Glatfelter

2019 A NA NA NA NA NA NA N N UN UN UN UN UN UN UN U A LA LA LA LAA LA  

R ER ER EER EEE P OP OP OP OP OP OP OP O R TR TR TR TR TTRR

Glatfelter is a leading global supplier of eng
Glatfelter is a leading global supplier of engineered materials.  The Company’s high-quality, innovative 

and customizable solutions are found in tea
and customizable solutions are found in tea and single-serve coffee filtration, personal hygiene and 

packaging products as well as home improv
packaging products as well as home improvement and industrial applications. Headquartered in York, 

PA and transitioning to new headquarters in
PA and transitioning to new headquarters in Charlotte, NC, the Company’s annual net sales approximate 

$925 million with customers in over 100 co
$925 million with customers in over 100 countries and approximately 2,600 employees worldwide.  

Operations include eleven manufacturing facilities located in the United States, Canada, Germany,  

France, the United Kingdom and the Philippines.  Additional information about Glatfelter may be found 

at www.glatfelter.com.

FORWARD-LOOKING STATEMENTS

Certain statements made in this annual report which pertain to future financial performance or business conditions and 

other financial and business matters are “forward-looking statements” within the meaning of the safe harbor provisions 

of the United States Private Securities Litigation Reform Act of 1995. These statements are based on management’s 

current expectations and are subject to numerous risks, uncertainties and other unpredictable or uncontrollable factors 

which may cause actual results or performance to differ materially from  management’s expectations. Some of the risks, 

uncertainties and other factors that could cause actual results to differ materially from those expressed in the forward-

looking statements are detailed on page 13 of the accompanying 2019 Annual Report on Form 10-K included herein 

and in other filings with the SEC.

D E A R   S H A R
D E A R   S H A R E H O L D E R S ,

As we entered 2019, we embarked upon a major strategic

transformation to recast Glatfelter as a growth-oriented, 

higher-margin engineered materials company. The Specialty

Papers divestiture in late 2018 was the catalyst for the 

creation of a new Glatfelter – a growing enterprise with

more stable and predictable financial performance. With 

dedication and passion, and while achieving best-ever

safety performance, Glatfelter PEOPLE worked diligently

on critical initiatives that reshaped our business portfolio,

reduced costs, increased profitability, and strengthened our

balance sheet.

•  Airlaid Materials achieved record EBITDA of 

$62 million driven by 11% shipment growth from its 

legacy business and a strong performance from our 

purchase of Georgia-Pacific’s European nonwovens 

business in Steinfurt, Germany. This acquisition 

was successfully integrated with our existing Airlaid 

business and helped to optimize our product mix 

in Europe. The new Fort Smith, Arkansas facility 

was a key element driving double-digit legacy 

volume growth as we ramped up to full commercial 

Dante C. Parrini, Chairman and Chief Executive Officer

•  A new operating model was implemented worldwide 

to create a leaner, flatter, and more agile organization.

Designed for speed and efficiency, the model 

emphasizes greater functional expertise, cost control, 

and process improvement and standardization. A

new executive team was appointed with the skills and 

leadership qualities that can drive our new organizational

structure to accelerate and sustain growth.

Through the best efforts of Glatfelter PEOPLE, these

noteworthy accomplishments are building a more focused,

less capital-intensive company that can generate steady 

earnings growth and greater cash flow over time. 

production, further increasing capacity utilization. 

Throughout 2019, we began realizing the benefits of 

•  Following the sale of Specialty Papers, we committed 

to significantly reduce corporate expenses to match

our smaller Company footprint. Our cost reduction 

goal of $14 - $16 million was achieved ahead of 

schedule, while successfully completing the transition 

services associated with the divestiture.

•  The Company refinanced its debt in the first quarter 

saving approximately $7 million in interest expense 

during 2019.

•  Glatfelter’s qualified defined benefit pension plan 

was terminated, successfully settling its U.S. pension

liabilities. The transaction reverted about $32 million 

our transformation by performing more consistently and

delivering on expectations in all four quarters. As a result,

adjusted annual earnings rose dramatically to $33.2 million 

or $0.75 per share compared with $9.2 million or $0.21 per 

share in 2018. Net sales of $927.7 million increased 7% over 

2018. Adjusted free cash flow was $56 million higher than 

the previous year and we reduced debt. Our share price

responded to this strong financial performance by climbing

88% during the year, and we distributed a dividend of 

$0.52 per share.

2 0 2 0 : A Y E A R F O C U S E D O N   

C O N T I N U E D T R A N S F O R M AT I O N

of unrestricted surplus cash to the Company. This 

As we entered 2020, Glatfelter PEOPLE were energized 

event, combined with our debt refinancing and strong 

and prepared to execute the next phase of our

earnings stream, significantly lowered our financial

transformation. While great strides were made during 

leverage during 2019.

•  The Company entered into a consent decree with

government authorities that resolved its liability for the

Fox River environmental matter in Wisconsin.

2019, more work is planned to enhance our organization, 

further improve performance, and maintain financial 

discipline in times of uncertainty.

1

• Composite Fi
• 

bers will focus on reducing its 

•  Relocating our headquarters from York,

cost structure,

 enhancing productivity, solidifying 

Pennsylvania to Charlotte, North Carolina represents

market shares,

, and introducing new higher-value

another important step in the Company’s ongoing 

products We w
products. We were encouraged to see the segment’s

transformation. The Carolinas are a leading hub 

performance rebound in the fourth quarter of 2019 

for the broader nonwovens industry, and Charlotte

as rigorous cost control and process improvement 

provides access to larger talent and resource pools 

countered market and economic headwinds. To

essential for future growth. Having access to a major 

better balance production with demand, we will shut

international airport in Charlotte also offers easier and

down metalized manufacturing at our Gernsbach, 

more efficient business travel to Glatfelter’s global 

Germany, facility, eliminating about 100 positions, 

operations. The transition to the new headquarters will

and consolidate all metalized operations at Caerphilly,

occur in a phased approach beginning in mid-2020.

U.K. In addition, we announced new cost optimization 

actions including the elimination of one production 

shift at our nonwoven wallcovering facility in

Dresden, Germany.

These actions will position Glatfelter with a higher-value

portfolio, leaner cost structure, and a more agile and

efficient operating model. We will also continue evaluating

options to invest in our growth in a thoughtful and

•  Airlaid Materials will focus on growing at market 

prudent manner.

levels or better as we continue to support our

customers and segments while further improving

overall asset utilization and profitability for this 

important growth platform.

Our success in 2019 was due to the commitment of

Glatfelter PEOPLE around the world who worked tirelessly 

to transform the Company for higher, more consistent 

performance. There is a new energy flowing through our 

•  Corporate expenses will be held at the $28 million to

organization, powered by quiet confidence and optimism 

$30 million level. This will complete our corporate cost 

about the future, while at the same time being extremely 

reduction program that was initiated after the sale of

mindful of the developing global health crisis related to 

the Specialty Papers business in 2018. 

the coronavirus.

•  Our new operating model will be utilized to drive 

As we are faced with the COVID-19 pandemic, the

greater functional expertise and operational excellence

health and safety of Glatfelter PEOPLE, their families, and

across the Company. We will continue to rebuild

communities are our primary concerns and we are taking 

and retool the organization to focus on sustainable

precautions and measures to protect them. In addition, we

growth. Leadership development and change

are proactively working to identify and mitigate risks to

management programs will focus on developing 

our business continuity to ensure we are best positioned to 

employees to reach their full potential, ingraining a

continue to supply our products, many of which play a very 

culture of safety and compliance, and attracting and 

important role in providing our local communities and the 

retaining critical talent.

world with critical health, hygiene, surface cleaning, and

•  New Product Development will target more

food and beverage products. 

breakthrough innovation. Future products will increase 

We are optimistic about the future and believe in the

exposure to growing markets where Glatfelter holds 

resiliency of our Company, PEOPLE, customers, suppliers, 

leading positions and strong customer relationships. 

and the communities where we live and work.

We will find new ways to leverage our competencies in

plant-based, natural fibers. 

•  Global Supply Chain will focus on driving continuous 

improvement and process optimization initiatives

at all our facilities, leveraging our global spend to

deliver greater savings while strengthening our 

supplier base, and enhancing customer service levels

and overall satisfaction.

Sincerely,

Dante C. Parrini

Chairman and Chief Executive Officer

March 12, 2020

2

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K

(cid:3)

(cid:4)

Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2019

or

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

For the transition period from

to

96 South George Street, Suite 520
York, Pennsylvania 17401
(Address of principal executive offices)

(717) 850 0170
(Registrant's telephone number, including area code)

Commission file number
1-03560

Exact name of registrant as
specified in its charter
P. H. Glatfelter Company

IRS Employer
Identification No.
23-0628360

State or other jurisdiction of
incorporation or organization
Pennsylvania

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

Title of Each Class
Common Stock, par value $.01 per share

Trading
Symbol(s)
GLT

Name of Each Exchange on which
registered
New York Stock Exchange

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes (cid:4) No (cid:3).

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes (cid:4) No (cid:3).

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past
90 days. Yes (cid:3) No (cid:4).

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes (cid:3) No (cid:4).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the
definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange
Act. (cid:3) Large accelerated filer (cid:4) Accelerated filer (cid:4) Non-accelerated filer (cid:4) Small reporting company (cid:4) Emerging Growth Company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes (cid:4) No (cid:3).

Based on the closing price as of June 30, 2019, the aggregate market value of the Common Stock of the Registrant held by non-affiliates was $728.0 million.

Emerging growth company (cid:4)

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. (cid:31)

Common Stock outstanding on February 25, 2020 totaled 44,308,031 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the following documents are incorporated by reference in this Annual Report on Form 10-K:

Portions of the registrant’s Proxy Statement to be dated on or about March 30, 2020 are incorporated by reference to Part III.

PART I
Item 1
Item 1A
Item 1B
Item 2
Item 3

Item 4

PART II

Item 5

Item 6
Item 7

Item 7A
Item 8

P. H. GLATFELTER COMPANY
ANNUAL REPORT ON FORM 10-K
For the Year Ended

DECEMBER 31, 2019

Table of Contents

Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Executive Officers
Mine Safety Disclosures

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of

Equity Securities
Stock Performance Graph

Selected Financial Data
Management's Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations
Liquidity and Capital Resources

Critical Accounting Policies and Estimates
Quantitative and Qualitative Disclosures about Market Risk
Financial Statements and Supplementary Data
Report of Independent Registered Public Accountants

Statements of Income (Loss)
Statements of Comprehensive Income (Loss)
Balance Sheets
Statements of Cash Flows
Statements of Shareholders’ Equity
Notes to Consolidated Financial Statements
1. Organization
2. Accounting Policies
3. Acquisition
4. Discontinued Operations
5. Gain on Dispositions of Plant, Equipment and Timberlands
6. Revenue
7. Earnings Per Share
8. Accumulated Other Comprehensive Income
9.
10. Stock-Based Compensation
11. Retirement Plans and Other Post-Retirement Benefits
12. Inventories
13. Plant, Equipment and Timberlands
14. Goodwill and Intangible Assets
15. Other Long-Term Assets
16. Other Current Liabilities
17. Leases
18. Long-Term Debt
19. Fair Value of Financial Instruments
20. Financial Derivatives and Hedging Activities

Income Taxes

Page

1
6
9
9
9
10
10

11
11
12
13
14
20
23
24
26
27
30
31
32
33
34

35
35
38
39
40
40
41
42
43
46
47
50
50
51
51
52
52
53
54
55

21. Shareholders’ Equity
22. Commitments, Contingencies and Legal Proceedings
23. Segment and Geographic Information
24. Quarterly Results (Unaudited)

Changes in and Disagreements With Accountants on Accounting and Financial Disclosures
Controls and Procedures
Other Information

Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder

Matters

Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services

Exhibits, Financial Statement Schedules

Item 9
Item 9A
Item 9B

PART III
Item 10
Item 11

Item 12
Item 13
Item 14

PART IV
Item 15

Signatures

Schedule II

57
57
59
60

61
61
61

61
61

61
61
61

62

65

66

PART I

P. H. Glatfelter Company makes regular filings with the Securities and Exchange Commission (“SEC”), including this

Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. These filings are
available, free of charge, on our website, www.glatfelter.com, and the SEC’s website at www.sec.gov. We also provide
copies of our SEC filings at no charge upon request to Investor Relations at (717) 225-2746, ir@glatfelter.com, or by mail to
Investor Relations, 96 South George Street, Suite 520, York, PA, 17401. In this filing, unless the context indicates otherwise,
the terms “we,” “our,” “us,” “the Company,” or “Glatfelter” refer to P. H. Glatfelter Company and subsidiaries.

ITEM 1

BUSINESS

Overview Glatfelter is a leading global supplier of engineered materials. Our high-quality, innovative and

customizable solutions are found in tea and single-serve coffee filtration, personal hygiene as well as in many diverse
packaging, home improvement and industrial applications. We are headquartered in York, PA, and our annual net sales
approximate $928 million with customers in over 100 countries and approximately 2,600 employees worldwide. We own
and operate eleven manufacturing facilities located in the United States, Canada, Germany, France, the United Kingdom and
the Philippines. Our eleven manufacturing facilities have a combined production capacity of approximately 293,000 metric
tons of composite fibers and airlaid materials used in a wide array of applications. In addition, we operate sales and
distribution offices in Russia, Italy, China, and the United States.

We manage our business and make investment decisions under a functional operating model with two distinct
reporting segments: Composite Fibers and Airlaid Materials. These segments serve growing global customers and markets
providing innovative and customizable solutions, ultimately delivering high-quality engineered materials. As a leading
global supplier of engineered materials for consumer and industrial applications, we maintain leading positions in key
segments serving markets that are growing commensurate with or in excess of gross domestic product (“GDP”). We partner
with leading consumer product companies and other market leaders to provide innovative solutions delivering outstanding
performance to meet market requirements. Over the past several years, we have divested of non-strategic assets and made
investments to increase production capacity and improve our technical capabilities to ensure we are best positioned to serve
the market demands and grow our revenue. We are committed to growing in our key markets and will make appropriate
investments to support our customers and satisfy market demands.

In 2018, we exited the uncoated freesheet market by divesting our former Specialty Papers business. We completed

the sale of the Specialty Papers business to Pixelle Specialty Solutions, LLC, an affiliate of Lindsay Goldberg, for $360
million. For financial reporting purposes, Specialty Papers is presented as a discontinued operation.

In 2018, we began commercial shipments of Airlaid product from our new $90 million facility in Arkansas. This
20,000 metric-ton facility was built to meet the growing demands of the North American market. Throughout 2018 and 2019,
we continued to ramp up production and shipments of wipes and table top products from this facility.

On October 1, 2018, we acquired Georgia-Pacific’s European nonwovens business located in Steinfurt, Germany,

(“Steinfurt”) along with its sales offices for $181 million. Steinfurt is a state-of-the-art, 32,000-metric-ton-capacity
manufacturing facility that employs approximately 220 people. These investments increased our total global airlaid materials
capacity to approximately 150,000 metric tons.

Our growth strategy is focused on expanding our engineered materials business with new product and business
development, organic investment acquisitions, and continually optimizing our cost structure to deliver on expectations of our
stakeholders.

GLATFELTER 2019 FORM 10-K

1

Our strategy focuses on:

Expanding our engineered
materials business

(cid:135) Investing in organic growth and strategic acquisitions to

expand capabilities and broaden scale

(cid:135) Driving innovation and growth by leveraging market-

leading capabilities

Driving continuous
improvement and cost
optimization initiatives

(cid:135) Achieving more consistent operational excellence across
the Company through robust continuous improvement
(cid:135) Managing cost structure to increase margins and improve

cash flow

Maintaining a healthy
balance sheet and financial
flexibility

(cid:135) Applying a disciplined capital spending mindset
(cid:135) Funding organic and inorganic growth opportunities

Segments Consolidated net sales and the relative net sales contribution of each of our two segments for the past three

years are summarized below:

Dollars in thousands

Net sales
Operating segment contribution
Composite Fibers
Airlaid Materials

Total

2019

2018

2017

$

927,673

$

866,286

$

800,362

56.2%
43.8
100.0%

64.1%
35.9
100.0%

Net tons sold by each segment for the past three years were as follows:

Metric tons

Composite Fibers
Airlaid Materials

Total

2019

2018

2017

133,473
137,595
271,068

143,777
104,774
248,551

68.0%
32.0
100.0%

150,388
92,633
243,021

COMPOSITE FIBERS Our Composite Fibers segment serves customers globally and focuses on higher value-added

products in the following markets:

•

Food & Beverage filtration paper primarily used for single-serve coffee and tea products;

• Wallcover base materials used by the world’s largest wallpaper manufacturers;
•

Technical Specialties a diverse line of specialty papers used in commercial and industrial applications such as
electrical energy storage, homecare, hygiene, and other highly-engineered fiber-based applications;

• Metallized products used in labels, packaging liners, gift wrap, and other consumer product applications; and
• Composite Laminates paper used in production of decorative laminates, furniture, and flooring applications.
We believe Composite Fibers maintains market leadership positions in the single-serve coffee and tea filtration markets,

wallcover base material and many other products it produces. We believe many of the markets served by Composite Fibers
present attractive growth opportunities due to evolving consumer preferences, new or emerging geographic markets, new product
innovation and increased market share through superior products and quality.

This segment’s revenue composition by market consisted of the following for the years indicated:

In thousands

Food & beverage
Wallcovering
Technical specialties
Metallized
Composite laminates

Total

2

2019

2018

2017

$

$

278,786
81,679
79,535
46,392
35,274
521,666

$

$

279,515
103,686
81,281
52,174
38,213
554,869

$

$

268,474
103,011
76,991
57,088
38,696
544,260

A significant portion of Composite Fibers’ revenue is transacted in currencies other than the U.S. dollar and therefore
the comparison from period to period reflects the impact of changes in currency exchange rates. Changes in exchange rates
unfavorably affected the comparison of 2019 to 2018 by $22.8 million and favorably affected the comparison of 2018 to
2017 by $18.9 million.

Composite Fibers is comprised of five paper making facilities (Germany (3), France and England), two metallizing

operations (Wales and Germany) and a pulp mill (the Philippines). The combined attributes of the facilities are summarized
as follows (in metric tons):

Production
Capacity

143,000 lightweight and other paper

21,600 metallized
15,000 abaca pulp

Principal Raw
Material
(“PRM”)
Abaca pulp
Wood pulp
Synthetic fiber
Base stock
Abaca fiber

Estimated Annual
Quantity of PRM
15,000
99,000
24,000
20,100
23,400

Composite Fibers’ lightweight products are produced using highly specialized inclined wire paper machine technology.

The primary raw materials used in the production of our lightweight papers are softwood pulps, abaca pulp, and other
specialty fibers. Enough quantities of abaca pulp and its source material, abaca fiber, are important to support growth in this
segment. Abaca pulp, a specialized pulp with limited sources of availability globally, is produced by our Philippine pulp mill,
providing a unique advantage to our Composite Fibers segment. As the supply of abaca fiber becomes constrained or when
production demands exceed the capacity of the Philippines mill, alternative sources and/or substitute fibers are used to meet
customer demands.

In addition to critical raw materials, Composite Fibers’ production cost is influenced by the price of electricity and

natural gas. The segment generates all the steam needed for production by burning natural gas. However, in 2019 it
purchased approximately 75% of its electricity needs, the cost of which is influenced by the natural gas markets.

In Composite Fibers’ markets, competition is product line specific as the necessity for technical expertise and
specialized manufacturing equipment limits the number of companies offering multiple product lines. The following chart
summarizes key competitors by market segment:

Market segment
Single serve coffee & tea
Wallcovering
Technical specialties

Composite laminates
Metallized

Competitor
Ahlstrom, Purico, Miquel y Costas and Zhejiang Kan
Mayak & Technocell JV, Neu Kaliss, Goznak, Kämmerer and Ahlstrom
Nippon Kodoshi Corp ("NKK"), Kan Kyo Technology, Burrows and
Suominen Oyj
Schweitzer-Maudit, Purico, Miquel y Costas and Oi Feng
AR Metallizing, Torras Papel Novelis, Vaassen, Galileo Nanotech, and
Wenzhou Protec Vacuum Metallizing Co.

Our strategy in Composite Fibers is focused on:
•

optimizing our product portfolio and capitalizing on growing global markets in beverage filtration, electrical
storage and consumer products trends;

•

leveraging innovation resources to drive plastic free applications, and new product and new business development;
• maximize continuous improvement methodologies to increase productivity, reduce costs and expand capacity; and
•

ensuring readily available access to specialized raw material requirements or suitable alternatives to support
projected growth.

In early 2020, we announced a restructuring at our Gernsbach, Germany facility, including the discontinuation of its

metalized production, which will be concentrated at our Caerphilly, Wales facility during 2020.

GLATFELTER 2019 FORM 10-K

3

AIRLAID MATERIALS Airlaid Materials is a leading global supplier of highly absorbent and very thin profile

cellulose-based airlaid nonwoven materials primarily used to manufacture consumer products for growing global end-user
markets. The markets served by Airlaid Materials include:

•

•

•

•

•

•

feminine hygiene;

specialty wipes;

table top;

adult incontinence;

home care; and

other consumer products.

Airlaid Materials’ customers are industry leading consumer product companies as well as private label converters. We

believe this business holds leading market share positions in the majority of the markets it serves. Airlaid Materials has
developed long-term customer relationships through superior quality, customer service, and a reputation for quickly bringing
product and process innovations to market.

Airlaid Materials’ revenue composition by market consisted of the following for the years indicated:

In thousands

Feminine hygiene
Specialty wipes
Table top
Adult incontinence
Home care
Other
Total

2019

2018

2017

$

$

207,301
70,149
66,486
25,233
17,266
19,572
406,007

$

$

195,686
45,375
21,600
19,734
16,010
13,012
311,417

$

$

179,671
29,519
6,707
14,425
13,029
12,751
256,102

A significant portion of Airlaid Materials’ revenue is transacted in currencies other than the U.S. dollar and therefore
the comparison from period to period reflects the impact of changes in currency exchange rates. Changes in exchange rates
unfavorably affected the comparison of 2019 to 2018 by $8.6 million and favorably affected 2018 to 2017 by $6.5 million.

The feminine hygiene category accounted for 51% and 63% of Airlaid Material’s revenue in 2019 and 2018,
respectively, reflecting continued diversification in our products due to growth in wipes and table top products from the
Steinfurt acquisition, and additional capacity at the Fort Smith facility. Most feminine hygiene sales are to a group of large,
leading global consumer products companies. We believe these markets are growth oriented due to population growth in
certain geographic regions and changing consumer preferences. In developing regions, demand is also influenced by
increases in disposable income and cultural preferences.

