2014

Domtar Corporation reports preliminary third quarter 2013 financial results

Third quarter highlighted by improved pulp productivity and continued growth in personal care earnings
(All financial information is in U.S. dollars, and all earnings per share results are diluted, unless otherwise noted.)

  • Third quarter 2013 net earnings of $0.82 per share, earnings before items1 of $1.25 per share
  • Closed the sale of the Ariva U.S. business
  • Price increases announced for several uncoated freesheet paper grades

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

MONTREAL, Oct. 24, 2013 /PRNewswire/ - Domtar Corporation (NYSE: UFS) (TSX: UFS) today reported net earnings of $27 million ($0.82 per share) for the third quarter of 2013 compared to a net loss of $46 million ($1.38 per share) for the second quarter of 2013 and net earnings of $66 million ($1.84 per share) for the third quarter of 2012. Sales for the third quarter of 2013 were $1,375 million.

Excluding items listed below, the Company had earnings before items1 of $41 million ($1.25 per share) for the third quarter of 2013 compared to earnings before items1 of $16 million ($0.48 per share) for the second quarter of 2013 and earnings before items1 of $67 million ($1.87 per share) for the third quarter of 2012.

Third quarter 2013 items:

  • Loss on sale of business of $19 million ($12 million after tax); and
  • Negative impact of purchase accounting of $2 million ($2 million after tax).

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.

Third quarter 2012 items:

  • Closure and restructuring costs of $2 million ($1 million after tax).

Our third quarter results were driven by improved productivity in our pulp business and continued growth in our personal care business," said John D. Williams, President and Chief Executive Officer. "Pulp and paper plays a vital role as the cash-generation platform in our journey to expand into higher-growth opportunities, and we are focused on running the business as efficiently as possible to ensure that we continue to extract maximum value from our assets.  During the quarter, we finished the reconfiguration of our Kamloops pulp mill following the closure of a pulp line and a recovery boiler, and we continue to look for opportunities to further improve our output.  Additionally, closing the sale of the Ariva U.S. business marked further progress in our transformation as we work to drive enhanced value for our shareholders.

Mr. Williams added, "Our personal care business continues its earnings progression with the ongoing integration of the recent AHP acquisition. While third quarter results were negatively impacted by an inventory adjustment at a large retail customer, we are enthusiastic about the long-term prospects for personal care and remain on track to deliver more than $200 million of EBITDA by 2017 with our existing platform."

QUARTERLY REVIEW

Operating income before items1 was $70 million in the third quarter of 2013 compared to an operating income before items1 of $42 million in the second quarter of 2013. Depreciation and amortization totaled $93 million in the third quarter of 2013.

(In millions of dollars)   3Q 2013   2Q 2013
         
Sales   $1,375   $1,312
         
Operating income (loss)        
         
  Pulp and Paper segment   42   16
         
  Personal Care segment   11   10
         
  Corporate   (4)   (56)
         
  Total   49   (30)
         
Operating income before items1   70   42
         
Depreciation and amortization   93   93

The increase in operating income before items1 in the third quarter of 2013 was the result of lower costs for maintenance, higher productivity in pulp, the inclusion of Associated Hygienic Products since July 1 and the exclusion of Ariva U.S. since July 31st, lower raw material costs, higher average selling prices for pulp and favorable exchange rates. These factors were partially offset by higher fixed costs and lower average selling prices for paper.

When compared to the second quarter of 2013, paper shipments increased 1.6% and pulp shipments increased 2.3%. The shipments-to-production ratio for paper was 98% in the third quarter of 2013, compared to 96% in the second quarter of 2013. Lack-of-order downtime and machine slowdowns in pulp and paper totaled 18,000 short tons in the third quarter of 2013. Paper inventories increased by 5,000 tons while pulp inventories increased by 3,000 metric tons at the end of September, compared to June levels.

On July 31st, Domtar sold the Ariva U.S. business and the results of the former Distribution segment have been reclassified under the Pulp and Paper segment.

LIQUIDITY AND CAPITAL

Cash flow provided from operating activities amounted to $287 million and capital expenditures were $180 million, resulting in free cash flow1 of $107 million for the first nine months of 2013. Domtar's net debt-to-total capitalization ratio1 stood at 26% at September 30, 2013 compared to 16% at December 31, 2012.

Domtar returned a total of $233 million to its shareholders through a combination of dividends and share buybacks in the first nine months of 2013. Under its stock repurchase program, Domtar repurchased a total of 533,327 shares of common stock at an average price of $68.85 in the third quarter of 2013, and a total of 11,170,506 shares of common stock at an average price of $78.48 since the implementation of the program in May 2010. At the end of the third quarter of 2013, Domtar had $121 million remaining under this program.

