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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 2024
or
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from to
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4350 Congress Street, Suite 600
Charlotte, North Carolina 28209
(Address of principal executive offices)
(704) 885-2555
(Registrant's telephone number, including area code)
 
Commission file
number
 
Exact name of registrant as
specified in its charter
 
IRS Employer
Identification No.
 
State or other jurisdiction of
incorporation or organization
 
 1-03560 Glatfelter Corporation 23-0628360 Pennsylvania 
(N/A)
Former name or former address, if changed since last report
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock GLT New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at the past 90 days. Yes No .
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No .
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a small reporting company or emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer Accelerated filer
Non-accelerated filer Smaller reporting company
  Emerging growth company 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes No .
Common Stock outstanding on May 6, 2024 totaled 45,252,530 shares.


GLATFELTER CORPORATION AND SUBSIDIARIES
REPORT ON FORM 10-Q
For the Quarterly Period Ended
March 31, 2024
Table of Contents
 
Page
 2
 
Condensed Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023 (unaudited)
 
 
 
 
Statements of Shareholders’ Equity for the three months ended March 31, 2024 and 2023 (unaudited)
 
 
 
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5
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 9
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 15
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 18
 19
Item 1B
 



PART I
Item 1 – Financial Statements
GLATFELTER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
 Three months ended
March 31,
In thousands, except per share20242023
   
Net sales$327,256 $378,208 
Costs of products sold292,746 341,994 
Gross profit34,510 36,214 
Selling, general and administrative expenses36,057 30,745 
Gains on dispositions of plant, equipment and timberlands, net
(2)(644)
Operating income (loss)(1,545)6,113 
Non-operating income (expense)
Interest expense(17,685)(12,594)
Interest income261 271 
Other, net(2,027)(3,278)
Total non-operating expense(19,451)(15,601)
Loss from continuing operations before income taxes(20,996)(9,488)
Income tax provision
5,154 3,694 
Loss from continuing operations(26,150)(13,182)
 
Discontinued operations:
Loss before income taxes
(197)(402)
Income tax provision  
Loss from discontinued operations
(197)(402)
Net loss$(26,347)$(13,584)
 
Basic earnings per share
Loss from continuing operations$(0.58)$(0.29)
Loss from discontinued operations (0.01)
Basic loss per share$(0.58)$(0.30)
 
Diluted earnings per share
Loss from continuing operations$(0.58)$(0.29)
Loss from discontinued operations (0.01)
Diluted loss per share$(0.58)$(0.30)
 
Weighted average shares outstanding
Basic45,18444,957 
Diluted45,18444,957 
The accompanying notes are an integral part of these condensed consolidated financial statements.
- 2 -



GLATFELTER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(unaudited)
 Three months ended
March 31,
In thousands20242023
Net loss$(26,347)$(13,584)
Foreign currency translation adjustments(9,164)6,663 
Net change in:
Deferred gains on derivatives, net of taxes
 of $(618) and $(53), respectively
1,442 157 
Unrecognized retirement obligations, net of taxes
 of $(7) and $(1), respectively
20 652 
Other comprehensive income (loss)(7,702)7,472 
Comprehensive loss$(34,049)$(6,112)
The accompanying notes are an integral part of these condensed consolidated financial statements.
- 3 -



GLATFELTER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
In thousandsMarch 31,
2024
December 31,
2023
Assets  
Cash and cash equivalents$30,181 $50,265 
Accounts receivable, net180,541 170,974 
Inventories299,659 298,248 
Prepaid expenses and other current assets73,925 86,480 
Total current assets584,306 605,967 
 
Plant, equipment and timberlands, net648,941 662,916 
Goodwill106,137 107,691 
Intangible assets, net98,661 106,333 
Other assets79,186 80,889 
Total assets$1,517,231 $1,563,796 
 
Liabilities and Shareholders' Equity
Current portion of long-term debt$ $1,005 
Short-term debt7,452 6,150 
Accounts payable134,241 158,455 
Environmental liabilities300 2,000 
Other current liabilities110,588 112,758 
Total current liabilities252,581 280,368 
 
Long-term debt868,202 853,163 
Deferred income taxes51,400 52,219 
Other long-term liabilities121,726 121,192 
Total liabilities1,293,909 1,306,942 
 
Commitments and contingencies (Note 18)
  
 
Shareholders’ equity
Common stock544 544 
Capital in excess of par value56,781 58,759 
Retained earnings393,463 419,810 
Accumulated other comprehensive loss(90,211)(82,509)
 360,577 396,604 
Less cost of common stock in treasury(137,255)(139,750)
Total shareholders’ equity223,322 256,854 
Total liabilities and shareholders’ equity$1,517,231 $1,563,796 
The accompanying notes are an integral part of these condensed consolidated financial statements.
- 4 -



