UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended Commission file number
December 31, 1994 1-3560

P.H. GLATFELTER COMPANY
(Exact name of registrant as specified in its charter)

PENNSYLVANIA 23-0628360
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
228 South Main Street
SPRING GROVE, PENNSYLVANIA 17362
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, (717) 225-4711
including area code

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

COMMON STOCK AMERICAN STOCK EXCHANGE INC.
(Title of each class) (Name of each exchange on which registered)

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

NONE
(Title of Class)

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 the past 90 days. Yes X No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in the definitive proxy statement
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. / /

The aggregate market value of the Common Stock of the Registrant held by
non-affiliates at March 1, 1995 was $481,549,212.

Common Stock outstanding at March 1, 1995: 44,201,916 Shares

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the following documents are incorporated by
reference in this Report on Form 10-K.

1. Proxy Statement dated March 17, 1995 (Part III)

PART I

Item 1. Business.

The Registrant, a paper manufacturing company, began
operations in Spring Grove, Pennsylvania in 1864 and was incorporated as a
Pennsylvania corporation in 1905. On January 30, 1979 the Registrant acquired
by merger Bergstrom Paper Company ("Bergstrom") with paper mills located in
Wisconsin and Ohio. The Ohio mill was sold on September 10, 1984. On May 7,
1987 the Registrant acquired all of the outstanding capital stock of Ecusta
Corporation ("Ecusta") with a paper mill located in North Carolina and other
operations in North Dakota, Canada and Australia. Ecusta was merged into and
became a division of the Registrant on June 30, 1987.

The Registrant's present papermaking operations are located in
Spring Grove, Pennsylvania, Pisgah Forest, North Carolina and Neenah,
Wisconsin. It manufactures printing papers and tobacco and other specialty
papers. The Registrant's products are used principally for case bound and
quality paperback books, commercial and financial printing, converting and
cigarette manufacturing.

The Registrant sells its products throughout the United States
and in a number of foreign countries. Net export sales in 1992, 1993 and 1994
were $48,830,000, $38,577,000 and $44,821,000, respectively. In 1994, sales of
paper for book publishing and commercial printing generally were made through
wholesale paper merchants, whereas sales of paper to cigarette manufacturers,
financial printers and converters generally were made directly. During 1994,
one of the Registrant's wholesale paper merchants, Central National-Gottesman
Inc. (which buys paper through its division, Lindenmeyr Book Publishing)
acquired substantially all of the assets of Perkins & Squier, another of the
Registrant's wholesale paper merchants; as a result, during 1994, Central
National-Gottesman Inc. accounted for 13% of the Registrant's net sales. In
1993 and 1994, the Registrant did not supply tobacco paper products to the
domestic tobacco operations of Philip Morris Companies, Inc., in accordance
with a decision communicated by Philip Morris to the Registrant on October 29,
1992. Philip Morris had been one of Registrant's six domestic customers for
tobacco paper products. Sales to Philip Morris amounted to 7.5% of the
Registrant's total sales in 1992. The Registrant succeeded in redirecting the
lost Philip Morris product volume to printing paper customers in 1993 and to
printing paper and the Registrant's remaining tobacco paper customers in 1994.
Such sales to printing paper customers in

1993 and 1994 were not as profitable as sales to Philip Morris in 1992. Sales
to the remaining tobacco paper customers in 1993 and 1994 were also less
profitable than in 1992 due to increased competitive pressure and cost-cutting
measures within the tobacco industry. In addition, the cost of pulp in 1994 was
significantly higher than in 1993, and the Registrant was unable to offset this
higher cost through price increases. As a result, the 1993 and 1994 profit
performances of the Registrant's Ecusta Division were sharply below that of
1992. As described in Note 2 to the Consolidated Financial Statements and in
Management's Discussion and Analysis of Financial Condition and Results of
Operations, during the fourth quarter of 1994, the Registrant recognized a
$208,949,000 noncash, pre-tax writedown of impaired assets, $198,189,000 of
which related to the Ecusta Division. The Registrant continues its efforts to
maximize utilization of its Ecusta Division's assets by attempting to direct
sales volume to its more profitable grades and by controlling costs. Even with
these efforts, the 1995 profit performance of the Ecusta Division, excluding the
favorable impact of reduced depreciation expense resulting from the writedown,
is expected to improve slightly over that of 1994.

Set forth below is the amount (in thousands) and percentage of
net sales contributed by each of the Registrant's two classes of similar
products during each of the years ended December 31, 1994, 1993 and 1992.

Year Ended December 31,

1994 1993 1992
Net Sales % Net Sales % Net Sales %
--------- - --------- - --------- -

Printing
Papers $335,882 70% $341,528 72% $348,497 64%

Tobacco
and Other
Specialty
Papers 142,420 30% 131,981 28% 191,560 36%
------- --- ------- --- ------- ---

Total $478,302 100% $473,509 100% $540,057 100%

Printing and specialty papers are manufactured in each of the
Registrant's mills. Tobacco papers are manufactured in the Registrant's Pisgah
Forest mill (Ecusta Division).

The competitiveness of the markets in which the Registrant
sells its products varies. There are numerous

concerns in the United States manufacturing printing papers, and no one company
holds a dominant position. Capacity in the uncoated free-sheet industry, which
includes uncoated printing papers, is not expected to increase significantly for
the next few years. As a result, industry operating rates are expected to
remain strong for the next few years. The Registrant was able to increase
prices on most of its printing paper lines during the second half of 1994.
Additional price increases for printing papers have been or are expected to be
implemented in the first half of 1995. In the tobacco papers business, while
there is only one significant domestic competitor, there are numerous
international competitors. Despite recent events described above, the
Registrant remains a major tobacco papers supplier to the domestic tobacco
products industry. Declining consumption of cigarettes in the United States,
the consumer shift to lower-priced and lower-cost cigarettes and the
availability of lower-priced tobacco paper products from foreign manufacturers
have caused tobacco companies to pressure the Registrant to reduce prices, but
have not, and are not expected to, affect the Registrant's relative competitive
position. Increasing foreign production of tobacco products by U.S. companies
may have an adverse effect on the Registrant's overall competitive position.
Service, product performance and technological advances are important
competitive factors in the Registrant's business. The Registrant believes its
reputation in these areas continues to be excellent.

Backlogs are not significant in the Registrant's business.

The principal raw material used at the Spring Grove mill is
pulpwood. In 1994, the Registrant acquired approximately 78% of its pulpwood
from saw mills and independent logging contractors and 22% from Company-owned
timberlands. Hardwood purchases constituted 53% of the pulpwood acquired and
softwood the balance. Hardwoods are still abundant within a relatively short
distance of the Registrant's Spring Grove mill, but the radius within which the
Registrant has been acquiring hardwoods has increased modestly over prior
years. Softwood is obtained primarily from Maryland, Delaware and Virginia.
In order to protect its sources of pulpwood, the Registrant has actively
promoted conservation and forest management among suppliers and woodland
owners. In addition, its subsidiary, The Glatfelter Pulp Wood Company, has
acquired, and is acquiring, woodlands, particularly softwood growing land, with
the objective of having sufficient softwood growing on its lands to provide a
significant portion of the Spring Grove mill's future softwood requirements.
Wood chips produced from sawmill waste also accounted for a substantial amount
of the Registrant's pulpwood purchases for the Spring Grove mill.

The Neenah mill uses high-grade and low-grade recycled
wastepaper as its principal raw material. The start-up of various wastepaper
deinking facilities has increased the demand in the near-term for the types of
wastepaper used at the Neenah mill. While it is anticipated that there will be
an adequate supply of wastepaper in the future, wastepaper prices increased
significantly in the fourth quarter of 1994 and continued to increase in the
first quarter of 1995 due to the current limited availability of wastepaper.

The major raw materials used at the Ecusta Division mill are
purchased wood pulp and processed flax straw, which is derived from linseed
flax plants. Flax has become a less important raw material as a result of the
loss of business of Philip Morris (referred to above), since it was the
Registrant's major customer for flax-based products. In addition, declining
consumption of cigarettes in the United States and the consumer shift to
lower-priced and lower-cost cigarettes, which are manufactured using
predominately wood pulp-based tobacco papers, has caused further deterioration
in demand for flax-based papers. This has necessitated the purchase of
additional wood pulp to manufacture products to replace the lost flax-based
business. The current supply of flax and wood pulp is sufficient for the
present and anticipated future operations at the Ecusta Division. Due to
sufficient levels of processed flax straw inventory, the Registrant elected not
to contract for the purchase of flax straw for 1994, but has decided to resume
its purchase of Canadian flax straw in 1995.

Wood pulp purchased from others comprised approximately
110,000 short tons or 24% of the total 1994 fiber requirements of the
Registrant. Wood pulp is currently in short supply, but the Registrant has
entered into contracts to ensure sufficient quantities of wood pulp to maintain
full operations. The cost of wood pulp increased significantly during 1994 and
additional cost increases have been implemented and are expected to be
implemented during 1995. The Registrant believes it will be successful in
increasing its prices to more than offset the cost increases.

The Registrant's Spring Grove mill generates all of its steam
requirements and is 100% self-sufficient in electrical energy generation. It
also produces excess electricity which is sold to the local power company under
a long-term co-generation contract, which resulted in 1994 net energy sales of
$5,645,000. Principal fuel sources used by the Registrant's Spring Grove mill
are coal, spent chemicals, bark and wood waste, and oil which in 1994 were used
to produce approximately 58%, 35%, 6% and 1%, respectively, of the total energy
internally generated at the Spring Grove mill.

The Pisgah Forest mill generates all of its steam requirements
and a majority of its electrical requirements (63% in 1994) and purchases
electric power for the remainder. The principal fuel source used at the Pisgah
Forest mill is coal (98.5% in 1994).

The Neenah mill generates all of its steam requirements and a
portion of its electric power requirements (13% in 1994) and purchases the
remainder of its electric power requirements. Gas was used to produce
essentially all of the mill's internally generated energy during 1994.

At December 31, 1994, the Registrant had 2,851 active
full-time employees.

Hourly employees at the Registrant's mills are represented by
different locals of the United Paperworkers International Union, AFL-CIO. A
labor agreement covering approximately 980 employees at the Pisgah Forest mill
expires in October 1996. Under this agreement, wages increased 3% in 1994 and
are to increase 3% in 1995. A five-year labor agreement covering approximately
745 hourly employees in Spring Grove was ratified in 1993 and expires in
January 1998. Under this agreement, wages increased by 3% in 1994 and are to
increase by 3% in each of the three years, 1995 through 1997. In January 1994,
a new five-year labor agreement covering Neenah employees (approximately 335)
was ratified. Under this agreement, which expires in August 1997, wages
increased 3% in 1994 and are to increase 3% in 1995 and 1996.

ENVIRONMENTAL MATTERS

The Registrant is subject to numerous Federal, state and
foreign laws and rules and regulations thereunder with respect to solid waste
disposal and the abatement of air and water pollution and noise. It has been
the Registrant's experience over many years that directives with respect to the
abatement of pollution have periodically been made increasingly stringent.
During the past twenty years or more, the Registrant has taken a number of
measures and spent substantial sums of money both for the installation of
facilities and operating expenses in order to abate air, water and noise
pollution and to alleviate the problem of disposal of solid waste. In spite of
the measures it has already taken, the Registrant anticipates that
environmental regulation of the Registrant's operations will continue to become
more burdensome and that compliance therewith, when and if technologically
feasible, will require additional capital expenditures and operating expenses.
In addition, the Registrant may incur obligations to remove or mitigate any
adverse effects on the environment resulting from its operations, including the
restoration of natural resources, and liability for

personal injury and damage to property, including natural resources. For
further information with respect to such compliance, reference is made to Item 3
of this report.

Compliance with government environmental regulations is a
matter of high priority to the Registrant. In order to meet environmental
requirements, the Registrant has undertaken certain projects, the most
significant of which relates to the modernization of the Spring Grove pulpmill.
The pulpmill modernization project, which began in 1990, was completed during
the fourth quarter of 1994 for a total cost of $171,000,000 (exclusive of
capitalized interest). Of this amount, $20,000,000 was expended through 1991,
$48,000,000 in 1992, $71,000,000 in 1993 and $28,000,000 in 1994. The
remaining $4,000,000 is expected to be paid in 1995. Since capital
expenditures for pollution abatement generally do not increase the productivity
or efficiency of the Registrant's mills, the Registrant's earnings have been
and will be adversely affected to the extent that selling prices have not been
and cannot be increased to offset additional incremental operating costs,
including depreciation, resulting from such capital expenditures and to offset
additional interest expense on the amounts expended for environmental purposes.
Because other paper companies located in the United States are generally
subject to the same environmental regulations, the Registrant does not believe
that its competitive position in the U.S. paper industry will be materially
adversely affected by its capital expenditures for, or operating costs of,
pollution abatement facilities for its present mills, any other environmental
related obligations it will incur or the limitations which environmental
compliance may place on its operations.

