<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 June 30, 1996
-------------
( ) 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 August 12, 1996 were 42,651,128.
<PAGE>
P. H. GLATFELTER COMPANY
INDEX
Part I - Financial Information
------------------------------
Financial Statements:
Condensed Consolidated Statements of Income and Retained
Earnings - Three Months and Six Months Ended June 30,
1996 and 1995 (Unaudited).............................. 3
Condensed Consolidated Balance Sheets - June 30, 1996
(Unaudited) and December 31, 1995...................... 4
Condensed Consolidated Statements of Cash Flows - Six
Months Ended June 30, 1996 and 1995 (Unaudited)........ 5
Notes to Condensed Consolidated Financial Statements
(Unaudited)............................................ 6-7
Independent Accountants' Report........................... 8
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 9-11
Part II - Other Information..................................... 12
---------------------------
Signature....................................................... 13
---------
Index of Exhibits............................................... 14
-----------------
Exhibit 11 - Computation of Net Income Per Share............. 15
Exhibit 15 - Letter in Lieu of Consent Regarding Review
Report of Unaudited Interim Financial
Information..................................... 16
Exhibit 27 - Financial Data Schedule......................... 17
2
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
P. H. GLATFELTER COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(in thousands, except number of shares and per share amounts)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
6/30/96 6/30/95 6/30/96 6/30/95
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 144,687 $ 166,879 $ 285,022 $ 321,916
Other income - net
Energy sales - net 2,410 2,328 4,707 3,944
Interest on investments
and other - net 394 343 576 629
Gain from property
dispositions, etc., - net 66 855 295 1,044
----------- ----------- ----------- -----------
Total 147,557 170,405 290,600 327,533
Costs and expenses
Cost of products sold 108,916 126,306 217,730 251,405
Selling, general and
administrative expenses 9,770 10,002 18,628 18,835
Interest on debt - net 2,297 2,694 4,644 5,417
----------- ----------- ----------- -----------
Total 120,983 139,002 241,002 275,657
Income before income taxes 26,574 31,403 49,598 51,876
Income tax provision
Current taxes 5,713 6,186 10,276 9,758
Deferred taxes 4,585 6,192 9,076 10,579
----------- ----------- ----------- -----------
Total 10,298 12,378 19,352 20,337
Net income 16,276 19,025 30,246 31,539
Retained earnings at
beginning of period 438,256 401,404 431,762 396,635
----------- ----------- ----------- -----------
Total 454,532 420,429 462,008 428,174
----------- ----------- ----------- -----------
Common stock dividends
declared 7,463 7,711 14,939 15,456
----------- ----------- ----------- -----------
Retained earnings at end
of period $ 447,069 $ 412,718 $ 447,069 $ 412,718
=========== =========== =========== ===========
Weighted average number of
common shares outstanding 42,846,262 44,440,830 43,073,896 44,413,091
Net income per common share $ .38 $ .43 $ .70 $ .71
=========== =========== =========== ===========
Dividends declared per
common share $ .175 $ .175 $ .35 $ .35
============ =========== =========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
P. H. GLATFELTER COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
ASSETS
------
<TABLE>
<CAPTION>
6/30/96 12/31/95
(unaudited)
----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 19,949 $ 18,864
Marketable securities 111 111
Accounts receivable - net 56,433 52,052
Inventories:
Raw materials 23,521 25,577
In process and finished products 33,124 30,821
Supplies 31,947 30,680
--------- ---------
Total inventory 88,592 87,078
Prepaid expenses and other current assets 4,722 2,318
--------- ---------
Total current assets 169,807 160,423
Plant, equipment and timberlands - net 446,732 451,461
Other assets 65,368 61,223
--------- ---------
Total assets $ 681,907 $ 673,107
========= =========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
Current liabilities:
Accounts payable $ 31,903 $ 34,623
Dividends payable 7,463 7,597
Federal, state and local taxes 3,088 235
Accrued compensation, other expenses
and deferred income taxes 36,224 41,553
--------- ---------
Total current liabilities 78,678 84,008
Long-term debt 150,000 150,000