GLATFELTER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
 Three months ended
March 31,
In thousands20242023
Operating activities  
Net loss$(26,347)$(13,584)
Loss from discontinued operations, net of taxes
197 402 
Adjustments to reconcile to net cash used by continuing operations:
Depreciation, depletion and amortization15,754 15,731 
Amortization of debt issue costs and original issue discount1,024 2,246 
Pension settlement charge 633 
Deferred income tax benefit(275)(675)
Gains on dispositions of plant, equipment and timberlands, net(2)(644)
Share-based compensation671 931 
Change in operating assets and liabilities:
Accounts receivable(10,070)(2,306)
Inventories(5,082)(8,827)
Prepaid and other current assets10,892 (9,117)
Accounts payable(21,241)(23,136)
Accruals and other current liabilities(1,216)7,550 
Other2,210 164 
Net cash used by operating activities from continuing operations(33,485)(30,632)
Investing activities
Expenditures for purchases of plant, equipment and timberlands(7,482)(9,500)
Proceeds from disposals of plant, equipment and timberlands, net2 713 
Net cash used by investing activities from continuing operations(7,480)(8,787)
Financing activities
Proceeds from term loan 262,273 
Repayment of term loans(988)(225,466)
Net borrowings (repayments) under revolving credit facility22,041 (16,332)
Payments of borrowing costs(60)(5,060)
Payments related to share-based compensation awards and other(154)(236)
Net cash provided by financing activities from continuing operations20,839 15,179 
Effect of exchange rate changes on cash(882)1,266 
Net decrease in cash, cash equivalents and restricted cash(21,008)(22,974)
Decrease in cash, cash equivalents and restricted cash from discontinued operations
(144)(11)
Cash, cash equivalents and restricted cash at the beginning of period55,360 119,162 
Cash, cash equivalents and restricted cash at the end of period34,208 96,177 
Less: restricted cash in Prepaid expenses and other current assets(4,027)(3,600)
Less: restricted cash in Other assets (3,936)
Cash and cash equivalents at the end of period$30,181 $88,641 
 
Supplemental cash flow information
Cash paid for:
Interest$10,414 $4,993 
Income taxes, net2,758 1,667 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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GLATFELTER CORPORATION AND SUBSIDIARIES
STATEMENTS OF SHAREHOLDERS’ EQUITY
(unaudited)
In thousands
Common
stock
Capital in
Excess of
Par Value
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Treasury
Stock
Total
Shareholders’
Equity
Balance at January 1, 2024$544 $58,759 $419,810 $(82,509)$(139,750)$256,854 
Net loss(26,347)(26,347)
Other comprehensive loss(7,702)(7,702)
Comprehensive loss(34,049)
Share-based compensation expense671 671 
Delivery of treasury shares:
RSUs and PSAs(2,649)2,495 (154)
Balance at March 31, 2024$544 $56,781 $393,463 $(90,211)$(137,255)$223,322 
 
Balance at January 1, 2023$544 $60,663 $498,863 $(97,895)$(144,171)$318,004 
Net loss(13,584)(13,584)
Other comprehensive income
7,472 7,472 
Comprehensive loss(6,112)
Share-based compensation expense931 931 
Delivery of treasury shares:
RSUs and PSAs(2,338)2,102 (236)
Balance at March 31, 2023$544 $59,256 $485,279 $(90,423)$(142,069)$312,587 


The accompanying notes are an integral part of these condensed consolidated financial statements.
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GLATFELTER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1.ORGANIZATION
Glatfelter Corporation and subsidiaries ("Glatfelter") is a leading global supplier of engineered materials with a strong focus on innovation and sustainability. Glatfelter's high quality, technology-driven, innovative, and customizable nonwovens solutions can be found in products that are Enhancing Everyday Life®. These include personal care and hygiene products, food and beverage filtration, critical cleaning products, medical and personal protection, packaging products, as well as home improvement and industrial applications. Headquartered in Charlotte, NC, our 2023 net sales were $1.4 billion. At March 31, 2024, we employed approximately 2,916 employees worldwide. Glatfelter’s operations utilize a variety of manufacturing technologies including airlaid, wetlaid, and spunlace with fifteen manufacturing sites located in the United States, Canada, Germany, the United Kingdom, France, Spain, and the Philippines. The Company has sales offices in all major geographies serving customers under the Glatfelter and Sontara brands. Additional information about Glatfelter may be found at www.glatfelter.com. The terms “we,” “us,” “our,” “the Company,” or “Glatfelter,” refer to Glatfelter Corporation and subsidiaries unless the context indicates otherwise.


