Supplemental Guarantor Financial Information | Supplemental Guarantor Financial Information All of our directly and indirectly owned, domestic subsidiaries guarantee the 2013 Notes on a joint and several basis. There are no significant restrictions on the ability of the guarantor subsidiaries to make distributions to Clearwater Paper, the issuer of the 2013 Notes. The following tables present the results of operations, financial position and cash flows of Clearwater Paper and its subsidiaries, the guarantor and non-guarantor entities, and the eliminations necessary to arrive at the information for Clearwater Paper on a consolidated basis. We acquired Manchester Industries on December 16, 2016 and their results of operations, financial position and cash flows are included below as a guarantor entity. Clearwater Paper Corporation Consolidating Statement of Operations and Comprehensive Income (Loss) Twelve Months Ended December 31, 2017 (In thousands) Issuer Guarantor Eliminations Total Net sales $ 1,707,283 $ 242,222 $ (219,097 ) $ 1,730,408 Cost and expenses: Cost of sales (1,524,925 ) (219,931 ) 215,235 (1,529,621 ) Selling, general and administrative expenses (97,989 ) (30,470 ) — (128,459 ) Total operating costs and expenses (1,622,914 ) (250,401 ) 215,235 (1,658,080 ) Income (loss) from operations 84,369 (8,179 ) (3,862 ) 72,328 Interest expense, net (30,820 ) (554 ) — (31,374 ) Earnings (loss) before income taxes 53,549 (8,733 ) (3,862 ) 40,954 Income tax benefit 34,250 20,644 1,491 56,385 Equity in earnings of subsidiary 11,911 — (11,911 ) — Net earnings $ 99,710 $ 11,911 $ (14,282 ) $ 97,339 Other comprehensive income, net of tax 7,770 — — 7,770 Comprehensive income $ 107,480 $ 11,911 $ (14,282 ) $ 105,109 Clearwater Paper Corporation Consolidating Statement of Operations and Comprehensive Income (Loss) Twelve Months Ended December 31, 2016 (In thousands) Issuer Guarantor Eliminations Total Net sales $ 1,685,327 $ 287,952 $ (238,516 ) $ 1,734,763 Cost and expenses: Cost of sales (1,468,691 ) (263,577 ) 236,641 (1,495,627 ) Selling, general and administrative expenses (113,766 ) (14,053 ) — (127,819 ) Total operating costs and expenses (1,582,457 ) (277,630 ) 236,641 (1,623,446 ) Income from operations 102,870 10,322 (1,875 ) 111,317 Interest expense, net (30,462 ) (189 ) — (30,651 ) Earnings before income taxes 72,408 10,133 (1,875 ) 80,666 Income tax provision (26,966 ) (4,802 ) 656 (31,112 ) Equity in earnings of subsidiary 5,331 — (5,331 ) — Net earnings $ 50,773 $ 5,331 $ (6,550 ) $ 49,554 Other comprehensive income, net of tax 3,795 — — 3,795 Comprehensive income $ 54,568 $ 5,331 $ (6,550 ) $ 53,349 Clearwater Paper Corporation Consolidating Statement of Operations and Comprehensive Income (Loss) Twelve Months Ended December 31, 2015 (In thousands) Issuer Guarantor Eliminations Total Net sales $ 1,683,890 $ 291,270 $ (222,759 ) $ 1,752,401 Cost and expenses: Cost of sales (1,458,121 ) (277,487 ) 222,759 (1,512,849 ) Selling, general and administrative expenses (108,414 ) (7,468 ) — (115,882 ) Total operating costs and expenses (1,566,535 ) (284,955 ) 222,759 (1,628,731 ) Income from operations 117,355 6,315 — 123,670 Interest expense, net (31,067 ) (115 ) — (31,182 ) Earnings before income taxes 86,288 6,200 — 92,488 Income tax provision (32,371 ) (3,724 ) (410 ) (36,505 ) Equity in earnings of subsidiary 2,476 — (2,476 ) — Net earnings $ 56,393 $ 2,476 $ (2,886 ) $ 55,983 Other comprehensive income, net of tax 15,315 — — 15,315 Comprehensive income $ 71,708 $ 2,476 $ (2,886 ) $ 71,298 Clearwater Paper Corporation Consolidating Balance Sheet At December 31, 2017 (In thousands) Issuer Guarantor Subsidiaries Eliminations Total ASSETS Current assets: Cash and cash equivalents $ 15,738 $ — $ — $ 15,738 Receivables, net 125,001 17,064 — 142,065 Taxes receivable 20,242 40 — 20,282 Inventories 228,311 41,594 (3,862 ) 266,043 Other current assets 8,587 74 — 8,661 Total current assets 397,879 58,772 (3,862 ) 452,789 Property, plant and equipment, net 936,659 114,323 — 1,050,982 Goodwill 244,161 — — 244,161 Intangible assets, net 2,089 30,453 — 32,542 Intercompany receivable (payable) (2,807 ) (1,055 ) 3,862 — Investment in subsidiary 157,000 — (157,000 ) — Other assets, net 21,413 2,696 (2,331 ) 21,778 TOTAL ASSETS $ 1,756,394 $ 205,189 $ (159,331 ) $ 1,802,252 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Borrowings under revolving credit facilities $ 155,000 $ — $ — $ 155,000 Accounts payable and accrued liabilities 235,439 21,182 — 256,621 Current liability for pensions and other postretirement employee benefits 7,631 — — 7,631 Total current liabilities 398,070 21,182 — 419,252 Long-term debt 570,524 — — 570,524 Liability for pensions and other postretirement employee benefits 72,469 — — 72,469 Other long-term obligations 43,275 — — 43,275 Accrued taxes 1,928 842 — 2,770 Deferred tax liabilities 94,694 26,165 (2,331 ) 118,528 TOTAL LIABILITES 1,180,960 48,189 (2,331 ) 1,226,818 Accumulated other comprehensive loss, net of tax (43,983 ) — — (43,983 ) Stockholders’ equity excluding 619,417 157,000 (157,000 ) 619,417 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,756,394 $ 205,189 $ (159,331 ) $ 1,802,252 Clearwater Paper Corporation Consolidating Balance Sheet At December 31, 2016 (In thousands) Issuer Guarantor Subsidiaries Eliminations Total ASSETS Current assets: Cash and cash equivalents $ 19,586 $ 3,415 $ — $ 23,001 Receivables, net 130,098 27,252 (10,276 ) 147,074 Taxes receivable 15,143 35 (5,469 ) 9,709 Inventories 208,472 51,432 (1,875 ) 258,029 Other current assets 8,161 521 — 8,682 Total current assets 381,460 82,655 (17,620 ) 446,495 Property, plant and equipment, net 802,064 143,264 — 945,328 Goodwill 244,283 — — 244,283 Intangible assets, net 3,135 37,350 — 40,485 Intercompany receivable (payable) 30,034 (31,909 ) 1,875 — Investment in subsidiary 145,089 — (145,089 ) — Other assets, net 8,433 2,853 (3,535 ) 7,751 TOTAL ASSETS $ 1,614,498 $ 234,213 $ (164,369 ) $ 1,684,342 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Borrowings under revolving credit facilities $ 135,000 $ — $ — $ 135,000 Accounts payable and accrued liabilities 202,187 37,257 (15,745 ) 223,699 Current liability for pensions and other postretirement employee benefits 7,821 — — 7,821 Total current liabilities 345,008 37,257 (15,745 ) 366,520 Long-term debt 569,755 — — 569,755 Liability for pensions and other postretirement employee benefits 81,812 — — 81,812 Other long-term obligations 41,424 352 — 41,776 Accrued taxes 1,614 820 — 2,434 Deferred tax liabilities 105,012 50,695 (3,535 ) 152,172 TOTAL LIABILITIES 1,144,625 89,124 (19,280 ) 1,214,469 Accumulated other comprehensive loss, net of tax (51,753 ) — — (51,753 ) Stockholders’ equity excluding accumulated other comprehensive loss 521,626 145,089 (145,089 ) 521,626 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,614,498 $ 234,213 $ (164,369 ) $ 1,684,342 Clearwater Paper Corporation Consolidating Statement of Cash Flows Twelve Months Ended December 31, 2017 (In thousands) Issuer Guarantor Subsidiaries Eliminations Total CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $ 99,710 $ 11,911 $ (14,282 ) $ 97,339 Adjustments to reconcile net earnings to net cash flows from operating activities: Depreciation and amortization 76,862 28,128 — 104,990 Equity-based compensation expense 3,620 — — 3,620 Deferred taxes (16,957 ) (23,632 ) — (40,589 ) Employee benefit plans (4,371 ) — — (4,371 ) Deferred issuance costs on debt 1,199 — — 1,199 Disposal of plant and equipment, net 512 3,541 — 4,053 Other non-cash activity 1,750 — — 1,750 Changes in working capital 8,776 5,529 7,456 21,761 Change in taxes receivable, net (5,099 ) (5 ) (5,469 ) (10,573 ) Other, net 1,585 (3,094 ) — (1,509 ) Net cash flows from operating activities 167,587 22,378 (12,295 ) 177,670 CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment (193,864 ) (5,884 ) — (199,748 ) Proceeds from sale of assets 283 668 — 951 Net cash flows from investing activities (193,581 ) (5,216 ) — (198,797 ) CASH FLOWS FROM FINANCING ACTIVITIES Purchase of treasury stock (4,875 ) — — (4,875 ) Borrowings on revolving credit facilities 298,308 — — 298,308 Repayments of borrowings on revolving credit facilities' (278,308 ) — — (278,308 ) Investment from (to) parent 8,282 (20,577 ) 12,295 — Payment of tax withholdings on equity- based payment arrangements (1,127 ) — — (1,127 ) Other, net (134 ) — — (134 ) Net cash flows from financing activities 22,146 (20,577 ) 12,295 13,864 Decrease