Domtar Corporation reports preliminary first quarter 2010 financial results
Solid first quarter financial performance
(All financial information is in U.S. dollars, and all earnings (loss) per share results are diluted, unless otherwise noted.)
- Net earnings of $1.34 per share, earnings before items(1) of $1.59 per
share
- Higher pulp, paper and wood selling prices
- Paper shipments increased 5.1% compared to the first quarter of 2009
TICKER SYMBOL
UFS (NYSE, TSX)
MONTREAL, April 30 /PRNewswire-FirstCall/ - Domtar Corporation (NYSE/TSX: UFS) today reported net earnings of $58 million ($1.34 per share) for the first quarter of 2010 compared to net earnings of $124 million ($2.86 per share) for the fourth quarter of 2009 and a net loss of $45 million ($1.05 per share) for the first quarter of 2009. Sales for the first quarter of 2010 amounted to $1.5 billion. Excluding items listed below, the Company had earnings before items(1) of $69 million ($1.59 per share) for the first quarter of 2010 compared to earnings before items(1) of $60 million ($1.39 per share) for the fourth quarter of 2009 and a loss before items(1) of $38 million ($0.88 per share) for the first quarter of 2009.
First quarter 2010 items:
------------------------
- Refundable excise tax credit for the production and use of alternative
bio fuel mixtures of $25 million ($18 million after tax);
- Charge of $22 million ($16 million after tax) related to the impairment
and write-down of property, plant and equipment;
- Closure and restructuring costs of $20 million ($14 million after tax);
and
- Gain on sale of property, plant and equipment of $1 million ($1 million
after tax).
Fourth quarter 2009 items:
-------------------------
- Refundable excise tax credit for the production and use of alternative
bio fuel mixtures of $162 million ($113 million after tax);
- Charge of $27 million ($22 million after tax) related to the impairment
and write-down of property, plant and equipment;
- Closure and restructuring costs of $29 million ($24 million after tax);
and
- Loss on sale of property, plant and equipment of $5 million ($3 million
after tax).
First quarter 2009 items:
------------------------
- Refundable excise tax credit for the production and use of alternative
bio fuel mixtures of $46 million ($28 million after tax);
- Charge of $35 million ($21 million after tax) related to the write-down
of property, plant and equipment at the Plymouth, North Carolina, mill;
and
- Closure and restructuring costs of $24 million ($14 million after tax).
"Despite a still modest economic recovery we recorded strong financial results due to price increases and higher pulp, paper and wood shipments," said John D. Williams, President and Chief Executive Officer. Discussing the Company's operations, Mr. Williams added, "Towards the end of the first quarter, our paper manufacturing system was balanced with our customer demand. We are now operating at full capacity with a lengthening backlog as a result of increased paper demand. We also have built inventories of pulp ahead of the second quarter, as we expect a higher level of maintenance work at our mills and in preparation for the first phase of the recently announced investments at our Kamloops pulp mill that will result in a 41-day shutdown."
SEGMENT REVIEW
Papers
Operating income before items(1) was $137 million in the first quarter of 2010 compared to operating income before items(1) of $104 million in the fourth quarter of 2009. Depreciation and amortization totaled $96 million in the first quarter of 2010. When compared to the fourth quarter of 2009, paper shipments increased by 1.8%. The shipments-to-production ratio for paper was 106% in the first quarter of 2010, compared to 104% in the fourth quarter of 2009. Paper inventories were lowered by 53,000 tons while pulp inventories increased by 47,000 metric tons at the end of March when compared to end of December levels.
The increase in operating income before items(1) in the first quarter of 2010 was the result of higher average selling prices, higher shipments and lower costs related to lack-of-order downtime and machine slowdowns. These factors were partially offset by higher costs for fiber, energy and freight and the impact of an unfavorable exchange rate including hedging.
