Domtar CORP - FORM 8-K - EX-99.1 - EXHIBIT 99.1

Attached files

file	filename
8-K - FORM 8-K - Domtar CORP	d472885d8k.htm

Exhibit 99.1


		395 de Maisonneuve Blvd. West Montreal, QC H3A 1L6



TICKER SYMBOL										MEDIA AND INVESTOR RELATIONS
(NYSE: UFS) (TSX: UFS)										Pascal Bossé Vice-President Corporate Communications and Investor Relations Tel.: 514-848-5938

DOMTAR CORPORATION REPORTS PRELIMINARY FOURTH QUARTER AND FISCAL YEAR 2012 FINANCIAL RESULTS

The conversion to specialty and packaging paper at the Marlboro mill nearing completion

(All financial information is in U.S. dollars, and all earnings per share results are diluted, unless otherwise noted.)

•

Fourth quarter 2012 net earnings of $0.54 per share, earnings before items¹ of $1.31 per share

•

Closed the sale of the Ottawa/Gatineau hydro assets for CDN$46 million

•

Free cash flow¹ payout of 68% in 2012 through regular dividends and share buybacks

Montreal, February 1, 2013 – Domtar Corporation (NYSE: UFS) (TSX: UFS) today reported net earnings of $19 million ($0.54 per share) for the fourth quarter of 2012 compared to net earnings of $66 million ($1.84 per share) for the third quarter of 2012 and net earnings of $61 million ($1.63 per share) for the fourth quarter of 2011. Sales for the fourth quarter of 2012 amounted to $1.3 billion.

Excluding items listed below, the Company had earnings before items¹ of $46 million ($1.31 per share) for the fourth quarter of 2012 compared to earnings before items¹ of $67 million ($1.87 per share) for the third quarter of 2012 and earnings before items¹ of $93 million ($2.49 per share) for the fourth quarter of 2011.

Fourth quarter 2012 items:

•

Closure and restructuring costs of $27 million ($18 million after tax);

•

Charge of $12 million ($8 million after tax) related to the impairment and write-down of property, plant and equipment and intangible assets; and

•

Net losses on the sale of property, plant and equipment of $2 million ($1 million after tax).

Third quarter 2012 items:

•

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

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

1 / 12

Fourth quarter 2011 items:

•

Closure and restructuring costs of $38 million ($23 million after tax); and

•

Charge of $12 million ($9 million after tax) related to the impairment and write-down of property, plant and equipment.

“Our paper and pulp businesses performed largely in-line with expectations from a sales standpoint in the fourth quarter,” said John D. Williams, President and Chief Executive Officer. “Higher costs for fiber and energy and unexpected costs incurred at a pulp mill following a planned maintenance outage affected results.”

FISCAL YEAR 2012 HIGHLIGHTS

For fiscal year 2012, net earnings amounted to $172 million ($4.76 per share) compared to net earnings of $365 million ($9.08 per share) for fiscal year 2011. The Company had earnings before items¹ of $233 million ($6.45 per share) for fiscal 2012 compared to earnings before items¹ of $452 million ($11.24 per share) for fiscal 2011. Sales amounted to $5.5 billion for fiscal year 2012.

Commenting on the year, Mr. Williams said, “The down cycle in pulp prices contributed to the majority of the decline in Domtar’s earnings. We accomplished a great deal again in 2012 nevertheless. We completed two acquisitions in our Personal Care business, we announced the conversion of a world-class commodity paper mill to manufacture specialty papers and launched several innovative projects that provide alternative uses for our wood fiber and the by-products of our manufacturing process. Our journey to build a growing fiber-based business is well underway,” added Mr. Williams.

QUARTERLY REVIEW

Operating income before items¹ was $84 million in the fourth quarter of 2012 compared to an operating income before items¹ of $111 million in the third quarter of 2012. Depreciation and amortization totaled $96 million in the fourth quarter of 2012.


