Domtar CORP - FORM 8-K - EX-99.1 - NEWS RELEASE OF DOMTAR CORPORATION, DATED OCTOBER 27, 2011

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EXHIBIT 99.1


				395 de Maisonneuve Blvd. West Montreal, QC H3A 1L6


TICKER SYMBOL				MEDIA AND INVESTOR RELATIONS
(NYSE: UFS) (TSX: UFS)				Pascal Bossé Vice-President Corporate Communications and Investor Relations Tel.: 514-848-5938

DOMTAR CORPORATION REPORTS PRELIMINARY THIRD QUARTER 2011 FINANCIAL RESULTS

Good results with lower maintenance costs and higher prices for paper offsetting weakness in pulp prices

(All financial information is in U.S. dollars, and all earnings per share results are diluted, unless otherwise noted.)

•

Third quarter net earnings of $2.95 per share, earnings before items¹ of $3.10 per share

•

Operating income of $187 million, EBITDA before items¹ of $286 million in the third quarter

•

Acquisition of Attends Healthcare, Inc. completed on September 1, 2011

Montreal, October 27, 2011 – Domtar Corporation (NYSE: UFS) (TSX: UFS) today reported net earnings of $117 million ($2.95 per share) for the third quarter of 2011 compared to net earnings of $54 million ($1.30 per share) for the second quarter of 2011 and net earnings of $191 million ($4.44 per share) for the third quarter of 2010. Sales for the third quarter of 2011 amounted to $1.4 billion. Excluding items listed below, the Company had earnings before items¹ of $123 million ($3.10 per share) for the third quarter of 2011 compared to earnings before items¹ of $98 million ($2.37 per share) for the second quarter of 2011 and earnings before items¹ of $183 million ($4.26 per share) for the third quarter of 2010.

Third quarter 2011 items:

•

Gains on the sale of property, plant and equipment and business of $4 million ($3 million after tax);

•

Charge of $8 million ($4 million after tax) related to the impairment and write-down of property, plant and equipment;

•

Premium paid on debt repurchase of $4 million ($3 million after tax);

•

Closure and restructuring costs of $1 million ($1 million after tax); and

•

Negative impact of purchase accounting of $1 million ($1 million after tax).

Second quarter 2011 items:

•

Charge of $62 million ($38 million after tax) related to the impairment and write-down of property, plant and equipment;

•

Net losses on the sale of property, plant and equipment and business of $6 million ($5 million after tax); and

¹	Non-GAAP financial measure. Refer to the Reconciliation of Non-GAAP Financial Measures in the appendix.

1/12

•

Closure and restructuring costs of $2 million ($1 million after tax).

Third quarter 2010 items:

•

Gain on sale of property, plant and equipment, and business of $14 million ($18 million after tax);

•

Charge of $14 million ($9 million after tax) related to the impairment and write-down of property, plant and equipment; and

•

Closure and restructuring costs of $1 million ($1 million after tax).

“Our performance remains strong. Our financial results improved when compared to the second quarter despite the decline in average selling prices for pulp and high input costs,” said John D. Williams, President and Chief Executive Officer. “While our domestic commodity uncoated paper volumes are in line with market demand, we have developed some business in new markets and geographies which has allowed our volumes to remain steady. The recent acquisition of Attends offers us organic growth prospects and the economic uncertainty provides a backdrop to seize other opportunities and to continue to buy back stock,” added Mr. Williams.

Domtar completed the acquisition of privately-held Attends Healthcare, Inc. (“Attends”) on September 1, 2011. The results reported for the third quarter of 2011 include the financial results of Attends for the period from September 1, 2011 to September 30, 2011. The segment results are reported under “Personal Care” segment.

QUARTERLY REVIEW

Operating income before items¹ was $193 million in the third quarter of 2011 compared to an operating income before items¹ of $165 million in the second quarter of 2011. Depreciation and amortization totaled $93 million in the third quarter of 2011.