(In millions of dollars) 1Q 2010 4Q 2009
-------------------------------------------- ------------- -------------
Sales $1,245 $1,188
Operating income $120 $212
Operating income before items(1) $137 $104
Depreciation and amortization $96 $95
On October 20, 2009, the Company announced that it would convert its Plymouth NC facility to 100% fluff pulp production by the fourth quarter of 2010. The paper machine has ceased producing uncoated freesheet paper in March and the mill's production will be focused on fluff pulp and roll pulp until the conversion is completed. In connection with this announcement, the Company recognized $13 million of accelerated depreciation in the first quarter of 2010 and is expected to record a further $26 million of accelerated depreciation over the next six months of 2010 in relation to the assets that will cease productive use in October 2010.
Paper Merchants
Operating income before items(1) was $1 million in the first quarter of 2010 compared to operating income before items(1) of $3 million in the fourth quarter of 2009. Depreciation and amortization was $1 million in the first quarter of 2010. Deliveries remained flat when compared to the fourth quarter of 2009.
(In millions of dollars) 1Q 2010 4Q 2009
-------------------------------------------- ------------- -------------
Sales $212 $212
Operating income $1 $2
Operating income before items(1) $1 $3
Depreciation and amortization $1 -
Wood
Operating loss before items(1) was $6 million in the first quarter of 2010, compared to operating loss before items(1) of $5 million in the fourth quarter of 2009. Depreciation and amortization totaled $5 million in the first quarter of 2010. When compared to the fourth quarter of 2009, lumber shipments increased 2%.
The increase in operating loss before items(1) in the first quarter of 2010 was primarily the result of the impact of higher costs and an unfavorable exchange rate including hedging. These factors were offset by higher average selling prices and higher shipments.
(In millions of dollars) 1Q 2010 4Q 2009
-------------------------------------------- ------------- -------------
Sales $67 $63
Operating loss ($5) ($11)
Operating loss before items(1) ($6) ($5)
Depreciation and amortization $5 $6
LIQUIDITY AND CAPITAL
Cash flow provided from operating activities amounted to $123 million and free cash flow(1) amounted to $92 million in the first quarter of 2010. Domtar's net debt-to-total capitalization ratio(1) stood at 33% at March 31, 2010 compared to 35% at December 31, 2009.
OUTLOOK
Demand for our uncoated freesheet paper remains stable from month to month and we expect the increasing level of economic activity to be supportive of the recent trend. Input costs are expected to rise moderately while we may also be negatively affected by unfavorable exchange rates. Domtar will benefit from price increases in pulp and paper, which are in the process of being implemented. The second quarter will be affected by higher-than-average maintenance costs.
EARNINGS CONFERENCE CALL
The Company will hold a conference call today at 10:00 a.m. (ET) to discuss its first quarter 2010 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 second quarter 2010 earnings on July 30, 2010 before markets open, followed by a conference call at 10:00 a.m. (ET) to discuss results. The date is tentative and will be confirmed approximately three weeks prior to the earnings release date.
About Domtar
Domtar Corporation (NYSE/TSX:UFS) is the largest integrated manufacturer and marketer of uncoated freesheet paper in North America and the second largest in the world based on production capacity, and is also a manufacturer of papergrade, fluff and specialty pulp. The Company designs, manufactures, markets and distributes a wide range of business, commercial printing and publishing as well as converting and specialty papers including recognized brands such as Cougar(R), Lynx(R) Opaque Ultra, Husky(R) Opaque Offset, First Choice(R) and Domtar EarthChoice(R) Office Paper, part of a family of environmentally and socially responsible papers. Domtar owns and operates Domtar Distribution Group, an extensive network of strategically located paper distribution facilities. Domtar also produces lumber and other specialty and industrial wood products. The Company employs over 10,000 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)
-------------------------------------------------------------------------