Deferred income taxes 89,758 80,682
Other long-term liabilities 45,836 43,011
Commitments and contingencies
Shareholders' equity:
Common stock 544 544
Capital in excess of par value 41,377 40,921
Retained earnings 447,069 431,762
--------- ---------
Total 488,990 473,227
Less cost of common stock in treasury (171,355) (157,821)
--------- ---------
Total shareholders' equity 317,635 315,406
Total liabilities and
shareholders' equity $ 681,907 $ 673,107
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
P. H. GLATFELTER COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
6/30/96 6/30/95
----------- -----------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 30,246 $ 31,539
Items included in net income not using
(providing) cash:
Depreciation and depletion 17,126 16,504
Gain on disposition of fixed assets (42) (881)
Expense related to employee stock
purchase and 401(k) plans 672 464
Change in assets and liabilities:
Accounts receivable (4,381) (9,520)
Inventories (1,514) (497)
Prepaid expenses and other assets (6,549) (6,435)
Accounts payable, accrued compensation,
other expenses, deferred income taxes
and other long-term liabilities (3,484) 15,357
Federal, state and local taxes 2,853 1,443
Deferred income taxes - non-current 9,076 7,629
-------- --------
Net cash provided by operating activities 44,003 55,603
-------- --------
Cash Flows from Investing Activities:
Proceeds from disposal of fixed assets 67 961
Additions to plant, equipment and timberlands (12,344) (10,031)
Decrease in liabilities related to
fixed asset acquisitions (542) (6,855)
-------- --------
Net cash used in investing activities (12,819) (15,925)
-------- --------
Cash Flows from Financing Activities:
Repayment of short-term debt - (20,100)
Dividends paid (15,073) (15,480)
Purchases of common stock (15,823) (4,453)
Proceeds from issuance of common stock under
employee stock purchase plans and key
employee long-term incentive plan 797 1,439
-------- --------
Net cash used in financing activities (30,099) (38,594)
-------- --------
Net increase (decrease) in cash and cash equivalents 1,085 1,084
Cash and Cash Equivalents:
At beginning of period 18,864 3,133
-------- --------
At end of period $ 19,949 $ 4,217
======== ========
Supplemental Disclosure of Cash Flow Information:
Cash paid for:
Interest $ 5,203 $ 4,615
Income taxes 11,711 9,895
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
P. H. GLATFELTER COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. A reconciliation between the income tax provision computed by applying the
statutory federal income tax rate of 35% to income before income taxes, and
the actual income tax provision follows in thousands:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
6/30/96 6/30/95 6/30/96 6/30/95
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Federal income tax provision at
statutory rate $ 9,301 $ 10,991 $ 17,359 $ 18,157
State income taxes after deducting
federal income tax benefit 1,001 1,457 1,880 2,334
Other (4) (70) 113 (154)
-------- -------- -------- --------
Actual income tax provision $ 10,298 $ 12,378 $ 19,352 $ 20,337
======== ======== ======== ========
</TABLE>
The deferred income tax provisions for the six-month periods ended June
30, 1996 and 1995 result from the following temporary differences
(in thousands):
<TABLE>
<CAPTION>
Six Months Ended
<S> <C> <C>
6/30/96 6/30/95
--------- ---------
Depreciation $ 6,152 $ 10,218
Pensions 2,340 2,004
Alternative minimum tax 1,907 (114)
Other (1,323) (1,529)
-------- --------
$ 9,076 $ 10,579
======== ========
</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 decreased by 789,186 in
the first six months of 1996. This decrease was due to the repurchase of
946,273 shares of common stock for the treasury, which more than offset the
delivery of 80,763 treasury shares pursuant to the various employee stock
purchase and 401(k) plans of the Registrant, the delivery of 4,131 treasury
shares pursuant to the exercise of stock options under the Registrant's
1992 Key Employee Long-Term Incentive Plan, and the delivery of 72,193
treasury shares pursuant to stock awards granted under the Registrant's
1988 Restricted Common Stock Award Plan. At June 30, 1996, 11,715,854
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 12,000,000
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 June 30, 1996, the Registrant had repurchased
an aggregate of 10,900,503 shares for a total consideration of
$ 184,425,824.
