Exhibit 99.1
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Boise Inc. Investor Relations 1111 West Jefferson PO Box 990050 Boise, ID 83799-0050 T 208 384 7456 F 208 395 7400 | | |  | |
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| News Release | | For Immediate Release: March 2, 2011 |
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| Media Contact | | Investor Relations Contact |
| Virginia Aulin – 208 384 7837 | | Jason Bowman – 208 384 7456 |
Boise Inc. reports financial results for fourth quarter and year-end 2010
BOISE, Idaho – Boise Inc. (NYSE: BZ) today reported net income of $26.2 million or $0.31 per diluted share for fourth quarter 2010 compared with net income of $55.7 million or $0.66 per diluted share for fourth quarter 2009. Net income for 2010 was $62.7 million or $0.75 per diluted share, compared with net income of $153.8 million or $1.85 per diluted share for 2009. Fourth quarter 2009 and full year 2009 results included benefits from alternative fuel mixture credits.
Net income excluding special items was $25.8 million or $0.31 per diluted share for fourth quarter 2010 and $76.8 million or $0.91 per diluted share for 2010. EBITDA excluding special items was $92.8 million for fourth quarter 2010 and $325.6 million for 2010.
FINANCIAL HIGHLIGHTS
(in millions, except per-share data)
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| | | 4Q 2010 | | | 4Q 2009 | | | 3Q 2010 | | | 2010 | | | 2009 | |
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Sales | | $ | 524.1 | | | $ | 490.3 | | | $ | 554.1 | | | $ | 2,093.8 | | | $ | 1,978.2 | |
Net income | | $ | 26.2 | | | $ | 55.7 | | | $ | 35.9 | | | $ | 62.7 | | | $ | 153.8 | |
Net income per diluted share | | $ | 0.31 | | | $ | 0.66 | | | $ | 0.43 | | | $ | 0.75 | | | $ | 1.85 | |
Net income excluding special items (a) | | $ | 25.8 | | | $ | 4.2 | | | $ | 36.6 | | | $ | 76.8 | | | $ | 20.4 | |
Net income excluding special items per diluted share (a) | | $ | 0.31 | | | $ | 0.05 | | | $ | 0.44 | | | $ | 0.91 | | | $ | 0.25 | |
EBITDA (b) | | $ | 93.4 | | | $ | 84.3 | | | $ | 109.8 | | | $ | 302.6 | | | $ | 395.7 | |
EBITDA excluding special items (b) | | $ | 92.8 | | | $ | 54.4 | | | $ | 110.9 | | | $ | 325.6 | | | $ | 232.1 | |
Net total debt at period end (c) | | $ | 604.4 | | | $ | 736.5 | | | $ | 604.0 | | | $ | 604.4 | | | $ | 736.5 | |
| (a) | For reconciliation of net income to net income excluding special items, see “Summary Notes to Consolidated Financial Statements and Segment Information.” |
| (b) | For reconciliation of net income 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.” |
“I am pleased with our accomplishments in 2010” said Alexander Toeldte, president and chief executive officer of Boise Inc. “Our 2010 EBITDA excluding special items was the highest since our inception as a public company three years ago. During 2010, we improved our margins, generated $178 million in free
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cash flow1, and grew sales volumes of both our corrugated packaging products and packaging demand-driven and premium office papers 13% over 2009. This strong performance allowed us to reduce our net total debt by $132 million dollars and reward our shareholders by paying a $0.40 per share special dividend in December.
“Our success was driven by several factors, including solid operational performance, strong pricing in our core uncoated freesheet and corrugated packaging markets, and continuing variable and fixed cost reductions. Importantly, we also worked more safely, achieving record low incident rates across the company.
“On February 22, 2011, we announced the acquisition of Tharco Packaging, an important step in our strategy to profitably grow our packaging business and create value for our shareholders and customers. In the year ahead, we will continue our focus on creating shareholder value through well-performing operations, disciplined capital allocation, and targeted growth.”
Sales
Total sales for fourth quarter 2010 were $524.1 million, up $33.8 million, or 7%, from $490.3 million for fourth quarter 2009 and down $30.0 million from third quarter 2010 sales of $554.1 million.
Paper segment sales increased $6.8 million during fourth quarter 2010 compared with fourth quarter 2009 due primarily to increased sales prices. Packaging segment sales increased $29.9 million during fourth quarter 2010 compared with fourth quarter 2009 driven by higher sales prices for linerboard, newsprint, and corrugated products and increased sales volumes for corrugated products.
Full year 2010 sales were $2.1 billion, a 6% increase over 2009 sales of $2.0 billion. The increase was driven primarily by increased sales prices in both the Paper and Packaging segments and, to a lesser extent, by increased sales volumes in the Packaging segment.
