Boise Inc. Announces Financial Results for First Quarter 2010


    



    
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<p><span class="xn-location">BOISE</span>, Idaho, <span class="xn-chron">May 4</span> /CNW/ -- <span class="xn-location">Boise</span> Inc. (NYSE:   BZ) today reported a net loss of <span class="xn-money">$12.7 million</span> or (<span class="xn-money">$0.16</span>) per diluted share for first quarter 2010 compared with a first quarter 2009 net loss of <span class="xn-money">$0.9 million</span> or (<span class="xn-money">$0.01</span>) per diluted share.  Net income excluding special items in first quarter 2010 was <span class="xn-money">$3.0 million</span> or <span class="xn-money">$0.04</span> per diluted share compared with <span class="xn-money">$2.7 million</span> or <span class="xn-money">$0.03</span> per diluted share in first quarter 2009.</p>
<p/>
<p>EBITDA excluding special items was <span class="xn-money">$54.9 million</span> for first quarter 2010 compared with <span class="xn-money">$58.6 million</span> for first quarter 2009.</p>
<p/>
<p> </p>
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                                    FINANCIAL HIGHLIGHTS
                            (in millions, except per-share data)
    
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<p> </p>
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                                           1Q 2010   1Q 2009   4Q 2009
                                           -------   -------   -------
    
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<p> </p>
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    Sales                                    $494.1    $500.3    $490.3
    Net income (loss)                        $(12.7)    $(0.9)    $55.7
    Net income (loss) per diluted share      $(0.16)   $(0.01)    $0.66
    Net income excluding special items (a)     $3.0      $2.7      $4.2
    Net income excluding special items per
     diluted share (a)                        $0.04     $0.03     $0.05
    EBITDA (b)                                $29.3     $52.7     $84.3
    EBITDA excluding special items (b)        $54.9     $58.6     $54.4
    
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<p> </p>
<p>Net total debt                           <span class="xn-money">$693.9</span>  <span class="xn-money">$1,016.5</span>    <span class="xn-money">$736.5</span></p>
<p> </p>
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    (a) For reconciliation of net income (loss) excluding special items
    to net income (loss), see "Summary Notes to Consolidated Financial
    Statements and Segment Information."
    (b) For reconciliation of net income (loss) to EBITDA and EBITDA to
    EBITDA excluding special items, see "Summary Notes to Consolidated
    Financial Statements and Segment Information."


    
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<p>"We operated well during the first quarter and saw improving conditions in our key markets," said Alexander Toeldte, President and Chief Executive Officer of <span class="xn-location">Boise</span> Inc.  "We grew our premium office, label and release, and flexible packaging products sales volumes 17% over the prior year, experienced strong demand in our corrugated packaging products, and continued to deliver solid results in our office papers business.  We extended debt maturities and reduced balance sheet risk through the debt refinancing we completed in March.  As expected, fiber and energy input costs increased during the quarter, and we experienced seasonal increases in working capital and increased maintenance expenditures from our planned annual outage at DeRidder.  Looking ahead, we expect to begin to benefit from recent price increases across our businesses in the second quarter."</p>
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    Sales

    
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<p>Total sales for first quarter 2010 were <span class="xn-money">$494.1 million</span>, down <span class="xn-money">$6.2 million</span>, or 1%, from <span class="xn-money">$500.3 million</span> for first quarter 2009 and up <span class="xn-money">$3.8 million</span> from fourth quarter 2009 sales of <span class="xn-money">$490.3 million</span>.</p>
<p/>
<p>Paper segment sales increased <span class="xn-money">$1.5 million</span> during first quarter 2010 compared with first quarter 2009, as increased sales volumes were offset partially by lower sales prices.  In first quarter 2009, we took market downtime to balance supply with customer demand.</p>
<p/>
<p>Packaging segment sales decreased <span class="xn-money">$8.9 million</span> during first quarter 2010 compared with first quarter 2009, driven by lower sales prices for segment linerboard, newsprint, and corrugated products and lower sales volumes of newsprint due to the idling of our DeRidder #2 newsprint machine in <span class="xn-chron">April 2009</span>.  These declines were offset partially by higher sales volumes of segment linerboard and corrugated products.</p>
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    Prices and Volumes

