.2	%
Other operating, net		(2,658	)		(1,975	)		(683	)		0.2	%		0.2	%

Operating income (loss)		5,518			24,658			(19,140	)		0.4	%		2.8	%
Other income (expense):
Interest expense		(67,605	)		(37,592	)		(30,013	)		5.0	%		4.3	%
Debt modification and extinguishment costs		(15,725	)		—			(15,725	)		1.2	%		—	%
Foreign currency and other, net		(11,626	)		(22	)		(11,604	)		0.9	%		—	%

Income (loss) before income taxes		(89,438	)		(12,956	)		(76,482	)		(6.6	)%		(1.5	)%
Income tax (provision) benefit		850			(9,444	)		10,294			(0.1	)%		1.1	%

Net income (loss)		(88,588	)		(22,400	)		(66,188	)		(6.5	)%		(2.6	)%
Less: Earnings attributable to noncontrolling interest and redeemable noncontrolling interest		(4,216	)		—			(4,216	)		0.3	%		—	%

Net income (loss) attributable to PGI Specialty Materials, Inc.	$	(84,372	)	$	(22,400	)	$	(61,972	)		(6.2	)%		(2.6	)%

Net Sales

Net sales for the nine months ended September 27, 2014 were $1,360.5 million, a $492.9 million increase compared with the nine months ended September 28, 2013. A reconciliation presenting the components of the period change by each of our operating segments is as follows:


In millions	North America			South America		Europe			Asia			Total
Prior period	$	409.4		$	113.8	$	219.1		$	125.3		$	867.6
Changes due to:
Volume		187.9			88.6		184.2			21.0			481.7
Price/product mix		7.0			2.6		(1.3	)		(3.6	)		4.7
Currency translation		(1.1	)		—		7.0			0.6			6.5

Sub-total		193.8			91.2		189.9			18.0			492.9

End of period	$	603.2		$	205.0	$	409.0		$	143.3		$	1,360.5

For the nine months ended September 27, 2014, volumes increased by $481.7 million compared with the nine months ended September 28, 2013. The primary driver of the increase related to the contributions from Fiberweb, which represented an incremental $340.9 million for the period. In addition, the Providência Acquisition provided $111.8 million of net sales since the date of acquisition. Incremental volume growth of $21.0 million in Asia was driven by higher volumes sold in the hygiene and healthcare markets, both of which

were supported by our recent capacity expansions. In Europe, increased sales into the technical specialties and wipes product markets increased net sales by $9.2 million. Improvements in the hygiene market provided $4.2 million of incremental volume growth in South America. Volumes decreased $5.4 million in North America, primarily driven by lower wipes and industrial markets sales as well as the timing of customer orders.

For the nine months ended September 27, 2014, net selling prices increased $4.7 million compared with the nine months ended September 28, 2013. The pricing increase was primarily driven by higher net selling prices of $7.0 million in North America, which reflects the impacts of pricing initiatives implemented during the year. In addition, we experienced pricing improvements in South America of $2.6 million. The pricing increase, which primarily resulted from our passing through higher raw material costs associated with index-based selling agreements and market-based pricing trends, more than offset lower selling prices of $1.3 million in Europe. Product mix movements in Asia impacted net sales by $3.6 million. The decrease was a result of a larger proportion of current year sales in the hygiene market compared with more prior year sales in the healthcare market, which have higher average selling prices.

Gross Profit

Gross profit for the nine months ended September 27, 2014 was $241.5 million, a $97.1 million increase compared with the nine months ended September 28, 2013. The primary driver of the increase related to the contributions from Fiberweb, which represented an incremental $76.1 million for the period, including contributions associated with integration synergies. In addition, contributions from Providência were $14.5 million, net of $4.9 million related to the non-recurring amortization expense of the inventory step-up established as a result of the acquisition as well as the negative impact of start-up inefficiencies in Brazil as certain lines were returning to normal operations during the third quarter after being temporarily shut down in the second quarter due to required alterations to meet safety regulations.

Increases in net sales within each of our geographic regions, primarily in Europe and Asia, further provided incremental gross profit. In addition, our reduction of our labor component of cost of goods sold reflects the positive benefits of our cost reduction initiatives. However, these amounts were partially offset by lower net spreads (the difference between the change in raw material costs and selling prices) of $10.3 million as raw material costs increased, primarily impacting the Asia and South America segments. Other costs that impacted gross profit include an increase to our overhead component of cost of goods sold, primarily related to increased manufacturing costs in South America and increased depreciation in Asia. These amounts were partially offset by improved manufacturing efficiencies in North America and Asia. As a result, gross profit as a percentage of net sales for the nine months ended September 27, 2014 increased to 17.8% from 16.7% for the nine months ended September 28, 2013.

