UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

☒Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the fiscal year ended December 31, ~~2016~~2017

☐Transition Report Pursuant to Section 12 or 15(d) of the Securities Exchange Act of 1934.

For the transition period from to .

Commission file number 1-10776

Calgon Carbon Corporation

(Exact name of registrant as specified in its charter)

Delaware		25-0530110
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

3000 GSK Drive
Moon Township, Pennsylvania		15108
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (412) 787-6700

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Name of each exchange on which registered
Common Stock, par value $0.01 per share		New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

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

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ ~~Smaller reporting company ☐~~ (Do not check if a smaller reporting company) Smaller reporting company ☐ Emerging growth company ☐

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

As of February 155, ~~2017~~2018, there were outstanding 50,~~645~~812,~~478~~679 shares of Common Stock, par value of $0.01 per share.

The aggregate market value of the voting stock held by non-affiliates as of June 30, ~~2016~~2017 was $~~602~~750,~~502~~784,~~505~~306.1550. The closing price of the Company’s common stock on June 30, ~~2016~~2017, as reported on the New York Stock Exchange was $~~13.~~15.10.

The following documents have been incorporated by reference:

Document		Form 10-K Part Number
Proxy Statement filed pursuant to Regulation 14A in connection with registrant’s		III
Annual Meeting of Stockholders to be held on May 4, 2017

Document		Form 10-K Part Number
None

Table of Contents

INDEX

PART I
Item 1.	Business	4
Item 1A.	Risk Factors	1211
Item 1B.	Unresolved Staff Comments	18
Item 2.	Properties	19
Item 3.	Legal Proceedings	21
Item 4.	Mine Safety Disclosures	2221
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Repurchases of Equity Securities	22
Item 6.	Selected Financial Data	24
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	4138
Item 8.	Financial Statements and Supplementary Data	4239
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	9592
Item 9A.	Controls and Procedures	9592
Item 9B.	Other Information	9592
PART III
Item 10.	Directors, Executive Officers, and Corporate Governance ~~of the Registrant~~	9693
Item 11.	Executive Compensation	9697
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	96131
Item 13.	Certain Relationships, and Related Transactions, and Director Independence	97136
Item 14.	Principal ~~Accounting~~Accountant Fees and Services	97136
PART IV
Item 15.	Exhibits and Financial Statement Schedule	98140
Signatures		~~104~~147

Table of Contents

Forward-Looking Information Safe Harbor

This Annual Report on Form 10-K contains historical information and forward-looking statements. Forward-looking statements typically contain words such as “expect,” “believe,” “estimate,” “anticipate,” or similar words indicating that future outcomes are uncertain. Statements looking forward in time, including statements regarding the proposed merger (Pending Merger) between Calgon Carbon Corporation (the Company) and a subsidiary of Kuraray Co., Ltd. (Kuraray), future growth and profitability, price increases, cost savings, broader product lines, enhanced competitive posture and acquisitions, are included in this Annual Report on ~~form~~Form 10-K pursuant to the “safe harbor” provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks and uncertainties that may cause ~~Calgon Carbon Corporation’s (~~the Company’s) actual results in future periods to be materially different from any future performance suggested herein. Further, the Company operates in an industry sector where securities values may be volatile and may be influenced by economic and other factors beyond the Company’s control. Factors that could affect future outcomes, including the future performance of the Company, include, without limitation: the failure to obtain governmental approval of the Pending Merger on the proposed terms and schedule, and any conditions imposed on the Company, Kuraray or the combined company in connection with consummation of the Pending Merger; and the failure to satisfy various other conditions to the closing of the Pending Merger contemplated by the merger agreement; disruption from the potential Pending Merger making it more difficult to maintain relationships with customers, employees or suppliers; the Company’s ability to successfully integrate the November 2, 2016 acquisition of the assets and business of the wood-based activated carbon, reactivation, and mineral-based filtration media of CECA, ~~a subsidiary of Arkema Group~~ (New Business) and achieve the expected results of the acquisition, including any expected synergies and the expected future accretion to earnings; changes in, or delays in the implementation of, regulations that cause a market for ~~our~~the Company’s products; the Company’s ability to successfully type approve or qualify its products to meet customer and end market requirements; changes in competitor prices for products similar to ~~ours~~the Company’s; higher energy and raw material costs; costs of imports and related tariffs; unfavorable weather conditions and changes in market prices of natural gas relative to prices of coal; changes in foreign currency exchange rates and interest rates; changes in corporate income and cross-border tax policies of the United States and other countries; labor relations; the availability of capital and environmental requirements as they relate to ~~both~~the ~~our~~Company’s operations and to those of ~~our~~its customers; borrowing restrictions; the validity of and licensing restrictions on the use of patents, trademarks and other intellectual property; ~~and~~ pension costs; and the results of litigation involving the Company, including any challenges to the Pending Merger. In the context of the forward-looking information provided in this Annual Report on Form 10-K, please refer to the discussions of risk factors and other information detailed in, as well as the other information contained in this Annual Report. Any forward-looking statement speaks only as of the date on which such statement is made and the Company does not intend to correct or update any forward-looking statements, whether as a result of new information, future events or otherwise, unless required to do so by the Federal securities laws of the United States.

In reviewing any agreements incorporated by reference in this Form 10-K, please remember such agreements are included to provide information regarding the terms of such agreements and are not intended to provide any other factual or disclosure information about the Company. The agreements may contain representations and warranties by the Company, which should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties should those statements prove to be inaccurate. The representation and warranties were made only as of the date of the relevant agreement or such other date or dates as may be specified in such agreement and are subject to more recent developments. Accordingly, these representations and warranties alone may not describe the actual state of affairs as of the date they were made or at any other time.

Table of Contents

PART I

Item 1. Business:

The Company

On ~~November~~September 221, ~~2016~~2017, the Company ~~completed~~entered ~~the~~into ~~acquisition~~a ofdefinitive ~~the~~merger ~~wood-based~~agreement ~~activated~~under ~~carbon,~~which ~~reactivation and mineral-based filtration media business of CECA,~~ a subsidiary of ~~Arkema Group (New Business). Due to~~ the ~~complementary~~Japanese ~~nature~~chemical ofmanufacturer ~~the~~Kuraray ~~New~~Co., ~~Business’~~Ltd. ~~products~~(Kuraray) ~~and~~agreed ~~market applications~~ to ~~those~~acquire of the Company, ~~and~~by ~~its~~way ~~significant~~of ~~exposure~~a toreverse ~~less~~triangular ~~regulated,~~merger ~~more~~(Pending ~~traditional~~Merger). Following ~~end markets,~~ the ~~addition~~consummation of the ~~New~~Pending ~~Business~~Merger, to the Company ~~creates~~would become a ~~more~~wholly ~~balanced~~owned ~~global~~subsidiary ~~platform~~of ~~from~~Kuraray. Refer ~~which~~to ~~the~~Note ~~Company~~21 ~~can continue~~ to ~~grow~~the byconsolidated ~~leveraging~~financial ~~its~~statements ~~now~~in ~~expanded~~Item ~~capabilities~~8 inof ~~the~~this ~~global~~Annual ~~activated~~Report ~~carbon~~for ~~and~~additional ~~adjacent~~information ~~filtration~~regarding ~~media~~the ~~market~~Pending ~~areas~~Merger.

On November 2, 2016, the Company completed the acquisition of the wood-based activated carbon, reactivation and mineral-based filtration media business of CECA, a subsidiary of Arkema Group (New Business). Due to the complementary nature of the New Business’ products and market applications to those of the Company, and its significant exposure to less regulated, more traditional end markets, the addition of the New Business to the Company created a more balanced global platform from which the Company can continue to grow by leveraging its now expanded capabilities in the global activated carbon and adjacent filtration media market areas.

Beginning January 1, 2017, the Company realigned its internal management reporting structure to incorporate the New Business into the existing business, and reorganized its current reportable segments. The Company is reporting its results using the new reportable segment structure and has restated prior periods to conform to the change in reportable segments.

The Company was organized as a Delaware corporation in 1967.

Products and Services

The Company offers a diverse range of products, services, and equipment specifically developed for the purification, separation, ~~and~~ concentration, and filtration of liquids, gases, and other media through its reportable business segments: Activated Carbon ~~and Service~~, ~~Equipment,~~Alternative ~~Consumer~~Materials, and ~~Other. In~~Advanced ~~2016,~~Water ~~Other is exclusively comprised of the results of the New Business~~Purification.

· The Activated Carbon ~~and Service~~ segment manufactures and/or markets granular and powdered coal-based, wood-based, and coconut shell-based activated carbon for use in many distinct market applications that remove organic compounds from water, air, and other liquids and gases. ~~The~~This ~~Service~~segment ~~aspect~~also ofincludes ~~this~~the ~~segment~~reactivation ~~consists~~ of spent carbon ~~reactivation~~ and the ~~leasing,~~sale ~~installation,~~or ~~monitoring~~leasing ~~and maintenance~~ of related carbon adsorption equipment, and maintenance at customer sites.

· The ~~Equipment~~Alternative Materials segment ~~provides~~supplies ~~solutions~~diatomaceous toearth ~~customers’~~and ~~air~~perlite filtration media for decolorization, ~~water~~purification, decontamination, and ~~other~~filtration ~~liquid~~of ~~purification~~liquids ~~problems~~in ~~through~~various ~~the~~applications ~~design,~~including ~~fabrication,~~the ~~installation~~manufacture and ~~sale~~processing of ~~equipment~~food ~~systems~~and ~~that~~beverage, ~~utilize~~industrial ~~one~~and orpharmaceutical ~~more~~products. ofThis ~~the~~segment ~~Company’s~~also ~~enabling~~consists ~~technologies:~~of ~~carbon~~activities ~~adsorption,~~related ~~ultraviolet~~to ~~(UV)~~carbon ~~light~~cloth (for ~~ballast~~use ~~water,~~in ~~drinking water~~military, ~~and~~industrial ~~wastewater treatment),~~ and ~~advanced~~medical ~~ion-exchange (IX) technologies~~applications.

· The ~~Consumer~~Advanced Water Purification segment ~~supplies~~provides ~~activated~~solutions ~~carbon~~to ~~cloth~~customer ~~for~~water ~~use~~process inproblems ~~medical~~through the design, ~~military~~fabrication, and ~~industrial~~operation ~~applications~~of systems, as well as the sale of materials and services that utilize the Company’s enabling technologies: ultraviolet light and advanced ion exchange separation.

· The New Business, reported in Other, manufactures and markets granular and powdered wood-based activated carbon, coal-based activated carbon reactivation, diatomaceous earth and perlite filtration media for use in various distinct market applications. They are used primarily for decolorization, purification, decontamination, and filtration of liquids in various applications including food and beverage, industrial, fine chemicals and pharmaceuticals.

For further information, refer to Note 18 to the consolidated financial statements in Item 8 of this Annual Report.

Activated Carbon ~~and Service~~. The sale of activated carbon is the principal component of the Activated Carbon ~~and Service~~ business segment. The Company is recognized as the leading manufacturer of bituminous coal-based granular activated carbon. Activated carbon is a porous material that removes organic compounds from liquids and gases by a process known as “adsorption.” In adsorption, undesirable organic molecules contained in a liquid or gas are attracted and bound to the surface of the pores of the activated carbon as the liquid or gas is passed through.

The primary raw material used in the production of the Company’s activated carbons is bituminous coal, which is crushed, sized and then processed in rotary kilns followed by high temperature furnaces. This heating process is known as “activation” and develops the pore structure of the carbon. Through adjustments in the activation process, pores of the required size and number are developed for a particular purification application. The Company’s technological expertise in adjusting the pore structure in the activation process has been one of a number of factors enabling the Company to develop many special types of activated carbon available in several particle sizes. The Company also markets activated carbons from other raw materials, including coconut shell and wood.

Table of Contents

The ~~Activated~~primary ~~Carbon~~raw ~~and~~material ~~Service~~used ~~business~~in ~~segment~~the ~~produces~~production ~~and~~of ~~sells~~the aCompany’s ~~broad~~activated ~~range~~carbons ofis ~~activated~~bituminous coal, ~~impregnated~~which oris ~~acid~~crushed, ~~washed~~sized ~~carbons~~and then processed in ~~granular,~~rotary ~~powdered~~kilns orfollowed ~~pellet~~by ~~form. Granular~~high ~~Activated~~temperature ~~Carbon~~furnaces. This ~~(GAC)~~heating ~~particles~~process ~~are~~is ~~irregular~~known inas ~~shape~~“activation” and ~~generally~~develops ~~used~~the pore structure of the carbon. Through adjustments in ~~fixed~~the ~~filter~~activation ~~beds~~process, pores of the required size and number are developed for ~~continuous~~a ~~flow~~particular purification ~~processes~~application. ~~Powdered~~The ~~Activated~~Company’s ~~Carbon~~technological ~~(PAC)~~expertise isin ~~carbon~~adjusting ~~that~~the pore structure in the activation process has been ~~pulverized~~one ~~into~~of ~~powder~~a ~~and~~number isof ~~often~~factors ~~used~~enabling inthe ~~batch~~Company ~~purification~~to ~~processes,~~develop inmany ~~municipal~~special ~~water~~types ~~treatment~~of ~~applications~~activated ~~and~~carbon ~~for~~available ~~flue~~in ~~gas~~several ~~emissions~~particle ~~control~~sizes. ~~Pelletized~~The manufacturing and marketing of wood-based activated ~~carbons~~carbon ~~are~~and ~~extruded~~reactivation ~~particles,~~of ~~cylindrical~~coal-based inactivated ~~shape,~~carbon ~~and~~are also are ~~typically~~included ~~used~~in ~~for~~the ~~gas~~Activated ~~phase~~Carbon ~~applications~~business ~~due~~segment. The toCompany ~~the~~also ~~low~~markets ~~pressure~~activated ~~drop,~~carbons ~~high~~produced ~~mechanical~~by ~~strength~~other manufacturers, ~~and~~as ~~low~~well ~~dust~~as ~~content~~activated ofcarbon ~~the~~produced ~~product~~from other raw materials, including coconut shells.

~~Another~~With ~~important~~primary ~~component~~manufacturing offacilities ~~the~~located ~~Activated~~in ~~Carbon~~Catlettsburg, Kentucky, Pearlington, Mississippi, and ~~Service~~Parentis-en-born, France, the Activated Carbon business segment isproduces ~~the~~and ~~optional~~sells ~~services~~a ~~that~~broad ~~the~~range ~~Company~~of ~~makes~~activated, ~~available~~impregnated toor ~~purchasers~~acid ofwashed ~~its~~carbons ~~products~~in ~~and~~granular, ~~systems~~powdered or pellet form. ItGranular ~~offers~~Activated aCarbon ~~variety~~(GAC) ofparticles ~~treatment~~are ~~services~~irregular in shape and generally used in fixed filter beds for ~~customers~~continuous ~~including~~flow purification processes. Powdered Activated Carbon (PAC) is carbon ~~supply,~~that ~~equipment~~has ~~leasing,~~been ~~installation~~pulverized into powder and ~~demobilization,~~is ~~transportation~~often used in batch purification processes, in municipal water treatment applications and ~~spent~~for ~~carbon~~flue ~~reactivation~~gas emissions control. ~~Other~~Pelletized ~~services~~activated ~~include~~carbons ~~feasibility~~are ~~testing~~extruded particles, ~~process~~cylindrical ~~design~~in shape, ~~performance~~and ~~monitoring~~are typically used for gas phase applications due to the low pressure drop, high mechanical strength, and ~~major~~low ~~maintenance~~dust content of ~~Company-owned~~the ~~adsorption equipment~~product.

Another important component of the Activated Carbon business segment is the optional services that the Company makes available to purchasers of its products and systems. It offers a variety of treatment services for customers including carbon supply, equipment leasing, installation and demobilization, transportation, and spent carbon reactivation. Other services include feasibility testing, process design, performance monitoring, and major maintenance of Company-owned adsorption equipment.

Along with providing activated carbon products, the Company has developed a portfolio of standardized, pre-engineered, activated carbon adsorption systems—for both liquid and vapor applications—which can be quickly delivered and easily installed at treatment sites. Liquid phase equipment systems are used for potable water treatment, process purification, wastewater treatment, groundwater remediation, and de-chlorination. Vapor phase equipment systems are used to control volatile organic compound (VOC) emissions, off gases from air strippers, and landfill gas production.

Spent carbon reactivation and re-supply is a key focus of the Company’s service business. In the reactivation process, the spent GAC is subjected to high temperature remanufacturing conditions that destroy the adsorbed organics and ensure that the activated carbon is returned to usable quality. The Company is permitted to handle and reactivate spent carbons containing hazardous and non-hazardous organic compounds.

Granular carbon reactivation is conducted at numerous locations throughout the world. It is valuable to acustomers ~~customer~~ for both environmental and economic reasons, allowing them to reuse carbon cost-effectively without purchasing more expensive new carbon, and, at the same time, protecting natural resources. The Company provides reactivation services in packages ranging from a ~~fifty-five~~thirty ~~gallon~~pound ~~drum~~bag to truckload quantities.

The Company’s custom reactivation process for United States (U.S.) municipal drinking water treatment plants is specially tailored to meet the unique demands of the drinking water industry. Activated carbon reactivation for use in drinking water treatment facilities in the U.S. must adhere to requirements of the American Water Works Association (AWWA) standard B605. Perhaps the most important requirement of this standard is that the reactivator must return to the municipality/water provider its own activated carbon that has been reactivated. Unlike industrial activated carbon reactivation practiced by a number of carbon companies, where carbons from different customers can be co-mingled and reactivated as a pooled material, drinking water carbons are carefully segregated. This means that a drinking water provider’s activated carbon is kept separate not only from industrial customers’ carbons, but also from the activated carbon of other providers’ activated carbon as well, to avoid any potential cross-contamination. The Company maintains the integrity of each drinking water provider’s carbon, and its potable reactivation facilities and procedures strictly adhere to AWWA B605. The Company’s ~~Blue Lake, California,~~ Columbus, Ohio, North Tonawanda, New York, and Gila Bend, Arizona plants have received certification from the National Sanitation Foundation International (NSF) under NSF/ANSI Standard 61: Drinking Water System Components - Health Effects for custom reactivated carbon for potable water applications. NSF International is an independent, not-for-profit organization committed to protecting and improving public health and the environment.

European custom reactivation process maintains the segregation of drinking water provider’s activated carbon and ensures returned product fulfills the requirements of European Standard EN12015 as well as specific additional requirements as found in the United Kingdom Drinking Water Inspectorate (DWI) approval list of products and in the KIWA-ATA certification. Custom reactivation for European municipal drinking water treatment plants is performed in reactivation facilities in Belgium, the United Kingdom, and Italy. The site in Feluy, Belgium, which is accredited ISO9001 and ISO14001 for Quality and Environmental management systems, is the only carbon reactivation facility in the world with ISO22000 accreditation for Food Safety Management System (FSMS).

Transportation services are offered via bulk activated carbon deliveries and spent carbon returns through the Company’s private fleet of trailers, capable of transporting both hazardous and non-hazardous material. The Company will arrange transportation for packaged and smaller volumes of activated carbon in appropriate containers and small returnable equipment through a network of commercial and less-than-truckload carriers.

Sales for the Activated Carbon and Service segment were $454.6 million, $486.5 million, and $498.2 million for the years ended December 31, 2016, 2015, and 2014, respectively.

Table of Contents

~~Equipment. Along~~European ~~with~~custom ~~providing~~reactivation process maintains the segregation of drinking water provider’s activated carbon ~~products,~~and ~~the~~ensures ~~Company~~returned ~~has~~product ~~developed~~fulfills athe ~~portfolio~~requirements of ~~standardized,~~European ~~pre-engineered,~~Standard ~~activated~~EN12915 ~~carbon~~as ~~adsorption~~well ~~systems—for~~as ~~both~~specific ~~liquid~~additional ~~and~~requirements ~~vapor~~as ~~applications—which~~found ~~can~~in bethe ~~quickly~~United ~~delivered~~Kingdom ~~and~~Drinking ~~easily~~Water ~~installed~~Inspectorate at(DWI) ~~treatment~~approval ~~sites. Liquid~~list ~~phase~~of ~~equipment~~products ~~systems~~and ~~are~~in ~~used~~the KIWA-ATA certification. Custom reactivation for ~~potable~~European municipal drinking water treatment, ~~process~~plants ~~purification,~~is ~~wastewater~~performed ~~treatment~~in reactivation facilities in Belgium, ~~groundwater~~the ~~remediation~~United Kingdom, and ~~de-chlorination~~Italy. ~~Vapor~~The ~~phase~~site ~~equipment~~in ~~systems~~Feluy, ~~are~~Belgium, ~~used~~which tois ~~control~~accredited ~~volatile~~ISO9001 ~~organic~~and ~~compound~~ISO14001 ~~(VOC)~~for ~~emissions~~Quality and Environmental management systems, ~~off~~is ~~gases~~the ~~from~~only ~~air~~carbon ~~strippers,~~reactivation ~~and~~facility ~~landfill~~in ~~gas~~the ~~production~~world with ISO22000 accreditation for Food Safety Management System (FSMS).

~~Through~~Transportation ~~its~~services UVare ~~Technologies~~offered ~~LLC~~via ~~subsidiary,~~bulk ~~the~~activated ~~Company~~carbon ~~also~~deliveries ~~manufactures~~ and ~~sells~~spent acarbon ~~broad~~returns ~~line~~through ~~of UV (ultraviolet) light disinfection equipment. Following~~ the Company’s ~~introduction~~private fleet of ~~an advanced UV oxidation process to remediate contaminated groundwater~~trailers, incapable ~~1998,~~of ~~its~~transporting ~~scientists~~both ~~invented~~hazardous ~~a UV disinfection process used to inactivate Cryptosporidium, Giardia~~ and ~~other~~non-hazardous ~~similar pathogens in surface water, rendering them harmless to humans~~material. ~~In combination with hydrogen peroxide, UV light is effective in destroying many contaminants common in groundwater remediation applications.~~ The Company ~~participates~~will inarrange ~~the~~transportation ~~marketplace~~ for ~~innovative~~packaged UV technologies with its Sentinel® line designed to protect municipal drinking water supplies from pathogens, the C3 Series™ open-channel wastewater disinfection product line for municipal wastewater disinfection, and ~~Rayox® UV~~smaller ~~advanced~~volumes ~~oxidation equipment for treatment~~ of ~~contaminants~~activated carbon in ~~groundwater,~~appropriate ~~process~~containers ~~water,~~ and ~~industrial~~small ~~wastewater. UV~~returnable ~~oxidation~~ equipment ~~can~~through ~~also~~a benetwork ~~combined~~of ~~with~~commercial ~~activated carbon to provide effective solutions for taste~~ and ~~odor~~less-than-truckload ~~removal in municipal drinking water and for water reuse~~carriers.

~~Under~~Sales ~~the~~for ~~trade name Hyde Marine, which was acquired in 2010,~~ the ~~Company~~Activated ~~also~~Carbon ~~manufactures~~segment ~~and~~were ~~sells~~$547.0 ~~UV ballast water management systems (BWMS) that combine filtration and UV disinfection to treat and disinfect the ballast water taken in by a ship in one location~~million, ~~and discharged in another, to prevent the spread of non-indigenous aquatic organisms~~$476. ~~Invasion~~8 of non-native species via ballast water is considered to be one of the greatest threats to the world’s waterways and marine environment. The Company competes in this market with its Hyde GUARDIAN® BWMS – an easy-to-usemillion, ~~cost-effective,~~ and ~~chemical-free ballast water management solution~~$496. ~~The~~9 ~~International~~million ~~Maritime~~for ~~Organization (IMO) type approved system meets~~ the ~~needs~~years ofended ~~ship owners committed to operating their vessels in a responsible~~December 31, ~~sustainable~~2017, ~~and economic way through its proven reliability~~2016, ~~flexible~~ and ~~compact design~~2015, ~~and low operating costs~~respectively. ~~In 2017, the Company is planning to complete the testing of its BWMS in order to apply to become type approved by the U.S. Coast Guard (USCG) for treating ballast water discharged in U.S. waterways.~~

~~The~~Alternative ~~Company also manufactures and sells fixed bed and continuous ion exchange equipment~~Materials. The ~~proprietary~~primary ~~continuous~~products ~~ISEP®~~offered ~~(Ionic~~in ~~Separator)~~the ~~and~~Alternative ~~CSEP®~~Materials ~~(Chromatographic~~segment ~~Separator) units~~ are ~~used~~diatomaceous ~~for~~earth ~~the~~(DE) ~~purification, separation~~ and ~~recovery~~perlite offiltration ~~many~~media. These products ~~in the food and beverage~~, ~~pharmaceutical,~~which ~~mining, chemical, and biotechnology industries. The ISEP® and CSEP® systems~~ are ~~currently~~primarily used inas ~~installations~~filter ~~worldwide~~aids ~~for~~in abeverage, ~~variety~~food, ofand ~~applications in~~ industrial ~~settings~~applications, asare ~~well~~marketed asand indistributed ~~selected~~across ~~environmental~~the ~~applications~~European ~~including~~region ~~perchlorate~~in ~~and~~relatively ~~nitrate~~close ~~removal~~proximity ~~from~~to ~~drinking~~their ~~water~~manufacturing locations. The ~~core~~Alternative ~~technology~~Materials ofsegment ~~these~~also ~~systems~~includes carbon cloth, which is ~~the~~activated ~~proprietary~~carbon ~~rotary~~in ~~distribution~~cloth ~~valve~~form. ~~This~~Carbon ~~valve~~cloth ~~technology~~ is ~~offered~~manufactured in ~~combination~~the ~~with~~United aKingdom ~~turntable~~(UK) ~~for~~and ~~movement~~sold ofto ~~media~~the ~~vessels~~medical, ormilitary, ~~with~~and ~~static~~specialty ~~media vessels where vessel-movement is simulated by recent advances in valve technology~~markets.

~~The~~For ~~Company~~the ~~assembles~~production ~~its~~of ~~equipment~~DE ~~using~~products, ~~parts~~the ~~that~~Alternative ~~are~~Materials ~~both~~business ~~manufactured~~segment ~~internally~~is asvertically ~~well~~integrated from the raw material source to the final product, as ~~purchased~~the Company owns two mineral deposit quarry sources which provide raw materials for the DE manufacturing processes. DE is manufactured from ~~other~~diatomite, ~~suppliers~~which is a lightweight and porous rock formed over many years by the successive accumulation and fossilization of the skeletal remains of single-cell algae – or diatoms – that lived in lakes, and were able to fix soluble silica on their shells. ~~During~~These ~~periods~~owned quarries each have 20 or more years of ~~heightened~~raw ~~demand~~material reserves available. The Company’s DE products, ~~manufacturing~~which are manufactured through a multi-step process that includes crushing, milling, calcination, and ~~assembly~~packaging, ~~may~~are besold ~~outsourced~~throughout tothe ~~other~~European ~~qualified~~region ~~manufacturers~~under the broadly recognized Clarcel® brand name.

~~Sales~~Perlite ~~for~~products, ~~the~~widely ~~Equipment~~known ~~segment~~in ~~were~~Europe ~~$38.9~~as ~~million~~Randalite® and Randafil™, ~~$39.3~~are ~~million~~manufactured from perlite ore, ~~and~~which ~~$45.3~~is ~~million~~a ~~for~~silica ~~the~~rock ~~years~~of ~~ended~~volcanic ~~December~~origin 31that contains fine water droplets. In the Company’s manufacturing process, ~~2016~~raw materials, ~~2015~~which are procured from mines located in the Mediterranean region, are expanded at high temperature then crushed and ~~2014,~~grated ~~respectively~~into final product form.

Consumer. The primary product offered in the Consumer segment is carbon cloth. Carbon cloth, which is activated carbon in cloth form, is manufactured in the United Kingdom (UK) and sold to the medical, military, and specialty markets. First developed in the 1970’s, activated carbon cloth was originally used in military clothing and masks to protect wearers against nuclear, biological and chemical agents. Today, activated carbon cloth can be used in numerous additional applications, including sensor protection, filters for ostomy bags, wound dressings, conservation of artifacts, and respiratory masks.

Sales for the ~~Consumer~~Alternative Materials segment were $856.74 million, $914.24 million, and $119.62 million for the years ended December 31, ~~2016~~2017, ~~2015~~2016, and ~~2014~~2015, respectively.

Advanced Water Purification. Through its UV Technologies LLC subsidiary, the Company also manufactures and sells a broad line of UV (ultraviolet) light disinfection equipment. Following the Company’s introduction of an advanced UV oxidation process to remediate contaminated groundwater, in 1998, its scientists invented a UV disinfection process used to inactivate Cryptosporidium, Giardia and other similar pathogens in surface water, rendering them harmless to humans. In combination with hydrogen peroxide, UV light is effective in destroying many contaminants common in groundwater remediation applications. The Company participates in the marketplace for innovative UV technologies with its Sentinel® line designed to protect municipal drinking water supplies from pathogens, the C3 Series™ open-channel wastewater disinfection product line for municipal wastewater disinfection, and Rayox® UV advanced oxidation equipment for treatment of contaminants in groundwater, process water, and industrial wastewater. UV oxidation equipment can also be combined with activated carbon to provide effective solutions for taste and odor removal in municipal drinking water and for water reuse.

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~~Other. As~~Under ~~mentioned~~the ~~previously~~trade name Hyde Marine, which was acquired in 2010, the Company’s ~~New~~also ~~Business~~manufactures isand ~~reported~~sells inUV ~~Other. In~~ballast ~~summary,~~water treatment systems (BWTS) that combine filtration and UV disinfection to treat and disinfect the ~~New~~ballast ~~Business~~water istaken in by a ~~leading~~ship ~~European~~in ~~manufacturer~~one location, and discharged in another, to prevent the spread of ~~wood~~non-~~based~~indigenous ~~activated~~aquatic ~~carbon,~~organisms. Invasion ~~coal~~of non-~~based~~native ~~activated~~species ~~carbon~~via ~~reactivation,~~ballast ~~and~~water ~~diatomaceous~~is ~~earth~~considered to be one of the greatest threats to the world’s waterways and ~~perlite~~marine ~~filtration~~environment. The ~~media~~Company competes in this market with its Hyde GUARDIAN® BWTS – an easy-to-use, cost-effective, and achemical-free ~~leading~~ballast ~~distributor~~water ofmanagement ~~such~~solution. The ~~products~~Company ~~and~~assembles ~~services~~its ~~primarily~~equipment ~~throughout~~using ~~the~~parts ~~European~~that ~~region~~are ~~and~~both ~~into~~manufactured ~~Asia~~internally as well as purchased from other suppliers. ~~With~~The ~~four~~International ~~manufacturing~~Maritime ~~facilities~~Organization ~~located~~(IMO) type approved system meets the needs of ship owners committed to operating their vessels in ~~France~~a responsible, sustainable, and ~~two~~economic inway ~~Italy~~through its proven reliability, ~~the~~flexible ~~2016~~and ~~sales~~compact ofdesign, and low operating costs. In 2018, the ~~New~~Company ~~Business~~is ~~were~~planning ~~$12.1~~to ~~million~~complete ~~from~~the testing of its ~~date~~BWTS ofin ~~acquisition~~order onto ~~November~~apply 2,to ~~2016~~become ~~through~~type ~~December~~approved ~~31,~~by ~~2016~~the U.S. Coast Guard (USCG) for treating ballast water discharged in U.S. waterways.

The ~~New~~Company ~~Business’~~also ~~wood-based~~manufactures ~~activated~~and ~~carbon~~sells ~~manufacturing~~fixed ~~facility~~bed isand ~~located~~continuous inion ~~Parentis~~exchange enequipment. The ~~Born,~~proprietary ~~France,~~continuous ~~which~~ISEP® is(Ionic ~~ideally~~Separator) ~~situated~~and inCSEP® ~~the~~(Chromatographic ~~heart~~Separator) ofunits aare ~~forest~~used infor ~~Europe. It is~~ the ~~only~~purification, ~~European~~separation ~~activated~~and ~~carbon~~recovery ~~facility~~of tomany ~~have~~products ~~both~~in ~~steam~~the food and ~~chemical~~beverage, ~~activation~~pharmaceutical, ~~process~~mining, ~~capabilities~~chemical, onand ~~the~~biotechnology ~~same site~~industries. The ~~New~~ISEP® ~~Business’~~and ~~manufacturing~~CSEP® ~~processes~~systems ~~impart~~are ~~first-rate~~currently ~~physio-chemical~~used ~~properties~~in toinstallations ~~the~~worldwide ~~final~~for ~~activated~~a ~~carbon~~variety ~~products~~of ~~including~~applications ~~high~~in ~~porosity,~~industrial ~~large adsorption capacity~~settings, ~~permeability,~~as ~~and~~well –as ~~when~~in ~~combined~~selected ~~with~~environmental aapplications ~~washing~~including ~~process~~perchlorate –and anitrate ~~high~~removal ~~level~~from ofdrinking ~~purity~~water. ~~Its~~The ~~products~~core ~~are~~technology ~~sold~~of ~~primarily~~these insystems ~~Europe~~is tothe ~~food,~~proprietary ~~beverage,~~rotary ~~industrial,~~distribution ~~fine chemicals and pharmaceutical customers~~valve. ItThis ~~also~~valve ~~sells~~technology ~~product~~is ~~into~~offered ~~Asia,~~in ~~primarily~~combination ~~India,~~with ~~principally~~a turntable for ~~pharmaceutical~~movement ~~end~~of ~~market~~media ~~usage. The~~vessels, ~~Company’s~~or ~~products~~with ~~are~~static ~~well~~media ~~known~~vessels inwhere ~~the~~vessel-movement ~~regional~~is ~~market~~simulated ~~places~~by asrecent ~~Acticarbone®~~advances ~~and~~in ~~Anticromos®~~valve technology.

~~The~~Sales ~~New~~for ~~Business’~~the ~~coal-based~~Advanced ~~granular~~Water ~~activated~~Purification ~~carbon~~segment ~~reactivation~~were ~~capability~~$16.4 ismillion, ~~located~~$23.1 ~~in northern Italy~~million, ~~which~~and is$28.9 ~~complementary~~million tofor the ~~location~~years ofended ~~the~~December ~~Company’s~~31, ~~other~~2017, ~~European~~2016, ~~reactivation facilities – which are located in the UK~~ and ~~Belgium. Its~~2015, ~~capabilities include both food grade and industrial grade reactivation kilns~~respectively.

The remainder of the New Business is related to the manufacture of diatomaceous earth (DE) and perlite filtration media products. These products, which are primarily used as filter aids in beverage, food, and industrial applications, are marketed and distributed across the European region in relatively close proximity to their manufacturing locations.

For the production of DE products, the New Business is vertically integrated from the raw material source to the final product, as it owns two mineral deposit quarry sources which provide raw materials for its DE manufacturing processes. DE is manufactured from diatomite, which is a lightweight and porous rock formed over many years by the successive accumulation and fossilization of the skeletal remains of single-cell algae – or diatoms – that lived in lakes, and were able to fix soluble silica on their shells. These owned quarries each have 20 or more years of raw material reserves available. The Company manufactures DE through a multi-step process that includes crushing, milling, calcination, and packaging. The New Business’ DE products are sold throughout the European region under the broadly recognized Clarcel® brand name.

The New Business’ perlite products, widely known in Europe as Randalite® and Randafil™, are manufactured from perlite oar, which is a silica rock of volcanic origin that contains fine water droplets. Through the New Business’ manufacturing process it is expanded at high temperature then crushed and grated into final product form. The Company obtains its raw material for perlite manufacturing from mines located in the Mediterranean region.

Markets

The Company participates in six primary markets: Potable Water, Industrial Process, Environmental Water, Environmental Air, Food and Beverage, and Specialty markets~~. Potable Water applications include municipal drinking water treatment as well as point of entry and point of use devices. Applications in the Industrial Process Market include catalysis~~, ~~product~~which ~~recovery~~are ~~and~~described purification of chemicals, specialty chemicals and pharmaceuticals, as well as process water treatment. The major applications for the two Environmental markets include wastewater treatment, groundwater remediation, ballast water treatment, VOC removal from vapors, and mercury control in ~~flue~~more ~~gas~~detail ~~streams~~below. Food and Beverage applications include wine, bottling, brewing, amino acids, and sweetener purification. Medical, personal protection (military and industrial), automotive, consumer, and precious metals applications comprise the Specialty Market.

Potable Water Market. The Company sells activated carbons, equipment, custom reactivation services, ion exchange technology, and UV technologies to municipalities for the treatment of potable water. The activated carbon adsorption technology is used to remove both regulated and non-regulated contaminants of concern, including disinfection by-products and their precursors, perfluorinated compounds, pesticides, carcinogenic ~~volatile organic compounds~~VOCs, algal toxins, other dissolved organic materials, and taste and odor compounds to meet regulated limits or to make the water quality acceptable to the public. The Company also sells to original equipment manufacturers (OEMs) of home water purification systems. Granular and powdered activated carbon products are sold in this market and in many cases the granular activated carbon functions both as the primary filtration media as well as an adsorption media to remove contaminants from the water. Ion exchange resins are sold for use in both fixed beds and continuous counter-current operations to meet strict regulatory guidelines for perchlorate and nitrate in water. UV advanced oxidation systems are sold for the destruction of waterborne contaminants, and UV disinfection systems are sold for the inactivation of pathogens in surface water.

Industrial Process Market. In industrial processing, the Company’s activated carbon and DE filtration media products are used either for purification, separation or concentration of customers’ products in the manufacturing process. The Company sells a wide range of activated carbons to the chemical, petroleum refining, and process industries for the purification of organic and inorganic chemicals, amines and vitamins. Further, activated carbon is used in treatment of natural gas, biogas and other high purity gases to remove unwanted contamination. The liquefied natural gas industry uses activated carbons to remove mercury compounds that would otherwise corrode process equipment. Activated carbons are also sold for gasoline vapor recovery equipment. The Company has a range of high purity activated carbons that are ideally suited as catalyst carriers and for use in the fine chemicals and pharmaceutical industries. The Company’s advanced ion exchange technology is used for a variety of industrial processes including separation and recovery in hydrometallurgy applications, decolorization in pulp and paper, the production of organic and inorganic chemicals, and the purification of brine.

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~~granular~~spills ~~activated~~comprise ~~carbon~~a ~~functions~~significant ~~both~~need asin ~~the~~this ~~primary filtration media as well as an adsorption media to remove contaminants from the water~~market. ~~Ion~~The ~~exchange~~Company ~~resins~~provides ~~are~~products ~~sold~~and ~~for~~services ~~use~~employing in both ~~fixed~~activated ~~beds~~carbon adsorption and ~~continuous counter-current operations to meet strict regulatory guidelines for perchlorate in water.~~ UV ~~advanced~~technologies ~~oxidation systems are sold~~ for ~~the~~emergency ~~destruction of waterborne contaminants,~~ and UVtemporary ~~disinfection~~cleanup ~~systems~~services ~~are~~as ~~sold~~well as for ~~the~~permanent ~~inactivation of pathogens in surface water~~installations.

Environmental Water and Air Markets. The Company offers its products and services to assist various industries in meeting the stringent environmental requirements imposed by various government entities. Products used for wastewater and ballast water treatment, the cleanup of contaminated groundwater, surface impoundments, and accidental spills comprise a significant need in this market. The Company provides products and services employing both activated carbon adsorption and UV technologies for emergency and temporary cleanup services as well as for permanent installations.

The Company’s reactivation service is an especially important element if the customer has contaminants that are hazardous organic chemicals. Reactivation of spent carbon protects the environment and eliminates the customers’ expense, potential liability, and difficulty in securing disposal options (such as landfills) for hazardous organic chemicals.

Activated carbon is also used in the chemical, pharmaceutical, and refining industries for purification of air discharge to remove contaminants such as benzene, toluene, and other volatile organics. In addition, reduction of mercury emissions from coal-fired power plants in the U.S. and Canada is a significant market, and is served by the Company with its broad line of FLUEPAC® powdered activated carbons.

The Company’s Rayox® UV System is an industry staple for the destruction of groundwater pollutants, as well as for the removal of alcohol, phenol and acetone in process water and total organic compound (TOC) reduction in wastewater treatment.

The Company’s Hyde GUARDIAN® ~~BWMS~~BWTS is a fully automated system that can be integrated into a ship’s ballast control system. The compact design can be skid mounted for new construction or can be made modular for easy installation in crowded machinery spaces on existing vessels. It is capable of providing complete ballast water management solutions for a variety of vessels including cruise ships, cargo and container ships, offshore supply vessels, and military vessels.

Food and Beverage Market. In this market, sweetener manufacturers are principal purchasers of the Company’s activated carbon ~~products,~~ and ~~also use the Company’s DE and perlite~~ filtration media products. The Company’s wood-based and coal-based activated carbon products are used in the purification of dextrose and high fructose corn syrup. Activated carbons are also sold for use in the purification of cane sugar. The Company’s DE and perlite filtration media and high performing activated carbons are used in applications such as the wine, beer, and flavoring markets. Other food and beverage processing applications include de-colorization and purification of many different foods and beverages and for purifying water, liquids and gases prior to usage in brewing and bottling. Continuous ion-exchange systems are also used in this market for the production of lysine and vitamin E as well as purification of dextrose, high fructose corn syrup and sugar cane.

Specialty Market. The Company is a major supplier of specialty activated carbons to manufacturers of gas masks for the U.S. and European ~~military~~militaries as well as protective respirators and collective filters for first responders and private industry. The markets for collective filters for U.S. and European military equipment, indoor air quality, and air containment in incineration and nuclear applications are also serviced.

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industry. The markets for collective filters for U.S. and European military equipment, indoor air quality, and air containment in incineration and nuclear applications are also serviced.

Additional industries using activated carbons include precious metals producers to recover gold and silver from low-grade ore. The Company’s activated carbon cloth product is used in medical and other specialty applications.

Sales and Marketing

In the U.S., the Company operates primarily through a direct sales force. In some markets and regions, the Company also sells through agents and distributors. In Latin America and Canada, the Company maintains a sales office in Sao Paulo, Brazil, and sells through agent/distributor relationships.

In the Asia Pacific Region, the Company maintains sales offices in Suzhou, Jiangsu Province, China; Hong Kong; Osaka, Japan; Tokyo, Japan; Singapore; and Taipei, Taiwan, and uses direct ~~sales~~selling as well as agents and distributors.

In Europe, the Company maintains sales offices in Feluy, Belgium; Kolding, Denmark; Paris, France; Beverungen, Germany; Milan, Italy; Ashton-in-Makerfield, United Kingdom; Houghton-le-Spring, United Kingdom; and Gothenburg, Sweden, and operates through a direct sales force. The Company also has a network of agents and distributors that conduct sales in certain countries in Europe, the Middle East, and Africa.

