Condensed Consolidating Financial Statements

12 Months Ended

Dec. 31, 2018

Condensed Financial Information Of Parent Company Only Disclosure [Abstract]

Condensed Consolidating Financial Statements

23. 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 (loss), including comprehensive income (loss), and cash flows for the years ended December 31, 2018, 2017 and 2016 and our condensed consolidating balance sheets as of December 31, 2018 and 2017.

Condensed Consolidating Statement of Income (Loss) for the

year ended December 31, 2018

In thousands	Parent Company			Guarantors			Non Guarantors			Adjustments/ Eliminations			Consolidated
Net sales	$	-		$	124,716		$	844,005		$	(102,435	)	$	866,286
Costs of products sold		3,746			117,867			716,701			(102,435	)		735,879
Gross profit (loss)		(3,746	)		6,849			127,304			—			130,407
Selling, general and administrative
expenses		45,491			1,856			64,374			—			111,721
Gain on dispositions of plant
equipment and timberlands, net		(16	)		(3,225	)		(15	)		—			(3,256	)
Operating income (loss)		(49,221	)		8,218			62,945			—			21,942
Other non-operating
income (expense)
Interest expense		(23,527	)		(2,784	)		(2,664	)		13,366			(15,609	)
Interest income		7,070			6,238			617			(13,366	)		559
Equity in earnings of subsidiaries		53,684			51,721			—			(105,405	)		—
Other, net		(714	)		(6,862	)		7,959			—			383
Total other non-operating
income (expense)		36,513			48,313			5,912			(105,405	)		(14,667	)
Income (loss) before income taxes		(12,708	)		56,531			68,857			(105,405	)		7,275
Income tax provision (benefit)		(12,260	)		3,079			16,904			—			7,723
Income (loss) from continuing operations		(448	)		53,452			51,953			(105,405	)		(448	)
Discontinued operations:
Income (loss) from discontinued operations    before income taxes		(207,242	)		—			—			—			(207,242	)
Income tax provision (benefit)		(30,086	)		—			—			—			(30,086	)
Income (loss) from discontinued operations		(177,156	)		—			—			—			(177,156	)
Net income (loss)		(177,604	)		53,452			51,953			(105,405	)		(177,604	)
Other comprehensive income (loss)		25,533			(22,411	)		(23,214	)		45,625			25,533
Comprehensive income (loss)	$	(152,071	)	$	31,041		$	28,739		$	(59,780	)	$	(152,071	)

