2014

Domtar Corporation reports preliminary second quarter 2012 financial results

Good financial results despite the impact of lack-of-order downtime in paper
(All financial information is in U.S. dollars, and all earnings per share results are diluted, unless otherwise noted.)

  • Second quarter 2012 net earnings of $1.61 per share, earnings before items1 of $1.61 per share
  • Year-to-date shipments of specialty and packaging paper increased 12% compared to 2011
  • Share buybacks totaled $69 million in the second quarter of 2012

TICKER SYMBOL
(NYSE: UFS) (TSX: UFS)

MONTREAL, July 27, 2012 /PRNewswire/ - Domtar Corporation (NYSE: UFS) (TSX: UFS) today reported net earnings of $59 million ($1.61 per share) for the second quarter of 2012 compared to net earnings of $28 million ($0.76 per share) for the first quarter of 2012 and net earnings of $54 million ($1.30 per share) for the second quarter of 2011. Sales for the second quarter of 2012 amounted to $1.4 billion.

Excluding items listed below, the Company had earnings before items1 of $59 million ($1.61 per share) for the second quarter of 2012 compared to earnings before items1 of $61 million ($1.65 per share) for the first quarter of 2012 and earnings before items1 of $98 million ($2.37 per share) for the second quarter of 2011.

Second quarter 2012 items:

  • None.

First quarter 2012 items:

  • Premium paid and costs related to the debt repurchase of $50 million ($30 million after tax);
  • Closure and restructuring costs, including write-down of property, plant and equipment, of $3 million ($2 million after tax); and
  • Negative impact of purchase accounting of $1 million ($1 million after tax).

Second quarter 2011 items:

  • Charge of $62 million ($38 million after tax) related to the impairment and write-down of property, plant and equipment;
  • Net losses on the sale of property, plant and equipment and business of $6 million ($5 million after tax); and
  • Closure and restructuring costs of $2 million ($1 million after tax).

"We had a good operating performance in the quarter despite costs associated with lack-of-order downtime," said John D. Williams, President and CEO. "So far this year, our shipments have declined due to softness in market demand for paper but our average pricing and margins are holding up well. The ramp-up of the Appleton paper supply agreement and the conversion of the Marlboro, South Carolina mill to lightweight specialty and packaging grades will remove high volume paper capacity and help reduce the amount of potential downtime for the back half of 2012."

Commenting on the Personal Care segment, Mr. Williams added, "Our Personal Care business continues its growth, reaching annualized sales of over $425 million in the second quarter. The addition of EAM Corporation will provide a long term research capability to help further differentiate our offering and grow the business."

QUARTERLY REVIEW

Operating income before items1 was $106 million in the second quarter of 2012 compared to an operating income before items1 of $113 million in the first quarter of 2012. Depreciation and amortization totaled $96 million in the second quarter of 2012.

(In millions of dollars)   2Q 2012   1Q 2012
Sales   $1,368   $1,398
Operating income (loss)        
  Pulp and Paper segment   96   107
  Distribution segment   (2)   (1)
  Personal Care segment   12   8
  Corporate   -   (5)
  Total   106   109
Operating income before items1   106   113
Depreciation and amortization   96   97

The decrease in operating income before items1 in the second quarter of 2012 was the result of lower shipments for papers and pulp and higher costs for both planned maintenance and for lack-of-order downtime in papers. These factors were partially offset by higher selling prices for paper and pulp, lower SG&A costs and the inclusion of Attends Europe for a full quarter.

When compared to the first quarter of 2012, paper shipments decreased 5.9% and pulp shipments decreased 5.4%. Paper deliveries of Ariva® decreased 9% when compared to the first quarter of 2012. The shipments-to-production ratio for paper was 98% in the second quarter of 2012, compared to 100% in the first quarter of 2012. Lack-of-order downtime and machine slowdowns in papers totaled 23,000 tons. Paper inventories increased by 13,000 tons while pulp inventories increased by 15,000 metric tons as at the end of June, compared to March levels.

LIQUIDITY AND CAPITAL

Cash flow provided from operating activities amounted to $175 million and capital expenditures amounted to $76 million, resulting in free cash flow1 of $99 million for the three months ended June of 2012. Domtar's net debt-to-total capitalization ratio1 stood at 19% at June 30, 2012 compared to 12% at December 31, 2011.

