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 ~~September~~June 30, ~~2021~~2022


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

For the transition period from to

4350 Congress Street, Suite 600

Charlotte, North Carolina 28209

(Address of principal executive offices)

(704) 885-2555

(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

Glatfelter Corporation

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 ~~October 26, 2021~~July 29, 2022 totaled ~~44,525,089~~44,774,912 shares.

GLATFELTER CORPORATION AND SUBSIDIARIES

REPORT ON FORM 10-Q

For the Quarterly Period Ended

~~September~~June 30, ~~2021~~2022

Table of Contents


PART I - FINANCIAL INFORMATION	PART I - FINANCIAL INFORMATION			Page	PART I - FINANCIAL INFORMATION			Page
Item 1	Item 1	Financial Statements		2	Item 1	Financial Statements		2
		Condensed Consolidated Statements of Income for the three months and nine months ended September 30, 2021 and 2020 (unaudited)		2
		Condensed Consolidated Statements of Comprehensive Income for the three months and nine months ended September 30, 2021 and 2020 (unaudited)		3		Condensed Consolidated Statements of Income for the three months and six months ended June 30, 2022 and 2021 (unaudited)		2
		Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020 (unaudited)		4		Condensed Consolidated Statements of Comprehensive Income for the three months and six months ended June 30, 2022 and 2021 (unaudited)		3
		Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 (unaudited)		5		Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021 (unaudited)		4
		Statements of Shareholders’ Equity for the three months and nine months ended September 30, 2021 and 2020 (unaudited)		6		Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021 (unaudited)		5
		Notes to Condensed Consolidated Financial Statements (unaudited)		7		Statements of Shareholders’ Equity for the three months and six months ended June 30, 2022 and 2021 (unaudited)		6
		1	Organization	7		Notes to Condensed Consolidated Financial Statements (unaudited)		7
		2	Accounting Policies	7		1	Organization	7
		3	Acquisition	7		2	Accounting Policies	7
		4	Revenue	9		3	Acquisition	7
		5	Gains on Disposition of Plant, Equipment and Timberlands	9		4	Revenue	10
		6	Discontinued Operations	10		5	Gains on Disposition of Plant, Equipment and Timberlands	11
		7	Earnings Per Share	10		6	Goodwill and Other Asset Impairment	11
		8	Accumulated Other Comprehensive Income	11		7	Discontinued Operations	12
		9	Stock-based Compensation	13		8	Earnings Per Share	12
		10	Retirement Plans and Other Post-Retirement Benefits	14		9	Accumulated Other Comprehensive Income	13
		11	Income Taxes	14		10	Stock-based Compensation	15
		12	Inventories	15		11	Retirement Plans and Other Post-Retirement Benefits	16
		13	Goodwill and Other Intangible Assets	16		12	Income Taxes	16
		14	Leases	17		13	Inventories	17
		15	Short-term Debt	17		14	Goodwill and Other Intangible Assets	17
		16	Long-term Debt	18		15	Leases	19
		17	Fair Value of Financial Instruments	19		16	Long-term Debt	20
		18	Financial Derivatives and Hedging Activities	20		17	Fair Value of Financial Instruments	21
		19	Commitments, Contingencies and Legal Proceedings	22		18	Financial Derivatives and Hedging Activities	21
		20	Segment Information	23		19	Commitments, Contingencies and Legal Proceedings	24
		21	Subsequent Events	24		20	Segment Information	26
Item 2	Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations		25	Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations		28
Item 3	Item 3	Quantitative and Qualitative Disclosures About Market Risks		36	Item 3	Quantitative and Qualitative Disclosures About Market Risks		42
Item 4	Item 4	Controls and Procedures		36	Item 4	Controls and Procedures		43
PART II – OTHER INFORMATION	PART II – OTHER INFORMATION			37	PART II – OTHER INFORMATION			44
Item 1A	Item 1A	Risk Factors		37	Item 1A	Risk Factors		44
Item 6	Item 6	Exhibits		38	Item 6	Exhibits		45
		SIGNATURES		39		SIGNATURES		46

PART I

Item 1 – Financial Statements

GLATFELTER CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)


		Three months ended September 30,				Nine months ended September 30,					Three months ended June 30,				Six months ended June 30,
In thousands, except per share	In thousands, except per share	2021		2020		2021		2020		In thousands, except per share	2022		2021		2022		2021

Net sales	Net sales	$	279,651	$	233,473	$	750,236	$	681,216	Net sales	$	363,963	$	244,911	$	745,643	$	470,585
Costs of products sold	Costs of products sold	241,294		195,222		637,029		574,100		Costs of products sold	326,566		209,357		676,581		395,735
Gross profit	Gross profit	38,357		38,251		113,207		107,116		Gross profit	37,397		35,554		69,062		74,850
Selling, general and administrative expenses	Selling, general and administrative expenses	26,066		24,635		77,877		72,707		Selling, general and administrative expenses	28,400		28,984		61,566		51,811
Gains on dispositions of plant, equipment and timberlands, net		(2,235)		(413)		(4,638)		(1,010)
Operating income		14,526		14,029		39,968		35,419
Goodwill and other asset impairment charges										Goodwill and other asset impairment charges	—		—		117,349		—
Loss (gains) on dispositions of plant, equipment and timberlands, net										Loss (gains) on dispositions of plant, equipment and timberlands, net	73		(1,553)		(2,888)		(2,403)
Operating income (loss)										Operating income (loss)	8,924		8,123		(106,965)		25,442
Non-operating income (expense)	Non-operating income (expense)									Non-operating income (expense)
Interest expense	Interest expense	(2,061)		(1,810)		(5,364)		(5,347)		Interest expense	(7,672)		(1,772)		(15,534)		(3,303)
Interest income	Interest income	21		39		52		390		Interest income	38		11		55		31
Pension settlement expenses, net		—		(389)		—		(6,792)

Other, net	Other, net	(876)		(1,728)		(1,949)		(3,243)		Other, net	(455)		(849)		(1,795)		(1,073)
Total non-operating expense	Total non-operating expense	(2,916)		(3,888)		(7,261)		(14,992)		Total non-operating expense	(8,089)		(2,610)		(17,274)		(4,345)
Income from continuing operations before income taxes		11,610		10,141		32,707		20,427
Income tax provision		3,551		3,614		14,762		8,775
Income from continuing operations		8,059		6,527		17,945		11,652
Income (loss) from continuing operations before income taxes										Income (loss) from continuing operations before income taxes	835		5,513		(124,239)		21,097
Income tax provision (benefit)										Income tax provision (benefit)	3,295		4,021		(13,489)		11,211
Income (loss) from continuing operations										Income (loss) from continuing operations	(2,460)		1,492		(110,750)		9,886

Discontinued operations:	Discontinued operations:									Discontinued operations:
Loss before income taxes		(532)		—		(614)		(135)
Income (loss) before income taxes										Income (loss) before income taxes	408		(82)		371		(82)
Income tax provision	Income tax provision	—		—		—		—		Income tax provision	—		—		—		—
Loss from discontinued operations	Loss from discontinued operations	(532)		—		(614)		(135)		Loss from discontinued operations	408		(82)		371		(82)
Net income		$	7,527	$	6,527	$	17,331	$	11,517
Net income (loss)										Net income (loss)	$	(2,052)	$	1,410	$	(110,379)	$	9,804

Basic earnings per share	Basic earnings per share									Basic earnings per share
Income from continuing operations		$	0.18	$	0.15	$	0.40	$	0.26
Loss from discontinued operations		(0.01)		—		(0.01)		—
Basic earnings per share		$	0.17	$	0.15	$	0.39	$	0.26
Income (loss) from continuing operations										Income (loss) from continuing operations	$	(0.05)	$	0.03	$	(2.47)	$	0.22
Income from discontinued operations										Income from discontinued operations	0.01		—		0.01		—
Basic earnings (loss) per share										Basic earnings (loss) per share	$	(0.04)	$	0.03	$	(2.46)	$	0.22

Diluted earnings per share	Diluted earnings per share									Diluted earnings per share
Income from continuing operations		$	0.18	$	0.15	$	0.40	$	0.26
Loss from discontinued operations		(0.01)		—		(0.01)		—
Diluted earnings per share		$	0.17	$	0.15	$	0.39	$	0.26
Income (loss) from continuing operations										Income (loss) from continuing operations	$	(0.05)	$	0.03	$	(2.47)	$	0.22
Income from discontinued operations										Income from discontinued operations	0.01		—		0.01		—
Diluted earnings (loss) per share										Diluted earnings (loss) per share	$	(0.04)	$	0.03	$	(2.46)	$	0.22

Weighted average shares outstanding	Weighted average shares outstanding									Weighted average shares outstanding
Basic	Basic	44,593		44,368		44,536		44,329		Basic	44,841		44,563		44,775		44,507
Diluted	Diluted	44,939		44,636		44,889		44,549		Diluted	44,841		44,872		44,775		44,865

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

- 2 -

GLATFELTER CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)


		Three months ended September 30,				Nine months ended September 30,					Three months ended June 30,				Six months ended June 30,
In thousands	In thousands	2021		2020		2021		2020		In thousands	2022		2021		2022		2021
Net income		$	7,527	$	6,527	$	17,331	$	11,517
Net income (loss)										Net income (loss)	$	(2,052)	$	1,410	$	(110,379)	$	9,804

Foreign currency translation adjustments	Foreign currency translation adjustments	(11,484)		17,836		(20,831)		9,824		Foreign currency translation adjustments	(28,675)		3,846		(39,590)		(9,347)
Net change in:	Net change in:									Net change in:
Deferred gains (losses) on cash flow hedges, net of taxes of $(319), $1,049, $(1,506) and $1,745, respectively		396		(2,835)		3,341		(4,704)
Unrecognized retirement obligations, net of taxes of $(57), $53, $(144) and $156 respectively		376		270		618		70
Deferred gains (losses) on derivatives, net of taxes of $(2,029), $114, $(2,629) and $(1,187), respectively										Deferred gains (losses) on derivatives, net of taxes of $(2,029), $114, $(2,629) and $(1,187), respectively	8,534		(316)		8,177		2,945
Unrecognized retirement obligations, net of taxes of $(49), $(14), $(101) and $(87), respectively										Unrecognized retirement obligations, net of taxes of $(49), $(14), $(101) and $(87), respectively	152		150		304		242
Other comprehensive income (loss)	Other comprehensive income (loss)	(10,712)		15,271		(16,872)		5,190		Other comprehensive income (loss)	(19,989)		3,680		(31,109)		(6,160)
Comprehensive income (loss)	Comprehensive income (loss)	$	(3,185)	$	21,798	$	459	$	16,707	Comprehensive income (loss)	$	(22,041)	$	5,090	$	(141,488)	$	3,644

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

- 3 -

GLATFELTER CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)


In thousands	In thousands	September 30, 2021		December 31, 2020		In thousands	June 30, 2022		December 31, 2021
Assets	Assets					Assets
Cash and cash equivalents	Cash and cash equivalents	$	100,032	$	99,581	Cash and cash equivalents	$	71,476	$	138,436
Accounts receivable, net	Accounts receivable, net	149,009		122,817		Accounts receivable, net	209,455		170,212
Inventories	Inventories	227,805		196,230		Inventories	307,612		279,520
Prepaid expenses and other current assets	Prepaid expenses and other current assets	38,238		34,297		Prepaid expenses and other current assets	46,083		48,398
Total current assets	Total current assets	515,084		452,925		Total current assets	634,626		636,566

Plant, equipment and timberlands, net	Plant, equipment and timberlands, net	605,067		543,267		Plant, equipment and timberlands, net	690,228		758,812
Goodwill	Goodwill	191,619		164,369		Goodwill	168,288		236,165
Intangible assets, net	Intangible assets, net	90,709		81,835		Intangible assets, net	110,096		156,304
Other assets	Other assets	54,073		44,485		Other assets	94,052		92,760
Total assets	Total assets	$	1,456,552	$	1,286,881	Total assets	$	1,697,290	$	1,880,607

Liabilities and Shareholders' Equity	Liabilities and Shareholders' Equity					Liabilities and Shareholders' Equity
Current portion of long-term debt	Current portion of long-term debt	$	27,441	$	25,057	Current portion of long-term debt	$	22,117	$	26,437
Short-term debt	Short-term debt	11,579		—		Short-term debt	10,610		22,843
Accounts payable	Accounts payable	142,639		127,505		Accounts payable	208,181		214,015
Dividends payable	Dividends payable	6,234		5,988		Dividends payable	6,269		6,237
Environmental liabilities	Environmental liabilities	2,529		3,700		Environmental liabilities	2,200		2,200
Other current liabilities	Other current liabilities	84,259		71,093		Other current liabilities	78,143		99,438
Total current liabilities	Total current liabilities	274,681		233,343		Total current liabilities	327,520		371,170

Long-term debt	Long-term debt	423,090		288,464		Long-term debt	779,026		738,075
Deferred income taxes	Deferred income taxes	74,573		77,131		Deferred income taxes	63,025		87,285
Other long-term liabilities	Other long-term liabilities	120,904		110,011		Other long-term liabilities	137,797		141,315
Total liabilities	Total liabilities	893,248		708,949		Total liabilities	1,307,368		1,337,845

Commitments and contingencies	Commitments and contingencies	—		—		Commitments and contingencies	—		—

Shareholders’ equity	Shareholders’ equity					Shareholders’ equity
Common stock	Common stock	544		544		Common stock	544		544
Capital in excess of par value	Capital in excess of par value	64,274		63,261		Capital in excess of par value	62,555		64,779
Retained earnings	Retained earnings	722,227		723,365		Retained earnings	582,687		705,600
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(75,525)		(58,653)		Accumulated other comprehensive loss	(111,413)		(80,304)
		711,520		728,517			534,373		690,619
Less cost of common stock in treasury	Less cost of common stock in treasury	(148,216)		(150,585)		Less cost of common stock in treasury	(144,451)		(147,857)
Total shareholders’ equity	Total shareholders’ equity	563,304		577,932		Total shareholders’ equity	389,922		542,762
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	1,456,552	$	1,286,881	Total liabilities and shareholders’ equity	$	1,697,290	$	1,880,607

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

- 4 -

GLATFELTER CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

Nine months ended September 30,
In thousands 2021 2020
Operating activities
Net income $ 17,331 $ 11,517
Loss from discontinued operations, net of taxes 614 135

Adjustments to reconcile to net cash provided by continuing operations:
Depreciation, depletion and amortization 44,176 43,310
Amortization of debt issue costs and original issue discount 478 441
Asset impairment charge — 900
Deferred income tax provision (419) 446
Gains on dispositions of plant, equipment and timberlands, net (4,638) (1,010)
Share-based compensation 4,015 3,994
Change in operating assets and liabilities:
Accounts receivable (19,304) (6,053)
Inventories (34,640) 2,229
Prepaid and other current assets 8,742 (1,154)
Accounts payable 19,815 (33,790)
Accruals and other current liabilities 4,689 284
Other (2,362) 3,290
Net cash provided by operating activities from continuing operations 38,497 24,539
Investing activities
Expenditures for purchases of plant, equipment and timberlands (18,519) (20,165)
Proceeds from disposals of plant, equipment and timberlands, net 4,951 1,037
Acquisition, net of cash acquired (172,331) —
Other (104) (50)
Net cash used by investing activities from continuing operations (186,003) (19,178)
Financing activities
Proceeds from short-term debt 23,559 —
Net borrowings under revolving credit facility 166,092 (26,092)
Payments of borrowing costs (1,855) —
Repayment of term loans (18,154) (17,136)
Payments of dividends (18,224) (17,502)
Payments related to share-based compensation awards and other (154) (233)
Net cash provided (used) by financing activities from continuing operations 151,264 (60,963)
Effect of exchange rate changes on cash (4,082) 2,361
Net decrease in cash, cash equivalents and restricted cash (324) (53,241)
Decrease in cash, cash equivalents and restricted cash from discontinued operations (481) (1,108)
Cash, cash equivalents and restricted cash at the beginning of period 111,665 126,201
Cash, cash equivalents and restricted cash at the end of period 110,860 71,852
Less: restricted cash in Prepaid expenses and other current assets (2,000) (2,000)
Less: restricted cash in Other assets (8,828) (10,611)
Cash and cash equivalents at the end of period $ 100,032 $ 59,241

Supplemental cash flow information
Cash paid for:
Interest $ 4,709 $ 4,704
Income taxes, net 9,794 8,592


	Six months ended June 30,
In thousands	2022		2021
Operating activities
Net income (loss)	$	(110,379)	$	9,804
Loss (income) from discontinued operations, net of taxes	(371)		82
Adjustments to reconcile to net cash provided (used) by continuing operations:
Depreciation, depletion and amortization	34,936		28,466
Amortization of debt issue costs and original issue discount	963		309

Goodwill and other asset impairment charges	117,349		—
Inventory and accounts receivable charges	3,948		—
Deferred income tax expense (benefit)	(22,186)		616
Gains on dispositions of plant, equipment and timberlands, net	(2,888)		(2,403)
Share-based compensation	2,419		2,537
Change in operating assets and liabilities:
Accounts receivable	(52,936)		(11,533)
Inventories	(45,148)		(21,870)
Prepaid and other current assets	3,472		3,377
Accounts payable	9,516		(4,542)
Accruals and other current liabilities	(16,910)		(5,841)
Other	(1,320)		2,363
Net cash provided (used) by operating activities from continuing operations	(79,535)		1,365
Investing activities
Expenditures for purchases of plant, equipment and timberlands	(22,697)		(11,211)
Proceeds from disposals of plant, equipment and timberlands, net	3,173		2,510
Acquisition, net of cash acquired	1,413		(172,331)
Other	(25)		(104)
Net cash used by investing activities from continuing operations	(18,136)		(181,136)
Financing activities

Proceeds from term loans	—		11,725
Repayment of term loans	(23,793)		(12,159)

Net borrowings under revolving credit facility	72,176		178,077
Payments of borrowing costs	(1,102)		(35)
Payments of dividends	(12,498)		(11,991)

Payments related to share-based compensation awards and other	(1,237)		(479)
Net cash provided by financing activities from continuing operations	33,546		165,138
Effect of exchange rate changes on cash	(3,587)		(1,432)
Net decrease in cash, cash equivalents and restricted cash	(67,712)		(16,065)
Decrease in cash, cash equivalents and restricted cash from discontinued operations	(231)		(238)
Cash, cash equivalents and restricted cash at the beginning of period	148,814		111,665
Cash, cash equivalents and restricted cash at the end of period	80,871		95,362
Less: restricted cash in Prepaid expenses and other current assets	(2,000)		(2,000)
Less: restricted cash in Other assets	(7,395)		(9,197)
Cash and cash equivalents at the end of period	$	71,476	$	84,165

Supplemental cash flow information
Cash paid for:
Interest	$	15,879	$	2,920
Income taxes, net	14,699		7,098

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

- 5 -

GLATFELTER CORPORATION AND SUBSIDIARIES

STATEMENTS OF SHAREHOLDERS’ EQUITY

(unaudited)


