Glatfelter P H Co – ‘10-K405’ for 12/31/97

As of:  Wednesday, 3/18/98   ·   For:  12/31/97   ·   Accession #:  893220-98-563   ·   File #:  1-03560

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Annual Report — [x] Reg. S-K Item 405   —   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K405     P.H. Glatfelter Company Form 10-K                     52    284K 
 2: EX-10.J     Credit Agreement                                     121    482K 
 3: EX-21       List of Subsidiaries                                   1      5K 
 4: EX-23       Independent Auditors' Consent                          1      6K 
 5: EX-27       Financial Data Schedule                                1      6K 

10-K405   —   P.H. Glatfelter Company Form 10-K
Document Table of Contents

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 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
 THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended                                 Commission file number
December 31, 1997                                               1-3560          

    P. H. GLATFELTER COMPANY
      (Exact name of registrant as specified in its charter)

 Pennsylvania                                         23-0628360
(State or other jurisdiction of                           (I.R.S. Employer      
incorporation or organization)                            Identification No.)   
228 South Main Street                                             
Spring Grove, Pennsylvania                                    17362         
(Address of principal executive offices)                      (Zip Code)        

Registrant's telephone number,                              (717) 225-4711      
including area code                                         

Securities registered pursuant to Section 12(b) of the Act:                     

Common Stock                           American Stock Exchange Inc.     
(Title of each class)              (Name of each exchange on which registered)  

Securities registered pursuant to Section 12(g) of the Act:                     

None
(Title of Class)

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 the past 90 days. Yes X No                                     

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405  
of Regulation S-K is not contained herein, and will not be contained, to the    
best of the Registrant's knowledge, in the definitive proxy statement           
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]                                                                  

The aggregate market value of the Common Stock of the Registrant held by        
non-affiliates at February 25, 1998 was $451,502,914.                           

Common Stock outstanding at February 25, 1998:  42,164,404 Shares               

       DOCUMENTS INCORPORATED BY REFERENCE

       Portions of the following documents are incorporated by
reference in this Report on Form 10-K.                                          

     1.    Proxy Statement dated March 13, 1998 (Part III)

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PART I  

Item 1.     Business.                                                           

          The Registrant, a paper manufacturing company, began operations in
Spring Grove, Pennsylvania in 1864 and was incorporated as a Pennsylvania       
corporation in 1905. On January 30, 1979 the Registrant acquired by merger      
Bergstrom Paper Company with paper mills located in Wisconsin and Ohio. The Ohio
mill was sold on September 10, 1984. On May 7, 1987 the Registrant acquired all 
of the outstanding capital stock of Ecusta Corporation ("Ecusta") with a paper  
mill located in Pisgah Forest, North Carolina and other operations in North     
Dakota, Canada and Australia. Ecusta was merged into and became a division of   
the Registrant on June 30, 1987. On January 2, 1998 the Registrant acquired S&H 
Papier-Holding GmbH ("S&H") with a paper mill located in Germany, a 50%         
ownership interest in a paper mill in France and other operations in the        
Philippines, France and the United States.                                      

 The Registrant's paper mills are located in Spring Grove,
Pennsylvania, Pisgah Forest, North Carolina and Neenah, Wisconsin. It           
manufactures printing papers and tobacco and other specialty papers.            

          The Registrant sells its products throughout the United States and
in a number of foreign countries. Net export sales in 1997, 1996 and 1995 were  
$61,992,000, $55,532,000 and $54,961,000, respectively.                         

            Most of the Registrant's printing paper products are directed at the
uncoated free-sheet portion of the industry. The Registrant's printing paper    
products are used principally for the printing of case bound and quality        
paperback books, commercial and financial printing and envelope converting.     
Printing papers are manufactured in each of the Registrant's mills.             

           In 1997, sales of paper for book publishing and commercial printing
generally were made through wholesale paper merchants, whereas sales of paper to
financial printers and converters generally were made directly. During 1994, one
of the Registrant's wholesale paper merchants, Central National- Gottesman Inc. 
(which buys paper through its division, Lindenmeyr Book Publishing) acquired    
substantially all of the assets of Perkins & Squier, another of the Registrant's
wholesale paper merchants. As a result, during 1997, 1996 and 1995, Central     
National-Gottesman Inc. accounted for 12%, 12% and 14% of the Registrant's net  
sales, respectively.                                                            

        The Registrant's tobacco and other specialty papers are used for
cigarette manufacturing and other specialty uses such as the manufacture of     
playing cards, stamps, labels and surgical                                      

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gowns. Sales of these papers are generally made directly to the converter of the
paper. Tobacco papers are manufactured in the Pisgah Forest mill. Other         
specialty papers are manufactured in each of the Registrant's mills.            

           A significant portion of the Pisgah Forest mill's sales are made to
a limited number of major tobacco companies. The current legal and regulatory   
pressures on the tobacco industry in the United States could have an adverse    
effect on the future tobacco paper sales and profitability of the Pisgah Forest 
mill. Under such conditions, the Registrant would attempt to replace any lost   
sales and profitability with increases in international tobacco paper sales and 
with sales of lightweight printing and other specialty papers.                  

          Set forth below is the amount (in thousands) and percentage of net
sales contributed by each of the Registrant's two classes of similar products   
during each of the years ended December 31, 1997, 1996 and 1995.                

Years Ended December 31,  

       1997                   1996                1995
       ----                   ----                ----
             Net Sales     %        Net Sales   %       Net Sales    %
             ---------     -        ---------   -       ---------    -

Printing                                                                        
Papers             $354,076    62%        $355,328   63%      $421,868   68%    

Tobacco                                                                         
and Other                                                                       
Specialty                                                                       
Papers              212,996    38%         210,756   37%       201,841   32%    
                -------    ---         -------   ---       -------   ---

Total              $567,072   100%        $566,084  100%      $623,709  100%    

            The competitiveness of the markets in which the Registrant sells its
products varies. There are numerous concerns in the United States manufacturing 
printing papers and no one company holds a dominant position. Capacity in the   
uncoated free-sheet industry, which includes uncoated printing papers, is not   
expected to increase significantly for the next few years. In the tobacco papers
business, while there is only one significant domestic competitor, there are    
numerous international competitors. The Registrant is a major tobacco papers    
supplier to the domestic tobacco products industry. During 1997, domestic       
tobacco papers sales were adversely affected by a shift in cigarette production 
by some domestic producers to international locations. The Registrant was able  
to replace the lost sales volume of domestic tobacco papers sales with          
international tobacco paper sales. The Registrant's ability                     

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to compete in the international tobacco papers market should be enhanced by its 
1998 acquisition of S&H.                                                        

   Service, product performance and technological advances are
important competitive factors in all of the Registrant's businesses. The        
Registrant believes its reputation in these areas continues to be excellent.    

            Backlogs are generally not significant in the Registrant's business,
as substantially all of the Registrant's customer orders are produced within 30 
days of receipt. A backlog of unmade customer orders is monitored primarily for 
purposes of scheduling production to optimize paper machine performance. From   
time to time, the Registrant may determine that the backlog of unmade orders,   
along with high finished goods inventory levels, may be insufficient to warrant 
a full schedule of paper machine production. In these circumstances, certain    
paper machines may be temporarily shut-down until backlog and inventory levels  
warrant a resumption of operations.                                             

   The principal raw material used at the Spring Grove mill is
pulpwood. In 1997, the Registrant acquired approximately 78% of its pulpwood    
from saw mills and independent logging contractors and 22% from Company-owned   
timberlands. Hardwood and softwood purchases constituted 52% and 48% of the     
pulpwood acquired, respectively. Hardwoods are still available within a         
relatively short distance of the Registrant's Spring Grove mill. Softwood is    
obtained primarily from Maryland, Delaware and Virginia. In order to protect its
sources of pulpwood, the Registrant actively promotes conservation and forest   
management among suppliers and woodland owners. In addition, its subsidiary, The
Glatfelter Pulp Wood Company, has acquired, and is acquiring, woodlands,        
particularly softwood growing land, with the objective of having a significant  
portion of the Registrant's softwood requirement available from Company-owned   
woodlands.                                                                      

           The Spring Grove pulp mill converts the pulpwood into wood pulp for
use in its papermaking operations. In addition to the pulp it produces, the     
Spring Grove mill purchases market pulp from others.                            

        The principal raw material used by the Neenah mill is high-grade
recycled wastepaper. The quality of different types of high-grade wastepaper    
varies significantly depending on the amount of contamination. Wastepaper prices
were relatively stable throughout 1997. It is anticipated that there will be an 
adequate supply of wastepaper in the future. During December 1996, the Neenah   
mill completed a project increasing its capacity to recycle lower quality high  
grade wastepapers. Although this project did not increase the mill's total      
de-inking capacity, it has reduced costs.                                       

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          The major raw materials used at the Ecusta mill are purchased wood
pulp and processed flax straw, which is derived from linseed flax plants. The   
current supply of wood pulp and flax straw is sufficient for the present and    
anticipated future operations at the Ecusta mill. Ecusta receives a majority of 
its processed flax straw from the Registrant's Canadian operation.              

    Wood pulp consumed which was purchased from others comprised
approximately 120,000 short tons or 26% of the total 1997 fiber requirements of 
the Registrant. The average cost of market pulp during 1997 did not change      
significantly from 1996. Pulp prices have decreased in early 1998. The          
Registrant anticipates that further pulp price decreases may occur before       
possible increases in the second half of 1998.                                  

     The Registrant's Spring Grove mill generates all of its steam
requirements and is 100% self-sufficient in electrical energy generation. The   
mill also produces excess electricity which is sold to the local power company  
under a long-term co-generation contract. Such net energy sales were $9,189,000 
in 1997. Principal fuel sources used by the Spring Grove mill are coal, spent   
chemicals, bark and wood waste, and oil, which were used to produce             
approximately 55%, 37%, 7% and 1%, respectively, of the total energy internally 
generated at the Spring Grove mill in 1997.                                     

            The Pisgah Forest mill generates all of its steam requirements and a
majority of its electrical requirements (62% in 1997) and purchases the         
remainder of its electric power requirements. Coal was used to produce          
essentially all of the mill's internally generated energy during 1997.          

     The Neenah mill generates all of its steam requirements and a
portion of its electric power requirements (13% in 1997) and purchases the      
remainder of its electric power requirements. Gas was used to produce 89% of the
mill's internally generated energy during 1997 with fuel oil being used to      
generate the remainder.                                                         

       At December 31, 1997, the Registrant had 3,076 active full-time
employees.                                                                      

     Hourly employees at the Registrant's mills are represented by
different locals of the United Paperworkers International Union, AFL-CIO (the   
"Union"). In October 1996 a five-year labor agreement covering approximately    
1,035 employees at the Pisgah Forest mill was ratified. Under this agreement,   
wages increased by 3% in 1997. A five-year labor agreement covering             
approximately 320 employees at the Neenah mill was ratified in August 1997.     
Under this agreement, wages increased 3% in 1997 and will increase by 3% per    
year for the duration of the agreement. A five-year labor agreement covering    
approximately 740 employees in Spring Grove expired in January                  

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1998. Under this agreement, wages increased by 3% in 1997. The hourly employees 
covered by this agreement are continuing to work under the provisions of the    
expired agreement. Negotiations between the Union and the Registrant continue.  

            On January 2, 1998, the Registrant acquired S&H, the specialty paper
division of the Schoeller and Hoesch Group. S&H primarily manufactures specialty
papers and has the leading position in the world tea bag papers market. S&H also
manufactures other specialty papers, including tobacco, metalized, stencil      
filter and casing papers, as well as some printing papers. S&H employs          
approximately 940 people.                                                       

   The acquisition of S&H represents a significant step in the
Registrant's long-term strategic plan, which emphasizes growth in technically   
engineered specialty paper markets. It provides the Registrant with a strong    
business position in the world tea bag paper market and a presence in other long
fiber markets such as stencil, filter and casing papers. It also strengthens the
Registrant's tobacco paper business by providing a manufacturing presence in    
Europe and a significant share of the European tobacco papers market, plus the  
ability to manufacture and market ultraporous plug wrap, a growing segment of   
the world tobacco papers market.                                                

ENVIRONMENTAL MATTERS                                                           

      The Registrant is subject to loss contingencies resulting from
regulation by various federal, state, local and foreign governmental authorities
with respect to the environmental impact of air and water emissions and noise   
from its mills, as well as disposal of solid waste generated by its operations. 
It has been the Registrant's experience over many years that directives with    
respect to the abatement of pollution have periodically been made increasingly  
stringent. During the past twenty years or more, the Registrant has taken a     
number of measures and spent substantial sums of money both for the installation
of facilities and operating expenses in order to abate air, water and noise     
pollution and to alleviate the problem of disposal of solid waste. The          
Registrant anticipates that environmental regulation of the Registrant's        
operations will continue to become more burdensome and that capital and         
operating expenditures will continue, and perhaps increase, in the future. In   
addition, the Registrant may incur obligations to remove or mitigate any adverse
effects on the environment resulting from its operations, including the         
restoration of natural resources, and liability for personal injury and damage  
to property, including natural resources. For further information with respect  
to such compliance, reference is made to Item 3 of this report.                 

Compliance with government environmental regulations is 
a matter of high priority to the Registrant.  In order to meet                  

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environmental requirements, the Registrant has undertaken certain projects, the 
most significant of which relates to the modernization of the Spring Grove      
pulpmill. The pulpmill modernization project, which began in 1990, was completed
during the fourth quarter of 1994 for a total cost of $171,000,000 (exclusive of
capitalized interest). During 1997, the Registrant expended approximately       
$8,000,000 on environmental capital projects. The Registrant estimates that     
$9,000,000 and $12,000,000 will be expended for environmental capital projects  
in 1998 and 1999, respectively. Since capital expenditures for pollution        
abatement generally do not increase the productivity or efficiency of the       
Registrant's mills, the Registrant's earnings have been and will be adversely   
affected to the extent that selling prices have not been and cannot be increased
to offset additional incremental operating costs, including depreciation,       
resulting from such capital expenditures and to offset additional interest      
expense on the amounts expended for environmental purposes. Because other paper 
companies located in the United States are generally subject to the same        
environmental regulations, the Registrant does not believe that its competitive 
position in the U.S. paper industry will be materially adversely affected by its
capital expenditures for, or operating costs of, pollution abatement facilities 
for its present mills or the limitations which environmental compliance may     
place on its operations.                                                        

       The Registrant, along with six other companies which operate or
formerly operated facilities along the Fox River in Wisconsin, has been in      
discussions with the Wisconsin Department of Natural Resources ("DNR") and the  
United States Fish and Wildlife Service (the "USFWS") regarding the alleged     
discharge of polychlorinated biphenyls ("PCBs") and other hazardous substances  
to the Fox River below Lake Winnebago (the "lower Fox River") and the Bay of    
Green Bay. On January 30, 1997, the Registrant and the six other companies      
entered into an agreement with the State of Wisconsin (the "Wisconsin           
Agreement") which was intended to establish a framework for the final resolution
of claims for natural resources damages and other relief which the State asserts
against the companies.                                                          

        Under the Wisconsin Agreement, the companies will provide in the
aggregate $10 million in work and funds to facilitate natural resources damages 
assessment activities, including, among other things, modeling and risk         
assessment, as well as field scale demonstration of sediment dredging and the   
enhancement of certain environmental amenities. The State has indicated that the
$10 million in work and funds is expected to be spent over a four year period   
although the bulk of the amount may be spent in 1998. The final allocated       
portion of the $10 million which the Registrant will be required to pay is      
unknown at present. The State will act as "lead authorized official" under      
federal law for purposes of any assessment of damages to natural resources      
within Wisconsin, except those within the                                       

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administrative jurisdiction of a federal agency. The USFWS, together with the   
National Oceanic and Atmospheric Administration and two Indian tribes, however, 
is conducting its own assessment despite the State's status. In general, the    
parties to the Wisconsin Agreement have agreed to toll all limitations periods  
and to forbear from litigation during the term of the agreement. The parties    
intend to conclude a final resolution of all of the State's claims during the   
course of, or after completion of, the work called for by the agreement.        

           By letter dated January 31, 1997, and received by the Registrant on
February 3, 1997, the USFWS provided 60 days' notice of the intention of the    
United States Departments of the Interior and Commerce to commence an action for
natural resources damages against the Registrant and the six other companies    
referred to above similarly relating to the discharge of hazardous substances   
into the lower Fox River. The Registrant does not know the amount which the     
federal trustees will claim as natural resources damages, but the Registrant    
believes that it will be substantial. Beginning as of March 1, 1997, the        
Registrant and six other companies entered into a series of agreements with the 
United States which provided that all limitation periods were tolled and the    
parties would forbear from litigation; the last tolling and forbearance period  
expired on December 2, 1997.                                                    

            On July 11, 1997, the Wisconsin DNR, the United States Department of
the Interior, the Menominee Indian Tribe of Wisconsin, the Oneida Tribe of      
Indians of Wisconsin, the National Oceanic and Atmospheric Administration and   
the United States Environmental Protection Agency (the "EPA") entered into a    
Memorandum of Agreement (the "MOA") which provides for coordination and         
cooperation among those parties in addressing the release or threat of release  
of hazardous substances into the lower Fox River, Green Bay and Lake Michigan   
environment. The MOA sets forth a mutual goal of remediating and/or responding  
to hazardous substance releases and threats of releases, and restoring injured  
and potentially injured natural resources. The MOA further states that, based on
current information, removal of the PCB-contaminated sediments in the lower Fox 
River is expected to be the principal, but not exclusive, action undertaken to  
achieve restoration and rehabilitation of injured natural resources. The MOA    
anticipates funding from the Registrant and the six other companies, all of     
which are identified as potentially responsible parties.                        

    The EPA has announced its intention to include the lower Fox
River/Bay of Green Bay on the National Priorities List maintained pursuant to   
the Comprehensive Environmental Response, Compensation and Liability Act. The   
EPA rejected the potentially responsible parties' offer to perform a remedial   
investigation and feasibility study ("RI/FS") for the site and the Wisconsin DNR
will take the lead in performing the RI/FS. The Registrant                      

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believes that this development increases the likelihood that this matter will   
end up in litigation. The Registrant cannot now predict the cost of the remedy  
which will be selected for the site, in part because the Registrant cannot      
predict the remedy for the site and the Registrant cannot predict its share of  
that cost.                                                                      

     The Registrant, with advice from its environmental consultants, continues
to believe that an aggressive effort, as currently proposed by the governmental 
authorities, to remove PCB-contaminated sediments, many of which are buried     
under cleaner material or are otherwise unlikely to move, would be              
environmentally detrimental and therefore inappropriate. Furthermore, the       
Registrant's share of the cost of such removal, depending on the amount of      
sediments to be removed, could exceed its available resources. The Registrant   
believes it will be able to persuade the parties to the MOA or a court against  
removal of a substantial amount of PCB-contaminated sediments. There can be no  
assurance, however, that the Registrant will be successful in arguing that      
removal of a substantial amount of PCB-contaminated sediments is inappropriate, 
that it would prevail in any resulting litigation or that its share of the cost 
of any such removal would not have a material adverse effect on the Registrant's
consolidated financial condition, liquidity and results of operation.           