2. ACCOUNTING POLICIES
Basis of Presentation The unaudited condensed consolidated financial statements (“financial statements”) include the accounts of Glatfelter and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated.
We prepared these financial statements in accordance with accounting principles generally accepted in the United States of America (“generally accepted accounting principles” or “GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission pertaining to interim financial statements. In our opinion, the financial statements reflect all normal, recurring adjustments needed to present fairly our results for the interim periods. When preparing these financial statements, we have assumed you have read the audited consolidated financial statements included in our 2023 Annual Report on Form 10-K.
Discontinued Operations The results of operations and cash flows of our former Specialty Papers business have been classified as discontinued operations for all periods presented in the condensed consolidated statements of operations.
Accounting Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingencies as of the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Management believes the estimates and assumptions used in the preparation of these financial statements are reasonable, based upon currently available facts and known circumstances, but recognizes actual results may differ from those estimates and assumptions.
Recently Issued Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). The standard improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for annual reporting periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The guidance is to be applied retrospectively to all prior periods presented in the financial statements. We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures.
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”). The standard enhances income tax disclosure requirements by requiring specified categories and greater disaggregation within the rate reconciliation table, disclosure of income taxes paid by jurisdiction, and provides clarification on uncertain tax positions and related financial statement impacts. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures.
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3.REVENUE

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

 Three months ended
March 31,
In thousands20242023
Revenue by product category  
Airlaid Materials
Feminine hygiene$44,809 $58,245 
Specialty wipes39,919 44,794 
Tabletop23,994 30,415 
Food pads3,807 3,540 
Home care6,147 7,359 
Adult incontinence6,597 7,359 
Other6,256 7,729 
131,529 159,441 
Composite Fibers
Food & beverage68,362 78,944 
Wallcovering13,921 16,157 
Technical specialties15,312 21,453 
Composite laminates11,319 8,983 
Metallized7,236 7,054 
116,150 132,591 
Spunlace
Consumer wipes32,706 38,109 
Critical cleaning28,332 29,149 
Health care8,767 10,375 
Hygiene6,965 5,660 
High performance2,705 3,209 
Beauty care655 221 
80,130 86,723 
Inter-segment sales elimination(553)(547)
Total$327,256 $378,208 
Three months ended
March 31,
In thousands20242023
Revenue by geography
Airlaid Materials
Americas$75,060 $89,837 
Europe, Middle East and Africa53,631 65,991 
Asia Pacific2,838 3,613 
131,529 159,441 
Composite Fibers
- 8 -



Europe, Middle East and Africa67,335 73,850 
Americas28,955 34,212 
Asia Pacific19,860 24,529 
116,150 132,591 
Spunlace
Americas51,267 53,152 
Europe, Middle East and Africa22,552 25,063 
Asia Pacific6,311 8,508 
80,130 86,723 
Inter-segment sales elimination(553)(547)
Total$327,256 $378,208 

4.PROPOSED MERGER
As previously announced on February 7, 2024, we entered into certain definitive agreements with Berry Global Group, Inc. (“Berry”) for Berry to spin-off and merge the majority of its Health, Hygiene and Specialties segment including its Global Nonwovens and Films business (“HHNF”) with Glatfelter (the “Merger”). The board of directors of both Berry and Glatfelter have unanimously approved the Merger. The Merger is expected to occur through a series of transactions, including a Reverse Morris Trust transaction such that HHNF will become a wholly owned subsidiary of Glatfelter. Upon completion of the Merger, Berry shareholders will hold 90% of the outstanding shares of Glatfelter and Glatfelter shareholders will continue to hold 10% of the outstanding shares of Glatfelter. The combined company’s Board of Directors will include 6 members chosen by Berry and 3 chosen from Glatfelter’s existing Board of Directors, with Curt Begle, the current president of the Health, Hygiene & Specialties Division of Berry becoming the Chief Executive Officer. The transaction is expected to close in the second half of 2024, subject to Glatfelter shareholder approval and customary closing conditions and regulatory approvals. Prior to the completion of the Merger, Glatfelter and HHNF will continue to operate as independent companies.


5.GAINS ON DISPOSITION OF PLANT, EQUIPMENT AND TIMBERLANDS

Timberland and other asset sales for the three months ended March 31, 2024 were inconsequential.

The following table sets forth sales of timberlands and other assets completed during the first three months of 2023:
Dollars in thousandsAcresProceedsGain (loss)
2023
Timberlands216$630 $617 
Othern/a83 28 
Total$713 $644 

6.DISCONTINUED OPERATIONS
For the three months ended March 31, 2024 and 2023, we recognized a loss in discontinued operations of $0.2 million and $0.4 million, respectively, primarily related to an insurance claim settlement in 2023 and legal costs incurred in both periods.


