SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

~~FORM 10-Q~~


☒			Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

☐
☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission file

number

Exact name of registrant as

specified in its charter

IRS Employer

Identification No.

State or other jurisdiction of

incorporation or organization

1-03560

~~P. H.~~ Glatfelter ~~Company~~

Corporation

23-0628360

Pennsylvania

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock

GLT

New York Stock Exchange

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 at 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐.

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

~~Large accelerated filer~~

☒

~~Accelerated filer~~

☐

Large Accelerated Filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

~~(Do not check if a smaller reporting company)~~

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

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

Common Stock outstanding on ~~October 25, 2017~~April 30, 2023 totaled ~~43,586,355~~44,933,007 shares.

Item 1 – Financial Statements

~~P. H.~~

GLATFELTER ~~COMPANY~~CORPORATION AND SUBSIDIARIES

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

- 2 -

~~GLATFELTER~~

~~09.30.17 Form 10-Q~~

Three months ended
September 30

Nine months ended
September 30

In thousands

2017

2016

2017

2016

Net income

$
12,105

$
19,601

$
17,994

$
37,734

Foreign currency translation adjustments

16,559

(1,530
)

50,128

(2,975
)
Net change in:

Deferred (gains) losses on cash flow hedges, net of taxes

of $111, $289, $2,031 and $88, respectively

(1,514
)

(858
)

(6,111
)

152

Unrecognized retirement obligations, net of taxes

of $(1,340), $(1,405), $(4,018) and $(4,214), respectively

2,285

2,319

6,838

6,957

Other comprehensive income (loss)

17,330

(69
)

50,855

4,134

Comprehensive income

$
29,435

$
19,532

$
68,849

$
41,868


	Three months ended March 31,
In thousands	2023		2022
Net loss	$	(13,584)	$	(108,327)

Foreign currency translation adjustments	6,663		(10,915)
Net change in:
Deferred gains on derivatives, net of taxes of $53 and $(600), respectively	157		(357)
Unrecognized retirement obligations, net of taxes of $(1), and $(160), respectively	652		152
Other comprehensive income (loss)	7,472		(11,120)
Comprehensive loss	$	(6,112)	$	(119,447)

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

- 3 -

~~GLATFELTER~~

~~09.30.17 Form 10-Q~~

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

- 4 -

~~GLATFELTER~~

~~09.30.17 Form 10-Q~~

(unaudited)

Nine months ended
September 30

In thousands
2017

2016

Operating activities

Net income
$
17,994

$
37,734

Adjustments to reconcile to net cash provided by operations:

Depreciation, depletion and amortization

56,343

49,725

Amortization of debt issue costs

868

864

Pension expense, net of unfunded benefits paid

3,707

2,908

Deferred income tax provision (benefit)

4,282

(4,266
)
(Gains) losses on dispositions of plant, equipment and timberlands, net

(50
)

31

Share-based compensation

4,868

4,218

Change in operating assets and liabilities

Accounts receivable

(23,753
)

(12,927
)
Inventories

2,906

(17,897
)
Prepaid and other current assets

(7,185
)

(4,205
)
Accounts payable

(4,001
)

(9,662
)
Accruals and other current liabilities

(3,702
)

10,257

Other

519

2,657

Net cash provided by operating activities

52,796

59,437

Investing activities

Expenditures for purchases of plant, equipment and timberlands

(102,172
)

(116,948
)
Proceeds from disposals of plant, equipment and timberlands, net

217

55

Other

(100
)

(400
)
Net cash used by investing activities

(102,055
)

(117,293
)

Financing activities

Repayments of note offerings

—

(136
)
Net borrowings (repayments) under revolving credit facility

96,534

(642
)
Proceeds from term loans

—

19,428

Repayment of term loans

(6,947
)

(3,803
)
Payments of dividends

(16,805
)

(16,134
)
Proceeds from government grants

—

5,251

Payments related to share-based compensation awards and other

(128
)

(990
)
Net cash provided by financing activities

72,654

2,974

Effect of exchange rate changes on cash

5,448

330

Net increase (decrease) in cash and cash equivalents

28,843

(54,552
)
Cash and cash equivalents at the beginning of period

55,444

105,304

Cash and cash equivalents at the end of period
$
84,287

$
50,752

Supplemental cash flow information

Cash paid for:

Interest, net of amounts capitalized
$
8,719

$
7,376

Income taxes, net

7,567

11,609

Three months ended March 31,
In thousands 2023 2022
Operating activities
Net loss $ (13,584) $ (108,327)
Loss from discontinued operations, net of taxes 402 37
Adjustments to reconcile to net cash used by continuing operations:
Depreciation, depletion and amortization 15,731 18,484
Amortization of debt issue costs and original issue discount 2,246 452
Pension settlement charge 633 —
Goodwill and other asset impairment charges — 117,349
Russia/Ukraine conflict charges — 3,948
Deferred income tax benefit (675) (21,227)
Gains on dispositions of plant, equipment and timberlands, net (644) (2,961)
Share-based compensation 931 909
Change in operating assets and liabilities:
Accounts receivable (2,306) (53,318)
Inventories (8,827) (17,699)
Prepaid and other current assets (9,117) (5,946)
Accounts payable (23,136) 1,776
Accruals and other current liabilities 7,550 949
Other 164 (666)
Net cash used by operating activities from continuing operations (30,632) (66,240)
Investing activities
Expenditures for purchases of plant, equipment and timberlands (9,500) (12,349)
Proceeds from disposals of plant, equipment and timberlands, net 713 3,160
Acquisition, net of cash acquired — 1,413
Other — (25)
Net cash used by investing activities from continuing operations (8,787) (7,801)
Financing activities
Proceeds from term loan 262,273 —
Repayment of term loans (225,466) (6,712)
Net borrowings (repayments) under revolving credit facility (16,332) 31,019
Payments of borrowing costs (5,060) (559)
Payments of dividends — (6,237)
Payments related to share-based compensation awards and other (236) (1,230)
Net cash provided by financing activities from continuing operations 15,179 16,281
Effect of exchange rate changes on cash 1,266 (748)
Net decrease in cash, cash equivalents and restricted cash (22,974) (58,508)
Decrease in cash, cash equivalents and restricted cash from discontinued operations (11) (108)
Cash, cash equivalents and restricted cash at the beginning of period 119,162 148,814
Cash, cash equivalents and restricted cash at the end of period 96,177 90,198
Less: restricted cash in Prepaid expenses and other current assets (3,600) (2,000)
Less: restricted cash in Other assets (3,936) (7,746)
Cash and cash equivalents at the end of period $ 88,641 $ 80,452

Supplemental cash flow information
Cash paid for:
Interest $ 4,993 $ 1,494
Income taxes, net 1,667 8,245
The accompanying notes are an integral part of these condensed consolidated financial statements.

- 5 -

~~GLATFELTER~~

~~09.30.17 Form 10-Q~~


In thousands	Common stock		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Shareholders’ Equity
Balance at January 1, 2023	$	544	$	60,663	$	498,863	$	(97,895)	$	(144,171)	$	318,004
Net loss					(13,584)						(13,584)
Other comprehensive income							7,472				7,472
Comprehensive loss											(6,112)

Share-based compensation expense			931								931
Delivery of treasury shares:
RSUs and PSAs			(2,338)						2,102		(236)
Balance at March 31, 2023	$	544	$	59,256	$	485,279	$	(90,423)	$	(142,069)	$	312,587

Balance at January 1, 2022	$	544	$	64,779	$	705,600	$	(80,304)	$	(147,857)	$	542,762
Net loss					(108,327)						(108,327)
Other comprehensive loss							(11,120)				(11,120)
Comprehensive loss											(119,447)
Cash dividends declared ($0.14 per share)					(6,261)						(6,261)
Share-based compensation expense			909								909
Delivery of treasury shares:
RSUs and PSAs			(3,815)						2,585		(1,230)
Balance at March 31, 2022	$	544	$	61,873	$	591,012	$	(91,424)	$	(145,272)	$	416,733

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

1.	~~ORGANIZATION~~

~~P. H.~~

Glatfelter ~~Company~~Corporation and subsidiaries ~~(“Glatfelter”~~("Glatfelter") is a ~~manufacturer~~leading global supplier of ~~specialty papers~~engineered materials with a strong focus on innovation and ~~fiber-based engineered materials.~~sustainability. Glatfelter's high quality, technology-driven, innovative, and customizable nonwovens solutions can be found in products that are Enhancing Everyday Life®. These include personal care and hygiene products, food and beverage filtration, critical cleaning products, medical and personal protection, packaging products, as well as home improvement and industrial applications. Headquartered in ~~York, PA, U.S.~~Charlotte, NC, the Company’s 2022 net sales were $1.5 billion with approximately 3,250 employees worldwide. Glatfelter’s operations ~~include facilities~~utilize a variety of manufacturing technologies including airlaid, wetlaid, and spunlace with sixteen manufacturing sites located in ~~Spring Grove, PA and Chillicothe and Fremont, OH. International operations include facilities in~~the United States, Canada, Germany, ~~France,~~ the United Kingdom, France, Spain, and the ~~Philippines, and~~Philippines. The Company has sales ~~and distribution~~ offices in ~~Russia~~all major geographies serving customers under the Glatfelter and ~~China.~~Sontara brands. Additional information about Glatfelter may be found at www.glatfelter.com. The terms “we,” “us,” “our,” “the Company,” or “Glatfelter,” refer to ~~P. H.~~ Glatfelter ~~Company~~Corporation and subsidiaries unless the context indicates otherwise. ~~Our products are marketed worldwide, either through wholesale paper merchants, brokers and agents, or directly to customers.~~

2.	~~ACCOUNTING POLICIES~~

2. ACCOUNTING POLICIES

Basis of Presentation The unaudited condensed consolidated financial statements (“financial statements”) include the accounts of Glatfelter and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated.

We prepared these financial statements in accordance with accounting principles generally accepted in the United States of America (“generally accepted accounting principles” or “GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission pertaining to interim financial statements. In our opinion, the financial statements reflect all normal, recurring adjustments needed to present fairly our results for the interim periods. When preparing these financial statements, we have assumed ~~that~~ you have read the audited consolidated financial statements included in our ~~2016~~2022 Annual Report on Form 10-K.

Discontinued Operations The results of operations and cash flows of our former Specialty Papers business have been classified as discontinued operations for all periods presented in the condensed consolidated statements of income.

Accounting Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingencies as of the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Management believes the estimates and assumptions used in the preparation of these financial statements are reasonable, based upon currently available facts and known circumstances, but recognizes ~~that~~ actual results may differ from those estimates and assumptions.

~~Recently Issued Accounting Pronouncements~~ ~~In March 2016,~~

The following tables set forth disaggregated information pertaining to our net sales:


	Three months ended March 31,
In thousands	2023	2022
Revenue by product category

Airlaid Materials
Feminine hygiene	58,245	59,312
Specialty wipes	44,794	37,095
Tabletop	30,415	30,747
Food pads	3,540	3,476


Home care	7,359		6,285
Adult incontinence	7,359		6,729
Other	7,729		5,820
	159,441		149,464
Composite Fibers
Food & beverage	78,944		75,223
Wallcovering	16,157		15,831
Technical specialties	21,453		23,136
Composite laminates	8,983		11,297
Metallized	7,054		10,342

	132,591		135,829
Spunlace
Consumer wipes	38,109		46,157
Critical cleaning	29,149		24,278
Health care	10,375		13,605
Hygiene	5,660		5,913
High performance	3,209		4,112
Beauty care	221		2,322

	86,723		96,387

Inter-segment sales elimination	(547)		—
Total	$	378,208	$	381,680

Revenue by geography

Airlaid Materials
Americas	$	89,837	$	80,913
Europe, Middle East and Africa	65,991		63,136
Asia Pacific	3,613		5,415
	159,441		149,464
Composite Fibers
Americas	34,212		37,976
Europe, Middle East and Africa	73,850		73,604
Asia Pacific	24,529		24,249
	132,591		135,829
Spunlace
Americas	53,152		55,484
Europe, Middle East and Africa	25,063		29,825
Asia Pacific	8,508		11,078
	86,723		96,387

Inter-segment sales elimination	(547)		—
Total	$	378,208	$	381,680

4.GAINS ON DISPOSITION OF PLANT, EQUIPMENT AND TIMBERLANDS

The following table sets forth sales of timberlands and other assets completed during the ~~Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09,~~ ~~Compensation – Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting~~ ~~designed to simplify certain aspects~~first three months of ~~accounting for share-~~

2023 and 2022:

based awards. The new ASU requires entities to recognize as a component of income tax expense all excess tax benefits or deficiencies arising from the difference between compensation costs recognized and the intrinsic value at the time an option is exercised or, in the case of restricted stock and similar awards, the fair value upon vesting of an award. Previously such differences


Dollars in thousands	Acres	Proceeds		Gain (loss)
2023
Timberlands	216	$	630	$	617
Other	n/a	83		28
Total		$	713	$	644

2022
Timberlands	790	$	3,130	$	2,962
Other	n/a	30		(1)
Total		$	3,160	$	2,961

5.GOODWILL AND OTHER ASSET IMPAIRMENT

No impairment charges were recognized in additional paid in capital as part of an “APIC pool.” The ASU also requires entities to exclude excess tax benefits and tax deficiencies from the calculation of common share equivalents for purposes of calculating earnings per share. In addition, as permitted by the ASU, we have elected to account for the impact of forfeitures as they occur rather to estimate forfeitures for purposes of recognizing compensation expense. We adopted this standard effective January 1, 2017, on a prospective basis; however, the adoption of the new standard did not have a material impact on our reported results of operations or financial position.

~~In May 2014, the FASB issued ASU No. 2014-09,~~ ~~Revenue from Contracts with Customers~~ which clarifies the principles for recognizing revenue and develops a common revenue standard for GAAP and International Financial Reporting Standards. The new standard is required to be adopted retrospectively for fiscal years beginning after December 15, 2017. The ASU requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. The guidance allows for both retrospective and modified retrospective methods of adoption. We will apply the modified retrospective method of adoption. We continue to perform our assessment of the impact of the ASU on our policies, processes, systems and controls and are developing processes to obtain the information necessary for the new disclosures. This assessment requires, among others, a review of a substantial amount of the contracts we have with our customers.

Substantially all of our revenue is earned pursuant to contracts under which we have one performance obligation that is satisfied at a point-in-time. We have completed our review of a substantial portion of our contracts and we do not expect this ASU will have a significant impact on the timing or amount of revenue recognition, our results of operations or our financial position.

~~In March 2017, the FASB issued ASU No. 2017-07,~~ ~~Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~ (“ASU 2017-07”). The update requires entities to present the service cost component of the net periodic benefit cost in the same income statement line item as other employee compensation costs arising from services rendered during ~~the period. All other components are to be presented below the determination of~~

operating income. Entities will be required to disclose the line(s) used to present the other components of net periodic benefit cost, if the components are not presented separately in the income statement. ASU 2017-07 is effective for fiscal years and interim periods beginning after December 15, 2017, and early adoption is permitted. We do not expect the adoption of ASU 2017-07 will have a material impact on our consolidated financial statements.

~~In February 2016, the FASB issued ASU No. 2016-02,~~ ~~Leases (Topic 842)~~. This ASU will require organizations such as us that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. The new guidance will be effective for annual periods beginning after December 15, 2018, and interim periods therein. Early adoption is permitted. We are in the process of assessing the impact this standard will have on us and expect to follow a modified retrospective method provided for under the standard.

~~In August 2017, the FASB issued ASU 2017-12, "Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities~~" (“ASU 2017-12”), which simplifies the application of hedge accounting and more closely aligns hedge accounting with an entity’s risk management strategies. ASU 2017-12 also amends the manner in which hedge effectiveness may be performed and changes the presentation of hedge ineffectiveness in the financial statements. ASU 2017-12 is effective for us beginning January 1, 2019, with early adoption permitted. ASU 2017-12 requires a cumulative-effect adjustment for certain items upon adoption. We are currently evaluating the impact the adoption of ASU 2017-12 will have on our consolidated financial statements.

~~In June 2016, the FASB issued ASU No. 2016-13~~ ~~Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~ that changes the impairment model for most financial instruments, including trade receivables from an incurred loss method to a new forward-looking approach, based on expected losses. Under the new guidance, an allowance is recognized based on an estimate of expected credit losses. This standard is effective for us in the first quarter of ~~2020~~2023.

During the first quarter of 2022, in connection with an assessment of potential impairment of long-lived and ~~must be adopted using~~indefinite lived intangible assets stemming from the compounding impacts resulting from the Russia/Ukraine military conflict and related sanctions, we recorded a ~~modified retrospective transition approach. We are currently assessing~~$117.3 million non-cash asset impairment charge related to Composite Fibers' Dresden facility and an impairment of Composite Fibers' goodwill. Dresden is a single-line facility that produces wallcover base paper, the ~~impact this standard may have~~majority of which is sold into the Russian and Ukrainian markets. As a direct result of the economic impacts from the conflict, and the disruptions in the underlying financial systems and restrictions on our ~~results~~ability to export wallcover base paper to Russia due to related sanctions, management expected a significant reduction in wallcover revenues and associated cash flows for the foreseeable future. In addition, the conflict also impacted other Composite Fibers products that are also subject to export sanctions into this region, and continued to significantly impact energy prices. Accordingly, a charge was recorded to reduce the carrying value of the Dresden fixed assets and intangible assets (technological know-how, customer relationships, and an indefinite-lived trade name), along with Composite Fibers’ goodwill to fair value.

The following table summarizes the impairment charges recorded as of the three months ended March 31, 2023 and 2022, respectively, in the accompanying condensed consolidated statements of income under the caption “Goodwill and other asset impairment charges:”


In thousands	2023		2022
Plant, property and equipment	$	—	$	27,619
Technological know-how	—		18,443
Customer relationships	—		11,695
Tradename	—		3,530
Goodwill	—		56,062
Total	$	—	$	117,349

The fair value of the underlying assets was estimated using discounted cash flow models, independent appraisals and similar methods, all of which are Level 3 fair value classification.

6.DISCONTINUED OPERATIONS

For the three months ended March 31, 2023, we recognized a loss in discontinued operations of $0.4 million primarily related to an insurance claim and ~~financial position.~~

legal costs.

3.	~~EARNINGS PER SHARE~~

The following table sets forth a summary of cash flows from discontinued operations which is included in the condensed consolidated statements of cash flows:

- 9 -


	Three months ended March 31,
In thousands	2023		2022
Net cash used by operating activities	$	(11)	$	(108)
Net cash used by investing activities	—		—
Net cash provided by financing activities	—		—
Change in cash and cash equivalents from discontinued operations	$	(11)	$	(108)

7.EARNINGS PER SHARE

The following table sets forth the details of basic and diluted earnings per share (“EPS”):

from continuing operations:

Three months ended
September 30

In thousands, except per share
2017

2016

Net income
$
12,105

$
19,601

Weighted average common shares

outstanding used in basic EPS

43,617

43,576

Common shares issuable upon

exercise of dilutive stock options

and PSAs / RSUs

565

557

Weighted average common shares

outstanding and common share

equivalents used in diluted EPS

44,182

44,133

Earnings per share

Basic
$
0.28

$
0.45

Diluted

0.27

0.44

Nine months ended
September 30

In thousands, except per share
2017

2016

Net income
$
17,994

$
37,734

Weighted average common shares

outstanding used in basic EPS

43,601

43,552

Common shares issuable upon

exercise of dilutive stock options

and PSAs / RSUs

809

507

Weighted average common shares

outstanding and common share

equivalents used in diluted EPS

44,410

44,059

Earnings per share

Basic
$
0.41

$
0.87

Diluted

0.41

0.86


	Three months ended March 31,
In thousands, except per share	2023		2022
Loss from continuing operations	$	(13,182)	$	(108,290)

Weighted average common shares outstanding used in basic EPS	44,957		44,709
Common shares issuable upon exercise of dilutive stock options and PSAs / RSUs	—		—
Weighted average common shares outstanding and common share equivalents used in diluted EPS	44,957		44,709

Loss per share from continuing operations
Basic	$	(0.29)	$	(2.42)
Diluted	(0.29)		(2.42)

The following table sets forth potential common shares outstanding that were not included in the computation of diluted EPS for the ~~period~~periods indicated, because their effect would be anti-dilutive:

September 30

In thousands
2017

2016

Three months ended

967

681

Nine months ended

593

683


	Three months ended March 31,
In thousands	2023	2022
Potential common shares	618	934

- 10 -

~~- 7 -~~

~~GLATFELTER~~

~~09.30.17 Form 10-Q~~

4.	~~ACCUMULATED OTHER~~ ~~COMPREHENSIVE INCOME~~

8.ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table sets forth details of the changes in accumulated other comprehensive income (losses) for the three months ended March 31, 2023 and ~~nine months ended September 30, 2017 and 2016.~~

2022.

