A N N U A L R E P O R T
Glatfelter is a leading global supplier of engineered materials. The Company’s high-quality, innovative
and customizable solutions are found in tea and single-serve coffee filtration, personal hygiene and
packaging products as well as home improvement and industrial applications. Headquartered in
Charlotte, NC, the Company’s annual net sales approximate $916 million with customers in over
100 countries and approximately 2,415 employees worldwide. Operations include 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 14 of the accompanying 2020 Annual Report on Form 10-K included herein
and in other filings with the SEC. The forward-looking statements speak only as of the date of this Annual Report and
Glatfelter undertakes no obligation, and does not intend, to update these forward-looking statements to reflect events
or circumstances occurring after the date of this Annual Report, except as may be required by law.
D E A R S H A R E H O L D E R S ,
Glatfelter enthusiastically entered 2020 building on
the momentum of a new operating model and leadership
team, and a refocused engineered materials portfolio
that promised exciting prospects for growth and value
creation. No one could have imagined the adversity and
suffering the impending coronavirus crisis would bring
to the world. When this once-in-a-century pandemic
struck, it turned our lives upside down – challenging our
communities, businesses, and lifestyles in ways we could
not have envisioned.
As businesses across the globe struggled with
unprecedented volatility and uncertainty, we focused
on the health and safety of Glatfelter PEOPLE and the
continued operation of our factories. More than ever, the
public was demanding access to life-sustaining essential
consumer staples. It was imperative that we maintained an
uninterrupted supply of the critical materials our customers
urgently needed. With little time to test the mettle of our
operating model, or the metal of our recent investments,
our team embraced the lessons of our transformation
– demonstrating laser-like focus, agility, teamwork, and
rigorous attention to operational excellence in response to
the extraordinary conditions.
I am pleased to report that Glatfelter PEOPLE performed
valiantly in an exceptionally challenging environment by
building on the progress achieved in 2019.
• Both product segments delivered strong profit
performances and cash flows during the year, driving
adjusted EBITDA up 12% over 2019. We met or
exceeded internal and investor expectations each
quarter in 2020, and every quarter since divesting
the Specialty Papers business in 2018. This improved
level of performance is demonstrating our company’s
enhanced capability to produce consistent, predictable
financial results while investing in growth.
• The Airlaid Materials segment achieved record
profitability through growth in its health and
hygiene product categories. Despite a decline in
tabletop products due to COVID-19-related restaurant
closures, the team performed well by optimizing its
product mix and reducing costs to meet the dynamic
market environment.
Dante C. Parrini, Chairman and Chief Executive Officer
• For the Composite Fibers segment, the focus on
continuous improvement, operational excellence,
and strong commercial execution strengthened
productivity and delivered a turnaround in profitability.
Consistent strength in food and beverage and
recovering consumer demand for wallcovering and
composite laminate products spurred increased
shipments, while consolidating our metalized
operations helped lower costs.
• Glatfelter PEOPLE readily embraced our health
and safety protocols and duty-of-care mandate
to protect themselves, their co-workers, and their
families. This commitment to safe and healthy best
practices kept our factories reliably operating while
enabling our success in maintaining an industry top-
quartile safety performance.
• We achieved an additional corporate responsibility
milestone when we published our first Sustainability
Report, formalizing our environmental, social, and
governance priorities. The relocation of the corporate
offices to Charlotte, North Carolina, was among the
actions that supported our diversity and sustainability
goals. As we strive to build a more inclusive company,
this major metropolitan area offers access to a larger
and more diverse talent base.
These accomplishments – despite the far-reaching
challenges of an unexpected and enduring global pandemic
– exemplified the durability and strength of the new
Glatfelter. Our reshaped engineered materials portfolio
positioned us to provide outstanding customer service,
with 85% of our products addressing essential consumer
staples’ markets. And our transformed operating model
generated the speed, agility, and cost savings needed to
111
1
succeed in a highly volatile environment. The true spirit and
At the same time, we are aggressively pursuing new
resilience of Glatfelter PEOPLE and our culture that thrives
avenues for organic and acquisitive growth. Our strong
on transparency and teamwork enabled us to successfully
balance sheet and stable cash flow position us well to
manage the risks and capture the opportunities presented
invest in opportunities that enhance our business and
by the pandemic and deliver another year of strong
add scale consistent with our long-term growth strategy.
financial performance.
Adjusted earnings rose 13% to $37.4 million or $0.84
per share over $33.2 million or $0.75 per share in 2019.
Revenue declined slightly to $916.5 million versus
$927.7 million in the previous year. With higher cash flow
and EBITDA, we reduced debt and de-levered our balance
sheet, finishing the year at leverage of 1.8x, providing
greater financial flexibility and the capacity to fund future
growth opportunities. We also increased the quarterly
dividend 4% to $0.135 per share.
T H E O U T L O O K
As the effects of the extended pandemic continue into
2021, the rapid progress in developing and distributing
vaccines gives us hope for the future. Even so, creating
immunity and returning to some degree of normalcy
will require time and patience. During the first half of
the coming year, demand for several of our products
will remain volatile as coronavirus infection rates slowly
In early 2021, we signed a definitive agreement to
acquire Georgia-Pacific’s U.S. nonwovens business
for $175 million. This beneficial acquisition is highly
complementary to our existing Airlaid segment and its
customer base. The transaction reinforces how our growth
strategy finds synergistic companies that help expand our
capacity, increase output, and reduce costs to build value
for the enterprise.
C L O S I N G T H O U G H T S
2020 was an exceptionally difficult year for our employees,
their families, and our company. In many ways, the
pandemic served as a testimony to the new Glatfelter
and our reshaped portfolio of essential consumer
staples. Faced with almost incomprehensible challenges,
Glatfelter PEOPLE pulled together to protect the health
of their colleagues, sustain our operations, and generate
growth in profits and cash flows amidst the turmoil of an
extraordinary pandemic.
recede and government lockdowns and restrictions abate.
Today, we are a flourishing global engineered materials
However, we anticipate the economy will strengthen
company. Our business trajectory is ascending. Our
through the year as the world’s population is vaccinated,
exciting product platforms and a strong balance
pent up consumer demand is released, and society
sheet offer powerful vehicles for growth. Plus, we are
transitions from the pandemic environment.
accelerating innovation and embracing sustainability
Our strategy includes optimizing Glatfelter’s
business for the post-COVID-19 world.
As consumers become more comfortable in a safer,
healthier climate, Glatfelter will remain committed to
satisfy their evolving needs for personal hygiene and
appetite for high-quality essential consumer staples. And
Glatfelter PEOPLE are maintaining their adherence to
health and safety protocols to ensure customers continue
and a more inclusive culture to become an even higher-
performing organization. All our hard work has instilled
enthusiasm and confidence in Glatfelter’s great potential.
I want to personally thank all our stakeholders –
shareholders, customers, suppliers, employees, and
communities – for their patience, loyalty, and support in
a very challenging year. We truly believe better days are
ahead and are excited about Glatfelter’s future.
to receive the service they have grown to depend on.
Sincerely,
Also, we now possess multiple product platforms that
promise GDP or better growth. We are accelerating
innovation to create exciting new materials that protect
our environment while leveraging our expertise in plant-
based fibers and chemistries, to deliver higher levels of
product performance.
Dante C. Parrini
Chairman & Chief Executive Officer
March 12, 2021
2
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(cid:1800)
(cid:1798)
Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2020
or
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from to
4350 Congress Street, Suite 600
Charlotte, North Carolina 28209
(Address of principal executive offices)
(704) 885-2555
(Registrant's telephone number, including area code)
Commission file number
1-03560
Exact name of registrant as
specified in its charter
Glatfelter Corporation
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:1407) No (cid:53).
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:1407) No (cid:53).
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:53) No (cid:1407).
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:53) No (cid:1407).
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
(cid:71)(cid:72)(cid:73)(cid:76)(cid:81)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:179)(cid:79)(cid:68)(cid:85)(cid:74)(cid:72)(cid:3)(cid:68)(cid:70)(cid:70)(cid:72)(cid:79)(cid:72)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:73)(cid:76)(cid:79)(cid:72)(cid:85)(cid:180)(cid:15)(cid:3)(cid:179)(cid:68)(cid:70)(cid:70)(cid:72)(cid:79)(cid:72)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:73)(cid:76)(cid:79)(cid:72)(cid:85)(cid:180)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:179)(cid:86)(cid:80)(cid:68)(cid:79)(cid:79)(cid:72)(cid:85)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:15)(cid:180)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:179)(cid:72)(cid:80)(cid:72)(cid:85)(cid:74)(cid:76)(cid:81)(cid:74)(cid:3)(cid:74)(cid:85)(cid:82)(cid:90)(cid:87)(cid:75)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:180)(cid:3)in Rule 12b-2 of the Exchange
Act. (cid:53) Large accelerated filer (cid:1407)Accelerated filer (cid:1407) Non-accelerated filer (cid:1407) Small reporting company (cid:1407) Emerging Growth Company
(cid:44)(cid:81)(cid:71)(cid:76)(cid:70)(cid:68)(cid:87)(cid:72)(cid:3)(cid:69)(cid:92)(cid:3)(cid:70)(cid:75)(cid:72)(cid:70)(cid:78)(cid:3)(cid:80)(cid:68)(cid:85)(cid:78)(cid:3)(cid:90)(cid:75)(cid:72)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:81)(cid:87)(cid:3)(cid:75)(cid:68)(cid:86)(cid:3)(cid:73)(cid:76)(cid:79)(cid:72)(cid:71)(cid:3)(cid:68)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:68)(cid:87)(cid:87)(cid:72)(cid:86)(cid:87)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:87)(cid:82)(cid:3)(cid:76)(cid:87)(cid:86)(cid:3)(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:86)(cid:86)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:73)(cid:73)ectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit
report. (cid:53)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes (cid:1407) No (cid:53).
Based on the closing price as of June 30, 2020, the aggregate market value of the Common Stock of the Registrant held by non-affiliates was $691.3 million.
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.
Common Stock outstanding on February 18, 2021 totaled 44,367,836 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement to be delivered to shareholders in connection with the Annual Meeting of Shareholders to be held on May 6, 2021 are
incorporated by reference into Part III.
GLATFELTER CORPORATION
ANNUAL REPORT ON FORM 10-K
For the Year Ended
DECEMBER 31, 2020
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
PART I
Item 1
Item 1A
Item 1B
Item 2
Item 3
Item 4
PART II
Item 5
Item 6
Item 7
Selected Financial Data
Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 7A
Item 8
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 Accounting Firm
Statements of Income (Loss)
Statements of Comprehensive Income (Loss)
Balance Sheets
Statements of Cash Flows
Statements of Shar(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:40)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)
Notes to Consolidated Financial Statements
1. Organization
2. Accounting Policies
3. Acquisitions
4. Discontinued Operations
5. Restructuring
6. Asset Impairment
7. Gain on Dispositions of Plant, Equipment and Timberlands
8. Revenue
9. Earnings Per Share
10. Accumulated Other Comprehensive Income
11. Income Taxes
12. Stock-Based Compensation
13. Retirement Plans and Other Post-Retirement Benefits
14. Inventories
15. Plant, Equipment and Timberlands
16. Goodwill and Intangible Assets
17. Other Long-Term Assets
18. Other Current Liabilities
19. Leases
20. Long-Term Debt
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21. Fair Value of Financial Instruments
22. Financial Derivatives and Hedging Activities
23. (cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:40)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)
24. Commitments, Contingencies and Legal Proceedings
25. Segment and Geographic Information
26. 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
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
Item 16
Form 10-K Summary
Signatures
Schedule II
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[THIS PAGE INTENTIONALLY LEFT BLANK]
PART I
(cid:42)(cid:79)(cid:68)(cid:87)(cid:73)(cid:72)(cid:79)(cid:87)(cid:72)(cid:85)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:80)(cid:68)(cid:78)(cid:72)(cid:86)(cid:3)(cid:85)(cid:72)(cid:74)(cid:88)(cid:79)(cid:68)(cid:85)(cid:3)(cid:73)(cid:76)(cid:79)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:40)(cid:91)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:76)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:11)(cid:179)(cid:54)(cid:40)(cid:38)(cid:180)(cid:12)(cid:15)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)
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(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:54)(cid:40)(cid:38)(cid:182)(cid:86)(cid:3)(cid:90)(cid:72)(cid:69)(cid:86)(cid:76)(cid:87)(cid:72)(cid:3)(cid:68)(cid:87)(cid:3)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, 4350 Congress Street, Suite 600, Charlotte, NC 28209. In this filing, unless the context indicates
(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:90)(cid:76)(cid:86)(cid:72)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:87)(cid:72)(cid:85)(cid:80)(cid:86)(cid:3)(cid:179)(cid:90)(cid:72)(cid:15)(cid:180)(cid:3)(cid:179)(cid:82)(cid:88)(cid:85)(cid:15)(cid:180)(cid:3)(cid:179)(cid:88)(cid:86)(cid:15)(cid:180)(cid:3)(cid:179)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:15)(cid:180)(cid:3)(cid:82)(cid:85)(cid:3)(cid:179)(cid:42)(cid:79)(cid:68)(cid:87)(cid:73)(cid:72)(cid:79)(cid:87)(cid:72)(cid:85)(cid:180)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:3)(cid:87)(cid:82)(cid:3)(cid:42)(cid:79)(cid:68)(cid:87)(cid:73)(cid:72)(cid:79)(cid:87)(cid:72)(cid:85)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:86)(cid:88)(cid:69)(cid:86)(cid:76)(cid:71)(cid:76)(cid:68)(cid:85)ies.
The following discussion of our Business sets forth an update of the material developments since our most recent full
discussion included in Item 1 (cid:177) (cid:179)(cid:37)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:180)(cid:3)(cid:82)(cid:73)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:21)(cid:19)(cid:20)(cid:28)(cid:3)(cid:36)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:20)(cid:19)-K filed with the SEC on February 26,
2020.
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. Our annual net sales approximate $916 million with customers in
over 100 countries. We own and operate eleven manufacturing facilities located in the United States, Canada, Germany,
France, the United Kingdom, and the Philippines. Our facilities have a combined production capacity of approximately
298,000 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.
Glatfelter has undergone a strategic transformation focused on becoming a leading engineered materials company
accelerating growth through innovation and sustainability. The transformation includes unlocking value through the
realignment of our product portfolio, investing in strategic growth opportunities, delivering shareholder distributions, and
creating financial capacity for strategic flexibility. Our portfolio now consists of leading positions serving markets growing at
or above gross domestic product rates, a predictable cash flow profile, and significantly improved adjusted earnings before
interest, taxes, depreciati(cid:82)(cid:81)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:68)(cid:80)(cid:82)(cid:85)(cid:87)(cid:76)(cid:93)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:11)(cid:179)(cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36)(cid:180)(cid:12)(cid:17)
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 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 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
sales. We are committed to growing with our key markets and will make appropriate investments to support our customers
and satisfy market demands.
On January 5, 2021, we signed a definitive agreement to purchase Georgia-Pacific's U.S. nonwovens business ("G-(cid:51)(cid:180)(cid:12)(cid:3)
for $175 million. This business includes the Mount Holly, NC manufacturing facility with annual production capacity of
approximately 37,000 metric tons and an R&D center and pilot line for nonwovens product development in Memphis, TN.
G-P had annual net sales of approximately $100 million. The acquisition is subject to customary closing conditions, including
receipt of required regulatory clearances. Additional information related to this pending acquisition is set forth in Item 8 (cid:177)
Financial Statements and Supplementary Data- Note 3 (cid:177) (cid:179)Acquisitions.(cid:180)
GLATFELTER 2020 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 and focusing on sustainability
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
(cid:135) Delivering shareholder distributions
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(cid:3)
Net sales
Operating segment contribution
Composite Fibers
Airlaid Materials
Total
2020
2019
2018
$
916,498
$
927,673
$
866,286
57.3 %
42.7
100.0 %
56.2 %
43.8
100.0 %
Net tons sold by each segment for the past three years were as follows:
Metric tons
Composite Fibers
Airlaid Materials
Total
2020
2019
2018
134,758
136,661
271,419
133,473
137,595
271,068
64.1 %
35.9
100.0 %
143,777
104,774
248,551
COMPOSITE FIBERS Our Composite Fibers segment, with annual net sales of approximately $525.1 million,
processes specialty long fibers, primarily from natural sources such as abaca, and other materials to create premium value-
added products in the following categories:
(cid:120) Food & Beverage filtration material primarily used for single-serve coffee and tea products;
(cid:120) Wallcover (cid:69)(cid:68)(cid:86)(cid:72)(cid:3)(cid:80)(cid:68)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:79)(cid:86)(cid:3)(cid:88)(cid:86)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:90)(cid:82)(cid:85)(cid:79)(cid:71)(cid:182)(cid:86)(cid:3)(cid:79)(cid:68)(cid:85)(cid:74)(cid:72)(cid:86)(cid:87)(cid:3)(cid:90)(cid:68)(cid:79)(cid:79)(cid:83)(cid:68)(cid:83)(cid:72)(cid:85)(cid:3)(cid:80)(cid:68)(cid:81)(cid:88)(cid:73)(cid:68)(cid:70)(cid:87)(cid:88)(cid:85)(cid:72)(cid:85)(cid:86)(cid:30)
(cid:120) Technical Specialties consists of a diverse line of specialty engineered products used in commercial and industrial
applications such as electrical energy storage, home, hygiene, and other highly-engineered fiber-based
applications;
(cid:120) Composite Laminates decorative laminate solutions used in furniture, and household and commercial flooring,
and other applications; and
(cid:120) Metallized products used in labels, packaging liners, gift wrap, and other consumer product applications.
We believe Composite Fibers maintains a market leadership position 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.
(cid:55)(cid:75)(cid:76)(cid:86)(cid:3)(cid:86)(cid:72)(cid:74)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)net sales composition by categories is set forth in Item 8 (cid:177) Financial Statements and Supplementary Data-
Note 8 (cid:177) (cid:179)Revenue.(cid:180)
2
Composite Fibers is comprised of five paper making facilities (Germany (3), France and England), a metallizing
operation (Wales) and a pulp mill (the Philippines). The combined attributes of the facilities are summarized as follows (in
metric tons):
Production
Capacity
Principal Raw Material
(cid:11)(cid:179)(cid:51)(cid:53)(cid:48)(cid:180)(cid:12)
Estimated Annual
Quantity of PRM
145,000 lightweight and other paper
15,700 metallized
15,000 abaca pulp
Abaca pulp
Wood pulp
Synthetic fiber
Base stock
Abaca fiber
14,900
86,000
20,500
13,350
23,700
(cid:38)(cid:82)(cid:80)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:72)(cid:3)(cid:41)(cid:76)(cid:69)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:79)(cid:76)(cid:74)(cid:75)(cid:87)(cid:90)(cid:72)(cid:76)(cid:74)(cid:75)(cid:87)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:72)(cid:71)(cid:3)(cid:88)(cid:86)(cid:76)(cid:81)(cid:74)(cid:3)(cid:75)(cid:76)(cid:74)(cid:75)(cid:79)(cid:92)(cid:3)(cid:86)(cid:83)(cid:72)(cid:70)(cid:76)(cid:68)(cid:79)(cid:76)(cid:93)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:76)(cid:81)(cid:72)(cid:71)(cid:3)(cid:90)(cid:76)(cid:85)(cid:72)(cid:3)(cid:83)(cid:68)(cid:83)(cid:72)(cid:85)(cid:3)(cid:80)(cid:68)(cid:70)(cid:75)(cid:76)(cid:81)(cid:72)(cid:3)(cid:87)(cid:72)(cid:70)(cid:75)(cid:81)(cid:82)(cid:79)(cid:82)(cid:74)(cid:92)(cid:17)
The primary raw materials used in the production of our lightweight materials 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.
(cid:44)(cid:81)(cid:3)(cid:68)(cid:71)(cid:71)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:87)(cid:82)(cid:3)(cid:70)(cid:85)(cid:76)(cid:87)(cid:76)(cid:70)(cid:68)(cid:79)(cid:3)(cid:85)(cid:68)(cid:90)(cid:3)(cid:80)(cid:68)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:79)(cid:86)(cid:15)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:72)(cid:3)(cid:41)(cid:76)(cid:69)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:70)(cid:82)(cid:86)(cid:87)(cid:3)(cid:76)(cid:86)(cid:3)(cid:76)(cid:81)(cid:73)(cid:79)(cid:88)(cid:72)(cid:81)(cid:70)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:83)(cid:85)(cid:76)(cid:70)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:72)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:76)(cid:70)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)
natural gas. In 2020, Composite Fibers purchased approximately 77% of its electricity needs, the cost of which is influenced
by the natural gas markets. In addition, the segment generates all the steam used in production by burning natural gas.
(cid:44)(cid:81)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:72)(cid:3)(cid:41)(cid:76)(cid:69)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:80)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:86)(cid:15)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:72)(cid:87)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:76)(cid:86)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:3)(cid:79)(cid:76)(cid:81)(cid:72)(cid:3)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(cid:3)
Nippon Kodoshi Corp ("NKK"), Kan Kyo Technology, Burrows and Suominen
Oyj
Schweitzer-Maudit, Purico, Miquel y Costas, MB Papeles Especiales 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:
(cid:120)
(cid:120)
leveraging innovation resources to drive plastic free applications, and new product and new business development;
optimizing our asset utilization and product portfolio while capitalizing on growing global markets in beverage
filtration, electrical storage and consumer products trends;
(cid:120) maximize continuous improvement methodologies to increase productivity, reduce costs and expand capacity; and
(cid:120)
ensuring readily available access to specialized raw material requirements or suitable alternatives to support
projected growth.
GLATFELTER 2020 FORM 10-K
3
AIRLAID MATERIALS Airlaid Materials, with annual net sales of approximately $391.4 million, is a leading
global supplier of highly absorbent and engineered cellulose-based airlaid nonwoven materials, primarily used to
manufacture consumer products for growing global end-user markets. Our products are composed of all-natural fluff pulp,
which is sustainable by design. The categories served by Airlaid Materials include:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
feminine hygiene and other hygiene products;
specialty wipes;
tabletop;
home care;
adult incontinence; and
other consumer and industrial products.
(cid:36)(cid:76)(cid:85)(cid:79)(cid:68)(cid:76)(cid:71)(cid:3)(cid:48)(cid:68)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:79)(cid:86)(cid:182)(cid:3)(cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:76)(cid:81)(cid:71)(cid:88)(cid:86)(cid:87)(cid:85)(cid:92)(cid:3)(cid:79)(cid:72)(cid:68)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:88)(cid:80)(cid:72)(cid:85)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:86)(cid:3)(cid:90)(cid:72)(cid:79)(cid:79)(cid:3)(cid:68)(cid:86)(cid:3)(cid:83)(cid:85)(cid:76)(cid:89)(cid:68)(cid:87)(cid:72)(cid:3)(cid:79)(cid:68)(cid:69)(cid:72)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:89)(cid:72)(cid:85)(cid:87)(cid:72)(cid:85)(cid:86)(cid:17)(cid:3)(cid:58)(cid:72)(cid:3)
believe this business holds a leading position 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.
This (cid:86)(cid:72)(cid:74)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)net sales composition by categories is set forth in Item 8 (cid:177) Financial Statements and Supplementary Data-
Note 8 (cid:177) (cid:179)Revenue. (cid:179)
(cid:55)(cid:75)(cid:72)(cid:3)(cid:73)(cid:72)(cid:80)(cid:76)(cid:81)(cid:76)(cid:81)(cid:72)(cid:3)(cid:75)(cid:92)(cid:74)(cid:76)(cid:72)(cid:81)(cid:72)(cid:3)(cid:70)(cid:68)(cid:87)(cid:72)(cid:74)(cid:82)(cid:85)(cid:92)(cid:3)(cid:68)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:72)(cid:71)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:24)(cid:21)(cid:8)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:24)(cid:20)(cid:8)(cid:3)(cid:82)(cid:73)(cid:3)(cid:36)(cid:76)(cid:85)(cid:79)(cid:68)(cid:76)(cid:71)(cid:3)(cid:48)(cid:68)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:79)(cid:182)(cid:86)(cid:3)(cid:81)(cid:72)(cid:87)(cid:3)(cid:86)(cid:68)(cid:79)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:21)(cid:19)(cid:21)(cid:19)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:21)(cid:19)(cid:20)(cid:28)(cid:15)(cid:3)
respectively. 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.
(cid:36)(cid:76)(cid:85)(cid:79)(cid:68)(cid:76)(cid:71)(cid:3)(cid:48)(cid:68)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:79)(cid:86)(cid:182)(cid:3)(cid:73)(cid:82)(cid:88)(cid:85)(cid:3)(cid:73)(cid:68)(cid:70)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:73)(cid:82)(cid:79)(cid:79)(cid:82)(cid:90)(cid:76)(cid:81)(cid:74)(cid:3)(cid:70)(cid:82)(cid:80)(cid:69)(cid:76)(cid:81)(cid:72)(cid:71)(cid:3)(cid:68)(cid:87)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:72)(cid:86)(cid:3)(cid:11)(cid:76)(cid:81)(cid:3)(cid:80)(cid:72)(cid:87)(cid:85)(cid:76)(cid:70)(cid:3)(cid:87)(cid:82)(cid:81)(cid:86)(cid:12)(cid:29)
Airlaid Production
Capacity (metric tons)
Principal Raw (cid:48)(cid:68)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:79)(cid:3)(cid:11)(cid:179)(cid:51)(cid:53)(cid:48)(cid:180)(cid:12)
Estimated Annual
Quantity of PRM
(short tons)
153,000
Fluff pulp
122,000
Key raw material used in the airlaid production process 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 74% of this
(cid:86)(cid:72)(cid:74)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:81)(cid:72)(cid:87)(cid:3)(cid:86)(cid:68)(cid:79)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:21)(cid:19)(cid:21)(cid:19)(cid:3)(cid:90)(cid:68)(cid:86)(cid:3)(cid:72)(cid:68)(cid:85)(cid:81)(cid:72)d under contracts whose selling price is influenced by pass-through provisions directly
related to the cost of certain key raw materials.
Airlaid Materials continues to be a technology and product innovation leader in technically demanding segments of the
markets it serves. Its 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 Mater(cid:76)(cid:68)(cid:79)(cid:86)(cid:182)(cid:3)
in-house technical expertise combined with significant capital investment requirements and rigorous customer expectations creates
large barriers to entry for new competitors.
(cid:55)(cid:75)(cid:72)(cid:3)(cid:73)(cid:82)(cid:79)(cid:79)(cid:82)(cid:90)(cid:76)(cid:81)(cid:74)(cid:3)(cid:86)(cid:88)(cid:80)(cid:80)(cid:68)(cid:85)(cid:76)(cid:93)(cid:72)(cid:86)(cid:3)(cid:36)(cid:76)(cid:85)(cid:79)(cid:68)(cid:76)(cid:71)(cid:3)(cid:48)(cid:68)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:79)(cid:86)(cid:182)(cid:3)(cid:78)(cid:72)(cid:92)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:72)(cid:87)(cid:76)(cid:87)(cid:82)(cid:85)(cid:86)(cid:29)
Market segment
Hygiene and other absorbent products
Tabletop
Wipes
Competitor
Fitesa, McAirlaid's GmbH, Domtar, Georgia-Pacific
Georgia-Pacific, SharpCell, Rexcell 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:
(cid:120) maintaining and expanding relationships with customers that are market-leading consumer product companies as
well as companies converting and distributing through private label arrangements;
(cid:120)
capitalizing on our product and process innovation capabilities, including developing plastic-free technologies;
4
(cid:120)
(cid:120)
(cid:120)
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.
Concentration of Customers Approximately 16% of our consolidated net sales 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
(cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:71)(cid:76)(cid:87)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:36)(cid:76)(cid:85)(cid:79)(cid:68)(cid:76)(cid:71)(cid:3)(cid:48)(cid:68)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:79)(cid:86)(cid:182)(cid:3)(cid:70)(cid:68)(cid:83)(cid:68)(cid:70)(cid:76)(cid:87)(cid:92)(cid:3)(cid:72)(cid:91)(cid:83)(cid:68)(cid:81)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:83)(cid:85)(cid:82)(cid:77)(cid:72)(cid:70)(cid:87)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:79)(cid:72)(cid:87)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:72)(cid:68)(cid:85)(cid:79)(cid:92)(cid:3)(cid:21)(cid:19)(cid:20)(cid:27)(cid:17)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:71)(cid:76)(cid:87)(cid:88)(cid:85)(cid:72)s totaled $28.1
million, $27.8 million and $42.1 million in 2020, 2019 and 2018, respectively. Capital expenditures in 2021 are estimated to
total between approximately $38 million and $42 million.
Government Regulations We are subject to various federal, state and local laws and regulations intended to protect
the environment as well as human health and safety. These regulations include, among others, limits on air emissions and
water use and discharges by our facilities throughout the world. Glatfelter is committed to operating responsibly and
addressing the concerns and needs of our stakeholders. 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.
Human Capital Our business is guided by our Board of Directors and a diverse management team comprised of
leaders with extensive business and industry experience. Additional information on our leadership team is set forth within
this Form 10-(cid:46)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:179)Executive Officers(cid:17)(cid:180)(cid:3)As of December 31, 2020, we employed 2,415 people worldwide, the
substantial majority of whom are skilled personnel responsible for the production and commercialization of our Composite
Fibers and Airlaid Materials products. Our facilities are a continuous flow manufacturing operation with approximately 79%
of our employees represented by local works councils or trade unions in Europe, the United Kingdom, Canada, and the
Philippines.
