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
|
| |
| News Release | For Immediate Release: August 2, 2012 |
| | |
| Media Contact | Investor Relations Contact |
| Virginia Aulin - 208 384 7837 | Greg Jones - 208 384 7141 |
| | |
Boise Inc. Reports Financial Results for Second Quarter 2012
BOISE, Idaho - Boise Inc. (NYSE: BZ) today reported net income of $13.7 million, or $0.14 per diluted share, for second quarter 2012, compared with net income of $11.9 million, or $0.11 per diluted share, for the same period in 2011. EBITDA was $75.1 million for second quarter 2012, compared with $70.5 million for second quarter 2011.
"Our businesses performed well in second quarter 2012. Total sales grew 6% and net income grew 15% over second quarter 2011. These results were driven by record quarterly sales from our packaging business and improved earnings in our paper business. Additionally, we efficiently and safely worked through annual maintenance outages at three of our mills during the quarter," said Alexander Toeldte, president and chief executive officer.
"We continue to integrate Tharco and Hexacomb into our packaging business, increasing our vertical integration. In our paper business, increased sales volumes of label and release papers offset secular declines in communication papers," said Mr. Toeldte.
"As we look ahead to third quarter, we anticipate improved selling prices, moderately increasing chemical and energy costs, and lower annual outage costs. We continue to focus on building shareholder value through well-performing operations, disciplined capital allocation, and growth."
|
| | | | | | | | | | | | | |
| | | |
| | Second Quarter Highlights | |
| | | |
| | Ÿ Overall sales of $637.8 million, up 6% from second quarter 2011 | |
| | | |
| | Ÿ Net income of $13.7 million, up 15% from second quarter 2011 | |
| | | |
| | Ÿ EBITDA of $75.1 million, up 7% from second quarter 2011 | |
| | | |
| | Ÿ Record sales in Packaging segment of $284.8 million, up 17% from second quarter 2011 | |
| | | |
| | Financial Highlights | |
| | (in millions, except per-share data) | |
| | | | | | | | |
| | | 2Q 2012 | | 2Q 2011 | | 1Q 2012 | |
| | Sales | $ | 637.8 |
| | $ | 603.1 |
| | $ | 644.8 |
| |
| | Net income | $ | 13.7 |
| | $ | 11.9 |
| | $ | 21.3 |
| |
| | Net income per diluted share | $ | 0.14 |
| | $ | 0.11 |
| | $ | 0.21 |
| |
| | Weighted average diluted shares outstanding | 101.0 |
| | 111.8 |
| | 101.4 |
| |
| | EBITDA (1) | $ | 75.1 |
| | $ | 70.5 |
| | $ | 87.4 |
| |
| | | | | | | | |
| | (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 2012 were $284.8 million, an increase of $41.5 million, or 17%, compared with second quarter 2011. The acquisition of Hexacomb on December 1, 2011, increased our corrugated product sales volumes, compared with the prior period. Additionally, corrugated sales volumes for our other operations also increased. During the quarter, we continued to increase our vertical integration as a result of our acquisitions of Tharco and Hexacomb, successfully reducing our exposure to linerboard export markets, which experienced a significant decline in selling prices, compared with the prior-year quarter. In second quarter 2012, we sold 31% less linerboard to external markets, compared with the same quarter a year ago. Packaging segment sales for second quarter 2012 were up 5%, compared with first quarter 2012, a result of higher corrugated product and newsprint sales volumes and higher net selling prices of linerboard. In July, we announced a $50-per-short-ton increase on linerboard sales. Due to our increased vertical integration, we expect to recognize most of the benefits of the price increase in the fourth quarter.
Packaging segment EBITDA was $40.0 million for second quarter 2012, flat compared with $40.3 million for the same period last year. Compared with second quarter 2011, the benefits from higher corrugated sales volumes and lower energy costs were offset by higher annual maintenance outage costs and increased chemical costs. In 2011, our maintenance outage occurred in first quarter, while in 2012 the majority of the outage occurred in second quarter. This also resulted in reduced linerboard available for external sales. Packaging segment EBITDA increased $2.1 million in second quarter 2012, or 5%, compared with first quarter 2012, due primarily to lower fiber and energy costs, offset by increased maintenance outage costs.
