<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
------------------
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________________ to _____________________
Commission File No. 1-3560
------
P. H. GLATFELTER COMPANY
- - -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-0628360
- - -------------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
228 South Main Street, Spring Grove, Pennsylvania 17362
-------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(717) 225-4711
--------------
(Registrant's telephone number, including area code)
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 .
------ ------
Shares of Common Stock outstanding at November 10, 1994 were 44,145,911.
<PAGE>
P. H. GLATFELTER COMPANY
INDEX
Part I - Financial Information
- - ------------------------------
Financial Statements:
Condensed Consolidated Statements of Income and Retained
Earnings - Three Months and Nine Months Ended September
30, 1994 and September 30, 1993 (Unaudited)............ 2
Condensed Consolidated Balance Sheets - September 30, 1994
(Unaudited) and December 31, 1993...................... 3
Condensed Consolidated Statements of Cash Flows - Nine
Months Ended September 30, 1994 and September
30, 1993 (Unaudited)................................... 4
Notes to Condensed Consolidated Financial Statements...... 5-6
Independent Accountants' Report........................... 7
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 8-10
Part II - Other Information..................................... 11
- - ---------------------------
Signature....................................................... 12
- - ---------
Index of Exhibits............................................... 13
Exhibit 11 - Computation of Net Income Per Share............. 14
Exhibit 15 - Letter in Lieu of Consent Regarding Review
Report of Unaudited Interim Financial
Information..................................... 15
Exhibit 27 - Financial Data Schedule......................... 16
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
P. H. GLATFELTER COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(dollars in thousands except number of shares and per share amounts)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
9/30/94 9/30/93 9/30/94 9/30/93
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales $ 120,261 $ 116,270 $ 346,404 $ 361,150
Other income - net
Energy sales - net 1,484 1,348 4,239 4,159
Interest on investments and other - net 193 628 796 2,229
Gain (loss) from property dispositions,
etc., - net 590 (3) 729 (117)
----------- ----------- ----------- -----------
Total 122,528 118,243 352,168 367,421
Costs and expenses
Cost of products sold 116,051 99,847 323,564 303,535
Selling, general and administrative
expenses 6,677 8,398 20,589 25,393
Interest on debt - net 1,952 805 3,912 2,346
----------- ----------- ----------- -----------
Total 124,680 109,050 348,065 331,274
Unusual items - - - 13,229
----------- ----------- ----------- -----------
Total costs and expenses 124,680 109,050 348,065 344,503
----------- ----------- ----------- -----------
Income (loss) before income taxes and
accounting changes (2,152) 9,193 4,103 22,918
Provision (benefit) for taxes on income
Current taxes 637 856 920 4,961
Deferred taxes (1,294) 1,986 435 2,470
Impact of federal tax rate change - 3,472 - 3,472
----------- ----------- ----------- -----------
Total (657) 6,314 1,355 10,903
Income (loss) before accounting changes (1,495) 2,879 2,748 12,015
Accounting changes - - - (4,193)
----------- ----------- ----------- -----------
Net income (loss) (1,495) 2,879 2,748 7,822
Retained earnings at beginning of period 534,590 549,899 545,770 560,388
----------- ----------- ----------- -----------
Total 533,095 552,778 548,518 568,210
----------- ----------- ----------- -----------
Cash dividends declared
Preferred stock - 2 - 6
Common stock 7,726 7,702 23,149 23,130
----------- ----------- ----------- -----------
Total 7,726 7,704 23,149 23,136
----------- ----------- ----------- -----------
Retained earnings at end of period $ 525,369 $ 545,074 $ 525,369 $ 545,074
=========== =========== =========== ===========
Weighted average number of common shares
outstanding 44,266,617 44,252,029 44,224,526 44,366,643
Earnings (loss) per common share
Income (loss) before accounting changes $ (.03) $ .07 $ .06 $ .27
Accounting changes - - - (.09)
----------- ----------- ----------- -----------
Net income (loss) $ (.03) $ .07 $ .06 $ .18
=========== =========== =========== ===========
Cash dividends declared per common share $ .175 $ .175 $ .525 $ .525