OUTLOOK

Paper shipments are expected to continue to decline with market demand and due to a shift to lower basis weight papers from the conversion of Communication paper to Specialty and packaging paper grades. Pulp markets are expected to remain challenging. We anticipate cost inflation to be moderate for the balance of the year.

EARNINGS CONFERENCE CALL

The Company will hold a conference call today at 11:00 a.m. (ET) to discuss its second quarter 2012 financial results. Financial analysts are invited to participate in the call by dialing at least 10 minutes before start time 1 (866) 321-8231 (toll free - North America) or 1 (416) 642-5213 (International), while media and other interested individuals are invited to listen to the live webcast on the Domtar Corporation website at www.domtar.com.

The Company will release its third quarter 2012 earnings on October 26, 2012 before markets open, followed by a conference call at 11:00 a.m. (ET) to discuss results. The date is tentative and will be confirmed approximately three weeks prior to the official earnings release date.


About Domtar

Domtar Corporation (NYSE: UFS) (TSX: UFS) designs, manufactures, markets and distributes a wide variety of fiber-based products including communication papers, specialty and packaging papers and adult incontinence products. The foundation of its business is a network of world class wood fiber converting assets that produce papergrade, fluff and specialty pulps. The majority of its pulp production is consumed internally to manufacture paper and consumer products. Domtar is the largest integrated marketer of uncoated freesheet paper in North America with recognized brands such as Cougar®, Lynx® Opaque Ultra, Husky® Opaque Offset, First Choice® and Domtar EarthChoice®. Domtar is also a leading marketer and producer of a complete line of incontinence care products marketed primarily under the Attends® brand name. Domtar owns and operates Ariva®, an extensive network of strategically located paper and printing supplies distribution facilities. In 2011, Domtar had sales of US$5.6 billion from nearly 50 countries. The Company employs approximately 9,500 people. To learn more, visit www.domtar.com.

Forward-Looking Statements

All statements in this news release that are not based on historical fact are "forward-looking statements." While management has based any forward-looking statements contained herein on its current expectations, the information on which such expectations were based may change. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of risks, uncertainties, and other factors, many of which are outside of our control that could cause actual results to materially differ from such statements. Such risks, uncertainties, and other factors include, but are not necessarily limited to, those set forth under the captions "Forward-Looking Statements" and "Risk Factors" of the latest Form 10-K filed with the SEC as periodically updated by subsequently filed Form 10-Q's. Unless specifically required by law, we assume no obligation to update or revise these forward-looking statements to reflect new events or circumstances.

     
1  Non-GAAP financial measure. Refer to the Reconciliation of Non-GAAP Financial Measures in the appendix.

Domtar Corporation
Highlights
(In millions of dollars, unless otherwise noted)

             
      Three months
ended June 30
Three months
ended June 30
Six months
ended June 30
Six months
ended June 30
      2012 2011 2012 2011
      (Unaudited)
      $ $ $ $
             
Selected Segment Information        
             
Sales        
    Pulp and Paper 1,132 1,261   2,323   2,530
    Distribution 172 190   361   407
    Personal Care 107 -   177 -
Total for reportable segments 1,411 1,451   2,861   2,937
    Intersegment sales - Pulp and Paper (43) (48) (95) (111)
Consolidated sales   1,368 1,403   2,766   2,826
Depreciation and amortization
and impairment and write-down of property, plant and equipment  
       
    Pulp and Paper   88    94   181   186
    Distribution   2    1   3   2
    Personal Care   6 -   9 -
Total for reportable segments   96    95   193   188
    Impairment and write-down of property, plant and equipment - Pulp and Paper -    62   2   65
Consolidated depreciation and amortization
and impairment and write-down of property, plant and equipment
96    157 195   253
             
Operating income (loss)        
    Pulp and Paper 96 91 203 300
    Distribution (2) (2) (3) 1
    Personal Care 12 - 20 -
    Corporate - 6 (5) 5
Consolidated operating income 106 95 215 306
Interest expense, net 18 21 89 42
Earnings before income taxes and equity earnings 88 74 126 264
Income tax expense 27 20 35 77
Equity loss, net of taxes 2 - 4 -
Net earnings 59 54 87 187
             