    
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<p>Pricing for uncoated freesheet improved in first quarter 2010 sequentially from fourth quarter 2009 but declined compared with first quarter 2009.  Average net selling prices for uncoated freesheet papers declined <span class="xn-money">$40</span> per ton, or 4%, to <span class="xn-money">$941</span> per ton during first quarter 2010 compared with first quarter 2009 and increased 1% from fourth quarter 2009.  In first quarter 2010, we implemented a $40-per-ton price increase across most of our uncoated freesheet grades, including cut-size office papers, offset, and midweight opaque grades.  In <span class="xn-chron">April 2010</span>, we announced a $60-per-ton price increase across virtually all of our uncoated office papers and printing and converting grades effective in <span class="xn-chron">May 2010</span>. Overall, uncoated freesheet sales volumes were 312,000 tons during first quarter 2010, an increase of 3% versus the prior year period, and up 1% from fourth quarter 2009 due to improved demand trends and reduced market downtime.  Combined sales volumes of premium office, label and release, and flexible packaging papers, which represented 29% of our total first quarter 2010 uncoated freesheet sales volumes, increased by 17% compared with first quarter 2009.</p>
<p/>
<p>Corrugated container and sheet sales volumes improved 14% during first quarter 2010 compared with first quarter 2009 and increased 4% from fourth quarter 2009, due primarily to increased sales of sheets from our sheet feeder plant in Texas. Corrugated container and sheet prices declined 12% in first quarter 2010 from first quarter 2009, driven by lower selling prices for containerboard and product mix changes.  Corrugated container and sheet prices decreased 2% compared with fourth quarter 2009.</p>
<p/>
<p>More favorable market conditions led to increased linerboard sales volumes to third parties, which were up 62%, to 62,000 tons, compared with first quarter 2009.  Third-party sales volumes decreased by 26% sequentially from fourth quarter 2009 as improved sales volumes in our corrugated product and sheet operations during first quarter 2010 resulted in less linerboard available for sales to third parties.  Linerboard net selling prices to third parties declined to <span class="xn-money">$296</span> per ton in first quarter 2010 from <span class="xn-money">$352</span> per ton in first quarter 2009 and improved 1% compared with fourth quarter 2009.  In first quarter 2010, we implemented a $50-per-ton and $70-per-ton price increase on domestic linerboard sales in the eastern and western U.S., respectively.  In April, we announced an additional $60-per-ton increase on domestic linerboard sales.</p>
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    Input Costs

    
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<p>Total fiber, energy, and chemical costs for first quarter 2010 were <span class="xn-money">$228.0 million</span>, an increase of <span class="xn-money">$22.3 million</span>, or 11%, compared with costs of <span class="xn-money">$205.7 million</span> for first quarter 2009.  The increase was driven primarily by higher fiber costs and higher consumption of all inputs due to increased production and sales volumes.</p>
<p> </p>
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                 INPUT COST SUMMARY
                   (in millions)
    
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<p> </p>
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                  1Q 2010       1Q 2009       4Q 2009
                  -------       -------       -------
    
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<p> </p>
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    Fiber           $115.5         $94.1        $106.5
    Energy            63.4          60.8          45.7
    Chemicals         49.1          50.8          52.8
    Total           $228.0        $205.7        $205.0
                    ======        ======        ======


    
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<p>Total fiber costs during first quarter 2010 were <span class="xn-money">$115.5 million</span>, an increase of <span class="xn-money">$21.4 million</span>, or 23%, from <span class="xn-money">$94.1 million</span> incurred in first quarter 2009.  This was due to increased fiber consumption, higher pulp prices, and increased wood costs in our Alabama operating region as a result of wet weather during the quarter.  Fiber costs in first quarter 2010 increased <span class="xn-money">$9.0 million</span>, or 8%, compared with <span class="xn-money">$106.5 million</span> in fourth quarter 2009.</p>
<p/>
<p>Energy costs in first quarter 2010 were <span class="xn-money">$63.4 million</span>, an increase of <span class="xn-money">$2.6 million</span>, or 4%, compared with <span class="xn-money">$60.8 million</span> in first quarter 2009, driven by increased consumption of energy due to higher production volumes, offset partially by lower prices for natural gas and electricity.  Energy costs in first quarter 2010 increased <span class="xn-money">$17.7 million</span>, or 39%, from <span class="xn-money">$45.7 million</span> in fourth quarter 2009 due to seasonal increases in consumption as a result of colder winter weather.</p>
<p/>
<p>Chemical costs in first quarter 2010 were <span class="xn-money">$49.1 million</span>, a decrease of <span class="xn-money">$1.7 million</span>, or 3%, compared with <span class="xn-money">$50.8 million</span> in first quarter 2009.  Chemical costs were down <span class="xn-money">$3.7 million</span>, or 7%, compared with <span class="xn-money">$52.8 million</span> in fourth quarter 2009.  The key drivers were lower prices offset partially by higher consumption of commodity chemicals.</p>
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    Refinancing