In thousands	In thousands	Common stock		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Shareholders’ Equity		In thousands	Common stock		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Shareholders’ Equity
Balance at July 1, 2021		$	544	$	62,796	$	720,934	$	(64,813)	$	(148,216)	$	571,245
Net income						7,527						7,527
Balance at April 1, 2022														Balance at April 1, 2022	$	544	$	61,873	$	591,012	$	(91,424)	$	(145,272)	$	416,733
Net loss														Net loss					(2,052)						(2,052)
Other comprehensive loss	Other comprehensive loss							(10,712)				(10,712)		Other comprehensive loss							(19,989)				(19,989)
Comprehensive loss	Comprehensive loss											(3,185)		Comprehensive loss											(22,041)
Cash dividends declared ($0.14 per share)	Cash dividends declared ($0.14 per share)					(6,234)						(6,234)		Cash dividends declared ($0.14 per share)					(6,273)						(6,273)
Share-based compensation expense	Share-based compensation expense			1,478								1,478		Share-based compensation expense			1,510								1,510
Delivery of treasury shares:														Delivery of treasury shares:
RSUs and PSAs														RSUs and PSAs			(828)						821		(7)
Balance at June 30, 2022														Balance at June 30, 2022	$	544	$	62,555	$	582,687	$	(111,413)	$	(144,451)	$	389,922


Balance at September 30, 2021		$	544	$	64,274	$	722,227	$	(75,525)	$	(148,216)	$	563,304

Balance at July 1, 2020		$	544	$	59,982	$	719,035	$	(87,977)	$	(150,585)	$	540,999
Balance at April 1, 2021														Balance at April 1, 2021	$	544	$	62,576	$	725,756	$	(68,493)	$	(149,322)	$	571,061
Net income	Net income					6,527						6,527		Net income					1,410						1,410
Other comprehensive income	Other comprehensive income							15,271				15,271		Other comprehensive income							3,680				3,680
Comprehensive income	Comprehensive income											21,798		Comprehensive income											5,090
Cash dividends declared ($0.135 per share)						(5,990)						(5,990)
Cash dividends declared ($0.14 per share)														Cash dividends declared ($0.14 per share)					(6,232)						(6,232)
Share-based compensation expense	Share-based compensation expense			1,618								1,618		Share-based compensation expense			1,329								1,329
Delivery of treasury shares:														Delivery of treasury shares:
RSUs and PSAs														RSUs and PSAs			(1,109)						1,106		(3)

Balance at June 30, 2021														Balance at June 30, 2021	$	544	$	62,796	$	720,934	$	(64,813)	$	(148,216)	$	571,245


Balance at September 30, 2020		$	544	$	61,600	$	719,572	$	(72,706)	$	(150,585)	$	558,425
Balance at January 1, 2022														Balance at January 1, 2022	$	544	$	64,779	$	705,600	$	(80,304)	$	(147,857)	$	542,762
Net loss														Net loss					(110,379)						(110,379)
Other comprehensive loss														Other comprehensive loss							(31,109)				(31,109)
Comprehensive loss														Comprehensive loss											(141,488)
Cash dividends declared ($0.14 per share)														Cash dividends declared ($0.14 per share)					(12,534)						(12,534)
Share-based compensation expense														Share-based compensation expense			2,419								2,419
Delivery of treasury shares:														Delivery of treasury shares:
RSUs and PSAs														RSUs and PSAs			(4,643)						3,406		(1,237)
Balance at June 30, 2022														Balance at June 30, 2022	$	544	$	62,555	$	582,687	$	(111,413)	$	(144,451)	$	389,922

Balance at January 1, 2021	Balance at January 1, 2021	$	544	$	63,261	$	723,365	$	(58,653)	$	(150,585)	$	577,932	Balance at January 1, 2021	$	544	$	63,261	$	723,365	$	(58,653)	$	(150,585)	$	577,932
Net income	Net income					17,331						17,331		Net income					9,804						9,804
Other comprehensive loss	Other comprehensive loss							(16,872)				(16,872)		Other comprehensive loss							(6,160)				(6,160)
Comprehensive loss												459
Cash dividends declared ($0.415 per share)						(18,469)						(18,469)
Comprehensive income														Comprehensive income											3,644
Cash dividends declared ($0.275 per share)														Cash dividends declared ($0.275 per share)					(12,235)						(12,235)
Share-based compensation expense	Share-based compensation expense			4,015								4,015		Share-based compensation expense			2,537								2,537
Delivery of treasury shares
Delivery of treasury shares:														Delivery of treasury shares:
RSUs and PSAs	RSUs and PSAs			(3,002)						2,369		(633)		RSUs and PSAs			(3,002)						2,369		(633)
Balance at September 30, 2021		$	544	$	64,274	$	722,227	$	(75,525)	$	(148,216)	$	563,304

Balance at January 1, 2020		$	544	$	59,900	$	725,795	$	(77,896)	$	(152,384)	$	555,959
Net income						11,517						11,517
Other comprehensive income								5,190				5,190
Comprehensive income												16,707
Cash dividends declared ($0.40 per share)						(17,740)						(17,740)
Share-based compensation expense				3,994								3,994
Delivery of treasury shares
RSUs and PSAs				(2,077)						1,657		(420)
Employee stock options exercised — net				(217)						142		(75)
Balance at September 30, 2020		$	544	$	61,600	$	719,572	$	(72,706)	$	(150,585)	$	558,425
Balance at June 30, 2021														Balance at June 30, 2021	$	544	$	62,796	$	720,934	$	(64,813)	$	(148,216)	$	571,245

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

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GLATFELTER CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1.ORGANIZATION

Glatfelter Corporation and subsidiaries ("Glatfelter") is a leading global supplier of engineered materials with a strong focus on innovation and sustainability. Glatfelter's high quality, technology-driven, innovative, and customizable nonwovens solutions can be found in products that are Enhancing Everyday Life®. These include personal care and hygiene products, food and beverage filtration, critical cleaning products, medical and personal protection, packaging products, as well as home improvement and industrial applications. Headquartered in Charlotte, NC, the Company’s ~~annualized~~2021 net sales ~~approximate $1.4~~were $1.1 billion with approximately ~~3,300~~3,250 employees worldwide. Glatfelter’s operations utilize a variety of manufacturing technologies including airlaid, wetlaid and spunlace with ~~sixteen~~16 manufacturing sites located in the United States, Canada, Germany, the United Kingdom, France, Spain, and the Philippines. The Company has sales offices in all major geographies serving customers under the Glatfelter and Sontara brands. Additional information about Glatfelter may be found at ~~www.glatfelter.com~~. www.glatfelter.com. The terms “we,” “us,” “our,” “the Company,” or “Glatfelter,” refer to Glatfelter Corporation 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 ~~2020~~2021 Annual Report on Form 10-K.

Discontinued Operations The results of operations and cash flows of 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.

~~Recently Issued Accounting Pronouncements~~Inventories In ~~December~~ ~~2019,~~Our inventories are stated at the ~~Financial Accounting Standards Board issued Accounting Standards Update No. 2019-12,~~ ~~Income Taxes (Topic 740): Simplifying~~lower of cost or net realizable value. Raw materials, in-process and finished goods inventories are valued principally using the ~~Accounting for Income Taxes (“ASU No. 2019-12”). The update eliminates, clarifies, and modifies~~ ~~certain~~ ~~guidance related to the accounting for income taxes. We adopted ASU No. 2019-12 effective January 1, 2021 and it did not have a material impact on our financial statements.~~average-cost method.

3.ACQUISITION

On May 13, 2021, we completed the acquisition of all the outstanding equity interests in Georgia-Pacific Mt. Holly LLC, Georgia-Pacific's U.S. nonwovens business ("Mount Holly"), for $170.9 million. This business includes the Mount Holly, NC manufacturing facility with annual production capacity of approximately 37,000 metric tons and an R&D center and pilot line for nonwovens product development in Memphis, TN. The Mount Holly facility produces high-quality airlaid products for the wipes, hygiene, and other nonwoven materials markets, competing in the marketplace with nonwoven technologies and substrates, as well as other materials focused primarily on consumer based end-use applications. The facility employs approximately 140 people. Mount Holly’s results are reported prospectively from the acquisition date as part of our Airlaid Materials segment. ~~Mount Holly had annual net sales~~

On October 29, 2021, we completed the acquisition of ~~approximately $100 million~~PMM Holding (Luxembourg) AG, the owner of all of the equity interest in ~~2020.~~Jacob Holm, a global leading manufacturer of premium quality spunlace nonwoven fabrics for critical

- 7 -

cleaning, high-performance materials, personal care, hygiene and medical applications, for approximately $304.0 million for all outstanding shares and the extinguishment of Jacob Holm’s debt.

For the quarter ended June 30, 2022, we adjusted the preliminary purchase price allocation related to the Jacob Holm acquisition by reducing preacquistion compensation incentive accruals by approximately $0.5 million, and reducing goodwill by the same amount, based on incentive payouts made during the quarter.

The ~~acquisition was financed through a combination of cash on hand and borrowings under our revolving credit facility.~~following table sets forth information related to the consideration exchanged for each acquisition.


In thousands	Mount Holly		Jacob Holm		Total
Total consideration	$	170,919	$	303,952	$	474,871
Less: Debt repaid	—		(148,000)		(148,000)
Cash consideration	$	170,919	$	155,952	$	326,871

The preliminary purchase price ~~allocation~~allocations set forth in the following table are based on all information available to us at the present time and is subject to change. With respect to the Mount Holly acquisition, the purchase price allocation is complete. However, the Jacob Holm purchase price allocation is preliminary as we are in the process of finalizing our analysis of certain matters, primarily related to the assessment of potential tax liabilities associated with the acquired entities. In the event new information becomes available, the measurement of the amount of goodwill reflected may be affected.


In thousands	Mount Holly		Jacob Holm		Total
Assets
Cash and cash equivalents	$	—	$	11,426	$	11,426
Accounts receivable	11,599		30,271		41,870
Inventory	7,031		45,340		52,371
Prepaid and other current assets	11		6,727		6,738
Plant, equipment and timberlands	100,498		158,612		259,110
Intangible assets	20,000		70,240		90,240
Goodwill	35,793		48,355		84,148
Other assets	8,041		26,929		34,970
Total assets	182,973		397,900		580,873
Liabilities
Short-term debt	0		14,081		14,081
Accounts payable	2,321		25,264		27,585
Other current liabilities	1,868		21,263		23,131
Other long-term liabilities	7,865		33,340		41,205
Total liabilities	12,054		93,948		106,002
Total preliminary purchase price	$	170,919	$	303,952	$	474,871

The preliminary purchase price allocations set forth in the table above are based on all information available to us at the present time and is subject to change. In the event new information becomes available, ~~primarily related to the finalization of post-closing working capital adjustments,~~ the measurement of the amount of goodwill reflected may be affected.

~~The following table summarizes preliminary allocation of the purchase price to assets acquired and liabilities assumed is as follows:~~


~~In thousands~~	~~Preliminary Allocation~~
~~Assets~~
~~Accounts receivable~~	$	~~11,576~~
~~Inventory~~	~~7,031~~
~~Prepaid and other current assets~~	11
~~Plant, equipment and timberlands~~	~~100,498~~
~~Intangible assets~~	~~20,000~~
~~Goodwill~~	~~36,231~~
~~Other assets~~	~~8,041~~
~~Total assets~~	~~183,388~~
~~Liabilities~~
~~Accounts payable~~	~~2,587~~
~~Other current liabilities~~	~~2,017~~
~~Other long-term liabilities~~	~~7,865~~
~~Total liabilities~~	~~12,469~~
~~Total purchase price~~	$	~~170,919~~

For purposes of allocating the total purchase price, assets acquired and liabilities assumed are recorded at their estimated fair market ~~value.~~values. The ~~allocation~~allocations set forth above isare based on management’s estimate of the fair value using valuation techniques such as discounted cash flow models, appraisals and similar methodologies.

The ~~amount allocated~~following table sets forth information related to ~~intangible assets represents the estimated value~~amounts of ~~customer relationships.~~

Acquired property, plant and equipment are being depreciated on a straight-line basis with estimated remaining lives ranging from five years to 35 years. Intangible assets are being amortized on a straight-line basis over an estimated remaining life of 11 years reflecting the expected future value.

In connection with the Mount Holly acquisition, we recorded $36.2 million of goodwill and $20.0 million of identifiable intangible assets consisting of customer relationships. The goodwill arising from the acquisition largely relates to strategic benefits, product and market diversification, assembled workforce, and similar factors. For tax purposes, the goodwill is deductible over 15 years.

~~Revenue~~net sales and operating income (loss) of ~~Mount Holly is~~the acquired businesses included in our ~~consolidated~~ results of operations ~~for 2021 prospectively from May 13, 2021,~~in the ~~date of acquisition,~~three and ~~totaled $34.2 million and $4.0 million, respectively.~~ six months ended 2022:

- 8 -


	Three months ended June 30,		Six months ended June 30,
In thousands	2022		2022
Mount Holly
Net sales	$	26,300	$	53,604
Operating income	1,911		4,635
Jacob Holm
Net sales	96,917		193,304
Operating loss	(1,808)		(3,380)

The following table summarizes annual unaudited pro forma financial information as if the acquisition occurred as of January 1, ~~2020:~~2021:


(unaudited)	(unaudited)	Three months ended September 30		Nine months ended September 30				(unaudited)	Three months ended June 30,		Six months ended June 30,
In thousands, except per share	In thousands, except per share	2020		2021		2020		In thousands, except per share	2021		2021
Pro forma	Pro forma							Pro forma
Net sales	Net sales	$	260,722	$	750,236	$	759,074	Net sales	$	347,895	$	690,448
Income from continuing operations		7,279		15,339		15,565
Income per share from continuing operations		0.16		0.34		0.35
Income (loss) from continuing operations								Income (loss) from continuing operations	(10,546)		12,892

The pro forma financial information set forth above for the three ~~months~~ and ~~nine~~six months ended ~~September~~June 30, 2021 includes ~~$0.2~~$3.7 million and ~~$4.6~~$4.3 million, respectively, of one-time costs directly related to the Mount Holly transaction. Such costs are presented under the caption “Selling, general and administrative expenses” in the accompanying condensed consolidated statements of income.

- 89 -

4.REVENUE

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


		Three months ended September 30				Nine months ended September 30					Three months ended June 30,				Six months ended June 30,
In thousands	In thousands	2021		2020		2021		2020		In thousands	2022		2021		2022		2021
Revenue by product category										Revenue by product category
Composite Fibers	Composite Fibers									Composite Fibers
Food & beverage	Food & beverage	$	73,667	$	68,593	$	224,155	$	213,074	Food & beverage	$	74,465	$	73,535	$	149,688	$	150,488
Wallcovering	Wallcovering	22,116		24,695		68,927		55,847		Wallcovering	9,902		24,182		25,733		46,811
Technical specialties	Technical specialties	22,029		22,517		70,232		61,340		Technical specialties	18,603		24,708		41,739		48,203
Composite laminates	Composite laminates	11,841		8,640		32,199		26,529		Composite laminates	11,570		10,549		22,867		20,358
Metallized	Metallized	8,465		7,974		25,452		30,477		Metallized	8,798		8,624		19,140		16,987
		138,118		132,419		420,965		387,267
											123,338		141,598		259,167		282,847
Airlaid Materials	Airlaid Materials									Airlaid Materials
Feminine hygiene	Feminine hygiene	55,177		53,463		150,002		154,227		Feminine hygiene	56,943		47,184		116,255		94,825
Specialty wipes	Specialty wipes	37,190		17,929		74,477		56,088		Specialty wipes	37,908		21,371		75,003		37,287
Tabletop	Tabletop	26,447		12,445		50,498		33,026		Tabletop	26,771		17,188		57,518		24,051
Food pads										Food pads	3,475		2,440		6,951		4,797
Home care										Home care	5,513		6,339		11,798		10,262
Adult incontinence	Adult incontinence	6,324		5,255		16,085		16,411		Adult incontinence	6,260		5,083		12,989		9,761
Home care		7,811		7,121		18,073		18,611
Other	Other	8,584		4,841		20,136		15,586		Other	6,838		3,708		12,658		6,755
		141,533		101,054		329,271		293,949			143,708		103,313		293,172		187,738
Spunlace										Spunlace
Consumer wipes										Consumer wipes	39,549		—		85,706		—
Critical cleaning										Critical cleaning	27,783		—		52,061		—
Health care										Health care	15,434		—		29,039		—
Hygiene										Hygiene	6,233		—		12,146		—
High performance										High performance	4,018		—		8,130		—
Beauty care										Beauty care	3,900		—		6,222		—
		$	279,651	$	233,473	$	750,236	$	681,216
											96,917		—		193,304		—
Total										Total	$	363,963	$	244,911	$	745,643	$	470,585

Revenue by geography										Revenue by geography
Composite Fibers										Composite Fibers
Europe, Middle East and Africa										Europe, Middle East and Africa	$	59,868	$	85,796	$	133,472	$	172,741
Americas										Americas	42,077		35,369		80,053		67,210
Asia Pacific										Asia Pacific	21,393		20,433		45,642		42,896
											123,338		141,598		259,167		282,847
Airlaid Materials										Airlaid Materials
Europe, Middle East and Africa										Europe, Middle East and Africa	63,355		49,552		126,491		94,624
Americas										Americas	77,608		52,031		158,521		89,516
Asia Pacific										Asia Pacific	2,745		1,730		8,160		3,598
											143,708		103,313		293,172		187,738
Spunlace										Spunlace
Europe, Middle East and Africa										Europe, Middle East and Africa	30,245		—		60,070		—
Americas										Americas	54,985		—		110,469		—
Asia Pacific										Asia Pacific	11,687		—		22,765		—

											96,917		—		193,304		—
Total										Total	$	363,963	$	244,911	$	745,643	$	470,585

Three months ended
September 30
Nine months ended
September 30
In thousands 2021 2020 2021 2020
Composite Fibers
Europe, Middle East and Africa $ 81,576 $ 82,032 $ 254,317 $ 230,434
Americas 33,461 31,583 100,671 97,656
Asia Pacific 23,081 18,804 65,977 59,177
138,118 132,419 420,965 387,267

Airlaid Materials
Europe, Middle East and Africa 64,730 52,835 159,354 151,434
Americas 74,876 44,141 164,392 133,789
Asia Pacific 1,927 4,078 5,525 8,726
141,533 101,054 329,271 293,949
$ 279,651 $ 233,473 $ 750,236 $ 681,216

- 10 -

5.GAINS ON DISPOSITION OF PLANT, EQUIPMENT AND TIMBERLANDS

The following table sets forth sales of timberlands and other assets completed during the first ~~nine~~six months of ~~2021~~2022 and ~~2020:~~2021:

Dollars in thousands Acres Proceeds Gain
2021
Timberlands 1,634 $ 4,951 $ 4,638
Other n/a — —
Total $ 4,951 $ 4,638

2020
Timberlands 357 $ 1,037 $ 1,013
Other n/a — (3)
Total $ 1,037 $ 1,010

~~- 9 -~~


Dollars in thousands	Acres	Proceeds		Gain (loss)
2022
Timberlands	790	$	3,130	$	2,962
Other	n/a	43		(74)
Total		$	3,173	$	2,888

2021
Timberlands	936	$	2,510	$	2,403
Other	n/a	—		—
Total		$	2,510	$	2,403

6.GOODWILL AND OTHER ASSET IMPAIRMENT

During the first quarter of 2022, in connection with an assessment of potential impairment of long-lived and indefinite lived intangible assets stemming from the compounding impacts resulting from the Russia/Ukraine military conflict and related sanctions, we recorded a $117.3 million non-cash asset impairment charge related to Composite Fibers' Dresden facility and an impairment of Composite Fibers' goodwill. Dresden is a single-line facility that produces wallcover base paper, the majority of which is sold into the Russian and Ukrainian markets. As a direct result of the economic impacts from the conflict, and the disruptions in the underlying financial systems and prohibition of the export of sanctioned wallcover base paper to Russia, management expects a significant reduction in wallcover revenues and associated cash flows for the foreseeable future. In addition, the conflict is expected to significantly impact energy prices and also impact other Composite Fibers products that are also subject to export sanctions into Russia. Accordingly, a charge was recorded to reduce the carrying value of the Dresden fixed assets and intangible assets (technological know-how, customer relationships, and an indefinite-lived trade name), along with Composite Fibers’ goodwill to fair value. The following table summarizes the impairment charge recorded in the accompanying condensed consolidated statements of income under the caption “Goodwill and other asset impairment charges:”


In thousands	Six months ended June 30,
Machinery and equipment	$	27,619
Technological know-how	18,443
Customer relationships	11,695
Tradename	3,530
Goodwill	56,062
Total	$	117,349

The fair value of the underlying assets was estimated using discounted cash flow models, independent appraisals and similar methods, all of which are Level 3 fair value classification.