      The amount and timing of future expenditures for environmental
compliance, clean-up, remediation and personal injury, natural resource damage  
and property damage liability, including but not limited to those related to the
lower Fox River and the Bay of Green Bay, cannot be ascertained with any        
certainty due to, among other things, the unknown extent and nature of any      
contamination, the extent and timing of any technological advances for pollution
control, the remedial actions which may be required and the number and financial
resources of any other responsible parties. The Registrant continues to evaluate
its exposure and the level of its reserves including, but not limited to, its   
share of the Wisconsin Agreement, its negotiations with the State concerning the
lower Fox River and Bay of Green Bay and the unknown amount which could be      
claimed by the federal trustees as natural resource damages related to the lower
Fox River. The Registrant believes that it is insured against certain losses    
related to the lower Fox River, depending on the nature and amount thereof.     
Coverage, which is currently being investigated under reservation of rights by  
various insurance companies, is dependent upon the identity of the plaintiff,   
the procedural posture of the claims asserted and how such claims are           
characterized. The Registrant does not expect that the insurers' investigation  
as to coverage will be completed prior to the time these factors become known.  
The Registrant's current assessment, after consultation with legal counsel, is  
that future expenditures for these matters are not likely to have a material    
adverse impact on the Registrant's                                              

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consolidated financial condition or liquidity, but could have a material adverse
effect on the Registrant's consolidated results from operations in a given year;
however, there can be no assurances that the Registrant's reserves will be      
adequate or that a material adverse effect on the Registrant's consolidated     
financial condition or liquidity will not occur at some future time.            

Item 2.     Properties.                                                         

       The Registrant's executive offices are located in Spring Grove,
Pennsylvania, 11 miles southwest of York. The Registrant's paper mills are      
located in Spring Grove, Pisgah Forest, North Carolina, Neenah, Wisconsin and   
Gernsbach, Germany. The Registrant also has a 50% ownership interest in a paper 
mill in Odet, France.                                                           

         The Spring Grove facilities include seven uncoated paper machines
with a daily capacity ranging from 12 to 304 tons and an aggregate              
annual capacity of about 300,000 tons of finished paper. The machines have been 
rebuilt and modernized from time to time. During 1997, the Spring Grove mill    
completed its Gravure Coater ("G-Coater") capital project. The Registrant views 
the G-Coater as an important strategic project which will allow it to expand    
its more profitable specialty paper product group. The G-Coater, along with     
Spring Grove's off-line combi-blade coater, gives the Registrant a potential    
annual production capacity for coated paper of approximately 53,000 tons. Since 
uncoated paper is used in producing coated paper, this does not represent an    
increase in the Spring Grove mill capacity. The Spring Grove facilities also    
include a pulpmill, which has a production capacity of approximately 650 tons   
of bleached pulp per day.                                                       

    The Registrant expects its Spring Grove mill to complete the
construction of a precipitated calcium carbonate ("PCC") plant during the first 
quarter of 1998. This plant will allow the Spring Grove mill to produce PCC,    
which the Registrant believes will be of a higher quality than that which is    
currently used. The Spring Grove mill will be able to replace its purchased PCC 
and other high-cost raw materials with its own-made PCC, resulting in           
significant cost savings to the Registrant.                                     

         The Pisgah Forest facilities include twelve paper machines, stock
preparation equipment, a modified kraft bleached flax pulpmill with thirteen    
rotary digesters, a precipitated calcium carbonate plant and a small recycled   
pulping operation. The annual light weight paper capacity is approximately      
99,000 tons. Nine paper machines are essentially identical while the newer,     
larger three machines have design variations specific for the products produced.
Converting equipment includes winders, calendars, slitters, perforators and     
printing presses. Due to                                                        

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current high finished tobacco paper goods inventory levels, the Registrant has  
temporarily shut down one of Pisgah Forest's smaller machines for an indefinite 
period of time.                                                                 

        The Neenah facilities, consisting of a paper manufacturing mill,
converting plant and offices, are located at two sites. The Neenah mill includes
three paper machines, with an aggregate annual capacity of approximately 158,000
tons and a wastepaper de-inking and bleaching plant with an annual capacity of  
approximately 97,000 tons. The converting plant contains a paper processing area
and warehouse space.                                                            

            As noted in Item 1, on January 2, 1998, the Registrant acquired S&H,
which owns and operates a paper mill in Gernsbach, Germany and has a 50%        
ownership interest of a paper mill in Odet, France. S&H also has a pulpmill in  
the Philippines which supplies abaca pulp to its paper mills. In addition, S&H  
owns and operates the facilities in Wisches, France and Summerville, South      
Carolina.                                                                       

           The Gernsbach facility includes five uncoated paper machines with a
daily light weight paper capacity ranging from 12 to 32 tons and an aggregate   
annual light weight capacity of about 37,000 tons. In addition, the Gernsbach   
facility has the capacity to annually produce 8,200 tons of metallized papers   
using a lacquering machine and two metallizers. The base paper used to          
manufacture the metallized paper is purchased. The Odet facility includes two   
paper machines with a total daily light weight capacity of approximately 10 tons
and an aggregate annual light weight capacity of approximately 3,900 tons of    
finished paper. The Philippine pulpmill has an aggregate annual capacity of     
approximately 7,200 tons of abaca pulp. Of this amount, approximately 7,000 tons
are supplied to the Gernsbach and Odet paper mills with the remainder being sold
to outside parties. The Gernsbach and Odet paper mills obtain approximately 97% 
of their abaca pulp from the Philippine pulpmill.                               

         The Glatfelter Pulp Wood Company, a subsidiary of the Registrant,
owns and manages approximately 111,000 acres of land, most of which is          
timberland.                                                                     

           The Registrant owns substantially all of the properties used in its
papermaking operations, except for certain land leased from the City of Neenah  
under leases expiring in 2050, on which wastewater treatment, storage and other 
facilities and a parking lot are located. All of the Registrant's properties,   
other than those which are leased, are free from any material liens or          
encumbrances. In conjunction with a financing transaction between the Registrant
and one of its subsidiaries completed in February 1997, however, the Registrant 
secured the indebtedness to the subsidiary incurred in the transaction with     
mortgages on real estate assets having a value of approximately $300 million.   
The Registrant considers that all of its buildings                              

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are in good structural condition and well-maintained and its properties are     
suitable and adequate for present operations.                                   

Item 3.     Pending Legal Proceedings.                                          

           For a discussion of potential legal proceedings involving the lower
Fox River, see "Environmental Matters" in Part I of this report. The Registrant 
does not believe that the other environmental matters discussed below will have 
a material adverse effect on its business or consolidated financial position or 
results of operations.                                                          

     On May 16, 1989, the Pennsylvania Environmental Hearing Board
approved and entered an Amended Consent Adjudication between the Registrant and 
the Pennsylvania Department of Environmental Resources, now known as the        
Department of Environmental Protection ("DEP") in connection with the           
Registrant's permit to discharge effluent into the West Branch of the Codorus   
Creek. The Amended Consent Adjudication establishes limitations on in-stream    
color, and requires the Registrant to conduct certain studies and to submit     
certain reports regarding internal and external measures to control the         
discharge of color and certain other adverse byproducts of chlorine bleaching to
the West Branch of the Codorus Creek.                                           

       During 1990 and again in 1991, the Pennsylvania DEP proposed to
reissue the Registrant's wastewater discharge permit on terms with which the    
Registrant does not agree. The Pennsylvania DEP issued a new proposed permit on 
March 4, 1997, which addressed to the Registrant's satisfaction several issues  
raised in its earlier comments, although the Registrant submitted comments      
pertaining to certain remaining concerns. The EPA formally objected to this     
proposed permit, and the Pennsylvania DEP agreed to issue a revised proposed    
permit which would attempt to address the EPA's objections and the other        
comments the Pennsylvania DEP had received. The Pennsylvania DEP sent a revised 
draft permit to the Registrant on December 24, 1997. On February 26, 1998, the  
Pennsylvania DEP withdrew the December 1997 draft in favor of a new draft in    
order better to satisfy the EPA. The Registrant plans to submit comments to the 
Pennsylvania DEP on the revised draft, and expects to litigate any terms which  
remain unacceptable in the final permit. If any other party elects to appeal    
reissuance of the permit, the Registrant would expect to defend the appeal. The 
Registrant continues to lawfully operate under its earlier permit, the          
expiration of which is administratively extended, while this renewal proceeding 
remains pending.                                                                

            The Wisconsin DNR has reissued the Registrant's wastewater discharge
permit for the Neenah mill on terms unacceptable to the Registrant. The         
Registrant has requested an adjudicatory hearing on the terms of that permit. In
the interim, the Wisconsin DNR sent the Registrant a draft of a renewed permit  
on what appear to be acceptable terms. Clean                                    

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Water Action Council of Northeast Wisconsin, a local environmental group, has   
submitted adverse comments and required a hearing to oppose issuance of the     
permit. The Registrant cannot determine the impact that the new Pennsylvania or 
Wisconsin wastewater discharge permits will have on the Registrant if they      
contain objectionable terms because it is too soon to determine what material   
terms will be in the permits' final form.                                       

Item 4.     Submission of Matters to a Vote of Security Holders.                

Not Applicable.                                         

Executive Officers of the Registrant.                                           

Executive Officers             Office                                       Age 
------------------             ------                                       --- 

T. C. Norris                   Chairman, President and Chief                59  
   Executive Officer (a)

G. H. Glatfelter II            Senior Vice President (b)                    46  

R. P. Newcomer                 Senior Vice President and Chief              49  
   Financial Officer (c)

E. J. Gillis                   Vice President - Marketing,                  50  
           Glatfelter Paper Division (d)

R. S. Lawrence                 Vice President - General Manager,            58  
       Ecusta Paper Division (e)

R. L. Miller                   Vice President - Administration              51  
(f)               

J. F. Myers                    Vice President - Manufacturing               59  
Technology (g)    

C. M. Smith                    Controller and Assistant Secretary           39  
(h)               

R. S. Wood                     Secretary and Treasurer (i)                  40  

     Officers are elected to serve at the pleasure of the Board of
Directors. Except in the case of officers elected to fill a new position or a   
vacancy occurring at some other date, officers are elected at the annual meeting
of the Board held immediately after the annual meeting of shareholders.         

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--------------------                                                            

(a)   Mr. Norris became Chairman of the Board, President and Chief Executive    
Officer in April 1988.                                              

(b)   Mr. Glatfelter became Senior Vice President in September 1995. From May   
1993 to September 1995, he was Vice President - General Manager,    
 Glatfelter Paper Division. Prior to May 1993, he was General Manager,
Glatfelter Paper Division.                                          

(c)   Mr. Newcomer became Senior Vice President and Chief Financial Officer in  
     May 1997. From September 1995 to April 1997 he was Senior Vice President,
     Treasurer and Chief Financial Officer. From April 1995 to September 1995,
     he was Vice President, Treasurer and Chief Financial Officer and from May
 1993 to April 1995, he was Vice President and Treasurer. Prior to May
1993, he was Assistant Controller.                                  

(d)   Mr. Gillis became Vice President - Marketing, Glatfelter Paper Division in
  May 1993. Prior to May 1993, he was Vice President - Sales, Glatfelter
Paper Division.                                                     

(e)   Mr. Lawrence became Vice President - General Manager, Ecusta Paper        
 Division in May 1993. Prior to May 1993, he was Director of Planning,
Acquisitions and Governmental Affairs.                              

(f)   Mr. Miller became Vice President - Administration in September 1995. From 
    August 1994 to September 1995, he was Director of Planning, Acquisitions
  and Governmental Affairs. He was Director, Marketing Services from May
1993 to August 1994. Prior to May 1993, he was Director, Customer   
Services.                                                           

(g)   Dr. Myers became Vice President - Manufacturing Technology in April 1989. 

(h)   Mr. Smith became Controller and Assistant Secretary in December 1997. From
     May 1993 to December 1997, he was Controller. Prior to May 1993, he was a
Financial Analyst.                                                  

(i)   Mr. Wood became Secretary and Treasurer in May 1997. Prior to May 1997, he
was Secretary and Assistant Treasurer.                              

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PART II 

Item 5.     Market for the Registrant's Common Stock and Related                
Stockholder Matters.                                    

Common Stock Prices and Dividends Paid Information                              

The table below shows the high and low prices of the Registrant's common stock  
on the American Stock Exchange (Ticket Symbol "GLT") and the dividends paid per 
share for each quarter during the past two years.                               

  1997                            1996

Quarter     High         Low      Dividends     High       Low     Dividends    

1st         $18 3/8      16 1/4   $.175        $18        15 5/8     $.175      
2nd          20          15 3/8    .175         18 3/8    16 1/4      .175      
3rd          23 3/8      17 3/8    .175         18 5/8    16 3/4      .175      
4th          22 11/16    17        .175         19 5/8    16 3/4      .175      

As of December 31, 1997 the Registrant had 3,891 shareholders of record. A      
number of the shareholders of record are nominees.                              

Item 6.     Selected Financial Data.                                            

     Nine-Year Summary of Selected Consolidated Financial Data

    Year Ended December 31
     (in thousands except per share amounts)

                                                        [Enlarge/Download Table]

------------------------------------------------------------------------------------------------------------------
                    1997      1996      1995       1994         1993       1992      1991       1990      1989    
------------------------------------------------------------------------------------------------------------------

                                                                                                                  
Net sales         $567,072  $566,084  $623,709  $478,302     $473,509    $540,057  $ 567,764  $625,429  $598,777  

Income (loss)       45,284    60,399    65,828  (118,251)(a)  20,409(c)    56,544     76,049    88,332    92,864  
 before accounting                                                                                                
 changes                                                                                                          

Basic earnings        1.07      1.41      1.50  (2.67)(a)        .46(c)      1.28       1.68      1.90      1.94  
 (loss) per share                                                                                                 
 before accounting                                                                                                
 changes                                                                                                          

Diluted earnings      1.07      1.41      1.49  (2.67)(a)        .46(c)      1.27       1.67      1.88       1.93 
 (loss) per share                                                                                                 
 before accounting                                                                                                
 changes                                                                                                          

Total assets       937,583   715,310   673,107   650,810(b)  842,087(d)   648,464    630,115   598,842   550,015  

Debt               348,665   150,000   150,000   174,100     150,000       10,100      __        __        1,100  

Cash dividends    $.   70   $    .70  $    .70  $    .70     $   .70     $    .70  $     .60  $   .575  $    .50  
 declared per                                                                                                     
 common share                                                                                                     
------------------------------------------------------------------------------------------------------------------

(a)   After impact of an after tax charge for a writedown of impaired assets    
(unusual items) of $127,981,000.                                    

(b)   After impact of writedown of impaired assets (unusual items)              
of $208,949,000.                                                    

(c)   After impact of an after tax charge for rightsizing and restructuring     
(unusual items) of $8,430,000 and the effect of an increased federal
corporate income tax rate of $3,587,000.                            

(d)   Includes an increase of $61,062,000 resulting from the                    
adoption of Statement of Financial Accounting Standards             
No. 109.                                                            

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF                                 
FINANCIAL CONDITION AND RESULTS OF OPERATIONS                   
P. H. Glatfelter Company and Subsidiaries                       

OVERVIEW                                                                        

The Company classifies its sales into two product groups: 1) printing papers;   
and 2) tobacco and other specialty papers. The Spring Grove, Pennsylvania and   
Neenah, Wisconsin mills produce printing and specialty papers. The Pisgah Forest
mill (hereinafter referred to as "Ecusta") produces printing papers and tobacco 
and other specialty papers.                                                     

Most of the Company's printing paper products are directed at the uncoated      
free-sheet portion of the industry. Demand for the Company's printing papers was
strong during 1997. High demand and full order backlogs allowed the Company to  
schedule its production equipment more efficiently, which in turn resulted in   
improved production and record-setting output. Despite the increase in demand,  
pricing for the Company's printing papers remained under adverse market pressure
for much of the year and on average, pricing was lower in 1997 than in 1996. The
Company was able to implement modest price increases for certain of its products
during the second and third quarter of 1997 and maintained that pricing through 
the fourth quarter. The near-term prospects for costs of the Company's principal
raw material, market pulp, as well as pricing of the Company's products, remain 
unclear.                                                                        

Overall, demand for the Company's tobacco and other specialty papers was fairly 
stable in 1997. Domestic tobacco paper sales were adversely affected by a shift 
in cigarette production by some domestic producers to international locations.  
As a result, the Company's sales of tobacco papers to the international market  
grew in 1997 while domestic paper sales declined. Domestic cigarette consumption
declined slightly while international cigarette consumption continued to        
increase. A significant portion of Ecusta's sales is made to a limited number of
global tobacco companies. The current legal and regulatory pressures on the     
tobacco industry in the U.S. could have an adverse effect on the future of      
tobacco paper sales and the profitability of Ecusta. Under such conditions, the 
Company would attempt to replace any lost sales and profitability with further  
increases in international tobacco paper sales and with sales of lightweight    
printing and other specialty papers.                                            

The U.S. pulp and paper industry entered 1998 during a period of market         
uncertainty. The financial problems in Southeast Asia, coupled with relatively  
weak world pulp markets, are providing a climate in which it is most difficult  
to predict the future direction of the international and U.S. paper markets. The
Company's orientation toward specialty products, especially with its January 2, 
1998 acquisition of the specialty paper division of the Schoeller and Hoesch    
Group, should help mitigate the negative impact if there were to be a downturn  
in the international and U.S. pulp and paper markets. Specialty papers' demand  
and prices have historically not fluctuated with international and U.S. pulp    
markets to the same extent as commodity papers.                                 

1997 COMPARED TO 1996                                                           

Net sales in 1997 increased $988,000, or 0.2%, compared to 1996. Each of the    
Company's operating facilities achieved increased sales volume which was offset 
by lower average net selling prices.                                            

Printing paper sales remained relatively flat in 1997 compared to 1996. An      
increase in sales volume of 7.0% was offset by a decrease in average net selling
price of 6.9%. The increase in sales volume was principally due to an increase  
in demand for the Company's products. Despite the increase in demand for the    
Company's printing papers, pricing for such papers remained under adverse market
pressure.                                                                       

Tobacco and other specialty paper sales also remained relatively flat in 1997 as
compared to the prior year, increasing by 1.1%. Tobacco paper sales volume      
increased by 1.3%, as an increase in international tobacco paper sales volume of
19.6% more than offset a decrease in domestic tobacco paper sales volume of     
11.1%. The average net selling prices for tobacco papers decreased slightly as  
increases in the average net selling price for domestic tobacco papers were more
than offset by a decrease in the average net selling prices of international    
tobacco papers. International tobacco paper prices were negatively impacted by  
the strengthening of the U.S. dollar versus most foreign currencies.            
International tobacco paper prices also decreased in part due to the acceptance 
of lower-priced, less-profitable business in order to fill machine capacity.    
Volume increased due to productivity increases, but was offset to a large extent
by downtime taken at Ecusta for market-related reasons, as well as for          
maintenance and equipment improvements. Average net selling prices for other    
specialty papers remained virtually unchanged during the year as compared to    
1996 and volume increased marginally in 1997 over 1996.                         