OUTLOOK

Our pulp business should benefit from accelerating momentum in global demand, notably in China. The recently announced price increases for several paper grades are expected to positively impact results towards the end of the quarter. We expect higher input costs due to higher usage in the winter months and we should see lower paper sales volumes in the fourth quarter due to seasonality. Looking out to 2014, we should continue to benefit from the recently announced paper price increases and our personal care business will continue to see earnings growth.

EARNINGS CONFERENCE CALL

The Company will hold a conference call today at 10:00 a.m. (ET) to discuss its third quarter 2013 financial results. Financial analysts are invited to participate in the call by dialing 1 (866) 321-8231 (toll free - North America) or 1 (416) 642-5213 (International) at least 10 minutes before start time, 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 5674179 until November 7, 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 broad line of incontinence care products marketed primarily under the Attends® brand name as well as baby diapers. In 2012, Domtar had sales of US$5.5 billion from some 50 countries. The Company employs approximately 9,500 people. To learn more, visit www.domtar.com.

Forward-Looking Statements
Statements in this release about our plans, expectations and future performance, including the statements by Mr. Williams and those contained under "Outlook," are "forward-looking statements." Actual results may differ materially from those suggested by these statements for a number of reasons, including changes in customer demand and pricing, changes in manufacturing costs, future acquisitions and divestitures, including facility closings, and the other reasons identified under "Risk Factors" in our Form 10-K for 2012 as filed with the SEC and as updated by subsequently filed Form 10-Q's. Except to the extent required by law, we expressly disclaim any obligation to update or revise these forward-looking statements to reflect new events or circumstances or otherwise.

________________________________
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 September 30 Three months ended September 30 Nine months ended September 30 Nine months ended September 30
  2013 2012 2013 2012
  (Unaudited)
         
  $ $ $ $
         
Selected Segment Information        
         
Sales        
    Pulp and Paper 1,204 1,280 3,650 3,870
    Personal Care 175 111 394  288
Total for reportable segments 1,379 1,391  4,044 4,158
    Intersegment sales - Pulp and Paper (4) (2) (12) (3)
Consolidated sales  1,375 1,389  4,032 4,155
Depreciation and amortization and impairment and write-down of property, plant and equipment        
    Pulp and Paper 84 90 260 274
    Personal Care 9  6 21 15
Total for reportable segments 93  96 281 289
    Impairment and write-down of property, plant and equipment - Pulp and Paper - - 15 2
Consolidated depreciation and amortization and impairment and write-down of property, plant and equipment 93 96 296 291
           
Operating income (loss)        
    Pulp and Paper 42 98 96 298
    Personal Care 11 12 34 32
    Corporate (4) (1) (62) (6)
Consolidated operating income 49 109 68 324
Interest expense, net 21 20 67 109
Earnings before income taxes and equity loss 28 89 1 215
Income tax expense (benefit) 1 22 (26) 57
Equity loss, net of taxes - 1 1 5
Net earnings 27 66 26 153
         
Per common share (in dollars)        
  Net earnings        
    Basic 0.83 1.85 0.77 4.21
    Diluted 0.82 1.84 0.77 4.20
Weighted average number of common and exchangeable shares outstanding (millions)          
    Basic 32.7 35.7 33.6 36.3
    Diluted 32.8 35.8 33.7 36.4
         
Cash flows provided from operating activities 104 206 287 411
Additions to property, plant and equipment 62 66 180 171


Domtar Corporation        
Consolidated Statements of Earnings        
(In millions of dollars, unless otherwise noted)        
         
         
  Three months
ended September 30
Three months
ended September 30
Nine months
ended September 30
Nine months
ended September 30
  2013 2012 2013 2012
  (Unaudited)
         
  $ $ $ $
         
Sales 1,375 1,389 4,032 4,155
Operating expenses        
    Cost of sales, excluding depreciation and amortization 1,116 1,100 3,280 3,263
    Depreciation and amortization 93 96 281 289
    Selling, general and administrative 95 80 281 268
    Impairment and write-down of property, plant and equipment - - 15  2
    Closure and restructuring costs - 2 18 3
    Other operating loss, net 22 2 89 6
  1,326 1,280 3,964 3,831
Operating income 49 109 68 324
Interest expense, net 21 20 67 109
Earnings before income taxes and equity loss 28 89 1 215
Income tax expense (benefit) 1 22 (26) 57
Equity loss, net of taxes - 1 1 5
Net earnings 27 66 26 153
         
