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The
fiber
of every day
2013 ANNUAL REPORT
Domstar
The fiber of every day
Creating useful, everyday products is what we do at Domtar. As a fiber-based consumer products company, we are woven into the lives of millions of people around the world. Our paper is everywhere, from a doctors handwritten prescription to a grocery store receipt, from a favorite book to a hospital gown. So is our range of absorbent hygiene products, from baby diapers to solutions that bring autonomy to adults dealing with incontinence. With all our products, we are truly delivering the fiber of every day and there is much more to come. Domtars transformation from papermaker to fiber innovator gained pace in 2013. Through acquisitions, the continued repurposing of existing assets, and other initiatives, we ended the year with strengthened earnings potential for the long term. As a result of the progress we made in 2013, the Domtar growth story is set firmly on its path.
John D. Williams
President and
Chief Executive Officer
1 | ||
Message to Shareholders | ||
A growing Personal Care business
We continued the growth momentum for Domtar Personal Care in 2013 with two additional acquisitions. Associated Hygienic Products (AHP) is a leading store-brand manufacturer of infant diapers in the United States, and now that it is part of Domtar, our product range and market reach have taken a significant step forward. The early 2014 acquisition of Spains largest branded adult incontinence (AI) products manufacturer, Indas, combined with the Attends Europe purchase in 2012, gives us the critical mass to build a truly pan-European business in this growing market segment.
With five acquisitions in just over two years, and capital investments in additional manufacturing capacity to drive organic growth, we are on track to reach our stated objective of $300500 million in EBITDA from growth businesses by 2017. An important element of this strategy will be realized through innovations that will maintain Domtars absorbent hygiene products at the forefront of the industry. To this end, our 2012 acquisition of EAM brought significant capabilities and technologies that will further enhance Domtars competitiveness into the future.
A high-performing Pulp and Paper business
Our high-performing Pulp and Paper business continues to be our central value proposition and we expect it to remain so for years to come. This core business is a strong cash flow generator and we continue to make disciplined strategic investments with a view toward improving our product mix by increasing the proportion of paper grades and market niches that are growing.
The 2013 completion of the repurposing of our Marlboro, South Carolina mill from commodity to specialty paper is a case in point. Specialty and packaging products now account for 15% of Domtars total paper sales. |
| |
Message to Shareholders | ||
3 | ||
Domtar at a Glance | ||||||
Domtar Corporation (NYSE: UFS)
(TSX: UFS) designs, |
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1 | Non-GAAP financial measure. Consult the
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5 | ||
Selected Financial Figures | ||||||||||||
(in millions of dollars unless otherwise noted)
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2011 | 2012 | 2013 | |||||||||
| ||||||||||||
Sales per segment | ||||||||||||
Pulp and Paper |
5,542 | 5,088 | 4,843 | |||||||||
Intersegment sales Pulp and Paper |
(1) | (5) | (18) | |||||||||
Personal Care |
71 | 399 | 566 | |||||||||
| ||||||||||||
Consolidated sales | 5,612 | 5,482 | 5,391 | |||||||||
Operating income (loss) per segment |
||||||||||||
Pulp and Paper |
581 | 330 | 171 | |||||||||
Personal Care |
7 | 45 | 43 | |||||||||
Corporate |
4 | (8) | (53) | |||||||||
| ||||||||||||
Operating income | 592 | 367 | 161 | |||||||||
Net earnings |
365 | 172 | 91 | |||||||||
Cash flow provided from operating activities |
883 | 551 | 411 | |||||||||
Capital expenditures |
144 | 236 | 242 | |||||||||
Free cash flow |
739 | 315 | 169 | |||||||||
Total assets |
5,869 | 6,123 | 6,278 | |||||||||
Long-term debt, including current portion |
841 | 1,207 | 1,514 | |||||||||
Net debt-to-total capitalization ratio |
12% | 16% | 24% | |||||||||
Total shareholders equity |
2,972 | 2,877 | 2,782 | |||||||||
Weighted average number of common and exchangeable shares outstanding in millions (diluted) |
40.2 | 36.1 | 33.4 | |||||||||
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1 | Includes the acquisition of Indas, completed January 2, 2014. |
Pulp and Paper
7 | ||
Acquired Xerox North American paper and media products business
$147 million OF CAPITAL INVESTMENT IN OUR PULP AND PAPER MILLS
Commercial scale lignin removal plant inaugurated at the Plymouth, North Carolina mill, to produce Domtar BioChoiceTM, a bio-based alternative to fossil fuel additives across a wide range of industrial applications
3rd year without a lost-time injury at our Addison, Illinois converting and distribution facility
15% of our paper sales were specialty and packaging grades