- 11 -

7.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.

For both the three ~~months~~ and ~~nine~~six months ended ~~September~~June 30, 2022, we recognized income of $0.4 million which primarily represents the successful appeal of a sales and use tax audit partially offset by legal costs. For 2021, ~~we reported a net~~the $0.1 million loss ~~from discontinued operations of $532 thousand and $614 thousand compared with $— and a net loss of $135 thousand in the three months and nine months ended September 30, 2020, respectively.~~is primarily related to legal costs.

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


		Nine months ended September 30					Six months ended June 30,
In thousands	In thousands	2021		2020		In thousands	2022		2021
Net cash used by operating activities	Net cash used by operating activities	$	(481)	$	(1,108)	Net cash used by operating activities	$	(231)	$	(238)
Net cash used by investing activities	Net cash used by investing activities	—		—		Net cash used by investing activities	—		—
Net cash provided by financing activities	Net cash provided by financing activities	—		—		Net cash provided by financing activities	—		—
Change in cash and cash equivalents from discontinued operations	Change in cash and cash equivalents from discontinued operations	$	(481)	$	(1,108)	Change in cash and cash equivalents from discontinued operations	$	(231)	$	(238)

7.8.EARNINGS PER SHARE

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


		Three months ended September 30				Nine months ended September 30					Three months ended June 30,				Six months ended June 30,
In thousands, except per share	In thousands, except per share	2021		2020		2021		2020		In thousands, except per share	2022		2021		2022		2021
Income from continuing operations		$	8,059	$	6527	$	17,945	$	11,652
Income (loss) from continuing operations										Income (loss) from continuing operations	$	(2,460)	$	1,492	$	(110,750)	$	9,886

Weighted average common shares outstanding used in basic EPS	Weighted average common shares outstanding used in basic EPS	44,593		44,368		44,536		44,329		Weighted average common shares outstanding used in basic EPS	44,841		44,563		44,775		44,507
Common shares issuable upon exercise of dilutive stock options and PSAs / RSUs	Common shares issuable upon exercise of dilutive stock options and PSAs / RSUs	346		268		353		220		Common shares issuable upon exercise of dilutive stock options and PSAs / RSUs	—		309		—		358
Weighted average common shares outstanding and common share equivalents used in diluted EPS	Weighted average common shares outstanding and common share equivalents used in diluted EPS	44,939		44,636		44,889		44,549		Weighted average common shares outstanding and common share equivalents used in diluted EPS	44,841		44,872		44,775		44,865

Earnings per share from continuing operations
Earnings (loss) per share from continuing operations										Earnings (loss) per share from continuing operations
Basic	Basic	$	0.18	$	0.15	$	0.40	$	0.26	Basic	$	(0.05)	$	0.03	$	(2.47)	$	0.22
Diluted	Diluted	0.18		0.15		0.40		0.26		Diluted	(0.05)		0.03		(2.47)		0.22

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:


		Three months ended September 30		Nine months ended September 30			Three months ended June 30,		Six months ended June 30,
In thousands	In thousands	2021	2020	2021	2020	In thousands	2022	2021	2022	2021
Potential common shares	Potential common shares	1,082	1,082	1,082	1,082	Potential common shares	934	1,082	934	1,082

- 1012 -

8.9.ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table sets forth details of the changes in accumulated other comprehensive income (losses) for the three months and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020.~~2021.


In thousands	In thousands	Currency translation adjustments		Unrealized gain (loss) on cash flow hedges		Change in pensions		Change in other postretirement defined benefit plans		Total		In thousands	Currency translation adjustments		Unrealized gain (loss) on derivatives		Change in pensions		Change in other postretirement defined benefit plans		Total

Balance at July 1, 2021		$	(51,872)	$	449	$	(12,509)	$	(881)	$	(64,813)
Balance at April 1, 2022												Balance at April 1, 2022	$	(80,672)	$	1,631	$	(11,356)	$	(1,027)	$	(91,424)
Other comprehensive income (loss) before reclassifications (net of tax)	Other comprehensive income (loss) before reclassifications (net of tax)	(11,484)		454		269		—		(10,761)		Other comprehensive income (loss) before reclassifications (net of tax)	(28,675)		9,760		—		—		(18,915)
Amounts reclassified from accumulated other comprehensive income (net of tax)	Amounts reclassified from accumulated other comprehensive income (net of tax)	—		(58)		154		(47)		49		Amounts reclassified from accumulated other comprehensive income (net of tax)	—		(1,226)		126		26		(1,074)
Net current period other comprehensive income (loss)	Net current period other comprehensive income (loss)	(11,484)		396		423		(47)		(10,712)		Net current period other comprehensive income (loss)	(28,675)		8,534		126		26		(19,989)
Balance at September 30, 2021		$	(63,356)	$	845	$	(12,086)	$	(928)	$	(75,525)
Balance at June 30, 2022												Balance at June 30, 2022	$	(109,347)	$	10,165	$	(11,230)	$	(1,001)	$	(111,413)

Balance at July 1, 2020		$	(84,358)	$	2,447	$	(6,956)	$	890	$	(87,977)
Other comprehensive income before reclassifications (net of tax)		17,836		(1,850)		365		—		16,351
Balance at April 1, 2021												Balance at April 1, 2021	$	(55,718)	$	765	$	(12,706)	$	(834)	$	(68,493)
Other comprehensive income (loss) before reclassifications (net of tax)												Other comprehensive income (loss) before reclassifications (net of tax)	3,846		(341)		—		—		3,505
Amounts reclassified from accumulated other comprehensive income (net of tax)	Amounts reclassified from accumulated other comprehensive income (net of tax)	—		(985)		153		(248)		(1,080)		Amounts reclassified from accumulated other comprehensive income (net of tax)	—		25		197		(47)		175
Net current period other comprehensive income (loss)	Net current period other comprehensive income (loss)	17,836		(2,835)		518		(248)		15,271		Net current period other comprehensive income (loss)	3,846		(316)		197		(47)		3,680
Balance at September 30, 2020		$	(66,522)	$	(388)	$	(6,438)	$	642	$	(72,706)
Balance at June 30, 2021												Balance at June 30, 2021	$	(51,872)	$	449	$	(12,509)	$	(881)	$	(64,813)

Balance at January 1, 2022												Balance at January 1, 2022	$	(69,757)	$	1,988	$	(11,482)	$	(1,053)	$	(80,304)
Other comprehensive income (loss) before reclassifications (net of tax)												Other comprehensive income (loss) before reclassifications (net of tax)	(39,590)		10,143		—		—		(29,447)
Amounts reclassified from accumulated other comprehensive income (net of tax)												Amounts reclassified from accumulated other comprehensive income (net of tax)	—		(1,966)		252		52		(1,662)
Net current period other comprehensive income (loss)												Net current period other comprehensive income (loss)	(39,590)		8,177		252		52		(31,109)
Balance at June 30, 2022												Balance at June 30, 2022	$	(109,347)	$	10,165	$	(11,230)	$	(1,001)	$	(111,413)

Balance at January 1, 2021												Balance at January 1, 2021	$	(42,525)	$	(2,496)	$	(12,844)	$	(788)	$	(58,653)
Other comprehensive income (loss) before reclassifications (net of tax)												Other comprehensive income (loss) before reclassifications (net of tax)	(9,347)		2,933		—		—		(6,414)
Amounts reclassified from accumulated other comprehensive income (net of tax)												Amounts reclassified from accumulated other comprehensive income (net of tax)	—		12		335		(93)		254
Net current period other comprehensive income (loss)												Net current period other comprehensive income (loss)	(9,347)		2,945		335		(93)		(6,160)
Balance at June 30, 2021												Balance at June 30, 2021	$	(51,872)	$	449	$	(12,509)	$	(881)	$	(64,813)

Balance at January 1, 2021 $ (42,525) $ (2,496) $ (12,844) $ (788) $ (58,653)
Other comprehensive income (loss) before reclassifications (net of tax) (20,831) 3,387 269 — (17,175)
Amounts reclassified from accumulated
other comprehensive income (net of tax)
— (46) 489 (140) 303
Net current period other comprehensive income (loss) (20,831) 3,341 758 (140) (16,872)
Balance at September 30, 2021 $ (63,356) $ 845 $ (12,086) $ (928) $ (75,525)

Balance at January 1, 2020 $ (76,346) $ 4,316 $ (7,253) $ 1,387 $ (77,896)
Other comprehensive income (loss) before reclassifications (net of tax) 9,824 (1,051) 365 — 9,138
Amounts reclassified from accumulated
other comprehensive income (net of tax)
— (3,653) 450 (745) (3,948)
Net current period other comprehensive income (loss) 9,824 (4,704) 815 (745) 5,190
Balance at September 30, 2020 $ (66,522) $ (388) $ (6,438) $ 642 $ (72,706)

- 1113 -

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


		Three months ended September 30				Nine months ended September 30						Three months ended June 30,				Six months ended June 30,
In thousands	In thousands	2021		2020		2021		2020			In thousands	2022		2021		2022		2021
Description	Description									Line Item in Statements of Income	Description									Line Item in Statements of Income
Cash flow hedges (Note 18)	Cash flow hedges (Note 18)										Cash flow hedges (Note 18)
Gains on cash flow hedges		$	(67)	$	(1,345)	$	(10)	$	(5,015)	Costs of products sold
Loss (gains) on cash flow hedges											Loss (gains) on cash flow hedges	$	(1,697)	$	33	$	(2,769)	$	57	Costs of products sold
Tax expense (benefit)	Tax expense (benefit)	(5)		360		(78)		1,362		Income tax provision	Tax expense (benefit)	480		(22)		792		(73)		Income tax provision
Net of tax	Net of tax	(72)		(985)		(88)		(3,653)			Net of tax	(1,217)		11		(1,977)		(16)

Loss on interest rate swaps		21		—		64		—		Interest expense
Loss (gains) on interest rate swaps											Loss (gains) on interest rate swaps	(9)		22		11		43		Interest expense
Tax benefit	Tax benefit	(7)		—		(22)		—		Income tax provision	Tax benefit	—		(8)		—		(15)		Income tax provision
Net of tax	Net of tax	14		—		42		—			Net of tax	(9)		14		11		28
Total cash flow hedges	Total cash flow hedges	(58)		(985)		(46)		(3,653)			Total cash flow hedges	(1,226)		25		(1,966)		12
Retirement plan obligations (Note 10)

Retirement plan obligations (Note 11)											Retirement plan obligations (Note 11)
Amortization of deferred benefit pension plans	Amortization of deferred benefit pension plans										Amortization of deferred benefit pension plans
Prior service costs	Prior service costs	12		12		36		35		Other, net	Prior service costs	11		12		22		24		Other, net
Actuarial losses	Actuarial losses	199		164		597		485		Other, net	Actuarial losses	164		199		331		398		Other, net
		211		176		633		520				175		211		353		422
Tax benefit	Tax benefit	(57)		(23)		(144)		(70)		Income tax provision	Tax benefit	(49)		(14)		(101)		(87)		Income tax provision
Net of tax	Net of tax	154		153		489		450			Net of tax	126		197		252		335
Amortization of deferred benefit other plans	Amortization of deferred benefit other plans										Amortization of deferred benefit other plans
Prior service credits		(58)		(115)		(175)		(347)		Other, net
Actuarial losses (gains)		11		(209)		35		(626)		Other, net
Prior service costs (credits)											Prior service costs (credits)	26		(59)		52		(117)		Other, net
Actuarial losses											Actuarial losses	—		12		—		24		Other, net
		(47)		(324)		(140)		(973)				26		(47)		52		(93)
Tax expense	Tax expense	—		76		—		228		Income tax provision	Tax expense	—		—		—		—		Income tax provision
Net of tax	Net of tax	(47)		(248)		(140)		(745)			Net of tax	26		(47)		52		(93)
Total reclassifications, net of tax	Total reclassifications, net of tax	$	49	$	(1,080)	$	303	$	(3,948)		Total reclassifications, net of tax	$	(1,074)	$	175	$	(1,662)	$	254

- 1214 -

9.10.STOCK-BASED COMPENSATION

~~The~~On May 5, 2022, upon Board and shareholder approval, the Glatfelter Corporation 2022 Long-Term Incentive Plan became effective and is a successor plan to the P. H. Glatfelter Amended and Restated Long-Term Incentive Plan ~~(the~~(collectively, the “LTIP”) ~~provides~~. The LTIP continues to provide 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. Furthermore, the LTIP increases the number shares previously available for issuance by 1,400,000 shares. As of June 30, 2022, there were 2,670,523 shares of common stock available for future issuance under the LTIP.

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

In ~~2021,~~2022, we issued awards to employees of RSUs and PSAs under our LTIP. In ~~2021,~~2022, 40% of fair value of the awards granted were RSUs, which vest based on the passage of time, generally over a graded three-year period or, in certain instances, the RSUs were ~~issued with five-year~~ cliff ~~vesting.~~vesting after one or three years. In addition, some awards vest over one year or less depending upon the retirement eligibility of the grantees in the LTIP. The remaining 60% of the fair value of the awards granted in ~~2021~~2022 were PSAs. The PSAs awarded in ~~2021~~2022 vest based on either the achievement of a cumulative financial performance ~~target~~targets covering a two-year ~~period followed by an additional one-year service~~ period or based on the three-year total shareholder return relative to a broad market index. 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. 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.

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


Units	Units	2021	2020	Units	2022	2021
Balance at January 1,	Balance at January 1,	1,071,652	896,463	Balance at January 1,	1,111,382	1,071,652
Granted	Granted	363,104	386,995	Granted	718,668	352,763
Forfeited	Forfeited	(101,431)	(87,523)	Forfeited	(215,656)	(98,012)
Shares delivered	Shares delivered	(196,637)	(136,182)	Shares delivered	(305,739)	(196,637)
Balance at September 30,		1,136,688	1,059,753
Balance at June 30,				Balance at June 30,	1,308,655	1,129,766

The amount granted in 2022 and 2021 includes 341,429 and ~~2020 includes~~ 162,480, ~~and 171,150,~~ 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:


		September 30					June 30,
In thousands	In thousands	2021		2020		In thousands	2022		2021
Three months ended	Three months ended	$	1,478	$	1,617	Three months ended	$	1,509	$	1,329
Nine months ended		4,015		3,994
Six months ended						Six months ended	$	2,418	$	2,537

~~Stock Only~~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~~1 share of common stock at the time of exercising the SOSAR and the exercise price. All SOSARs are vested and have a term of ten years. No SOSARs were awarded since 2016.

The following table sets forth information related to outstanding SOSARs:

2021 2020
SOSARS Shares
Wtd Avg
Exercise
Price
Shares
Wtd Avg
Exercise
Price
Outstanding at January 1, 1,082,413 $ 20.40 1,291,947 $ 20.05
Granted — — — —
Exercised — — (58,460) 12.85
Canceled / forfeited — — (151,074) 20.25
Outstanding at September 30, 1,082,413 $ 20.40 1,082,413 $ 20.40

- 1315 -


	2022			2021
	Shares	Wtd Avg Exercise Price		Shares	Wtd Avg Exercise Price
Outstanding at January 1,	1,079,113	$	20.42	1,082,413	$	20.40
Granted	—	—		—	—
Exercised	—	—		—	—
Canceled / forfeited	(145,440)	15.61		—	—
Outstanding at June 30,	933,673	$	21.17	1,082,413	$	20.40

~~10.~~

11.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 September 30				Nine months ended September 30					Three months ended June 30,				Six months ended June 30,
In thousands	In thousands	2021		2020		2021		2020		In thousands	2022		2021		2022		2021
Pension Benefits	Pension Benefits									Pension Benefits
Service cost	Service cost	$	—	$	61	$	—	$	153	Service cost	$	—	$	—	$	—	$	—
Interest cost	Interest cost	266		318		789		919		Interest cost	179		273		414		523
Amortization of prior service cost	Amortization of prior service cost	12		12		36		35		Amortization of prior service cost	11		12		22		24
Amortization of actuarial loss	Amortization of actuarial loss	199		164		597		485		Amortization of actuarial loss	164		199		331		398
Total net periodic benefit expense	Total net periodic benefit expense	$	477	$	555	$	1,422	$	1,592	Total net periodic benefit expense	$	354	$	484	$	767	$	945

Other Benefits	Other Benefits									Other Benefits
Service cost	Service cost	$	8	$	8	$	22	$	22	Service cost	$	—	$	7	$	—	$	14
Interest cost	Interest cost	31		46		95		138		Interest cost	32		32		65		64
Amortization of prior service credit		(58)		(115)		(175)		(347)
Amortization of actuarial loss (gains)		11		(209)		35		(626)
Total net periodic benefit income		$	(8)	$	(270)	$	(23)	$	(813)
Amortization of prior service cost (credit)										Amortization of prior service cost (credit)	26		(59)		52		(117)
Amortization of actuarial loss										Amortization of actuarial loss	—		12		—		24
Total net periodic benefit expense (income)										Total net periodic benefit expense (income)	$	58	$	(8)	$	117	$	(15)

~~11.~~12.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 condensed consolidated financial statements or tax returns. The effects of income taxes are measured based on enacted tax laws and rates.

For the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, we had pretax ~~income~~loss from continuing operations of ~~$32.7~~$124.2 million and income tax benefit of $13.5 million. The income tax benefit includes $19.2 million of deferred tax benefit associated with the asset impairment charge and related bad debt and inventory reserves (refer to Note 6). Absent these charges, the Company had pre-tax loss of $2.9 million and income tax expense of ~~$14.8 million. The effective income tax rate for the period ended September 30, 2021~~$5.7 million, which was unfavorably impacted by the jurisdictional mix of pretax results among the Company and its subsidiaries, primarily by ~~$19.6 million in~~the pretax losses in the U.S., which generated no tax ~~benefit, and a $2.0 million unfavorable impact attributable to income tax rate increases in Germany and the United Kingdom.~~benefit.

For the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, we recorded ~~a decrease~~an increase in our federal valuation allowance of ~~$2.6~~$4.5 million against our net deferred tax assets. 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 ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we had ~~$43.0~~$56.8 million and ~~$46.3~~$55.7 million, respectively, of gross unrecognized tax benefits. As of ~~September~~June 30, ~~2021,~~2022, if such benefits were to be recognized, approximately ~~$38.2~~$53.0 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.~~

~~- 14 -~~

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


	~~Open Tax Years~~
~~Jurisdiction~~	~~Examinations not~~ ~~yet initiated~~	~~Examinations in~~ ~~progress~~

~~United States~~
~~Federal~~	2014 - 2015; 2017 - 2020	~~N/A~~
~~State~~	~~2016 - 2020~~	~~2015 - 2018~~
~~Canada(1)~~	~~2013 - 2018; 2020~~	~~2019~~
~~Germany(1)~~	~~2020~~	~~2016 - 2019~~
~~France~~	~~2018 - 2020~~	~~N/A~~
~~United Kingdom~~	~~2019 - 2020~~	~~N/A~~
~~Philippines~~	~~2019 - 2020~~	~~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

- 16 -

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 ~~$1.8~~$1.7 million. ~~Substantially all of this range relates to tax positions taken in the U.S.~~

We recognize interest and penalties related to uncertain taxpositions as income tax expense.

