Domtar Corporation reports preliminary fourth quarter and fiscal year 2007 results



    
    TICKER SYMBOL
    UFS (NYSE, TSX)

    Company surpasses first year synergy target

    - Free Cash Flow amounted to $131 million in the fourth quarter,
      $490 million for the year
    - Synergies of $130 million run-rate at the end of the year
    - Price increases announced for several business and commercial printing
      paper grades for implementation in the first quarter 2008
    

    MONTREAL, Feb. 15 /CNW Telbec/ - Domtar Corporation (NYSE/TSX: UFS) today
reported a net loss of $26 million ($0.05 per diluted share) for the fourth
quarter of 2007 compared to net income of $36 million ($0.07 per diluted
share) for the third quarter of 2007. Sales for the fourth quarter amounted to
$1.7 billion, unchanged from the third quarter 2007. Excluding the items
listed below, the Company earned $29 million ($0.06 per diluted share) in the
fourth quarter of 2007 compared to $44 million ($0.09 per diluted share) in
the third quarter of 2007. The stronger Canadian dollar reduced earnings by
approximately $0.02 per diluted share in the fourth quarter when compared to
the third quarter 2007.

    
    Fourth quarter 2007:
    --------------------

    - Charge of $96 million ($66 million after tax) related to the impairment
      of goodwill and property, plant and equipment;

    - Gains of $51 million ($35 million after tax) for lawsuit and insurance
      claim settlements;

    - Expenses of $25 million ($17 million after tax) related to the debt
      restructuring;

    - Costs of $21 million ($14 million after tax) related to synergies,
      integration and optimization;

    - Gain of $11 million related to a change in statutory income tax rates;

    - Closure and restructuring costs of $7 million ($5 million after tax);
      and

    - Gains of $2 million ($1 million after tax) related to financial
      instruments.

    Third quarter 2007:
    -------------------

    - Costs of $14 million ($8 million after tax) related to synergies,
      integration and optimization;

    - Gains of $6 million ($4 million after tax) related to financial
      instruments;

    - Charge of $3 million related to a change in statutory income tax rates;
      and

    - Closure and restructuring costs of $2 million ($1 million after tax).

    Commenting on the financial results, Mr. Raymond Royer, President and CEO
said, "In the fourth quarter, our results were impacted by the unprecedented
run-up in the value of the Canadian dollar against the U.S. dollar and by
continued pressure on fiber, chemical and energy related costs. Nonetheless,
we benefited from a better supply-demand balance in our system with reduced
lack-of-order downtime, paper production in sync with our shipments and
pricing momentum despite the seasonally slower period of the year."

    FISCAL YEAR 2007 HIGHLIGHTS

    For fiscal year 2007, net income amounted to $70 million compared to net
loss of $609 million for fiscal year 2006. Sales amounted to $5.9 billion for
fiscal year 2007, including sales of Domtar Inc. from March 7, 2007 (please
refer to section "The Transaction" for further explanation). Domtar synergy
teams continued to aggressively pursue $200 million of transaction-related
cost savings and efficiency improvement opportunities that the Company has
committed to capturing in stages by March 2009. At the end of December, the
Company had captured synergies with an estimated run-rate of $130 million
surpassing the targeted $80 million run-rate. Based on the success to date,
the Company remains confident that it will exceed its synergies goal of
$200 million run-rate before the end of 2008.
    "This has been a historic year for Domtar," added Mr. Royer. "During 2007,
we closed a transformational transaction creating a new leader in our
industry, conducted a review of our operations resulting in the streamlining
of our portfolio of assets and, as a result of our synergy efforts, identified
and launched several projects aimed at reducing costs and improving
efficiency. We completed a bond exchange and tender offers for the purpose of
simplifying our capital structure, achieved and surpassed our first-year
synergy target and strengthened our balance sheet. As we approach our first
anniversary as a new Company, I cannot overlook how instrumental our employees
were in achieving this remarkable performance. These actions will continue to
benefit our organization as we execute on our strategy of establishing our
presence to better serve our customers and build on our leading position in
North America."

