Guarantor Financial Statements

9 Months Ended

Sep. 30, 2012

Guarantor Financial Statements [Abstract]

GUARANTOR FINANCIAL STATEMENTS

16. GUARANTOR FINANCIAL STATEMENTS

Our 7.125% 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.

Condensed Consolidating Statement of Income for the three months ended September 30, 2012

In thousands	Parent Company			Guarantors			Non Guarantors			Adjustments/ Eliminations			Consolidated
Net sales	$	232,620		$	13,936		$	171,734		$	(13,936	)	$	404,354
Energy and related sales, net		1,867			—			—			—			1,867
Total revenues		234,487			13,936			171,734			(13,936	)		406,221
Costs of products sold		203,084			12,472			145,377			(13,904	)		347,029
Gross profit		31,403			1,464			26,357			(32	)		59,192
Selling, general and administrative expenses		16,842			880			11,658			—			29,380
Gains on dispositions of plant, equipment and timberlands, net		16			(1,489	)		—			—			(1,473	)
Operating income		14,545			2,073			14,699			(32	)		31,285
Other non-operating income (expense)
Interest expense, net		(4,917	)		1,779			(908	)		—			(4,046	)
Other, net		12,016			269			238			(12,527	)		(4	)
Total other non-operating income (expense)		7,099			2,048			(670	)		(12,527	)		(4,050	)
Income (loss) before income taxes		21,644			4,121			14,029			(12,559	)		27,235
Income tax provision (benefit)		1,545			1,637			3,967			(13	)		7,136
Net income (loss)		20,099			2,484			10,062			(12,546	)		20,099
Other comprehensive income (loss)		11,566			3,923			5,356			(9,279	)		11,566
Comprehensive income	$	31,665		$	6,407		$	15,418		$	(21,825	)	$	31,665

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

In thousands	Parent Company			Guarantors			Non Guarantors			Adjustments/ Eliminations			Consolidated
Net sales	$	225,410		$	13,060		$	191,083		$	(13,060	)	$	416,493
Energy and related sales, net		2,840			—			—			—			2,840
Total revenues		228,250			13,060			191,083			(13,060	)		419,333
Costs of products sold		201,649			11,949			163,900			(13,081	)		364,417
Gross profit		26,601			1,111			27,183			21			54,916
Selling, general and administrative expenses		17,661			646			13,123			—			31,430
Gains on dispositions of plant, equipment and timberlands, net		(276	)		(417	)		(5	)		—			(698	)
Operating income		9,216			882			14,065			21			24,184
Other non-operating income (expense)
Interest expense, net		(6,625	)		2,032			(1,729	)		—			(6,322	)
Other, net		10,935			(134	)		653			(11,591	)		(137	)
Total other non-operating income (expense)		4,310			1,898			(1,076	)		(11,591	)		(6,459	)
Income (loss) before income taxes		13,526			2,780			12,989			(11,570	)		17,725
Income tax provision (benefit)		500			979			3,213			7			4,699
Net income (loss)		13,026			1,801			9,776			(11,577	)		13,026
Other comprehensive income (loss)		(14,236	)		(8,284	)		(11,057	)		19,341			(14,236	)
Comprehensive income	$	(1,210	)	$	(6,483	)	$	(1,281	)	$	7,764		$	(1,210	)

Condensed Consolidating Statement of Income for the nine months ended September 30, 2012