    
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<p>In <span class="xn-chron">March 2010</span>, we refinanced our variable rate debt due in 2014 with fixed rate debt due in 2020, extending maturities, fixing interest rates, and increasing our financial flexibility.  In connection with the refinancing, we recognized a <span class="xn-money">$22.2 million</span> noncash loss on the extinguishment of debt during the three months ended <span class="xn-chron">March 31, 2010</span>.</p>
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    Webcast and Conference Call

    
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<p><span class="xn-location">Boise</span> Inc. will host a webcast and conference call on <span class="xn-chron">Tuesday, May 4, 2010</span>, at <span class="xn-chron">12:00 p.m. ET</span>, at which time we will review the company's recent performance.  To participate in the conference call, dial 866-841-1001 (international callers should dial 832-4451689).  The webcast may be accessed through Boise's Internet site and will be archived for one year following the call.  Go to <a href="http://www.BoiseInc.com">www.BoiseInc.com</a> and click on the link to the webcast under Webcasts & Presentations on the Investors drop-down menu.</p>
<p/>
<p>A replay of the conference call will be available in Webcasts & Presentations from <span class="xn-chron">May 4</span> at <span class="xn-chron">3:00 p.m. ET</span> through <span class="xn-chron">June 4</span> at <span class="xn-chron">11:45 p.m. ET</span>.  Playback numbers are 800-642-1687 for U.S. callers and 706-645-9291 for international callers.  The passcode is 69548759.</p>
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    About Boise Inc.

    
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<p>Headquartered in <span class="xn-location">Boise</span>, Idaho, <span class="xn-location">Boise</span> Inc. (NYSE:   BZ) manufactures packaging products and papers including corrugated containers, containerboard, label and release and flexible packaging papers, imaging papers for the office and home, printing and converting papers, newsprint, and market pulp.  Our employees are committed to delivering excellent value while managing our businesses to sustain environmental resources for future generations.  Visit our website at <a href="http://www.BoiseInc.com">www.BoiseInc.com</a>.</p>
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    Basis of Presentation

    
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<p>We present our consolidated financial statements in accordance with U.S. generally accepted accounting principles (GAAP).  Our earnings release also supplements the GAAP presentations by reflecting EBITDA.  EBITDA represents income (loss) before interest (change in fair value of interest rate derivatives, interest expense, and interest income), income taxes, and depreciation, amortization, and depletion.  EBITDA is the primary measure used by our chief operating decision makers to evaluate segment operating performance and to decide how to allocate resources to segments.  We believe EBITDA is useful to investors because it provides a means to evaluate the operating performance of our segments and our company on an ongoing basis using criteria that are used by our internal decision makers and because it is frequently used by investors and other interested parties in the evaluation of companies with substantial financial leverage.  We believe EBITDA is a meaningful measure because it presents a transparent view of our recurring operating performance and allows management to readily view operating trends, perform analytical comparisons, and identify strategies to improve operating performance.  For example, we believe that the inclusion of items such as taxes, interest expense, and interest income distorts management's ability to assess and view the core operating trends in our segments.  EBITDA, however, is not a measure of our liquidity or financial performance under GAAP and should not be considered as an alternative to net income (loss), income (loss) from operations, or any other performance measure derived in accordance with GAAP or as an alternative to cash flow from operating activities as a measure of our liquidity.  The use of EBITDA instead of net income (loss) or segment income (loss) has limitations as an analytical tool, including the inability to determine profitability; the exclusion of interest and associated significant cash requirements; and the exclusion of depreciation, amortization, and depletion, which represent significant and unavoidable operating costs, given the level of our indebtedness and the capital expenditures needed to maintain our businesses.  Management compensates for these limitations by relying on our GAAP results.  Our measures of EBITDA are not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the methods of calculation.</p>
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    Forward-Looking Statements