Operating Income (Loss)

Operating income for the nine months ended September 27, 2014 was $5.5 million, a $19.2 million decrease compared with the nine months ended September 28, 2013. A reconciliation presenting the components of the period change by each of our operating divisions is as follows:


In millions	North America			South America			Europe			Asia			Corporate/ Other			Total
Prior period	$	40.4		$	5.3		$	9.2		$	13.7		$	(43.9	)	$	24.7

Changes due to:
Volume		32.1			1.4			0.8			7.0			—			41.3
Price/product mix		7.0			2.5			(1.3	)		(3.6	)		—			4.6
Raw material cost		(7.2	)		(5.0	)		(0.1	)		(2.6	)		—			(14.9	)
Manufacturing costs		1.8			(2.9	)		0.1			1.2			—			0.2
Currency translation		0.1			7.0			0.9			(2.1	)		0.1			6.0
Depreciation and amortization		2.4			0.5			(0.2	)		(2.5	)		—			0.2
Purchase accounting		(9.6	)		(4.6	)		2.5			—			—			(11.7	)
Special charges		—			—			—			—			(37.2	)		(37.2	)
All other		(3.6	)		(1.0	)		0.8			(0.2	)		(3.7	)		(7.7	)

Sub-total		23.0			(2.1	)		3.5			(2.8	)		(40.8	)		(19.2	)

End of period	$	63.4		$	3.2		$	12.7		$	10.9		$	(84.7	)	$	5.5

The amounts for acquisition and integration expenses as well as special charges have not been allocated to our reportable business divisions because our management does not evaluate such charges on a division-by-division basis. Division operating performance is measured and evaluated before such items.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the nine months ended September 27, 2014 were $185.5 million, a $78.3 million increase compared with the nine months ended September 28, 2013. The increase was primarily related to the inclusion of Fiberweb, which added an incremental $54.1 million of costs for the period. In addition, expenses related to our recent acquisition of Providência added $18.8 million to selling, general and administrative expenses. Other selling general and administrative expenses increased $5.4 million compared to the prior year. Factors that contributed to the increase include higher incentive compensation and Blackstone-related management fees as well as increased selling, marketing and freight expenses. However, these costs were partially offset by a reduction in third-party fees and expenses and lower stock-based compensation expense. As a result, selling, general and administrative expenses as a percentage of net sales increased to 13.6% for the nine months ended September 27, 2014 from 12.4% for the nine months ended September 28, 2013. The nine months ended September 28, 2013 include $5.3 million of expenses related to the announced retirement, and simultaneous appointment of, our Chief Executive Officer position.

Special Charges, net

As part of our business strategy, we incur costs related to corporate-level decisions or Board of Director actions. These actions are primarily associated with initiatives attributable to restructuring and realignment of manufacturing operations and management structures as well as the pursuit of certain transaction opportunities when applicable. In addition, we evaluate our long-lived assets for impairment whenever events or changes in circumstances including the aforementioned, indicate that the carrying amounts may not be recoverable.

Special charges for the nine months ended September 27, 2014 were $47.9 million and consisted of the following components:

•

$19.2 million related to professional fees and other transaction costs associated with our acquisition of Providência;

•

$10.1 million related to separation and severance expenses associated with our plant realignment cost initiatives;

•

$10.1 million related to professional fees and other transaction costs associated with our acquisition of Fiberweb;

•

$6.9 million related to non-cash goodwill impairment charge in South America segment;

•

$1.0 million related to cost associated with our internal redesign and restructuring of global operations initiatives; and

•

$0.6 million related to other corporate initiatives.

Special charges for the nine months ended September 28, 2013 were $10.6 million and consisted of the following components:

•

$6.2 million related to professional fees and other transaction costs associated with our acquisition of Fiberweb;

•

$2.2 million related to cost associated with our internal redesign and restructuring of global operations initiatives;

•

$1.5 million related to separation and severance expenses associated with our plant realignment cost initiatives; and

•

$0.7 million related to other corporate initiatives.

The amounts included in Special charges, net have not been allocated to our reportable business divisions because our management does not evaluate such charges on a division-by-division basis. Division operating performance is measured and evaluated before such items.

Other Operating, net

For the nine months ended September 27, 2014, other operating expense totaled $2.7 million, of which $5.1 million was associated with foreign currency losses. These losses were partially offset by $2.4 million related to other operating income. Other operating expense for the nine months ended September 28, 2013 was $2.0 million. Amounts associated with foreign currency losses on operating assets and liabilities totaled $2.2 million. These losses were partially offset by $0.2 million of other operating income.

Other Income (Expense)

Interest expense for the nine months ended September 27, 2014 and the nine months ended September 28, 2013 was $67.6 million and $37.6 million, respectively. The increase primarily relates to interest expense and amortization of debt issuance costs associated with the Term Loans and the Senior Unsecured Notes, both of which were used to fund our recent acquisitions. Combined, we realized an additional $23.8 million of expense associated with changes to our debt structure as a result of the Fiberweb and Providência transactions.

During the nine months ended September 27, 2014, we redeemed $56.0 million of the Senior Secured Notes at a redemption price of 103.0% of the aggregate principal amount plus any accrued and unpaid interest. As a result, we recognized a loss on debt extinguishment of $2.6 million. In addition, we entered into an assignment agreement with a third-party financial institution to transfer, to us, their rights and obligations under an export credit facility acquired in the Providência Acquisition. Fees related to the assignment totaled $2.4 million during the period. In association with the Providência Acquisition, we incurred $21.3 million of loan acquisition costs, of which $10.7 million was expensed as incurred during the second quarter of 2014. These amounts are included within Debt modification and extinguishment costs.