(In millions of dollars)	4Q 2012			3Q 2012

Sales	$	1,327		$	1,389

Operating income (loss)

Pulp and Paper segment		40			103

Distribution segment		(8	)		(5	)

Personal Care segment		13			12

Corporate		(2	)		(1	)


Total		43			109

Operating income before items¹		84			111

Depreciation and amortization		96			96

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

2 / 12

The decrease in operating income before items¹ in the fourth quarter of 2012 was the result of lower average selling prices for pulp and paper, higher unit costs for fiber and energy, higher SG&A, freight, and maintenance costs and lower volumes for pulp and paper. These factors were partially offset by high productivity and lower costs for lack-of-order downtime in paper.

When compared to the third quarter of 2012, paper shipments decreased 2.5% and pulp shipments decreased 7.2%. Paper deliveries of Ariva^® decreased 10.4% when compared to the third quarter of 2012. The shipments-to-production ratio for paper was 97% in the fourth quarter of 2012, compared to 105% in the third quarter of 2012. Lack-of-order downtime and machine slowdowns in papers totaled 23,000 short tons in the fourth quarter of 2012. Paper inventories increased by 27,000 tons while pulp inventories increased by 3,000 metric tons as at the end of December, compared to September levels.

LIQUIDITY AND CAPITAL

Cash flow provided from operating activities amounted to $551 million and capital expenditures amounted to $236 million, resulting in free cash flow¹ of $315 million for fiscal year 2012. Domtar’s net debt-to-total capitalization ratio¹ stood at 16% at December 31, 2012 compared to 12% at December 31, 2011.

Domtar returned a total of $215 million to its shareholders through a combination of dividends and share buybacks in 2012. Under its stock repurchase program, Domtar repurchased 2,000,925 shares of common stock throughout 2012 and a total of 8,660,703 shares of common stock at an average price of $80.04 since the implementation of the program in May 2010. At the end of the year, Domtar had $304 million remaining under this program.

OUTLOOK

In 2013, we expect market demand for uncoated freesheet paper to decline at a 3 to 4% rate in North America, but our shipments are expected to trend slightly better than market due to an exposure to stable specialty and packaging papers and the incremental volume from the supply agreement signed with Appleton. Paper prices are expected to trend at levels similar to year-end while we expect a slow and steady recovery in pulp prices. The implementation of our growth plans in the Personal Care segment are expected to yield incremental earnings beginning in the fourth quarter of 2013.

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

3 / 12

EARNINGS CONFERENCE CALL

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

The Company will release its first quarter 2013 earnings on April 25, 2013 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 official earnings release date.

About Domtar

Domtar Corporation (NYSE: UFS) (TSX: UFS) designs, manufactures, markets and distributes a wide variety of fiber-based products including communication papers, specialty and packaging papers and adult incontinence products. The foundation of its business is a network of world class wood fiber converting assets that produce papergrade, fluff and specialty pulps. The majority of its pulp production is consumed internally to manufacture paper and consumer products. Domtar is the largest integrated marketer of uncoated freesheet paper in North America with recognized brands such as Cougar^®, Lynx^® Opaque Ultra, Husky^® Opaque Offset, First Choice^® and Domtar EarthChoice^®. Domtar is also a leading marketer and producer of a complete line of incontinence care products marketed primarily under the Attends^® brand name. Domtar owns and operates Ariva^®, an extensive network of strategically located paper and printing supplies distribution facilities. In 2012, Domtar had sales of US$5.5 billion from nearly 50 countries. The Company employs approximately 9,300 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.

- (30) -

4 / 12

Domtar Corporation

Highlights

(In millions of dollars, unless otherwise noted)


	Three months ended December 31			Three months ended December 31			Twelve months ended December 31			Twelve months ended December 31
	2012			2011			2012			2011
	(Unaudited)

	$			$			$			$

Selected Segment Information

Sales
Pulp and Paper		1,099			1,177			4,575			4,953
Distribution		157			177			685			781
Personal Care		111			54			399			71

Total for reportable segments		1,367			1,408			5,659			5,805
Intersegment sales - Pulp and Paper		(40	)		(39	)		(177	)		(193	)

Consolidated sales		1,327			1,369			5,482			5,612


Depreciation and amortization and impairment and write-down of property, plant and equipment and intangible assets
Pulp and Paper		90			91			361			368
Distribution		1			1			4			4
Personal Care		5			3			20			4

Total for reportable segments		96			95			385			376
Impairment and write-down of property, plant and equipment - Pulp and Paper		7			12			9			85

