glt-10q_20190331.htm

 

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

 

 

Page

 

Page

 

 

PART I - FINANCIAL INFORMATION

 

 

 

 

 

 

Item 1

Financial Statements

 

 

 

Condensed Consolidated Statements of Income for the three months ended March 31, 2019 and 2018 (unaudited)

 

2

 

Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2019 and 2018 (unaudited)

 

3

 

Condensed Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018 (unaudited)

 

4

 

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2019 and 2018 (unaudited)

 

5

 

Statements of Shareholders’ Equity

 

6

 

Notes to Condensed Consolidated Financial Statements (unaudited)

 

7

 

1.

Organization

 

7

 

2.

Accounting Policies

 

7

 

3.

Acquisition

 

8

 

4.

Revenue

 

9

 

5.

Discontinued Operations

 

10

 

6.

Gain on Disposition of Plant, Equipment and Timberlands

 

11

 

7.

Earnings Per Share

 

11

 

8.

Accumulated Other Comprehensive Income

 

12

 

9.

Income Taxes

 

13

 

10.

Stock-based Compensation

 

14

 

11.

Retirement Plans and Other Post- Retirement Benefits

 

15

 

12.

Inventories

 

15

 

13.

Capitalized Interest

 

15

 

14.

Leases

 

15

 

15.

Long-term Debt

 

16

 

16.

Fair Value of Financial Instruments

 

17

 

17.

Financial Derivatives and Hedging Activities

 

17

 

18.

Commitments, Contingencies and Legal Proceedings

 

18

 

19.

Segment Information

 

20

 

 

 

 

Item 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

21

Item 3

Quantitative and Qualitative Disclosures About Market Risks

 

27

Item 4

Controls and Procedures

 

27

 

 

 

 

PART II – OTHER INFORMATION

 

28

 

 

 

 

Item 6

Exhibits

 

28

 

 

 

 

 

SIGNATURES

 

28

 

 

 

 

 


 

PART I

Item 1 – Financial Statements

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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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, 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.

ORGANIZATION

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.

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 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.

ACQUISITION

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.

REVENUE

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


 

5.

DISCONTINUED OPERATIONS

 

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