Foreign currency and other, net was a loss of $11.6 million for the nine months ended September 27, 2014. The main driver of the expense related to $21.7 million associated with foreign currency losses on non-operating assets and liabilities. A majority of the loss occurred in South America as the U.S. dollar strengthened significantly against local currencies in Brazil and Argentina. In addition, non-operating asset values in Europe created currency losses as the Euro weakened against the U.S. dollar. Other non-operating income totaled $10.1 million and included the settlement of a foreign exchange forward contracts associated with the Providência Acquisition, which provided $18.9 million of income realized at the date of acquisition. However, these amounts were partially offset by $1.4 million of non-operating expenses, primarily associated with factoring fees as well as $5.0 million of expenses associated with Providência. Other costs recognized included $2.4 million associated with the changes in fair value of a series options related to the Mandatory Tender Offer and the deferred portion of the purchase price. For the nine months ended September 28, 2013, foreign currency and other was an expense of less than $0.1 million. Items impacting the results include $1.3 million associated with foreign currency losses on non-operating assets and liabilities as well as $1.1 million of other non-operating expenses, primarily associated with factoring fees. In addition, we incurred $0.5 million related to the release of a FIN 48 tax indemnification asset. However, these amounts were offset by the benefit related to a foreign exchange forward contract associated with our acquisition of Fiberweb, which provided $2.9 million to the period.

Income Tax (Provision) Benefit

During the nine months ended September 27, 2014, we recognized an income tax benefit of $0.9 million on consolidated pre-tax book loss from continuing operations of $89.4 million. During the nine months ended September 28, 2013, we recognized income tax provision of $9.4 million on consolidated pre-tax book loss from continuing operations of $13.0 million. The combination of our income tax provision and our recorded loss from operations before income taxes resulted in a negative effective tax rate for the nine months ended September 28, 2013. Our income tax expense in 2014 and 2013 is different than such expense determined at the U.S. federal statutory rate due to losses in certain jurisdictions for which no income tax benefits are anticipated, foreign withholding taxes for which tax credits are not anticipated, changes in the amounts recorded for tax uncertainties, foreign taxes calculated at statutory rates different than the U.S. federal statutory rate, and the application of intraperiod tax allocation rules.

Earnings Attributable to Noncontrolling Interest and to Redeemable Noncontrolling Interest

Earnings attributable to noncontrolling interest and to redeemable noncontrolling interest for the nine months ended September 27, 2014 was a loss of $4.2 million. Noncontrolling interest and redeemable noncontrolling interest represent the minority partners’ interest in the income or loss of consolidated subsidiaries which are not wholly-owned by us. Our acquisition of Providência represents approximately a 71.25% controlling interest and the remaining 28.75% is recorded as redeemable noncontrolling interest on our Consolidated Balance Sheets. As a result, we incurred $4.0 million related to the redeemable noncontrolling interest during the current period. In association with the acquisition of Fiberweb, the Company assumed control of Terram Geosynthetics Private Limited, a joint venture located in Gujarat, India in which we maintain a 65% controlling interest. As a result, we incurred $0.2 million related to the noncontrolling interest during the current period.

Comparison of Successor Fiscal Year Ended December 28, 2013 and Successor Fiscal Year Ended December 29, 2012

The following table sets forth the period change for each category of the Statement of Operations for the fiscal year ended December 28, 2013 for the Successor as compared to the fiscal year ended December 29, 2012 for the Successor, as well as each category as a percentage of net sales:


	Successor			Successor			Period Change			Percentage of Net Sales for the Respective Period End
*In thousands*	Fiscal Year Ended December 28, 2013			Fiscal Year Ended December 29, 2012			Period Change			December 28, 2013			December 29, 2012
Net sales	$	1,214,862		$	1,155,163		$	59,699			100.0	%		100.0	%
Cost of goods sold:
Raw materials		(665,363	)		(624,795	)		(40,568	)		54.8	%		54.1	%
Labor		(71,692	)		(76,132	)		4,440			5.9	%		6.6	%
Overhead		(281,751	)		(256,990	)		(24,761	)		23.2	%		22.2	%

Gross profit		196,056			197,246			(1,190	)		16.1	%		17.1	%
Selling, general and administrative expenses		(153,188	)		(140,776	)		(12,412	)		12.6	%		12.2	%
Special charges, net		(33,188	)		(19,592	)		(13,596	)		2.7	%		1.7	%
Other operating, net		(2,512	)		287			(2,799	)		0.2	%		—

Operating income (loss)		7,168			37,165			(29,997	)		0.6	%		3.2	%
Other income (expense):
Interest expense		(55,974	)		(50,414	)		(5,560	)		4.6	%		4.4	%
Debt modification and extinguishment charges		(3,334	)		—			(3,334	)		0.3	%		—	%
Foreign currency and other, net		(8,851	)		(5,134	)		(3,717	)		0.7	%		0.4	%

Income (loss) before income taxes		(60,991	)		(18,383	)		(42,608	)		(5.0	)%		(1.6	)%
Income tax (provision) benefit		36,024			(7,655	)		43,679			(3.0	)%		0.7	%

Net income (loss)		(24,967	)		(26,038	)		1,071			(2.1	)%		(2.3	)%
Less: Earnings attributable to noncontrolling interest		(34	)		—			(34	)		—			—

Net income (loss) attributable to PGI Specialty Materials, Inc.	$	(24,933	)	$	(26,038	)	$	1,105			(2.1	)%		(2.3	)%

Net Sales

Net sales for the fiscal year ended December 28, 2013 were $1,214.9 million, a $59.7 million increase compared with the fiscal year ended December 29, 2012. A reconciliation presenting the components of the period change by each of our operating segments is as follows:


In millions	North America			South America			Europe		Asia			Total
Beginning of period	$	542.8		$	161.5		$	294.1	$	156.8		$	1,155.2
Changes due to:
Volume		23.8			(5.2	)		11.8		19.7			50.1
Price/product mix		5.9			(2.5	)		2.6		(5.2	)		0.8
Currency translation		(0.4	)		—			7.9		1.3			8.8

Sub-total		29.3			(7.7	)		22.3		15.8			59.7

End of period	$	572.1		$	153.8		$	316.4	$	172.6		$	1,214.9

For the fiscal year ended December 28, 2013, volumes increased by $50.1 million compared with the fiscal year ended December 29, 2012. The primary driver of the increase related to the contribution of Fiberweb results since the Acquisition Date, which represented an incremental $51.9 million for the period. These amounts were partially offset by volume reductions in North America and Europe, which had a combined net impact of $16.3 million. European results reflected the stabilization of underlying demand in our industrial, consumer disposables and healthcare markets. However, they were more than offset by reductions in the hygiene market. Volumes were lower in North America, primarily driven by the exit of certain low-margin business in the healthcare market during 2012 as well as lower consumer disposable volume. In addition, the volume reduction of $5.2 million in South America was primarily attributable to lower demand in the hygiene market. Incremental volume growth of $19.7 million in Asia was driven by higher volumes sold in the hygiene and healthcare markets, both of which were supported by our recent capacity expansions.

For the fiscal year ended December 28, 2013, net selling prices increased $0.8 million compared with the fiscal year ended December 29, 2012. The pricing increase was primarily driven by increases in the North American and European industrial and consumer disposable markets. The pricing increases, which resulted from our passing through higher raw material costs associated with index-based selling agreements and market-based pricing trends, provided an incremental $8.5 million to net sales. However, these amounts were partially offset by product mix movements in Asia, a result of a larger proportion of current year sales in the hygiene market compared with more prior year sales in the healthcare market, which have higher average selling prices. In addition, product mix movements in South America impacted results as we shifted products between sites and end-uses. Combined, these factors impacted net sales by $7.7 million.

Gross Profit

Gross profit for the fiscal year ended December 28, 2013 was $196.1 million, a $1.2 million decrease compared with the fiscal year ended December 29, 2012. The decrease in gross profit was primarily driven by higher overall cost for the raw materials of resin and fibers, especially polypropylene resin. The increase, which impacted gross profit by $40.6 million, included $24.3 million related to the inclusion of Fiberweb results since the Acquisition Date. In addition, our overhead component increased $24.8 million, of which $20.4 million related to Fiberweb and included $7.3 million associated with the non-recurring amortization of the inventory step-up established as a result of the Acquisition. The $4.4 million increase in remaining costs were primarily associated with volume-related inefficiencies in the North America and South America as well as increased depreciation in Asia. However, the decrease in gross profit was partially offset by the improvement in our labor component of cost of goods sold which reflects the positive benefits of our cost reduction initiatives implemented during 2012. The $4.4 million improvement was impacted by the inclusion of Fiberweb results since the Acquisition Date which added an incremental $3.7 million of labor costs during the period. As a result, gross profit as a percentage of net sales for the fiscal year ended December 28, 2013 decreased to 16.1% from 17.1% for the fiscal year ended December 29, 2012.

Operating Income (Loss)

Operating income for the fiscal year ended December 28, 2013 was $7.2 million, a $30.0 million decrease compared with the fiscal year ended December 29, 2012. A reconciliation presenting the components of the period change by each of our operating divisions is as follows:


In millions	North America			South America			Europe			Asia			Sub-total			Corporate/ Other			Total
Beginning of period	$	50.0		$	18.1		$	11.1		$	18.1		$	97.3		$	(60.1	)	$	37.2
Changes due to:
Volume		2.1			(1.7	)		(3.9	)		7.8			4.3			—			4.3
Price/product mix		6.0			(2.5	)		2.6			(5.2	)		0.9			—			0.9
Raw material cost		(6.8	)		(4.8	)		(0.2	)		(1.1	)		(12.9	)		—			(12.9	)
Manufacturing costs		3.9			(2.4	)		(0.4	)		4.8			5.9			—			5.9
Currency translation		(0.8	)		1.0			1.5			(0.4	)		1.3			—			1.3
Depreciation and amortization		2.5			0.7			(1.1	)		(6.2	)		(4.1	)		—			(4.1	)
Purchase accounting		(5.0	)		—			(2.7	)		—			(7.7	)		—			(7.7	)
Special charges		—			—			—			—			—			(13.6	)		(13.6	)
All other		(0.4	)		(0.7	)		1.6			—			0.5			(4.6	)		(4.1	)

Sub-total		1.5			(10.4	)		(2.6	)		(0.3	)		(11.8	)		(18.2	)		(30.0	)

End of period	$	51.5		$	7.7		$	8.5		$	17.8		$	85.5		$	(78.3	)	$	7.2

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the fiscal year ended December 28, 2013 were $153.2 million, a $12.4 million increase compared with the fiscal year ended December 29, 2012. As a result, selling, general and administrative expenses as a percentage of net sales increased to 12.6% for the fiscal year ended December 28, 2013 from 12.2% for the fiscal year ended December 29, 2012. The increase was primarily related to the inclusion of Fiberweb results since the Acquisition Date, which added an incremental $8.5 million for the period. In addition, costs related to the announced retirement of our previous Chief Executive Officer and simultaneous appointment of our new Chief Executive Officer totaled $6.5 million, which included $2.0 million of non-cash stock compensation expense. Combined, these expenses had a 1.3 point impact on selling, general and administrative expenses as a percentage of net sales. Other factors that contributed to the increase include shipping and handling costs as activity between regions increased with the ramp up of certain new products, higher depreciation and amortization on new capital investments as well as increase in third-party fees and expenses. However, these amounts were more than offset by lower short-term incentive compensation as well as the impacts of our cost reduction initiatives implemented during the year which reduced employee-related expenses.

