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: August 4, 2011 |
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Media Contact Virginia Aulin – 208 384 7837 | | Investor Relations Contact Jason Bowman – 208 384 7456 |
Boise Inc. Reports Financial Results for Second Quarter 2011 and Announces Authorization of $75 million Share Repurchase Program
BOISE, Idaho – Boise Inc. (NYSE: BZ) today reported net income of $11.9 million, or $0.11 per diluted share, for second quarter 2011, compared with net income of $13.3 million, or $0.16 per diluted share, for second quarter 2010. There were no special items for second quarter 2011. Net income excluding special items was $11.4 million, or $0.14 per diluted share, for second quarter 2010.
EBITDA excluding special items was $70.5 million for second quarter 2011, compared with $67.0 million for second quarter 2010.
In August, Boise Inc.’s board of directors authorized a program, effective immediately, to repurchase up to $75 million of Boise’s outstanding common stock. The timing and exact number of shares actually repurchased will be affected by several factors, including legal and regulatory requirements and changes in the market price of Boise Inc. stock.
FINANCIAL HIGHLIGHTS
(in millions, except per-share data)
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| | | 2Q 2011 | | | 2Q 2010 | | | 1Q 2011 | |
Sales | | $ | 603.1 | | | $ | 521.6 | | | $ | 568.8 | |
Net income | | $ | 11.9 | | | $ | 13.3 | | | $ | 18.7 | |
Net income per diluted share (a) | | $ | 0.11 | | | $ | 0.16 | | | $ | 0.21 | |
Net income excluding special items (b) | | $ | 11.9 | | | $ | 11.4 | | | $ | 20.0 | |
Net income excluding special items per diluted share (a)(b) | | $ | 0.11 | | | $ | 0.14 | | | $ | 0.22 | |
EBITDA (b) | | $ | 70.5 | | | $ | 70.1 | | | $ | 82.2 | |
EBITDA excluding special items (b) | | $ | 70.5 | | | $ | 67.0 | | | $ | 84.4 | |
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Net total debt at period end (b) | | $ | 526.8 | | | $ | 657.1 | | | $ | 770.4 | |
| (a) | During second quarter 2011, Boise Inc. warrant holders exercised 40.3 million warrants, resulting in the issuance of 38.4 million additional common shares. For additional information see “Summary Notes to Consolidated Financial Statements and Segment Information.” |
| (b) | For reconciliations of net income to net income excluding special items, net income to EBITDA, EBITDA to EBITDA excluding special items, and total debt to net total debt, see “Summary Notes to Consolidated Financial Statements and Segment Information.” |
“During the second quarter, our Packaging segment delivered strong results, and we extended our partnership with OfficeMax through a new long-term contract,” said Alexander Toeldte, president and chief executive officer of Boise Inc. “Our Paper segment results were affected by increased input costs, maintenance outage costs, and operational challenges. We have aggressively taken steps to resolve the operating issues and improve our performance going forward.
“Our integration of Tharco is progressing well, expanding our presence in packaging markets, and we continue to grow sales volumes of our packaging demand-driven and premium office papers over last year. After completing three planned outages in the second quarter, we have now completed the majority of our scheduled outages for the year, with just one remaining in the fourth quarter.
“The announced share repurchase authorization will enable us to return capital to shareholders opportunistically. We have returned approximately $80 million, or $0.80 per share, in cash to shareholders through special dividends over the last eight months. We will continue to look for ways to return capital to shareholders when our performance and outlook create the appropriate opportunities.
“Looking ahead, we expect to begin to benefit from the recently implemented price increase on cut-size office papers in the third quarter. We remain focused on serving our customers with distinction and creating shareholder value through well-performing operations, disciplined capital allocation, and targeted growth.”
Sales
Total sales for second quarter 2011 were $603.1 million, up $81.5 million, or 16%, from $521.6 million for second quarter 2010 and up $34.3 million, or 6%, from first quarter 2011 sales of $568.8 million. The primary driver of the increase in both periods was the acquisition of Tharco Packaging, Inc. (Tharco), which we completed in March 2011. Higher net selling prices across all of our product lines also contributed to the increase, compared with the prior-year period.
