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ANNUAL REPORT

2015-2016

PCA Annual Report 2015-2016 2

The past 12 months have been part of a period of transformation for the PCA as we seek to better serve our members and the pine chemicals industry,

in general.

The pine chemicals sector has a great story to tell. Pine chemicals have been important since ancient times. Today, pine chemicals represent a bio-sustainable, “green” industry that is vital to many sectors—from inks, adhesives, fragrances, flavorings, pharmaceuticals and other health products, to name a few. Pine chemicals are an essential part of our

global economy.

While we have a long history, the challenges we currently face are very contemporary and critical. Today, many legislators, regulators and the general public lack an understanding of the value and importance of pine chemicals. The availability of raw materials is and will remain important, as will the availability of new technology to access and use pine chemicals. Regulatory and legislative issues surface around the world, including biomass and biopreferred initiatives, UVCB and TSCA reforms, safety and transportation issues, circular economy

and the impact of global warming.

As we create increased awareness of our industry we must assure that we create a positive image—one reflecting attention to principles of ethics, a concern about the environment and the safety of employees and the public. The PCA has taken important steps in these areas, as you will see in the release of the PCA Ethical Principles and our Safety Excellence program.

The PCA is creating a roadmap to turn challenges into opportunities for the pine chemical sector. We have already embarked on this journey but we still

have miles (or kilometers) to go.

In 2015, Charlie Morris announced his retirement from the PCA. Not wanting to lose the momentum we built, the Board recruited a seasoned association executive with a record of helping organizations meet their challenges and thrive. We are pleased to have Sherry Keramidas, PhD, FASAE, CAE join the organization and help us to make our journey successful. We are already taking steps to streamline and enhance our governance and operations to focus on efforts that offer the highest value to you, our members, and to the pine chemicals sector.

Steve Violette President Plasmine Technology &

Chairman, PCA Board of Directors

In 2015 and continuing into 2016, the PCA Board of Directors, our committees and our members have been active in helping us to identify and effectively research issues. To be successful, we need your

involvement in the year ahead.

It is an honor to represent and to serve you. Together, we will drive an exciting future for pine

chemicals.

Sherry Keramidas, PhD, FASAE, CAE President & COO

Message to PCA Members


Chairman Steve Violette President Plasmine Technology Vice Chairman Mike Roberts Vice President, Pine, Mining & Oil Field Chemicals Georgia Pacific Chemicals, LLC President Sherry Keramidas, PhD, FASAE, CAE Pine Chemicals Association Secretary/Treasurer Amanda Young Pine Chemicals Association Directors: Peter Acton COO Arboris, LLC Greg Adams Category Manager International Flavors and Fragrances Alejandro Cunningham Director AR El Dorado Lee Godina President Resinall Corporation Hunter Harris Director- Operations Support Ingevity

Vice President- Pine,

Mikio Katayama Director Global Business Development Lawter, Inc. Ken Kennedy Sr. Vice President/Chief Technology Officer Pinova Holdings Dave Keselica President & CEO ArrMaz Greg McLean Director Global Strategic Raw Materials Arizona Chemical, a Kraton Company Corey Schneider President DRT America

2015-2016 PCA Board of Directors &

Officers


PCA MISSION, VISION & VALUES

The PCA is:

Recognized as the global leader representing, supporting and advocating for the values of pine chemicals as bio-renewable and sustainable products.

A leading monitor of regulatory and legislative issues impacting the global pine chemical industry taking action independently or in collaboration with other associations or groups to address critical issues.

The global resource for developing and maintaining industry standards.

The recognized resource for information and education related to the pine chemicals industry.

Recognized for its culture of ethics and adherence to anti-trust compliance.


Membership and Information Committee

The objective of the Membership and Information Committee is to create, communicate and ensure the value proposition of membership in the PCA to all stakeholders. The Committee assures that members have: access to regulatory, legislative and key business developments; access to best practices, education and training for their staff; and can effectively network with colleagues. The Committee works closely with other PCA committees to identify valuable programs, services and activities. In 2015, the PCA membership increased from 82 to 85 paid members. The Committee established a goal of reaching 125 members within three years. Additional goals for 2016 include: Ensure access to information on key legislative,

regulatory, legal, scientific and other international

topics.

Communicate a clear value proposition of

membership to current and potential members.

Create forums and collaborations with related

associations and thought leaders.

The PCA represents the pine chemicals industry around the globe and provides the

best opportunities for networking with

organizations and individuals involved in the

full life cycle of pine chemicals.

