Domtar Corporation reports preliminary first quarter 2009 financial results
May 1, 2009
TICKER SYMBOL
UFS (NYSE, TSX)
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 items(1) 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
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.
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 items(1) was $5 million in the first quarter of
2009 compared to operating income before items(1) 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 items(1) 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 items(1) $5 $29
Depreciation and amortization $94 $104
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 items(1) was $16 million in the first quarter of
2009, compared to operating loss before items(1) 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 items(1) 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 items(1) ($16) ($9)
Depreciation and amortization $4 $5
LIQUIDITY AND CAPITAL
Cash flow provided from operating activities amounted to $57 million and
free cash flow(1) amounted to $33 million in the first quarter of 2009.
Domtar's net debt-to-total capitalization ratio(1) 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(R), Lynx(R) Opaque, Husky(R) Offset, First Choice(R) and
Domtar EarthChoice(R) Office Paper, part of a family of environmentally and
socially responsible papers. Domtar owns and operates Domtar Distribution
Group, an extensive network of strategically located paper distribution
facilities. Domtar also produces lumber and other specialty and industrial
wood products. The Company employs nearly 11,000 people. To learn more, visit
www.domtar.com.
Forward-Looking Statements
All statements in this news release that are not based on historical fact
are "forward-looking statements." While management has based any
forward-looking statements contained herein on its current expectations, the
information on which such expectations were based may change. These
forward-looking statements rely on a number of assumptions concerning future
events and are subject to a number of risks, uncertainties, and other factors,
many of which are outside of our control that could cause actual results to
materially differ from such statements. Such risks, uncertainties, and other
factors include, but are not necessarily limited to, those set forth under the
captions "Forward-Looking Statements" and "Risk Factors" of the latest Form
10-K filed with the SEC as periodically updated by subsequently filed Form
10-Q's. Unless specifically required by law, we assume no obligation to update
or revise these forward-looking statements to reflect new events or
circumstances.
----------------------
(1) Non-GAAP financial measure. Refer to the Reconciliation of Non-GAAP
Financial Measures in the appendix.
Domtar Corporation
Highlights
(In millions of dollars, unless otherwise noted)
-------------------------------------------------------------------------
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Three Three
months months
ended ended
March 31 March 30
-------------------------------------------------------------------------
2009 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
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-------------------------------------------------------------------------
Cash flows provided from operating activities 57 27
Additions to property, plant and equipment 24 29
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Domtar Corporation
Consolidated Statements of Earnings
(In millions of dollars, unless otherwise noted)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three Three
months months
ended ended
March 31 March 30
-------------------------------------------------------------------------
2009 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
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Domtar Corporation
Consolidated Balance Sheets at
(In millions of dollars)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
March 31 December 31
-------------------------------------------------------------------------
2009 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
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Domtar Corporation
Consolidated Statements of Cash Flows
(In millions of dollars)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three Three
months months
ended ended
March 31 March 30
-------------------------------------------------------------------------
2009 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
