22.	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., Glatfelter Advance Materials N.A., Inc., 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 our condensed consolidating statements of income, including comprehensive income and cash flows for the years ended December 31, 2017, 2016 and 2015 and our condensed consolidating balance sheets as of December 31, 2017 and 2016.

Condensed Consolidating Statement of Income for the

year ended December 31, 2017

In thousands	Parent Company			Guarantors			Non Guarantors			Adjustments/ Eliminations			Consolidated
Net sales	$	790,933		$	89,787		$	798,603		$	(88,026	)	$	1,591,297
Energy and related sales, net		5,126			—			—			—			5,126
Total revenues		796,059			89,787			798,603			(88,026	)		1,596,423
Costs of products sold		747,736			85,196			659,007			(88,026	)		1,403,913
Gross profit		48,323			4,591			139,596			—			192,510
Selling, general and administrative
expenses		69,483			2,598			62,313			—			134,394
(Gain) loss on dispositions of plant
equipment and timberlands, net		223			(188	)		(9	)		—			26
Operating income (loss)		(21,383	)		2,181			77,292			—			58,090
Other non-operating
income (expense)
Interest expense		(20,394	)		(971	)		(1,801	)		5,394			(17,772	)
Interest income		599			4,947			85			(5,394	)		237
Equity in earnings of subsidiaries		18,864			60,871			—			(79,735	)		—
Other, net		2,241			(6,776	)		3,315			—			(1,220	)
Total other non-operating
income (expense)		1,310			58,071			1,599			(79,735	)		(18,755	)
Income (loss) before income taxes		(20,073	)		60,252			78,891			(79,735	)		39,335
Income tax provision (benefit)		(27,987	)		41,388			18,020			—			31,421
Net income		7,914			18,864			60,871			(79,735	)		7,914
Other comprehensive income		63,931			52,290			51,828			(104,118	)		63,931
Comprehensive income	$	71,845		$	71,154		$	112,699		$	(183,853	)	$	71,845

Condensed Consolidating Statement of Income for the

year ended December 31, 2016

In thousands	Parent Company			Guarantors			Non Guarantors			Adjustments/ Eliminations			Consolidated
Net sales	$	843,582		$	75,000		$	755,860		$	(69,645	)	$	1,604,797
Energy and related sales, net		6,141			—			—			—			6,141
Total revenues		849,723			75,000			755,860			(69,645	)		1,610,938
Costs of products sold		763,109			70,991			627,880			(69,645	)		1,392,335
Gross profit		86,614			4,009			127,980			—			218,603
Selling, general and administrative
expenses		133,387			(156	)		57,463			—			190,694
Loss on dispositions of plant
equipment and timberlands, net		177			—			39			—			216
Operating income (loss)		(46,950	)		4,165			70,478			—			27,693
Other non-operating
income (expense)
Interest expense		(17,436	)		(41	)		(3,060	)		4,715			(15,822	)
Interest income		687			4,177			57			(4,715	)		206
Equity in earnings of subsidiaries		61,007			58,347			—			(119,354	)		—
Other, net		(2,312	)		(3,966	)		5,007			—			(1,271	)
Total other non-operating
income (expense)		41,946			58,517			2,004			(119,354	)		(16,887	)
Income (loss) before income taxes		(5,004	)		62,682			72,482			(119,354	)		10,806
Income tax provision (benefit)		(26,558	)		1,675			14,135			—			(10,748	)
Net income		21,554			61,007			58,347			(119,354	)		21,554
Other comprehensive loss		(14,120	)		(25,916	)		(25,176	)		51,092			(14,120	)
Comprehensive income	$	7,434		$	35,091		$	33,171		$	(68,262	)	$	7,434

Condensed Consolidating Statement of Income for the

year ended December 31, 2015

In thousands	Parent Company			Guarantors			Non Guarantors			Adjustments/ Eliminations			Consolidated
Net sales	$	875,026		$	84,704		$	779,380		$	(78,026	)	$	1,661,084
Energy and related sales, net		5,664			—			—			—			5,664
Total revenues		880,690			84,704			779,380			(78,026	)		1,666,748
Costs of products sold		811,329			80,455			650,025			(78,026	)		1,463,783
Gross profit		69,361			4,249			129,355			—			202,965
Selling, general and administrative
expenses		71,751			821			55,134			—			127,706
Gain on dispositions of plant
equipment and timberlands, net		(19,720	)		(1,183	)		(210	)		—			(21,113	)
Operating income		17,330			4,611			74,431			—			96,372
Other non-operating
income (expense)
Interest expense		(18,147	)		—			(36,859	)		37,542			(17,464	)
Interest income		673			37,127			26			(37,543	)		283
Equity in earnings of subsidiaries		61,946			24,737			—			(86,683	)		—
Other, net		(3,389	)		(1,471	)		4,245			—			(615	)
Total other non-operating
income (expense)		41,083			60,393			(32,588	)		(86,684	)		(17,796	)
Income before income taxes		58,413			65,004			41,843			(86,684	)		78,576
Income tax provision (benefit)		(6,162	)		2,922			17,241			—			14,001
Net income		64,575			62,082			24,602			(86,684	)		64,575
Other comprehensive income (loss)		(35,616	)		(41,010	)		29,680			11,330			(35,616	)
Comprehensive income	$	28,959		$	21,072		$	54,282		$	(75,354	)	$	28,959

