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, 2019
or
☐ |
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from to
96 South George Street, Suite 520
York, Pennsylvania 17401
(Address of principal executive offices)
(717) 225-4711
(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 |
|
P. H. Glatfelter Company |
|
23-0628360 |
|
Pennsylvania |
|
N/A
(Former name or former address, if changed since last report)
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 April 25, 2019 totaled 44,058,227 shares.
P. H. GLATFELTER COMPANY AND SUBSIDIARIES
REPORT ON FORM 10-Q
For the QUARTERLY PERIOD ENDED
March 31, 2019
Table of Contents
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Item 1 |
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2 |
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3 |
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Condensed Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018 (unaudited) |
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4 |
|||||||
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5 |
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6 |
||||||||
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Notes to Condensed Consolidated Financial Statements (unaudited) |
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7 |
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1. |
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7 |
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2. |
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7 |
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3. |
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8 |
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4. |
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9 |
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5. |
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10 |
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6. |
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11 |
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7. |
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11 |
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8. |
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12 |
9. |
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13 |
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10. |
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14 |
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11. |
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15 |
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12. |
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15 |
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13. |
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15 |
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14. |
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15 |
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15. |
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16 |
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16. |
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17 |
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17. |
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17 |
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18. |
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18 |
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19. |
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20 |
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Item 2 |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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21 |
|||||||
Item 3 |
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27 |
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Item 4 |
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27 |
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28 |
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Item 6 |
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28 |
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28 |
P. H. GLATFELTER COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
|
|
Three months ended March 31 |
|
|||||
In thousands, except per share |
|
2019 |
|
|
2018 |
|
||
Net sales |
|
$ |
229,133 |
|
|
$ |
211,207 |
|
Costs of products sold |
|
|
193,516 |
|
|
|
174,647 |
|
Gross profit |
|
|
35,617 |
|
|
|
36,560 |
|
Selling, general and administrative expenses |
|
|
24,622 |
