Domtar Corporation reports preliminary second quarter 2013 financial results

Earnings affected by higher planned maintenance costs and lower productivity in pulp
(All financial information is in U.S. dollars, and all earnings per share results are diluted, unless otherwise noted.)

  • Second quarter 2013 net loss of $1.38 per share, earnings before items1 of $0.48 per share
  • EBITDA before items1 of $135 million in the second quarter
  • Share buyback totaled $100 million in the second quarter of 2013
  • Completed the acquisition of AHP, the leading manufacturer of store brand baby diapers in the United States, on July 1st, 2013

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

MONTREAL, July 25, 2013 /PRNewswire/ - Domtar Corporation (NYSE: UFS) (TSX: UFS) today reported a net loss of $46 million ($1.38 per share) for the second quarter of 2013 compared to net earnings of $45 million ($1.29 per share) for the first quarter of 2013 and net earnings of $59 million ($1.61 per share) for the second quarter of 2012. Sales for the second quarter of 2013 amounted to $1,312 million.

Excluding items listed below, the Company had earnings before items1 of $16 million ($0.48 per share) for the second quarter of 2013 compared to earnings before items1 of $33 million ($0.95 per share) for the first quarter of 2013.

Second quarter 2013 items:

  • Litigation settlement of $49 million ( $46 million after tax);

  • Closure and restructuring charges of $18 million ($13 million after tax); and

  • Charge of $5 million ($3 million after tax) related to the impairment and write-down of property, plant and equipment.

First quarter 2013 items:

  • Conversion of $26 million ($18 million after tax) of alternative fuel tax credits into cellulosic biofuel producer income tax credits of $55 million ($33 million after tax) resulting in a net gain after tax of $15 million;

  • Charge of $10 million ($7 million after tax) related to the impairment and write-down of property, plant and equipment;

  • Gain on the sale of property, plant and equipment of $10 million ($6 million after tax); and

  • Premium paid and costs related to the debt repurchase of $3 million ($2 million after tax), included in interest expense.

"Our productivity improved in our paper business in the second quarter when compared to the first quarter," said John D. Williams, President and Chief Executive Officer. "In pulp however, we had the busiest maintenance quarter on record with 10 of our 12 pulp mills taking shutdowns. Operational challenges during the start-up phase affected our costs but our mills are now running well and we are confident that those issues are behind us."

On Personal Care, John D. Williams added, "I am pleased with the acquisition of AHP. This will give us stronger access to the retail market for our adult incontinence products and synergies to the bottom line. Raw material costs had a negative impact on the segment's profitability in the quarter, but the business remains well on track."

QUARTERLY REVIEW

Operating income before items1 was $42 million in the second quarter of 2013 compared to an operating income before items1 of $75 million in the first quarter of 2013. Depreciation and amortization totaled $93 million in the second quarter of 2013.

(In millions of dollars)   2Q 2013   1Q 2013
Sales   $1,312   $1,345
Operating income (loss)        
  Pulp and Paper segment   24   39
  Distribution segment   (8)   (1)
  Personal Care segment   10   13
  Corporate   (56)   (2)
  Total   (30)   49
Operating income before items1   42   75
Depreciation and amortization   93   95

The decrease in operating income before items1 in the second quarter of 2013 was the result of higher costs for planned maintenance shutdowns, lower productivity for pulp, lower volumes for pulp and for paper, higher freight costs and higher selling, general and administrative expenses. These factors were partially offset by higher average selling prices for pulp and overall favorable exchange rates.

When compared to the first quarter of 2013, paper shipments declined 3.3% and pulp shipments declined 7.5%. The shipments-to-production ratio for paper was 96% in the second quarter of 2013, compared to 104% in the first quarter of 2013. Paper inventories increased by 37,000 tons while pulp inventories declined by 26,000 metric tons at the end of June, compared to March levels.

LIQUIDITY AND CAPITAL

Cash flow provided from operating activities amounted to $183 million and capital expenditures amounted to $118 million, resulting in free cash flow1 of $65 million for the first six months of 2013. Domtar's net debt-to-total capitalization ratio1 stood at 20% at June 30, 2013 compared to 16% at December 31, 2012.

