P. H. Glatfelter Company (Form: 8-K)

GLATFELTER REPORTS STRONG SECOND QUARTER 2012 RESULTS
- Adjusted earnings per share increased 71% –

YORK, Pennsylvania – July 31, 2012 – Glatfelter (NYSE: GLT) today reported 2012 second quarter adjusted earnings of $5.3 million, or $0.12 per diluted share, compared with $3.1 million, or $0.07 per diluted share, in the 2011 second quarter. On a GAAP basis, second quarter 2012 net income totaled $13.4 million, or $0.31 per share, compared with $2.5 million, or $0.05 per share, in the second quarter of 2011. Consolidated net sales in the second quarter of 2012 totaled $384.7 million, a decrease of 3.3 percent from the second quarter of 2011.

“Despite the difficult, global macroeconomic conditions, we are pleased to report another quarter of strong earnings, with adjusted earnings per share increasing 71 percent compared with a year ago,” said Dante C. Parrini, chairman and chief executive officer. “Our second quarter results reflect the strategic benefits of our diversified and balanced business portfolio. The strong North American market positions across each of our businesses coupled with the success of our ongoing continuous improvement initiatives and stringent cost control more than offset the impact of the generally weak European economy. Our results also reflect the benefits from our share repurchase program and debt refinancing undertaken late last year which are contributing to year-over-year earnings-per-share growth.”

Mr. Parrini continued, “With current economic conditions expected to persist, particularly in Europe, we will remain focused on operational excellence, accelerating our continuous improvement initiatives and improving the product solutions we deliver to our customers. I expect this will allow us to continue to generate healthy earnings and cash flows in the second half of the year.”

Adjusted earnings is a non-GAAP measure that excludes from the Company’s GAAP-based results certain non-core business items. The following table sets forth a reconciliation of results determined in accordance with accounting principles generally accepted in the United States of America to non-GAAP adjusted earnings discussed herein:


	Three Months Ended June 30
	2012						2011
In thousands, except per share	After tax income			Diluted EPS			After tax income		Diluted EPS

Net income	$	13,432		$	0.31		$	2,501	$	0.05
Conversion of Alternative fuel mixture/Cellulosic
biofuel credits		(4,440	)		(0.10	)		–		–
Timberland sales and related costs		(3,696	)		(0.08	)		69		–
Acquisition and integration related costs		–			–			518		0.01

Adjusted earnings	$	5,296		$	0.12		$	3,088	$	0.07

The sum of individual per share amounts set forth above may not agree to adjusted earnings per share due to rounding.


	For the quarter ended June 30
Dollars in thousands	2012			2011			Change
Tons shipped		186,797			191,763			(4,966	)	(2.6	)%
Net sales	$	214,113		$	216,708		$	(2,595	)	(1.2	)%
Energy and related sales, net		1,630			2,060			(430	)	(20.9	)%
Operating income (loss)		4,244			(92	)		4,336		-
Operating margin		2.0	%		–

On a year-over-year basis, Specialty Papers’ net sales decreased 1.2 percent as shipping volumes declined 2.6 percent partially offset by a $2.6 million benefit from higher selling prices.

During the second quarters of 2012 and 2011, the Company completed annually scheduled maintenance outages at its Chillicothe, OH and Spring Grove, PA facilities. The outages adversely impacted operating income by $19.9 million in the second quarter of 2012, compared with $20.6 million in the same quarter a year ago.

Specialty Papers’ 2012 second quarter operating income increased by $4.3 million compared with the 2011 second quarter due to the benefit from higher selling prices, $2.0 million from lower raw material and energy prices, and $1.9 million from continuous improvement initiatives and production efficiencies. These factors were partially offset by $1.6 million of higher selling, general and administrative costs primarily related to corporate support services and incentive compensation.

Composite Fibers’ net sales decreased $7.7 million, or 6.7 percent, primarily due to the translation of foreign currencies which unfavorably impacted the comparison by $9.4 million while selling prices were substantially unchanged.

Composite Fibers’ second-quarter 2012 operating income decreased by $1.3 million primarily due to the negative impact from foreign currency translation totaling $1.3 million. Operating results were also negatively impacted by an aggregate $0.9 million due to start-up costs associated with the completion of machine upgrades at two facilities as well as costs associated with intermittent, external power supply interruptions at one of its facilities. The business unit was able to offset the impact of these factors with benefits from ongoing continuous improvement initiatives.

On a year-over-year basis, Advanced Airlaid Materials’ net sales decreased $2.9 million or 4.5 percent primarily due to a $4.3 million unfavorable impact from the translation of foreign currencies. Volumes shipped increased 2.0 percent and average selling prices declined slightly in the comparison.

Second-quarter 2012 operating income increased $0.9 million, or 23.8 percent, compared with the year ago quarter primarily due to a $2.0 million benefit from lower raw material and energy costs partially offset by $0.8 million from unfavorable foreign currency translations.

Pension expense totaled $2.7 million and $1.6 million for the second quarters of 2012 and 2011, respectively. Since the Company’s qualified plan remains overfunded, a cash contribution is not required to be made in 2012.

Interest expense declined $2.3 million in the year-over-year comparison primarily reflecting the redemption of $100.0 million of 7 1/8 percent bonds at the end of 2011. For the second quarter of 2012, interest expense totaled $4.2 million compared with $6.5 million in the year ago quarter.

The Company completed the sale of 3,345 acres of Pennsylvania timberlands during the second quarter of 2012 and realized a $6.4 million pre-tax gain. Aggregate cash proceeds totaled $6.6 million after closing costs.

In March 2010, the Company was approved by the Internal Revenue Service to be registered as a producer of cellulosic biofuel under the Internal Revenue Code. The cellulosic biofuel credit was equal to $1.01 per gallon of black liquor produced in its operations during 2009. In the second quarter of 2012, the Company made the decision to convert certain of the previously utilized refundable alternative fuel mixture credits, which were equal to $0.50 per gallon, to the non-refundable cellulosic biofuel credit and intends to amend its 2009 federal income tax return to claim the credit for a portion of the black liquor gallons produced in 2009. This resulted in a net benefit to income taxes in the second quarter of 2012 of $4.4 million.

In the second quarter of 2012, the Company recorded an income tax provision of $2.1 million on adjusted pre-tax earnings resulting in an effective tax rate of 28.0 percent. In the comparable quarter a year ago, the Company recorded an income tax benefit of $2.8 million on adjusted pre-tax earnings of $0.3 million. The 2011-second quarter income tax benefit was primarily due to the favorable resolution of certain foreign tax audits, partially offset by adjustments to the carrying value of deferred taxes in connection with changes in state tax laws.

