14.	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 Advance 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; 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, 2016 and 2015, our condensed consolidating balance sheets as of September 30, 2016 and December 31, 2015 and our condensed consolidating cash flows for the nine months ended September 30, 2016 and 2015.

Condensed Consolidating Statement of Income for the three months ended September 30, 2016

In thousands	Parent Company			Guarantors			Non Guarantors			Adjustments/ Eliminations			Consolidated
Net sales	$	211,761		$	18,086		$	192,214		$	(16,760	)	$	405,301
Energy and related sales, net		1,346			—			—			—			1,346
Total revenues		213,107			18,086			192,214			(16,760	)		406,647
Costs of products sold		186,297			16,732			159,208			(16,760	)		345,477
Gross profit		26,810			1,354			33,006			—			61,170
Selling, general and administrative
expenses		21,048			(25	)		14,724			—			35,747
(Gain) loss on dispositions of plant
equipment and timberlands, net		7			—			(2	)		—			5
Operating income		5,755			1,379			18,284			—			25,418
Other non-operating
income (expense)
Interest expense		(4,332	)		(1	)		(751	)		1,189			(3,895	)
Interest income		173			1,063			5			(1,189	)		52
Equity in earnings of subsidiaries		17,228			16,225			—			(33,453	)		—
Other, net		(670	)		(819	)		916			—			(573	)
Total other non-operating
income (expense)		12,399			16,468			170			(33,453	)		(4,416	)
Income before income taxes		18,154			17,847			18,454			(33,453	)		21,002
Income tax provision (benefit)		(1,447	)		619			2,229			—			1,401
Net income		19,601			17,228			16,225			(33,453	)		19,601
Other comprehensive loss		(69	)		(2,307	)		(2,462	)		4,769			(69	)
Comprehensive income	$	19,532		$	14,921		$	13,763		$	(28,684	)	$	19,532

Condensed Consolidating Statement of Income for the nine months ended September 30, 2016

In thousands	Parent Company			Guarantors			Non Guarantors			Adjustments/ Eliminations			Consolidated
Net sales	$	638,918		$	54,293		$	573,355		$	(52,634	)	$	1,213,932
Energy and related sales, net		4,013			—			—			—			4,013
Total revenues		642,931			54,293			573,355			(52,634	)		1,217,945
Costs of products sold		582,751			51,493			474,599			(52,634	)		1,056,209
Gross profit		60,180			2,800			98,756			—			161,736
Selling, general and administrative
expenses		62,115			(246	)		42,927			—			104,796
Loss on dispositions of plant
equipment and timberlands, net		11			—			20			—			31
Operating income (loss)		(1,946	)		3,046			55,809			—			56,909
Other non-operating
income (expense)
Interest expense		(13,036	)		(1	)		(2,352	)		3,425			(11,964	)
Interest income		523			3,056			50			(3,425	)		204
Equity in earnings of subsidiaries		46,485			44,050			—			(90,535	)		—
Other, net		(1,787	)		(2,220	)		3,051			—			(956	)
Total other non-operating
income (expense)		32,185			44,885			749			(90,535	)		(12,716	)
Income before income taxes		30,239			47,931			56,558			(90,535	)		44,193
Income tax provision (benefit)		(7,495	)		1,446			12,508			—			6,459
Net income		37,734			46,485			44,050			(90,535	)		37,734
Other comprehensive income (loss)		4,134			(2,691	)		(2,835	)		5,526			4,134
Comprehensive income	$	41,868		$	43,794		$	41,215		$	(85,009	)	$	41,868

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
Gain 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 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 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 Balance Sheet as of September 30, 2016

