Guarantor Financial Statements

6 Months Ended

Jun. 30, 2011

Guarantor Financial Statements [Abstract]

GUARANTOR FINANCIAL STATEMENTS

18. GUARANTOR FINANCIAL STATEMENTS

     Our 7⅛% Notes have been fully and unconditionally guaranteed, on a joint and several basis, by certain of our 100%-owned domestic subsidiaries: PHG Tea Leaves, Inc., Mollanvick, Inc., The Glatfelter Pulp Wood Company, and Glatfelter Holdings, LLC.

     The following presents our condensed consolidating statements of income and cash flow, and our condensed consolidating balance sheets. These financial statements reflect P. H. Glatfelter Company (the parent), the guarantor subsidiaries (on a combined basis), the non-guarantor subsidiaries (on a combined basis) and elimination entries necessary to combine such entities on a consolidated basis. We have reclassified certain interest income amounts for the three- and six-months ended June 30, 2010 of $0.2 million and $0.3 million, respectively, in total from “Other — net”, to “Interest expense, net”, to conform to the 2011 presentation. This reclassification had no effect on the reported amounts of Interest income, Interest expense, or Other — net for any period presented in our accompanying condensed consolidated statement of operations.

Condensed Consolidating Statement of Income for the
three months ended June 30, 2011

	Parent					Non			Adjustments/
In thousand	Company			Guarantors		Guarantors			Eliminations			Consolidated
Net sales	$	216,708		$	11,986	$	181,277		$	(11,986	)	$	397,985
Energy and related sales — net		2,060			—		—			—			2,060
Total revenues		218,768			11,986		181,277			(11,986	)		400,045
Costs of products sold		208,575			11,271		154,753			(12,054	)		362,545
Gross profit		10,193			715		26,524			68			37,500
Selling, general and administrative expenses		17,293			688		13,339			—			31,320
Gains on dispositions of plant, equipment and timberlands, net		(29	)		—		—			—			(29	)
Operating income		(7,071	)		27		13,185			68			6,209
Other non-operating income (expense)
Interest expense		(6,242	)		—		(219	)		—			(6,461	)
Other income (expense) — net		12,497			2,026		(1,576	)		(13,072	)		(125	)
Total other non-operating income (expense)		6,255			2,026		(1,795	)		(13,072	)		(6,586	)
Income (loss) before income taxes		(816	)		2,053		11,390			(13,004	)		(377	)
Income tax provision (benefit)		(3,317	)		676		(257	)		20			(2,878	)
Net income (loss)	$	2,501		$	1,377	$	11,647		$	(13,024	)	$	2,501

Condensed Consolidating Statement of Income for the
three months ended June 30, 2010

	Parent						Non			Adjustments/
In thousand	Company			Guarantors			Guarantors			Eliminations			Consolidated
Net sales	$	208,740		$	11,750		$	154,041		$	(11,750	)	$	362,781
Energy and related sales — net		1,915			—			—			—			1,915
Total revenues		210,655			11,750			154,041			(11,750	)		364,696
Costs of products sold		198,062			10,283			132,620			(11,729	)		329,236
Gross profit		12,593			1,467			21,421			(21	)		35,460
Selling, general and administrative expenses		17,034			627			11,186			—			28,847
Gains on dispositions of plant, equipment and timberlands, net		—			(168	)		—			—			(168	)
Operating income		(4,441	)		1,008			10,235			(21	)		6,781
Other non-operating income (expense)
Interest expense		(6,474	)		—			(343	)		—			(6,817	)
Other income (expense) — net		7,844			1,094			(27	)		(8,377	)		534
Total other non-operating income (expense)		1,370			1,094			(370	)		(8,377	)		(6,283	)
Income (loss) before income taxes		(3,071	)		2,102			9,865			(8,398	)		498
Income tax provision (benefit)		(3,174	)		390			3,187			(8	)		395
Net income (loss)	$	103		$	1,712		$	6,678		$	(8,390	)	$	103

Condensed Consolidating Statement of Income for the six
months ended June 30, 2011