Airlaid Materials operates state-of-the-art facilities in Falkenhagen and Steinfurt, Germany, Gatineau, Canada and Fort

Smith, Arkansas. During 2018, this segment’s capacity increased by a combined 52,000 metric tons from the Steinfurt
acquisition and the start-up of the Fort Smith facility. Steinfurt produces high-quality airlaid products for the table-top,
wipes, hygiene, food pad, and other nonwoven materials markets, competing in the marketplace with nonwoven technologies
and substrates, as well as other materials focused primarily on consumer based end-use applications. The state-of-the art
facility has 32,000-metric-ton-capacity.

Airlaid Materials’ four facilities operate with the following combined attributes (in metric tons):

Airlaid Production
Capacity (metric tons)

Principal Raw Material (“PRM”)

Estimated Annual
Quantity of PRM
(short tons)

150,000

Fluff pulp

120,000

Key raw material inputs other than fluff pulp include synthetic fibers, super absorbent polymers and latex. The cost to
produce is influenced by the cost of critical raw materials and energy prices. Airlaid Materials purchases substantially all the
electricity and natural gas used in its operations. Approximately 73% of this segment’s revenue is earned under contracts
with pass-through provisions directly related to the cost of key raw materials.

4

Airlaid Materials continues to be a technology and product innovation leader in technically demanding segments of the
airlaid market. It’s airlaid material production employs multi-bonded and thermal-bonded airlaid technologies as opposed to other
methods such as hydrogen-bonding. We believe that its facilities are among the most modern and flexible airlaid facilities in the
world, allowing it to produce at industry leading operating rates. Its proprietary single-lane festooning technology provides
converting and product packaging capabilities which supports efficiency in the customers converting processes. Airlaid Materials’
in-house technical expertise combined with significant capital investment requirements and rigorous customer expectations creates
large barriers to entry for new competitors.

The following summarizes Airlaid Materials’ key competitors:

Market segment
Hygiene and other absorbent products
Table top
Wipes

Competitor
Fitesa, McAirlaid's GmbH, Domtar, Georgia-Pacific
Georgia-Pacific, SharpCell, Duni AB, Ascutec
Jacob Holm, Suominen Oyj, Georgia-Pacific, Kimberly Clark

The global markets served by Airlaid Materials are characterized by attractive growth opportunities. To take advantage of

this, our strategy is focused on:

• maintaining and expanding relationships with customers that are market-leading consumer product companies as

•

•

•

•

well as companies distributing through private label arrangements;

capitalizing on our product and process innovation capabilities;

expanding geographic reach of markets served;

optimizing the use of existing production capacity; and

employing continuous improvement methodologies and initiatives to reduce costs, improve efficiencies and create
additional capacity.

Additional financial information for each of our segments, including geographic revenue and amounts of long-lived
asset, is included in Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations and in
Item 8 – Financial Statements and Supplementary Data, Note 23.

Concentration of Customers Approximately 16% of our consolidated net revenue in each of the past three years was

from sales to Procter & Gamble Company, a customer in the Airlaid Materials segment.

Capital Expenditures Our business requires expenditures for equipment enhancements to support growth strategies,

research and development initiatives, and for normal upgrades or replacements. Most recently, we incurred significant
expenditures for Airlaid Materials’ capacity expansion project completed in early 2018. Capital expenditures totaled $27.8
million, $42.1 million and $80.8 million in 2019, 2018 and 2017, respectively. Capital expenditures in 2020 are estimated to
total between approximately $30 million and $35 million.

Environmental Matters 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 costs to comply with these regulations
and we could incur additional costs as new regulations are developed or regulatory priorities change.

During 2019, we substantially resolved our exposure to liabilities at the Fox River environmental site, a complex and
significant matter. For a more complete discussion of this matter and our exposure to potential additional costs, see Item 8 –
Financial Statements and Supplementary Data – Note 22.

Employees As of December 31, 2019, we employed 2,557 people worldwide, of whom approximately 64% are

represented by labor works councils. We consider the overall relationship with our employees to be satisfactory.

Other Available Information The Corporate Governance page of our website includes our Governance Principles,

Code of Business Conduct, and biographies of our Board of Directors and Executive Officers. In addition, the website
includes charters of the Audit, Compensation, and Nominating and Corporate Governance Committees of the Board of
Directors. The Corporate Governance page also includes the Code of Business Ethics for the CEO and Senior Financial
Officers of Glatfelter, our “whistle-blower” policy and other related material. We satisfy the disclosure requirement for any
future amendments to, or waivers from, our Code of Business Conduct or Code of Business Ethics for the CEO and Senior
Financial Officers by posting such information on our website. We will provide a copy of these documents, without charge,
to any person who requests one by contacting Investor Relations at (717) 225-2746, ir@glatfelter.com or by mail to 96 South
George Street, Suite 520, York, PA, 17401.

GLATFELTER 2019 FORM 10-K

5

ITEM 1A RISK FACTORS

Our business and financial performance may be adversely affected by a weak global economic environment or
downturns in the target markets that we serve.

Adverse global economic conditions could impact our target markets resulting in decreased demand for our products.

Our results could be adversely affected if economic conditions weaken. In the event of significant currency weakening in the
countries into which our products are sold, demand for or pricing of our products could be adversely impacted. Also, there
may be periods during which demand for our products is insufficient to enable us to operate our production facilities in an
economical manner. As a result, we may be forced to take machine downtime to curtail production to match demand. The
economic environment may also cause customer insolvencies which may result in their inability to satisfy their financial
obligations to us. These conditions are beyond our control and may have a significant impact on our sales and results of
operations.

Approximately $68 million of our revenue in 2019, was earned from customers located in Ukraine, Russia and members
of the Commonwealth of Independent States (also known as “CIS”). Uncertain geo-political conditions, this region’s economic
environment and volatile currencies may cause demand for our products to be volatile and cause abrupt changes in our
customers buying patterns.

Approximately 56% of our revenue in 2019 was from shipments to customers in Europe, the demand for which is

dependent on economic conditions in this area, or to the extent such customers do business outside of Europe, in other
regions of the world. Uncertain economic conditions in this region may cause weakness in demand for our products as well
as volatility in our customers buying patterns.

Foreign currency exchange rate fluctuations could adversely affect our results of operations.

A significant proportion of our revenue and earnings is generated from operations outside of the United States. In addition,
we own and operate manufacturing facilities in Canada, Germany, France, the United Kingdom and the Philippines. A significant
portion of our business is transacted in currencies other than the U.S. dollar including the euro, British pound, Canadian dollar and
Philippine peso, among others. Our euro denominated revenue exceeds euro expenses by an estimated €140 million. With respect to
the British pound, Canadian dollar and Philippine peso, we have greater outflows than inflows 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.

Our ability to maintain our products' price competitiveness is reliant, in part, on the relative strength of the currency in
which the product is denominated compared to the currency of the market into which it is sold and the functional currency of our
competitors. Changes in the rate of exchange of foreign currencies in relation to the U.S. dollar, and other currencies, may
adversely impact our results of operations and our ability to offer products in certain markets at acceptable prices. For example,
approximately $68 million of our revenue in 2019 was earned from shipments to customers located in Ukraine, Russia and
members of the CIS. Although the majority of these sales are denominated in euros, a significant weakening of the customers’
local currencies may adversely affect our revenue, our customers’ credit risk and our results of operation.

The cost of raw materials and energy used to manufacture our products could increase or the availability of certain
raw materials could become constrained.

We require access to sufficient, and reasonably priced, quantities of pulps, pulp substitutes, abaca fiber, synthetic

fibers, and certain other raw materials, as well as access to reliable and abundant supplies of water to support many of our
production facilities. We require significant quantities of wood pulps and, therefore, the volatility of wood pulp prices can
have a significant impact on our results of operations.

Our Philippine mill purchases abaca fiber to produce abaca pulp, a key material used to manufacture paper for single-
serve coffee, tea and technical specialty products at Composite Fibers’ facilities. At certain times, the supply of abaca fiber
has been constrained or the quality diminished due to factors such as weather-related damage to the source crop as well as
decisions by land owners to produce alternative crops in lieu of those used to produce abaca fiber. These factors have
contributed to volatility in fiber prices or limited available supply.

Airlaid Materials requires access to sufficient quantities of fluff pulp, the supply of which is subject to availability of

certain softwoods.

The cost of many of our production materials, including petroleum-based chemicals and freight charges, are influenced

by the cost of oil. Natural gas is the principal source of fuel for each of our facilities worldwide and has historically been
more volatile than other fuels.

6

Government rules, regulations and policies have an impact on the cost of certain energy sources, particularly for our
European operations. In Europe, we currently benefit from a number of government-sponsored programs related to, among
others, green energy or renewable energy initiatives designed to mitigate the cost of electricity to larger industrial consumers
of power. Any reduction in the extent of government sponsored incentives may adversely affect the cost ultimately borne by
our operations.

Although we have contractual arrangements with certain Airlaid Materials customers pursuant to which our product’s

selling price is adjusted for changes in the cost of certain raw materials, we may not be able to fully pass increased raw
materials or energy costs on to all customers if the market will not bear the higher price or if existing agreements limit price
increases. If price adjustments significantly trail increases in raw materials or energy prices, our operating results could be
adversely affected.

Our industry is highly competitive and increased competition could reduce our sales and profitability.

The global markets in which we compete are served by a variety of competitors and a variety of substrates. As a result,

our ability to compete is sensitive to, and may be adversely impacted by:

•

•

•

•

the entry of new competitors into the markets we serve;

the aggressiveness of our competitors’ pricing strategies, which could force us to decrease prices in order to
maintain market share;

our failure to anticipate and respond to changing customer preferences; and

technological advances or changes that impact production or cost competitiveness of our products.

The impact of any significant changes may result in our inability to effectively compete in the markets in which we

operate, and as a result our sales and operating results would be adversely affected.

We may not be able to develop new products acceptable to our existing or potential customers.

Our business strategy is market focused and includes investments in developing new products to meet the changing

needs of our customers, serve new customers and to maintain our market share. Our success will depend, in part, on our
ability to develop and introduce new and enhanced products that keep pace with introductions by our competitors and
changing customer preferences. If we fail to anticipate or respond adequately to these factors, we may lose opportunities for
business with both current and potential customers. The success of our new product offerings will depend on several factors,
including our ability to:

•

•

•

•

•

anticipate and properly identify our customers' needs and industry trends;

develop and commercialize new products and applications in a timely manner;

price our products competitively;

differentiate our products from our competitors' products; and

invest efficiently in research and development activities.

Our inability to develop new products or new business opportunities could adversely impact our business and

ultimately harm our profitability.

We are subject to substantial costs and potential liability for environmental matters.

We are subject to various environmental laws and regulations that govern our operations, including discharges into the
environment, and the handling and disposal of hazardous substances and wastes. We are also subject to laws and regulations
that impose liability and clean-up responsibility for releases of hazardous substances. To comply with environmental laws
and regulations, we have incurred, and will continue to incur, substantial expenditures.

We may incur obligations to remove or mitigate any adverse effects on the environment, such as air and water quality,

resulting from mills we operate or have operated. Potential obligations include costs for government oversight of the
remediation activities, the restoration of natural resources, and/or personal injury and property damages.

Airlaid Materials generates a substantial portion of its revenue from one customer serving the hygiene products
market, the loss of which could have a material adverse effect on our results of operations.

Airlaid Materials’ derives approximately 79% of its net sales from sales of hygiene and home care products. In
addition, sales to the feminine hygiene market accounted for 51% of Airlaid Materials’ net sales. One customer accounted for
37% of this segment’s sales, and the balance is concentrated with a small group of large customers. The loss of the large

GLATFELTER 2019 FORM 10-K

7

customer or a decline in sales of hygiene products could have a material adverse effect on this business’s operating results.
Our ability to effectively compete could be affected by technological production alternatives which could provide substitute
products into this market segment. Customers in the airlaid nonwoven fabric material market, including the hygiene market,
may also switch to less expensive products, change preferences or otherwise reduce demand for Airlaid Materials’ products,
thus reducing the size of the markets in which it currently sells its products. Any of the foregoing could have a material
adverse effect on our financial performance and business prospects.

Our operations may be impaired, and we may be exposed to potential losses and liability as a result of natural disasters,
acts of terrorism or sabotage or similar events.

If we have a catastrophic loss or unforeseen operational disruption at any of our facilities, we could suffer significant

lost production which could impair our ability to satisfy customer demands.

Natural disasters, such as earthquakes, hurricanes, typhoons, flooding or fire, and acts of terrorism or sabotage
affecting our operating activities and major facilities could materially and adversely affect our operations, operating results
and financial condition.

In addition, many of our operations require a reliable and abundant supply of water. Such mills rely on a local water
body or water source for their water needs and, therefore, are particularly sensitive to drought conditions or other natural or
manmade interruptions to water supplies. Any interruption or curtailment of operations at any of our production facilities due
to drought or low flow conditions at the principal water source or another cause could materially and adversely affect our
operating results and financial condition.

Our pulp mill in Lanao del Norte on the Island of Mindanao in the Republic of the Philippines is located along the

Pacific Rim, one of the world’s hazard belts. By virtue of its geographic location, this mill is subject to similar types of
natural disasters discussed above, cyclones, typhoons, and volcanic activity. Moreover, the area of Lanao del Norte has been
a target of suspected terrorist activities. Our pulp mill in Mindanao is located in a rural portion of the island and is susceptible
to attacks and/or power interruptions. The Mindanao mill supplies the abaca pulp used by Composite Fibers to manufacture
paper for single serve coffee and tea products and certain technical specialties products. Any interruption, loss or extended
curtailment of operations at our Mindanao mill could affect our ability to meet customer demands for our products and
materially affect our operating results and financial condition.

We have operations in a potentially politically and economically unstable location.

Our pulp mill in the Philippines is located in a region that is unstable and subject to political unrest. As discussed
above, our Philippine pulp mill produces abaca pulp, a significant raw material used by Composite Fibers and is currently our
main source of abaca pulp. There are limited suitable alternative sources of readily available abaca pulp in the world. In the
event of a disruption in supply from our Philippine mill, there is no guarantee that we could obtain adequate amounts of
abaca pulp, if at all, from alternative sources at a reasonable price. Further, there is no assurance the performance of such
alternative materials will satisfy customer performance requirements. As a consequence, any civil disturbance, unrest,
political instability or other event that causes a disruption in supply could limit the availability of abaca pulp and would
increase our cost of obtaining abaca pulp. Such occurrences could adversely impact our sales volumes, revenues and
operating results.

Our international operations pose certain risks that may adversely impact sales and earnings.

We have significant operations and assets located in Canada, Germany, France, the United Kingdom, and the
Philippines. Our international sales and operations are subject to a number of unique risks, in addition to the risks in our
domestic sales and operations, including, but not limited to, economic and trade disruptions resulting from geopolitical
developments, differing protections of intellectual property, trade barriers, labor unrest, exchange controls, regional economic
uncertainty, differing (and possibly more stringent) labor regulation, risk of governmental expropriation, domestic and
foreign customs and tariffs, differing regulatory environments, difficulty in managing widespread operations and political
instability. These factors may adversely affect our future profits. Also, in some foreign jurisdictions, we may be subject to
laws limiting the right and ability of entities organized or operating therein to pay dividends or remit earnings to affiliated
companies unless specified conditions are met. Any such limitations would restrict our flexibility in using funds generated in
those jurisdictions.

8

We are subject to cyber-security risks related to unauthorized or malicious access to sensitive customer, vendor,
company or employee information as well as to the technology that supports our operations and other business
processes.

Our business operations rely upon secure systems for mill operations, and data capture, processing, storage and reporting.
Although we maintain appropriate data security and controls, our information technology systems, and those of our third-party
providers, could become subject to cyberattacks. Systems such as ours are inherently exposed to cyber-security risks and
potential attacks. The result of such attacks could result in a breach of data security and controls. Such a breach of our network,
systems, applications or data could result in operational disruptions or damage or information misappropriation including, but
not limited to, interruption to systems availability, denial of access to and misuse of applications required by our customers to
conduct business with us, denial of access to the applications we use to plan our operations, procure materials, manufacture and
ship products and account for orders, theft of intellectual knowhow and trade secrets, and inappropriate disclosure of
confidential company, employee, customer or vendor information, could stem from such incidents.

Any of these operational disruptions and/or misappropriation of information could adversely affect our results of

operations, create negative publicity and could have a material effect on our business.

We operate in and are subject to taxation from numerous U.S. and foreign jurisdictions.

The multinational nature of our business subjects us to taxation in the U.S and numerous foreign jurisdictions. Due to
economic and political conditions, tax rates in various jurisdictions may be subject to significant change. Our effective tax rates
could be affected by changes in tax laws or their interpretation or changes in the mix of earnings in jurisdictions with differing
statutory tax rates, changes in the valuation of deferred tax assets and liabilities. For example, the European Commission has
opened formal investigations to examine whether decisions by the tax authorities in certain European countries comply with
European Union rules on state aid. The outcome of the European Commission’s investigations could require changes to existing
tax rulings that, in turn, could have an impact on our income taxes and results of operations.

In the event any of the above risk factors impact our business in a material way or in combination during the same period, we
may be unable to generate enough cash flow to simultaneously fund our operations, finance capital expenditures, satisfy
obligations and make dividend payments on our common stock.

In addition to debt service obligations, our business requires expenditures to support growth strategies, research and

development initiatives, and for normal upgrades or replacements. We expect to meet all our near and long-term cash needs
from a combination of operating cash flow, cash and cash equivalents, availability under our credit facility or other long-term
debt. If we are unable to generate enough cash flow from these sources, we could be unable to fund our operations, finance
capital expenditures, satisfy our near and long-term cash needs or make dividend payments.

ITEM 1B UNRESOLVED STAFF COMMENTS

None.

ITEM 2

PROPERTIES

We own substantially all the land and buildings comprising our manufacturing facilities located in Arkansas; Canada;

the United Kingdom; Germany; France; and the Philippines; as well as substantially all of the equipment used in our
manufacturing and related operations. Certain of our operations are under lease arrangements including our metallized paper
production facility located in Caerphilly, Wales, office and warehouse space in the United States, Moscow, Russia, Suzhou,
China and our corporate offices in York, Pennsylvania. All our properties, other than those that are leased, are free from any
material liens or encumbrances. We consider all our buildings to be in good structural condition and well maintained and our
properties to be suitable and adequate for present operations.

ITEM 3

LEGAL PROCEEDINGS

We are involved in various lawsuits that we consider to be ordinary and incidental to our business. The ultimate
outcome of these lawsuits cannot be predicted with certainty; however, we do not expect such lawsuits, individually or in the
aggregate, will have a material adverse effect on our consolidated financial position, liquidity or results of operations.

GLATFELTER 2019 FORM 10-K

9

EXECUTIVE OFFICERS

The following table sets forth certain information with respect to our executive officers and other senior management

members of February 25, 2020

Name

Age Office with the Company

Dante C. Parrini
Christopher W. Astley
Samuel L. Hillard
Wolfgang Laures
Eileen L. Beck
David C. Elder
Philippe Sevoz
Jill L. Urey
Joseph J. Zakutney

Chairman and Chief Executive Officer
Senior Vice President, Chief Commercial Officer
Senior Vice President, Chief Financial Officer
Senior Vice President, Global Supply Chain

55
47
38
50
57 Vice President, Human Resources and Administration
51 Vice President, Finance and Chief Accounting Officer
52 Vice President, Global Operation
53 Vice President, Deputy General Counsel & Corporate Secretary
57 Vice President, Global Business Services & Chief Information Officer

Dante C. Parrini became Chief Executive Officer effective January 1, 2011 and Chairman of the Board in May 2011.

Prior to this, he was Executive Vice President and Chief Operating Officer, a position he held since February 2005. Mr. Parrini
joined us in 1997 and previously served as Senior Vice President and General Manager, a position he held beginning in January
2003 and prior to that as Vice President responsible for Sales and Marketing.

Christopher W. Astley was named Senior Vice President, Chief Commercial Officer in September 2019. Previously
he was Senior Vice President & Business Unit President, Airlaid Materials a position he held since January 2015. He joined
us in August 2010 as Vice President, Corporate Strategy and was promoted to Senior Vice President in February 2014. Prior
to joining us, he was an entrepreneur leading a privately held business from 2004 until 2010. Prior to that Mr. Astley held
positions with Accenture, a global management consulting firm, and The Coca-Cola Company.

Samuel L. Hillard was promoted to Senior Vice President, Chief Financial Officer in March of 2019. He joined us in

March 2016 as Vice President, Corporate Development & Strategy. Prior to joining us, Mr. Hillard was Vice President –
Business Development for Dover Corporation from July 2014 until 2016 where he was responsible for strategy and mergers
& acquisitions within the Fluids Business Segment. From February 2011 to 2014, he served as Vice President – Business
Development for SPX Corporation where he was responsible for all M&A related strategy activity within the Flow
Technology Segment. Additionally, he previously worked for Blackstone in their M&A group.

Wolfgang Laures joined us in September 2019 as Senior Vice President, Global Supply Chain. Prior to this, Mr.
Laures served as Executive Vice President, Global Supply Chain and Digital Transformation from 2014 to 2019 for Perstorp
Group, a private equity-owned specialty chemicals innovator. Prior to joining Perstorp, he held supply chain and operations-
related roles at Avery Dennison, McKinsey & Company and Procter & Gamble.

Eileen L. Beck was promoted to Vice President Human Resources & Administration in April 2017. She joined us in

2012 as Director, Global Compensation and Benefits and was promoted to Vice President in September 2015. Ms. Beck
previously held various Human Resources roles at Armstrong World Industries.

David C. Elder was named Vice President, Finance in December 2011 and serves as our Chief Accounting Officer.
Prior to his promotion, he was our Vice President, Corporate Controller, a position held since joining Glatfelter in January
2006. Mr. Elder was previously Corporate Controller for YORK International Corporation.

Philippe Sevoz was promoted to Vice President, Global Operations in September 2019. Previously, Mr. Sevoz has

held various leadership positions in Composite Fibers including Vice President, Operations and Director, New Product
Development since 2017. From 2013 until 2017, he was responsible for our facilities in Dresden and Oberschmitten,
Germany. He joined Glatfelter in 2013 as General Mill Manager for Scaër, France. Before joining Glatfelter, Mr. Sevoz held
mill manager positions with specialty paper companies Arjowiggins and Hahnemühle.

Jill L. Urey was promoted to Vice President, Deputy General Counsel & Corporate Secretary in July 2019 and has led
our legal function since December 2018. She joined Glatfelter in January 2013 as Assistant General Counsel and assumed the
additional role of Chief Compliance Officer in the beginning of 2016. Prior to joining us, Ms. Urey was Corporate Counsel
and later Interim General Counsel for Graham Packaging Company from 2007 to 2012.

Joseph J. Zakutney joined us in September 2015 as Vice President and Chief Information Officer. Prior to joining

Glatfelter, he spent 17 years with The Hershey Company where he held a broad spectrum of IT roles including Vice
President and CIO.

