Exhibit 99.1
395 de Maisonneuve Blvd. West | ||||||
Montreal, QC H3A 1L6 |
News Release |
TICKER SYMBOL | MEDIA RELATIONS | INVESTOR RELATIONS | ||
UFS (NYSE, TSX) | Michel Marcouiller Tel.: 514-848-5555 ext: 85515 Email: communications@domtar.com | Pascal Bossé Tel.: 514-848-5938 Email: ir@domtar.com |
DOMTAR CORPORATION REPORTS PRELIMINARY FIRST QUARTER 2009 FINANCIAL RESULTS
Company generates free cash flow despite costs for downtime and a steep decline in pulp prices
(All financial information is in U.S. dollars, and all earnings (loss) per share results are diluted, unless otherwise noted.)
• | Net loss of $0.09 per share, loss before items1 of $0.07 per share |
• | Cash flow provided from operating activities of $57 million |
• | Lack-of-order downtime and machine slowdowns totaling 185 thousand tons of paper and 75 thousand metric tons of pulp |
Montreal, May 1, 2009 – Domtar Corporation (NYSE/TSX: UFS) today reported a net loss of $45 million ($0.09 per share) for the first quarter of 2009 compared to a net loss of $676 million ($1.31 per share) for the fourth quarter of 2008 and net earnings of $36 million ($0.07 per share) for the first quarter of 2008. Sales for the first quarter of 2009 amounted to $1.3 billion. Excluding items1 listed below, the Company lost $38 million ($0.07 per share1) for the first quarter of 2009 compared to a loss of $20 million ($0.04 per share1) for the fourth quarter of 2008 and earnings of $25 million ($0.05 per share1) for the first quarter of 2008.
First quarter 2009:
• | 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). |
Fourth quarter 2008:
• | Charge of $387 million ($270 million after tax) related to the impairment and write-down of property, plant and equipment and intangible assets; |
• | Charge of $321 million ($321 million after tax) related to the impairment of goodwill; |
• | Charge of $52 million related to a valuation allowance on Canadian deferred income tax assets; |
• | Closure and restructuring costs of $28 million ($18 million after tax); |
• | Gain on debt repurchase of $12 million ($8 million after tax); and |
• | Costs of $5 million ($3 million after tax) related to synergies and integration. |
1 | Non-GAAP financial measure. Refer to theReconciliation of Non-GAAP Financial Measures in the appendix. |
1/12
First quarter 2008:
• | Reversal of a $23 million provision ($17 million after tax) due to the early termination of an unfavorable contract by the counterparty; |
• | Costs of $8 million ($5 million after tax) related to synergies and integration; and |
• | Closure and restructuring costs of $1 million ($1 million after tax). |
“We continue to face a very hostile environment in pulp with prices reaching cyclical lows. To bring our system back in balance we have announced the indefinite closure of our Woodland pulp mill and idled our Dryden pulp mill for ten weeks,”said John D. Williams, President and Chief Executive Officer. “Our people have responded remarkably well to the mandate of right-sizing the organization, improving its operating performance and reducing procurement costs and discretionary spending. We have generated free cash flow and our paper inventories have been significantly reduced despite a very weak demand environment. This could prove to be a catalyst as demand for fine paper levels off,”added Mr. Williams.
SEGMENT REVIEW
Papers
Operating income before items1 was $5 million in the first quarter of 2009 compared to operating income before items1 of $29 million in the fourth quarter of 2008. Depreciation and amortization totaled $94 million in the first quarter of 2009. When compared to the fourth quarter of 2008, paper shipments decreased 7% while pulp shipments decreased 11%. The shipments-to-production ratio for papers was 105% in the first quarter of 2009, compared to 104% in the fourth quarter of 2008. Paper inventories were 43,000 tons lower at the end of March when compared to year-end levels.
The decrease in operating income before items1 in the first quarter of 2009 was the result of lower average selling prices for pulp and a resulting higher inventory revaluation charge for pulp, lower paper and pulp shipments, higher usage for energy and higher costs for chemicals. These factors were partially offset by lower maintenance costs, lower freight costs, lower depreciation and amortization, lower energy and fiber costs and a favorable exchange rate including hedging.