The following table summarizes information included in continuing operations related to interest on uncertain tax positions:


		Nine months ended September 30					Six months ended June 30,
In millions	In millions	2021		2020		In millions	2022		2021
Interest expense	Interest expense	$	0.4	$	0.2	Interest expense	$	0.8	$	0.4

September 30
2021 December 31
2020
Accrued interest payable $ 2.2 $ 1.8


	June 30, 2022		December 31, 2021
Accrued interest payable	$	4.7	$	3.9
Accrued penalties	3.0		3.0

~~12.~~13.INVENTORIES

Inventories, net of reserves, were as follows:

In thousands September 30,
2021 December 31,
2020
Raw materials $ 76,422 $ 55,466
In-process and finished 104,349 97,109
Supplies 47,034 43,655
Total $ 227,805 $ 196,230

~~- 15 -~~


In thousands	June 30, 2022		December 31, 2021
Raw materials	$	100,129	$	87,448
In-process and finished	153,224		139,058
Supplies	54,259		53,014
Total	$	307,612	$	279,520

~~13.~~14.GOODWILL AND OTHER INTANGIBLE ASSETS

The following table sets forth changes in the amounts of goodwill and other intangible assets recorded by each of our segments during the periods indicated:

In thousands December 31,
2020 Acquisitions Amortization Translation September 30,
2021
Goodwill
Composite Fibers $ 84,586 $ — $ — $ (4,531) $ 80,055
Airlaid Materials 79,783 36,231 — (4,450) 111,564
Total $ 164,369 $ 36,231 $ — $ (8,981) $ 191,619

Other Intangible Assets
Composite Fibers
Tradename - non amortizing $ 3,902 $ — $ — $ (220) $ 3,682

Technology and related 41,578 — — (2,189) 39,389
Accumulated amortization (18,636) — (1,424) 952 (19,108)
Net 22,942 — (1,424) (1,237) 20,281

Customer relationships and related 37,535 — — (2,051) 35,484
Accumulated amortization (21,290) — (1,892) 1,208 (21,974)
Net 16,245 — (1,892) (843) 13,510

Airlaid Materials
Tradename 3,960 — — (223) 3,737
Accumulated amortization (456) — (145) 31 (570)
Net 3,504 — (145) (192) 3,167

Technology and related 20,053 — — (1,099) 18,954
Accumulated amortization (3,591) — (968) 223 (4,336)
Net 16,462 — (968) (876) 14,618

Customer relationships and related 26,636 20,000 — (1,502) 45,134
Accumulated amortization (7,856) — (2,333) 506 (9,683)
net 18,780 20,000 (2,333) (996) 35,451

Total intangibles 133,664 20,000 — (7,284) 146,380
Total accumulated amortization (51,829) — (6,762) 2,920 (55,671)
Net intangibles $ 81,835 $ 20,000 $ (6,762) $ (4,364) $ 90,709

As discussed in Note 3, “Acquisition”, we recorded $36.2 million of goodwill and $20.0 million of identifiable intangible assets consisting of customer relationships in connection with the May 13, 2021 Mount Holly acquisition.

- 1617 -


In thousands	December 31, 2021		Impairment		Purchase price allocation adjustment		Translation		June 30, 2022
Goodwill
Composite Fibers	$	78,438	$	(56,062)	$	—	$	(1,968)	$	20,408
Airlaid Materials	109,486		—		—		(6,105)		103,381
Spunlace	48,241		—		(500)		(3,242)		44,499
Total	$	236,165	$	(56,062)	$	(500)	$	(11,315)	$	168,288
Other Intangible Assets	December 31, 2021		Impairment		Amortization		Translation		June 30, 2022
Composite Fibers
Tradename - non-amortizing	$	3,601	$	(3,530)	$	—	$	(71)	$	—

Technology and related	38,614		(37,823)		—		(791)		—
Accumulated amortization	(19,224)		19,380		(424)		268		—
Net	19,390		(18,443)		(424)		(523)		—

Customer relationships and related	34,739		(34,046)		—		(693)		—
Accumulated amortization	(22,104)		22,351		(587)		340		—
Net	12,635		(11,695)		(587)		(353)		—

Airlaid Materials
Tradename	4,485		—		—		(1,133)		3,352
Accumulated amortization	(603)		—		(88)		63		(628)
Net	3,882		—		(88)		(1,070)		2,724

Technology and related	17,825		—		—		(756)		17,069
Accumulated amortization	(4,552)		—		(587)		387		(4,752)
Net	13,273		—		(587)		(369)		12,317

Customer relationships and related	44,585				—		(2,038)		42,547
Accumulated amortization	(10,512)		—		(1,864)		895		(11,481)
Net	34,073		—		(1,864)		(1,143)		31,066

Spunlace
Products and Tradenames	27,623				—		(1,638)		25,985
Accumulated amortization	(253)		—		(801)		343		(711)
Net	27,370		—		(801)		(1,295)		25,274

Technology and related	14,547				—		(862)		13,685
Accumulated amortization	(202)		—		(676)		335		(543)
Net	14,345		—		(676)		(527)		13,142

Customer relationships and related	28,003				—		(1,660)		26,343
Accumulated amortization	(268)		—		(846)		344		(770)
Net	27,735		—		(846)		(1,316)		25,573

Total intangibles	214,022		(75,399)		—		(9,642)		128,981
Total accumulated amortization	(57,718)		41,731		(5,873)		2,975		(18,885)
Net intangibles	$	156,304	$	(33,668)	$	(5,873)	$	(6,667)	$	110,096

- 18 -

~~14.~~

15.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, office space and land. 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 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. For purposes of recording the lease arrangement, the term of lease 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.


Dollars in thousands	Dollars in thousands	September 30, 2021			December 31, 2020			Dollars in thousands	June 30, 2022			December 31, 2021
Right of use asset	Right of use asset	$	22,513		$	11,789		Right of use asset	$	26,275		$	27,186
Weighted average discount rate	Weighted average discount rate	3.38		%	2.94		%	Weighted average discount rate	2.97		%	3.31		%
Weighted average remaining maturity (years)	Weighted average remaining maturity (years)	29.5			5.5			Weighted average remaining maturity (years)	21.2			26.0

The following table sets forth operating lease expense for the periods indicated:


		September 30,					Six months ended June 30,
In thousands	In thousands	2021		2020		In thousands	2022		2021
Three months ended	Three months ended	$	1,490	$	1,400	Three months ended	$	1,499	$	1,452
Nine months ended		4,289		4,285
Six months ended						Six months ended	$	2,920	$	2,799

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

In thousands
2021 $ 1,142
2022 4,306
2023 2,875
2024 2,286
2025 1,968
Thereafter 40,461

In connection with the May 2021 Mount Holly acquisition, we assumed a long-term lease of the land on which the facility is situated. The lease obligation, including renewal options that are expected to be exercised, expires in July 2077, and a corresponding right of use asset totaled of $7.7 million at the time the acquisition was completed.


In thousands
2022	$	2,988
2023	3,606
2024	2,742
2025	2,350
2026	2,270
Thereafter	22,416

~~15.~~
~~SHORT-TERM DEBT~~

On March 30, 2021, through Glatfelter Gernsbach GmbH, a wholly-owned subsidiary, we borrowed $11.7 million from Commerzbank AG, a German financial institution. The non-amortizing borrowing bears a fixed-interest rate of 0.75% per annum and the loan matures on March 29, 2022. The proceeds were used for general corporate purposes.

- 1719 -

16.LONG-TERM DEBT

Long-term debt is summarized as follows:

In thousands September 30,
2021 December 31,
2020
Revolving credit facility, due Feb. 2024 $ 200,527 $ 36,813
Term loan, due Feb. 2024 226,080 249,715
2.40%Term Loan, due Jun. 2022 1,241 2,629
2.05% Term Loan, due Mar. 2023 9,270 14,737
1.30% Term Loan, due Jun. 2023 2,895 4,382
1.55% Term Loan, due Sep. 2025 5,674 7,143
1.10% Term Loan, due Mar. 2024 10,527 —
Total long-term debt 456,214 315,419
Less current portion (27,441) (25,057)
Unamortized deferred issuance costs (5,683) (1,898)
Long-term debt, net of current portion $ 423,090 $ 288,464


In thousands	June 30, 2022		December 31, 2021
Revolving credit facility, due Sep 2026	$	81,161	$	10,000
4.750% Senior Notes, due Oct 2029	500,000		500,000
Term loan, due Feb 2024	194,237		218,026
2.40% Term Loan, due Jun 2022	—		809
2.05% Term Loan, due Mar 2023	4,158		7,556
1.30% Term Loan, due Jun 2023	1,484		2,427
1.55% Term Loan, due Sep 2025	4,137		5,204
1.10% Term Loan, due Mar 2024	6,610		9,267
0.57% Term Loan, due Jul 2023	20,774		22,652
Total long-term debt	812,561		775,941
Less current portion	(22,117)		(26,437)
Unamortized deferred issuance costs	(11,418)		(11,429)
Long-term debt, net of current portion	$	779,026	$	738,075

~~In connection with the Mount Holly acquisition, we borrowed $160.0 million under the Revolving Credit Facility.~~

On September 2, 2021, ~~the Company and certain of its subsidiaries as borrowers (together with the Company, the "Borrowers") and certain of its domestic subsidiaries as guarantors,~~we entered into a restatement agreement as part of a Fourth Amended and Restated $400 million Revolving Credit ~~Agreement (the~~Facility and a €220.0 million Term Loan (collectively, the “Credit Agreement”) ~~with a consortium of banks. Pursuant~~which matures September 6, 2026 and February 8, 2024, respectively.

On May 9, 2022, we entered into an amendment to the Credit ~~Agreement,~~Agreement. The amendment: i) increases the ~~banks agreed (i)~~permitted maximum ratio of consolidated total net debt to ~~make available~~consolidated adjusted EBITDA (“leverage ratio”); ii) increases the maximum interest rate borrowing margin to be applied to the ~~Borrowers multi-currency revolving credit loans (the “Revolving Loans”) in an aggregate principal amount not~~applicable index by 25 basis points; and iii) pledges as collateral substantially all domestic assets to exceed $400 million outstanding at any time (the “Revolving Facility”), which may be borrowed, repaid and reborrowed until September 2, 2026 and (ii) to continue the Euro denominated term loan in an aggregate amount not to exceed €220.0 million (the “Term Loan Facility”) which matures February 8, 2024. Borrowings of Revolving Loans will be available in U.S Dollars, Euros, British Pound Sterling, and Canadian Dollars and the borrowing of Term Loans will be available in Euros.

In addition, the Borrowers may request (i) letters of credit in an aggregate face amount not to exceed $30 million; and (ii) Swing Loans (as defined in the Credit Agreement) in an aggregate principal amount not to exceed $30 million. Under the Credit Agreement, the Borrowers also have the option to request that the Lenders increase their commitments under the Revolving Facility or Term Loan Facility or join one or more new Lenders to the Credit Agreement (such new Lenders subject to the approval of the Administrative Agent), provided that the increase in the aggregate principal amount of commitments may not exceed $150 million. Borrowingssecure obligations owed under the Credit ~~Agreement~~Agreement. As amended, we are ~~unsecured.~~

~~The Borrowers are permitted~~obligated to ~~use borrowings under the Revolving Facility for general corporate purposes including working capital needs and to finance future permitted acquisitions.~~

~~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.~~

Borrowing rates for the Revolving Loans are determined at our option at the time of each borrowing. For all U.S. Dollar denominated Revolving Loan borrowings, the borrowing rate is either, (a) the bank’s base rate which is equal to the greater of i) the prime rate; ii) the overnight bank funding rate plus 50 basis points; or iii) the daily 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 daily Euro-rate or EURIBOR-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 the Term Loan and non-U.S. Dollar denominated borrowings, interest is based on (b) above.

The Credit Agreement contains representations, warranties, covenants and events of default customary for financings of this type. If an event of default occurs and is continuing, then the Agent may declare outstanding obligations under the Credit Agreement immediately due and payable. The Credit Agreement specifiesmaintain a maximum ratio of consolidated total net debt to consolidated adjusted EBITDA ~~also known as~~of 6.75 to 1.0 until the ~~leverage ratio. Prior to~~quarter ended December 31, 2023, after which the acquisition in October 2021 of all of the outstanding equity interests of PMM Holding (Luxembourg) AG (the “Jacob Holm Acquisition”), we are obligated to maintain a leverage ratio of no more than 4.00 to 1.00, provided that such ratio increases to 4.50 to 1.00 during the period of four fiscal quarters immediately following a material acquisition. Subsequent to the Jacob Holm Acquisition, we must maintain a maximum leverage ratio ~~of no more than 5.25 to 1.00, which~~ steps down to ~~4.00~~4.0 to ~~1.00 after 24 months of the Jacob Holm Acquisition.~~ 1.0.

The Credit Agreement also contains covenants requiring a minimum interest coverage ratio and

~~- 18 -~~

provisions limiting our ability to, among other things, (i) incur debt and guaranty obligations, (ii) incur liens, (iii) make loans, advances, investments and acquisitions, (iv) merge or liquidate, or (v) sell or transfer assets. In addition, the Credit Agreement provides that if, and for so long as, the Debt Rating (as defined in the Credit Agreement) is below “BB” by Standard & Poor’s or below “Ba2” by Moody’s, obligations under the Credit Agreement will be secured by substantially all domestic assets, ~~of the Company and the guarantors, subject to certain exceptions and limitations.~~(vi) incur additional indebtedness

As of ~~September~~June 30, ~~2021,~~2022, the leverage ratio as calculated in accordance with the definition in our Credit Agreement was ~~2.6x.~~ 5.3x. A breach of these requirements would give rise to certain remedies under the Revolving Credit ~~Facility,~~Agreement, among which are the termination of the agreement and ~~accelerated~~the 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 September 2, 2026.~~

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.

Glatfelter Corporation 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 $6.7 million ~~and $7.3 million~~ as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020, respectively.~~2021. 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.

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17.FAIR VALUE OF FINANCIAL INSTRUMENTS

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

September 30, 2021 December 31, 2020
In thousands
Carrying
Value
Fair Value
Carrying
Value
Fair Value
Variable rate debt $ 200,527 $ 200,527 $ 36,813 $ 36,813
Term loan, due Feb. 2024 226,080 226,080 249,715 249,715
2.40% Term Loan 1,241 1,250 2,629 2,651
2.05% Term Loan 9,270 9,356 14,737 14,873
1.30% Term Loan 2,895 2,903 4,382 4,384
1.55% Term Loan 5,674 5,727 7,143 7,210
1.10% Term Loan 10,527 10,520 — —
Total $ 456,214 $ 456,363 $ 315,419 $ 315,646

~~- 19 -~~


	June 30, 2022				December 31, 2021
In thousands	Carrying Value		Fair Value		Carrying Value		Fair Value
Variable rate debt	$	81,161	$	81,161	$	10,000	$	10,000
4.750% Senior Notes, due Oct. 2029	500,000		348,750		500,000		516,875
Term loan, due Feb. 2024	194,237		194,237		218,026		218,026
2.40% Term Loan	—		—		809		813
2.05% Term Loan	4,158		4,162		7,556		7,616
1.30% Term Loan	1,484		1,477		2,427		2,433
1.55% Term Loan	4,137		4,047		5,204		5,234
1.10% Term Loan	6,610		6,514		9,267		9,252
0.57% Term Loan	20,774		20,484		22,652		22,657
Total	$	812,561	$	660,832	$	775,941	$	792,906

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 18.

18.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 ~~September~~June 30, ~~2021,~~2022, the maturity of currency forward contracts ranged from one month to 18 months.

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.

- 21 -

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	In thousands	September 30, 2021	December 31, 2020	In thousands	June 30, 2022	December 31, 2021
Derivative	Derivative			Derivative
Sell/Buy - sell notional	Sell/Buy - sell notional			Sell/Buy - sell notional
Philippine Peso / Euro		13,514	18,522
Euro / British Pound	Euro / British Pound	19,318	18,638	Euro / British Pound	22,083	18,823

U.S. Dollar / British Pound	U.S. Dollar / British Pound	10,331	—	U.S. Dollar / British Pound	27,221	16,205
U.S. Dollar / Euro	U.S. Dollar / Euro	1,022	1,041	U.S. Dollar / Euro	3,402	658
Canadian Dollar / U.S. Dollar		—	70


Sell/Buy - buy notional	Sell/Buy - buy notional			Sell/Buy - buy notional
Euro / Philippine Peso	Euro / Philippine Peso	876,006	853,686	Euro / Philippine Peso	965,540	896,291
British Pound / Philippine Peso	British Pound / Philippine Peso	1,149,365	1,081,791	British Pound / Philippine Peso	1,303,213	1,121,183
Euro / U.S. Dollar	Euro / U.S. Dollar	93,797	69,324	Euro / U.S. Dollar	107,614	108,467
U.S. Dollar / Canadian Dollar	U.S. Dollar / Canadian Dollar	33,345	34,847	U.S. Dollar / Canadian Dollar	36,493	36,904
British Pound / U.S. Dollar		851	—

~~In October 2019,~~On June 15, 2022, we ~~entered into~~terminated a €180 million notional value floating-to-fixed interest rate swap agreement with certain financial ~~institutions. Under~~institutions that was entered into in October 2019 and was to mature in December 2022. During the ~~terms~~life of the swap, we ~~will pay~~paid a fixed interest rate of the applicable margin plus 0.0395% on €180 million of the underlying variable rate term loan. We ~~will receive~~received the greater of 0.00% or EURIBOR. At termination, we recognized a deferred gain of $0.4 million that will be amortized into interest expense through December 2022.

Derivatives Designated as Hedging Instruments – Net Investment Hedge The €220 million Term Loan discussed in Note 16 – “Long-Term Debt” is designated as a net investment hedge of our Euro functional currency foreign subsidiaries. During the first ~~nine~~six months of 2022 and 2021, we recognized a pre-tax gain of ~~$13.8~~$15.7 million and ~~in the same period of 2020 a pre-tax loss of $9.7~~$7.8 million, respectively, on the remeasurement of the term loan from changes in currency exchange rates. Such amounts are recorded as a component of Other Comprehensive Income (Loss).

On March 3, 2022, we entered into cross-currency swaps with an aggregate notional value of $150.0 million. Pursuant to the terms of the swaps, we agreed to receive 4.750% interest denominated in U.S. dollars and we agreed to pay 3.06% interest denominated in euros. Interest is paid semi-annually on May 15 and November 15 and the swaps mature on May 15, 2025. We designated the cross-currency swaps as a hedge of our net investment in certain euro functional currency subsidiaries.