Per common share (in dollars)        
         
  Net earnings        
    Basic 0.83 1.85 0.77 4.21
    Diluted 0.82 1.84 0.77 4.20
Weighted average number of common and exchangeable shares outstanding (millions)        
    Basic 32.7 35.7 33.6 36.3
    Diluted 32.8 35.8 33.7 36.4


Domtar Corporation    
Consolidated Balance Sheets at    
(In millions of dollars)    
     
  September 30 December 31
  2013 2012
  (Unaudited)
     
  $ $
Assets    
Current assets    
  Cash and cash equivalents 191 661
  Receivables, less allowances of $4 and $4 583 562
  Inventories 703 675
  Prepaid expenses 31 24
  Income and other taxes receivable 48 48
  Deferred income taxes 58 45
    Total current assets 1,614 2,015
     
  Property, plant and equipment, at cost 8,928 8,793
  Accumulated depreciation (5,576) (5,392)
    Net property, plant and equipment 3,352   3,401
Goodwill 367 263
Intangible assets, net of amortization 409 309
Other assets 143 135
      Total assets 5,885 6,123
     
Liabilities and shareholders' equity    
Current liabilities    
  Bank indebtedness 6 18
  Trade and other payables 693 646
  Income and other taxes payable 16 15
  Long-term debt due within one year 6 79
    Total current liabilities 721 758
     
Long-term debt 1,102 1,128
Deferred income taxes and other 946 903
Other liabilities and deferred credits 435 457
     
Shareholders' equity    
  Exchangeable shares 46 48
  Additional paid-in capital 1,998 2,175
  Retained earnings   756 782
  Accumulated other comprehensive loss (119) (128)
    Total shareholders' equity   2,681 2,877
     
      Total liabilities and shareholders' equity 5,885 6,123


Domtar Corporation      
Consolidated Statements of Cash Flows      
(In millions of dollars)      
       
  Nine months ended
September 30
  Nine months ended
September 30
  2013   2012
  (Unaudited)
       
  $   $
       
Operating activities      
Net earnings 26   153
Adjustments to reconcile net earnings to cash flows from operating activities      
  Depreciation and amortization 281   289
  Deferred income taxes and tax uncertainties (9)   13
  Impairment and write-down of property, plant and equipment 15   2
  Net losses on disposals of property, plant and equipment and sale of business 9   -
  Stock-based compensation expense 4   3
  Equity loss, net 1   5
  Other (4)   (11)
Changes in assets and liabilities, excluding the effects of acquisition and sale of businesses    
  Receivables (46)   (1)
  Inventories (19)   20
  Prepaid expenses (5)   (7)
  Trade and other payables 15   (80)
  Income and other taxes (11)   6
  Difference between employer pension and other post-retirement contributions
and pension and other post-retirement expense
23   7
  Other assets and other liabilities 7   12
  Cash flows provided from operating activities 287   411
       
Investing activities      
Additions to property, plant and equipment (180)   (171)
Proceeds from disposals of property, plant and equipment and sale of business 55   -
Acquisition of businesses, net of cash acquired (287)   (293)
Investment in joint venture (1)   (5)
  Cash flows used for investing activities (413)   (469)
       
Financing activities      
Dividend payments (50)   (42)
Net change in bank indebtedness (13)   8
Issuance of long-term debt -   548
Repayment of long-term debt (99)   (190)
Stock repurchase (183)   (116)
Other 2   (1)
  Cash flows (used for) provided from financing activities (343)   207
       
Net (decrease) increase in cash and cash equivalents (469)   149
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 191   593
       
Supplemental cash flow information      
  Net cash payments for:      
    Interest (including $2 million and $47 million of tender offer premiums in 2013 and 2012, respectively) 60   92
    Income taxes (refund) paid (8)   60



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 Q3 YTD Q1 Q2 Q3 Q4 YTD
Reconciliation of "Earnings before items" to Net earnings (loss)                    
    Net earnings (loss) ($) 45 (46) 27 26 28 59 66 19 172
  (+) Impairment and write-down of property, plant and equipment and intangible assets ($) 7 3 10 1 8 9
  (+) Closure and restructuring costs ($) 13 13 1 1 18 20
  (-) Net (gains) losses on disposals of property, plant and equipment and business ($) (6) 12 6 1 1
  (+) Impact of purchase accounting ($) 2 2 1 1
  (+) Reversal of alternative fuel tax credits ($) 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 41 90 61 59 67 46 233
  (/) Weighted avg. number of common and exchangeable shares outstanding (diluted) (millions) 34.9 33.4 32.8 33.7 37.0 36.6 35.8 35.2 36.1
  (=) Earnings before items per diluted share ($) 0.95 0.48 1.25 2.67 1.65 1.61 1.87 1.31 6.45
                         