Prices and Volumes
Uncoated freesheet net selling prices increased 1% for second quarter 2011, compared with second quarter 2010, and decreased 1%, compared with first quarter 2011. Total uncoated freesheet sales volumes were 313,000 short tons for second quarter 2011, flat versus the prior-year period and up 1% versus first quarter 2011. During second quarter 2011, we announced a $60-per-ton price increase
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effective in June across our cut-size office papers, from which we expect to benefit beginning in third quarter 2011.
Corrugated container and sheet sales volumes improved 32% during second quarter 2011, compared with second quarter 2010, and increased 17%, compared with first quarter 2011. This increase was due primarily to the acquisition of Tharco. Corrugated container and sheet prices increased 23% during second quarter 2011, compared with second quarter 2010, and increased 10% sequentially from first quarter 2011, driven primarily by product mix changes due to the Tharco acquisition.
Linerboard net selling prices to third parties increased 25% in second quarter 2011, compared with second quarter 2010, as a result of price increases implemented during 2010, and were flat from first quarter 2011. Linerboard sales volumes to third parties were 55,000 short tons in second quarter 2011, up 3% compared with second quarter 2010 and down 10% sequentially from first quarter 2011. The sequential decline was due primarily to replenishment of low containerboard inventories in our corrugated container and sheet operations, which resulted in less linerboard available for sales to third parties.
Input Costs
Total fiber, energy, and chemical costs for second quarter 2011 were $247.0 million, an increase of $31.9 million, or 15%, compared with costs of $215.1 million for second quarter 2010. This increase was driven primarily by fiber costs associated with Tharco in our Packaging segment as well as higher chemical and energy costs in our Paper segment. Prices for chemicals and fiber increased sequentially from first quarter 2011 to second quarter 2011.
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| | | INPUT COST SUMMARY (in millions) | |
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| | | 2Q 2011 | | | 2Q 2010 | | | 1Q 2011 | |
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Fiber | | $ | 137.7 | | | $ | 117.1 | | | $ | 116.3 | |
Energy | | | 52.7 | | | | 48.1 | | | | 52.8 | |
Chemicals | | | 56.6 | | | | 49.9 | | | | 54.3 | |
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Total | | $ | 247.0 | | | $ | 215.1 | | | $ | 223.3 | |
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Total fiber costs during second quarter 2011 were $137.7 million, an increase of $20.6 million, or 18%, compared with $117.1 million incurred in second quarter 2010. This was driven primarily by increased costs of purchased containerboard rollstock as a result of the Tharco acquisition in our Packaging segment and by increased prices for fiber in our Paper segment. These costs were offset partially by lower wood prices in our Packaging segment. Fiber costs increased $21.4 million, or 18%, compared with $116.3 million incurred in first quarter 2011, driven primarily by increased purchased pulp consumption due to the scheduled maintenance outages, as well as higher wood prices in our Paper segment.
Energy costs in second quarter 2011 were $52.7 million, an increase of $4.6 million, or 10%, compared with $48.1 million in second quarter 2010. This was driven primarily by higher prices for electricity in our Paper segment and higher consumption of electricity in our Packaging segment. These costs were offset partially by lower natural gas prices. Energy costs were flat, compared with $52.8 million in first quarter 2011.
Chemical costs in second quarter 2011 were $56.6 million, an increase of $6.7 million, or 13%, compared with $49.9 million in second quarter 2010, and an increase of $2.3 million, or 4%, from $54.3 million in first quarter 2011, a result of increased prices for commodity chemicals.
Webcast and Conference Call
Boise Inc. will host a webcast and conference call on Thursday, August 4, 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 August 4 at 2:00 p.m. ET through September 2 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 82337154.
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About Boise Inc.