Prices and Volumes
Uncoated freesheet net selling prices increased 7% in fourth quarter 2010 compared with fourth quarter 2009 and were flat compared with third quarter 2010. Full year net selling prices for uncoated freesheet improved 2% in 2010 compared with 2009. Total uncoated freesheet sales volumes were 291,000 tons during fourth quarter 2010, a decrease of 6% versus the prior year period and a decrease of 9% from third quarter 2010. Full year sales volumes of uncoated freesheet papers were 1.2 million tons in 2010, down 1% compared
| 1 | Cash provided by operations less expenditures for property and equipment. |
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with 2009. Combined sales volumes of premium office, label and release, and flexible packaging papers represented 31% of our total 2010 uncoated freesheet sales volumes compared with 27% during 2009. This growth primarily displaced commodity paper products.
Corrugated container and sheet sales volumes improved 9% during fourth quarter 2010 compared with fourth quarter 2009, and full year 2010 sales volumes increased 13%, to 6.7 billion square feet, compared with 2009. These improved sales volumes were due primarily to increased sales of sheets from our sheet feeder plant in Texas as industrial markets in the area continued to improve. Corrugated container and sheet sales volumes decreased 3% from third quarter 2010 as a result of seasonal demand decline. Corrugated container and sheet prices increased 9% during fourth quarter 2010 compared with fourth quarter 2009 due to improved market conditions and pass-through of increased prices for linerboard and medium. Corrugated container and sheet prices were flat sequentially from third quarter 2010. Full year corrugated container and sheet prices decreased 2% in 2010 compared with 2009 driven primarily by an increased sales mix of corrugated sheets relative to corrugated containers.
Linerboard net selling prices to third parties increased 47% in fourth quarter 2010 compared with fourth quarter 2009 and improved 8% sequentially from third quarter 2010. Full year 2010 net selling prices to third parties increased 21% in 2010 compared with 2009. Linerboard sales volumes to third parties decreased 27% in fourth quarter 2010 from fourth quarter 2009 and decreased 11%, to 225,000 tons, in 2010 compared with 2009. The decreased sales volumes were due primarily to improved sales volumes in our corrugated container and sheet operations during those periods, which resulted in less linerboard available for sales to third parties. Linerboard sales volumes to third parties increased 27% sequentially from third quarter 2010. Total linerboard sales volumes in 2010, including linerboard utilized internally in our corrugated container and sheet operations, were 602,000 tons, an increase of 11% compared with 2009.
Input Costs
Total fiber, energy, and chemical costs for fourth quarter 2010 were $209.2 million, an increase of $4.2 million, or 2%, compared with costs of $205.0 million for fourth quarter 2009. The increase was driven primarily by increased purchased pulp prices in our Paper segment. Full year 2010 fiber, energy, and chemical costs totaled $878.4 million, an increase of $78.1 million, or 10%, from costs of $800.3 million for 2009.
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INPUT COST SUMMARY
(in millions)
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| | | 4Q 2010 | | | 4Q 2009 | | | 3Q 2010 | | | 2010 | | | 2009 | |
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Fiber | | $ | 110.0 | | | $ | 106.5 | | | $ | 119.1 | | | $ | 461.8 | | | $ | 401.1 | |
Energy | | | 47.8 | | | | 45.7 | | | | 52.4 | | | | 211.7 | | | | 188.9 | |
Chemicals | | | 51.4 | | | | 52.8 | | | | 54.6 | | | | 204.9 | | | | 210.3 | |
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Total | | $ | 209.2 | | | $ | 205.0 | | | $ | 226.1 | | | $ | 878.4 | | | $ | 800.3 | |
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Total fiber costs during fourth quarter 2010 were $110.0 million, an increase of $3.5 million, or 3%, from $106.5 million incurred in fourth quarter 2009. Full year 2010 fiber costs were $461.8 million, an increase of $60.7 million, or 15%, from costs of $401.1 million for 2009. Increases in both periods were due to higher purchased pulp and recycled fiber prices in our Paper segment and increased consumption of fiber as a result of increased overall production. Fiber costs in fourth quarter 2010 decreased $9.1 million, or 8%, compared with $119.1 million in third quarter 2010.
Energy costs in fourth quarter 2010 were $47.8 million, an increase of $2.1 million, or 5%, compared with $45.7 million in fourth quarter 2009. This was driven primarily by higher electrical rates in our Packaging segment compared with fourth quarter 2009. These rates declined sequentially from third quarter 2010; accordingly, energy costs in fourth quarter 2010 decreased $4.6 million, or 9%, from $52.4 million in third quarter 2010. Full year 2010 energy costs were $211.7 million, an increase of $22.8 million, or 12%, from costs of $188.9 million in 2009. This was driven primarily by higher electrical rates in our Packaging segment and increased consumption as a result of increased production.
Chemical costs in fourth quarter 2010 were $51.4 million, a decrease of $1.4 million, or 3%, compared with $52.8 million in fourth quarter 2009, and down $3.2 million, or 6%, from third quarter 2010 due primarily to reduced consumption of higher cost commodity chemicals. Full year 2010 chemical costs were $204.9 million, a decrease of $5.4 million, or 3%, from costs of $210.3 million in 2009 as a result of a more favorable chemical mix, which reduced consumption of some higher cost commodity chemicals.