Special Charges, net

As part of our business strategy, we incur costs related to corporate-level decisions or Board of Director actions. In addition, we evaluate our long-lived assets for impairment whenever events or changes in circumstances including the aforementioned, indicate that the carrying amounts may not be recoverable. Special charges for the fiscal year ended December 28, 2013 were $33.2 million and consisted of the following components:

•

$18.3 million related to professional fees and other transaction costs associated with our acquisition of Fiberweb;

•

$8.4 million related to separation and severance expenses associated with our plant realignment cost initiatives;

•

$2.3 million related to cost associated with our internal redesign and restructuring of global operations initiatives;

•

$2.3 million non-cash impairment charge related to the fair value adjustment of property and equipment at our manufacturing facility in Buenos Aires, Argentina; and

•

$1.9 million related to other corporate initiatives.

Special charges for the fiscal year ended December 29, 2012 were $19.6 million and consisted of the following components:

•

$12.4 million related to cost associated with our internal redesign and restructuring of global operations initiatives;

•

$4.1 million related to separation and severance expenses associated with our plant realignment cost initiatives;

•

$0.9 million related to separation and severance expenses associated with our IS support initiative;

•

$0.5 million related to professional fees and other transaction costs associated with the Merger; and

•

$1.7 million related to other corporate initiatives.

The amounts included in Special charges, net have not been allocated to our reportable business divisions because our management does not evaluate such charges on a division-by-division basis. Division operating performance is measured and evaluated before such items.

Other Operating, net

Other operating expense for the fiscal year ended December 28, 2013 was $2.5 million. Amounts associated with foreign currency losses on operating assets and liabilities totaled $2.8 million. These losses were partially offset by $0.3 million of other operating income. For the fiscal year ended December 29, 2012, other operating income totaled $0.3 million, of which $0.2 million was associated with foreign currency gains and $0.1 million related to other operating income.

Other Income (Expense)

Interest expense for the fiscal year ended December 28, 2013 and the fiscal year ended December 29, 2012 was $56.0 million and $50.4 million, respectively. The increase primarily relates to interest expense and amortization of debt issuance costs associated with the Secured Bridge Facility and the Unsecured Bridge Facility, which were used to fund the acquisition of Fiberweb. Interest expense on the Senior Secured Credit Agreement, which was used to partially repay both bridge facilities, also contributed to the increase. Combined, we realized an additional $4.4 million associated with changes to our debt structure as a result of the Fiberweb transaction.

In association with the acquisition of Fiberweb, we refinanced the Bridge Facilities with a Senior Secured Credit Agreement during the fourth quarter of 2013. As a result, we recognized a loss on the extinguishment of debt of $3.3 million during the period. This amount represented debt issuance costs that were previously capitalized and required to be written off upon the refinancing and included within Debt modification and extinguishment costs.

Foreign currency and other was an expense of $8.9 million for the fiscal year ended December 28, 2013. Items impacting the results include $6.7 million associated with foreign currency losses on non-operating assets

and liabilities as well as $1.7 million of other non-operating expenses, primarily associated with factoring fees. In addition, we incurred $0.5 million related to the release of a tax indemnification asset that was established in the opening balance sheet in connection with the Merger.

For the fiscal year ended December 29, 2012, foreign currency and other was an expense of $5.1 million. Items impacting the results include $3.4 million associated with foreign currency losses on non-operating assets and liabilities as well as $1.0 million of other non-operating expenses, primarily associated with factoring fees. In addition, we incurred $0.7 million related to the release of a tax indemnification asset that was established in the opening balance sheet in connection with the Merger.

Income Tax (Provision) Benefit

During the fiscal year ended December 28, 2013, we recognized an income tax benefit of $36.0 million on consolidated pre-tax book loss from continuing operations of $61.0 million. During the fiscal year ended December 29, 2012, we recognized income tax expense of $7.7 million on consolidated pre-tax book loss from continuing operations of $18.4 million. Our income tax expense in 2013 and 2012 is different than such expense determined at the U.S. federal statutory rate due to losses in certain jurisdictions for which no income tax benefits are anticipated, foreign withholding taxes for which tax credits are not anticipated, changes in the amounts recorded for Personal Holding Company (“PHC”) tax uncertainties, foreign taxes calculated at statutory rates different than the U.S. federal statutory rate, and the application of intraperiod tax allocation rules.

Earnings Attributable to Noncontrolling Interest

Earnings attributable to noncontrolling interest for the fiscal year ended December 28, 2013 were less than $0.1 million. Noncontrolling interest represents the minority partners’ interest in the income or loss of consolidated subsidiaries which are not wholly-owned by us. In association with the acquisition of Fiberweb, the Company assumed control of Terram Geosynthetics Private Limited, a joint venture located in Gujarat, India in which we maintain a 65% controlling interest. As a result, we incurred $0.1 million related to the noncontrolling interest.