ITEM 4 MINE SAFETY DISCLOSURES

Not Applicable

10

PART II

ITEM 5 MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND

ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is traded on the New York Stock Exchange under the symbol “GLT”

Our Board of Directors declared quarterly cash dividends of $0.13 per common share in each of the four quarters of

both 2019 and 2018.

As of February 20, 2020, we had 938 shareholders of record.

STOCK PERFORMANCE GRAPH

The following stock performance graph compares the cumulative 5-year total return of our common stock with the
cumulative total returns of both a broad market index and a peer group. We compare our stock performance to the S&P Small
Cap 600 index and to the S&P Small Cap 600 Paper Products index comprised of us, Clearwater Paper Corp., Neenah Paper
Inc., and Schweitzer-Mauduit International.

The following graph assumes $100 was invested in our common stock, in each index, and in the peer group (including

reinvestment of dividends) on December 31, 2014 and charts the performance through December 31, 2019.

(cid:38)(cid:50)(cid:48)(cid:51)(cid:36)(cid:53)(cid:44)(cid:54)(cid:50)(cid:49) (cid:50)(cid:41) (cid:24) (cid:60)(cid:40)(cid:36)(cid:53) (cid:38)(cid:56)(cid:48)(cid:56)(cid:47)(cid:36)(cid:55)(cid:44)(cid:57)(cid:40) (cid:55)(cid:50)(cid:55)(cid:36)(cid:47) (cid:53)(cid:40)(cid:55)(cid:56)(cid:53)(cid:49)

(cid:7)(cid:20)(cid:27)(cid:19)

(cid:7)(cid:20)(cid:25)(cid:19)

(cid:7)(cid:20)(cid:23)(cid:19)

(cid:7)(cid:20)(cid:21)(cid:19)

(cid:7)(cid:20)(cid:19)(cid:19)

(cid:7)(cid:27)(cid:19)

(cid:7)(cid:25)(cid:19)

(cid:7)(cid:23)(cid:19)

(cid:7)(cid:21)(cid:19)

(cid:7)(cid:19)
(cid:39)(cid:72)(cid:70)(cid:16)(cid:20)(cid:23)

(cid:39)(cid:72)(cid:70)(cid:16)(cid:20)(cid:24)

(cid:39)(cid:72)(cid:70)(cid:16)(cid:20)(cid:25)

(cid:39)(cid:72)(cid:70)(cid:16)(cid:20)(cid:26)

(cid:39)(cid:72)(cid:70)(cid:16)(cid:20)(cid:27)

(cid:39)(cid:72)(cid:70)(cid:16)(cid:20)(cid:28)

(cid:42)(cid:79)(cid:68)(cid:87)(cid:73)(cid:72)(cid:79)(cid:87)(cid:72)(cid:85)

(cid:54)(cid:9)(cid:51) (cid:54)(cid:80)(cid:68)(cid:79)(cid:79)(cid:70)(cid:68)(cid:83) (cid:25)(cid:19)(cid:19)

(cid:54)(cid:9)(cid:51) (cid:54)(cid:80)(cid:68)(cid:79)(cid:79)(cid:38)(cid:68)(cid:83) (cid:25)(cid:19)(cid:19) (cid:51)(cid:68)(cid:83)(cid:72)(cid:85) (cid:51)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:86) (cid:44)(cid:81)(cid:71)(cid:72)(cid:91)

GLATFELTER 2019 FORM 10-K

11

ITEM 6 SELECTED FINANCIAL DATA

As of or for the year ended December 31
Dollars in thousands, except per share
Net sales

2019
$ 927,673

2018
$ 866,286

2017
$ 800,362

2016
$ 761,216

2015
$ 786,058

Income (loss) from continuing operations
Income (loss) from discontinued operations
Net income (loss)

(25,211)
3,670
(21,541)

(448)
(177,156)
(177,604)

(5,612)
13,526
7,914

(14,177)
35,731
21,554

30,406
34,170
64,576

Earnings (loss) per share from continuing
operations
Basic
Diluted

Total assets
Total debt
Shareholders’ equity

Cash dividends declared per common

share

Depreciation, depletion and

amortization

Capital expenditures
Net tons sold
Number of employees

$

(0.57)
(0.57)

$

(0.01) $
(0.01)

(0.13) $
(0.13)

(0.33) $
(0.33)

0.70
0.69

$ 1,283,794
359,859
555,959

$ 1,339,754
411,747
538,898

$ 1,730,795
481,396
708,928

$ 1,521,259
372,608
653,826

$1,500,416
360,662
663,247

0.52

0.52

0.52

0.50

0.48

50,820
27,765
271,068
2,557

47,525
42,129
248,551
2,600

42,078
80,783
243,021
2,360

39,287
61,162
227,527
2,355

37,284
36,387
226,546
2,345

12

ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

You should read the following discussion of our financial condition and results of operations in conjunction with the

financial statements and the notes thereto included elsewhere in this annual report. Our discussion and analysis of 2019
compared to 2018 is included herein. For discussion and analysis of 2018 compared to 2017, please refer to Item 7 of Part
II, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on
Form 10-K for the fiscal year ended December 31, 2018, which was filed with the United States Securities and Exchange
Commission on February 25, 2019 and is incorporated herein by reference.

Forward-Looking Statements This Annual Report on Form 10-K 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-K 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, 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.

ii.

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

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

iii.

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

iv. geopolitical events, including Russia, Ukraine and Philippines;

v.

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

vi. changes in the price or availability of raw materials we use, particularly pulp, pulp substitutes, synthetic pulp, specialty

fibers and abaca fiber;

vii. changes in energy-related prices and the price of commodity raw materials with an energy component;

viii. the impact of unplanned production interruptions at our facilities or at any of our key suppliers;

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

x.

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

xi. unfavorable outcomes or unforeseen costs with respect to our ongoing obligations for the Fox River environmental

matter;

xii. the impact of war and terrorism;

xiii. 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 tax assets;

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

xv. our ability to finance, consummate and integrate future acquisitions.

GLATFELTER 2019 FORM 10-K

13

Introduction We manufacture a wide array of engineered materials and manage our company along two operating

segments:

•

•

Composite Fibers with revenue from the sale 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

Airlaid Materials with revenue from the sale of airlaid nonwoven fabric-like materials used in feminine hygiene, adult
incontinence products, table top, specialty wipes, home care products and other airlaid applications.

Specialty Papers’ results of operations and financial condition are reported as discontinued operations. The following
discussion and analysis primarily focuses on the financial results of operations and financial condition of our continuing
operations.

RESULTS OF OPERATIONS

2019 versus 2018

Overview For the year ended December 31, 2019 we reported a net loss of $21.5 million, or $0.49 per share compared

with a net loss of $177.6 million, or $4.06 per diluted share in 2018. The results for 2019 reflect a number of significant
actions we undertook including corporate cost reductions, debt refinancing and termination and settlement of our qualified
pension plan. Excluding these items from reported results, adjusted earnings, a non-GAAP measure, was $33.2 million, or
$0.75 per diluted share for 2019, compared with $9.2 million, or $0.21 per diluted share, a year ago.

On October 31, 2018, we completed the sale of the Specialty Papers business, and on October 1, 2018, we completed our

acquisition of Georgia-Pacific’s European nonwovens business based in Steinfurt, Germany (“Steinfurt”), with annual
revenues of approximately $99 million as part of our strategic transformation to becoming a leading global supplier of
engineered materials. These actions are all part of our strategic transformation to becoming a leading global supplier of
engineered materials.

The results discussed in the preceding paragraph are in accordance with generally accepted accounting principles in the
United States (“GAAP”). These reported results reflect the impact of significant unusual and non-recurring items including,
among others, the results of Specialty Papers, a discontinued operation, the cost to terminate and settle liabilities associated
with our qualified pension plan, cost optimization actions, costs of strategic initiatives, capacity expansion and gains from
timberland sales.

We generated $102.8 million of cash from operations in 2019 compared with the use of $6.0 million a year ago. The
amount reported for 2019 includes $53.4 million of cash, before tax, available to us as a result of the pension plan termination
and settlement of all liabilities. During 2019 and 2018, capital expenditures totaled $27.8 and $42.1 million, respectively,
reflecting the completion of the airlaid capacity expansion project in early 2018.

The following table sets forth summarized GAAP-based consolidated results of operations:

In thousands, except per share
Net sales
Gross profit
Operating income
Continuing operations

Loss
Loss per share

Discontinued operations

Income (loss) from discontinued operations
Earnings (loss) per share

Net loss
Loss per share

$

Year ended
December 31

2019

2018

$

927,673
147,542
54,635

(25,211)
(0.57)

3,670
0.08
(21,541)
(0.49)

866,286
130,407
21,942

(448)
(0.01)

(177,156)
(4.05)
(177,604)
(4.06)

In addition to the results reported in accordance with GAAP, we evaluate our performance using adjusted earnings and

adjusted earnings per diluted share. 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

14

underlying operating trends and cash flow generation. Adjusted earnings consist of net income determined in accordance
with GAAP adjusted to exclude the impact of the following:

Discontinued Operations. In connection with the sale of the Specialty Papers business, its results of operations, including

the loss recorded in connection with the sale, are reported as discontinued operations for all periods presented. This
adjustment reflects the net results of this discontinued operation.

Pension settlement charge. This adjustment reflects a charge recorded in connection with the termination of our qualified
pension plan and the related actions to settle all obligations to the plan’s participants. The pension settlement charge reflects
the recognition of previously unrecognized losses deferred as a component of accumulated other comprehensive losses. Since
the pension plan was fully funded, this action did not require the use of cash, but instead was accomplished through the use or
transfer of plan assets.

Cost optimization actions. These adjustments reflect charges incurred in connection with initiatives to optimize the cost
structure of the Company including costs related to the organizational change to a functional operating model. The costs are
primarily related to executive separation, other headcount reductions, professional fees, asset write-offs and certain contract
termination costs. These adjustments, which have occurred at various times in the past, are irregular in timing and relate to
specific identified programs to reduce or optimize the cost structure of a particular operating segment or the corporate
function.

Strategic initiatives. These adjustments primarily reflect one-time professional and legal fees incurred directly related to
evaluating and executing certain strategic initiatives, acquisition transaction costs and, in 2018, a currency translation gain on
acquisition financing.

Airlaid capacity expansion costs. This adjustment reflects non-capitalized, one-time costs incurred related to the start-up

of a new airlaid production facility in Fort Smith, Arkansas and the implementation of a new business system.

Debt refinancing costs. Represents a charge to write-off unamortized debt issuance costs in connection with the

redemption of the Company’s $250 million, 5.375% Notes.

Fox River environmental matter. This adjustment excludes a gain and reflects a decrease in the Company’s overall

reserve for the Fox River matter primarily due to the resolution of the litigation in the first quarter of 2019.

Timberland sales and related costs. This adjustment excludes 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.

U.S. Tax Reform. This adjustment reflects amounts recorded estimating the impact of the TCJA which was signed into
law on December 22, 2017. The TCJA includes, among many provisions, a tax on the mandatory repatriation of earnings of
the Company’s non-U.S. subsidiaries and a change in the corporate tax rate from 35% to 21%.

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 to adjusted earnings for the years ended December 31, 2019 and 2018 :

GLATFELTER 2019 FORM 10-K

15

In thousands, except per share
Net income
Exclude: Net income from discontinued operations

Loss from continuing operations

Adjustments (pre-tax)

Pension settlement charge
Cost optimization actions
Airlaid capacity expansion costs
Debt refinancing
Strategic initiatives
Fox River environmental matter
Timberland sales and related costs
Total adjustments (pre-tax)
Income taxes (1)
U.S. Tax Reform
Total after-tax adjustments
Adjusted earnings

Year ended December 31

2019

Amount

EPS

$

(21,541) $
(3,670)
(25,211)

(0.49)
(0.08)
(0.57)

2018

Amount
(177,604) $
177,156
(448)

EPS

(4.06)
4.05
(0.01)

75,326
8,583
1,014
992
249
(2,509)
(1,572)
82,083
(23,722)
—
58,361
33,150

$

1.32
0.75

$

$

—
440
7,072
—
5,898
—
(3,225)
10,185
6
(545)
9,646
9,198

0.22
0.21

$

(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.

Segment Financial Performance

Year ended December 31
Dollars in millions

Net sales
Cost of products sold
Gross profit (loss)

SG&A
Gains on dispositions of plant,

equipment and timberlands, net

Total operating income (loss)
Non-operating expense

$

Income (loss) before income taxes $

Supplementary Data
Net tons sold (thousands)
Depreciation, depletion and

amortization

Capital expenditures

$

Composite Fibers
2018
2019

Airlaid Materials

Other and
Unallocated

Total

2019

2018

2019

2018

2019

2018

$

$

$

521.7
432.2
89.5
41.6

—
47.9
—
47.9

133.5

26.2
12.0

$

$

$

554.9
462.3
92.6
44.2

—
48.4
—
48.4

143.8

28.3
15.7

$

$

$

406.0
346.6
59.4
18.3

—
41.1
—
41.1

137.6

21.1
13.7

311.4
269.3
42.1
12.2

—
29.9
—
29.9

104.8

14.9
21.6

$

$

$

— $
1.3
(1.3)
35.1

— $
4.3
(4.3)
55.3

(2.1)
(34.3)
(89.1)
(123.4)

—

3.5
2.1

$

$

(3.3)
(56.3)
(14.7)
(71.0)

—

4.3
4.8

$

$

$

$

$

927.7
780.1
147.6
95.0

(2.1)
54.6
(89.1)
(34.5)

271.1

50.8
27.8

866.3
735.9
130.4
111.7

(3.3)
21.9
(14.7)
7.3

248.6

47.5
42.1

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

16

Segments Results of individual 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
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 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 operating segment are allocated primarily based on an estimated utilization of support area services
or are included in “Other and Unallocated” in the table above.

Management evaluates results of operations of the segments before 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 operating 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 operating segment 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.

Sales and Costs of Products Sold

In thousands
Net sales
Costs of products sold
Gross profit
Gross profit as a percent of Net sales

Year ended
December 31

2019
927,673
780,131
147,542

$

$

2018
866,286
735,879
130,407

Change

61,387
44,252
17,135

$

$

$

$

15.9%

15.1%

The following table sets forth the contribution to consolidated net sales by each segment:

Percent of Total
Segment
Composite Fibers
Airlaid Materials

Total

Year ended
December 31

2019

2018

56.2%
43.8
100.0%

64.1%
35.9
100.0%

Net sales on a consolidated basis totaled $927.7 million and $866.3 million in 2019 and 2018, respectively. The $61.4
million increase was primarily driven by the Steinfurt acquisition, which contributed $71.0 million in the comparison, and
partially offset by $31.4 million of unfavorable currency translation. Shipping volumes increased 9.1%.

GLATFELTER 2019 FORM 10-K

17

Composite Fibers’ net sales decreased $33.2 million, or 6.0%, and totaled $521.7 million in 2019. The decrease was
primarily due to $22.8 million from unfavorable currency translation and a 7.2% decrease in shipping volumes reflecting
weak demand for wallcover and metallized products. Slightly higher selling prices added $2.2 million.

Composite Fibers’ operating income for the year ended December 31, 2019 decreased $0.5 million to $47.9 million
compared to a year ago. Lower shipping volumes impacted results by $4.7 million and higher operating costs driven by
inflationary pressure and higher freight, adversely affected the comparison by $2.8 million. Currency was $4.7 million
favorable compared to the year-ago period reflecting hedging instruments that matured more than offsetting the impact of the
lower Euro translation rate. The primary drivers are summarized in the following chart (in millions):

(cid:7)(cid:23)(cid:27)(cid:17)(cid:23)

(cid:7)(cid:21)(cid:17)(cid:21)

(cid:7)(cid:11)(cid:23)(cid:17)(cid:26)(cid:12)

(cid:7)(cid:19)(cid:17)(cid:20)

(cid:7)(cid:11)(cid:21)(cid:17)(cid:27)(cid:12)

(cid:7)(cid:23)(cid:17)(cid:26)

(cid:7)(cid:23)(cid:26)(cid:17)(cid:28)

(cid:21)(cid:19)(cid:20)(cid:27) (cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)
(cid:44)(cid:81)(cid:70)(cid:82)(cid:80) (cid:72)

(cid:54)(cid:72)(cid:79)(cid:79)(cid:76)(cid:81)(cid:74) (cid:51)(cid:85)(cid:76)(cid:70)(cid:72) (cid:57)(cid:82)(cid:79)(cid:88)(cid:80) (cid:72) (cid:9) (cid:48)(cid:76)(cid:91) (cid:53)(cid:48) (cid:9) (cid:40)(cid:81)(cid:72)(cid:85)(cid:74)(cid:92)

(cid:44)(cid:81)(cid:73)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)

(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86) (cid:9)
(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)

(cid:41)(cid:59)

(cid:21)(cid:19)(cid:20)(cid:28) (cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)
(cid:44)(cid:81)(cid:70)(cid:82)(cid:80) (cid:72)

Airlaid Materials’ net sales totaled $406.0 million in 2019. Net sales increased $94.6 million in the year-over-year
comparison primarily due the Steinfurt acquisition which contributed $71 million of the increase and an 11.0% increase in
shipping volumes from the legacy business. Selling prices and currency translation were unfavorable by $2.7 million and
$8.6 million, respectively.

Airlaid Materials’ operating income totaled $41.1 million, an increase of $11.2 million, or 37.5% compared to a year

ago. The increase was primarily due to higher shipping volumes related to the Steinfurt acquisition and the additional
capacity added by the Fort Smith facility. Lower raw material and energy costs were partially offset by lower selling prices,
primarily reflecting pass-through arrangements. The primary drivers are summarized in the following chart (in millions):

(cid:7) (cid:20) (cid:21) (cid:17)(cid:21)

(cid:7) (cid:22) (cid:17)(cid:27)

(cid:7) (cid:11)(cid:22) (cid:17)(cid:22) (cid:12)

(cid:7) (cid:20) (cid:17)(cid:21)

(cid:7) (cid:23) (cid:20) (cid:17)(cid:20)

(cid:7) (cid:21) (cid:28) (cid:17)(cid:28)

(cid:7) (cid:11)(cid:21) (cid:17)(cid:26) (cid:12)

(cid:21) (cid:19) (cid:20) (cid:27)
(cid:50) (cid:83) (cid:72) (cid:85)(cid:68) (cid:87)(cid:76)(cid:81) (cid:74)
(cid:44)(cid:81) (cid:70) (cid:82) (cid:80) (cid:72)

(cid:54) (cid:72) (cid:79)(cid:79)(cid:76) (cid:81) (cid:74)
(cid:51) (cid:85)(cid:76)(cid:70) (cid:72)

(cid:57) (cid:82) (cid:79)(cid:88) (cid:80) (cid:72) (cid:9)
(cid:48) (cid:76) (cid:91)

(cid:53) (cid:48) (cid:9)
(cid:40) (cid:81) (cid:72) (cid:85)(cid:74) (cid:92)
(cid:44)(cid:81) (cid:73) (cid:79)(cid:68) (cid:87)(cid:76) (cid:82) (cid:81)

(cid:50) (cid:83) (cid:72) (cid:85)(cid:68) (cid:87)(cid:76) (cid:82) (cid:81) (cid:86)
(cid:9) (cid:50) (cid:87)(cid:75) (cid:72) (cid:85)

(cid:41) (cid:59)

(cid:21) (cid:19) (cid:20) (cid:28)
(cid:50) (cid:83) (cid:72) (cid:85)(cid:68) (cid:87)(cid:76)(cid:81) (cid:74)
(cid:44)(cid:81) (cid:70) (cid:82) (cid:80) (cid:72)

18

Other and Unallocated The amount of net operating expenses not allocated to an operating segment and reported as
“Other and Unallocated” in our table of Segment Financial Performance, totaled $34.3 million for 2019 compared with $56.3
million in 2018. The amounts presented in this category include cost optimization actions, strategic initiatives, airlaid
capacity expansion, Fox River reserve adjustments and gains on timberland sales, all of which are presented previously in the
reconciliation of GAAP results to Adjusted earnings. Excluding these items, unallocated expenses declined $14.8 million
primarily reflecting receipt of payments for transition services, cost control and rightsizing initiatives and lower professional
services.

Gain on Sales of Plant, Equipment and Timberlands, net During each of the past three years, we completed the

following sales of assets:

Dollars in thousands
2019
Timberlands
Other

Total

2018
Timberlands
Other

Total

2017
Timberlands
Other

Total

Acres

Proceeds

Gain (loss)

1,996 $
n/a

$

1,918 $
n/a

$

332 $
n/a

$

1,705
493
2,198

3,414
48
3,462

209
9
218

$

$

$

$

$

$

1,572
488
2,060

3,225
31
3,256

188
9
197

Income taxes On continuing operations, for the year ended December 31, 2019, we recorded a $9.2 million income tax
benefit on a pretax loss of $34.5 million. The amounts for 2019 include a $23.1 million of tax benefit recorded in
connection with the $75.3 million pension settlement charge. In addition, the income taxes in 2019 include a $3.0 million
benefit due to the completion of tax audits and the release of certain state valuation allowances. During 2018, we recorded a
provision of $7.7 million on pretax income of $7.3 million. Our effective tax rate for 2018 was unusually high primarily due
to losses from lower taxed U.S.-based operations, together with provisions of the TCJA which require us to provide for an
additional U.S. tax on international earnings (Global Intangible Low Taxed Income, or GILTI).

Foreign Currency We own and operate facilities in Canada, Germany, France, the United Kingdom and the Philippines.
The functional currency of our Canadian operations is the U.S. dollar. However, in Germany and France it is the Euro, in the
UK, it is the British Pound Sterling, and in the Philippines the functional currency is the Peso. On an annual basis, our euro
denominated revenue exceeds euro expenses by an estimated €140 million. For 2019 compared to 2018, the average currency
exchange rate of the euro weakened relative to the U.S. dollar by approximately 5.2% in the year over year comparison, and
the British pound sterling to the dollar weakened by approximately 4.4%. 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, 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.

GLATFELTER 2019 FORM 10-K

19

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 period indicated.

In thousands

Net sales
Costs of products sold
SG&A expenses
Income taxes and other

Net income

Year ended
December 31, 2019
Favorable
(unfavorable)

$

$

(31,438)
35,017
2,282
(330)
5,531

The above table only presents the financial reporting impact of foreign currency translations assuming currency

exchange rates in 2019 were the same as 2018, or “constant currency.” It does not present the impact of certain competitive
advantages or disadvantages of operating or competing in multi-currency markets.

Discontinued Operations We completed the sale of the Specialty Papers business on October 31, 2018. Its results of
operations are reported as discontinued operations for all periods presented. For 2019, we reported income from discontinued
operations of $3.7 million related to adjustments for post-closing working capital, pension, the reversal of tax reserves
associated with the closure of tax matters, and other items in connection with the sale of Specialty Papers. For the year ended
December 31, 2018, we reported a net loss from discontinued operations of $177.2 million, including a $144.1 million
impairment charge recorded in connection with the sale of the business.