7.EARNINGS PER SHARE
The following table sets forth the details of basic and diluted earnings per share (“EPS”) from continuing operations:
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 Three months ended March 31,
In thousands, except per share20242023
Loss from continuing operations$(26,150)$(13,182)
 
Weighted average common shares outstanding used in basic EPS45,184 44,957 
Common shares issuable upon exercise of dilutive stock options
 and PSAs / RSUs
  
Weighted average common shares outstanding and common share
 equivalents used in diluted EPS
45,184 44,957 
 
Loss per share from continuing operations
Basic$(0.58)$(0.29)
Diluted(0.58)(0.29)
The following table sets forth potential common shares outstanding that were not included in the computation of diluted EPS for the periods indicated, because their effect would be anti-dilutive:
 Three months ended March 31,
In thousands20242023
Potential common shares428 618 

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8.ACCUMULATED OTHER COMPREHENSIVE LOSS
The following table sets forth details of the changes in accumulated other comprehensive loss for the three months ended March 31, 2024 and 2023.
In thousandsCurrency translation adjustments Unrealized gain (loss) on derivativesChange in pensions Change in other postretirement defined benefit plans Total
Balance at January 1, 2024$(90,733)$10,555 $(2,692)$361 $(82,509)
Other comprehensive income before reclassifications (net of tax)(9,164)1,895   (7,269)
Amounts reclassified from accumulated other comprehensive income (net of tax)
 (453)24 (4)(433)
Net current period other comprehensive income (loss)(9,164)1,442 24 (4)(7,702)
Balance at March 31, 2024$(99,897)$11,997 $(2,668)$357 $(90,211)
 
Balance at January 1, 2023$(106,242)$11,176 $(3,247)$418 $(97,895)
Other comprehensive income (loss) before reclassifications (net of tax)6,663 1,556   8,219 
Amounts reclassified from accumulated other comprehensive income (net of tax)
 (1,399)660 (8)(747)
Net current period other comprehensive income (loss)6,663 157 660 (8)7,472 
Balance at March 31, 2023$(99,579)$11,333 $(2,587)$410 $(90,423)

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Reclassifications out of accumulated other comprehensive loss and into the condensed consolidated statements of operations were as follows:
 Three months ended
March 31,
 
In thousands20242023 
Description  
Line Item in Statements of Operations
Cash flow hedges (Note 17)
   
Gains on cash flow hedges$165 $(918)Costs of products sold
Tax benefit
(618)(481)Income tax provision (benefit)
Net of tax(453)(1,399) 
Total cash flow hedges(453)(1,399) 
Retirement plan obligations (Note 10)
 
Amortization of deferred benefit pension plans 
Prior service costs4 6 Other, net
Actuarial losses27 22 Other, net
Pension settlement 633 Other, net
 31 661  
Tax benefit(7)(1)Income tax provision (benefit)
Net of tax24 660  
Amortization of deferred benefit other plans 
Prior service costs 12 5 Other, net
Actuarial gain(16)(13)Other, net
 (4)(8) 
Tax expense  Income tax provision (benefit)
Net of tax(4)(8) 
Total reclassifications, net of tax$(433)$(747) 
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9.SHARE-BASED COMPENSATION
On May 5, 2023 (the “Effective Date”), the Board and shareholders approved an amendment and restatement of the Glatfelter Corporation 2022 Long-Term Incentive Plan (the “Equity Plan”) to increase the number of shares available for grant under the Equity Plan (as amended and restated, the “Amended Plan”) (collectively, the “LTIP”). The LTIP is a long-term incentive plan, pursuant to which awards may be granted to full-time or part-time employees, officers, non-employee directors, and consultants of the Company or any subsidiary or affiliate of the Company, including stock options, stock-only stock appreciation rights (“SOSARs”), restricted stock awards, restricted stock units (“RSUs”), performance share awards (“PSAs”), and other share-based awards. The Amended Plan was adopted primarily to increase the number of shares of Company common stock reserved for equity-based awards by 675,000 shares (in addition to any shares that remained available for awards under the Equity Plan as of the Effective Date and any shares subject to outstanding awards granted under the Equity Plan as of the Effective Date). As of March 31, 2024, there were 653,316 shares of common stock available for future issuance under the LTIP.
Pursuant to terms of the LTIP, we have issued to eligible participants RSUs, PSAs and SOSARs.