Headquartered in Boise, Idaho, Boise Inc. (NYSE: BZ) manufactures paper and packaging products, including imaging papers for the office and home, printing and converting papers, label and release and flexible packaging papers, corrugated containers, containerboard, 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. Statements regarding the changes we have made to improve our operational performance, and the expected price increases for our products, are forward-looking statements. There can be no assurance the steps we have taken will improve our operational performance or that we will be able to implement or realize all or any part of the described price increases. Similarly, the statements related to our stock repurchase program are forward-looking statements, and there can be no assurances about the timing or number of shares, if any, that will be repurchased under the program. 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 | |
| | | June 30 | | | March 31,
2011 (1) | |
| | | 2011 (1) | | | 2010 | | |
Sales | | | | | | | | | | | | |
Trade | | $ | 592,784 | | | $ | 511,012 | | | $ | 560,320 | |
Related parties | | | 10,351 | | | | 10,549 | | | | 8,443 | |
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| | | 603,135 | | | | 521,561 | | | | 568,763 | |
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Costs and expenses | | | | | | | | | | | | |
Materials, labor, and other operating expenses | | | 485,001 | | | | 419,594 | | | | 449,070 | |
Fiber costs from related parties | | | 4,383 | | | | 5,168 | | | | 4,440 | |
Depreciation, amortization, and depletion | | | 36,090 | | | | 32,267 | | | | 33,974 | |
Selling and distribution expenses | | | 29,483 | | | | 14,254 | | | | 19,373 | |
General and administrative expenses | | | 14,622 | | | | 12,569 | | | | 12,697 | |
Other (income) expense, net | | | (813 | ) | | | (445 | ) | | | 1,077 | |
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| | | 568,766 | | | | 483,407 | | | | 520,631 | |
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Income from operations | | | 34,369 | | | | 38,154 | | | | 48,132 | |
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Foreign exchange gain (loss) | | | 55 | | | | (323 | ) | | | 132 | |
Loss on extinguishment of debt | | | — | | | | (28 | ) | | | — | |
Interest expense | | | (16,072 | ) | | | (16,178 | ) | | | (16,367 | ) |
Interest income | | | 74 | | | | 61 | | | | 78 | |
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| | | (15,943 | ) | | | (16,468 | ) | | | (16,157 | ) |
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Income before income taxes | | | 18,426 | | | | 21,686 | | | | 31,975 | |
Income tax provision | | | (6,529 | ) | | | (8,376 | ) | | | (13,281 | ) |
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Net income | | $ | 11,897 | | | $ | 13,310 | | | $ | 18,694 | |
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Weighted average common shares outstanding (2): | | | | | | | | | | | | |
Basic | | | 106,754 | | | | 80,624 | | | | 80,964 | |
Diluted | | | 111,772 | | | | 84,093 | | | | 90,417 | |
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Net income per common share (2): | | | | | | | | | | | | |
Basic | | $ | 0.11 | | | $ | 0.17 | | | $ | 0.23 | |
Diluted | | $ | 0.11 | | | $ | 0.16 | | | $ | 0.21 | |
For footnotes, see Summary Notes to Consolidated Financial Statements and Segment Information beginning on page 13.
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Boise Inc.
Segment Information
(unaudited, dollars in thousands)
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| | | Three Months Ended | |
| | | June 30 | | | March 31,
2011 (1) | |
| | | 2011 (1) | | | 2010 | | |
Segment sales | | | | | | | | | | | | |
Paper | | $ | 371,052 | | | $ | 364,199 | | | $ | 375,180 | |
Packaging | | | 243,318 | | | | 166,143 | | | | 203,393 | |
Intersegment eliminations and other | | | (11,235 | ) | | | (8,781 | ) | | | (9,810 | ) |
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| | $ | 603,135 | | | $ | 521,561 | | | $ | 568,763 | |
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Segment income (loss) | | | | | | | | | | | | |
Paper | | $ | 13,150 | | | $ | 25,708 | | | $ | 40,970 | |
Packaging | | | 27,494 | | | | 17,105 | | | | 13,626 | |
Corporate and Other | | | (6,220 | ) | | | (4,982 | ) | | | (6,332 | ) |
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| | | 34,424 | | | | 37,831 | | | | 48,264 | |
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Loss on extinguishment of debt | | | — | | | | (28 | ) | | | — | |
Interest expense | | | (16,072 | ) | | | (16,178 | ) | | | (16,367 | ) |
Interest income | | | 74 | | | | 61 | | | | 78 | |
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Income before income taxes | | $ | 18,426 | | | $ | 21,686 | | | $ | 31,975 | |
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EBITDA (4) | | | | | | | | | | | | |
Paper | | $ | 35,513 | | | $ | 47,406 | | | $ | 63,022 | |
Packaging | | | 40,343 | | | | 26,684 | | | | 24,599 | |
Corporate and Other | | | (5,342 | ) | | | (4,020 | ) | | | (5,383 | ) |
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| | $ | 70,514 | | | $ | 70,070 | | | $ | 82,238 | |
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Boise Inc.