For the first six months of 2012, on a GAAP basis, the Company reported net income of $32.3 million or $0.74 per diluted share, compared with $19.9 million or $0.43 per diluted share in the same period of 2011. The results of operations for both periods include the impact of significant unusual and non-recurring items. The following table sets forth a reconciliation of results determined on a GAAP basis to adjusted earnings:


	Six Months Ended June 30
	2012						2011
In thousands, except per share	After tax income			Diluted EPS			After tax income			Diluted EPS

Net income	$	32,310		$	0.74		$	19,927		$	0.43
Conversion of Alternative fuel mixture/Cellulosic
biofuel credits		(4,440	)		(0.10	)		–			–
Timberland sales and related costs		(3,696	)		(0.08	)		(1,650	)		(0.04	)
Acquisition and integration related costs		–			–			793			0.02
Adjusted earnings	$	24,174		$	0.56		$	19,070		$	0.41

The sum of individual per share amounts set forth above may not agree to adjusted earnings per share due to rounding.

Consolidated net sales for the first half of 2012 were $782.0 million, a 1.6 percent decrease compared with $794.8 million for the same period of 2011, primarily reflecting unfavorable foreign currency translations.

Capital expenditures totaled $30.6 million in the first half of 2012, including $7.3 million for the Composite Fibers capacity expansion project. For the full year 2012, capital expenditures are estimated to be $90 million to $95 million, including approximately $30 million of the $50 million investment to expand Composite Fibers’ capacity scheduled to be completed in the first quarter of 2013.

Cash and cash equivalents totaled $23.4 million as of June 30, 2012, and net debt was $194.6 million, compared with $188.7 million at the end of 2011.

Free cash flow (cash provided by operations less capital expenditures) was $(2.1) million for the first six months of 2012 compared with $20.4 million for the first six months of 2011. Free cash flow in 2011 included $17.8 million related to cellulosic biofuel production credits. (Refer to the calculation of these measures provided in this release.)

In May 2012, the Company announced a two-year, $25 million share buyback program authorized by its Board of Directors. Through June 30, 2012, the Company repurchased approximately 172 thousand shares of common stock for approximately $2.6 million.

For Specialty Papers, the Company expects shipping volumes to increase by approximately 5 percent in the third quarter of 2012 compared with the second quarter of 2012. The impact of selling price increases announced earlier in the year is expected to slightly outpace overall input cost increases compared to the second quarter. During the second quarter the business completed its annual maintenance outages at a cost of $19.9 million. For the third quarter, maintenance spending is expected to be approximately $2.5 million higher than normal quarterly rates due to ongoing initiatives to enhance this business unit’s machine reliability and operating efficiencies.

The Company anticipates Composite Fibers’ shipping volumes to be slightly higher in the third quarter compared to the second quarter while selling prices and input costs are expected to be generally in line with the second quarter of 2012. In addition, start-up issues associated with two machine upgrades completed in the first half of 2012 are expected to be resolved during the third quarter and cost control measures are expected to benefit results.

Shipping volumes for the Advanced Airlaid Materials business unit in the third quarter of 2012 are expected to be slightly higher than the second quarter of 2012, while selling prices and input cost are expected to be in-line with the second quarter. The Company expects ongoing benefits from its continuous improvement initiatives.

As previously announced, the Company will hold a conference call at 1:00 p.m. (Eastern) today to discuss its second-quarter results. The Company’s earnings release and an accompanying financial supplement, which includes significant financial information to be discussed on the conference call, will be available on Glatfelter’s Investor Relations web site at the address indicated below. Information related to the conference call is as follows:


What:	Glatfelter’s2nd Quarter 2012 Earnings Release Conference Call
When:	Tuesday, July 31, 2012, 1:00 p.m. Eastern Time
Number:	US dial 888.335.5539
	International dial 973.582.2857
Conference ID:		91687372
Webcast:	http://www.glatfelter.com/about_us/investor_relations/default.aspx
Rebroadcast Dates:	July 31, 2012 3:00 p.m. through August 14, 2012 midnight.
Rebroadcast Number:	Within US dial 855.859.2056
	International dial 404.537.3406
Conference ID:		91687372

Interested persons who wish to hear the live webcast should go to the website prior to the starting time to register, download and install any necessary audio software.

Any statements included in this press release which pertain to future financial and business matters are “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and are subject to numerous risks, uncertainties and other unpredictable or uncontrollable factors which may cause actual results or performance to differ materially from the Company’s expectations. Various risks and factors that could cause future results to differ materially from those expressed in forward-looking statements include, but are not limited to: changes in industry, business, market, political and economic conditions in the U.S. and other countries in which Glatfelter does business, demand for or pricing of its products, changes in tax legislation, governmental laws, regulations and policies, initiatives of regulatory authorities, acquisition integration risks, technological changes and innovations, market growth rates, cost reduction initiatives, the cost, and successful design and construction, of the Composite Fibers capacity expansion project and other factors. In light of these risks, uncertainties and other factors, the forward-looking matters discussed in this press release may not occur and readers are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements speak only as of the date of this press release and Glatfelter undertakes no obligation, and does not intend, to update these forward-looking statements to reflect events or circumstances occurring after the date of this press release. More information about these factors is contained in Glatfelter’s filings with the U.S. Securities and Exchange Commission, which are available at www.glatfelter.com.

Headquartered in York, PA, Glatfelter is a global manufacturer of specialty papers and fiber-based engineered materials, offering over a century of experience, technical expertise and world-class service. U.S. operations include facilities in Spring Grove, PA and Chillicothe and Fremont, OH. International operations include facilities in Canada, Germany, France, the United Kingdom and the Philippines, a representative office in China and a sales and distribution office in Russia. Glatfelter’s sales approximate $1.6 billion annually and its common stock is traded on the New York Stock Exchange under the ticker symbol GLT. Additional information may be found at www.glatfelter.com.

