false 2020 Q2 0000041719 --12-31 Large Accelerated Filer 2024-02-29 2024-02-29 2022-06-30 2023-03-31 2023-06-30 2025-09-30 P2Y P1Y us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember 2016 2015 2015 2012 2016 2018 2018 2016 2019 P66M P34M 2023-03-31 2022-06-30 2025-09-30 2023-06-30 2025-09-30 us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember us-gaap:ProductMember 0000041719 2020-01-01 2020-06-30 xbrli:shares 0000041719 2020-07-24 iso4217:USD 0000041719 2020-04-01 2020-06-30 0000041719 2019-04-01 2019-06-30 0000041719 2019-01-01 2019-06-30 iso4217:USD xbrli:shares 0000041719 2020-06-30 0000041719 2019-12-31 0000041719 2018-12-31 0000041719 2019-06-30 xbrli:pure 0000041719 glt:FivePointThreeSevenFivePercentNotesDueOctoberTwoThousandTwentyMember 2020-06-30 0000041719 us-gaap:CommonStockMember 2020-03-31 0000041719 us-gaap:AdditionalPaidInCapitalMember 2020-03-31 0000041719 us-gaap:RetainedEarningsMember 2020-03-31 0000041719 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-03-31 0000041719 us-gaap:TreasuryStockMember 2020-03-31 0000041719 2020-03-31 0000041719 us-gaap:RetainedEarningsMember 2020-04-01 2020-06-30 0000041719 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-04-01 2020-06-30 0000041719 us-gaap:AdditionalPaidInCapitalMember 2020-04-01 2020-06-30 0000041719 us-gaap:TreasuryStockMember 2020-04-01 2020-06-30 0000041719 us-gaap:CommonStockMember 2020-06-30 0000041719 us-gaap:AdditionalPaidInCapitalMember 2020-06-30 0000041719 us-gaap:RetainedEarningsMember 2020-06-30 0000041719 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-06-30 0000041719 us-gaap:TreasuryStockMember 2020-06-30 0000041719 us-gaap:CommonStockMember 2019-03-31 0000041719 us-gaap:AdditionalPaidInCapitalMember 2019-03-31 0000041719 us-gaap:RetainedEarningsMember 2019-03-31 0000041719 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-31 0000041719 us-gaap:TreasuryStockMember 2019-03-31 0000041719 2019-03-31 0000041719 us-gaap:RetainedEarningsMember 2019-04-01 2019-06-30 0000041719 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-04-01 2019-06-30 0000041719 us-gaap:AdditionalPaidInCapitalMember 2019-04-01 2019-06-30 0000041719 us-gaap:TreasuryStockMember 2019-04-01 2019-06-30 0000041719 us-gaap:CommonStockMember 2019-06-30 0000041719 us-gaap:AdditionalPaidInCapitalMember 2019-06-30 0000041719 us-gaap:RetainedEarningsMember 2019-06-30 0000041719 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-06-30 0000041719 us-gaap:TreasuryStockMember 2019-06-30 0000041719 us-gaap:CommonStockMember 2019-12-31 0000041719 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0000041719 us-gaap:RetainedEarningsMember 2019-12-31 0000041719 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-31 0000041719 us-gaap:TreasuryStockMember 2019-12-31 0000041719 us-gaap:RetainedEarningsMember 2020-01-01 2020-06-30 0000041719 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-01-01 2020-06-30 0000041719 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-06-30 0000041719 us-gaap:TreasuryStockMember 2020-01-01 2020-06-30 0000041719 us-gaap:CommonStockMember 2018-12-31 0000041719 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0000041719 us-gaap:RetainedEarningsMember 2018-12-31 0000041719 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0000041719 us-gaap:TreasuryStockMember 2018-12-31 0000041719 us-gaap:RetainedEarningsMember 2019-01-01 2019-06-30 0000041719 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-06-30 0000041719 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-06-30 0000041719 us-gaap:TreasuryStockMember 2019-01-01 2019-06-30 0000041719 glt:RestrictedStockUnitsAndPerformanceShareAwardsMember 2020-01-01 2020-06-30 0000041719 us-gaap:StockAppreciationRightsSARSMember 2020-01-01 2020-06-30 0000041719 us-gaap:DesignatedAsHedgingInstrumentMember 2020-01-01 2020-06-30 0000041719 us-gaap:NondesignatedMember 2020-01-01 2020-06-30 0000041719 glt:CompositeFibersMember 2020-04-01 2020-06-30 0000041719 glt:CompositeFibersMember 2020-01-01 2020-06-30 0000041719 glt:CompositeFibersMember us-gaap:FoodAndBeverageMember 2020-04-01 2020-06-30 0000041719 glt:CompositeFibersMember us-gaap:FoodAndBeverageMember 2019-04-01 2019-06-30 0000041719 glt:CompositeFibersMember us-gaap:FoodAndBeverageMember 2020-01-01 2020-06-30 0000041719 glt:CompositeFibersMember us-gaap:FoodAndBeverageMember 2019-01-01 2019-06-30 0000041719 glt:CompositeFibersMember glt:WallcoveringMember 2020-04-01 2020-06-30 0000041719 glt:CompositeFibersMember glt:WallcoveringMember 2019-04-01 2019-06-30 0000041719 glt:CompositeFibersMember glt:WallcoveringMember 2020-01-01 2020-06-30 0000041719 glt:CompositeFibersMember glt:WallcoveringMember 2019-01-01 2019-06-30 0000041719 glt:CompositeFibersMember glt:TechnicalSpecialtiesMember 2020-04-01 2020-06-30 0000041719 glt:CompositeFibersMember glt:TechnicalSpecialtiesMember 2019-04-01 2019-06-30 0000041719 glt:CompositeFibersMember glt:TechnicalSpecialtiesMember 2020-01-01 2020-06-30 0000041719 glt:CompositeFibersMember glt:TechnicalSpecialtiesMember 2019-01-01 2019-06-30 0000041719 glt:CompositeFibersMember glt:CompositeLaminatesMember 2020-04-01 2020-06-30 0000041719 glt:CompositeFibersMember glt:CompositeLaminatesMember 2019-04-01 2019-06-30 0000041719 glt:CompositeFibersMember glt:CompositeLaminatesMember 2020-01-01 2020-06-30 0000041719 glt:CompositeFibersMember glt:CompositeLaminatesMember 2019-01-01 2019-06-30 0000041719 glt:CompositeFibersMember glt:MetallizedMember 2020-04-01 2020-06-30 0000041719 glt:CompositeFibersMember glt:MetallizedMember 2019-04-01 2019-06-30 0000041719 glt:CompositeFibersMember glt:MetallizedMember 2020-01-01 2020-06-30 0000041719 glt:CompositeFibersMember glt:MetallizedMember 2019-01-01 2019-06-30 0000041719 glt:CompositeFibersMember 2019-04-01 2019-06-30 0000041719 glt:CompositeFibersMember 2019-01-01 2019-06-30 0000041719 glt:AirlaidMaterialsMember glt:FeminineHygieneMember 2020-04-01 2020-06-30 0000041719 glt:AirlaidMaterialsMember glt:FeminineHygieneMember 2019-04-01 2019-06-30 0000041719 glt:AirlaidMaterialsMember glt:FeminineHygieneMember 2020-01-01 2020-06-30 0000041719 glt:AirlaidMaterialsMember glt:FeminineHygieneMember 2019-01-01 2019-06-30 0000041719 glt:AirlaidMaterialsMember glt:SpecialtyWipesMember 2020-04-01 2020-06-30 0000041719 glt:AirlaidMaterialsMember glt:SpecialtyWipesMember 2019-04-01 2019-06-30 0000041719 glt:AirlaidMaterialsMember glt:SpecialtyWipesMember 2020-01-01 2020-06-30 0000041719 glt:AirlaidMaterialsMember glt:SpecialtyWipesMember 2019-01-01 2019-06-30 0000041719 glt:AirlaidMaterialsMember glt:TableTopMember 2020-04-01 2020-06-30 0000041719 glt:AirlaidMaterialsMember glt:TableTopMember 2019-04-01 2019-06-30 0000041719 glt:AirlaidMaterialsMember glt:TableTopMember 2020-01-01 2020-06-30 0000041719 glt:AirlaidMaterialsMember glt:TableTopMember 2019-01-01 2019-06-30 0000041719 glt:AirlaidMaterialsMember glt:AdultIncontinenceMember 2020-04-01 2020-06-30 0000041719 glt:AirlaidMaterialsMember glt:AdultIncontinenceMember 2019-04-01 2019-06-30 0000041719 glt:AirlaidMaterialsMember glt:AdultIncontinenceMember 2020-01-01 2020-06-30 0000041719 glt:AirlaidMaterialsMember glt:AdultIncontinenceMember 2019-01-01 2019-06-30 0000041719 glt:AirlaidMaterialsMember glt:HomeCareMember 2020-04-01 2020-06-30 0000041719 glt:AirlaidMaterialsMember glt:HomeCareMember 2019-04-01 2019-06-30 0000041719 glt:AirlaidMaterialsMember glt:HomeCareMember 2020-01-01 2020-06-30 0000041719 glt:AirlaidMaterialsMember glt:HomeCareMember 2019-01-01 2019-06-30 0000041719 glt:AirlaidMaterialsMember glt:OtherProductsMember 2020-04-01 2020-06-30 0000041719 glt:AirlaidMaterialsMember glt:OtherProductsMember 2019-04-01 2019-06-30 0000041719 glt:AirlaidMaterialsMember glt:OtherProductsMember 2020-01-01 2020-06-30 0000041719 glt:AirlaidMaterialsMember glt:OtherProductsMember 2019-01-01 2019-06-30 0000041719 glt:AirlaidMaterialsMember 2020-04-01 2020-06-30 0000041719 glt:AirlaidMaterialsMember 2019-04-01 2019-06-30 0000041719 glt:AirlaidMaterialsMember 2020-01-01 2020-06-30 0000041719 glt:AirlaidMaterialsMember 2019-01-01 2019-06-30 0000041719 us-gaap:ProductMember 2020-04-01 2020-06-30 0000041719 us-gaap:ProductMember 2019-04-01 2019-06-30 0000041719 us-gaap:ProductMember 2020-01-01 2020-06-30 0000041719 us-gaap:ProductMember 2019-01-01 2019-06-30 0000041719 glt:CompositeFibersMember glt:EuropeMiddleEastAndAfricaMember 2020-04-01 2020-06-30 0000041719 glt:CompositeFibersMember glt:EuropeMiddleEastAndAfricaMember 2019-04-01 2019-06-30 0000041719 glt:CompositeFibersMember glt:EuropeMiddleEastAndAfricaMember 2020-01-01 2020-06-30 0000041719 glt:CompositeFibersMember glt:EuropeMiddleEastAndAfricaMember 2019-01-01 2019-06-30 0000041719 glt:CompositeFibersMember country:US 2020-04-01 2020-06-30 0000041719 glt:CompositeFibersMember country:US 2019-04-01 2019-06-30 0000041719 glt:CompositeFibersMember country:US 2020-01-01 2020-06-30 0000041719 glt:CompositeFibersMember country:US 2019-01-01 2019-06-30 0000041719 glt:CompositeFibersMember srt:AsiaPacificMember 2020-04-01 2020-06-30 0000041719 glt:CompositeFibersMember srt:AsiaPacificMember 2019-04-01 2019-06-30 0000041719 glt:CompositeFibersMember srt:AsiaPacificMember 2020-01-01 2020-06-30 0000041719 glt:CompositeFibersMember srt:AsiaPacificMember 2019-01-01 2019-06-30 0000041719 glt:AirlaidMaterialsMember glt:EuropeMiddleEastAndAfricaMember 2020-04-01 2020-06-30 0000041719 glt:AirlaidMaterialsMember glt:EuropeMiddleEastAndAfricaMember 2019-04-01 2019-06-30 0000041719 glt:AirlaidMaterialsMember glt:EuropeMiddleEastAndAfricaMember 2020-01-01 2020-06-30 0000041719 glt:AirlaidMaterialsMember glt:EuropeMiddleEastAndAfricaMember 2019-01-01 2019-06-30 0000041719 glt:AirlaidMaterialsMember country:US 2020-04-01 2020-06-30 0000041719 glt:AirlaidMaterialsMember country:US 2019-04-01 2019-06-30 0000041719 glt:AirlaidMaterialsMember country:US 2020-01-01 2020-06-30 0000041719 glt:AirlaidMaterialsMember country:US 2019-01-01 2019-06-30 0000041719 glt:AirlaidMaterialsMember srt:AsiaPacificMember 2020-04-01 2020-06-30 0000041719 glt:AirlaidMaterialsMember srt:AsiaPacificMember 2019-04-01 2019-06-30 0000041719 glt:AirlaidMaterialsMember srt:AsiaPacificMember 2020-01-01 2020-06-30 0000041719 glt:AirlaidMaterialsMember srt:AsiaPacificMember 2019-01-01 2019-06-30 0000041719 glt:SpecialtyPapersMember 2018-10-31 0000041719 glt:SpecialtyPapersMember 2018-10-01 2018-10-31 0000041719 glt:SpecialtyPapersMember 2020-04-01 2020-06-30 0000041719 glt:SpecialtyPapersMember 2019-04-01 2019-06-30 0000041719 glt:SpecialtyPapersMember 2020-01-01 2020-06-30 0000041719 glt:SpecialtyPapersMember 2019-01-01 2019-06-30 utr:acre 0000041719 glt:TimberlandsMember 2020-06-30 0000041719 glt:TimberlandsMember 2019-06-30 0000041719 glt:TimberlandsMember 2020-01-01 2020-06-30 0000041719 glt:TimberlandsMember 2019-01-01 2019-06-30 0000041719 us-gaap:OtherCapitalizedPropertyPlantAndEquipmentMember 2019-01-01 2019-06-30 0000041719 us-gaap:OtherCapitalizedPropertyPlantAndEquipmentMember 2020-01-01 2020-06-30 0000041719 us-gaap:AccumulatedTranslationAdjustmentMember 2020-03-31 0000041719 glt:UnrealizedGainsLossesCashFlowHedgesMember 2020-03-31 0000041719 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2020-03-31 0000041719 glt:AccumulatedDefinedBenefitPlansOtherPostretirementAdjustmentMember 2020-03-31 0000041719 us-gaap:AccumulatedTranslationAdjustmentMember 2020-04-01 2020-06-30 0000041719 glt:UnrealizedGainsLossesCashFlowHedgesMember 2020-04-01 2020-06-30 0000041719 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2020-04-01 2020-06-30 0000041719 glt:AccumulatedDefinedBenefitPlansOtherPostretirementAdjustmentMember 2020-04-01 2020-06-30 0000041719 us-gaap:AccumulatedTranslationAdjustmentMember 2020-06-30 0000041719 glt:UnrealizedGainsLossesCashFlowHedgesMember 2020-06-30 0000041719 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2020-06-30 0000041719 glt:AccumulatedDefinedBenefitPlansOtherPostretirementAdjustmentMember 2020-06-30 0000041719 us-gaap:AccumulatedTranslationAdjustmentMember 2019-03-31 0000041719 glt:UnrealizedGainsLossesCashFlowHedgesMember 2019-03-31 0000041719 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-03-31 0000041719 glt:AccumulatedDefinedBenefitPlansOtherPostretirementAdjustmentMember 2019-03-31 0000041719 us-gaap:AccumulatedTranslationAdjustmentMember 2019-04-01 2019-06-30 0000041719 glt:UnrealizedGainsLossesCashFlowHedgesMember 2019-04-01 2019-06-30 0000041719 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-04-01 2019-06-30 0000041719 glt:AccumulatedDefinedBenefitPlansOtherPostretirementAdjustmentMember 2019-04-01 2019-06-30 0000041719 us-gaap:AccumulatedTranslationAdjustmentMember 2019-06-30 0000041719 glt:UnrealizedGainsLossesCashFlowHedgesMember 2019-06-30 0000041719 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-06-30 0000041719 glt:AccumulatedDefinedBenefitPlansOtherPostretirementAdjustmentMember 2019-06-30 0000041719 us-gaap:AccumulatedTranslationAdjustmentMember 2019-12-31 0000041719 glt:UnrealizedGainsLossesCashFlowHedgesMember 2019-12-31 0000041719 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-12-31 0000041719 glt:AccumulatedDefinedBenefitPlansOtherPostretirementAdjustmentMember 2019-12-31 0000041719 us-gaap:AccumulatedTranslationAdjustmentMember 2020-01-01 2020-06-30 0000041719 glt:UnrealizedGainsLossesCashFlowHedgesMember 2020-01-01 2020-06-30 0000041719 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2020-01-01 2020-06-30 0000041719 glt:AccumulatedDefinedBenefitPlansOtherPostretirementAdjustmentMember 2020-01-01 2020-06-30 0000041719 us-gaap:AccumulatedTranslationAdjustmentMember 2018-12-31 0000041719 glt:UnrealizedGainsLossesCashFlowHedgesMember 2018-12-31 0000041719 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-12-31 0000041719 glt:AccumulatedDefinedBenefitPlansOtherPostretirementAdjustmentMember 2018-12-31 0000041719 us-gaap:AccumulatedTranslationAdjustmentMember 2019-01-01 2019-06-30 0000041719 glt:UnrealizedGainsLossesCashFlowHedgesMember 2019-01-01 2019-06-30 0000041719 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-01-01 2019-06-30 0000041719 glt:AccumulatedDefinedBenefitPlansOtherPostretirementAdjustmentMember 2019-01-01 2019-06-30 0000041719 us-gaap:CashFlowHedgingMember us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2020-04-01 2020-06-30 0000041719 us-gaap:CashFlowHedgingMember us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2019-04-01 2019-06-30 0000041719 us-gaap:CashFlowHedgingMember us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2020-01-01 2020-06-30 0000041719 us-gaap:CashFlowHedgingMember us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2019-01-01 2019-06-30 0000041719 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember us-gaap:PensionPlansDefinedBenefitMember 2020-04-01 2020-06-30 0000041719 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember us-gaap:PensionPlansDefinedBenefitMember 2019-04-01 2019-06-30 0000041719 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember us-gaap:PensionPlansDefinedBenefitMember 2020-01-01 2020-06-30 0000041719 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember us-gaap:PensionPlansDefinedBenefitMember 2019-01-01 2019-06-30 0000041719 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember glt:AccumulatedDefinedBenefitPlansAdjustmentNetActuarialLossesMember us-gaap:PensionPlansDefinedBenefitMember 2020-04-01 2020-06-30 0000041719 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember glt:AccumulatedDefinedBenefitPlansAdjustmentNetActuarialLossesMember us-gaap:PensionPlansDefinedBenefitMember 2019-04-01 2019-06-30 0000041719 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember glt:AccumulatedDefinedBenefitPlansAdjustmentNetActuarialLossesMember us-gaap:PensionPlansDefinedBenefitMember 2020-01-01 2020-06-30 0000041719 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember glt:AccumulatedDefinedBenefitPlansAdjustmentNetActuarialLossesMember us-gaap:PensionPlansDefinedBenefitMember 2019-01-01 2019-06-30 0000041719 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:PensionPlansDefinedBenefitMember 2020-04-01 2020-06-30 0000041719 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:PensionPlansDefinedBenefitMember 2019-04-01 2019-06-30 0000041719 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:PensionPlansDefinedBenefitMember 2020-01-01 2020-06-30 0000041719 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:PensionPlansDefinedBenefitMember 2019-01-01 2019-06-30 0000041719 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember us-gaap:OtherPensionPlansDefinedBenefitMember 2020-04-01 2020-06-30 0000041719 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember us-gaap:OtherPensionPlansDefinedBenefitMember 2019-04-01 2019-06-30 0000041719 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember us-gaap:OtherPensionPlansDefinedBenefitMember 2020-01-01 2020-06-30 0000041719 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember us-gaap:OtherPensionPlansDefinedBenefitMember 