Consolidated Statements of Income
(unaudited, dollars and shares in thousands, except per-share data)
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| | | Six Months Ended June 30 | |
| | | 2011 (1) | | | 2010 | |
Sales | | | | | | | | |
Trade | | $ | 1,153,104 | | | $ | 996,863 | |
Related parties | | | 18,794 | | | | 18,803 | |
| | | | | | | | |
| | | 1,171,898 | | | | 1,015,666 | |
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Costs and expenses | | | | | | | | |
Materials, labor, and other operating expenses | | | 934,071 | | | | 828,079 | |
Fiber costs from related parties | | | 8,823 | | | | 14,999 | |
Depreciation, amortization, and depletion | | | 70,064 | | | | 64,398 | |
Selling and distribution expenses | | | 48,856 | | | | 27,988 | |
General and administrative expenses | | | 27,319 | | | | 24,028 | |
Other (income) expense, net | | | 264 | | | | (620 | ) |
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| | | 1,089,397 | | | | 958,872 | |
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Income from operations | | | 82,501 | | | | 56,794 | |
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Foreign exchange gain | | | 187 | | | | 364 | |
Loss on extinguishment of debt (3) | | | — | | | | (22,225 | ) |
Interest expense | | | (32,439 | ) | | | (32,652 | ) |
Interest income | | | 152 | | | | 98 | |
| | | | | | | | |
| | | (32,100 | ) | | | (54,415 | ) |
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Income before income taxes | | | 50,401 | | | | 2,379 | |
Income tax provision | | | (19,810 | ) | | | (1,754 | ) |
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Net income | | $ | 30,591 | | | $ | 625 | |
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Weighted average common shares outstanding (2): | | | | | | | | |
Basic | | | 93,928 | | | | 80,214 | |
Diluted | | | 101,117 | | | | 84,143 | |
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Net income per common share (2): | | | | | | | | |
Basic | | $ | 0.33 | | | $ | 0.01 | |
Diluted | | $ | 0.30 | | | $ | 0.01 | |
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Boise Inc.
Segment Information
(unaudited, dollars in thousands)
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| | | Six Months Ended June 30 | |
| | | 2011 (1) | | | 2010 | |
Segment sales | | | | | | | | |
Paper | | $ | 746,232 | | | $ | 717,688 | |
Packaging | | | 446,711 | | | | 314,297 | |
Intersegment eliminations and other | | | (21,045 | ) | | | (16,319 | ) |
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| | $ | 1,171,898 | | | $ | 1,015,666 | |
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Segment income (loss) | | | | | | | | |
Paper | | $ | 54,120 | | | $ | 55,651 | |
Packaging | | | 41,120 | | | | 11,335 | |
Corporate and Other | | | (12,552 | ) | | | (9,828 | ) |
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| | | 82,688 | | | | 57,158 | |
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Loss on extinguishment of debt (3) | | | — | | | | (22,225 | ) |
Interest expense | | | (32,439 | ) | | | (32,652 | ) |
Interest income | | | 152 | | | | 98 | |
| | | | | | | | |
Income before income taxes | | $ | 50,401 | | | $ | 2,379 | |
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EBITDA (4) | | | | | | | | |
Paper | | $ | 98,535 | | | $ | 98,818 | |
Packaging | | | 64,942 | | | | 30,610 | |
Corporate and Other (3) | | | (10,725 | ) | | | (30,097 | ) |
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| | $ | 152,752 | | | $ | 99,331 | |
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Boise Inc.