Per common share (in dollars)        
  Net earnings        
    Basic 1.62 1.31 2.38 4.50
    Diluted 1.61 1.30 2.36 4.46
Weighted average number of common
and exchangeable shares outstanding (millions)
       
    Basic 36.4 41.1 36.6 41.6
    Diluted 36.6 41.4 36.8 41.9
             
Cash flows provided from operating activities 175 306 205 454
Additions to property, plant and equipment 76 20 105 33

Domtar Corporation
Consolidated Statements of Earnings
(In millions of dollars, unless otherwise noted)

           
    Three months
ended June 30
Three months
ended June 30
Six months
ended June 30
Six months
ended June 30
    2012 2011 2012 2011
    (Unaudited)
    $ $ $ $
           
Sales 1,368 1,403 2,766 2,826
Operating expenses        
  Cost of sales, excluding depreciation and amortization 1,075 1,056 2,163 2,077
  Depreciation and amortization 96 95 193 188
  Selling, general and administrative 89 88 188 178
  Impairment and write-down of property, plant and equipment - 62 2 65
  Closure and restructuring costs - 2 1 13
  Other operating loss (income), net 2 5 4 (1)
  1,262 1,308 2,551 2,520
Operating income 106 95 215 306
Interest expense, net 18 21 89 42
Earnings before income taxes and equity earnings 88 74 126 264
Income tax expense 27 20 35 77
Equity loss, net of taxes 2 - 4 -
Net earnings 59 54 87 187
         
Per common share (in dollars)        
  Net earnings        
    Basic 1.62 1.31 2.38 4.50
    Diluted 1.61 1.30 2.36 4.46
  Weighted average number of common
and exchangeable shares outstanding (millions)
       
    Basic 36.4 41.1 36.6 41.6
    Diluted 36.6 41.4 36.8 41.9

Domtar Corporation
Consolidated Balance Sheets at
(In millions of dollars)

       
    June 30 December 31
    2012 2011
    (Unaudited)
    $ $
 
Assets        
Current assets      
  Cash and cash equivalents 276 444
  Receivables, less allowances of $5 and $5 642 644
  Inventories 673 652
  Prepaid expenses 39 22
  Income and other taxes receivable 51 47
  Deferred income taxes 128 125
    Total current assets 1,809 1,934
       
  Property, plant and equipment, at cost   8,624 8,448
  Accumulated depreciation   (5,174) (4,989)
    Net property, plant and equipment 3,450 3,459
Goodwill   260 163
Intangible assets, net of amortization   346 204
Other assets   108 109
      Total assets 5,973 5,869
             
Liabilities and shareholders' equity      
Current liabilities      
  Bank indebtedness 22 7
  Trade and other payables 639 688
  Income and other taxes payable 23 17
  Long-term debt due within one year 6 4
    Total current liabilities 690 716
 
Long-term debt   950 837
Deferred income taxes and other   990 927
Other liabilities and deferred credits   395 417
 
Shareholders' equity      
  Exchangeable shares 49 49
  Additional paid-in capital 2,254 2,326
  Retained earnings 729 671
  Accumulated other comprehensive loss (84) (74)
    Total shareholders' equity 2,948 2,972
      Total liabilities and shareholders' equity 5,973 5,869

Domtar Corporation
Consolidated Statements of Cash Flows
(In millions of dollars)

     
  Six months
ended June 30
Six months
ended June 30
  2012 2011
  (Unaudited)
      $ $
     
Operating activities    
Net earnings 87 187
Adjustments to reconcile net earnings to cash flows from operating activities    
  Depreciation and amortization 193 188
  Deferred income taxes and tax uncertainties 8 30
  Impairment and write-down of property, plant and equipment 2 65
  Net gains on disposals of property, plant and equipment and sale of business - (1)
  Stock-based compensation expense 2 2
  Equity loss, net 4 -
  Other (4) 1
Changes in assets and liabilities, excluding the effects of acquisition and sale of businesses    
  Receivables 26 (61)
  Inventories 3   34
  Prepaid expenses (12) (13)
  Trade and other payables (120) (31)
  Income and other taxes  - 22
  Difference between employer pension and other post-retirement contributions
and pension and other post-retirement expense
5 12
  Other assets and other liabilities 11 19
  Cash flows provided from operating activities 205 454
 