Tharco Packaging Acquisition
On February 21, 2011, our wholly owned subsidiary, Boise Paper Holdings, L.L.C., entered into a Stock Purchase Agreement (the Agreement) to purchase all of the outstanding stock of Tharco Packaging, Inc., for $200 million of cash consideration, subject to adjustments set forth in the Agreement. This acquisition, which closed on March 1, 2011, expands our presence in packaging markets; extends our geographical reach from the Pacific Northwest to California, Colorado, Arizona, and Georgia; and increases our containerboard integration to over 85% from approximately 70%. We obtained appropriate consents from our lenders to enable the acquisition under our Credit Facilities.
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Webcast and Conference Call
Boise Inc. will host a webcast and conference call on Wednesday, March 2, 2011, at 11:00 a.m. ET, 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 832-445-1689). The webcast may be accessed through Boise’s Internet site and will be archived for one year following the call. Go to www.BoiseInc.com and click on the link to the webcast under Webcasts & Presentations on the Investors drop-down menu.
A replay of the conference call will be available in Webcasts & Presentations from March 2 at 2:00 p.m. ET through April 2 at 11:45 p.m. ET. Playback numbers are 800-642-1687 for U.S. callers and 706-645-9291 for international callers. The passcode is 45469310.
About Boise Inc.
Headquartered in Boise, Idaho, Boise 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 www.BoiseInc.com.
Forward-Looking Statements
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 in this release include those regarding the anticipated closing date of our announced transaction with Tharco, the expected magnitude and timing of synergies to be derived from the transaction, and our expectations regarding the effect of this acquisition on earnings. These statements involve risks and uncertainties, including some that are outside our control. Unexpected delays, reactions by customers, suppliers, employees, or competitors, and general economic, competitive, and regulatory factors may cause actual results to differ materially from those expressed in the forward-looking statements. 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.
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Boise Inc.
Consolidated Statements of Income
(unaudited, dollars and shares in thousands, except per-share data)
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| | | Three Months Ended | |
| | | December 31 | | | September 30, | |
| | | 2010 | | | 2009 | | | 2010 | |
Sales | | | | | | | | | | | | |
Trade | | $ | 517,764 | | | $ | 481,853 | | | $ | 543,505 | |
Related parties | | | 6,292 | | | | 8,422 | | | | 10,550 | |
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| | | 524,056 | | | | 490,275 | | | | 554,055 | |
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Costs and expenses | | | | | | | | | | | | |
Materials, labor, and other operating expenses | | | 393,113 | | | | 395,455 | | | | 412,847 | |
Fiber costs from related parties | | | 5,355 | | | | 11,897 | | | | 4,905 | |
Depreciation, amortization, and depletion | | | 33,071 | | | | 33,720 | | | | 32,457 | |
Selling and distribution expenses | | | 16,235 | | | | 14,130 | | | | 13,884 | |
General and administrative expenses | | | 15,651 | | | | 14,373 | | | | 12,594 | |
St. Helens mill restructuring | | | 252 | | | | (378 | ) | | | 234 | |
Alternative fuel mixture credits, net | | | — | | | | (72,698 | ) | | | — | |
Other (income) expense, net | | | 199 | | | | (378 | ) | | | 148 | |
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| | | 463,876 | | | | 396,121 | | | | 477,069 | |
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Income from operations | | | 60,180 | | | | 94,154 | | | | 76,986 | |
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Foreign exchange gain (loss) | | | 140 | | | | 563 | | | | 386 | |
Change in fair value of interest rate derivatives | | | — | | | | (52 | ) | | | (1 | ) |
Loss on extinguishment of debt | | | — | | | | (44,102 | ) | | | — | |
Interest expense | | | (16,073 | ) | | | (18,284 | ) | | | (16,099 | ) |
Interest income | | | 103 | | | | 92 | | | | 105 | |
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| | | (15,830 | ) | | | (61,783 | ) | | | (15,609 | ) |
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Income before income taxes | | | 44,350 | | | | 32,371 | | | | 61,377 | |
Income tax (provision) benefit | | | (18,164 | ) | | | 23,349 | | | | (25,454 | ) |
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Net income | | $ | 26,186 | | | $ | 55,720 | | | $ | 35,923 | |
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Weighted average common shares outstanding: | | | | | | | | | | | | |
Basic | | | 80,744 | | | | 79,131 | | | | 80,664 | |
Diluted | | | 84,157 | | | | 84,232 | | | | 84,082 | |
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Net income per common share: | | | | | | | | | | | | |
Basic | | $ | 0.32 | | | $ | 0.70 | | | $ | 0.45 | |
Diluted | | $ | 0.31 | | | $ | 0.66 | | | $ | 0.43 | |
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Segment Information