In thousands	Parent Company			Guarantors			Non Guarantors			Adjustments/ Eliminations			Consolidated
Net sales	$	670,536		$	41,307		$	515,874		$	(41,318	)	$	1,186,399
Energy and related sales – net		5,358			—			—			—			5,358
Total revenues		675,894			41,307			515,874			(41,318	)		1,191,757
Costs of products sold		596,508			37,524			437,945			(41,260	)		1,030,717
Gross profit		79,386			3,783			77,929			(58	)		161,040
Selling, general and administrative expenses		51,570			2,220			35,670			—			89,460
Gains on dispositions of plant, equipment and timberlands, net		(506	)		(7,940	)		(25	)		—			(8,471	)
Operating income		28,322			9,503			42,284			(58	)		80,051
Other non-operating income (expense)
Interest expense, net		(14,704	)		5,121			(2,665	)		—			(12,248	)
Other, net		36,817			642			1,099			(38,263	)		295
Total other non-operating income (expense)		22,113			5,763			(1,566	)		(38,263	)		(11,953	)
Income (loss) before income taxes		50,435			15,266			40,718			(38,321	)		68,098
Income tax provision (benefit)		(1,974	)		6,523			11,165			(25	)		15,689
Net income (loss)		52,409			8,743			29,553			(38,296	)		52,409
Other comprehensive income		12,598			1,815			1,366			(3,181	)		12,598
Comprehensive income	$	65,007		$	10,558		$	30,919		$	(41,477	)	$	65,007

Condensed Consolidating Statement of Income for the nine months ended September 30, 2011

In thousands	Parent Company			Guarantors			Non Guarantors			Adjustments/ Eliminations			Consolidated
Net sales	$	662,572		$	37,878		$	548,677		$	(37,878	)	$	1,211,249
Energy and related sales, net		7,887			—			—			—			7,887
Total revenues		670,459			37,878			548,677			(37,878	)		1,219,136
Costs of products sold		601,185			34,691			468,756			(38,079	)		1,066,553
Gross profit		69,274			3,187			79,921			201			152,583
Selling, general and administrative expenses		53,671			1,893			38,956			—			94,520
Gains on dispositions of plant, equipment and timberlands, net		(318	)		(3,575	)		(9	)		—			(3,902	)
Operating income		15,921			4,869			40,974			201			61,965
Other non-operating income (expense)
Interest expense, net		(16,563	)		5,905			(4,928	)		(3,300	)		(18,886	)
Other, net		34,120			(13	)		474			(34,986	)		(405	)
Total other non-operating income (expense)		17,557			5,892			(4,454	)		(38,286	)		(19,291	)
Income (loss) before income taxes		33,478			10,761			36,520			(38,085	)		42,674
Income tax provision (benefit)		525			4,111			6,251			(1,166	)		9,721
Net income (loss)		32,953			6,650			30,269			(36,919	)		32,953
Other comprehensive income		8,723			105			2,187			(2,292	)		8,723
Comprehensive income	$	41,676		$	6,755		$	32,456		$	(39,211	)	$	41,676

Condensed Consolidating Balance Sheet as of September 30, 2012

In thousands	Parent Company		Guarantors		Non Guarantors		Adjustments/ Eliminations			Consolidated
Assets
Cash and cash equivalents	$	3,155	$	5,647	$	19,520	$	—		$	28,322
Other current assets		281,788		441,642		244,263		(532,137	)		435,556
Plant, equipment and timberlands, net		236,084		6,243		364,317		—			606,644
Other assets		785,241		160,327		47,983		(880,038	)		113,513
Total assets	$	1,306,268	$	613,859	$	676,083	$	(1,412,175	)	$	1,184,035
Liabilities and Shareholders’ Equity
Current liabilities	$	400,569	$	68,461	$	297,296	$	(537,930	)	$	228,396
Long-term debt		219,000		—		—		—			219,000
Deferred income taxes		37,350		4,900		39,463		(15,722	)		65,991
Other long-term liabilities		103,432		10,020		9,128		2,151			124,731
Total liabilities		760,351		83,381		345,887		(551,501	)		638,118
Shareholders’ equity		545,917		530,478		330,196		(860,674	)		545,917
Total liabilities and shareholders’ equity	$	1,306,268	$	613,859	$	676,083	$	(1,412,175	)	$	1,184,035