The Wisconsin DNR has initiated an investigation of a deposit
("Deposit A") of polychlorinated biphenyls ("PCBs") in an impoundment of the
lower Fox River close to the Registrant's Neenah mill. DNR has alleged that
the Registrant's operations are a source of those PCBs. DNR has not yet made
any claim with respect to that deposit. The State of Wisconsin has notified
another party that the State considers it to be potentially responsible with
the Registrant for Deposit A. The Registrant has agreed to do the work
necessary to upgrade DNR's initial study of the deposit to the usual technical
standards of a remedial investigation/feasibility study, and has submitted that
study. In November 1994, DNR proposed a remedy for Deposit A which DNR
estimates will cost $9.3 million. In March 1995, DNR informed the Registrant
that DNR had increased its estimate of the cost of its proposed remedy to $14.6
million. The Registrant submitted comments opposing the proposed remedy, as
did others. DNR has not selected a remedy.

In June 1994 the United States Fish and Wildlife Service
("FWS") notified the Registrant and four other parties that FWS considers them
to be potentially responsible for natural

resources damages arising from the presence of PCBs in the lower Fox River and
the Bay of Green Bay pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA" or "Superfund"). FWS indicated that it
intended to commence a natural resources damages assessment ("NRDA"). The State
of Wisconsin has declined the United States' invitation to participate in the
NRDA as a co-trustee, and has repeatedly requested that the United States not
undertake the NRDA because the NRDA and natural resource damage claims would
disrupt a program of voluntary cleanup under the auspices of the DNR through a
public/private group known as the Fox River Coalition. The Registrant is a
member of the Fox River Coalition. The Menominee Indian Tribe has, however,
indicated to FWS that it intends to participate in the NRDA as a co-trustee. In
addition, the Menominee Tribe has commenced litigation in the United States
District Court for the Western District of Wisconsin against the State to
establish the tribe's usufructuary rights to natural resources, including the
Fox River; the Registrant is not presently a party to that litigation. The
Registrant is engaged in negotiations with FWS regarding the scope, nature and
propriety of the NRDA and with DNR regarding the scope, nature and propriety of
activities through the Fox River Coalition, and is investigating any potential
claims of the Menominee Tribe.

The amount and timing of future expenditures for environmental
compliance, clean-up, remediation or personal injury or property damage
liability cannot be ascertained with any certainty due, among other things, to
the unknown extent and nature of any contamination, the extent and timing of
any technological advances for pollution control, the remedial actions which
may be required and the number and financial resources of any other responsible
parties. The Registrant continues to evaluate its exposure and the level of
its reserves. The Registrant's current assessment is that such expenditures
are not likely to have a material adverse effect on its financial condition,
results of operation or liquidity, but there can be no assurance that its
reserves will be adequate or that such an effect will not occur at some future
time.

Item 2. Properties.

The Registrant's executive offices are located in Spring
Grove, Pennsylvania, 11 miles southwest of York. The Registrant's paper mills
are located in Spring Grove, Pennsylvania, Pisgah Forest, North Carolina and
Neenah, Wisconsin.

The Spring Grove facilities include seven uncoated paper
machines with a daily capacity ranging from 11 to 273 tons and an aggregate
annual capacity of about 279,000 tons of

finished paper. The machines have been rebuilt and modernized from time to
time. An off-machine coater gives the Registrant a potential annual production
capacity for coated paper of approximately 48,000 tons. Since uncoated paper is
used in producing coated paper, this does not represent an increase in the
Spring Grove mill capacity. The pulpmill has a production capacity of
approximately 585 tons of bleached pulp per day.

The Pisgah Forest facilities include twelve paper machines,
stock preparation equipment and a modified kraft bleached flax pulpmill with
thirteen rotary digesters. The annual light weight paper capacity is
approximately 99,000 tons. Nine paper machines are essentially identical while
the newer three machines have design variations specific for the products
produced. Converting equipment includes winders, calendars, slitters,
perforators and printing presses.

The Neenah facilities, consisting of a paper manufacturing
mill, converting plant and offices, are located at two sites. The Neenah mill
includes three paper machines, with an aggregate annual capacity of
approximately 156,000 tons, a wastepaper processing and warehousing building, a
wastepaper de-inking and bleaching plant, stock preparation equipment, power
plant, water treatment and waste treatment plants, and warehousing space. The
converting plant contains a paper processing area and warehouse space.

The Glatfelter Pulp Wood Company, a subsidiary of the
Registrant, owns and manages approximately 110,000 acres of land, most of which
is timberland.

The Registrant owns substantially all of the properties used
in its papermaking operations except for certain land leased from the City of
Neenah under leases expiring in 2050, on which wastewater treatment and storage
facilities and a parking lot are located. All of the Registrant's properties,
other than those which are leased, are free from any major liens or
encumbrances. The Registrant considers that all of its buildings are in good
structural condition and well maintained and its properties are suitable and
adequate for present operations.

Item 3. Pending Legal Proceedings.

The Registrant does not believe that the environmental matters
discussed below will have a material effect on its business or consolidated
financial position.

On May 16, 1989, the Pennsylvania Environmental Hearing Board
approved and entered an Amended Consent Adjudication between the Registrant and
the Pennsylvania Department of

Environmental Resources ("DER") in connection with the Registrant's permit to
discharge effluent into the West Branch of the Codorus Creek. The Amended
Consent Adjudication establishes limitations on in-stream color, and requires
the Registrant to conduct certain studies and to submit certain reports
regarding internal and external measures to control the discharge of color and
certain other adverse byproducts of chlorine bleaching to the West Branch of the
Codorus Creek.

During 1990 and again in 1991, the Pennsylvania DER proposed
to reissue the Registrant's waste water discharge permit on terms with which
the Registrant does not agree. The Registrant intends to contest those terms
should they be included in the final permit. Among those terms is an
unacceptable term concerning a suspected discharge of 2,3,7,8
tetrachlorodibenzo-p-dioxin ("dioxin"). At the behest of the United States
Environmental Protection Agency ("EPA"), DER has included the Registrant's
Spring Grove mill on the list of dischargers submitted to and approved by EPA
pursuant to Section 304(l) of the Clean Water Act. EPA has approved that list
because EPA suspects that the Spring Grove mill may discharge dioxin in
concentrations of concern. The Registrant believes that the Spring Grove mill
should not be included on the discharger list.

The Registrant has been identified by EPA and the Ohio
Environmental Protection Agency as one of 34 potentially responsible parties
("PRPs") for the clean-up of the Cardington Road Landfill in Montgomery County,
Ohio. EPA has selected a remedy estimated to cost approximately $8.2 million
and, by letter dated February 9, 1994, demanded that the PRPs perform a
remedial design. Appleton Paper, Inc., which purchased the Registrant's West
Carrolton, Ohio mill, was previously identified as a PRP and has demanded that
the Company indemnify it for costs incurred in connection with this landfill,
but did not receive the February 9 letter. On March 25, 1994 the Registrant
received notice that the court in Cardington Road Site Coalition v. Snyder
Properties, Inc. (Case No. C-3-88-632 S.D. Ohio), a Superfund cost recovery
action brought by the PRPs who implemented the remedial investigation, had
authorized the filing of a complaint naming the Registrant as a third-party
defendant in such action, but no complaint has been served.

The Wisconsin DNR has reissued the Registrant's wastewater
discharge permit for the Neenah mill on terms unacceptable to the Registrant.
The Registrant has requested an adjudicatory hearing on the terms of that
permit. The Wisconsin Paper Council is presently engaged in joint negotiation
of some issues common to a number of permits issued at the same time to similar
mills.

Item 4. Submission of Matters to a Vote of Security Holders.

Not Applicable.

Executive Officers of the Registrant.

Executive Officers Office (a) Age
------------------ ------ ---

T. C. Norris Chairman of the Board, 56
President and Chief
Executive Officer and
Director

R. W. Wand Vice President - 55
Administration

J. F. Myers Vice President - 56
Manufacturing Technology

R. P. Newcomer Vice President and 46
Treasurer (b)

R. S. Lawrence Vice President - General 55
Manager, Ecusta Paper
Division (c)

G. H. Glatfelter II Vice President - General 43
Manager, Glatfelter Paper
Division (d)

C. M. Smith Comptroller (e) 36

R. S. Wood Secretary and 37
Assistant Treasurer (f)

Officers are elected to serve at the pleasure of the Board of
Directors. Except in the case of officers elected to fill a new position or a
vacancy occurring at some other date, officers are elected at the annual
meeting of the Board held immediately after the annual meeting of shareholders.

____________________

(a) Unless otherwise indicated, the offices listed have been held for five
or more years.

(b) Mr. Newcomer became Vice President and Treasurer on May 1, 1993.
Prior to May 1, 1993, he was Assistant Comptroller.

(c) Mr. Lawrence became Vice President - General Manager, Ecusta Paper
Division on May 1, 1993. Prior to May 1, 1993, he was Director of
Planning, Acquisitions and Governmental Affairs.

(d) Mr. Glatfelter became Vice President - General Manager, Glatfelter
Paper Division on May 1, 1993. Prior to May 1, 1993, he was General
Manager, Glatfelter Paper Division.

(e) Mr. Smith became Comptroller on May 1, 1993. From December 1990 to
May 1993, he was a Financial Analyst. Prior to December 1990, he was
Comptroller for Flagship Cleaning Services, Inc.

(f) Mr. Wood became Secretary and Assistant Treasurer on September 23,
1992. Prior to September 23, 1992, he was Assistant Secretary and
Assistant Treasurer.

PART II

Item 5. Market for the Registrant's Common Stock and Related Stockholder
Matters.

Common Stock Prices and Dividends Paid Information

The table below shows the high and low prices of the Company's common stock on
the American Stock Exchange (Ticket Symbol "GLT") and the dividends paid per
share for each quarter during the past two years.

1994 1993
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Quarter High Low Dividends High Low Dividends

1st $19 3/8 $15 7/8 $.175 $19 1/8 16 3/4 $.175
2nd 17 3/8 15 1/8 .175 19 1/2 15 3/4 .175
3rd 18 1/4 14 5/8 .175 19 15 3/8 .175
4th 17 1/2 15 1/8 .175 19 1/8 15 1/8 .175

As of December 31, 1994, the Company had 5,070 shareholders of record. A
number of the shareholders of record are nominees.

13
Item 6. Selected Financial Data.

Six-Year Summary of Selected Consolidated Financial Data

Year Ended December 31

1994 1993 1992 1991 1990 1989

Net Sales $ 478,302 $ 473,509 $ 540,057 $ 567,764 $ 625,429 $ 598,777
Income (loss) before
accounting changes (118,251)(a) 20,409(c) 56,544 76,049 88,332 92,864
Income (loss) per
common share before
accounting changes (2.67)(a) .46(c) 1.27 1.67 1.88 1.93
Total assets 650,810 (b) 842,087(d) 648,464 630,115 598,842 550,015
Debt 174,100 150,000 10,100 -- -- 1,100
Cash dividends
declared per
common share $ .70 $ .70 $ .70 $ .60 $ .575 $ .50

(a) After impact of an after tax charge for a writedown of impaired assets
(unusual items) of $127,981,000 or $2.89 per share.

(b) After impact of writedown of impaired assets (unusual items) of
$208,949,000.

(c) After impact of an after tax charge for unusual items of $8,430,000 or
$.19 per share and the effect of an increased federal corporate income
tax rate of $3,587,000 or $.08 per share.

(d) Includes an increase of $61,062,000 resulting from the adoption of
Statement of Financial Accounting Standards No. 109.

14
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
P. H. GLATFELTER COMPANY AND SUBSIDIARIES

OVERVIEW

The Company classifies its sales into two product groups: 1) printing papers;
and 2) tobacco and other specialty papers. The Spring Grove, Pennsylvania and
Neenah, Wisconsin mills produce printing and other specialty papers. The Pisgah
Forest mill (hereinafter referred to as the Ecusta Division or "Ecusta")
produces printing, tobacco and other specialty papers.