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Many offices can play a role in sales of products or services from each of the Company’s segments. Geographic sales information can be found in Note 18 to the consolidated financial statements in Item 8 of this Annual Report. Also refer to Risk Factors in Item 1A.

Over the past three years, no single customer accounted for more than 10% of the total sales of the Company in any year.

Backlog

The Company had a sales backlog of $1011.16 million and $1510.49 million as of ~~January~~December 31, 2017 and 2016, respectively~~, in the Equipment segment~~. The $5.3 million decrease was a result of regulatory delays for ballast water treatment systems and several large contracts that were completed during 2016 that more than offset new contracts. The Company expects to carry approximately $1.3 million of the 2017 backlog into 2018 and $0.5 million into 2019.

Competition

With respect to the production and sale of activated carbon related products, the Company has a major global presence, and has several competitors in the worldwide market. Norit, a subsidiary of U.S. company Cabot Corporation,; Ingevity Corporation, formerly the Specialty Chemicals Division of WestRock Company, a U.S. company,; Jacobi Carbons, a Swedish company and a wholly-owned subsidiary of Osaka Gas Chemicals Co., Ltd., of Japan; and Evoqua Water Technologies (formerly Siemens Water Technologies), a U.S. company, are the primary competitors. Chinese producers of coal-based activated carbon and certain East Asian producers of coconut-based activated carbon participate in the market on a worldwide basis and sell principally through numerous resellers. Competition in activated carbons, carbon equipment and services is based on quality, performance, and/or price. Other sources of competition for the Company’s activated carbon services and systems are alternative technologies for purification, filtration, and extraction processes that do not employ activated carbons.

A number of other smaller competitors engage in the production and sale of activated carbons and in local markets, but do not compete with the Company on a global basis. These companies compete with the Company in the sale of specific types of activated carbons, but do not generally compete with a broad range of products in the worldwide activated carbon business. For example, ADA Carbon Solutions, owned by Energy Capital Partners, competes with the Company in the America’s market for the removal of mercury from coal-fired power plant flue gas.

With respect to the Company’s DE and perlite filtration media products, due to their low weight, low density physical properties, the Company primarily distributes these products throughout the European region. Competitors in the region include EP Minerals, Imerys and Dicalite. Similar to activated carbon, competition for these products is primarily based on quality, performance and/or price.

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The Company competes with several small regional companies for the sale of its reactivation services and carbon equipment in the U.S., Europe, Japan, and China.

The Company’s UV technologies product line has primary competition from Trojan Technologies, Inc., a Canadian company owned by Danaher Corporation, a U.S. company,; and Xylem Inc., headquartered in White Plains, N.Y., a U.S. company.

Competition for ~~The~~the Company’s UV technologies Hyde Marine ballast water treatment systems utilizing UV and filtration includes Panasia of Busan, Korea, Alfa Laval of Sweden and Optimarin of Norway. As of December 31, ~~2016~~2017, more than 60 treatment systems have been granted IMO Type Approval, while ~~three~~six systems have been granted USCG Type Approval.

Raw Materials

The principal raw material purchased by the Company for its Activated Carbon ~~and Service~~ segment is bituminous coal from mines primarily in the U.S. purchased under ~~long term and annual~~ supply contracts, as well as spot purchases. The Company purchases wood from a local forest in Europe.

The Company ~~purchases~~owns ~~natural~~two ~~gas~~mineral ~~from~~deposit ~~various~~quarry ~~suppliers~~sources, ~~for~~which ~~use~~provide inraw materials for its ~~Activated~~DE ~~Carbon~~manufacturing ~~and~~processes. These ~~Service~~quarries ~~segment~~each ~~production~~have ~~facilities. In~~20 ~~both~~or ~~the~~more ~~U.S.~~years ~~and~~of ~~Europe,~~raw ~~natural~~material ~~gas~~reserves isavailable. The ~~purchased~~Company ~~pursuant~~obtains toits ~~various~~crude ~~annual~~perlite ~~and~~ore ~~multi-year~~raw ~~contracts,~~material asfrom ~~well~~mines aslocated ~~spot~~in ~~purchases~~the Mediterranean region.

The Company buys various metals, acids and other additives that are used within the activated carbon production process to enhance the performance of certain products. These materials are bought under multi-year and annual contracts, as well as on a spot basis.9

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The Company purchases natural gas from various suppliers for use in its production facilities. In both the U.S. and Europe, natural gas is purchased pursuant to various contracts, as well as spot purchases. The Company buys various metals, acids and other additives that are used within the production processes to enhance the performance of certain products. These materials are bought under contracts, as well as on a spot basis.

The purchase of key equipment components and fabrications are coordinated through agreements with various suppliers for UV, ISEP® and the carbon equipment markets.

With the recent addition of the New Business, the Company also purchases wood from a local forest in Europe. The Company owns two mineral deposit quarry sources, which provide raw materials for its DE manufacturing processes. These quarries each have 20 or more years of raw material reserves available. The Company obtains its crude perlite oar raw material from mines located in the Mediterranean region.

The Company does not presently anticipate any significant problems in obtaining adequate supplies of its raw materials or equipment components.

Research and Development

The Company’s primary research and development (R&D) activities are conducted at an innovation center in Pittsburgh, Pennsylvania ~~with an additional facility in Japan~~. The ~~Pittsburgh~~ facility is used for the evaluation of experimental activated carbon and equipment and application development. Experimental systems are also designed and evaluated at this location.

The principal goals of the R&D’s research program are to improve the Company’s position as a technological leader in solving customers’ problems with its products, services and equipment; develop new products and services; and provide technical support to customers and operations of the Company. Research programs include new and improved methods for manufacturing and utilizing new and enhanced activated carbons.

The Company performs R&D to continuously advance the application of UV technologies to pathogens as well as new and emerging contaminants. Additionally, R&D is devoted to continual product advancement for reduction of life cycle cost to the customer and to ensure compliance with U.S. and international regulations. This includes R&D work on Advanced Oxidation for treatment of taste and odor compounds (MIB and Geosmin), nitrosamines, pesticide/herbicides and pharmaceutical/personal care products.

For ballast water treatment, Hyde Marine has active R&D for continued ballast treatment efficacy testing in multiple marine environments and new product development to extend the range, usability and end application.

10Research and development expenses were $5.4 million, $5.4 million, and $6.4 million for the years ended December 31, 2017, 2016, and 2015, respectively.

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Research and development expenses were $5.4 million, $6.4 million, and $6.4 million for the years ended December 31, 2016, 2015, and 2014, respectively.

Patents and Trade Secrets

The Company possesses a substantial body of technical knowledge and trade secrets and owns 49 46 U.S. patent applications and/or patents as well as ~~156~~184 patent applications and/or patents in other countries. The issued patents expire in various years from ~~2017~~2018 through ~~2033~~2036.

The technology embodied in these patents, trade secrets, and technical knowledge applies to all phases of the Company’s business including production processes, product formulations, and application engineering. The Company considers this body of technology important to the conduct of its business.

Regulatory Matters

The Company is subject to various environmental health and safety laws and regulations of a nature considered normal to its business. It is the Company’s policy to accrue for amounts related to these matters when it is probable that a liability has been incurred and the loss amount is reasonably estimable. Refer to Note 16 to the consolidated financial statements in Item 8 of this Annual Report, which is incorporated herein by reference, for further details.

Employee Relations

As of December 31, ~~2016~~2017, the Company employed 1,~~334~~268 persons on a full-time basis, ~~723~~658 of whom were salaried and non-union hourly production, office, supervisory and sales personnel. The United Steelworkers represent ~~228~~236 hourly personnel in the U.S. The current contracts with the United Steelworkers expire on July 31, 2018, at the Pittsburgh, Pennsylvania facility, February 17, 2019 at the Columbus, Ohio facility and June 917, ~~2017~~2021 at the Company’s Catlettsburg, Kentucky facility. The 66 hourly personnel at the Company’s Belgian facility are represented by two national labor organizations with contracts that expired on December 31, 2016 and are in the process of being renegotiated. The 63 hourly personnel at the Company’s facilities in Italy are represented by two national labor organizations with one contract that expired on December 31, 2016 and is in the process of being renegotiated and two that will expire on December 31, 2017. The 254 hourly personnel at the Company’s facilities in France are represented by multiple national labor organizations with contracts that will expire on February 2, 2018.

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Catlettsburg, Kentucky facility. The 63 hourly personnel at the Company’s Belgian facility are represented by two national labor organizations with contracts that expire on December 31, 2018. The 59 hourly personnel at the Company’s facilities in Italy are represented by two national labor organizations with one contract that expired on December 31, 2017 and is in the process of being renegotiated and one that will expire on December 31, 2019. The 252 hourly personnel at the Company’s facilities in France are represented by multiple national labor organizations with contracts that will expire on December 31, 2018.

Copies of Reports

The periodic and current reports of the Company filed with the SEC pursuant to Section 13(a) of the Securities Exchange Act of 1934 are available free of charge, as soon as reasonably practicable after the same are filed with or furnished to the SEC, at the Company’s website at www.calgoncarbon.com. All other filings with the SEC are available on the SEC’s website at www.sec.gov.

Copies of Corporate Governance Documents

The following Company corporate governance documents are available free of charge at the Company’s website at www.calgoncarbon.com and such information is available in print to any stockholder who requests it by contacting the Secretary of the Company at 3000 GSK Drive, Moon Township, PA 15108.

Corporate Governance Guidelines

Audit Committee Charter

Compensation Committee Charter

Governance Committee Charter

Investment Committee Charter

Code of Business Conduct and Ethics

Code of Ethical Business Conduct Supplement for Chief Executive and Senior Financial Officers

Related Party Transaction Policy

11Item 1A. Risk Factors

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Item 1A. Risk Factors:

Risks relating to our business

Increases in U.S. and European imports of Chinese or other foreign manufactured activated carbon could have an adverse effect on our financial results.

We face pressure and competition in our U.S. and European markets from brokers of low cost imported activated carbon products, primarily from China. We believe we offer the market technically superior products and related customer support. However, in some applications, low cost imports have become accepted as viable alternatives to our products because they have been frequently sold at less than fair value in the market. If the markets in which we compete experience an increase in these imported low cost carbons, especially if sold at less than fair value, we could see declines in net sales. In addition, the sales of these low cost activated carbons may make it more difficult for us to pass through raw material price increases to our customers.

In response to a petition from the U.S. activated carbon industry filed in March 2006, the U.S. Department of Commerce (Commerce Department) announced the imposition of anti-dumping duties starting in October 2006. The Commerce Department announcement was based on extensive economic analysis of the operations and pricing practices of the Chinese producers and exporters. The Commerce Department announcement required U.S. Customs and Border Protection to require importers of steam activated carbon from China to post a provisional bond or cash deposit in the amount of the duties. The anti-dumping duties are intended to offset the amount by which the steam activated carbon from China is sold at less than fair value in the U.S.

Annual reviews of duties begin to occur in April of the year following the twelve month period then completed. The significant anti-dumping duties originally imposed by the Commerce Department, and the affirmative decision by the International Trade Commission (ITC), has had an adverse impact on the cost of Chinese manufactured activated carbon imported into the U.S. ~~However~~Furthermore, ~~the~~such anti-dumping duties ~~could~~are besubject ~~further~~to ~~reduced~~a orsunset ~~eliminated~~review inevery ~~the~~five ~~future which could adversely affect demand or pricing of our product~~years. The

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duties were renewed during the first such sunset review. The second sunset review will occur in 2018. There can be no assurance that these duties will again be renewed or that the rates of these duties will not be further reduced, which could adversely affect demand or pricing of our product.

We have operations in multiple foreign countries and, as a result, are subject to foreign exchange translation risk, which could have an adverse effect on our financial results.

We conduct significant business operations in several foreign countries. Of our ~~2016~~2017 net sales, approximately 4753% were sales to customers outside of the U.S., and ~~2016~~2017 net sales denominated in non-U.S. dollars represented approximately 3242% of our overall net sales. ~~With the acquisition of the New Business, these percentages are expected to increase.~~ We conduct business in the local currencies of each of our foreign subsidiaries or affiliates. Those local currencies are then translated into U.S. dollars at the applicable exchange rates for inclusion in our consolidated financial statements. The exchange rates between some of these currencies and the U.S. dollar in recent years have fluctuated significantly and may continue to do so in the future. Changes in exchange rates, particularly the strengthening of the U.S. dollar, could significantly reduce our sales and profitability from foreign subsidiaries or affiliates from one period to the next as local currency amounts are translated into fewer U.S. dollars.

Our European and Japanese activated carbon businesses are sourced from both the U.S. and China, which subjects these businesses to foreign exchange transaction risk.

Our virgin activated carbon is produced primarily in the U.S. We also source significant quantities of activated carbon in China. Produced and sourced activated carbons are provisioned to all of our global operations. Purchases of these carbons are typically denominated in U.S. dollars yet are ultimately sold in other currencies thereby creating foreign currency exchange transaction risk. We generally execute foreign currency derivative contracts of not more than eighteen months in duration to cover a portion of our known or projected foreign currency exposure. However, those contracts do not protect us from longer-term trends of a strengthening U.S. dollar, which could significantly increase our cost of activated carbon delivered to our European and Japanese markets, and we may not be able to offset these costs by increasing our prices.

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Our financial results could be adversely affected by an interruption of supply or an increase in the price of raw materials we use, such as coal and wood.

We use bituminous coal as the main raw material in our activated carbon production process. Based upon our current projected usage and price, we estimate that our ~~2017~~2018 coal costs in the U.S. will be approximately $26.67 million excluding the cost of transportation to our carbon manufacturing facilities. We have various annual and multi-year contracts in place for the supply of our coal that expire at various intervals in ~~2017 and~~ 2018 and cover approximately 8883% of our expected ~~2017~~2018 tonnage. Interruptions in coal supply caused by mine accidents, labor disputes, transportation delays, breach of supplier contractual obligations, floods or other events for other than a temporary period could have an adverse effect on our ability to meet customer demand. We use very specific high quality metallurgical coals for many of our products. Our inability to obtain these high-quality coals at competitive prices in a timely manner due to changing market conditions with limited high-quality suppliers could also have an adverse ~~affect~~effect on our financial results. In addition, increases in the prices we pay for coal under our supply contracts could adversely affect our financial results by significantly increasing production costs. Based upon the current estimated usage and price of coal in ~~2017~~2018, a hypothetical 10% increase in the price of coal, excluding transportation costs, that is not covered by our supply contracts, would result in $0.53 million of additional pre-tax expense to us. We may not be able to pass through raw material price increases to our customers.

Additionally, as a result of our acquisition of the New Business in late 2016, wood has become an important raw material for us. We have various contracts in place to secure ~~nearly~~approximately half of our wood requirement through ~~2017~~2018. Since we require a certain quality of wood, our inability to secure this product could affect our ability to meet customer demand for our products. Our inability to obtain this quality at a reasonable price in a timely manner could affect our operations or financial position. We may not be able to pass through these raw material price increases to our customers.

A planned or unplanned shutdown at one of our production facilities could have an adverse effect on our financial results.

We operate multiple facilities and source product from strategic partners who operate facilities which are close to water or in areas susceptible to floods, hurricanes, and earthquakes. An unplanned shutdown at any of our or our strategic partners’ facilities for more than a temporary period as a result of a hurricane, typhoon, earthquake, flood or other natural disaster, or as a result of fire, explosions, war, terrorist activities, political conflict or other hostilities, or as a result of unforeseen mechanical problems, could significantly affect our ability to meet our demand requirements, thereby resulting in lost sales and profitability in the short-term or eventual loss of customers in the long term. In addition, a prolonged planned shutdown of any of our production facilities due to a change in the business conditions could result in impairment charges that could have an adverse impact on our financial results.

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partners’ facilities for more than a temporary period as a result of a hurricane, typhoon, earthquake, flood or other natural disaster, or as a result of fire, explosions, war, terrorist activities, political conflict or other hostilities, or as a result of unforeseen mechanical problems, could significantly affect our ability to meet our demand requirements, thereby resulting in lost sales and profitability in the short-term or eventual loss of customers in the long term. In addition, a prolonged planned shutdown of any of our production facilities due to a change in the business conditions could result in impairment charges that could have an adverse impact on our financial results.

Delays in enactment of new state or federal regulations could restrict our ability to reach our strategic growth targets and lower our return on invested capital.

Our strategic growth initiatives are reliant upon more restrictive environmental regulations being enacted for the purpose of making water and air cleaner and safer. Examples include regulation of mercury emissions, drinking water disinfection by-products, and ship ballast water. If stricter regulations are delayed or are not enacted or enacted but subsequently repealed or amended to be less strict, or enacted with prolonged phase-in periods, our sales growth targets could be adversely affected and our return on invested capital could be reduced.

For example, our Hyde GUARDIAN® ballast water treatment system received type approval from the IMO in April 2009. However, the IMO Ballast Water Management Convention, which mandates the use of IMO approved ballast water treatment systems for ships in international traffic, was not ratified until September 2016 and iswas not scheduled to go into force until September 2017. Until the July 2017 meeting of the Marine Environment Protection Committee (MEPC) of the IMO, the Company expected to see higher BWTS sales beginning in late 2017 due to the IMO Convention entering into force for all ships on September 8, 2017. At this MEPC meeting, the compliance implementation schedule was amended to delay compliance with standards of the IMO Convention requiring currently in-service vessels to treat their ballast water until September 8, 2019. The Company expects this amendment to the Convention implementation schedule to dampen the pace of near-term market development and demand growth for ballast water treatment systems. The timing and pace of change in the Company’s BWTS sales beyond 2017 and prior to September 2019 will be dependent upon a number of variables including the Company’s level of success in completing its USCG testing. The pace of change in the Company’s BWTS sales beyond September 2019 will be dependent upon the amended IMO Convention compliance schedule for currently in-service vessels to begin treating their ballast water remaining in place. Similarly, the USCG regulates ballast water in U.S. waters, and will not follow the IMO convention. We, along with several other ballast water treatment system manufacturers have received Alternate Management System designation from the USCG, but this is a temporary designation while full USCG type approval is pursued. In December 2015, the USCG decided it would not allow us, and several other manufacturers of ultraviolet light-based ballast water treatment systems, to use the Most Probable Number (MPN) test method for purposes of testing the Company’s system to apply for type approval under USCG regulations. Consequently, we have redesigned our Hyde GUARDIAN® system under USCG testing protocols and are embarking on testing to support our application for USCG Type Approval in the ~~fourth~~second quarter of ~~2017~~2018. The first USCG type approvals were granted to competitors in December 2016 and two of these approvals were for UV light-based systems. While we remain confident in our product’s capabilities, there can be no assurance that we will receive USCG type approval or that additional approval of competing systems will not have an adverse effect on the Company’s ability to compete in the market for ballast water treatment systems for vessels discharging ballast water in U.S. waterways and ports.

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capabilities, there can be no assurance that we will receive USCG type approval or that additional approval of competing systems will not have an adverse effect on the Company’s ability to compete in the market for ballast water treatment systems for vessels discharging ballast water in U.S. waterways and ports.

Our required capital expenditures may exceed estimates.

Our capital expenditures were $3157.94 million in ~~2016~~2017 and are forecasted to be approximately $7035 million to $8045 million in ~~2017, including capital expenditures related to the New Business~~2018. Future capital expenditures may be significantly higher and may vary substantially if we are required to undertake certain actions to comply with new regulatory requirements or compete with new technologies. We may not have the capital to undertake the capital investments. If we are unable to do so, we may not be able to effectively compete.

Encroachment into our markets by competitive technologies could adversely affect our financial results.

Activated carbon is utilized in various applications as a cost-effective solution to solve customer problems. If other competitive technologies, such as membranes, ozone and UV, are advanced to the stage in which such technologies could cost effectively compete with activated carbon technologies, we could experience a decline in net sales, which could adversely affect our financial results.

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Our industry is highly competitive. If we are unable to compete effectively with competitors having greater resources than we do, our financial results could be adversely affected.

Our activated carbon and service business faces significant competition principally from Cabot Norit, the MWV (MeadWestvaco) Specialty Chemicals Division of WestRock Company and Evoqua Water Technologies, as well as from Chinese and European activated carbon producers and East Asian producers of coconut-based activated carbon. Our UV technology products face significant competition principally from Trojan Technologies, Inc., which is owned by Danaher Corporation, and Xylem. Our competitors include major manufacturers and diversified companies, a number of which have revenues and capital resources exceeding ours, which they may use to develop more advanced or more cost-effective technologies, increase market share or leverage their distribution networks. We could experience reduced net sales as a result of having fewer resources than these competitors.

Our international operations are subject to political and economic risks for conducting business in corrupt environments.

We conduct business in developing countries, and we are focusing on increasing our sales in regions such as South America, Southeast Asia, India, China and the Middle East, which are less developed, have less stability in legal systems and financial markets, and are generally recognized as potentially more corrupt business environments than the U.S. and therefore, present greater political, economic and operational risks. We emphasize compliance with the law and have policies in place, procedures and certain ongoing training of employees with regard to business ethics and key legal requirements such as the U.S. Foreign Corrupt Practices Act (FCPA), the United Kingdom Bribery Act (UKBA) and all applicable export control laws and regulations of the U.S. and other countries (the Export Regulations); however, there can be no assurances that our employees will adhere to our code of business conduct, other Company policies, the FCPA, the UKBA or the Export Regulations. If we fail to enforce our policies and procedures properly or maintain internal accounting practices to accurately record our international transactions or if we violate any of these laws or regulations, we may be subject to severe criminal or civil sanctions and penalties, including fines, debarment from export privileges and loss of authorizations needed to conduct aspects of our international business. We could incur significant costs for investigation, litigation, fees, settlements and judgments which, in turn, could negatively affect our business, financial condition and results of operations.

Significant stockholders or potential stockholders may attempt to effect changes at the Company or acquire control over the Company, which could adversely affect the Company’s results of operations and financial condition.

Stockholders of the Company may from time to time engage in proxy solicitations, advance stockholder proposals or otherwise attempt to effect changes or acquire control over the Company. Campaigns by stockholders to effect changes at publicly traded companies are sometimes led by investors seeking to increase short-term stockholder value through actions such as financial restructuring, increased debt, special dividends, stock repurchases or sales of assets or the entire company. Responding to proxy contests and other actions by activist stockholders can be costly and time-consuming, disrupting the Company’s operations and diverting the attention of the Company’s Board of Directors and senior management from the pursuit of business strategies. As a result, stockholder campaigns could adversely affect the Company’s results of operations and financial condition.

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company. Responding to proxy contests and other actions by activist stockholders can be costly and time-consuming, disrupting the Company’s operations and diverting the attention of the Company’s Board of Directors and senior management from the pursuit of business strategies. As a result, stockholder campaigns could adversely affect the Company’s results of operations and financial condition.

Failure to innovate new products or applications could adversely affect our ability to meet our strategic growth targets.

Part of our strategic growth and profitability plans involve the development of new products or new applications for our current products in order to replace more mature products or markets that have seen increased competition. If we are unable to develop new products or applications, our financial results could be adversely affected.

Our inability to successfully negotiate new collective bargaining agreements upon expiration of the existing agreements could have an adverse effect on our financial results.

We have collective bargaining agreements in place at ~~six~~various production facilities covering approximately 4648% of our full-time workforce as of December 31, ~~2016~~2017. Those collective bargaining agreements expire through ~~2019~~2021. Any work stoppages as a result of disagreements with any of the labor unions or our failure to renegotiate any of the contracts as ~~they expire could disrupt production and significantly increase product costs as a result of less efficient operations caused by the resulting need to rely on temporary labor.~~

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they expire could disrupt production and significantly increase product costs as a result of less efficient operations caused by the resulting need to rely on temporary labor.

Our business is subject to a number of global economic risks.

Financial markets in the U.S., Europe, and Asia continue to experience disruption, including, among other things, volatility in security prices, diminished liquidity and credit availability, rating downgrades of certain investments and declining valuations of others. Governments have taken actions intending to address these market conditions that include restricted credit and declines in values of certain assets.

An economic downturn in the businesses or geographic areas in which we sell our products could reduce demand for our products and result in a decrease in sales volume that could have a negative impact on our results of operations. Continued volatility and disruption of financial markets in the U.S., Europe and Asia could limit our customers’ ability to obtain adequate financing or credit to purchase our products or to maintain operations, and result in a decrease in sales volumes that could have a negative impact on our results of operations.

Our international operations expose us to political and economic uncertainties and risks from abroad, which could negatively affect our results of operations.

We have manufacturing facilities and sales offices throughout the world which are subject to economic conditions and political factors within the respective countries which, if changed in a manner adverse to us, could negatively affect our results of operations and cash flow. Political risk factors include, but are not limited to, taxation, nationalization, inflation, currency fluctuations, foreign exchange restrictions, increased regulation and quotas, tariffs and other protectionist measures. Approximately 7981% of our sales in ~~2016~~2017 were generated by products sold in the U.S., Canada, and Western Europe while the remaining sales were generated in other areas of the world, such as Asia, Eastern Europe, and Latin America.

Environmental compliance and remediation and potential climate change could result in substantially increased capital requirements and operating costs.

Our production facilities are subject to environmental laws and regulations in the jurisdictions in which they operate or maintain properties. Costs may be incurred in complying with such laws and regulations. Each of our domestic production facilities require permits and licenses issued by local, state and federal regulators which regulate air emissions, water discharges, and solid waste handling. These permits are subject to renewal and, in some circumstances, revocation. International environmental requirements vary and could have substantially lesser requirements that may give competitors a competitive advantage. Additional costs may be incurred if environmental remediation measures are required. In addition, the discovery of contamination at any of our current or former sites or at locations at which we dispose of waste may expose us to cleanup obligations and other damages. In addition, there is currently vigorous debate over the effect of CO² gas releases and the effect on climate change. Many of our activities create CO² gases. Should legislation or regulation be enacted, it could have a material adverse effect upon our ability to expand our operations or perhaps continue to operate as we currently do.

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Should legislation or regulation be enacted, it could have a material adverse effect upon our ability to expand our operations or perhaps continue to operate as we currently do.

Our financial results could be adversely affected by shortages in energy supply or increases in energy costs.

The price for and availability of energy resources could be volatile as it is affected by political and economic conditions that are outside our control. We utilize natural gas as a key component in our activated carbon reactivation manufacturing process at many of our facilities. If shortages of, or restrictions on the delivery of natural gas occur, production at our activated carbon reactivation facilities would be reduced, which could result in missed deliveries or lost sales. We also have exposure to fluctuations in energy costs as they relate to the transportation and distribution of our products. We may not be able to pass through natural gas and other fuel price increases to our customers.

Our business includes capital equipment sales which could have fluctuations due to the cyclical nature of that type of business.

Our Equipment segment represented approximately 8% of our 2016 net sales. This business generally has a long project life cycle from bid solicitation to project completion and often requires customers to make large capital commitments well in advance of project execution. In addition, this business is usually affected by the general health of the overall economy. As a result, sales and earnings from the Equipment segment could be volatile.

Our products could infringe the intellectual property rights of others, which may cause us to pay unexpected litigation costs or damages or prevent us from selling our products.

Although it is our intention to avoid infringing or otherwise violating the intellectual property rights of others, our products may infringe or otherwise violate the intellectual property rights of others. We may be subject to legal proceedings and claims, including claims of alleged infringement by us of the patents and other intellectual property ~~rights of third parties. Intellectual property litigation is expensive and time-consuming, regardless of the merits of any claim.~~

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rights of third parties. Intellectual property litigation is expensive and time-consuming, regardless of the merits of any claim.

If we were to discover or be notified that our products potentially infringe or otherwise violate the intellectual property rights of others, we may need to obtain licenses from these parties or substantially re-engineer our products in order to avoid infringement. We might not be able to obtain the necessary licenses on acceptable terms, or at all, or be able to re-engineer our products successfully. Moreover, if we are sued for infringement and lose the suit, we could be required to pay substantial damages and/or be enjoined from using or selling the infringing products. Any of the foregoing could cause us to incur significant costs and prevent us from selling our products.

Declines in the operating performance of one of our business segments could result in an impairment of the segment’s goodwill.

As of December 31, ~~2016~~2017, we had consolidated goodwill of approximately $6677.38 million, ofrecorded ~~which $41.0 million is related to the acquisition of the New Business reported~~ in ~~Other. The remaining $25.3 million of goodwill is primarily from~~ our ~~Activated~~business ~~Carbon and Service and Equipment~~ segments. We test our goodwill on an annual basis or when an indication of possible impairment exists in order to determine whether the carrying value of our assets is still supported by the fair value of the underlying business. To the extent that it is not, we are required to record an impairment charge to reduce the asset to fair value. A decline in the operating performance of any of our business segments could result in a goodwill impairment charge which could have a material effect on our financial results.

Our pension plans are currently underfunded, and we could be subject to increases in pension contributions to our defined benefit pension plans, thereby restricting our cash flow.

We sponsor various pension plans in the U.S. and Europe that are underfunded and may require significant cash payments. We contributed $0.78 million and $10.37 million to our U.S. pension plans and $12.71 million and $1.87 million to our European pension plans in ~~2016~~2017 and ~~2015~~2016, respectively. We currently expect to contribute in ~~2017~~2018 approximately $2.91 million to our U.S. plans and $12.70 million to our European plans to meet minimum funding requirements, in accordance with our funding policy.

The funding status of our pension plans is determined using many assumptions, such as inflation, rates of return on investments, mortality, turnover and interest rates, any of which could prove to be different than projected. If the performance of the assets in our pension plans does not meet our expectations, or if other actuarial assumptions are modified, or not realized, we may be required to contribute more to our pension plans than we currently expect. For example, an approximate 25-basis point decline in the funding target interest rate under Section 430 of the Internal Revenue Code, as added by the Pension Protection Act of 2006 for minimum funding requirements, would increase our minimum required funding policy contributions to our U.S. pension plans by approximately $1 million to $3 million over the next three fiscal years. This amount reflects the provisions of Moving Ahead for Progress in the 21st Century Act (MAP-21) and the Highway and Transportation Funding Act of 2014 (HAFTA), both of which affect pension plan funding.

Our pension plans are underfunded in the aggregate by approximately $38 million as of December 31, 2017 based on comparing the projected benefit obligation, calculated using actuarial assumptions in accordance with Accounting Standards Codification (ASC) 715 “Compensation — Retirement Benefits,” to the fair value of plan assets. Our U.S. pension plans, which were underfunded by approximately $22 million as of December 31, 2017, are subject to ERISA. In the event our U.S. pension plans are terminated for any reason while the plans are less than fully funded, we will incur a liability to the Pension Benefit Guaranty Corporation that may be equal to the entire amount of the underfunding at the time of the termination. In addition, changes in required pension funding rules that were affected by the enactment of the Pension Protection Act of 2006 have significantly increased funding requirements, which could have an adverse effect on our cash flows. If cash flows from operations are insufficient to fund our worldwide pension liability, we may be required to reduce or delay capital expenditures, or to seek additional capital. Refer to Note 9 to the consolidated financial statements in Item 8 of this Annual Report.

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~~The~~We ~~funding~~previously ~~status~~identified ofa ~~our~~material ~~pension~~weakness ~~plans~~in isour ~~determined~~internal ~~using~~control ~~many~~over ~~assumptions,~~financial ~~such as inflation~~reporting, ~~rates of return on investments, mortality, turnover and interest rates, any of~~ which ~~could~~has ~~prove~~now tobeen ~~be different than projected~~remediated. IfAny ~~the~~future ~~performance~~failure ofto ~~the~~establish ~~assets~~and inmaintain ~~our~~effective ~~pension~~internal ~~plans~~control ~~does~~over ~~not~~financial ~~meet~~reporting ~~our~~could ~~expectations,~~result orin ifmaterial ~~other~~misstatements ~~actuarial~~in ~~assumptions~~our ~~are~~financial ~~modified,~~statements orand ~~not~~cause ~~realized,~~investors ~~we may be required~~ to ~~contribute~~lose ~~more~~confidence toin our ~~pension~~reported ~~plans~~financial ~~than we currently expect. For example~~information, anwhich ~~approximate 25-basis point decline~~ in ~~the~~turn ~~funding~~could ~~target~~cause ~~interest rate under Section 430 of~~ the ~~Internal~~trading ~~Revenue~~price ~~Code, as added by the Pension Protection Act~~ of ~~2006 for minimum funding requirements, would increase~~ our ~~minimum~~common ~~required~~stock ~~funding policy contributions~~ to ~~our U~~decline.S. pension plans by approximately $1.0 million to $2.0 million over the next three fiscal years. This amount reflects the provisions of Moving Ahead for Progress in the 21st Century Act (MAP-21) and the Highway and Transportation Funding Act of 2014 (HAFTA), both of which affect pension plan funding.

~~Our~~We ~~pension~~previously ~~plans~~identified ~~are~~a ~~underfunded~~material inweakness ~~the aggregate by approximately $38 million as of December 31, 2016 based on comparing the projected benefit obligation, calculated using actuarial assumptions~~ in ~~accordance~~our ~~with~~internal ~~Accounting~~control ~~Standards~~over ~~Codification~~financial ~~(ASC)~~reporting ~~715~~related ~~“Compensation — Retirement Benefits,”~~ to the ~~fair~~recognition ~~value~~ of ~~plan~~revenue ~~assets. Our~~for ~~U.S.~~a ~~pension~~subset ~~plans, which were underfunded by approximately $22 million as~~ of ~~December~~transactions ~~31,~~within ~~2016, are subject to ERISA. In~~ the ~~event our~~ U.S. ~~pension~~potable ~~plans~~water are terminated for any reason while the plans are less than fully funded, we will incur a liability to the Pension Benefit Guaranty Corporation that may be equal to the entire amount of the underfunding at the time of the terminationmarket. InAs ~~addition,~~a ~~changes~~result ~~in required pension funding rules that were affected by the enactment~~ of ~~the~~such ~~Pension Protection Act of 2006 have significantly increased funding requirements~~weakness, ~~which could have an adverse effect on~~ our ~~cash~~management ~~flows. If~~concluded ~~cash~~that ~~flows from operations are insufficient to fund~~ our ~~worldwide~~disclosure ~~pension~~controls ~~liability,~~and weprocedures ~~may~~and beinternal ~~required~~control toover ~~reduce or delay capital expenditures, or to seek additional capital. Refer to Note 9 to the consolidated~~ financial ~~statements~~reporting inwere ~~Item~~not 8effective as of ~~this~~December ~~Annual~~31, ~~Report~~2016.

WeThe ~~have~~material ~~identified~~weakness concerned a ~~material~~subset ~~weakness~~of intransactions ~~our~~within ~~internal~~the ~~controls~~U.S. ~~over~~potable ~~financial~~water ~~reporting~~market ~~that,~~where ifcertain ~~not~~contracts ~~properly~~were ~~corrected,~~inappropriately ~~could~~bifurcated ~~have~~and arevenue was recognized prior to the completion of the revenue recognition criteria. The Company addressed the material ~~adverse~~weakness ~~effect~~through, onamong ~~our~~other ~~operations~~things, adding new and/or ~~result~~enhanced inexisting ~~material~~controls ~~misstatements~~surrounding inthe ~~our~~assessment ~~financial~~of ~~statements~~the revenue recognition criteria to ensure all such criteria were considered and met prior to the recording of revenue.

AsAlthough ~~described~~we inhave ~~the~~remediated ~~Report~~this ofmaterial ~~Management~~weakness in ~~"Item~~our 8.internal ~~Financial~~control ~~Statements~~over ~~and~~financial ~~Supplementary Data~~reporting," weany ~~have~~failure ~~concluded~~to ~~that~~improve our disclosure controls and procedures or internal control over financial reporting ~~was~~to ~~ineffective~~address asany ofidentified ~~December~~weaknesses 31in the future, ~~2016~~if ~~because~~they awere ~~material~~to ~~weakness~~occur, ~~existed~~could inprevent ~~our~~us ~~internal~~from ~~control~~maintaining ~~over~~accurate ~~financial~~accounting ~~reporting~~records ~~related~~and todiscovering ~~the~~material ~~recognition~~accounting errors. Any of ~~revenue~~these ~~for~~results acould ~~subset~~adversely ofaffect ~~transactions~~our ~~within~~business and the ~~U.S.~~value ~~potable~~of ~~water~~our ~~market.~~common stock.

Management has identified actions that the Company intends to implement immediately in order to remediate this material weakness. However, we have not completed all of the corrective actions that we believe are necessary. As we continue to evaluate and work to remediate the material weakness, we may implement additional measures. The actions we are taking to remediate the material weakness are subject to ongoing senior management review, as well as oversight by the Audit Committee of our Board of Directors.

If our remedial measures are insufficient to address the material weakness, or if additional material weaknesses or significant deficiencies in our internal control over financial reporting are discovered or occur in the future, our consolidated financial statements may contain material misstatements and we could be required to restate our financial results, which could adversely affect our stock price and result in our inability to maintain compliance with applicable stock exchange listing requirements.

Existing and future laws, regulations and other legal requirements relating to our business may increase our costs of doing business and may expose us to liability.

We are subject to laws, regulations and other legal requirements enacted or adopted by federal, state and local authorities, as well as foreign authorities relating to various matters, including the protection of our workers, our consumers and the environment. Complying with these requirements has had, and will continue to have an effect on our costs of operations and competitive position. In addition, there is the possibility that we could incur substantial costs as a result of violations under these laws or be subject to governmental orders which cause us to alter our operations or expend substantial resources to comply with such orders. Any additional laws, regulations and other legal requirements enacted or adopted by federal, state and local authorities, as well as foreign authorities or new interpretations of existing legal requirements by regulatory bodies could further affect our costs of operations and competitive position. For example, as a result of our acquisition of the New Business in late 2016, we may be subject to additional regulations currently under consideration related to the effects of crystalline silica. If such regulations are ultimately adopted, we may need to expend substantial resources to comply with these regulations and if we fail to comply with these new regulations we could be subject to fines, penalties and other liabilities.

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may need to expend substantial resources to comply with these regulations and if we fail to comply with these new regulations we could be subject to fines, penalties and other liabilities.

Our future success may be dependent upon the successful integration of our acquisitions and reaping the anticipated benefits from those acquisitions.

We may make acquisitions of businesses that complement or expand our current business. No assurance can be given that we will be able to identify suitable acquisition opportunities, negotiate acceptable terms, obtain financing for acquisitions on acceptable terms or successfully acquire the identified targets. The success of any completed acquisition will depend on our ability to effectively integrate the acquired business into our existing operations and obtain the benefits contemplated at the time we made the acquisition. The process of integrating and operating any acquired business may involve unforeseen difficulties and may require a disproportionate amount of our managerial and financial resources. Our failure to successfully integrate the acquired businesses and assets into our existing operations and achieve the anticipated benefits from those acquisitions could have a material adverse effect on our financial condition and results of operations.

Our certificate of incorporation and bylaws and Delaware law contain provisions that may delay or prevent an otherwise beneficial takeover attempt of our Company.

Certain provisions of our certificate of incorporation and bylaws and Delaware law could make it more difficult for a third party to acquire us, even if doing so would be beneficial to our stockholders. These include provisions:

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providing for a board of directors with staggered, three-year terms;

requiring super-majority voting to affect certain amendments to our certificate of incorporation and bylaws;

limiting the persons who may call special stockholders’ meetings;

limiting stockholder action by written consent;

establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon at stockholders’ meetings; and

allowing our board of directors to issue shares of preferred stock without stockholder approval.

These provisions, alone or in combination with each other, may discourage transactions involving actual or potential changes of control, including transactions that otherwise could involve payment of a premium over prevailing market prices to holders of our common stock, or could limit the ability of our stockholders to approve transactions that they may deem to be in their best interest.

The security of our information technology systems could be compromised, which could adversely affect our ability to operate.

Increased global information technology security requirements, threats and sophisticated and targeted computer crime pose a risk to the security of our systems, networks and the confidentiality, availability and integrity of our data. Despite our efforts to protect sensitive information and confidential and personal data, our facilities and systems may be vulnerable to security breaches. This could lead to negative publicity, theft, modification or destruction of proprietary information or key information, manufacture of defective products, production downtimes and operational disruptions, which could adversely affect our reputation, competitiveness and results of operations.

Risks relating to our previously announced merger with a subsidiary of Kuraray Co., Ltd.

Delisting and Deregistration of our common stock

Following the successful completion of the merger, shares of our common stock currently listed on the New York Stock Exchange (NYSE) will be converted into the right to receive $21.50 per share and will be delisted from the NYSE and deregistered under the Securities Exchange Act of 1934, as amended. Therefore, there will no longer be a public trading market for our common stock.

The required regulatory approvals may not be obtained or may contain materially burdensome conditions.

Completion of the Merger remains conditioned upon the receipt of clearance by the U.S. Committee on Foreign Investment in the United States (CFIUS). There can be no assurance that this approval will be obtained. In addition, CFIUS may impose conditions on the completion of the merger or require changes to the terms of the merger. Such conditions or changes could have the effect of jeopardizing or delaying completion of the merger.

Failure to complete the Merger could negatively impact our stock price and future business and financial results.

If the merger is not completed, our stock price and our ongoing business may be adversely affected. In addition, we may be required to pay Kuraray a termination fee of $33.2 million if the merger agreement is terminated because the merger has not been consummated on or before April 30, 2018, unless we mutually agree with Kuraray to extend this date. Furthermore, matters relating to the merger have required and may continue to require substantial commitments of time and resources by our management, which could otherwise have been devoted to other opportunities that may have been beneficial to our Company.