Membership PCA membership in 2015:

In recognition of the global scope of the PCA, the Board of Directors recommends an addition to the PCA name:

Pine Chemicals Association

international

46 47

60

7381 85

0

20

40

60

80

100

2010 2011 2012 2013 2014 2015

45 14

15

2 9

Producer

User

Associate

Fractionator

19Producer

User

Associate

Fractionator

19

Members by Type

15

40 11

Members by Region


ETHICAL PRINCIPLES OF THE

PINE CHEMICALS ASSOCIATION The following statement of ethical principles is established for the purpose of guiding the conduct of all PCA members and supporting the PCA’s commitment to fairness in business relationships. Membership in the PCA constitutes a commitment by each member to use its best efforts:

To support the purposes of the PCA as set forth in its Mission and Vision Statements.

To observe the highest level of integrity when acting on behalf of the PCA, representing the best interests of the association over individual interests.

To respect and comply with applicable local laws and regulations where such member organization operates (as well as international treaties and agreements to which the country of operation is a signatory).

To maintain and enhance the safety and well-being of workers.

To encourage environmental stewardship and sustainable forestry practices.

To comply with applicable antitrust and competition laws at all PCA-related meetings and events, refraining from any discussions of competitively sensitive topics, including but not limited to, local, regional or international prices or pricing strategies.

To be considered/adopted by PCA Board of Directors, April 2016


PCA International Meetings are among the largest gatherings for the pine chemicals sector, focused exclusively on developments, issues and opportunities in pine chemicals. Reflecting the global nature of the industry, the 2015 meeting was held in Kyoto, Japan with over 220 attendees. In 2016, the PCA International Conference will be held at the Ritz Carlton in Santiago, Chile, on 18-20 September. This year’s meeting will explore the global dimensions of pine chemicals in South America, North America, Europe and Asia as well as opportunities to lead the pine chemicals industry to face the challenges and pursue the

opportunities ahead.

In 2017, the PCA International Conference will be held at Le Westin Hotel in Montreal, Canada, on 17-19 September.

PCA International Meetings bring together the global pine chemicals industry for a unique opportunity to address current

issues, learn and network with colleagues


PCA Research and Symposia Provide Unique

and Critical Information In 2015, PCA embarked on two important studies on the pine chemical industry. These studies will be completed in 2016 and presented for the first time during the 2016 PCA Annual meeting. As highlighted below, these studies are:

ANALYSIS OF THE EUROPEAN CRUDE TALL OIL INDUSTRY - DOWNSTREAM VALUE, JOB IMPACT & ECONOMIC POTENTIAL This study compares the societal impact of CTO in chemical use relative to its use as a biodiesel. In particular it measures and compares the carbon footprint, number of jobs created and revenue generated both from direct and indirect sales for each application. The independent study is being conducted by

Fraunhofer UMSICHT, a highly respected German consulting firm.

THE MODERN PINE CHEMICALS INDUSTRY This study examines the global size of the Pine Chemicals industry in terms of total direct and indirect employment and revenue. The study manager, Smita Bhatia, initially conducted a confidential survey of pine chemical processing companies around the world. Using this primary data combined with public studies, industry experts, market reports and governmental import/export databases, the consultant was able to develop an excellent overview and analysis of the industry. The study set the boundary limits for the pulp mill sourced pine chemicals industry as CTO or CST arriving at a Distillation plant through to the fractions processed into 1st generation products (i.e. resins). For Pine Chemical products produced from tapping trees, the study included the tapping of trees through the production of 1st generation products.

INTERNATIONAL SYMPOSIUM ON OLEORESIN PRODUCTION In February, the PCA held the first International Symposium focused on oleoresin

production. With over 80 participants from Asia, Europe, South America and North America, the meeting addressed the full life cycle of oleoresin—from genetics and biology of pine species to tapping, production, workforce and economics. With emphasis on opportunities for innovation, participants recommended follow-up by the PCA Gum Rosin Committee over the next few years.


PCA Committees offer members an opportunity to engage in issues critical to the pine chemicals

industry.

