A N N U A L R E P O R T
Glatfelter is a leading global supplier of engineered materials with a strong focus on
innovation and sustainability. The Company’s high quality, technology-driven, innovative, and
customizable nonwovens solutions can be found in products that are Enhancing Everyday Life®.
These include personal care and hygiene products, food and beverage filtration, critical cleaning
products, medical and personal protection, packaging products, as well as home improvement
and industrial applications. Headquartered in Charlotte, NC, the Company’s annualized net sales
approximate $1.4 billion with approximately 3,250 employees worldwide. Glatfelter’s operations
utilize a variety of manufacturing technologies including airlaid, wetlaid and spunlace with
sixteen manufacturing sites located in the United States, Canada, Germany, the United Kingdom,
France, Spain, and the Philippines. The Company has sales offices in all major geographies
serving customers under the Glatfelter and Sontara® brands. Additional information about
Glatfelter may be found at www.glatfelter.com.
Forward-Looking Statements
Certain statements included in this annual report that pertain to future 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. We use words such as “anticipate”, “believe”, “expect”,
“future”, “intend”, “plan”, “target”, and similar expressions to identify forward-looking statements. Any such statements are based on management’s current
expectations and are subject to numerous risks, uncertainties and other unpredictable or uncontrollable factors that could cause future results to differ
materially from those expressed in the forward-looking statements. The risks, uncertainties and other unpredictable or uncontrollable factors are described
in our filings with the U.S. Securities and Exchange Commission (“SEC”) in the Risk Factors section and under the heading “Forward-Looking Statements” in
the accompanying Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q, which are available on the SEC’s website at www.sec.gov. In light
of these risks, uncertainties and other factors, any such forward-looking matters may not occur, and readers are cautioned not to place undue reliance on
these forward-looking statements. The forward-looking statements speak only as of the date of this report and we undertake 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.
Dear Shareholders,
Chairman and Chief Executive Officer
2021 was a momentous year for Glatfelter. The global pandemic
and writing paper segment, consistent with our multi-year
touched our lives with adversity and spawned a business
growth strategy. These historic acquisitions position us
environment of pandemic-driven inflation, global supply-chain
well to deliver long-term shareholder value with greater
disruptions, and market volatility that significantly impacted the
influence in growth markets, more innovative products, and
year’s performance. Glatfelter PEOPLE rose to the occasion and
expanded margins.
embraced our health and safety protocols to keep our facilities
running efficiently and fulfill demand on behalf of our customers
that produce some of the world’s most well-known essential
PANDEMIC-DRIVEN ECONOMIC HEADWINDS
IMPACTED OUR PERFORMANCE.
consumer staples. As we strove to mitigate the impact of these
Glatfelter’s performance was severely hindered by
extraordinary economic conditions, the Company remained
pandemic-driven cost inflation, unprecedented energy
committed to its growth and transformation strategies with
prices in Europe, and global supply-chain disruptions that
the successful acquisitions of two leading engineered
materials businesses.
THE NEW GLATFELTER IS NOW A $1.4 BILLION GLOBAL
COMPANY WITH APPROXIMATELY 3,250 EMPLOYEES.
escalated throughout the year. We anticipated our price
increases and energy surcharges, when combined with a
sharp focus on continuous improvement and operational
excellence, would adequately offset these issues. However, the
unparalleled economic headwinds intensified in the fourth
The acquisitions of Jacob Holm and Georgia-Pacific’s (GP) U.S.
quarter and substantially depressed margins in the Composite
nonwovens business provide greater scale, broader product and
Fibers and Spunlace segments.
technology diversification, and stronger leadership positions in
growing engineered materials segments.
Despite the various actions we took and the unrelenting efforts
of all Glatfelter PEOPLE throughout 2021, we could not fully
•
Jacob Holm, the largest acquisition in Glatfelter’s 158-year
overcome the global economic challenges although managed
history, became our new Spunlace segment and expanded
to achieve several key financial highlights:
our portfolio in the growing wipes, critical-cleaning,
healthcare, and hygiene categories.
•
Adjusted EBITDA was $120 million and Adjusted EPS
was $0.61 versus $125 million Adjusted EBITDA and
•
The integration of GP’s U.S. nonwovens business is meeting
$0.84 Adjusted EPS in 2020.
our near-term performance expectations as the integration
continues to progress. This acquisition positions Glatfelter
as the world’s largest airlaid materials producer and
contributed to our Airlaid Materials’ segment sustaining its
track record of year-over-year profit growth in 2021.
When combined with the previous acquisition of GP’s European
•
•
•
Revenue of $1,085 million was up from $916 million
in the previous year.
Glatfelter’s quarterly dividend was increased to
$0.14 per share.
A $500 million bond offering financed our new
Nonwovens business, these transactions have nearly doubled the
acquisitions at an attractive interest rate.
Company’s size since the 2018 divestiture of our legacy printing
G L A T F E L T E R 2 0 2 1 A N N U A L R E P O R T 1
Given the circumstances surrounding 2021, and having fallen
CLOSING THOUGHTS
short of meeting shareholders’ expectations, we are taking
swift and aggressive actions focused on optimizing earnings,
strengthening cash flow, and paying down debt.
We are confident in the merits of our growth strategy and the
Company’s ability to reward shareholders. Since embarking on
our transformation in late 2018, considerable progress has been
THE OUTLOOK: FOCUSING ON IMPERATIVES FOR
achieved. After successfully completing the 2021 acquisitions,
HIGHER PERFORMANCE
2022 is another important year as we integrate our acquisitions,
achieve synergies, and navigate the recovery from a multi-year
pandemic in the midst of a tragic humanitarian crisis in Ukraine
that is currently straining the global economy. To successfully
deliver in 2022, we are focused on four critical imperatives:
1. Uphold employee health and safety: The mental and
physical well-being of Glatfelter PEOPLE is a key priority as
we begin living in a post-pandemic environment. Equally
important, we will remain steadfast in sustaining our
industry top-quartile safety performance while productively
operating our facilities and implementing continuous
improvement and operational excellence initiatives.
2.
Integrate acquisitions and realize synergies: We have
applied our best and brightest resources and proven
integration methodology to rapidly transition Jacob Holm
and GP’s U.S. nonwovens business into Glatfelter’s operating
model. We are addressing the critical business priorities
to achieve our overall goal of $25 million in synergies and
improve our operating performance.
3. Minimize price volatility: Our commercial team is
engaging with strategic customers to implement well-
justified pricing improvements. We are leveraging our
experience and proven commercial arrangements from
Airlaid Materials to migrate 50% of our Composite Fibers and
Spunlace customers to a dynamic pricing model in 2022.
This effort will reduce price volatility for Glatfelter and its
customers, plus equitably manage input cost fluctuations
across the value chain.
4.
Further grow our Airlaid Materials segment: This
business is a vital driver of cash flow and EBITDA and has
demonstrated stability and resilience in generating growth
during the pandemic. Its cost pass-through arrangements
with customers protect margins from inflation and must be
emulated by the other segments. In addition, the further
integration of GP’s U.S. nonwovens business will be a key
contributor to steadily growing this segment.
90% of Glatfelter’s manufacturing output produces essential
consumer staples and 80% of these product categories are
projected to grow at GDP levels or greater. Most of these
offerings are closely aligned with the megatrends driving
consumer demand with the majority derived from sustainable,
plant-based materials. As testimony to the first 3 years of our
transformation results, I am proud to share that Glatfelter was
ranked in the 73rd percentile of S&P 600 Small Cap companies
for shareholder returns. As we enter 2022, we have amassed
the manufacturing assets, technologies, and talent to produce
innovative, high-performing, and more environmentally
friendly engineered materials that meet the world’s demand
for healthy living, convenience, mobility, and sustainability.
While we are encouraged by this progress, our 2021 results
remind us there is still much work that lies ahead. We are far
from satisfied with our performance and are committed to
increasing enterprise value in the years to come.
I cannot conclude this letter without acknowledging our
greatest and most unique asset – Glatfelter PEOPLE – who gave
their very best every day during extraordinarily challenging
circumstances. None of our accomplishments would have
been possible without the energy, talents, and creativity of our
3,250 employees for which I express my personal gratitude.
I also want to thank you, our shareholders, for your
unwavering support during a year of excitement, progress,
and unprecedented challenges. Your continued loyalty and
encouragement affirm our confidence that Glatfelter is on the
right path for continued growth and long-term success.
Sincerely,
Dante C. Parrini
Chairman and Chief Executive Officer
March 11, 2022
2 G L A T F E L T E R 2 0 2 1 A N N U A L R E P O R T
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
☒ Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2021
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 po
rincipal executive offices)s
(704) 885-2555
(Registrant's
e
telephone number, including area code)
Commission file number
1-03560
Exact name of registrant as
p
specifiedff
in its charter
Glatfelter Corporation
IRS Employer
Identification No.
23-0628360
Securities registered pursuant to Section 12(b) of the Act:
State or other jurisdiction of
p
incorporation
or organization
rr
Pennsylvania
g
Title of Each Class
Common Stock, par value $.01 per share
Trading Symbol(s)
( )
y
GLT
Name of Each Exchange on which
registered
New York Stock Exchange
g
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined
ff
in Rule 405 of the Securities Act. Yes ☐ No ☑.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or forff
requirements for the past 90 days. Yes ☑ No ☐.
such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing
Indicate by check mark whether the registrant has submitted electronically every I
Regulation S-T during the preceding 12 months (or forff
rr
such shorter period that the registrant was required to submit such filff es). Yes ☑ No ☐.
nteractive Data File required to be submitted pursuant to Rule 405 of
Indicate by check mark whether the registrant is a large accelerated filff er, an accelerated filer, a non-accelerated filer, or a small reporting company. See
the definitions
of “large accelerated filff er”, “accelerated filff er” and “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the
ff
Exchange Act. ☑ Large accelerated filff er ☐ Accelerated filer ☐ Non-accelerated filff er ☐ Small reporting company ☐ Emerging Growth Company
Indicate by check mark whether the registrant has filff ed a report on and attestation to its management’s assessment of the effectivene
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. ☑
ss of its internal
ff
Indicate by check mark whether the registrant is a shell company (as defined
ff
in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑.
Based on the closing price as of June 30, 2020, the aggregate market value of the Common Stock of the Registrant held by non‑affiff liates was
$509.1 million.
If an emerging growth company, indicate by check mark i
new or revised finff ancial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
r
f the registrant has elected not to use the extended transition period for complying with any
Common Stock outstanding on February 18, 2022 totaled 44,627,704 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive
2022 are incorporated by reference into Part III.
ff
Proxy Statement to be delivered to shareholders in connection with the Annual Meeting of Shareholders to be held on May 5,
GLATFELTER CORPORATION
ANNUAL REPORT ON FORM 10-K
For the Year Ended
December 31, 2021
Table of Contents
PART I
Item 1
Item 1A
Item 1B
Item 2
Item 3
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Executive Officers
Item 4
Mine Safety Disclosures
PART II
Item 5
Item 6
Item 7
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Stock Performance Graph
[Reserved]
Management's Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations
Liquidity and Capital Resources
Item 7A
Quantitative and Qualitative Disclosures about Market Risk
Item 8
Financial Statements and Supplementary Data
Management's Report on Internal Control Over Financial Reporting
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Income (Loss)
Consolidated Statements of Comprehensive Income (Loss)
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Consolidated Statements of Shareholders’ Equity
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
Page
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7
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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
21. Fair Value of Financial Instruments
22. Financial Derivatives and Hedging Activities
23. Shareholders’ Equity
24. Commitments, Contingencies and Legal Proceedings
25. Segment and Geographic Information
Changes in and Disagreements With Accountants on Accounting and Financial Disclosures
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
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
Item 9
Item 9A
Item 9B
Item 9C
PART III
Item 10
Item 11
Item 12
Item 13
Item 14
PART IV
Item 15
Exhibits, Financial Statement Schedules
Form 10-K Summary
Item 16
Signatures
Schedule II
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PART I
Glatfelter Corporation makes regular filings with the Securities and Exchange Commission (“SEC”), including
this Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. These filings are
available, free of charge, on our website, www.glatfelter.com, and the SEC’s website at www.sec.gov. We also provide
copies of our SEC filings at no charge upon request to Investor Relations at (717) 225-2746, ir@glatfelter.com, or by mail
to Investor Relations, 4350 Congress Street, Suite 600, Charlotte, NC 28209. In this filing, unless the context indicates
otherwise, the terms “we,” “our,” “us,” “the Company,” or “Glatfelter” refer to Glatfelter Corporation and subsidiaries.
The following discussion of our Business sets forth an update of the material developments since our most recent
full discussion included in Item 1 – “Business” of our 2020 Annual Report on Form 10-K filed with the SEC on February
25, 2021.
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 $1.4 billion, on a pro forma
basis giving effect to recently completed acquisitions, with customers in over 100 countries. Our operations utilize a variety
of manufacturing technologies including airlaid, wetlaid and spunlace with sixteen manufacturing sites located in the
United States, Canada, Germany, the United Kingdom, France, Spain, and the Philippines. We have sales offices in all
major geographies serving customers under the Glatfelter and Sontara brands.
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 improved adjusted earnings before interest,
taxes, depreciation, and amortization (“EBITDA”).
We manage our business and make investment decisions under a functional operating model with three distinct
reporting segments: Composite Fibers, Airlaid Materials and Spunlace. 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.
In 2021, we completed two significant acquisitions to further our business transformation and in alignment with
our stated strategy. On May 13, 2021, we completed the acquisition of all the outstanding equity interests of Georgia-
Pacific Mt. Holly LLC, Georgia-Pacific’s U.S. nonwovens business (“Mount Holly”), for $170.9 million. This business
includes the Mount Holly, NC manufacturing facility and an R&D center and pilot line for nonwovens product
development in Memphis, TN. The Mount Holly facility produces high-quality airlaid products for the wipes, hygiene, 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. Mount Holly had net sales of approximately
$100 million in 2020. The Mount Holly acquisition expanded our footprint and income generation in the U.S. and balanced
our sales mix between the Airlaid Materials and Composite Fibers segments.
On October 29, 2021, we completed the acquisition of PMM Holding (Luxembourg) AG, and its wholly-owned
subsidiaries (“Jacob Holm”), a global leading manufacturer of premium quality spunlace nonwoven fabrics for critical
cleaning, high-performance materials, personal care, hygiene and medical applications, for an enterprise value of
approximately $304.0 million, including the extinguishment of debt. Jacob Holm's annual revenue approximates $400.0
million. We expect the combination to create an expanded portfolio of engineered specialty applications based on spunlace-
based production assets with opportunities for long-term growth aligned with post-COVID lifestyle changes. Jacob Holm's
results are reported prospectively from the date of acquisition as Spunlace, a newly established reporting segment.
Additional information related to these acquisitions is set forth in Item 8 – Financial Statements and
Supplementary Data - Note 3 – “Acquisitions.”
GLATFELTER 2021 FORM 10-K
1
Our strategy focuses on:
Expanding our engineered
materials business
Driving continuous improvement
and cost optimization initiatives
Maintaining a healthy balance
sheet and financial flexibility
•Investing in organic growth and strategic acquisitions to expand
capabilities and broaden scale
•Driving innovation and growth by leveraging market-leading capabilities
and focusing on sustainability
•Achieving more consistent operational excellence across the Company
through robust continuous improvement
•Managing cost structure to increase margins and improve cash flow
•Applying a disciplined capital spending mindset
•Funding organic and inorganic growth opportunities
•Delivering shareholder distributions
Segments Consolidated net sales and the relative net sales contribution of each of our segments for the past three
years are summarized below (the data includes the results of the recently completed acquisitions prospectively from the
closing date):
Dollars in thousands
Net sales
Operating segment contribution
Composite Fibers
Airlaid Materials
Spunlace
Total
2021
2020
2019
$
1,084,694
$
916,498
$
927,673
51.3 %
43.4
5.3
100.0 %
57.3 %
42.7
—
100.0 %
56.2 %
43.8
—
100.0 %
On a pro forma basis, assuming the acquisitions of Mount Holly and Jacob Holm had been completed on January
1, 2021, annual sales would have been approximately $1.4 billion and the operating segment contribution by Composite
Fibers, Airlaid Materials and Spunlace would have been 39.2%, 35.3% and 25.5%, respectively.
Net tons sold by each segment for the past three years were as follows:
Metric tons
Composite Fibers
Airlaid Materials
Spunlace
Total
2021
2020
2019
132,196
148,134
12,514
292,844
134,758
136,661
133,473
137,595
271,419
271,068
COMPOSITE FIBERS Our Composite Fibers segment, with annual net sales of approximately $556.8 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:
Food & Beverage filtration material primarily used for single-serve coffee and tea products;
•
• Wallcover base materials used by the world’s largest wallpaper manufacturers;
•
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;
Composite Laminates decorative laminate solutions used in furniture, and household and commercial
flooring, and other applications; and
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.
This segment’s net sales composition by categories is set forth in Item 8 – Financial Statements and
Supplementary Data- Note 8 – “Revenue.”
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
147,000 lightweight and other paper
11,200 metallized
12,000 abaca pulp
Abaca pulp
Wood pulp
Synthetic fiber
Base stock
Abaca fiber
Principal Raw Material
(“PRM”)
Estimated Annual
Quantity of PRM
14,400
86,500
21,500
11,000
23,700
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.
In addition to critical raw materials, Composite Fibers’ production cost is influenced by the price of electricity and
natural gas. In 2021, 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.
In Composite Fibers’ markets, competition is product line specific as the necessity for technical expertise and
specialized manufacturing equipment limits the number of companies offering multiple product lines. In addition,
Composite Fibers’ lightweight products are produced using highly specialized inclined wire paper machine technology.
The following chart summarizes key competitors by market segment:
Market segment
Competitor
Single serve coffee & tea
Ahlstrom, Delfort Group AG, Purico, Miquel y Costas and Zhejiang Kan
Wallcovering
Technical specialties
Composite laminates
Metallized
Mayak & Technocell JV, Neu Kaliss, Goznak, Kämmerer and Ahlstrom
Nippon Kodoshi Corp ("NKK"), Kan Kyo Technology, Miquel y Costas, 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:
•
•
•
•
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;
maximize continuous improvement methodologies to increase productivity, reduce costs and expand
capacity; and
ensuring readily available access to specialized raw material requirements or suitable alternatives to support
projected growth.
AIRLAID MATERIALS Airlaid Materials, with annual net sales of approximately $470.3 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:
•
•
•
•
•
•
feminine hygiene and other hygiene products;
specialty wipes;
tabletop;
home care;
adult incontinence; and
other consumer and industrial products.
Airlaid Materials’ customers are industry leading consumer product companies, as well as private label converters.
We believe this business holds a leading position in the majority of the markets it serves. Airlaid Materials has developed
GLATFELTER 2021 FORM 10-K
3
long-term customer relationships through superior quality, customer service, and a reputation for quickly bringing product
and process innovations to market.
This segment’s net sales composition by categories is set forth in Item 8 – Financial Statements and
Supplementary Data- Note 8 – “Revenue. “
The feminine hygiene category accounted for 44.0% and 52.1% of Airlaid Material’s net sales in 2021 and 2020,
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,
Fort Smith, Arkansas and Mount Holly, North Carolina. The segment's five facilities operate with the following combined
attributes (in metric tons):
Airlaid Production
Capacity (metric tons)
Principal Raw Material (“PRM”)
Estimated Annual
Quantity of PRM
(short tons)
190,000
Fluff pulp
130,000
Key raw materials 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 79% of
this segment’s net sales in 2021 was earned 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 Materials’ in-house technical expertise combined with significant capital investment
requirements and rigorous customer expectations creates large barriers to entry for new competitors.