Domtar returned a total of $178 million to its shareholders through a combination of dividend and share buybacks in the first six months of 2013. Under its stock repurchase program, Domtar repurchased a total of 1,370,676 shares of common stock at an average price of $72.87 in the second quarter of 2013, and a total of 10,637,179 shares of common stock at an average price of $78.97 since the implementation of the program in May 2010. At the end of the second quarter of 2013, Domtar had $158 million remaining under the current authorization.

OUTLOOK

Earnings from pulp are expected to benefit from lower planned maintenance costs, higher productivity and higher sales volumes. The completion of the AHP acquisition on July 1st will be accretive to the Personal Care segment's earnings in the third quarter. Input costs are expected to stay relatively stable for the second half of 2013.

EARNINGS CONFERENCE CALL

The Company will hold a conference call today at 10:00 a.m. (ET) to discuss its second quarter 2013 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.

A replay will be available by dialing 1 (888) 203-1112 (North America) or 1 (647) 436-0148 (International) using access code 5591030 until August 8, 2013.

______________________________________

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 absorbent hygiene 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 as well as baby diapers. Domtar owns and operates Ariva®, a network of strategically located paper and printing supplies distribution facilities. In 2012, Domtar had sales of US$5.5 billion from some 50 countries. The Company employs approximately 9,900 people. To learn more, visit www.domtar.com.

Forward-Looking Statements
All statements in this news release that are not based on historical fact, including the statements contained under "Outlook", 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
  2013 2012 2013 2012
    (Unaudited)  
   $  $  $ $
         
Selected Segment Information        
Sales         
    Pulp and Paper 1,097 1,132 2,220 2,323
    Distribution 153 172 315 361
    Personal Care 108 107 219
177
Total for reportable segments 1,358 1,411 2,754 2,861
    Intersegment sales - Pulp and Paper (46) (43) (97) (95)
Consolidated sales 1,312 1,368 2,657 2,766
Depreciation and amortization and impairment and write-down of property, plant and equipment        
    Pulp and Paper 87 88 175 181
    Distribution - 2 1 3
    Personal Care 6 6 12 9
Total for reportable segments 93 96 188 193
    Impairment and write-down of property, plant and equipment - Pulp and Paper - - 10 2
    Impairment and write-down of property, plant and equipment - Distribution 5 - 5 -
Consolidated depreciation and amortization and impairment and write-down of property, plant and equipment 98 96 203 195
          
Operating income (loss)         
    Pulp and Paper 24 96 63 203
    Distribution (8) (2) (9) (3)
    Personal Care 10 12 23 20
    Corporate (56) - (58) (5)
Consolidated operating (loss) income  (30) 106 19 215
Interest expense, net 21 18 46 89
(Loss) earnings before income taxes and equity loss (51) 88 (27) 126
Income tax (benefit) expense  (5) 27 (27) 35
Equity loss, net of taxes - 1 4
Net (loss) earnings  (46) 59  (1) 87
         
Per common share (in dollars)        
  Net (loss) earnings        
    Basic (1.38) 1.62 (0.03) 2.38
    Diluted (1.38) 1.61 (0.03) 2.36
Weighted average number of common and exchangeable shares outstanding (millions)        
    Basic 33.4 36.4 34.1 36.6
    Diluted 33.4 36.6 34.1 36.8
         
Cash flows provided from operating activities  120 175 183 205
Additions to property, plant and equipment 62 76 118 105

 

Domtar Corporation         
Consolidated Statements of (Loss) 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
   2013 2012 2013 2012
     (Unaudited)  
   $ $ $ $
          
Sales    1,312  1,368  2,657   2,766
Operating expenses        
    Cost of sales, excluding depreciation and amortization   1,082   1,075   2,164   2,163
    Depreciation and amortization   93   96   188   193
    Selling, general and administrative   95   89   186   188
    Impairment and write-down of property, plant and equipment 5 -   15  2
    Closure and restructuring costs 18 - 18 1
    Other operating loss, net 49  2 67 4
  1,342 1,262 2,638 2,551
Operating (loss) income (30) 106 19 215
Interest expense, net 21 18 46 89
(Loss) earnings before income taxes and equity loss (51) 88 (27) 126
Income tax (benefit) expense (5) 27 (27) 35
Equity loss, net of taxes - 2 1 4
Net (loss) earnings (46) 59 (1) 87
          
