Boise Inc. Announces Financial Results for Second Quarter 2010


    



    
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<p><span class="xn-location">BOISE</span>, Idaho, <span class="xn-chron">Aug. 3</span> /CNW/ -- <span class="xn-location">Boise</span> Inc. (NYSE:   BZ) today reported net income of <span class="xn-money">$13.3 million</span> or <span class="xn-money">$0.16</span> per diluted share for second quarter 2010 compared with net income of <span class="xn-money">$50.9 million</span> or <span class="xn-money">$0.60</span> per diluted share for second quarter 2009.  Net income excluding special items was <span class="xn-money">$11.4 million</span> or <span class="xn-money">$0.14</span> per diluted share in second quarter 2010 compared with <span class="xn-money">$3.3 million</span> or <span class="xn-money">$0.04</span> per diluted share in second quarter 2009.</p>
<p/>
<p>EBITDA excluding special items was <span class="xn-money">$67.0 million</span> for second quarter 2010 compared with <span class="xn-money">$53.0 million</span> for second quarter 2009.</p>
<p/>
<p> </p>
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                                FINANCIAL HIGHLIGHTS
                        (in millions, except per-share data)
    
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<p> </p>
<p> </p>
<p> </p>
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                                           2Q 2010 2Q 2009 1Q 2010
                                           ------- ------- -------
    
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<p> </p>
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    Sales                                   $521.6  $479.4    $494.1
    Net income (loss)                        $13.3   $50.9    $(12.7)
    Net income (loss) per diluted share      $0.16   $0.60    $(0.16)
    Net income excluding special items (a)   $11.4    $3.3      $3.0
    Net income excluding special items per
     diluted share (a)                       $0.14   $0.04     $0.04
    EBITDA (b)                               $70.1  $130.6     $29.3
    EBITDA excluding special items (b)       $67.0   $53.0     $54.9
    
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<p> </p>
<p>Net total debt at quarter end (c)       <span class="xn-money">$657.1</span>  <span class="xn-money">$901.7</span>    <span class="xn-money">$693.9</span></p>
<p> </p>
<pre>
    
    (a)  For reconciliation of net income (loss) to net income excluding
    special items, 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."
    (c)  For reconciliation of total debt to net total debt, see "Summary
    Notes to Consolidated Financial Statements and Segment
     Information."



    
</pre>
<p>"During the second quarter, we began to benefit from improving pricing trends in both packaging and paper markets and experienced growth in our packaging and packaging demand-driven paper businesses," said Alexander Toeldte, President and Chief Executive Officer of <span class="xn-location">Boise</span> Inc.  "Shipments in our corrugated packaging business were up 17% over the prior year, and  sales volumes of our premium office, label and release, and flexible packaging products grew 14% over the prior year period.  During the second quarter, we completed planned annual outages at our International Falls and Wallula mills.  Looking ahead to the third quarter, we have no planned annual maintenance outages and expect to continue to benefit from the recently implemented price increases."</p>
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    Sales

    
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<p>Total sales for second quarter 2010 were <span class="xn-money">$521.6 million</span>, up <span class="xn-money">$42.2 million</span>, or 9%, from <span class="xn-money">$479.4 million</span> for second quarter 2009 and up <span class="xn-money">$27.5 million</span> from first quarter 2010 sales of <span class="xn-money">$494.1 million</span>.</p>
<p/>
<p>Paper segment sales increased <span class="xn-money">$7.8 million</span> during second quarter 2010 compared with second quarter 2009 due primarily to increased sales prices.  Packaging segment sales increased <span class="xn-money">$35.9 million</span> during second quarter 2010 compared with second quarter 2009 driven by higher sales volumes for corrugated products and newsprint and higher sales prices for linerboard and newsprint.  These increases were offset partially by lower sales prices of corrugated products compared with the prior year.</p>
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    Prices and Volumes