Most of the Company's printing paper sales are directed at the uncoated
free-sheet segment of the industry. Industry operating rates improved
significantly during the second half of 1994 and are expected to remain strong
during 1995. Industry uncoated free-sheet capacity is not expected to increase
significantly for the next few years. Profit from operations at the Spring
Grove and Neenah mills is expected to improve during 1995 as a result of
increased selling prices for printing papers and other specialty papers, offset
somewhat by increased costs, particularly for wastepaper, pulp and
depreciation.

The trend of declining domestic tobacco consumption continued in 1994, with no
change in the trend expected. Competition for domestic and foreign tobacco
paper sales is also expected to remain intense in the foreseeable future.
Profit from operations before depreciation at Ecusta is expected to improve
slightly in 1995 compared to 1994. The Company believes it can increase
Ecusta's printing paper and tobacco and other specialty product selling prices
sufficiently to offset anticipated increased pulp costs. Depreciation costs
will decrease significantly due to the writedown of Ecusta's net assets
discussed below.

1994 COMPARED TO 1993

Overall demand for the Company's products increased significantly in the second
half of 1994, particularly in the fourth quarter, which led to several price
increases for certain printing paper grades. Net sales in 1994 increased
$4,793,000 over 1993. Net sales in the fourth quarter of 1994 were $19,539,000
higher than in the fourth quarter of 1993.

Printing paper sales decreased $5,646,000, or 1.7% in 1994 compared to 1993.
The annual average net printing paper price decreased 1.3% in 1994 from 1993
due to the supply of uncoated free-sheet papers exceeding demand during the
first half of 1994. Significant increases in demand, particularly in the fourth
quarter of 1994, led to price increases for certain printing paper grades. The
average net selling price in the fourth quarter of 1994 was 8.6% higher than in
the third quarter of 1994 and 4.0% higher than in the fourth quarter of 1993.

Net tobacco and other specialty paper sales increased $10,439,000, or 7.9%, in
1994 compared to 1993. Other specialty paper sales increased 18.9% in 1994 over
1993, with a 16.4% increase in sales volume and a 2.2% increase in average net
selling price. Increased competition and cost-cutting measures taken by Ecusta
tobacco paper customers put severe pressure on tobacco paper prices.
Aggressive pricing by the Company resulted in a 16.3% increase in tobacco paper
sales volume in 1994 over 1993, primarily to export customers, but a 9.7%
decrease in average net selling price.

Despite the increase in sales, operating profits slipped significantly in 1994
from 1993. Profit from operations, before unusual items, accounting changes,
interest income and expense and taxes was $21,541,000 compared to $48,563,000
in 1993, a 55.6% decrease. A decrease in average net selling price and
increases in the cost of products sold caused a decrease in gross margin from
15.7% in 1993 to 8.5% in 1994. The cost of products sold increased as a result
of higher costs for market pulp and wastepaper and higher depreciation costs,
primarily as a result of the completion of the Spring Grove pulpmill
modernization project. The Company's gross margin was also negatively impacted
by unplanned mill downtime at the Spring Grove and Neenah mills during the
first quarter of 1994 and above normal downtime at the Spring Grove mill during
the third quarter of 1994 due to the complex integration of equipment required
by the pulpmill modernization project.

Selling, general and administrative expenses were $4,098,000 lower in 1994 than
in 1993. This expected decrease occurred primarily in salaries, wages and other
compensation expenses resulting from the Company's 1993 restructuring efforts.
Profit sharing and incentive expenses were also lower in 1994 than in 1993 due
to lower earnings.

Interest on debt in 1994 increased $3,540,000 over 1993. This increase is due
primarily to a full year of interest expense in 1994 related to the Company's
March 1993 issuance of $150,000,000 principal amount of its 5 7/8% Notes and an
increase in interest expense related to short-term borrowings in 1994. In
addition, during the third quarter of 1994, the Company ceased capitalizing
interest on expenditures relating to the pulpmill modernization project,
resulting in a significant increase in net interest expense.

Results by Mill

The Company's Spring Grove mill showed a decline in its profits from operations
of $5,856,000 in 1994 compared to 1993. Net sales were relatively flat in 1994
compared to 1993 as an overall improvement in average net selling price offset
a slight decline in sales volume. The primary reason for the decline in profits
from operations was an increase in depreciation expense resulting from the
completion of the Spring Grove pulpmill modernization project.

Profit from operations at the Neenah mill showed a decline of $6,322,000 in
1994 compared to 1993. Net sales increased $833,000 in 1994 as a 3.8% increase
in volume more than offset a 2.8% decrease in average net selling price.
Neenah's profit from operations was negatively impacted by an increase in the
cost of wastepaper, particularly in the fourth quarter of 1994. Wastepaper
prices continued to increase in January 1995.

Profit from operations at Ecusta declined $14,844,000 in 1994 compared to 1993
resulting in an operating loss for the year.

15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
P. H. GLATFELTER COMPANY AND SUBSIDIARIES

Net sales increased $3,737,000 in 1994 as an 8.0% increase in sales volume was
offset somewhat by a 5.4% decrease in average net selling price. Ecusta's
profit from operations was most negatively impacted by a sharp increase in the
cost of purchased pulp and its inability to pass the increased costs on to its
customers, particularly tobacco paper customers, due to severe competitive
pressures.

1994--UNUSUAL CHARGES

During 1994 the Company closely monitored the Ecusta Division and continued its
efforts to maximize utilization of Ecusta's assets by attempting to direct
sales volume to its more profitable grades and by controlling costs. Despite
these efforts, Ecusta experienced a 1994 operating loss before an unfavorable
LIFO inventory charge, unusual items, interest expense and taxes of $4,921,000.
Ecusta continued to be negatively impacted by the continuing trend of declining
domestic tobacco consumption, a trend which is expected to continue. Increased
competition for foreign tobacco paper sales has also adversely impacted
Ecusta's profitability.

Based on 1994 Ecusta operating results, and indications that market conditions
were unlikely to improve significantly in the near future, the Company
determined that its efforts to return Ecusta to an acceptable level of
profitability would not be successful. As a result, the Company decided to
evaluate other strategic alternatives. As part of its consideration of such
alternatives, the Company solicited offers to buy the Ecusta Division during
the fourth quarter of 1994. In January 1995, the Company rejected all offers
which it received to buy the Ecusta Division because the offers were less than
the Company's valuation of the net assets. Nevertheless, as a result of these
offers, as well as the Company's revised valuation of the net assets of Ecusta,
the Company concluded that the fair value of the net assets was far less than
the book value. Accordingly, during the fourth quarter of 1994, the net assets
of Ecusta were written down to fair value, resulting in a $198,189,000 charge
to pre-tax earnings. This writedown had no cash impact on the Company.

The Company concluded that asset impairment recognition was required as the
revised projected undiscounted future cash flows of the Ecusta Division were
less than the carrying value. In developing the revised projections, the
Company considered 1994 actual results and the Company's conclusions concerning
future market conditions and the resulting impact on prices. To determine the
fair value of the Ecusta Division net assets, the Company projected the present
value of future cash flows using a 13% discount rate. The resulting fair value,
which exceeded the offers received, was used to determine the amount of the
writedown. The Company plans to continue to operate the Ecusta Division and
enhance its profitability and cash generation through additional cost reduction
efforts. The Company believes Ecusta will continue to generate cash in the
future. The writedown of Ecusta's net assets will reduce depreciation expense
in 1995 by approximately $14,000,000 (or an estimated $.19 per common share)
and in subsequent periods by declining amounts.

During the fourth quarter of 1994, the Company also identified impaired
property and equipment at its Spring Grove and Neenah mills, resulting in a
pre-tax charge of $10,760,000. This writedown primarily relates to solid waste
disposal assets, specifically, a sludge combustor at the Neenah mill and an
unused landfill at the Spring Grove mill. Both of these assets would require
significant additional expenditures to receive the required operating permits
from the appropriate environmental agencies. During the fourth quarter of 1994,
the Company identified more economical means, acceptable to such agencies, by
which to dispose of its solid waste at these locations and concluded that the
significant additional expenditures necessary to make the assets operational
were not prudent, resulting in unusable assets.

1993 COMPARED TO 1992

Net sales in 1993 decreased $66,548,000 from 1992, with lower tobacco sales
accounting for 94% of this decrease. On October 29, 1992, Philip Morris
Companies, Inc. informed the Company that, effective January 1, 1993, it would
cease to make purchases from the Company for its domestic tobacco operations.
Sales to this customer in 1992 were 7.5% of total sales for the year. The
Company's dollar amount of sales of tobacco paper products to remaining
domestic and foreign tobacco product manufacturers declined in 1993 as a result
of sharply lower unit prices due to increased competition. Increased
competitive pressure and cost-cutting measures taken by the remaining domestic
and foreign customers resulted in lower unit prices and lower revenues.

During 1993, the Company succeeded in redirecting the lost Philip Morris
product volume to printing paper customers. These sales were not as profitable
as sales to Philip Morris were in 1992. In addition, due to increased
competitive pressure and cost-cutting measures within the tobacco industry,
sales to remaining tobacco customers in 1993 were less profitable than in 1992.
As a result, the 1993 profit performance of Ecusta was sharply below 1992.

Profit from operations, before restructuring charges, accounting changes,
interest income and expense and taxes was $48,563,000 in 1993 compared to
$90,312,000 in 1992, a decrease of 46.2%.

Selling, administrative and general expenses decreased $3,728,000 in 1993,
$3,640,000 of which was the result of lower management incentive bonus and
profit sharing expenses.

Net interest income increased by $2,414,000 in 1993 due to increased cash
available for investment as a result of the $150,000,000 debt issuance.
Interest on debt increased by $2,824,000, net of an increase in capitalized
interest of $4,050,000.

16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
P. H. GLATFELTER COMPANY AND SUBSIDIARIES

Accounting for Postemployment Benefits" ("SFAS No. 112"). The combined 1993 net
of tax charge due to the adoption of these standards was approximately $4.2
million, or $.09 per common share. Note 1(i) further describes the expected
effects of implementing these Standards.

During 1993, the Company incurred net unusual charges of $13,229,000, or $.19
per common share, including rightsizing and restructuring costs in 1993 of
$16,363,000, partially offset by a gain of $1,492,000 on the disposal of
Ecusta's airplane and a credit of $1,642,000 resulting from the updating of
estimates relating to SFAS No. 106, subsequent to its adoption on January 1,
1993. The charges primarily include provisions for the accelerated pension,
stock awards and postretirement benefit costs of early retirements and other
terminations in the second quarter of 1993 and other one-time net costs
relating to the rightsizing and restructuring of the Company's operations. The
rightsizing and restructuring, which was completed during 1993, resulted in the
early retirement of 156 employees and a reduction in annual salaries, wages and
benefits of approximately $7,500,000.

Results by Mill

The Company's Ecusta Division showed a decline in profits from operations of
$29,018,000 in 1993 compared to 1992. Net sales decreased $47,707,000 for the
reasons noted above.

Profit from operations at the Neenah mill showed a decline of $6,997,000 in
1993 compared to 1992. Net sales declined $8,651,000 in 1993 due primarily to
lower sales volume.

The Spring Grove mill had a decrease in its profits from operations of
$5,734,000 in 1993 compared to 1992. Net sales were $10,190,000 lower in 1993.
The Spring Grove mill had a 4% decrease in average net selling price, primarily
as a result of mix.

FINANCIAL CONDITION

Liquidity

During 1994, the Company's cash, cash equivalents and marketable securities
decreased by $38,122,000. In addition, the Company incurred $24,100,000 in
short-term bank debt. This decrease in cash, cash equivalents and marketable
securities and increase in short-term debt were primarily due to the funding of
capital-related projects of $81,639,000 and the payment of $30,847,000 in
dividends, which were partially offset by $46,315,000 of cash provided by
operating activities.

The Company expects to meet all its near-term and long-term cash needs from a
combination of internally generated funds, cash, cash equivalents, marketable
securities and existing bank lines of credit.

The Company's interest rate risk is limited to its level of variable rate
borrowings. In March 1993, the Company issued $150,000,000 principal amount of
its 5 7/8% Notes and immediately entered into an interest rate swap agreement
having a total notational principal amount of $50,000,000. Under the agreement,
the Company receives a fixed rate of 5 7/8% and pays a floating rate (London
Interbank Offered Rate (LIBOR) plus sixty basis points), as determined at six
month intervals. The floating rate is 5.9125% for the six month period ending
March 1, 1995. Although the Company can pay to terminate the swap agreement at
any time, the Company intends to hold the swap agreement until its March 1,
1998 maturity. The cost to the Company to terminate the agreement fluctuates
with prevailing market interest rates. As of December 31, 1994, the cost to
terminate the swap agreement was approximately $4,000,000. The Company also
has variable interest rate short-term bank debt which is expected to decrease
during 1995.