2019-01-01 2019-06-30 0000041719 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember glt:AccumulatedDefinedBenefitPlansAdjustmentNetActuarialGainsMember us-gaap:OtherPensionPlansDefinedBenefitMember 2020-04-01 2020-06-30 0000041719 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember glt:AccumulatedDefinedBenefitPlansAdjustmentNetActuarialGainsMember us-gaap:OtherPensionPlansDefinedBenefitMember 2019-04-01 2019-06-30 0000041719 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember glt:AccumulatedDefinedBenefitPlansAdjustmentNetActuarialGainsMember us-gaap:OtherPensionPlansDefinedBenefitMember 2020-01-01 2020-06-30 0000041719 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember glt:AccumulatedDefinedBenefitPlansAdjustmentNetActuarialGainsMember us-gaap:OtherPensionPlansDefinedBenefitMember 2019-01-01 2019-06-30 0000041719 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:OtherPensionPlansDefinedBenefitMember 2020-04-01 2020-06-30 0000041719 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:OtherPensionPlansDefinedBenefitMember 2019-04-01 2019-06-30 0000041719 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:OtherPensionPlansDefinedBenefitMember 2020-01-01 2020-06-30 0000041719 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember us-gaap:OtherPensionPlansDefinedBenefitMember 2019-01-01 2019-06-30 0000041719 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember 2020-04-01 2020-06-30 0000041719 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember 2019-04-01 2019-06-30 0000041719 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember 2020-01-01 2020-06-30 0000041719 us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-06-30 0000041719 glt:PensionAndRestructuringChargesMember 2020-01-01 2020-06-30 0000041719 srt:MinimumMember us-gaap:DomesticCountryMember country:US 2020-01-01 2020-06-30 0000041719 us-gaap:DomesticCountryMember country:US srt:MaximumMember 2020-01-01 2020-06-30 0000041719 srt:MinimumMember us-gaap:StateAndLocalJurisdictionMember country:US 2020-01-01 2020-06-30 0000041719 us-gaap:StateAndLocalJurisdictionMember country:US srt:MaximumMember 2020-01-01 2020-06-30 0000041719 srt:MinimumMember us-gaap:ForeignCountryMember country:CA 2020-01-01 2020-06-30 0000041719 us-gaap:ForeignCountryMember country:CA srt:MaximumMember 2020-01-01 2020-06-30 0000041719 srt:MinimumMember us-gaap:ForeignCountryMember country:DE 2020-01-01 2020-06-30 0000041719 us-gaap:ForeignCountryMember country:DE srt:MaximumMember 2020-01-01 2020-06-30 0000041719 srt:MinimumMember us-gaap:ForeignCountryMember country:FR 2020-01-01 2020-06-30 0000041719 us-gaap:ForeignCountryMember country:FR srt:MaximumMember 2020-01-01 2020-06-30 0000041719 srt:MinimumMember us-gaap:ForeignCountryMember country:GB 2020-01-01 2020-06-30 0000041719 us-gaap:ForeignCountryMember country:GB srt:MaximumMember 2020-01-01 2020-06-30 0000041719 us-gaap:ForeignCountryMember country:PH 2020-01-01 2020-06-30 0000041719 srt:MinimumMember us-gaap:ForeignCountryMember country:PH 2020-01-01 2020-06-30 0000041719 us-gaap:ForeignCountryMember country:PH srt:MaximumMember 2020-01-01 2020-06-30 0000041719 srt:MinimumMember 2020-06-30 0000041719 srt:MaximumMember 2020-06-30 0000041719 us-gaap:RestrictedStockUnitsRSUMember 2020-01-01 2020-06-30 0000041719 glt:PerformanceShareAwardsMember 2020-01-01 2020-06-30 0000041719 glt:RestrictedStockUnitsAndPerformanceShareAwardsMember 2019-12-31 0000041719 glt:RestrictedStockUnitsAndPerformanceShareAwardsMember 2018-12-31 0000041719 glt:RestrictedStockUnitsAndPerformanceShareAwardsMember 2019-01-01 2019-06-30 0000041719 glt:RestrictedStockUnitsAndPerformanceShareAwardsMember 2020-06-30 0000041719 glt:RestrictedStockUnitsAndPerformanceShareAwardsMember 2019-06-30 0000041719 glt:PerformanceShareAwardsMember 2019-01-01 2019-06-30 0000041719 glt:RestrictedStockUnitsAndPerformanceShareAwardsMember 2020-04-01 2020-06-30 0000041719 glt:RestrictedStockUnitsAndPerformanceShareAwardsMember 2019-04-01 2019-06-30 0000041719 us-gaap:StockAppreciationRightsSARSMember 2016-01-01 2020-06-30 0000041719 us-gaap:StockAppreciationRightsSARSMember 2019-12-31 0000041719 us-gaap:StockAppreciationRightsSARSMember 2018-12-31 0000041719 us-gaap:StockAppreciationRightsSARSMember 2019-01-01 2019-06-30 0000041719 us-gaap:StockAppreciationRightsSARSMember 2020-06-30 0000041719 us-gaap:StockAppreciationRightsSARSMember 2019-06-30 0000041719 us-gaap:PensionPlansDefinedBenefitMember 2020-04-01 2020-06-30 0000041719 us-gaap:PensionPlansDefinedBenefitMember 2019-04-01 2019-06-30 0000041719 us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2020-04-01 2020-06-30 0000041719 us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2019-04-01 2019-06-30 0000041719 us-gaap:PensionPlansDefinedBenefitMember 2020-01-01 2020-06-30 0000041719 us-gaap:PensionPlansDefinedBenefitMember 2019-01-01 2019-06-30 0000041719 us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2020-01-01 2020-06-30 0000041719 us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember 2019-01-01 2019-06-30 0000041719 glt:RevolvingCreditFacilityDueFebruaryTwoThousandAndTwentyFourMember 2020-06-30 0000041719 glt:RevolvingCreditFacilityDueFebruaryTwoThousandAndTwentyFourMember 2019-12-31 0000041719 glt:TermLoanDueFebruaryTwoThousandAndTwentyFourMember 2020-06-30 0000041719 glt:TermLoanDueFebruaryTwoThousandAndTwentyFourMember 2019-12-31 0000041719 glt:TwoPointFourZeroPercentTermLoanDueJuneTwoThousandTwentyTwoMember 2020-06-30 0000041719 glt:TwoPointFourZeroPercentTermLoanDueJuneTwoThousandTwentyTwoMember 2019-12-31 0000041719 glt:TwoPointZeroFivePercentTermLoanDueMarchTwoThousandTwentyThreeMember 2020-06-30 0000041719 glt:TwoPointZeroFivePercentTermLoanDueMarchTwoThousandTwentyThreeMember 2019-12-31 0000041719 glt:OnePointThreeZeroPercentageTermLoanDueJuneTwoThousandTwentyThreeMember 2020-06-30 0000041719 glt:OnePointThreeZeroPercentageTermLoanDueJuneTwoThousandTwentyThreeMember 2019-12-31 0000041719 glt:OnePointFiveFivePercentageTermLoanDueSeptemberTwoThousandTwentyFiveMember 2020-06-30 0000041719 glt:OnePointFiveFivePercentageTermLoanDueSeptemberTwoThousandTwentyFiveMember 2019-12-31 0000041719 glt:RevolvingCreditFacilityDueFebruaryTwoThousandAndTwentyFourMember 2020-01-01 2020-06-30 0000041719 glt:TermLoanDueFebruaryTwoThousandAndTwentyFourMember 2020-01-01 2020-06-30 0000041719 glt:TwoPointFourZeroPercentTermLoanDueJuneTwoThousandTwentyTwoMember 2020-01-01 2020-06-30 0000041719 glt:TwoPointZeroFivePercentTermLoanDueMarchTwoThousandTwentyThreeMember 2020-01-01 2020-06-30 0000041719 glt:OnePointThreeZeroPercentageTermLoanDueJuneTwoThousandTwentyThreeMember 2020-01-01 2020-06-30 0000041719 glt:OnePointFiveFivePercentageTermLoanDueSeptemberTwoThousandTwentyFiveMember 2020-01-01 2020-06-30 0000041719 us-gaap:RevolvingCreditFacilityMember 2019-02-08 iso4217:EUR 0000041719 glt:TermLoansMember 2019-02-08 0000041719 glt:FivePointThreeSevenFivePercentNotesMember 2020-06-30 0000041719 2019-07-01 0000041719 us-gaap:RevolvingCreditFacilityMember glt:FederalFundsRateMember 2020-01-01 2020-06-30 0000041719 us-gaap:RevolvingCreditFacilityMember 2020-01-01 2020-06-30 0000041719 us-gaap:RevolvingCreditFacilityMember srt:MinimumMember 2020-01-01 2020-06-30 0000041719 us-gaap:RevolvingCreditFacilityMember srt:MaximumMember 2020-01-01 2020-06-30 0000041719 us-gaap:RevolvingCreditFacilityMember us-gaap:EurodollarMember srt:MinimumMember 2020-01-01 2020-06-30 0000041719 us-gaap:RevolvingCreditFacilityMember us-gaap:EurodollarMember srt:MaximumMember 2020-01-01 2020-06-30 0000041719 us-gaap:RevolvingCreditFacilityMember glt:EuriborMember srt:MinimumMember 2020-01-01 2020-06-30 0000041719 us-gaap:RevolvingCreditFacilityMember glt:EuriborMember srt:MaximumMember 2020-01-01 2020-06-30 0000041719 glt:FloatingToFixedInterestRateSwapAgreementMember 2019-10-31 0000041719 srt:MinimumMember 2019-10-31 0000041719 srt:ScenarioForecastMember 2020-10-01 2020-12-31 0000041719 glt:IKBDeutscheIndustriebankAGBorrowingAgreementsMember glt:GlatfelterGernsbachGmbHMember glt:IkbDeutscheIndustriebankAgMember 2013-04-11 0000041719 glt:IKBDeutscheIndustriebankAGBorrowingAgreementsMember glt:GlatfelterGernsbachGmbHMember glt:IkbDeutscheIndustriebankAgMember 2014-09-04 0000041719 glt:IKBDeutscheIndustriebankAGBorrowingAgreementsMember glt:GlatfelterGernsbachGmbHMember glt:IkbDeutscheIndustriebankAgMember 2015-10-10 0000041719 glt:IKBDeutscheIndustriebankAGBorrowingAgreementsMember glt:GlatfelterGernsbachGmbHMember glt:IkbDeutscheIndustriebankAgMember 2016-04-26 0000041719 glt:IKBDeutscheIndustriebankAGBorrowingAgreementsMember glt:GlatfelterGernsbachGmbHMember glt:IkbDeutscheIndustriebankAgMember 2016-05-04 0000041719 glt:IKBDeutscheIndustriebankAGBorrowingAgreementsMember glt:GlatfelterGernsbachGmbHMember glt:IkbDeutscheIndustriebankAgMember 2013-04-10 2013-04-11 0000041719 glt:IKBDeutscheIndustriebankAGBorrowingAgreementsMember glt:GlatfelterGernsbachGmbHMember glt:IkbDeutscheIndustriebankAgMember 2014-09-03 2014-09-04 0000041719 glt:IKBDeutscheIndustriebankAGBorrowingAgreementsMember glt:GlatfelterGernsbachGmbHMember glt:IkbDeutscheIndustriebankAgMember 2015-10-09 2015-10-10 0000041719 glt:IKBDeutscheIndustriebankAGBorrowingAgreementsMember glt:GlatfelterGernsbachGmbHMember glt:IkbDeutscheIndustriebankAgMember 2016-04-25 2016-04-26 0000041719 glt:IKBDeutscheIndustriebankAGBorrowingAgreementsMember glt:GlatfelterGernsbachGmbHMember glt:IkbDeutscheIndustriebankAgMember 2016-05-03 2016-05-04 0000041719 us-gaap:LetterOfCreditMember 2020-06-30 0000041719 us-gaap:LetterOfCreditMember 2019-12-31 0000041719 glt:RevolvingCreditFacilityDueMarchTwoThousandTwentyAndNovemberTwoThousandSixteenMember 2020-06-30 0000041719 glt:RevolvingCreditFacilityDueMarchTwoThousandTwentyAndNovemberTwoThousandSixteenMember 2019-12-31 0000041719 srt:MaximumMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:CashFlowHedgingMember 2020-01-01 2020-06-30 0000041719 srt:MinimumMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:CashFlowHedgingMember 2020-01-01 2020-06-30 0000041719 glt:EuroBritishPoundMember us-gaap:CashFlowHedgingMember us-gaap:ShortMember us-gaap:DesignatedAsHedgingInstrumentMember 2020-06-30 0000041719 glt:EuroBritishPoundMember us-gaap:CashFlowHedgingMember us-gaap:ShortMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-12-31 0000041719 glt:USDollarEuroMember us-gaap:CashFlowHedgingMember us-gaap:ShortMember us-gaap:DesignatedAsHedgingInstrumentMember 2020-06-30 0000041719 glt:USDollarEuroMember us-gaap:CashFlowHedgingMember us-gaap:ShortMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-12-31 0000041719 glt:UsDollarCanadianDollarMember us-gaap:CashFlowHedgingMember us-gaap:ShortMember us-gaap:DesignatedAsHedgingInstrumentMember 2020-06-30 0000041719 glt:UsDollarCanadianDollarMember us-gaap:CashFlowHedgingMember us-gaap:ShortMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-12-31 iso4217:PHP 0000041719 glt:EuroPhilippinePesoMember us-gaap:CashFlowHedgingMember us-gaap:LongMember us-gaap:DesignatedAsHedgingInstrumentMember 2020-06-30 0000041719 glt:EuroPhilippinePesoMember us-gaap:CashFlowHedgingMember us-gaap:LongMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-12-31 0000041719 glt:BritishPoundPhilippinePesoMember us-gaap:CashFlowHedgingMember us-gaap:LongMember us-gaap:DesignatedAsHedgingInstrumentMember 2020-06-30 0000041719 glt:BritishPoundPhilippinePesoMember us-gaap:CashFlowHedgingMember us-gaap:LongMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-12-31 0000041719 glt:EuroUSDollarMember us-gaap:CashFlowHedgingMember us-gaap:LongMember us-gaap:DesignatedAsHedgingInstrumentMember 2020-06-30 0000041719 glt:EuroUSDollarMember us-gaap:CashFlowHedgingMember us-gaap:LongMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-12-31 iso4217:CAD 0000041719 glt:UsDollarCanadianDollarMember us-gaap:CashFlowHedgingMember us-gaap:LongMember us-gaap:DesignatedAsHedgingInstrumentMember 2020-06-30 0000041719 glt:UsDollarCanadianDollarMember us-gaap:CashFlowHedgingMember us-gaap:LongMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-12-31 0000041719 glt:CanadianDollarUSDollarMember us-gaap:CashFlowHedgingMember us-gaap:LongMember us-gaap:DesignatedAsHedgingInstrumentMember 2020-06-30 0000041719 glt:CanadianDollarUSDollarMember us-gaap:CashFlowHedgingMember us-gaap:LongMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-12-31 0000041719 glt:TermLoansMember 2020-06-30 0000041719 glt:USDollarBritishPoundMember glt:ForeignCurrencyHedgingMember us-gaap:ShortMember us-gaap:NondesignatedMember 2020-06-30 0000041719 glt:USDollarBritishPoundMember glt:ForeignCurrencyHedgingMember us-gaap:ShortMember us-gaap:NondesignatedMember 2019-12-31 iso4217:GBP 0000041719 glt:BritishPoundEuroMember glt:ForeignCurrencyHedgingMember us-gaap:ShortMember us-gaap:NondesignatedMember 2020-06-30 0000041719 glt:BritishPoundEuroMember glt:ForeignCurrencyHedgingMember us-gaap:ShortMember us-gaap:NondesignatedMember 2019-12-31 0000041719 glt:EuroUSDollarMember glt:ForeignCurrencyHedgingMember us-gaap:LongMember us-gaap:NondesignatedMember 2020-06-30 0000041719 glt:EuroUSDollarMember glt:ForeignCurrencyHedgingMember us-gaap:LongMember us-gaap:NondesignatedMember 2019-12-31 0000041719 glt:BritishPoundEuroMember glt:ForeignCurrencyHedgingMember us-gaap:LongMember us-gaap:NondesignatedMember 2020-06-30 0000041719 glt:BritishPoundEuroMember glt:ForeignCurrencyHedgingMember us-gaap:LongMember us-gaap:NondesignatedMember 2019-12-31 0000041719 us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:ForeignExchangeForwardMember us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember 2020-06-30 0000041719 us-gaap:NondesignatedMember us-gaap:ForeignExchangeForwardMember us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember 2020-06-30 0000041719 us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:ForeignExchangeForwardMember us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember 2019-12-31 0000041719 us-gaap:NondesignatedMember us-gaap:ForeignExchangeForwardMember us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember 2019-12-31 0000041719 us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:ForeignExchangeForwardMember us-gaap:OtherCurrentLiabilitiesMember 2020-06-30 0000041719 us-gaap:NondesignatedMember us-gaap:ForeignExchangeForwardMember us-gaap:OtherCurrentLiabilitiesMember 2020-06-30 0000041719 us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:ForeignExchangeForwardMember us-gaap:OtherCurrentLiabilitiesMember 2019-12-31 0000041719 us-gaap:NondesignatedMember us-gaap:ForeignExchangeForwardMember us-gaap:OtherCurrentLiabilitiesMember 2019-12-31 0000041719 us-gaap:CostOfSalesMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:ForeignExchangeForwardMember 2020-04-01 2020-06-30 0000041719 us-gaap:CostOfSalesMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:ForeignExchangeForwardMember 2019-04-01 2019-06-30 0000041719 us-gaap:CostOfSalesMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:ForeignExchangeForwardMember 2020-01-01 2020-06-30 0000041719 us-gaap:CostOfSalesMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:ForeignExchangeForwardMember 2019-01-01 2019-06-30 0000041719 us-gaap:OtherNonoperatingIncomeExpenseMember us-gaap:NondesignatedMember us-gaap:ForeignExchangeForwardMember 2020-04-01 2020-06-30 0000041719 us-gaap:OtherNonoperatingIncomeExpenseMember us-gaap:NondesignatedMember us-gaap:ForeignExchangeForwardMember 2019-04-01 2019-06-30 0000041719 us-gaap:OtherNonoperatingIncomeExpenseMember us-gaap:NondesignatedMember us-gaap:ForeignExchangeForwardMember 2020-01-01 2020-06-30 0000041719 us-gaap:OtherNonoperatingIncomeExpenseMember us-gaap:NondesignatedMember us-gaap:ForeignExchangeForwardMember 2019-01-01 2019-06-30 0000041719 us-gaap:FairValueMeasurementsRecurringMember srt:MinimumMember 2020-01-01 2020-06-30 0000041719 srt:MaximumMember us-gaap:FairValueMeasurementsRecurringMember 2020-01-01 2020-06-30 glt:Operable_Unit 0000041719 glt:DownstreamMember 2020-01-01 2020-06-30 0000041719 glt:GlatfelterConsentDecreeMember 2019-01-01 2019-01-31 0000041719 srt:MinimumMember 2020-01-01 2020-06-30 0000041719 glt:GlatfelterConsentDecreeMember 2019-01-01 2019-12-31 0000041719 us-gaap:OtherNoncurrentLiabilitiesMember 2020-06-30 0000041719 glt:CompositeFibersMember 2020-04-01 2020-06-30 0000041719 glt:CompositeFibersMember 2019-04-01 2019-06-30 0000041719 glt:AirlaidMaterialsMember 2020-04-01 2020-06-30 0000041719 glt:AirlaidMaterialsMember 2019-04-01 2019-06-30 0000041719 us-gaap:AllOtherSegmentsMember 2020-04-01 2020-06-30 0000041719 us-gaap:AllOtherSegmentsMember 2019-04-01 2019-06-30 utr:T 0000041719 glt:CompositeFibersMember 2020-01-01 2020-06-30 0000041719 glt:CompositeFibersMember 2019-01-01 2019-06-30 0000041719 glt:AirlaidMaterialsMember 2020-01-01 2020-06-30 0000041719 glt:AirlaidMaterialsMember 2019-01-01 2019-06-30 0000041719 us-gaap:AllOtherSegmentsMember 2020-01-01 2020-06-30 0000041719 us-gaap:AllOtherSegmentsMember 2019-01-01 2019-06-30