-------------------------------------------------------------------------
-------------------------------------------------------------------------
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
-----------------------------------
Q1 Q2 Q3 Q4 YTD
-----------------------------------
Reconciliation of
"Earnings (Loss)
Before Items" to
Net earnings (loss)
Net earnings (loss) ($) (45)
(-) Alternative fuel tax
credits ($) (28)
(+) Write-down of PP&E/
Impairment of PP&E and
intangible assets ($) 21
(+) Closure and
restructuring costs ($) 14
(+) Impairment of goodwill ($)
(+) Valuation allowance on
Canadian deferred
income tax assets ($)
(+) Costs related to
synergies,
integration and
optimization ($)
(-) Reversal of a
provision for
unfavorable contract ($)
(-) Gain on debt
repurchase ($)
(-) Gain related to the
sale of trademarks ($)
(=) Earnings (Loss)
Before Items ($) (38)
(/) Weighted avg. number
of common shares
outstanding
(diluted) (millions) 515.5
(=) Earnings (Loss)
Before Items per
diluted share ($) (0.07)
Reconciliation of
"EBITDA" and "EBITDA
Before Items" to
Net earnings (loss)
Net earnings (loss) ($) (45)
(+) Income tax expense
(benefit) ($) (8)
(+) Interest expense ($) 31
(=) Operating income
(loss) ($) (22)
(+) Depreciation and
amortization ($) 99
(+) Write-down of PP&E/
Impairment of
goodwill, PP&E and
intangible assets ($) 35
(equal) EBITDA ($) 112
(-) Alternative fuel tax
credits ($) (46)
(+) Closure and
restructuring costs ($) 24
(-) Reversal of a
provision for
unfavorable contract ($)
(+) Costs related to
synergies,
integration and
optimization ($)
(-) Gain related to the
sale of trademarks ($)
(=) EBITDA Before
Items ($) 90
Reconciliation of
"Free Cash Flow"
to Cash flow from
operating activities
Cash flow provided
from operating
activities ($) 57
(-) Additions to
property, plant
and equipment ($) (24)
(equal) Free Cash Flow ($) 33
"Net Debt-to-Total
Capitalization"
Computation
Bank indebtedness ($) 52
(+) Current portion of
long-term debt ($) 18
(+) Long-term debt ($) 2,195
(-) Cash and cash
equivalents ($) (145)
(equal) Net Debt ($) 2,120
(+) Shareholders' equity ($) 2,073
(=) Total
capitalization ($) 4,193
Net debt ($) 2,120
(/) Total capitalization ($) 4,193
(=) Net Debt-to-Total
Capitalization (%) 51%
-----------------------------------
-----------------------------------
2008
-----------------------------------
Q1 Q2 Q3 Q4 YTD
-----------------------------------
Reconciliation of
"Earnings (Loss)
Before Items" to
Net earnings (loss)
Net earnings (loss) ($) 36 24 43 (676) (573)
(-) Alternative Fuel tax
credits ($)
(+) Write-down of PP&E/
Impairment of PP&E and
intangible assets ($) 270 270
(+) Closure and
restructuring costs ($) 1 7 2 18 28
(+) Impairment of goodwill ($) 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 ($) (4) (4)
(=) Earnings (Loss)
Before Items ($) 25 32 51 (20) 88
(/) Weighted avg. number
of common shares
outstanding
(diluted) (millions) 515.9 515.8 515.7 515.5 515.5
(=) Earnings (Loss)
Before Items per
diluted share ($) 0.05 0.06 0.10 (0.04) 0.17
Reconciliation of
"EBITDA" and "EBITDA
Before Items" to
Net earnings (loss)
Net earnings (loss) ($) 36 24 43 (676) (573)
(+) Income tax expense
(benefit) ($) 19 19 30 (65) 3
(+) Interest expense ($) 39 37 35 22 133
(=) Operating income
(loss) ($) 94 80 108 (719) (437)
(+) Depreciation and
amortization ($) 116 118 119 110 463
(+) Write-down of PP&E/
Impairment of
goodwill, PP&E and
intangible assets ($) 708 708
(equal) EBITDA ($) 210 198 227 99 734
(-) Alternative fuel tax
credits ($)
(+) Closure and
restructuring costs ($) 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 ($) (6) (6)
(=) EBITDA Before
Items ($) 196 212 240 132 780
Reconciliation of
"Free Cash Flow"
to Cash flow from
operating activities
Cash flow provided
from operating
activities ($) 27 113 131 (74) 197
(-) Additions to
property, plant
and equipment ($) (29) (36) (49) (49) (163)
(equal) Free Cash Flow ($) (2) 77 82 (123) 34
"Net Debt-to-Total
Capitalization"
Computation
Bank indebtedness ($) 86 38 36 43
(+) Current portion of
long-term debt ($) 17 19 19 38
(+) Long-term debt ($) 2,155 2,122 2,118 2,090
(-) Cash and cash
equivalents ($) (57) (61) (127) (16)
(equal) Net Debt ($) 2,201 2,118 2,046 2,155
(+) Shareholders' equity ($) 3,172 3,217 3,194 2,143
(=) Total
capitalization ($) 5,373 5,335 5,240 4,298
Net debt ($) 2,201 2,118 2,046 2,155
(/) Total capitalization ($) 5,373 5,335 5,240 4,298
(=) Net Debt-to-Total
Capitalization (%) 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.