Condensed Consolidating Balance Sheet as of December 31, 2017

In thousands	Parent Company		Guarantors		Non Guarantors		Adjustments/ Eliminations			Consolidated
Assets
Cash and cash equivalents	$	1,292	$	720	$	114,207	$	—		$	116,219
Other current assets		249,293		217,822		279,626		(277,989	)		468,752
Plant, equipment and timberlands, net		375,231		80,992		409,520		—			865,743
Investments in subsidiaries		829,895		653,128		—		(1,483,023	)		—
Other assets		139,552		—		140,529		—			280,081
Total assets	$	1,595,263	$	952,662	$	943,882	$	(1,761,012	)	$	1,730,795
Liabilities and Shareholders' Equity
Current liabilities	$	402,787	$	54,640	$	167,738	$	(277,989	)	$	347,176
Long-term debt		368,496		51,000		50,602		—			470,098
Deferred income taxes		14,081		16,814		52,676		—			83,571
Other long-term liabilities		100,971		313		19,738		—			121,022
Total liabilities		886,335		122,767		290,754		(277,989	)		1,021,867
Shareholders’ equity		708,928		829,895		653,128		(1,483,023	)		708,928
Total liabilities and shareholders’ equity	$	1,595,263	$	952,662	$	943,882	$	(1,761,012	)	$	1,730,795

Condensed Consolidating Balance Sheet as of December 31, 2016

In thousands	Parent Company		Guarantors			Non Guarantors		Adjustments/ Eliminations			Consolidated
Assets
Cash and cash equivalents	$	5,082	$	1,461		$	48,901	$	—		$	55,444
Other current assets		206,002		256,289			242,187		(265,663	)		438,815
Plant, equipment and timberlands, net		360,521		31,455			383,922		—			775,898
Investments in subsidiaries		789,565		540,029			—		(1,329,594	)		—
Other assets		123,010		—			128,092		—			251,102
Total assets	$	1,484,180	$	829,234		$	803,102	$	(1,595,257	)	$	1,521,259
Liabilities and Shareholders' Equity
Current liabilities	$	426,628	$	26,085		$	135,961	$	(265,663	)	$	323,011
Long-term debt		283,686		14,000			65,961		—			363,647
Deferred income taxes		10,221		(729	)		45,503		—			54,995
Other long-term liabilities		109,819		313			15,648		—			125,780
Total liabilities		830,354		39,669			263,073		(265,663	)		867,433
Shareholders’ equity		653,826		789,565			540,029		(1,329,594	)		653,826
Total liabilities and shareholders’ equity	$	1,484,180	$	829,234		$	803,102	$	(1,595,257	)	$	1,521,259

Condensed Consolidating Statement of Cash Flows for the year

ended December 31, 2017

In thousands	Parent Company			Guarantors			Non Guarantors			Adjustments/ Eliminations			Consolidated

Net cash provided (used) by
Operating activities	$	(4,259	)	$	(3,506	)	$	112,027		$	—		$	104,262
Investing activities
Expenditures for purchases of plant, equipment and timberlands		(65,822	)		(45,644	)		(20,838	)		—			(132,304	)
Proceeds from disposals of plant, equipment and timberlands, net		11			209			8			—			228
Repayments from intercompany loans		—			12,000			—			(12,000	)		—
Advances of intercompany loans		—			(14,400	)		—			14,400			—
Intercompany capital contributed		(14,000	)		(400	)		—			14,400			—
Acquisitions, net of cash acquired		—			—			—			—			—
Other		(243	)		—			—			—			(243	)
Total investing activities		(80,054	)		(48,235	)		(20,830	)		16,800			(132,319	)
Financing activities
Net long-term borrowings		84,200			37,000			(21,535	)		—			99,665
Payment of dividends to shareholders		(22,480	)		—			—			—			(22,480	)
Repayments of intercompany loans		—			—			(12,000	)		12,000			—
Borrowings of intercompany loans		14,400			—			—			(14,400	)		—
Intercompany capital received		—			14,000			400			(14,400	)		—
Proceeds from government grants		4,875			—			—			—			4,875
Payments related to share-based compensation awards and other		(472	)		—			—			—			(472	)
Total financing activities		80,523			51,000			(33,135	)		(16,800	)		81,588
Effect of exchange rate on cash		—			—			7,244			—			7,244
Net increase (decrease) in cash		(3,790	)		(741	)		65,306			—			60,775
Cash at the beginning of period		5,082			1,461			48,901			—			55,444
Cash at the end of period	$	1,292		$	720		$	114,207		$	—		$	116,219