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Three months Three months
ended ended
March 31 March 31
-------------------------------------------------------------------------
2010 2009
-------------------------------------------------------------------------
--------(Unaudited)--------
$ $
Selected Segment Information
Sales
Papers 1,245 1,106
Paper Merchants 212 217
Wood 67 43
-------------------------------------------------------------------------
Total for reportable segments 1,524 1,366
Intersegment sales - Papers (62) (60)
Intersegment sales - Wood (5) (4)
-------------------------------------------------------------------------
Consolidated sales 1,457 1,302
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Depreciation and amortization
Papers 96 94
Paper Merchants 1 1
Wood 5 4
-------------------------------------------------------------------------
Total for reportable segments 102 99
Impairment and write-down of property,
plant and equipment 22 35
-------------------------------------------------------------------------
Consolidated depreciation and amortization
and impairment and write-down of property,
plant and equipment 124 134
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Operating income (loss)
Papers 120 (6)
Paper Merchants 1 2
Wood (5) (18)
-------------------------------------------------------------------------
Consolidated operating income (loss) 116 (22)
Interest expense 32 31
-------------------------------------------------------------------------
Earnings (loss) before income taxes 84 (53)
Income tax expense (benefit) 26 (8)
-------------------------------------------------------------------------
Net earnings (loss) 58 (45)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Per common share (in dollars)
Net earnings (loss)
Basic 1.35 (1.05)
Diluted 1.34 (1.05)
Weighted average number of common and
exchangeable shares outstanding (millions)
Basic 43.0 43.0
Diluted 43.3 43.0
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Cash flows provided from operating activities 123 57
Additions to property, plant and equipment 31 24
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Domtar Corporation
Consolidated Statements of Earnings (Loss)
(In millions of dollars, unless otherwise noted)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three months Three months
ended ended
March 31 March 31
-------------------------------------------------------------------------
2010 2009
-------------------------------------------------------------------------
--------(Unaudited)--------
$ $
Sales 1,457 1,302
Operating expenses
Cost of sales, excluding depreciation and
amortization 1,142 1,123
Depreciation and amortization 102 99
Selling, general and administrative 84 83
Impairment and write-down of property,
plant and equipment 22 35
Closure and restructuring costs 20 24
Other operating income, net (29) (40)
-------------------------------------------------------------------------
1,341 1,324
-------------------------------------------------------------------------
Operating income (loss) 116 (22)
Interest expense 32 31
-------------------------------------------------------------------------
Earnings (loss) before income taxes 84 (53)
Income tax expense (benefit) 26 (8)
-------------------------------------------------------------------------
Net earnings (loss) 58 (45)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Per common share (in dollars)
Net earnings (loss)
Basic 1.35 (1.05)
Diluted 1.34 (1.05)
Weighted average number of common and
exchangeable shares outstanding (millions)
Basic 43.0 43.0
Diluted 43.3 43.0
-------------------------------------------------------------------------
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Domtar Corporation
Consolidated Balance Sheets at
(In millions of dollars)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
March 31 December 31
-------------------------------------------------------------------------
2010 2009
-------------------------------------------------------------------------
(Unaudited)
$ $
Assets
Current assets
Cash and cash equivalents 314 324
Receivables, less allowances of $8 and $8 628 536
Inventories 743 745
Prepaid expenses 42 46
Income and other taxes receivable 404 414
Deferred income taxes 139 137
-------------------------------------------------------------------------
Total current assets 2,270 2,202
Property, plant and equipment, at cost 9,618 9,575
Accumulated depreciation (5,548) (5,446)
-------------------------------------------------------------------------