Some 500,000 miles of annual truck traffic eliminated by installing a conveyor system at the Hawesville, Kentucky mill
Some 8,000 employees in our pulp and paper business
BEST YEAR ever in safety performance with a TFR1 OF 0.95
960,400
tons of EarthChoice paper sold
No recordable incidents at the Marlboro, South Carolina mill in 2013
16th year without a lost-time injury at our Rock Hill, South Carolina converting and distribution facility
Start-up of biomass cogeneration plant with We Energies at the Rothschild, Wisconsin mill
Announced agreement to sell the former Ottawa/Gatineau mill site
EBITDA before items2 of $582 million
HIGHLIGHTS DIVISION
50+ countries are end markets for our pulp and paper products
1 Total Frequency Rate: number of recordable incidents per 100 employees
2 Non-GAAP financial measure. Consult the Reconciliation of Non-GAAP Financial Measures at the end of this document or at www.domtar.com
Personal
Care
11 | ||
Our Personal Care business encompasses the design, manufacture, marketing, and distribution of adult incontinence (AI) products, infant diapers, and other absorbent products. We sell a combination of branded and private label products, including briefs, protective underwear, underpads, pads, washcloths, baby diapers, infant training pants, and related products. | ||
We distribute our products into healthcare and retail channels. In both North America and Europe, we are a leading AI supplier in the healthcare channel, with a growing presence in retail. Our early 2014 acquisition of Indas, Spains largest branded AI supplier, increased our AI position in Southern Europe in both healthcare and retail channels. In North America, we increased our presence in retail channels with our acquisition of AHP, a leading store-brand manufacturer of infant diapers. |
13 6
6 manufacturing locations in North America and Europe
Continued the expansion of the segment created in 2011 with the acquisition of
Associated Hygienic Products (AHP), a leading manufacturer and marketer
of store-brand infant diapers in the United States, and the acquisition of Laboratorios Indas (Indas), SPAIN
the largest manufacturer and marketer of branded adult incontinence products in Spain (completed in January 2014)
SOME 2,0001 EMPLOYEES
11%2 increase in sales of absorbent technology products
ZERO
incidents for AHP Delaware facility in 2013
$91 million capital investments
New automated warehouse in Sweden
SALE IN SOME 50 COUNTRIES
HIGHLIGHTS OF PERSONAL CARE DIVISION
SALES OF $566 million
1 Includes the acquisition of Indas, completed January 2, 2014
2 Reflecting full-year 2012 results for EAM Corporation
Our Evolution in Personal Care
Attends HEALTHCARE1 PRODUCTS
The Smart Choice in Incontinence Care
2011
EAM
2012
2013
INDAS
2014
1 U.S. business
2 European business
AttendsR2
AHP
Associated Hygienic Products LLC
Our Personal Care Footprint
Divisional Head Office in Raleigh, North Carolina
Currently employs some 2,000 people around the globe
6 plants located in: Greenville, NC; Jesup, GA; Delaware, OH; Waco, TX; Aneby, Sweden; Toledo, Spain
Strategically located distribution centers
Over 700,000 square feet of manufacturing space
Sustainability Spotlight
Domtars early and continued support for Forest Stewardship Council certification has been a hallmark of our sustainability leadership for over a decade. The flagship for our sustainable forestry commitment is our EarthChoice family of environmentally responsible papers, widely acknowledged as the largest offering of its kind in North America. We are proud that we helped create a market for responsibly sourced and manufactured paper, one that is growing every year. With the brand growth comes the evolution of EarthChoice to an overarching sustainability philosophy that guides our engagement both externally and internally.
We have committed to increasing our FSC fiber supply by 25% by 2020 (compared to 2010), and we are making steady progress towards this target. We have also set an aspirational goal of 100% of our fiber supply coming from FSC certified lands. However, just like consumer preference, we cant force private landowners in our mills fiber baskets to achieve FSC certification. What we can do is support them along the path, as we have done so successfully in Ashdown, Arkansas, with the Four States Timberland Owners Association group certification model.
It is exactly this kind of practical, results-oriented sustainability action that defines us as a company. And now the mantle is being handed to each and every Domtar employee to make the Company more efficient, resilient, innovative, and better performingin a word, more sustainable.
This work is taking place through our EarthChoice Ambassador teams in place at six facilities already, with additional EarthChoice Ambassador teams being rolled out across our network over the coming years. We are also directly empowering our manufacturing teams in our mills to take meaningful sustainability action by providing them with good data and a decision-making framework that connects isolated actions to the big picture of long-term corporate strategy.