Reconciliation of "EBITDA" and "EBITDA before items" to Net earnings (loss)                        
    Net earnings (loss) ($) 45 (46) 27 26 28 59 66 19 172
  (+) Equity loss, net of taxes ($) 1 1 2 2 1 1 6
  (+) Income tax (benefit) expense ($) (22) (5) 1 (26) 8 27 22 1 58
  (+) Interest expense, net ($) 25 21 21 67 71 18 20 22 131
  (=) Operating income (loss) ($) 49 (30) 49 68 109 106 109 43 367
  (+) Depreciation and amortization ($) 95 93 93 281 97 96 96 96 385
  (+) Impairment and write-down of property, plant and equipment and intangible assets ($) 10 5 15 2 12 14
  (-) Net (gains) losses on disposals of property, plant and equipment and business ($) (10) 19 9 2 2
  (=) EBITDA ($) 144 68 161 373 208 202 205 153 768
  (/) Sales ($) 1,345 1,312 1,375 4,032 1,398 1,368 1,389 1,327 5,482
  (=) EBITDA margin (%) 11% 5% 12% 9% 15% 15% 15% 12% 14%
    EBITDA ($) 144 68 161 373 208 202 205 153 768
  (+) Reversal of alternative fuel tax credits ($) 26 26
  (+) Closure and restructuring costs ($) 18 18 1 2 27 30
  (+) Impact of purchase accounting ($) 2 2 1 1
  (+) Weston litigation settlement ($) 49 49
  (=) EBITDA before items ($) 170 135 163 468 210 202 207 180 799
  (/) Sales ($) 1,345 1,312 1,375 4,032 1,398 1,368 1,389 1,327 5,482
  (=) EBITDA margin before items (%) 13% 10% 12% 12% 15% 15% 15% 14% 15%
                         
Reconciliation of "Free cash flow" to Cash flow provided from operating activities                        
    Cash flow provided from operating activities ($) 63 120 104 287 30 175 206 140 551
  (-) Additions to property, plant and equipment ($) (56) (62) (62) (180) (29) (76) (66) (65) (236)
  (=) Free cash flow ($) 7 58 42 107 1 99 140 75 315
                         
"Net debt-to-total capitalization" computation                        
    Bank indebtedness ($) 13 2 6   13 22 15 18  
  (+) Long-term debt due within one year ($) 8 7 6   6 6 7 79  
  (+) Long-term debt ($) 1,104 1,102 1,102   952 950 1,196 1,128  
  (=) Debt ($) 1,125 1,111 1,114   971 978 1,218 1,225  
  (-) Cash and cash equivalents ($) (513) (432) (191)   (315) (276) (593) (661)  
  (=) Net debt ($) 612 679 923   656 702 625 564  
  (+) Shareholders' equity ($) 2,842 2,652 2,681   3,009 2,948 3,004 2,877  
  (=) Total capitalization ($) 3,454 3,331 3,604   3,665 3,650 3,629 3,441  
    Net debt ($) 612 679 923   656 702 625 564  
  (/) Total capitalization ($) 3,454 3,331 3,604   3,665 3,650 3,629 3,441  
  (=) Net debt-to-total capitalization (%) 18% 20% 26%   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) Personal Care (2) 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
Reconciliation of Operating income (loss) to "Operating income (loss) before items"                                          
    Operating income (loss) ($) 38 16 42 96 13 10 11 34 (2) (56) (4) (62) 49 (30) 49 68
  (+) Impairment and write-down of property, plant and equipment ($) 10 5 15 - 10 5 15
  (-) Net (gain) loss on disposal of property, plant and equipment and business ($) (10) 19 9 - (10) 19 9
  (+) Reversal of alternative fuel tax credits ($) 26 26 - - 26 26
  (+) Weston litigation settlement ($) - - 49 49 49 49
  (+) Closure and restructuring costs ($) 10 10 2 2 6 6 18 18
  (+) Impact of purchase accounting ($) - 2 2 - 2 2
  (=) Operating income (loss) before items ($) 64 31 61 156 13 12 13 38 (2) (1) (4) (7) 75 42 70 187
                                               
Reconciliation of "Operating income (loss) before items" to "EBITDA before items"                                          
    Operating income (loss) before items ($) 64 31 61 156 13 12 13 38 (2) (1) (4) (7) 75 42 70 187
  (+) Depreciation and amortization ($) 89 87 84 260 6 6 9 21 95 93 93 281
                                               
  (=) EBITDA before items ($) 153 118 145 416 19 18 22 59 (2) (1) (4) (7) 170 135 163 468
  (/) Sales ($) 1,238 1,208 1,204 3,650 111 108 175 394 - 1,349 1,316 1,379 4,044
  (=) EBITDA margin before items (%) 12% 10% 12% 11% 17% 17% 13% 15% - 13% 10% 12% 12%



"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.
(2) On July 1, 2013, the Company acquired 100% of the shares of Associated Hygiene Products LLC.