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,

~~- 20 -~~

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 September 30, 2021 December 31, 2020
Derivative
Sell/Buy - sell notional
U.S. Dollar / British Pound 22,050 25,250
Euro / British Pound — 600
British Pound / Euro 2,400 1,900
U.S. Dollar / Swiss Franc 1,300 —
British Pound / Swiss Franc 750 —
Euro / Swiss Franc 1,400 —

Sell/Buy - buy notional
Euro / U.S. Dollar 17,200 7,500
British Pound / Euro 1,200 —

- 22 -


In thousands	June 30, 2022	December 31, 2021
Derivative
Sell/Buy - sell notional
U.S. Dollar / British Pound	29,450	26,600

British Pound / Euro	2,800	3,400
U.S. Dollar / Swiss Franc	7,960	2,180
British Pound / Swiss Franc	2,290	1,025
Euro / Swiss Franc	6,520	2,750
Euro / U.S. Dollar	6,400	11,000

Sell/Buy - buy notional
Euro / U.S. Dollar	2,700	20,900
British Pound / Euro	15,300	5,300

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

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	In thousands	September 30, 2021		December 31, 2020		September 30, 2021		December 31, 2020		In thousands	June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021
Balance sheet caption	Balance sheet caption	Prepaid Expenses and Other Current Assets				Other Current Liabilities				Balance sheet caption	Prepaid Expenses and Other Current Assets				Other Current Liabilities
Designated as hedging:	Designated as hedging:									Designated as hedging:
Forward foreign currency exchange contracts	Forward foreign currency exchange contracts	$	2,569	$	577	$	740	$	4,342	Forward foreign currency exchange contracts	$	7,151	$	3,197	$	2,037	$	288
Interest rate swap	Interest rate swap	—		—		98		136		Interest rate swap	—		—		—		44

Not designated as hedging:	Not designated as hedging:									Not designated as hedging:
Forward foreign currency exchange contracts	Forward foreign currency exchange contracts	$	275	$	456	$	572	$	118	Forward foreign currency exchange contracts	$	822	701		$	1,124	$	116

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:

- 2123 -


		Three months ended September 30,				Nine months ended September 30,					Three months ended June 30,				Six months ended June 30,
In thousands	In thousands	2021		2020		2021		2020		In thousands	2022		2021		2022		2021
Designated as hedging:	Designated as hedging:									Designated as hedging:
Forward foreign currency exchange contracts:	Forward foreign currency exchange contracts:									Forward foreign currency exchange contracts:
Cost of products sold	Cost of products sold	$	67	$	1,345	$	10	$	5,015	Cost of products sold	$	(1,697)	$	(33)	$	(2,769)	$	(57)
Interest expense	Interest expense	21		—		64		—		Interest expense	(9)		22		11		43

Not designated as hedging:	Not designated as hedging:									Not designated as hedging:
Forward foreign currency exchange contracts:	Forward foreign currency exchange contracts:									Forward foreign currency exchange contracts:
Other – net	Other – net	$	(376)	$	1,037	$	327	$	510	Other – net	$	1,289	$	433	$	1,729	$	703

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	In thousands	2021		2020		In thousands	2022		2021
Balance at January 1,	Balance at January 1,	$	(3,460)	$	5,859	Balance at January 1,	$	2,889	$	(3,460)
Deferred gains (losses) on cash flow hedges		4,920		(1,435)
Deferred gains on cash flow hedges						Deferred gains on cash flow hedges	6,565		4,117
Reclassified to earnings	Reclassified to earnings	(74)		(5,015)		Reclassified to earnings	(2,758)		14
Balance at September 30,		$	1,386	$	(591)
Balance at June 30,						Balance at June 30,	$	6,696	$	671

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.

19.COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS

Fox River - Neenah, Wisconsin

Background We have previously reported that we face liabilities 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. The United States Environmental Protection Agency (“EPA”) has divided the Site into 5 “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”).

Over the past several years, we and certain other PRPs completed all remedial actions pursuant to applicable consent decrees or a Unilateral Administrative Order. 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 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 Our remaining obligations under the OU1 consent decree consist of long-term monitoring and maintenance. Furthermore, we are primarily responsible 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 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

- 24 -

exceptions, such as, for extraordinary amounts of cap maintenance or replacement. Our obligation under this agreement is

~~- 22 -~~

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 ~~September~~June 30, ~~2021,~~2022, the balance in the escrow is less than amounts due under the fixed-price contract by approximately ~~$1.6~~$1.3 million. Our obligation to pay this difference is secured by a letter of credit.

At ~~September~~June 30, ~~2021,~~2022, the escrow account balance totaled ~~$8.8~~$8.7 million which is included in the condensed consolidated balance sheet under the caption “Other assets.”

Under the consent decree, we are responsible for reimbursement of government oversight costs paid from October 2018 and later over approximately the next 30 years. We anticipate that oversight costs will decline as activities at the site ~~transition~~have transitioned from remediation to 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:~~

Nine months ended September 30,
In thousands 2021 2020
Balance at January 1, $ 18,455 $ 21,870
Payments (1,780) (3,243)
Accretion 152 155
Balance at September 30, $ 16,827 $ 18,782

~~The payments set forth above represent amounts due under the long-term monitoring and maintenance agreement. With respect to our total reserve for the Fox River, $2.5~~totaled $14.8 million at June 30, 2022, of which $2.2 million is recorded in the accompanying ~~September~~June 30, ~~2021~~2022 condensed consolidated balance sheet under the caption “Environmental liabilities” and the remaining ~~$14.3~~$12.6 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.

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20.SEGMENT INFORMATION

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

Three months ended September 30 Other and
Dollars in thousands Composite Fibers Airlaid Materials Unallocated Total
2021 2020 2021 2020 2021 2020 2021 2020
Net sales $ 138,118 $ 132,419 $ 141,533 $ 101,054 $ — $ — $ 279,651 $ 233,473
Cost of products sold 121,028 112,031 121,102 83,699 (836) (508) 241,294 195,222
Gross profit (loss) 17,090 20,388 20,431 17,355 836 508 38,357 38,251
SG&A 11,278 9,924 5,689 4,438 9,099 10,273 26,066 24,635
Gains on dispositions of plant,
equipment and timberlands, net
— — — — (2,235) (413) (2,235) (413)
Total operating income (loss) 5,812 10,464 14,742 12,917 (6,028) (9,352) 14,526 14,029
Non-operating expense — — — — (2,916) (3,888) (2,916) (3,888)
Income (loss) before income taxes $ 5,812 $ 10,464 $ 14,742 $ 12,917 $ (8,944) $ (13,240) $ 11,610 $ 10,141
Supplementary Data
Net tons sold 32,737 35,009 43,526 34,752 — — 76,263 69,761
Depreciation, depletion and amortization ($ in thousands) $ 6,904 $ 6,755 $ 7,763 $ 5,674 $ 1,043 $ 1,273 $ 15,710 $ 13,702
Capital expenditures 2,585 3,060 2,926 2,791 1,797 2,303 7,308 8,154


	Three months ended June 30,				Six months ended June 30,
Dollars in thousands	2022		2021		2022		2021
Net Sales
Composite Fibers	$	123,338	$	141,598	$	259,167	$	282,847
Airlaid Material	143,708		103,313		293,172		187,738
Spunlace	96,917		—		193,304		—
Total	$	363,963	$	244,911	$	745,643	$	470,585

Operating income (loss)
Composite Fibers	$	5,779	$	11,063	$	5,444	$	27,128
Airlaid Material	11,944		8,431		24,165		15,628
Spunlace	(1,808)		—		(3,380)		—
Other and unallocated	(6,991)		(11,371)		(133,194)		(17,314)
Total	$	8,924	$	8,123	$	(106,965)	$	25,442

Depreciation and amortization
Composite Fibers	$	4,796	$	7,000	$	11,315	$	13,981
Airlaid Material	7,542		6,767		15,171		12,615
Spunlace	2,945		—		5,859		—
Other and unallocated	1,169		966		2,591		1,870
Total	$	16,452	$	14,733	$	34,936	$	28,466

Capital expenditures
Composite Fibers	$	4,131	$	2,882	$	10,258	$	5,655
Airlaid Material	2,064		1,297		5,532		3,036
Spunlace	1,801		—		3,886		—
Other and unallocated	2,353		1,653		3,021		2,520
Total	10,349		5,832		$	22,697	$	11,211

Tons shipped (metric)
Composite Fibers	24,246		34,471		52,457		68,611
Airlaid Material	40,681		34,315		83,733		63,179
Spunlace	19,358		—		40,094		—

Total	84,285		68,786		176,284		131,790

~~- 23 -~~

Nine months ended
September 30
Other and
Dollars in thousands Composite Fibers Airlaid Materials Unallocated Total
2021 2020 2021 2020 2021 2020 2021 2020
Net sales $ 420,965 $ 387,267 $ 329,271 $ 293,949 $ — $ — $ 750,236 $ 681,216
Cost of products sold 354,629 319,403 283,825 243,526 (1,425) 11,171 637,029 574,100
Gross profit (loss) 66,336 67,864 45,446 50,423 1,425 (11,171) 113,207 107,116
SG&A 33,396 30,811 15,076 13,192 29,405 28,704 77,877 72,707
Gains on dispositions of plant,
equipment and timberlands, net
— — — — (4,638) (1,010) (4,638) (1,010)
Total operating income (loss) 32,940 37,053 30,370 37,231 (23,342) (38,865) 39,968 35,419
Non-operating expense — — — — (7,261) (14,992) (7,261) (14,992)
Income (loss) before income taxes $ 32,940 $ 37,053 $ 30,370 $ 37,231 $ (30,603) $ (53,857) $ 32,707 $ 20,427
Supplementary Data
Net tons sold 101,348 100,024 106,705 103,068 — — 208,053 203,092
Depreciation, depletion and amortization ($ in thousands) (1)
$ 20,885 $ 19,652 $ 20,378 $ 16,598 $ 2,913 $ 7,060 $ 44,176 $ 43,310
Capital expenditures 8,240 9,121 5,962 6,606 4,317 4,438 18,519 20,165

~~(1)The amount presented in 2020 in the Other and unallocated columns 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 above.

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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.

~~21.Subsequent Events~~

On October 25, 2021, we completed the private placement of $500 million in aggregate principal amount of 4.750% senior notes due 2029 (the “Notes”). The net proceeds from the offering of the Notes, together with cash on hand, were used to pay the purchase price of the Jacob Holm Acquisition, to repay certain indebtedness of Jacob Holm, to repay outstanding revolving borrowings under our Revolving Facility, and to pay estimated fees and expenses.

On October 29, 2021, we completed our previously announced acquisition of PMM Holding (Luxembourg) AG, the owner of all of the equity interest in Jacob Holm, a global leading manufacturer of premium quality spunlace nonwoven fabrics for critical cleaning, high-performance materials, personal care, hygiene and medical applications, for approximately $302 million for the outstanding shares and the extinguishment of Jacob Holm’s debt and subject to post-closing adjustments.

Jacob Holm’s broad product offerings and blue-chip customer base expands Glatfelter’s portfolio to include surgical drapes and gowns, wound care, face masks, facial wipes and cosmetic masks. The acquisition of Jacob Holm’s Sontara business, a leading brand of finished products for critical cleaning wipes and medical apparel, enhances Glatfelter’s technological capabilities. Jacob Holm has approximately 760 employees, operates production facilities in the United States, France and Spain, and its revenue in 2020 totaled approximately $400 million. We intend to report Jacob Holm as a separate reporting segment.

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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 ~~2020~~2021 Annual Report on Form 10-K ("~~2020~~2021 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 related to the military conflict between Russia and Ukraine and its impact on our production, sales, supply chain, cost of energy, and availability of energy due to potential natural gas supply issues into Europe from the Nord Stream 1 pipeline;

ii.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.~~iii.disruptions of our global supply chain, including the availability of key raw materials and transportation for the delivery of critical inputs and of products to customers, and the increase in the costs of transporting materials and products;

~~iii.~~iv.risks associated with our ability to increase selling prices quickly or sufficiently enough to recover rapid cost inflation in our raw materials, energy, freight and other costs;

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

~~iv.~~vi.the impact of competition, changes in industry production capacity, including the construction of new facilities or new machines, the closing of facilities and incremental changes due to capital expenditures or productivity increases;

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

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

~~vii.~~viii.our ability to develop new, high value-added products;

~~viii.~~ix.changes in the price or availability of raw materials we use, particularly woodpulp, pulp substitutes, synthetic pulp, other specialty fibers and abaca fiber;

~~ix.~~x.changes in energy-related prices and commodity raw materials with an energy component;

x.xi.the impact of unplanned production interruption at our facilities or at any of our key suppliers;

~~xi.~~xii.disruptions in production and/or increased costs due to labor disputes;

~~xii.~~xiii.the gain or loss of significant customers and/or on-going viability of such customers;

xiv.the impact of war and terrorism;

~~xiii.~~xv.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.~~xvi.enactment of adverse state, federal or foreign tax or other legislation or changes in government legislation, policy or regulation; and

~~xv.~~xvii.our ability to finance, consummate and integrate ~~acquisitions.~~

~~COVID-19 Pandemic~~acquisitions, On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic as the virus spread throughout the world. 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 termsincluding our acquisitions 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 or volatile demand for certain of our products due to the effects of the pandemic. Shortly after the pandemic began and through the first several months of 2021, our financial performance

~~- 25 -~~

and results of operations were adversely impacted by the pandemic, particularly by weaker demand for tabletop products used by restaurants, catering and similar venues, all of which were impacted by “lockdowns” throughout many regions of the world. However, demand is improving as restaurants around the world begin to reopen. The majority of our other product portfolios are considered to be “essential or life-sustaining” and we continued to produce products used in the global response effort to the pandemic. We believe demand for certain of our products, such as Composite Fibers’ food and beverage filtration products and Airlaid Materials’ personal hygiene and wipes, will remain stable.

~~Acquisition~~ ~~As discussed in Item 1 - Financial Statements, Note 3 “Acquisition~~,” on May 13, 2021, we completed our acquisition of Georgia-Pacific's U.S. nonwovens business (“Mount Holly”) for $170.9 million, subject to customary post-closing adjustments. This business includes the Mount Holly ~~NC manufacturing facility, with annual production capacity of approximately 37,000 metric tons,~~ and an R&D center and pilot line for nonwovens product development in Memphis, TN. Mount Holly’s net sales in 2020 were approximately $100 million. Prospectively from the date of acquisition, Mount Holly’s results of operation are included as part of our Airlaid Materials reporting segment.Jacob Holm.

~~RESULTS OF OPERATIONS~~

Introduction We manufacture a wide array of engineered materials and ~~report~~manage our ~~results~~company along ~~two~~three operating segments:

•Composite Fiberswith ~~revenue from the sale~~sales of single-serve tea and coffee filtration ~~products,~~papers, wallcovering base materials, composite ~~laminates,~~laminate papers, technical specialties including substrates for electrical applications, and metallized products; ~~and~~

•Airlaid Materialswith ~~revenue from the sale~~sales of airlaid nonwoven fabric-like materials used in feminine hygiene ~~and~~products, adult incontinence products, tabletop, specialty wipes, home care products and other airlaid applications; and

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•Spunlace with sales of premium quality spunlace nonwovens for critical cleaning, high-performance materials, personal care, hygiene and medical 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.

~~Nine~~

Acquisition As discussed in Item 1 - Financial Statements and Supplementary Data, Note 3 “Acquisitions,” we completed our acquisitions of Georgia-Pacific's U.S. nonwovens business (“Mount Holly”) on May 13, 2021 for $170.9 million and the acquisition of all outstanding equity of PMM Holdings (Luxembourg) AG ("Jacob Holm") on October 29, 2021 for $304.0 million. Refer to Note 3 - “Acquisitions"”for additional information about these transactions.

RESULTS OF OPERATIONS

Six months ended ~~September~~June 30, ~~2021~~2022 versus the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021

Overview For the first ~~nine~~six months of ~~2021,~~2022, we reported ~~income~~a loss from continuing operations of ~~$17.9~~$110.8 million, or ~~$0.40~~$2.47 per ~~diluted~~ share compared with ~~$11.7~~income of $9.9 million and ~~$0.26~~$0.22 per diluted share in the year earlier period. The following table sets forth summarized consolidated results of operations:


		Nine months ended September 30,					Six months ended June 30,
In thousands, except per share	In thousands, except per share	2021		2020		In thousands, except per share	2022		2021
Net sales	Net sales	$	750,236	$	681,216	Net sales	$	745,643	$	470,585
Gross profit	Gross profit	113,207		107,116		Gross profit	69,062		74,850
Operating income		39,968		35,419
Operating income (loss)						Operating income (loss)	(106,965)		25,442
Continuing operations	Continuing operations					Continuing operations
Income		17,945		11,652
Income (loss)						Income (loss)	(110,750)		9,886
Earnings per share	Earnings per share	0.40		0.26		Earnings per share	(2.47)		0.22
Net income		17,331		11,517
Net income (loss)						Net income (loss)	(110,379)		9,804
Earnings per share	Earnings per share	0.39		0.26		Earnings per share	(2.46)		0.22

The reported results are in accordance with generally accepted accounting principles in the United States (“GAAP”) and reflect the impact of a number of significant ~~actions we undertook~~items including a goodwill and other asset impairment charge related to our Dresden operations and Composite Fibers segment, strategic initiatives, corporate headquarters relocation and cost optimization, ~~and the restructuring and consolidation of our metallized business,~~ among others. ~~Excluding these items from reported results,~~On an adjusted earnings basis, a non-GAAP measure, ~~was $26.0~~we had a loss from continuing operations of $7.8 million, or ~~$0.58~~$0.17 per ~~diluted~~ share for the first ~~nine~~six months of ~~2021,~~2022, compared with ~~$27.7~~income of $16.5 million, or ~~$0.62~~$0.37 per diluted share, a year ago. ~~Operating income~~

Our operating results for ~~our Composite Fibers segment was $4.1 million lower than~~ the ~~same period a year ago primarily reflecting~~first six months of 2022 reflect: i) the impact of ~~inflationary pressures. Airlaid Materials’ operating income was $6.9~~Russia/Ukraine military conflict which commenced on February 24, 2022 and the compounding impacts, including sanctions on the sale of certain products into Russia, adversely impacted sales, prices paid for energy, production and collection of receivables and resulted in the recording of a $117.3 million ~~lower primarily due to~~asset impairment charge; ii) the completion of two significant acquisitions in 2021, which collectively added $246.9 million of net sales; iii) the adverse impact of significant inflationary pressures, particularly energy costs, which outpaced our efforts to realize higher selling prices; and iv) interest expense increased reflecting the ~~pandemic on demand for certain products and the related machine downtime to manage inventory levels.~~acquisition financing.

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.

~~- 26 -~~

Adjusted earnings ~~consist~~consists of net income determined in accordance with GAAP adjusted to exclude the impact of the following:

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, related integrations, and ~~related integrations.~~charges incurred to step-up acquired inventory to fair-value.

- 29 -

Corporate headquarters relocation.These adjustments reflect costs incurred in connection with the strategic relocation of the Company’s corporate headquarters to Charlotte, NC. The costs are primarily related to employee relocation costs and exit costs at the former corporate headquarters.

~~Restructuring charge – Metallized operations~~. This adjustment represents the charges incurred in 2020 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 Caerphilly, UK.

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 separations,~~improve efficiencies or other objectives. Such actions may include asset rationalization, headcount reductions ~~professional fees, asset write-offs and certain contract termination costs.~~or similar actions. 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.~~Goodwill and other asset impairment charges. This adjustment ~~reflects professional fees~~represents a non-cash charge recorded ~~in connection with~~to reduce the ~~Company’s termination~~carrying amount of ~~its qualified pension plan~~certain long-lived assets, intangible assets and goodwill of our Dresden facility and the Composite Fibers reporting segment. The impairment was directly related ~~actions to settle all obligations~~ to the ~~plan’s participants. Since the pension plan was fully funded, the settlement of pension obligations did not require the use~~adverse impact of the ~~Company’s cash, but instead was accomplished with plan assets.~~Russia/Ukraine military conflict on our projected revenue and EBITDA.

