Exhibit 99.1
Boise Inc.
Investor Relations
1111 West Jefferson PO Box 990050 Boise, ID 83799-0050
T 208 384 7141 F 208 395 7400
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| |
| News Release | For Immediate Release: August 1, 2013 |
| | |
| Media Contact | Investor Relations Contact |
| Virginia Aulin - 208 384 7837 | Greg Jones - 208 384 7141 |
| | |
Boise Inc. Reports Financial Results for Second Quarter 2013
BOISE, Idaho - Boise Inc. (NYSE: BZ) today reported a net loss of $(2.2) million, or $(0.02) per diluted share, for second quarter 2013, compared with net income of $13.7 million, or $0.14 per diluted share, for the same period in 2012. Excluding special items, net income was $10.5 million, or $0.10 per diluted share, for second quarter 2013. EBITDA, excluding special items,(1) was $71.2 million for second quarter 2013, compared with $75.1 million for second quarter 2012.
Special items during the quarter included $15.3 million of pretax costs, of which $9.0 million will be cash expenditures related primarily to our plan to shut down two uncoated freesheet paper machines and an off-machine coater at our mill in International Falls, Minnesota. Additionally, we recorded $5.5 million of incremental depreciation expense related to shortening the useful lives of some of our assets, primarily at our mill in International Falls.
"We grew both sales and margins in our Packaging business during second quarter. However, prices declined during the quarter in Paper," said Alexander Toeldte, president and chief executive officer. "The two, large strategic projects we announced in May are both proceeding as planned. At our mill in DeRidder, Louisiana, the conversion of an idled newsprint machine to lightweight linerboard and medium is on schedule and budget. Likewise, the closure of the machines in International Falls is progressing smoothly and on schedule for completion in early fourth quarter 2013. We continue to believe both these projects will enhance not only the competitiveness of these mills but also the competitiveness of the company overall."
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| | | | | | | | | | | | | |
| | | |
| | Financial Highlights | |
| | (in millions, except per-share data) | |
| | | | | | | | |
| | | 2Q 2013 | | 2Q 2012 | | 1Q 2013 | |
| | Sales | $ | 621.7 |
| | $ | 637.8 |
| | $ | 607.0 |
| |
| | Net income (loss) | $ | (2.2 | ) | | $ | 13.7 |
| | $ | (1.2 | ) | |
| | Net income (loss) per diluted share | $ | (0.02 | ) | | $ | 0.14 |
| | $ | (0.01 | ) | |
| | Net income excluding special items (1) | $ | 10.5 |
| | $ | 13.7 |
| | $ | 2.0 |
| |
| | Net income per diluted share excluding special items (1) | $ | 0.10 |
| | $ | 0.14 |
| | $ | 0.02 |
| |
| | Weighted average diluted shares outstanding (1) | 100.5 |
| | 101.0 |
| | 100.2 |
| |
| | EBITDA (1) | $ | 55.8 |
| | $ | 75.1 |
| | $ | 56.2 |
| |
| | EBITDA excluding special items (1) | $ | 71.2 |
| | $ | 75.1 |
| | $ | 56.2 |
| |
| | (1) For reconciliations of non-GAAP measures, see "Summary Notes to Consolidated Financial Statements and Segment Information." | |
| | | |
Packaging Segment
Packaging segment sales for second quarter 2013 were $300.6 million, an increase of $15.8 million, or 6%, compared with second quarter 2012. The increase related primarily to benefits from implementation of the linerboard price increase we announced in fall 2012 and 5% sales volume growth in our network of box plants, offset partially by a 6% decrease (or $32 per short ton) in sales prices of newsprint. Prices for our corrugated containers and sheets increased $4 per msf, or 5%, in second quarter 2013, compared with second quarter 2012. We expect to begin benefiting from the $50-per-ton linerboard price increase we announced in May 2013 during third quarter, with full realization expected in fourth quarter 2013.
Packaging segment EBITDA, excluding special items, was $49.1 million for second quarter 2013, an increase of $9.1 million, compared with $40.0 million for the same period last year. The increase was due to the implementation of our fall 2012 linerboard price increase, sales volume increases, and lower maintenance outage costs of $5.9 million, offset partially by approximately $2.0 million of lower revenue in newsprint. During second quarter 2013, key input costs for fiber, energy, and chemicals increased in total over second quarter 2012, due primarily to increased consumption and higher prices for some key inputs. During second quarter, we began to see some margin improvements at our operations in California and Texas, which experienced competitive pressures in recent quarters. We expect the combination of announced price increases and investments in our corrugated operations to improve our results for the rest of the year.