Giving our people license to lead and the data to make informed decisions is a powerful combination, and one that will be transformational for Domtars sustainability progress in the years to come. As we continue to diversify our fiber-based product mix from pulp and paper to personal care, we continue to push ourselves to re-define and re-create our sustainability leadership position. Employees, customers, investors, NGO partners, regulators, and host communities all have a part to play in this transformational endeavor. For in the end, the path of sustainable growth, our EarthChoice, is one we must all make together.
EarthChoice Ambassadors and their families tree planting activity Windsor, Quebec
17 | ||
Our Communities | ||
Domtar and First Book: Putting books in the hands of children in need
Domtar has teamed up with First Book to help bring the power of books into the communities where Domtar employees live and work. First Book, a non-profit social enterprise, was founded 20 years ago with the mission of putting new books in the hands of kids who need them.
The First Book and Domtar collaboration provides books to schools and programs serving children from low-income families in communities across North America. Highlights in 2013 include providing approximately 60,000 brand new books, and paying for shipping an additional 35,000 books. |
Domtar and United Way/Centraide: Helping to brighten lives in our host communities
In 2013, Domtar and its employees together comitted over $800,000 to United Way/ Centraide organizations across North America.
Donating to the United Way/ Centraide helps brighten lives, and improving the quality of life in our host communities is one of Domtars Community Investment Policy objectives. We are proud to pursue this goal through our longstanding affiliation with annual United Way/Centraide fundraising efforts. |
EarthChoice
19 | ||
PAPERbecause . . . by the numbers
5 years of PAPERbecause:
18 videos
28 essays
45 print ads
200+ customer and industry co-branded projects |
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Our Network
We have a network of 13 pulp and paper mills across North America. This production system is supported by 15 converting and/or forms manufacturing operations, an extensive distribution network and regional replenishment centers. It includes Enterprise Group®, a Domtar business that primarily sells and distributes Domtar-branded cut-size business paper and continuous forms, as well as digital paper, converting rolls, and specialty products.
In Asia, we have established a converting and distribution presence in southern mainland China, in the province of Guangdong. We also have a representative office in Hong Kong that provides customer services support to Asian pulp customers.
Ariva sells and distributes a wide range of paper products from Domtar and other manufacturers. Ariva serves a diverse customer base through 6 locations in Canada.
Our Personal Care business produces a wide range of adult incontinence and baby diaper products. These products are manufactured and shipped out of 6 production and distribution facilities located in the U.S. and Europe. Our research and development activities for Domtar Personal Care are centralized in the Divisional Head Office in Raleigh, North Carolina, while R&D activities undertaken for EAM customers are conducted at our operations in Jesup, Georgia.
HEAD OFFICE
Montreal, Quebec
PULP AND PAPER
Divisional Head Office
Fort Mill, South Carolina
Uncoated Freesheet
Ashdown, Arkansas
Espanola, Ontario
Hawesville, Kentucky
Johnsonburg, Pennsylvania
Kingsport, Tennessee
Marlboro, South Carolina
Nekoosa, Wisconsin
Port Huron, Michigan
Rothschild, Wisconsin
Windsor, Quebec
Pulp
Dryden, Ontario
Kamloops, British Columbia
Plymouth, North Carolina
Chip Mills
Hawesville, Kentucky
Johnsonburg, Pennsylvania
Kingsport, Tennessee
Marlboro, South Carolina
Converting and
Distribution Onsite
Ashdown, Arkansas
Rothschild, Wisconsin
Windsor, Quebec
Converting and
Distribution Offsite
Addison, Illinois
Brownsville, Tennessee
Dallas, Texas
DuBois, Pennsylvania
Griffin, Georgia
Indianapolis, Indiana
Owensboro, Kentucky
Ridgefields, Tennessee
Rock Hill, South Carolina
Tatum, South Carolina
Washington Court House, Ohio
Zengcheng, China
Forms Manufacturing
Dallas, Texas
Indianapolis, Indiana
Rock Hill, South Carolina
Enterprise Group
United States
Addison, Illinois
Albuquerque, New Mexico
Altoona, Iowa
Antioch, Tennessee
Atlanta, Georgia
Birmingham, Alabama
Brook Park, Ohio
Buffalo, New York