	Parent						Non			Adjustments/
In thousand	Company			Guarantors			Guarantors			Eliminations			Consolidated
Net sales	$	437,162		$	24,818		$	357,594		$	(24,818	)	$	794,756
Energy and related sales — net		5,047			—			—			—			5,047
Total revenues		442,209			24,818			357,594			(24,818	)		799,803
Costs of products sold		399,537			22,742			304,855			(24,998	)		702,136
Gross profit		42,672			2,076			52,739			180			97,667
Selling, general and administrative expenses		36,011			1,247			25,832			—			63,090
Gains on dispositions of plant, equipment and timberlands, net		(42	)		(3,158	)		(4	)		—			(3,204	)
Operating income		6,703			3,987			26,911			180			37,781
Non-operating income (expense)
Interest expense		(12,481	)		—			(440	)		—			(12,921	)
Other income (expense) — net		25,933			3,993			(2,938	)		(26,899	)		89
Total other income (expense)		13,452			3,993			(3,378	)		(26,899	)		(12,832	)
Income (loss) before income taxes		20,155			7,980			23,533			(26,719	)		24,949
Income tax provision (benefit)		228			3,132			2,836			(1,174	)		5,022
Net income (loss)	$	19,927		$	4,848		$	20,697		$	(25,545	)	$	19,927

Condensed Consolidating Statement of Income for the six
months ended June 30, 2010

	Parent						Non			Adjustments/
In thousand	Company			Guarantors			Guarantors			Eliminations			Consolidated
Net sales	$	416,443		$	24,353		$	283,613		$	(24,353	)	$	700,056
Energy and related sales — net		5,522			—			—			—			5,522
Total revenues		421,965			24,353			283,613			(24,353	)		705,578
Costs of products sold		383,690			20,693			245,711			(24,192	)		625,902
Gross profit		38,275			3,660			37,902			(161	)		79,676
Selling, general and administrative expenses		39,582			1,168			22,767			—			63,517
Gains on dispositions of plant, equipment and timberlands, net		—			(168	)		—			—			(168	)
Operating income		(1,307	)		2,660			15,135			(161	)		16,327
Non-operating income (expense)
Interest expense		(11,805	)		—			(675	)		—			(12,480	)
Other income (expense) — net		6,948			2,103			1,155			(13,485	)		(3,279	)
Total other income (expense)		(4,857	)		2,103			480			(13,485	)		(15,759	)
Income (loss) before income taxes		(6,164	)		4,763			15,615			(13,646	)		568
Income tax provision (benefit)		(5,893	)		1,554			5,359			(181	)		839
Net income (loss)	$	(271	)	$	3,209		$	10,256		$	(13,465	)	$	(271	)

Condensed Consolidating Balance Sheet as of
June 30, 2011

	Parent				Non		Adjustments/
In thousand	Company		Guarantors		Guarantors		Eliminations			Consolidated
Assets
Current assets
Cash and cash equivalents	$	84,571	$	961	$	22,764	$	—		$	108,296
Other current assets		247,111		417,534		243,085		(469,008	)		438,722
Plant, equipment and timberlands — net		241,933		6,815		375,050		—			623,798
Other assets		816,150		175,361		101,953		(863,692	)		229,772
Total assets	$	1,389,765	$	600,671	$	742,852	$	(1,332,700	)	$	1,400,588
Liabilities and Shareholders’ Equity
Current liabilities	$	316,532	$	31,483	$	352,332	$	(469,575	)	$	230,772
Long-term debt		295,870		—		36,695		—			332,565
Deferred income taxes		76,464		19,494		44,675		(31,867	)		108,766
Other long-term liabilities		115,677		13,363		10,689		3,534			143,263
Total liabilities		804,543		64,340		444,391		(497,908	)		815,366
Shareholders’ equity		585,222		536,331		298,461		(834,792	)		585,222
Total liabilities and shareholders’ equity	$	1,389,765	$	600,671	$	742,852	$	(1,332,700	)	$	1,400,588

