Domtar Corporation reports preliminary fourth quarter and fiscal year 2011 financial results

TICKER SYMBOL
(NYSE: UFS) (TSX: UFS)

Good financial results despite softness in global pulp markets
(All financial information is in U.S. dollars, and all earnings (loss) per share results are diluted, unless otherwise noted.)

  • Fourth quarter 2011 net earnings of $1.63 per share, earnings before items1 of $2.49 per share
  • Personal care segment delivers financial performance in line with expectations
  • Share buyback totaled $494 million in 2011; share count reduced by 14% from December 2010


MONTREAL, Feb. 3, 2012 /CNW Telbec/ - Domtar Corporation (NYSE: UFS) (TSX: UFS) today reported net earnings of $61 million ($1.63 per share) for the fourth quarter of 2011 compared to net earnings of $117 million ($2.95 per share) for the third quarter of 2011 and net earnings of $325 million ($7.59 per share) for the fourth quarter of 2010. Sales for the fourth quarter of 2011 amounted to $1.4 billion. Excluding items listed below, the Company had earnings before items1 of $93 million ($2.49 per share) for the fourth quarter of 2011 compared to earnings before items1 of $123 million ($3.10 per share) for the third quarter of 2011 and earnings before items1 of $103 million ($2.41 per share) for the fourth quarter of 2010.

Fourth quarter 2011 items:

  • Closure and restructuring costs of $38 million ($23 million after tax) mostly related to the restructuring of certain U.S. pension benefit plans; and

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

Third quarter 2011 items:

  • Gains on the sale of property, plant and equipment of $4 million ($3 million after tax);

  • Charge of $8 million ($4 million after tax) related to the impairment and write-down of property, plant and equipment;

  • Premium paid on debt repurchase of $4 million ($3 million after tax);

  • Closure and restructuring costs of $1 million ($1 million after tax); and

  • Negative impact of purchase accounting of $1 million ($1 million after tax).

Fourth quarter 2010 items:

  • Benefit from cellulosic biofuel producer income tax credit of $127 million;

  • Benefit from reversal of a valuation allowance on Canadian deferred income tax assets of $100 million;

  • Costs for debt repurchase of $7 million ($4 million after tax); and

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

"Our pulp earnings were affected by the rapid decline in global pulp prices while earnings from our paper business were impacted by the typical seasonal slowdown of the fourth quarter. Nevertheless, our fourth quarter results are good results and I am pleased to see the Attends business perform to expectations," said John D. Williams, President and Chief Executive Officer.

FISCAL YEAR 2011 HIGHLIGHTS

For fiscal year 2011, net earnings amounted to $365 million ($9.08 per share) compared to net earnings of $605 million ($14.00 per share) for fiscal year 2010. The Company had earnings before items1 of $452 million ($11.24 per share) for fiscal 2011 compared to earnings before items1 of $471 million ($10.90 per share) for fiscal 2010. Sales amounted to $5.6 billion for fiscal year 2011.

Commenting on the 2011 performance, Mr. Williams said, "Looking back at 2011, we delivered another strong performance. The second half was slightly more challenging due to the decline in pulp prices however we maintained our volumes. This solid performance enabled us to pursue our commitment to returning a majority of free cash flow to shareholders. In 2011, we returned over $543 million or $13.50 per share, representing 73% of total free cash flow1, through a combination of share buyback and regular dividends."

QUARTERLY REVIEW

Operating income before items1 was $148 million in the fourth quarter of 2011 compared to an operating income before items1 of $193 million in the third quarter of 2011. Depreciation and amortization totaled $95 million in the fourth quarter of 2011.

In December 2011, Domtar signed a four-year master agreement with the United Steelworkers that covers approximately 3,000 hourly employees at nine different locations in the United States. Per the agreement, Domtar is restructuring the pension plans covering these negotiated employees. This will result in Domtar's withdrawal from a multi-employer pension plan and the transition of all covered employees not grandfathered under the existing defined-benefit pension plans to a defined-contribution pension plan for future service. As a result, Domtar incurred a $41 million charge recorded under Closure and restructuring costs.