    
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<p>This news release contains statements that are "forward looking" as defined by the Private Securities Litigation Reform Act of 1995.  Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance, or achievements.  Forward-looking statements involve risks and uncertainties, including but not limited to economic, competitive, and technological factors outside our control that may cause our business, strategy, or actual results to differ materially from the forward-looking statements.  Statements regarding announced price increases on our products are considered forward looking; accordingly, there can be no assurance that we will be able to implement or realize all or any part of such price increases.  For further information about the risks and uncertainties associated with our business, please refer to our filings with the Securities and Exchange Commission.  The company does not intend, and undertakes no obligation, to update any forward-looking statements.</p>
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<p> </p>
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                                 Boise Inc.
                  Consolidated Statements of Income (Loss)
     (unaudited, dollars in thousands, except share and per-share data)
    
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<p> </p>
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                                          Three Months Ended
                                          ------------------
                                          March 31           December 31,
                                        --------
                                          2010           2009        2009
                                          ----           ----        ----
    Sales
    Trade                             $485,851       $484,868    $481,853
    Related parties                      8,254         15,417       8,422
                                       494,105        500,285     490,275
                                       -------        -------     -------
    Costs and expenses
    Materials, labor, and other
     operating expenses                408,485        413,139     395,455
    Fiber costs from related
     parties                             9,831          5,703      11,897
    Depreciation, amortization, and
     depletion                          32,131         31,972      33,720
    Selling and distribution
     expenses                           13,734         13,782      14,130
    General and administrative
     expenses                           11,459         10,373      14,373
    St. Helens mill restructuring          128          3,648        (378)
    Alternative fuel mixture
     credits, net                            -              -     (72,698)
    Other (income) expense, net           (303)           239        (378)
                                       475,465        478,856     396,121
                                       -------        -------     -------
    
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<p> </p>
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    Income from operations              18,640         21,429      94,154
                                        ------         ------      ------
    
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<p> </p>
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    Foreign exchange gain (loss)           687           (678)        563
    Change in fair value of
     interest rate derivatives             (29)          (132)        (52)
    Loss on extinguishment of debt     (22,197)             -     (44,102)
    Interest expense                   (16,445)       (22,154)    (18,284)
    Interest income                         37             54          92
                                       (37,947)       (22,910)    (61,783)
                                       -------        -------     -------
    
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<p> </p>
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    Income (loss) before income
     taxes                             (19,307)        (1,481)     32,371
    Income tax (provision) benefit       6,622            565      23,349
    Net income (loss)                 $(12,685)         $(916)    $55,720
                                      ========          =====     =======
    
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<p> </p>
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    Weighted average common shares
     outstanding:
    Basic                           79,800,010     77,491,233  79,130,897
    Diluted                         79,800,010     77,491,233  84,232,429
    
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<p> </p>
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    Net income (loss) per common
     share:
    Basic                               $(0.16)        $(0.01)      $0.70
    Diluted                             $(0.16)        $(0.01)      $0.66




    
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<p> </p>
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                                  Segment Information
                           (unaudited, dollars in thousands)
    
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<p> </p>
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                                        Three Months Ended
                                        ------------------
                                            March 31       December 31,
                                        --------
                                          2010           2009      2009
                                          ----           ----      ----
    Segment sales
    Paper                             $353,489       $351,995  $345,602
    Packaging                          148,154        157,132   150,574
    Intersegment eliminations and
     other                              (7,538)        (8,842)   (5,901)
                                      $494,105       $500,285  $490,275
                                      ========       ========  ========
    
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<p> </p>
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    Segment income (loss)
    Paper (1)                          $29,943        $24,776   $75,112
    Packaging (1)                       (5,770)         1,125    23,344
    Corporate and Other (1)             (4,846)        (5,150)   (3,739)
                                        19,327         20,751    94,717
                                        ------         ------    ------
    
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<p> </p>
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    Change in fair value of interest
     rate derivatives                      (29)          (132)      (52)
    Loss on extinguishment of debt     (22,197)             -   (44,102)
    Interest expense                   (16,445)       (22,154)  (18,284)
    Interest income                         37             54        92
    Income (loss) before income taxes $(19,307)       $(1,481)  $32,371
                                      ========        =======   =======
    
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<p> </p>
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    EBITDA (2)
    Paper (1)                          $51,412        $46,122   $96,637
    Packaging (1)                        3,926         10,781    34,466
    Corporate and Other (1) (3)        (26,077)        (4,180)  (46,768)
                                       $29,261        $52,723   $84,335
                                       =======        =======   =======

    
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<p> </p>
<p> </p>
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    (1)    The three months ended December 31, 2009, included $50.1
     million of income recorded in the Paper segment, $22.2 million of
     income recorded in the Packaging segment, and $0.4 million of income
     recorded in the Corporate and Other segment relating to alternative
     fuel mixture credits. These amounts are net of fees and expenses and
     before taxes.
    