4. Pursuant to the Registrant's 1992 Key Employee Long-Term Incentive Plan
(the "Plan"), on May 1, 1996, the Registrant granted to certain key
employees, excluding officers, non-qualified stock options to purchase an
aggregate of 92,000 shares of common stock. Of this amount, stock options
for 82,000 shares of common stock, subject to certain conditions, are
exercisable for 25% of such shares beginning on January 1, 1997 and for an
additional 25% of such shares beginning on January 1 of each of the next
three years. Subject to certain conditions, the remaining 10,000 stock
options are exercisable beginning on November 1, 1996. All of the stock
options, which expire on April 30, 2006, were granted at an exercise price
of $16.625 per share, representing the fair market value of the
Registrant's common stock on May 1, 1996.
6
<PAGE>
5. The Registrant 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 Registrant has incurred substantial capital and operating expenditures
over the past several years. The Registrant anticipates that environmental
regulation of the Registrant's operations will continue to become more
burdensome and that capital expenditures will continue and operating
expenditures will continue, and perhaps increase, in the future. 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. 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 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 may 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 to, among other things, 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. Management's current assessment, after
consultation with legal counsel, is that such expenditures are not likely
to have a material adverse effect on the Registrant'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.
6. 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, 1995. 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.
7
<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 June 30, 1996, and the related
condensed consolidated statements of income and retained earnings for the three-
month and six-month periods ended June 30, 1996 and 1995 and of cash flows for
the six-months ended June 30, 1996 and 1995. 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, 1995, 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 2, 1996, 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, 1995 is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
Deloitte & Touche LLP
Philadelphia, Pennsylvania
July 16, 1996
8
<PAGE>
P. H. GLATFELTER COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------
Any statements set forth below or otherwise made in writing or orally by the
Registrant with regard to its expectations as to financial results and other
aspects of its business may constitute forward looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Although the
Registrant makes such statements based on assumptions which it believes to be
reasonable, there can be no assurance that actual results will not differ
materially from the Registrant's expectations. Accordingly, the Registrant
hereby identifies the following important factors, among others, which could
cause its results to differ from any results which might be projected, forecast
or estimated by the Registrant in any such forward looking statements: (i)
variations in demand for its products, (ii) changes in the cost or availability
of raw materials used by the Registrant, in particular market pulp, pulp
substitutes and wastepaper; (iii) changes in industry paper production capacity,
including the construction of new mills, the closing of mills and incremental
changes due to capital expenditures or productivity increases; (iv) the gain or
loss of significant customers; (v) cost and other effects of environmental
compliance, cleanup, damages, remediation or restoration, or personal injury or
property damage related thereto, such as the cost of natural resource
restoration or damages related to the presence of PCBs in the lower Fox River on
which the Registrant's Neenah mill is located; (vi) significant changes in
cigarette consumption, both domestically and internationally; (vii) enactment of
adverse state or federal legislation or changes in government policy or
regulation; (viii) adverse results in litigation; and (ix) disruptions in
production and/or increased costs due to labor disputes.
