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Domtar Corporation reports preliminary fourth quarter and fiscal year 2012 financial results

February 1, 2013

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

TICKER SYMBOL 
(NYSE: UFS) (TSX: UFS)

MONTREAL, Feb. 1, 2013 /PRNewswire/ – 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 items(1) of $46 million ($1.31 per share) for the fourth quarter of 2012
compared to earnings before items(1) of $67 million ($1.87 per share) for the third quarter of 2012 and
earnings before items(1) 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).

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 items(1) of $233 million ($6.45 per share) for fiscal 2012 compared to earnings
before items(1) 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 items(1) was $84 million in the fourth quarter of 2012 compared to an operating
income before items(1) 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

The decrease in operating income before items(1) 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 flow(1 )of $315 million for fiscal year 2012. Domtar’s net debt-to-total
capitalization ratio(1) 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.

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.

_________________________

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

Domtar Corporation
Highlights
(In millions of dollars, unless otherwise noted)


                      Three months Three months Twelve months Twelve months
                         ended        ended         ended         ended
                      December 31  December 31   December 31  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 earning                                                          

        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

Domtar Corporation
Consolidated Statements of Earnings
(In millions of dollars, unless otherwise noted)


                                                   Twelve
                       Three months Three months   months    Twelve months
                          ended        ended        ended        ended
                       December 31  December 31  December 31  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

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

Domtar Corporation
Consolidated Statements of Cash Flows
(In millions of dollars)


                                          Twelve months     Twelve months
                                        ended December 31 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

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.


Domtar Corporation
Quarterly Reconciliation of Non-GAAP Financial Measures – By Segment
2012

(In millions of dollars, unless otherwise noted)

The following table sets forth certain non-U.S. generally accepted
accounting principles (“GAAP”), financial metrics identified in bold as
“Operating income (loss) before items”, “EBITDA before items” and
“EBITDA margin before items” by reportable segment. Management believes
that the financial metrics presented are frequently used by investors
and are useful to measure the operating performance and benchmark with
peers within the industry. These metrics are presented as a complement
to enhance the understanding of operating results but not in
substitution for GAAP results.

The Company calculates the segmented “Operating income (loss) before
items” by excluding the pre-tax effect of items considered by
management as not reflecting our ongoing operations. Management uses
these measures to focus on ongoing operations and believes that it is
useful to investors because it enables them to perform meaningful
comparisons between periods. Domtar believes that using this
information along with Operating income (loss) provides for a more
complete analysis of the results of operations. Operating income (loss)
by segment is the most directly comparable GAAP measure.


                                       Pulp and Paper                 Distribution            Personal Care (1)                 Corporate                        Total

                            Q1'12 Q2'12 Q3'12 Q4'12  YTD  Q1'12 Q2'12 Q3'12 Q4'12 YTD  Q1'12 Q2'12 Q3'12 Q4'12 YTD Q1'12 Q2'12 Q3'12 Q4'12 YTD Q1'12 Q2'12 Q3'12 Q4'12  YTD

    Reconciliation of
    Operating income
    (loss) to
    "Operating income
    (loss) before
    items"                                                                                                                                                              

          Operating
          income (loss) ($)   107    96   103    40   346   (1)   (2)   (5)   (8) (16)     8    12    12    13  45   (5)     -   (1)   (2) (8)   109   106   109    43   367

      (+) Impairment
          and
          write-down of
          property,
          plant and
          equipment and
          intangible
          assets        ($)     2     -     -     7     9     -     -     -     5    5     -     -     -     -   -     -     -     -     -   -     2     -     -    12    14

      (+) Closure and
          restructuring
          costs         ($)     1     -     -    26    27     -     -     1     1    2     -     -     1     -   1     -     -     -     -   -     1     -     2    27    30

      (-) Net losses on
          disposals of
          property,
          plant and
          equipment     ($)     -     -     -     2     2     -     -     -     -    -     -     -     -     -   -     -     -     -     -   -     -     -     -     2     2

      (+) Impact of
          purchase
          accounting    ($)     -     -     -     -     -     -     -     -     -    -     1     -     -     -   1     -     -     -     -   -     1     -     -     -     1

      (=) Operating
          income (loss)
          before items  ($)   110    96   103    75   384   (1)   (2)   (4)   (2)  (9)     9    12    13    13  47   (5)     -   (1)   (2) (8)   113   106   111    84   414

    Reconciliation of
    "Operating income
    (loss) before
    items" to "EBITDA
    before items"                                                                                                                                                       

          Operating
          income (loss)
          before items  ($)   110    96   103    75   384   (1)   (2)   (4)   (2)  (9)     9    12    13    13  47   (5)     -   (1)   (2) (8)   113   106   111    84   414

      (+) Depreciation
          and
          amortization  ($)    93    88    90    90   361     1     2     -     1    4     3     6     6     5  20     -     -     -     -   -    97    96    96    96   385

      (=) EBITDA before
          items         ($)   203   184   193   165   745     -     -   (4)   (1)  (5)    12    18    19    18  67   (5)    -    (1)   (2) (8)   210   202   207   180   799

      (/) Sales         ($) 1,191 1,132 1,153 1,099 4,575   189   172   167   157  685    70   107   111   111 399     -     -     -     -   - 1,450 1,411 1,431 1,367 5,659

      (=) EBITDA margin
          before items  (%)   17%   16%   17%   15%   16%     -     -     -     -    -   17%   17%   17%   16% 17%     -     -     -     -   -   14%   14%   14%   13%   14%


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


    (1) On March 1, 2012, the Company acquired 100% of the shares of
        Attends Healthcare Limited.
        On May 1, 2012, the Company acquired 100% of the shares of EAM
        Corporation.

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

(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

                            Q1'11 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%

“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 September 1, 2011, the Company acquired 100% of the shares of
Attends Healthcare Inc. 


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    ('000
      (a)               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

                        EUREUR
                        / $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.

 

 

 

 

SOURCE DOMTAR CORPORATION


Source: PR Newswire