In thousands
Currency translation adjustments

Unrealized gain (loss) on cash flow hedges

Change in pensions

Change in other postretirement defined benefit plans

Total

Balance at July 1, 2017
$
(66,879
)

$
(3,097
)

$
(105,824
)

$
4,719

$
(171,081
)
Other comprehensive income
   before reclassifications  (net of tax)

16,559

(1,533
)

—

—

15,026

Amounts reclassified from accumulated
   other comprehensive income  (net of tax)

—

19

2,424

(139
)

2,304

Net current period other comprehensive
   income (loss)

16,559

(1,514
)

2,424

(139
)

17,330

Balance at September 30, 2017
$
(50,320
)

$
(4,611
)

$
(103,400
)

$
4,580

$
(153,751
)
Balance at July 1, 2016
$
(74,486
)

$
785

$
(115,786
)

$
3,204

$
(186,283
)
Other comprehensive income
   before reclassifications  (net of tax)

(1,530
)

(1,195
)

—

—

(2,725
)
Amounts reclassified from accumulated
   other comprehensive income  (net of tax)

—

337

2,464

(145
)

2,656

Net current period other comprehensive
   income (loss)

(1,530
)

(858
)

2,464

(145
)

(69
)
Balance at September 30, 2016
$
(76,016
)

$
(73
)

$
(113,322
)

$
3,059

$
(186,352
)

In thousands
Currency translation adjustments

Unrealized gain (loss) on cash flow hedges

Change in pensions

Change in other postretirement defined benefit plans

Total

Balance at January 1, 2017
$
(100,448
)

$
1,500

$
(110,656
)

$
4,998

$
(204,606
)
Other comprehensive income
   before reclassifications  (net of tax)

50,128

(4,868
)

—

1

45,261

Amounts reclassified from accumulated
   other comprehensive income  (net of tax)

—

(1,243
)

7,256

(419
)

5,594

Net current period other comprehensive
   income (loss)

50,128

(6,111
)

7,256

(418
)

50,855

Balance at September 30, 2017
$
(50,320
)

$
(4,611
)

$
(103,400
)

$
4,580

$
(153,751
)
Balance at January 1, 2016
$
(73,041
)

$
(225
)

$
(120,714
)

$
3,494

$
(190,486
)
Other comprehensive income
   before reclassifications  (net of tax)

(2,975
)

(106
)

—

—

(3,081
)
Amounts reclassified from accumulated
   other comprehensive income  (net of tax)

—

258

7,392

(435
)

7,215

Net current period other comprehensive
   income (loss)

(2,975
)

152

7,392

(435
)

4,134

Balance at September 30, 2016
$
(76,016
)

$
(73
)

$
(113,322
)

$
3,059

$
(186,352
)


In thousands	Currency translation adjustments		Unrealized gain (loss) on derivatives		Change in pensions		Change in other postretirement defined benefit plans		Total

Balance at January 1, 2023	$	(106,242)	$	11,176	$	(3,247)	$	418	$	(97,895)
Other comprehensive income (loss) before reclassifications (net of tax)	6,663		1,556		—		—		8,219
Amounts reclassified from accumulated other comprehensive income (net of tax)	—		(1,399)		660		(8)		(747)
Net current period other comprehensive income (loss)	6,663		157		660		(8)		7,472
Balance at March 31, 2023	$	(99,579)	$	11,333	$	(2,587)	$	410	$	(90,423)

Balance at January 1, 2022	$	(69,757)	$	1,988	$	(11,482)	$	(1,053)	$	(80,304)
Other comprehensive income (loss) before reclassifications (net of tax)	(10,915)		383		—		—		(10,532)
Amounts reclassified from accumulated other comprehensive income (net of tax)	—		(740)		126		26		(588)
Net current period other comprehensive income (loss)	(10,915)		(357)		126		26		(11,120)
Balance at March 31, 2022	$	(80,672)	$	1,631	$	(11,356)	$	(1,027)	$	(91,424)

- 811 -

~~GLATFELTER~~

~~09.30.17 Form 10-Q~~

Reclassifications out of accumulated other comprehensive income and into the condensed consolidated statements of income were as follows:

Three months ended September 30

Nine months ended
September 30

In thousands

2017

2016

2017

2016

Description

Line Item in Statements of Income
Cash flow hedges (Note 12)

(Gains) losses on cash flow hedges

$
29

$
347

$
(1,687
)

$
264

Costs of products sold
Tax expense (benefit)

(10
)

(10
)

444

(6
)

Income tax provision
Net of tax

19

337

(1,243
)

258

Retirement plan obligations (Note 7)

Amortization of deferred benefit pension plans

Prior service costs

532

506

1,592

1,519

Costs of products sold

176

168

528

504

Selling, general and administrative
Actuarial losses

2,290

2,450

6,852

7,350

Costs of products sold

788

843

2,359

2,530

Selling, general and administrative

3,786

3,967

11,331

11,903

Tax benefit

(1,362
)

(1,503
)

(4,075
)

(4,511
)

Income tax provision
Net of tax

2,424

2,464

7,256

7,392

Amortization of deferred benefit other plans

Prior service costs

(37
)

(37
)

(112
)

(112
)

Costs of products sold

(8
)

(8
)

(24
)

(24
)

Selling, general and administrative
Actuarial losses

(77
)

(156
)

(233
)

(467
)

Costs of products sold

(17
)

(33
)

(50
)

(100
)

Selling, general and administrative

(139
)

(234
)

(419
)

(703
)

Tax expense

—

89

—

268

Income tax provision
Net of tax

(139
)

(145
)

(419
)

(435
)

Total reclassifications, net of tax

$
2,304

$
2,656

$
5,594

$
7,215


	Three months ended March 31,
In thousands	2023		2022
Description					Line Item in Statements of Income
Cash flow hedges (Note 17)
Gains on cash flow hedges	$	(918)	$	(1,072)	Costs of products sold
Tax expense	(481)		312		Income tax provision
Net of tax	(1,399)		(760)

Loss on interest rate swaps	—		20		Interest expense
Tax expense	—		—		Income tax provision
Net of tax	—		20
Total cash flow hedges	(1,399)		(740)

Retirement plan obligations (Note 10)
Amortization of deferred benefit pension plans
Prior service costs	6		11		Other, net
Actuarial losses	22		167		Other, net
Pension settlement	633		—
	661		178
Tax expense (benefit)	(1)		(52)		Income tax provision
Net of tax	660		126
Amortization of deferred benefit other plans
Prior service costs	5		26		Other, net
Actuarial gain	(13)		—		Other, net
	(8)		26
Tax expense	—		—		Income tax provision
Net of tax	(8)		26
Total reclassifications, net of tax	$	(747)	$	(588)

- 912 -

~~GLATFELTER~~

~~09.30.17 Form 10-Q~~

5.~~INCO~~ME

9.STOCK-BASED COMPENSATION

On May 5, 2022, upon Board and shareholder approval, the Glatfelter Corporation 2022 Long-Term Incentive Plan became effective and is a successor plan to the P. H. Glatfelter Amended and Restated Long-Term Incentive Plan (collectively, the “LTIP”). The LTIP continues to provide for the issuance of Glatfelter common stock to eligible participants in the form of restricted stock units (“RSUs”), restricted stock awards, incentive stock options, non-qualified stock options, stock-only stock appreciation rights (“SOSARs”) and performance share awards (“PSAs”). As of March 31, 2023, there were 1,527,906 shares of common stock available for future issuance under the LTIP.

Pursuant to terms of the LTIP, we have issued to eligible participants RSUs, PSAs and SOSARs.

Restricted Stock Units and Performance Share Awards In the first quarter of 2023 and 2022, we granted RSUs and PSAs to employees under our LTIP. In both 2023 and 2022, 50% of fair value of the awards granted were RSUs, which vest based on the passage of time, generally over a graded three-year period or, in certain instances, the RSUs were cliff vesting after one or three years. The remaining 50% of the fair value of the awards granted in 2023 and 2022 were PSAs. The PSAs awarded vest based on either the achievement of cumulative financial performance targets covering a two-year period or based on the three-year total shareholder return relative to a broad market index. The performance measures include a minimum, target and maximum performance level providing the grantees an opportunity to receive more or less shares than targeted depending on actual financial performance.

For RSUs, the grant date fair value of the awards, or the closing price per common share on the date of the award, is used to determine the amount of expense to be recognized over the applicable service period. For PSAs, the grant date fair value is estimated using a lattice model. The significant inputs include the stock price, volatility, dividend yield, and risk-free rate of return. Settlement of RSUs and PSAs will be made in shares of our common stock currently held in treasury.

The following table summarizes RSU and PSA activity during periods indicated:


Units	2023	2022
Balance at January 1,	1,650,152	1,111,382
Granted	1,190,206	528,011
Forfeited	(98,717)	(92,569)
Shares delivered	(199,263)	(250,301)
Balance at March 31,	2,542,378	1,296,523

The amount granted in 2023 and 2022 includes 697,045 and 299,993, respectively, of PSAs exclusive of reinvested dividends.

The following table sets forth aggregate RSU and PSA compensation expense included in continuing operations for the periods indicated:


	March 31,
In thousands	2023		2022
Three months ended	$	931	$	909

Stock-Only Stock Appreciation Rights Under terms of the SOSAR, a recipient receives the right to a payment in the form of shares of common stock equal to the difference, if any, in the fair market value of one share of common stock at the time of exercising the SOSAR and the exercise price. All SOSARs are vested and have a term of ten years. No SOSARs were awarded since 2016.

The following table sets forth information related to outstanding SOSARs:

- 13 -


	2023			2022
	Shares	Wtd Avg Exercise Price		Shares	Wtd Avg Exercise Price
Outstanding at January 1,	769,544	$	21.34	1,079,113	$	20.42
Granted	—	—		—	—
Exercised	—	—		—	—
Canceled / forfeited	(151,487)	18.36		(145,440)	15.61
Outstanding at March 31,	618,057	$	22.07	933,673	$	21.17

10.RETIREMENT PLANS AND OTHER POST-RETIREMENT BENEFITS

The following tables provide information with respect to the net periodic costs of our pension and post-retirement medical benefit plans included in continuing operations.


	Three months ended March 31,
In thousands	2023		2022
Pension Benefits
Service cost	$	—	$	—
Interest cost	411		235
Amortization of prior service cost	6		11
Amortization of actuarial loss	22		167
Pension settlement charge	633		—
Total net periodic benefit expense	$	1,072	$	413

Other Benefits
Service cost	$	3	$	—
Interest cost	44		33
Amortization of prior service cost	5		26
Amortization of actuarial gain	(13)		—
Total net periodic benefit expense	$	39	$	59

During the three months ended March 31, 2023, we made a $5.8 million lump-sum payment to our former CEO under the terms of his non-qualified pension plan. In accordance with pension settlement accounting, we recorded a $0.6 million settlement charge reflecting the recognition of amounts previously included in accumulated other comprehensive income.

11.INCOME TAXES

Income taxes are recognized for the amount of taxes payable or refundable for the current year, and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in our condensed consolidated financial statements or tax returns. The effects of income taxes are measured based on enacted tax laws and rates.

For the three months ended March 31, 2023, we had a pretax loss from continuing operations of $9.5 million and income tax expense of $3.7 million. The effective income tax rate for the three months ended March 31, 2023 was unfavorably impacted by the jurisdictional mix of pretax results among the Company and its subsidiaries and losses which generated no tax benefit in domestic and certain foreign jurisdictions.

For the three months ended March 31, 2023, we recorded an increase in the valuation allowance of $3.1 million for U.S. federal and certain foreign jurisdictions against our net deferred tax assets. In assessing the need for a valuation allowance, management considers all available positive and negative evidence in its analysis. Based on this analysis, we recorded a valuation allowance for the portion of deferred tax assets where the weight of the evidence indicated it is more likely than not that the deferred assets will not be realized.

- 14 -

As of ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016,~~2022, we had ~~$17.1~~$57.2 million and ~~$14.2~~$56.5 million, respectively, of gross unrecognized tax benefits. As of ~~September 30, 2017,~~March 31, 2023, if such benefits were to be recognized, approximately ~~$11.5~~$54.1 million would be recorded as a component of income tax expense, thereby affecting our effective tax rate.

~~We, or one of our subsidiaries, file income tax returns with the United States Internal Revenue Service, as well as various state and foreign authorities.~~

~~The following table summarizes, by major jurisdiction, tax years that remain subject to examination:~~

	~~Open Tax Years~~
~~Jurisdiction~~	~~Examinations not yet initiated~~	~~Examination in progress~~
~~United States~~
~~Federal~~	~~2014 - 2016~~	~~N/A~~
~~State~~	~~2012 - 2016~~	~~2013 -2014~~
~~Canada~~⁽¹⁾	~~2010-2013; 2016~~	~~2014 - 2015~~
~~Germany~~⁽¹⁾	~~2016~~	~~2012 - 2015~~
~~France~~	~~2014 - 2016~~	~~2011 - 2012~~
~~United Kingdom~~	~~2015 - 2016~~	~~N/A~~
~~Philippines~~	~~2015 -2016~~	~~N/A~~

~~(1)~~

~~includes provincial or similar local jurisdictions, as applicable~~

The amount of income taxes we pay is subject to ongoing audits by federal, state and foreign tax authorities, which often result in proposed assessments. Management performs a comprehensive review of its global tax positions on a quarterly basis and accrues amounts for uncertain tax positions. Based on these reviews and the result of discussions and resolutions of matters with ~~certain~~ tax authorities and the closure of tax years subject to tax audit, reserves are adjusted as necessary. However, future results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are determined or resolved or as ~~such~~ statutes are closed. Due to potential ~~for~~ resolution of federal, state and foreign examinations, and the lapse of various statutes of limitation, it is reasonably possible our gross unrecognized tax benefits ~~balance~~ may decrease within the next twelve months by a range of zero to ~~$0.7~~$8.4 million. ~~Substantially all of this range relates to tax positions taken in the United Kingdom and the U.S.~~

We recognize interest and penalties related to uncertain taxpositions as income tax expense.

The following table summarizes information included in continuing operations related to interest ~~and penalties~~ on uncertain tax positions:

Nine months ended
September 30

In millions
2017

2016

Interest expense (income)
$
0.3

$
0.2

Penalties

—

—


	Three months ended March 31,
In millions	2023		2022
Interest expense	$	0.5	$	0.4

September 30

December 31

2017

2016

Accrued interest payable
$
0.8

$
0.5


	March 31, 2023		December 31, 2022
Accrued interest payable	$	5.3	$	4.8
Accrued penalties	3.0		3.0

Inventories, net of Glatfelter common stock to eligible participants in the form of restricted stock units, restricted stock awards, non-qualified stock options, performance shares, incentive stock options and performance units.

~~Pursuant to terms of the LTIP, we have issued to eligible participants restricted stock units, performance share awards and stock only stock appreciation rights.~~

~~Restricted Stock Units (“RSU”) and Performance Share Awards (“PSAs”)~~ Awards of RSUs and PSAs are made under our LTIP. On May 4, 2017, our shareholders approved a 1,840,000 share increase in the shares available to be awarded under the LTIP. The RSUs vest on the passage of time, generally on a graded scale over a three, four, and five-year period, or in certain instances the RSUsreserves, were issued with five year cliff vesting. PSAs are issued to members of management and vesting is based on achievement of cumulative financial performance targets covering a two year period followed by an additional one-year service period. The performance measures include a minimum, target and maximum performance level providing the grantees an opportunity to receive more or less shares than targeted depending on actual financial performance. For both RSUs and PSAs, the grant date fair value of the awards, which is equal to the closing price per common share on the date of the award, is used to determine the amount of expense to be recognized over the applicable service period. Settlement of RSUs and PSAs will be made in shares of our common stock currently held in treasury.

as follows:


In thousands	March 31, 2023		December 31, 2022
Raw materials	$	96,402	$	109,166
In-process and finished	164,017		142,331
Supplies	61,008		57,939
Total	$	321,427	$	309,436

- 1015 -

~~GLATFELTER~~

~~09.30.17 Form 10-Q~~

13.GOODWILL AND OTHER INTANGIBLE ASSETS

~~The following table summarizes RSU and PSA activity during periods indicated:~~

Units
2017

2016

Balance at January 1,

679,038

674,523

Granted

370,458

298,832

Forfeited

(93,045
)

(146,327
)
Shares delivered

(26,352
)

(149,975
)
Balance at September 30,

930,099

677,053

~~The amount granted in 2017 and 2016 includes PSAs of 163,274 and 199,693, respectively, exclusive of reinvested dividends.~~

The following table sets forth ~~aggregate RSU~~changes in the amounts of goodwill and ~~PSA compensation expense~~other intangible assets recorded by each of our segments during the periods indicated:


In thousands	December 31, 2022		Impairment		Purchase price allocation adjustment		Translation		March 31, 2023
Goodwill
Airlaid Materials	$	105,195	$	—	$	—	$	1,354	$	106,553
Composite Fibers	—		—		—		—		—
Spunlace	—		—		—		—		—
Total	$	105,195	$	—	$	—	$	1,354	$	106,553
Other Intangible Assets	December 31, 2022		Impairment		Amortization		Translation		March 31, 2023
Airlaid Materials
Tradename	$	3,442	$	—	$	—	$	67	$	3,509
Accumulated amortization	(739)		—		(43)		(15)		(797)
Net	2,703		—		(43)		52		2,712

Technology and related	17,512		—		—		331		17,843
Accumulated amortization	(5,437)		—		(288)		(118)		(5,843)
Net	12,075		—		(288)		213		12,000

Customer relationships and related	43,152				—		454		43,606
Accumulated amortization	(13,571)		—		(923)		(198)		(14,692)
Net	29,581		—		(923)		256		28,914

Spunlace
Products and Tradenames	27,290				—		197		27,487
Accumulated amortization	(1,759)		—		(360)		55		(2,064)
Net	25,531		—		(360)		252		25,423

Technology and related	14,372				—		103		14,475
Accumulated amortization	(1,455)		—		(297)		(127)		(1,879)
Net	12,917		—		(297)		(24)		12,596

Customer relationships and related	27,666				—		199		27,865
Accumulated amortization	(1,803)		—		(383)		(8)		(2,194)
Net	25,863		—		(383)		191		25,671

Total intangibles	133,434		—		—		1,351		134,785
Total accumulated amortization	(24,764)		—		(2,294)		(411)		(27,469)
Net intangibles	$	108,670	$	—	$	(2,294)	$	940	$	107,316

We enter into a variety of arrangements in which we are the lessee for the ~~periods indicated:~~

use of automobiles, forklifts and other production equipment, production facilities, warehouses, office space and land. We determine if an arrangement contains a lease at inception. All our lease arrangements are operating leases and are recorded in the condensed consolidated balance sheet under the caption “Other assets” and the lease obligation is under “Other current liabilities” and “Other long-term liabilities.” We do not have any finance leases.

September 30

In thousands
2017

2016

Three months ended
$
1,658

$
765

Nine months ended

3,746

2,167

- 16 -

~~Stock Only Stock Appreciation Rights~~

Operating lease right of use (“~~SOSARs”~~ROU”) ~~Under terms~~ assets and operating lease liabilities are recognized based on the present value of the ~~SOSAR, a recipient receives~~future minimum lease payments over the ~~right to a payment in~~lease term at commencement date. ROU assets also include any initial direct costs incurred and any lease payments made at or before the ~~form of shares of common stock equal to the difference, if any, in the fair market value of one share of common stock~~lease commencement date, less lease incentives received. We use our incremental borrowing rate based on information available at the ~~time~~commencement date in determining the lease liabilities as our leases generally do not provide an implicit rate. For purposes of ~~exercising~~recording the ~~SOSAR and~~lease arrangement, the ~~exercise price. The SOSARs vest ratably over a three year period and have a~~ term of ~~ten years.~~

~~No SOSARs were granted in 2017.~~ lease may include options to extend or terminate when we are reasonably certain that the option will be exercised. Lease expense is recognized on a straight-line basis over the lease term.

The following table sets forth information related to ~~outstanding SOSARS for~~our leases as of the ~~nine months ended September 30, 2017 and 2016;~~

2017

2016

SOSARS
Shares

Wtd Avg
Exercise
Price

Shares

Wtd Avg
Exercise
Price

Outstanding at January 1,

2,736,616

$
17.64

2,199,742

$
17.82

Granted

—

—

743,925

17.54

Exercised

(33,050
)

14.65

(61,190
)

10.70

Canceled / forfeited

(17,630
)

18.46

(143,932
)

17.87

Outstanding at September 30,

2,685,936

$
17.67

2,738,545

$
17.64

SOSAR Grants

Weighted average grant date
fair value per share
$
-

$
4.07

Aggregate grant date
fair value (in thousands)
$
-

$
3,013

Black-Scholes assumptions

Dividend yield

-

2.85
%

Risk free rate of return

-

1.34
%

Volatility

-

31.97
%

Expected life
-

6 yrs

periods indicated.


Dollars in thousands	March 31, 2023			December 31, 2022
Right of use asset	$	29,581		$	25,420
Weighted average discount rate	3.68		%	3.14		%
Weighted average remaining maturity (years)	18.2			21.2

Nine months ended
September 30

In thousands

2017

2016

Pension Benefits

Service cost

$
8,065

$
7,855

Interest cost

17,825

18,360

Expected return on plan assets

(32,246
)

(33,992
)
Amortization of prior service
   cost

2,120

2,023

Amortization of unrecognized
   loss

9,211

9,880

Total net periodic benefit cost

$
4,975

$
4,126

Other Benefits

Service cost

$
868

$
860

Interest cost

1,497

1,494

Amortization of prior
   service credit

(136
)

(136
)
Amortization of
   actuarial gain

(283
)

(567
)
Total net periodic
   benefit cost

$
1,946

$
1,651

8.	~~INVENTORIES~~

~~Inventories, net of reserves, were as follows:~~

September 30

December 31

In thousands
2017

2016

Raw materials
$
64,088

$
66,359

In-process and finished

117,490

112,507

Supplies

75,186

70,803

Total
$
256,764

$
249,669

9.	~~CAPITALIZED INTEREST~~

The following table sets forth ~~details of interest incurred, capitalized and expensed:~~

Three months ended
September 30

Nine months ended
September 30

In thousands

2017

2016

2017

2016

Interest cost incurred

$
5,079

$
4,334

$
14,556

$
12,962

Interest capitalized

532

439

1,525

998

Interest expense

$
4,547

$
3,895

$
13,031

$
11,964

~~Capitalized interest primarily relates to spending for Specialty Papers’ environmental compliance and~~required remaining future minimum lease payments during the ~~Airlaid capacity expansion projects.~~

~~10.~~

~~LONG-TERM DEBT~~

years indicated:


In thousands
2023	$	4,979
2024	5,507
2025	4,623
2026	2,677
2027	2,211
Thereafter	20,147

- 17 -

15.LONG-TERM DEBT

Long-term debt is summarized as follows:

September 30

December 31

In thousands
2017

2016

Revolving credit facility, due Mar. 2020
$
158,298

$
61,595

5.375% Notes, due Oct. 2020

250,000

250,000

2.40% Term Loan, due Jun. 2022

8,012

8,282

2.05% Term Loan, due Mar. 2023

34,659

35,163

1.30% Term Loan, due Jun. 2023

9,698

9,788

1.55% Term Loan, due Sep. 2025

11,574

10,333

Total long-term debt

472,241

375,161

Less current portion

(11,122
)

(8,961
)
Unamortized deferred issuance costs

(2,094
)

(2,553
)
Long-term debt, net of current portion
$
459,025

$
363,647


In thousands	March 31, 2023		December 31, 2022
Revolving credit facility, due Sep 2026	$	104,400	$	118,685
4.750% Senior Notes, due Oct 2029	500,000		500,000
11.25% Term loan, due Mar 2029	266,438		—
Term loan, due Feb 2024	—		193,588
2.05% Term Loan, due Mar 2023	—		1,423
1.30% Term Loan, due Jun 2023	—		762
1.55% Term Loan, due Sep 2025	—		3,594
1.10% Term Loan, due Mar 2024	3,955		4,848
0.57% Term Loan, due Jul 2023	—		21,332
Total long-term debt	874,793		844,232
Less current portion	(3,955)		(40,435)
Unamortized deferred issuance costs	(18,748)		(10,545)
Long-term debt, net of current portion	$	852,090	$	793,252

On September 2, 2021, we entered into a restatement agreement as part of a Fourth Amended and Restated $400.0 million Revolving Credit Facility and a €220.0 million Term Loan (collectively, the “Credit Agreement”).

On March ~~12, 2015,~~30, 2023, we ~~amended our revolving credit agreement with a consortium of banks (the “Revolving~~entered into an amendment to the Credit ~~Facility”)~~Agreement which ~~increased the amount available for borrowing to $400 million, extended the maturity of the facility to March 12, 2020, and instituted a revised interest rate pricing grid. On February 1, 2017,~~reduced the Revolving Credit Facility ~~was further~~to $250.0 million and had us fully extinguish the €220.0 million Term Loan. The amendment: i) modifies the “leverage ratio” to be the ratio of consolidated senior secured debt to consolidated adjusted EBITDA ; ii) increases the maximum interest rate borrowing margin to be applied to the applicable index by 275 basis points; and iii) pledges as collateral substantially all domestic and Canadian assets to secure obligations owed under the Credit Agreement, as well as, on a second lien basis, the European assets that secure the AG Loan (as defined below). As amended, we are obligated to ~~among other things, change~~maintain a leverage ratio under 4.25 to 1.0 through the ~~definition~~quarter ended December 31, 2024, stepping down to 4.0 to 1.0 at March 31, 2025, and 3.50 to 1.0 at March 31, 2026.

