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DOMTAR CORPORATION REPORTS PRELIMINARY THIRD QUARTER 2010 FINANCIAL RESULTS

October 29, 2010

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

  • Net earnings of $4.44 per share, earnings before items(1) of $4.26 per share
  • EBITDA before items(1) of $334 million, up 27% over second quarter 2010
  • Plymouth mill conversion to fluff pulp on time for scheduled start-up in
    fourth quarter 2010

TICKER SYMBOL
UFS (NYSE, TSX)

MONTREAL, Oct. 29 /PRNewswire-FirstCall/ – Domtar Corporation (NYSE/TSX: UFS)
today reported net earnings of $191 million ($4.44 per share) for the
third quarter of 2010 compared to net earnings of $31 million ($0.71
per share) for the second quarter of 2010 and net earnings of
$183 million ($4.24 per share) for the third quarter of 2009. Sales for
the third quarter of 2010 amounted to $1.5 billion. Excluding items
listed below, the Company had earnings before items(1) of $183 million ($4.26 per share) for the third quarter of 2010
compared to earnings before items(1) of $116 million ($2.67 per share) for the second quarter of 2010 and
earnings before items(1) of $57 million ($1.32 per share) for the third quarter of 2009.

Third quarter 2010 items:

  • Charge of $14 million ($9 million after tax) related to the impairment
    and write-down of property, plant and equipment;
  • Closure and restructuring costs of $1 million ($1 million after tax);
    and
  • Gain on sale of property, plant and equipment, and business of $14
    million
    ($18 million after tax).

Second quarter 2010 items:

  • Loss on sale of the Wood business of $50 million ($50 million after
    tax);
  • Costs for debt repurchase, including premium paid, of $40 million ($24
    million
    after tax);
  • Charge of $14 million ($9 million after tax) related to the impairment
    and write-down of property, plant and equipment;
  • Closure and restructuring costs of $5 million ($4 million after tax);
    and
  • Gain on sale of property, plant and equipment of $2 million ($2 million
    after tax).

Third quarter 2009 items:

  • Refundable excise tax credit for the production and use of alternative
    bio fuel mixtures of $159 million ($116 million after tax);
  • Gain on sale of property, plant and equipment of $12 million
    ($12 million after tax); and
  • Closure and restructuring costs of $4 million ($2 million after tax).

“Once again, we delivered strong financial results while successfully
executing our strategic roadmap. We reduced our exposure to hardwood
pulp markets by selling our Woodland mill, paring cyclicality in our
earnings and improving our risk profile. We also repaid our outstanding
secured debt and maintained a strong liquidity position,”
said John D. Williams, President and Chief Executive Officer. “While demand for fine paper is fairly stable, we remain conservative
in our business approach because of continued high levels of
unemployment in the U.S. and economic uncertainty.”

Mr. Williams also said, “On the front end of the business, we are working on promoting the
responsible use of paper products with the launch of our “Paper
Because” campaign. I am confident that this initiative will help
educate consumers about the positive messages behind paper – a
sustainable and purposeful product, – and demonstrate that sometimes,
there is no substitute for paper.”

SEGMENT REVIEW

Papers

Operating income before items(1) was $238 million in the third quarter of 2010 compared to operating
income before items(1) of $165 million in the second quarter of 2010. Depreciation and
amortization totaled $96 million in the third quarter of 2010. When
compared to the second quarter of 2010, paper shipments increased by
0.5% while pulp shipments decreased by 15%. The shipments-to-production
ratio for paper was 99% in the third quarter of 2010, compared to 101%
in the second quarter of 2010. When compared to the end of June, paper
inventories increased by 10,000 tons and pulp inventories increased by
33,000 metric tons at the end of September.

The increase in operating income before items(1) in the third quarter of 2010 was the result of lower costs related to
planned maintenance downtime and lower wood fiber costs.

(In millions of dollars) 3Q 2010 2Q 2010
Sales $1,296 $1,317
Operating income $237 $149
Operating income before items(1) $238 $165
Depreciation and amortization $96 $95

Paper Merchants

Operating income before items was nil in the third quarter of 2010
compared to an operating loss of $1 million in the second quarter of
2010. Depreciation and amortization was $1 million in the third quarter
of 2010. Deliveries increased by 9% when compared to the second quarter
of 2010.