The following summarizes Airlaid Materials’ key competitors:
Market segment
Hygiene and other absorbent products
Tabletop
Wipes
Competitor
Fitesa, McAirlaid's GmbH, Domtar, Suominen Oyj, Karweb Nonwovens,
Gelok International
SharpCell, Rexcell AB, Ascutec, Karweb Nonwovens, Main SpA
Suominen Oyj, Berry, Kimberly Clark, Spuntech Industries, AS
Nonwovens
The global markets served by Airlaid Materials are characterized by attractive growth opportunities. To take
advantage of this, our strategy is focused on:
•
•
•
•
•
maintaining and expanding relationships with customers that are market-leading consumer product
companies, as well as companies converting and distributing through private label arrangements;
capitalizing on our product and process innovation capabilities, including developing plastic-free
technologies;
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.
4
SPUNLACE Spunlace is a global leading specialty manufacturer of premium quality spunlace nonwovens for
critical cleaning, high-performance materials, personal care, surface disinfecting wipes, hygiene, beauty care and medical
applications. Spunlace, formed as a result of our Jacob Holm acquisition, is a global manufacturer with state of the art
proprietary production technology, conversion capabilities and branded products. Spunlace serves the world's largest
brands and focuses on quality, sustainability and innovation. The categories served by Spunlace include:
•
•
•
•
•
•
critical cleaning;
health care;
high performance;
beauty care;
wipes; and
feminine hygiene
Spunlace's products are used by a wide range of end users. The critical cleaning and high performance product
categories are used in applications such as automotive refinishing, aerospace, cleanroom, automotive acoustics, fire
blocking and filtration. It has long-standing relationships with its customers who are niche players with highly specialized
requirements. Health and beauty care includes medical gowns and drapes, wound care, surgical towels, facial masks and
face and body wipes. Customers in the wipes and feminine hygiene category consist of some of the world's largest
consumer brands, retailers and converters.
The Spunlace segment results are included prospectively from October 29, 2021, the date of the acquisition. On a
proforma basis, Jacob Holm operations had net sales of approximately $362.9 million for the full year 2021, of which
$57.6 million is included in our results.
Spunlace’s operates four manufacturing facilities, two of which are located in the United States, and one each in
France and Spain. In addition, Spunlace provides converting capabilities transforming semi-finished roll goods into
finished products using various converting technologies. Spunlace production facilities have the following combined
attributes (in metric tons):
91,000
Spunlace Production Capacity
Principal Raw Material
(“PRM”)
Estimated Annual
Quantity of PRM
(metric tonnes)
Synthetic fibers
Pulp-based fibers
Fluff pulp
Base paper
37,500
32,750
17,850
16,350
Key raw materials used in the spunlace production process include natural and synthetic fibers, pulps and paper
stock. The spunlace production process utilized by Spunlace's facilities consumes a significant amount of water to facilitate
the formation fibers into salable product. The cost to produce is influenced by the cost of critical raw materials and energy
prices, including electricity and natural gas used in its operations. Approximately 40% of this segment’s net sales in 2021
was earned under contracts whose selling price is influenced by pass-through provisions directly related to the price indices
of certain key raw materials.
The following summarizes Spunlace's key competitors:
Market segment
Critical cleaning and high performance
Feminine hygiene, Health and beauty care
Competitor
Berry Plastics; Norafin; Kimberly Clark; Essity; Lydall; Fibertex
Suominen Oyj, Kimberly Clark, Berry Plastics, Fibertex Personal Care
Our strategy in Spunlace is focused on:
•
•
•
•
•
integrating its operations to maximize planned synergies;
leading the industry transition in sustainability by leveraging our technological advantage;
being the preferred co-innovator;
optimizing the use of existing production capacity; and
delivering operational excellence.
Concentration of Customers In each of the past three years, approximately 16% of our consolidated net sales
were from sales to Procter & Gamble Company, a customer in the Airlaid Materials and Spunlace segments.
GLATFELTER 2021 FORM 10-K
5
Capital Expenditures Our business requires expenditures for equipment enhancements to support growth
strategies, research and development initiatives, and for normal upgrades or replacements. Capital expenditures totaled
$30.0 million, $28.1 million and $27.8 million in 2021, 2020 and 2019, respectively. Capital expenditures in 2022 are
estimated to total between approximately $45 million and $50 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-K under the caption “Executive Officers.” As of December 31, 2021, we employed 3,235 people worldwide,
the substantial majority of whom are skilled personnel responsible for the production and commercialization of our
Composite Fibers, Airlaid Materials and Spunlace products. Our facilities are a continuous flow manufacturing operation
with approximately 61% 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 is rooted in the Company’s longstanding Code of Business Conduct and
Core 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.
We view health and safety as everyone’s responsibility and involve all employees at every level of the
organization in our programs. Glatfelter facilities are striving to be “injury free every day” through implementation of our
Global Health & 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
(“TCIR”), 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.
Diversity, Equity and Inclusion We are a global company that encourages and embraces different cultures and
backgrounds. Our employees, including our management team, are diverse – 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 a diverse and inclusive place to work, while also strengthening the
communities in which we live.
6
Other Available Information The Corporate Governance page of our website includes our Governance
Principles, Code of Business Conduct, and biographies of our Board of Directors and Executive Officers. In addition, the
website includes charters of the Audit, Compensation, and Nominating and Corporate Governance Committees of the
Board of Directors. The Corporate Governance page also includes the Code of Business Ethics for the CEO and Senior
Financial Officers of Glatfelter, our “whistle-blower” policy and other related material. We satisfy the disclosure
requirement for any future amendments to, or waivers from, our Code of Business Conduct or Code of Business Ethics for
the CEO and Senior Financial Officers by posting such information on our website. We will provide a copy of these
documents, without charge, to any person who requests one by contacting Investor Relations at (717) 225-2746,
ir@glatfelter.com or by mail to 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, and variants thereof, continued its rapid spread, a significant portion of the
world’s economies was adversely impacted, and may continue to be so from time to time, by government mandates
intending to slow or reduce the virus' reach such as i) reduced operation of “non-essential” businesses; ii) “social
distancing”; and iii) vaccine mandates. The actions undertaken across 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, disruptions
in global supply chains, increased unemployment, and insolvencies in a variety of industries and markets.
The majority of our product portfolios are considered to be “essential or life-sustaining” and we continued to
produce products used in the global response effort to the pandemic. However, shortly after the pandemic began and
through the first several months of 2021, our financial performance and results of operations were impacted by the
pandemic, particularly by weaker demand for tabletop products used by restaurants, catering and similar venues, all of
which were impacted by “lockdowns” throughout many regions of the world. 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-19 pandemic’s impact on various economies throughout the world could lead to financial
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 52% of our net sales in 2021 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.
Disruption of our global supply chain could adversely affect our business.
Our ability to manufacture, sell and distribute products is critical to our operations. Our products contain raw
materials that we source globally from suppliers. If there is a shortage of a key material in our supply chain, and a
replacement cannot be readily sourced from an alternative supplier, the shortage may disrupt our production. Likewise,
disruptions in the transportation and delivery of products - both from suppliers to our production facilities, and from our
production facilities to our customers - may impact our ability to sell product and deliver goods to our customers on time.
GLATFELTER 2021 FORM 10-K
7
In addition, the costs of transporting materials and products through our chain of sourcing and production may increase,
and such increases could be significant. The failure of third parties on which we rely, including those third parties who
supply our raw materials, packaging, capital equipment and other necessary operating materials, contract manufacturers,
commercial transport, distributors, contractors, and external business partners, to meet their obligations to us, or significant
disruptions in their ability to do so, may negatively impact our operations. Failure to take adequate steps to mitigate the
likelihood or potential impact of such disruptions, or to effectively manage such disruptions if they occur, could adversely
affect our business and results of operations, as well as require additional resources to restore our global supply chain. Any
of these factors could have a material adverse impact on our results of operations and financial condition.
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, polyester
or synthetic fibers, and certain other raw materials, as well as access to reliable and abundant supplies of water to support
many of our production facilities. We require significant quantities of wood pulps and, therefore, the volatility of wood
pulp prices can have a significant impact on our results of operations.
Our Philippine production site purchases abaca fiber to produce abaca pulp, a key material used to manufacture
paper for single-serve coffee, tea, and technical specialty products at Composite Fibers’ facilities. At certain times, the
supply of abaca fiber has been constrained or the quality diminished due to factors such as weather-related damage to the
source crop, as well as decisions by 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 contractual arrangements with certain Airlaid Materials and Spunlace customers pursuant to
which our product’s selling price is adjusted for changes in the cost of certain raw materials, we may not be able to fully
pass increased raw materials or energy costs on to all customers if the market will not bear the higher price or if existing
agreements limit price increases. If price adjustments significantly trail increases in raw materials, 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, Spain, 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 net sales exceeds euro expenses
by an estimated €150 million. With respect to the British pound, Canadian dollar, and Philippine peso, we have greater
outflows than inflows of these currencies, although to a lesser degree than the euro. As a result, we are exposed to changes
in currency exchange rates and such changes could be significant.
Our ability to maintain our products' price competitiveness is reliant, in part, on the relative strength of the
currency in which the product is denominated compared to the currency of the market into which it is sold and the
functional currency of our competitors. Changes in the rate of exchange of foreign currencies in relation to the U.S. dollar,
and other currencies, may adversely impact our results of operations and our ability to offer products in certain markets at
acceptable prices.
In the event of significant currency weakening in the countries into which our products are sold, demand for our
products, pricing of our products, or a customer’s ability to satisfy obligations to us, could be adversely impacted.
8
The conflict between Russia and Ukraine could adversely affect our results of operations.
Approximately $95 million of our net sales in 2021 was earned from customers located in Russia and Ukraine.
Uncertain geopolitical conditions, the invasion of Ukraine, sanctions, and other potential impacts on this region’s economic
environment and currencies may cause demand for our products to be volatile, cause abrupt changes in our customers'
buying patterns, interrupt our ability to supply products to this region or limit customers' access to financial resources and
ability to satisfy obligations to us.
In addition, we operate manufacturing sites throughout Europe, including Germany, France, Spain and the United
Kingdom. In many instances, these sites depend on the availability of natural gas for use in the production of products. The
supply of a substantial portion of the natural gas used may originate from Russia.
In the event geopolitical tensions fail to abate or deteriorate further, additional governmental sanctions may be
enacted adversely impacting this region's economy, its banking and monetary systems, markets or customers for our
products, or the supply and cost of natural gas used by our sites.
Our industry is highly competitive and increased competition could reduce our sales and profitability.
The global markets in which we compete are served by a variety of competitors and a variety of substrates. As a
result, our ability to compete is sensitive to, and may be adversely impacted by:
•
•
•
•
the entry of new competitors into the markets we serve;
the aggressiveness of our competitors’ pricing strategies, which could force us to decrease prices in order to
maintain market share;
our failure to anticipate and respond to changing customer preferences; and
technological advances or changes that impact production or cost competitiveness of our products.
The impact of any significant changes may result in our inability to effectively compete in the markets in which
we operate, and as a result our sales and operating results would be adversely affected.
We may not be able to develop new products acceptable to our existing or potential customers.
Our business strategy is market focused and includes investments in developing new products to meet the
changing needs of our customers, serve new customers and to maintain our market share. Our success will depend, in part,
on our ability to develop and introduce new and enhanced products that keep pace with introductions by our competitors
and changing customer preferences. If we fail to anticipate or respond adequately to these factors, we may lose
opportunities for business with both current and potential customers. The success of our new product offerings will depend
on several factors, including our ability to:
•
•
•
•
•
anticipate and properly identify our customers' needs and industry trends;
develop and commercialize new products and applications in a timely manner;
price our products competitively;
differentiate our products from our competitors' products; and
invest efficiently in research and development activities.
Our inability to develop new products or new business opportunities could adversely impact our business and
ultimately harm our profitability.
We are subject to substantial costs and potential liability for environmental matters.
We are subject to various environmental laws and regulations that govern our operations, including discharges
into the environment, and the handling and disposal of hazardous substances and wastes. We are also subject to laws and
regulations that impose liability and clean-up responsibility for releases of hazardous substances. To comply with
environmental laws and regulations, we have incurred, and will continue to incur, substantial expenditures.
We may incur obligations to remove or mitigate any adverse effects on the environment, such as air and water
quality, resulting from mills we operate or have operated. Potential obligations include costs for government oversight of
the remediation activities, the restoration of natural resources, and/or personal injury and property damages.
We generate a substantial portion of Airlaid Materials' and Spunlace's 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.
Airlaid Materials and Spunlace derive approximately 44% and 6% respectively, of their annual net sales from
sales to the feminine hygiene market. In addition, one customer accounted for 36% of Airlaid Materials' and 11% of
GLATFELTER 2021 FORM 10-K
9
Spunlace's sales. The balance is concentrated with a small group of large customers. The loss of this one large customer or
a decline in sales of hygiene products could have a material adverse effect on these segment's operating results. Our ability
to effectively compete could be affected by technological production alternatives which could provide substitute products
into this market segment. Customers in the airlaid and spunlace nonwoven fabric material market, including the hygiene
market, may also switch to less expensive products, change preferences or otherwise reduce demand for our products, thus
reducing the size of the markets in which the segments currently sell their products. Any of the foregoing could have a
material adverse effect on our financial performance and business prospects.
Our operations may be impaired, and we may be exposed to potential losses and liability as a result of natural
disasters, acts of terrorism or sabotage or similar events.
If we have a catastrophic loss or unforeseen operational disruption at any of our facilities, we could suffer
significant lost production which could impair our ability to satisfy customer demands.
Natural disasters, such as earthquakes, hurricanes, typhoons, flooding or fire, and acts of terrorism or sabotage
affecting our operating activities and major facilities could materially and adversely affect our operations, operating results
and financial condition.
In addition, many of our operations require a reliable and abundant supply of water. Such sites rely on local bodies
of water or water sources for their production needs and, therefore, are particularly sensitive to drought conditions or other
natural or man-made 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 facility in Lanao del Norte on the Island of Mindanao in the Republic of the Philippines is located along
the Pacific Rim, one of the world’s hazard belts. By virtue of its geographic location, this site is subject to similar types of
natural disasters discussed above, cyclones, typhoons, and volcanic activity. Moreover, the area of Lanao del Norte has
been a target of suspected terrorist activities. Our pulp mill in Mindanao is located in a rural portion of the island and is
susceptible to attacks and/or power interruptions. The Mindanao site 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 site 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 facility in the Philippines is located in a region that is unstable and subject to political unrest. As
discussed above, our Philippine pulp facility 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 site, 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, Spain, 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.
10
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 site 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 know-how and
trade secrets, and inappropriate disclosure of confidential company, employee, customer or vendor information, could stem
from such incidents.
Any of these operational disruptions and/or misappropriation of information could adversely affect our results of
operations, create negative publicity, and could have a material effect on our business.
We operate in and are subject to taxation from numerous U.S. and foreign jurisdictions.
The multinational nature of our business subjects us to taxation in the U.S. and numerous foreign jurisdictions.
Due to economic and political conditions, tax rates in various jurisdictions are subject to significant change. Our effective
tax rates could be affected by changes in tax laws or their interpretation, changes in the mix of earnings in jurisdictions
with differing statutory tax rates, and changes in the valuation of deferred tax assets and liabilities. Also, many jurisdictions
continue to adopt tax policies in response to the Organization for Economic Co-operation and Development’s (“OECD”)
anti-Base Erosion and Profit Shifting (“BEPS”) project. For example, in July of 2021, 130 countries agreed in principle to a
framework of international taxation proposed by the OECD that would change the rules of how profit is allocated among
countries and impose a global minimum tax rate. These and other developments could significantly negatively impact the
Company’s overall tax expense, results of operations, and future cash flows.
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.
We may not realize the growth opportunities and operational synergies that are anticipated from the Jacob
Holm acquisition and the Mount Holly acquisition.
The benefits that we expect to result from the Jacob Holm acquisition and the Mount Holly acquisition will
depend, in part, on our ability to realize anticipated growth opportunities and operational synergies. Our success in
realizing these growth opportunities and operational synergies, and the timing of this realization, will depend in part on the
successful integration of the Mount Holly and Jacob Holm businesses.
There is a significant degree of difficulty and management distraction inherent in the process of integrating
acquisitions as sizable as the Jacob Holm acquisition and the Mount Holly acquisition. The process of integrating
operations could cause an interruption of, or loss of momentum in, our Mount Holly’s or Jacob Holm’s business. Members
of our senior management may be required to devote considerable amounts of time to this integration process, which will
decrease the time they will have to manage our company, service existing customers, attract new customers and develop
new products or strategies. If senior management is not able to effectively manage the integration process, or if any
significant business activities are interrupted as a result of the integration process, our business could suffer.
We cannot assure you that we will successfully or cost-effectively integrate Mount Holly’s or Jacob Holm’s
business or at all. The failure to do so could have a material adverse effect on our business, financial condition or results of
operations. Even if we are able to integrate Mount Holly’s or Jacob Holm’s business successfully, this integration may not
result in the realization of the growth opportunities and operational synergies that we currently expect from this integration,
and we cannot guarantee that these benefits will be achieved within anticipated timeframes or at all.
GLATFELTER 2021 FORM 10-K
11
We have substantial indebtedness and may incur substantial additional indebtedness, which could adversely affect
our financial health and our ability to obtain financing in the future, react to changes in our business and make
payments on the notes.
As of December 31, 2021, we had approximately $787.4 million of senior unsecured debt and $118.3 million of
revolving commitments available under our Credit Facility (after giving effect to $6.7 million of outstanding undrawn
letters of credit). We are able to, and may, incur additional indebtedness in the future, subject to the limitations contained in
the agreements governing our indebtedness. Our substantial indebtedness could have important consequences to holders of
our indebtedness, including:
• making it more difficult for us to satisfy our obligations with respect to our long-term debt;
•
•
•
•
•
•
•
limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions
or other general corporate requirements and our ability to satisfy our obligations with respect to the notes in the
future;
requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other
purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures,
acquisitions and other general corporate purposes;
increasing our vulnerability to general adverse economic and industry conditions;
exposing us to the risk of increased interest rates as certain of our borrowings, including under the Credit Facility,
are at variable rates of interest;
limiting our flexibility in planning for and reacting to changes in the industry in which we compete;
placing us at a disadvantage compared to other, less leveraged competitors or competitors with comparable debt
and more favorable terms and thereby affecting our ability to compete; and
increasing our cost of borrowing.
Although our borrowing arrangements contain restrictions on the incurrence of additional indebtedness, these
restrictions are subject to a number of qualifications and exceptions, and the additional indebtedness incurred in
compliance with these restrictions could be substantial. These restrictions also will not prevent us from incurring
obligations that do not constitute indebtedness. If new debt is added to our current debt levels, the related risks that we
face would increase, and we may not be able to meet all our debt obligations, including the repayment of the notes.
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; Spain 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, land at our Mount Holly site, office and various
warehouse space in the United States, Canada, Europe, Russia, China and our corporate offices in Charlotte, NC. 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.
12
EXECUTIVE OFFICERS
The following table sets forth certain information with respect to our executive officers and other senior
management members of February 25, 2022.
Name
Dante C. Parrini
Christopher W. Astley
Samuel L. Hillard
Wolfgang Laures
Eileen L. Beck
David C. Elder
Ramesh Shettigar
Jill L. Urey
Age Office with the Company
57
49
40
52
59
53
46
55
Chairman and Chief Executive Officer
Senior Vice President, Chief Commercial Officer
Senior Vice President, Chief Financial Officer
Senior Vice President, Integrated Global Supply Chain & Information Technology
Vice President, Human Resources and Administration
Vice President, Finance and Chief Accounting Officer
Vice President, ESG, Investor Relations and Corporate Treasurer
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 – Business Development for Dover Corporation from July 2014 until 2016 where he was responsible for strategy
and mergers & acquisitions within the Fluids Business Segment. From February 2011 to 2014, he served as Vice President
– Business Development for SPX Corporation where he was responsible for all M&A related strategy activity within the
Flow Technology Segment. Additionally, he previously worked for Blackstone in their M&A group.
