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Condensed Consolidating Financial Statements
9 Months Ended
Sep. 30, 2015
Condensed Financial Information of Parent Company Only Disclosure [Abstract]  
Condensed Consolidating Financial Statements
18. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

Our 5.375% Notes issued by P. H. Glatfelter Company (the “Parent”) are fully and unconditionally guaranteed, on a joint and several basis, by certain of our 100%-owned domestic subsidiaries, PHG Tea Leaves, Inc., Mollanvick, Inc., Glatfelter Composite Fibers N. A., Inc. (“CFNA”), Glatfelter Advanced Materials N.A., Inc. (“GAMNA”), and Glatfelter Holdings, LLC. The guarantees are subject to certain customary release provisions including i) the designation of such subsidiary as an unrestricted or excluded subsidiary; (ii) in connection with any sale or disposition of the capital stock of the subsidiary guarantor; and (iii) upon our exercise of our legal defeasance option or our covenant defeasance option, all of which are more fully described in the Indenture dated as of October 3, 2012 and the First Supplemental Indenture dated as of October 27, 2015, among us, the Guarantors and US Bank National Association, as Trustee, relating to the 5.375% Notes.

The following presents the condensed consolidating statements of income, including comprehensive income for the three months and nine months ended September 30, 2015 and 2014, the condensed consolidating balance sheets as of September 30, 2015 and December 31, 2014 and the condensed consolidating cash flows for the nine months ended September 30, 2015 and 2014. These financial statements reflect 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. The condensed consolidating financial statements set forth below include the addition of CFNA and GAMNA as guarantors effective September 30, 2015 and all prior periods have been restated to retroactively effect this change. In addition, our presentation of the Guarantors’ statement of income for the three months and nine months ended September 30, 2014 has been restated to correctly apply the equity method of accounting to reflect the Guarantors’ equity interests in certain Non Guarantors. Such changes are reflected under the caption “Equity in earnings of subsidiaries” in the accompanying condensed consolidating statements of income. The correction had no impact on any financial information of the Parent Company, the Non Guarantors or on the condensed consolidating balance sheet or the statement of cash flows.

Condensed Consolidating Statement of Income for the

three months ended September 30, 2015

 

In thousands

   Parent
Company
    Guarantors     Non
Guarantors
    Adjustments/
Eliminations
    Consolidated  

Net sales

   $ 222,803      $ 19,005      $ 197,589      $ (19,437   $ 419,960   

Energy and related sales, net

     1,153        —          —          —          1,153   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     223,956        19,005        197,589        (19,437     421,113   

Costs of products sold

     197,906        17,299        165,437        (19,437     361,205   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     26,050        1,706        32,152        —          59,908   

Selling, general and administrative expenses

     24,764        (8     15,036        —          39,792   

Gains on dispositions of plant, equipment and timberlands, net

     (4     —          (119     —          (123
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     1,290        1,714        17,235        —          20,239   

Other non-operating income (expense)

          

Interest expense

     (4,346     —          (23,201     23,230        (4,317

Interest income

     181        23,129        11        (23,231     90   

Equity in earnings of subsidiaries

     14,173        (9,366     —          (4,808     —     

Other, net

     (961     23        718        —          (220
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other non-operating income (expense)

     9,047        13,786        (22,472     (4,809     (4,447
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     10,337        15,500        (5,237     (4,809     15,792   

Income tax provision (benefit)

     (3,167     1,270        4,185        —          2,288   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     13,504        14,230        (9,422     (4,809     13,504   

Other comprehensive income (loss)

     (3,002     (5,954     (7,752     13,706        (3,002
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss)

   $ 10,502      $ 8,276      $ (17,174   $ 8,897      $ 10,502   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Condensed Consolidating Statement of Income for the

three months ended September 30, 2014

 

In thousands

   Parent
Company
    Guarantors     Non
Guarantors
    Adjustments/
Eliminations
    Consolidated  

Net sales

   $ 236,182      $ 17,735      $ 228,699      $ (17,524   $ 465,092   

Energy and related sales, net

     860        —          —          —          860   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     237,042        17,735        228,699        (17,524     465,952   

Costs of products sold

     197,182        17,019        188,762        (17,524     385,439   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     39,860        716        39,937        —          80,513   

Selling, general and administrative expenses

     19,352        589        17,946        —          37,886   

Gains on dispositions of plant, equipment and timberlands, net

     (1,590     —          —          —          (1,590
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     22,098        127        21,991        —          44,217   

Other non-operating income (expense)

          

Interest expense

     (4,790     —          (90,098     90,217        (4,671

Interest income

     152        89,951        145        (90,218     30   

Equity in earnings of subsidiaries

     14,935        (74,502     —          59,566        —     

Other, net

     (383     9        202        5        (167
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other non-operating income (expense)

     9,914        15,458        (89,751     59,570        (4,808
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     32,012        15,585        (67,760     59,570        39,409   

Income tax provision (benefit)

