Boise Inc. Reports Financial Results for Fourth Quarter and Year End 2012

BOISE, Idaho - Boise Inc. (NYSE: BZ) today reported net income of $13.5 million, or $0.13 per diluted share, for fourth quarter 2012, compared with net income of $16.3 million, or $0.15 per diluted share, for fourth quarter 2011. Net income for the year ended 2012 was $52.2 million, or $0.52 per diluted share, compared with $75.2 million, or $0.70 per diluted share, for the year ended 2011. Net income excluding special items for the year ended 2012 was $71.6 million, compared with $79.9 million for the year ended 2011.

EBITDA excluding special items (1) was $78.7 million for fourth quarter 2012, compared with EBITDA excluding special items of $85.0 million for fourth quarter 2011. EBITDA excluding special items was $331.8 million for the year ended 2012, versus our record 2011 EBITDA excluding special items of $340.2 million.

2012 Highlights

-Record annual sales of $2.56 billion, a 6% increase over 2011
-EBITDA excluding special items of $331.8 million for 2012 and $78.7 million for 4Q 2012 (1)
-Special items include pretax costs of $31.7 million, primarily related to ceasing uncoated freesheet production at our paper mill in St. Helens, Oregon
-Generated annual free cash flow of $97.4 million (1)
-Paid two special cash dividends totaling $1.20 per common share, or $119.7 million

"We were pleased with our overall 2012 operating results," said Alexander Toeldte, president and chief executive officer of Boise Inc. "Our mills and converting operations ran well, and we reduced costs through productivity improvement by reducing usage of key raw materials. During the year, we generated significant free cash flow and returned capital to our shareholders through the payment of two special cash dividends totaling $1.20 per common share. Despite these achievements, our 2012 results were affected adversely by margin compression in some of our Packaging operations and declining prices in our Paper business."

"In Packaging, we experienced margin compression in some of our converting operations, primarily in our California and Texas markets. We saw little benefit from the announced $50 per ton linerboard price increase during the fourth quarter in our converting operations, but we expect to more fully benefit from the increase in first quarter 2013.  As of January 31, 2013, we had implemented over 90% of the $50 price increase through our converting operations. We are making targeted capital investments in our converting operations to improve efficiency and keep pace with our sales growth."

"In Paper, we faced declining prices for communication-grade papers throughout the year, particularly in the fourth quarter. The average price for uncoated freesheet in the fourth quarter 2012 declined $27 per ton from the previous quarter and dropped $45 per ton from the fourth quarter 2011, as industry supply continued to outpace demand. These dynamics factored heavily into our decision to cease paper production at our mill in St. Helens, Oregon, reducing our production capacity in 2013 by 60,000 tons. During fourth quarter, we took 16,000 tons of market-related downtime in addition to the 8,000 tons of downtime from our annual maintenance outage at our mill in Jackson, Alabama. Going forward, we will continue to aggressively manage our costs and evaluate the optimal configuration of our white paper assets, to balance our production with demand for our products."

Quarterly and Annual Financial Results
          
  (in millions, except per-share data)
  4Q 2012   4Q 2011   3Q 2012   2012   2011
Sales $627.5   $600.4   $645.2   $2,555.4   $2,404.1
Net income $13.5   $16.3   $3.6   $52.2   $75.2
Net income per diluted share (2) $0.13   $0.15   $0.04   $0.52   $0.70
Net income excluding special items (1) $13.8   $18.5   $22.8   $71.6   $79.9
Net income excluding special items per diluted share (1) $0.14   $0.17   $0.23   $0.71   $0.75
Weighted average diluted common shares outstanding (2) 101.2   106.6   101.0   101.1   106.7
EBITDA (1) $78.3   $81.4   $59.2   $300.0   $332.6
EBITDA excluding special items (1) $78.7   $85.0   $90.5   $331.8   $340.2

(1) For reconciliations of non-GAAP measures, see "Summary Notes to Consolidated Financial Statements and Segment Information."
(2) As of December 31, 2012, we had 100.5 million common shares outstanding. For additional information, see "Summary Notes to Consolidated Financial Statements and Segment Information."