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<p> </p>
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    (2)     See Summary Notes to Consolidated Financial Statements and
     Segment information for a reconciliation of our EBITDA to net income
     (loss).
    
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<p> </p>
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    (3)     The three months ended March 31, 2010, and December 31, 2009,
     include $22.2 million and $44.1 million, respectively, of loss on
     extinguishment of debt.



    
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<p> </p>
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                                    Boise Inc.
                            Consolidated Balance Sheets
                         (unaudited, dollars in thousands)
    
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<p> </p>
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                                                           December 31,
                                          March 31, 2010       2009
                                          --------------  -------------
    ASSETS
    
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<p> </p>
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    Current
    Cash and cash equivalents                     $91,068        $69,393
    Short-term investments                          7,232         10,023
    Receivables
       Trade, less allowances of $760 and
        $839                                      183,719        185,110
       Related parties                              1,578          2,056
       Other (1)                                    6,167         62,410
    Inventories                                   266,073        252,173
    Deferred income taxes                          11,279              -
    Prepaid and other                               5,836          4,819
                                                  572,952        585,984
                                                  -------        -------
    Property
    Property and equipment, net                 1,189,743      1,205,679
    Fiber farms and deposits                       16,884         17,094
                                                1,206,627      1,222,773
                                                ---------      ---------
    
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<p> </p>
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    Deferred financing costs                       34,614         47,369
    Intangible assets, net                         31,670         32,358
    Other assets                                    7,402          7,306
                                                    -----          -----
    Total assets                               $1,853,265     $1,895,790
    
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<p> </p>
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    (1)   December 31, 2009, includes a $56.6 million receivable for
    alternative fuel mixture credits. This amount was collected during
    first quarter 2010.




    
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<p> </p>
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                                 Boise Inc.
                   Consolidated Balance Sheets (continued)
     (unaudited, dollars in thousands, except share and per-share data)
    
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<p> </p>
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                                   March 31, 2010    December 31, 2009
                                   --------------    -----------------
    LIABILITIES AND
     STOCKHOLDERS' EQUITY
    
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<p> </p>
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    Current
    Current portion of long-
     term debt                              $16,663             $30,711
    Income taxes payable                         98                 240
    Accounts payable
       Trade                                174,442             172,518
       Related parties                          941               2,598
    Accrued liabilities
       Compensation and benefits             45,636              67,948
       Interest payable                      12,443               4,946
       Other                                 17,647              23,735
                                            267,870             302,696
                                            -------             -------
    
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<p> </p>
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    Debt
    Long-term debt, less
     current portion                        775,581             785,216
                                            -------             -------
    
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<p> </p>
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    Other
    Deferred income taxes                    48,777              32,253
    Compensation and benefits               120,686             123,889
    Other long-term
     liabilities                             30,681              30,801
                                             ------              ------
                                            200,144             186,943
                                            -------             -------
    
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<p> </p>
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    Commitments and contingent
     liabilities
    
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<p> </p>
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    Stockholders' Equity
    Preferred stock, $.0001
     par value per share:                         -                   -
         1,000,000 shares
          authorized; none issued
    Common stock, $.0001 par
     value per share:                             8                   8
         250,000,000 shares
          authorized;
         84,792,231 shares and
          84,418,691 shares issued
          and outstanding
    Additional paid-in capital              579,563             578,669
    Accumulated other
     comprehensive income
     (loss)                                 (71,027)            (71,553)
    Retained earnings                       101,126             113,811
    Total stockholders' equity              609,670             620,935
                                            -------             -------
    
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<p> </p>
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    Total liabilities and
     stockholders' equity                $1,853,265          $1,895,790
                                         ==========          ==========



    
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<p> </p>
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                                       Boise Inc.
                          Consolidated Statements of Cash Flows
                            (unaudited, dollars in thousands)
    
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<p> </p>
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                                          Three Months Ended March 31
                                          ---------------------------
                                               2010                   2009
                                               ----                   ----
    