(unaudited, dollars in thousands)
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| | | Three Months Ended | |
| | | December 31 | | | September 30, | |
| | | 2010 | | | 2009 | | | 2010 | |
Segment sales | | | | | | | | | | | | |
Paper | | $ | 352,444 | | | $ | 345,602 | | | $ | 388,193 | |
Packaging | | | 180,483 | | | | 150,574 | | | | 177,094 | |
Intersegment eliminations and other | | | (8,871 | ) | | | (5,901 | ) | | | (11,232 | ) |
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| | $ | 524,056 | | | $ | 490,275 | | | $ | 554,055 | |
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Segment income (loss) | | | | | | | | | | | | |
Paper (1) | | $ | 38,975 | | | $ | 75,112 | | | $ | 56,884 | |
Packaging (1) | | | 28,923 | | | | 23,344 | | | | 24,758 | |
Corporate and Other (1) | | | (7,578 | ) | | | (3,739 | ) | | | (4,270 | ) |
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| | | 60,320 | | | | 94,717 | | | | 77,372 | |
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Change in fair value of interest rate derivatives | | | — | | | | (52 | ) | | | (1 | ) |
Loss on extinguishment of debt | | | — | | | | (44,102 | ) | | | — | |
Interest expense | | | (16,073 | ) | | | (18,284 | ) | | | (16,099 | ) |
Interest income | | | 103 | | | | 92 | | | | 105 | |
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Income before income taxes | | $ | 44,350 | | | $ | 32,371 | | | $ | 61,377 | |
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EBITDA (3) | | | | | | | | | | | | |
Paper (1) | | $ | 61,264 | | | $ | 96,637 | | | $ | 78,787 | |
Packaging (1) | | | 38,605 | | | | 34,466 | | | | 34,357 | |
Corporate and Other (1) (2) | | | (6,478 | ) | | | (46,768 | ) | | | (3,315 | ) |
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| | $ | 93,391 | | | $ | 84,335 | | | $ | 109,829 | |
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| (1) | For the three months ended December 31, 2009, Segment income (loss) was $25.0 million in the Paper segment, $1.1 million in the Packaging segment, and $(4.1) million in the Corporate and Other segment, excluding $50.1 million of income, $22.2 million of income, and $0.4 million of income relating to alternative fuel mixture credits recognized in each segment, respectively. EBITDA excluding alternative fuel mixture credits during the same time period was $46.6 million in the Paper segment, $12.2 million in the Packaging segment, and $(47.1) million in the Corporate and Other segment. Alternative fuel mixture credits are net of fees and expenses and before taxes. |
| (2) | The three months ended December 31, 2009, includes $44.1 million of loss on extinguishment of debt. |
| (3) | See Summary Notes to Consolidated Financial Statements and Segment Information for a reconciliation of our EBITDA to net income. |
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Boise Inc.
Consolidated Statements of Income
(dollars and shares in thousands, except per-share data)
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| | | Year Ended December 31 | |
| | | 2010 | | | 2009 | |
Sales | | | | | | | | |
Trade | | $ | 2,058,132 | | | $ | 1,935,410 | |
Related parties | | | 35,645 | | | | 42,782 | |
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| | | 2,093,777 | | | | 1,978,192 | |
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Costs and expenses | | | | | | | | |
Materials, labor, and other operating expenses | | | 1,634,039 | | | | 1,596,214 | |
Fiber costs from related parties | | | 25,259 | | | | 36,858 | |
Depreciation, amortization, and depletion | | | 129,926 | | | | 131,500 | |
Selling and distribution expenses | | | 58,107 | | | | 55,524 | |
General and administrative expenses | | | 52,273 | | | | 50,250 | |
St. Helens mill restructuring | | | 180 | | | | 5,805 | |
Alternative fuel mixture credits, net | | | — | | | | (207,607 | ) |
Other (income) expense, net | | | 33 | | | | 4,005 | |
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| | | 1,899,817 | | | | 1,672,549 | |
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Income from operations | | | 193,960 | | | | 305,643 | |
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Foreign exchange gain (loss) | | | 890 | | | | 2,639 | |
Change in fair value of interest rate derivatives | | | (43 | ) | | | 568 | |
Loss on extinguishment of debt | | | (22,225 | ) | | | (44,102 | ) |
Interest expense | | | (64,782 | ) | | | (83,263 | ) |
Interest income | | | 306 | | | | 367 | |
| | | | | | | | |
| | | (85,854 | ) | | | (123,791 | ) |
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Income before income taxes | | | 108,106 | | | | 181,852 | |
Income tax provision | | | (45,372 | ) | | | (28,010 | ) |
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Net income | | $ | 62,734 | | | $ | 153,842 | |
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Weighted average common shares outstanding: | | | | | | | | |
Basic | | | 80,461 | | | | 78,355 | |
Diluted | | | 84,131 | | | | 83,081 | |
| | |
Net income per common share: | | | | | | | | |
Basic | | $ | 0.78 | | | $ | 1.96 | |
Diluted | | $ | 0.75 | | | $ | 1.85 | |
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Segment Information
(dollars in thousands)
| | | | | | | | |