Charlotte, North Carolina
Cincinnati, Ohio
Delran, New Jersey
Denver, Colorado
Garland, Texas
Houston, Texas
Indianapolis, Indiana
Jackson, Mississippi
Jacksonville, Florida
Kansas City, Kansas
Kent, Washington
Lakeland, Florida
Lexington, Kentucky
Louisville, Kentucky
Mansfield, Massachusetts
Medley, Florida
Memphis, Tennessee
Milwaukee, Wisconsin
Minneapolis, Minnesota
Omaha, Nebraska
Overland, Missouri
Phoenix, Arizona
Pittsburgh, Pennsylvania
Plain City, Ohio
Richmond, Virginia
Salt Lake City, Utah
San Antonio, Texas
San Lorenzo, California
Wayland, Michigan
Wayne, Michigan
Global reach, local roots
Ariva Canada
Halifax, Nova Scotia Montreal, Quebec
Mount Pearl, Newfoundland and Labrador Ottawa, Ontario Quebec City, Quebec Toronto, Ontario
Enterprise Group Canada
Calgary, Alberta Delta, British Columbia Longueuil, Quebec Mississauga, Ontario
Regional Replenishment Centers (RRC) United States
Addison, Illinois
Charlotte, North Carolina Garland, Texas Jacksonville, Florida Kent, Washington Mira Loma, California
Regional Replenishment Centers (RRC) Canada
Mississauga, Ontario Richmond, Quebec Winnipeg, Manitoba
Representative Office International
Guangzhou, China Hong Kong, China
PERSONAL CARE
Divisional Head Office
Raleigh, North Carolina
Attends North America Manufacturing and Distribution
Greenville, North Carolina
Attends Europe
Manufacturing and Distribution
Aneby, Sweden
Attends Europe
Direct Sales Organizations
Emmeloord, The Netherlands Espoo, Finland Keerbergen, Belgium Wakefield, United Kingdom Oslo, Norway Pasching, Austria Rheinfelden, Switzerland Schwalbach am Taunus, Germany
Indas Manufacturing and Distribution
Sant Vicenç de Castellet, Spain Toledo, Spain
Indas Direct Sales Organizations
Casablanca, Morocco Lisbon, Portugal
AHP Manufacturing and Distribution
Delaware, Ohio Waco, Texas
EAM Corporation
Manufacturing and Distribution
Jesup, Georgia
LIST OF LOCATIONS AND CAPACITIES
Pulp and Paper Mills
Ashdown, AR
629,000 ST of paper per year
Espanola, ON
72,000 ST of paper per year
Hawesville, KY
572,000 ST of paper per year
Johnsonburg, PA
356,000 ST of paper per year
Kingsport, TN
417,000 ST of paper per year
Marlboro, SC
264,000 ST of paper per year
Nekoosa, WI
156,000 ST of paper per year
Port Huron, MI
112,000 ST of paper per year
Rothschild, WI
136,000 ST of paper per year
Windsor, QC
641,000 ST of paper per year
Market Pulp Mills
Dryden, ON
327,000 ADMT of pulp per year
Kamloops, BC
353,000 ADMT of pulp per year
Plymouth, NC
448,000 ADMT of pulp per year
All paper tonnage is expressed in short tons (ST) and by mill production capacity.
All pulp tonnage is expressed in air dry metric tons (ADMT) and by mill market pulp production capacity.
Corporate Governance and Management
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Domtars Management Committee and Board of Directors are committed to the sustainability of the business and to upholding the highest standards of ethical and socially responsible behavior. They are responsible for the overall stewardship of the Company and ensuring that decisions are taken in the best interests of Domtar and its shareholders. They work closely together in developing and approving business strategies and material corporate actions while always taking into account the economic, social, and environmental impacts of their decisions. They are also constantly assessing the various risks and opportunities facing the Company while ensuring strict compliance with laws and ethical guidelines.
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Board of Directors | ||||||||||||
Harold H. MacKay |
Giannella Alvarez |
Robert E. Apple |
Louis P. Gignac |
David J. Illingworth |
||||||||
Chairman of the Board Counsel, MacPherson Leslie & Tyerman LLP Regina Saskatchewan Canada
|
Corporate Director Atlanta, Georgia USA |
Chief Operating Officer MasTec, Inc. Miami, Florida USA |
President G Mining Services Inc. Montreal, Quebec Canada |
Corporate Director Orchid, Florida USA |
Management Committee | ||||||||
John D. Williams | Melissa Anderson | Daniel Buron | ||||||
President and Chief Executive Officer (CEO)
John D. Williams has been President and Chief Executive Officer of Domtar since January 2009. He is also a member of the Board of Directors.
Mr. Williams has over 30 years of experience in both consumer products and packaging. He began his career in consumer product sales in 1976, gaining insight into key market dynamics in the U.K. and the U.S. Prior to joining Domtar, he was President of SCA Packaging Europe.