    
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<p>Pricing for uncoated freesheet improved in second quarter 2010 compared with second quarter 2009 and first quarter 2010.  Average net selling prices for uncoated freesheet papers increased <span class="xn-money">$12</span> per ton, or 1%, to <span class="xn-money">$970</span> per ton during second quarter 2010 compared with second quarter 2009 and increased <span class="xn-money">$29</span> per ton from first quarter 2010.  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 effective in May across virtually all of our uncoated office papers and printing and converting grades, from which we expect to further benefit beginning in third quarter 2010.  Overall, uncoated freesheet sales volumes were 312,000 tons during second quarter 2010, a decrease of 1% versus the prior year period, and flat from first quarter 2010.  Combined sales volumes of premium office, label and release, and flexible packaging papers, which represented 32% of our total second quarter 2010 uncoated freesheet sales volumes, increased by 14% compared with second quarter 2009.</p>
<p/>
<p>Corrugated container and sheet sales volumes improved 17% during second quarter 2010 compared with second quarter 2009 and increased 4% from first quarter 2010. This increase was due primarily to increased sales of sheets from our sheet feeder plant in Texas as a result of improving industrial markets in the area.  Corrugated container and sheet prices increased 6% sequentially from first quarter 2010 driven by higher selling prices for containerboard.  Corrugated container and sheet prices decreased 5% in second quarter 2010 from second quarter 2009 driven primarily by an increased sales mix of corrugated sheets relative to corrugated containers.</p>
<p/>
<p>Linerboard net selling prices to third parties increased <span class="xn-money">$38</span> per ton, or 13%, to <span class="xn-money">$340</span> per ton in second quarter 2010 compared with <span class="xn-money">$302</span> per ton in second quarter 2009 and improved <span class="xn-money">$44</span> per ton sequentially from first quarter 2010.  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.  During second quarter, we implemented an additional $60-per-ton increase on domestic linerboard sales.  In July, we announced an additional $60-per-ton increase on domestic linerboard sales effective on August orders.  Linerboard sales volumes to third parties were 54,000 tons during second quarter 2010, flat from second quarter 2009.  Third-party sales volumes decreased 13% sequentially from first quarter 2010 as improved sales volumes in our corrugated product and sheet operations during second quarter 2010 resulted in less linerboard available for sales to third parties.</p>
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    Input Costs

    
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<p>Total fiber, energy, and chemical costs for second quarter 2010 were <span class="xn-money">$215.1 million</span>, an increase of <span class="xn-money">$31.4 million</span>, or 17%, compared with costs of <span class="xn-money">$183.7 million</span> for second quarter 2009.  The increase was driven primarily by higher fiber costs and higher consumption of all inputs due to increased production volumes.</p>
<p/>
<p> </p>
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              INPUT COST SUMMARY
                (in millions)
    
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<p> </p>
<p> </p>
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                  2Q 2010     2Q 2009     1Q 2010
                  -------     -------     -------
    
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<p> </p>
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    Fiber          $117.1       $92.2      $115.5
    Energy           48.1        40.5        63.4
    Chemicals        49.9        51.0        49.1
    Total          $215.1      $183.7      $228.0
                   ======      ======      ======



    
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<p>Total fiber costs during second quarter 2010 were <span class="xn-money">$117.1 million</span>, an increase of <span class="xn-money">$24.9 million</span>, or 27%, from <span class="xn-money">$92.2 million</span> incurred in second quarter 2009.  This was due to higher purchased pulp prices and increased fiber consumption.  Fiber costs in second quarter 2010 increased <span class="xn-money">$1.6 million</span>, or 1%, compared with <span class="xn-money">$115.5 million</span> in first quarter 2010.</p>
<p/>
<p>Energy costs in second quarter 2010 were <span class="xn-money">$48.1 million</span>, an increase of <span class="xn-money">$7.6 million</span>, or 19%, compared with <span class="xn-money">$40.5 million</span> in second quarter 2009.  This was driven by increased consumption of energy due to higher production volumes, offset partially in the Paper segment by lower electrical prices and more favorable energy mix.  Energy costs in second quarter 2010 decreased <span class="xn-money">$15.3 million</span>, or 24%, from <span class="xn-money">$63.4 million</span> in first quarter 2010 due to seasonal decreases in consumption and lower natural gas prices.</p>
<p/>
<p>Chemical costs in second quarter 2010 were <span class="xn-money">$49.9 million</span>, a decrease of <span class="xn-money">$1.1 million</span>, or 2%, compared with <span class="xn-money">$51.0 million</span> in second quarter 2009 as lower prices were offset partially by higher consumption of commodity chemicals.  Chemical costs were up <span class="xn-money">$0.8 million</span>, or 2%, compared with <span class="xn-money">$49.1 million</span> in first quarter 2010 due to higher prices.</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, August 3, 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">August 3</span> at <span class="xn-chron">3:00 p.m. ET</span> through <span class="xn-chron">August 31</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 88822731.</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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    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 and the benefits we expect to derive from such increases 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 and shares in thousands, except per-share data)
    