(In millions of dollars) | 1Q 2009 | 4Q 2008 | ||||||
Sales | $ | 1,106 | $ | 1,240 | ||||
Operating income (loss) | $ | (6 | ) | $ | (693 | ) | ||
Operating income before items1 | $ | 5 | $ | 29 | ||||
Depreciation and amortization | $ | 94 | $ | 104 |
1 | Non-GAAP financial measure. Refer to theReconciliation of Non-GAAP Financial Measures in the appendix. |
2/12
Paper Merchants
Operating income was $2 million in the first quarter of 2009 unchanged from the fourth quarter of 2008. Depreciation and amortization was $1 million in the first quarter of 2009. Deliveries decreased 1% when compared to the fourth quarter. Lower selling prices and a decrease in deliveries were offset by lower costs.
(In millions of dollars) | 1Q 2009 | 4Q 2008 | ||||
Sales | $ | 217 | $ | 228 | ||
Operating income | $ | 2 | $ | 2 | ||
Depreciation and amortization | $ | 1 | $ | 1 |
Wood
Operating loss before items1 was $16 million in the first quarter of 2009, compared to operating loss before items1 of $9 million in the fourth quarter of 2008. Depreciation and amortization totaled $4 million in the first quarter of 2009. When compared to the fourth quarter of 2008, lumber shipments decreased 21%.
The increase in operating loss before items1 in the first quarter of 2009 was primarily the result of lower average selling prices, an increase in bad debt expense, and higher energy costs. These were partially offset by a favorable exchange rate including hedging.
(In millions of dollars) | 1Q 2009 | 4Q 2008 | ||||||
Sales | $ | 43 | $ | 59 | ||||
Operating loss | $ | (18 | ) | $ | (28 | ) | ||
Operating loss before items1 | $ | (16 | ) | $ | (9 | ) | ||
Depreciation and amortization | $ | 4 | $ | 5 |
1 | Non-GAAP financial measure. Refer to theReconciliation of Non-GAAP Financial Measures in the appendix. |
3/12
LIQUIDITY AND CAPITAL
Cash flow provided from operating activities amounted to $57 million and free cash flow1 amounted to $33 million in the first quarter of 2009. Domtar’s net debt-to-total capitalization ratio1 stood at 51% at March 31, 2009 compared to 50% at December 31, 2008. Amounts drawn on the receivables securitization program were reduced by $15 million when compared to year-end levels to $95 million.
ALTERNATIVE FUEL CREDITS
The U.S. Internal Revenue Code permits a refundable excise tax credit for the production and use of alternative bio fuel mixtures. Domtar submitted an application with the U.S. Internal Revenue Service to be registered as an alternative fuel mixer and received notification that its registration had been accepted in late March 2009. The Company began producing and consuming alternative fuel mixtures in February 2009 at its eligible mills. In the first quarter of 2009, the Company has recorded $46 million in “Other operating (income) expense” related to claims filed for the period ending March 31, 2009. The claims for the refundable credits are based on the volume of bio fuel mixtures produced and burned during that period. The $46 million credit represents approximately 40% of the estimated future eligible alternative fuel tax credits available to the Company each quarter.
According to the Code, the tax credit expires at the end of 2009. The U.S. Congress is currently reviewing the Alternative Fuel Credit law and may enact legislation to amend the Code. Although this does create some uncertainty related to the future of this credit, the Company believes that amounts reflected in income to date have met the revenue recognition criteria.
OUTLOOK
Market conditions in all Domtar businesses remain challenging, although the rapid decline of paper volumes in recent months has been abating. In pulp, transaction prices have been stabilizing in some overseas markets but inventories are still high. Domtar will continue to manage its working capital requirements through inventory control and the balancing of production to meet customer demand. The indefinite closure of the Woodland pulp mill will help lower inventories and, in combination with the permanent closure of a paper machine at the Plymouth pulp and paper mill, will contribute to reducing fixed costs in the Papers segment starting in the second quarter.