| | | Year Ended December 31 | |
| | | 2010 | | | 2009 | |
Segment sales | | | | | | | | |
Paper | | $ | 1,458,325 | | | $ | 1,419,961 | |
Packaging | | | 671,874 | | | | 588,405 | |
Intersegment eliminations and other | | | (36,422 | ) | | | (30,174 | ) |
| | | | | | | | |
| | $ | 2,093,777 | | | $ | 1,978,192 | |
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| | |
Segment income (loss) | | | | | | | | |
Paper (1) | | $ | 151,510 | | | $ | 262,665 | |
Packaging (1) | | | 65,016 | | | | 67,089 | |
Corporate and Other (1) | | | (21,676 | ) | | | (21,472 | ) |
| | | | | | | | |
| | | 194,850 | | | | 308,282 | |
| | | | | | | | |
| | |
Change in fair value of interest rate derivatives | | | (43 | ) | | | 568 | |
Loss on extinguishment of debt | | | (22,225 | ) | | | (44,102 | ) |
Interest expense | | | (64,782 | ) | | | (83,263 | ) |
Interest income | | | 306 | | | | 367 | |
| | | | | | | | |
Income before income taxes | | $ | 108,106 | | | $ | 181,852 | |
| | | | | | | | |
| | |
EBITDA (3) | | | | | | | | |
Paper (1) | | $ | 238,869 | | | $ | 347,806 | |
Packaging (1) | | | 103,572 | | | | 109,321 | |
Corporate and Other (1) (2) | | | (39,890 | ) | | | (61,447 | ) |
| | | | | | | | |
| | $ | 302,551 | | | $ | 395,680 | |
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| (1) | For the year ended December 31, 2009, Segment income (loss) was $112.7 million in the Paper segment, $5.5 million in the Packaging segment, and $(17.5) million in the Corporate and Other segment, excluding $149.9 million of income, $61.6 million of income, and $3.9 million of expense relating to alternative fuel mixture credits recognized in each segment, respectively. EBITDA excluding alternative fuel mixture credits during the same time period was $197.9 million in the Paper segment, $47.7 million in the Packaging segment, and $(57.5) million in the Corporate and Other segment. Alternative fuel mixture credits are net of fees and expenses and before taxes. |
| (2) | The years ended December 31, 2010 and 2009, included $22.2 million and $44.1 million, respectively, of loss on extinguishment of debt. |
| (3) | See Summary Notes to Consolidated Financial Statements and Segment Information for a reconciliation of our EBITDA to net income. |
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Boise Inc.
Consolidated Balance Sheets
(dollars in thousands)
| | | | | | | | |
| | | December 31 | |
| | | 2010 | | | 2009 | |
ASSETS | | | | | | | | |
| | |
Current | | | | | | | | |
Cash and cash equivalents | | $ | 166,833 | | | $ | 69,393 | |
Short-term investments | | | 10,621 | | | | 10,023 | |
Receivables | | | | | | | | |
Trade, less allowances of $603 and $839 | | | 188,588 | | | | 185,110 | |
Related parties | | | 1 | | | | 2,056 | |
Other (1) | | | 3,839 | | | | 62,410 | |
Inventories | | | 261,471 | | | | 252,173 | |
Deferred income taxes | | | 16,658 | | | | — | |
Prepaid and other | | | 5,214 | | | | 4,819 | |
| | | 653,225 | | | | 585,984 | |
| | |
Property | | | | | | | | |
Property and equipment, net | | | 1,199,035 | | | | 1,205,679 | |
Fiber farms and deposits | | | 18,285 | | | | 17,094 | |
| | | 1,217,320 | | | | 1,222,773 | |
| | |
Deferred financing costs | | | 30,396 | | | | 47,369 | |
Intangible assets, net | | | 29,605 | | | | 32,358 | |
Other assets | | | 8,444 | | | | 7,306 | |
Total assets | | $ | 1,938,990 | | | $ | 1,895,790 | |
| (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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Boise Inc.
Consolidated Balance Sheets (continued)
(dollars and shares in thousands, except per-share data)
| | | | | | | | |
| | | December 31 | |
| | | 2010 | | | 2009 | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | |
| | |
Current | | | | | | | | |
Current portion of long-term debt | | $ | 43,750 | | | $ | 30,711 | |
Income taxes payable | | | 82 | | | | 240 | |
Accounts payable | | | | | | | | |
Trade | | | 178,923 | | | | 172,518 | |
Related parties | | | 291 | | | | 2,598 | |
Accrued liabilities | | | | | | | | |
Compensation and benefits | | | 54,574 | | | | 67,948 | |
Interest payable | | | 10,535 | | | | 4,946 | |
Other | | | 16,123 | | | | 23,735 | |
| | | | | | | | |
| | | 304,278 | | | | 302,696 | |
| | | | | | | | |
| | |
Debt | | | | | | | | |
Long-term debt, less current portion | | | 738,081 | | | | 785,216 | |
| | | | | | | | |
| | |
Other | | | | | | | | |
Deferred income taxes | | | 88,200 | | | | 32,253 | |
Compensation and benefits | | | 121,318 | | | | 123,889 | |
Other long-term liabilities | | | 40,278 | | | | 30,801 | |
| | | | | | | | |
| | | 249,796 | | | | 186,943 | |
| | | | | | | | |
| | |
Commitments and contingent liabilities | | | | | | | | |
| | |
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; 84,845 shares and 84,419 shares issued and outstanding | | | | | | | | |
Additional paid-in capital | | | 581,442 | | | | 578,669 | |
Accumulated other comprehensive income (loss) | | | (78,822) | | | | (71,553) | |
Retained earnings | | | 144,207 | | | | 113,811 | |
| | | | | | | | |
Total stockholders’ equity | | | 646,835 | | | | 620,935 | |
| | | | | | | | |
| | |
Total liabilities and stockholders’ equity | | $ | 1,938,990 | | | $ | 1,895,790 | |
| | | | | | | | |
-11-
Boise Inc.