(In millions of dollars)	3Q 2011			2Q 2011
Sales	$	1,417		$	1,403
Operating income (loss)
Pulp and Paper segment		189			91
Distribution segment		(1	)		(2	)
Personal Care segment		—			—
Corporate		(1	)		6

Total		187			95
Operating income before items¹		193			165
Depreciation and amortization		93			95

¹	Non-GAAP financial measure. Refer to the Reconciliation of Non-GAAP Financial Measures in the appendix.

2/12

The increase in operating income before items¹ in the third quarter of 2011 was the result of lower maintenance costs and variable compensation, higher average selling prices for paper and the positive impact of a weaker Canadian dollar. These factors were partially offset by lower average selling prices for pulp and lower shipments for paper and pulp. When compared to the second quarter of 2011, paper shipments decreased 1% and pulp shipments decreased 1%. Paper deliveries of Ariva^TM increased 5% when compared to the second quarter of 2011. The shipments-to-production ratio for paper was 102% in the third quarter of 2011, compared to 101% in the second quarter of 2011. Paper inventories declined by 16,000 tons while pulp inventories increased by 21,000 metric tons as at the end of September, compared to June levels.

LIQUIDITY AND CAPITAL

Cash flow provided from operating activities amounted to $257 million and capital expenditures amounted to $31 million resulting in free cash flow¹ of $226 million in the third quarter of 2011.

Under its stock repurchase program, Domtar repurchased 2,515,791 shares of common stock during the third quarter and a total of 5,725,841 shares of common stock at an average price of $82.16 since the implementation of the program in May 2010. Domtar currently has $130 million remaining availability under its Program.

OUTLOOK

Domtar paper shipments are expected to decline in the fourth quarter when compared to the third quarter due to seasonal factors while the cyclical downturn in global pulp markets is expected to lead to further declines in average selling prices for market pulp. Domtar’s fourth quarter results will benefit from the inclusion of Attends’ financial results for a full quarter.

EARNINGS CONFERENCE CALL

The Company will hold a conference call today at 10:00 a.m. (ET) to discuss its third quarter 2011 financial results. Financial analysts are invited to participate in the call by dialing at least 10 minutes before start time 1-866-321-8231 (toll free—North America) or 1-416-642-5213 (International), while media and other interested individuals are invited to listen to the live webcast on the Domtar Corporation website at www.domtar.com.

The Company will release its fourth quarter 2011 earnings on February 2, 2012 before markets open, followed by a conference call at 10:00 a.m. (ET) to discuss results. The date is tentative and will be confirmed approximately three weeks prior to the official earnings release date.

¹	Non-GAAP financial measure. Refer to the Reconciliation of Non-GAAP Financial Measures in the appendix.

3/12

About Domtar

Domtar Corporation (NYSE: UFS) (TSX: UFS) is the largest integrated manufacturer and marketer of uncoated freesheet paper in North America and the second largest in the world based on production capacity, and is also a manufacturer of papergrade, fluff and specialty pulp. The Company designs, manufactures, markets and distributes a wide range of business, commercial printing and publishing as well as converting and specialty papers including recognized brands such as Cougar^®, Lynx^® Opaque Ultra, Husky^® Opaque Offset, First Choice^® and Domtar EarthChoice^® Office Paper, part of a family of environmentally and socially responsible papers. Domtar also produces a complete line of incontinence care products and distributes washcloths marketed primarily under the Attends^® brand name. Domtar owns and operates Ariva^TM^, an extensive network of strategically located paper distribution facilities. The Company employs approximately 8,800 people. To learn more, visit www.domtar.com.

Forward-Looking Statements

All statements in this news release that are not based on historical fact are “forward-looking statements.” While management has based any forward-looking statements contained herein on its current expectations, the information on which such expectations were based may change. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of risks, uncertainties, and other factors, many of which are outside of our control that could cause actual results to materially differ from such statements. Such risks, uncertainties, and other factors include, but are not necessarily limited to, those set forth under the captions “Forward-Looking Statements” and “Risk Factors” of the latest Form 10-K filed with the SEC as periodically updated by subsequently filed Form 10-Q’s. Unless specifically required by law, we assume no obligation to update or revise these forward-looking statements to reflect new events or circumstances.

