Domtar Corporation Reports Preliminary Fourth Quarter and Fiscal Year 2016 Financial Results

By: Domtar Corporation via Business Wire News Releases

February 09, 2017 at 06:55 AM EST

Domtar Corporation (NYSE: UFS) (TSX: UFS) today reported net earnings of $47 million ($0.75 per share) for the fourth quarter of 2016 compared to net earnings of $59 million ($0.94 per share) for the third quarter of 2016 and net earnings of $57 million ($0.91 per share) for the fourth quarter of 2015. Sales for the fourth quarter of 2016 were $1.3 billion.

Excluding items listed below, the Company had earnings before items1 of $47 million ($0.75 per share) for the fourth quarter of 2016 compared to earnings before items1 of $71 million ($1.13 per share) for the third quarter of 2016 and earnings before items1 of $70 million ($1.11 per share) for the fourth quarter of 2015.

Fourth quarter 2016 items:

Closure and restructuring impact of $(1) million ($(1) million after tax); and
Negative impact of purchase accounting of $1 million ($1 million after tax).

Third quarter 2016 items:

Closure and restructuring costs of $10 million ($8 million after tax); and
Impairment of property, plant & equipment of $5 million ($4 million after tax).

Fourth quarter 2015 items:

Closure and restructuring costs of $1 million ($1 million after tax); and
Impairment of property, plant & equipment of $20 million ($12 million after tax).

FISCAL YEAR 2016 HIGHLIGHTS

For fiscal year 2016, net earnings amounted to $128 million ($2.04 per share) compared to net earnings of $142 million ($2.24 per share) for fiscal year 2015. The Company had earnings before items1 of $178 million ($2.84 per share) for fiscal year 2016 compared to earnings before items1 of $211 million ($3.33 per share) for fiscal year 2015. Sales amounted to $5.1 billion for fiscal year 2016.

Commenting on the full-year results, John D. Williams, President and Chief Executive Officer, said, “Our businesses generated strong EBITDA and cash flow in a challenging macro-economic and competitive environment. This allowed us to further execute on our growth strategy, while returning cash to our shareholders.”

QUARTERLY REVIEW

“Our pulp business shipped record volumes of softwood in the fourth quarter. Nevertheless, the segment was impacted by lower prices and higher costs,” said John D. Williams, President and Chief Executive Officer. “Personal Care began manufacturing baby diapers using Ashdown fluff pulp with initial trials providing good results. This production is the first step towards qualifying Ashdown fluff pulp for the hygiene market.”

Mr. Williams added, “The fourth quarter marked our highest Personal Care sales and EBITDA of the year, which included the results of our recent HDIS acquisition. We are scaling up our capabilities in the rapidly growing direct-to-consumer channel, while expanding our partner-brand strategy to capture sales growth and higher margins by continuing to differentiate the way we sell our products.”

Operating income was $74 million in the fourth quarter of 2016 compared to an operating income of $92 million in the third quarter of 2016. Depreciation and amortization totaled $85 million in the fourth quarter of 2016.

Operating income before items1 was $74 million in the fourth quarter of 2016 compared to an operating income before items1 of $107 million in the third quarter of 2016.


(In millions of dollars)	4Q 2016			3Q 2016

Sales	$	1,274		$	1,270
Operating income (loss)
Pulp and Paper segment		74			89
Personal Care segment		13			15
Corporate		(13	)		(12	)
Total operating income		74			92
Operating income before items1		74			107
Depreciation and amortization		85			87

The decrease in operating income in the fourth quarter of 2016 was the result of lower average selling prices, higher raw material costs, lower productivity and higher maintenance costs. These factors were partially offset by an increase in pulp sales volume and favorable exchange rates.

When compared to the third quarter of 2016, manufactured paper shipments were down 1% and pulp shipments increased 12%. The shipments-to-production ratio for paper was 104% in the fourth quarter of 2016, compared to 102% in the third quarter of 2016. Paper inventories decreased by 22,000 tons and pulp inventories increased by 19,000 metric tons when compared to the third quarter of 2016.

LIQUIDITY AND CAPITAL

Cash flow provided from operating activities amounted to $155 million, and capital expenditures were $45 million, resulting in free cash flow1 of $110 million for the fourth quarter of 2016. Domtar’s net debt-to-total capitalization ratio1 stood at 30% at December 31, 2016 and at September 30, 2016.