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<p> </p>
<p> </p>
<p> </p>
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                                           Three Months Ended
                                           ------------------
                                                                March
                                          June 30                      31,
                                          -------
                                      2010         2009          2010
                                      ----         ----          ----
    Sales
    Trade                         $511,012     $469,877      $485,851
    Related parties                 10,549        9,490         8,254
                                   521,561      479,367       494,105
                                   -------      -------       -------
    Costs and expenses
    Materials, labor, and other
     operating expenses            419,594      386,013       408,485
    Fiber costs from related
     parties                         5,168        8,933         9,831
    Depreciation, amortization,
     and depletion                  32,267       32,892        32,131
    Selling and distribution
     expenses                       14,254       14,024        13,734
    General and administrative
     expenses                       12,569       12,691        11,459
    St. Helens mill restructuring     (434)       1,133           128
    Alternative fuel mixture
     credits, net                        -     (75,337)             -
    Other (income) expense, net        (11)       2,434          (303)
                                   483,407      382,783       475,465
                                   -------      -------       -------
    
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<p> </p>
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    Income from operations          38,154       96,584        18,640
                                    ------       ------        ------
    
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<p> </p>
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    Foreign exchange gain (loss)      (323)       1,157           687
    Change in fair value of
     interest rate derivatives         (13)         627           (29)
    Loss on extinguishment of
     debt                              (28)           -       (22,197)
    Interest expense              (16,165)     (21,389)       (16,445)
    Interest income                     61           91            37
                                  (16,468)     (19,514)       (37,947)
                                   -------      -------       -------
    
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<p> </p>
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    Income (loss) before income
     taxes                          21,686       77,070       (19,307)
    Income tax (provision)
     benefit                        (8,376)    (26,187)         6,622
    Net income (loss)              $13,310      $50,883      $(12,685)
                                   =======      =======      ========
    
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<p> </p>
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    Weighted average common
     shares outstanding:
    Basic                           80,624       78,142        79,800
    Diluted                         84,093       84,254        79,800
    
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<p> </p>
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    Net income (loss) per common
     share:
    Basic                            $0.17        $0.65        $(0.16)
    Diluted                          $0.16        $0.60        $(0.16)



    
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<p> </p>
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                         Segment Information
                  (unaudited, dollars in thousands)
    
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<p> </p>
<p> </p>
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                                            Three Months Ended
                                            ------------------
                                                                 March
                                           June 30                      31,
                                           -------
                                       2010         2009          2010
                                       ----         ----          ----
    Segment sales
    Paper                          $364,199     $356,401      $353,489
    Packaging                       166,143      130,237       148,154
    Intersegment eliminations and
     other                           (8,781)      (7,271)       (7,538)
                                   $521,561     $479,367      $494,105
                                   ========     ========      ========
    
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<p> </p>
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    Segment income (loss)
    Paper (1)                       $25,708      $84,505       $29,943
    Packaging (1)                    17,105       20,330        (5,770)
    Corporate and Other (1)          (4,982)      (7,094)       (4,846)
                                     37,831       97,741        19,327
                                     ------       ------        ------
    
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<p> </p>
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    Change in fair value of
     interest rate derivatives          (13)         627           (29)
    Loss on extinguishment of debt      (28)           -       (22,197)
    Interest expense               (16,165)     (21,389)       (16,445)
    Interest income                      61           91            37
    Income (loss) before income
     taxes                          $21,686      $77,070      $(19,307)
                                    =======      =======      ========
    
