Exhibit 99.1
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: November 3, 2011 |
Media Contact Virginia Aulin - 208 384 7837 | Investor Relations Contact Jason Bowman - 208 384 7456 |
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Boise Inc. Reports Financial Results for Third Quarter 2011
BOISE, Idaho - Boise Inc. (NYSE: BZ) today reported net income of $28.4 million, or $0.24 per diluted share, for third quarter 2011, compared with net income of $35.9 million, or $0.43 per diluted share, for third quarter 2010. EBITDA was $98.5 million for third quarter 2011, compared with $109.8 million for third quarter 2010.
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| | | | | | | | | | | | | |
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| | Third Quarter Highlights | |
| | | |
| | Ÿ Reported record sales of $251.6 million and record operating income of $32.0 million in Packaging segment | |
| | | |
| | Ÿ Generated free cash flow1 of $49.3 million | |
| | | |
| | Ÿ Repurchased 13.4 million common shares for $76.3 million2 | |
| | | |
| | Ÿ Announced acquisition of Hexacomb, a leader in protective packaging products, in October | |
| | | |
| | Financial Highlights | |
| | (in millions, except per-share data) | |
| | | | | | | | |
| | | 3Q 2011 | | 3Q 2010 | | 2Q 2011 | |
| | Sales | $ | 631.7 |
| | $ | 554.1 |
| | $ | 603.1 |
| |
| | Net income | $ | 28.4 |
| | $ | 35.9 |
| | $ | 11.9 |
| |
| | Net income per diluted share (2) | $ | 0.24 |
| | $ | 0.43 |
| | $ | 0.11 |
| |
| | Weighted average diluted common shares outstanding (2) | $ | 118.0 |
| | $ | 84.1 |
| | $ | 111.8 |
| |
| | EBITDA (3) | $ | 98.5 |
| | $ | 109.8 |
| | $ | 70.5 |
| |
| | | | | | | | |
| | Net total debt at period end (3) | $ | 581.0 |
| | $ | 604.0 |
| | $ | 526.8 |
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| | | | | | | | |
| | (1) Cash provided by operations less expenditures for property and equipment. | |
| | (2) During third quarter 2011, we repurchased 13.4 million of our common shares at an average price of $5.71 per share. We continued to repurchase shares and, through October 31, 2011, had repurchased a total of 15.0 million common shares for $84.7 million dollars. As of September 30 and October 31, 2011, we had 108.1 million and 106.4 common shares outstanding, respectively. For additional information see "Summary Notes to Consolidated Financial Statements and Segment Information." | |
| | (3) For reconciliations of non-GAAP measures, see "Summary Notes to Consolidated Financial Statements and Segment Information." | |
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"We had strong performance in the third quarter, generating $49 million in free cash flow and setting sales and earnings records in our packaging business," said Alexander Toeldte, president and chief executive officer of Boise Inc. "Despite increased input costs, our paper business results were also solid and benefited from improved office paper pricing.
"In October, we announced the acquisition of Hexacomb, a leader in honeycomb protective packaging products. Hexacomb has demonstrated strong growth, expands our position in protective packaging markets, and steps up our vertical integration. In our packaging business, the integration of Tharco is progressing well, and in our paper business, we grew sales volumes of our packaging demand-driven and premium office papers 5% over the prior-year quarter.
"In September, we completed the $75 million share repurchase program we announced in August and authorized a second $75 million repurchase program. Over the last twelve months, we have returned over $165 million in cash to shareholders through share repurchases and special dividends. We continue to look for ways to return capital to shareholders when our performance and outlook create the appropriate opportunity."
Sales
Total sales for third quarter 2011 were $631.7 million, up $77.6 million, or 14%, from $554.1 million for third quarter 2010, due primarily to the acquisition of Tharco Packaging, which was completed in March 2011, as well as higher net selling prices for linerboard, newsprint, and corrugated products. Total sales for third quarter were up $28.6 million, or 5%, from second quarter 2011 sales of $603.1 million, driven by higher prices for uncoated freesheet and increased sales volumes of corrugated products.
Prices and Volumes
Uncoated freesheet net selling prices were flat for third quarter 2011, compared with third quarter 2010, and increased 3%, compared with second quarter 2011, driven by improved pricing across our cut-size office papers. Total uncoated freesheet sales volumes were 312,000 short tons for third quarter 2011, a decrease of 2% versus the prior-year period and flat versus second quarter 2011.