-(30)-

4/12

Domtar Corporation

Highlights

(In millions of dollars, unless otherwise noted)


	Three months ended September 30 2011			Three months ended September 30 2010			Nine months ended September 30 2011			Nine months ended September 30 2010
	(Unaudited)
		$			$			$			$
Selected Segment Information
Sales
Pulp and Paper		1,246			1,296			3,776			3,858
Distribution		197			233			604			658
Personal Care		17			—			17			—
Wood		—			—			—			150

Total for reportable segments		1,460			1,529			4,397			4,666
Intersegment sales - Pulp and Paper		(43	)		(56	)		(154	)		(178	)
Intersegment sales - Wood		—			—			—			(11	)

Consolidated sales		1,417			1,473			4,243			4,477

Depreciation and amortization and impairment and write-down of property, plant and equipment
Pulp and Paper		91			96			277			287
Distribution		1			1			3			3
Personal Care		1			—			1			—
Wood		—			—			—			10

Total for reportable segments		93			97			281			300
Impairment and write-down of property, plant and equipment - Pulp and Paper		8			14			73			50

Consolidated depreciation and amortization and impairment and write-down of property, plant and equipment		101			111			354			350

Operating income (loss)
Pulp and Paper		189			237			489			506
Distribution		(1	)		—			—			—
Personal Care		—			—			—			—
Wood		—			—			—			(54	)
Corporate		(1	)		(1	)		4			(4	)

Consolidated operating income		187			236			493			448
Interest expense, net		25			24			67			126

Earnings before income taxes		162			212			426			322
Income tax expense		45			21			122			42

Net earnings		117			191			304			280

Per common share (in dollars)
Net earnings
Basic		2.96			4.47			7.43			6.53
Diluted		2.95			4.44			7.38			6.48
Weighted average number of common and exchangeable shares outstanding (millions)
Basic		39.5			42.7			40.9			42.9
Diluted		39.7			43.0			41.2			43.2

Cash flows provided from operating activities		257			267			711			1,000
Additions to property, plant and equipment		31			38			64			112

5/12

Domtar Corporation

Consolidated Statements of Earnings

(In millions of dollars, unless otherwise noted)


	Three months ended September 30 2011			Three months ended September 30 2010			Nine months ended September 30 2011			Nine months ended September 30 2010
	(Unaudited)
		$			$			$			$
Sales		1,417			1,473			4,243			4,477
Operating expenses
Cost of sales, excluding depreciation and amortization		1,055			1,048			3,132			3,397
Depreciation and amortization		93			97			281			300
Selling, general and administrative		75			91			253			244
Impairment and write-down of property, plant and equipment		8			14			73			50
Closure and restructuring costs		1			1			14			26
Other operating loss (income), net		(2	)		(14	)		(3	)		12

		1,230			1,237			3,750			4,029

Operating income		187			236			493			448
Interest expense, net		25			24			67			126

Earnings before income taxes		162			212			426			322
Income tax expense		45			21			122			42

Net earnings		117			191			304			280

Per common share (in dollars)
Net earnings
Basic		2.96			4.47			7.43			6.53
Diluted		2.95			4.44			7.38			6.48
Weighted average number of common and exchangeable shares outstanding (millions)
Basic		39.5			42.7			40.9			42.9
Diluted		39.7			43.0			41.2			43.2

6/12

Domtar Corporation

Consolidated Balance Sheets at

(In millions of dollars)


	September 30 2011			December 31 2010
	(Unaudited)
		$			$
Assets
Current assets
Cash and cash equivalents		461			530
Receivables, less allowances of $5 and $7		679			601
Inventories		630			648
Prepaid expenses		24			28
Income and other taxes receivable		51			78
Deferred income taxes		115			115