The increase in operating income in the third quarter of 2010 was
primarily the result of higher average selling prices and higher
deliveries.

(In millions of dollars) 3Q 2010 2Q 2010
Sales $233 $213
Operating income (loss) $- ($1)
Depreciation and amortization $1 $1

LIQUIDITY AND CAPITAL

Cash flow provided from operating activities amounted to $267 million
and capital expenditures amounted to $38 million. Free cash flow(1) amounted to $229 million in the third quarter of 2010. Domtar’s net
debt-to-total capitalization ratio(1) stood at 14% at September 30, 2010 compared to 35% at December 31,
2009
.

Under its stock repurchase program, Domtar repurchased 399,720 shares of
common stock at an average price of $61.07 during the third quarter of
2010. Since the implementation of the program, the Company has
repurchased a total of 739,850 shares of common stock at an average
price of $58.64.

OUTLOOK

Domtar’s paper shipments are expected to decline in the last quarter of
the year due to seasonal factors. Pulp shipments are expected to be
impacted by the sale of the Woodland facility. The Company anticipates
that selling prices for pulp will continue to come under pressure
through the end of the year due to capacity restarts. Input costs are
expected to be seasonally higher in the fourth quarter.

EARNINGS CONFERENCE CALL

The Company will hold a conference call today at 10:00 a.m. (ET) to
discuss its third quarter 2010 financial results. Financial analysts
are invited to participate in the call by dialing at least 10 minutes
before start time 1 (866) 321-8231 (toll free – North America) or 1
(416) 642-5213 (International), while media and other interested
individuals are invited to listen to the live webcast on the Domtar
Corporation website at www.domtar.com.

The Company will release its fourth quarter 2010 earnings on February 4,
2011
before markets open, followed by a conference call at 10:00 a.m.
(ET)
to discuss results. The date is tentative and will be confirmed
approximately three weeks prior to the earnings release date.


About Domtar

Domtar Corporation (NYSE/TSX:UFS) is the largest integrated manufacturer
and marketer of uncoated freesheet paper in North America and the
second largest in the world based on production capacity, and is also a
manufacturer of papergrade, fluff and specialty pulp. The Company
designs, manufactures, markets and distributes a wide range of
business, commercial printing and publishing as well as converting and
specialty papers including recognized brands such as Cougar((R)), Lynx((R)) Opaque Ultra, Husky((R)) Opaque Offset, First Choice((R)) and Domtar EarthChoice((R)) Office Paper, part of a family of environmentally and socially
responsible papers. Domtar owns and operates Domtar Distribution Group,
an extensive network of strategically located paper distribution
facilities. The Company employs approximately 8,500 people. To learn
more, visit www.domtar.com.

Forward-Looking Statements

All statements in this press 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 Annual
Report on Form 10-K filed with the SEC as updated by the Company’s
latest Quarterly Report on Form 10-Q. 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 ended

September 30

Three months ended

September 30

Nine months ended

September 30

Nine months ended

September 30

    2010 2009 2010 2009
  ————————————————- (Unaudited)
————————————————
    $ $ $ $
Selected Segment Information
 
Sales
    Papers   1,296   1,211   3,858   3,444
    Paper Merchants   233   239   658   661
    Wood   59   150   148
Total for reportable segments     1,529   1,509   4,666   4,253
    Intersegment sales – Papers (56) (63) (178) (178)
    Intersegment sales – Wood (6) (11) (14)
Consolidated sales     1,473   1,440   4,477   4,061
Depreciation and amortization and impairment and write-down of

property, plant and equipment  

    Papers   96   95   287   287
    Paper Merchants   1   1   3   3
    Wood   5   10   14
Total for reportable segments     97   101   300   304
    Impairment and write-down of property, plant and equipment – Papers   14   50   35
Consolidated depreciation and amortization and impairment and

write-down of property, plant and equipment   

111 101   350   339
 
Operating income (loss)   
    Papers   237   294   506   438
    Paper Merchants   2   5
    Wood (1) (54) (31)
    Corporate (1) (4)
Consolidated operating income     236   295   448   412
Interest expense     24   34   126   88
Earnings before income taxes     212   261   322   324
Income tax expense     21   78   42   138
Net earnings     191   183   280   186
 