Condensed Consolidating Statement of Income for the

year ended December 31, 2017

In thousands	Parent Company			Guarantors			Non Guarantors			Adjustments/ Eliminations			Consolidated
Net sales	$	-		$	89,787		$	798,603		$	(88,028	)	$	800,362
Costs of products sold		598			85,196			659,007			(88,028	)		656,773
Gross profit		(598	)		4,591			139,596			—			143,589
Selling, general and administrative
expenses		45,623			2,598			62,313			—			110,534
Gain on dispositions of plant
equipment and timberlands, net		—			(188	)		(9	)		—			(197	)
Operating income (loss)		(46,221	)		2,181			77,292			—			33,252
Other non-operating
income (expense)
Interest expense		(15,939	)		(971	)		(1,801	)		5,394			(13,317	)
Interest income		599			4,947			85			(5,394	)		237
Equity in earnings of subsidiaries		18,864			60,871			—			(79,735	)		—
Other, net		2,756			(6,776	)		3,315			—			(705	)
Total other non-operating
income (expense)		6,280			58,071			1,599			(79,735	)		(13,785	)
Income (loss) before income taxes		(39,941	)		60,252			78,891			(79,735	)		19,467
Income tax provision (benefit)		(34,329	)		41,388			18,020			—			25,079
Income (loss) from continuing operations		(5,612	)		18,864			60,871			(79,735	)		(5,612	)
Discontinued operations:
Income from discontinued operations    before income taxes		19,868			—			—			—			19,868
Income tax provision		6,342			—			—			—			6,342
Income from discontinued operations		13,526			—			—			—			13,526
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	$	-		$	75,000		$	755,860		$	(69,644	)	$	761,216
Costs of products sold		240			70,991			627,880			(69,644	)		629,467
Gross profit (loss)		(240	)		4,009			127,980			—			131,749
Selling, general and administrative
Expenses		95,846			(156	)		57,463			—			153,153
Loss on dispositions of plant
equipment and timberlands, net		77			—			39			—			116
Operating income (loss)		(96,163	)		4,165			70,478			—			(21,520	)
Other non-operating
income (expense)
Interest expense		(15,464	)		(41	)		(3,060	)		4,715			(13,850	)
Interest income		687			4,177			57			(4,715	)		206
Equity in earnings of subsidiaries		61,007			58,347			—			(119,354	)		—
Other, net		(8,459	)		(3,966	)		5,007			—			(7,418	)
Total other non-operating
income (expense)		37,771			58,517			2,004			(119,354	)		(21,062	)
Income (loss) before income taxes		(58,392	)		62,682			72,482			(119,354	)		(42,582	)
Income tax provision (benefit)		(44,215	)		1,675			14,135			—			(28,405	)
Income (loss) from continuing operations		(14,177	)		61,007			58,347			—			(14,177	)
Discontinued operations:
Income from discontinued operations    before income taxes		53,388			—			—			—			53,388
Income tax provision		17,657			—			—			—			17,657
Income from discontinued operations		35,731			—			—			—			35,731
Net income		21,554			61,007			58,347			—			21,554
Other comprehensive income (loss)		(14,120	)		(25,916	)		(25,176	)		51,092			(14,120	)
Comprehensive income	$	7,434		$	35,091		$	33,171		$	51,092		$	7,434

Condensed Consolidating Balance Sheet as of December 31, 2018

In thousands	Parent Company			Guarantors		Non Guarantors		Adjustments/ Eliminations			Consolidated
Assets
Cash and cash equivalents	$	69,574		$	2,924	$	70,187	$	—		$	142,685
Other current assets		113,809			162,065		306,575		(255,848	)		326,601
Current assets held for sale		—			—		—		—			—
Plant, equipment and timberlands, net		23,943			85,854		446,247		—			556,044
Investments in subsidiaries		789,958			651,873		—		(1,441,831	)		—
Other assets		59,252			—		255,172		—			314,424
Noncurrent assets held for sale		—			—		—		—			—
Total assets	$	1,056,536		$	902,716	$	1,078,181	$	(1,697,679	)	$	1,339,754
Liabilities and Shareholders' Equity
Current liabilities	$	212,625		$	105,603	$	170,422	$	(255,848	)	$	232,802
Current liabilities held for sale		—			—		—		—			—
Long-term debt		248,906			—		152,056		—			400,962
Deferred income taxes		(11,024	)		15,891		73,784		—			78,651
Other long-term liabilities		67,131			107		21,203		—			88,441
Long-term liabilities held for sale		—			—		—		—			—
Total liabilities		517,638			121,601		417,465		(255,848	)		800,856
Shareholders’ equity		538,898			781,115		660,716		(1,441,831	)		538,898
Total liabilities and shareholders’ equity	$	1,056,536		$	902,716	$	1,078,181	$	(1,697,679	)	$	1,339,754