Wolfgang Laures 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.
Ramesh Shettigar was promoted to Vice President, ESG, Investor Relations and Corporate Treasurer in
September 2021. He joined us in July 2014 as Vice President and Treasurer. Prior to joining us, Mr. Shettigar was Director
of Treasury at Quest Diagnostics with responsibility for a broad range of corporate finance activities including cash
management, global liquidity, FX, debt/equity financing and capital planning. Prior to joining Glatfelter, Mr. Shettigar held
treasury and related positions with Praxair Inc, Delphi Corporation an McDermott International.
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 2021 FORM 10-K
13
PART II
ITEM 5
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is traded on the New York Stock Exchange under the symbol “GLT”
Our Board of Directors declared quarterly cash dividends of $0.14 per common share beginning with the second
quarter of 2021 and declared a $0.13 per share dividend in the first quarter of 2020 and a $0.135 per share dividend in each
of the following four quarters.
As of February 18, 2022, we had 874 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.,
Mercer International, Inc., Neenah, Inc., and Schweitzer-Mauduit International.
The following graph assumes $100 was invested in our common stock and in each index (including reinvestment
of dividends) on December 31, 2016 and charts the performance through December 31, 2021.
COMPARISON of 5-YEAR CUMULATIVE TOTAL RETURN
$200
$180
$160
$140
$120
$100
$80
$60
$40
$20
$0
Dec-16
Dec-17
Dec-18
Dec-19
Dec-20
Dec-21
Glatfelter
S&P Smallcap 600
S&P Smallcap 600 Paper Products
ITEM 6
[RESERVED]
14
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
2021 compared to 2020 is included herein. For discussion and analysis of 2020 compared to 2019, 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, 2020, which was filed with the United States Securities and
Exchange Commission on February 25, 2021 and is incorporated herein by reference.
Forward-Looking Statements This Annual Report on Form 10-K includes forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact,
including statements regarding industry prospects and future consolidated financial position or results of operations, made
in this Report on Form 10-K are forward looking. We use words such as “anticipates”, “believes”, “expects”, “future”,
“intends” and similar expressions to identify forward-looking statements. Forward-looking statements reflect
management’s current expectations and are inherently uncertain. Our actual results may differ significantly from such
expectations. The following discussion includes forward-looking statements regarding expectations of, among others,
environmental costs, capital expenditures and liquidity, all of which are inherently difficult to predict. Although we make
such statements based on assumptions that we believe to be reasonable, there can be no assurance that actual results will
not differ materially from our expectations. Accordingly, we identify the following important factors, among others, which
could cause our results to differ from any results that might be projected, forecasted or estimated in any such forward-
looking statements:
i.
ii.
iii.
iv.
v.
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;
disruptions of our global supply chain, including the availability of key raw materials and transportation for
the delivery of critical inputs and of products to customers, and the increase in the costs of transporting
materials and products;
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;
vi.
vii. our ability to develop new, high value-added products;
viii. changes in the price or availability of raw materials we use, particularly woodpulp, pulp substitutes, synthetic
ix.
x.
xi.
xii.
xiii.
xiv.
xv.
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
xvi. our ability to finance, consummate and integrate acquisitions, including our acquisitions of Mount Holly and
Jacob Holm.
GLATFELTER 2021 FORM 10-K
15
Introduction We manufacture a wide array of engineered materials and manage our company along three
operating segments:
•
•
•
Composite Fibers with sales of single-serve tea and coffee filtration papers, wallcovering base materials,
composite laminate papers, technical specialties including substrates for electrical applications, and
metallized products;
Airlaid Materials with 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; and
Spunlace with sales of premium quality spunlace nonwovens for critical cleaning, high-performance
materials, personal care, hygiene and medical applications.
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. The COVID-19 pandemic and the actions undertaken throughout the
world in an attempt to contain the virus have had an unprecedented and significant impact on global economies in terms of
reduced GDP, inflation, volatile energy prices, disruptions in global supply chains, increased unemployment, and
insolvencies in a variety of industries and markets. As a result, we have experienced and may continue to experience
weaker or volatile demand for certain of our products due to the effects of the pandemic. Shortly after the pandemic began
and through the first several months of 2021, our financial performance and results of operations were adversely impacted
by the pandemic, particularly by weaker demand for tabletop products used by restaurants, catering and similar venues, all
of which were impacted by “lockdowns” throughout many regions of the world. However, demand is improving as
restaurants around the world begin to reopen. The majority of our other product portfolios are considered to be “essential or
life-sustaining” and we continued to produce products used in the global response effort to the pandemic. We believe
demand for certain of our products, such as Composite Fibers’ food and beverage filtration products and Airlaid Materials’
personal hygiene and wipes, will remain stable. The following discussion and analysis primarily focus on the financial
results of operations and financial condition of our continuing operations.
Acquisition As discussed in Item 8 - Financial Statements and Supplementary Data, Note 3 “Acquisitions,” we
completed our acquisitions of Georgia-Pacific's U.S. nonwovens business (“Mount Holly”) on May 13, 2021 for $170.9
million and the acquisition of all outstanding equity of PMM Holdings (Luxembourg) AG ("Jacob Holm") on October 29,
2021 for $304.0 million. Refer to Note 3 - "Acquisitions" for additional information about these transactions.
RESULTS OF OPERATIONS
2021 versus 2020
Overview For the year ended December 31, 2021, we reported income from continuing operations of $6.7
million, or $0.15 per share compared with $20.8 million and $0.47 per share in 2020. 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
Earnings per share
Discontinued operations:
Income
Earnings per share
Net income
Earnings per share
Year ended
December 31,
2021
2020
$
1,084,694
$
144,795
28,614
6,721
0.15
216
—
6,937
$
0.15
$
916,498
147,869
49,156
20,783
0.47
515
0.01
21,298
0.48
We generated $71.0 million of cash from operations in 2021 compared with $109.0 million a year ago. During
2021 and 2020, capital expenditures totaled $30.0 and $28.1 million, respectively. Refer to Liquidity and Capital
Resources for additional discussion of our sources and uses of cash.
The reported results are in accordance with generally accepted accounting principles in the United States
(“GAAP”) and reflect a number of significant actions we undertook, including strategic initiatives, corporate headquarters
relocation, cost optimization and the restructuring and consolidation of our metallized business, among others. Excluding
16
these items from reported results, adjusted earnings, a non-GAAP measure, was $27.6 million, or $0.61 per diluted share
2021, compared with $37.4 million, or $0.84 per diluted share, a year ago. The weaker financial performance largely
reflects the adverse impact of significantly higher raw material and energy prices. Operating income for our Composite
Fibers segment was $14.7 million lower in 2021 compared with 2020 and Airlaid Materials’ operating income was $4.1
million lower. Spunlace, our new segment created in connection with the Jacob Holm acquisition, lost $1.3 million for the
two months since the acquisition was completed. In addition to the results reported in accordance with GAAP, we evaluate
our performance using adjusted earnings and adjusted earnings per diluted share. We disclose this information to allow
investors to evaluate our performance exclusive of certain items that impact the comparability of results from period to
period and we believe it is helpful in understanding underlying operating trends and cash flow generation.
Adjusted earnings consists of net income determined in accordance with GAAP adjusted to exclude the impact of
the following:
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.
Strategic initiatives. These adjustments primarily reflect professional, investment banker and legal fees incurred
directly related to evaluating and executing certain strategic initiatives, including costs associated with acquisitions, related
integrations and charges incurred to step-up acquired inventory to fair-value.
Corporate headquarters relocation. These adjustments reflect costs incurred in connection with the strategic
relocation of the Company’s corporate headquarters to Charlotte, NC. The costs are primarily related to employee
relocation costs and exit costs at the former corporate headquarters.
Restructuring charge – Metallized operations. This adjustment represents charges incurred in 2020 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, UK.
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.
COVID-19 incremental costs. This adjustment represents incremental cash costs incurred directly related to the
COVID-19 pandemic such as 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.
Pension settlement expenses, net. This adjustment reflects professional fees recorded in connection with the
Company’s termination of its qualified pension plan and the related actions to settle all obligations to the plan’s
participants. Since the pension plan was fully funded, the settlement of pension obligations did not require the use of the
Company’s cash, but instead was accomplished with plan assets.
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.
Other tax adjustments. In 2021, these adjustments primarily reflect the tax impact related to the reversal of the
permanent reinvestment assertion for certain foreign jurisdictions and a foreign tax benefit related to the establishment of a
center of excellence. In 2020, a tax benefit was recorded in connection with passage of the Coronavirus Aid, Relief, and
Economic Security Act (“CARES”) related to provisions that modified the “net operating loss” provisions of previous law
to allow certain losses to be carried back five years.
GLATFELTER 2021 FORM 10-K
17
These adjustments are each unique and not considered to be on-going in nature. The transactions are irregular in
timing and amount and may significantly impact our operating performance. As such, these items may not be indicative of
our past or future performance and therefore are excluded for comparability purposes.
Adjusted earnings and adjusted earnings per diluted share are considered measures not calculated in accordance
with GAAP, and therefore are non-GAAP measures. The non-GAAP financial information should not be considered in
isolation from, or as a substitute for, measures of financial performance prepared in accordance with GAAP. The following
table sets forth the reconciliation of net income to adjusted earnings for the periods presented:
In thousands, except per share
Amount
EPS
Amount
EPS
Year ended December 31,
2021
2020
Net income
$
6,937
$
0.15
$
21,298
$
Exclude: Income from discontinued operations, net of tax
Income from continuing operations
Adjustments (pre-tax):
Strategic initiatives
Corporate headquarters relocation
Restructuring charge - Metallized operations
Cost optimization actions
Pension settlement expenses, net
COVID-19 incremental costs
Asset impairment charge
Timberland sales and related costs
Total adjustments (pre-tax)
Income taxes (1)
Other tax adjustments (2)
Total after-tax adjustments
(216)
6,721
30,928
585
—
885
—
—
—
(5,239)
27,159
415
(6,696)
20,878
—
0.15
0.46
(515)
20,783
1,567
1,053
11,111
5,979
6,154
2,715
900
(1,382)
28,097
(5,405)
(6,082)
16,610
Adjusted earnings from continuing operations
$
27,599
$
0.61
$
37,393
$
0.48
(0.01)
0.47
0.37
0.84
(1) Tax effect on adjustments calculated based on the incremental effective tax rate of the jurisdiction in which each adjustment originated.
(2)
In 2021, reflects the tax impact related to the reversal of permanent reinvestment assertion for certain foreign jurisdictions and a foreign tax benefit
related to the establishment of a center of excellence. In 2020, a tax benefit was recorded in connection with passage of the Coronavirus Aid, Relief,
and Economic Security Act (“CARES”) related to provisions that modified the “net operating loss” provisions of previous law to allow certain
losses to be carried back five years.
18
Segment Financial Performance
In thousands, except tons
Net Sales by Segment
Composite Fibers
Airlaid Material
Spunlace
Total
Operating income by Segment
Composite Fibers
Airlaid Material
Spunlace
Other and unallocated
Total
Depreciation and amortization
Composite Fibers
Airlaid Material
Spunlace
Other and unallocated
Total
Capital expenditures
Composite Fibers
Airlaid Material
Spunlace
Other and unallocated
Total
Tons shipped (metric)
Composite Fibers
Airlaid Material
Spunlace
Total
$
$
$
$
$
$
$
$
Year ended December 31,
2021
2020
556,807
$
470,250
57,637
525,089
391,409
—
1,084,694
$
916,498
37,422
$
42,244
(1,338)
(49,714)
28,614
$
52,094
46,304
—
(49,242)
49,156
27,690
$
28,101
1,693
3,937
61,421
$
11,912
$
8,431
3,810
5,884
30,037
$
132,196
148,134
12,514
292,844
26,175
22,416
—
8,009
56,600
13,262
9,311
—
5,563
28,136
134,758
136,661
—
271,419
Segments Results of individual operating segments are presented based on our management accounting practices
and management structure. There is no comprehensive, authoritative body of guidance for management accounting
equivalent to accounting principles generally accepted in the United States of America; therefore, the financial results of
individual segments are not necessarily comparable with similar information for any other company. The management
accounting process uses assumptions and allocations to measure performance of the segments. Methodologies are refined
from time to time as management accounting practices are enhanced and businesses change. The costs incurred by support
areas not directly aligned with the operating segment are allocated primarily based on an estimated utilization of support
area services or are included in “Other and Unallocated” in the table above.
Management evaluates results of operations of the segments before certain corporate level costs and the effects of
certain gains or losses not considered to be related to the core business operations. Management believes that this is a more
meaningful representation of the operating performance of its core businesses, the profitability of operating segments and
the extent of cash flow generated from these core operations. Such amounts are presented under the caption “Other and
Unallocated.” In the evaluation of operating segment results, management does not use any measures of total assets. This
presentation is aligned with the management and operating structure of our company. It is also on this basis that the
Company’s performance is evaluated internally and by the Company’s Board of Directors.
GLATFELTER 2021 FORM 10-K
19
Sales and Costs of Products Sold
In thousands
Net sales
Costs of products sold
Gross profit
Year ended December 31
2021
1,084,694
939,899
144,795
$
$
2020
Change
$
$
916,498
768,629
147,869
$
$
168,196
171,270
(3,074)
Gross profit as a percent of Net sales
13.3 %
16.1 %
The following table sets forth the contribution to consolidated net sales by each segment:
Percent of Total
Segment
Composite Fibers
Airlaid Materials
Spunlace
Total
Year ended December 31
2021
2020
51.3 %
43.4
5.3
100.0 %
57.3 %
42.7
—
100.0 %
Net sales on a consolidated basis totaled $1,084.7 million and $916.5 million in 2021 and 2020, respectively. The
$168.2 million increase was primarily driven by $60.6 million from the Mount Holly acquisition and $57.6 million from
the Jacob Holm acquisition. In addition, higher average selling prices favorably impacted the comparison by $50.6 million
and shipping volumes decreased 3.6% on an organic basis.
Composite Fibers’ net sales increased $31.7 million or 6.0% in 2021 compared to 2020 driven by favorable
currency translation of $18.5 million and $17.0 million from higher selling prices. During 2021, we announced price
increases of 8% and 12% in response to significantly higher input costs. Overall shipments decreased 1.9% in the year-to-
year comparison.
Composite Fibers’ 2021 operating income of $37.4 million was $14.7 million lower than 2020. The decline in
operating results reflects the adverse impact of significantly higher costs for raw materials, primarily woodpulp, and higher
energy prices in Europe, which increased $36.4 million in the aggregate. The adverse impact of inflation more than
outpaced the $17.0 million increase in selling prices. The primary drivers are summarized in the following chart (in
millions):
$17.0
$1.0
$52.1
$6.3
$37.4
$(36.4)
$(2.6)
2020
Operating
Income
Selling Price
Volume &
Mix
RM &
Energy
Inflation
Operations &
Other
FX
2021
Operating
Income
Airlaid Materials’ net sales increased $78.8 million, in the comparison of 2021 to 2020, and shipments increased
8.4% each driven by the addition of Mount Holly, which is included prospectively from the May 13, 2021 closing of the
transaction. Mount Holly is estimated to generate approximately $100.0 million of net sales on an annual basis. The Airlaid
Materials' net sales were impacted by lower shipments in the hygiene and wipes categories (excluding volumes added by
Mount Holly). Currency translation was $6.5 million favorable.
20
Airlaid Materials’ 2021 operating income of $42.3 million was $4.0 million lower than 2020. Higher shipments
positively impacted results by $10.2 million. Selling price increases of $33.6 million, primarily due to raw material cost-
pass through provisions and an energy surcharge, were more than offset by higher input costs. Operations were
unfavorable $7.3 million as a result of higher spending and inflationary pressures. The impact of currency and related
hedging negatively impacted earnings by $2.8 million. The primary drivers are summarized in the following chart (in
millions):
$10.2
$33.6
$46.3
$(37.7)
$42.3
$(7.3)
$(2.8)
2020
Operating
Income
Selling Price
Volume &
Mix
RM &
Energy
Inflation
Operations &
Other
FX
2021
Operating
Income
Spunlace Spunlace net sales totaled $57.6 million and operating loss totaled $1.3 million for the period October
29, 2021 to December 31, 2021. Shipments were adversely affected by a larger customer's actions to recalibrate orders for
wipes to manage year-end inventory, in addition to production delays that were impacted by raw material availability.
These factors, combined with unfavorable mix, negatively impacted profitability by approximately $0.7 million. In
addition, raw material inflation, particularly on synthetic fibers, coupled with higher than anticipated energy costs, lowered
profits by approximately $1.5 million. Operations further negatively impacted results by $1.4 million from lower
production, higher than anticipated waste rates and COVID-related labor challenges. The preliminary purchase price
allocation resulted in depreciation and amortization of approximately $1.7 million after including the acquisition step-up to
fixed and intangible assets.
Other and Unallocated The amount of net operating expenses not allocated to an operating segment and reported
as “Other and Unallocated” in our table of Segment Financial Performance, totaled $49.7 million for 2021 compared with
$49.2 million in 2020. Excluding the items identified to present “adjusted earnings,” unallocated expenses for the
comparison increased $1.3 million.
Gain on Sales of Plant, Equipment and Timberlands, net During each of the past two years, we sold certain
assets, primarily timberlands. For a summary of these transactions, refer to Item 8 - Financial Statements and
Supplementary Data, Note 7 - "Gain on Dispositions of Plant Equipment and Timberlands."
Interest expense, net For the year ended December 31, 2021, interest expense, net totaled $12.3 million
compared with $6.6 million for 2020. The increase reflects additional net borrowings totaling $497.3 million incurred to
finance the two acquisitions completed in May 2021 and October 2021. In addition, in connection with the October 2021
issuance of our 4.750% senior notes to finance the Jacob Holm acquisition, we refinanced the amounts outstanding under
our variable-rate revolving credit facility which averaged approximately 1.6% at the time they were refinanced, with the
proceeds of the fixed-rate notes.
Income taxes For the year ended December 31, 2021, we recorded a $7.0 million income tax provision on a
pretax income of $13.7 million from continuing operations. The comparable amounts for 2020 were $11.6 million income
tax provision on a pre-tax income of $32.4 million. During 2021, the effective tax rate reflects the impact of $3.6 million of
tax expense related to the reversal of a permanent reinvestment assertion for certain foreign jurisdictions and a foreign tax
benefit of $10.7 million related to the establishment of a center of excellence. 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 signed into law on March 27, 2020, modified the “net operating
loss” provisions of previous law to allow certain losses to be carried back five years. These amounts are excluded from net
income when arriving at adjusted earnings.
GLATFELTER 2021 FORM 10-K
21
On adjusted pre-tax income of $40.8 million, income tax expense was $13.2 million in 2021. The comparable
amounts in 2020 were $60.5 million and $23.1 million, respectively. The effective tax rate on adjusted earnings was 32.4%
in the 2021 compared to 38.2% in 2020.
Foreign Currency We own and operate facilities in Canada, Germany, France, the United Kingdom, Spain and
the Philippines. The functional currency of our Canadian operations is the U.S. dollar. However, in Germany, France and
Spain 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 exceeds euro expenses by an estimated €150 million. For 2021 compared
to 2020, the average currency exchange rate of the euro strengthened relative to the U.S. dollar by approximately 3.7% ,
and the British pound sterling to the dollar strengthened by approximately 7.2%. 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.S. based operations from the conversion of these operation’s results for the period indicated.
In thousands
Net sales
Costs of products sold
SG&A expenses
Income taxes and other
Net income
Year ended
December 31,2021
Favorable
(unfavorable)
$
$
25,015
(28,698)
(1,726)
(1,537)
(6,946)
The above table only presents the financial reporting impact of foreign currency translations assuming currency
exchange rates in 2021 were the same as 2020, or “constant currency.” It does not present the impact of certain competitive
advantages or disadvantages of operating or competing in multi-currency markets.
