ý
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Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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¨
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Delaware
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20-3594554
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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601 West Riverside, Suite 1100
Spokane, Washington
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99201
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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ý
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Accelerated filer
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¨
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Page Number
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PART I.
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ITEM 1.
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Consolidated Statements of Operations for the three and six months ended June 30, 2016 and 2015
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Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2016 and 2015
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Consolidated Balance Sheets at
June 30, 2016 and December 31, 2015
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Consolidated Statements of Cash Flows for the
six months ended June 30, 2016 and 2015
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ITEM 2.
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ITEM 3.
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ITEM 4.
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PART II.
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ITEM 1.
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ITEM 1A.
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ITEM 2.
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ITEM 6.
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ITEM 1.
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Consolidated Financial Statements
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Three Months Ended
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Six Months Ended
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||||||||||||
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June 30,
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June 30,
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||||||||||||
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2016
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2015
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2016
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2015
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||||||||
Net sales
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$
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436,671
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$
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444,558
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$
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873,875
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$
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878,584
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Costs and expenses:
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||||||||
Cost of sales
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(361,851
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)
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(384,347
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)
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(730,498
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)
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(774,179
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)
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||||
Selling, general and administrative expenses
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(34,655
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)
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(28,138
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)
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(65,450
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)
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(57,095
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)
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||||
Total operating costs and expenses
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(396,506
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)
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(412,485
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)
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(795,948
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)
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(831,274
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)
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||||
Income from operations
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40,165
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32,073
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77,927
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47,310
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|
||||
Interest expense, net
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(7,396
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)
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(7,774
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)
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(15,039
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)
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(15,556
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)
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||||
Earnings before income taxes
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32,769
|
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24,299
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62,888
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31,754
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|
||||
Income tax provision
|
(11,905
|
)
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(8,702
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)
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(23,578
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)
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(10,400
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)
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||||
Net earnings
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$
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20,864
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$
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15,597
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$
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39,310
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$
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21,354
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Net earnings per common share:
|
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||||||||
Basic
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$
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1.22
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$
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0.82
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$
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2.27
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$
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1.11
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Diluted
|
1.21
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0.81
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2.26
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|
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1.10
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|
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Three Months Ended
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Six Months Ended
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||||||||||||
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June 30,
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June 30,
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||||||||||||
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2016
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2015
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2016
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2015
|
||||||||
Net earnings
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$
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20,864
|
|
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$
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15,597
|
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$
|
39,310
|
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$
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21,354
|
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Other comprehensive income:
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||||||||
Defined benefit pension and other postretirement employee benefits:
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||||||||
Amortization of actuarial loss included in net periodic
cost, net of tax of $276, $1,261, $865, and $2,467
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427
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1,965
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1,339
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3,842
|
|
||||
Amortization of prior service credit included in net periodic cost,
net of tax of $(166), $(204), $(332), and $(411)
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(256
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)
|
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(321
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)
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(513
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)
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(641
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)
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||||
Other comprehensive income, net of tax
|
171
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1,644
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826
|
|
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3,201
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|
||||
Comprehensive income
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$
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21,035
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$
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17,241
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$
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40,136
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$
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24,555
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|
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June 30,
2016 |
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December 31,
2015 |
||||
ASSETS
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|
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Current assets:
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||||
Cash and cash equivalents
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$
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9,395
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$
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5,610
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Restricted cash
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2,270
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2,270
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|
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Short-term investments
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—
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250
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|
||
Receivables, net
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143,061
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139,052
