Domtar Corporation reports preliminary third quarter 2013 financial results

 Domtar Corporation reports preliminary third quarter 2013 financial results

PR Newswire

MONTREAL, Oct. 24, 2013

Third quarter highlighted by improved pulp productivity and continued growth
in personal care earnings
(All financial information is in U.S. dollars, and all earnings per share
results are diluted, unless otherwise noted.)

  *Third quarter 2013 net earnings of $0.82 per share, earnings before
    items^1 of $1.25 per share
  *Closed the sale of the Ariva U.S. business
  *Price increases announced for several uncoated freesheet paper grades

TICKER SYMBOL
(NYSE: UFS) (TSX: UFS)

MONTREAL, Oct. 24, 2013  /PRNewswire/ - Domtar  Corporation (NYSE: UFS)  (TSX: 
UFS) today reported  net earnings  of $27million  ($0.82 per  share) for  the 
third quarter of 2013 compared to a net loss of $46million ($1.38 per  share) 
for the second  quarter of  2013 and  net earnings  of $66million  ($1.84per 
share) for the third quarter of 2012. Sales for the third quarter of 2013 were
$1,375million.

Excluding items listed below, the Company  had earnings before items^1 of  $41 
million ($1.25 per share) for the  third quarter of 2013 compared to  earnings 
before items^1 of $16 million ($0.48 per share) for the second quarter of 2013
and earnings before  items^1 of $67million  ($1.87 per share)  for the  third 
quarter of 2012.

Third quarter 2013 items:

  *Loss on sale of business of $19 million ($12 million after tax); and
  *Negative impact of purchase accounting of $2 million ($2 million after
    tax).

Second quarter 2013 items:

  *Litigation settlement of $49 million ($46 million after tax);
  *Closure and restructuring charges of $18 million ($13 million after tax);
    and
  *Charge of $5 million ($3 million after tax) related to the impairment and
    write-down of property, plant and equipment.

Third quarter 2012 items:

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

Our third quarter  results were driven  by improved productivity  in our  pulp 
business and continued  growth in our  personal care business,"  said John  D. 
Williams, President and Chief Executive Officer. "Pulp and paper plays a vital
role  as  the  cash-generation  platform   in  our  journey  to  expand   into 
higher-growth opportunities, and  we are  focused on running  the business  as 
efficiently as possible to  ensure that we continue  to extract maximum  value 
from our assets. During the quarter,  we finished the reconfiguration of  our 
Kamloops pulp mill following the closure of a pulp line and a recovery boiler,
and we continue  to look  for opportunities  to further  improve our  output. 
Additionally, closing  the sale  of  the Ariva  U.S. business  marked  further 
progress in our  transformation as  we work to  drive enhanced  value for  our 
shareholders.

Mr. Williams  added,  "Our  personal  care  business  continues  its  earnings 
progression with the ongoing integration of the recent AHP acquisition.  While 
third quarter results were negatively impacted by an inventory adjustment at a
large retail customer, we are  enthusiastic about the long-term prospects  for 
personal care and remain on track to deliver more than $200 million of  EBITDA 
by 2017 with our existing platform."

QUARTERLY REVIEW

Operating income before items^1 was $70million  in the third quarter of  2013 
compared to an operating  income before items^1 of  $42million in the  second 
quarter of  2013. Depreciation  and amortization  totaled $93  million in  the 
third quarter of 2013.

(In millions of dollars)         3Q 2013  2Q 2013
                                              
Sales                             $1,375   $1,312
                                              
Operating income (loss)                        
                                              
     Pulp and Paper segment          42       16
                                              
     Personal Care segment           11       10
                                              
     Corporate                      (4)     (56)
                                              
     Total                           49     (30)
                                              
Operating income before items^1       70       42
                                              
Depreciation and amortization         93       93

The increase in operating income before  items^1 in the third quarter of  2013 
was the result of  lower costs for maintenance,  higher productivity in  pulp, 
the inclusion of Associated Hygienic Products  since July 1 and the  exclusion 
of Ariva  U.S. since  July  31st, lower  raw  material costs,  higher  average 
selling prices  for pulp  and  favorable exchange  rates. These  factors  were 
partially offset by higher  fixed costs and lower  average selling prices  for 
paper.