Paper Segment
Paper segment sales for second quarter 2013 were $334.8 million, a decrease of $28.4 million, or 8%, compared with second quarter 2012. Excluding sales at our mill in St. Helens, Oregon, where we ceased paper production in December 2012, second quarter sales decreased $11.8 million, compared with second quarter 2012. The decrease related to lower uncoated freesheet net sales prices. Excluding St. Helens, our average net sales price for uncoated freesheet declined $52, or 5%, to $915 from $967 per short ton in second quarter 2012, and our uncoated freesheet volumes increased 1%, compared with second quarter 2012.
In second quarter 2013, Paper segment EBITDA, excluding special items, was $28.2 million, a decrease of $12.7 million, compared with second quarter 2012. The decrease was due primarily to lower net sales prices of uncoated freesheet papers and temporarily higher selling expenses, offset in part by lower fiber costs. During second quarter 2013, we successfully completed maintenance outages at our mills in Wallula, Washington, and International Falls, Minnesota, at a total cost of $8.7 million, which was slightly lower than the $9.8 million of maintenance outage costs at the same facilities in second quarter 2012.
Webcast and Conference Call
Boise Inc. will host a webcast and conference call on Thursday, August 1, 2013, at 12:00 p.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 four weeks following the call. Go to www.BoiseInc.com and click on About Boise Inc. to reach the link to the webcast under Webcasts & Presentations on the Investors menu.
A replay of the conference call will be available in Webcasts & Presentations from August 1, 2013, at 2:00 p.m. ET through September 2, 2013, at 11:45 p.m. ET. Playback numbers are 855-859-2056 for U.S. callers and 404-537-3406 for international callers. The passcode is 18607920.
About Boise Inc.
Headquartered in Boise, Idaho, Boise Inc. (NYSE: BZ) manufactures a wide variety of packaging and paper products. Boise's range of packaging products includes linerboard and corrugating medium, corrugated containers and sheets, and protective packaging products. Boise's paper products include imaging papers for the office and home, printing and converting papers, and papers used in packaging, such as label and release papers. 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. Statements regarding announced price increases on our products, asset configuration changes, and the benefits we expect to derive from such outcomes and actions are forward looking. Given the risks and uncertainties involved, there can be no assurance we will be able to achieve our stated goals or realize any benefits. For example, changes in the economy and competitive influences may result in our being unable to implement or realize any additional benefit from our announced price increases. Economic and competitive influences, availability of equipment and suppliers, the performance of the equipment once installed, order patterns, customer demand, and other factors could cause the outcome of our asset configuration projects, the related costs, and the timing to differ materially from our expectations. For further information about the risks and uncertainties associated with our business, please refer to our filings with the Securities and Exchange Commission. We undertake no obligation to update the forward-looking statements in this release whether as a result of new information, future events, or otherwise.
Boise Inc.
Segment Highlights
(unaudited, dollars in millions) |
| | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | Six Months Ended |
| | | June 30 | | March 31, | | June 30 |