=========== =========== =========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
2
<PAGE>
P. H. GLATFELTER COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
ASSETS
------
<TABLE>
<CAPTION>
September 30 December 31
1994 1993
(unaudited)
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 3,802 $ 19,182
Marketable securities 1,614 22,184
Accounts receivable - net 48,259 34,340
Inventories:
Raw materials 29,678 37,340
In process and finished products 30,593 33,503
Supplies 28,408 28,087
-------- --------
Total inventory 88,679 98,930
Prepaid expenses and deferred income taxes 1,485 1,305
-------- --------
Total current assets 143,839 175,941
Plant, equipment and timberlands - net 648,163 621,113
Other assets 50,267 45,033
-------- --------
Total assets $842,269 $842,087
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
<CAPTION>
<S> <C> <C>
Current liabilities:
Short-term bank borrowings $ 31,800 $ -
Accounts payable 29,002 39,935
Dividends payable 7,726 7,698
Federal, state and local taxes 4,099 4,872
Accrued compensation, other expenses
and deferred income taxes 19,956 28,972
--------- ---------
Total current liabilities $ 92,583 $ 81,477
Long-term debt 150,000 150,000
Deferred income taxes 137,746 130,509
Other long-term liabilities 38,311 38,701
Shareholders' equity:
Common stock 544 544
Capital in excess of par value 39,748 39,323
Retained earnings 525,369 545,770
--------- ---------
Total 565,661 585,637
Less cost of common treasury stock (142,032) (144,237)
--------- ---------
Total shareholders' equity 423,629 441,400
--------- ---------
Total liabilities and
shareholders' equity $ 842,269 $ 842,087
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
P. H. GLATFELTER COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
9/30/94 9/30/93
--------- ---------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 2,748 $ 7,822
Accounting changes - 4,193
Items included in net income not using
(providing) cash:
Depreciation and depletion 32,337 28,934
Gain on disposition of fixed assets (121) (753)
Expense related to employee stock purchase
plans 605 652
Change in assets and liabilities:
Accounts receivable (13,919) (7,226)
Inventories 10,251 (2,888)
Prepaid expenses, deferred income taxes,
and other assets (5,414) (9,163)
Accounts payable, accrued compensation,
other expenses, deferred income taxes
and other long-term liabilities (15,441) 510
Federal, state and local taxes (773) (2,150)
Deferred income taxes - noncurrent 7,237 5,804
--------- ---------
Net cash provided by operating activities 17,510 25,735
--------- ---------
Cash Flows from Investing Activities:
Sale (purchase) of marketable securities and
long-term investments 20,570 (27,797)
Proceeds from disposal of fixed assets 1,100 1,763
Additions to plant, equipment and timberlands (60,231) (78,309)
Decrease in liabilities related to fixed
asset acquisitions (4,758) (4,956)
--------- ---------
Net cash used in investing activities (43,319) (109,299)
--------- ---------
Cash Flows from Financing Activities:
Proceeds of long-term
debt issuance - 150,000
Borrowing (repayment) of short-term debt 31,800 (10,100)
Dividends paid (23,121) (23,143)
Treasury stock purchases - (3,042)
Employees' contribution - common stock issued
under employee stock purchase plans 1,750 1,806
--------- ---------
Net cash provided by financing activities 10,429 115,521
--------- ---------
Net increase (decrease) in cash and cash
equivalents (15,380) 31,957
Cash and Cash Equivalents:
At beginning of period 19,182 3,093
--------- ---------
At end of period $ 3,802 $ 35,050
--------- ---------
Supplemental Disclosure of Cash Flow Information:
Cash paid for:
Interest (net of amount capitalized) $ 6,263 $ 1,601
Income taxes $ 2,194 $ 7,601
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
P. H. GLATFELTER COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. During the three-month period ended September 30, 1993, federal tax
legislation was enacted that significantly changed the income tax
provisions for the Registrant. The principal provision of the new law
affecting the Registrant was an increase in the federal corporate income
tax rate from 34% to 35%. Taxes currently payable and deferred tax
liabilities increased by $138,000 and $3,334,000, respectively, as a result
of the new law and the application of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109"). As a
result, income tax expense from continuing operations for the three-month
period ended September 30, 1993, increased by $3,472,000, causing a
reduction in net income by the same amount.