Restricted Stock Units and Performance Share Awards In the first three months of 2024, we granted RSUs to employees under our LTIP. The RSUs awarded in 2024 vest over three years, with 33% vesting on December 31, 2024, 33% on February 28, 2026, and 34% vesting on February 28, 2027. PSAs were not awarded in 2024. Instead, there was a cash restoration award (paid in cash instead of stock) that vests the same as the RSUs. This cash restoration award is outside of the LTIP. In 2023, we granted RSUs and PSAs to employees under our LTIP. In 2023, 50% of fair value of the awards granted were RSUs, which vest based on the passage of time, generally over a graded three-year period or, in certain instances, the RSUs were cliff vesting after one or three years. The remaining 50% of the fair value of the awards granted in 2023 were PSAs. The PSAs awarded vest based on either the achievement of cumulative financial performance targets covering a two-year period or based on the three-year total shareholder return relative to a broad market index. The performance measures include a minimum, target and maximum performance level providing the grantees an opportunity to receive more or less shares than targeted depending on actual financial performance.
For RSUs, the grant date fair value of the awards, or the closing price per common share on the date of the award, is used to determine the amount of expense to be recognized over the applicable service period. For PSAs, the grant date fair value is estimated using a lattice model. The significant inputs include the stock price, volatility, dividend yield, and risk-free rate of return. Settlement of RSUs and PSAs will be made in shares of our common stock currently held in treasury.
The following table summarizes RSU and PSA activity during periods indicated:
Units20242023
Balance at January 1,2,273,939 1,650,152 
Granted1,980,593 1,190,206 
Forfeited(144,681)(98,717)
Shares delivered(239,034)(199,263)
Balance at March 31,3,870,817 2,542,378 
The amount granted in 2023 included 697,045 of PSAs exclusive of reinvested dividends.
The following table sets forth aggregate RSU and PSA compensation expense included in continuing operations for the periods indicated:
 March 31,
In thousands20242023
Three months ended$671 $931 

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Stock-Only Stock Appreciation Rights Under terms of the SOSAR, a recipient receives the right to a payment in the form of shares of common stock equal to the difference, if any, in the fair market value of one share of common stock at the time of exercising the SOSAR and the exercise price. All SOSARs are vested, exercisable and have a term of ten years. No SOSARs have been awarded since 2016.
The following table sets forth information related to outstanding SOSARs:
 20242023
Shares
Wtd Avg
Exercise
Price
Shares
Wtd Avg
Exercise
Price
Outstanding at January 1,531,519 $22.10 769,544 $21.34 
Granted    
Exercised    
Canceled / forfeited(103,742)29.89 (151,487)18.36 
Outstanding at March 31,427,777 $20.21 618,057 $22.07 


10.RETIREMENT PLANS AND OTHER POST-RETIREMENT BENEFITS
The following tables provide information with respect to the net periodic costs of our pension and post-retirement medical benefit plans included in continuing operations.
 Three months ended
March 31,
In thousands20242023
Pension Benefits  
Service cost$ $ 
Interest cost355 411 
Amortization of prior service cost4 6 
Amortization of actuarial loss27 22 
Pension settlement charge 633 
Total net periodic benefit expense$386 $1,072 
 
Other Benefits
Service cost$5 $3 
Interest cost41 44 
Amortization of prior service cost12 5 
Amortization of actuarial gain(16)(13)
Total net periodic benefit expense$42 $39 

11.INCOME TAXES
Income taxes are recognized for the amount of taxes payable or refundable for the current year, and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in our condensed consolidated financial statements or tax returns. The effects of income taxes are measured based on enacted tax laws and rates.
For the three months ended March 31, 2024, we had a pretax loss from continuing operations of $21.0 million and income tax expense of $5.2 million. The effective income tax rate for the three months ended March 31, 2024 was unfavorably impacted by the jurisdictional mix of pretax results among the Company and its subsidiaries and losses which generated no tax benefit in domestic and certain foreign jurisdictions.
For the three months ended March 31, 2024, we recorded an increase in the valuation allowance of $5.2 million for U.S. federal and certain foreign jurisdictions against our net deferred tax assets. In assessing the need for a valuation
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allowance, management considers all available positive and negative evidence in its analysis. Based on this analysis, we recorded a valuation allowance for the portion of deferred tax assets where the weight of the evidence indicated it is more likely than not that the deferred assets will not be realized.
As of March 31, 2024 and December 31, 2023, we had $61.6 million and $60.7 million, respectively, of gross unrecognized tax benefits. As of March 31, 2024, if such benefits were to be recognized, approximately $59.0 million would be recorded as a component of income tax expense, thereby affecting our effective tax rate.
The amount of income taxes we pay is subject to ongoing audits by federal, state and foreign tax authorities, which often result in proposed assessments. Management performs a comprehensive review of its global tax positions on a quarterly basis and accrues amounts for uncertain tax positions. Based on these reviews and the result of discussions and resolutions of matters with tax authorities and the closure of tax years subject to tax audit, reserves are adjusted as necessary. However, future results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are determined or resolved or as statutes are closed. Due to potential resolution of federal, state and foreign examinations, and the lapse of various statutes of limitation, it is reasonably possible our gross unrecognized tax benefits may decrease within the next twelve months by a range of zero to $21.0 million. We recognize interest and penalties related to uncertain tax positions as income tax expense.
The following table summarizes information included in continuing operations related to interest on uncertain tax positions:
 Three months ended March 31,
In millions20242023
Interest expense $0.7 $0.5 
 March 31,
2024
December 31,
2023
Accrued interest payable $7.0 $6.3 
Accrued penalties2.8 2.8 