    SEGMENT REVIEW

    PAPERS

    Operating income, including a $92 million charge for the impairment of
property, plant and equipment associated with the fourth quarter announcement
of the reorganization of our Dryden, Ontario mill, was $25 million in the
fourth quarter of 2007 compared to operating income of $133 million in the
third quarter of 2007. Depreciation and amortization totaled $124 million in
the fourth quarter. When compared to the third quarter of 2007, sales remained
unchanged at $1.4 billion. Shipments-to-production ratio was 98% in the fourth
quarter compared to 106% in the third quarter. Paper inventories increased
17,000 tons throughout the quarter.
    Excluding the $92 million of impairment of property, plant and equipment,
the decrease in operating income, when compared to the third quarter, is the
result of lower paper shipments, higher costs including costs related to
synergies, integration and optimization, unfavorable foreign exchange and
higher costs for fiber, energy and chemicals. These factors were partially
mitigated by a lawsuit settlement, higher average selling prices for paper and
pulp and higher pulp shipments.

    (In millions of dollars)                           3Q 2007       4Q 2007
    ----------------------------------           -------------   -----------
    Sales                                               $1,411        $1,401
    Operating income                                      $133           $25
    Depreciation and amortization                         $122          $124
    Impairment of PP&E                                       -           $92

    PAPER MERCHANTS

    Operating income was $1 million in the fourth quarter of 2007 compared to
operating income of $6 million in the third quarter of 2007. Depreciation and
amortization amounted to $1 million in the fourth quarter. Sales increased 5%
to $262 million while deliveries increased 5%.
    When compared to the third quarter, the decrease in operating income is
the result of a decrease in allowance for doubtful accounts recorded in the
third quarter and higher costs. These factors were partially mitigated by
higher deliveries.

    (In millions of dollars)                           3Q 2007       4Q 2007
    ----------------------------------           -------------   -----------
    Sales                                                 $249          $262
    Operating income                                        $6            $1
    Depreciation and amortization                            -            $1

    WOOD

    The operating loss, including a $4 million charge for the impairment of
goodwill, was $26 million in the fourth quarter of 2007, compared to an
operating loss of $13 million in the third quarter of 2007. Depreciation and
amortization totaled $8 million in the fourth quarter of 2007. When compared
to the third quarter of 2007, sales decreased 10% to $79 million with lumber
shipments decreasing 13%.
    Excluding the $4 million of impairment of goodwill, the increase in
operating loss, when compared to the third quarter, is the result of lower
average selling prices, unfavorable foreign exchange and higher freight costs.

    (In millions of dollars)                           3Q 2007       4Q 2007
    ----------------------------------           -------------   -----------
    Sales                                                  $88           $79
    Operating loss                                        ($13)         ($26)
    Depreciation and amortization                           $6            $8
    Impairment of goodwill                                   -            $4

    OUTLOOK

    For 2008, inflation pressures on energy-related costs, including those
related to fiber and chemicals, are expected to remain while costs related to
integration are expected to decelerate in the second half of the year. Average
paper price realizations are expected to increase after giving effect to price
increases implemented toward the end of 2007 and additional pricing
initiatives announced for 2008. Paper volumes are expected to stay relatively
steady when compared to 2007. While there are indications that growth in the
U.S. economy may continue to slow in the next months, this has not yet
translated into Domtar's Papers business.

    EARNINGS CONFERENCE CALL

    The Company will hold a conference call today at 10:00 a.m. (EST) to
discuss its fourth quarter 2007 financial results. Financial analysts are
invited to participate in the call by dialing 1-866-321-6651 (North America)
or 1-416-642-5212 (International), while media and other interested
individuals are invited to listen to the live webcast on the Domtar corporate
website at www.domtar.com/en/investors/.

    THE TRANSACTION

    Domtar Corporation started its operations on March 7, 2007 following the
combination of the Weyerhaeuser Fine Paper Business and Domtar Inc. Prior to
the completion of the Transaction, the Weyerhaeuser Fine Paper Business was
operated by Weyerhaeuser Company.
    The financial results of Domtar Corporation cover certain periods prior to
the Transaction. For accounting and financial reporting purposes, Weyerhaeuser
Fine Paper Business is considered to be the "predecessor" to Domtar
Corporation and as a result, its historical financial statements now
constitute the historical financial statements of Domtar Corporation. The
results reported for the third and fourth quarter of 2007 include the results
of operations of the new Company for the entire period. The results reported
for the fiscal year 2006 include only the results of operations of the
Weyerhaeuser Fine Paper Business, on a carve-out basis, for the entire period.
The results reported for the fiscal year 2007 include the results of
operations of the Weyerhaeuser Fine Paper Business, on a carve-out basis, for
the period from January 1, 2007 to March 6, 2007 and the results of operations
of the new Company for the period from March 7, 2007 to December 30, 2007.