`

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ | Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2020

or

☐ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

96 South George Street, Suite 520

York, Pennsylvania 17401

(Address of principal executive offices)

(717) 850-0170

(Registrant's telephone number, including area code)

| Commission file number |  | Exact name of registrant as specified in its charter |  | IRS Employer Identification No. |  | State or other jurisdiction of incorporation or organization |
| 1-03560 |  | P. H. Glatfelter Company |  | 23-0628360 |  | Pennsylvania |

N/A

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class |  | Trading Symbol(s) |  | Name of each exchange on which registered
Common Stock |  | GLT |  | New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at the past 90 days. Yes ☒ No ☐.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a small reporting company or emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer | ☒ |  | Accelerated filer | ☐
Non-accelerated filer | ☐ |  | Smaller reporting company | ☐
|  | Emerging growth company | ☐ |  |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒.

Common Stock outstanding on July 24, 2020 totaled 44,367,836 shares.

P. H. GLATFELTER COMPANY AND SUBSIDIARIES

REPORT ON FORM 10-Q

For the QUARTERLY PERIOD ENDED

June 30, 2020

Table of Contents

|  | Page
PART I - FINANCIAL INFORMATION |  |
Item 1 | Financial Statements |  |
| Condensed Consolidated Statements of Income for the three months and six months ended June 30, 2020 and 2019 (unaudited) |  | 2
| Condensed Consolidated Statements of Comprehensive Income for the three months and six months ended June 30, 2020 and 2019 (unaudited) |  | 3
| Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019 (unaudited) |  | 4
| Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019 (unaudited) |  | 5
| Statements of Shareholders’ Equity for the three months and six months ended June 30, 2020 and 2019 (unaudited) |  | 6
| Notes to Condensed Consolidated Financial Statements (unaudited) |  | 7
| 1. | Organization |  | 7
| 2. | Accounting Policies |  | 7
| 3. | Restructuring |  | 8
| 4. | Asset Impairment |  | 8
| 5. | Revenue |  | 8
| 6. | Discontinued Operations |  | 9
| 7. | Gain on Disposition of Plant, Equipment and Timberlands |  | 10
| 8. | Earnings Per Share |  | 10
| 9. | Accumulated Other Comprehensive Income |  | 12
| 10. | Income Taxes |  | 13
| 11. | Stock-based Compensation |  | 14
| 12. | Retirement Plans and Other Post- Retirement Benefits |  | 16
| 13. | Inventories |  | 17
| 14. | Leases |  | 17
| 15. | Long-term Debt |  | 18
| 16. | Fair Value of Financial Instruments |  | 19
| 17. | Financial Derivatives and Hedging Activities |  | 19
| 18. | Commitments, Contingencies and Legal Proceedings |  | 22
| 19. | Segment Information |  | 23
Item 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations |  | 25
Item 3 | Quantitative and Qualitative Disclosures About Market Risks |  | 37
Item 4 | Controls and Procedures |  | 38
PART II – OTHER INFORMATION |  |
Item 1A | Risk Factors |  | 38
Item 6 | Exhibits |  | 39
| SIGNATURES |  | 40

PART I

Item 1 – Financial Statements

P. H. GLATFELTER COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

|  | Three months ended June 30 |  |  | Six months ended June 30 |
In thousands, except per share |  | 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |
Net sales |  | $ | 216,183 |  |  | $ | 235,053 |  |  | $ | 447,743 |  |  | $ | 464,186 |
Costs of products sold |  |  | 184,120 |  |  |  | 197,553 |  |  |  | 378,878 |  |  |  | 391,069 |
Gross profit |  |  | 32,063 |  |  |  | 37,500 |  |  |  | 68,865 |  |  |  | 73,117 |
Selling, general and administrative expenses |  |  | 23,551 |  |  |  | 22,800 |  |  |  | 48,072 |  |  |  | 47,422 |
Gains on dispositions of plant, equipment and timberlands, net |  |  | (597 | ) |  |  | (423 | ) |  |  | (597 | ) |  |  | (1,092 | )
Operating income |  |  | 9,109 |  |  |  | 15,123 |  |  |  | 21,390 |  |  |  | 26,787 |
Non-operating income (expense) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest expense |  |  | (1,759 | ) |  |  | (1,865 | ) |  |  | (3,537 | ) |  |  | (6,611 | )
Interest income |  |  | 87 |  |  |  | 241 |  |  |  | 351 |  |  |  | 746 |
Pension settlement expenses, net |  |  | (6,330 | ) |  |  | — |  |  |  | (6,403 | ) |  |  | — |
Other, net |  |  | (835 | ) |  |  | (1,551 | ) |  |  | (1,515 | ) |  |  | (2,513 | )
Total non-operating expense |  |  | (8,837 | ) |  |  | (3,175 | ) |  |  | (11,104 | ) |  |  | (8,378 | )
Income from continuing operations before income taxes |  |  | 272 |  |  |  | 11,948 |  |  |  | 10,286 |  |  |  | 18,409 |
Income tax provision |  |  | 2,553 |  |  |  | 5,655 |  |  |  | 5,161 |  |  |  | 7,513 |
Income (loss) from continuing operations |  |  | (2,281 | ) |  |  | 6,293 |  |  |  | 5,125 |  |  |  | 10,896 |
Discontinued operations: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income (loss) before income taxes |  |  | (135 | ) |  |  | (485 | ) |  |  | (135 | ) |  |  | 229 |
Income tax provision (benefit) |  |  | — |  |  |  | (23 | ) |  |  | — |  |  |  | 8 |
Income (loss) from discontinued operations |  |  | (135 | ) |  |  | (462 | ) |  |  | (135 | ) |  |  | 221 |
Net income (loss) |  | $ | (2,416 | ) |  | $ | 5,831 |  |  | $ | 4,990 |  |  | $ | 11,117 |
Basic earnings (loss) per share |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income (loss) from continuing operations |  | $ | (0.05 | ) |  | $ | 0.14 |  |  | $ | 0.12 |  |  | $ | 0.25 |
Income (loss) from discontinued operations |  |  | — |  |  |  | (0.01 | ) |  |  | (0.01 | ) |  |  | 0.01 |
Basic earnings (loss) per share |  | $ | (0.05 | ) |  | $ | 0.13 |  |  | $ | 0.11 |  |  | $ | 0.26 |
Diluted earnings (loss) per share |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income (loss) from continuing operations |  | $ | (0.05 | ) |  | $ | 0.14 |  |  | $ | 0.12 |  |  | $ | 0.25 |
Income (loss) from discontinued operations |  |  | — |  |  |  | (0.01 | ) |  |  | (0.01 | ) |  |  | — |
Diluted earnings (loss) per share |  | $ | (0.05 | ) |  | $ | 0.13 |  |  | $ | 0.11 |  |  | $ | 0.25 |
Cash dividends declared per common share |  | $ | 0.135 |  |  | $ | 0.13 |  |  | $ | 0.265 |  |  | $ | 0.26 |
Weighted average shares outstanding |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  |  | 44,343 |  |  |  | 44,140 |  |  |  | 44,309 |  |  |  | 44,084 |
Diluted |  |  | 44,343 |  |  |  | 44,382 |  |  |  | 44,541 |  |  |  | 44,351 |

The accompanying notes are an integral part of these condensed consolidated financial statements.

- 2 -

GLATFELTER

Form 10-Q

P. H. GLATFELTER COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

|  | Three months ended June 30 |  |  | Six months ended June 30 |
In thousands |  | 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |
Net income (loss) |  | $ | (2,416 | ) |  | $ | 5,831 |  |  | $ | 4,990 |  |  | $ | 11,117 |
Foreign currency translation adjustments |  |  | 5,891 |  |  |  | 1,426 |  |  |  | (8,012 | ) |  |  | (3,379 | )
Net change in: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deferred gains (losses) on cash flow hedges, net of taxes of $295, $78, $696 and $(756), respectively |  |  | (552 | ) |  |  | 21 |  |  |  | (1,869 | ) |  |  | 2,243 |
Unrecognized retirement obligations, net of taxes of $52, $(1,241), $103 and $(1,386), respectively |  |  | (99 | ) |  |  | 4,352 |  |  |  | (200 | ) |  |  | 4,840 |
Other comprehensive income (loss) |  |  | 5,240 |  |  |  | 5,799 |  |  |  | (10,081 | ) |  |  | 3,704 |
Comprehensive income (loss) |  | $ | 2,824 |  |  | $ | 11,630 |  |  | $ | (5,091 | ) |  | $ | 14,821 |

The accompanying notes are an integral part of these condensed consolidated financial statements.

- 3 -

GLATFELTER

Form 10-Q

P. H. GLATFELTER COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

|  | June 30 |  |  | December 31 |
In thousands |  | 2020 |  |  | 2019 |
Assets |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 76,619 |  |  | $ | 126,201 |
Accounts receivable, net |  |  | 121,713 |  |  |  | 124,442 |
Inventories |  |  | 196,044 |  |  |  | 190,415 |
Prepaid expenses and other current assets |  |  | 37,483 |  |  |  | 36,274 |
Total current assets |  |  | 431,859 |  |  |  | 477,332 |
Plant, equipment and timberlands, net |  |  | 517,541 |  |  |  | 537,421 |
Goodwill |  |  | 150,104 |  |  |  | 150,816 |
Intangible assets, net |  |  | 78,569 |  |  |  | 83,735 |
Other assets |  |  | 48,811 |  |  |  | 34,490 |
Total assets |  | $ | 1,226,884 |  |  | $ | 1,283,794 |
Liabilities and Shareholders' Equity |  |  |  |  |  |  |  |
Current portion of long-term debt |  | $ | 22,866 |  |  | $ | 22,940 |
Accounts payable |  |  | 93,626 |  |  |  | 130,039 |
Dividends payable |  |  | 5,989 |  |  |  | 5,752 |
Environmental liabilities |  |  | 5,000 |  |  |  | 9,000 |
Other current liabilities |  |  | 67,047 |  |  |  | 62,772 |
Total current liabilities |  |  | 194,528 |  |  |  | 230,503 |
Long-term debt |  |  | 324,693 |  |  |  | 336,919 |
Deferred income taxes |  |  | 72,773 |  |  |  | 76,374 |
Other long-term liabilities |  |  | 93,891 |  |  |  | 84,039 |
Total liabilities |  |  | 685,885 |  |  |  | 727,835 |
Commitments and contingencies |  |  | - |  |  |  | - |
Shareholders’ equity |  |  |  |  |  |  |  |
Common stock |  |  | 544 |  |  |  | 544 |
Capital in excess of par value |  |  | 59,982 |  |  |  | 59,900 |
Retained earnings |  |  | 719,035 |  |  |  | 725,795 |
Accumulated other comprehensive loss |  |  | (87,977 | ) |  |  | (77,896 | )
|  |  | 691,584 |  |  |  | 708,343 |
Less cost of common stock in treasury |  |  | (150,585 | ) |  |  | (152,384 | )
Total shareholders’ equity |  |  | 540,999 |  |  |  | 555,959 |
Total liabilities and shareholders’ equity |  | $ | 1,226,884 |  |  | $ | 1,283,794 |

The accompanying notes are an integral part of these condensed consolidated financial statements.

- 4 -

GLATFELTER

Form 10-Q

P. H. GLATFELTER COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

|  | Six months ended June 30 |
In thousands |  | 2020 |  |  | 2019 |
Operating activities |  |  |  |  |  |  |  |
Net income |  | $ | 4,990 |  |  | $ | 11,117 |
Loss (income) from discontinued operations, net of taxes |  |  | 135 |  |  |  | (221 | )
Adjustments to reconcile to net cash used by continuing operations: |  |  |  |  |  |  |  |
Depreciation, depletion and amortization |  |  | 29,608 |  |  |  | 25,520 |
Amortization of debt issue costs and original issue discount |  |  | 293 |  |  |  | 1,380 |
Asset impairment charge |  |  | 900 |  |  |  | — |
Deferred income tax benefit |  |  | (2,432 | ) |  |  | (143 | )
Gains on dispositions of plant, equipment and timberlands, net |  |  | (597 | ) |  |  | (1,092 | )
Share-based compensation |  |  | 2,377 |  |  |  | 1,638 |
Change in operating assets and liabilities |  |  |  |  |  |  |  |
Accounts receivable |  |  | 1,388 |  |  |  | (17,004 | )
Inventories |  |  | (7,450 | ) |  |  | (19,513 | )
Prepaid and other current assets |  |  | (1,757 | ) |  |  | (6,593 | )
Accounts payable |  |  | (33,062 | ) |  |  | (3,465 | )
Accruals and other current liabilities |  |  | 2,510 |  |  |  | (12,258 | )
Other |  |  | 2,185 |  |  |  | 1,349 |
Net cash used by operating activities from continuing operations |  |  | (912 | ) |  |  | (19,285 | )
Investing activities |  |  |  |  |  |  |  |
Expenditures for purchases of plant, equipment and timberlands |  |  | (12,011 | ) |  |  | (10,633 | )
Proceeds from disposals of plant, equipment and timberlands, net |  |  | 613 |  |  |  | 1,116 |
Acquisition, net of cash acquired |  |  | — |  |  |  | (1,974 | )
Other |  |  | (50 | ) |  |  | (90 | )
Net cash used by investing activities from continuing operations |  |  | (11,448 | ) |  |  | (11,581 | )
Financing activities |  |  |  |  |  |  |  |
Net (repayments) borrowings under revolving credit facility |  |  | — |  |  |  | (19,294 | )
Repayment of 5.375% Notes |  |  | — |  |  |  | (250,000 | )
Proceeds from term loans |  |  | — |  |  |  | 248,644 |
Payments of borrowing costs |  |  | — |  |  |  | (2,170 | )
Repayment of term loans |  |  | (11,300 | ) |  |  | (5,326 | )
Payments of dividends |  |  | (11,513 | ) |  |  | (11,452 | )
Payments related to share-based compensation awards and other |  |  | (362 | ) |  |  | (755 | )
Net cash used by financing activities from continuing operations |  |  | (23,175 | ) |  |  | (40,353 | )
Effect of exchange rate changes on cash |  |  | (123 | ) |  |  | (291 | )
Net decrease in cash, cash equivalents and restricted cash |  |  | (35,658 | ) |  |  | (71,510 | )
Change in cash, cash equivalents and restricted cash from discontinued operations |  |  | (945 | ) |  |  | (12,230 | )
Cash, cash equivalents and restricted cash at the beginning of period |  |  | 126,201 |  |  |  | 142,685 |
Cash, cash equivalents and restricted cash at the end of period |  |  | 89,598 |  |  |  | 58,945 |
Less: restricted cash in Prepaid and other current assets |  |  | (2,000 | ) |  |  | — |
Less: restricted cash in Other assets |  |  | (10,979 | ) |  |  | — |
Cash and cash equivalents at the end of period |  | $ | 76,619 |  |  | $ | 58,945 |
Supplemental cash flow information |  |  |  |  |  |  |  |
Cash paid for: |  |  |  |  |  |  |  |
Interest |  | $ | 3,175 |  |  | $ | 7,742 |
Income taxes, net |  |  | 4,669 |  |  |  | 7,157 |

The accompanying notes are an integral part of these condensed consolidated financial statements.

- 5 -

GLATFELTER

Form 10-Q

P. H. GLATFELTER COMPANY AND SUBSIDIARIES

STATEMENTS OF SHAREHOLDERS’ EQUITY

(unaudited)

In thousands |  | Common stock |  |  | Capital in Excess of Par Value |  |  | Retained Earnings |  |  | Accumulated Other Comprehensive Loss |  |  | Treasury Stock |  |  | Total Shareholders’ Equity |
Balance at April 1, 2020 |  | $ | 544 |  |  | $ | 59,623 |  |  | $ | 727,440 |  |  | $ | (93,217 | ) |  | $ | (151,480 | ) |  | $ | 542,910 |
Net loss |  |  |  |  |  |  |  |  |  |  | (2,416 | ) |  |  |  |  |  |  |  |  |  |  | (2,416 | )
Other comprehensive income |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 5,240 |  |  |  |  |  |  |  | 5,240 |
Comprehensive income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 2,824 |
Cash dividends declared ($0.135 per share) |  |  |  |  |  |  |  |  |  |  | (5,989 | ) |  |  |  |  |  |  |  |  |  |  | (5,989 | )
Share-based compensation expense |  |  |  |  |  |  | 1,292 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,292 |
Delivery of treasury shares |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
RSUs and PSAs |  |  |  |  |  |  | (865 | ) |  |  |  |  |  |  |  |  |  |  | 850 |  |  |  | (15 | )
Employee stock options exercised — net |  |  |  |  |  |  | (68 | ) |  |  |  |  |  |  |  |  |  |  | 45 |  |  |  | (23 | )
Balance at June 30, 2020 |  | $ | 544 |  |  | $ | 59,982 |  |  | $ | 719,035 |  |  | $ | (87,977 | ) |  | $ | (150,585 | ) |  | $ | 540,999 |
Balance at April 1, 2019 |  | $ | 544 |  |  | $ | 60,565 |  |  | $ | 769,857 |  |  | $ | (139,535 | ) |  | $ | (155,243 | ) |  | $ | 536,188 |
Net income |  |  |  |  |  |  |  |  |  |  | 5,831 |  |  |  |  |  |  |  |  |  |  |  | 5,831 |
Other comprehensive income |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 5,799 |  |  |  |  |  |  |  | 5,799 |
Comprehensive income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 11,630 |
Cash dividends declared ($0.13 per share) |  |  |  |  |  |  |  |  |  |  | (5,748 | ) |  |  |  |  |  |  |  |  |  |  | (5,748 | )
Share-based compensation expense |  |  |  |  |  |  | 1,161 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,161 |
Delivery of treasury shares |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
RSUs and PSAs |  |  |  |  |  |  | (1,429 | ) |  |  |  |  |  |  |  |  |  |  | 1,427 |  |  |  | (2 | )
Employee stock options exercised — net |  |  |  |  |  |  | (377 | ) |  |  |  |  |  |  |  |  |  |  | 267 |  |  |  | (110 | )
Balance at June 30, 2019 |  | $ | 544 |  |  | $ | 59,920 |  |  | $ | 769,940 |  |  | $ | (133,736 | ) |  | $ | (153,549 | ) |  | $ | 543,119 |
Balance at January 1, 2020 |  | $ | 544 |  |  | $ | 59,900 |  |  | $ | 725,795 |  |  | $ | (77,896 | ) |  | $ | (152,384 | ) |  | $ | 555,959 |
Net income |  |  |  |  |  |  |  |  |  |  | 4,990 |  |  |  |  |  |  |  |  |  |  |  | 4,990 |
Other comprehensive loss |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (10,081 | ) |  |  |  |  |  |  | (10,081 | )
Comprehensive loss |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (5,091 | )
Cash dividends declared ($0.265 per share) |  |  |  |  |  |  |  |  |  |  | (11,750 | ) |  |  |  |  |  |  |  |  |  |  | (11,750 | )
Share-based compensation expense |  |  |  |  |  |  | 2,377 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 2,377 |
Delivery of treasury shares |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
RSUs and PSAs |  |  |  |  |  |  | (2,078 | ) |  |  |  |  |  |  |  |  |  |  | 1,657 |  |  |  | (421 | )
Employee stock options exercised — net |  |  |  |  |  |  | (217 | ) |  |  |  |  |  |  |  |  |  |  | 142 |  |  |  | (75 | )
Balance at June 30, 2020 |  | $ | 544 |  |  | $ | 59,982 |  |  | $ | 719,035 |  |  | $ | (87,977 | ) |  | $ | (150,585 | ) |  | $ | 540,999 |
Balance at January 1, 2019 |  | $ | 544 |  |  | $ | 62,239 |  |  | $ | 770,305 |  |  | $ | (137,440 | ) |  | $ | (156,750 | ) |  | $ | 538,898 |
Net income |  |  |  |  |  |  |  |  |  |  | 11,117 |  |  |  |  |  |  |  |  |  |  |  | 11,117 |
Other comprehensive income |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 3,704 |  |  |  |  |  |  |  | 3,704 |
Comprehensive income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 14,821 |
Cash dividends declared ($0.26 per share) |  |  |  |  |  |  |  |  |  |  | (11,482 | ) |  |  |  |  |  |  |  |  |  |  | (11,482 | )
Share-based compensation expense |  |  |  |  |  |  | 1,638 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,638 |
Delivery of treasury shares |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
RSUs and PSAs |  |  |  |  |  |  | (2,421 | ) |  |  |  |  |  |  |  |  |  |  | 2,097 |  |  |  | (324 | )
Employee stock options exercised — net |  |  |  |  |  |  | (1,536 | ) |  |  |  |  |  |  |  |  |  |  | 1,104 |  |  |  | (432 | )
Balance at June 30, 2019 |  | $ | 544 |  |  | $ | 59,920 |  |  | $ | 769,940 |  |  | $ | (133,736 | ) |  | $ | (153,549 | ) |  | $ | 543,119 |

The accompanying notes are an integral part of these condensed consolidated financial statements.

- 6 -

GLATFELTER

Form 10-Q

P. H. GLATFELTER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. | ORGANIZATION

P. H. Glatfelter Company and subsidiaries (“Glatfelter”) is a leading global supplier of engineered materials. Our high-quality, innovative and customizable solutions are found in tea and single-serve coffee filtration, personal hygiene and packaging products as well as home improvement and industrial applications. We are headquartered in York, PA, and transitioning to new headquarters in Charlotte, NC, and operate facilities in the United States, Canada, Germany, France, the United Kingdom and the Philippines. We have sales and distribution offices in the U.S., Europe, Russia and China and our products are marketed worldwide, either directly to customers or through brokers and agents. The terms “we,” “us,” “our,” “the Company,” or “Glatfelter,” refer to P. H. Glatfelter Company and subsidiaries unless the context indicates otherwise.

2. | ACCOUNTING POLICIES

Basis of Presentation The unaudited condensed consolidated financial statements (“financial statements”) include the accounts of Glatfelter and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated.

We prepared these financial statements in accordance with accounting principles generally accepted in the United States of America (“generally accepted accounting principles” or “GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission pertaining to interim financial statements. In our opinion, the financial statements reflect all normal, recurring adjustments needed to present fairly our results for the interim periods. When preparing these financial statements, we have assumed you have read the audited consolidated financial statements included in our 2019 Annual Report on Form 10-K.

Discontinued Operations The results of operations for our former Specialty Papers business have been classified as discontinued operations for all periods presented in the condensed consolidated statements of income.

Accounting Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingencies as of the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Management believes the estimates and assumptions used in the preparation of these financial statements are reasonable, based upon currently available facts and known circumstances, but recognizes actual results may differ from those estimates and assumptions.

Restricted Cash Restricted cash represents amounts contributed to a 401(k) suspense accounts in connection with the termination of the Company’s qualified pension plan in 2019 and subsequent reversion of excess plan assets to the Company in 2020. The amounts contributed to the 401(k)-suspense account can only be used to pay 401(k) contributions to employees for a period not to exceed the next seven years from its establishment in 2020.

Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13 “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” that changes the impairment model for most financial instruments, including trade receivables from an incurred loss method to a new forward-looking approach, based on expected losses. Under the new guidance, an allowance is recognized based on an estimate of expected credit losses. We adopted this standard effective January 1, 2020 using a modified retrospective approach. The adoption of this standard did not impact our results of operations or financial position.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The update eliminates, clarifies, and modifies certain guidance related to the accounting for income taxes. ASU 2019-12 is effective for annual reporting periods beginning after December 15, 2020, with early adoption permitted. We are currently evaluating the impact this ASU will have on our financial statements and related disclosures as well as the timing of adoption.

- 7 -

GLATFELTER

Form 10-Q

3. | RESTRUCTURING

In the first quarter of 2020 we announced restructuring actions within the Composite Fibers operating segment. The actions primarily consisted of the consolidation of our metallizing operation from Gernsbach, Germany to our Caerphilly, U.K. site.

|  | Three months ended June 30 |  |  |  | Six months ended June 30 |  |
In thousands |  | 2020 |  |  |  | 2020 |  |
Severance and benefit continuation |  | $ | 2,689 |  |  |  | $ | 6,143 |  |
Accelerated depreciation |  |  | 1,352 |  |  |  |  | 3,885 |  |
Inventory and spare parts |  |  | 935 |  |  |  |  | 935 |  |
Other |  |  | 91 |  |  |  |  | 91 |  |
Total |  | $ | 5,067 |  |  |  | $ | 11,054 |  |

The restructuring charge is recorded under the caption “Costs of product sold” in the accompanying condensed consolidated statements of income for the three months and six months ended June 30, 2020. The amounts accrued for severance and benefit continuation are recorded as other current liabilities in the accompanying condensed consolidated balance sheet as of June 30, 2020. With the exception of the severance and benefit continuation amounts, substantially all other amounts accrued represent accelerated non-cash asset write-downs. The severance and benefit continuation costs are primarily expected to be paid out ratably over the next 6 months.

