19.

GUARANTOR FINANCIAL STATEMENTS

Our 5.375% Notes 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., The Glatfelter Pulp Wood Company, 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 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, 2013 and 2012, our condensed consolidating balance sheets as of September 30, 2013 and December 31, 2012 and condensed consolidating cash flows for the nine months ended September 30, 2013 and 2012. 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 Statements of Income and Comprehensive Income for the

three months ended September 30, 2013

In thousands

Parent
Company

Guarantors

Non
Guarantors

Adjustments/
Eliminations

Consolidated

Net sales

225,690

12,688

230,958

(12,688

)

456,648

Energy and related sales, net

1,196

—

1,196

Total revenues

226,886

12,688

230,958

(12,688

)

457,844

Costs of products sold

201,414

10,907

192,209

(12,725

)

391,805

Gross profit

25,472

1,781

38,749

66,039

Selling, general and administrative expenses

15,716

677

18,087

—

34,480

Gains on dispositions of plant, equipment and timberlands, net

)

(282

)

—

(282

)

Operating income

9,759

1,386

20,659

31,841

Other non-operating income (expense)

Interest expense

(3,885

)

—

(903

)

—

(4,788

)

Interest income

(621

)

2,344

(1,631

)

—

Other, net

19,377

162

(587

)

(18,986

)

(34

)

Total other non-operating income (expense)

14,871

2,506

(3,121

)

(18,986

)

(4,730

)

Income (loss) before income taxes

24,630

3,892

17,538

(18,949

)

27,111

Income tax provision (benefit)

(9,489

)

(364

)

2,827

(7,008

)

Net income (loss)

34,119

4,256

14,711

(18,967

)

34,119

Other comprehensive income

17,903

6,400

(219

)

(6,181

)

17,903

Comprehensive income (loss)

52,022

10,656

14,492

(25,148

)

52,022

Condensed Consolidating Statements of Income and Comprehensive 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		(4,152	)		—			—			—			(4,152	)
Interest income		(765	)		1,779			(908	)		—			106
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		11,566			3,923			5,356			(9,279	)		11,566

Comprehensive income (loss)	$	31,665		$	6,407		$	15,418		$	(21,825	)	$	31,665

Condensed Consolidating Statements of Income and Comprehensive Income for the

nine months ended September 30, 2013

In thousands

Parent
Company

Guarantors

Non
Guarantors

Adjustments/
Eliminations

Consolidated

Net sales

669,792

40,988

618,012

(40,988

)

1,287,804

Energy and related sales – net

2,721

—

2,721

Total revenues

672,513

40,988

618,012

(40,988

)

1,290,525

Costs of products sold

614,507

35,843

516,747

(40,826

)

1,126,271

Gross profit

58,006

5,145

101,265

(162

)

164,254

Selling, general and administrative expenses

52,640

1,909

47,946

—

102,495

Gains on dispositions of plant, equipment and timberlands, net

(17

)

(357

)

—

(374

)

Operating income

5,383

3,593

53,319

(162

)

62,133

Other non-operating income (expense)

Interest expense

(11,573

)

—

(1,570

)

—

(13,143

)

Interest income

(2,031

)

5,697

(3,426

)

—

240

Other, net

45,342

283

868

(46,105

)

388

Total other non-operating income (expense)

31,738

5,980

(4,128

)

(46,105

)

(12,515

)

Income (loss) before income taxes

37,121

9,573

49,191

(46,267

)

49,618

Income tax provision (benefit)

(13,560

)

1,210

11,353

(66

)

(1,063

)

Net income (loss)

50,681

8,363

37,838

(46,201

)

50,681

Other comprehensive income

17,319

3,171

(5,078

)

1,907

17,319

Comprehensive income (loss)

68,000

11,534

32,760

(44,294

)

68,000

Condensed Consolidating Statements of Income and Comprehensive 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		(12,575	)		—			(5	)		—			(12,580	)
Interest income		(2,129	)		5,121			(2,660	)		—			332
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 (loss)	$	65,007		$	10,558		$	30,919		$	(41,477	)	$	65,007

Condensed Consolidating Balance Sheet as of

September 30, 2013

In thousands

Parent
Company

Guarantors

Non
Guarantors

Adjustments/
Eliminations

Consolidated

Assets

Cash and cash equivalents

34,505

29,042

—

63,635

Other current assets

277,452

365,428

302,465

(467,259

)