(In millions of dollars)   4Q 2011   3Q 2011
Sales   $1,369   $1,417
Operating income (loss)        
  Pulp and Paper segment   92   189
  Distribution segment   -   (1)
  Personal Care segment   7   -
  Corporate   -   (1)
  Total   99   187
Operating income before items1   148   193
Depreciation and amortization   95   93


The decrease in operating income before items1 in the fourth quarter of 2011 was the result of lower average selling prices for pulp, lower shipments for paper and higher energy costs. These factors were partially offset by lower maintenance costs, lower freight costs, the positive impact of a weaker Canadian dollar and the inclusion of Attends' earnings for a full quarter.

When compared to the third quarter of 2011, paper shipments decreased 6.5% and pulp shipments increased 12.6%. Paper deliveries of ArivaTM decreased 8% when compared to the third quarter of 2011. The shipments-to-production ratio for paper was 95% in the fourth quarter of 2011, compared to 102% in the third quarter of 2011. Paper inventories increased by 40,000 tons while pulp inventories decreased by 25,000 metric tons as at the end of December, compared to September levels.

LIQUIDITY AND CAPITAL

Cash flow provided from operating activities amounted to $883 million and capital expenditures amounted to $144 million, resulting in free cash flow1 of $739 million for fiscal 2011. Domtar's net debt-to-total capitalization ratio1 stood at 12% at December 31, 2011 compared to 9% at December 31, 2010.

OUTLOOK

Prices for pulp are still expected to remain under pressure in certain geographies while market dynamics in the Asian markets are stabilizing. In fine papers, North American demand is expected to decline at a 2-4% rate in 2012, consistent with long-term trends. Any acceleration in employment growth may help mitigate the structural decline in paper demand. Inflation on input costs is expected to be moderate in 2012.

EARNINGS CONFERENCE CALL

The Company will hold a conference call today at 11:00 a.m. (ET) to discuss its fourth quarter 2011 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 2012 earnings on April 26, 2012 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) 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®, Lynx® Opaque Ultra, Husky® Opaque Offset, First Choice® and Domtar EarthChoice® Office Paper, part of a family of environmentally and socially responsible papers. Domtar also produces a complete line of incontinence care products and distributes washcloths marketed primarily under the Attends® brand name. Domtar owns and operates ArivaTM, an extensive network of strategically located paper distribution facilities. The Company employs approximately 8,700 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 ended
December 31
  Three months ended
December 31
  Twelve months ended
December 31
  Twelve months ended
December 31
    2011   2010   2011   2010
    (Unaudited)
    $   $   $   $
                   
Selected Segment Information                
               
Sales                
    Pulp and Paper 1,177   1,212   4,953   5,070
    Distribution 177   212   781   870
    Personal Care 54   -   71   -
    Wood -   -   -   150
Total for reportable segments 1,408   1,424   5,805   6,090
    Intersegment sales - Pulp and Paper (39)   (51)   (193)   (229)
    Intersegment sales - Wood -   -   -   (11)
Consolidated sales 1,369   1,373   5,612   5,850
Depreciation and amortization and impairment and write-down of property, plant and equipment              
    Pulp and Paper 91   94   368   381
    Distribution 1   1   4   4
    Personal Care 3   -   4   -
    Wood -   -   -   10
Total for reportable segments 95   95   376   395
    Impairment and write-down of property, plant and equipment - Pulp and Paper 12   -   85   50
Consolidated depreciation and amortization and impairment and write-down
of property, plant and equipment
107   95   461   445
                   
Operating income (loss)                
    Pulp and Paper 92   161   581   667
    Distribution -   (3)   -   (3)
    Personal Care 7   -   7   -
    Wood -   -   -   (54)
    Corporate -   (3)   4   (7)
Consolidated operating income 99   155   592   603
Interest expense, net 20   29   87   155
Earnings before income taxes and equity earnings 79   126   505   448
Income tax expense (benefit) 11   (199)   133   (157)
Equity loss, net of taxes 7   -   7   -
Net earnings 61   325   365   605
               
Per common share (in dollars)                
  Net earnings                  
    Basic 1.64   7.67   9.15   14.14
    Diluted 1.63   7.59   9.08   14.00
Weighted average number of common and exchangeable shares outstanding (millions)              
    Basic 37.1   42.4   39.9   42.8
    Diluted 37.4   42.8   40.2   43.2
               