EARNINGS CONFERENCE CALL
The Company will hold a conference call today at 10:00 a.m. (ET) to discuss its first quarter 2009 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.
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 publication as well as converting and specialty papers including recognized brands such as Cougar®, Lynx® Opaque, Husky® Offset, First Choice® and Domtar EarthChoice® 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 nearly 11,000 people. To learn more, visitwww.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 theReconciliation of Non-GAAP Financial Measures in the appendix. |
4/12
Domtar Corporation
Highlights
(In millions of dollars, unless otherwise noted)
Three months ended | Three months ended | |||||||
March 31, 2009 | March 30, 2008 | |||||||
(Unaudited) | ||||||||
Selected Segment Information | ||||||||
Sales | ||||||||
Papers | $ | 1,106 | $ | 1,429 | ||||
Paper Merchants | 217 | 262 | ||||||
Wood | 43 | 63 | ||||||
Total for reportable segments | 1,366 | 1,754 | ||||||
Intersegment sales—Papers | (60 | ) | (83 | ) | ||||
Intersegment sales—Wood | (4 | ) | (6 | ) | ||||
Consolidated sales | 1,302 | 1,665 | ||||||
Depreciation and amortization | ||||||||
Papers | 94 | 110 | ||||||
Paper Merchants | 1 | — | ||||||
Wood | 4 | 6 | ||||||
Total for reportable segments | 99 | 116 | ||||||
Write-down of property, plant and equipment - Papers | 35 | — | ||||||
Consolidated depreciation and amortization and write-down of property, plant and equipment | 134 | 116 | ||||||
Operating income (loss) | ||||||||
Papers | (6 | ) | 114 | |||||
Paper Merchants | 2 | 3 | ||||||
Wood | (18 | ) | (22 | ) | ||||
Total for reportable segments | (22 | ) | 95 | |||||
Corporate | — | (1 | ) | |||||
Consolidated operating income (loss) | (22 | ) | 94 | |||||
Interest expense | 31 | 39 | ||||||
Earnings (loss) before income taxes | (53 | ) | 55 | |||||
Income tax (benefit) expense | (8 | ) | 19 | |||||
Net (loss) earnings | (45 | ) | 36 | |||||
Per common share (in dollars) | ||||||||
Net (loss) earnings | ||||||||
Basic | (0.09 | ) | 0.07 | |||||
Diluted | (0.09 | ) | 0.07 | |||||
Weighted average number of common and exchangeable shares outstanding (millions) | ||||||||
Basic | 515.5 | 515.5 | ||||||
Diluted | 515.5 | 515.9 | ||||||
Cash flows provided from operating activities | 57 | 27 | ||||||
Additions to property, plant and equipment | 24 | 29 | ||||||
5/12
Domtar Corporation
Consolidated Statements of Earnings
(In millions of dollars, unless otherwise noted)
Three months ended | Three months ended | ||||||
March 31, 2009 | March 30, 2008 | ||||||
(Unaudited) | |||||||
Sales | $ | 1,302 | $ | 1,665 | |||
Operating expenses | |||||||
Cost of sales, excluding depreciation and amortization | 1,123 | 1,342 | |||||
Depreciation and amortization | 99 | 116 | |||||
Selling, general and administrative | 83 | 108 | |||||
Write-down of property, plant and equipment | 35 | — | |||||
Closure and restructuring costs | 24 | 1 | |||||
Other operating (income) expense | (40 | ) | 4 | ||||
1,324 | 1,571 | ||||||
Operating income (loss) | (22 | ) | 94 | ||||
Interest expense | 31 | 39 | |||||
Earnings (loss) before income taxes | (53 | ) | 55 | ||||
Income tax (benefit) expense | (8 | ) | 19 | ||||
Net (loss) earnings | (45 | ) | 36 | ||||
Per common share (in dollars) | |||||||
Net (loss) earnings | |||||||
Basic | (0.09 | ) | 0.07 | ||||
Diluted | (0.09 | ) | 0.07 | ||||
Weighted average number of common and exchangeable shares outstanding (millions) | |||||||
Basic | 515.5 | 515.5 | |||||
Diluted | 515.5 | 515.9 | |||||
6/12
Domtar Corporation
Consolidated Balance Sheets at
(In millions of dollars)
March 31, 2009 | December 31, 2008 | |||||||
(Unaudited) | ||||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 145 | $ | 16 | ||||