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<p> </p>
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    EBITDA (2)
    Paper (1)                       $47,406     $105,604       $51,412
    Packaging (1)                    26,684       31,108         3,926
    Corporate and Other (1) (3)      (4,020)      (6,079)      (26,077)
                                     ------       ------       -------
                                    $70,070     $130,633       $29,261
                                    =======     ========       =======
    
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<p> </p>
<pre>
    
    (1) The three months ended June 30, 2009, included $57.0 million of
    income recorded in the Paper
    segment, $19.9 million of income recorded in the Packaging segment,
    and $1.6 million of
    expenses recorded in the Corporate and Other segment relating to
    alternative fuel mixture
    credits. These amounts are net of fees and expenses and before taxes.
    (2) See Summary Notes to Consolidated Financial Statements and
    Segment Information for a
    reconciliation of our EBITDA to net income (loss).
    (3) The three months ended March 31, 2010, included $22.2 million of
    loss on extinguishment of
    debt.




    
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<p> </p>
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                                 Boise Inc.
                     Consolidated Statements of Income
    (unaudited, dollars and shares in thousands, except per-share data)
    
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<p> </p>
<p> </p>
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                                                    Six Months Ended
                                                    ----------------
                                                        June 30
                                                        -------
                                                      2010         2009
                                                      ----         ----
    Sales
    Trade                                         $996,863     $954,745
    Related parties                                 18,803       24,907
                                                 1,015,666      979,652
                                                 ---------      -------
    Costs and expenses
    Materials, labor, and other operating
     expenses                                      828,079      799,152
    Fiber costs from related parties                14,999       14,636
    Depreciation, amortization, and depletion       64,398       64,864
    Selling and distribution expenses               27,988       27,806
    General and administrative expenses             24,028       23,064
    St. Helens mill restructuring                     (306)       4,781
    Alternative fuel mixture credits, net                -     (75,337)
    Other (income) expense, net                       (314)       2,673
                                                   958,872      861,639
                                                   -------      -------
    
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<p> </p>
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    Income from operations                          56,794      118,013
                                                    ------      -------
    
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<p> </p>
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    Foreign exchange gain (loss)                       364          479
    Change in fair value of interest rate
     derivatives                                       (42)         495
    Loss on extinguishment of debt                 (22,225)           -
    Interest expense                               (32,610)    (43,543)
    Interest income                                     98          145
                                                   (54,415)    (42,424)
                                                   -------      -------
    
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<p> </p>
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    Income before income taxes                       2,379       75,589
    Income tax (provision) benefit                  (1,754)    (25,622)
    Net income                                        $625      $49,967
                                                      ====      =======
    
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<p> </p>
<pre>
    
    Weighted average common shares
     outstanding:
    Basic                                           80,214       77,818
    Diluted                                         84,143       81,906
    
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<p> </p>
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    Net income per common share:
    Basic                                            $0.01        $0.64
    Diluted                                          $0.01        $0.61




    
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<p> </p>
<p> </p>
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                      Segment Information
               (unaudited, dollars in thousands)
    
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<p> </p>
<p> </p>
<p> </p>
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                                            Six Months Ended
                                            ----------------
                                                 June 30
                                                 -------
                                               2010         2009
                                               ----         ----
    Segment sales
    Paper                                  $717,688     $708,396
    Packaging                               314,297      287,369
    Intersegment eliminations and
     other                                  (16,319)    (16,113)
                                         $1,015,666     $979,652
                                         ==========     ========
    
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<p> </p>
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    Segment income
    Paper (1)                               $55,651     $109,281
    Packaging (1)                            11,335       21,455
    Corporate and Other (1) (2)              (9,828)    (12,244)
                                             57,158      118,492
                                             ------      -------
    
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<p> </p>
<pre>
    
    Change in fair value of interest
     rate derivatives                           (42)         495
    Loss on extinguishment of debt          (22,225)           -
    Interest expense                        (32,610)    (43,543)
    Interest income                              98          145
    Income (loss) before income taxes        $2,379      $75,589
                                             ======      =======
    
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<p> </p>
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    EBITDA (2)
    Paper (1)                               $98,818     $151,726
    Packaging (1)                            30,610       41,889
    Corporate and Other (1) (3)             (30,097)    (10,259)
                                            -------      -------
                                            $99,331     $183,356
                                            =======     ========
    