Profit from operations before interest income and expense and taxes was         
$84,492,000 in 1997 compared to $105,639,000 in 1996. This decrease was the     
result of a decrease in average net selling prices, a weakening in the product  
sales mix to less profitable products and an increase in the Company's cost of  
products sold. The cost of products sold increased due to the increased sales   
volume; however, the cost of sales per unit did not change significantly. Raw   
material prices did not significantly affect the Company's relative performance 
in 1997 as compared to 1996 as per ton costs for the Company's principal raw    
materials, market pulp and wastepaper, did not change significantly. The mix of 
products sold weakened in 1997 versus 1996, particularly at the Ecusta mill. The
mill sold a higher amount of lower-priced, lower-margin printing                

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF                                         
FINANCIAL CONDITION AND RESULTS OF OPERATIONS                                   
P. H. Glatfelter Company and Subsidiaries                                       

papers and international tobacco papers. Gross margin per ton decreased by 22.2%
in 1997, a direct result of the change in product mix and lower average net     
selling prices for certain of the Company's products noted above.               

Selling, general and administrative expenses increased by $1,319,000, primarily 
as a result of increased spending on certain legal matters as well as various   
other professional fees. The Company also increased its spending on information 
systems to address certain needs, including the impact of "Year 2000" on its    
existing computer systems and software. Selling, general and administrative     
expenses were 6.5% and 6.3% of net sales for 1997 and 1996, respectively.       

Interest on debt increased by $9,392,000 and net income from investments and    
other increased by $6,211,000. This was primarily a result of various financing 
transactions entered into by the Company during 1997 as detailed below in       
"Financial Condition."                                                          

RESULTS BY MILL                                                                 

The Spring Grove mill's profit from operations decreased by $5,053,000 in 1997  
compared to 1996. Net sales increased by $6,847,000, primarily due to increased 
sales volume more than offsetting lower average net selling prices. Cost of     
sales increased by 5.3% principally due to higher production volume. During     
1997, the Spring Grove mill achieved high productivity rates and established    
several production records. The mill also began operation of its gravure coater 
("G-Coater") in December of 1997. Although the G-Coater did not significantly   
impact the mill's results during 1997, it will allow the Spring Grove mill to   
produce a wider range of value-added products for its customers in 1998 and     
beyond and is expected to improve the mill's profit performance.                

Profits from operations at the Neenah mill were $7,909,000 lower in 1997 than in
1996. Average net selling prices decreased by 6.9% in 1997 versus 1996, more    
than offsetting an increase in sales volume. Neenah's comparative earnings were 
not significantly affected by changes in raw material prices, as they remained  
relatively constant from year to year. Since the mill's fixed costs were spread 
among a greater number of tons, cost of products sold per ton decreased;        
however, total cost of products sold increased due to higher production volume. 

The Ecusta mill, whose profit from operations decreased by $10,464,000, also    
experienced strong productivity gains during 1997. Despite some paper machine   
downtime related to both market conditions and paper machine improvements, sales
volume increased by 4.1%. Ecusta's average net selling price decreased by 4.7%. 
This average selling price decrease was caused by a shift in product mix to     
lower-priced, lower-margin printing papers as well as decreases in the average  
selling prices of international tobacco papers discussed above. Ecusta's cost of
products sold per ton increased by 2.5%. This increase was primarily due to an  
increase in market pulp costs. Ecusta achieved significant volume discounts on  
purchased market pulp during 1996 which were not repeated in 1997.              

1996 COMPARED TO 1995                                                           

Net sales in 1996 decreased $57,625,000, or 9.2%, compared to 1995. This        
decrease was principally caused by a decrease in average selling prices at the  
Spring Grove and Neenah mills. The sales volume at all the Company's mills was  
also down slightly in 1996 compared to 1995.                                    

Printing paper sales decreased by $66,540,000, or 15.8%, in 1996 compared to    
1995. The annual average net printing paper selling price decreased 12.2% in    
1996 from 1995 due to the decrease in demand for printing papers. Demand for    
these papers was slow early in the year, improved in the second and third       
quarters, and then slowed again in the fourth quarter.                          

Net tobacco and other specialty paper sales increased $8,915,000, or 4.4%, in   
1996 compared to 1995. The Company had a slight decrease in tobacco paper sales 
in 1996 compared to 1995. Tobacco paper sales volume was down 3.4% in 1996      
versus 1995; however, demand was sufficient for the Company to improve its sales
mix for these papers. This resulted in a slight increase in average tobacco     
paper selling price in 1996 compared to 1995. Other specialty paper sales       
increased by 12.5% in 1996 compared to 1995 as sales volume increased by 7.3%.  
The average selling price of other specialty papers increased by 4.9%, in part  
due to improved product mix.                                                    

Profit from operations before interest income and expense and taxes was         
$105,639,000 in 1996 compared to $116,501,000 in 1995. This decrease was the    
result of decreased sales volume and selling prices. Despite these decreases,   
gross margin increased from 22.7% in 1995 to 23.2% in 1996. The increase in     
gross margin was primarily a result of lower costs for market pulp, pulp        
substitutes and wastepaper. These cost reductions particularly benefited the    
Ecusta and Neenah mills which rely more on purchased fiber than the Spring Grove
mill. The Company's 1996 gross margins also increased due to favorable changes  
in product mix. On average, tobacco and other specialty paper sales, which      
increased in 1996, have a higher margin than printing paper sales. These raw    
material price decreases and changes in product mix more than offset the        
unfavorable impact of lower production during 1996 compared to 1995. The        
Company's lower production resulted in higher fixed costs per ton as fixed costs
were absorbed over fewer tons produced.                                         

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF                                         
FINANCIAL CONDITION AND RESULTS OF OPERATIONS                                   
P. H. Glatfelter Company and Subsidiaries                                       

Selling, general and administrative expenses were $886,000 lower in 1996 than in
1995. This decrease was primarily the result of lower profit sharing and        
incentive expenses, which were partially offset by increased miscellaneous      
general and administrative expenses. Selling, general and administrative        
expenses were 6.3% and 5.8% of net sales for 1996 and 1995, respectively.       

Interest on debt in 1996 decreased $957,000 from 1995. This decrease was        
primarily the result of reduced short-term bank borrowings. The Company had     
average net short-term borrowings of $20,000 and $9,447,000 during 1996 and     
1995, respectively at an average interest rate of 6.1% and 6.2%, respectively.  
The Company had no short-term borrowings at the end of 1996. Interest on debt   
also decreased as a result of a lower variable interest rate on the Company's   
interest rate swap agreement which has a total notional principal amount of     
$50,000,000.                                                                    

RESULTS BY MILL                                                                 

The Spring Grove mill's profit from operations decreased by $27,073,000 in 1996 
compared to 1995. Net sales decreased $32,738,000 in 1996 compared to 1995 due  
primarily to a decrease in average selling price. Sales volume was less than 1% 
lower in 1996 than 1995. Cost of sales decreased slightly, primarily due to     
lower raw material costs, offsetting increases in other costs including         
depreciation. Selling, general and administrative expenses also decreased,      
primarily due to lower profit sharing and incentive expenses.                   

Despite a decrease in net sales of $24,205,000 in 1996 compared to 1995, profit 
from operations at the Neenah mill showed an increase of $2,404,000. The net    
sales decrease was primarily the result of lower average selling price. Sales   
volume was approximately 2% lower in 1996 than 1995. Neenah's cost of sales     
decreased by $27,147,000, primarily due to significantly lower wastepaper, pulp 
and pulp substitute costs. Wastepaper costs were extremely high in 1995 and the 
1996 costs represented a return to historical levels.                           

Profit from operations at Ecusta increased $13,807,000 in 1996 compared to 1995.
Net sales were flat in 1996 compared to 1995. A slight increase in average      
selling price due to improved product mix offset a slight reduction in sales    
volume. Ecusta's cost of sales decreased significantly during the year,         
primarily as a result of decreased pulp costs. During 1996, the Ecusta mill     
purchased a significant amount of pulp at low cost, much of which remained in   
the Company's inventory at the end of 1996.                                     

FINANCIAL CONDITION                                                             

LIQUIDITY                                                                       

During 1997, the Company's cash and cash equivalents increased by $35,117,000.  
This increase in cash and cash equivalents was principally due to cash generated
by operations of $85,203,000 and borrowings of $48,665,000 to facilitate, in    
part, the acquisition of S&H Papier - Holding GmbH on January 2, 1998, offset by
additions to property, plant and equipment of $60,503,000, dividend payments of 
$29,601,000 and purchases of common stock for the treasury of $11,304,000, the  
purpose of which was to enhance shareholder value.                              

In February 1997, the Company formed GWS Valuch, Inc. ("GWS Valuch"), a         
corporation organized under the laws of the State of Delaware, with the         
intention that GWS Valuch would qualify as a real estate investment trust. The  
Company invested approximately $122,500,000 to acquire approximately 99.9% of   
the voting Class A common stock of GWS Valuch. GWS Valuch also issued shares of 
step-down preferred stock ("Step-Down Preferred Stock"), having a liquidation   
preference of $150,000,000 and an initial dividend of approximately 13.9%, to   
other investors. This dividend included an amortization component of the        
Step-Down Preferred Stock, resulting in an effective yield of approximately     
8.1%. GWS Valuch has been consolidated in the Company's financial statements    
since the date of formation.                                                    

In connection with this transaction, the Company deposited $154,757,000, which  
included amounts to pay semiannual interest, into a trust to defease certain    
covenants under the Company's indenture dated as of January 15, 1993, under     
which the Company's $150,000,000 principal amount of 5 7/8% Notes due March 1,  
1998, are outstanding. As of December 31, 1997, approximately $153,000,000      
remains in the trust. This amount, along with interest to be earned, will be    
held to maturity and used to pay the total amount of principal and interest due 
on the 5 7/8% Notes on March 1, 1998.                                           

Subsequent to the above transactions, the Internal Revenue Service announced    
that it intended to issue regulations with retroactive effect on transactions   
using self-amortizing investments in conduit financing entities. As a result of 
this announcement, the likelihood that the Company could lose certain tax       
benefits arising from GWS Valuch's Step-Down Preferred Stock financing increased
substantially. Accordingly, on July 2, 1997, using the proceeds of a short-term 
unsecured loan in the principal amount of $144,675,000, the Company purchased   
approximately 145,000 shares of Class A common stock of GWS Valuch. The funds   
received were used by GWS Valuch to redeem all 150,000 outstanding shares of the
Step-Down Preferred Stock.                                                      

On July 22, 1997, the Company issued $150,000,000 principal amount of 6 7/8%    
Notes due July 15, 2007. Interest on the 6 7/8% Notes is payable semiannually on
January 15 and July 15 of each year. The 6 7/8% Notes are redeemable, in whole  
or in part,                                                                     

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS                                   
P. H. Glatfelter Company and Subsidiaries                                       

at the option of the Company at any time at a calculated redemption price plus  
accrued and unpaid interest to the date of redemption, and constitute unsecured 
and unsubordinated indebtedness of the Company. The net proceeds from the sale  
of the 6 7/8% Notes were used to repay the $144,675,000 principal amount of the 
short-term unsecured loan described above and approximately $501,000 of related 
interest. The remaining balance of the net proceeds was applied to general      
corporate purposes.                                                             

On December 22, 1997, the Company entered into a $200 million multi-currency    
revolving credit facility ("Revolving Credit Facility") with a syndicate of     
major lending institutions. The Revolving Credit Facility enables the Company to
borrow up to the equivalent of $200 million in certain currencies in the form of
revolving credit loans with a final maturity date of December 22, 2002 and with 
interest periods principally determined, at the Company's option, on a daily or 
one to six month basis. Interest on the revolving credit loans is at variable   
rates, based, at the Company's option, on the Eurocurrency Rate or the Base Rate
(lender's prime rate), plus applicable margins. Margins are based on the higher 
of the Company's debt ratings as published by Standard & Poor's and Moody's.    

On December 30, 1997, the Company borrowed, under the Revolving Credit Facility,
DM 87,500,000 (approximately $48,665,000) in anticipation of its January 2, 1998
acquisition of S & H Papier - Holding GmbH ("S&H"), the specialty paper division
of the Schoeller and Hoesch Group. These proceeds were used to capitalize two   
German subsidiaries in order to facilitate the S&H acquisition. These funds were
borrowed at a three-day rate of 5.075% and invested in overnight securities     
until January 2, 1998.                                                          

On January 2, 1998, the Company borrowed an additional DM 182,500,000           
(approximately $101,500,000) under the Revolving Credit Facility. These funds,  
along with the DM 87,500,000 borrowed on December 30, 1997, were used to        
complete the acquisition of S&H. In order to offset some of the variable rate   
characteristics of the total borrowings under the Revolving Credit Facility, the
Company, during 1998, entered into two interest rate swap agreements, each      
having total notional principal amounts of DM 52,600,000 (approximately         
$29,300,000). Under the agreements, the Company pays fixed rates of 4.18% and   
4.45% for periods of two and three years, respectively, and receives a floating 
rate of the six-month DM London Interbank Offered Rate ("LIBOR"). The six-month 
DM LIBOR applicable for the first half of 1998 is approximately 3.8%.           

The Company expects to meet all its near-term cash needs from a combination of  
internally generated funds, cash, cash equivalents, marketable securities and   
the Revolving Credit Agreement or other bank lines of credit.                   

CAPITAL RESOURCES                                                               

During 1997, the Company expended $60,503,000 for capital projects. Most of     
these expenditures were for maintenance-related capital projects; however, these
expenditures include spending related to the gravure coater ("G-Coater") and the
precipitated calcium carbonate ("PCC") plant. The Company views the G-Coater as 
an important strategic project which will allow it to expand its more profitable
specialty paper product group. The Company expects that this new piece of       
equipment will have a positive impact on its profitability. The total cost of   
this project is expected to be $15,000,000. Of this amount, $11,500,000 was     
expended during 1997 and approximately $3,000,000 is expected to be expended in 
1998.                                                                           

The PCC plant, which is scheduled to begin operations late in the first quarter 
of 1998, will allow the Spring Grove mill to produce PCC, which it believes will
be of a higher quality than that which is currently used. The Spring Grove mill 
will be able to replace its purchased PCC and other high-cost raw materials with
its own-made PCC, resulting in significant cost savings to the Company. The     
total cost of this project is expected to be $9,500,000. Of this amount,        
$6,000,000 was expended during 1997 and approximately $2,700,000 is expected to 
be expended in 1998.                                                            

ACQUISITION OF SCHOELLER & HOESCH                                               

On January 2, 1998, the Company acquired S & H Papier - Holding GmbH ("S&H"),   
the specialty paper division of the Schoeller and Hoesch Group. S&H, a German   
company, owns and operates a paper mill in Gernsbach, Germany and has a 50%     
ownership interest of a paper mill in Odet, France. S&H also has a pulpmill in  
the Philippines which supplies abaca pulp to its paper mills. In addition, S&H  
owns and operates other facilities in Wisches, France and Summerville, South    
Carolina. S&H primarily manufactures specialty papers and has the leading market
position in world tea bag paper. S&H also manufactures other specialty papers,  
including tobacco, metalized, stencil, filter and casing papers, as well as some
printing papers.                                                                

The acquisition of S&H represents a significant step in the Company's long-term 
strategic plan, which emphasizes growth in technically engineered specialty     
paper markets. It provides the Company with a strong business position in the   
world tea bag paper market and a presence in other long fiber markets such as   
stencil, filter and casing papers. It also strengthens the Company's tobacco    
papers business by providing a manufacturing presence in Europe and a           
significant share of the European tobacco papers market, plus the ability to    
manufacture and market ultraporous plug wrap, a growing segment of the world    
tobacco papers market.                                                          

ENVIRONMENTAL MATTERS                                                           

The Company is subject to loss contingencies resulting from regulation by       
various federal, state, local and for-                                          

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF                                         
FINANCIAL CONDITION AND RESULTS OF OPERATIONS                                   
P. H. Glatfelter Company and Subsidiaries                                       

eign governmental authorities with respect to the environmental impact of air   
and water emissions and noise from its mills, as well as its disposal of solid  
waste generated by its operations. In order to comply with environmental laws   
and regulations, the Company has incurred substantial capital and operating     
expenditures over the past several years. During 1997, 1996 and 1995, the       
Company incurred approximately $14,800,000, $15,200,000 and $14,600,000,        
respectively, in operating costs related to complying with environmental laws   
and regulations. The Company anticipates that environmental regulation of the   
Company's operations will continue to become more burdensome and that capital   
and operating expenditures will continue, and perhaps increase, in the future.  
In addition, the Company may incur obligations to remove or mitigate any adverse
effects on the environment resulting from its operations, including the         
restoration of natural resources, and liability for personal injury and damage  
to property, including natural resources. In particular, the Company continues  
to negotiate with the State of Wisconsin regarding natural resources restoration
and damages related to the discharge of polychlorinated biphenyls ("PCBs") and  
other hazardous substances to the lower Fox River, on which the Company's Neenah
mill is located. The cost of such restoration and damages is presently unknown  
but could be substantial and perhaps exceed the Company's available resources as
discussed in Note 7 to the Company's consolidated financial statements.         
Management's current assessment, after consultation with legal counsel, is that 
such expenditures are not likely to have a material adverse effect on the       
Company's consolidated financial condition or liquidity, but could have a       
material adverse effect on the Company's consolidated results from operations in
a given year; however, there can be no assurance that the Company's reserves    
will be adequate or that a material adverse effect on the Company's consolidated
financial condition or liquidity will not occur at some future time.            

YEAR 2000                                                                       

During 1997, the Company began reviewing its embedded technology, computer      
systems and software to determine which are not "Year 2000" compliant. The      
Company has established plans and processes for evaluating and managing the     
risks associated with this problem in order to ensure that all necessary        
modifications and/or replacements of existing embedded technology, computer     
systems and software are completed on a timely basis. The Company has also      
established task forces to, among other things, gather information concerning   
the Year 2000 compliance status of suppliers and customers. Nearly all of the   
Company's business systems use internally developed software. As a result, some 
of the Company's internal information systems personnel have been dedicated     
toward modifying these systems to be Year 2000 compliant by mid-year 1999. To   
date, the Company is on schedule to meet that deadline. The Company is assessing
other areas of the business where Year 2000 noncompliance could negatively      
impact the Company, in particular, embedded technology in process control       
systems. Solutions to the embedded technology issue may involve interaction with
the original system vendors, possible replacement of systems or use of outside  
professional services to modify the embedded technologies.                      