Capital Resources

Capital spending of $81,639,000 during 1994 continued to be high due to the
completion of the pulpmill modernization project and the installation of a
turbine generator at the Spring Grove mill. The pulpmill modernization project,
which began in 1990, was completed during the fourth quarter of 1994 for a
total cost of $171,000,000 (exclusive of capitalized interest). Of this amount,
$28,000,000 was expended in 1994. The turbine generator was installed during
the fourth quarter of 1994 for a total cost of $19,000,000, $14,400,000 of
which was expended during 1994. Although these projects are complete,
expenditures related to these projects of approximately $7,500,000 are expected
to be paid in 1995. Capital spending in 1995 is expected to be approximately
$40,000,000.

ENVIRONMENTAL MATTERS

The Company is subject to loss contingencies resulting from regulation by
various Federal, state, local and foreign governmental authorities with respect
to the environmental impact of air and water emissions and noise from its mills
as well as its disposal of solid waste generated by its operations. In order to
comply with environmental laws and regulations, the Company has incurred
substantial capital and operating expenditures over the past several years. The
Company anticipates that environmental regulation of the Company's operations
will continue to become more burdensome and that capital and operating
expenditures will continue, and perhaps increase, in the future. In addition,
the Company may incur obligations to remove or mitigate any adverse effects on
the environment resulting from its operations, including the restoration of
natural resources, and liability for personal injury and damage to property,
including natural resources. Management's current assessment, after
consultation with legal counsel, is that such expenditures are not likely to
have a material adverse effect on the Company's financial condition, results of
operations or liquidity, but there can be no assurance that its reserves will
be adequate or that such an effect will not occur at some future time.

EFFECTS OF CHANGING PRICES

The moderate levels of inflation during recent years have not had a material
effect on the Company's net sales, revenues or income from operations. Although
the replacement cost of assets increases during inflationary periods, earnings
and cash flow can be maintained through an increase in selling prices.

17
Item 8. Financial Statements and Supplementary Data.

CONSOLIDATED STATEMENTS OF
INCOME AND RETAINED EARNINGS
P. H. GLATFELTER COMPANY AND SUBSIDIARIES

FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992

(in thousands except per share amounts) 1994 1993 1992
------------------------------------------------------------------------------------------------------------------------------

NET SALES $ 478,302 $ 473,509 $ 540,057
OTHER INCOME:
Interest on investments and other--net 998 2,873 459
Energy sales--net 5,645 5,602 5,870
Gain from property dispositions, etc.--net 2,558 21 1,453
-------------- -------------- --------------
Total 487,503 482,005 547,839
-------------- -------------- --------------
COSTS AND EXPENSES:
Cost of products sold 437,745 399,252 422,033
Selling, administrative and general expenses 27,219 31,317 35,045
Interest on debt (Notes 1(h) and 13) 6,364 2,824 --
-------------- -------------- --------------
471,328 433,393 457,078
Unusual items (Notes 2 and 3) 208,949 13,229 --
-------------- -------------- --------------
Total costs and expenses 680,277 446,622 457,078
-------------- -------------- --------------
INCOME (LOSS) BEFORE INCOME TAXES AND
ACCOUNTING CHANGES (192,774) 35,383 90,761
-------------- -------------- --------------
INCOME TAX PROVISION (CREDIT) (Note 9):
Current 526 8,167 24,536
Deferred (75,049) 3,220 9,681
Impact of federal tax rate change -- 3,587 --
-------------- -------------- --------------
Total (74,523) 14,974 34,217
-------------- -------------- --------------
INCOME (LOSS) BEFORE ACCOUNTING CHANGES (118,251) 20,409 56,544
ACCOUNTING CHANGES (Note 1(i)) -- (4,193) --
-------------- -------------- --------------
NET INCOME (LOSS) (118,251) 16,216 56,544
RETAINED EARNINGS AT BEGINNING OF YEAR 545,770 560,388 534,755
-------------- -------------- --------------
Total 427,519 576,604 591,299
CASH DIVIDENDS DECLARED:
Common stock (per share: 1994, $.70; 1993, $.70;
1992, $.70) and preferred stock (Note 4) 30,884 30,834 30,911
-------------- -------------- --------------
RETAINED EARNINGS AT END OF YEAR $ 396,635 $ 545,770 $ 560,388
============== ============== ==============
INCOME (LOSS) PER COMMON SHARE (Notes 1(b) and 4):
Income (loss) before accounting changes $ (2.67) $ .46 $ 1.27
Impact of accounting changes -- $ (.09) --
-------------- -------------- --------------
Net income (loss) $ (2.67) $ .37 $ 1.27
============== ============== ==============

See notes to consolidated financial statements.

18
CONSOLIDATED BALANCE SHEETS
P. H. GLATFELTER COMPANY AND SUBSIDIARIES

DECEMBER 31, 1994 AND 1993

(in thousands except per share amounts) 1994 1993
------------------------------------------------------------------------------------------------------------------------------

ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Note 1(c)) $ 3,133 $ 19,182
Marketable securities (Notes 1(c) and 1(f)) 111 22,184
Accounts receivable (less allowance for doubtful accounts:
1994, $1,850,000; 1993, $1,838,000) 48,912 34,340
Inventories (Note 1(d)) 81,831 98,930
Prepaid expenses 1,382 1,305
-------------- --------------
Total current assets 135,369 175,941
-------------- --------------
PLANT, EQUIPMENT, AND TIMBERLANDS--NET (Notes 1(e), 1(h), 2 and 10) 460,420 621,113
-------------- --------------
OTHER ASSETS (Notes 1(f) and 7) 55,021 45,033
-------------- --------------
Total $ 650,810 $ 842,087
============== ==============

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank borrowings (Note 13) $ 24,100 $ --
Accounts payable 44,309 39,935
Dividends payable 7,735 7,698
Federal, state and local taxes 2,489 4,872
Accrued compensation, other expenses
and deferred income taxes 25,639 28,972
-------------- --------------
Total current liabilities 104,272 81,477
-------------- --------------
LONG-TERM DEBT (Note 13) 150,000 150,000
DEFERRED INCOME TAXES (Notes 1(g), 1(i) and 9) 60,313 130,509
OTHER LONG-TERM LIABILITIES (Notes 6 and 8) 40,491 38,701
COMMITMENTS AND CONTINGENCIES (Notes 10 and 11)
SHAREHOLDERS' EQUITY (Notes 4, 5 and 6):
Capital Stock:
Common, $.01 par value; authorized--120,000,000
shares; issued (including shares in treasury:
1994, 10,162,151; 1993, 10,374,652)--54,361,980 shares 544 544
Capital in excess of par value 39,838 39,323
Retained earnings 396,635 545,770
-------------- --------------
Total 437,017 585,637
Less cost of common stock in treasury (141,283) (144,237)
-------------- --------------
Shareholders' equity 295,734 441,400
-------------- --------------
Total $ 650,810 $ 842,087
============== ==============

See notes to consolidated financial statements.

19
CONSOLIDATED STATEMENTS OF CASH FLOWS
P. H. GLATFELTER COMPANY AND SUBSIDIARIES

FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992

(in thousands except per share amounts) 1994 1993 1992
------------------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (118,251) $ 16,216 $ 56,544
Unusual item--writedown of impaired assets 208,949 -- --
Accounting changes -- 4,193 --
Items included in net income not using (providing) cash:
Depreciation and depletion 42,906 38,132 31,893
Expense related to employee stock purchase plans 814 855 879
Gain on disposition of fixed assets (345) (541) (172)
Changes in assets and liabilities:
Accounts receivable (14,572) 4,200 4,237
Inventories 11,459 (10,507) 769
Other assets and prepaid expenses (11,116) (10,919) (8,074)
Accounts payable, accrued compensation, other expenses,
deferred income taxes and other long-term liabilities (950) 7,057 (8,535)
Federal, state and local taxes (2,383) (3,403) (5,751)
Deferred income taxes--noncurrent (70,196) 97 9,682
--------------- -------------- --------------
Net cash provided by operating activities 46,315 45,380 81,472
--------------- -------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale (purchase) of marketable securities--net 22,073 (27,184) --
Proceeds from disposal of fixed assets 1,569 1,841 1,213
Additions to plant, equipment and timberlands (83,499) (112,820) (90,316)
Increase in liabilities related to fixed asset acquisitions 1,860 1,705 3,294
--------------- -------------- --------------
Net cash used in investing activities (57,997) (136,458) (85,809)
--------------- -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of long-term debt issuance -- 150,000 --
Borrowing (repayment) of short-term debt--net 24,100 (10,100) 10,100
Dividends paid (30,847) (30,847) (29,896)
Purchases of common and preferred stock -- (4,281) (19,683)
Employees' contribution--common stock issued
under employee stock purchase plans 2,380 2,395 2,149
--------------- -------------- --------------
Net cash provided by (used in) financing activities (4,367) 107,167 (37,330)
--------------- -------------- --------------
Net increase (decrease) in cash and cash equivalents (16,049) 16,089 (41,667)
CASH AND CASH EQUIVALENTS:
At beginning of year 19,182 3,093 44,760
--------------- -------------- --------------
At end of year $ 3,133 $ 19,182 $ 3,093
=============== ============== ==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash Paid For:
Interest (net of amount capitalized) $ 5,832 $ 155 $ --
Income taxes 2,899 11,716 30,354
=============== ============== ==============

See notes to consolidated financial statements.

20
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
P. H. GLATFELTER COMPANY AND SUBSIDIARIES

FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Principles of Consolidation

The accounts of the Company, and its wholly-owned, significant subsidiaries,
are included in the consolidated financial statements. All intercompany
transactions have been eliminated. Certain reclassifications have been made of
previously reported amounts in order to conform with classifications used in
the current year.

(b) Earnings per Share

Net income (loss) per share of common stock is computed on the basis of the
weighted average number of shares of common stock and common stock equivalents
(Note 6) outstanding during each year.

The 1994 net loss per share of common stock of $2.67, as presented in the
Consolidated Statements of Income and Retained Earnings, reflects the negative
impact of the writedown of impaired assets (Note 2). The 1993 net income per
share of common stock of $.37, as presented in the Consolidated Statements of
Income and Retained Earnings, reflects the negative impact of adopting certain
Statements of Financial Accounting Standards (Note 1(i)), rightsizing and
restructuring charges (Note 3) and the increase in the federal corporate income
tax rate from 34% to 35% (Note 9). The 1994 and 1993 net income per share of
common stock, exclusive of these items, would have been $.22 and $.73,
respectively. A reconciliation of these amounts follows:

1994 1993
-------- ------

Net income (loss) per share of common
stock reported $ (2.67) $ .37
After tax impact of:
Writedown of impaired assets 2.89 --
Rightsizing and restructuring charges -- .19
Accounting changes -- .09
Increase in federal corporate
income tax rate -- .08
-------- ------
Net income per share of common
stock exclusive of the above items $ .22 $ .73
======== ======

The Company considers all highly liquid financial instruments with effective
maturities at date of purchase of three months or less to be cash equivalents.
Highly liquid financial instruments with maturities in excess of three months
but which the Company considers available for sale are classified as marketable
securities on the Company's Consolidated Balance Sheets.

(d) Inventories

Inventories are stated at the lower of cost or market. Raw materials and
in-process and finished inventories are valued using the last-in, first-out
(LIFO) method, and the supplies inventory is valued principally using the
average cost method. Inventories at December 31 are summarized as follows:

1994 1993
---------- ----------
(in thousands)

Raw materials $ 28,894 $ 37,340
In-process and finished 24,202 33,503
Supplies 28,735 28,087
---------- ----------
Total $ 81,831 $ 98,930
========== ==========

If the Company had valued all inventories using the average cost method,
inventories would have been $8,488,000 higher than reported at December 31,
1994, and $2,141,000 lower than reported at December 31, 1993. During 1994, the
Company liquidated certain LIFO inventories. The effect of the liquidation did
not have a significant impact on net income. If the Company had valued all
inventories using the average cost method, net income in 1993 and 1992 would
not have been significantly different than that reported.

At December 31, 1994, the value of the above inventories exceeded inventories
for income tax purposes by approximately $24,200,000.

As described in Note 2, during the fourth quarter of 1994, the Company
recognized a noncash, pre-tax writedown on impaired assets including a charge
for a reduction in inventory of $6,406,000.

(e) Plant, Equipment, and Timberlands

Depreciation is computed for financial reporting on the straight-line method
over the estimated useful lives of the respective assets, and for income taxes
principally on accelerated methods over lives established by statute or
Treasury Department procedures. Provision is made for deferred income taxes
applicable to this difference.