Comparison of Successor Eleven Months Ended December 29, 2012 and Successor Eleven Months Ended December 31, 2011

The following table sets forth the period change for each category of the Statement of Operations for the eleven months ended December 29, 2012 for the Successor as compared to the eleven months ended December 31, 2011 for the Successor, as well as each category as a percentage of net sales. Note that the Successor had no operating activities between its October 4, 2010 inception date and the closing date of the Merger which occurred on January 28, 2011. In terms of comparability the eleven months ended December 29, 2012 are compared to the eleven months ended December 28, 2011 for the Successor. The financial information of the Successor for the period from October 4, 2010 to January 2, 2011, and as of January 2, 2011, have been omitted from this prospectus because we believe the Successor qualified as a “business combination related shell company” within the meaning of relevant SEC guidance during such period, as it was formed for the sole purpose of completing the Merger and did not have any assets as of January 2, 2011:


	Successor			Successor			Period Change			Percentage of Net Sales for the Respective Period End
*In thousands*	Eleven Months Ended December 29, 2012			Eleven Months Ended December 31, 2011			Period Change			December 29, 2012			December 31, 2011
Net sales	$	1,069,218		$	1,102,929		$	(33,711	)		100.0	%		100.0	%
Cost of goods sold:
Raw materials		(579,644	)		(641,803	)		62,159			54.2	%		58.2	%
Labor		(70,402	)		(68,508	)		(1,894	)		6.6	%		6.2	%
Overhead		(238,294	)		(222,212	)		(16,082	)		22.3	%		20.1	%

Gross profit		180,878			170,406			10,472			16.9	%		15.5	%
Selling, general and administrative expenses		(130,338	)		(134,483	)		4,145			12.2	%		12.2	%
Special charges, net		(18,982	)		(41,345	)		22,363			1.8	%		3.7	%
Other operating, net		(338	)		(2,634	)		2,296			—			0.2	%

Operating income (loss)		31,220			(8,056	)		39,276			2.9	%		(0.7	)%
Other income (expense):
Interest expense		(46,376	)		(46,409	)		33			4.3	%		4.2	%
Foreign currency and other, net		(4,877	)		(18,636	)		13,759			0.5	%		1.7	%

Income (loss) before income taxes		(20,033	)		(73,101	)		53,068			(1.9	)%		(6.6	)%
Income tax (provision) benefit		(6,420	)		3,272			(9,692	)		0.6	%		(0.3	)%

Income (loss) from continuing operations		(26,453	)		(69,829	)		43,376			(2.5	)%		(6.3	)%
Discontinued operations, net		—			(6,283	)		6,283			—			(0.6	)%

Net income (loss)		(26,453	)		(76,112	)		49,659			(2.5	)%		(6.9	)%
Less: Earnings attributable to noncontrolling interest		—			59			(59	)		—			—

Net income (loss) attributable to PGI Specialty Materials, Inc.	$	(26,453	)	$	(76,171	)	$	49,718			(2.5	)%		(6.9	)%

Net Sales

Net sales for the eleven months ended December 29, 2012 were $1,069.2 million, a $33.7 million decrease compared with the eleven months ended December 31, 2011. A reconciliation presenting the components of the period change by each of our operating divisions is as follows:


In millions	North America			South America			Europe			Asia			Total
Beginning of period	$	523.8		$	145.6		$	297.9		$	135.6		$	1,102.9
Changes due to:
Volume		17.4			20.0			3.0			16.0			56.4
Price/product mix		(36.0	)		(9.0	)		(6.2	)		(5.1	)		(56.3	)
Currency translation		(4.0	)		(7.3	)		(23.4	)		0.9			(33.8	)

Sub-total		(22.6	)		3.7			(26.6	)		11.8			(33.7	)

End of period	$	501.2		$	149.3		$	271.3		$	147.4		$	1,069.2

For the eleven months ended December 29, 2012, net selling prices decreased $56.3 million compared with the eleven months ended December 31, 2011. The pricing decrease, which included $36.0 million in North America and $9.0 million in South America, resulted from our passing through lower raw material costs associated with index-based selling agreements and market-based pricing trends. Competitive pricing in Europe impacted net sales by $6.2 million, while a competitive environment and spot market sales impacted Asia by $5.1 million. In addition, unfavorable foreign currency impacts of $33.8 million resulted in lower translation of sales generated in foreign jurisdictions, particularly in Europe and South America.

For the eleven months ended December 29, 2012, volumes increased by $56.4 million compared with the eleven months ended December 31, 2011. The increase was primarily driven by improved volumes in South America as our plant in Colombia returned to normal operations after the disruption during the prior year due to a severe flood in late 2010. Incremental volume in the North America, primarily in the healthcare and wipes markets, contributed $17.4 million as demand increased overall. Additional growth of $16.0 million in Asia was primarily driven by higher volumes sold in the hygiene markets as well as healthcare product sales from the new spunmelt line installed in 2011. Higher volumes in Europe were due to the stabilization of underlying demand in our industrial markets as well as additional volume for consumer disposables, particularly wipes.