Corrugated container and sheet sales volumes improved 31% during third quarter 2011, compared with third quarter 2010, due primarily to the acquisition of Tharco. Corrugated sales volumes increased 3%, compared with second quarter 2011, driven by seasonally stronger demand in agricultural markets. Corrugated container and sheet prices increased 18% during third quarter 2011, compared with third quarter 2010, driven primarily by product mix changes due to the Tharco acquisition, and increased 1% sequentially from second quarter 2011.
Compared with third quarter 2010, linerboard net selling prices to third parties increased 7% for third quarter 2011, due to price increases realized during the latter part of 2010. Linerboard net selling prices were flat, compared with second quarter 2011. Linerboard sales volumes to third parties were 55,000 short tons in third quarter 2011, up 15%, compared with third quarter 2010, driven by increased production of linerboard and solid demand in linerboard export markets. Linerboard sales volumes to third parties were flat sequentially from second quarter 2011.
Input Costs
Total fiber, energy, and chemical costs for third quarter 2011 were $259.6 million, an increase of $33.5 million, or 15%, compared with costs of $226.1 million for third quarter 2010. This increase was driven primarily by fiber costs associated with Tharco in our Packaging segment and higher fiber and chemical costs in our Paper segment. Costs for chemicals and fiber also increased sequentially from second quarter 2011 to third quarter 2011.
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| | | | | | | | | | | |
| | Input Cost Summary |
| | (in millions) |
| | | | | | |
| | 3Q 2011 |
| | 3Q 2010 |
| | 2Q 2011 |
|
| Fiber | $ | 143.7 |
| | $ | 119.1 |
| | $ | 137.7 |
|
| Energy | 52.2 |
| | 52.4 |
| | 52.7 |
|
| Chemicals | 63.8 |
| | 54.6 |
| | 56.6 |
|
| Total | $ | 259.6 |
| | $ | 226.1 |
| | $ | 246.9 |
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Total fiber costs during third quarter 2011 were $143.7 million, an increase of $24.6 million, or 21%, compared with $119.1 million in third quarter 2010. This was driven primarily by increased purchased containerboard roll stock costs related to the Tharco acquisition in our Packaging segment and increased fiber and chemical costs in our Paper segment. These costs were offset partially by lower wood prices in our Packaging segment. Fiber costs increased $6.0 million, or 4%, compared with $137.7 million in second quarter 2011, driven primarily by increased production in the Paper segment. Second quarter 2011 included annual shutdowns at three mills.
Energy costs in third quarter 2011 were $52.2 million, a slight decrease, compared with third quarter 2010 and second quarter 2011, due to lower prices for natural gas that were offset partially by increased prices for electricity and increased production.
Chemical costs in third quarter 2011 were $63.8 million, an increase of $9.2 million, or 17%, compared with $54.6 million in third quarter 2010, and an increase of $7.2 million, or 13%, from $56.6 million in second quarter 2011, a result of increased prices for commodity chemicals.
Selling and distribution costs were $29.8 million in third quarter 2011, an increase of $15.9 million, compared with $13.9 million in third quarter 2010, due primarily to incremental expenses from Tharco's operations. Selling and distributions costs increased slightly from $29.5 million in second quarter 2011.
Webcast and Conference Call
Boise Inc. will host a webcast and conference call on Thursday, November 3, 2011, 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 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 November 3, 2011, at 2:00 p.m. ET through November 2, 2012, 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 19336637.
About Boise Inc.
Headquartered in Boise, Idaho, Boise Inc. (NYSE: BZ) manufactures a wide variety of paper and 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 and flexible packaging papers. Boise's range of packaging products includes linerboard and corrugating medium, corrugated containers and sheets, and protective packaging products. 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. 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.
Boise Inc.