Paper Segment
Paper segment sales for second quarter 2012 were $363.3 million, a decrease of $7.8 million, or 2%, compared with second quarter 2011, due to decreased net selling prices and volumes of market pulp. Net selling prices of uncoated freesheet decreased slightly and volumes remained flat, compared with second quarter 2011. Paper segment sales decreased $19.1 million, or 5%, compared with first quarter 2012, due to decreased volumes and prices of uncoated freesheet.
Paper segment EBITDA was $40.9 million for second quarter 2012, an increase of $5.4 million, or 15%, compared with second quarter 2011. Lower natural gas prices and lower fiber costs were offset partially by the effect of weak market pulp sales and higher chemical input costs. Paper segment EBITDA for second quarter 2012 decreased $14.3 million from first quarter 2012 as a result of maintenance outage costs and decreased sales volumes of uncoated freesheet, offset by lower energy costs.
Other
Selling and distribution costs were $30.6 million in second quarter 2012, an increase of $1.1 million, compared with second quarter 2011. Selling and distribution costs were flat from $30.6 million in first quarter 2012. General and administrative expenses were $20.0 million in second quarter 2012, an increase of $5.4 million, compared with $14.6 million in second quarter 2011, and flat from $20.0 million in first quarter 2012. The increase compared with the prior-year quarter is due primarily to Hexacomb, which was acquired in December 2011.
Webcast and Conference Call
Boise Inc. will host a webcast and conference call on Thursday, August 2, 2012, 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 two weeks 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 2, 2012, at 2:00 p.m. ET through August 22, 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 is10077042.
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. 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.
Segment Highlights
(unaudited, dollars in millions)
|
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30 | | March 31, | | June 30 |
| | 2012 | | 2011 | | 2012 | | 2012 | | 2011 |
| Packaging | | | | | | | | | |
| Sales volumes (thousands of short tons, except corrugated) | | | | | | | | | |
| Linerboard, Total | 146.0 |
| | 154.2 |
| | 152.6 |
| | 298.6 |
| | 292.0 |
|
| Linerboard, External sales | 38.2 |
| | 55.5 |
| | 53.0 |
| | 91.1 |
| | 117.4 |
|
| Newsprint | 58.3 |
| | 59.7 |
| | 54.8 |
| | 113.0 |
| | 114.3 |
|
| Corrugated containers and sheets (mmsf) (a) | 2,485 |
| | 2,228 |
| | 2,433 |
| | 4,918 |
| | 4,139 |
|
| Input costs | | | | | | | | | |
| Fiber, including purchased rollstock | $ | 39.2 |
| | $ | 42.9 |
| | $ | 54.5 |
| | $ | 93.7 |
| | $ | 73.2 |
|
| Energy | 13.4 |
| | 16.9 |
| | 15.0 |
| | 28.4 |
| | 33.7 |
|
| Chemicals | 10.4 |
| | 8.5 |
| | 10.2 |
| | 20.6 |
| | 17.8 |
|
| Total input costs | 63.0 |
| | 68.3 |
| | 79.6 |
| | 142.7 |
| | 124.7 |
|
| Outage costs | 5.9 |
| | 3.4 |
| | 1.8 |
| | 7.7 |
| | 9.9 |
|
| EBITDA | 40.0 |
| | 40.3 |
| | 37.9 |
| | 77.9 |
| | 64.9 |
|
| EBITDA excluding special items (b) | 40.0 |