Borrowing rates for the Revolving Loans are determined at our option at the time of ~~earnings before interest, taxes, depreciation and amortization (“EBITDA”) for purposes of calculating covenant compliance.~~

each borrowing. For all ~~US dollar~~U.S. Dollar denominated ~~borrowings under the~~ Revolving ~~Credit Facility,~~Loan borrowings, the borrowing rate is ~~at our option,~~ either, (a) the bank’s base rate which is equal to the greater of i) the prime rate; ii) the ~~federal funds~~overnight bank funding rate plus 50 basis points; or iii) the daily ~~Euro-rate~~Simple Secured Overnight Financing Rate (“SOFR”) rate plus 100 basis points plus an applicable spread over either i), ii) or iii) ranging from ~~12.5~~250 basis points to ~~100~~400 basis points based on the Company’s leverage ~~ratio and its corporate credit ratings determined by Standard & Poor’s Rating Services and Moody’s Investor Service, Inc. (the “Corporate Credit Rating”);~~ratio; or (b) the daily ~~Euro-rate~~Term SOFR-rate plus an applicable margin ranging from ~~112.5~~350 basis points to ~~200~~500 basis points based on the Company’s leverage ~~ratio and the Corporate Credit Rating.~~ratio. For ~~non-US dollar~~non-U.S. Dollar denominated borrowings, interest is based on ~~(b) above.~~

the Euro-rate or EURIBOR-rate plus an applicable margin ranging from 350 basis points to 500 basis points based on the Company’s leverage ratio.

The ~~Revolving~~ Credit ~~Facility~~Agreement contains a number of customary covenants for financings of this type that, among other things, restrict our ability to dispose of or create liens on assets, incur additional indebtedness, ~~repay other indebtedness,~~ limits certain intercompany financing arrangements, make acquisitions and engage in mergers or consolidations. WeThe Credit Agreement also contains covenants requiring a minimum debt coverage ratio.

Revolving Loans borrowings are ~~also required to comply with specified financial tests~~available in U.S. Dollars, Euros, British Pound Sterling, and ~~ratios including: i) maximum net debt to EBITDA ratio (the “leverage ratio”);~~Canadian Dollars.

All remaining principal outstanding and ~~ii) a consolidated EBITDA to~~accrued interest ~~expense ratio. The most restrictive of our covenants is a maximum leverage ratio of 3.5x.~~ under the Revolving Credit Facility will be due and payable on September 2, 2026.

As of ~~September 30, 2017,~~March 31, 2023, the leverage ratio, as calculated in accordance with the definition in our ~~amended credit agreement,~~Credit Agreement, was ~~2.6x.~~3.0x. A breach of these requirements would give rise to certain remedies under the Revolving Credit Facility, among which ~~are~~is the termination of the ~~agreement~~agreement.

- 18 -

On March 30, 2023, we entered into a €250.0 million Term Loan with certain affiliates of Angelo, Gordon & Co., L.P. (“AG Loan”). The net proceeds from the AG Loan were used to extinguish the €220.0 million Term Loan, to repay a portion of outstanding revolving borrowings under the Revolving Credit Facility, for working capital and ~~accelerated repayment~~general corporate purposes and to pay estimated fees and expenses.

The AG Loan will mature on March 23, 2029. Interest on the AG Loan accrues at the rate of 11.25% per annum and is payable quarterly in arrears on March 31, June 30, September 30, and December 31 each year, commencing on June 30, 2023.

The AG Loan is prepayable, in whole or in part, at any time at the prepayable premium specified in the Term Loan Agreement. Prior to September 30, 2024, we may prepay some or all of the ~~outstanding borrowings plus accrued~~AG Loan at a "make-whole" premium as specified.

Under the terms of the AG Loan, we have pledged as collateral substantially all assets of our subsidiaries in Germany, Luxembourg, United Kingdom, Malta and ~~unpaid interest under~~Switzerland, as well as, on a second lien basis, the ~~credit facility.~~

domestic and Canadian assets that secure the Revolving Credit Facility.

All covenants contained in the AG Loan agreement are substantially consistent with the Credit Agreement.

On October ~~3, 2012,~~25, 2021, we ~~completed a private placement offering of $250.0~~issued $500.0 million aggregate principal amount of ~~5.375% Senior Notes~~4.750% senior notes due ~~2020~~2029 (the ~~“5.375% Notes”~~“Notes”). The ~~5.375%~~ Notes ~~which~~ are ~~now publically registered, are fully and unconditionally~~ guaranteed on a senior unsecured basis, jointly and severally, by ~~PHG Tea Leaves, Inc.~~each of our existing and future domestic restricted subsidiaries that guarantees our obligations under the Credit Agreement, and/or certain other indebtedness.

The Notes were issued pursuant to an indenture dated as of October 25, 2021 (the “Base Indenture”), ~~Mollanvick, Inc., Glatfelter Composite Fibers N. A., Inc., Glatfelter Advanced Materials N.A., LLC.,~~as supplemented by the supplemental indenture dated as of October 25, 2021 (the “Supplemental Indenture” and, ~~Glatfelter Holdings, LLC (the “Guarantors”~~together with the Base Indenture, the “Indenture”). among the Company, certain subsidiaries of the Company party thereto, as guarantors, and Wilmington Trust, National Association, as trustee.

The net proceeds from the offering of the Notes, together with cash on hand, were used to pay the purchase price of the Jacob Holm acquisition, to repay certain indebtedness of Jacob Holm, to repay outstanding revolving borrowings under the Revolving Credit Facility, and to pay estimated fees and expenses.

The Notes will mature on November 15, 2029. Interest on the ~~5.375%~~ Notes accrues at the rate of 4.750% per annum and is payable ~~semiannually~~semi-annually in arrears on ~~April~~May 15 and ~~October 15.~~

November 15 of each year, commencing on May 15, 2022.

The ~~5.375%~~ Notes are redeemable, in whole or in part, at any time at the redemption prices specified in the ~~applicable~~ Indenture. ~~These Notes and the guarantees~~Prior to November 15, 2024, we may redeem some or all of the ~~notes are senior obligations of~~Notes at a "make-whole" premium as specified in the ~~Company and the Guarantors, respectively, rank equally in right of payment with future senior indebtedness of the Company and the Guarantors and will mature on October 15, 2020.~~

Indenture.

The ~~5.375%~~ Notes contain various covenants customary to indebtedness of this nature, including limitations on i) the amount of indebtedness that may be incurred; ii) certain restricted payments including common stock dividends; iii)

distributions from certain subsidiaries; iv) sales of assets; v) transactions amongst subsidiaries; and vi) incurrence of liens on assets. In addition, the ~~5.375%~~ Notes contain cross default provisions that could result in all such notes becoming due and payable in the event of a failure to repay debt outstanding under the ~~Revolving~~ Credit ~~Facility~~Agreement at maturity or a default under the ~~Revolving~~ Credit ~~Facility~~Agreement that accelerates the debt outstanding thereunder. As of ~~September 30, 2017,~~March 31, 2023, we met all of the requirements of our debt covenants.

Glatfelter Gernsbach GmbH ~~& Co. KG~~ (“Gernsbach”), a wholly-owned subsidiary of ours, entered into a series of borrowing agreements with IKB Deutsche Industriebank AG, Düsseldorf (“IKB”) ~~as summarized below:~~

Amounts in thousands
Original
Principal

Interest
Rate

Maturity
Borrowing date

Apr. 11, 2013
€
42,700

2.05
%

Mar. 2023
Sep. 4, 2014

10,000

2.40
%

Jun. 2022
Oct. 10, 2015

2,608

1.55
%

Sep. 2025
May 4, 2016

7,195

1.55
%

Sep. 2025
Apr. 26, 2016

10,000

1.30
%

Jun. 2023

. Each of the borrowings require quarterly repayments of principal and interest and provide for representations, warranties and covenants customary for financings of these types. The financial covenants ~~contained in each~~ of ~~the IKB loans, which relate to the minimum ratio of consolidated EBITDA to consolidated interest expense and the maximum ratio of consolidated total net debt to consolidated adjusted EBITDA,~~these borrowings are calculated by reference to the Credit Agreement. These borrowings were fully extinguished on March 14, 2023.

In 2021, Gernsbach also entered into two fixed-rate non-amortizing term loans with certain financial institutions. Similar to the IKB loans discussed above, the financial covenants of these borrowings are calculated by reference to the Credit Agreement. On February 28, 2023, one of these term loans for €20.0 million was fully extinguished. The remaining term loan has a principal balance of $4.0 million and matures in March 2024.

Aggregated unamortized deferred debt issuance costs incurred in connection with all of our ~~Revolving Credit Facility.~~

~~P. H.~~ outstanding debt totaled $18.7 million at March 31, 2023. The deferred costs are being amortized on a straight-line basis over the life of the

- 19 -

underlying instruments. Amortization expense related to deferred debt issuance costs totaled $2.2 million, $1.9 million and $0.9 million in 2023, 2022 and 2021, respectively.

The following schedule sets forth the amortization of our term loan agreements together with the maturity of our other long-term debt during the indicated year.


In thousands
2023	$	2,966
2024	989
2025	—
2026	104,400
2027	—
Thereafter	766,438

Glatfelter ~~Company~~Corporation guarantees all debt obligations of its subsidiaries. All such obligations are recorded in these ~~condensed~~ consolidated financial statements.

~~Letters~~

As of March 31, 2023 and March 31, 2022, we had $5.4 million and $6.7 million, respectively, of letters of credit issued to us by certain financial ~~institutions totaled $5.2 million as of September 30, 2017 and $5.1 million as of December 31, 2016.~~institutions. The letters of credit, which reduce amounts available under our ~~revolving credit facility, primarily~~Revolving Credit Facility, provide financial assurances for the performance of long-term monitoring activities associated with the Fox River environmental matter and for the benefit of certain state workers compensation insurance agencies in conjunction with our self-insurance program. We bear the credit risk on this amount to the extent that we do not comply with the provisions of certain agreements. No amounts are outstanding under the letters of credit.

~~11.~~

~~FAIR VALUE OF FINANCIAL INSTRUMENTS~~

- 20 -

16.FAIR VALUE OF FINANCIAL INSTRUMENTS

The amounts reported on the condensed consolidated balance sheets for cash and cash equivalents, accounts receivable, ~~and~~ accounts payable and short-term debt approximate their respective fair value. The following table sets forth carrying value and fair value of long-term debt:

��

September 30, 2017

December 31, 2016

In thousands
Carrying
Value

Fair Value

Carrying
Value

Fair Value

Variable rate debt
$
158,298

$
158,298

$
61,595

$
61,595

Fixed-rate bonds

250,000

254,265

250,000

256,563

2.40% Term loan

8,012

8,207

8,282

8,877

2.05% Term loan

34,659

35,223

35,163

37,089

1.30% Term Loan

9,698

9,644

9,788

10,062

1.55% Term loan

11,574

11,509

10,333

10,082

Total
$
472,241

$
477,146

$
375,161

$
384,268

~~As of September 30, 2017, and December 31, 2016, we had $250.0 million of 5.375% fixed rate bonds. These bonds are publicly registered, but thinly traded. Accordingly, the~~


	March 31, 2023				December 31, 2022
In thousands	Carrying Value		Fair Value		Carrying Value		Fair Value
Revolving credit facility, due Sep. 2026	$	104,400	$	104,400	$	118,685	$	118,685
4.750% Senior Notes, due Oct. 2029	500,000		330,625		500,000		301,250
11.25% Term loan, due Mar 2029	266,438		271,705		—		—
Term loan, due Feb. 2024	—		—		193,588		188,998
2.05% Term Loan, due Mar. 2023	—		—		1,423		1,418
1.30% Term Loan, Jun. 2023	—		—		762		754
1.55% Term Loan, due Sep. 2025	—		—		3,594		3,430
1.10% Term Loan, due Mar. 2024	3,955		3,861		4,848		4,721
0.57% Term Loan, due Jul. 2023	—		—		21,332		20,932
Total	$	874,793	$	710,591	$	844,232	$	640,188

The values set forth above ~~for the bonds, as well as our other debt instruments,~~ are based on observable inputs and other relevant market data (Level 2). The fair value of financial derivatives is set forth below in Note ~~12.~~

~~12.~~

~~FINANCIAL DERIVATIVES AND HEDGING ACTIVITIES~~

17.

17.FINANCIAL DERIVATIVES AND HEDGING ACTIVITIES

As part of our overall risk management practices, we enter into financial derivatives primarily designed to either i) hedge foreign currency risks associated with forecasted transactions ~~– “cash~~(“cash flow hedges”); or ii) mitigate the impact that changes in currency exchange rates have on intercompany financing transactions and foreign currency denominated receivables and payables ~~– “foreign~~(“foreign currency ~~hedges."~~

hedges”); or iii) convert variable-interest-rate debt to fixed rates.

Derivatives Designated as Hedging Instruments - Cash Flow Hedges We use currency forward contracts as cash flow hedges to manage our exposure to fluctuations in the currency exchange rates on certain forecasted production ~~costs or capital expenditures expected to be incurred.~~costs. Currency forward contracts involve fixing the exchange for delivery of a specified amount of foreign currency on a specified date. As of ~~September 30, 2017,~~March 31, 2023, the maturity of currency forward contracts ranged from one month to 18 months.

We designate certain currency forward contracts as cash flow hedges of forecasted raw material purchases, certain production costs or capital expenditures with exposure to changes in foreign currency exchange rates. ~~The effective portion of changes~~Changes in the fair value of derivatives designated and that qualify as cash flow hedges of foreign exchange risk is deferred as a component of accumulated other comprehensive income in the accompanying condensed consolidated balance sheets. With respect to hedges of forecasted raw material purchases or production costs, the

amount deferred is subsequently reclassified into costs of products sold in the period that, inventory produced using the hedged transaction, affects earnings. For hedged capital expenditures, deferred gains or losses are reclassified and included in the historical cost of the capital asset and subsequently affect earnings as depreciation is recognized. The ineffective portion of the change in fair value of the derivative is recognized directly to earnings and reflected in the accompanying condensed consolidated statements of income as non-operating income (expense) under the caption “Other, net.”

- 21 -

We had the following outstanding derivatives that were used to hedge foreign exchange risks associated with forecasted transactions and designated as hedging instruments:

In thousands
September 30 2017

December 31 2016

Derivative

Sell/Buy - sell notional

Philippine Peso / British Pound

19,047

—

Euro / British Pound

11,428

10,373

U.S. Dollar / Euro

1,471

—

Canadian Dollar / U.S. Dollar

20

—

Sell/Buy - buy notional

Euro / Philippine Peso

857,103

699,279

British Pound / Philippine Peso

644,076

557,025

U.S. Dollar / Euro

7,799

15,379

Euro / U.S. Dollar

54,135

43,951

U.S. Dollar / Canadian Dollar

32,760

35,290

British Pound / Euro

335

—


In thousands	March 31, 2023	December 31, 2022
Derivative
Sell/Buy - sell notional
Euro / British Pound	14,990	18,961

U.S. Dollar / British Pound	27,204	34,501
U.S. Dollar / Euro	91	824


Sell/Buy - buy notional
Euro / Philippine Peso	879,092	1,030,114
British Pound / Philippine Peso	910,029	1,144,839
Euro / U.S. Dollar	82,901	78,435
U.S. Dollar / Canadian Dollar	29,987	36,423

On June 15, 2022, we terminated a €180 million notional value floating-to-fixed interest rate swap agreement with certain financial institutions that was entered into in October 2019 and was to mature in December 2022. During the life of the swap, we paid a fixed interest rate of the applicable margin plus 0.0395% on €180 million of the underlying variable rate term loan. We received the greater of 0.00% or the EURIBOR-rate. At termination, we recognized a deferred gain of $0.4 million that will be amortized into interest expense through December 2022.

Derivatives Designated as Hedging Instruments – Net Investment HedgeThe €220 million Term Loan discussed in Note 15 – “Long-Term Debt” is designated as a net investment hedge of our Euro functional currency foreign subsidiaries. During the first three months of 2023 and 2022, we recognized a pre-tax loss of $3.7 million and a pre-tax gain of $2.4 million, respectively, on the remeasurement of the term loan from changes in currency exchange rates. Such amounts are recorded as a component of Other Comprehensive Income (Loss).

On September 6, 2022, we terminated a $150.0 million cross currency swap agreement with certain financial institutions that was entered into in March 2022 and was to mature in May 2025. Pursuant to the terms of the swap, we agreed to receive 4.750% interest denominated in U.S. dollars and we agreed to pay 3.06% interest denominated in euros. We designated the cross-currency swap as a hedge of our net investment in certain euro functional currency subsidiaries. We collected cash proceeds of approximately $15.2 million upon termination. The gain associated with the swap remains in accumulated other comprehensive loss.

Derivatives Not Designated as Hedging Instruments - Foreign Currency HedgesWe also ~~enter~~entered into forward foreign exchange contracts to mitigate the impact changes in currency exchange rates have on balance sheet monetary assets and liabilities. None of these contracts are designated as hedges for financial accounting purposes and, accordingly, changes in value of the foreign exchange forward contracts and in the offsetting underlying on-balance-sheet transactions are reflected in the accompanying condensed consolidated statements of income under the caption “Other, net.”

The following sets forth derivatives used to mitigate the impact changes in currency exchange rates have on balance sheet monetary assets and liabilities:

In thousands
September 30   2017

December 31   2016

Derivative

Sell/Buy -  sell notional

U.S. Dollar / British Pound

17,500

10,500

British Pound / Euro

1,000

2,500

Sell/Buy - buy notional

Euro / U.S. Dollar

4,500

3,500

British Pound / Euro

12,000

18,500

- 22 -

In thousands March 31, 2023 December 31, 2022
Derivative
Sell/Buy - sell notional
U.S. Dollar / British Pound 28,100 28,600
British Pound / Euro 1,410 2,800
British Pound / Swiss Franc 2,700 2,535
Euro / U.S. Dollar 10,000 9,630
Sell/Buy - buy notional
Euro / U.S. Dollar 7,700 2,900
British Pound / Euro 13,700 15,950
Swiss Franc / Euro 2,560 2,250
Swiss Franc / U.S. Dollar 1,720 930
Chinese Yuan / U.S. Dollar 4,330 4,400

These contracts have maturities of one month from the date originally entered into.

Fair Value Measurements The following table summarizes the fair values of derivative instruments for the period indicated and the line items in the accompanying condensed consolidated balance sheets where the instruments are recorded:

In thousands
September 30   2017

December 31    2016

September 30   2017

December 31    2016

Prepaid Expenses
and Other

Other

Balance sheet caption
Current Assets

Current Liabilities

Designated as hedging:

Forward foreign currency

exchange contracts
$
1,416

$
2,625

$
5,672

$
1,493

Not designated as hedging:

Forward foreign currency

exchange contracts
$
679

$
60

$
780

$
104


In thousands	March 31, 2023		December 31, 2022		March 31, 2023		December 31, 2022
Balance sheet caption	Prepaid Expenses and Other Current Assets				Other Current Liabilities
Designated as hedging:
Forward foreign currency exchange contracts	$	657	$	1,795	$	1,068	$	2,368


Not designated as hedging:
Forward foreign currency exchange contracts	$	582	797		$	383	$	317

The amounts set forth in the table above represent the net asset or liability giving effect to rights of offset with each counterparty. The effect of netting the amounts presented above did not have a material effect on our consolidated financial position.

The following table summarizes the amount of income or (loss) from derivative instruments recognized in our results of operations for the periods indicated and the line items in the accompanying condensed consolidated statements of income where the results are recorded:

Three months ended
September 30

Nine months ended
September 30

In thousands

2017

2016

2017

2016

Designated as hedging:

Forward foreign currency exchange contracts:

Effective portion – cost of products sold

$
(29
)

$
(347
)

$
1,687

$
(264
)
Ineffective portion – other – net

40

(69
)

126

(399
)
Not designated as hedging:

Forward foreign currency

exchange contracts:

Other – net

$
328

$
332

$
719

$
1,396

~~The impact of activity not designated as hedging was substantially all offset by the remeasurement of the underlying on-balance-sheet item.~~

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 fair values of the foreign exchange forward contracts are considered to be Level 2. Foreign currency forward contracts are valued using foreign currency forward and interest rate curves. The fair value of each contract is determined by comparing the contract rate to the forward rate and discounting to present value. Contracts in a gain position are recorded in the condensed consolidated balance sheets under the caption “Prepaid expenses and other current assets” and the value of contracts in a loss position is recorded under the caption “Other current liabilities.”

- 23 -


	Three months ended March 31,
In thousands	2023		2022
Designated as hedging:
Forward foreign currency exchange contracts:
Cost of products sold	$	(918)	$	(1,072)
Interest expense	—		20

Not designated as hedging:
Forward foreign currency exchange contracts:
Other – net	$	(234)	$	440

The impact of activity not designated as hedging was substantially all offset by the remeasurement of the underlying on-balance-sheet item.

A rollforward of fair value amounts recorded as a component of accumulated other comprehensive income (loss), before taxes, is as follows:

In thousands
2017

2016

Balance at January 1,
$
1,882

$
(178
)
Deferred (losses) gains

on cash flow hedges

(6,455
)

(200
)
Reclassified to earnings

(1,687
)

264

Balance at September 30,
$
(6,260
)

$
(114
)


In thousands	2023		2022
Balance at January 1,	$	242	$	2,889
Deferred gains on cash flow hedges	1,021		1,076
Reclassified to earnings	(918)		1,052
Balance at March 31,	$	345	$	5,017

We expect substantially all of the amounts recorded as a component of accumulated other comprehensive income will be recorded ~~as a component of the capital asset or realized~~ in results of operations within the next 12 to 18 months and the amount ultimately recognized will vary depending on actual market rates.

Credit risk related to derivative activity arises in the event the counterparty fails to meet its obligations to us. This exposure is generally limited to the amounts, if any, by which the counterparty’s obligations exceed our obligation to them. Our policy is to enter into contracts only with financial institutions which meet certain minimum credit ratings.

~~13.~~

~~COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS~~

18.COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS

Fox River - Neenah, Wisconsin

~~Background.~~

Background We have ~~significant uncertainties~~previously reported that we face liabilities associated with environmental claims arising out of the presence of polychlorinated biphenyls (“PCBs”) in sediments in the lower Fox River, on which our former Neenah facility was located, and in the Bay of Green Bay, Wisconsin (collectively, the “Site”). Since the early 1990s, the United States, the State of Wisconsin and two Indian tribes (collectively, the “Governments”) have pursued a cleanup of a 39-mile stretch of river from Little Lake Butte des Morts into Green Bay and natural resource damages (“NRDs”).