Packaging Segment

Packaging segment sales for fourth quarter 2012 were $287.3 million, an increase of $35.9 million, or 14%, compared with $251.4 million in fourth quarter 2011. About half of the increase was the result of our acquisition of Hexacomb on December 1, 2011. The remaining increase resulted from sales volume growth in our network of box plants, which increased 9% in fourth quarter 2012, compared with the same quarter in 2011. Our vertical integration rose from an average of 71% during 2011 to 84% in 2012, and we expect it to increase to approximately 90% in 2013 based on our current volumes. Our increased vertical integration decreased our sales to third parties by 46% in fourth quarter 2012, compared with fourth quarter 2011. Net sales prices for our corrugated products, excluding Hexacomb, increased 2% during fourth quarter 2012, compared with fourth quarter 2011. Packaging segment sales for fourth quarter 2012 were essentially flat, compared with third quarter 2012.

Packaging segment sales for full year 2012 were $1,130.1 million, an increase of $180.4 million, or 19%, compared with $949.7 million for 2011. Sales volumes of corrugated products increased 16% in 2012, compared with 2011.  Slightly more than half of this increase related to growth from our 2011 acquisitions and the remainder was due to increased sales from our network of box plants, which offset the decline in linerboard net sales prices and volumes sold to third parties during 2012 by 2% and 31%, respectively, compared with 2011.

Packaging segment EBITDA, excluding special items, was $47.1 million for fourth quarter 2012, a slight increase from $46.9 million in fourth quarter 2011. Although we benefited from two additional months of operations at Hexacomb in the quarter, this was offset by higher input costs and margin compression on the sale of some of our corrugated products at our converting operations. Packaging segment EBITDA in fourth quarter 2012 increased $9.6 million, or 25%, compared with third quarter 2012, due to improved sales prices of linerboard sold to third parties and lower maintenance outage costs, offset partially by higher fiber costs.

Packaging segment EBITDA, excluding special items, for full year 2012 was $162.5 million, an increase of $3.2 million, or 2%, compared with 2011. The increase reflects a full year impact from our acquisitions. Our corrugated products sales volumes increased 16% year over year; however, these increases were largely offset by margin compression on the sale of some of our corrugated products.

During first quarter 2013, we will conduct a cold outage at our mill in DeRidder, Louisiana. Cold outages at this facility occur every five years and are more extensive and costly than our normal annual maintenance outages.  We expect total maintenance outage costs for our Packaging segment in 2013 to be approximately $23 million, an increase of approximately $12 million from 2012, with $20 million expected in first quarter 2013, relative to $2 million in first quarter 2012, with the remaining $3 million expected in third quarter 2013.

Paper Segment

Lower uncoated freesheet sales prices affected our fourth quarter 2012 sales, compared with fourth quarter 2011 and third quarter 2012. Paper segment sales for fourth quarter 2012 were $352.7 million, a decrease of $7.0 million, or 2%, compared with fourth quarter 2011. Paper segment sales decreased $17.3 million, or 5%, compared with third quarter 2012. Our average sales price of uncoated freesheet declined from $993 per short ton in fourth quarter 2011 and $975 per short ton in third quarter 2012 to $948 per short ton in fourth quarter 2012. Total uncoated freesheet sales volumes increased 3% versus the prior-year period but were down 4% versus third quarter 2012 as a result of seasonal demand decline.

Paper segment sales for full year 2012 were $1,468.3 million, down 2% compared with 2011, due to lower sales prices of uncoated freesheet and lower sales prices and volumes of market pulp. Our average sales price of uncoated freesheet was $968 per short ton in 2012, down from an average of $990 per short ton in 2011. Sales volumes of uncoated freesheet were up 2% in 2012, compared with 2011. The increase in our uncoated freesheet sales volumes for the year is due to a 5% increase in sales of label and release and premium office papers and higher purchase volumes by our cut-size customers. Combined sales volumes of label and release and premium office papers represented 34% of our total uncoated freesheet sales volumes for 2012, up from 33% in the prior year.