Consolidated Statements of Cash Flows
(dollars in thousands)
| | | | | | | | |
| | | Year Ended December 31 | |
| | | 2010 | | | 2009 | |
Cash provided by (used for) operations | | | | | | | | |
Net income | | $ | 62,734 | | | $ | 153,842 | |
Items in net income not using (providing) cash | | | | | | | | |
Depreciation, depletion, and amortization of deferred financing costs and other | | | 137,495 | | | | 144,079 | |
Share-based compensation expense | | | 3,733 | | | | 3,518 | |
Notes payable interest expense | | | — | | | | 9,000 | |
Pension and other postretirement benefit expense | | | 9,537 | | | | 7,376 | |
Deferred income taxes | | | 38,884 | | | | 27,709 | |
Change in fair value of energy derivatives | | | 609 | | | | (5,877 | ) |
Change in fair value of interest rate derivatives | | | 43 | | | | (568 | ) |
(Gain) loss on sales of assets, net | | | 312 | | | | 514 | |
Other | | | (869 | ) | | | (2,639 | ) |
Loss on extinguishment of debt | | | 22,225 | | | | 44,102 | |
Decrease (increase) in working capital, net of acquisitions | | | | | | | | |
Receivables | | | 57,255 | | | | (18,579 | ) |
Inventories | | | (17,120 | ) | | | 83,037 | |
Prepaid expenses | | | 4,690 | | | | 1,470 | |
Accounts payable and accrued liabilities | | | (6,690 | ) | | | 25,710 | |
Current and deferred income taxes | | | 5,585 | | | | (372) | |
Pension and other postretirement benefit payments | | | (25,637) | | | | (13,001) | |
Other | | | (3,005) | | | | (609) | |
| | | | | | | | |
Cash provided by (used for) operations | | | 289,781 | | | | 458,712 | |
| | | | | | | | |
| | |
Cash provided by (used for) investment | | | | | | | | |
Acquisitions of businesses and facilities | | | — | | | | (543) | |
Expenditures for property and equipment | | | (111,619) | | | | (77,145) | |
Purchases of short-term investments | | | (25,336) | | | | (21,643) | |
Maturities of short-term investments | | | 24,744 | | | | 11,615 | |
Sales of assets | | | 717 | | | | 1,031 | |
Other | | | 2,224 | | | | 2,168 | |
| | | | | | | | |
Cash provided by (used for) investment | | | (109,270 | ) | | | (84,517 | ) |
| | | | | | | | |
| | |
Cash provided by (used for) financing | | | | | | | | |
Issuances of long-term debt | | | 300,000 | | | | 310,000 | |
Payments of long-term debt | | | (334,096) | | | | (531,523) | |
Extinguishment of debt | | | — | | | | (39,717) | |
Payments of notes payable | | | — | | | | (52,924) | |
Payments of deferred financing fees | | | (12,003) | | | | (13,156) | |
Exercise of warrants | | | 638 | | | | — | |
Payments of special dividend | | | (32,276) | | | | — | |
Other | | | (5,334) | | | | — | |
| | | | | | | | |
Cash provided by (used for) financing | | | (83,071 | ) | | | (327,320 | ) |
| | | | | | | | |
| | |
Increase in cash and cash equivalents | | | 97,440 | | | | 46,875 | |
| | |
Balance at beginning of the period | | | 69,393 | | | | 22,518 | |
| | | | | | | | |
| | |
Balance at end of the period | | $ | 166,833 | | | $ | 69,393 | |
| | | | | | | | |
-12-
Summary Notes to Consolidated Financial Statements and Segment Information
The Consolidated Statements of Income, 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 2010 Annual Report on Form 10-K, as well as other reports the Company files with the SEC. Net income for all periods presented involved estimates and accruals.
Boise Inc. operates its business in three reportable segments: Paper, Packaging, and Corporate and Other (support services). Boise Inc. manufactures and sells a range of papers, including communication-based papers, packaging demand-driven papers, and market pulp. Boise Inc. also manufactures and sells corrugated containers and sheets as well as linerboard and newsprint.
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 tables reconcile these non-GAAP measures with the most directly comparable GAAP measures.