P. H. Glatfelter Company and subsidiaries
Consolidated Statements of Income
(unaudited)


	Three Months Ended						Six Months Ended June
	June 30						30
In thousands, except per share	2012			2011			2012			2011
Net sales	$	384,693		$	397,985		$	782,045		$	794,756
Energy and related sales – net		1,630			2,060			3,491			5,047

Total revenues		386,323			400,045			785,536			799,803
Costs of products sold		345,445			362,545			683,688			702,136

Gross profit		40,878			37,500			101,848			97,667

Selling, general and administrative expenses		30,113			31,320			60,080			63,090
Gains on dispositions of plant, equipment

and timberlands, net		(6,961	)		(29	)		(6,998	)		(3,204	)
Operating income		17,726			6,209			48,766			37,781
Non-operating income (expense)
Interest expense		(4,159	)		(6,461	)		(8,428	)		(12,921	)
Interest income		103			150			226			357
Other – net		103			(275	)		299			(268	)

Total other income (expense)		(3,953	)		(6,586	)		(7,903	)		(12,832	)

Income before income taxes		13,773			(377	)		40,863			24,949
Income tax provision (benefit)		341			(2,878	)		8,553			5,022

Net income	$	13,432		$	2,501		$	32,310		$	19,927


Earnings per share
Basic	$	0.31		$	0.05		$	0.75		$	0.43
Diluted		0.31			0.05			0.74			0.43

Cash dividends declared per common share	$	0.09		$	0.09		$	0.18		$	0.18

Weighted average shares outstanding
Basic		42,854			46,080			42,802			46,075
Diluted		43,558			46,633			43,529			46,502


Three months ended June 30										Advanced Airlaid
In millions	Specialty Papers					Composite Fibers				Materials				Other and Unallocated						Total
	2012		2011			2012		2011		2012		2011		2012			2011			2012			2011
Net sales	$	214.1	$	216.7		$	108.6	$	116.4	$	62.0	$	64.9		—			—		$	384.7		$	398.0
Energy and related sales, net		1.6		2.1			—		—		—		—		—			—			1.6			2.1

Total revenue		215.7		218.8			108.6		116.4		62.0		64.9		—			—			386.3			400.0
Cost of products sold		197.5		206.5			90.7		97.6		55.0		58.3		2.2			0.1			345.4			362.5

Gross profit		18.3		12.2			17.9		18.8		6.9		6.6		(2.2	)		(0.1	)		40.9			37.5
SG&A		14.0		12.3			10.0		9.6		2.3		2.8		3.8			6.6			30.1			31.3
Gains on dispositions of plant,equipment
and timberlands		—		—			—		—		—		—		(7.0	)		—			(7.0	)		—

Total operating income (loss)		4.2		(0.1	)		7.9		9.2		4.6		3.8		1.0			(6.7	)		17.7			6.2
Non-operating income (expense)		—		—			—		—		—		—		(4.0	)		(6.6	)		(4.0	)		(6.6	)

Income (loss) before income taxes	$	4.2	$	(0.1	)	$	7.9	$	9.2	$	4.6	$	3.8	$	(3.0	)	$	(13.3	)	$	13.8		$	(0.4	)


Supplementary Data
Net tons sold		186.8		191.8			23.0		22.9		22.7		22.3		—			—			232.5			237.0
Depreciation, depletion and amortization	$	9.0	$	8.9		$	5.8	$	6.4	$	2.2	$	2.1		—			—		$	17.0		$	17.4
Capital expenditures		9.1		9.4			6.3		6.6		0.9		3.7		0.1			—			16.4			19.8


Six months ended June 30									Advanced Airlaid
In millions	Specialty Papers				Composite Fibers				Materials				Other and Unallocated						Total
	2012		2011		2012		2011		2012		2011		2012			2011			2012			2011
Net sales	$	437.9	$	437.2	$	220.6	$	231.6	$	123.6	$	126.0		—			—		$	782.0		$	794.8
Energy and related sales, net		3.5		5.0		—		—		—		—		—			—			3.5			5.0

Total revenue		441.4		442.2		220.6		231.6		123.6		126.0		—			—			785.5			799.8
Cost of products sold		386.1		393.9		182.3		190.6		110.1		115.0		5.2			2.6			683.7			702.1

Gross profit		55.3		48.3		38.3		41.0		13.4		11.0		(5.2	)		(2.6	)		101.8			97.7
SG&A		27.4		26.2		19.5		19.4		5.0		5.5		8.3			12.0			60.1			63.1
Gains on dispositions of plant,equipment
and timberlands		—		—		—		—		—		—		(7.0	)		(3.2	)		(7.0	)		(3.2	)

Total operating income (loss)		27.9		22.1		18.8		21.6		8.4		5.5		(6.5	)		(11.5	)		48.8			37.8
Non-operating income (expense)		—		—		—		—		—		—		(7.9	)		(12.8	)		(7.9	)		(12.8	)

Income (loss) before income taxes	$	27.9	$	22.1	$	18.8	$	21.6	$	8.4	$	5.5	$	(14.4	)	$	(24.3	)	$	40.9		$	24.9


Supplementary Data
Net tons sold		382.6		390.5		45.7		45.8		45.1		43.8		—			—			473.3			480.2
Depreciation, depletion and amortization	$	17.9	$	17.5	$	11.8	$	12.5	$	4.3	$	4.3		—			—		$	34.1		$	34.3
Capital expenditures		13.7		13.3		15.3		10.5		1.4		4.1		0.1			—			30.6			27.9

The clerical accuracy of the amounts set forth above may be affected by, or the amounts may not agree to the consolidated financial statements included herein due to, rounding.


	Six months ended
	June 30
In thousands	2012			2011
Cash Flow Data
Cash provided (used) by:
Operating activities	$	28,532		$	48,313
Investing activities		(23,398	)		(24,437	)
Financing activities		(19,736	)		(13,446	)

Depreciation, depletion and amortization		34,053			34,257
Capital expenditures		30,587			27,877
June 30				December 31
		2012			2011

Balance Sheet Data
Cash and cash equivalents	$	23,437		$	38,277
Total assets		1,154,784			1,136,925
Total debt		218,000			227,000
Shareholders’ equity		516,041			490,404

Reconciliation of GAAP Financial Information to Non-GAAP Financial Information

This press release includes a discussion of earnings before the effects of certain specifically identified items, which is referred to as adjusted earnings, a non-GAAP measure. The company uses non-GAAP adjusted earnings to supplement the understanding of its consolidated financial statements presented in accordance with GAAP. Non-GAAP adjusted earnings is meant to present the financial performance of the company’s core operations, which consists of the production and sale of specialty papers, composite fibers papers and airlaid non-woven materials. Management and the company’s Board of Directors use non-GAAP adjusted earnings to evaluate the performance of the company’s fundamental business in relation to prior periods. The performance of the company’s operations is evaluated based upon numerous items such as tons sold, average selling prices, gross margins overhead, and operating margins, among others. Alternative fuel mixture and cellulosic biofuel credits, gains on the sale of timberlands, and acquisition and integration related costs are excluded from the company’s calculation of non-GAAP adjusted earnings because management believes each of these items is unique and not part of the company’s core business, and will only impact the company’s financial results for a limited period of time. Alternative fuel mixture and cellulosic biofuel credits and gains from timberland sales are distinct from revenues generated from product sales. Unlike items such as cost of raw materials and overhead costs, acquisition and integration related costs are unique items that do not represent direct costs incurred in the manufacture and sale of the company’s products.