Russia/Ukraine conflict charges. This adjustment represents a non-cash charge recorded to reduce the carrying amount of accounts receivable and inventory directly related to the Russia/Ukraine military conflict.

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 benefit our operating results.

Coronavirus Aid, Relief, and Economic Security (CARES) Act 2020. This adjustment reflects taxes recorded ~~as a result~~in connection with passage of the ~~March 27, 2020 change in U.S. tax~~Coronavirus Aid, Relief, and Economic Security Act (“CARES”) related to provisions that modified the “net operating loss” provisions of previous law ~~which, among others, allows net operating~~to allow certain losses to be carried back five years.

These adjustments are each unique and not considered to be on-going in nature. The transactions are irregular in timing and amount and may significantly impact our operating performance. As such, these items may not be indicative of our past or future performance and therefore are excluded for comparability purposes.

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 period indicated:

Nine months ended September 30,
2021 2020
In thousands, except per share Amount EPS Amount EPS
Net income $ 17,331 $ 0.39 $ 11,517 $ 0.26
Exclude: Loss from discontinued operations 614 0.01 135 —
Income from continuing operations 17,945 0.40 11,652 0.26
Adjustments (pre-tax)

Strategic initiatives 11,207 843
Corporate headquarters relocation 429 610
Restructuring charge - Metallized operations — 11,111
Cost optimization actions 687 4,367
Pension settlement expenses, net — 6,792
COVID 19 - incremental costs — 1,766
Asset impairment charge — 900
Timberland sales and related costs (4,638) (1,013)
Total adjustments (pre-tax) 7,685 25,376
Income taxes (1)
49 (4,257)
CARES Act of 2020 tax provision (benefit) (2)
295 (5,023)
Total after-tax adjustments 8,029 0.18 16,096 0.36
Adjusted earnings $ 25,974 $ 0.58 $ 27,748 $ 0.62


	Six months ended June 30,
	2022				2021
In thousands, except per share	Amount		EPS		Amount		EPS
Net income (loss)	$	(110,379)	$	(2.46)	$	9,804	$	0.22
Exclude: Loss (income) from discontinued operations, net of tax	(371)		(0.01)		82		—
Income (loss) from continuing operations	(110,750)		(2.47)		9,886		0.22
Adjustments (pre-tax):
Goodwill and other asset impairment charges (1)	117,349				—
Russia/Ukraine conflict charges (2)	3,948				—
Strategic initiatives (3)	2,488				8,434
Corporate headquarters relocation	223				361
Cost optimization actions (4)	941				—
Timberland sales and related costs	(2,962)				(2,403)
Total adjustments (pre-tax)	121,987				6,392
Income taxes (5)	(19,167)				31
CARES Act of 2020 tax provision (6)	175				183
Total after-tax adjustments	102,995		2.30		6,606		0.15
Adjusted earnings (loss) from continuing operations	$	(7,755)	$	(0.17)	$	16,492	$	0.37

(1)Reflects goodwill impairment charge of $56.1 million and other asset impairment charges of $61.3 million. Refer to Note 6, Goodwill and Other Asset Impairment, for details of this item.

(2)Reflects bad debt expense charges of $2.9 million and inventory reserves charges $1.0 million. Refer to Note 6, Goodwill and Other Asset Impairment, for details of this item.

(3)For 2022, primarily reflects professional services fees (including legal, audit, valuation specialists and consulting) of $1.7 million, employee separation and other costs of $0.8 million and other costs, all of which are directly related to acquisitions. For 2021, primarily reflects

- 30 -

professional services fees related to acquisitions (including legal, audit and valuation specialists) of $7.1 million, employee separation and other costs of $0.6 million, inventory valuation step-up costs of $0.5 million and other costs, all of which are directly related to acquisitions.

(4)Primarily reflects employee separation costs of $0.4 million, equipment write-down of $0.4 million and other costs of $0.1 million directly associated with closure of synthetic fiber production facility in the U.K..

(5)Tax effect on adjustments calculated based on the incremental effective tax rate of the jurisdiction in which each adjustment originated. For items originating in the U.S., no tax effect is recognized due to the previously established valuation allowance on the net deferred tax assets. No tax effects were recognized on the goodwill impairment as there were no related deferred taxes.

~~(2)~~(6)~~Tax impact recorded in connection with passage~~Reflects the tax effect of applying certain provisions of the ~~Coronavirus Aid, Relief,~~CARES Act of 2020.

Segment Financial Performance


	Six months ended June 30,
Dollars in thousands		2022		2021
Net Sales
Composite Fibers		$	259,167	$	282,847
Airlaid Material		293,172		187,738
Spunlace		193,304		—
Total		$	745,643	$	470,585

Operating income (loss)
Composite Fibers		$	5,444	$	27,128
Airlaid Material		24,165		15,628
Spunlace		(3,380)		—
Other and unallocated		(133,194)		(17,314)
Total		$	(106,965)	$	25,442

Depreciation and amortization
Composite Fibers		$	11,315	$	13,981
Airlaid Material		15,171		12,615
Spunlace		5,859		—
Other and unallocated		2,591		1,870
Total		$	34,936	$	28,466

Capital expenditures
Composite Fibers		$	10,258	$	5,655
Airlaid Material		5,532		3,036
Spunlace		3,886		—
Other and unallocated		3,021		2,520
Total		$	22,697	$	11,211

Tons shipped (metric)
Composite Fibers		52,457		68,611
Airlaid Material		83,733		63,179
Spunlace		40,094		—
Total		176,284		$	131,790

Segments Results of individual operating segments are presented based on our management accounting practices and ~~Economic Security Act (“CARES”) related~~management structure. There is no comprehensive, authoritative body of guidance for management accounting equivalent to ~~provisions that modified~~accounting principles generally accepted in the ~~“net operating loss” provisions~~United States of ~~previous law~~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 ~~allow certain losses~~measure performance of the segments. Methodologies are refined from time to ~~be carried back five years.~~time as management accounting practices are enhanced and businesses change. The costs incurred by support areas not

- 2731 -

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	2022			2021			Change
Net sales	$	745,643		$	470,585		$	275,058
Costs of products sold	676,581			395,735			280,846
Gross profit	$	69,062		$	74,850		$	(5,788)
Gross profit as a percent of Net sales	9.3		%	15.9		%

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


	Six months ended June 30,
Percent of Total	2022		2021
Segment
Composite Fibers	34.8	%	60.1	%
Airlaid Materials	39.3		39.9
Spunlace	25.9		—
Total	100.0	%	100.0	%

Net sales totaled $745.6 million and $470.6 million in the first six months of 2022 and 2021, respectively. Net sales for Composite Fibers and Airlaid Materials (including Mount Holly) decreased by 2.0% and increased by 63.7%, respectively, on a constant currency basis. The Spunlace segment, formed in connection with the Jacob Holm acquisition, had net sales of approximately $193.3 million in the first six months of 2022.

Composite Fibers’ net sales decreased $23.7 million or 8.4% in the first six months of 2022, compared to the year-ago quarter. Wallcover shipments were below prior year by 49% due to lower shipments to customers in Russia and Ukraine, resulting from the continuation of the military conflict in this region and prohibition of the export of sanctioned wallcover base paper and tea filter products to Russia. Lower shipments were partially offset by higher selling prices of $32.0 million. Currency translation was unfavorable $18.0 million.

Composite Fibers had operating income of $5.4 million in the first six months of 2022 compared with $27.1 million in the year-ago period. Higher selling prices and energy surcharges of $32.0 million fell $14.0 million short of recovering continued inflation in energy and raw material. Lower shipments and market related downtime, primarily in our Dresden facility, negatively impacted results by $12.2 million. The impact of currency and related hedging positively impacted earnings by $4.5 million. The primary drivers of the change in Composite Fibers’ operating income are summarized in the following chart (presented in millions):

- 32 -

Airlaid Materials’ net sales increased $105.4 million in the year-over-year comparison driven by higher shipments in all major product categories and higher selling prices from cost-pass-through arrangements with customers. Shipments were 32.5% higher driven by strong growth in the tabletop, wipes, and hygiene product categories, including the benefit from a full six months of Mount Holly in 2022. Currency translation was $14.1 million unfavorable.

Airlaid Materials’ operating income, for the first six months of 2022, of $24.2 million was $8.5 million higher than the same period in 2021. Higher shipments and product mix positively impacted results by $11.9 million. Selling price increases of $36.4 million was $2.4 million short of offsetting the higher raw material prices and energy inflation costs. Operations were favorable $1.6 million driven by higher production, which offset other general inflationary pressures. The impact of currency and related hedging negatively impacted earnings by $2.5 million. The primary drivers are summarized in the following chart (presented in millions):

Spunlace net sales for the first six months were approximately $193.3 million. An operating loss of $3.4 million was mainly driven by higher raw material and energy costs only partially offset by higher selling prices and energy surcharges.

Asset Impairment During the first quarter of 2022, in connection with an assessment of potential impairment of long-lived and indefinite-lived intangible assets stemming from the compounding impacts resulting from the Russia/Ukraine military conflict and related sanctions, we recorded a $117.3 million non-cash asset impairment charge related to Composite Fibers' Dresden facility and an impairment of Composite Fibers' goodwill. Dresden is a single-line facility that produces wallcover base paper, the majority of which is directly sold into the Russian and Ukrainian markets. As a direct

- 33 -

result of the economic impacts from the conflict, including disruptions in the underlying financial systems and prohibition of the export of sanctioned wallcover base paper to Russia, management expects a significant reduction in wallcover revenues and associated cash flows for the foreseeable future. In addition, the conflict is expected to significantly impact energy prices and also impact other Composite Fibers products that are subject to export sanctions into Russia. During the year ended December 31, 2021, we had total net sales of wallcover and other products to customers in Russia and Ukraine totaling approximately $95 million. We do not expect significant sales to customers in this region for the foreseeable future as a result of the military conflict, its impact on Ukrainian customers, and the economic sanctions on sales of certain products to customers in Russia. Accordingly, a charge was recorded to reduce the carrying value of the Dresden fixed assets and intangible assets (technological know-how, customer relationships, and an indefinite-lived trade name), along with Composite Fiber's goodwill to fair value.

In addition, as a result of economic sanctions and disruptions to the financial markets, certain customers are not able to satisfy outstanding accounts receivables. As such, during the first quarter of 2022, we recognized bad debt expense of approximately $2.9 million directly related to Russian and Ukrainian customers which is included in “Selling, general and administrative expenses” in the accompanying condensed consolidated statements of income for the six months ended June 30, 2022. At June 30, 2022, we had accounts receivable, net of reserves, from customers in this region totaling approximately $2.6 million which we expect to collect in normal course. However, if circumstances change such that some customers are unable to satisfy their obligations, we may be required to recognize additional bad debt expense in future periods. Furthermore, during the first quarter of 2022, we increased inventory reserves by approximately $1.0 million, primarily related to wallcover products. The charge related to inventory reserves is included in “Cost of products sold” in the accompanying condensed consolidated statements of income for the six months ended June 30, 2022. Substantially all other products which we will no longer be able to export to Russia due to sanctions can be sold to existing customers outside the Russia/Ukraine region.

Other and Unallocated The amount of operating expense not allocated to a reporting segment in the Segment Financial Information totaled $133.2 million in the first six months of 2022 compared with $17.3 million in the same period a year ago. Excluding the items identified to present “adjusted earnings,” unallocated expenses for the first six months of 2022 decreased $0.3 million compared to the same period in 2021.

Income taxes In the first six months of 2022, our loss from continuing operations totaled $124.2 million and we recorded an income tax benefit of $13.5 million. On adjusted pre-tax loss of $2.3 million, income tax provision was $5.5 million in the first six months of 2022, which primarily related to reserves for uncertain tax positions and valuation allowances for losses for which no tax benefit could be recognized. The comparable amounts in the first six months of 2021 were adjusted pre-tax income of $27.5 million and income tax expense of $11.0 million, respectively.

Foreign Currency We own and operate facilities in Canada, Germany, France, the United Kingdom, Spain, and the Philippines. The functional currency of our Canadian operations is the U.S. dollar. However, in Germany, France and Spain, 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 net sales exceeds euro expenses by an estimated €150 million. For the first six months of 2022, the average currency exchange rate was 1.09 dollar/euro compared with 1.20 in the same period of 2021. 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 2022.


In thousands	Six months ended June 30,
	Favorable (unfavorable)
Net sales	$	(32,135)
Costs of products sold	31,774
SG&A expenses	2,010
Income taxes and other	241
Net loss	$	1,890

- 34 -

The above table only presents the financial reporting impact of foreign currency translations assuming currency exchange rates in 2022 were the same as 2021. It does not present the impact of certain competitive advantages or disadvantages of operating or competing in multi-currency markets.

Three months ended June 30, 2022 versus the three months ended June 30, 2021

Overview For the second quarter of 2022, we reported loss from continuing operations of $2.5 million, or $0.05 per share compared with income of $1.5 million and $0.03 per diluted share in the year earlier period. The following table sets forth summarized consolidated results of operations:


	Three months ended June 30,
In thousands, except per share	2022		2021
Net sales	$	363,963	$	244,911
Gross profit	37,397		35,554
Operating income	8,924		8,123
Continuing operations:
Income (loss)	(2,460)		1,492
Earnings per share	(0.05)		0.03
Net income (loss)	(2,052)		1,410
Earnings per share	(0.05)		0.03

The reported results are in accordance with generally accepted accounting principles in the United States (“GAAP”) and reflect the impact of significant items including strategic initiatives and corporate headquarters relocation costs, among others. On an adjusted earnings basis, a non-GAAP measure, we had a loss from continuing operations of $1.6 million, or $0.04 per share for the second quarter of 2022, compared with income of $8.0 million, or $0.18 per diluted share, a year ago.

Our second quarter of 2022 operating results reflect: i) the continuation of the compounding impacts of the Russia/Ukraine military conflict commencing on February 24, 2022 including the adverse impact of the prohibition of the export of sanctioned products into Russia; ii) the completion of two significant acquisitions in 2021, which collectively added $123.2 million of net sales; iii) the adverse impact of significant inflationary pressures, particularly energy costs, which outpaced our efforts to realize higher selling prices; and iv) interest expense increased reflecting the acquisition financing.

The following table sets forth the reconciliation of net income to adjusted earnings for the period indicated:


	Three months ended June 30,
	2022				2021
In thousands, except per share	Amount		EPS		Amount		EPS
Net income (loss)	$	(2,052)	$	(0.04)	$	1,410	$	0.03
Exclude: Income from discontinued operations, net of tax	(408)		(0.01)		82		—
Income (loss) from continuing operations	(2,460)		(0.05)		1,492		0.03
Adjustments (pre-tax):


Strategic initiatives (1)	653				7,831
Corporate headquarters relocation	135				206

Timberland sales and related costs	—				(1,553)
Total adjustments (pre-tax)	788				6,484
Income taxes (2)	(20)				(50)
CARES Act of 2020 tax provision (3)	96				90
Total after-tax adjustments	864		0.01		6,524		0.15
Adjusted earnings (loss) from continuing operations	$	(1,596)	$	(0.04)	$	8,016	$	0.18

(1)For 2022, primarily reflects professional services fees (including legal, audit, valuation specialists and consulting) of $0.5 million, employee separation and other costs of $0.4 million and other costs, all of which are directly related to acquisitions. For 2021, reflects professional services fees related to acquisitions (including transaction advisory, legal, audit and valuation specialists) of $6.5 million, employee separation and other costs of $0.6 million, inventory valuation step-up costs of $0.5 million and other costs all of which are directly related to acquisitions.

(2)Tax effect on adjustments calculated based on the incremental effective tax rate of the jurisdiction in which each adjustment originated. For items originating in the U.S., no tax effect is recognized due to the previously established valuation allowance on the net deferred tax assets.

(3)Reflects the tax effect of applying certain provisions of the CARES Act of 2020.

- 35 -

Segment Financial Performance

Nine months ended September 30,
Dollars in thousands Composite Fibers Airlaid Materials Other and
Unallocated Total
2021 2020 2021 2020 2021 2020 2021 2020
Net sales $ 420,965 $ 387,267 $ 329,271 $ 293,949 $ — $ — $ 750,236 $ 681,216
Cost of products sold 354,629 319,403 283,825 243,526 (1,425) 11,171 637,029 574,100
Gross profit (loss) 66,336 67,864 45,446 50,423 1,425 (11,171) 113,207 107,116
SG&A 33,396 30,811 15,076 13,192 29,405 28,704 77,877 72,707
Gains on dispositions of plant,
equipment and timberlands, net — — — — (4,638) (1,010) (4,638) (1,010)
Total operating income (loss) 32,940 37,053 30,370 37,231 (23,342) (38,865) 39,968 35,419
Non-operating expense — — — — (7,261) (14,992) (7,261) (14,992)
Income (loss) before income taxes $ 32,940 $ 37,053 $ 30,370 $ 37,231 $ (30,603) $ (53,857) $ 32,707 $ 20,427
Supplementary Data
Net tons sold 101,348 100,024 106,705 103,068 — — 208,053 203,092
Depreciation, depletion and amortization ($ in thousands) (1) $ 20,885 $ 19,652 $ 20,378 $ 16,598 $ 2,913 $ 7,060 $ 44,176 $ 43,310
Capital expenditures 8,240 9,121 5,962 6,606 4,317 4,438 18,519 20,165

~~(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.~~


	Three months ended June 30,
Dollars in thousands		2022		2021
Net sales
Composite Fibers		$	123,338	$	141,598
Airlaid Material		143,708		103,313
Spunlace		96,917		—
Total		$	363,963	$	244,911

Operating income (loss)
Composite Fibers		$	5,779	$	11,063
Airlaid Material		11,944		8,431
Spunlace		(1,808)		—
Other and unallocated		(6,991)		(11,371)
Total		$	8,924	$	8,123

Depreciation and amortization
Composite Fibers		$	4,796	$	7,000
Airlaid Material		7,542		6,767
Spunlace		2,945		—
Other and unallocated		1,169		966
Total		$	16,452	$	14,733

Capital expenditures
Composite Fibers		$	4,131	$	2,882
Airlaid Material		2,064		1,297
Spunlace		1,801		—
Other and unallocated		2,353		1,653
Total		$	10,349	$	5,832

Tons shipped (metric)
Composite Fibers		24,246		34,471
Airlaid Material		40,681		34,315
Spunlace		19,358		—
Total		84,285		$	68,786

- 36 -

Sales and Costs of Products Sold

Nine months ended September 30,
In thousands 2021 2020 Change
Net sales $ 750,236 $ 681,216 $ 69,020
Costs of products sold 637,029 574,100 62,929
Gross profit $ 113,207 $ 107,116 $ 6,091
Gross profit as a percent of Net sales 15.1 % 15.7 %

~~- 28 -~~


	Three months ended June 30,
In thousands	2022			2021			Change
Net sales	$	363,963		$	244,911		$	119,052
Costs of products sold	326,566			209,357			117,209
Gross profit	$	37,397		$	35,554		$	1,843
Gross profit as a percent of Net sales	10.3		%	14.5		%

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


		Nine months ended September 30,					Three months ended June 30,
Percent of Total	Percent of Total	2021		2020		Percent of Total	2022		2021
Segment	Segment					Segment
Composite Fibers	Composite Fibers	56.1	%	56.8	%	Composite Fibers	33.9	%	57.8	%
Airlaid Materials	Airlaid Materials	43.9		43.2		Airlaid Materials	39.5		42.2
Spunlace						Spunlace	26.6		—
Total	Total	100.0	%	100.0	%	Total	100.0	%	100.0	%

Net sales totaled ~~$750.2~~$364.0 million and ~~$681.2~~$244.9 million in the ~~first nine months~~second quarter of 2022 and 2021, respectively. Net sales for Composite Fibers and ~~2020, respectively.~~Airlaid Materials (including Mount Holly) decreased by 4.4% and increased by 47.7%, respectively, on a constant currency basis. The Spunlace segment, formed in connection with the Jacob Holm acquisition, had net sales of approximately $96.9 million in the second quarter of 2022.