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Taxes receivable
|
744
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14,851
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Inventories
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248,934
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255,573
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Other current assets
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7,659
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9,331
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Total current assets
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412,063
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426,937
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Property, plant and equipment, net
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881,975
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866,538
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Goodwill
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209,087
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209,087
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Intangible assets, net
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17,517
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19,990
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Pension assets
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1,555
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596
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|
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Other assets, net
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4,535
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4,221
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TOTAL ASSETS
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$
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1,526,732
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$
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1,527,369
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Current liabilities:
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Accounts payable and accrued liabilities
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$
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208,292
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$
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220,368
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Current liability for pensions and other postretirement employee benefits
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7,559
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7,559
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Total current liabilities
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215,851
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227,927
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Long-term debt
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569,371
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568,987
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Liability for pensions and other postretirement employee benefits
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86,465
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89,057
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|
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Other long-term obligations
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42,873
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46,738
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|
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Accrued taxes
|
1,516
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|
1,676
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|
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Deferred tax liabilities
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127,762
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118,118
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|
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Stockholders’ equity:
|
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|
||||
Preferred stock, par value $0.0001 per share, 5,000,000 authorized shares, no shares
issued
|
—
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|
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—
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|
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Common stock, par value $0.0001 per share, 100,000,000 authorized
shares-24,208,242 and 24,193,098 shares issued
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2
|
|
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2
|
|
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Additional paid-in capital
|
343,155
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|
|
340,095
|
|
||
Retained earnings
|
559,617
|
|
|
520,307
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|
||
Treasury stock, at cost, common shares-7,215,340 and 6,380,309 shares repurchased
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(365,158
|
)
|
|
(329,990
|
)
|
||
Accumulated other comprehensive loss, net of tax
|
(54,722
|
)
|
|
(55,548
|
)
|
||
Total stockholders’ equity
|
482,894
|
|
|
474,866
|
|
||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
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$
|
1,526,732
|
|
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$
|
1,527,369
|
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Six Months Ended
|
||||||
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June 30,
|
||||||
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2016
|
|
2015
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES
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|
|
|
||||
Net earnings
|
$
|
39,310
|
|
|
$
|
21,354
|
|
Adjustments to reconcile net earnings to net cash flows from operating activities:
|
|
|
|
||||
Depreciation and amortization
|
43,174
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|
|
41,640
|
|
||
Equity-based compensation expense
|
7,716
|
|
|
2,019
|
|
||
Deferred tax provision (benefit)
|
8,674
|
|
|
(2,480
|
)
|
||
Employee benefit plans
|
(2,561
|
)
|
|
1,438
|
|
||
Deferred issuance costs on long-term debt
|
419
|
|
|
446
|
|
||
Disposal of plant and equipment, net
|
—
|
|
|
272
|
|
||
Non-cash adjustments to unrecognized taxes
|
(160
|
)
|
|
(979
|
)
|
||
Changes in working capital, net
|
(13,394
|
)
|
|
29,309
|
|
||
Changes in taxes receivable, net
|
14,107
|
|
|
1,255
|
|
||
Excess tax benefits from equity-based payment arrangements
|
(148
|
)
|
|
(1,459
|
)
|
||
Funding of qualified pension plans
|
—
|
|
|
(3,179
|
)
|
||
Other, net
|
(722
|
)
|
|
(1,726
|
)
|
||
Net cash flows from operating activities
|
96,415
|
|
|
87,910
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
||||
Changes in short-term investments, net
|
250
|
|
|
(10,000
|
)
|
||
Additions to plant and equipment
|
(57,394
|
)
|
|
(55,538
|
)
|
||
Proceeds from sale of assets
|
—
|
|
|
507
|
|
||
Net cash flows from investing activities
|
(57,144
|
)
|
|
(65,031
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
||||
Purchase of treasury stock
|
(35,168
|
)
|
|
(37,148
|
)
|
||
Borrowings on revolving credit facility
|
477,169
|
|
|
—
|
|
||
Repayments of revolving credit facility borrowings
|
(477,169
|
)
|
|
—
|
|
||
Payment of tax withholdings on equity-based payment arrangements
|
(466
|
)
|
|
(3,048
|
)
|
||
Excess tax benefits from equity-based payment arrangements
|
148
|
|
|
1,459
|
|
||
Other, net
|
—
|
|
|
(8
|
)
|
||
Net cash flows from financing activities
|
(35,486
|
)
|
|
(38,745
|
)
|
||
Increase (decrease) in cash and cash equivalents
|
3,785
|
|
|
(15,866
|
)
|
||
Cash and cash equivalents at beginning of period
|
5,610
|
|
|
27,331
|
|
||
Cash and cash equivalents at end of period
|
$
|
9,395
|
|
|
$
|
11,465
|
|
|
|
|
|
||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
||||
Cash paid for interest, net of amounts capitalized
|
$
|
13,368
|
|
|
$
|
14,280
|
|
Cash paid for income taxes
|
10,885
|
|
|
8,030
|
|
||
Cash received from income tax refunds
|
10,506
|
|
|
2,029
|
|
||
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING
ACTIVITIES
|
|
|
|
||||
Changes in accrued plant and equipment
|
$
|
(2,841
|
)
|
|
$
|
(5,187
|
)
|
(In thousands)
|
June 30, 2016
|
|
December 31, 2015
|
||||
Pulp, paperboard and tissue products
|
$
|
157,054
|
|
|
$
|
156,055
|
|
Materials and supplies
|
79,782
|
|
|
80,020
|
|
||
Logs, pulpwood, chips and sawdust
|
12,098
|
|
|
19,498
|
|
||
|
$
|
248,934
|
|
|
$
|
255,573
|
|
|
June 30, 2016
|
||||||||||||
(Dollars in thousands, lives in years)
|
Useful
Life
|
|
Historical
Cost
|
|
Accumulated
Amortization
|
|
Net
Balance
|
||||||
Customer relationships
|
9.0
|
|
$
|
41,001
|
|
|
$
|
(25,056
|
)
|
|
$
|
15,945
|
|
Trade names and trademarks
|
10.0
|
|
3,286
|
|
|
(1,807
|
)
|
|
1,479
|
|
|||
Non-compete agreements
|
5.0
|
|
574
|
|
|
(481
|
)
|
|
93
|
|
|||
|
|
|
$
|
44,861
|
|
|
$
|
(27,344
|
)
|
|
$
|
17,517
|
|
|
|
|
|
|
|
|
|
||||||
|
December 31, 2015
|
||||||||||||
(Dollars in thousands, lives in years)
|
Useful
Life
|
|
Historical
Cost
|
|
Accumulated
Amortization
|
|
Net
Balance
|
||||||
Customer relationships
|
9.0
|
|
$
|
41,001
|
|
|
$
|
(22,778
|
)
|
|
$
|
18,223
|
|
Trade names and trademarks
|
10.0
|
|
3,286
|
|
|
(1,643
|
)
|
|
1,643
|
|
|||
Non-compete agreements
|
5.0
|
|
574
|
|
|
(450
|
)
|
|
124
|
|
|||
|
|
|
$
|
44,861
|
|
|
$
|
(24,871
|
)
|
|
$
|
19,990
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
Statutory federal income tax rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State taxes, net of credits
|
3.6
|
|
|
2.2
|
|
|
3.6
|
|
|
2.2
|
|
Change in valuation allowances
|
(0.2
|
)
|
|
0.9
|
|
|
0.1
|
|
|
0.9
|
|
Federal manufacturing deduction
|
(1.7
|
)
|
|
(3.1
|
)
|
|
(1.7
|
)
|
|
(3.1
|
)
|
Change in uncertain tax positions
|
0.2
|
|
|
—
|
|
|
1.2
|
|
|
(3.1
|
)
|
Interest accrued on uncertain tax positions
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
Federal credits and audit adjustments
|
(0.7
|
)
|
|
(0.4
|
)
|
|
(0.7
|
)
|
|
(0.4
|
)
|
Return to provision adjustments
|
(0.2
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
(0.1
|
)
|
Other
|
0.3
|
|
|
1.2
|
|
|
—
|
|
|
1.3
|
|
Effective tax rate
|
36.3
|
%
|
|
35.8
|
%
|
|
37.4
|
%
|
|
32.8
|
%
|
(In thousands)
|
June 30, 2016
|
|
December 31, 2015
|
||||
Trade accounts payable
|
$
|
116,909
|
|
|
$
|
128,045
|
|
Accrued wages, salaries and employee benefits
|
45,137
|
|
|
43,997
|
|
||
Accrued interest
|
11,930
|
|
|
11,981
|
|
||
Accrued discounts and allowances
|
9,819
|
|
|
8,954
|
|
||
Accrued taxes other than income taxes payable
|
6,282
|
|
|
5,112
|
|
||
Accrued utilities
|
6,202
|
|
|
7,536
|
|
||
Other
|
12,013
|
|
|
14,743
|
|
||
|
$
|
208,292
|
|
|
$
|
220,368
|
|
(In thousands)
|
June 30, 2016
|
|
December 31, 2015
|
||||
Long-term lease obligations, net of current portion
|
$
|
23,636
|
|
|
$
|
24,054
|
|
Deferred compensation
|
8,720
|
|
|
10,755
|
|
||
Deferred proceeds
|
8,235
|
|
|
9,386
|
|
||
Other
|
2,282
|
|
|
2,543
|
|
||
|
$
|
42,873
|
|
|
$
|
46,738
|
|
(In thousands)
|
Pension and Other Post Retirement Employee Benefit Plan Adjustments
|
|
Total
|
||||
Balance at December 31, 2015
|
$
|
(55,548
|
)
|
|
$
|
(55,548
|
)
|
Other comprehensive income, net of tax
1
|
826
|
|
|
826
|
|
||
Balance at June 30, 2016
|
$
|
(54,722
|
)
|
|
$
|
(54,722
|
)
|
|
|
|
|
||||
(In thousands)
|
Pension and Other Post Retirement Employee Benefit Plan Adjustments
|
|
Total
|
||||
Balance at December 31, 2014
|
$
|
(70,863
|
)
|
|
$
|
(70,863
|
)
|
Other comprehensive income, net of tax
1
|
3,201
|
|
|
3,201
|
|
||
Balance at June 30, 2015
|
$
|
(67,662
|
)
|
|
$
|
(67,662
|
)
|
1
|
For the
six
months ended
June 30, 2016
and
2015
, net periodic costs associated with our pension and other postretirement employee benefit, or OPEB, plans included in other comprehensive income and reclassified from accumulated other comprehensive loss included
$2.2 million
and
$6.3 million
, respectively, of actuarial loss amortization, as well as
$0.8 million
and
$1.1 million
, respectively, of prior service credit amortization, all net of tax totaling
$0.5 million
and
$2.1 million
, respectively. These accumulated other comprehensive loss components are included in the computation of net periodic pension and OPEB costs in Note 10, “Pension and Other Postretirement Employee Benefit Plans.”