Net property, plant and equipment 4,070 4,129
Intangible assets, net of amortization 86 85
Other assets 102 103
-------------------------------------------------------------------------
Total assets 6,528 6,519
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Liabilities and shareholders' equity
Current liabilities
Bank indebtedness 19 43
Trade and other payables 668 686
Income and other taxes payable 36 31
Long-term debt due within one year 31 11
-------------------------------------------------------------------------
Total current liabilities 754 771
Long-term debt 1,600 1,701
Deferred income taxes and other 1,038 1,019
Other liabilities and deferred credits 388 366
Shareholders' equity
Exchangeable shares 78 78
Additional paid-in capital 2,815 2,816
Accumulated deficit (158) (216)
Accumulated other comprehensive income (loss) 13 (16)
-------------------------------------------------------------------------
Total shareholders' equity 2,748 2,662
-------------------------------------------------------------------------
Total liabilities and shareholders' equity 6,528 6,519
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Domtar Corporation
Consolidated Statements of Cash Flows
(In millions of dollars)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three months Three months
ended ended
March 31 March 31
-------------------------------------------------------------------------
2010 2009
-------------------------------------------------------------------------
--------(Unaudited)--------
$ $
Operating activities
Net earnings (loss) 58 (45)
Adjustments to reconcile net earnings
(loss) to cash flows from operating activities
Depreciation and amortization 102 99
Deferred income taxes and tax uncertainties 15 (15)
Impairment and write-down of property,
plant and equipment 22 35
Net gains on disposals of property, plant
and equipment (1) -
Stock-based compensation expense 1 4
Other (1) 3
Changes in assets and liabilities
Receivables (90) (36)
Inventories 10 34
Prepaid expenses (5) (2)
Trade and other payables (25) (46)
Income and other taxes 23 14
Difference between employer pension and other
post-retirement contributions and pension
and other post-retirement expense 10 13
Other assets and other liabilities 4 (1)
-------------------------------------------------------------------------
Cash flows provided from operating activities 123 57
-------------------------------------------------------------------------
Investing activities
Additions to property, plant and equipment (31) (24)
Proceeds from disposals of property, plant
and equipment 7 -
-------------------------------------------------------------------------
Cash flows used for investing activities (24) (24)
-------------------------------------------------------------------------
Financing activities
Net change in bank indebtedness (23) 9
Change of revolving bank credit facility - 90
Repayment of long-term debt (103) (3)
Borrowings under accounts receivable
securitization program 20 -
Other (3) -
-------------------------------------------------------------------------
Cash flows provided from (used for) financing
activities (109) 96
-------------------------------------------------------------------------
Net increase (decrease) in cash and cash
equivalents (10) 129
Cash and cash equivalents at beginning of period 324 16
-------------------------------------------------------------------------
Cash and cash equivalents at end of period 314 145
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Supplemental cash flow information
Net cash payments for:
Interest 21 24
Income taxes refund (1) -
-------------------------------------------------------------------------
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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 (Loss) Before Items", "Earnings (Loss) 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 the 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 (Loss) Before Items" and "EBITDA Before Items" by excluding the after-tax (pre-tax) effect of items considered by management as not reflecting our ongoing 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 (loss) provides for a more complete analysis of the results of operations. Net earnings (loss) and Cash flow provided from (used for) operating activities are the most directly comparable GAAP measures.
2010
-----------------------------------
Q1 Q2 Q3 Q4 YTD
-----------------------------------
Reconciliation of