Paper segment EBITDA, excluding special items, was $38.7 million for fourth quarter 2012, a decrease of $5.7 million, or 13%, compared with fourth quarter 2011. This decrease was due primarily to lower sales prices of uncoated freesheet. This decline was largely offset by generally lower input and maintenance outage costs. Paper segment EBITDA, excluding special items, for fourth quarter 2012 decreased $19.9 million from third quarter 2012 as a result of lower sales volumes and net selling prices for uncoated freesheet and higher maintenance outage costs as a result of our annual outage at our Jackson, Alabama, mill.

Paper segment EBITDA, excluding special items, for full year 2012 was $193.3 million, a decrease of $8.2 million, or 4%, compared with $201.5 million for the year ended December 31, 2011. This decrease resulted from the $22 per short ton reduction in the average sales price of uncoated freesheet and the $107 per short ton reduction in the average sales price of market pulp. Additionally, chemical costs increased $13.8 million year over year, due to higher prices and increased volumes for key chemicals such as caustic soda and starch. These changes were offset partially by an overall $34.0 million reduction in fiber costs as higher wood chip prices, primarily in the Pacific Northwest, were offset by lower purchased pulp prices and improved pulp production at International Falls, Minnesota, and Jackson, Alabama, which reduced our consumption of purchased pulp.

Webcast and Conference Call

Boise Inc. will host a webcast and conference call on Tuesday, February 26, 2013, at 11:00 a.m. ET, at which time we will review the company`s recent performance. To participate in the conference call, dial 866-841-1001 (international callers should dial 832-445-1689). This webcast will be archived from February 26, 2013, at 2:00 p.m. ET through March 26, 2013, 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 87424464. To access the replay, go to www.BoiseInc.com and click on About Boise Inc. to reach the link to the webcast under Webcasts & Presentations on the Investors menu.

Annual Meeting Date

Boise Inc. intends to hold its annual shareholders` meeting at 9:00 a.m. MDT on Wednesday, April 24, 2013, in Boise, Idaho. The record date to determine shareholders eligible to vote at the meeting is Monday, March 18, 2013.

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. Statements regarding announced price increases on our products, cost management efforts, asset configuration changes, and vertical integration levels and the benefits we expect to derive from such outcomes and actions are forward looking. Given the risks and uncertainties involved, there can be no assurance we will be able to achieve our stated goals or realize any benefits. For example, changes in the economy and competitive influences may result in our being unable to implement or realize any additional benefit from our announced price increases. Economic and competitive influences, availability of equipment and suppliers, the performance of the equipment once installed, and other factors could cause the outcome of our asset configuration projects, the related costs, and the timing to differ materially from what we have predicted in this release. For further information about the risks and uncertainties associated with our business, please refer to our filings with the Securities and Exchange Commission.  We undertake no obligation to update the forward-looking statements in this release whether as a result of new information, future events, or otherwise.

Boise Inc.
Segment Highlights
(dollars in millions)

  4Q 2012   4Q 2011   3Q 2012   2012   2011
Packaging          
Sales volumes (thousands of short tons, except corrugated)          
Linerboard, Total 156.8   157.9   155.7   611.1   606.5
Linerboard, External sales 31.2   57.5   36.5   158.9   230.2
Newsprint 60.3   58.6   60.0   233.4   230.8
Corrugated containers and sheets (mmsf) (a) 2,578   2,297   2,584   10,079   8,720
Key input costs          
Fiber, including purchased rollstock $43.4   $42.3   $39.8   $176.9   $156.9
Energy 16.4   15.1   16.4   61.2   65.2
Chemicals 10.9   10.0   10.6   42.0   38.0
Outage costs (0.3)   -   3.5   10.9   9.9
EBITDA (b) 47.1   45.5   37.5   162.5   155.5
EBITDA excluding special items (b) 47.1   46.9   37.5   162.5   159.3
Assets        $958.0   $957.3
Paper          
Sales volumes (thousands of short tons)          
Uncoated freesheet (c) 302.4   294.1   313.8   1,253.8   1,229.8
Corrugating medium 34.9   33.9   33.7   135.3   135.3
Market pulp 15.6   20.3   18.5   52.9   90.2
Key input costs          
Fiber $77.9   $94.1   $85.7   $343.1   $377.1
Energy 34.2   36.4   33.4   134.8   143.9
Chemicals 49.6   51.1   55.6   211.6   197.8
Outage costs 4.6   7.8   0.4   14.8   21.5
EBITDA (b) 38.2   44.4   27.3   161.6   201.5
EBITDA excluding special items (b) 38.7   44.4   58.6   193.3   201.5
Assets        $1,144.7   $1,190.9