|
|
Three Months Ended June 30,
|
||||||||||||||
(In thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
Pension Benefit Plans
|
|
Other Postretirement
Employee Benefit Plans
|
||||||||||||
Service cost
|
$
|
382
|
|
|
$
|
307
|
|
|
$
|
51
|
|
|
$
|
33
|
|
Interest cost
|
3,633
|
|
|
3,475
|
|
|
810
|
|
|
892
|
|
||||
Expected return on plan assets
|
(4,878
|
)
|
|
(5,074
|
)
|
|
(1
|
)
|
|
—
|
|
||||
Amortization of prior service cost (credit)
|
6
|
|
|
18
|
|
|
(428
|
)
|
|
(543
|
)
|
||||
Amortization of actuarial loss (gain)
|
2,761
|
|
|
3,226
|
|
|
(2,058
|
)
|
|
—
|
|
||||
Net periodic cost
|
$
|
1,904
|
|
|
$
|
1,952
|
|
|
$
|
(1,626
|
)
|
|
$
|
382
|
|
|
Six Months Ended June 30,
|
||||||||||||||
(In thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
Pension Benefit Plans
|
|
Other Postretirement
Employee Benefit Plans
|
||||||||||||
Service cost
|
$
|
780
|
|
|
$
|
623
|
|
|
$
|
125
|
|
|
$
|
181
|
|
Interest cost
|
7,261
|
|
|
6,965
|
|
|
1,576
|
|
|
1,940
|
|
||||
Expected return on plan assets
|
(9,761
|
)
|
|
(10,058
|
)
|
|
(1
|
)
|
|
—
|
|
||||
Amortization of prior service cost (credit)
|
11
|
|
|
36
|
|
|
(856
|
)
|
|
(1,088
|
)
|
||||
Amortization of actuarial loss (gain)
|
5,645
|
|
|
6,309
|
|
|
(3,441
|
)
|
|
—
|
|
||||
Net periodic cost
|
$
|
3,936
|
|
|
$
|
3,875
|
|
|
$
|
(2,597
|
)
|
|
$
|
1,033
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Basic average common shares outstanding
1
|
17,065,663
|
|
|
19,081,848
|
|
|
17,293,091
|
|
|
19,205,254
|
|
||||
Incremental shares due to:
|
|
|
|
|
|
|
|
||||||||
Restricted stock units
|
53,108
|
|
|
93,459
|
|
|
32,355
|
|
|
74,324
|
|
||||
Performance shares
|
89,783
|
|
|
118,868
|
|
|
60,617
|
|
|
104,330
|
|
||||
Stock options
|
25,441
|
|
|
79
|
|
|
—
|
|
|
459
|
|
||||
Diluted average common shares outstanding
|
17,233,995
|
|
|
19,294,254
|
|
|
17,386,063
|
|
|
19,384,367
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Basic net earnings per common share
|
$
|
1.22
|
|
|
$
|
0.82
|
|
|
$
|
2.27
|
|
|
$
|
1.11
|
|
Diluted net earnings per common share
|
1.21
|
|
|
0.81
|
|
|
2.26
|
|
|
1.10
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Anti-dilutive shares excluded from calculation
|
222,026
|
|
|
265,149
|
|
|
665,605
|
|
|
326,085
|
|
1
|
Basic average common shares outstanding include restricted stock awards that are fully vested, but are deferred for future issuance.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(In thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Restricted stock units
|
$
|
367
|
|
|
$
|
552
|
|
|
$
|
660
|
|
|
$
|
963
|
|
Performance shares
|
819
|
|
|
1,164
|
|
|
1,436
|
|
|
2,043
|
|
||||
Stock options
|
748
|
|
|
592
|
|
|
1,284
|
|
|
941
|
|
||||
Total employee equity-based compensation
|
$
|
1,934
|
|
|
$
|
2,308
|
|
|
$
|
3,380
|
|
|
$
|
3,947
|
|
|
Six Months Ended
|
|||||
|
June 30, 2016
|
|||||
|
Number of
Shares Subject to Award
|
|
Average Fair
Value of Award Per Share
|
|||
Restricted stock units
|
44,627
|
|
|
$
|
39.10
|
|
Performance shares
|
93,397
|
|
|
39.70
|
|
|
Stock options
|
280,191
|
|
|
14.42
|
|
|
June 30,
|
|
December 31,
|
||||||||||||
|
2016
|
|
2015
|
||||||||||||
|
Carrying
|
|
Fair
|
|
Carrying
|
|
Fair
|
||||||||
(In thousands)
|
Amount
|
|
Value
|
|
Amount
|
|
Value
|
||||||||
Cash and cash equivalents, restricted cash and short-term investments (Level 1)
|
$
|
11,665
|
|
|
$
|
11,665
|
|
|
$
|
8,130
|
|
|
$
|
8,130
|
|
Long-term debt (Level 1)
|
575,000
|
|
|
569,500
|
|
|
575,000
|
|
|
558,250
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(In thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Segment net sales:
|
|
|
|
|
|
|
|
||||||||
Consumer Products
|
$
|
247,912
|
|
|
$
|
239,391
|
|
|
$
|
492,930
|
|
|
$
|
474,567
|
|
Pulp and Paperboard
|
188,759
|
|
|
205,167
|
|
|
380,945
|
|
|
404,017
|
|
||||
Total segment net sales
|
$
|
436,671
|
|
|
$
|
444,558
|
|
|
$
|
873,875
|
|
|
$
|
878,584
|
|
|
|
|
|
|
|
|
|
||||||||
Operating income (loss):
|
|
|
|
|
|
|
|
||||||||
Consumer Products
|
$
|
18,544
|
|
|
$
|
17,032
|
|
|
$
|
36,934
|
|
|
$
|
29,427
|
|
Pulp and Paperboard
|
40,032
|
|
|
27,754
|
|
|
75,195
|
|
|
43,948
|
|
||||
|
58,576
|
|
|
44,786
|
|
|
112,129
|
|
|
73,375
|
|
||||
Corporate
|
(18,411
|
)
|
|
(12,713
|
)
|
|
(34,202
|
)
|
|
(26,065
|
)
|
||||
Income from operations
|
$
|
40,165
|
|
|
$
|
32,073
|
|
|
$
|
77,927
|
|
|
$
|
47,310
|
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization:
|
|
|
|
|
|
|
|
||||||||
Consumer Products
|
$
|
14,203
|
|
|
$
|
13,438
|
|
|
$
|
27,962
|
|
|
$
|
26,415
|
|
Pulp and Paperboard
|
6,449
|
|
|
6,737
|
|
|
12,816
|
|
|
14,048
|
|
||||
Corporate
|
1,372
|
|
|
457
|
|
|
2,396
|
|
|
1,177
|
|
||||
Total depreciation and amortization
|
$
|
22,024
|
|
|
$
|
20,632
|
|
|
$
|
43,174
|
|
|
$
|
41,640
|
|
|
|
|
Guarantor
|
|
|
|
|
||||||||
(In thousands)
|
Issuer
|
|
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||
Net sales
|
$
|
425,637
|
|
|
$
|
67,824
|
|
|
$
|
(56,790
|
)
|
|
$
|
436,671
|
|
Cost and expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of sales
|
(356,698
|
)
|
|
(61,943
|
)
|
|
56,790
|
|
|
(361,851
|
)
|
||||
Selling, general and administrative expenses
|
(30,817
|
)
|
|
(3,838
|
)
|
|
—
|
|
|
(34,655
|
)
|
||||
Total operating costs and expenses
|
(387,515
|
)
|
|
(65,781
|
)
|
|
56,790
|
|
|
(396,506
|
)
|
||||