Consolidated Balance Sheets
(unaudited, dollars in thousands)
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| | | June 30, 2011 (1) | | | December 31, 2010 | |
ASSETS | | | | | | | | |
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Current | | | | | | | | |
Cash and cash equivalents | | $ | 236,263 | | | $ | 166,833 | |
Short-term investments | | | — | | | | 10,621 | |
Receivables | | | | | | | | |
Trade, less allowances of $879 and $603 | | | 228,631 | | | | 188,589 | |
Other | | | 7,629 | | | | 3,839 | |
Inventories | | | 271,759 | | | | 261,471 | |
Deferred income taxes | | | 19,473 | | | | 16,658 | |
Prepaid and other | | | 12,568 | | | | 5,214 | |
| | | | | | | | |
| | | 776,323 | | | | 653,225 | |
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Property | | | | | | | | |
Property and equipment, net | | | 1,213,357 | | | | 1,199,035 | |
Fiber farms and deposits | | | 19,373 | | | | 18,285 | |
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| | | 1,232,730 | | | | 1,217,320 | |
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Deferred financing costs | | | 27,534 | | | | 30,396 | |
Goodwill | | | 103,280 | | | | — | |
Intangible assets, net | | | 99,129 | | | | 29,605 | |
Other assets | | | 8,414 | | | | 8,444 | |
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Total assets | | $ | 2,247,410 | | | $ | 1,938,990 | |
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Boise Inc.
Consolidated Balance Sheets (continued)
(unaudited, dollars and shares in thousands, except per-share data)
| | | | | | | | |
| | | June 30, 2011 (1) | | | December 31, 2010 | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | |
| | |
Current | | | | | | | | |
Current portion of long-term debt | | $ | 76,563 | | | $ | 43,750 | |
Income taxes payable | | | 311 | | | | 82 | |
Accounts payable | | | 194,294 | | | | 179,214 | |
Accrued liabilities | | | | | | | | |
Compensation and benefits | | | 55,386 | | | | 54,574 | |
Interest payable | | | 10,525 | | | | 10,535 | |
Other | | | 18,146 | | | | 16,123 | |
| | | | | | | | |
| | | 355,225 | | | | 304,278 | |
| | | | | | | | |
Debt | | | | | | | | |
Long-term debt, less current portion | | | 686,518 | | | | 738,081 | |
| | | | | | | | |
| | |
Other | | | | | | | | |
Deferred income taxes | | | 141,328 | | | | 88,200 | |
Compensation and benefits | | | 100,554 | | | | 121,318 | |
Other long-term liabilities | | | 48,953 | | | | 40,278 | |
| | | | | | | | |
| | | 290,835 | | | | 249,796 | |
| | | | | | | | |
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; 121,421 shares and 84,845 shares issued and outstanding (2) | | | 12 | | | | 8 | |
Additional paid-in capital (2) | | | 865,229 | | | | 581,442 | |
Accumulated other comprehensive income (loss) | | | (77,107 | ) | | | (78,822 | ) |
Retained earnings | | | 126,698 | | | | 144,207 | |
| | | | | | | | |
Total stockholders’ equity | | | 914,832 | | | | 646,835 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Total liabilities and stockholders’ equity | | $ | 2,247,410 | | | $ | 1,938,990 | |
| | | | | | | | |
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Boise Inc.