In thousands	Parent Company		Guarantors			Non Guarantors		Adjustments/ Eliminations			Consolidated
Assets
Cash and cash equivalents	$	3,658	$	418		$	46,676	$	—		$	50,752
Other current assets		222,853		265,889			270,650		(280,576	)		478,816
Plant, equipment and timberlands, net		351,301		20,918			399,234		—			771,453
Investments in subsidiaries		798,376		548,865			—		(1,347,241	)		—
Other assets		115,900		—			137,318		—			253,218
Total assets	$	1,492,088	$	836,090		$	853,878	$	(1,627,817	)	$	1,554,239
Liabilities and Shareholders' Equity
Current liabilities	$	415,957	$	36,689		$	144,048	$	(280,576	)	$	316,118
Long-term debt		269,535		1,000			97,014		—			367,549
Deferred income taxes		26,048		(288	)		47,315		—			73,075
Other long-term liabilities		88,859		313			16,636		—			105,808
Total liabilities		800,399		37,714			305,013		(280,576	)		862,550
Shareholders’ equity		691,689		798,376			548,865		(1,347,241	)		691,689
Total liabilities and
shareholders’ equity	$	1,492,088	$	836,090		$	853,878	$	(1,627,817	)	$	1,554,239

Condensed Consolidating Balance Sheet as of December 31, 2015

In thousands	Parent Company		Guarantors			Non Guarantors		Adjustments/ Eliminations			Consolidated
Assets
Cash and cash equivalents	$	59,130	$	465		$	45,709	$	—		$	105,304
Other current assets		199,690		238,515			239,367		(230,509	)		447,063
Plant, equipment and timberlands, net		286,334		1,114			411,416		—			698,864
Investments in subsidiaries		737,450		507,116			—		(1,244,566	)		—
Other assets		106,586		—			142,599		—			249,185
Total assets	$	1,389,190	$	747,210		$	839,091	$	(1,475,075	)	$	1,500,416
Liabilities and Shareholders' Equity
Current liabilities	$	363,037	$	9,725		$	162,081	$	(230,523	)	$	304,320
Long-term debt		247,075		—			106,221		—			353,296
Deferred income taxes		28,561		(79	)		47,976		—			76,458
Other long-term liabilities		87,270		—			15,825		—			103,095
Total liabilities		725,943		9,646			332,103		(230,523	)		837,169
Shareholders’ equity		663,247		737,564			506,988		(1,244,552	)		663,247
Total liabilities and
shareholders’ equity	$	1,389,190	$	747,210		$	839,091	$	(1,475,075	)	$	1,500,416

Condensed Consolidating Statement of Cash Flows for the nine months ended September 30, 2016

In thousands	Parent Company			Guarantors			Non Guarantors			Adjustments/ Eliminations			Consolidated
Net cash provided (used) by
Operating activities	$	41,753		$	3,748		$	13,936		$	—		$	59,437
Investing activities
Expenditures for purchases of plant,
equipment and timberlands		(78,187	)		(21,066	)		(17,695	)		—			(116,948	)
Proceeds from disposals of plant,
equipment and timberlands, net		41			—			14			—			55
Repayments from intercompany loans		—			11,101			—			(11,101	)		—
Advances of intercompany loans		—			(12,330	)		—			12,330			—
Intercompany capital
contributed		(17,000	)		(500	)		—			17,500			—
Other		(400	)		—			—			—			(400	)
Total investing activities		(95,546	)		(22,795	)		(17,681	)		18,729			(117,293	)
Financing activities
Net long-term borrowings		—			—			14,983			—			14,983
Payments of borrowing costs		(136	)		—			—			—			(136	)
Payment of dividends
to shareholders		(16,134	)		—			—			—			(16,134	)
Repayments of intercompany loans		—			—			(11,101	)		11,101			—
Borrowings of intercompany loans		12,330			—			—			(12,330	)		—
Intercompany capital (returned) received		—			17,000			500			(17,500	)		—
Proceeds from government grants		3,251			2,000			—			—			5,251
Payments related to share-based comp-
ensation awards and other		(990	)		—			—			—			(990	)
Total financing activities		(1,679	)		19,000			4,382			(18,729	)		2,974
Effect of exchange rate on cash		—			—			330			—			330
Net increase (decrease) in cash		(55,472	)		(47	)		967			—			(54,552	)
Cash at the beginning of period		59,130			465			45,709			—			105,304
Cash at the end of period	$	3,658		$	418		$	46,676		$	—		$	50,752

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 disposals of 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 (returned) received		—			(10,500	)		300			10,200			—
Payments related to share-based comp-
ensation 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