Condensed Consolidating Statement of Cash Flows for the year

ended December 31, 2016

In thousands	Parent Company			Guarantors			Non Guarantors			Adjustments/ Eliminations			Consolidated
Net cash provided (used) by
Operating activities	$	33,109		$	1,275		$	81,726		$	—		$	116,110
Investing activities
Expenditures for purchases of plant, equipment and timberlands		(104,595	)		(30,682	)		(24,881	)		—			(160,158	)
Proceeds from disposals of plant, equipment and timberlands, net		41			—			29			—			70
Repayments from intercompany loans		—			15,601			—			(15,601	)		—
Advances of intercompany loans		—			(18,330	)		—			18,330			—
Intercompany capital (contributed) returned		(17,000	)		(500	)		—			17,500			—
Other		(800	)		—			—			—			(800	)
Total investing activities		(122,354	)		(33,911	)		(24,852	)		20,229			(160,888	)
Financing activities
Net repayments of indebtedness		36,000			14,000			(35,886	)		—			14,114
Payments of borrowing costs		(136	)		—			—			—			(136	)
Payment of dividends to shareholders		(21,589	)		—			—			—			(21,589	)
Repayments of intercompany loans		—			—			(15,601	)		15,601			—
Borrowings of intercompany loans		18,330			—			—			(18,330	)		—
Intercompany capital (returned) received		—			17,000			500			(17,500	)		—
Payment of intercompany dividend		—			632			(632	)		—			—
Proceeds from government grants		3,582			2,000			—			—			5,582
Payments related to share-based compensation awards and other		(990	)		—			—			—			(990	)
Total financing activities		35,197			33,632			(51,619	)		(20,229	)		(3,019	)
Effect of exchange rate on cash		—			—			(2,063	)		—			(2,063	)
Net increase (decrease) in cash		(54,048	)		996			3,192			—			(49,860	)
Cash at the beginning of period		59,130			465			45,709			—			105,304
Cash at the end of period	$	5,082		$	1,461		$	48,901		$	—		$	55,444

Condensed Consolidating Statement of Cash Flows for the year

ended December 31, 2015

In thousands	Parent Company			Guarantors			Non Guarantors			Adjustments/ Eliminations			Consolidated
Net cash provided (used) by
Operating activities	$	34,391		$	627		$	98,725		$	—		$	133,743
Investing activities
Expenditures for plant, equipment and timberlands		(65,265	)		(109	)		(34,515	)		—			(99,889	)
Proceeds from disposal plant, equipment and timberlands, net		22,741			1,213			505			—			24,459
Repayments from intercompany loans		—			57,855			—			(57,855	)		—
Advances of intercompany loans		—			(49,230	)		—			49,230			—
Intercompany capital contributed, net		10,100			(300	)		—			(9,800	)		—
Acquisitions, net of cash acquired		—			—			(224	)		—			(224	)
Other		(1,600	)		—			—			—			(1,600	)
Total investing activities		(34,024	)		9,429			(34,234	)		(18,425	)		(77,254	)
Financing activities
Net proceeds from indebtedness		—			—			(24,650	)		—			(24,650	)
Payments of note offering costs		(1,329	)		—			—			—			(1,329	)
Payment of dividends to shareholders		(20,443	)		—			—			—			(20,443	)
Repayments of intercompany loans		(9,158	)		—			(48,697	)		57,855			—
Borrowings of intercompany loans		49,230			—			—			(49,230	)		—
Intercompany capital (returned) received		—			(10,100	)		300			9,800			—
Proceeds from government grants		421			—			—			—			421
Payments related to share-based compensation awards and other		(2,166	)		—			151			—			(2,015	)
Total financing activities		16,555			(10,100	)		(72,896	)		18,425			(48,016	)
Effect of exchange rate on cash		—			—			(3,006	)		—			(3,006	)
Net increase (decrease) in cash		16,922			(44	)		(11,411	)		—			5,467
Cash at the beginning of period		42,208			509			57,120			—			99,837
Cash at the end of period	$	59,130		$	465		$	45,709		$	—		$	105,304