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<p> </p>
<p> </p>
<pre>
    
    (1) The six months ended June 30, 2009, included $57.0 million of
    income recorded in the Paper segment, $19.9 million of income recorded in
    the Packaging segment, and $1.6 million of expenses recorded in the 
    Corporate and Other segment relating to alternative fuel mixture credits.
    These amounts are net of fees and expenses and before taxes.
    (2) See Summary Notes to Consolidated Financial Statements and
    Segment Information for a reconciliation of our EBITDA to net income.
    (3) The six months ended June 30, 2010, included $22.2 million 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)
    
</pre>
<p> </p>
<p> </p>
<pre>
    
                                             June 30,        December 31,
                                               2010               2009
                                            ---------       -------------
    ASSETS
    
</pre>
<p> </p>
<pre>
    
    Current
    Cash and cash equivalents                 $128,062             $69,393
    Short-term investments                      10,606              10,023
    Receivables
       Trade, less allowances of $616 and
        $839                                   205,268             185,110
       Related parties                           2,236               2,056
       Other (1)                                 4,274              62,410
    Inventories                                255,335             252,173
    Deferred income taxes                       12,151                   -
    Prepaid and other                           10,829               4,819
                                               628,761             585,984
                                               -------             -------
    Property
    Property and equipment, net              1,186,072           1,205,679
    Fiber farms and deposits                    17,825              17,094
                                             1,203,897           1,222,773
                                             ---------           ---------
    
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<p> </p>
<pre>
    
    Deferred financing costs                    32,980              47,369
    Intangible assets, net                      30,981              32,358
    Other assets                                 7,546               7,306
                                                 -----               -----
    Total assets                            $1,904,165          $1,895,790
                                            ==========          ==========
    
</pre>
<p> </p>
<pre>
    
    (1) December 31, 2009, included 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 and shares in thousands, except per-share data)
    
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<p> </p>
<p> </p>
<pre>
    
                                                 June 30,    December 31,
                                                   2010           2009
                                                ---------   -------------
    LIABILITIES AND STOCKHOLDERS' EQUITY
    
</pre>
<p> </p>
<pre>
    
    Current
    Short-term borrowings                           $3,536              $-
    Current portion of long-term debt               29,163          30,711
    Income taxes payable                                63             240
    Accounts payable
       Trade                                       193,238         172,518
       Related parties                                 931           2,598
    Accrued liabilities
       Compensation and benefits                    53,690          67,948
       Interest payable                             11,319           4,946
       Other                                        17,019          23,735
                                                   308,959         302,696
                                                   -------         -------
    
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<p> </p>
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    Debt
    Long-term debt, less current portion           763,081         785,216
                                                   -------         -------
    
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<p> </p>
<pre>
    
    Other
    Deferred income taxes                           53,065          32,253
    Compensation and benefits                      122,446         123,889
    Other long-term liabilities                     33,729          30,801
                                                    ------          ------
                                                   209,240         186,943
                                                   -------         -------
    
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<p> </p>
<p>Commitments and contingent liabilities</p>
<p> </p>
<pre>
    
    Stockholders' equity
    Preferred stock, $.0001 par value per
     share:                                              -               -
         1,000 shares authorized; none issued
    Common stock, $.0001 par value per
     share:                                              8               8
         250,000 shares authorized;
         84,760 shares and 84,419 shares issued
          and outstanding
    Additional paid-in capital                     579,211         578,669
    Accumulated other comprehensive income
     (loss)                                        (70,770)        (71,553)
    Retained earnings                              114,436         113,811
    Total stockholders' equity                     622,885         620,935
                                                   -------         -------
    
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<p> </p>
<pre>
    
    Total liabilities and stockholders'
     equity                                     $1,904,165      $1,895,790
                                                ==========      ==========




    
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<p> </p>
<pre>
    
                              Boise Inc.
                 Consolidated Statements of Cash Flows
                   (unaudited, dollars in thousands)
    