EBITDA represents income 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 to EBITDA for the three months ended December 31, 2010 and 2009, and the three months ended September 30, 2010 (unaudited, dollars in thousands):
| | | | | | | | | | | | |
| | | Three Months Ended | |
| | | December 31 | | | September 30, | |
| | | 2010 | | | 2009 | | | 2010 | |
| | | |
Net income | | $ | 26,186 | | | $ | 55,720 | | | $ | 35,923 | |
Change in fair value of interest rate derivatives | | | — | | | | 52 | | | | 1 | |
Interest expense | | | 16,073 | | | | 18,284 | | | | 16,099 | |
Interest income | | | (103 | ) | | | (92 | ) | | | (105 | ) |
Income tax provision (benefit) | | | 18,164 | | | | (23,349 | ) | | | 25,454 | |
Depreciation, amortization, and depletion | | | 33,071 | | | | 33,720 | | | | 32,457 | |
| | | | | | | | | | | | |
EBITDA | | $ | 93,391 | | | $ | 84,335 | | | $ | 109,829 | |
| | | | | | | | | | | | |
The following table reconciles net income to EBITDA for the years ended December 31, 2010 and 2009 (dollars in thousands):
| | | | | | | | | | |
| | | Year Ended December 31 | | | |
| | | 2010 | | | 2009 | | | |
| | | |
Net income | | $ | 62,734 | | | $ | 153,842 | | | |
Change in fair value of interest rate derivatives | | | 43 | | | | (568 | ) | | |
Interest expense | | | 64,782 | | | | 83,263 | | | |
Interest income | | | (306 | ) | | | (367 | ) | | |
Income tax provision | | | 45,372 | | | | 28,010 | | | |
Depreciation, amortization, and depletion | | | 129,926 | | | | 131,500 | | | |
| | | | | | | | | | |
EBITDA | | $ | 302,551 | | | $ | 395,680 | | | |
| | | | | | | | | | |
-13-
The following table reconciles segment income (loss) and EBITDA to EBITDA excluding special items for the three months ended December 31, 2010 and 2009, and the three months ended September 30, 2010 (unaudited, dollars in thousands):
| | | | | | | | | | | | |
| | | Three Months Ended | |
| | | December 31 | | | September 30, | |
| | | 2010 | | | 2009 | | | 2010 | |
Paper | | | | | | | | | | | | |
Segment income | | $ | 38,975 | | | $ | 75,112 | | | $ | 56,884 | |
Depreciation, amortization, and depletion | | | 22,289 | | | | 21,525 | | | | 21,903 | |
| | | | | | | | | | | | |
EBITDA | | $ | 61,264 | | | $ | 96,637 | | | $ | 78,787 | |
| | | | | | | | | | | | |
St. Helens mill restructuring | | | 252 | | | | (378 | ) | | | 234 | |
Change in fair value of energy hedges | | | (754 | ) | | | (835 | ) | | | 742 | |
Alternative fuel mixture credits, net | | | — | | | | (50,087 | ) | | | — | |
| | | | | | | | | | | | |
EBITDA excluding special items | | $ | 60,762 | | | $ | 45,337 | | | $ | 79,763 | |
| | | | | | | | | | | | |
| | | |
Packaging | | | | | | | | | | | | |
Segment income | | $ | 28,923 | | | $ | 23,344 | | | $ | 24,758 | |
Depreciation, amortization, and depletion | | | 9,682 | | | | 11,122 | | | | 9,599 | |
| | | | | | | | | | | | |
EBITDA | | $ | 38,605 | | | $ | 34,466 | | | $ | 34,357 | |
| | | | | | | | | | | | |
Change in fair value of energy hedges | | | (139 | ) | | | (141 | ) | | | 143 | |
Alternative fuel mixture credits, net | | | — | | | | (22,256 | ) | | | — | |
| | | | | | | | | | | | |
EBITDA excluding special items | | $ | 38,466 | | | $ | 12,069 | | | $ | 34,500 | |
| | | | | | | | | | | | |
| | | |
Corporate and Other | | | | | | | | | | | | |
Segment loss | | $ | (7,578 | ) | | $ | (3,739 | ) | | $ | (4,270 | ) |
Depreciation, amortization, and depletion | | | 1,100 | | | | 1,073 | | | | 955 | |
Loss on extinguishment of debt | | | — | | | | (44,102 | ) | | | — | |
| | | | | | | | | | | | |
EBITDA | | $ | (6,478 | ) | | $ | (46,768 | ) | | $ | (3,315 | ) |
| | | | | | | | | | | | |
Alternative fuel mixture credits, net | | | — | | | | (355 | ) | | | — | |
Loss on extinguishment of debt | | | — | | | | 44,102 | | | | — | |
| | | | | | | | | | | | |
EBITDA excluding special items | | $ | (6,478 | ) | | $ | (3,021 | ) | | $ | (3,315 | ) |
| | | | | | | | | | | | |
| | | |
| | | | | | | | | | | | |
EBITDA | | $ | 93,391 | | | $ | 84,335 | | | $ | 109,829 | |
| | | | | | | | | | | | |
| | | |
| | | | | | | | | | | | |
| EBITDA excluding special items | | $ | 92,750 | | | $ | 54,385 | | | $ | 110,948 | |
| | | | | | | | | | | | |
-14-
The following table reconciles segment income (loss) and EBITDA to EBITDA excluding special items for the years ended December 31, 2010 and 2009 (dollars in thousands):
| | | | | | | | |
| | | Year Ended December 31 | |
| | | 2010 | | | 2009 | |