Per common share (in dollars)        
   Net (loss) earnings        
    Basic (1.38) 1.62 (0.03) 2.38
    Diluted (1.38) 1.61 (0.03) 2.36
Weighted average number of common and exchangeable shares outstanding (millions)        
    Basic 33.4 36.4 34.1 36.6
    Diluted 33.4 36.6 34.1 36.8


Domtar Corporation     
Consolidated Balance Sheets at     
(In millions of dollars)     
      
   June 30 December 31
  2013 2012
   (Unaudited)
   $ $
Assets      
Current assets     
  Cash and cash equivalents 432 661
  Receivables, less allowances of $5 and $4 586 562
  Inventories 678 675
  Prepaid expenses 34 24
  Income and other taxes receivable 56 48
  Deferred income taxes 49 45
    Total current assets 1,835 2,015
      
Property, plant and equipment, at cost  8,710 8,793
Accumulated depreciation (5,454) (5,392)
    Net property, plant and equipment 3,256 3,401
Goodwill 262 263
Intangible assets, net of amortization  310 309
Other assets 138 135
      Total assets 5,801 6,123
 
Liabilities and shareholders' equity     
Current liabilities     
  Bank indebtedness 2 18
  Trade and other payables 683 646
  Income and other taxes payable   19 15
  Long-term debt due within one year 7 79
    Total current liabilities 711 758
 
Long-term debt 1,102 1,128
Deferred income taxes and other 904 903
Other liabilities and deferred credits    432   457
 
Shareholders' equity     
    Exchangeable shares   46   48
    Additional paid-in capital   2,033   2,175
    Retained earnings   747   782
    Accumulated other comprehensive loss (174) (128)
      Total shareholders' equity   2,652   2,877
        Total liabilities and shareholders' equity   5,801   6,123


Domtar Corporation    
Consolidated Statements of Cash Flows    
(In millions of dollars)    
     
  Six months
ended June 30
Six months
ended June 30
  2013 2012
  (Unaudited)
  $ $
     
Operating activities    
Net (loss) earnings (1)  87
Adjustments to reconcile net (loss) earnings to cash flows from operating activities    
  Depreciation and amortization 188 193
  Deferred income taxes and tax uncertainties - 8
  Impairment and write-down of property, plant and equipment 15 2
  Net gains on disposals of property, plant and equipment (10) -
  Stock-based compensation expense 3 2
  Equity loss, net 1 4
  Other (2) (4)
Changes in assets and liabilities, excluding the effects of acquisition of businesses    
  Receivables (30) 26
  Inventories (10) 3
  Prepaid expenses (7)
(12)
  Trade and other payables   19 (120)
  Income and other taxes  (9) -
  Difference between employer pension and other post-retirement contributions and pension and other post-retirement expense 26 5
  Other assets and other liabilities - 11
  Cash flows provided from operating activities   183   205
 
Investing activities    
Additions to property, plant and equipment (118) (105)
Proceeds from disposals of property, plant and equipment 10 -
Acquisition of businesses, net of cash acquired (11) (293)
Investment in joint venture (1) (4)
  Cash flows used for investing activities (120) (402)
 
Financing activities    
Dividend payments (31) (26)
Net change in bank indebtedness (17)   15
Issuance of long-term debt -   299
Repayment of long-term debt (97) (188)
Stock repurchase (147) (73)
Other   1   2
  Cash flows (used for) provided from financing activities (291)   29
 
Net decrease in cash and cash equivalents (228) (168)
Impact of foreign exchange on cash (1) -
Cash and cash equivalents at beginning of period 661 444
Cash and cash equivalents at end of period 432 276
       
Supplemental cash flow information    
  Net cash payments for:    
    Interest (including $2 million and $47 million of tender offer premiums in 2013 and 2012, respectively) 27 82
    Income taxes (refund) paid (9) 49



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.