Impairment and write-down of intangible assets - Distribution		5			—			5			—

Consolidated depreciation and amortization and impairment and write-down of property, plant and equipment and intangible assets		108			107			399			461


Operating income (loss)
Pulp and Paper		40			92			346			581
Distribution		(8	)		—			(16	)		—
Personal Care		13			7			45			7
Corporate		(2	)		—			(8	)		4

Consolidated operating income		43			99			367			592
Interest expense, net		22			20			131			87

Earnings before income taxes and equity earnings		21			79			236			505
Income tax expense		1			11			58			133
Equity loss, net of taxes		1			7			6			7

Net earnings		19			61			172			365


Per common share (in dollars)
Net earnings
Basic		0.54			1.64			4.78			9.15
Diluted		0.54			1.63			4.76			9.08
Weighted average number of common and exchangeable shares outstanding (millions)
Basic		35.1			37.1			36.0			39.9
Diluted		35.2			37.4			36.1			40.2


Cash flows provided from operating activities		140			172			551			883
Additions to property, plant and equipment		65			80			236			144

5 / 12

Domtar Corporation

Consolidated Statements of Earnings

(In millions of dollars, unless otherwise noted)


	Three months ended December 31		Three months ended December 31			Twelve months ended December 31		Twelve months ended December 31
	2012		2011			2012		2011
	(Unaudited)

	$		$			$		$

Sales		1,327		1,369			5,482		5,612
Operating expenses
Cost of sales, excluding depreciation and amortization		1,058		1,039			4,321		4,171
Depreciation and amortization		96		95			385		376
Selling, general and administrative		90		87			358		340
Impairment and write-down of property, plant and equipment and intangible assets		12		12			14		85
Closure and restructuring costs		27		38			30		52
Other operating loss (income), net		1		(1	)		7		(4	)

		1,284		1,270			5,115		5,020


Operating income		43		99			367		592

Interest expense, net		22		20			131		87


Earnings before income taxes and equity earnings		21		79			236		505

Income tax expense		1		11			58		133

Equity loss, net of taxes		1		7			6		7


Net earnings		19		61			172		365


Per common share (in dollars)

Net earnings
Basic		0.54		1.64			4.78		9.15
Diluted		0.54		1.63			4.76		9.08
Weighted average number of common and exchangeable shares outstanding (millions)
Basic		35.1		37.1			36.0		39.9
Diluted		35.2		37.4			36.1		40.2

6 / 12

Domtar Corporation

Consolidated Balance Sheets at

(In millions of dollars)


	December 31			December 31
	2012			2011
	(Unaudited)

	$			$

Assets
Current assets
Cash and cash equivalents		661			444
Receivables, less allowances of $4 and $5		562			644
Inventories		675			652
Prepaid expenses		24			22
Income and other taxes receivable		48			47
Deferred income taxes		45			125

Total current assets		2,015			1,934

Property, plant and equipment, at cost		8,793			8,448
Accumulated depreciation		(5,392	)		(4,989	)

Net property, plant and equipment		3,401			3,459
Goodwill		263			163
Intangible assets, net of amortization		309			204
Other assets		135			109

Total assets		6,123			5,869


Liabilities and shareholders’ equity
Current liabilities
Bank indebtedness		18			7
Trade and other payables		646			688
Income and other taxes payable		15			17
Long-term debt due within one year		79			4

Total current liabilities		758			716

Long-term debt		1,128			837
Deferred income taxes and other		903			927
Other liabilities and deferred credits		457			417

Shareholders’ equity
Exchangeable shares		48			49
Additional paid-in capital		2,175			2,326
Retained earnings		782			671
Accumulated other comprehensive loss		(128	)		(74	)

Total shareholders’ equity		2,877			2,972

Total liabilities and shareholders’ equity		6,123			5,869

7 / 12

Domtar Corporation

Consolidated Statements of Cash Flows

(In millions of dollars)


	Twelve months ended December 31			Twelve months ended December 31
	2012			2011
	(Unaudited)