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 Six Months Ended
June 30, 1996 and June 30, 1996 and
June 30, 1995 June 30, 1995
------------------------------------------------
Increase (Decrease)
(dollars in thousands)
<S> <C> <C> <C> <C>
Net sales $ (22,192) -13.3% $ (36,894) -11.5%
Other income - net (656) -18.6% (39) - 0.7%
Cost of products sold (17,390) -13.8% (33,675) -13.4%
Selling, general and
administrative expenses (232) - 2.3% (207) - 1.1%
Interest on debt (397) -14.7% (773) -14.3%
Income tax provision (2,080) -16.8% (985) - 4.8%
Net income (2,749) -14.4% (1,293) - 4.1%
</TABLE>
Net Sales
- - ---------
The Registrant classifies product sales into two groups: 1) printing papers; and
2) tobacco and other specialty papers. Overall net sales declined $22,192,000,
or 13.3%, in the second quarter of 1996 compared to the second quarter of 1995,
and $36,894,000, or 11.5%, in the first six months of 1996 compared to the
corresponding period in the prior year. Printing paper net sales for the second
quarter of 1996 decreased $22,037,000, or 17.6%, compared to the corresponding
period in 1995 due to decreased sales volume and average net selling prices of
3.5% and 14.6%, respectively. For the first six months of 1996 compared to the
first six months of 1995, printing paper net sales declined $38,231,000, or
15.8%. This decline was a result of decreased sales volume and average net
selling prices of 10.8% and 5.7%, respectively.
Pricing for printing papers showed mixed results during the second quarter.
Commodity and non-commodity printing paper prices declined early in the quarter;
however, in early June a modest price increase was implemented for commodity
papers.
Tobacco and other specialty papers net sales were relatively flat in the second
quarter of 1996 compared to the second quarter of 1995. Decreased net sales
volume of 4.5% was offset by the effect of a 4.3% increase in the average net
selling price. In the first six months of 1996, net sales of tobacco and other
specialty papers improved $1,337,000, or 1.7%, over the
9
<PAGE>
first six months of 1995. Increased average net selling prices of 3.9% more than
offset a 2.2% decline in volume in the first half of 1996 compared to the first
half of 1995.
A decrease in printing paper demand led to the decline in sales volume in the
second quarter and first six months of 1996 compared to the corresponding
periods of 1995. Although no unscheduled operating downtime was required during
the second quarter of 1996, approximately seven days of unplanned downtime was
taken at the Registrant's Spring Grove, Pennsylvania mill early in the year. In
contrast, during the first six months of 1995, each of the Registrant's mills
operated at full capacity. Although order backlogs were below the levels
experienced one year earlier, demand for printing papers improved during the
second quarter when compared to the earlier part of 1996, which allowed the
Registrant's mills to operate without any unplanned downtime.
Cost of Products Sold
- - ---------------------
The Registrant's gross margin increased from 21.9% for the first six months of
1995 to 23.6% for the first six months of 1996, and from 24.3% for the second
quarter of 1995 to 24.7% for the second quarter of 1996. A reduction in the
cost of products sold per ton more than offset the negative impact of lower net
selling prices per ton. The reduction in cost per ton was due primarily to
lower costs for market pulp, pulp substitutes and wastepaper in 1996 versus the
comparable periods in 1995. These raw material cost decreases more than offset
the unfavorable impact of lower production during the three and six month
periods ended June 30, 1996 compared to the corresponding periods of 1995. The
Registrant's lower production resulted in higher fixed costs per ton as fixed
costs were absorbed over fewer tons produced.
Although fiber costs are likely to remain lower throughout the balance of 1996
relative to the comparable periods in 1995, the Registrant believes that the
cost of purchased fiber will be higher during the second half of 1996 in
comparison to levels realized earlier in the year. Market pulp costs increased
modestly effective July 1, 1996. At the present time it is difficult to
determine whether these higher prices will hold and whether further increases
will follow. Higher pulp costs could also provide an environment conducive to
improved prices for printing papers, which could more than offset the negative
impact of higher fiber costs.
Selling, General and Administrative Expenses
- - --------------------------------------------
The Registrant's selling, general and administrative expenses for the second
quarter and first six months of 1996 were $232,000 and $207,000 less than the
selling, general and administrative expenses for the corresponding periods of
1995. These decreases were primarily the result of lower profit sharing and
incentive expenses, which were partially offset by increased miscellaneous
general and administrative expenses.