Cash flows provided from operating activities 172   166   883   1,166
Additions to property, plant and equipment 80   41   144   153
               
                 
Domtar Corporation              
Consolidated Statements of Earnings              
(In millions of dollars, unless otherwise noted)              
                 
    Three months ended
December 31
  Three months ended
December 31
  Twelve months ended
December 31
  Twelve months ended
December 31
    2011   2010   2011   2010
    (Unaudited)
    $   $   $   $
                 
Sales 1,369   1,373   5,612   5,850
Operating expenses              
    Cost of sales, excluding depreciation and amortization 1,039   1,020   4,171   4,417
    Depreciation and amortization 95   95   376   395
    Selling, general and administrative 87   94   340   338
    Impairment and write-down of property, plant and equipment 12   -   85   50
    Closure and restructuring costs 38   1   52   27
    Other operating loss (income), net (1)   8   (4)   20
    1,270   1,218   5,020   5,247
Operating income 99   155   592   603
Interest expense, net 20   29   87   155
Earnings before income taxes and equity earnings 79   126   505   448
Income tax expense (benefit) 11   (199)   133   (157)
Equity loss, net of taxes 7   -   7   -
Net earnings 61   325   365   605
                 
Per common share (in dollars)              
               
  Net earnings              
    Basic 1.64   7.67   9.15   14.14
    Diluted 1.63   7.59   9.08   14.00
Weighted average number of common and exchangeable shares outstanding (millions)              
    Basic 37.1   42.4   39.9   42.8
    Diluted 37.4   42.8   40.2   43.2

Domtar Corporation        
Consolidated Balance Sheets at      
(In millions of dollars)      
       
  December 31   December 31
  2011   2010
  (Unaudited)
  $   $
       
Assets      
Current assets      
    Cash and cash equivalents 444   530
    Receivables, less allowances of $5 and $7 644   601
    Inventories 652   648
    Prepaid expenses 22   28
    Income and other taxes receivable 47   78
    Deferred income taxes 125   115
      Total current assets 1,934   2,000
       
  Property, plant and equipment, at cost   8,448   9,255
  Accumulated depreciation   (4,989)   (5,488)
      Net property, plant and equipment 3,459   3,767
Goodwill 163   -
Intangible assets, net of amortization 204   56
Other assets   109   203
        Total assets 5,869   6,026
       
Liabilities and shareholders' equity        
Current liabilities        
    Bank indebtedness 7   23
    Trade and other payables 688   678
    Income and other taxes payable 17   22
    Long-term debt due within one year 4   2
        Total current liabilities 716   725
       
Long-term debt 837   825
Deferred income taxes and other   927   924
Other liabilities and deferred credits   417   350
       
Shareholders' equity        
  Exchangeable shares 49   64
  Additional paid-in capital 2,326   2,791
  Retained earnings 671   357
  Accumulated other comprehensive loss (74)   (10)
      Total shareholders' equity 2,972   3,202
        Total liabilities and shareholders' equity 5,869   6,026

 

Domtar Corporation
Consolidated Statements of Cash Flows
(In millions of dollars)    
     
  Twelve months
ended December 31
Twelve months
ended December 31
  2011 2010
  (Unaudited)
  $ $
     
Operating activities    
Net earnings 365 605
Adjustments to reconcile net earnings to cash flows from operating activities    
  Depreciation and amortization 376 395
  Deferred income taxes and tax uncertainties 40 (174)
  Impairment and write-down of property, plant and equipment 85 50
  Loss on repurchase of long-term debt 4 47
  Net losses (gains) on disposals of property, plant and equipment and sale of businesses (6) 33
  Stock-based compensation expense 3 5
  Equity loss, net 7 -
  Other - (2)
Changes in assets and liabilities, excluding the effects of acquisition and sale of businesses    
  Receivables (12) (73)
  Inventories 2 39
  Prepaid expenses 2 6
  Trade and other payables (17) (11)
  Income and other taxes 33 344
  Difference between employer pension and other post-retirement contributions and pension and other post-retirement expense (18) (120)
  Other assets and other liabilities 19 22
  Cash flows provided from operating activities 883 1,166
     