Consolidated Statements of Income
(unaudited, dollars and shares in thousands, except per-share data)
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| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
| | September 30 | | June 30, | | September 30 |
| | 2011 (1) | | 2010 | | 2011 (1) | | 2011 (1) | | 2010 |
| Sales | | | | | | | | | |
| Trade | $ | 619,396 |
| | $ | 543,505 |
| | $ | 592,784 |
| | $ | 1,772,500 |
| | $ | 1,540,368 |
|
| Related parties | 12,346 |
| | 10,550 |
| | 10,351 |
| | 31,140 |
| | 29,353 |
|
| | 631,742 |
| | 554,055 |
| | 603,135 |
| | 1,803,640 |
| | 1,569,721 |
|
| | | | | | | | | | |
| Costs and expenses | | | | | | | | | |
| Materials, labor, and other operating expenses | 483,885 |
| | 412,847 |
| | 485,001 |
| | 1,417,956 |
| | 1,240,926 |
|
| Fiber costs from related parties | 4,786 |
| | 4,905 |
| | 4,383 |
| | 13,609 |
| | 19,904 |
|
| Depreciation, amortization, and depletion | 36,374 |
| | 32,457 |
| | 36,090 |
| | 106,438 |
| | 96,855 |
|
| Selling and distribution expenses | 29,799 |
| | 13,884 |
| | 29,483 |
| | 78,655 |
| | 41,872 |
|
| General and administrative expenses | 14,396 |
| | 12,594 |
| | 14,622 |
| | 41,715 |
| | 36,622 |
|
| Other (income) expense, net | (130 | ) | | 382 |
| | (813 | ) | | 134 |
| | (238 | ) |
| | 569,110 |
| | 477,069 |
| | 568,766 |
| | 1,658,507 |
| | 1,435,941 |
|
| | | | | | | | | | |
| Income from operations | 62,632 |
| | 76,986 |
| | 34,369 |
| | 145,133 |
| | 133,780 |
|
| | | | | | | | | | |
| Foreign exchange gain (loss) | (482 | ) | | 386 |
| | 55 |
| | (295 | ) | | 750 |
|
| Loss on extinguishment of debt (4) | — |
| | — |
| | — |
| | — |
| | (22,225 | ) |
| Interest expense | (15,725 | ) | | (16,100 | ) | | (16,072 | ) | | (48,164 | ) | | (48,752 | ) |
| Interest income | 58 |
| | 105 |
| | 74 |
| | 210 |
| | 203 |
|
| | (16,149 | ) | | (15,609 | ) | | (15,943 | ) | | (48,249 | ) | | (70,024 | ) |
| | | | | | | | | | |
| Income before income taxes | 46,483 |
| | 61,377 |
| | 18,426 |
| | 96,884 |
| | 63,756 |
|
| Income tax provision | (18,119 | ) | | (25,454 | ) | | (6,529 | ) | | (37,929 | ) | | (27,208 | ) |
| Net income | $ | 28,364 |
| | $ | 35,923 |
| | $ | 11,897 |
| | $ | 58,955 |
| | $ | 36,548 |
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| | | | | | | | | | |
| Weighted average common shares outstanding (2): | | | | | | | | | |
| Basic | 115,657 |
| | 80,664 |
| | 106,754 |
| | 101,250 |
| | 80,366 |
|
| Diluted | 117,955 |
| | 84,082 |
| | 111,772 |
| | 106,791 |
| | 84,123 |
|
| | | | | | | | | | |
| Net income per common share (2): | | | | | | | | | |
| Basic | $ | 0.25 |
| | $ | 0.45 |
| | $ | 0.11 |
| | $ | 0.58 |
| | $ | 0.45 |
|
| Diluted | $ | 0.24 |
| | $ | 0.43 |
| | $ | 0.11 |
| | $ | 0.55 |
| | $ | 0.43 |
|
For Footnotes, see Summary Notes to Consolidated Statements and Segment Information.
Boise Inc.