~~The Site has been subject to certain studies, demonstration projects and interim cleanups. The permanent cleanup, known as a “remedial action” under the~~

Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), consists of sediment dredging, installation of engineered caps and placement of sand covers in various areas in the bed of the river.

The United States originally notified several entities that they were potentially responsible parties (“PRPs”); however, after giving effect to settlements reached with the Governments, the remaining PRPs exposed to continuing obligations to implement the remainder of the cleanup consist of us, ~~Georgia Pacific~~Georgia-Pacific Consumer Products, L.P. (“~~Georgia Pacific”~~Georgia-Pacific”) and NCR ~~Corporation (“NCR”). In addition to the government claims, Appvion, Inc. (“Appvion”) retains a claim against us and Georgia Pacific.~~

Corporation. The United States Environmental Protection Agency (“EPA”) has divided the Site into five “operable ~~units,”~~units”, including the most upstream portion of the Site on which our facility was located (“OU1”) and four downstream reaches of the river and bay (“OU2-5”).

Over the past several years, we and ~~WTM I Company, one of the~~certain other PRPs ~~implemented the~~completed all remedial ~~action in OU1 under a~~actions pursuant to applicable consent ~~decree with the Governments; Menasha Corporation made a financial contribution to that work. That project began in 2004 and the work is complete, other than on-going monitoring and maintenance.~~

~~For OU2-5, work has proceeded primarily under~~decrees or a Unilateral Administrative Order (“UAO”) issued in November 2007 by the EPA to us and seven other respondents. The majority of that work to date has been funded or conducted by parties other than us, although before the UAO,Order. In January 2019, we contributed to a project in that area and we have conducted about $13.4 million of cleanup work under the UAO in 2015 and 2016. The cleanup is expected to continue through 2018. However, as discussed below, under a consent decree betweenreached an agreement with the United States, the State of Wisconsin, ~~NCR~~ and ~~Appvion~~Georgia-Pacific to resolve all remaining claims among those parties. Under the Glatfelter consent decree, we are ~~not~~primarily responsible for ~~any additional cleanup at the Site.~~

~~Litigation and Settlement~~. In 2008, in an allocation action, NCR and Appvion sued us and many other defendants in an effort to allocate among the liable parties the costs of cleaning up this Site and compensating the Governments for their costs and the natural resource trustees for NRDs. This case has been called the “Whiting litigation.” After several summary judgment rulings and a trial, the trial court entered judgment in the Whiting Litigation allocating to NCR 100% of the costs of (a) the OU2-5 cleanup, (b) NRDs, (c) past and future costs incurred by the Governments in OU2-5, and (d) past and future costs incurred by any of the other parties net of an appropriate equitable adjustment for insurance recoveries.

On appeal, the United States Court of Appeals for the Seventh Circuit affirmed the district court’s ruling, holding that if knowledge and fault were the only equitable factors governing allocation of costs and NRDs at the Site, NCR

would owe 100% of all costs and damages in OU2-5, but would not have a share of costs in OU1 -- which is upstream of the outfall of the facilities for which NCR is responsible -- solely as an “arranger for disposal” of PCB-containing waste paper by recycling it at our mill. However, the court of appeals vacated the judgment and remanded the case for the district court’s further consideration of whether any other equitable factors might cause the district court to alter its allocation.

In 2010, in an enforcement action, the Governments sued us and other defendants for (a) an injunction to require implementation of the cleanup ordered by the 2007 UAO, (b) recovery of the Governments’ past and future costs of response, (c) recovery of NRDs, and (d) recovery of a declaration of liability for the Site. After appeals, the Governments did not obtain an injunction and they withdrew their claims for NRDs. The Governments obtained a declaration of our liability to comply with the 2007 UAO. The Governments’ costs claims remained pending.

On January 17, 2017, the United States filed a consent decree with the federal district court among the United States, Wisconsin, NCR, and Appvion (the “NCR/Appvion consent decree”) under which NCR would agree to complete the remaining cleanup and both NCR and Appvion would agree not to seek to recover from us or anyone else any amounts they have spent or will spend, and we and others would be barred from seeking claims against NCR or Appvion. On March 29, 2017, the United States moved for entry of a somewhat revised version of the NCR/Appvion consent decree, which the federal district court entered on August 23, 2017. Under the consent decree, if it were to withstand any appeal, we would only face exposure to: (i) government past oversight costs, (ii) government future oversight costs, (iii) long term monitoring and maintenance, and (iv) depending on the reason, a further remedy if necessary in the event the currently ordered remedy fails, over 30 or more years, to achieve its objectives. As the result of earlier settlements, Georgia Pacific is only jointly liable with us to the Governments for monitoring and maintenance costs incurred in the most downstream three miles of the river (“OU4b”) and the bay of Green Bay (“OU5”).

In addition, we and Georgia Pacific had claims against each other to reallocate the costs that we have each incurred or will incur. We have settled those claims. Under this settlement, Georgia Pacific has agreed to implement thelong-term monitoring and maintenance in ~~OU4b~~OU2-OU4a and ~~OU5 and~~for reimbursement of government oversight costs paid after October 2018. Finally, we ~~would be~~remain responsible for our obligation to continue long-term monitoring and maintenance ~~of all other upstream Operable Units. We paid Georgia Pacific $9.5 million in August 2017.~~

~~The NCR/Appvion~~under our OU1 consent decree.

- 24 -

Cost estimates Our remaining obligations under the OU1 consent decree consist of long-term monitoring and ~~our settlement with Georgia Pacific resulted in all claims among the responsible parties being barred, waived, or withdrawn. Accordingly, on October 10, 2017, the federal district court~~

~~approved a stipulation dismissing all remaining claims in the Whiting litigation. Therefore, unless certain limited circumstances occur permitting reassertion of claims,~~maintenance. Furthermore, we are ~~not subject to claims for reallocation of costs or damages incurred by any of the other parties and we cannot seek contribution or reallocation from them.~~

On October 20, 2017, we appealed the district court’s approval of the NCR/Appvion consent decree. We contend that the court did not do what was required to properly conclude that the NCR/Appvion consent decree was substantially fair to us. We contend that the consent decree was unfair to us.

~~Cost estimates.~~ The proposed NCR/Appvion consent decree, as revised, states that all parties combined have spent more than approximately $1 billion to date towards remedial actions and NRDs, of which we have contributed approximately $75 million. In addition, work to complete the remaining site remedy under the UAO was anticipated to cost approximately $200 million at the beginning of the 2017 remediation season. With the consent decree being entered, we are no longer exposed to reallocation of any of those amounts.

~~Under the NCR/Appvion consent decree, we would remain~~primarily responsible for the Governments’ unreimbursed past costs, which although in dispute, are represented to total approximately $34 million and the Governments’ future costs. Furthermore, we, along with Georgia Pacific, would be responsible for long termlong-term monitoring and maintenance required pursuant to the Lower Fox River 100% Remedial Design Report dated December 2009 – Long Term Monitoring Plan (the “Plan”). The Plan requires long term monitoring of each of OU1 through OU5in OU2-OU4a over a period of at least 30 years. The monitoring activities consist of, among others, testing fish tissue, sampling water quality and sediment, and inspections of the engineered caps. ~~Each operable unit is required to be monitored; however, because~~In 2018, we entered into a fixed-price, 30-year agreement with a third party for the performance of all of our ~~settlement~~monitoring and maintenance obligations in OU1 through OU4a with ~~Georgia Pacific, our obligations are~~limited exceptions, such as, for extraordinary amounts of cap maintenance or replacement. Our obligation under this agreement is included in ~~OU1-OU4a. Although we are unable to determine with certainty the timing of cash expenditures for the above matters, they are reasonably likely to extend over a period of at least 30 years.~~

~~- 16 -~~

~~GLATFELTER~~

~~09.30.17 Form 10-Q~~

~~Reserves for the Site.~~ ~~Our reserve for all remaining claims against us relating to PCB contamination is set forth below:~~

Nine months ended
September 30

In thousands

2017

2016

Balance at January 1,

$
52,788

$
17,105

Payments

(9,581
)

(4,193
)
Accruals

-

-

Balance at September 30,

$
43,207

$
12,912

The payments set forth above represent cash paid towards completion of remediation activities in connection with the 2016 and 2015 Work Plans, the Georgia-Pacific settlement and ongoing monitoring activities. Of our total reserve for the ~~Fox River, $20.0~~Site. We are obligated to make the regular payments under that fixed-price contract until the remaining amount due is less than the OU1 escrow account balance. We are permitted to pay for this contract using the remaining balance of the escrow account established by us and WTM I Company (“WTM I”) another PRP, under the OU1 consent decree during any period that the balance in the escrow account exceeds the amount due under our fixed-price contract. As of March 31, 2023, the balance in the escrow is less than amounts due under the fixed-price contract by approximately $1.1 million. Our obligation to pay this difference is secured by a letter of credit.

At March 31, 2023, the escrow account balance totaled $8.9 million which is included in the condensed consolidated balance sheet under the caption “Other assets.”

Under the consent decree, we are responsible for reimbursement of government oversight costs paid from October 2018 and later over approximately the next 30 years. We anticipate that oversight costs will decline as activities at the site have transitioned from remediation to long-term monitoring and maintenance.

Reserves for the Site Our reserve for past and future government oversight costs and long-term monitoring and maintenance totaled $14.4 million at March 31, 2023, of which $2.1 million is recorded in the accompanying ~~September 30, 2017~~March 31, 2023 condensed consolidated balance sheet under the caption “Environmental liabilities” and the remaining ~~$23.2~~$12.3 million is recorded under the caption “Other ~~long term~~long-term liabilities.”

Range of Reasonably Possible Outcomes. Based on our analysis of all available information, including but not limited to decisions of the courts, official documents such as records of decision, discussions with legal counsel, cost estimates for

future monitoring and maintenance and other post-remediation costs to be performed at the Site, we do not believe ~~it is reasonably possible~~ that our costs associated with the Fox River matter could exceed the aggregate amounts accrued by amounts ranging from insignificant to approximately $30 million. We believe the likelihood of an outcome in the upper end of the monetary range is less than other possible outcomes within the range and the possibility of an outcome in excess of the upper end of the monetary range is remote.

~~Summary~~. Our current assessment is we will be able to manage this environmental matter without a long-term, material adverse impact on the Company. This matter could, however, at any particular time or for any particular year or years, have a material adverse effect on our consolidated financial position, liquidity and/or results of operations or could result in a default under our debt covenants. Moreover, there can be no assurance our reserves will be adequate to provide for future obligations related to this matter, or our share of costs and/or damages will not exceed our available resources, or those obligations will not have a material adverse effect on our consolidated financial position, liquidity and results of operations and might result in a default under our loan covenants.

amount.

- 1725 -

~~GLATFELTER~~

~~09.30.17 Form 10-Q~~

~~14.~~

~~SEGMENT INFORMATION~~

19.SEGMENT INFORMATION

The following tables set forth financial and other information by ~~business unit~~segment for the period indicated:

Three months ended September 30

Advanced Airlaid

Other and

Dollars in millions
Composite Fibers

Materials

Specialty Papers

Unallocated

Total

2017

2016

2017

2016

2017

2016

2017

2016

2017

2016

Net sales
$
142.3

$
131.7

$
67.8

$
61.9

$
203.2

$
211.8

$
—

$
—

$
413.3

$
405.3

Energy and related sales, net

—

—

—

—

1.2

1.3

—

—

1.2

1.3

Total revenue

142.3

131.7

67.8

61.9

204.4

213.1

—

—

414.6

406.6

Cost of products sold

115.0

105.8

57.2

53.5

179.7

180.1

7.9

6.1

359.8

345.5

Gross profit (loss)

27.3

25.9

10.6

8.4

24.7

33.0

(7.9
)

(6.1
)

54.7

61.2

SG&A

10.9

11.9

2.4

2.0

12.2

14.3

7.9

7.5

33.4

35.7

(Gains) losses on dispositions of plant,
   equipment and timberlands, net

—

—

—

—

—

—

—

—

—

—

Total operating income (loss)

16.4

14.0

8.2

6.4

12.5

18.7

(15.8
)

(13.6
)

21.4

25.4

Non-operating expense

—

—

—

—

—

—

(5.0
)

(4.4
)

(5.0
)

(4.4
)
Income (loss) before
   income taxes
$
16.4

$
14.0

$
8.2

$
6.4

$
12.5

$
18.7

$
(20.8
)

$
(18.0
)

$
16.4

$
21.0

Supplementary Data

Net tons sold (thousands)

43.8

39.1

26.2

25.2

197.1

197.3

—

—

267.1

261.5

Depreciation, depletion and
   amortization
$
7.1

$
6.9

$
2.5

$
2.4

$
8.0

$
6.4

$
3.8

$
0.6

$
21.4

$
16.3

Capital expenditures

3.8

5.1

12.6

4.3

10.2

26.7

4.5

0.5

31.1

36.6

Nine months ended September 30

Advanced Airlaid

Other and

Dollars in millions
Composite Fibers

Materials

Specialty Papers

Unallocated

Total

2017

2016

2017

2016

2017

2016

2017

2016

2017

2016

Net sales
$
400.6

$
391.6

$
190.4

$
183.4

$
600.3

$
638.9

$
—

$
—

$
1,191.4

$
1,213.9

Energy and related sales, net

—

—

—

—

3.3

4.0

—

—

3.3

4.0

Total revenue

400.6

391.6

190.4

183.4

603.6

642.9

—

—

1,194.7

1,217.9

Cost of products sold

322.2

316.0

160.7

157.5

555.7

574.1

14.0

8.6

1,052.6

1,056.2

Gross profit (loss)

78.4

75.6

29.7

25.9

47.9

68.8

(14.0
)

(8.6
)

142.1

161.7

SG&A

32.9

35.1

6.9

6.2

36.0

40.9

24.7

22.6

100.5

104.8

(Gains) losses on dispositions of plant,

equipment and timberlands, net

—

—

—

—

—

—

—

—

—

—

Total operating income (loss)

45.5

40.5

22.8

19.7

11.9

27.9

(38.7
)

(31.2
)

41.7

56.9

Non-operating expense

—

—

—

—

—

—

(13.7
)

(12.7
)

(13.7
)

(12.7
)
Income (loss) before
income taxes
$
45.5

$
40.5

$
22.8

$
19.7

$
11.9

$
27.9

$
(52.4
)

$
(43.9
)

$
27.9

$
44.2

Supplementary Data

Net tons sold (thousands)

124.5

116.7

76.6

74.1

578.4

597.7

—

—

779.5

788.5

Depreciation, depletion and
amortization
$
20.9

$
21.2

$
7.1

$
7.0

$
22.9

$
19.7

$
5.4

$
1.8

$
56.3

$
49.7

Capital expenditures

10.6

13.7

36.1

25.0

44.2

77.4

11.3

0.8

102.2

116.9


	Three months ended March 31,
Dollars in thousands	2023		2022
Net Sales
Airlaid Material	$	159,441	$	149,464
Composite Fibers	132,591		135,829
Spunlace	86,723		96,387
Inter-segment sales elimination	(547)		—
Total	$	378,208	$	381,680

Operating income (loss)
Airlaid Material	$	13,914	$	12,221
Composite Fibers	6,127		(335)
Spunlace	(2,023)		(1,572)
Other and unallocated	(11,905)		(126,203)
Total	$	6,113	$	(115,889)

Depreciation and amortization
Airlaid Material	$	7,686	$	7,629
Composite Fibers	3,965		6,519
Spunlace	3,092		2,914
Other and unallocated	988		1,422
Total	$	15,731	$	18,484

Capital expenditures
Airlaid Material	$	2,082	$	3,468
Composite Fibers	3,663		6,127
Spunlace	2,701		2,085
Other and unallocated	1,054		668
Total	$	9,500	$	12,348

Tons shipped (metric)
Airlaid Material	39,827		43,052
Composite Fibers	24,818		28,211
Spunlace	16,420		20,736
Total	81,065		91,999

~~The sum of individual amounts set forth above may not agree to the consolidated financial statements included herein due to rounding.~~

~~Business Units~~Segments Results of individual ~~business units~~operating segments are presented based on our management accounting practices and management structure. There is no comprehensive, authoritative body of guidance for management accounting equivalent to accounting principles generally accepted in the United States of America; therefore, the financial results of individual ~~business units~~segments are not necessarily comparable with similar information for any other company. The management accounting process uses assumptions and allocations to measure performance of the ~~business units.~~segments. Methodologies are refined from time to time as management accounting practices are enhanced and businesses change. The costs incurred by support areas not directly aligned with the ~~business unit~~segment are allocated primarily based on an estimated utilization of support area services or are included in “Other and Unallocated” in the ~~Business Unit Performance table.~~

table set forth above.

- 26 -

Management evaluates results of operations of the ~~business units~~operating segments before ~~pension expense,~~ certain corporate level costs and the effects of certain gains or losses not considered to be related to the core business operations. Management believes that this is a more meaningful representation of the operating performance of its core businesses, the profitability of ~~business units~~the segments and the extent of cash flow generated from these core operations. Such amounts are presented under the caption “Other and Unallocated.” In the evaluation of ~~business unit~~operating segments results, management does not use any measures of total assets. This presentation is aligned with the management and operating structure of our company. It is also on this basis that the Company’s performance is evaluated internally and by the Company’s Board of Directors.

- 27 -

~~- 18 -~~

~~GLATFELTER~~

~~09.30.17 Form 10-Q~~

~~15.~~

~~CONDENSED CONSOLIDATING FINANCIAL STATEMENTS~~

Our 5.375% Notes issued by P. H. Glatfelter Company (the “Parent”) are fully and unconditionally guaranteed, on a joint and several basis, by certain of our 100%-owned domestic subsidiaries, PHG Tea Leaves, Inc., Mollanvick, Inc., Glatfelter Composite Fibers N. A., Inc. (“CFNA”), Glatfelter Advance Materials N.A., Inc. (“GAMNA”), and Glatfelter Holdings, LLC. The guarantees are subject to certain customary release provisions including i) the designation of such subsidiary as an unrestricted or excluded subsidiary; (ii) in connection with any sale or disposition of the capital stock of the subsidiary guarantor; or (iii) upon our exercise of our legal defeasance option or our covenant defeasance option, all of which are more fully described in the Indenture dated as of October 3, 2012 and the First Supplemental Indenture dated as of October 27, 2015, among us, the Guarantors and US Bank National Association, as Trustee, relating to the 5.375% Notes.

The following presents our condensed consolidating statements of income, including comprehensive income, for the three months and nine months ended September 30, 2017 and 2016, our condensed consolidating balance sheets as of September 30, 2017 and December 31, 2016, and our condensed consolidating cash flows for the nine months ended September 30, 2017 and 2016.

~~Condensed Consolidating Statement of Income for the three months ended September 30, 2017~~

In thousands
Parent
Company

Guarantors

Non
Guarantors

Adjustments/
Eliminations

Consolidated

Net sales
$
203,205

$
20,588

$
211,331

$
(21,799
)

$
413,325

Energy and related sales, net

1,236

—

—

—

1,236

Total revenues

204,441

20,588

211,331

(21,799
)

414,561

Costs of products sold

188,677

19,525

173,423

(21,799
)

359,826

Gross profit

15,764

1,063

37,908

—

54,735

Selling, general and administrative

expenses

18,730

536

14,133

—

33,399

(Gain) loss on dispositions of plant

equipment and timberlands, net

70

(114
)

20

—

(24
)
Operating income (loss)

(3,036
)

641

23,755

—

21,360

Other non-operating

income (expense)

Interest expense

(5,241
)

(300
)

(436
)

1,430

(4,547
)
Interest income

160

1,316

5

(1,430
)

51

Equity in earnings of subsidiaries

17,880

18,096

—

(35,976
)

—

Other, net

498

(1,920
)

944

—

(478
)
Total other non-operating

income (expense)

13,297

17,192

513

(35,976
)

(4,974
)
Income before income taxes

10,261

17,833

24,268

(35,976
)

16,386

Income tax provision (benefit)

(1,844
)

(47
)

6,172

—

4,281

Net income

12,105

17,880

18,096

(35,976
)

12,105

Other comprehensive income

17,330

14,812

14,959

(29,771
)

17,330

Comprehensive income
$
29,435

$
32,692

$
33,055

$
(65,747
)

$
29,435

~~- 19 -~~

~~GLATFELTER~~

~~09.30.17 Form 10-Q~~

~~Condensed Consolidating Statement of Income for the nine months ended September 30, 2017~~

In thousands
Parent
Company

Guarantors

Non
Guarantors

Adjustments/
Eliminations

Consolidated

Net sales
$
600,346

$
63,173

$
591,926

$
(64,065
)

$
1,191,380

Energy and related sales, net

3,346

—

—

—

3,346

Total revenues

603,692

63,173

591,926

(64,065
)

1,194,726

Costs of products sold

568,067

60,158

488,466

(64,065
)

1,052,626

Gross profit

35,625

3,015

103,460

—

142,100

Selling, general and administrative

expenses

55,976

846

43,662

—

100,484

(Gain) loss on dispositions of plant

equipment and timberlands, net

118

(188
)

20

—

(50
)

Operating income (loss)

(20,469
)

2,357

59,778

—

41,666

Other non-operating

income (expense)

Interest expense

(15,084
)

(619
)

(1,377
)

4,049

(13,031
)

Interest income

451

3,714

93

(4,049
)

209

Equity in earnings of subsidiaries

50,298

51,197

—

(101,495
)

—

Other, net

1,525

(6,445
)

4,014

—

(906
)

Total other non-operating

income (expense)

37,190

47,847

2,730

(101,495
)

(13,728
)

Income before income taxes

16,721

50,204

62,508

(101,495
)

27,938

Income tax provision (benefit)

(1,273
)

(94
)

11,311

—

9,944

Net income

17,994

50,298

51,197

(101,495
)

17,994

Other comprehensive income

50,855

43,878

43,344

(87,222
)

50,855

Comprehensive income
$
68,849

$
94,176

$
94,541

$
(188,717
)

$
68,849

~~Condensed Consolidating Statement of Income for the three months ended September 30, 2016~~

In thousands
Parent
Company

Guarantors

Non
Guarantors

Adjustments/
Eliminations

Consolidated

Net sales
$
211,761

$
18,086

$
192,214

$
(16,760
)

$
405,301

Energy and related sales, net

1,346

—

—

—

1,346

Total revenues

213,107

18,086

192,214

(16,760
)

406,647

Costs of products sold

186,297

16,732

159,208

(16,760
)

345,477

Gross profit

26,810

1,354

33,006

—

61,170

Selling, general and administrative

expenses

21,048

(25
)

14,724

—

35,747

(Gain) loss on dispositions of plant

equipment and timberlands, net

7

—

(2
)

—

5

Operating income

5,755

1,379

18,284

—

25,418

Other non-operating

income (expense)

Interest expense

(4,332
)

(1
)

(751
)

1,189

(3,895
)
Interest income

173

1,063

5

(1,189
)

52

Equity in earnings of subsidiaries

17,228

16,225

—

(33,453
)

—

Other, net

(670
)

(819
)

916

—

(573
)
Total other non-operating

income (expense)