Per common share (in dollars) 
Net earnings  
    Basic   4.47   4.26   6.53   4.33
    Diluted   4.44   4.24   6.48   4.32
Weighted average number of common and exchangeable shares

outstanding (millions)  

    Basic   42.7   43.0   42.9   43.0
    Diluted   43.0   43.2   43.2   43.1
 
Cash flows provided from operating activities     267   244   1,000   607
Additions to property, plant and equipment     38   24   112   66
Domtar Corporation
Consolidated Statements of Earnings
(In millions of dollars, unless otherwise noted)
 
 
    Three months

ended September 30

Three months

ended September 30

Nine months

ended September 30

Nine months

ended September 30 

    2010 2009 2010 2009 
   ————————————————– (Unaudited)
————————————————–
    $ $ $ $
 
Sales   1,473   1,440   4,477   4,061
Operating expenses
    Cost of sales, excluding depreciation and amortization   1,048   1,124   3,397   3,363
    Depreciation and amortization   97   101   300   304
    Selling, general and administrative   91   85   244   254
    Impairment and write-down of property, plant and equipment   14 -   50   35
    Closure and restructuring costs   1   4   26   34
    Other operating loss (income), net (14) (169)   12 (341)
      1,237   1,145   4,029   3,649
Operating income     236   295   448   412
Interest expense     24   34   126   88
Earnings before income taxes     212   261   322   324
Income tax expense     21   78   42   138
Net earnings     191   183   280   186
 
Per common share (in dollars)
 
Net earnings 
    Basic   4.47   4.26   6.53   4.33
    Diluted   4.44   4.24   6.48   4.32
Weighted average number of common and exchangeable

shares outstanding (millions)  

    Basic   42.7   43.0   42.9   43.0
    Diluted   43.0   43.2   43.2 43.1
Domtar Corporation    
Consolidated Balance Sheets at  
(In millions of dollars) 
 
      September 30 December 31
      2010 2009
  (Unaudited)
      $ $
 
 
Assets  
Current assets   
  Cash and cash equivalents     537   324
  Receivables, less allowances of $8 and $8     653   536
  Inventories     639   745
  Prepaid expenses     28   46
  Income and other taxes receivable     43   414
  Deferred income taxes     139   137
    Total current assets   2,039   2,202
       
Property, plant and equipment, at cost       9,335   9,575
Accumulated depreciation       (5,555) (5,446)
    Net property, plant and equipment   3,780   4,129
Intangible assets, net of amortization       56   85
Other assets       114   103
      Total assets   5,989   6,519
 
 
Liabilities and shareholders’ equity  
Current liabilities 
  Bank indebtedness       26   43
  Trade and other payables       662   686
  Income and other taxes payable     30   31
  Long-term debt due within one year     22   11
    Total current liabilities     740   771
 
Long-term debt         961   1,701
Deferred income taxes and other       1,033   1,019
Other liabilities and deferred credits       444   366
 
Shareholders’ equity  
  Exchangeable shares       66   78
  Additional paid-in capital     2,766   2,816
  Retained earnings (accumulated deficit)       43 (216)
  Accumulated other comprehensive loss     (64) (16)
    Total shareholders’ equity     2,811   2,662
      Total liabilities and shareholders’ equity   5,989   6,519
Domtar Corporation
Consolidated Statements of Cash Flows
(In millions of dollars)
 
        
    Nine months

ended September 30

Nine months

ended September 30 

    2010 2009 
  ——————— (Unaudited) ———————
  $ $
        
 
Operating activities
Net earnings     280   186
Adjustments to reconcile net earnings to cash flows from operating
activities    
  Depreciation and amortization   300   304
  Deferred income taxes   7   122
  Impairment and write-down of property, plant and equipment   50   35
  Loss (gain) on repurchase of long-term debt   40 (12)
  Net losses (gains) on disposals of property, plant and equipment and
sale of businesses
  33 (12)
  Stock-based compensation expense   3   6
  Other (6)   8
Changes in assets and liabilities, excluding the effects of sale of
businesses 
  Receivables (134) (141)
  Inventories   40   234
  Prepaid expenses (2) (2)
  Trade and other payables (4)   25
  Income and other taxes   375 (172)
  Difference between employer pension and other post-retirement
contributions and pension and other post-retirement expense
  5   10
  Other assets and other liabilities   13   16
  Cash flows provided from operating activities   1,000   607
 