"Earnings (Loss)
Before Items" to
Net earnings (loss)
Net earnings (loss) ($) 58
(-) Alternative fuel tax
credits ($) (18)
(+) Write-down of PP&E /
Impairment of PP&E ($) 16
(+) Closure and
restructuring costs ($) 14
(-) (Gains) Losses on sale
of property, plant
and equipment ($) (1)
(-) Gain on debt
repurchase ($)
(=) Earnings (Loss)
Before Items ($) 69
(/) Weighted avg. number
of common shares
outstanding
(diluted) (millions) 43.3
(=) Earnings (Loss)
Before Items per
diluted share ($) 1.59
Reconciliation of
"EBITDA" and "EBITDA
Before Items" to
Net earnings (loss)
Net earnings (loss) ($) 58
(+) Income tax expense
(benefit) ($) 26
(+) Interest expense ($) 32
(=) Operating income
(loss) ($) 116
(+) Depreciation and
amortization ($) 102
(+) Write-down of PP&E /
Impairment of PP&E ($) 22
(-) (Gains) Losses on sale
of property, plant
and equipment ($) (1)
(equal) EBITDA ($) 239
(/) Sales ($) 1,457
= EBITDA
Margin (%) 16%
EBITDA ($) 239
(-) Alternative fuel
tax credits ($) (25)
(+) Closure and
restructuring costs ($) 20
(=) EBITDA
Before Items ($) 234
(/) Sales ($) 1,457
= EBITDA Margin
Before Items (%) 16%
Reconciliation of
"Free Cash Flow"
to Cash flow provided
from operating activities
Cash flow provided from
(used for) operating
activities ($) 123
(-) Additions to property,
plant and equipment ($) (31)
(=) Free Cash
Flow ($) 92
"Net Debt-to-Total
Capitalization" Computation
Bank indebtedness ($) 19
(+) Current portion of
long-term debt ($) 31
(+) Long-term debt ($) 1,600
(equal)Debt ($) 1,650
(-) Cash and cash
equivalents ($) (314)
(equal) Net Debt ($) 1,336
(+) Shareholders' equity ($) 2,748
(=) Total
capitalization ($) 4,084
Net debt ($) 1,336
(/) Total capitalization ($) 4,084
(=) Net Debt-to-Total
Capitalization (%) 33%
-----------------------------------
-----------------------------------
2009
-----------------------------------
Q1 Q2 Q3 Q4 YTD
-----------------------------------
Reconciliation of
"Earnings (Loss)
Before Items" to
Net earnings (loss)
Net earnings (loss) ($) (45) 48 183 124 310
(-) Alternative fuel tax
credits ($) (28) (79) (116) (113) (336)
(+) Write-down of PP&E /
Impairment of PP&E ($) 21 22 43
(+) Closure and
restructuring costs ($) 14 4 2 24 44
(-) (Gains) Losses on sale
of property, plant
and equipment ($) (12) 3 (9)
(-) Gain on debt
repurchase ($) (6) (6)
(=) Earnings (Loss)
Before Items ($) (38) (33) 57 60 46
(/) Weighted avg. number
of common shares
outstanding
(diluted) (millions) 43.0 43.0 43.2 43.3 43.2
(=) Earnings (Loss)
Before Items per
diluted share ($) (0.88) (0.77) 1.32 1.39 1.06
Reconciliation of
"EBITDA" and "EBITDA
Before Items" to
Net earnings (loss)
Net earnings (loss) ($) (45) 48 183 124 310
(+) Income tax expense
(benefit) ($) (8) 68 78 42 180
(+) Interest expense ($) 31 23 34 37 125
(=) Operating income
(loss) ($) (22) 139 295 203 615
(+) Depreciation and
amortization ($) 99 104 101 101 405
(+) Write-down of PP&E /
Impairment of PP&E ($) 35 27 62
(-) (Gains) Losses on sale
of property, plant
and equipment ($) (12) 5 (7)
(equal) EBITDA ($) 112 243 384 336 1,075
(/) Sales ($) 1,302 1,319 1,440 1,404 5,465
(=) EBITDA
Margin (%) 9% 18% 27% 24% 20%
EBITDA ($) 112 243 384 336 1,075
(-) Alternative fuel
tax credits ($) (46) (131) (159) (162) (498)
(+) Closure and
restructuring costs ($) 24 6 4 29 63
(=) EBITDA
Before Items ($) 90 118 229 203 640
(/) Sales ($) 1,302 1,319 1,440 1,404 5,465
(=) EBITDA Margin
Before Items (%) 7% 9% 16% 14% 12%
Reconciliation of
"Free Cash Flow"
to Cash flow provided
from operating activities
Cash flow provided from
(used for) operating
activities ($) 57 306 244 185 792
(-) Additions to property,
plant and equipment ($) (24) (18) (24) (40) (106)
(=) Free Cash
Flow ($) 33 288 220 145 686
"Net Debt-to-Total
Capitalization" Computation
Bank indebtedness ($) 52 24 30 43
(+) Current portion of
long-term debt ($) 18 13 13 11
(+) Long-term debt ($) 2,195 2,162 1,971 1,701
(equal) Debt ($) 2,265 2,199 2,014 1,755
(-) Cash and cash
equivalents ($) (145) (381) (433) (324)
(equal) Net Debt ($) 2,120 1,818 1,581 1,431
(+) Shareholders' equity ($) 2,073 2,264 2,580 2,662
= Total
capitalization ($) 4,193 4,082 4,161 4,093
Net debt ($) 2,120 1,818 1,581 1,431
(/) Total capitalization ($) 4,193 4,082 4,161 4,093
(=) Net Debt-to-Total
Capitalization (%) 51% 45% 38% 35%
-----------------------------------
"Earnings (Loss) Before Items", "Earnings (Loss) 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 (loss), 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.