| | 40.3 |
| | 37.9 |
| | 77.9 |
| | 67.1 |
|
| Assets | 943.5 |
| | 755.1 |
| | 932.0 |
| | | | |
| Paper | | | | | | | | | |
| Sales volumes (thousands of short tons) | | | | | | | | | |
| Uncoated freesheet (c) | 312.5 |
| | 312.7 |
| | 325.1 |
| | 637.6 |
| | 623.6 |
|
| Corrugating medium | 34.2 |
| | 34.1 |
| | 32.5 |
| | 66.7 |
| | 66.8 |
|
| Market pulp | 10.3 |
| | 16.6 |
| | 8.5 |
| | 18.8 |
| | 38.5 |
|
| Input costs | | | | | | | | | |
| Fiber | $ | 88.0 |
| | $ | 94.7 |
| | $ | 91.5 |
| | $ | 179.6 |
| | $ | 180.7 |
|
| Energy | 32.2 |
| | 35.8 |
| | 35.0 |
| | 67.2 |
| | 71.8 |
|
| Chemicals | 53.1 |
| | 48.1 |
| | 53.3 |
| | 106.4 |
| | 93.1 |
|
| Total input costs | 173.3 |
| | 178.7 |
| | 179.9 |
| | 353.2 |
| | 345.6 |
|
| Outage costs | 9.8 |
| | 13.7 |
| | — |
| | 9.8 |
| | 13.7 |
|
| EBITDA and EBITDA excluding special items (b) | 40.9 |
| | 35.5 |
| | 55.2 |
| | 96.0 |
| | 98.5 |
|
| Assets | 1,198.3 |
| | 1,190.6 |
| | 1,207.6 |
| | | | |
|
| | | | | | | | | | | |
| | 2Q 2012 vs. 2Q 2011 | | 2Q 2012 vs. 1Q 2012 | | YTD 2012 vs. YTD 2011 |
| Packaging | | | | | |
| Change in net sales prices (dollars per short ton, except corrugated): | | | | | |
| Linerboard, Total | $ | (10 | ) | | $ | 3 |
| | $ | (6 | ) |
| Linerboard, External sales | (21 | ) | | 6 |
| | (25 | ) |
| Newsprint | 2 |
| | 2 |
| | — |
|
| Corrugated containers and sheets ($/msf) (a) | (5 | ) | | — |
| | (2 | ) |
| Paper | | | | | |
| Change in net sales prices (dollars per short ton): | | | | | |
| Uncoated freesheet (c) | $ | (4 | ) | | $ | (4 | ) | | $ | (9 | ) |
| Corrugating medium | (6 | ) | | (1 | ) | | 4 |
|
| Market pulp | (150 | ) | | 4 |
| | (136 | ) |
____________
(a) Includes corrugated container and sheet volumes for Tharco and protective packaging product volumes for Hexacomb since the acquisitions on March 1 and December 1, 2011, respectively.
(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.
Boise Inc.
Consolidated Statements of Income
(unaudited, dollars and shares in thousands, except per-share data)
|
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30 | | March 31, | | June 30 |
| | 2012 | | 2011 | | 2012 | | 2012 | | 2011 |
| Sales | | | | | | | | | |
| Trade | $ | 618,585 |
| | $ | 592,784 |
| | $ | 633,528 |
| | $ | 1,252,113 |
| | $ | 1,153,104 |
|
| Related parties | 19,255 |
| | 10,351 |
| | 11,318 |
| | 30,573 |
| | 18,794 |
|
| | 637,840 |
| | 603,135 |
| | 644,846 |
| | 1,282,686 |
| | 1,171,898 |
|
| | | | | | | | | | |
| Costs and expenses | | | | | | | | | |
| Materials, labor, and other operating expenses (1) | 507,343 |
| | 485,001 |
| | 502,299 |
| | 1,009,642 |
| | 934,071 |
|
| Fiber costs from related parties | 4,466 |
| | 4,383 |
| | 4,946 |
| | 9,412 |
| | 8,823 |
|
| Depreciation, amortization, and depletion | 37,303 |
| | 36,090 |
| | 37,556 |
| | 74,859 |
| | 70,064 |
|
| Selling and distribution expenses | 30,568 |
| | 29,483 |
| | 30,642 |
| | 61,210 |
| | 48,856 |
|
| General and administrative expenses | 20,035 |
| | 14,622 |
| | 20,008 |
| | 40,043 |
| | 27,319 |
|
| Other (income) expense, net | 381 |