  4Q 2012 vs.   4Q 2012 vs.   2012 vs.
4Q 2011 3Q 2012 2011
Packaging
Change in net sales prices (dollars per short ton, except corrugated) (d)      
Linerboard, Total $45   $40   $8
Linerboard, External sales only 39   31   (7)
Newsprint (1)   3   (1)
Corrugated containers and sheets ($/msf) (a) 6   1   8
Paper      
Change in net sales prices (dollars per short ton) (d)      
Uncoated freesheet (c) $(45)   $(27)   $(22)
Corrugating medium 77   53   28
Market pulp (12)   (6)   (107)

(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. Increase in sales price during 2012 is primarily due to Hexacomb.
(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.
(d) Average net selling prices for our principal products represent sales less freight costs, discounts, and allowances.

Boise Inc.
Consolidated Statements of Income
(dollars and shares in thousands, except per-share data)

Three Months Ended   Year Ended
December 31   September 30,   December 31
2012   2011 (2)   2012   2012   2011 (2)
Sales          
Trade $611,925   $591,524   $631,054   $2,495,092   $2,364,024
Related parties 15,567   8,917   14,131   60,271   40,057
  627,492   600,441   645,185   2,555,363   2,404,081
         
Costs and expenses          
Materials, labor, and other operating expenses (excluding depreciation) (1) 491,554   462,315   502,848   2,004,044   1,880,271
Fiber costs from related parties 5,094   5,154   5,266   19,772   18,763
Depreciation, amortization, and depletion 39,907   37,320   37,540   152,306   143,758
Selling and distribution expenses 30,602   28,999   30,015   121,827   107,654
General and administrative expenses 20,492   18,872   19,213   79,748   60,587
St. Helens charges (1) 111   -   27,448   27,559   -
Other (income) expense, net (3) 982   1,860   1,509   2,572   1,994
  588,742   554,520   623,839   2,407,828   2,213,027
         
Income from operations 38,750   45,921   21,346   147,535   191,054
         
Foreign exchange gain (loss) (376)   430   296   179   135
Loss on extinguishment of debt (4) -   (2,300)   -   -   (2,300)
Interest expense (15,484)   (15,653)   (15,458)   (61,740)   (63,817)
Interest income 59   59   3   160   269
  (15,801)   (17,464)   (15,159)   (61,401)   (65,713)
         
Income before income taxes 22,949   28,457   6,187   86,134   125,341
Income tax provision (9,402)   (12,202)   (2,584)   (33,984)   (50,131)
Net income $13,547   $16,255   $3,603   $52,150   $75,210
         
Weighted average common shares outstanding:          
Basic 100,167   103,991   100,144   99,872   101,941
Diluted 101,180   106,613   101,030   101,143   106,746
          
Net income per common share:          
Basic $0.14   $0.16   $0.04   $0.52   $0.74
Diluted $0.13   $0.15   $0.04   $0.52   $0.70

For footnotes, see Summary Notes to Consolidated Financial Statements and Segment Information.