Total current assets		1,960			2,000
Property, plant and equipment, at cost		8,424			9,255
Accumulated depreciation		(4,934	)		(5,488	)

Net property, plant and equipment		3,490			3,767
Goodwill		163			—
Intangible assets, net of amortization		205			56
Other assets		202			203

Total assets		6,020			6,026

Liabilities and shareholders’ equity
Current liabilities
Bank indebtedness		17			23
Trade and other payables		753			678
Income and other taxes payable		29			22
Long-term debt due within one year		5			2

Total current liabilities		804			725
Long-term debt		837			825
Deferred income taxes and other		1,052			924
Other liabilities and deferred credits		328			350
Shareholders’ equity
Exchangeable shares		53			64
Additional paid-in capital		2,388			2,791
Retained earnings		623			357
Accumulated other comprehensive loss		(65	)		(10	)

Total shareholders’ equity		2,999			3,202

Total liabilities and shareholders’ equity		6,020			6,026

7/12

Domtar Corporation

Consolidated Statements of Cash Flows

(In millions of dollars)


	Nine months ended September 30 2011			Nine months ended September 30 2010
	(Unaudited)
		$			$
Operating activities
Net earnings		304			280
Adjustments to reconcile net earnings to cash flows from operating activities
Depreciation and amortization		281			300
Deferred income taxes and tax uncertainties		56			7
Impairment and write-down of property, plant and equipment		73			50
Loss on repurchase of long-term debt		4			40
Net losses (gains) on disposals of property, plant and equipment and sale of businesses		(5	)		33
Stock-based compensation expense		3			3
Other		—			(6	)
Changes in assets and liabilities, excluding the effects of acquisition and sale of businesses
Receivables		(56	)		(134	)
Inventories		20			40
Prepaid expenses		(4	)		(2	)
Trade and other payables		14			(4	)
Income and other taxes		27			375
Difference between employer pension and other post-retirement contributions and pension and other post-retirement expense		(7	)		5
Other assets and other liabilities		1			13

Cash flows provided from operating activities		711			1,000

Investing activities
Additions to property, plant and equipment		(64	)		(112	)
Proceeds from disposals of property, plant and equipment		34			26
Proceeds from sale of businesses		10			161
Acquisition of business, net of cash acquired		(288	)		—

Cash flows provided from (used for) investing activities		(308	)		75

Financing activities
Dividend payments		(36	)		(11	)
Net change in bank indebtedness		(7	)		(16	)
Repayment of long-term debt		(17	)		(763	)
Borrowings under accounts receivable securitization program		—			20
Premium paid on debt repurchases		(7	)		(26	)
Stock repurchase		(415	)		(44	)
Prepaid on structured stock repurchase, net		—			(19	)
Other		10			(3	)

Cash flows used for financing activities		(472	)		(862	)

Net increase (decrease) in cash and cash equivalents		(69	)		213
Translation adjustments related to cash and cash equivalents		—			—
Cash and cash equivalents at beginning of period		530			324

Cash and cash equivalents at end of period		461			537

Supplemental cash flow information
Net cash payments for:
Interest		51			77
Income taxes paid		42			24

8/12

Domtar Corporation

Quarterly Reconciliation of Non-GAAP Financial Measures

(In millions of dollars, unless otherwise noted)