Discontinued Operations We completed the sale of 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 2021 and 2020.
LIQUIDITY AND CAPITAL RESOURCES
Our business requires expenditures for new or enhanced equipment, research and development efforts, and to
support our business strategy. In addition, we have mandatory debt service requirements of both principal and interest. The
following table summarizes cash flow information for each of the periods presented:
In thousands
Cash and cash equivalents at beginning of period
Cash provided (used) by
Operating activities
Investing activities
Financing activities
Effect of exchange rate changes on cash
Change in cash and cash equivalents from discontinued operations
Net cash provided (used)
Cash, 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,
2021
2020
$
99,581
$
126,201
70,977
(489,766)
462,352
(5,418)
(996)
37,149
148,814
(2,000)
(8,378)
$
138,436
$
108,993
(26,773)
(100,306)
5,163
(1,613)
(14,536)
111,665
(2,000)
(10,084)
99,581
At December 31, 2020, we had $138.5 million in cash and cash equivalents (“cash”), of which approximately 90%
was 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, 2021, $118.3 million was available under our existing
revolving credit agreement.
22
Cash provided by operating activities totaled $71.0 million in 2021 compared with $109.0 million a year ago. The cash
from operations includes $22.9 million of cash payments related to strategic initiatives and a $20.4 million tax refund in
2020 associated with the CARES Act. Working capital benefits from accounts payable were largely offset by uses of
working capital for accounts receivable and inventory. Operating cash flow in 2021 only includes the EBITDA of the two
acquisitions prospectively from their date of acquisition. Operating cash flow in 2020 includes $5.3 million of outflows
associated with the metallized restructuring and $6.2 million related to the pension settlement. The following table sets
forth a measure of "Adjusted EBITDA" a non-GAAP financial measure used by management to assess the cash generated
by our core business operations. Pro forma Adjusted EBITDA presents this measure adjusted to include the historical
results of the Mount Holly and Jacob Holm acquisitions for 2021 which aligns with the definition of this measure in
accordance with our credit agreement for calculation of covenant compliance.
Adjusted EBITDA
In thousands
Net income
Exclude: Income from discontinued operations, net of tax
Add back: Taxes on Continuing operations
Depreciation and amortization
Interest expense, net
EBITDA
Adjustments:
Strategic initiatives
d compensation
Cost optimization actions
COVID-19 incremental costs
Corporate headquarters relocation
Restructuring charge - Metallized operations
Asset impairment charge
Pension settlement expenses, net
Timberland sales and related costs
Adjusted EBITDA
Pro forma - Mount Holly (1)
Pro forma - Jacob Holm (2)
Pro forma Adjusted EBITDA
Year ended December 31,
2021
2020
$
6,937
$
21,298
(216)
6,956
61,421
12,280
87,378
30,928
5,063
885
—
585
—
—
—
(5,239)
119,600
2,088
18,291
(515)
11,576
56,600
6,623
95,582
1,567
5,655
5,979
2,715
871
7,211
900
6,154
(1,382)
125,252
—
—
$
139,979
$
125,252
(1) Represents pro forma Mount Holly EBITDA for the period January 1, 2021 through the May 13, 2021 acquisition date, adjusted to eliminate certain
corporate cost overhead allocated to Mount Holly during its period of ownership by its previous parent.
(2) Represents pro forma Jacob Holm EBITDA for the period January 1, 2021 through the October 29, 2021 acquisition date.
EBITDA is a measure used by management to assess our operating performance and is calculated using
income (loss) from continuing operations and excludes interest expense, interest income, income taxes and
depreciation and amortization. Adjusted EBITDA is calculated using EBITDA and further excludes certain items
management considers to be unrelated to the company’s core operations. The adjustments include the costs of strategic
initiatives, certain cost optimization and restructuring activities, certain COVID-19 costs, corporate headquarters relocation
expenses, pension settlement expenses, asset impairment charge, share-based compensation expense and debt refinancing,
as well as the elimination of gains from sales of timberlands. Adjusted EBITDA is a performance measure that excludes
costs that we do not consider to be indicative of our ongoing operating performance.
Net cash used by investing activities reflects the $464.9 million combined purchase price, net of cash acquired, of
the two acquisitions completed in 2021. Capital expenditures totaled $30.0 million in 2021 compared with $28.1 million in
2020. Capital expenditures are expected to total between $45 million and $50 million in 2022.
Net cash provided by financing activities totaled $462.4 million in 2021 compared with a use of $100.3 million in
2020. The change in the year-to-year comparison primarily reflects the issuance of bonds to finance our acquisitions in
2021.
GLATFELTER 2021 FORM 10-K
23
Details of our outstanding long-term indebtedness are set forth under Item 8 - Financial Statements and
Supplementary Data – Note 20 -“Long-Term Debt."
In October 2021, we issued $500 million aggregate principal amount of 4.750% senior notes due 2029 (the
“Notes”). The net proceeds from the offering of the Notes, together with cash on hand, were used to pay the purchase price
of the Jacob Holm acquisition, certain indebtedness of Jacob Holm, outstanding borrowings under the Revolving Credit
Facility including amounts previously borrowed to purchase Mount Holly, and to pay fees and expenses.
Our revolving credit facility due in September 2026, contains a number of customary compliance covenants, the
most restrictive of which is a maximum leverage ratio of 5.25x at the end of 2021. As of December 31, 2021, the leverage
ratio, as calculated in accordance with the definition in our amended credit agreement, was 3.8x, within the limits set forth
in our credit agreement.
Financing activities includes cash used for common stock dividends. In 2021, we used $24.5 million of cash for
dividends on our common stock compared with $23.5 million in 2020. In the second quarter of 2021, we increased the
quarterly cash dividend by 3.7%. 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 – Note 24 – “Commitments,
Contingencies and Legal Proceedings,” we are involved in the Lower Fox River in Wisconsin (the “Fox River”), an EPA
Superfund site for which we remain potentially liable for certain government oversight and long-term monitoring and
maintenance costs. Pursuant to a consent decree with certain government agencies entered into in January 2019, we paid
$20.5 million for past government oversight costs. Although there remains some uncertainty as to the amount we may
ultimately be required to spend, primarily for government oversight costs, the consent decree specifies the nature of our
future obligations.
We expect to meet all our near and long-term cash needs from a combination of operating cash flow, cash and
cash equivalents, our existing credit facility and other long-term debt.
Off-Balance-Sheet Arrangements As of December 31, 2021 and 2020, 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 – Financial
Statements and Supplementary Data.
24
ITEM 7A
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In thousands, except percentages
Long-term debt
Average principal outstanding
For the year Ended December 31
2022
2023
2024
2025
2026
December 31, 2021
Carrying
Value
Fair Value
At variable interest rates
$ 228,026
$ 218,682
$ 206,223
$ 47,999
$
6,740
$ 228,026
$ 228,026
At fixed interest rates – Term Loans
538,106
523,918
502,421
500,417
500,000
547,915
564,880
$ 775,941
$ 792,906
Weighted-average interest rate
On variable rate debt
On fixed rate debt – Term Loans
Interest rate swap
1.79%
4.48%
1.79%
4.57%
1.79%
4.73%
1.79%
4.75%
1.79%
4.75%
Pay fixed/received variable (notional)
€ 180,000
€ 180,000
€ 180,000
Rate paid
Rate received
0.0395%
0.0395%
0.0395%
—
—
—
—
—
—
—
—
—
The table above presents the average principal outstanding and related interest rates for the next five years for debt
outstanding as of December 31, 2021. 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, 2021, we had $775.9 million of long-term debt, net of deferred debt issuance costs. After giving effect to the
interest rate swap agreement, approximately 3.1% of our debt was at variable interest rates. The fixed-rate Term Loans are
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 and a euro-denominated term loan which accrue interest based
on one-month LIBOR plus a margin. At December 31, 2021, the contractual interest rate paid was 1.79%. A hypothetical
100 basis point increase interest rates would increase annual interest expense by $0.2 million and a hypothetical decrease in
rates would have virtually no impact on interest expense.
We entered into a €180 million notional value floating-to-fixed interest rate swap agreement. Under the terms of
the swap, we will pay a fixed interest rate of the applicable margin determined in accordance with our revolving credit
agreement plus 0.0395% on €180 million of the underlying variable rate term loan. We will receive the greater of 0.00% or
EURIBOR. As of the end of 2021, EURIBOR was (0.572)%.
As part of our overall risk management practices, we enter into financial derivatives primarily designed to either i)
hedge currency risks associated with forecasted transactions – “cash flow hedges”; or ii) mitigate the impact that changes in
currency exchange rates have on intercompany financing transactions and foreign currency denominated receivables and
payables – “foreign currency hedges.” For a more complete discussion of this activity, refer to Item 8 – Financial
Statements and Supplementary Data – Note 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 exceed euro expenses by approximately €150 million. With respect to the British Pound Sterling, Canadian
Dollar, and Philippine Peso, we have greater outflows than inflows of these currencies, although to a lesser degree. As a
result, particularly with respect to the euro, we are exposed to changes in currency exchange rates and such changes could
be significant.
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 ongoing basis, we
evaluate our estimates, including those related to long-lived assets, environmental liabilities, and income taxes. We base
our estimates on historical experience and on various other assumptions that we believe are 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.
GLATFELTER 2021 FORM 10-K
25
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 fourth quarter, or more frequently if impairment
indicators are present.
The fair value of our reporting units, which are also our operating segments, is determined using a market
approach and a discounted cash flow model. 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.
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.
26
Income Taxes We record the estimated future tax effects of temporary differences between the tax bases of assets
and liabilities and amounts reported in our consolidated balance sheets, as well as operating loss and tax credit carry
forwards. These deferred tax assets and liabilities are measured using enacted tax rates and laws that will be in effect when
such amounts are expected to reverse or be utilized. We regularly review our deferred tax assets for recoverability based on
historical taxable income, projected future taxable income, the expected timing of the reversals of existing temporary
differences and tax planning strategies. If we are unable to generate sufficient future taxable income, or if there is a
material change in the actual effective tax rates or time period within which the underlying temporary differences become
taxable or deductible, we could be required to increase the valuation allowance against our deferred tax assets, which may
result in a substantial increase in our effective tax rate and a material adverse impact on our reported results.
Significant judgment is required in determining our worldwide provision for income taxes and recording the
related assets and liabilities. In the ordinary course of our business, there are many transactions and calculations where the
ultimate tax determination is less than certain. We and our subsidiaries are examined by various Federal, State and foreign
tax authorities. We regularly assess the potential outcomes of these examinations and any future examinations for the
current or prior years in determining the adequacy of our provision for income taxes. We continually assess the likelihood
and amount of potential adjustments and adjust the income tax provision, the current liability and deferred taxes in the
period in which the facts that give rise to a revision become known.
Other significant accounting policies, not involving the same level of uncertainties as those discussed above, are
nevertheless important to an understanding of the Consolidated Financial Statements. Refer to Item 8 – Financial
Statements and Supplementary Data – Notes to Consolidated Financial Statements for additional accounting policies.
GLATFELTER 2021 FORM 10-K
27
ITEM 8
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management of Glatfelter Corporation (the “Company”) is responsible for establishing and maintaining adequate
internal control over financial reporting. The Company’s internal control over financial reporting is a process designed
under the supervision of the chief executive and chief financial officer to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of the Company’s financial statements for external reporting purposes
in accordance with accounting principles generally accepted in the United States.
As of December 31, 2021, management conducted an assessment of the effectiveness of the Company’s internal
control over financial reporting based on the framework established in Internal Control — Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). We excluded from our
assessment the internal control over financial reporting at Glatfelter Mt. Holly LLC ("Mount Holly") and PMM Holding
(Luxembourg) AG ("Jacob Holm"), which were acquired on May 13, 2021 and October 29, 2021, respectively, and whose
financial statements constitute 11.4% and 19.6%, respectively, of total assets, and 5.6% and 5.3%, respectively, of total net
sales of the Company’s consolidated financial statement amounts as of and for the year ended December 31, 2021.
Management has determined that the Company’s internal control over financial reporting as of December 31,
2021, is effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the
Company’s financial statements for external reporting purposes in accordance with accounting principles generally
accepted in the United States.
The Company’s internal control over financial reporting includes policies and procedures that pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets;
provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in
accordance with accounting principles generally accepted in the United States, and that receipts and expenditures are being
made only in accordance with authorizations of management; and provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect
on our financial statements.
The Company’s internal control over financial reporting as of December 31, 2021, has been audited by Deloitte &
Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein which expresses
an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31,
2021.
The Company’s management, including the chief executive officer and chief financial officer, does not expect that
internal control over financial reporting will prevent or detect all errors and all frauds. A control system, no matter how
well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will
be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls
must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues
and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that
judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls
can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management
override of the controls. The design of any system of controls is based, in part, on certain assumptions about the likelihood
of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential
future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time,
controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with
policies or procedures.
28
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the 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, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained,
in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria
established in Internal Control – Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2021, of the Company
and our report dated February 25, 2022, expressed an unqualified opinion on those financial statements.
As described in Management’s Report on Internal Control over Financial Reporting, management excluded from its
assessment the internal control over financial reporting at Georgia-Pacific Mt. Holly LLC (“Mount Holly”) and PMM
Holding (Luxembourg) AG (“Jacob Holm”), which were acquired on May 13, 2021 and October 29, 2021, respectively,
and whose financial statements constitute 11.4% and 19.7%, respectively, of total assets, and 5.6% and 5.3%, respectively,
of total net sales of the Company’s consolidated financial statement amounts as of and for the year ended December 31,
2021. Accordingly, our audit did not include the internal control over financial reporting at Mount Holly and Jacob Holm.
Basis for Opinion
The Company's management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s
Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal
control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in
all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing
the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control
based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and
that receipts and expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ DELOITTE & TOUCHE LLP
Charlotte, North Carolina
February 25, 2022
GLATFELTER 2021 FORM 10-K
29
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the 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, 2021 and 2020, the related consolidated statements of income (loss), comprehensive
income (loss), shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2021, and
the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the “financial statements”). In
our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of
December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period
ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission and our report dated February 25, 2022, expressed an unqualified opinion on the Company’s
internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion
on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the
financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits
also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our
opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements
that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or
disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex
judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements,
taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the
critical audit matter or on the accounts or disclosures to which it relates.
Goodwill Valuation – Composite Fibers Reporting Unit — Refer to Notes 2 and 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 $236.2 million as of December 31, 2021, of which $78.4
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.
Given the significant estimates and assumptions management makes to estimate the fair value of the Composite Fibers
reporting unit and the sensitivity of the reporting unit’s operations to market conditions, such as higher raw materials and
energy prices, performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions
30
required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value
specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures over management’s estimates of future cash flows expected to be generated from the use of the
underlying assets used to value the Composite Fibers reporting unit, included the following, among others:
• We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over
management’s development of the estimates of future cash flows used to value the reporting unit.
• We evaluated management’s historical ability to accurately forecast financial results by comparing management’s
projections reflected in the prior period reporting unit forecast to actual results.
• We evaluated the reasonableness of management’s current reporting unit forecast by comparing the forecast to:
•
•
•
Historical results.
Internal communications to management and the Board of Directors.
Forecasted information included in industry reports for the Company and certain of its peer companies.
• With the assistance of our fair value specialists, we evaluated the reasonableness of the valuation assumptions,
including testing the underlying source information supporting the assumptions and the mathematical accuracy of the
calculations.
/s/ DELOITTE & TOUCHE LLP
Charlotte, North Carolina
February 25, 2022
We have served as the Company’s auditor since at least 1940; however, an earlier year could not be reliably determined.
GLATFELTER 2021 FORM 10-K
31
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 before income taxes
Income tax provision (benefit)
Income from discontinued operations
Net income (loss)
Basic earnings (loss) per share
Income (loss) from continuing operations
Income from discontinued operations
Basic earnings per share
Diluted earnings (loss) per share
Income (loss) from continuing operations
Income from discontinued operations
Diluted earnings per share
Weighted average shares outstanding
Basic
Diluted
Year ended December 31,
2021
2020
2019
$
1,084,694
$
916,498
$
939,899
144,795
121,250
(5,069)
28,614
(12,353)
73
—
(2,657)
(14,937)
13,677
6,956
6,721
216
—
216
768,629
147,869
100,045
(1,332)
49,156
(7,022)
399
(6,154)
(4,020)
(16,797)
32,359
11,576
20,783
544
29
515
927,673
780,131
147,542
94,967
(2,060)
54,635
(10,408)
1,123
(75,326)
(4,477)
(89,088)
(34,453)
(9,242)
(25,211)
1,284
(2,386)
3,670
$
$
$
$
$
6,937
$
21,298
$
(21,541)
0.15
—
0.15
0.15
—
0.15
$
$
$
$
0.47
0.01
0.48
0.47
0.01
0.48
$
$
$
$
(0.57)
0.08
(0.49)
(0.57)
0.08
(0.49)
44,551
44,924
44,339
44,614
44,132
44,132
The accompanying notes are an integral part of these consolidated financial statements.
32
GLATFELTER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
In thousands
Net income (loss)
Year ended December 31,
2021
2020
2019
$
6,937
$
21,298
$
(21,541)
Foreign currency translation adjustments
(27,232)
33,821
(6,724)
Net change in:
Deferred gains (losses) on cash flow hedges, net of taxes of$(1,866),
$2,507, and $(737), respectively
Unrecognized retirement obligations, net of taxes of $(111), $158, and
$(22,927), respectively
Other comprehensive income (loss)
Comprehensive income (loss)
4,484
(6,812)
2,117
1,097
(21,651)
(7,766)
19,243
$
(14,714) $
40,541
$
64,151
59,544
38,003
The accompanying notes are an integral part of these consolidated financial statements.
GLATFELTER 2021 FORM 10-K
33
GLATFELTER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
In thousands
Cash and cash equivalents
Assets
Accounts receivable (less allowance for doubtful accounts: 2021 - $2,731; 2020 - $2,093)
Inventories
Prepaid expenses and other current assets
Total current assets
Plant, equipment and timberlands, net
Goodwill
Intangible assets, net
Other assets
Total assets
December 31
2021
2020
$
138,436
$
170,212
279,520
48,398
636,566
758,812
236,165
156,304
92,760
99,581
122,817
196,230
34,297
452,925
543,267
164,369
81,835
44,485
$
1,880,607
$
1,286,881
Liabilities and Shareholders' Equity
Current portion of long-term debt
$
26,437
$
Short-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
22,843
214,015
6,237
2,200
99,438
371,170
738,075
87,285
141,315
1,337,845
25,057
—
127,505
5,988
3,700
71,093
233,343
288,464
77,131
110,011
708,949
Commitments and contingencies
—
—
Shareholders’ equity
Common stock, $0.01 par value; authorized - 120,000,000; issued - 54,361,980 (including
treasury shares: 2021 - 9,812,841; 2020 - 9,994,144)
Capital in excess of par value
Retained earnings
Accumulated other comprehensive loss
Less cost of common stock in treasury
Total shareholders’ equity
Total liabilities and shareholders’ equity
544
64,779
705,600
(80,304)
690,619
(147,857)
542,762
544
63,261
723,365
(58,653)
728,517
(150,585)
577,932
$
1,880,607
$
1,286,881
The accompanying notes are an integral part of these consolidated financial statements.