Consolidated Statements of Cash Flows
(unaudited, dollars in thousands)
| | | | | | | | |
| | | Six Months Ended June 30 | |
| | | 2011 (1) | | | 2010 | |
Cash provided by (used for) operations | | | | | | | | |
Net income | | $ | 30,591 | | | $ | 625 | |
Items in net income not using (providing) cash | | | | | | | | |
Depreciation, depletion, and amortization of deferred financing costs and other | | | 73,188 | | | | 68,864 | |
Share-based compensation expense | | | 1,771 | | | | 1,834 | |
Pension expense | | | 6,096 | | | | 4,830 | |
Deferred income taxes | | | 17,182 | | | | 912 | |
Change in fair value of energy derivatives | | | (684 | ) | | | 617 | |
Other | | | 982 | | | | (277 | ) |
Loss on extinguishment of debt | | | — | | | | 22,225 | |
Decrease (increase) in working capital, net of acquisitions | | | | | | | | |
Receivables | | | (11,060 | ) | | | 37,899 | |
Inventories | | | 8,640 | | | | (5,347 | ) |
Prepaid expenses | | | (3,326 | ) | | | 1,503 | |
Accounts payable and accrued liabilities | | | (4,505 | ) | | | 6,352 | |
Current and deferred income taxes | | | 690 | | | | 344 | |
Pension payments | | | (25,512 | ) | | | (5,824 | ) |
Other | | | 2,726 | | | | (266 | ) |
| | | | | | | | |
Cash provided by operations | | | 96,779 | | | | 134,291 | |
| | | | | | | | |
| | |
Cash provided by (used for) investment | | | | | | | | |
Acquisition of businesses and facilities, net of cash acquired | | | (201,509 | ) | | | — | |
Expenditures for property and equipment | | | (53,737 | ) | | | (37,481 | ) |
Purchases of short-term investments | | | (3,494 | ) | | | (11,825 | ) |
Maturities of short-term investments | | | 14,114 | | | | 11,247 | |
Sales of assets | | | 1,181 | | | | 575 | |
Other | | | 137 | | | | 230 | |
| | | | | | | | |
Cash used for investment | | | (243,308 | ) | | | (37,254 | ) |
| | | | | | | | |
| | |
Cash provided by (used for) financing | | | | | | | | |
Issuances of long-term debt | | | 75,000 | | | | 300,000 | |
Payments of long-term debt | | | (93,750 | ) | | | (323,683 | ) |
Payments of deferred financing costs | | | (160 | ) | | | (11,613 | ) |
Proceeds from exercise of warrants (2) | | | 284,785 | | | | — | |
Payments of special dividend | | | (47,916 | ) | | | — | |
Other | | | (2,000 | ) | | | (3,072 | ) |
| | | | | | | | |
Cash provided by (used for) financing | | | 215,959 | | | | (38,368 | ) |
| | | | | | | | |
| | |
Increase in cash and cash equivalents | | | 69,430 | | | | 58,669 | |
| | |
Balance at beginning of the period | | | 166,833 | | | | 69,393 | |
| | | | | | | | |
| | |
Balance at end of the period | | $ | 236,263 | | | $ | 128,062 | |
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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 and the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2011, as well as other reports the Company files with the SEC. Net income for all periods presented involved estimates and accruals.
| 1. | On March 1, 2011, our wholly owned subsidiary Boise Paper Holdings, L.L.C., acquired 100% of the outstanding stock of Tharco Packaging, Inc. (Tharco) for a preliminary purchase price of $200.8 million plus or minus working capital adjustments. We financed the acquisition with existing cash and $75 million in borrowings on our revolving credit facility. For more information, including an allocation of the purchase price to the assets acquired and liabilities assumed, based on our estimates of the fair value at the date of the acquisition, see Note 2, Acquisition of Tharco Packaging, Inc., of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in our June 30, 2011, Form 10-Q. |
The consolidated financial statements included herein include Tharco for the period of March 1 through June 30, 2011, in the Packaging segment. In connection with the acquisition, we recognized $2.2 million of expense related to inventory purchase accounting adjustments during the three months ended March 31, 2011, and the six months ended June 30, 2011.