| | (813 | ) | | (300 | ) | | 81 |
| | 264 |
|
| | 600,096 |
| | 568,766 |
| | 595,151 |
| | 1,195,247 |
| | 1,089,397 |
|
| | | | | | | | | | |
| Income from operations | 37,744 |
| | 34,369 |
| | 49,695 |
| | 87,439 |
| | 82,501 |
|
| | | | | | | | | | |
| Foreign exchange gain | 102 |
| | 55 |
| | 157 |
| | 259 |
| | 187 |
|
| Interest expense | (15,433 | ) | | (16,072 | ) | | (15,365 | ) | | (30,798 | ) | | (32,439 | ) |
| Interest income | 54 |
| | 74 |
| | 44 |
| | 98 |
| | 152 |
|
| | (15,277 | ) | | (15,943 | ) | | (15,164 | ) | | (30,441 | ) | | (32,100 | ) |
| | | | | | | | | | |
| Income before income taxes | 22,467 |
| | 18,426 |
| | 34,531 |
| | 56,998 |
| | 50,401 |
|
| Income tax provision | (8,805 | ) | | (6,529 | ) | | (13,193 | ) | | (21,998 | ) | | (19,810 | ) |
| Net income | $ | 13,662 |
| | $ | 11,897 |
| | $ | 21,338 |
| | $ | 35,000 |
| | $ | 30,591 |
|
| | | | | | | | | | |
| Weighted average common shares outstanding (2): | | | | | | | | | |
| Basic | 100,116 |
| | 106,754 |
| | 99,052 |
| | 99,584 |
| | 93,928 |
|
| Diluted | 101,008 |
| | 111,772 |
| | 101,414 |
| | 101,182 |
| | 101,117 |
|
| | | | | | | | | | |
| Net income per common share (2): | | | | | | | | | |
| Basic | $ | 0.14 |
| | $ | 0.11 |
| | $ | 0.22 |
| | $ | 0.35 |
| | $ | 0.33 |
|
| Diluted | $ | 0.14 |
| | $ | 0.11 |
| | $ | 0.21 |
| | $ | 0.35 |
| | $ | 0.30 |
|
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 |
| | 2012 | | 2011 | | 2012 | | 2012 | | 2011 |
| Segment sales | | | | | | | | | |
| Packaging | $ | 284,772 |
| | $ | 243,318 |
| | $ | 272,293 |
| | $ | 557,065 |
| | $ | 446,711 |
|
| Paper | 363,258 |
| | 371,052 |
| | 382,432 |
| | 745,690 |
| | 746,232 |
|
| Intersegment eliminations and other | (10,190 | ) | | (11,235 | ) | | (9,879 | ) | | (20,069 | ) | | (21,045 | ) |
| | $ | 637,840 |
| | $ | 603,135 |
| | $ | 644,846 |
| | $ | 1,282,686 |
| | $ | 1,171,898 |
|
| | | | | | | | | | |
| Segment income (loss) | | | | | | | | | |
| Packaging (1) | $ | 24,846 |
| | $ | 27,494 |
| | $ | 22,435 |
| | $ | 47,281 |
| | $ | 41,120 |
|
| Paper | 19,575 |
| | 13,150 |
| | 33,949 |
| | 53,524 |
| | 54,120 |
|
| Corporate and Other | (6,575 | ) | | (6,220 | ) | | (6,532 | ) | | (13,107 | ) | | (12,552 | ) |
| | 37,846 |
| | 34,424 |
| | 49,852 |
| | 87,698 |
| | 82,688 |
|
| | | | | | | | | | |
| Interest expense | (15,433 | ) | | (16,072 | ) | | (15,365 | ) | | (30,798 | ) | | (32,439 | ) |
| Interest income | 54 |
| | 74 |
| | 44 |
| | 98 |
| | 152 |
|
| Income before income taxes | $ | 22,467 |
| | $ | 18,426 |
| | $ | 34,531 |
| | $ | 56,998 |
| | $ | 50,401 |
|
| | | | | | | | | | |
| EBITDA (4) | | | | | | | | | |
| Packaging (1) | $ | 39,995 |
| | $ | 40,343 |
| | $ | 37,920 |
| | $ | 77,915 |
| | $ | 64,942 |
|
| Paper | 40,880 |
| | 35,513 |
| | 55,164 |
| | 96,044 |
| | 98,535 |
|
| Corporate and Other | (5,726 | ) | | (5,342 | ) | | (5,676 | ) | | (11,402 | ) | | (10,725 | ) |
| | $ | 75,149 |
| | $ | 70,514 |
| | $ | 87,408 |
| | $ | 162,557 |
| | $ | 152,752 |
|
For Footnotes, see Summary Notes to Consolidated Financial Statements and Segment Information.