Condensed Consolidating Balance Sheet as of
December 31, 2010

	Parent				Non		Adjustments/
In thousand	Company		Guarantors		Guarantors		Eliminations			Consolidated
Assets
Current assets
Cash and cash equivalents	$	61,953	$	91	$	33,744	$	—		$	95,788
Other current assets		230,957		380,986		203,048		(408,089	)		406,902
Plant, equipment and timberlands — net		244,157		7,161		356,836		16			608,170
Other assets		773,254		167,877		103,250		(813,494	)		230,887
Total assets	$	1,310,321	$	556,115	$	696,878	$	(1,221,567	)	$	1,341,747
Liabilities and Shareholders’ Equity
Current liabilities	$	277,343	$	3,672	$	336,679	$	(404,548	)	$	213,146
Long-term debt		295,529		—		36,695		—			332,224
Deferred income taxes		70,575		14,836		42,204		(32,697	)		94,918
Other long-term liabilities		114,432		13,210		9,999		11,376			149,017
Total liabilities		757,879		31,718		425,577		(425,869	)		789,305
Shareholders’ equity		552,442		524,397		271,301		(795,698	)		552,442
Total liabilities and shareholders’ equity	$	1,310,321	$	556,115	$	696,878	$	(1,221,567	)	$	1,341,747

Condensed Consolidating Statement of Cash Flows for the six
months ended June 30, 2011

	Parent						Non			Adjustments/
In thousand	Company			Guarantors			Guarantors			Eliminations			Consolidated
Net cash provided (used) by
Operating activities	$	38,587		$	2,969		$	10,057		$	(3,300	)	$	48,313
Investing activities
Purchase of plant, equipment and timberlands		(13,284	)		(16	)		(14,577	)		—			(27,877	)
Proceeds from disposal plant, equipment and timberlands		49			3,373			18			—			3,440
Repayments from (advances of) intercompany loans, net		(3,586	)		(2,156	)		—			5,742			—
Total investing activities		(16,821	)		1,201			(14,559	)		5,742			(24,437	)
Financing activities
Net (repayments of) proceeds from indebtedness		—			—			(798	)		—			(798	)
Payment of dividends to shareholders		(8,396	)		—			—			—			(8,396	)
Repurchases of common stock		(4,369	)		—			—			—			(4,369	)
(Repayments) borrowings of intercompany loans, net		13,500			—			(7,758	)		(5,742	)		—
Payment of intercompany dividends		—			(3,300	)		—			3,300			—
Proceeds from stock options exercised		117			—			—			—			117
Total financing activities		852			(3,300	)		(8,556	)		(2,442	)		(13,446	)
Effect of exchange rate on cash		—			—			2,078			—			2,078
Net increase (decrease) in cash		22,618			870			(10,980	)		—			12,508
Cash at the beginning of period		61,953			91			33,744			—			95,788
Cash at the end of period	$	84,571		$	961		$	22,764		$	—		$	108,296

Condensed Consolidating Statement of Cash Flows for the six
months ended June 30, 2010

	Parent						Non			Adjustments/
In thousand	Company			Guarantors			Guarantors			Eliminations			Consolidated
Net cash provided (used) by
Operating activities	$	(90,129	)	$	132,713		$	40,391		$	(300	)	$	82,675
Investing activities
Purchase of plant, equipment and timberlands		(8,404	)		(301	)		(6,740	)					(15,445	)
Proceeds from disposals of plant, equipment and timberlands		—			182			—			—			182
Acquisition of Concert Industries Corp., net of cash acquired		—			—			(229,080	)		—			(229,080	)
Repayments from (advances of) intercompany loans, net		(1,676	)		(132,507	)		4,806			129,377			—
Total investing activities		(10,080	)		(132,626	)		(231,014	)		129,377			(244,343	)
Financing activities
Net (repayments of) proceeds from indebtedness		76,470			—			2,016			—			78,486
Payment of dividends to shareholders		(8,360	)		—			—			—			(8,360	)
(Repayments) borrowings of intercompany loans, net		(24,628	)		—			154,205			(129,577	)		—
Payment of intercompany dividends		—			(500	)		—			500			—
Proceeds from stock options exercised and other		110			—			—			—			110
Total financing activities		43,592			(500	)		156,221			(129,077	)		70,236
Effect of exchange rate on cash		—			—			(1,361	)		—			(1,361	)
Net increase (decrease) in cash		(56,617	)		(413	)		(35,763	)		—			(92,793	)
Cash at the beginning of period		76,970			985			57,465			—			135,420
Cash at the end of period	$	20,353		$	572		$	21,702		$	—		$	42,627