The daily work of Glatfelter employees (cid:76)(cid:86)(cid:3)(cid:85)(cid:82)(cid:82)(cid:87)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:79)(cid:82)(cid:81)(cid:74)(cid:86)(cid:87)(cid:68)(cid:81)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:38)(cid:82)(cid:71)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:37)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:38)(cid:82)(cid:81)(cid:71)(cid:88)(cid:70)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:82)(cid:85)(cid:72)(cid:3)
Values of Integrity, Financial Discipline, Mutual Respect, Customer focus, Environmental Responsibility and Social
Responsibility.
Employee Health and Safety We have a well-established safety management system and ongoing employee wellness
programs. The health and safety of our employees and their families have remained a top priority, and we have been
diligently taking the necessary measures to protect them. This includes expanded safety, hygiene, and communication
protocols throughout our facilities in response to the COVID-19 pandemic.
(cid:58)(cid:72)(cid:3)(cid:89)(cid:76)(cid:72)(cid:90)(cid:3)(cid:75)(cid:72)(cid:68)(cid:79)(cid:87)(cid:75)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:86)(cid:68)(cid:73)(cid:72)(cid:87)(cid:92)(cid:3)(cid:68)(cid:86)(cid:3)(cid:72)(cid:89)(cid:72)(cid:85)(cid:92)(cid:82)(cid:81)(cid:72)(cid:182)(cid:86)(cid:3)(cid:85)(cid:72)(cid:86)(cid:83)(cid:82)(cid:81)(cid:86)(cid:76)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:76)(cid:81)(cid:89)(cid:82)(cid:79)(cid:89)(cid:72)(cid:3)(cid:68)(cid:79)(cid:79)(cid:3)(cid:72)(cid:80)(cid:83)(cid:79)(cid:82)(cid:92)(cid:72)(cid:72)(cid:86)(cid:3)(cid:68)(cid:87)(cid:3)(cid:72)(cid:89)ery level of the organization in
(cid:82)(cid:88)(cid:85)(cid:3)(cid:83)(cid:85)(cid:82)(cid:74)(cid:85)(cid:68)(cid:80)(cid:86)(cid:17)(cid:3)(cid:42)(cid:79)(cid:68)(cid:87)(cid:73)(cid:72)(cid:79)(cid:87)(cid:72)(cid:85)(cid:3)(cid:73)(cid:68)(cid:70)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:86)(cid:87)(cid:85)(cid:76)(cid:89)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:82)(cid:3)(cid:69)(cid:72)(cid:3)(cid:179)(cid:76)(cid:81)(cid:77)(cid:88)(cid:85)(cid:92)(cid:3)(cid:73)(cid:85)(cid:72)(cid:72)(cid:3)(cid:72)(cid:89)(cid:72)(cid:85)(cid:92)(cid:3)(cid:71)(cid:68)(cid:92)(cid:180)(cid:3)(cid:87)(cid:75)(cid:85)(cid:82)(cid:88)(cid:74)(cid:75)(cid:3)(cid:76)(cid:80)(cid:83)(cid:79)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:42)(cid:79)(cid:82)(cid:69)(cid:68)(cid:79)(cid:3)(cid:43)(cid:72)(cid:68)(cid:79)(cid:87)(cid:75)(cid:3)(cid:9)(cid:3)
Safety Protocol, regulatory compliance, site-specific safety plans, safety resources and training, ongoing risk assessment and
a safety auditing program. We track multiple safety metrics, including total case incident rate ((cid:179)TCIR(cid:180)), to encourage and
ensure continuous improvement and mitigation of potential safety risks. In recent years, our TCIR has consistently ranked in
the top quartile of safety performance in our industry.
Talent Attraction, Retention and Development Our employees make essential contributions to our success and ability
to drive growth and innovation. Even as the organization has undertaken substantial change in recent years, our vision and
Core Values remain the center of our steadfast compliant culture. We are always working to enhance our human resources
programs by implementing and integrating enterprise-level processes for talent attraction, career development and training.
Creating a best-in-class, globally consistent process for these employee experiences has become even more important as part
of our strategic transformation and the move of our corporate headquarters to Charlotte, North Carolina.
Glatfelter supports its team by providing fair wages, competitive salaries, comprehensive benefits, diverse wellness
programs and other benefits to help enhance the lives of our employees. We regularly review our employee offerings to
ensure we are positioned to attract and retain world-class talent.
Employee Training Training and professional growth are central to developing our workforce and driving long-term
success for our organization. Global training encompasses a variety of programs, from apprenticeships and machine-specific
skill development, grant-funded partnerships, Lean Six Sigma principles training, leadership development and compliance
training. To ensure we continue to have the necessary resources with skills necessary to support the production of
increasingly sophisticated engineered materials, we invest in the development of skills necessary to operate our machinery
including operational apprenticeship programs in many of our global locations.
GLATFELTER 2020 FORM 10-K
5
Diversity and Inclusion We are a global company that encourages and embraces different cultures and backgrounds.
Our employees, including our management team, are diverse (cid:177) as our facilities hire locally for leadership positions, as well as
salaried and production positions at all levels. We strive to create an inclusive culture and provide opportunities for people of
all backgrounds to share their unique viewpoints and contribute to our success. The global nature of our business helps drive
our inclusive corporate environment, as we regularly collaborate with colleagues who have different backgrounds, ethnicities
and world views.
We are committed to ensuring our Company is diverse and inclusive place to work, while also strengthening the
communities in which we live.
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
(cid:50)(cid:73)(cid:73)(cid:76)(cid:70)(cid:72)(cid:85)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:42)(cid:79)(cid:68)(cid:87)(cid:73)(cid:72)(cid:79)(cid:87)(cid:72)(cid:85)(cid:15)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:179)(cid:90)(cid:75)(cid:76)(cid:86)(cid:87)(cid:79)(cid:72)-(cid:69)(cid:79)(cid:82)(cid:90)(cid:72)(cid:85)(cid:180)(cid:3)(cid:83)(cid:82)(cid:79)(cid:76)(cid:70)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:85)(cid:72)(cid:79)ated 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 4350
Congress Street, Suite 600, Charlotte, NC, 28209.
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. Also, there may be periods during which demand for
our products is insufficient to enable us to operate our production facilities at full capacity and in an economical manner
which may force us to take machine downtime to curtail production to match demand.
On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic as the virus spread
throughout the world. As the virus continued its rapid spread, a significant (cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:90)(cid:82)(cid:85)(cid:79)(cid:71)(cid:182)(cid:86)(cid:3)(cid:72)(cid:70)(cid:82)(cid:81)(cid:82)(cid:80)(cid:76)(cid:72)(cid:86)(cid:3)(cid:90)(cid:68)(cid:86)(cid:3)(cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:81)(cid:87)(cid:79)(cid:92)(cid:3)
impacted, and will continue to be so, by government (cid:80)(cid:68)(cid:81)(cid:71)(cid:68)(cid:87)(cid:72)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:68)(cid:79)(cid:79)(cid:3)(cid:179)(cid:81)(cid:82)(cid:81)-(cid:72)(cid:86)(cid:86)(cid:72)(cid:81)(cid:87)(cid:76)(cid:68)(cid:79)(cid:180)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:72)(cid:86)(cid:3)(cid:70)(cid:79)(cid:82)(cid:86)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)
(cid:179)(cid:86)(cid:75)(cid:72)(cid:79)(cid:87)(cid:72)(cid:85)-in-(cid:83)(cid:79)(cid:68)(cid:70)(cid:72)(cid:180)(cid:3)(cid:82)(cid:85)(cid:3)(cid:83)(cid:85)(cid:68)(cid:70)(cid:87)(cid:76)(cid:70)(cid:72)(cid:3)(cid:179)(cid:86)(cid:82)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:71)(cid:76)(cid:86)(cid:87)(cid:68)(cid:81)(cid:70)(cid:76)(cid:81)(cid:74)(cid:17)(cid:180)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:68)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:87)(cid:68)(cid:78)(cid:72)(cid:81)(cid:3)(cid:68)(cid:70)(cid:85)(cid:82)(cid:86)(cid:86)(cid:3)the globe in an attempt to contain the spread
of the virus have had an unprecedented and significant adverse impact on global economies in terms of reduced GDP,
increased unemployment, and insolvencies in a variety of industries and markets.
In the event economic activity continues to be adversely impacted, or the impact intensifies, due to the spread of
COVID-19 or due to actions to control the spread, we could be forced to curtail operations further due to reduced customer
demand, compliance with government mandates or the inability to adequately staff production facilities due to a widespread
or sustained outbreak of COVID-19 at one or more of our facilities. In addition, our global supply chain could be disrupted,
demand for our products, or the prices the products are sold, could be adversely impacted if economic conditions in the target
markets that we serve remain weak or weaken further. We also could face potential legal actions that could arise due to our
operations during the pandemic. This economic environment may also cause customer insolvencies which may result in their
inability to satisfy their financial obligations to us. The conditions are beyond our control and may have a significant impact
on our sales and results of operations.
In addition, the COVID-(cid:20)(cid:28)(cid:3)(cid:83)(cid:68)(cid:81)(cid:71)(cid:72)(cid:80)(cid:76)(cid:70)(cid:182)(cid:86)(cid:3)(cid:76)(cid:80)(cid:83)(cid:68)(cid:70)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:89)(cid:68)(cid:85)(cid:76)(cid:82)(cid:88)(cid:86)(cid:3)(cid:72)(cid:70)(cid:82)(cid:81)(cid:82)(cid:80)(cid:76)(cid:72)(cid:86)(cid:3)(cid:87)(cid:75)(cid:85)(cid:82)(cid:88)(cid:74)(cid:75)(cid:82)(cid:88)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:90)(cid:82)(cid:85)(cid:79)(cid:71)(cid:3)(cid:70)(cid:82)(cid:88)(cid:79)(cid:71)(cid:3)(cid:79)(cid:72)(cid:68)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)
instabilities or insolvencies of some of our customers or the customers they in turn serve which could impact our ability to
sell our products. These conditions are beyond our control and may have a significant impact on our sales and results of
operations. As we cannot predict the duration or scope of the COVID-19 pandemic, in the event the spread continues or the
government actions intensify, our results of operations and/or financial position could be adversely impacted.
Approximately 55% of our net sales in 2020 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.
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
6
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 (cid:86)(cid:83)(cid:72)(cid:70)(cid:76)(cid:68)(cid:79)(cid:87)(cid:92)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:86)(cid:3)(cid:68)(cid:87)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:72)(cid:3)(cid:41)(cid:76)(cid:69)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:73)(cid:68)(cid:70)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:17)(cid:3)(cid:36)(cid:87)(cid:3)(cid:70)(cid:72)(cid:85)(cid:87)(cid:68)(cid:76)(cid:81)(cid:3)(cid:87)(cid:76)(cid:80)(cid:72)(cid:86)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:86)(cid:88)(cid:83)(cid:83)(cid:79)(cid:92) 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 landowners 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.
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 contract(cid:88)(cid:68)(cid:79)(cid:3)(cid:68)(cid:85)(cid:85)(cid:68)(cid:81)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:70)(cid:72)(cid:85)(cid:87)(cid:68)(cid:76)(cid:81)(cid:3)(cid:36)(cid:76)(cid:85)(cid:79)(cid:68)(cid:76)(cid:71)(cid:3)(cid:48)(cid:68)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:79)(cid:86)(cid:3)(cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:86)(cid:3)(cid:83)(cid:88)(cid:85)(cid:86)(cid:88)(cid:68)(cid:81)(cid:87)(cid:3)(cid:87)(cid:82)(cid:3)(cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:182)(cid:86)(cid:3)
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.
Foreign currency exchange rate fluctuations could adversely affect our results of operations.
A significant proportion of our net sale 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 (cid:81)(cid:72)(cid:87)(cid:3)(cid:86)(cid:68)(cid:79)(cid:72)(cid:86)(cid:3)(cid:72)(cid:91)(cid:70)(cid:72)(cid:72)(cid:71)(cid:86)(cid:3)(cid:72)(cid:88)(cid:85)(cid:82)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)(cid:86)(cid:3)(cid:69)(cid:92)(cid:3)(cid:68)(cid:81)(cid:3)(cid:72)(cid:86)(cid:87)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:188)(cid:20)(cid:24)(cid:19)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:17)(cid:3)(cid:58)(cid:76)(cid:87)(cid:75)(cid:3)(cid:85)(cid:72)(cid:86)(cid:83)(cid:72)(cid:70)(cid:87)(cid:3)
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.
In the event of significant currency weakening in the countries into which our products are sold, demand for our
(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:86)(cid:15)(cid:3)(cid:83)(cid:85)(cid:76)(cid:70)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:73)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:86)(cid:15)(cid:3)(cid:82)(cid:85)(cid:3)(cid:68)(cid:3)(cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:182)(cid:86)(cid:3)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:87)(cid:82)(cid:3)(cid:86)(cid:68)(cid:87)(cid:76)(cid:86)(cid:73)(cid:92)(cid:3)(cid:82)bligations to us, could be adversely impacted.
Approximately $79 million of our net sales in 2020 was earned from customers located in Ukraine and Russia. Uncertain
geo-(cid:83)(cid:82)(cid:79)(cid:76)(cid:87)(cid:76)(cid:70)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:71)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:15)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:85)(cid:72)(cid:74)(cid:76)(cid:82)(cid:81)(cid:182)(cid:86)(cid:3)(cid:72)(cid:70)(cid:82)(cid:81)(cid:82)(cid:80)(cid:76)(cid:70)(cid:3)(cid:72)(cid:81)(cid:89)(cid:76)(cid:85)(cid:82)(cid:81)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:89)(cid:82)(cid:79)(cid:68)(cid:87)(cid:76)(cid:79)(cid:72)(cid:3)(cid:70)(cid:88)(cid:85)(cid:85)(cid:72)(cid:81)(cid:70)(cid:76)(cid:72)(cid:86)(cid:3)(cid:80)(cid:68)(cid:92)(cid:3)(cid:70)ause demand for our products to be
volatile and cause abrupt changes in our customers buying patterns.
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:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
the entry of new competitors into the markets we serve;
(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:74)(cid:74)(cid:85)(cid:72)(cid:86)(cid:86)(cid:76)(cid:89)(cid:72)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:72)(cid:87)(cid:76)(cid:87)(cid:82)(cid:85)(cid:86)(cid:182)(cid:3)(cid:83)(cid:85)(cid:76)(cid:70)(cid:76)(cid:81)(cid:74)(cid:3)(cid:86)(cid:87)(cid:85)(cid:68)(cid:87)(cid:72)(cid:74)(cid:76)es, 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.
GLATFELTER 2020 FORM 10-K
7
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:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
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 net sales from one customer serving the hygiene products
market, the loss of which could have a material adverse effect on our results of operations.
(cid:36)(cid:76)(cid:85)(cid:79)(cid:68)(cid:76)(cid:71)(cid:3)(cid:48)(cid:68)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:79)(cid:86)(cid:182)(cid:3)(cid:71)(cid:72)(cid:85)(cid:76)(cid:89)(cid:72)(cid:86)(cid:3)(cid:68)(cid:83)(cid:83)(cid:85)(cid:82)(cid:91)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:79)(cid:92)(cid:3)(cid:24)(cid:21)(cid:8)(cid:3)(cid:82)(cid:73)(cid:3)(cid:76)(cid:87)(cid:86)(cid:3)(cid:81)(cid:72)(cid:87)(cid:3)(cid:86)(cid:68)(cid:79)(cid:72)(cid:86)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:86)(cid:68)(cid:79)(cid:72)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:73)(cid:72)(cid:80)(cid:76)(cid:81)(cid:76)(cid:81)(cid:72)(cid:3)(cid:75)(cid:92)(cid:74)(cid:76)(cid:72)(cid:81)(cid:72)(cid:3)(cid:80)(cid:68)rket. In addition,
(cid:82)(cid:81)(cid:72)(cid:3)(cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:3)(cid:68)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:72)(cid:71)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:22)(cid:28)(cid:8)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:86)(cid:72)(cid:74)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:86)(cid:68)(cid:79)(cid:72)(cid:86)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:69)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:76)(cid:86)(cid:3)(cid:70)(cid:82)(cid:81)(cid:70)(cid:72)(cid:81)(cid:87)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:68)(cid:3)(cid:86)(cid:80)(cid:68)(cid:79)(cid:79)(cid:3)(cid:74)(cid:85)(cid:82)(cid:88)(cid:83)(cid:3)(cid:82)(cid:73)(cid:3)(cid:79)(cid:68)(cid:85)(cid:74)(cid:72)(cid:3)
customers. The loss of the large customer or a decline in sales of hygiene products could have a material adverse effect on
(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:182)(cid:86)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)(cid:17)(cid:3)(cid:50)(cid:88)(cid:85)(cid:3)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:87)(cid:82)(cid:3)(cid:72)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:79)(cid:92)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:72)(cid:87)(cid:72)(cid:3)(cid:70)(cid:82)(cid:88)(cid:79)(cid:71)(cid:3)(cid:69)(cid:72)(cid:3)(cid:68)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:87)(cid:72)(cid:70)(cid:75)(cid:81)(cid:82)(cid:79)(cid:82)(cid:74)(cid:76)(cid:70)(cid:68)(cid:79)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:79)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:87)(cid:76)ves
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
(cid:73)(cid:82)(cid:85)(cid:3)(cid:36)(cid:76)(cid:85)(cid:79)(cid:68)(cid:76)(cid:71)(cid:3)(cid:48)(cid:68)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:79)(cid:86)(cid:182)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:86)(cid:15)(cid:3)(cid:87)(cid:75)(cid:88)(cid:86)(cid:3)(cid:85)(cid:72)(cid:71)(cid:88)(cid:70)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:86)(cid:76)(cid:93)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:80)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3)(cid:76)(cid:87)(cid:3)(cid:70)(cid:88)(cid:85)(cid:85)(cid:72)(cid:81)(cid:87)(cid:79)(cid:92)(cid:3)(cid:86)(cid:72)(cid:79)(cid:79)(cid:86)(cid:3)(cid:76)(cid:87)(cid:86)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:86)(cid:17)(cid:3)(cid:36)(cid:81)(cid:92)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)
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.
8
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
(cid:51)(cid:68)(cid:70)(cid:76)(cid:73)(cid:76)(cid:70)(cid:3)(cid:53)(cid:76)(cid:80)(cid:15)(cid:3)(cid:82)(cid:81)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:90)(cid:82)(cid:85)(cid:79)(cid:71)(cid:182)(cid:86)(cid:3)(cid:75)(cid:68)(cid:93)(cid:68)(cid:85)(cid:71)(cid:3)(cid:69)(cid:72)(cid:79)(cid:87)(cid:86)(cid:17)(cid:3)(cid:37)(cid:92)(cid:3)(cid:89)(cid:76)(cid:85)(cid:87)(cid:88)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:76)(cid:87)(cid:86)(cid:3)(cid:74)(cid:72)(cid:82)(cid:74)(cid:85)(cid:68)(cid:83)(cid:75)(cid:76)(cid:70)(cid:3)(cid:79)(cid:82)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:3)(cid:76)(cid:86)(cid:3)(cid:86)(cid:88)(cid:69)(cid:77)(cid:72)(cid:70)(cid:87)(cid:3)(cid:87)(cid:82)(cid:3)(cid:86)(cid:76)(cid:80)(cid:76)(cid:79)(cid:68)(cid:85)(cid:3)(cid:87)(cid:92)(cid:83)(cid:72)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)
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, net sales, 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.
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.
GLATFELTER 2020 FORM 10-K
9
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
(cid:40)(cid:88)(cid:85)(cid:82)(cid:83)(cid:72)(cid:68)(cid:81)(cid:3)(cid:56)(cid:81)(cid:76)(cid:82)(cid:81)(cid:3)(cid:85)(cid:88)(cid:79)(cid:72)(cid:86)(cid:3)(cid:82)(cid:81)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:3)(cid:68)(cid:76)(cid:71)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:82)(cid:88)(cid:87)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:40)(cid:88)(cid:85)(cid:82)(cid:83)(cid:72)(cid:68)(cid:81)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:76)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:76)(cid:74)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:70)(cid:82)(cid:88)(cid:79)(cid:71)(cid:3)(cid:85)(cid:72)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:3)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:72)(cid:91)(cid:76)(cid:86)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)
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 various warehouse space in the United States, Canada, Europe,
Russia, China and our corporate offices in Charlotte, NC and York, PA. 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.
10
EXECUTIVE OFFICERS
The following table sets forth certain information with respect to our executive officers and other senior management
members of February 24, 2021
Name
Age Office with the Company
Dante C. Parrini
Christopher W. Astley
Samuel L. Hillard
Wolfgang Laures
Eileen L. Beck
David C. Elder
Jill L. Urey
Senior Vice President, Chief Commercial Officer
Senior Vice President, Chief Financial Officer
Senior Vice President, Integrated Global Supply Chain & Information Technology
56 Chairman and Chief Executive Officer
48
39
51
58 Vice President, Human Resources and Administration
52 Vice President, Finance and Chief Accounting Officer
54 Vice President, Deputy General Counsel & Corporate Secretary
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 (cid:177)
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 (cid:177) 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 is our Senior Vice President, Integrated Global Supply Chain and Information Technology. He
joined us in September 2019 with responsibility for our global supply chain and in July 2020 assumed additional leadership
of Information Technology for Glatfelter. Prior to joining us, 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.
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.
ITEM 4 MINE SAFETY DISCLOSURES
Not Applicable
GLATFELTER 2020 FORM 10-K
11
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 (cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:86)(cid:92)(cid:80)(cid:69)(cid:82)(cid:79)(cid:3)(cid:179)(cid:42)(cid:47)(cid:55)(cid:180)
Our Board of Directors declared quarterly cash dividends of $0.135 per common share in beginning with the second
quarter of 2020 and declared a $0.13 per share dividend in the first quarter of 2020 and each of the four quarters of 2019.
As of February 16, 2021, we had 902 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, 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, 2015 and charts the performance through December 31, 2020.
COMPARISON of 5 YEAR CUMULATIVE TOTAL RETURN
$200
$180
$160
$140
$120
$100
$80
$60
$40
$20
$0
Dec-15
Dec-16
Dec-17
Dec-18
Dec-19
Dec-20
Glatfelter
S&P Smallcap 600
S&P SmallCap 600 Paper Products
12
ITEM 6 SELECTED FINANCIAL DATA
As of or for the year ended December 31
Dollars in thousands, except per share
Net sales
2020
2018
$ 916,498 $ 927,673 $ 866,286 $ 800,362 $ 761,216
2016
2019
2017
Income (loss) from continuing operations
Income (loss) from discontinued operations
Net income (loss)
20,783
515
21,298
(25,211 )
(14,625 )
3,670 (177,156 )
(21,541 ) (191,781 )
(5,612 )
13,526
7,914
(14,177 )
35,731
21,554
Earnings (loss) per share from continuing
operations
Basic
Diluted
Total assets
Total debt
(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)
$
0.47 $
0.47
(0.57 ) $
(0.57 )
(0.01 ) $
(0.01 )
(0.13 ) $
(0.13 )
(0.33 )
(0.33 )
$ 1,286,881 $ 1,283,794 $ 1,339,754 $ 1,730,795 $ 1,521,259
313,521 359,858 411,747 481,396 372,608
577,932 555,959 538,898 708,928 653,826
Cash dividends declared per common share
Depreciation, depletion and amortization
Capital expenditures
$
0.535 $
56,600
28,136
0.52 $
50,820
27,765
0.52 $
47,525
42,129
0.52 $
42,078
80,783
0.50
39,287
61,162
Net tons sold
Number of employees
271,419 271,068 248,551 243,021 227,527
2,355
2,415
2,600
2,360
2,557
GLATFELTER 2020 FORM 10-K
13
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 2020
compared to 2019 is included herein. For discussion and analysis of 2019 compared to 2018, 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, 2019, which was filed with the United States Securities and Exchange
Commission on February 26, 2020 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-(cid:46)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:90)(cid:68)(cid:85)(cid:71)(cid:3)(cid:79)(cid:82)(cid:82)(cid:78)(cid:76)(cid:81)(cid:74)(cid:17)(cid:3)(cid:58)(cid:72)(cid:3)(cid:88)(cid:86)(cid:72)(cid:3)(cid:90)(cid:82)(cid:85)(cid:71)(cid:86)(cid:3)(cid:86)(cid:88)(cid:70)(cid:75)(cid:3)(cid:68)(cid:86)(cid:3)(cid:179)(cid:68)(cid:81)(cid:87)(cid:76)(cid:70)(cid:76)(cid:83)(cid:68)(cid:87)(cid:72)(cid:86)(cid:180)(cid:15)(cid:3)(cid:179)(cid:69)(cid:72)(cid:79)(cid:76)(cid:72)(cid:89)(cid:72)(cid:86)(cid:180)(cid:15)(cid:3)(cid:179)(cid:72)(cid:91)(cid:83)(cid:72)(cid:70)(cid:87)(cid:86)(cid:180)(cid:15)(cid:3)(cid:179)(cid:73)(cid:88)(cid:87)(cid:88)(cid:85)(cid:72)(cid:180)(cid:15)(cid:3)
(cid:179)(cid:76)(cid:81)(cid:87)(cid:72)(cid:81)(cid:71)(cid:86)(cid:180)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:86)(cid:76)(cid:80)(cid:76)(cid:79)(cid:68)(cid:85)(cid:3)(cid:72)(cid:91)(cid:83)(cid:85)(cid:72)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:76)(cid:73)(cid:92)(cid:3)(cid:73)(cid:82)(cid:85)(cid:90)(cid:68)(cid:85)(cid:71)-looking statements. Forward-looki(cid:81)(cid:74)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:85)(cid:72)(cid:73)(cid:79)(cid:72)(cid:70)(cid:87)(cid:3)(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)
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:
risks associated with the impact of the COVID-19 pandemic including global and regional economic conditions,
changes in demand for our products, interruptions in our global supply chain, ability to continue production by
our facilities, credit conditions of our customers or suppliers, or potential legal actions that could arise due to
our operations during the pandemic;
variations in demand for our products including the impact of unplanned market-related downtime, variations in
product pricing, or product substitution;
the impact of competition, changes in industry production capacity, including the construction of new facilities or
new machines, the closing of facilities and incremental changes due to capital expenditures or productivity
increases;
risks associated with our international operations, including local economic and political environments and
fluctuations in currency exchange rates;
geopolitical matters, including any impact to our operations from events in Russia, Ukraine and Philippines;
our ability to develop new, high value-added products;
changes in the price or availability of raw materials we use, particularly woodpulp, pulp substitutes, synthetic
pulp, other specialty fibers and abaca fiber;
changes in energy-related prices and commodity raw materials with an energy component;
the impact of unplanned production interruption at our facilities or at any of our key suppliers;
disruptions in production and/or increased costs due to labor disputes;
the gain or loss of significant customers and/or on-going viability of such customers;
the impact of war and terrorism;
the impact of unfavorable outcomes of audits by various state, federal or international tax authorities or changes in
pre-tax income and its impact on the valuation of deferred taxes;
enactment of adverse state, federal or foreign tax or other legislation or changes in government legislation, policy or
regulation; and
our ability to finance, consummate and integrate acquisitions.
i.
ii.
iii.
iv.
v.
vi.
vii.
viii.
ix.
x.
xi.
xii.
xiii.
xiv.
xv.
14
Introduction We manufacture a wide array of engineered materials and manage our company along two operating
segments:
(cid:135) Composite Fibers with net sales of single-serve tea and coffee filtration papers, wallcovering base materials, composite
laminate papers, technical specialties including substrates for electrical applications, and metallized products; and
(cid:135) Airlaid Materials with net sales of airlaid nonwoven fabric-like materials used in feminine hygiene products, adult
incontinence products, tabletop, specialty wipes, home care products and other airlaid applications.
(cid:54)(cid:83)(cid:72)(cid:70)(cid:76)(cid:68)(cid:79)(cid:87)(cid:92)(cid:3)(cid:51)(cid:68)(cid:83)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:71)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:72)(cid:71)(cid:3)(cid:68)(cid:86)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:72)(cid:71)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:73)(cid:82)(cid:79)(cid:79)(cid:82)(cid:90)(cid:76)(cid:81)(cid:74)(cid:3)
discussion and analysis primarily focuses on the financial results of operations and financial condition of our continuing
operations.
COVID-19 Pandemic On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a
pandemic as the virus spread throughout the world. As the virus continued its rapid spread, a significant portion of the
(cid:90)(cid:82)(cid:85)(cid:79)(cid:71)(cid:182)(cid:86)(cid:3)(cid:72)(cid:70)(cid:82)(cid:81)(cid:82)(cid:80)(cid:76)(cid:72)(cid:86)(cid:3)(cid:90)(cid:72)(cid:85)(cid:72) (cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:81)(cid:87)(cid:79)(cid:92)(cid:3)(cid:76)(cid:80)(cid:83)(cid:68)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:74)(cid:82)(cid:89)(cid:72)(cid:85)(cid:81)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:80)(cid:68)(cid:81)(cid:71)(cid:68)(cid:87)(cid:72)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:68)(cid:79)(cid:79)(cid:3)(cid:179)(cid:81)(cid:82)(cid:81)-(cid:72)(cid:86)(cid:86)(cid:72)(cid:81)(cid:87)(cid:76)(cid:68)(cid:79)(cid:180)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:72)(cid:86)(cid:3)(cid:70)(cid:79)(cid:82)(cid:86)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)
(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:179)(cid:86)(cid:75)(cid:72)(cid:79)(cid:87)(cid:72)(cid:85)-in-(cid:83)(cid:79)(cid:68)(cid:70)(cid:72)(cid:180)(cid:3)(cid:82)(cid:85)(cid:3)(cid:83)(cid:85)(cid:68)(cid:70)(cid:87)(cid:76)(cid:70)(cid:72)(cid:3)(cid:179)(cid:86)(cid:82)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:71)(cid:76)(cid:86)(cid:87)(cid:68)(cid:81)(cid:70)(cid:76)(cid:81)(cid:74)(cid:17)(cid:180)(cid:3)(cid:55)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3)(cid:68)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:75)(cid:68)(cid:71)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:79)(cid:76)(cid:78)(cid:72)(cid:79)(cid:92)(cid:3)(cid:87)(cid:82)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:15)(cid:3)(cid:68)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:76)(cid:81)(cid:74)(cid:3)
significant adverse impact on a wide range of economies and industries throughout the world, including certain markets we
serve.