Segment Information
(unaudited, dollars in thousands)
|
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
| | September 30 | | June 30, | | September 30 |
| | 2011 (1) | | 2010 | | 2011 (1) | | 2011 (1) | | 2010 |
| Segment sales | | | | | | | | | |
| Paper | $ | 390,608 |
| | $ | 388,193 |
| | $ | 371,052 |
| | $ | 1,136,840 |
| | $ | 1,105,881 |
|
| Packaging | 251,611 |
| | 177,094 |
| | 243,318 |
| | 698,322 |
| | 491,391 |
|
| Intersegment eliminations and other | (10,477 | ) | | (11,232 | ) | | (11,235 | ) | | (31,522 | ) | | (27,551 | ) |
| | $ | 631,742 |
| | $ | 554,055 |
| | $ | 603,135 |
| | $ | 1,803,640 |
| | $ | 1,569,721 |
|
| | | | | | | | | | |
| Segment income (loss) | | | | | | | | | |
| Paper | $ | 36,137 |
| | $ | 56,884 |
| | $ | 13,150 |
| | $ | 90,257 |
| | $ | 112,535 |
|
| Packaging | 32,039 |
| | 24,758 |
| | 27,494 |
| | 73,159 |
| | 36,093 |
|
| Corporate and Other | (6,026 | ) | | (4,270 | ) | | (6,220 | ) | | (18,578 | ) | | (14,098 | ) |
| | 62,150 |
| | 77,372 |
| | 34,424 |
| | 144,838 |
| | 134,530 |
|
| | | | | | | | | | |
| Loss on extinguishment of debt (4) | — |
| | — |
| | — |
| | — |
| | (22,225 | ) |
| Interest expense | (15,725 | ) | | (16,100 | ) | | (16,072 | ) | | (48,164 | ) | | (48,752 | ) |
| Interest income | 58 |
| | 105 |
| | 74 |
| | 210 |
| | 203 |
|
| Income before income taxes | $ | 46,483 |
| | $ | 61,377 |
| | $ | 18,426 |
| | $ | 96,884 |
| | $ | 63,756 |
|
| | | | | | | | | | |
| EBITDA (5) | | | | | | | | | |
| Paper | 58,608 |
| | 78,787 |
| | 35,513 |
| | 157,143 |
| | 177,605 |
|
| Packaging | 45,083 |
| | 34,357 |
| | 40,343 |
| | 110,025 |
| | 64,967 |
|
| Corporate and Other (4) | (5,167 | ) | | (3,315 | ) | | (5,342 | ) | | (15,892 | ) | | (33,412 | ) |
| | $ | 98,524 |
| | $ | 109,829 |
| | $ | 70,514 |
| | $ | 251,276 |
| | $ | 209,160 |
|
For Footnotes, see Summary Notes to Consolidated Statements and Segment Information.
Boise Inc.
Consolidated Balance Sheets
(unaudited, dollars in thousands)
|
| | | | | | | |
| | September 30, 2011 (1) | | December 31, 2010 |
| ASSETS | | | |
| | | | |
| Current | | | |
| Cash and cash equivalents | $ | 169,628 |
| | $ | 166,833 |
|
| Short-term investments | — |
| | 10,621 |
|
| Receivables | | | |
| Trade, less allowances of $792 and $603 | 236,154 |
| | 188,589 |
|
| Other | 6,976 |
| | 3,839 |
|
| Inventories | 290,397 |
| | 261,471 |
|
| Deferred income taxes | 18,856 |
| | 16,658 |
|
| Prepaid and other | 11,809 |
| | 5,214 |
|
| | 733,820 |
| | 653,225 |
|
| | | | |
| Property | | | |
| Property and equipment, net | 1,208,499 |
| | 1,199,035 |
|
| Fiber farms and deposits | 20,694 |
| | 18,285 |
|
| | 1,229,193 |
| | 1,217,320 |
|
| | | | |
| Deferred financing costs | 26,025 |
| | 30,396 |
|
| Goodwill | 103,242 |
| | — |
|
| Intangible assets, net | 97,316 |
| | 29,605 |
|
| Other assets | 8,240 |
| | 8,444 |
|
| Total assets | $ | 2,197,836 |
| | $ | 1,938,990 |
|
For Footnotes, see Summary Notes to Consolidated Statements and Segment Information.
Boise Inc.
Consolidated Balance Sheets (continued)
(unaudited, dollars and shares in thousands, except per-share data)
|
| | | | | | | |
| | September 30, 2011 (1) | | December 31, 2010 |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | |
| | | | |
| Current | | | |
| Current portion of long-term debt | $ | 103,125 |
| | $ | 43,750 |
|
| Income taxes payable | 129 |
| | 82 |
|
| Accounts payable | 190,607 |
| | 179,214 |
|
| Accrued liabilities | | | |
| Compensation and benefits | 57,999 |
| | 54,574 |
|
| Interest payable | 23,509 |
| | 10,535 |
|
| Other | 23,462 |
| | 16,123 |
|
| | 398,831 |
| | 304,278 |
|
| | | | |
| Debt | | | |
| Long-term debt, less current portion | 647,456 |
| | 738,081 |
|
| | | | |
| Other | | | |
| Deferred income taxes | 155,630 |
| | 88,200 |
|
| Compensation and benefits | 101,718 |
| | 121,318 |
|
| Other long-term liabilities | 51,393 |
| | 40,278 |
|
| | 308,741 |
| | 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; 108,052 shares and 84,845 shares issued and outstanding (2) | 12 |
| | 8 |
|
| Treasury stock, 13,371 shares and none (3) | (76,328 | ) | | — |
|
| Additional paid-in capital (2) (3) | 841,134 |
| | 581,442 |
|
| Accumulated other comprehensive income (loss) | (77,072 | ) | | (78,822 | ) |
| Retained earnings | 155,062 |
| | 144,207 |
|
| Total stockholders’ equity | 842,808 |
| | 646,835 |
|
| | | | |
| Total liabilities and stockholders’ equity | $ | 2,197,836 |
| | $ | 1,938,990 |
|
For Footnotes, see Summary Notes to Consolidated Statements and Segment Information.