|
|
|
29,931 |
|
Gains on dispositions of plant, equipment and timberlands, net |
|
|
(669 |
) |
|
|
(1,116 |
) |
Operating income |
|
|
11,664 |
|
|
|
7,745 |
|
Non-operating income (expense) |
|
|
|
|
|
|
|
|
Interest expense |
|
|
(4,746 |
) |
|
|
(3,450 |
) |
Interest income |
|
|
505 |
|
|
|
54 |
|
Other, net |
|
|
(962 |
) |
|
|
(323 |
) |
Total non-operating expense |
|
|
(5,203 |
) |
|
|
(3,719 |
) |
Income from continuing operations before income taxes |
|
|
6,461 |
|
|
|
4,026 |
|
Income tax provision |
|
|
1,858 |
|
|
|
1,762 |
|
Income from continuing operations |
|
|
4,603 |
|
|
|
2,264 |
|
|
|
|
|
|
|
|
|
|
Discontinued operations: |
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
714 |
|
|
|
4,459 |
|
Income tax provision |
|
|
31 |
|
|
|
1,007 |
|
Income from discontinued operations |
|
|
683 |
|
|
|
3,452 |
|
Net income |
|
$ |
5,286 |
|
|
$ |
5,716 |
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
|
|
|
|
|
|
|
Income from continuing operations |
|
$ |
0.10 |
|
|
$ |
0.05 |
|
Income from discontinued operations |
|
|
0.02 |
|
|
|
0.08 |
|
Basic earnings per share |
|
$ |
0.12 |
|
|
$ |
0.13 |
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
|
|
|
|
|
|
|
Income from continuing operations |
|
$ |
0.10 |
|
|
$ |
0.05 |
|
Income from discontinued operations |
|
|
0.02 |
|
|
$ |
0.08 |
|
Diluted earnings per share |
|
$ |
0.12 |
|
|
$ |
0.13 |
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per common share |
|
$ |
0.13 |
|
|
$ |
0.13 |
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding |
|
|
|
|
|
|
|
|
Basic |
|
|
44,027 |
|
|
|
43,700 |
|
Diluted |
|
|
44,279 |
|
|
|
44,567 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
- 2 -
GLATFELTER
03.31.19 Form 10-Q
P. H. GLATFELTER COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
|
|
Three months ended March 31 |
|
|
|||||
In thousands |
|
2019 |
|
|
2018 |
|
|
||
Net income |
|
$ |
5,286 |
|
|
$ |
5,716 |
|
|
Foreign currency translation adjustments |
|
|
(5,163 |
) |
|
|
12,747 |
|
|
Net change in: |
|
|
|
|
|
|
|
|
|
Deferred gains (losses) on cash flow hedges, net of taxes |
|
|
|
|
|
|
|
|
|
of $(834) and $583, respectively |
|
|
2,222 |
|
|
|
(1,802 |
) |
|
Unrecognized retirement obligations, net of taxes |
|
|
|
|
|
|
|
|
|
of $(145) and $(977), respectively |
|
|
846 |
|
|
|
3,075 |
|
|
Other comprehensive income (loss) |
|
|
(2,095 |
) |
|
|
14,020 |
|
|
Comprehensive income |
|
$ |
3,191 |
|
|
$ |
19,736 |
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
- 3 -
GLATFELTER
03.31.19 Form 10-Q
P. H. GLATFELTER COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
|
March 31 |
|
|
December 31 |
|
||
In thousands |
2019 |
|
|
2018 |
|
||
Assets |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
76,666 |
|
|
$ |
142,685 |
|
Accounts receivable, net |
|
129,200 |
|
|
|
119,772 |
|
Inventories |
|
184,870 |
|
|
|
173,411 |
|
Prepaid expenses and other current assets |
|
40,189 |
|
|
|
33,418 |
|
Total current assets |
|
430,925 |
|
|
|
469,286 |
|
|
|
|
|
|
|
|
|
Plant, equipment and timberlands, net |
|
544,758 |
|
|
|
556,044 |
|
Goodwill |
|
151,918 |
|
|
|
153,463 |
|
Intangible assets, net |
|
89,886 |
|
|
|
93,614 |
|
Other assets |
|
80,378 |
|
|
|
67,347 |
|
Total assets |
$ |
1,297,865 |
|
|
$ |
1,339,754 |
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders' Equity |
|
|
|
|
|
|
|
Current portion of long-term debt |
$ |
19,852 |
|
|
$ |
10,785 |
|
Accounts payable |
|
120,033 |
|
|
|
120,701 |
|
Dividends payable |
|
5,732 |
|
|
|
5,719 |
|
Environmental liabilities |
|
5,047 |
|
|
|
23,000 |
|
Other current liabilities |
|
70,985 |
|
|
|
72,597 |
|
Total current liabilities |
|
221,649 |
|
|
|
232,802 |
|
|
|
|
|
|
|
|
|
Long-term debt |
|
370,574 |
|
|
|
400,962 |
|
Deferred income taxes |
|
77,291 |
|
|
|
78,651 |
|
Other long-term liabilities |
|
92,163 |
|
|
|
88,441 |
|
Total liabilities |
|
761,677 |
|
|
|
800,856 |
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
Shareholders’ equity |
|
|
|
|
|
|
|
Common stock |
|
544 |
|
|
|
544 |
|
Capital in excess of par value |
|
60,565 |
|
|
|
62,239 |
|
Retained earnings |
|
769,857 |
|
|
|
770,305 |
|
Accumulated other comprehensive loss |
|
(139,535 |
) |
|
|
(137,440 |
) |
|
|
691,431 |
|
|
|
695,648 |
|
Less cost of common stock in treasury |
|
(155,243 |
) |
|
|
(156,750 |
) |
Total shareholders’ equity |
|
536,188 |
|
|
|
538,898 |
|
Total liabilities and shareholders’ equity |
$ |
1,297,865 |
|