The COVID-19 pandemic and the actions undertaken throughout the world in an attempt to contain the virus have had an
unprecedented and significant adverse impact on global economies in terms of reduced GDP, increased unemployment, and
insolvencies in a variety of industries and markets. As a result, we have experienced and may continue to experience weaker
demand for certain of our products due to the effects of the pandemic, and there may be periods during which demand for our
products is insufficient to enable us to operate our production facilities in an economical manner which may force us to take
machine downtime to curtail production to match demand.
Our financial performance and results of operations have been impacted by the weaker economic conditions related to
the pandemic as demand for wallcover products were significantly weaker particularly during the second quarter of 2020,
although shipping volumes increased significantly during the second half of 2020. In addition, demand for tabletop products
has been significantly adversely impacted by the pandemic and the effect on venues, such as restaurants, which use tabletop
products. The majority of our other (cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:3)(cid:83)(cid:82)(cid:85)(cid:87)(cid:73)(cid:82)(cid:79)(cid:76)(cid:82)(cid:86)(cid:3)(cid:76)(cid:86)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:76)(cid:71)(cid:72)(cid:85)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:69)(cid:72)(cid:3)(cid:179)(cid:72)(cid:86)(cid:86)(cid:72)(cid:81)(cid:87)(cid:76)(cid:68)(cid:79)(cid:180)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:88)(cid:80)(cid:72)(cid:85)(cid:3)(cid:86)(cid:87)(cid:68)(cid:83)(cid:79)(cid:72)(cid:86)(cid:17)(cid:3)(cid:58)(cid:72)(cid:3)(cid:69)(cid:72)(cid:79)(cid:76)(cid:72)(cid:89)(cid:72)(cid:3)(cid:71)(cid:72)(cid:80)(cid:68)(cid:81)(cid:71)(cid:3)
(cid:73)(cid:82)(cid:85)(cid:3)(cid:70)(cid:72)(cid:85)(cid:87)(cid:68)(cid:76)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:86)(cid:15)(cid:3)(cid:86)(cid:88)(cid:70)(cid:75)(cid:3)(cid:68)(cid:86)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:72)(cid:3)(cid:41)(cid:76)(cid:69)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:73)(cid:82)(cid:82)(cid:71)(cid:3)(cid:9)(cid:3)(cid:69)(cid:72)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:73)(cid:76)(cid:79)(cid:87)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:36)(cid:76)(cid:85)(cid:79)(cid:68)(cid:76)(cid:71)(cid:3)(cid:48)(cid:68)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:79)(cid:86)(cid:182)(cid:3)(cid:83)(cid:72)(cid:85)(cid:86)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)
hygiene and wipes, will remain strong. To date, we have successfully maintained our global supply chain securing critical
raw materials with minimal disruptions or incremental costs and the demand for substantially all products has been stable as
our customers continued to serve critical products to end-user consumers.
As disclosed in Item 1A (cid:177) Risk Factors to this Annual Report, approximately $79 million of our net sales in 2020 was
earned from customers located in Ukraine, Russia, and members of the Commonwealth of Independent States. The large
majority of our net sales from this region consists of wallcover base material. During the second quarter of 2020, our
wallcover net sales were significantly impacted by temporary suspension of operations of many of our customers due to
government orders related to the pandemic. Although our customers have resumed operations and demand for our wallcover
products returned to more normalized levels, if the governmental authorities reimplement actions to fight any resurgence of
COVID-19 in these regions, or if economic hardships continue, sales to some of our customers, such as wallpaper printers,
may be adversely impacted. In addition, as authorities instituted restrictions limiting business operations, social distancing
and other health and safety measures, restaurants and similar venues globally were forced to significantly curtail or close their
businesses. As a result, tabletop volumes in our Airlaid Materials segment were significantly lower in 2020.
The health and safety of our employees and their families are a top priority, and we remain committed to taking all the
necessary measures to protect them. We have instituted appropriate new safety, hygiene, and communication protocols
throughout our facilities to ensure we maintain our ability to produce product. Accordingly, we continue to proactively work
to identify and mitigate risks to safeguard the continuity of our business. We believe we are well positioned from a liquidity
and leverage perspective following the successful restructuring and cost optimization initiatives in 2019 and 2020 and the
debt refinancing in 2019. As a result, we believe we are able to supply our customers high-quality engineered materials
necessary to manufacture a variety of essential and life-sustaining consumer staples including wipes, health and hygiene
products, and food and beverage items during this challenging time.
GLATFELTER 2020 FORM 10-K
15
RESULTS OF OPERATIONS
2020 versus 2019
Overview For the year ended December 31, 2020 we reported income from continuing operations of $20.8 million, or
$0.47 per share compared with a loss of $25.2 million, or $0.57 per share in 2019.
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
Income (loss)
Earnings (loss) per share
Discontinued operations
Income
Earnings per share
Net income (loss)
Earnings (loss) per share
Year ended
December 31
2020
2019
$
$
$
916,498
147,869
49,156
20,783
0.47
515
0.01
21,298
0.48
$
927,673
147,542
54,635
(25,211 )
(0.57 )
3,670
0.08
(21,541 )
(0.49 )
We generated $109.0 million of cash from operations in 2020 compared with $102.8 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 2020 and 2019, capital expenditures totaled $28.1 and $27.8 million, respectively.
The results presented above are in accordance with generally accepted accounting principles in the United States
(cid:11)(cid:179)(cid:42)(cid:36)(cid:36)(cid:51)(cid:180)(cid:12)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:85)(cid:72)(cid:73)(cid:79)(cid:72)(cid:70)(cid:87)(cid:3)(cid:68)(cid:3)(cid:81)(cid:88)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:82)(cid:73)(cid:3)(cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:68)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:90)(cid:72)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:87)(cid:82)(cid:82)(cid:78)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:70)(cid:82)(cid:86)(cid:87)(cid:3)(cid:82)(cid:83)(cid:87)(cid:76)(cid:80)(cid:76)(cid:93)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:86)(cid:87)(cid:85)(cid:88)(cid:70)(cid:87)(cid:88)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)
consolidation of our metallized business, debt refinancing and termination and settlement of our qualified pension plan,
among others. Excluding these items from reported results, adjusted earnings, a non-GAAP measure, was $37.4 million, or
$0.84 per diluted share for 2020, compared with $33.2 million, or $0.75 per diluted share, a year ago. Operating income for
our segments, Composite Fibers and Airlaid Materials, increased by $4.2 million, or 8.8%, and $5.2 million, or 12.6%,
respectively. Although growth in aggregate shipping volumes was limited due to the COVID-(cid:20)(cid:28)(cid:3)(cid:83)(cid:68)(cid:81)(cid:71)(cid:72)(cid:80)(cid:76)(cid:70)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:86)(cid:72)(cid:74)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:182)(cid:3)
results benefited from a favorable mix of products sold, efficient operations and disciplined cost control. In addition, interest
expense, net declined $2.7 million reflecting the benefits of our debt refinancing in 2019.
Adjusted earnings consists 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 2018 connection with the sale, are reported as discontinued operations for all periods presented. This
adjustment reflects the net results of this discontinued operation.
Restructuring charge – Metallized operations. This adjustment represents the charges incurred in connection with the
decision to restructure a portion of the Composite Fibers segment, primarily consisting of the consolidation of our metallizing
operation from Gernsbach, Germany to Caerphilly, U.K. The adjustment includes a non-cash charge of $5.0 million
associated with accelerated depreciation and the write-off of inventory and spare parts in addition to cash severance costs
totaling $6.1 million.
16
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 separations, 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.
Corporate headquarters relocation. These adjustments reflect costs incurred in connection with the strategic relocation
(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:75)(cid:72)(cid:68)(cid:71)(cid:84)(cid:88)(cid:68)(cid:85)(cid:87)(cid:72)(cid:85)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:38)(cid:75)(cid:68)(cid:85)(cid:79)(cid:82)(cid:87)(cid:87)(cid:72)(cid:15)(cid:3)(cid:49)(cid:38)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)costs are primarily related to employee relocation costs and
exit costs at the previous corporate headquarters.
Pension settlement expenses, net. This adjustment reflects expenses incurred in connection with the termination of the
(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:84)(cid:88)(cid:68)(cid:79)(cid:76)(cid:73)(cid:76)(cid:72)(cid:71)(cid:3)(cid:83)(cid:72)(cid:81)(cid:86)(cid:76)on plan in 2019 and the reversion of excess pension plan assets to the Company. In the fourth
quarter of 2019, the Company incurred a $75.3 million pension settlement charge in connection with the termination of the
plan. Since the pension plan was fully funded, the settlement of the pension obligations did not require the use of the
(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:15)(cid:3)(cid:69)(cid:88)(cid:87)(cid:3)(cid:76)(cid:81)(cid:86)(cid:87)(cid:72)(cid:68)(cid:71)(cid:3)(cid:90)(cid:68)(cid:86)(cid:3)(cid:68)(cid:70)(cid:70)(cid:82)(cid:80)(cid:83)(cid:79)(cid:76)(cid:86)(cid:75)(cid:72)(cid:71)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:83)(cid:79)(cid:68)(cid:81)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86). In connection with the reversion of excess pension plan
assets in the second quarter of 2020, the Company incurred pension settlement expenses related to excise taxes, net of post
settlement adjustments and certain related professional fees.
COVID-19 incremental costs. This adjustment represents incremental cash costs incurred directly related to the COVID-
19 pandemic such as mill employee incentive payments, enhanced hygiene protocols, safety and supplies and professional
fees primarily associated with the CARES Act benefit.
Asset Impairment Charge. This adjustment represents a non-cash charge recorded to reduce the carrying amount of a
tradename intangible asset of the Dresden wallcover business due to the impact of the COVID 19 pandemic on the
underlying forecasted revenue stream.
Airlaid capacity expansion costs. These adjustments reflect non-capitalized, one-time costs incurred related to the start-
up of a new airlaid production facility in Fort Smith, Arkansas and implementation of a new business system.
Strategic initiatives. These adjustments primarily reflect professional and legal fees incurred directly related to
evaluating and executing certain strategic initiatives including costs associated with acquisitions and the related integration.
Debt refinancing costs. Represents a charge to write-off unamortized debt issuance costs in connection with the
redemption (cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:7)(cid:21)(cid:24)(cid:19)(cid:3)million, 5.375% Notes.
Fox River environmental matter. (cid:55)(cid:75)(cid:76)(cid:86)(cid:3)(cid:68)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:72)(cid:91)(cid:70)(cid:79)(cid:88)(cid:71)(cid:72)(cid:86)(cid:3)(cid:68)(cid:3)(cid:74)(cid:68)(cid:76)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:85)(cid:72)(cid:73)(cid:79)(cid:72)(cid:70)(cid:87)(cid:86)(cid:3)(cid:68)(cid:3)(cid:71)(cid:72)(cid:70)(cid:85)(cid:72)(cid:68)(cid:86)(cid:72)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:68)(cid:79)(cid:79)(cid:3)
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. These adjustments exclude gains from the sales of timberlands as these items are not
considered to be part of our core business, ongoing results of operations or cash flows. These adjustments are irregular in
timing and amount and may benefit our operating results.
Coronavirus Aid, Relief, and Economic Security (CARES) Act 2020. This adjustment reflects the tax benefit recognized
as a result of the March 27, 2020 change in U.S. tax law which, among others, allows net operating losses to be carried back
five years.
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.
GLATFELTER 2020 FORM 10-K
17
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, 2020 and 2019:
In thousands, except per share
Net income
Exclude: Income from discontinued operations
Income (loss) from continuing operations
Adjustments (pre-tax)(cid:3)
Restructuring charge - Metallized operations
Cost optimization actions
Corporate headquarters relocation
Pension settlement expenses, net
COVID 19 - incremental costs
Asset impairment charge
Airlaid capacity expansion costs
Debt refinancing
Strategic initiatives
Fox River environmental matter
Timberland sales and related costs
Total adjustments (pre-tax)
Income taxes (1)(cid:3)
CARES Act of 2020 tax benefit (2)(cid:3)
Total after-tax adjustments
Adjusted earnings
Year ended
December 31
2020
2019
Amount
EPS
Amount
EPS
$
$
21,298 $
(515 )
20,783
11,111
5,979
1,053
6,154
2,715
900
(cid:178)
(cid:178)
1,567
(cid:178)
(1,382 )
28,097
(5,405 )
(6,082 )
16,610
37,393 $
0.48 $
(0.01 )
0.47
(21,541 ) $
(3,670 )
(25,211 )
(0.49 )
(0.08 )
(0.57 )
(cid:178)
8,583
(cid:178)
75,326
(cid:178)
(cid:178)
1,014
992
249
(2,509 )
(1,572 )
82,083
(23,722 )
(cid:178)
58,361
33,150 $
0.37
0.84 $
1.32
0.75
(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.
(2) T(cid:68)(cid:91)(cid:3)(cid:69)(cid:72)(cid:81)(cid:72)(cid:73)(cid:76)(cid:87)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:70)(cid:82)(cid:81)(cid:81)(cid:72)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:83)(cid:68)(cid:86)(cid:86)(cid:68)(cid:74)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:85)(cid:82)(cid:81)(cid:68)(cid:89)(cid:76)(cid:85)(cid:88)(cid:86)(cid:3)(cid:36)(cid:76)(cid:71)(cid:15)(cid:3)(cid:53)(cid:72)(cid:79)(cid:76)(cid:72)(cid:73)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:40)(cid:70)(cid:82)(cid:81)(cid:82)(cid:80)(cid:76)(cid:70)(cid:3)(cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:92)(cid:3)(cid:36)(cid:70)(cid:87)(cid:3)(cid:11)(cid:179)(cid:38)(cid:36)(cid:53)(cid:40)(cid:54)(cid:180)(cid:12) related to provisions
that (cid:80)(cid:82)(cid:71)(cid:76)(cid:73)(cid:76)(cid:72)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:179)(cid:81)(cid:72)(cid:87)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:79)(cid:82)(cid:86)(cid:86)(cid:180)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:86)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:83)(cid:85)(cid:72)(cid:89)(cid:76)(cid:82)(cid:88)(cid:86)(cid:3)(cid:79)(cid:68)(cid:90)(cid:3)(cid:87)(cid:82)(cid:3)(cid:68)(cid:79)(cid:79)(cid:82)(cid:90)(cid:3)(cid:70)(cid:72)(cid:85)(cid:87)(cid:68)(cid:76)(cid:81)(cid:3)losses to be carried back five years.
Segment Financial Performance
Year ended
December 31
Dollars in thousands
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)(cid:3)
Depreciation, depletion and
amortization(cid:3)
Capital expenditures
Composite Fibers
2019
2020
$ 521,666
$ 525,089
432,154
430,420
89,512
94,669
41,629
42,575
Airlaid Materials
2020
$ 391,409
326,809
64,600
18,296
2019
$ 406,007
346,568
59,439
18,321
$
(cid:178)
52,094
(cid:178)
(cid:178)
47,883
(cid:178)
(cid:178)
46,304
(cid:178)
(cid:178)
41,118
(cid:178)
Other and
Unallocated
Total
2020
(cid:178)
11,400
(11,400 )
39,174
(1,332 )
(49,242 )
(16,797 )
$
2019
(cid:178)
1,409
(1,409 )
35,017
2020
$ 916,498
768,629
147,869
100,045
2019
$ 927,673
780,131
147,542
94,967
(2,060 )
(34,366 )
(89,088 )
(1,332 )
49,156
(16,797 )
(2,060 )
54,635
(89,088 )
$ 52,094
$
47,883
$
46,304
$
41,118
$
(66,039 )
$ (123,454 )
$
32,359
$
(34,453 )
134,758
133,473
136,661
137,595
(cid:178)
(cid:178)
271,419
271,068
$ 26,175
13,262
$
26,153
11,972
$
22,416
9,311
$
21,136
13,667
$
$
8,009
5,563
$
3,531
2,126
56,600
28,136
$
50,820
27,765
The sum of individual amounts set forth above may not agree to the consolidated financial statements included herein due to rounding.
18
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
(cid:82)(cid:85)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:179)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:56)(cid:81)(cid:68)(cid:79)(cid:79)(cid:82)(cid:70)(cid:68)(cid:87)(cid:72)(cid:71)(cid:180)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:87)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:68)(cid:69)(cid:82)(cid:89)(cid:72)(cid:17)(cid:3)
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
(cid:72)(cid:91)(cid:87)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:73)(cid:79)(cid:82)(cid:90)(cid:3)(cid:74)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:87)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3)(cid:70)(cid:82)(cid:85)(cid:72)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:17)(cid:3)(cid:54)(cid:88)(cid:70)(cid:75)(cid:3)(cid:68)(cid:80)(cid:82)(cid:88)(cid:81)(cid:87)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:83)(cid:85)(cid:72)(cid:86)(cid:72)(cid:81)(cid:87)(cid:72)(cid:71)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:179)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)
(cid:56)(cid:81)(cid:68)(cid:79)(cid:79)(cid:82)(cid:70)(cid:68)(cid:87)(cid:72)(cid:71)(cid:17)(cid:180)(cid:3)(cid:44)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:89)(cid:68)(cid:79)(cid:88)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)ing 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
(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:83)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:76)(cid:86)(cid:3)(cid:72)(cid:89)(cid:68)(cid:79)(cid:88)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:37)(cid:82)(cid:68)(cid:85)(cid:71)(cid:3)(cid:82)(cid:73)(cid:3)(cid:39)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)(cid:17)
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
$
2020
916,498
768,629
147,869
$
16.1 %
$
2019
927,673
780,131
147,542
$
15.9 %
Change
(11,175 )
(11,502 )
327
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
2020
2019
57.3 %
42.7
100.0 %
56.2 %
43.8
100.0 %
Net sales on a consolidated basis totaled $916.5 million and $927.7 million in 2020 and 2019, respectively. The $11.2
million decrease was primarily driven by lower average selling prices partially offset by favorable currency translation.
Shipping volumes increased 0.1%.
(cid:38)(cid:82)(cid:80)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:72)(cid:3)(cid:41)(cid:76)(cid:69)(cid:72)(cid:85)(cid:86)(cid:182) net sales increased $3.4 million, or 0.7%, and totaled $525.1 million in 2020. The increase was
primarily due to a more favorable mix of products sold and $7.1 million from favorable currency translation. Shipping
volumes increased 1.0% and lower selling prices adversely impacted the comparison by $11.3 million.
GLATFELTER 2020 FORM 10-K
19
(cid:38)(cid:82)(cid:80)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:72)(cid:3)(cid:41)(cid:76)(cid:69)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:72)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85) 31, 2020 increased $4.2 million to $52.1 million
compared to a year ago(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:86)(cid:72)(cid:74)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)(cid:3)(cid:90)(cid:72)(cid:85)(cid:72)(cid:3)(cid:73)(cid:68)(cid:89)(cid:82)(cid:85)(cid:68)(cid:69)(cid:79)(cid:92) impacted by $10.4 million from lower raw material and energy
prices, operational efficiencies, and volume/mix improvements. Currency was $0.9 million unfavorable compared to the prior
year. The primary drivers are summarized in the following chart (in millions):
$47.9
$(11.3)
$10.4
$2.0
$4.0
$(0.9)
$52.1
2019 Operating
Income
Selling Price
Volume & Mix
RM & Energy
Inflation
Operations & Other
FX
2020 Operating
Income
(cid:36)(cid:76)(cid:85)(cid:79)(cid:68)(cid:76)(cid:71)(cid:3)(cid:48)(cid:68)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:79)(cid:86)(cid:182) net sales totaled $391.4 million in 2020, a $14.6 million decrease in the year-over-year comparison
driven by $13.7 million of lower selling prices. Shipping volumes declined slightly as the closure of restaurants globally due
to the COVID-19 pandemic resulted in significantly lower tabletop volumes. This decline was partially offset by strong
shipments of home care, food pads and wipes products. Lower selling prices primarily reflects contractual pass-through
arrangements. Currency translation was favorable $4.4 million.
(cid:36)(cid:76)(cid:85)(cid:79)(cid:68)(cid:76)(cid:71)(cid:3)(cid:48)(cid:68)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:79)(cid:86)(cid:182)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:87)(cid:82)(cid:87)(cid:68)(cid:79)(cid:72)(cid:71)(cid:3)(cid:7)(cid:23)(cid:25)(cid:17)(cid:22)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3)(cid:68)(cid:81)(cid:3)(cid:76)(cid:81)(cid:70)(cid:85)(cid:72)(cid:68)(cid:86)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:7)(cid:24)(cid:17)(cid:21)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3)(cid:82)(cid:85)(cid:3)(cid:20)(cid:21)(cid:17)(cid:25)(cid:8)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:85)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:68)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:68)(cid:74)(cid:82)(cid:17)(cid:3)
The increase was primarily due to lower raw material and energy costs partially offset by lower selling prices, primarily
reflecting pass-through arrangements. Currency translation was favorable $2.0 million. The primary drivers are summarized
in the following chart (in millions):
(cid:936)(cid:1008)(cid:1005)(cid:856)(cid:1005)(cid:3)
(cid:936)(cid:894)(cid:1005)(cid:1007)(cid:856)(cid:1011)(cid:895)
(cid:936)(cid:1005)(cid:1008)(cid:856)(cid:1012)(cid:3)
(cid:936)(cid:1004)(cid:856)(cid:1010)(cid:3)
(cid:936)(cid:1006)(cid:856)(cid:1004)(cid:3)
(cid:936)(cid:1008)(cid:1010)(cid:856)(cid:1007)(cid:3)
(cid:936)(cid:1005)(cid:856)(cid:1008)(cid:3)
2019
Opera ting
Income
Selling
Price
Volume &
Mix
RM &
Energy
Infla tion
Opera tions
& Other
FX
2020
Opera ting
Income
20
Other and Unallocated The amount of net operating expenses not allocated to an operating segment and reported as
(cid:179)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:56)(cid:81)(cid:68)(cid:79)(cid:79)(cid:82)(cid:70)(cid:68)(cid:87)(cid:72)(cid:71)(cid:180)(cid:3)(cid:76)(cid:81)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:87)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:54)(cid:72)(cid:74)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:51)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:81)(cid:70)(cid:72)(cid:15)(cid:3)(cid:87)(cid:82)(cid:87)(cid:68)(cid:79)(cid:72)(cid:71)(cid:3)(cid:7)(cid:23)(cid:28)(cid:17)(cid:21)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:21)(cid:19)(cid:21)(cid:19)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:85)(cid:72)(cid:71)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:7)(cid:22)(cid:23)(cid:17)(cid:23)(cid:3)
million in 2019. Excluding the items identified to present (cid:179)(cid:68)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3)(cid:72)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:15)(cid:180)(cid:3)(cid:88)(cid:81)(cid:68)(cid:79)(cid:79)(cid:82)(cid:70)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:85)(cid:76)(cid:86)(cid:82)(cid:81)
declined $1.3 million primarily reflecting cost reduction initiatives, position elimination and less travel.
Gain on Sales of Plant, Equipment and Timberlands, net During each of the past two years, we completed the
following sales of assets:
Dollars in thousands
2020
Timberlands
Other
Total
2019
Timberlands
Other
Total
Acres
Proceeds
Gain (loss)
461 $
n/a
$
1,996 $
n/a
$
1,413 $
(cid:178)
1,413 $
1,705 $
493
2,198 $
1,381
(49 )
1,332
1,572
488
2,060
Income taxes For continuing operations for the year ended December 31, 2020, we recorded a $11.6 million income tax
provision on a pretax income of $32.4 million. The comparable amounts for 2019 were a $9.2 million income tax benefit on a
pretax loss of $34.5 million. The income tax expense in 2020 includes the impact of nondeductible excise tax totaling $8.3
million partially offset by a $6.1 million benefit recorded in connection with passage of the CARES Act. This Act, which was
(cid:86)(cid:76)(cid:74)(cid:81)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:87)(cid:82)(cid:3)(cid:79)(cid:68)(cid:90)(cid:3)(cid:82)(cid:81)(cid:3)(cid:48)(cid:68)(cid:85)(cid:70)(cid:75)(cid:3)(cid:21)(cid:26)(cid:15)(cid:3)(cid:21)(cid:19)(cid:21)(cid:19)(cid:15)(cid:3)(cid:80)(cid:82)(cid:71)(cid:76)(cid:73)(cid:76)(cid:72)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:179)(cid:81)(cid:72)(cid:87)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:79)(cid:82)(cid:86)(cid:86)(cid:180)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:86)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:83)(cid:85)(cid:72)(cid:89)(cid:76)(cid:82)(cid:88)(cid:86)(cid:3)(cid:79)(cid:68)(cid:90)(cid:3)(cid:87)(cid:82)(cid:3)(cid:68)(cid:79)(cid:79)(cid:82)(cid:90)(cid:3)(cid:70)(cid:72)(cid:85)(cid:87)(cid:68)(cid:76)(cid:81)(cid:3)(cid:79)(cid:82)(cid:86)(cid:86)(cid:72)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:69)(cid:72)
carried back five years. These amounts are excluded from net income when arriving at adjusted earnings. The amounts for
2019 included a $23.1 million tax benefit recorded in connection with the $75.3 million pension settlement charge. In
addition, income taxes in 2019 included a $3.0 million benefit due to the completion of tax audits and the release of certain
state valuation allowances.
On adjusted pre-tax income of $60.5 million, income tax expense was $23.1 million in 2020. The comparable amounts in
2019 were $47.6 million and $14.0 million, respectively. The effective tax rate on adjusted earnings was 38.2% in the 2020
compared to 30.4% in 2019.
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 net sales (cid:72)(cid:91)(cid:70)(cid:72)(cid:72)(cid:71)(cid:86)(cid:3)(cid:72)(cid:88)(cid:85)(cid:82)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)(cid:86)(cid:3)(cid:69)(cid:92)(cid:3)(cid:68)(cid:81)(cid:3)(cid:72)(cid:86)(cid:87)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:188)150 million. For 2020 compared to 2019, the average
currency exchange rate of the euro strengthened relative to the U.S. dollar by approximately 9.5% in the year over year
comparison, and the British pound sterling to the dollar strengthened by approximately 2.3%. 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.
The table below summarizes the translation impact on reported results that changes in currency exchange rates had on
our non-U(cid:17)(cid:54)(cid:17)(cid:3)(cid:69)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:82)(cid:81)(cid:89)(cid:72)(cid:85)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:182)(cid:86)(cid:3)(cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:83)(cid:72)(cid:85)(cid:76)(cid:82)(cid:71)(cid:3)(cid:76)(cid:81)(cid:71)(cid:76)(cid:70)(cid:68)(cid:87)(cid:72)(cid:71)(cid:17)
In thousands
Net sales
Costs of products sold
SG&A expenses
Income taxes and other
Net income
Year ended
December 31, 2020
Favorable
(unfavorable)
$
$
11,467
(9,894 )
(448 )
(13 )
1,112
The above table only presents the financial reporting impact of foreign currency translations assuming currency
(cid:72)(cid:91)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:3)(cid:85)(cid:68)(cid:87)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:21)(cid:19)(cid:21)(cid:19)(cid:3)(cid:90)(cid:72)(cid:85)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:86)(cid:68)(cid:80)(cid:72)(cid:3)(cid:68)(cid:86)(cid:3)(cid:21)(cid:19)(cid:20)(cid:28)(cid:15)(cid:3)(cid:82)(cid:85)(cid:3)(cid:179)(cid:70)(cid:82)(cid:81)(cid:86)(cid:87)(cid:68)(cid:81)(cid:87)(cid:3)(cid:70)(cid:88)(cid:85)(cid:85)(cid:72)(cid:81)(cid:70)(cid:92)(cid:17)(cid:180)(cid:3)(cid:44)(cid:87)(cid:3)(cid:71)(cid:82)(cid:72)(cid:86)(cid:3)(cid:81)(cid:82)(cid:87)(cid:3)(cid:83)(cid:85)(cid:72)(cid:86)(cid:72)(cid:81)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:76)(cid:80)(cid:83)(cid:68)(cid:70)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:70)(cid:72)(cid:85)(cid:87)(cid:68)(cid:76)(cid:81)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:72)(cid:87)(cid:76)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)
advantages or disadvantages of operating or competing in multi-currency markets.
Discontinued Operations We completed the sale of our Specialty Papers business on October 31, 2018. Its results of
operations are reported as discontinued operations for all periods presented. There was an immaterial amount of activity in
results of discontinued operations for 2020. In 2019, we reported income from discontinued operations of $3.7 million
GLATFELTER 2020 FORM 10-K
21
primarily relating to adjustments for post-closing working capital, pension and the reversal of tax reserves associated with the
closure of tax matters, and other items in connection with the sale of Specialty Papers.