In 2021, the Organization for Economic Cooperation and Development (OECD) published Pillar Two Model Rules defining a global minimum tax, which calls for the taxation of large corporations at a minimum rate of 15%. The OECD has since issued administrative guidance providing transition and safe harbor rules around the implementation of the Pillar Two global minimum tax. Effective January 1, 2024, a number of countries have proposed or enacted legislation to implement core elements of the Pillar Two proposal. Pillar Two did not have a significant impact on Glatfelter's first quarter 2024 results. While Glatfelter is monitoring developments and evaluating the potential impact on future periods, Glatfelter does not expect Pillar Two to have a significant impact on its 2024 financial results.
12.INVENTORIES
Inventories, net of reserves, were as follows:
In thousandsMarch 31,
2024
December 31,
2023
Raw materials$83,088 $82,012 
In-process and finished150,126 150,220 
Supplies66,445 66,016 
Total$299,659 $298,248 

- 15 -



13.GOODWILL AND OTHER INTANGIBLE ASSETS
The following table sets forth changes in the amounts of goodwill and other intangible assets recorded by each of our segments during the periods indicated:
In thousandsDecember 31,
2023
Purchase price allocation adjustmentTranslationMarch 31,
2024
Goodwill    
Airlaid Materials$107,691 $ $(1,554)$106,137 
Total$107,691 $ $(1,554)$106,137 
Other Intangible AssetsDecember 31,
2023
Amortization
TranslationMarch 31,
2024
Airlaid Materials
Tradename$3,566 $— $(77)$3,489 
Accumulated amortization(944)(47)24 (967)
Net2,622 (47)(53)2,522 
 
Technology and related18,121 — (379)17,742 
Accumulated amortization(6,819)(308)156 (6,971)
Net11,302 (308)(223)10,771 
 
Customer relationships and related43,986 — (519)43,467 
Accumulated amortization(17,685)(981)334 (18,332)
Net26,301 (981)(185)25,135 
Spunlace
Products and Tradenames30,064 — (2,172)27,892 
Accumulated amortization(3,452)(403)284 (3,571)
Net26,612 (403)(1,888)24,321 
Technology and related15,833 — (1,144)14,689 
Accumulated amortization(3,146)(332)222 (3,256)
Net12,687 (332)(922)11,433 
Customer relationships and related30,478 — (2,201)28,277 
Accumulated amortization(3,669)(429)300 (3,798)
Net26,809 (429)(1,901)24,479 
Total intangibles142,048 — (6,492)135,556 
Total accumulated amortization(35,715)(2,500)1,320 (36,895)
Net intangibles$106,333 $(2,500)$(5,172)$98,661 

14.LEASES
We enter into a variety of arrangements in which we are the lessee for the use of automobiles, forklifts and other production equipment, production facilities, warehouses, office space and land. We determine if an arrangement contains a lease at inception. All our lease arrangements are operating leases and are recorded in the condensed consolidated balance sheet under the caption “Other assets” and the lease obligation is under “Other current liabilities” and “Other long-term liabilities.” We do not have any finance leases.
Operating lease right of use (“ROU”) assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. ROU assets also include any initial direct costs incurred and any lease payments made at or before the lease commencement date, less lease incentives received. We
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use our incremental borrowing rate based on information available at the commencement date in determining the lease liabilities as our leases generally do not provide an implicit rate. For purposes of recording the lease arrangement, the term of lease may include options to extend or terminate when we are reasonably certain that the option will be exercised. Lease expense is recognized on a straight-line basis over the lease term.
The following table sets forth information related to our leases as of the periods indicated.

Dollars in thousandsMarch 31,
2024
December 31,
2023
Right of use asset$25,222$24,991
Weighted average discount rate3.85 %3.63 %
Weighted average remaining maturity (years)
1920
The following table sets forth operating lease expense for the periods indicated:
 March 31,
In thousands20242023
Three months ended$1,599 $1,825 
The following table sets forth required remaining future minimum lease payments during the years indicated:
In thousands 
2024$4,557 
20255,358 
20263,059 
20272,443 
20281,844 
Thereafter18,847 

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15.LONG-TERM DEBT
Long-term debt is summarized as follows:
In thousandsMarch 31,
2024
December 31,
2023
Revolving credit facility, due Sep 2026
$119,165 $99,450 
4.750% Senior Notes, due Oct 2029
500,000 500,000 
11.25% Term loan, due Mar 2029
265,517 271,215 
1.10% Term Loan, due Mar 2024
 1,005 
Total long-term debt884,682 871,670 
Less current portion (1,005)
Unamortized deferred issuance costs(16,480)(17,502)
Long-term debt, net of current portion$868,202 $853,163 