12,399

16,468

170

(33,453
)

(4,416
)
Income before income taxes

18,154

17,847

18,454

(33,453
)

21,002

Income tax provision (benefit)

(1,447
)

619

2,229

—

1,401

Net income

19,601

17,228

16,225

(33,453
)

19,601

Other comprehensive loss

(69
)

(2,307
)

(2,462
)

4,769

(69
)
Comprehensive income
$
19,532

$
14,921

$
13,763

$
(28,684
)

$
19,532

~~- 20 -~~

~~GLATFELTER~~

~~09.30.17 Form 10-Q~~

~~Condensed Consolidating Statement of Income for the nine months ended September 30, 2016~~

In thousands
Parent
Company

Guarantors

Non
Guarantors

Adjustments/
Eliminations

Consolidated

Net sales
$
638,918

$
54,293

$
573,355

$
(52,634
)

$
1,213,932

Energy and related sales, net

4,013

—

—

—

4,013

Total revenues

642,931

54,293

573,355

(52,634
)

1,217,945

Costs of products sold

582,751

51,493

474,599

(52,634
)

1,056,209

Gross profit

60,180

2,800

98,756

—

161,736

Selling, general and administrative

expenses

62,115

(246
)

42,927

—

104,796

Loss on dispositions of plant

equipment and timberlands, net

11

—

20

—

31

Operating income (loss)

(1,946
)

3,046

55,809

—

56,909

Other non-operating

income (expense)

Interest expense

(13,036
)

(1
)

(2,352
)

3,425

(11,964
)

Interest income

523

3,056

50

(3,425
)

204

Equity in earnings of subsidiaries

46,485

44,050

—

(90,535
)

—

Other, net

(1,787
)

(2,220
)

3,051

—

(956
)

Total other non-operating

income (expense)

32,185

44,885

749

(90,535
)

(12,716
)

Income before income taxes

30,239

47,931

56,558

(90,535
)

44,193

Income tax provision (benefit)

(7,495
)

1,446

12,508

—

6,459

Net income

37,734

46,485

44,050

(90,535
)

37,734

Other comprehensive income (loss)

4,134

(2,691
)

(2,835
)

5,526

4,134

Comprehensive income
$
41,868

$
43,794

$
41,215

$
(85,009
)

$
41,868

~~Condensed Consolidating Balance Sheet as of September 30, 2017~~

In thousands

Parent
Company

Guarantors

Non
Guarantors

Adjustments/
Eliminations

Consolidated

Assets

Cash and cash equivalents

$
374

$
682

$
83,231

$
—

$
84,287

Other current assets

226,678

287,440

289,956

(316,866
)

487,208

Plant, equipment and timberlands, net

383,014

70,093

402,910

—

856,017

Investments in subsidiaries

885,734

634,893

—

(1,520,627
)

—

Other assets

129,617

—

139,665

—

269,282

Total assets

$
1,625,417

$
993,108

$
915,762

$
(1,837,493
)

$
1,696,794

Liabilities and Shareholders' Equity

Current liabilities

$
436,791

$
58,602

$
157,486

$
(316,866
)

$
336,013

Long-term debt

357,441

49,000

52,584

—

459,025

Deferred income taxes

14,478

(541
)

51,660

—

65,597

Other long-term liabilities

106,111

313

19,139

—

125,563

Total liabilities

914,821

107,374

280,869

(316,866
)

986,198

Shareholders’ equity

710,596

885,734

634,893

(1,520,627
)

710,596

Total liabilities and shareholders’ equity

$
1,625,417

$
993,108

$
915,762

$
(1,837,493
)

$
1,696,794

~~- 21 -~~

~~GLATFELTER~~

~~09.30.17 Form 10-Q~~

~~Condensed Consolidating Balance Sheet as of December 31, 2016~~

In thousands

Parent
Company

Guarantors

Non
Guarantors

Adjustments/
Eliminations

Consolidated

Assets

Cash and cash equivalents

$
5,082

$
1,461

$
48,901

$
—

$
55,444

Other current assets

206,002

256,289

242,187

(265,663
)

438,815

Plant, equipment and timberlands, net

360,521

31,455

383,922

—

775,898

Investments in subsidiaries

789,565

540,029

—

(1,329,594
)

—

Other assets

123,010

—

128,092

—

251,102

Total assets

$
1,484,180

$
829,234

$
803,102

$
(1,595,257
)

$
1,521,259

Liabilities and Shareholders' Equity

Current liabilities

$
426,628

$
26,085

$
135,961

$
(265,663
)

$
323,011

Long-term debt

283,686

14,000

65,961

—

363,647

Deferred income taxes

10,221

(729
)

45,503

—

54,995

Other long-term liabilities

109,819

313

15,648

—

125,780

Total liabilities

830,354

39,669

263,073

(265,663
)

867,433

Shareholders’ equity

653,826

789,565

540,029

(1,329,594
)

653,826

Total liabilities and shareholders’ equity

$
1,484,180

$
829,234

$
803,102

$
(1,595,257
)

$
1,521,259

~~Condensed Consolidating Statement of Cash Flows for the nine months ended September 30, 2017~~

In thousands

Parent
Company

Guarantors

Non
Guarantors

Adjustments/
Eliminations

Consolidated

Net cash provided (used) by

Operating activities

$
(17,066
)

$
(3,241
)

$
73,103

$
—

$
52,796

Investing activities

Expenditures for purchases of plant, equipment and timberlands

(55,415
)

(32,847
)

(13,910
)

—

(102,172
)

Proceeds from disposals of plant, equipment and timberlands, net

8

209

—

—

217

Repayments from intercompany loans

—

12,000

—

(12,000
)

—

Advances of intercompany loans

—

(13,500
)

—

13,500

—

Intercompany capital contributed

(2,000
)

(400
)

—

2,400

—

Other

(100
)

—

—

—

(100
)

Total investing activities

(57,507
)

(34,538
)

(13,910
)

3,900

(102,055
)

Financing activities

Net long-term borrowings

73,298

35,000

(18,711
)

—

89,587

Payment of dividends to shareholders

(16,805
)

—

—

—

(16,805
)

Repayments of intercompany loans

—

—

(12,000
)

12,000

—

Borrowings of intercompany loans

13,500

—

—

(13,500
)

—

Intercompany capital received

—

2,000

400

(2,400
)

—

Payment of intercompany dividend

—

—

—

—

—

Payments related to share-based compensation awards and other

(128
)

—

—

—

(128
)

Total financing activities

69,865

37,000

(30,311
)

(3,900
)

72,654

Effect of exchange rate on cash

—

—

5,448

—

5,448

Net increase (decrease) in cash

(4,708
)

(779
)

34,330

—

28,843

Cash at the beginning of period

5,082

1,461

48,901

—

55,444

Cash at the end of period

$
374

$
682

$
83,231

$
—

$
84,287

~~- 22 -~~

~~GLATFELTER~~

~~09.30.17 Form 10-Q~~

~~Condensed Consolidating Statement of Cash Flows for the nine months ended September 30, 2016~~

In thousands

Parent
Company

Guarantors

Non
Guarantors

Adjustments/
Eliminations

Consolidated

Net cash provided (used) by

Operating activities

$
41,753

$
3,748

$
13,936

$
—

$
59,437

Investing activities

Expenditures for purchases of plant, equipment and timberlands

(78,187
)

(21,066
)

(17,695
)

—

(116,948
)

Proceeds from disposals of plant, equipment and timberlands, net

41

—

14

—

55

Repayments from intercompany loans

—

11,101

—

(11,101
)

—

Advances of intercompany loans

—

(12,330
)

—

12,330

—

Intercompany capital (contributed) returned

(17,000
)

(500
)

—

17,500

—

Other

(400
)

—

—

—

(400
)

Total investing activities

(95,546
)

(22,795
)

(17,681
)

18,729

(117,293
)

Financing activities

Net long-term borrowings

—

—

14,983

—

14,983

Payments of borrowing costs

(136
)

—

—

—

(136
)

Payment of dividends to shareholders

(16,134
)

—

—

—

(16,134
)

Repayments of intercompany loans

—

—

(11,101
)

11,101

—

Borrowings of intercompany loans

12,330

—

—

(12,330
)

—

Intercompany capital (returned) received

—

17,000

500

(17,500
)

—

Proceeds from government grants

3,251

2,000

—

—

5,251

Payments related to share-based compensation awards and other

(990
)

—

—

—

(990
)

Total financing activities

(1,679
)

19,000

4,382

(18,729
)

2,974

Effect of exchange rate on cash

—

—

330

—

330

Net increase (decrease) in cash

(55,472
)

(47
)

967

—

(54,552
)

Cash at the beginning of period

59,130

465

45,709

—

105,304

Cash at the end of period

$
3,658

$
418

$
46,676

$
—

$
50,752

~~- 23 -~~

~~GLATFELTER~~

~~09.30.17 Form 10-Q~~

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the information in the unaudited condensed consolidated financial statements and notes thereto included herein and Glatfelter’s Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our ~~2016~~2022 Annual Report on Form ~~10-K.~~

10-K ("2022 Form 10-K").

Forward-Looking Statements This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including statements regarding industry prospects and future consolidated financial position or results of operations, made in this Report on Form 10-Q are forward looking. We use words such as “anticipates”, “believes”, “expects”, “future”, “intends” and similar expressions to identify forward-looking statements. Forward-looking statements reflect management’s current expectations and are inherently uncertain. Our actual results may differ significantly from such expectations. The following discussion includes forward-looking statements ~~regarding expectations of, among others, shipping volumes, selling prices, input costs, non-cash pension expense, environmental costs, capital expenditures and liquidity,~~ all of which are inherently difficult to predict. Although we make such statements based on assumptions that we believe to be reasonable, there can be no assurance that actual results will not differ materially from our expectations. Accordingly, we identify the following important factors, among others, which could cause our results to differ from any results that might be projected, forecasted or estimated in any such forward-looking statements:

i.	~~variations in demand for our products including the impact of unplanned market-related downtime, variations in product pricing, or product substitution;~~

~~ii.~~

the impact of competition, both domestic and international, changes in industry production capacity, including the construction of new mills or new machines, the closing of mills and incremental changes due to capital expenditures or productivity increases;

~~iii.~~

~~risks associated with our international operations, including local economic and political environments and fluctuations in currency exchange rates;~~

~~iv.~~

~~geopolitical events, including the impact of conflicts such as Russia and Ukraine;~~

v.	~~our ability to develop new, high value-added products;~~

~~vi.~~

~~changes in the cost or availability of raw materials we use, in particular pulpwood, pulp, pulp substitutes, caustic soda, and abaca fiber;~~

~~vii.~~

~~changes in energy-related costs and commodity raw materials with an energy component;~~

~~viii.~~

~~the impact of unplanned production interruption;~~

~~ix.~~

disruptions in production and/or increased costs due to labor disputes including an inability to renew our collective bargaining arrangement for the Spring Grove, PA facility which expired in February 2017;

x.	~~the impact of exposure to volatile market-based pricing for sales of excess electricity;~~

~~xi.~~

~~the gain or loss of significant customers and/or on-going viability of such customers;~~

~~xii.~~

cost and other effects of environmental compliance, cleanup, damages, remediation or restoration, or personal injury or property damages related thereto, such as the costs of natural resource restoration or damages related to the presence of polychlorinated biphenyls ("PCBs") in the lower Fox River on which our former Neenah mill was located;

~~xiii.~~

~~our ability to successfully complete the implementation of new manufacturing and business systems to support Advanced Airlaid Materials;~~

~~xiv.~~

~~adverse results in litigation in the Fox River matter;~~

~~xv.~~

~~the impact of war and terrorism;~~

~~xvi.~~

~~the impact of unfavorable outcomes of audits by various state, federal or international tax authorities or changes in pre-tax income and its impact on the valuation of deferred taxes;~~

~~xvii.~~

~~enactment of adverse state, federal or foreign tax or other legislation or changes in government policy or regulation; and~~

~~xviii.~~

~~our ability to finance, consummate and integrate acquisitions.~~

i.risks related to the military conflict between Russia and Ukraine and its impact on our production, sales, supply chain, cost of energy, and availability of energy due to natural gas supply issues into Europe from the Nord Stream 1 pipeline;

ii.risks associated with the impact of the COVID-19 pandemic, including global and regional economic conditions, changes in demand for our products, interruptions in our global supply chain, ability to continue production by our facilities, credit conditions of our customers or suppliers, or potential legal actions that could arise due to our operations during the pandemic;

iii.disruptions of our global supply chain, including the availability of key raw materials and transportation for the delivery of critical inputs and of products to customers, and the increase in the costs of transporting materials and products;

iv.risks associated with our ability to increase selling prices quickly or sufficiently enough to recover rapid cost inflation in our raw materials, energy, freight and other costs, and the potential reduction or loss of sales due to price increases;

v.variations in demand for our products, including the impact of unplanned market-related downtime, variations in product pricing, or product substitution;

vi.the impact of competition, changes in industry production capacity, including the construction of new facilities or new machines, the closing of facilities and incremental changes due to capital expenditures or productivity increases;

vii.risks associated with our international operations, including local economic and political environments and fluctuations in currency exchange rates;

viii.our ability to develop new, high value-added products;

ix.changes in the price or availability of raw materials we use, particularly woodpulp, pulp substitutes, synthetic pulp, other specialty fibers and abaca fiber;

x.changes in energy-related prices and commodity raw materials with an energy component;

xi.the impact of unplanned production interruption at our facilities or at any of our key suppliers;

xii.disruptions in production and/or increased costs due to labor disputes;

xiii.the gain or loss of significant customers and/or on-going viability of such customers;

xiv.the impact of war and terrorism;

xv.the impact of unfavorable outcomes of audits by various state, federal or international tax authorities or changes in pre-tax income and its impact on the valuation of deferred taxes;

xvi.enactment of adverse state, federal or foreign tax or other legislation or changes in government legislation, policy or regulation; and

xvii.our ability to finance, consummate and integrate acquisitions, including our acquisitions of Mount Holly and Jacob Holm.

Introduction We manufacture a wide array of ~~specialty papers~~engineered materials and ~~engineered materials. We~~ manage our company along three ~~business units:~~

~~Composite Fibers~~ with revenue from the sale of single-serve tea and coffee filtration papers, nonwoven wallcovering base materials, metallized products, composite laminate papers, and many technically special papers including substrates for electrical applications;

operating segments:

~~Advanced~~ •Airlaid Materialswith ~~revenue from the sale~~sales of airlaid nonwoven fabric-like materials used in feminine hygiene ~~and~~products, adult incontinence products, tabletop, specialty wipes, home care products and other airlaid applications;

- 28 -

•Composite Fibers with sales of single-serve tea and

coffee filtration papers, wallcovering base materials, composite laminate papers, technical specialties including substrates for electrical applications, and metallized products; and

•Spunlace with sales of premium quality spunlace nonwovens for critical cleaning, high-performance materials, personal care, hygiene and medical applications.

The former Specialty Papers ~~with revenue from~~business’ results of operations and financial condition are reported as discontinued operations. Following is a discussion and analysis primarily of the ~~sale~~financial results of ~~papers for carbonless~~operations and other forms, envelopes, book publishing, and engineered products such as papers for high-speed ink jet printing, office specialty products, greeting cards, packaging, casting, release, transfer, playing card, postal, FDA-compliant food, and other niche specialty applications.

financial condition of our continuing operations.

~~- 24 -~~

~~GLATFELTER~~

~~09.30.17 Form 10-Q~~

RESULTS OF OPERATIONS

~~Nine~~

Three months ended ~~September 30, 2017~~March 31, 2023 versus the ~~nine~~three months ended ~~September 30, 2016~~

March 31, 2022

OverviewFor the first ~~nine~~three months of ~~2017 net income totaled $18.0~~2023, we reported a loss from continuing operations of $13.2 million, or ~~$0.41~~$0.29 per ~~diluted~~ share compared with ~~$37.7~~a loss of $108.3 million ~~and $0.86~~or $2.42 per ~~diluted~~ share in the year earlier period.

The following table sets forth summarized consolidated results of operations:


	Nine months ended September 30					Three months ended March 31,
In thousands, except per share	2017		2016		In thousands, except per share	2023		2022
Net sales	$	1,191,380	$	1,213,932	Net sales	$	378,208	$	381,680
Gross profit		142,100		161,736	Gross profit	36,214		31,665
Operating income		41,666		56,909
Net income		17,994		37,734
Earnings per diluted share		0.41	0.86
Operating income (loss)					Operating income (loss)	6,113		(115,889)
Continuing operations					Continuing operations
Loss					Loss	(13,182)		(108,290)
Loss per share					Loss per share	(0.29)		(2.42)
Net loss					Net loss	(13,584)		(108,327)
Loss per share					Loss per share	(0.30)		(2.42)

~~Reported~~

The reported results are in accordance with generally accepted accounting principles in the United States (“GAAP”) and reflect the impact of a number of significant items including debt refinancing, turnaround strategy costs, strategic initiatives, CEO transition costs, and cost optimization, among others. Our operating results for the first ~~nine~~three months of ~~2017~~2023 reflect: i) improved operating profit by our Airlaid and ~~2016 include on a pre-tax basis $19.5~~Composite Fibers segments driven by price-cost gap improvements, ii) higher interest expense reflecting charges associated with the debt refinancing which included extinguishing our €220.0 million Term Loan, our IKB term loans and ~~$8.0 million, respectively, of net costs considered to be unusual or non-core business in nature. The decline in our results summarized~~reduction in the ~~table above reflects the $11.5 million increase in such costs. Our Composite Fibers~~revolver credit facility and Advanced Airlaid Materials businesses, which combined represented approximately 50% of consolidated net sales, reported higher operating income and operating margin expansion in the comparison driven by higher shipping volumes and improved productivity. Specialty Papers’ results declined significantly in the comparison reflecting challenging market conditions.

iii) costs incurred related to our turnaround strategy.

In addition to the results reported in accordance with GAAP, we evaluate our performance using financial metrics not calculated in accordance with GAAP, including adjusted earnings and adjusted earnings before interest expense, interest income, income taxes, depreciation and amortization and stock-based compensation (“Adjusted EBITDA”). On an adjusted earnings basis, a non-GAAP measure, we had an adjusted loss from continuing operations of $5.9 million, or $0.13 per ~~diluted share.~~share for the first three months of 2023, compared with a loss of $6.2 million, or $0.14 per share, a year ago. Our Adjusted EBITDA, also a non-GAAP measure, was $24.8 million for the three months ended March 31, 2023 as compared to $23.0 million for the same period in 2022. We disclose this information to allow investors to evaluate our performance exclusive of certain items that impact the comparability of results from period to period and we believe it is helpful in understanding underlying operating trends and cash flow generation.

Adjusted earnings consists of net income determined in accordance with GAAP adjusted to exclude the impact of the following:

Goodwill and other asset impairment charges. This adjustment represents non-cash charges recorded to reduce the carrying amount of certain long-lived assets of our Dresden, Germany facility and goodwill of our Composite Fibers reporting segment.

Turnaround strategy costs. This adjustment reflects costs incurred in connection with the Company's turnaround strategy initiated in 2022 under its new chief executive officer to drive operational and financial improvement. These costs are primarily related to professional services fees and employee separation costs.

Russia/Ukraine conflict charges. This adjustment represents a non-cash charge recorded to reduce the carrying amount of accounts receivable and inventory directly related to the Russia/Ukraine military conflict.

- 29 -

Strategic initiatives. These adjustments primarily reflect professional and legal fees incurred directly related to evaluating and executing certain strategic initiatives including costs associated with acquisitions, related integrations, and charges incurred to step-up acquired inventory to fair-value.

Debt refinancing costs. Represents charges to write-off unamortized debt issuance costs in connection with the extinguishment of the Company’s €220.0 million Term Loan and IKB loans, as well as, the amendment to the Company's credit facility. These costs also include an early repayment penalty related to the extinguishment of the IKB loans.

CEO transition costs.This adjustment reflects a non-cash pension settlement charge associated with the separation of our former CEO related to a lump-sum distribution made in Q1 2023 under the terms of his non-qualified pension plan agreement.

Corporate headquarters relocation. These adjustments reflect costs incurred in connection with the strategic relocation of the Company’s corporate headquarters to Charlotte, NC. The costs are primarily related to employee relocation costs and exit costs at the former corporate headquarters.

Cost optimization actions.These adjustments ~~reflects~~reflect charges incurred in connection with initiatives to optimize the cost structure of ~~certain business units in response to changes in business conditions. The costs are primarily related to~~the Company, improve efficiencies or other objectives. Such actions may include asset rationalization, headcount ~~reduction efforts, asset write-offs and certain contract termination costs.~~

~~Specialty Papers environmental compliance.~~reductions, or similar actions. These adjustments, ~~reflect non-capitalized, one-time costs incurred by~~which have occurred at various times in the ~~business unit directly related~~past, are irregular in timing and relate to specific identified programs to reduce or optimize the compliance with the U.S. EPA Best Available Retrofit Technology rule and the Boiler Maximum Achievable Control Technology rule. This adjustment includes costs incurred during the transition period in which the newly installed equipment was brought on-line.

~~Airlaid capacity expansion costs.~~ ~~These adjustments reflect non-capitalized, one-time costs incurred related to the start-up~~cost structure of a ~~new airlaid production facility in Fort Smith, Arkansas.~~

particular operating segment or the corporate function.

Timberland sales and related costs.These adjustments exclude gains from the sales of timberlands as these items are not considered to be part of our core business, ongoing results of operations or cash flows. These adjustments are irregular in timing and amount and may benefit our operating results.

These adjustments are each unique and not considered to be on-going in nature. The transactions are irregular in timing and amount and may significantly impact our operating performance.

As such, these items may not be indicative of our past or future performance and therefore are excluded for comparability purposes.

Adjusted earnings and adjusted earnings per ~~diluted~~ share are considered measures not calculated in accordance with GAAP, and therefore are non-GAAP measures. The non-GAAP financial information should not be considered in isolation from, or as a substitute for, measures of financial performance prepared in accordance with GAAP.

The following table sets forth the reconciliation of net ~~income~~loss to adjusted ~~earnings~~loss from continuing operations for the ~~nine months ended September~~periods indicated:


	Three months ended March 31,
	2023				2022
In thousands, except per share	Amount		EPS		Amount		EPS
Net loss	$	(13,584)	$	(0.30)	$	(108,327)	$	(2.42)
Exclude: Loss from discontinued operations, net of tax	402		0.01		37		—
Loss from continuing operations	(13,182)		(0.29)		(108,290)		(2.42)
Adjustments (pre-tax):
Goodwill and other asset impairment charges (1)	—				117,349
Turnaround strategy costs (2)	4,483				—
Russia/Ukraine conflict charges (3)	—				3,948
Strategic initiatives (4)	730				1,835
Debt refinancing (5)	1,883				—
CEO transition costs (6)	633				—
Corporate headquarters relocation	—				88
Cost optimization actions (7)	—				941
Timberland sales and related costs	(617)				(2,962)
Total adjustments (pre-tax)	7,112				121,199
Income taxes (8)	(3)				(19,147)
Other tax adjustments (9)	207				79
Total after-tax adjustments	7,316		0.16		102,131		2.28
Adjusted loss from continuing operations	$	(5,866)	$	(0.13)	$	(6,159)	$	(0.14)

- 30 ~~2017~~-

(1)Reflects goodwill impairment charge of $56.1 million and ~~2016:~~

other asset impairment charges of $61.3 million recognized in Q1 2022.