Boise Inc.
Consolidated Balance Sheets
(unaudited, dollars in thousands)
|
| | | | | | | |
| | June 30, 2012 | | December 31, 2011 |
| ASSETS | | | |
| | | | |
| Current | | | |
| Cash and cash equivalents (3) | $ | 59,502 |
| | $ | 96,996 |
|
| Receivables | | | |
| Trade, less allowances of $1,091 and $1,343 | 240,157 |
| | 228,838 |
|
| Other | 8,033 |
| | 7,622 |
|
| Inventories | 327,259 |
| | 307,305 |
|
| Deferred income taxes | 6,928 |
| | 20,379 |
|
| Prepaid and other | 14,314 |
| | 6,944 |
|
| | 656,193 |
| | 668,084 |
|
| | | | |
| Property | | | |
| Property and equipment, net | 1,223,631 |
| | 1,235,269 |
|
| Fiber farms | 22,331 |
| | 21,193 |
|
| | 1,245,962 |
| | 1,256,462 |
|
| | | | |
| Deferred financing costs | 28,940 |
| | 30,956 |
|
| Goodwill | 160,555 |
| | 161,691 |
|
| Intangible assets, net | 152,634 |
| | 159,120 |
|
| Other assets | 8,188 |
| | 9,757 |
|
| Total assets | $ | 2,252,472 |
| | $ | 2,286,070 |
|
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, 2012 | | December 31, 2011 |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | |
| | | | |
| Current | | | |
| Current portion of long-term debt | $ | 15,000 |
| | $ | 10,000 |
|
| Income taxes payable | 825 |
| | 590 |
|
| Accounts payable | 197,339 |
| | 201,994 |
|
| Accrued liabilities | | | |
| Compensation and benefits | 57,402 |
| | 64,907 |
|
| Interest payable | 10,540 |
| | 10,528 |
|
| Other | 25,847 |
| | 22,540 |
|
| | 306,953 |
| | 310,559 |
|
| | | | |
| Debt | | | |
| Long-term debt, less current portion | 780,000 |
| | 790,000 |
|
| | | | |
| Other | | | |
| Deferred income taxes | 172,273 |
| | 161,260 |
|
| Compensation and benefits | 156,107 |
| | 172,394 |
|
| Other long-term liabilities | 54,515 |
| | 57,010 |
|
| | 382,895 |
| | 390,664 |
|
| | | | |
| 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; 100,487 shares and 100,272 shares issued and outstanding | 12 |
| | 12 |
|
| Treasury stock, 21,151 shares held | (121,423 | ) | | (121,421 | ) |
| Additional paid-in capital | 865,206 |
| | 866,901 |
|
| Accumulated other comprehensive income (loss) | (119,549 | ) | | (121,962 | ) |
| Retained earnings (3) | 158,378 |
| | 171,317 |
|
| Total stockholders’ equity | 782,624 |
| | 794,847 |
|
| | | | |
| Total liabilities and stockholders’ equity | $ | 2,252,472 |
| | $ | 2,286,070 |
|
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 |
| | 2012 | | 2011 |
| Cash provided by (used for) operations | | | |
| Net income | $ | 35,000 |
| | $ | 30,591 |
|
| Items in net income not using (providing) cash | | | |
| Depreciation, depletion, and amortization of deferred financing costs and other | 77,190 |
| | 73,188 |
|
| Share-based compensation expense | 2,729 |
| | 1,771 |
|
| Pension expense | 5,474 |
| | 5,875 |
|
| Deferred income taxes | 12,610 |
| | 17,182 |
|
| Other | (43 | ) | | 298 |
|
| Decrease (increase) in working capital, net of acquisitions | | | |
| Receivables | (12,050 | ) | | (11,060 | ) |
| Inventories | (20,224 | ) | | 8,640 |
|
| Prepaid expenses | (4,869 | ) | | (3,326 | ) |
| Accounts payable and accrued liabilities | (14,061 | ) | | (4,505 | ) |
| Current and deferred income taxes | 7,452 |
| | 690 |
|
| Pension payments | (18,191 | ) | | (25,291 | ) |
| Other | 2,110 |
| | 2,049 |
|
| Cash provided by operations | 73,127 |
| | 96,102 |
|
| Cash provided by (used for) investment | | | |
| Acquisition of businesses and facilities, net of cash acquired | — |
| | (200,832 | ) |
| Expenditures for property and equipment | (52,457 | ) | | (53,737 | ) |