Mr. Williams is a member of the Board of Directors of Owens Corning (NYSE: OC) and Chairman of the Board of the Montreal Chamber Orchestra. He is also Board Chairman of the American Forest & Paper Association. In 2010, he was named North American CEO of the Year by RISI as well as Global CEO of the Year by Pulp & Paper International (PPI). Mr. Williams was named Executive Papermaker of the Year for 2012 by PaperAge magazine. |
Senior Vice-President Human Resources
Melissa Anderson has been Senior Vice-President, Human Resources since January 2010.
Prior to joining Domtar, she served as Senior Vice-President, Human Resources and Government Relations for The Pantry, Inc., one of the largest independently operated convenience retailers in the United States. Previously, Ms. Anderson spent 17 years with International Business Machines Corporation, serving as Vice-President of Human Resources for IBM Global Financing, where she led an international team of HR professionals.
At Domtar, she is responsible for talent acquisition and management, health and safety, employee experience, labor relations, HR shared services, and HR business partners. |
Senior Vice-President and Chief Financial Officer (CFO)
Daniel Buron has been Senior Vice-President and Chief Financial Officer since May 2004.
Prior to May 2004, he was Vice-President, Finance, Pulp and Paper Sales Division and, prior to September 2002, Vice-President and Controller.
He has management oversight and responsibility for all financial functions, including financial reporting, financial risks and debt management, treasury operations, taxation, and information technology. |
Domtars commitment to sustainability and to high standards of conduct governs the Companys relationships with customers, suppliers, shareholders, competitors, host communities, and employees at every level of the organization. This standard is outlined in Domtars Code of Business Conduct and Ethics applicable to all employees, including officers. The Board also adheres to its own Code as well as to the Corporate Governance Guidelines required by the New York and Toronto stock exchanges.
For complete information on Domtars policies, procedures, and governance documents, please visit domtar.com.
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23 | |||||||||||
Brian M. Levitt | David G. Maffucci | Robert J. Steacy | Pamela B. Strobel | Denis Turcotte | John D. Williams | |||||||
Non-Executive Co-Chair Osler, Hoskin & Harcourt LLP Montreal, Quebec Canada |
Corporate Director Charlotte North Carolina USA |
Corporate Director Toronto, Ontario Canada |
Corporate Director Chicago, Illinois USA |
President and CEO North Channel Management Sault Ste. Marie Ontario Canada |
President and Chief Executive Officer Domtar Corporation Charlotte North Carolina USA |
Michael Fagan | Zygmunt Jablonski | Patrick Loulou | Richard L. Thomas | |||||
Senior Vice-President Personal Care
Michael Fagan has been Senior Vice-President, Personal Care of Domtar since 2012.
Prior to joining Domtar, Mr. Fagan held the positions of President and CEO of Attends Healthcare, Inc. since 2006 and Senior Vice-President, Sales and Marketing since 1999. Prior to joining Attends, he held a variety of sales development roles with Procter & Gamble, the previous owners of the Attends line of products and the creators of the category.
Mr. Fagan has management oversight and responsibility for Domtars Personal Care segment that involves the manufacturing, sale and distribution of infant care and adult incontinence care products. |
Senior Vice-President Law and Corporate Affairs
Zygmunt Jablonski has been Senior Vice-President, Law and Corporate Affairs since 2009.
Prior to joining Domtar in 2008, he served in various in-house counsel positions for major manufacturing and distribution companies in the paper industry for over 13 years. From 1985 to 1994, he practiced law in Washington, DC.
Mr. Jablonski is responsible for Domtars Legal Affairs, Secretariat, Sustainability, and Environmental Affairs. He is also responsible for Corporate Communications & Investor Relations, Government Relations, and Internal Audit. |
Senior Vice-President Corporate Development
Patrick Loulou has been Senior Vice-President, Corporate Development since March 2007.
Previously, he held a number of positions in the telecommunications sector as well as in management consulting. He has several years of experience in corporate strategy and business development.
Mr. Loulou is responsible for managing new business development, corporate strategy, and mergers and acquisitions. He is also responsible for Domtars paper converting business in China. |
Senior Vice-President Sales and Marketing
Richard L. Thomas has been Senior Vice-President, Sales and Marketing since 2007, when Domtar acquired Weyerhaeusers Fine Paper division.
Prior to joining Domtar, he was Vice-President, Fine Papers, at Weyerhaeuser Company. Mr. Thomas joined Weyerhaeuser in 2002 when Willamette Industries, Inc. was acquired by Weyerhaeuser. At Willamette, he held various management positions in operations after joining the company in 1992. Previously, he was with Champion International Corporation for 12 years.