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 used
Cash, cash equivalents and restricted cash at the end of period
Less: restricted cash in Prepaid and other current assets
Less: restricted cash in Other assets
Cash and cash equivalents at end of period
Year ended
December 31
2020
2019
$
126,201
$
142,685
108,993
(26,773 )
(100,306 )
5,163
(1,613 )
(14,536 )
111,665
(2,000 )
(10,084 )
$
99,581
102,835
(27,113 )
(72,774 )
(269 )
(19,163 )
(16,484 )
126,201
(cid:178)
(cid:178)
126,201
$
At December (cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:21)(cid:19)(cid:15)(cid:3)(cid:90)(cid:72)(cid:3)(cid:75)(cid:68)(cid:71)(cid:3)(cid:7)(cid:28)(cid:28)(cid:17)(cid:25)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:76)(cid:81)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:89)(cid:68)(cid:79)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:11)(cid:179)(cid:70)(cid:68)(cid:86)(cid:75)(cid:180)(cid:12)(cid:15)(cid:3)(cid:82)(cid:73)(cid:3)(cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3)(cid:68)(cid:83)(cid:83)(cid:85)(cid:82)(cid:91)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:79)(cid:92)(cid:3)(cid:27)(cid:25)(cid:8)(cid:3)(cid:90)(cid:68)(cid:86)(cid:3)
held by foreign subsidiaries. Cash held by our foreign subsidiaries can be repatriated without incurring a significant amount
of additional taxes. In addition to cash, as of December 31, 2020, $175.2 million was available under our existing revolving
credit agreement.
Cash provided by operating activities totaled $109.0 million in 2020 compared with $102.8 million a year ago, which
included $53.4 million of cash received in connection with the termination of our overfunded qualified pension plan. The
improvement in operating cash flow reflects a $12.9 million increase in EBITDA, adjusted to exclude items identified to
determine adjusted earnings, $21.7 million from improved working capital usage, a $20.4 million tax refund associated with
the CARES Act, and $17.2 million of lower cash used for the Fox River matter, partially offset by cash used for restructuring
activities, excise taxes on the pension asset reversion and strategic initiatives in 2020. Cash used for interest payments
declined $4.0 million in the comparison reflecting savings from our debt refinancing in early 2019.
Net cash used by investing activities decreased by $0.3 million in the year-over-year comparison. Capital expenditures
totaled $28.1 million in 2020 compared with $27.8 million in 2019. Capital expenditures are expected to total between $38
million and $42 million in 2021.
Net cash used by financing activities totaled $100.3 million in 2020 compared with $72.8 million in 2019. The change in
the year-to-year comparison primarily reflects reductions in amounts outstanding under our Revolving credit facility and term
loan repayments.
The following table sets forth our outstanding long-term indebtedness:
In thousands
Revolving credit facility, due Feb. 2024
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
2020
2019
$
$
36,813
249,715
2,629
14,737
4,382
7,143
315,419
(25,057 )
(1,898 )
288,464
$
$
84,255
240,969
4,012
19,487
5,617
7,915
362,255
(22,940 )
(2,396 )
336,919
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 2020. As of December 31, 2020, the leverage ratio, as
calculated in accordance with the definition in our amended credit agreement, was 1.8x, within the limits set forth in our credit
agreement.
22
The table above sets forth our outstanding debt as of December 31, 2020. The significant terms of the debt instruments are
more fully discussed in Item 8 - Financial Statements and Supplementary Data (cid:177) Note 20 - (cid:179)Long-Term Debt(cid:17)(cid:180)(cid:3)All term loans
are denominated in euros and the balances reported are influenced by currency translation, the effect of which is mitigated by
certain financial derivatives as discussed in Item 8 (cid:177) Financial Statements and Supplementary Data (cid:177) Note - (cid:21)(cid:21)(cid:3)(cid:179)Financial
Derivatives and Hedging Activities(cid:17)(cid:180)
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-(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:73)(cid:68)(cid:70)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:11)(cid:87)(cid:75)(cid:72)(cid:3)(cid:179)(cid:21)(cid:19)(cid:20)(cid:28)(cid:3)(cid:41)(cid:68)(cid:70)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:180)(cid:12)(cid:3)(cid:85)(cid:72)(cid:83)(cid:79)(cid:68)(cid:70)(cid:72)(cid:86)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:72)(cid:91)(cid:76)(cid:86)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:53)(cid:72)(cid:89)(cid:82)(cid:79)(cid:89)(cid:76)(cid:81)(cid:74)(cid:3)(cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:73)(cid:68)(cid:70)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:76)(cid:86)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:68)(cid:3)(cid:7)400 million
variable rate revolver and a (cid:188)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 2020, we used $23.5 million of cash for dividends on
our common stock compared with $22.9 million in 2019. In the second quarter of 2020, we increased the quarterly cash dividend
by 3.85%. 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.
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 (cid:177) Note 24 (cid:177) (cid:179)Commitments, Contingencies
and Legal Proceedings,” (cid:90)(cid:72)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:76)(cid:81)(cid:89)(cid:82)(cid:79)(cid:89)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:47)(cid:82)(cid:90)(cid:72)(cid:85)(cid:3)(cid:41)(cid:82)(cid:91)(cid:3)(cid:53)(cid:76)(cid:89)(cid:72)(cid:85)(cid:3)(cid:76)(cid:81)(cid:3)(cid:58)(cid:76)(cid:86)(cid:70)(cid:82)(cid:81)(cid:86)(cid:76)(cid:81)(cid:3)(cid:11)(cid:87)(cid:75)(cid:72)(cid:3)(cid:179)(cid:41)(cid:82)(cid:91)(cid:3)(cid:53)(cid:76)(cid:89)(cid:72)(cid:85)(cid:180)(cid:12)(cid:15)(cid:3)(cid:68)(cid:81)(cid:3)(cid:40)(cid:51)(cid:36)(cid:3)(cid:54)(cid:88)(cid:83)(cid:72)(cid:85)(cid:73)(cid:88)(cid:81)(cid:71)(cid:3)(cid:86)(cid:76)(cid:87)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)
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, including the pending acquisition of Georgia-Pacific's U.S.
nonwovens business for $175 million, from a combination of operating cash flow, cash and cash equivalents, our existing credit
facility and other long-term debt.
Off-Balance-Sheet Arrangements As of December 31, 2020 and 2019, we had not entered into any off-balance-sheet
arrangements. Financial derivative instruments, to which we are a party, and guarantees of indebtedness, which solely consist
of obligations of subsidiaries, are reflected in the consolidated balance sheets included herein in Item 8 (cid:177) Financial
Statements and Supplementary Data.
Contractual Obligations The following table sets forth contractual obligations as of December 31, 2020:
In millions
Long-term debt (1)(cid:3)
Operating leases (2)(cid:3)
Purchase obligations (3)(cid:3)
Other long term obligations (4), (5)(cid:3)
Total
Payments due during the year ending December 31,
Total
2021
2022 to 2023
2024 to 2025
$
$
330 $
16
104
32
482 $
30 $
5
92
3
130 $
50 $
5
12
6
73 $
250 $
2
(cid:178)
5
257 $
2026 and
beyond
(cid:178)
4
(cid:178)
18
22
(1)
(2)
(3)
(4)
(5)
Represents contractual principal and interest payments due on long-term debt. The amounts include expected interest payments of $14 million over the
term of the underlying debt instruments based contractual or, in the case of variable rate instruments, current market rates.
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.
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
(cid:177) Financial Statements and Supplementary Data, Note 11 - (cid:179)(cid:44)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:55)(cid:68)(cid:91)(cid:72)(cid:86)(cid:15)(cid:180)(cid:3)(cid:86)(cid:88)(cid:70)(cid:75)(cid:3)(cid:68)mounts totaled $46 million at December 31, 2020.
GLATFELTER 2020 FORM 10-K
23
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, net sales 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 annually, during the third quarter, or more frequently if impairment indicators are present.
However, in 2020, as a result of potential impairment indicators related to the impact of the COVID-19 pandemic, we
evaluated such assets as of the end of the second quarter and, in connection with our normal review cycle, in the third quarter.
In addition, in order to align the evaluation process more closely with the timing change for our strategic planning cycle, we
changed the timing of the annual evaluation to be completed in the fourth quarter. Accordingly, we completed an evaluation
during the fourth quarter of 2020, and we concluded there was no impairment of goodwill or non-amortizing tradename
intangible assets.
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)(cid:3)
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
2020
2019
2018
2.70 %
2.17 %
(cid:178)
(cid:178)
3.11 %
2.30 %
5.30 %
4.50 %
2037
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
(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.
24
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 (cid:177) Financial Statements
and Supplementary Data (cid:177) 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
At variable interest rates
At fixed interest rates (cid:177) Term Loans
Weighted-average interest rate
On variable rate debt
On fixed rate debt (cid:177) Term Loans
Interest rate swap
Pay fixed/received variable (notional)(cid:3)
Rate paid
Rate received
2021
2022
2023
2024
2025
Year Ended December 31
December 31, 2020
Carrying Value Fair Value
$ 276,404 $ 262,906 $ 249,408 $ 45,102 $
1,880
23,111 11,815
3,973
(cid:178)
$
451
$
286,528 $ 286,528
28,891 29,118
315,419 $ 315,646
1.50 %
1.82 %
1.50 %
1.73 %
1.50 %
1.58 %
1.50 %
1.55 %
1.50 %
1.55 %
(cid:188) 180,000 (cid:188) 180,000 (cid:188) 180,000
0.0395 % 0.0395 % 0.0395 %
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
The table above presents the average principal outstanding and related interest rates for the next five years for debt
outstanding as of December 31, 2020. 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, 2020, we had $313.5 million of long-term debt, net of deferred debt issuance costs. After giving effect to the interest rate
swap agreement, approximately 19.7% 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, 2020, 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 $0.3 million.
GLATFELTER 2020 FORM 10-K
25
W(cid:72)(cid:3)(cid:72)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:87)(cid:82)(cid:3)(cid:68)(cid:3)(cid:188)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% (cid:82)(cid:81)(cid:3)(cid:188)180 million of the underlying variable rate term loan. We will receive the greater of 0.00% or EURIBOR.
As of the end of 2020, EURIBOR was (0.545)%.
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 (cid:177) (cid:179)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:73)(cid:79)(cid:82)(cid:90)(cid:3)(cid:75)(cid:72)(cid:71)(cid:74)(cid:72)(cid:86)(cid:180)(cid:30)(cid:3)(cid:82)(cid:85)(cid:3)(cid:76)(cid:76)(cid:12)(cid:3)(cid:80)(cid:76)(cid:87)(cid:76)(cid:74)(cid:68)(cid:87)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:76)(cid:80)(cid:83)(cid:68)(cid:70)(cid:87)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)
currency exchange rates have on intercompany financing transactions and foreign currency denominated receivables and
payables (cid:177) (cid:179)(cid:73)(cid:82)(cid:85)(cid:72)(cid:76)(cid:74)(cid:81)(cid:3)(cid:70)(cid:88)(cid:85)(cid:85)(cid:72)(cid:81)(cid:70)(cid:92)(cid:3)(cid:75)(cid:72)(cid:71)(cid:74)(cid:72)(cid:86)(cid:17)(cid:180)(cid:3)(cid:41)(cid:82)(cid:85)(cid:3)(cid:68)(cid:3)(cid:80)(cid:82)(cid:85)(cid:72)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:79)(cid:72)(cid:87)(cid:72)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:88)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:68)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:92)(cid:15)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:3)(cid:87)(cid:82)(cid:3)(cid:44)(cid:87)(cid:72)(cid:80)(cid:3)(cid:27)(cid:3)(cid:177) Financial Statements
and Supplementary Data (cid:177) Note 22 - “Financial Derivatives and Hedging Activities.”
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 net sales is estimated to
(cid:72)(cid:91)(cid:70)(cid:72)(cid:72)(cid:71)(cid:3)(cid:72)(cid:88)(cid:85)(cid:82)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)(cid:86)(cid:3)(cid:69)(cid:92)(cid:3)(cid:68)(cid:83)(cid:83)(cid:85)(cid:82)(cid:91)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:79)(cid:92)(cid:3)(cid:188)(cid:20)(cid:24)(cid:19)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:17)(cid:3)(cid:58)(cid:76)(cid:87)(cid:75)(cid:3)(cid:85)(cid:72)(cid:86)(cid:83)(cid:72)(cid:70)(cid:87)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:37)(cid:85)(cid:76)(cid:87)(cid:76)(cid:86)(cid:75)(cid:3)(cid:51)(cid:82)(cid:88)(cid:81)(cid:71)(cid:3)(cid:54)(cid:87)(cid:72)(cid:85)(cid:79)(cid:76)(cid:81)(cid:74)(cid:15)(cid:3)(cid:38)(cid:68)(cid:81)(cid:68)(cid:71)(cid:76)(cid:68)(cid:81)(cid:3)(cid:71)(cid:82)(cid:79)(cid:79)(cid:68)(cid:85)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)
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.
26
ITEM 8
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
(cid:48)(cid:36)(cid:49)(cid:36)(cid:42)(cid:40)(cid:48)(cid:40)(cid:49)(cid:55)(cid:182)(cid:54)(cid:3)(cid:53)(cid:40)(cid:51)(cid:50)(cid:53)(cid:55)(cid:3)(cid:50)(cid:49)(cid:3)(cid:44)(cid:49)(cid:55)(cid:40)(cid:53)(cid:49)(cid:36)(cid:47)(cid:3)(cid:38)(cid:50)(cid:49)(cid:55)(cid:53)(cid:50)(cid:47)(cid:3)OVER FINANCIAL REPORTING
(cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:42)(cid:79)(cid:68)(cid:87)(cid:73)(cid:72)(cid:79)(cid:87)(cid:72)(cid:85)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:11)(cid:87)(cid:75)(cid:72)(cid:3)(cid:179)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:180)(cid:12)(cid:3)(cid:76)(cid:86)(cid:3)(cid:85)(cid:72)(cid:86)(cid:83)(cid:82)(cid:81)(cid:86)(cid:76)(cid:69)(cid:79)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:72)(cid:86)(cid:87)(cid:68)(cid:69)(cid:79)(cid:76)(cid:86)(cid:75)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:80)(cid:68)(cid:76)(cid:81)(cid:87)(cid:68)(cid:76)(cid:81)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:71)(cid:72)(cid:84)(cid:88)(cid:68)(cid:87)(cid:72)(cid:3)
(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:76)(cid:86)(cid:3)(cid:68)(cid:3)(cid:83)(cid:85)(cid:82)(cid:70)(cid:72)(cid:86)(cid:86)(cid:3)(cid:71)(cid:72)(cid:86)(cid:76)(cid:74)(cid:81)(cid:72)(cid:71)(cid:3)under
the supervision of the chief executive and chief financial officer to provide reasonable assurance regarding the reliability of
(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:83)(cid:85)(cid:72)(cid:83)(cid:68)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:72)(cid:91)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:83)(cid:88)(cid:85)(cid:83)(cid:82)(cid:86)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:68)(cid:70)(cid:70)(cid:82)(cid:85)(cid:71)(cid:68)(cid:81)(cid:70)e
with accounting principles generally accepted in the United States.
(cid:36)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:21)(cid:19)(cid:15)(cid:3)(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:70)(cid:82)(cid:81)(cid:71)(cid:88)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3)(cid:68)(cid:81)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:86)(cid:86)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)
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).
(cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:75)(cid:68)(cid:86)(cid:3)(cid:71)(cid:72)(cid:87)(cid:72)(cid:85)(cid:80)(cid:76)(cid:81)(cid:72)(cid:71)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:21)(cid:19)(cid:15)(cid:3)(cid:76)(cid:86)(cid:3)
effective to p(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:72)(cid:3)(cid:85)(cid:72)(cid:68)(cid:86)(cid:82)(cid:81)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:68)(cid:86)(cid:86)(cid:88)(cid:85)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:85)(cid:72)(cid:74)(cid:68)(cid:85)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:82)(cid:73)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:83)(cid:85)(cid:72)(cid:83)(cid:68)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)
financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United
States.
The Com(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:72)(cid:86)(cid:3)(cid:83)(cid:82)(cid:79)(cid:76)(cid:70)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:83)(cid:85)(cid:82)(cid:70)(cid:72)(cid:71)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:83)(cid:72)(cid:85)(cid:87)(cid:68)(cid:76)(cid:81)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)
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
(cid:88)(cid:81)(cid:68)(cid:88)(cid:87)(cid:75)(cid:82)(cid:85)(cid:76)(cid:93)(cid:72)(cid:71)(cid:3)(cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3)(cid:88)(cid:86)(cid:72)(cid:3)(cid:82)(cid:85)(cid:3)(cid:71)(cid:76)(cid:86)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:70)(cid:82)(cid:88)(cid:79)(cid:71)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:68)(cid:3)(cid:80)(cid:68)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:79)(cid:3)(cid:72)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)
statements.
(cid:55)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)l over financial reporting as of December 31, 2020, 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 C(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:21)(cid:19)(cid:17)
(cid:55)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:72)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:82)(cid:73)(cid:73)(cid:76)(cid:70)(cid:72)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:82)(cid:73)(cid:73)(cid:76)(cid:70)(cid:72)(cid:85)(cid:15)(cid:3)(cid:71)(cid:82)(cid:72)(cid:86)(cid:3)(cid:81)(cid:82)(cid:87)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:70)(cid:87)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)
internal control over financial reporting will prevent or detect all errors and all frauds. A control system, no matter how well
(cid:71)(cid:72)(cid:86)(cid:76)(cid:74)(cid:81)(cid:72)(cid:71)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:15)(cid:3)(cid:70)(cid:68)(cid:81)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:72)(cid:3)(cid:82)(cid:81)(cid:79)(cid:92)(cid:3)(cid:85)(cid:72)(cid:68)(cid:86)(cid:82)(cid:81)(cid:68)(cid:69)(cid:79)(cid:72)(cid:15)(cid:3)(cid:81)(cid:82)(cid:87)(cid:3)(cid:68)(cid:69)(cid:86)(cid:82)(cid:79)(cid:88)(cid:87)(cid:72)(cid:15)(cid:3)(cid:68)(cid:86)(cid:86)(cid:88)(cid:85)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:86)(cid:92)(cid:86)(cid:87)(cid:72)(cid:80)(cid:182)(cid:86)(cid:3)(cid:82)(cid:69)(cid:77)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:86)(cid:3)(cid:90)(cid:76)(cid:79)(cid:79)(cid:3)(cid:69)(cid:72)(cid:3)(cid:80)(cid:72)(cid:87)(cid:17)
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.
GLATFELTER 2020 FORM 10-K
27
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and Board of Directors of
Glatfelter Corporation
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Glatfelter Corporation and subsidiaries (the
"Company") as of December 31, 2020, based on criteria established in Internal Control (cid:178) 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, 2020, based on
criteria established in Internal Control (cid:177) 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, 2020, of the Company and
our report dated February 25, 2021, 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
(cid:68)(cid:86)(cid:86)(cid:72)(cid:86)(cid:86)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:15)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:70)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:76)(cid:81)(cid:74)(cid:3)(cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)
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
(cid:74)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3)(cid:68)(cid:70)(cid:70)(cid:72)(cid:83)(cid:87)(cid:72)(cid:71)(cid:3)(cid:68)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:83)(cid:85)(cid:76)(cid:81)(cid:70)(cid:76)(cid:83)(cid:79)(cid:72)(cid:86)(cid:17)(cid:3)(cid:36)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:72)(cid:86)(cid:3)(cid:87)(cid:75)(cid:82)(cid:86)(cid:72)(cid:3)(cid:83)(cid:82)(cid:79)(cid:76)(cid:70)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)
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, 2021
28
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and Board of Directors of
Glatfelter Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Glatfelter Corporation and subsidiaries (the
"Company") as of December 31, 2020 and 2019, the related consolidated statements of income (loss), comprehensive income
(cid:11)(cid:79)(cid:82)(cid:86)(cid:86)(cid:12)(cid:15)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:73)(cid:79)(cid:82)(cid:90)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:72)(cid:68)(cid:70)(cid:75)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:87)(cid:75)(cid:85)(cid:72)(cid:72)(cid:3)years in the period ended December 31, 2020, and the related
notes and the schedule listed in the Index at Item (cid:20)(cid:24)(cid:3)(cid:11)(cid:70)(cid:82)(cid:79)(cid:79)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:79)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:85)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:68)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:179)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:180)(cid:12)(cid:17)(cid:3)(cid:3)(cid:44)(cid:81)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:82)(cid:83)(cid:76)(cid:81)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3)
the financial statements present fairly, in all material respects, the financial position of the Company as of December 31,
2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December
31, 2020, 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
(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:86)(cid:12)(cid:3)(cid:11)(cid:51)(cid:38)(cid:36)(cid:50)(cid:37)(cid:12)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)control over financial reporting as of December 31, 2020, based on criteria
established in Internal Control (cid:177) Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission and our report dated February 25, 2021(cid:15)(cid:3)(cid:72)(cid:91)(cid:83)(cid:85)(cid:72)(cid:86)(cid:86)(cid:72)(cid:71)(cid:3)(cid:68)(cid:81)(cid:3)(cid:88)(cid:81)(cid:84)(cid:88)(cid:68)(cid:79)(cid:76)(cid:73)(cid:76)(cid:72)(cid:71)(cid:3)(cid:82)(cid:83)(cid:76)(cid:81)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)
control over financial reporting.
Basis for Opinion
These financial statements (cid:68)(cid:85)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:86)(cid:83)(cid:82)(cid:81)(cid:86)(cid:76)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)ment. Our responsibility is to express an
(cid:82)(cid:83)(cid:76)(cid:81)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:69)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:68)(cid:88)(cid:71)(cid:76)(cid:87)(cid:86)(cid:17)(cid:3)(cid:58)(cid:72)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:68)(cid:3)(cid:83)(cid:88)(cid:69)(cid:79)(cid:76)(cid:70)(cid:3)(cid:68)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:73)(cid:76)(cid:85)(cid:80)(cid:3)(cid:85)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:72)(cid:85)(cid:72)(cid:71)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)
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 16 to the financial statements
Critical Audit Matter Description
The Company reviews goodwill for impairment at least annually 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 $164.4 million as of December 31, 2020, of which
$79.8 million was allocated to the Composite Fibers operating segment, which is also a reporting unit. The fair value of the
Composite Fibers reporting unit exceeded its carrying value and, therefore, no impairment was recognized.
GLATFELTER 2020 FORM 10-K
29
Given the significant estimates and assumptions management makes to estimate the fair value of the Composite Fibers
(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:88)(cid:81)(cid:76)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:86)(cid:72)(cid:81)(cid:86)(cid:76)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:92)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:88)(cid:81)(cid:76)(cid:87)(cid:182)(cid:86)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:80)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:3)(cid:70)(cid:82)(cid:81)(cid:71)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:15)(cid:3)(cid:86)(cid:88)(cid:70)(cid:75)(cid:3)(cid:68)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)economic instability in
Russia and Ukraine and the impact of the COVID-19 pandemic, performing audit procedures to evaluate the reasonableness
(cid:82)(cid:73)(cid:3)(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:72)(cid:86)(cid:87)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:68)(cid:86)(cid:86)(cid:88)(cid:80)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:85)(cid:72)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:71)(cid:3)(cid:68)(cid:3)(cid:75)(cid:76)(cid:74)(cid:75)(cid:3)(cid:71)(cid:72)(cid:74)(cid:85)(cid:72)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:68)(cid:88)(cid:71)(cid:76)(cid:87)(cid:82)(cid:85)(cid:3)(cid:77)(cid:88)(cid:71)(cid:74)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:68)(cid:81)(cid:3)(cid:76)(cid:81)(cid:70)(cid:85)(cid:72)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:72)(cid:91)(cid:87)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:72)(cid:73)(cid:73)(cid:82)(cid:85)(cid:87)(cid:15)(cid:3)
including the need to involve our fair value specialists.
How the Critical Audit Matter Was Addressed in the Audit
(cid:50)(cid:88)(cid:85)(cid:3)(cid:68)(cid:88)(cid:71)(cid:76)(cid:87)(cid:3)(cid:83)(cid:85)(cid:82)(cid:70)(cid:72)(cid:71)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:72)(cid:86)(cid:87)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)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:
(cid:120) (cid:58)(cid:72)(cid:3)(cid:87)(cid:72)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:86)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:74)(cid:82)(cid:82)(cid:71)(cid:90)(cid:76)(cid:79)(cid:79)(cid:3)(cid:76)(cid:80)(cid:83)(cid:68)(cid:76)(cid:85)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:72)(cid:89)(cid:68)(cid:79)(cid:88)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:82)(cid:86)(cid:72)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)
(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:71)(cid:72)(cid:89)(cid:72)(cid:79)(cid:82)(cid:83)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)estimates of future cash flows used to value the reporting unit.
(cid:120) (cid:58)(cid:72)(cid:3)(cid:72)(cid:89)(cid:68)(cid:79)(cid:88)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:75)(cid:76)(cid:86)(cid:87)(cid:82)(cid:85)(cid:76)(cid:70)(cid:68)(cid:79)(cid:3)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:87)(cid:82)(cid:3)(cid:68)(cid:70)(cid:70)(cid:88)(cid:85)(cid:68)(cid:87)(cid:72)(cid:79)(cid:92)(cid:3)(cid:73)(cid:82)(cid:85)(cid:72)(cid:70)(cid:68)(cid:86)(cid:87)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)(cid:3)(cid:69)(cid:92)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)
projections reflected in the prior period reporting unit forecast to actual results.
(cid:120) (cid:58)(cid:72)(cid:3)(cid:72)(cid:89)(cid:68)(cid:79)(cid:88)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:68)(cid:86)(cid:82)(cid:81)(cid:68)(cid:69)(cid:79)(cid:72)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:70)(cid:88)rrent reporting unit forecast by comparing the forecast to:
o Historical results.
o
o Forecasted information included in industry reports for the Company and certain of its peer companies.
Internal communications to management and the Board of Directors.
(cid:120) 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, 2021
(cid:58)(cid:72)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:86)(cid:72)(cid:85)(cid:89)(cid:72)(cid:71)(cid:3)(cid:68)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:68)(cid:88)(cid:71)(cid:76)(cid:87)(cid:82)(cid:85)(cid:3)(cid:86)(cid:76)(cid:81)(cid:70)(cid:72)(cid:3)(cid:68)(cid:87)(cid:3)(cid:79)(cid:72)(cid:68)(cid:86)(cid:87)(cid:3)(cid:20)(cid:28)(cid:23)(cid:19)(cid:30)(cid:3)(cid:75)(cid:82)(cid:90)(cid:72)(cid:89)(cid:72)(cid:85)(cid:15)(cid:3)(cid:68)(cid:81)(cid:3)(cid:72)(cid:68)(cid:85)(cid:79)(cid:76)(cid:72)(cid:85)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:70)(cid:82)(cid:88)(cid:79)(cid:71)(cid:3)(cid:81)(cid:82)(cid:87)(cid:3)(cid:69)(cid:72)(cid:3)(cid:85)(cid:72)(cid:79)(cid:76)(cid:68)(cid:69)(cid:79)(cid:92)(cid:3)(cid:71)(cid:72)(cid:87)(cid:72)(cid:85)(cid:80)(cid:76)(cid:81)(cid:72)(cid:71).
30
GLATFELTER CORPORATION 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)
Income (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
Income (loss) from continuing operations
Income (loss) from discontinued operations
Basic earnings per share
Diluted earnings (loss) per share
Income (loss) from continuing operations
Income (loss) from discontinued operations
Diluted earnings per share
Weighted average shares outstanding
Basic
Diluted
$
Year ended December 31
$
2020
916,498
768,629
147,869
100,045
(1,332 )
49,156
$
2019
927,673
780,131
147,542
94,967
(2,060 )
54,635
2018
866,286
735,879
130,407
111,721
(3,256 )
21,942
(7,022 )
399
(6,154 )
(4,020 )
(16,797 )
32,359
11,576
20,783
544
29
515
21,298
0.47
0.01
0.48
0.47
0.01
0.48
$
$
$
$
$
(10,408 )
1,123
(75,326 )
(4,477 )
(89,088 )
(34,453 )
(9,242 )
(25,211 )
(15,609 )
559
(cid:178)
383
(14,667 )
7,275
7,723
(448 )
1,284
(2,386 )
3,670
(21,541 ) $
(207,242 )
(30,086 )
(177,156 )
(177,604 )
(0.57 ) $
0.08
(0.49 ) $
(0.57 ) $
0.08
(0.49 ) $
(0.01 )
(4.05 )
(4.06 )
(0.01 )
(4.05 )
(4.06 )
44,339
44,614
44,132
44,132
43,768
43,768
$
$
$
$
$
The accompanying notes are an integral part of these consolidated financial statements.
GLATFELTER 2020 FORM 10-K
31
GLATFELTER CORPORATION 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 $2,507, $(737), and $(2,353),
respectively
Unrecognized retirement obligations, net of
taxes of $158, $(22,927), and $(13,898),
respectively
Other comprehensive income
Comprehensive income (loss)
Year ended December 31
2020
2019
2018
$
21,298
$
(21,541 )
$
(177,604 )
33,821
(6,724 )
(27,783 )
(6,812 )
2,117
6,291
(7,766 )
19,243
40,541
$
64,151
59,544
38,003
$
47,025
25,533
(152,071 )
$
The accompanying notes are a n integral part of these consolidated financial statements.