OUTLOOK

In 2017, we expect our paper shipments to be in-line with market demand, while pulp shipments should be higher due to the conversion of a paper machine to a fluff pulp line. We anticipate some volatility in softwood and fluff pulp markets due to the strong U.S. dollar and new capacity additions. Costs, including freight, labor and raw materials, are expected to marginally increase. In Personal Care, investments in advertising and promotion in addition to new customer wins should drive higher sales.

EARNINGS CONFERENCE CALL

The Company will hold a conference call today at 10:00 a.m. (ET) to discuss its fourth quarter and fiscal year 2016 financial results. Financial analysts are invited to participate in the call by dialing 1 (800) 499-4035 (toll free - North America) or 1 (416) 204-9269 (International) at least 10 minutes before start time, 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 first quarter 2017 earnings results on April 27, 2017, 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.

About Domtar
Domtar is a leading provider of a wide variety of fiber-based products including communication, specialty and packaging papers, market pulp and absorbent hygiene products. With approximately 10,000 employees serving more than 50 countries around the world, Domtar is driven by a commitment to turn sustainable wood fiber into useful products that people rely on every day. Domtar’s annual sales are approximately $5.1 billion, and its common stock is traded on the New York and Toronto Stock Exchanges. Domtar’s principal executive office is in Fort Mill, South Carolina. To learn more, visit www.domtar.com.

Forward-Looking Statements
Statements in this release about our plans, expectations and future performance, including the statements by Mr. Williams and those contained under “Outlook,” are “forward-looking statements.” Actual results may differ materially from those suggested by these statements for a number of reasons, including changes in customer demand and pricing, changes in manufacturing costs, future acquisitions and divestitures, including facility closings, and the other reasons identified under “Risk Factors” in our Form 10-K for 2015 as filed with the SEC and as updated by subsequently filed Form 10-Q’s. Except to the extent required by law, we expressly disclaim any obligation to update or revise these forward-looking statements to reflect new events or circumstances or otherwise.

Domtar Corporation
Highlights
(In millions of dollars, unless otherwise noted)

	Three months ended			Three months ended			Twelve months ended			Twelve months ended
	December 31,			December 31,			December 31,			December 31,
	2016			2015			2016			2015
	(Unaudited)
	$			$			$			$

Selected Segment Information
Sales
Pulp and Paper		1,046			1,110			4,239			4,458
Personal Care		242			221			917			869
Total for reportable segments		1,288			1,331			5,156			5,327
Intersegment sales		(14	)		(17	)		(58	)		(63	)
Consolidated sales		1,274			1,314			5,098			5,264
Depreciation and amortization and impairment of property, plant and equipment
Pulp and Paper		68			73			284			297
Personal Care		17			16			64			62
Total for reportable segments		85			89			348			359
Impairment of property, plant and equipment - Pulp and Paper		—			20			29			77
Consolidated depreciation and amortization and impairment of property, plant and equipment		85			109			377			436

Operating income (loss)
Pulp and Paper		74			86			217			270
Personal Care		13			16			57			61
Corporate		(13	)		(8	)		(51	)		(43	)
Consolidated operating income		74			94			223			288
Interest expense, net		17			17			66			132
Earnings before income taxes		57			77			157			156
Income tax expense		10			20			29			14
Net earnings		47			57			128			142
Per common share (in dollars)
Net earnings
Basic		0.75			0.91			2.04			2.24
Diluted		0.75			0.91			2.04			2.24
Weighted average number of common shares outstanding (millions)
Basic		62.6			62.8			62.6			63.3
Diluted		62.7			62.9			62.7			63.4
Cash flows provided from operating activities		155			137			465			453
Additions to property, plant and equipment		45			87			347			289

Domtar Corporation
Consolidated Statements of Earnings
(In millions of dollars, unless otherwise noted)

	Three months ended			Three months ended		Twelve months ended		Twelve months ended
	December 31,			December 31,		December 31,		December 31,
	2016			2015		2016		2015
	(Unaudited)
	$			$		$		$