| Purchases of short-term investments | — |
| | (3,494 | ) |
| Maturities of short-term investments | — |
| | 14,114 |
|
| Other | 586 |
| | 1,318 |
|
| Cash used for investment | (51,871 | ) | | (242,631 | ) |
| Cash provided by (used for) financing | | | |
| Payments of special dividend (3) | (47,483 | ) | | (47,916 | ) |
| Issuances of long-term debt | — |
| | 75,000 |
|
| Payments of long-term debt | (5,000 | ) | | (93,750 | ) |
| Proceeds from exercise of warrants (2) | — |
| | 284,785 |
|
| Other | (6,267 | ) | | (2,160 | ) |
| Cash provided by (used for) financing | (58,750 | ) | | 215,959 |
|
| Increase (decrease) in cash and cash equivalents | (37,494 | ) | | 69,430 |
|
| Balance at beginning of the period | 96,996 |
| | 166,833 |
|
| Balance at end of the period | $ | 59,502 |
| | $ | 236,263 |
|
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 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 2011 Annual Report on Form 10-K and the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2012, as well as other reports the Company files with the SEC. Net income for all periods presented involved estimates and accruals.
On March 1 and December 1, 2011, we completed the acquisitions of Tharco Packaging (Tharco) and Hexacomb Corporation (Hexacomb), respectively. Total cash consideration was $200 million and $125
million, respectively, subject to post-closing adjustments. Financial results for Tharco and Hexacomb are included in our Packaging segment from their acquisition dates forward.
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| 1. | In connection with the Tharco purchase price allocation, inventories were written up to their estimated fair market value. As the related inventories were sold, we recognized $2.2 million of expense in "Materials, labor, and other operating expenses" in our Consolidated Statement of Income for the six months ended June 30, 2011. |
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| 2. | During the six months ended June 30, 2011, warrant holders exercised their warrants, resulting in the issuance of 38.4 million common shares and cash proceeds of $284.8 million. We repurchased 21.2 million common shares in the second half of 2011. |
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| 3. | During the six months ended June 30, 2012 and 2011, we paid special cash dividends of $47.5 million and $47.9 million, respectively. |
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| 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 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 and six months ended June 30, 2012 and 2011, and the three months ended March 31, 2012 (unaudited, dollars in thousands): |
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30 | | March 31, | | June 30 |
| | 2012 | | 2011 | | 2012 | | 2012 | | 2011 |
| Net income | $ | 13,662 |
| | $ | 11,897 |
| | $ | 21,338 |
| | $ | 35,000 |
| | $ | 30,591 |
|
| Interest expense | 15,433 |
| | 16,072 |
| | 15,365 |
| | 30,798 |
| | 32,439 |
|
| Interest income | (54 | ) | | (74 | ) | | (44 | ) | | (98 | ) | | (152 | ) |
| Income tax provision | 8,805 |
| | 6,529 |
| | 13,193 |
| | 21,998 |
| | 19,810 |
|
| Depreciation, amortization, and depletion | 37,303 |
| | 36,090 |
| | 37,556 |
| | 74,859 |
| | 70,064 |
|
| EBITDA | $ | 75,149 |
| | $ | 70,514 |
| | $ | 87,408 |
| | $ | 162,557 |
| | $ | 152,752 |
|