Income from operations
|
38,122
|
|
|
2,043
|
|
|
—
|
|
|
40,165
|
|
||||
Interest expense, net
|
(7,373
|
)
|
|
(23
|
)
|
|
—
|
|
|
(7,396
|
)
|
||||
Earnings before income taxes
|
30,749
|
|
|
2,020
|
|
|
—
|
|
|
32,769
|
|
||||
Income tax provision
|
(11,124
|
)
|
|
(781
|
)
|
|
—
|
|
|
(11,905
|
)
|
||||
Equity in income of subsidiary
|
1,239
|
|
|
—
|
|
|
(1,239
|
)
|
|
—
|
|
||||
Net earnings
|
$
|
20,864
|
|
|
$
|
1,239
|
|
|
$
|
(1,239
|
)
|
|
$
|
20,864
|
|
Other comprehensive income, net of tax
|
171
|
|
|
—
|
|
|
—
|
|
|
171
|
|
||||
Comprehensive income
|
$
|
21,035
|
|
|
$
|
1,239
|
|
|
$
|
(1,239
|
)
|
|
$
|
21,035
|
|
|
|
|
Guarantor
|
|
|
|
|
||||||||
(In thousands)
|
Issuer
|
|
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||
Net sales
|
$
|
844,683
|
|
|
$
|
145,449
|
|
|
$
|
(116,257
|
)
|
|
$
|
873,875
|
|
Cost and expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of sales
|
(713,412
|
)
|
|
(133,343
|
)
|
|
116,257
|
|
|
(730,498
|
)
|
||||
Selling, general and administrative expenses
|
(57,654
|
)
|
|
(7,796
|
)
|
|
—
|
|
|
(65,450
|
)
|
||||
Total operating costs and expenses
|
(771,066
|
)
|
|
(141,139
|
)
|
|
116,257
|
|
|
(795,948
|
)
|
||||
Income from operations
|
73,617
|
|
|
4,310
|
|
|
—
|
|
|
77,927
|
|
||||
Interest expense, net
|
(15,016
|
)
|
|
(23
|
)
|
|
—
|
|
|
(15,039
|
)
|
||||
Earnings before income taxes
|
58,601
|
|
|
4,287
|
|
|
—
|
|
|
62,888
|
|
||||
Income tax provision
|
(21,594
|
)
|
|
(1,984
|
)
|
|
—
|
|
|
(23,578
|
)
|
||||
Equity in loss of subsidiary
|
2,303
|
|
|
—
|
|
|
(2,303
|
)
|
|
—
|
|
||||
Net earnings
|
$
|
39,310
|
|
|
$
|
2,303
|
|
|
$
|
(2,303
|
)
|
|
$
|
39,310
|
|
Other comprehensive income, net of tax
|
826
|
|
|
—
|
|
|
—
|
|
|
826
|
|
||||
Comprehensive income
|
$
|
40,136
|
|
|
$
|
2,303
|
|
|
$
|
(2,303
|
)
|
|
$
|
40,136
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
Guarantor
|
|
|
|
|
||||||||
(In thousands)
|
Issuer
|
|
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||
Net sales
|
$
|
401,444
|
|
|
$
|
70,271
|
|
|
$
|
(27,157
|
)
|
|
$
|
444,558
|
|
Cost and expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of sales
|
(342,714
|
)
|
|
(68,790
|
)
|
|
27,157
|
|
|
(384,347
|
)
|
||||
Selling, general and administrative expenses
|
(25,431
|
)
|
|
(2,707
|
)
|
|
—
|
|
|
(28,138
|
)
|
||||
Total operating costs and expenses
|
(368,145
|
)
|
|
(71,497
|
)
|
|
27,157
|
|
|
(412,485
|
)
|
||||
Income (loss) from operations
|
33,299
|
|
|
(1,226
|
)
|
|
—
|
|
|
32,073
|
|
||||
Interest expense, net
|
(7,715
|
)
|
|
(59
|
)
|
|
—
|
|
|
(7,774
|
)
|
||||
Earnings (loss) before income taxes
|
25,584
|
|
|
(1,285
|
)
|
|
—
|
|
|
24,299
|
|
||||
Income tax provision
|
(9,681
|
)
|
|
(841
|
)
|
|
1,820
|
|
|
(8,702
|
)
|
||||
Equity in income of subsidiary
|
(2,126
|
)
|
|
—
|
|
|
2,126
|
|
|
—
|
|
||||
Net earnings (loss)
|
$
|
13,777
|
|
|
$
|
(2,126
|
)
|
|
$
|
3,946
|
|
|
$
|
15,597
|
|
Other comprehensive income, net of tax
|
1,644
|
|
|
—
|
|
|
—
|
|
|
1,644
|
|
||||
Comprehensive income (loss)
|
$
|
15,421
|
|
|
$
|
(2,126
|
)
|
|
$
|
3,946
|
|
|
$
|
17,241
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
Guarantor
|
|
|
|
|
||||||||
(In thousands)
|
Issuer
|
|
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||
Net sales
|
$
|
796,831
|
|
|
$
|
143,599
|
|
|
$
|
(61,846
|
)
|
|
$
|
878,584
|
|
Cost and expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of sales
|
(693,760
|
)
|
|
(142,265
|
)
|
|
61,846
|
|
|
(774,179
|
)
|
||||
Selling, general and administrative expenses
|
(50,219
|
)
|
|
(6,876
|
)
|
|
—
|
|
|
(57,095
|
)
|
||||
Total operating costs and expenses
|
(743,979
|
)
|
|
(149,141
|
)
|
|
61,846
|
|
|
(831,274
|
)
|
||||
Income (loss) from operations
|
52,852
|
|
|
(5,542
|
)
|
|
—
|
|
|
47,310
|
|
||||
Interest expense, net
|
(15,482
|
)
|
|
(74
|
)
|
|
—
|
|
|
(15,556
|
)
|
||||
Earnings (loss) before income taxes
|
37,370
|
|
|
(5,616
|
)
|
|
—
|
|
|
31,754
|
|
||||
Income tax provision
|
(12,909
|
)
|
|
(1,183
|
)
|
|
3,692
|
|
|
(10,400
|
)
|
||||
Equity in loss of subsidiary
|
(6,799
|
)
|
|
—
|
|
|
6,799
|
|
|
—
|
|
||||
Net earnings (loss)
|
$
|
17,662
|
|
|
$
|
(6,799
|
)
|
|
$
|
10,491
|
|
|
$
|
21,354
|
|
Other comprehensive income, net of tax
|
3,201
|
|
|
—
|
|
|
—
|
|
|
3,201
|
|
||||
Comprehensive income (loss)
|
$
|
20,863
|
|
|
$
|
(6,799
|
)
|
|
$
|
10,491
|
|
|
$
|
24,555
|
|
(In thousands)
|
Issuer
|
|
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||
ASSETS
|
|
|
|
|
|
|
|
||||||||
Current assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
9,395
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,395
|
|
Restricted cash
|
2,270
|
|
|
—
|
|
|
—
|
|
|
2,270
|
|
||||
Receivables, net
|
127,823
|
|
|
15,238
|
|
|
—
|
|
|
143,061
|
|
||||
Taxes receivable
|
2,221
|
|
|
35
|
|
|
(1,512
|
)
|
|
744
|
|
||||
Inventories
|
216,891
|
|
|
32,043
|
|
|
—
|
|
|
248,934
|
|
||||
Other current assets
|
7,196
|
|
|
463
|
|
|
—
|
|
|
7,659
|
|
||||
Total current assets
|
365,796
|
|
|
47,779
|
|
|
(1,512
|
)
|
|
412,063
|
|
||||
Property, plant and equipment, net
|
740,687
|
|
|
141,288
|
|
|
—
|
|
|
881,975
|
|
||||
Goodwill
|
209,087
|
|
|
—
|
|
|
—
|
|
|
209,087
|
|
||||
Intangible assets, net
|
3,657
|
|
|
13,860
|
|
|
—
|
|
|
17,517
|
|
||||
Intercompany receivable (payable)
|
(1,147
|
)
|
|
1,147
|
|
|
—
|
|
|
—
|
|
||||
Investment in subsidiary