Sales		1,274			1,314		5,098		5,264
Operating expenses
Cost of sales, excluding depreciation and amortization		1,003			1,007		4,035		4,147
Depreciation and amortization		85			89		348		359
Selling, general and administrative		113			100		427		394
Impairment of property, plant and equipment		—			20		29		77
Closure and restructuring costs		(1	)		1		32		4
Other operating loss (income), net		—			3		4		(5	)
		1,200			1,220		4,875		4,976
Operating income		74			94		223		288
Interest expense, net		17			17		66		132
Earnings before income taxes		57			77		157		156
Income tax expense		10			20		29		14
Net earnings		47			57		128		142
Per common share (in dollars)
Net earnings
Basic		0.75			0.91		2.04		2.24
Diluted		0.75			0.91		2.04		2.24
Weighted average number of common shares outstanding (millions)
Basic		62.6			62.8		62.6		63.3
Diluted		62.7			62.9		62.7		63.4

Domtar Corporation
Consolidated Balance Sheets at
(In millions of dollars)


	December 31,			December 31,
	2016			2015
	(Unaudited)
	$			$
Assets
Current assets
Cash and cash equivalents		125			126
Receivables, less allowances of $7 and $6		613			627
Inventories		759			766
Prepaid expenses		40			21
Income and other taxes receivable		31			14
Total current assets		1,568			1,554
Property, plant and equipment, net		2,825			2,835
Goodwill		550			539
Intangible assets, net		608			601
Other assets		129			125
Total assets		5,680			5,654
Liabilities and shareholders' equity
Current liabilities
Bank indebtedness		12			—
Trade and other payables		656			720
Income and other taxes payable		22			27
Long-term debt due within one year		63			41
Total current liabilities		753			788
Long-term debt		1,218			1,210
Deferred income taxes and other		675			654
Other liabilities and deferred credits		358			350
Shareholders' equity
Common stock		1			1
Additional paid-in capital		1,963			1,966
Retained earnings		1,211			1,186
Accumulated other comprehensive loss		(499	)		(501	)
Total shareholders' equity		2,676			2,652
Total liabilities and shareholders' equity		5,680			5,654

Domtar Corporation
Consolidated Statements of Cash Flows
(In millions of dollars)

	For the twelve months ended
	December 31, 2016			December 31, 2015
	(Unaudited)
	$			$
Operating activities
Net earnings		128			142
Adjustments to reconcile net earnings to cash flows from operating activities
Depreciation and amortization		348			359
Deferred income taxes and tax uncertainties		9			(56	)
Impairment of property, plant and equipment		29			77
Net gains on disposals of property, plant and equipment		—			(15	)
Stock-based compensation expense		7			5
Other		(2	)		4
Changes in assets and liabilities, excluding effect of sale and acquisition of businesses
Receivables		18			(22	)
Inventories		14			(84	)
Prepaid expenses		5			5
Trade and other payables		(51	)		—
Income and other taxes		(18	)		38
Difference between employer pension and other post-retirement contributions and pension and other post-retirement expense		(21	)		(1	)
Other assets and other liabilities		(1	)		1
Cash flows provided from operating activities		465			453
Investing activities
Additions to property, plant and equipment		(347	)		(289	)
Proceeds from disposals of property, plant and equipment and sale of business		1			36
Acquisition of businesses, net of cash acquired		(46	)		—
Other		1			9
Cash flows used for investing activities		(391	)		(244	)
Financing activities
Dividend payments		(102	)		(100	)
Stock repurchase		(10	)		(50	)
Net change in bank indebtedness		12			(11	)
Change in revolving bank credit facility		—			50
Proceeds from receivables securitization facility		140			—
Repayments of receivables securitization facility		(70	)		—
Issuance of long-term debt		—			300
Repayments of long-term debt		(40	)		(439	)
Other		(3	)		1
Cash flows used for financing activities		(73	)		(249	)
Net increase (decrease) in cash and cash equivalents		1			(40	)
Impact of foreign exchange on cash		(2	)		(8	)
Cash and cash equivalents at beginning of year		126			174
Cash and cash equivalents at end of year		125			126
Supplemental cash flow information
Net cash payments for:
Interest (including $40 million of redemption premiums in 2015)		64			133
Income taxes paid, net		40			34

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 are useful to understand our operating performance and benchmark with peers within the industry. The Company calculates “Earnings before items” and “EBITDA before items” by excluding the after-tax (pre-tax) effect of specified items. These metrics are presented as a complement to enhance the understanding of operating results but not in substitution for GAAP results.