4.ASSET IMPAIRMENT

During the second quarter of 2020, in connection with an assessment of potential impairment of indefinite lived intangible assets, we recorded $0.9 million of non-cash asset impairment charge related to a trade name intangible asset acquired in connection with our Composite Fibers segment’s 2013 Dresden acquisition. The charge was due to a change in the estimated fair value of the trade name, primarily driven by lower forecasted wallcover revenues associated with economic instability in Russia and Ukraine and incremental impacts from the COVID-19 pandemic on this business. The charge is recorded in the accompanying condensed consolidated statements of income under the caption “Selling, general and administrative expenses.” The fair value of the asset was estimated using a discounted cash flow model, Level 3 fair value classification.

5. | REVENUE

The following tables set forth disaggregated information pertaining to our net sales:

|  | Three months ended June 30 |  |  | Six months ended June 30 |
In thousands |  | 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |
Composite Fibers |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Food & beverage |  | $ | 73,014 |  |  | $ | 70,390 |  |  | $ | 144,481 |  |  | $ | 141,843 |
Wallcovering |  |  | 11,259 |  |  |  | 22,958 |  |  |  | 31,152 |  |  |  | 41,508 |
Technical specialties |  |  | 18,816 |  |  |  | 19,266 |  |  |  | 38,823 |  |  |  | 38,554 |
Composite laminates |  |  | 8,126 |  |  |  | 9,218 |  |  |  | 17,889 |  |  |  | 17,693 |
Metallized |  |  | 10,922 |  |  |  | 10,749 |  |  |  | 22,503 |  |  |  | 21,700 |
|  |  | 122,137 |  |  |  | 132,581 |  |  |  | 254,848 |  |  |  | 261,298 |
Airlaid Materials |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Feminine hygiene |  |  | 50,668 |  |  |  | 51,851 |  |  |  | 100,764 |  |  |  | 106,839 |
Specialty wipes |  |  | 20,947 |  |  |  | 17,656 |  |  |  | 38,159 |  |  |  | 34,988 |
Tabletop |  |  | 5,529 |  |  |  | 16,347 |  |  |  | 20,581 |  |  |  | 29,678 |
Adult incontinence |  |  | 5,011 |  |  |  | 6,365 |  |  |  | 11,156 |  |  |  | 11,853 |
Home care |  |  | 6,278 |  |  |  | 4,352 |  |  |  | 11,490 |  |  |  | 8,316 |
Other |  |  | 5,613 |  |  |  | 5,901 |  |  |  | 10,745 |  |  |  | 11,214 |
|  |  | 94,046 |  |  |  | 102,472 |  |  |  | 192,895 |  |  |  | 202,888 |
Total |  | $ | 216,183 |  |  | $ | 235,053 |  |  | $ | 447,743 |  |  | $ | 464,186 |

- 8 -

GLATFELTER

Form 10-Q

|  | Three months ended June 30 |  |  | Six months ended June 30 |
In thousands |  | 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |
Composite Fibers |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Europe, Middle East and Africa |  | $ | 68,807 |  |  | $ | 80,002 |  |  | $ | 148,402 |  |  | $ | 157,916 |
Americas |  |  | 33,352 |  |  |  | 33,964 |  |  |  | 66,073 |  |  |  | 65,604 |
Asia Pacific |  |  | 19,978 |  |  |  | 18,615 |  |  |  | 40,373 |  |  |  | 37,778 |
|  |  | 122,137 |  |  |  | 132,581 |  |  |  | 254,848 |  |  |  | 261,298 |
Airlaid Materials |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Europe, Middle East and Africa |  |  | 45,879 |  |  |  | 55,206 |  |  |  | 98,599 |  |  |  | 109,645 |
Americas |  |  | 45,262 |  |  |  | 45,261 |  |  |  | 89,648 |  |  |  | 89,595 |
Asia Pacific |  |  | 2,905 |  |  |  | 2,005 |  |  |  | 4,648 |  |  |  | 3,648 |
|  |  | 94,046 |  |  |  | 102,472 |  |  |  | 192,895 |  |  |  | 202,888 |
Total |  | $ | 216,183 |  |  | $ | 235,053 |  |  | $ | 447,743 |  |  | $ | 464,186 |

6. | DISCONTINUED OPERATIONS

On October 31, 2018, we completed the previously announced sale of our Specialty Papers business on a cash free and debt free basis to Pixelle Specialty Solutions LLC, an affiliate of Lindsay Goldberg (the “Purchaser”) for $360 million. Cash proceeds from the sale were approximately $323 million in cash reflecting estimated purchase price adjustments as of the closing date and the assumption by the Purchaser of approximately $38 million in retiree healthcare liabilities. In addition, the Purchaser assumed approximately $210 million of pension liabilities relating to Specialty Papers’ employees and received approximately $274 million of related assets from the Company’s existing pension plan.

In connection with the sale of Specialty Papers, we entered into a Transition Services Agreement with Purchaser pursuant to which we agreed to provide various back-office and information technology support until the business is fully separated from us, which was completed in the third quarter of 2019.

The following table sets forth a summary of discontinued operations included in the condensed consolidated statements of income:

|  | Three months ended June 30 |  |  | Six months ended June 30 |
In thousands |  | 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |
Net sales |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Energy and related sales, net |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total revenues |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Costs of products sold |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Gross profit |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Selling, general and administrative expenses |  |  | 135 |  |  |  | 485 |  |  |  | 135 |  |  |  | (229 | )
Gains on dispositions of plant, equipment and timberlands, net |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Operating income (loss) |  |  | (135 | ) |  |  | (485 | ) |  |  | (135 | ) |  |  | 229 |
Non-operating income (expense) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest expense |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Other, net |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Impairment charge |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Income (loss) before income taxes |  |  | (135 | ) |  |  | (485 | ) |  |  | (135 | ) |  |  | 229 |
Income tax provision (benefit) |  |  | — |  |  |  | (23 | ) |  |  | — |  |  |  | 8 |
Income (loss) from discontinued operations |  | $ | (135 | ) |  | $ | (462 | ) |  | $ | (135 | ) |  | $ | 221 |

- 9 -

GLATFELTER

Form 10-Q

The following table sets forth a summary of cash flows from discontinued operations which is included in the condensed consolidated statements of cash flows:

|  | Six months ended June 30 |  |
In thousands |  | 2020 |  |  | 2019 |  |
Net cash used by operating activities |  | $ | (945 | ) |  | $ | (10,658 | ) |
Net cash used by investing activities |  |  | — |  |  |  | (1,572 | ) |
Net cash provided by financing activities |  |  | — |  |  |  | — |  |
Change in cash and cash equivalents from discontinued operations |  | $ | (945 | ) |  | $ | (12,230 | ) |

7. | GAINS ON DISPOSITION OF PLANT, EQUIPMENT AND TIMBERLANDS

The following table sets forth sales of timberlands and other assets completed during the first six months of 2020 and 2019.

Dollars in thousands |  | Acres |  |  | Proceeds |  |  | Gain |  |
2020 |  |  |  |  |  |  |  |  |  |  |  |  |
Timberlands |  | 216 |  |  | $ | 613 |  |  | $ | 601 |  |
Other |  | n/a |  |  |  | - |  |  |  | (4 | ) |
Total |  |  |  |  |  | $ | 613 |  |  | $ | 597 |  |
2019 |  |  |  |  |  |  |  |  |  |  |  |  |
Timberlands |  |  | 361 |  |  | $ | 902 |  |  | $ | 881 |  |
Other |  | n/a |  |  |  | 214 |  |  |  | 211 |  |
Total |  |  |  |  |  | $ | 1,116 |  |  | $ | 1,092 |  |

8. | EARNINGS PER SHARE

The following table sets forth the details of basic and diluted earnings per share (“EPS”) from continuing operations:

|  | Three months ended June 30 |
In thousands, except per share |  | 2020 |  |  |  | 2019 |
Income (loss) from continuing operations |  | $ | (2,281 | ) |  |  | $ | 6,293 |
Weighted average common shares outstanding used in basic EPS |  |  | 44,343 |  |  |  |  | 44,140 |
Effect of dilutive SOSARs, PSAs and RSUs |  |  | — |  |  |  |  | 242 |
Weighted average common shares outstanding and |  |  |  |  |  |  |  |  |
common share equivalents used in diluted EPS |  |  | 44,343 |  |  |  |  | 44,382 |
Earnings (loss) per share from continuing operations |  |  |  |  |  |  |  |  |
Basic |  | $ | (0.05 | ) |  |  | $ | 0.14 |
Diluted |  |  | (0.05 | ) |  |  |  | 0.14 |

- 10 -

GLATFELTER

Form 10-Q

|  | Six months ended June 30 |
In thousands, except per share |  | 2020 |  |  |  | 2019 |
Income from continuing operations |  | $ | 5,125 |  |  |  | $ | 10,896 |
Weighted average common shares outstanding used in basic EPS |  |  | 44,309 |  |  |  |  | 44,084 |
Effect of dilutive SOSARs, PSAs and RSUs |  |  | 232 |  |  |  |  | 267 |
Weighted average common shares outstanding and |  |  |  |  |  |  |  |  |
common share equivalents used in diluted EPS |  |  | 44,541 |  |  |  |  | 44,351 |
Earnings per share from continuing operations |  |  |  |  |  |  |  |  |
Basic |  | $ | 0.12 |  |  |  | $ | 0.25 |
Diluted |  |  | 0.12 |  |  |  |  | 0.25 |

The numerator used to compute income per share from discontinued operations was $(0.1) million, $(0.5) million, $(0.1) million and $0.2 million, for the second quarters of 2020 and 2019 and the first six months of 2020 and 2019, respectively. The denominator used to compute per share amounts of loss from discontinued operations is the same as the denominator used for per share amounts of income from continuing operations.

The following table sets forth potential common shares outstanding that were not included in the computation of diluted EPS for the periods indicated, because their effect would be anti-dilutive:

|  | June 30 |
In thousands |  | 2020 |  |  |  | 2019 |
Three months ended |  |  | 1,129 |  |  |  |  | 1,233 |
Six months ended |  |  | 1,129 |  |  |  |  | 1,233 |

- 11 -

GLATFELTER

Form 10-Q

9. | ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table sets forth details of the changes in accumulated other comprehensive income (losses) for the three months and six months ended June 30, 2020 and 2019.

In thousands | Currency translation adjustments |  |  | Unrealized gain (loss) on cash flow hedges |  |  | Change in pensions |  |  | Change in other postretirement defined benefit plans |  |  | Total |
Balance at April 1, 2020 | $ | (90,249 | ) |  | $ | 2,999 |  |  | $ | (7,105 | ) |  | $ | 1,138 |  |  | $ | (93,217 | )
Other comprehensive income before reclassifications (net of tax) |  | 5,891 |  |  |  | 516 |  |  |  | — |  |  |  | — |  |  |  | 6,407 |
Amounts reclassified from accumulated other comprehensive income (net of tax) |  | — |  |  |  | (1,068 | ) |  |  | 149 |  |  |  | (248 | ) |  |  | (1,167 | )
Net current period other comprehensive income (loss) |  | 5,891 |  |  |  | (552 | ) |  |  | 149 |  |  |  | (248 | ) |  |  | 5,240 |
Balance at June 30, 2020 | $ | (84,358 | ) |  | $ | 2,447 |  |  | $ | (6,956 | ) |  | $ | 890 |  |  | $ | (87,977 | )
Balance at April 1, 2019 | $ | (74,427 | ) |  | $ | 4,421 |  |  | $ | (70,810 | ) |  | $ | 1,281 |  |  | $ | (139,535 | )
Other comprehensive income before reclassifications (net of tax) |  | 1,426 |  |  |  | 1,040 |  |  |  | 4,926 |  |  |  | — |  |  |  | 7,392 |
Amounts reclassified from accumulated other comprehensive income (net of tax) |  | — |  |  |  | (1,019 | ) |  |  | (441 | ) |  |  | (133 | ) |  |  | (1,593 | )
Net current period other comprehensive income (loss) |  | 1,426 |  |  |  | 21 |  |  |  | 4,485 |  |  |  | (133 | ) |  |  | 5,799 |
Balance at June 30, 2019 | $ | (73,001 | ) |  | $ | 4,442 |  |  | $ | (66,325 | ) |  | $ | 1,148 |  |  | $ | (133,736 | )

In thousands | Currency translation adjustments |  |  | Unrealized gain (loss) on cash flow hedges |  |  | Change in pensions |  |  | Change in other postretirement defined benefit plans |  |  | Total |
Balance at January 1, 2020 | $ | (76,346 | ) |  | $ | 4,316 |  |  | $ | (7,253 | ) |  | $ | 1,387 |  |  | $ | (77,896 | )
Other comprehensive income (loss) before reclassifications (net of tax) |  | (8,012 | ) |  |  | 799 |  |  |  | — |  |  |  | - |  |  |  | (7,213 | )
Amounts reclassified from accumulated other comprehensive income (net of tax) |  | — |  |  |  | (2,668 | ) |  |  | 297 |  |  |  | (497 | ) |  |  | (2,868 | )
Net current period other comprehensive income (loss) |  | (8,012 | ) |  |  | (1,869 | ) |  |  | 297 |  |  |  | (497 | ) |  |  | (10,081 | )
Balance at June 30, 2020 | $ | (84,358 | ) |  | $ | 2,447 |  |  | $ | (6,956 | ) |  | $ | 890 |  |  | $ | (87,977 | )
Balance at January 1, 2019 | $ | (69,622 | ) |  | $ | 2,199 |  |  | $ | (71,431 | ) |  | $ | 1,414 |  |  | $ | (137,440 | )
Other comprehensive income (loss) before reclassifications (net of tax) |  | (3,379 | ) |  |  | 3,681 |  |  |  | 4,926 |  |  |  | - |  |  |  | 5,228 |
Amounts reclassified from accumulated other comprehensive income (net of tax) |  | — |  |  |  | (1,438 | ) |  |  | 180 |  |  |  | (266 | ) |  |  | (1,524 | )
Net current period other comprehensive income (loss) |  | (3,379 | ) |  |  | 2,243 |  |  |  | 5,106 |  |  |  | (266 | ) |  |  | 3,704 |
Balance at June 30, 2019 | $ | (73,001 | ) |  | $ | 4,442 |  |  | $ | (66,325 | ) |  | $ | 1,148 |  |  | $ | (133,736 | )

- 12 -

GLATFELTER

Form 10-Q

Reclassifications out of accumulated other comprehensive income and into the condensed consolidated statements of income were as follows:

|  | Three months ended June 30 |  |  | Six months ended June 30 |  |  |
In thousands |  | 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |  |  |
Description |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Line Item in Statements of Income
Cash flow hedges (Note 17) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Gains on cash flow hedges |  | $ | (1,488 | ) |  | $ | (1,411 | ) |  | $ | (3,670 | ) |  | $ | (1,996 | ) |  | Costs of products sold
Tax expense |  |  | 420 |  |  |  | 392 |  |  |  | 1,002 |  |  |  | 558 |  |  | Income tax provision
Net of tax |  |  | (1,068 | ) |  |  | (1,019 | ) |  |  | (2,668 | ) |  |  | (1,438 | ) |  |
Retirement plan obligations (Note 12) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Amortization of deferred benefit pension plans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Prior service costs |  |  | 11 |  |  |  | 54 |  |  |  | 23 |  |  |  | 88 |  |  | Other, net
Actuarial losses |  |  | 161 |  |  |  | 789 |  |  |  | 321 |  |  |  | 1,564 |  |  | Other, net
|  |  | 172 |  |  |  | 843 |  |  |  | 344 |  |  |  | 1,652 |  |  |
Tax benefit |  |  | (23 | ) |  |  | (1,284 | ) |  |  | (47 | ) |  |  | (1,472 | ) |  | Income tax provision
Net of tax |  |  | 149 |  |  |  | (441 | ) |  |  | 297 |  |  |  | 180 |  |  |
Amortization of deferred benefit other plans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Prior service costs |  |  | (116 | ) |  |  | (3 | ) |  |  | (232 | ) |  |  | (5 | ) |  | Other, net
Actuarial gains |  |  | (208 | ) |  |  | (173 | ) |  |  | (417 | ) |  |  | (346 | ) |  | Other, net
|  |  | (324 | ) |  |  | (176 | ) |  |  | (649 | ) |  |  | (351 | ) |  |
Tax expense |  |  | 76 |  |  | 43 |  |  |  | 152 |  |  | 85 |  |  | Income tax provision
Net of tax |  |  | (248 | ) |  |  | (133 | ) |  |  | (497 | ) |  |  | (266 | ) |  |
Total reclassifications, net of tax |  | $ | (1,167 | ) |  | $ | (1,593 | ) |  | $ | (2,868 | ) |  | $ | (1,524 | ) |  |

10. | INCOME TAXES

Income taxes are recognized for the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in our consolidated financial statements or tax returns. The effects of income taxes are measured based on enacted tax laws and rates.

For the six months ended June 30, 2020 we had pretax income from continuing operations of $10.3 million and income tax expense of $5.2 million. The effective income tax rate for the period ended June 30, 2020 was unfavorably impacted by $7.8 million of pension and restructuring charges for which no tax benefit was recorded, offset in part by $2.6 million recorded in connection with passage of the Coronavirus Aid, Relief, and Economic Security Act (“CARES”). This Act, which was signed into law on March 27, 2020, modified the “net operating loss” provisions of previous law to allow losses arising in a taxable year beginning after December 31, 2017 and before January 1, 2021, to be carried back five years.

For the six months ended June 30, 2020, we recorded a decrease in our valuation allowance of $3.4 million against our net deferred tax assets in connection with passage of the CARES Act and the ability to carry our “net operating loss” back five years. In assessing the need for a valuation allowance, management considers all available positive and negative evidence in its analysis. Based on this analysis, we recorded a valuation allowance for the portion of deferred tax assets where the weight of the evidence indicated it is more likely than not that the deferred assets will not be realized.

As of June 30, 2020 and December 31, 2019, we had $33.7 million and $30.5 million of gross unrecognized tax benefits. As of June 30, 2020, if such benefits were to be recognized, approximately $22.9 million would be recorded as a component of income tax expense, thereby affecting our effective tax rate.

We, or one of our subsidiaries, file income tax returns with the United States Internal Revenue Service, as well as various state and foreign authorities.

- 13 -

GLATFELTER

Form 10-Q

The following table summarizes, by major jurisdiction, tax years that remain subject to examination:

| Open Tax Years
Jurisdiction | Examinations not yet initiated |  |  | Examination in progress
United States |  |  |  |
Federal | 2016 - 2019 |  |  | N/A
State | 2015 - 2019 |  |  | 2015 - 2018
Canada(1) | 2012 - 2019 |  |  | N/A
Germany(1) | 2016 - 2019 |  |  | N/A
France | 2018 - 2019 |  |  | N/A
United Kingdom | 2018 - 2019 |  |  | N/A
Philippines | 2019 |  |  | 2016 - 2018

(1) | includes provincial or similar local jurisdictions, as applicable

The amount of income taxes we pay is subject to ongoing audits by federal, state and foreign tax authorities, which often result in proposed assessments. Management performs a comprehensive review of its global tax positions on a quarterly basis and accrues amounts for uncertain tax positions. Based on these reviews and the result of discussions and resolutions of matters with certain tax authorities and the closure of tax years subject to tax audit, reserves are adjusted as necessary. However, future results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are determined or resolved or as such statutes are closed. Due to potential for resolution of federal, state and foreign examinations, and the lapse of various statutes of limitation, it is reasonably possible our gross unrecognized tax benefits balance may decrease within the next twelve months by a range of zero to $1.2 million. Substantially all of this range relates to tax positions taken in Canada and the U.S.

We recognize interest and penalties related to uncertain tax positions as income tax expense. The following table summarizes information included in continuing operations related to interest on uncertain tax positions:

| Six months ended June 30 |
In millions | 2020 |  |  |  | 2019 |
Interest expense (income) | $ | 0.2 |  |  |  | $ | 0.2 |

| June 30 |  |  |  | December 31 |
| 2020 |  |  |  | 2019 |
Accrued interest payable | $ | 0.6 |  |  |  | $ | 0.4 |

11.STOCK-BASED COMPENSATION

The P. H. Glatfelter Amended and Restated Long-Term Incentive Plan (the “LTIP”) provides for the issuance of Glatfelter common stock to eligible participants in the form of restricted stock units, restricted stock awards, non-qualified stock options, performance shares, incentive stock options and performance units.

Pursuant to terms of the LTIP, we have issued to eligible participants restricted stock units (“RSUs”), performance share awards (“PSAs”) and stock only stock appreciation rights.

Awards of RSUs and PSAs are made under our LTIP. The vesting of RSUs is generally based on the passage of time, generally over a three-year period or in certain instances the RSUs were issued with five-year cliff vesting. PSAs are issued to members of management and vesting is based on achievement of cumulative financial performance targets covering a two-year period followed by an additional one-year service period. The performance measures include a minimum, target and maximum performance level providing the grantees an opportunity to receive more or less shares than targeted depending on actual financial performance. In addition, PSA awards include a modifier based on the three-year total shareholder return relative to a broad market index. For RSUs the grant date fair value of the awards, or the closing price per common share on the date of the award, is used to determine the amount of expense to be recognized over the applicable service period. For PSAs, the grant date fair value is estimated using a lattice model. The significant inputs include the stock price, volatility, dividend yield, and risk-free rate of return. Settlement of RSUs and PSAs will be made in shares of our common stock currently held in treasury.

- 14 -

GLATFELTER

Form 10-Q

The following table summarizes RSU and PSA activity during periods indicated:

Units |  | 2020 |  |  |  | 2019 |
Balance at January 1, |  |  | 896,463 |  |  |  |  | 756,786 |
Granted |  |  | 369,975 |  |  |  |  | 449,054 |
Forfeited |  |  | (81,046 | ) |  |  |  | (127,603 | )
Shares delivered |  |  | (136,182 | ) |  |  |  | (163,078 | )
Balance at June 30, |  |  | 1,049,210 |  |  |  |  | 915,159 |

The amount granted in 2020 and 2019 includes 169,983 and 218,422, respectively, of PSAs exclusive of reinvested dividends.

