19.	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; or (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, for the three months and nine months ended September 30, 2018 and 2017, our condensed consolidating balance sheets as of September 30, 2018 and December 31, 2017, and our condensed consolidating cash flows for the nine months ended September 30, 2018 and 2017.

Condensed Consolidating Statement of Income for the three months ended September 30, 2018

In thousands	Parent Company			Guarantors			Non Guarantors			Adjustments/ Eliminations			Consolidated
Net sales	$	-		$	35,285		$	203,910		$	(29,340	)	$	209,855
Costs of products sold		945			32,727			175,651			(29,340	)		179,983
Gross profit (loss)		(945	)		2,558			28,259			—			29,872
Selling, general and administrative
expenses		10,557			43			15,199			—			25,799
Gain on dispositions of plant
equipment and timberlands, net		—			(249	)		—			—			(249	)
Operating income (loss)		(11,502	)		2,764			13,060			—			4,322
Other non-operating
income (expense)
Interest expense		(4,439	)		(629	)		(446	)		1,549			(3,965	)
Interest income		134			1,528			34			(1,549	)		147
Equity in earnings of subsidiaries		13,217			10,783			—			(24,000	)		—
Other, net		341			1,077			835			—			2,253
Total other non-operating
income (expense)		9,253			12,759			423			(24,000	)		(1,565	)
Income (loss) from continuing operations before income taxes		(2,249	)		15,523			13,483			(24,000	)		2,757
Income tax provision (benefit)		(1,544	)		2,349			2,657			—			3,462
Income (loss) from continuing operations		(705	)		13,174			10,826			(24,000	)		(705	)

Discontinued operations:
Income (loss) from discontinued operations before income taxes		(114,656	)		—			—			—			(114,656	)
Income tax provision (benefit)		(19,530	)		—			—			—			(19,530	)
Income (loss) from discontinued operations		(95,126	)		—			—			—			(95,126	)
Net income (loss)		(95,831	)		13,174			10,826			(24,000	)		(95,831	)
Other comprehensive income (loss)		19,971			(1,767	)		(3,187	)		4,954			19,971
Comprehensive income (loss)	$	(75,860	)	$	11,407		$	7,639		$	(19,046	)	$	(75,860	)

Condensed Consolidating Statement of Income for the nine months ended September 30, 2018

In thousands	Parent Company			Guarantors			Non Guarantors			Adjustments/ Eliminations			Consolidated
Net sales	$	-		$	87,617		$	628,624		$	(79,435	)	$	636,806
Costs of products sold		4,254			82,089			530,165			(79,435	)		537,073
Gross profit (loss)		(4,254	)		5,528			98,459			—			99,733
Selling, general and administrative
expenses		35,457			1,716			44,742			—			81,915
(Gain) loss on dispositions of plant
equipment and timberlands, net		(17	)		(1,929	)		7			—			(1,939	)
Operating income (loss)		(39,694	)		5,741			53,710			—			19,757
Other non-operating
income (expense)
Interest expense		(12,773	)		(1,670	)		(1,320	)		4,526			(11,237	)
Interest income		413			4,219			121			(4,526	)		227
Equity in earnings of subsidiaries		49,421			45,745			—			(95,166	)
Other, net		(1,634	)		(1,657	)		4,422			—			1,131
Total other non-operating
income (expense)		35,427			46,637			3,223			(95,166	)		(9,879	)
Income (loss) before income taxes		(4,267	)		52,378			56,933			(95,166	)		9,878
Income tax provision (benefit)		(7,108	)		3,022			11,123			—			7,037
Income (loss) from continuing operations		2,841			49,356			45,810			(95,166	)		2,841

Discontinued operations:
Income (loss) from discontinued operations before income taxes		(128,714	)		—			—			—			(128,714	)
Income tax provision (benefit)		(28,361	)		—			—			—			(28,361	)
Income (loss) from discontinued operations		(100,353	)		—			—			—			(100,353	)
Net income (loss)		(97,512	)		49,356			45,810			(95,166	)		(97,512	)
Other comprehensive income (loss)		8,338			(19,318	)		(19,301	)		38,619			8,338
Comprehensive income (loss)	$	(89,174	)	$	30,038		$	26,509		$	(56,547	)	$	(89,174	)

Condensed Consolidating Statement of Income for the three months ended September 30, 2017