When compared to the  second quarter of 2013,  paper shipments increased  1.6% 
and pulp shipments increased 2.3%. The shipments-to-production ratio for paper
was 98% in the third quarter of 2013, compared to 96% in the second quarter of
2013. Lack-of-order downtime and machine  slowdowns in pulp and paper  totaled 
18,000 short tons in the third quarter of 2013. Paper inventories increased by
5,000 tons while pulp inventories increased by 3,000 metric tons at the end of
September, compared to June levels.

On July 31st,  Domtar sold  the Ariva  U.S. business  and the  results of  the 
former Distribution segmenthave  been reclassifiedunder the  Pulp and  Paper 
segment.

LIQUIDITY AND CAPITAL

Cash flow  provided from  operating activities  amounted to  $287 million  and 
capital expenditures were $180 million, resulting in free cash flow^1 of  $107 
million for  the  first  nine  months  of  2013.  Domtar's  net  debt-to-total 
capitalization ratio^1 stood at 26% at  September 30, 2013 compared to 16%  at 
December 31, 2012.

Domtar returned  a  total  of  $233 million  to  its  shareholders  through  a 
combination of dividends and share buybacks in the first nine months of  2013. 
Under its  stock repurchase  program, Domtar  repurchased a  total of  533,327 
shares of common stock at an average  price of $68.85 in the third quarter  of 
2013, and a total of 11,170,506 shares of common stock at an average price  of 
$78.48 since the implementation of the program in May 2010. At the end of  the 
third quarter of 2013, Domtar had $121 million remaining under this program.

OUTLOOK

Our pulp business should benefit from accelerating momentum in global  demand, 
notably in China.  The recently  announced price increases  for several  paper 
grades are  expected to  positively  impact results  towards  the end  of  the 
quarter. We expect higher input costs due to higher usage in the winter months
and we should  see lower  paper sales  volumes in  the fourth  quarter due  to 
seasonality. Looking  out to  2014, we  should continue  to benefit  from  the 
recently announced paper price increases  and our personal care business  will 
continue to see earnings growth.

EARNINGS CONFERENCE CALL

The Company will hold a  conference call today at  10:00 a.m. (ET) to  discuss 
its third quarter 2013  financial results. Financial  analysts are invited  to 
participate in  the  call by  dialing  1 (866)  321-8231  (toll free  -  North 
America) or 1 (416) 642-5213 (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.

A replay will be available  by dialing 1 (888)  203-1112 (North America) or  1 
(647) 436-0148 (International)  using access  code 5674179  until November  7, 
2013.

                             -------------------

About Domtar
Domtar Corporation (NYSE: UFS) (TSX:  UFS) designs, manufactures, markets  and 
distributes a  wide variety  of fiber-based  products including  communication 
papers, specialty and  packaging papers  and absorbent  hygiene products.  The 
foundation of its business is a  network of world class wood fiber  converting 
assets that produce papergrade, fluff and specialty pulps. The majority of its
pulp production  is  consumed internally  to  manufacture paper  and  consumer 
products. Domtar  is the  largest integrated  marketer of  uncoated  freesheet 
paper in North America  with recognized brands such  as Cougar®, Lynx®  Opaque 
Ultra, Husky® Opaque Offset, First Choice® and Domtar EarthChoice®. Domtar  is 
also a leading  marketer and  producer of a  broad line  of incontinence  care 
products marketed primarily  under the  Attends® brand  name as  well as  baby 
diapers. In 2012, Domtar had sales  of US$5.5 billion from some 50  countries. 
The  Company  employs  approximately  9,500  people.  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 2012 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.

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

Domtar Corporation                                                       
Highlights                                                               
(In millions of dollars,
unless otherwise noted)                                                  
                                                                         
                                                               
                            Three months Three months Nine months Nine months
                                ended        ended        ended       ended
                             September 30 September 30  September   September
                                                           30          30
                                2013         2012        2013        2012
                                               (Unaudited)
                                                               
                                       $            $           $           $
                                                                         
Selected Segment Information                                              
                                                                         
Sales                                                                     
        Pulp and Paper            1,204        1,280       3,650       3,870
        Personal Care               175          111         394        288
Total for reportable
segments                            1,379        1,391      4,044       4,158
        Intersegment sales
          - Pulp and Paper            (4)          (2)        (12)         (3)
Consolidated sales                 1,375        1,389      4,032       4,155
Depreciation and
amortization and impairment
and write-down of property,
plant and equipment                                                       
        Pulp and Paper               84           90         260         274
        Personal Care                 9           6          21          15
Total for reportable
segments                               93          96         281         289
        Impairment and
          write-down of
          property, plant
          and equipment -
          Pulp and Paper                -            -          15           2
Consolidated depreciation
and amortization and
impairment and write-down of
property, plant and
equipment                              93           96         296         291
                                                                        