The following table sets forth certain non-U.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 debt-to-total 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 after-tax (pre-tax) 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												2010
			Q1			Q2			Q3			YTD			Q1			Q2			Q3			Q4			YTD
Reconciliation of “Earnings before items” to Net earnings
	Net earnings	($)		133			54			117			304			58			31			191			325			605
(-)	Alternative fuel tax credits	($)		—			—			—			—			(18	)		—			—			—			(18	)
(-)	Cellulose biofuel producer credits	($)		—			—			—			—			—			—			—			(127	)		(127	)
(-)	Reversal of valuation allowance on Canadian deferred income tax balances	($)		—			—			—			—			—			—			—			(100	)		(100	)
(+)	Impairment and write-down of property, plant and equipment	($)		2			38			4			44			16			9			9			—			34
(+)	Closure and restructuring costs	($)		8			1			1			10			14			4			1			1			20
(-)	Net losses (gains) on disposals of property, plant and equipment and sale of businesses	($)		(5	)		5			(3	)		(3	)		(1	)		48			(18	)		—			29
(+)	Impact of purchase accounting	($)		—			—			1			1			—			—			—			—			—
(+)	Loss on repurchase of long-term debt	($)		—			—			3			3			—			24			—			4			28
(=)	Earnings before items	($)		138			98			123			359			69			116			183			103			471
(/)	Weighted avg. number of common and exchangeable shares outstanding (diluted)	(millions)		42.4			41.4			39.7			41.2			43.3			43.4			43.0			42.8			43.2
(=)	Earnings before items per diluted share	($)		3.25			2.37			3.10			8.71			1.59			2.67			4.26			2.41			10.90

Reconciliation of “EBITDA” and “EBITDA before items” to Net earnings
	Net earnings	($)		133			54			117			304			58			31			191			325			605
(+)	Income tax expense (benefit)	($)		57			20			45			122			26			(5	)		21			(199	)		(157	)
(+)	Interest expense, net	($)		21			21			25			67			32			70			24			29			155
(=)	Operating income	($)		211			95			187			493			116			96			236			155			603
(+)	Depreciation and amortization	($)		93			95			93			281			102			101			97			95			395
(+)	Impairment and write-down of property, plant and equipment	($)		3			62			8			73			22			14			14			—			50
(-)	Net losses (gains) on disposals of property, plant and equipment and sale of businesses	($)		(7	)		6			(4	)		(5	)		(1	)		48			(14	)		—			33
(=)	EBITDA	($)		300			258			284			842			239			259			333			250			1,081
(/)	Sales	($)		1,423			1,403			1,417			4,243			1,457			1,547			1,473			1,373			5,850
(=)	EBITDA margin	(%)		21	%		18	%		20	%		20	%		16	%		17	%		23	%		18	%		18	%
	EBITDA	($)		300			258			284			842			239			259			333			250			1,081
(-)	Alternative fuel tax credits	($)		—			—			—			—			(25	)		—			—			—			(25	)
(+)	Closure and restructuring costs	($)		11			2			1			14			20			5			1			1			27
(+)	Impact of purchase accounting	($)		—			—			1			1			—			—			—			—			—
(=)	EBITDA before items	($)		311			260			286			857			234			264			334			251			1,083
(/)	Sales	($)		1,423			1,403			1,417			4,243			1,457			1,547			1,473			1,373			5,850
(=)	EBITDA margin before items	(%)		22	%		19	%		20	%		20	%		16	%		17	%		23	%		18	%		19	%

Reconciliation of “Free cash flow” to Cash flow provided from operating activities
	Cash flow provided from operating activities	($)		148			306			257			711			123			610			267			166			1,166
(-)	Additions to property, plant and equipment	($)		(13	)		(20	)		(31	)		(64	)		(31	)		(43	)		(38	)		(41	)		(153	)
(=)	Free cash flow	($)		135			286			226			647			92			567			229			125			1,013

“Net debt-to-total capitalization” computation
	Bank indebtedness	($)		25			25			17						19			30			26			23
(+)	Long-term debt due within one year	($)		2			2			5						31			30			22			2
(+)	Long-term debt	($)		825			824			837						1,600			1,186			961			825
(=)	Debt	($)		852			851			859						1,650			1,246			1,009			850
(-)	Cash and cash equivalents	($)		(604	)		(742	)		(461	)					(314	)		(514	)		(537	)		(530	)
(=)	Net debt	($)		248			109			398						1,336			732			472			320
(+)	Shareholders’ equity	($)		3,288			3,194			2,999						2,748			2,642			2,811			3,202
(=)	Total capitalization	($)		3,536			3,303			3,397						4,084			3,374			3,283			3,522
	Net debt	($)		248			109			398						1,336			732			472			320
(/)	Total capitalization	($)		3,536			3,303			3,397						4,084			3,374			3,283			3,522
(=)	Net debt-to-total capitalization	(%)		7	%		3	%		12	%					33	%		22	%		14	%		9	%

“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 debt-to-total 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.