Domtar Corporation
Quarterly Reconciliation of Non-GAAP Financial Measures - By Segment 2010
(In millions of dollars, unless otherwise noted)
The following table sets forth certain non-U.S. generally accepted accounting principles ("GAAP") financial metrics identified 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.
-----------------------------------
Papers
-----------------------------------
Q1'10 Q2'10 Q3'10 Q4'10 YTD
-----------------------------------
Reconciliation of
Operating income to
"Operating Income
Before Items"
Operating income (loss) ($) 120 120
(-) Alternative fuel tax
credits ($) (25) (25)
(+) Impairment and write-down
of property, plant and
equipment ($) 22 22
(+) Closure and restructuring
costs ($) 20 20
(-) (Gains) Losses on sale
of property, plant
and equipment ($)
(=) Operating Income
(Loss) Before Items ($) 137 137
Reconciliation of
"Operating Income
Before Items" to
"EBITDA Before Items"
Operating Income (Loss)
Before Items ($) 137 137
(+) Depreciation and
amortization ($) 96 96
(=) EBITDA Before
Items ($) 233 233
(/) Sales ($) 1,245 1,245
(=) EBITDA Margin
Before Items (%) 19% 19%
-----------------------------------
-----------------------------------
Paper Merchants
-----------------------------------
Q1'10 Q2'10 Q3'10 Q4'10 YTD
-----------------------------------
Reconciliation of
Operating income to
"Operating Income
Before Items"
Operating income (loss) ($) 1 1
(-) Alternative fuel tax
credits ($)
(+) Impairment and write-down
of property, plant and
equipment ($)
(+) Closure and restructuring
costs ($)
(-) (Gains) Losses on sale
of property, plant
and equipment ($)
(=) Operating Income
(Loss) Before Items ($) 1 1
Reconciliation of
"Operating Income
Before Items" to
"EBITDA Before Items"
Operating Income (Loss)
Before Items ($) 1 1
(+) Depreciation and
amortization ($) 1 1
(=) EBITDA Before
Items ($) 2 2
(/) Sales ($) 212 212
(=) EBITDA Margin
Before Items (%) 1% 1%
-----------------------------------
-----------------------------------
Wood
-----------------------------------
Q1'10 Q2'10 Q3'10 Q4'10 YTD
-----------------------------------
Reconciliation of
Operating income to
"Operating Income
Before Items"
Operating income (loss) ($) (5) (5)
(-) Alternative fuel tax
credits ($)
(+) Impairment and write-down
of property, plant and
equipment ($)
(+) Closure and restructuring
costs ($)
(-) (Gains) Losses on sale
of property, plant
and equipment ($) (1) (1)
(=) Operating Income
(Loss) Before Items ($) (6) (6)
Reconciliation of
"Operating Income
Before Items" to
"EBITDA Before Items"
Operating Income (Loss)
Before Items ($) (6) (6)
(+) Depreciation and
amortization ($) 5 5
(=) EBITDA Before
Items ($) (1) (1)
(/) Sales ($) 67 67
(=) EBITDA Margin
Before Items (%)
-----------------------------------
-----------------------------------
Corporate
-----------------------------------
Q1'10 Q2'10 Q3'10 Q4'10 YTD
-----------------------------------
Reconciliation of
Operating income to
"Operating Income
Before Items"
Operating income (loss) ($)
(-) Alternative fuel tax
credits ($)
(+) Impairment and write-down
of property, plant and
equipment ($)
(+) Closure and restructuring
costs ($)
(-) (Gains) Losses on sale
of property, plant
and equipment ($)
(=) Operating Income
(Loss) Before Items ($)
Reconciliation of
"Operating Income
Before Items" to
"EBITDA Before Items"
Operating Income (Loss)
Before Items ($)
(+) Depreciation and
amortization ($)
(=) EBITDA Before
Items ($)
(/) Sales ($)
(=) EBITDA Margin
Before Items (%)
-----------------------------------
"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.