Operating income (loss)                                                   
        Pulp and Paper               42           98          96         298
        Personal Care                11           12          34          32
        Corporate                   (4)          (1)        (62)         (6)
Consolidated operating
income                                 49          109          68         324
Interest expense, net                  21           20          67         109
Earnings before income taxes
and equity loss                        28           89           1         215
Income tax expense (benefit)            1           22        (26)          57
Equity loss, net of taxes               -            1           1           5
Net earnings                           27           66          26         153
                                                                         
Per common share (in
dollars)                                                                  
    Net earnings                                                         
        Basic                      0.83         1.85        0.77        4.21
        Diluted                    0.82         1.84        0.77        4.20
Weighted average number of
common and exchangeable
shares outstanding
(millions)                                                               
        Basic                      32.7         35.7        33.6        36.3
        Diluted                    32.8         35.8        33.7        36.4
                                                                         
Cash flows provided from
operating activities                  104          206         287         411
Additions to property, plant
and equipment                          62           66         180         171

Domtar Corporation                                              
Consolidated Statements of
Earnings                                                        
(In millions of dollars, unless
otherwise noted)                                                
                                                               
                                                               
                                    Three     Three
                                    months    months   Nine months Nine months
                                     ended     ended      ended       ended
                                   September September  September   September
                                      30        30         30          30
                                    2013      2012       2013        2012
                                                  (Unaudited)
                                                               
                                          $         $           $           $
                                                               
Sales                                  1,375     1,389       4,032       4,155
Operating expenses                                              
       Cost of sales, excluding                                        3,263
         depreciation and
         amortization                  1,116     1,100       3,280
       Depreciation and
         amortization                     93        96         281         289
       Selling, general and
         administrative                   95        80         281         268
       Impairment and
         write-down of property,
         plant and equipment               -         -          15          2
       Closure and
         restructuring costs               -         2          18           3
       Other operating loss,
         net                              22         2          89           6
                                      1,326     1,280       3,964       3,831
Operating income                          49       109          68         324
Interest expense, net                     21        20          67         109
Earnings before income taxes and                    89           1         215
equity loss                               28
Income tax expense (benefit)               1        22        (26)          57
Equity loss, net of taxes                  -         1           1           5
Net earnings                              27        66          26         153
                                                               
Per common share (in dollars)                                   
                                                               
    Net earnings                                               
       Basic                          0.83      1.85        0.77        4.21
       Diluted                        0.82      1.84        0.77        4.20
Weighted average number of common
and exchangeable shares
outstanding (millions)                                          
       Basic                          32.7      35.7        33.6        36.3
       Diluted                        32.8      35.8        33.7        36.4

Domtar Corporation                                                     
Consolidated Balance Sheets at                                         
(In millions of dollars)                                               
                                                                      
                                                September 30 December 31
                                                    2013        2012
                                                      (Unaudited)
                                                            
                                                           $           $
Assets                                                                 
Current assets                                                         
 Cash and cash equivalents                               191         661
 Receivables, less allowances of $4 and $4               583         562
 Inventories                                             703         675
 Prepaid expenses                                         31          24
 Income and other taxes receivable                        48          48
 Deferred income taxes                                    58          45
  Total current assets                                1,614       2,015
                                                                      
 Property, plant and equipment, at cost                8,928       8,793
 Accumulated depreciation                            (5,576)     (5,392)
  Net property, plant and equipment                   3,352      3,401
Goodwill                                                  367         263
Intangible assets, net of amortization                    409         309
Other assets                                              143         135
   Total assets                                      5,885       6,123
                                                            
Liabilities and shareholders' equity                                   
Current liabilities                                                    
 Bank indebtedness                                         6          18
 Trade and other payables                                693         646
 Income and other taxes payable                           16          15
 Long-term debt due within one year                        6          79
  Total current liabilities                             721         758
                                                            
Long-term debt                                          1,102       1,128
Deferred income taxes and other                           946         903
Other liabilities and deferred credits                    435         457
                                                            
Shareholders' equity                                                   
 Exchangeable shares                                      46          48
 Additional paid-in capital                            1,998       2,175
 Retained earnings                                      756         782
 Accumulated other comprehensive loss                  (119)       (128)
  Total shareholders' equity                         2,681       2,877
                                                            