32
GLATFELTER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
In thousands
Assets
Cash and cash equivalents
Accounts receivable (less allowance for doubtful
accounts: 2020 - $2,093; 2019 - $1,682)
Inventories
Prepaid expenses and other current assets
Total current assets
Plant, equipment and timberlands, net
Goodwill
Intangible assets, net
Other assets
December 31
2020
2019
$
99,581
$
126,201
122,817
196,230
34,297
452,925
543,267
164,369
81,835
44,485
124,442
190,415
36,274
477,332
537,421
150,816
83,735
34,490
Total assets
$
1,286,881
$
1,283,794
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
(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)
Common stock, $0.01 par value; authorized - 120,000,000;
issued - 54,361,980 (including treasury
shares: 2020 - 9,994,144; 2019 - 10,113,504)
Capital in excess of par value
Retained earnings
Accumulated other comprehensive loss
Less cost of common stock in treasury
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)
(cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)
$
$
25,057
127,505
5,988
3,700
71,093
233,343
288,464
77,131
110,011
708,949
(cid:178)
22,940
130,039
5,752
9,000
62,772
230,503
336,919
76,374
84,039
727,835
(cid:178)
544
63,261
723,365
(58,653 )
728,517
(150,585 )
577,932
1,286,881
$
544
59,900
725,795
(77,896 )
708,343
(152,384 )
555,959
1,283,794
$
The accompanying notes are an integral part of these consolidated financial statements.
GLATFELTER 2020 FORM 10-K
33
GLATFELTER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands
Operating activities
Net income (loss)
(Income) loss from discontinued operations, net of tax benefits
2020
Year ended December 31
2019
2018
$
21,298
(515 )
$
(21,541 ) $
(3,670 )
(177,604 )
177,156
Adjustments to reconcile to net cash provided (used) by operating activities:
Depreciation, depletion and amortization
Amortization of debt issue costs and original issue discount
Pension settlement charge
Asset impairment charge
Deferred income tax benefit
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 repayments under revolving credit facility
Payments of borrowing costs
Proceeds from term loans
Repayment of term loans
Payments of dividends
Proceeds from government grants
Payments related to share-based compensation awards and other
Net cash used by financing activities
Effect of exchange rate changes on cash
Net increase (decrease) in cash, cash equivalents and restricted cash
Change in cash and cash equivalents from discontinued operations
Cash, cash equivalents and restricted cash at the beginning of period
Cash, cash equivalents and restricted cash at the end of period
Less: restricted cash in Prepaid and other current assets
Less: restricted cash in Other assets
Cash and cash equivalents at the end of period
Supplemental cash flow information
Cash paid (refunded) for:
Interest, net of amounts capitalized
Income taxes, net
$
$
56,600
590
(cid:178)
900
(2,071 )
(1,332 )
5,655
9,563
6,860
1,679
(7,234 )
12,143
(cid:178)
4,857
108,993
(28,136 )
1,413
(cid:178)
(50 )
(26,773 )
(cid:178)
(53,392 )
(39 )
(cid:178)
(23,246 )
(23,492 )
358
(495 )
(100,306 )
5,163
(12,923 )
(1,613 )
126,201
111,665
(2,000 )
(10,084 )
99,581
6,180
(9,993 )
$
$
50,820
1,672
75,326
(cid:178)
(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 )
(cid:178)
(1,556 )
(72,774 )
(269 )
2,679
(19,163 )
142,685
126,201
(cid:178)
(cid:178)
126,201 $
47,525
1,159
(cid:178)
(cid:178)
(7,704 )
(3,256 )
6,288
(621 )
(32,138 )
(3,372 )
13,774
(23,984 )
(cid:178)
(3,175 )
(5,952 )
(42,129 )
3,462
(178,905 )
(68 )
(217,640 )
(cid:178)
(55,446 )
(cid:178)
(cid:178)
(11,069 )
(22,760 )
(cid:178)
(2,151 )
(91,426 )
(5,564 )
(320,582 )
347,048
116,219
142,685
(cid:178)
(cid:178)
142,685
10,208 $
14,242
15,760
15,171
The accompanying notes are an integral part of these consolidated financial statements.
34
GLATFELTER CORPORATION AND SUBSIDIARIES
(cid:38)(cid:50)(cid:49)(cid:54)(cid:50)(cid:47)(cid:44)(cid:39)(cid:36)(cid:55)(cid:40)(cid:39)(cid:3)(cid:54)(cid:55)(cid:36)(cid:55)(cid:40)(cid:48)(cid:40)(cid:49)(cid:55)(cid:54)(cid:3)(cid:50)(cid:41)(cid:3)(cid:54)(cid:43)(cid:36)(cid:53)(cid:40)(cid:43)(cid:50)(cid:47)(cid:39)(cid:40)(cid:53)(cid:54)(cid:182)(cid:3)(cid:40)(cid:52)(cid:56)(cid:44)(cid:55)(cid:60)
For the years ended December 31, 2020, 2019 and 2018
In thousands
Balance at January 1, 2018
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 (cid:178) 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 (cid:178) net
Balance at December 31, 2019
Net income
Other comprehensive income
Comprehensive income
Cash dividends declared ($0.535 per share)
Share-based compensation expense
Delivery of treasury shares
RSUs and PSAs
Employee stock options exercised (cid:178) net
Balance at December 31, 2020
Common
Stock
Capital in
Excess of
Par Value
$
544
$
62,594
$
(7 )
7,000
(6,201 )
(1,147 )
62,239
3,583
(3,625 )
(2,297 )
59,900
5,655
(2,077 )
(217 )
63,261
544
544
$
544
$
Accumulated
Other
Comprehensive
Loss
(140,675 )
(22,298 )
$
25,533
Treasury
Stock
(161,946 )
$
Retained
Earnings
948,411
22,298
(177,604 )
(22,800 )
4,575
621
(156,750 )
2,833
1,533
(152,384 )
770,305
(137,440 )
(21,541 )
(22,969 )
59,544
725,795
(77,896 )
21,298
(23,728 )
19,243
Total
(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:182)
Equity
$
708,928
(cid:178)
(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
21,298
19,243
40,541
(23,728 )
5,655
$
723,365
$
(58,653 )
$
1,657
142
(150,585 )
$
(420 )
(75 )
577,932
The accompanying notes are an integral part of the consolidated financial statements.
GLATFELTER 2020 FORM 10-K
35
GLATFELTER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION
(cid:42)(cid:79)(cid:68)(cid:87)(cid:73)(cid:72)(cid:79)(cid:87)(cid:72)(cid:85)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:86)(cid:88)(cid:69)(cid:86)(cid:76)(cid:71)(cid:76)(cid:68)(cid:85)(cid:76)(cid:72)(cid:86)(cid:3)(cid:11)(cid:179)(cid:42)(cid:79)(cid:68)(cid:87)(cid:73)(cid:72)(cid:79)(cid:87)(cid:72)(cid:85)(cid:180)(cid:12)(cid:3)formerly known as P. H. Glatfelter Company and subsidiaries, 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 and packaging products as well as home improvement and industrial
applications. We are headquartered in Charlotte, NC, 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, Italy, China, and
the United States. Our products are marketed worldwide, either directly to customers or through brokers and agents. The
(cid:87)(cid:72)(cid:85)(cid:80)(cid:86)(cid:3)(cid:179)(cid:90)(cid:72)(cid:15)(cid:180)(cid:3)(cid:179)(cid:88)(cid:86)(cid:15)(cid:180)(cid:3)(cid:179)(cid:82)(cid:88)(cid:85)(cid:15)(cid:180)(cid:3)(cid:179)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:15)(cid:180)(cid:3)(cid:82)(cid:85)(cid:3)(cid:179)(cid:42)(cid:79)(cid:68)(cid:87)(cid:73)(cid:72)(cid:79)(cid:87)(cid:72)(cid:85)(cid:15)(cid:180)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:3)(cid:87)(cid:82)(cid:3)(cid:42)(cid:79)(cid:68)(cid:87)(cid:73)(cid:72)(cid:79)(cid:87)(cid:72)(cid:85)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)d 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 net
sales 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 Our 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 (cid:177) 45 Years
5 (cid:177) 40 Years
3 (cid:177) 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
(cid:88)(cid:81)(cid:71)(cid:76)(cid:86)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:72)(cid:71)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:73)(cid:79)(cid:82)(cid:90)(cid:86)(cid:3)(cid:76)(cid:86)(cid:3)(cid:79)(cid:72)(cid:86)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:68)(cid:85)(cid:85)(cid:92)(cid:76)(cid:81)(cid:74)(cid:3)(cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:182)(cid:86)(cid:3)(cid:73)(cid:68)(cid:76)(cid:85)(cid:3)(cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:76)(cid:86)(cid:3)(cid:72)(cid:86)(cid:87)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:71)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:68)(cid:81)(cid:3)(cid:76)(cid:80)(cid:83)(cid:68)(cid:76)(cid:85)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)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 annually, during the third
quarter, or more frequently if impairment indicators are present. However, in 2020, as a result of potential impairment
indicators related to the impact of the COVID-19 pandemic, we evaluated such assets as of the end of the second quarter and,
in connection with our normal review cycle, in the third quarter. In addition, in order to align the evaluation process more
closely with the timing change for our strategic planning cycle, we changed the timing of the annual evaluation to be
completed in the fourth quarter. Accordingly, we completed an evaluation during the fourth quarter of 2020, and we
concluded there was no impairment of goodwill or non-amortizing tradename intangible assets. We believe the change in our
annual impairment testing date did not delay, accelerate, or avoid an impairment charge. We have determined that this change
36
in accounting principle is preferable under the circumstances and does not result in adjustments to our financial statements
when applied retrospectively.
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
(cid:74)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3)(cid:71)(cid:72)(cid:87)(cid:72)(cid:85)(cid:80)(cid:76)(cid:81)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:71)(cid:76)(cid:73)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:69)(cid:72)(cid:87)(cid:90)(cid:72)(cid:72)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:88)(cid:81)(cid:76)(cid:87)(cid:182)(cid:86)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:17)(cid:3)(cid:58)(cid:76)(cid:87)(cid:75)(cid:3)(cid:85)(cid:72)(cid:86)(cid:83)(cid:72)(cid:70)(cid:87)(cid:3)(cid:87)(cid:82)(cid:3)(cid:81)(cid:82)(cid:81)-amortizing
tradenames, impairment losses, if any, are recognized for the amount by which the carrying value of the tradename exceeds
its fair value. For additional information, refer to Note 6 (cid:177) (cid:179)Asset Impairment(cid:17)(cid:3)(cid:179)
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 (cid:11)(cid:179)(cid:36)(cid:54)(cid:38)(cid:3)(cid:26)(cid:23)(cid:19)(cid:180)(cid:12)(cid:17)(cid:3)(cid:56)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:36)(cid:54)(cid:38)(cid:3)(cid:26)(cid:23)(cid:19)(cid:15)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:72)(cid:86)(cid:3)(cid:56)(cid:17)(cid:54)(cid:17)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)
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-(cid:87)(cid:68)(cid:91)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:11)(cid:179)(cid:42)(cid:44)(cid:47)(cid:55)(cid:44)(cid:180)(cid:12)(cid:3)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
(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:72)(cid:76)(cid:74)(cid:81)(cid:3)(cid:86)(cid:88)(cid:69)(cid:86)(cid:76)(cid:71)(cid:76)(cid:68)(cid:85)(cid:76)(cid:72)(cid:86)(cid:182)(cid:3)(cid:87)(cid:68)(cid:81)(cid:74)(cid:76)(cid:69)(cid:79)(cid:72)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:17)
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, or net sales, in accordance with ASU No. 2014-09, Revenue from
Contracts with Customers. (cid:50)(cid:88)(cid:85)(cid:3)(cid:85)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:3)(cid:76)(cid:86)(cid:3)(cid:72)(cid:68)(cid:85)(cid:81)(cid:72)(cid:71)(cid:3)(cid:83)(cid:85)(cid:76)(cid:80)(cid:68)(cid:85)(cid:76)(cid:79)(cid:92)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:80)(cid:68)(cid:81)(cid:88)(cid:73)(cid:68)(cid:70)(cid:87)(cid:88)(cid:85)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:86)(cid:68)(cid:79)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:72)(cid:81)(cid:74)(cid:76)(cid:81)(cid:72)(cid:72)(cid:85)(cid:72)(cid:71)(cid:3)(cid:80)(cid:68)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:79)(cid:86)(cid:3)(cid:11)(cid:179)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:3)
(cid:86)(cid:68)(cid:79)(cid:72)(cid:86)(cid:180)(cid:12)(cid:17)(cid:3)(cid:53)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:3)(cid:76)(cid:86)(cid:3)(cid:72)(cid:68)(cid:85)(cid:81)(cid:72)(cid:71)(cid:3)(cid:83)(cid:88)(cid:85)(cid:86)(cid:88)(cid:68)(cid:81)(cid:87)(cid:3)(cid:87)(cid:82)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:68)(cid:70)(cid:87)(cid:86)(cid:15)(cid:3)(cid:86)(cid:88)(cid:83)(cid:83)(cid:79)(cid:92)(cid:3)(cid:68)(cid:74)(cid:85)(cid:72)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:68)(cid:85)(cid:85)(cid:68)(cid:81)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:68)(cid:3)(cid:90)(cid:76)(cid:71)(cid:72)(cid:3)(cid:89)(cid:68)(cid:85)(cid:76)(cid:72)(cid:87)(cid:92)(cid:3)(cid:82)(cid:73)(cid:3)(cid:70)(cid:88)stomers.
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 8 (cid:177) (cid:179)Revenue(cid:180)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:68)(cid:71)(cid:71)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:76)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:69)(cid:82)(cid:88)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:71)(cid:76)(cid:86)(cid:68)(cid:74)(cid:74)(cid:85)(cid:72)(cid:74)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:81)(cid:72)(cid:87)(cid:3)(cid:86)(cid:68)(cid:79)(cid:72)(cid:86)(cid:17)
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
GLATFELTER 2020 FORM 10-K
37
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.
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 (cid:11)(cid:179)(cid:36)(cid:54)(cid:38)(cid:3)(cid:27)(cid:20)(cid:24)(cid:180)(cid:12)(cid:15)(cid:3)(cid:90)(cid:72)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:3)
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 matures, is de-designated, 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 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. We adopted this standard effective
January 1, 2020 using a modified retrospective approach. The adoption of this standard did not impact 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 will adopt
this standard in the first quarter of 2021, but do not expect this ASU will have a material impact on our financial statements.
3.
ACQUISITIONS
On January 5, 2021, we signed a definitive agreement to purchase Georgia-Pacific's U.S. nonwovens business ("G-P")
for $175 million, subject to customary post-closing purchase price adjustments. This business includes the Mount Holly, NC
manufacturing facility with annual production capacity of approximately 37,000 metric tons and an R&D center and pilot line
for nonwovens product development in Memphis, TN. G-P had annual net sales of approximately $100 million in 2020.
Upon completion of the acquisition, the acquired business will be operated as part of our Airlaid Materials reporting segment.
38
The proposed acquisition is subject to customary closing conditions, including receipt of required regulatory
clearances. The acquisition will be financed through a combination of cash on hand and borrowings under our revolving
credit facility.
(cid:58)(cid:72)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:81)(cid:82)(cid:87)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:72)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:71)(cid:71)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:79)(cid:82)(cid:86)(cid:88)(cid:85)(cid:72)(cid:3)(cid:85)(cid:72)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:85)(cid:72)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:71)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:36)(cid:54)(cid:38)(cid:3)(cid:49)(cid:82)(cid:17)(cid:3)(cid:27)(cid:19)(cid:24)(cid:3)(cid:179)Business Combinations(cid:180)(cid:3)(cid:68)(cid:86)(cid:3)
it was deemed impractical to do so considering the transaction has not been completed.
On October 1, 2018, we completed the acquisition of Georgia-(cid:51)(cid:68)(cid:70)(cid:76)(cid:73)(cid:76)(cid:70)(cid:182)(cid:86)(cid:3)(cid:40)(cid:88)(cid:85)(cid:82)(cid:83)(cid:72)(cid:68)(cid:81)(cid:3)(cid:81)(cid:82)(cid:81)(cid:90)(cid:82)(cid:89)(cid:72)(cid:81)(cid:86)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:69)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)
(cid:54)(cid:87)(cid:72)(cid:76)(cid:81)(cid:73)(cid:88)(cid:85)(cid:87)(cid:15)(cid:3)(cid:42)(cid:72)(cid:85)(cid:80)(cid:68)(cid:81)(cid:92)(cid:3)(cid:11)(cid:179)(cid:54)(cid:87)(cid:72)(cid:76)(cid:81)(cid:73)(cid:88)(cid:85)(cid:87)(cid:180)(cid:12)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:7)(cid:20)(cid:27)(cid:27)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:3)(cid:90)(cid:82)(cid:85)(cid:78)(cid:76)(cid:81)(cid:74)(cid:3)(cid:70)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:83)(cid:82)(cid:86)(cid:87)-closing purchase price
adjustments. The post-closing purchase price amount was recorded as an adjustment to goodwill.
The acquisition consisted of Georgia-(cid:51)(cid:68)(cid:70)(cid:76)(cid:73)(cid:76)(cid:70)(cid:182)(cid:86)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:79)(cid:82)(cid:70)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:54)(cid:87)(cid:72)(cid:76)(cid:81)(cid:73)(cid:88)(cid:85)(cid:87)(cid:3)(cid:68)(cid:79)(cid:82)(cid:81)(cid:74)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:86)(cid:68)(cid:79)(cid:72)(cid:86)(cid:3)(cid:82)(cid:73)(cid:73)(cid:76)(cid:70)(cid:72)(cid:86)(cid:3)(cid:79)(cid:82)(cid:70)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:41)(cid:85)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)
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-
(cid:70)(cid:68)(cid:83)(cid:68)(cid:70)(cid:76)(cid:87)(cid:92)(cid:3)(cid:80)(cid:68)(cid:81)(cid:88)(cid:73)(cid:68)(cid:70)(cid:87)(cid:88)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:73)(cid:68)(cid:70)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:72)(cid:80)(cid:83)(cid:79)(cid:82)(cid:92)(cid:86)(cid:3)(cid:68)(cid:83)(cid:83)(cid:85)(cid:82)(cid:91)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:79)(cid:92)(cid:3)(cid:21)(cid:21)(cid:19)(cid:3)(cid:83)(cid:72)(cid:82)(cid:83)(cid:79)(cid:72)(cid:17)(cid:3)(cid:54)(cid:87)(cid:72)(cid:76)(cid:81)(cid:73)(cid:88)(cid:85)(cid:87)(cid:182)(cid:86)(cid:3)(cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:72)(cid:71)(cid:3)(cid:83)(cid:85)(cid:82)(cid:86)(cid:83)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:79)(cid:92)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)
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.
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.
Net sales 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, 2018:
In thousands, except per share
Pro forma
Net sales
Income from continuing operations
Income per share from continuing operations
2018
(unaudited)
$
937,043
1,585
0.04
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 presen(cid:87)(cid:72)(cid:71)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:179)(cid:54)(cid:72)(cid:79)(cid:79)(cid:76)(cid:81)(cid:74)(cid:15)(cid:3)(cid:74)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:68)(cid:71)(cid:80)(cid:76)(cid:81)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)(cid:86)(cid:180)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:70)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:76)(cid:81)(cid:74)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)
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
(cid:51)(cid:76)(cid:91)(cid:72)(cid:79)(cid:79)(cid:72)(cid:3)(cid:54)(cid:83)(cid:72)(cid:70)(cid:76)(cid:68)(cid:79)(cid:87)(cid:92)(cid:3)(cid:54)(cid:82)(cid:79)(cid:88)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:47)(cid:47)(cid:38)(cid:15)(cid:3)(cid:68)(cid:81)(cid:3)(cid:68)(cid:73)(cid:73)(cid:76)(cid:79)(cid:76)(cid:68)(cid:87)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:47)(cid:76)(cid:81)(cid:71)(cid:86)(cid:68)(cid:92)(cid:3)(cid:42)(cid:82)(cid:79)(cid:71)(cid:69)(cid:72)(cid:85)(cid:74)(cid:3)(cid:11)(cid:87)(cid:75)(cid:72)(cid:3)(cid:179)(cid:51)(cid:88)(cid:85)(cid:70)(cid:75)(cid:68)(cid:86)(cid:72)(cid:85)(cid:180)(cid:12)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:7)(cid:22)(cid:25)(cid:19)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:86)(cid:68)(cid:79)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)s
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
(cid:51)(cid:88)(cid:85)(cid:70)(cid:75)(cid:68)(cid:86)(cid:72)(cid:85)(cid:3)(cid:68)(cid:86)(cid:86)(cid:88)(cid:80)(cid:72)(cid:71)(cid:3)(cid:68)(cid:83)(cid:83)(cid:85)(cid:82)(cid:91)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:79)(cid:92)(cid:3)(cid:7)(cid:21)(cid:20)(cid:19)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:83)(cid:72)(cid:81)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:85)(cid:72)(cid:79)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:82)(cid:3)(cid:54)(cid:83)(cid:72)(cid:70)(cid:76)(cid:68)(cid:79)(cid:87)(cid:92)(cid:3)(cid:51)(cid:68)(cid:83)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:80)(cid:83)(cid:79)(cid:82)(cid:92)(cid:72)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:85)(cid:72)(cid:70)(cid:72)(cid:76)(cid:89)(cid:72)(cid:71)(cid:3)
(cid:68)(cid:83)(cid:83)(cid:85)(cid:82)(cid:91)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:79)(cid:92)(cid:3)(cid:7)(cid:21)(cid:26)(cid:23)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:85)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:84)(cid:88)(cid:68)(cid:79)(cid:76)(cid:73)(cid:76)(cid:72)(cid:71)(cid:3)(cid:83)(cid:72)(cid:81)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:83)(cid:79)(cid:68)(cid:81)(cid:17)(cid:3)(cid:58)(cid:72)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:74)(cid:81)(cid:76)(cid:93)(cid:72)(cid:71)(cid:3)(cid:68)(cid:3)(cid:7)(cid:20)(cid:23)(cid:23)(cid:17)(cid:20)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)
pre-tax loss, (cid:83)(cid:85)(cid:72)(cid:86)(cid:72)(cid:81)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:72)(cid:79)(cid:82)(cid:90)(cid:3)(cid:68)(cid:86)(cid:3)(cid:68)(cid:81)(cid:3)(cid:179)(cid:44)(cid:80)(cid:83)(cid:68)(cid:76)(cid:85)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:70)(cid:75)(cid:68)(cid:85)(cid:74)(cid:72)(cid:180)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:80)(cid:82)(cid:88)(cid:81)(cid:87)(cid:3)(cid:69)(cid:92)(cid:3)(cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3)(cid:54)(cid:83)(cid:72)(cid:70)(cid:76)(cid:68)(cid:79)(cid:87)(cid:92)(cid:3)(cid:51)(cid:68)(cid:83)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:70)(cid:68)(cid:85)(cid:85)(cid:92)(cid:76)(cid:81)(cid:74)(cid:3)(cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:72)(cid:91)(cid:70)(cid:72)(cid:72)(cid:71)(cid:72)(cid:71)(cid:3)
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.
GLATFELTER 2020 FORM 10-K
39
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 from discontinued operations
Year ended
December 31
2019
2018
$
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(544 )
(cid:178)
544
(cid:178)
(cid:178)
(cid:178)
544
29
515
$
$
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
109
(cid:178)
(109 )
(cid:178)
1,393
(cid:178)
1,284
(2,386 )
3,670
$
661,186
3,388
664,574
637,472
27,102
32,465
(423 )
(4,940 )
(6,942 )
(51,236 )
(144,124 )
(207,242 )
(30,086 )
(177,156 )
2020
$
(cid:3)(cid:3)
$
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 amount set forth above (cid:76)(cid:81)(cid:3)(cid:21)(cid:19)(cid:21)(cid:19)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:179)(cid:54)(cid:72)(cid:79)(cid:79)(cid:76)(cid:81)(cid:74)(cid:15)(cid:3)
(cid:74)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:68)(cid:71)(cid:80)(cid:76)(cid:81)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)(cid:86)(cid:15)(cid:180)(cid:3)(cid:83)(cid:85)(cid:76)(cid:80)(cid:68)(cid:85)(cid:76)(cid:79)(cid:92)(cid:3)(cid:85)(cid:72)(cid:83)(cid:85)(cid:72)(cid:86)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:86)(cid:72)(cid:87)(cid:87)(cid:79)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:68)(cid:3)(cid:86)(cid:68)(cid:79)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:88)(cid:86)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:68)(cid:88)(cid:71)(cid:76)(cid:87)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:68)(cid:80)(cid:82)(cid:88)(cid:81)(cid:87)(cid:86)(cid:3)in 2018
(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:179)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)(cid:15)(cid:3)(cid:81)(cid:72)(cid:87)(cid:180)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:72)(cid:3)(cid:87)(cid:75)e recognition of a $54.0 million, pre-tax, curtailment and settlement charge for
pension and other post-(cid:72)(cid:80)(cid:83)(cid:79)(cid:82)(cid:92)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:69)(cid:72)(cid:81)(cid:72)(cid:73)(cid:76)(cid:87)(cid:86)(cid:3)(cid:85)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:87)(cid:85)(cid:68)(cid:81)(cid:86)(cid:73)(cid:72)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:73)(cid:88)(cid:87)(cid:88)(cid:85)(cid:72)(cid:3)(cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:54)(cid:83)(cid:72)(cid:70)(cid:76)(cid:68)(cid:79)(cid:87)(cid:92)(cid:3)(cid:51)(cid:68)(cid:83)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)
employees.
The following table sets forth a summary of cash flows from discontinued operations which is included in the
consolidated statements of cash flows:
(cid:3)
In thousands
Net cash (used) provided 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
5.
RESTRUCTURING
(cid:3)(cid:3)
(cid:3)(cid:3)
$
Year ended
December 31
2019
2020
(cid:3)(cid:3)
(1,613 ) (cid:3)(cid:3) $
(10,942 ) (cid:3)(cid:3) $
(cid:178) (cid:3)(cid:3)
(cid:178) (cid:3)(cid:3)
(8,221 ) (cid:3)(cid:3)
(cid:178) (cid:3)(cid:3)
$
(1,613 ) (cid:3)(cid:3) $
(19,163 ) (cid:3)(cid:3) $
2018
(cid:3)(cid:3)
(cid:3)(cid:3)
38,803 (cid:3)(cid:3)
308,120 (cid:3)(cid:3)
125 (cid:3)(cid:3)
347,048 (cid:3)(cid:3)
In the first quarter of 2020, we announced restructuring actions within the Composite Fibers operating segment. The
actions primarily consisted of the consolidation of our metallizing operation from Gernsbach, Germany to our Caerphilly,
U.K. site.
In thousands
Severance and benefit continuation
Accelerated depreciation
Inventory and spare parts
Other
Total
40
Year ended
December 31
2020
$
$
6,143
3,900
977
91
11,111
(cid:55)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:86)(cid:87)(cid:85)(cid:88)(cid:70)(cid:87)(cid:88)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:70)(cid:75)(cid:68)(cid:85)(cid:74)(cid:72)(cid:3)(cid:76)(cid:86)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:72)(cid:71)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:179)(cid:38)(cid:82)(cid:86)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:3)(cid:86)(cid:82)(cid:79)(cid:71)(cid:180)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:70)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:76)(cid:81)(cid:74)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)
statements of income for the year ended December 31, 2020. With the exception of the severance and benefit continuation
amounts, all other amounts accrued represent accelerated non-cash asset write-downs. As of December 31, 2020, the accrued
and unpaid restructuring charge totaled approximately $1.0 million. The severance and benefit continuation costs are
generally expected to be paid out ratably over the next 6 months.
6.
ASSET IMPAIRMENT
During the second quarter of 2020, in connection with an assessment of potential impairment of indefinite lived
intangible assets, we recorded a $0.9 million non-cash asset impairment charge related to a trade name intangible asset
acquired in connection w(cid:76)(cid:87)(cid:75)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:72)(cid:3)(cid:41)(cid:76)(cid:69)(cid:72)(cid:85)(cid:86)(cid:3)(cid:86)(cid:72)(cid:74)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:21)(cid:19)(cid:20)(cid:22)(cid:3)(cid:39)(cid:85)(cid:72)(cid:86)(cid:71)(cid:72)(cid:81)(cid:3)(cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:17)(cid:3)The charge was due to a change in
the estimated fair value of the trade name, primarily driven by lower forecasted wallcover net sale associated with economic
instability in Russia and Ukraine together with the impact of the COVID-19 pandemic on this business. The charge is
(cid:85)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:70)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:76)(cid:81)(cid:74)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:179)(cid:54)(cid:72)(cid:79)(cid:79)(cid:76)(cid:81)(cid:74)(cid:15)(cid:3)(cid:74)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:68)(cid:71)(cid:80)(cid:76)(cid:81)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)
(cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)(cid:86)(cid:17)(cid:180)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:73)(cid:68)(cid:76)(cid:85)(cid:3)(cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:3)(cid:90)(cid:68)(cid:86)(cid:3)(cid:72)(cid:86)(cid:87)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:88)(cid:86)(cid:76)(cid:81)(cid:74) a discounted cash flow model (Level 3 fair value classification).
7. GAIN ON DISPOSITIONS OF PLANT, EQUIPMENT AND TIMBERLANDS
During 2020, 2019 and 2018, we completed the following sales of assets:
Dollars in thousands
2020
Timberlands
Other
Total
2019
Timberlands
Other
Total
2018
Timberlands
Other
Total
8.