Maintenance and repairs are charged to income and major renewals and
betterments are capitalized. At the time property is retired or sold, the cost
and related reserve are eliminated and any resultant gain or loss is included
in income.

Depletion of the cost of timber is computed on a unit rate of usage by growing
area based on estimated quantities of recoverable material.

As described in Note 2, during the fourth quarter of 1994, the Company
recognized a noncash, pre-tax writedown on impaired assets including a charge
to reduce net property, plant and timberlands by $200,201,000.

21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
P. H. GLATFELTER COMPANY AND SUBSIDIARIES

Property, plant and equipment accounts are summarized as follows:

1994 1993
------------ ------------
(in thousands)

Land and buildings $ 109,253 $ 94,330
Machinery and equipment 838,416 626,322
Other 26,855 26,234
Less accumulated depreciation
and impairment (535,074) (296,925)
------------- -------------
Total 439,450 449,961
Construction in progress 4,207 154,545
Timberlands, less depletion 16,763 16,607
------------- -------------
Plant, equipment, and
timberlands--net $ 460,420 $ 621,113
============= =============

(f) Investments in Debt and Equity Securities

Effective January 1, 1994, the Company changed its method of accounting for
investments in debt and equity securities to conform to Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" ("SFAS No. 115"). The adoption of this Standard did not
have a material impact on the Company's Consolidated Balance Sheets or
Consolidated Statements of Income and Retained Earnings.

Long-term investments in debt securities classified as held-to-maturity are
included in Other Assets on the Consolidated Balance Sheets. The investments
consist of approximately $16,000,000 and $13,500,000 in U. S. Treasury and
government obligations at December 31, 1994 and 1993, respectively. Investments
in debt and equity securities of $111,000 and $22,184,000, primarily consisting
of U. S. Treasury and government obligations, classified as available-for-sale,
are reported as marketable securities on the Consolidated Balance Sheets at
December 31, 1994 and 1993, respectively. The estimated fair value of the
investments in debt and equity securities approximated the amortized cost and
therefore, there were no significant unrealized holding gains or losses as of
December 31, 1994 and 1993.

The principal amounts of the debt securities are due ratably over a 20-year
period.

(g) Income Tax Accounting

Effective January 1, 1993, the Company changed its policy of accounting for
income taxes to conform to Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ("SFAS No. 109") (Notes 1(i) and 9). The Company
previously followed Accounting Principles Board Opinion No. 11, "Accounting for
Income Taxes". Deferred taxes are provided for differences between amounts
shown for financial reporting purposes and those included with tax return
filings that will reverse in future periods.

(h) Capitalized Interest

The Company capitalizes interest incurred in connection with qualified
additions to property. The Company capitalized $3,066,000, $4,138,000 and
$88,000 of interest in 1994, 1993 and 1992, respectively.

(i) Accounting Changes for Statements of Financial Accounting Standards

Effective January 1, 1993, the Company adopted the provisions of Statements of
Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions" ("SFAS No. 106"), No. 112,
"Employers' Accounting for Postemployment Benefits" ("SFAS No. 112"), and No.
109, "Accounting for Income Taxes" ("SFAS No. 109"). The cumulative effect of
the accounting changes, net of tax charges (credits) due to the adoption of
these Standards in 1993, was as follows:

SFAS No. 106 $ 12,850,000
SFAS No. 112 1,967,000
SFAS No. 109 (10,624,000)
----------------
$ 4,193,000
================

SFAS No. 106 requires recognition of the cost of retiree health and insurance
benefits during an employee's active service. The cumulative effect, as of
January 1, 1993, of the adoption of SFAS No. 106 was a one-time charge for
postretirement health care costs of $20,900,000 which, after deferred income
tax benefits of $8,050,000, resulted in a 1993 first quarter net charge of
$12,850,000.

The Company had previously recognized the cost of postretirement benefits in
the period benefits were paid. The effect of this change in accounting for the
years ended December 31, 1994 and December 31, 1993, was an additional pre-tax
expense of approximately $300,000 and $770,000, respectively. The
postretirement expense for the year ended December 31, 1992 was approximately
$1,320,000. The pro forma effect on operations of this change for the year
ended December 31, 1992 would have been an additional pre-tax expense of
approximately $855,000.

SFAS No. 112 requires employers to recognize the obligation to provide
postemployment benefits under certain conditions. Such benefits, relating
primarily to disability-related benefits, were not previously recognized by the
Company until paid. The cumulative effect as of January 1, 1993 of the adoption
of SFAS No. 112 was a provision for accrued postemployment benefits of
$3,201,000 which, after deferred income tax benefits of $1,234,000, resulted in
a 1993 first quarter net charge of $1,967,000. The pro forma effect on
operations of this change for the year ended December 31, 1992 would not have
been significant.

SFAS No. 109 required a remeasurement of the Company's Ecusta Division
acquisition which resulted in an increase in the fair value of the acquired
assets and the establishment of a deferred income tax liability for the
difference between the book and tax values of such assets. The adoption of SFAS
No. 109 also resulted in a reversal of deferred income taxes provided during
years when the effective income tax rates

22
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
P. H. GLATFELTER COMPANY AND SUBSIDIARIES

were higher than those currently in effect. The cumulative effect of these
changes recorded in 1993 was an increase in plant and equipment of
approximately $61,062,000; an increase in deferred income taxes of
approximately $50,438,000; and a credit to operations as a cumulative effect of
the change in method of accounting for income taxes of approximately
$10,624,000. The pro forma effect on operations of this change for the year
ended December 31, 1992 would not have been significant.

(j) Fair Market Value of Financial Instruments

In 1993, the Company adopted Statement of Financial Accounting Standards No.
107, "Disclosures About Fair Value of Financial Instruments" ("SFAS No. 107").
This Standard requires that fair values be disclosed for most of the Company's
financial instruments. The amounts reported in the Consolidated Balance Sheets
for cash and cash equivalents, marketable securities, trade receivables and
other assets approximate fair value. The amount reported in the Consolidated
Balance Sheets for long-term debt is $150,000,000. Due to the increase in
interest rates since the date of issuance, the fair value of the long-term debt
at December 31, 1994 was approximately $139,000,000.

(k) Asset Impairment

Assets are reviewed for impairment on an annual basis in conjunction with the
preparation of the annual budget or when a specific event indicates that the
carrying value of an asset may not be recoverable. Recoverability is assessed
based on estimates of future cash flows expected to result from the use and
eventual disposition of the asset. If the sum of expected undiscounted cash
flows is less than the carrying value of the asset, an impairment loss is
recognized. The impairment loss is measured as the amount by which the carrying
amount of the asset exceeds its fair value.

2. WRITEDOWN OF IMPAIRED ASSETS (UNUSUAL ITEMS)

During the fourth quarter of 1994, the Company recognized a noncash, pre-tax
writedown of impaired assets of $208,949,000. Of this amount, $198,189,000
relates to the pre-tax writedown of the Company's Ecusta Division to its fair
value primarily due to writedowns related to property, plant and equipment of
$189,441,000 and inventory of $6,406,000.

During 1994, the Company closely monitored the Ecusta Division and continued
its efforts to maximize utilization of the Ecusta Division's assets by
attempting to direct sales volume to its more profitable grades and by
controlling costs. Despite these efforts, the Ecusta Division experienced a
1994 operating loss of $4,921,000 before an unfavorable LIFO inventory charge,
unusual items, interest expense and taxes.

Based on 1994 Ecusta Division operating results, and indications that market
conditions were unlikely to improve significantly in the near future, the
Company determined that its efforts to return the Ecusta Division to an
acceptable level of profitability would not be successful. As a result, the
Company decided to evaluate other strategic alternatives. As part of its
consideration of such alternatives, the Company solicited offers to buy the
Ecusta Division during the fourth quarter of 1994. In January 1995, the Company
rejected all offers which it received to buy the Ecusta Division because the
offers were less than the Company's valuation of the net assets.

The Company concluded that asset impairment recognition was required as the
revised projected undiscounted future cash flows of the Ecusta Division were
less than its carrying value. In developing the revised projections, the
Company considered 1994 actual results and the Company's conclusions concerning
future market conditions and the resulting impact on prices. To determine the
fair value of the Ecusta Division net assets, the Company projected the present
value of future cash flows using a 13% discount rate. The resulting fair value,
which exceeded the offers received, was used to determine the amount of the
writedown. The Company plans to continue to operate the Ecusta Division and
enhance its profitability and cash generation through additional cost reduction
efforts.

During the fourth quarter of 1994, the Company also identified impaired
property and equipment at its Spring Grove, Pennsylvania and Neenah, Wisconsin
mills, resulting in a pre-tax charge of $10,760,000. This writedown primarily
relates to solid waste disposal assets, specifically, a sludge combustor at the
Neenah mill and an unused landfill at the Spring Grove mill. Both of these
assets would require significant additional expenditures to receive the
required operating permits from the appropriate environmental agencies. During
the fourth quarter of 1994, the Company identified more economical means,
acceptable to such agencies, by which to dispose of its solid waste at these
locations and concluded that the significant additional expenditures necessary
to make the assets operational were not prudent, resulting in unusable assets.

The aggregate after tax impact of these charges is $127,981,000 or $2.89 per
common share.

3. RIGHTSIZING AND RESTRUCTURING (UNUSUAL ITEMS)

During 1993, the Company incurred net unusual charges of $13,229,000, including
rightsizing and restructuring costs of $16,363,000, partially offset by a gain
of $1,492,000 on the disposal of its Ecusta Division's airplane and a credit of
$1,642,000 resulting from the updating of estimates relating to SFAS No. 106,
subsequent to its adoption on January 1, 1993. The charges primarily include
provisions for the accelerated pension, stock awards and postretirement benefit
costs of early retirements and other terminations in the second quarter of 1993
and other one-time net costs relating to the rightsizing and restructuring of
the Company's operations. The rightsizing and restructuring, which was
completed during 1993, resulted in the early retirement of 156 employees and a
reduction in annual salaries, wages and benefits of approximately $7,500,000.
The after tax impact of these charges was $8,430,000 or $.19 per common share.

23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
P. H. GLATFELTER COMPANY AND SUBSIDIARIES

4. CAPITAL STOCK

A summary of the number of shares of common stock outstanding follows:

1994 1993 1992
-------------- -------------- --------------

Balance at
beginning of year 43,987,328 44,057,273 44,629,402
Delivery of
treasury shares:
Restricted
common stock
award plan (Note 6) 15,012 -- 62,256
Employee stock
purchase plans 197,489 186,955 131,471
Purchase of stock
for treasury -- (256,900) (765,856)
-------------- -------------- --------------
Balance at end of year 44,199,829 43,987,328 44,057,273
============== ============== ==============

Under the employee stock purchase plans, eligible employees may acquire shares
of the Company's common stock at its fair market value. Employees may
contribute up to 10% of their compensation, as defined, and the Company may
contribute, as specified in the plans, amounts up to 50% of the employee's
contribution but not more than 3% of the employee's compensation, as defined.

On September 22, 1993, the Company's Board of Directors called for the
redemption of all 3,147 outstanding shares of 4 5/8% preferred stock. The
preferred shares were redeemed on October 27, 1993 for $50.75 per share. The
redeemed shares of preferred stock and all preferred stock shares held in
treasury were canceled on October 27, 1993. The Company has 40,000 shares
remaining of 4 5/8% preferred stock authorized but not issued.

5. CAPITAL IN EXCESS OF PAR VALUE

A summary of changes in capital in excess of par value follows:

1994 1993 1992
---------- ---------- ----------
(in thousands)

Balance at beginning of year $ 39,323 $ 38,633 $ 37,758
Two-for-one common
stock split -- -- (272)
Excess (deficiency)
of compensation value
net of tax benefits under
average cost of treasury
shares delivered under
restricted common stock
award plan (Note 6) 67 -- (96)
Excess of market value over
average cost of treasury
shares delivered under
employee stock
purchase plans 448 656 1,225
Excess of par value over cost
of preferred shares
redeemed -- 34 18
---------- ---------- ----------
Balance at end of year $ 39,838 $ 39,323 $ 38,633
========== ========== ==========

6. KEY EMPLOYEE LONG-TERM INCENTIVE PLAN AND RESTRICTED COMMON STOCK AWARD PLAN

On April 22, 1992, the common shareholders approved the 1992 Key Employee
Long-Term Incentive Plan which authorizes the issuance of up to 3,000,000
shares of the Company's common stock to eligible participants. The Plan
provides for incentive stock options, non-qualified stock options, restricted
stock awards, performance shares and performance units. The Company's 1988
Restricted Common Stock Award Plan ("1988 Plan") was simultaneously amended to
provide that no further awards of common shares may be made thereunder.