| | | 2013 | | 2012 | | 2013 | | 2013 | | 2012 |
| Packaging | | | | | | | | | |
| Sales volumes (thousands of short tons, except corrugated) | | | | | | | | | |
| | Linerboard, Total | 151.5 |
| | 146.0 |
| | 138.9 |
| | 290.3 |
| | 298.6 |
|
| | Linerboard, External sales | 38.6 |
| | 38.2 |
| | 36.8 |
| | 75.3 |
| | 91.1 |
|
| | Newsprint | 58.4 |
| | 58.3 |
| | 53.8 |
| | 112.3 |
| | 113.0 |
|
| | Corrugated containers and sheets (mmsf) | 2,613 |
| | 2,485 |
| | 2,552 |
| | 5,165 |
| | 4,918 |
|
| | Key input costs | | | | | | | | | |
| | Fiber, including purchased rollstock (a) | $ | 70.2 |
| | $ | 63.6 |
| | $ | 75.3 |
| | $ | 145.4 |
| | $ | 129.3 |
|
| | Energy | 16.9 |
| | 13.4 |
| | 16.3 |
| | 33.1 |
| | 28.4 |
|
| | Chemicals | 12.2 |
| | 10.4 |
| | 10.9 |
| | 23.1 |
| | 20.6 |
|
| | Outage costs | — |
| | 5.9 |
| | 22.4 |
| | 22.4 |
| | 7.7 |
|
| EBITDA (b) | 48.1 |
| | 40.0 |
| | 17.2 |
| | 65.3 |
| | 77.9 |
|
| EBITDA excluding special items (b) | 49.1 |
| | 40.0 |
| | 17.2 |
| | 66.3 |
| | 77.9 |
|
| Assets | 986.1 |
| | 943.5 |
| | 959.7 |
| | | | |
| Paper | | | | | | | | | |
| Sales volumes (thousands of short tons) | | | | | | | | | |
| | Uncoated freesheet (c) | 301.4 |
| | 312.5 |
| | 298.8 |
| | 600.2 |
| | 637.6 |
|
| | Uncoated freesheet, excluding St. Helens (d) | 300.5 |
| | 297.6 |
| | 295.6 |
| | 596.0 |
| | 607.1 |
|
| | Corrugating medium | 34.4 |
| | 34.2 |
| | 33.2 |
| | 67.6 |
| | 66.7 |
|
| | Market pulp, External sales | 6.3 |
| | 10.3 |
| | 1.3 |
| | 7.6 |
| | 18.8 |
|
| | Key input costs | | | | | | | | | |
| | Fiber (e) | $ | 62.5 |
| | $ | 78.2 |
| | $ | 69.1 |
| | $ | 131.6 |
| | $ | 163.1 |
|
| | Energy | 33.3 |
| | 32.2 |
| | 34.4 |
| | 67.7 |
| | 67.2 |
|
| | Chemicals | 51.8 |
| | 53.1 |
| | 50.8 |
| | 102.6 |
| | 106.4 |
|
| | Outage costs | 8.7 |
| | 9.8 |
| | 0.4 |
| | 9.1 |
| | 9.8 |
|
| EBITDA (b) | 15.9 |
| | 40.9 |
| | 45.6 |
| | 61.5 |
| | 96.0 |
|
| EBITDA excluding special items (b) | 28.2 |
| | 40.9 |
| | 45.6 |
| | 73.8 |
| | 96.0 |
|
| Assets | 1,110.6 |
| | 1,198.3 |
| | 1,142.6 |
| | | | |
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| | | | | | | | | | | | |
| | | 2Q 2013 vs. 2Q 2012 | | 2Q 2013 vs. 1Q 2013 | | YTD 2013 vs. YTD 2012 |
| Packaging | | | | | |
| Change in average net sales prices (dollars per short ton, except corrugated) (f) | | | | | |
| | Linerboard, Total | $ | 86 |
| | $ | 33 |
| | $ | 71 |
|
| | Linerboard, External sales | 75 |
| | 15 |
| | 72 |
|
| | Newsprint | (32 | ) | | (13 | ) | | (25 | ) |
| | Corrugated containers and sheets ($/msf) | 4 |
| | 2 |
| | 3 |
|
| Paper | | | | | |
| Change in average net sales prices (dollars per short ton) (f) | | | | | |
| | Uncoated freesheet (c) | $ | (58 | ) | | $ | (15 | ) | | $ | (52 | ) |
| | Uncoated freesheet, excluding St. Helens (d) | (52 | ) | | (14 | ) | �� | (48 | ) |
| | Corrugating medium | 105 |
| | 25 |
| | 92 |
|
| | Market pulp, External sales | (9 | ) | | 9 |
| | (8 | ) |
__________
| |
| (a) | Includes purchases of corrugating medium from our Paper segment, which are eliminated in consolidation. |
| |
| (b) | For reconciliations of non-GAAP measures, see "Summary Notes to Consolidated Financial Statements and Segment Information." |
| |
| (c) | Includes cut-size office papers, printing and converting papers, and label and release papers. |
| |
| (d) | We ceased paper production at our mill in St. Helens, Oregon, in December 2012. |
| |
| (e) | Fiber costs at our St. Helens, Oregon, mill, were $6.7 million and $13.5 million for the three and six months ended June 30, 2012, respectively. |
| |
| (f) | Average net selling prices for our principal products represent sales less freight costs, discounts, and allowances. |
Boise Inc.