				2016															2015
				Q1			Q2			Q3			Q4			Year			Q1			Q2			Q3			Q4			Year
Reconciliation of "Earnings before items" to Net earnings
		Net earnings	($)		4			18			59			47			128			36			38			11			57			142
	(+)	Impairment of property, plant and equipment	($)		16			2			4			—			22			12			11			12			12			47
	(+)	Closure and restructuring costs	($)		2			16			8			(1	)		25			1			1			1			1			4
	(+)	Litigation settlement	($)		—			2			—			—			2			—			—			—			—			—
	(-)	Net gains on disposals of property, plant and equipment	($)		—			—			—			—			—			(1	)		(11	)		—			—			(12	)
	(+)	Impact of purchase accounting	($)		—			—			—			1			1			—			—			—			—			—
	(+)	Debt refinancing costs	($)		—			—			—			—			—			—			—			30			—			30
	(=)	Earnings before items	($)		22			38			71			47			178			48			39			54			70			211
	(/)	Weighted avg. number of common shares outstanding (diluted)	(millions)		62.8			62.7			62.7			62.7			62.7			63.9			63.7			63.0			62.9			63.4
	(=)	Earnings before items per diluted share	($)		0.35			0.61			1.13			0.75			2.84			0.75			0.61			0.86			1.11			3.33

Reconciliation of "EBITDA" and "EBITDA before items" to Net earnings
		Net earnings	($)		4			18			59			47			128			36			38			11			57			142
	(+)	Income tax (benefit) expense	($)		(3	)		6			16			10			29			9			(1	)		(14	)		20			14
	(+)	Interest expense, net	($)		17			15			17			17			66			26			25			64			17			132
	(=)	Operating income	($)		18			39			92			74			223			71			62			61			94			288
	(+)	Depreciation and amortization	($)		89			87			87			85			348			90			91			89			89			359
	(+)	Impairment of property, plant and equipment	($)		21			3			5			—			29			19			18			20			20			77
	(-)	Net gains on disposals of property, plant and equipment	($)		—			—			—			—			—			(1	)		(14	)		—			—			(15	)
	(=)	EBITDA	($)		128			129			184			159			600			179			157			170			203			709
	(/)	Sales	($)		1,287			1,267			1,270			1,274			5,098			1,348			1,310			1,292			1,314			5,264
	(=)	EBITDA margin	(%)		10	%		10	%		14	%		12	%		12	%		13	%		12	%		13	%		15	%		13	%
		EBITDA	($)		128			129			184			159			600			179			157			170			203			709
	(+)	Closure and restructuring costs	($)		2			21			10			(1	)		32			1			1			1			1			4
	(+)	Litigation settlement	($)		—			2			—			—			2			—			—			—			—			—
	(+)	Impact of purchase accounting	($)		—			—			—			1			1			—			—			—			—			—
	(=)	EBITDA before items	($)		130			152			194			159			635			180			158			171			204			713
	(/)	Sales	($)		1,287			1,267			1,270			1,274			5,098			1,348			1,310			1,292			1,314			5,264
	(=)	EBITDA margin before items	(%)		10	%		12	%		15	%		12	%		12	%		13	%		12	%		13	%		16	%		14	%

Reconciliation of "Free cash flow" to Cash flows provided from operating activities
		Cash flows provided from operating activities	($)		97			118			95			155			465			127			122			67			137			453
	(-)	Additions to property, plant and equipment	($)		(100	)		(119	)		(83	)		(45	)		(347	)		(70	)		(66	)		(66	)		(87	)		(289	)
	(=)	Free cash flow	($)		(3	)		(1	)		12			110			118			57			56			1			50			164