The following table sets forth aggregate RSU and PSA compensation expense included in continuing operations for the periods indicated:

|  | June 30 |
In thousands |  | 2020 |  |  |  | 2019 |
Three months ended |  | $ | 1,292 |  |  |  | $ | 1,161 |
Six months ended |  |  | 2,377 |  |  |  |  | 1,595 |

Stock Only Stock Appreciation Rights (“SOSARs”) Under terms of the SOSAR, a recipient receives the right to a payment in the form of shares of common stock equal to the difference, if any, in the fair market value of one share of common stock at the time of exercising the SOSAR and the exercise price. The SOSARs vest ratably over a three year period and have a term of ten years. No SOSARs were awarded since 2016.

The following table sets forth information related to outstanding SOSARS:

|  | 2020 |  |  | 2019 |
SOSARS |  | Shares |  |  |  | Wtd Avg Exercise Price |  |  | Shares |  |  | Wtd Avg Exercise Price |
Outstanding at January 1, |  |  | 1,291,947 |  |  |  | $ | 20.05 |  |  |  | 2,334,742 |  |  | $ | 18.08 |
Granted |  |  | — |  |  |  |  | — |  |  |  | — |  |  |  | — |
Exercised |  |  | (58,460 | ) |  |  |  | 12.85 |  |  |  | (441,920 | ) |  |  | 14.31 |
Canceled / forfeited |  |  | (104,801 | ) |  |  |  | 21.57 |  |  |  | (446,435 | ) |  |  | 21.06 |
Outstanding at June 30, |  |  | 1,128,686 |  |  |  | $ | 20.28 |  |  |  | 1,446,387 |  |  | $ | 19.31 |

The following table sets forth SOSAR compensation expense included in continuing operations for the periods indicated:

|  | June 30 |
In thousands |  | 2020 |  |  |  | 2019 |
Three months ended |  | $ | — |  |  |  | $ | — |
Six months ended |  |  | — |  |  |  |  | 43 |

- 15 -

GLATFELTER

Form 10-Q

12. | RETIREMENT PLANS AND OTHER POST-RETIREMENT BENEFITS

The following tables provide information with respect to the net periodic costs of our pension and post-retirement medical benefit plans included in continuing operations.

|  | Three months ended June 30 |
In thousands |  | 2020 |  |  |  | 2019 |
Pension Benefits |  |  |  |  |  |  |  |  |
Service cost |  | $ | 48 |  |  |  | $ | 373 |
Interest cost |  |  | 300 |  |  |  |  | 3,337 |
Expected return on plan assets |  |  | — |  |  |  |  | (3,699 | )
Amortization of prior service cost |  |  | 11 |  |  |  |  | 54 |
Amortization of unrecognized loss |  |  | 161 |  |  |  |  | 789 |
Total net periodic benefit cost |  | $ | 520 |  |  |  | $ | 854 |
Other Benefits |  |  |  |  |  |  |  |  |
Service cost |  | $ | 7 |  |  |  | $ | 9 |
Interest cost |  |  | 46 |  |  |  |  | 84 |
Amortization of prior service credit |  |  | (116 | ) |  |  |  | (3 | )
Amortization of actuarial gain |  |  | (208 | ) |  |  |  | (173 | )
Total net periodic benefit credit |  | $ | (271 | ) |  |  | $ | (83 | )

|  | Six months ended June 30 |
In thousands |  | 2020 |  |  |  | 2019 |
Pension Benefits |  |  |  |  |  |  |  |  |
Service cost |  | $ | 92 |  |  |  | $ | 857 |
Interest cost |  |  | 601 |  |  |  |  | 6,787 |
Expected return on plan assets |  |  | — |  |  |  |  | (7,395 | )
Amortization of prior service cost |  |  | 23 |  |  |  |  | 88 |
Amortization of unrecognized loss |  |  | 321 |  |  |  |  | 1,564 |
Total net periodic benefit cost |  | $ | 1,037 |  |  |  | $ | 1,901 |
Other Benefits |  |  |  |  |  |  |  |  |
Service cost |  | $ | 14 |  |  |  | $ | 18 |
Interest cost |  |  | 92 |  |  |  |  | 168 |
Amortization of prior service credit |  |  | (232 | ) |  |  |  | (5 | )
Amortization of actuarial gain |  |  | (417 | ) |  |  |  | (346 | )
Total net periodic benefit credit |  | $ | (543 | ) |  |  | $ | (165 | )

During 2019, our qualified pension plan was terminated, and all plan liabilities were settled by either a lump sum distribution or assumed by a third-party in exchange for a transfer of assets from the pension plan trust fund. For active participants, the pension benefit was replaced with an enhanced defined contribution plan, or 401(k), to which we contributed a percent of eligible compensation. Currently we contribute 10% from a suspense account established in connection with the termination of the qualified pension plan and reversion of excess assets to us.

During the second quarter of 2020, we recorded a $6.3 million pension settlement charge, net of post settlement adjustments, in connection with the completion of the reversion of $55.5 million of excess pension plan assets. After transferring $14.1 million to a suspense account to fund future 401(k) contributions and accruing $8.3 million of excise taxes, approximately $33.1 million is available for general corporate purposes.

In December 2019, our Board of Directors approved the freezing of benefit accruals in the non-qualified pension plan for active participants effective December 31, 2019. As of January 1, 2020, each active participant’s frozen non-qualified pension benefit was transferred to a newly approved Deferred Compensation Plan non-qualified benefit plan and earns interest credits going forward. The Deferred Compensation Plan also provides for employer contributions and the Plan provides for elective employee deferrals. Under the Deferred Compensation Plan, participants are eligible to receive annual Company contributions that such participants would have received under the P. H. Glatfelter 401(k) Savings Plan but for certain limitations imposed by the Internal Revenue Code on 401(k) plan contributions (“Company Contributions”).

- 16 -

GLATFELTER

Form 10-Q

The remaining non-contributory pension plans are unfunded non-qualified plans.

13. | INVENTORIES

Inventories, net of reserves, were as follows:

|  | June 30 |  |  |  | December 31 |
In thousands |  | 2020 |  |  |  | 2019 |
Raw materials |  | $ | 58,082 |  |  |  | $ | 59,164 |
In-process and finished |  |  | 96,883 |  |  |  |  | 92,231 |
Supplies |  |  | 41,079 |  |  |  |  | 39,020 |
Total |  | $ | 196,044 |  |  |  | $ | 190,415 |

14. | LEASES

We enter into a variety of arrangements in which we are the lessee for the use of automobiles, forklifts and other production equipment, production facilities, warehouses and office space. We determine if an arrangement contains a lease at inception. All our lease arrangements are operating leases and are recorded in the condensed consolidated balance sheet under the caption “Other assets” and the lease obligation is under “Other current liabilities” and “Other long-term liabilities.” We currently do not have any finance leases.

Operating lease right of use (“ROU”) assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. ROU assets also include any initial direct costs incurred and any lease payments made at or before the lease commencement date, less lease incentives received. We use our incremental borrowing rate based on information available at the commencement date in determining the lease liabilities as our leases generally do not provide an implicit rate. Lease terms may include options to extend or terminate when we are reasonably certain that the option will be exercised. Lease expense is recognized on a straight-line basis over the lease term.

The following table sets forth information related to our leases as of the periods indicated.

|  | June 30 |  |  | December 31 |  |
Dollars in thousands |  | 2020 |  |  | 2019 |  |
Right of use asset |  | $ | 14,601 |  |  | $ | 11,701 |  |
Weighted average discount rate |  |  | 3.33 | % |  |  | 2.92 | % |
Weighted average remaining maturity (months) |  |  | 66 |  |  |  | 34 |  |
The following table sets for operating lease expense for the periods indicated:
|  | June 30 |  |
In thousands |  | 2020 |  |  | 2019 |  |
Three months ended |  | $ | 1,443 |  |  | $ | 1,416 |  |
Six months ended |  |  | 2,885 |  |  |  | 3,022 |  |

The following table sets forth required future minimum lease payments for the years indicated:

In thousands |  |  |  |  |  |  |
2020 |  |  |  | $ | 2,403 |  |
2021 |  |  |  |  | 4,151 |  |
2022 |  |  |  |  | 2,690 |  |
2023 |  |  |  |  | 1,348 |  |
2024 |  |  |  |  | 939 |  |
Thereafter |  |  |  |  | 4,218 |  |

- 17 -

GLATFELTER

Form 10-Q

15. | LONG-TERM DEBT

Long-term debt is summarized as follows:

|  | June 30 |  |  |  | December 31 |
In thousands |  | 2020 |  |  |  | 2019 |
Revolving credit facility, due Feb. 2024 |  | $ | 83,985 |  |  |  | $ | 84,255 |
Term loan, due Feb. 2024 |  |  | 234,038 |  |  |  |  | 240,969 |
2.40% Term Loan, due Jun. 2022 |  |  | 3,200 |  |  |  |  | 4,012 |
2.05% Term Loan, due Mar. 2023 |  |  | 16,437 |  |  |  |  | 19,487 |
1.30% Term Loan, due Jun. 2023 |  |  | 4,799 |  |  |  |  | 5,617 |
1.55% Term Loan, due Sep. 2025 |  |  | 7,203 |  |  |  |  | 7,915 |
Total long-term debt |  |  | 349,662 |  |  |  |  | 362,255 |
Less current portion |  |  | (22,866 | ) |  |  |  | (22,940 | )
Unamortized deferred issuance costs |  |  | (2,103 | ) |  |  |  | (2,396 | )
Long-term debt, net of current portion |  | $ | 324,693 |  |  |  | $ | 336,919 |

On February 8, 2019, we entered into an amended and restated $400 million Revolving Credit Facility and a €220 million Term Loan with a consortium of banks (together, the “Credit Agreement”). The proceeds of the Term Loan due Feb. 2024 were used to redeem in its entirety the 5.375% Notes. The principal amount of the Term Loan amortizes in consecutive quarterly installments of principal, with each such quarterly installment to be in an amount equal to 1.25% of the Term Loan funded, commencing on July 1, 2019 and continuing quarterly thereafter.

For all U.S. dollar denominated borrowings under the Revolving Credit Facility, the borrowing rate is, at our option, either, (a) the bank’s base rate which is equal to the greater of i) the prime rate; ii) the federal funds rate plus 50 basis points; or iii) the Euro-rate plus 100 basis points plus an applicable spread over either i), ii) or iii) ranging from 12.5 basis points to 100 basis points based on the Company’s leverage ratio and its corporate credit ratings determined by Standard & Poor’s Rating Services and Moody’s Investor Service, Inc. (the “Corporate Credit Rating”); or (b) the Euro-rate plus an applicable margin ranging from 112.5 basis points to 200 basis points based on the Company’s leverage ratio and the Corporate Credit Rating. For non-US dollar denominated borrowings, the borrowing rate is, at our option, based on (b) above or for Euro denominated borrowings, the Euro Interbank Offering Rate (“EURIBOR”) plus an applicable margin ranging from 112.5 basis points to 200 basis points based on the Company’s leverage ratio and the Corporate Credit Rating.

In October 2019, we entered into a €180 million notional value floating-to-fixed interest rate swap agreement with certain financial institutions. Under the terms of the swap, we will pay a fixed interest rate of the applicable margin plus 0.0395% on €180 million of the underlying variable rate term loan. We will receive the greater of 0.00% or EURIBOR.

The Credit Agreement contains a number of customary covenants for financings of this type that, among other things, restrict our ability to dispose of or create liens on assets, incur additional indebtedness, repay other indebtedness, limits certain intercompany financing arrangements, make acquisitions and engage in mergers or consolidations. We are also required to comply with specified financial tests and ratios including: i) maximum net debt to EBITDA ratio (the “leverage ratio”); and ii) a consolidated EBITDA to interest expense ratio. The most restrictive of our covenants is a maximum leverage ratio of 4.0x provided that such ratio increases to 4.5x during the period of four fiscal quarters immediately following a material acquisition such as Steinfurt. As of June 30, 2020, the leverage ratio, as calculated in accordance with the definition in our Credit Agreement, was 2.4x. A breach of these requirements would give rise to certain remedies under the Revolving Credit Facility, among which are the termination of the agreement and accelerated repayment of the outstanding borrowings plus accrued and unpaid interest under the Credit Agreement.

All remaining principal outstanding and accrued interest under the Credit Agreement will be due and payable on February 8, 2024.

- 18 -

GLATFELTER

Form 10-Q

Glatfelter Gernsbach GmbH (“Gernsbach”), a wholly-owned subsidiary of ours, entered into a series of borrowing agreements with IKB Deutsche Industriebank AG, Düsseldorf (“IKB”) as summarized below:

Amounts in thousands |  | Original Principal |  |  |  | Interest Rate |  |  |  | Maturity
Borrowing date |  |  |  |  |  |  |  |  |  |  |  |
Apr. 11, 2013 |  | € | 42,700 |  |  |  |  | 2.05 | % |  |  | Mar. 2023
Sep. 4, 2014 |  |  | 10,000 |  |  |  |  | 2.40 | % |  |  | Jun. 2022
Oct. 10, 2015 |  |  | 2,608 |  |  |  |  | 1.55 | % |  |  | Sep. 2025
Apr. 26, 2016 |  |  | 10,000 |  |  |  |  | 1.30 | % |  |  | Jun. 2023
May 4, 2016 |  |  | 7,195 |  |  |  |  | 1.55 | % |  |  | Sep. 2025

Each of the borrowings require quarterly repayments of principal and interest and provide for representations, warranties and covenants customary for financings of these types. The financial covenants contained in each of the IKB loans, which relate to the minimum ratio of consolidated EBITDA to consolidated interest expense and the maximum ratio of consolidated total net debt to consolidated adjusted EBITDA, are calculated by reference to our Credit Agreement.

P. H. Glatfelter Company guarantees all debt obligations of its subsidiaries. All such obligations are recorded in these condensed consolidated financial statements.

Letters of credit issued to us by certain financial institutions totaled $7.3 million as of June 30, 2020 and December 31, 2019. The letters of credit, which reduce amounts available under our Revolving Credit Facility, primarily provide financial assurances for the benefit of certain state workers compensation insurance agencies in conjunction with our self-insurance program and for performance of certain remediation activity related to the Fox River matter. We bear the credit risk on this amount to the extent that we do not comply with the provisions of certain agreements. No amounts are outstanding under the letters of credit.

16. | FAIR VALUE OF FINANCIAL INSTRUMENTS

The amounts reported on the condensed consolidated balance sheets for cash and cash equivalents, accounts receivable and accounts payable approximate fair value. The following table sets forth carrying value and fair value of long-term debt:

| June 30, 2020 |  |  |  | December 31, 2019 |
In thousands | Carrying Value |  |  | Fair Value |  |  |  | Carrying Value |  |  | Fair Value |
Variable rate debt | $ | 83,985 |  |  | $ | 83,985 |  |  |  | $ | 84,255 |  |  | $ | 84,255 |
Term loan, due Feb. 2024 |  | 234,038 |  |  |  | 234,038 |  |  |  |  | 240,969 |  |  |  | 240,969 |
2.40% Term Loan |  | 3,200 |  |  |  | 3,258 |  |  |  |  | 4,012 |  |  |  | 4,076 |
2.05% Term Loan |  | 16,437 |  |  |  | 16,733 |  |  |  |  | 19,487 |  |  |  | 19,764 |
1.30% Term Loan |  | 4,799 |  |  |  | 4,834 |  |  |  |  | 5,617 |  |  |  | 5,624 |
1.55% Term Loan |  | 7,203 |  |  |  | 7,321 |  |  |  |  | 7,915 |  |  |  | 7,975 |
Total | $ | 349,662 |  |  | $ | 350,169 |  |  |  | $ | 362,255 |  |  | $ | 362,663 |

The values set forth above are based on observable inputs and other relevant market data (Level 2). The fair value of financial derivatives is set forth below in Note 17.

17. | FINANCIAL DERIVATIVES AND HEDGING ACTIVITIES

As part of our overall risk management practices, we enter into financial derivatives primarily designed to either i) hedge foreign currency risks associated with forecasted transactions (“cash flow hedges”); ii) mitigate the impact that changes in currency exchange rates have on intercompany financing transactions and foreign currency denominated receivables and payables (“foreign currency hedges”); or iii) convert variable-interest-rate debt to fixed rates.

Derivatives Designated as Hedging Instruments - Cash Flow Hedges We use currency forward contracts as cash flow hedges to manage our exposure to fluctuations in the currency exchange rates on certain forecasted production costs. Currency forward contracts involve fixing the exchange for delivery of a specified amount of foreign currency on a specified date. As of June 30, 2020, the maturity of currency forward contracts ranged from one month to 18 months.

- 19 -

GLATFELTER

Form 10-Q

We designate certain currency forward contracts as cash flow hedges of forecasted raw material purchases, certain production costs or capital expenditures with exposure to changes in foreign currency exchange rates. Changes in the fair value of derivatives designated and that qualify as cash flow hedges of foreign exchange risk is deferred as a component of accumulated other comprehensive income in the accompanying condensed consolidated balance sheets. With respect to hedges of forecasted raw material purchases or production costs, the amount deferred is subsequently reclassified into costs of products sold in the period that inventory produced using the hedged transaction affects earnings. For hedged capital expenditures, deferred gains or losses are reclassified and included in the historical cost of the capital asset and subsequently affect earnings as depreciation is recognized.

We had the following outstanding derivatives that were used to hedge foreign exchange risks associated with forecasted transactions and designated as hedging instruments:

In thousands |  | June 30, 2020 |  |  | December 31, 2019 |
Derivative |  |  |  |  |  |  |  |
Sell/Buy - sell notional |  |  |  |  |  |  |  |
Euro / British Pound |  |  | 18,966 |  |  |  | 17,702 |
U.S. Dollar / Euro |  |  | 8,322 |  |  |  | 5,347 |
U.S. Dollar / Canadian Dollar |  |  | 1,153 |  |  |  | 1,523 |
Sell/Buy - buy notional |  |  |  |  |  |  |  |
Euro / Philippine Peso |  |  | 976,397 |  |  |  | 1,039,432 |
British Pound / Philippine Peso |  |  | 1,111,995 |  |  |  | 1,077,871 |
Euro / U.S. Dollar |  |  | 73,257 |  |  |  | 82,317 |
U.S. Dollar / Canadian Dollar |  |  | 34,111 |  |  |  | 34,094 |
Canadian Dollar / U.S. Dollar |  |  | 1,153 |  |  |  | 1,523 |

The €220 million Term Loan is designated as a net investment hedge of our Euro functional currency foreign subsidiaries. During the first six months of 2020, we recognized a pre-tax gain of $0.8 million from changes in currency exchange rates through Other Comprehensive Income (Loss)

Derivatives Not Designated as Hedging Instruments - Foreign Currency Hedges We also entered into forward foreign exchange contracts to mitigate the impact changes in currency exchange rates have on balance sheet monetary assets and liabilities. None of these contracts are designated as hedges for financial accounting purposes and, accordingly, changes in value of the foreign exchange forward contracts and in the offsetting underlying on-balance-sheet transactions are reflected in the accompanying condensed consolidated statements of income under the caption “Other, net.”

The following sets forth derivatives used to mitigate the impact changes in currency exchange rates have on balance sheet monetary assets and liabilities:

In thousands |  | June 30, 2020 |  |  | December 31, 2019 |
Derivative |  |  |  |  |  |  |  |
Sell/Buy - sell notional |  |  |  |  |  |  |  |
U.S. Dollar / British Pound |  |  | 26,000 |  |  |  | 25,500 |
British Pound / Euro |  |  | 3,000 |  |  |  | 3,000 |
Sell/Buy - buy notional |  |  |  |  |  |  |  |
Euro / U.S. Dollar |  |  | 3,500 |  |  |  | 8,000 |
British Pound / Euro |  |  | 5,000 |  |  |  | 7,000 |

These contracts have maturities of one month from the date originally entered into.

- 20 -

GLATFELTER

Form 10-Q

Fair Value Measurements The following table summarizes the fair values of derivative instruments for the period indicated and the line items in the accompanying condensed consolidated balance sheets where the instruments are recorded:

In thousands |  | June 30, 2020 |  |  | December 31, 2019 |  |  | June 30, 2020 |  |  | December 31, 2019 |
|  | Prepaid Expenses and Other |  |  | Other |
Balance sheet caption |  | Current Assets |  |  | Current Liabilities |
Designated as hedging: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Forward foreign currency exchange contracts |  | $ | 2,373 |  |  | $ | 4,314 |  |  | $ | 449 |  |  | $ | 34 |
Not designated as hedging: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Forward foreign currency exchange contracts |  | $ | 157 |  |  | $ | 566 |  |  | $ | 196 |  |  | $ | 205 |

The amounts set forth in the table above represent the net asset or liability giving effect to rights of offset with each counterparty. The effect of netting the amounts presented above did not have a material effect on our consolidated financial position.

The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).

The fair values of the foreign exchange forward contracts are considered to be Level 2. Foreign currency forward contracts are valued using foreign currency forward and interest rate curves. The fair value of each contract is determined by comparing the contract rate to the forward rate and discounting to present value. Contracts in a gain position are recorded in the condensed consolidated balance sheets under the caption “Prepaid expenses and other current assets” and the value of contracts in a loss position is recorded under the caption “Other current liabilities.”