| 2. | During the three months ended June 30, 2011, Boise Inc. warrant holders exercised 40.3 million warrants, resulting in the issuance of 38.4 million additional common shares. For the three and six months ended June 30, 2011, the exercise added 25.3 million and 12.7 million, respectively, to the number of weighted average shares included in basic net income per share and an incremental 2.5 million and 4.5 million, respectively, to the weighted average diluted net income per share for the period the warrants were outstanding. There were approximately 4.0 million unexercised warrants on June 20, 2011, when the warrants expired. During 2011, we received cash proceeds of approximately $284.8 million, which primarily increased “Additional paid-in capital” on our Consolidated Balance Sheet at June 30, 2011, compared with December 31, 2010, and is recorded in “Proceeds from exercise of warrants” in our Consolidated Statement of Cash Flows for the six months ended June 30, 2011. |
| 3. | The six months ended June 30, 2010, included $22.2 million of expense related to a loss on the extinguishment of debt. |
| 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, 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 tables that follow reconcile these non-GAAP measures with the most directly comparable GAAP measures. |
EBITDA represents income before interest (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 June 30, 2011 and 2010, the three months ended March 31, 2011, and the six months ended June 30, 2011 and 2010 (unaudited, dollars in thousands):
| | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Six Months Ended | |
| | | June 30 | | | March 31,
2011 | | | June 30 | |
| | | 2011 | | | 2010 | | | | 2011 | | | 2010 | |
| | | | | |
Net income | | $ | 11,897 | | | $ | 13,310 | | | $ | 18,694 | | | $ | 30,591 | | | $ | 625 | |
Interest expense | | | 16,072 | | | | 16,178 | | | | 16,367 | | | | 32,439 | | | | 32,652 | |
Interest income | | | (74 | ) | | | (61 | ) | | | (78 | ) | | | (152 | ) | | | (98 | ) |
Income tax provision | | | 6,529 | | | | 8,376 | | | | 13,281 | | | | 19,810 | | | | 1,754 | |
Depreciation, amortization, and depletion | | | 36,090 | | | | 32,267 | | | | 33,974 | | | | 70,064 | | | | 64,398 | |
| | | | | | | | | | | | | | | | | | | | |
EBITDA | | $ | 70,514 | | | $ | 70,070 | | | $ | 82,238 | | | $ | 152,752 | | | $ | 99,331 | |
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13
The following table reconciles segment income (loss) and EBITDA to EBITDA excluding special items for the three months ended June 30, 2011 and 2010, the three months ended March 31, 2011, and the six months ended June 30, 2011 and 2010 (unaudited, dollars in thousands):
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| | | Three Months Ended | | | Six Months Ended | |
| | | June 30 | | | March 31, | | | June 30 | |
| | | 2011 | | | 2010 | | | 2011 | | | 2011 | | | 2010 | |
Paper | | | | | | | | | | | | | | | | | | | | |
Segment income | | $ | 13,150 | | | $ | 25,708 | | | $ | 40,970 | | | $ | 54,120 | | | $ | 55,651 | |
Depreciation, amortization, and depletion | | | 22,363 | | | | 21,698 | | | | 22,052 | | | | 44,415 | | | | 43,167 | |
| | | | | | | | | | | | | | | | | | | | |
EBITDA | | | 35,513 | | | | 47,406 | | | | 63,022 | | | | 98,535 | | | | 98,818 | |
| | | | | | | | | | | | | | | | | | | | |
St. Helens mill restructuring | | | — | | | | (434 | ) | | | — | | | | — | | | | (306 | ) |
Change in fair value of energy hedges | | | — | | | | (2,312 | ) | | | — | | | | — | | | | 521 | |
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EBITDA excluding special items | | $ | 35,513 | | | $ | 44,660 | | | $ | 63,022 | | | $ | 98,535 | | | $ | 99,033 | |
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Packaging | | | | | | | | | | | | | | | | | | | | |
Segment income | | $ | 27,494 | �� | | $ | 17,105 | | | $ | 13,626 | | | $ | 41,120 | | | $ | 11,335 | |
Depreciation, amortization, and depletion | | | 12,849 | | | | 9,579 | | | | 10,973 | | | | 23,822 | | | | 19,275 | |
| | | | | | | | | | | | | | | | | | | | |
EBITDA | | | 40,343 | | | | 26,684 | | | | 24,599 | | | | 64,942 | | | | 30,610 | |
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Inventory purchase accounting expense | | | — | | | | — | | | | 2,200 | | | | 2,200 | | | | — | |