|
$ |
1,339,754 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
- 4 -
GLATFELTER
03.31.19 Form 10-Q
P. H. GLATFELTER COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
|
Three months ended March 31 |
|
|||||
In thousands |
2019 |
|
|
2018 |
|
||
Operating activities |
|
|
|
|
|
|
|
Net income |
$ |
5,286 |
|
|
$ |
5,716 |
|
Income from discontinued operations, net of taxes |
|
(683 |
) |
|
|
(3,452 |
) |
|
|
|
|
|
|
|
|
Adjustments to reconcile to net cash used by continuing operations: |
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
12,788 |
|
|
|
11,336 |
|
Amortization of debt issue costs and original issue discount |
|
1,236 |
|
|
|
290 |
|
Deferred income tax benefit |
|
(1,240 |
) |
|
|
(3,251 |
) |
Gains on dispositions of plant, equipment and timberlands, net |
|
(669 |
) |
|
|
(1,116 |
) |
Share-based compensation |
|
477 |
|
|
|
1,841 |
|
Change in operating assets and liabilities |
|
|
|
|
|
|
|
Accounts receivable |
|
(10,364 |
) |
|
|
(5,714 |
) |
Inventories |
|
(13,233 |
) |
|
|
(15,060 |
) |
Prepaid and other current assets |
|
(4,149 |
) |
|
|
(3,263 |
) |
Accounts payable |
|
2,066 |
|
|
|
3,261 |
|
Accruals and other current liabilities |
|
(15,956 |
) |
|
|
1,658 |
|
Other |
|
296 |
|
|
|
605 |
|
Net cash used by operating activities from continuing operations |
|
(24,145 |
) |
|
|
(7,149 |
) |
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
|
Expenditures for purchases of plant, equipment and timberlands |
|
(5,865 |
) |
|
|
(20,068 |
) |
Proceeds from disposals of plant, equipment and timberlands, net |
|
689 |
|
|
|
1,157 |
|
Acquisition, net of cash acquired |
|
(1,974 |
) |
|
|
— |
|
Other |
|
(90 |
) |
|
|
(28 |
) |
Net cash used by investing activities from continuing operations |
|
(7,240 |
) |
|
|
(18,939 |
) |
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
|
Net (repayments) borrowings under revolving credit facility |
|
(11,488 |
) |
|
|
25,388 |
|
Repayment of 5.375% Notes |
|
(250,000 |
) |
|
|
— |
|
Proceeds from term loans |
|
248,644 |
|
|
|
— |
|
Payments of borrowing costs |
|
(1,757 |
) |
|
|
— |
|
Repayment of term loans |
|
(2,646 |
) |
|
|
(2,902 |
) |
Payments of dividends |
|
(5,720 |
) |
|
|
(5,679 |
) |
Payments related to share-based compensation awards and other |
|
(644 |
) |
|
|
(965 |
) |
Net cash provided (used) by financing activities from continuing operations |
|
(23,611 |
) |
|
|
15,842 |
|
Effect of exchange rate changes on cash |
|
(658 |
) |
|
|
2,458 |
|
Net decrease in cash and cash equivalents |
|
(55,654 |
) |
|
|
(7,788 |
) |
Change in cash and cash equivalents from discontinued operations |
|
(10,365 |
) |
|
|
8,846 |
|
Cash and cash equivalents at the beginning of period |
|
142,685 |
|
|
|
116,219 |
|
Cash and cash equivalents at the end of period |
$ |
76,666 |
|
|
$ |
117,277 |
|
|
|
|
|
|
|
|
|
Supplemental cash flow information |
|
|
|
|
|
|
|
Cash paid for: |
|
|
|
|
|
|
|
Interest, net of amounts capitalized |
$ |
5,989 |
|
|
$ |
— |
|
Income taxes, net |
|
2,956 |
|
|
|
2,956 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
- 5 -
GLATFELTER
03.31.19 Form 10-Q
P. H. GLATFELTER COMPANY AND SUBSIDIARIES
STATEMENTS OF SHAREHOLDERS’ EQUITY
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
Capital in Excess of Par Value |
|
|
Retained Earnings |
|
|
Accumulated Other Comprehensive Loss |
|
|
Treasury Stock |
|
|
Total Shareholders’ Equity |
|
|||||||
Balance at January 1, 2018 |
$ |
544 |
|
|
$ |
62,594 |
|
|
$ |
948,411 |
|
|
$ |
(140,675 |
) |
|
$ |
(161,946 |
) |
|
$ |
708,928 |
|
Reclassisfication pursuant to ASU No. 2018-02 |
|
|
|
|
|
|
|
|
|
22,298 |
|
|
|
(22,298 |
) |
|
|
|
|
|
|
— |
|
Net income |
|
|
|
|
|
|
|
|
|
5,716 |
|
|
|
|
|
|
|
|
|
|
|
5,716 |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
14,020 |
|
|
|
|
|
|
|
14,020 |
|
Comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,736 |
|
Cash dividends declared ($0.13 per share) |
|
|
|
|
|
|
|
|
|
(5,689 |
) |
|
|
|
|
|
|
|
|
|
|
(5,689 |
) |
Share-based compensation expense |
|
|
|
|
|
1,982 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,982 |
|
Delivery of treasury shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSUs and PSAs |
|
|
|
|
|
(1,160 |
) |
|
|
|
|
|
|
|
|
|
|
685 |
|
|
|
(475 |
) |
Employee stock options exercised — net |
|
|
|
|
|
(1,057 |
) |
|
|
|
|
|
|
|
|
|
|
567 |
|
|
|
(490 |
) |
Balance at March 31, 2018 |
$ |
544 |
|
|
$ |
62,359 |
|
|
$ |
970,736 |
|
|
$ |
(148,953 |