"Net debt-to-total capitalization" computation
		Bank indebtedness	($)		6			1			—			12						6			1			1			—
	(+)	Long-term debt due within one year	($)		41			64			63			63						169			169			42			41
	(+)	Long-term debt	($)		1,211			1,237			1,309			1,218						1,170			1,169			1,236			1,210
	(=)	Debt	($)		1,258			1,302			1,372			1,293						1,345			1,339			1,279			1,251
	(-)	Cash and cash equivalents	($)		(97	)		(111	)		(168	)		(125	)					(183	)		(207	)		(128	)		(126	)
	(=)	Net debt	($)		1,161			1,191			1,204			1,168						1,162			1,132			1,151			1,125
	(+)	Shareholders' equity	($)		2,736			2,716			2,754			2,676						2,710			2,761			2,659			2,652
	(=)	Total capitalization	($)		3,897			3,907			3,958			3,844						3,872			3,893			3,810			3,777
		Net debt	($)		1,161			1,191			1,204			1,168						1,162			1,132			1,151			1,125
	(/)	Total capitalization	($)		3,897			3,907			3,958			3,844						3,872			3,893			3,810			3,777
	(=)	Net debt-to-total capitalization	(%)		30	%		30	%		30	%		30	%					30	%		29	%		30	%		30	%

"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.

Domtar Corporation
Quarterly Reconciliation of Non-GAAP Financial Measures – By Segment 2016
(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 are useful to understand our operating performance and benchmark with peers within the industry. The Company calculates the segmented “Operating income (loss) before items” by excluding the pre-tax effect of specified items. These metrics are presented as a complement to enhance the understanding of operating results but not in substitution for GAAP results.

				Pulp and Paper					Personal Care (1)					Corporate					Total
				Q1'16	Q2'16	Q3'16	Q4'16	Year	Q1'16	Q2'16	Q3'16	Q4'16	Year	Q1'16	Q2'16	Q3'16	Q4'16	Year	Q1'16	Q2'16	Q3'16	Q4'16	Year
Reconciliation of Operating income (loss) to "Operating income (loss) before items"
		Operating income (loss)	($)	19	35	89	74	217	14	15	15	13	57	(15)	(11)	(12)	(13)	(51)	18	39	92	74	223
	(+)	Impairment of property, plant and equipment	($)	21	3	5	—	29	—	—	—	—	—	—	—	—	—	—	21	3	5	—	29
	(+)	Impact of purchase accounting	($)	—	—	—	—	—	—	—	—	1	1	—	—	—	—	—	—	—	—	1	1
	(+)	Closure and restructuring costs	($)	2	21	10	(2)	31	—	—	—	1	1	—	—	—	—	—	2	21	10	(1)	32
	(+)	Litigation settlement	($)	—	—	—	—	—	—	—	—	—	—	—	2	—	—	2	—	2	—	—	2
	(=)	Operating income (loss) before items	($)	42	59	104	72	277	14	15	15	15	59	(15)	(9)	(12)	(13)	(49)	41	65	107	74	287

Reconciliation of "Operating income (loss) before items" to "EBITDA before items"
		Operating income (loss) before items	($)	42	59	104	72	277	14	15	15	15	59	(15)	(9)	(12)	(13)	(49)	41	65	107	74	287
	(+)	Depreciation and amortization	($)	73	72	71	68	284	16	15	16	17	64	—	—	—	—	—	89	87	87	85	348

	(=)	EBITDA before items	($)	115	131	175	140	561	30	30	31	32	123	(15)	(9)	(12)	(13)	(49)	130	152	194	159	635
	(/)	Sales	($)	1,085	1,054	1,054	1,046	4,239	216	228	231	242	917	—	—	—	—	—	1,301	1,282	1,285	1,288	5,156
	(=)	EBITDA margin before items	(%)	11%	12%	17%	13%	13%	14%	13%	13%	13%	13%	—	—	—	—	—	10%	12%	15%	12%	12%

"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 October 1, 2016, the Company acquired 100% of the shares of Home Delivery Incontinent Supplies Co. in the United States.

Domtar Corporation
Quarterly Reconciliation of Non-GAAP Financial Measures – By Segment 2015
(In millions of dollars, unless otherwise noted)

				Pulp and Paper					Personal Care					Corporate					Total
				Q1'15	Q2'15	Q3'15	Q4'15	Year	Q1'15	Q2'15	Q3'15	Q4'15	Year	Q1'15	Q2'15	Q3'15	Q4'15	Year	Q1'15	Q2'15	Q3'15	Q4'15	Year
Reconciliation of Operating income (loss) to "Operating income (loss) before items"
		Operating income (loss)	($)	75	55	54	86	270	10	17	18	16	61	(14)	(10)	(11)	(8)	(43)	71	62	61	94	288
	(+)	Impairment of property, plant and equipment	($)	19	18	20	20	77	—	—	—	—	—	—	—	—	—	—	19	18	20	20	77
	(-)	Net gains on disposals of property, plant and equipment	($)	—	(14)	—	—	(14)	—	—	—	—	—	(1)	—	—	—	(1)	(1)	(14)	—	—	(15)
	(+)	Closure and restructuring costs	($)	—	1	1	1	3	1	—	—	—	1	—	—	—	—	—	1	1	1	1	4
	(=)	Operating income (loss) before items	($)	94	60	75	107	336	11	17	18	16	62	(15)	(10)	(11)	(8)	(44)	90	67	82	115	354