The following table summarizes the amount of income or (loss) from derivative instruments recognized in our results of operations for the periods indicated and the line items in the accompanying condensed consolidated statements of income where the results are recorded:

|  |  |  | Three months ended June 30 |  |  | Six months ended June 30 |
In thousands |  |  |  | 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |
Designated as hedging: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Forward foreign currency exchange contracts: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cost of products sold |  |  |  | $ | 1,488 |  |  | $ | 1,460 |  |  | $ | 3,670 |  |  | $ | 2,045 |
Not designated as hedging: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Forward foreign currency exchange contracts: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other – net |  |  |  | $ | 92 |  |  | $ | (264 | ) |  | $ | (527 | ) |  | $ | 28 |

The impact of activity not designated as hedging was substantially all offset by the remeasurement of the underlying on-balance-sheet item.

A rollforward of fair value amounts recorded as a component of accumulated other comprehensive income (loss), before taxes, is as follows:

In thousands |  | 2020 |  |  | 2019 |
Balance at January 1, |  | $ | 5,859 |  |  | $ | 3,004 |
Deferred gains on cash flow hedges |  |  | 1,103 |  |  |  | 5,044 |
Reclassified to earnings |  |  | (3,670 | ) |  |  | (2,045 | )
Balance at June 30, |  | $ | 3,292 |  |  | $ | 6,003 |

We expect substantially all of the amounts recorded as a component of accumulated other comprehensive income will be recorded in results of operations within the next 12 to 18 months and the amount ultimately recognized will vary depending on actual market rates.

Credit risk related to derivative activity arises in the event the counterparty fails to meet its obligations to us. This exposure is generally limited to the amounts, if any, by which the counterparty’s obligations exceed our obligation to them. Our policy is to enter into contracts only with financial institutions which meet certain minimum credit ratings.

- 21 -

GLATFELTER

Form 10-Q

18. | COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS

Fox River - Neenah, Wisconsin

Background. We have previously reported that we face significant uncertainties associated with environmental claims arising out of the presence of polychlorinated biphenyls (“PCBs”) in sediments in the lower Fox River, on which our former Neenah facility was located, and in the Bay of Green Bay, Wisconsin (collectively, the “Site”). Since the early 1990s, the United States, the State of Wisconsin and two Indian tribes (collectively, the “Governments”) have pursued a cleanup of a 39-mile stretch of river from Little Lake Butte des Morts into Green Bay and natural resource damages (“NRDs”).

The United States originally notified several entities that they were potentially responsible parties (“PRPs”); however, after giving effect to settlements reached with the Governments, the remaining PRPs exposed to continuing obligations to implement the remainder of the cleanup consist of us, Georgia Pacific Consumer Products, L.P. (“Georgia Pacific”) and NCR Corporation (“NCR”).

The United States Environmental Protection Agency (“EPA”) has divided the Site into five “operable units”, including the most upstream portion of the Site on which our facility was located (“OU1”) and four downstream reaches of the river and bay (“OU2-5”).

We, with contributions of certain other PRPs, implemented the remedial action in OU1 under a consent decree with the Governments. That work is complete, other than on-going monitoring and maintenance.

For OU2-5, work has proceeded primarily under a Unilateral Administrative Order (“UAO”) issued in November 2007 by the EPA to us and seven other respondents. The majority of the work in OU 2-5 has been funded or conducted by parties other than us. The cleanup is expected to be completed in 2020 and decommissioning thereafter.

In January 2019, we reached an agreement with the United States, the State of Wisconsin, and Georgia-Pacific to resolve all remaining claims among those parties. Under the Glatfelter consent decree, we settled the United States’ and Wisconsin’s claims for response costs paid by them before October 2018 and for NRDs. In addition, we are primarily responsible for long-term monitoring and maintenance in OU2-OU4a and for reimbursement of government oversight costs paid after October 2018. Finally, we remain responsible for our obligation to continue long-term monitoring and maintenance under our OU1 consent decree.

Cost estimates. Under terms of the Glatfelter consent decree, in January 2019 we paid $20.5 million to the United States in satisfaction of the governments’ claims for costs incurred prior to October 2018, and NRDs.

We are subject to remaining obligations under the OU1 consent decree, which now consist primarily of long-term monitoring and maintenance and for long term monitoring and maintenance in OU2-OU4a over a period of at least 30 years. The monitoring activities consist of, among others, testing fish tissue, sampling water quality and sediment, and inspections of the engineered caps. In the first quarter of 2018, we entered into a fixed-price, 30-year agreement with a third party for the performance of all of our monitoring and maintenance obligations in OU1 through OU4a with limited exceptions, such as, for extraordinary amounts of cap maintenance or replacement. Our obligation under this agreement is included in our total reserve for the Site. We are obligated to make the regular payments under that fixed-price contract until the remaining amount due is less than the OU1 escrow account balance. We are permitted to pay for this contract using the remaining balance of the escrow account established by us and WTM I Company (“WTM I”) another PRP, under the OU1 consent decree during any period that the balance in the escrow account exceeds the amount due under our fixed-price contract. As of June 30, 2020, the balance in the escrow is less than amounts due under the fixed-price contract by approximately $0.5 million. We secured our obligation to pay that difference with a letter of credit.

At June 30, 2020, the escrow account balance totaled $9.0 million which is included in the condensed consolidated balance sheet under the caption “Other assets.”

Under the consent decree, we will be responsible for reimbursement of government oversight costs incurred from October 2018 and later over approximately the next 30 years. We anticipate that a significant portion of the oversight costs will be incurred until such time as remediation is completed. Once completed, costs will be an order of magnitude lower in most years during the period of long-term monitoring and maintenance.

Reserves for the Site. Our reserve for past and future government oversight costs and long-term monitoring and maintenance is set forth below:

|  | Six months ended June 30 |
In thousands |  |  | 2020 |  |  |  |  | 2019 |
Balance at January 1, |  | $ | 21,870 |  |  |  | $ | 45,001 |
Payments |  |  | (2,234 | ) |  |  |  | (20,641 | )
Reserve adjustment |  |  | — |  |  |  |  | (2,509 | )
Accretion |  |  | 104 |  |  |  | 98 |
Balance at June 30, |  | $ | 19,740 |  |  |  | $ | 21,949 |

- 22 -

GLATFELTER

Form 10-Q

The payments set forth above represent the $20.5 million paid in 2019 pursuant to the Glatfelter consent decree and for amounts due under the long-term monitoring and maintenance agreement and government oversight costs. Of our total reserve for the Fox River, $5.0 million is recorded in the accompanying June 30, 2020 condensed consolidated balance sheet under the caption “Environmental liabilities” and the remaining $14.7 million is recorded under the caption “Other long-term liabilities.”

Range of Reasonably Possible Outcomes. Based on our analysis of all available information, including but not limited to decisions of the courts, official documents such as records of decision, discussions with legal counsel, cost estimates for future monitoring and maintenance and other post-remediation costs to be performed at the Site, we do not believe that our costs associated with the Fox River matter could exceed the aggregate amounts accrued by a material amount.

19. | SEGMENT INFORMATION

The following tables set forth financial and other information by segment for the period indicated:

Three months ended June 30 |  |  |  |  |  |  | Other and |  |  |  |
Dollars in thousands | Composite Fibers |  |  | Airlaid Materials |  |  | Unallocated |  |  | Total |
| 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |
Net sales | $ | 122,137 |  |  | $ | 132,581 |  |  | $ | 94,046 |  |  | $ | 102,472 |  |  | $ | — |  |  | $ | — |  |  | $ | 216,183 |  |  | $ | 235,053 |
Cost of products sold |  | 100,387 |  |  |  | 109,565 |  |  |  | 77,581 |  |  |  | 87,825 |  |  |  | 6,152 |  |  |  | 163 |  |  |  | 184,120 |  |  |  | 197,553 |
Gross profit (loss) |  | 21,750 |  |  |  | 23,016 |  |  |  | 16,465 |  |  |  | 14,647 |  |  |  | (6,152 | ) |  |  | (163 | ) |  |  | 32,063 |  |  |  | 37,500 |
SG&A |  | 10,263 |  |  |  | 10,031 |  |  |  | 4,173 |  |  |  | 4,285 |  |  |  | 9,115 |  |  |  | 8,484 |  |  |  | 23,551 |  |  |  | 22,800 |
Gains on dispositions of plant, equipment and timberlands, net |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (597 | ) |  |  | (423 | ) |  |  | (597 | ) |  |  | (423 | )
Total operating income (loss) |  | 11,487 |  |  |  | 12,985 |  |  |  | 12,292 |  |  |  | 10,362 |  |  |  | (14,670 | ) |  |  | (8,224 | ) |  |  | 9,109 |  |  |  | 15,123 |
Non-operating expense |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (8,837 | ) |  |  | (3,175 | ) |  |  | (8,837 | ) |  |  | (3,175 | )
Income (loss) before income taxes | $ | 11,487 |  |  | $ | 12,985 |  |  | $ | 12,292 |  |  | $ | 10,362 |  |  | $ | (23,507 | ) |  | $ | (11,399 | ) |  | $ | 272 |  |  | $ | 11,948 |
Supplementary Data |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net tons sold (thousands) |  | 29,032 |  |  |  | 34,523 |  |  |  | 33,277 |  |  |  | 34,041 |  |  |  | — |  |  |  | — |  |  |  | 62,309 |  |  |  | 68,564 |
Depreciation, depletion and amortization(1) | $ | 6,431 |  |  | $ | 6,601 |  |  | $ | 5,473 |  |  | $ | 5,279 |  |  | $ | 2,302 |  |  | $ | 852 |  |  | $ | 14,206 |  |  | $ | 12,732 |
Capital expenditures |  | 2,105 |  |  |  | 1,516 |  |  |  | 1,712 |  |  |  | 2,821 |  |  |  | 1,180 |  |  |  | 431 |  |  |  | 4,997 |  |  |  | 4,768 |

Six months ended June 30 |  |  |  |  |  |  | Other and |  |  |  |
Dollars in thousands | Composite Fibers |  |  | Airlaid Materials |  |  | Unallocated |  |  | Total |
| 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |
Net sales | $ | 254,848 |  |  | $ | 261,298 |  |  | $ | 192,895 |  |  | $ | 202,888 |  |  | $ | — |  |  | $ | — |  |  | $ | 447,743 |  |  | $ | 464,186 |
Cost of products sold |  | 207,372 |  |  |  | 216,128 |  |  |  | 159,827 |  |  |  | 173,814 |  |  |  | 11,679 |  |  |  | 1,127 |  |  |  | 378,878 |  |  |  | 391,069 |
Gross profit (loss) |  | 47,476 |  |  |  | 45,170 |  |  |  | 33,068 |  |  |  | 29,074 |  |  |  | (11,679 | ) |  |  | (1,127 | ) |  |  | 68,865 |  |  |  | 73,117 |
SG&A |  | 20,887 |  |  |  | 20,837 |  |  |  | 8,754 |  |  |  | 8,674 |  |  |  | 18,431 |  |  |  | 17,911 |  |  |  | 48,072 |  |  |  | 47,422 |
Gains on dispositions of plant, equipment and timberlands, net |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (597 | ) |  |  | (1,092 | ) |  |  | (597 | ) |  |  | (1,092 | )
Total operating income (loss) |  | 26,589 |  |  |  | 24,333 |  |  |  | 24,314 |  |  |  | 20,400 |  |  |  | (29,513 | ) |  |  | (17,946 | ) |  |  | 21,390 |  |  |  | 26,787 |
Non-operating expense |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (11,104 | ) |  |  | (8,378 | ) |  |  | (11,104 | ) |  |  | (8,378 | )
Income (loss) before income taxes | $ | 26,589 |  |  | $ | 24,333 |  |  | $ | 24,314 |  |  | $ | 20,400 |  |  | $ | (40,617 | ) |  | $ | (26,324 | ) |  | $ | 10,286 |  |  | $ | 18,409 |
Supplementary Data |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net tons sold (thousands) |  | 65,015 |  |  |  | 66,052 |  |  |  | 68,316 |  |  |  | 67,218 |  |  |  | — |  |  |  | — |  |  |  | 133,332 |  |  |  | 133,270 |
Depreciation, depletion and amortization(1) | $ | 12,897 |  |  | $ | 13,275 |  |  | $ | 10,924 |  |  | $ | 10,547 |  |  | $ | 5,787 |  |  | $ | 1,698 |  |  | $ | 29,608 |  |  | $ | 25,520 |
Capital expenditures |  | 6,061 |  |  |  | 4,704 |  |  |  | 3,815 |  |  |  | 5,013 |  |  |  | 2,135 |  |  |  | 916 |  |  |  | 12,011 |  |  |  | 10,633 |

| (1) | The amount presented in 2020 in the Other and unallocated column represents accelerated depreciation incurred in connection with the restructuring of our metallized operations.

Segments Results of individual operating segments are presented based on our management accounting practices and management structure. There is no comprehensive, authoritative body of guidance for management accounting equivalent to accounting principles generally accepted in the United States of America; therefore, the financial results of individual segments are not necessarily comparable with similar information for any other company. The management accounting process uses assumptions and allocations to measure performance of the segments. Methodologies are refined from time to time as management accounting practices are enhanced and businesses change. The costs incurred by support areas not directly aligned with the segment are allocated primarily based on an estimated utilization of support area services or are included in “Other and Unallocated” in the table set forth

- 23 -

GLATFELTER

Form 10-Q

above.

Management evaluates results of operations of the operating segments before certain corporate level costs and the effects of certain gains or losses not considered to be related to the core business operations. Management believes that this is a more meaningful representation of the operating performance of its core businesses, the profitability of the segments and the extent of cash flow generated from these core operations. Such amounts are presented under the caption “Other and Unallocated.” In the evaluation of operating segments results, management does not use any measures of total assets. This presentation is aligned with the management and operating structure of our company. It is also on this basis that the Company’s performance is evaluated internally and by the Company’s Board of Directors.

- 24 -

GLATFELTER

Form 10-Q

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the information in the unaudited condensed consolidated financial statements and notes thereto included herein and Glatfelter’s Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our 2019 Annual Report on Form 10-K.

Forward-Looking Statements This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including statements regarding industry prospects and future consolidated financial position or results of operations, made in this Report on Form 10-Q are forward looking. We use words such as “anticipates”, “believes”, “expects”, “future”, “intends” and similar expressions to identify forward-looking statements. Forward-looking statements reflect management’s current expectations and are inherently uncertain. Our actual results may differ significantly from such expectations. The following discussion includes forward-looking statements all of which are inherently difficult to predict. Although we make such statements based on assumptions that we believe to be reasonable, there can be no assurance that actual results will not differ materially from our expectations. Accordingly, we identify the following important factors, among others, which could cause our results to differ from any results that might be projected, forecasted or estimated in any such forward-looking statements:

| i. | risks associated with the impact of the COVID-19 pandemic including global and regional economic conditions, changes in demand for our products, interruptions in our global supply chain, ability to continue production by our facilities, credit conditions of our customers or suppliers, or potential legal actions that could arise due to our operations during the pandemic; |

| ii. | variations in demand for our products including the impact of unplanned market-related downtime, variations in product pricing, or product substitution;

| iii. | the impact of competition, changes in industry production capacity, including the construction of new mills or new machines, the closing of mills and incremental changes due to capital expenditures or productivity increases; |

| iv. | risks associated with our international operations, including local economic and political environments and fluctuations in currency exchange rates;

| v. | geopolitical matters, including any impact to our operations from events in Russia, Ukraine and Philippines;

| vi. | our ability to develop new, high value-added products;

| vii. | changes in the price or availability of raw materials we use, particularly woodpulp, pulp substitutes, synthetic pulp, and abaca fiber; |

| viii. | changes in energy-related prices and commodity raw materials with an energy component;

| ix. | the impact of unplanned production interruption at our facilities or at any of our key suppliers;

| x. | disruptions in production and/or increased costs due to labor disputes;

| xi. | the gain or loss of significant customers and/or on-going viability of such customers;

| xii. | the impact of war and terrorism;

| xiii. | the impact of unfavorable outcomes of audits by various state, federal or international tax authorities or changes in pre-tax income and its impact on the valuation of deferred taxes;

| xiv. | enactment of adverse state, federal or foreign tax or other legislation or changes in government legislation, policy or regulation; and

| xv. | our ability to finance, consummate and integrate acquisitions.

COVID-19 Pandemic On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic as the virus spread throughout the world. As the virus continued its rapid spread, a significant portion of the world’s economies were significantly impacted by government mandates that all “non-essential” businesses close and that residents “shelter-in-place” or practice “social distancing.” These actions have had, and are likely to have, a continuing significant adverse impact on a wide range of economies and industries throughout the world, including certain markets we serve. As disclosed in Item 1A – Risk Factors of our 2019 Annual Report on Form 10-K, we included a risk factor stating, “Our business and financial performance may be adversely affected by a weak global economic environment or downturns in the target markets that we serve. Adverse global economic conditions could impact our target markets resulting in decreased demand for our products. Our results could be adversely affected if economic conditions weaken.” The COVID-19 pandemic and the actions undertaken throughout the world in an attempt to contain the virus have had an unprecedented and significant adverse impact on global economies in terms of reduced GDP, increased unemployment, and insolvencies in a variety of industries and markets. As a result, we have experienced and may continue to experience weaker demand for certain of our products due to the effects of the pandemic.

Through the end of the first six months of 2020, our financial performance and results of operations have been impacted by the weaker economic conditions, particularly wallcover and tabletop products. The majority of our other product portfolios is considered to be “essential or life-sustaining” and we continued to produce products used in the global response effort to the pandemic. We

- 25 -

GLATFELTER

Form 10-Q

believe demand for certain of our products, such as Composite Fibers’ food & beverage filtration products and Airlaid Materials’ personal hygiene and wipes, will remain strong. To date, we have successfully maintained our global supply chain securing critical raw materials with minimal disruptions or incremental costs and the demand for substantially all products has been stable as our customers continued to serve critical products to end-user consumers.

Although we anticipate a decline in overall economic activity, we believe demand for the majority of our products will remain strong. As disclosed in Item 1A – Risk Factors to our 2019 Annual Report, “approximately $68 million of our revenue in 2019, was earned from customers located in Ukraine, Russia and members of the Commonwealth of Independent States.” The large majority of our revenue from this region consists of wallcover base material. During the second quarter of 2020, our wallcover revenues were significantly impacted by temporary suspension of operations of many of our customers due to government orders related to the pandemic. Although our customers have begun to resume operations, if the governmental authorities reimplement aggressive actions to fight any resurgence of COVID-19 in these regions, or if economic hardships continue, we expect sales to some of our customers, such as wallpaper printers, will be adversely impacted.

The health and safety of our employees and their families are a top priority, and we remain committed to taking all the necessary measures to protect them. We have instituted several new safety, hygiene and communication protocols throughout our facilities to ensure we maintain our ability to produce product. Accordingly, we are proactively working to identify and mitigate risks to safeguard the continuity of our business. We believe we are well positioned from a liquidity and leverage perspective following the successful restructuring and cost optimization initiatives in 2019 and 2020 and the debt refinancing in 2019. As a result, we believe we are able to supply our customers high-quality engineered materials necessary to manufacture a variety of essential and life-sustaining consumer staples including wipes, health and hygiene products, and food and beverage items during this challenging time.

RESULTS OF OPERATIONS

Introduction We manufacture a wide array of engineered materials and report our results along two segments:

| • | Composite Fibers with revenue from the sale of single-serve tea and coffee filtration products, wallcovering base materials, composite laminates, technical specialties including substrates for electrical applications, and metallized products; and

| • | Airlaid Materials with revenue from the sale of airlaid nonwoven fabric-like materials used in feminine hygiene and adult incontinence products, specialty wipes, home care products and other airlaid applications.

The former Specialty Papers business’ results of operations and financial condition are reported as discontinued operations. Following is a discussion and analysis primarily of the financial results of operations and financial condition of our continuing operations.

Six months ended June 30, 2020 versus the six months ended June 30, 2019

Overview For the first six months of 2020, we reported income from continuing operations of $5.1 million, or $0.12 per share compared with $10.9 million and $0.25 per diluted share in the year earlier period. The following table sets forth summarized consolidated results of operations:

| Six months ended June 30 |
In thousands, except per share | 2020 |  |  |  | 2019 |
Net sales | $ | 447,743 |  |  |  | $ | 464,186 |
Gross profit |  | 68,865 |  |  |  |  | 73,117 |
Operating income |  | 21,390 |  |  |  |  | 26,787 |
Continuing operations |  |  |  |  |  |  |  |
Income |  | 5,125 |  |  |  |  | 10,896 |
Earnings per share |  | 0.12 |  |  |  |  | 0.25 |
Discontinued operations |  |  |  |  |  |  |  |
Income (loss) from discontinued operations |  | (135 | ) |  |  |  | 221 |
Earnings (loss) per share |  | (0.01 | ) |  |  |  | 0.01 |
Net income |  | 4,990 |  |  |  |  | 11,117 |
Earnings per share | $ | 0.11 |  |  |  | $ | 0.25 |

- 26 -

GLATFELTER

Form 10-Q

The reported results reflect the cost of strategic initiatives and other items identified below to derive “adjusted earnings.” These factors cost an aggregate of $15.6 million in 2020 compared with similar items of $4.8 million in the same period of 2019. Operating income for both segments, each of our segments reported improved results. Although Composite Fibers’ shipments decreased by 1.6%, driven by the pandemic’s impact on shipments of wallcover, operating profit improved by 9.3%. Airlaid Materials’ shipments increased 1.6% year-over-year and operating profit increased 19.2%. In addition, interest expense, net declined $2.7 million reflecting the benefits of our debt refinancing in 2019.

In addition to the results reported in accordance with GAAP, we evaluate our performance using adjusted earnings and adjusted earnings per diluted share. We disclose this information to allow investors to evaluate our performance exclusive of certain items that impact the comparability of results from period to period and we believe it is helpful in understanding underlying operating trends and cash flow generation.