LIQUIDITY AND CAPITAL RESOURCES

Our business requires expenditures for new or enhanced equipment, research and development efforts, 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:

In thousands
Cash and cash equivalents at beginning

of period

Cash provided (used) by
Operating activities
Investing activities
Financing activities

Effect of exchange rate changes on cash
Change in cash and cash equivalents from discontinued operations
Net cash provided (used)

Cash and cash equivalents at end of

period

Year ended
December 31

2019

2018

$

142,685

$

116,219

102,835
(27,113)
(72,774)
(269)
(19,163)
(16,484)

(5,952)
(217,640)
(91,426)
(5,564)
347,048
26,466

$

126,201

$

142,685

At December 31, 2019, we had $126.2 million in cash and cash equivalents (“cash”), of which approximately 37% was
held by foreign subsidiaries. Cash held by our foreign subsidiaries can be repatriated without incurring a significant amount
of additional taxes. The cash held at the end of 2019 includes $53.4 million received in connection with the termination of
our overfunded qualified pension plan. In 2020, after we establish an account to fund 401(k) contributions for the next 7
years and pay excise taxes and fees, approximately $32 million will be available for unrestricted general use.

In addition to cash, as of December 31, 2019, $74 million was available under our existing revolving credit agreement.

Cash provided by operating activities totaled $102.8 million in 2019 compared with a use of $6.0 million a year ago. The

improvement in cash from operations primarily reflects the $53.4 million of cash from the pension settlement, improved
earnings, reduced working capital use, predominantly inventory, as well as lower payments for interest as a result of changes
in our capital debt structure in early 2019. These improvements were partially offset by the $20.8 million payment related to
the Fox River matter.

Net cash used by investing activities decreased by $190.5 million in the year-over-year comparison as the amount for
2018 included the use of $178.9 million, net of cash acquired for the Steinfurt acquisition. Capital expenditures totaled $27.8
million in 2019 compared with $42.1 million in 2018 reflecting lower spending due to the completion of Airlaid Materials’
capacity expansion project in early 2018. Capital expenditures are expected to total between $30 million and $35 million in

20

2020.

Net cash used by financing activities totaled $72.8 million in 2019 compared with $91.4 million in 2018. The change in
the year-to-year comparison primarily reflects lower repayments of amounts outstanding under our Revolving credit facility,
partially offset by an increase of $5.6 million in term loan repayments.

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

In thousands
Revolving credit facility, due Mar. 2020
Revolving credit facility, due Feb. 2024
5.375% Notes, due Oct. 2020
Term loan, due Feb. 2024
2.40% Term Loan, due Jun. 2022
2.05% Term Loan, due Mar. 2023
1.30% Term Loan, due Jun. 2023
1.55% Term Loan, due Sep. 2025

Total long-term debt

Less current portion
Unamortized deferred issuance costs
Long-term debt, net of current portion

December 31

2019

2018

$

$

—
84,255
—
240,969
4,012
19,487
5,617
7,915
362,255
(22,940)
(2,396)
336,919

$

$

114,495
—
250,000
—
5,725
25,972
7,361
9,470
413,023
(10,785)
(1,276)
400,962

Our revolving credit facility due in February 2024, contains a number of customary compliance covenants, the most
restrictive of which is a maximum leverage ratio of 4.0x at the end of 2019. As of December 31, 2019, the leverage ratio, as
calculated in accordance with the definition in our amended credit agreement, was 2.2x, within the limits set forth in our credit
agreement.

The table above sets forth our outstanding debt as of December 31, 2019. The significant terms of the debt instruments are

more fully discussed in Item 8 - Financial Statements and Supplementary Data – Note 18.

In early 2019, we significantly changed our debt capital structure. In February 2019 we redeemed at par, all outstanding
5.375% Notes. In addition, on February 8, 2019, we entered into a new credit facility with a consortium of financial institutions.
The new five-year facility (the “2019 Facility”) replaces our existing Revolving credit facility and consists of a $400 million
variable rate revolver and a €220 million term loan. The other terms of the 2019 Facility are substantially similar to our then
existing Revolving credit facility.

Financing activities includes cash used for common stock dividends. In 2019, we used $22.9 million of cash for dividends on
our common stock compared with $22.8 million in 2018. Our Board of Directors determines what, if any, dividends will be paid
to our shareholders. Dividend payment decisions are based upon then-existing factors and conditions and, therefore, historical
trends of dividend payments are not necessarily indicative of future payments.

During 2018, we sold Specialty Papers for net proceeds of $323 million. This receipt and the net activities of the business

are reflected in the summary table of cash flows under the caption “Change in cash and cash equivalents from discontinued
operations.”

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 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 8 - Financial Statements and Supplementary Data – Note 22 – Commitments, Contingencies
and Legal Proceedings (“Note 21”), 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 government oversight and long-term monitoring and maintenance costs.
Pursuant to a consent decree with certain government agencies entered into in January 2019, we paid $20.5 million for past
government oversight costs. Although there remains some uncertainty as to the amount we may ultimately be required to spend,
primarily for government oversight costs, the consent decree specifies the nature of our future obligations.

We expect to meet all 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.

GLATFELTER 2019 FORM 10-K

21

Off-Balance-Sheet Arrangements As of December 31, 2019 and 2018, 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 and a partnership, are reflected in the consolidated balance sheets included herein in Item 8 –
Financial Statements and Supplementary Data.

Contractual Obligations The following table sets forth contractual obligations as of December 31, 2019:

In millions
Long-term debt (1)
Operating leases (2)
Purchase obligations (3)
Other long term obligations (4), (5)

Total

Payments due during the year ending December 31,

Total

2020

$

$

381
18
119
52
570

$

$

2021 to 2022
54
$
7
32
6
99

$

2023 to 2024
298
$
2
—
5
305

$

$

$

28
5
87
4
124

2025 and
beyond

1
4
—
37
42

(1)

(2)

(3)

(4)

(5)

Represents contractual principal and interest payments due on long-term debt. The amounts include expected interest payments of $19 million over
the term of the underlying debt instruments based contractual or current market rates in the case of variable rate instruments.

Represents agreements for the lease of production equipment, warehouse space, facilities, automobiles, and office space.

Represents open purchase orders and other obligations, primarily for raw material and energy supply contracts. In certain situations, prices are
subject to variations based on market prices. In such situations, the information above is based on prices in effect at December 31, 2019.

Primarily represents benefits estimated to be paid pursuant to retirement medical plans and nonqualified pension plans.

Since we are unable to reasonably estimate the timing of ultimate payment, the amounts set forth above do not include any payments that may be
made related to uncertain tax positions, including potential interest, accounted for in accordance with ASC 740-10-20. As discussed in more detail in
Item 8 – Financial Statements and Supplementary Data, Note 9, “Income Taxes,” such amounts totaled $31 million at December 31, 2019.

22

Critical Accounting Policies and 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, revenues and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, we
evaluate our estimates, including those related to inventories, long-lived assets, pension and post-employment obligations,
environmental liabilities and income taxes. We base our estimates on historical experience and on various other assumptions that
we believe are 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 the following represent the most significant and subjective estimates used in the preparation of our

consolidated financial statements.

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
circumstances indicate that the carrying amounts may not be recoverable. Goodwill and non-amortizing tradename intangible
assets are reviewed for impairment during the third quarter of each year. 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. The fair value of non-
amortizing tradename intangible assets is determined using 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 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.
Future adverse changes 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.

Pension and Other Post-Employment Obligations Accounting for defined-benefit pension plans, and any

curtailments or settlements thereof, requires various assumptions, including, but not limited to discount rates, expected long-term
rates of return on plan assets, future compensation growth rates and mortality rates. Accounting for our retiree medical plans,
and any curtailments or settlements thereof, also requires various assumptions, which include, but are not limited to, discount
rates and annual rates of increase in the per capita costs of health care benefits.

The following chart summarizes the more significant assumption used in the actuarial valuation of our defined-benefit

plans for each of the past three years:

Pension plans
Weighted average discount rate for benefit expense

for benefit obligation

Expected long-term rate of return on plan assets(1)
Rate of compensation increase
Post-employment medical
Weighted average discount rate for benefit expense

for benefit obligation

Health care cost trend rate assumed for next year
Ultimate cost trend rate
Year that the ultimate cost trend rate is reached

2019

2018

2017

4.34%
2.70%
4.50%
2.50%

4.19%
3.11%
5.60%
4.50%
2037

3.85%
4.34%
7.25%
3.00%

3.68%
4.19%
5.90%
4.50%
2037

4.44%
3.85%
7.25%
3.00%

4.18%
3.68%
6.20%
4.50%
2037

(1)

For 2019, the expected long-term rate of return on plan assets was reduced to 4.50% due, in part, to a change in the investment allocation of plan
assets.

We evaluate these assumptions at least once each year or as facts and circumstances dictate and we make changes as

conditions warrant. Changes to these assumptions will increase or decrease our reported net periodic benefit expense, which
will result in changes to the recorded benefit plan assets and liabilities.

GLATFELTER 2019 FORM 10-K

23

Environmental Liabilities We maintain accruals for losses associated with environmental obligations when it is

probable that a liability has been incurred and the amount of the liability can be reasonably estimated based on existing
legislation and remediation technologies. These accruals are adjusted periodically as assessment and remediation actions
continue and/or further legal or technical information develops. Such liabilities are exclusive of any insurance or other claims
against third parties. Environmental costs are capitalized if the costs extend the life of the asset, increase its capacity and/or
mitigate or prevent contamination from future operations. Recoveries of environmental remediation costs from other parties,
including insurance carriers, are recorded as assets when their receipt is assured beyond a reasonable doubt.

Income Taxes We record the estimated future tax effects of temporary differences between the tax bases of assets

and liabilities and amounts reported in our consolidated balance sheets, as well as operating loss and tax credit carry
forwards. These deferred tax assets and liabilities are measured using enacted tax rates and laws that will be in effect when
such amounts are expected to reverse or be utilized. We regularly review our deferred tax assets for recoverability based on
historical taxable income, projected future taxable income, the expected timing of the reversals of existing temporary
differences and tax planning strategies. If we are unable to generate sufficient future taxable income, or if there is a material
change in the actual effective tax rates or time period within which the underlying temporary differences become taxable or
deductible, we could be required to increase the valuation allowance against our deferred tax assets, which may result in a
substantial increase in our effective tax rate and a material adverse impact on our reported results.

Significant judgment is required in determining our worldwide provision for income taxes and recording the related

assets and liabilities. In the ordinary course of our business, there are many transactions and calculations where the ultimate
tax determination is less than certain. We and our subsidiaries are examined by various Federal, State and foreign tax
authorities. We regularly assess the potential outcomes of these examinations and any future examinations for the current or
prior years in determining the adequacy of our provision for income taxes. We continually assess the likelihood and amount
of potential adjustments and adjust the income tax provision, the current liability and deferred taxes in the period in which the
facts that give rise to a revision become known.

Other significant accounting policies, not involving the same level of uncertainties as those discussed above, are
nevertheless important to an understanding of the Consolidated Financial Statements. Refer to Item 8 – Financial Statements
and Supplementary Data – Notes to Consolidated Financial Statements for additional accounting policies.

ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In thousands, except percentages
Long-term debt
Average principal outstanding

2020

Year Ended December 31
2022

2021

2023

December 31, 2019

2024

Carrying Value

Fair Value

At fixed interest rates – Term Loans
At variable interest rates

31,741
315,956

21,158
303,599

11,178
291,241

5,198
278,884

1,721
30,632

37,031
325,224
362,255

37,439
325,224
$ 362,663

$

Weighted-average interest rate

On fixed rate debt – Term Loans
On variable rate debt

Interest rate swap

1.85%
1.50%

1.82%
1.50%

1.77%
1.50%

1.67%
1.50%

1.55%
1.50%

Pay fixed/received variable (notional)
Rate paid
Rate received

€180,000

€180,000

€180,000

1.540%
—

1.540%
—

1.540%
—

—
—
—

—
—
—

The table above presents the average principal outstanding and related interest rates for the next five years for debt
outstanding as of December 31, 2019. 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 December

31, 2019, we had $359.9 million of long-term debt, net of deferred debt issuance costs. After giving effect to the interest rate
swap agreement, approximately 33.6% of our debt was at variable interest rates. The fixed rate Term Loans and the variable
rate debt are all euro-based borrowings and thus the value of which is also subject to currency risk. Variable-rate debt
outstanding represents borrowings under our revolving credit agreement that accrues interest based on one-month LIBOR
plus a margin. At December 31, 2019, the contractual interest rate paid was 1.50%. A hypothetical 100 basis point increase or
decrease in the interest rate on variable rate debt would increase or decrease annual interest expense by $1.2 million.

24

We entered into a €180 million notional value floating-to-fixed interest rate swap agreement. Under the terms of the

swap, we will pay a fixed interest rate of the applicable margin determined in accordance with our revolving credit agreement
plus 0.0395% on €180 million of the underlying variable rate term loan. We will receive the greater of 0.00% or EURIBOR.
As of the end of 2019, EURIBOR was 0.00%.

As part of our overall risk management practices, we enter into financial derivatives primarily designed to either i)

hedge 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 8 – Financial Statements
and Supplementary Data – Note 20.

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 is estimated to
exceed euro expenses by approximately €140 million. With respect to the British Pound Sterling, Canadian dollar, and
Philippine Peso, we have greater outflows than inflows of these currencies, although to a lesser degree. As a result,
particularly with respect to the euro, we are exposed to changes in currency exchange rates and such changes could be
significant.

GLATFELTER 2019 FORM 10-K

25

ITEM 8

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of P. H. Glatfelter Company (the “Company”) is responsible for establishing and maintaining adequate

internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under
the supervision of the chief executive and chief financial officer to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of the Company’s financial statements for external reporting purposes in accordance
with accounting principles generally accepted in the United States.

As of December 31, 2019, management conducted an assessment of the effectiveness of the Company’s internal

control over financial reporting based on the framework established in Internal Control — Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Management has determined that the Company’s internal control over financial reporting as of December 31, 2019, is

effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s
financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United
States.

The Company’s internal control over financial reporting includes policies and procedures that pertain to the

maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide
reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance
with accounting principles generally accepted in the United States, and that receipts and expenditures are being made only in
accordance with authorizations of management; and provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on our financial
statements.

The Company’s internal control over financial reporting as of December 31, 2019, has been audited by Deloitte &
Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein which expresses an
unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2019.

The Company’s management, including the chief executive officer and chief financial officer, does not expect that

internal control over financial reporting will prevent or detect all errors and all frauds. A control system, no matter how well
designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.
The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls
can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances
of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in
decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be
circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the
controls. The design of any system of controls is based, in part, on certain assumptions about the likelihood of future events,
and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become
inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

26

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and Board of Directors of

P. H. Glatfelter Company

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of P. H. Glatfelter Company and subsidiaries (the

"Company") as of December 31, 2019, based on criteria established in Internal Control — Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company
maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on
criteria established in Internal Control – Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United

States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2019, of the Company and
our report dated February 25, 2020, expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Company's management is responsible for maintaining effective internal control over financial reporting and for its

assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s
Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal
control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and

perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding

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

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.

/s/ DELOITTE & TOUCHE LLP

Philadelphia, Pennsylvania
February 25, 2020

GLATFELTER 2019 FORM 10-K

27

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and Board of Directors of

P. H. Glatfelter Company

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of P. H. Glatfelter Company and subsidiaries (the
"Company") as of December 31, 2019 and 2018, the related consolidated statements of income (loss), comprehensive income
(loss), shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2019, and the related
notes and the schedule listed in the Index at Item 15 (collectively referred to as the “financial statements”). In our opinion,
the financial statements present fairly, in all material respects, the financial position of the Company as of December 31,
2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December
31, 2019, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United

States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2019, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission and our report dated February 25, 2020, expressed an unqualified opinion on the Company’s internal
control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an

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

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

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial
statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or
disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex
judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements,
taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the
critical audit matter or on the accounts or disclosures to which it relates.

Goodwill Valuation – Composite Fibers Reporting Unit — Refer to Notes 2 and 14 to the financial statements

Critical Audit Matter Description

The Company reviews goodwill for impairment during the third quarter of each year or more frequently if impairment
indicators are present. The fair value of goodwill is determined using a market approach and a discounted cash flow model.
These approaches incorporate several assumptions, including estimates of future cash flows expected to be generated from
the use of the underlying assets. For goodwill, impairment losses, if any, are recognized for the amount by which the carrying
value of the reporting unit exceeds its fair value. The goodwill balance was $150.8 million as of December 31, 2019, of
which $77.8 million was recorded within the Composite Fibers reporting unit, which is also an operating segment. The fair
value of the Composite Fibers reporting unit exceeded its carrying value and, therefore, no impairment was recognized.

28

Given the significant estimates and assumptions management makes to estimate the fair value of the Composite Fibers

reporting unit and the sensitivity of the reporting unit’s operations to market conditions, such as geopolitical factors in
Ukraine and Russia, performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions
required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value
specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures over management’s estimates of future cash flows expected to be generated from the use of the

underlying assets used to value the Composite Fibers reporting unit, included the following, among others:

• We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over

management’s development of the estimates of future cash flows used to value the reporting unit.

• We evaluated management’s historical ability to accurately forecast financial results by comparing management’s

projections reflected in the prior period reporting unit forecast to actual results.

• We evaluated the reasonableness of management’s current reporting unit forecast by comparing the forecast to:

o Historical results.
o
o

Internal communications to management and the Board of Directors.
Forecasted information included in industry reports for the Company and certain of its peer companies.

• With the assistance of our fair value specialists, we evaluated the reasonableness of the valuation assumptions,

including testing the underlying source information supporting the assumptions and the mathematical accuracy of
the calculations.

/s/ DELOITTE & TOUCHE LLP

Philadelphia, Pennsylvania
February 25, 2020

We have served as the Company’s auditor since at least 1940; however, an earlier year could not be reliably determined.

GLATFELTER 2019 FORM 10-K

29

P. H. GLATFELTER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)

In thousands, except per share
Net sales
Costs of products sold

Gross profit

Selling, general and administrative expenses
Gains on dispositions of plant, equipment

and timberlands, net

Operating income

Non-operating income (expense)

Interest expense
Interest income
Pension settlement
Other, net

Total non-operating expense
Income (loss) before income taxes
Income tax provision (benefit)
Loss from continuing operations

Discontinued operations:

Income (loss) before income taxes
Income tax provision (benefit)

Income (loss) from discontinued operations

Net income (loss)

Basic earnings (loss) per share

Loss from continuing operations
Income (loss) from discontinued operations

Basic earnings (loss) per share

Diluted earnings (loss) per share
Loss from continuing operations
Income (loss) from discontinued operations
Diluted earnings (loss) per share

Weighted average shares outstanding

Basic
Diluted

$

$

$

$

$

$

2019

Year ended December 31
2018

$

927,673
780,131
147,542
94,967

$

866,286
735,879
130,407
111,721

2017

800,362
656,773
143,589
110,534

(2,060)
54,635

(10,408)
1,123
(75,326)
(4,477)
(89,088)
(34,453)
(9,242)
(25,211)

(3,256)
21,942

(15,609)
559
—
383
(14,667)
7,275
7,723
(448)

(197)
33,252

(13,317)
237
—
(705)
(13,785)
19,467
25,079
(5,612)

1,284
(2,386)
3,670
(21,541) $

(207,242)
(30,086)
(177,156)
(177,604) $

19,868
6,342
13,526
7,914

(0.57) $
0.08
(0.49) $

(0.57) $
0.08
(0.49) $

(0.01) $
(4.05)
(4.06) $

(0.01) $
(4.05)
(4.06) $

(0.13)
0.31
0.18

(0.13)
0.30
0.18

44,132
44,132

43,768
43,768

43,609
44,439

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

30

P. H. GLATFELTER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

In thousands

Net income (loss)

Foreign currency translation adjustments
Net change in:

Deferred gains (losses) on cash flow hedges,
net of taxes of $(737), $(2,353) and $1,930,
respectively
Unrecognized retirement obligations, net of
taxes of $(22,927), $(13,898) and $(6,293),
respectively

Other comprehensive income

Comprehensive income (loss)

Year ended December 31

2019

2018

2017

$

(21,541)

$

(177,604)

$

7,914

(6,724)

(27,783)

58,609

2,117

6,291

(5,592)

64,151
59,544
38,003

47,025
25,533
(152,071)

$

$

10,914
63,931
71,845

$

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

GLATFELTER 2019 FORM 10-K

31

P. H. GLATFELTER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

In thousands

Assets

Cash and cash equivalents
Accounts receivable (less allowance for doubtful

accounts: 2019 - $1,682; 2018 - $1,661)

Inventories
Prepaid expenses and other current assets

Total current assets

Plant, equipment and timberlands, net
Goodwill
Intangible assets, net
Other assets

Total assets

Liabilities and Shareholders' Equity

Current portion of long-term debt
Accounts payable
Dividends payable
Environmental liabilities
Other current liabilities

Total current liabilities

Long-term debt
Deferred income taxes
Other long-term liabilities

Total liabilities

Commitments and contingencies

Shareholders’ equity
Common stock, $0.01 par value; authorized - 120,000,000;

issued - 54,361,980 (including treasury
shares: 2019 - 10,113,504; 2018 - 10,403,296)

Capital in excess of par value
Retained earnings

Accumulated other comprehensive loss

Less cost of common stock in treasury

Total shareholders’ equity

Total liabilities and shareholders’ equity

December 31

2019

2018

$

126,201

$

142,685

124,442
190,415
36,274
477,332

537,421
150,816
83,735
34,490

1,283,794

22,940
130,039
5,752
9,000
62,772
230,503

336,919
76,374
84,039
727,835

—

544
59,900
725,795
(77,896)
708,343
(152,384)
555,959
1,283,794

$

$

$

119,772
173,411
33,418
469,286

556,044
153,463
93,614
67,347

1,339,754

10,785
120,701
5,719
23,000
72,597
232,802

400,962
78,651
88,441
800,856

—

544
62,239
770,305
(137,440)
695,648
(156,750)
538,898
1,339,754

$

$

$

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

32

P. H. GLATFELTER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

In thousands
Operating activities
Net income (loss)
(Income) loss from discontinued operations, net of tax benefits

Adjustments to reconcile to net cash provided by

operations:
Depreciation, depletion and amortization
Amortization of debt issue costs and original issue discount
Pension settlement charge
Deferred income tax benefit (provision)
Gains on dispositions of plant, equipment and timberlands, net
Share-based compensation

Change in operating assets and liabilities

Accounts receivable
Inventories
Prepaid and other current assets
Accounts payable
Accruals and other current liabilities
Pension assets received
Other