    ABOUT DOMTAR

    Domtar Corporation (NYSE/TSX: UFS) is the largest integrated producer of
uncoated freesheet paper in North America and the second largest in the world
based on production capacity, and is also a manufacturer of papergrade pulp.
The Company designs, manufactures, markets and distributes a wide range of
business, commercial printing, publication as well as technical and specialty
papers with recognized brands such as First Choice(R), Domtar Microprint(R),
Windsor Offset(R), Cougar(R) as well as its full line of environmentally and
socially responsible papers, Domtar EarthChoice(R). Domtar owns and operates
Domtar Distribution Group, an extensive network of strategically located paper
distribution facilities. Domtar also produces lumber and other specialty and
industrial wood products. The Company employs nearly 13,000 people. To learn
more, visit www.domtar.com

    FORWARD-LOOKING STATEMENTS

    All statements in this press release that are not based on historical fact
are "forward-looking statements." While management has based any
forward-looking statements contained herein on its current expectations, the
information on which such expectations were based may change. These
forward-looking statements rely on a number of assumptions concerning future
events and are subject to a number of risks, uncertainties, and other factors,
many of which are outside of our control that could cause actual results to
materially differ from such statements. Such risks, uncertainties, and other
factors include, but are not necessarily limited to, those set forth under the
captions "Forward-Looking Statements" and "Risk Factors" of the Form 10-Q
filed with the SEC. Unless specifically required by law, we assume no
obligation to update or revise these forward-looking statements to reflect new
events or circumstances.



    Domtar Corporation
    Consolidated Statements of Income
    (In millions of US dollars, unless otherwise noted)

    -------------------------------------------------------------------------
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                               Thirteen    Fourteen   Fifty-two  Fifty-three
                                  weeks       weeks       weeks        weeks
                                  ended       ended       ended        ended
    -------------------------------------------------------------------------
                               December    December    December     December
                                     30          31          30           31
                                   2007        2006        2007         2006
                                   (Unaudited)              (Unaudited)
                           ------------  ----------  ----------  -----------
                           ------------  ----------  ----------  -----------
                                      $           $           $            $
    Sales                         1,653         873       5,947        3,306
    Operating expenses
      Cost of sales, excluding
       depreciation and
       amortization               1,319         671       4,757        2,676
      Depreciation and
       amortization                 133          82         471          311
      Selling, general
       and administrative           136          43         408          174
      Impairment of goodwill
       and property, plant
       and equipment                 96           -          96          749
      Closure and
       restructuring costs            7          (1)         14           15
      Antidumping and
       countervailing duties
       refund                         -         (65)          -          (65)
      Other operating expenses
       (income)                     (45)          -         (69)           2
    --------------------------------------------------------------------------
                                  1,646         730       5,677        3,862
    -------------------------------------------------------------------------
    Operating income (loss)           7         143         270         (556)
    Interest expense                 65           -         171            -
    -------------------------------------------------------------------------
    Income (loss) before
     income taxes                   (58)        143          99         (556)
    Income tax expense
     (benefit)                      (32)         41          29           53
    -------------------------------------------------------------------------
    Net income (loss)               (26)        102          70         (609)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Per common share (in dollars)
      Net income (loss)
        Basic                     (0.05)       0.36        0.15        (2.14)
        Diluted                   (0.05)       0.36        0.15        (2.14)

      Weighted average number
       of common and
       exchangeable shares
       outstanding (millions)
        Basic                     515.4       284.1       474.1        284.1
        Diluted                   515.4       284.1       475.9        284.1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Domtar Corporation
    Consolidated Balance Sheets As at
    (In millions of US dollars)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                   December 30   December 31
    -------------------------------------------------------------------------
                                                          2007          2006
                                                    (Unaudited)
                                                             $             $

    Assets
    Current assets
      Cash and cash equivalents                             71             1
      Receivables, less allowances
       of $9 and $2                                        570           340
      Inventories                                          936           520
      Prepaid expenses                                      14             6
      Income and other taxes receivable                     53             -
      Deferred income taxes                                181            22
    -------------------------------------------------------------------------
        Total current assets                             1,825           889