Composite Fibers’ net sales ~~increased $33.7~~decreased $18.3 million or ~~8.7%~~12.9% in the ~~first nine months~~second quarter of ~~2021~~2022, compared to the year-ago ~~period,~~quarter. Higher selling prices of $14.4 million were more than offset by lower shipments of 29.7%. Wallcover shipments were below prior year by 62% due to lower shipments to customers in Russia and Ukraine, resulting from the continuation of the geopolitical conflict in this region and prohibition of the export of sanctioned wallcover and tea filter products into Russia. Currency translation was unfavorable $12.0 million.

Composite Fibers had operating income for the second quarter of $5.8 million compared with $11.1 million operating income in the second quarter of 2021. Lower shipments and market-related downtime, primarily in our Dresden facility, negatively impacted results by $6.4 million. Higher selling prices and energy surcharges of $14.4 million fell $2.5 million short of fully recovering continued inflation in energy, raw material and freight of $16.9 million. The impact of currency and related hedging positively impacted earnings by $3.6 million mainly driven by ~~favorable currency translation~~weakening of ~~$22.2 million, and $7.8 million from higher selling prices. During~~ the ~~first nine months of 2021, we announced price increases of 8% and 12% in response to significantly higher input costs. Overall shipments increased 1.3% in the period-over-period comparison.~~

Composite Fibers’ operating income of $32.9 million was $4.1 million lower than the first nine months of 2020. The decline in operating results reflects the adverse impact of significantly higher costs for raw materials, primarily woodpulp, and higher energy prices, which in the aggregate increased $19.8 million. The adverse impact of inflation more than outpaced the $7.8 million increase in selling prices.British Pound. The primary drivers of the change in Composite Fibers’ operating income are summarized in the following chart (presented in millions):

- 37 -

Airlaid Materials’ net sales increased ~~$35.3~~$40.4 million in the year-over-year comparison ~~and shipments increased 3.5% each~~ driven by the addition of Mount Holly. The segments sales were impacted by lower shipments in the hygiene and wipes categories (excluding volumes added by Mount Holly) as customers adjusted their buying patterns following elevated year-end inventory levels maintained due to the pandemic. Currency translation was $9.3 million favorable, and the Mount Holly acquisition, ~~is included prospectively~~higher shipments in all major product categories, and higher selling prices from cost-pass-through arrangements with customers. Shipments were 18.6% higher driven by strong growth in the ~~May 13, 2021 closing of the transaction, adding $34.2~~wipes, tabletop, and hygiene product categories. Currency translation was $8.9 million ~~of net sales.~~unfavorable.

Airlaid Materials’ ~~first nine months of 2021~~second quarter operating income of ~~$30.4~~$11.9 million was ~~$6.9~~$3.5 million ~~lower~~higher when compared to the ~~same period in 2020, due to higher input costs, primarily pulp~~second quarter of 2021. Higher shipments positively impacted results by $3.9 million. Selling price increases and energy ~~prices which outpaced increases in selling prices. Higher average selling prices largely due to raw material pass-through provisions, added $16.5 million. Higher~~surcharges of $18.0 million fully offset the higher raw material and energy ~~prices more than~~costs which improved results by $0.8 million. Operations were slightly favorable by $0.3 million as higher production was mostly offset ~~the benefit~~by general inflationary pressures. The impact of ~~higher selling prices.~~currency and related hedging negatively impacted earnings by $1.5 million due to a weakening Euro. The primary drivers are summarized in the following chart (presented in millions):

~~- 29 -~~

Spunlace net sales for the second quarter were approximately $96.9 million. An operating loss of $1.8 million was mainly driven by higher raw material and energy costs only partially offset by higher selling prices and energy surcharges.

Other and Unallocated The amount of ~~“Other and Unallocated”~~ operating expense not allocated to a reporting segment in ~~our table of~~the Segment Financial Information totaled ~~$23.3~~$7.0 million in the ~~first nine months~~second quarter of ~~2021~~2022 compared with ~~$38.9~~$11.4 million in the ~~first nine months of 2020.~~same period a year ago. Excluding the items identified to present “adjusted earnings,” unallocated expenses for the ~~comparison decreased $4.6~~second quarter of 2022 increased $1.3 million ~~primarily due~~compared to ~~lower incentive compensation in~~ the ~~comparison.~~second quarter of 2021.

- 38 -

Income taxes ~~During~~In the ~~first nine months~~second quarter of ~~2021,~~2022, our income from continuing operations totaled ~~$32.7~~$0.8 million and we recorded an income tax ~~expense totaled $14.8~~provision of $3.3 million. On adjusted pre-tax income of ~~$40.4~~$1.6 million, the income tax expense was ~~$14.4~~$3.2 million in the ~~first nine months~~second quarter of ~~2021.~~2022, which primarily related to reserves for uncertain tax positions and valuation allowances for losses for which no tax benefit could be recognized. The comparable amounts in the same ~~period~~quarter of ~~2020~~2021 were ~~$45.8~~adjusted pre-tax income of $12.0 million and ~~$18.1 million, respectively. The~~ income tax expense ~~in the nine months~~ of ~~2020 includes a $5.0~~$4.0 million, ~~tax benefit recorded in connection with passage of the CARES Act. The effective tax rate on adjusted earnings was 35.7% in the first nine months of 2021.~~respectively.

Foreign Currency We own and operate facilities in Canada, Germany, France, the United Kingdom, Spain, and the Philippines. The functional currency of our Canadian operations is the U.S. dollar. However, in Germany, France and ~~France~~Spain, it is the Euro, in the UK, it is the British ~~Pound Sterling,~~pound sterling, and in the Philippines the functional currency is the ~~Peso.~~peso. On an annual basis, our ~~Euro~~euro denominated ~~revenue~~net sales exceeds ~~Euro~~euro expenses by an estimated €150 million. For the ~~first nine~~three months ~~of 2021,~~ended June 30, 2022, the average currency exchange rate was ~~1.19~~1.07 dollar/euro compared with ~~1.14~~1.19 in the same period of ~~2020.~~2021. With respect to the British ~~Pound Sterling,~~pound sterling, Canadian ~~Dollar,~~dollar, and Philippine ~~Peso,~~peso, we have differing amounts of inflows and outflows of these currencies, although to a lesser degree than the ~~Euro.~~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.


In thousands	~~Nine~~Three months ended ~~September~~June 30, 2022
	Favorable (unfavorable)
Net sales	$	~~31,530~~(20,875)
Costs of products sold	~~(32,679)~~21,553
SG&A expenses	~~(2,101)~~1,384
Income taxes and other	~~(460)~~190
Net loss	$	~~(3,710)~~2,252

The above table only presents the financial reporting impact of foreign currency translations assuming currency exchange rates in ~~2021~~2022 were the same as ~~2020.~~2021. It does not present the impact of certain competitive advantages or disadvantages of operating or competing in multi-currency markets.

~~- 30 -~~

~~Three months ended September 30, 2021 versus the three months ended September 30, 2020~~

~~Overview~~ We reported income from continuing operations for the third quarter of 2021 of $8.1 million, or $0.18 per diluted share, compared with $6.5 million, or $0.15 per diluted share, in the same period a year ago. The 2021 results include the acquisition of Mount Holly prospectively from the May 13, 2021 acquisition date. Adjusted earnings from continuing operations for the third quarters of 2021 and 2020, were $9.5 million, or $0.21 per share, compared with $7.0 million, or $0.16 per share, respectively. The following table sets forth summarized results of operations:

Three months ended September 30,
In thousands, except per share 2021 2020
Net sales $ 279,651 $ 233,473
Gross profit 38,357 38,251
Operating income 14,526 14,029
Continuing operations
Income 8,059 6,527
Earnings per share 0.18 0.15
Net income 7,527 6,527
Earnings per share $ 0.17 $ 0.15

~~The following table sets forth the reconciliation of net income (loss) to adjusted earnings for the periods indicate:~~

Three months ended September 30,
2021 2020
In thousands, except per share Amount EPS Amount EPS
Net income $ 7,527 $ 0.17 $ 6,527 $ 0.15
Exclude: Loss from discontinued operations 532 0.01 — —
Income from continuing operations 8,059 0.18 6,527 0.15
Adjustments (pre-tax)

Strategic initiatives 2,773 843
Corporate headquarters relocation 68 610
Restructuring charge - Metallized operations — 57
Cost optimization actions 687 1,270
Pension settlement expenses, net — 389
COVID 19 - incremental costs — 586
Timberland sales and related costs (2,235) (412)
Total adjustments (pre-tax) 1,293 3,343
Income taxes (1)
18 (375)
CARES Act of 2020 tax provision (2)
112 (2,454)
Total after-tax adjustments 1,423 0.03 514 0.01
Adjusted earnings $ 9,482 $ 0.21 $ 7,041 $ 0.16

~~(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 CARES related to provisions that modified the “net operating loss” provisions of previous law to allow certain losses to be carried back five years.

~~- 31 -~~

~~Segment Financial Performance~~

Three months ended September 30,
Dollars in thousands Composite Fibers Airlaid Materials Other and
Unallocated Total
2021 2020 2021 2020 2021 2020 2021 2020
Net sales $ 138,118 $ 132,419 $ 141,533 $ 101,054 $ — $ — $ 279,651 $ 233,473
Cost of products sold 121,028 112,031 121,102 83,699 (836) (508) 241,294 195,222
Gross profit 17,090 20,388 20,431 17,355 836 508 38,357 38,251
SG&A 11,278 9,924 5,689 4,438 9,099 10,273 26,066 24,635
Gains on dispositions of plant,
equipment and timberlands, net
— — — — (2,235) (413) (2,235) (413)
Total operating income (loss) 5,812 10,464 14,742 12,917 (6,028) (9,352) 14,526 14,029
Non-operating expense — — — — (2,916) (3,888) (2,916) (3,888)
Income (loss) before income taxes $ 5,812 $ 10,464 $ 14,742 $ 12,917 $ (8,944) $ (13,240) $ 11,610 $ 10,141
Supplementary Data
Net tons sold 32,737 35,009 43,526 34,752 — — 76,263 69,761
Depreciation, depletion and amortization ($ in thousands) (1)
$ 6,904 $ 6,755 $ 7,763 $ 5,674 $ 1,043 $ 1,273 $ 15,710 $ 13,702
Capital expenditures 2,585 3,060 2,926 2,791 1,797 2,303 7,308 8,154

~~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 September 30,
In thousands 2021 2020 Change
Net sales $ 279,651 $ 233,473 $ 46,178
Costs of products sold 241,294 195,222 46,072
Gross profit $ 38,357 $ 38,251 $ 106
Gross profit as a percent of Net sales 13.7 % 16.4 %

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

Three months ended September 30,
Percent of Total 2021 2020
Segment
Composite Fibers 49.4 % 56.7 %
Airlaid Materials 50.6 43.3
Total 100.0 % 100.0 %

~~Net sales~~ Consolidated net sales for the three months ended September 30, 2021 totaled $279.7 million, compared with $233.5 million for the same period in 2020. On a constant currency basis, net sales for Composite Fibers and Airlaid Materials (including Mount Holly) increased by 3.4% and 39.5%, respectively.

Composite Fibers’ net sales increased $5.7 million or 4.3% in the third quarter of 2021, compared to the year-ago quarter, mainly driven by higher selling prices of $5.8 million and favorable currency translation of $1.2 million. Overall, shipments were 6.5% lower primarily due to wallcover products. In Q3 2020, wallcover had a strong rebound in demand after volume dropped sharply in the second quarter of 2020 due to the pandemic, making for a challenging year-over-year comparison. In addition, a few wallcover customers took unexpected downtime in late August, 2021.

Composite Fibers’ operating income for the third quarter of 2021 totaled $5.8 million compared with $10.5 million in the third quarter of 2020. Higher raw material and energy inflation of $12.4 million was partially offset by $5.8 million in higher selling prices, reducing earnings by net $6.6 million. Favorable mix driven by higher demand in composite laminates and food and beverage categories, coupled with strong production to meet customer demand, positively impacted results by $3.1 million. The impact of currency and related hedging activity negatively impacted earnings by $1.2 million mainly due to favorable hedging gains on our underlying positions last year. The primary drivers are summarized in the following chart (presented in millions):

~~- 32 -~~

Airlaid Materials’ net sales increased $40.5 million in the year-over-year comparison, driven by the first full quarter of sales from Mount Holly as well as higher selling prices from cost pass-through arrangements. Shipments were 25.2% higher driven by Mount Holly as well as improvements in demand for tabletop and wipes products, slightly offset by lower shipments of hygiene products. Currency translation was $0.5 million favorable.

Airlaid Materials’ third quarter of 2021 operating income of $14.7 million was $1.8 million higher when compared to the third quarter of 2020. Higher shipments positively impacted results by $7.3 million. Selling price increases of $11.6 million, primarily due to raw material cost pass-through provisions, were more than offset by higher raw material and energy prices of $13.4 million, reducing earnings by net $1.8 million. Most pass-through contracts do not include energy inflation which was $1.3 million during the quarter. Operations were unfavorable $2.5 million mainly due to lower production compared to a strong quarter last year and higher inflationary pressures experienced in the quarter. The impact of currency and related hedging activity negatively impacted earnings by $1.2 million. The primary drivers are summarized in the following chart (presented in millions):

~~Other and Unallocated~~ The amount of operating expense not allocated to a segment in the table of Segment Financial Information totaled $6.0 million in the third quarter of 2021 compared with $9.4 million in the same period a year ago. Excluding the items identified to present “adjusted earnings,” unallocated expenses for the third quarter of 2021 decreased $1.7 million compared to the third quarter of 2020.

~~Income Taxes~~ In the third quarter of 2021, income from continuing operations totaled $11.6 million and income tax expense totaled $3.6 million. On adjusted pre-tax income of $12.9 million, income tax expense was $3.4 million in the third quarter of 2021. The comparable amounts in the same quarter of 2020 were $13.5 million and $6.4 million, respectively. The effective tax rate on adjusted earnings was 26.5% in the third quarter of 2021 and includes a $1.1 million reduction in our valuation allowance on deferred tax assets.

~~- 33 -~~

~~Foreign Currency~~ For the three months ended September 30, 2021, the average currency exchange rate was 1.18 dollar/euro compared with 1.17 in the same period of 2020. 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 2021.


~~In thousands~~	Three months ended September 30, 2021
	~~Favorable (unfavorable)~~
~~Net sales~~	$	~~1,716~~
~~Costs of products sold~~	~~(3,919)~~
~~SG&A expenses~~	~~(217)~~
~~Income taxes and other~~	~~(38)~~
~~Net loss~~	$	~~(2,458)~~

The above table only presents the financial reporting impact of foreign currency translations assuming currency exchange rates in 2021 were the same as 2020. 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:

Nine months ended September 30,
In thousands 2021 2020
Cash, cash equivalents and restricted cash at the beginning of period $ 111,665 $ 126,201
Cash provided (used) by
Operating activities 38,497 24,539
Investing activities (186,003) (19,178)
Financing activities 151,264 (60,963)
Effect of exchange rate changes on cash (4,082) 2,361
Change in cash and cash equivalents from discontinued operations (481) (1,108)
Net cash used (805) (54,349)
Cash, cash equivalents and restricted cash at the end of period 110,860 71,852
Less: restricted cash in Prepaid and other current assets (2,000) (2,000)
Less: restricted cash in Other assets (8,828) (10,611)
Cash and cash equivalents at the end of period $ 100,032 $ 59,241

- 39 -


	Six months ended June 30,
In thousands	2022		2021
Cash, cash equivalents and restricted cash at the beginning of period	$	148,814	$	111,665
Cash provided (used) by
Operating activities	(79,535)		1,365
Investing activities	(18,136)		(181,136)
Financing activities	33,546		165,138
Effect of exchange rate changes on cash	(3,587)		(1,432)
Change in cash and cash equivalents from discontinued operations	(231)		(238)
Net cash used	(67,943)		(16,303)
Cash, cash equivalents and restricted cash at the end of period	80,871		95,362
Less: restricted cash in Prepaid and other current assets	(2,000)		(2,000)
Less: restricted cash in Other assets	(7,395)		(9,197)
Cash and cash equivalents at the end of period	$	71,476	$	84,165

At ~~September~~June 30, ~~2021,~~2022, we had ~~$100.0~~$71.5 million in cash and cash equivalents (“cash”) held by both domestic and foreign subsidiaries. Approximately ~~91%~~89.3% of our cash and cash equivalents is held by our foreign subsidiaries but could be repatriated without incurring a significant amount of additional taxes.~~In addition to cash, as of September 30, 2021, $180.4 million~~ ~~was available under our existing revolving credit agreement.~~

Cash ~~provided~~used by operating activities in the first ~~nine~~six months of ~~2021~~2022 totaled ~~$38.5~~$79.5 million compared with ~~$24.5~~cash provided by operating activities of $1.4 million in the same period a year ago. ~~The~~The increase was primarily due to ~~improved operating results and improved~~an increase in working capital ~~usage. During~~usage, primarily accounts receivable, inventory and the ~~first quarter~~termination of a factoring arrangement previously utilized by certain former Jacob Holm entities, an $11.5 million reduction in adjusted EBITDA, a $7.6 million increase in income taxes paid and a $13.0 million increase in interest paid.


Adjusted EBITDA	Six months ended June 30,
In thousands	2022		2021

Net income (loss)	$	(110,379)	$	9,804
Exclude: Income (loss) from discontinued operations, net of tax	(371)		82
Add back: Taxes on Continuing operations	(13,489)		11,211
Depreciation and amortization	34,936		28,466
Interest expense, net	15,479		3,272
EBITDA	(73,824)		52,835
Adjustments:
Goodwill and other asset impairment charges	117,349		—
Russia/Ukraine conflict charges	3,948		—
Strategic initiatives	2,488		8,434
Share-based compensation (1)	2,419		2,537


Corporate headquarters relocation	223		361
Cost optimization actions	589		—

Timberland sales and related costs	(2,962)		(2,403)
Adjusted EBITDA	$	50,230	$	61,764

(1)Adjusted EBITDA for 2021 has been restated to add back share-based compensation consistent with our amended credit agreement. The share-based compensation adjustment represents the non-cash amount of share-based compensation expense included in results of operations.

EBITDA is a measure used by management to assess our operating performance and is calculated using income (loss) from continuing operations and excludes interest expense, interest income, income taxes and depreciation and amortization. Adjusted EBITDA is calculated using EBITDA and further excludes certain items management considers to be unrelated to the company’s core operations. The adjustments include asset impairment charges, costs of strategic initiatives, certain cost optimization and restructuring activities, corporate headquarters relocation expenses, as well as the elimination of gains

- 40 -

from sales of timberlands. Adjusted EBITDA is a performance measure that excludes costs that we ~~used $11.8 million related~~do not consider to ~~value-added tax liabilities identified while reviewing certain customer sales arrangements. During the third quarter~~be indicative of ~~2021, we recovered the amounts from the respective customer.~~our ongoing operating performance.