Receivables, less allowances of $12 and $11 | 506 | 477 | ||||||
Inventories | 922 | 963 | ||||||
Prepaid expenses | 22 | 27 | ||||||
Income and other taxes receivable | 50 | 56 | ||||||
Deferred income taxes | 115 | 116 | ||||||
Total current assets | 1,760 | 1,655 | ||||||
Property, plant and equipment, at cost | 8,888 | 8,963 | ||||||
Accumulated depreciation | (4,734 | ) | (4,662 | ) | ||||
Net property, plant and equipment | 4,154 | 4,301 | ||||||
Intangible assets, net of amortization | 76 | 81 | ||||||
Other assets | 72 | 67 | ||||||
Total assets | 6,062 | 6,104 | ||||||
Liabilities and shareholders’ equity | ||||||||
Current liabilities | ||||||||
Bank indebtedness | 52 | 43 | ||||||
Trade and other payables | 576 | 646 | ||||||
Income and other taxes payable | 46 | 36 | ||||||
Long-term debt due within one year | 18 | 18 | ||||||
Total current liabilities | 692 | 743 | ||||||
Long-term debt | 2,195 | 2,110 | ||||||
Deferred income taxes | 809 | 824 | ||||||
Other liabilities and deferred credits | 293 | 284 | ||||||
Shareholders’ equity | ||||||||
Common stock | 5 | 5 | ||||||
Exchangeable shares | 134 | 138 | ||||||
Additional paid-in capital | 2,751 | 2,743 | ||||||
Accumulated deficit | (571 | ) | (526 | ) | ||||
Accumulated other comprehensive loss | (246 | ) | (217 | ) | ||||
Total shareholders’ equity | 2,073 | 2,143 | ||||||
Total liabilities and shareholders’ equity | 6,062 | 6,104 | ||||||
7/12
Domtar Corporation
Consolidated Statements of Cash Flows
(In millions of dollars)
Three months ended | Three months ended | |||||||
March 31, 2009 | March 30, 2008 | |||||||
(Unaudited) | ||||||||
Operating activities | ||||||||
Net (loss) earnings | $ | (45 | ) | $ | 36 | |||
Adjustments to reconcile net (loss) earnings to cash flows from operating activities | ||||||||
Depreciation and amortization | 99 | 116 | ||||||
Deferred income taxes | (15 | ) | 12 | |||||
Write-down of property, plant and equipment | 35 | — | ||||||
Stock-based compensation expense | 4 | 5 | ||||||
Other | 3 | 2 | ||||||
Changes in assets and liabilities | ||||||||
Receivables | (36 | ) | (81 | ) | ||||
Inventories | 34 | (11 | ) | |||||
Prepaid expenses | 7 | (17 | ) | |||||
Trade and other payables | (55 | ) | (18 | ) | ||||
Income and other taxes | 14 | 12 | ||||||
Difference between employer pension and other post-retirement expense and contribution | 13 | (5 | ) | |||||
Other assets and other liabilities | (1 | ) | (24 | ) | ||||
Cash flows provided from operating activities | 57 | 27 | ||||||
Investing activities | ||||||||
Additions to property, plant and equipment | (24 | ) | (29 | ) | ||||
Proceeds from disposals of property, plant and equipment | — | 21 | ||||||
Cash flows used for investing activities | (24 | ) | (8 | ) | ||||
Financing activities | ||||||||
Net change in bank indebtedness | 9 | 23 | ||||||
Change of revolving bank credit facility | 90 | (50 | ) | |||||
Repayment of long-term debt | (3 | ) | (6 | ) | ||||
Cash flows provided from (used for) financing activities | 96 | (33 | ) | |||||
Net increase (decrease) in cash and cash equivalents | 129 | (14 | ) | |||||
Cash and cash equivalents at beginning of period | 16 | 71 | ||||||
Cash and cash equivalents at end of period | 145 | 57 | ||||||
Supplemental cash flow information | ||||||||
Net cash payments for: | ||||||||
Interest | 24 | 19 | ||||||
Income taxes | — | 7 | ||||||
8/12
Domtar Corporation
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,” “EBITDA,” “EBITDA 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 typifying the Net earnings (loss) reported under U.S. GAAP. 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 from operating activities are the most directly comparable GAAP measures.