REVENUE
Acres
Proceeds
Gain (loss)
461 $
n/a
$
1,996 $
n/a
$
1,918 $
n/a
$
1,413 $
(cid:178)
1,413 $
1,705 $
493
2,198 $
3,414 $
48
3,462 $
1,381
(49 )
1,332
1,572
488
2,060
3,225
31
3,256
The following tables set forth disaggregated information pertaining to our net sales from contracts with customers:
In thousands
Composite Fibers
Food & beverage
Wallcovering
Technical specialties
Composite laminates
Metallized
Airlaid Materials
Feminine hygiene
Specialty wipes
Tabletop
Home care
Adult incontinence
Other
TOTAL
2020
Year ended December 31
2019
2018
$
$
285,665
79,346
$
84,320
36,856
38,902
525,089
204,085
74,942
45,314
25,040
21,825
20,203
391,409
$
916,498
278,786 $
81,679
79,535
35,274
46,392
521,666
207,301
70,149
66,486
17,266
25,233
19,572
406,007
927,673 $
279,515
103,686
81,281
38,213
52,174
554,869
195,686
45,375
21,600
16,010
19,734
13,012
311,417
866,286
GLATFELTER 2020 FORM 10-K
41
In thousands
Composite Fibers
2020
Year ended December 31
2019
2018
Europe, Middle East and Africa
$
315,881 $
312,218
$
Americas
Asia Pacific
Airlaid Materials
Europe, Middle East and Africa
Americas
Asia Pacific
TOTAL
9.
EARNINGS PER SHARE
128,385
80,823
525,089
132,845
76,603
521,666
(cid:3)(cid:3) (cid:3)(cid:3)
(cid:3)(cid:3) (cid:3)(cid:3) (cid:3)(cid:3)
(cid:3)(cid:3) (cid:3)(cid:3) (cid:3)(cid:3)
204,728
174,606
12,075
391,409
916,498 $
220,924
179,067
6,016
406,007
927,673 $
$
354,978
113,546
86,345
554,869
(cid:3)(cid:3)
163,157
144,913
3,347
311,417
866,286
The following table sets forth the details of basic and diluted earnings (loss) per share (EPS):
In thousands, except per share
Net income (loss)
Year ended December 31
2020
2019
2018
$
21,298
$
(21,541 )
$
(177,604 )
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
44,339
275
44,614
44,132
43,768
(cid:178)
(cid:178)
44,132
43,768
Earnings (loss) per share
Continuing operations
Discontinued operations
$
0.47
0.01
$
(0.57 )
0.08
$
(0.01 )
(4.05 )
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
2020
Year ended December 31
2019
2018
1,082
1,233
1,379
42
10. 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, 2020, 2019 and 2018.
In thousands
Balance at January 1, 2020
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, 2020
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
Balance at January 1, 2018
Amount reclassified for adoption of ASU No. 2018-02
Balance as adjusted at January 1, 2018
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
Unrealized
gain (loss)
on cash
flow hedges
Change in
pensions
Change in
other
postretirement
defined
benefit
plans
Total
4,316 $
(7,253 ) $
1,387 $
(77,896 )
Currency
translation
adjustments
$
(76,346 ) $
33,821
(2,840 )
(6,202 )
(878 )
23,901
(cid:178)
33,821
(42,525 ) $
(3,972 )
(6,812 )
(2,496 ) $
611
(5,591 )
(12,844 ) $
(1,297 )
(2,175 )
(788 ) $
(4,658 )
19,243
(58,653 )
(69,622 ) $
2,199 $
(71,431 ) $
1,414 $
(137,440 )
(6,724 )
6,800
8,730
826
9,632
(cid:178)
(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 )
(41,839 ) $
(cid:178)
(41,839 )
(4,092 ) $
(cid:178)
(4,092 )
(98,295 ) $
(23,297 )
(121,592 )
3,551 $
999
4,550
(140,675 )
(22,298 )
(162,973 )
(27,783 )
2,641
(9,267 )
2,979
(31,430 )
(cid:178)
(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 )
$
$
$
$
$
GLATFELTER 2020 FORM 10-K
43
The following table sets forth the amounts reclassified from accumulated other comprehensive income (losses) for the
Year ended December 31
2019
2018
2020
$
$
(5,503 )
1,448
(4,055 )
83
(cid:178)
83
(3,972 )
48
651
(cid:178)
(cid:178)
(cid:178)
699
(88 )
611
(463 )
(834 )
(cid:178)
(cid:178)
(1,297 )
(cid:178)
(1,297 )
(4,658 )
$
Line Item in Statements of Income
Costs of products sold
Income tax provision (benefit)
Interest expense
Income tax provision (benefit)
$
5,020
(1,370 )
3,650
(cid:178)
(cid:178)
(cid:178)
3,650
39
7,050
Other, net
Other, net
6,990
61,917
(cid:178)
75,996
(16,568 )
59,428
Discontinued operations
Discontinued operations
Pension settlement
Income tax provision (benefit)
(cid:178)
(261 )
Other, net
Other, net
(575 )
(7,949 )
(8,785 )
2,670
(6,115 )
56,963
$
Discontinued operations
Income tax provision (benefit)
(6,468 )
1,785
(4,683 )
(cid:178)
(cid:178)
(cid:178)
(4,683 )
216
2,842
(cid:178)
(cid:178)
75,326
78,384
(22,936 )
55,448
(10 )
(852 )
(cid:178)
(cid:178)
(862 )
9
(853 )
49,912
years indicated.
In thousands
Description
Cash flow hedges (Note 19)
(Gains) losses on cash flow hedges
Tax expense (benefit)
Net of tax
Loss on interest rate swaps
Tax expense
Net of tax
Total cash flow hedges
Retirement plan obligations (Note 13)
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 gains
Discontinued operations amortization of defined
benefit other plans
Other benefit plan settlement
Tax expense
Net of tax
Total reclassifications, net of tax
$
44
11.
INCOME TAXES
Income taxes are recognized for the amount of taxes payable or refundable for the current year and deferred tax liabilities
and assets for the future tax consequences of events that have been recognized in our 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
2020
2019
2018
$
$
(4,989 )
166
18,470
13,647
540
(1,183 )
(1,428 )
(2,071 )
11,576
$
$
(419 )
134
14,014
13,729
(20,448 )
(4,105 )
1,582
(22,971 )
(9,242 )
$
$
(cid:178)
442
14,985
15,427
(9,242 )
251
1,287
(7,704 )
7,723
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
2020
2019
(35,696 )
68,055
32,359
$
$
(107,455 )
73,002
(34,453 )
$
$
2018
(59,264 )
66,539
7,275
$
$
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
Effect of U.S. tax law change(cid:3)
Global Intangible Low-taxed Income
Stock-based compensation
Nondeductible officer's compensation
Valuation allowance
Pension termination, settlement and related
Other
Actual tax rate
Year ended December 31
2020
2019
2018
21.0 %
0.6
3.4
(10.2 )
12.4
0.7
(21.5 )
7.1
1.4
1.0
11.7
5.4
2.8
35.8 %
21.0 %
3.7
2.0
8.2
(8.0 )
0.1
(cid:178)
(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
(cid:178)
7.8
106.2 %
The effective income tax rate for the year ended December 31, 2020 was unfavorably impacted by operating losses in
the US which generated no tax benefit, and $10.5 million of pension, restructuring, and other non-recurring costs for which
no tax benefit was recorded, offset in part by $6.1 million recorded in connection with passage of the Coronavirus Aid,
(cid:53)(cid:72)(cid:79)(cid:76)(cid:72)(cid:73)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:40)(cid:70)(cid:82)(cid:81)(cid:82)(cid:80)(cid:76)(cid:70)(cid:3)(cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:92)(cid:3)(cid:36)(cid:70)(cid:87)(cid:3)(cid:11)(cid:179)(cid:38)(cid:36)(cid:53)(cid:40)(cid:54)(cid:180)(cid:12)(cid:17)(cid:3)(cid:55)(cid:75)(cid:76)(cid:86)(cid:3)(cid:36)(cid:70)(cid:87)(cid:15)(cid:3)(cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3)(cid:90)(cid:68)(cid:86)(cid:3)(cid:86)(cid:76)(cid:74)(cid:81)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:87)(cid:82)(cid:3)(cid:79)(cid:68)(cid:90)(cid:3)(cid:82)(cid:81)(cid:3)(cid:48)(cid:68)(cid:85)(cid:70)(cid:75)(cid:3)(cid:21)(cid:26)(cid:15)(cid:3)(cid:21)(cid:19)(cid:21)(cid:19)(cid:15)(cid:3)(cid:80)(cid:82)(cid:71)(cid:76)(cid:73)(cid:76)(cid:72)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:179)(cid:81)(cid:72)(cid:87)(cid:3)
(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:79)(cid:82)(cid:86)(cid:86)(cid:180)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:86)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:83)(cid:85)(cid:72)(cid:89)(cid:76)(cid:82)(cid:88)(cid:86)(cid:3)(cid:79)(cid:68)(cid:90)(cid:3)(cid:87)(cid:82)(cid:3)(cid:68)(cid:79)(cid:79)(cid:82)(cid:90)(cid:3)(cid:79)(cid:82)(cid:86)(cid:86)(cid:72)(cid:86)(cid:3)(cid:68)(cid:85)(cid:76)(cid:86)(cid:76)(cid:81)(cid:74)(cid:3)(cid:76)(cid:81)(cid:3)(cid:68)(cid:3)(cid:87)(cid:68)(cid:91)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:69)(cid:72)(cid:74)(cid:76)(cid:81)(cid:81)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:73)(cid:87)(cid:72)(cid:85)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:26)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)
before January 1, 2021, to be carried back five years.
GLATFELTER 2020 FORM 10-K
45
The sources of deferred income taxes were as follows at December 31:
In thousands
Reserves
Environmental
Compensation
Pension
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
2020
2019
685
4,481
2,415
4,279
1,388
3,092
(cid:178)
16,703
5,714
38,757
(23,305 )
15,452
(70,492 )
(18,808 )
(cid:178)
(3,282 )
(92,582 )
(77,130 )
$
$
991
5,696
3,287
(cid:178)
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 )
$
$
Non-current deferred tax assets and liabilities are included in the following balance sheet captions:
In thousands
Other assets
Deferred income taxes
December 31
2020
2019
$
1
$
77,131
17
76,374
(cid:36)(cid:87)(cid:3)(cid:39)(cid:72)(cid:70)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:21)(cid:19)(cid:3)(cid:90)(cid:72)(cid:3)(cid:75)(cid:68)(cid:71)(cid:3)(cid:73)(cid:72)(cid:71)(cid:72)(cid:85)(cid:68)(cid:79)(cid:15)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:73)(cid:82)(cid:85)(cid:72)(cid:76)(cid:74)(cid:81)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:81)(cid:72)(cid:87)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:79)(cid:82)(cid:86)(cid:86)(cid:3)(cid:11)(cid:179)(cid:49)(cid:50)(cid:47)(cid:180)(cid:12)(cid:3)(cid:70)(cid:68)(cid:85)(cid:85)(cid:92)(cid:73)(cid:82)(cid:85)(cid:90)(cid:68)(cid:85)(cid:71)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:7)(cid:20)(cid:19)(cid:17)(cid:19)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3)
$199.3 million and $3.6 million, respectively. These NOL carryforwards are available to offset future taxable income, if any.
The federal NOL carryforward expires in 2037. The state NOL carryforwards expire at various times and in various amounts
beginning in 2021. Certain foreign NOL carryforwards begin to expire after 2024.
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 $14.2 million which begin to expire after 2034 and
state tax credit carryforwards totaling $3.4 million, which begin to expire in 2021.
As of December 31, 2020 and 2019, we had a valuation allowance of $23.3 million and $28.5 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 $3.3
million, $2.8 million and $(0.1) million in 2020, 2019 and 2018, respectively, related to research and development credits.
At December 31, 2020 and 2019, unremitted earnings of subsidiaries outside the United States deemed to be
indefinitely reinvested totaled $109 million and $62.0 million, respectively. Because the unremitted earnings of subsidiaries
are deemed to be indefinitely reinvested as of December 31, 2020 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, 2020, 2019 and 2018, we had $46.3 million, $30.5 million and $29.6 million of gross
unrecognized tax benefits, respectively. As of December 31, 2020, if such benefits were to be recognized, approximately
$35.8 million would be recorded as a component of income tax expense, thereby affecting our effective tax rate.
46
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
2020
2019
2018
$
$
30.5
13.9
(0.1 )
(cid:178)
4.4
(1.1 )
(1.3 )
46.3
$
$
29.6
2.8
(2.9 )
(cid:178)
4.6
(0.3 )
(3.3 )
30.5
$
$
26.9
0.3
(1.0 )
0.3
4.0
(0.2 )
(0.7 )
29.6
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)(cid:3)
Germany(1)(cid:3)
France
United Kingdom
Philippines
Open Tax Years
Examinations not
yet initiated
Examination in
progress
2014 - 2015;
2017 - 2020
2016 - 2020
2013 - 2018; 2020
2016 - 2020
2018 - 2020
2019 - 2020
2019 - 2020
N/A
2015 - 2018
2019
N/A
N/A
N/A
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 $6.1 million. The majority of this range
relates to tax positions taken in Canada and the U.S.
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
As of or for the year ended December 31,
2020
2019
2018
$
$
1.8
1.0
(cid:178)
$
0.4
(0.7 )
(cid:178)
1.1
0.3
(cid:178)
GLATFELTER 2020 FORM 10-K
47
12. STOCK-BASED COMPENSATION
Our (cid:36)(cid:80)(cid:72)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:53)(cid:72)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:47)(cid:82)(cid:81)(cid:74)(cid:3)(cid:55)(cid:72)(cid:85)(cid:80)(cid:3)(cid:44)(cid:81)(cid:70)(cid:72)(cid:81)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:51)(cid:79)(cid:68)(cid:81)(cid:3)(cid:11)(cid:87)(cid:75)(cid:72)(cid:3)(cid:179)(cid:47)(cid:55)(cid:44)(cid:51)(cid:180)(cid:12)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:72)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:76)(cid:86)(cid:86)(cid:88)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:42)(cid:79)(cid:68)(cid:87)(cid:73)(cid:72)(cid:79)(cid:87)(cid:72)(cid:85)(cid:3)(cid:70)(cid:82)(cid:80)(cid:80)(cid:82)(cid:81)(cid:3)
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, 2020, there were 1,899,527 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
(cid:68)(cid:90)(cid:68)(cid:85)(cid:71)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:86)(cid:87)(cid:82)(cid:70)(cid:78)(cid:3)(cid:82)(cid:81)(cid:79)(cid:92)(cid:3)(cid:86)(cid:87)(cid:82)(cid:70)(cid:78)(cid:3)(cid:68)(cid:83)(cid:83)(cid:85)(cid:72)(cid:70)(cid:76)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:85)(cid:76)(cid:74)(cid:75)(cid:87)(cid:86)(cid:3)(cid:11)(cid:179)(cid:54)(cid:50)(cid:54)(cid:36)(cid:53)(cid:86)(cid:180)(cid:12)(cid:17)
(cid:53)(cid:72)(cid:86)(cid:87)(cid:85)(cid:76)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3)(cid:54)(cid:87)(cid:82)(cid:70)(cid:78)(cid:3)(cid:56)(cid:81)(cid:76)(cid:87)(cid:86)(cid:3)(cid:11)(cid:179)(cid:53)(cid:54)(cid:56)(cid:86)(cid:180)(cid:12)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:51)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:3)(cid:36)(cid:90)(cid:68)(cid:85)(cid:71)(cid:86)(cid:3)(cid:11)(cid:179)(cid:51)(cid:54)(cid:36)(cid:86)(cid:180)(cid:12) 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,
2020
2019
2018
896,463
400,854
(89,483 )
(136,182 )
1,071,652
756,786
600,820
(223,677 )
(237,466 )
896,463
929,386
435,542
(112,501 )
(495,641 )
756,786
Compensation expense
$
5,655
$
3,543
$
5,971
2020
2019
2018
The amount granted in 2020, 2019 and 2018 includes 171,150, 218,422 and 184,834 PSAs, respectively, exclusive of
reinvested dividends. The weighted average grant date fair value per unit for awards in 2020, 2019 and 2018 was $16.65,
$15.86 and $20.20, respectively. As of December 31, 2020, unrecognized compensation expense for outstanding RSUs and
PSAs totaled $5.4 million. The weighted average remaining period over which the expense will be recognized is 1.6 years.
Stock Only Stock Appreciation Rights The following table sets forth information related to outstanding SOSARS:
2020
Wtd Avg
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)(cid:3) $
Shares
1,291,947 $
(cid:178)
(58,460 )
(151,074 )
1,082,413 $
1,082,413
1,082,413
(cid:178)
Exercise Price
20.05
(cid:178)
12.85
20.25
20.40
20.40
2019
2018
Wtd Avg
Exercise Price
18.08
(cid:178)
15.56
21.06
20.05
20.05
Shares
2,334,742 $
(cid:178)
(596,360 )
(446,435 )
1,291,947 $
1,291,947
1,291,947
Wtd Avg
Exercise Price
17.87
(cid:178)
13.31
21.09
18.08
18.13
Shares
2,561,846 $
(cid:178)
(158,545 )
(68,559 )
2,334,742 $
2,134,297
2,334,742
$
40
$
317
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 any of the past
three years. As of December 31, 2020, the intrinsic value of SOSARs vested and expected to vest totaled $0.1 million and the
remaining weighted average contractual life of outstanding SOSARs was 3.5 years.
48
13. 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 U.S.
qualified pension plan effective June 30, 2019 and replaced the benefits with an enhanced 401(k) defined contribution plan.
(cid:51)(cid:68)(cid:85)(cid:87)(cid:76)(cid:70)(cid:76)(cid:83)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:69)(cid:72)(cid:81)(cid:72)(cid:73)(cid:76)(cid:87)(cid:86)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:83)(cid:79)(cid:68)(cid:81)(cid:86)(cid:3)(cid:90)(cid:72)(cid:85)(cid:72)(cid:3)(cid:69)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:88)(cid:83)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:80)(cid:83)(cid:79)(cid:82)(cid:92)(cid:72)(cid:72)(cid:86)(cid:182)(cid:3)(cid:71)(cid:68)(cid:87)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:75)(cid:76)(cid:85)(cid:72)(cid:17)(cid:3)(cid:56)(cid:17)(cid:54)(cid:17)(cid:3)(cid:69)(cid:72)(cid:81)(cid:72)(cid:73)(cid:76)(cid:87)(cid:86)(cid:3)(cid:68)(cid:70)(cid:70)(cid:85)(cid:88)(cid:72)(cid:71)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)
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 a result of terminating the qualified plan and settling the associated liabilities, as of December 31, 2019, $53.4
million of assets remained in the pension trust and was included in cash and cash equivalents in the accompanying
consolidated balance sheet based on the nature of the underlying assets. In addition, during 2020 we received $2.3 million as
post-settlement adjustment with the third party. After transferring $14.1 million to a suspense account to fund future 401(k)
contributions and paying $8.3 million of excise taxes, approximately $33.3 million was 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. (cid:36)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:45)(cid:68)(cid:81)(cid:88)(cid:68)(cid:85)(cid:92)(cid:3)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:21)(cid:19)(cid:15)(cid:3)(cid:72)(cid:68)(cid:70)(cid:75)(cid:3)(cid:68)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:83)(cid:68)(cid:85)(cid:87)(cid:76)(cid:70)(cid:76)(cid:83)(cid:68)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)frozen non-qualified
pension benefit was 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, beginning in 2021, the Plan may
provide for elective employee deferrals. Under the Deferred Compensation Plan, participants are eligible to receive annual
Company contributions that such participants would have received under our 401(k) Savings Plan but for certain limitations
(cid:76)(cid:80)(cid:83)(cid:82)(cid:86)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:53)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:3)(cid:38)(cid:82)(cid:71)(cid:72)(cid:3)(cid:82)(cid:81)(cid:3)(cid:23)(cid:19)(cid:20)(cid:11)(cid:78)(cid:12)(cid:3)(cid:83)(cid:79)(cid:68)(cid:81)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:11)(cid:179)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3)(cid:38)(cid:82)(cid:81)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:180)(cid:12)(cid:17)(cid:3)(cid:56)(cid:81)(cid:79)(cid:72)(cid:86)(cid:86)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:90)(cid:76)(cid:86)(cid:72)(cid:3)
determined by the Compensation Committee, Company Contributions under the Deferred Compensation Plan will not exceed
(cid:26)(cid:8)(cid:3)(cid:82)(cid:73)(cid:3)(cid:68)(cid:3)(cid:83)(cid:68)(cid:85)(cid:87)(cid:76)(cid:70)(cid:76)(cid:83)(cid:68)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:68)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3)(cid:72)(cid:79)(cid:76)(cid:74)(cid:76)(cid:69)(cid:79)(cid:72)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:72)(cid:81)(cid:86)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:76)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:72)(cid:91)(cid:70)(cid:72)(cid:86)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:53)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:3)(cid:38)(cid:82)(cid:71)(cid:72)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:72)(cid:81)(cid:86)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:79)(cid:76)(cid:80)(cid:76)(cid:87)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)
401(k) plans.
Non-U.S. benefits were based on average salary and years of service. We use a December 31-measurement date for all
of our defined benefit plans.
As of December 31, 2020 and 2019, the remaining non-contributory pension plans are unfunded non-qualified 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 in 2018 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 2020 FORM 10-K
49
All information presented in the following tables represents amounts attributable to continuing operations.
In millions
Change in Benefit Obligation
Balance at beginning of year
Service cost
Interest cost
Benefits paid
Participant contributions
Plan amendments
Actuarial (gain)/loss
Special termination benefits
Curtailment
Settlement/transfer
Transfers from Discontinued Operations
Effect of currency rate changes
Balance at end of year
Change in Plan Assets
Fair value of plan assets at beginning of year
Reversion of excess plan assets
Actual return on plan assets
Total contributions
Benefits paid
Transfers from Discontinued Operations
Settlement/transfer
Fair value of plan assets at end of year
Funded status at end of year
Pension Benefits
Other Benefits
2020
2019
2020
2019
$
$
$
$
45.7
(cid:178)
1.2
(2.4 )
(cid:178)
(cid:178)
1.7
(cid:178)
(cid:178)
(cid:178)
(cid:178)
1.1
47.3
53.4
(53.4 )
(cid:178)
2.4
(2.4 )
(cid:178)
(cid:178)
(cid:178)
(47.3 )
$
$
$
$
332.2 $
1.3
11.5
(22.3 )
(cid:178)
(0.2 )
29.2
1.3
(1.9 )
(309.5 )
4.3
(0.2 )
45.7 $
333.2 $
(cid:178)
44.1
2.2
(22.3 )
5.7
(309.5 )
53.4
7.7 $
6.5 $
(cid:178)
0.2
(1.6 )
(cid:178)
(cid:178)
0.9
(cid:178)
(cid:178)
(cid:178)
(cid:178)
(cid:178)
6.0 $
(cid:178) $
(cid:178)
(cid:178)
1.6
(1.6 )
(cid:178)
(cid:178)
(cid:178)
(6.0 ) $
9.2
(cid:178)
0.3
(3.0 )
0.9
(cid:178)
(0.3 )
(cid:178)
(0.6 )
(cid:178)
(cid:178)
(cid:178)
6.5
(cid:178)
(cid:178)
(cid:178)
3.0
(3.0 )
(cid:178)
(cid:178)
(cid:178)
(6.5 )
(cid:36)(cid:80)(cid:82)(cid:88)(cid:81)(cid:87)(cid:86)(cid:3)(cid:83)(cid:85)(cid:72)(cid:86)(cid:72)(cid:81)(cid:87)(cid:72)(cid:71)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:179)(cid:87)(cid:85)(cid:68)(cid:81)(cid:86)(cid:73)(cid:72)(cid:85)(cid:86)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:72)(cid:71)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:180)(cid:3)(cid:85)(cid:72)(cid:83)(cid:85)(cid:72)(cid:86)(cid:72)(cid:81)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:76)(cid:80)(cid:83)(cid:68)(cid:70)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:72)(cid:80)(cid:83)(cid:79)(cid:82)(cid:92)(cid:72)(cid:72)(cid:86)(cid:3)
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 as of December 31, 2019 consist entirely of the amounts discussed above and remaining in
the qualified plan trust account. As of December 31, 2020, the non-qualified plans have an unfunded projected benefit
obligation of $47.3 million.
Amounts recognized in the consolidated balance sheets consist of the following as of December 31:
In millions
Cash and cash equivalents
Current liabilities
Other long-term liabilities
Net amount recognized
Pension Benefits
Other Benefits
2020
2019
2020
2019
$
$
(cid:178)
(2.3 )
(45.0 )
(47.3 )
$
$
53.4 $
(2.3 )
(43.4 )
7.7 $
(cid:178)
$
(1.2 )
(4.8 )
(6.0 ) $
(cid:178)
(1.4 )
(5.1 )
(6.5 )
The components of amounts (cid:85)(cid:72)(cid:70)(cid:82)(cid:74)(cid:81)(cid:76)(cid:93)(cid:72)(cid:71)(cid:3)(cid:68)(cid:86)(cid:3)(cid:179)(cid:36)(cid:70)(cid:70)(cid:88)(cid:80)(cid:88)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:85)(cid:72)(cid:75)(cid:72)(cid:81)(cid:86)(cid:76)(cid:89)(cid:72)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:180)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:76)(cid:86)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:73)(cid:82)(cid:79)(cid:79)(cid:82)(cid:90)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:81)(cid:3)(cid:68)(cid:3)
pre-tax basis:
In millions
Prior service credit (cost)
Net actuarial gain (loss)
Pension Benefits
Other Benefits
2020
2019
2020
2019
$
$
(0.2 )
(15.6 )
$
0.1
4.2
$
0.1
(0.4 )
0.6
1.4
The accumulated benefit obligation for all defined benefit pension plans was $47.3 million and $45.7 million at
December 31, 2020 and 2019, respectively.
The weighted-average assumptions used in computing the benefit obligations above were as follows:
Discount rate (cid:177) benefit obligation
Future compensation growth rate
Pension Benefits
Other Benefits
2020
2019
2020
2019
2.17 %
(cid:178)
2.70 %
(cid:178)
2.30 %
(cid:178)
3.11 %
(cid:178)
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
50
plan. The resulting discount rates as of December 31, 2020 ranged from 1.22% to 2.61% for pension plans and was 2.30% for
the 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
2020
2019
$
$
47.3
47.3
(cid:178)
Net periodic benefit (income) expense 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 expense
Other Benefits
Service cost
Interest cost
Expected return on plan assets
Amortization of prior service credit
Amortization of actuarial loss
Total net periodic benefit (income) expense
2020
Year Ended December 31
2019
2018
$
$
$
$
(cid:178)
1.2
(cid:178)
(cid:178)
0.7
(cid:178)
(cid:178)
1.9
$
$
$
(cid:178)
0.2
(0.5 )
(0.8 )
(1.1 )
$
1.3 $
11.5
(13.7 )
0.2
2.8
1.3
75.3
78.7 $
(cid:178) $
0.3
(cid:178)
(0.9 )
(0.6 ) $
45.7
45.7
(cid:178)
2.3
13.3
(21.1 )
(cid:178)
7.1
(cid:178)
(cid:178)
1.6
0.1
0.5
(cid:178)
(0.3 )
0.3
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 gain
Total recognized in other comprehensive (income) loss
Total recognized in net periodic benefit cost and other comprehensive (income) loss
Year Ended December 31
2020
2019
$
$
$
$
1.7 $
(cid:178)
(cid:178)
(0.7 )
1.0
2.9 $
0.9 $
0.8
1.7
0.6 $
(5.2 )
(0.2 )
(0.2 )
(78.1 )
(83.7 )
(5.0 )
(0.3 )
0.9
0.6
-
The weighted-average assumptions used in computing the net periodic benefit expense information above were as
follows:
Pension Benefits
Discount rate (cid:177) benefit expense
Future compensation growth rate
Expected long-term rate of return on plan assets
Other Benefits
Discount rate (cid:177) benefit expense
2020
Year Ended December 31
2019
2018
2.70 %
(cid:178)
(cid:178)
4.34 %
2.50
4.50
3.85 %
3.00
7.25
3.11 %
4.19 %
3.68 %
For 2019 and 2018, the development of the expected long-term rate of return assumption was based on the historical
returns and expected future returns for each asset class, as well as the target asset allocation of the pension portfolio.
GLATFELTER 2020 FORM 10-K
51
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
2020
2019
5.30 %
4.50
2037
5.60 %
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.
Cash Flow Benefit payments expected to be made under our non-qualified pension plans and other benefit plans are
summarized below:
In thousands
2021
2022
2023
2024
2025
2026 through 2030
$
Pension Benefits
Other Benefits
2,271 $
2,210
2,147
2,082
2,020
16,972
1,167
852
626
495
460
1,399
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
(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:80)(cid:83)(cid:79)(cid:82)(cid:92)(cid:72)(cid:72)(cid:86)(cid:182)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:76)(cid:81)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:17)(cid:3)(cid:37)(cid:72)(cid:74)(cid:76)(cid:81)(cid:81)(cid:76)(cid:81)(cid:74)(cid:3)(cid:45)(cid:88)(cid:81)(cid:72)(cid:3)(cid:20)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:28)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:83)(cid:83)(cid:85)(cid:82)(cid:91)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:26)(cid:8)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)
(cid:72)(cid:80)(cid:83)(cid:79)(cid:82)(cid:92)(cid:72)(cid:72)(cid:182)(cid:86)(cid:3)(cid:72)(cid:79)(cid:76)(cid:74)(cid:76)(cid:69)(cid:79)(cid:72)(cid:3)(cid:72)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:80)(cid:82)(cid:88)(cid:81)(cid:87)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:90)(cid:68)(cid:86)(cid:3)(cid:76)(cid:81)(cid:70)(cid:85)(cid:72)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:68)(cid:83)(cid:83)(cid:85)(cid:82)(cid:91)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:79)(cid:92)(cid:3)(cid:20)(cid:20)(cid:8)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:21)(cid:19)(cid:21)(cid:19)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)(cid:3)
associated with our 401(k) plan was $2.0 million, $1.9 million and $0.4 million in 2020, 2019 and 2018, respectively.