    Property, plant and equipment,
     at cost                                             9,685         6,696
    Accumulated depreciation                            (4,323)       (3,631)
    -------------------------------------------------------------------------
        Net property, plant and equipment                5,362         3,065
    Goodwill                                               393            14
    Intangible assets, net of amortization                 111             -
    Other assets                                           119            30
    -------------------------------------------------------------------------
        Total assets                                     7,810         3,998
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Liabilities and shareholders' equity
    Current liabilities
      Bank indebtedness                                     63             -
      Trade and other payables                             789           250
      Income and other taxes payable                        50             6
      Long-term debt due within one year                    17            12
    -------------------------------------------------------------------------
        Total current liabilities                          919           268

    Long-term debt                                       2,213            32
    Deferred income taxes                                1,066           758
    Other liabilities and deferred credits                 440            25

    Shareholders' equity
      Business Unit equity                                   -         2,852
      Common stock                                           5             -
      Exchangeable shares                                  293             -
      Additional paid-in capital                         2,548             -
      Retained earnings                                     46             -
      Accumulated other comprehensive income               280            63
    -------------------------------------------------------------------------
        Total shareholders' equity                       3,172         2,915
    -------------------------------------------------------------------------
          Total liabilities and
           shareholders' equity                          7,810         3,998
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Domtar Corporation
    Consolidated Statements of Cash Flows
    (In millions of US dollars)

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                               Thirteen    Fourteen   Fifty-two  Fifty-three
                                  weeks       weeks       weeks        weeks
                                  ended       ended       ended        ended
    -------------------------------------------------------------------------
                               December    December    December     December
                                     30          31          30           31
                                   2007        2006        2007         2006
                                   (Unaudited)              (Unaudited)
                           ------------  ----------  ----------  -----------
                           ------------  ----------  ----------  -----------
                                      $           $           $            $
    Operating activities
    Net income (loss)               (26)        102          70         (609)
    Adjustments to reconcile
     income to cash flows
     from operating activities
      Depreciation and
       amortization                 133          82         471          311
      Deferred income taxes         (48)        (30)        (73)         (52)
      Closure and restructuring
       costs                          7          (1)         14           15
      Impairment of goodwill
       and property, plant
       and equipment                 96           -          96          749
      Debt restructuring costs       25           -          25            -
      Other                          (4)          3          (2)           4

    Changes in assets and
     liabilities, net of
     effects of acquisition
      Receivables                    23           9        (103)         (19)
      Inventories                    17          (1)         38           43
      Prepaid expenses               10           2           6           (2)
      Trade and other payables       30         (16)         88          (79)
      Income and other taxes        (19)          -          49            -
      Other assets and other
       liabilities                  (61)         (5)        (67)          (4)
    Payments of closure and
     restructuring costs             (1)          -          (6)           -
    -------------------------------------------------------------------------
    Cash flows provided from
     operating activities           182         145         606          357
    -------------------------------------------------------------------------

    Investing activities
    Additions to property,
     plant and equipment            (51)        (11)       (116)         (64)
    Proceeds from disposals of
     property, plant and
     equipment                        6           1          29            1
    Business acquisitions
     - cash acquired                  -           -         573            -
    Other                             -           -          (1)           -
    -------------------------------------------------------------------------
    Cash flows provided from
     (used for) investing
     activities                     (45)        (10)        485          (63)
    -------------------------------------------------------------------------

    Financing activities
    Net change in bank
     indebtedness                   (12)          -         (21)           -
    Drawdown of revolving
     bank credit                     50           -          50            -
    Issuance of short-term debt       -           -       1,350            -
    Issuance of long-term debt        -           -         800            -
    Repayment of short-term debt      -           -      (1,350)           -
    Repayment of long-term debt    (155)         (3)       (311)          (7)
    Debt issue costs                (15)          -         (39)           -
    Premium on redemption
     of long-term debt              (40)          -         (40)           -
    Repurchase of minority
     interest                       (24)          -         (24)           -
    Distribution to Weyerhaeuser
     prior to March 7, 2007           -        (132)     (1,431)        (287)
    Other                             -           -          (5)           -
    -------------------------------------------------------------------------
    Cash flows used for financing
     activities                    (196)       (135)     (1,021)        (294)
    -------------------------------------------------------------------------

    Net increase (decrease) in
     cash and cash equivalents      (59)          -          70            -
    Translation adjustments
     related to cash and
     cash equivalents                (6)          -           -            -
    Cash and cash equivalents
     at beginning of year           136           1           1            1
    -------------------------------------------------------------------------
    Cash and cash equivalents
     at end of year                  71           1          71            1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplemental cash flow
     information
      Net cash payments for:
        Interest                     60           -         148            -
        Income taxes                 74           -         112            -
    -------------------------------------------------------------------------