Investing activities        
Additions to property, plant and equipment (105) (33)
Proceeds from disposals of property, plant and equipment - 28
Proceeds from sale of business - 10
Acquisition of businesses, net of cash acquired (293) -
Other (4) -
  Cash flows (used for) provided from investing activities (402) 5
 
Financing activities    
Dividend payments (26) (21)
Net change in bank indebtedness 15 2
Issuance of long-term debt 300 -
Repayment of long-term debt (188) (1)
Debt issue costs - (3)
Stock repurchase (73) (234)
Other 1 9
  Cash flows provided from (used for) financing activities 29 (248)
 
Net (decrease) increase in cash and cash equivalents (168) 211
Translation adjustments related to cash and cash equivalents - 1
Cash and cash equivalents at beginning of period 444 530
Cash and cash equivalents at end of period 276 742
     
Supplemental cash flow information    
  Net cash payments for:    
    Interest (including $47 million of tender offer premiums in 2012) 82 37
    Income taxes paid 49 25

 

Domtar Corporation
Quarterly Reconciliation of Non-GAAP Financial Measures
(In millions of dollars, unless otherwise noted)

The following table sets forth certain non-U.S. generally accepted accounting principles ("GAAP") financial metrics identified in bold as "Earnings before items", "Earnings before items per diluted share", "EBITDA", "EBITDA margin", "EBITDA before items", "EBITDA margin before items", "Free cash flow", "Net debt" and "Net debt-to-total capitalization." Management believes that the financial metrics presented are frequently used by investors and are useful to evaluate our ability to service debt and our overall credit profile. Management believes these metrics are also useful to measure the operating performance and benchmark with peers within the industry. These metrics are presented as a complement to enhance the understanding of operating results but not in substitution for GAAP results.

The Company calculates "Earnings before items" and "EBITDA before items" by excluding the after-tax (pre-tax) effect of items considered by management as not reflecting our current operations. Management uses these measures, as well as EBITDA and Free cash flow, to focus on ongoing operations and believes that it is useful to investors because it enables them to perform meaningful comparisons between periods. Domtar believes that using this information along with Net earnings provides for a more complete analysis of the results of operations. Net earnings and Cash flow provided from operating activities are the most directly comparable GAAP measures.

       
    2012   2011
    Q1 Q2 YTD   Q1 Q2 Q3 Q4 YTD
Reconciliation of "Earnings before items" to Net earnings                    
    Net earnings ($) 28 59 87   133 54 117 61 365
  (+) Impairment and write-down of property, plant and equipment ($) 1 - 1   2 38 4 9 53
  (+) Closure and restructuring costs ($) 1 - 1   8 1 1 23 33
  (-) Net losses (gains) on disposals of property, plant and equipment and sale of business ($) - -   (5) 5 (3) - (3)
  (+) Impact of purchase accounting ($) 1 - 1   - - 1 - 1
  (+) Loss on repurchase of long-term debt ($) 30 - 30   - - 3 - 3
  (=) Earnings before items ($) 61 59 120   138 98 123 93 452
  ( / ) Weighted avg. number of common and exchangeable shares outstanding (diluted) (millions) 37.0 36.6 36.8   42.4 41.4 39.7 37.4 40.2
  (=) Earnings before items per diluted share ($) 1.65 1.61 3.26   3.25 2.37 3.10 2.49 11.24
                     
Reconciliation of "EBITDA" and "EBITDA before items" to Net earnings                    
    Net earnings ($) 28 59 87   133 54 117 61 365
  (+) Equity loss, net of taxes ($) 2 2 4   - - - 7 7
  (+) Income tax expense ($) 8 27 35   57 20 45 11 133
  (+) Interest expense, net ($) 71 18 89   21 21 25 20 87
  (=) Operating income ($) 109 106 215   211 95 187 99 592
  (+) Depreciation and amortization ($) 97 96 193   93 95 93 95 376
  (+) Impairment and write-down of property, plant and equipment ($) 2 - 2   3 62 8 12 85
  (-) Net losses (gains) on disposals of property, plant and equipment and sale of business ($) - - -   (7) 6 (4) (1) (6)
  (=) EBITDA ($) 208 202 410   300 258 284 205 1,047
  (/) Sales ($) 1,398 1,368 2,766   1,423 1,403 1,417 1,369 5,612
  (=) EBITDA margin (%) 15% 15% 15%   21% 18% 20% 15% 19%
    EBITDA ($) 208 202 410   300 258 284 205 1,047
  (+) Closure and restructuring costs ($) 1 - 1   11 2 1 38 52
  (+) Impact of purchase accounting ($) 1 - 1   - - 1 - 1
  (=) EBITDA before items ($) 210 202 412   311 260 286 243 1,100
  (/) Sales ($) 1,398 1,368 2,766   1,423 1,403 1,417 1,369 5,612
  (=) EBITDA margin before items (%) 15% 15% 15%   22% 19% 20% 18% 20%
                     