) |
|
$ |
(160,694 |
) |
|
$ |
723,992 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2019 |
$ |
544 |
|
|
$ |
62,239 |
|
|
$ |
770,305 |
|
|
$ |
(137,440 |
) |
|
$ |
(156,750 |
) |
|
$ |
538,898 |
|
Net income |
|
|
|
|
|
|
|
|
|
5,286 |
|
|
|
|
|
|
|
|
|
|
|
5,286 |
|
Other comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,095 |
) |
|
|
|
|
|
|
(2,095 |
) |
Comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,191 |
|
Cash dividends declared ($0.13 per share) |
|
|
|
|
|
|
|
|
|
(5,734 |
) |
|
|
|
|
|
|
|
|
|
|
(5,734 |
) |
Share-based compensation expense |
|
|
|
|
|
477 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
477 |
|
Delivery of treasury shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSUs and PSAs |
|
|
|
|
|
(992 |
) |
|
|
|
|
|
|
|
|
|
|
670 |
|
|
|
(322 |
) |
Employee stock options exercised — net |
|
|
|
|
|
(1,159 |
) |
|
|
|
|
|
|
|
|
|
|
837 |
|
|
|
(322 |
) |
Balance at March 31, 2019 |
$ |
544 |
|
|
$ |
60,565 |
|
|
$ |
769,857 |
|
|
$ |
(139,535 |
) |
|
$ |
(155,243 |
) |
|
$ |
536,188 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
- 6 -
GLATFELTER
03.31.19 Form 10-Q
P. H. GLATFELTER COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. |
P. H. Glatfelter Company and subsidiaries is a leading global supplier of high-quality, innovative and customizable solutions found in tea and single-serve coffee filtration, personal hygiene and packaging products, as well as home improvement and industrial applications. We are headquartered in York, Pennsylvania, and operate facilities in the United States, Canada, Germany, France, the United Kingdom and the Philippines. We have sales and distribution offices in the U.S., Europe, Russia and China and our products are marketed worldwide, either directly to customers or through brokers and agents. The terms “we,” “us,” “our,” “the Company,” or “Glatfelter,” refer to P. H. Glatfelter Company and subsidiaries unless the context indicates otherwise.
2. |
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 2018 Annual Report on Form 10-K.
Discontinued Operations The results of operations for our Specialty Papers Business Unit have been classified as discontinued operations for all periods presented in the condensed consolidated statements of income.
Accounting Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingencies as of the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Management believes the estimates and assumptions used in the preparation of these financial statements are reasonable, based upon currently available facts and known circumstances, but recognizes actual results may differ from those estimates and assumptions.
Recently Issued Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 842”). This ASU requires organizations to recognize on its balance sheet the assets and liabilities for the rights and obligations created by leases. We adopted ASU 842 as of January 1, 2019 and elected to follow a modified retrospective method which permitted us to adopt the standard without restating previously reported periods. As a result of adopting ASU 842, we recorded a right of use asset and corresponding lease obligation of approximately $14.1 million. Refer to Note 14 “Leases” for additional information.
In August 2017, the FASB issued ASU No. 2017-12, "Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities" (“ASU No. 2017-12”), which simplifies the application of hedge accounting and more closely aligns hedge accounting with an entity’s risk management strategies. ASU No. 2017-12 also amends the manner in which hedge effectiveness may be performed and changes the presentation of hedge ineffectiveness in the financial statements. We adopted ASU No. 2017-12 effective January 1, 2019 but it had an insignificant effect on our results of operations and financial position.
In June 2016, the FASB issued ASU No. 2016-13 “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” that changes the impairment model for most financial instruments, including trade receivables from an incurred loss method to a new forward-looking approach, based on expected losses. Under the new guidance, an allowance is recognized based on an estimate of expected credit losses. This standard is effective for us in the first quarter of 2020 and must be adopted using a modified retrospective approach. We are currently assessing the impact this standard may have on our results of operations and financial position.