     1,640        1,091        6,306        —          9,037   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     30,372        14,494        (74,066     59,570        30,372   

Other comprehensive income (loss)

     (29,577     (25,843     16,924        8,919        (29,577
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss)

   $ 795      $ (11,349   $ (57,142   $ 68,489      $ 795   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Condensed Consolidating Statement of Income for the

nine months ended September 30, 2015

 

In thousands

   Parent
Company
    Guarantors     Non
Guarantors
    Adjustments/
Eliminations
    Consolidated  

Net sales

   $ 655,599      $ 61,822      $ 590,466      $ (59,655   $ 1,248,232   

Energy and related sales, net

     3,936        —          —          —          3,936   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     659,535        61,822        590,466        (59,655     1,252,168   

Costs of products sold

     614,060        58,554        494,360        (59,655     1,107,319   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     45,475        3,268        96,106        —          144,849   

Selling, general and administrative expenses

     57,607        947        41,647        —          100,201   

Gains on dispositions of plant, equipment and timberlands, net

     (1,526     (1,183     (179     —          (2,888
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     (10,606     3,504        54,638        —          47,536   

Other non-operating income (expense)

          

Interest expense

     (13,771     —          (35,965     36,559        (13,177

Interest income

     513        36,226        52        (36,559     232   

Equity in earnings of subsidiaries

     48,775        11,879        —          (60,654     —     

Other, net

     (2,423     (136     2,367        —          (192
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other non-operating income (expense)

     33,094        47,969        (33,546     (60,654     (13,137
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     22,488        51,473        21,092        (60,654     34,399   

Income tax provision (benefit)

     (7,789     2,586        9,325        —          4,122   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     30,277        48,887        11,767        (60,654     30,277   

Other comprehensive income (loss)

     (21,200     (30,607     21,156        9,451        (21,200
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income

   $ 9,077      $ 18,280      $ 32,923      $ (51,203   $ 9,077   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Condensed Consolidating Statement of Income for the

nine months ended September 30, 2014

 

In thousands

   Parent
Company
    Guarantors     Non
Guarantors
    Adjustments/
Eliminations
    Consolidated  

Net sales

   $ 679,877      $ 56,138      $ 685,350      $ (55,211   $ 1,366,154   

Energy and related sales, net

     6,912        —          —          —          6,912   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     686,789        56,138        685,350        (55,211     1,373,066   

Costs of products sold

     629,984        53,491        567,812        (55,211     1,196,076   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     56,805        2,647        117,538        —          176,990   

Selling, general and administrative expenses

     53,699        1,431        48,622        —          103,751   

Gains on dispositions of plant, equipment and timberlands, net

     (2,565     (1,316     —          —          (3,881
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     5,671        2,532        68,916        —          77,120   

Other non-operating income (expense)

          

Interest expense

     (14,284     —          (95,643     95,682        (14,245

Interest income

     468        95,165        193        (95,683     143   

Equity in earnings of subsidiaries

     56,784        (38,229     —          (18,555     —     

Other, net

     (1,603     30        1,673        5        105   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other non-operating income (expense)

     41,365        56,966        (93,777     (18,551     (13,997
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     47,036        59,498        (24,861     (18,551     63,123   

Income tax provision (benefit)

     (2,653     2,719        13,368        —          13,434   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     49,689        56,779        (38,229     (18,551     49,689   

Other comprehensive income (loss)

     (23,586     (26,392     18,907        7,485        (23,586
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss)

   $ 26,103      $ 30,387      $ (19,322   $ (11,066   $ 26,103   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Condensed Consolidating Balance Sheet as of

September 30, 2015

 

In thousands

   Parent
Company
     Guarantors     Non
Guarantors
     Adjustments/
Eliminations
    Consolidated  
Assets             

Cash and cash equivalents

   $ 28,626       $ 297      $ 44,742       $ —        $ 73,665   

Other current assets

     232,486         260,054        261,431         (268,192     485,779   

Plant, equipment and timberlands, net

     283,712         1,005        412,607         —          697,324   

Investments in subsidiaries

     734,303         504,783        —           (1,239,086     —     

Other assets

     132,732         —          148,732         (485     280,979   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total assets

   $ 1,411,859       $ 766,139      $ 867,512       $ (1,507,763   $ 1,537,747   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 
Liabilities and Shareholders’ Equity             

Current liabilities

   $ 368,220       $ 31,720      $ 163,984       $ (271,574   $ 292,350   

Long-term debt

     250,000         —          131,535         —          381,535   

Deferred income taxes

     48,226         (505     50,110         3,376        101,207   

Other long-term liabilities

     99,297         33        17,209         —          116,539   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total liabilities

     765,743         31,248        362,838         (268,198     891,631   

Shareholders’ equity

     646,116         734,891        504,674         (1,239,565     646,116   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 1,411,859       $ 766,139      $ 867,512       $ (1,507,763   $ 1,537,747   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Condensed Consolidating Balance Sheet as of

December 31, 2014

 