Reconciliation of "Free cash flow" to Cash flow provided from operating activities                    
    Cash flow provided from operating activities ($) 30 175 205   148 306 257 172 883
  (-) Additions to property, plant and equipment ($) (29) (76) (105)   (13) (20) (31) (80) (144)
  (=) Free cash flow ($) 1 99 100   135 286 226 92 739
                     
"Net debt-to-total capitalization" computation                    
    Bank indebtedness ($) 13 22     25 25 17 7  
  (+) Long-term debt due within one year ($) 6 6     2 2 5 4  
  (+) Long-term debt ($) 952 950     825 824 837 837  
  (=) Debt ($) 971 978     852 851 859 848  
  (-) Cash and cash equivalents ($) (315) (276)     (604) (742) (461) (444)  
  (=) Net debt ($) 656 702     248 109 398 404  
  (+) Shareholders' equity ($) 3,009 2,948     3,288 3,194 2,999 2,972  
  (=) Total capitalization ($) 3,665 3,650     3,536 3,303 3,397 3,376  
    Net debt ($) 656 702     248 109 398 404  
  (/) Total capitalization ($) 3,665 3,650     3,536 3,303 3,397 3,376  
  (=) Net debt-to-total capitalization (%) 18% 19%     7% 3% 12% 12%  

"Earnings before items", "Earnings before items per diluted share", "EBITDA", "EBITDA margin", "EBITDA before items", "EBITDA margin before items", "Free cash flow", "Net debt" and "Net debt-to-total capitalization" have no standardized meaning prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies and therefore should not be considered in isolation or as a substitute for Net earnings, Operating income or any other earnings statement, cash flow statement or balance sheet financial information prepared in accordance with GAAP. It is important for readers to understand that certain items may be presented in different lines by different companies on their financial statements thereby leading to different measures for different companies.

Domtar Corporation
Quarterly Reconciliation of Non-GAAP Financial Measures - By Segment 2012
(In millions of dollars, unless otherwise noted)

The following table sets forth certain non-U.S. generally accepted accounting principles ("GAAP"), financial metrics identified in bold as "Operating income (loss) before items", "EBITDA before items" and "EBITDA margin before items" by reportable segment. Management believes that the financial metrics presented are frequently used by investors and are useful to measure the operating performance and benchmark with peers within the industry. These metrics are presented as a complement to enhance the understanding of operating results but not in substitution for GAAP results.

The Company calculates the segmented "Operating income (loss) before items" by excluding the pre-tax effect of items considered by management as not reflecting our ongoing operations. Management uses these measures to focus on ongoing operations and believes that it is useful to investors because it enables them to perform meaningful comparisons between periods. Domtar believes that using this information along with Operating income (loss) provides for a more complete analysis of the results of operations. Operating income (loss) by segment is the most directly comparable GAAP measure.

                                                         
        Pulp and Paper Distribution Personal Care (1) Corporate Total
        Q1'12 Q2'12 Q3'12 Q4'12 YTD Q1'12 Q2'12 Q3'12 Q4'12 YTD Q1'12 Q2'12 Q3'12 Q4'12 YTD Q1'12 Q2'12 Q3'12 Q4'12 YTD Q1'12 Q2'12 Q3'12 Q4'12 YTD
Reconciliation of Operating income (loss) to "Operating income (loss) before items"                                                      
    Operating income (loss) ($) 107 96 - - 203 (1) (2) - - (3) 8 12 - - 20 (5) - - - (5) 109 106 - - 215
  (+) Impairment and write-down of property, plant and equipment ($) 2 - - - 2 - - - - - - - - - - - - - - - 2 - - - 2
  (+) Closure and restructuring costs ($) 1 - - - 1 - - - - - - - - - - - - - - - 1 - - - 1
  (+) Impact of purchase accounting ($) - - - - - - - - - - 1 - - - 1 - - - - - 1 - - - 1
                                                         