Unlike net income determined in accordance with GAAP, non-GAAP adjusted earnings does not reflect all charges and gains recorded by the company for the applicable period and, therefore, does not present a complete picture of the company’s results of operations for the respective period. However, non-GAAP adjusted earnings provide a measure of how the company’s core operations are performing, which management believes is useful to investors because it allows comparison of such operations from period to period. Free cash flow and net debt are also non-GAAP financial measures, however, the calculation of each is derived directly from information included in the Company’s GAAP based consolidated financial statements. The Company believes these provide meaningful measures of the Company’s financial position and of its ability to generate sufficient levels of cash flow to support its business strategies.

Non-GAAP adjusted earnings, free cash flow and net debt should not be considered in isolation from, or as substitutes for, measures of financial performance prepared in accordance with GAAP.

Good afternoon. My name is Tracy and I will be your conference operator today. At this time, I would like to welcome everyone to Glatfelter’s second-quarter conference call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks there will be a question and answer session. (Operator Instructions) Thank you, and I’ll now introduce and turn the call over to Mr. John Jacunski, Chief Financial Officer. You may begin your conference, sir.

Thank you, Tracy. Good afternoon and welcome to Glatfelter’s 2012 second-quarter earnings conference call.

Before we get to our presentation, I have a few standard reminders. Through our call today, we will use the term adjusted earnings as well as other non-GAAP financial measures. A reconciliation of these financial measures to our GAAP-based results is included in today’s earnings release and in the investor slides. We’ll also make forward-looking statements today that are subject to risks and uncertainties.

Our 2011 Form 10-K filed with the SEC and available on our website discloses factors that could cause our actual results to differ materially from these forward-looking statements. These forward-looking statements speak only as of today, and we undertake no responsibility to update them.

And finally, we have made available a slide presentation to accompany our comments on today’s call. You may access the slides on our website or through the webcast provider. I will now turn the call over to Dante Parrini, our Chairman and Chief Executive Officer.

Earlier this morning, we issued our second-quarter earnings, which are summarized on slide three of today’s presentation.

We are pleased to announce another strong quarter for Glatfelter with adjusted earnings up 71% from the second quarter of 2011. During the quarter, we earned $0.12 per share compared to $0.07 last year. This is a very good result considering foreign currency impacts that reduced earnings per share by $0.03 and the generally weak economic environment.

Our net sales were $385 million during the quarter, up slightly compared to last year on a constant currency basis. Specialty Paper shipments declined 2.6%. However, we again beat the broader market which was down nearly 5%.

Even with the soft general market, we see good opportunities for this business as we enter the seasonally strong third-quarter. Our Airlaid business, again, had strong growth in our specialty wipes products in North America and we expect this strong performance to continue. And despite weak markets in Europe, Composite Fibers was able to hold shipments flat in the quarter.

From an operating profit perspective, Specialty Papers generated $4.2 million versus breakeven in the second quarter of 2011. We continued to deliver solid operating performance in this business, driven by ongoing success with our continuous improvement program, maintaining stringent cost control within our operations, and excellent execution of our annual maintenance outages.

Composite Fibers operating profit declined 14%, largely due to currency translation which hurt results by $1.3 million. This business is facing weak market conditions in Europe and customers are more aggressively managing inventories. However, our marketing efforts in metallized and strong customer relationships with major tea and coffee producers have helped us overcome this weakness, holding shipments flat during the quarter. Our continuous improvement initiatives are generating consistent financial results and we completed two important machine upgrades in the first half of the year that are strategically important to the long-term success of this business.

The Advanced Airlaid Materials business operating profit increased to $4.6 million, or up 24% compared to the second quarter of last year. This is the best quarterly results since we acquired the business. And EBITDA margins improved 190 basis points to 10.9% during the quarter. Strong growth in North America specialty wipes more than offset weakness in Europe and resulted in shipments rising 2% during the quarter. And success with our continuous improvement initiatives is allowing us to improve the cost structure of this business. During the quarter we also benefited from our share repurchase program and debt refinancing that we completed last year, which together improved earnings per share by $0.04.

Overall, I’m very pleased with our results this quarter as well as for the first half of the year, with adjusted earnings per share up 36%. I believe we are well positioned to deliver another strong year for our shareholders and I’ll provide additional commentary after John gives a more in-depth review of Q2 results. John?

Thank you, Dante. For the second quarter, we reported net income of $5.3 million, or $0.12 per share, compared to $3.1 million, or $0.07 per share, in the second quarter of last year after adjusting to exclude the tax benefit from a planned conversion of alternative fuel mixture credits to cellulosic biofuel credits and gains on land sales this year, and integration costs last year.

Slide 4 shows a bridge of adjusting earnings per share from the second quarter of last year to this year.
Adjusted earnings per share increased this year from higher operating income in Specialty Papers and Advanced Airlaid Materials, which added $0.07 per share and $0.01 per share, respectively, to earnings. Composite Fibers results were $0.02 per share lower due to the negative impact of foreign currency exchange rates. Lower corporate costs added $0.03. However, higher pension expense reduced earnings by $0.02 per share. A combination of lower interest expense from our debt refinancing in late 2011 and our share repurchase program benefited results by $0.04 per share. And finally, income tax reduced earnings per share by $0.06, but I would like to remind you that the second quarter of last year, adjusted earnings included a $0.06 per share benefit, primarily from the resolution of certain foreign tax audits.

Turning to slide 5, Specialty Papers’ operating income increased to $4.2 million, representing a very strong quarter for this business. For the first half of the year, Specialty Papers’ operating profit has increased 26%. During the second quarter, we completed the annual maintenance outages at Specialty Papers’ two facilities. The outages cost us $19.9 million this year, compared with $20.6 million last year.

Net sales for this business totaled $214 million for the quarter, 1.2% lower than the second quarter of last year.