in cash and cash equivalents (3,848 ) (3,415 ) — (7,263 ) Cash and cash equivalents at beginning of period 19,586 3,415 — 23,001 Cash and cash equivalents at end of period $ 15,738 $ — $ — $ 15,738 Clearwater Paper Corporation Consolidating Statement of Cash Flows Twelve Months Ended December 31, 2016 (In thousands) Issuer Guarantor Subsidiaries Eliminations Total CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $ 50,773 $ 5,331 $ (6,550 ) $ 49,554 Adjustments to reconcile net earnings to net cash flows from operating activities: Depreciation and amortization 68,496 22,594 — 91,090 Equity-based compensation expense 12,385 — — 12,385 Deferred taxes 18,860 605 (1,138 ) 18,327 Employee benefit plans (1,979 ) — — (1,979 ) Deferred issuance costs on debt 1,242 — — 1,242 Disposal of plant and equipment, net 781 600 — 1,381 Other non-cash activity 740 18 — 758 Changes in working capital, net of acquisition (642 ) 774 (3,594 ) (3,462 ) Change in taxes receivable, net 1,078 (1,405 ) 5,469 5,142 Excess tax benefits from equity-based payment arrangements (312 ) — — (312 ) Other, net (1,592 ) (921 ) 1,138 (1,375 ) Net cash flows from operating activities 149,830 27,596 (4,675 ) 172,751 CASH FLOWS FROM INVESTING ACTIVITIES Change in short-term investments, net 250 — — 250 Additions to property, plant and equipment (145,579 ) (9,770 ) — (155,349 ) Acquisition of Manchester Industries, net of cash acquired (67,443 ) — — (67,443 ) Proceeds from the sale of assets — 36 — 36 Net cash flows from investing activities (212,772 ) (9,734 ) — (222,506 ) CASH FLOWS FROM FINANCING ACTIVITIES Purchase of treasury stock (65,327 ) — — (65,327 ) Borrowings on revolving credit facilities 1,273,959 — — 1,273,959 Repayments of borrowings on revolving credit facilities' (1,138,959 ) — — (1,138,959 ) Investment from (to) parent 9,772 (14,447 ) 4,675 — Payments for debt issuance costs (1,906 ) — — (1,906 ) Payment of tax withholdings on equity-based payment arrangements (933 ) — — (933 ) Excess tax benefits from equity-based payment arrangements 312 — — 312 Net cash flows from financing activities 76,918 (14,447 ) 4,675 67,146 Increase in cash and cash equivalents 13,976 3,415 — 17,391 Cash and cash equivalents at beginning of period 5,610 — — 5,610 Cash and cash equivalents at end of period $ 19,586 $ 3,415 $ — $ 23,001 Clearwater Paper Corporation Consolidating Statement of Cash Flows Twelve Months Ended December 31, 2015 (In thousands) Issuer Guarantor Subsidiaries Eliminations Total CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $ 56,393 $ 2,476 $ (2,886 ) $ 55,983 Adjustments to reconcile net earnings to net cash flows from operating activities: Depreciation and amortization 65,078 19,654 — 84,732 Equity-based compensation expense 4,557 — — 4,557 Deferred taxes 9,944 3,178 2,959 16,081 Employee benefit plans 3,011 — — 3,011 Deferred issuance costs on debt 928 — — 928 Disposal of plant and equipment, net 1,587 (95 ) — 1,492 Other non-cash activities (1,028 ) 8 — (1,020 ) Changes in working capital, net 11,809 3,032 — 14,841 Change in taxes receivable, net (9,461 ) (14,388 ) 10,253 (13,596 ) Excess tax benefits from equity-based payment arrangements (1,433 ) — — (1,433 ) Funding of qualified pension plans (3,179 ) — — (3,179 ) Other, net (1,591 ) (1,131 ) — (2,722 ) Net cash flows from operating activities 136,615 12,734 10,326 159,675 CASH FLOWS FROM INVESTING ACTIVITIES Change in short-term investments, net 49,750 — — 49,750 Additions to property, plant and equipment (121,720 ) (7,182 ) — (128,902 ) Proceeds from sale of assets — 604 — 604 Net cash flows from investing activities (71,970 ) (6,578 ) — (78,548 ) CASH FLOWS FROM FINANCING ACTIVITIES Purchase of treasury stock (99,990 ) — — (99,990 ) Investment from (to) parent 16,482 (6,156 ) (10,326 ) — Payment of tax withholdings on equity-based payment arrangements (4,152 ) — — (4,152 ) Excess tax benefits from equity-based payment arrangements 1,433 — — 1,433 Other, net (139 ) — — (139 ) Net cash flows from financing activities (86,366 ) (6,156 ) (10,326 ) (102,848 ) Decrease in cash and cash equivalents (21,721 ) — — (21,721 ) Cash and cash equivalents at beginning of period 27,331 — — 27,331 Cash and cash equivalents at end of period $ 5,610 $ — $ — $ 5,610 |