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<p> </p>
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    Cash provided by (used for)
     operations
    Net income (loss)                      $(12,685)                 $(916)
    Items in net income (loss) not
     using (providing) cash
       Depreciation, depletion, and
        amortization
          of deferred financing costs and
           other                             35,066                 35,030
       Share-based compensation expense         894                    857
       Notes payable interest expense             -                  2,623
       Pension and other postretirement
        benefit expense                       2,438                  2,450
       Deferred income taxes                 (7,461)                  (844)
       Change in fair value of energy
        derivatives                           3,330                  2,191
       Change in fair value of interest
        rate derivatives                         29                    132
       (Gain) loss on sales of assets,
        net                                    (114)                   (20)
       Other                                   (687)                   678
    Loss on extinguishment of debt           22,197                      -
    Decrease (increase) in working
     capital, net of acquisitions
       Receivables                           58,213                 38,800
       Inventories                          (16,085)                25,258
       Prepaid expenses                         389                    256
       Accounts payable and accrued
        liabilities                         (13,057)               (19,577)
    Current and deferred income taxes           831                    (39)
    Pension and other postretirement
     benefit payments                        (5,657)                (1,319)
    Other                                       321                    128
                                                ---                    ---
       Cash provided by operations           67,962                 85,688
                                             ------                 ------
    Cash provided by (used for)
     investment
    Acquisitions of businesses and
     facilities                                   -                   (543)
    Expenditures for property and
     equipment                              (14,734)               (17,171)
    Purchases of short-term
     investments                             (2,388)                     -
    Maturities of short-term
     investments                              5,182                      -
    Sales of assets                              22                     61
    Other                                     1,093                   (412)
       Cash used for investment             (10,825)               (18,065)
                                            -------                -------
    Cash provided by (used for)
     financing
    Issuances of long-term debt             300,000                 10,000
    Payments of long-term debt             (323,683)               (72,631)
    Payments of deferred financing
     fees                                   (11,779)                     -
       Cash used for financing              (35,462)               (62,631)
                                            -------                -------
    Increase in cash and cash
     equivalents                             21,675                  4,992
    Balance at beginning of the
     period                                  69,393                 22,518
    Balance at end of the period            $91,068                $27,510
                                            =======                =======


    Summary Notes to Consolidated Financial Statements and Segment Information

    
</pre>
<p>The Consolidated Statements of Income (Loss), Consolidated Balance Sheets, Consolidated Statements of Cash Flows, and Segment Information do not include all Notes to Consolidated Financial Statements and should be read in conjunction with the Company's 2009 Annual Report on Form 10K and the Company's Quarterly Report on Form 10Q for the period ended <span class="xn-chron">March 31, 2010</span>, as well as other reports the Company files with the SEC. Net income (loss) for all periods presented involved estimates and accruals.</p>
<p/>
<p><span class="xn-location">Boise</span> Inc. operates its business in three reportable segments: Paper, Packaging, and Corporate and Other (support services).  <span class="xn-location">Boise</span> Inc. manufactures and sells a range of papers, including communication-based papers, packaging-demand-driven papers, and market pulp.  <span class="xn-location">Boise</span> Inc. also manufactures and sells corrugated containers and sheets as well as linerboard and newsprint.</p>
<p/>
<p>EBITDA represents income (loss) before interest (change in fair value of interest rate derivatives, interest expense, and interest income), income taxes, and depreciation, amortization, and depletion.  The following table reconciles net income (loss) to EBITDA for the three months ended <span class="xn-chron">March 31, 2010</span> and 2009, and the three months ended <span class="xn-chron">December 31, 2009</span> (unaudited, dollars in thousands):</p>
<p/>
<p> </p>
<p> </p>
<pre>
    
                                             March 31          December 31,
                                             --------
                                         2010            2009          2009
                                         ----            ----          ----
    
</pre>
<p> </p>
<pre>
    
    Net income (loss)                $(12,685)          $(916)      $55,720
    Change in fair value of interest
     rate derivatives                      29             132            52
    Interest expense                   16,445          22,154        18,284
    Interest income                       (37)            (54)          (92)
    Income tax provision (benefit)     (6,622)           (565)      (23,349)
    Depreciation, amortization, and
     depletion                         32,131          31,972        33,720
    EBITDA                            $29,261         $52,723       $84,335
                                      =======         =======       =======