   Total liabilities and shareholders' equity        5,885       6,123

Domtar Corporation                                                         
Consolidated Statements of Cash Flows                                      
(In millions of dollars)                                                   
                                                                          
                                        Nine months ended   Nine months ended
                                           September 30       September 30
                                              2013               2012
                                                     (Unaudited)
                                                                          
                                                        $                  $
                                                                          
Operating activities                                                       
Net earnings                                            26                153
Adjustments to reconcile net earnings to
cash flows from operating activities                                       
 Depreciation and amortization                        281                289
 Deferred income taxes and tax
  uncertainties                                        (9)                 13
 Impairment and write-down of property,
  plant and equipment                                   15                  2
 Net losses on disposals of property,
  plant and equipment and sale of
  business                                               9                  -
 Stock-based compensation expense                       4                  3
 Equity loss, net                                       1                  5
 Other                                                (4)               (11)
Changes in assets and liabilities,
excluding the effects of acquisition and
sale of businesses                                                          
 Receivables                                         (46)                (1)
 Inventories                                         (19)                 20
 Prepaid expenses                                     (5)                (7)
 Trade and other payables                              15               (80)
 Income and other taxes                              (11)                  6
 Difference between employer pension
  and other post-retirement
  contributions
  and pension and other post-retirement
  expense                                               23                  7
 Other assets and other liabilities                     7                 12
 Cash flows provided from operating
  activities                                           287                411
                                                                          
Investing activities                                                       
Additions to property, plant and
equipment                                            (180)              (171)
Proceeds from disposals of property,
plant and equipment and sale of business                55                  -
Acquisition of businesses, net of cash
acquired                                             (287)              (293)
Investment in joint venture                            (1)                (5)
 Cash flows used for investing
  activities                                         (413)              (469)
                                                                          
Financing activities                                                       
Dividend payments                                     (50)               (42)
Net change in bank indebtedness                       (13)                  8
Issuance of long-term debt                               -                548
Repayment of long-term debt                           (99)              (190)
Stock repurchase                                     (183)              (116)
Other                                                    2                (1)
 Cash flows (used for) provided from
  financing activities                               (343)                207
                                                                          
Net (decrease) increase in cash and cash
equivalents                                          (469)                149
Impact of foreign exchange on cash                     (1)                  -
Cash and cash equivalents at beginning
of period                                              661                444
Cash and cash equivalents at end of
period                                                 191                593
                                                                          
Supplemental cash flow information                                         
 Net cash payments for:                                                   
  Interest (including $2 million and
    $47 million of tender offer premiums
    in 2013 and 2012, respectively)                     60                 92
  Income taxes (refund) paid                         (8)                 60

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

The following table sets forth certain non-U.S. generally accepted accounting
principles ("GAAP") financial metrics identified in bold as "Earnings before
items", "Earnings before items per diluted share", "EBITDA", "EBITDA margin",
"EBITDA before items", "EBITDA margin before items", "Free cash flow", "Net
debt" and "Net debt-to-total capitalization." Management believes that the
financial metrics presented are frequently used by investors and are useful to
evaluate our ability to service debt and our overall credit profile.
Management believes these metrics are also useful to measure the operating
performance and benchmark with peers within the industry. These metrics are
presented as a complement to enhance the understanding of operating results
but not in substitution for GAAP results.

The Company calculates "Earnings before items" and "EBITDA before items" by
excluding the after-tax (pre-tax) effect of items considered by management as
not reflecting our current operations. Management uses these measures, as well
as EBITDA and Free cash flow, to focus on ongoing operations and believes that
it is useful to investors because it enables them to perform meaningful
comparisons between periods. Domtar believes that using this information along
with Net earnings provides for a more complete analysis of the results of
operations. Net earnings and Cash flow provided from operating activities are
the most directly comparable GAAP measures.