14.
INVENTORIES
Inventories, net of reserves were as follows:
In thousands
Raw materials
In-process and finished
Supplies
Total
15. PLANT, EQUIPMENT AND TIMBERLANDS
Plant, equipment and timberlands at December 31 were as follows:
In thousands
Land and buildings
Machinery and equipment
Furniture, fixtures, and other
Accumulated depreciation
Construction in progress
Timberlands, less depletion
Total
December 31
2020
2019
$
$
55,466
97,109
43,655
196,230
$
$
$
59,164
92,231
39,020
190,415
2019
163,066
685,081
152,777
(490,032 )
510,892
26,508
21
537,421
2020
173,646
754,737
160,922
(569,386 )
519,919
23,330
18
543,267
$
$
$
As of December 31, 2020 and 2019, we had $3.1 million and $4.4 million, respectively, of accrued capital
expenditures.
The following table sets forth amounts of interest expense capitalized in connection with major capital projects:
2020
Year Ended December 31
2019
2018
$
$
7,022
(cid:178)
7,022
$
$
10,408
(cid:178)
10,408
$
$
16,005
396
15,609
Interest cost incurred
Interest capitalized
Interest expense
52
16.
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 (cid:177) non amortizing
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
2020
2019
84,586
79,783
164,369
3,902
41,578
37,535
3,960
20,053
26,636
133,664
(51,829 )
81,835
$
$
$
$
77,775
73,041
150,816
4,470
38,256
34,445
3,625
18,406
24,385
123,587
(39,852 )
83,735
$
$
$
$
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:
2021
2022
2023
2024
2025
2020
2019
2018
$
8,014
$
7,986
$
5,680
7,626
7,511
7,511
7,511
7,511
The remaining weighted average useful life of intangible assets was 10.5 years at December 31, 2020.
17. OTHER LONG-TERM ASSETS
Other long-term assets consist of the following:
In thousands
Right-of-use asset operating leases
Restricted cash
Other
Total
18. 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
December 31
2020
2019
11,789
10,084
22,612
44,485
$
$
11,701
(cid:178)
22,789
34,490
December 31
2020
2019
21,726
9,376
4,781
4,002
31,208
71,093
$
$
19,369
5,826
2,075
3,852
31,650
62,772
$
$
$
$
GLATFELTER 2020 FORM 10-K
53
19. LEASES
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 consolidated balance sheet under the
capt(cid:76)(cid:82)(cid:81)(cid:3)(cid:179)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:180)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:79)(cid:72)(cid:68)(cid:86)(cid:72)(cid:3)(cid:82)(cid:69)(cid:79)(cid:76)(cid:74)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:76)(cid:86)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:179)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:70)(cid:88)(cid:85)(cid:85)(cid:72)(cid:81)(cid:87)(cid:3)(cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:180)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:179)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:79)(cid:82)(cid:81)(cid:74)-(cid:87)(cid:72)(cid:85)(cid:80)(cid:3)(cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:17)(cid:180)(cid:3)(cid:3)(cid:58)(cid:72)(cid:3)
currently do not have any finance leases.
(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:79)(cid:72)(cid:68)(cid:86)(cid:72)(cid:3)(cid:85)(cid:76)(cid:74)(cid:75)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:88)(cid:86)(cid:72)(cid:3)(cid:11)(cid:179)(cid:53)(cid:50)(cid:56)(cid:180)(cid:12)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:79)(cid:72)(cid:68)(cid:86)(cid:72)(cid:3)(cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:74)(cid:81)(cid:76)(cid:93)(cid:72)(cid:71)(cid:3)(cid:69)(cid:68)(cid:86)ed 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 expedients 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.
The following table sets forth information related to our leases as of the periods indicated.
Dollars in thousands
Right of use asset
Weighted average discount rate
Weighted average remaining maturity (months)(cid:3)
$
December 31
2020
2019
11,789
$
2.94 %
66
11,701
2.92 %
34
The following table sets forth operating lease expense for the periods indicated:
In thousands
Operating lease expense
December 31
2020
2019
$
5,876 $
4,527
The following table sets forth required minimum lease payments for the years indicated:
In thousands
2021
2022
2023
2024
2025
Thereafter
20. LONG-TERM DEBT
Long-term debt is summarized as follows:
In thousands
Revolving credit facility, due Feb. 2024
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
$
4,736
3,277
1,568
1,005
726
3,620
December 31
2020
2019
$
$
36,813
249,715
2,629
14,737
4,382
7,143
315,419
(25,057 )
(1,898 )
288,464
$
$
84,255
240,969
4,012
19,487
5,617
7,915
362,255
(22,940 )
(2,396 )
336,919
(cid:50)(cid:81)(cid:3)(cid:41)(cid:72)(cid:69)(cid:85)(cid:88)(cid:68)(cid:85)(cid:92)(cid:3)(cid:27)(cid:15)(cid:3)(cid:21)(cid:19)(cid:20)(cid:28)(cid:15)(cid:3)(cid:90)(cid:72)(cid:3)(cid:72)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:87)(cid:82)(cid:3)(cid:68)(cid:81)(cid:3)(cid:68)(cid:80)(cid:72)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:85)(cid:72)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:7)(cid:23)(cid:19)(cid:19)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:53)(cid:72)(cid:89)(cid:82)(cid:79)(cid:89)(cid:76)(cid:81)(cid:74)(cid:3)(cid:38)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:41)(cid:68)(cid:70)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:68)(cid:3)(cid:188)(cid:21)(cid:21)(cid:19)(cid:3)
(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:55)(cid:72)(cid:85)(cid:80)(cid:3)(cid:47)(cid:82)(cid:68)(cid:81)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:68)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:85)(cid:87)(cid:76)(cid:88)(cid:80)(cid:3)(cid:82)(cid:73)(cid:3)(cid:69)(cid:68)(cid:81)(cid:78)(cid:86)(cid:3)(cid:11)(cid:87)(cid:82)(cid:74)(cid:72)(cid:87)(cid:75)(cid:72)(cid:85)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:179)(cid:38)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:36)(cid:74)(cid:85)(cid:72)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:180)(cid:12)(cid:17)(cid:3) The principal amount of the Term Loan
54
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.
For all US dollar denominated borrowings under the Revolving Credit Facility, the borrowing rate is, at our option,
either, (a) (cid:87)(cid:75)(cid:72)(cid:3)(cid:69)(cid:68)(cid:81)(cid:78)(cid:182)(cid:86)(cid:3)(cid:69)(cid:68)(cid:86)(cid:72)(cid:3)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3)(cid:76)(cid:86)(cid:3)(cid:72)(cid:84)(cid:88)(cid:68)(cid:79)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:74)(cid:85)(cid:72)(cid:68)(cid:87)(cid:72)(cid:85)(cid:3)(cid:82)(cid:73)(cid:3)(cid:76)(cid:12)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:83)(cid:85)(cid:76)(cid:80)(cid:72)(cid:3)(cid:85)(cid:68)(cid:87)(cid:72)(cid:30)(cid:3)(cid:76)(cid:76)(cid:12)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:73)(cid:72)(cid:71)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:73)(cid:88)(cid:81)(cid:71)(cid:86)(cid:3)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:83)(cid:79)(cid:88)(cid:86)(cid:3)(cid:24)(cid:19)(cid:3)(cid:69)(cid:68)(cid:86)(cid:76)(cid:86)(cid:3)(cid:83)(cid:82)(cid:76)(cid:81)(cid:87)(cid:86)(cid:30)(cid:3)
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
(cid:20)(cid:19)(cid:19)(cid:3)(cid:69)(cid:68)(cid:86)(cid:76)(cid:86)(cid:3)(cid:83)(cid:82)(cid:76)(cid:81)(cid:87)(cid:86)(cid:3)(cid:69)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:79)(cid:72)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:76)(cid:87)(cid:86)(cid:3)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)(cid:71)(cid:72)(cid:87)(cid:72)(cid:85)(cid:80)(cid:76)(cid:81)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:54)(cid:87)(cid:68)(cid:81)(cid:71)(cid:68)(cid:85)(cid:71) (cid:9)(cid:3)(cid:51)(cid:82)(cid:82)(cid:85)(cid:182)(cid:86)(cid:3)
Rating Se(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:48)(cid:82)(cid:82)(cid:71)(cid:92)(cid:182)(cid:86)(cid:3)(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:82)(cid:85)(cid:3)(cid:54)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:15)(cid:3)(cid:44)(cid:81)(cid:70)(cid:17)(cid:3)(cid:11)(cid:87)(cid:75)(cid:72)(cid:3)(cid:179)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:38)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:53)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:180)(cid:12)(cid:30)(cid:3)(cid:82)(cid:85)(cid:3)(cid:11)(cid:69)(cid:12) the Euro-rate plus an applicable
(cid:80)(cid:68)(cid:85)(cid:74)(cid:76)(cid:81)(cid:3)(cid:85)(cid:68)(cid:81)(cid:74)(cid:76)(cid:81)(cid:74)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:20)(cid:20)(cid:21)(cid:17)(cid:24)(cid:3)(cid:69)(cid:68)(cid:86)(cid:76)(cid:86)(cid:3)(cid:83)(cid:82)(cid:76)(cid:81)(cid:87)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:21)(cid:19)(cid:19)(cid:3)(cid:69)(cid:68)(cid:86)(cid:76)(cid:86)(cid:3)(cid:83)(cid:82)(cid:76)(cid:81)(cid:87)(cid:86)(cid:3)(cid:69)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:79)(cid:72)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:38)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)
Rating. For non-US dollar denominated borrowings, the borrowing rate is, at our option, based on (b) above or for Euro
denominated borrowings, (cid:87)(cid:75)(cid:72)(cid:3)(cid:40)(cid:88)(cid:85)(cid:82)(cid:3)(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:69)(cid:68)(cid:81)(cid:78)(cid:3)(cid:50)(cid:73)(cid:73)(cid:72)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:53)(cid:68)(cid:87)(cid:72)(cid:3)(cid:11)(cid:179)(cid:40)(cid:56)(cid:53)(cid:44)(cid:37)(cid:50)(cid:53)(cid:180)(cid:12)(cid:3)(cid:83)(cid:79)(cid:88)(cid:86)(cid:3)(cid:68)(cid:81)(cid:3)(cid:68)(cid:83)(cid:83)(cid:79)(cid:76)(cid:70)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:80)(cid:68)(cid:85)(cid:74)(cid:76)(cid:81)(cid:3)(cid:85)(cid:68)(cid:81)(cid:74)(cid:76)(cid:81)(cid:74)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:20)(cid:20)(cid:21)(cid:17)(cid:24)(cid:3)
basis points to 200 basis points based on (cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:79)(cid:72)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:38)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:53)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74).
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 earnings before interest, taxes,
(cid:71)(cid:72)(cid:83)(cid:85)(cid:72)(cid:70)(cid:76)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:68)(cid:80)(cid:82)(cid:85)(cid:87)(cid:76)(cid:93)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:11)(cid:179)EBITDA(cid:180)(cid:12) (cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:3)(cid:11)(cid:87)(cid:75)(cid:72)(cid:3)(cid:179)(cid:79)(cid:72)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:180)(cid:12)(cid:30)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:76)(cid:76)(cid:12)(cid:3)(cid:68)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:40)(cid:37)(cid:44)(cid:55)(cid:39)(cid:36)(cid:3)(cid:87)(cid:82)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)(cid:3)
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. As of December 31, 2020, the leverage
ratio, as calculated in accordance with the definition in our Credit Agreement, was 1.8x. 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.
(cid:42)(cid:79)(cid:68)(cid:87)(cid:73)(cid:72)(cid:79)(cid:87)(cid:72)(cid:85)(cid:3)(cid:42)(cid:72)(cid:85)(cid:81)(cid:86)(cid:69)(cid:68)(cid:70)(cid:75)(cid:3)(cid:42)(cid:80)(cid:69)(cid:43)(cid:3)(cid:9)(cid:3)(cid:38)(cid:82)(cid:17)(cid:3)(cid:46)(cid:42)(cid:3)(cid:11)(cid:179)(cid:42)(cid:72)(cid:85)(cid:81)(cid:86)(cid:69)(cid:68)(cid:70)(cid:75)(cid:180)(cid:12)(cid:15)(cid:3)(cid:68)(cid:3)(cid:90)(cid:75)(cid:82)(cid:79)(cid:79)(cid:92)-owned subsidiary of ours, entered into a series of
borrowing agreeme(cid:81)(cid:87)(cid:86)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:44)(cid:46)(cid:37)(cid:3)(cid:39)(cid:72)(cid:88)(cid:87)(cid:86)(cid:70)(cid:75)(cid:72)(cid:3)(cid:44)(cid:81)(cid:71)(cid:88)(cid:86)(cid:87)(cid:85)(cid:76)(cid:72)(cid:69)(cid:68)(cid:81)(cid:78)(cid:3)(cid:36)(cid:42)(cid:15)(cid:3)(cid:39)(cid:129)(cid:86)(cid:86)(cid:72)(cid:79)(cid:71)(cid:82)(cid:85)(cid:73)(cid:3)(cid:11)(cid:179)(cid:44)(cid:46)(cid:37)(cid:180)(cid:12)(cid:3)(cid:68)(cid:86)(cid:3)(cid:86)(cid:88)(cid:80)(cid:80)(cid:68)(cid:85)(cid:76)(cid:93)(cid:72)(cid:71)(cid:3)(cid:69)(cid:72)(cid:79)(cid:82)(cid:90)(cid:29)
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
(cid:188)
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
$1.9 million at December 31, 2020. 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 $0.6 million in 2020.
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
2021
2022
2023
2024
2025
Thereafter
$
25,057
24,181
17,516
247,538
1,127
-
Glatfelter Corporation guarantees all debt obligations of its subsidiaries. All such obligations are recorded in these
consolidated financial statements.
GLATFELTER 2020 FORM 10-K
55
As of December 31, 2020 and 2019, we had $7.3 million 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.
21. 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
Term loan, due Feb. 2024
2.40% Term loan
2.05% Term loan
1.30% Term Loan
1.55% Term loan
Total
2020
Carrying
Value
Fair
Value
2019
Carrying
Value
Fair
Value
$
$
36,813 $
249,715
2,629
14,737
4,382
7,143
315,419 $
36,813
249,715
2,651
14,873
4,384
7,210
315,646
$
$
84,255 $
240,969
4,012
19,487
5617
7,915
362,255 $
84,255
240,969
4,076
19,764
5,624
7,975
362,663
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 22 (cid:177) (cid:179)Financial Derivatives and Hedging Activities.(cid:180)
22. 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 (cid:177) (cid:179)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:73)(cid:79)(cid:82)(cid:90)(cid:3)(cid:75)(cid:72)(cid:71)(cid:74)(cid:72)(cid:86)(cid:180)(cid:30)(cid:3)(cid:76)(cid:76)(cid:12)(cid:3)(cid:80)(cid:76)(cid:87)(cid:76)(cid:74)(cid:68)(cid:87)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:76)(cid:80)(cid:83)(cid:68)(cid:70)(cid:87)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)
changes in currency exchange rates have on intercompany financing transactions and foreign currency denominated
receivables and payables (cid:177) (cid:179)(cid:73)(cid:82)(cid:85)(cid:72)(cid:76)(cid:74)(cid:81)(cid:3)(cid:70)(cid:88)(cid:85)(cid:85)(cid:72)(cid:81)(cid:70)(cid:92)(cid:3)(cid:75)(cid:72)(cid:71)(cid:74)(cid:72)(cid:86)(cid:180)(cid:30)(cid:3)(cid:82)(cid:85)(cid:3)(cid:76)(cid:76)(cid:76)(cid:12)(cid:3)(cid:70)(cid:82)(cid:81)(cid:89)(cid:72)(cid:85)(cid:87)(cid:3)(cid:89)(cid:68)(cid:85)(cid:76)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:71)(cid:72)(cid:69)(cid:87)(cid:3)(cid:87)(cid:82)(cid:3)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 that are designated and qualify as cash flow hedges of foreign exchange risk are 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
Euro / British Pound
Philippine Peso / Euro
U.S. Dollar / Euro
Canadian Dollar / U.S. Dollar
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
56
December 31
2020
2019
18,638
18,522
1,041
70
(cid:178)
853,686
1,081,791
69,324
34,847
(cid:178)
17,702
(cid:178)
5,347
(cid:178)
1,523
1,039,432
1,077,871
82,317
34,094
1,523
These contracts have maturities of eighteen months or less.
(cid:44)(cid:81)(cid:3)(cid:50)(cid:70)(cid:87)(cid:82)(cid:69)(cid:72)(cid:85)(cid:3)(cid:21)(cid:19)(cid:20)(cid:28)(cid:15)(cid:3)(cid:90)(cid:72)(cid:3)(cid:72)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:87)(cid:82)(cid:3)(cid:68)(cid:3)(cid:188)(cid:20)(cid:27)(cid:19)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:81)(cid:82)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:73)(cid:79)(cid:82)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)-to-fixed interest rate swap agreement with
(cid:70)(cid:72)(cid:85)(cid:87)(cid:68)(cid:76)(cid:81)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:76)(cid:81)(cid:86)(cid:87)(cid:76)(cid:87)(cid:88)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:71)(cid:72)(cid:86)(cid:76)(cid:74)(cid:81)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:86)(cid:90)(cid:68)(cid:83)(cid:3)(cid:68)(cid:86)(cid:3)(cid:68)(cid:3)(cid:75)(cid:72)(cid:71)(cid:74)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)(cid:3)(cid:82)(cid:81)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:188)(cid:20)(cid:27)(cid:19)(cid:3)(cid:55)(cid:72)(cid:85)(cid:80)(cid:3)(cid:79)(cid:82)(cid:68)(cid:81)(cid:17)(cid:3)Under the terms
of the swap, we (cid:90)(cid:76)(cid:79)(cid:79)(cid:3)(cid:83)(cid:68)(cid:92)(cid:3)(cid:68)(cid:3)(cid:73)(cid:76)(cid:91)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:83)(cid:83)(cid:79)(cid:76)(cid:70)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:80)(cid:68)(cid:85)(cid:74)(cid:76)(cid:81)(cid:3)(cid:83)(cid:79)(cid:88)(cid:86)(cid:3)(cid:19)(cid:17)(cid:19)(cid:22)(cid:28)(cid:24)(cid:8)(cid:3)(cid:82)(cid:81)(cid:3)(cid:188)(cid:20)(cid:27)(cid:19)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:79)(cid:92)(cid:76)(cid:81)(cid:74)(cid:3)
variable rate term loan. We will receive the greater of 0.00% or EURIBOR.
Derivatives Designated as Hedging Instruments – Net Investment Hedge The (cid:188)220 million Term Loan discussed in
Note 20 (cid:177) (cid:179)Long-Term Debt” is designated as a net investment hedge of our Euro functional currency foreign subsidiaries.
During 2020, we recognized a pre-tax loss of $21.1 million and in 2019 a pre-tax gain of $1.6 million on the remeasurement
of the term loan from changes in currency exchange rates. Such amounts are recorded as a component of Other
Comprehensive Income (Loss).
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
(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:70)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:76)(cid:81)(cid:74)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:11)(cid:79)(cid:82)(cid:86)(cid:86)(cid:12)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:179)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)(cid:15)(cid:3)(cid:81)(cid:72)(cid:87)(cid:17)(cid:180)
In thousands
Derivative
Sell/Buy - sell notional
U.S. Dollar / British Pound
Euro / British Pound
British Pound / Euro
Sell/Buy - buy notional
Euro / U.S. Dollar
British Pound / Euro
December 31
2020
2019
25,250
600
1,900
7,500
(cid:178)
25,500
(cid:178)
3,000
8,000
7,000
These contracts have maturities of one month from the date originally entered into.
Fair Value Measurements
The following table summarizes the fair values of derivative instruments 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
Interest rate swap
Not designated as hedging:
Forward foreign currency exchange contracts
December 31
December 31
2020
2019
2020
2019
Prepaid Expenses
and Other
Current Assets
Other Current
Liabilities
$
$
$
577
(cid:178)
$
4,314
(cid:178)
4,342
136
$
34
12
456
$
566
$
118
$
205
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 (cid:177) cost of products sold
Ineffective portion (cid:177) other (cid:177) net
Interest expense
Not designated as hedging:(cid:3)
Forward foreign currency exchange contracts:
Other (cid:177) net
2020
Year ended December 31
2019
2018
$
5,503 $
(cid:178)
83
6,468
(cid:178)
(cid:178)
$
(5,020 )
138
(cid:178)
$
1,679 $
300
$
(1,419 )
GLATFELTER 2020 FORM 10-K
57
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 (cid:177) (cid:179)Accounting Policies(cid:17)(cid:180)
The fair values of the foreign exchange forward contracts are considered to be Level 2. These 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
(cid:68)(cid:70)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:76)(cid:81)(cid:74)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:86)(cid:75)(cid:72)(cid:72)(cid:87)(cid:86)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:179)(cid:51)(cid:85)(cid:72)(cid:83)(cid:68)(cid:76)(cid:71)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:70)(cid:88)(cid:85)(cid:85)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:180)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)
(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:68)(cid:70)(cid:87)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:68)(cid:3)(cid:79)(cid:82)(cid:86)(cid:86)(cid:3)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:76)(cid:86)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:72)(cid:71)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:179)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:70)(cid:88)(cid:85)(cid:85)(cid:72)(cid:81)(cid:87)(cid:3)(cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:17)(cid:180)
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,
2020
2019
$
$
5,859
(3,899 )
(5,420 )
(3,460 )
$
$
3,004
9,323
(6,468 )
5,859
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
(cid:72)(cid:91)(cid:83)(cid:82)(cid:86)(cid:88)(cid:85)(cid:72)(cid:3)(cid:76)(cid:86)(cid:3)(cid:74)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3)(cid:79)(cid:76)(cid:80)(cid:76)(cid:87)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:80)(cid:82)(cid:88)(cid:81)(cid:87)(cid:86)(cid:15)(cid:3)(cid:76)(cid:73)(cid:3)(cid:68)(cid:81)(cid:92)(cid:15)(cid:3)(cid:69)(cid:92)(cid:3)(cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:72)(cid:85)(cid:83)(cid:68)(cid:85)(cid:87)(cid:92)(cid:182)(cid:86)(cid:3)(cid:82)(cid:69)(cid:79)(cid:76)(cid:74)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:72)(cid:91)(cid:70)(cid:72)(cid:72)(cid:71)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:82)(cid:69)(cid:79)(cid:76)(cid:74)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:80)(cid:17)(cid:3)
Our policy is to enter into contracts only with financial institutions which meet certain minimum credit ratings.
23. (cid:54)(cid:43)(cid:36)(cid:53)(cid:40)(cid:43)(cid:50)(cid:47)(cid:39)(cid:40)(cid:53)(cid:54)(cid:182)(cid:3)(cid:40)(cid:52)(cid:56)(cid:44)(cid:55)(cid:60)
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
2020
Year ended December 31
2019
2018
44,248
110
10
44,368
43,959
188
101
44,248
43,614
304
41
43,959
24. 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
2021
2022
2023
2024
2025
Thereafter
$
Leases
Other
$
4,736
3,277
1,568
1,005
726
3,620
91,806
12,304
(cid:178)
(cid:178)
(cid:178)
(cid:178)
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, 2020, required minimum annual payments due under operating leases and other similar contractual
obligations aggregated $14.9 million and $104.1 million, respectively.
58
Fox River - Neenah, Wisconsin
Background. We have previously reported that we face liabilities associated with environmental claims arising out of
(cid:87)(cid:75)(cid:72)(cid:3)(cid:83)(cid:85)(cid:72)(cid:86)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:83)(cid:82)(cid:79)(cid:92)(cid:70)(cid:75)(cid:79)(cid:82)(cid:85)(cid:76)(cid:81)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:76)(cid:83)(cid:75)(cid:72)(cid:81)(cid:92)(cid:79)(cid:86)(cid:3)(cid:11)(cid:179)(cid:51)(cid:38)(cid:37)(cid:86)(cid:180)(cid:12)(cid:3)(cid:76)(cid:81)(cid:3)(cid:86)(cid:72)(cid:71)(cid:76)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:79)(cid:82)(cid:90)(cid:72)(cid:85)(cid:3)(cid:41)(cid:82)(cid:91)(cid:3)(cid:53)(cid:76)(cid:89)(cid:72)(cid:85)(cid:15)(cid:3)(cid:82)(cid:81)(cid:3)(cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:73)(cid:82)(cid:85)(cid:80)(cid:72)(cid:85)(cid:3)(cid:49)(cid:72)(cid:72)(cid:81)(cid:68)(cid:75)(cid:3)
facility was located, and in the Ba(cid:92)(cid:3)(cid:82)(cid:73)(cid:3)(cid:42)(cid:85)(cid:72)(cid:72)(cid:81)(cid:3)(cid:37)(cid:68)(cid:92)(cid:15)(cid:3)(cid:58)(cid:76)(cid:86)(cid:70)(cid:82)(cid:81)(cid:86)(cid:76)(cid:81)(cid:3)(cid:11)(cid:70)(cid:82)(cid:79)(cid:79)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:79)(cid:92)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:179)(cid:54)(cid:76)(cid:87)(cid:72)(cid:180)(cid:12)(cid:17)(cid:3)(cid:54)(cid:76)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:68)(cid:85)(cid:79)(cid:92)(cid:3)(cid:20)(cid:28)(cid:28)(cid:19)(cid:86)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:56)(cid:81)(cid:76)(cid:87)(cid:72)(cid:71)(cid:3)
(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:86)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:58)(cid:76)(cid:86)(cid:70)(cid:82)(cid:81)(cid:86)(cid:76)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:90)(cid:82)(cid:3)(cid:44)(cid:81)(cid:71)(cid:76)(cid:68)(cid:81)(cid:3)(cid:87)(cid:85)(cid:76)(cid:69)(cid:72)(cid:86)(cid:3)(cid:11)(cid:70)(cid:82)(cid:79)(cid:79)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:79)(cid:92)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:179)(cid:42)(cid:82)(cid:89)(cid:72)(cid:85)(cid:81)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:180)(cid:12)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:83)(cid:88)(cid:85)(cid:86)(cid:88)(cid:72)(cid:71)(cid:3)(cid:68)(cid:3)(cid:70)(cid:79)(cid:72)(cid:68)(cid:81)(cid:88)(cid:83)(cid:3)(cid:82)(cid:73)(cid:3)(cid:68)(cid:3)(cid:22)(cid:28)-mile
stretch of river from Little Lake Butte des M(cid:82)(cid:85)(cid:87)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:82)(cid:3)(cid:42)(cid:85)(cid:72)(cid:72)(cid:81)(cid:3)(cid:37)(cid:68)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:81)(cid:68)(cid:87)(cid:88)(cid:85)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:86)(cid:82)(cid:88)(cid:85)(cid:70)(cid:72)(cid:3)(cid:71)(cid:68)(cid:80)(cid:68)(cid:74)(cid:72)(cid:86)(cid:3)(cid:11)(cid:179)(cid:49)(cid:53)(cid:39)(cid:86)(cid:180)(cid:12)(cid:17)
(cid:55)(cid:75)(cid:72)(cid:3)(cid:56)(cid:81)(cid:76)(cid:87)(cid:72)(cid:71)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:86)(cid:3)(cid:82)(cid:85)(cid:76)(cid:74)(cid:76)(cid:81)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3)(cid:81)(cid:82)(cid:87)(cid:76)(cid:73)(cid:76)(cid:72)(cid:71)(cid:3)(cid:86)(cid:72)(cid:89)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:72)(cid:81)(cid:87)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:92)(cid:3)(cid:90)(cid:72)(cid:85)(cid:72)(cid:3)(cid:83)(cid:82)(cid:87)(cid:72)(cid:81)(cid:87)(cid:76)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3)(cid:85)(cid:72)(cid:86)(cid:83)(cid:82)(cid:81)(cid:86)(cid:76)(cid:69)(cid:79)(cid:72)(cid:3)(cid:83)(cid:68)(cid:85)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:11)(cid:179)(cid:51)(cid:53)(cid:51)(cid:86)(cid:180)(cid:12)(cid:30)(cid:3)(cid:75)(cid:82)(cid:90)(cid:72)(cid:89)(cid:72)(cid:85)(cid:15)(cid:3)
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-(cid:51)(cid:68)(cid:70)(cid:76)(cid:73)(cid:76)(cid:70)(cid:3)(cid:38)(cid:82)(cid:81)(cid:86)(cid:88)(cid:80)(cid:72)(cid:85)(cid:3)(cid:51)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:86)(cid:15)(cid:3)(cid:47)(cid:17)(cid:51)(cid:17)(cid:3)(cid:11)(cid:179)(cid:42)(cid:72)(cid:82)(cid:85)(cid:74)(cid:76)(cid:68)-(cid:51)(cid:68)(cid:70)(cid:76)(cid:73)(cid:76)(cid:70)(cid:180)(cid:12)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)
NCR Corporation.