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 year

ended December 31, 2018

In thousands	Parent Company			Guarantors			Non Guarantors			Adjustments/ Eliminations			Consolidated
Net cash provided (used) by
Operating activities	$	(61,355	)	$	14,707		$	81,131		$	(40,435	)	$	(5,952	)
Investing activities
Expenditures for purchases of plant, equipment and timberlands		(4,799	)		(14,929	)		(22,401	)		—			(42,129	)
Proceeds from disposals of plant, equipment and timberlands, net		17			3,416			29			—			3,462
Advances of intercompany loans		(75,500	)		(8,050	)		—			83,550			—
Intercompany capital contributed		—			(315	)		—			315			—
Intercompany capital returned		—			20,000			—			(20,000	)		—
Acquisitions, net of cash acquired		—			—			(178,905	)		—			(178,905	)
Other		(68	)		—			—			—			(68	)
Total investing activities		(80,350	)		122			(201,277	)		63,865			(217,640	)
Financing activities
Net borrowings (repayments) of long-term debt		(120,200	)		(51,000	)		104,685			—			(66,515	)
Payment of dividends to shareholders		(22,760	)		—			—			—			(22,760	)
Borrowings of intercompany loans		8,050			68,500			7,000			(83,550	)		—
Intercompany capital received		—			—			315			(315	)		—
Intercompany capital returned		—			—			(20,000	)		20,000			—
Payment of intercompany dividend		—			(30,125	)		(10,310	)		40,435			—
Payments related to share-based compensation awards and other		(2,151	)		—			—			—			(2,151	)
Total financing activities		(137,061	)		(12,625	)		81,690			(23,430	)		(91,426	)
Effect of exchange rate on cash		—			—			(5,564	)		—			(5,564	)
Net increase (decrease) in cash		(278,766	)		2,204			(44,020	)		—			(320,582	)
Change in cash from discontinued operations		347,048			—			—			—			347,048
Cash at the beginning of period		1,292			720			114,207			—			116,219
Cash at the end of period	$	69,574		$	2,924		$	70,187		$	—		$	142,685

Condensed Consolidating Statement of Cash Flows for the

ended December 31, 2017

In thousands	Parent Company			Guarantors			Non Guarantors			Adjustments/ Eliminations			Consolidated
Net cash provided (used) by
Operating activities	$	(55,287	)	$	(3,506	)	$	112,027		$	—		$	53,234
Investing activities
Expenditures for purchases of plant, equipment    and timberlands		(14,301	)		(45,644	)		(20,838	)		—			(80,783	)
Proceeds from disposals of plant, equipment    and timberlands, net		1			209			8			—			218
Repayments from intercompany loans		—			12,000			—			(12,000	)		—
Advances of intercompany loans		—			(14,400	)		—			14,400			—
Intercompany capital contributed		(14,000	)		(400	)		—			14,400			—
Intercompany capital returned		—			—			—			—			—
Other		(243	)		—			—			—			(243	)
Total investing activities		(28,543	)		(48,235	)		(20,830	)		16,800			(80,808	)
Financing activities
Net borrowings (repayments) of long-term debt		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	)		—
Payments related to share-based    compensation awards and other		(472	)		—			—			—			(472	)
Total financing activities		75,648			51,000			(33,135	)		(16,800	)		76,713
Effect of exchange rate on cash		—			—			7,244			—			7,244
Net increase (decrease) in cash		(8,182	)		(741	)		65,306			—			56,383
Change in cash from discontinued operations		4,392			—			—			—			4,392
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	$	(51,923	)	$	1,275		$	81,726		$	—		$	31,078
Investing activities
Expenditures for purchases of plant, equipment    and timberlands		(5,599	)		(30,682	)		(24,881	)		—			(61,162	)
Proceeds from disposals of plant, equipment    and timberlands, net		—			—			29			—			29
Repayments from intercompany loans		—			15,601			—			(15,601	)		—
Advances of intercompany loans		—			(18,330	)		—			18,330			—
Intercompany capital contributed		(17,000	)		(500	)		—			17,500			—
Acquisitions, net of cash acquired		—			—			—			—			—
Other		(800	)		—			—			—			(800	)
Total investing activities		(23,399	)		(33,911	)		(24,852	)		20,229			(61,933	)
Financing activities
Net borrowings (repayments) of long-term debt		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 received		—			17,000			500			(17,500	)		—
Payment of intercompany dividend		—			632			(632	)		—
Proceeds from government grants		—			2,000			—			—			2,000
Payments related to share-based    compensation awards and other		(990	)		—			—			—			(990	)
Total financing activities		31,615			33,632			(51,619	)		(20,229	)		(6,601	)
Effect of exchange rate on cash		—			—			(2,063	)		—			(2,063	)
Net increase (decrease) in cash		(43,707	)		996			3,192			—			(39,519	)
Change in cash from discontinued operations		(10,341	)											(10,341	)
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