2009 | 2008 | |||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | YTD | Q1 | Q2 | Q3 | Q4 | YTD | |||||||||||||||||||
Reconciliation of “Earnings (Loss) Before Items” to Net earnings (loss) | ||||||||||||||||||||||||||||
Net earnings (loss) | ($) | (45 | ) | 36 | 24 | 43 | (676 | ) | (573 | ) | ||||||||||||||||||
(-) Alternative fuel tax credits | ($) | (28 | ) | |||||||||||||||||||||||||
(+) Write-down of PP&E/Impairment of PP&E and intangible assets | ($) | 21 | 270 | 270 | ||||||||||||||||||||||||
(+) Closure and restructuring costs | ($) | 14 | 1 | 7 | 2 | 18 | 28 | |||||||||||||||||||||
(+) Impairment of goodwill | ($) | 321 | 321 | |||||||||||||||||||||||||
(+) Valuation allowance on Canadian deferred income tax assets | ($) | 52 | 52 | |||||||||||||||||||||||||
(+) Costs related to synergies, integration and optimization | ($) | 5 | 5 | 6 | 3 | 19 | ||||||||||||||||||||||
(-) Reversal of a provision for unfavorable contract | ($) | (17 | ) | (17 | ) | |||||||||||||||||||||||
(-) Gain on debt repurchase | ($) | (8 | ) | (8 | ) | |||||||||||||||||||||||
(-) Gain related to the sale of trademarks | ($) | (4 | ) | (4 | ) | |||||||||||||||||||||||
(=) Earnings (Loss) Before Items | ($) | (38 | ) | 25 | 32 | 51 | (20 | ) | 88 | |||||||||||||||||||
(/) Weighted avg. number of common shares outstanding (diluted) | (millions) | 515.5 | 515.9 | 515.8 | 515.7 | 515.5 | 515.5 | |||||||||||||||||||||
(=) Earnings (Loss) Before Items per diluted share | ($) | (0.07 | ) | 0.05 | 0.06 | 0.10 | (0.04 | ) | 0.17 | |||||||||||||||||||
Reconciliation of “EBITDA” and “EBITDA Before Items” to Net earnings (loss) | ||||||||||||||||||||||||||||
Net earnings (loss) | ($) | (45 | ) | 36 | 24 | 43 | (676 | ) | (573 | ) | ||||||||||||||||||
(+) Income tax expense (benefit) | ($) | (8 | ) | 19 | 19 | 30 | (65 | ) | 3 | |||||||||||||||||||
(+) Interest expense | ($) | 31 | 39 | 37 | 35 | 22 | 133 | |||||||||||||||||||||
(=) Operating income (loss) | ($) | (22 | ) | 94 | 80 | 108 | (719 | ) | (437 | ) | ||||||||||||||||||
(+) Depreciation and amortization | ($) | 99 | 116 | 118 | 119 | 110 | 463 | |||||||||||||||||||||
(+) Write-down of PP&E/Impairment of goodwill, PP&E and intangible assets | ($) | 35 | 708 | 708 | ||||||||||||||||||||||||
(=) EBITDA | ($) | 112 | 210 | 198 | 227 | 99 | 734 | |||||||||||||||||||||
(-) Alternative fuel tax credits | ($) | (46 | ) | |||||||||||||||||||||||||
(+) Closure and restructuring costs | ($) | 24 | 1 | 11 | 3 | 28 | 43 | |||||||||||||||||||||
(-) Reversal of a provision for unfavorable contract | ($) | (23 | ) | (23 | ) | |||||||||||||||||||||||
(+) Costs related to synergies, integration and optimization | ($) | 8 | 9 | 10 | 5 | 32 | ||||||||||||||||||||||
(-) Gain related to the sale of trademarks | ($) | (6 | ) | (6 | ) | |||||||||||||||||||||||
(=) EBITDA Before Items | ($) | 90 | 196 | 212 | 240 | 132 | 780 | |||||||||||||||||||||
Reconciliation of “Free Cash Flow” to Cash flow from operating activities | ||||||||||||||||||||||||||||
Cash flow provided from operating activities | ($) | 57 | 27 | 113 | 131 | (74 | ) | 197 | ||||||||||||||||||||