- 7 -
GLATFELTER
03.31.19 Form 10-Q
3. |
On October 1, 2018, we completed our acquisition of Georgia-Pacific’s European nonwovens business (the “GP Business”) for $186 million including a working capital adjustment and post-closing purchase price adjustments of $2.0 million.
The acquisition consisted of Georgia-Pacific’s operations located in Steinfurt, Germany, along with sales offices located in France and Italy. The Steinfurt facility produces high-quality airlaid products for the table-top, wipes, hygiene, food pad, and other nonwoven materials markets, competing in the marketplace with nonwoven technologies and substrates, as well as other materials focused primarily on consumer based end-use applications. The facility is a state-of-the-art, 32,000-metric-ton-capacity manufacturing facility that employs approximately 220 people. Steinfurt’s results were reported prospectively from the acquisition date as part of our Advanced Airlaid Materials business unit.
We financed the transaction through a combination of cash on hand and borrowings under our revolving credit facility.
The preliminary allocation set forth in the following table is based on all information available to us at the present time and is subject to change. In the event new information, primarily related to the finalization of the values of certain intangible assets, becomes available, the measurement of the amounts of goodwill reflected may be affected. The preliminary allocation of the purchase price to assets acquired and liabilities assumed is as follows:
In thousands |
|
|
Preliminary Allocation |
|
|
Assets |
|
|
|
|
|
Cash and cash equivalents |
|
|
$ |
7,540 |
|
Accounts receivable |
|
|
|
13,277 |
|
Inventory |
|
|
|
11,133 |
|
Prepaid and other current assets |
|
|
|
290 |
|
Plant, equipment and timberlands |
|
|
|
66,167 |
|
Intangible assets |
|
|
|
43,573 |
|
Goodwill |
|
|
|
75,349 |
|
Total assets |
|
|
|
217,329 |
|
Liabilities |
|
|
|
|
|
Accounts payable |
|
|
|
8,577 |
|
Deferred tax liabilities |
|
|
|
19,119 |
|
Other long term liabilities |
|
|
|
1,162 |
|
Total liabilities |
|
|
|
28,858 |
|
Total |
|
|
|
188,471 |
|
less cash acquired |
|
|
|
(7,540 |
) |
Total purchase price |
|
|
$ |
180,931 |
|
For purposes of allocating the total purchase price, assets acquired and liabilities assumed are recorded at their estimated fair market value. The allocation set forth above is based on management’s estimate of the fair value using valuation techniques such as discounted cash flow models, appraisals and similar methodologies. The amount allocated to intangible assets represents the estimated value of customer relationships, technological know-how and trade name.
In connection with the Steinfurt acquisition we recorded $75.3 million of goodwill and $43.6 million of intangible assets. The goodwill arising from the acquisition largely relates to strategic benefits, product and market diversification, assembled workforce, and similar factors. For tax purposes, none of the goodwill is deductible. Intangible assets consist of technology, customer relationships and tradename.
The following table summarizes unaudited pro forma financial information as if the acquisition occurred as of January 1, 2018:
|
|
|
Three months ended March 31, 2018 |
|
|
|
In thousands, except per share |
|
|
(unaudited) |
|
|
|
Pro forma |
|
|
|
|
|
|
Net sales |
|
|
$ |
237,286 |
|
|
Income from continuing operations |
|
|
|
3,901 |
|
|
Income per share from continuing operations |
|
|
|
0.09 |
|
|
- 8 -
GLATFELTER
03.31.19 Form 10-Q
4. |
The following tables set forth disaggregated information pertaining to our net sales:
|
|
Three months ended March 31 |
|
|
|||||
In thousands |
|
2019 |
|
|
2018 |
|
|
||
Composite Fibers |
|
|
|
|
|
|
|
|
|
Food & beverage |
|
$ |
71,453 |
|
|
$ |
70,397 |
|
|
Wallcovering |
|
|
18,550 |
|
|
|
28,132 |
|
|
Technical specialties |