The following table reconciles segment income (loss) and EBITDA to EBITDA excluding special items for the three and six months ended June 30, 2012 and 2011, and the three months ended March 31, 2012 (unaudited, dollars in thousands):
|
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30 | | March 31, | | June 30 |
| | 2012 | | 2011 | | 2012 | | 2012 | | 2011 |
| Packaging | | | �� | | | | | | |
| Segment income | $ | 24,846 |
| | $ | 27,494 |
| | $ | 22,435 |
| | $ | 47,281 |
| | $ | 41,120 |
|
| Depreciation, amortization, and depletion | 15,149 |
| | 12,849 |
| | 15,485 |
| | 30,634 |
| | 23,822 |
|
| EBITDA | $ | 39,995 |
| | $ | 40,343 |
| | $ | 37,920 |
| | $ | 77,915 |
| | $ | 64,942 |
|
| Inventory purchase accounting expense | — |
| | — |
| | — |
| | — |
| | 2,200 |
|
| EBITDA excluding special items | $ | 39,995 |
| | $ | 40,343 |
| | $ | 37,920 |
| | $ | 77,915 |
| | $ | 67,142 |
|
| | | | | | | | | | |
| Paper | | | | | | | | | |
| Segment income | $ | 19,575 |
| | $ | 13,150 |
| | $ | 33,949 |
| | $ | 53,524 |
| | $ | 54,120 |
|
| Depreciation, amortization, and depletion | 21,305 |
| | 22,363 |
| | 21,215 |
| | 42,520 |
| | 44,415 |
|
| EBITDA and EBITDA excluding special items | $ | 40,880 |
| | $ | 35,513 |
| | $ | 55,164 |
| | $ | 96,044 |
| | $ | 98,535 |
|
| | | | | | | | | | |
| Corporate and Other | | | | | | | | | |
| Segment loss | $ | (6,575 | ) | | $ | (6,220 | ) | | $ | (6,532 | ) | | $ | (13,107 | ) | | $ | (12,552 | ) |
| Depreciation, amortization, and depletion | 849 |
| | 878 |
| | 856 |
| | 1,705 |
| | 1,827 |
|
| EBITDA and EBITDA excluding special items | $ | (5,726 | ) | | $ | (5,342 | ) | | $ | (5,676 | ) | | $ | (11,402 | ) | | $ | (10,725 | ) |
| | | | | | | | | | |
| EBITDA | $ | 75,149 |
| | $ | 70,514 |
| | $ | 87,408 |
| | $ | 162,557 |
| | $ | 152,752 |
|
| | | | | | | | | | |
| EBITDA excluding special items | $ | 75,149 |
| | $ | 70,514 |
| | $ | 87,408 |
| | $ | 162,557 |
| | $ | 154,952 |
|
The following table reconciles net income to net income excluding special items and presents net income excluding special items per diluted share for the three and six months ended June 30, 2012 and 2011, and the three months ended March 31, 2012 (unaudited, dollars and shares in thousands, except per-share data):
|
| | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30 | | March 31, | | June 30 |
| | 2012 | | 2011 | | 2012 | | 2012 | | 2011 |
| Net income | $ | 13,662 |
| | $ | 11,897 |
| | $ | 21,338 |
| | $ | 35,000 |
| | $ | 30,591 |
|
| Inventory purchase accounting expense | — |
| | — |
| | — |
| | — |
| | 2,200 |
|
| Tax provision for special items (a) | — |
| | — |
| | — |
| | — |
| | (851 | ) |
| Net income excluding special items | $ | 13,662 |
| | $ | 11,897 |
| | $ | 21,338 |
| | $ | 35,000 |
| | $ | 31,940 |
|
| | | | | | | | | | |
| Weighted average diluted shares outstanding: | 101,008 |
| | 111,772 |
| | 101,414 |
| | 101,182 |
| | 101,117 |
|
| Net income per diluted share excluding special items | $ | 0.14 |
| | $ | 0.11 |
| | $ | 0.21 |
| | $ | 0.35 |
| | $ | 0.32 |
|
____________
(a)Taxes are applied to special items in the aggregate at the combined federal and state statutory rate in effect for the period.
The following table reconciles cash provided by operations to free cash flow for the six months ended June 30, 2012 and 2011 (unaudited, dollars in thousands):
|
| | | | | | | |
| | Six Months Ended
June 30 |
| | 2012 | | 2011 |
| Cash provided by operations | $ | 73,127 |
| | $ | 96,102 |
|
| Expenditures for property and equipment | (52,457 | ) | | (53,737 | ) |
| Free cash flow | $ | 20,670 |
| | $ | 42,365 |
|