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<p> </p>
<p> </p>
<pre>
    
                                                        Six Months Ended
                                                            June 30
                                                         ----------------
                                                         2010          2009
                                                         ----          ----
    
</pre>
<p> </p>
<pre>
    
    Cash provided by (used for) operations
    Net income                                           $625       $49,967
    Items in net income not using (providing)
     cash
       Depreciation, depletion, and amortization
          of deferred financing costs and other        68,864        71,178
       Share-based compensation expense                 1,834         1,744
       Notes payable interest expense                       -         5,349
       Pension and other postretirement benefit
        expense                                         4,705         4,877
       Deferred income taxes                              912        16,593
       Change in fair value of energy derivatives         617        (1,277)
       Change in fair value of interest rate
        derivatives                                        42          (495)
       (Gain) loss on sales of assets, net                 45            10
       Other                                             (364)         (385)
    Loss on extinguishment of debt                     22,225             -
    Decrease (increase) in working capital,
     net of acquisitions
       Receivables                                     37,899        12,982
       Inventories                                     (5,347)       68,237
       Prepaid expenses                                 1,503        (2,650)
       Accounts payable and accrued liabilities         6,352        (7,121)
    Current and deferred income taxes                     344         8,420
    Pension and other postretirement benefit
     payments                                          (5,864)       (7,031)
    Other                                                (101)          331
       Cash provided by (used for) operations         134,291       220,729
                                                      -------       -------
    Cash provided by (used for) investment
    Acquisitions of businesses and facilities               -          (543)
    Expenditures for property and equipment           (37,481)      (35,854)
    Purchases of short-term investments               (11,825)      (10,000)
    Maturities of short-term investments               11,247             -
    Sales of assets                                       575           317
    Other                                                 230           571
       Cash provided by (used for) investment         (37,254)      (45,509)
                                                      -------       -------
    Cash provided by (used for) financing
    Issuances of long-term debt                       300,000        10,000
    Payments of long-term debt                       (323,683)      (92,631)
    Payments of short-term borrowings                  (1,752)            -
    Payments of deferred financing fees               (11,613)            -
    Other                                              (1,320)            -
       Cash provided by (used for) financing          (38,368)      (82,631)
                                                      -------       -------
    
</pre>
<p> </p>
<p>Increase in cash and cash equivalents              58,669        92,589</p>
<p> </p>
<p>Balance at beginning of the period                 69,393        22,518</p>
<p> </p>
<pre>
    
    Balance at end of the period                     $128,062      $115,107
                                                     ========      ========



    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">June 30, 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>This release contains several financial measures that are not measures under U.S. generally accepted accounting principles (GAAP). These measures include EBITDA, EBITDA excluding special items, net income excluding special items, net total debt, and other similar measures. Management uses these measures to evaluate ongoing operations and believes they are useful to investors because they enable them to perform meaningful comparisons of past and present operating results. The following charts reconcile these non-GAAP measures with the most directly comparable GAAP measures.</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">June 30, 2010</span> and 2009, and the three months ended <span class="xn-chron">March 31, 2010</span> (unaudited, dollars in thousands):</p>
<p/>
<p> </p>
<p> </p>
<pre>
    
                                            Three Months Ended
                                            ------------------
                                                                March
                                           June 30                     31,
                                           -------
                                      2010         2009          2010
                                      ----         ----          ----
    
</pre>
<p> </p>
<pre>
    
    Net income (loss)              $13,310      $50,883      $(12,685)
    Change in fair value of
     interest rate derivatives          13         (627)           29
    Interest expense                16,165       21,389        16,445
    Interest income                    (61)         (91)          (37)
    Income tax provision (benefit)   8,376       26,187        (6,622)
    Depreciation, amortization,
     and depletion                  32,267       32,892        32,131
    EBITDA                         $70,070     $130,633       $29,261
                                   =======     ========       =======


    
</pre>
<p>The following table reconciles net income to EBITDA for the six months ended <span class="xn-chron">June 30, 2010</span> and 2009 (unaudited, dollars in thousands):</p>
<p/>
<p> </p>
<p> </p>
<pre>
    
                                          Six Months Ended
                                          ----------------
                                               June 30
                                               -------
                                          2010         2009
                                          ----         ----
    