Gross Profit

Gross profit for the eleven months ended December 29, 2012 was $180.9 million, a $10.5 million increase compared with the eleven months ended December 31, 2011. As a result, gross profit as a percentage of sales increased from 15.5% to 16.9%. However, the eleven months ended December 31, 2011 includes $12.5 million related to the non-recurring amortization of the inventory step-up established as a result of the Merger. The charge had a 1.1 point impact on gross profit as a percentage of net sales in the period. In addition, during the eleven months ended December 31, 2011, we incurred higher relative manufacturing costs associated with the disruption of operations at our plant in Colombia due to a severe flood.

The year-over-year increase in gross margin was primarily driven by the lower cost for the raw materials of resin and fibers, especially polypropylene resin. As a percentage of net sales, the raw material component of cost of goods sold decreased from 58.2% to 54.2%. However, the increase in gross profit was partially offset by our labor and overhead components of cost of goods sold which reflects higher manufacturing costs primarily associated with volume-related manufacturing inefficiencies. As a percentage of net sales, labor increased from 6.2% to 6.6% and overhead increased from 20.1% to 22.3%. Also, the additional full year impacts of both the incremental depreciation on our new spunmelt manufacturing lines in the U.S. and China as well as the incremental lease expense related to the new U.S. line impacted our results. These amounts were partially offset by the positive benefits of our plant consolidation activity in the U.S.

Operating Income

Operating income for the eleven months ended December 29, 2012 was $31.2 million, a $39.3 million increase compared with the eleven months ended December 31, 2011. A reconciliation presenting the components of the period change by each of our operating divisions is as follows:


In millions	North America			South America			Europe			Asia			Sub-total			Corporate/ Other			Total
Beginning of period	$	35.0		$	8.4		$	8.4		$	19.8		$	71.6		$	(79.7	)	$	(8.1	)
Changes due to:
Volume		4.1			6.2			0.2			5.1			15.6			—			15.6
Price/product mix		(35.9	)		(9.1	)		(6.0	)		(5.1	)		(56.1	)		—			(56.1	)
Raw material cost		37.0			11.6			5.1			2.7			56.4			0.1			56.5
Manufacturing costs		(2.9	)		1.1			(0.9	)		(3.3	)		(6.0	)		0.1			(5.9	)
Currency translation		—			(1.2	)		(0.7	)		(0.1	)		(2.0	)		2.0			—
Depreciation and amortization		(0.8	)		(0.8	)		(0.5	)		(2.7	)		(4.8	)		—			(4.8	)
Purchase accounting		5.2			0.1			5.0			1.4			11.7			—			11.7
Special charges		—			—			—			—			—			22.4			22.4
All other		3.5			0.4			(0.5	)		(1.0	)		2.4			(2.5	)		(0.1	)

Sub-total		10.2			8.3			1.7			(3.0	)		17.2			22.1			39.3

End of period	$	45.2		$	16.7		$	10.1		$	16.8		$	88.8		$	(57.6	)	$	31.2

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the eleven months ended December 29, 2012 were $130.3 million, a $4.1 million decrease compared with the eleven months ended December 31, 2011. The decrease in selling, general and administrative expenses was primarily related to cost reduction initiatives implemented during the year which reduced employee-related expenses such as salaries, benefits, relocation, travel and entertainment by $2.7 million. Other drivers of the decrease included lower sales related taxes of $1.3 million and favorable changes in foreign currency rates of $3.9 million. These amounts were partially offset by an $0.9 million increase in volume-related expenses such as shipping and handling costs, higher short-term incentive compensation of $0.8 million as well as incremental selling and marketing costs. As a result, selling, general and administrative expenses as a percentage of net sales remained at 12.2% for each respective period.

Special Charges, net

Special charges for the eleven months ended December 29, 2012 were $19.0 million and consisted of the following components:

•

$12.4 million related to cost associated with our internal redesign and restructuring of global operations initiatives;

•

$3.8 million related to separation and severance expenses associated with our plant realignment cost initiatives;

•

$0.9 million related to separation and severance expenses associated with our IS support initiative;

•

$0.3 million related to professional fees and other transaction costs associated with the Merger; and

•

$1.6 million related to other corporate initiatives.

Special charges for the eleven months ended December 31, 2011 were $41.3 million and consisted of the following components:

•

$27.9 million related to professional fees and other transaction costs associated with the Merger;

•

$7.6 million non-cash impairment charge related to goodwill associated with four reporting units;

•

$1.6 million non-cash impairment charge related to the fair value adjustment of a former manufacturing facility in North Little Rock, Arkansas;

•

$1.5 million related to plant realignment costs;

•

$1.0 million related to costs incurred to re-establish manufacturing operations at our Cali, Colombia facility after a severe flood that occurred in December 2010; and

•

$1.7 million related to other corporate initiatives.

Other Operating, net

Other operating expense for the eleven months ended December 29, 2012 was $0.3 million, all of which were associated with foreign currency losses. For the eleven months ended December 31, 2011, other operating expense was $2.6 million. Amounts associated with foreign currency losses totaled $3.3 million and income related to a customer licensing agreement with a third-party manufacturer was $0.7 million.

Other Income (Expense)

Interest expense for the eleven months ended December 29, 2012 and the eleven months ended December 31, 2011 was $46.4 million, primarily related to our Senior Secured Notes issued in connection with the Merger. The notes bear interest at 7.75% and pay interest semi-annually each February 1 and August 1. Average outstanding debt levels and weighted-average interest rates have been consistent over each of the respective periods.