|
142,061
|
|
|
—
|
|
|
(142,061
|
)
|
|
—
|
|
||||
Pension assets
|
1,555
|
|
|
—
|
|
|
—
|
|
|
1,555
|
|
||||
Other assets, net
|
5,043
|
|
|
844
|
|
|
(1,352
|
)
|
|
4,535
|
|
||||
TOTAL ASSETS
|
$
|
1,466,739
|
|
|
$
|
204,918
|
|
|
$
|
(144,925
|
)
|
|
$
|
1,526,732
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
||||||||
Current liabilities:
|
|
|
|
|
|
|
|
||||||||
Accounts payable and accrued
liabilities
|
$
|
185,769
|
|
|
$
|
24,035
|
|
|
$
|
(1,512
|
)
|
|
$
|
208,292
|
|
Current liability for pensions and
other postretirement employee benefits
|
7,559
|
|
|
—
|
|
|
—
|
|
|
7,559
|
|
||||
Total current liabilities
|
193,328
|
|
|
24,035
|
|
|
(1,512
|
)
|
|
215,851
|
|
||||
Long-term debt
|
569,371
|
|
|
—
|
|
|
—
|
|
|
569,371
|
|
||||
Liability for pensions and other
postretirement employee benefits
|
86,465
|
|
|
—
|
|
|
—
|
|
|
86,465
|
|
||||
Other long-term obligations
|
42,458
|
|
|
415
|
|
|
—
|
|
|
42,873
|
|
||||
Accrued taxes
|
705
|
|
|
811
|
|
|
—
|
|
|
1,516
|
|
||||
Deferred tax liabilities
|
91,518
|
|
|
37,596
|
|
|
(1,352
|
)
|
|
127,762
|
|
||||
Stockholders' equity excluding accumulated other comprehensive loss
|
537,616
|
|
|
142,061
|
|
|
(142,061
|
)
|
|
537,616
|
|
||||
Accumulated other comprehensive loss,
net of tax |
(54,722
|
)
|
|
—
|
|
|
—
|
|
|
(54,722
|
)
|
||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
1,466,739
|
|
|
$
|
204,918
|
|
|
$
|
(144,925
|
)
|
|
$
|
1,526,732
|
|
(In thousands)
|
Issuer
|
|
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||
ASSETS
|
|
|
|
|
|
|
|
||||||||
Current assets:
|
|
|
|
|
|
|
|
||||||||
Cash
|
$
|
5,610
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,610
|
|
Restricted cash
|
2,270
|
|
|
—
|
|
|
—
|
|
|
2,270
|
|
||||
Short-term investments
|
250
|
|
|
—
|
|
|
—
|
|
|
250
|
|
||||
Receivables, net
|
123,131
|
|
|
15,921
|
|
|
—
|
|
|
139,052
|
|
||||
Taxes receivable
|
16,221
|
|
|
(1,370
|
)
|
|
—
|
|
|
14,851
|
|
||||
Inventories
|
219,130
|
|
|
36,443
|
|
|
—
|
|
|
255,573
|
|
||||
Other current assets
|
8,838
|
|
|
493
|
|
|
—
|
|
|
9,331
|
|
||||
Total current assets
|
375,450
|
|
|
51,487
|
|
|
—
|
|
|
426,937
|
|
||||
Property, plant and equipment, net
|
719,436
|
|
|
147,102
|
|
|
—
|
|
|
866,538
|
|
||||
Goodwill
|
209,087
|
|
|
—
|
|
|
—
|
|
|
209,087
|
|
||||
Intangible assets, net
|
4,180
|
|
|
15,810
|
|
|
—
|
|
|
19,990
|
|
||||
Intercompany receivable (payable)
|
14,013
|
|
|
(15,151
|
)
|
|
1,138
|
|
|
—
|
|
||||
Investment in subsidiary
|
139,758
|
|
|
—
|
|
|
(139,758
|
)
|
|
—
|
|
||||
Pension assets
|
596
|
|
|
—
|
|
|
—
|
|
|
596
|
|
||||
Other assets, net
|
4,142
|
|
|
79
|
|
|
—
|
|
|
4,221
|
|
||||
TOTAL ASSETS
|
$
|
1,466,662
|
|
|
$
|
199,327
|
|
|
$
|
(138,620
|
)
|
|
$
|
1,527,369
|
|
LIABILITIES AND STOCKHOLDERS’
EQUITY
|
|
|
|
|
|
|
|
||||||||
Current liabilities:
|
|
|
|
|
|
|
|
||||||||
Accounts payable and accrued
liabilities
|
$
|
196,891
|
|
|
$
|
23,477
|
|
|
$
|
—
|
|
|
$
|
220,368
|
|
Current liability for pensions and
other postretirement employee benefits
|
7,559
|
|
|
—
|
|
|
—
|
|
|
7,559
|
|
||||
Total current liabilities
|
204,450
|
|
|
23,477
|
|
|
—
|
|
|
227,927
|
|
||||
Long-term debt
|
568,987
|
|
|
—
|
|
|
—
|
|
|
568,987
|
|
||||
Liability for pensions and other
postretirement employee benefits
|
89,057
|
|
|
—
|
|
|
—
|
|
|
89,057
|
|
||||
Other long-term obligations
|
46,182
|
|
|
556
|
|
|
—
|
|
|
46,738
|
|
||||
Accrued taxes
|
874
|
|
|
802
|
|
|
—
|
|
|
1,676
|
|
||||
Deferred tax liabilities
|
82,246
|
|
|
34,734
|
|
|
1,138
|
|
|
118,118
|
|
||||
Stockholders’ equity excluding
accumulated other comprehensive loss |
530,414
|
|
|
139,758
|
|
|
(139,758
|
)
|
|
530,414
|
|
||||
Accumulated other comprehensive loss,
net of tax
|
(55,548
|
)
|
|
—
|
|
|
—
|
|
|
(55,548
|
)
|
||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
1,466,662
|
|
|
$
|
199,327
|
|
|
$
|
(138,620
|
)
|
|
$
|
1,527,369
|
|
(In thousands)
|
Issuer
|
|
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
||||||||
Net earnings
|
$
|
39,310
|
|
|
$
|
2,303
|
|
|
$
|
(2,303
|
)
|
|
$
|
39,310
|
|
Adjustments to reconcile net earnings to
net cash flows from operating activities:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
32,905
|
|
|
10,269
|
|
|
—
|
|
|
43,174
|
|
||||
Equity-based compensation expense
|
7,716
|
|
|
—
|
|
|
—
|
|
|
7,716
|
|
||||
Deferred tax provision
|
7,858
|
|
|
1,954
|
|
|
(1,138
|
)
|
|
8,674
|
|
||||
Employee benefit plans
|
(2,561
|
)
|
|
—
|
|
|
—
|
|
|
(2,561
|
)
|
||||
Deferred issuance costs on long-term debt
|
419
|
|
|
—
|
|
|
—
|
|
|
419
|
|
||||
Non-cash adjustments to unrecognized taxes
|
(169
|
)
|
|
9
|
|
|
—
|
|
|
(160
|
)
|
||||
Changes in working capital, net
|
(18,437
|
)
|
|
6,555
|
|
|
(1,512
|
)
|
|
(13,394
|
)
|
||||
Changes in taxes receivable, net
|
14,000
|
|
|
(1,405
|
)
|
|
1,512
|
|
|
14,107
|
|
||||
Excess tax benefits from equity-based payment arrangements
|
(148
|
)
|
|
—
|
|
|
—
|
|
|
(148
|
)
|
||||
Other, net
|
(706
|
)
|
|
(16
|
)
|
|
—
|
|
|
(722
|
)
|
||||
Net cash flows from operating activities
|
80,187
|
|
|
19,669
|
|
|
(3,441
|
)
|
|
96,415
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
||||||||
Changes in short-term investments, net
|
250
|
|
|
—
|
|
|
—
|
|
|
250
|
|
||||
Additions to plant and equipment
|
(54,049
|
)
|
|
(3,345
|
)
|
|
—
|
|
|
(57,394
|
)
|
||||