34
GLATFELTER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands
Operating activities
Net income (loss)
Income from discontinued operations, net of tax
Adjustments to reconcile to net cash provided 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 by operating activities
Investing activities
Expenditures for purchases of plant, equipment and timberlands
Proceeds from disposals of plant, equipment and timberlands, net
Acquisitions, net of cash acquired
Other investing
Net cash used by investing activities
Financing activities
Proceeds from note offerings
Proceeds from term loans
Repayment of term loans
Repayments of note offerings
Net repayments under revolving credit facility
Payments of borrowing costs
Payments of dividends
Proceeds from government grants
Payments related to share-based compensation awards and other
Net cash provided (used) by financing activities
Effect of exchange rate changes on cash
Net increase (decrease) in cash, 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
Year ended December 31,
2021
2020
2019
$
6,937
$
21,298
$
(216)
(515)
61,421
56,600
865
—
—
(13,619)
(5,069)
5,063
(14,794)
(40,019)
5,770
65,828
(4,165)
—
2,975
70,977
(30,037)
5,567
(464,856)
(440)
(489,766)
500,000
46,849
(26,088)
—
(23,481)
(10,132)
(24,458)
479
(817)
462,352
(5,418)
38,145
(996)
111,665
148,814
(2,000)
(8,378)
590
—
900
(2,071)
(1,332)
5,655
9,563
6,860
1,679
(7,234)
12,143
—
4,857
108,993
(28,136)
1,413
—
(50)
(26,773)
—
—
(23,246)
—
(53,392)
(39)
(23,492)
358
(495)
(100,306)
5,163
(12,923)
(1,613)
126,201
111,665
(2,000)
(10,084)
(21,541)
(3,670)
50,820
1,672
75,326
—
(22,971)
(2,060)
3,583
(5,473)
(17,387)
(2,833)
10,337
(19,536)
53,401
3,167
102,835
(27,765)
2,198
(1,383)
(163)
(27,113)
—
248,644
(16,660)
(250,000)
(28,062)
(2,204)
(22,936)
—
(1,556)
(72,774)
(269)
2,679
(19,163)
142,685
126,201
—
—
$
$
$
138,436
$
99,581
$
126,201
6,957
15,500
$
$
6,180
$
(9,993) $
10,208
14,242
The accompanying notes are an integral part of these consolidated financial statements.
GLATFELTER 2021 FORM 10-K
35
GLATFELTER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
For the years ended December 31, 2021, 2020 and 2019
In thousands
Common
Stock
Capital in
Excess of
Par Value
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Treasury
Stock
Total
Shareholders’
Equity
Balance at January 1, 2019
$
544
$
62,239
$
770,305
$
(137,440) $
(156,750) $
Net loss
Other comprehensive income
Comprehensive loss
Cash dividends declared ($0.52 per share)
Share-based compensation expense
Delivery of treasury shares:
RSUs and PSAs
Employee stock options exercised — net
Balance at December 31, 2019
544
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 — net
Balance at December 31, 2020
544
Net income
Other comprehensive loss
Comprehensive loss
Cash dividends declared ($0.555###per
share)
Share-based compensation expense
Delivery of treasury shares:
RSUs and PSAs
Employee stock options exercised — net
3,583
(3,625)
(2,297)
59,900
5,655
(2,077)
(217)
63,261
5,063
(3,538)
(7)
(21,541)
(22,969)
59,544
2,833
1,533
538,898
(21,541)
59,544
38,003
(22,969)
3,583
(792)
(764)
725,795
(77,896)
(152,384)
555,959
19,243
21,298
(23,728)
21,298
19,243
40,541
(23,728)
5,655
(420)
(75)
1,657
142
723,365
(58,653)
(150,585)
577,932
(21,651)
6,937
(24,702)
6,937
(21,651)
(14,714)
(24,702)
5,063
(815)
(2)
2,723
5
Balance at December 31, 2021
$
544
$
64,779
$
705,600
$
(80,304) $
(147,857) $
542,762
The accompanying notes are an integral part of the consolidated financial statements.
36
GLATFELTER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.
ORGANIZATION
Glatfelter Corporation and subsidiaries (“Glatfelter”) produce and supply high quality, technology-driven,
innovative, and customizable nonwovens solutions can be found in products that are Enhancing Everyday Life®. These
include personal care and hygiene products, food and beverage filtration, critical cleaning products, medical and personal
protection, packaging products, as well as home improvement and industrial applications. Headquartered in Charlotte, NC,
annualized net sales approximate $1.4 billion with approximately 3,300 employees worldwide. Glatfelter’s operations
utilize a variety of manufacturing technologies including airlaid, wetlaid and spunlace with sixteen manufacturing sites
located in the United States, Canada, Germany, the United Kingdom, France, Spain, and the Philippines. The Company has
sales offices in all major geographies serving customers under the Glatfelter and Sontara brands. The terms “we,” “us,”
“our,” “the Company,” or “Glatfelter,” refer to Glatfelter Corporation and subsidiaries unless the context indicates
otherwise.
2.
ACCOUNTING POLICIES
Principles of Consolidation The consolidated financial statements include the accounts of Glatfelter and its
wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated.
Accounting Estimates The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingencies as of the balance sheet date and the reported amounts of
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 – 45 years
5 – 40 years
3 – 25 years
Maintenance and Repairs Maintenance and repairs costs are charged to income and major renewals and
betterments are capitalized. At the time property is retired or sold, the net carrying value is eliminated and any resultant
gain or loss is included in income.
Valuation of Long-lived Assets, Intangible Assets and Goodwill We evaluate long-lived assets for impairment
when a specific event indicates that the carrying value of an asset may not be recoverable. Recoverability is assessed based
on estimates of future cash flows expected to result from the use and eventual disposition of the asset. If the sum of
expected undiscounted cash flows is less than the carrying value of the asset, the asset’s fair value is estimated, and an
impairment loss is recognized for the amount by which the carrying value exceeds the estimated fair value.
Goodwill and indefinite-lived intangible assets are not amortized and, therefore, are reviewed for impairment
annually, during the fourth quarter, or more frequently if impairment indicators are present.
The fair value of our reporting units, which are also our operating segments, is determined using a market
approach and a discounted cash flow model. The fair value of non-amortizing tradename intangible assets is determined
using a discounted cash flow model and requires the use and analysis of significant assumptions including among others,
GLATFELTER 2021 FORM 10-K
37
estimated cash flows consistent with our long-term strategic plan, perpetuity growth rates, capital expenditures, and
discount rates. In addition, the discounted cash flow model requires the use of significant judgement to assess the potential
impact of macroeconomic conditions including higher energy prices in Europe, raw material inflation in all three segments,
logistics costs, competition and similar factors. For goodwill, impairment losses, if any, are recognized for the amount by
which the carrying value of the reporting unit exceeds its fair value. The carrying value of a reporting unit is defined using
an enterprise premise which is generally determined by the difference between the unit’s assets and operating liabilities.
With respect to non-amortizing tradenames, impairment losses, if any, are recognized for the amount by which the carrying
value of the tradename exceeds its fair value. For additional information, refer to Note 6 – “Asset Impairment.“
Income Taxes Income taxes are determined using the asset and liability method of accounting for income taxes in
accordance with FASB ASC 740 Income Taxes (“ASC 740”). Under ASC 740, tax expense includes U.S. and international
income taxes plus the provision for U.S. taxes on undistributed earnings of international subsidiaries not deemed to be
permanently invested. Tax credits and other incentives reduce tax expense in the year the credits are claimed. Certain items
of income and expense are not reported in tax returns and financial statements in the same year. The tax effect of such
temporary differences is reported in deferred income taxes. Deferred tax assets are recognized if it is more likely than not
that the assets will be realized in future years. We establish a valuation allowance for deferred tax assets for which
realization is not more likely than not.
Significant judgment is required in determining our worldwide provision for income taxes and recording the
related assets and liabilities. In the ordinary course of our business, there are many transactions and calculations where the
ultimate tax determination is less than certain. We and our subsidiaries are examined by various Federal, State, and foreign
tax authorities. We regularly assess the potential outcomes of these examinations and any future examinations for the
current or prior years in determining the adequacy of our provision for income taxes. We continually assess the likelihood
and amount of potential adjustments and record any necessary adjustments in the period in which the facts that give rise to
a revision become known.
Investment tax credits are accounted for by the flow-through method, which results in recognition of the benefit in
the year in which the credit become available.
We account for global intangible low-taxed income (“GILTI”) tax in the period in which it is incurred. The GILTI
provisions require entities to include in its U.S. income tax return foreign subsidiary earnings in excess of an allowable
return on the foreign subsidiaries’ tangible assets.
Treasury Stock Common stock purchased for treasury is recorded at cost. At the date of subsequent reissue, the
treasury stock account is reduced by the cost of such stock on the weighted-average cost basis.
Foreign Currency Translation Foreign currency translation gains and losses and the effect of exchange rate
changes on transactions designated as hedges of net foreign investments are included as a component of other
comprehensive income (loss). Transaction gains and losses are included in income in the period in which they occur.
Revenue Recognition We recognize revenue, or net sales, in accordance with ASU No. 2014-09, Revenue from
Contracts with Customers. Our revenue is earned primarily from the manufacture and sale of engineered materials
(“product sales”). Revenue is earned pursuant to contracts, supply agreements and other arrangements with a wide variety
of customers. Our performance obligation is to produce a specified product according to technical specifications and, in
substantially all instances, to deliver the product. Revenue from product sales is earned at a point in time. We recognize
revenue on product sales when we have satisfied our performance obligation and control of the product has passed to the
customer thereby entitling us to payment. With respect to substantially all arrangements for product sales, this is deemed to
occur when title transfers in accordance with specified shipping terms.
Selling prices are fixed at the time the sales arrangement is entered into and payment terms are customary for
similar arrangements in our industry. Many of our agreements include customary provisions for volume rebates, discounts
and similar incentives. In addition, we are obligated for products that fail to meet agreed upon specification. Provisions for
such items are estimated and recorded as sales deductions in the period in which the related revenue is recognized.
Refer to Note 8 – “Revenue” for additional information about the disaggregation of our net sales.
Environmental Liabilities Accruals for losses associated with environmental obligations are recorded when it is
probable that a liability has been incurred and the amount of the liability can be reasonably estimated based on existing
legislation and remediation technologies. These accruals are adjusted periodically as assessment and remediation actions
continue and/or further legal or technical information develops. Such undiscounted liabilities are exclusive of any insurance
or other claims against third parties. Environmental costs are capitalized if the costs extend the life of the asset, increase its
capacity and/or mitigate or prevent contamination from future operations. Recoveries of environmental remediation costs
38
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 (“ASC 815”), we record
all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the
intended use of the derivative, whether we have elected to designate a derivative in a hedging relationship and apply hedge
accounting, and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting.
The gain or loss on those derivative instruments designated and qualifying as a hedge of the exposure to
variability in expected future cash flows related to forecasted transactions is deferred and reported as a component of
accumulated other comprehensive income (loss). Deferred gains or losses are reclassified to our results of operations at the
time the hedged forecasted transaction is recorded in our results of operations. The effectiveness of cash flow hedges is
assessed at inception and quarterly thereafter. If the instrument 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. For
additional information, refer to Note 22 - "Financial Derivatives and Hedging Activities."
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 December 2020, 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. We adopted this standard in the
first quarter of 2021, but it did not have a material impact on our financial statements.
GLATFELTER 2021 FORM 10-K
39
3.
ACQUISITIONS
On May 13, 2021, we completed the acquisition of all the outstanding equity interests in Georgia-Pacific Mt.
Holly LLC, Georgia-Pacific's U.S. nonwovens business ("Mount Holly") for $170.9 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. The Mount Holly facility produces high-quality
airlaid products for the wipes, hygiene, 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 employs approximately 140 people. Mount Holly’s results are reported prospectively from the
acquisition date as part of our Airlaid Materials segment. Mount Holly had annual net sales of approximately $100 million
in 2020.
The Mount Holly acquisition was financed through a combination of cash on hand and borrowings under our
revolving credit facility.
On October 29, 2021, we completed the acquisition of PMM Holding (Luxembourg) AG, the owner of all of the
equity interest in Jacob Holm, a global leading manufacturer of premium quality spunlace nonwoven fabrics for critical
cleaning, high-performance materials, personal care, hygiene and medical applications, for approximately $304.0 million
for all outstanding shares and the extinguishment of Jacob Holm’s debt.
Jacob Holm’s broad product offerings and blue-chip customer base expands our portfolio to include surgical
drapes and gowns, wound care, face masks, facial wipes and cosmetic masks. The acquisition of Jacob Holm’s Sontara
brand, a leading producer of finished products for critical cleaning wipes and medical apparel, enhances our technological
capabilities. Jacob Holm has approximately 760 employees, operates production facilities in the United States, France and
Spain, and its revenue in 2020 totaled approximately $400 million. The results of Jacob Holm's operations are reported as
Spunlace, a newly formed segment, prospectively from the acquisition date.
The Jacob Holm acquisition was financed with the proceeds of a private placement of $500.0 million of senior
notes discussed in Note 17 - "Long-term Debt."
The following table sets forth information related to the consideration exchanged for each acquisition.
In thousands
Total consideration
Less: Debt repaid
Cash consideration
Mount Holly
Jacob Holm
Total
$
$
170,919
—
170,919
$
$
303,952
(148,000)
155,952
$
$
474,871
(148,000)
326,871
The preliminary purchase price allocations set forth in the following table are based on all information available to
us at the present time and is subject to change. With respect to the Mount Holly acquisition, the purchase price allocation is
complete. However, the Jacob Holm purchase price allocation is preliminary as we are in the process of finalizing our
analysis of certain matters, primarily related to the assessment potential tax liabilities associated with the acquired entities.
In the event new information becomes available, the measurement of the amount of goodwill reflected may be affected.
40
In thousands
Assets
Cash and cash equivalents
Accounts receivable
Inventory
Prepaid and other current assets
Plant, equipment and timberlands
Intangible assets
Goodwill
Other assets
Total assets
Liabilities
Short-term debt
Accounts payable
Other current liabilities
Other long-term liabilities
Total liabilities
Mount Holly
Jacob Holm
Total
$
— $
11,426
$
11,599
7,031
11
100,498
20,000
35,793
8,041
182,973
2,321
1,868
7,865
12,054
30,271
45,340
6,727
158,612
70,240
48,855
26,929
398,400
14,081
25,264
21,763
33,340
94,448
11,426
41,870
52,371
6,738
259,110
90,240
84,648
34,970
581,373
14,081
27,585
23,631
41,205
106,502
474,871
Total preliminary purchase price
$
170,919
$
303,952
$
The preliminary purchase price allocations set forth in the table above are based on all information available to us
at the present time and is subject to change. In the event new information becomes available, primarily related to the
finalization of post-closing working capital adjustments, the measurement of the amount of goodwill reflected may be
affected. For purposes of allocating the total purchase price, assets acquired and liabilities assumed are recorded at their
estimated fair market values. The allocations set forth above are based on management’s estimate of the fair value using
valuation techniques such as discounted cash flow models, appraisals and similar methodologies.
Acquired property, plant and equipment in both acquisitions are being depreciated on a straight-line basis with
estimated remaining lives ranging from five years to 35 years. Intangible assets recorded in connection with the Mount
Holly acquisition consist of customer relationships and are being amortized on a straight-line basis (11 years). With respect
to the Jacob Holm acquisition, identifiable intangible assets consist of trade and product names (15 to 20-year life),
technical know-how (8 to 20-year life) and customer relationships (20-year life). These assets are being amortized on a
straight-line basis. The goodwill arising from the acquisitions largely relates to strategic benefits, product and market
diversification, assembled workforce, and similar factors. Goodwill recorded in connection with the Mount Holly
transaction is deductible for federal tax purposes over 15 years. Additional information is discussed in Note 16 - "Goodwill
and Intangible Assets."
In connection with the Jacob Holm acquisition and as provided for in the underlying Share Purchase Agreement,
we recorded a $17.3 million indemnification asset related to certain potential tax liabilities. The indemnification asset is
presented above under the caption "Other assets."
The following table sets forth information related to amounts of net sales, operating income (loss) of the acquired
businesses included in our results of operations prospectively from the date of acquisition and amounts of legal and
professional fees directly related to the transaction included in our results of operations for the year ended December 31,
2021:
In thousands
Net sales
Operating income (loss)
Legal and professional fees included in SG&A
Mount Holly
Jacob Holm
$
60,599
$
6,205
3,421
57,637
(1,338)
16,336
For purposes of presenting the pro forma financial information, the legal and professional costs directly related to
the acquisitions have been eliminated. The following table summarizes annual unaudited pro forma financial information as
GLATFELTER 2021 FORM 10-K
41
if the acquisition occurred as of January 1, 2020:
In thousands, except per share
Net sales
Income (loss) from continuing operations
2021
2020
(unaudited)
$
1,400,901
$
1,421,578
14,677
23,055
For purposes of presenting the above pro forma financial information, the legal and professional costs directly
related to the acquisitions have been eliminated. 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
In 2018, we completed the sale of the Specialty Papers business on a cash free and debt free basis to Pixelle
Specialty Solutions LLC, an affiliate of Lindsay Goldberg (the “Purchaser”) for $360.0 million. The sale of the business
was in connection with the strategic focus on our more growth oriented Composite Fibers and Airlaid Materials.
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,
2021
2020
2019
$
— $
— $
—
—
—
—
(216)
—
216
—
—
—
216
—
—
—
—
—
(544)
—
544
—
—
—
544
29
$
216
$
515
$
—
—
—
—
—
109
—
(109)
—
1,393
—
1,284
(2,386)
3,670
The amount set forth above in 2021 primarily represents reversal of sales and use tax reserves due to the
expiration of statutes of limitation partially offset by legal costs incurred to pursue certain legal claims. In 2020, the amount
set forth above primarily represents the settlement of a sales and use tax audit.
The following table sets forth a summary of cash flows from discontinued operations which is included in the
consolidated statements of cash flows:
In thousands
Net cash used by operating activities
Net cash used by investing activities
Net cash provided by financing activities
Change in cash and cash equivalents from discontinued operations
Year ended December 31,
2021
2020
2019
$
$
(996) $
(1,613) $
—
—
—
—
(10,942)
(8,221)
—
(996) $
(1,613) $
(19,163)
42
5.
RESTRUCTURING
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
Year ended
December 31,
2020
$
$
6,143
3,900
977
91
11,111
The restructuring charge is recorded under the caption “Costs of product sold” in the accompanying consolidated
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, 2021, the
accrued and unpaid restructuring charge totaled approximately $0.3 million.
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 with our Composite Fibers segment’s 2013 Dresden acquisition. The charge was due to a change in
the estimated fair value of the trade name, primarily driven by lower forecasted wallcover net sales associated with
economic instability in Russia and Ukraine together with the impact of the COVID-19 pandemic on this business. The
charge is recorded in the accompanying consolidated statement of income for 2020 under the caption “Selling, general and
administrative expenses.” The fair value of the asset was estimated using a discounted cash flow model (Level 3 fair value
classification).
7.
GAIN ON DISPOSITIONS OF PLANT, EQUIPMENT AND TIMBERLANDS
During 2021, 2020 and 2019, we completed the following sales of assets:
Dollars in thousands
Acres
Proceeds
Gain (loss)
2021
Timberlands
Other
Total
2020
Timberlands
Other
Total
2019
Timberlands
Other
Total
1,796
n/a
461
n/a
1,996
n/a
$
$
$
$
$
$
5,567
—
5,567
1,413
—
1,413
1,705
493
2,198
$
$
$
$
$
$
5,239
(170)
5,069
1,381
(49)
1,332
1,572
488
2,060
GLATFELTER 2021 FORM 10-K
43
8.