(-) Additions to property, plant and equipment | ($) | (24 | ) | (29 | ) | (36 | ) | (49 | ) | (49 | ) | (163 | ) | |||||||||||||||
(=) Free Cash Flow | ($) | 33 | (2 | ) | 77 | 82 | (123 | ) | 34 | |||||||||||||||||||
“Net Debt-to-Total Capitalization” Computation | ||||||||||||||||||||||||||||
Bank indebtedness | ($) | 52 | 86 | 38 | 36 | 43 | ||||||||||||||||||||||
(+) Current portion of long-term debt | ($) | 18 | 17 | 19 | 19 | 38 | ||||||||||||||||||||||
(+) Long-term debt | ($) | 2,195 | 2,155 | 2,122 | 2,118 | 2,090 | ||||||||||||||||||||||
(-) Cash and cash equivalents | ($) | (145 | ) | (57 | ) | (61 | ) | (127 | ) | (16 | ) | |||||||||||||||||
(=) Net Debt | ($) | 2,120 | 2,201 | 2,118 | 2,046 | 2,155 | ||||||||||||||||||||||
(+) Shareholders’ equity | ($) | 2,073 | 3,172 | 3,217 | 3,194 | 2,143 | ||||||||||||||||||||||
(=) Total capitalization | ($) | 4,193 | 5,373 | 5,335 | 5,240 | 4,298 | ||||||||||||||||||||||
Net debt | ($) | 2,120 | 2,201 | 2,118 | 2,046 | 2,155 | ||||||||||||||||||||||
(/) Total capitalization | ($) | 4,193 | 5,373 | 5,335 | 5,240 | 4,298 | ||||||||||||||||||||||
(=) Net Debt-to-Total Capitalization | (%) | 51 | % | 41 | % | 40 | % | 39 | % | 50 | % |
“Earnings (Loss) Before Items,” “EBITDA,” “EBITDA 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.
9/12
Domtar Corporation
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 Before Items” and “EBITDA 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 Before Items” by excluding the pre-tax effect of items considered by management as not typifying the segment Operating income (loss) reported under U.S. GAAP. 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 | Paper Merchants | Wood | Corporate | ||||||||||||||||||||||||||||||||||||||||||
Q1’09 | Q2’09 | Q3’09 | Q4’09 | YTD | Q1’09 | Q2’09 | Q3’09 | Q4’09 | YTD | Q1’09 | Q2’09 | Q3’09 | Q4’09 | YTD | Q1’09 | Q2’09 | Q3’09 | Q4’09 | YTD | ||||||||||||||||||||||||||
Reconciliation of Operating income to “Operating Income Before Items” | |||||||||||||||||||||||||||||||||||||||||||||
Operating income (loss) | ($ | ) | (6 | ) | 2 | (18 | ) | ||||||||||||||||||||||||||||||||||||||
(-) Alternative fuel tax credits | ($ | ) | (46 | ) | |||||||||||||||||||||||||||||||||||||||||
(+) Write-down of property, plant and equipment | ($ | ) | 35 | ||||||||||||||||||||||||||||||||||||||||||
(+) Closure and restructuring costs | ($ | ) | 22 | 2 | |||||||||||||||||||||||||||||||||||||||||
(=) Operating Income Before Items | ($ | ) | 5 | 2 | (16 | ) | |||||||||||||||||||||||||||||||||||||||
Reconciliation of “Operating Income Before Items” to “EBITDA Before Items” | |||||||||||||||||||||||||||||||||||||||||||||
Operating Income Before Items | ($ | ) | 5 | 2 | (16 | ) | |||||||||||||||||||||||||||||||||||||||
(+) Depreciation and amortization | ($ | ) | 94 | 1 | 4 | ||||||||||||||||||||||||||||||||||||||||
(=) EBITDA Before Items | ($ | ) | 99 | 3 | (12 | ) |
“Operating Income Before Items” and “EBITDA 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.