Net cash flows from investing activities
|
(53,799
|
)
|
|
(3,345
|
)
|
|
—
|
|
|
(57,144
|
)
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
||||||||
Purchase of treasury stock
|
(35,168
|
)
|
|
—
|
|
|
—
|
|
|
(35,168
|
)
|
||||
Investment from (to) parent
|
12,883
|
|
|
(16,324
|
)
|
|
3,441
|
|
|
—
|
|
||||
Borrowings on revolving credit facility
|
477,169
|
|
|
—
|
|
|
—
|
|
|
477,169
|
|
||||
Repayments of revolving credit facility borrowings
|
(477,169
|
)
|
|
—
|
|
|
—
|
|
|
(477,169
|
)
|
||||
Payment of tax withholdings on equity-based
payment arrangements
|
(466
|
)
|
|
—
|
|
|
—
|
|
|
(466
|
)
|
||||
Excess tax benefits from equity-based
payment arrangements
|
148
|
|
|
—
|
|
|
—
|
|
|
148
|
|
||||
Net cash flows from financing activities
|
(22,603
|
)
|
|
(16,324
|
)
|
|
3,441
|
|
|
(35,486
|
)
|
||||
Decrease in cash and cash equivalents
|
3,785
|
|
|
—
|
|
|
—
|
|
|
3,785
|
|
||||
Cash and cash equivalents at beginning of period
|
5,610
|
|
|
—
|
|
|
—
|
|
|
5,610
|
|
||||
Cash and cash equivalents at end of period
|
$
|
9,395
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,395
|
|
(In thousands)
|
Issuer
|
|
Guarantor Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
||||||||
Net earnings (loss)
|
$
|
17,662
|
|
|
$
|
(6,799
|
)
|
|
$
|
10,491
|
|
|
$
|
21,354
|
|
Adjustments to reconcile net earnings (loss) to net
cash flows from operating activities:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
31,792
|
|
|
9,848
|
|
|
—
|
|
|
41,640
|
|
||||
Equity-based compensation expense
|
2,019
|
|
|
—
|
|
|
—
|
|
|
2,019
|
|
||||
Deferred tax (benefit) provision
|
(4,751
|
)
|
|
296
|
|
|
1,975
|
|
|
(2,480
|
)
|
||||
Employee benefit plans
|
1,438
|
|
|
—
|
|
|
—
|
|
|
1,438
|
|
||||
Deferred issuance costs on long-term debt
|
446
|
|
|
—
|
|
|
—
|
|
|
446
|
|
||||
Disposal of plant and equipment, net
|
303
|
|
|
(31
|
)
|
|
—
|
|
|
272
|
|
||||
Non-cash adjustments to unrecognized taxes
|
(977
|
)
|
|
(2
|
)
|
|
—
|
|
|
(979
|
)
|
||||
Changes in working capital, net
|
23,859
|
|
|
5,450
|
|
|
—
|
|
|
29,309
|
|
||||
Changes in taxes receivable, net
|
6,760
|
|
|
(15,758
|
)
|
|
10,253
|
|
|
1,255
|
|
||||
Excess tax benefits from equity-based payment arrangements
|
(1,459
|
)
|
|
—
|
|
|
—
|
|
|
(1,459
|
)
|
||||
Funding of qualified pension plans
|
(3,179
|
)
|
|
—
|
|
|
—
|
|
|
(3,179
|
)
|
||||
Other, net
|
(703
|
)
|
|
(1,023
|
)
|
|
—
|
|
|
(1,726
|
)
|
||||
Net cash flows from operating activities
|
73,210
|
|
|
(8,019
|
)
|
|
22,719
|
|
|
87,910
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
||||||||
Changes in short-term investments, net
|
(10,000
|
)
|
|
—
|
|
|
—
|
|
|
(10,000
|
)
|
||||
Additions to plant and equipment
|
(52,526
|
)
|
|
(3,012
|
)
|
|
—
|
|
|
(55,538
|
)
|
||||
Proceeds from sale of assets
|
—
|
|
|
507
|
|
|
—
|
|
|
507
|
|
||||
Net cash flows from investing activities
|
(62,526
|
)
|
|
(2,505
|
)
|
|
—
|
|
|
(65,031
|
)
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
||||||||
Purchase of treasury stock
|
(37,148
|
)
|
|
—
|
|
|
—
|
|
|
(37,148
|
)
|
||||
Investment from parent
|
12,195
|
|
|
10,524
|
|
|
(22,719
|
)
|
|
—
|
|
||||
Payment of tax withholdings on equity-based
payment arrangements
|
(3,048
|
)
|
|
—
|
|
|
—
|
|
|
(3,048
|
)
|
||||
Excess tax benefits from equity-based payment arrangements
|
1,459
|
|
|
—
|
|
|
—
|
|
|
1,459
|
|
||||
Other, net
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
||||
Net cash flows from financing activities
|
(26,550
|
)
|
|
10,524
|
|
|
(22,719
|
)
|
|
(38,745
|
)
|
||||
Decrease in cash
|
(15,866
|
)
|
|
—
|
|
|
—
|
|
|
(15,866
|
)
|
||||
Cash at beginning of period
|
27,331
|
|
|
—
|
|
|
—
|
|
|
27,331
|
|
||||
Cash at end of period
|
$
|
11,465
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,465
|
|
•
|
competitive pricing pressures for our products, including as a result of increased capacity as additional manufacturing facilities are operated by our competitors in North America and abroad;
|
•
|
changes in the U.S. and international economies and in general economic conditions in the regions and industries in which we operate;
|
•
|
changes in customer product preferences and competitors' product offerings;
|
•
|
the loss of or changes in prices in regards to a significant customer;
|
•
|
cyclical industry conditions;
|
•
|
changes in the cost and availability of wood fiber and wood pulp;
|
•
|
inability to successfully implement our operational efficiencies and expansion strategies;
|
•
|
changes in transportation costs and disruptions in transportation services;
|
•
|
customer acceptance, timing and quantity of purchases of our tissue products;
|
•
|
changes in costs and availability of packaging supplies, chemicals, energy and maintenance and repairs;
|
•
|
environmental liabilities or expenditures;
|
•
|
labor disruptions;
|
•
|
manufacturing or operating disruptions, including IT system and IT system implementation failures, equipment malfunction and damage to our manufacturing facilities;
|
•
|
changes in expenses and required contributions associated with our pension plans;
|
•
|
reliance on a limited number of third-party suppliers for raw materials;
|
•
|
inability to fund our debt obligations;
|
•
|
restrictions on our business from debt covenants and terms; and
|
•
|
changes in laws, regulations or industry standards affecting our business.