Nine months ended September 30

2017

2016

In thousands, except per share
Amount

Diluted EPS

Amount

Diluted EPS

Net income
$
17,994

$
0.41

$
37,734

$
0.86

Adjustments (pre-tax)

Cost optimization actions

9,627

88

Specialty Papers' environmental compliance

3,076

6,645

Airlaid capacity expansion costs

7,034

1,308

Timberland sales and related costs

(188
)

-

Total adjustments (pre-tax)

19,549

8,041

Income taxes (1)

(1,122
)

(2,736
)

Total after-tax adjustments

18,427

0.41

5,305

0.12

Adjusted earnings
$
36,421

$
0.82

$
43,039

$
0.98

(2)Reflects employee separation costs of $3.3 million and $1.2 million in professional fees.

~~(1)~~

~~Tax effect on adjustments calculated based on the incremental effective tax rate of the jurisdiction in which each adjustment originated and the related impact of valuation allowances.~~

(3)Reflects bad debt expense charges of $2.9 million and inventory reserves charges of $1.0 million recognized in Q1 2022.

(4)For 2023, reflects consulting and legal fees of $0.5 million, employee separation costs of $0.1 million, and other costs of $0.1 million. For 2022, reflects professional and legal fees of $1.3 million, employee separation costs of $0.3 million, and other costs of $0.2 million.

(5)Reflects $1.8 million of deferred debt issuance costs in connection with the Company’s new €250 million EUR Term loan, and $0.1 million in early repayment penalties and write-off of unamortized financing fees on the IKB loans.

(6)Reflects pension settlement charge related to former CEO's separation.

(7)Primarily reflects employee separation costs of $0.4 million, equipment write-down of $0.4 million and other costs of $0.1 million directly associated with closure of a synthetic fiber production facility in the U.K. recognized in Q1 2022.

(8)Tax effect on adjustments calculated based on the incremental effective tax rate of the jurisdiction in which each adjustment originated. For items originating in the U.S., no tax effect is recognized due to the previously established valuation allowance on the net deferred tax assets.

(9)Tax effect of applying certain provisions of the CARES Act of 2020.

The ~~sum~~following table sets forth the reconciliation of ~~individual per share amounts set forth above may not agree~~net loss to adjusted ~~earnings per share due~~EBITDA for the periods indicated:


Adjusted EBITDA	Three months ended March 31,
In thousands	2023		2022

Net loss	$	(13,584)	$	(108,327)
Exclude: Loss from discontinued operations, net of tax	402		37
Add back: Taxes on continuing operations	3,694		(16,784)
Depreciation and amortization	15,731		18,484
Interest expense, net	12,323		7,845
EBITDA	18,566		(98,745)
Adjustments:
Goodwill and other asset impairment charges	—		117,349
Turnaround strategy costs	4,483		—
Russia/Ukraine conflict charges	—		3,948
Strategic initiatives	730		1,835
Debt refinancing	59		—
CEO transition costs	633		—
Corporate headquarters relocation	—		88
Share-based compensation	931		909
Cost optimization actions, excluding accelerated depreciation	—		589

Timberland sales and related costs	(617)		(2,962)
Adjusted EBITDA	$	24,785	$	23,011

EBITDA is a measure used by management to ~~rounding.~~

assess our operating performance and is calculated using

~~- 25 -~~

~~GLATFELTER~~

~~09.30.17 Form 10-Q~~

income (loss) from continuing operations and excludes interest expense, interest income, income taxes, and

~~Business Unit Performance~~

~~The sum of individual amounts set forth above may not agree~~depreciation and amortization. Adjusted EBITDA is calculated using EBITDA and further excludes certain items management considers to be unrelated to the ~~consolidated financial statements included herein due~~company’s core operations. The adjustments include, among others, goodwill and other asset impairment charges, the costs of strategic initiatives, turnaround strategy costs, CEO transition costs, optimization costs, corporate headquarters relocation expenses, asset impairment charge, and share-based compensation expense, as well as the elimination of gains from sales of timberlands. Adjusted EBITDA is a performance measure that excludes costs that we do not consider to ~~rounding.~~

be indicative of our ongoing operating performance.

~~Business Units~~

- 31 -

Segment Financial Performance


	Three months ended March 31,
Dollars in thousands	2023		2022
Net Sales
Airlaid Material	$	159,441	$	149,464
Composite Fibers	132,591		135,829
Spunlace	86,723		96,387
Inter-segment sales elimination	(547)		—
Total	$	378,208	$	381,680

Operating income (loss)
Airlaid Material	$	13,914	$	12,221
Composite Fibers	6,127		(335)
Spunlace	(2,023)		(1,572)
Other and unallocated	(11,905)		(126,203)
Total	$	6,113	$	(115,889)

Depreciation and amortization
Airlaid Material	$	7,686	$	7,629
Composite Fibers	3,965		6,519
Spunlace	3,092		2,914
Other and unallocated	988		1,422
Total	$	15,731	$	18,484

Capital expenditures
Airlaid Material	$	2,082	$	3,468
Composite Fibers	3,663		6,127
Spunlace	2,701		2,085
Other and unallocated	1,054		668
Total	$	9,500	$	12,348

Tons shipped (metric)
Airlaid Material	39,827		43,052
Composite Fibers	24,818		28,211
Spunlace	16,420		20,736
Total	81,065		$	91,999

Segments Results of individual ~~business units~~operating segments are presented based on our management accounting practices and management structure. There is no comprehensive, authoritative body of guidance for management accounting equivalent to accounting principles generally accepted in the United States of America; therefore, the financial results of individual ~~business units~~segments are not necessarily comparable with similar information for any other company. The management accounting process uses assumptions and allocations to measure performance of the ~~business units.~~segments. Methodologies are refined from time to time as management accounting practices are enhanced and businesses change. The costs incurred by support areas not directly aligned with the ~~business unit~~segment are allocated primarily based on an estimated utilization of support area services or are included in “Other and Unallocated” in the ~~Business Unit Performance table.~~

table set forth above.

- 32 -

presentation is aligned with the management and operating structure of our company. It is also on this basis that the Company’s performance is evaluated internally and by the Company’s Board of Directors.

~~- 26 -~~

~~GLATFELTER~~

~~09.30.17 Form 10-Q~~

Sales and Costs of Products Sold


	Nine months ended September 30										Three months ended March 31,
In thousands	2017			2016			Change			In thousands	2023			2022			Change
Net sales	$	1,191,380		$	1,213,932		$	(22,552	)	Net sales	$	378,208		$	381,680		$	(3,472)
Energy and related sales, net		3,346			4,013			(667	)
Total revenues		1,194,726			1,217,945			(23,219	)
Costs of products sold		1,052,626			1,056,209			(3,583	)	Costs of products sold	341,994			350,015			(8,021)
Gross profit	$	142,100		$	161,736		$	(19,636	)	Gross profit	$	36,214		$	31,665		$	4,549
Gross profit as a percent of Net sales		11.9	%		13.3	%				Gross profit as a percent of Net sales	9.6		%	8.3		%

The following table sets forth the contribution to consolidated net sales by each ~~business unit:~~

segment:


	Nine months ended September 30							Three months ended March 31,
Percent of Total	2017			2016			Percent of Total	2023		2022
Business Unit
Segment							Segment
Airlaid Materials							Airlaid Materials	42.1	%	35.6	%
Composite Fibers		33.6	%		32.3	%	Composite Fibers	35.0		39.2
Advanced Airlaid Material		16.0			15.1
Specialty Papers		50.4			52.6
Spunlace							Spunlace	22.9		25.2
Total		100.0	%		100.0	%	Total	100.0	%	100.0	%

Net sales totaled ~~$1,191.4~~$378.2 million and ~~$1,213.9~~$381.7 million in the first ~~nine~~three months of ~~2017~~2023 and ~~2016,~~2022, respectively. Net sales for Airlaid Materials and Composite Fibers increased by 8.9% and 2.0%, respectively, on a constant currency basis. The ~~$22.5 million decrease was primarily driven~~Spunlace segment'’s net sales decreased by ~~$22.4 million of lower selling prices. Shipping volumes decreased 1.1%.~~

~~Composite Fibers’~~8.6% on a constant currency basis.

Airlaid Materials’ net sales increased ~~$9.0 million, or 2.3%. Shipping volumes increased 6.7%. However, currency translation and lower selling prices adversely impacted the comparison by $6.7 million and $6.3 million, respectively.~~

Composite Fibers’ operating income for the first nine months of 2017 increased $5.0 million to $45.5 million compared to the year-ago period primarily due to a $9.7 million benefit from improved operations including the impact of our cost optimization program initiated in late 2016 and the benefit of higher shipping volumes, improved machine utilization rates and reduced downtime. The primary drivers are summarized in the following chart:

~~Advanced Airlaid Materials’ net sales increased $7.0~~$10.0 million in the year-over-year comparison ~~primarily~~mainly driven by higher selling prices from cost-pass-through arrangements with customers and pricing actions to recover significant inflation in raw materials and energy. Shipments were 7.5% lower mainly due to ~~higher shipping volumes which increase 3.4% due to higher shipments of wipes~~feminine hygiene and ~~personal hygiene products.~~

tabletop categories and currency translation was unfavorable by $3.4 million.

~~Advanced~~

Airlaid Materials’ first quarter operating income ~~totaled $22.8~~of $13.9 million ~~an increase of $3.1~~was $1.7 million higher when compared to the ~~same period a year ago.~~first quarter of 2022. Lower shipments were mostly offset by favorable mix, lowering results by $0.1 million. Selling price increases and energy surcharges of $20.5 million more than offset higher raw material and energy costs of $18.1 million. In the first three months of 2023, primary raw material input costs increased $16 million, or 21%, and energy costs increased $1 million, or 12%, compared to the first three months of 2022. The increase in primary ~~drivers are summarized~~raw material input costs was approximately in-line with broader market indices, however, energy costs, in general, increased higher than broader market indices due to our entering into certain forward purchases. We expect prices for both energy and raw materials to steadily decline in 2023. As of March 31, 2023, Airlaid Materials had approximately 77% of its net sales with contracts with pass-through provisions. Operations were unfavorable by $1.4 million mainly driven by lower production to manage customer demand as some customers slowed ordering patterns to manage inventory levels built up at the end of 2022 to avoid anticipated energy and supply chain disruptions in the ~~following chart:~~

~~Specialty Papers’ net sales decreased $38.6 million, or 6.0%, due to a 3.2% decrease in shipping volumes~~beginning of 2023. The impact of currency and ~~a $16.4 million impact from lower selling prices.~~

~~Operating income totaled $11.9 million in the first nine months of 2017, compared with $27.9 million for the first nine months of 2016. The business unit continues to be adversely~~related hedging positively impacted earnings by a supply/demand imbalance affecting the broader uncoated freesheet market as reflected as lower pricing and volume in the chart below. Aggressive cost control actions, lower maintenance spending and improved operating performance contributed to the $8.3 million benefit from operations.$0.8 million. The primary drivers of the change in Airlaid Materials’ operating income are summarized in the following ~~chart:~~

chart (presented in millions):

- 33 -

~~- 27 -~~

~~GLATFELTER~~

~~09.30.17 Form 10-Q~~

~~We sell excess power generated~~

Composite Fibers’ net sales was $3.2 million lower in the first quarter of 2023, compared to the year-ago quarter as lower shipment of 12.0% and unfavorable currency translation of $5.9 million was partially offset by ~~the Spring Grove, PA facility. The following table summarizes this activity~~higher selling prices of $12.0 million.

Composite Fibers had operating income for the first ~~nine~~quarter of $6.1 million compared with an operating loss of $0.3 million in the first quarter of 2022. Higher selling prices and energy surcharges more than offset the continued inflation in energy, raw material, and freight and was a net favorable benefit to results of $3.5 million. In the first three months of ~~2017~~2023, energy costs increased $1.6 million, or 6%, and ~~2016:~~

Nine months ended
September 30

In thousands
2017

2016

Change

Energy sales
$
2,379

$
2,919

$
(540
)
Costs to produce

(3,121
)

(3,229
)

108

Net

(742
)

(310
)

(432
)
Renewable energy credits

4,088

4,323

(235
)
Total
$
3,346

$
4,013

$
(667
)

~~Renewable~~primary raw material input costs increased $7.2 million, or 15%, compared to the first three months of 2022. The increase in primary raw material input costs was approximately in-line with broader market indices, however, energy ~~credits (“RECs”) represent~~costs, in general, increased higher than broader market indices due to our entering into certain forward purchases. We expect prices for both energy and raw materials to steadily decline in 2023. As of March 31, 2023, freight inflation reported as part of raw material, energy and other inflation slightly decreased as global supply chain disruptions experienced in 2022 significantly improved in 2023. Lower shipments negatively impacted income by $1.6 million as all product categories were down compared to same quarter last year reflecting softening demand from inflationary pressures and wallcover shipments additionally impacted by the Russia/Ukraine conflict. As of March 31, 2023, Composite Fibers had approximately 46% of its net sales with contracts with pass-through provisions. Operations was favorable $3.9 million mainly driven by headcount actions taken related to the turnaround strategy as well as lower energy consumption due to lower production volume to match customer demand. The impact of currency and related hedging positively impacted earnings by $0.6 million. The primary drivers of the change in Composite Fibers’ operating income are summarized in the following chart (presented in millions):

Spunlace’s net sales was $9.7 million lower in the first quarter of 2023, compared to the year-ago quarter as lower shipment of 20.8% and unfavorable currency translation of $1.4 million was partially offset by higher selling prices of $12.0 million.

- 34 -

Spunlace had an operating loss of $2.0 million in the first quarter of this year compared with an operating loss of $1.6 million in the first quarter of 2022. Higher selling prices and energy surcharges fully offset the higher raw material and energy costs favorably impacting earnings by $3.2 million. In the first three months of 2023, primary raw material input costs increased $10 million, or 18%, and energy costs decreased $1 million, or 11%, compared to the first three months of 2022. The increase in primary raw material input costs was approximately in-line with broader market indices. We expect prices for both energy and raw materials to decline in 2023. Volume was unfavorable $2.2 million driven by lower shipments in almost all categories. As of March 31, 2023, Spunlace had approximately 39% of its net sales with contracts with pass-through provisions. Operations was unfavorable $1.2 million mainly driven by lower production but partially offset by headcount actions taken in 2022 to improve segment profitability. The impact of currency negatively impacted earnings by $0.2 million. The primary drivers of the change in Spunlace’s operating income are summarized in the following chart (presented in millions):

Asset Impairment During the first quarter of 2022, in connection with an assessment of potential impairment of long-lived and indefinite-lived intangible assets stemming from the compounding impacts resulting from the Russia/Ukraine military conflict and related sanctions, we recorded a $117.3 million non-cash asset impairment charge related to Composite Fibers' Dresden facility and an impairment of Composite Fibers' goodwill. Dresden is a single-line facility that produces wallcover base paper, the majority of which is directly sold into the Russian and Ukrainian markets. As a direct result of the economic impacts from the conflict, and the disruptions in the underlying financial systems and restrictions on our ability to export wallcover base paper to Russia due to related sanctions, management expected a significant reduction in wallcover revenues and associated cash flows for the foreseeable future. In addition, the conflict impacted other Composite Fibers products that are also subject to export sanctions into this region, and continued to significantly impact energy prices. We do not expect significant sales to customers in this region for the foreseeable future as a result of the military conflict, its impact on Ukrainian customers, and the economic sanctions on sales of ~~certified credits earned~~certain products to customers in Russia. Accordingly, a charge was recorded to reduce the carrying value of the Dresden fixed assets and intangible assets (technological know-how, customer relationships, and an indefinite-lived trade name), along with Composite Fiber's goodwill to fair value.

In addition, as a result of economic sanctions and disruptions to the financial markets, certain customers were not able to satisfy outstanding accounts receivables. As such, during the first quarter of 2022, we recognized bad debt expense of approximately $2.9 million directly related to ~~burning renewable sources~~Russian and Ukrainian customers which is included in “Selling, general and administrative expenses” in the accompanying condensed consolidated statements of ~~energy such as black liquor and wood waste. We sell RECs into an illiquid market.~~income. Furthermore, during the quarter of 2022, we increased inventory reserves by approximately $1.0 million, primarily related to wallcover products. The ~~extent and value~~charge related to inventory reserves is included in “Cost of ~~future revenues from REC sales is dependent on many factors outside~~products sold” in the accompanying condensed consolidated statements of ~~management’s control. Therefore,~~income. Substantially all other products which we ~~may not~~will no longer be able to ~~generate consistent additional sales of RECs in future periods.~~

export to Russia due to sanctions can be sold to existing customers outside the Russia/Ukraine region.

Other and UnallocatedThe amount of net operating expenses not allocated to ~~a business unit~~an operating segment, and reported as “Other and Unallocated” in our table of ~~Business Unit~~Segment Financial Performance, totaled ~~$38.7~~$11.9 million in the first ~~nine~~three months of ~~2017~~2023 compared with ~~$31.2~~$126.2 million in the first nine months of 2016. The increase in Other and Unallocated expenses primarily related to costs incurred in connection with our cost optimization actions and the Airlaid capacity expansion project, partially offset by lower costs for Specialty Papers’ environmental compliance project and the legal costs for the Fox River matter.

~~Pension Expense~~ ~~The following table summarizes the amounts of pension expense recognized for the periods indicated:~~

Nine months ended
September 30

In thousands
2017

2016

Change

Recorded as:

Costs of products sold
$
2,534

$
1,761

$
773

SG&A expense

2,441

2,365

76

Total
$
4,975

$
4,126

$
849

The amount of pension expense recognized each year is dependent on various actuarial assumptions and certain other factors, including discount rates and the fair value of our pension assets. Pension expense for the full year of 2017 is expected to be approximately $6.6 million compared with $5.5 million in 2016 (which excludes a $7.3 million settlement charge).

~~Income taxes~~ For the first nine months of 2017, we recorded a provision for income taxes of $9.9 million on pre-tax income of $27.9 million. The comparable amounts in the first nine months of 2016 were $6.5 million and $44.2 million,

~~respectively. The effective tax rate was 35.5% in the first nine months of 2017 compared with 14.6%~~ in the same period a year ago. Excluding the items identified to present “adjusted

- 35 -

earnings,” unallocated expenses for the first three months of ~~2016. This year’s~~2023 increased $2.3 million compared to the same period in 2022 mainly driven by higher incentive accruals and professional services costs.

Income taxes For the three months ended March 31, 2023, we recorded a $3.7 million income tax provision ~~includes~~on a pretax loss of $9.5 million from continuing operations. The comparable amounts for 2022 were $16.8 million income tax benefit on a pre-tax loss of ~~$2.4 million primarily from a tax loss carryback opportunity and the release of U.S. tax reserves due to the lapse of statute of limitations.~~$125.1 million. The income tax provision in both periods reflects valuation allowances recorded for the operating losses in the U.S. and certain foreign jurisdictions for which no income tax benefit was recorded. The income tax benefit in 2022 also ~~reflects the adverse impact of an increase in unrecognized~~includes deferred tax benefits associated with the asset impairment charges and ~~in our valuation allowances for U.S. deferred tax assets. We currently expect to record valuation allowances of between $13 million~~related bad debt and $16 million for the full year 2017. The effective tax rate in future periods may be affected by changes in U.S.-based pre-tax income, including pension expense, and the related impact on the valuation of deferred taxes.

inventory reserves.

Foreign CurrencyWe own and operate facilities in Canada, Germany, France, the United Kingdom, Spain, and the Philippines. The functional currency of our Canadian operations is the U.S. dollar. However, in Germany, France and ~~France~~Spain, it is the ~~Euro,~~euro, in the UK, it is the British ~~Pound Sterling,~~pound sterling, and in the Philippines the functional currency is the ~~Peso.~~peso. On an annual basis, our euro denominated ~~revenue~~net sales exceeds euro expenses by ~~approximately €125 million to €130~~an estimated €190 million. For the first ~~nine~~three months of ~~2017,~~2023, the average currency exchange rate ~~for euro to the U.S. dollar~~ was ~~1.113~~1.07 dollar/euro compared with ~~1.116 for~~1.12 in the same period of ~~2016.~~2022. With respect to the British ~~Pound Sterling,~~pound sterling, Canadian dollar, and Philippine ~~Peso,~~peso, we have differing amounts of inflows and outflows of these currencies, although to a lesser degree than the euro. As a result, we are exposed to changes in currency exchange rates and such changes could be significant. The translation of the results from international operations into U.S. dollars is subject to changes in foreign currency exchange rates.

The table below summarizes the translation impact on reported results that changes in currency exchange rates had on our non-U.S. based operations from the conversion of these operation’s results for the first ~~nine~~three months of ~~2017.~~

2023.

In thousands
Nine months ended
September 30, 2017

Favorable
(unfavorable)

Net sales

$
(6,752
)

Costs of products sold

7,366

SG&A expenses

615

Income taxes and other

320

Net income

$
1,549


In thousands	Three months ended March 31,
	Favorable (unfavorable)
Net sales	$	(10,650)
Costs of products sold	11,157
SG&A expenses	717
Income taxes and other	51
Net loss	$	1,275

The above table only presents the financial reporting impact of foreign currency translations assuming currency exchange rates in ~~2017~~2023 were the same as ~~2016.~~2022. It does not present the impact of certain competitive advantages or disadvantages of operating or competing in multi-currency markets.

~~- 28 -~~

~~GLATFELTER~~

~~09.30.17 Form 10-Q~~

~~Three months ended September 30, 2017 versus the three months ended September 30, 2016~~

~~Overview~~ For the third quarter of 2017, net income totaled $12.1 million, or $0.27 per diluted share compared with net income of $19.6 million, or $0.44 per diluted share in the third quarter of 2016. On an adjusted basis earnings for the third quarter of 2017 was $21.9 million, or $0.50 per diluted share compared with $24.0 million, or $0.54 per diluted share, for the same period a year ago.