                       
        2013 2012
        Q1 Q2 YTD Q1 Q2 Q3 Q4 YTD
Reconciliation of "Earnings before items" to Net earnings (loss)                  
    Net earnings (loss) ($) 45 (46) (1) 28 59 66 19 172
  (+) Impairment and write-down of property, plant and equipment and intangible assets ($) 7 3 10 1 - - 8 9
  (+) Closure and restructuring costs ($) - 13 13 1 - 1 18 20
  (-) Net (gains) losses on disposals of property, plant and equipment ($) (6) - (6) - - - 1 1
  (+) Impact of purchase accounting ($) - - - 1 - - - 1
  (+) Reversal of alternative fuel tax credits ($) 18 - 18 - - - - -
  (-) Cellulosic biofuel producer credits ($) (33) - (33) - - - - -
  (+) Loss on repurchase of long-term debt ($) 2 - 2 30 - - - 30
  (+) Weston litigation settlement ($) - 46 46 - - - - -
  (=) Earnings before items ($) 33 16 49 61 59 67 46 233
  (/) Weighted avg. number of common and exchangeable shares outstanding (diluted) (millions) 34.9 33.4 34.1 37.0 36.6 35.8 35.2 36.1
  (=) Earnings before items per diluted share ($) 0.95 0.48 1.44 1.65 1.61 1.87 1.31 6.45
                       
Reconciliation of "EBITDA" and "EBITDA before items" to Net earnings (loss)                  
    Net earnings (loss) ($) 45 (46) (1) 28 59 66 19 172
  (+) Equity loss, net of taxes ($) 1 - 1 2 2 1 1 6
  (+) Income tax (benefit) expense  ($) (22) (5) (27) 8 27 22 1 58
  (+) Interest expense, net ($) 25 21 46 71 18 20 22 131
  (=) Operating income (loss) ($) 49 (30) 19 109 106 109 43 367
  (+) Depreciation and amortization ($) 95 93 188 97 96 96 96 385
  (+) Impairment and write-down of property, plant and equipment and intangible assets ($) 10 5 15 2 - - 12 14
  (-) Net (gains) losses on disposals of property, plant and equipment ($) (10) - (10) - - - 2 2
  (=) EBITDA ($) 144 68 212 208 202 205 153 768
  (/) Sales ($) 1,345 1,312 2,657 1,398 1,368 1,389 1,327 5,482
  (=) EBITDA margin (%) 11% 5% 8% 15% 15% 15% 12% 14%
    EBITDA ($) 144 68 212 208 202 205 153 768
  (+) Reversal of alternative fuel tax credits ($) 26 - 26 - - - - -
  (+) Closure and restructuring costs ($) - 18 18 1 - 2 27 30
  (+) Impact of purchase accounting  ($) - - - 1 - - - 1
  (+) Weston litigation settlement ($) - 49 49 - - - - -
  (=) EBITDA before items ($) 170 135 305 210 202 207 180 799
  (/) Sales ($) 1,345 1,312 2,657 1,398 1,368 1,389 1,327 5,482
  (=) EBITDA margin before items (%) 13% 10% 11% 15% 15% 15% 14% 15%
                       
Reconciliation of "Free cash flow" to Cash flow provided from operating activities                  
    Cash flow provided from operating activities ($) 63 120 183 30 175 206 140 551
  (-) Additions to property, plant and equipment ($) (56) (62) (118) (29) (76) (66) (65) (236)
  (=) Free cash flow ($) 7 58 65 1 99 140 75 315
                       