It is not expected that such modifications and/or replacements will have a      
material adverse effect in 1998 or 1999 on the Company's consolidated financial 
statements. The Company's use of its own information systems personnel to make  
the business systems Year 2000 compliant has and will continue to delay some    
other strategic information systems development and implementation which would  
have otherwise benefitted the Company in various ways and to varying extents.   
The Company does not believe that it will be at a competitive disadvantage as a 
result of these delays. In the event that any of the Company's significant      
suppliers or customers do not successfully achieve Year 2000 compliance on a    
timely basis, the Company's business or operations could be adversely affected. 

FORWARD-LOOKING STATEMENTS                                                      

Any statements set forth in this annual report or otherwise made in writing or  
orally by the Company with regard to its expectations as to financial results   
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 which it        
believes to be reasonable, there can be no assurance that actual results will   
not differ materially from the Company's expectations. Accordingly, the Company 
hereby identifies the following important factors, among others, which could    
cause its results to differ from any results which might be projected,          
forecasted or estimated by the Company in any such forward looking statements:  
(i) variations in demand for its products; (ii) changes in the cost or          
availability of raw materials used by the Company, in particular market pulp,   
pulp substitutes and wastepaper; (iii) changes in industry paper production     
capacity, including the construction of new mills, the closing of mills and     
incremental changes due to capital expenditures or productivity increases; (iv) 
the gain or loss of significant customers; (v) cost and other effects of        
environmental compliance, cleanup, damages, remediation or restoration, or      
personal injury or property damage related thereto, such as the cost of natural 
resource restoration or damages related to the presence of PCBs in the lower Fox
River on which the Company's Neenah mill is located; (vi) significant changes in
cigarette consumption, both domestically and internationally; (vii) enactment of
adverse state or federal legislation or changes in government policy or         
regulation; (viii) adverse results in litigation; and (ix) disruptions in       
production and/or increased costs due to labor disputes.                        

Item 7A.    Quantitative and Qualitative Disclosures About Market               
Risk.                                                   

Not Applicable.                                         

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Item 8.     Financial Statements and Supplementary Data.                        

CONSOLIDATED STATEMENTS OF INCOME                                               
P. H. Glatfelter Company and Subsidiaries                                       

For the Years Ended December 31, 1997, 1996 and 1995                            

                                                                [Download Table]

(in thousands except per share amounts)           1997        1996       1995   
                                                --------    --------    --------
                                                                                
NET SALES                                       $567,072    $566,084    $623,709
OTHER INCOME:                                                                   
  Interest on investments and other -- net         7,785       1,574       1,376
  Energy sales -- net (Note 1(k))                  9,189       8,559       9,455
  Gain from property dispositions, etc. -- net     3,166         977       1,852
                                                --------    --------    --------
      Total                                      587,212     577,194     636,392
                                                --------    --------    --------
COSTS AND EXPENSES:                                                             
  Cost of products sold                          458,126     434,491     482,139
  Selling, general and                                                          
    administrative expenses                       36,809      35,490      36,376
  Interest on debt (Note 10)                      18,700       9,308      10,265
                                                --------    --------    --------
      Total costs and expenses                   513,635     479,289     528,780
                                                --------    --------    --------
INCOME BEFORE INCOME TAXES                        73,577      97,905     107,612
                                                --------    --------    --------
INCOME TAX PROVISION (Note 6):                                                  
  Current                                         25,453      20,604      18,123
  Deferred                                         2,840      16,902      23,661
                                                --------    --------    --------
      Total                                       28,293      37,506      41,784
                                                --------    --------    --------
NET INCOME                                      $ 45,284    $ 60,399    $ 65,828
                                                ========    ========    ========
BASIC EARNINGS PER SHARE                                                        
  (Notes 1(b) and 3)                            $   1.07    $   1.41    $   1.50
DILUTED EARNINGS PER SHARE                                                      
  (Notes 1(b) and 3)                            $   1.07    $   1.41    $   1.49

The accompanying notes are an integral part of these consolidated financial     
statements.                                                                     

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CONSOLIDATED BALANCE SHEETS                                                     
P. H. Glatfelter Company and Subsidiaries                                       

December 31, 1997 and 1996                                                      

                                                                [Download Table]

(in thousands except share information)                1997        1996   
                                                    ---------   --------- 
                                                                          
ASSETS                                                                    
CURRENT ASSETS:                                                           
  Cash and cash equivalents (Notes 1(c) and 2)      $  66,919   $  31,802 
  Marketable securities (Note 1(f))                   155,174         811 
  Accounts receivable (less allowance for doubtful                        
    accounts: 1997, $1,973; 1996, $1,913)              50,187      49,703 
  Inventories (Note 1(d))                             101,232     101,231 
  Prepaid expenses                                      2,967       4,522 
                                                    ---------   --------- 
    Total current assets                              376,479     188,069 
PLANT, EQUIPMENT AND TIMBERLANDS -- NET                                   
  (Notes 1(e) and 7)                                  475,189     455,190 
OTHER ASSETS (Notes 1(f) and 4)                        85,915      72,051 
                                                    ---------   --------- 
        Total assets                                $ 937,583   $ 715,310 
                                                    =========   ========= 
LIABILITIES AND SHAREHOLDERS' EQUITY                                      
CURRENT LIABILITIES:                                                      
  Current portion of long-term debt (Note 10)       $ 150,000   $      -- 
  Short-term debt (Note 2)                             48,665          -- 
  Accounts payable                                     36,218      35,249 
  Dividends payable                                     7,390       7,444 
  Federal, state and local taxes                        5,106       4,305 
  Accrued compensation, other expenses                                    
    and deferred income taxes                          41,506      39,185 
                                                    ---------   --------- 
        Total current liabilities                     288,885      86,183 
LONG-TERM DEBT (Note 10)                              150,000     150,000 
DEFERRED INCOME TAXES (Notes 1(g) and 6)              101,995      99,139 
OTHER LONG-TERM LIABILITIES (Notes 1(l), 3 and 5)      56,287      48,958 
                                                    ---------   --------- 
        Total liabilities                             597,167     384,280 
                                                    ---------   --------- 
COMMITMENTS AND CONTINGENCIES (Notes 7 and 8)                             
SHAREHOLDERS' EQUITY (Note 3):                                            
  Common stock, $.01 par value;                                           
  authorized -- 120,000,000 shares; issued                                
  (including shares in treasury: 1997, 12,212,372;                        
  1996, 11,822,152) -- 54,361,980 shares                  544         544 
  Capital in excess of par value                       42,623      41,601 
  Retained earnings                                   478,073     462,337 
                                                    ---------   --------- 
    Total                                             521,240     504,482 
  Less cost of common stock in treasury              (180,824)   (173,452)
                                                    ---------   --------- 
    Total shareholders' equity                        340,416     331,030 
                                                    ---------   --------- 
        Total liabilities and shareholders' equity  $ 937,583   $ 715,310 
                                                    =========   ========= 

The accompanying notes are an integral part of these consolidated financial     
statements.                                                                     

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY                                 
P. H. Glatfelter Company and Subsidiaries                                       

For the Years Ended December 31, 1997, 1996 and 1995                            

                                                        [Enlarge/Download Table]

                                                Common                       Capital in                                    Total    
                                                Shares            Common   Excess of Par    Retained      Treasury     Shareholders'
(in thousands except shares outstanding)      Outstanding          Stock       Value        Earnings        Stock         Equity    
----------------------------------------------------------------------------------------------------------------------------------- 
                                                                                                                                    
Balance, January 1, 1995                       44,199,829           $544       $39,838       $396,635      $(141,283)     $295,734  
  Net income                                                                                   65,828                       65,828  
  Cash dividends declared                                                                     (30,701)                     (30,701) 
  Delivery of treasury shares:                                                                                                      
    Employee stock purchase                                                                                                         
      and 401(k) plans                            174,929                          955                         2,402         3,357  
    Employee stock options                                                                                                          
      exercised -- net                             16,754                          128                           138           266  
Purchase of stock for treasury                   (956,200)                                                   (19,078)      (19,078) 
                                             ------------         ------       -------        -------      ---------      ----------
Balance, December 31, 1995                     43,435,312            544        40,921        431,762       (157,821)      315,406  
  Net income                                                                                   60,399                       60,399  
  Cash dividends declared                                                                     (29,824)                     (29,824) 
  Delivery of treasury shares:                                                                                                      
    Restricted stock awards                        72,193                          223                         1,054         1,277  
    Employee stock purchase                                                                                                         
      and 401(k) plans                            151,265                          447                         2,207         2,654  
    Employee stock options                                                                                                          
      exercised -- net                             12,131                           10                           176           186  
  Purchase of stock for treasury               (1,131,073)                                                   (19,068)      (19,068) 
                                             ------------         ------       -------        -------      ---------      ----------
Balance, December 31, 1996                     42,539,828            544        41,601        462,337       (173,452)      331,030  
  Net income                                                                                   45,284                       45,284  
  Cash dividends declared                                                                     (29,548)                     (29,548) 
  Delivery of treasury shares:                                                                                                      
    Restricted stock awards                        13,350                          217                           196           413  
    Employee stock purchase                                                                                                         
      and 401(k) plans                            150,940                          545                         2,219         2,764  
    Employee stock options                                                                                                          
      exercised -- net                            103,690                          260                         1,517         1,777  
  Purchase of stock for treasury                 (658,200)                                                   (11,304)      (11,304) 
                                             ------------         ------       -------       --------      ---------      ----------
BALANCE, DECEMBER 31, 1997                     42,149,608           $544       $42,623       $478,073      $(180,824)     $340,416  
                                             ============         ======       =======       ========      =========      ==========

The accompanying notes are an integral part of these consolidated financial     
statements.                                                                     

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CONSOLIDATED STATEMENTS OF CASH FLOWS                                           
P. H. Glatfelter Company and Subsidiaries                                       

For the Years Ended December 31, 1997, 1996 and 1995                            

                                                        [Enlarge/Download Table]


(in thousands)                                                     1997             1996               1995    
                                                          -----------------   --------------   --------------- 
                                                                                                               
CASH FLOWS FROM OPERATING ACTIVITIES:                                                                          
Net income                                                        $  45,284         $ 60,399         $  65,828 
Items included in net income not using (providing) cash:                                                       
Depreciation and depletion                                           35,796           33,570            32,599 
Expense related to employee stock                                                                              
purchase and 401(k) plans                                             1,270            1,224               975 
Loss (gain) on disposition of fixed assets                           (2,121)             169              (476)
Changes in assets and liabilities:                                                                             
Accounts receivable                                                    (484)           2,349            (3,140)
Inventories                                                              (1)         (14,153)           (5,247)
Other assets and prepaid expenses                                   (12,309)         (14,885)          (13,252)
Accounts payable, accrued                                                                                      
compensation, other expenses,                                                                                  
deferred income taxes and other                                                                                
long-term liabilities                                                14,111            3,555            17,096 
Federal, state and local taxes                                          801            4,070            (2,254)
Deferred income taxes -- noncurrent                                   2,856           18,457            20,369 
                                                          -----------------   --------------   --------------- 
Net cash provided by operating activities                            85,203           94,755           112,498 
                                                          -----------------   --------------   --------------- 
CASH FLOWS FROM INVESTING ACTIVITIES:                                                                          
Sale (purchase) or maturity of                                                                                 
investments -- net                                                 (154,363)           1,153             6,114 
Proceeds from disposal of fixed assets                                3,749              102               987 
Additions to plant, equipment and                                                                              
timberlands                                                         (57,664)         (37,477)          (25,777)
Increase (decrease) in liabilities related                                                                     
to fixed asset acquisitions                                          (2,839)           1,833            (6,716)
                                                          -----------------   --------------   --------------- 
Net cash used in investing activities                              (211,117)         (34,389)          (25,392)
                                                          -----------------   --------------   --------------- 
CASH FLOWS FROM FINANCING ACTIVITIES:                                                                          
Borrowing (repayment) of short-term                                                                            
debt -- net                                                          48,665              --            (24,100)
Borrowing of long-term debt                                         150,000              --                --  
Dividends paid                                                      (29,601)         (29,977)          (30,839)
Purchases of common stock                                           (11,304)         (19,068)          (19,078)
Employees' contribution -- common stock                                                                        
issued under employee benefit plans                                   3,271            1,617             2,642 
                                                          -----------------   --------------   --------------- 
Net cash provided by (used in) financing                                                                       
activities                                                          161,031          (47,428)          (71,375)
                                                          -----------------   --------------   --------------- 
Net increase in cash and cash equivalents                            35,117           12,938            15,731 
CASH AND CASH EQUIVALENTS:                                                                                     
At beginning of year                                                 31,802           18,864             3,133 
                                                          -----------------   --------------   --------------- 
At end of year                                                    $  66,919         $ 31,802         $  18,864 
                                                          =================   ==============   =============== 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                                              
Cash paid for:                                                                                                 
Interest                                                          $  14,293         $  9,684         $  10,366 
Income taxes                                                         24,650           20,480            21,571 

The accompanying notes are an integral part of these consolidated financial     
statements.                                                                     

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      

P. H. Glatfelter Company and Subsidiaries                                       

For the Years Ended December 31, 1997, 1996 and 1995                            

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                   

(a) Nature of Operations and Principles of Consolidation                        

P. H. Glatfelter Company and subsidiaries are principally manufacturers of      
printing papers and tobacco and other specialty papers. Headquartered in Spring 
Grove, Pennsylvania, the Company's paper mills are located in Spring Grove,     
Pisgah Forest, North Carolina and Neenah, Wisconsin. The Company's products are 
marketed in most parts of the United States and in many foreign countries,      
either through wholesale paper merchants, brokers and agents or direct to       
customers. The accounts of the Company, and its wholly-owned, significant       
subsidiaries, are included in the consolidated financial statements. All        
inter-company transactions have been eliminated. Certain reclassifications have 
been made to the prior years' consolidated financial statements to conform to   
those classifications used in 1997.                                             

On January 2, 1998, the Company acquired S & H Papier - Holding GmbH ("S&H"),   
the specialty paper division of the Schoeller and Hoesch Group. The results of  
S&H, a German company, are not included in the consolidated financial statements
for the years ended December 31, 1997, 1996 and 1995. See Note 2 for further    
discussion of the acquisition, including disclosure of pro forma information.   

(b) Basic and Diluted Earnings per Share                                        

Effective December 31, 1997, the Company adopted the provisions of Statement of 
Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS No. 128").  
SFAS No. 128 specifies the computation, presentation and disclosure requirements
of earnings per share and supersedes Accounting Principles Board Opinion No. 15,
"Earnings Per Share." SFAS No. 128 requires presentation of basic and diluted   
earnings per share on the face of the Company's Consolidated Statements of      
Income and a reconciliation of the computation of basic earnings per share to   
diluted earnings per share in the notes to the consolidated financial           
statements. Basic earnings per share exclude the dilutive impact of common stock
equivalents and are computed by dividing net income by the weighted-average     
number of shares of common stock outstanding for the period. Diluted earnings   
per share include the effect of potential dilution from the issuance of common  
stock, pursuant to common stock equivalents, using the treasury stock method.   

SFAS No. 128 is required to be adopted for financial statements ending after    
December 15, 1997. Early adoption was not permitted. Concurrent with the        
adoption, all prior years' earnings per share information has been restated,    
resulting in no material differences.                                           

                                                        [Enlarge/Download Table]

                                       1997                          1996                          1995              
                              --------------------------    --------------------------    -------------------------- 
                            Net Income        Shares      Net Income         Shares      Net Income        Shares    
                            (Numerator)    (Denominator)  (Numerator)     (Denominator)  (Numerator)    (Denominator)
                              -----------     ----------    -----------     ----------    -----------     ---------- 

                                                                                                                     
Basic earnings per                                                                                                   
share factors                 $45,284,000     42,220,200    $60,399,000     42,717,834    $65,828,000     43,953,766 
Effect of potentially                                                                                                
dilutive employee                                                                                                    
incentive plans:                                                                                                     
Restricted stock                                                                                                     
awards                                --          31,059            --          80,191            --         161,652 
Performance stock                                                                                                    
awards                                --          95,879            --          69,287            --          26,520 
Employee stock                                                                                                       
options                               --          95,102            --          42,783            --         116,736 
                              -----------     ----------    -----------     ----------    -----------     ---------- 
Diluted earnings per                                                                                                 
share factors                 $45,284,000     42,442,240    $60,399,000     42,910,095    $65,828,000     44,258,674 
                              ===========     ==========    ===========     ==========    ===========     ========== 

Basic earnings per share            $1.07                         $1.41                         $1.50                

Diluted earnings per share          $1.07                         $1.41                         $1.49                

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      

P. H. Glatfelter Company and Subsidiaries                                       

(c) Cash and Cash Equivalents                                                   

The Company considers all highly liquid financial instruments with effective    
maturities at date of purchase of three months or less to be cash equivalents.  

(d) Inventories                                                                 

Inventories are stated at the lower of cost or market. Raw materials and        
in-process and finished inventories are valued using the last-in, first out     
(LIFO) method, and the supplies inventory is valued principally using the       
average cost method. Inventories at December 31 are summarized as follows:      

            1997          1996
              ---------      ---------

            (in thousands)

Raw materials                      $  35,980      $  36,355                     
In-process and finished               31,724         33,073                     
Supplies                              33,528         31,803                     
              ---------      ---------

Total                               $101,232       $101,231                     
              =========      =========

If the Company had valued all inventories using the average cost method,        
inventories would have been $2,839,000 and $2,571,000 higher than reported at   
December 31, 1997 and 1996, respectively.                                       

At December 31, 1997 and 1996, the recorded value of the above inventories      
exceeded inventories for income tax purposes by approximately $20,700,000 and   
$20,400,000, respectively.                                                      

(e) Plant, Equipment and Timberlands                                            

Depreciation is computed for financial reporting on the straight-line method    
over the estimated useful lives of the respective assets and for income taxes   
principally on accelerated methods over lives established by statute or Treasury
Department procedures. Provision is made for deferred income taxes applicable to
this difference. See Notes 1(g) and 6.                                          

The range of estimated service lives used to calculate financial reporting      
depreciation for principal items of property, plant and equipment are as        
follows:                                                                        

Buildings                                                10 - 45 Years          
Machinery and equipment                                   7 - 35 Years          
Other                                                     4 - 40 Years          

Depletion of the cost of timber is computed on a unit rate of usage by growing  
area based on estimated quantities of recoverable material.                     