(cid:55)(cid:75)(cid:72)(cid:3)(cid:56)(cid:81)(cid:76)(cid:87)(cid:72)(cid:71)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:86)(cid:3)(cid:40)(cid:81)(cid:89)(cid:76)(cid:85)(cid:82)(cid:81)(cid:80)(cid:72)(cid:81)(cid:87)(cid:68)(cid:79)(cid:3)(cid:51)(cid:85)(cid:82)(cid:87)(cid:72)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:36)(cid:74)(cid:72)(cid:81)(cid:70)(cid:92)(cid:3)(cid:11)(cid:179)(cid:40)(cid:51)(cid:36)(cid:180)(cid:12)(cid:3)(cid:75)(cid:68)(cid:86)(cid:3)(cid:71)(cid:76)(cid:89)(cid:76)(cid:71)(cid:72)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:54)(cid:76)(cid:87)(cid:72)(cid:3)(cid:76)(cid:81)(cid:87)(cid:82)(cid:3)(cid:73)(cid:76)(cid:89)(cid:72)(cid:3)(cid:179)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:88)(cid:81)(cid:76)(cid:87)(cid:86)(cid:180)(cid:15)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)
(cid:87)(cid:75)(cid:72)(cid:3)(cid:80)(cid:82)(cid:86)(cid:87)(cid:3)(cid:88)(cid:83)(cid:86)(cid:87)(cid:85)(cid:72)(cid:68)(cid:80)(cid:3)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:54)(cid:76)(cid:87)(cid:72)(cid:3)(cid:82)(cid:81)(cid:3)(cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:73)(cid:68)(cid:70)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:90)(cid:68)(cid:86)(cid:3)(cid:79)(cid:82)(cid:70)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:11)(cid:179)(cid:50)(cid:56)(cid:20)(cid:180)(cid:12)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:73)(cid:82)(cid:88)(cid:85)(cid:3)(cid:71)(cid:82)(cid:90)(cid:81)(cid:86)(cid:87)(cid:85)(cid:72)(cid:68)(cid:80)(cid:3)(cid:85)(cid:72)(cid:68)(cid:70)(cid:75)(cid:72)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:76)(cid:89)(cid:72)(cid:85)(cid:3)
(cid:68)(cid:81)(cid:71)(cid:3)(cid:69)(cid:68)(cid:92)(cid:3)(cid:11)(cid:179)(cid:50)(cid:56)(cid:21)-(cid:24)(cid:180)(cid:12)(cid:17)
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 Unilat(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:36)(cid:71)(cid:80)(cid:76)(cid:81)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:85)(cid:71)(cid:72)(cid:85)(cid:3)(cid:11)(cid:179)(cid:56)(cid:36)(cid:50)(cid:180)(cid:12)(cid:3)(cid:76)(cid:86)(cid:86)(cid:88)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:49)(cid:82)(cid:89)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:21)(cid:19)(cid:19)(cid:26)(cid:3)
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. The cleanup was completed in 2020 and the site is being decommissioned.
In January 2019, we reached an agreement with the United States, the State of Wisconsin, and Georgia-Pacific to
(cid:85)(cid:72)(cid:86)(cid:82)(cid:79)(cid:89)(cid:72)(cid:3)(cid:68)(cid:79)(cid:79)(cid:3)(cid:85)(cid:72)(cid:80)(cid:68)(cid:76)(cid:81)(cid:76)(cid:81)(cid:74)(cid:3)(cid:70)(cid:79)(cid:68)(cid:76)(cid:80)(cid:86)(cid:3)(cid:68)(cid:80)(cid:82)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:82)(cid:86)(cid:72)(cid:3)(cid:83)(cid:68)(cid:85)(cid:87)(cid:76)(cid:72)(cid:86)(cid:17)(cid:3)(cid:3)(cid:56)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:79)(cid:68)(cid:87)(cid:73)(cid:72)(cid:79)(cid:87)(cid:72)(cid:85)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:72)(cid:81)(cid:87)(cid:3)(cid:71)(cid:72)(cid:70)(cid:85)(cid:72)(cid:72)(cid:15)(cid:3)(cid:90)(cid:72)(cid:3)(cid:86)(cid:72)(cid:87)(cid:87)(cid:79)(cid:72)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:56)(cid:81)(cid:76)(cid:87)(cid:72)(cid:71)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:86)(cid:182)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)
(cid:58)(cid:76)(cid:86)(cid:70)(cid:82)(cid:81)(cid:86)(cid:76)(cid:81)(cid:182)(cid:86) 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 satisfactio(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:74)(cid:82)(cid:89)(cid:72)(cid:85)(cid:81)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:182)(cid:3)(cid:70)(cid:79)(cid:68)(cid:76)(cid:80)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:70)(cid:82)(cid:86)(cid:87)(cid:86)(cid:3)(cid:76)(cid:81)(cid:70)(cid:88)(cid:85)(cid:85)(cid:72)(cid:71)(cid:3)(cid:83)(cid:85)(cid:76)(cid:82)(cid:85)(cid:3)(cid:87)(cid:82)(cid:3)(cid:50)(cid:70)(cid:87)(cid:82)(cid:69)(cid:72)(cid:85)(cid:3)(cid:21)(cid:19)(cid:20)(cid:27)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:49)(cid:53)(cid:39)(cid:86)(cid:17)
We 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 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
(cid:69)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:86)(cid:70)(cid:85)(cid:82)(cid:90)(cid:3)(cid:68)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:3)(cid:72)(cid:86)(cid:87)(cid:68)(cid:69)(cid:79)(cid:76)(cid:86)(cid:75)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:88)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:58)(cid:55)(cid:48)(cid:3)(cid:44)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3)(cid:11)(cid:179)(cid:58)(cid:55)(cid:48)(cid:3)(cid:44)(cid:180)(cid:12)(cid:3)(cid:68)(cid:81)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:51)(cid:53)(cid:51)(cid:15)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:50)(cid:56)(cid:20)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:72)(cid:81)(cid:87)(cid:3)
decree during any period that the balance in the escrow account exceeds the amount due under our fixed-price contract. As of
December 31, 2020, the balance in the escrow is less than amounts due under the fixed-price contract by approximately $1.5
million. Our obligation to pay this difference is secured by a letter of credit.
At December 31, 2020, the escrow account balance totaled $9.0 million which is included in the condensed
(cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:86)(cid:75)(cid:72)(cid:72)(cid:87)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:179)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:17)(cid:180)
Under the consent decree, we are responsible for reimbursement of government oversight costs paid from October
2018 and later over approximately the next 30 years. We anticipate that oversight costs will decline as activities at the site
transition from remediation to long-term monitoring and maintenance.
Reserves for the Site. Our reserve for past and future government oversight costs and long-term monitoring and
maintenance is set forth below:
GLATFELTER 2020 FORM 10-K
59
In thousands
Balance at January 1,
Payments
Reserve adjustment
Accretion
Balance at December 31,
Year ended
December 31
2020
2019
21,870 $
(3,622 )
(cid:178)
207
18,455 $
45,001
(20,805 )
(2,509 )
183
21,870
$
$
The payments set forth above represent payments for government oversight costs, including the $20.5 million paid in
2019 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, $3.7 million is recorded in the accompanying December 31, 2020,
(cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:86)(cid:75)(cid:72)(cid:72)(cid:87)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:179)(cid:40)(cid:81)(cid:89)(cid:76)(cid:85)(cid:82)(cid:81)(cid:80)(cid:72)(cid:81)(cid:87)(cid:68)(cid:79)(cid:3)(cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:180)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:80)(cid:68)(cid:76)(cid:81)(cid:76)(cid:81)(cid:74)(cid:3)(cid:7)(cid:20)(cid:23)(cid:17)(cid:27)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:76)(cid:86)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:72)(cid:71)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)
(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:179)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:79)(cid:82)(cid:81)(cid:74)(cid:3)(cid:87)(cid:72)(cid:85)(cid:80)(cid:3)(cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:17)(cid:180)
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.
25.
SEGMENT AND GEOGRAPHIC INFORMATION
The following tables set forth profitability and other information by segment:
For the year ended December 31, 2020
In thousands
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, 2019
In thousands
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
Composite
Fibers
Airlaid
Materials
Other and
Unallocated
Total
$
$
$
$
$
$
525,089
430,420
94,669
42,575
(cid:178)
52,094
(cid:178)
52,094
225,444
26,175
13,262
$
$
$
391,409
326,809
64,600
18,296
(cid:178)
46,304
(cid:178)
46,304
295,806
22,416
9,311
$
$
$
(cid:178)
11,400
(11,400 )
39,174
(1,332 )
(49,242 )
(16,797 )
(66,039 )
22,017
8,009
5,563
916,498
768,629
147,869
100,045
(1,332 )
49,156
(16,797 )
32,359
543,267
56,600
28,136
Composite
Fibers
Airlaid
Materials
Other and
Unallocated
Total
$
$
$
$
$
$
521,666
432,154
89,512
41,629
(cid:178)
47,883
(cid:178)
47,883
222,710
26,153
11,972
$
$
$
406,007
346,568
59,439
18,321
(cid:178)
41,118
(cid:178)
41,118
293,779
21,136
13,667
$
$
$
(cid:178)
1,409
(1,409 )
35,017
(2,060 )
(34,366 )
(89,088 )
(123,454 )
20,932
3,531
2,126
927,673
780,131
147,542
94,967
(2,060 )
54,635
(89,088 )
(34,453 )
537,421
50,820
27,765
60
For the year ended December 31, 2018
In thousands
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
$
$
$
$
$
$
554,869
462,270
92,599
44,205
(cid:178)
48,394
(cid:178)
48,394
233,167
28,256
15,685
$
$
$
311,417
269,272
42,145
12,182
(cid:178)
29,963
(cid:178)
29,963
298,232
14,892
21,646
$
$
$
(cid:178)
4,337
(4,337 )
55,334
(3,256 )
(56,415 )
(14,667 )
(71,082 )
24,645
4,377
4,798
866,286
735,879
130,407
111,721
(3,256 )
21,942
(14,667 )
7,275
556,044
47,525
42,129
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.
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
(cid:179)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:56)(cid:81)(cid:68)(cid:79)(cid:79)(cid:82)(cid:70)(cid:68)(cid:87)(cid:72)(cid:71)(cid:17)(cid:180)(cid:3)(cid:44)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:89)(cid:68)(cid:79)(cid:88)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:86)(cid:72)(cid:74)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)(cid:15)(cid:3)(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:71)(cid:82)(cid:72)(cid:86)(cid:3)(cid:81)(cid:82)(cid:87)(cid:3)(cid:88)(cid:86)(cid:72)(cid:3)(cid:68)(cid:81)(cid:92)(cid:3)(cid:80)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)
assets. This presentation is aligned with the management and operating structure of our company. It is also on this basis that
(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:83)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:76)(cid:86)(cid:3)(cid:72)(cid:89)(cid:68)(cid:79)(cid:88)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:37)(cid:82)(cid:68)(cid:85)(cid:71)(cid:3)(cid:82)(cid:73)(cid:3)(cid:39)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)(cid:17)
Our Composite Fibers segment serves customers globally and focuses on higher value-added products in the following
categories:
(cid:120) Food & Beverage - filtration material primarily used for single-serve coffee and tea products;
(cid:120) Wallcovering - (cid:69)(cid:68)(cid:86)(cid:72)(cid:3)(cid:80)(cid:68)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:79)(cid:86)(cid:3)(cid:88)(cid:86)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:90)(cid:82)(cid:85)(cid:79)(cid:71)(cid:182)(cid:86)(cid:3)(cid:79)(cid:68)(cid:85)(cid:74)(cid:72)(cid:86)(cid:87)(cid:3)(cid:90)(cid:68)(cid:79)(cid:79)(cid:83)(cid:68)(cid:83)(cid:72)(cid:85)(cid:3)(cid:80)(cid:68)(cid:81)(cid:88)(cid:73)(cid:68)(cid:70)(cid:87)(cid:88)(cid:85)(cid:72)(cid:85)(cid:86)(cid:30)
(cid:120) Technical Specialties - consists of a diverse line of specialty engineered products used in commercial and
industrial applications such as electrical energy storage, home, hygiene, and other highly-engineered fiber-based
applications;
(cid:120) Composite Laminate - decorative laminate solutions used in furniture, and household and commercial flooring,
and other applications; and
(cid:120) 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 the following categories:
(cid:120) Feminine hygiene and other hygiene applications;
(cid:120) Specialty wipes;
(cid:120) Tabletop;
(cid:120) Home care;
(cid:120) Adult incontinence; and
(cid:120) Other consumer and industrial products.
Disaggregated net sales by categories and geographic region for Composite Fibers and Airlaid Materials is presented in
Item 8 Financial Statements and Supplementary Data, Note 8 (cid:177) (cid:179)Revenue(cid:17)(cid:180)(cid:3)
GLATFELTER 2020 FORM 10-K
61
Approximately 16% of our consolidated net sales in 2020, 2019 and 2018, 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.
2020
2019
2018
Plant,
Equipment and
Timberlands (cid:177)
Net
Net sales
Plant,
Equipment and
Timberlands (cid:177)
Net
Net sales
Plant,
Equipment and
Timberlands (cid:177)
Net
Net sales
$
$
166,131
489,655
73,604
112,128
74,980
916,498
$
$
103,570
286,591
50,140
68,975
33,991
543,267
$
$
167,887
504,012
70,018
121,789
63,967
927,673
$
$
105,763
274,146
52,039
72,436
33,037
537,421
$
$
124,690
483,628
76,053
114,877
67,038
866,286
$
$
109,797
286,839
50,483
74,448
34,477
556,044
In thousands
United States
Germany
United Kingdom
Canada
Other
Total
26. QUARTERLY RESULTS (UNAUDITED)
In thousands,
except per share
First
Second
Third
Fourth
Net sales
2020
$ 231,560
216,183
233,473
235,282
2019
$ 229,133
235,053
232,515
230,972
$
Gross Profit
2020
2019
Income (loss) from
continuing operations
2019
2020
Earnings (loss) per share
2019
2020
$
36,802
32,063
38,251
40,753
$
$
35,617
37,500
38,021
36,404
7,406
(2,281 )
6,527
9,131
$
4,603
6,293
8,643
(44,750 )
0.17
(0.05 )
0.15
0.21
$
0.10
0.14
0.19
(1.01 )
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, 2020, concluded
that, as of the evaluation date, our disclosure controls and procedures were effective.
Internal Control Over Financial Reporting
(cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:11)(cid:68)(cid:86)(cid:3)(cid:71)(cid:72)(cid:73)(cid:76)(cid:81)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:40)(cid:91)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:3)(cid:36)(cid:70)(cid:87)(cid:3)(cid:53)(cid:88)(cid:79)(cid:72)(cid:86)(cid:3)
13a-15(f) and 15d-15(f)) and the related report of our independent registered public accounting firm are included in Item 8 (cid:177)
Financial Statements and Supplementary Data.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the three months ended December 31,
2020, 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 31, 2021. Our board of directors has determined that, based on the relevant
experience of the members of the Audit Committee, five 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
(cid:76)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:75)(cid:72)(cid:85)(cid:72)(cid:76)(cid:81)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:179)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:73)(cid:73)(cid:76)(cid:70)(cid:72)(cid:85)(cid:86)(cid:180)(cid:3)(cid:68)(cid:86)(cid:3)(cid:86)(cid:72)(cid:87)(cid:3)(cid:73)(cid:82)(cid:85)(cid:87)(cid:75)(cid:3)(cid:76)(cid:81)(cid:3)(cid:51)(cid:68)(cid:85)(cid:87) I, page 11 of this report.
62
(cid:58)(cid:72)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:68)(cid:71)(cid:82)(cid:83)(cid:87)(cid:72)(cid:71)(cid:3)(cid:68)(cid:3)(cid:38)(cid:82)(cid:71)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:37)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:40)(cid:87)(cid:75)(cid:76)(cid:70)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:40)(cid:50)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:54)(cid:72)(cid:81)(cid:76)(cid:82)(cid:85)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:50)(cid:73)(cid:73)(cid:76)(cid:70)(cid:72)(cid:85)(cid:86)(cid:3)(cid:11)(cid:87)(cid:75)(cid:72)(cid:3)(cid:179)(cid:38)(cid:82)(cid:71)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:37)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:40)(cid:87)(cid:75)(cid:76)(cid:70)(cid:86)(cid:180)(cid:12)(cid:3)
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 31, 2021.
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 31, 2021.
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 31, 2021.
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 31, 2021.
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.
PART IV
ITEM 15 EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)
1.
Our Consolidated Financial Statements as follows are included in Part II, Item 8:
i.
Consolidated Statements of Income (Loss) for the years ended December 31, 2020, 2019 and 2018
ii. Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2020, 2019 and 2018
iii. Consolidated Balance Sheets as of December 31, 2020 and 2019
iv. Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018
v. Consolidated Statements of Shareholders' Equity for the years ended December 31, 2020, 2019 and 2018
vi. Notes to Consolidated Financial Statements
(a)
2.
Financial Statement Schedules (Consolidated) included in Part IV:
i.
Schedule II -Valuation and Qualifying Accounts - For each of the three years ended December 31, 2020
(a)
3.
Exhibits
See Index to Exhibits
ITEM 16 FORM 10-K SUMMARY
None
Exhibit
Number
Index to Exhibits
Item 15(a)(3)
Description of Documents
Incorporated by Reference to
Exhibit
Filing
2.1
2.2
2.3
3.1
3.2
Asset Purchase Agreement, dated August 21, 2018, by and between P. H. Glatfelter Company and
2.1
Form 8-K filed
Spartan Paper LLC.
Amendment No. 1 to the Asset Purchase Agreement, dated as of October 31, 2018, by and between P. H.
2.1
Glatfelter Company and Pixelle Specialty Solutions LLC.
Aug. 22, 2018
Form 8-K filed
Nov. 6, 2018
Share Purchase Agreement, dated January 5, 2021, by and between GPPC Equity Holdings LLC and
Glatfelter Corporation, filed herewith. (cid:130)
Articles of Amendment to Articles of Incorporation, effective October 1, 2020.
Articles of Incorporation, as amended through December 20, 2007.
3.1
3.1
Form 8-K filed
Oct. 1, 2020
Form 10-K filed
Feb. 26, 2020
GLATFELTER 2020 FORM 10-K
63
3.2
4.1
10.1
Amended and Restated By-Laws of Glatfelter Corporation, as amended, dated December 18, 2020.
Description of securities.
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.
3.1
4.1
10.1
Form 8-K filed
Dec. 22, 2020
Form 10-K filed
Feb. 26, 2020
Form 8-K filed
Feb. 11, 2019
10.2
First Amendment to Third Amended and Restated Credit Agreement, dated September 25, 2019, by and
10.2
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
10.1
Deutsche Industriebank AG, Düsseldorf.
Guaranty, dated April 17, 2013, executed by the Registrant (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. **
10.2
10.1
P. H. Glatfelter Company Amended and Restated 2005 Management Incentive Plan, effective January 1,
10.1
2015. **
P. H. Glatfelter Company Supplemental Long Term Disability Plan, dated February 25, 2014, between the
10.1
registrant and certain employees. **
P. H. Glatfelter Company Supplemental Management Pension Plan (amended and restated effective January
10(d)
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. **
10.1
10.2
10.12
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). **
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 the Registrant and Dante C. Parrini,
dated July 2, 2010. **
Restricted Stock Unit Award Certificate for Dante C. Parrini, dated as of November 13, 2019. **
10.3
10.2
10.2
10.3
10(l)
10.1
10.1
Long Term Employment Contract between Glatfelter Switzerland Gmbh, a wholly-owned subsidiary, and
10.21
Wolfgang Laures, effective January 1, 2020. **
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-Q filed
Jul. 30, 2019
Form 10-Q filed
Jul. 30, 2019
Form 10-K filed
Feb. 26, 2020
Form 8-K filed
May 4, 2017
Form 10-Q filed
May 2, 2014
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
Mar. 3, 2014
Form 8-K filed
Jul. 6, 2010
Form 8-K filed
Nov. 18, 2019
Form 10-K filed
Feb. 26, 2020
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
10.20
10.21
Form of Change in Control Employment Agreement by and between the Registrant and certain employees
(form effective as of March 7, 2008). **
10(j)
Form 10-K filed
Mar. 13, 2009
10.22
Form of Change in Control Employment Agreement by and between the Registrant and certain employees
10(q)
(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. **
10.24
P. H. Glatfelter Company Deferred Compensation Plan for Directors, effective as of January 1, 2007. **
10(k)
(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:82)(cid:73)(cid:3)(cid:39)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:182)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:50)(cid:73)(cid:73)(cid:76)(cid:70)(cid:72)(cid:85)(cid:182)(cid:86) Indemnification Agreement. **
Guidelines for Executive Severance. **
10.1
10.2
10.23
10.24
10.25
10.26
10.27
64
Form 10-K filed
Mar. 3, 2014
Form 10-K filed
Feb. 26, 2020
Form 10-K filed
Mar. 8, 2013
Form 8-K filed
Dec. 19, 2017
Form 8-K filed
Jul. 6, 2010
10.28
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.).
10.3(a) Form 10-Q filed
Aug. 6, 2010
10.29
Agreed Supplement to Consent Decree between United States of America and the State of Wisconsin vs. P. H.
10.3(b) Form 10-Q filed
Glatfelter Company and WTM I Company (f/k/a Wisconsin Tissue Mills Inc.).
Aug. 6, 2010
10.30
Second Agreed Supplement to Consent Decree between United States of America and the State of Wisconsin
10.3(c) Form 10-Q filed
vs. P. H. Glatfelter Company and WTM I Company (f/k/a Wisconsin Tissue Mills Inc.).
Aug. 6, 2010
10.31
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).
10.3(d) Form 10-Q filed
Aug. 6, 2010
10.32
Administrative Order for Remedial Action dated November 13, 2007, issued by the United States
Environmental Protection Agency.
10.2
Form 8-K filed
Nov. 19, 2007
10.33
Consent Decree between P. H. Glatfelter Company, Georgia-Pacific Consumer Products LP, the United
10.2
States of America and the State of Wisconsin, dated March 14, 2019.
Form 10-Q filed
Apr. 30, 2019
14
21
23
Code of Business Ethics for the CEO and Senior Financial Officers of Glatfelter
Subsidiaries of the Registrant, filed herewith.
Consent of Independent Registered Public Accounting Firm, filed herewith.
14
Form 10-K filed
Feb. 26, 2020
31.1
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.
31.2
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.
32.1
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.
32.2
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.
101.INS
Inline XBRL Instance Document (cid:177) the instance document does not appear in the Interactive Data file
because its iXBRL tags are embedded within the Inline XBRL document.
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
104
Inline XBRL Taxonomy Extension Schema Document.
Inline XBRL Extension Calculation Linkbase Document.
Inline XBRL Extension Definition Linkbase Document.
Inline XBRL Extension Label Linkbase Document.
Inline XBRL Extension Presentation Linkbase Document.
Cover Page Interactive Data File (formatted as an inline XBRL and contained in Exhibit 101).
Portions of this exhibit and the exhibits and schedules thereto, marked by brackets, have been omitted pursuant to Item 601(b)(10) of Regulation S-K.
(cid:130)
** Management contract or compensatory plan
GLATFELTER 2020 FORM 10-K
65
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, 2021
GLATFELTER CORPORATION
(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, 2021
/s/ Dante C. Parrini
Dante C. Parrini
Chairman and Chief Executive Officer
Principal Executive Officer and Director
February 25, 2021
/s/ Samuel L. Hillard
Samuel L. Hillard
Senior Vice President and
Chief Financial Officer
Principal Financial Officer
February 25, 2021
/s/ David C. Elder
David C. Elder
Principal Accounting Officer
Vice President, Finance and Chief
Accounting Officer
February 25, 2021
/s/ Bruce Brown
Bruce Brown
/s/ Kathleen A. Dahlberg
Kathleen A. Dahlberg
/s/ Nicholas DeBenedictis
Nicholas DeBenedictis
/s/ Kevin M. Fogarty
Kevin M. Fogarty
/s/ Marie T. Gallagher
Marie T. Gallagher
/s/ Darrel Hackett
Darrel Hackett
/s/ J. Robert Hall
J. Robert Hall
/s/ Ronald J. Naples
Ronald J. Naples
/s/ Lee C. Stewart
Lee C. Stewart
February 25, 2021
February 25, 2021
February 25, 2021
February 25, 2021
February 25, 2021
February 25, 2021
February 25, 2021
February 25, 2021
66
Director
Director
Director
Director
Director
Director
Director
Director
Director
GLATFELTER CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL STATEMENT SCHEDULE
For each of the three years ended December 31, 2020
Valuation and Qualifying Accounts
Allowance for
Schedule II
In thousands
Balance, beginning of year
Provision
Write-offs, recoveries and discounts allowed
Other (1)
Balance, end of year
2020
Doubtful Accounts
2019
2018
Sales Discounts and Deductions
2019
2018
2020
$
1,682 $
1,661 $
488
(114 )
37
720
(678 )
(21 )
$
2,093 $
1,682 $
1,761 $
695
(688 )
(107 )
1,661 $
578 $
832 $
1,516
1,440
1,029
2,075
(1,291 )
(1,526 )
(2,294 )
(12 )
791 $
(168 )
578 $
22
832
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.
(1) Relates primarily to changes in currency exchange rates.
GLATFELTER 2020 FORM 10-K
67
O F F I C E 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
Ramesh Shettigar
Chairman & Chief Executive Officer
Vice President, Global Human Resources &
Vice President, Investor Relations &
Christopher W. Astley
Administration
Corporate Treasurer
Senior Vice President & Chief Commercial Officer
David C. Elder
Amy R. Wannemacher
Samuel L. Hillard
Vice President, Finance & Chief Accounting Officer
Vice President, Tax
Senior Vice President & Chief Financial Officer
Jill L. Urey
Wolfgang Laures
Senior Vice President, Integrated Global Supply
Chain & Information Technology
Vice President, Deputy General Counsel &
Corporate Secretary
D I R E C T O R S
Dante C. Parrini
Kevin M. Fogarty
J. Robert Hall
Chairman & Chief Executive Officer
President and Chief Executive Officer
Chief Executive Officer
Bruce Brown
Kraton Corporation, Inc.
Ole Smoky Distillery LLC
Retired Chief Technology Officer
Marie T. Gallagher
Ronald J. Naples*
Procter & Gamble, Inc.
Senior Vice President and Controller
Chairman Emeritus
Kathleen A. Dahlberg
Chief Executive Officer
G.G.I., Inc.
Nicholas DeBenedictis*
Chairman Emeritus
Essential Utilities, Inc.
PepsiCo, Inc.
Darrel Hackett
President
BMO Wealth Management – U.S.
BMO Financial Group
Quaker Chemical Corporation
Lee C. Stewart
Private Financial Consultant
* Retiring as of the 2021 Annual
Meeting of Shareholders.
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 6, 2021, 8:00 a.m. ET
Virtual Meeting
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
Investor Relations
Glatfelter Corporation
4350 Congress Street, Suite 600
Overnight correspondence should be sent to:
Charlotte, NC 28209
Computershare
717-225-2746
ir@glatfelter.com
wwwww.virtual
www.virtualshareholdermeeting.com/GLT2021
462 South 4th Street, Suite 1600
Louisville, KY 40202
Shareholder website
www.computershare.com/investor
toll-free: 877-832-7259
nte
international: +1 201-680-6578
L O C A T I O N S
Global Centeers
H E A D Q U A R T E R S
S AT E L L I T E O F F I C E
C E N T E R O F E XC E L L E N C E
4350 Congress Street, Suite 600
96 South George Street
Charlotte, NC 28209 U.S.A.
Suite 350
York, PA 17401 U.S.A.
Glatfelter Switzerland Sàrl
Grafenauweg, 8
6300 Zug, Switzerland
Manufacturringg LLooocattiionsss
N O R T H A MM E R II CCC A
F O R T S M I T H*
8201 Chad Colley Boulevard
Fort Smith, AR 72916 U.S.A.
E U R O P E
G AT I N E A U *
1680 rue Atmec
Gatineau, QC J8R 7G7 Canada
C A E R P H I L LY*
Pontygwindy Industrial Estate
G E R N S B A C H*
Hördener Strasse 3-7
S C A Ë R*
BP2
CF83 3HU Caerphilly, Mid Glamorgan
76593 Gernsbach, Germany
29390 Scaër, France
United Kingdom
D R E S D E N*
Pirnaer Strasse 31-33
01809 Heidenau, Germany
FA L K E N H AG E N*
Gewerbepark Prignitz/Falkenhagen
Rolf-Hövelmann-Strasse 10
16928 Pritzwalk, Germany
LY D N E Y*
Church Road
S T E I N F U R T *
Dieselstrasse 16
GL15 5EJ Lydney, Gloucestershire
48565 Steinfurt, Germany
United Kingdom
O B E R - S C H M I T T E N*
Rhönstrasse 13
63667 Nidda, Germany
Sales & Disttribuutiiooon OOOfficccess
N O R T H A MM E R II CCC A
G A I N E S V I L L E , G E O R G I A
351 Jesse Jewell Parkway
Suite 301
Gainesville, GA 30501 U.S.A.
E U R O P E / A SS I AAA
M I L A N , I TA LY
Via Alberto da Giussano 1
I-20145 Milano, Italy
M O S C O W , R U S S I A
S U Z H O U , C H I N AAN AI NC H, UOOHHU ZS U
13 2-ya Zvenigorodskaya Street
Building 41 (Floor 6)
123022 Moscow, Russia
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Specialty Fibberr Faacccilitiies
P H I L I P P I N E S
Newtech Pulp, Inc.
Barrio María Cristina
C O S TA R I C A
Autopista 27, camino a Multiplaza
Oficentro Trilogía, Edificio 1, Oficina 111-A-1a
9217 Balo-I, Lanoa del Norte, Philippines
10203 San José, San Rafael, Costa RicacaR
* Also a Sales & Distribution Office
W W W . G L A T F E L T E R . C O M
© 2 021 GLATFELTER