As Senior Vice-President, Sales and Marketing, he is responsible for pulp and paper sales, customer service, product development, and the marketing of all pulp and paper grades produced at the mills. |
Domtar Corporation Reconciliation of NonGAAP Financial Measures
(In millions of dollars, unless otherwise noted)
The following table sets forth certain nonU.S. generally accepted accounting principles (GAAP) financial metrics identified in bold as Earnings before items, Earnings before items per diluted share, EBITDA, EBITDA margin, EBITDA before items, EBITDA margin before items, Free cash flow, Net debt and Net debttototal capitalization. Management believes that the financial metrics presented are frequently used by investors and are useful to evaluate our ability to service debt and our overall credit profile. Management believes these metrics are also useful to measure the operating performance and benchmark with peers within the industry. These metrics are presented as a complement to enhance the understanding of operating results but not in substitution for GAAP results.
The Company calculates Earnings before items and EBITDA before items by excluding the aftertax (pretax) effect of items considered by management as not reflecting our current operations. Management uses these measures, as well as EBITDA and Free cash flow, to focus on ongoing operations and believes that it is useful to investors because it enables them to perform meaningful comparisons between periods. Domtar believes that using this information along with Net earnings provides for a more complete analysis of the results of operations. Net earnings and Cash flow provided from operating activities are the most directly comparable GAAP measures.
2011 | 2012 | 2013 | ||||||||||||||||||||
Reconciliation of Earnings before items to Net earnings |
||||||||||||||||||||||
Net earnings |
($) | 365 | 172 | 91 | ||||||||||||||||||
(+) Impairment and writedown of PP&E¹ and intangible assets |
($) | 53 | 9 | 17 | ||||||||||||||||||
(+) Closure and restructuring costs |
($) | 33 | 20 | 13 | ||||||||||||||||||
() Net (gains) losses on disposals of PP&E¹ and sale of business |
($) | (3 | ) | 1 | 2 | |||||||||||||||||
(+) Impact of purchase accounting |
($) | 1 | 1 | 2 | ||||||||||||||||||
(+) Reversal of alternative fuel tax credits |
($) | | | 18 | ||||||||||||||||||
() Cellulose biofuel producer credits |
($) | | | (33) | ||||||||||||||||||
(+) Loss on repurchase of longterm debt |
($) | 3 | 30 | 2 | ||||||||||||||||||
(+) Weston litigation settlement |
($) | | | 46 | ||||||||||||||||||
(=) Earnings before items |
($) | 452 | 233 | 158 | ||||||||||||||||||
( / ) Weighted avg. number of common and exchangeable shares outstanding (diluted) |
(millions) | 40.2 | 36.1 | 33.4 | ||||||||||||||||||
(=) Earnings before items per diluted share |
($) | 11.24 | 6.45 | 4.73 | ||||||||||||||||||
Reconciliation of EBITDA and EBITDA before items to Net earnings |
||||||||||||||||||||||
Net earnings |
($) | 365 | 172 | 91 | ||||||||||||||||||
(+) Equity loss, net of taxes |
($) | 7 | 6 | 1 | ||||||||||||||||||
(+) Income tax expense (benefit) |
($) | 133 | 58 | (20) | ||||||||||||||||||
(+) Interest expense, net |
($) | 87 | 131 | 89 | ||||||||||||||||||
(=) Operating income |
($) | 592 | 367 | 161 | ||||||||||||||||||
(+) Depreciation and amortization |
($) | 376 | 385 | 376 | ||||||||||||||||||
(+) Impairment and writedown of PP&E¹ and intangible assets |
($) | 85 | 14 | 22 | ||||||||||||||||||
() Net (gains) losses on disposals of PP&E¹ and sale of business |
($) | (6 | ) | 2 | 4 | |||||||||||||||||
(=) EBITDA |
($) | 1,047 | 768 | 563 | ||||||||||||||||||
(/) Sales |
($) | 5,612 | 5,482 | 5,391 | ||||||||||||||||||
(=) EBITDA margin |
(%) | 19% | 14% | 10% | ||||||||||||||||||