A reconciliation between the provision for income taxes, computed by
applying the statutory federal income tax rate of 35% to income before
income taxes and accounting changes, and the actual provision for income
taxes follows (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
9/30/94 9/30/93 9/30/94 9/30/93
------- -------- -------- --------
<S> <C> <C> <C> <C>
Federal income tax provision
(benefit) at statutory rate $(753) $ 3,217 $ 1,436 $ 8,021
State income taxes after deducting
Federal income tax benefit 37 394 199 1,030
SFAS No. 109 impact of rate increase - 3,272 - 3,272
Other 59 (569) (280) (1,420)
----- ------- -------- --------
Actual provision (benefit)
for income taxes $(657) $ 6,314 $ 1,355 $ 10,903
===== ======= ======== ========
</TABLE>
The deferred income tax provision for the nine-month periods ended
September 30, 1994 and 1993 results from the following temporary
differences (in thousands):
<TABLE>
<CAPTION>
Nine Months Ended
9/30/94 9/30/93
--------- ---------
<S> <C> <C>
Depreciation $ 6,454 $ 5,465
Pensions 1,467 (2,247)
Alternative Minimum Tax (6,797) -
Other (689) (748)
-------- -------
$ 435 $ 2,470
======== ========
</TABLE>
The provision for deferred income taxes is, in part, estimated based on an
allocation of the appropriate amount relative to the number of months
reported herein and in conformance with existing tax regulations.
2. The number of shares of common stock outstanding increased by 158,583 in
the first nine months of 1994 due to the sale of 143,571 treasury shares
pursuant to the various Employee Stock Purchase Plans of the Registrant and
the delivery of 15,012 treasury shares pursuant to the 1988 Restricted
Common Stock Award Plan of the Registrant. At September 30, 1994,
10,216,069 shares of common stock were held in treasury.
3. The Registrant's Board of Directors has authorized the repurchase in the
open market or in privately negotiated transactions of up to 10,000,000
shares of the Registrant's common stock in the aggregate. Repurchased
shares are added to the treasury and are available for future sale. Under
these authorizations, as of September 30, 1994, the Registrant had
repurchased 8,998,030 shares for a total consideration of $149,523,823.
5
<PAGE>
4. Pursuant to the Registrant's 1992 Key Employee Long-Term Incentive Plan, on
May 1, 1994, the Registrant granted to certain key employees, excluding
officers, non-qualified stock options to purchase an aggregate of 246,000
shares of common stock. 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 Registrant's common stock on Friday, April
29, 1994 and Monday, May 2, 1994. 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 common stock beginning on January 1, 1995 and for an additional 25% of
such common stock beginning on January 1 of each of the next three years.
5. Effective January 1, 1994, the Registrant 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 Registrant's Condensed
Consolidated Balance Sheets or Condensed Consolidated Statements of Income
and Retained Earnings.
6. Effective January 1, 1993, the Registrant 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
SFAS No. 109. The net of tax charges (credits), impacting the first
quarter of 1993, due to the adoption of these Standards, was as follows:
<TABLE>
<S> <C>
SFAS No. 106 $ 12,850,000
SFAS No. 112 1,967,000
SFAS No. 109 (10,624,000)
------------
Total accounting changes $ 4,193,000
============
</TABLE>
7. During the first quarter of 1993, the Registrant incurred unusual charges
in connection with rightsizing and restructuring 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.