Item 1B. Unresolved Staff Comments:

None

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Item 2. Properties:

The Company believes that the production facilities, warehouses, service centers, sales offices, and quarries are adequate and suitable for its current operating needs. The following table sets forth the locations utilized by the Company:

Description	Location	Property Interest
Carbon Manufacturing Plant	Catlettsburg, Kentucky	Owned
Carbon Manufacturing Plant	Pearlington, Mississippi	Owned
Carbon Manufacturing Plant	Parentis-en-Born, France	Owned
Carbon Reactivation Plant	Pittsburgh, Pennsylvania	Owned
Carbon Reactivation Plant	Blue Lake, California	Owned
Carbon Reactivation Plant	Feluy, Seneffe, Belgium	Owned
Carbon Reactivation Plant	Gila Bend, Arizona	Owned
Carbon Reactivation Plant	Columbus, Ohio	Owned
Carbon Reactivation Plant	Grays, United Kingdom	Owned
Carbon Reactivation Plant	Tipton, Dudley, United Kingdom	Owned
Carbon Reactivation Plant	San Pietro di Legnago, Italy	Owned
Carbon Reactivation Plant	Fukui, Japan	Owned
Carbon Reactivation Plant	Suzhou, China	Owned
Equipment & Assembly Plant	Pittsburgh, Pennsylvania	Owned
Carbon Reactivation Plant	North Tonawanda, New York	Leased
Carbon Reactivation Plant	Ashton-in-Makerfield, United Kingdom	Leased
Carbon Cloth Fabrication Plant	Houghton-le-Spring, United Kingdom	Leased
Diatomaceous Earth Plant	Riom-ès-Montagnes, France	Owned
Diatomaceous Earth Plant	Saint Bauzile, Chomerac, France	Owned
Diatomite Quarry	Virargues, France	Owned
Diatomite Quarry	Saint-Bauzile, France	Owned
Perlite Plant	Foggia, Italy	Owned
2 Warehouses	Pittsburgh, Pennsylvania	Owned
Equipment & Assembly Plant	Pittsburgh, Pennsylvania	Owned
Carbon Reactivation Plant	North Tonawanda, New York	Leased
Carbon Reactivation Plant	Ashton-in-Makerfield, United Kingdom	Leased
UV Manufacturing & Fabrication Plant	Coraopolis, Pennsylvania	Leased
Carbon Cloth Fabrication Plant	Houghton-le-Spring, United Kingdom	Leased
Diatomite Quarry	Virargues, France	Owned
Diatomite Quarry	Saint-Bauzile, France	Owned
Corporate Headquarters & Innovation Center	Moon Township, Pennsylvania	Leased
Field Service Center	Joliet, Illinois	Leased
Field Service Center	~~St. Catherines~~Tempe, ~~Ontario, Canada~~Arizona	Leased
Field Service Center	Westlake, Louisiana	Leased
Field Service Center	Douglasville, Georgia	Leased
Service Center	Downingtown, Pennsylvania	Leased
Service Center	Rutland, Massachusetts	Leased
Sales Office & Service Center	Houston, Texas	Leased
Sales Office	São Paulo, Brazil	Leased
Sales Office	Beverungen, Germany	Leased
Sales Office	Gothenburg, Sweden	Leased
Sales Office	Paris, France	Leased
Sales Office	Singapore, Singapore	Leased
Sales Office	Taipei, Taiwan	Leased
Sales Office	Osaka, Japan	Leased
Sales Office	Hong Kong, China	Leased
Operational Office	Malmaison, France	Leased
Operational Office	Milan, Italy	Leased
Operational Office	Tokyo, Japan	Leased
Office & Warehouse	Tianjin, China	Leased
Office & Warehouse	Ashton-in Makerfield, United Kingdom	Leased
Warehouse & Maintenance Facility	Abidos, France	Leased
Warehouse, Service Center & Office	Kolding, Denmark	Leased
4 Warehouses	Huntington, West Virginia	Leased
Warehouses	Huntington (4), Kenova (1), Nitro (1), West Virginia	Leased
3 Warehouses	North Tonawanda, New York	Leased
Warehouses	Pittsburgh (2), Pennsylvania	Owned
Warehouses	North Tonawanda (2), New York	Leased
Warehouses	Santa Fe Springs (1), Stockton (1), California	Leased
Warehouse	Coraopolis, Pennsylvania	Leased
Warehouse	~~Santa Fe Springs~~Phoenix, ~~California~~Arizona	Leased
Warehouse	South Point, Ohio	Leased
Warehouse	Singapore, Singapore	Leased

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~~Warehouse~~ The ~~Stockton,~~following ~~California~~properties ~~Leased~~all ~~Warehouse~~serve ~~Tempe,~~the ~~Arizona~~Activated ~~Leased~~Carbon ~~Warehouse Kenova, West Virginia Leased Warehouse Phoenix, Arizona Leased Warehouse South Point, Ohio Leased Warehouse Singapore, Singapore Leased Warehouse Nitro, West Virginia Leased~~segment:

The Catlettsburg, Kentucky plant is the Company’s largest facility, with plant operations occupying approximately 50 acres of a 226-acre site. This plant, ~~which serves the Activated Carbon and Service segment,~~ produces granular and powdered activated carbons and acid washed granular activated carbons and reactivates spent granular activated carbons.

The ~~Pittsburgh~~Pearlington, ~~Pennsylvania~~Mississippi ~~carbon production~~ plant occupies a ~~15-acre~~ site ~~which~~of ~~serves~~approximately ~~the~~100 ~~Activated Carbon and Service segment~~acres. ~~Operations~~The ~~at the~~ plant ~~include~~has ~~the~~one ~~reactivation~~production ofline ~~spent~~that ~~granular~~produces ~~activated carbons, the impregnation of~~ granular ~~activated carbons~~ and ~~the grinding of granular activated carbons into~~ powdered activated carbons. The plant also has the capacity to finish coal-based or coconut-based specialty activated carbons. The plant is now partially idle while a 36,000 square foot warehouse is being constructed, which is expected to be completed in the first quarter of 2018.

The ~~Pearlington,~~Parentis-en-Born ~~Mississippi~~ plant occupies aapproximately ~~site~~59 ofacres ~~approximately~~and ~~100~~is ~~acres~~located near Landes Forest in Southwestern France. The plant ~~has~~is ~~one~~approximately ~~production~~860,000 ~~line~~square ~~that~~feet ~~produces~~and ~~granular~~it ~~and~~is ~~powdered~~a ~~activated~~virgin ~~carbons~~wood-based ~~for~~activation ~~the~~carbon ~~Activated~~plant ~~Carbon~~utilizing both steam and ~~Service~~chemical ~~segment~~activation processes.

The ~~Columbus~~Pittsburgh, ~~Ohio~~Pennsylvania carbon production plant occupies ~~approximately~~a 2715-acre ~~acres~~site. Operations at the plant include the reactivation of spent granular activated carbons, the impregnation of granular activated ~~carbon,~~carbons ~~crushing~~and the grinding of granular activated ~~carbon~~carbons tointo ~~fine~~powdered ~~mesh,~~activated ~~acid~~carbons. The ~~and~~plant ~~water~~also ~~washing,~~has ~~filter~~the capacity to finish coal-~~filling~~based or coconut-based specialty activated carbons. The plant is now partially idle while a 24,000 ~~and~~square ~~various~~foot ~~other~~warehouse ~~value~~is ~~added~~being ~~processes~~constructed. Construction is scheduled to ~~granular~~be ~~activated~~completed ~~carbon~~in ~~for~~2018, with the ~~Activated~~plant ~~Carbon~~expected ~~and~~to ~~Service~~return ~~segment~~to full production.

The ~~Pittsburgh,~~Blue ~~Pennsylvania~~Lake ~~Equipment and Assembly~~ plant, is located onnear ~~Neville~~the ~~Island~~city ~~and~~of isEureka, ~~situated within a 16-acre site that includes a 300~~California,~~000~~ ~~square foot building. The Equipment and Assembly plant~~ occupies ~~85,000~~approximately ~~square~~2 ~~feet with the remaining space used as a centralized warehouse for carbon inventory~~acres. The ~~plant,~~primary ~~which~~operation ~~serves~~at ~~both~~ the ~~Equipment and Activated Carbon and Service segments, manufactures and assembles fully engineered carbon and ISEP® equipment for purification, concentration and separation systems. This~~ plant ~~also~~includes ~~serves as~~ the ~~East~~reactivation ~~Coast~~of ~~staging~~spent ~~and~~granular ~~refurbishment~~activated ~~point~~carbons, ~~for~~but ~~carbon~~is ~~service~~currently ~~equipment~~idled.

The ~~Coraopolis~~Feluy, ~~Pennsylvania~~Seneffe ~~Equipment~~plant ~~plants~~occupies ~~consist of~~ a ~~44,000-square~~site ~~foot~~of ~~production~~approximately ~~facility~~38 ~~and~~acres alocated ~~16,691-square~~30 ~~foot~~miles ~~production~~south ~~facility~~of ~~located near Pittsburgh~~Brussels, ~~Pennsylvania~~Belgium. ~~The~~Operations ~~facilities~~at ~~are adjacent properties and~~ the ~~primary~~plant ~~focus~~include isboth the ~~manufacture~~reactivation of UVspent ~~and~~granular ~~Hyde~~activated ~~GUARDIAN®~~carbons ~~equipment, including mechanical~~ and ~~electrical~~the ~~assembly,~~grinding ~~controls systems integration and validation testing~~ of ~~equipment. This~~granular ~~location~~activated ~~also~~carbons ~~serves~~into aspowdered ~~the~~activated ~~Pilot Testing facility for Process Development, as well as the spare parts distribution center for UV and Hyde GUARDIAN® systems~~carbons. ~~These plants serve the Equipment segment.~~

The Gila Bend, Arizona facility occupies a 20-acre site. Operations at the plant include the reactivation of spent granular activated carbons ~~for the Activated Carbon and Service segment~~.

The ~~North Tonawanda~~Columbus, ~~New~~Ohio ~~York~~ plant ~~consists~~occupies ofapproximately ~~12,500~~27 ~~square feet~~acres. ~~The~~Operations ~~facility~~at ~~houses~~the aplant ~~dry~~include ~~feed~~the ~~system,~~reactivation ~~screening~~of ~~tower~~spent granular activated carbons, ~~reactivation~~impregnation ~~furnace~~of activated carbon, ~~storage~~crushing ~~tanks~~activated carbon to fine mesh, acid and ~~packaging~~water ~~system~~washing, filter-filling, and ~~services~~various ~~customers~~other ~~for~~value ~~the~~added ~~Activated~~processes ~~Carbon~~to ~~and~~granular ~~Service~~activated ~~segment~~carbon.

The ~~Blue~~Tipton ~~Lake~~ plant, located near the city of ~~Eureka~~Dudley, ~~California~~United Kingdom, occupies approximately 24 acres~~. The~~ ~~primary~~and ~~operation~~became atoperational ~~the~~in ~~plant~~2016 ~~includes~~after ~~the~~several ~~reactivation~~years ofundergoing ~~spent~~operational ~~granular~~upgrades. It ~~activated~~is ~~carbons~~a ~~for~~reactivation ~~the~~plant ~~Activated~~of ~~Carbon~~spent ~~and~~granular ~~Service~~activated ~~segment~~carbon. ~~The plant is currently idled.~~

The ~~Feluy,~~San ~~Seneffe~~Pietro ~~plant~~di ~~occupies~~Legnago aplant, ~~site of approximately 38 acres~~ located 30in ~~miles~~northern ~~south~~Italy, ofoccupies ~~Brussels,~~approximately ~~Belgium~~5 acres. ~~Operations~~The primary operation at the plant, ~~include~~which ~~both~~consists ~~the reactivation~~ of ~~spent~~approximately ~~granular~~54,000 ~~activated~~square ~~carbons~~feet, ~~and~~includes the ~~grinding~~reactivation of spent granular activated carbons ~~into powdered activated carbons for the Activated Carbon and Service segment~~.

The Fukui, Fukui Prefecture, Japan plant occupies a site of approximately 6 acres and has two production lines for carbon reactivation. The plant is currently idled.

The Suzhou, China plant occupies approximately 11 acres and is licensed to export activated carbon products. This plant is a reactivation facility.

The North Tonawanda, New York plant consists of 12,500 square feet. The facility houses a dry feed system, screening tower, reactivation furnace, storage tanks, and packaging system.

The Ashton-in-Makerfield plant occupies a 1.6-acre site, 20 miles west of Manchester, United Kingdom. Operations at the plant include the impregnation of granular activated carbons. The plant also has the capacity to finish coal-based or coconut-based activated carbons.

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The ~~Tipton~~following ~~plant,~~properties ~~located~~all ~~near~~service the ~~city~~Alternative ofMaterials Dudley, United Kingdom, occupies approximately 4 acres and became operational in 2016 after several years undergoing operational upgrades. It is a reactivation plant of spent granular activated carbon that serves the Activated Carbon and Service segment.:

The ~~Ashton-in-Makerfield~~Houghton ~~plant occupies a 1.6~~le-~~acre~~Spring ~~site~~plant, 20located ~~miles~~near ~~west~~the city of ~~Manchester~~Newcastle, United Kingdom, occupies approximately 2 acres. Operations at the plant include the ~~impregnation~~manufacture of ~~granular~~woven ~~activated~~and ~~carbons~~knitted ~~for~~activated ~~the~~carbon ~~Activated~~textiles ~~Carbon~~ and ~~Service~~their ~~segment. The~~impregnation ~~plant~~and ~~also has the capacity to finish coal-based or coconut-based activated carbons~~lamination.

The ~~Houghton le~~Riom-~~Spring~~ès-Montagnes plant, occupies approximately 3 acres and is located ~~near~~in south-central France. The plant produces Clarcel® brand diatomaceous earth which is mined from the ~~city~~diatomite ofquarry ~~Newcastle,~~which ~~United~~is ~~Kingdom~~located in Virargues, ~~occupies~~France, approximately 223 ~~acres~~miles from Riom-ès-Montagnes. ~~Operations~~The ~~at the~~ plant ~~include~~is ~~the~~approximately ~~manufacture~~30,000 ofsquare ~~woven~~feet and ~~knitted~~occupies ~~activated~~a ~~carbon~~2.5 ~~textiles~~acre ~~and~~site, ~~their~~while ~~impregnation~~the ~~and~~quarry ~~lamination~~is ~~for~~approximately ~~the~~118 ~~Consumer segment~~acres.

The ~~Grays~~Saint Bauzile plant, ~~occupies~~located ain ~~3-acre~~Chomerac, ~~site~~France ~~near~~produces ~~London,~~Clarcel® ~~United~~brand ~~Kingdom. Operations~~diatomaceous atearth ~~the~~which ~~plant~~is ~~include~~mined from the ~~reactivation~~diatomite ofquarry ~~spent~~which ~~granular~~is ~~activated~~located ~~carbons~~in ~~for~~Saint-Bauzile, ~~the~~France. The ~~Activated~~plant ~~Carbon~~is approximately 163,000 square feet and ~~Service~~occupies ~~segment. The~~a ~~plant~~17 acre site, while the quarry is ~~currently~~approximately ~~idled~~348 acres.

The Fukui, Fukui Prefecture, Japan plant, that serves the Activated Carbon and Service segment, occupies a site of approximately 6 acres and has two production lines for carbon reactivation.

The Suzhou, China plant occupies approximately 11 acres and is licensed to export activated carbon products. This plant is a reactivation facility that serves the Activated Carbon and Service segment.

In November 2016, the following locations were acquired upon the consummation of the purchase of the New Business, which is being reported as Other in 2016 for segment reporting purposes:

The Parentis-en-Born plant occupies approximately 62 acres and is located in Landes Forest in Southwestern France. The plant is approximately 860,000 square feet and it is a virgin wood-based activation carbon plant.

The Riom-ès-Montagnes plant occupies approximately 3 acres and is located in south-central France. The plant produces Clarcel® brand diatomaceous earth which is mined from the diatomite quarry also acquired from CECA which is located in Viragues, France, approximately 23 miles from Riom-ès-Montagnes. The plant is approximately 30,000 square feet and the quarry is approximately 118 acres.

The Saint Bauzile plant, located in Chomerac, France produces Clarcel® brand diatomaceous earth which is mined from the diatomite quarry also acquired from CECA which is located in Saint-Bauzile, France. The plant occupies a 17 acre site, and is approximately 163,000 square feet.

The Foggia, Italy plant produces Randalite® and Randafil™ brands perlite filtration media and it is located in southern Italy. The plant occupies 8 acres and consists of approximately 353,000 square feet.

The ~~San~~Company ~~Peitro~~has dithese ~~Legnago~~additional ~~plant,~~properties ~~located~~that inserve ~~northern~~its ~~Italy,~~other ~~occupies~~segments ~~approximately~~as ~~5 acres. The primary operation at the plant, which consists of approximately 54,000 square feet, includes the reactivation of spent granular activated carbons.~~follows:

The Pittsburgh, Pennsylvania Equipment and Assembly plant is located on Neville Island and is situated within a 16-acre site that includes a 300,000 square foot building. The Equipment and Assembly plant occupies 85,000 square feet with the remaining space used as a centralized warehouse for carbon inventory. The plant, which serves both the Activated Carbon and Advanced Water Purification segments, manufactures and assembles fully engineered carbon and ISEP® equipment for purification, concentration and separation systems. This plant also serves as the East Coast staging and refurbishment point for carbon service equipment.

The Coraopolis, Pennsylvania Equipment plants consist of a 44,000-square foot production facility and a 16,691-square foot production facility located near Pittsburgh, Pennsylvania. The facilities are adjacent properties and the primary focus is the manufacture of UV and Hyde GUARDIAN® equipment, including mechanical and electrical assembly, controls systems integration and validation testing of equipment. This location also serves as the Pilot Testing facility for Process Development, as well as the spare parts distribution center for UV and Hyde GUARDIAN® systems. These facilities serve the Advanced Water Purification segment.

Item 3. Legal Proceedings:

On February 21, 2017, the Japan Fair Trade Commission (the JFTC) informed the Company’s subsidiary, Calgon Carbon Japan (CCJ) that it is investigating CCJ along with several other manufacturers and distributors that participate in the activated carbon market in Japan over concerns of anti-competitive conduct. The JFTC is investigating whether manufacturers and sellers of activated carbon used in water purification plants, garbage incineration plants and other similar facilities in Japan have acted in concert with each other in violation of the Japan Anti-Monopoly Act. JFTC agents searched the offices of CCJ, reviewing and collecting contracts and other business records and interviewed certain CCJ employees. At this early stage of the investigation, it is difficult to predict the outcome of this matter or what remedies, if any, may be imposed by the JFTC. CCJ is cooperating with the JFTC as it conducts its investigation.

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Refer to Note 16 to the consolidated financial statements in Item 8 of this Annual Report, which is incorporated herein by reference.

Item 4. Mine Safety Disclosures:

Not applicable.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Repurchases of Equity Securities:

Common Shares and Market Information

Common shares are traded on the New York Stock Exchange under the trading symbol CCC. There were ~~980~~937 registered stockholders as of December 31, ~~2016~~2017.

Quarterly Common Stock Price Ranges and Dividends

	2016						2015
	2017						2016
Fiscal Quarter	High		Low		Dividend		High		Low		Dividend
First	$	17.5380	$	13.6710	$	0.05	$	2117.5953	$	1913.0267	$	0.05
Second	$	1615.5960	$	1213.7540	$	0.05	$	2316.2059	$	1912.2675	$	0.05
Third	$	1521.7745	$	12.7000	$	0.05	$	1915.6977	$	1412.9070	$	0.05
Fourth	$	1822.8010	$	1421.4523	$	0.05	$	18.2280	$	14.7245	$	0.05

~~On February 18, 2015, the Company’s Board of Directors reinstated its common stock dividend program.~~ Quarterly dividends of $0.05 per share were declared in each of the four quarters for the years ended December 31, ~~2016~~2017 and ~~2015~~2016. ~~The Company did not declare or pay any dividends in 2014.~~ Dividend declaration and payout are at the discretion of the Board of Directors. Future dividends will depend on the Company’s earnings, cash flows, and capital investment plans to pursue long-term growth opportunities.

The information appearing in Item 12 of Part III below regarding common stock issuable under the Company’s equity compensation plan is incorporated herein by reference.

Stockholder Return Performance Graph

The following performance graph and related information shall not be deemed “filed” with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that the Company specifically incorporates it by reference into such filing.

The graph below compares the yearly change in cumulative total stockholder return of the Company’s common stock with the cumulative total return of the Standard & Poor’s (S&P) 500 Stock Composite Index, the New Peer Group and the Old Peer Group. The Company believes that its core business consists of purifying air, water and other products. As such, the Company’s selected peer group consists of companies that are involved in lines of business that are similar to the Company’s core business. ~~The Peer Group is comprised of five companies: Cabot Corporation, CLARCOR, Inc., Donaldson Company, Inc., ESCO Technologies Inc., and Lydall, Inc.~~

The New Peer Group is comprised of seven companies: Cabot Corporation, CLARCOR, Inc., Donaldson Company, Inc., ESCO Technologies Inc., Imerys SA, Ingevity Corporation, and Lydall, Inc. The Old Peer Group consisted of five of the seven companies included in the New Peer Group. In consideration of the Company’s acquisition of the New Business in late 2016, the New Peer Group reflects the inclusion of filtration media and wood-based activated carbon manufacturers, Imerys SA and Ingevity Corporation, respectively.

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Comparison of Five-Year Cumulative Total Return*

Among Calgon Carbon’s Common Stock, S&P 500 Composite Index, and Peer ~~Group~~Groups

Issuer Repurchases of Equity Securities

					(d) Maximum Number
				(c) Total Number of	(or Approximate
				Shares Purchased	Dollar Value)
	(a) Total			as Part of Publicly	of Shares that May
	Number	(b) Average		Announced	Yet be Purchased
	of Shares	Price Paid		Repurchase Plans	Under the Plans or
Period	Purchased ~~(1)~~	Per Share		or Programs (21)	Programs
October 1 — October 31, 2016	—	$	—	—	$	64,131,013
October 1 — October 31, 2017	—	$	—	—	$	64,131,013
November 1 — November 30, 2016	—	$	—	—	$	64,131,013
November 1 — November 30, 2017	—	$	—	—	$	64,131,013
December 1 — December 31, 2016	624	$	17.87	—	$	64,131,013
December 1 — December 31, 2017	—	$	—	—	$	64,131,013

(1) ~~Includes~~In ~~624~~December ~~shares~~2013, ~~surrendered to~~ the Company’s byBoard ~~employees~~of toDirectors ~~satisfy~~authorized ~~tax~~the ~~withholding~~repurchase ~~obligations~~of onadditional ~~restricted~~common ~~share~~stock, ~~awards~~resulting ~~issued~~in ~~under~~a ~~the~~total ~~Company’s~~remaining ~~Equity~~availability ~~Incentive~~of ~~Plan~~$64.1 ~~Future~~million. ~~purchases~~There ~~under~~is no expiration date for this ~~Plan~~program. ~~will~~In beApril ~~dependent~~2016, ~~upon~~the ~~employee~~Company ~~elections~~announced that it would suspend the activities of the share repurchase program.

(2) In December 2013, the Company’s Board of Directors authorized the repurchase of additional common stock, resulting in a total remaining availability of $150 million. There is no expiration date for this program. In April 2016, the Company announced that it would suspend the activities of the share repurchase program.

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Item 6. Selected Financial Data:

FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA

Calgon Carbon Corporation

(Dollars in thousands, except per share data)	~~2016 (1)~~2017		~~2015~~2016 (1)		~~2014~~2015		~~2013~~2014		~~2012 (3)~~2013
Income Statement Data:
Net sales	$	~~514~~619,~~246~~811	$	~~535~~514,~~004~~246	$	~~555~~535,~~103~~004	$	~~547~~555,~~939~~103	$	~~562~~547,~~255~~939
Net income	$	1321,~~797~~101	$	4313,~~463~~797	$	4943,~~370~~463	$	4549,~~713~~370	$	2345,~~272~~713
Net income per common share, basic	$	0.2742	$	0.8427	$	0.9384	$	0.8593	$	0.4185
Net income per common share, diluted	$	0.2742	$	0.8227	$	0.9282	$	0.8492	$	0.4184
Cash dividends declared per common share	$	0.20	$	0.20	$	—0.20	$	—	$	—
Balance Sheet Data (as of year end):
Total assets	$	~~775~~854,~~218~~584	$	~~656~~775,~~518~~218	$	~~621~~656,~~661~~518	$	~~590~~621,~~078~~661	$	~~577~~590,~~769~~078
Long-term debt (2)	$	~~220~~228,~~000~~500	$	~~103~~220,~~941~~000	$	70103,~~448~~941	$	3270,~~114~~448	$	4432,~~408~~114

(1) Includes $15.7 million of costs related to the acquisition of the New Business, consisting primarily of $14.0 million of transaction costs. Total assets and long-term debt increased in 2016 as a result of the acquisition of the New Business. Refer to Note 20 ofto the consolidated financial statements in Item 8 of this Annual Report for further information.

(2) Excludes $5.0 million and $7.5.0 million of debt which is classified as the current portion of long-term debt as of December 31, ~~2016~~2017 and ~~2015~~2016, respectively. Refer to Note 8 ofto the consolidated financial statements in Item 8 of this Annual Report for further information. Excludes $07.85 million, $20.28 million, and $192.62 million of debt which was classified as a current liability as of December 31, ~~2014~~2015, ~~2013~~2014, and ~~2012~~2013, respectively.

(3) Includes $10.2 million of restructuring charges and $1.7 million of multi-employer pension charges. Also includes a $1.7 million charge related to an agreement with the Company’s former Chief Executive Officer.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations:

Overview

On September 21, 2017, the Company entered into a definitive merger agreement under which a subsidiary of the Japanese chemical manufacturer Kuraray Co., Ltd. (Kuraray) agreed to acquire the Company, by way of a reverse triangular merger (Pending Merger). Following the consummation of the Pending Merger, the Company would become a wholly owned subsidiary of Kuraray. Refer to Note 21 to the consolidated financial statements in Item 8 of this Annual Report for additional information regarding the Pending Merger.

On November 2, 2016, the Company completed the acquisition of the wood-based activated carbon, reactivation and mineral-based filtration media business of CECA, a subsidiary of Arkema Group (New Business). Due to the complementary nature of the New Business’ products and market applications to those of the Company, and its significant exposure to less regulated, more traditional end markets, the addition of the New Business to the Company creates a more balanced global platform from which the Company can continue to grow by leveraging its now expanded capabilities in the global activated carbon and adjacent filtration media market areas.

~~The~~Beginning ~~Company~~January ~~reported~~1, ~~net~~2017, ~~income~~the ofCompany ~~$13.8~~realigned ~~million~~its orinternal ~~$0.27~~management ~~per~~reporting ~~diluted~~structure ~~share~~to ~~for~~incorporate ~~2016,~~the asNew ~~compared~~Business tointo ~~net~~the ~~income~~existing ofbusiness, ~~$43.5~~and ~~million~~reorganized orits ~~$0.82~~current ~~per~~reportable ~~diluted share for 2015~~segments. ~~Net~~The ~~sales~~Company ~~decreased~~is ~~$20.8~~reporting ~~million~~its orresults ~~3.9%~~using inthe ~~2016~~new asreportable ~~compared~~segment tostructure ~~2015. Without~~and ~~the~~has ~~$12.1~~restated ~~million~~prior ~~net~~periods ~~sales~~to ofconform ~~the~~to ~~New Business for~~ the ~~two~~change ~~month period~~ in ~~2016,~~reportable ~~net sales would have declined $32~~segments.9 Refer ~~million~~to orNotes ~~6.1%~~18 inand ~~2016~~20 ~~as compared~~ to ~~2015. The~~the ~~total~~consolidated ~~negative~~financial ~~impact~~statements ofin ~~foreign~~Item ~~currency~~8 ~~translation~~of ~~due~~this toAnnual aReport ~~stronger~~for ~~U.S.~~additional ~~dollar~~information inregarding the ~~United~~reportable ~~Kingdom~~segments and ~~China,~~the ~~partially offset by a weaker U~~acquisition.~~S. dollar in Japan on consolidated net sales was $2.8 million.~~

The Company’s ~~results~~reported ~~were~~net ~~impacted~~income byof ~~acquisition~~$21.1 ~~related~~million ~~costs,~~or a$0.42 ~~slowing~~per ~~global~~diluted ~~economy~~share ~~and~~for ~~the~~2017, ~~negative~~as ~~impact~~compared to net income of a$13.8 ~~strong~~million Uor $0.S.27 ~~dollar~~per diluted share for 2016. ~~The~~Consolidated ~~Company~~net ~~continued~~sales increased $105.6 million or 20.5% in 2017 as compared to ~~increase~~2016. Included ~~shareholder~~in ~~value~~the ~~through~~change ~~its~~was ~~common~~the ~~stock~~incremental ~~dividend~~net ~~program~~sales ~~and~~of ~~its~~$91.9 ~~open~~million ~~market~~from ~~share~~the ~~repurchase~~New ~~program~~Business. For ~~through~~the ~~April~~year ~~2016~~to date period, foreign currency translation had a positive impact of $0.2 million.

Results of Operations

~~2016~~2017 Versus ~~2015~~2016

Net sales for the Activated Carbon ~~and Service~~ segment ~~decreased~~increased $3270.02 million or 614.67% from ~~2015~~2016. ~~Included~~Of this increase, the New Business contributed $48.6 million of additional net sales in ~~this~~2017 ~~change~~as ~~was~~compared to the ~~negative~~prior ~~impact~~year, ofprimarily ~~foreign~~in the Food and Beverage and Industrial markets. Foreign currency translation ~~which~~effects ~~totaled~~for ~~$1.8~~the ~~million~~segment were not significant.

	Increase (Decrease) in Net Sales
			Foreign		Net of Foreign
(Dollars in millions)	As Reported		Currency Impact		Currency Impact
Environmental Air market	$	~~(10~~12.8)3	$	(0.6)2	$	~~(11~~12.4)5
Environmental Water market		~~(14~~0.2)9		(0.62)		~~(14~~0.8)7
Food and Beverage market		(320.1)7		—(0.5)		(320.1)2
Industrial market		(517.1)4		—(0.4)		(517.1)0
Potable Water market		(312.7)		10.95		(113.8)2
Specialty Carbon market		67.48		1.0.3		78.41
Other		(1.56)		0.1		(1.45)
Total Activated Carbon and Service	$	(32.0)	$	1.8	$	(30.2)
Total Activated Carbon	$	70.2	$	—	$	70.2

~~Contributing~~Excluding to the ~~year~~New ~~over~~Business, ~~year~~net ~~decline~~sales ~~was lower demand~~ in the ~~Environmental~~Activated ~~Air~~Carbon ~~market~~segment ~~resulting~~increased ~~from~~in a2017 ~~legacy~~as ~~customer~~compared ~~that~~to ~~was~~2016. The ~~using~~increased ~~standard~~sales ~~product~~were ~~and~~attributed ~~switched~~to ~~suppliers~~higher indemand ~~2016~~for asEnvironmental ~~well~~Air asmarket amercury ~~number~~removal ofproducts ~~coal-fired~~as ~~electric~~well ~~generation~~as ~~units~~respirator ~~permanently~~products ~~changing~~and ~~over~~metal torecovery ~~gas~~in ~~fired~~the ~~units~~Specialty ~~due~~market toin ~~very~~the ~~low natural gas prices~~Americas. In addition, the ~~unseasonably~~Potable ~~warmer~~Water ~~winter~~market ~~weather~~experienced ~~conditions~~higher indemand for the ~~early~~removal ~~part~~ of ~~the~~1,2,3-trichloropropane ~~year~~(1,2,3-TPC) ~~coupled~~and ~~with~~perfluorinated ~~the~~compounds ~~low~~(PFCs) ~~natural~~contaminants ~~gas~~from ~~prices~~drinking ~~reduced the operational requirements of certain customers’ coal-fired electric generating units in 2016~~water. ~~This~~These ~~decline~~increases ~~was~~were partially offset by anlower ~~increase in demand for~~ activated carbon ~~pellets~~pellet sales for treating sulfur and nitrogen oxide emissions~~. The~~ ~~Environmental Water market was negatively impacted by a customer plant closure~~ in the Asia, ~~along~~Environmental ~~with~~Air amarket ~~decline~~as ~~in industrial environmental activity due to~~ a ~~slow~~certain ~~economy~~customer ~~and~~order ~~large orders~~ in ~~2015~~2016 ~~that~~ did not repeat in ~~2016~~2017. Lower demand in the Industrial and the Food and Beverage markets was largely due to soft economic conditions, customers optimizing their processes resulting in a rationalization of carbon usage, and a general slowness in project related activity. An increase in the Specialty Carbon market for metal recovery carbon products in the Americas and for respirator carbon products in Asia partially offset the decline in the other markets.

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Net sales for the ~~Equipment~~Alternative Materials segment ~~declined~~increased ~~slightly~~$42.0 million for the year ended December 31, 2017 as compared to ~~2015~~the same period in 2016 as a result of $43. 3 million of additional sales of diatomaceous earth and perlite filtration media products related to the New Business. These sales were partially offset by lower demand for defense and medical application products. Foreign currency translation ~~effects~~had ina positive impact of $0.2 million for the ~~Equipment~~year ~~segment~~ended ~~were~~December ~~not~~31, ~~significant~~2017, as a stronger Euro offset the weaker British pound sterling.

	Increase (Decrease)
(Dollars in millions)	in Net Sales
Carbon adsorption equipment	$	5.9
Ballast water treatment systems		(4.9)
Traditional ultraviolet light systems		(0.3)
Ion exchange systems		(1.1)
Total Equipment	$	(0.4)

Net sales for the Advanced Water Purification segment declined $6.7 million when compared to 2016. Foreign currency translation effects in the Advanced Water Purification segment were not significant.

Net sales for ballast water treatment systems were lower due to continued regulatory delays and a decline in sales of equipment to offshore service vessels, the demand from which has been impacted by ongoing low oil prices. In addition, sales of ion exchange equipment were lower due to several large projects in 2015 that did not repeat in 2016. These declines were offset by several large projects for carbon adsorption equipment, including $3.3 million related to treatment of perfluorinated compounds in drinking water, in 2016 as compared to the prior year.


	Increase (Decrease)
(Dollars in millions)	in Net Sales
Ballast water treatment	$	(1.5)
Traditional ultraviolet light		(1.2)
Ion exchange		(4.0)
Total Advanced Water Purification	$	(6.7)

Net sales for ~~the~~ballast ~~Consumer~~water ~~segment~~treatment ~~decreased~~were ~~$0.5~~lower ~~million~~due orto ~~5.1%~~a ~~from~~lack ~~2015~~of asmarket ~~higher~~ demand ~~for~~driven ~~defense~~by ~~application~~ship ~~products~~owners ~~was~~requesting ~~more~~extensions ~~than~~to ~~offset~~compliance bydates and a delay in the ~~negative~~IMO ~~impact~~implementation ofschedule ~~foreign~~from ~~currency~~the ~~translation~~initial ~~which~~2017 ~~totaled~~date $0to 2019.9 Ion ~~million~~exchange and traditional ultraviolet light sales were lower due to ~~the~~several ~~weaker~~large ~~British~~projects ~~Pound~~that ~~Sterling~~were completed in 2016 that did not repeat in 2017.

Net sales less cost of ~~$12~~products sold (excluding depreciation and amortization), as a percentage of net sales, was 30.5% for 2017 compared to 32.6% for the comparable 2016 period, a 2.1 percentage point or $13.0 million ~~related~~decrease. Contributing to the decline was the inclusion in 2017 of the historically lower margins of the New Business ~~subsequent~~which tocaused an approximate $9.3 million decline, impacting both the ~~acquisition~~Activated inCarbon ~~November~~and ~~2016~~Alternative ~~were~~Materials ~~reported~~segments. In addition, a $0.9 million business interruption insurance settlement benefited the Activated Carbon segment in ~~Other~~2016. ~~Refer~~ The toremaining ~~additional~~decline ~~discussion~~occurred ofwithin the ~~acquisition~~legacy business, primarily in ~~Notes~~the 18Activated ~~and~~Carbon 20segment, due to a less favorable product mix and timing of scheduled major maintenance at the ~~consolidated~~coal-based ~~financial~~virgin ~~statements~~activated incarbon ~~Item~~manufacturing 8facilities. The Company’s cost of ~~this~~products ~~Annual~~sold ~~Report~~excludes depreciation and amortization; therefore it may not be comparable to that of other companies.

~~Net~~Depreciation ~~sales less cost of products sold (excluding depreciation~~ and amortization), asincreased ~~a percentage of net sales, was 32~~$8.6% ~~for 2016 compared to 35.8% for the comparable 2015 period, a 3.2 percentage point or $16.5~~ million ~~decrease. Approximately $11.3 million of this decrease resulted from a decline~~ in ~~the~~2017 volume of higher margin products, including FLUEPAC® products for mercury removal coupled with an increase in volume of lower margin products compared to the prior year. The Company incurred higher post retirement costs of approximately $0.9 million for the U.S. plans in 2016 as compared to ~~2015. In 2015~~2016, ~~the~~primarily ~~Company~~as ~~benefited~~a ~~from~~result ~~refunds for import duties paid~~ of $18.37 million ~~which did not repeat in the 2016 period. A business interruption insurance settlement~~ of ~~$0.9~~expense ~~million~~related ~~received in 2016 provided a partial offset~~ to the ~~aforementioned~~New ~~items~~Business, ~~all~~for of which ~~primarily impacted~~ the ~~Activated~~impact Carbon and Service segment. In addition, the Equipment segment incurred higher warranty costs of approximately $1.2 million in 2016 as compared to the prior year. Also contributing to the decline was ~~$1.5~~split ~~million~~relatively ofevenly ~~additional~~between ~~costs related to~~ the ~~inventory~~Activated ~~fair~~Carbon ~~value step up,~~ and ~~$1.0~~Alternative ~~million~~Materials ~~in costs related to scheduled plant maintenance outages at certain of the New Business’ production facilities reported in Other~~segments. ~~The Company’s cost of products sold excludes depreciation and amortization; therefore it may not be comparable to that of other companies.~~

~~Depreciation~~Selling, general and ~~amortization~~administrative ~~increased~~expenses decreased $21.60 million or 1.0% in ~~2016~~2017 as compared to ~~2015~~2016. The ~~increase~~decline ~~was~~included ~~primarily~~lower ~~due~~acquisition toand ~~higher~~integration ~~depreciation~~related ~~expense~~costs ~~related~~of to$11.2 ~~the~~million ~~completion~~and ofoutside ~~several~~consulting ~~large~~costs ~~projects~~of ~~such~~$1.5 asmillion, impacting both the ~~improvement~~Activated Carbon and ~~upgrades~~Alternative toMaterials ~~the~~segments, ~~Company’s~~and ~~manufacturing~~lower ~~facilities,~~pension ~~the~~settlement ~~new~~charges ~~headquarters~~of ~~facility,~~$0.5 ~~and~~million in the ~~SAP~~Activated ~~re-implementation~~Carbon ~~project~~segment. Partially ~~and~~offsetting these amounts were $17.49 million of expenses incurred by the New Business, ~~reported~~for inwhich ~~Other~~the ~~for~~impact was split relatively evenly between the ~~two~~Activated ~~month~~Carbon and Alternative Materials segments. The 2017 period ~~ended~~also ~~December~~included 31$4.6 million of costs related to the Pending Merger with Kuraray, ~~2016~~which were not allocated to a reportable segment.

~~Selling,~~Research ~~general~~ and ~~administrative~~development expenses ~~increased~~were $15.0 million or 17.7% in 2016 as compared to 2015. During 2016, $13.4 million of additional transaction costs related to the acquisition of the New Business have been incurred with approximately half in the Activated Carbon and Service segment and half in Other. The Company experienced higher employee related costs of $0.8 million, of which $0.7 million was a result of higher pension settlement costs in 2016 versus the comparable ~~period in 2015, primarily impacting the Activated Carbon and Services segment. These increases were partially offset by outside consulting services incurred in 2015, largely related~~ to ~~the SAP re-implementation project, which did not repeat, but were partially offset by other project costs in~~ 2016~~. In~~ ~~addition, 2016 expenses included $1.7 million incurred by the New Business for the two month period ended December 31, 2016 reported in Other.~~

~~Research~~Other ~~and~~operating ~~development~~income ~~expenses~~for ~~decreased~~2017 ~~$1.0~~included ~~million in 2016 versus~~ the ~~comparable 2015 period~~$4. ~~This~~1 ~~decrease~~million ~~was~~gain ~~largely~~on ~~due to expenses related to~~ the ~~Company’s~~sale ~~new~~of ~~research~~an ~~and~~idled ~~development~~plant ~~innovation center that were incurred~~ in ~~2015~~the ~~but did not repeat in 2016~~UK.

Interest income in 2017 was comparable to 2016.

Interest expense increased $5.5 million in 2017 as compared to 2016 due to an increase in the average outstanding debt balance, primarily resulting from the Company’s purchase of the New Business, coupled with higher interest rates in 2017.

The additional income of $1.3 million in other income (expense) — net for 2017 as compared to 2016 was largely related to favorable foreign exchange when compared to the prior year.

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~~Interest~~The income tax provision for 2017 was $12.5 million compared to $6.3 million in 2016. The income tax provision increased $4.7 million as a result of higher pre-tax earnings in 2017 as compared to 2016. In addition, the incorporation of the Company’s U.S. Belgium branch in 2017, which was ~~comparable~~part of an overall single integrated plan of reorganization that included the Company’s acquisition of the New Business, increased the 2017 income tax provision by $3.1 million as compared to ~~2015~~2016. Partially offsetting these increases was a $2.0 million decrease in the income tax provision as a result of higher foreign earnings in 2017, since the income tax rates applicable to foreign taxing jurisdictions are lower than those in the U.S.

~~Interest~~The ~~expense~~effective ~~increased~~tax $rate for 2017 was 37.1% compared to 31.63% ~~million~~for 2016. The implementation of the overall single integrated plan of reorganization which included the incorporation of the Company’s U.S. Belgium branch in ~~2016~~2017 asresulted ~~compared~~in toa ~~2015~~9.4% ~~due~~increase in the effective tax rate for 2017. As discussed in further detail in Note 14 to anthe ~~increase~~consolidated financial statements in Item 8 of this Annual Report, on December 22, 2017 the ~~average~~U.S. ~~outstanding~~enacted ~~borrowings~~the ~~under~~Tax Cuts and Jobs Act (the ~~Company’s~~Act). The ~~debt~~Act, ~~agreements~~which ~~resulting~~is ~~from~~also commonly referred to as “U.S. tax reform,” significantly changes U.S. corporate income tax laws by, among other things, reducing the U.S. corporate income tax rate to 21% starting in 2018 and creating a territorial tax system with a one-time mandatory tax on previously deferred foreign earnings of U.S. subsidiaries. The net impact of the Act increased the Company’s ~~purchase~~tax rate by approximately 1.8% over the 2017 statutory rate. The effective tax rate for 2016 included the 2.7% benefit realized from the enactment of the ~~New~~U.S. ~~Business~~Internal Revenue Code Section 987 Treasury Regulations, ~~coupled~~which ~~with~~were ~~slightly~~finalized and issued in 2016. As discussed above, the Company had higher ~~interest~~foreign ~~rates~~earnings in 2017, which decreased the effective tax rate 3.3% as compared to 2016.

The ~~additional~~effective ~~expense~~tax rate for 2017 of $37.1% was higher than the U.5S. ~~million~~statutory inrate ~~other~~of ~~income~~35% ~~(expense)~~primarily –due ~~for~~to ~~2016~~the 9.4% increase as ~~compared~~a toresult ~~2015~~of the overall single integrated plan of reorganization, which was ~~largely~~offset ~~related~~by tothe 9.8% decrease as a result of foreign ~~exchange~~earnings, ~~and~~which are taxed at lower income ~~reported~~tax inrates, ~~2015~~both of which are described above. The effective tax rate for 2017 was 1.8% higher as a ~~decline~~result of the Act which was enacted in 2017, which is also described above. U.S state income taxes caused a 1.9% increase in the ~~earn-out~~effective ~~liability~~tax rate, but were partially offset by a 1.3% decrease related to apermanent ~~2010~~tax ~~acquisition~~differences, ~~that~~primarily ~~did~~related ~~not~~to ~~repeat~~non-taxable manufacturing income in ~~2016~~the U.S. along with other non-taxable income in the UK and Singapore.