REVENUE
The following table sets forth disaggregated information pertaining to our net sales from contracts with customers:
Revenue by product category
Year ended December 31,
2021
2020
2019
$
298,859
$
285,665
$
278,786
In thousands
Composite Fibers
Food & beverage
Wallcovering
Technical specialties
Composite laminates
Metallized
Airlaid Materials
Feminine hygiene
Specialty wipes
Tabletop
Home care
Adult incontinence
Other
Spunlace
Consumer wipes
Critical cleaning
Health care
Hygiene
High performance
Beauty care
Revenue by geography
Composite Fibers
Europe, Middle East and Africa
Americas
Asia Pacific
Airlaid Materials
Europe, Middle East and Africa
Americas
Asia Pacific
Spunlace
Europe, Middle East and Africa
Americas
Asia Pacific
44
88,057
92,351
43,438
34,102
556,807
207,116
110,201
76,904
25,575
22,034
28,420
470,250
23,937
16,871
10,785
3,428
1,483
1,133
57,637
79,346
84,320
36,856
38,902
525,089
81,679
79,535
35,274
46,392
521,666
204,085
207,301
74,942
45,314
25,040
21,825
20,203
70,149
66,486
17,266
25,233
19,572
391,409
406,007
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,084,694
$
916,498
$
927,673
333,608
$
315,881
$
134,753
88,446
556,807
223,718
237,808
8,724
470,250
19,990
30,815
6,832
57,637
128,385
80,823
525,089
204,728
174,606
12,075
391,409
—
—
—
—
312,218
132,845
76,603
521,666
220,924
179,067
6,016
406,007
—
—
—
—
Total
$
$
Total
$
1,084,694
$
916,498
$
927,673
9.
EARNINGS PER SHARE
The following table sets forth the details of basic and diluted earnings (loss) per share (EPS):
In thousands, except per share
Net income (loss)
Weighted average common shares outstanding used in basic EPS
Common shares issuable upon exercise of dilutive stock options and PSAs / RSUs
Weighted average common shares outstanding and common share equivalents used in
diluted EPS
Earnings (loss) per share
Continuing operations
Discontinued operations
Year ended December 31,
2021
2020
2019
$
6,937
$
21,298
$
(21,541)
44,551
373
44,924
44,339
275
44,614
44,132
—
44,132
$
0.15
$
—
0.47
$
0.01
(0.57)
0.08
The following table sets forth the potential common shares outstanding for stock options that were not included in
the computation of diluted EPS for the period indicated, because their effect would be anti-dilutive:
In thousands
Potential common shares
Year ended December 31,
2021
2020
2019
1,079
1,082
1,233
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, 2021, 2020 and 2019.
In thousands
Balance at January 1, 2021
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, 2021
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)
Currency
translation
adjustments
Unrealized
gain (loss)
on cash
flow hedges
Change in
pensions
Change in
other
postretirement
defined
benefit
plans
Total
$
(42,525) $
(2,496) $
(12,844) $
(788) $
(58,653)
$
$
$
$
(27,232)
4,759
—
(27,232)
(69,757) $
(275)
4,484
1,988
(76,346) $
4,316
$
$
611
751
1,362
(79)
(21,941)
(186)
(265)
290
(21,651)
(80,304)
(11,482) $
(1,053) $
(7,253) $
1,387
$
(77,896)
33,821
(2,840)
(6,202)
(878)
23,901
—
33,821
(3,972)
(6,812)
611
(5,591)
(1,297)
(2,175)
(4,658)
19,243
(42,525) $
(2,496) $
(12,844) $
(788) $
(58,653)
(69,622) $
2,199
$
(71,431) $
1,414
$
(137,440)
(6,724)
6,800
8,730
—
(6,724)
(4,683)
2,117
55,448
64,178
826
(853)
(27)
9,632
49,912
59,544
Balance at December 31, 2019
$
(76,346) $
4,316
$
(7,253) $
1,387
$
(77,896)
GLATFELTER 2021 FORM 10-K
45
The following table sets forth the amounts reclassified from accumulated other comprehensive income (losses) for
the years indicated.
In thousands
Description
Cash flow hedges (Note 22)
Gains on cash flow hedges
Tax expense
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
Pension settlement
Tax benefit
Net of tax
Amortization of defined benefit other plan items
Prior service costs
Actuarial gains
Tax expense
Net of tax
Year ended December 31,
2021
2020
2019
Line Item in Statements of Income
$
(382) $
(5,503) $
(6,468) Costs of products sold
22
(360)
85
—
85
1,448
(4,055)
83
—
83
(275)
(3,972)
1,785
Income tax provision (benefit)
(4,683)
— Interest expense
— Income tax provision (benefit)
—
(4,683)
47
792
—
839
(88)
751
(233)
47
(186)
—
(186)
48
651
—
699
(88)
611
(463)
(834)
(1,297)
—
(1,297)
216
Other, net
2,842
Other, net
75,326
78,384
(22,936)
Income tax provision (benefit)
55,448
(10) Other, net
(852) Other, net
(862)
9
Income tax provision (benefit)
(853)
49,912
Total reclassifications, net of tax
$
290
$
(4,658) $
46
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
Year ended December 31,
2021
2020
2019
$
(570) $
(4,989) $
584
20,561
20,575
(1,159)
234
(12,694)
(13,619)
166
18,470
13,647
540
(1,183)
(1,428)
(2,071)
(419)
134
14,014
13,729
(20,448)
(4,105)
1,582
(22,971)
(9,242)
Income tax provision (benefit)
$
6,956
$
11,576
$
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,
2021
2020
2019
$
$
(44,682) $
(35,696) $
(107,455)
58,359
68,055
13,677
$
32,359
$
73,002
(34,453)
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
Change in reinvestment assertion
Effect of U.S. tax law change
Global Intangible Low-Taxed Income
Stock-based compensation
Nondeductible officer's compensation
Valuation allowance
Recognition of non-U.S. intangible tax basis
Capitalized transaction costs
Pension termination, settlement and related
Prior year adjustments
Other
Actual tax rate
Year ended December 31,
2021
2020
2019
21.0 %
21.0 %
21.0 %
2.7
(3.3)
(0.1)
23.6
15.3
26.4
2.8
18.7
3.9
3.9
(3.1)
(78.1)
8.9
—
7.1
1.2
50.9 %
0.6
3.4
(10.2)
12.4
0.7
—
(21.5)
7.1
1.4
1.0
11.7
—
—
5.4
4.5
3.7
2.0
8.2
(8.0)
0.1
—
—
(9.4)
(1.0)
(0.7)
4.3
—
—
5.0
1.8
(1.7)
35.8 %
(0.2)
26.8 %
The effective income tax rate for the year ended December 31, 2021 was unfavorably impacted by operating
losses in the U.S. which generated no tax benefit, $25.6 million of restructuring and other non-recurring costs for which no
tax benefit was recorded, and a $3.6 million tax charge related to unremitted earnings of a foreign subsidiary, offset in part
by a $10.7 million benefit recorded in connection with the recognition of an intangible asset at a foreign subsidiary.
GLATFELTER 2021 FORM 10-K
47
The sources of deferred income taxes were as follows at December 31:
In thousands
Reserves
Environmental
Compensation
Pension
Post-retirement benefits
Research & development expenses
Tax carryforwards
Other
Deferred tax assets
Valuation allowance
Net deferred tax assets
Property
Intangible assets
Inventories
Other
Deferred tax liabilities
Net deferred tax liabilities
2021
2020
$
1,060
$
3,970
1,920
4,479
1,210
4,239
45,729
2,444
65,051
(24,526)
40,525
(93,164)
(14,063)
(37)
(5,201)
(112,465)
$
(71,940) $
685
4,481
2,415
4,279
1,388
3,092
16,703
5,714
38,757
(23,305)
15,452
(70,492)
(18,808)
—
(3,282)
(92,582)
(77,130)
Non-current deferred tax assets and liabilities are included in the following balance sheet captions:
In thousands
Other assets
Deferred income taxes
December 31,
2021
2020
$
15,345
$
87,285
1
77,131
At December 31, 2021, we had federal, state and foreign tax net operating loss (“NOL”) carryforwards of
$98.7 million, $198.8 million, and $40.2 million, respectively. These NOL carryforwards are available to offset future
taxable income, if any. $6.2 million of the federal NOL carryforward expires in 2037; the residual $92.5 million of the
federal NOL never expires. The state NOL carryforwards expire at various times and in various amounts beginning in
2022. Certain foreign NOL carryforwards begin to expire after 2025.
The federal and state NOL carryforwards on the income tax returns filed included unrecognized tax benefits taken
in prior years. The deferred tax assets recognized for financial statement purposes for such NOL carryforwards 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 2028.
As of December 31, 2021 and 2020, we had a valuation allowance of $24.5 million and $23.3 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
$0.0 million, $3.3 million and $2.8 million in 2021, 2020 and 2019, respectively, related to research and development
credits.
At December 31, 2021 and 2020, unremitted earnings of certain subsidiaries outside the United States deemed to
be indefinitely reinvested totaled $107.0 million and $109.0 million, respectively. Because the unremitted earnings of those
subsidiaries are deemed to be indefinitely reinvested as of December 31, 2021 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 with regard
to those subsidiaries. During 2021, we designated unremitted earnings of a subsidiary as not indefinitely reinvested, and as
a result, recorded a $3.6 million deferred tax charge with regard to the unremitted earnings of that subsidiary.
48
As of December 31, 2021, 2020 and 2019, we had $55.7 million, $46.3 million and $30.5 million of gross
unrecognized tax benefits, respectively. As of December 31, 2021, if such benefits were to be recognized, approximately
$51.1 million would be recorded as a component of income tax expense, thereby affecting our effective tax rate.
A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as
follows:
In thousands
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
2021
2020
2019
$
46,259
$
30,458
$
38
(638)
12,718
3,683
—
(6,400)
13,866
(72)
—
4,400
(1,101)
(1,292)
$
55,660
$
46,259
$
29,620
2,803
(2,892)
—
4,552
(309)
(3,316)
30,458
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
(1)
Canada
(1)
Germany
France
United Kingdom
Philippines
Open Tax Years
Examinations not
yet initiated
Examination in
progress
2014, 2015;
2018 - 2021
2017 - 2021
N/A
N/A
2014 - 2018; 2021
2019 - 2020
2020 - 2021
2019 - 2021
2020 - 2021
2020 - 2021
2016 - 2019
N/A
N/A
2018, 2019
(1)
Includes provincial or similar local jurisdictions, as applicable.
The amount of income taxes we pay is subject to ongoing audits by federal, state and foreign tax authorities,
which often result in proposed assessments. Management performs a comprehensive review of its global tax positions on a
quarterly basis and accrues amounts for uncertain tax positions. Based on these reviews and the result of discussions and
resolutions of matters with certain tax authorities and the closure of tax years subject to tax audit, reserves are adjusted as
necessary. However, future results may include favorable or unfavorable adjustments to our estimated tax liabilities in the
period the assessments are determined or resolved or as such statutes are closed. Due to potential for resolution of federal,
state and foreign examinations, and the expiration of various statutes of limitation, it is reasonably possible our gross
unrecognized tax benefits balance may decrease within the next twelve months by a range of zero to $1.7 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. $3.0 million of penalty accruals and
$1.2 million of interest accruals were recorded in 2021 through purchase accounting:
In thousands
Accrued interest payable
Interest expense (income)
Penalties
As of or for the year ended December 31,
2021
2020
2019
$
3,947
$
1,792
$
974
3,020
927
—
424
(649)
—
GLATFELTER 2021 FORM 10-K
49
12.
STOCK-BASED COMPENSATION
Our Amended and Restated Long-Term Incentive Plan (the “LTIP”) provides for the issuance of Glatfelter
common stock to eligible participants in the form of restricted stock units, restricted stock awards, non-qualified stock
options, performance shares, incentive stock options and performance units. As of December 31, 2021, there were
1,628,094 shares of common stock available for future issuance under the LTIP.
Pursuant to the terms of the LTIP, we have issued to eligible participants restricted stock units, performance share
awards and stock only stock appreciation rights (“SOSARs”).
Restricted Stock Units (“RSUs”) and Performance Share Awards (“PSAs”) Awards of RSUs and PSAs are
made under our LTIP. The vesting of RSUs is generally based on the passage of time, generally over a three-year period or
in certain instances the RSUs were issued with five-year cliff vesting. PSAs are issued to members of management and
vesting is based on achievement of cumulative financial performance targets covering a two-year period followed by an
additional one-year service period. The performance measures include a minimum, target and maximum performance level
providing the grantees an opportunity to receive more or less shares than targeted depending on actual financial
Performance. In addition, beginning in 2019, 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,
In thousands
Compensation expense
2021
2020
2019
1,071,652
374,931
(103,499)
(231,702)
1,111,382
896,463
400,854
(89,483)
(136,182)
1,071,652
756,786
600,820
(223,677)
(237,466)
896,463
2021
2020
2019
$
5,063
$
5,655
$
3,543
The amount granted in 2021, 2020 and 2019 includes 162,480, 171,150 and 218,422 PSAs, respectively, exclusive
of reinvested dividends. The weighted average grant date fair value per unit for awards in 2021, 2020 and 2019 was
$16.71, $16.65 and $15.86, respectively. As of December 31, 2021, unrecognized compensation expense for outstanding
RSUs and PSAs totaled $3.6 million. The weighted average remaining period over which the expense will be recognized is
1.4 years.
Stock Only Stock Appreciation Rights The following table sets forth information related to outstanding SOSARs:
SOSARs
2021
2020
2019
Shares
Wtd Avg
Exercise Price
Shares
Wtd Avg
Exercise Price
Shares
Wtd Avg
Exercise Price
Outstanding at January 1,
1,082,413
$
Granted
Exercised
Canceled / forfeited
Outstanding at December 31,
Exercisable at December 31,
Vested and expected to vest
—
(3,300)
—
1,079,113
$
1,079,113
1,079,113
20.40
—
15.61
—
20.42
20.42
1,291,947
$
—
(58,460)
(151,074)
1,082,413
$
1,082,413
1,082,413
20.05
—
12.85
20.25
20.40
20.40
2,334,742
$
—
(596,360)
(446,435)
1,291,947
$
1,291,947
1,291,947
18.08
—
15.56
21.06
20.05
20.05
Compensation expense (in thousands)
$
—
$
—
$
40
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, 2021, the intrinsic value of SOSARs vested and expected to vest totaled $0.2
million and the remaining weighted average contractual life of outstanding SOSARs was 2.5 years.
50
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.
Participation and benefits under the plans were based upon the employees’ date of hire. U.S. benefits accrued under the
terminated pension plan was based on a final average pay formula or cash balance formula for salaried employees.
We froze qualified pension plan benefits as of May 31, 2019 and terminated the plan June 30, 2019. During 2019,
all plan liabilities were settled by either a lump sum distribution or assumed by a third-party in exchange for a transfer of
assets from the pension plan trust fund. After giving effect to these transactions, we recorded a $309.5 million reduction in
both the projected benefit obligation and the plan assets. In addition, in accordance with pension plan settlement
accounting, we recorded a $75.3 million settlement charge reflecting the recognition of amounts previously included in
accumulated other comprehensive income.
As a result of terminating the qualified plan and settling the associated liabilities, as of December 31, 2020, $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 a 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. As of January 1, 2020, each active participant’s 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 2022, 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 imposed by the Internal Revenue Code on 401(k) plan contributions (“Company Contributions”). Unless
otherwise determined by the Compensation Committee, Company Contributions under the Deferred Compensation Plan
will not exceed 7% of a participant’s annual eligible compensation that is in excess of the Internal Revenue Code
compensation limit for 401(k) plans.
As of December 31, 2021 and 2020, the remaining non-contributory pension plans are unfunded non-qualified
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.
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.
GLATFELTER 2021 FORM 10-K
51
All information presented in the following tables represents amounts attributable to continuing operations.
In thousands
Change in Benefit Obligation
Balance at beginning of year
Service cost
Interest cost
Benefits paid
Participant contributions
Plan amendments
Actuarial (gain)/loss
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
Total contributions
Benefits paid
Fair value of plan assets at end of year
Funded status at end of year
Pension Benefits
Other Benefits
2021
2020
2021
2020
$
47,333
$
45,714
$
5,967
$
—
974
(2,247)
—
—
(203)
(972)
—
1,210
(2,420)
—
—
1,749
1,080
29
127
(1,078)
—
6
79
—
6,511
—
184
(1,611)
—
—
883
—
$
$
$
44,885
$
47,333
$
5,130
$
5,967
— $
—
2,247
(2,247)
—
53,401
$
(53,401)
2,420
(2,420)
—
— $
—
1,078
(1,078)
—
(44,885) $
(47,333) $
(5,130) $
—
—
1,611
(1,611)
—
(5,967)
As of December 31, 2021, the non-qualified plans have an unfunded projected benefit obligation of $44.9 million.
Amounts recognized in the consolidated balance sheets consist of the following as of December 31:
In thousands
Current liabilities
Other long-term liabilities
Net amount recognized
Pension Benefits
Other Benefits
2021
2020
2021
2020
$
$
(2,096) $
(2,271) $
(42,789)
(45,062)
(44,885) $
(47,333) $
(852) $
(4,278)
(5,130) $
(1,167)
(4,800)
(5,967)
The components of amounts recognized as “Accumulated other comprehensive income” consist of the following
on a pre-tax basis:
In thousands
Prior service credit (cost)
Net actuarial gain (loss)
Pension Benefits
Other Benefits
2021
2020
2021
2020
$
(172) $
(226) $
(14,189)
(15,612)
(125) $
(382)
108
(350)
The weighted-average assumptions used in computing the benefit obligations above were as follows:
Pension Benefits
Other Benefits
2021
2020
2021
2020
Discount rate – benefit obligation
2.42 %
2.17 %
2.70 %
2.30 %
The discount rates set forth above were estimated based on the modeling of expected cash flows for each of our
benefit plans and selecting a portfolio of high-quality debt instruments with maturities matching the respective cash flows
of each plan. The resulting discount rates as of December 31, 2021 ranged from 1.10% to 2.88% for pension plans and was
2.70% for the other benefit plans.
Information for pension plans with an accumulated benefit obligation in excess of plan assets was as follows:
In thousands
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
52
2021
2020
$
44,885
$
44,885
—
47,333
47,333
—
Net periodic benefit (income) expense includes the following components:
In thousands
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
Amortization of prior service credit
Amortization of actuarial loss (gain)
Total net periodic benefit income
Year Ended December 31,
2021
2020
2019
$
$
$
$
— $
974
—
48
790
—
—
— $
1,210
—
48
655
—
—
1,812
$
1,913
$
29
$
— $
127
(233)
47
184
(458)
(834)
(30) $
(1,108) $
1,269
11,495
(13,724)
246
2,759
1,259
75,356
78,660
—
313
—
(892)
(579)
Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) were as
follows:
In thousands
Pension Benefits
Actuarial (gain) loss
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 loss
Amortization of actuarial gain (loss)
Total recognized in other comprehensive loss
Total recognized in net periodic benefit cost and other comprehensive loss
Year Ended December 31,
2021
2020
$
$
$
$
(203) $
(48)
(790)
(1,041)
771
79
(47)
32
2
$
$
$
1,750
(48)
(655)
1,047
2,960
883
834
1,717
609
The weighted-average assumptions used in computing the net periodic benefit expense information above were as
follows:
Pension Benefits
Discount rate – benefit expense
Future compensation growth rate
Expected long-term rate of return on plan assets
Other Benefits
Discount rate – benefit expense
Year Ended December 31,
2021
2020
2019
2.17 %
2.70 %
—
—
—
—
4.34 %
2.50 %
4.50 %
2.30 %
3.11 %
4.19 %
For 2019, 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 2021 FORM 10-K
53
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
2021
2020
5.30 %
4.50 %
2037
5.30 %
4.50 %
2037
Cash Flow Benefit payments expected to be made under our non-qualified pension plans and other benefit plans
are summarized below:
In thousands
2022
2023
2024
2025
2026
2027 through 2031
Pension Benefits
Other Benefits
$
2,096
$
2,057
2,013
1,968
1,909
17,208
852
582
468
436
427
1,471
Defined Contribution Plans We maintain 401(k) plans for substantially all U.S.-based employees. Employees
may contribute up to 50% of their earnings, subject to certain restrictions. Through the end of May 2019, the Company
matched a portion of the employees’ contribution in cash. We currently provide a minimum company contribution equal to
7% of eligible compensation. In addition, we have provided discretionary contributions resulting in total contributions
equal to 10% and 11% of compensation in 2021 and 2020, respectively. The expense associated with our 401(k) plan was
$2.4 million, $2.0 million and $1.9 million in 2021, 2020 and 2019, 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,
2021
2020
$
$
87,448
$
139,058
53,014
55,466
97,109
43,655
279,520
$
196,230
2021
2020
$
236,347
$
838,999
219,111
(591,803)
702,654
56,156
2
173,646
754,737
160,922
(569,386)
519,919
23,330
18
$
758,812
$
543,267
As of December 31, 2021 and 2020, we had $7.1 million and $3.1 million, respectively, of accrued capital
expenditures.