In thousands

   Parent
Company
     Guarantors     Non
Guarantors
    Adjustments/
Eliminations
    Consolidated  
Assets            

Cash and cash equivalents

   $ 42,208       $ 509      $ 57,120      $ —        $ 99,837   

Other current assets

     216,940         439,910        254,911        (436,976     474,785   

Plant, equipment and timberlands, net

     255,255         996        441,357        —          697,608   

Investments in subsidiaries

     826,084         401,540        —          (1,227,624     —     

Other assets

     121,125         —          186,128        (17,979     289,274   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

   $ 1,461,612       $ 842,955      $ 939,516      $ (1,682,579   $ 1,561,504   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 
Liabilities and Shareholders’ Equity            

Current liabilities

     403,662         13,143        307,184        (444,258     279,731   

Long-term debt

     250,000         —          721,457        (572,579     398,878   

Deferred income taxes

     46,483         (506     70,328        (12,289     104,016   

Other long-term liabilities

     112,358         24        11,608        5,780        129,770   

Total liabilities

     812,503         12,661        1,110,577        (1,023,346     912,395   

Shareholders’ equity

     649,109         830,294        (171,061     (659,233     649,109   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 1,461,612       $ 842,955      $ 939,516      $ (1,682,579   $ 1,561,504   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

Condensed Consolidating Statement of Cash Flows for the

nine months ended September 30, 2015

 

In thousands

   Parent
Company
    Guarantors     Non
Guarantors
    Adjustments/
Eliminations
    Consolidated  

Net cash provided (used) by

          

Operating activities

   $ 9,927      $ 152      $ 60,444      $ —        $ 70,523   

Investing activities

          

Expenditures for purchases of plant, equipment and timberlands

     (52,331     (42     (21,907     —          (74,280

Proceeds from disposal plant, equipment and timberlands, net

     1,584        1,213        384        —          3,181   

Repayments from intercompany loans

     1,465        53,855        —          (55,320     —     

Advances of intercompany loans

     —          (44,590     —          44,590        —     

Intercompany capital (contributed) returned

     10,500        (300     —          (10,200     —     

Acquisitions, net of cash acquired

     —          —          (224     —          (224

Other

     (1,600     —          —          —          (1,600
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total investing activities

     (40,382     10,136        (21,747     (20,930     (72,923

Financing activities

          

Net repayments of indebtedness

     —          —          (3,387     —          (3,387

Payments of borrowing costs

     (1,329     —          —          —          (1,329

Payment of dividends to shareholders

     (15,215     —          —          —          (15,215

Repayments of intercompany loans

     (9,158     —          (46,162     55,320        —     

Borrowings of intercompany loans

     44,590        —          —          (44,590     —     

Intercompany capital received (returned)

     —          (10,500     300        10,200        —     

Payments related to share-based compensation awards and other

     (2,015     —          —          —          (2,015
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total financing activities

     16,873        (10,500     (49,249     20,930        (21,946

Effect of exchange rate on cash

     —          —          (1,826     —          (1,826
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net decrease in cash

     (13,582     (212     (12,378     —          (26,172

Cash at the beginning of period

     42,208        509        57,120        —          99,837   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash at the end of period

   $ 28,626      $ 297      $ 44,742      $ —        $ 73,665   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Condensed Consolidating Statement of Cash Flows for the

nine months ended September 30, 2014

 

In thousands

   Parent
Company
    Guarantors     Non
Guarantors
    Adjustments/
Eliminations
    Consolidated  

Net cash provided (used) by

          

Operating activities

   $ 712      $ 3,371      $ 17,297      $ —        $ 21,380   

Investing activities

          

Expenditures for purchases of plant, equipment and timberlands

     (26,368     —          (20,668     —          (47,036

Proceeds from disposal plant, equipment and timberlands, net

     2,687        1,355        9        —          4,051   

Repayments from intercompany loans

     —          10,409        —          (10,409     —     

Advances of intercompany loans

     —          (15,540     —          15,540        —     

Other

     (600     —          —          —          (600
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total investing activities

     (24,281     (3,776     (20,659     5,131        (43,585

Financing activities

          

Net proceeds from indebtedness

     —          —          (18,128     —          (18,128

Payment of dividends to shareholders

     (13,935     —          —          —          (13,935

Repurchases of common stock

     (12,180     —          —          —          (12,180

Borrowings of intercompany loans

     15,540        —          —          (15,540     —     

Repayments of intercompany loans

     —          —          (10,409     10,409        —     

Payments related to share-based compensation awards and other

     (1,764     —          —          —          (1,764
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total financing activities

     (12,339     —          (28,537     (5,131     (46,007

Effect of exchange rate on cash

     —          —          (1,015     —          (1,015
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net decrease in cash

     (35,908     (405     (32,914     —          (69,227

Cash at the beginning of period

     56,216        495        66,171        —          122,882   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash at the end of period

   $ 20,308      $ 90      $ 33,257      $ —        $ 53,655