In thousands	Parent Company			Guarantors			Non Guarantors			Adjustments/ Eliminations			Consolidated
Net sales	$	-		$	20,588		$	211,331		$	(21,799	)	$	210,120
Costs of products sold		1,596			19,525			173,423			(21,799	)		172,745
Gross profit		(1,596	)		1,063			37,908			—			37,375
Selling, general and administrative
Expenses		12,414			536			14,133			—			27,083
(Gain) loss on dispositions of plant
equipment and timberlands, net		1			(114	)		20			—			(93	)
Operating income (loss)		(14,011	)		641			23,755			—			10,385
Other non-operating
income (expense)
Interest expense		(4,018	)		(300	)		(436	)		1,430			(3,324	)
Interest income		160			1,316			5			(1,430	)		51
Equity in earnings of subsidiaries		17,880			18,096			—			(35,976	)		—
Other, net		589			(1,920	)		944			—			(387	)
Total other non-operating
income (expense)		14,611			17,192			513			(35,976	)		(3,660	)
Income (loss) from continuing operations before income taxes		600			17,833			24,268			(35,976	)		6,725
Income tax provision (benefit)		(4,445	)		(47	)		6,172			—			1,680
Income (loss) from continuing operations		5,045			17,880			18,096			(35,976	)		5,045

Discontinued operations:
Income from discontinued operations before income taxes		9,661			—			—			—			9,661
Income tax provision		2,601			—			—			—			2,601
Income from discontinued operations		7,060			—			—			—			7,060
Net income		12,105			17,880			18,096			(35,976	)		12,105
Other comprehensive income		17,330			14,812			14,959			(29,771	)		17,330
Comprehensive income	$	29,435		$	32,692		$	33,055		$	(65,747	)	$	29,435

Condensed Consolidating Statement of Income for the nine months ended September 30, 2017

In thousands	Parent Company			Guarantors			Non Guarantors			Adjustments/ Eliminations			Consolidated
Net sales	$	-		$	63,173		$	591,926		$	(64,064	)	$	591,035
Costs of products sold		1,223			60,158			488,466			(64,064	)		485,783
Gross profit		(1,223	)		3,015			103,460			—			105,252
Selling, general and administrative
Expenses		37,022			846			43,662			—			81,530
(Gain) loss on dispositions of plant
equipment and timberlands, net		—			(188	)		20			—			(168	)
Operating income (loss)		(38,245	)		2,357			59,778			—			23,890
Other non-operating
income (expense)
Interest expense		(12,078	)		(619	)		(1,377	)		4,049			(10,025	)
Interest income		451			3,714			93			(4,049	)		209
Equity in earnings of subsidiaries		50,298			51,197			—			(101,495	)		—
Other, net		1,873			(6,445	)		4,014			—			(558	)
Total other non-operating
income (expense)		40,544			47,847			2,730			(101,495	)		(10,374	)
Income before income taxes		2,299			50,204			62,508			(101,495	)		13,516
Income tax provision (benefit)		(6,788	)		(94	)		11,311			—			4,429
Income (loss) from continuing operations		9,087			50,298			51,197			(101,495	)		9,087

Discontinued operations:
Income from discontinued operations before income taxes		14,422			—			—			—			14,422
Income tax provision		5,515			—			—			—			5,515
Income from discontinued operations		8,907			—			—			—			8,907
Net income		17,994			50,298			51,197			(101,495	)		17,994
Other comprehensive income		50,855			43,878			43,344			(87,222	)		50,855
Comprehensive income	$	68,849		$	94,176		$	94,541		$	(188,717	)	$	68,849

Condensed Consolidating Balance Sheet as of September 30, 2018

In thousands	Parent Company			Guarantors		Non Guarantors		Adjustments/ Eliminations			Consolidated
Assets
Cash and cash equivalents	$	1,735		$	3,682	$	228,653	$	—		$	234,070
Other current assets		87,635			273,697		301,068		(343,585	)		318,815
Current assets held for sale		188,322			—		—		—			188,322
Plant, equipment and timberlands, net		24,618			86,722		386,228		—			497,568
Investments in subsidiaries		848,832			659,978		—		(1,508,810	)		—
Other assets		99,394			—		140,875		—			240,269
Noncurrent assets held for sale		271,731			—		—		—			271,731
Total assets	$	1,522,267		$	1,024,079	$	1,056,824	$	(1,852,395	)	$	1,750,775
Liabilities and Shareholders' Equity
Current liabilities	$	312,663		$	97,154	$	154,003	$	(343,585	)	$	220,235
Current liabilities held for sale		110,163			—		—		—			110,163
Long-term debt		406,962			68,000		160,444		—			635,406
Deferred income taxes		(14,346	)		18,293		52,652		—			56,599
Other long-term liabilities		59,399			654		20,893		—			80,946
Long-term liabilities held for sale		40,480			—		—		—			40,480
Total liabilities		915,321			184,101		387,992		(343,585	)		1,143,829
Shareholders’ equity		606,946			839,978		668,832		(1,508,810	)		606,946
Total liabilities and shareholders’ equity	$	1,522,267		$	1,024,079	$	1,056,824	$	(1,852,395	)	$	1,750,775