54
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
Spunlace
Total
Other Intangible Assets
Composite Fibers
Tradename - non-amortizing
Technology and related
Accumulated amortization
Net
Customer relationships and related
Accumulated amortization
Net
Airlaid Materials
Tradename
Accumulated amortization
Net
Technology and related
Accumulated amortization
Net
Customer relationships and related
Accumulated amortization
Net
Spunlace
Products and Tradenames
Accumulated amortization
Net
Technology and related
Accumulated amortization
Net
Customer relationships and related
Accumulated amortization
Net
Total intangibles
Total accumulated amortization
December 31,
2020
Acquisitions
Amortization
Translation
December 31,
2021
84,586
$
— $
79,783
—
35,793
48,855
— $
—
(6,148) $
(6,090)
(614)
164,369
$
84,648
$
— $
(12,852) $
78,438
109,486
48,241
236,165
3,902
$
— $
— $
(301) $
3,601
$
$
$
41,578
(18,636)
22,942
37,535
(21,290)
16,245
3,960
(456)
3,504
20,053
(3,591)
16,462
26,636
(7,856)
18,780
—
—
—
—
—
—
—
—
—
133,664
(51,829)
—
—
—
—
—
—
—
—
—
—
—
—
20,000
—
20,000
27,649
—
27,649
14,561
—
14,561
28,030
—
28,030
90,240
—
—
(1,845)
(1,845)
—
(2,478)
(2,478)
—
(190)
(190)
—
(1,268)
(1,268)
—
(3,249)
(3,249)
—
(253)
(253)
—
(202)
(202)
—
(268)
(268)
—
(9,753)
(9,753) $
(2,964)
1,257
(1,707)
(2,796)
1,664
(1,132)
525
43
568
(2,228)
307
(1,921)
(2,051)
593
(1,458)
(26)
—
(26)
(14)
—
(14)
(27)
—
(27)
(9,882)
3,864
(6,018) $
38,614
(19,224)
19,390
34,739
(22,104)
12,635
4,485
(603)
3,882
17,825
(4,552)
13,273
44,585
(10,512)
34,073
27,623
(253)
27,370
14,547
(202)
14,345
28,003
(268)
27,735
214,022
(57,718)
156,304
Net intangibles
$
81,835
$
90,240
$
The following table sets forth information pertaining to amortization of intangible assets:
GLATFELTER 2021 FORM 10-K
55
In thousands
Aggregate amortization expense
Estimated amortization expense:
2022
2023
2024
2025
2026
2021
2020
2019
$
9,753
$
8,014
$
7,986
13,966
13,966
13,966
13,966
13,966
Intangible assets are amortized on a straight-line basis, except for Composite Fiber's indefinite life tradename. We
amortize trade and product names over 14 years to 20 years; technical know-how over 7 years to 20 years; and customer
relationships over 11 years to 20 years. The remaining weighted average useful life of intangible assets was 13.2 years at
December 31, 2021.
17.
OTHER LONG-TERM ASSETS
Other long-term assets consist of the following:
In thousands
Right-of-use asset operating leases
Deferred taxes
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
19.
LEASES
December 31,
2021
2020
27,186
$
15,345
8,378
41,851
92,760
$
11,789
2
10,084
22,610
44,485
December 31,
2021
2020
25,572
$
5,633
11,746
6,327
50,160
99,438
$
21,726
9,376
4,781
4,002
31,208
71,093
$
$
$
$
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
caption “Other assets” and the lease obligation is under “Other current liabilities” and “Other long-term liabilities.” We
currently do not have any finance leases.
Operating lease right of use (“ROU”) assets and operating lease liabilities are recognized based on the present
value of the future minimum lease payments over the lease term at commencement date. ROU assets also include any
initial direct costs incurred and any lease payments made at or before the lease commencement date, less lease incentives
received. We use our incremental borrowing rate based on information available at the commencement date in determining
the lease liabilities as our leases generally do not provide an implicit rate. Lease terms may include options to extend or
terminate when we are reasonably certain that the option will be exercised. Lease expense is recognized on a straight-line
basis over the lease term.
We also have arrangements with both lease and non-lease components. We elected the practical 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.
56
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 (years)
The following table sets forth operating lease expense for the periods indicated:
In thousands
Operating lease expense
December 31,
2021
2020
$
27,186
$
11,789
3.31 %
26.0
2.94 %
5.5
December 31,
2021
2020
$
5,742
$
5,876
The following table sets forth required minimum lease payments for the years indicated:
In thousands
2022
2023
2024
2025
2026
Thereafter
20.
LONG-TERM DEBT
Long-term debt is summarized as follows:
In thousands
Revolving credit facility, due Sep. 2026
4.750% Senior Notes, due Oct. 2029
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
1.10% Term Loan, due Mar 2024
0.57% Term Loan, due Jul 2023
Total long-term debt
Less current portion
Unamortized deferred issuance costs
Long-term debt, net of current portion
$
6,479
3,921
3,028
2,618
2,541
38,588
December 31,
2021
2020
$
10,000
$
500,000
218,026
809
7,556
2,427
5,204
9,267
22,652
775,941
(26,437)
(11,429)
$
738,075
$
36,813
—
249,715
2,629
14,737
4,382
7,143
—
—
315,419
(25,057)
(1,898)
288,464
On September 2, 2021, we entered into a restatement agreement as part of a Fourth Amended and Restated
$400 million Revolving Credit Facility and a €220.0 million Term Loan (collectively, the “Credit Facility ”) which matures
September 6, 2026 and February 8, 2024, respectively. Revolving Loans borrowings are available in U.S. Dollars, Euros,
British Pound Sterling, and Canadian Dollars and the borrowing of Term Loans are available in Euros. The principal
amount of the Term Loan amortizes in consecutive quarterly installments of principal, with each such quarterly installment
to be in an amount equal to 1.25% of the Term Loan funded.
Borrowing rates for the Revolving Loans are determined at our option at the time of each borrowing. For all U.S.
Dollar denominated Revolving Loan borrowings, the borrowing rate is either, (a) the bank’s base rate which is equal to the
greater of i) the prime rate; ii) the overnight bank funding rate plus 50 basis points; or iii) the daily Euro-rate plus 100 basis
points plus an applicable spread over either i), ii) or iii) ranging from 12.5 basis points to 100 basis points based on the
Company’s leverage ratio and its corporate credit ratings determined by Standard & Poor’s Rating Services and Moody’s
Investor Service, Inc. (the “Corporate Credit Rating”); or (b) the daily Euro-rate or EURIBOR-rate plus an applicable
margin ranging from 112.5 basis points to 200 basis points based on the Company’s leverage ratio and the Corporate Credit
Rating. For the Term Loan and non-U.S. Dollar denominated borrowings, interest is based on (b) above.
GLATFELTER 2021 FORM 10-K
57
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, limits certain intercompany
financing arrangements, make acquisitions and engage in mergers or consolidations. The Credit Agreement also specifies a
maximum ratio of consolidated total net debt to consolidated adjusted EBITDA, also known as the leverage ratio.
Subsequent to the Jacob Holm acquisition, we must maintain a maximum leverage ratio of no more than 5.25 to 1.00,
which steps down to 4.00 to 1.00 after 24 months of the Jacob Holm acquisition. The Credit Agreement also contains
covenants requiring a minimum interest coverage ratio and provisions limiting our ability to, among other things, (i) incur
debt and guaranty obligations, (ii) incur liens, (iii) make loans, advances, investments and acquisitions, (iv) merge or
liquidate, or (v) sell or transfer assets. In addition, the Credit Agreement provides that if, and for so long as, the Debt
Rating (as defined in the Credit Agreement) is below “BB” by Standard & Poor’s or below “Ba2” by Moody’s, obligations
under the Credit Agreement will be secured by substantially all domestic assets of the Company and the guarantors, subject
to certain exceptions and limitations.
All remaining principal outstanding and accrued interest under the Revolving Credit Facility and the Term Loan
will be due and payable on September 2, 2026 and February 8, 2024, respectively.
As of December 31, 2021, the leverage ratio, as calculated in accordance with the definition in our Credit
Agreement, was 3.8x. A breach of these requirements would give rise to certain remedies under the Revolving Credit
Facility, among which is the termination of the agreement.
On October 25, 2021, we issued $500 million aggregate principal amount of 4.750% senior notes due 2029 (the
“Notes”). The Notes are guaranteed on a senior unsecured basis, jointly and severally, by each of our existing and future
domestic restricted subsidiaries that guarantees our obligations under the Credit Agreement, and/or certain other
indebtedness (the “Guarantees”).
The Notes were issued pursuant to an indenture dated as of October 25, 2021 (the “Base Indenture”), as
supplemented by the supplemental indenture dated as of October 25, 2021 (the “Supplemental Indenture” and, together
with the Base Indenture, the “Indenture”) among the Company, certain subsidiaries of the Company party thereto (the
“Guarantors”) and Wilmington Trust, National Association, as trustee.
The net proceeds from the offering of the Notes, together with cash on hand, were used to pay the purchase price
of the Jacob Holm acquisition, to repay certain indebtedness of Jacob Holm, to repay outstanding revolving borrowings
under the Revolving Credit Facility, and to pay estimated fees and expenses.
The Notes will mature on November 15, 2029. Interest on the Notes accrues at the rate of 4.750% per annum and
is payable semi-annually in arrears on May 15 and November 15 of each year, commencing on May 15, 2022.
The Notes are redeemable, in whole or in part, at any time at the redemption prices specified in the underlying
indenture. Prior to November 15, 2024, we may redeem some or all of the Notes at a "make-whole" premium as specified.
The Notes contain various covenants customary to indebtedness of this nature, including limitations on i) the
amount of indebtedness that may be incurred; ii) certain restricted payments including common stock dividends; iii)
distributions from certain subsidiaries; iv) sales of assets; v) transactions amongst subsidiaries; and vi) incurrence of liens
on assets. In addition, the Notes contain cross default provisions that could result in all such notes becoming due and
payable in the event of a failure to repay debt outstanding under the Credit Agreement at maturity or a default under the
Credit Agreement that accelerates the debt outstanding thereunder. As of December 31, 2021, we met all of the
requirements of our debt covenants.
Glatfelter Gernsbach GmbH (“Gernsbach”), a wholly-owned subsidiary of ours, entered into a series of borrowing
agreements with IKB Deutsche Industriebank AG, Düsseldorf (“IKB”). 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.
In 2021, Gernsbach also entered into two fixed-rate non-amortizing term loans with certain financial institutions.
Similar to the IKB loans discussed above, the financial covenants of these borrowings are calculated by reference to the
Credit Agreement.
Aggregated unamortized deferred debt issuance costs incurred in connection with all of our outstanding debt
totaled $11.4 million at December 31, 2021. 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 $0.9 million in 2021.
58
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
2022
2023
2024
2025
2026
Thereafter
$
26,438
42,938
195,525
1,040
10,000
500,000
Glatfelter Corporation guarantees all debt obligations of its subsidiaries. All such obligations are recorded in these
consolidated financial statements.
As of December 31, 2021 and 2020, we had $6.7 million and $7.3 million, respectively, of letters of credit issued
to us by certain financial institutions. The letters of credit, which reduce amounts available under our revolving credit
facility, provide financial assurances for the performance of long-term monitoring activities associated with the Fox River
environmental matter and for the benefit of certain state workers compensation insurance agencies in conjunction with our
self-insurance program. We bear the credit risk on this amount to the extent that we do not comply with the provisions of
certain agreements. No amounts are outstanding under the letters of credit.
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
4.750% Senior Notes, due Oct. 2029
Term loan, due Feb. 2024
2.40% Term Loan
2.05% Term Loan
1.30% Term Loan
1.55% Term Loan
1.10% Term Loan
0.57% DZ Bank
Total
2021
2020
Carrying
Value
Fair
Value
Carrying
Value
Fair
Value
$
10,000
$
10,000
$
36,813
$
500,000
218,026
809
7,556
2,427
5,204
9,267
22,652
516,875
218,026
813
7,616
2,433
5,234
9,252
22,657
—
249,715
2,629
14,737
4,382
7,143
—
—
36,813
—
249,715
2,651
14,873
4,384
7,210
—
—
$
775,941
$
792,906
$
315,419
$
315,646
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 – “Financial Derivatives and Hedging Activities.”
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 – “cash flow hedges”; ii) mitigate the impact that
changes in currency exchange rates have on intercompany financing transactions and foreign currency denominated
receivables and payables – “foreign currency hedges”; or iii) convert variable interest rate debt to fixed rates.
Derivatives Designated as Hedging Instruments - Cash Flow Hedges We use currency forward contracts as cash
flow hedges to manage our exposure to fluctuations in the currency exchange rates on certain forecasted production costs
or capital expenditures expected to be incurred over a maximum of eighteen months. Currency forward contracts involve
fixing the EUR-USD exchange rate or USD-CAD for delivery of a specified amount of foreign currency on a specified
date.
We designate certain currency forward contracts as cash flow hedges of forecasted raw material purchases, certain
production costs or capital expenditures with exposure to changes in foreign currency exchange rates. Changes in the fair
value of derivatives 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
GLATFELTER 2021 FORM 10-K
59
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 / British Pound
U.S. Dollar / Euro
Canadian Dollar / U.S. Dollar
Sell/Buy - buy notional
Euro / Philippine Peso
British Pound / Philippine Peso
Euro / U.S. Dollar
U.S. Dollar / Canadian Dollar
December 31,
2021
2020
18,823
—
16,205
658
—
896,291
1,121,183
108,467
36,904
18,638
18,522
—
1,041
70
853,686
1,081,791
69,324
34,847
These contracts have maturities of eighteen months or less.
In October 2019, we entered into a €180 million notional value floating-to-fixed interest rate swap agreement with
certain financial institutions and designated the swap as a hedge of interest expense on our €180 million Term loan. Under
the terms of the swap, we will pay a fixed interest rate of the applicable margin plus 0.0395% on €180 million of the
underlying variable rate term loan. We will receive the greater of 0.00% or EURIBOR.
Derivatives Designated as Hedging Instruments – Net Investment Hedge The €220 million Term Loan discussed
in Note 20 – “Long-Term Debt” is designated as a net investment hedge of our Euro functional currency foreign
subsidiaries. During 2021, we recognized a pre-tax gain of $18.6 million and in 2020 a pre-tax loss of $21.1 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 the accompanying consolidated statements of income (loss) under the caption “Other, net.”
In thousands
Derivative
Sell/Buy - sell notional
U.S. Dollar / British Pound
Euro / British Pound
British Pound / Euro
U.S. Dollar / Swiss Franc
British Pound / Swiss Franc
Euro / Swiss Franc
Euro / U.S. Dollar
Sell/Buy - buy notional
Euro / U.S. Dollar
British Pound / Euro
These contracts have maturities of one month from the date originally entered into.
60
December 31,
2021
2020
26,600
—
3,400
2,180
1,025
2,750
11,000
20,900
5,300
25,250
600
1,900
—
—
—
—
7,500
—
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:
December 31,
December 31,
2021
2020
2021
2020
Prepaid Expenses
and Other
Current Assets
Other Current
Liabilities
Forward foreign currency exchange contracts
$
3,197
$
577
$
288
$
Interest rate swap
Not designated as hedging:
Forward foreign currency exchange contracts
—
701
—
456
44
116
4,342
136
118
The amounts set forth in the table above represent the net asset or liability giving effect to rights of offset with
each counterparty.
The following table summarizes the amount of income or loss from derivative instruments recognized in our
results of operations for the periods indicated and the line items in the accompanying consolidated statements of income
(loss) where the results are recorded:
In thousands
Designated as hedging:
Forward foreign currency exchange contracts:
Effective portion – cost of products sold
Interest expense
Not designated as hedging:
Forward foreign currency exchange contracts:
Other – net
Year ended December 31,
2021
2020
2019
$
382
$
85
5,503
$
83
6,468
—
2,666
1,679
300
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 – “Accounting Policies.”
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
accompanying consolidated balance sheets under the caption “Prepaid expenses and other current assets” and the value of
contracts in a loss position is recorded under the caption “Other current liabilities.”
A rollforward of fair value amounts recorded as a component of accumulated other comprehensive income is as
follows:
In thousands
Balance at January 1,
Deferred (losses) gains on cash flow hedges
Reclassified to earnings
Balance at December 31,
2021
2020
(3,460) $
6,646
(297)
2,889
$
5,859
(3,899)
(5,420)
(3,460)
$
$
We expect substantially all of the amounts recorded as a component of accumulated other comprehensive income
will be realized in results of operations within the next twelve to eighteen months and the amount ultimately recognized
will vary depending on actual market rates.
Credit risk related to derivative activity arises in the event a counterparty fails to meet its obligations to us. This
exposure is generally limited to the amounts, if any, by which the counterparty’s obligations exceed our obligation to them.
Our policy is to enter into contracts only with financial institutions which meet certain minimum credit ratings.
GLATFELTER 2021 FORM 10-K
61
23.
SHAREHOLDERS’ EQUITY
The following table summarizes outstanding shares of common stock:
In thousands
Shares outstanding at beginning of year
Treasury shares issued for:
Restricted stock awards
Employee stock options exercised
Shares outstanding at end of year
Year ended December 31,
2021
2020
2019
44,368
44,248
43,959
181
—
44,549
110
10
44,368
188
101
44,248
24.
COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS
Contractual Commitments The following table summarizes the minimum annual payments due on
noncancellable operating leases and other similar contractual obligations having initial or remaining terms in excess of one
year:
In thousands
2022
2023
2024
2025
2026
Thereafter
Leases
Other
$
6,479
$
3,921
3,028
2,618
2,541
38,588
—
19,154
—
—
—
—
Other contractual obligations primarily represent unconditional purchase obligations under energy supply contracts.
At December 31, 2021, required minimum annual payments due under operating leases and other similar contractual
obligations aggregated $57.2 million and $19.2 million, respectively.
Fox River - Neenah, Wisconsin
Background We have previously reported that we face liabilities associated with environmental claims arising out
of the presence of polychlorinated biphenyls (“PCBs”) in sediments in the lower Fox River, on which our former Neenah
facility was located, and in the Bay of Green Bay, Wisconsin (collectively, the “Site”). Since the early 1990s, the United
States, the State of Wisconsin and two Indian tribes (collectively, the “Governments”) have pursued a cleanup of a 39-mile
stretch of river from Little Lake Butte des Morts into Green Bay and natural resource damages (“NRDs”). The United
States originally notified several entities that they were potentially responsible parties (“PRPs”); however, after giving
effect to settlements reached with the Governments, the remaining PRPs exposed to continuing obligations to implement
the remainder of the cleanup consist of us, Georgia-Pacific Consumer Products, L.P. (“Georgia-Pacific”) and NCR
Corporation. The United States Environmental Protection Agency (“EPA”) has divided the Site into five “operable units,”
including the most upstream portion of the Site on which our facility was located (“OU1”) and four downstream reaches of
the river and bay (“OU2-5”).
Over the past several years, we and certain other PRPs completed all remedial actions pursuant to applicable consent
decrees or a Unilateral Administrative Order. In January 2019, we reached an agreement with the United States, the State
of Wisconsin, and Georgia-Pacific to resolve all remaining claims among those parties. Under the Glatfelter consent
decree, we 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 Our remaining obligations under the OU1 consent decree 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 balance of the escrow account established by us and WTM I Company (“WTM I”) another PRP, under
the OU1 consent decree during any period that the balance in the escrow account exceeds the amount due under our fixed-
62
price contract. As of December 31, 2021, the escrow account balance, which is included in the consolidated balance sheet
under the caption “Other assets” totaled $8.7 million which is less than amounts due under the fixed-price contract by
approximately $1.7 million. Our obligation to pay this difference is secured by a letter of credit.