9/12

Domtar Corporation

Quarterly Reconciliation of Non-GAAP Financial Measures—By Segment 2011

(In millions of dollars, unless otherwise noted)

The following table sets forth certain non-U.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 pre-tax 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 Paper														Distribution														Personal Care ⁽¹⁾
			Q1’11			Q2’11			Q3’11			Q4’11		YTD			Q1’11			Q2’11			Q3’11			Q4’11		YTD			Q1’11		Q2’11		Q3’11			Q4’11		YTD
Reconciliation of Operating income (loss) to “Operating income (loss) before items”
	Operating income (loss)	($)		209			91			189			—		489			3			(2	)		(1	)		—		—			—		—		—			—		—
(+)	Impairment and write-down of property, plant and equipment	($)		3			62			8			—		73			—			—			—			—		—			—		—		—			—		—
(+)	Closure and restructuring costs	($)		11			2			1			—		14			—			—			—			—		—			—		—		—			—		—
(-)	Net losses (gains) on disposals of property, plant and equipment and sale of business	($)		(4	)		12			(4	)		—		4			(3	)		—			—			—		(3	)		—		—		—			—		—
(+)	Impact of purchase accounting	($)		—			—			—			—		—			—			—			—			—		—			—		—		1			—		1
(=)	Operating income (loss) before items	($)		219			167			194			—		580			—			(2	)		(1	)		—		(3	)		—		—		1			—		1
Reconciliation of “Operating income (loss) before items” to “EBITDA before items”
	Operating income (loss) before items	($)		219			167			194			—		580			—			(2	)		(1	)		—		(3	)		—		—		1			—		1
(+)	Depreciation and amortization	($)		92			94			91			—		277			1			1			1			—		3			—		—		1			—		1
(=)	EBITDA before items	($)		311			261			285			—		857			1			(1	)		—			—		—			—		—		2			—		2
(/)	Sales	($)		1,269			1,261			1,246			—		3,776			217			190			197			—		604			—		—		17			—		17
(=)	EBITDA margin before items	(%)		25	%		21	%		23	%		—		23	%		—			—			—			—		—			—		—		12	%		—		12	%


			Corporate														Total
			Q1’11			Q2’11			Q3’11			Q4’11		YTD			Q1’11			Q2’11			Q3’11			Q4’11		YTD
Reconciliation of Operating income (loss) to “Operating income (loss) before items”
	Operating income (loss)	($)		(1	)		6			(1	)		—		4			211			95			187			—		493
(+)	Impairment and write-down of property, plant and equipment	($)		—			—			—			—		—			3			62			8			—		73
(+)	Closure and restructuring costs	($)		—			—			—			—		—			11			2			1			—		14
(-)	Net losses (gains) on disposals of property, plant and equipment and sale of business	($)		—			(6	)		—			—		(6	)		(7	)		6			(4	)		—		(5	)
(+)	Impact of purchase accounting	($)		—			—			—			—		—			—			—			1			—		1
(=)	Operating income (loss) before items	($)		(1	)		—			(1	)		—		(2	)		218			165			193			—		576
Reconciliation of “Operating income (loss) before items” to “EBITDA before items”
	Operating income (loss) before items	($)		(1	)		—			(1	)		—		(2	)		218			165			193			—		576
(+)	Depreciation and amortization	($)		—			—			—			—		—			93			95			93			—		281
(=)	EBITDA before items	($)		(1	)		—			(1	)		—		(2	)		311			260			286			—		857
(/)	Sales	($)		—			—			—			—		—			1,486			1,451			1,460			—		4,397
(=)	EBITDA margin before items	(%)		—			—			—			—		—			21	%		18	%		20	%		—		19	%

“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 September 1, 2011, the Company acquired 100% of the shares of Attends Healthcare, Inc.