Adjusted earnings from continuing operations for the first six months of 2020 were $20.7 million, or $0.46 per diluted share compared with $15.7 million, or $0.35 per diluted share, for the same period a year ago. Adjusted earnings consists of net income determined in accordance with GAAP adjusted to exclude the impact of the following:

Restructuring charge – Metallized operations. This adjustment represents the charges incurred in connection with the decision to restructure a portion of the Composite Fibers segment, primarily consisting of the consolidation of our metallizing operation from Gernsbach, Germany to our Caerphilly, U.K. site. For the six months ended June 30, 2020, the adjustment includes a non-cash charge of $4.8 million associated with accelerated depreciation and the write-off of inventory and spare parts in addition to cash severance costs totaling $6.3 million.

Cost optimization actions. These adjustments reflect charges incurred in connection with initiatives to optimize the cost structure of the Company including costs related to the organizational change to a functional operating model. The costs are primarily related to executive separation, other headcount reductions, professional fees, asset write-offs and certain contract termination costs. These adjustments, which have occurred at various times in the past, are irregular in timing and relate to specific identified programs to reduce or optimize the cost structure of a particular operating segment or the corporate function.

Pension settlement expenses, net. This adjustment reflects expenses incurred in connection with the termination of our qualified pension plan in 2019 and the reversion of excess pension plan assets to us in the second quarter of 2020. In the fourth quarter of 2019, we incurred a $75.3 million pension settlement charge in connection with the termination of the plan. Since the pension plan was fully funded, the settlement of the pension obligations did not require the use of cash, but instead was accomplished with plan assets. In connection with the reversion of excess pension plan assets in the second quarter of 2020, we incurred pension settlement expenses related to excise taxes, net of post settlement adjustments and certain related professional fees.

COVID-19 incremental costs. This adjustment represents incremental cash costs incurred directly related to the COVID 19 pandemic such as mill employee incentive compensation, enhanced hygiene protocols, safety and supplies.

Asset Impairment Charge. This adjustment represents a non-cash charge recorded to reduce the carrying amount of a trade name intangible asset of the Dresden wallcover business due to the impact of the COVID-19 pandemic on the underlying forecasted revenue stream.

Airlaid capacity expansion costs. These adjustments reflect non-capitalized, one-time costs incurred related to the start-up of a new airlaid production facility in Fort Smith, Arkansas and implementation of a new business system.

Debt refinancing costs. Represents a charge to write-off unamortized debt issuance costs in connection with the redemption of the Company’s $250 million, 5.375% Notes.

Strategic initiatives. These adjustments primarily reflect professional and legal fees incurred directly related to evaluating and executing certain strategic initiatives including costs associated with acquisitions and the related integration.

Fox River environmental matter. This adjustment excludes a gain for a decrease in the Company’s overall reserve for the Fox River matter primarily due to the resolution of the litigation in the first quarter of 2019.

Timberland sales and related costs. These adjustments exclude gains from the sales of timberlands as these items are not considered to be part of our core business, ongoing results of operations or cash flows. These adjustments are irregular in timing and amount and may significantly impact our operating results.

Coronavirus Aid, Relief, and Economic Security (CARES) Act 2020. This adjustment reflects the tax benefit recognized as a result of the March 27, 2020 change in U.S. tax law which, among others, allowing net operating losses to be carried back five years.

- 27 -

GLATFELTER

Form 10-Q

Adjusted earnings and adjusted earnings per share are considered measures not calculated in accordance with GAAP, and therefore are non-GAAP measures. The non-GAAP financial information should not be considered in isolation from, or as a substitute for, measures of financial performance prepared in accordance with GAAP.

The following table sets forth the reconciliation of net income to adjusted earnings for the six months ended June 30, 2020 and 2019:

|  | Six months ended June 30 |  |
|  | 2020 |  |  | 2019 |  |
In thousands, except per share |  | Amount |  |  | EPS |  |  | Amount |  |  | EPS |  |
Net income |  | $ | 4,990 |  |  | $ | 0.11 |  |  | $ | 11,117 |  |  | $ | 0.25 |  |
Exclude: Loss (income) from discontinued operations |  |  | 135 |  |  |  | 0.01 |  |  |  | (221 | ) |  |  | — |  |
Income from continuing operations |  |  | 5,125 |  |  |  | 0.12 |  |  |  | 10,896 |  |  |  | 0.25 |  |
Adjustments (pre-tax) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Restructuring charge - Metallized operations |  |  | 11,054 |  |  |  |  |  |  |  | — |  |  |  |  |  |
Cost optimization actions |  |  | 3,097 |  |  |  |  |  |  |  | 5,907 |  |  |  |  |  |
Pension settlement expenses, net |  |  | 6,403 |  |  |  |  |  |  |  | — |  |  |  |  |  |
COVID 19 - incremental costs |  |  | 1,180 |  |  |  |  |  |  |  | — |  |  |  |  |  |
Asset impairment charge |  |  | 900 |  |  |  |  |  |  |  | — |  |  |  |  |  |
Airlaid capacity expansion costs |  |  | — |  |  |  |  |  |  |  | 1,014 |  |  |  |  |  |
Debt refinancing |  |  | — |  |  |  |  |  |  |  | 992 |  |  |  |  |  |
Strategic initiatives |  |  | — |  |  |  |  |  |  |  | 249 |  |  |  |  |  |
Fox River environmental matter |  |  | — |  |  |  |  |  |  |  | (2,509 | ) |  |  |  |  |
Timberland sales and related costs |  |  | (601 | ) |  |  |  |  |  |  | (881 | ) |  |  |  |  |
Total adjustments (pre-tax) |  |  | 22,033 |  |  |  |  |  |  |  | 4,772 |  |  |  |  |  |
Income taxes (1) |  |  | (3,882 | ) |  |  |  |  |  |  | 67 |  |  |  |  |  |
CARES Act of 2020 tax benefit (2) |  |  | (2,569 | ) |  |  |  |  |  |  | — |  |  |  |  |  |
Total after-tax adjustments |  |  | 15,582 |  |  |  | 0.34 |  |  |  | 4,839 |  |  |  | 0.11 |  |
Adjusted earnings |  | $ | 20,707 |  |  | $ | 0.46 |  |  | $ | 15,735 |  |  | $ | 0.35 |  |

| (1) | Tax effect on adjustments calculated based on the incremental effective tax rate of the jurisdiction in which each adjustment originated.

| (2) | Tax benefit recorded in connection with passage of the Coronavirus Aid, Relief, and Economic Security Act (“CARES”) related to provisions that modified the “net operating loss” provisions of previous law to allow certain losses to be carried back five years.

The sum of individual per share amounts set forth above may not agree to adjusted earnings per share due to rounding.

Segment Financial Performance

Six months ended June 30 |  |  |  |  |  |  | Other and |  |  |  |
Dollars in thousands | Composite Fibers |  |  | Airlaid Materials |  |  | Unallocated |  |  | Total |
| 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |
Net sales | $ | 254,848 |  |  | $ | 261,298 |  |  | $ | 192,895 |  |  | $ | 202,888 |  |  | $ | — |  |  | $ | — |  |  | $ | 447,743 |  |  | $ | 464,186 |
Cost of products sold |  | 207,372 |  |  |  | 216,128 |  |  |  | 159,827 |  |  |  | 173,814 |  |  |  | 11,679 |  |  |  | 1,127 |  |  |  | 378,878 |  |  |  | 391,069 |
Gross profit (loss) |  | 47,476 |  |  |  | 45,170 |  |  |  | 33,068 |  |  |  | 29,074 |  |  |  | (11,679 | ) |  |  | (1,127 | ) |  |  | 68,865 |  |  |  | 73,117 |
SG&A |  | 20,887 |  |  |  | 20,837 |  |  |  | 8,754 |  |  |  | 8,674 |  |  |  | 18,431 |  |  |  | 17,911 |  |  |  | 48,072 |  |  |  | 47,422 |
Gains on dispositions of plant, equipment and timberlands, net |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (597 | ) |  |  | (1,092 | ) |  |  | (597 | ) |  |  | (1,092 | )
Total operating income (loss) |  | 26,589 |  |  |  | 24,333 |  |  |  | 24,314 |  |  |  | 20,400 |  |  |  | (29,513 | ) |  |  | (17,946 | ) |  |  | 21,390 |  |  |  | 26,787 |
Non-operating expense |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (11,104 | ) |  |  | (8,378 | ) |  |  | (11,104 | ) |  |  | (8,378 | )
Income (loss) before income taxes | $ | 26,589 |  |  | $ | 24,333 |  |  | $ | 24,314 |  |  | $ | 20,400 |  |  | $ | (40,617 | ) |  | $ | (26,324 | ) |  | $ | 10,286 |  |  | $ | 18,409 |
Supplementary Data |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net tons sold (thousands) |  | 65,015 |  |  |  | 66,052 |  |  |  | 68,316 |  |  |  | 67,218 |  |  |  | — |  |  |  | — |  |  |  | 133,332 |  |  |  | 133,270 |
Depreciation, depletion and amortization(1) | $ | 12,897 |  |  | $ | 13,275 |  |  | $ | 10,924 |  |  | $ | 10,547 |  |  | $ | 5,787 |  |  | $ | 1,698 |  |  | $ | 29,608 |  |  | $ | 25,520 |
Capital expenditures |  | 6,061 |  |  |  | 4,704 |  |  |  | 3,815 |  |  |  | 5,013 |  |  |  | 2,135 |  |  |  | 916 |  |  |  | 12,011 |  |  |  | 10,633 |

| (1) | The amount presented in 2020 in the Other and unallocated column represents accelerated depreciation incurred in connection with the restructuring of the metallized operations.

- 28 -

GLATFELTER

Form 10-Q

Segments Results of individual operating segments are presented based on our management accounting practices and management structure. There is no comprehensive, authoritative body of guidance for management accounting equivalent to accounting principles generally accepted in the United States of America; therefore, the financial results of individual segments are not necessarily comparable with similar information for any other company. The management accounting process uses assumptions and allocations to measure performance of the segments. Methodologies are refined from time to time as management accounting practices are enhanced and businesses change. The costs incurred by support areas not directly aligned with the segment are allocated primarily based on an estimated utilization of support area services or are included in “Other and Unallocated” in the table set forth above.

Management evaluates results of operations of the operating segments before certain corporate level costs and the effects of certain gains or losses not considered to be related to the core business operations. Management believes that this is a more meaningful representation of the operating performance of its core businesses, the profitability of the segments and the extent of cash flow generated from these core operations. Such amounts are presented under the caption “Other and Unallocated.” In the evaluation of operating segments results, management does not use any measures of total assets. This presentation is aligned with the management and operating structure of our company. It is also on this basis that the Company’s performance is evaluated internally and by the Company’s Board of Directors.

Sales and Costs of Products Sold

| Six months ended June 30 |  |  |  |  |
In thousands | 2020 |  |  |  | 2019 |  |  | Change |
Net sales | $ | 447,743 |  |  |  | $ | 464,186 |  |  | $ | (16,443 | )
Costs of products sold |  | 378,878 |  |  |  |  | 391,069 |  |  |  | (12,191 | )
Gross profit | $ | 68,865 |  |  |  | $ | 73,117 |  |  | $ | (4,252 | )
Gross profit as a percent of Net sales |  | 15.4 | % |  |  |  | 15.8 | % |  |  |  |

The following table sets forth the contribution to consolidated net sales by each segment:

| Six months ended June 30 |
Percent of Total | 2020 |  |  |  | 2019 |
Segment |  |  |  |  |  |  |  |
Composite Fibers |  | 56.9 | % |  |  |  | 56.3 | %
Airlaid Materials |  | 43.1 |  |  |  |  | 43.7 |
Total |  | 100.0 | % |  |  |  | 100.0 | %

Net sales totaled $447.7 million and $464.2 million in the first six months of 2020 and 2019, respectively. On a constant currency basis, Composite Fibers’ and Airlaid Material’s net sales decreased 0.5% and 3.6%, respectively.

Composite Fibers’ net sales decreased $6.5 million or 2.5%, compared to the first six months of 2019, driven by $5.1 million of unfavorable currency translation and $4.7 million of lower selling prices partially offset by favorable mix of shipping volumes.

Composite Fibers’ operating income in the first six months of 2020 totaled $26.6 million and was $2.3 million, or 9.3%, higher than the same period of 2019. The improved results were driven by a $7.1 million benefit from lower prices for wood pulp and energy partially offset by lower selling prices in certain product categories. Improved operations contributed $0.8 million reflecting the impact of cost control initiatives.

The primary drivers of the change in Composite Fibers’ operating income are summarized in the following chart:

- 29 -

GLATFELTER

Form 10-Q

Airlaid Materials’ net sales decreased $10.0 million, or 4.9%, in the year-over-year comparison driven by $9.4 million of lower selling prices and a $2.8 million unfavorable currency translation. Shipping volumes increased 1.6% led by strong shipments of home care, food pads and wipes products which offset significantly lower tabletop products as restaurants globally were closed or operated at reduced capacity due to the pandemic. Lower selling prices primarily reflects contractual pass-through arrangements.

Airlaid Materials’ operating income for the first six months of 2020 totaled $24.3 million, or 19.2% higher than the comparable period a year ago. Higher shipping volumes contributed $1.6 million of additional earnings while price declines due to raw material pass-through provisions were more than offset by lower raw material and energy prices, adding net $1.1 million of profit. Operations were $1.3 million favorable, mainly driven by higher production to support stronger demand and by disciplined cost control. The primary drivers are summarized in the following chart:

Other and Unallocated The amount of “Other and Unallocated” operating expense in our table of Segment Financial Information totaled $29.5 million in the first six months of 2020 compared with $17.9 million in the first six months of 2019. Excluding the items identified to present “adjusted earnings,” unallocated expenses for the comparison decreased $0.3 million.

During the second quarter of 2020, we recorded non-cash asset impairment charges of $0.9 million related to a trade name intangible asset acquired in connection with the 2013 Dresden acquisition. The charge was due to a change in the estimated fair value of the trade name, primarily driven by lower forecasted revenues associated with the business due to the COVID 19 pandemic and associated economic instability in Russian and Ukraine.

- 30 -

GLATFELTER

Form 10-Q

Income taxes During the first six months of 2020, income from continuing operations totaled $10.3 million and income tax expense totaled $5.2 million. The income tax expense in the first six months of 2020 includes a $2.6 million tax benefit recorded in connection with passage of the Coronavirus Aid, Relief, and Economic Security Act (“CARES”). This Act, which was signed into law on March 27, 2020, modified the “net operating loss” provisions of previous law to allow certain losses to be carried back five years. This tax benefit is excluded from net income when arriving at adjusted earnings. We are in the process of evaluating additional tax planning opportunities which may allow us to carry back additional NOLs.

On adjusted pre-tax income of $32.3 million, income tax expense was $11.6 million in the first six months of 2020. The comparable amounts in the same period of 2019 were $23.2 million and $7.4 million, respectively. The effective tax rate on adjusted earnings was 35.9% in the first six months of 2020.

Foreign Currency We own and operate facilities in Canada, Germany, France, the United Kingdom and the Philippines. The functional currency of our Canadian operations is the U.S. dollar. However, in Germany and France it is the Euro, in the UK, it is the British Pound Sterling, and in the Philippines the functional currency is the Peso. On an annual basis, our Euro denominated revenue exceeds Euro expenses by an estimated €140 million. For the first six months of 2020, the average currency exchange rate was 1.10 dollar/euro compared with 1.13 in the same period of 2019. With respect to the British Pound Sterling, Canadian Dollar, and Philippine Peso, we have differing amounts of inflows and outflows of these currencies, although to a lesser degree than the Euro. As a result, we are exposed to changes in currency exchange rates and such changes could be significant. The translation of the results from international operations into U.S. dollars is subject to changes in foreign currency exchange rates.

The table below summarizes the translation impact on reported results that changes in currency exchange rates had on our non-U.S. based operations from the conversion of these operation’s results for the first six months of 2020.

In thousands | Six months ended June 30, 2020 |
| Favorable (unfavorable) |
Net sales |  |  |  | $ | (7,919 | )
Costs of products sold |  |  |  |  | 7,032 |
SG&A expenses |  |  |  |  | 641 |
Income taxes and other |  |  |  |  | 393 |
Net income |  |  |  | $ | 147 |

The above table only presents the financial reporting impact of foreign currency translations assuming currency exchange rates in 2020 were the same as 2019. It does not present the impact of certain competitive advantages or disadvantages of operating or competing in multi-currency markets.

Discontinued Operations We completed the sale of our Specialty Papers business on October 31, 2018. Its results of operations are reported as discontinued operations for all periods presented. There was an immaterial amount of activity in results of discontinued operations for each of the periods presented.

- 31 -

GLATFELTER

Form 10-Q

Three months ended June 30, 2020 versus the three months ended June 30, 2019

Overview For the second quarter of 2020, we had a loss from continuing operations of $2.3 million, or $0.05 per share compared with income of $6.3 million, or $0.14 per share in the second quarter of 2019. On an adjusted basis earnings from continuing operations for the second quarter of 2020 was $9.9 million, or $0.22 per share compared with $8.5 million, or $0.19 per share, for the same period a year ago. The following table sets forth summarized results of operations:

| Three months ended June 30 |
In thousands, except per share | 2020 |  |  |  | 2019 |
Net sales | $ | 216,183 |  |  |  | $ | 235,053 |
Gross profit |  | 32,063 |  |  |  |  | 37,500 |
Operating income |  | 9,109 |  |  |  |  | 15,123 |
Continuing operations |  |  |  |  |  |  |  |
Income (loss) |  | (2,281 | ) |  |  |  | 6,293 |
Earnings (loss) per share |  | (0.05 | ) |  |  |  | 0.14 |
Discontinued operations |  |  |  |  |  |  |  |
Loss from discontinued operations |  | (135 | ) |  |  |  | (462 | )
Earnings (loss) per share |  | — |  |  |  |  | (0.01 | )
Net income (loss) |  | (2,416 | ) |  |  |  | 5,831 |
Earnings (loss) per share | $ | (0.05 | ) |  |  | $ | 0.13 |

The following table sets forth the reconciliation of net income (loss) to adjusted earnings for the three months ended June 30, 2020 and 2019:

|  | Three months ended June 30 |  |
|  | 2020 |  |  | 2019 |  |
In thousands, except per share |  | Amount |  |  | EPS |  |  | Amount |  |  | EPS |  |
Net income |  | $ | (2,416 | ) |  | $ | (0.05 | ) |  | $ | 5,831 |  |  | $ | 0.13 |  |
Exclude: Loss from discontinued operations |  |  | 135 |  |  |  | — |  |  |  | 462 |  |  |  | 0.01 |  |
Income (loss) from continuing operations |  |  | (2,281 | ) |  |  | (0.05 | ) |  |  | 6,293 |  |  |  | 0.14 |  |
Adjustments (pre-tax) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Restructuring charge - Metallized operations |  |  | 5,067 |  |  |  |  |  |  |  | — |  |  |  |  |  |
Cost optimization actions |  |  | 1,349 |  |  |  |  |  |  |  | 1,984 |  |  |  |  |  |
Pension settlement expenses, net |  |  | 6,330 |  |  |  |  |  |  |  | — |  |  |  |  |  |
COVID 19 - incremental costs |  |  | 1,180 |  |  |  |  |  |  |  | — |  |  |  |  |  |
Asset impairment charge |  |  | 900 |  |  |  |  |  |  |  | — |  |  |  |  |  |
Strategic initiatives |  |  | — |  |  |  |  |  |  |  | 142 |  |  |  |  |  |
Timberland sales and related costs |  |  | (601 | ) |  |  |  |  |  |  | (423 | ) |  |  |  |  |
Total adjustments (pre-tax) |  |  | 14,225 |  |  |  |  |  |  |  | 1,703 |  |  |  |  |  |
Income taxes (1) |  |  | (2,047 | ) |  |  |  |  |  |  | 456 |  |  |  |  |  |
Total after-tax adjustments |  |  | 12,178 |  |  |  | 0.27 |  |  |  | 2,159 |  |  |  | 0.05 |  |
Adjusted earnings |  | $ | 9,897 |  |  | $ | 0.22 |  |  | $ | 8,452 |  |  | $ | 0.19 |  |

| (1) | Tax effect on adjustments calculated based on the incremental effective tax rate of the jurisdiction in which each adjustment originated.