Domtar Corporation
Quarterly Reconciliation of Non-GAAP Financial Measures - By Segment 2009
(In millions of dollars, unless otherwise noted)
The following table sets forth certain non-U.S. generally accepted accounting principles ("GAAP") financial metrics identified 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.
-----------------------------------
Papers
-----------------------------------
Q1'09 Q2'09 Q3'09 Q4'09 YTD
-----------------------------------
Reconciliation of Operating
income to "Operating Income
Before Items"
Operating income (loss) ($) (6) 150 294 212 650
(-) Alternative fuel tax
credits ($) (46) (131) (159) (162) (498)
(+) Impairment and write-down
of property, plant and
equipment ($) 35 27 62
(+) Closure and restructuring
costs ($) 22 4 4 22 52
(-) (Gains) Losses on sale
of property, plant
and equipment ($) (1) 5 4
(=) Operating Income
(Loss) Before Items ($) 5 23 138 104 270
Reconciliation of "Operating
Income Before Items" to
"EBITDA Before Items"
Operating Income (Loss)
Before Items ($) 5 23 138 104 270
(+) Depreciation and
amortization ($) 94 98 95 95 382
(=) EBITDA Before
Items ($) 99 121 233 199 652
(/) Sales ($) 1,106 1,127 1,211 1,188 4,632
(=) EBITDA Margin
Before Items (%) 9% 11% 19% 17% 14%
-----------------------------------
-----------------------------------
Paper Merchants
-----------------------------------
Q1'09 Q2'09 Q3'09 Q4'09 YTD
-----------------------------------
Reconciliation of Operating
income to "Operating Income
Before Items"
Operating income (loss) ($) 2 1 2 2 7
(-) Alternative fuel tax
credits ($)
(+) Impairment and write-down
of property, plant and
equipment ($)
(+) Closure and restructuring
costs ($) 1 1 2
(-) (Gains) Losses on sale
of property, plant
and equipment ($)
(=) Operating Income
(Loss) Before Items ($) 2 2 2 3 9
Reconciliation of "Operating
Income Before Items" to
"EBITDA Before Items"
Operating Income (Loss)
Before Items ($) 2 2 2 3 9
(+) Depreciation and
amortization ($) 1 1 1 3
(=) EBITDA Before
Items ($) 3 3 3 3 12
(/) Sales ($) 217 205 239 212 873
(=) EBITDA Margin
Before Items (%) 1% 1% 1% 1% 1%
-----------------------------------
-----------------------------------
Wood
-----------------------------------
Q1'09 Q2'09 Q3'09 Q4'09 YTD
-----------------------------------
Reconciliation of Operating
income to "Operating Income
Before Items"
Operating income (loss) ($) (18) (12) (1) (11) (42)
(-) Alternative fuel tax
credits ($)
(+) Impairment and write-down
of property, plant and
equipment ($)
(+) Closure and restructuring
costs ($) 2 1 6 9
(-) (Gains) Losses on sale
of property, plant
and equipment ($) (8) (8)
= Operating Income
(Loss) Before Items ($) (16) (11) (9) (5) (41)
Reconciliation of "Operating
Income Before Items" to
"EBITDA Before Items"
Operating Income (Loss)
Before Items ($) (16) (11) (9) (5) (41)
(+) Depreciation and
amortization ($) 4 5 5 6 20
= EBITDA Before
Items ($) (12) (6) (4) 1 (21)
(/) Sales ($) 43 46 59 63 211
= EBITDA Margin
Before Items (%) 2%
-----------------------------------
-----------------------------------
Corporate
-----------------------------------
Q1'09 Q2'09 Q3'09 Q4'09 YTD
-----------------------------------
Reconciliation of Operating
income to "Operating Income
Before Items"
Operating income (loss) ($)
(-) Alternative fuel tax
credits ($)
(+) Impairment and write-down
of property, plant and
equipment ($)
(+) Closure and restructuring
costs ($)
(-) (Gains) Losses on sale
of property, plant
and equipment ($) (3) (3)
= Operating Income
(Loss) Before Items ($) (3) (3)
Reconciliation of "Operating
Income Before Items" to
"EBITDA Before Items"
Operating Income (Loss)
Before Items ($) (3) (3)
(+) Depreciation and
amortization ($)
= EBITDA Before
Items ($) (3) (3)
(/) Sales ($)
= EBITDA Margin
Before Items (%)
-----------------------------------
"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.