On September 2, 2021, we entered into a restatement agreement as part of a Fourth Amended and Restated $400.0 million Revolving Credit Facility and a €220.0 million Term Loan (collectively, the “Credit Agreement”).
On May 9, 2022, we entered into an amendment to the Credit Agreement, which was further amended on March 30, 2023. The March 30, 2023 amendment to the Credit Agreement reduced the Revolving Credit Facility to $250.0 million and had us fully extinguish the €220.0 million Term Loan. All remaining principal outstanding and accrued interest under the Revolving Credit Facility will be due and payable on September 2, 2026.
The Credit Agreement contains a number of customary covenants for financings of this type that, among other things, restrict our ability to dispose of or create liens on assets, incur additional indebtedness, limits certain intercompany financing arrangements, make acquisitions and engage in mergers or consolidations. The Credit Agreement also contains covenants requiring a minimum debt coverage ratio. As of March 31, 2024, the leverage ratio, as calculated in accordance with the definition in our Credit Agreement, was 3.7x. A breach of these requirements would give rise to certain remedies under the Revolving Credit Facility, among which is the termination of the agreement.
On March 30, 2023, we entered into a €250.0 million Term Loan with certain affiliates of Angelo, Gordon & Co., L.P. (“AG Loan”). The net proceeds from the AG Loan were used to extinguish the €220.0 million Term Loan, to repay a portion of outstanding revolving borrowings under the Revolving Credit Facility, for working capital and general corporate purposes and to pay estimated fees and expenses. The AG Loan will mature on March 23, 2029 and is prepayable, in whole or in part, at any time at the prepayable premium specified in the Term Loan Agreement. Prior to September 30, 2024, we may prepay some or all of the AG Loan at a "make-whole" premium as specified.
On October 25, 2021, we issued $500.0 million aggregate principal amount of 4.750% senior notes due 2029 (the “Notes”). The net proceeds from the offering of the Notes, together with cash on hand, were used to pay the purchase price of the Jacob Holm acquisition, to repay certain indebtedness of Jacob Holm, to repay outstanding revolving borrowings under the Revolving Credit Facility, and to pay estimated fees and expenses. The Notes will mature on November 15, 2029. The Notes are redeemable, in whole or in part, at any time at the redemption prices specified in the Indenture. Prior to November 15, 2024, we may redeem some or all of the Notes at a "make-whole" premium as specified in the Indenture.
Glatfelter Gernsbach GmbH (“Gernsbach”), a wholly-owned subsidiary of ours, entered into a series of borrowing agreements with IKB Deutsche Industriebank AG, Düsseldorf (“IKB”). Each of the borrowings require quarterly repayments of principal and interest and provide for representations, warranties and covenants customary for financings of these types. The financial covenants of these borrowings are calculated by reference to the Credit Agreement. These borrowings were fully extinguished on March 14, 2023.
In 2021, Gernsbach also entered into two fixed-rate non-amortizing term loans with certain financial institutions. Similar to the IKB loans discussed above, the financial covenants of these borrowings are calculated by reference to the Credit Agreement. On February 28, 2023, one of these term loans for €20.0 million was fully extinguished. The remaining term loan matured in March 2024.
Aggregated unamortized deferred debt issuance costs incurred in connection with all of our outstanding debt totaled $16.5 million at March 31, 2024. The deferred costs are being amortized on a straight-line basis over the life of the underlying instruments. Amortization expense related to deferred debt issuance costs totaled $0.9 million and $2.2 million in 2024 and 2023, respectively.
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The following schedule sets forth the amortization of our term loan agreements together with the maturity of our other long-term debt during the indicated year.

In thousands
2025$
2026119,165
2027
2028
2029765,517
Thereafter

Glatfelter Corporation guarantees all debt obligations of its subsidiaries. All such obligations are recorded in these consolidated financial statements.
As of March 31, 2024 and December 31, 2023, we had $4.1 million and $5.7 million, respectively, of letters of credit issued to us by certain financial institutions. The letters of credit, which reduce amounts available under our Revolving Credit Facility, provide financial assurances for the performance of long-term monitoring activities associated with the Fox River environmental matter and for the benefit of certain state workers compensation insurance agencies in conjunction with our self-insurance program. We bear the credit risk on this amount to the extent that we do not comply with the provisions of certain agreements. No amounts are outstanding under the letters of credit.

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16.FAIR VALUE OF FINANCIAL INSTRUMENTS
The amounts reported on the condensed consolidated balance sheets for cash and cash equivalents, accounts receivable, accounts payable and short-term debt approximate their respective fair value. The following table sets forth carrying value and fair value of long-term debt:
 March 31, 2024December 31, 2023
In thousands
Carrying
Value
Fair Value
Carrying
Value
Fair Value
Revolving credit facility, due Sep 2026
$119,165 $119,165 $99,450 $99,450 
4.750% Senior Notes, due Oct 2029
500,000 427,500 500,000 346,250 
11.25% Term loan, due Mar 2029
265,517 273,501 271,215 282,586 
1.10% Term Loan, due Mar 2024
  1,005 993 
Total$884,682 $820,166 $871,670 $729,279 
The values set forth above are based on observable inputs and other relevant market data (Level 2). The fair value of financial derivatives is set forth below in Note 18.