Investing activities
Additions to property, plant and equipment (112) (66)
Proceeds from disposals of property, plant and equipment   26   16
Proceeds from sale of businesses   161
  Cash flows provided from (used for) investing activities   75 (50)
 
Financing activities
Dividend payments   (11) -  
Net change in bank indebtedness   (16) (13)
Change of revolving bank credit facility   (60)
Issuance of long-term debt     385
Repayment of long-term debt   (763) (451)
Borrowings under accounts receivable securitization program     20 -  
Debt issue and tender offer costs   (26) (14)
Stock repurchase   (44) -  
Prepaid on structured stock repurchase, net   (19) -  
Other   (3) -  
  Cash flows used for financing activities (862) (153)
 
Net increase in cash and cash equivalents     213   404
Translation adjustments related to cash and cash equivalents     13
Cash and cash equivalents at beginning of period     324   16
Cash and cash equivalents at end of period     537   433

Domtar Corporation
Quarterly Reconciliation of Non-GAAP Financial Measures
(In millions of dollars, unless otherwise noted)

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

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

  2010 2009
        Q1 Q2 Q3 YTD Q1 Q2 Q3 Q4 YTD  
Reconciliation of “Earnings (loss) before items” to Net earnings (loss)                     
    Net earnings (loss) ($) 58 31 191 280 (45) 48 183 124 310
  (-) Alternative fuel tax credits ($) (18) (18) (28) (79) (116) (113) (336)
  (+) Impairment and write-down of property, plant and equipment ($) 16 9 9 34 21 22 43
  (+) Closure and restructuring costs ($) 14 4 1 19 14 4 2 24 44
  (-) Net losses (gains) on disposals of property, plant and equipment and
sale of businesses
($) (1) 48 (18) 29 (12) 3 (9)
  (-) Loss (gain) on repurchase of long-term debt ($) 24 24 (6) (6)
  (=) Earnings (loss) before items ($) 69 116 183 368 (38) (33) 57 60 46
  ( /) Weighted avg. number of common and exchangeable shares outstanding
(diluted)
(millions) 43.3 43.4 43.0 43.2 43.0 43.0 43.2 43.3 43.2
  (=) Earnings (loss) before items per diluted share ($) 1.59 2.67 4.26 8.52 (0.88) (0.77) 1.32 1.39 1.06
                           
Reconciliation of “EBITDA” and “EBITDA before items” to Net earnings (loss)                    
    Net earnings (loss) ($) 58 31 191 280 (45) 48 183 124 310
  (+) Income tax expense (benefit) ($) 26 (5) 21 42 (8) 68 78 42 180
  (+) Interest expense ($) 32 70 24 126 31 23 34 37 125
  (=) Operating income (loss) ($) 116 96 236 448 (22) 139 295 203 615
  (+) Depreciation and amortization ($) 102 101 97 300 99 104 101 101 405
  (+) Impairment and write-down of property, plant and equipment ($) 22 14 14 50 35 27 62
  (-) Net losses (gains) on disposals of property, plant and equipment and
sale of businesses
($) (1) 48 (14) 33 (12) 5 (7)
  (=) EBITDA ($) 239 259 333 831 112 243 384 336 1,075
  (/) Sales ($) 1,457 1,547 1,473 4,477 1,302 1,319 1,440 1,404 5,465
  (=) EBITDA margin (%) 16% 17% 23% 19% 9% 18% 27% 24% 20%
    EBITDA ($) 239 259 333 831 112 243 384 336 1,075
  (-) Alternative fuel tax credits ($) (25) (25) (46) (131) (159) (162) (498)
  (+) Closure and restructuring costs ($) 20 5 1 26 24 6 4 29 63
  (=) EBITDA before items ($) 234 264 334 832 90 118 229 203 640
  (/) Sales ($) 1,457 1,547 1,473 4,477 1,302 1,319 1,440 1,404 5,465
  (=) EBITDA margin before items (%) 16% 17% 23% 19% 7% 9% 16% 14% 12%
                          