Consolidated Statements of Operations
(unaudited, dollars and shares in thousands, except per-share data)
|
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30 | | March 31, | | June 30 |
| | 2013 | | 2012 | | 2013 | | 2013 | | 2012 |
| Sales | | | | | | | | | |
| Trade | $ | 604,821 |
| | $ | 618,585 |
| | $ | 591,321 |
| | $ | 1,196,142 |
| | $ | 1,252,113 |
|
| Related party | 16,843 |
| | 19,255 |
| | 15,697 |
| | 32,540 |
| | 30,573 |
|
| | 621,664 |
| | 637,840 |
| | 607,018 |
| | 1,228,682 |
| | 1,282,686 |
|
| | | | | | | | | | |
| Costs and expenses | | | | | | | | | |
| Materials, labor, and other operating expenses (excluding depreciation) (1) | 495,689 |
| | 507,343 |
| | 496,269 |
| | 991,958 |
| | 1,009,642 |
|
| Fiber costs from related party | 5,319 |
| | 4,466 |
| | 6,146 |
| | 11,465 |
| | 9,412 |
|
| Depreciation, amortization, and depletion (1) | 43,891 |
| | 37,303 |
| | 43,428 |
| | 87,319 |
| | 74,859 |
|
| Selling and distribution expenses | 33,764 |
| | 30,568 |
| | 28,849 |
| | 62,613 |
| | 61,210 |
|
| General and administrative expenses | 19,693 |
| | 20,035 |
| | 18,923 |
| | 38,616 |
| | 40,043 |
|
| Restructuring costs (1) | 9,011 |
| | — |
| | — |
| | 9,474 |
| | — |
|
| Other (income) expense, net (2) | 1,930 |
| | 381 |
| | 331 |
| | 1,798 |
| | 81 |
|
| | 609,297 |
| | 600,096 |
| | 593,946 |
| | 1,203,243 |
| | 1,195,247 |
|
| | | | | | | | | | |
| Income from operations | 12,367 |
| | 37,744 |
| | 13,072 |
| | 25,439 |
| | 87,439 |
|
| | | | | | | | | | |
| Foreign exchange gain (loss) | (415 | ) | | 102 |
| | (341 | ) | | (756 | ) | | 259 |
|
| Interest expense | (15,456 | ) | | (15,433 | ) | | (15,419 | ) | | (30,875 | ) | | (30,798 | ) |
| Interest income | 7 |
| | 54 |
| | 27 |
| | 34 |
| | 98 |
|
| | (15,864 | ) | | (15,277 | ) | | (15,733 | ) | | (31,597 | ) | | (30,441 | ) |
| | | | | | | | | | |
| Income (loss) before income taxes | (3,497 | ) | | 22,467 |
| | (2,661 | ) | | (6,158 | ) | | 56,998 |
|
| Income tax (provision) benefit | 1,289 |
| | (8,805 | ) | | 1,436 |
| | 2,725 |
| | (21,998 | ) |
| Net income (loss) | $ | (2,208 | ) | | $ | 13,662 |
| | $ | (1,225 | ) | | $ | (3,433 | ) | | $ | 35,000 |
|
| | | | | | | | | | |
| Weighted average common shares outstanding: | | | | | | | | | |
| Basic | 100,531 |
| | 100,116 |
| | 100,242 |
| | 100,387 |
| | 99,584 |
|
| Diluted | 100,531 |
| | 101,008 |
| | 100,242 |
| | 100,387 |
| | 101,182 |
|
| | | | | | | | | | |
| Net income (loss) per common share: | | | | | | | | | |
| Basic | $ | (0.02 | ) | | $ | 0.14 |
| | $ | (0.01 | ) | | $ | (0.03 | ) | | $ | 0.35 |
|
| Diluted | $ | (0.02 | ) | | $ | 0.14 |
| | $ | (0.01 | ) | | $ | (0.03 | ) | | $ | 0.35 |
|
For Footnotes, see Summary Notes to Consolidated Financial Statements and Segment Information.
Boise Inc.