Selling prices increased for nearly all of our products, benefiting results by $2.6 million during the quarter. Shipments were down 2.6%, which again beat the broader uncoated freesheet market. Shipments of engineered products were up nearly 7% from growth in casting products as well as high-speed inkjet products. We also grew our shipments of foreign products again this quarter, which were up 4%.

Shipments of carbonless products were down 10%, reflecting the general decline in the market and it was a weak quarter for shipments of book products, which were down 10%, although we expect a much stronger fall book season. Input cost for this business declined $2 million during the second quarter compared to last year. Substantially lower purchase pulp prices, as well as favorable electricity prices, more than offset higher prices for wood, starch, and other raw materials.

Our ongoing continuous improvement initiatives in cost control remain a critical success factor for each of our businesses, and these initiatives generated a benefit for Specialty Papers of $1.9 million during the quarter, but this was offset in part by higher SG&A costs and lower power sales.

Slide 6 shows Composite Fibers’ performance, which was a good quarter considering the impact of the unfavorable foreign currency translation of $1.3 million and start-up costs associated with two machine rebuilds as well as the interruption of external power supply at one of its facilities. This resulted in operating profit declining for this business by $1.3 million to $7.9 million during the quarter. The generally weak European economic economy and more aggressive inventory management by customers has led to a more challenging market environment. Despite these circumstances, Composite Fibers held shipments flat during the quarter and generated net sales of $108.6 million, up 1.4% on a constant currency basis, compared to the second quarter of 2011. The translation of foreign currencies resulted in a $9.4 million decline in net sales, while selling prices were essentially unchanged.

Shipments of metallized products grew by 6% this quarter, driven by events like the European Soccer Championships and the Olympics, as well as new products we have brought to this market. This growth, when combined with the growth of technical specialties, offset lower shipments in the weak composite laminate market. Single serve coffee product shipments were flat compared to last year, primarily due to customers’ more aggressive management of inventories.

Input costs for this business were slightly lower in the aggregate, with substantially lower prices for wood pulp being offset by higher prices for synthetic fibers and chemicals.

As communicated during our previous earnings calls, we completed the upgrade of two machines in this business during the first half of the year. These upgrades improved the general condition, reliability, and efficiency of the equipment, while also adding new capabilities. The commissioning of these machines and ramp-up to full production during the quarter created some cost penalties. In addition, our Lydney, UK facility has short interruptions in the electricity supply for which no advance notice was provided. This caused damage to some equipment and increased down time to clean and restart the machines. These two factors negatively impacted results by approximately $1 million during the quarter. The utility servicing this plant is taking steps to address these interruptions and we are hopeful that any impact will be minimal going forward.

The machine rebuilds we completed were extensive and complex and we have made significant progress with the startup. We can produce nearly all of the targeted products and we are making progress with improving the manufacturing efficiency. We expect this progress to continue during the third quarter with all remaining startup issues being resolved by the end of the quarter.

Moving to slide 7, Advanced Airlaid Materials continues to improve margins and profitability, generating operating income of $4.6 million in the quarter, a 24% increase from the second quarter of 2011. Net sales increased 2% on a constant currency basis, with shipments increasing 2% led by growth in specialty wipes products in North America and, as expected, demand in Europe was weaker than a year ago.

Lower raw material and energy costs benefited results by $2 million during the quarter. With about 80% of our revenue having cost pass-through arrangements, most of this benefit was offset by lower prices to customers. However, we were able to limit this adverse price impact during the quarter through offsetting negotiated price increases.

Substantial progress has been made to improve the cost structure of this business through our continuous improvement program and this will continue to be a focus for this business. Despite the negative impact of foreign currency translation that totaled $800,000, EBITDA margins for this business improved by 190 basis points during the quarter to 10.9%, and they are up 490 basis points since 2010, our first year of owning this business.

Turning to slide 8, you see an update on other financial matters for the quarter. Pension expense increased $1 million on a year-over-year basis to $2.7 million. For the full year, we expect pension expense of $11.5 million. However, we are not required to make cash contributions to the qualified plan in 2012 and we don’t expect to have to make contributions for the foreseeable future as this plan is overfunded.

Interest expense declined $2.3 million during the quarter, reflecting the debt refinancing we completed last year in which we redeemed $100 million of 7.125% bonds at the end of 2011. We also had two unusual items during the quarter. The first was that we made the decision to convert a portion of the refundable alternative fuel mixture credits, which were equal to $0.50 per gallon, to the nonrefundable cellulosic biofuel credits worth $1.01 per gallon. This resulted in a net benefit to income taxes in the second quarter of $4.4 million. As a result of this decision, we will be required to return to the Internal Revenue Service approximately $25 million related to the AFM credits that we previously received. During the remainder of 2010, we plan to use these converted credits to offset $10 million in expected cash tax payments. And we will utilize the remainder of the cellulosic biofuel credits by early 2014.

We also completed the sale of 3345 acres of Pennsylvania timberlands during the second quarter and realized a $6.4 million pre-tax gain. Aggregate cash proceeds totaled $6.6 million after closing costs.

And slide 9 summarizes our share repurchase programs. In May we announced a 25 million share repurchase program, and under this program we purchased — repurchased 172,000 shares, or $2.6 million during the quarter. This follows a completion in January of a $50 million program we announced in 2011. The repurchases completed under these programs reduced outstanding shares by 3.6 million and added $0.01 to our earnings per share during the second quarter compared to the year-ago quarter.

Turning to slide 10, you see free cash flow was negative $2.1 million during the first half of the year. This reflects normal working capital flows, the cost of the annual maintenance outages completed in the second quarter, and increased capital expenditures driven by $7 million for the Composite Fibers capacity expansion. As is typical with our business, we expect much higher free cash flow in the second half of the year. In 2012, we expect capital spending to be $90 million up to $95 million. This includes $30 million of the $50 million capacity expansion project in Composite Fibers.

And finally, slide 11 summarizes our balance sheet. Our balance sheet remains in very good shape. We finished the quarter with $23 million of cash and $327 million available under our revolving credit facilities. Our leverage remains low at 1.3 times on a net debt basis, so our liquidity remains sufficient to continue to fund our growth initiatives.

Thanks, John. Before opening the call for questions, I have a few comments on our outlook, which are summarized on slide 12.

Weak global economic conditions are expected to continue in the second half of the year. This affects us, particularly in Europe, and continues to result in softer and inconsistent demand in this region for some of our more consumer-driven products like feminine hygiene, where our customers are aggressively managing inventory levels, and end consumers are more frequently considering value brand options. In composite laminates where more construction and renovation projects are being delayed, we’re scaled down.