Interest on Debt
- - ----------------
The Registrant's interest on debt for the second quarter and first six months of
1996 was $397,000 and $773,000 less than the corresponding periods of 1995.
Reduced short-term bank borrowings accounted for $245,000 and $624,000 of these
amounts, respectively. Interest on debt was approximately $152,000 and $149,000
less in the second quarter and first six months of 1996 compared to the
comparable periods in 1995 due to a lower variable interest rate on the
Registrant's interest rate swap agreement which has a total notional principal
amount of $50,000,000. The variable rate on the swap agreement is recalculated
in March and September of each year until the termination of the agreement on
March 1, 1998. As a result of this lower rate, during the first two months of
the third quarter the Registrant's interest on debt will be approximately
$101,000 less than in the comparable two month period of 1995. Based upon
current interest rate levels, however, the Registrant expects a modest increase
in the variable interest rate on its interest rate swap agreement when the rate
resets on September 3, 1996. The Registrant does not anticipate the need for
short-term bank borrowings during the balance of 1996.
Income Tax Provision
- - --------------------
The Registrant's provision for income taxes decreased by $2,080,000 and $985,000
for the second quarter and first six months of 1996 compared to the same periods
in 1995, primarily due to lower taxable income.
10
<PAGE>
FINANCIAL CONDITION:
- - --------------------
Liquidity:
- - ---------
The Registrant's cash, cash equivalents, and marketable securities increased by
$1,085,000 during the first six months of 1996. Cash provided by operating
activities of $44,003,000 slightly exceeded cash used in investing activities of
$12,819,000 and cash used in financing activities of $30,099,000. Significant
uses of cash in the first half of 1996 were $15,823,000 for purchases of common
stock for the treasury, $15,073,000 for the payment of dividends, and
$12,886,000 for the funding of capital projects.
The Registrant expects to meet all of its near and long-term cash needs,
including the retirement of the $150,000,000 principal amount of its 5 7/8%
notes due March 1, 1998, from a combination of internally generated funds, cash,
cash equivalents, marketable securities, existing bank lines of credit, and if
prudent, long-term debt.
ENVIRONMENTAL MATTERS:
- - ---------------------
The Registrant 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 Registrant has incurred
substantial capital and operating expenditures over the past several years. The
Registrant anticipates that environmental regulation of the Registrant's
operations will continue to become more burdensome and that capital expenditures
will continue and operating expenditures will continue, and perhaps increase, in
the future. 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. The Registrant's
current assessment, after consultation with legal counsel, is that such
expenditures are not likely to have a material adverse effect on its 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.
11
<PAGE>
PART II - OTHER INFORMATION
---------------------------
Item 4. Submission of Matters to a Vote of Security Holders
- - ------------------------------------------------------------
(a) The Registrant's Annual Meeting of Shareholders was held on
April 24, 1996.
(b) The shareholders elected all of management's nominees for
Directors.
(c) The votes cast for election of Directors were as follows
(cumulative voting applied):
<TABLE>
<CAPTION>
For Withheld
----------- ------------
<S> <C> <C>
N. DeBenedictis 36,435,014 677,708
G. H. Glatfelter 36,871,505 241,217
M. A. Johnson II 36,862,874 249,848
</TABLE>
No other matters were voted upon at the meeting.