On May 1, 1994, the Company granted to certain key employees, excluding
officers, non-qualified stock options to purchase an aggregate of 246,000
shares of common stock. Subject to certain conditions, these stock options are
exercisable for 174,000 shares of common stock beginning on November 1, 1994.
Stock options for the remaining 72,000 shares of common stock, subject to
certain conditions, are exercisable for 25% of such shares beginning on January
1, 1995, and for an additional 25% of such shares beginning on January 1 of
each of the next three years. The stock options, which expire on April 30,
2004, were granted at an exercise price of $15.4375 per share, representing the
average fair market value of the Company's common stock on Friday, April 29,
1994 and Monday, May 2, 1994.

On May 1, 1993, the Company granted to certain key employees non-qualified
stock options to purchase an aggregate of 940,000 shares of common stock.
Subject to certain conditions, beginning on January 1, 1994, the stock options
are exercisable for 25% of such shares and for an additional 25% of such shares
beginning on January 1 of each of the next three years. The stock options,
which expire on April 30, 2003, were granted at an exercise price of $17.96875
per share, representing the average fair market value of the Company's common
stock on Friday, April 30, 1993 and Monday, May 3, 1993.

During 1988 and 1991, 755,000 and 76,000 shares, respectively, were awarded
under the 1988 Plan. Awarded shares will be subject to forfeiture, in whole or
in part, if the recipient ceases to be an employee within a specified period of
time. Compensation expense equal to the market value of awarded shares on the
award date is recognized over the period from the award date to the date the
forfeiture provisions lapse. The Company may reduce the number of shares
otherwise required to be delivered by an amount which would have a market value
equal to the taxes withheld by the Company on delivery. The Company may also,
at its sole discretion, elect to pay to the recipients in cash an amount equal
to the market value of the shares that would otherwise be required to be
delivered. In conjunction with the Company's rightsizing and restructuring in
1993 (Note 3), the vesting date was accelerated to 1993 for 120,000 shares and
to 1994 for 28,000 shares.

24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
P. H. GLATFELTER COMPANY AND SUBSIDIARIES

On March 1, 1994, under the 1988 Plan, in lieu of delivering 28,000 shares, the
Company elected to pay in cash an amount equal to the fair market value of such
shares. On May 2, 1994, 15,012 shares were delivered from treasury (after
reduction of 8,988 shares for taxes). In 1993, the Company paid cash in lieu of
delivering 271,000 shares. On May 1, 1992, 62,256 shares were delivered from
treasury (after reduction of 33,744 shares for taxes). On December 1, 1992, the
Company paid cash in lieu of delivering 26,000 shares. Shares awarded under the
1988 Plan cease to be subject of forfeiture as follows: 182,000 in 1996 and
20,000 in each of 1997, 1998 and 1999.

7. PENSION PLANS

The Company and its subsidiaries have trusteed, noncontributory pension plans
covering substantially all of their employees. The benefits are based, in the
case of certain plans, on average salary and years of service and, in the case
of other plans, on a fixed amount for each year of service. Plan provisions and
funding met the requirements of the Employee Retirement Income Security Act of
1974. Pension income of $6,082,000, $4,205,000 and $2,760,000 was recognized in
1994, 1993 and 1992, respectively.

As discussed in Note 3, during 1993, the Company incurred rightsizing and
restructuring costs, including provisions for the costs of termination
benefits. In accordance with Statement of Financial Accounting Standards No.
88, "Employers' Accounting for Settlements and Curtailments of Defined Benefit
Pension Plans and for Termination Benefits", the Company recognized a charge of
$7,978,000 in 1993 related to early retirement termination benefits.

The following table sets forth the status of the Company's plans at December
31, 1994 and 1993:

1994 1993
---------------------------- ----------------------------
Overfunded Underfunded Overfunded Underfunded
Plans Plans Plans Plans
------------ ----------- ------------ -----------
(in thousands)

Actuarial present value of accumulated benefit
obligation:
Vested employees $ (93,293) $ (25,431) $ (112,271) $ (10,750)
Nonvested employees (4,891) (2,413) (6,427) (559)
---------- --------- ---------- ---------
Total (98,184) (27,844) (118,698) (11,309)
========== ========== ========== =========
Projected benefit obligation for services rendered
to date $ (112,776) $ (28,750) $ (135,764) $ (12,296)
Plan assets at fair value (primarily stocks, bonds
and cash equivalents) 210,584 16,713 230,436 --
---------- --------- ---------- ---------
Plan assets in excess of (less than) projected
benefit obligation 97,808 (12,037) 94,672 (12,296)
Unrecognized net (gain) loss from past experience
different from that assumed (42,071) 1,011 (45,704) 1,481
Unrecognized prior service cost 7,969 2,801 10,789 33
Unrecognized net (asset) liability at January 1 (19,127) 3,028 (21,240) 3,464
---------- ---------- ---------- ---------
Prepaid (accrued) pension cost $ 44,579 $ (5,197) $ 38,517 $ (7,318)
========== ========== ========== =========

Net pension income, excluding unusual charges, includes the following
components:

1994 1993 1992
--------- --------- ---------
(in thousands)

Service cost--benefits earned during period $ (3,572) $(3,462) $(3,795)
Interest cost on projected benefit obligation (10,361) (9,529) (8,370)
Actual return on plan assets 2,676 21,938 19,486
Net amortization and deferral 17,339 (4,742) (4,561)
-------- ------- -------
Net pension income $ 6,082 $ 4,205 $ 2,760
======== ======= =======

The assumptions used in computing the information above were as follows:

1994 1993 1992
------ ------ ------

Discount rate--pension expense 8.0% 7.5% 7.5%
Expected long-term rate of return on plan assets 8.5% 8.5% 8.0%
Discount rate--projected benefit obligation 8.0% 7.0% 7.5%
Future compensation growth rate 3.5% 3.5% 3.5%

25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
P. H. GLATFELTER COMPANY AND SUBSIDIARIES

8. OTHER POSTRETIREMENT BENEFITS

The Company provides certain health care benefits to eligible retired
employees. These benefits include a comprehensive medical plan for retirees
prior to age 65 and supplemental premium payments to retirees over age 65 to
help defray the costs of Medicare. As discussed in Note 1(i), the Company
adopted SFAS No. 106, effective January 1, 1993. The plan is not funded; claims
are paid as incurred.

The following table sets forth the plan's status as of December 31:

Accumulated postretirement 1994 1993
benefit obligation: ------- -------
(in thousands)

Retirees $10,137 $ 9,978
Fully eligible active plan participants 4,705 3,770
Other active plan participants 14,742 11,254
------- -------
Accumulated postretirement
benefit obligation $29,584 $25,002
Unrecognized net loss (6,672) (2,384)
------- -------
Accrued postretirement benefit cost $22,912 $22,618
======= =======

Net periodic postretirement benefit cost included the following components:

1994 1993
------ ------
(in thousands)

Service cost $ 585 $ 586
Interest on accumulated
benefit obligation 1,740 1,587
Net amortization and deferral 20 ---
------ ------
Net periodic postretirement
benefit cost $2,345 $2,173
====== ======

The Company assumes an increase in the annual rate of per capita cost of
covered health benefits of 10% for 1995 decreasing by approximately 1% per year
to 5.5% in 2000. The weighted average discount rates used in determining the
accumulated postretirement benefit obligation were 8.0% in 1994 and 7.0% in
1993. If the health care cost trend rate increased by 1%, the accumulated
postretirement benefit obligation as of December 31, 1994 would have been
approximately $2,384,000 greater and the net periodic postretirement benefit
cost would have been approximately $229,000 greater.

9. INCOME TAXES

As discussed in Notes 1(g) and 1(i), effective January 1, 1993, the Company
adopted SFAS No. 109. Under SFAS No. 109, income taxes are recognized for (a)
the amount of taxes payable or refundable for the current year, and (b)
deferred tax liabilities and assets for the future tax consequences of events
that have been recognized in the Company's financial statements or tax returns.
The effects of income taxes are measured based on effective tax law and rates.

During 1993, federal tax legislation was enacted that significantly changed the
income tax provisions for the Company. The principal provision of the new law
affecting the Company was an increase in the federal corporate income tax rate
from 34% to 35%. Taxes currently payable and deferred tax liabilities increased
by $226,000 and $3,361,000, respectively, as a result of the new law. As a
result, income tax expense from continuing operations for 1993 was increased by
$3,587,000, causing a reduction in net income by the same amount and a
reduction to earnings per share of $.08.

The Company has a federal alternative minimum tax credit carryforward of
$3,700,000 which has no expiration period and state tax net operating loss
carryforwards, which the Company believes are realizable, of approximately
$13,000,000 which expire through 1997.

Following are the domestic and foreign components of pre-tax income (loss):

1994 1993 1992
--------- ------- -------
(in thousands)

United States $(194,512) $33,388 $86,405
Foreign 1,738 1,995 4,356
--------- ------- -------
Total pre-tax
income (loss) $(192,774) $35,383 $90,761
========= ======= =======

The income tax provision (credit) consists of the following:

Current: 1994 1993 1992
-------- ------- -------
(in thousands)

Federal $ (202) $ 6,423 $19,688
State -- 1,060 4,064
Foreign 728 684 784
-------- ------- -------
Total current
tax provision $ 526 $ 8,167 $24,536
-------- ------- -------
Deferred:
Federal $(67,446) $ 2,583 $ 8,657
State (7,515) 762 1,145
Foreign (88) (125) (121)
-------- ------- -------
Total deferred
tax provision (75,049) 3,220 9,681
-------- ------- -------
Impact of federal
tax rate change -- 3,587 --
-------- ------- -------
Total income
tax provision $ (74,523) $14,974 $34,217
========= ======= =======

26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
P. H. GLATFELTER COMPANY AND SUBSIDIARIES

The net deferred tax amounts reported on the Company's Consolidated Balance
Sheets as of December 31 are as follows:

1994 1993
---------------------------------------------------- --------
Federal State Foreign Total Total
------- ----- ------- ----- -----
(in thousands)

Current liability $ 1,230 $ 186 $ -- $ 1,416 $ 6,268
Long-term liability 52,056 7,309 948 60,313 130,509

The following are components of the net deferred tax balances as of December
31:

1994 1993
---------------------------------------------------- --------
Federal State Foreign Total Total
------- ----- ------- ----- -----
(in thousands)

Deferred tax assets:
Current $ 9,071 $ 1,368 $ -- $10,439 $ 4,277
Long-term 17,039 2,667 -- 19,706 15,658
------- ------- ------ ------- --------
$26,110 $ 4,035 $ -- $30,145 $ 19,935
======= ======= ====== ======= ========
Deferred tax liabilities:
Current $10,301 $ 1,554 $ -- $11,855 $ 10,545
Long-term 69,095 9,976 948 80,019 146,167
------- ------- ------ ------- --------
$79,396 $11,530 $ 948 $91,874 $156,712
======= ======= ====== ======= ========

The tax effects of temporary differences as of December 31 are as follows:

1994 1993
------- --------
(in thousands)

Deferred tax assets:
Reserves $ 7,416 $ 3,710
Compensation 6,875 5,697
Postretirement benefits 10,542 9,522
Federal alternative minimum tax credit 3,700 --
Other 1,612 1,006
------- --------
$30,145 $ 19,935
======= ========
Deferred tax liabilities:
Property $60,438 $131,667
Pension 14,696 11,069
Inventories 11,838 10,132
Other 4,902 3,844
------- --------
$91,874 $156,712
======= ========

A reconciliation between the provision (credit) for income taxes, computed by
applying the statutory federal income tax rate of 35% for 1994 and 1993, and
34% for 1992, to income (loss) before income taxes, and the actual provision
(credit) for income taxes follows:

1994 1993 1992
-------- ------- -------
(in thousands)

Federal income tax provision (credit) at statutory rate $(67,471) $12,384 $30,859
State income taxes, net of federal income tax benefit (provision) (10,043) 1,156 3,864
Tax effect of non-deductible depreciation--Ecusta property -- -- 1,979
Tax effect of exempt earnings of foreign sales corporation (19) (218) (568)
SFAS No. 109 impact of rate increase--Federal -- 2,977 --
--State 2,645 -- --
Other, including tax-exempt interest 365 (1,325) (1,917)
-------- ------- -------
Actual provision (credit) for income taxes $(74,523) $14,974 $34,217
======== ======= =======

27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
P. H. GLATFELTER COMPANY AND SUBSIDIARIES

10. COMMITMENTS AND CONTINGENCIES

In order to meet environmental requirements, the Company has undertaken certain
projects, the most significant of which relates to the modernization of the
Spring Grove pulpmill. The pulpmill modernization project, which began in 1990,
was completed during the fourth quarter of 1994 for a total cost of
$171,000,000 (exclusive of capitalized interest). Of this amount, $20,000,000
was expended through 1991, $48,000,000 in 1992, $71,000,000 in 1993, and
$28,000,000 in 1994. The remaining $4,000,000 is expected to be paid in 1995.
During 1994, the Company expended approximately $2,000,000 in other
environmental capital projects and estimates that $7,000,000 and $5,000,000
will be expended for environmental capital projects in 1995 and 1996,
respectively.