	$			$

Operating activities
Net earnings		172			365
Adjustments to reconcile net earnings to cash flows from operating activities
Depreciation and amortization		385			376
Deferred income taxes and tax uncertainties		(1	)		40
Impairment and write-down of property, plant and equipment and intangible assets		14			85
Loss on repurchase of long-term debt		—			4
Net losses (gains) on disposals of property, plant and equipment and sale of business		2			(6	)
Stock-based compensation expense		5			3
Equity loss, net		6			7
Other		(13	)		—
Changes in assets and liabilities, excluding the effects of acquisition and sale of businesses
Receivables		99			(12	)
Inventories		5			2
Prepaid expenses		(3	)		2
Trade and other payables		(118	)		(27	)
Income and other taxes		(4	)		33
Difference between employer pension and other post-retirement contributions and pension and other post-retirement expense		(13	)		(18	)
Other assets and other liabilities		15			29

Cash flows provided from operating activities		551			883


Investing activities
Additions to property, plant and equipment		(236	)		(144	)
Proceeds from disposals of property, plant and equipment		49			34
Proceeds from sale of business		—			10
Acquisition of businesses, net of cash acquired		(293	)		(288	)
Investment in joint venture		(6	)		(7	)

Cash flows used for investing activities		(486	)		(395	)

Financing activities
Dividend payments		(58	)		(49	)
Net change in bank indebtedness		11			(16	)
Issuance of long-term debt		548			—
Repayment of long-term debt		(192	)		(18	)
Debt issue and tender offer costs		—			(7	)
Stock repurchase		(157	)		(494	)
Other		—			10

Cash flows provided from (used for) financing activities		152			(574	)


Net increase (decrease) in cash and cash equivalents		217			(86	)
Cash and cash equivalents at beginning of year		444			530

Cash and cash equivalents at end of year		661			444


Supplemental cash flow information
Net cash payments for:
Interest (including $47 million of tender offer premiums in 2012)		116			74
Income taxes paid		76			60

8 / 12

Domtar Corporation

Quarterly Reconciliation of Non-GAAP Financial Measures

(In millions of dollars, unless otherwise noted)

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

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


			2012															2011
			Q1			Q2			Q3			Q4			YTD			Q1			Q2			Q3			Q4			YTD
Reconciliation of “Earnings before items” to Net earnings
	Net earnings	($)		28			59			66			19			172			133			54			117			61			365
(+)	Impairment and write-down of property, plant and equipment and intangible assets	($)		1			—			—			8			9			2			38			4			9			53
(+)	Closure and restructuring costs	($)		1			—			1			18			20			8			1			1			23			33
(-)	Net losses (gains) on disposals of property, plant and equipment and sale of business	($)		—			—			—			1			1			(5	)		5			(3	)		—			(3	)
(+)	Impact of purchase accounting	($)		1			—			—			—			1			—			—			1			—			1
(+)	Loss on repurchase of long-term debt	($)		30			—			—			—			30			—			—			3			—			3
(=)	Earnings before items	($)		61			59			67			46			233			138			98			123			93			452
(/)	Weighted avg. number of common and exchangeable shares outstanding (diluted)	(millions)		37.0			36.6			35.8			35.2			36.1			42.4			41.4			39.7			37.4			40.2
(=)	Earnings before items per diluted share	($)		1.65			1.61			1.87			1.31			6.45			3.25			2.37			3.10			2.49			11.24

Reconciliation of “EBITDA” and “EBITDA before items” to Net earnings
	Net earnings	($)		28			59			66			19			172			133			54			117			61			365
(+)	Equity loss, net of taxes	($)		2			2			1			1			6			—			—			—			7			7
(+)	Income tax expense	($)		8			27			22			1			58			57			20			45			11			133
(+)	Interest expense, net	($)		71			18			20			22			131			21			21			25			20			87
(=)	Operating income	($)		109			106			109			43			367			211			95			187			99			592
(+)	Depreciation and amortization	($)		97			96			96			96			385			93			95			93			95			376
(+)	Impairment and write-down of property, plant and equipment and intangible assets	($)		2			—			—			12			14			3			62			8			12			85
(-)	Net losses (gains) on disposals of property, plant and equipment and sale of business	($)		—			—			—			2			2			(7	)		6			(4	)		(1	)		(6	)
(=)	EBITDA	($)		208			202			205			153			768			300			258			284			205			1,047
(/)	Sales	($)		1,398			1,368			1,389			1,327			5,482			1,423			1,403			1,417			1,369			5,612
(=)	EBITDA margin	(%)		15	%		15	%		15	%		12	%		14	%		21	%		18	%		20	%		15	%		19	%
	EBITDA	($)		208			202			205			153			768			300			258			284			205			1,047
(+)	Closure and restructuring costs	($)		1			—			2			27			30			11			2			1			38			52
(+)	Impact of purchase accounting	($)		1			—			—			—			1			—			—			1			—			1
(=)	EBITDA before items	($)		210			202			207			180			799			311			260			286			243			1,100
(/)	Sales	($)		1,398			1,368			1,389			1,327			5,482			1,423			1,403			1,417			1,369			5,612
(=)	EBITDA margin before items	(%)		15	%		15	%		15	%		14	%		15	%		22	%		19	%		20	%		18	%		20	%