8. In the opinion of the Registrant, the accompanying unaudited condensed
consolidated financial statements contain all adjustments (which comprise
only normal recurring accruals) necessary for a fair presentation of the
financial information contained therein. These unaudited condensed
consolidated financial statements should be read in conjunction with the
more complete disclosures contained in the Company's Annual Report on Form
10-K for the year ended December 31, 1993. Certain reclassifications have
been made of previously reported amounts in order to conform with
classifications used in the current year. The accompanying unaudited
condensed consolidated financial statements have been reviewed by the
Registrant's independent public accountants, Deloitte & Touche LLP, in
accordance with the established professional standards and procedures for
such limited review. No additional adjustments or disclosures were
required as a result of this review.
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
- - -------------------------------
P. H. Glatfelter Company:
We have reviewed the accompanying condensed consolidated balance sheet of P. H.
Glatfelter Company and subsidiaries as of September 30, 1994, and the related
condensed consolidated statements of income and retained earnings for the three-
month and nine-month periods ended September 30, 1994 and 1993 and of cash flows
for the nine months ended September 30, 1994 and 1993. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of P.H. Glatfelter Company and
subsidiaries as of December 31, 1993, and the related consolidated statements of
income and retained earnings and of cash flows for the year then ended (not
presented herein); and in our report dated February 11, 1994, we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying condensed consolidated balance
sheet as of December 31, 1993 is fairly stated, in all material respects in
relation to the consolidated balance sheet from which it has been derived.
Deloitte & Touche LLP
October 14, 1994
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------
FINANCIAL CONDITION:
- - -------------------
Liquidity:
The Registrant's cash and marketable securities decreased by $35,950,000 during
the first nine months of 1994. In addition, the Registrant incurred $31,800,000
in short-term bank debt. This decrease in cash and marketable securities and
increase in short-term debt was primarily due to the funding of capital related
projects of $64,989,000 and the payment of $23,121,000 in dividends, which were
partially offset by $17,510,000 of cash provided by operating activities.
During the third quarter of 1994, the Registrant incurred $27,100,000 in short-
term bank debt. This indebtedness was incurred primarily for the funding of
capital related projects of $22,037,000 and the payment of $7,717,000 in
dividends, which were partially offset by $1,077,000 of cash provided by
operating activities.
The Company expects to meet all its near and long-term cash needs from a
combination of internally generated funds, cash, cash equivalents, marketable
securities and existing bank lines of credit.
Capital Resources:
The Registrant has continued its work on a major project to modernize the
pulpmill in Spring Grove, Pennsylvania. The project began in 1990 with
completion expected in the fourth quarter of 1994 for a total cost of
approximately $171,000,000. By September 30, 1994, the Registrant had spent a
total of $164,207,000 on this project, of which $24,985,000 was spent in the
first nine months of 1994. The project's focus is almost entirely for
improvement to the environment, with a modest increase in pulping capacity.
Although the project is expected to be completed in the fourth quarter of 1994,
expenditures relating to the project of approximately $3,000,000 are expected to
be paid in 1995.
The Registrant intends to spend approximately $20,000,000 for the installation
of a turbine generator at the Spring Grove mill. The project began in 1993 with
completion expected in the fourth quarter of 1994. By September 30, 1994, the
Registrant had spent a total of $10,978,000 on this project, of which $9,970,000
was spent in the first nine months of 1994. Total capital spending by the
Registrant in 1994 for this project is expected to approximate $15,500,000.
Although the project is expected to be completed in the fourth quarter of 1994,
expenditures related to the project of approximately $3,500,000 are expected to
be paid in 1995.
RESULTS OF OPERATIONS:
- - ---------------------
A summary of the period-to-period changes in the principal items included in the
consolidated statements of income is shown below.