Net cash used by investing activities was ~~$186.0~~$18.1 million compared with ~~$19.2~~$181.1 million in the same period a year ago. ~~The increase was due to~~During the ~~Mount~~six months ended June 30, 2021, we used $172.3 million for the Mount. Holly acquisition. Capital expenditures totaled ~~$18.5~~$22.7 million and ~~$20.2~~$11.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and are expected to be ~~$30~~$45 million to ~~$35~~$50 million, including $7 million to $8 million for Spunlace integration, for the full year ~~2021.~~2022.

Net cash provided by financing activities totaled ~~$151.3~~$33.5 million in the first ~~nine~~six months of ~~2021~~2022 compared with ~~a use of $61.0~~$165.1 million in the same period of ~~2020.~~2021. The change in financing activities primarily reflects ~~$160 million~~a decrease in ~~additional~~

~~- 34 -~~

borrowings under our revolving credit agreement. In 2021, we used borrowings under the revolving credit facility to ~~fund~~pay for the Mount Holly ~~acquisition as well as miscellaneous term loan borrowing, the proceeds of which were used for general purposes.~~acquisition.

As discussed in Item 1 - Financial Information, Note - 16, our Credit Agreement contains a number of customary compliance covenants. As of ~~September~~June 30, ~~2021,~~2022, the leverage ratio, as calculated in accordance with the definition in our Credit Agreement, was ~~2.6x,~~5.3x, well within the maximum limit allowed under our Credit Agreement. 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. ~~Based~~ As discussed in Note 16 - “Long Term Debt,” on May 9, 2022, we amended our ~~expectations~~Credit Agreement to increase the maximum leverage ratio to 6.75 to 1.0 until the quarter ended December 31, 2023, after which the maximum ratio will step down to 4.0 to 1.0.

Details 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:~~

In thousands September 30, 2021 December 31, 2020
Revolving credit facility, due Feb. 2024 $ 200,527 $ 36,813
Term loan, due Feb. 2024 226,080 249,715
2.40% Term Loan, due Jun. 2022 1,241 2,629
2.05% Term Loan, due Mar. 2023 9,270 14,737
1.30% Term Loan, due Jun. 2023 2,895 4,382
1.55% Term Loan, due Sep. 2025 5,674 7,143
1.10% Term Loan, due Mar. 2024 10,527 —
Total long-term debt 456,214 315,419
Less current portion (27,441) (25,057)
Unamortized deferred issuance costs (5,683) (1,898)
Long-term debt, net of current portion $ 423,090 $ 288,464
indebtedness are set forth under Item 1 - Financial Statements – Note 16 -“Long-Term Debt."

Financing activities include cash used for common stock dividends. In ~~both~~ the first ~~nine~~six months of ~~2021~~2022 and ~~2020,~~2021, we used ~~$18.2~~$12.5 million and ~~$17.5~~$12.0 million, respectively, 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.

On October 25, 2021, we completed the private placement of $500 million in aggregate principal amount of 4.750% senior notes due 2029 (the “Notes”). The net proceeds from the Notes offering, together with cash on hand, were used to pay the purchase price of the Jacob Holm, to repay certain indebtedness of Jacob Holm, to repay outstanding revolving borrowings under our Credit Agreement, and to pay estimated fees and expenses.

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 ~~September~~June 30, ~~2021,~~2022, we had ample liquidity consisting of ~~$100.0~~$71.5 million of cash on hand and ~~$180.4~~$131.6 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 ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, 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.

- 3541 -

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS


		Year Ended December 31															September 30, 2021					Year Ended December 31															June 30, 2022
In thousands, except percentages	In thousands, except percentages	2021			2022			2023			2024			2025			Carrying Value		Fair Value		In thousands, except percentages	2022			2023			2024			2025			2026			Carrying Value		Fair Value
Long-term debt	Long-term debt																				Long-term debt
Average principal outstanding	Average principal outstanding																				Average principal outstanding
At variable interest rates	At variable interest rates	$	423,423		$	413,870		$	401,133		$	239,375		$	200,527		$	426,607	$	426,607	At variable interest rates	$	272,541		$	261,116		$	255,403		$	81,161		$	54,700		$	275,398	$	275,398
At fixed interest rates – Term Loans	At fixed interest rates – Term Loans	33,389			24,101			11,408			2,785			425			29,607		29,756		At fixed interest rates – Term Loans	533,306			521,934			502,221			500,382			500,000			537,163		385,434
																	$	456,214	$	456,363																	$	812,561	$	660,832
Weighted-average interest rate	Weighted-average interest rate																				Weighted-average interest rate
On variable rate debt	On variable rate debt	1.56		%	1.56		%	1.56		%	1.56		%	1.56		%					On variable rate debt	2.44		%	2.44		%	2.44		%	2.44		%	2.44		%
On fixed rate debt – Term Loans	On fixed rate debt – Term Loans	1.62		%	1.60		%	1.62		%	1.49		%	1.55		%					On fixed rate debt – Term Loans	4.51		%	4.58		%	4.74		%	4.75		%	4.75		%

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 ~~September~~June 30, ~~2021.~~2022. 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 ~~September~~June 30, ~~2021,~~2022, we had ~~$456.2~~$812.6 million of long-term debt, of which ~~93.5%~~33.9% was at variable interest rates. After giving effect to the interest rate swap agreement, approximately 47% of our debt was at variable interest rates. The fixed rate Term Loans and a portion of the variable rate debt are euro-based borrowings; thus the value of which is also subject to currency risk. Variable-rate debt represents borrowings under our credit agreement that accrues interest based on one-month U.S. Dollar LIBOR or one-month Euro LIBOR indexes, but in no event less than zero, plus the applicable margin. At ~~September~~June 30, ~~2021,~~2022, the weighted-average interest rate paid was equal to ~~1.56%~~2.44%. A hypothetical 100 basis point increase in the interest rate on variable rate debt would increase annual interest expense by ~~$1.9~~$1.6 million. In the event rates are 100 basis points lower, interest expense would be ~~$0.1~~$0.5 million lower.

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 18.

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 €150 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.

Long- and indefinite-lived Assets We evaluate the recoverability of our long- and indefinite-lived assets, including plant, equipment, timberlands, goodwill, and other intangible assets periodically or whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. Goodwill is reviewed for impairment annually during the fourth quarter, or more frequently if impairment indicators are present.

The fair value of our reporting units, which are also our operating segments, is determined using a market approach and a discounted cash flow model. Our evaluations include a variety of qualitative factors and analyses based on estimates of future cash flows expected to be generated from the use of the underlying assets, trends or other determinants of fair value. If the value of an asset determined by these evaluations is less than its carrying amount, a loss is recognized for the difference between the fair value and the carrying value of the asset. Our Airlaid Materials segment’s fair value substantially exceeded its carrying value at the time of its last valuation performed in connection with the last annual impairment test in the fourth quarter of 2021. Our Composite Fibers segment, having performed its last valuation and having recognized a goodwill impairment in the first quarter of 2022, has a fair value that approximates its carrying value. Our Spunlace segment, which was formed in conjunction with the Jacob Holm acquisition on October 29, 2021, also has a fair value that approximates its carrying value. Both Composite Fibers’ and Spunlace’s fair value could be impacted by factors such as unexpected changes in inflation, significant disruptions in the delivery of energy to our sites, particularly in Europe, or the Company’s inability to continue to increase selling prices in response to inflationary pressures. Future adverse changes such as these or in market conditions or poor operating results of the related business may indicate an inability to recover the carrying value of the assets, thereby possibly requiring an impairment charge in the future.

- 42 -

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 ~~September~~June 30, ~~2021,~~2022, 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 ~~September~~June 30, ~~2021,~~2022, that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

- 3643 -

PART II – OTHER INFORMATION

ITEM 1A. RISK FACTORS

The following ~~additional~~updated risk factor ~~updates, and~~ should be considered in addition to the risk factors set forth under Part I, Item 1A. Risk Factors in our ~~2020~~2021 Form 10-K. Except as described herein, there have been no material changes with respect to the risk factors disclosed in our ~~2020~~2021 Form 10-K.

The ~~risks described below~~conflict between Russia and ~~in our 2020 Form 10-K are not the only risks we face. Additional risks~~Ukraine has adversely affected, and ~~uncertainties not currently known~~may continue 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, orand results of operations. ~~Therefore, historical operating results,~~

Approximately $95 million of our net sales in 2021, or 7.3% of our net sales in 2021, was earned from customers located in Russia and Ukraine. The geopolitical conditions resulting from the Russia/Ukraine military conflict, including government-imposed sanctions and the current macroeconomic climate in Russia and Ukraine, have adversely impacted both demand for our products and our ability to deliver products to this region, as well as, limited customers' access to financial resources and ~~business performance,~~their ability to satisfy obligations to us. For example, as a direct result of the military conflict, economic sanctions, and the disruptions in the region’s financial systems, our management expects a significant reduction in wallcover revenues and cash flows, for the foreseeable future, from our facility located in Dresden, Germany that produces wallcover paper, a significant portion of which historically was sold into the Ukraine and Russian markets. Certain wallcover base paper, together with certain filtration products produced by our Composite Fibers segment, are subject to sanction restrictions and currently are unable to be sold into the Russian market. As a result, during the first six months of 2022, we recorded a $117.3 million non-cash asset impairment charge related to assets of our Dresden facility and an impairment of our Composite Fibers business' goodwill. Moreover, certain customers have not been able to satisfy outstanding accounts receivables and, as such, during the first six months of 2022, we recognized bad debt expense of approximately $2.9 million directly related to Russian and Ukrainian customers. At June 30, 2022, we had accounts receivable, net of reserves, from customers in this region totaling approximately $2.6 million which we expect to collect in normal course.

In addition, we operate manufacturing sites elsewhere in Europe that have been adversely impacted as a result of the military conflict in Ukraine and related geopolitical events and ~~trends are often not~~sanctions. In many instances, these sites depend on the availability of natural gas for use in the production of products. The supply of a ~~reliable indicator~~substantial portion of ~~future operating results,~~the natural gas used may originate from Russia. We expect that shortages in supply and increases in costs of natural gas will adversely impact our ability to operate these sites in an efficient and cost-effective manner, for the foreseeable future.

The risk of cyber-security incidents and cyber attacks has increased in connection with the ongoing conflict, driven by justifications such as retaliation for the sanctions imposed in conjunction with the conflict. It is possible that such incidents or attacks could have collateral effects on additional critical infrastructure and financial ~~and business performance, events or trends.~~

~~Disruption of our global supply chain~~institutions globally, which could adversely affect our ~~business.~~operations and could increase the frequency and severity of cyber-based attacks against our information technology systems. The proliferation of malware from the conflict, into systems unrelated to the conflict, or cyberattacks against U.S. companies in retaliation for U.S. sanctions against Russia or U.S. support of Ukraine, could also adversely affect our operations and our supply chain.

~~Our ability to manufacture, sell~~To the extent the current conflict adversely affects our business, financial condition and ~~distribute products is critical to our operations. Our products contain raw materials that we source globally from suppliers. If there is a shortage~~results of ~~a key material~~operations, it may also have the effect of heightening many other risks disclosed in Part I, Item 1A. Risk Factors in our ~~supply chain,~~2021 Form 10-K, any of which could materially and a replacement cannot be readily sourced from an alternative supplier, the shortage may disrupt our production. Likewise, disruptions in the transportation and delivery of products - both from suppliers to our production facilities, and from our production facilities to our customers - may impact our ability to sell product and deliver goods to our customers on time. In addition, the costs of transporting materials and products through our chain of sourcing and production may increase, and such increases could be significant. The failure of third parties on which we rely, including those third parties who supply our raw materials, packaging, capital equipment and other necessary operating materials, contract manufacturers, commercial transport, distributors, contractors, and external business partners, to meet their obligations to us, or significant disruptions in their ability to do so, may negatively impact our operations. Failure to take adequate steps to mitigate the likelihood or potential impact of such disruptions, or to effectively manage such disruptions if they occur, could adversely affect our business and results of operations, ~~as well as require additional resources~~however, due to ~~restore our global supply chain. Any~~the continually evolving nature of ~~these factors~~the conflict, the potential impact that the conflict could have ~~a material~~on such risk factors, and others that cannot yet be identified, remains uncertain.

In the event that current geopolitical tensions fail to abate, or deteriorate further, or additional governmental sanctions are enacted against the Russian economy or its banking and monetary systems, we may face additional adverse ~~impact on~~consequences to our business and results of ~~operations~~operations. Even if the conflict moderates or a resolution between Ukraine and Russia is reached, we expect that we will continue to experience ongoing adverse consequences to our business, financial ~~condition.~~condition and results of operation resulting from the conflict for the foreseeable future, including because certain of the economic and other sanctions imposed, or that may be imposed, against Russia may continue for a period of time after any resolution has been reached.

- 3744 -

ITEM 6. EXHIBITS

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


		Incorporated by reference to
~~2.1~~	~~Share Purchase Agreement, dated July 22, 2021, by and among Glatfelter, PHG Tea Leaves, Inc., Ammon Ammon AG and the ultimate owners of Ammon Ammon AG~~.	~~Ex. 2.1 to Form 8-K filed Jul. 23, 2021~~

~~10.1~~	~~Third Amendment to Third Amended and Restated Credit Agreement, dated August 11, 2021, by and among Glatfelter, PNC Bank National Association, and other lenders party thereto.~~	~~Ex. 10.1 to Form 8-K filed Aug. 12, 2021~~

~~10.2~~	Fourth Restatement Agreement, dated September 2, 2021, by and among Glatfelter, PNC Bank, National Association, and the other lenders party thereto (the Fourth Amended and Restated Credit Agreement is appended as Exhibit A to the Fourth Restatement Agreement).	~~Ex. 10.1 to Form 8-K filed Sep. 2, 2021~~

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~~herewith..

31.2	Certification of ~~Samuel L. Hillard,~~Ramesh Shettigar, Senior Vice President, ~~and~~ Chief Financial Officer and Treasurer of Glatfelter, 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, furnished ~~herewith~~herewith..

32.2	Certification of ~~Samuel L. Hillard,~~Ramesh Shettigar, Senior Vice President, ~~and~~ Chief Financial Officer and Treasurer of Glatfelter, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, furnished herewith.
10.1	First Amendment to Fourth Amended and Restated Credit Agreement	Ex. 10.1 to Form 8-K filed May 10, 2022
10.2	Glatfelter Corporation 2022 Long-Term Incentive Plan	Ex. 99.1 to Form S-8 filed May 11, 2022
10.3	Form of Restricted Stock Unit Award Certificate (form effective as of May 5, 2022)
10.4	Form of Performance Share Award Certificate (form effective as of May 5, 2022)
10.5	Form of Restricted Stock Unit Award Certificate for CEO (form effective as of May 5, 2022)
10.6	Form of Performance Share Award Certificate for CEO (form effective as of May 5, 2022)
10.7	Form of Non-Employee Director Restricted Stock Unit Award Certificate (form effective as of May 5, 2022)
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.

101.SCH	Inline XBRL Taxonomy Extension Schema.

101.CAL	Inline XBRL Extension Calculation Linkbase.

101.DEF	Inline XBRL Extension Definition Linkbase.

101.LAB	Inline XBRL Extension Label Linkbase.

101.PRE	Inline XBRL Extension Presentation Linkbase.

104	Cover Page Interactive Data File (formatted as an inline XBRL and contained in Exhibit 101).

- 3845 -

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.


	Glatfelter Corporation (Registrant)

~~November~~August 2, ~~2021~~2022

	By	/s/ David C. Elder
		David C. Elder
		Vice President, Finance and Chief Accounting Officer (Principal Accounting Officer)

- 3946 -


	2021			2020
SOSARS	Shares	Wtd Avg Exercise Price		Shares	Wtd Avg Exercise Price
Outstanding at January 1,	1,082,413	$	20.40	1,291,947	$	20.05
Granted	—	—		—	—
Exercised	—	—		(58,460)	12.85
Canceled / forfeited	—	—		(151,074)	20.25
Outstanding at September 30,	1,082,413	$	20.40	1,082,413	$	20.40


	September 30 2021		December 31 2020
Accrued interest payable	$	2.2	$	1.8


In thousands	December 31, 2020		Acquisitions		Amortization		Translation		September 30, 2021
Goodwill
Composite Fibers	$	84,586	$	—	$	—	$	(4,531)	$	80,055
Airlaid Materials	79,783		36,231		—		(4,450)		111,564
Total	$	164,369	$	36,231	$	—	$	(8,981)	$	191,619

Other Intangible Assets
Composite Fibers
Tradename - non amortizing	$	3,902	$	—	$	—	$	(220)	$	3,682

Technology and related	41,578		—		—		(2,189)		39,389
Accumulated amortization	(18,636)		—		(1,424)		952		(19,108)
Net	22,942		—		(1,424)		(1,237)		20,281

Customer relationships and related	37,535		—		—		(2,051)		35,484
Accumulated amortization	(21,290)		—		(1,892)		1,208		(21,974)
Net	16,245		—		(1,892)		(843)		13,510

Airlaid Materials
Tradename	3,960		—		—		(223)		3,737
Accumulated amortization	(456)		—		(145)		31		(570)
Net	3,504		—		(145)		(192)		3,167

Technology and related	20,053		—		—		(1,099)		18,954
Accumulated amortization	(3,591)		—		(968)		223		(4,336)
Net	16,462		—		(968)		(876)		14,618

Customer relationships and related	26,636		20,000		—		(1,502)		45,134
Accumulated amortization	(7,856)		—		(2,333)		506		(9,683)
net	18,780		20,000		(2,333)		(996)		35,451

Total intangibles	133,664		20,000		—		(7,284)		146,380
Total accumulated amortization	(51,829)		—		(6,762)		2,920		(55,671)
Net intangibles	$	81,835	$	20,000	$	(6,762)	$	(4,364)	$	90,709


In thousands
2021	$	1,142
2022	4,306
2023	2,875
2024	2,286
2025	1,968
Thereafter	40,461


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


Three months ended September 30									Other and
Dollars in thousands	Composite Fibers				Airlaid Materials				Unallocated				Total
	2021		2020		2021		2020		2021		2020		2021		2020
Net sales	$	138,118	$	132,419	$	141,533	$	101,054	$	—	$	—	$	279,651	$	233,473
Cost of products sold	121,028		112,031		121,102		83,699		(836)		(508)		241,294		195,222
Gross profit (loss)	17,090		20,388		20,431		17,355		836		508		38,357		38,251
SG&A	11,278		9,924		5,689		4,438		9,099		10,273		26,066		24,635
Gains on dispositions of plant, equipment and timberlands, net	—		—		—		—		(2,235)		(413)		(2,235)		(413)
Total operating income (loss)	5,812		10,464		14,742		12,917		(6,028)		(9,352)		14,526		14,029
Non-operating expense	—		—		—		—		(2,916)		(3,888)		(2,916)		(3,888)
Income (loss) before income taxes	$	5,812	$	10,464	$	14,742	$	12,917	$	(8,944)	$	(13,240)	$	11,610	$	10,141
Supplementary Data
Net tons sold	32,737		35,009		43,526		34,752		—		—		76,263		69,761
Depreciation, depletion and amortization ($ in thousands)	$	6,904	$	6,755	$	7,763	$	5,674	$	1,043	$	1,273	$	15,710	$	13,702
Capital expenditures	2,585		3,060		2,926		2,791		1,797		2,303		7,308		8,154