Maintenance and repairs are charged to income and major renewals and betterments
are capitalized. At the time property is retired or sold, the cost and related  
reserve are eliminated and any resultant gain or loss is included in income.    

Property, plant and equipment accounts are summarized as follows:               

            1997          1996
              ---------      ---------
            (in thousands)
Land and buildings                 $ 116,186      $ 112,973                     
Machinery and equipment              916,063        870,116                     
Other                                 29,553         28,286                     
Less accumulated                                                                
depreciation                        (617,576)      (585,954)                    

              ---------      ---------
Total                                444,226        425,421                     
Construction in progress              13,149         12,342                     
Timberlands, less depletion           17,814         17,427                     
              ---------      ---------
Plant, equipment                                                                
and timberlands -- net             $ 475,189      $ 455,190                     
              =========      =========

(f) Investments in Debt and Equity Securities                                   

Long-term investments, which are due over a 17-year period and are classified as
held-to-maturity, are included in "Other assets" on the Consolidated Balance    
Sheets at December 31, 1997 and 1996. The investments consist of approximately  
$12,100,000 and $11,900,000 in U. S. Treasury and government obligations in 1997
and 1996, respectively. The estimated fair value of the investments in such     
securities approximated the amortized cost, and therefore, there were no        
significant unrealized gains or losses as of December 31, 1997 and 1996.        
Investments in municipal debt and equity securities of $2,089,000, classified as
held-to-maturity, and $811,000, classified as available-for-sale, are reported  
as "Marketable securities" on the Consolidated Balance Sheets at December 31,   
1997 and 1996, respectively. The fair market value for such securities          
approximates cost. See Note 10 for a description of other investments reported  
as "Marketable securities."                                                     

(g) Income Tax Accounting                                                       

The Company recognizes deferred tax assets and liabilities for temporary        
differences between the financial reporting basis and the tax basis of the      
Company's assets and liabilities. The impact on deferred taxes of changes in tax
rates and laws, if any, applied to the years during which temporary differences 
are expected to be settled, are reflected in the consolidated financial         
statements in the period of enactment.                                          

(h) Fair Market Value of Financial Instruments                                  

The amounts reported in the Consolidated Balance Sheets for cash and cash       
equivalents, marketable securities, accounts receivable, other assets,          
short-term debt and long-term debt approximate fair value.                      

(i) Valuation of Long-Lived Assets                                              

The Company evaluates long-lived assets for impairment on an annual basis in    
conjunction with the preparation of the annual budget or when a specific event  
indicates that the carrying value of an asset may not be                        

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      

P. H. Glatfelter Company and Subsidiaries                                       

recoverable. Recoverability is assessed based on estimates of future cash flows 
expected to result from the use and eventual disposition of the asset. If the   
sum of expected undiscounted cash flows is less than the carrying value of the  
asset, an impairment loss is recognized. The impairment loss is measured as the 
amount by which the carrying amount of the asset exceeds its fair value.        

(j) Accounting Estimates                                                        

The preparation of financial statements in conformity with generally accepted   
accounting principles requires the use of management's estimates and            
assumptions. Management believes the estimates and assumptions used in the      
preparation of these consolidated financial statements are reasonable based upon
currently available facts and known circumstances but recognizes that actual    
results may differ from those estimates and assumptions. See Note 7.            

(k) Revenue Recognition                                                         

The Company recognizes revenue on product sales upon shipment and on energy     
sales when electricity is delivered to its customer. Certain costs associated   
with the production of electricity, such as fuel, labor, depreciation and       
maintenance, are netted against the energy sales for presentation on the        
Consolidated Statements of Income. The Company's current contract to sell excess
electricity it produces expires in the year 2010 and requires that the customer 
purchase all of the Company's excess electricity up to a certain level. The     
price for the electricity is determined pursuant to a formula and varies        
depending upon the amount sold in any given year.                               

(l) Environmental Liabilities                                                   

Accruals for losses associated with environmental obligations are recorded when 
it is probable that a liability has been incurred and that the amount of the    
liability can be reasonably estimated based on existing legislation and         
remediation technologies. These accruals are adjusted periodically as assessment
and remediation actions continue and/or further legal or technical information  
develops. Accrued environmental liabilities are classified as "Other long-term  
liabilities" on the Consolidated Balance Sheets. Such undiscounted liabilities  
are exclusive of any insurance or other claims against third parties.           

Costs related to environmental remediation are charged to expense. Environmental
costs are capitalized if the costs extend the life of the property, increase its
capacity and/or mitigate or prevent contamination from future operations.       

(m) Stock-Based Compensation                                                    

The Company has adopted the provisions of SFAS No. 123, "Accounting for         
Stock-Based Compensation." SFAS No. 123 encourages, but does not require,       
companies to record compensation cost for stock-based compensation plans at fair
value. The Company has elected to continue to account for stock-based           
compensation in accordance with Accounting Principles Board Opinion No. 25,     
"Accounting for Stock Issued to Employees", and related interpretations, as     
permitted by SFAS No. 123. Compensation expense for stock options is measured as
the excess, if any, of the quoted market price of the Company's stock at the    
date of grant over the amount an employee must pay to acquire the stock.        
Compensation expense for restricted stock awards is equal to the quoted market  
price of the Company's stock at the date of grant and is recorded ratably over  
the period in which forfeiture provisions lapse. Compensation expense for       
performance stock awards is recognized over the performance period based on     
changes in quoted market prices of the Company's stock and the likelihood of    
achieving the performance goals. See Note 3.                                    

(n) Derivative Financial Instruments                                            

The Company uses interest rate swap agreements to manage its exposure to        
fluctuations in interest rates. Amounts to be paid or received under interest   
rate swap agreements are recognized as interest expense or interest income      
during the period in which they accrue. The Company does not hold any derivative
financial instruments for trading purposes. The credit risks associated with the
Company's interest rate swap agreements are controlled through the evaluation   
and monitoring of creditworthiness of the counterparties. Although the Company  
may be exposed to losses in the event of nonperformance by counterparties, the  
Company does not expect such losses, if any, to be significant.                 

(o) New Accounting Pronouncements                                               

In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS No. 
130, "Reporting Comprehensive Income" ("SFAS No. 130"). This statement, which   
establishes standards for reporting and disclosure of comprehensive income, is  
effective for interim and annual periods beginning after December 15, 1997.     
Reclassification of financial information for earlier periods presented for     
comparative purposes is required under SFAS No. 130. As this statement only     
requires additional disclosures in the Company's consolidated financial         
statements, its adoption will not have any impact on the Company's consolidated 
financial position or results of operations. The Company will adopt SFAS No. 130
in 1998.                                                                        

In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an   
Enterprise and Related Information" ("SFAS No. 131"). This statement, which     
establishes standards for the reporting of information about operating segments 
on an annual basis and requires the reporting of selected condensed information 
about operating segments in interim financial statements, is effective for      
fiscal years beginning after                                                    

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      

P. H. Glatfelter Company and Subsidiaries                                       

December 15, 1997. Reclassification of segment information for earlier periods  
presented for comparative purposes is required under SFAS No. 131. The Company  
is evaluating whether the adoption of this statement will result in any changes 
to its presentation of financial data for interim and annual periods in 1998.   

2. ACQUISITION OF THE SPECIALTY PAPER DIVISION OF THE SCHOELLER AND HOESCH GROUP

Effective January 2, 1998, the Company acquired all of the outstanding common   
stock of S&H Papier - Holding GmbH ("S&H"), the specialty paper division of the 
Schoeller and Hoesch Group, from RQPO Beteiligungs GmbH & Co. Papier KG ("RQPO")
and EVOBESTRA Vermogensverwaltungsgesellschaft mbH, for approximately DM 270    
million ($150 million), subject to certain adjustments, in cash. The principal  
partners in RQPO are Deutsche Beteiligungs AG and S&H management. The Company   
will account for the S&H acquisition under the purchase method of accounting and
S&H will be consolidated with the Company beginning in January 1998.            

S&H was founded in 1881 in Gernsbach, Germany, where its corporate offices and  
major paper production facilities are located. S&H has a 50% ownership interest 
in a paper mill in Odet, France. S&H also has an abaca pulpmill in the          
Philippines and other facilities in France and the United States. S&H produces a
range of paper products, including tea bag and other long fiber products such as
stencil, filter and casing paper, as well as tobacco papers and printing papers.

The purchase price of S&H, including certain transaction costs, will be         
allocated to the assets acquired and liabilities assumed based upon their fair  
values at the date of acquisition. The excess of the purchase price over the    
fair value of net assets acquired will be recorded principally as goodwill, and 
amortized on a straight-line basis over 20 years.                               

To finance the acquisition, on December 22, 1997, the Company entered into a    
$200 million multi-currency revolving credit facility ("Revolving Credit        
Facility") with a syndicate of major lending institutions. The Revolving Credit 
Facility enables the Company to borrow up to the equivalent of $200 million in  
certain currencies in the form of revolving credit loans with a final maturity  
date of December 22, 2002 and with interest periods determined, at the Company's
option, on a daily or one to six month basis. Interest on the revolving credit  
loans is at variable rates based, at the Company's option, on the Eurocurrency  
Rate or the Base Rate (lender's prime rate), plus applicable margins. Margins   
are based on the higher of the Company's debt ratings as published by Standard &
Poor's and Moody's.                                                             

On December 30, 1997, the Company borrowed DM 87,500,000 (approximately         
$48,665,000) under the Revolving Credit Facility at a three-day rate of 5.075%. 
These proceeds were used to capitalize two German subsidiaries in order to      
facilitate the S&H acquisition and are included in "Cash and cash equivalents"  
on the Consolidated Balance Sheet. The borrowings are classified as "Short-term 
debt" on the Consolidated Balance Sheet at December 31, 1997.                   

On January 2, 1998, the Company borrowed the remaining DM 182,500,000           
(approximately $101,500,000) necessary to complete the acquisition. To offset   
some of the variable rate characteristics of the total borrowing under the      
Revolving Credit Facility, in January 1998, the Company entered into two        
interest rate swap agreements, each having total notional principal amounts of  
DM 52,600,000 (approximately $29,300,000). Under the agreements, the Company    
pays fixed rates of 4.18% and 4.45% for periods of two and three years,         
respectively, and receives a floating rate of the six-month DM London Interbank 
Offered Rate ("LIBOR"). The six-month DM LIBOR applicable for the first half of 
1998 is approximately 3.8%.                                                     

The following summarized unaudited combined pro forma information for the years 
ended December 31, 1997 and 1996 has been presented as if the S&H acquisition   
had occurred on January 1, 1996. This unaudited pro forma information is based  
on the historical results of operations adjusted for acquisition costs and, in  
the opinion of management, is not necessarily indicative of what the results    
would have been had the Company operated S&H since January 1, 1996 (dollars in  
thousands, except per share data).                                              

             Unaudited Pro Forma
             Information
            Year Ended December 31
            1997          1996
              ------------------------

Net sales                           $738,547)      $754,405                     
Net income                            51,483         61,371                     
Basic earnings per share                1.22           1.44                     
Diluted earnings per share              1.21           1.43                     

3. KEY EMPLOYEE LONG-TERM INCENTIVE PLAN, RESTRICTED COMMON STOCK AWARD PLAN AND
EMPLOYEE STOCK PURCHASE PLANS                                                   

On April 23, 1997, the common shareholders amended the 1992 Key Employee        
Long-Term Incentive Plan ("1992 Plan") to authorize, among other things, the    
issuance of up to 5,000,000 shares of the Company's common stock to eligible    
participants. The 1992 Plan provides for incentive stock options, non-qualified 
stock options, restricted stock awards, performance shares and performance      
units. The Company's 1988 Restricted Common Stock Award Plan ("1988 Plan") was  
amended in 1992 to provide that no further awards of common shares may be made  
thereunder.                                                                     

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      

P. H. Glatfelter Company and Subsidiaries                                       

Restricted Stock Awards                                                         

During 1988 and 1991, 755,000 and 76,000 shares of common stock, respectively,  
were awarded under the 1988 Plan. Awarded shares are subject to forfeiture, in  
whole or in part, if the recipient ceases to be an employee within a specified  
period of time. The Company may reduce the number of shares otherwise required  
to be delivered by an amount which would have a fair market value equal to the  
taxes withheld by the Company on delivery. The Company may also, at its sole    
discretion, elect to pay to the recipients in cash an amount equal to the fair  
market value of the shares that would otherwise be required to be delivered.    

On May 1, 1996, in lieu of delivering 60,303 shares, the Company elected to pay 
in cash an amount equal to the fair value of such shares. Also on May 1, 1996,  
72,193 shares were delivered from treasury (after reduction of 49,504 shares for
taxes). On May 1, 1997, 13,350 shares were delivered from treasury (after       
reduction of 6,650 shares for taxes). The Company expensed $166,000, $283,000   
and $615,000 related to the restricted stock awards in 1997, 1996 and 1995,     
respectively. Shares awarded under the 1988 Plan cease to be subject to         
forfeiture as follows: 20,000 in each of 1998 and 1999.                         

Performance Shares                                                              

On May 1, 1995, January 1, 1996, January 1, 1997 and January 1, 1998, the       
Company awarded, under the 1992 Plan, 59,620, 44,860, 40,060 and 45,740 shares, 
respectively, subject to certain conditions, to certain key employees to be     
issued in whole or in part depending on the Company's degree of success in      
achieving certain financial performance goals during defined four-year          
performance periods. The May 1, 1995, January 1, 1996, January 1, 1997 and      
January 1, 1998 awards are for the performance periods ending December 31, 1998,
1999, 2000 and 2001, respectively, and if earned will be distributed the        
following year. The Company expensed $722,000, $504,000 and $186,000 related to 
these awards in 1997, 1996 and 1995, respectively. The fair market value of the 
shares granted during 1998, 1997, 1996 and 1995 was $18.38, $17.88, $17.16 and  
$17.81, respectively.                                                           

Non-Qualified Stock Options                                                     

The following summarizes the activity with respect to non-qualified options     
under the 1992 Plan to purchase shares of common stock for the years ended      
December 31, 1997, 1996 and 1995:                                               

                                                        [Enlarge/Download Table]

                                              1997                         1996                         1995            
                                  --------------------------------------------------------------------------------------
                                                  Wtd. Avg.                     Wtd. Avg.                    Wtd. Avg.  
                                      Shares      Exer. Price      Shares       Exer. Price     Shares       Exer. Price
                                  --------------------------------------------------------------------------------------

                                                                                                                        
Outstanding at beginning of year      1,403,640       $17.42      1,235,910      $17.48      1,115,000        $17.42    
Options granted                         352,750        18.25        202,030       16.91        229,660         17.81    
Options exercised                      (105,225)       17.20        (12,300)      15.44        (39,025)        17.42    
Options canceled                        (30,000)       17.41        (22,000)      17.48        (69,725)        17.61    
                                   ------------                   ---------                  ---------                  
Outstanding at end of year            1,621,165        17.61      1,403,640       17.42      1,235,910         17.48    
Exercisable at end of year            1,001,813        17.49        816,046       17.39        556,362         17.17    

The exercise price for the options outstanding as of December 31, 1997 is       
between $15.44 and $18.78. Such options will expire on average in 6.9 years. An 
additional 294,360 options became exercisable January 1, 1998, at a weighted    
average exercise price of $17.75. The weighted average fair value of options    
granted during 1997, 1996 and 1995 was $4.92, $4.24 and $4.46, respectively, on 
the date of grant. The fair value of each option on the date of grant is        
estimated using the Black-Scholes option pricing model with expected lives of   
ten years and the following weighted average assumptions:                       

                                      1997            1996            1995
                                    ------------------------------------------
Risk-free interest rate                  6.43%           6.12%           6.12%  
Expected dividend yield                  3.86%           3.99%           3.99%  
Expected volatility                      24.7%           24.0%           24.0%  

Options typically become exercisable for 25% of the shares of common stock      
issuable on exercise thereof, beginning January 1 of the year following the date
of grant, assuming six months has passed, with options for an additional 25% of 
such shares becoming exercisable on January 1 of each of the next three years.  
Options not exercisable in this format are exercisable in full either six months
or one year from the date of grant. All options expire on the earlier of        
termination or, in some instances, a defined period subsequent to termination of
employment, or ten years from the date of grant.                                

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      

P. H. Glatfelter Company and Subsidiaries                                       

The exercise price represents the quoted market price of the Company's common   
stock on the date of grant, or the average quoted market prices of the Company's
common stock on the first day before and after the date of grant for which      
quoted market price information was available if such information was not       
available on the date of grant.                                                 

Pro Forma Information                                                           

The Company accounts for these plans under Accounting Principles Board Opinion  
No. 25, under which no compensation cost has been recognized for the            
non-qualified stock options and for which compensation cost has been recognized 
for stock awards, as described above. Had compensation cost for these plans been
determined consistent with Statement of Financial Accounting Standards No. 123, 
"Accounting for Stock-Based Compensation," the Company's net income and earnings
per share for the years ended December 31, 1997, 1996 and 1995 would have been  
reduced to the following pro forma amounts:                                     

     1997        1996       1995
      -------     -------    -------
      (in thousands except
      per share information)

Net income:                                                                     
As reported                $45,284    $60,399     $65,828                   
Pro forma                   45,195     60,289      65,793                   
Earnings                                                                        
per share:                                                                      

Reported -- basic            $1.07      $1.41       $1.50                   
Reported -- diluted           1.07       1.41        1.49                   

Pro forma -- basic            1.07       1.41        1.50                   
Pro forma -- diluted          1.06       1.41        1.49                   

Employee Stock Purchase Plans                                                   

Under the employee stock purchase plans, eligible hourly employees may acquire  
shares of the Company's common stock at its fair market value. Employees may    
contribute up to 10% of their compensation, as defined. For employee            
contributions up to 6% of their compensation, the Company shall contribute, as  
specified in the plans, 15% of the employee's contribution.                     

1998 Activity                                                                   

On January 1, 1998, the Company granted to certain key employees non-qualified  
options to purchase an aggregate of 211,010 shares of common stock. Options to  
purchase 100,000 shares are exercisable on January 1, 1999. Subject to certain  
conditions, the remaining stock options are exercisable as to 25% of such shares
beginning on January 1, 1999 and an additional 25% of such shares beginning on  
January 1 of each of the next three years. These stock options, which expire on 
December 31, 2007, were granted at an exercise price of $18.375 per share,      
representing the average of the quoted market prices of the Company's common    
stock on Wednesday, December 31, 1997 and Friday, January 2, 1998.              