</pre>
<p> </p>
<pre>
    
    Net income                            $625      $49,967
    Change in fair value of interest
     rate derivatives                       42         (495)
    Interest expense                    32,610       43,543
    Interest income                        (98)        (145)
    Income tax provision (benefit)       1,754       25,622
    Depreciation, amortization, and
     depletion                          64,398       64,864
    EBITDA                             $99,331     $183,356
                                       =======     ========



    
</pre>
<p>The following table reconciles segment income (loss) and EBITDA to EBITDA excluding special items for the three months ended <span class="xn-chron">June  30, 2010</span> and 2009, and the three months ended <span class="xn-chron">March 31, 2010</span> (unaudited, dollars in thousands):</p>
<p/>
<p> </p>
<p> </p>
<pre>
    
                                             Three Months Ended
                                             ------------------
                                                                 March
                                                 June 30                 31,
                                                 -------
                                             2010         2009      2010
                                             ----         ----      ----
    
</pre>
<p> </p>
<pre>
    
    Paper
    Segment income                        $25,708      $84,505   $29,943
    Depreciation, amortization, and
     depletion                             21,698       21,099    21,469
    EBITDA                                $47,406     $105,604   $51,412
                                          -------     --------   -------
    St. Helens mill restructuring            (434)       1,133       128
    Change in fair value of energy hedges  (2,312)      (2,797)    2,832
    Alternative fuel mixture credits, net       -     (56,967)         -
    EBITDA excluding special items        $44,660      $46,973   $54,372
                                          -------      -------   -------
    
</pre>
<p> </p>
<pre>
    
    Packaging
    Segment income (loss)                 $17,105      $20,330   $(5,770)
    Depreciation, amortization, and
     depletion                              9,579       10,778     9,696
    EBITDA                                $26,684      $31,108    $3,926
                                          -------      -------    ------
    Change in fair value of energy hedges    (401)        (671)      498
    Alternative fuel mixture credits, net       -     (19,947)         -
    EBITDA excluding special items        $26,283      $10,490    $4,424
                                          -------      -------    ------
    
</pre>
<p> </p>
<pre>
    
    Corporate and Other
    Segment loss                          $(4,982)     $(7,094)  $(4,846)
    Depreciation, amortization, and
     depletion                                990        1,015       966
    Loss on extinguishment of debt            (28)           -   (22,197)
    EBITDA                                $(4,020)     $(6,079) $(26,077)
                                          -------      -------  --------
    Alternative fuel mixture credits, net       -        1,577         -
    Loss on extinguishment of debt             28            -    22,197
    EBITDA excluding special items        $(3,992)     $(4,502)  $(3,880)
                                          -------      -------   -------
    
</pre>
<p> </p>
<pre>
    
    EBITDA                                $70,070     $130,633   $29,261
                                          =======     ========   =======
    
</pre>
<p> </p>
<pre>
    
    EBITDA excluding special items        $66,951      $52,961   $54,916
                                          =======      =======   =======



    
</pre>
<p>The following table reconciles segment income (loss) and EBITDA to EBITDA excluding special items for the six months ended <span class="xn-chron">June 30, 2010</span> and 2009 (unaudited, dollars in thousands):</p>
<p/>
<p> </p>
<p> </p>
<pre>
    
                                                 Six Months Ended
                                                      June 30
                                                  ----------------
                                                  2010          2009
                                                  ----          ----
    
</pre>
<p> </p>
<pre>
    
    Paper
    Segment income                             $55,651      $109,281
    Depreciation, amortization, and
     depletion                                  43,167        42,445
    EBITDA                                     $98,818      $151,726
                                               -------      --------
    St. Helens mill restructuring                 (306)        4,781
    Change in fair value of energy hedges          521          (994)
    Alternative fuel mixture credits, net            -       (56,967)
    EBITDA excluding special items             $99,033       $98,546
                                               -------       -------
    
</pre>
<p> </p>
<pre>
    
    Packaging
    Segment income                             $11,335       $21,455
    Depreciation, amortization, and
     depletion                                  19,275        20,434
    EBITDA                                     $30,610       $41,889
                                               -------       -------
    Change in fair value of energy hedges           96          (283)
    Alternative fuel mixture credits, net            -       (19,947)
    EBITDA excluding special items             $30,706       $21,659
                                               -------       -------
    