10/12

Domtar Corporation

Quarterly Reconciliation of Non-GAAP Financial Measures—By Segment 2010

(In millions of dollars, unless otherwise noted)


			Pulp and Paper															Distribution														Wood ⁽¹⁾
			Q1’10			Q2’10			Q3’10			Q4’10			YTD			Q1’10			Q2’10			Q3’10		Q4’10			YTD			Q1’10			Q2’10			Q3’10		Q4’10		YTD
Reconciliation of Operating income (loss) to “Operating income (loss) before items”
	Operating income (loss)	($)		120			149			237			161			667			1			(1	)		—		(3	)		(3	)		(5	)		(49	)		—		—		(54	)
(-)	Alternative fuel tax credits	($)		(25	)		—			—			—			(25	)		—			—			—		—			—			—			—			—		—		—
(+)	Impairment and write-down of property, plant and equipment	($)		22			14			14			—			50			—			—			—		—			—			—			—			—		—		—
(+)	Closure and restructuring costs	($)		20			5			1			—			26			—			—			—		1			1			—			—			—		—		—
(-)	Net losses (gains) on disposals of property, plant and equipment and sale of businesses	($)		—			(3	)		(14	)		—			(17	)		—			—			—		—			—			(1	)		49			—		—		48
(=)	Operating income (loss) before items	($)		137			165			238			161			701			1			(1	)		—		(2	)		(2	)		(6	)		—			—		—		(6	)
Reconciliation of “Operating income (loss) before items” to “EBITDA before items”
	Operating income (loss) before items	($)		137			165			238			161			701			1			(1	)		—		(2	)		(2	)		(6	)		—			—		—		(6	)
(+)	Depreciation and amortization	($)		96			95			96			94			381			1			1			1		1			4			5			5			—		—		10
(=)	EBITDA before items	($)		233			260			334			255			1,082			2			—			1		(1	)		2			(1	)		5			—		—		4
(/)	Sales	($)		1,245			1,317			1,296			1,212			5,070			212			213			233		212			870			67			83			—		—		150
(=)	EBITDA margin before items	(%)		19	%		20	%		26	%		21	%		21	%		1	%		—			—		—			—			—			6	%		—		—		3	%


			Corporate														Total
			Q1’10		Q2’10			Q3’10			Q4’10			YTD			Q1’10			Q2’10			Q3’10			Q4’10			YTD
Reconciliation of Operating income (loss) to “Operating income (loss) before items”
	Operating income (loss)	($)		—		(3	)		(1	)		(3	)		(7	)		116			96			236			155			603
(-)	Alternative fuel tax credits	($)		—		—			—			—			—			(25	)		—			—			—			(25	)
(+)	Impairment and write-down of property, plant and equipment	($)		—		—			—			—			—			22			14			14			—			50
(+)	Closure and restructuring costs	($)		—		—			—			—			—			20			5			1			1			27
(-)	Net losses (gains) on disposals of property, plant and equipment and sale of businesses	($)		—		2			—			—			2			(1	)		48			(14	)		—			33
(=)	Operating income (loss) before items	($)		—		(1	)		(1	)		(3	)		(5	)		132			163			237			156			688
Reconciliation of “Operating income (loss) before items” to “EBITDA before items”
	Operating income (loss) before items	($)		—		(1	)		(1	)		(3	)		(5	)		132			163			237			156			688
(+)	Depreciation and amortization	($)		—		—			—			—			—			102			101			97			95			395
(=)	EBITDA before items	($)		—		(1	)		(1	)		(3	)		(5	)		234			264			334			251			1,083
(/)	Sales	($)		—		—			—			—			—			1,524			1,613			1,529			1,424			6,090
(=)	EBITDA margin before items	(%)		—		—			—			—			—			15	%		16	%		22	%		18	%		18	%

⁽¹⁾	As previously reported, Domtar sold 88% of the Wood segment on June 30, 2010 to EACOM Timber Corporation (“EACOM”). During the fourth quarter of 2010, in an unrelated transaction, Domtar sold the remaining 12% of common stock held in EACOM.