Gum Rosin Committee: During the last three years, the Gum Rosin Committee shifted its

original work plan as a task group working on gum rosin specifics (physic-chemical specifications, markets, production) into an advocacy forum. This shift included annual Gum Rosin focused presentations at PCA meetings and participation in other pine chemicals events. This has helped to offer greater visibility to the issues and opportunities in this aspect of pine chemicals. The Committee’s efforts were most apparent in the Oleoresin Symposium held in Lisbon in February. Beyond its education functions, this Symposium brought together the global players of the sector, offering a baseline of gum rosin today that should help organize the Committee mission and objectives. The Committee will continue to refine its mission and objectives and its function to drive knowledge and innovation through its activities in Austin and Santiago.

Product Regulatory and Stewardship Committee & Advocacy Committee: Addressing key issues shaping the regulatory, legislative and business environment affecting pine chemicals around the globe, these committees are addressing concerns vital to the PCA members. In 2015 and 2016, key areas of focus include issues related to bio-based products and circular economy, as well as, the following: US: Continue to support TSCA reauthorization, as a member of the American Alliance for Innovation (AAI) as well as other issues with the EPA. CALIFORNIA: Follow up petition to remove hydrogenated rosin derivatives from the Candidate Chemicals List.

EUROPE: Continue to work with HARRPA and CEFIC to support the efforts in CTO. Scientific and economic studies were completed by the PCA and others groups. CANADA: Work with the Industry Coordinating Group to provide data favorable to pine chemicals regulation, particularly in the area of UVCB substances to Environment Canada. GLOBAL: Address the UVCB/Substance Identity issues (including CTO-DTO regulatory issue). The PCA will release a white paper on this topic by mid-2016, complete the Rosin & Derivatives Skin Sensitization White Paper for posting and to defend our position on this issue with regulatory authorities, monitor global regulations for impact on pine chemicals and related materials and advocate accordingly.

In the year ahead, the PCA will formulate an advocacy strategy to proactively address issues that may shape the pine chemicals sector, including identifying collaborators on these issues.


Recovery Committee: focuses on educating members on

safe handling, recovery and processing of by-products (co-products) from the pulp and paper industry, specifically black liquor soap, crude sulfate turpentine and crude tall oil. The Committee accomplishes its work through papers on best practices, short courses on soap and turpentine recovery, as well as, crude tall oil processing to educate those specializing in the recovery and processing of these materials from the pulp and paper industry. In 2015-2016, the Committee released best practice articles on the PCA website and held two acclaimed training Courses on Soap & Turpentine Recovery and Crude Tall Oil Processing attended by nearly 130 total participants.

Environmental, Health and Safety Committee: provides

an avenue for PCA members to address environmental, health and safety issues by identifying and sharing information, best practices and lessons learned for the purpose of reducing risk and advancing accident prevention programs at Member Facilities. To address this important role, in 2015-2016 the Committee: Established and administered the EHS Awards Program

recognizing facilities, employees and leaders. Created a Best Practice Document Program, publishing

information on the PCA website. Provided a forum for members to share knowledge related

to new EHS rules and regulations at committee meetings and information exchanges.

Defined and collected pertinent EHS data from member companies and disseminates for comparative purposes.

The EHS is vital to pine chemical companies and the Committee is actively requesting member companies to engage with and utilize the Committee.

Testing Committee: is responsible for maintaining and

updating PCA, ASTM and ISO standard test methods related to the pine chemicals industry; developing new and improved methods; and harmonizing methods, when possible. Efforts this year

included:

ASTM D01.34 Test Methods-10 test methods were reviewed and approved for renewal in 2015; five to be considered in 2016. Method development focused on measurement of color in rosin in

solution, as current methods apply only to solid rosin.

ISO TC35/SC10/WG5- efforts concentrated on a widely used method for measuring softening point of resins by the Mettler cup and ball methods and comparing different methods used in the US and Europe. Preliminary conclusions indicate methods can give the

same result with appropriate test conditions.

PCA Test Methods- specific for the industry are under review, to be completed in 2016. In 2015, methods for determining black liquor in tall oil soap by centrifugation and turpentine in soap, black liquor and crude tall oil were written. These will become PCA standards after review by the Recovery Committee.


The PCA safety awards recognize excellence in

protecting the environment and

employees.