  (=) Operating income (loss) before items ($) 110 96 - - 206 (1) (2) - (3) 9 12 - - 21 (5) - - (5) 113 106 - - 219
                                                         
Reconciliation of "Operating income (loss) before items"
to "EBITDA before items"
                                                       
    Operating income (loss) before items ($) 110 96 - - 206 (1) (2) - - (3) 9 12 - - 21 (5) - - (5) 113 106 - - 219
  (+) Depreciation and amortization ($) 93 88 - - 181 1 2 - - 3 3 6 - - 9 - - - - 97 96 - - 193
                                                         
  (=) EBITDA before items ($) 203 184 - - 387 - - - - - 12 18 - - 30 (5) - - (5) 210 202 - - 412
  (/) Sales ($) 1,191 1,132 - - 2,323 189 172 - - 361 70 107 - - 177 - - - 1,450 1,411 - - 2,861
  (=) EBITDA margin before items (%) 17% 16% - - 17% - - - - - 17% 17% - - 17% - - - - 14% 14% - - 14%

"Operating income (loss) before items", "EBITDA before items" and "EBITDA margin before items" have no standardized meaning prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies and therefore should not be considered in isolation or as a substitute for Operating income (loss) or any other earnings statement, cash flow statement or balance sheet financial information prepared in accordance with GAAP. It is important for readers to understand that certain items may be presented in different lines by different companies on their financial statements thereby leading to different measures for different companies.

(1) On March 1, 2012, the Company acquired 100% of the shares of Attends Healthcare Limited. 

On May 1, 2012, the Company acquired 100% of the shares of EAM Corporation. 

Domtar Corporation
Quarterly Reconciliation of Non-GAAP Financial Measures - By Segment 2011
(In millions of dollars, unless otherwise noted)

The following table sets forth certain non-U.S. generally accepted accounting principles ("GAAP"), financial metrics identified in bold as "Operating income (loss) before items", "EBITDA before items" and "EBITDA margin before items" by reportable segment. Management believes that the financial metrics presented are frequently used by investors and are useful to measure the operating performance and benchmark with peers within the industry. These metrics are presented as a complement to enhance the understanding of operating results but not in substitution for GAAP results.

The Company calculates the segmented "Operating income (loss) before items" by excluding the pre-tax effect of items considered by management as not reflecting our ongoing operations. Management uses these measures to focus on ongoing operations and believes that it is useful to investors because it enables them to perform meaningful comparisons between periods. Domtar believes that using this information along with Operating income (loss) provides for a more complete analysis of the results of operations. Operating income (loss) by segment is the most directly comparable GAAP measure.

                                                         
        Pulp and Paper Distribution Personal Care (1) Corporate Total
        Q1'11 Q2'11 Q3'11 Q4'11 YTD Q1'11 Q2'11 Q3'11 Q4'11 YTD Q1'11 Q2'11 Q3'11 Q4'11 YTD Q1'11 Q2'11 Q3'11 Q4'11 YTD Q1'11 Q2'11 Q3'11 Q4'11 YTD
Reconciliation of Operating income (loss) to "Operating income (loss) before items"                                                      
    Operating income (loss) ($) 209 91 189 92 581 3 (2) (1) - - - - - 7 7 (1) 6 (1) - 4 211 95 187 99 592
  (+) Impairment and write-down of property, plant and equipment ($) 3 62 8 12 85 - - - - - - - - - - - - - - - 3 62 8 12 85
  (+) Closure and restructuring costs ($) 11 2 1 37 51 - - - 1 1 - - - - - - - - - - 11 2 1 38 52
  (-) Net losses (gains) on disposals of property, plant and equipment and sale of business ($) (4) 12 (4) (1) 3 (3) - - - (3) - - - - - - (6) - - (6) (7) 6 (4) (1) (6)
  (+) Impact of purchase accounting ($) - - - - - - - - - - - - 1 - 1 - - - - - - - 1 - 1
                                                         
