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Press Release Source: Glatfelter
Glatfelter Earns $26.8 million, or $0.61 per share, in First Quarter 2003
Tuesday April 22, 8:59 am ET
Profits Boosted by Sale of Timberlands

YORK, Pa.--(BUSINESS WIRE)--April 22, 2003--Glatfelter (NYSE:GLT) today reported net income and diluted earnings per share for the first quarter of 2003 of $26.8 million and $.61, respectively, compared to $11.1 million and $.26, respectively, for the comparable quarter in 2002.

The 2003 first quarter results include a pre-tax gain of $31.2 million, or $20.0 million after-tax, from the previously announced sale of approximately 25,500 acres of timberlands, as well as a $0.7 million after-tax loss on the sale of certain paper making equipment.

Excluding these asset sales, earnings for the first quarter of 2003 were $7.5 million, or $.17 per diluted share. On this basis, the decline in earnings was primarily due to higher costs of products sold and lower non-cash pension income.

"Our first quarter operating results reflect the impact of a challenging economic environment," said George H. Glatfelter II, Chairman and Chief Executive Officer. "However, our highly specialized Long Fiber & Overlay and Engineered Products business units experienced attractive sales growth relative to more commodity-based businesses. In this difficult business climate, we are differentiating ourselves with a mix of specialized businesses. Our first quarter results were adversely affected by higher costs, particularly for pulp, wastepaper and energy," Mr. Glatfelter added. "We continued our focus on controlling costs and, as the timberland sale indicates, we remain committed to maximizing the value of our assets. This transaction allowed us to extract value from the timberlands while maintaining a substantial source of wood fiber through a long-term supply agreement."

Net sales totaled $143.6 million for the first quarter of 2003 compared to $132.0 million for the year-earlier quarter, an increase of $11.6 million, or 8.8%. Sales growth was primarily attributable to increased volumes in the Company's Long Fiber & Overlay and Engineered Products business units, together with favorable effects of a weaker U.S. dollar on translated results of international operations.

Gross profit for the first quarter of 2003 totaled $30.6 million compared to $34.5 million in the comparable quarter of 2002. The decrease in gross profit reflects the favorable effect of a weaker U.S. dollar, which was more than offset by lower non-cash pension income, the impact of higher pulp, wastepaper, and energy prices and higher costs related to heavy snows during 2003.

Gross profit includes net non-cash pension income resulting from the overfunded status of the Company's defined benefit pension plans. Cost of products sold was reduced for such income by $4.5 million in the first quarter of 2003 and by $6.4 million in the first quarter of 2002.

In the first quarter of 2003, selling, general and administrative ("SG&A") expenses totaled $15.2 million compared with $14.5 million in the year-earlier quarter.

The increase was primarily due to the unfavorable effect of a weaker U.S. dollar on translated results of international operations, a $0.5 million increase in depreciation expense related to an investment in a worldwide ERP information system, and a reduced amount of non-cash pension income.

Net non-cash pension income reduced reported SG&A expenses $0.6 million in the first quarter of 2003 and $1.4 million in 2002.

Headquartered in York, Pennsylvania, Glatfelter is a global manufacturer of specialty papers and engineered products. U.S. operations include facilities in Spring Grove, PA and Neenah, WI. International operations include facilities in Germany, France and the Philippines. Glatfelter's common stock is traded on the New York Stock Exchange under the ticker symbol GLT.

Any statements set forth in this press release with regard to the Company's expectations as to industry conditions, demand for or pricing of its products, its profit improvements and cost reductions, its projected financial results or cash flow, and other aspects of its business may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although the Company makes such statements based on assumptions that it believes to be reasonable, there can be no assurance that actual results will not differ materially from the Company's expectations. Factors that could cause or contribute to actual results differing materially from such forward-looking statements are discussed in the Company's Securities and Exchange Commission filings.

As previously announced, Glatfelter will hold a conference call today at 11:00 AM EST to discuss its first quarter results. The conference call may be accessed via the Company's web site at or at the CCBN web site at

York, Pennsylvania

Three Months
Ended March 31
In thousands, except per share data 2003 2002

Net sales $143,614 $131,998
Energy sales - net 2,277 2,166
Total revenues 145,891 134,164
Cost of products sold 115,262 99,657
Gross profit 30,629 34,507
Operating expenses
Selling, general and administrative expenses 15,211 14,492
Loss (gain) on sale of plant, equipment and
timberlands (30,547) (568)
Total operating expenses (15,336) 13,924
Operating income 45,965 20,583
Other nonoperating income (expense)
Interest expense on debt (3,769) (3,744)
Interest income on investments and other - net 187 242
Other - net (530) 22
Total other income (expense) (4,112) (3,480)
Income before income taxes 41,853 17,103
Income tax provision 15,076 5,979
Net income $26,777 $11,124

Earnings per share
Basic and diluted $.61 $.26

Weighted average shares outstanding
Basic 43,681 42,952
Diluted 43,702 43,612

The accompanying press release of results of operations for the
three months ended March 31, 2003 includes a discussion of
earnings before the effect of net gains from certain asset sales.
Management believes that adjusted earnings are useful to investors
as it represents how management views results of operations and it
is the basis on which performance is measured internally and by
the Company's Board of Directors.

Three Months Ended March 31
2003 2002
In thousands, except share data Income EPS Income EPS

Net income $26,777 $.61 $11,124 $.26
Gain on sale of timberlands (19,965) (.46) - -
Loss on sale of certain paper making
equipment 654 .02 - -
Adjusted income $7,466 $.17 $11,124 $.26

Glatfelter, York
Helen Marsteller, 717/845-1098

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