~~The income tax provision for~~ 2016 ~~was~~Versus ~~$6.3 million as compared to $19.9 million in~~ 2015~~. The income tax provision decreased $13.6 million in 2016 as compared to 2015 predominately due to a decline in pre-tax earnings.~~

~~The~~Net ~~effective~~sales ~~tax rate~~ for ~~2016~~the ~~was~~Activated ~~31.3%~~Carbon ~~compared~~segment todecreased 31$20.4%2 ~~for~~million ~~the~~from ~~similar~~ 2015 ~~period~~. ~~The~~Included ~~2016~~in ~~effective~~this ~~rate~~change was ~~lower than~~ the ~~U.S.~~negative ~~statutory~~impact ~~rate mainly due to the mix~~ of ~~income throughout~~ foreign ~~jurisdictions,~~currency ~~the~~translation ~~majority of~~ which ~~was~~totaled ~~related to China, the UK and Singapore, which reduced the rate by 6~~$1.~~5%. The~~8 ~~decrease of the 2016 rate was partially offset by state income taxes which increased the overall 2016 tax rate by 2~~million.9%. In addition, the 2016 rate was increased by 3.2% for permanent items including non-deductible transaction costs in the U.S. This increase was partially offset by the benefit realized from the enactment of the U.S. Internal Revenue Code Section 987 Treasury Regulations, which were finalized and issued on December 7, 2016. The benefit realized from the issuance of the final regulations reduced the 2016 rate by 2.7%.

2015 Versus 2014


	Increase (Decrease) in Net Sales
			Foreign		Net of Foreign
(Dollars in millions)	As Reported		Currency Impact		Currency Impact
Environmental Air market	$	(9.0)	$	(0.6)	$	(9.6)
Environmental Water market		(12.8)		(0.6)		(13.4)
Food and Beverage market		(0.9)		—		(0.9)
Industrial market		(2.1)		—		(2.1)
Potable Water market		(0.4)		1.9		(1.5)
Specialty Carbon market		6.6		1.0		7.6
Other		(1.6)		0.1		1.5
Total Activated Carbon	$	(20.2)	$	1.8	$	(18.4)

~~Net~~Contributing ~~sales~~to ~~for~~the year over year decline was lower demand in the ~~Activated~~Environmental ~~Carbon~~Air market resulting from a legacy customer that was using standard product and ~~Service~~switched ~~segment~~suppliers ~~decreased~~in ~~$11.7~~2016 ~~million~~as orwell 2as a number of coal-fired electric generation units permanently changing over to gas fired units due to very low natural gas prices.3% In ~~from~~addition, ~~2014~~the unseasonably warmer winter weather conditions in the early part of the year coupled with the low natural gas prices reduced the operational requirements of certain customers’ coal-fired electric generating units in 2016. ~~Included~~This decline was partially offset by an increase in ~~this~~demand ~~change~~for activated carbon pellets for treating sulfur and nitrogen oxide emissions. The Environmental Water market was negatively impacted by a customer plant closure in Asia, along with a decline in industrial environmental activity due to a slow economy and large orders in 2015 that did not repeat in 2016. Lower demand in the ~~negative~~Industrial ~~impact~~and the Food and Beverage markets was largely due to soft economic conditions, customers optimizing their processes resulting in a rationalization of ~~foreign~~carbon ~~currency~~usage, ~~translation~~and ~~which~~a ~~totaled~~general ~~$21~~slowness in project related activity.9 An ~~million~~increase in the Specialty Carbon market for metal recovery carbon products in the Americas and for respirator carbon products in Asia partially offset the decline in the other markets. In addition, 2016 included net sales

	Increase (Decrease) in Net Sales
			Foreign		Net of Foreign
(Dollars in millions)	As Reported		Currency Impact		Currency Impact
Environmental Air market	$	27.0	$	2.6	$	29.6
Environmental Water market		(4.4)		4.3		(0.1)
Food and Beverage market		(10.8)		4.0		(6.8)
Industrial market		(6.1)		3.8		(2.3)
Potable Water market		(14.9)		5.7		(9.2)
Specialty Carbon market		(4.4)		1.2		(3.2)
Other		1.9		0.3		2.2
Total Activated Carbon and Service	$	(11.7)	$	21.9	$	10.2

The decrease in net sales for the Activated Carbon and Service segment is principally due to the negative impact of foreign currency translation. Absent the negative impact of foreign currency, sales for the Activated Carbon and Service Segment increased in 2015 as compared to 2014. The increase was principally due to higher sales in the Americas Environmental Air market of approximately $29.5 million due to additional sales volume as a result of customers complying with mercury removal regulations promulgated by 19 states and certain Canadian provinces, as well as the Mercury and Air Toxics Standards. This increase was partially offset by the decline in the Americas Food and Beverage market due to certain non-repeat orders and Americas Specialty market due to continued lower demand for respirators from the U.S. government. In addition, the Asian Potable Water market declined approximately $8.2 million primarily due to certain large orders in 2014 that did not repeat in 2015, along with a softer growth rate.

Net sales for the Equipment segment decreased $6.0 million or 13.3% from 2014. Foreign currency translation effect in the Equipment segment was $0.3 million.

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	Increase (Decrease)
(Dollars in millions)	in Net Sales
Carbon adsorption equipment	$	(3.6)
Ballast water treatment systems		(3.4)
Traditional ultraviolet light systems		—
Ion exchange systems		1.3
Total Equipment	$	(6.0)

of $6.4 million related to the New Business primarily in the Food and Beverage and Industrial markets, along with several large projects for carbon adsorption equipment, including $3.3 million related to treatment of perfluorinated compounds in drinking water, recorded in 2016 as compared to the prior year.

~~The~~Net ~~decline in~~ sales ~~was~~for ~~due~~the toAlternative ~~lower~~Materials ~~demand~~segment ~~for~~increased ~~carbon~~$5.2 ~~adsorption~~million ~~equipment resulting~~ from ~~the~~2015 ~~completion~~largely ofdue ~~projects~~to ~~for~~net ~~installations~~sales ~~for~~of ~~certain~~$5.7 ~~customers~~million related to the ~~initial~~New ~~Disinfectants~~Business ~~and~~subsequent ~~Disinfection~~to ~~Byproducts~~the ~~Rule~~acquisition ~~and a decline~~ in ~~project~~November ~~related~~2016. Higher ~~discretionary~~demand ~~spending as well as lower sales~~ for ~~ballast~~defense ~~water~~application ~~treatment~~cloth ~~systems~~products ~~due~~was tomore ~~continued~~than ~~regulatory~~offset ~~delays~~by ~~and~~the anegative ~~decline~~impact ~~in sales~~ of ~~our~~foreign ~~equipment~~currency totranslation ~~offshore service vessels, the demand from~~ which ~~has~~totaled ~~been impacted by ongoing low oil prices~~$0. ~~This~~9 ~~decline~~million ~~was~~due ~~partially~~to ~~offset by~~ the ~~higher~~weaker ~~sales~~British ~~for~~Pound ~~ion exchange systems~~Sterling.

Net sales infor the ~~Consumer~~Advanced Water Purification segment ~~decreased~~declined $25.48 million oras ~~20.8%~~compared ~~from 2014 due~~ to ~~higher~~2015. Foreign ~~demand~~currency ~~from~~translation aeffects ~~single customer~~ in ~~2014 that did not repeat in 2015, as well as~~ the ~~negative~~Advanced ~~impact~~Water ofPurification ~~foreign~~segment ~~currency~~were ~~translation~~not ~~which totaled $0~~significant.~~6 million for the Consumer segment.~~

Net sales less cost of products sold (excluding depreciation and amortization), as a percentage of net sales, was 35.8% for 2015 compared to 34.6% in 2014, a 1.2 percentage point or $6.4 million increase which was primarily in the Activated Carbon and Service segment. Approximately $3.0 million of this improvement resulted from higher margin products sold, including FLUEPAC® products for mercury removal, coupled with a decline in volume of lower margin products. The Company’s cost improvement programs, including lower coal costs of approximately $2.2 million, primarily from two long-term coal contracts, contributed to margin improvement in all geographic regions. In addition, the Company benefited from refunds for import duties paid of approximately $1.3 million under the Trade Preferences Extension Act of 2015 pertaining to purchases of coconut carbons. In the Equipment segment, improved margins on projects in progress contributed approximately $0.5 million to the improvement as compared to the prior year. The Company’s cost of products sold excludes depreciation and amortization; therefore it may not be comparable to that of other companies.



	Increase (Decrease)
(Dollars in millions)	in Net Sales
Ballast water treatment		(4.7)
Traditional ultraviolet light		(0.3)
Ion exchange		(0.8)
Total Advanced Water Purification	$	(5.8)

~~Depreciation~~Net ~~and~~sales ~~amortization~~for ~~increased~~ballast bywater ~~$5.0~~treatment ~~million~~were orlower ~~16.4%~~due ~~in 2015 as compared~~ to ~~2014. The~~continued ~~increases~~regulatory ~~were~~delays ~~primarily~~and ~~due~~a todecline ~~higher~~in ~~depreciation~~sales ~~expense~~of ~~related~~equipment to ~~improvements~~offshore toservice ~~the Company’s Catlettsburg~~vessels, ~~Kentucky~~the ~~virgin~~demand ~~carbon~~from ~~manufacturing~~which ~~facility~~has ~~and~~been ~~the~~impacted ~~July~~by ~~2015~~ongoing ~~completion~~low ofoil ~~the SAP re-implementation project~~prices. ~~Also~~In ~~contributing~~addition, tosales ~~the~~of ~~increase~~ion ~~was~~exchange ~~accelerated~~equipment ~~depreciation~~were ~~expense~~lower ofdue ~~approximately~~to ~~$3.0~~several ~~million~~large projects in 2015 ~~related to certain assets~~ that ~~have~~did ~~been~~not orrepeat ~~will~~in ~~be replaced as the result of new projects, including the Company’s SAP re-implementation project~~2016.

~~Selling,~~Net ~~general~~sales less cost of products sold (excluding depreciation and ~~administrative~~amortization), ~~expenses~~as ~~increased~~a bypercentage $4of net sales, was 32.06% ~~million~~for or2016 4compared to 35.98% infor the comparable 2015 asperiod, ~~compared~~a to3.2 ~~2014~~percentage point or $16.5 million decrease. ~~The~~Approximately ~~increase~~$11.3 ~~was~~million ~~due~~of tothis ~~costs~~decrease ~~related~~resulted tofrom ana ~~SAP~~decline ~~re-implementation~~in ~~project~~the ~~which~~volume ~~commenced~~of inhigher ~~January~~margin ~~2014~~products, ~~aimed~~including atFLUEPAC® ~~improving~~products ~~functionality~~for mercury removal coupled with an increase in volume of lower margin products compared to the ~~Company’s~~prior ~~enterprise~~year. Also ~~resource~~contributing ~~planning~~to ~~system~~the ofdecline ~~approximately~~was $1.05 million~~. The~~ ~~Company~~of ~~re-implemented~~additional ~~SAP~~costs asrelated ofto ~~July~~the 1inventory fair value step up, ~~2015~~and $1. In0 ~~addition,~~million ~~outside~~in ~~consulting~~costs ~~services~~related ~~increased~~to byscheduled ~~$4.4~~plant ~~million~~maintenance outages at certain of the New Business’ production facilities. The Company ~~experienced~~incurred higher ~~employee~~post ~~related~~retirement costs of approximately $2.0.9 million, offor ~~which~~the $0U.7S. ~~million~~plans ~~was~~in a2016 ~~result~~as ofcompared ~~higher~~to ~~pension costs~~2015. ~~Partially~~In ~~offsetting~~2015, ~~these~~the ~~increases,~~Company ~~which~~benefited ~~were~~from ~~primarily~~refunds infor ~~the~~import ~~Activated~~duties ~~Carbon~~paid ~~and~~of ~~Service~~$1.3 ~~segment,~~million ~~was~~which did not repeat in the ~~positive~~2016 ~~impact~~period. A ofbusiness ~~foreign~~interruption ~~currency~~insurance ~~translation~~settlement of $30.19 million ~~due~~received in 2016 provided a partial offset to the ~~stronger~~aforementioned ~~U.S.~~items, ~~dollar~~all of which ~~was also~~ primarily ~~within~~impacted the Activated Carbon ~~and Service~~ segment. ~~Selling~~In addition, ~~general~~the ~~and~~Advanced ~~administrative~~Water ~~expenses~~Purification ~~declined~~segment inincurred ~~the~~higher ~~Equipment~~warranty ~~segment~~costs byof approximately $01.42 million in ~~2015~~2016 as compared to ~~2014,~~the asprior ayear. The ~~result~~Company’s cost of ~~successful~~products ~~cost~~sold ~~improvements,~~excludes ~~including~~depreciation aand ~~reduction~~amortization; intherefore ~~headcount~~it may not be comparable to that of other companies.

~~Research~~Depreciation and ~~development~~amortization ~~expenses~~increased ~~were~~$2.6 ~~comparable~~million in ~~2015~~2016 as compared to ~~2014~~2015. The increase was primarily due to higher depreciation expense related to the completion of several large projects such as the improvement and upgrades to the Company’s manufacturing facilities, the new headquarters facility, and the SAP re-implementation project and $1.4 million incurred by the New Business for the two month period ended December 31, 2016.

Selling, general and administrative expenses increased $15.0 million or 17.7% in 2016 as compared to 2015. During 2016, $13.4 million of additional transaction costs related to the acquisition of the New Business had been incurred. The Company ~~recorded~~experienced higher employee related costs of $0.38 million, of ~~restructuring~~which ~~income~~$0.7 million was a result of higher pension settlement costs in ~~2014~~2016 ~~which~~versus ~~represents~~the ~~reductions~~comparable period in 2015, primarily impacting the ~~estimated~~Activated ~~accrual~~Carbon ~~and~~segment. These aincreases ~~pre~~were partially offset by outside consulting services incurred in 2015, largely related to the SAP re-~~tax~~implementation ~~gain~~project, which did not repeat, but were partially offset by other project costs in 2016. In addition, 2016 expenses included $1.7 million incurred by the New Business for the ~~sale~~two ofmonth aperiod ~~warehouse~~ended December 31, 2016 reported in ~~Belgium~~the Activated Carbon and Alternative Materials segments.

~~Interest~~Research ~~income~~and ~~was~~development expenses decreased $1.0 million in 2016 versus the comparable 2015 period. This decrease was largely due to expenses related to the Company’s new research and development innovation center that were incurred in 2015 ~~versus~~but ~~2014~~did not repeat in 2016.

Interest ~~expense~~income ~~increased $0.5 million~~ in ~~2015~~2016 aswas ~~compared~~comparable to ~~2014 due to an increase in the outstanding borrowings under the Company’s debt agreements~~2015.

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~~The~~Interest ~~additional income in other~~ expense —increased ~~net of~~ $1.26 million ~~for~~in ~~2015~~2016 as compared to ~~2014~~2015 ~~was~~due ~~largely~~to ~~related~~an toincrease ~~foreign~~in ~~exchange~~the average outstanding borrowings under the Company’s debt agreements resulting from the Company’s purchase of the New Business, coupled with slightly higher interest rates in 2016.

The ~~income~~additional ~~tax~~expense ~~provision~~of ~~for 2015 was~~ $191.95 million ~~as compared to $23.1 million~~ in ~~2014. For~~other ~~2015,~~income ~~tax~~ (expense) ~~decreased~~— ~~approximately~~net ~~$3.2~~for ~~million~~2016 as compared to ~~2014 predominately due to a decrease in pre-tax earnings of $9.1 million. In the fourth quarter of~~ 2015, ~~the~~was ~~Company~~largely ~~completed~~related ato ~~U.S.~~foreign ~~research~~exchange and ~~development~~income ~~tax~~reported ~~credit~~in ~~study~~2015 for ~~the prior years 2012 — 2014. The Company recognized~~ a ~~benefit~~decline ofin ~~$1.1 million related to~~ the ~~research~~earn-out ~~and~~liability ~~development credit. Compared to 2014, the Company’s state income taxes decreased by $0.5 million~~ related to ~~state apportionment changes. The 2014 tax expense includes~~ a ~~net~~2010 ~~$1.4~~acquisition ~~million~~that ~~benefit~~did ~~related~~not torepeat ain ~~completed Internal Revenue Service (IRS) examination and the effective settlement and release of uncertain tax positions~~2016.

The ~~effective~~income tax ~~rate~~provision for ~~2015~~2016 was 31$6.4%3 million as compared to 31$19.9% ~~for~~million ~~the~~in ~~similar 2014 period~~2015. The ~~2015~~income ~~effective~~tax ~~rate~~provision ~~was~~decreased ~~lower than the U~~$13.S.6 ~~statutory~~million ~~rate~~in ~~mainly~~2016 ~~due~~as tocompared ~~the mix of income throughout foreign jurisdictions, the majority of which was related~~ to ~~the UK and Singapore, which reduced the rate 3.1%. The aforementioned research and development credit reduced the~~ 2015 ~~effective~~predominately ~~tax~~due ~~rate~~to bya ~~1.7%. The~~decline ~~decrease~~in ~~of the 2015 rate was partially offset by state income taxes which increased the overall 2015~~ pre-tax ~~rate by 1~~earnings.~~8%.~~

The effective tax rate for 2016 was 31.3% compared to 31.4% for the similar 2015 period. The 2016 effective rate was lower than the U.S. statutory rate mainly due to the mix of income throughout foreign jurisdictions, the majority of which was related to China, the UK and Singapore, which reduced the rate by 6.5%. The decrease of the 2016 rate was partially offset by state income taxes which increased the overall 2016 tax rate by 2.9%. In addition, the 2016 rate was increased by 3.2% for permanent items including non-deductible transaction costs in the U.S. This increase was partially offset by the benefit realized from the enactment of the U.S. Internal Revenue Code Section 987 Treasury Regulations, which were finalized and issued on December 7, 2016. The benefit realized from the issuance of the final regulations reduced the 2016 rate by 2.7%.

Liquidity and Capital Resources

The Company has had sufficient financial resources to meet its operating requirements and to fund capital spending, the acquisition, dividend payments, share repurchases and pension plans.

Cash flows provided by operating activities were $6964.06 million in ~~2016~~2017, as compared to $69.90 million in ~~2015~~2016. Net cash flow was ~~comparable~~slightly lower between the two periods as a net ~~favorable~~unfavorable working capital change offset the ~~lower~~higher operating results in ~~2016~~2017. Cash flows provided by operating activities ~~declined~~were ~~in 2015 as compared to~~ $8469.30 million in ~~2014~~2016 ~~primarily~~as ~~due~~compared to ~~unfavorable~~$69.9 ~~working capital changes from higher inventories~~million. ~~The~~ Net ~~Company~~cash ~~made~~flow ~~contributions~~was tocomparable ~~its~~between ~~pension~~the ~~plans,~~two ~~which~~periods ~~included~~as ~~$0.6~~a ~~million~~net ~~and~~favorable ~~$1.2~~working ~~million~~capital ofchange ~~discretionary~~offset ~~contributions to~~ the ~~U.S.~~lower ~~pension~~operating ~~plans~~results ~~during~~in 2016 ~~and 2015, respectively~~.

~~The~~Cash ~~Company~~flows ~~received~~used ~~$0.6~~in ~~million~~investing ~~and~~activities ~~$1.8~~decreased ~~million~~ in 2017 as 2016 ~~and~~included ~~2014,~~the ~~respectively,~~acquisition of ~~proceeds~~the ~~related~~New toBusiness ~~government~~for ~~grants~~$153.6 inmillion, ~~Asia~~net ~~and~~of ~~Europe~~cash acquired. ~~Grants~~ During ~~related~~2017, tothe ~~income~~Company ~~were~~finalized ~~reported~~the ~~within~~purchase ~~operating~~price ~~activities,~~of ~~while~~the ~~grants~~New ~~related~~Business, toresulting ~~assets~~in ~~were~~an ~~reported~~additional aspayment ~~cash~~of ~~flows~~$1.2 ~~from investing activities~~million. Refer to Note 1920 to the consolidated financial statements in Item 8 of this Annual Report for further information.

~~Cash~~Capital ~~flows~~expenditures ~~used~~were in$57.4 ~~investing~~million, ~~activities~~$31.9 ~~increased~~million, ~~significantly~~and $62.3 million, in 2017, 2016 asand ~~compared~~2015, torespectively. Expenditures ~~2015~~for 2017 and ~~2014~~2016 aswere aprimarily ~~result~~for ofimprovements to manufacturing facilities, including the ~~acquisition~~upgrade of the ~~New~~Company’s ~~Business~~Pennsylvania reactivation plant and debottlenecking of its plant in France in 2017. Expenditures for 2015 included $~~153~~19.63 million for improvements to the Company’s Catlettsburg, ~~net~~Kentucky ofmanufacturing ~~cash~~facility, ~~acquired~~$5. ~~Refer~~8 tomillion ~~Note~~of 20upgrades to the ~~consolidated~~Tipton ~~financial~~plant ~~statements~~ in ~~Item~~the 8UK, expenditures of ~~this~~$11.3 ~~Annual~~million ~~Report~~related to the Company’s new headquarters facility, which includes the research and development innovation center; and $4.1 million for ~~further~~a ~~information~~SAP re-implementation project. Capital expenditures for 2018 are currently projected to be approximately $35 million to $45 million. The aforementioned expenditures are expected to be funded by operating cash flows, cash on hand, and borrowings.

~~Capital~~Proceeds ~~expenditures~~for ~~were~~sales ~~$31.9~~of ~~million~~property, ~~$62.3~~plant ~~million,~~ and ~~$63.5~~equipment ~~million, in 2016, 2015 and 2014, respectively. Expenditures for 2016~~ were ~~primarily for improvements to manufacturing facilities. Expenditures for 2015 included~~ $~~19.3 million for improvements to the Company’s Catlettsburg, Kentucky manufacturing facility, $~~5.81 million ~~of upgrades to the Tipton plant~~ in ~~the UK~~2017, ~~expenditures of~~ $111.32 million ~~related~~in ~~to the Company’s new headquarters facility~~2016, ~~which includes the research~~ and ~~development~~not ~~innovation~~significant ~~center;~~in ~~and $4~~2015.~~1 million for a SAP re-implementation project.~~ ~~Expenditures~~The ~~for~~majority 2014 included $48.9 million for improvements to manufacturing facilities including approximately $38.6 million for the Company’s Catlettsburg, Kentucky and Pearlington, Mississippi facilities, along with expenditures for a SAP re-implementation project of ~~approximately $6.2 million. Capital expenditures for~~ 2017, ~~which~~proceeds ~~includes~~were ~~expected~~from ~~spending for~~ the ~~upgrade~~sale of ~~the~~an ~~Company’s~~idled ~~Pittsburgh, Pennsylvania reactivation~~ plant ~~and~~in the ~~New Business~~UK, ~~are~~which ~~currently~~resulted ~~projected~~in toa begain ~~approximately~~of $704.1 million ~~to $80 million~~. ~~The aforementioned expenditures are expected to be funded by operating cash flows, cash on hand, and borrowings.~~

~~Proceeds~~Cash flows for ~~sales~~financing ofactivities ~~property,~~increased ~~plant~~significantly in 2016 as compared to 2017 and ~~equipment~~2015 ~~were~~as $1a result of the incremental borrowings required under the Company's debt arrangements to fund the acquisition of the New Business.2 Other ~~million~~financing inincludes ~~2016~~the ~~and~~settlement ~~not~~of ~~significant~~derivative incontracts ~~2015~~pertaining orto ~~2014~~an intercompany loan related to the acquisition of the New Business.

~~Cash~~On ~~flows~~October ~~provided~~4, by2016, ~~financing~~the ~~activities~~Company ~~increased~~entered ~~significantly~~into inthe ~~2016~~First asAmended ~~compared to 2015~~ and ~~2014~~Restated asCredit aAgreement ~~result~~(Credit ofAgreement) ~~the~~which ~~incremental~~provides ~~borrowings~~for ~~required~~total ~~under~~borrowing ~~the~~capacity ~~Company's~~of ~~debt~~$400 ~~arrangements~~million, tocomprised ~~fund~~of ~~the~~a ~~acquisition~~$300 ofmillion ~~the~~revolving ~~New~~credit ~~Business.~~ facility

On October 4, 2016, the Company entered into the First Amended and Restated Credit Agreement (Amended Credit Agreement) which amended the Company’s existing U.S. Credit Agreement (Credit Agreement). The Amended Credit

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~~Agreement~~(Revolver) ~~increases~~that ~~the~~expires ~~Company’s~~on ~~total~~October ~~borrowing capacity to $400 million~~4, ~~comprised~~2021 ~~of a $300 million revolving credit facility (Amended Revolver)~~ and a $100 million term loan facility (Term Loan)~~. The~~ ~~Amended~~that ~~Credit~~expires ~~Agreement~~on ~~extends the term of the Amended Revolver to~~ October 4, ~~2021 and the maturity date of the Term Loan to October 4,~~ 2023.

The Company borrowed the full ~~amount~~$100 ofmillion under the Term Loan ~~was borrowed~~ on ~~the~~October ~~closing date~~4, ~~with~~2016. During the ~~proceeds~~fourth ~~used~~quarter toof ~~repay~~2016, ~~all~~the ~~outstanding~~Company ~~term~~borrowed ~~loan~~$160 ~~and~~million ~~revolving credit facility borrowings~~ under the ~~Credit Agreement. The Amended~~ Revolver ~~was used~~ to ~~fund~~finance the acquisition of the New Business, and is available for working capital requirements and general corporate purposes. The total debt outstanding increased $~~113~~8.65 million in ~~2016 as a result of the acquisition of the New Business~~2017. Total availability under the Amended Credit Agreement was $~~172~~159.52 million as of December 31, ~~2016~~2017.

~~Beginning~~Required ~~January~~quarterly 1,payments ~~2017,~~under the ~~Company~~Term ~~will~~Loan bebegan ~~required~~January to1, ~~make~~2017, ~~quarterly~~and ~~repayments~~are ~~under the Term Loan~~ equal to 1.25% of the original outstanding balance of the Term Loan until January 1, 2019, at which time the quarterly repayments will increase to 2.0% until the remaining balance is due on the October 4, 2023 maturity date.

Certain domestic subsidiaries of the Company unconditionally guarantee all indebtedness and obligations related to borrowings under the ~~Amended~~ Credit Agreement. The Company’s obligations under the ~~Amended~~ Credit Agreement are unsecured. The ~~Amended~~ Credit Agreement contains customary affirmative and negative covenants for credit facilities of this type. ~~The~~As a result of an amendment signed in February 2017, the Company ~~has~~is permitted to pay annual dividends of up to $14 million, so long as the sum of availability under the Credit Agreement and the amount of U.S. cash on hand is at least $50 million. The Company must comply with certain financial covenants including minimum interest coverage ratio and a maximum leverage ratio as defined within the ~~Amended~~ Credit Agreement. The Company was in compliance with all such covenants as of December 31, ~~2016~~2017.

In ~~February 2017~~2016, anCalgon ~~amendment~~Carbon ~~was~~Japan ~~signed~~(CCJ) toentered ~~the~~into ~~Amended~~a 2.0 billion Japanese Yen unsecured revolving loan facility agreement (Japanese Credit Agreement,) which, ~~among~~was ~~other~~scheduled ~~things~~to expire on March 24, ~~removes~~2019. The ~~the~~Company ~~quarterly~~was ~~leverage~~jointly ~~ratio~~and ~~requirement~~severally ~~for~~liable as the ~~Company~~guarantor toof ~~pay~~CCJ’s ~~dividends~~obligations tounder ~~its~~the ~~stockholders~~Japanese ~~and~~Credit ~~replaces~~Agreement. Total itavailability ~~with~~under anthe ~~annual~~Japanese ~~dividend~~Credit ~~dollar~~Agreement ~~restriction~~was 2.0 billion Japanese Yen as of ~~$14~~December 31, 2017.0 In ~~million~~January 2018, the Company canceled the Japanese Credit Agreement.

On March 24, 2016, Calgon Carbon Japan (CCJ) entered into a 2.0 billion Japanese Yen unsecured revolving loan facility agreement (Japanese Credit Agreement) which expires on March 24, 2019. The Company is jointly and severally liable as the guarantor of CCJ’s obligations under the Japanese Credit Agreement. Total availability under the Japanese Credit Agreement was 2.0 billion Japanese Yen as of December 31, 2016.

Refer to Note 8 to the consolidated financial statements in Item 8 of this Annual Report, which is incorporated herein by reference, for further details on the Company’s borrowing arrangements.

In December 2013, the Company’s Board of Directors approved a share repurchase program with a total of $150 million of purchases authorized. As of December 31, ~~2016~~2017, the Company had repurchased a total of 4,598,661 shares at an average price of $18.67 per share under this program. All of the above mentioned repurchases were funded from operating cash flows, cash on hand, and borrowings and the shares are held as treasury stock. Subsequent to these repurchases, the Company’s remaining authorization to repurchase its common stock is approximately $64.1 million. In April 2016, the Company suspended the activities of the share repurchase program.

On February 18, 2015, the Company’s Board of Directors reinstated its common stock dividend program. Quarterly dividends of $0.05 per share were declared and paid in each of the four quarters for the years ended December 31, 2017, 2016, and 2015. ~~No common stock dividends were declared or paid in 2014.~~ In addition, in February ~~2017~~2018, a common stock dividend of $0.05 per share was declared. Dividend declaration and payout are at the discretion of the Board of Directors. Future dividends will depend on the Company’s earnings, cash flows, capital investment plans to pursue long-term growth opportunities, and share repurchases, if any.

The Company currently expects that cash from operating activities plus cash balances and available external financing will be sufficient to meet its cash requirements for the next twelve months. The cash needs of each of the Company’s reporting segments are principally covered by the segment’s operating cash flow on a standalone basis. Any additional needs will be funded by cash on hand or borrowings under the Company’s credit facilities. The ~~Equipment~~Advanced ~~and~~Water ~~Consumer~~Purification ~~segments~~segment historically ~~have~~has not required extensive capital expenditures. The Company believes that operating cash flows, cash on hand and borrowings will adequately support each of the segments cash needs.

Cash and cash equivalents include $2733.41 million and $4527.14 million held by the Company’s foreign subsidiaries as of December 31, ~~2016~~2017 and ~~2015~~2016, respectively. Generally, cash and cash equivalents held by foreign subsidiaries are not readily available for use in the U.S. without adverse tax consequences. The Company’s principal sources of liquidity are its cash flows from its operating activities or borrowings directly from its credit facilities. The Company does not believe the level of its non-U.S. cash position will have an adverse effect on working capital needs, planned growth, repayment of maturing debt, or benefit plan funding.

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readily available for use in the U.S. without adverse tax consequences. The Company’s principal sources of liquidity are its cash flows from its operating activities or borrowings directly from its credit facilities. The Company does not believe the level of its non-U.S. cash position will have an adverse effect on working capital needs, planned growth, repayment of maturing debt, or benefit plan funding.

Contractual Obligations

The Company is obligated to make future payments under various contracts such as debt agreements, lease agreements, and unconditional purchase obligations. The following table represents the significant contractual cash obligations and other commercial commitments of the Company as of December 31, ~~2016~~2017:

	Payments due by period
(Dollars in thousands)	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Long-term debt, including current portion	$	~~225~~233,~~000~~500	$	5,000	$	1316,000	$	~~141~~154,~~000~~500	$	6658,000
Interest (1)		2835,~~700~~546		58,~~693~~463		1016,~~953~~166		9,~~369~~069		21,~~685~~848
Operating leases		41,320		8,174		9,958		4,651		18,537
Transition tax payable		6,780		542		1,085		1,085		4,068
Unconditional purchase obligations (2)		47,792		21,375		24,790		1,627		—
Operating leases		41,462		8,579		10,153		6,211		16,519
Total contractual cash obligations	$	342,812	$	40,242	$	58,701	$	156,647	$	87,222
Unconditional purchase obligations (2)		6,249		3,066		2,362		821		—
Total contractual cash obligations	$	323,537	$	25,650	$	45,766	$	171,686	$	80,435

(1) AsThe ofCompany’s ~~December~~debt ~~31,~~carries ~~2016,~~variable ~~the weighted average effective~~ interest ~~rate was approximately 2~~rates.~~56%~~ onDuring 2017, the Company’s ~~total~~entered ~~borrowings~~into ofa $~~225.0~~50 million. ~~The~~interest ~~Company’s~~rate ~~debt~~swap ~~carries~~to manage its exposure to its variable ~~interest~~rate ~~rates~~borrowings. The interest amounts have been estimated based on the applicable interest rate per annum as of December 31, ~~2016~~2017, including the effect of the interest rate swap, which was 3.66% and the outstanding debt balances as of December 31, ~~2016~~2017, adjusted for the future required repayments shown above.

(2) Primarily for the purchase of ~~raw materials and~~ information systems and services and raw materials.

As a result of the previously described Tax Cuts and Jobs Act, the Company is required to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred. The Company will elect to pay for this transition tax payable over an eight year period, and has reflected the expected payments in the above table. The long-term tax payable of $0.9 million, ~~pertaining to the tax liability~~ related to the accounting for uncertainty in income taxes, has been excluded ~~from~~as the ~~above table due to the fact that the~~ Company is unable to determine the period in which the liability will be resolved.

The Company does not have any special-purpose entities.

The Company maintains qualified defined benefit pension plans, which cover certain non-union and union employees in the U.S. and Europe. The fair value of the Company’s pension plan assets has ~~decreased~~increased ~~slightly~~ to $~~116~~126.29 million as of December 31, ~~2016~~2017 from $~~118~~116.72 million as of December 31, ~~2015~~2016. During ~~2016~~2017 and ~~2015~~2016, the Company made lump sum payments of $54.2 million and $35.82 million, respectively, to certain eligible terminated vested participants. The Pension Protection Act, passed into law in August 2006, prescribes athe ~~new~~ methodology for determining the minimum amount that must be contributed to U.S. defined benefit pension plans which began in 2008. During the years ended December 31, ~~2016~~2017 and ~~2015~~2016, respectively, the Company funded its pension plans with $2.49 million and $32.14 million in cash contributions. The Company expects that it will be required, in accordance with its funding policy, to fund the plans with approximately $4.61 million in contributions for the year ending December 31, ~~2017~~2018. The Company may make additional contributions to the plans in ~~2017~~2018 beyond the required funding. Additional voluntary contributions would be dependent upon, among other things, the Company’s ongoing operating results and liquidity.

Off-Balance Sheet Arrangements

The Company’s off-balance sheet arrangements include the operating leases and unconditional purchase obligations disclosed above as well as letters of credit and guarantees as discussed in Note 8 to the consolidated financial statements in Item 8 of this Annual Report.

Contingencies

The Company is involved in various legal proceedings, lawsuits and claims, including employment, product warranty and environmental matters of a nature considered normal to its business. It is the Company’s policy to accrue for amounts related to these legal matters when it is probable that a liability has been incurred and the loss amount is reasonably estimable. Refer to Note 16 to the consolidated financial statements in Item 8 of this Annual Report, which is incorporated herein by reference, for further details.

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Critical Accounting Policies

Management of the Company has evaluated the accounting policies used in the preparation of the financial statements and related footnotes and believes the policies to be reasonable and appropriate. The preparation of the financial statements in accordance with accounting principles generally accepted in the U.S. requires management to make judgments, estimates, and assumptions regarding uncertainties that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. Management uses historical experience and all available information to make these judgments and estimates, and actual results will inevitably differ from those estimates and assumptions that are used to prepare the Company’s financial statements at any given time. Despite these inherent limitations, management believes that Management’s Discussion and Analysis (MD&A) and the financial statements and related footnotes provide a meaningful and fair perspective of the Company.

The following are the Company’s critical accounting policies impacted by management’s judgments, assumptions, and estimates. Management believes that the application of these policies on a consistent basis enables the Company to provide the users of the financial statements with useful and reliable information about the Company’s operating results and financial condition.

Revenue Recognition

The Company recognizes revenue and related costs when goods are shipped or services are rendered to customers provided that ~~ownership,~~ persuasive evidence of an arrangement exists, ownership and risk of loss have passed to the customer, the price to the customer is fixed or determinable, and collection is reasonably assured. Revenue for major equipment projects is recognized under the percentage of completion method. The Company’s major equipment projects generally have a long project life cycle from bid solicitation to project completion. The nature of the contracts are generally fixed price with milestone billings. The Company recognizes revenue for these projects based on the fixed sales prices multiplied by the percentage of completion. In applying the percentage of completion method, a project’s percent complete as of any balance sheet date is computed as the ratio of total costs incurred to date divided by the total estimated costs at completion. As changes in the estimates of total costs at completion and/or estimated total losses on projects are identified, appropriate earnings adjustments are recorded during the period that the change is identified. The Company has a history of making reasonably dependable estimates of costs at completion on contracts that follow the percentage of completion method; however, due to uncertainties inherent in the estimation process, it is possible that actual project costs at completion could vary from their estimates. The principal components of costs include material, direct labor, subcontracts, and allocated indirect costs. Indirect costs primarily consist of administrative labor and associated operating expenses, which are allocated to the respective projects on actual hours charged to the project utilizing a standard hourly rate.

Goodwill and Other Intangible Assets

Goodwill represents the excess of the cost of an acquired business over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in a business combination. Identifiable intangible assets acquired in business combinations are recorded based on their fair values at the date of acquisition. In accordance with guidance within ASC 350 “Intangibles — Goodwill and Other” goodwill and identifiable intangible assets with indefinite lives are not subject to amortization but must be evaluated for impairment.

OnThe ~~November~~Company 2,evaluates ~~2016~~goodwill and indefinite-lived intangible assets for impairment annually, ~~the~~or ~~Company~~when ~~completed~~events occur or circumstances change that may reduce the ~~acquisition~~fair value of the ~~New~~asset ~~Business~~below its carrying amount. The ~~transaction~~Company ~~was~~has ~~accounted~~elected ~~for~~to ~~under~~perform the ~~acquisition~~annual ~~method~~impairment test of ~~accounting~~its ingoodwill ~~accordance~~and ~~with~~indefinite-lived ~~ASC~~intangible ~~805~~assets, ~~“Business~~as ~~Combinations.” Under~~required, ~~the~~on ~~acquisition~~December ~~method~~31 of ~~accounting,~~each year by initially comparing the ~~tangible~~fair ~~and~~value ~~identifiable~~of ~~intangible~~each ~~assets~~of ~~acquired~~the ~~and~~Company’s ~~liabilities~~reporting ~~assumed~~units ~~are~~or ~~recorded~~indefinite-lived ~~based~~assets onto ~~their~~its ~~fair~~related carrying value. If atthe carrying amount of the ~~acquisition~~intangible ~~date~~asset exceeds its fair value, ~~with~~the ~~excess~~Company ~~consideration~~recognizes ~~paid~~an ~~over~~impairment ~~the~~loss ~~net~~in ~~assets~~the ~~acquired~~amount ~~recorded~~of asthe ~~goodwill~~excess. ~~The~~If the fair value ~~was~~of ~~determined~~the ~~based~~reporting onunit ~~the~~is ~~preliminary~~less ~~acquisition~~than ~~valuation~~its ~~which~~carrying ~~included~~value, the ~~use~~Company ofperforms ~~estimates~~an ~~based~~additional onstep ~~information~~to ~~available~~determine tothe implied fair value of the ~~Company~~goodwill. AsThe aimplied ~~result~~fair value of ~~the~~goodwill ~~acquisition,~~is ~~the~~determined ~~Company~~by ~~has~~first ~~recorded~~allocating ~~various~~the ~~intangible~~fair ~~assets,~~value ~~including~~of ~~trade~~the ~~names~~reporting ~~and~~unit ~~trademarks,~~to ~~unpatented~~all ~~technology,~~of the assets and ~~customer~~liabilities ~~relationships. The~~of ~~trade~~the ~~names~~unit and ~~trademarks~~then ~~acquired~~computing ~~have~~the ~~indefinite~~excess ~~lives,~~of ~~while~~the ~~all~~unit’s ~~remaining~~fair ~~acquired~~value ~~identifiable~~over ~~intangible~~the ~~assets~~amounts ~~have~~assigned ~~finite~~to ~~lives~~the assets and liabilities. ~~The~~If the carrying value of goodwill ~~associated~~exceeds ~~with~~the implied fair value of goodwill, such excess represents the ~~acquisition~~amount of goodwill impairment, and the ~~New~~Company ~~Business~~recognizes issuch ~~reported~~impairment asaccordingly. Fair ~~Other~~values ~~for~~are ~~segment~~estimated ~~reporting~~using ~~purposes~~discounted cash flows and ~~has~~other ~~not~~valuation ~~been~~methodologies ~~allocated~~that ~~below~~are ~~this~~based ~~level~~on asprojections of ~~December~~the 31amounts and timing of future revenues and cash flows, ~~2016~~assumed discount rates and other assumptions as deemed appropriate. The Company also considers such

The Company evaluates goodwill and indefinite-lived intangible assets for impairment annually, or when events occur or circumstances change that may reduce the fair value of the asset below its carrying amount. The Company has elected to

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perform the annual impairment test of its goodwill and indefinite-lived intangible assets, as required, on December 31 of each year by initially comparing the fair value of each of the Company’s reporting units to their related carrying values. The Company will also perform an impairment test between annual tests whenever events or circumstances indicate that the carrying value of a reporting unit may exceed its fair value. If the fair value of the reporting unit is less than its carrying value, the Company performs an additional step to determine the implied fair value of the goodwill. The implied fair value of goodwill is determined by first allocating the fair value of the reporting unit to all of the assets and liabilities of the unit and then computing the excess of the unit’s fair value over the amounts assigned to the assets and liabilities. If the carrying value of goodwill exceeds the implied fair value of goodwill, such excess represents the amount of goodwill impairment, and the Company recognizes such impairment accordingly. Fair values are estimated using discounted cash flows and other valuation methodologies, such as the guideline public company method, that are based on projections of the amounts and timing of future revenues and cash flows, assumed discount rates and other assumptions as deemed appropriate. The Company also considers such factors as historical performance, anticipated market conditions, operating expense trends and capital expenditure requirements. Each reporting unit periodically prepares discrete operating forecasts and uses these forecasts as the basis for assumptions used in the discounted cash flow analysis and guideline public company method. The Company has consistently used a discount rate commensurate with its cost of capital which ranges 10.05% to 14.0%, adjusted for inherent business risks within its respective reporting units and has consistently used a terminal growth factor of 3.0%. The Company also reconciles the estimated aggregate fair value of its reporting units as derived from the discounted cash flow analysis and guideline public company method to the Company’s overall market capitalization. The Company has ~~historically~~five ~~had six~~ reporting units for purposes of goodwill evaluation. These reporting units ~~consist~~include of (1a) the Activated Carbon ~~and Service~~ segment ~~which is segregated into two regional reporting units~~, the ~~Americas/Asia~~Advanced ~~and~~Water ~~Europe,~~Purification ~~(2) the Equipment~~ segment which isincludes ~~segregated by technology~~ (~~a) carbon adsorption, (~~b) ultraviolet light, and (c) ion exchange separation technologies, and ~~(3)~~ the ~~Consumer~~Alternative Materials segment which includes the ~~charcoal~~(d) filtration media and (e) cloth reporting ~~unit~~units. The Company continually monitors its reporting units for impairment indicators and updates assumptions used in the most recent calculation of the fair value of a reporting unit as appropriate. The fair value of the Company’s reporting units substantially exceeds the carrying value ~~of its goodwill~~ as of December 31, ~~2016~~2017.