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

                                   ------------------------------------------
                                                  2007
                                   ------------------------------------------
                                        Q1       Q2       Q3      Q4     YTD
                                   ------------------------------------------
    Papers Segment
      Sales(a)                  ($)   $955   $1,349   $1,411  $1,401  $5,116
      Operating Income          ($)    $71      $92     $133     $25    $321
      Depreciation &
       amortization             ($)    $72     $126     $122    $124    $444
      Impairment of PP&E(b)     ($)                              $92     $92

      Papers

      Papers Production    ('000 ST)   826    1,216    1,187   1,182   4,411
      Papers Shipments     ('000 ST)   871    1,209    1,261   1,160   4,501
        Uncoated freesheet ('000 ST)   814    1,163    1,194   1,104   4,275
        Coated groundwood  ('000 ST)    57       46       67      56     226
      20-lb repro bond,
       92 bright (copy)(c)
       list price            ($/ton)  $930     $963     $990    $990    $968
      50-lb offset,
       rolls(c) list price   ($/ton)  $810     $810     $803    $847    $818
      Coated publication
       No. 5, 40-lb offset,
       rolls(c) list price   ($/ton)  $778     $748     $782    $840    $787

      Pulp

      Pulp Shipments(d)  ('000 ADMT)   249      330      333     411   1,323
        Hardwood Kraft
         Pulp                    (%)    21%      46%      48%     45%     42%
        Softwood Kraft
         Pulp                    (%)    61%      41%      40%     46%     46%
        Fluff Pulp               (%)    18%      13%      12%      9%     12%
      Pulp NBSK - U.S.
       market(c) list
       price                ($/ADMT)  $790     $810     $837    $858    $824
      Pulp NBHK - Japan
       market(c)(e) list
       price                ($/ADMT)  $640     $640     $658    $683    $655

    Paper Merchants Segment

      Sales(a)                   ($)   $76     $226     $249    $262    $813
      Operating Income           ($)    $4       $2       $6      $1     $13
      Depreciation &
       amortization              ($)    $1                        $1      $2

    Wood Segment

      Sales(a)                   ($)   $47      $90      $88     $79    $304
      Operating Loss             ($)   ($4)    ($20)    ($13)   ($26)   ($63)
      Depreciation &
       amortization              ($)    $5       $6       $6      $8     $25
      Impairment of goodwill     ($)                              $4      $4

      Lumber
       Production     (Millions FBM)    68      152      164     158     542
      Lumber
       Shipments      (Millions FBM)    88      227      197     172     684
      Lumber G.L. 2x4x8
       studs(c) prices      ($/MFBM)  $317     $335     $336    $294    $321
      Lumber G.L. 2x4 R/L,
       no. 1 & no. 2(c)
       prices               ($/MFBM)  $332     $332     $343    $308    $329

    Average Exchange Rates      CAN  1.172    1.098    1.044   0.981   1.074
                                 US  0.854    0.911    0.958   1.020   0.931
                                   ------------------------------------------

    (a) Sales represent sales before intersegment sales.
    (b) Includes $92 million related to the impairment of assets due to the
        fourth quarter announcement of reorganization at our Dryden, Ontario
        mill.
    (c) Source: Pulp & Paper Week and Random Lengths.
    (d) Figures are gross of market pulp purchased from other producers on
        the open market for some of our paper making operations. Pulp
        shipments represents the amount of pulp produced in excess of our
        internal requirement.
    (e) Based on Pulp & Paper Week's Southern Bleached Hardwood Kraft pulp
        prices for Japan, increased by an average differential of $15/ADMT
        between Northern and Southern Bleached Hardwood Kraft pulp prices.



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

    The following table sets forth certain non-U.S. generally accepted
accounting principles ("GAAP") financial metrics identified as "Earnings
Before Items," "EBITDA," "EBITDA Before Items," "Free Cash Flow" and "Net
Debt-to-Total Capitalization." Management believes that the financial metrics
presented are frequently used by investors and are useful to evaluate the
ability to service debt and the overall credit profile of the company.
Management believes these metrics are also useful to measure the operating
performance and benchmark with peers within the industry. These metrics are
presented as a complement to enhance the understanding of operating results
but not in substitution for GAAP results.
    The company calculates "Earnings Before Items" and "EBITDA Before Items"
by excluding the after-tax (pre-tax) effect of items considered by management
as not typifying the net income (loss) reported under U.S. GAAP. Management
uses these measures to focus on ongoing operations and believes that it is
useful to investors because it enables them to perform meaningful comparisons
between periods. Domtar believes that using this information along with net
income (loss) provides for a more complete analysis of the results of
operations. Net income (loss) is the most directly comparable GAAP measure.