Net cash provided (used) by operating activities

Investing activities
Expenditures for purchases of plant, equipment and timberlands
Proceeds from disposals of plant, equipment and timberlands, net
Acquisition, net of cash acquired
Other investing

Net cash used by investing activities

Financing activities
Repayments of note offerings
Net borrowings (repayments) under revolving credit facility
Payments of borrowing costs
Proceeds from term loans
Repayment of term loans
Payments of dividends
Payments related to share-based compensation awards and other

Net cash provided (used) by financing activities

Effect of exchange rate changes on cash
Net increase (decrease) in cash and cash

equivalents
Change in cash and cash equivalents from discontinued operations

Cash and cash equivalents at the beginning of

period
Cash and cash equivalents at the end of period

Supplemental cash flow information
Cash paid for:

Interest, net of amounts capitalized
Income taxes, net

2019

Year ended December 31
2018

2017

$

(21,541)
(3,670)

$

(177,604) $
177,156

7,914
(13,526)

50,820
1,672
75,326
(22,971)
(2,060)
3,583

(5,473)
(17,387)
(2,833)
10,337
(19,536)
53,401
3,167
102,835

(27,765)
2,198
(1,383)
(163)
(27,113)

(250,000)
(28,062)
(2,204)
248,644
(16,660)
(22,936)
(1,556)
(72,774)
(269)

2,679
(19,163)

142,685
126,201

10,208
14,242

$

$

47,525
1,159
—
(7,704)
(3,256)
6,288

(621)
(32,138)
(3,372)
13,774
(23,984)
—
(3,175)
(5,952)

(42,129)
3,462
(178,905)
(68)
(217,640)

—
(55,446)
—
—
(11,069)
(22,760)
(2,151)
(91,426)
(5,564)

(320,582)
347,048

116,219
142,685

15,760
15,171

$

$

42,078
1,157
—
12,003
(197)
5,494

(4,148)
1,522
(910)
20,361
(16,690)
—
(1,824)
53,234

(80,783)
218
—
(243)
(80,808)

—
109,436
—
—
(9,771)
(22,480)
(472)
76,713
7,244

56,383
4,392

55,444
116,219

13,934
9,336

$

$

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

GLATFELTER 2019 FORM 10-K

33

P. H. GLATFELTER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
For the years ended December 31, 2019, 2018 and 2017

In thousands
Balance at January 1, 2017
Previously unrecognized excess tax benefit on

exercise of stock awards

Net income
Other comprehensive income
Comprehensive income

Cash dividends declared ($0.52 per share)
Share-based compensation expense
Delivery of treasury shares

RSUs and PSAs
Employee stock options exercised — net
Balance at December 31, 2017

Reclassification pursuant to ASU No. 2018-02
Net loss
Other comprehensive income

Comprehensive loss

Tax effect of exercise of stock awards
Cash dividends declared ($0.52 per share)
Share-based compensation expense
Delivery of treasury shares

RSUs and PSAs
Employee stock options exercised — net
Balance at December 31, 2018

Net loss
Other comprehensive income
Comprehensive income

Cash dividends declared ($0.52 per share)
Share-based compensation expense
Delivery of treasury shares

RSUs and PSAs
Employee stock options exercised — net
Balance at December 31, 2019

Common
Stock

Capital in
Excess of
Par Value

Retained
Earnings

Accumulated
Other
Comprehensive
Loss

$

544

$

57,917

$

962,884

$

(204,606) $

Total
Shareholders’
Equity

Treasury
Stock
(162,913) $

317
7,914

(22,704)

63,931

948,411

(140,675)

421
546
(161,946)

(22,298)

25,533

22,298
(177,604)

(22,800)

770,305

(137,440)

(21,541)

(22,969)

59,544

4,575
621
(156,750)

$

725,795

$

(77,896) $

2,833
1,533
(152,384) $

6,214

(535)
(1,002)
62,594

(7)

7,000

(6,201)
(1,147)
62,239

3,583

(3,625)
(2,297)
59,900

544

544

$

544

$

653,826

317
7,914
63,931
71,845
(22,704)
6,214

(114)
(456)
708,928

—
(177,604)
25,533
(152,071)
(7)
(22,800)
7,000

(1,626)
(526)
538,898

(21,541)
59,544
38,003
(22,969)
3,583

(792)
(764)
555,959

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

34

P. H. GLATFELTER COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.

ORGANIZATION

P. H. Glatfelter Company and subsidiaries (“Glatfelter”) is a leading global supplier of engineered materials. Its high-
quality, innovative and customizable solutions are found in tea and single-serve coffee filtration, personal hygiene as well as
in many diverse packaging, home improvement and industrial applications. We are headquartered in York, PA, and operate
facilities in the United States, Canada, Germany, France, the United Kingdom and the Philippines. We have sales and
distribution offices in the U.S., Europe, Russia and China and our products are marketed worldwide, either directly to
customers or through brokers and agents. The terms “we,” “us,” “our,” “the Company,” or “Glatfelter,” refer to P. H.
Glatfelter Company and subsidiaries unless the context indicates otherwise.

2.

ACCOUNTING POLICIES

Principles of Consolidation The consolidated financial statements include the accounts of Glatfelter and its wholly

owned subsidiaries. All intercompany balances and transactions have been eliminated.

Accounting Estimates The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America 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 consolidated financial statements are reasonable, based upon currently available facts and known
circumstances, but recognizes that actual results may differ from those estimates and assumptions.

Discontinued Operations The results of operations for the Specialty Papers business have been classified as

discontinued operations for all periods presented in the consolidated statements of income (loss).

Cash and Cash Equivalents We classify all highly liquid instruments with an original maturity of three months or

less at the time of purchase as cash equivalents.

Inventories

Inventories are stated at the lower of cost or market. Raw materials, in-process and finished goods

inventories are valued principally using the average-cost method.

Plant, Equipment and Timberlands For financial reporting purposes, depreciation is computed using the straight-

line method over the estimated useful lives of the respective assets.

The range of estimated service lives used to calculate financial reporting depreciation for principal items of plant and

equipment are as follows:

Buildings
Machinery and equipment
Other

15 – 45 Years
5 – 40 Years
3 – 25 Years

Maintenance and Repairs Maintenance and repairs costs are charged to income and major renewals and betterments

are capitalized. At the time property is retired or sold, the net carrying value is eliminated and any resultant gain or loss is
included in income.

Valuation of Long-lived Assets, Intangible Assets and Goodwill We evaluate long-lived assets for impairment

when a specific event indicates that the carrying value of an asset may not be recoverable. Recoverability is assessed based
on estimates of future cash flows expected to result from the use and eventual disposition of the asset. If the sum of expected
undiscounted cash flows is less than the carrying value of the asset, the asset’s fair value is estimated, and an impairment loss
is recognized for the amount by which the carrying value exceeds the estimated fair value.

Goodwill and non-amortizing tradename intangible assets are reviewed for impairment during the third quarter of each

year 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. The fair value of non-
amortizing tradename intangible assets is determined using a discounted cash flow model. For goodwill, impairment losses, if
any, are recognized for the amount by which the carrying value of the reporting unit exceeds its fair value. The carrying value
of a reporting unit is defined using an enterprise premise which is generally determined by the difference between the unit’s
assets and operating liabilities. With respect to non-amortizing tradenames, impairment losses, if any, are recognized for the
amount by which the carrying value of the tradename exceeds its fair value.

GLATFELTER 2019 FORM 10-K

35

Income Taxes

Income taxes are determined using the asset and liability method of accounting for income taxes in
accordance with FASB ASC 740 Income Taxes (“ASC 740”). Under ASC 740, tax expense includes U.S. and international
income taxes plus the provision for U.S. taxes on undistributed earnings of international subsidiaries not deemed to be
permanently invested. Tax credits and other incentives reduce tax expense in the year the credits are claimed. Certain items of
income and expense are not reported in tax returns and financial statements in the same year. The tax effect of such
temporary differences is reported in deferred income taxes. Deferred tax assets are recognized if it is more likely than not that
the assets will be realized in future years. We establish a valuation allowance for deferred tax assets for which realization is
not more likely than not.

Significant judgment is required in determining our worldwide provision for income taxes and recording the related

assets and liabilities. In the ordinary course of our business, there are many transactions and calculations where the ultimate
tax determination is less than certain. We and our subsidiaries are examined by various Federal, State, and foreign tax
authorities. We regularly assess the potential outcomes of these examinations and any future examinations for the current or
prior years in determining the adequacy of our provision for income taxes. We continually assess the likelihood and amount
of potential adjustments and record any necessary adjustments in the period in which the facts that give rise to a revision
become known.

Investment tax credits are accounted for by the flow-through method, which results in recognition of the benefit in the

year in which the credit become available.

We account for global intangible low-taxed income (“GILTI”) tax in the period in which it is incurred. The GILTI
provisions require entities to include in its U.S. income tax return foreign subsidiary earnings in excess of an allowable return
on the foreign subsidiaries’ tangible assets.

Treasury Stock Common stock purchased for treasury is recorded at cost. At the date of subsequent reissue, the

treasury stock account is reduced by the cost of such stock on the weighted-average cost basis.

Foreign Currency Translation Foreign currency translation gains and losses and the effect of exchange rate
changes on transactions designated as hedges of net foreign investments are included as a component of other comprehensive
income (loss). Transaction gains and losses are included in income in the period in which they occur.

Revenue Recognition We recognize revenue in accordance with ASU No. 2014-09, Revenue from Contracts with

Customers. Our revenue is earned primarily from the manufacture and sale of engineered materials (“product sales”).
Revenue is earned pursuant to contracts, supply agreements and other arrangements with a wide variety of customers. Our
performance obligation is to produce a specified product according to technical specifications and, in substantially all
instances, to deliver the product. Revenue from product sales is earned at a point in time. We recognize revenue on product
sales when we have satisfied our performance obligation and control of the product has passed to the customer thereby
entitling us to payment. With respect to substantially all arrangements for product sales, this is deemed to occur when title
transfers in accordance with specified shipping terms.

Selling prices are fixed at the time the sales arrangement is entered into and payment terms are customary for similar

arrangements in our industry. Many of our agreements include customary provisions for volume rebates, discounts and
similar incentives. In addition, we are obligated for products that fail to meet agreed upon specification. Provisions for such
items are estimated and recorded as sales deductions in the period in which the related revenue is recognized.

Refer to Note 6 for additional information about the disaggregation of our net sales.

Environmental Liabilities Accruals for losses associated with environmental obligations are recorded when it is

probable that a liability has been incurred and the amount of the liability can be reasonably estimated based on existing
legislation and remediation technologies. These accruals are adjusted periodically as assessment and remediation actions
continue and/or further legal or technical information develops. Such undiscounted liabilities are exclusive of any insurance
or other claims against third parties. Environmental costs are capitalized if the costs extend the life of the asset, increase its
capacity and/or mitigate or prevent contamination from future operations. Recoveries of environmental remediation costs
from other parties, including insurance carriers, are recorded as assets when their receipt is assured beyond a reasonable
doubt.

Earnings Per Share Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted-

average common shares outstanding during the respective periods. Diluted earnings per share is computed by dividing net
income by the weighted-average common shares and common share equivalents outstanding during the period. In periods in
which there is a net loss, diluted loss per share is equal to basic loss per share. The dilutive effect of common share
equivalents is considered in the diluted earnings per share computation using the treasury stock method.

36

Financial Derivatives and Hedging Activities We use financial derivatives to manage exposure to changes in
foreign currencies and interest rates. In accordance with FASB ASC 815 Derivatives and Hedging (“ASC 815”), we record
all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the
intended use of the derivative, whether we have elected to designate a derivative in a hedging relationship and apply hedge
accounting, and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting.

The gain or loss on those derivative instruments designated and qualifying as a hedge of the exposure to variability in
expected future cash flows related to forecasted transactions is deferred and reported as a component of accumulated other
comprehensive income (loss). Deferred gains or losses are reclassified to our results of operations at the time the hedged
forecasted transaction is recorded in our results of operations. The effectiveness of cash flow hedges is assessed at inception
and quarterly thereafter. If the instrument becomes ineffective or it becomes probable that the originally forecasted
transaction will not occur, the related change in fair value of the derivative instrument is also reclassified from accumulated
other comprehensive income (loss) and recognized in earnings.

Fair Value of Financial Instruments Under the accounting for fair value measurements and disclosures, a fair value

hierarchy was established that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives
the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and
the lowest priority to unobservable inputs (Level 3 measurements). A financial instrument's level within the fair value
hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The three levels of the
fair value hierarchy are described below:

Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted

assets or liabilities.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or
similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the
asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable
market data by correlation or other means.

Level 3 - Inputs that are both significant to the fair value measurement and unobservable.

Recently Issued Accounting Pronouncements In February 2016, the Financial Accounting Standards Board
(“FASB”) issued ASU No. 2016-02, Leases (Topic 842) (“ASU 842”). This ASU requires organizations to recognize on its
balance sheet the assets and liabilities for the rights and obligations created by leases. We adopted ASU 842 as of January 1,
2019 and elected to follow a modified retrospective method which permitted us to adopt the standard without restating
previously reported periods. As a result of adopting ASU 842, we recorded a right of use asset and corresponding lease
obligation of approximately $14.1 million. Refer to Note 17 “Leases” for additional information.

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. We
adopted ASU No. 2017-12 effective January 1, 2019 but it had an insignificant effect on our results of operations and
financial position.

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 and must be adopted using a modified retrospective transition approach. The adoption of this standard
will not have a material impact on our results of operations or financial position.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income
Taxes. The update eliminates, clarifies, and modifies certain guidance related to the accounting for income taxes. ASU 2019-
12 is effective for annual reporting periods beginning after December 15, 2020, with early adoption permitted. We are
currently evaluating the impact this ASU will have on our financial statements and related disclosures as well as the timing of
adoption.

GLATFELTER 2019 FORM 10-K

37

3.

ACQUISITION

On October 1, 2018, we completed the acquisition of Georgia-Pacific’s European nonwovens business based in

Steinfurt, Germany (“Steinfurt”) for $188 million including a working capital and post-closing purchase price
adjustments. The post-closing purchase price amount was recorded as an adjustment to goodwill.

The acquisition consisted of Georgia-Pacific’s operations located in Steinfurt along with sales offices located in France

and Italy. The Steinfurt facility produces high-quality airlaid products for the table-top, wipes, hygiene, food pad, and other
nonwoven materials markets, competing in the marketplace with nonwoven technologies and substrates, as well as other
materials focused primarily on consumer based end-use applications. The facility is a state-of-the-art, 32,000-metric-ton-
capacity manufacturing facility that employs approximately 220 people. Steinfurt’s results are reported prospectively from
the acquisition date as part of our Airlaid Materials operating segment.

We financed the transaction through a combination of cash on hand and borrowings under our revolving credit facility.

The allocation of the purchase price to assets acquired and liabilities assumed is as follows:

In thousands
Assets

Cash and cash equivalents
Accounts receivable
Inventory
Prepaid and other current assets
Plant, equipment and timberlands
Intangible assets
Goodwill

Total assets
Liabilities

Accounts payable
Deferred tax liabilities
Other long term liabilities

Total liabilities

Total
less cash acquired
Total purchase price

Allocation

7,540
13,277
11,133
869
66,167
43,573
74,770
217,329

8,577
19,119
1,162
28,858
188,471
(7,540)
180,931

$

$

For purposes of allocating the total purchase price, assets acquired and liabilities assumed are recorded at their
estimated fair market value. The allocation set forth above is based on management’s estimate of the fair value using
valuation techniques such as discounted cash flow models, appraisals and similar methodologies. The amount allocated to
intangible assets represents the estimated value of customer relationships, technological know-how and trade name.

In connection with the Steinfurt acquisition we recorded $74.8 million of goodwill and $43.6 million of intangible
assets. The goodwill arising from the acquisition largely relates to strategic benefits, product and market diversification,
assembled workforce, and similar factors. For tax purposes, none of the goodwill is deductible. Intangible assets consist of
technology, customer relationships and tradename.

Acquired property, plant and equipment are being depreciated on a straight-line basis with estimated remaining lives

ranging from 5 years to 25 years. Intangible assets are being amortized on a straight-line basis over an average estimated
remaining life of 13 years reflecting the expected future value.

Revenue and operating income of Steinfurt included in our consolidated results of operations for 2018 totaled $23.1

million and $2.4 million, respectively. The following table summarizes annual unaudited pro forma financial information as
if the acquisition occurred as of January 1, 2017:

In thousands, except per share

Pro forma
Net sales
Income from continuing operations
Income per share from continuing operations

38

2018

2017

(unaudited)

$

$

937,043
1,585
0.04

904,430
1,396
0.03

During 2018, we incurred legal, professional and advisory costs directly related to the Steinfurt acquisition totaling
$5.1 million. For purposes of presenting the above pro forma financial information, such costs have been eliminated. All such
costs are presented under the caption “Selling, general and administrative expenses” in the accompanying consolidated
statements of income (loss).

This unaudited pro forma financial information presented in this section is not necessarily indicative of what the
operating results would have been had the acquisition been completed at the beginning of the respective period nor is it
indicative of future results.

4.

DISCONTINUED OPERATIONS

On October 31, 2018, we completed the sale of the Specialty Papers business on a cash free and debt free basis to
Pixelle Specialty Solutions LLC, an affiliate of Lindsay Goldberg (the “Purchaser”) for $360 million. The sale of the business
was in connection with the strategic focus on our more growth oriented Composite Fibers and Airlaid Materials. Cash
proceeds from the sale were approximately $323 million reflecting estimated purchase price adjustments as of the closing
date and the assumption by the Purchaser of approximately $38 million in retiree healthcare liabilities. In addition, the
Purchaser assumed approximately $210 million of pension liabilities relating to Specialty Papers’ employees and received
approximately $274 million of related assets from the Company’s qualified pension plan. We recognized a $144.1 million
pre-tax loss, presented below as an “Impairment charge” for the amount by which Specialty Papers’ carrying value exceeded
net proceeds from the sale.

In connection with the sale of Specialty Papers, we entered into a Transition Services Agreement with Purchaser

pursuant to which we agreed to provide various back-office and information technology support until the business is fully
separated from us, which was completed in the third quarter of 2019.

The following table sets forth a summary of discontinued operations included in the consolidated statements of income

(loss):

In thousands
Net sales
Energy and related sales, net

Total revenues
Costs of products sold

Gross profit

Selling, general and administrative expenses
(Gains) losses on dispositions of plant, equipment and timberlands, net

Operating income (loss)
Non-operating income (expense)

Interest expense
Other, net
Impairment charge

Income (loss) before income taxes
Income tax provision (benefit)

Income (loss) from discontinued operations

$

2019

$

$

Year ended
December 31
2018
661,186
3,388
664,574
637,472
27,102
32,465
(423)
(4,940)

— $
—
—
—
—
109
—
(109)

—
1,393
—
1,284
(2,386)
3,670

$

(6,942)
(51,236)
(144,124)
(207,242)
(30,086)
(177,156) $

2017
790,935
5,126
796,061
751,135
44,926
22,538
219
22,169

(4,455)
2,154
—
19,868
6,342
13,526

The amounts presented above are derived from the segment reporting for Specialty Papers adjusted to include certain

retirement benefit costs and to exclude corporate shared services costs which are required to remain in continuing operations.
Interest expense was allocated to discontinued operations based on borrowings under the revolving credit facility required to
be repaid with proceeds from the sale of Specialty Papers. The amounts set forth above in 2018 under the caption “Other,
net” include the recognition of a $54.0 million, pre-tax, curtailment and settlement charge for pension and other post-
employment benefits related to the transfer and discontinuance of future service of Specialty Papers’ employees.

GLATFELTER 2019 FORM 10-K

39

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

consolidated statements of cash flows:

In thousands
Net cash (provided) used by operating activities
Net cash (used) provided by investing activities
Net cash provided by financing activities
Change in cash and cash equivalents from discontinued operations

2019

2018

2017

$

$

(10,942) $
(8,221)
—
(19,163) $

38,803
308,120
125
347,048

$

$

51,028
(51,511)
4,875
4,392

Year ended
December 31

5.

GAIN ON DISPOSITIONS OF PLANT, EQUIPMENT AND TIMBERLANDS

During 2019, 2018 and 2017, we completed the following sales of assets:

Dollars in thousands
2019
Timberlands
Other

Total

2018
Timberlands
Other

Total

2017
Timberlands
Other

Total

6.

REVENUE

Acres

Proceeds

Gain (loss)

1,996 $
n/a

$

1,918 $
n/a

$

332 $
n/a

$

1,705
493
2,198

3,414
48
3,462

209
9
218

$

$

$

$

$

$

1,572
488
2,060

3,225
31
3,256

188
9
197

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

2019

Year ended December 31
2018

2017

$

$

278,786
81,679

79,535
46,392
35,274

521,666

207,301

70,149

66,486

25,233

17,266

19,572

$

279,515
103,686
81,281
52,174
38,213
554,869

195,686
45,375

21,600

19,734
16,010

13,012

$

406,007
927,673

$

311,417
866,286

$

268,474
103,011
76,991
57,088
38,696
544,260

179,671
29,519

6,707

14,425
13,029

12,751

256,102
800,362

In thousands
Composite Fibers

Food & beverage
Wallcovering
Technical specialties and other
Metallized
Composite laminates

Airlaid Materials

Feminine hygiene

Specialty wipes

Table top

Adult incontinence

Home care

Other

TOTAL

40

In thousands

Composite Fibers

2019

Year ended December 31
2018

2017

Europe, Middle East and Africa

$

312,218

$

354,978

$

Americas

Asia Pacific

Airlaid Materials

Europe, Middle East and Africa

Americas

Asia Pacific

TOTAL

7.

EARNINGS PER SHARE

132,845

76,603
521,666

220,924

179,067

6,016
406,007
927,673

$

113,546

86,345
554,869

163,157

144,913

3,347
311,417
866,286

$

$

349,336

107,064

87,860
544,260

132,480

122,379

1,243
256,102
800,362

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

In thousands, except per share
Net income (loss)
Weighted average common shares
outstanding used in basic EPS

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

Income (loss) per share
Continuing operations
Discontinued operations

Year ended December 31

2019

2018

2017

$

(21,541)

$

(177,604) $

7,914

44,132

43,768

43,609

—

—

830

44,132

43,768

44,439

$

(0.57)
0.08

$

(0.01) $
(4.05)

(0.13)
0.30

The following table sets forth the potential common shares outstanding for stock options that were not included in the

computation of diluted EPS for the period indicated, because their effect would be anti-dilutive:

In thousands
Potential common shares

Year ended December 31

2019

1,233

2018

2017

1,379

610

GLATFELTER 2019 FORM 10-K

41

8.

ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table sets forth details of the changes in accumulated other comprehensive income (losses) for the three

years ended December 31, 2019, 2018 and 2017.