Domtar Corporation
Supplemental Segmented Information
(In millions of dollars, unless otherwise noted)
-----------------------------------
2010
-----------------------------------
Q1 Q2 Q3 Q4 YTD
-----------------------------------
Papers Segment
Sales ($) 1,245
Intersegment sales
- Papers ($) (62)
Operating income (loss) ($) 120
Depreciation &
amortization ($) 96
Impairment and write-down
of PP&E ($) 22
Papers
Papers Production ('000 ST) 906
Papers Shipments ('000 ST) 960
Uncoated freesheet ('000 ST) 925
Coated groundwood ('000 ST) 35
Pulp
Pulp Shipments(a) ('000 ADMT) 388
Hardwood Kraft Pulp (%) 40%
Softwood Kraft Pulp (%) 49%
Fluff Pulp (%) 11%
Paper Merchants Segment
Sales ($) 212
Operating income ($) 1
Depreciation &
amortization ($) 1
Wood Segment
Sales ($) 67
Intersegment sales
- Wood ($) (5)
Operating loss ($) (5)
Depreciation &
amortization ($) 5
Lumber Production (Millions FBM) 172
Lumber Shipments (Millions FBM) 164
Average Exchange Rates CAN 1.041
US 0.961
-----------------------------------
-----------------------------------
2009
-----------------------------------
Q1 Q2 Q3 Q4 YTD
-----------------------------------
Papers Segment
Sales ($) 1,106 1,127 1,211 1,188 4,632
Intersegment sales
- Papers ($) (60) (55) (63) (53) (231)
Operating income (loss) ($) (6) 150 294 212 650
Depreciation &
amortization ($) 94 98 95 95 382
Impairment and write-down
of PP&E ($) 35 27 62
Papers
Papers Production ('000 ST) 869 912 920 903 3,604
Papers Shipments ('000 ST) 913 929 972 943 3,757
Uncoated freesheet ('000 ST) 887 901 939 890 3,617
Coated groundwood ('000 ST) 26 28 33 53 140
Pulp
Pulp Shipments(a) ('000 ADMT) 314 393 446 386 1,539
Hardwood Kraft Pulp (%) 33% 33% 40% 35% 36%
Softwood Kraft Pulp (%) 54% 54% 49% 54% 52%
Fluff Pulp (%) 13% 13% 11% 11% 12%
Paper Merchants Segment
Sales ($) 217 205 239 212 873
Operating income ($) 2 1 2 2 7
Depreciation &
amortization ($) 1 1 1 3
Wood Segment
Sales ($) 43 46 59 63 211
Intersegment sales
- Wood ($) (4) (4) (6) (6) (20)
Operating loss ($) (18) (12) (1) (11) (42)
Depreciation &
amortization ($) 4 5 5 6 20
Lumber Production (Millions FBM) 121 131 147 161 560
Lumber Shipments (Millions FBM) 125 135 153 161 574
Average Exchange Rates CAN 1.245 1.167 1.097 1.056 1.142
US 0.803 0.857 0.911 0.947 0.876
-----------------------------------
(a) Figures are gross of market pulp purchased from other producers on
the open market for some of our paper making operations. Pulp
shipments represents the amount of pulp produced in excess of our
internal requirement.
Note: the term "ST" refers to a short ton, the term "ADMT" refers to
an air dry metric ton, and the term "FBM" refers to foot board
measure.
SOURCE DOMTAR CORPORATION
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