                                   ------------------------------------------
                                                       2007
                                   ------------------------------------------
                                        Q1       Q2       Q3      Q4     YTD
                                   ------------------------------------------
    Reconciliation of "Earnings
     Before Items" to Net
     Income (Loss)
        Net income (loss)        ($)    49       11       36     (26)     70
    (+) Impairment of goodwill
         and property, plant
         and equipment           ($)                              66      66
    (-) Gains for lawsuit and
         insurance claim
         settlements             ($)                             (35)    (35)
    (+) Expenses related to the
         debt restructuring      ($)                              17      17
    (+) Costs related to synergies,
         integration and
         optimization            ($)     4        4        8      14      30
    (-) Gain related to change in
         statutory income
         tax rate                ($)    (6)      (1)       3     (11)    (15)
    (+) Closure and restructuring
         costs                   ($)     2        1        1       5       9
    (-) Gains related to financial
         instruments             ($)             (6)      (4)     (1)    (11)
    (=) Earnings
         before items            ($)    49        9       44      29     131

    Reconciliation of "EBITDA"
     and "EBITDA Before Items"
     to Net Income (Loss)
        Net income (loss)        ($)    49       11       36     (26)     70
    (+) Income tax expense
        (benefit)                ($)    11       11       39     (32)     29
    (+) Interest expense         ($)    11       47       48      65     171
    (+) Depreciation and
         amortization            ($)    78      132      128     133     471
    (+) Impairment of goodwill
         and property, plant
         and equipment           ($)                              96      96
    (=) EBITDA
                                 ($)   149      201      251     236     837

    (-) Gains for lawsuit
         & insurance claim
         settlements             ($)                             (51)    (51)
    (+) Costs related to synergies,
         integration and
         optimization            ($)     7        6       14      21      48
    (+) Closure and restructuring
         costs                   ($)     3        2        2       7      14
    (-) Gains related to financial
         instruments             ($)            (10)      (6)     (2)    (18)
    (=) EBITDA
         before items            ($)   159      199      261     211     830

    Reconciliation of "Free Cash
     Flow" to Cash Flow from
     Operating Activities
        Cash flow provided from
         operating activities    ($)    91      189      144     182     606
    (-) Additions to property,
         plant and equipment     ($)   (14)     (32)     (19)    (51)   (116)
    (=) Free cash
         flow                    ($)    77      157      125     131     490

    "Net Debt-to-Total
      Capitalization" Reconciliation
        Bank indebtedness        ($)    89       74       75      63       -
    (+) Current portion of
         long-term debt          ($)    21       19       19      17       -
    (+) Long-term debt           ($) 2,577    2,425    2,356   2,213       -
    (-) Cash and cash
         equivalents             ($)  (110)     (80)    (136)    (71)      -
    (=) Net
         debt                    ($) 2,577    2,438    2,314   2,222       -
    (+) Shareholders' equity     ($) 2,941    3,094    3,212   3,172       -
    (=) Total
         capitalization          ($) 5,518    5,532    5,526   5,394       -
        Net debt                 ($) 2,577    2,438    2,314   2,222       -
    (/) Total capitalization     ($) 5,518    5,532    5,526   5,394       -
    (=) Net
         debt-to-total
         capitalization          (%)    47%      44%      42%     41%      -


    "Earnings Before Items," "EBITDA," "EBITDA Before Items," "Free Cash Flow"
and "Net Debt-to-Total Capitalization" have no standardized meaning prescribed
by GAAP and are not necessarily comparable to similar measures presented by
other companies and therefore should not be considered in isolation or as a
substitute for net income (loss), or any other income statement, cash flow
statement or balance sheet financial information prepared in accordance with
GAAP. It is important for readers to understand that certain items may be
presented in different lines by different companies on their financial
statements thereby leading to different measures for different companies.
    




For further information:

For further information: Media relations: Michel A. Rathier, (514)
848-5103; Investor relations: Pascal Bossé, (514) 848-5938

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Domtar Corporation

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