In thousands

Balance at January 1, 2019

Other comprehensive income (loss) before
reclassifications (net of tax)
Amounts reclassified from accumulated

other comprehensive income (net of tax)

Net current period other comprehensive income (loss)

Balance at December 31, 2019

Currency
translation
adjustments
$ (69,622) $

Unrealized
gain (loss)
on cash
flow hedges
2,199

Change in
other
postretirement
defined
benefit
plans

Change in
pensions

$ (71,431) $

1,414

Total
$ (137,440)

(6,724)

6,800

8,730

826

9,632

—
(6,724)
$ (76,346) $

(4,683)
2,117
4,316

$

55,448
64,178
(7,253) $

(853)
(27)
1,387

49,912
59,544
$ (77,896)

Balance at January 1, 2018

$ (41,839) $

(4,092) $ (98,295) $

Amount reclassified for adoption of ASU No. 2018-02

Balance as adjusted at January 1, 2019

(41,839)

(4,092)

(23,297)
(121,592)

3,551
999
4,550

$ (140,675)
(22,298)
(162,973)

Other comprehensive income (loss) before
reclassifications (net of tax)
Amounts reclassified from accumulated

other comprehensive income (net of tax)

Net current period other comprehensive income (loss)

Balance at December 31, 2018

(27,783)

2,641

(9,267)

2,979

(31,430)

—
(27,783)
$ (69,622) $

3,650
6,291
2,199

59,428
50,161
$ (71,431) $

(6,115)
(3,136)
1,414

56,963
25,533
$ (137,440)

Balance at January 1, 2017

$ (100,448) $

1,500

$ (110,656) $

4,998

$ (204,606)

Other comprehensive income (loss) before
reclassifications (net of tax)
Amounts reclassified from accumulated

other comprehensive income (net of tax)

Net current period other comprehensive income (loss)

Balance at December 31, 2017

58,609

(5,182)

2,981

(1,099)

55,309

—
58,609
$ (41,839) $

(410)
(5,592)
(4,092) $ (98,295) $

9,380
12,361

(348)
(1,447)
3,551

8,622
63,931
$ (140,675)

42

The following table sets forth the amounts reclassified from accumulated other comprehensive income (losses) for the

years indicated.

In thousands

Description
Cash flow hedges (Note 19)
(Gains) losses on cash flow hedges
Tax expense (benefit)

Net of tax

Year ended December 31
2018

2017

2019

Line Item in Statements of Income

$

$

(6,468)
1,785
(4,683)

$

5,020
(1,370)
3,650

(532)
122
(410)

Costs of products sold
Income tax provision (benefit)

Retirement plan obligations (Note 11)
Amortization of defined benefit pension plan items

Prior service costs
Actuarial losses

Discontinued operations amortization of defined
benefit pension plans
Pension curtailment and settlement
Pension settlement

Tax benefit

Net of tax

Amortization of defined benefit other plan items

Prior service costs
Actuarial losses
Discontinued operations amortization of defined
benefit other plans

Other benefit plan settlement

Tax expense

Net of tax

Total reclassifications, net of tax

$

9.

INCOME TAXES

216
2,842

—
—
75,326
78,384
(22,936)
55,448

(10)
(852)

—
—
(862)
9
(853)
49,912

$

39
7,050

6,990
61,917
—
75,996
(16,568)
59,428

—
(261)

(575)
(7,949)
(8,785)
2,670
(6,115)
56,963

$

21
7,109

7,975
—
—
15,105
(5,725)
9,380

—
(13)

(547)
—
(560)
212
(348)
8,622

Other, net
Other, net

Discontinued operations
Discontinued operations
Pension settlement

Income tax provision (benefit)

Other, net
Other, net

Discontinued operations

Income tax provision (benefit)

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 consolidated financial
statements or tax returns. The effects of income taxes are measured based on enacted tax laws and rates.

The provision for (benefit from) income taxes from continuing operations consisted of the following:

In thousands
Current taxes
Federal
State
Foreign

Deferred taxes and other

Federal
State
Foreign

Income tax provision (benefit)

Year ended December 31

2019

2018

2017

$

$

(419)
134
14,014
13,729

(20,448)
(4,105)
1,582
(22,971)
(9,242)

$

$

—
442
14,985
15,427

(9,242)
251
1,287
(7,704)
7,723

$

$

(1,323)
107
14,292
13,076

5,375
2,652
3,976
12,003
25,079

The following are the domestic and foreign components of pretax income (loss) from continuing operations:

In thousands
United States
Foreign

Total pretax income (loss)

Year ended December 31

2019

2018

$

$

(107,455)
73,002
(34,453)

$

$

(59,264)
66,539
7,275

2017
(60,788)
80,255
19,467

$

$

GLATFELTER 2019 FORM 10-K

43

The following table sets forth a reconciliation of the statutory federal income tax rate to our actual effective tax rate for

continuing operations.

Federal income tax provision at statutory rate
State income taxes, net of federal income tax benefit
Foreign income tax rate differential
Tax effect of tax credits
Provision for (resolution of) tax matters
Rate changes due to enacted legislation
State benefit due to enacted legislation
Effect of U.S. tax law change (1)
Global Intangible Low-taxed Income
Stock-based compensation
Nondeductible officer's compensation
Valuation allowance
Pension termination, settlement and related
Other
Actual tax rate

The sources of deferred income taxes were as follows at December 31:

In thousands
Reserves
Environmental
Compensation
Post-retirement benefits
Research & development expenses
Inventories
Tax carryforwards
Other

Deferred tax assets
Valuation allowance

Net deferred tax assets

Property
Intangible assets
Pension
Other

Deferred tax liabilities

Net deferred tax liabilities

Year ended December 31

2019

2018

2017

21.0%
3.7
2.0
8.2
(8.0)
0.1
—
—
(9.4)
(1.0)
(0.7)
4.3
5.0
1.6
26.8%

21.0%
(15.9)
(18.9)
1.3
46.5
7.2
—
(7.5)
33.8
10.0
5.2
15.7

7.8
106.2%

2019

2018

$

$

991
5,696
3,287
1,619
6,439
(91)
25,227
1,117
44,285
(28,485)
15,800
(65,027)
(19,355)
(6,198)
(1,577)
(92,157)
(76,357)

$

$

35.0%
(1.8)
(58.0)
(20.1)
27.8
(1.3)
(8.2)
107.5
—
(0.2)
—
47.0

1.1
128.8%

3,720
10,795
3,957
2,133
—
(35)
21,843
3,506
45,919
(30,029)
15,890
(66,426)
(22,231)
(3,890)
(1,935)
(94,482)
(78,592)

Non-current deferred tax assets and liabilities are included in the following balance sheet captions:

In thousands
Other assets

Deferred income taxes

December 31

$

2019

2018

17

$

76,374

59

78,651

At December 31, 2019 we had federal, state and foreign tax net operating loss (“NOL”) carryforwards of $62.4 million,
$199.3 million and $3.3 million, respectively. These NOL carryforwards are available to offset future taxable income, if any.
$30.1 million of the federal NOL carryforward expires in 2037; the remainder does not expire. The state NOL carryforwards
expire at various times and in various amounts beginning in 2020 and through 2039. Certain foreign NOL carryforwards
begin to expire after 2023.

The federal, state and foreign NOL carryforwards on the income tax returns filed included unrecognized tax benefits
taken in prior years. The NOLs for which a deferred tax asset is recognized for financial statement purposes in accordance
with ASC 740 are presented net of these unrecognized tax benefits.

In addition, we had various federal tax credit carryforwards totaling $12.5 million which begin to expire after 2036,

state tax credit carryforwards totaling $1.4 million, which begin to expire in 2020, and foreign investment tax credits of $2.5
million which begin to expire after 2027.

44

As of December 31, 2019 and 2018, we had a valuation allowance of $28.5 million and $30.0 million, respectively,

against net deferred tax assets, primarily due to uncertainty regarding the ability to utilize federal, state and foreign tax NOL
carryforwards and certain state tax credits. 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 available evidence indicated it is more likely than not that the deferred tax
assets will not be realized.

Tax credits and other incentives reduce tax expense in the year the credits are claimed. We recorded tax credits of $2.8

million, $(0.1) million and $3.9 million in 2019, 2018 and 2017, respectively, related to research and development credits.

At December 31, 2019 and 2018, unremitted earnings of subsidiaries outside the United States deemed to be

indefinitely reinvested totaled $62.0 million and $29.0 million, respectively. Because the unremitted earnings of subsidiaries
are deemed to be indefinitely reinvested as of December 31, 2019 and because we have no need for or plans to repatriate such
earnings, no deferred tax liability has been recognized in our consolidated financial statements.

As of December 31, 2019, 2018 and 2017, we had $30.5 million, $29.6 million and $26.9 million of gross

unrecognized tax benefits, respectively. As of December 31, 2019, if such benefits were to be recognized, approximately
$19.6 million would be recorded as a component of income tax expense, thereby affecting our effective tax rate.

A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as

follows:

In millions
Balance at January 1

Increases in tax positions for prior years
Decreases in tax positions for prior years
Acquisition related:

Purchase Accounting

Increases in tax positions for current year
Settlements
Lapse in statutes of limitation

Balance at December 31

2019

2018

2017

$

$

29.6
2.8
(2.9)

—
4.6
(0.3)
(3.3)
30.5

$

$

26.9
0.3
(1.0)

0.3
4.0
(0.2)
(0.7)
29.6

$

$

14.2
1.7
—

—
11.9
—
(0.9)
26.9

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 tax years that remain subject to examination by major
jurisdiction:

Jurisdiction
United States
Federal
State
Canada(1)
Germany(1)
France
United Kingdom
Philippines

Open Tax Years

Examinations not
yet initiated

Examination in
progress

2016 - 2019
2015 - 2019
2012 - 2019
2016 - 2019
2018 - 2019
2018 - 2019
2019

N/A
2015 - 2018
N/A
N/A
N/A
N/A
2016 - 2018

(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 expiration 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 $1.6 million. The majority of this range
relates to tax positions taken in Canada and the U.S.

GLATFELTER 2019 FORM 10-K

45

We recognize interest and penalties related to uncertain tax positions as income tax expense. The following table

summarizes information related to interest and penalties on uncertain tax positions:

In millions
Accrued interest payable
Interest expense (income)
Penalties

10.

STOCK-BASED COMPENSATION

As of or for the year ended
December 31,

2019

2018

$

$

0.4
(0.7)
–

2017

$

0.8
0.3
–

1.1
0.3
–

The P. H. Glatfelter Amended and Restated Long Term Incentive Plan (the “LTIP”) provides for the issuance 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. As of December 31, 2019, there were
2,060,034 shares of common stock available for future issuance under the LTIP.

Pursuant to the terms of the LTIP, we have issued to eligible participants restricted stock units, performance share

awards and stock only stock appreciation rights (“SOSARs”).

Restricted Stock Units (“RSUs”) and Performance Share Awards (“PSAs”)

Awards of RSUs and PSAs are

made under our LTIP. The vesting of RSUs is generally based on the passage of time, generally over a three -year period or
in certain instances the RSUs 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.
In addition, beginning in 2018, PSA awards include a modifier based on the three-year total shareholder return relative to a
broad market index. 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 the past three years:

Units
Balance at January 1,
Granted
Forfeited
Shares delivered
Balance at December 31,

2019

2018

2017

756,786
600,820
(223,677)
(237,466)
896,463

929,386
435,542
(112,501)
(495,641)
756,786

679,038
375,435
(96,306)
(28,781)
929,386

Compensation expense

$

3,543

$

5,971

$

4,228

2019

2018

2017

The amount granted in 2019, 2018 and 2017 includes 218,422, 184,834 and 163,274 PSAs, respectively, exclusive of

reinvested dividends. The weighted average grant date fair value per unit for awards in 2019, 2018 and 2017 was $15.86,
$20.20 and $22.32, respectively. As of December 31, 2019, unrecognized compensation expense for outstanding RSUs and
PSAs totaled $6.3 million. The weighted average remaining period over which the expense will be recognized is 2.1 years.

Stock Only Stock Appreciation Rights The following table sets forth information related to outstanding SOSARS:

2019

2018

2017

Wtd Avg
Exercise Price
18.08
$
—
15.56
21.06
20.05
20.05

$

Shares
2,334,742
—
(596,360)
(446,435)
1,291,947
1,291,947
1,291,947

Wtd Avg
Exercise Price
17.87
$
—
13.31
21.09
18.08
18.13

$

Shares
2,561,846
—
(158,545)
(68,559)
2,334,742
2,134,297
2,334,742

Wtd Avg
Exercise Price
17.64
$
—
13.76
18.46
17.87
17.56

$

Shares
2,736,616
—
(157,140)
(17,630)
2,561,846
2,011,075
2,561,846

$

40

$

317

$

1,266

SOSARS

Outstanding at January 1,
Granted
Exercised
Canceled / forfeited
Outstanding at December 31,

Exercisable at December 31,
Vested and expected to vest

Compensation expense

(in thousands)

46

Under terms of the SOSAR, the recipients receive the right to receive 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. The SOSARs vest ratably over a three year period. No SOSARs were issued during 2019, 2018 or
2017. As of December 31, 2019, the intrinsic value of SOSARs vested and expected to vest totaled $1.2 million and the
remaining weighted average contractual life of outstanding SOSARs was 4.6 years.

11. RETIREMENT PLANS AND OTHER POST-RETIREMENT BENEFITS

Prior to May 2019, we provided non-contributory retirement benefits under both funded and unfunded plans to all U.S.

employees and to certain non-U.S. employees in Germany. As discussed in more detail below, we terminated our qualified
pension plan effective June 30, 2019 and replaced the benefits with an enhanced 401(k) defined contribution plan.
Participation and benefits under the plans are based upon the employees’ date of hire. U.S. benefits accrued under the
terminated pension plan was based on a final average pay formula or cash balance formula for salaried employees.

We froze qualified pension plan benefits as of May 31, 2019 and terminated the plan June 30, 2019. During 2019, all
plan liabilities were settled by either a lump sum distribution or assumed by a third-party in exchange for a transfer of assets
from the pension plan trust fund. After giving effect to these transactions, we recorded a $309.5 million reduction in both the
projected benefit obligation and the plan assets. In addition, in accordance with pension plan settlement accounting, we
recorded a $75.3 million settlement charge reflecting the recognition of amounts previously included in accumulated other
comprehensive income.

As of December 31, 2019, $53.4 million of assets remain in the pension trust and is included in cash and cash
equivalents in the accompanying consolidated balance sheet based on the nature of the underlying assets. In 2020, after a
portion of the assets are transferred to a trust fund to be used to make contributions over the next seven years to the 401(k)
plan and satisfying excise tax obligations, approximately $32 million is expected to revert to us and will be available for
general corporate purposes.

In December 2019, our Board of Directors approved the freezing of benefit accruals in the non-qualified pension plan

for active participants effective December 31, 2019. As of January 1, 2020, each active participant’s frozen non-qualified
pension benefit will be transferred to a newly approved Deferred Compensation Plan non-qualified benefit plan and will earn
interest credits going forward.

The Deferred Compensation Plan also provides for employer contributions and, in the future, the Plan may provide for
elective employee deferrals. Under the Deferred Compensation Plan, participants will be eligible to receive annual Company
contributions that such participants would have received under the P. H. Glatfelter 401(k) Savings Plan but for certain
limitations imposed by the Internal Revenue Code on 401(k) plan contributions (“Company Contributions”). Unless
otherwise determined by the Compensation Committee, Company Contributions under the Deferred Compensation Plan will
not exceed 7% of a participant’s annual eligible compensation that is in excess of the Internal Revenue Code compensation
limit for 401(k) plans.

As of December 31, 2019, the remaining non-contributory pension plans are unfunded non-qualified plans.

Non-U.S. benefits are based, in the case of certain plans, on average salary and years of service and, in the case of other

plans, on a fixed amount for each year of service. U.S. plan provisions and funding meet the requirements of the Employee
Retirement Income Security Act of 1974. We use a December 31-measurement date for all of our defined benefit plans.

We also provide certain health care benefits to eligible U.S.-based retired employees. Participation in the plan is closed

to any salaried employees hired after December 31, 2006. These benefits include a comprehensive medical plan for retirees
prior to age 65 and a fixed payment to certain retirees over age 65 to help defray the costs of Medicare. Claims are paid as
reported.

In connection with the sale of the Specialty Papers business, the buyer assumed $210 million of pension liabilities for

all employees active as of October 31, 2018, and we agreed to transfer pension assets of approximately $274 million. In
addition, the buyers assumed $38 million of retiree healthcare liabilities related to employees active as of the October 31,
2018. We retained the pension retiree healthcare liabilities for all retired and deferred vested Specialty Paper employees.

GLATFELTER 2019 FORM 10-K

47

All information presented in the following tables represents amounts attributable to continuing operations and all prior

year data has been restated.

In millions

Change in Benefit Obligation
Balance at beginning of year
Service cost
Interest cost
Plan amendments
Participant contributions
Transfers from Discontinued Operations
Actuarial (gain)/loss
Special termination benefits
Benefits paid
Curtailment
Settlement/transfer
Effect of currency rate changes

Balance at end of year

Change in Plan Assets
Fair value of plan assets at beginning of year
Actual return on plan assets
Total contributions
Transfers from Discontinued

Operations
Benefits paid
Settlement/transfer
Fair value of plan assets at end

of year

Funded status at end of year

Pension Benefits

2019

2018

Other Benefits

2019

2018

$

$

$

$

$

$

$

332.2
1.3
11.5
(0.2)
—
4.3
29.2
1.3
(22.3)
(1.9)
(309.5)
(0.2)
45.7

333.2
44.1
2.2

5.7
(22.3)
(309.5)

$

$

$

347.0
2.3
13.3
0.1
—
25.7
(10.6)
—
(45.1)
—
—
(0.5)
332.2

372.8
(22.4)
2.2

25.7
(45.1)
—

53.4
7.7

$

333.2
1.0

$

9.2
—
0.3
—
0.9
—
(0.3)
—
(3.0)
(0.6)
—
—
6.5

$

$

— $
—
3.0

—
(3.0)
—

—
(6.5)

$

9.7
0.1
0.5
—
1.2
4.3
(3.1)
—
(3.5)
—
—
—
9.2

—
—
3.5

—
(3.5)
—

—
(9.2)

Amounts presented under the caption “transfers from discontinued operations” represent the impact of employees

changing their status from what was originally assumed for purposes of accounting for discontinued operations to the final
determination in accordance with the sale agreement.

The fair value of plan assets presented above consist entirely of the amounts discussed above and remaining in the

qualified plan trust account. The non-qualified plans have an unfunded projected benefit obligation of $45.7 million.

Amounts recognized in the consolidated balance sheets consist of the following as of December 31:

In millions

Cash and cash equivalents
Other assets
Current liabilities
Other long-term liabilities
Net amount recognized

Pension Benefits

2019

2018

Other Benefits

2019

2018

$

$

53.4
—
(2.3)
(43.4)
7.7

$

$

— $

43.3
(2.1)
(40.2)
1.0

$

— $
—
(1.4)
(5.1)
(6.5)

$

—
—
(2.4)
(6.8)
(9.2)

The components of amounts recognized as “Accumulated other comprehensive income” consist of the following on a

pre-tax basis:

In millions

Prior service cost/(credit)
Net actuarial loss

Pension Benefits

2019

2018

Other Benefits

2019

2018

$

$

0.1
4.2

$

0.5
90.9

$

0.6
1.4

—
1.9

The accumulated benefit obligation for all defined benefit pension plans was $45.7 million and $324.0 million at

December 31, 2019 and 2018, respectively.

The weighted-average assumptions used in computing the benefit obligations above were as follows:

Discount rate – benefit obligation
Future compensation growth rate

48

Pension Benefits

Other Benefits

2019

2018

2019

2018

2.70%
—

4.34%
2.50

3.11%
—

4.19%
—

The discount rates set forth above were estimated based on the modeling of expected cash flows for each of our benefit

plans and selecting a portfolio of high-quality debt instruments with maturities matching the respective cash flows of each
plan. The resulting discount rates as of December 31, 2019 ranged from 1.22% to 3.25% for pension plans and from 2.93% to
3.25% for other benefit plans.

Information for pension plans with an accumulated benefit obligation in excess of plan assets was as follows:

In millions
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets

Net periodic benefit cost includes the following components:

In millions
Pension Benefits
Service cost
Interest cost
Expected return on plan assets
Amortization of prior service cost
Amortization of actuarial loss
Termination benefits
One-time settlement charge

Total net periodic benefit cost

Other Benefits
Service cost
Interest cost
Amortization of actuarial loss

Total net periodic benefit cost

2019

2018

$

$

45.7
45.7
—

2019

Year Ended December 31
2018

2017

$

$

$

$

1.3
11.5
(13.7)
0.2
2.8
1.3
75.3
78.7

—
0.3
(0.9)
(0.6)

$

$

$

$

2.3
13.3
(21.1)
—
7.1
—
—
1.6

0.1
0.5
(0.3)
0.3

$

$

$

$

42.2
36.6
—

2.0
13.7
(22.2)
—
7.1
—
—
0.6

0.1
0.4
—
0.5

Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) were as follows:

In millions

Pension Benefits
Actuarial (gain) loss
Plan amendments
Recognized prior service costs
Recognized actuarial losses
Total recognized in other comprehensive (income) loss
Total recognized in net periodic benefit cost and

other comprehensive loss

Other Benefits
Actuarial (gain) loss
Amortization of actuarial losses
Total recognized in other comprehensive

(income) loss

Total recognized in net periodic benefit cost and

other comprehensive (income) loss

Year Ended December 31

2019

2018

$

$

$

$

$

$

$

(5.2)
(0.2)
(0.2)
(78.1)
(83.7)

(5.0)

(0.3)
0.9

0.6

-

$

32.9
0.1
—
(7.1)
25.9

27.5

(3.1)
0.3

(2.8)

(2.5)

The weighted-average assumptions used in computing the net periodic benefit cost information above were as follows:

Pension Benefits
Discount rate – benefit expense
Future compensation growth rate
Expected long-term rate of return on plan assets

Other Benefits
Discount rate – benefit expense

2019

Year Ended December 31
2018

2017

4.34%
2.50
4.50

3.85%
3.00
7.25

4.44%
3.00
7.25

4.19%

3.68%

4.18%

To develop the expected long-term rate of return assumption, we considered the historical returns and the future

expected returns for each asset class, as well as the target asset allocation of the pension portfolio.