478,086

Plant, equipment and timberlands, net

244,090

5,877

464,371

—

714,338

Other assets

848,779

244,498

210,969

(1,028,846

)

275,400

Total assets

1,404,826

615,891

1,006,847

(1,496,105

)

1,531,459

Liabilities and Shareholders’ Equity

Current liabilities

409,815

56,244

264,980

(467,656

)

263,383

Long-term debt

250,000

—

503,131

(314,550

)

438,581

Deferred income taxes

32,601

1,893

77,880

(17,528

)

94,846

Other long-term liabilities

114,650

6,234

13,250

2,755

136,889

Total liabilities

807,066

64,371

859,241

(796,979

)

933,699

Shareholders’ equity

597,760

551,520

147,606

(699,126

)

597,760

Total liabilities and shareholders’ equity

1,404,826

615,891

1,006,847

(1,496,105

)

1,531,459

Condensed Consolidating Balance Sheet as of

December 31, 2012


In thousands	Parent Company		Guarantors		Non Guarantors		Adjustments/ Eliminations			Consolidated

Assets
Cash and cash equivalents	$	43,748	$	4,311	$	49,620	$	—		$	97,679
Other current assets		204,961		387,627		214,568		(385,977	)		421,179
Plant, equipment and timberlands, net		241,969		6,204		373,013		—			621,186
Other assets		787,348		160,741		45,133		(890,281	)		102,941

Total assets	$	1,278,026	$	558,883	$	682,334	$	(1,276,258	)	$	1,242,985


Liabilities and Shareholders’ Equity
Current liabilities	$	337,761	$	6,041	$	291,547	$	(384,441	)	$	250,908
Long-term debt		250,000		—		—		—			250,000
Deferred income taxes		34,604		3,691		40,972		(17,221	)		62,046
Other long-term liabilities		115,982		10,602		11,093		2,675			140,352

Total liabilities		738,347		20,334		343,612		(398,987	)		703,306
Shareholders’ equity		539,679		538,549		338,722		(877,271	)		539,679

Total liabilities and shareholders’ equity	$	1,278,026	$	558,883	$	682,334	$	(1,276,258	)	$	1,242,985

Condensed Consolidating Statement of Cash Flows for the nine

months ended September 30, 2013


In thousands	Parent Company			Guarantors			Non Guarantors			Adjustments/ Eliminations			Consolidated
Net cash provided (used) by
Operating activities	$	36,772		$	(4,431	)	$	63,123		$	229		$	95,693
Investing activities
Expenditures for plant, equipment and timberlands		(32,007	)		(68	)		(53,805	)		(209	)		(86,089	)
Proceeds from disposals of plant, equipment and timberlands, net		22			357			—			—			379
Repayments from (advances of) intercompany loans, net and other		820			(810	)		—			(10	)		—
Intercompany capital contributed		—			(91	)		—			91			—
Acquisitions, net of cash acquired		—			—			(210,911	)		—			(210,911	)
Other		(325	)		—			—			—			(325	)

Total investing activities		(31,490	)		(612	)		(264,716	)		(128	)		(296,946	)
Financing activities
Net proceeds from indebtedness		—			—			182,230			—			182,230
Payments of note offering costs		(160	)		—			(259	)		—			(419	)
Payment of dividends to shareholders		(12,603	)		—			—			—			(12,603	)
(Repayments) borrowings of intercompany loans, net		570			820			(1,380	)		(10	)		—
Intercompany capital received		—			—			91			(91	)		—
Payments for share-based compensation awards and other		(2,332	)		—			—			—			(2,332	)

Total financing activities		(14,525	)		820			180,682			(101	)		166,876
Effect of exchange rate on cash		—			—			333			—			333

Net decrease in cash		(9,243	)		(4,223	)		(20,578	)		—			(34,044	)
Cash at the beginning of period		43,748			4,311			49,620			—			97,679

Cash at the end of period	$	34,505		$	88		$	29,042		$	—		$	63,635

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 disposals of plant, equipment and timberlands, net		654			8,185			36			—			8,875
Repayments from (advances of) intercompany loans, net		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) proceeds from 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	)		(7,400.0	)		(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