    
</pre>
<p>The following table reconciles EBITDA to EBITDA excluding special items for the three months ended <span class="xn-chron">March 31, 2010</span> and 2009, and the three months ended <span class="xn-chron">December 31, 2009</span> (unaudited, dollars in thousands):</p>
<p/>
<p> </p>
<p> </p>
<pre>
    
                                          Three Months Ended
                                          ------------------
                                             March 31        December 31,
                                            --------
                                             2010        2009        2009
                                             ----        ----        ----
    
</pre>
<p> </p>
<pre>
    
    EBITDA                                $29,261     $52,723     $84,335
    St. Helens mill restructuring (a)         128       3,648        (378)
    Change in fair value of energy hedges   3,330       2,191        (976)
    Alternative fuel mixture credits (b)        -           -     (72,698)
    Loss on extinguishment of debt         22,197           -      44,102
    EBITDA excluding special items        $54,916     $58,562     $54,385
                                          =======     =======     =======

    
</pre>
<p> </p>
<p> </p>
<pre>
    
    (a)     In November 2008, we announced the restructuring of our St.
     Helens, Oregon, paper mill.  We continue to incur decommissioning
     and other miscellaneous costs related to the restructuring of the
     mill.  These expenses are recorded when the liability is incurred.
    
</pre>
<p> </p>
<pre>
    
    (b)     During the three months ended December 31, 2009, we recorded
     $72.7 million of alternative fuel mixture credits, net of associated
     fees and expenses and before taxes. We recorded these amounts in
     "Alternative fuel mixture credits, net" in our Consolidated
     Statement of Income (Loss).  At December 31, 2009, we had $56.6
     million recorded in "Receivables, other" related to these credits.
     During first quarter 2010, we collected $56.6 million related to
     these credits.


    
</pre>
<p>The following table reconciles net income (loss) to net income (loss) excluding special items and presents net income (loss) excluding special items per diluted share for the three months ended <span class="xn-chron">March 31, 2010</span> and 2009, and the three months ended <span class="xn-chron">December 31, 2009</span> (unaudited, dollars in thousands, except share and per-share data):</p>
<p/>
<p> </p>
<p> </p>
<pre>
    
                                           Three Months Ended
                                           ------------------
                                        March 31,   March 31, December 31,
                                              2010        2009        2009
                                              ----        ----        ----
    
</pre>
<p> </p>
<pre>
    
    Net income (loss)                     $(12,685)      $(916)    $55,720
      St. Helens mill restructuring            128       3,648        (378)
      Change in fair value of energy
       hedges                                3,330       2,191        (976)
      Alternative fuel mixture credits           -           -     (72,698)
      Loss on extinguishment of debt        22,197           -      44,102
    Tax impact of special items (a)         (9,928)     (2,260)     11,591
    Reversal of income tax valuation
     allowances                                  -           -     (33,180)
    Net income (loss) excluding special
     items                                  $3,042      $2,663      $4,181
                                            ======      ======      ======
    Weighted average common shares
     outstanding: diluted               84,194,612  79,078,590  84,232,429
    Net income (loss) excluding special
     items per diluted share                 $0.04       $0.03       $0.05

    
</pre>
<p> </p>
<p> </p>
<pre>
    
    (a)     Special items are tax effected in the aggregate at an assumed
     combined federal and state statutory rate of 38.7%.


    
</pre>
<p>The following table reconciles total debt to net total debt as of <span class="xn-chron">March 31, 2010</span> and 2009, and <span class="xn-chron">December 31, 2009</span> (unaudited, dollars in thousands):</p>
<p> </p>
<p> </p>
<pre>
    
                                   March 31,   March 31,   December 31,
                                         2010        2009           2009
                                         ----        ----           ----
    
</pre>
<p> </p>
<pre>
    
    Current portion of long-term
     debt                             $16,663      $7,479        $30,711
    Long-term debt, less current
     portion                          775,581     967,340        785,216
    Notes payable                           -      69,229              -
                                          ---      ------            ---
    Total debt                        792,244   1,044,048        815,927
    Less cash and cash equivalents
     and short-term investments       (98,300)    (27,510)       (79,416)
                                      -------     -------        -------
    Net total debt                   $693,944  $1,016,538       $736,511
                                     ========  ==========       ========





    

For further information: For further information: Media, Virginia Aulin, +1-208-384-7837, Investors, Jason Bowman, both of Boise Inc., +1-208-384-7456 Web Site: http://www.BoiseInc.com

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BOISE INC.

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