10/12
Domtar Corporation
Reconciliation of Non-GAAP Financial Measures—By Segment 2008
(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 Before Items” and “EBITDA 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 Before Items” by excluding the pre-tax effect of items considered by management as not typifying the segment Operating income (loss) reported under U.S. GAAP. 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 | Paper Merchants | Wood | Corporate | ||||||||||||||||||||||||||||||||||||||||
Q1’08 | Q2’08 | Q3’08 | Q4’08 | YTD | Q1’08 | Q2’08 | Q3’08 | Q4’08 | YTD | Q1’08 | Q2’08 | Q3’08 | Q4’08 | YTD | Q1’08 | Q2’08 | Q3’08 | Q4’08 | YTD | ||||||||||||||||||||||||
Reconciliation of Operating income to “Operating Income Before Items” | |||||||||||||||||||||||||||||||||||||||||||
Operating income (loss) | ($ | ) | 114 | 92 | 118 | (693) | (369) | 3 | 2 | 1 | 2 | 8 | (22) | (12) | (11) | (28) | (73) | (1) | (2) | (3) | |||||||||||||||||||||||
(+) Impairment and write-down of goodwill, PP&E and intangible assets | ($ | ) | 694 | 694 | 14 | 14 | |||||||||||||||||||||||||||||||||||||
(+) Closure and restructuring costs | ($ | ) | 1 | 11 | 3 | 23 | 38 | 5 | 5 | ||||||||||||||||||||||||||||||||||
(+) Costs related to synergies, integration and optimization | ($ | ) | 8 | 9 | 10 | 5 | 32 | ||||||||||||||||||||||||||||||||||||
(-) Reversal of a provision for unfavorable contract | ($ | ) | (23) | (23) | |||||||||||||||||||||||||||||||||||||||
(-) Gain related to the sale of trademarks | ($ | ) | (6) | (6) | |||||||||||||||||||||||||||||||||||||||
(=) Operating Income Before Items | ($ | ) | 100 | 106 | 131 | 29 | 366 | 3 | 2 | 1 | 2 | 8 | (22) | (12) | (11) | (9) | (54) | (1) | (2) | (3) | |||||||||||||||||||||||
Reconciliation of “Operating Income Before Items” to “EBITDA Before Items” | |||||||||||||||||||||||||||||||||||||||||||
Operating Income Before Items | ($ | ) | 100 | 106 | 131 | 29 | 366 | 3 | 2 | 1 | 2 | 8 | (22) | (12) | (11) | (9) | (54) | (1) | (2) | (3) | |||||||||||||||||||||||
(+) Depreciation and amortization | ($ | ) | 110 | 110 | 111 | 104 | 435 | 1 | 1 | 1 | 3 | 6 | 7 | 7 | 5 | 25 | |||||||||||||||||||||||||||
(=) EBITDA Before Items | ($ | ) | 210 | 216 | 242 | 133 | 801 | 3 | 3 | 2 | 3 | 11 | (16) | (5) | (4) | (4) | (29) | (1) | (2) | (3) |
“Operating Income Before Items” and “EBITDA 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.