17.FINANCIAL DERIVATIVES AND HEDGING ACTIVITIES
As part of our overall risk management practices, we enter into financial derivatives primarily designed to either i) hedge foreign currency risks associated with forecasted transactions (“cash flow hedges”); ii) mitigate the impact that changes in currency exchange rates have on intercompany financing transactions and foreign currency denominated receivables and payables (“foreign currency hedges”); or iii) convert variable-interest-rate debt to fixed rates.
Derivatives Designated as Hedging Instruments - Cash Flow Hedges We use currency forward contracts as cash flow hedges to manage our exposure to fluctuations in the currency exchange rates on certain forecasted production costs. Currency forward contracts involve fixing the exchange for delivery of a specified amount of foreign currency on a specified date. As of March 31, 2024, the maturity of currency forward contracts ranged from one month to 15 months.
We designate certain currency forward contracts as cash flow hedges of forecasted raw material purchases, certain production costs or capital expenditures with exposure to changes in foreign currency exchange rates. Changes in the fair value of derivatives designated and that qualify as cash flow hedges of foreign exchange risk is deferred as a component of accumulated other comprehensive income in the accompanying condensed consolidated balance sheets. With respect to hedges of forecasted raw material purchases or production costs, the amount deferred is subsequently reclassified into costs of products sold in the period that inventory produced using the hedged transaction affects earnings. For hedged capital expenditures, deferred gains or losses are reclassified and included in the historical cost of the capital asset and subsequently affect earnings as depreciation is recognized.
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We had the following outstanding derivatives that were used to hedge foreign exchange risks associated with forecasted transactions and designated as hedging instruments:
In thousandsMarch 31,
2024
December 31,
2023
Derivative  
Sell/Buy - sell notional  
Euro / British Pound15,58015,210
Philippine Peso / Euro19,962137,449
U.S. Dollar / British Pound14,03018,470
U.S. Dollar / Euro344277
 
Sell/Buy - buy notional
Euro / Philippine Peso683,231788,342
British Pound / Philippine Peso947,687923,653
Euro / U.S. Dollar80,44493,397
U.S. Dollar / Canadian Dollar32,89230,914
British Pound / U.S. Dollar3682,211
Derivatives Designated as Hedging Instruments – Net Investment Hedge The €220 million Term Loan discussed in Note 16 – “Long-Term Debt” was designated as a net investment hedge of our Euro functional currency foreign subsidiaries and was extinguished on March 30, 2023 in conjunction with the amendment of the Credit Facility. During the first three months of 2023, we recognized a pre-tax loss of $3.7 million on the remeasurement of the term loan from changes in currency exchange rates. Such amounts are recorded as a component of Other Comprehensive Income (Loss).
Derivatives Not Designated as Hedging Instruments - Foreign Currency Hedges We also entered into forward foreign exchange contracts to mitigate the impact changes in currency exchange rates have on balance sheet monetary assets and liabilities. None of these contracts are designated as hedges for financial accounting purposes and, accordingly, changes in value of the foreign exchange forward contracts and in the offsetting underlying on-balance-sheet transactions are reflected in the accompanying condensed consolidated statements of operations under the caption “Other, net.”
The following sets forth derivatives used to mitigate the impact changes in currency exchange rates have on balance sheet monetary assets and liabilities:
In thousandsMarch 31,
2024
December 31,
2023
Derivative  
Sell/Buy - sell notional  
U.S. Dollar / British Pound22,00022,800
British Pound / Euro3,5603,500
Japanese Yen / Euro47,920
U.S. Dollar / Swiss Franc14,94213,620
British Pound / Swiss Franc1,2502,240
Euro / Swiss Franc4,7324,940
Euro / U.S. Dollar11,50011,000
U.S Dollar / Philippine Peso7,7606,700
Sell/Buy - buy notional
Euro / U.S. Dollar8,70010,200
British Pound / Euro11,8116,470
Swiss Franc / Danish Krone990
U.S. Dollar / Canadian Dollar
3,1201,120
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These contracts have maturities of one month from the date originally entered into.
Fair Value Measurements The following table summarizes the fair values of derivative instruments for the period indicated and the line items in the accompanying condensed consolidated balance sheets where the instruments are recorded:
In thousandsMarch 31,
2024
December 31, 2023March 31,
2024
December 31, 2023
Balance sheet captionPrepaid Expenses and Other
Current Assets
Other
Current Liabilities
Designated as hedging:    
Forward foreign currency exchange contracts$1,132 $851