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 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
Reconciliation of Operating income (loss) to "Operating income (loss) before items"                                          
    Operating income (loss) ($) 106 94 98 32 330 8 12 12 13 45 (5) (1) (2) (8) 109 106 109 43 367
  (+) Impairment and write-down of property, plant and equipment and intangible assets ($) 2 12 14 - - 2 12 14
  (+) Closure and restructuring costs ($) 1 1 27 29 1 1 - 1 2 27 30
  (-) Net losses on disposals of property, plant and equipment ($) 2 2 - - 2 2
  (+) Impact of purchase accounting ($) - 1 1 - 1 1
                                               
  (=) Operating income (loss) before items ($) 109 94 99 73 375 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 ($) 109 94 99 73 375 9 12 13 13 47 (5) (1) (2) (8) 113 106 111 84 414
  (+) Depreciation and amortization ($) 94 90 90 91 365 3 6 6 5 20 97 96 96 96 385
                                               
  (=) EBITDA before items ($) 203 184 189 164 740 12 18 19 18 67 (5) (1) (2) (8) 210 202 207 180 799
  (/) Sales ($) 1,329 1,261 1,280 1,218 5,088 70 107 111 111 399 1,399 1,368 1,391 1,329 5,487
  (=) EBITDA margin before items (%) 15% 15% 15% 13% 15% 17% 17% 17% 16% 17% 15% 15% 15% 14% 15%
                                               


"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 Q3 YTD Q1 Q2 Q3 Q4 YTD
Pulp and Paper Segment                        
  Sales   ($) 1,238 1,208 1,204 3,650 1,329 1,261 1,280 1,218 5,088
  Operating income   ($) 38 16 42 96 106 94 98 32 330
  Depreciation and amortization   ($) 89 87 84 260 94 90 90 91 365
  Impairment and write-down of propery, plant and equipment and intangible assets  ($) 10 5 15 2 - 12 14
                       
  Papers                      
  Papers Production ('000 ST) 795 837 827 2,459 870 832 788 831 3,321
  Papers Shipments - Manufactured ('000 ST) 828 801 814 2,443 870 819 826 805 3,320
    Communication Papers ('000 ST) 706 676 694 2,076 756 705 709 684 2,854
    Specialty and Packaging ('000 ST) 122 125 120 367 114 114 117 121 466
  Paper Shipments - Sourced from 3rd parties  ('000 ST) 83 85 73 241 100 92 91 78 361
  Paper Shipments - Total ('000 ST) 911 886 887 2,684 970 911 917 883 3,681
  Pulp                    
  Pulp Shipments(a) ('000 ADMT) 372 344 352 1,068 389 368 415 385 1,557
    Hardwood Kraft Pulp (%) 17% 14% 14% 15% 15% 16% 20% 19% 18%
    Softwood Kraft Pulp (%) 56% 57% 58% 57% 61% 57% 55% 56% 57%
    Fluff Pulp (%) 27% 29% 27% 28% 24% 27% 25% 25% 25%
                        
                        
Personal Care Segment                    
  Sales  ($) 111 108 175 394 70 107 111 111 399
  Operating income  ($) 13 10 11 34 8 12 12 13 45
  Depreciation and amortization  ($) 6 6 9 21 3 6 6 5 20
                         
                         
Average Exchange Rates $US / $CAN 1.009 1.023 1.039 1.024 1.001 1.010 0.995 0.991 0.999
      $CAN / $US 0.991 0.977 0.963 0.977 0.999 0.990 1.006 1.009 1.001
      €EUR / $US 1.320 1.306 1.325 1.317 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: "Domtar Personal Care manufacturing facility, Delaware, Ohio (CNW Group/Domtar Corporation)". Image available at: http://photos.newswire.ca/images/download/20131024_C6141_PHOTO_EN_32492.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/20131024_C6141_PHOTO_EN_32494.jpg

Image with caption: "Domtar market pulp bales (CNW Group/Domtar Corporation)". Image available at: http://photos.newswire.ca/images/download/20131024_C6141_PHOTO_EN_32496.jpg



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