Condensed Consolidating Balance Sheet as of December 31, 2011

In thousands	Parent Company		Guarantors		Non Guarantors		Adjustments/ Eliminations			Consolidated
Assets
Cash and cash equivalents	$	3,007	$	2,894	$	32,376	$	—		$	38,277
Other current assets		203,173		378,519		223,494		(421,050	)		384,136
Plant, equipment and timberlands, net		243,554		6,648		351,748		—			601,950
Other assets		736,733		175,945		48,610		(848,726	)		112,562
Total assets	$	1,186,467	$	564,006	$	656,228	$	(1,269,776	)	$	1,136,925
Liabilities and Shareholders’ Equity
Current liabilities	$	310,814	$	31,328	$	293,283	$	(424,185	)	$	211,240
Long-term debt		227,000		—		—		—			227,000
Deferred income taxes		42,252		4,079		39,511		(16,051	)		69,791
Other long-term liabilities		115,997		10,059		9,415		3,019			138,490
Total liabilities		696,063		45,466		342,209		(437,217	)		646,521
Shareholders’ equity		490,404		518,540		314,019		(832,559	)		490,404
Total liabilities and shareholders’ equity	$	1,186,467	$	564,006	$	656,228	$	(1,269,776	)	$	1,136,925

Condensed Consolidating Statement of Cash Flows for the nine months ended September 30, 2012

In thousands	Parent Company			Guarantors			Non Guarantors			Adjustments/ Eliminations			Consolidated
Net cash provided (used) by Operating activities	$	9,196		$	4,971		$	34,298		$	—		$	48,465
Investing activities
Expenditures for plant, equipment and timberlands		(19,035	)		(281	)		(25,711	)		—			(45,027	)
Proceeds from disposal plant, equipment and timberlands, net		654			8,185			36			—			8,875
Repayments from (advances of) intercompany loans, net and other		13,397			(2,722	)		(514	)		(10,161	)		—
Other		(150	)		—			—			—			(150	)
Total investing activities		(5,134	)		5,182			(26,189	)		(10,161	)		(36,302	)
Financing activities
Net repayments of indebtedness		(8,000	)		—			—			—			(8,000	)
Payments of note offering costs		(102	)		—			—			—			(102	)
Payment of dividends to shareholders		(11,696	)		—			—			—			(11,696	)
Repurchases of common stock		(4,060	)		—			—			—			(4,060	)
(Repayments) borrowings of intercompany loans, net		18,510			(7,400	)		(21,271	)		10,161			—
Proceeds from stock options exercised and other		1,434			—			27			—			1,461
Total financing activities		(3,914	)		(7,400	)		(21,244	)		10,161			(22,397	)
Effect of exchange rate on cash		—			—			279			—			279
Net increase (decrease) in cash		148			2,753			(12,856	)		—			(9,955	)
Cash at the beginning of period		3,007			2,894			32,376			—			38,277
Cash at the end of period	$	3,155		$	5,647		$	19,520		$	—		$	28,322

Condensed Consolidating Statement of Cash Flows for the nine months ended September 30, 2011

In thousands	Parent Company			Guarantors			Non Guarantors			Adjustments/ Eliminations			Consolidated
Operating activities	$	78,151		$	(29,590	)	$	35,875		$	(3,300	)	$	81,136
Investing activities
Expenditures for plant, equipment and timberlands		(19,985	)		(65	)		(24,592	)		—			(44,642	)
Proceeds from disposal plant, equipment and timberlands, net		597			3,821			24			—			4,442
Repayments from (advances of) intercompany loans, net		(10,133	)		29,933			—			(19,800	)		0
Total investing activities		(29,521	)		33,689			(24,568	)		(19,800	)		(40,200	)
Financing activities
Net repayments of short-term debt		—			—			(798	)		—			(798	)
Payment of dividends to shareholders		(12,578	)		—			—			—			(12,578	)
Repurchases of common stock		(26,251	)		—			—			—			(26,251	)
(Repayments) borrowings of intercompany loans, net		(2,050	)		—			(17,750	)		19,800			—
Payment of inter- company dividend		—			(3,300	)		—			3,300			—
Proceeds from stock options exercised and other		132			—			—			—			132
Total financing activities		(40,747	)		(3,300	)		(18,548	)		23,100			(39,495	)
Effect of exchange rate on cash		—			—			1,022			—			1,022
Net increase (decrease) in cash		7,883			799			(6,219	)		—			2,463
Cash at the beginning of period		61,953			91			33,744			—			95,788
Cash at the end of period	$	69,836		$	890		$	27,525			—		$	98,251