|
Operating costs
|
|||||||||||||
|
Three Months Ended June 30,
|
||||||||||||
(Dollars in thousands)
|
2016
|
|
2015
|
||||||||||
|
Cost
|
|
Percentage of
Cost of Sales
|
|
Cost
|
|
Percentage of
Cost of Sales
|
||||||
Purchased pulp
|
$
|
46,513
|
|
|
12.9
|
%
|
|
$
|
45,223
|
|
|
11.8
|
%
|
Transportation
1
|
45,233
|
|
|
12.5
|
|
|
44,776
|
|
|
11.6
|
|
||
Chemicals
|
40,676
|
|
|
11.2
|
|
|
43,528
|
|
|
11.3
|
|
||
Chips, sawdust and logs
|
38,543
|
|
|
10.7
|
|
|
35,481
|
|
|
9.2
|
|
||
Energy
|
18,787
|
|
|
5.2
|
|
|
26,188
|
|
|
6.8
|
|
||
Packaging supplies
|
21,196
|
|
|
5.9
|
|
|
23,432
|
|
|
6.1
|
|
||
Maintenance and repairs
2
|
21,345
|
|
|
5.9
|
|
|
24,124
|
|
|
6.3
|
|
||
Depreciation
|
19,294
|
|
|
5.3
|
|
|
18,731
|
|
|
4.9
|
|
||
|
$
|
251,587
|
|
|
69.5
|
%
|
|
$
|
261,483
|
|
|
68.0
|
%
|
|
|
|
|
|
|
|
|
||||||
|
Six Months Ended June 30,
|
||||||||||||
(Dollars in thousands)
|
2016
|
|
2015
|
||||||||||
|
Cost
|
|
Percentage of
Cost of Sales |
|
Cost
|
|
Percentage of
Cost of Sales |
||||||
Purchased pulp
|
$
|
94,643
|
|
|
13.0
|
%
|
|
$
|
92,951
|
|
|
12.0
|
%
|
Transportation
1
|
89,846
|
|
|
12.3
|
|
|
88,578
|
|
|
11.4
|
|
||
Chemicals
|
82,919
|
|
|
11.4
|
|
|
86,687
|
|
|
11.2
|
|
||
Chips, sawdust and logs
|
75,608
|
|
|
10.4
|
|
|
70,757
|
|
|
9.1
|
|
||
Energy
|
41,183
|
|
|
5.6
|
|
|
54,676
|
|
|
7.1
|
|
||
Packaging supplies
|
42,365
|
|
|
5.8
|
|
|
47,601
|
|
|
6.2
|
|
||
Maintenance and repairs
2
|
39,650
|
|
|
5.4
|
|
|
53,580
|
|
|
6.9
|
|
||
Depreciation
|
38,060
|
|
|
5.2
|
|
|
37,700
|
|
|
4.9
|
|
||
|
$
|
504,274
|
|
|
69.0
|
%
|
|
$
|
532,530
|
|
|
68.8
|
%
|
1
|
Includes internal and external transportation costs.
|
2
|
Excluding related labor costs.
|
|
Three Months Ended June 30,
|
||||||||||||
(Dollars in thousands)
|
2016
|
|
2015
|
||||||||||
Net sales
|
$
|
436,671
|
|
|
100.0
|
%
|
|
$
|
444,558
|
|
|
100.0
|
%
|
Costs and expenses:
|
|
|
|
|
|
|
|
||||||
Cost of sales
|
(361,851
|
)
|
|
82.9
|
|
|
(384,347
|
)
|
|
86.5
|
|
||
Selling, general and administrative expenses
|
(34,655
|
)
|
|
7.9
|
|
|
(28,138
|
)
|
|
6.3
|
|
||
Total operating costs and expenses
|
(396,506
|
)
|
|
90.8
|
|
|
(412,485
|
)
|
|
92.8
|
|
||
Income from operations
|
40,165
|
|
|
9.2
|
|
|
32,073
|
|
|
7.2
|
|
||
Interest expense, net
|
(7,396
|
)
|
|
1.7
|
|
|
(7,774
|
)
|
|
1.7
|
|
||
Earnings before income taxes
|
32,769
|
|
|
7.5
|
|
|
24,299
|
|
|
5.5
|
|
||
Income tax provision
|
(11,905
|
)
|
|
2.7
|
|
|
(8,702
|
)
|
|
2.0
|
|
||
Net earnings
|
$
|
20,864
|
|
|
4.8
|
%
|
|
$
|
15,597
|
|
|
3.5
|
%
|
|
Three Months Ended
|
||||||
|
June 30,
|
||||||
(In thousands)
|
2016
|
|
2015
|
||||
Income tax provision
|
$
|
(11,905
|
)
|
|
$
|
(8,702
|
)
|
Special items, tax impact:
|
|
|
|
||||
Directors' equity-based compensation (expense) benefit
|
(1,275
|
)
|
|
459
|
|
||
Costs associated with Long Island facility closure
|
(188
|
)
|
|
(231
|
)
|
||
Gain associated with the sale of the specialty mills
|
—
|
|
|
419
|
|
||
Adjusted income tax provision
|
$
|
(13,368
|
)
|
|
$
|
(8,055
|
)
|
|
Three Months Ended
|
||||||
|
June 30,
|
||||||
(Dollars in thousands - except per ton amounts)
|
2016
|
|
2015
|
||||
Net sales
|
$
|
247,912
|
|
|
$
|
239,391
|
|
Operating income
|
18,544
|
|
|
17,032
|
|
||
Percent of net sales
|
7.5
|
%
|
|
7.1
|
%
|
||
|
|
|
|
||||
Shipments (short tons)
|
|
|
|
||||
Non-retail
|
20,028
|
|
|
24,744
|
|
||
Retail
|
79,095
|
|
|
71,476
|
|
||
Total tissue tons
|
99,123
|
|
|
96,220
|
|
||
Converted products cases (in thousands)
|
13,229
|
|
|
13,125
|
|
||
|
|
|
|
||||
Sales price (per short ton)
|
|
|
|
||||
Non-retail
|
$
|
1,496
|
|
|
$
|
1,430
|
|
Retail
|
2,747
|
|
|
2,846
|
|
||
Total tissue
|
$
|
2,494
|
|
|
$
|
2,482
|
|
|
Three Months Ended
|
||||||
|
June 30,
|
||||||
(Dollars in thousands - except per ton amounts)
|
2016
|
|
2015
|
||||
Net sales
|
$
|
188,759
|
|
|
$
|
205,167
|
|
Operating income
|
40,032
|
|
|
27,754
|
|
||
Percent of net sales
|
21.2
|
%
|
|
13.5
|
%
|
||
|
|
|
|
||||
Paperboard shipments (short tons)
|
199,132
|
|
|
204,983
|
|
||
Paperboard sales price (per short ton)
|
$
|
948
|
|
|
$
|
997
|
|
|
Six Months Ended June 30,
|
||||||||||||
(Dollars in thousands)
|
2016
|
|
2015
|
||||||||||
Net sales
|
$
|
873,875
|
|
|
100.0
|
%
|
|
$
|
878,584
|
|
|
100.0
|
%
|
Costs and expenses:
|
|
|
|
|
|
|
|
||||||
Cost of sales
|
(730,498
|
)
|
|
83.6
|
|
|
(774,179
|
)
|
|
88.1
|
|
||
Selling, general and administrative expenses
|
(65,450
|
)
|
|
7.5
|
|
|
(57,095
|
)
|
|
6.5
|
|
||
Total operating costs and expenses
|
(795,948
|
)
|
|
91.1
|
|
|
(831,274
|
)
|
|
94.6
|
|
||
Income from operations
|
77,927
|
|
|
8.9
|
|
|
47,310
|
|
|
5.4
|
|
||
Interest expense, net
|
(15,039
|
)
|
|
1.7
|
|
|
(15,556
|
)
|
|
1.8
|
|
||
Earnings before income taxes
|
62,888
|
|
|
7.2
|
|
|
31,754
|
|
|
3.6
|
|
||
Income tax provision
|
(23,578
|
)
|
|
2.7
|
|
|
(10,400
|
)
|
|
1.2
|
|
||
Net earnings
|
$
|
39,310
|
|
|
4.5
|
|
|
$
|
21,354
|
|
|
2.4
|
|
|
Six Months Ended
|
||||||
|
June 30,
|
||||||
(In thousands)
|
2016
|
|
2015
|
||||
Income tax provision
|
$
|
(23,578
|
)
|
|
$
|
(10,400
|
)
|
Special items, tax impact:
|
|
|
|
||||
Directors' equity-based compensation (expense) benefit
|
(1,536
|
)
|
|
604
|
|
||
Costs associated with Long Island facility closure
|
(343
|
)
|
|
(402
|
)
|
||
Gain associated with the sale of the specialty mills
|
—
|
|
|
459
|
|
||
Costs associated with labor agreement
|
—
|
|
|
(533
|
)
|
||
Adjusted income tax provision
|
$
|
(25,457
|
)
|
|
$
|
(10,272
|
)
|
|
Six Months Ended
|
||||||
|
June 30,
|
||||||
(Dollars in thousands - except per ton amounts)
|
2016
|
|
2015
|
||||
Net sales
|
$
|
492,930
|
|
|
$
|
474,567
|
|
Operating income
|
36,934
|
|
|
29,427
|
|
||
Percent of net sales
|
7.5
|
%
|
|
6.2
|
%
|
||
|
|
|
|
||||
Shipments (short tons)
|
|
|
|
||||
Non-retail
|
44,386
|
|
|
45,851
|
|
||
Retail
|
154,122
|
|
|
142,578
|
|
||
Total tissue tons
|
198,508
|
|
|
188,429
|
|
||
Converted products cases (in thousands)
|
26,219
|
|
|
26,150
|
|
||
|
|
|
|
||||
Sales price (per short ton)
|
|
|
|
||||
Non-retail
|
$
|
1,486
|
|
|
$
|
1,451
|
|
Retail
|
2,765
|
|
|
2,855
|
|
||
Total tissue
|
$
|
2,479
|
|
|
$
|
2,513
|
|
|
Six Months Ended
|
||||||
|
June 30,
|
||||||
(Dollars in thousands - except per ton amounts)
|
2016
|
|
2015
|
||||
Net sales
|
$
|
380,945
|
|
|
$
|
404,017
|
|
Operating income
|
75,195
|
|
|
43,948
|
|
||
Percent of net sales
|
19.7
|
%
|
|
10.9
|
%
|
||
|
|
|
|
||||
Paperboard shipments (short tons)
|
400,472
|
|
|
396,618
|
|
||
Paperboard sales price (per short ton)
|
$
|
950
|
|
|
$
|
1,014
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
(In thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net earnings