Boise Inc.
Segment Information
(dollars in thousands)

  Three Months Ended   Year Ended
  December 31 September 30,   December 31
  2012   2011   2012   2012   2011
Segment sales          
Packaging (2) $287,332   $251,388   $285,705   $1,130,102   $949,710
Paper 352,702   359,697   369,952   1,468,344   1,496,537
Intersegment eliminations and other (12,542)   (10,644)   (10,472)   (43,083)   (42,166)
  $627,492   $600,441   $645,185   $2,555,363   $2,404,081
          
Segment income (loss)          
Packaging (2) (3) $31,630   $31,837   $22,715   $101,626   $104,996
Paper (1) 14,926   21,794   5,463   73,913   112,051
Corporate and Other (3) (8,182)   (7,280)   (6,536)   (27,825)   (25,858)
  38,374   46,351   21,642   147,714   191,189
          
Loss on extinguishment of debt (4) -   (2,300)   -   -   (2,300)
Interest expense (15,484)   (15,653)   (15,458)   (61,740)   (63,817)
Interest income 59   59   3   160   269
Income before income taxes $22,949   $28,457   $6,187   $86,134   $125,341
          
EBITDA (5)          
Packaging (2) (3) $47,089   $45,518   $37,538   $162,542   $155,543
Paper (1) 38,244   44,390   27,275   161,563   201,533
Corporate and Other (3) (4) (7,052)   (8,537)   (5,631)   (24,085)   (24,429)
  $78,281   $81,371   $59,182   $300,020   $332,647
         
EBITDA excluding special items (5)          
Packaging (2) (3) $47,089   $46,882   $37,538   $162,542   $159,334
Paper (1) 38,701   44,390   58,563   193,308   201,533
Corporate and Other (3) (4) (7,052)   (6,237)   (5,631)   (24,085)   (20,626)
  $78,738   $85,035   $90,470   $331,765   $340,241
          

For footnotes, see Summary Notes to Consolidated Financial Statements and Segment Information.

Boise Inc.
Consolidated Balance Sheets
(dollars in thousands)

  December 31, 2012   December 31, 2011
ASSETS    
    
Current    
Cash and cash equivalents $49,707   $96,996
Receivables    
Trade, less allowances of $1,382 and $1,343 240,459   228,838
Other 8,267   7,622
Inventories 294,484   307,305
Deferred income taxes 17,955   20,379
Prepaid and other 8,828   6,944
  619,700   668,084
    
Property    
Property and equipment, net 1,223,001   1,235,269
Fiber farms 24,311   21,193
  1,247,312   1,256,462
    
Deferred financing costs 26,677   30,956
Goodwill 160,130   161,691
Intangible assets, net 147,564   159,120
Other assets 7,029   9,757
Total assets $2,208,412   $2,286,070

For footnotes, see Summary Notes to Consolidated Financial Statements and Segment Information.

Boise Inc.
Consolidated Balance Sheets (continued)
(dollars and shares in thousands, except per-share data)

  December 31, 2012   December 31, 2011
LIABILITIES AND STOCKHOLDERS` EQUITY    
    
Current    
Current portion of long-term debt $10,000   $10,000
Accounts payable 185,078   202,584
Accrued liabilities    
Compensation and benefits 70,950   64,907
Interest payable 10,516   10,528
Other 20,528   22,540
  297,072   310,559
    
Debt    
Long-term debt, less current portion 770,000   790,000
    
Other    
Deferred income taxes 198,370   161,260
Compensation and benefits 121,682   172,394
Other long-term liabilities 73,102   57,010
  393,154   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; 100,503 and 100,272 shares issued and outstanding 12   12
Treasury stock, 21,151 shares held (121,423)   (121,421)
Additional paid-in capital 868,840   866,901
Accumulated other comprehensive income (loss) (101,304)   (121,962)
Retained earnings 102,061   171,317
Total stockholders` equity 748,186   794,847
    
Total liabilities and stockholders` equity $2,208,412   $2,286,070

For footnotes, see Summary Notes to Consolidated Financial Statements and Segment Information.