Foreign currency and other, net for the eleven months ended December 29, 2012 was an expense of $4.9 million, a $13.8 million decrease compared with the eleven months ended December 31, 2011. The decrease was primarily driven by the write-off of a $16.6 million tax indemnification asset that was established in the opening balance sheet in connection with the Merger. The amount was established to offset a $16.2 million unrecognized tax benefit that was resolved during 2011.

Income Tax (Provision) Benefit

During the eleven months ended December 29, 2012, we recognized income tax expense of $6.4 million on consolidated pre-tax book loss from continuing operations of $20.0 million. Our income tax expense in 2012 and 2011 is different than such expense determined at the U.S. federal statutory rate due to losses in certain jurisdictions for which no income tax benefits are anticipated, foreign withholding taxes for which tax credits are not anticipated, changes in the amounts recorded for PHC tax uncertainties, foreign taxes calculated at statutory rates different than the U.S. federal statutory rate, and the application of intraperiod tax allocation rules.

During the eleven months ended December 31, 2011, we recognized an income tax benefit of $3.3 million on consolidated pre-tax book losses from continuing operations of $73.1 million. We determined the Company may be subject to PHC tax for past periods and therefore, established an unrecognized tax benefit in 2010. During the eleven months ended December 31, 2011, the Internal Revenue Service (“IRS”) issued a favorable ruling determining the Company was not a PHC and $16.6 million was released, which represented the full amount of the unrecognized tax benefit associated with the PHC matter, including interest and penalties.

Discontinued Operations, net

Discontinued operations for the eleven months ended December 31, 2011 was a loss $6.3 million. In April 2011, we entered into an agreement to sell certain assets and the working capital of Difco for cash proceeds of $10.9 million. As a result, we accounted for Difco as a discontinued operation for all periods presented. The sale was completed on May 10, 2011 and resulted in a pre-tax loss of $0.7 million.

Earnings Attributable to Noncontrolling Interest

Earnings attributable to noncontrolling interest for the eleven months ended December 31, 2011 was $0.1 million. Noncontrolling interest represents the minority partners’ interest in the income or loss of consolidated subsidiaries which are not wholly-owned by us. During 2010, this interest included a 20% noncontrolling interest in our Chinese subsidiary, Nanhai Nanxin. We completed our acquisition of the remaining interest in the first quarter of 2011, and as a result, no longer incur charges or income associated with the noncontrolling interest.

Comparison of Successor One Month Ended January 28, 2012 and Predecessor One Month Ended January 28, 2011

The following table sets forth the period change for each category of the Statement of Operations for the one month ended January 28, 2012 for the Successor as compared to the one month ended January 28, 2011 for the Predecessor, as well as each category as a percentage of net sales:


	Successor			Predecessor									Percentage of Net Sales for the Respective Period End
*In thousands*	One Month Ended January 28, 2012			One Month Ended January 28, 2011			Period Change			January 28, 2012			January 28, 2011
Net sales	$	85,945		$	84,606		$	1,339			100.0	%		100.0	%
Cost of goods sold
Raw materials		(45,151	)		(45,417	)		266			52.5	%		53.7	%
Labor		(5,730	)		(5,584	)		(146	)		6.7	%		6.6	%
Overhead		(18,696	)		(17,530	)		(1,166	)		21.8	%		20.7	%

Gross profit		16,368			16,075			293			19.0	%		19.0	%
Selling, general and administrative expenses		(10,438	)		(11,564	)		1,126			12.1	%		13.7	%
Special charges, net		(610	)		(20,824	)		20,214			0.7	%		24.6	%
Other operating, net		625			564			61			(0.7	)%		(0.7	)%

Operating income (loss)		5,945			(15,749	)		21,694			6.9	%		(18.6	)%
Other income (expense):
Interest expense		(4,038	)		(1,922	)		(2,116	)		4.7	%		2.3	%
Foreign currency and other, net		(257	)		(82	)		(175	)		0.3	%		0.1	%

Income (loss) before income taxes		1,650			(17,753	)		19,403			1.9	%		(21.0	)%
Income tax (provision) benefit		(1,235	)		(549	)		(686	)		1.4	%		0.6	%

Income (loss) from continuing operations		415			(18,302	)		18,717			0.5	%		(21.6	)%
Discontinued operations, net		—			182			(182	)		—			0.2	%

Net income (loss)		415			(18,120	)		18,535			0.5	%		(21.4	)%
Less: Earnings attributable to noncontrolling interest		—			83			(83	)		—			(0.1	)%

Net income (loss) attributable to PGI Specialty Materials, Inc.	$	415		$	(18,203	)	$	18,618			0.5	%		(21.5	)%

Net Sales

Net sales for the one month ended January 28, 2012 were $85.9 million, a $1.3 million increase compared with the one month ended January 28, 2011. A reconciliation presenting the components of the period change by each of our operating segments is as follows:


In millions	North America			South America		Europe		Asia		Total
Beginning of period	$	43.5		$	7.4	$	24.3	$	9.4	$	84.6
Changes due to:
Volume		(2.7	)		6.4		0.2		—		3.9
Pri

Large accelerated filer

Accelerated filer

Non-accelerated filer

x (Do not check if a smaller reporting company)

Smaller reporting company

PGI Specialty Materials, Inc. S-1