|
|
19,288 |
|
|
|
20,958 |
|
|
Composite laminates |
|
|
8,475 |
|
|
|
9,398 |
|
|
Metallized |
|
|
10,951 |
|
|
|
12,713 |
|
|
|
|
|
128,717 |
|
|
|
141,598 |
|
|
Advanced Airlaid Materials |
|
|
|
|
|
|
|
|
|
Feminine hygiene |
|
|
54,988 |
|
|
|
48,473 |
|
|
Specialty wipes |
|
|
17,332 |
|
|
|
7,767 |
|
|
Table top |
|
|
13,331 |
|
|
|
2,065 |
|
|
Adult incontinence |
|
|
5,488 |
|
|
|
4,432 |
|
|
Home care |
|
|
3,964 |
|
|
|
4,027 |
|
|
Other |
|
|
5,313 |
|
|
|
2,845 |
|
|
|
|
|
100,416 |
|
|
|
69,609 |
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL |
|
$ |
229,133 |
|
|
$ |
211,207 |
|
|
|
|
Three months ended March 31 |
|
|
|||||
In thousands |
|
2019 |
|
|
2018 |
|
|
||
Composite Fibers |
|
|
|
|
|
|
|
|
|
Europe, Middle East and Africa |
|
$ |
77,914 |
|
|
$ |
94,782 |
|
|
Americas |
|
|
31,640 |
|
|
|
24,048 |
|
|
Asia Pacific |
|
|
19,163 |
|
|
|
22,768 |
|
|
|
|
|
128,717 |
|
|
|
141,598 |
|
|
|
|
|
|
|
|
|
|
|
|
Advanced Airlaid Materials |
|
|
|
|
|
|
|
|
|
Europe, Middle East and Africa |
|
|
54,439 |
|
|
|
36,228 |
|
|
Americas |
|
|
44,334 |
|
|
|
32,815 |
|
|
Asia Pacific |
|
|
1,643 |
|
|
|
566 |
|
|
|
|
|
100,416 |
|
|
|
69,609 |
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL |
|
$ |
229,133 |
|
|
$ |
211,207 |
|
|
- 9 -
GLATFELTER
03.31.19 Form 10-Q
On October 31, 2018, we completed the previously announced sale of our Specialty Papers Business Unit on a cash free and debt free basis to Pixelle Specialty Solutions LLC, an affiliate of Lindsay Goldberg (the “Purchaser”) for $360 million. Cash proceeds from the sale were approximately $323 million in cash reflecting estimated purchase price adjustments as of the closing date and the assumption by the Purchaser of approximately $38 million in retiree healthcare liabilities. In addition, the Purchaser assumed approximately $210 million of pension liabilities relating to Specialty Papers’ employees and will receive approximately $280 million of related assets from the Company’s existing pension plan.
In connection with the sale of Specialty Papers, we entered into a Transition Services Agreement with Purchaser pursuant to which we agreed to provide various back-office and information technology support until the business is fully separated from us.
The following table sets forth a summary of discontinued operations included in the condensed consolidated statements of income:
|
|
Three months ended March 31 |
|
|||||
In thousands |
|
2019 |
|
|
2018 |
|
||
Net sales |
|
$ |
— |
|
|
$ |
199,438 |
|
Energy and related sales, net |
|
|
— |
|
|
|
1,429 |
|
Total revenues |
|
|
— |
|
|
|
200,867 |
|
Costs of products sold |
|
|
— |
|
|
|
188,521 |
|
Gross profit |
|
|
— |
|
|
|
12,346 |
|
Selling, general and administrative expenses |
|
|
(714 |
) |
|
|
7,132 |
|
Gains on dispositions of plant, equipment and timberlands, net |
|
|
— |
|
|
|
(438 |
) |
Operating income |
|
|
714 |
|
|
|
5,652 |
|
Non-operating income (expense) |
|
|
|
|
|
|
|
|
Interest expense |
|
|
— |
|
|
|
(1,745 |
) |
Other, net |
|
|
— |
|
|
|
552 |
|
Income before income taxes |
|
|
714 |
|
|
|
4,459 |
|
Income tax provision (benefit) |
|
|
(31 |
) |
|
|
1,007 |
|
Income from discontinued operations |
|
$ |
683 |
|
|
$ |
3,452 |
|
The amounts presented above are derived from the segment reporting for Specialty Papers adjusted to include certain retirement benefit costs and to exclude corporate shared services costs which are required to remain in continuing operations. Interest expense was allocated to discontinued operations based on borrowings under the revolving credit facility required to be repaid with proceeds from the sale of Specialty Papers.
The following table sets forth a summary of cash flows from discontinued operations which is included in the condensed consolidated statements of cash flows:
|
|
Three months ended March 31 |
|
|||||
In thousands |