~~Given~~The ~~the~~Company’s ~~preliminary~~identifiable ~~nature~~intangible ofassets ~~the~~other ~~purchase~~than ~~price~~goodwill ~~allocation~~and trade names and ~~the~~trademarks ~~relatively~~have ~~short~~finite ~~time~~lives. Certain ~~period~~of ~~between~~these ~~the~~intangible ~~acquisition~~assets ~~date~~are ~~and~~amortized ~~December~~using ~~31,~~an ~~2016~~accelerated methodology, while the ~~Company~~majority ~~did~~are ~~not~~amortized ~~perform~~on a ~~full~~straight-line ~~evaluation~~basis ofover ~~the~~their ~~acquired~~estimated ~~goodwill~~useful ~~and~~lives. In ~~indefinite-lived~~addition, intangible assets, ~~but~~with ~~rather~~finite ~~performed~~lives aare ~~qualitative~~evaluated ~~assessment~~for ~~that~~impairment ~~did~~whenever ~~not~~events ~~result~~or incircumstances anindicate ~~indication~~that oftheir ~~impairment~~carrying ~~for~~amount ~~the~~may ~~New~~not ~~Business~~be recoverable, as ofprescribed ~~December~~by ~~31,~~guidance ~~2016. For~~within ~~further~~ASC ~~information~~360 “Property, ~~refer~~Plant, ~~to Notes 18~~ and ~~20 to the consolidated financial statements in Item 8 of this Annual Report~~Equipment.”

The Company’s identifiable intangible assets other than goodwill and trade names and trademarks have finite lives. Certain of these intangible assets, such as customer relationships, are amortized using an accelerated methodology while others, such as patents, are amortized on a straight-line basis over their estimated useful lives. In addition, intangible assets with finite lives are evaluated for impairment whenever events or circumstances indicate that their carrying amount may not be recoverable, as prescribed by guidance within ASC 360 “Property, Plant, and Equipment.”

Pensions

The Company maintains defined benefit pension plans covering certain union and non-union employees in the U.S. and Europe. As of December 31, ~~2016~~2017, all of the U.S. plans are closed to new hires. In addition, future benefit accruals are frozen for a number of the plans. ~~During~~ Some ~~2016,~~of the Company’s ~~offered~~defined ~~certain~~benefit ~~eligible terminated vested participants in the U.S. pension~~ plans ~~the~~allow ~~opportunity~~for ~~to elect a~~ lump sum ~~payment~~payments, ofwhich ~~their~~may ~~respective~~trigger ~~pension~~settlement ~~benefits~~accounting. AsThe aCompany ~~result~~made ~~of these elections, and significant~~ lump sum ~~payouts~~payments infrom the U.S. and European plans, ~~the~~totaling ~~Company~~$4.2 ~~paid~~million, ~~benefits of~~ $5.2 million, and ~~incurred a settlement charge of~~ $13.58 million induring ~~2016. In 2015,~~ the ~~Company~~years ~~incurred~~ended ~~settlement~~December ~~charges~~31, in2017, ~~both~~2016, ~~the U.S.~~ and ~~European~~2015, ~~plans that totaled $0~~respectively.8 As ~~million as~~ a result of ~~employee~~these ~~retirements,~~lump ~~and~~sum ~~paid $3.8 million from plan assets. In 2014~~payments, the Company ~~offered~~incurred ~~certain~~settlement ~~eligible~~charges ~~terminated vested participants~~ in the U.S. ~~pension~~and European plans ~~the~~totaling ~~opportunity~~$1.0 ~~to elect a lump sum payment of their respective pension benefits~~million, ~~and as a result, incurred a settlement charge of~~ $1.05 million, and ~~paid benefits of~~ $40.48 million~~. As~~, aduring ~~result of~~ the ~~acquisition~~years ofended ~~the~~December ~~New~~31, ~~Business~~2017, ~~the~~2016, ~~projected~~and ~~benefit~~2015, ~~obligation of the European plans increased $3~~respectively.~~9 million in 2016.~~

Net periodic pension cost, which totaled $4.41 million, $24.04 million, and $02.80 million in ~~2016~~2017, ~~2015~~2016, and ~~2014~~2015, respectively, is calculated based upon a number of actuarial assumptions. These assumptions include the long-term rate of return on the defined benefit plans’ assets, funding levels, discount rates, and various other factors related to employees and retirees participating in the defined benefit plans, including retirement age, salary increases, and mortality assumptions.

In 2017 and 2016, the Company assumed an expected weighted average long-term rate of return on the Company’s defined benefit plans’ assets ranging from 4.46% to 6.87% and 5.28% to 7.00%, respectively. For 2018, the expected weighted average rate of return on assets will range from 4.45% to 6.44%. In developing the expected long-term rate of return assumption, the Company evaluated input from its investment advisors, including their review of asset class return expectations as well as long-term inflation assumptions. The Company also considered historical returns on asset classes and the investment mix. The expected long-term return on the U.S. defined benefit plans’ assets is based on a targeted asset allocation assumption of approximately 40%-50% with equity securities, 45%-55% with fixed-income securities, and 5% with other investments. The European defined benefit plans’ assets are based on a targeted asset allocation assumption of approximately 25%-35% with equity securities, 40%-50% with fixed-income securities, and 20%-30% with other investments. The Company regularly reviews its asset allocation and periodically rebalances its investments to the targeted allocation when considered appropriate.

During 2017, the Company funded its defined benefit plans with $2.9 million in cash contributions. The Company expects that it will be required, in accordance with its funding policy, to fund its defined benefit plans with approximately $4.1 million in contributions in 2018.

The discount rate that the Company utilizes for its defined benefit plans to determine pension obligations is based on a review of long-term bonds that receive one of the two highest ratings given by a recognized rating agency. The weighted average discount rate determined on this basis has decreased from a range of 2.11% to 4.09% as of December 31, 2016 to a range of 2.02% to 3.63% as of December 31, 2017.

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~~employees~~ For the U.S. plans, the Company has used the same mortality tables, RP-2014 and ~~retirees~~a ~~participating~~modified inversion of the projection scale MP-2014 since 2014. For the European defined benefit plans, ~~including~~the ~~retirement~~Company ~~age~~utilizes country-specific mortality tables and has used the same tables for the majority of its European plans since 2014. In 2016, ~~salary~~the ~~increases~~Company updated the mortality tables used for the UK plans which did not cause a significant increase to the projected benefit obligations for those plans. For the European defined benefit plans, the Company utilizes country-specific mortality tables and has used the same tables for the majority of its European plans since 2014. In 2016, the Company updated the mortality ~~assumptions~~tables used for the UK plans which did not cause a significant increase to the projected benefit obligations for those plans.

In 2016 and 2015, the Company assumed an expected weighted average long-term rate of return on the Company’s defined benefit plans’ assets ranging from 5.28% to 7.00% and 5.54% to 7.50%, respectively. For 2017, the expected weighted average rate of return on assets will range from 4.46% to 6.87%. In developing the expected long-term rate of return assumption, the Company evaluated input from its investment advisors, including their review of asset class return expectations as well as long-term inflation assumptions. The Company also considered historical returns on asset classes and the investment mix. The expected long-term return on the U.S. defined benefit plans’ assets is based on a targeted asset allocation assumption of approximately 40%-50% with equity securities, 45%-55% with fixed-income securities, and 5% with other investments. The European defined benefit plans’ assets are based on a targeted asset allocation assumption of approximately 20%-30% with equity securities, 55%-65% with fixed-income securities, and 10%-20% with other investments. The Company regularly reviews its asset allocation and periodically rebalances its investments to the targeted allocation when considered appropriate.

During 2016, the Company funded its defined benefit plans with $2.4 million in contributions. The Company expects that it will be required, in accordance with its funding policy, to fund its defined benefit plans with approximately $4.6 million in contributions in 2017.

The discount rate that the Company utilizes for its defined benefit plans to determine pension obligations is based on a review of long-term bonds that receive one of the two highest ratings given by a recognized rating agency. The weighted average discount rate determined on this basis has decreased from a range of 3.15% to 4.38% as of December 31, 2015 to a range of 2.11% to 4.09% as of December 31, 2016.

During 2014, the Society of Actuaries released a new mortality table — RP-2014, and a new projection scale — MP-2014. As a result of these new tables, the Company changed its mortality assumptions for its U.S. plans in 2014. The Company adopted the new RP-2014 mortality table and a modified version of the new MP-2014 projection scale for the U.S. defined benefit plans. The Company has continued to use the same mortality tables and the modified version of the projection scale in 2015 and 2016. For the European defined benefit plans, the Company utilizes country-specific mortality tables and has used the same tables for the majority of its European plans since 2014. In 2016, the Company updated the mortality tables used for the UK plans which did not cause a significant increase to the projected benefit obligations for those plans.

Amortization of the actuarial net gain or loss as a result of experience differing from that assumed and from changes in assumptions is included as a component of net periodic pension cost for the year. The Company uses a 10% corridor such that if, as of the beginning of the year, the net gain or loss exceeds 10% of the greater of the projected benefit obligation or the market-related value of plan assets, the amortization is that excess divided by the average future working lifetime of participating employees expected to receive benefits under the plan or the average remaining life expectancy of the plan’s participants if the percentage of actives is less than 10% of the total population. As only the excess actuarial gain or loss is amortized, this approach will not fully amortize the net actuarial gain or loss. The Company considers participants whose benefits are frozen to be active participants, and considers the plan population to be “all or almost all” inactive when at least 90% of the population is inactive. Under this methodology, the accumulated net actuarial gain/loss amounts recognized in accumulated other comprehensive income (loss) are not expected to be fully recognized in net periodic pension cost until the plan is terminated (or an earlier event, like a settlement, triggers recognition) because the average expected remaining service of active participants expected to benefit under the plan or the average expected remaining lifetime of inactive participants over which the amounts are amortized is re-determined each year and actuarial gains or losses that fall within the corridor described above are not amortized.

The Company estimates that it will record net periodic pension cost for the defined benefit pension plans that will approximate $32.16 million in ~~2017~~2018. The Company recorded net periodic pension cost of $4.41 million in ~~2016~~2017, which included a $1.50 million settlement charge. Thus, the ~~2017~~2018 expected net periodic pension cost is relatively consistent with the ~~2016~~2017 expense, absent the ~~2016~~2017 settlement charge. Future actual net periodic pension cost will depend on future investment performance, funding levels, changes in discount rates and various other factors related to the populations participating in its defined benefit plans, including lump sum payouts, which could result in the recognition of additional settlement charges. The Company will continue to evaluate its actuarial assumptions at least annually, and will adjust as necessary.

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A sensitivity analysis of the projected incremental effect of a hypothetical one percent change in the significant assumptions used in the pension calculations is provided in the following table:

	Hypothetical Rate Increase (Decrease)
	U.S. Plans				European Plans
(Dollars in thousands)	(1%)		1%		(1%)		1%
Discount rate
Pension liabilities as of December 31, 2016	$	14,784	$	(12,981)	$	8,643	$	(6,664)
Pension liabilities as of December 31, 2017	$	16,561	$	(14,506)	$	9,099	$	(7,129)
Pension costs for the year ended December 31, 2016	$	1,260	$	(1,081)	$	310	$	(109)
Pension costs for the year ended December 31, 2017	$	1,110	$	(965)	$	270	$	(197)
Indexation (1)
Pension liabilities as of December 31, 2016	$	—	$	—	$	(1,890)	$	2,078
Pension liabilities as of December 31, 2017	$	—	$	—	$	(4,035)	$	4,980
Pension costs for the year ended December 31, 2016	$	—	$	—	$	(148)	$	162
Pension costs for the year ended December 31, 2017	$	—	$	—	$	(312)	$	388
Expected return on plan assets
Pension costs for the year ended December 31, 2016	$	861	$	(862)	$	270	$	(270)
Pension costs for the year ended December 31, 2017	$	852	$	(852)	$	281	$	(281)
Compensation
Pension liabilities as of December 31, 2016	$	(994)	$	1,011	$	(1,152)	$	1,671
Pension liabilities as of December 31, 2017	$	(996)	$	1,012	$	(1,433)	$	1,911
Pension costs for the year ended December 31, 2016	$	(175)	$	199	$	(158)	$	233
Pension costs for the year ended December 31, 2017	$	(177)	$	201	$	(168)	$	234

(1) Pension indexation related to the Company’s German Qualified Plan is regulated by German pension law. The law dictates that a pension that is already in payment must be adjusted for inflation every 3 years which is measured by the published German price index for the same time interval. Pension indexation related to the Company’s UK Chemviron Plan is based on the Consumer Price Index ~~(CPI)~~ in the UK. For this plan, the index is capped at 5% per annum for pensions accrued ~~prior~~between toApril 6, 1997 and January 1, 2008 and is capped at 2.5% per annum for pensions accrued after December 31, 2007. For service accrued prior to April 6, 1997, indexation is subject to Trustee discretion, other than the statutory increases applicable to the Guaranteed Minimum Pension elements. For purposes of the Company’s UK Sutcliffe Speakman plan, the indexation is fixed at 3% per annum for pensions accrued prior to April 6, 1997. For those pensions accrued from April 6, 1997 to July 31, 2005, the index is based on the Retail Prices Index (RPI) in the UK, subject to a minimum of 3% per annum and a maximum of 5% per annum. For those pensions accrued after July 31, 2005, the index is based on the RPI in the UK, capped at 2.5% per annum.

Income Taxes

During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. Significant judgment is required in determining the Company’s annual effective tax rate and in evaluating tax positions. The Company utilizes guidance within ASC 740 “Income Taxes” regarding the accounting for uncertainty in income taxes. This guidance contains a two-step approach to recognizing and measuring uncertain tax positions taken or expected to be taken in a tax return. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement.

Although the Company believes it has adequately reserved for its uncertain tax positions, no assurance can be given that the final tax outcome of these matters will not be different. The Company adjusts these reserves in light of changing facts and circumstances, such as the closing of a tax audit, the refinement of an estimate, or a lapse of a tax statute. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate, as well as the related penalties and net interest.

The Company is subject to varying statutory tax rates in the countries where it conducts business. Fluctuations in the mix of the Company’s income between countries will result in changes to the Company’s overall effective tax rate.

~~The~~As ~~Company~~described ~~recognizes~~in ~~benefits~~Note ~~associated~~14 ~~with~~to ~~foreign and domestic net operating loss and credit carryforwards when~~ the ~~Company~~consolidated ~~believes~~financial ~~that~~statements ~~it is more likely than not that its future taxable income~~ in ~~the~~Item ~~relevant~~8 ~~tax jurisdictions will be sufficient to enable the realization~~ of ~~the~~this ~~tax~~Annual ~~benefits. As of December 31~~Report, ~~2016,~~ the Company ~~had~~continues ~~recorded~~to ~~total~~analyze ~~deferred~~the ~~tax~~Tax ~~assets~~Cuts ofand ~~$44.4~~Jobs ~~million,~~Act ofenacted ~~which~~in ~~$7.8~~December ~~million~~2017 ~~represents~~and ~~tax~~refine ~~benefits~~its ~~resulting from $0.2 million of unused U.S. foreign tax credits~~calculations, ~~$4.9~~which ~~million~~could ofpotentially ~~net~~impact ~~operating~~the ~~losses,~~measurement ~~$1.4 million~~ of ~~state~~its tax ~~credits, and a capital loss carryover of $0~~balances.~~8 million.~~ ~~State~~However, ~~operating~~as ~~loss carryforwards~~ of ~~$0.5~~December ~~million~~31, ~~net~~2017, ~~expire~~the ~~from~~Company ~~2018~~has toestimated ~~2036,~~the ofimpacts ~~which~~on ~~approximately~~the ~~92%~~ending ~~will~~deferred ~~begin~~tax tobalances ~~expire~~and ~~after~~the ~~2021,~~one-time iftransition ~~not utilized~~tax.

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The Company ~~periodically~~recognizes ~~reviews~~benefits ~~the~~associated ~~need~~with ~~for~~foreign aand ~~valuation~~domestic ~~allowance~~net ~~against~~operating ~~deferred~~loss ~~tax assets~~ and ~~recognizes~~credit ~~these~~carryforwards ~~deferred~~when ~~tax assets to~~ the ~~extent~~Company believes that ~~realization~~it is more likely than not~~. Based~~ ~~upon~~that aits ~~review~~future oftaxable ~~earnings~~income ~~history~~in ~~and trends, forecasted earnings and~~ the relevant ~~expiration~~tax ofjurisdictions ~~carryforwards,~~will ~~the~~be ~~Company~~sufficient ~~believes~~to ~~that~~enable the ~~valuation~~realization ~~allowances~~of ~~provided~~the ~~are~~tax ~~appropriate~~benefits. As of December 31, ~~2016~~2017, the Company ~~has~~had recorded atotal ~~valuation~~deferred ~~allowance~~tax assets of ~~approximately~~$32.7 million, of which $26.52 million ~~related~~represents totax ~~foreign~~benefits resulting from net operating losses, ~~domestic~~and ~~capital~~credit ~~loss~~ carryovers, Uincluding $4.S.4 ~~passive~~million ~~foreign~~of ~~tax~~net ~~credits~~operating losses and $1.8 million of state tax credits. State operating loss carryforwards of $0.5 million, net, expire from 2018 to 2037, of which approximately 98% will begin to expire after 2024, if not utilized.

~~Approximately~~The ~~88% of the~~ Company’s ~~deferred~~periodically ~~tax~~reviews ~~assets,~~the orneed ~~$39.2~~for ~~million,~~a ~~represent~~valuation ~~temporary~~allowance ~~differences~~against ~~associated~~deferred ~~with~~tax ~~pensions,~~assets ~~accruals,~~ and ~~inventories. Approximately~~recognizes ~~73%~~these ofdeferred ~~the~~tax ~~Company’s~~assets ~~deferred~~to ~~tax~~the ~~liabilities~~extent ofthat ~~$62.1~~realization ~~million~~is asmore oflikely ~~December 31,~~than ~~2016~~not. Based ~~relate~~upon toa ~~temporary~~review ~~differences~~of ~~associated~~earnings ~~with~~history ~~property~~and trends, ~~plant~~forecasted earnings and ~~equipment. These~~the ~~temporary~~relevant ~~differences~~expiration ~~will~~of ~~reverse~~carryforwards, in the ~~future~~Company ~~due~~believes tothat the ~~realization~~valuation ofallowances ~~temporary~~provided ~~differences~~are ~~between~~appropriate. As ~~annual~~of ~~book~~December 31, ~~and~~2017, ~~tax~~the ~~reporting. The~~ Company ~~believes~~has ~~that~~recorded ~~the~~a ~~deferred~~valuation ~~tax~~allowance ~~liabilities~~of ~~generally~~approximately ~~will~~$2.1 ~~impact~~million ~~taxable~~related ~~income~~to offoreign ~~the~~and ~~same~~state ~~character~~net ~~(ordinary~~operating ~~income)~~losses, ~~timing,~~U.S. ~~and~~passive ~~jurisdiction~~foreign astax ~~the~~credits, ~~deferred~~and state tax ~~assets~~credits.

Approximately 87% of the Company’s deferred tax assets, or $28.5 million, represent temporary differences associated with pensions, accruals, and inventories. Approximately 63% of the Company’s deferred tax liabilities or $25.9 million as of December 31, 2017 relate to temporary differences associated with property, plant and equipment. These temporary differences will reverse in the future due to the realization of temporary differences between annual book and tax reporting. The Company believes that the deferred tax liabilities generally will impact taxable income of the same character (ordinary income), timing, and jurisdiction as the deferred tax assets.

Contingencies

The Company is involved in various asserted and unasserted legal claims. An estimate is made to accrue for a loss contingency relating to any of these legal claims if it is probable that a liability was incurred at the date of the financial statements and the amount of loss can be reasonably estimated. Because of the subjective nature inherent in assessing the outcome of legal claims and because the potential that an adverse outcome in a legal claim could have a material impact on the Company’s legal position or results of operations, such estimates are considered to be critical accounting estimates. Legal fees associated with defending these various lawsuits and claims are expensed when incurred. The Company will continue to evaluate all legal matters as additional information becomes available. Reference is made to Note 16 ofto the consolidated financial statements in Item 8 of this Annual Report for a discussion of litigation and contingencies.

Long-Lived Assets

The Company evaluates long-lived assets under the provisions of ASC 360 “Property, Plant, and Equipment” which addresses financial accounting and reporting for the impairment of long-lived assets, and for disposal of long-lived assets. For assets to be held and used, the Company groups a long-lived asset or assets with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. An impairment loss for an asset group reduces only the carrying amounts of a long-lived asset or assets of the group being evaluated. The loss is allocated to the long-lived assets of the group on a pro-rata basis using the relative carrying amounts of those assets, except that the loss allocated to an individual long-lived asset of the group does not reduce the carrying amount of that asset below its fair value whenever that fair value is determinable without undue cost and effort. Estimates of future cash flows used to test the recoverability of a long-lived asset group include only the future cash flows that are directly associated with and that are expected to arise as a direct result of the use and eventual disposition of the asset group.

New Accounting Pronouncements

Refer to Note 1 to the consolidated financial statements in Item 8 of this Annual Report, which is incorporated herein by reference, for details on recently issued accounting guidance.

Outlook

Activated Carbon and Service

According to the Company and independent market research estimates, demand for activated carbon is forecasted to increase at a 3% - 6% compound annual growth rate from 2016 through 2021. This estimated growth is expected to be driven by increasing global demand for clean air and drinking water as a result of expected economic growth generally, heightened public and consumer awareness of the harmful impacts to human health of contaminants in air and water supplies, and new and continuing government regulations. In addition, expected long-term growth of the economies of both mature and developing countries around the world are expected to increase the demand for activated carbon for use in industrial and food and beverage production processes and related wastewater treatment applications.

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The ultimate pace of future demand growth for activated carbon will be dependent upon many factors, including: the ultimate pace of global economic growth, including potential negative impacts of short or prolonged economic slowdowns in any one or several geographic regions. Future demand growth is also dependent on the impact and timing of potential new air and water regulations as well as potential changes to existing regulations, including the potential impact of environmental policies of the new Presidential administration installed in the U.S. in January of 2017. Changes in corporate income tax and cross-border tax policies in the U.S. and other countries, and, as it relates more specifically to the Company, potential negative impacts of a stronger U.S. dollar versus other global currencies could also impact future demand growth.Outlook

AsOver a85% ~~result~~ of the Company’s ~~significant~~current ~~participation~~revenues inare ~~providing~~derived ~~high~~from ~~performing~~activities ~~virgin~~in ~~activated~~its ~~carbon~~Activated ~~and~~Carbon ~~reactivated~~segment. According ~~carbon and services~~ to ~~meet~~ the ~~market~~Company ~~requirements,~~and ~~the~~independent ~~Company~~market ~~expects~~research estimates, demand for ~~its~~ activated carbon ~~products~~is ~~and~~forecasted ~~services~~ to increase ~~over~~into the ~~longer term~~future. ~~Globally,~~This ~~the~~forecasted ~~Company~~growth ~~derives~~in ~~approximately~~the ~~one-third~~usage of ~~its~~activated ~~sales~~carbon ~~from~~is ~~industrial~~expected ~~sector~~to ~~customers~~be ~~through~~driven ~~providing~~by ~~activated~~increasing ~~carbon~~global ~~and~~demand ~~services~~ for ~~their~~clean ~~industrial~~air ~~process,~~and ~~environmental~~drinking water ~~and~~as ~~environmental~~a ~~air~~result ~~end~~of ~~market~~expected ~~application~~economic ~~needs. During~~growth ~~2016~~generally, ~~the~~heightened ~~Company~~public ~~experienced~~and aconsumer ~~decline~~awareness ~~in sales~~ of ~~its~~the ~~products~~harmful ~~due~~impacts to ~~soft~~human ~~global~~health ~~industrial~~of ~~sector~~contaminants ~~market~~in ~~conditions. As~~air ~~2016~~and ~~came~~water ~~to a close~~supplies, ~~the~~and ~~Company~~new ~~believes that market conditions impacting industrial sector customers were stabilizing~~ and ~~that~~continuing itgovernment ~~was~~regulations. In ~~beginning~~addition, toexpected ~~see~~long-term ~~early~~growth ~~indications~~of ~~that~~ the ~~industrial~~economies ~~sector~~of ~~economic~~both ~~environment~~mature ~~may~~and bedeveloping ~~improving. While~~countries ~~this~~around ~~provides~~ the ~~Company~~world ~~with~~are ~~cautious~~expected ~~optimism~~to ~~about~~increase the ~~potential~~demand for anactivated ~~industrial~~carbon ~~sector~~for ~~recovery~~use ~~and a related increase~~ in ~~revenues~~industrial ~~from~~and ~~these~~food ~~customers~~and inbeverage ~~2017,~~production ~~the~~processes ~~Company~~and ~~currently~~related ~~expects~~wastewater ~~2017~~treatment ~~sales in this sector to be approximately level with 2016~~applications.

~~The~~Ultimately, ~~Company~~this ~~currently~~expected ~~expects~~increase ~~growth~~ in ~~sales~~the ~~over~~future ~~2016~~use ~~for certain municipal drinking water applications and for mercury removal from flue gas emissions~~ of ~~coal-fired~~activated ~~power~~carbon ~~plants. Increased~~– ~~public~~as ~~awareness~~well ofas the ~~presence~~pace and ~~human~~timing ~~health impacts~~ of ~~man-made~~such ~~chemicals and naturally occurring contaminants in drinking water is~~ expected toincrease ~~contribute~~– towill ~~growth~~be ofdependent ~~the~~upon ~~Company’s~~many ~~municipal drinking water business in 2017 and into the future~~factors. ~~Chemicals~~These ~~from~~include: ~~industrial~~the ~~processes~~pace ~~and other activities can contaminate groundwater wells and surface water sources. Many~~ of ~~these~~global ~~chemicals~~economic ~~are~~growth; ~~currently~~short ~~unregulated and the U.S. Environmental Protection Agency (EPA) and other state-level agencies may~~ or ~~may~~prolonged ~~not~~economic ~~regulate~~slowdowns ~~these contaminants~~ in ~~the~~any ~~future. The~~one ~~Company~~or ~~has~~several ~~seen~~geographic ~~recent~~regions; ~~activity at~~ the ~~consumer~~impact ~~level~~and ~~demonstrating~~timing ~~that communities are demanding drinking water that is free from contaminants regardless~~ of ~~the~~potential ~~current~~new ~~regulatory~~air ~~status of those contaminants. Chemical releases that impact sources of drinking water highlight the need for utilities to provide barrier defenses against such events in both groundwater~~ and ~~surface~~ water~~. Granular~~ ~~activated~~regulations ~~carbon~~as ~~(GAC)~~well isas anthe ~~ideal~~possibility ~~technology~~ for ~~this~~changes ~~purpose and the Company expects utilities~~ to ~~look to install GAC to provide protection against spills and contamination. Most recently~~, ~~concern~~or ~~regarding~~ the ~~presence~~elimination of ~~perfluorinated~~existing ~~compounds~~regulations, ~~(PFCs)~~including ~~in drinking water sources has led to an increase in both inquiries and orders from numerous utilities as well as remediation projects across~~ the ~~U.S. In~~potential ~~May~~impact ~~2016,~~of ~~after~~environmental apolicies ~~large number~~ of ~~community~~the ~~water~~new ~~systems~~Presidential ~~found~~administration ~~PFC~~installed ~~contamination~~ in ~~drinking water sources,~~ the U.S. ~~EPA~~in ~~issued~~January ~~a health advisory limit for PFOA and PFOS, the two most common PFCs.~~2017; Achanges health advisory limit is non-enforceable and non-regulatory and is meant to inform state agencies and public health officials about the subject contaminants. Many utilities have measured PFC levels above the EPA health advisory limit, resulting in ~~“do~~corporate ~~not~~income ~~drink”~~tax ~~alerts~~policies in ~~many communities. In addition, several states are currently considering issuing maximum contaminant levels that are considerably lower than~~ the ~~health advisory limits established by the EPA~~U. ~~As a result, the Company has won a number of projects across the country related to PFC removal and is continuing to pursue additional active projects in this area~~S. A substantial portion of the sales of an initial PFC removal project tends to be related to the procurement of carbon adsorption equipment that is provided by the Company’s Equipment segment. In a similar vein, 1,2,3-Trichloropropane (1,2,3-TCP) in groundwater has become a major issue in California, and toother acountries; ~~lesser extent in New York~~ and ~~New Jersey~~, ~~and~~potential ~~the~~impacts ~~Company~~from ~~has~~changes ~~received equipment orders~~ in California and New Jersey and is presently handling inquiries for several more. Harmful algal blooms can also present a human health risk to community drinking water supplies; both GAC and powdered activated carbon (PAC) have been used successfully to protect against the ~~intrusion~~value of ~~algal~~the ~~toxins in drinking water systems~~U. ~~Use~~S. ofdollar ~~GAC~~versus ~~can~~other ~~protect~~global ~~water treatment plants from the harmful effects of algal bloom toxicity, while increased dosing of PAC can also help when algal blooms are detected~~currencies.

InAs ~~addition,~~a result of the Company’s ~~expects~~demonstrated ability to ~~see~~effectively ~~ongoing~~meet ~~business~~market asrequirements ~~municipalities~~through ~~continue~~its toprovisioning ~~adopt the usage~~ of ~~GAC~~high toperforming ~~comply~~virgin ~~with~~activated ~~the~~carbon ~~U.S.~~and ~~EPA’s~~reactivated ~~Stage 2 Disinfection Byproducts (DBP) Rule~~carbon, ~~for~~as ~~which~~well ~~the~~as ~~compliance~~its ~~requirements~~highly-regarded ~~became~~and ~~effective~~value-added ~~between~~field ~~2013~~ and ~~2015. While~~technical ~~the~~support ~~Company~~services ~~has~~and ~~been~~carbon ~~successful~~adsorption inequipment ~~attracting~~offerings ~~municipalities~~– toeither ~~utilize~~individually ~~GAC~~or ~~for~~in ~~Stage 2 DBP compliance~~combination, ~~many~~the ~~utilities~~Company ~~currently~~expects ~~use~~demand ~~alternative~~for ~~disinfectants,~~its ~~such~~activated ascarbon ~~chloramines,~~products asand ~~their~~services ~~primary means~~ to ~~comply~~increase ~~with~~over the ~~DBP~~longer ~~Stage 2 Rule~~term. ~~Disinfection~~Backlog ~~with~~for ~~chloramines,~~carbon ~~however,~~adsorption ~~can~~equipment ~~result~~was in$6.2 ~~the~~million ~~formation~~as of ~~emerging~~December ~~classes of harmful DBP’s~~31, ~~many~~2017 ofas ~~which~~compared ~~are~~to ~~not~~$7.2 ~~currently~~million ~~regulated~~as ~~under~~of ~~the~~December ~~DBP~~31, ~~Stage 2 rule~~2016.

Nearly 10% of the Company’s current revenues are derived from its Alternative Materials segment. Over the longer term, the Company expects increased demand for its carbon cloth products in wound care applications due to the demonstrated benefits of these products in the wound healing process and for controlling wound odor as well as the Company’s recent and increased focus on marketing these products to wound care end market customers. In addition the Company anticipates a continuation of steady demand for its diatomaceous earth and perlite filtration media products, particularly in Europe in food and beverage and industrial end market applications.

Less than 5% of the Company’s current revenues are derived from its Advanced Water Purification segment. Similar to the Activated Carbon segment, the potential for the future growth of activities in this segment are dependent upon environmental regulations – including those related to regulating the discharge of ballast water from ships. Over the longer term, the Company expects steady demand for its ion exchange and traditional ultraviolet light water treatment products and services, to be complemented by a period of significant growth in demand for its ballast water treatment systems (BWTS). This expected increase in demand is expected to coincide with, and be driven by, the commencement of the compliance implementation schedule of the International Maritime Organization’s ballast water management regulation (the IMO Convention) on September 8, 2019. The ultimate timing and pace of change in the demand for the Company’s BWTS will be dependent upon a number of variables including: the September 8, 2019 IMO Convention compliance implementation schedule date remaining in place, and the Company’s level of success in completing the testing of its BWTS to gain type approval for compliance with a separate United States Coast Guard ballast water regulation that is already in effect. Equipment backlog for the Advanced Water Purification segment was $5.4 million as of December 31, 2017 as compared to $3.7 million as of December 31, 2016.

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In this regard, the EPA is completing its Six Year Review of the DBP Rule, which could in turn lead to a new Stage 3 DBP Rule, which might include a number of these emerging classes of DBPs and could drive additional municipalities to adopt GAC. Although the Company does not expect a DBP Stage 3 rule limiting the use of chloramines or the DBPs formed by chloramine disinfection to go into effect for a number of years, the volume of GAC required to meet these needs could be significant. The Company estimates that the municipal water systems in nine of the largest cities in the U.S. that currently use chloramines to meet their DBP Stage 2 compliance requirements would need initial installations, in the aggregate, of approximately 330 million pounds of GAC. Some of these utilities are already involved in studies or pilot test programs to evaluate the use of GAC to meet their DBP treatment needs. It is possible that some of these, or other municipalities that are treating for DBPs using chloramines, will choose to switch to GAC prior to the issuance of a DBP Stage 3 regulation. As more municipalities move to install GAC for the various reasons mentioned, the Company expects to see more municipalities adopt the use of its custom municipal reactivation (CMR) services.

In Europe, the Company expects sales growth in 2017 primarily from higher demand for drinking water applications, excluding potential negative impacts of currency translation. In this regard the Company has a multi-year contract with a large water provider in the United Kingdom (UK) and will supply virgin carbon and reactivation services for up to the remaining seven year period from its upgraded Tipton plant in the UK.

China had also announced that it will commit billions of dollars to water and wastewater improvements. Investments are underway, but have been slower than anticipated. The Company continues to monitor this situation closely. China has also tightened the regulations for VOC emissions, which is resulting in new reactivation opportunities.

In the environmental air market, the Company has established itself as a market leading supplier of PAC in North America for the removal of mercury from the flue gas of coal-fired power plants, a significant market that completed its formation in April 2016 in compliance with the Mercury and Air Toxics Standards (MATS) regulation, as well as regulations that had previously been in effect in 19 states and Canada. Based on standard PAC products, the Company estimates the annual demand for mercury removal in North America is between 250 million to 350 million pounds. This annual estimated demand can be impacted by the price of natural gas relative to coal (as electric generating units that are fueled with natural gas do not require PAC to remove mercury emissions as do coal-fired units) and abnormal weather conditions that could lead to higher or lower levels of required electricity generation. The Company’s advanced PAC mercury removal products, which can have carbon usage rates of 50% to 90% less than alternative products, are important to its ongoing success in this market. The Company’s expectation is that its ongoing share of the value of this market will be at least 30%. Based on 2017 representing the first complete year of compliance with MATS, and the Company’s success at capturing net new market share in 2017 relative to 2016, the Company expects its 2017 revenues into this market to experience moderate growth compared to 2016. Over the longer term, it is expected that the number of coal fired generating units utilized in North America will ultimately decline and lead to a decline in the annual estimated market size.

In addition to mercury regulations in North America, China has announced plans for mercury removal from its coal-fired power plants. The plans, as announced, stipulate levels of mercury removal that would not likely result in large activated carbon sales. However, trials will purportedly be conducted to establish removal requirements.

The Company believes that fair pricing for activated carbon in the U.S. is being achieved via the application of a tariff imposed on Chinese steam activated carbon. Under the anti-dumping rules, importers of steam activated carbon from China are potentially required to pay anti-dumping duties. The U.S. Department of Commerce (Commerce Department) conducts reviews in order to determine whether changes (increases or decreases) should be made to the anti-dumping tariff rate applicable to any foreign exporter. These retrospective reviews occur annually while the anti-dumping duty order (the order) is in effect (the current order is scheduled to expire in March 2018). Refer to Note 16 of the consolidated financial statements in Item 8 of this Annual Report for further details.

Through a series of initiatives that began in 2012, including additional capital investment; plant efficiency studies; and, product rationalization, the Company successfully increased its virgin carbon manufacturing capacity from an estimated 142 million pounds per year to approximately 164 million pounds per year. In addition, over this same timeframe, the Company has been successfully promoting its reactivation offerings to U.S. drinking water customers. Increasing the utilization of the Company’s available reactivation capacity has also had the intended impact of freeing up – and effectively increasing – its virgin activated carbon capacity available for customers requiring virgin activated carbon products. No significant virgin bituminous coal-based activated carbon capacity expansion projects are planned for

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2017. However, the previously planned project to refurbish and expand the Company’s Pittsburgh, Pennsylvania reactivation facility is expected to continue in 2017 and into early 2018.

Raw material costs for production in 2017 are expected to be comparable to 2016. The Company’s most significant raw material cost is coal. The quantity of coal consumed varies based on the overall production levels achieved as well as the mix of products manufactured during the year. As of December 31, 2016, the Company has approximately 88% of its anticipated coal requirements for the remainder of 2017 under contract or in inventory.

Equipment

The Company’s equipment business is somewhat cyclical in nature and depends on both regulations and the general health of the overall economy. In 2017, the Company expects moderate growth from 2016 due to expected higher demand for activated carbon adsorption equipment related to the treatment of PFC’s and 1,2,3 TCP discussed in the Activated Carbon and Service section above, as well as from expected higher demand in 2017 for ballast water treatment systems (BWTS). The Company believes that global demand for its other UV equipment systems will continue for a variety of applications including drinking water, wastewater, and advanced oxidation.

BWTS are used to filter and disinfect the water carried in the ballast tanks of ships to prevent the transfer of organisms from one aquatic ecosystem to another, where such organisms could be potentially harmful. Driving the future demand for BWTS are the U.S. Coast Guard (USCG) Final Rule applicable to treating ballast water discharges in the U.S., and the International Maritime Organization’s (IMO) International Convention for the Control and Management of Ships’ Ballast Water and Sediments (IMO Convention) applicable to treating ballast water discharges internationally.

Each regulation requires the management of a ship’s ballast water, generally through the use of a Type Approved BWTS. The Company’s Hyde GUARDIAN® UV-based BWTS are one of more than 60 BWTS to have achieved Type Approval under the IMO Convention, and it expects to commence testing in March 2017 to ready itself to apply for Type Approval under the USCG Final Rule in late 2017.

Recent positive regulatory developments in this market include the September 8, 2016 ratification of the IMO Convention – which calls for it to enter into force on September 8, 2017, and the USCG’s December 2016 granting of its first three BWTS Type Approvals, two of which were for UV light-based systems. Although the USCG Final Rule phased into effect on January 1, 2014 and January 1, 2016, the lack of availability of any type approved systems until just recently has led to the USCG issuing over 11,500 vessel compliance extensions as of December 16, 2016.

As a result of these developments, the Company began experiencing a notable increase in customer inquiries for its BWTS compared to activity earlier in 2016. It expects the pace of activity to remain robust throughout 2017, and lead to higher BWTS equipment sales in late 2017 and continuing into 2018. The timing and pace of this expected increase in sales will be dependent upon a number of variables including the Company’s level of success in completing its USCG testing in 2017 as well as the IMO enforcing compliance with its regulation on the September 8, 2017 effective date.

The Company currently estimates the size of the future market for BWTS to be in the range of $18 billion to $28 billion and be applicable to approximately 64,000 vessels (both retrofit and new build vessels), with a majority of these vessels expected to be outfitted with BWTS equipment over the next 5 to 7 years. Factors influencing the size of the market include pricing, the ultimate number of vessels to be retrofit, the future economic health of the shipping industry, the number of manufacturers who are ultimately able to effectively serve this market, and ongoing uncertainty surrounding USCG regulation compliance enforcement, and the ultimate vessel implementation schedule to be enforced for IMO Convention compliance.

Backlog for the Equipment segment as of December 31, 2016 was $10.9 million.

Consumer

The Company’s Consumer segment supplies activated carbon cloth for use in medical, military and specialty applications. The Company anticipates future growth in medical applications for wound care as its cloth aids in the healing process while providing odor control. The Company continues to focus additional marketing and sales resources to this area of its business, and expects to see modest annual growth in 2017.

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Other

The activities included in Other are exclusively comprised of the New Business acquired by the Company in November 2016, and primarily consists of the manufacture and sale of wood-based activated carbon and diatomaceous earth (DE) filtration media in Europe and Asia.

The New Business’ wood-based activated carbon activities – with annual production capacity located in France of approximately 22 million pounds – are a component of the global activated carbon market described above in the discussion of the Activated Carbon and Service segment. However, its current activities are not dependent upon environmental regulations, and are primarily leveraged to industrial (including fine chemicals and pharmaceutical production) and food and beverage market applications. The Company estimates these markets will grow in line with the general health of the overall economy.

Similarly, the New Business’ DE filtration media capabilities are primarily leveraged to food and beverage and industrial end markets. With annual capacity located in France of approximately 160 million pounds, the Company expects to see a continuation of solid and steady demand for its DE products, particularly in Europe where only approximately 60% of that region’s annual demand is satisfied by the capacity of the Company and other regional manufacturers.

The Company currently expects the New Business to contribute approximately $100 million to the Company’s sales in 2017.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk:

Commodity Price Risk

In the normal course of its business, the Company is exposed to market risk or price fluctuations related to the production of ~~activated~~its ~~carbon~~ products. Coal, ~~and~~ natural gas, and wood, which are significant to the manufacturing ~~of activated carbon~~process, have market prices that fluctuate regularly. Based on the estimated ~~2017~~2018 usage and price of ~~coal~~these ~~and~~items ~~natural gas~~ not under a fixed price contract as of January 1, ~~2017~~2018, a hypothetical 10% increase (or decrease) in the price of coal, ~~and~~ natural gas, and wood would result in the pre-tax loss (or gain) of $0.53 million, $0.6 million, and $20.57 million, respectively.