- 32 -

GLATFELTER

Form 10-Q

Segment Financial Performance

Three months ended June 30 |  |  |  |  |  |  | Other and |  |  |  |
Dollars in thousands | Composite Fibers |  |  | Airlaid Materials |  |  | Unallocated |  |  | Total |
| 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |
Net sales | $ | 122,137 |  |  | $ | 132,581 |  |  | $ | 94,046 |  |  | $ | 102,472 |  |  | $ | — |  |  | $ | — |  |  | $ | 216,183 |  |  | $ | 235,053 |
Cost of products sold |  | 100,387 |  |  |  | 109,565 |  |  |  | 77,581 |  |  |  | 87,825 |  |  |  | 6,152 |  |  |  | 163 |  |  |  | 184,120 |  |  |  | 197,553 |
Gross profit (loss) |  | 21,750 |  |  |  | 23,016 |  |  |  | 16,465 |  |  |  | 14,647 |  |  |  | (6,152 | ) |  |  | (163 | ) |  |  | 32,063 |  |  |  | 37,500 |
SG&A |  | 10,263 |  |  |  | 10,031 |  |  |  | 4,173 |  |  |  | 4,285 |  |  |  | 9,115 |  |  |  | 8,484 |  |  |  | 23,551 |  |  |  | 22,800 |
Gains on dispositions of plant, equipment and timberlands, net |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (597 | ) |  |  | (423 | ) |  |  | (597 | ) |  |  | (423 | )
Total operating income (loss) |  | 11,487 |  |  |  | 12,985 |  |  |  | 12,292 |  |  |  | 10,362 |  |  |  | (14,670 | ) |  |  | (8,224 | ) |  |  | 9,109 |  |  |  | 15,123 |
Non-operating expense |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (8,837 | ) |  |  | (3,175 | ) |  |  | (8,837 | ) |  |  | (3,175 | )
Income (loss) before income taxes | $ | 11,487 |  |  | $ | 12,985 |  |  | $ | 12,292 |  |  | $ | 10,362 |  |  | $ | (23,507 | ) |  | $ | (11,399 | ) |  | $ | 272 |  |  | $ | 11,948 |
Supplementary Data |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net tons sold (thousands) |  | 29,032 |  |  |  | 34,523 |  |  |  | 33,277 |  |  |  | 34,041 |  |  |  | — |  |  |  | — |  |  |  | 62,309 |  |  |  | 68,564 |
Depreciation, depletion and amortization(1) | $ | 6,431 |  |  | $ | 6,601 |  |  | $ | 5,473 |  |  | $ | 5,279 |  |  | $ | 2,302 |  |  | $ | 852 |  |  | $ | 14,206 |  |  | $ | 12,732 |
Capital expenditures |  | 2,105 |  |  |  | 1,516 |  |  |  | 1,712 |  |  |  | 2,821 |  |  |  | 1,180 |  |  |  | 431 |  |  |  | 4,997 |  |  |  | 4,768 |

The sum of individual amounts set forth above may not agree to the condensed consolidated financial statements included herein due to rounding

Sales and Costs of Products Sold

| Three months ended June 30 |  |  |  |  |  |  |
In thousands | 2020 |  |  |  | 2019 |  |  |  | Change |  |
Net sales | $ | 216,183 |  |  |  | $ | 235,053 |  |  |  | $ | (18,870 | ) |
Costs of products sold |  | 184,120 |  |  |  |  | 197,553 |  |  |  |  | (13,433 | ) |
Gross profit | $ | 32,063 |  |  |  | $ | 37,500 |  |  |  | $ | (5,437 | ) |
Gross profit as a percent of Net sales |  | 14.8 | % |  |  |  | 16.0 | % |  |  |  |  |  |

The following table sets forth the contribution to consolidated net sales by each segment:

| Three months ended June 30 |
Percent of Total | 2020 |  |  |  | 2019 |
Segment |  |  |  |  |  |  |  |
Composite Fibers |  | 56.5 | % |  |  |  | 56.4 | %
Airlaid Materials |  | 43.5 |  |  |  |  | 43.6 |
Total |  | 100.0 | % |  |  |  | 100.0 | %

Net sales totaled $216.2 million and $235.1 million in the second quarters of 2020 and 2019, respectively. On a constant currency basis, Composite Fibers’ and Airlaid Materials’ net sales decreased by 6.3%. and 7.2%, respectively.

Composite Fibers’ net sales decreased $10.4 million or 7.9%, compared to the year-ago quarter driven by lower shipments of wallcover products, which were down 49%, as well as unfavorable foreign currency translation of $2.0 million.

Composite Fibers’ operating income of $11.5 million was $1.5 million lower, or 11.6% unfavorable, compared to the second quarter of 2019. Lower shipping volumes impacted results by $2.1 million, driven predominantly by lower wallcover demand. The downtime required to manage inventory levels for nonwoven wallcover products were mostly offset by improved operations, strong cost control actions and higher production to meet strong demand in our food and beverage category. A benefit of $3.1 million from lower input prices, primarily wood pulp, was partially offset by a $2.0 million impact from lower selling prices. Currency unfavorably impacted results by $0.2 million compared to the year-ago quarter. The primary drivers are summarized in the following chart:

- 33 -

GLATFELTER

Form 10-Q

Airlaid Materials’ net sales decreased $8.4 million in the year-over-year comparison. Shipments were lower by 2.2% due to weak demand for tabletop products as restaurants globally were closed or operated at dramatically limited capacity. This shortfall in demand was mostly offset by strong orders for home care and health and hygiene products. Selling prices were $4.6 million lower due to contractual cost pass through arrangements while currency translation was unfavorable $1.1 million.

Airlaid Materials’ second quarter 2020 operating income of $12.3 million was $1.9 million favorable or 18.6% higher, when compared to the second quarter of 2019. Improved sales mix favorably impacted results by $0.6 million while price declines due to contractual raw material pass-through provisions were more than offset by lower raw material and energy prices, adding net $0.5 million of profit. Efficient operations complemented by disciplined cost control favorably impacted results by $0.9 million, driven by higher demand for essential product categories and improved performance in both North American facilities compared to the year-ago quarter. The primary drivers are summarized in the following chart:

Other and Unallocated The amount of “Other and Unallocated” operating expense in our table of Segment Financial Performance totaled $14.7 million in the second quarter of 2020 compared with $8.2 million in the second quarter of 2019. Excluding the items identified to present “adjusted earnings,” unallocated expenses for second quarter of 2020 increased $0.3 million compared to the second quarter of 2019.

Income Taxes In the second quarter of 2020, income from continuing operations totaled $0.3 million and income tax expense totaled $2.6 million. On adjusted pre-tax income of $14.5 million, income tax expense was $4.6 million in the second quarter of 2020. The comparable amounts in the same quarter of 2019 were $13.7 million and $5.2 million, respectively. The effective tax rate on adjusted earnings was 32% in the second quarter of 2020.

- 34 -

GLATFELTER

Form 10-Q

Foreign Currency For the three months ended June 30, 2020, the average currency exchange rate was 1.10 dollar/euro compared with 1.12 in the same period of 2019. The table below summarizes the translation impact on reported results that changes in currency exchange rates had on our non-U.S. based operations from the conversion of these operation’s results for the second quarter of 2020.

In thousands | Three months ended June 30, 2020 |  |
| Favorable (unfavorable) |  |
Net sales |  |  |  | $ | (3,108 | ) |
Costs of products sold |  |  |  |  | 2,376 |  |
SG&A expenses |  |  |  |  | 277 |  |
Income taxes and other |  |  |  |  | 203 |  |
Net loss |  |  |  | $ | (252 | ) |

The above table only presents the financial reporting impact of foreign currency translations assuming currency exchange rates in 2020 were the same as 2019. It does not present the impact of certain competitive advantages or disadvantages of operating or competing in multi-currency markets.

LIQUIDITY AND CAPITAL RESOURCES

Our business requires significant expenditures for new or enhanced equipment, to support our research and development efforts, and to support our business strategy. In addition, we have mandatory debt service requirements of both principal and interest. The following table summarizes cash flow information for each of the periods presented:

| Six months ended June 30 |  |
In thousands | 2020 |  |  |  | 2019 |  |
Cash, cash equivalents and restricted cash at the beginning of period | $ | 126,201 |  |  |  | $ | 142,685 |  |
Cash used by |  |  |  |  |  |  |  |  |
Operating activities |  | (912 | ) |  |  |  | (19,285 | ) |
Investing activities |  | (11,448 | ) |  |  |  | (11,581 | ) |
Financing activities |  | (23,175 | ) |  |  |  | (40,353 | ) |
Effect of exchange rate changes on cash |  | (123 | ) |  |  |  | (291 | ) |
Change in cash and cash equivalents from discontinued operations |  | (945 | ) |  |  |  | (12,230 | ) |
Net cash used |  | (36,603 | ) |  |  |  | (83,740 | ) |
Cash, cash equivalents and restricted cash at the end of period |  | 89,598 |  |  |  |  | 58,945 |  |
Less: restricted cash in Prepaid and other current assets |  | (2,000 | ) |  |  |  | — |  |
Less: restricted cash in Other assets |  | (10,979 | ) |  |  |  | — |  |
Cash and cash equivalents at the end of period | $ | 76,619 |  |  |  | $ | 58,945 |  |

At June 30, 2020, we had $76.6 million in cash and cash equivalents held by both domestic and foreign subsidiaries. Unremitted earnings of our foreign subsidiaries as of January 1, 2018 and forward are deemed to be indefinitely reinvested and therefore no U.S. tax liability is reflected in the accompanying condensed consolidated financial statements. Approximately 60% of our cash and cash equivalents is held by our foreign subsidiaries but could be repatriated without incurring a significant amount of additional taxes.

Cash used by operating activities in the first six months of 2020 totaled $0.9 million compared with a use of $19.3 million in the same period a year ago. During the first six months of 2020, we used $5.2 million for higher incentive compensation payments and in 2019 we used $20.5 million to settle Fox River related claims. An improvement in the use of working capital for accounts receivables and inventory was largely offset by an increased use for accounts payable. In addition, cash used for interest payments declined $4.6 million in the year-over-year comparison reflecting savings from our debt refinancing in early 2019.

Net cash used by investing activities was essentially unchanged in the year-over-year comparison. Capital expenditures totaled $12.0 million and $10.6 million for the six months ended June 30, 2020 and 2019, respectively, and are expected to be $30 million to $33 million for the full year 2020.

Net cash used by financing activities totaled $23.2 million in the first six months of 2020 compared with $40.4 million in the same period of 2019. The decrease in cash used by financing activities primarily reflects repayment of $19.3 million of borrowings

- 35 -

GLATFELTER

Form 10-Q

under our revolving credit facility in the first six months of 2019. This decrease in cash used was partially offset by higher repayments on term loans of $6.0 million from 2019 to 2020.

In the first quarter of 2019, we significantly changed our debt capital structure. On February 8, 2019, we entered into a new credit facility with a consortium of financial institutions. The new five-year facility (the “2019 Facility”) replaces our then existing revolving credit facility and consists of a $400 million variable rate revolver and a €220 million, amortizing term loan. The other terms of the 2019 Facility are substantially similar to our previous revolving credit facility. On February 28, 2019, we redeemed all outstanding 5.375% Notes with proceeds from the new term loan.

The 2019 Facility contains a number of customary compliance covenants, the most restrictive of which is a maximum leverage ratio of 4.0x provided that such ratio increases to 4.5x during the period of four fiscal quarters immediately following a material acquisition. As of June 30, 2020, the leverage ratio, as calculated in accordance with the definition in our amended credit agreement, was 2.4x, within the limits set forth in our credit agreement. As part of our proactive management of potential risks presented by the COVID-19 pandemic we assessed our liquidity position in a number of more severe scenarios projecting potential implications of the economic crises. We believe the strength of our balance sheet and our production of engineered materials essential to the global response effort provides adequate financial flexibility in this challenging time. Based on our expectations of future results of operations and capital needs, we do not believe the debt covenants will impact our operations or limit our ability to undertake financings that may be necessary to meet our capital needs.

The following table sets forth our outstanding long-term indebtedness:

|  | June 30 |  |  |  | December 31 |
In thousands |  | 2020 |  |  |  | 2019 |
Revolving credit facility, due Feb. 2024 |  | $ | 83,985 |  |  |  | $ | 84,255 |
Term loan, due Feb. 2024 |  |  | 234,038 |  |  |  |  | 240,969 |
2.40% Term Loan, due Jun. 2022 |  |  | 3,200 |  |  |  |  | 4,012 |
2.05% Term Loan, due Mar. 2023 |  |  | 16,437 |  |  |  |  | 19,487 |
1.30% Term Loan, due Jun. 2023 |  |  | 4,799 |  |  |  |  | 5,617 |
1.55% Term Loan, due Sep. 2025 |  |  | 7,203 |  |  |  |  | 7,915 |
Total long-term debt |  |  | 349,662 |  |  |  |  | 362,255 |
Less current portion |  |  | (22,866 | ) |  |  |  | (22,940 | )
Unamortized deferred issuance costs |  |  | (2,103 | ) |  |  |  | (2,396 | )
Long-term debt, net of current portion |  | $ | 324,693 |  |  |  | $ | 336,919 |

Financing activities include cash used for common stock dividends. In both the first six months of 2020 and 2019, we used $11.5 million of cash for dividends on our common stock. Our Board of Directors determines what, if any, dividends will be paid to our shareholders. Dividend payment decisions are based upon then-existing factors and conditions and, therefore, historical trends of dividend payments are not necessarily indicative of future payments. In the second quarter of 2020, the Board approved a 3.8% increase in the quarterly dividend beginning August 2020.

We are subject to various federal, state and local laws and regulations intended to protect the environment as well as human health and safety. At various times, we have incurred significant costs to comply with these regulations and we could incur additional costs as new regulations are developed or regulatory priorities change.

At June 30, 2020, we had ample liquidity consisting of $76.6 million of cash on hand and $112.2 million of capacity under our revolving credit facility. We expect to meet all of our near and long-term cash needs from a combination of operating cash flow, cash and cash equivalents, our existing credit facility and other long-term debt.

Off-Balance-Sheet Arrangements As of June 30, 2020 and December 31, 2019, we had not entered into any off-balance-sheet arrangements. Financial derivative instruments, to which we are a party, and guarantees of indebtedness, which solely consist of obligations of subsidiaries, are reflected in the condensed consolidated balance sheets included herein in Item 1 – Financial Statements.

CRITICAL ACCOUNTING ESTIMATE During the second quarter of 2020, we performed an impairment test of our Dresden trade name and Composite Fibers goodwill driven by lower forecasted revenue of wallcover material as a result of the COVID-19 pandemic and the associated economic instability in Russia and Ukraine.

- 36 -

GLATFELTER

Form 10-Q

Based on our analysis, as of June 30, 2020, we recorded a non-cash impairment charge of $0.9 million related to the trade name acquired in connection with the 2013 Dresden wallcover acquisition, reducing its non-amortizing intangible value to $3.4 million. Although we determined that Composite Fibers goodwill was not impaired as of June 30, 2020, the estimated fair value of the Composite Fibers reporting unit exceeded its carrying value by less than 10%. Any prolonged downturns due to COVID-19 in our Composite Fibers’ markets, particularly in wallcover materials, or other negative revisions to key assumptions such as our weighted average cost of capital, may require us to perform additional impairment analysis that could result in a non-cash goodwill impairment charge. As of June 30, 2020, we had approximately $77 million of goodwill related to Composite Fibers.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

|  | Year Ended December 31 |  |  |  | June 30, 2020 |  |
In thousands, except percentages |  | 2020 |  |  | 2021 |  |  | 2022 |  |  | 2023 |  |  | 2024 |  |  |  | Carrying Value |  |  | Fair Value |  |
Long-term debt |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Average principal outstanding |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
At variable interest rates |  | $ | 311,864 |  |  | $ | 302,626 |  |  | $ | 290,308 |  |  | $ | 277,990 |  |  | $ | 54,366 |  |  |  | $ | 318,023 |  |  | $ | 318,023 |  |
At fixed interest rates – Term Loans |  |  | 29,001 |  |  |  | 21,090 |  |  |  | 10,782 |  |  |  | 3,626 |  |  |  | 1,715 |  |  |  |  | 31,639 |  |  |  | 32,146 |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 349,662 |  |  | $ | 350,169 |  |
Weighted-average interest rate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
On variable rate debt |  |  | 1.50 | % |  |  | 1.50 | % |  |  | 1.50 | % |  |  | 1.50 | % |  |  | 1.50 | % |  |  |  |  |  |  |  |  |  |
On fixed rate debt – Term Loans |  |  | 1.86 | % |  |  | 1.82 | % |  |  | 1.73 | % |  |  | 1.58 | % |  |  | 1.55 | % |  |  |  |  |  |  |  |  |  |
Interest rate swap |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pay fixed/received variable (notional) |  | € | 180,000 |  |  | € | 180,000 |  |  | € | 180,000 |  |  |  | — |  |  |  | — |  |  |  |  |  |  |  |  |  |  |
Rate paid |  |  | 0.0395 | % |  |  | 0.0395 | % |  |  | 0.0395 | % |  |  | — |  |  |  | — |  |  |  |  |  |  |  |  |  |  |
Rate received |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  |  |  |  |  |  |  |  |

The table above presents the average principal outstanding and related interest rates for the next five years for debt outstanding as of June 30, 2020. Fair values included herein have been determined based upon rates currently available to us for debt with similar terms and remaining maturities.

Our market risk exposure primarily results from changes in interest rates and currency exchange rates. At June 30, 2020, we had $347.6 million of long-term debt, net of unamortized debt issuance costs, of which 91.5% was at variable interest rates. After giving effect to the interest rate swap agreement, approximately 32.9% of our debt was at variable interest rates. The fixed rate Term Loans and the variable rate debt are all euro-based borrowings and thus the value of which is also subject to currency risk. Variable-rate debt outstanding represents borrowings under our revolving credit agreement that accrues interest based on one-month EURIBOR, but in no event less than zero, plus the applicable margin. At June 30, 2020, the weighted average EURIBOR on our outstanding debt was (0.47)%. Accordingly, the interest rate paid was equal to the margin, or 1.50%. A hypothetical 100 basis point increase in the interest rate on variable rate debt would increase annual interest expense by $0.6 million. In the event rates are lower, interest expense would be unchanged.

We entered into a €180 million notional value floating-to-fixed interest rate swap agreement with certain financial institutions. Under the terms of the swap, we will pay a fixed interest rate of 0.0395% on €180 million of the underlying variable rate term loan. We will receive the greater of 0.00% or EURIBOR.

As part of our overall risk management practices, we enter into financial derivatives primarily designed to either i) hedge foreign currency risks associated with forecasted transactions – “cash flow hedges”; or ii) mitigate the impact that changes in currency exchange rates have on intercompany financing transactions and foreign currency denominated receivables and payables – “foreign currency hedges.” For a more complete discussion of this activity, refer to Item 1 – Financial Statements – Note 17.

We are subject to certain risks associated with changes in foreign currency exchange rates to the extent our operations are conducted in currencies other than the U.S. Dollar. On an annual basis, our Euro denominated revenue exceeds euro expenses by an estimated €140 million. With respect to the British Pound Sterling, Canadian Dollar, and Philippine Peso, we have differing amounts of inflows and outflows of these currencies, although to a lesser degree than the Euro. As a result, particularly with respect to the Euro, we are exposed to changes in currency exchange rates and such changes could be significant.

- 37 -

GLATFELTER

Form 10-Q

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures Our chief executive officer and our principal financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 30, 2020, have concluded that, as of the evaluation date, our disclosure controls and procedures are effective.

Changes in Internal Controls There were no changes in our internal control over financial reporting during the three months ended June 30, 2020, that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II

ITEM 1A. RISK FACTORS

The following additional risk factor relating to COVID-19 should be read in conjunction with the risk factors set forth under “Item 1A. Risk Factors” (“Item 1A”) in our 2019 Annual Report on Form 10-K (“2019 Form 10-K”). The developments described in this additional risk factor have heightened, or in some cases developed since the filing of our 2019 Form 10-K, certain of the risks disclosed in Item 1A. Except as described herein, there have been no material changes with respect to the risk factors disclosed in our 2019 Form 10-K.

The risks described below and in our 2019 Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, may occur or become material in the future and adversely affect our business, reputation, financial condition or results of operations. Therefore, historical operating results, financial and business performance, events and trends are often not a reliable indicator of future operating results, financial and business performance, events or trends.

The COVID-19 pandemic outbreak could impact our ability to operate our facilities in an economical manner or could adversely impact demand for our products, which could have a material adverse effect on our operations and business.

On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic as the virus spread throughout the world. As the virus continued its rapid spread, a significant portion of the world’s economies was significantly impacted, and will continue to be so, by government mandates that all “non-essential” businesses close and that residents “shelter-in-place” or practice “social distancing.” The actions undertaken across the globe in an attempt to contain the spread of the virus have had an unprecedented and significant adverse impact on global economies in terms of reduced GDP, increased unemployment, and insolvencies in a variety of industries and markets.

In the event economic activity continues to be adversely impacted, or the impact intensifies, due to the spread of COVID-19 or due to actions to control the spread, we could be forced to curtail operations due to reduced customer demand, compliance with government mandates or the inability to adequately staff production facilities due to a widespread or sustained outbreak of COVID-19 at one or more of our facilities. In addition, our global supply chain could be disrupted, demand for our products, or the prices the products are sold, could be adversely impacted if economic conditions in the target markets that we serve remain weak or weaken further. We also could face potential legal actions that could arise due to our operations during the pandemic.

In addition, the COVID-19 pandemic’s impact on various economies throughout the world could lead to financial instabilities or insolvencies of some of our customers or the customers they in turn serve which could impact our ability to sell our products.

As we cannot predict the duration or scope of the COVID-19 pandemic, in the event the spread continues or the government actions intensify, our results of operations and/or financial position could be adversely impacted.

- 38 -

GLATFELTER

Form 10-Q

ITEM 6. EXHIBITS

The following exhibits are filed herewith or incorporated by reference as indicated.

10.1 | Glatfelter Deferred Compensation Plan, filed herewith.
31.1 | Certification of Dante C. Parrini, Chairman and Chief Executive Officer of Glatfelter, pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002, filed herewith.
31.2 | Certification of Samuel L. Hillard, Senior Vice President and Chief Financial Officer, pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002, filed herewith.
32.1 | Certification of Dante C. Parrini, Chairman and Chief Executive Officer of Glatfelter, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, filed herewith.
32.2 | Certification of Samuel L. Hillard, Senior Vice President and Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, filed herewith.
101.INS | Inline XBRL Instance Document - – the instance document does not appear in the Interactive Data file because its iXBRL tags are embedded within the Inline XBRL document, filed herewith.
101.SCH | XBRL Taxonomy Extension Schema, filed herewith.
101.CAL | XBRL Extension Calculation Linkbase, filed herewith.
101.DEF | XBRL Extension Definition Linkbase, filed herewith.
101.LAB | XBRL Extension Label Linkbase, filed herewith.
101.PRE | XBRL Extension Presentation Linkbase, filed herewith.
104 | The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, has been formatted in Inline XBRL.

- 39 -

GLATFELTER

Form 10-Q

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

| P. H. GLATFELTER COMPANY (Registrant)
August 4, 2020 |  |  |
| By |  | /s/ David C. Elder
|  |  | David C. Elder
|  |  | Vice President, Finance and Chief Accounting Officer

- 40 -

GLATFELTER

Form 10-Q