Boise Inc.
Consolidated Statements of Cash Flows
(unaudited, dollars in thousands)
|
| | | | | | | |
| | Nine Months Ended |
| | September 30 |
| | 2011 (1) | | 2010 |
| Cash provided by (used for) operations | | | |
| Net income | $ | 58,955 |
| | $ | 36,548 |
|
| Items in net income not using (providing) cash | | | |
| Depreciation, depletion, and amortization of deferred financing costs and other | 111,123 |
| | 102,856 |
|
| Share-based compensation expense | 2,676 |
| | 2,774 |
|
| Pension expense | 8,569 |
| | 7,429 |
|
| Deferred income taxes | 33,806 |
| | 27,196 |
|
| Change in fair value of energy derivatives | (244 | ) | | 1,502 |
|
| Other | 1,317 |
| | (625 | ) |
| Loss on extinguishment of debt | — |
| | 22,225 |
|
| Decrease (increase) in working capital, net of acquisitions | | | |
| Receivables | (17,711 | ) | | 21,725 |
|
| Inventories | (9,998 | ) | | (4,802 | ) |
| Prepaid expenses | (1,301 | ) | | 3,655 |
|
| Accounts payable and accrued liabilities | 10,619 |
| | 13,605 |
|
| Current and deferred income taxes | 1,912 |
| | (543 | ) |
| Pension payments | (25,659 | ) | | (18,463 | ) |
| Other | 1,481 |
| | 208 |
|
| Cash provided by operations | 175,545 |
| | 215,290 |
|
| Cash provided by (used for) investment | | | |
| Acquisition of businesses and facilities, net of cash acquired | (201,289 | ) | | — |
|
| Expenditures for property and equipment | (83,869 | ) | | (66,697 | ) |
| Purchases of short-term investments | (3,494 | ) | | (17,675 | ) |
| Maturities of short-term investments | 14,114 |
| | 17,090 |
|
| Sales of assets | 1,757 |
| | 646 |
|
| Other | (251 | ) | | 1,689 |
|
| Cash used for investment | (273,032 | ) | | (64,947 | ) |
| Cash provided by (used for) financing | | | |
| Issuances of long-term debt | 75,000 |
| | 300,000 |
|
| Payments of long-term debt | (106,250 | ) | | (327,846 | ) |
| Payments of deferred financing costs | (160 | ) | | (11,861 | ) |
| Repurchases of common stock (3) | (76,328 | ) | | — |
|
| Equity yield enhancement program (3) | (25,000 | ) | | — |
|
| Proceeds from exercise of warrants (2) | 284,785 |
| | — |
|
| Payments of special dividend | (47,916 | ) | | — |
|
| Other | (3,849 | ) | | (6,580 | ) |
| Cash provided by (used for) financing | 100,282 |
| | (46,287 | ) |
| Increase in cash and cash equivalents | 2,795 |
| | 104,056 |
|
| Balance at beginning of the period | 166,833 |
| | 69,393 |
|
| Balance at end of the period | $ | 169,628 |
| | $ | 173,449 |
|
For Footnotes, see Summary Notes to Consolidated Statements and Segment Information.
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 September 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 $201.3 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 September 30, 2011, Form 10-Q. |
The consolidated financial statements included herein include Tharco for the period of March 1 through September 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 nine months ended September 30, 2011.