Investing activities    
Additions to property, plant and equipment (144) (153)
Proceeds from disposals of property, plant and equipment 34 26
Proceeds from sale of businesses and investments 10 185
Acquisition of business, net of cash acquired (288) -
Other (7) -
  Cash flows (used for) provided from investing activities (395) 58
     
Financing activities    
Dividend payments (49) (21)
Net change in bank indebtedness (16) (19)
Repayment of long-term debt (18) (898)
Premium paid on debt repurchases (7) (35)
Stock repurchase (494) (44)
Prepaid on structured stock repurchase, net - 2
Other 10 (3)
  Cash flows used for financing activities (574) (1,018)
     
Net (decrease) increase in cash and cash equivalents (86) 206
Translation adjustments related to cash and cash equivalents - -
Cash and cash equivalents at beginning of year 530 324
Cash and cash equivalents at end of year 444 530
     
Supplemental cash flow information    
  Net cash payments for:    
    Interest 74 107
    Income taxes paid 60 28

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.
 

                                             
        2011 2010
        Q1   Q2   Q3   Q4   YTD   Q1   Q2   Q3   Q4   YTD
Reconciliation of "Earnings before items" to Net earnings                                        
    Net earnings ($) 133   54   117   61   365   58   31   191   325   605
  (-) Alternative fuel tax credits ($) -   -   -   -   -   (18)   -   -   -   (18)
  (-) Cellulose biofuel producer credits ($) -   -   -   -   -   -   -   -   (127)   (127)
  (-) Reversal of valuation allowance on Canadian deferred income tax balances ($) -   -   -   -   -   -   -   -   (100)   (100)
  (+) Impairment and write-down of property, plant and equipment ($) 2   38   4   9   53   16   9   9   -   34
  (+) Closure and restructuring costs ($) 8   1   1   23   33   14   4   1   1   20
  (-) Net losses (gains) on disposals of property, plant and equipment and sale of businesses ($) (5)   5   (3)   -   (3)   (1)   48   (18)   -   29
  (+) Impact of purchase accounting ($) -   -   1   -   1   -   -   -   -   -
  (+) Loss on repurchase of long-term debt ($) -   -   3   -   3   -   24   -   4   28
  (=) Earnings before items ($) 138   98   123   93   452   69   116   183   103   471
  (/) Weighted avg. number of common and exchangeable shares outstanding (diluted) (millions) 42.4   41.4   39.7   37.4   40.2   43.3   43.4   43.0   42.8   43.2
  (=) Earnings before items per diluted share ($) 3.25   2.37   3.10   2.49   11.24   1.59   2.67   4.26   2.41   10.90
                                             
Reconciliation of "EBITDA" and "EBITDA before items" to Net earnings                                        
    Net earnings ($) 133   54   117   61   365   58   31   191   325   605
  (+) Equity loss, net of taxes ($) -   -   -   7   7   -   -   -   -   -
  (+) Income tax expense (benefit) ($) 57   20   45   11   133   26   (5)   21   (199)   (157)
  (+) Interest expense, net ($) 21   21   25   20   87   32   70   24   29   155
  (=) Operating income ($) 211   95   187   99   592   116   96   236   155   603
  (+) Depreciation and amortization ($) 93   95   93   95   376   102   101   97   95   395
  (+) Impairment and write-down of property, plant and equipment ($) 3   62   8   12   85   22   14   14   -   50
  (-) Net losses (gains) on disposals of property, plant and equipment and sale of businesses ($) (7)   6   (4)   (1)   (6)   (1)   48   (14)   -   33
  (=) EBITDA ($) 300   258   284   205   1,047   239   259   333   250   1,081
  (/) Sales ($) 1,423   1,403   1,417   1,369   5,612   1,457   1,547   1,473   1,373   5,850
  (=) EBITDA margin (%) 21%   18%   20%   15%   19%   16%   17%   23%   18%   18%
    EBITDA ($) 300   258   284   205   1,047   239   259   333   250   1,081
  (-) Alternative fuel tax credits ($) -   -   -   -   -   (25)   -   -   -   (25)
  (+) Closure and restructuring costs ($) 11   2   1   38   52   20   5   1   1   27
  (+) Impact of purchase accounting ($) -   -   1   -   1   -   -   -   -   -
  (=) EBITDA before items ($) 311   260   286   243   1,100   234   264   334   251   1,083
  (/) Sales ($) 1,423   1,403   1,417   1,369   5,612   1,457   1,547   1,473   1,373   5,850
  (=) EBITDA margin before items (%) 22%   19%   20%   18%   20%   16%   17%   23%   18%   19%
                                             