Reconciliation of “Free cash flow” to Cash flow provided from operating activities                      
    Cash flow provided from operating activities ($) 123 610 267 1,000 57 306 244 185 792
  (-) Additions to property, plant and equipment ($) (31) (43) (38) (112) (24) (18) (24) (40) (106)
  (=) Free cash flow ($) 92 567 229 888 33 288 220 145 686
                          
“Net debt-to-total capitalization” computation                    
    Bank indebtedness ($) 19 30 26   52 24 30 43   
  (+) Long-term debt due within one year ($) 31 30 22   18 13 13 11   
  (+) Long-term debt ($) 1,600 1,186 961   2,195 2,162 1,971 1,701   
  (=) Debt ($) 1,650 1,246 1,009   2,265 2,199 2,014 1,755   
  (-) Cash and cash equivalents ($) (314) (514) (537)   (145) (381) (433) (324)   
  (=) Net debt ($) 1,336 732 472   2,120 1,818 1,581 1,431   
  (+) Shareholders’ equity ($) 2,748 2,642 2,811   2,073 2,264 2,580 2,662   
  (=) Total capitalization ($) 4,084 3,374 3,283   4,193 4,082 4,161 4,093   
    Net debt ($) 1,336 732 472   2,120 1,818 1,581 1,431   
  ( /) Total capitalization ($) 4,084 3,374 3,283   4,193 4,082 4,161 4,093   
  (=) Net debt-to-total capitalization (%) 33% 22% 14%   51% 45% 38% 35%  
                         

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

Domtar Corporation

Quarterly Reconciliation of Non-GAAP Financial Measures – By Segment 2010

(In millions of dollars, unless otherwise noted)

The following table sets forth certain non-U.S. generally accepted
accounting principles (“GAAP”) financial metrics identified 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

        Papers Paper Merchants Wood Corporate
        Q1’10 Q2’10 Q3′10 YTD Q1’10 Q2’10 Q3’10 YTD Q1’10 Q2’10 Q3’10 YTD Q1’10 Q2’10 Q310 YTD
Reconciliation of Operating income (loss) to “Operating income (loss) before items”                                   
    Operating income (loss) ($) 120 149 237 506 1 (1) (5) (49) -  (54) (3) (1) (4)
  (+) Alternative fuel tax credits ($) (25) (25) -  - 
  (+) Impairment and write-down of property, plant and equipment ($) 22 14 14 50 -  -  - 
  (+) Closure and restructuring costs ($) 20 5 1 26 -  - 
  (-) Net losses (gains) on disposals of property, plant and equipment and
sale of businesses
($) (3) (14) (17) -  (1) 49 48 2 -  2
                                       
  (=) Operating income (loss) before items ($) 137 165 238 540 1 (1) -  (6) (6) (1) (1) (2)
                                       
Reconciliation of “Operating income (loss) before items” to “EBITDA before items”                                  
    Operating income (loss) before items ($) 137 165 238 540 1 (1) -  (6) -  (6) (1) (1) (2)
  (+) Depreciation and amortization ($) 96 95 96 287 1 1 1 3 5 5 -  10 - 
                                       
  (=) EBITDA before items ($) 233 260 334 827 2 1 3 (1) 5 4 (1) (1) (2)
  (/) Sales ($) 1,245 1,317 1,296 3,858 212 213 233 658 67 83 150 - 
  (=) EBITDA margin before items (%) 19% 20% 26% 21% 1% 6% -  3%

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

Domtar Corporation
Quarterly Reconciliation of Non-GAAP Financial Measures – By Segment
2009

(In millions of dollars, unless otherwise noted)

The following table sets forth certain non-U.S. generally accepted
accounting principles (“GAAP”) financial metrics identified 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.