GLATFELTER 2019 FORM 10-K

49

Assumed health care cost trend rates used to determine benefit obligations at December 31 were as follows:

Health care cost trend rate assumed for next year
Rate to which the cost trend rate is assumed to

decline (the ultimate trend rate)

Year that the rate reaches the ultimate rate

2019

2018

5.60%

4.50
2037

5.90%

4.50
2037

At the end of 2019, assets held in the pension trust consisted entirely of $53.4 million of cash and cash equivalents and
were primarily a Level 1 type. The table below presents the fair values of our benefit plan assets as of December 31, 2018 by
level within the fair value hierarchy, as described in Note 2:

In millions
Fixed income
Cash and equivalents
Total

December 31, 2018

Total

Level 1

Level 2

Level 3

$

$

330.9
2.3
333.2

$

$

41.8
—
41.8

$

$

289.1
2.3
291.4

$

$

—
—
—

Cash Flow Benefit payments expected to be made in 2020 under our non-qualified pension plans and other benefit

plans are summarized below:

In thousands
Nonqualified pension plans
Other benefit plans

The following benefit payments under all pension and other benefit plans are expected to be paid:

In thousands
2020
2021
2022
2023
2024
2025 through 2029

$

Pension Benefits

2,290
2,190
2,134
2,076
2,016
24,071

$

$

2,290
1,453

Other Benefits

1,453
973
698
538
471
1,724

Defined Contribution Plans We maintain 401(k) plans for substantially all U.S. based employees. Employees may

contribute up to 50% of their earnings, subject to certain restrictions. Through the end of May 2019, the Company matched a
portion of the employees’ contribution in cash. Beginning June 1, 2019, the Company’s contribution approximated 7% of the
employee’s eligible earnings. The expense associated with our 401(k) plan was $1.9 million, $0.4 million and $0.3 million in
2019, 2018 and 2017, respectively.

12.

INVENTORIES

Inventories, net of reserves were as follows:

In thousands
Raw materials
In-process and finished
Supplies
Total

13. PLANT, EQUIPMENT AND TIMBERLANDS

Plant, equipment and timberlands at December 31 were as follows:

December 31

2019

2018

$

$

59,164
92,231
39,020
190,415

$

$

50,205
84,894
38,312
173,411

In thousands
Land and buildings
Machinery and equipment
Furniture, fixtures, and other
Accumulated depreciation

Construction in progress
Timberlands, less depletion
Total

$

$

2019

2018

163,066
685,081
152,777
(490,032)
510,892
26,508
21
537,421

$

$

164,002
676,501
152,121
(458,567)
534,057
21,946
41
556,044

As of December 31, 2019 and 2018, we had $4.4 million and $4.8 million, respectively, of accrued capital

expenditures.

50

The following table sets forth amounts of interest expense capitalized in connection with major capital projects:

Interest cost incurred
Interest capitalized
Interest expense

2019

Year Ended December 31
2018

2017

$

$

10,408
—
10,408

$

$

16,005
396
15,609

$

$

15,066
1,749
13,317

14. GOODWILL AND INTANGIBLE ASSETS

The following table sets forth information with respect to goodwill and other intangible assets:

In thousands
Goodwill

Composite Fibers
Airlaid Materials
Total Goodwill

Other Intangible Assets
Composite Fibers

Tradename - nonamortizing
Technology and related
Customer relationships and related

Airlaid Materials
Tradename
Technology and related
Customer relationships and related

Total intangibles

Accumulated amortization

Net intangibles

December 31

2019

2018

$

$

$

$

77,775
73,041
150,816

4,470
38,256
34,445

3,625
18,406
24,385
123,587
(39,852)
83,735

$

$

$

$

79,024
74,439
153,463

4,556
38,813
35,029

4,534
18,014
24,853
125,799
(32,185)
93,614

The change in the gross value of goodwill and intangible assets was primarily due to currency translation adjustments.

Other than goodwill and an indefinite-lived tradename, intangible assets are amortized on a straight-line basis. Customer
relationships are amortized over periods ranging from 10 years to 14 years and technology and related intangible assets are
amortized over periods ranging from 14 years to 20 years. The following table sets forth information pertaining to
amortization of intangible assets:

In thousands
Aggregate amortization expense:

Estimated amortization expense:

2020
2021
2022
2023
2024

2019

2018

2017

$

7,986

$

5,860

$

4,773

7,864
7,482
7,368
7,368
7,368

The remaining weighted average useful life of intangible assets was 11.4 years at December 31, 2019.

15. OTHER LONG-TERM ASSETS

Other long-term assets consist of the following:

In thousands
Pension
Right-of-use asset operating leases
Other

Total

December 31

2019

2018

$

$

—
11,701
22,789
34,490

$

$

43,341
—
24,006
67,347

GLATFELTER 2019 FORM 10-K

51

16. OTHER CURRENT LIABILITIES

Other current liabilities consist of the following:

In thousands
Accrued payroll and benefits
Other accrued compensation and retirement benefits
Income taxes payable
Accrued rebates
Other accrued expenses

Total

17.

LEASES

December 31

2019

2018

$

$

19,369
5,826
2,075
3,852
31,650
62,772

$

$

15,898
6,064
2,147
2,889
45,599
72,597

We enter into a variety of arrangements in which we are the lessee for the use of automobiles, forklifts and other
production equipment, production facilities, warehouses and office space. 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 currently do not have any finance leases.

Operating lease right of use (“ROU”) assets and operating lease liabilities are recognized based on the present value of
the future minimum lease payments over the lease term at commencement date. ROU assets also include any initial direct
costs incurred and any lease payments made at or before the lease commencement date, less lease incentives received. We
use our incremental borrowing rate based on information available at the commencement date in determining the lease
liabilities as our leases generally do not provide an implicit rate. Lease terms 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.

We also have arrangements with both lease and non-lease components. We elected the practical expedient not to

separate non-lease components from lease components for our real estate and automobile leases and the lack of need to
reassess classification. We elected to apply the short-term lease measurement and recognition exemption in which ROU
assets and lease liabilities are not recognized for arrangements less than twelve months in duration.

At December 31, 2019, the ROU assets and corresponding lease obligation included in our consolidated balance sheet
totaled $11.7 million and had a weighted average remaining maturity of 34 months. The weighted average discount rate used
to value the leases at inception was 2.92%. We recognized $4.5 million of operating lease expense during the 2019.

The following table sets forth required minimum lease payments for the periods indicated:

$

December 31

2019

4,897
3,501
2,022
700
292
67

In thousands
2020
2021
2022
2023
2024
Thereafter

52

18. LONG-TERM DEBT

Long-term debt is summarized as follows:

In thousands
Revolving credit facility, due Mar. 2020
Revolving credit facility, due Feb. 2024
5.375% Notes, due Oct. 2020
Term loan, due Feb. 2024
2.40% Term Loan, due Jun. 2022
2.05% Term Loan, due Mar. 2023
1.30% Term Loan, due Jun. 2023
1.55% Term Loan, due Sep. 2025

Total long-term debt

Less current portion
Unamortized deferred issuance costs
Long-term debt, net of current portion

December 31

2019

2018

$

$

—
84,255
—
240,969
4,012
19,487
5,617
7,915
362,255
(22,940)
(2,396)
336,919

$

$

114,495
—
250,000
—
5,725
25,972
7,361
9,470
413,023
(10,785)
(1,276)
400,962

On February 8, 2019, we entered into an amended and restated $400 million Revolving Credit Facility and a €220
million Term Loan with a consortium of banks (together, the “Credit Agreement”). The proceeds of the Term Loan due Feb.
2024 were used to redeem in its entirety the 5.375% Notes. The principal amount of the Term Loan amortizes in consecutive
quarterly installments of principal, with each such quarterly installment to be in an amount equal to 1.25% of the Term Loan
funded, commencing on July 1, 2019 and continuing quarterly thereafter. The €220 million Term Loan is designated as a net
investment hedge of our Euro functional currency foreign subsidiaries. During 2019, we recognized a pre-tax gain of $1.6
million from changes in currency exchange rates through Other Comprehensive Income (Loss).

For all US dollar denominated borrowings under the Revolving Credit Facility, 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 rate plus 50 basis points;
or iii) the Euro-rate plus 100 basis points plus an applicable spread over either i), ii) or iii) ranging from 12.5 basis points to
100 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”); or (b) the Euro-rate plus an applicable
margin ranging from 112.5 basis points to 200 basis points based on the Company’s leverage ratio and the Corporate Credit
Rating. For non-US dollar denominated borrowings, the borrowing rate is, at our option, based on (b) above or for Euro
denominated borrowings, the Euro Interbank Offering Rate (“EURIBOR”) plus an applicable margin ranging from 112.5
basis points to 200 basis points based on the Company’s leverage ratio and the Corporate Credit Rating.

In October 2019, we entered into a €180 million notional value floating-to-fixed interest rate swap agreement with

certain financial institutions. Under the terms of the swap, we will pay a fixed interest rate of the applicable margin plus
0.0395% on €180 million of the underlying variable rate term loan. We will receive the greater of 0.00% or EURIBOR.

The Credit 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. We are also
required to comply with specified financial tests and ratios including: i) maximum net debt to EBITDA ratio (the “leverage
ratio”); and ii) a consolidated EBITDA to interest expense ratio. The most restrictive of our covenants is a maximum leverage
ratio of 4.0x provided that such ratio increases to 4.5x during the period of four fiscal quarters immediately following a
material acquisition such as Steinfurt. As of December 31, 2019, the leverage ratio, as calculated in accordance with the
definition in our Credit Agreement, was 2.2x. 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.

All remaining principal outstanding and accrued interest under the Credit Agreement will be due and payable on

February 8, 2024.

GLATFELTER 2019 FORM 10-K

53

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
Borrowing date

Apr. 11, 2013
Sep. 4, 2014
Oct. 10, 2015
Apr. 26, 2016
May 4, 2016

Original
Principal

Interest
Rate

Maturity

€

42,700
10,000
2,608
10,000
7,195

2.05%
2.40%
1.55%
1.30%
1.55%

Mar. 2023
Jun. 2022
Sep. 2025
Jun. 2023
Sep. 2025

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, will be calculated by reference to our Credit Agreement.

Aggregated unamortized deferred debt issuance costs incurred in connection with all of our outstanding debt totaled

$2.4 million at December 31, 2019. The deferred costs are being amortized on a straight-line basis over the life of the
underlying instruments. Amortization expense related to deferred debt issuance costs totaled $1.6 million in 2019.

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

2020
2021
2022
2023
2024
Thereafter

$

22,940
22,940
22,137
16,035
277,173
1,030

P. H. Glatfelter Company guarantees all debt obligations of its subsidiaries. All such obligations are recorded in these

consolidated financial statements.

As of December 31, 2019 and 2018, we had $7.3 million and $5.2 million, respectively, of letters of credit issued to us

by certain financial institutions. The letters of credit, which reduce amounts available under our 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.

19. FAIR VALUE OF FINANCIAL INSTRUMENTS

The amounts reported on the consolidated balance sheets for cash and cash equivalents, accounts receivable and short-

term debt approximate fair value. The following table sets forth the carrying value and fair value of long-term debt as of
December 31:

In thousands
Variable rate debt
Fixed-rate bonds
Term loan, due Feb. 2024
2.40% Term loan
2.05% Term loan
1.30% Term Loan
1.55% Term loan

Total

2019

2018

Carrying
Value

Fair
Value

Carrying
Value

Fair
Value

$

$

84,255
—
240,969
4,012
19,487
5,617
7,915
362,255

$

$

84,255
—
240,969
4,076
19,764
5,624
7,975
362,663

$

$

114,495
250,000
—
5,725
25,972
7361
9,470
413,023

$

$

114,495
249,010
—
5,836
26,346
7,341
9,453
412,481

The values set forth above are based on observable inputs and other relevant market data (Level 2). The fair value of

financial derivatives is set forth below in Note 20.

54

20. 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 flow hedges”; 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”; 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 over a maximum of eighteen months. Currency forward contracts involve fixing
the EUR-USD exchange rate or USD-CAD for delivery of a specified amount of foreign currency on a specified date.

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. 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 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.

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
Derivative
Sell/Buy - sell notional
Philippine Peso / British Pound

Euro / British Pound

Philippine Peso / Euro

U.S. Dollar / Euro

U.S. Dollar / Canadian Dollar

Sell/Buy - buy notional
Euro / Philippine Peso
British Pound / Philippine Peso
Euro / U.S. Dollar
U.S. Dollar / Canadian Dollar
Canadian Dollar / U.S. Dollar
British Pound / Euro

December 31

2019

2018

—

17,702

—

5,347

1,523

1,039,432
1,077,871
82,317
34,094
1,523

—

13,140

15,250

16,446

88

—

1,069,006
980,137
76,417
35,154
—

216

These contracts have maturities of eighteen months or less.

Derivatives Not Designated as Hedging Instruments - Foreign Currency Hedges We also enter 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 consolidated statements of income (loss) under the caption “Other, net.”

In thousands
Derivative
Sell/Buy - sell notional
U.S. Dollar / British Pound
British Pound / Euro

Sell/Buy - buy notional
Euro / U.S. Dollar
British Pound / Euro

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

December 31

2019

2018

25,500
3,000

8,000
7,000

25,500
2,000

11,000
8,000

GLATFELTER 2019 FORM 10-K

55

Fair Value Measurements

The following table summarizes the fair values of derivative instruments as of December 31 for the year indicated and

the line items in the accompanying consolidated balance sheets where the instruments are recorded:

In thousands

Balance sheet caption
Designated as hedging:
Forward foreign currency exchange contracts
Not designated as hedging:
Forward foreign currency exchange contracts

December 31

December 31

2019

2018

2019

2018

Prepaid Expenses
and Other
Current Assets

Other Current
Liabilities

$

$

4,314

566

$

$

4,381

103

$

$

34

205

$

$

1,548

122

The amounts set forth in the table above represent the net asset or liability giving effect to rights of offset with each

counterparty.

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 consolidated statements of income (loss) where
the results are recorded:

In thousands
Designated as hedging:
Forward foreign currency exchange contracts:
Effective portion – cost of products sold

Ineffective portion – other – net

Not designated as hedging:
Forward foreign currency exchange contracts:

Other – net

2019

Year ended December 31
2018

2017

$

$

6,468
—

300

$

$

(5,020)

$

138

(1,419)

$

532

182

882

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 three
levels of the fair value hierarchy are described in Note 2.

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 accompanying 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.”

A rollforward of fair value amounts recorded as a component of accumulated other comprehensive income is as

follows:

In thousands
Balance at January 1,
Deferred (losses) gains on cash flow hedges
Reclassified to earnings

Balance at December 31,

2019

2018

$

$

3,004
9,323
(6,468)
5,859

$

$

(5,640)
3,624
5,020
3,004

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

Credit risk related to derivative activity arises in the event a 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.

56

21.

SHAREHOLDERS’ EQUITY

The following table summarizes outstanding shares of common stock:

In thousands
Shares outstanding at beginning of year
Treasury shares issued for:
Restricted stock awards
Employee stock options exercised

Shares outstanding at end of year

Year ended December 31

2019

2018

2017

43,959

188
101
44,248

43,614

304
41
43,959

43,550

28
36
43,614

22. COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS

Contractual Commitments The following table summarizes the minimum annual payments due on noncancelable operating
leases and other similar contractual obligations having initial or remaining terms in excess of one year:

In thousands
2020
2021
2022
2023
2024
Thereafter

$

Leases

Other

$

5,236
4,090
2,626
1,320
927
4,222

86,722
17,258
14,334
62
5
12

The amounts set forth for above includes commitments for leases that had not commenced as of December 31, 2019.
Other contractual obligations primarily represent minimum purchase commitments under energy supply contracts and other
purchase obligations.

At December 31, 2019, required minimum annual payments due under operating leases and other similar contractual

obligations aggregated $18.4 million and $118.4 million, respectively.

Fox River - Neenah, Wisconsin

Background. We have previously reported that we face significant uncertainties 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 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 Consumer Products, L.P. (“Georgia Pacific”) and NCR
Corporation (“NCR”).

The United States Environmental Protection Agency (“EPA”) has divided the Site into five “operable 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”).

We, with contributions of certain other PRPs, implemented the remedial action in OU1 under a consent decree with the

Governments. That work is complete, other than on-going monitoring and maintenance.

For OU2-5, work has proceeded primarily under a Unilateral Administrative Order (“UAO”) issued in November 2007

by the EPA to us and seven other respondents. The majority of the work in OU 2-5 has been funded or conducted by parties
other than us. Prior to the UAO, we contributed to a project in that area. Since the issuance of the UAO, we have conducted
about $13.4 million of cleanup work under the UAO in 2015 and 2016. The cleanup is expected to continue at least through
2020 and decommissioning thereafter.

In January 2019, we reached an agreement with the United States, the State of Wisconsin, and Georgia-Pacific to
resolve all remaining claims among those parties. Under the Glatfelter consent decree, we settled the United States’ and
Wisconsin’s claims for response costs paid by them before October 2018 and for NRDs. In addition, we are primarily
responsible for long-term monitoring and maintenance in OU2-OU4a and for reimbursement of government oversight costs
paid after October 2018. Finally, we remain responsible for our obligation to continue long-term monitoring and maintenance
under our OU1 consent decree.

Cost estimates. Under terms of the Glatfelter consent decree, in January 2019 we paid $20.5 million to the United

States in satisfaction of the governments’ claims for costs incurred prior to October 2018, and NRDs.

GLATFELTER 2019 FORM 10-K

57

We remain subject to our remaining obligations under the OU1 consent decree, which now consist of long-term
monitoring and maintenance. Furthermore, we are primarily responsible for long term monitoring and maintenance in 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. In the first quarter of 2018, we entered into a fixed-price, 30-
year agreement with a third party for the performance of all of our monitoring and maintenance obligations in OU1 through
OU4a with limited exceptions, such as, for extraordinary amounts of cap maintenance or replacement. Our obligation under
this agreement is included in our total reserve for the 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 December 31, 2019, the balance in the escrow is less than amounts due under the fixed-price
contract by approximately $2 million. We are also have secured the payment of that difference with a letter of credit.

We and WTM I executed documents for the withdrawal of WTM I from the entity we jointly formed for the

performance of the OU1 work and for the release of all claims between us related to the Site. The court overseeing WTM I’s
bankruptcy approved this action in May 2018. As a result, we assumed WTM I’s portion of the OU1 escrow account totaling
approximately $4.7 million, and have recorded a corresponding increase of the same amount to our Fox River reserve for
potential liabilities associated with the river that we believe may ultimately be satisfied with funds from the escrow account.
At December 31, 2019, the combined account balance totaled $8.9 million which is included in the consolidated balance
sheet under the caption “other assets.”

Under the consent decree, we will be responsible for reimbursement of government oversight costs paid from October

2018 and later over approximately the next 30 years. We anticipate that a significant portion of the oversight costs will be
incurred until such time as remediation is completed. Once completed, costs will be an order of magnitude lower in most
years during the period of long-term monitoring and maintenance.

Reserves for the Site. Our reserve for past and future government oversight costs and long-term monitoring and

maintenance is set forth below:

In thousands
Balance at January 1,

Payments
Reserve adjustment
Assumption of WTM I escrow
Accretion
Balance at December 31,

Year ended
December 31

2019

2018

$

$

45,001
(20,805)
(2,509)
—
183
21,870

$

$

43,144
(3,054)
—
4,746
165
45,001

The payments set forth above represent the $20.5 million paid pursuant to the Glatfelter consent decree and for
amounts due under the long-term monitoring and maintenance agreement. Of our total reserve for the Fox River, $9.0 million
is recorded in the accompanying December 31, 2019 consolidated balance sheet under the caption “Environmental liabilities”
and the remaining $12.9 million is recorded under the caption “Other 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 that our costs associated with the Fox River matter could exceed the aggregate amounts accrued by a material
amount.

58

23.

SEGMENT AND GEOGRAPHIC INFORMATION

The following tables set forth profitability and other information by segment:

For the year ended December 31, 2019
In millions
Net sales
Cost of products sold
Gross profit (loss)
SG&A
Gains on dispositions of plant, equipment

and timberlands, net

Total operating income (loss)
Non-operating expense

Income (loss) before income taxes

Supplementary Data

Plant, equipment and timberlands, net
Depreciation, depletion and amortization
Capital expenditures

For the year ended December 31, 2018
In millions
Net sales
Cost of products sold
Gross profit (loss)
SG&A
Gains on dispositions of plant, equipment

and timberlands, net

Total operating income (loss)
Non-operating expense

Income (loss) before income taxes

Supplementary Data
Plant, equipment and timberlands, net
Depreciation, depletion and amortization
Capital expenditures

For the year ended December 31, 2017
In millions
Net sales
Cost of products sold
Gross profit (loss)
SG&A
Loss on dispositions of plant, equipment

and timberlands, net

Total operating income (loss)
Non-operating expense

Income (loss) before income taxes

Supplementary Data
Plant, equipment and timberlands, net
Depreciation, depletion and amortization
Capital expenditures

Composite
Fibers

Airlaid
Materials

Other and
Unallocated

Total

$

$

$

$

$

$

$

$

$

521.7
432.2
89.5
41.6

—
47.9
—
47.9

222.7
26.2
12.0

Composite
Fibers

554.9
462.3
92.6
44.2

—
48.4
—
48.4

233.2
28.3
15.7

Composite
Fibers

544.3
437.6
106.7
44.4

—
62.3
—
62.3

254.0
28.3
15.9

$

$

$

$

$

$

$

$

$

406.0
346.6
59.4
18.3

—
41.1
—
41.1

293.8
21.1
13.7

Airlaid
Materials

311.4
269.3
42.1
12.2

—
29.9
—
29.9

298.2
14.9
21.6

Airlaid
Materials

256.1
216.7
39.4
9.3

—
30.1
—
30.1

235.6
9.6
50.6

$

$

$

$

$

$

$

$

$

—
1.3
(1.3)
35.1

(2.1)
(34.3)
(89.1)
(123.4)

20.9
3.5
2.1

Other and
Unallocated

—
4.3
(4.3)
55.3

(3.3)
(56.3)
(14.7)
(71.0)

24.6
4.3
4.8

Other and
Unallocated

—
2.5
(2.5)
56.8

(0.2)
(59.1)
(13.8)
(72.9)

25.6
4.2
14.3

$

$

$

$

$

$

$

$

$

927.7
780.1
147.5
95.0

(2.1)
54.6
(89.1)
(34.5)

537.4
50.8
27.8

Total

866.3
735.9
130.4
111.7

(3.3)
21.9
(14.7)
7.3

556.0
47.5
42.1

Total

800.4
656.8
143.6
110.5

(0.2)
33.3
(13.8)
19.5

515.2
42.1
80.8

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

Results of individual 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
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 operating 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 operating segments are allocated primarily based on an estimated utilization of support area
services.

GLATFELTER 2019 FORM 10-K

59

Management evaluates results of operations of the 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
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 operating segment 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.

Our Composite Fibers segment serves customers globally and focuses on higher value-added products in the following

markets:

•

Food & Beverage filtration paper primarily used for single-serve coffee and tea products;

• Wallcovering base materials used by the world’s largest wallpaper manufacturers;
•

Technical Specialties a diverse line of specialty papers used in commercial and industrial applications such as
electrical energy storage, homecare, hygiene, and other highly-engineered fiber-based applications;

• Composite Laminate paper used in production of decorative laminates, furniture, and flooring applications; and
• Metallized products used in labels, packaging liners, gift wrap, and other consumer product applications.