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		59,341		217,822		279,626		(277,989	)		278,800
Current assets held for sale		189,952		—		—		—		$	189,952
Plant, equipment and timberlands, net		24,671		80,992		409,520		—			515,183
Investments in subsidiaries		829,895		653,128		—		(1,483,023	)		—
Other assets		82,201		—		140,529		—			222,730
Noncurrent assets held for sale		407,911		—		—		—			407,911
Total assets	$	1,595,263	$	952,662	$	943,882	$	(1,761,012	)	$	1,730,795
Liabilities and Shareholders' Equity
Current liabilities	$	289,967	$	54,640	$	167,738	$	(277,989	)	$	234,356
Current liabilities held for sale		112,820		—		—		—			112,820
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		59,598		313		19,738		—			79,649
Long-term liabilities held for sale		41,373		—		—		—			41,373
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 Statement of Cash Flows for the nine months ended September 30, 2018

In thousands	Parent Company			Guarantors			Non Guarantors			Adjustments/ Eliminations			Consolidated

Net cash provided (used) by
Operating activities	$	(40,899	)	$	3,350		$	41,337		$	(20,000	)	$	(16,212	)
Investing activities
Expenditures for purchases of plant, equipment and timberlands		(3,655	)		(13,834	)		(14,666	)		—			(32,155	)
Proceeds from disposals of plant, equipment and timberlands, net		17			2,046			10			—			2,073
Advances of intercompany loans		—			(5,285	)		—			5,285			—
Intercompany capital contributed		—			(315	)		—			315			—
Intercompany capital returned		—			20,000			—			(20,000	)		—
Other		(68	)		—			—			—			(68	)
Total investing activities		(3,706	)		2,612			(14,656	)		(14,400	)		(30,150	)
Financing activities
Net borrowings of long-term debt		38,007			17,000			111,381			—			166,388
Payment of dividends to shareholders		(17,064	)		—			—			—			(17,064	)
Borrowings of intercompany loans		5,285			—			—			(5,285	)		—
Intercompany capital received		—			—			315			(315	)		—
Intercompany capital returned		—			—			(20,000	)		20,000			—
Payment of intercompany dividend		—			(20,000	)		—			20,000			—
Payments related to share-based compensation awards and other		(1,008	)		—			—			—			(1,008	)
Total financing activities		25,220			(3,000	)		91,696			34,400			148,316
Effect of exchange rate on cash		—			—			(3,931	)		—			(3,931	)
Net increase (decrease) in cash		(19,385	)		2,962			114,446			—			98,023
Change in cash from discontinued operations		19,828			—			—			—			19,828
Cash at the beginning of period		1,292			720			114,207			—			116,219
Cash at the end of period	$	1,735		$	3,682		$	228,653		$	0		$	234,070

Condensed Consolidating Statement of Cash Flows for the nine months ended September 30, 2017

In thousands	Parent Company			Guarantors			Non Guarantors			Adjustments/ Eliminations			Consolidated
Net cash provided (used) by
Operating activities	$	(49,361	)	$	(3,241	)	$	73,103		$	-		$	20,501
Investing activities
Expenditures for purchases of plant, equipment and timberlands		(11,221	)		(32,847	)		(13,910	)		—			(57,978	)
Proceeds from disposals of plant, equipment and timberlands, net		—			209			—			—			209
Repayments from intercompany loans		—			12,000			—			(12,000	)		—
Advances of intercompany loans		—			(13,500	)		—			13,500			—
Intercompany capital contributed		(2,000	)		(400	)		—			2,400			—
Intercompany capital returned		—			—			—			—			—
Other		(100	)		—			—			—			(100	)
Total investing activities		(13,321	)		(34,538	)		(13,910	)		3,900			(57,869	)
Financing activities
Net borrowings (repayments) of long-term debt		73,298			35,000			(18,711	)		—			89,587
Payment of dividends to shareholders		(16,805	)		—			—			—			(16,805	)
Repayments of intercompany loans		—			—			(12,000	)		12,000			—
Borrowings of intercompany loans		13,500			—			—			(13,500	)		—
Intercompany capital received		—			2,000			400			(2,400	)		—
Payments related to share-based compensation awards and other		(128	)		—			—			—			(128	)
Total financing activities		69,865			37,000			(30,311	)		(3,900	)		72,654
Effect of exchange rate on cash		—			—			5,448			—			5,448
Net increase (decrease) in cash		7,183			(779	)		34,330			—			40,734
Change in cash from discontinued operations		(11,891	)		—			—			—			(11,891	)
Cash at the beginning of period		5,082			1,461			48,901			—			55,444
Cash at the end of period	$	374		$	682		$	83,231		$	0		$	84,287