Proactive steps toward protecting the environment and employees is important to pine chemical companies and to the identity of this sustainable, bio-based sector. The PCA promotes a safety culture among member organizations and recognizes people and facilities demonstrating excellence in safety. The PCA is pleased to recognize this year’s Safety Excellence Awardees:

Leadership Recognizing a CEO or facility manager whose commitment and leadership foster Environmental, Health and Safety excellence in the workplace

Nikolay Khodov, ORGKHIM BCH Management Company, JSC, Nizhny Novgorod, Russia and

Mason Faggert, Arizona Chemical, a Kraton Company, Panama City, Florida

Employee Recognizing an employee whose contributions and commitment foster Environmental, Health and Safety excellence in the workplace

Mark Williams, Arizona Chemical, a Kraton Company, Savannah, Georgia

Facility Recognizing a plant or facility demonstrating environmental, health and safety excellence among their management and employees, who implemented new programs to protect the environment and/or identify and control workplace hazards

. ORGKHIM Biochemical Holding Management Company, JSC, Nizhny Novgorod, Russia

Safety Excellence

Awards


Welcome Remarks PCA Today and in the Year Ahead

Membership: Opportunities for Growth

Creating Greater Value for Members

Building Awareness of Pine Chemicals Globally

Proposed change to PCA: Pine Chemicals Association International Finances: 2015 Review and Approval of 2016 Budget Nominating Committee Report/Election of Board Officers & Directors Other Business Closing Remarks Adjourn

2016 PCA Business Meeting

Building the Pine Chemicals Industry & PCA


2015 Unaudited Financial Summary

2015 2014 $ Change

Current Assets

Total Cash and Cash Equivalents 502,089 574,956 -72,867

Accounts Receivable 156,129 184,050 -27,921

Other Current Assets

Prepaid Expenses 81,237 33,263 47,974

Undeposited Funds 2,685 4,000 -1,315

Total Current Assets 742,140 796,270 -54,129

Total Fixed Assets 6,090 3,737 2,353

TOTAL ASSETS 748,230 800,007 -51,776

Liabilities

Current Liabilities (AP) 4,027 11,764 -7,737

Accounts Payable & Other 3,884 18,452 -14,568

Deferred Dues 241,084 229,458 11,626

Gum Rosin Symposium Registration 13,925 0 13,925

Recovery Course Registration 8,450 4,095 4,355

Total Current Liabilities 267,343 252,006 15,338

Equity

Fund Balance 548,001 526,258 21,743

Net Income -67,114 21,743 -88,857

Total Equity 480,887 548,001 -67,114

TOTAL LIABILITIES & EQUITY 748,230 800,007 -51,776

Statement of Cash Flows

As of December 31, 2015


2015 Unaudited Financial Summary and 2016 Annual Operating Budget

2016 Budget 2015 Actual 2015 Changes

Revenue and Support

Meeting Revenue 524,967 424,445 100,522

Membership Dues 289,980 271,774 18,206

Books & Video Sales 5,095 5,095 0

Shipping and Handling 730 730 0

European CTO Industry Analysis 62,489 26,132 36,357

ASTM 0 -1,400 1,400

Hydrogenated Rosin 0 38,441 -38,441

HPV Project Revenue 0 2,263 -2,263

Total Revenue and Support 883,261 767,479 115,782

Expenses

Operating Expenses 486,146 418,911 67,235

Conference & Meeting Expenses 301,737 306,975 -5,238

EU CTO Analysis 62,489 26,132 36,357

Global Economic Study 20,000 25,000 -5,000

Communications Strategy Expense 10,000 35,335 -25,335

California Safer Chemicals Act 0 22,241 -22,241

Total Expense 880,372 834,593 45,779

Net Surplus/Loss 2,889 -67,114 70,003

Statement of Activities

2016 Budget versus 2015 Actual


Nominating Committee Report: Proposed 2016/2017

Board Officers & Directors

Chairman Mike Roberts Vice President, Pine, Mining & Oil Field Chemicals Georgia Pacific Chemicals, LLC Vice Chairman Greg Adams Category Manager International Flavors and Fragrances Directors: Peter Acton COO Arboris, LLC Alejandro Cunningham Director AR El Dorado Lee Godina President Resinall Corporation Keely Goodwin Business Unit Manager Eastman Chemical Company Hunter Harris Director- Operations Support Ingevity Ken Kennedy Sr. Vice President/Chief Technology Officer Pinova Holdings

Vice President- Pine,

Mikio Katayama Director Global Business Development Lawter, Inc. Dave Keselica President & CEO ArrMaz Greg McLean Director Global Strategic Raw Materials Arizona Chemical, a Kraton Company Corey Schneider President DRT America Steve Violette President Plasmine Technology

President Sherry Keramidas, PhD, FASAE, CAE Pine Chemicals Association Secretary/Treasurer Amanda Young Pine Chemicals Association

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