A weaker euro relative to the dollar is negatively impacting our operating results and totaled $2.1 million in the second quarter. However, over time, I believe we’ve performed very well under a variety of circumstances and we demonstrated this again during the second quarter. In this environment, we’ll remain focused on operational excellence, accelerating our continuous improvement initiatives, and improving the product solutions we deliver to our customers.

As I look to the third quarter, for Specialty Papers we expect shipping volumes to increase by approximately 5% compared to the second quarter of 2012. This is a seasonally strong period for book and envelope products and our market position should allow us to grow our shipments during this period. The impact of announced selling price increases is expected to outpace overall input cost increases, and non-shutdown related maintenance spending is expected to increase by approximately $2.5 million, pre-tax, compared to our normal run rate as we strive to enhance machine reliability and overall efficiencies.

Composite Fibers shipping volumes are expected to be slightly higher on a sequential quarter basis. We expect modest growth in our tea and single serve coffee products, as well as technical specialties, to more than offset continued weakness in composite laminates. Selling prices and input costs are expected to be generally in line with the second quarter, and we expect to resolve the remaining start-up issues related to the two machinery builds by the end of the quarter.

Global shipping volumes for the Advanced Airlaid Materials business unit are expected to be slightly higher than the second quarter of 2012, driven by continued growth in North America. Selling prices and input costs are expected to be generally in line with the second quarter of 2012. And we expect to see benefits from our continuous improvement initiatives.

In closing, I remain optimistic about Glatfelter’s future. Despite the economic challenges facing us today, I’m excited about the opportunities our business has. We are working with customers across each of our businesses and developing several attractive new and next-generation products. We will begin ramping up production of several of these products during the third quarter, which should help us offset the impact of weak economic conditions. Our demonstrated ability to improve and expand our product portfolio through customer collaboration by developing new and innovative products has been a cornerstone of our growth strategy. As a result of our commitment to new product development for the past several years we’ve consistently generated over 50% of total revenue from products less than five years old. Our success has been, and will continue to be, driven by key elements of our strategy — a well balanced and diversified product portfolio, with leading market positions, an ability to develop new and innovative products and expand customer relationships through superior customer service and an ability to consistently improve the efficiency and effectiveness of our operations. When combined with consistent cash flow generation, a strong balance sheet, and initiatives such as our share repurchase programs and debt refinancing, I believe we are well positioned to continue to generate substantial value for our shareholders.

Good morning, or good afternoon, Dante. Good afternoon, John. A few questions. If we go back to that guidance for the third quarter, particularly in Composite Fibers, it sounded like you’ve got start-up costs that are going to continue in the third quarter. I wondered if you could just give us some sense of how they would look relative to the start-up costs in the second quarter. And then also the fact that you won’t have these power disruption issues, presumably, in the third quarter, what that adds to the equation.

Sure, Mark. The combination of those two factors in the second quarter cost us about $1 million. And the split between those, it’s about half — each one was about half of that. So we would expect some cost to continue on the commissioning and ramp-up of the machines, although not quite at the same level as the second quarter. And we’re hopeful that some of the issues related to the electricity delivery have been resolved and that can go away completely, although that’s not completely in our control. So that’s I think the best I can dimensionalize it for you. But certainly, if there is no electricity interruptions, we should see a benefit from that, and then the costs related to the commissioning of the machines should decline somewhat.

Okay. And then just staying with that business for a minute, you sounded like coffee shipments have kind of flattened out year over year. What’s your current rate on underlying growth into the single serve coffee market for you right now, if we look at it on an annual, year-over-year basis?

Hi, Mark, you are correct that we had some planning out in our overall single serve coffee business. This has been a very high growth — a rapid growth business for the last number of years. Our outlook for this business continues to be optimistic in terms of its growth prospects and we view this current near-term period as more of an inventory adjustment and, from a big picture point of view, we still expect to see some level of growth in aggregate in 2012 versus 2011.

Dante, any way to kind of put a set of brackets around what kind of growth we might expect?

Okay. And then stepping over to the book publishing market. You had a big decline there. It sounds like some of that might have been just seasonal issues. What’s your sense for the overall book/paper market right now and what the rate of decline looks like in that business?

Sure. I think there is some timing-related issues that are playing out in Q2 and Q3. As we’ve said before in previous calls, we estimate that market decline at about a 5% rate on a year-over-year basis. And as John mentioned in his comments, we do see some strength in terms of seasonality, the fall book season and expect to see better performance in Q3.

Okay. And again, staying kind of with that specialty paper business, Dante, any kind of fallout that we should be thinking about from your perspective from this Appleton/Domtar deal?

Okay. Another issue, you noted that in the Airlaid business, you did — you were strong in specialty wipes and I usually think about that business as being more a kind of a fem-hygiene business. Is the business mix kind of changing permanently there?

You are correct in saying that the largest segment of our Airlaid business is fem-hy. We’ve been working very diligently to make sure that we provide innovation and service to our fem-hy customers that enables them to gain confidence in Glatfelter and feel that they’re getting best value from us at the same time working on expanding our innovation and product platforms and collaborating with customers to come up with new solutions that fit underserved and unmet needs. And so over the last number of quarters, we’ve been engaged in a variety of activities in terms of business development and new product development, and we’re starting to see the fruits of our labor generate results through the P&L. I expect this to be a permanent part of our portfolio as we look to the future.

Okay. And then the last thing I wanted to ask about was the land sales. You gave us of the cash proceeds. I wondered if you could give us the actual sales price of the land.

The average sale price was about $2000 an acre, and this was all land in Pennsylvania. So if you think about some of our past sales, I think we’ve averaged around $2500 and a acre on a mix of properties from Virginia, Delaware, and Pennsylvania. Clearly, the Pennsylvania lands are — typically sell for a lower value than the Delaware and Virginia land. So again, this was about $2000 an acre and was all in Pennsylvania.

Yes, it struck me, John, for Pennsylvania land for you guys that actually was above what I would have expected. Can you give us some color on the tax implications of that sale?

The tax rates that apply to these are a little bit high. About 42% in total is what we recorded against those land sales. The biofuel credits should help us offset much of that taxes on the federal side, so that conversion will help us to make these a little bit more tax efficient. But the tax rate tends to be quite high.

Okay. And do you have any visibility into the land sale pipeline in the second half of the year?

There are some potentials, but again, I think it’s going to be on a relatively modest scale. The Virginia and Delaware areas, there’s very little activity. So anything we sell will likely come out of Pennsylvania and be quite modest, I would expect.