The Company is subject to loss contingencies resulting from regulation by
various Federal, state, local and foreign governmental authorities with respect
to the environmental impact of air and water emissions and noise from its mills
as well as its disposal of solid waste generated by its operations. In order to
comply with environmental laws and regulations, the Company has incurred
substantial capital and operating expenditures over the past several years. The
Company anticipates that environmental regulation of the Company's operations
will continue to become more burdensome and that capital and operating
expenditures will continue, and perhaps increase, in the future. In addition,
the Company may incur obligations to remove or mitigate any adverse effects on
the environment resulting from its operations, including the restoration of
natural resources, and liability for personal injury and damage to property,
including natural resources. Because other paper companies located in the
United States are generally subject to the same environmental regulations, the
Company does not believe that its competitive position in the United States
paper industry will be materially adversely affected by its capital
expenditures for, or operating costs of, pollution abatement facilities for its
present mills, any other environmental-related obligations it will incur or the
limitations which environmental compliance may place on its operations.

The amount and timing of future expenditures for environmental compliance,
clean-up, remediation and personal injury and property damage liability cannot
be ascertained with any certainty due, among other things, to the unknown
extent and nature of any contamination, the extent and timing of any
technological advances for pollution control, the remedial actions which may be
required and the number and financial resources of any other responsible
parties. The Company continues to evaluate its exposure and the level of its
reserves. Management's current assessment, after consultation with legal
counsel, is that such expenditures are not likely to have a material adverse
effect on the Company's financial condition, results of operations or
liquidity, but there can be no assurance that its reserves will be adequate or
that such an effect will not occur at some future time.

On October 29, 1992, Philip Morris Companies, Inc. informed the Company that,
effective January 1, 1993, it would cease to make purchases from the Company
for its domestic tobacco operations. Sales to this customer in 1992 were 7.5%
of total sales for the year. During 1993 and 1994, the Company succeeded in
redirecting the lost Philip Morris product volume to printing paper customers.
These sales were not as profitable as sales to Philip Morris in 1992. In
addition, due to increased competitive pressure and cost-cutting measures
within the tobacco industry, sales to remaining tobacco paper customers in 1993
and 1994 were less profitable than in 1992. As a result, the 1993 and 1994
profit performances of the Ecusta Division were sharply below that of 1992.

As described in Note 2, the Company recognized a noncash, pre-tax writedown on
impaired assets, $198,189,000 which relates to the Ecusta Division. The Company
continues its efforts to maximize utilization of its Ecusta Division's assets
by attempting to direct sales volume to its more profitable grades and by
controlling costs. Even with these efforts, the 1995 profit performance of the
Ecusta Division, excluding the favorable impact of reduced depreciation
expense, is expected to improve only slightly over that of 1994.

11. LEGAL PROCEEDINGS

The Company is involved in various lawsuits. Although the ultimate outcome of
these lawsuits cannot be predicted with certainty, the Company's management,
after consultation with legal counsel, does not expect that such lawsuits will
have a material adverse effect on the Company's financial condition, results of
operations or liquidity.

12. SIGNIFICANT CUSTOMER AND FOREIGN SALES

The Company sells a significant portion of its printing and writing papers
through wholesale paper merchants. During 1994, two of the Company's wholesale
paper merchants merged into one company and, as a result, during 1994, this
customer accounted for 13.0% of the Company's net sales. Net sales in dollars
to foreign customers were 9.4%, 8.1% and 9.0% of total net sales in 1994, 1993
and 1992, respectively.

28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
P. H. GLATFELTER COMPANY AND SUBSIDIARIES

13. BORROWINGS

The Company has available lines of credit from two different banks aggregating
$95,000,000 at interest rates approximating money market rates. Short-term
borrowings were $24,100,000 as of December 31, 1994, at an average interest
rate of 6.3%, resulting in net available lines of credit of $70,900,000. The
Company had average net short-term borrowings of $13,850,000 during 1994 at an
average interest rate of 5.2%. Maximum short-term borrowings during 1994 were
$36,900,000.

In March 1993, the Company issued $150,000,000 principal amount of its 5 7/8%
Notes. These Notes will mature on March 1, 1998 and may not be redeemed prior
to maturity. Interest on the Notes is payable semiannually on March 1 and
September 1. The Notes are unsecured obligations of the Company.

In March 1993, the Company entered into an interest rate swap agreement having
a total notational principal amount of $50,000,000. Under the agreement, the
Company receives a fixed rate of 5 7/8% and pays a floating rate (London
Interbank Offered Rate (LIBOR) plus sixty basis points), as determined at six
month intervals. The floating rate is 5.9125% for the six month period ending
March 1, 1995. The agreement converts a portion of the Company's debt
obligation from a fixed rate to a floating rate basis. During 1994, the Company
recognized $2,938,000 of interest income and $2,505,000 of interest expense
under the agreement, resulting in a net credit of $433,000. This net amount is
included in "Interest on debt" on the Company's Consolidated Statements of
Income and Retained Earnings. The Company has pledged $6,500,000 of its other
assets as security under the swap agreement. Although the Company can pay to
terminate the swap agreement at any time, the Company intends to hold the swap
agreement until its March 1, 1998 maturity. The cost to the Company to
terminate the agreement fluctuates with prevailing market interest rates. As of
December 31, 1994, the cost to terminate the swap agreement was approximately
$4,000,000.

The Company has approximately $9,300,000 of letters of credit outstanding as of
December 31, 1994. The Company bears the credit risk on this amount to the
extent that the Company does not comply with the provisions of certain
agreements. The letters of credit do not reduce the amount available under the
Company's lines of credit.

29
MANAGEMENT'S RESPONSIBILITY
REPORT

The management of P. H. Glatfelter Company has prepared and is responsible for
the Company's financial statements and other corroborating information
contained herein. Management bears responsibility for the integrity of these
statements which have been prepared in accordance with generally accepted
accounting principles and include management's best judgments and estimates.
All information in this annual report consistently reflects the data contained
in the financial statements.

The Company maintains a system of internal controls designed to provide
reasonable assurance that assets are safeguarded, transactions are executed and
recorded in accordance with their authorizations, and financial records are
maintained so as to permit the preparation of reliable financial statements.
The system of internal controls is enhanced by written policies and procedures,
an organizational structure providing appropriate segregation of duties,
careful selection and training of qualified people, and periodic reviews
performed by both its internal audit department and independent public
auditors.

The Audit Committee of the Board of Directors, consisting exclusively of
directors who are not Company employees, provides oversight of financial
reporting. The Company's internal audit department and independent auditors
meet with the Audit Committee on a periodic basis to discuss financial
reporting and internal control issues and have completely free access to the
Audit Committee.

/s/ T. C. NORRIS
----------------
T. C. NORRIS
Chairman of the Board, President
and Chief Executive Officer

/s/ R. P. NEWCOMER
------------------
R. P. NEWCOMER
Vice President and Treasurer

INDEPENDENT AUDITORS' REPORT

P. H. Glatfelter Company,
Its Shareholders and Directors:

We have audited the accompanying consolidated balance sheets of P. H. Glatfelter
Company and subsidiaries as of December 31, 1994 and 1993, and the related
consolidated statements of income and retained earnings, and cash flows for each
of the three years in the period ended December 31, 1994. Our audits also
included the financial statement schedule listed in the Index at Item 14. These
financial statements and the financial statement schedule are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements and the financial statement schedule based on our
audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of P. H. Glatfelter Company and
subsidiaries at December 31, 1994 and 1993, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1994 in conformity with generally accepted accounting principles. Also, in
our opinion, the financial statement schedule, when considered in relation to
the basic consolidated financial statements taken as a whole, presents fairly in
all material respects the information set forth therein.

As discussed in Note 1(i) to the consolidated financial statements, the Company
changed its method of accounting for income taxes, postretirement benefits other
than pensions and postemployment benefits as of January 1, 1993.

/s/ Deloitte & Touche LLP
-------------------------

DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
February 10, 1995

Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure.

Not Applicable.

PART III

Item 10. Directors and Executive Officers of the Registrant.

(a) Directors. The information with respect to directors required
under this item is incorporated herein by reference to pages 1 through 3 and
page 13 of the Registrant's Proxy Statement dated March 17, 1995.

(b) Executive Officers of the Registrant. The information with
respect to the executive officers required under this item is set forth in Part
I of this Report and incorporated by reference to page 14 of the Registrant's
Proxy Statement dated March 17, 1995.

Item 11. Executive Compensation.

The information required under this item is incorporated herein by
reference to pages 5 through 11 of the Registrant's Proxy Statement dated March
17, 1995.

Item 12. Security Ownership of Certain Beneficial Owners and Management.

The information required under this item is incorporated herein by
reference to pages 12 through 14 of the Registrant's Proxy Statement dated March
17, 1995.

Item 13. Certain Relationships and Related Transactions.

The information required under this item is incorporated herein by
reference to page 11 of the Registrant's Proxy Statement dated March 17, 1995.

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K.

(a) 1. A. Financial Statements filed as part of this report:

Consolidated Statements of Income and Retained
Earnings for the Years Ended December 31, 1994, 1993 and
1992

Consolidated Balance Sheets, December 31, 1994 and 1993
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements for the Years Ended
December 31, 1994, 1993 and 1992

B. Supplementary Data for each of the three years in
the period ended December 31, 1994.

2. Financial Statement Schedules (Consolidated):

For Each of the Three Years in the Period Ended December 31,
1994:

VIII - Valuation and Qualifying Accounts

Schedules other than those listed above are omitted because of the
absence of conditions under which they are required or because the
required information is included in the Notes to the Consolidated
Financial Statements.

Individual financial statements of the Registrant are not presented
inasmuch as the Registrant is primarily an operating company and
its consolidated subsidiaries are wholly-owned.

3. Executive Compensation Plans and Arrangements: see Exhibits
10(a) through 10(h), described below.

Exhibits:

Number Description of Documents

Reduction of Authorized Shares dated August 2, 1982 (incorporated by
reference to Exhibit 3(a) of Registrant's Annual Report on Form 10-K
for the year ended December 31, 1993); a Statement of Reduction of
Authorized Shares dated July 29, 1983 (incorporated by reference to
Exhibit 3(a) of Registrant's Annual Report on Form 10-K for the year
ended December 31, 1993); by Articles of Amendment dated April 25,
1984; a Statement of Reduction of Authorized Shares dated October 15,
1984 (incorporated by reference to Exhibit (3)(b) of Registrant's Form
10-K for the year ended December 31, 1984); a Statement of Reduction of
Authorized Shares dated December 24, 1985 (incorporated by reference to
Exhibit (3)(b) of Registrant's Form 10-K for the year ended December
31, 1985); by Articles of Amendment dated April 23, 1986 (incorporated
by reference to Exhibit (3) of Registrant's Quarterly Report on Form
10-Q for the quarter ended March 31, 1986); a Statement of Reduction of
Authorized Shares dated July 11, 1986 (incorporated by reference to
Exhibit (3)(b) of Registrant's Form 10-K for the year ended December
31, 1986); a Statement of Reduction of Authorized Shares dated March
25, 1988 (incorporated by reference to Exhibit (3)(b) of Registrant's
Form 10-K for the year ended December 31, 1987); a Statement of
Reduction of Authorized Shares dated November 9, 1988 (incorporated by
reference to Exhibit (3)(b) of Registrant's Form 10-K for the year
ended December 31, 1988); a Statement of Reduction of Authorized Shares
dated April 24, 1989 (incorporated by reference to Exhibit 3(b) of
Registrant's Form 10-K for the year ended December 31, 1989); Articles
of Amendment dated November 29, 1990 (incorporated by reference to
Exhibit 3(b) of Registrant's Form 10-K for the year ended December 31,
1990); Articles of Amendment dated June 26, 1991 (incorporated by
reference to Exhibit 3(b) of Registrant's Form 10-K for the year ended
December 31, 1991); Articles of Amendment dated August 7, 1992
(incorporated by reference to Exhibit 3(b) of Registrant's Form 10-K
for the year ended December 31, 1992); Articles of Amendment dated July
30, 1993 (incorporated by reference to Exhibit 3(b) of Registrant's
Form 10-K for the year ended December 31, 1993); and Articles of
Amendment dated January 26, 1994 (incorporated by reference to Exhibit
3(b) of Registrant's Form 10-K for the year ended December 31, 1993).