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| 2. | During the nine months ended September 30, 2011, Boise Inc. warrant holders exercised 40.3 million warrants, resulting in the issuance of 38.4 million additional common shares. During 2011, we received cash proceeds of approximately $284.8 million, which increased “Additional paid-in capital” on our Consolidated Balance Sheet at September 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 nine months ended September 30, 2011. |
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| 3. | During third quarter 2011, we announced our intent to repurchase up to $150 million of our common stock through a variety of methods, including in the open market, privately negotiated transactions, or through structured share repurchases. As of September 30, 2011, we repurchased 13.4 million common shares at an average price of $5.71 per share, and as of October 31, 2011, we had repurchased 15.0 million common shares at an average price of $5.65 per share. For the three and nine months ended September 30, 2011, share repurchases decreased weighted average shares included in the basic and diluted net income per share calculation by 4.3 million and 1.4 million, respectively. All shares repurchased are recorded as "Treasury stock" on our Consolidated Balance Sheets and "Repurchases of common stock" on our Consolidated Statements of Cash Flows. |
As part of our $150 million repurchase program, on September 14, 2011, we entered into an equity yield enhancement program that, upon maturity, could result in the repurchase of up to $25 million of our common stock. Under the program, we paid a financial institution $25 million in consideration for the financial institution's obligation to pay us cash or shares of our common stock, depending on the closing market price of our common stock when the agreement expires in December 2011.
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| 4. | The nine months ended September 30, 2010, included $22.2 million of expense related to a loss on the extinguishment of debt. |
| |
| 5. | 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 September 30, 2011 and 2010, the three months ended June 30, 2011, and the nine months ended September 30, 2011 and 2010 (unaudited, dollars in thousands):
|
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
| | September 30 | | June 30, | | September 30 |
| | 2011 | | 2010 | | 2011 | | 2011 | | 2010 |
| Net income | $ | 28,364 |
| | $ | 35,923 |
| | $ | 11,897 |
| | $ | 58,955 |
| | $ | 36,548 |
|
| Interest expense | 15,725 |
| | 16,100 |
| | 16,072 |
| | 48,164 |
| | 48,752 |
|
| Interest income | (58 | ) | | (105 | ) | | (74 | ) | | (210 | ) | | (203 | ) |
| Income tax provision | 18,119 |
| | 25,454 |
| | 6,529 |
| | 37,929 |
| | 27,208 |
|
| Depreciation, amortization, and depletion | 36,374 |
| | 32,457 |
| | 36,090 |
| | 106,438 |
| | 96,855 |
|
| EBITDA | $ | 98,524 |
| | $ | 109,829 |
| | $ | 70,514 |
| | $ | 251,276 |
| | $ | 209,160 |
|
The following table reconciles segment income (loss) and EBITDA to EBITDA excluding special items for the three months ended September 30, 2011 and 2010, the three months ended June 30, 2011, and the nine months ended September 30, 2011 and 2010 (unaudited, dollars in thousands):
|
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
| | September 30 | | June 30, | | September 30 |
| | 2011 | | 2010 | | 2011 | | 2011 | | 2010 |
| Paper | | | | | | | | | |
| Segment income | $ | 36,137 |
| | $ | 56,884 |
| | $ | 13,150 |
| | $ | 90,257 |
| | $ | 112,535 |
|
| Depreciation, amortization, and depletion | 22,471 |
| | 21,903 |
| | 22,363 |
| | 66,886 |
| | 65,070 |
|
| EBITDA | 58,608 |
| | 78,787 |
| | 35,513 |
| | 157,143 |
| | 177,605 |
|
| St. Helens mill restructuring | — |
| | 234 |
| | — |
| | — |
| | (72 | ) |
| Change in fair value of energy hedges | — |
| | 742 |
| | — |
| | — |
| | 1,263 |
|
| EBITDA excluding special items | $ | 58,608 |
| | $ | 79,763 |
| | $ | 35,513 |
| | $ | 157,143 |
| | $ | 178,796 |
|
| | | | | | | | | | |
| Packaging | | | | | | | | | |