Reconciliation of "Free cash flow" to Cash flow provided from operating activities                                        
    Cash flow provided from operating activities ($) 148   306   257   172   883   123   610   267   166   1,166
  (-) Additions to property, plant and equipment ($) (13)   (20)   (31)   (80)   (144)   (31)   (43)   (38)   (41)   (153)
  (=) Free cash flow ($) 135   286   226   92   739   92   567   229   125   1,013
                                             
"Net debt-to-total capitalization" computation                                        
    Bank indebtedness ($) 25   25   17   7       19   30   26   23    
  (+) Long-term debt due within one year ($) 2   2   5   4       31   30   22   2    
  (+) Long-term debt ($) 825   824   837   837       1,600   1,186   961   825    
  (=) Debt ($) 852   851   859   848       1,650   1,246   1,009   850    
  (-) Cash and cash equivalents ($) (604)   (742)   (461)   (444)       (314)   (514)   (537)   (530)    
  (=) Net debt ($) 248   109   398   404       1,336   732   472   320    
  (+) Shareholders' equity ($) 3,288   3,194   2,999   2,972       2,748   2,642   2,811   3,202    
  (=) Total capitalization ($) 3,536   3,303   3,397   3,376       4,084   3,374   3,283   3,522    
    Net debt ($) 248   109   398   404       1,336   732   472   320    
  (/) Total capitalization ($) 3,536   3,303   3,397   3,376       4,084   3,374   3,283   3,522    
  (=) Net debt-to-total capitalization (%) 7%   3%   12%   12%       33%   22%   14%   9%    
                                             

"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 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
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.

 

                                                         
        Pulp and Paper Distribution Wood (1) Corporate Total
        Q1'10 Q2'10 Q3'10 Q4'10 YTD Q1'10 Q2'10 Q3'10 Q4'10 YTD Q1'10 Q2'10 Q3'10 Q4'10 YTD Q1'10 Q2'10 Q3'10 Q4'10 YTD Q1'10 Q2'10 Q3'10 Q4'10 YTD
Reconciliation of Operating income (loss) to "Operating income (loss) before items"                                                      
    Operating income (loss) ($) 120 149 237 161 667 1 (1) - (3) (3) (5) (49) - - (54) - (3) (1) (3) (7) 116 96 236 155 603
  (-) Alternative fuel tax credits ($) (25) - - - (25) - - - - - - - - - - - - - - - (25) - - - (25)
  (+) Impairment and write-down of property, plant and equipment ($) 22 14 14 - 50 - - - - - - - - - - - - - - - 22 14 14 - 50
  (+) Closure and restructuring costs ($) 20 5 1 - 26 - - - 1 1 - - - - - - - - - - 20 5 1 1 27
  (-) Net losses (gains) on disposals of property, plant and equipment and sale of businesses ($) - (3) (14) - (17) - - - - - (1) 49 - - 48 - 2 - - 2 (1) 48 (14) - 33
                                                         
  (=) Operating income (loss) before items ($) 137 165 238 161 701 1 (1) - (2) (2) (6) - - - (6) - (1) (1) (3) (5) 132 163 237 156 688
                                                         
Reconciliation of "Operating income (loss) before items" to "EBITDA before items"                                                        
    Operating income (loss) before items ($) 137 165 238 161 701 1 (1) - (2) (2) (6) - - - (6) - (1) (1) (3) (5) 132 163 237 156 688
  (+) Depreciation and amortization ($) 96 95 96 94 381 1 1 1 1 4 5 5 - - 10 - - - - - 102 101 97 95 395
                                                         