<TABLE>
<CAPTION>
Comparison of
Three Months Ended Nine Months Ended
Sept. 30, 1994 and Sept. 30, 1994 and
Sept. 30, 1993 Sept. 30, 1993
-----------------------------------------------
Increase (Decrease)
(dollars in thousands)
<S> <C> <C> <C> <C>
Net sales $ 3,991 3.4% $(14,746) (4.0%)
Other income - net 294 14.9% (507) (8.1%)
Cost of products sold 16,204 16.2% 20,029 6.6%
Selling, general and
administrative expenses (1,721) (20.5%) (4,804) (18.9%)
Interest on debt - net 1,147 142.5% 1,566 66.8%
Unusual items - expenses - NC (13,229) (100.0%)
Provision for taxes on income (6,971) (110.4%) (9,548) (87.6%)
Income before accounting changes (4,374) (151.9%) (9,267) (77.1%)
Accounting changes - NC (4,193) (100.0%)
Net income (4,374) (151.9%) (5,074) (64.9%)
NC - not calculable
</TABLE>
8
<PAGE>
Net Sales
- - ---------
The Registrant classifies product sales into two groups: 1) printing papers;
and 2) tobacco and other specialty papers. Net sales increased by $3,991,000
for the third quarter of 1994 compared to the third quarter of 1993. Net sales
decreased $14,746,000 for the first nine months of 1994 compared to the
corresponding period of 1993.
During the first nine months of 1994, net sales of printing papers were 8.0%
lower than for the first nine months of 1993 due to both a decrease in sales
volume and a decrease average net selling price. Reduced orders in the first
quarter of 1994 led to unplanned downtime at the Registrant's Spring Grove,
Pennsylvania and Neenah, Wisconsin mills. Demand for printing papers improved
during the second and third quarters of 1994 and prices have increased since the
first quarter of 1994 for most of the Registrant's printing papers produced at
the Spring Grove and Neenah mills. The Registrant remains cautiously optimistic
that continued improved market conditions will allow additional price increases
on certain printing paper grades during the fourth quarter of 1994.
Net sales of printing papers were 2.1% higher in the third quarter of 1994
compared to the third quarter of 1993. Increased demand for printing papers
resulted in an increase in sales volume, which more than offset a decrease in
average net selling price compared to the third quarter of 1993.
Net sales of tobacco and other specialty papers were 9.6% higher in the third
quarter of 1994 compared to the third quarter of 1993, and 8.0% higher in the
first nine months of 1994 compared to the same period in 1993. A significant
volume increase of 17.0% has more than offset a 7.7% drop in average net selling
price, primarily for tobacco papers, for the first nine months of 1994 compared
to the first nine months of 1993.
The Registrant's Pisgah Forest, North Carolina mill experienced a moderate
operating loss during the third quarter and first nine months of 1994 and has
incurred an additional moderate operating loss in October, 1994. The
Registrant's continuing efforts to improve the results of operations for the
Pisgah Forest mill have not yet been successful, with the result that further
restructuring and cost cutting or other measures may be required.
Other Income (net)
- - ------------------
Other income (net) in the third quarter of 1994 increased $294,000 compared to
the corresponding period in 1993. This increase was primarily due to gains from
property dispositions, which were partially offset by a decrease in investment
income. Other income (net) for the first nine months of 1994 decreased $507,000
compared to the first nine months of 1993. This decrease is primarily due to a
reduction in the amount of interest earned on short-term investments, which was
partially offset by an increase in gains from property dispositions. Surplus
investiable funds from the Registrant's issuance of $150,000,000 principal
amount of its 5-7/8% Notes in March, 1993, have dramatically decreased due to
the funding of capital related projects and the payment of dividends, as
described under the Liquidity section above.
Cost of Products Sold
- - ---------------------
The Registrant's gross margins fell from 16.0% for the first nine months of 1993
to 6.6% for the first nine months of 1994, and from 14.1% for the third quarter
of 1993 to 3.5% for the third quarter of 1994. These decreases were due to
lower average net selling prices and an increased cost of products sold per ton.
The cost of products sold increased as a result of higher costs for market pulp,
pulp substitutes and wastepaper and increased depreciation costs. The increased
cost per ton was also largely due to fewer tons of products manufactured because
of the unplanned mill downtime mentioned above and the Registrant's high fixed
cost manufacturing process.