~~The following table sets forth summarized results of operations:~~

Three months ended
September 30

In thousands, except per share
2017

2016

Net sales
$
413,325

$
405,301

Gross profit

54,735

61,170

Operating income

21,360

25,418

Net income

12,105

19,601

Earnings per share

0.27

0.44

~~The following table sets forth the reconciliation of net income to adjusted earnings for the three months ended September 30, 2017 and 2016:~~

Three months ended September 30

2017

2016

In thousands, except per share
Amount

Diluted EPS

Amount

Diluted EPS

Net income
$
12,105

$
0.27

$
19,601

$
0.44

Adjustments (pre-tax)

Cost optimization

6,839

-

Specialty Papers' environmental compliance and other

596

5,520

Airlaid capacity expansion costs

2,581

1,051

Timberland sales and related costs

(114
)

-

Total adjustments (pre-tax)

9,902

6,571

Income taxes (1)

(123
)

(2,193
)

Total after-tax adjustments

9,779

0.22

4,378

0.10

Adjusted earnings
$
21,884

$
0.50

$
23,979

$
0.54

~~(1)~~

~~Tax effect on adjustments calculated based on the incremental effective tax rate of the jurisdiction in which each adjustment originated and the related impact of valuation allowances.~~

~~Business Unit Performance~~

~~The sum of individual amounts set forth above may not agree to the consolidated financial statements included herein due to rounding.~~

~~- 29 -~~

~~GLATFELTER~~

~~09.30.17 Form 10-Q~~

~~Sales and Costs of Products Sold~~

Three months ended
September 30

In thousands
2017

2016

Change

Net sales
$
413,325

$
405,301

$
8,024

Energy and related sales,
net

1,236

1,346

(110
)

Total revenues

414,561

406,647

7,914

Costs of products sold

359,826

345,477

14,349

Gross profit
$
54,735

$
61,170

$
(6,435
)

Gross profit as a percent
of Net sales

13.2
%

15.1
%

~~The following table sets forth the contribution to consolidated net sales by each business unit:~~

Three months ended
September 30

Percent of Total
2017

2016

Business Unit

Composite Fibers

34.4
%

32.5
%

Advanced Airlaid Material

16.4

15.3

Specialty Papers

49.2

52.2

Total

100.0
%

100.0
%

~~Net sales~~ totaled $413.3 million and $405.3 million in the third quarters of 2017 and 2016, respectively. Shipping volumes increased 2.1% and foreign currency translation favorably impacted the quarter-over-quarter comparison by $6.0 million. Lower selling prices unfavorably impacted the comparison by $8.0 million.

Composite Fibers’ net sales increased $10.7 million, or 8.1%, primarily due to higher shipping volumes and $4.2 million of favorable currency translation partially offset by $2.3 million from lower selling prices.

Composite Fibers’ third quarter of 2017 operating income increased to $16.4 million, an increase of $2.4 million compared to the year ago quarter. Higher shipping volumes combined with higher machine utilization rates and solid operating performance improved earnings by $5.8 million. The primary drivers are summarized in the following chart:

Advanced Airlaid Materials’ net sales increased $5.9 million in the quarter-over-quarter comparison. Shipping volumes increased 4.2% primarily due to continued growth of personal hygiene and wipes products and $1.8 million favorable impact from currency translation.

~~Advanced Airlaid Materials’ operating income totaled $8.2 million compared with $6.4 million in the third quarter of 2016. The primary drivers are summarized in the following chart:~~

~~Specialty Papers’ net sales decreased $8.6 million, or 4.0%, as its markets continued to be impacted by a supply-demand imbalance resulting in $6.5 million of lower selling prices.~~

Specialty Papers’ operating income totaled $12.5 million in the third quarter of 2017, compared with $18.7 million in the same period a year ago. The primary drivers are summarized in the following chart:

~~Aggressive cost control actions and lower maintenance spending more than offset the adverse impact of market-related downtime and higher depreciation, and increased operating income by $1.8 million.~~

~~- 30 -~~

~~GLATFELTER~~

~~09.30.17 Form 10-Q~~

~~We sell excess power generated by the Spring Grove, PA facility. The following table summarizes this activity for the third quarters of 2017 and 2016:~~

Three months ended
September 30

In thousands
2017

2016

Change

Energy sales
$
586

$
1,101

$
(515
)

Costs to produce

(754
)

(1,187
)

433

Net

(168
)

(86
)

(82
)

Renewable energy credits

1,404

1,432

(28
)

Total
$
1,236

$
1,346

$
(110
)

~~Other and Unallocated~~ The amount of net operating expenses not allocated to a business unit and reported as “Other and Unallocated” in our table of Business Unit Performance excluding gains from sales of timberlands, totaled $15.8 million in the third quarter of 2017 compared with $13.6 million in the third quarter of 2016. The increase in Other and Unallocated expenses primarily related to costs incurred in connection with our cost optimization actions and the Airlaid capacity expansion project, partially offset by lower costs for Specialty Papers’ environmental compliance project and the legal costs for the Fox River matter.

During the third quarter the Company recorded $6.8 million of one-time costs of actions primarily related to the permanent shutdown of a machine and a 15% reduction in salaried workforce in the Specialty Papers business unit. The costs incurred consisted of $4.5 million related to the write-off of the machine and associated spares parts and the balance represented severance costs for the salaried positions. These costs have been excluded from the business unit results and from adjusted earnings.

~~Pension Expense~~ ~~The following table summarizes the amounts of pension expense recognized for the periods indicated:~~

Three months ended
September 30

In thousands
2017

2016

Change

Recorded as:

Costs of products sold
$
842

$
582

$
260

SG&A expense

819

788

31

Total
$
1,661

$
1,370

$
291

~~Income taxes~~ For the third quarter of 2017, we recorded a $4.3 million provision for income tax pre-tax income of $16.4 million. The comparable amounts in the third quarter of 2016 were $1.4 million of tax provision on pre-tax income of $21.0 million. The current quarter’s tax provision includes a benefit of $2.4 million primarily from a tax loss carryback opportunity and the release of U.S. tax reserves due to the lapse of statute of limitations.

~~Foreign Currency~~ ~~The table below summarizes the translation impact on reported results that changes in currency~~

~~exchange rates had on our non-U.S. based operations from the conversion of these operation’s results for the third quarter of 2017.~~

In thousands
Three months ended
September 30, 2017

Favorable (unfavorable)

Net sales

$
6,047

Costs of products sold

(4,340
)

SG&A expenses

(448
)

Income taxes and other

(47
)

Net income

$
1,212

The above table only presents the financial reporting impact of foreign currency translations assuming currency exchange rates in 2017 were the same as 2016. It does not present the impact of certain competitive advantages or disadvantages of operating or competing in multi-currency markets.

LIQUIDITY AND CAPITAL RESOURCES

Our business ~~is capital intensive and~~ requires significant expenditures for new or enhanced equipment, to support our research and development efforts, ~~for environmental compliance matters including, but not limited to, the Clean Air Act,~~ and to support our business strategy. In addition, we have mandatory debt service requirements of both principal and interest. The following table summarizes cash flow information for each of the periods presented:

Nine months ended
September 30

In thousands
2017

2016

Cash and cash equivalents at

beginning of period
$
55,444

$
105,304

Cash provided (used) by

Operating activities

52,796

59,437

Investing activities

(102,055
)

(117,293
)
Financing activities

72,654

2,974

Effect of exchange rate

changes on cash

5,448

330

Net cash provided (used)

28,843

(54,552
)
Cash and cash equivalents at

end of period
$
84,287

$
50,752

- 36 -


	Three months ended March 31,
In thousands	2023		2022
Cash, cash equivalents and restricted cash at the beginning of period	$	119,162	$	148,814
Cash provided (used) by
Operating activities	(30,632)		(66,240)
Investing activities	(8,787)		(7,801)
Financing activities	15,179		16,281
Effect of exchange rate changes on cash	1,266		(748)
Change in cash and cash equivalents from discontinued operations	(11)		(108)
Net cash used	(22,985)		(58,616)
Cash, cash equivalents and restricted cash at the end of period	96,177		90,198
Less: restricted cash in Prepaid and other current assets	(3,600)		(2,000)
Less: restricted cash in Other assets	(3,936)		(7,746)
Cash and cash equivalents at the end of period	$	88,641	$	80,452

At ~~September 30, 2017,~~March 31, 2023, we had ~~$84.3~~$88.6 million in cash and cash equivalents (“cash”) held by both domestic and foreign subsidiaries. ~~Unremitted earnings~~Approximately 86.7% of our foreign subsidiaries are deemed to be indefinitely reinvested and therefore no U.S. tax liability is reflected in the accompanying condensed consolidated financial statements. As of September 30, 2017, the majority of our cash is held by our international subsidiaries and the repatriation of such funds would result in additional tax liability. In addition to our cash and cash equivalents ~~$93.2 million~~ is ~~available under~~held by our ~~revolving credit agreement, which matures in March 2020.~~

foreign subsidiaries but could be repatriated without incurring a significant amount of additional taxes.

~~- 31 -~~

~~GLATFELTER~~

~~09.30.17 Form 10-Q~~

Cash ~~provided~~used by operating activities ~~totaled $52.8 million~~ in the first ~~nine~~three months of ~~2017~~2023 totaled $30.6 million compared with ~~$59.4~~$66.2 million in the same period a year ago. ~~The~~The decrease in cash ~~from operations~~used was primarily ~~reflects lower cash earnings~~due to a decrease in working capital usage of approximately $35.0 million, primarily accounts receivable, which was driven by higher accounts receivables in Q1 2022 due to higher selling prices to offset raw material and ~~the $9.5~~energy inflation, a $6.6 million ~~payment related~~decrease in income taxes paid due to ~~certain claims~~higher Canadian income taxes and withholding tax in ~~the Fox River matter,~~Q1 2022 and a U.K. income tax refund in Q1 2023 partially offset by ~~$4.0~~a $3.5 million increase in interest paid and a $5.8 million lump-sum payment in Q1 2023 to our former CEO under the terms of ~~lower income tax payments.~~

his non-qualified pension plan.

Net cash used by investing activities ~~decreased by $15.2~~was $8.8 million compared with $7.8 million in the ~~year-over-year comparison primarily due to lower capital expenditures.~~same period a year ago. Capital expenditures totaled $9.5 million and $12.3 million for the three months ended March 31, 2023 and 2022, respectively. Capital expenditures are expected to total between ~~$130~~$35 million and ~~$135~~$40 million, including $4 to $5 million for ~~2017, including approximately $13 million for the Specialty Papers’ environmental compliance projects and approximately $49 million for the Airlaid capacity expansion.~~

Spunlace integration, in 2023.

Net cash provided by financing activities totaled ~~$72.7~~$15.2 million in the first ~~nine~~three months of ~~2017~~2023 compared with ~~$3.0~~$16.3 million in the same period of ~~2016.~~2022. The ~~increase~~change in ~~cash provided by~~ financing activities primarily reflects ~~additional~~the new €250.0 million Term Loan we entered into in which the proceeds were used to fully extinguish the €220.0 million Term Loan, the IKB term loans and reduced the revolving credit facility balance. In 2022, we used borrowings under ~~our credit agreement.~~

~~The following table sets forth our outstanding long-term indebtedness:~~

~~Our~~the revolving credit facility for working capital and other operating expenditures.

As discussed in Item 1 - Financial Information, Note - 15, our Credit Agreement contains a number of customary compliance ~~covenants, the most restrictive of which is a maximum leverage ratio of 3.5x.~~covenants. As of ~~September 30, 2017,~~March 31, 2023, the leverage ratio, as calculated in accordance with the definition in our ~~amended credit agreement,~~Credit Agreement, was ~~2.6x,~~3.0x, well within the ~~limits~~maximum limit allowed under our Credit Agreement. A breach of these requirements would give rise to certain remedies under the Revolving Credit Facility, among which are the termination of the agreement and accelerated repayment of the outstanding borrowings plus accrued and unpaid interest under the Credit Agreement and the Term loan. As discussed in Note 15 - “Long Term Debt,” on March 30, 2023, we amended our Credit Agreement to permit the maximum leverage ratio (calculated as consolidated senior secured debt to consolidated adjusted EBITDA) to be 4.25 to 1.0 through the quarter ended December 31, 2024, stepping down to 4.0 to 1.0 at March 31, 2025, and 3.50 to 1.0 at March 31, 2026.

Details of our outstanding long-term indebtedness are set forth in our credit agreement. Based on our expectations of future results of operations and capital needs, we do not believe the debt covenants will impact our operations or limit our ability to undertake financings that may be necessary to meet our capital needs.

~~The 5.375% Notes contain cross default provisions that could result in all such notes becoming due and payable in the event of a failure to repay debt outstanding~~ under the credit agreement at maturity, or a default under the credit agreement that accelerates the debt outstanding thereunder. As of September 30, 2017, we met all of the requirements of our debt covenants. The significant terms of the debt instruments

~~are more fully discussed in~~ Item 1 - Financial Statements – Note ~~10.~~

15 -“Long-Term Debt."

Financing activities ~~includes~~include cash used for common stock dividends which increased in the comparison reflecting a 4% increase in our quarterly cash dividend. In the first nine months of 2017, we used $16.8 million of cash for dividends on our common stock compared with $16.1 million in the same period of 2016.dividends. Our Board of Directors determines what, if any, dividends will be paid to our shareholders. ~~Dividend payment decisions are based upon then-existing factors~~In the third quarter of 2022, our Board of Directors suspended the Company’s quarterly cash dividend to focus efforts on optimizing the operational and ~~conditions and, therefore, historical trends~~financial results of ~~dividend payments are not necessarily indicative~~the business. As such, we

- 37 -

paid no cash dividends in the first three months of ~~future payments.~~

2023. In the first three months of 2022, we paid $6.2 million of cash for dividends on our common stock.

We are subject to various federal, state and local laws and regulations intended to protect the environment, as well as human health and safety. At various times, we have incurred significant costs to comply with these regulations and we could incur additional costs as new regulations are developed or regulatory priorities change.

~~As more fully discussed in Item 1 - Financial Statements – Note 13 – Commitments, Contingencies~~

At March 31, 2023, we had ample liquidity consisting of $88.6 million of cash on hand and Legal Proceedings (“Note 13”), we are involved in the Lower Fox River in Wisconsin (the “Fox River”), an EPA Superfund site for which we remain potentially liable for certain response costs and long-term monitoring and maintenance related matters. Based on the recent developments more fully discussed in Note 13, it is conceivable the resolution$140.7 million of this matter may require us to spend in excess of $20.0 million in the next twelve months. Although we are unable to determine with any degree of certainty the amount we may be required to spend the recent developments provide greater clarity to the extent of such amounts.

capacity under our revolving credit facility. We expect to meet all of our near and long-term cash needs from a combination of operating cash flow, cash and cash equivalents, our existing credit facility and other long-term debt. ~~However,~~

On April 13, 2023, our credit rating from Moody’s Investor Service was upgraded to B3, in part due to our successful refinancing of our €220.0 million Term Loan with the €250.0 million AG Loan as discussed in Note ~~13, an unfavorable outcome~~15 - “Long Term Debt,”. In October 2022, our credit rating was downgraded by S&P Global Ratings to CCC+ based on its latest assessment of our business, and no further action has been taken to date. Although the ~~Fox River matters could have a material adverse~~Moody’s Investor Service ratings upgrade action is positive, it does not impact our current interest costs, or reduce the possibility of default on any of our ~~consolidated financial position, liquidity and/or results of operations.~~

debt.

Off-Balance-Sheet Arrangements As of ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016,~~2022, we had not entered into any off-balance-sheet arrangements. Financial derivative instruments, to which we are a party, and guarantees of indebtedness, which solely consist of obligations of subsidiaries, are reflected in the condensed consolidated balance sheets included herein in Item 1 – Financial Statements.

~~Outlook~~ Composite Fibers’ shipping volumes in the fourth quarter of 2017 are expected to be approximately 10% lower than the third quarter driven by normal seasonality with the majority of the impact of lower shipping volumes expected to be offset by improved product mix. Selling prices and overall raw material and energy prices are expected to be in-line with the third quarter.

- 3238 -

~~GLATFELTER~~

~~09.30.17 Form 10-Q~~

Advanced Airlaid Materials’ shipping volumes in the fourth quarter are expected to be approximately 3% lower than the third quarter due to normal seasonality. Selling prices and raw material and energy prices are expected to increase slightly compared with the third quarter. For 2018, we anticipate shipping volumes to be 10% to 15% higher than 2017 driven by the start-up of the Fort Smith, Arkansas facility.

Specialty Papers’ shipping volumes in the fourth quarter are expected to be approximately 5% lower than the third quarter of 2017 due to normal seasonality. Selling prices are expected to be in-line and raw material and energy prices are expected to increase compared to the third quarter. Specialty Papers will also benefit by $1 million more than the third quarter from the cost reduction actions.

In addition, costs associated with the Specialty Papers environmental compliance projects and Advanced Airlaid Materials capacity expansion are expected to be $1 million and $3 million, respectively, during the fourth quarter and zero and $3 million in 2018.

~~Consolidated capital expenditures are expected to total between $130 million and $135 million for 2017 and approximately between $65 million to $70 million in 2018.~~

~~The effective tax rate on adjusted earnings is expected to be approximately 35% for the fourth quarter of 2017 and for 2018.~~

~~- 33 -~~

~~GLATFELTER~~

~~09.30.17 Form 10-Q~~

ITEM 3. QUANTITATIVE AND ~~QUALITATI~~VEQUALITATIVE DISCLOSURES ABOUT MARKET ~~RISK~~S

RISKS

	Year Ended December 31															September 30, 2017
Dollars in thousands	2017			2018			2019			2020			2021			Carrying Value		Fair Value
																					Year Ended December 31															March 31, 2023
In thousands, except percentages																				In thousands, except percentages	2023			2024			2025			2026			2027			Carrying Value		Fair Value
Long-term debt																				Long-term debt
Average principal outstanding																				Average principal outstanding
At fixed interest rates – Bond	$	250,000		$	250,000		$	250,000		$	218,750		$	—		$	250,000	$	254,265
At fixed interest rates – Term Loans		63,942			55,963			44,841			33,720			22,598			63,943		64,583
At variable interest rates		158,298			158,298			158,298			32,979			—			158,298		158,298	At variable interest rates	$	298,791		$	104,400		$	104,400		$	70,363		$	—		$	104,400	$	104,400
At fixed interest rates																				At fixed interest rates	786,702			767,427			766,438			766,438			766,438			770,393		606,191
																$	472,241	$	477,146																	$	874,793	$	710,591
Weighted-average interest rate																				Weighted-average interest rate
On fixed rate debt – Bond		5.375	%		5.375	%		5.375	%		5.375	%		—
On fixed rate debt – Term Loans		1.89	%		1.89	%		1.88	%		1.86	%		1.82	%
On variable rate debt		2.74	%		2.74	%		2.74	%		2.74	%		—						On variable rate debt	3.33		%	7.41		%	7.41		%	4.99		%	—		%
On fixed rate debt																				On fixed rate debt	5.91		%	7.00		%	7.01		%	7.01		%	7.01		%

Our market risk exposure primarily results from changes in interest rates and currency exchange rates. The table above presents the average principal outstanding and related interest rates for the next five years for debt outstanding as of ~~September 30, 2017.~~March 31, 2023. Fair values included herein have been determined based upon rates currently available to us for debt with similar terms and remaining maturities.

~~Our market risk exposure primarily results from changes in interest rates and currency exchange rates.~~

At ~~September 30, 2017,~~March 31, 2023, we had ~~$470.2~~$874.8 million of long-term debt, ~~net of unamortized debt issuance costs,~~ of which ~~33.7%~~$104.4 was at variable interest rates. Variable-rate debt ~~outstanding~~ represents borrowings under our ~~revolving~~ credit agreement that accrues interest based on one-month U.S. Dollar LIBOR or one-month Euro LIBOR indexes, but in no event less than zero, plus athe applicable margin. At ~~September 30, 2017,~~March 31, 2023, the weighted-average interest rate paid was ~~approximately 2.74%~~equal to 7.41%. A hypothetical 100 basis point increase ~~or decrease~~ in the interest rate on variable rate debt would increase ~~or decrease~~ annual interest expense by ~~$1.6~~$1.0 million.

In the event rates are 100 basis points lower, interest expense would be $1.0 million lower.

We are subject to certain risks associated with changes in foreign currency exchange rates to the extent our operations are conducted in currencies other than the U.S. dollar. On an annual basis, our euro denominated revenue exceeds euro expenses by an estimated €190 million. With respect to the British pound sterling, Canadian dollar, and Philippine peso, we have differing amounts of inflows and outflows of these currencies, although to a lesser degree than the euro. As a result, particularly with respect to the euro, we are exposed to changes in currency exchange rates and such changes could be significant.

As part of our overall risk management practices, we enter into financial derivatives primarily designed to either i) hedge foreign currency risks associated with forecasted transactions – “cash flow hedges”; or ii) mitigate the impact that changes in currency exchange rates have on intercompany financing transactions and foreign currency denominated receivables and payables – “foreign currency hedges.” For a more complete discussion of this activity, refer to Item 1 – Financial Statements – Note ~~12.~~

17.

Critical Accounting Policies and Significant Estimates

The preceding discussion and analysis of our consolidated financial position and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, net sales and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to long-lived assets, environmental liabilities, and income taxes. We base our estimates on historical experience and on various other assumptions that we believe are ~~subject to certain risks associated with~~reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. We believe that our policies for long- and indefinite-lived assets, environmental liabilities and income taxes represent the most significant and subjective estimates used in the preparation of our consolidated financial statements and are therefore considered our critical accounting policies and estimates.

During the three months ended March 31, 2023, there were no changes in ~~foreign currency exchange rates~~our critical accounting policies or estimates. See Note 2 — Accounting Policies, of the Condensed Consolidated Financial Statements included elsewhere in this Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC, for additional information regarding our critical accounting policies.

Long- and indefinite-lived Assets We evaluate the recoverability of our long- and indefinite-lived assets, including plant, equipment, timberlands, goodwill, and other intangible assets periodically or whenever events or changes in

- 39 -

circumstances indicate that the carrying amounts may not be recoverable. Goodwill is reviewed for impairment annually during the fourth quarter, or more frequently if impairment indicators are present.

The fair value of our reporting units, which are also our operating segments, is determined using a market approach and a discounted cash flow model. Our evaluations include a variety of qualitative factors and analyses based on estimates of future cash flows expected to be generated from the ~~extent~~use of the underlying assets, trends or other determinants of fair value. If the value of an asset determined by these evaluations is less than its carrying amount, a loss is recognized for the difference between the fair value and the carrying value of the asset. In 2022, all the goodwill of our ~~operations are conducted~~Composite Fibers and Spunlace operating segments was fully impaired. Our Airlaid Materials segment’s fair value substantially exceeded its carrying value at the time of its last valuation performed in ~~currencies other than~~connection with the ~~U.S. Dollar. On an~~last annual ~~basis,~~impairment test in the fourth quarter of 2022. Airlaid Material’s fair value, as well as the asset groups within each of our ~~euro denominated revenue exceeds euro expenses~~operating segment, could be impacted by approximately €125 million to €130 million. With respect to the British Pound Sterling, Canadian dollar, and Philippine Peso, we have differing amounts of inflows and outflows of these currencies, although to a lesser degree than the euro. As a result, particularly with respect to the euro, we are exposed tofactors such as unexpected changes in ~~currency exchange rates and~~inflation, significant disruptions in the delivery of energy to our sites, particularly in Europe, among other factors. Future adverse changes such ~~changes could be significant.~~

as these or in market conditions or poor operating results of the related business may indicate an inability to recover the carrying value of the assets, thereby possibly requiring an impairment charge in the future.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures Our ~~chief executive officer~~Chief Executive Officer and our principal financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of ~~September 30, 2017,~~March 31, 2023, have concluded that, as of the evaluation date, our disclosure controls and procedures are effective.