To mitigate the risk of fluctuating prices, the Company has entered into long-term contracts or derivative contracts to hedge the purchase of a percentage of the estimated need of coal, ~~and~~ natural gas and wood at fixed prices. The ~~future commitments under the long-term contracts, which provide economic hedges, are disclosed within Note 15 of the consolidated financial statements in Item 8 of this Annual Report. The~~ fair value of the cash-flow hedges for natural gas is disclosed in Note 6 ofto the consolidated financial statements in Item 8 of this Annual Report.

Interest Rate Risk

The Company’s net exposure to interest rate risk consists ~~primarily~~ of borrowings under its U.S. ~~and~~Credit ~~Japanese~~Agreement ~~credit agreements~~ described within Note 8 ofto the consolidated financial statements in Item 8 of this Annual Report. The Company’s U.S. ~~Amended~~ Credit Agreement bears interest at rates that are based off of the prime rate, LIBOR, or Fed Funds rate, plus a margin rate based on the Company’s leverage ratio. As of December 31, ~~2016~~2017, the Company had $~~225~~233.05 million of borrowings under the U.S. ~~Amended~~ Credit Agreement. ~~The~~During 2017, the Company’s ~~Japanese~~entered ~~Credit~~into ~~Agreement~~a ~~also~~$50 ~~bears~~million interest atrate ~~variable~~swap ~~rates,~~to ~~however~~manage ~~there~~its ~~were~~exposure noto ~~borrowings~~its ~~outstanding~~variable asrate ~~of December 31, 2016~~borrowings. A hypothetical one percentage point increase in the interest rates on the December 31, ~~2016~~2017 outstanding balances under the Company’s variable rate borrowing arrangements would cause annual interest costs to increase by approximately $21.38 million.

Foreign Currency Exchange Risk

The Company is subject to risk of price fluctuations related to anticipated revenues and operating costs, firm commitments for capital expenditures, and existing assets and liabilities denominated in currencies other than U.S. dollars. The Company enters into foreign currency forward exchange contracts and purchases options to manage these exposures. A hypothetical 10% strengthening (or weakening) of the U.S. dollar against the British Pound Sterling, Canadian Dollar, Mexican Peso, Brazilian Real, Chinese Yuan, Japanese Yen, Singapore Dollar, Danish Krone, Swedish Krona, and Euro as of December 31, ~~2016~~2017 would result in a pre-tax loss (or gain) of approximately $2.1 6 million. The foreign currency forward exchange contracts purchased during ~~2016~~2017 have been accounted for according to ASC 815 “Derivatives and Hedging.”

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Item 8. Financial Statements and Supplementary Data:

REPORT OF MANAGEMENT

Responsibility for Financial Statements

Management is responsible for the preparation of the financial statements included in this Annual Report. The Consolidated Financial Statements were prepared in accordance with accounting principles generally accepted in the United States of America and include amounts that are based on the best estimates and judgments of management.

Management’s Annual Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal controls over financial reporting as defined in Rules 13a-15(f) or 15d-15(f) under the Securities Exchange Act of 1934. The Company’s internal control system is designed to provide reasonable assurance concerning the reliability of the financial data used in the preparation of the Company’s financial statements, as well as reasonable assurance with respect to safeguarding the Company’s assets from unauthorized use or disposition. However, no matter how well designed and operated, an internal control system can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

~~During~~Management ~~fiscal~~conducted ~~year~~an ~~2016,~~evaluation ~~the~~of ~~Company acquired~~ the ~~wood-based~~effectiveness ~~activated carbon, reactivation and mineral-based filtration media business~~ of ~~CECA, a subsidiary of Arkema Group (New Business). For purposes of Management’s evaluation of~~ the Company’s internal control over financial reporting as of December 31, ~~2016,~~2017. In wemaking ~~have~~this ~~elected~~evaluation, tomanagement ~~exclude~~used the ~~New~~criteria ~~Business~~set ~~from~~forth by the ~~scope~~Committee of ~~management’s~~Sponsoring ~~assessment~~Organizations asof ~~permitted by guidance provided by~~ the ~~U.S.~~Treadway ~~Securities and Exchange~~ Commission~~. The~~ ~~acquisition~~(COSO) ~~was~~in ~~completed~~Internal onControl ~~November~~— 2,Integrated ~~2016~~Framework (2013). ~~The~~Management’s ~~New~~evaluation ~~Business~~included ~~represents~~reviewing ~~approximately~~the ~~24%~~documentation of our ~~consolidated assets at December 31~~controls, ~~2016~~evaluating ~~and~~the ~~contributed~~design 2%effectiveness of ~~total~~controls, ~~net~~and ~~sales~~testing ~~for~~their ~~the~~operating ~~year~~effectiveness. Based ~~ended~~on ~~December~~this 31evaluation, ~~2016. Management~~management isbelieves inthat, ~~the~~as ~~process~~ of ~~integrating~~December ~~the~~31, ~~New~~2017, ~~Business into~~ the Company’s internal ~~control framework. This acquired business will be included in management’s annual report on the effectiveness of the Company’s internal~~ controls over financial reporting inwere ~~fiscal year 2017~~effective.

~~Management~~The ~~conducted an evaluation of the~~ effectiveness of ~~the Company’s~~ internal control over financial reporting as of December 31, ~~2016. In making this evaluation~~2017, ~~management~~has ~~used~~been ~~the~~audited ~~criteria set forth~~ by ~~the~~Deloitte ~~Committee~~& ofTouche ~~Sponsoring~~LLP, ~~Organizations~~an ofindependent ~~the~~registered ~~Treadway~~public ~~Commission~~accounting ~~(COSO)~~firm, inwho ~~Internal~~also ~~Control~~audited —our ~~Integrated~~consolidated ~~Framework~~financial ~~(2013)~~statements. ~~Management~~Deloitte & Touche LLP’s ~~evaluation~~attestation ~~included~~report ~~reviewing~~on the ~~documentation~~effectiveness of our ~~controls,~~internal ~~evaluating~~control ~~the~~over ~~design~~financial ~~effectiveness~~reporting ofappears ~~controls,~~after ~~and~~this ~~testing~~Report ~~their~~of ~~operating effectiveness~~Management.

ARemediation ~~material weakness is defined as a significant deficiency or combination~~ of ~~significant~~Prior ~~deficiencies,~~Year inMaterial ~~internal~~Weakness ~~control over financial reporting such that there is a reasonable possibility that a material misstatement~~ in ~~the~~Internal ~~annual~~Control or interim financial statements will not be prevented or detected on a timely basis. In connection with management’s assessment of our internal control over financial reporting as described above, management concluded there was a material weakness in the design of our internal control over financial reporting as of December 31, 2016 related to the recognition of revenue for a subset of transactions within the U.S. potable water market. In these instances, certain contracts were inappropriately bifurcated and revenue was recognized prior to the completion of the revenue recognition criteria. Management determined the Company’s controls were not designed to properly identify and assess revenue recognition criteria ensuring all such criteria were considered and met prior to the recording of revenue.

A material weakness is defined as a significant deficiency or combination of significant deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement in the annual or interim financial statements will not be prevented or detected on a timely basis. In connection with management’s assessment of our internal control over financial reporting in the prior year, management concluded there was a material weakness in the design of our internal control over financial reporting as of December 31, 2016 related to the recognition of revenue for a subset of transactions within the U.S. potable water market. In these instances, certain contracts were inappropriately bifurcated between product delivery and installation and revenue was recognized prior to the completion of the revenue recognition criteria. Management determined the Company’s controls were not designed to properly identify and assess revenue recognition criteria ensuring all such criteria were considered and met prior to the recording of revenue.

Given this material weakness, management concluded the Company did not maintain effective internal control over financial reporting as of December 31, 2016.

~~Notwithstanding~~The ~~such~~following ~~material~~actions ~~weakness,~~were ~~management~~taken ~~has~~by ~~concluded that~~ the ~~consolidated~~Company ~~financial~~to ~~statements~~remediate ~~included in~~ the ~~Form 10-K present fairly, in all~~ material ~~respects, our financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the U.S.~~weakness:

· The ~~effectiveness~~Company’s ofrevenue ~~internal~~recognition ~~control~~policy ~~over~~was ~~financial~~modified ~~reporting~~with asadditional ofdetailed ~~December~~guidance ~~31,~~on ~~2016,~~the ~~has~~identification ~~been~~and ~~audited~~application byof ~~Deloitte~~revenue &recognition ~~Touche LLP~~criteria, anspecifically ~~independent~~as ~~registered~~it ~~public~~relates ~~accounting~~to ~~firm,~~contracts ~~who~~within ~~also~~the ~~audited our consolidated financial statements~~U. ~~Deloitte~~S. &potable ~~Touche~~water ~~LLP’s attestation report on the effectiveness of our internal control over financial reporting appears after this Report of Management~~market.

42 · Training was conducted within the appropriate areas of the business regarding the Company’s revenue recognition policy.

The newly created Compliance function worked with the business units and corporate accounting to assess business processes and enhance internal controls, including those internal controls over the assessment of revenue recognition criteria as it relates to the contracts impacted by the material weakness described above.

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~~Remediation~~Additional ofinternal ~~Material~~controls ~~Weakness~~were designed and implemented to specifically address revenue recognition in ~~Internal~~the ~~Control~~U.S. potable water market.

WeThe ~~are~~Company ~~committed~~monitored to the ~~remediation~~effectiveness of ~~the~~these ~~material~~remediation ~~weakness in a timely manner~~actions. WeManagement ~~have~~concluded, ~~begun~~through testing of the ~~process~~operating effectiveness of ~~developing~~the aCompany’s ~~remediation~~implemented ~~plan~~controls ~~that~~related ~~will~~to ~~address~~revenue recognition, that the material weakness inhas ~~internal~~been ~~control~~fully ~~over~~remediated ~~financial~~as ~~reporting. Specifically,~~of weDecember ~~intend~~31, ~~to implement the following changes:~~2017.

· Revise the Company’s revenue recognition policy with more detailed guidance on the identification and application of revenue recognition criteria, specifically as it relates to contracts within the U.S. potable water market.

· Implement training within the appropriate areas of the business regarding the Company’s revenue recognition policy.

· Establish a Compliance function that will work with the business units and corporate accounting to assess business processes and enhance internal controls, including those internal controls over the assessment of revenue recognition criteria as it relates to the contracts impacted by the material weakness described above.

On a quarterly basis, the status of the remediation implementation will be provided to the Company’s Audit Committee. The Company will monitor the effectiveness of these remediation actions once the plans are implemented. We believe the actions described above will strengthen our internal controls over financial reporting related to the revenue recognition process for this subset of transactions, and will, once completed, address the material weakness that we identified in our internal controls over financial reporting as of December 31, 2016.

Changes in Internal Control

~~There~~During ~~have~~fiscal ~~not~~year ~~been~~2016, ~~any~~the ~~changes~~Company inacquired the wood-based activated carbon, reactivation and mineral-based filtration media business of CECA, a subsidiary of Arkema Group (New Business). For purposes of Management’s evaluation of the Company’s internal ~~controls~~control over financial reporting as of December 31, ~~other~~2016, ~~than~~we had elected to exclude the ~~above~~New ~~mentioned~~Business ~~acquisition,~~from ~~that~~the ~~occurred~~scope ~~during~~of management’s assessment as permitted by guidance provided by the ~~fourth~~U.S. ~~quarter~~Securities and Exchange Commission. As of ~~2016~~December 31, ~~which~~2017, ~~have~~Management ~~materially~~has ~~affected,~~evaluated orthe ~~are~~New ~~reasonably~~Business ~~likely~~and toimplemented ~~materially~~controls ~~affect,~~consistent with the Company’s internal control ~~over financial reporting~~framework.

43As a result of the Company’s material weakness in the design of its internal control over financial reporting as of December 31, 2016 related to the recognition of revenue for a subset of transactions within the U.S. potable water market, controls were implemented to address proper revenue recognition. Management evaluated the effectiveness of these controls as of December 31, 2017. Management’s evaluation included reviewing the documentation of our controls, evaluating the design effectiveness of controls, and testing their operating effectiveness. In addition, the evaluation included reviewing the documentation of our existing and new controls, evaluating the design effectiveness of controls, and testing their operating effectiveness. As a result of the evaluation, Management has determined that the controls described above are operating effectively as of December 31, 2017.

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~~INTERNAL CONTROLS —~~ REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors ~~and~~of ~~Stockholders~~Calgon ofCarbon Corporation

~~Calgon~~Opinion ~~Carbon~~on ~~Corporation~~Internal Control over Financial Reporting

~~Moon~~We ~~Township~~have audited the internal control over financial reporting of Calgon Carbon Corporation and subsidiaries (the “Company”) as of December 31, ~~Pennsylvania~~2017, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have ~~audited~~also ~~Calgon Carbon Corporation’s and subsidiaries’ (the “Company’s”) internal control over financial reporting as of December 31~~audited, ~~2016, based on criteria established~~ in ~~Internal~~accordance ~~Control~~with ~~— Integrated Framework (2013) issued by~~ the ~~Committee~~standards of ~~Sponsoring Organizations of~~ the ~~Treadway~~Public ~~Commission. As~~Company ~~described~~Accounting inOversight ~~Management’s~~Board Annual Report on Internal Control over Financial Reporting, management excluded from its assessment the internal control over financial reporting at the wood-based activated carbon, reactivation and mineral-based filtration media business of CECA (~~the~~United ~~“New~~States) ~~Business”~~(PCAOB), ~~which was acquired on November 2, 2016 and whose financial statements constitute 24% of consolidated assets and 2% of total net sales of~~ the consolidated financial ~~statement~~statements ~~amounts~~ as of and for the year ended December 31, ~~2016. Accordingly~~2017, ~~our~~of ~~audit did not include~~ the ~~internal control over financial reporting at the New Business. The~~ Company’s ~~management is responsible for maintaining effective internal control over financial reporting~~ and ~~for~~our ~~its~~report ~~assessment~~dated ofMarch ~~the~~1, ~~effectiveness of internal control over financial reporting~~2018, ~~include~~expressed ~~in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express~~ an unqualified opinion on ~~the~~those ~~Company’s internal control over~~ financial ~~reporting based on our audit~~statements.

WeBasis conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on that risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for ~~our opinion.~~Opinion

AThe ~~company~~Company’s management is responsible for maintaining effective internal control over financial reporting isand afor ~~process~~its ~~designed~~assessment ~~by,~~of ~~or under~~ the ~~supervision~~effectiveness of, ~~the~~internal ~~company’s~~control ~~principal~~over ~~executive and principal~~ financial ~~officers~~reporting, orincluded ~~persons~~in ~~performing similar functions, and effected by~~ the ~~company~~accompanying Management’s ~~board~~Annual ofReport ~~directors,~~on ~~management,~~Internal ~~and~~Control ~~other~~over ~~personnel~~Financial toReporting. ~~provide~~Our ~~reasonable~~responsibility ~~assurance~~is ~~regarding~~to ~~the~~express ~~reliability~~an ofopinion ~~financial~~on ~~reporting and~~ the ~~preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company~~Company’s internal control over financial reporting ~~includes~~based ~~those~~on ~~policies~~our ~~and~~audit. ~~procedures~~We ~~that~~are ~~(1)~~a ~~pertain~~public toaccounting ~~the~~firm ~~maintenance~~registered ofwith ~~records that, in reasonable detail, accurately and fairly reflect~~ the ~~transactions~~PCAOB and ~~dispositions~~are ofrequired ~~the~~to ~~assets~~be ofindependent ~~the~~with ~~company;~~respect ~~(2) provide reasonable assurance that transactions are recorded as necessary~~ to ~~permit~~the ~~preparation~~Company ~~of financial statements~~ in accordance with ~~generally~~the ~~accepted~~U.S. ~~accounting~~federal ~~principles,~~securities ~~and~~laws ~~that receipts~~ and ~~expenditures of~~ the ~~company~~applicable ~~are~~rules ~~being made only in accordance with authorizations of management~~ and ~~directors~~regulations of the ~~company;~~Securities and ~~(3)~~Exchange ~~provide~~Commission ~~reasonable~~and ~~assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of~~ the ~~company’s assets that could have a material effect on the financial statements~~PCAOB.

~~Because~~We ofconducted ~~the~~our ~~inherent~~audit ~~limitations~~in ofaccordance ~~internal~~with ~~control~~the ~~over~~standards ~~financial~~of ~~reporting,~~the ~~including~~PCAOB. ~~the~~Those ~~possibility~~standards ofrequire ~~collusion~~that orwe ~~improper~~plan ~~management~~and ~~override~~perform ofthe ~~controls,~~audit ~~material~~to ~~misstatements~~obtain ~~due~~reasonable toassurance ~~error~~about orwhether ~~fraud~~effective ~~may~~internal ~~not~~control beover ~~prevented~~financial orreporting ~~detected~~was onmaintained ain ~~timely~~all ~~basis~~material respects. ~~Also,~~ ~~projections~~Our ofaudit ~~any~~included ~~evaluation~~obtaining ofan ~~the~~understanding ~~effectiveness~~ of ~~the~~ internal control over financial reporting, toassessing ~~future~~the ~~periods~~risk ~~are~~that ~~subject~~a tomaterial ~~the~~weakness ~~risk~~exists, ~~that~~testing ~~the~~and ~~controls~~evaluating ~~may~~the ~~become~~design ~~inadequate~~and ~~because~~operating effectiveness of ~~changes~~internal incontrol ~~conditions~~based on the assessed risk, orand ~~that~~performing ~~the~~such ~~degree~~other ofprocedures ~~compliance~~as ~~with~~we considered necessary in the ~~policies~~circumstances. orWe ~~procedures~~believe ~~may~~that ~~deteriorate~~our audit provides a reasonable basis for our opinion.

ADefinition ~~material~~and ~~weakness~~Limitations ~~is a deficiency, or a combination~~ of ~~deficiencies,~~Internal inControl ~~internal control~~ over ~~financial~~Financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weakness has been identified and included in management's assessment: For a subset of transactions within the U.S. potable water market, certain contracts were inappropriately bifurcated and revenue was recognized prior to the completion of the revenue recognition criteria. The Company’s controls were not designed to properly identify and assess revenue recognition criteria ensuring all such criteria were considered and met prior to the recording of revenue. This material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the consolidated financial statements as of and for the year ended December 31, 2016, of the Company and this report does not affect our report on such financial statements. Reporting

44A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ DELOITTE & TOUCHE LLP

Pittsburgh, Pennsylvania

March 1, 2018

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InREPORT ~~our~~OF ~~opinion,~~INDEPENDENT ~~because~~REGISTERED ofPUBLIC ~~the~~ACCOUNTING effect of the material weakness identified above on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2016, based on the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.FIRM

WeTo ~~have also audited, in accordance with~~ the ~~standards~~stockholders ofand the ~~Public Company Accounting Oversight~~ Board ~~(United States), the consolidated financial statements as~~ of ~~and~~Directors ~~for the year ended December 31, 2016,~~ of ~~the~~Calgon ~~Company~~Carbon ~~and our report dated March 1, 2017 expressed an unqualified opinion on those financial statements.~~Corporation

~~/s/~~ Opinion ~~DELOITTE~~on &the ~~TOUCHE~~Financial ~~LLP Pittsburgh, Pennsylvania March 1, 2017~~Statements

45We have audited the accompanying consolidated balance sheets of Calgon Carbon Corporation and subsidiaries (the "Company") as of December 31, 2017 and 2016, the related consolidated statements of comprehensive income, stockholders' equity, and cash flows, for each of the three years in the period ended December 31, 2017, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 1, 2018, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ DELOITTE & TOUCHE LLP

Pittsburgh, Pennsylvania

March 1, 2018

We have served as the Company’s auditor since 2000.

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FINANCIAL STATEMENTS — REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Calgon Carbon Corporation

Moon Township, Pennsylvania

We have audited the accompanying consolidated balance sheets of Calgon Carbon Corporation and subsidiaries (the “Company”) as of December 31, 2016 and 2015, and the related consolidated statements of comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2016. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Calgon Carbon Corporation and subsidiaries as of December 31, 2016 and 2015, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2016, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2016, based on the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 1, 2017, expressed an adverse opinion on the Company’s internal control over financial reporting because of a material weakness.

/s/ DELOITTE & TOUCHE LLP Pittsburgh, Pennsylvania March 1, 2017

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Calgon Carbon Corporation

	Year Ended December 31
(Dollars in thousands, except per share amounts)	~~2016~~2017		~~2015~~2016		~~2014~~2015
Net sales	$	~~514~~619,~~246~~811	$	~~535~~514,~~004~~246	$	~~555~~535,~~103~~004
Cost of products sold (excluding depreciation and amortization)		~~346~~430,~~398~~896		~~343~~346,~~522~~398		~~363~~343,~~014~~522
Depreciation and amortization		3846,~~070~~667		3538,~~453~~070		3035,~~470~~453
Selling, general and administrative expenses		9998,~~815~~806		8499,~~810~~815		8084,~~860~~810
Research and development expenses		5,~~441~~416		65,~~425~~441		6,~~406~~425
Restructuring income		—		—		(252)
Other operating income		(4,148)		—		—
		489,724		470,210		480,498
		577,637		489,724		470,210
Income from operations		2442,~~522~~174		6424,~~794~~522		7464,~~605~~794
Interest income		9949		5899		7758
Interest expense		(27,~~385~~842)		(~~773~~2,385)		(~~263~~773)
Other expense — net		(2,163)		(693)		(1,911)
Other income (expense) — net		(818)		(2,163)		(693)
Income before income tax provision		2033,~~073~~563		6320,~~386~~073		7263,~~508~~386
Income tax provision (Note 14)		612,~~276~~462		196,~~923~~276		2319,~~138~~923
Net income		1321,~~797~~101		4313,~~463~~797		4943,~~370~~463
Other comprehensive income (loss), net of tax (Note 12)
Foreign currency translation		~~(10~~27,~~956)~~989		(1310,~~013~~956)		(1413,~~850~~013)
Defined benefit pension plans		(1,~~899)~~292		(~~116~~1,899)		(~~11,908~~116)
Derivatives		~~886~~(1,323)		~~(991)~~886		~~388~~(991)
Total other comprehensive loss		(11,969)		(14,120)		(26,370)
Total other comprehensive income (loss)		27,958		(11,969)		(14,120)
Total comprehensive income	$	149,~~828~~059	$	291,~~343~~828	$	2329,~~000~~343
Net income per common share
Basic	$	0.2742	$	0.8427	$	0.9384
Diluted	$	0.2742	$	0.8227	$	0.9282
Dividends per common share	$	0.20	$	0.20	$	—0.20
Weighted average shares outstanding, in thousands
Basic		50,~~259~~470		5150,~~902~~259		5351,~~042~~902
Diluted		5150,~~023~~546		5251,~~709~~023		5352,~~941~~709

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

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CONSOLIDATED BALANCE SHEETS

Calgon Carbon Corporation

	December 31
(Dollars in thousands)	~~2016~~2017		~~2015~~2016
Assets
Current assets:
Cash and cash equivalents	$	3742,~~984~~328	$	5337,~~629~~984
Receivables (net of allowance of $1,416 and $1,675)		108,056		96,674
Receivables (net of allowance of $1,820 and $1,416)		133,465		108,056
Revenue recognized in excess of billings on uncompleted contracts		67,~~998~~601		96,~~156~~998
Inventories		~~125~~121,~~115~~647		~~110~~125,~~364~~115
Deferred income taxes — current		—		22,537
Other current assets		16,154		13,437
Other current assets		13,437		15,365
Total current assets		321,195		291,590
Total current assets		291,590		307,725
Property, plant and equipment, net		399,510		366,442
Property, plant and equipment, net		366,442		311,019
Intangibles, net		44,066		40,543
Intangibles, net		40,543		5,961
Goodwill		77,773		66,316
Goodwill		66,316		25,777
Deferred income taxes		9,515		7,957
Deferred income taxes — long-term		7,957		2,816
Other assets		2,525		2,370
Other assets		2,370		3,220
Total assets	$	854,584	$	775,218
Total assets	$	775,218	$	656,518
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities	$	7492,~~493~~852	$	5374,~~716~~493
Billings in excess of revenue recognized on uncompleted contracts		4,~~063~~097		34,~~581~~063
Payroll and benefits payable		1520,~~458~~097		1315,~~753~~458
Accrued income taxes		12,~~641~~713		21,~~091~~641
Current portion of long-term debt		5,000		75,~~500~~000
Total current liabilities		~~100~~124,~~655~~759		80100,~~641~~655
Long-term debt		~~220~~228,~~000~~500		~~103~~220,~~941~~000
Deferred income taxes — long-term		25,624		41,383
Deferred income taxes		17,584		25,624
Accrued pension and other liabilities		4759,~~796~~320		3647,~~562~~796
Total liabilities		~~394~~430,~~075~~163		~~262~~394,~~527~~075
Commitments and contingencies (Notes 15 and 16)
Stockholders’ equity:
Common stock, $.01 par value, 100,000,000 shares authorized, 61,531,025 and 61,300,553 shares issued (Note 11)		615		613
Common stock, $.01 par value, 100,000,000 shares authorized, 61,729,948 and 61,531,025 shares issued		617		615
Additional paid-in capital		~~185~~190,~~791~~534		~~181~~185,~~676~~791
Retained earnings		~~402~~413,~~286~~198		~~398~~402,~~627~~286
Treasury stock, at cost, 10,781,001 and 10,232,612 shares		(153,950)		(145,295)
Treasury stock, at cost, 10,804,009 and 10,781,001 shares		(154,287)		(153,950)
Accumulated other comprehensive loss		(5325,~~599~~641)		(4153,~~630~~599)
Total stockholders’ equity		~~381~~424,~~143~~421		~~393~~381,~~991~~143
Total liabilities and stockholders’ equity	$	~~775~~854,~~218~~584	$	~~656~~775,~~518~~218

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

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CONSOLIDATED STATEMENTS OF CASH FLOWS

Calgon Carbon Corporation

	Year Ended December 31
(Dollars in thousands)	~~2016~~2017		~~2015~~2016		~~2014~~2015
Cash flows from operating activities
Net income	$	1321,~~797~~101	$	4313,~~463~~797	$	4943,~~370~~463
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		3846,~~070~~667		3538,~~453~~070		3035,~~470~~453
Employee benefit plan provisions		4,376		2,044		1,186
Gain on sale of property, plant and equipment		(4,148)		—		—
Stock-based compensation		4,058		3,761		3,748
Employee benefit plan provisions		4,084		4,376		2,044
Deferred income tax (benefit) expense		(5,392)		6,782		9,213
Stock-based compensation		4,338		4,058		3,761
Deferred income tax (benefit) expense		(9,339)		(5,392)		6,782
Changes in assets and liabilities — net of effects from foreign exchange:
Receivables		(319,~~665~~358)		(43,~~751~~665)		(34,~~137~~751)
Inventories		35,~~692~~458		~~(14~~3,~~805)~~692		7(14,~~907~~805)
Revenue in excess of billings on uncompleted contracts and other current assets		5(3,~~302~~987)		535,302		~~(5,503)~~53
Accounts payable and other accrued liabilities		1116,~~247~~018		111,~~112~~247		(41,~~103)~~112
Pension contributions		(2,426)		(3,056)		(3,505)
Transition tax payable		6,780		—		—
Other items — net		(87)		(175)		(1,298)
Pension contributions		(2,925)		(2,426)		(3,056)
Net cash provided by operating activities		68,972		69,881		84,348
Other items — net		(98)		(87)		(175)
Net cash provided by operating activities		64,591		68,972		69,881
Cash flows from investing activities
Proceeds from sale of assets		1,234		—		451
Purchase of business - net of cash		(1,234)		(153,599)		—
Purchase of business - net of cash (Note 20)		(153,599)		—		—
Capital expenditures		(57,379)		(31,870)		(62,264)
Capital expenditures		(31,870)		(62,264)		(63,459)
Proceeds from sale of assets		5,106		1,234		—
Government grants received		—		—		1,209
Other investing		348		—		—
Net cash used in investing activities		(~~184~~53,~~235~~159)		(62184,~~264~~235)		(6162,~~799~~264)
Cash flows from financing activities
Japanese working capital loan borrowings — short-term		—		~~1,643~~—		31,~~330~~643
Japanese working capital loan repayments — short-term		—		~~(2,490)~~—		(42,~~301~~490)
Credit agreement borrowings — long-term		~~328~~151,~~249~~411		~~111~~328,~~400~~249		97111,~~200~~400
Credit agreement repayments — long-term		(~~210~~142,~~650~~920)		(70210,~~400~~650)		(5670,~~750~~400)
Repayment of term loan — long-term		(4,002)		—		—
Repayment of Japanese term loan — long-term		—		(4,002)		—
Reductions of debt obligations		—		—		(1,880)
Treasury stock purchased		(337)		(8,655)		(35,634)
Treasury stock purchased		(8,655)		(35,634)		(40,190)
Common stock dividends paid		(10,189)		(10,138)		(10,430)
Common stock dividends paid		(10,138)		(10,430)		—
Proceeds from the exercise of stock options		407		286		1,095
Proceeds from the exercise of stock options		286		1,095		2,199
Other financing		(10,916)		5,709		—
Other financing		5,709		—		—
Net cash (used in) provided by financing activities		(12,544)		100,799		(4,816)
Net cash provided by (used in) financing activities		100,799		(4,816)		(392)
Effect of exchange rate changes on cash and cash equivalents		5,456		(1,181)		(2,305)
Effect of exchange rate changes on cash and cash equivalents		(1,181)		(2,305)		(1,966)
Net increase (decrease) increase in cash and cash equivalents		4,344		(15,645)		496
Net (decrease) increase in cash and cash equivalents		(15,645)		496		20,191
Cash and cash equivalents, beginning of period		37,984		53,629		53,133
Cash and cash equivalents, beginning of period		53,629		53,133		32,942
Cash and cash equivalents, end of period	$	42,328	$	37,984	$	53,629
Cash and cash equivalents, end of period	$	37,984	$	53,629	$	53,133

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

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Calgon Carbon Corporation

								Accumulated
	Common			Additional				Other		Treasury			Total
	Stock	Common		Paid-In		Retained		Comprehensive		Stock	Treasury		Stockholders'
(Dollars in thousands)	Shares	Stock		Capital		Earnings		Income (Loss)		Shares	Stock		Equity
Balance, December 31, 2013 (Note 11)	60,885,920	$	609	$	170,283	$	316,224	$	(1,140)	6,242,326	$	(69,471)	$	416,505
2014
Net income	—		—		—		49,370		—	—		—		49,370
Other comprehensive loss, net of tax (Note 12)	—		—		—		—		(26,370)	—		—		(26,370)
Employee and director stock plans	237,339		3		6,155		—		—	—		—		6,158
Share repurchase (Note 11)	—		—		—		—		—	1,930,841		(39,725)		(39,725)
Treasury stock purchased	—		—		—		—		—	23,205		(465)		(465)
Balance, December 31, 2014 (Note 11)	61,123,259	$	612	$	176,438	$	365,594	$	(27,510)	8,196,372	$	(109,661)	$	405,473
2015
Net income	—		—		—		43,463		—	—		—		43,463
Other comprehensive loss, net of tax (Note 12)	—		—		—		—		(14,120)	—		—		(14,120)
Cash dividends	—		—		—		(10,430)		—	—		—		(10,430)
Employee and director stock plans	177,294		1		5,238		—		—	—		—		5,239
Share repurchase (Note 11)	—		—		—		—		—	2,002,444		(34,952)		(34,952)
Treasury stock purchased	—		—		—		—		—	33,796		(682)		(682)
Balance, December 31, 2015 (Note 11)	61,300,553	$	613	$	181,676	$	398,627	$	(41,630)	10,232,612	$	(145,295)	$	393,991
2016
Net income	—		—		—		13,797		—	—		—		13,797
Other comprehensive loss, net of tax (Note 12)	—		—		—		—		(11,969)	—		—		(11,969)
Cash dividends	—		—		—		(10,138)		—	—		—		(10,138)
Employee and director stock plans	230,472		2		4,115		—		—	—		—		4,117
Share repurchase (Note 11)	—		—		—		—		—	518,576		(8,201)		(8,201)
Treasury stock purchased	—		—		—		—		—	29,813		(454)		(454)
Balance, December 31, 2016 (Note 11)	61,531,025	$	615	$	185,791	$	402,286	$	(53,599)	10,781,001	$	(153,950)	$	381,143
2017
Net income	—		—		—		21,101		—	—		—		21,101
Other comprehensive income, net of tax (Note 12)	—		—		—		—		27,958	—		—		27,958
Cash dividends	—		—		—		(10,189)		—	—		—		(10,189)
Employee and director stock plans	198,923		2		4,743		—		—	—		—		4,745
Treasury stock purchased	—		—		—		—		—	23,008		(337)		(337)
Balance, December 31, 2017 (Note 11)	61,729,948	$	617	$	190,534	$	413,198	$	(25,641)	10,804,009	$	(154,287)	$	424,421

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

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Calgon Carbon Corporation

(Dollars in thousands, except per share amounts or as otherwise noted)

1. Summary of Accounting Policies

Operations

Calgon Carbon Corporation (the Company) is a global leader in innovative solutions, high quality products and reliable services designed to protect human health and the environment from harmful contaminants in water, and air. As a leading manufacturer of activated carbon, with broad capabilities in ultraviolet light disinfection, the Company provides purification solutions for drinking water, wastewater, pollution abatement, and a variety of industrial and commercial manufacturing processes. The Company’s operations are principally conducted in ~~four~~three business segments: Activated Carbon ~~and Service~~, ~~Equipment,~~Alternative ~~Consumer~~Materials, and ~~Other~~Advanced Water Purification. Each of these segments includes the production, design and marketing of products and services specifically developed for the purification, separation and concentration of liquids and gases and other media. The Activated Carbon ~~and Service~~ segment relies on activated carbon as a base material, while the ~~Equipment~~Advanced Water Purification segment relies on a variety of methods and materials which involve other products. The Alternative Materials segment supplies diatomaceous earth and perlite filtration media for use in ~~addition~~applications tofor ~~activated~~decolorization, ~~carbon. The~~purification, ~~Consumer~~decontamination, ~~segment~~and ~~supplies~~filtration of liquids in various applications including food and beverage, industrial and pharmaceuticals; as well as activated carbon cloth for use in military, industrial, and medical applications. The Company’s largest markets are in the United States (U.S.), Europe, and Japan. The Company also has markets in Africa, Canada, China, India, Latin America, and in other parts of Asia. On November 2, 2016, the Company completed the acquisition of the wood-based activated carbon, reactivation, and mineral-based filtration media business of CECA, a subsidiary of Arkema Group (New Business). With the complementary New Business located in Europe, the Company ~~becomes~~became an even more global and diverse industry leader in activated carbon, and reactivation, ~~and~~as well as filtration media in the form of diatomaceous earth and perlites. ~~For purposes of reporting the results of its segments in 2016, Other is exclusively comprised of the New Business subsequent to its acquisition.~~ Refer to Notes 18 and 20 for additional information regarding the acquisition.

On September 21, 2017, the Company entered into a definitive merger agreement under which a subsidiary of the Japanese chemical manufacturer Kuraray Co., Ltd. (Kuraray) agreed to acquire the Company, by way of a reverse triangular merger (Pending Merger). Following the consummation of the Pending Merger, the Company would become a wholly owned subsidiary of Kuraray. Refer to Note 21 for additional information regarding the Pending Merger.

Principles of Consolidation

The consolidated financial statements include the accounts of majority-owned and controlled subsidiaries. Investments in business entities in which the Company does not have control, but has the ability to exercise significant influence over the operating and financial policies, are accounted for under the equity method. All intercompany transactions and accounts have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications had no impact on the Company’s previously reported net income, cash flows, or stockholders’ equity.

Foreign Currency

Substantially all assets and liabilities of the Company’s international operations are translated at year-end exchange rates; income and expenses are translated at average exchange rates prevailing during the year. Translation adjustments

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represent other comprehensive income or loss and are accumulated in a separate component of stockholders’ equity. Transaction gains and losses are included in ~~Other~~other income (expense-) — net.

Revenue Recognition

Revenue and related costs are recognized when goods are shipped or services are rendered to customers provided that ownership and risk of loss have passed to the customer, the price to the customer is fixed or determinable, persuasive evidence of an arrangement exists and collection is reasonably assured. Revenue for major equipment projects is recognized under the percentage of completion method. The Company’s major equipment projects generally have a long project life cycle from bid solicitation to project completion. The nature of the contracts are generally fixed price with milestone billings. The Company recognizes revenue for these projects based on the fixed sales prices multiplied by the percentage of completion. In applying the percentage of completion method, a project’s percent complete as of any balance sheet date is computed as the ratio of total costs incurred to date divided by the total estimated costs at completion. As changes in the estimates of total costs at completion and/or estimated total losses on projects are identified, appropriate earnings adjustments are recorded during the period that the change is identified. The Company has a history of making reasonably dependable estimates of costs at completion on contracts that follow the percentage of completion method; however, due to uncertainties inherent in the estimation process, it is possible that actual project costs at completion could vary from estimates. The principal components of costs include material, direct labor, subcontracts, and allocated indirect costs. Indirect costs primarily consist of administrative labor and associated operating expenses, which are allocated to the respective projects on actual hours charged to the project utilizing a standard hourly rate.

Cash and Cash Equivalents

The Company considers all highly liquid, short-term investments made with an original maturity of three months or less to be cash equivalents. From time to time, the Company could have cash deposited with financial institutions in excess of federally insured limits. As of December 31, ~~2016~~2017 and ~~2015~~2016, the Company had $43.8 million and ~~zero~~$4.8 million, respectively, of cash deposits with U.S. financial institutions in excess of federally insured limits. The Company’s foreign subsidiaries held cash and cash equivalents of $2733.41 million and $4527.14 million as of December 31, ~~2016~~2017 and ~~2015~~2016, respectively. Generally, cash and cash equivalents held by foreign subsidiaries are not readily available for use in the U.S. without adverse tax consequences.

Concentration of Credit Risk

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents and customer receivables. The Company places its cash with financial institutions and invests in low-risk, highly liquid instruments. With respect to customer receivables, the Company believes that it has no significant concentration of credit risk as no single customer accounted for more than 10 percent of gross annual revenues as of December 31, ~~2016~~2017. The Company closely monitors the credit risk associated with its customers and to date has not experienced material losses.

Allowance for Doubtful Accounts

The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The amount of allowance recorded is primarily based upon a periodic review of specific customer transactions that remain outstanding at least three months beyond their respective due dates.

Inventories

Inventories are carried at the lower of cost or ~~market~~net realizable value. Inventory costs are primarily determined using the first-in, first-out (FIFO) method.

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Property, Plant and Equipment

Property, plant and equipment is recorded at cost. Repair and maintenance costs are expensed as incurred. Depreciation for financial reporting purposes is computed on the straight-line method over the estimated service lives of the assets, which are from 15 to 30 years for land improvements and buildings, 5 to 15 years for furniture, machinery and equipment, 5 to 10 years for customer capital, 5 years for vehicles, and 5 to 10 years for computer hardware and software. Depletion is computed for mineral rights for the diatomite ore deposits using the units-of-production method and is included in the Company’s depreciation expense. Expenditures for new facilities and improvements that substantially extend the capacity or useful life of an asset are capitalized.

Mineral rights were acquired as part of the acquisition of the New Business. Mineral rights include diatomite ore deposits, and are stated at cost, less accumulated depletion. Depletion is computed for mineral rights using the units-of-production method and is included in the Company’s depreciation expense.

Asset Retirement Obligations

AsThe ~~a result of the acquisition of the New Business, the~~ Company has ~~recognized~~ asset retirement obligations (AROs) related to reclamation obligations associated with the normal operation of the diatomite mining facilities. These AROs consist primarily of costs associated with mine reclamation and landfill closures. The fair values of these AROs are recorded on a discounted basis at the time the obligation is incurred, and accreted over time for the change in present value. Additionally, the Company capitalizes asset retirement costs by increasing the carrying amount of the related long-lived assets and depreciating these assets over the remaining life of the active mining facilities. ~~The Company reviews, on an annual basis, unless otherwise deemed necessary, the reclamation obligation at each active mine site in accordance with accounting guidance for reclamation obligations.~~

Goodwill and Other Intangible Assets

Goodwill represents the excess of the cost of an acquired business over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in a business combination. Identifiable intangible assets acquired in business combinations are recorded based on their fair values at the date of acquisition. In accordance with guidance within Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 350 “Intangibles - Goodwill and Other,” goodwill and identifiable intangible assets with indefinite lives are not subject to amortization but must be evaluated for impairment.

AsThe aCompany ~~result~~evaluates ofgoodwill and indefinite-lived intangible assets for impairment annually, or when events occur or circumstances change that may reduce the ~~acquisition~~fair value of the ~~New~~asset ~~Business,~~below ~~the~~its carrying amount. The Company has ~~recorded~~elected ~~various~~to perform the annual impairment test of its goodwill and indefinite-lived intangible assets, ~~including~~as ~~trade~~required, ~~names~~on ~~and~~December 31 ~~trademarks~~of each year by initially comparing the fair value of each of the Company’s reporting units or indefinite-lived assets to its related carrying value. If the carrying amount of the intangible asset exceeds its fair value, ~~unpatented~~the ~~technology~~Company recognizes an impairment loss in the amount of the excess. If the fair value of the reporting unit is less than its carrying value, ~~and~~the ~~customer~~Company ~~relationships~~performs an additional step to determine the implied fair value of the goodwill. The ~~trade~~implied ~~names~~fair value of goodwill is determined by first allocating the fair value of the reporting unit to all of the assets and ~~trademarks~~liabilities ~~acquired~~of ~~have~~the ~~indefinite~~unit ~~lives~~and then computing the excess of the unit’s fair value over the amounts assigned to the assets and ~~will~~liabilities. If bethe ~~tested~~carrying ~~for~~value of goodwill exceeds the implied fair value of goodwill, such excess represents the amount of goodwill impairment, ~~annually~~and the Company recognizes such impairment accordingly. ~~All~~Fair ~~remaining~~values ~~acquired~~are ~~identifiable~~estimated ~~intangible~~using ~~assets~~discounted ~~have~~cash ~~finite~~flows ~~lives~~and other valuation methodologies that are based on projections of the amounts and timing of future revenues and cash flows, assumed discount rates and other assumptions as deemed appropriate. The Company also considers such factors as historical performance, anticipated market conditions, operating expense trends and capital expenditure requirements.