In July, 1994, in connection with the annual Spring Grove mill maintenance
shutdown, the Registrant began integrating various components of new equipment
related to the pulpmill modernization project. The complexity of integrating
the new equipment led to more downtime in the pulpmill than would normally be
incurred during the annual shutdown. This had an unfavorable impact on the
Registrant's gross margins and net income in the third quarter of 1994 compared
to the third quarter of 1993.
9
<PAGE>
Selling, General and Administrative Expenses
- - --------------------------------------------
The Registrant's selling, general and administrative expenses for the third
quarter and first nine months of 1994 decreased by $1,721,000 and $4,804,000,
respectively, compared to the same periods of 1993. These decreases occurred
primarily in salaries, wages and other compensation related expenses resulting
from the Registrant's 1993 restructuring efforts. Profit sharing and incentive
expenses were also lower in 1994 than in 1993 due to lower earnings.
Interest on Debt (net)
- - ----------------------
The Registrant's interest on debt (net) increased $1,147,000 and $1,566,000 for
the third quarter and first nine months of 1994, respectively, compared to the
corresponding periods of 1993. As noted above, the Registrant issued
$150,000,000 principal amount of its 5-7/8% Notes in March, 1993. These Notes
were outstanding for only seven months during the first nine months of 1993
compared to nine months during the 1994 period. During the third quarter of
1994, the Registrant ceased capitalizing interest on a majority of the
expenditures related to the pulpmill modernization project, resulting in a
significant increase in net interest expense.
Unusual Items
- - -------------
During the first quarter of 1993, the Registrant incurred unusual charges in
connection with rightsizing and restructuring 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 of employees in the
second quarter of 1993 and other one-time net costs relating to the rightsizing
and restructuring of the Registrant'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.
Accounting Changes
- - ------------------
Effective January 1, 1993, the Registrant adopted the provisions of SFAS No.
106, SFAS No. 112, and SFAS No. 109. The cumulative charge, net of tax,
resulting from the adoption of these Standards was $4,193,000. Set Note 6 to
the condensed financial statements for a further description of the accounting
changes.
10
<PAGE>
PART II OTHER INFORMATION
- - --------------------------
Item 6. Exhibits and Reports on Form 8-K
- - -----------------------------------------
(a) Exhibits
--------
Number Description of Documents
------ ------------------------
11 Computation of Net Income per Share
15 Letter in Lieu of Consent Regarding Review
Reports of Unaudited Interim Financial
Information
27 Financial Data Schedule
(b) Reports on Form 8-K
-------------------
None
11
<PAGE>
SIGNATURE
Pursuant to the requirements 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
Date: November 14, 1994 -------------------------------------------
R. P. Newcomer
Vice President and Treasurer
(Principal Financial Officer)
12
<PAGE>
INDEX OF EXHIBITS
-----------------
Number Description of Documents
------ ------------------------
11 Computation of Net Income per Share
15 Letter in Lieu of Consent Regarding Review
Reports of Unaudited Interim Financial Information
27 Financial Data Schedule
13
<PAGE>
EXHIBIT 11
P. H. GLATFELTER COMPANY
AND CONSOLIDATED SUBSIDIARIES
=============================
Computation of Net Income Per Share
<TABLE>
<CAPTION>
For the 3 Months Ended
9/30/94 9/30/93
------------- --------------
<S> <C> <C>
Weighted average number of common and common
share equivalents:
Common Shares:
Shares outstanding, beginning of period.. 44,097,588 44,081,549
Less shares purchased for treasury....... - (13,878)/(1)/
Shares issued - Employee Stock Purchase
Plans.................................. 525/(2)/ 545 /(3)/
Shares issued - 1988 Restricted Common
Stock Award Plan........................ - -
------------- --------------
Total................................. 44,098,113 44,068,216
Common share equivalents applicable to
outstanding stock awards............... 168,504/(5)/ 183,813/(5)/