Segment Information
(unaudited, dollars in thousands)
|
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30 | | March 31, | | June 30 |
| | 2013 | | 2012 | | 2013 | | 2013 | | 2012 |
| Segment sales | | | | | | | | | |
| Packaging | $ | 300,564 |
| | $ | 284,772 |
| | $ | 287,047 |
| | $ | 587,611 |
| | $ | 557,065 |
|
| Paper (3) | 334,835 |
| | 363,258 |
| | 332,742 |
| | 667,577 |
| | 745,690 |
|
| Intersegment eliminations and other | (13,735 | ) | | (10,190 | ) | | (12,771 | ) | | (26,506 | ) | | (20,069 | ) |
| | $ | 621,664 |
| | $ | 637,840 |
| | $ | 607,018 |
| | $ | 1,228,682 |
| | $ | 1,282,686 |
|
| | | | | | | | | | |
| Segment income (loss) | | | | | | | | | |
| Packaging (1) | $ | 31,284 |
| | $ | 24,846 |
| | $ | 893 |
| | $ | 32,177 |
| | $ | 47,281 |
|
| Paper (1) | (9,942 | ) | | 19,575 |
| | 19,675 |
| | 9,733 |
| | 53,524 |
|
| Corporate and Other (2) | (9,390 | ) | | (6,575 | ) | | (7,837 | ) | | (17,227 | ) | | (13,107 | ) |
| | 11,952 |
| | 37,846 |
| | 12,731 |
| | 24,683 |
| | 87,698 |
|
| | | | | | | | | | |
| Interest expense | (15,456 | ) | | (15,433 | ) | | (15,419 | ) | | (30,875 | ) | | (30,798 | ) |
| Interest income | 7 |
| | 54 |
| | 27 |
| | 34 |
| | 98 |
|
| Income (loss) before income taxes | $ | (3,497 | ) | | $ | 22,467 |
| | $ | (2,661 | ) | | $ | (6,158 | ) | | $ | 56,998 |
|
| | | | | | | | | | |
| EBITDA (4) | | | | | | | | | |
| Packaging (1) | $ | 48,072 |
| | $ | 39,995 |
| | $ | 17,224 |
| | $ | 65,296 |
| | $ | 77,915 |
|
| Paper (1) | 15,914 |
| | 40,880 |
| | 45,626 |
| | 61,540 |
| | 96,044 |
|
| Corporate and Other (2) | (8,143 | ) | | (5,726 | ) | | (6,691 | ) | | (14,834 | ) | | (11,402 | ) |
| | $ | 55,843 |
| | $ | 75,149 |
| | $ | 56,159 |
| | $ | 112,002 |
| | $ | 162,557 |
|
| | | | | | | | | | |
| EBITDA excluding special items (4) | | | | | | | | | |
| Packaging | $ | 49,072 |
| | $ | 39,995 |
| | $ | 17,224 |
| | $ | 66,296 |
| | $ | 77,915 |
|
| Paper | 28,184 |
| | 40,880 |
| | 45,626 |
| | 73,810 |
| | 96,044 |
|
| Corporate and Other | (6,097 | ) | | (5,726 | ) | | (6,691 | ) | | (12,788 | ) | | (11,402 | ) |
| | $ | 71,159 |
| | $ | 75,149 |
| | $ | 56,159 |
| | $ | 127,318 |
| | $ | 162,557 |
|
For Footnotes, see Summary Notes to Consolidated Financial Statements and Segment Information.
Boise Inc.
Consolidated Balance Sheets
(unaudited, dollars in thousands)
|
| | | | | | | |
| | June 30, 2013 | | December 31, 2012 |
| ASSETS | | | |
| | | | |
| Current | | | |
| Cash and cash equivalents | $ | 61,086 |
| | $ | 49,707 |
|
| Receivables | | | |
| Trade, less allowances of $1,349 and $1,382 | 254,348 |
| | 240,459 |
|
| Other | 9,861 |
| | 8,267 |
|
| Inventories | 288,707 |
| | 294,484 |
|
| Deferred income taxes | 10,068 |
| | 17,955 |
|
| Prepaid and other | 14,139 |
| | 8,828 |
|
| | 638,209 |
| | 619,700 |
|
| | | | |
| Property | | | |
| Property and equipment, net | 1,212,663 |
| | 1,223,001 |
|
| Fiber farms | 25,113 |
| | 24,311 |
|
| | 1,237,776 |
| | 1,247,312 |
|
| | | | |
| Deferred financing costs | 24,380 |
| | 26,677 |
|
| Goodwill | 160,132 |
| | 160,130 |
|
| Intangible assets, net | 142,018 |
| | 147,564 |
|
| Other assets | 6,629 |
| | 7,029 |
|
| Total assets | $ | 2,209,144 |
| | $ | 2,208,412 |
|
For Footnotes, see Summary Notes to Consolidated Financial Statements and Segment Information.
Boise Inc.