Good afternoon. First, could you update us on how the Gernsbach expansion is going, and have you started to presell any of the additional capacity?

We are tracking according to plan, and so the work we’re doing with our partners is going exactly the way we had envisioned and our long-term view of how we’re going to use these assets — or this asset — and which markets we’re going to serve has not changed fundamentally.

Okay. And are you pre-selling any of that, or do you have contracts written or anything?

I believe the way we’ve addressed that question in the past is to say that clearly we have a pretty good purview of the markets that we want to serve and the conversations that we had with our customers gave us confidence in terms of committing these funds to the rebuild and having a higher level of comfort recognizing that we publicly stated we expect a 15% to 20% after-tax return in a three-year period. So we have a pretty good level of confidence as to how we’re going to utilize this asset and this capacity over the upcoming quarters in the next few years.

Fair enough. Thank you. And then, switching gears a little, what’s your expected tax rate, excluding black liquor, this year?

And then, just lastly, as we look back through the remainder of the year, do we have any scheduled maintenance in the third or fourth quarter that we should be building in?

Is pretty standard maintenance with the exception of Q3, we said we were going to spend a little bit more on some reliability matters, but I would say that it’s more or less in line with what we’ve spent in prior years.

Thanks. Good afternoon. I believe you said that you have 80% pass-throughs on certain input costs. I missed which segment that was in and I was wondering, do you have to pass through the savings if pulp prices decline.

Steve, that was related to the Airlaid business, and about 80% of our revenue, the agreements contain a cost pass-through. And so as fluff pulp prices have been declining, we have been passing that through to customers.

I think in the second quarter, we showed that raw material costs declined by about $2 million in that business and so most of that was passed through to customers.

Understood. And then currency hurt you in the quarter. I don’t believe you do any hedging, but I was wondering if you had any plans to change that or any hedging on any other inputs?

Steve, we do hedge our currencies so we do have some pages related to the euro. Typically, we are hedging around 35% or so of our next 12 months expected cash flows. So we have some protection, but rates — the euro was — averaged about 1.43, I think it was, in the second quarter of a year ago, and it was about 1.28 the second quarter this year, so that’s a pretty substantial decline. And today, last I checked, it was about 1.23. So it’s a little bit lower than it was in our second quarter. So we do have some protection in place, but it’s typically more in the next six months and then over the succeeding six months past that, it’s a little bit lower.

And it’s fairly static strategy? You’re not actively changing it as market conditions change?

And a final question for me. Just wondering if you could discuss maybe any bigger picture growth objectives now that the Concert acquisition seems to be really paying off.

Yes, Steve. This is Dante. You’ll see us consistently stick to the parameters of the strategy that we’ve been conveying for the last year and a half. So of course we want to grow, but we want to do it in a profitable and responsible way. We want to manage our balance sheet in a way that it doesn’t get over-levered. We are very happy with how we’ve reshaped Glatfelter’s portfolio, whereby now two of our three businesses are growing global businesses that have much more attractive underlying fundamentals, and that gives us organic growth opportunities that, of course, have a lower risk profile and better certainty. So we have 1.3 times leverage, so I think we’re in very good position and have plenty of capacity to accelerate the execution of our growth strategy, provided we find investment opportunities that meet our very stringent hurdle rates and criteria.

Good afternoon. You guys were mentioning paper shipments for the next quarter are going to be up about 5% while the other segments are going to be up slightly to flat. Can you expand on some of the areas that are showing stronger demands? And is there any intention to maybe exit some of the stagnant businesses in that area?

Hey, Larry, this is Dante. It’s important to recognize that our Specialty Papers business in North America, during the second quarter when we had the two big outages, that has an impact on shipments as well. And we do have seasonality in that business. So as we stated earlier, the fall book season, when a lot of the bestsellers come out from the publishers, that typically gives us a lift. The envelope and converting business sees a lift as we enter the fall season where communication — papers and cards and things of that nature — are more in demand. So that’s really what’s driving the sequential quarter improvement of 5% in Specialty Papers.

In terms of the businesses that are flat, I think, again, you take a look at the cash flow generating capabilities of our North American business and the fact that we’ve continued to outperform the broader market, and we’re growing our operating income. So I don’t feel any pressure to jettison any parts of Glatfelter’s business. Of course, we review our entire portfolio on a regular basis and we focus on underperforming parts of our business or underperforming assets. And to the extent that we’ve fully exhausted all of our continuous improvement opportunities and putting good sweat equity into the business, then we would consider doing something like shutting it down or selling at it. But until that point in time, we’re going to make sure that we give every best effort to fully optimize the performance of the assets that we have. And I think if you look at our track record over the last number of years, along a variety of dimensions, you can see that we’ve had more success than not along those lines.

Okay. Got you. Circling back to the timber sales, what was the impetus for the sale? Was it just favorable pricing? And I guess can you comment? I know a previous question was about the pipeline in the future. Is it kind of going to be similar to this quarter or maybe down a little bit for the rest of the year?

Our expectation is that over time, we will sell all of our property. We have about 30,000 acres — maybe just short of that now; maybe 29,000 acres of property remaining. We had sold a substantial amount of our property several years ago, and with the downturn in the real estate markets and the values, we sort of paused on that program.

But as we see opportunities to get an appropriate value, we will pursue the sales. And so that’s what happened in the second quarter. The market in Pennsylvania has shown a little bit more life, certainly, than the markets in Virginia and Delaware. So we saw that we thought were good opportunities to get appropriate value and we sold them. So we will continue that. As I said, I don’t think Virginia and Delaware are going to provide many opportunities in the near future for us to sell. But we will continue to monitor the markets and as good opportunities arise we will sell the property.

Okay. Got you. And finally, as Green Mountain’s patents are expiring in September, how do you guys look at some of these store brands that are coming online that are compatible with the Keurig system? And how do you view some of these lower-cost pods coming on line?

I can only offer you our opinion. I can’t speak on behalf of Green Mountain or anyone else, for that matter. But it’s our understanding that they have a portfolio of intellectual property that covers their K-Cup systems and the patents that are expiring this year are from a previous generation K-Cup, and to my knowledge are not the predominant technology being used today for K-Cups. So the intellectual property that covers the K-Cup technology that’s in the market today, I believe expires in 2017 or 2020. It’s in the out years.

So again, we serve more than one customer and we are very confident that this is an attractive market for Glatfelter over the longer term and remain very committed to serving it.

Right. Okay. I know you guys mentioned maybe 10% — you know, the US is not quite up to double digits yet. Is there a kind of a time frame where you see that penetration rate in the US?