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
-----------------------------------
Q1'09 Q2'09 Q3'09 Q4'09 YTD
-----------------------------------
Reconciliation of
Operating income to
"Operating Income
Before Items"
Operating income (loss) ($) (6)
(-) Alternative fuel tax
credits ($) (46)
(+) Write-down of property,
plant and equipment ($) 35
(+) Closure and restructuring
costs ($) 22
(=) Operating Income
Before Items ($) 5
Reconciliation of
"Operating Income
Before Items" to
"EBITDA Before Items"
Operating Income
Before Items ($) 5
(+) Depreciation and
amortization ($) 94
(=) EBITDA Before
Items ($) 99
-----------------------------------
-----------------------------------
Paper Merchants
-----------------------------------
Q1'09 Q2'09 Q3'09 Q4'09 YTD
-----------------------------------
Reconciliation of
Operating income to
"Operating Income
Before Items"
Operating income (loss) ($) 2
(-) Alternative fuel tax
credits ($)
(+) Write-down of property,
plant and equipment ($)
(+) Closure and restructuring
costs ($)
(=) Operating Income
Before Items ($) 2
Reconciliation of
"Operating Income
Before Items" to
"EBITDA Before Items"
Operating Income
Before Items ($) 2
(+) Depreciation and
amortization ($) 1
(=) EBITDA Before
Items ($) 3
-----------------------------------
-----------------------------------
Wood
-----------------------------------
Q1'09 Q2'09 Q3'09 Q4'09 YTD
-----------------------------------
Reconciliation of
Operating income to
"Operating Income
Before Items"
Operating income (loss) ($) (18)
(-) Alternative fuel tax
credits ($)
(+) Write-down of property,
plant and equipment ($)
(+) Closure and restructuring
costs ($) 2
(=) Operating Income
Before Items ($) (16)
Reconciliation of
"Operating Income
Before Items" to
"EBITDA Before Items"
Operating Income
Before Items ($) (16)
(+) Depreciation and
amortization ($) 4
(=) EBITDA Before
Items ($) (12)
-----------------------------------
-----------------------------------
Corporate
-----------------------------------
Q1'09 Q2'09 Q3'09 Q4'09 YTD
-----------------------------------
Reconciliation of
Operating income to
"Operating Income
Before Items"
Operating income (loss) ($)
(-) Alternative fuel tax
credits ($)
(+) Write-down of property,
plant and equipment ($)
(+) Closure and restructuring
costs ($)
(=) Operating Income
Before Items ($)
Reconciliation of
"Operating Income
Before Items" to
"EBITDA Before Items"
Operating Income
Before Items ($)
(+) Depreciation and
amortization ($)
(=) EBITDA Before
Items ($)
-----------------------------------
"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.
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
-----------------------------------
Q1'08 Q2'08 Q3'08 Q4'08 YTD
-----------------------------------
Reconciliation of Operating
income to "Operating Income
Before Items"
Operating income (loss) ($) 114 92 118 (693) (369)
(+) Impairment and
write-down of goodwill,
PP&E and intangible
assets ($) 694 694
(+) Closure and
restructuring costs ($) 1 11 3 23 38
(+) Costs related to
synergies, integration
and optimization ($) 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 ($) 100 106 131 29 366
Reconciliation of "Operating
Income Before Items" to
"EBITDA Before Items"
Operating Income Before
Items ($) 100 106 131 29 366
(+) Depreciation and
amortization ($) 110 110 111 104 435
(=) EBITDA Before
Items ($) 210 216 242 133 801
-----------------------------------
-----------------------------------
Paper Merchants
-----------------------------------
Q1'08 Q2'08 Q3'08 Q4'08 YTD
-----------------------------------
Reconciliation of Operating
income to "Operating Income
Before Items"
Operating income (loss) ($) 3 2 1 2 8
(+) Impairment and
write-down of goodwill,
PP&E and intangible
assets ($)
(+) Closure and
restructuring costs ($)
(+) Costs related to
synergies, integration
and optimization ($)
(-) Reversal of a provision
for unfavorable contract ($)
(-) Gain related to the sale
of trademarks ($)
(=) Operating Income
Before Items ($) 3 2 1 2 8
Reconciliation of "Operating
Income Before Items" to
"EBITDA Before Items"
Operating Income Before
Items ($) 3 2 1 2 8
(+) Depreciation and
amortization ($) 1 1 1 3
(=) EBITDA Before
Items ($) 3 3 2 3 11
-----------------------------------
-----------------------------------
Wood
-----------------------------------
Q1'08 Q2'08 Q3'08 Q4'08 YTD
-----------------------------------
Reconciliation of Operating
income to "Operating Income
Before Items"
Operating income (loss) ($) (22) (12) (11) (28) (73)
(+) Impairment and
write-down of goodwill,
PP&E and intangible
assets ($) 14 14
(+) Closure and
restructuring costs ($) 5 5
(+) Costs related to
synergies, integration
and optimization ($)
(-) Reversal of a provision
for unfavorable contract ($)
(-) Gain related to the sale
of trademarks ($)
(=) Operating Income
Before Items ($) (22) (12) (11) (9) (54)
Reconciliation of "Operating
Income Before Items" to
"EBITDA Before Items"
Operating Income Before
Items ($) (22) (12) (11) (9) (54)
(+) Depreciation and
amortization ($) 6 7 7 5 25
(=) EBITDA Before
Items ($) (16) (5) (4) (4) (29)
-----------------------------------
-----------------------------------
Corporate
-----------------------------------
Q1'08 Q2'08 Q3'08 Q4'08 YTD
-----------------------------------
Reconciliation of Operating
income to "Operating Income
Before Items"
Operating income (loss) ($) (1) (2) (3)
(+) Impairment and
write-down of goodwill,
PP&E and intangible
assets ($)
(+) Closure and
restructuring costs ($)
(+) Costs related to
synergies, integration
and optimization ($)
(-) Reversal of a provision
for unfavorable contract ($)
(-) Gain related to the sale
of trademarks ($)
(=) Operating Income
Before Items ($) (1) (2) (3)
Reconciliation of "Operating
Income Before Items" to
"EBITDA Before Items"
Operating Income Before
Items ($) (1) (2) (3)
(+) Depreciation and
amortization ($)
(=) EBITDA Before
Items ($) (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.
