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P. H. Glatfelter Company Announces Tobacco Papers Capacity Reduction

York, Pennsylvania - December 13, 1999 - P. H. Glatfelter Company (NYSE: GLT), a global manufacturer of engineered papers and specialized printing papers, announced today that it will begin reducing tobacco paper manufacturing capacity at its Ecusta Division next year.

Although the amount of the reduction is uncertain, capacity could be reduced by up to one-third. The capacity reduction is the result of anticipated volume losses following the Company’s announcement that it would raise tobacco paper prices in light of the declining profitability of its tobacco paper business.

Glatfelter’s announced price increases for tobacco papers have generated mixed reactions from tobacco paper customers which were consistent with the Company’s expectations. "Some of our customers chose to remain with us while others have sought new suppliers," said George H. Glatfelter II, President and Chief Executive Officer. Mr. Glatfelter added that the timing and amount of the capacity reduction is dependent upon how quickly customers establish new sources of supply and the extent to which they do so.

Several cigarette paper machines, together with associated ancillary equipment, are expected to be idled sometime during the first half of next year. Depending on the ultimate reduction in tobacco paper manufacturing capacity, the Company could reduce the Division’s workforce by as many as 300 people through a combination of early retirements and layoffs. The Ecusta Division’s remaining tobacco paper capacity, along with that of Glatfelter’s German subsidiary, Schoeller & Hoesch, will allow the Pennsylvania-based company to remain a top-tier player in the world tobacco paper markets. In addition to cigarette and other tobacco papers, the Ecusta Division will continue to manufacture specialized printing papers and other engineered papers.

Because the extent of the sales volume losses cannot be reliably estimated at this time, the Company does not know the exact amount of a one-time charge associated with the workforce reduction or the amount of a one-time charge, if any, associated with the idling of equipment. The Company believes the charge associated with this capacity reduction will be recognized in the first half of 2000 and does not believe it will materially adversely affect its financial condition.

To offset the loss of tobacco paper volume, Glatfelter is planning to grow its printing and engineered papers businesses and has invested resources into its new product development area.

"As a specialized producer of value-added papers, we deal in highly dynamic market niches," Mr. Glatfelter stated. "A key factor in the successful management of our business lies in developing and implementing market strategies that drive value to our customers as well as to our shareholders. We fully expect that the changes that we are initiating will enable our Company to be a better supplier to our remaining tobacco paper customers while, at the same time, provide a better financial return to the benefit of our shareholders," Mr. Glatfelter added.

P. H. Glatfelter Company manufactures a broad product line of engineered papers and specialized printing papers in the U.S., Germany and France and has other production facilities in Canada, Australia and the Philippines. In addition to tobacco papers, the Company holds a leading market share in book publishing papers and tea bag papers. Net sales for the most recent four quarters ended September 30, 1999 were $664 million.

Certain statements set forth in this press release with respect to the possible effect of the announced price increases and related capacity reductions and the Company’s ability to re-deploy assets and grow other businesses as well as develop new products and reduce costs 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, which 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 include, but are not limited to, the inability of the Company to re-deploy assets or reduce costs sufficiently to offset the effect of any reduction in capacity and demand for its tobacco paper products, expand other businesses or to develop new products, as well as those factors discussed in the Company’s Securities and Exchange Commission filings.


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