|
$
|
20,864
|
|
|
$
|
15,597
|
|
|
$
|
39,310
|
|
|
$
|
21,354
|
|
Interest expense, net
|
7,396
|
|
|
7,774
|
|
|
15,039
|
|
|
15,556
|
|
||||
Income tax provision
|
11,905
|
|
|
8,702
|
|
|
23,578
|
|
|
10,400
|
|
||||
Depreciation and amortization expense
|
22,024
|
|
|
20,632
|
|
|
43,174
|
|
|
41,640
|
|
||||
EBITDA
|
$
|
62,189
|
|
|
$
|
52,705
|
|
|
$
|
121,101
|
|
|
$
|
88,950
|
|
Directors' equity-based compensation expense (benefit)
|
3,610
|
|
|
(1,457
|
)
|
|
4,336
|
|
|
(1,927
|
)
|
||||
Costs associated with Long Island facility closure
|
533
|
|
|
735
|
|
|
965
|
|
|
1,289
|
|
||||
Costs associated with labor agreement
|
—
|
|
|
—
|
|
|
—
|
|
|
1,730
|
|
||||
Gain associated with the sale of the specialty mills
|
—
|
|
|
(1,331
|
)
|
|
—
|
|
|
(1,462
|
)
|
||||
Adjusted EBITDA
|
$
|
66,332
|
|
|
$
|
50,652
|
|
|
$
|
126,402
|
|
|
$
|
88,580
|
|
(In thousands)
|
2016
|
|
2015
|
||||
Net cash flows from operating activities
|
$
|
96,415
|
|
|
$
|
87,910
|
|
Net cash flows from investing activities
|
(57,144
|
)
|
|
(65,031
|
)
|
||
Net cash flows from financing activities
|
(35,486
|
)
|
|
(38,745
|
)
|
ITEM 4.
|
|
Controls and Procedures
|
ITEM 1.
|
|
Legal Proceedings
|
ITEM 1A.
|
|
Risk Factors
|
ITEM 2.
|
|
Unregistered Sales of Equity Securities and Uses of Proceeds
|
Period
|
Total
Number of
Shares
Purchased
|
|
Average
Price Paid per
Share
|
|
Total
Number of
Shares
Purchased as
Part of Publicly
Announced
Program
|
|
Approximate
Dollar Value of
Shares that May
Yet Be Purchased
Under the
Program
|
||||||
April 1, 2016 to April 30, 2016
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
72,339
|
|
May 1, 2016 to May 31, 2016
|
125,665
|
|
|
$
|
59.75
|
|
|
125,665
|
|
|
$
|
64,832
|
|
June 1, 2016 to June 30, 2016
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
64,832
|
|
Total
|
125,665
|
|
|
$
|
59.75
|
|
|
125,665
|
|
|
|
ITEM 6.
|
|
Exhibits
|
|
The exhibit index is located on page
36
of this Form 10-Q.
|
|
|
|
|
|
|
|
|
CLEARWATER PAPER CORPORATION
|
|
|
|
|
(Registrant)
|
|
|
|
|
||
|
|
|
|
|
Date: July 27, 2016
|
|
By
|
/s/ JOHN D. HERTZ
|
|
|
|
|
|
John D. Hertz
|
|
|
|
|
Senior Vice President, Finance and
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
(Duly Authorized Officer; Principal
|
|
|
|
|
Financial Officer)
|
|
|
|
|
|
|
|
|
|
|
Date: July 27, 2016
|
|
By
|
/s/ ROBERT N. DAMMARELL
|
|
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Robert N. Dammarell
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Vice President, Corporate Controller
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(Duly Authorized Officer; Principal
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Accounting Officer)
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EXHIBIT
NUMBER
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DESCRIPTION
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10.1
1
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Amendment to the Clearwater Paper Corporation Annual Incentive Plan, effective as of January 1, 2016
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(31)
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Rule 13a-14(a)/15d-14(a) Certifications.
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(32)*
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Furnished statements of the Chief Executive Officer and Chief Financial Officer under 18 U.S.C Section 1350.
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101.INS
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XBRL Instance Document.
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101.SCH
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XBRL Taxonomy Extension Schema.
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase.
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase.
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101.LAB
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XBRL Taxonomy Extension Label Linkbase.
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase.
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*
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In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibit 32 hereto are deemed to accompany this Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act.
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1
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Management contract or compensatory plan, contract or arrangement.
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1.
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I have reviewed this report on Form 10-Q of Clearwater Paper Corporation;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: July 27, 2016
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/S/ LINDA K. MASSMAN
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Linda K. Massman
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President and Chief Executive Officer
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1.
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I have reviewed this report on Form 10-Q of Clearwater Paper Corporation;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: July 27, 2016
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/S/ JOHN D. HERTZ
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John D. Hertz
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Senior Vice President, Finance and Chief Financial Officer
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(1)
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the Quarterly Report of the Company on Form 10-Q for the period ended
June 30, 2016
, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and
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(2)
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/S/ LINDA K. MASSMAN
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Linda K. Massman
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President and Chief Executive Officer
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July 27, 2016
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(1)
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the Quarterly Report of the Company on Form 10-Q for the period ended
June 30, 2016
, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and
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(2)
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/S/ JOHN D. HERTZ
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John D. Hertz
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Senior Vice President, Finance and Chief Financial Officer
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July 27, 2016
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