Consolidated Statements of Cash Flows
(dollars in thousands)

  Year Ended December 31
2012   2011
Cash provided by (used for) operations    
Net income $52,150   $75,210
Items in net income not using (providing) cash    
Depreciation, depletion, and amortization of deferred financing costs and other 157,040   149,715
Share-based compensation expense 5,983   3,695
Pension expense 11,279   10,916
Deferred income taxes 33,684   44,301
St. Helens charges 28,481   -
Other 1,868   1,878
Loss on extinguishment of debt (4) -   2,300
Decrease (increase) in working capital, net of acquisitions    
Receivables (9,803)   1,624
Inventories 8,136   (22,237)
Prepaid expenses (814)   (275)
Accounts payable and accrued liabilities (16,505)   3,803
Current and deferred income taxes (1,938)   4,632
Pension payments (35,205)   (25,414)
Other 674   43
Cash provided by operations 235,030   250,191
Cash provided by (used for) investment  
Acquisition of businesses and facilities, net of cash acquired (2) -   (326,223)
Expenditures for property and equipment (137,642)   (128,762)
Purchases of short-term investments -   (3,494)
Maturities of short-term investments -   14,114
Other 1,393   1,048
Cash used for investment (136,249)   (443,317)
Cash provided by (used for) financing    
Issuances of long-term debt 5,000   275,000
Payments of long-term debt (25,000)   (256,831)
Payments of financing costs (188)   (8,613)
Repurchases of common stock (2)   (121,421)
Proceeds from exercise of warrants -   284,785
Payment of special dividends (119,653)   (47,916)
Tax withholdings on net settlements of share-based awards (5,833)   (2,775)
Other (394)   1,060
Cash provided by (used for) financing (146,070)   123,289
Decrease in cash and cash equivalents (47,289)   (69,837)
Balance at beginning of the period 96,996   166,833
Balance at end of the period $49,707   $96,996

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 2012 Annual Report on Form 10-K, as well as other reports the Company files with the SEC. Net income for all periods presented involved estimates and accruals.

1. In September 2012, we committed to a plan to cease paper production on our one remaining paper machine at our St. Helens, Oregon, paper mill, which we shut down in December 2012. During the three months ended September 30, 2012 and the year ended December 31, 2012, we recorded $31.3 million and $31.7 million, respectively, of pretax costs related primarily to ceasing operations at the mill. These costs are recorded in our Paper segment. The $31.7 million of costs for the year ended December 31, 2012, included approximately $14.2 million of noncash charges related primarily to the impairment of property, plant and equipment, and inventory; and approximately $17.5 million of cash costs of which we expect to pay approximately $7.3 million of employee-related and other costs in early 2013 and the remaining amounts over a longer term. During the three months ended September 30, 2012 and the year ended December 31, 2012, we recorded $27.4 million and $27.6 million, respectively, in "St. Helens charges" and $3.9 million and $4.1 million, respectively, related primarily to inventory in Materials, labor, and other operating expenses (excluding depreciation)" in our Consolidated Statements of Income.

2. On March 1 and December 1, 2011, we completed the acquisitions of Tharco Packaging (Tharco) and Hexacomb Corporation (Hexacomb), respectively. Total cash consideration was $326.2 million. Financial results for Tharco and Hexacomb are included in our Packaging segment following the dates of acquisition.

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 (excluding depreciation)" in our Consolidated Statement of Income for the year ended December 31, 2011.

3. During the three months ended December 31, 2011, we recorded $1.4 million of transaction-related expenses in the Packaging segment, and during the year ended December 31, 2011, we recorded $1.6 million and $1.5 million of expenses in our Packaging and Corporate and Other segments, respectively. Transaction-related expenses include expenses associated with transactions, whether consummated or not, and do not include integration costs.

4. The year ended December 31, 2011, included $2.3 million of expense related to losses 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, 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 and EBITDA to EBITDA excluding special items (unaudited, dollars in thousands):

  Three Months Ended   Year Ended
  December 31   September 30,   December 31
  2012   2011   2012   2012   2011
Net income $13,547   $16,255   $3,603   $52,150   $75,210
Interest expense 15,484   15,653   15,458   61,740   63,817
Interest income (59)   (59)   (3)   (160)   (269)
Income tax provision 9,402   12,202   2,584   33,984   50,131
Depreciation, amortization, and depletion 39,907   37,320   37,540   152,306   143,758
EBITDA $78,281   $81,371   $59,182   $300,020   $332,647
          