Reconciliation of “Free cash flow” to Cash flow provided from operating activities
	Cash flow provided from operating activities	($)		30			175			206			140			551			148			306			257			172			883
(-)	Additions to property, plant and equipment	($)		(29	)		(76	)		(66	)		(65	)		(236	)		(13	)		(20	)		(31	)		(80	)		(144	)
(=)	Free cash flow	($)		1			99			140			75			315			135			286			226			92			739

“Net debt-to-total capitalization” computation
	Bank indebtedness	($)		13			22			15			18						25			25			17			7
(+)	Long-term debt due within one year	($)		6			6			7			79						2			2			5			4
(+)	Long-term debt	($)		952			950			1,196			1,128						825			824			837			837
(=)	Debt	($)		971			978			1,218			1,225						852			851			859			848
(-)	Cash and cash equivalents	($)		(315	)		(276	)		(593	)		(661	)					(604	)		(742	)		(461	)		(444	)
(=)	Net debt	($)		656			702			625			564						248			109			398			404
(+)	Shareholders’ equity	($)		3,009			2,948			3,004			2,877						3,288			3,194			2,999			2,972
(=)	Total capitalization	($)		3,665			3,650			3,629			3,441						3,536			3,303			3,397			3,376
	Net debt	($)		656			702			625			564						248			109			398			404
(/)	Total capitalization	($)		3,665			3,650			3,629			3,441						3,536			3,303			3,397			3,376
(=)	Net debt-to-total capitalization	(%)		18	%		19	%		17	%		16	%					7	%		3	%		12	%		12	%

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

9 / 12

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.

10 / 12

Domtar Corporation

Quarterly Reconciliation of Non-GAAP Financial Measures – By Segment 2011

(In millions of dollars, unless otherwise noted)


				Pulp and Paper														Distribution															Personal Care ⁽¹⁾													Corporate														Total
				Q1 ’11		Q2 ’11			Q3 ’11			Q4 ’11			YTD			Q1 ’11			Q2 ’11			Q3 ’11			Q4 ’11			YTD			Q1 ’11		Q2 ’11		Q3 ’11			Q4 ’11			YTD			Q1 ’11			Q2 ’11			Q3 ’11			Q4 ’11		YTD			Q1 ’11			Q2 ’11			Q3 ’11			Q4 ’11			YTD
Reconciliation of Operating income (loss) to “Operating income (loss) before items”
		Operating income (loss)	($)		209		91			189			92			581			3			(2	)		(1	)		—			—			—		—		—			7			7			(1	)		6			(1	)		—		4			211			95			187			99			592
	(+)	Impairment and write-down of property, plant and equipment	($)		3		62			8			12			85			—			—			—			—			—			—		—		—			—			—			—			—			—			—		—			3			62			8			12			85
	(+)	Closure and restructuring costs	($)		11		2			1			37			51			—			—			—			1			1			—		—		—			—			—			—			—			—			—		—			11			2			1			38			52
	(-)	Net losses (gains) on disposals of property, plant and equipment and sale of business	($)		(4)		12			(4	)		(1	)		3			(3	)		—			—			—			(3	)		—		—		—			—			—			—			(6	)		—			—		(6	)		(7	)		6			(4	)		(1	)		(6	)
	(+)	Impact of purchase accounting	($)		—		—			—			—			—			—			—			—			—			—			—		—		1			—			1			—			—			—			—		—			—			—			1			—			1