4. RETIREMENT PLANS                                                             

The Company has trusteed noncontributory defined benefit pension plans covering 
substantially all of its employees. The benefits are based, in the case of      
certain plans, on average salary and years of service and, in the case of other 
plans, on a fixed amount for each year of service. Plan provisions and funding  
met the requirements of the Employee Retirement Income Security Act of 1974.    
Pension income of $10,063,000, $9,246,000 and $6,623,000 was recognized in 1997,
1996 and 1995, respectively.                                                    

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      

P. H. Glatfelter Company and Subsidiaries                                       

The following table sets forth the status of the Company's defined benefit      
pension plans at December 31, 1997 and 1996:                                    

                                                        [Enlarge/Download Table]

                                                           1997                             1996             
                                                  -------------------------       ------------------------   
                                                 Overfunded      Underfunded     Overfunded       Underfunded
                                                   Plans            Plans           Plans            Plans   
                                                  ---------       ---------       ---------       ---------  
                                                                       (in thousands)                        
                                                                                                             
Actuarial present value of accumulated                                                                       
  benefit obligation:                                                                                        
    Vested employees                              $(150,686)      $ (11,937)      $(112,164)      $ (38,165) 
    Nonvested employees                              (8,930)           (530)         (5,583)         (3,614) 
                                                  ---------       ---------       ---------       ---------  
      Total                                       $(159,616)      $ (12,467)      $(117,747)      $ (41,779) 
                                                  =========       =========       =========       =========  

Projected benefit obligation for services                                                                    
  rendered to date                                $(178,645)      $ (12,944)      $(134,657)      $ (42,202) 
Plan assets at fair value (primarily stocks,                                                                 
  bonds and cash equivalents)                       413,807              --         311,567          23,854  
                                                  ---------       ---------       ---------       ---------  
Plan assets in excess of (less than)                                                                         
  projected benefit obligation                      235,162         (12,944)        176,910         (18,348) 
Unrecognized net (gain) loss from past                                                                       
  experience different from that assumed           (156,571)          2,001        (101,050)           (420) 
Unrecognized prior service cost                      16,507              --           6,910           9,142  
Unrecognized net (asset) liability at January 1     (12,789)          1,863         (14,901)          2,251  
                                                  ---------       ---------       ---------       ---------  
Prepaid (accrued) pension cost                    $  82,309       $  (9,080)      $  67,869       $  (7,375) 
                                                  =========       =========       =========       =========  

The net prepaid pension cost is included in "Other assets" on the Consolidated  
Balance Sheets at December 31, 1997 and 1996. Net pension income includes the   
following components:                                                           

                                                                [Download Table]

                                                 1997          1996          1995  
                                               --------      --------     -------- 
                                                          (in thousands)           
                                                                                   
Service cost -- benefits earned during period  $ (4,605)     $ (4,076)    $ (3,671)
Interest cost on projected benefit obligation   (13,008)      (11,708)     (10,951)
Actual return on plan assets                     84,622        51,210       68,583 
Net amortization and deferral                   (56,946)      (26,180)     (47,338)
                                               --------      --------     -------- 
Net pension income                             $ 10,063      $  9,246     $  6,623 
                                               ========      ========     ======== 

The assumptions used in computing the information above were as follows:        

                                                        [Enlarge/Download Table]

                                                      1997        1996           1995    
                                                  ------------  -----------  ------------

                                                                                         
Discount rate -- pension expense                      7.5%        7.5%           8.0%    
Expected long-term rate of return on plan assets      9.0%        9.0%           8.5%    
Discount rate -- projected benefit obligation         7.5%        7.5%           7.5%    
Future compensation growth rate                       3.5%        3.5%           3.5%    

During 1995, the Company established a 401(k) plan for all salaried employees.  
Salaried employees may contribute up to 15% of their salary to this plan,       
subject to certain restrictions. The Company will contribute up to 50% of the   
employee's contribution, but not more than 3% of the employee's compensation, as
defined, in the form of shares of the Company's common stock into the Company   
stock fund maintained under the 401(k) plan. During 1997, 1996 and 1995, the    
Company contributed shares of its common stock valued at $1,093,000, $1,048,000 
and $235,000, respectively, to the 401(k) plan.                                 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      

P. H. Glatfelter Company and Subsidiaries                                       

5. OTHER POSTRETIREMENT BENEFITS                                                

The Company provides certain health care benefits to eligible retired employees.
These benefits include a comprehensive medical plan for retirees prior to age 65
and fixed supplemental premium payments to retirees over age 65 to help defray  
the costs of Medicare. The plan is not funded; claims are paid as incurred.     

The following table sets forth the plan's status as of December 31:             

                                                                [Download Table]


                               1997            1996   
                             --------        -------- 
                                  (in thousands)      
                                                      
Accumulated                                           
  postretirement                                      
  benefit obligation:                                 
Retirees                     $  8,640        $  9,024 
Fully eligible active                                 
  plan participants             5,883           5,414 
  Other active plan                                   
  participants                 12,927          13,392 
                             --------        -------- 
Accumulated                                           
  postretirement                                      
  benefit obligation           27,450          27,830 
Unrecognized net loss          (3,673)         (4,594)
Unrecognized prior                                    
  service cost                  1,573           1,356 
                             --------        -------- 

Accrued postretirement                                
  benefit cost               $ 25,350        $ 24,592 
                             ========        ======== 

Accrued postretirement benefit costs are principally included in "Other         
long-term liabilities" on the Consolidated Balance Sheets at December 31, 1997  
and 1996. Net periodic postretirement benefit cost includes the following       
components:                                                                     

                                                                [Download Table]


                            1997        1996        1995   
                          ------       ------       ------ 
                                    (in thousands)         
                                                           

Service cost              $  732       $  732       $  730 
Interest on                                                
  accumulated benefit                                      
  obligation               2,036        2,003        2,171 
Net amortization                                           
  and deferral                54           75          112 
                           ------       ------       ------

Net periodic                                               
  postretirement                                           
  benefit cost            $2,822       $2,810       $3,013 
                          ======       ======       ====== 

The Company assumes increases in the per capita cost of covered health benefits 
of 7.0% for 1998 decreasing to 6.0% in 1999 and 5.5% in 2000 and beyond. The    
weighted average discount rate used in determining the accumulated              
postretirement benefit obligation was 7.5% in 1997, 1996 and 1995. If the health
care cost trend rate increased by 1.0%, the accumulated postretirement benefit  
obligation as of December 31, 1997 would have been approximately $2,131,000     
greater and the net periodic postretirement benefit cost would have been        
approximately $268,000 greater.                                                 

6. INCOME TAXES                                                                 

Income taxes are recognized for the amount of taxes payable or refundable for   
the current year and deferred tax liabilities and assets for the future tax     
consequences of events that have been recognized in the Company's consolidated  
financial statements or tax returns. The effects of income taxes are measured   
based on effective tax law and rates.                                           

The following are domestic and foreign components of pre-tax income:            

                                                                [Download Table]

                             1997           1996          1995   
                           --------       --------       --------
                                      (in thousands)             
                                                                 

United States              $ 69,331       $ 94,457       $104,989
Foreign                       4,246          3,448          2,623
                           --------       --------       --------
Total pre-tax income       $ 73,577       $ 97,905       $107,612
                           ========       ========       ========

The income tax provision consists of the following:                             

                                                                [Download Table]


                       1997           1996           1995   
                     --------       --------       -------- 
                                  (in thousands)            
                                                            
Current:                                                    
  Federal            $ 23,590       $ 17,816       $ 15,851 
  State                   626          1,801          1,711 
  Foreign               1,237            987            561 
                     --------       --------       -------- 
Total current                                               
tax provision          25,453         20,604         18,123 
                     --------       --------       -------- 
Deferred:                                                   
  Federal               2,358         14,570         20,234 
  State                   444          2,297          3,823 
  Foreign                  38             35           (396)
                     --------       --------       -------- 
    Total deferred                                          
      tax provision     2,840         16,902         23,661 
                     --------       --------       -------- 
Total income                                                
  tax provision      $ 28,293       $ 37,506       $ 41,784 
                     ========       ========       ======== 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      

P. H. Glatfelter Company and Subsidiaries                                       

The net deferred tax amounts reported on the Company's Consolidated Balance     
Sheets as of December 31 are as follows:                                        

                                                        [Enlarge/Download Table]

                                                    1997                                      1996      
                     ------------------------------------------------------------------  ---------------
                         Federal            State          Foreign           Total            Total     
                     ---------------   --------------  ---------------  ---------------  ---------------
                                                       (in thousands)                                   
                                                                                                        
Current liability        $   2,643         $    497          $   --         $   3,140       $   3,152   
Long-term liability       $ 85,387          $15,982             $626         $101,995        $ 99,139   

The following are components of the net deferred tax balances as of December 31:

                                                        [Enlarge/Download Table]

                                                   1997                               1996  
                            -----------------------------------------------------   --------
                            Federal          State        Foreign         Total      Total  
                            --------       --------       --------       --------   --------
                                                      (in thousands)                        
                                                                                            
Deferred tax assets:                                                                        
  Current                  $  4,377       $    825       $     --       $  5,202   $  5,035 
  Long-term                   20,902          3,936             --         24,838     23,827
                            --------       --------       --------       --------   --------
                            $ 25,279       $  4,761       $     --       $ 30,040   $ 28,862
                            ========       ========       ========       ========   ========
Deferred tax liabilities:                                                                   
  Current                   $  7,020       $  1,322       $     --       $  8,342   $  8,187
  Long-term                  106,289         19,918            626        126,833    122,966
                            --------       --------       --------       --------   --------
                            $113,309       $ 21,240       $    626       $135,175   $131,153
                            ========       ========       ========       ========   ========

The tax effects of temporary differences as of December 31 are as follows:      

                                                                [Download Table]

                                               1997           1996  
                                             --------       --------
                                                                    
Deferred tax assets:                              (in thousands)    
  Reserves                                   $ 10,662       $  8,693
  Compensation                                  8,020          7,335
  Postretirement benefits                       9,816          9,558
  Federal alternative minimum tax credit           --          1,168
  Other                                         1,542          2,108
                                             --------       --------
                                             $ 30,040       $ 28,862
                                             ========       ========

Deferred tax liabilities:                                           
  Property                                   $ 97,643       $ 97,406
  Pension                                      27,866         23,433
  Inventories                                   8,115          8,031
  Other                                         1,551          2,283
                                             --------       --------
                                             $135,175       $131,153
                                             ========       ========

A reconciliation between the provision for income taxes, computed by applying   
the statutory federal income tax rate of 35%, to income before income taxes, and
the actual provision for income taxes follows:                                  

                                                        [Enlarge/Download Table]

                                                              1997          1996         1995   
                                                            --------      --------     -------- 
                                                                       (in thousands)           
                                                                                                
Federal income tax provision at statutory rate              $ 25,752      $ 34,267     $ 37,664 
State income taxes, net of federal income tax benefit            696         2,663        4,201 
Tax effect of exempt earnings of foreign sales corporation      (552)         (431)        (422)
Other                                                          2,397         1,007          341 
                                                            --------      --------     -------- 
Actual provision for income taxes                           $ 28,293      $ 37,506     $ 41,784 
                                                            ========      ========     ======== 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      

P. H. Glatfelter Company and Subsidiaries                                       

7. COMMITMENTS AND CONTINGENCIES                                                

The Company is subject to loss contingencies resulting from regulation by       
various federal, state, local and foreign governmental authorities with respect 
to the environmental impact of air and water emissions and noise from its mills,
as well as its disposal of solid waste generated by its operations. In order to 
comply with environmental laws and regulations, the Company has incurred        
substantial capital and operating expenditures over the past several years. The 
Company anticipates that environmental regulation of the Company's operations   
will continue to become more burdensome and that capital and operating          
expenditures will continue and perhaps increase, in the future. In addition, the
Company may incur obligations to remove or mitigate any adverse effects on the  
environment resulting from its operations, including the restoration of natural 
resources, and liability for personal injury and damage to property, including  
natural resources. Because other paper companies located in the United States   
are generally subject to the same environmental regulations, the Company does   
not believe that its competitive position in the United States paper industry   
will be materially adversely affected by its capital expenditures for, or       
operating costs of, pollution abatement facilities for its present mills or the 
limitations which environmental compliance may place on its operations.         

The Pennsylvania Department of Environmental Protection ("DEP") has proposed to 
reissue the Company's wastewater discharge permit for the Spring Grove mill.    
Various federal agencies have demanded that the permit contain additional terms 
with which the Company does not agree. The Pennsylvania DEP has indicated that  
it will issue a new permit in response to the agencies' demands. In addition,   
the Wisconsin Department of Natural Resources ("DNR") has reissued in draft the 
Company's wastewater discharge permit for the Neenah mill on terms which are    
acceptable to the Company but as to which certain local residents have objected.
The Company cannot determine the impact that the new permits will have on the   
Company if they contain objectionable terms because it is too soon to determine 
what material terms will be in the permits' final forms.                        

The Company, along with six other companies which operate or formerly operated  
facilities along the Fox River in Wisconsin, has been in discussions with the   
Wisconsin DNR and the United States Fish and Wildlife Service ("USFWS")         
regarding the alleged discharge of polychlorinated biphenyls ("PCBs") and other 
hazardous substances to the Fox River below Lake Winnebago ("the lower Fox      
River") and the Bay of Green Bay.                                               

On January 30, 1997, the Company and the six other companies entered into an    
agreement with the State of Wisconsin (the "Wisconsin Agreement") which was     
intended to establish a framework for the final resolution of claims for natural
resources damages and other relief which the State asserts against the          
companies. Under the agreement, the companies will provide in the aggregate $10 
million in work and funds to facilitate natural resources damages assessment    
activities, including, among other things, modeling and risk assessment, as well
as field scale demonstration of sediment dredging and the enhancement of certain
environmental amenities. The State has indicated that the $10 million in work   
and funds is expected to be spent over a four-year period, although the bulk of 
the amount may be spent in 1998. The final allocated portion of the $10 million 
which the Company is required to pay is unknown at present. The State has agreed
to act as "lead authorized official" under federal law for purposes of any      
assessment of damages to natural resources within Wisconsin, except those within
the administrative jurisdiction of a federal agency. The USFWS, together with   
the National Oceanic and Atmospheric Administration and two Indian tribes,      
however, is conducting its own assessment despite the State's status. In        
general, the parties to the Wisconsin Agreement have agreed to toll all         
limitations periods and to forbear from litigation during the term of the       
agreement. The parties intend to conclude a final resolution of all of the      
State's claims during the course of, or after completion of, the work called for
by the agreement.                                                               

By letter dated January 31, 1997, and received by the Company on February 3,    
1997, the USFWS provided 60 days' notice of the intention of the United States  
Departments of the Interior and Commerce to commence an action for natural      
resources damages against the Company and the six other companies referred to   
above similarly relating to the discharge of hazardous substances into the lower
Fox River. The Company does not know the amount which the federal trustees will 
claim as natural resources damages, but the Company believes that it will be    
substantial. Beginning as of March 1, 1997, the Company and the six other       
companies entered into a series of agreements with the United States which      
provided that all limitation periods were tolled and the parties would forbear  
from litigation; the last tolling and forbearance period expired on December 2, 
1997.                                                                           

On July 11, 1997, the Wisconsin DNR, the United States Department of the        
Interior, the Menominee Indian Tribe of Wisconsin, the Oneida Tribe of Indians  
of Wisconsin, the National Oceanic and Atmospheric Administration and the United
States Environmental Protection Agency ("EPA") entered into a Memorandum of     
Agreement ("MOA") which provides for coordination and cooperation among those   
parties in addressing the release or threat of release of hazardous substances  
into the lower Fox River, Green Bay and Lake Michigan environment. The MOA sets 
forth a mutual goal of remediating and/or responding to hazardous substance     
releases and threats of releases, and restoring injured and potentially injured 
natural resources. The                                                          

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      

P. H. Glatfelter Company and Subsidiaries                                       

MOA further states that, based on current information, removal of the           
PCB-contaminated sediments in the lower Fox River is expected to be the         
principal, but not exclusive, action undertaken to achieve restoration and      
rehabilitation of injured natural resources. The MOA anticipates funding from   
the Company and the six other companies, all of which are identified as         
potentially responsible parties.                                                

The EPA has announced its intention to include the lower Fox River and the Bay  
of Green Bay sites on the National Priorities List maintained pursuant to the   
Comprehensive Environmental Response, Compensation and Liability Act. The EPA   
rejected the potentially responsible parties' offer to perform a remedial       
investigation and feasibility study ("RI/FS") for the site and either the EPA or
the Wisconsin DNR will perform the RI/FS. The Company believes that this        
development increases the likelihood that this matter will end up in litigation.
The Company cannot now predict the cost of the remedy which will be selected for
the site, in part because the Company cannot predict the remedy for the site and
the Company cannot predict its share of that cost.                              

The Company, with advice from its environmental consultants, continues to       
believe that an aggressive effort, as currently proposed by the governmental    
authorities, to remove PCB-contaminated sediments, many of which are buried     
under cleaner material or are otherwise unlikely to move, would be              
environmentally detrimental and therefore inappropriate. Furthermore, the       
Company's share of the cost of such removal, depending on the amount of         
sediments to be removed, could exceed its available resources. The Company      
believes it will be able to persuade the parties to the MOA or a court against  
removal of a substantial amount of PCB-contaminated sediments. There can be no  
assurance, however, that the Company will be successful in arguing that removal 
of a substantial amount of PCB-contaminated sediments is inappropriate, that it 
would prevail in any resulting litigation or that its share of the cost of any  
such removal would not have a material adverse effect on the Company's          
consolidated financial condition, liquidity and results of operation.           

The amount and timing of future expenditures for environmental compliance, clean
up, remediation and personal injury and property damage liability, including but
not limited to those related to the lower Fox River and the Bay of Green Bay,   
cannot be ascertained with any certainty due to, among other things, the unknown
extent and nature of any contamination, the extent and timing of any            
technological advances for pollution control, the remedial actions which may be 
required and the number and financial resources of any other responsible        
parties. The Company continues to evaluate its exposure and the level of its    
reserves, including, but not limited to, its share of the Wisconsin Agreement,  
its negotiations with the State concerning those areas and the unknown amount   
which could be claimed by the federal trustees as natural resource damages      
related to the lower Fox River. The Company believes that it is insured against 
certain losses related to the lower Fox River, depending on the nature and      
amount thereof. Coverage, which is currently being investigated under           
reservation of rights by various insurance companies, is dependent upon the     
identity of the plaintiff, the procedural posture of the claims asserted and how
such claims are characterized. The Company does not expect that the insurers'   
investigation as to coverage will be completed prior to the time these factors  
become known. The Company's current assessment after consultation with legal    
counsel, is that future expenditures for these matters are not likely to have a 
material adverse impact on the Company's consolidated financial condition or    
liquidity, but could have a material adverse effect on the Company's            
consolidated results from operations in a given year; however, there can be no  
assurances that the Company's reserves will be adequate or that a material      
adverse effect on the Company's consolidated financial condition or liquidity   
will not occur at some future time.                                             

During 1997 and 1996, the Company expended approximately $8,000,000 and         
$2,000,000, respectively, on environmental capital projects. The Company        
estimates that $9,000,000 and $12,000,000 will be expended for environmental    
capital projects in 1998 and 1999, respectively.                                