(3)(b) Articles of Incorporation, as amended through January 26, 1994
(restated for the purpose of filing on EDGAR) (incorporated by
reference to Exhibit 3(c) of

Registrant's Form 10-K for the year ended December 31, 1993).

(3)(c) By-Laws as amended through March 16, 1994 (incorporated by reference
to Exhibit 3(d) of Registrant's Form 10-K for the year ended December
31, 1993).

(4)(a) Indenture between P. H. Glatfelter Company and Wachovia Bank of
Georgia, N.A. as Trustee dated as of January 15, 1993 (incorporated by
reference to Exhibit 4(a) of Registrant's Form 10-K for the year ended
December 31, 1993).

(4)(b) Form of Note issued to Purchasers of 5 7/8% Notes due March 1, 1998
(incorporated by reference to Exhibit 4(b) of Registrant's Form 10-K
for the year ended December 31, 1992).

(9) P. H. Glatfelter Family Shareholders' Voting Trust dated July 1, 1993
(incorporated by reference to Exhibit 1 of the Schedule 13D filed by P.
H. Glatfelter Family Shareholders' Voting Trust dated July 1, 1993).

(10)(a) P. H. Glatfelter Company Management Incentive Plan, adopted as of
January 1, 1994, as amended and restated effective March 16, 1995.

(10)(b) P. H. Glatfelter Company 1988 Restricted Common Stock Award Plan, as
amended and restated June 24, 1992 (incorporated by reference to
Exhibit (10)(c) of Registrant's Form 10-K for the year ended December
31, 1992).

(10)(c) P. H. Glatfelter Company Supplemental Executive Retirement Plan,
effective January 1, 1988, as amended and restated December 22, 1994.

(10)(d) Deferral Benefit Pension Plan of Ecusta Division, effective May 22,
1986 (incorporated by reference to Exhibit (10)(ee) of Registrant's
Form 10-K for the year ended December 31, 1987).

(10)(e) Description of Executive Salary Continuation Plan (incorporated by
reference to Exhibit (10)(g) of Registrant's Form 10-K for the year
ended December 31, 1990).

(10)(f) P. H. Glatfelter Company Plan of Supplemental Retirement Benefits for
the Management Committee, as amended and restated effective June 28,
1989 (incorporated by reference to Exhibit (10)(h) of

Registrant's Form 10-K for the year ended December 31, 1989).

(10)(g) P.H. Glatfelter Company 1992 Key Employee Long-Term Incentive Plan,
effective April 22, 1992 (incorporated by reference to Exhibit (10)(i)
of Registrant's Form 10-K for the year ended December 31, 1992).

(11) Computation of Earnings Per Share

(21) Subsidiaries of the Registrant

(23) Consent of Independent Certified Public Auditors

(27) Financial Data Schedule

(b) The Registrant filed the following report on Form 8-K during the
quarter ended December 31, 1994:

N O N E

SIGNATURES

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

P. H. GLATFELTER COMPANY
(Registrant)
March 30, 1995
By /s/ T. C. Norris
-----------------------
T. C. Norris
Chairman of the Board

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated:

Date Signature Capacity
---- --------- --------

March 30, 1995 /s/ T. C. Norris Principal Executive Officer and Director
------------------------
T. C. Norris

March 30,1995 /s/ R. P. Newcomer Principal Financial Officer, Vice President and Treasurer
------------------------
R. P. Newcomer

March 30,1995 /s/ C. M. Smith Comptroller
------------------------
C. M. Smith

March 30,1995 /s/ G. Baldwin, Jr. Director
------------------------
G. Baldwin, Jr.

March 30,1995 /s/ R. E. Chappell Director
------------------------
R. E. Chappell

March 30,1995 /s/ G. H. Glatfelter Director
------------------------
G. H. Glatfelter

March 30,1995 /s/ G. H. Glatfelter II Director
------------------------
G. H. Glatfelter II

March 30,1995 /s/ P. H. Glatfelter III Director
------------------------
P. H. Glatfelter III

March 30,1995 /s/ R. S. Hillas Director
------------------------
R. S. Hillas

March 30,1995 /s/ M. A. Johnson II Director
------------------------
M. A. Johnson

March 30, 1995 /s/ J. W. Kennedy Director
-----------------
J. W. Kennedy

March 30, 1995 /s/ P. R. Roedel Director
-----------------
P. R. Roedel

March 30, 1995 /s/ J. M. Sanzo Director
-----------------
J. M. Sanzo

March 30, 1995 /s/ R.L. Smoot Director
-----------------
R. L. Smoot

P. H. GLATFELTER COMPANY AND
SUBSIDIARIES

FINANCIAL STATEMENT SCHEDULE
FOR EACH OF THE THREE YEARS IN THE
PERIOD ENDED DECEMBER 31, 1994 AND
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

PREPARED FOR FILING AS PART OF
ANNUAL REPORT (FORM 10-K)
TO THE SECURITIES AND EXCHANGE COMMISSION

FINANCIAL STATEMENT SCHEDULE VIII

P. H. GLATFELTER COMPANY AND SUBSIDIARIES

SUPPLEMENTARY DATA
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1994
--------------------------------------------------------------------------------

A. ALLOWANCES FOR DOUBTFUL ACCOUNTS AND SALES DISCOUNTS

ALLOWANCES FOR
-----------------------------------------------------------------------------------
DOUBTFUL ACCOUNTS SALES DISCOUNTS
------------------------------------- ------------------------------------------
1994 1993 1992 1994 1993 1992

Balance, beginning of year $1,838,000 $ 890,000 $880,000 $ 554,300 $ 490,000 $ 557,000

Provision 12,000 981,000 10,000 6,619,900 6,524,800 6,454,000

Write-offs, recoveries and
discounts allowed (33,000) (6,614,100) (6,460,500) (6,521,000)

---------- ---------- -------- ----------- ----------- -----------
Balance, end of year $1,850,000 $1,838,000 $890,000 $ 560,100 $ 554,300 $ 490,000
========== ========== ======== =========== =========== ===========

The provision for doubtful accounts is included in administrative expense
and the provision for sales discounts is deducted from sales. The related
allowances are deducted from accounts receivable.

39
Exhibit Index

Number Description of Documents

(3)(a) Articles of Amendment dated April 27, 1977, including restated
Articles of Incorporation (incorporated by reference to
Exhibit 3(a) of Registrant's Annual Report on Form 10-K for
the year ended December 31, 1993) as amended by Articles of
Merger dated January 30, 1979 (incorporated by reference to
Exhibit 3(a) of Registrant's Annual Report on Form 10-K for
the year ended December 31, 1993); a Statement of Reduction of
Authorized Shares dated May 12, 1980 (incorporated by
reference to Exhibit 3(a) of Registrant's Annual Report on
Form 10-K for the year ended December 31, 1993); a Statement
of Reduction of Authorized Shares dated September 23, 1981
(incorporated by reference to Exhibit 3(a) of Registrant's
Annual Report on Form 10-K for the year ended December 31,
1993); a Statement of Reduction of Authorized Shares dated
August 2, 1982 (incorporated by reference to Exhibit 3(a) of
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1993); a Statement of Reduction of Authorized
Shares dated July 29, 1983 (incorporated by reference to
Exhibit 3(a) of Registrant's Annual Report on Form 10-K for
the year ended December 31, 1993); by Articles of Amendment
dated April 25, 1984; a Statement of Reduction of Authorized
Shares dated October 15, 1984 (incorporated by reference to
Exhibit (3)(b) of Registrant's Form 10-K for the year ended
December 31, 1984); a Statement of Reduction of Authorized
Shares dated December 24, 1985 (incorporated by reference to
Exhibit (3)(b) of Registrant's Form 10-K for the year ended
December 31, 1985); by Articles of Amendment dated April 23,
1986 (incorporated by reference to Exhibit (3) of Registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31,
1986); a Statement of Reduction of Authorized Shares dated
July 11, 1986 (incorporated by reference to Exhibit (3)(b) of
Registrant's Form 10-K for the year ended December 31, 1986);
a Statement of Reduction of Authorized Shares dated March 25,
1988 (incorporated by reference to Exhibit (3)(b) of
Registrant's Form 10-K for the year ended December 31, 1987);
a Statement of Reduction of Authorized Shares dated November
9, 1988 (incorporated by reference to Exhibit (3)(b) of
Registrant's Form 10-K for the year ended December 31, 1988);
a Statement of Reduction of Authorized Shares dated April 24,
1989 (incorporated by reference to Exhibit 3(b) of
Registrant's Form 10-K for the year ended December 31, 1989);
Articles of Amendment dated November 29, 1990 (incorporated by
reference to Exhibit 3(b) of Registrant's Form 10-K for the
year ended December 31, 1990); Articles of Amendment dated
June 26, 1991 (incorporated by reference to Exhibit 3(b) of
Registrant's Form 10-K for the year ended December 31, 1991);
Articles

of Amendment dated August 7, 1992 (incorporated by
reference to Exhibit 3(b) of Registrant's Form 10-K for the
year ended December 31, 1992); Articles of Amendment dated
July 30, 1993 (incorporated by reference to Exhibit 3(b) of
Registrant's Form 10-K for the year ended December 31, 1993);
and Articles of Amendment dated January 26, 1994 (incorporated
by reference to Exhibit 3(b) of Registrant's Form 10-K for the
year ended December 31, 1993).

(3)(b) Articles of Incorporation, as amended through January 26, 1994
(restated for the purpose of filing on EDGAR) (incorporated by
reference to Exhibit 3(c) of Registrant's Form 10-K for the
year ended December 31, 1993).

(3)(c) By-Laws as amended through March 16, 1994 (incorporated by
reference to Exhibit 3(d) of Registrant's Form 10-K for the
year ended December 31, 1993).

(4)(a) Indenture between P. H. Glatfelter Company and Wachovia Bank
of Georgia, N.A. as Trustee dated as of January 15, 1993
(incorporated by reference to Exhibit 4(a) of Registrant's
Form 10-K for the year ended December 31, 1993).

(4)(b) Form of Note issued to Purchasers of 5 7/8% Notes due March 1,
1998 (incorporated by reference to Exhibit 4(b) of
Registrant's Form 10-K for the year ended December 31, 1992).

(9) P. H. Glatfelter Family Shareholders' Voting Trust dated July
1, 1993 (incorporated by reference to Exhibit 1 of the
Schedule 13D filed by P. H. Glatfelter Family Shareholders'
Voting Trust dated July 1, 1993).

(10)(a) P. H. Glatfelter Company Management Incentive Plan, adopted as
of January 1, 1994, as amended and restated effective March
16, 1995.

(10)(b) P. H. Glatfelter Company 1988 Restricted Common Stock Award
Plan, as amended and restated June 24, 1992 (incorporated by
reference to Exhibit (10)(c) of Registrant's Form 10-K for the
year ended December 31, 1992).

(10)(c) P. H. Glatfelter Company Supplemental Executive Retirement
Plan, effective January 1, 1988, as amended and restated
December 22, 1994.

(10)(d) Deferral Benefit Pension Plan of Ecusta Division, effective
May 22, 1986 (incorporated by reference to Exhibit (10)(ee) of
Registrant's Form 10-K for the year ended December 31, 1987).

(10)(e) Description of Executive Salary Continuation Plan
(incorporated by reference to Exhibit (10)(g) of Registrant's
Form 10-K for the year ended December 31, 1990).

(10)(f) P. H. Glatfelter Company Plan of Supplemental Retirement
Benefits for the Management Committee, as amended and restated
effective June 28, 1989 (incorporated by reference to Exhibit
(10)(h) of Registrant's Form 10-K for the year ended December
31, 1989).

(10)(g) P.H. Glatfelter Company 1992 Key Employee Long-Term Incentive
Plan, effective April 22, 1992 (incorporated by reference to
Exhibit (10)(i) of Registrant's Form 10-K for the year ended
December 31, 1992).

(11) Computation of Earnings Per Share

(21) Subsidiaries of the Registrant

(23) Consent of Independent Certified Public Auditors

(27) Financial Data Schedule