	(=)	Operating income (loss) before items	($)		219		167			194			140			720			—			(2	)		(1	)		1			(2	)		—		—		1			7			8			(1	)		—			(1	)		—		(2	)		218			165			193			148			724

Reconciliation of “Operating income (loss) before items” to “EBITDA before items”
		Operating income (loss) before items	($)		219		167			194			140			720			—			(2	)		(1	)		1			(2	)		—		—		1			7			8			(1	)		—			(1	)		—		(2	)		218			165			193			148			724
	(+)	Depreciation and amortization	($)		92		94			91			91			368			1			1			1			1			4			—		—		1			3			4			—			—			—			—		—			93			95			93			95			376

	(=)	EBITDA before items	($)		311		261			285			231			1,088			1			(1	)		—			2			2			—		—		2			10			12			(1	)		—			(1	)		—		(2	)		311			260			286			243			1,100
	(/)	Sales	($)		1,269		1,261			1,246			1,177			4,953			217			190			197			177			781			—		—		17			54			71			—			—			—			—		—			1,486			1,451			1,460			1,408			5,805
	(=)	EBITDA margin before items	(%)		25%		21	%		23	%		20	%		22	%		—			—			—			1	%		—			—		—		12	%		19	%		17	%		—			—			—			—		—			21	%		18	%		20	%		17	%		19	%

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

11 / 12

Domtar Corporation

Supplemental Segmented Information

(In millions of dollars, unless otherwise noted)


		2012															2011
		Q1			Q2			Q3			Q4			YTD			Q1			Q2			Q3			Q4			YTD
Pulp and Paper Segment
Sales	($)		1,191			1,132			1,153			1,099			4,575			1,269			1,261			1,246			1,177			4,953
Intersegment sales - Pulp and Paper	($)		(52	)		(43	)		(42	)		(40	)		(177	)		(63	)		(48	)		(43	)		(39	)		(193	)
Operating income	($)		107			96			103			40			346			209			91			189			92			581
Depreciation and amortization	($)		93			88			90			90			361			92			94			91			91			368
Impairment and write-down of property, plant and equipment	($)		2			—			—			7			9			3			62			8			12			85

Papers
Papers Production	(‘000 ST)		870			832			788			831			3,321			899			890			875			871			3,535
Papers Shipments	(‘000 ST)		870			819			826			805			3,320			913			901			889			831			3,534
Communication Papers	(‘000 ST)		756			705			709			684			2,854			816			794			784			729			3,123
Specialty and Packaging	(‘000 ST)		114			114			117			121			466			97			107			105			102			411

Pulp
Pulp Shipments^(a)	(‘000 ADMT)		389			368			415			385			1,557			375			361			358			403			1,497
Hardwood Kraft Pulp	(%)		15	%		16	%		20	%		19	%		18	%		20	%		19	%		18	%		19	%		19	%
Softwood Kraft Pulp	(%)		61	%		57	%		55	%		56	%		57	%		55	%		54	%		57	%		58	%		57	%
Fluff Pulp	(%)		24	%		27	%		25	%		25	%		25	%		25	%		27	%		25	%		23	%		24	%

Distribution Segment
Sales	($)		189			172			167			157			685			217			190			197			177			781
Operating income (loss)	($)		(1	)		(2	)		(5	)		(8	)		(16	)		3			(2	)		(1	)		—			—
Depreciation and amortization	($)		1			2			—			1			4			1			1			1			1			4
Impairment and write-down of intangible assets	($)		—			—			—			5			5			—			—			—			—			—
Personal Care Segment
Sales	($)		70			107			111			111			399			—			—			17			54			71
Operating income	($)		8			12			12			13			45			—			—			—			7			7
Depreciation and amortization	($)		3			6			6			5			20			—			—			1			3			4

Average Exchange Rates	$US / $CAN		1.001			1.010			0.995			0.991			0.999			0.986			0.968			0.980			1.023			0.989
	$CAN / $US		0.999			0.990			1.006			1.009			1.001			1.014			1.034			1.021			0.977			1.011
	€EUR / $US		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.

12 / 12

Domtar CORP - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - February 1, 2013

Attached files

Domtar CORP Reports