EBITDA |
($) | 1,047 | 768 | 563 | ||||||||||||||||||
(+) Reversal of alternative fuel tax credits |
($) | | | 26 | ||||||||||||||||||
(+) Closure and restructuring costs |
($) | 52 | 30 | 18 | ||||||||||||||||||
(+) Impact of purchase accounting |
($) | 1 | 1 | 2 | ||||||||||||||||||
(+) Weston litigation settlement |
($) | | | 49 | ||||||||||||||||||
(=) EBITDA before items |
($) | 1,100 | 799 | 658 | ||||||||||||||||||
(/) Sales |
($) | 5,612 | 5,482 | 5,391 | ||||||||||||||||||
(=) EBITDA margin before items |
(%) | 20% | 15% | 12% | ||||||||||||||||||
Reconciliation of Free cash flow to Cash flow provided from operating activities |
||||||||||||||||||||||
Cash flow provided from operating activities |
($) | 883 | 551 | 411 | ||||||||||||||||||
() Additions to PP&E¹ |
($) | (144 | ) | (236 | ) | (242) | ||||||||||||||||
(=) Free cash flow |
($) | 739 | 315 | 169 |
1 | PP&E: Property, plant and equipment |
(continued) | 2011 | 2012 | 2013 | |||||||||||||||||
Net debttototal capitalization computation |
|
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Bank indebtedness |
($) | 7 | 18 | 15 | ||||||||||||||||
(+) Longterm debt due within one year |
($) | 4 | 79 | 4 | ||||||||||||||||
(+) Longterm debt |
($) | 837 | 1,128 | 1,510 | ||||||||||||||||
(=) Debt |
($) | 848 | 1,225 | 1,529 | ||||||||||||||||
() Cash and cash equivalents |
($) | (444 | ) | (661 | ) | (655) | ||||||||||||||
(=) Net debt |
($) | 404 | 564 | 874 | ||||||||||||||||
(+) Shareholders equity |
($) | 2,972 | 2,877 | 2,782 | ||||||||||||||||
(=) Total capitalization |
($) | 3,376 | 3,441 | 3,656 | ||||||||||||||||
Net debt |
($) | 404 | 564 | 874 | ||||||||||||||||
(/) Total capitalization |
($) | 3,376 | 3,441 | 3,656 | ||||||||||||||||
(=) Net debttototal capitalization |
(%) | 12% | 16% | 24% |
Earnings before items, Earnings before items per diluted share, EBITDA, EBITDA margin, EBITDA before items, EBITDA margin before items, Free cash flow, Net debt and Net debttototal capitalization have no standardized meaning prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies and therefore should not be considered in isolation or as a substitute for Net earnings, Operating income or any other earnings statement, cash flow statement or balance sheet financial information prepared in accordance with GAAP. It is important for readers to understand that certain items may be presented in different lines by different companies on their financial statements thereby leading to different measures for different companies.
Reconciliation of NonGAAP Financial Measures By Segment
(In millions of dollars, unless otherwise noted)
The following table sets forth certain nonU.S. generally accepted accounting principles (GAAP), financial metrics identified in bold as Operating income (loss) before items, EBITDA before items and EBITDA margin before items by reportable segment. Management believes that the financial metrics presented are frequently used by investors and are useful to measure the operating performance and benchmark with peers within the industry. These metrics are presented as a complement to enhance the understanding of operating results but not in substitution for GAAP results.
The Company calculates the segmented Operating income (loss) before items by excluding the pretax effect of items considered by management as not reflecting our ongoing operations. Management uses these measures to focus on ongoing operations and believes that it is useful to investors because it enables them to perform meaningful comparisons between periods. Domtar believes that using this information along with Operating income (loss) provides for a more complete analysis of the results of operations. Operating income (loss) by segment is the most directly comparable GAAP measure.