The Company’s ~~evaluates~~identifiable ~~goodwill and indefinite-lived~~ intangible assets ~~for~~other ~~impairment~~than ~~annually,~~goodwill orand ~~when~~trade ~~events~~names ~~occur~~and ortrademarks ~~circumstances~~have ~~change~~finite ~~that may reduce the fair value of the asset below its carrying amount~~lives. ~~The~~Certain ~~Company has elected to perform the annual impairment test~~ of ~~its~~these ~~goodwill and indefinite-lived~~ intangible assets, asare ~~required,~~amortized onusing ~~December 31~~an ofaccelerated ~~each~~methodology, ~~year~~while ~~by initially comparing~~ the ~~fair~~majority ~~value~~are ofamortized ~~each~~on ofa ~~the~~straight-line ~~Company’s~~basis ~~reporting~~over ~~units to~~ their ~~related~~estimated ~~carrying~~useful ~~values~~lives. IfIn ~~the fair value of the reporting unit is less than its carrying value~~addition, ~~the~~intangible Company performs an additional step to determine the implied fair value of the goodwill. The implied fair value of goodwill is determined by first allocating the fair value of the reporting unit to all of the assets ~~and~~with ~~liabilities~~finite oflives ~~the~~are ~~unit~~evaluated ~~and~~for ~~then~~impairment ~~computing~~whenever ~~the~~events ~~excess~~or ofcircumstances ~~the~~indicate ~~unit’s~~that ~~fair~~their ~~value over the amounts assigned to the assets and liabilities. If the~~ carrying ~~value~~amount ofmay ~~goodwill~~not ~~exceeds~~be ~~the implied fair value of goodwill~~recoverable, ~~such~~as ~~excess~~prescribed ~~represents~~by ~~the~~guidance ~~amount~~within ofASC ~~goodwill~~360 ~~impairment~~“Property, and the Company recognizes such impairment accordingly. Fair values are estimated using discounted cash flows and other valuation methodologies that are based on projections of the amounts and timing of future revenues and cash flowsPlant, ~~assumed discount rates~~ and ~~other~~ Equipment.”

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assumptions as deemed appropriate. The Company also considers such factors as historical performance, anticipated market conditions, operating expense trends and capital expenditure requirements.

Long-Lived Assets

The Company evaluates long-lived assets under the provisions of ASC 360 “Property, Plant, and Equipment” which addresses financial accounting and reporting for the impairment of long-lived assets and for long-lived assets to be disposed of. For assets to be held and used, the Company groups a long-lived asset or assets with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. An impairment loss for an asset group reduces only the carrying amounts of a long-lived asset or assets of the group being evaluated. The loss is allocated to the long-lived assets of the group on a pro-rata basis using the relative carrying amounts of those assets, except that the loss allocated to an individual long-lived asset of the group does not reduce the carrying amount of that asset below its fair value whenever that fair value is determinable without undue cost and effort. Estimates of future cash flows to test the recoverability of a long-lived asset group include only the future cash flows that are directly associated with and that are expected to arise as a direct result of the use and eventual disposition of the asset group. The future cash flow estimates used by the Company exclude interest charges.

Fair Value

Fair value 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. The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 — Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3 — Unobservable inputs that reflect the reporting entity’s own assumptions.

The Company’s financial instruments, excluding derivative instruments, consist primarily of cash and cash equivalents, short and long-term debt as well as accounts receivable and accounts payable. The fair value of accounts receivable and accounts payable approximates their carrying value because of the short-term maturity of the instruments.

Derivative Instruments

The Company applies ASC 815 “Derivatives and Hedging” which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities. Derivative financial instruments are utilized by the Company to manage risk exposure to movements in foreign exchange rates, interest rates or the prices of natural gas. The Company enters into derivative financial instruments with high credit quality counterparties and diversifies its positions among such counterparties. In addition, various master netting arrangements are in place with counterparties to facilitate settlement of gains and losses on these contracts. The Company does not net its derivative positions by counterparty for purposes of balance sheet presentation and disclosure. Changes in the value of the derivative financial instruments are measured at the balance sheet date and recognized in current earnings or other comprehensive income depending on whether the derivative is designated as part of a hedge transaction and meets certain other criteria. The Company does not hold derivative financial instruments for trading purposes.

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Company does not net its derivative positions by counterparty for purposes of balance sheet presentation and disclosure. Changes in the value of the derivative financial instruments are measured at the balance sheet date and recognized in current earnings or other comprehensive income depending on whether the derivative is designated as part of a hedge transaction and meets certain other criteria. The Company does not hold derivative financial instruments for trading purposes.

Pensions

The Company accounts for its pensions in accordance with ASC 715 “Compensation – Retirement Benefits.” Accounting for pensions involves estimating the cost of benefits to be provided well into the future and attributing that cost over the time period each employee works. To accomplish this, extensive use is made of assumptions about inflation, investment returns, mortality, turnover and discount rates. These assumptions are reviewed annually. In determining the expected return on plan assets, the Company evaluates long-term actual return information, the mix of investments that comprise plan assets and future estimates of long-term investment returns. The Company uses country specific mortality tables and updates them periodically as better information becomes available. In determining the discount rates for pension obligations, the Company evaluates long-term corporate bonds that receive one of the two highest ratings given by a recognized rating agency.

Stock-Based Compensation

The Company applies ASC 718 “Compensation — Stock Compensation.” In ~~accordance~~and ~~with~~accordingly ~~guidance~~records ~~within ASC 718,~~ compensation expense for stock options ~~is recorded~~ over the vesting period using the fair value on the date of grant, as calculated by the Company using the Black-Scholes model. For time vested restricted stock awards, the nonvested restricted stock grant date fair value, which is the market price of the underlying common stock, is expensed over the vesting period. For certain performance based stock awards, ~~the initial grant date fair value of the performance stock awards~~ that vest subject to a market condition, the initial grant date fair value is determined using a Monte Carlo simulation model and is expensed on a straight-line basis over the performance period. For certain performance based stock awards that vest subject to a performance condition, the initial grant date fair value is the market price of the underlying common stock. This fair value is expensed on a straight-line basis over the performance period when it is probable that the performance condition will be achieved. The Company’s stock-based compensation plans are more fully described in Note 10.

Net Income per Common Share

Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per common share is computed by dividing net income by the weighted average number of common shares outstanding plus all ~~potential~~potentially dilutive common shares outstanding during the period. ~~Potential~~Potentially dilutive common shares are determined using the treasury stock method. Under the treasury stock method, ~~exercise~~the ofCompany’s ~~options~~stock-based iscompensation ~~assumed~~awards atare ~~the~~treated ~~beginning~~as ofif ~~the~~they ~~period~~had ~~when~~been exercised, with any proceeds used to repurchase common stock at the average ~~stock~~market price during the period. Any ~~exceeds~~incremental difference between the ~~exercise~~assumed ~~price~~number of ~~outstanding~~shares ~~options~~issued and ~~common~~purchased ~~shares~~is ~~are~~included ~~assumed~~in ~~issued~~the diluted share computation. ~~The~~For ~~proceeds~~the ~~from~~Company’s ~~exercise~~performance ~~are~~based ~~assumed~~stock toawards, betheir ~~used~~contingent tofeatures ~~purchase~~result ~~common~~in ~~stock~~an atassessment ~~the~~for ~~average~~any ~~market~~potentially ~~price~~dilutive ~~during~~common stock by using the ~~period. The~~end ~~incremental~~of ~~shares~~the toreporting beperiod ~~issued~~as ~~are~~if ~~considered~~it towere bethe end of the ~~potential~~contingency ~~dilutive~~period ~~common~~for ~~shares~~all ~~outstanding~~awards granted.

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Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the book and tax basis of assets and liabilities based upon enacted tax rates. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized. The Company assesses its ability to realize deferred tax assets based on normalized historical performance and on projections of future taxable income in the relevant tax jurisdictions. Normalized historical performance for purposes of this assessment includes adjustments for those income and expense items that are unusual and non-recurring in nature and are not expected to affect results in future periods. Such unusual and non-recurring items include the effects of legal fees or settlements associated with specific litigation matters, acquisition and restructuring costs. The Company’s projections of future taxable income considers known events, such as the passage of legislation or expected occurrences, and do not reflect a general growth assumption. The Company’s estimates of future taxable income are reviewed annually or whenever events or changes in circumstances indicate that such projections should be modified.

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realize deferred tax assets based on normalized historical performance and on projections of future taxable income in the relevant tax jurisdictions. Normalized historical performance for purposes of this assessment includes adjustments for those income and expense items that are unusual and non-recurring in nature and are not expected to affect results in future periods. Such unusual and non-recurring items include the effects of legal fees or settlements associated with specific litigation matters, acquisition and restructuring costs. The Company’s projections of future taxable income consider known events, such as the passage of legislation or expected occurrences, and do not reflect a general growth assumption. The Company’s estimates of future taxable income are reviewed annually or whenever events or changes in circumstances indicate that such projections should be modified.

The Company utilizes guidance within ASC 740 “Income Taxes” regarding the accounting for uncertainty in income taxes. This guidance prescribes recognition and measurement standards for a tax position taken or expected to be taken in a tax return. According to this guidance, the evaluation of a tax position is a two step process. The first step is the determination of whether a tax position should be recognized in the financial statements. The benefit of a tax position taken or expected to be taken in a tax return is to be recognized only if the Company determines that it is more likely than not that the tax position will be sustained upon examination by the tax authorities based upon the technical merits of the position. In step two, for those tax positions which should be recognized, the measurement of a tax position is determined as being the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement.

NoExcept for the estimated U.S. transition tax, no provision is made for U.S. income taxes on the undistributed earnings of non-U.S. subsidiaries because these earnings are intended to be indefinitely reinvested outside the U.S. These earnings would become subject to additional income tax if they were remitted as dividends, were loaned to the Company or a U.S. affiliate, or if the Company were to sell its ownership interest in the subsidiaries. Refer to Note 14 for additional information on the estimated U.S. transition tax.

In November 2015, the FASB issued Accounting Standards Update (ASU) 2015-17, “Balance Sheet Classification of Deferred Taxes” which requires that all deferred tax assets (DTAs) and deferred tax liabilities (DTLs), along with any related valuation allowance, be classified as noncurrent in a classified balance sheet. Netting of DTAs and DTLs by tax jurisdiction is still required under the new guidance. The Company adopted ASU 2015-17 effective December 31, 2016 on a prospective basis. Adoption of this ASU resulted in an initial reclassification of $18.1 million of the Company’s net current deferred income tax asset to the long-term deferred income tax asset in its consolidated balance sheet as of December 31, 2016. Due to required netting by tax jurisdiction, a large portion of this amount was netted against the long-term deferred income tax liability. No prior periods were retrospectively adjusted.

Leases

The Company leases certain facilities, equipment and vehicles. Certain of the Company’s leases contain renewal options, rent escalation clauses and landlord incentives. Renewal terms generally reflect market rates at the time of renewal. Rent expense for noncancelable operating leases with scheduled rent increases or landlord incentives is recognized on a straight-line basis over the lease term, including any applicable rent holidays, beginning with the lease commencement date. The excess of straight-line rent expense over scheduled payment amounts and landlord incentives is recorded as a deferred liability.

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Contingencies

The Company from time to time is subject to various legal proceedings, lawsuits and claims, including employment, product warranty and environmental matters of the nature considered normal to its business. It is the Company’s policy to accrue for amounts related to legal matters when it is probable that a liability has been incurred and the loss amount is reasonably estimable. Estimates are developed through consultation with legal counsel involved in the defense and are based upon an analysis of probable results, assuming a combination of litigation and settlement strategies. Legal fees associated with defending these various lawsuits and claims are expensed when incurred.

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Government Grants

The Company’s policy for accounting for government grants, including non-monetary grants at fair value, is to recognize them only when there is reasonable assurance that (a) the Company will comply with the conditions attached to the grants and (b) the grants will be received. A grant will be recognized over the period necessary to match it to the related costs, for which it is intended to compensate, on a systematic basis. A grant related to assets is presented by deducting it from the asset’s ~~carrying~~depreciation ~~amount~~expense and is reported within cash flows from investing activities. A grant related to income will be deducted from the related expense and reported within cash flows from operating activities.

Labor Agreements

Collective bargaining agreements cover approximately 4648% of the Company’s full-time labor force as of December 31, ~~2016~~2017 ~~that~~and expire at various dates through ~~2019~~2021. Approximately 63% of the Company’s labor force is operating under ~~contracts~~a contract that expired on December 31, ~~2016~~2017, which ~~are~~is in the process of being renegotiated. The Company has certain contracts with national labor organizations in the U.S. and Europe that expire in July and December 2018, respectively, affecting 4% and 25% of the Company’s labor force, respectively.

New Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update (ASU) 2014-09, “Revenue (Topic 606): Revenue from Contracts with Customers”, as amended, which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of ASU 2014-09 is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services by applying five steps listed in the guidance. ASU 2014-09 also requires disclosure of both quantitative and qualitative information that enables users of the financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from customers. InThe August 2015, the FASB issued ASU 2015-14, which defers the effective date of ASU 2014-09 by one year. In March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)” which amends the principal-versus agent implementation guidance and illustrations in FASB’s new revenue standard ~~ASU 2014-09. The new guidance includes indicators to assist an entity in determining whether it controls a specified good or service before it~~ is transferred to the customers. In April 2016, the FASB issued ASU 2016-10, “Identifying Performance Obligations and Licensing” which amends certain aspects of the guidance in ASU 2014-09. For identifying performance obligations, the amendments include: immaterial promised goods and services, shipping and handling activities, and identifying when promises represent performance obligations. In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients.” This clarifies the collectability assessment, sales tax presentation and the treatment of contract modifications and completed contracts at transition. In May 2016, the FASB issued ASU 2016-11, “Rescission of SEC Guidance Because of Accounting Standards Update 2014-09” which rescinds certain SEC guidance upon adoption including those related to freight services in process and shipping and handling fees. All of the new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company is currently determining the potential impacts of the new standard on its contract portfolio. The approach includes performing a detailed review of key contracts representative of its different businesses and comparing historical accounting policies and practices to the new standard. The Company will continue to evaluate the provisions of this ASU to assess the

57The Company will adopt the new revenue standard effective January 1, 2018 using the modified retrospective method. The Company will recognize the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings, for those contracts not completed as of the adoption date, however this effect is not expected to be material. While certain assets and liabilities will also change upon adoption of this standard, the changes are again not expected to be material. There will be no restatement of comparative prior year information, as those periods will continue to be reported under the accounting standards in effect for those periods.

Prospectively, the Company does not expect that the adoption of the new revenue standard will have a material impact to the Company’s net income on an ongoing basis. For the majority of the Company’s revenue which consists of product sales, the Company does not anticipate a material change to result from the adoption of the new standard, as the revenue recognition will continue to be at a point in time. Approximately 6% of the Company’s consolidated net sales for the year ended December 31, 2017 were recognized on a percentage of completion basis. For some of these contracts, the new guidance will instead require revenue to be recognized at a point in time due to the nature of the product, which in some cases has an alternative use to the Company. In 2017, these sales are reported in both the Activated Carbon and Advanced Water Purification reportable segments.

In July 2015, the FASB issued Accounting Standards Update 2015-11, “Simplifying the Measurement of Inventory” which requires entities to measure most inventory at the lower of cost and net realizable value. This simplifies the current guidance under which an entity measures inventory at the lower of cost or market. Market in this context is defined as one of three different measures, one of which is net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and

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~~impact it may have on its consolidated financial statements and related disclosures~~transportation. The Company isadopted ~~planning~~this ~~to adopt the provisions of the~~ ASU ~~and~~on ~~its~~a ~~subsequent~~prospective ~~amendments~~basis ~~using~~as ~~the~~of ~~modified~~January ~~retrospective~~1, ~~transition~~2017 ~~method~~and ~~for~~it ~~existing~~did ~~transactions~~not ~~that~~have ~~may result in~~ a ~~cumulative~~material ~~effect~~impact ~~adjustment~~on asthe ofCompany’s ~~January~~consolidated 1,financial ~~2018~~statements.

In ~~July~~February ~~2015~~2016, the FASB issued ASU ~~2015~~2016-1102, “~~Simplifying~~Leases ~~the~~(Topic ~~Measurement of Inventory~~842)” which ~~requires~~introduces ~~entities~~a tolessee ~~measure~~model that brings most ~~inventory~~leases aton the ~~lower~~balance ofsheet, ~~cost~~requiring ~~and~~lessees ~~net~~to ~~realizable~~recognize ~~value. This~~the ~~simplifies~~right ~~the~~to ~~current~~use ~~guidance~~assets ~~under~~and ~~which~~lease anobligations ~~entity~~that ~~measures~~arise ~~inventory~~from atlease ~~the~~arrangements ~~lower~~exceeding ofa ~~cost~~twelve ormonth ~~market~~term. ~~Market~~Lessees inwill ~~this~~also ~~context~~need isto ~~defined~~disclose asqualitative ~~one~~and ofquantitative ~~three~~information ~~different~~about ~~measures~~lease transactions, ~~one~~such ofas ~~which~~information isabout ~~net~~variable ~~realizable~~lease ~~value~~payments and options to renew and terminate leases. ~~Net~~For ~~realizable~~income ~~value~~statement ispurposes, the ~~estimated~~FASB ~~selling~~retained ~~prices~~a indual ~~the~~model, ~~ordinary~~requiring ~~course~~leases ofto ~~business,~~be ~~less~~classified ~~reasonably~~as ~~predictable~~either ~~costs~~operating ofor ~~completion,~~finance. Classification ~~disposal~~will be based on criteria that are largely similar to those applied in current lease accounting, ~~and~~but ~~transportation~~without explicit bright lines. ~~The~~Lessor ~~new~~accounting ~~guidance~~is ~~will~~similar beto ~~applied~~the ~~prospectively~~current model, but updated to align with certain changes to the lessee model and the new revenue recognition standard. The new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, ~~2016~~2018. Entities are required to use a modified retrospective transition for existing leases. The ~~adoption~~Company is evaluating the provisions of this ASU isand ~~not~~assessing ~~expected~~the toimpact ~~have~~it amay ~~material~~have ~~impact~~ on the Company’s consolidated financial statements and related disclosures. At a minimum, total assets and total liabilities will increase in the period the ASU is adopted. As of December 31, 2017, the Company’s undiscounted future minimum payments outstanding for lease obligations were approximately $41 million.

In ~~February~~March 2016, the FASB issued ASU 2016-0209, “~~Leases~~Compensation ~~(Topic~~– ~~842)”~~Stock ~~which~~Compensation ~~introduces~~(Topic a lessee model that brings most leases on the balance sheet, requiring lessees to recognize the right to use assets and lease obligations that arise from lease arrangements exceeding a twelve month term.718): ~~Lessees~~Improvements ~~will also need~~ to ~~disclose~~Employee ~~qualitative~~Share-Based ~~and~~Payment ~~quantitative~~Accounting” ~~information~~which ~~about~~simplifies ~~lease~~several ~~transactions,~~aspects ~~such~~of ~~as information about variable lease payments and options to renew and terminate leases. For income statement purposes,~~ the ~~FASB~~accounting ~~retained~~for aemployee ~~dual model, requiring leases to be classified as either operating or finance. Classification will be~~ share-based onpayment ~~criteria that are largely similar to those applied in current lease accounting~~transactions, ~~but~~including ~~without~~the ~~explicit bright lines. Lessor~~ accounting isfor ~~similar~~income ~~to the current model~~taxes, ~~but updated to align with certain changes to the lessee model and the new revenue recognition standard. The new guidance is effective for fiscal years~~forfeitures, and ~~interim~~statutory ~~periods~~tax ~~within~~withholding ~~those years~~requirements, ~~beginning~~as ~~after~~well ~~December~~as ~~15,~~classification ~~2018. Entities~~in ~~are~~the ~~required~~statement toof ~~use~~cash ~~a modified retrospective transition for existing leases~~flows. The Company isadopted ~~evaluating~~ the provisions of this ASU ~~and~~effective ~~assessing~~January ~~the impact it may have on the Company’s consolidated financial statements and related disclosures. At a minimum~~1, ~~total~~2017 ~~assets~~ and ~~total~~it ~~liabilities~~did ~~will~~not ~~increase~~have ina ~~the~~material ~~period~~impact ~~the~~on ~~ASU is adopted. As of December 31, 2016,~~ the Company’s ~~undiscounted~~consolidated ~~future~~financial ~~minimum payments outstanding for lease obligations were approximately $41 million~~statements.

In March 2016, the FASB issued ASU 2016-09, “Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” which simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The new guidance is effective for annual reporting periods beginning after December 15, 2016, including interim periods within those annual reporting periods. The Company is planning to adopt the provisions of this ASU using the modified retrospective transition method for existing share-based payment transactions, effective January 1, 2017. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” which adds a Current Expected Credit Loss (CECL) model that is based on expected losses rather than incurred losses, which is applicable to trade receivables. The new guidance is effective for annual reporting periods beginning after December 15, 2019, including interim periods within those annual reporting periods. Entities are required to use the modified retrospective approach. The Company is evaluating the provisions of this ASU and assessing the impact it may have on the Company’s consolidated financial statements and related disclosures.

In August and November 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” and ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash” to add or clarify guidance on the classification of certain cash receipts and payments and restricted cash in the statement of cash flows. ~~The new guidance is effective for annual reporting period beginning after December 15, 2017, including interim periods within those annual reporting periods.~~ Entities must apply the guidance retrospectively to all periods presented, but may apply it prospectively from the earliest date practicable if retrospective application would be impracticable. The Company is planning to adopt the provisions of this ASU, effective January 1, 2018. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements.

58In March 2017, the FASB issued ASU 2017-07, “Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” which requires that employers disclose components of their pension service cost in the same line item as other compensation costs related to relevant employees. The ASU also requires that other components of net benefit costs be presented separately from the service cost component within the income statement, and outside of income from operations. The provisions of this ASU are effective for annual reporting periods beginning after December 15, 2017, and interim periods within those annual reporting periods. The Company will retrospectively adopt this ASU as of January 1, 2018 as required, which will result in a reclassification of $2.6 million and $3.0 million for the years ended December 31, 2017 and 2016, respectively, for the components of net periodic pension cost other than service cost outside of income from operations on the Company’s consolidated financial statements.

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impracticable. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements.

2. Inventories

	December 31
	2016		2015
	2017		2016
Raw materials	$	2429,~~831~~940	$	2324,~~327~~831
Finished goods		~~100~~91,~~284~~707		87100,~~037~~284
Total	$	~~125~~121,~~115~~647	$	~~110~~125,~~364~~115

Inventories are recorded net of reserves of $2.68 million and $2.46 million for obsolete and slow-moving items as of December 31, ~~2016~~2017 and ~~2015~~2016, respectively.

3. Property, Plant and Equipment

	December 31
	2016		2015
	2017		2016
Land and improvements	$	3739,~~479~~679	$	3237,~~522~~479
Mineral rights		11,~~240~~424		—11,240
Buildings		9096,~~385~~694		6790,~~841~~385
Machinery, equipment and customer capital		~~494~~524,~~722~~162		~~458~~494,~~975~~722
Computer hardware and software		4345,~~631~~499		4143,~~850~~631
Furniture and vehicles		1012,~~893~~189		10,~~534~~893
Construction-in-progress		3061,~~525~~459		3230,~~141~~525
		718,875		643,863
		791,106		718,875
Less accumulated depreciation		(~~352~~391,~~433~~596)		(~~332~~352,~~844~~433)
Property, plant and equipment, net	$	~~366~~399,~~442~~510	$	~~311~~366,~~019~~442

Depreciation expense for the years ended December 31, ~~2016~~2017, ~~2015~~2016, and ~~2014~~2015 totaled $3644.34 million, $3336.73 million, and $2833.27 million, respectively.

~~The~~In ~~Company's~~2017, ~~AROs related to~~ the ~~acquisition~~Company ofsold ~~the~~an ~~New~~idled ~~Business~~plant ~~are~~in ~~for legal obligations associated with~~ the ~~normal~~United ~~operations~~Kingdom of(UK) ~~the~~and ~~diatomite~~recorded ~~mining~~a ~~facilities~~$4.1 upmillion togain ~~the~~in ~~end~~earnings, ofwithin ~~the~~other ~~quarries’~~operating ~~exploration~~income. ~~These~~Proceeds ~~AROs~~from ~~consist~~the ~~primarily~~sale of ~~costs~~assets ~~associated with mine reclamation and landfill closures related to the mineral rights. As~~ of ~~December 31, 2016, the~~ $14.87 million ~~liability~~ was ~~recorded~~reflected ason athe ~~component~~consolidated statements of ~~accrued~~cash ~~pension and other liabilities~~flows.

The Company's AROs are for legal obligations associated with the normal operations of the diatomite mining facilities up to the end of the quarries’ exploration. These AROs consist primarily of costs associated with mine reclamation and landfill closures related to the mineral rights. As of December 31, 2017 and 2016, the $2.8 million and $1.8 million liabilities were recorded as components of accrued pension and other liabilities.

4. Goodwill and Other Identifiable Intangible Assets

The Company has elected to perform the annual impairment test of its goodwill and indefinite-lived intangible assets, as required, on December 31 of each year. For purposes of the test, the Company ~~had~~has ~~historically~~ identified ~~six~~five reporting units as defined within ASC 350 “Intangibles – Goodwill and Other” ~~at a regional level for the Activated Carbon~~ and ~~Service segment and at the technology level for the Equipment segment and~~ has allocated goodwill to these reporting units accordingly. These reporting units ~~consist~~include of(a) ~~the~~ Activated Carbon ~~and Service~~ segment ~~which is segregated into two regional reporting units~~, the ~~Americas/Asia~~Advanced ~~and~~Water ~~Europe,~~Purification ~~the Equipment~~ segment which isincludes ~~segregated by technology~~ (~~a) carbon adsorption, (~~b) ultraviolet light, and (c) ion exchange separation technologies, and the ~~Consumer~~Alternative Materials segment which includes the ~~charcoal~~(d) ~~cloth~~filtration ~~reporting~~media ~~unit. The goodwill associated with the Consumer segment is not material~~ and ~~has~~(e) ~~not~~cloth ~~been~~reporting ~~allocated below the segment level~~units.

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~~The~~Goodwill ~~goodwill~~and ~~associated with~~ the ~~acquisition of the New Business is reported as Other and has not been allocated below this level as of December 31, 2016. Refer to Notes 18 and 20 for further information. The~~ changes in the carrying amount of goodwill by segment for the years ended December 31, ~~2016~~2017 and ~~2015~~2016 are as follows:

	Activated		Alternative		Advanced
	Carbon and		Equipment		Consumer		Other
	Carbon		Materials		Water Purification
	Service Segment		Segment		Segment		Segment		Total
	Segment		Segment		Segment		Total
Balance as of January 1, 2015	$	19,753	$	6,384	$	60	$	—	$	26,197
Balance as of January 1, 2016	$	19,604	$	60	$	6,113	$	25,777
Foreign currency translation		(149)		(271)		—		—		(420)
Goodwill acquired (Note 20)		26,415		16,429		—		42,844
Balance as of December 31, 2015		19,604		6,113		60		—		25,777
Foreign currency translation		(1,673)		(679)		47		(2,305)
Acquisition		—		—		—		42,844		42,844
Balance as of December 31, 2016		44,346		15,810		6,160		66,316
Foreign currency translation		(551)		47		—		(1,801)		(2,305)
Measurement period adjustments		2,788		2,085		—		4,873
Balance as of December 31, 2016	$	19,053	$	6,160	$	60	$	41,043	$	66,316
Foreign currency translation		4,054		2,427		103		6,584
Balance as of December 31, 2017	$	51,188	$	20,322	$	6,263	$	77,773

The following is a summary of the Company’s identifiable intangible assets as of December 31, ~~2016~~2017 and ~~2015~~2016, respectively:

December 31, 2016

December 31, 2017

Weighted

Average

Gross

Net

Amortization

Carrying

Foreign

Accumulated

Carrying

Period

Amount

Exchange

Amortization

Amount

Amortized intangible assets:

Customer relationships

18.9

Years

25,~~035~~584

~~(873)~~1,250

(89,~~900~~859)

1516,~~262~~975

Product certification

78.4

Years

8,~~649~~453

(9089)

(4,~~320~~427)

43,~~239~~937

Unpatented technology

20.0

Years

14,174

~~(586)~~1,273

(~~114~~839)

1314,~~474~~608

Licenses

20.0

Years

964

(9981)

(~~354~~394)

~~511~~489

17.3

Years

48,822

(1,648)

(13,688)

33,486

17.9

Years

49,175

2,353

(15,519)

36,009

Indefinite lived intangible assets:

Indefinite-lived intangible assets:

Trade names and trademarks

7,362

~~(305)~~695

—

78,057

Total

56,~~184~~537

(13,~~953)~~048

(1315,~~688~~519)

4044,~~543~~066

	December 31, 2015
	December 31, 2016
	Weighted
	Average		Gross						Net
	Amortization		Carrying		Foreign		Accumulated		Carrying
	Period		Amount		Exchange		Amortization		Amount
Amortized intangible assets:
Patents	20.0	Years	$	676	$	—	$	(656)	$	20
Customer relationships	18.9	Years	$	25,035	$	(873)	$	(8,900)	$	15,262
Customer relationships	15.9	Years		10,450		(303)		(9,526)		621
Product certification	7.4	Years		8,649		(90)		(4,320)		4,239
Product certification	7.2	Years		10,954		(95)		(6,259)		4,600
Unpatented technology	20.0	Years		14,174		(586)		(114)		13,474
Unpatented technology	20.0	Years		3,183		—		(2,996)		187
Licenses	20.0	Years		964		(99)		(354)		511
Licenses	20.0	Years		964		(119)		(312)		533
	17.3	Years		48,822		(1,648)		(13,688)		33,486
Total	13.8	Years	$	26,227	$	(517)	$	(19,749)	$	5,961
Indefinite-lived intangible assets:
Trade names and trademarks				7,362		(305)		—		7,057
Total			$	56,184	$	(1,953)	$	(13,688)	$	40,543

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For the years ended December 31, ~~2016~~2017, ~~2015~~2016 and ~~2014~~2015, the Company recognized $12.83 million, $1.78 million, and $21.27 million, respectively, of amortization expense related to intangible assets. The Company estimates amortization expense to be recognized during the next five years as follows:

For the year ending December 31:
2017	$	2,243
2018	$	2,230
2018		2,250
2019		2,477
2019		2,041
2020		2,389
2020		1,953
2021		2,344
2021		1,910
2022		2,333

5. Fair Value Measurements

The following financial instrument assets (liabilities) are presented below at carrying amount, fair value, and classification within the fair value hierarchy (refer to Notes 6 and 8 for details relating to derivative instruments and borrowing arrangements). The only financial instruments measured at fair value on a recurring basis are derivative instruments and the acquisition earn-out liability:

	Fair Value	December 31, ~~2016~~2017				December 31, ~~2015~~2016
	Hierarchy	Carrying		Fair		Carrying		Fair
	Level	Amount		Value		Amount		Value
Cash and cash equivalents	1	$	37,984	$	37,984	$	53,629	$	53,629
Derivative assets	2	$	560	$	560	$	1,168	$	1,168
Derivative assets	2		1,168		1,168		468		468
Derivative liabilities	2		(1,095)		(1,095)		(1,452)		(1,452)
Derivative liabilities	2		(1,452)		(1,452)		(783)		(783)
Acquisition earn-out liability	2		—		—		(125)		(125)
Acquisition earn-out liability	2		(125)		(125)		(163)		(163)
Long-term debt, including current portion	2		(233,500)		(233,500)		(225,000)		(225,000)
Long-term debt, including current portion	2		(225,000)		(225,000)		(111,441)		(111,441)

~~Accounts~~Cash, accounts receivable and accounts payable included in the consolidated balance sheets approximate fair value and are excluded from the table above. The fair value of ~~cash and cash equivalents are based on quoted prices. The fair value of~~ derivative assets and liabilities are measured based on inputs from market sources that aggregate data based upon market transactions. Fair value for the acquisition earn-out liability is based upon Level 2 inputs which are periodically re-evaluated for changes in future projections and the discount rate. This liability is recorded in accrued pension and other liabilities within the Company’s consolidated balance sheets. The Company’s debt bears interest based on market rates and, accordingly, the carrying value of this obligation approximates fair value.

6. Derivative Instruments

The Company uses foreign currency forward exchange contracts and foreign exchange option contracts to limit the exposure of exchange rate fluctuations on certain foreign currency receivables, payables, and other known and forecasted transactional exposures for periods consistent with the expected cash flow of the underlying transactions. Management’s policy for managing ~~foreign currency~~ risk is to use derivatives to hedge up to 75% of the value of the forecasted exposure. The foreign currency forward exchange ~~and foreign exchange option~~ contracts generally mature within eighteen months, ~~and~~while ~~are~~the ~~designed~~natural togas ~~limit~~contracts ~~exposure~~generally tomature ~~exchange~~within ~~rate~~twenty-four ~~fluctuations~~months.

~~The~~In ~~Company~~May ~~also~~2017, ~~uses natural gas forward contracts to limit~~ the ~~exposure~~Company toentered ~~changes~~into ina ~~natural gas prices~~$50. ~~Management’s~~0 ~~policy~~million ~~for~~interest ~~managing~~rate ~~natural~~swap ~~gas~~contract ~~exposure~~(the isSwap) towith ~~use~~a ~~derivatives~~2023 totermination ~~hedge~~date, up to ~~75%~~manage ofits ~~the~~exposure ~~forecasted~~to ~~natural~~its ~~gas~~variable ~~requirements~~rate ~~that are not fixed. The natural gas forward contracts generally mature within twenty~~LIBOR-~~four~~based ~~months~~borrowings.

61The Company accounts for its derivative instruments under ASC 815 “Derivatives and Hedging.” Hedge effectiveness is measured on a quarterly basis and any portion of ineffectiveness as well as hedge components excluded from the assessment of effectiveness are recorded directly to current earnings, in other income (expense) — net.

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The Company accounts for its derivative instruments under ASC 815 “Derivatives and Hedging.” Hedge effectiveness is measured on a quarterly basis and any portion of ineffectiveness as well as hedge components excluded from the assessment of effectiveness are recorded directly to current earnings, in other expense – net.

The fair value of outstanding derivative contracts in the consolidated balance sheets was as follows:

		December 31
Asset Derivatives	Balance Sheet Locations	~~2016~~2017		~~2015~~2016
Derivatives designated as hedging instruments:
Foreign exchange contracts	Other current assets	$	~~670~~129	$	~~411~~670
Natural gas contracts	Other current assets		~~255~~—		—255
Foreign exchange contracts	Other assets		~~179~~—		6179
Natural gas contracts	Other assets		431		—43
Interest rate swap contract	Other assets		121		—
Derivatives not designated as hedging instruments:
Foreign exchange contracts	Other current assets		21309		5121
Total asset derivatives		$	~~1,168~~560	$	~~468~~1,168

		December 31
Liability Derivatives	Balance Sheet Locations	~~2016~~2017		~~2015~~2016
Derivatives designated as hedging instruments:
Foreign exchange contracts	Accounts payable and accrued liabilities	$	30639	$	1330
Natural gas contracts	Accounts payable and accrued liabilities		—143		~~586~~—
Foreign exchange contracts	Accrued pension and other liabilities		152		31
Natural gas contracts	Accrued pension and other liabilities		—50		89—
Derivatives not designated as hedging instruments:
Foreign exchange contracts	Accounts payable and accrued liabilities		~~1,421~~211		921,421
Total liability derivatives		$	1,~~452~~095	$	~~783~~1,452

The Company had the following outstanding derivative contracts that were entered into to hedge forecasted transactions:

	December 31
(in thousands except for mmbtu)	2016		2015		2014
(in thousands except for millions of British Thermal Units (mmbtu))	2017		2016		2015
Natural gas contracts (mmbtu)		~~540~~1,105,000		~~955~~540,000		~~810~~955,000
Foreign exchange contracts	$	~~199~~75,~~420~~006	$	37199,~~016~~420	$	4137,~~237~~016
Interest rate swap contract	$	50,000	$	—	$	—

The Company’s hedging associated with foreign exchange contracts increased significantly as of December 31, 2016 as a result of an intercompany loan relating to the acquisition of the New Business. Related to these non-designated contracts, there was a net $4.4 million gain recognized for the year ended December 31, 2016, of which $5.7 million was realized. The net gain was offset by a foreign exchange unrealized transaction loss of $5.0 million. The amounts are recorded in earnings, in other expense – net.

The use of derivatives exposes the Company to the risk that a counterparty may default on a derivative contract. The Company enters into derivative financial instruments with high credit quality counterparties and diversifies its positions among such counterparties. The aggregate fair value of the Company’s derivative instruments in asset positions represents the maximum loss that the Company would recognize at that date if all counterparties failed to perform as contracted. The Company has entered into various master netting arrangements with counterparties to facilitate settlement of gains and losses on these contracts. These arrangements may allow for netting of exposures in the event of default or termination of the counterparty agreement due to breach of contract. The Company does not net its derivative positions by counterparty for purposes of balance sheet presentation and disclosure.

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represents the maximum loss that the Company would recognize at that date if all counterparties failed to perform as contracted. The Company has entered into various master netting arrangements with counterparties to facilitate settlement of gains and losses on these contracts. These arrangements may allow for netting of exposures in the event of default or termination of the counterparty agreement due to breach of contract. The Company does not net its derivative positions by counterparty for purposes of balance sheet presentation and disclosure.

	December 31, 2017				December 31, 2016
	Fair Value		Fair Value		Fair Value		Fair Value
	of Assets		of Liabilities		of Assets		of Liabilities
Gross derivative amounts recognized in the balance sheet	$	560	$	1,095	$	1,168	$	1,452
Gross derivative amounts not offset in the balance sheet that are eligible for offsetting		(341)		(341)		(52)		(52)
Net amount	$	219	$	754	$	1,116	$	1,400

	December 31, 2016				December 31, 2015
	Fair Value		Fair Value		Fair Value		Fair Value
	of Assets		of Liabilities		of Assets		of Liabilities
Gross derivative amounts recognized in the balance sheet	$	1,168	$	1,452	$	468	$	783
Gross derivative amounts not offset in the balance sheetthat are eligible for offsetting		(52)		(52)		(67)		(67)
Net amount	$	1,116	$	1,400	$	401	$	716

Derivatives in Cash Flow Hedging Relationships

For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income (loss) (OCI) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The location of the gain or (loss) reclassified into earnings (effective portion) for derivatives in cash flow hedging relationships is cost of products sold (excluding depreciation and amortization) except for the Swap, which is reclassified into earnings in interest expense.

	Amount of Gain or (Loss) Recognized
	in OCI on Derivatives (Effective Portion)
	Year Ended December 31
	2016		2015		2014
	2017		2016		2015
Foreign exchange contracts	$	~~399~~(1,421)	$	~~647~~399	$	~~2,095~~647
Natural gas contracts		~~835~~(467)		~~(984)~~835		(~~782~~984)
Total	$	1,234	$	(337)	$	1,313
Interest rate swap contract		(190)		—		—
Total	$	(2,078)	$	1,234	$	(337)

	Amount of Gain or (Loss) Recognized from
	Accumulated OCI into Earnings (Effective Portion) (1)
	Year Ended December 31
	2016		2015		2014
	2017		2016		2015
Foreign exchange contracts	$	~~206~~102	$	~~2,077~~206	$	~~484~~2,077
Natural gas contracts		~~(339)~~66		(~~941~~339)		~~221~~(941)
Total	$	(133)	$	1,136	$	705
Interest rate swap contract		(311)		—		—
Total	$	(143)	$	(133)	$	1,136

(1) Assuming market rates remain constant with the rates as of December 31, ~~2016~~2017, a ~~gain~~loss of $0.17 million is expected to be recognized in earnings over the next 12 months.

During the years ended December 31, ~~2016~~2017, ~~2015~~2016, and ~~2014~~2015, there was no gain or (loss) recognized in earnings on derivatives related to the ineffective portion and the amount excluded from effectiveness testing~~, which would have been recorded in other expense – net~~.

~~Derivatives Not Designated as Hedging Instruments~~59

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~~qualified~~ Derivatives ~~these~~Not ~~contracts~~Designated ~~for hedge accounting treatment and therefore, the fair value gains and losses on these contracts are recorded in earnings, in other expense – net~~ as ~~follows:~~Hedging Instruments

	Amount of Gain or (Loss) Recognized
	in Earnings on Derivatives
	Year Ended December 31
	2016		2015		2014
Foreign exchange contracts	$	4,425	$	(1,042)	$	(511)
Total	$	4,425	$	(1,042)	$	(511)

The Company has also entered into certain derivatives to minimize its exposure of exchange rate fluctuations on certain foreign currency receivables, payables, and other known and forecasted transactional exposures. The Company has not qualified these contracts for hedge accounting treatment and therefore, the fair value gains and losses on these contracts are recorded in earnings, in other income (expense) — net as follows:


	Amount of Gain or (Loss) Recognized
	in Earnings on Derivatives
	Year Ended December 31
	2017		2016		2015
Foreign exchange contracts	$	(9,096)	$	4,425	$	(1,042)
Total	$	(9,096)	$	4,425	$	(1,042)

For the years ended December 31, 2017 and 2016, non-designated contracts pertaining to an intercompany loan related to the acquisition of the New Business resulted in net losses of $9.6 million and a net gain of $4.4 million, respectively, which were offset by foreign exchange transaction gains of $10.3 million and losses of $5.0 million, respectively, both of which were recorded in earnings, within other income (expense) — net. The realized portion of this loss from the settlement of these contracts was reflected in other financing on the consolidated statements of cash flows.

7. Product Warranties

The Company establishes a warranty reserve for equipment project sales and estimates the warranty accrual based on the history of warranty claims to total sales, adjusted for significant known claims in excess of established reserves.

Warranty terms are based on the negotiated equipment project contract and typically are either 18 months from shipment date or 12 months from project startup date. The change in the warranty reserve, which is included in accounts payable and accrued liabilities in the consolidated balance sheets, is as follows:

	December 31
	2016		2015
	2017		2016
Balance as of January 1	$	1,~~252~~402	$	1,~~449~~252
Payments and replacement product		(~~1,495~~390)		(~~677~~1,495)
Additions to warranty reserve for warranties issued during the period		~~1,647~~618		~~485~~1,647
Change in the warranty reserve for pre-existing warranties		~~(2)~~6		(52)
Balance as of December 31	$	1,~~402~~636	$	1,~~252~~402

8. Borrowing Arrangements

	December 31
	2016		2015
	2017		2016
U.S. credit agreement borrowings	$	225,000	$	107,700
Total long-term debt	$	233,500	$	225,000
Japanese term loan borrowings		—		3,741
Less current portion of long-term debt		(5,000)		(5,000)
Total long-term debt	$	225,000	$	111,441
Net long-term debt	$	228,500	$	220,000
Less current portion of long-term debt		(5,000)		(7,500)
Net long-term debt	$	220,000	$	103,941

U.S. ~~Amended~~ Credit Agreement

On October 4, 2016, the Company entered into the First Amended and Restated Credit Agreement (~~Amended~~ Credit

Agreement) which ~~amended~~provides ~~the~~for ~~Company’s existing U.S. Credit Agreement (Credit Agreement) described below. The Amended Credit Agreement increases the Company’s~~ total borrowing capacity toof $400 million, comprised of a $300 million revolving credit facility (~~Amended~~ Revolver) that expires on October 4, 2021 and a $100 million term loan facility (Term Loan)~~. The~~ ~~Amended~~that ~~Credit~~expires ~~Agreement~~on ~~extends the term of the Amended Revolver to~~ October 4, ~~2021 and the maturity date of the Term Loan to October 4,~~ 2023.