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
Report of Unaudited Interim Financial
Information
27 Financial Data Schedule
(b) Reports on Form 8-K
-------------------
None
12
<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: August 13, 1996
---------------------------------
R. P. Newcomer
Senior Vice President, Treasurer
and Chief Financial Officer
13
<PAGE>
INDEX OF EXHIBITS
-----------------
Number Description of Documents
------ ------------------------
11 Computation of Net Income per Share
15 Letter in Lieu of Consent Regarding
Review Report of Unaudited Interim
Financial Information
27 Financial Data Schedule
14
<PAGE>
P. H. GLATFELTER COMPANY AND SUBSIDIARIES
=========================================
Computation of Net Income Per Share
EXHIBIT 11
<TABLE>
<CAPTION>
For the 3 Months Ended For the 6 Months Ended
6/30/96 6/30/95 6/30/96 6/30/95
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Weighted average number of common and common
share equivalents:
Common Shares:
Shares outstanding, beginning of period... 42,718,608 44,253,341 43,435,312 44,199,829
Less shares purchased for treasury........ (105,965)(1) (77,544)(2) (633,195)(1) (38,986)(2)
Shares issued:
Employee Stock Purchase Plans............ 678 (3) 518 (4) 11,634 (3) 26,397 (4)
Key Employee Long-Term Incentive Plan.... 514 (5) 1 (6) 2,524 (5) 1,690 (6)
401(k) Plan.............................. 5,355 (7) - 18,891 (7) -
Restricted Common Stock Award Plan....... 48,393 (8) - 24,196 (8) -
----------- ----------- ----------- -----------
Total................................... 42,667,583 44,176,316 42,859,362 44,188,930
Common share equivalents applicable to
outstanding stock awards and
option grants............................ 178,679 (9) 264,514 (9) 214,534 (9) 224,161 (9)
----------- ----------- ----------- -----------
Total................................... 42,846,262 44,440,830 43,073,896 44,413,091
Net income.................................. $16,276,653 $19,024,754 $30,246,226 $31,538,839
Net income per common share................. $ .38 $ .43 $ .70 $ .71
=========== =========== =========== ===========
</TABLE>
(1) Weighted average effect of 181,100 common shares repurchased in the second
quarter of 1996 and 946,273 common shares repurchased in the first six
months of 1996.
(2) Weighted average effect of 235,600 common shares repurchased in the second
quarter of 1995.
(3) Weighted average effect of 20,562 common shares issued from treasury on
June 28, 1996 and 42,432 common shares issued from treasury in the first
six months of 1996.
(4) Weighted average effect of 47,162 common shares issued from treasury on
June 30, 1995 and 98,583 common shares issued from treasury in the first
six months of 1995.
(5) Weighted average effect of 955 common shares issued from treasury in the
second quarter of 1996 and 4,131 common shares issued from treasury in the
first six months of 1996.
(6) Weighted average effect of 44 common shares issued from treasury in the
second quarter of 1995 and 2,135 common shares issued from treasury in the
first six months of 1995.
(7) Weighted average effect of 14,908 common shares issued from treasury in the
second quarter of 1996 and 38,331 common shares issued from treasury in the
first six months of 1996.
(8) Weighted average effect of 72,193 common shares issued from treasury on May
1, 1996.
(9) 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.
15
<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 six-month periods ended June 30, 1996
and 1995, as indicated in our report dated July 16, 1996; 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 June 30, 1996, is
incorporated by reference in Registration Statements Nos. 33-24858, 33-
25884, 33-37198, 33-49660, 33-53338, 33-54409 and 33-62331 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
July 16, 1996.
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 19,949
<SECURITIES> 111
<RECEIVABLES> 58,518
<ALLOWANCES> 2,085
<INVENTORY> 88,592
<CURRENT-ASSETS> 169,807
<PP&E> 1,018,722
<DEPRECIATION> 571,990
<TOTAL-ASSETS> 681,907
<CURRENT-LIABILITIES> 78,678
<BONDS> 150,000
0
0
<COMMON> 544
<OTHER-SE> 317,091
<TOTAL-LIABILITY-AND-EQUITY> 681,907
<SALES> 285,022
<TOTAL-REVENUES> 290,600
<CGS> 217,730
<TOTAL-COSTS> 217,730
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 106
<INTEREST-EXPENSE> 4,644
<INCOME-PRETAX> 49,598
<INCOME-TAX> 19,352
<INCOME-CONTINUING> 30,246
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 30,246
<EPS-PRIMARY> .70
<EPS-DILUTED> .70
</TABLE>