Consolidated Balance Sheets (continued)
(unaudited, dollars and shares in thousands, except per-share data)
|
| | | | | | | |
| | June 30, 2013 | | December 31, 2012 |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | |
| | | | |
| Current | | | |
| Current portion of long-term debt | $ | 15,000 |
| | $ | 10,000 |
|
| Accounts payable | 203,202 |
| | 185,078 |
|
| Accrued liabilities | | | |
| Compensation and benefits | 65,386 |
| | 70,950 |
|
| Interest payable | 10,529 |
| | 10,516 |
|
| Other | 25,158 |
| | 20,528 |
|
| | 319,275 |
| | 297,072 |
|
| | | | |
| Debt | | | |
| Long-term debt, less current portion | 760,000 |
| | 770,000 |
|
| | | | |
| Other | | | |
| Deferred income taxes | 189,918 |
| | 198,370 |
|
| Compensation and benefits | 116,153 |
| | 121,682 |
|
| Other long-term liabilities | 73,990 |
| | 73,102 |
|
| | 380,061 |
| | 393,154 |
|
| | | | |
| Commitments and contingent liabilities | | | |
| | | | |
| Stockholders’ equity | | | |
| Preferred stock, $0.0001 par value per share: 1,000 shares authorized; none issued | — |
| | — |
|
| Common stock, $0.0001 par value per share: 250,000 shares authorized; 100,884 shares and 100,503 shares issued and outstanding | 12 |
| | 12 |
|
| Treasury stock, 21,151 shares held | (121,423 | ) | | (121,423 | ) |
| Additional paid-in capital | 871,065 |
| | 868,840 |
|
| Accumulated other comprehensive income (loss) | (98,520 | ) | | (101,304 | ) |
| Retained earnings | 98,674 |
| | 102,061 |
|
| Total stockholders’ equity | 749,808 |
| | 748,186 |
|
| | | | |
| Total liabilities and stockholders’ equity | $ | 2,209,144 |
| | $ | 2,208,412 |
|
For Footnotes, see Summary Notes to Consolidated Financial Statements and Segment Information.
Boise Inc.
Consolidated Statements of Cash Flows
(unaudited, dollars in thousands)
|
| | | | | | | |
| | Six Months Ended
June 30 |
| | 2013 | | 2012 |
| Cash provided by (used for) operations | | | |
| Net income (loss) | $ | (3,433 | ) | | $ | 35,000 |
|
| Items in net income (loss) not using (providing) cash | | | |
| Depreciation, depletion, and amortization of deferred financing costs and other | 89,793 |
| | 77,190 |
|
| Share-based compensation expense | 3,076 |
| | 2,729 |
|
| Pension expense | 3,020 |
| | 5,474 |
|
| Deferred income taxes | (2,624 | ) | | 12,610 |
|
| Restructuring costs | 9,992 |
| | — |
|
| Other | 1,400 |
| | (43 | ) |
| Decrease (increase) in working capital | | | |
| Receivables | (15,731 | ) | | (12,050 | ) |
| Inventories | 2,566 |
| | (20,224 | ) |
| Prepaid expenses | (2,127 | ) | | (4,869 | ) |
| Accounts payable and accrued liabilities | 1,040 |
| | (14,061 | ) |
| Current and deferred income taxes | (689 | ) | | 7,452 |
|
| Pension payments | (5,091 | ) | | (18,191 | ) |
| Other | 404 |
| | 2,110 |
|
| Cash provided by operations | 81,596 |
| | 73,127 |
|
| Cash provided by (used for) investment | | | |
| Expenditures for property and equipment | (64,595 | ) | | (52,457 | ) |
| Other | 690 |
| | 586 |
|
| Cash used for investment | (63,905 | ) | | (51,871 | ) |
| Cash provided by (used for) financing | | | |
| Payments of long-term debt | (5,000 | ) | | (5,000 | ) |
| Payments of special dividend | — |
| | (47,483 | ) |
| Other | (1,312 | ) | | (6,267 | ) |
| Cash used for financing | (6,312 | ) | | (58,750 | ) |
| Increase (decrease) in cash and cash equivalents | 11,379 |
| | (37,494 | ) |
| Balance at beginning of the period | 49,707 |
| | 96,996 |
|
| Balance at end of the period | $ | 61,086 |
| | $ | 59,502 |
|
For Footnotes, see Summary Notes to Consolidated Financial Statements and Segment Information.
Summary Notes to Consolidated Financial Statements and Segment Information
The Consolidated Statements of Operations, 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 2012 Annual Report on Form 10-K and the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2013, as well as other reports the Company files with the SEC. Net income (loss) for all periods presented involved estimates and accruals.
| |
| 1. | During second quarter 2013, we recorded $13.3 million of pretax restructuring costs, of which $12.3 million was recorded in our Paper segment and related primarily to our plan to shut down two paper machines and an off-machine coater at our mill in International Falls, Minnesota, in early fourth quarter 2013. We recorded $1.0 million of costs in our Packaging segment related to restructuring activities in connection with our recently announced project to convert a machine at our DeRidder, Louisiana, mill to produce lightweight linerboard and corrugating medium. The $13.3 million of costs included approximately $6.3 million of noncash charges related primarily to inventory and asset write-downs and approximately $7.0 million of cash costs related to employee severance. We expect to pay most of these cash costs in late 2013 and early 2014. In addition to the amounts recorded in "Restructuring costs" on our Consolidated Statements of Operations, we recorded $4.0 million of other restructuring costs that related primarily to inventory write-downs in "Materials, labor and other operating expenses (excluding depreciation)", during the three and six months ended June 30, 2013. |
During the three and six months ended June 30, 2013, we recognized $5.5 million and $10.8 million, respectively, of incremental depreciation expense related to shortening the useful lives of some of our assets, primarily at International Falls, Minnesota. We recognized $3.8 million and $7.6 million of incremental depreciation expense in our Paper segment during the three and six months ended June 30, 2013, respectively, and $1.7 million and $3.2 million of incremental depreciation expense, respectively, in our Packaging segment.