Reconciliation of "Operating income (loss) before items" to "EBITDA before items"
		Operating income (loss) before items	($)	94	60	75	107	336	11	17	18	16	62	(15)	(10)	(11)	(8)	(44)	90	67	82	115	354
	(+)	Depreciation and amortization	($)	74	75	75	73	297	16	16	14	16	62	—	—	—	—	—	90	91	89	89	359
	(=)	EBITDA before items	($)	168	135	150	180	633	27	33	32	32	124	(15)	(10)	(11)	(8)	(44)	180	158	171	204	713
	(/)	Sales	($)	1,146	1,110	1,092	1,110	4,458	218	216	214	221	869	—	—	—	—	—	1,364	1,326	1,306	1,331	5,327
	(=)	EBITDA margin before items	(%)	15%	12%	14%	16%	14%	12%	15%	15%	14%	14%	—	—	—	—	—	13%	12%	13%	15%	13%

“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.

Domtar Corporation
Supplemental Segmented Information
(In millions of dollars, unless otherwise noted)

		2016															2015
		Q1			Q2			Q3			Q4			Year			Q1			Q2			Q3			Q4			Year
Pulp and Paper Segment
Sales	($)		1,085			1,054			1,054			1,046			4,239			1,146			1,110			1,092			1,110			4,458
Operating income	($)		19			35			89			74			217			75			55			54			86			270
Depreciation and amortization	($)		73			72			71			68			284			74			75			75			73			297
Impairment of property, plant and equipment	($)		21			3			5			—			29			19			18			20			20			77

Paper
Paper Production	('000 ST)		785			715			726			714			2,940			808			806			794			837			3,245
Paper Shipments - Manufactured	('000 ST)		786			752			744			739			3,021			804			783			779			797			3,163
Communication Papers	('000 ST)		657			627			620			618			2,522			669			653			648			669			2,639
Specialty and Packaging	('000 ST)		129			125			124			121			499			135			130			131			128			524
Paper Shipments - Sourced from 3rd parties	('000 ST)		32			29			35			27			123			35			29			35			28			127
Paper Shipments - Total	('000 ST)		818			781			779			766			3,144			839			812			814			825			3,290
Pulp
Pulp Shipments(a)	('000 ADMT)		369			360			369			415			1,513			350			345			333			386			1,414
Hardwood Kraft Pulp	(%)		6	%		4	%		5	%		8	%		6	%		9	%		8	%		8	%		8	%		8	%
Softwood Kraft Pulp	(%)		69	%		66	%		67	%		67	%		67	%		65	%		65	%		65	%		69	%		66	%
Fluff Pulp	(%)		25	%		30	%		28	%		25	%		27	%		26	%		27	%		27	%		23	%		26	%

Personal Care Segment
Sales	($)		216			228			231			242			917			218			216			214			221			869
Operating income	($)		14			15			15			13			57			10			17			18			16			61
Depreciation and amortization	($)		16			15			16			17			64			16			16			14			16			62

Average Exchange Rates	$US / $CAN		1.375			1.289			1.305			1.333			1.325			1.241			1.229			1.309			1.335			1.279
	$CAN / $US		0.727			0.776			0.766			0.750			0.755			0.806			0.813			0.765			0.749			0.782
	€ / $US		1.103			1.130			1.116			1.078			1.107			1.126			1.106			1.112			1.095			1.110

(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 and the term "ADMT" refers to an air dry metric ton.

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

View source version on businesswire.com: http://www.businesswire.com/news/home/20170209005609/en/

Contacts:

Domtar Corporation
INVESTOR RELATIONS
Nicholas Estrela, 514-848-5555 x 85979
Director
Investor Relations
or
MEDIA RELATIONS
David Struhs, 803-802-8031
Vice-President
Corporate Services and Sustainability