The Amended Revolver contains a $75 million sublimit for the issuance of letters of credit, and a $15 million sublimit for swing loans. The Company also has the option to increase the Amended Revolver by a maximum of $100 million with the consent of the Lenders. Availability under the Amended Credit Agreement is conditioned upon various customary conditions. 60

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The Revolver contains a $75 million sublimit for the issuance of letters of credit, and a $15 million sublimit for swing loans. The Company has the option to increase the Revolver by a maximum of $100 million with the consent of the Lenders. Availability under the Credit Agreement was conditioned upon various customary conditions. Upon entering into the ~~Amended~~ Credit Agreement, the Company incurred issuance costs of $0.8 million of which approximately $0.1 million ~~were~~was expensed. ~~and~~The remainder of the ~~remainder~~issuance costs were deferred, and along with other previously deferred costs, are being amortized over the ~~term~~terms of the ~~Amended~~ Revolver and Term Loan facilities. A quarterly nonrefundable commitment fee is payable by the Company based on the unused availability under the ~~Amended~~ Revolver and was equal to 0.2325% as of December 31, ~~2016~~2017.

The interest rate on amounts owed under the ~~Amended~~ Revolver and Term Loan will be, at the Company’s option, either (i) a fluctuating Base Rate or (ii) an adjusted LIBOR rate, plus, in each case, an applicable margin based on the Company’s leverage ratio as set forth in the ~~Amended~~ Credit Agreement. The interest rate charged on amounts owed under swing loans will be either (i) a fluctuating Base Rate or (ii) such other interest rates as the lender and the Company may agree to from time to time. The interest rate per annum on outstanding borrowings ranged from 23.5137% to 23.62% as of December 31, ~~2016~~2017.

The Company borrowed the full $100 million under the Term Loan on October 4, 2016 ~~and repaid all amounts owed under the Credit Agreement~~. During the fourth quarter of 2016, the Company borrowed $160 million under the ~~Amended~~ Revolver to finance the acquisition of the New Business. ~~Beginning~~ Required ~~January~~quarterly 1,repayments ~~2017,~~under the ~~Company~~Term ~~will~~Loan bebegan ~~required~~January to1, ~~make~~2017, ~~quarterly~~and ~~repayments~~are ~~under the Term Loan~~ equal to 1.25% of the original outstanding balance of the Term Loan until January 1, 2019, at which time the quarterly repayments will increase to 2.0% until the remaining balance is due on the October 4, 2023 maturity date. As a result, $5.0 million is shown as the current portion of long-term debt within the consolidated balance ~~sheet~~sheets as of both December 31, 2017 and 2016.

Total outstanding borrowings under the Revolver as of December 31, 2017 and 2016 were $138.5 million and $125.0 million respectively. Total availability under the ~~Amended~~ Revolver as of December 31, 2017 and 2016 ~~were~~was $~~125~~159.02 million and $172.5 million, respectively, after considering borrowings and outstanding letters of credit of $2.3 million and $2.5 million as of December 31, 2017 and 2016, respectively. Total outstanding borrowings under the Term Loan were $~~100~~95.0 million and ~~there~~$100.0 ~~was~~million noas ~~remaining~~of ~~availability~~ as of December 31, 2017 and 2016, respectively. There is no remaining availability under the Term Loan. Borrowings and repayments are presented on a gross basis within the Company’s consolidated statement of cash flows.

The ~~Amended~~ Credit Agreement contains customary affirmative and negative covenants for credit facilities of this type. ~~The~~As of a result of an amendment signed in February 2017, the Company is permitted to pay annual dividends of up to $14 million, so long as the sum of availability under the ~~Amended~~ Credit Agreement and the amount of U.S. cash on hand is at least $50.0 million~~, and debt is less than or equal to 2~~.~~75x earnings before interest, taxes, depreciation and amortization.~~ In addition, the ~~Amended~~ Credit Agreement includes limitations on the Company and its subsidiaries with respect to indebtedness, additional liens, disposition of assets or subsidiaries, and transactions with affiliates. The Company must comply with certain financial covenants including a minimum interest coverage ratio and a maximum leverage ratio as defined within the Credit Agreement. The Company was in compliance with all such covenants as of December 31, ~~2016~~2017. The Credit Agreement also provides for customary events of default, including failure to pay principal or interest when due, breach of representations and warranties, certain insolvency or receivership events affecting the Company and its subsidiaries and a change in control of the Company. If an event of default occurs, the lenders would be under no further obligation to make loans or issue letters of credit. Upon the occurrence of certain events of default, all outstanding obligations of the Company automatically would become immediately due and payable, and other events of default would allow the agent to declare all or any portion of the outstanding obligations of the Company to be immediately due and payable.

In February 2017, an amendment was signed to the Amended Credit Agreement, which, among other things, removes the quarterly leverage ratio requirement for the Company to pay dividends to its stockholders and replaces it with an annual dividend dollar restriction of $14.0 million.61

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U.S. Credit Agreement

On November 6, 2013, the Company entered into the Credit Agreement which provided for a senior unsecured revolving credit facility (Revolver) in an amount up to $225.0 million. As a result of amendments, the expiration date of the Revolver was November 6, 2020. In April 2016, an amendment was signed to the Credit Agreement that increased the threshold for a “Permitted Acquisition.” Refer to Note 20 for further information. The Credit Agreement also provided for senior unsecured delayed draw term loans (Delayed Draw Term Loans) in an aggregate amount up to $75.0 million which were scheduled to expire on November 6, 2020. Beginning January 1, 2016, the Company began making quarterly repayments. As a result, as of December 31, 2015, $7.5 million was shown as current portion of long-term debt within the consolidated balance sheet.

Upon entering into the Credit Agreement, the Company incurred issuance costs of $0.8 million, which were deferred and were being amortized over the term of the Revolver and Delayed Draw Term Loan facilities. Upon termination of the Credit Agreement, approximately $0.2 million of these previously deferred issuance costs were written off, while the remainder continued to be deferred and amortized over the life of the Amended Revolver. A quarterly nonrefundable commitment fee was payable by the Company based on the unused availability under the Revolver and was equal to 0.15% as of December 31, 2015. The interest rate options under the Credit Agreement were the same as those under the Amended Credit Agreement described above. The interest rate per annum on outstanding borrowings ranged from 1.25% to 1.40% as of December 31, 2015.

Total outstanding borrowings and availability under the Revolver were $32.7 million and $189.9 million, respectively, as of December 31, 2015, after considering borrowings and outstanding letters of credit of $2.4 million. Total outstanding borrowings under the Delayed Draw Term Loans were $75.0 million as of December 31, 2015 and there was no remaining availability.

Certain domestic subsidiaries of the Company unconditionally guaranteed all indebtedness and obligations related to borrowings under the Credit Agreement. The Company’s obligations under the Credit Agreement were unsecured. The Credit Agreement contained customary affirmative and negative covenants for credit facilities of this type which were similar to the covenants currently in effect for the Amended Credit Agreement. The Company was in compliance with all such covenants as of December 31, 2015.

Japanese Credit Agreement

OnIn ~~March 24,~~ 2016, Calgon Carbon Japan (CCJ) entered into a 2.0 billion Japanese Yen unsecured revolving loan facility agreement (Japanese Credit Agreement) which ~~expires~~was scheduled to expire on March 24, 2019. The Japanese Credit Agreement replaced the Term Loan Agreement (Japanese Term Loan) and Working Capital Loan (Japanese Working Capital Loan) agreement that CCJ previously had in place which are described below. As of both December 31, 2017 and 2016, ~~CCJ~~there ~~had~~were no amounts outstanding under the Japanese Credit Agreement. ~~Any~~ Total ~~outstanding~~availability ~~borrowings~~was ~~would~~2.0 bebillion ~~shown~~Japanese asyen, ~~long-term~~or ~~debt~~$17.8 ~~within~~million ~~the~~as ~~consolidated~~of ~~balance~~December ~~sheets~~31, ~~and~~2017. Borrowings ~~borrowings~~ and repayments are presented on a gross basis within the Company’s consolidated statements of cash flows.

A quarterly nonrefundable commitment fee iswas payable by CCJ based on the unused availability under the Japanese Credit Agreement and iswas equal to 0.1825%~~. Total~~ ~~availability under the Japanese Credit Agreement was 2.0 billion Japanese Yen, or $17.1 million~~ as of December 31, ~~2016~~2017. The Japanese Credit Agreement ~~bears~~bore interest based on the Tokyo Interbank Offered Rate of interest ~~(TIBOR)~~, plus an applicable margin based on the Company’s leverage ratio as defined in the U.S. Credit Agreement,. The ~~which~~interest rate averaged 2.06% and 1.31% per annum as of December 31, 2017 and 2016, respectively. The Company iswas jointly and severally liable as the guarantor of CCJ’s obligations under the Japanese Credit Agreement. CCJ ~~may~~could make voluntary prepayments of principal and interest after providing prior written notice and before the full amount then outstanding iswas due and payable on the March 24, 2019 expiration date. In January 2018, the Company canceled the Japanese Credit Agreement.

66Prior to March 31, 2016, CCJ maintained a Japanese Term Loan and Japanese Working Capital Loan. These agreements were terminated on March 31, 2016 in conjunction with the repayment of the $4.0 million balance then outstanding. These agreements were replaced by the Japanese Credit Agreement described above.

~~Table~~Other ofCredit ~~Contents~~Facilities

~~Prior~~The ~~Japanese~~Company ~~Loans~~also maintains smaller credit facilities denominated in the local currencies of the various countries in which it operates. These facilities totaled approximately $7 million and $6 million as of December 31, 2017 and 2016, respectively. There are no financial covenants related to these facilities and the Company had no outstanding borrowings under them as of either December 31, 2017 and 2016. Bank guarantees totaling $5.1 million and $3.5 million were issued as of December 31, 2017 and 2016, respectively. In addition, the Company had surety bonds outstanding of $1.1 million as of both December 31, 2017 and 2016.

Prior to March 31, 2016, CCJ maintained a Japanese Term Loan and Japanese Working Capital Loan. These agreements were terminated on March 31, 2016, and replaced by the Japanese Credit Agreement described above. The Company was jointly and severally liable as the guarantor of CCJ’s obligations and the Company permitted CCJ to grant a security interest and continuing lien in certain of its assets, including inventory and accounts receivable, to secure its obligations under both loan agreements. The amount of the assets available to be pledged was in excess of the outstanding obligation as of December 31, 2015.

The Japanese Term Loan provided for a principal amount of 1.0 billion Japanese Yen and bore interest based on the Uncollateralized Overnight Call Rate plus an applicable margin which averaged 0.7% per annum as of December 31, 2015. As of December 31, 2015, CCJ had 450 million Japanese Yen or $3.7 million outstanding. The outstanding borrowings were shown as long-term debt within the consolidated balance sheets. Borrowings and repayments were presented on a gross basis within the Company’s consolidated statements of cash flows.

The Japanese Working Capital Loan provided for borrowings up to 1.5 billion Japanese Yen, and bore interest based on the Short-term Prime Rate. As of December 31, 2015, CCJ had no outstanding borrowings under this facility.

Chinese Credit Facility

The Company maintained an Uncommitted Revolving Loan Facility Letter (Facility Letter) which provided for an uncommitted line of credit totaling 5.0 million Renminbi (RMB) or $0.8 million. This Facility Letter was scheduled to expire on July 19, 2016, but was cancelled in April 2016. The Company was jointly and severally liable as the guarantor under the Facility Letter. There were no outstanding borrowings under this facility as of December 31, 2015.

Belgian Credit Facility

The Company maintains an unsecured Belgian credit facility totaling 2.0 million Euros. Bank guarantees of 1.2 million Euros and 0.9 million Euros were issued as of December 31, 2016 and 2015, respectively.

United Kingdom Credit Facility

The Company maintains a United Kingdom credit facility totaling 0.6 million British Pounds Sterling. Bank guarantees of 0.4 million British Pounds Sterling were issued as of December 31, 2016 and 2015, respectively.

Italian Credit Facility

The Company maintains an Italian credit facility totaling 2.9 million Euros. Bank guarantees of 1.7 million Euros were issued as of December 31, 2016. In addition, surety bonds totaling 1.0 million Euros were outstanding as of December 31, 2016.

Maturities of Debt

The Company intends to make principal payments on debt outstanding as of December 31, ~~2016~~2017 of $5.0 million in ~~2017~~2018, $58.0 million in ~~2018~~2019, $8.0 million in ~~2019~~2020, $8146.05 million in ~~2020~~2021, and $~~133~~8.0 million in ~~2021~~2022.

Interest Expense

The Company’s interest expense for the years ended December 31, ~~2016~~2017, ~~2015~~2016, and ~~2014~~ 2015 totaled $27.48 million, $02.84 million, and $0.38 million, respectively. These amounts are net of interest costs capitalized of $0.38 million, $0.43 million, and $0.64 million for the years ended December 31, ~~2016~~2017, ~~2015~~2016, and ~~2014~~2015, respectively.

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9. Employee Benefit Plans

The Company sponsors defined benefit pension plans covering certain union and non-union employees in the U.S. and Europe. As of December 31, ~~2016~~2017, all of the U.S. plans are closed to new hires. In addition, future benefit accruals are frozen for a number of the plans. The Company uses a measurement date of December 31 for all of its pension plans.

~~During~~Some ~~2016,~~of the Company’s ~~offered~~defined ~~certain~~benefit ~~eligible terminated vested participants in the U.S. pension~~ plans ~~the~~allow ~~opportunity~~for ~~to elect a~~ lump sum ~~payment~~payments, ofwhich ~~their~~may ~~respective~~trigger ~~pension~~settlement ~~benefits~~accounting. As The aCompany ~~result~~made ~~of these elections, and significant~~ lump sum ~~payouts~~payments infrom the U.S. and European plans, ~~the~~totaling ~~Company~~$4.2 ~~paid~~million, ~~benefits of~~ $5.2 million, and ~~incurred a settlement charge of~~ $13.58 million induring ~~2016. In 2015,~~ the ~~Company~~years ~~incurred~~ended ~~settlement~~December ~~charges~~31, in2017, ~~both~~2016, ~~the U.S.~~ and ~~European~~2015 ~~plans that totaled $0~~respectively.8 As ~~million as~~ a result of ~~employee~~these ~~retirements,~~lump ~~and~~sum ~~paid $3.8 million from plan assets. In 2014~~payments, the Company ~~offered~~incurred ~~certain~~settlement ~~eligible~~charges ~~terminated vested participants~~ in the U.S. ~~pension~~and European plans ~~the~~totaling ~~opportunity~~$1.0 ~~to elect a lump sum payment of their respective pension benefits~~million, ~~and as a result, incurred a settlement charge of~~ $1.05 million, and ~~paid benefits of~~ $40.48 million~~. As~~, aduring ~~result of~~ the ~~acquisition~~years ofended ~~the~~December ~~New~~31, ~~Business~~2017, ~~the~~2016, ~~projected~~and ~~benefit~~2015, ~~obligation of the European plans increased $3~~respectively.~~9 million in 2016.~~

InFor ~~2014~~the U.S. plans, the ~~Society~~Company ofhas ~~Actuaries~~used ~~released~~the asame ~~new~~ mortality ~~table~~tables, – RP-2014, and a ~~new~~modified version of the projection scale – MP-2014 since 2014. ~~The~~For ~~Company~~the ~~adopted~~European defined benefit plans, the ~~new~~Company RPutilizes country-~~2014~~specific mortality ~~table~~tables and ahas ~~modified~~used ~~version of~~ the ~~new~~same ~~MP-2014~~tables ~~projection scale~~ for the ~~U.S.~~majority ~~plans~~of asits ofEuropean ~~December~~plans ~~31,~~since 2014. ~~The~~ In ~~Company~~2016, ~~has~~the ~~continued~~Company toupdated ~~use~~ the ~~same~~ mortality tables ~~and~~used for the ~~modified~~UK ~~version~~plans ofwhich did not cause a significant increase to the ~~projection~~projected ~~scale~~benefit inobligations ~~2015~~for ~~and~~those ~~2016~~plans. For the European defined benefit plans, the Company utilizes country-specific mortality tables and has used the same tables for the majority of its European plans since 2014. In 2016, the Company updated the mortality tables used for the ~~United~~UK ~~Kingdom~~ plans which did not cause a significant increase to the projected benefit obligations for those plans.

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The following table provides a reconciliation of changes in the plans’ benefit obligations and fair value of assets over the two-year period ended December 31, ~~2016~~2017 and the funded status as of December 31 for both years:

	U.S. Plans				European Plans
	2016		2015		2016		2015
	2017		2016		2017		2016
Change in projected benefit obligations
Projected benefit obligations as of January 1	$	~~108~~110,~~938~~732	$	~~117~~108,~~319~~938	$	3943,~~201~~495	$	4239,~~886~~201
Service cost		~~957~~959		~~1,136~~957		~~395~~524		~~288~~395
Interest cost		4,~~589~~413		4,~~499~~589		~~1,142~~972		1,~~250~~142
Employee contributions		—		—		7372		7173
Actuarial loss (gain)		4,293		(7,551)		7,018		(64)
Actuarial loss		7,796		4,293		593		7,018
Benefits paid		(4,~~094~~327)		(4,~~022~~094)		(1,~~527~~055)		(1,~~091~~527)
Acquisition		—		—		~~3,899~~—		—3,899
Plan amendments		—		—		~~(91)~~—		—(91)
Settlement		(32,~~951~~021)		(23,~~443~~951)		(12,~~224~~173)		(1,~~383~~224)
Foreign currency exchange rate changes		—		—		(54,~~391)~~836		(25,~~756~~391)
Projected benefit obligations as of December 31	$	~~110~~117,~~732~~552	$	~~108~~110,~~938~~732	$	4347,~~495~~264	$	3943,~~201~~495
Change in plan assets
Fair value of plan assets as of January 1	$	8988,~~382~~240	$	9889,~~395~~382	$	2927,~~351~~936	$	3129,~~025~~351
Actual return on plan assets		612,~~221~~547		(36,~~830)~~221		42,~~212~~012		~~646~~4,212
Employer contributions		~~682~~838		~~1,282~~682		12,~~744~~087		1,~~774~~744
Employee contributions		—		—		7372		7173
Benefits paid		(4,~~094~~327)		(4,~~022~~094)		(1,~~527~~055)		(1,~~091~~527)
Settlement		(32,~~951~~021)		(23,~~443~~951)		(12,~~224~~173)		(1,~~383~~224)
Foreign currency exchange rate changes		—		—		(42,~~693)~~775		(14,~~691~~693)
Fair value of plan assets as of December 31	$	8895,~~240~~277	$	8988,~~382~~240	$	2731,~~936~~654	$	2927,~~351~~936
Funded status as of December 31	$	(22,~~492~~275)	$	(1922,~~556~~492)	$	(15,~~559~~610)	$	(915,~~850~~559)
Amounts recognized in the balance sheets consist of:
Noncurrent asset — Other assets	$	—	$	~~273~~—	$	~~141~~710	$	~~1,258~~141
Current liability — Payroll and benefits payable		(82)		(82)		(~~493~~630)		(~~450~~493)
Noncurrent liability — Accrued pension and other liabilities		(22,~~410~~193)		(1922,~~747~~410)		(15,~~207~~690)		(1015,~~658~~207)
Net amount recognized	$	(22,~~492~~275)	$	(1922,~~556~~492)	$	(15,~~559~~610)	$	(915,~~850~~559)
Amounts recognized in accumulated other comprehensive income consist of:
Accumulated prior service cost	$	—	$	—	$	(91)	$	—(91)
Accumulated net actuarial loss		3836,~~694~~273		38,~~741~~694		10,~~549~~720		810,~~039~~549
Net amount recognized, before tax effect	$	3836,~~694~~273	$	38,~~741~~694	$	10,~~458~~629	$	810,~~039~~458

The assumptions used to determine benefit obligations are shown in the following table:

	U.S. Plans				European Plans
Weighted average actuarial assumptions as of December 31:	~~2016~~2017		~~2015~~2016		~~2016~~2017		~~2015~~2016
Discount rate	43.0963	%	4.3809	%	2.1102	%	32.1511	%
Rate of increase in compensation levels	3.00	%	3.00	%	2.8795	%	32.3787	%

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The following tables set forth the fair values of the Company’s pension plans assets as of December 31, ~~2016~~2017 and ~~2015~~2016:

	U.S. Plans
	Fair Value Measurements								Fair Value Measurements
	as of December 31, 2016								as of December 31, 2015
	as of December 31, 2017								as of December 31, 2016
Asset Category	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	42,~~414~~984	$	—	$	—	$	42,~~414~~984	$	~~262~~4,414	$	~~4,038~~—	$	—	$	4,~~300~~414
Equity securities
Large cap		1617,~~528~~260		—		—		1617,~~528~~260		1916,~~329~~528		—		—		1916,~~329~~528
Small/mid cap		911,~~584~~485		—		—		911,~~584~~485		9,~~598~~584		—		—		9,~~598~~584
Equities blend (a)		—		—		—		—		257		—		—		257
International equity (a)		7,927		—		—		7,927		6,377		—		—		6,377
International equity (b)		6,377		—		—		6,377		5,607		—		—		5,607
Emerging markets (b)		6,190		—		—		6,190		5,333		—		—		5,333
Emerging markets (c)		5,333		—		—		5,333		5,056		—		—		5,056
Fixed income securities
Corporate bonds (d)		—		23,034		—		23,034		—		23,777		—		23,777
Corporate bonds (c)		—		25,906		—		25,906		—		23,034		—		23,034
Government bonds (e)		561		13,785		—		14,346		1,487		12,458		—		13,945
Government bonds (d)		690		14,370		—		15,060		561		13,785		—		14,346
International bonds (f)		—		3,966		—		3,966		—		3,531		—		3,531
International bonds (e)		—		5,001		—		5,001		—		3,966		—		3,966
Commodities (g)		2,051		—		—		2,051		1,768		—		—		1,768
Commodities (f)		1,737		—		—		1,737		2,051		—		—		2,051
Real estate (h)		2,607		—		—		2,607		2,214		—		—		2,214
Real estate (g)		1,727		—		—		1,727		2,607		—		—		2,607
Total	$	4750,~~455~~000	$	4045,~~785~~277	$	—	$	8895,~~240~~277	$	4547,~~578~~455	$	4340,~~804~~785	$	—	$	8988,~~382~~240

(a) This category ~~invests~~consists inof ~~the~~international ~~common~~equity ~~stock~~securities offrom ~~primarily~~Europe, ~~U.S.~~Australia ~~companies~~and ~~across~~Southeast ~~the capitalization spectrum~~Asia.

(b) This category ~~consists~~invests ofin ~~international~~global ~~equity~~emerging ~~securities~~markets ~~from~~outside ~~Europe,~~the ~~Australia~~U.S. ~~and~~The ~~Southeast~~strategy ~~Asia~~targets broad diversification across various economic sectors in emerging economies.

(c) This category invests primarily in ~~global~~investment ~~emerging~~grade ~~markets~~corporate ~~outside the U~~securities.~~S. The strategy targets broad diversification across various economic sectors in emerging economies.~~

(d) This category ~~invests~~includes securities and mutual funds which invest in a diversified portfolio of longer duration bonds. The funds typically invest primarily in U.S. investment grade ~~corporate~~ securities.

(e) This ~~category~~ includes securities and mutual funds which invest in a diversified portfolio of longer duration foreign bonds. ~~The funds typically invest primarily in U.S. investment grade securities.~~

(f) This ~~includes~~fund ~~securities~~invests ~~and~~in ~~mutual~~assets ~~funds~~of ~~which~~commodity ~~invest~~linked inderivative ainstruments ~~diversified~~and ~~portfolio~~fixed ofincome ~~longer duration foreign bonds~~securities.

(g) This fund primarily invests in ~~assets~~equity ofrelated ~~commodity~~securities ~~linked~~of ~~derivative~~real ~~instruments~~estate companies and ~~fixed~~other ~~income~~real estate securities. A significant portion of the total assets are typically in foreign securities.

~~(h) This fund primarily invests in equity related securities of real estate companies and other real estate securities. A significant portion of the total assets are typically in foreign securities.~~ 65

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	European Plans
	Fair Value Measurements								Fair Value Measurements
	as of December 31, 2016								as of December 31, 2015
	as of December 31, 2017								as of December 31, 2016
Asset Category	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	2,~~005~~833	$	—	$	—	$	2,~~005~~833	$	12,~~997~~005	$	—	$	—	$	12,~~997~~005
Equity securities
M&G PP UK equity passive fund (a)		~~950~~1,092		—		—		~~950~~1,092		—950		—		—		—950
M&G PP overseas equity passive fund (b)		45,~~291~~062		—		—		45,~~291~~062		—4,291		—		—		—4,291
LGIM dynamic diversified fund (c)		32,~~758~~672		—		—		32,~~758~~672		—3,758		—		—		—3,758
W. Blair dynamic diversified allocation fund (d)		12,~~160~~418		—		—		12,~~160~~418		—1,160		—		—		—1,160
M&G PP discretionary fund (e)		—		—		—		—		4,673		—		—		4,673
Global equity 60-40 index (f)		—		—		—		—		5,412		—		—		5,412
Fixed income securities
Delta Lloyd fixed income (g)		—		—		1,158		1,158		—		—		1,864		1,864
Delta Lloyd fixed income (e)		—		—		738		738		—		—		1,158		1,158
Corporate bonds (h)		428		—		—		428		5,022		—		—		5,022
Corporate bonds (f)		548		—		—		548		428		—		—		428
Government bonds (i)		10,582		—		—		10,582		6,913		—		—		6,913
Government bonds (g)		12,823		—		—		12,823		10,582		—		—		10,582
Real estate (j)		2,796		—		—		2,796		2,211		—		—		2,211
Real estate (h)		2,581		—		—		2,581		2,796		—		—		2,796
Insurance reserves (k)		—		—		808		808		—		—		1,259		1,259
Insurance reserves (i)		—		—		887		887		—		—		808		808
Total	$	2530,~~970~~029	$	—	$	1,~~966~~625	$	2731,~~936~~654	$	2625,~~228~~970	$	—	$	31,~~123~~966	$	2927,~~351~~936

(a)

This fund invests in the shares of UK companies.

(b)

This fund invests in overseas companies with fixed proportions representing each region’s economic importance.

(c)

This fund invests in a range of different asset classes, including equities, bonds, properties, commodities, listed infrastructure, private equity, and global real estate companies.

(d)

This fund utilizes a combination of traditional assets (equities, bonds, currencies, etc.), and investment strategies based on advanced derivative techniques.

(e) This ~~fund~~category invests in afixed ~~mix~~income ofinvestments UKwith ~~and~~Delta ~~overseas equity shares, bonds, property and cash~~Lloyd.

(f) This ~~index~~category ~~fund~~ invests primarily in ~~the~~investment UKgrade ~~Equity~~corporate ~~Index~~bonds, ~~Fund~~and other debt instruments, including higher yielding corporate bonds, government debt, convertible and ~~secondarily~~preferred instocks, ~~overseas~~money ~~index~~market ~~funds~~instruments and equities.

(g) This category invests mainly in ~~fixed~~long-term ~~income investments with Delta Lloyd~~gilts.

(h) This category invests ~~primarily~~ in ~~investment~~commercial ~~grade~~properties ~~corporate~~in ~~bonds,~~the UK and ~~other~~is ~~debt~~well ~~instruments,~~diversified ~~including~~in ~~higher~~the ~~yielding corporate bonds~~retail, ~~government debt~~office, ~~convertible~~ and ~~preferred~~industrial ~~stocks, money market instruments and equities~~sectors.

(i) This category invests ~~mainly~~in individual insurance policies in ~~long-term~~the ~~gilts~~name of the individual plan members.

~~(j) This category invests in commercial properties in the UK and is well diversified in the retail, office, and industrial sectors.~~ 66

(k) This category invests in individual insurance policies in the name of the individual plan members.

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The European plans’ Level 3 investments were valued using significant unobservable inputs. Inputs to these valuations include characteristics and quantitative data relating to the assets and reserves, investment and insurance policy cost, position size, liquidity, current financial condition of the company/insurer and other relevant market data. The following table sets forth changes in the fair value measurements for the years ended December 31, ~~2016~~2017 and ~~2015~~2016:

	Delta Lloyd		Insurance
	Fixed Income		Reserves
Balance as of January 1, 2015	$	3,481	$	1,299
Balance as of January 1, 2016	$	1,864	$	1,259
Purchases		—		139
Sales/Maturities		(1,394)		(50)
Foreign currency translation		(223)		(129)
Balance as of December 31, 2015	$	1,864	$	1,259
Purchases		—		101
Sales/Maturities		(668)		(525)
Foreign currency translation		(38)		(27)
Balance as of December 31, 2016	$	1,158	$	808
Purchases		—		95
Sales/Maturities		(554)		(129)
Foreign currency translation		134		113
Balance as of December 31, 2017	$	738	$	887

The following table provides information on the plans’ projected benefit obligations, accumulated benefit obligations, and the fair value of plan assets:

U.S. Plans

European Plans

December 31

2016

2015

2016

2015

2017

2016

2017

2016

The projected benefit obligation and accumulated benefit obligation for all defined benefit plans was as follows:

Projected benefit obligation

~~110~~117,~~732~~552

~~108~~110,~~938~~732

4347,~~495~~264

3943,~~201~~495

Accumulated benefit obligation

~~107~~114,~~037~~322

~~105~~107,~~550~~037

4043,~~886~~940

3740,~~133~~886

Fair value of plan assets

8895,~~240~~277

8988,~~382~~240

2731,~~936~~654

2927,~~351~~936

The aggregate projected benefit obligation and fair value of plan assets for plans with projected benefit obligations in excess of plan assets was as follows:

Projected benefit obligation

~~110~~117,~~732~~552

99110,~~920~~732

3133,~~570~~896

2831,~~150~~570

Fair value of plan assets

8895,~~240~~277

8088,~~091~~240

1517,~~872~~575

1715,~~042~~872

The aggregate accumulated benefit obligation and fair value of plan assets for plans with accumulated benefit obligations in excess of plan assets was as follows:

Accumulated benefit obligation

~~107~~114,~~037~~322

96107,~~532~~037

2830,~~962~~572

2628,~~083~~962

Fair value of plan assets

8895,~~240~~277

8088,~~091~~240

1517,~~872~~575

1715,~~042~~872

7267

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Information about the expected cash flows by year for the pension plans follows:

	U.S. Plans		European Plans
Employer contributions
2017	$	2,885	$	1,689
2018	$	2,126	$	1,950
Benefit payments
2017	$	6,358	$	1,251
2018	$	6,188	$	1,429
2018		6,144		1,495
2019		6,551		1,291
2019		6,451		1,159
2020		6,791		1,433
2020		6,841		1,294
2021		6,756		1,377
2021		6,703		1,249
2022		7,933		1,645
2022 - 2026		36,536		8,817
2023 - 2027		36,611		10,311

For the European plans, the total benefit payments include both the Company’s share of the benefit cost and the participants’ share of the cost, which is funded by participant contributions to the plans.

	U.S. Plans						European Plans
	Year Ended December 31						Year Ended December 31
	2016		2015		2014		2016		2015		2014
Net periodic pension cost	2017		2016		2015		2017		2016		2015
Net periodic pension cost
Service cost	$	959	$	957	$	1,136	$	524	$	395	$	288
Service cost	$	957	$	1,136	$	895	$	395	$	288	$	342
Interest cost		4,413		4,589		4,499		972		1,142		1,250
Interest cost		4,589		4,499		4,815		1,142		1,250		1,653
Expected return on assets		(5,855)		(6,040)		(7,070)		(1,322)		(1,416)		(1,705)
Expected return on assets		(6,040)		(7,070)		(7,541)		(1,416)		(1,705)		(1,549)
Amortization of prior service cost (credit)		—		—		15		(9)		—		—
Amortization of prior service cost		—		15		74		—		—		—
Net actuarial loss amortization		2,987		3,010		2,606		452		229		219
Net actuarial loss amortization		3,010		2,606		877		229		219		245
Settlement		537		1,149		607		426		361		199
Settlement		1,149		607		1,025		361		199		—
Net periodic pension cost	$	3,041	$	3,665	$	1,793	$	1,043	$	711	$	251
Net periodic pension cost	$	3,665	$	1,793	$	145	$	711	$	251	$	691

	U.S. Plans						European Plans
	Year Ended December 31						Year Ended December 31
	2016		2015		2014		2016		2015		2014
Amounts recognized in other comprehensive income (loss)	2017		2016		2015		2017		2016		2015
Amounts recognized in other comprehensive income (loss)
Current year actuarial gain (loss)	$	(1,103)	$	(4,112)	$	(3,348)	$	98	$	(4,222)	$	(984)
Current year actuarial loss	$	(4,112)	$	(3,348)	$	(19,756)	$	(4,222)	$	(984)	$	(2,117)
Amortization of actuarial loss		2,987		3,010		2,606		452		229		219
Amortization of actuarial loss		3,010		2,606		877		229		219		245
Current year prior service credit		—		—		—		—		91		—
Current year prior service credit		—		—		—		91		—		—
Amortization of prior service cost (credit)		—		—		15		(9)		—		—
Amortization of prior service cost		—		15		74		—		—		—
Settlement		537		1,149		607		426		361		199
Settlement		1,149		607		1,025		361		199		—
Foreign currency exchange		—		—		—		(1,138)		1,122		603
Foreign currency exchange		—		—		—		1,122		603		818
Total recognized in other comprehensive income (loss)	$	2,421	$	47	$	(120)	$	(171)	$	(2,419)	$	37
Total recognized in other comprehensive income (loss)	$	47	$	(120)	$	(17,780)	$	(2,419)	$	37	$	(1,054)
Total recognized in net periodic pension cost and other comprehensive income (loss)	$	(620)	$	(3,618)	$	(1,913)	$	(1,214)	$	(3,130)	$	(214)
Total recognized in net periodic pension cost and other comprehensive income (loss)	$	(3,618)	$	(1,913)	$	(17,925)	$	(3,130)	$	(214)	$	(1,745)


	U.S. Plans		European Plans
Amounts expected to be recognized in net periodic pension cost	2018		2018
Prior service credit	$	—	$	(10)
Net actuarial loss		2,825		367
Total as of December 31	$	2,825	$	357

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	U.S. Plans		European Plans
	2017		2017
Amounts expected to be recognized in net periodic pension cost
Prior service credit	$	—	$	(9)
Net actuarial loss		2,984		424
Total as of December 31	$	2,984	$	415

The assumptions used in the measurement of net periodic pension cost are shown in the following table:

	U.S. Plans						European Plans
	December 31						December 31
	2016		2015		2014		2016		2015		2014
Weighted average actuarial assumptions	2017		2016		2015		2017		2016		2015
Weighted average actuarial assumptions
Discount rate	4.09	%	4.38	%	4.01	%	2.11	%	2.97	%	3.00	%
Discount rate	4.38	%	4.01	%	4.88	%	2.97	%	3.00	%	3.92	%
Expected annual return on plan assets	6.87	%	7.00	%	7.50	%	4.46	%	5.28	%	5.54	%
Expected annual return on plan assets	7.00	%	7.50	%	7.75	%	5.28	%	5.54	%	5.23	%
Rate of increase in compensation levels	3.00	%	3.00	%	3.00	%	2.87	%	3.07	%	3.38	%
Rate of increase in compensation levels	3.00	%	3.00	%	3.50	%	3.07	%	3.38	%	3.50	%

The discount rates that the Company utilizes to determine pension obligations for its U.S. plans are based on a review of long-term corporate bonds that receive one of the two highest ratings given by a recognized rating agency.

The expected rate of return on plan assets was determined by the Company based on a review of asset class return expectations, as well as long-term inflation assumptions. Projected returns are based on broad equity and bond indices that the Company uses to benchmark its actual asset portfolio performance. The Company also considered historical returns on asset classes and investment mix. The expected long-term return on the U.S. plans’ assets is based on an asset allocation assumption of approximately 40%-50% equity securities, 45%-55% fixed income securities, and 5% with other investments. The expected long-term return on the European plans’ assets is based on its targeted portfolio mix of approximately 2025%-3035% equity securities, 5540%-6550% fixed income securities and 1020%-2030% other investments. The Company also takes into account the effect on its projected returns from any reasonably likely changes in its asset portfolio when applicable. The Company’s investment strategy is to earn the highest possible long-term total rate of return while minimizing the associated risk to ensure the preservation of the plan assets for the provision of benefits to participants and their beneficiaries. This is accomplished by managing a diversified portfolio of fund styles, asset types, risk characteristics and investment holdings.

Multi-Employer Pension Plan

In addition to the aforementioned European plans, the Company participates in a multi-employer pension plan in Europe. This multi-employer plan almost entirely relates to former employees of operations it has divested. Benefits are distributed by the multi-employer plan. The multi-employer plan reduced benefits to entitled parties, and the local Labor Court concluded that an employer was required to compensate its pensioners for the shortfall if benefits had been reduced. As a result, the Company has a liability for the past shortfall to its former employees, including a cost of ~~both~~living adjustment on the amounts paid by the multi-employer plan. As of December 31, ~~2016~~2017 and ~~2015~~2016, the Company had a $1.1 million and a $0.9 million liability recorded as a component of payroll and benefits payable within its consolidated balance sheets for the past shortfall adjustments to its former employees, respectively. ~~Refer~~The toCompany ~~Note~~cannot 16predict ~~for~~if ~~further~~future ~~information~~benefit ~~related~~payments to ~~this~~entitled parties to be made by the multi-employer plan will continue to be reduced.

Defined Contribution Plans

The Company sponsors a defined contribution plan for certain U.S. employees. The plan allows for employee contributions, and the Company can make fixed, matching and discretionary contributions to the plan on behalf of its employees. The Company also makes contributions to the ~~USW~~United Steelworkers 401(k) Plan for certain eligible employees. Total expenses related to the defined contribution plans were $3.86 million, $3.18 million, and $23.81 million for the years ended December 31, ~~2016~~2017, ~~2015~~2016, and ~~2014~~2015, respectively.

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10. Stock Compensation Plans

In 2008, the Company adopted an equity incentive plan for eligible employees, service providers, and non-employee directors of the Company and its subsidiaries. InSince ~~2014~~that time, the Company has amended and restated the 2008 Equity Incentive Plan to among other things, increase the aggregate number of shares available for issuance ~~from 2,000,000~~ to 57.6 million,~~000,000,~~ and to extend the term ~~for a period~~ of ~~ten~~the ~~years~~plan. The plan includes a 1~~,500,000~~.5 million share fixed sub-limit for the granting of incentive stock options. The awards may be stock options, restricted stock units, performance units or other stock-based awards. Stock options may be non-statutory or incentive. The exercise price for options and stock appreciation rights shall not be less than the fair market value on the date of grant, except if an incentive stock option is granted to a “10% employee,” as defined by the plan, then the option price may not be less than 110% of such fair market value. Options and stock appreciation rights may be exercisable commencing with the grant date, and are no longer exercisable after the expiration of seven or ten years from the grant date.

The former Employee Stock Option Plan and the Non-Employee Directors’ Stock Option Plan (Prior Plans) were terminated and superseded by the 2008 Equity Incentive Plan. The Prior Plans both had stock-based awards outstanding as of December 31, 2016 and 2015. The Prior Plans granted stock options and restricted stock to officers, directors and other key employees of the Company. The stock options were granted at the fair market value on the grant date, became exercisable no less than six months after granted, and, in general, expire ten years after the date of grant.69

Stock Options

The following tables show a summary of the status and activity of stock options for the year ended December 31, 2016:

				Weighted-
		Weighted-		Average
		Average		Remaining
		Exercise Price		Contractual Term	Aggregate
Employee stock options:	Shares	(per share)		(in years)	Intrinsic Value
Outstanding as of January 1, 2016	1,252,136	$	19.08	5.01	$	645
Granted	508,999		14.06
Exercised	(13,574)		9.10
Forfeited	(17,907)		17.91
Expired	(62,852)		18.33
Outstanding as of December 31, 2016	1,666,802	$	17.67	4.69	$	1,993
Vested and expected to vest as of December 31, 2016	1,666,802	$	17.67	4.69	$	1,993
Exercisable as of December 31, 2016	974,977	$	18.87	3.85	$	476

				Weighted-
		Weighted-		Average
		Average		Remaining
		Exercise Price		Contractual Term	Aggregate
Non-employee director stock options:	Shares	(per share)		(in years)	Intrinsic Value
Outstanding as of January 1, 2016	39,885	$	6.99	0.81	$	379
Granted	—		—
Exercised	(22,320)		5.90
Forfeited	—		—
Expired	—		—
Outstanding as of December 31, 2016	17,565	$	8.37	0.42	$	154
Vested as of December 31, 2016	17,565	$	8.37	0.42	$	154
Exercisable as of December 31, 2016	17,565	$	8.37	0.42	$	154

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options. The awards may be stock options, restricted stock, performance units or other stock-based awards. Stock options may be non-statutory or incentive. The exercise price for options and stock appreciation rights shall not be less than the fair market value on the date of grant, except if an incentive stock option is granted to a “10% employee,” as defined by the plan, then the option price may not be less than 110% of such fair market value. Options and stock appreciation rights may be exercisable commencing with the grant date, and are no longer exercisable after the expiration of seven or ten years from the grant date.

The former Employee Stock Option Plan and the Non-Employee Directors’ Stock Option Plan (Prior Plans) were terminated and superseded by the 2008 Equity Incentive Plan. The Prior Plans had stock-based awards outstanding as of December 31, 2017 and 2016. The Prior Plans granted stock options and restricted stock to officers, directors and other key employees of the Company. The stock options were granted at the fair market value on the grant date, became exercisable no less than six months after granted, and, in general, expire ten years after the date of grant.

Stock Options

The following tables show a summary of the status and activity of stock options for the year ended December 31, 2017:


				Weighted-
		Weighted-		Average
		Average		Remaining
		Exercise Price		Contractual Term	Aggregate
Employee stock options:	Shares	(per share)		(in years)	Intrinsic Value
Outstanding as of January 1, 2017	1,666,802	$	17.67	4.69	$	1,993
Granted	540,466		14.37
Exercised

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