  (=) EBITDA before items ($) 233 260 334 255 1,082 2 - 1 (1) 2 (1) 5 - - 4 - (1) (1) (3) (5) 234 264 334 251 1,083
  (/) Sales ($) 1,245 1,317 1,296 1,212 5,070 212 213 233 212 870 67 83 - - 150 - - - - - 1,524 1,613 1,529 1,424 6,090
  (=) EBITDA margin before items (%) 19% 20% 26% 21% 21% 1% - - - - - 6% - - 3% - - - - - 15% 16% 22% 18% 18%
                                                         

"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) As previously reported, Domtar sold 88% of the Wood segment on June 30, 2010 to EACOM Timber Corporation ("EACOM"). During the fourth quarter of 2010, in an unrelated transaction, Domtar sold the remaining 12% of common stock held in EACOM.

 

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

                                         
    2011 2010

  Q1   Q2   Q3   Q4   YTD   Q1   Q2   Q3   Q4   YTD
Pulp and Paper Segment                                        
  Sales ($) 1,269   1,261   1,246   1,177   4,953   1,245   1,317   1,296   1,212   5,070
    Intersegment sales - Pulp and Paper ($) (63)   (48)   (43)   (39)   (193)   (62)   (60)   (56)   (51)   (229)
  Operating income ($) 209   91   189   92   581   120   149   237   161   667
  Depreciation and amortization ($) 92   94   91   91   368   96   95   96   94   381
  Impairment and write-down of property, plant and equipment ($) 3   62   8   12   85   22   14   14   -   50
 
  Papers                                        
  Papers Production ('000 ST) 899   890   875   871   3,535   906   882   906   873   3,567
  Papers Shipments ('000 ST) 913   901   889   831   3,534   960   891   896   850   3,597
    Uncoated Freesheet ('000 ST) 913   901   889   831   3,534   925   889   896   850   3,560
    Coated Groundwood ('000 ST) -   -   -   -   -   35   2   -   -   37
 
  Pulp                                        
  Pulp Shipments(a) ('000 ADMT) 375   361   358   403   1,497   388   486   412   376   1,662
    Hardwood Kraft Pulp (%) 20%   19%   18%   19%   19%   40%   38%   37%   24%   35%
    Softwood Kraft Pulp (%) 55%   54%   57%   58%   57%   49%   52%   53%   62%   54%
    Fluff Pulp (%) 25%   27%   25%   23%   24%   11%   10%   10%   14%   11%
 
Distribution Segment                                        
  Sales ($) 217   190   197   177   781   212   213   233   212   870
  Operating income (loss) ($) 3   (2)   (1)   -   -   1   (1)   -   (3)   (3)
  Depreciation and amortization ($) 1   1   1   1   4   1   1   1   1   4
 
Personal Care Segment                                        
  Sales ($) -   -   17   54   71   -   -   -   -   -
  Operating income ($) -   -   -   7   7   -   -   -   -   -
  Depreciation and amortization ($) -   -   1   3   4   -   -   -   -   -
 
Wood Segment                                        
  Sales ($) -   -   -   -   -   67   83   -   -   150
    Intersegment sales - Wood ($) -   -   -   -   -   (5)   (6)   -   -   (11)
  Operating loss ($) -   -   -   -   -   (5)   (49)   -   -   (54)
  Depreciation and amortization ($) -   -   -   -   -   5   5   -   -   10
 
  Lumber Production (Millions FBM) -   -   -   -   -   172   165   -   -   337
  Lumber Shipments (Millions FBM) -   -   -   -   -   164   187   -   -   351
 
Average Exchange Rates $US / $CAN 0.986   0.968   0.980   1.023   0.989   1.041   1.028   1.039   1.013   1.030
      $CAN / $US 1.014   1.034   1.021   0.977   1.011   0.961   0.973   0.962   0.987   0.971

 

(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, the term "ADMT" refers to an air dry metric ton, and the term "FBM" refers to foot board measure.

SOURCE DOMTAR CORPORATION

For further information:

MEDIA AND INVESTOR RELATIONS
Pascal Bossé
Vice-President
Corporate Communications and Investor Relations
Tel.: 514-848-5938

Profil de l'entreprise

DOMTAR CORPORATION

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