------------- --------------
Total................................. 44,266,617 44,252,029
Net income..................................... $ (1,495,288) $ 2,878,904
Preferred dividends............................ - (1,762)
------------- --------------
Net income applicable to common shares......... $ (1,495,288) $ 2,877,142
------------- --------------
Net income per common share.................... $ (.03) $ .07
============= ==============
<CAPTION>
For the 9 Months Ended
9/30/94 9/30/93
------------- --------------
<S> <C> <C>
Weighted average number of common and common
share equivalents:
Common Shares:
Shares outstanding, beginning of period.. 43,987,328 44,057,273
Less shares purchased for treasury....... - (57,291)/(1)/
Shares issued - Employee Stock Purchase
Plans.................................. 48,467/(2)/ 49,624 /(3)/
Shares issued - 1988 Restricted Common
Stock Award Plan........................ 8,358/(4)/ -
------------- --------------
Total................................. 44,044,153 44,049,606
Common share equivalents applicable to
outstanding stock awards............... 180,373/(5)/ 317,037 /(6)/
------------- --------------
Total................................. 44,224,526 44,366,643
Net income..................................... $ 2,747,826 $ 7,821,690
Preferred dividends............................ - (5,401)
------------- --------------
Net income applicable to common shares......... $ 2,747,826 $ 7,816,289
------------- --------------
</TABLE>
/(1)/ Weighted average effect of 116,200 common shares repurchased in the third
quarter of 1993 and 186,600 common shares repurchased in the first nine
months of 1993.
/(2)/ Weighted average effect of 48,323 common shares sold from treasury on
September 30, 1994 and 143,571 common shares sold from treasury in the
first nine months of 1994.
/(3)/ Weighted average effect of 50,186 common shares sold from treasury on
September 30, 1993 and 144,862 common shares sold from treasury in the
first nine months of 1993.
/(4)/ Weighted average effect of 15,012 common shares issued from treasury in
the second quarter of 1994.
/(5)/ Weighted average effect of shares subject to outstanding awards under the
Registrant's 1988 Restricted Common Stock Award Plan and weighted average
effect of shares issuable under the Registrant's 1992 Key Employee Long-
Term Incentive Plan.
14
<PAGE>
EXHIBIT 15
LETTER IN LIEU OF CONSENT REGARDING REVIEW REPORT OF UNAUDITED
--------------------------------------------------------------
INTERIM FINANCIAL INFORMATION
-----------------------------
P. H. Glatfelter Company:
We have reviewed, in accordance with standards established by the American
Institute of Certified Public Accountants, the unaudited condensed consolidated
financial statements of P. H. Glatfelter Company and subsidiaries for the three-
month and nine-month periods ended September 30, 1994 and 1993, as indicated in
our report dated October 14, 1994; because we did not perform an audit, we
expressed no opinion on that information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended September 30, 1994, is
incorporated by reference in Registration Statements Nos. 33-24858, 33-25884,
33-37198, 33-49660, 33-53338 and 33-54409 on Form S-8.
We are also aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act, is not considered a part of the Registration Statement
prepared or certified by an accountant or a report prepared or certified by an
accountant within the meaning of Sections 7 and 11 of that Act.
Deloitte & Touche LLP
Philadelphia, Pennsylvania
October 14, 1994
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 3,802
<SECURITIES> 1,614
<RECEIVABLES> 50,133
<ALLOWANCES> 1,874
<INVENTORY> 88,679
<CURRENT-ASSETS> 143,839
<PP&E> 972,676
<DEPRECIATION> 324,513
<TOTAL-ASSETS> 842,269
<CURRENT-LIABILITIES> 92,583
<BONDS> 150,000
<COMMON> 544
0
0
<OTHER-SE> 423,085
<TOTAL-LIABILITY-AND-EQUITY> 842,269
<SALES> 346,404
<TOTAL-REVENUES> 352,168
<CGS> 323,564
<TOTAL-COSTS> 323,564
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 36
<INTEREST-EXPENSE> 3,912
<INCOME-PRETAX> 4,103
<INCOME-TAX> 1,355
<INCOME-CONTINUING> 2,748
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,748
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>