8. LEGAL PROCEEDINGS                                                            

The Company is involved in various lawsuits. Although the ultimate outcome of   
these lawsuits cannot be predicted with certainty, the Company's management,    
after consultation with legal counsel, does not expect that such lawsuits will  
have a material adverse effect on the Company's consolidated financial position,
results of operations or liquidity.                                             

9. SIGNIFICANT CUSTOMER AND FOREIGN SALES                                       

The Company sells a significant portion of its printing and writing papers      
through wholesale paper merchants. Prior to 1995, two of the Company's wholesale
paper merchants merged into one company, and as a result, during 1997, 1996 and 
1995, this customer accounted for 11.6%, 12.1% and 13.9% of the Company's net   
sales, respectively. Net sales in dollars to foreign customers were 10.9%, 9.8% 
and 8.8% of total net sales in 1997, 1996 and 1995, respectively.               

10. BORROWINGS                                                                  

In addition to the Revolving Credit Facility described in Note 2, the Company   
has an available line of credit from a bank aggregating $25,000,000 at interest 
rates approximating money market rates. Under this line of credit, the Company  
had no short-term borrowings as of December 31, 1997 and 1996 and had average   
net                                                                             

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      

P. H. Glatfelter Company and Subsidiaries                                       

short-term borrowings of $3,000 and $20,000 during 1997 and 1996, respectively, 
at an average interest rate of 5.8% and 6.1%, respectively. Maximum short-term  
borrowings during 1997 and 1996 were $1,000,000 and $4,000,000, respectively.   

In March 1993, the Company issued $150,000,000 principal amount of its 5 7/8%   
Notes. These Notes will mature on March 1, 1998 and may not be redeemed prior to
maturity. Interest on the Notes is payable semiannually on March 1 and September
1. The Notes are unsecured obligations of the Company.                          

In March 1993, the Company entered into an interest rate swap agreement having a
total notional principal amount of $50,000,000. Under the agreement, the Company
receives a fixed rate of 5 7/8% and pays a floating rate (London Interbank      
Offered Rate (LIBOR) plus sixty basis points), as determined at six-month       
intervals. The floating rate is approximately 6.4% for the six-month period     
ending February 28, 1998. The agreement converts a portion of the Company's debt
obligation from a fixed rate to a floating rate basis. Under the agreement, the 
Company recognized net interest expense of $275,000, $174,000 and $453,000 in   
1997, 1996 and 1995, respectively. These amounts are included in "Interest on   
debt" on the Company's Consolidated Statements of Income. The Company has       
pledged $2,089,000 principal amount of its marketable securities as security    
under the swap agreement. Although the Company can pay to terminate the swap    
agreement at any time, the Company intends to hold the swap agreement until its 
March 1, 1998 maturity. The cost to the Company to terminate the agreement      
fluctuates with prevailing market interest rates. As of December 31, 1997, the  
cost to terminate the swap agreement was approximately $150,000.                

The Company has approximately $1,440,000 of letters of credit outstanding as of 
December 31, 1997. The Company bears the credit risk on this amount to the      
extent that the Company does not comply with the provisions of certain          
agreements. The letters of credit do not reduce the amount available under the  
Company's lines of credit.                                                      

In February 1997, the Company formed GWS Valuch, Inc. ("GWS Valuch"), a         
corporation organized under the laws of the State of Delaware, with the         
intention that GWS Valuch would qualify as a real estate investment trust. The  
Company invested approximately $122,500,000 to acquire approximately 99.9% of   
the voting Class A common stock of GWS Valuch. GWS Valuch also issued shares of 
step-down preferred stock ("Step-Down Preferred Stock"), having a liquidation   
preference of $150,000,000 and an initial dividend of approximately 13.9%, to   
other investors. This dividend included an amortization component of the        
Step-Down Preferred Stock, resulting in an effective yield of approximately     
8.1%. GWS Valuch has been consolidated in the Company's financial statements    
since the date of formation.                                                    

Immediately following the establishment and capitalization of GWS Valuch, the   
Company borrowed $270,000,000 from GWS Valuch under a note secured by certain   
real estate assets of the Company. Using the proceeds of the note and other     
available cash, the Company immediately repaid, with interest, an amount        
initially borrowed to purchase the Class A common stock of GWS Valuch. The      
Company also deposited $154,757,000, which included amounts to pay semiannual   
interest, into a trust to defease certain covenants under the Company's         
indenture dated as of January 15, 1993, under which the Company's $150,000,000  
principal amount of 5 7/8% Notes due March 1, 1998, are outstanding. As of      
December 31, 1997, approximately $153,000,000 of U.S. Treasury Notes remain in  
the trust and are reported on the Company's Consolidated Balance Sheets as a    
component of "Marketable securities." This amount, along with interest to be    
earned, will be held to maturity and used to pay the total amount of principal  
and interest due on the 5 7/8% Notes on March 1, 1998.                          

Subsequent to the above transactions, the Internal Revenue Service announced    
that it intended to issue regulations with retroactive effect on transactions   
using self-amortizing investments in conduit financing entities. As a result of 
this announcement, the likelihood that the Company could lose certain tax       
benefits arising from GWS Valuch's Step-Down Preferred Stock financing increased
substantially. Accordingly, on July 2, 1997, using the proceeds of a short-term 
unsecured loan in the principal amount of $144,675,000, the Company purchased   
approximately 145,000 shares of Class A common stock of GWS Valuch. The funds   
received were used by GWS Valuch to redeem all 150,000 outstanding shares of the
Step-Down Preferred Stock. "Interest on debt" on the Company's Consolidated     
Statement of Income for the year ended December 31, 1997 includes $4,235,000,   
representing a portion of the dividend paid relating to the Step-Down Preferred 
Stock.                                                                          

On July 22, 1997, the Company issued $150,000,000 principal amount of 6 7/8%    
Notes due July 15, 2007. Interest on the 6 7/8% Notes is payable semiannually on
January 15 and July 15 of each year. The 6 7/8% Notes are redeemable, in whole  
or in part, at the option of the Company at any time at a calculated redemption 
price plus accrued and unpaid interest to the date of redemption, and constitute
unsecured and unsubordinated indebtedness of the Company. The net proceeds from 
the sale of the 6 7/8% Notes were used to repay the $144,675,000 principal      
amount of the short-term unsecured loan described above and approximately       
$501,000 of related interest. The remaining balance of the net proceeds was     
applied to general corporate purposes.                                          

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MANAGEMENT'S RESPONSIBILITY REPORT                                              

The management of P. H. Glatfelter Company has prepared and is responsible for  
the Company's consolidated financial statements and other corroborating         
information contained herein. Management bears responsibility for the integrity 
of these statements which have been prepared in accordance with generally       
accepted accounting principles and include management's best judgments and      
estimates. All information in this annual report consistently reflects the data 
contained in the consolidated financial statements.                             

The Company maintains a system of internal controls designed to provide         
reasonable assurance that assets are safeguarded, transactions are executed and 
recorded in accordance with their authorizations, and financial records are     
maintained so as to permit the preparation of reliable financial statements. The
system of internal controls is enhanced by written policies and procedures, an  
organizational structure providing appropriate segregation of duties, careful   
selection and training of qualified people, and periodic reviews performed by   
both its internal audit department and independent public auditors.             

The Audit Committee of the Board of Directors, consisting exclusively of        
directors who are not Company employees, provides oversight of financial        
reporting. The Company's internal audit department and independent auditors meet
with the Audit Committee on a periodic basis to discuss financial reporting and 
internal control issues and have completely free access to the Audit Committee. 

/s/ T. C. Norris                                                                
--------------------------------                                                
T. C. Norris                                                                    
Chairman of the Board, President                                                
and Chief Executive Officer                                                 

/s/ R. P. Newcomer                                                              
--------------------------------                                                
R. P. Newcomer                                                                  
Senior Vice President                                                           
and Chief Financial Officer                                                     

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-----------------------------------------------------------------               
P. H. Glatfelter Company                                                        
and Subsidiaries                                                                

Financial Statement Schedule                                                    
For Each of the Three Years in the                                              
Period Ended December 31, 1997 and                                              
Independent Auditors' Report                                                    

Prepared for Filing As Part of                                                  
Annual Report (Form 10-K)                                                       

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INDEPENDENT AUDITORS' REPORT                                                    

P. H. Glatfelter Company,                                                       
Its Shareholders and Directors:                                           

We have audited the accompanying consolidated balance sheets of P. H. Glatfelter
Company and subsidiaries as of December 31, 1997 and 1996, and the related      
consolidated statements of income, shareholders' equity, and cash flows for each
of the three years in the period ended December 31, 1997. Our audits also       
included the financial statement schedule listed in the Index at Item 14. These 
financial statements and the financial statement schedule are the responsibility
of the Company's management. Our responsibility is to express an opinion on     
these financial statements and the financial statement schedule based on our    
audits.                                                                         

We conducted our audits in accordance with generally accepted auditing          
standards. Those standards require that we plan and perform the audit to obtain 
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting 
the amounts and disclosures in the financial statements. An audit also includes 
assessing the accounting principles used and significant estimates made by      
management, as well as evaluating the overall financial statement presentation. 
We believe that our audits provide a reasonable basis for our opinion.          

In our opinion, such consolidated financial statements present fairly, in all   
material respects, the financial position of P.H. Glatfelter Company and        
subsidiaries at December 31, 1997 and 1996, and the results of their operations 
and their cash flows for each of the three years in the period ended December   
31, 1997 in conformity with generally accepted accounting principles. Also, in  
our opinion, the financial statement schedule, when considered in relation to   
the basic consolidated financial statements taken as a whole, presents fairly in
all material respects the information set forth therein.                        

/s/ Deloitte & Touche LLP                                                       

Philadelphia, Pennsylvania                                                      
February 6, 1998                                                                

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QUARTERLY FINANCIAL DATA                                                        

                                                                [Download Table]

            Net Sales         Gross Profit       Net Income        Basic and Diluted
          In Thousands        In Thousands       In Thousands      Earning Per Share
        ------------------  ------------------  -----------------  -----------------
          1997      1996      1997      1996      1997      1996     1997      1996 
        --------  --------  --------  --------  -------   -------    -----     -----
                                                                                    
First   $142,185  $140,335  $ 30,180  $ 31,521  $12,823   $13,970    $ .30     $ .32
Second   141,935   144,687    27,100    35,771   11,222    16,276      .27       .38
Third    139,192   139,748    21,072    30,437    7,423    13,237      .17       .31
Fourth   143,760   141,314    30,594    33,864   13,816    16,916      .33       .40
        --------  --------  --------  --------  -------   -------    -----     -----
Total   $567,072  $566,084  $108,946  $131,593  $45.284   $60,399    $1.07     $1.41
        ========  ========  ========  ========  =======   =======    =====     =====


Item 9.     Changes in and Disagreements With Accountants on                    
Accounting and Financial Disclosure.                    

Not Applicable.                                         

PART III    

Item 10.  Directors and Executive Officers of the Registrant.                   

         (a) Directors. The information with respect to directors required
under this item is incorporated herein by reference to pages 2, 3 and 15 of the 
Registrant's Proxy Statement, dated March 13, 1998.                             

      (b) Executive Officers of the Registrant. The information with
respect to the executive officers required under this item is set forth in Part 
I of this Report.                                                               

Item 11.  Executive Compensation.                                               

          The information required under this item is incorporated herein by
reference to pages 5 through 13 of the Registrant's Proxy Statement, dated March
13, 1998.                                                                       

Item 12.    Security Ownership of Certain Beneficial Owners and                 
Management.                                             

          The information required under this item is incorporated herein by
reference to pages 14 through 15 of the Registrant's Proxy Statement, dated     
March 13, 1998.                                                                 

Item 13.    Certain Relationships and Related Transactions.                     

          The information required under this item is incorporated herein by
reference to page 13 of the Registrant's Proxy Statement, dated March 13, 1998. 

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PART IV   

Item 14.    Exhibits, Financial Statement Schedules, and Reports                
on Form 8-K.                                            

(a)   1.    A.    Financial Statements filed as part of 
this report:                                                                    

   Consolidated Statements of Income for the Years
Ended December 31, 1997, 1996 and 1995  
  Consolidated Balance Sheets, December 31, 1997
and 1996                                
                 Consolidated Statements of Shareholders' Equity for the Years
Ended December 31, 1997, 1996 and 1995  
 Consolidated Statements of Cash Flows for the
    Years Ended December 31, 1997, 1996 and 1995
  Notes to Consolidated Financial Statements for
   the Years Ended December 31, 1997, 1996 and
1995                                    

        B.    Supplementary Data for each of the
three years in the period ended December 31, 1997.                              

2.    Financial Statement Schedules (Consolidated):     

                For Each of the Three Years in the Period Ended December 31,
1997:                                                                           

    II -     Valuation and Qualifying Accounts

          Schedules other than those listed above are omitted because of the
          absence of conditions under which they are required or because the
         required information is included in the Notes to the Consolidated
Financial Statements.                                   

           Individual financial statements of the Registrant are not presented
            inasmuch as the Registrant is primarily an operating company and its
consolidated subsidiaries are essentially wholly-owned. 

3.    Executive Compensation Plans and Arrangements:    
see Exhibits 10(a) through 10(g), described below.                              

Exhibits:                                               

Number                        Description of Documents                          

(2)         Stock Purchase Agreement dated as of November 14,                   
1997 by and among certain subsidiaries of P. H.         
Glatfelter Company, the Stockholders of S&H Papier-     

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Holding GmbH, Deutsche Beteiligungs                     
Aktiengesellschaft                                      
Unternehmensbeteiligungsgesellschaft and P.H.           
Glatfelter Company (incorporated by reference to        
    Exhibit 2.1 of Registrant's Form 8-K dated January 2, 1998).

(3)(a)      Articles of Amendment dated April 27, 1977, including               
restated Articles of Incorporation (incorporated by     
reference to Exhibit 3(a) of Registrant's Annual        
Report on Form 10-K for the year ended December 31,     
1993) as amended by Articles of Merger dated            
January 30, 1979 (incorporated by reference to          
Exhibit 3(a) of Registrant's Annual Report on           
Form 10-K for the year ended December 31, 1993); a      
Statement of Reduction of Authorized Shares dated       
May 12, 1980 (incorporated by reference to              
Exhibit 3(a) of Registrant's Annual Report on           
Form 10-K for the year ended December 31, 1993); a      
Statement of Reduction of Authorized Shares dated       
September 23, 1981 (incorporated by reference to        
Exhibit 3(a) of Registrant's Annual Report on           
Form 10-K for the year ended December 31, 1993); a      
Statement of Reduction of Authorized Shares dated       
August 2, 1982 (incorporated by reference to            
Exhibit 3(a) of Registrant's Annual Report on           
Form 10-K for the year ended December 31, 1993); a      
Statement of Reduction of Authorized Shares dated       
July 29, 1983 (incorporated by reference to             
Exhibit 3(a) of Registrant's Annual Report on           
Form 10-K for the year ended December 31, 1993); by     
Articles of Amendment dated April 25, 1984              
(incorporated by reference to Exhibit 3(a) of           
Registrant's Annual Report on Form 10-K for the year    
ended December 31, 1994); a Statement of Reduction of   
Authorized Shares dated October 15, 1984                
(incorporated by reference to Exhibit (3)(b) of         
Registrant's Form 10-K for the year ended               
December 31, 1984); a Statement of Reduction of         
Authorized Shares dated December 24, 1985               
(incorporated by reference to Exhibit (3)(b) of         
Registrant's Form 10-K for the year ended               
December 31, 1985); by Articles of Amendment dated      
April 23, 1986 (incorporated by reference to Exhibit    
(3) of Registrant's Quarterly Report on Form 10-Q for   
the quarter ended March 31, 1986); a Statement of       
Reduction of Authorized Shares dated July 11, 1986      
(incorporated by reference to Exhibit (3)(b) of         
Registrant's Form 10-K for the year ended               
December 31, 1986); a Statement of Reduction of         
Authorized Shares dated March 25, 1988 (incorporated    
by reference to Exhibit (3)(b) of Registrant's Form     
10-K for the year ended December 31, 1987); a           

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          Statement of Reduction of Authorized Shares dated November 9, 1988
         (incorporated by reference to Exhibit (3)(b) of Registrant's Form
            10-K for the year ended December 31, 1988); a Statement of Reduction
            of Authorized Shares dated April 24, 1989 (incorporated by reference
    to Exhibit 3(b) of Registrant's Form 10-K for the year ended
         December 31, 1989); Articles of Amendment dated November 29, 1990
            (incorporated by reference to Exhibit 3(b) of Registrant's Form 10-K
          for the year ended December 31, 1990); Articles of Amendment dated
   June 26, 1991 (incorporated by reference to Exhibit 3(b) of
     Registrant's Form 10-K for the year ended December 31, 1991);
   Articles of Amendment dated August 7, 1992 (incorporated by
        reference to Exhibit 3(b) of Registrant's Form 10-K for the year
           ended December 31, 1992); Articles of Amendment dated July 30, 1993
            (incorporated by reference to Exhibit 3(b) of Registrant's Form 10-K
        for the year ended December 31, 1993); and Articles of Amendment
            dated January 26, 1994 (incorporated by reference to Exhibit 3(b) of
     Registrant's Form 10-K for the year ended December 31, 1993).

(3)(b)      Articles of Incorporation, as amended through January 26, 1994      
      (restated for the purpose of filing on EDGAR) (incorporated by
        reference to Exhibit 3(c) of Registrant's Form 10-K for the year
ended December 31, 1993).                               

(3)(c)      By-Laws as amended through March 14, 1996 (incorporated by reference
      to Exhibit (3)(c) of Registrant's Form 10-K for the year ended
December 31, 1996).                                     

(4)(a)      Indenture between P. H. Glatfelter Company and Wachovia Bank of     
           Georgia, N.A. as Trustee dated as of January 15, 1993 (incorporated
           by reference to Exhibit 4(a) of Registrant's Form 10-K for the year
ended December 31, 1993).                               

(4)(b)      Form of Note issued to Purchasers of 5 7/8% Notes due March 1, 1998 
            (incorporated by reference to Exhibit 4(b) of Registrant's Form 10-K
for the year ended December 31, 1992).                  

(4)(c)      Escrow Agreement, dated as of February 24, 1997 between P. H.       
            Glatfelter Company and the Bank of New York relating to 5 7/8% Notes
         due March 1, 1998 (incorporated by reference to Exhibit (4)(c) of
     Registrant's Form 10-K for the year ended December 31, 1996).