        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 (loss) to “Operating income (loss) before items”                                          
    Operating income (loss) ($) (6) 150 294 212 650 2 1 2 2 7 (18) (12) (1) (11) (42) -  
  (-) Alternative fuel tax credits ($) (46) (131) (159) (162) (498) -  
  (+) Impairment and write-down of property, plant and equipment ($) 35 27 62 -  
  (+) Closure and restructuring costs ($) 22 4 4 22 52 1 1 2 2 1 6 9 -  
  (-) Net losses (gains) on disposals of property, plant and equipment ($) (1) 5 4 (8) (8) (3) (3) 
                                                
  (=) Operating income (loss) before items ($) 5 23 138 104 270 2 2 2 3 9 (16) (11) (9) (5) (41) (3) (3) 
                                                
Reconciliation of “Operating income (loss) before items” to “EBITDA before items                                           
    Operating income (loss) before items ($) 5 23 138 104 270 2 2 2 3 9 (16) (11) (9) (5) (41) (3) (3) 
  (+) Depreciation and amortization ($) 94 98 95 95 382 1 1 1 3 4 5 5 6 20 -  
                                                
  (=) EBITDA before items ($) 99 121 233 199 652 3 3 3 3 12 (12) (6) (4) 1 (21) (3) (3) 
  (/) Sales ($) 1,106 1,127 1,211 1,188 4,632 217 205 239 212 873 43 46 59 63 211 -  
  (=) EBITDA margin before items (%) 9% 11% 19% 17% 14% 1% 1% 1% 1% 1% 2% -  

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

Domtar Corporation
Supplemental Segmented Information
(In millions of dollars, unless otherwise noted)

  2010 2009   
  Q1     Q2 Q3 YTD Q1 Q2 Q3 Q4 YTD 
Papers Segment
  Sales ($) 1,245 1,317 1,296 3,858 1,106 1,127 1,211 1,188 4,632
    Intersegment sales – Papers ($) (62) (60) (56) (178) (60) (55) (63) (53) (231)
  Operating income (loss) ($) 120 149 237 506 (6) 150 294 212 650
  Depreciation and amortization ($) 96 95 96 287 94 98 95 95 382
  Impairment and write-down of property,

plant and equipment

($) 22 14 14 50 35 27 62
 
  Papers
  Papers Production (’000 ST) 906 882 906 2,694 869 912 920 903 3,604
  Papers Shipments (’000 ST) 960 891 896 2,747 913 929 972 943 3,757
    Uncoated Freesheet (’000 ST) 925 889 896 2,710 887 901 939 890 3,617
    Coated Groundwood (’000 ST) 35 2 37 26 28 33 53 140
 
  Pulp
  Pulp Shipments((a)) (’000 ADMT) 388 486 412 1,286 314 393 446 386 1,539
     Hardwood Kraft Pulp (%) 40% 38% 37% 39% 33% 33% 40% 35% 36%
     Softwood Kraft Pulp (%) 49% 52% 53% 51% 54% 54% 49% 54% 52%
     Fluff Pulp (%) 11% 10% 10% 10% 13% 13% 11% 11% 12% 
 
Paper Merchants Segment
  Sales ($) 212 213 233 658 217 205 239 212 873
  Operating income (loss) ($) 1 (1) 2 1 2 2 7
  Depreciation and amortization ($) 1 1 1 3 1 1 1 3
 
Wood Segment
  Sales ($) 67 83 150 43 46 59 63 211
    Intersegment sales – Wood ($) (5) (6) (11) (4) (4) (6) (6) (20)
  Operating loss ($) (5) (49) (54) (18) (12) (1) (11) (42)
  Depreciation and amortization ($) 5 5 10 4 5 5 6 20
 
  Lumber Production (Millions FBM) 172 165 337 121 131 147 161 560
  Lumber Shipments (Millions FBM) 164 187 351 125 135 153 161 574
 
Average Exchange Rates CAN 1.041 1.028 1.039 1.036 1.245 1.167 1.097 1.056 1.142
  US 0.961 0.973 0.962 0.965 0.803 0.857 0.911 0.947 0.876

(a) Figures are gross of market pulp purchased from other producers on the
open market for some of our paper making operations. Pulp shipments
represents the amount of pulp produced in excess of our internal
requirement.

Note: the term “ST” refers to a short ton, the term “ADMT” refers to an
air dry metric ton, and the term “FBM” refers to foot board measure.

SOURCE DOMTAR CORPORATION


Source: newswire



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