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:
In thousands
Balance at January 1,
Payments
Accretion
Balance at December 31,
Year ended
December 31,
2021
2020
$
$
18,455
$
(2,458)
203
16,200
$
21,870
(3,622)
207
18,455
The payments set forth above represent payments for government oversight costs for amounts due under the long-
term monitoring and maintenance agreement. Of our total reserve for the Fox River, $2.2 million is recorded in the
accompanying December 31, 2021, consolidated balance sheet under the caption “Environmental liabilities” and the
remaining $14.0 million is recorded under the caption “Other long-term liabilities.”
Range of Reasonably Possible Outcomes. Based on our analysis of all available information, including but not
limited to decisions of the courts, official documents such as records of decision, discussions with legal counsel, cost
estimates for future monitoring and maintenance and other post-remediation costs to be performed at the Site, we do not
believe that our costs associated with the Fox River matter could exceed the aggregate amounts accrued by a material
amount.
GLATFELTER 2021 FORM 10-K
63
25.
SEGMENT AND GEOGRAPHIC INFORMATION
The following table sets forth net sales, profitability and other information by segment:
In thousands, except per share
2021
2020
2019
Year ended December 31,
Net Sales
Composite Fibers
Airlaid Material
Spunlace
Total
Operating income (loss)
Composite Fibers
Airlaid Material
Spunlace
Other and unallocated
Total
Depreciation and amortization
Composite Fibers
Airlaid Material
Spunlace
Other and unallocated
Total
Capital expenditures
Composite Fibers
Airlaid Material
Spunlace
Other and unallocated
Total
Tons shipped (metric)
Composite Fibers
Airlaid Material
Spunlace
Total
Plant, equipment and timberlands, net
Composite Fibers
Airlaid Material
Spunlace
Other and unallocated
Total
$
$
$
$
$
$
$
$
$
$
556,807
$
525,089
$
470,250
57,637
391,409
—
1,084,694
$
916,498
$
37,422
$
52,094
$
42,244
(1,338)
(49,714)
46,304
—
(49,242)
28,614
$
49,156
$
27,690
$
26,175
$
28,101
1,693
3,937
22,416
—
8,009
61,421
$
56,600
$
11,912
$
13,262
$
8,431
3,810
5,884
9,311
—
5,563
30,037
$
28,136
$
132,196
148,134
12,514
292,844
134,758
136,661
—
271,419
202,445
$
225,444
$
371,324
161,478
23,565
295,806
—
22,017
758,812
$
543,267
$
521,666
406,007
—
927,673
47,883
41,118
—
(34,366)
54,635
26,153
21,136
—
3,531
50,820
11,972
13,667
—
2,126
27,765
133,473
137,595
—
271,068
222,710
293,779
—
20,932
537,421
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
64
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 “Other and Unallocated.” In the evaluation of operating segment results, management does not use any
measures of total assets. This presentation is aligned with the management and operating structure of our company. It is
also on this basis that the Company’s performance is evaluated internally and by the Company’s Board of Directors.
Our Composite Fibers segment serves customers globally and focuses on higher value-added products in the
following categories:
Food & Beverage;
•
• Wallcovering;
•
•
• Metallized products.
Technical Specialties;
Composite Laminate; and
The Airlaid Materials segment is a leading global supplier of highly absorbent cellulose-based airlaid nonwoven
materials used in the following categories:
•
Feminine hygiene and other hygiene applications;
•
Specialty wipes;
•
Tabletop;
• Home care;
• Adult incontinence; and
• Other consumer and industrial products.
The Spunlace segment is a global leading specialist manufacturer of premium quality spunlace nonwovens for
critical cleaning, high-performance materials, personal care, hygiene and medical applications. The categories served by
Spunlace include:
Critical cleaning;
•
Health care;
•
High performance;
•
Beauty care;
•
• Wipes; and
•
Feminine hygiene.
Disaggregated net sales by categories and geographic region for the segments is presented in Item 8 Financial
Statements and Supplementary Data, Note 8 – “Revenue.”
In each of the past three years ended December 31, 2021, approximately 16% of our consolidated net sales were
from sales to Procter & Gamble Company, a customer of the Airlaid Materials and Spunlace segments.
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.
2021
2020
2019
Plant,
Equipment and
Timberlands – Net
Net sales
Plant,
Equipment and
Timberlands – Net
Net sales
Plant,
Equipment and
Timberlands – Net
Net sales
$
255,086
$
326,668
$
166,131
$
103,570
$
167,887
$
513,043
82,144
120,808
113,613
251,375
50,420
65,291
65,057
489,655
73,604
112,128
74,980
286,591
50,140
68,975
33,991
504,012
70,018
121,789
63,967
105,763
274,146
52,039
72,436
33,037
$
1,084,694
$
758,812
$
916,498
$
543,267
$
927,673
$
537,421
In thousands
United States
Germany
United Kingdom
Canada
Other
Total
GLATFELTER 2021 FORM 10-K
65
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, 2021, concluded
that, as of the evaluation date, our disclosure controls and procedures were effective.
Internal Control Over Financial Reporting
Management’s report on the Company’s internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) and the related report of our independent registered public accounting firm are included in
Item 8 – Financial Statements and Supplementary Data.
Changes in Internal Control over Financial Reporting
We completed the acquisition of Mount Holly and Jacob Holm on May 13, 2021 and October 29, 2021,
respectively. We are in the process of incorporating Mount Holly's and Jacob Holm's internal controls into our control
structure. The ongoing integration of each entity is considered a material change in our internal control over financial
reporting. There were no changes in our internal control over financial reporting during the three months ended December
31, 2021, that have materially affected or are reasonably likely to materially affect our internal control over financial
reporting.
ITEM 9B
OTHER INFORMATION
None.
ITEM 9C
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
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, 2022. Our board of directors has determined that, based on the
relevant experience of the members of the Audit Committee, four of the five members are audit committee financial
experts as this term is set forth in the applicable regulations of the SEC.
Executive Officers of the Registrant The information with respect to the executive officers required under this
Item is incorporated herein by reference to “Executive Officers” as set forth in Part I, page 12 of this report.
We have adopted a Code of Business Ethics for the CEO and Senior Financial Officers (the “Code of Business
Ethics”) in compliance with applicable rules of the Securities and Exchange Commission that applies to our chief executive
officer, chief financial officer and our principal accounting officer or controller, or persons performing similar functions. A
copy of the Code of Business Ethics is filed as an exhibit to this Annual Report on Form 10-K and is available on our
website, free of charge, at www.glatfelter.com.
66
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, 2022.
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, 2022.
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, 2022.
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, 2022.
Our Chief Executive Officer has certified to the New York Stock Exchange that he is not aware of any violations
by the Company of the NYSE corporate governance listing standards.
GLATFELTER 2021 FORM 10-K
67
PART IV
ITEM 15
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)
1.
Our Consolidated Financial Statements as follows are included in Part II, Item 8:
i.
ii.
iii.
iv.
v.
vi.
Consolidated Statements of Income (Loss) for the years ended December 31, 2021, 2020 and 2019
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2021, 2020 and 2019
Consolidated Balance Sheets as of December 31, 2021 and 2020
Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019
Consolidated Statements of Shareholders' Equity for the years ended December 31, 2021, 2020 and 2019
Notes to Consolidated Financial Statements
Financial Statement Schedules (Consolidated) included in Part IV:
i.
Schedule II ‑Valuation and Qualifying Accounts - for years ended December 31, 2021, 2020 and 2019
Exhibits
See Index to Exhibits
(a)
(a)
2.
3.
ITEM 16
FORM 10-K SUMMARY
None
Index to Exhibits
Item 15(a)(3)
Description of Documents
Exhibit
Filing
Incorporated by
Reference to
Exhibit
Number
2.1
2.2
3.1
3.2
3.2
4.1
4.2
4.3
4.4
Share Purchase Agreement, dated July 22, 2021, by and among Glatfelter Corporation, PHG Tea Leaves,
Inc., Ammon Ammon AG and the ultimate owners of Ammon Ammon AG ‡
Share Purchase Agreement, dated January 5, 2021, by and between GPPC Equity Holdings LLC and
Glatfelter Corporation †
Articles of Amendment to Articles of Incorporation, effective October 1, 2020.
Articles of Incorporation, as amended through December 20, 2007.
Amended and Restated By-laws of Glatfelter Corporation, dated May 6, 2021.
Indenture, dated as of October 25, 2021, among Glatfelter Corporation, the subsidiaries of Glatfelter
Corporation party thereto and Wilmington Trust, National Association, as trustee.
Supplemental Indenture, dated as of October 25, 2021, among Glatfelter Corporation, the subsidiaries of
Glatfelter Corporation party thereto and Wilmington Trust, National Association, as trustee.
Form of 4.750% Senior Note due 2029 (included as Exhibit A to the Supplemental Indenture filed as
Exhibit 4.2).
Description of securities.
2.1
2.3
3.1
3.1
3.1
4.1
4.2
4.2
4.1
10.1
Fourth Restatement Agreement, dated September 2, 2021, by and among Glatfelter Corporation, PNC Bank
National Association, and the other lenders party thereto (the Fourth Amended and Restated Credit
Agreement is appended as Exhibit A to the Fourth Restatement Agreement).
10.1
10.2
Loan Agreement, dated April 11, 2013, by and among Glatfelter Gernsbach GmbH & Co. KG. and IKB
10.1
Deutsche Industriebank AG, Düsseldorf.
10.3
Guaranty, dated April 17, 2013, executed by the P. H. Glatfelter Company (as Guarantor) in favor of IKB
10.2
Deutsche Industriebank AG.
10.4
P. H. Glatfelter Company Amended and Restated Long-Term Incentive Plan, as amended and restated
effective February 23, 2017. **
10.5
P. H. Glatfelter Company Amended and Restated 2005 Management Incentive Plan, effective January 1,
10.1
10.1
2015. **
68
Form 8-K filed
July 23, 2021
Form 10-K filed
Feb. 25, 2021
Form 8-K filed
Oct. 1, 2020
Form 10-K filed
Feb. 26, 2020
Form 8-K filed
May 6, 2021
Form 8-K filed
Oct. 25, 2021
Form 8-K filed
Oct. 25, 2021
Form 8-K filed
Oct. 25, 2021
Form 10-K filed
Feb. 26, 2020
Form 8-K filed
Sep. 2, 2021
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
10.6
P. H. Glatfelter Company Supplemental Long Term Disability Plan, dated February 25, 2014, between P.
10.1
H. Glatfelter Company and certain employees. **
10.7
P. H. Glatfelter Company Supplemental Management Pension Plan (amended and restated effective January
10(d)
1, 2008). **
10.8
P. H. Glatfelter Company Supplemental Executive Retirement Plan (Amended and Restated). **
10.9
Amendment No. 2019-1 to the P. H. Glatfelter Company Supplemental Management Pension Plan. **
10.10
Glatfelter Switzerland Sàrl Retirement Pension Plan for management employees. **
10.1
10.2
10.12
10.11
Form of Non-Employee Director Restricted Stock Unit Award Certificate (form effective May 4, 2017). **
10.4
10.12
Form of Stock-Only Stock Appreciation Right Award Certificate (form effective February 26, 2014). **
10.13
Form of Performance Share Award Certificate (form effective February 23, 2017). **
10.14
Form of Performance Share Award Certificate (form effective February 26, 2014). **
10.15
Form of Restricted Stock Unit Award Certificate (form effective as of February 23, 2017). **
10.16
Form of Restricted Stock Unit Award Certificate (form effective as of December 13, 2013). **
10.3
10.2
10.2
10.3
10(l)
10.17
Non-Competition and Non-Solicitation Agreement by and between P. H. Glatfelter Company and Dante C.
10.1
Parrini, dated July 2, 2010. **
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
10.18
Restricted Stock Unit Award Certificate for Dante C. Parrini, dated as of November 13, 2019. **
10.1
Form 8-K filed
10.19
Long Term Employment Contract between Glatfelter Switzerland Gmbh, a wholly-owned subsidiary, and
10.21
Wolfgang Laures, effective January 1, 2020. **
10.20
Form of Change in Control Employment Agreement by and between P. H. Glatfelter Company and certain
10(j)
employees (form effective as of March 7, 2008). **
10.21
Form of Change in Control Employment Agreement by and between P. H. Glatfelter Company and certain
10(q)
employees (form effective as of August 5, 2013). **
Schedule of Change in Control Employment Agreements, filed herewith. **
Summary of Non-Employee Director Compensation, effective January 1, 2020. **
10.25
10.22
10.23
10.24
P. H. Glatfelter Company Deferred Compensation Plan for Directors, effective as of January 1, 2007. **
10(k)
10.25
Form of Director’s and Officer’s Indemnification Agreement. **
10.26
Guidelines for Executive Severance. **
10.32
Consent Decree between P. H. Glatfelter Company, Georgia-Pacific Consumer Products LP, the United
States of America and the State of Wisconsin, dated March 14, 2019.
14.1
Code of Business Ethics for the CEO and Senior Financial Officers of Glatfelter, filed herewith.
21.1
23.1
31.1
Subsidiaries of Glatfelter Corporation, filed herewith.
Consent of Independent Registered Public Accounting Firm, filed herewith.
Certification of Dante C. Parrini, Chairman and Chief Executive Officer of Glatfelter, pursuant to Section
302(a) of the Sarbanes-Oxley Act of 2002, filed herewith.
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.
10.1
10.2
10.2
14
Nov. 18, 2019
Form 10-K filed
Feb. 26, 2020
Form 10-K filed
Mar. 13, 2009
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
Form 10-Q filed
Apr. 30, 2019
Form 10-K filed
Feb. 26, 2020
GLATFELTER 2021 FORM 10-K
69
101.INS Inline XBRL Instance Document – the instance document does not appear in the Interactive Data file
because its iXBRL tags are embedded within the Inline XBRL document.
101.SCH Inline XBRL Taxonomy Extension Schema Document.
101.CAL Inline XBRL Extension Calculation Linkbase Document.
101.DEF Inline XBRL Extension Definition Linkbase Document.
101.LAB Inline XBRL Extension Label Linkbase Document.
101.PRE Inline XBRL Extension Presentation Linkbase Document.
104
Cover Page Interactive Data File (formatted as an inline XBRL and contained in Exhibit 101).
________________________________
‡
†
Certain schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Glatfelter Corporation agrees to furnish supplementally a
copy of such schedules, or any section thereof, to the SEC upon request.
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.
**
Management contract or compensatory plan
70
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, 2022
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, 2022 /s/ Dante C. Parrini
Dante C. Parrini
Chairman and Chief Executive Officer
February 25, 2022 /s/ Samuel L. Hillard
Samuel L. Hillard
Senior Vice President and Chief Financial Officer
Principal Executive Officer and Director
Principal Financial Officer
February 25, 2022 /s/ David C. Elder
David C. Elder
Vice President, Finance and Chief Accounting Officer
Principal Accounting Officer
February 25, 2022 /s/ Bruce Brown
Bruce Brown
February 25, 2022 /s/ Kathleen A. Dahlberg
Kathleen A. Dahlberg
February 25, 2022 /s/ Kevin M. Fogarty
Kevin M. Fogarty
February 25, 2022 /s/ Marie T. Gallagher
Marie T. Gallagher
February 25, 2022 /s/ Darrel Hackett
Darrel Hackett
February 25, 2022 /s/ J. Robert Hall
J. Robert Hall
February 25, 2022 /s/ Lee C. Stewart
Lee C. Stewart
Director
Director
Director
Director
Director
Director
Director
GLATFELTER 2021 FORM 10-K
71
Schedule II
GLATFELTER CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL STATEMENT SCHEDULE
For each of the three years ended December 31, 2021
Valuation and Qualifying Accounts
Allowance for
In thousands
Doubtful Accounts
Sales Discounts and Deductions
2021
2020
2019
2021
2020
2019
Balance, beginning of year
$
2,093
$
1,682
$
1,661
$
791
$
578
$
Provision
Write-offs, recoveries and discounts allowed
(1)
Other
Balance, end of year
469
(10)
179
488
(114)
37
720
(678)
(21)
1,649
(1,493)
(122)
$
2,731
$
2,093
$
1,682
$
825
$
1,516
(1,291)
(12)
791
$
832
1,440
(1,526)
(168)
578
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.
72
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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
Chairman & Chief Executive Officer
Eileen L. Beck
Vice Pres
sident, Global Human Resources &
Jill L. Urey
Vice President, Deputy General Counsel &
Christopher W. Astley
Senior Vice President & Chief Commercial Officer
Samuel L. Hillard
Senior Vice President & Chief Financial Officer
Wolfgang Laures
Senior Vice President, Integrated Global Supply
Chain & Information Technology
Administration
Corporate Secretary
David C. Elder
Vice President, Finance & Chief Accounting Officer
Timothy A. Cobb
Vice President, Tax
Ramesh Shettigar
Vice President, ESG, Investor Relations &
Corporate Treasurer
D I R E C T O R S
Dante C. Parrini
Chairman & Chief Executive Officer
Bruce Brown
Retired Chief Technology Officer
Procter & Gamble, Inc.
Kathleen A. Dahlberg
Chief Executive Officer
G.G.I., Inc.
J. Robert Hall
Chief Executive Officer
Ole Smoky Distillery, LLC
Lee C. Stewart
Private Financial Consultant
Kevin M. Fogarty
Retired President, CEO, and Director
Kraton Corporation, Inc.
Marie T. Gallagher
Senior Vice President and Controller
PepsiCo, Inc.
Darrel Hackett
President
US Wealth Management
BMO Financial Group
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 X C H A N G E
A N D S Y M B O L
New York Stock Exchange
g
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 5, 2022, 8:00 a.m. ET
Virtual Meeting
T R A N S F E R A G E N T,
D I V I D E N D D I S B U R S I N G
A G 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
Overnight correspondence should be sent to:
Computershare
Investor Relations
Glatfelter Corporation
4350 Congress Street, Suite 600
Charlotte, NC 28209
717-225-2746
ir@glatfelter.com
virtualshareholdermeeting.com/GLT2022
462 South 4th Street, Suite 1600
Louisville, KY 40202
Shareholder website
www.computershare.com/investor
toll-free: 877-832-7259
international: +1 201-680-6578
Sales & Diisttrribbbutttioonnn
Offices
North America
Gainesville, GA
Mexico City, Mexico
South America
Buenos Aires, Argentina
Europe / Asia
Kuala Lumpur, Malaysia
Milan, Italy
Moscow, Russia
Seoul, South Korea
Shanghai, Peoples Republic of China
Suzhou, Peoples Republic of China
Tokyo, Japan
Specialty Fiibbberrr
Sites
Lanao del Norte, Philippines
San José, Costa Rica
L O C A T I O N S
Global
Centerss
Headquarters
Charlotte, NC U.S.A.
Integrated Global Supply Chain
Center of Excellence
Zug, Switzerland
Spunlace
Center of Excellence
Basel, Switzerland
Manufaacttuurrinnng
Locationnss
North America
Asheville, NC *
Fort Smith, AR *
Gatineau, QC CanCanada *
Mount Holly, Ny, NC
Old Hickorkory, TN
Europe
Astuturias, Spain
CaCaerphilly, Wales *
Dresden, Germany *
Falkenhagen, Germany *
Gernsbach, Germany *
Lydney, England *
Ober-Schmitten, Germany *
Scaer, France *
Soultz, France
Steinfurt, Germany *
* Also a Sales & Distribution Office
W W W . G L A T F E L T E R . C O M
© 2 02 1 GLATFELTER