  (=) Operating income (loss) before items ($) 219 167 194 140 720 - (2) (1) 1 (2) - - 1 7 8 (1) - (1) - (2) 218 165 193 148 724
                                                         
Reconciliation of
"Operating income (loss) before items" to "EBITDA before items"
                                                   
    Operating income (loss) before items ($) 219 167 194 140 720 - (2) (1) 1 (2) - - 1 7 8 (1) - (1) - (2) 218 165 193 148 724
  (+) Depreciation and amortization ($) 92 94 91 91 368 1 1 1 1 4 - - 1 3 4 - - - - - 93 95 93 95 376
                                                         
  (=) EBITDA before items ($) 311 261 285 231 1,088 1 (1) - 2 2 - - 2 10 12 (1) - (1) - (2) 311 260 286 243 1,100
  (/) Sales ($) 1,269 1,261 1,246 1,177 4,953 217 190 197 177 781 - - 17 54 71 - - - - - 1,486 1,451 1,460 1,408 5,805
  (=) EBITDA margin before items (%) 25% 21% 23% 20% 22% - - - 1% - - - 12% 19% 17% - - - - - 21% 18% 20% 17% 19%

"Operating income (loss) before items", "EBITDA before items" and "EBITDA margin before items" have no standardized meaning prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies and therefore should not be considered in isolation or as a substitute for Operating income (loss) or any other earnings statement, cash flow statement or balance sheet financial information prepared in accordance with GAAP. It is important for readers to understand that certain items may be presented in different lines by different companies on their financial statements thereby leading to different measures for different companies.

(1) On September 1, 2011, the Company acquired 100% of the shares of Attends Healthcare Inc. 

Domtar Corporation
Supplemental Segmented Information
(In millions of dollars, unless otherwise noted)

                             
            2012   2011
            Q1 Q2 YTD   Q1 Q2 Q3 Q4 YTD
Pulp and Paper Segment                    
  Sales ($) 1,191 1,132 2,323   1,269 1,261 1,246 1,177 4,953
    Intersegment sales - Pulp and Paper ($) (52) (43) (95)   (63) (48) (43) (39) (193)
  Operating income ($) 107 96 203   209 91 189 92 581
  Depreciation and amortization ($) 93 88 181   92 94 91 91 368
  Impairment and write-down of property, plant and equipment ($) 2 - 2   3 62 8 12 85
                           
  Papers                    
  Papers Production ('000 ST) 870 832 1,702   899 890 875 871 3,535
  Papers Shipments ('000 ST) 870 819 1,689   913 901 889 831 3,534
      Communication Papers ('000 ST) 756 705 1,461   816 794 784 729 3,123
      Specialty and Packaging ('000 ST) 114 114 228   97 107 105 102 411
                           
  Pulp                    
  Pulp Shipments(a) ('000 ADMT) 389 368 757   375 361 358 403 1,497
      Hardwood Kraft Pulp (%) 15% 16% 19%   20% 19% 18% 19% 19%
      Softwood Kraft Pulp (%) 61% 57% 57%   55% 54% 57% 58% 57%
      Fluff Pulp (%) 24% 27% 24%   25% 27% 25% 23% 24%
                           
Distribution Segment                    
  Sales ($) 189 172 361   217 190 197 177 781
  Operating income (loss) ($) (1) (2) (3)   3 (2) (1) - -
  Depreciation and amortization ($) 1 2 3   1 1 1 1 4
                           
Personal Care Segment                    
  Sales ($) 70 107 177   - - 17 54 71
  Operating income ($) 8 12 20   - - - 7 7
  Depreciation and amortization ($) 3 6 9   - - 1 3 4
                       
                       
Average Exchange Rates $US / $CAN 1.001 1.010 1.006   0.986 0.968 0.980 1.023 0.989
        $CAN / $US 0.999 0.990 0.994   1.014 1.034 1.021 0.977 1.011
        €EUR / $US 1.312 1.283 1.297   - - - - -

(a) Figures are gross of market pulp purchased from other producers on the open market for some of our paper making operations. Pulp Shipments represent the amount of pulp produced in excess of our internal requirement.
   
  Note: the term "ST" refers to a short ton and the term "ADMT" refers to an air dry metric ton.

 

SOURCE DOMTAR CORPORATION



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