The Airlaid Materials segment is a leading global supplier of highly absorbent cellulose-based airlaid nonwoven

materials used in:

•

•

•

•

•

•

feminine hygiene;

specialty wipes;

table top;

adult incontinence;

home care; and

other consumer products.

Disaggregated revenue by market segment and geographic region for Composite Fibers and Airlaid Materials is

presented in Item 8 Financial Statements and Supplementary Data, Note 6 – Revenue.

Approximately 16% of our consolidated net revenue in 2019, 2018 and 2017, were from sales to Procter & Gamble

Company, a customer of the Airlaid Materials segment.

Our net sales to external customers and location of net plant, equipment and timberlands are summarized below. Net

sales are attributed to countries based upon origin of shipment.

2019

2018

2017

In thousands
United States
Germany
United Kingdom
Canada
Other

Total

Net sales

167,887
504,012
70,018
121,789
63,967
927,673

$

$

$

$

Plant,
Equipment and
Timberlands –
Net

105,763
274,146
52,039
72,436
33,037
537,421

Plant,
Equipment and
Timberlands –
Net

109,797
286,839
50,483
74,448
34,477
556,044

Net sales

124,690
483,628
76,053
114,877
67,038
866,286

$

$

$

$

Plant,
Equipment and
Timberlands –
Net

105,663
240,932
55,494
78,220
34,874
515,183

Net sales

89,773
450,668
76,594
120,433
62,894
800,362

$

$

$

$

24. QUARTERLY RESULTS (UNAUDITED)

In thousands,
except per share
First
Second
Third
Fourth

Net sales

$

2019
229,133
235,053
232,515
230,972

$

2018
211,209
215,742
209,855
229,480

Gross Profit

2019

2018

Income (loss) from
continuing operations
2018
2019

Earnings (loss) per share
2018
2019

$

35,617
37,500
38,021
36,404

$

36,561
33,300
29,872
30,674

$

4,603
6,293
8,643
(44,750)

$

$

2,267
1,278
(705)
(3,289)

$

0.10
0.14
0.19
(1.01)

0.05
0.03
(0.02)
(0.08)

60

ITEM 9

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES

None.

ITEM 9A CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our chief executive officer and our chief financial officer have, 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 December 31, 2019, concluded
that, as of the evaluation date, our disclosure controls and procedures were effective.

Internal Control Over Financial Reporting

Management’s report on the Company’s internal control over financial reporting (as defined in Exchange Act Rules

13a-15(f) and 15d-15(f)) and the related report of our independent registered public accounting firm are included in Item 8 –
Financial Statements and Supplementary Data.

Changes in Internal Control over Financial Reporting

During the fourth quarter of 2019, we completed the implementation of a new enterprise resource planning and
manufacturing system for our Airlaid Materials’ Falkenhagen, Germany location. There were no other changes in our internal
control over financial reporting during the three months ended December 31, 2019, that have materially affected or are
reasonably likely to materially affect our internal control over financial reporting.

ITEM 9B OTHER INFORMATION

None.

PART III

ITEM 10 DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors The information with respect to directors required under this Item is incorporated herein by reference to our
Proxy Statement, to be dated on or about March 30, 2020. Our board of directors has determined that, based on the relevant
experience of the members of the Audit Committee, four of the six members are audit committee financial experts as this
term is set forth in the applicable regulations of the SEC.

Executive Officers of the Registrant The information with respect to the executive officers required under this Item is

incorporated herein by reference to “Executive Officers” as set forth in Part I, page 11 of this report.

We have adopted a Code of Business Ethics for the CEO and Senior Financial Officers (the “Code of Business Ethics”)

in compliance with applicable rules of the Securities and Exchange Commission that applies to our chief executive officer,
chief financial officer and our principal accounting officer or controller, or persons performing similar functions. A copy of
the Code of Business Ethics is filed as an exhibit to this Annual Report on Form 10-K and is available on our website, free of
charge, at www.glatfelter.com.

ITEM 11 EXECUTIVE COMPENSATION

The information required under this Item is incorporated herein by reference to our Proxy Statement, to be dated on or

about March 30, 2020.

ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required under this Item is incorporated herein by reference to our Proxy Statement, to be dated on or

about March 30, 2020.

ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required under this Item is incorporated herein by reference to our Proxy Statement, to be dated on or

about March 30, 2020.

ITEM 14 PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required under this Item is incorporated herein by reference to our Proxy Statement, to be dated on or

about March 30, 2020.

Our Chief Executive Officer has certified to the New York Stock Exchange that he is not aware of any violations by

the Company of the NYSE corporate governance listing standards.

GLATFELTER 2019 FORM 10-K

61

PART IV

ITEM 15 EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)

1.

Our Consolidated Financial Statements as follows are included in Part II, Item 8:
Consolidated Statements of Income (Loss) for the years ended December 31, 2019, 2018 and 2017
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2019, 2018 and 2017

i.
ii.
iii. Consolidated Balance Sheets as of December 31, 2019 and 2018
iv. Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017
v.
vi. Notes to Consolidated Financial Statements

Consolidated Statements of Shareholders' Equity for the years ended December 31, 2019, 2018 and 2017

2.

i.

Financial Statement Schedules (Consolidated) included in Part IV:
Schedule II -Valuation and Qualifying Accounts - For each of the three years ended December 31, 2019

(b) Exhibit Index

Exhibit
Number

Description of Documents

Share Purchase Agreement, dated June 19, 2018, by and among Buckeye Holdings GmbH, Georgia-Pacific

Nonwovens LLC and Glatfelter Gernsbach GmbH & Co. KG. ***

First Amendment to Share Purchase Agreement by and among Buckeye Holdings GmbH, Georgia-Pacific
Nonwovens LLC, and Glatfelter Gernsbach GmbH, a wholly-owned subsidiary of P. H. Glatfelter
Company.

Asset Purchase Agreement, dated August 21, 2018, by and between P. H. Glatfelter Company and

Spartan Paper LLC. ***

Amendment No. 1 to the Asset Purchase Agreement, dated as of October 31, 2018, by and between P. H.

Glatfelter Company and Pixelle Specialty Solutions LLC. ***

Articles of Incorporation, as amended through December 20, 2007, filed herewith.

Amended and Restated By-Laws of P. H. Glatfelter Company, as amended, dated February 20, 2020.
Description of securities, filed herewith.

Third Amended and Restated Credit Agreement, dated as of February 8, 2019, by and among the Company,
certain of its subsidiaries as borrowers and certain of its subsidiaries as guarantors and PNC Bank,
National Association, as administrative agent, PNC Capital Markets LLC, JPMorgan Chase Bank, N.A.,
and HSBC Bank USA, N.A., as joint lead arrangers and joint bookrunners, and JPMorgan Chase Bank,
N.A. and HSBC Bank USA, N.A., as co-syndication agents, and Cobank, ACB, Bank of America, N.A.
and Manufacturers and Traders Trust Company, as co-documentation agents.

First Amendment to Third Amended and Restated Credit Agreement, dated September 25, 2019, by and

among P. H. Glatfelter Company, the Lenders party thereto, and PNC Bank, National Association, in its
capacity as administrative agent for the Lenders.

Loan Agreement, dated April 11, 2013, by and among Glatfelter Gernsbach GmbH & Co. KG. and IKB

Deutsche Industriebank AG, Düsseldorf.

Guaranty, dated April 17, 2013, executed by P. H. Glatfelter Company (as Guarantor) in favor of IKB

Deutsche Industriebank AG.

P. H. Glatfelter Company Amended and Restated Long-Term Incentive Plan, as amended and restated

effective February 23, 2017. **

P. H. Glatfelter Company Amended and Restated 2005 Management Incentive Plan, effective January 1,

2015. **

P. H. Glatfelter Company Supplemental Long Term Disability Plan, dated February 25, 2014, between the

registrant and certain employees. **

P. H. Glatfelter Company Supplemental Executive Retirement Plan (amended and restated effective

January 1, 2010). **

P. H. Glatfelter Company Supplemental Management Pension Plan (amended and restated effective

January 1, 2008). **

P. H. Glatfelter Company Supplemental Executive Retirement Plan (Amended and Restated). **

Amendment No. 2019-1 to the P.H. Glatfelter Company Supplemental Management Pension Plan. **
Glatfelter Switzerland Sàrl Retirement Pension Plan for management employees, filed herewith. **

Form of Non-Employee Director Restricted Stock Unit Award Certificate (form effective May 4, 2017). **

10.4

Form of Stock-Only Stock Appreciation Right Award Certificate (form effective February 26, 2014). **

10.3

Incorporated by Reference to
Exhibit

Filing

2.1

10.1

2.1

2.1

Form 8-K filed
Jun. 19, 2018

Form 10-Q filed
Nov. 6, 2018
Form 8-K filed

August 22, 2018

Form 8-K filed
Nov. 6, 2018

Form 8-K filed
Feb. 24, 2020

3.1

10.1

10.2

10.1

10.2

10.1

10.1

10.1

10(c)

10(d)

10.1

10.2

Form 8-K filed
Feb. 11, 2019

Form 10-Q filed
Oct. 30, 2019
Form 10-Q filed
May 9, 2013
Form 10-Q filed
May 9, 2013
Form 8-K filed
May 4, 2017
Form 8-K filed
May 8, 2015
Form 10-Q filed
May 2, 2014
Form 10-K filed
Mar. 8, 2013
Form 10-K filed
Mar. 8, 2013
Form 10-Q filed
Jul. 30, 2019
Form 10-Q filed
Jul. 30, 2019

Form 8-K filed
May 4, 2017
Form 10-Q filed
May 2, 2014

2.1

2.2

2.3

2.4

3.1

3.2

4.1

10.1

10.2

10.3

10.4

10.5

10.6

10.7

10.8

10.9

10.10

10.11
10.12

10.13

10.14

62

10.15

10.16

10.17

10.18

10.19

10.20

10.21

10.22

10.23

10.24
10.25

10.26

10.27

10.28

10.29

10.30

10.31

10.32

10.33

10.34

10.35

10.36

10.37

10.38
14
21
23

31.1

31.2

32.1

32.2

Form of Performance Share Award Certificate (form effective February 23, 2017). **

Form of Performance Share Award Certificate (form effective February 26, 2014). **

Form of Restricted Stock Unit Award Certificate (form effective as of February 23, 2017). **

Form of Restricted Stock Unit Award Certificate (form effective as of December 13, 2013). **
Non-Competition and Non-Solicitation Agreement by and between P. H. Glatfelter Company and Dante C.

Parrini, dated July 2, 2010. **

Restricted Stock Unit Award Certificate for Dante C. Parrini, dated as of November 13, 2019. **
Long Term Employment Contract between Glatfelter Switzerland Gmbh, a wholly-owned subsidiary, and

Wolfgang Laures, effective January 1, 2020, filed herewith. **

Form of Change in Control Employment Agreement by and between P. H. Glatfelter Company and certain

employees (form effective as of March 7, 2008). **

Form of Change in Control Employment Agreement by and between P. H. Glatfelter Company and certain

employees (form effective as of August 5, 2013). **

Schedule of Change in Control Employment Agreements, filed herewith. **

Summary of Non-Employee Director Compensation, effective January 1, 2020, filed herewith. **

10.2

10.2

10.3

10(l)

10.1

10.1

10(j)

10(q)

Form 8-K filed
May 4, 2017
Form 10-Q filed
May 2, 2014
Form 8-K filed
May 4, 2017
Form 10-K filed
March 3, 2014

Form 8-K filed
July 6, 2010
Form 8-K filed

Nov. 18, 2019

Form 10-K filed
Mar. 13, 2009

Form 10-K filed
Mar. 3, 2014

P. H. Glatfelter Company Deferred Compensation Plan for Directors, effective as of January 1, 2007. **

10(k)

Form 10-K filed
Mar. 8, 2013
Form 10-Q filed
Apr. 30, 2019
Form 10-K filed
Mar. 16, 2007
Form 10-K filed
Mar. 13, 2008
Form 8-K/A2 filed
May 2, 2019
Form 8-K filed

Dec. 19, 2017
Form 8-K filed .
Jul. 6, 2010

10.1

10(r)

10(t)

10.1

10.1

10.2

Form 10-Q filed

10.3(a)

August 6, 2010

10.3(b)

10.3(c)

Form 10-Q filed
Aug. 6, 2010
Form 10-Q filed
Aug. 6, 2010

10.3(d)

10.2

10.2

Form 10-Q filed
Aug. 6, 2010
Form 8-K filed

Nov. 19, 2007
Form 10-Q filed
Apr. 30, 2019

Separation Agreement and General Release between John P. Jacunski and P. H. Glatfelter Company. **
Service Agreement, commencing on August 1, 2006, between the Registrant (through a wholly owned

subsidiary) and Martin Rapp. **

Retirement Pension Contract, dated October 31, 2007, between Registrant (through a wholly owned

subsidiary) and Martin Rapp. **

Separation Agreement and General Release between Martin Rapp and P. H. Glatfelter Company. **

Form of Director’s and Officer’s Indemnification Agreement. **

Guidelines for Executive Severance. **
Consent Decree for Remedial Design and Remedial Action at Operable Unit 1 of the Lower Fox River and
Green Bay Site between the United States of America and the State of Wisconsin v. P. H. Glatfelter
Company and WTM I Company (f/k/a Wisconsin Tissue Mills Inc.).

Agreed Supplement to Consent Decree between United States of America and the State of Wisconsin vs. P. H.

Glatfelter Company and WTM I Company (f/k/a Wisconsin Tissue Mills Inc.).

Second Agreed Supplement to Consent Decree between United States of America and the State of Wisconsin

vs. P. H. Glatfelter Company and WTM I Company (f/k/a Wisconsin Tissue Mills Inc.).

Amended Consent Decree for Remedial Design and Remedial Action at Operable Unit 1 of the Lower Fox
River and Green Bay Site by and among the United States of America and the State of Wisconsin v. P.
H. Glatfelter and WTM I Company (f/k/a Wisconsin Tissue Mills Inc.) (certain Appendices have been
intentionally omitted, copies of which can be obtained free of charge from the Registrant).
Administrative Order for Remedial Action dated November 13, 2007, issued by the United States

Environmental Protection Agency.

Consent Decree between P. H. Glatfelter Company, Georgia-Pacific Consumer Products LP, the United

States of America and the State of Wisconsin, dated March 14, 2019.

Code of Business Ethics for the CEO and Senior Financial Officers of Glatfelter, filed herewith.
Subsidiaries of the Registrant, filed herewith.
Consent of Independent Registered Public Accounting Firm, filed herewith.
Certification of Dante C. Parrini, Chairman and Chief Executive Officer of Glatfelter, pursuant to Section

302(a) of the Sarbanes-Oxley Act of 2002, filed herewith.

Certification of Samuel L. Hillard, Senior Vice President and Chief Financial Officer of Glatfelter, pursuant

to Section 302(a) of the Sarbanes-Oxley Act of 2002, filed herewith.

Certification of Dante C. Parrini, Chairman 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.

Certification of Samuel L. Hillard, Senior Vice President and Chief Financial Officer of Glatfelter, pursuant

to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, furnished herewith.

GLATFELTER 2019 FORM 10-K

63

101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE

104

Inline XBRL Instance Document – the instance document does not appear in the Interactive Data file

because its iXBRL tags are embedded within the Inline XBRL document, filed herewith.

XBRL Taxonomy Extension Schema, filed herewith.
XBRL Extension Calculation Linkbase, filed herewith.
XBRL Extension Definition Linkbase, filed herewith.
XBRL Extension Label Linkbase, filed herewith.
XBRL Extension Presentation Linkbase, filed herewith.
The cover page from the Company’s Annual Report on Form 10-K for the year ended December 31, 2019,
has been formatted in Inline XBRL.

*** Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K and will be provided to the Securities and Exchange Commission upon

request.

** Management contract or compensatory plan

64

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.

SIGNATURES

February 25, 2020

P. H. GLATFELTER COMPANY
(Registrant)

By /s/ Dante C. Parrini
Dante C. Parrini
Chairman and

Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the

following persons on behalf of the Registrant in the capacities and on the dates indicated:

Date

Signature

Capacity

February 25, 2020

February 25, 2020

February 25, 2020

February 25, 2020

February 25, 2020

February 25, 2020

February 25, 2020

February 25, 2020

February 25, 2020

February 25, 2020

February 25, 2020

/s/ Dante C. Parrini
Dante C. Parrini
Chairman and Chief Executive Officer

Principal Executive Officer and Director

/s/ Samuel L. Hillard
Samuel L. Hillard
Senior Vice President and
Chief Financial Officer

/s/ David C. Elder
David C. Elder
Vice President, Finance

/s/ Bruce Brown
Bruce Brown

/s/ Kathleen A. Dahlberg
Kathleen A. Dahlberg

/s/ Nicholas DeBenedictis
Nicholas DeBenedictis

/s/ Kevin M. Fogarty
Kevin M. Fogarty

Marie T. Gallagher

/s/ J. Robert Hall
J. Robert Hall

/s/ Ronald J. Naples
Ronald J. Naples

/s/ Lee C. Stewart
Lee C. Stewart

Principal Financial Officer

Chief Accounting Officer

Director

Director

Director

Director

Director

Director

Director

Director

GLATFELTER 2019 FORM 10-K

65

P. H. GLATFELTER COMPANY AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL STATEMENT SCHEDULE

For each of the three years ended December 31, 2019
Valuation and Qualifying Accounts

Allowance for

Schedule II

In thousands

Balance, beginning of year

Provision

Write-offs, recoveries and discounts allowed

Other (a)
Balance, end of year

2019

Doubtful Accounts
2018

2017

Sales Discounts and Deductions
2018

2017

2019

$

$

1,661

720

(678)

(21)

$

1,761

$

1,695

$

695

(688)

(107)

(152)

—

218

1,682

$

1,661

$

1,761

$

832

1,440

(1,526)

(168)

578

$

$

1,029

2,075

(2,294)

22

832

$

$

925

1,191

(1,159)

72

1,029

The provision for doubtful accounts is included in selling, general and administrative expense and the provision for

sales discounts and deductions is deducted from sales. The related allowances are deducted from accounts receivable.

(a) Relates primarily to changes in currency exchange rates.

66

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O F F I C E R

R S   A N D   D I R E C T O R S

O F F I C E R S

Dante C. Parrini

Eileen L. Beck

Joseph J. Zakutney

Chairman and Chief Executive Officer

Vice President, Global Human Resources &

Vice President, Global Business Services &

Christopher W. Astley

   Administration

   Chief Information Officer

Senior Vice President & Chief Commercial Officer

David C. Elder

Ramesh Shettigar

Vice President, Finance & Chief Accounting Officer

Vice President, Investor Relations &

Vice President, Global Operations

Amy R. Wannemacher

   Corporate Treasurer

Vice President, Tax

Senior Vice President & Chief Financial Officer

Philippe Sevoz

Samuel L. Hillard

Wolfgang Laures

Senior Vice President, Global Supply Chain

Jill L. Urey

Vice President, Deputy General Counsel &

   Corporate Secretary

D I R E C T O R S

Dante C. Parrini

Nicholas DeBenedictis

Chairman and Chief Executive Officer

Chairman Emeritus

Bruce Brown

Essential Utilities, Inc.

Retired Chief Technology Officer

Kevin M. Fogarty 

J. Robert Hall

Chief Executive Officer

Ole Smoky Distillery

Ronald J. Naples

Procter & Gamble

President and Chief Executive Officer 

Chairman Emeritus

Kathleen A. Dahlberg

Chief Executive Officer

G.G.I., Inc.

Kraton Corporation, Inc.

Quaker Chemical Corporation

Marie T. Gallagher

Lee C. Stewart

Senior Vice President and Controller

Private Financial Consultant

PepsiCo, Inc.

C O R P O R A T E   I N F O R M A T I O N

S T O C K   E XC H A N G E   
A N D   S Y M B O L

New York Stock Exchange

GLT

A N N U A L   M E E T I N G   
O F   S H A R E H O L D E R S

May 7, 2020, 8:00 a.m. EST

The Kimpton Tryon Park Hotel

303 South Church Street

Charlotte, NC 28202

T R A N S F E R   AG E N T,   
D I V I D E N D   D I S B U R S I N G   
AG E N T   A N D   R E G I S T R A R

I N F O R M AT I O N   S O U R C E S

For the latest quarterly business results or

other information, visit www.glatfelter.com

Correspondence should be mailed to:

or contact:

Computershare

P.O. Box 505000

Louisville, KY 40233

Shareholder website 

www.computershare.com/investor

toll-free: 877-832-7259

international: 201-680-6578

Ramesh Shettigar

Vice President, Investor Relations &

   Corporate Treasurer  

phone: 717-225-2746

e-mail: ir@glatfelter.com

U . S .   L O C A T I
U . S .   L O C A T I O N S

I N T E R N A T I O N A L   L O C A T I O N S

N O R T H   C A R O L I N A

Headquarters

(effective mid 2020)

4350 Congress Street

Suite 600

Charlotte, NC 28209

P E N N S Y LVA N I A

Satellite Office

96 South George Street

Suite 400

York, PA 17401

A R K A N S A S

8201 Chad Colley Boulevard

Fort Smith, AR 72916

G E O R G I A*

351 Jesse Jewell Parkway

Suite 301

Gainesville, GA  30501

I TA LY

Milano* 

Via Alberto da Giussano 1

I-20145 Milano

P H I L L I P I N E S 

Newtech

Bo. Maria Cristina

9217 Balo-I

Lanao del Norte

R U S S I A   

Moscow*  

13 2-ya Zvenigorodskaya Street

Building 41 (Floor 9)

Moscow 123022

U N I T E D   K I N G D O M 

Caerphilly

Pontygwindy Industrial Estate

Caerphilly, Mid Glamorgan

CF83 3HU

Lydney 

Church Road

Lydney, Gloucestershire

GL15 5EJ

C A N A DA 
Gatineau 

1680 rue Atmec

Gatineau, QC J8P 7G7

C H I N A 

Suzhou*

Room 501

Building 24 of Times Square

Suzhou Industrial Park

215028 Suzhou

F R A N C E 
Scaër 

BP 2

29390 Scaër

G E R M A N Y 
Dresden

Pirnaer Straße 31-33

01809 Heidenau

Falkenhagen

Gewerbepark Prignitz/Falkenhagen

Rolf-Hövelmann-Straße 10

16928 Pritzwalk

Gernsbach 

Hördener Straße 5

76593 Gernsbach

Ober-Schmitten 

Rhönstraße 13

Ober-Schmitten

63667 Nidda

Steinfurt  

Dieselstraße 16

48565 Steinfurt

* Sales office only

© 2 02 0 GLATFELTER