| |
| 2. | Transaction-related costs for the three and six months ended June 30, 2013, were $2.0 million, and include expenses associated with transactions, whether consummated or not. We explore strategic transactions to the extent we believe they may improve our competitive position or enhance shareholder value. These costs were recorded in "Other (income) expense, net" on our Consolidated Statements of Operations in our Corporate and Other segment. |
| |
| 3. | The decrease in Paper segment sales relates partially to ceasing paper production at our mill in St. Helens, Oregon, in December 2012. During the three and six months ended June 30, 2012, St. Helens sales were $17.5 million and $35.6 million, respectively. |
| |
| 4. | 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, free cash flow, 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 tables that follow reconcile these non-GAAP measures with the most directly comparable GAAP measures. |
EBITDA represents income (loss) before interest (interest expense and interest income), income taxes, and depreciation, amortization, and depletion. The following table reconciles net income (loss) to EBITDA and EBITDA excluding special items (unaudited, dollars in thousands): |
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30 | | March 31, | | June 30 |
| | 2013 | | 2012 | | 2013 | | 2013 | | 2012 |
| Net income (loss) | $ | (2,208 | ) | | $ | 13,662 |
| | $ | (1,225 | ) | | $ | (3,433 | ) | | $ | 35,000 |
|
| Interest expense | 15,456 |
| | 15,433 |
| | 15,419 |
| | 30,875 |
| | 30,798 |
|
| Interest income | (7 | ) | | (54 | ) | | (27 | ) | | (34 | ) | | (98 | ) |
| Income tax provision (benefit) | (1,289 | ) | | 8,805 |
| | (1,436 | ) | | (2,725 | ) | | 21,998 |
|
| Depreciation, amortization, and depletion | 43,891 |
| | 37,303 |
| | 43,428 |
| | 87,319 |
| | 74,859 |
|
| EBITDA | $ | 55,843 |
| | $ | 75,149 |
| | $ | 56,159 |
| | $ | 112,002 |
| | $ | 162,557 |
|
| | | | | | | | | | |
| Restructuring costs (1) | $ | 13,270 |
| | $ | — |
| | $ | — |
| | $ | 13,270 |
| | $ | — |
|
| Transaction-related costs (2) | 2,046 |
| | — |
| | — |
| | 2,046 |
| | — |
|
| EBITDA excluding special items | $ | 71,159 |
| | $ | 75,149 |
| | $ | 56,159 |
| | $ | 127,318 |
| | $ | 162,557 |
|
The following table reconciles segment income (loss) and EBITDA to EBITDA excluding special items (unaudited, dollars in thousands): |
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30 | | March 31, | | June 30 |
| | 2013 | | 2012 | | 2013 | | 2013 | | 2012 |
| Packaging | | | | | | | | | |
| Segment income | $ | 31,284 |
| | $ | 24,846 |
| | $ | 893 |
| | $ | 32,177 |
| | $ | 47,281 |
|
| Depreciation, amortization, and depletion | 16,788 |
| | 15,149 |
| | 16,331 |
| | 33,119 |
| | 30,634 |
|
| EBITDA | $ | 48,072 |
| | $ | 39,995 |
| | $ | 17,224 |
| | $ | 65,296 |
| | $ | 77,915 |
|
| Restructuring costs | 1,000 |
| | — |
| | — |
| | 1,000 |
| | — |
|
| EBITDA excluding special items | $ | 49,072 |
| | $ | 39,995 |
| | $ | 17,224 |
| | $ | 66,296 |
| | $ | 77,915 |
|
| | | | | | | | | | |
| Paper | | | | | | | | | |
| Segment income (loss) | $ | (9,942 | ) | | $ | 19,575 |
| | $ | 19,675 |
| | $ | 9,733 |
| | $ | 53,524 |
|
| Depreciation, amortization, and depletion | 25,856 |
| | 21,305 |
| | 25,951 |
| | 51,807 |
| | 42,520 |
|
| EBITDA | $ | 15,914 |
| | $ | 40,880 |
| | $ | 45,626 |
| | $ | 61,540 |
| | $ | 96,044 |
|
| Restructuring costs | 12,270 |