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Domtar Corporation
Supplemental Segmented Information
(In millions of dollars, unless otherwise noted)
2009 | 2008 | |||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | YTD | Q1 | Q2 | Q3 | Q4 | YTD | |||||||||||||||||||
Papers Segment | ||||||||||||||||||||||||||||
Sales | ($) | 1,106 | 1,429 | 1,407 | 1,364 | 1,240 | 5,440 | |||||||||||||||||||||
Intersegment sales – Papers | ($) | (60 | ) | (83 | ) | (73 | ) | (64 | ) | (56 | ) | (276 | ) | |||||||||||||||
Operating income (loss) | ($) | (6 | ) | 114 | 92 | 118 | (693 | ) | (369 | ) | ||||||||||||||||||
Depreciation & amortization | ($) | 94 | 110 | 110 | 111 | 104 | 435 | |||||||||||||||||||||
Impairment and write-down of goodwill and PP&E | ($) | 35 | 694 | 694 | ||||||||||||||||||||||||
Papers | ||||||||||||||||||||||||||||
Papers Production | (’000 ST) | 869 | 1,173 | 1,146 | 1,115 | 951 | 4,385 | |||||||||||||||||||||
Papers Shipments | (’000 ST) | 913 | 1,205 | 1,137 | 1,079 | 985 | 4,406 | |||||||||||||||||||||
Uncoated freesheet | (’000 ST) | 887 | 1,149 | 1,096 | 1,044 | 952 | 4,241 | |||||||||||||||||||||
Coated groundwood | (’000 ST) | 26 | 56 | 41 | 35 | 33 | 165 | |||||||||||||||||||||
Pulp | ||||||||||||||||||||||||||||
Pulp Shipments(a) | (’000 ADMT) | 314 | 347 | 347 | 325 | 353 | 1,372 | |||||||||||||||||||||
Hardwood Kraft Pulp | (%) | 33 | % | 44 | % | 43 | % | 41 | % | 37 | % | 41 | % | |||||||||||||||
Softwood Kraft Pulp | (%) | 54 | % | 47 | % | 46 | % | 47 | % | 50 | % | 48 | % | |||||||||||||||
Fluff Pulp | (%) | 13 | % | 9 | % | 11 | % | 12 | % | 13 | % | 11 | % | |||||||||||||||
Paper Merchants Segment | ||||||||||||||||||||||||||||
Sales | ($) | 217 | 262 | 243 | 257 | 228 | 990 | |||||||||||||||||||||
Intersegment sales – Paper Merchants | ($) | |||||||||||||||||||||||||||
Operating income | ($) | 2 | 3 | 2 | 1 | 2 | 8 | |||||||||||||||||||||
Depreciation & amortization | ($) | 1 | 1 | 1 | 1 | 3 | ||||||||||||||||||||||
Wood Segment | ||||||||||||||||||||||||||||
Sales | ($) | 43 | 63 | 70 | 76 | 59 | 268 | |||||||||||||||||||||
Intersegment sales – Wood | ($) | (4 | ) | (6 | ) | (8 | ) | (8 | ) | (6 | ) | (28 | ) | |||||||||||||||
Operating loss | ($) | (18 | ) | (22 | ) | (12 | ) | (11 | ) | (28 | ) | (73 | ) | |||||||||||||||
Depreciation & amortization | ($) | 4 | 6 | 7 | 7 | 5 | 25 | |||||||||||||||||||||
Impairment of goodwill, PP&E and intangible assets | ($) | 14 | 14 | |||||||||||||||||||||||||
Lumber Production | (Millions FBM) | 121 | 168 | 155 | 163 | 181 | 667 | |||||||||||||||||||||
Lumber Shipments | (Millions FBM) | 125 | 160 | 181 | 178 | 158 | 677 | |||||||||||||||||||||
Average Exchange Rates | CAN | 1.245 | 1.004 | 1.010 | 1.042 | 1.212 | 1.067 | |||||||||||||||||||||
US | 0.803 | 0.996 | 0.990 | 0.960 | 0.825 | 0.937 |
(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.
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