Change in fair value of energy hedges | | | — | | | | (401 | ) | | | — | | | | — | | | | 96 | |
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EBITDA excluding special items | | $ | 40,343 | | | $ | 26,283 | | | $ | 26,799 | | | $ | 67,142 | | | $ | 30,706 | |
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Corporate and Other | | | | | | | | | | | | | | | | | | | | |
Segment loss | | $ | (6,220 | ) | | $ | (4,982 | ) | | $ | (6,332 | ) | | $ | (12,552 | ) | | $ | (9,828 | ) |
Depreciation, amortization, and depletion | | | 878 | | | | 990 | | | | 949 | | | | 1,827 | | | | 1,956 | |
Loss on extinguishment of debt | | | — | | | | (28 | ) | | | — | | | | — | | | | (22,225 | ) |
| | | | | | | | | | | | | | | | | | | | |
EBITDA | | | (5,342 | ) | | | (4,020 | ) | | | (5,383 | ) | | | (10,725 | ) | | | (30,097 | ) |
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Loss on extinguishment of debt | | | — | | | | 28 | | | | — | | | | — | | | | 22,225 | |
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EBITDA excluding special items | | $ | (5,342 | ) | | $ | (3,992 | ) | | $ | (5,383 | ) | | $ | (10,725 | ) | | $ | (7,872 | ) |
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| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
EBITDA | | $ | 70,514 | | | $ | 70,070 | | | $ | 82,238 | | | $ | 152,752 | | | $ | 99,331 | |
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| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
EBITDA excluding special items | | $ | 70,514 | | | $ | 66,951 | | | $ | 84,438 | | | $ | 154,952 | | | $ | 121,867 | |
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14
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 June 30, 2011 and 2010, the three months ended March 31, 2011, and the six months ended June 30, 2011 and 2010 (unaudited, dollars and shares in thousands):
| | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Six Months Ended | |
| | | June 30 | | | March 31,
2011 | | | June 30 | |
| | | 2011 | | | 2010 | | | | 2011 | | | 2010 | |
| | | | | |
Net income | | $ | 11,897 | | | $ | 13,310 | | | $ | 18,694 | | | $ | 30,591 | | | $ | 625 | |
Inventory purchase accounting expense | | | — | | | | — | | | | 2,200 | | | | 2,200 | | | | — | |
Change in fair value of energy hedges | | | — | | | | (2,713 | ) | | | — | | | | — | | | | 617 | |
St. Helens mill restructuring | | | — | | | | (434 | ) | | | — | | | | — | | | | (306 | ) |
Loss on extinguishment of debt | | | — | | | | 28 | | | | — | | | | — | | | | 22,225 | |
Tax (provision) benefit for special items (a) | | | — | | | | 1,207 | | | | (851 | ) | | | (851 | ) | | | (8,721 | ) |
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Net income excluding special items | | $ | 11,897 | | | $ | 11,398 | | | $ | 20,043 | | | $ | 31,940 | | | $ | 14,440 | |
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Weighted average common shares outstanding: diluted (b) | | | 111,772 | | | | 84,093 | | | | 90,417 | | | | 101,117 | | | | 84,143 | |
Net income excluding special items per diluted share (b) | | $ | 0.11 | | | $ | 0.14 | | | $ | 0.22 | | | $ | 0.32 | | | $ | 0.17 | |
| (a) | Special items are tax effected in the aggregate at an assumed combined federal and state statutory rate of 38.7%. |
| (b) | During second quarter 2011, Boise Inc. warrant holders exercised 40.3 million warrants, resulting in the issuance of 38.4 million additional common shares. For more information see Note 2 within this Summary Notes to Consolidated Financial Statements and Segment Information. |
The following table reconciles total debt to net total debt as of June 30, 2011 and 2010, and March 31, 2011 (unaudited, dollars in thousands):
| | | | | | | | | | | | |
| | | June 30 | | | March 31,
2011 | |
| | | 2011 | | | 2010 | | |
| | | |
Short-term borrowings | | $ | — | | | $ | 3,536 | | | $ | — | |
Current portion of long-term debt | | | 76,563 | | | | 29,163 | | | | 50,000 | |
Long term debt, less current portion | | | 686,518 | | | | 763,081 | | | | 780,581 | |
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Total debt | | | 763,081 | | | | 795,780 | | | | 830,581 | |
Less cash and cash equivalents and short-term investments | | | (236,263 | ) | | | (138,668 | ) | | | (60,136 | ) |
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Net total debt | | $ | 526,818 | | | $ | 657,112 | | | $ | 770,445 | |
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15