"Net debt-to-total capitalization" computation                  
    Bank indebtedness ($) 13 2   13 22 15 18  
  (+) Long-term debt due within one year ($) 8 7   6 6 7 79  
  (+) Long-term debt ($) 1,104 1,102   952 950 1,196 1,128  
  (=) Debt ($) 1,125 1,111   971 978 1,218 1,225  
  (-) Cash and cash equivalents ($) (513) (432)   (315) (276) (593) (661)  
  (=) Net debt ($) 612 679   656 702 625 564  
  (+) Shareholders' equity ($) 2,842 2,652   3,009 2,948 3,004 2,877  
  (=) Total capitalization ($) 3,454 3,331   3,665 3,650 3,629 3,441  
    Net debt ($) 612 679   656 702 625 564  
  (/) Total capitalization ($) 3,454 3,331   3,665 3,650 3,629 3,441  
  (=) Net debt-to-total capitalization (%) 18% 20%   18% 19% 17% 16%  

 

"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 2013
(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 (1) Distribution Personal Care  Corporate Total
        Q1'13 Q2'13 Q3'13 Q4'13 YTD Q1'13 Q2'13 Q3'13 Q4'13 YTD Q1'13 Q2'13 Q3'13 Q4'13 YTD Q1'13 Q2'13 Q3'13 Q4'13 YTD Q1'13 Q2'13 Q3'13 Q4'13 YTD
Reconciliation of Operating income (loss) to "Operating income (loss) before items"                                                    
    Operating income (loss) ($) 39 24 - - 63 (1) (8) - - (9) 13 10 - - 23 (2) (56) - - (58) 49 (30) - - 19
  (+) Impairment and write-down of property, plant and equipment ($) 10 - - - 10 - 5 - - 5 - - - - - - - - - - 10 5 - - 15
  (-) Net gain on disposal of property, plant and equipment ($) (10) - - - (10) - - - - - - - - - - - - - - - (10) - - - (10)
  (+) Reversal of alternative fuel tax credits ($) 26 - - - 26 - - - - - - - - - - - - - - - 26 - - - 26
  (+) Weston litigation settlement ($) - - - - - - - - - - - - - - - - 49 - - 49 - 49 - - 49
  (+) Closure and restructuring costs ($) - 10 - - 10 - - - - - - 2 - - 2 - 6 - - 6 - 18 - - 18
  (=) Operating income (loss) before items ($) 65 34 - - 99 (1) (3) - - (4) 13 12 - - 25 (2) (1) - - (3) 75 42 - - 117
                                                         
Reconciliation of "Operating income (loss) before items" to "EBITDA before items"                                                    
    Operating income (loss) before items ($) 65 34 - - 99 (1) (3) - - (4) 13 12 - - 25 (2) (1) - - (3) 75 42 - - 117
  (+) Depreciation and amortization ($) 88 87 - - 175 1 - - - 1 6 6 - - 12 - - - - - 95 93 - - 188
                                                         
  (=) EBITDA before items ($) 153 121 - - 274 - (3) - - (3) 19 18 - - 37 (2) (1) - - (3) 170 135 - - 305
  (/) Sales ($) 1,123 1,097 - - 2,220 162 153 - - 315 111 108 - - 219 - - - - - 1,396 1,358 - - 2,754
  (=) EBITDA margin before items (%) 14% 11% - - 12% - - - - - 17% 17% - - 17% - - - - - 12% 10% - - 11%


"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 May 31, 2013, the Company acquired Xerox's paper print and media product's assets in the United States and Canada.



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) ($) 107 96 103 40 346 (1) (2) (5) (8) (16) 8 12 12 13 45 (5) - (1) (2) (8) 109 106 109 43 367
  (+) Impairment and write-down of property, plant and equipment and intangible assets ($) 2 - - 7 9 - - - 5 5 - - - - - - - - - - 2 - - 12 14
  (+) Closure and restructuring costs ($) 1 - - 26 27 - - 1 1 2 - - 1 - 1 - - - - - 1 - 2 27 30
  (-) Net losses on disposals of property, plant and equipment ($) - - - 2 2 - - - - - - - - - - - - - - - - - - 2 2
  (+) Impact of purchase accounting ($) - - - - - - - - - - 1 - - - 1 - - - - - 1 - - - 1
                                                         
  (=) Operating income (loss) before items ($) 110 96 103 75 384 (1) (2) (4) (2) (9) 9 12 13 13 47 (5) - (1) (2) (8) 113 106 111 84 414
                                                         