Yes, I think you’re referencing where we see single serve coffee in more established markets like the Benelux or Western Europe where certain countries have over 30% penetration, and the US it’s still single digits. We haven’t gotten that granular, nor do I know of anyone that can forecast at that level of accuracy, other than if you think about single-digit to somewhere north of that and we have past precedents where other Western markets have evolved to 30% plus penetration, it shows a lot of upside. And so that was one of the driving forces behind the investment in the G-10 rebuild, but not the only factor. The asset that we are rebuilding in Germany can produce beverage filtration papers as well as a variety of specialty papers that will go into consumer and industrial applications. So I feel good about the overall growth trajectory of single serve coffee, and that penetration rate will increase over time in the United States and that the asset that we are rebuilding in Europe will be able to serve a variety of specialty markets effectively.

Yes, just a few follow-ons here. One, it looked like you had expense in the second quarter in the US business, in part trying to improve internal efficiencies. I assume that that was kind of centered at Chillicothe. And I just wondered if you could give us some sense of when we could start to see some benefit there, particularly see some better margins out of the Ohio mill.

Yes, Mark, I’m not exactly sure, specifically, what you are referring to about the additional spending. We have been, over time, making investments in Chillicothe. Some are capital and some are maintenance for improvement of reliability. We have seen improvements in profitability, as I mentioned. Our profitability this quarter — or the first half of this year — in Specialty Papers is up around 25% or 26%. And if you look over the last — since we acquired that business, we’ve seen very dramatic improvements in profitability. So I think we are seeing it in the profitability metrics. We continue to believe we have opportunities to improve the efficiency of the operations in Chillicothe, and that gives us some growth opportunities with respect to operating income for Specialty Papers. So we will continue to make some of those investments and we think they’ll continue to drive value.

Okay. And just to kind of follow along on that. Again, to come back to this deal that Appleton has done. Have you guys thought about any kind of transactions or opportunities to do what Domtar is doing for Appleton here, which is basically take a high cost producer of specialties and just bring some of that volume in-house, either on your book or for someone else?

Hey, Mark. This is Dante. I would say that from a bigger picture point of view, we are continually looking at every aspect of our business and trying to disaggregate the value chain and determine where we are adding value and where value may be destroyed and determine are there better mouse traps for us to consider. To this point in time, we haven’t come up with any alternative constructs that we feel confident that over the longer term would be less volatile and a better cost than the approach that we are taking. And again, I would say if you look at the track record of our financial performance over the last five, six years, you’d see that we’ve had substantial improvement across all the primary dimensions. So we’re confident that we’re on the right track, but we’re also open-minded to new constructs that could create better value if it’s sustainable.

Okay. And then the other question I had is just sort of on the balance sheet and cash flows. I mean, if you look at the numbers in the presentation here, you actually look like you’re, on a net basis, levered only about 1.2 times now. Maybe you could talk with us about where you’d like to keep that leverage level at, and then how you see the use of cash beyond the Gernsbach rebuild over the next 18 to 24 months.

Sure. A couple things. One is we are committed to making sure that we always have a healthy balance sheet. We’ve demonstrated over time that where we see investment opportunities and where we understand the risks and we’re comfortable that we can manage and mitigate them, we are willing to take on more debt and increase our leverage on a temporary basis if we have a window toward retiring that debt in reasonable debt amount of time. Right now, you are correct. We are about 1.3 times on a net debt basis. We have plenty of capacity. I think in this kind of business environment, it’s good to err on the side of having a strong balance sheet. And as we demonstrated in the 2009/2010 time frame, if we see opportunities that fit our strategy, we are not going to be shy about executing them and investing in rebuilds or making acquisitions.

In terms of how high we would leverage the balance sheet in this kind of environment, I think if we get much above 2.5, 2.75, you start to get to the point of really having to think it through and be highly confident that we could bring down debt pretty quickly. So I think if you look at those parameters, the amount of dry powder we have, we have a lot of flexibility, which is the way we want it. John, do you want to add anything?

Hey, guys. It’s probably just a question here for John. On the conversion to the cellulosic biofuel credits, on page 12 of the presentation you show a $15 million benefit in 2013. Any idea what the 2014 benefit could be as we can sort of frame that?

Okay. And then, it looked to me like the CapEx guidance was down maybe about $5 million from prior guidance. Is that the case and if so, what’s going on? Is it a timing thing or are you foregoing some stuff?

It’s a combination of factors. It is a little bit of timing; it’s a little bit of foreign currency translation. So it’s those two things. But I would say we haven’t consciously deferred anything other than for our ability to complete some of the work and the timing of getting it done.

There are no further questions at this time. Dante, I turn the call over back to you.

Okay, well, thank you again for joining us today. John and I appreciate your questions and your interest in Glatfelter and we look forward to speaking with you next quarter. Have a good day.

This concludes today’s conference call. Thank you for your participants in Glatfelter’s second-quarter conference call. You may now disconnect.


Pennsylvania	001-03560	23-0628360
_____________________ (State or other jurisdiction	_____________ (Commission	______________ (I.R.S. Employer
of incorporation)	File Number)	Identification No.)

96 S. George Street, Suite 500, York, Pennsylvania		17401
_________________________________ (Address of principal executive offices)		___________ (Zip Code)


	P. H. Glatfelter Company

July 31, 2012	By:	David C. Elder

		Name: David C. Elder
		Title: Vice President, Finance


Exhibit No.		Description

99.1		A copy of the press release dated July 31, 2012 issued by the Company to report its results of operations for the three months and six months ended June 30, 2012.
99.2		Copy of teleconference call transcript held by management on July 31, 2012 to discuss the Company's 2012 second quarter results.


For Immediate Release	Contacts:

	Investors:	Media:
	John P. Jacunski	William T. Yanavitch
	(717) 225-2794	(717) 225-2747


Calculation of Free Cash Flow	Six months ended June 30
In thousands	2012			2011
Cash from operations	$	28,532		$	48,313
Less:
Capital expenditures		(30,587	)		(27,877	)
Free cash flow	$	(2,055	)	$	20,436


Date of Report (Date of Earliest Event Reported):		July 31, 2012


Registrant’s telephone number, including area code:		717 225 4711


Calculation of Net Debt	June 30	December 31
In thousands	2012			2011
Short term debt		$	—	$	-
Long term debt	218,000				227,000

Total	218,000				227,000
Less: Cash	(23,437)				(38,277	)

Net Debt	$194,563			$	188,723