11/12

Domtar Corporation

Supplemental Segmented Information

(In millions of dollars, unless otherwise noted)


		2011												2010
		Q1			Q2			Q3			YTD			Q1			Q2			Q3			Q4			YTD
Pulp and Paper Segment
Sales	($)		1,269			1,261			1,246			3,776			1,245			1,317			1,296			1,212			5,070
Intersegment sales - Pulp and Paper	($)		(63	)		(48	)		(43	)		(154	)		(62	)		(60	)		(56	)		(51	)		(229	)
Operating income	($)		209			91			189			489			120			149			237			161			667
Depreciation and amortization	($)		92			94			91			277			96			95			96			94			381
Impairment and write-down of property, plant and equipment	($)		3			62			8			73			22			14			14			—			50
Papers
Papers Production	(’000 ST)		899			890			875			2,664			906			882			906			873			3,567
Papers Shipments	(’000 ST)		913			901			889			2,703			960			891			896			850			3,597
Uncoated Freesheet	(’000 ST)		913			901			889			2,703			925			889			896			850			3,560
Coated Groundwood	(’000 ST)		—			—			—			—			35			2			—			—			37
Pulp
Pulp Shipments^(a)	(’000 ADMT)		375			361			358			1,094			388			486			412			376			1,662
Hardwood Kraft Pulp	(%)		20	%		19	%		18	%		19	%		40	%		38	%		37	%		24	%		35	%
Softwood Kraft Pulp	(%)		55	%		54	%		56	%		55	%		49	%		52	%		53	%		62	%		54	%
Fluff Pulp	(%)		25	%		27	%		26	%		26	%		11	%		10	%		10	%		14	%		11	%
Distribution Segment
Sales	($)		217			190			197			604			212			213			233			212			870
Operating income (loss)	($)		3			(2	)		(1	)		—			1			(1	)		—			(3	)		(3	)
Depreciation and amortization	($)		1			1			1			3			1			1			1			1			4
Personal Care Segment
Sales	($)		—			—			17			17			—			—			—			—			—
Operating income	($)		—			—			—			—			—			—			—			—			—
Depreciation and amortization	($)		—			—			1			1			—			—			—			—			—
Wood Segment
Sales	($)		—			—			—			—			67			83			—			—			150
Intersegment sales - Wood	($)		—			—			—			—			(5	)		(6	)		—			—			(11	)
Operating loss	($)		—			—			—			—			(5	)		(49	)		—			—			(54	)
Depreciation and amortization	($)		—			—			—			—			5			5			—			—			10
Lumber Production	(Millions FBM)		—			—			—			—			172			165			—			—			337
Lumber Shipments	(Millions FBM)		—			—			—			—			164			187			—			—			351
Average Exchange Rates	$US/$CAN		0.986			0.968			0.980			0.978			1.041			1.028			1.039			1.013			1.030
	$CAN/$US		1.014			1.034			1.021			1.023			0.961			0.973			0.962			0.987			0.971

(a)	Figures are gross of market pulp purchased from other producers on the open market for some of our paper making operations. Pulp Shipments represent the amount of pulp produced in excess of our internal requirement.

Note: the term “ST” refers to a short ton, the term “ADMT” refers to an air dry metric ton, and the term “FBM” refers to foot board measure.

12/12

Domtar CORP - FORM 8-K - EX-99.1 - NEWS RELEASE OF DOMTAR CORPORATION, DATED OCTOBER 27, 2011 - October 27, 2011

Attached files

Domtar CORP Reports