</pre>
<p> </p>
<pre>
    
    Corporate and Other
    Segment loss                               $(9,828)     $(12,244)
    Depreciation, amortization, and
     depletion                                   1,956         1,985
    Loss on extinguishment of debt             (22,225)            -
    EBITDA                                    $(30,097)     $(10,259)
                                              --------      --------
    Alternative fuel mixture credits, net            -         1,577
    Loss on extinguishment of debt              22,225             -
    EBITDA excluding special items             $(7,872)      $(8,682)
                                               -------       -------
    
</pre>
<p> </p>
<pre>
    
    EBITDA                                     $99,331      $183,356
                                               =======      ========
    
</pre>
<p> </p>
<pre>
    
    EBITDA excluding special items            $121,867      $111,523
                                              ========      ========



    
</pre>
<p>The following tables reconcile net income (loss) to net income excluding special items and presents net income excluding special items per diluted share for the three months ended <span class="xn-chron">June 30, 2010</span> and 2009, the three months ended <span class="xn-chron">March 31, 2010</span>, and the six months ended <span class="xn-chron">June 30, 2010</span> and 2009 (unaudited, dollars and shares in thousands):</p>
<p/>
<p> </p>
<p> </p>
<pre>
    
                                            Three Months Ended
                                            ------------------
                                                                March
                                           June 30                       31,
                                           -------             ------
                                       2010          2009          2010
                                       ----          ----          ----
    
</pre>
<p> </p>
<pre>
    
    Net income (loss)               $13,310       $50,883      $(12,685)
      St. Helens mill restructuring    (434)        1,133           128
      Change in fair value of
       energy hedges                (2,713)        (3,468)        3,330
      Alternative fuel mixture
       credits, net                       -       (75,337)            -
      Loss on extinguishment of
       debt                              28             -        22,197
    Tax impact of special items
     (a)                              1,207        30,059        (9,928)
                                      -----        ------        ------
    Net income excluding special
     items                          $11,398        $3,270        $3,042
                                    -------        ------        ------
    Weighted average common
     shares outstanding: diluted     84,093        84,254        84,195
    Net income excluding special
     items per diluted share          $0.14         $0.04         $0.04



    
</pre>
<p> </p>
<p> </p>
<pre>
    
                                        Six Months Ended
                                        ----------------
                                             June 30
                                             -------
                                        2010         2009
                                        ----         ----
    
</pre>
<p> </p>
<pre>
    
    Net income                          $625      $49,967
      St. Helens mill restructuring     (306)       4,781
      Change in fair value of
       energy hedges                     617       (1,277)
      Alternative fuel mixture
       credits, net                        -     (75,337)
      Loss on extinguishment of
       debt                           22,225            -
    Tax impact of special items
     (a)                             (8,721)       27,799
                                      ------       ------
    Net income excluding special
     items                           $14,440       $5,933
                                     -------       ------
    Weighted average common
     shares outstanding: diluted      84,143       81,906
    Net income excluding special
     items per diluted share           $0.17        $0.07
    
</pre>
<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">June 30, 2010</span> and 2009, and <span class="xn-chron">March 31, 2010</span> (unaudited, dollars in thousands):</p>
<p/>
<p> </p>
<p> </p>
<pre>
    
                                                                     March
                                    June 30,        June 30,          31,
                                         2010            2009          2010
                                         ----            ----          ----
    
</pre>
<p> </p>
<pre>
    
    Short-term borrowings              $3,536              $-            $-
    Current portion of long-term
     debt                              29,163          14,890        16,663
    Long-term debt, less current
     portion                          763,081         939,929       775,581
    Notes payable                           -          71,955             -
                                          ---          ------           ---
    Total debt                        795,780       1,026,774       792,244
    Less cash and cash
     equivalents and short-term
     investments                     (138,668)       (125,108)     (98,300)
                                     --------        --------       -------
    Net total debt                   $657,112        $901,666      $693,944
                                     ========        ========      ========






    

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

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