| Paper | | | | | | | | |
Segment income | | $ | 151,510 | | | $ | 262,665 | |
Depreciation, amortization, and depletion | | | 87,359 | | | | 85,141 | |
| | | | | | | | |
EBITDA | | $ | 238,869 | | | $ | 347,806 | |
| | | | | | | | |
St. Helens mill restructuring | | | 180 | | | | 5,805 | |
Change in fair value of energy hedges | | | 509 | | | | (4,748 | ) |
Alternative fuel mixture credits, net | | | — | | | | (149,948 | ) |
| | | | | | | | |
EBITDA excluding special items | | $ | 239,558 | | | $ | 198,915 | |
| | | | | | | | |
| | |
| Packaging | | | | | | | | |
Segment income | | $ | 65,016 | | | $ | 67,089 | |
Depreciation, amortization, and depletion | | | 38,556 | | | | 42,232 | |
| | | | | | | | |
EBITDA | | $ | 103,572 | | | $ | 109,321 | |
| | | | | | | | |
Change in fair value of energy hedges | | | 100 | | | | (1,129 | ) |
Alternative fuel mixture credits, net | | | — | | | | (61,592 | ) |
| | | | | | | | |
EBITDA excluding special items | | $ | 103,672 | | | $ | 46,600 | |
| | | | | | | | |
| | |
| Corporate and Other | | | | | | | | |
Segment loss | | $ | (21,676 | ) | | $ | (21,472 | ) |
Depreciation, amortization, and depletion | | | 4,011 | | | | 4,127 | |
Loss on extinguishment of debt | | | (22,225 | ) | | | (44,102 | ) |
| | | | | | | | |
EBITDA | | $ | (39,890 | ) | | $ | (61,447 | ) |
| | | | | | | | |
Alternative fuel mixture credits, net | | | — | | | | 3,933 | |
Loss on extinguishment of debt | | | 22,225 | | | | 44,102 | |
| | | | | | | | |
EBITDA excluding special items | | $ | (17,665 | ) | | $ | (13,412 | ) |
| | | | | | | | |
| | |
| | | | | | | | |
| EBITDA | | $ | 302,551 | | | $ | 395,680 | |
| | | | | | | | |
| | |
| | | | | | | | |
| EBITDA excluding special items | | $ | 325,565 | | | $ | 232,103 | |
| | | | | | | | |
-15-
The following tables reconcile net income to net income excluding special items and presents net income excluding special items per diluted share for the three months ended December 31, 2010 and 2009, the three months ended September 30, 2010, and the years ended December 31, 2010 and 2009 (quarterly period unaudited, dollars and shares in thousands):
| | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Year Ended | |
| | | December 31 | | | September 30,
2010 | | | December 31 | |
| | | 2010 | | | 2009 | | | | 2010 | | | 2009 | |
| | | | | |
Net income | | $ | 26,186 | | | $ | 55,720 | | | $ | 35,923 | | | $ | 62,734 | | | $ | 153,842 | |
St. Helens mill restructuring | | | 252 | | | | (378 | ) | | | 234 | | | | 180 | | | | 5,805 | |
Change in fair value of energy hedges | | | (892 | ) | | | (976 | ) | | | 885 | | | | 609 | | | | (5,877 | ) |
Alternative fuel mixture credits, net | | | — | | | | (72,698 | ) | | | — | | | | — | | | | (207,607 | ) |
Loss on extinguishment of debt | | | — | | | | 44,102 | | | | — | | | | 22,225 | | | | 44,102 | |
Tax benefit (provision) for special items (a) | | | 248 | | | | 11,591 | | | | (433 | ) | | | (8,906 | ) | | | 63,304 | |
Reversal of income tax valuation allowances | | | — | | | | (33,180 | ) | | | — | | | | — | | | | (33,180 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net income excluding special items | | $ | 25,794 | | | $ | 4,181 | | | $ | 36,609 | | | $ | 76,842 | | | $ | 20,389 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Weighted average common shares outstanding: diluted | | | 84,157 | | | | 84,232 | | | | 84,082 | | | | 84,131 | | | | 83,081 | |
Net income excluding special items per diluted share | | $ | 0.31 | | | $ | 0.05 | | | $ | 0.44 | | | $ | 0.91 | | | $ | 0.25 | |
| (a) | Special items are tax effected in the aggregate at an assumed combined federal and state statutory rate of 38.7%. |
The following table reconciles total debt to net total debt as of December 31, 2010 and 2009, and September 30, 2010 (interim period unaudited, dollars in thousands):
| | | | | | | | | | | | |
| | | December 31 | | | September 30,
2010 | |
| | | 2010 | | | 2009 | | |
| | | |
Current portion of long-term debt | | $ | 43,750 | | | $ | 30,711 | | | $ | 37,500 | |
Long-term debt, less current portion | | | 738,081 | | | | 785,216 | | | | 750,581 | |
| | | | | | | | | | | | |
Total debt | | | 781,831 | | | | 815,927 | | | | 788,081 | |
Less cash and cash equivalents and short-term investments | | | (177,454 | ) | | | (79,416 | ) | | | (184,063 | ) |
| | | | | | | | | | | | |
Net total debt | | $ | 604,377 | | | $ | 736,511 | | | $ | 604,018 | |
| | | | | | | | | | | | |
-16-