Reconciliation of "Operating income (loss) before items" to "EBITDA before items"                                                    
    Operating income (loss) before items ($) 110 96 103 75 384 (1) (2) (4) (2) (9) 9 12 13 13 47 (5) - (1) (2) (8) 113 106 111 84 414
  (+) Depreciation and amortization ($) 93 88 90 90 361 1 2 - 1 4 3 6 6 5 20 - - - - - 97 96 96 96 385
                                                         
  (=) EBITDA before items ($) 203 184 193 165 745 - - (4) (1) (5) 12 18 19 18 67 (5) - (1) (2) (8) 210 202 207 180 799
  (/) Sales ($) 1,191 1,132 1,153 1,099 4,575 189 172 167 157 685 70 107 111 111 399 - - - - - 1,450 1,411 1,431 1,367 5,659
  (=) EBITDA margin before items (%) 17% 16% 17% 15% 16% - - - - - 17% 17% 17% 16% 17% - - - - - 14% 14% 14% 13% 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                  
Supplemental Segmented Information                  
(In millions of dollars, unless otherwise noted)                  
                       
        2013 2012
        Q1 Q2 YTD Q1 Q2 Q3 Q4 YTD
Pulp and Paper Segment                  
  Sales ($) 1,123 1,097 2,220 1,191 1,132 1,153 1,099 4,575
    Intersegment sales - Pulp and Paper ($) (51) (46) (97) (52) (43) (42) (40) (177)
  Operating income ($) 39 24 63 107 96 103 40 346
  Depreciation and amortization ($) 88 87 175 93 88 90 90 361
  Impairment and write-down of property, plant and equipment ($) 10 - 10 2 - - 7 9
                       
  Papers                  
  Papers Production ('000 ST) 795 837 1,632 870 832 788 831 3,321
  Papers Shipments ('000 ST) 828 801 1,629 870 819 826 805 3,320
    Communication Papers ('000 ST) 706 676 1,382 756 705 709 684 2,854
    Specialty and Packaging ('000 ST) 122 125 247 114 114 117 121 466
                       
  Pulp                  
  Pulp Shipments(a) ('000 ADMT) 372 344 716 389 368 415 385 1,557
    Hardwood Kraft Pulp (%) 17% 14% 16% 15% 16% 20% 19% 18%
    Softwood Kraft Pulp (%) 56% 57% 57% 61% 57% 55% 56% 57%
    Fluff Pulp (%) 27% 29% 28% 24% 27% 25% 25% 25%
                       
Distribution Segment                  
  Sales ($) 162 153 315 189 172 167 157 685
  Operating loss ($) (1) (8) (9) (1) (2) (5) (8) (16)
  Depreciation and amortization ($) 1 - 1 1 2 - 1 4
  Impairment and write-down of intangible assets ($) - - - - - - 5 5
  Impairement and write-down of property, plant and equipment ($) - 5 5 - - - - -
                       
Personal Care Segment                  
  Sales ($) 111 108 219 70 107 111 111 399
  Operating income ($) 13 10 23 8 12 12 13 45
  Depreciation and amortization ($) 6 6 12 3 6 6 5 20
                       
                       
Average Exchange Rates $US / $CAN 1.009 1.023 1.016 1.001 1.010 0.995 0.991 0.999
      $CAN / $US 0.991 0.977 0.984 0.999 0.990 1.006 1.009 1.001
      €EUR / $US 1.320 1.306 1.319 1.312 1.283 1.252 1.298 1.286

(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

Image with caption: "AHP manufacturing facility, Delaware, Ohio (CNW Group/Domtar Corporation)". Image available at: http://photos.newswire.ca/images/download/20130725_C8921_PHOTO_EN_29258.jpg

Image with caption: "John D. Williams, President and CEO, Domtar Corporation (CNW Group/Domtar Corporation)". Image available at: http://photos.newswire.ca/images/download/20130725_C8921_PHOTO_EN_29262.jpg

Image with caption: "Domtar pulp bales (CNW Group/Domtar Corporation)". Image available at: http://photos.newswire.ca/images/download/20130725_C8921_PHOTO_EN_29260.jpg



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