St. Helens charges $457   $-   $31,288   $31,745   $-
Inventory purchase accounting expense -   -   -   -   2,200
Loss on extinguishment of debt -   2,300   -   -   2,300
Transaction-related costs -   1,364   -   -   3,094
EBITDA excluding special items $78,738   $85,035   $90,470   $331,765   $340,241

The following table reconciles segment income (loss) and EBITDA to EBITDA excluding special items (dollars in thousands):

  Three Months Ended   Year Ended
  December 31   September 30,   December 31
  2012   2011   2012   2012   2011
Packaging          
Segment income $31,630   $31,837   $22,715   $101,626   $104,996
Depreciation, amortization, and depletion 15,459   13,681   14,823   60,916   50,547
EBITDA 47,089   45,518   37,538   162,542   155,543
Inventory purchase accounting expense -   -   -   -   2,200
Transaction-related costs (a) -   1,364   -   -   1,591
EBITDA excluding special items $47,089   $46,882   $37,538   $162,542   $159,334
         
Paper          
Segment income $14,926   $21,794   $5,463   $73,913   $112,051
Depreciation, amortization, and depletion 23,318   22,596   21,812   87,650   89,482
EBITDA $38,244   $44,390   $27,275   $161,563   $201,533
St. Helens charges 457   -   31,288   31,745   -
EBITDA excluding special items 38,701   44,390   58,563   193,308   201,533
          
Corporate and Other          
Segment loss $(8,182)   $(7,280)   $(6,536)   $(27,825)   $(25,858)
Depreciation, amortization, and depletion 1,130   1,043   905   3,740   3,729
Loss on extinguishment of debt -   (2,300)   -   -   (2,300)
EBITDA $(7,052)   $(8,537)   $(5,631)   $(24,085)   $(24,429)
Loss on extinguishment of debt -   2,300   -   -   2,300
Transaction-related costs (a) -   -   -   -   1,503
EBITDA excluding special items (7,052)   (6,237)   (5,631)   (24,085)   (20,626)
          
EBITDA $78,281   $81,371   $59,182   $300,020   $332,647
          
EBITDA excluding special items $78,738   $85,035   $90,470   $331,765   $340,241

(a)Transaction-related costs include expenses associated with transactions, whether consummated or not, and do not include integration costs.

The following table reconciles net income to net income excluding special items and presents net income per diluted share excluding special items (unaudited, dollars and shares in thousands, except per-share data):

  Three Months Ended   Year Ended
  December 31   September 30,   December 31
  2012   2011   2012   2012   2011
Net income $13,547   $16,255   $3,603   $52,150   $75,210
St. Helens charges 457   -   31,288   31,745   -
Inventory purchase accounting expense -   -   -   -   2,200
Loss on extinguishment of debt -   2,300   -   -   2,300
Transaction-related costs -   1,364   -   -   3,094
Tax provision for special items (a) (177)   (1,418)   (12,108)   (12,285)   (2,939)
Net income excluding special items $13,827   $18,501   $22,783   $71,610   $79,865
         
Weighted average common shares outstanding: diluted 101,180   106,613   101,030   101,143   106,746
Net income excluding special items per diluted share $0.14   $0.17   $0.23   $0.71   $0.75

(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 (unaudited, dollars in thousands):

  Three Months Ended   Year Ended
  December 31   September 30,   December 31
  2012   2011   2012   2012   2011
Cash provided by operations $69,756   $74,646   $92,147   $235,030   $250,191
Expenditures for property and equipment (55,349)   (44,893)   (29,836)   (137,642)   (128,762)
Free cash flow $14,407   $29,753   $62,311   $97,388   $121,429

SOURCE: Boise Inc.

Greg Jones
Director, Investor Relations
208-384-7141

Virginia Aulin
Vice President, Human Resources and Corporate Affairs
208-384-7837

http://www.boiseinc.com/




This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients.

The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of the
information contained therein.

Source: Boise Paper Holdings LLC via Thomson Reuters ONE

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