Changes in Internal ControlsThere were no changes in our internal control over financial reporting during the three months ended ~~September 30, 2017,~~March 31, 2023, that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

- 40 -

PART II – OTHER INFORMATION

ITEM 1B. LEGAL PROCEEDINGS

See the discussion of legal proceedings contained in Note 18 - ~~34 -~~

~~GLATFELTER~~

~~09.30.17 Form 10-Q~~

~~PART~~ II

“Commitments, Contingencies and Legal Proceedings” to our unaudited consolidated financial statements in Part I, Item 1 of this report, which is incorporated herein by reference.

ITEM 6. EXHIBITS

The following exhibits are filed or furnished herewith or incorporated by reference as indicated.


~~31.1~~			Incorporated by reference to
3.1		Glatfelter Corporation Amended and Restated By-Laws (Amended and Restated as of April 5, 2023)	Ex. 3.1 to Form 8-K filed April 5, 2023
10.1		Commitment Letter for Term Loan with Angelo, Gordon & Co., L.P.	Ex. 10.1 to Form 8-K filed February 21, 2023
10.2		Second Amendment to Fourth Amended and Restated Credit Agreement	Ex. 10.1 to Form 8-K filed March 31, 2023
10.3		Term Loan Credit Agreement with Angelo, Gordon & Co., L.P.	Ex. 10.2 to Form 8-K filed March 31, 2023
10.4		Offer Letter to Boris Illetschko as Chief Operating Officer
31.1		Certification of ~~Dante C. Parrini, Chairman~~Thomas M. Fahnemann, President and Chief Executive Officer of Glatfelter, pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002, filed ~~herewith~~herewith.
31.2
~~31.2~~	Certification of ~~John P. Jacunski, Executive~~Ramesh Shettigar, Senior Vice President, ~~and~~ Chief Financial Officer and Treasurer of Glatfelter, pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002, filed ~~herewith~~herewith.
32.1
~~32.1~~	Certification of ~~Dante C. Parrini, Chairman~~Thomas M. Fahnemann, President and Chief Executive Officer of Glatfelter, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, furnished ~~herewith~~herewith.
32.2
~~32.2~~	Certification of ~~John P. Jacunski, Executive~~Ramesh Shettigar, Senior Vice President, ~~and~~ Chief Financial Officer and Treasurer of Glatfelter, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, furnished ~~herewith~~herewith.
101.INS
~~101.INS~~	Inline XBRL Instance Document ~~filed herewith~~ – the instance document does not appear in the Interactive Data file because its iXBRL tags are embedded within the Inline XBRL document.
101.SCH
~~101.SCH~~	Inline XBRL Taxonomy Extension ~~Schema, filed herewith~~ Schema.
101.CAL
~~101.CAL~~	Inline XBRL Extension Calculation ~~Linkbase, filed herewith~~ Linkbase.
101.DEF
~~101.DEF~~	Inline XBRL Extension Definition ~~Linkbase, filed herewith~~ Linkbase.
101.LAB
~~101.LAB~~	Inline XBRL Extension Label ~~Linkbase, filed herewith~~ Linkbase.
101.PRE
~~101.PRE~~	Inline XBRL Extension Presentation ~~Linkbase, filed herewith~~ Linkbase.
104
Cover Page Interactive Data File (formatted as an inline XBRL and contained in Exhibit 101).

- 41 -

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

~~P. H. GLATFELTER COMPANY~~

~~(Registrant)~~

Glatfelter Corporation

(Registrant)

~~October 31, 2017~~

May 4, 2023

/s/ David C. Elder

David C. Elder

Vice President, Finance

and Chief Accounting Officer

(Principal accounting officer)

- 3542 -

~~GLATFELTER~~

~~09.30.17 Form 10-Q~~


PART I - FINANCIAL INFORMATION			Page
Item 1	Financial Statements		2
	Condensed Consolidated Statements of Income for the three months ended March 31, 2023 and 2022 (unaudited)		2
	Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2023 and 2022 (unaudited)		3
	Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022 (unaudited)		4
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022 (unaudited)		5
	Statements of Shareholders’ Equity for the three months ended March 31, 2023 and 2022 (unaudited)		6
	Notes to Condensed Consolidated Financial Statements (unaudited)		7
	1	Organization	7
	2	Accounting Policies	7

	3	Revenue	7
	4	Gains on Disposition of Plant, Equipment and Timberlands	9
	5	Goodwill and Other Asset Impairment	9
	6	Discontinued Operations	9
	7	Earnings Per Share	10
	8	Accumulated Other Comprehensive Income	11
	9	Stock-based Compensation	13
	10	Retirement Plans and Other Post-Retirement Benefits	14
	11	Income Taxes	14
	12	Inventories	15
	13	Goodwill and Other Intangible Assets	16
	14	Leases	16
	15	Long-term Debt	18
	16	Fair Value of Financial Instruments	21
	17	Financial Derivatives and Hedging Activities	21
	18	Commitments, Contingencies and Legal Proceedings	24
	19	Segment Information	26

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations		28
Item 3	Quantitative and Qualitative Disclosures About Market Risks		39
Item 4	Controls and Procedures		40
PART II – OTHER INFORMATION			41

Item 1B	L egal Proceedings		41
Item 6	Exhibits		41
	SIGNATURES		42

	7.	Retirement Plans and Other Post- Retirement Benefits	11
	8.	Inventories	12
	9.	Capitalized Interest	12
	10.	Long-term Debt	12
	11.	Fair Value of Financial Instruments	13
	12.	Financial Derivatives and Hedging Activities	13
	13.	Commitments, Contingencies and Legal Proceedings	15
	14.	Segment Information	18
	15.	Condensed Consolidating Financial Statements	19

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations		24
Item 3	Quantitative and Qualitative Disclosures About Market Risks		34
Item 4	Controls and Procedures		34

PART II – OTHER INFORMATION			35

Item 6	Exhibits		35

	SIGNATURES		35


	Three months ended September 30						Nine months ended September 30							Three months ended March 31,
In thousands, except per share	2017			2016			2017			2016			In thousands, except per share	2023		2022

Net sales	$	413,325		$	405,301		$	1,191,380		$	1,213,932		Net sales	$	378,208	$	381,680
Energy and related sales, net		1,236			1,346			3,346			4,013
Total revenues		414,561			406,647			1,194,726			1,217,945
Costs of products sold		359,826			345,477			1,052,626			1,056,209		Costs of products sold	341,994		350,015
Gross profit		54,735			61,170			142,100			161,736		Gross profit	36,214		31,665
Selling, general and administrative expenses		33,399			35,747			100,484			104,796		Selling, general and administrative expenses	30,745		33,166
(Gains) losses on dispositions of plant, equipment and timberlands, net		(24	)		5			(50	)		31
Operating income		21,360			25,418			41,666			56,909
Goodwill and other asset impairment charges													Goodwill and other asset impairment charges	—		117,349
Gains on dispositions of plant, equipment and timberlands, net													Gains on dispositions of plant, equipment and timberlands, net	(644)		(2,961)
Operating income (loss)													Operating income (loss)	6,113		(115,889)
Non-operating income (expense)													Non-operating income (expense)
Interest expense		(4,547	)		(3,895	)		(13,031	)		(11,964	)	Interest expense	(12,594)		(7,862)
Interest income		51			52			209			204		Interest income	271		17
Other, net		(478	)		(573	)		(906	)		(956	)	Other, net	(3,278)		(1,340)
Total non-operating expense		(4,974	)		(4,416	)		(13,728	)		(12,716	)	Total non-operating expense	(15,601)		(9,185)
Income before income taxes		16,386			21,002			27,938			44,193
Loss from continuing operations before income taxes													Loss from continuing operations before income taxes	(9,488)		(125,074)
Income tax provision (benefit)													Income tax provision (benefit)	3,694		(16,784)
Loss from continuing operations													Loss from continuing operations	(13,182)		(108,290)

Discontinued operations:													Discontinued operations:
Loss before income taxes													Loss before income taxes	(402)		(37)
Income tax provision		4,281			1,401			9,944			6,459		Income tax provision	—		—
Net income	$	12,105		$	19,601		$	17,994		$	37,734
Earnings per share
Basic	$	0.28		$	0.45		$	0.41		$	0.87
Diluted		0.27			0.44			0.41			0.86
Cash dividends declared per common share	$	0.13		$	0.125		$	0.39		$	0.375
Loss from discontinued operations													Loss from discontinued operations	(402)		(37)
Net loss													Net loss	$	(13,584)	$	(108,327)

Basic earnings per share													Basic earnings per share
Loss from continuing operations													Loss from continuing operations	$	(0.29)	$	(2.42)
Loss from discontinued operations													Loss from discontinued operations	(0.01)		—
Basic loss per share													Basic loss per share	$	(0.30)	$	(2.42)

Diluted earnings per share													Diluted earnings per share
Loss from continuing operations													Loss from continuing operations	$	(0.29)	$	(2.42)
Loss from discontinued operations													Loss from discontinued operations	(0.01)		—
Diluted loss per share													Diluted loss per share	$	(0.30)	$	(2.42)

Weighted average shares outstanding													Weighted average shares outstanding
Basic		43,617			43,576			43,601			43,552		Basic	44,957		44,709
Diluted		44,182			44,133			44,410			44,059		Diluted	44,957		44,709

	September 30			December 31
In thousands	2017			2016			In thousands	March 31, 2023		December 31, 2022
Assets							Assets
Cash and cash equivalents	$	84,287		$	55,444		Cash and cash equivalents	$	88,641	$	110,660
Accounts receivable, net		186,310			152,989		Accounts receivable, net	196,900		195,665
Inventories		256,764			249,669		Inventories	321,427		309,436
Prepaid expenses and other current assets		44,134			36,157		Prepaid expenses and other current assets	72,256		63,723
Total current assets		571,495			494,259		Total current assets	679,224		679,484

Plant, equipment and timberlands, net		856,017			775,898		Plant, equipment and timberlands, net	676,362		675,811
Goodwill		81,497			73,094		Goodwill	106,553		105,195
Intangible assets, net		59,199			56,259		Intangible assets, net	107,316		108,670
Other assets		128,586			121,749		Other assets	82,016		78,193
Total assets	$	1,696,794		$	1,521,259		Total assets	$	1,651,471	$	1,647,353

Liabilities and Shareholders' Equity							Liabilities and Shareholders' Equity
Current portion of long-term debt	$	11,122		$	8,961		Current portion of long-term debt	$	3,955	$	40,435
Short-term debt							Short-term debt	8,206		11,422
Accounts payable		168,848			164,345		Accounts payable	196,433		217,625
Dividends payable		5,675			5,455

Environmental liabilities		20,000			25,000		Environmental liabilities	2,100		2,200
Other current liabilities		130,368			119,250		Other current liabilities	97,191		88,724
Total current liabilities		336,013			323,011		Total current liabilities	307,885		360,406

Long-term debt		459,025			363,647		Long-term debt	852,090		793,252
Deferred income taxes		65,597			54,995		Deferred income taxes	54,973		54,388
Other long-term liabilities		125,563			125,780		Other long-term liabilities	123,936		121,303
Total liabilities		986,198			867,433		Total liabilities	1,338,884		1,329,349

Commitments and contingencies		—			—		Commitments and contingencies

Shareholders’ equity							Shareholders’ equity
Common stock		544			544		Common stock	544		544
Capital in excess of par value		62,346			57,917		Capital in excess of par value	59,256		60,663
Retained earnings		963,853			962,884		Retained earnings	485,279		498,863
Accumulated other comprehensive loss		(153,751	)		(204,606	)	Accumulated other comprehensive loss	(90,423)		(97,895)
		872,992			816,739			454,656		462,175
Less cost of common stock in treasury		(162,396	)		(162,913	)	Less cost of common stock in treasury	(142,069)		(144,171)
Total shareholders’ equity		710,596			653,826		Total shareholders’ equity	312,587		318,004
Total liabilities and shareholders’ equity	$	1,696,794		$	1,521,259		Total liabilities and shareholders’ equity	$	1,651,471	$	1,647,353

In thousands	Currency translation adjustments			Unrealized gain (loss) on cash flow hedges			Change in pensions			Change in other postretirement defined benefit plans			Total
Balance at July 1, 2017	$	(66,879	)	$	(3,097	)	$	(105,824	)	$	4,719		$	(171,081	)
Other comprehensive income before reclassifications (net of tax)		16,559			(1,533	)		—			—			15,026
Amounts reclassified from accumulated other comprehensive income (net of tax)		—			19			2,424			(139	)		2,304
Net current period other comprehensive income (loss)		16,559			(1,514	)		2,424			(139	)		17,330
Balance at September 30, 2017	$	(50,320	)	$	(4,611	)	$	(103,400	)	$	4,580		$	(153,751	)
Balance at July 1, 2016	$	(74,486	)	$	785		$	(115,786	)	$	3,204		$	(186,283	)
Other comprehensive income before reclassifications (net of tax)		(1,530	)		(1,195	)		—			—			(2,725	)
Amounts reclassified from accumulated other comprehensive income (net of tax)		—			337			2,464			(145	)		2,656
Net current period other comprehensive income (loss)		(1,530	)		(858	)		2,464			(145	)		(69	)
Balance at September 30, 2016	$	(76,016	)	$	(73	)	$	(113,322	)	$	3,059		$	(186,352	)

	Three months ended September 30						Nine months ended September 30
In thousands	2017			2016			2017			2016
Description													Line Item in Statements of Income
Cash flow hedges (Note 12)
(Gains) losses on cash flow hedges	$	29		$	347		$	(1,687	)	$	264		Costs of products sold
Tax expense (benefit)		(10	)		(10	)		444			(6	)	Income tax provision
Net of tax		19			337			(1,243	)		258
Retirement plan obligations (Note 7)
Amortization of deferred benefit pension plans
Prior service costs		532			506			1,592			1,519		Costs of products sold
		176			168			528			504		Selling, general and administrative
Actuarial losses		2,290			2,450			6,852			7,350		Costs of products sold
		788			843			2,359			2,530		Selling, general and administrative
		3,786			3,967			11,331			11,903
Tax benefit		(1,362	)		(1,503	)		(4,075	)		(4,511	)	Income tax provision
Net of tax		2,424			2,464			7,256			7,392
Amortization of deferred benefit other plans
Prior service costs		(37	)		(37	)		(112	)		(112	)	Costs of products sold
		(8	)		(8	)		(24	)		(24	)	Selling, general and administrative
Actuarial losses		(77	)		(156	)		(233	)		(467	)	Costs of products sold
		(17	)		(33	)		(50	)		(100	)	Selling, general and administrative
		(139	)		(234	)		(419	)		(703	)
Tax expense		—			89			—			268		Income tax provision
Net of tax		(139	)		(145	)		(419	)		(435	)
Total reclassifications, net of tax	$	2,304		$	2,656		$	5,594		$	7,215

	2017					2016
SOSARS	Shares			Wtd Avg Exercise Price		Shares			Wtd Avg Exercise Price
Outstanding at January 1,		2,736,616		$	17.64		2,199,742		$	17.82
Granted		—			—		743,925		17.54
Exercised		(33,050	)		14.65		(61,190	)		10.70
Canceled / forfeited		(17,630	)		18.46		(143,932	)		17.87
Outstanding at September 30,		2,685,936		$	17.67		2,738,545		$	17.64

SOSAR Grants

Weighted average grant date fair value per share	$	-				$	4.07
Aggregate grant date fair value (in thousands)	$	-				$	3,013
Black-Scholes assumptions
Dividend yield		-					2.85	%
Risk free rate of return		-					1.34	%
Volatility		-					31.97	%
Expected life	-					6 yrs

Amounts in thousands	Original Principal		Interest Rate			Maturity
Borrowing date
Apr. 11, 2013	€	42,700		2.05	%	Mar. 2023
Sep. 4, 2014		10,000		2.40	%	Jun. 2022
Oct. 10, 2015		2,608		1.55	%	Sep. 2025
May 4, 2016		7,195		1.55	%	Sep. 2025
Apr. 26, 2016		10,000		1.30	%	Jun. 2023

	September 30, 2017				December 31, 2016
In thousands	Carrying Value		Fair Value		Carrying Value		Fair Value
Variable rate debt	$	158,298	$	158,298	$	61,595	$	61,595
Fixed-rate bonds		250,000		254,265		250,000		256,563
2.40% Term loan		8,012		8,207		8,282		8,877
2.05% Term loan		34,659		35,223		35,163		37,089
1.30% Term Loan		9,698		9,644		9,788		10,062
1.55% Term loan		11,574		11,509		10,333		10,082
Total	$	472,241	$	477,146	$	375,161	$	384,268

In thousands	September 30 2017		December 31 2016
Derivative
Sell/Buy - sell notional
Philippine Peso / British Pound		19,047		—
Euro / British Pound		11,428		10,373
U.S. Dollar / Euro		1,471		—
Canadian Dollar / U.S. Dollar		20		—
Sell/Buy - buy notional
Euro / Philippine Peso		857,103		699,279
British Pound / Philippine Peso		644,076		557,025
U.S. Dollar / Euro		7,799		15,379
Euro / U.S. Dollar		54,135		43,951
U.S. Dollar / Canadian Dollar		32,760		35,290
British Pound / Euro		335		—

Three months ended September 30					Advanced Airlaid								Other and
Dollars in millions	Composite Fibers				Materials				Specialty Papers				Unallocated						Total
	2017		2016		2017		2016		2017		2016		2017			2016			2017			2016
Net sales	$	142.3	$	131.7	$	67.8	$	61.9	$	203.2	$	211.8	$	—		$	—		$	413.3		$	405.3
Energy and related sales, net		—	—			—	—			1.2		1.3		—			—			1.2			1.3
Total revenue		142.3		131.7		67.8	61.9			204.4		213.1		—			—			414.6			406.6
Cost of products sold		115.0		105.8		57.2		53.5		179.7		180.1		7.9			6.1			359.8			345.5
Gross profit (loss)		27.3		25.9		10.6		8.4		24.7		33.0		(7.9	)		(6.1	)		54.7			61.2
SG&A		10.9		11.9		2.4		2.0		12.2		14.3		7.9			7.5			33.4			35.7
(Gains) losses on dispositions of plant, equipment and timberlands, net		—		—		—		—		—		—		—			—			—			—
Total operating income (loss)		16.4		14.0		8.2		6.4		12.5		18.7		(15.8	)		(13.6	)		21.4			25.4
Non-operating expense		—		—		—		—		—		—		(5.0	)		(4.4	)		(5.0	)		(4.4	)
Income (loss) before income taxes	$	16.4	$	14.0	$	8.2	$	6.4	$	12.5	$	18.7	$	(20.8	)	$	(18.0	)	$	16.4		$	21.0
Supplementary Data
Net tons sold (thousands)		43.8		39.1		26.2		25.2		197.1		197.3		—			—			267.1			261.5
Depreciation, depletion and amortization	$	7.1	$	6.9	$	2.5	$	2.4	$	8.0	$	6.4	$	3.8		$	0.6		$	21.4		$	16.3
Capital expenditures		3.8		5.1		12.6		4.3		10.2		26.7		4.5			0.5			31.1			36.6

Nine months ended September 30					Advanced Airlaid								Other and
Dollars in millions	Composite Fibers				Materials				Specialty Papers				Unallocated						Total
	2017		2016		2017		2016		2017		2016		2017			2016			2017			2016
Net sales	$	400.6	$	391.6	$	190.4	$	183.4	$	600.3	$	638.9	$	—		$	—		$	1,191.4		$	1,213.9
Energy and related sales, net		—	—			—	—			3.3		4.0		—			—			3.3			4.0
Total revenue		400.6	391.6			190.4		183.4		603.6		642.9		—			—			1,194.7			1,217.9
Cost of products sold		322.2		316.0		160.7		157.5		555.7		574.1		14.0			8.6			1,052.6			1,056.2
Gross profit (loss)		78.4		75.6		29.7		25.9		47.9		68.8		(14.0	)		(8.6	)		142.1			161.7
SG&A		32.9		35.1		6.9		6.2		36.0		40.9		24.7			22.6			100.5			104.8
(Gains) losses on dispositions of plant,
equipment and timberlands, net		—		—		—		—		—		—		—			—			—			—
Total operating income (loss)		45.5		40.5		22.8		19.7		11.9		27.9		(38.7	)		(31.2	)		41.7			56.9
Non-operating expense		—		—		—		—		—		—		(13.7	)		(12.7	)		(13.7	)		(12.7	)
Income (loss) before income taxes	$	45.5	$	40.5	$	22.8	$	19.7	$	11.9	$	27.9	$	(52.4	)	$	(43.9	)	$	27.9		$	44.2
Supplementary Data
Net tons sold (thousands)		124.5		116.7		76.6		74.1		578.4		597.7		—			—			779.5			788.5
Depreciation, depletion and amortization	$	20.9	$	21.2	$	7.1	$	7.0	$	22.9	$	19.7	$	5.4		$	1.8		$	56.3		$	49.7
Capital expenditures		10.6		13.7		36.1		25.0		44.2		77.4		11.3			0.8			102.2			116.9

In thousands	Parent Company			Guarantors			Non Guarantors			Adjustments/ Eliminations			Consolidated
Net sales	$	203,205		$	20,588		$	211,331		$	(21,799	)	$	413,325
Energy and related sales, net		1,236			—			—			—			1,236
Total revenues		204,441			20,588			211,331			(21,799	)		414,561
Costs of products sold		188,677			19,525			173,423			(21,799	)		359,826
Gross profit		15,764			1,063			37,908			—			54,735
Selling, general and administrative
expenses		18,730			536			14,133			—			33,399
(Gain) loss on dispositions of plant
equipment and timberlands, net		70			(114	)		20			—			(24	)
Operating income (loss)		(3,036	)		641			23,755			—			21,360
Other non-operating
income (expense)
Interest expense		(5,241	)		(300	)		(436	)		1,430			(4,547	)
Interest income		160			1,316			5			(1,430	)		51
Equity in earnings of subsidiaries		17,880			18,096			—			(35,976	)		—
Other, net		498			(1,920	)		944			—			(478	)
Total other non-operating
income (expense)		13,297			17,192			513			(35,976	)		(4,974	)
Income before income taxes		10,261			17,833			24,268			(35,976	)		16,386
Income tax provision (benefit)		(1,844	)		(47	)		6,172			—			4,281
Net income		12,105			17,880			18,096			(35,976	)		12,105
Other comprehensive income		17,330			14,812			14,959			(29,771	)		17,330
Comprehensive income	$	29,435		$	32,692		$	33,055		$	(65,747	)	$	29,435

In thousands	Nine months ended September 30, 2017
	Favorable (unfavorable)
Net sales		$	(6,752	)
Costs of products sold			7,366
SG&A expenses			615
Income taxes and other			320
Net income		$	1,549

In thousands	Three months ended September 30, 2017
	Favorable (unfavorable)
Net sales		$	6,047
Costs of products sold			(4,340	)
SG&A expenses			(448	)
Income taxes and other			(47	)
Net income		$	1,212