Pulp and Paper¹ | Personal Care² | Corporate | ||||||||||||||||||||||||||||||||||||||||
2011 | 2012 | 2013 | 2011 | 2012 | 2013 | 2011 | 2012 | 2013 | ||||||||||||||||||||||||||||||||||
Reconciliation of Operating income (loss) to Operating income (loss) before items |
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Operating income (loss) |
($) | 581 | 330 | 171 | 7 | 45 | 43 | 4 | (8 | ) | (53) | |||||||||||||||||||||||||||||||
(+) Impairment and writedown of PP&Eł and intangible assets |
($) | 85 | 14 | 20 | | | 2 | | | | ||||||||||||||||||||||||||||||||
() Net (gains) losses on disposals of PP&E³ and sale of business |
($) | | 2 | 10 | | | | (6 | ) | | (6) | |||||||||||||||||||||||||||||||
(+) Reversal of alternative fuel tax credits |
($) | | | 26 | | | | | | | ||||||||||||||||||||||||||||||||
(+) Weston litigation settlement |
($) | | | | | | | | | 49 | ||||||||||||||||||||||||||||||||
(+) Closure and restructuring costs |
($) | 52 | 29 | 10 | | 1 | 2 | | | 6 | ||||||||||||||||||||||||||||||||
(+) Impact of purchase accounting |
($) | | | | 1 | 1 | 2 | | | | ||||||||||||||||||||||||||||||||
(=) Operating income (loss) before items |
($) | 718 | 375 | 237 | 8 | 47 | 49 | (2 | ) | (8 | ) | (4) | ||||||||||||||||||||||||||||||
Reconciliation of Operating income (loss) before items to EBITDA before items |
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Operating income (loss) before items |
($) | 718 | 375 | 237 | 8 | 47 | 49 | (2 | ) | (8 | ) | (4) | ||||||||||||||||||||||||||||||
(+) Depreciation and amortization |
($) | 372 | 365 | 345 | 4 | 20 | 31 | | | | ||||||||||||||||||||||||||||||||
(=) EBITDA before items |
($) | 1,090 | 740 | 582 | 12 | 67 | 80 | (2 | ) | (8 | ) | (4) | ||||||||||||||||||||||||||||||
(/) Sales |
($) | 5,542 | 5,088 | 4,843 | 71 | 399 | 566 | | | | ||||||||||||||||||||||||||||||||
(=) EBITDA margin before items |
(%) | 20% | 15% | 12% | 17% | 17% | 14% | | | |
Operating income (loss) before items, EBITDA before items and EBITDA margin before items have no standardized meaning prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies and therefore should not be considered in isolation or as a substitute for Operating income (loss) or any other earnings statement, cash flow statement or balance sheet financial information prepared in accordance with GAAP. It is important for readers to understand that certain items may be presented in different lines by different companies on their financial statements thereby leading to different measures for different companies.
1 | On May 31, 2013, the Company acquired Xeroxs paper print and media products assets in the United States and Canada. |
2 | On July 1, 2013, the Company acquired 100% of the shares of Associated Hygiene Products LLC. |
On May 1, 2012, the Company acquired 100% of the shares of EAM Corporation. |
On March 1, 2012, the Company acquired 100% of the shares of Attends Healthcare Limited. |
On September 1, 2011, the Company acquired 100% of the shares of Attends Healthcare Inc. |
3 | PP&E: Property, plant and equipment |
Shareholder Information | ||
Dividend policy
Subject to approval by its Board of Directors, Domtar pays a quarterly dividend on its common stock
(NYSE: UFS) (TSX: UFS) and on its exchangeable shares (TSX: UFX).
Dividend history
Year ended 2013
Declared |
Record Date | Payable Date | Amount | |||||
October 30, 2013 |
December 13, 2013 | January 15, 2014 | US$0.55 | |||||
July 31, 2013 |
September 13, 2013 | October 15, 2013 | US$0.55 | |||||
May 1, 2013 |
June 14, 2013 | July 15, 2013 | US$0.55 | |||||
February 20, 2013 |
March 15, 2013 | April 15, 2013 | US$0.45 |
Shareholder Services
For shareholder-related services, including estate settlement, lost stock certificates, change of name or address, stock transfers, and duplicate mailings, please contact the transfer agent at:
Computershare Investor Services Computershare P.O. BOX 30170 College Station, TX 77845-3170 Toll free: 1-877-282-1168 Outside the U.S.: 1-781-575-2879 Web site: www.computershare.com/investor
Canadian stockholders should contact the transfer agent at:
Computershare Investor Services Inc. 100 University Ave., 8th Floor Toronto, ON Canada M5J 2Y1 Toll free: 1-866-245-4053 www.investorcentre.com/service |
Stock Exchange information
Domtar Corporation common stock is traded on the New York Stock Exchange and on the Toronto Stock Exchange under the symbol UFS. Domtar (Canada) Paper Inc. exchangeable shares are traded on the Toronto Stock Exchange under the symbol UFX. |
Requests for information
For additional copies of the Annual Report or other financial information, please contact:
Investor Relations Department Domtar Corporation 395 de Maisonneuve Blvd. West Montreal, QC Canada H3A 1L6 Tel.: 514-848-5555 Voice Recognition: Investor Relations Email: ir@domtar.com Web site www.domtar.com
Electronic versions of this Annual Report, SEC filings, and other Company publications are available through the corporate Web site. |
2014 Tentative Earnings Calendar
First Quarter: Thursday, April 24, 2014
Second Quarter: Thursday, July 24, 2014
Third Quarter: Thursday, October 23, 2014
Fourth Quarter: Friday, February 6, 2015
Annual Meeting
Domtar Annual Meeting of Stockholders April 30, 2014, Montreal, Quebec
Montreal Museum of Fine Arts Claire and Marc Bourgie Pavilion 1339 Sherbrooke Street West Montreal, QC Canada H3G 1J5 |
Production Notes | ||
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