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(4)(d)      Indenture, dated as of July 22, 1997, between P. H. Glatfelter      
          Company and The Bank of New York, relating to the 6-7/8% Notes due
          2007 (incorporated by reference to Exhibit 4.1 to the Registrant's
Form S-4 Registration Statement, Reg. No. 333-36395).   

(4)(e)      Registration Rights Agreement, dated as of July 22, 1997, among P.  
         H. Glatfelter Company, Bear, Stearns & Co. Inc. and BT Securities
           Corporation, relating to the 6-7/8% Notes due 2007 (incorporated by
          reference to Exhibit 4.3 to the Registrant's Form S-4 Registration
Statement, Reg. No. 333-36395).                         

(9)         P. H. Glatfelter Family Shareholders' Voting Trust dated July 1,    
        1993 (incorporated by reference to Exhibit 1 of the Schedule 13D
         filed by P. H. Glatfelter Family Shareholders' Voting Trust dated
July 1, 1993).                                          

(10)(a)     P. H. Glatfelter Company Management Incentive Plan, adopted as of   
         January 1, 1994, as amended and restated effective March 13, 1997
     (incorporated by reference to Exhibit B of Registrant's Proxy
Statement, dated March 14, 1997).                       

(10)(b)     P. H. Glatfelter Company 1988 Restricted Common Stock Award Plan, as
        amended and restated June 24, 1992 (incorporated by reference to
    Exhibit (10)(c) of Registrant's Form 10-K for the year ended
December 31, 1992).                                     

(10)(c)     P. H. Glatfelter Company Supplemental Executive Retirement Plan,    
            effective January 1, 1988, as amended and restated December 22, 1994
        (incorporated by reference to Exhibit 10(c) of Registrant's Form
10-K for the year ended December 31, 1994).             

(10)(d)     Deferral Benefit Pension Plan of Ecusta Division, effective May 22, 
          1986 (incorporated by reference to Exhibit (10)(e) of Registrant's
Form 10-K for the year ended December 31, 1987).        

(10)(e)     Description of Executive Salary Continuation Plan (incorporated by  
           reference to Exhibit (10)(g) of Registrant's Form 10-K for the year
ended December 31, 1990).                               

(10)(f)     P. H. Glatfelter Company Plan of Supplemental Retirement Benefits   
            for the Management Committee, as amended and restated effective June
 28, 1989 (incorporated by reference to Exhibit (10)(h) of
     Registrant's Form 10-K for the year ended December 31, 1989).

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(10)(g)     P.H. Glatfelter Company 1992 Key Employee Long-Term Incentive Plan, 
            as amended April 23, 1997 (incorporated by reference to Exhibit A of
Registrant's Proxy Statement, dated March 14, 1997).    

(10)(h)     Loan Agreement, dated February 24, 1997 between P. H. Glatfelter    
           Company, as borrower, and GWS Valuch, Inc., as lender (incorporated
         by reference to Exhibit (10)(h) of Registrant's Form 10-K for the
year ended December 31, 1996).                          

(10)(i)     Agreement between the State of Wisconsin and Certain                
Companies Concerning the Fox River, dated as of         
January 31, 1997, among P. H. Glatfelter Company,       
Fort Howard Corporation, NCR Corporation, Appleton      
Papers Inc., Riverside Paper Corporation, U.S. Paper    
Mills, Wisconsin Tissue Mills Inc. and the State of     
Wisconsin  (incorporated by reference to Exhibit        
(10)(i) of Registrant's Form 10-K for the year ended    
December 31, 1996).                                     

(10)(j)     Credit Agreement, dated as of December 22, 1997 among               
P. H. Glatfelter Company, various subsidiary            
borrowers, Bankers Trust Company, as Agent, and         
various lending institutions with Deutsche Bank AG,     
as Documentation Agent, PNC Bank, National              
Association, as Syndication Agent, and First National   
Bank of Maryland and Wachovia Bank, N.A., as Managing   
Agents.                                                 

(21)        Subsidiaries of the Registrant                                      

(23)        Consent of Independent Certified Public Auditors                    

(27)        Financial Data Schedule                                             

   (b)   The Registrant filed the following reports on Form 8-K during the
quarter ended December 31, 1997:                        

Date of Report             Item Reported    
--------------             -------------    

November 14, 1997                   5       
November 20, 1997                   5       
December 11, 1997                   5       

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SIGNATURES    

  Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to  
be signed on its behalf by the undersigned, thereunto duly authorized.          

                            P. H. GLATFELTER COMPANY
                (Registrant)
March 18, 1998                                                                  
                       By /s/ T. C. Norris
                                 -----------------------
                            T. C. Norris
                                     Chairman of the Board

            Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the     
Registrant in the capacities and on the dates indicated:                        

Date                Signature                Capacity               
----                ---------                --------               

March 18, 1998          /s/ T. C. Norris                    Principal Executive 
                        -------------------------           Officer and Director
T. C. Norris                    

March 18, 1998          /s/ R. P. Newcomer                  Principal Financial 
                      -------------------------           Officer and Senior
                  R. P. Newcomer                      Vice President

March 18, 1998          /s/ C. M. Smith                     Controller and      
                       -------------------------           Assistant Secretary
C. M. Smith                     

March 18, 1998          /s/ R. E. Chappell                  Director            
-------------------------       
R. E. Chappell                  

March 18, 1998          /s/ N. DeBenedictis                 Director            
-------------------------       
N. DeBenedictis                 

March 18, 1998          /s/ G. H. Glatfelter                Director            
-------------------------       
G. H. Glatfelter                

March 18, 1998          /s/ G. H. Glatfelter II             Director            
-------------------------       
G. H. Glatfelter II             

March 18, 1998          /s/ R. S. Hillas                    Director            
-------------------------       
R. S. Hillas                    

March 18, 1998          /s/ M. A. Johnson II                Director            
-------------------------       
M. A. Johnson II                

March 18, 1998          /s/ R. W. Kelso                     Director            
-------------------------       
R. W. Kelso                     

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March 18, 1998          /s/ P. R. Roedel                    Director            
-------------------------       
P. R. Roedel                    

March 18, 1998          /s/ J. M. Sanzo                     Director            
-------------------------       
J. M. Sanzo                     

March 18, 1998          /s/ R. L. Smoot                     Director            
-------------------------       
R. L. Smoot                     

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                                                                     SCHEDULE II

P. H. GLATFELTER COMPANY AND SUBSIDIARIES                                       

SUPPLEMENTAL FINANCIAL STATEMENT SCHEDULE                                       
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1997               

VALUATION AND QUALIFYING ACCOUNTS                                               

                                                        [Enlarge/Download Table]

                                                                 ALLOWANCES FOR                                     
                            --------------------------------------------------------------------------------------- 
                                           DOUBTFUL ACCOUNTS                            SALES DISCOUNTS             
                            -----------------------------------------    ------------------------------------------ 
                                1997          1996           1995           1997            1996          1995      

                                                                                                                    
Balance, beginning of year  $ 1,913,000    $ 1,979,000    $ 1,850,000    $    551,000    $   501,000    $   560,100 

Provision                       160,000         10,000        201,000      12,882,000      8,866,000      7,937,700 

Write-offs, recoveries and                                                                                          
discounts allowed              (100,000)       (76,000)       (72,000)    (12,891,000)    (8,816,000)    (7,996,800)
                            -----------    -----------    -----------    ------------    -----------    ----------- 

Balance, end of year        $ 1,973,000    $ 1,913,000    $ 1,979,000    $    542,000    $   551,000    $   501,000 
                            ===========    ===========    ===========    ============    ===========    =========== 

The provision for doubtful accounts is included in administrative expense and   
the provision for sales discounts is deducted from sales. The related allowances
are deducted from accounts receivable.                                          

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EXHIBIT INDEX   

Number                                                                          

(2)         Stock Purchase Agreement dated as of November 14, 1997              
by and among certain subsidiaries of P. H. Glatfelter   
Company, the Stockholders of S&H Papier-Holding GmbH,   
Deutsche Beteiligungs Aktiengesellschaft                
Unternehmensbeteiligungsgesellschaft and P.H.           
Glatfelter Company (incorporated by reference to        
Exhibit 2.1 of Registrant's Form 8-K dated January 2,   
1998).                                                  

(3)(a)      Articles of Amendment dated April 27, 1977, including               
restated Articles of Incorporation (incorporated by     
reference to Exhibit 3(a) of Registrant's Annual Report 
on Form 10-K for the year ended December 31, 1993) as   
amended by Articles of Merger dated January 30, 1979    
(incorporated by reference to Exhibit 3(a) of           
Registrant's Annual Report on Form 10-K for the year    
ended December 31, 1993); a Statement of Reduction of   
Authorized Shares dated May 12, 1980 (incorporated by   
reference to Exhibit 3(a) of Registrant's Annual Report 
on Form 10-K for the year ended December 31, 1993); a   
Statement of Reduction of Authorized Shares dated       
September 23, 1981 (incorporated by reference to        
Exhibit 3(a) of Registrant's Annual Report on Form 10-K 
for the year ended December 31, 1993); a Statement of   
Reduction of Authorized Shares dated August 2, 1982     
(incorporated by reference to Exhibit 3(a) of           
Registrant's Annual Report on Form 10-K for the year    
ended December 31, 1993); a Statement of Reduction of   
Authorized Shares dated July 29, 1983 (incorporated by  
reference to Exhibit 3(a) of Registrant's Annual Report 
on Form 10-K for the year ended December 31, 1993); by  
Articles of Amendment dated April 25, 1984              
(incorporated by reference to Exhibit 3(a) of           
Registrant's Annual Report on Form 10-K for the year    
ended December 31, 1994); a Statement of Reduction of   
Authorized Shares dated October 15, 1984 (incorporated  
by reference to Exhibit (3)(b) of Registrant's Form 10- 
K for the year ended December 31, 1984); a Statement of 
Reduction of Authorized Shares dated December 24, 1985  
(incorporated by reference to Exhibit (3)(b) of         
Registrant's Form 10-K for the year ended December 31,  
1985); by Articles of Amendment dated April 23, 1986    
(incorporated by reference to Exhibit (3) of            
Registrant's Quarterly Report on Form 10-Q for the      
quarter ended March 31, 1986); a Statement of Reduction 
of Authorized Shares dated July 11, 1986 (incorporated  
by reference to Exhibit (3)(b) of Registrant's Form 10-K
for the year ended December 31, 1986); a Statement of   
Reduction of Authorized Shares dated March 25, 1988     

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         (incorporated by reference to Exhibit (3)(b) of Registrant's Form
            10-K for the year ended December 31, 1987); a Statement of Reduction
    of Authorized Shares dated November 9, 1988 (incorporated by
          reference to Exhibit (3)(b) of Registrant's Form 10-K for the year
        ended December 31, 1988); a Statement of Reduction of Authorized
         Shares dated April 24, 1989 (incorporated by reference to Exhibit
      3(b) of Registrant's Form 10-K for the year ended December 31,
          1989); Articles of Amendment dated November 29, 1990 (incorporated
           by reference to Exhibit 3(b) of Registrant's Form 10-K for the year
           ended December 31, 1990); Articles of Amendment dated June 26, 1991
            (incorporated by reference to Exhibit 3(b) of Registrant's Form 10-K
          for the year ended December 31, 1991); Articles of Amendment dated
    August 7, 1992 (incorporated by reference to Exhibit 3(b) of
     Registrant's Form 10-K for the year ended December 31, 1992);
            Articles of Amendment dated July 30, 1993 (incorporated by reference
    to Exhibit 3(b) of Registrant's Form 10-K for the year ended
            December 31, 1993); and Articles of Amendment dated January 26, 1994
            (incorporated by reference to Exhibit 3(b) of Registrant's Form 10-K
for the year ended December 31, 1993).                  

(3)(b)      Articles of Incorporation, as amended through January 26, 1994      
      (restated for the purpose of filing on EDGAR) (incorporated by
        reference to Exhibit 3(c) of Registrant's Form 10-K for the year
ended December 31, 1993).                               

(3)(c)      By-Laws as amended through March 14, 1996 (incorporated by reference
      to Exhibit (3)(c) of Registrant's Form 10-K for the year ended
December 31, 1996).                                     

(4)(a)      Indenture between P. H. Glatfelter Company and Wachovia Bank of     
           Georgia, N.A. as Trustee dated as of January 15, 1993 (incorporated
           by reference to Exhibit 4(a) of Registrant's Form 10-K for the year
ended December 31, 1993).                               

(4)(b)      Form of Note issued to Purchasers of 5 7/8% Notes due March 1, 1998 
            (incorporated by reference to Exhibit 4(b) of Registrant's Form 10-K
for the year ended December 31, 1992).                  

(4)(c)      Escrow Agreement, dated as of February 24, 1997 between P. H.       
            Glatfelter Company and the Bank of New York relating to 5 7/8% Notes
         due March 1, 1998 (incorporated by reference to Exhibit (4)(c) of
     Registrant's Form 10-K for the year ended December 31, 1996).

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(4)(d)      Indenture, dated as of July 22, 1997, between P. H. Glatfelter      
          Company and The Bank of New York, relating to the 6-7/8% Notes due
          2007 (incorporated by reference to Exhibit 4.1 to the Registrant's
Form S-4 Registration Statement, Reg. No. 333-36395).   

(4)(e)      Registration Rights Agreement, dated as of July 22, 1997, among P.  
         H. Glatfelter Company, Bear, Stearns & Co. Inc. and BT Securities
           Corporation, relating to the 6-7/8% Notes due 2007 (incorporated by
          reference to Exhibit 4.3 to the Registrant's Form S-4 Registration
Statement, Reg. No. 333-36395).                         

(9)         P. H. Glatfelter Family Shareholders' Voting Trust dated July 1,    
        1993 (incorporated by reference to Exhibit 1 of the Schedule 13D
         filed by P. H. Glatfelter Family Shareholders' Voting Trust dated
July 1, 1993).                                          

(10)(a)     P. H. Glatfelter Company Management Incentive Plan, adopted as of   
         January 1, 1994, as amended and restated effective March 13, 1997
     (incorporated by reference to Exhibit B of Registrant's Proxy
Statement, dated March 14, 1997).                       

(10)(b)     P. H. Glatfelter Company 1988 Restricted Common Stock Award Plan, as
        amended and restated June 24, 1992 (incorporated by reference to
    Exhibit (10)(c) of Registrant's Form 10-K for the year ended
December 31, 1992).                                     

(10)(c)     P. H. Glatfelter Company Supplemental Executive Retirement Plan,    
            effective January 1, 1988, as amended and restated December 22, 1994
        (incorporated by reference to Exhibit 10(c) of Registrant's Form
10-K for the year ended December 31, 1994).             

(10)(d)     Deferral Benefit Pension Plan of Ecusta Division, effective May 22, 
          1986 (incorporated by reference to Exhibit (10)(e) of Registrant's
Form 10-K for the year ended December 31, 1987).        

(10)(e)     Description of Executive Salary Continuation Plan (incorporated by  
           reference to Exhibit (10)(g) of Registrant's Form 10-K for the year
ended December 31, 1990).                               

(10)(f)     P. H. Glatfelter Company Plan of Supplemental Retirement Benefits   
            for the Management Committee, as amended and restated effective June
 28, 1989 (incorporated by reference to Exhibit (10)(h) of
     Registrant's Form 10-K for the year ended December 31, 1989).

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(10)(g)     P.H. Glatfelter Company 1992 Key Employee Long-Term Incentive Plan, 
            as amended April 23, 1997 (incorporated by reference to Exhibit A of
Registrant's Proxy Statement dated March 14, 1997).     

(10)(h)     Loan Agreement, dated February 24, 1997 between P. H. Glatfelter    
           Company, as borrower, and GWS Valuch, Inc., as lender (incorporated
         by reference to Exhibit (10)(h) of Registrant's Form 10-K for the
year ended December 31, 1996).                          

(10)(i)     Agreement between the State of Wisconsin and Certain Companies      
           Concerning the Fox River, dated as of January 31, 1997, among P. H.
     Glatfelter Company, Fort Howard Corporation, NCR Corporation,
            Appleton Papers Inc., Riverside Paper Corporation, U.S. Paper Mills,
            Wisconsin Tissue Mills Inc. and the State of Wisconsin (incorporated
         by reference to Exhibit (10)(i) of Registrant's Form 10-K for the
year ended December 31, 1996).                          

(10)(j)     Credit Agreement, dated as of December 22, 1997 among P. H.         
       Glatfelter Company, various subsidiary borrowers, Bankers Trust
         Company, as Agent, and various lending institutions with Deutsche
           Bank AG, as Documentation Agent, PNC Bank, National Association, as
           Syndication Agent, and First National Bank of Maryland and Wachovia
Bank, N.A., as Managing Agents.                         

(21)        Subsidiaries of the Registrant                                      

(23)        Consent of Independent Certified Public Auditors                    

(27)        Financial Data Schedule                                             

49    

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10-K405’ Filing		Date		First		Last			Other Filings
		12/31/07		30					10-K,  11-K,  5
		7/15/07		18		36
		12/22/02		19		28
		12/31/01		29					10-K
		12/31/00		29					10-K
		12/31/99		29					10-K,  NT 11-K
		1/1/99		30
		12/31/98		29					10-K
Filed on:		3/18/98		46		47
		3/13/98		1		40			DEF 14A
		3/1/98		18		50
		2/28/98		36
		2/26/98		12
		2/25/98		1
		2/6/98		39
		1/2/98		2		49			8-K,  8-K/A
		1/1/98		29		30
For Period End:		12/31/97		3		48
		12/30/97		19		28
		12/24/97		12
		12/22/97		19		52
		12/15/97		25		28
		12/2/97		8		34
		11/14/97		41		49			8-K
		7/22/97		18		51
		7/11/97		8		34			8-K
		7/2/97		18		36
		5/1/97		29
		4/23/97		28		52			DEF 14A
		3/14/97		44		52			DEF 14A
		3/13/97		44		51
		3/4/97		12
		3/1/97		8		34
		2/24/97		43		52
		2/3/97		8		34
		1/31/97		8		52
		1/30/97		7		34			8-K
		1/1/97		29
		12/31/96		3		52			10-K,  10-K/A
		5/1/96		29
		3/14/96		43		50
		1/1/96		28		29
		12/31/95		3		41			10-K
		5/1/95		29
		12/31/94		42		51			10-K
		12/22/94		44		51
		1/26/94		43		50
		1/1/94		44		51
		12/31/93		42		50			10-K,  11-K,  DEF 14A
		7/30/93		43		50
		7/1/93		44		51
		1/15/93		18		50
		12/31/92		43		51
		8/7/92		43		50
		6/24/92		44		51
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