Domtar Corporation
Supplemental Segmented Information
(In millions of dollars, unless otherwise noted)
-----------------------------------
2009
-----------------------------------
Q1 Q2 Q3 Q4 YTD
-----------------------------------
Papers Segment
Sales ($) 1,106
Intersegment sales
- Papers ($) (60)
Operating income (loss) ($) (6)
Depreciation &
amortization ($) 94
Impairment and write-down
of goodwill and PP&E ($) 35
Papers
Papers Production ('000 ST) 869
Papers Shipments ('000 ST) 913
Uncoated freesheet ('000 ST) 887
Coated groundwood ('000 ST) 26
Pulp
Pulp Shipments(a) ('000 ADMT) 314
Hardwood Kraft Pulp (%) 33%
Softwood Kraft Pulp (%) 54%
Fluff Pulp (%) 13%
Paper Merchants Segment
Sales ($) 217
Intersegment sales
- Paper Merchants ($)
Operating income ($) 2
Depreciation &
amortization ($) 1
Wood Segment
Sales ($) 43
Intersegment sales
- Wood ($) (4)
Operating loss ($) (18)
Depreciation &
amortization ($) 4
Impairment of goodwill,
PP&E and intangible
assets ($)
Lumber Production (Millions FBM) 121
Lumber Shipments (Millions FBM) 125
Average Exchange Rates CAN 1.245
US 0.803
-----------------------------------
-----------------------------------
2008
-----------------------------------
Q1 Q2 Q3 Q4 YTD
-----------------------------------
Papers Segment
Sales ($) 1,429 1,407 1,364 1,240 5,440
Intersegment sales
- Papers ($) (83) (73) (64) (56) (276)
Operating income (loss) ($) 114 92 118 (693) (369)
Depreciation &
amortization ($) 110 110 111 104 435
Impairment and write-down
of goodwill and PP&E ($) 694 694
Papers
Papers Production ('000 ST) 1,173 1,146 1,115 951 4,385
Papers Shipments ('000 ST) 1,205 1,137 1,079 985 4,406
Uncoated freesheet ('000 ST) 1,149 1,096 1,044 952 4,241
Coated groundwood ('000 ST) 56 41 35 33 165
Pulp
Pulp Shipments(a) ('000 ADMT) 347 347 325 353 1,372
Hardwood Kraft Pulp (%) 44% 43% 41% 37% 41%
Softwood Kraft Pulp (%) 47% 46% 47% 50% 48%
Fluff Pulp (%) 9% 11% 12% 13% 11%
Paper Merchants Segment
Sales ($) 262 243 257 228 990
Intersegment sales
- Paper Merchants ($)
Operating income ($) 3 2 1 2 8
Depreciation &
amortization ($) 1 1 1 3
Wood Segment
Sales ($) 63 70 76 59 268
Intersegment sales
- Wood ($) (6) (8) (8) (6) (28)
Operating loss ($) (22) (12) (11) (28) (73)
Depreciation &
amortization ($) 6 7 7 5 25
Impairment of goodwill,
PP&E and intangible
assets ($) 14 14
Lumber Production (Millions FBM) 168 155 163 181 667
Lumber Shipments (Millions FBM) 160 181 178 158 677
Average Exchange Rates CAN 1.004 1.010 1.042 1.212 1.067
US 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.
SOURCE DOMTAR CORPORATION
Source: newswire
Topics:
Business Finance, Generally Accepted Accounting Principles, Accountancy, Finance, USD, Domtar Corporation, Net income, Free cash flow, Income, Amortization, Depreciation, Cash flow statement, Earnings before interest and taxes, Operating cash flow, Earnings before interest, taxes, depreciation and amortization