| | — |
| | — |
| | 12,270 |
| | — |
|
| EBITDA excluding special items | $ | 28,184 |
| | $ | 40,880 |
| | $ | 45,626 |
| | $ | 73,810 |
| | $ | 96,044 |
|
| | | | | | | | | | |
| Corporate and Other | | | | | | | | | |
| Segment loss | $ | (9,390 | ) | | $ | (6,575 | ) | | $ | (7,837 | ) | | $ | (17,227 | ) | | $ | (13,107 | ) |
| Depreciation, amortization, and depletion | 1,247 |
| | 849 |
| | 1,146 |
| | 2,393 |
| | 1,705 |
|
| EBITDA | $ | (8,143 | ) | | $ | (5,726 | ) | | $ | (6,691 | ) | | $ | (14,834 | ) | | $ | (11,402 | ) |
| Transaction-related costs | 2,046 |
| | | | | | 2,046 |
| | |
| EBITDA excluding special items | $ | (6,097 | ) | | $ | (5,726 | ) | | $ | (6,691 | ) | | $ | (12,788 | ) | | $ | (11,402 | ) |
| | | | | | | | | | |
| EBITDA | $ | 55,843 |
| | $ | 75,149 |
| | $ | 56,159 |
| | $ | 112,002 |
| | $ | 162,557 |
|
| | | | | | | | | | |
| Restructuring costs | $ | 13,270 |
| | $ | — |
| | $ | — |
| | $ | 13,270 |
| | $ | — |
|
| Transaction-related costs | 2,046 |
| | — |
| | — |
| | 2,046 |
| | — |
|
| EBITDA excluding special items | $ | 71,159 |
| | $ | 75,149 |
| | $ | 56,159 |
| | $ | 127,318 |
| | $ | 162,557 |
|
The following table reconciles net income (loss) to net income excluding special items and presents net income per diluted share excluding special items (unaudited, dollars and shares in thousands, except per-share data):
|
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30 | | March 31, | | June 30 |
| | 2013 | | 2012 | | 2013 | | 2013 | | 2012 |
| Net income (loss) | $ | (2,208 | ) | | $ | 13,662 |
| | $ | (1,225 | ) | | $ | (3,433 | ) | | $ | 35,000 |
|
| Restructuring costs | 13,270 |
| | — |
| | — |
| | 13,270 |
| | — |
|
Incremental depreciation due to changes in estimated useful lives
| 5,463 |
| | — |
| | 5,316 |
| | 10,779 |
| | — |
|
| Transaction-related costs | 2,046 |
| | — |
| | — |
| | 2,046 |
| | — |
|
| Tax provision for special items (a) | (8,041 | ) | | — |
| | (2,057 | ) | | (10,099 | ) | | — |
|
| Net income excluding special items | $ | 10,530 |
| | $ | 13,662 |
| | $ | 2,034 |
| | $ | 12,563 |
| | $ | 35,000 |
|
| | | | | | | | | | |
| Weighted average diluted shares outstanding: (b) | 100,872 |
| | 101,008 |
| | 100,890 |
| | 100,852 |
| | 101,182 |
|
| Net income per diluted share excluding special items | $ | 0.10 |
| | $ | 0.14 |
| | $ | 0.02 |
| | $ | 0.12 |
| | $ | 0.35 |
|
____________
| |
| (a) | Taxes are applied to special items in the aggregate at the combined federal and state statutory rate in effect for the period. |
| |
| (b) | For the three and six months ended June 30, 2013, and the three months ended March 31, 2013, basic and diluted weighted average common shares outstanding reported in our Consolidated Statements of Operations were 100.5 million, 100.4 million, and 100.2 million, respectively. Adjusting for the special items above, diluted weighted average common shares outstanding increased 0.3 million, 0.5 million, and 0.6 million shares, respectively, to reflect the incremental effect of dilutive common stock equivalents. |
The following table reconciles cash provided by operations to free cash flow (unaudited, dollars in thousands): |
| | | | | | | |
| | Six Months Ended June 30 |
| | 2013 | | 2012 |
| Cash provided by operations | $ | 81,596 |
| | $ | 73,127 |
|
| Expenditures for property and equipment | (64,595 | ) | | (52,457 | ) |
| Free cash flow | $ | 17,001 |
| | $ | 20,670 |
|