| Segment income | $ | 32,039 |
| | $ | 24,758 |
| | $ | 27,494 |
| | $ | 73,159 |
| | $ | 36,093 |
|
| Depreciation, amortization, and depletion | 13,044 |
| | 9,599 |
| | 12,849 |
| | 36,866 |
| | 28,874 |
|
| EBITDA | 45,083 |
| | 34,357 |
| | 40,343 |
| | 110,025 |
| | 64,967 |
|
| Inventory purchase accounting expense | — |
| | — |
| | — |
| | 2,200 |
| | — |
|
| Change in fair value of energy hedges | — |
| | 143 |
| | — |
| | — |
| | 239 |
|
| EBITDA excluding special items | $ | 45,083 |
| | $ | 34,500 |
| | $ | 40,343 |
| | $ | 112,225 |
| | $ | 65,206 |
|
| | | | | | | | | | |
| Corporate and Other | | | | | | | | | |
| Segment loss | $ | (6,026 | ) | | $ | (4,270 | ) | | $ | (6,220 | ) | | $ | (18,578 | ) | | $ | (14,098 | ) |
| Depreciation, amortization, and depletion | 859 |
| | 955 |
| | 878 |
| | 2,686 |
| | 2,911 |
|
| Loss on extinguishment of debt | — |
| | — |
| | — |
| | — |
| | (22,225 | ) |
| EBITDA | (5,167 | ) | | (3,315 | ) | | (5,342 | ) | | (15,892 | ) | | (33,412 | ) |
| Loss on extinguishment of debt | — |
| | — |
| | — |
| | — |
| | 22,225 |
|
| EBITDA excluding special items | (5,167 | ) | | (3,315 | ) | | (5,342 | ) | | (15,892 | ) | | (11,187 | ) |
| | | | | | | | | | |
| EBITDA | $ | 98,524 |
| | $ | 109,829 |
| | $ | 70,514 |
| | $ | 251,276 |
| | $ | 209,160 |
|
| | | | | | | | | | |
| EBITDA excluding special items | $ | 98,524 |
| | $ | 110,948 |
| | $ | 70,514 |
| | $ | 253,476 |
| | $ | 232,815 |
|
| | | | | | | | | | |
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 September 30, 2011 and 2010, the three months ended June 30, 2011, and the nine months ended September 30, 2011 and 2010 (unaudited, dollars and shares in thousands):
|
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
| | September 30 | | June 30, | | September 30 |
| | 2011 | | 2010 | | 2011 | | 2011 | | 2010 |
| Net income | $ | 28,364 |
| | $ | 35,923 |
| | $ | 11,897 |
| | $ | 58,955 |
| | $ | 36,548 |
|
| Inventory purchase accounting expense | — |
| | — |
| | — |
| | 2,200 |
| | — |
|
| Change in fair value of energy hedges | — |
| | 885 |
| | — |
| | — |
| | 1,502 |
|
| St. Helens mill restructuring | — |
| | 234 |
| | — |
| | — |
| | (72 | ) |
| Loss on extinguishment of debt | — |
| | — |
| | — |
| | — |
| | 22,225 |
|
| Tax provision for special items (a) | — |
| | (433 | ) | | — |
| | (851 | ) | | (9,154 | ) |
| Net income excluding special items | $ | 28,364 |
| | $ | 36,609 |
| | $ | 11,897 |
| | $ | 60,304 |
| | $ | 51,049 |
|
| | | | | | | | | | |
| Weighted average common shares outstanding: diluted (b) | 117,955 |
| | 84,082 |
| | 111,772 |
| | 106,791 |
| | 84,123 |
|
| Net income excluding special items per diluted share (b) | $ | 0.24 |
| | $ | 0.44 |
| | $ | 0.11 |
| | $ | 0.56 |
| | $ | 0.61 |
|
____________
| |
| (a) | Special items are tax effected in the aggregate at an assumed combined federal and state statutory rate in effect for the period. |
| |
| (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. |
During third quarter 2011, we announced our intent to repurchase up to $150 million of our outstanding common stock. As of September 30, 2011, we had repurchased 13.4 million of our common shares at an average price of $5.71 per share. For the three and nine months ended September 30, 2011, share repurchases decreased the weighted average shares included in the basic and diluted net income per share calculation by 4.3 million and 1.4 million, respectively.
The following table reconciles total debt to net total debt as of September 30, 2011 and 2010, and June 30, 2011 (unaudited, dollars in thousands):
|
| | | | | | | | | | | |
| | September 30 | | June 30, |
| | 2011 | | 2010 | | 2011 |
| Current portion of long-term debt | $ | 103,125 |
| | $ | 37,500 |
| | $ | 76,563 |
|
| Long-term debt, less current portion | 647,456 |
| | 750,581 |
| | 686,518 |
|
| Total debt | 750,581 |
| | 788,081 |
| | 763,081 |
|
| Less cash and cash equivalents and short-term investments | (169,628 | ) | | (184,063 | ) | | (236,263 | ) |
| Net total debt | $ | 580,953 |
| | $ | 604,018 |
| | $ | 526,818 |
|
| | | | | | |