                                                                        
                                        2013                       2012
                             Q1    Q2    Q3    YTD   Q1    Q2    Q3    Q4    YTD
Reconciliation of        
"Earnings before
items" to Net
earnings (loss)                                                             
    Net earnings
      (loss)         ($)           45  (46)    27    26    28    59    66    19   172
 (+) Impairment and
      write-down of
      property,
      plant and
      equipment and
      intangible
      assets         ($)            7     3    -    10     1    -    -     8     9
 (+) Closure and
      restructuring
      costs          ($)           -    13    -    13     1    -     1    18    20
 (-) Net (gains)
      losses on
      disposals of
      property,
      plant and
      equipment and
      business       ($)          (6)    -    12     6    -    -    -     1     1
 (+) Impact of
      purchase
      accounting     ($)           -    -     2     2     1    -    -    -     1
 (+) Reversal of
      alternative
      fuel tax
      credits        ($)           18    -    -    18    -    -    -    -    -
 (-) Cellulosic
      biofuel
      producer
      credits        ($)         (33)    -    -  (33)    -    -    -    -    -
 (+) Loss on
      repurchase of
      long-term debt ($)            2    -    -     2    30    -    -    -    30
 (+) Weston
      litigation
      settlement     ($)           -    46    -    46    -    -    -    -    -
 (=) Earnings
      before items   ($)           33    16    41    90    61    59    67    46   233
 (/) Weighted avg.
      number of
      common and
      exchangeable
      shares
      outstanding
      (diluted)      (millions)  34.9  33.4  32.8  33.7  37.0  36.6  35.8  35.2  36.1
 (=) Earnings
      before items
      per diluted
      share          ($)         0.95  0.48  1.25  2.67  1.65  1.61  1.87  1.31  6.45
                                                                        
Reconciliation of        
"EBITDA" and "EBITDA
before items" to Net
earnings (loss)                                                           
    Net earnings
      (loss)         ($)           45  (46)    27    26    28    59    66    19   172
 (+) Equity loss,
      net of taxes   ($)            1    -    -     1     2     2     1     1     6
 (+) Income tax
      (benefit)
      expense        ($)         (22)   (5)     1  (26)     8    27    22     1    58
 (+) Interest
      expense, net   ($)           25    21    21    67    71    18    20    22   131
 (=) Operating
      income (loss)  ($)           49  (30)    49    68   109   106   109    43   367
 (+) Depreciation
      and
      amortization   ($)           95    93    93   281    97    96    96    96   385
 (+) Impairment and
      write-down of
      property,
      plant and
      equipment and
      intangible
      assets         ($)           10     5    -    15     2    -    -    12    14
 (-) Net (gains)
      losses on
      disposals of
      property,
      plant and
      equipment and
      business       ($)         (10)    -    19     9    -    -    -     2     2
 (=) EBITDA         ($)          144    68   161   373   208   202   205   153   768
 (/) Sales          ($)        1,345 1,312 1,375 4,032 1,398 1,368 1,389 1,327 5,482
 (=) EBITDA margin  (%)          11%    5%   12%    9%   15%   15%   15%   12%   14%
    EBITDA         ($)          144    68   161   373   208   202   205   153   768
 (+) Reversal of
      alternative
      fuel tax
      credits        ($)           26    -    -    26    -    -    -    -    -
 (+) Closure and
      restructuring
      costs          ($)           -    18    -    18     1    -     2    27    30
 (+) Impact of
      purchase
      accounting     ($)           -    -     2     2     1    -    -    -     1
 (+) Weston
      litigation
      settlement     ($)           -    49    -    49    -    -    -    -    -
 (=) EBITDA before
      items          ($)          170   135   163   468   210   202   207   180   799
 (/) Sales          ($)        1,345 1,312 1,375 4,032 1,398 1,368 1,389 1,327 5,482
 (=) EBITDA margin
      before items   (%)          13%   10%   12%   12%   15%   15%   15%   14%   15%
                                                                        
Reconciliation of        
"Free cash flow" to
Cash flow provided
from operating
activities                                                                
    Cash flow
      provided from
      operating
      activities     ($)           63   120   104   287    30   175   206   140   551
 (-) Additions to
      property,
      plant and
      equipment      ($)         (56)  (62)  (62) (180)  (29)  (76)  (66)  (65) (236)
 (=) Free cash flow ($)            7    58    42   107     1    99   140    75   315
                                                                        
"Net debt-to-total       
capitalization"
computation                                                               
    Bank
      indebtedness   ($)           13     2     6         13    22    15    18     
 (+) Long-term debt
      due within one
      year           ($)            8     7     6          6     6     7    79     
 (+) Long-term debt ($)        1,104 1,102 1,102        952   950 1,196 1,128     
 (=) Debt           ($)        1,125 1,111 1,114        971   978 1,218 1,225     
 (-) Cash and cash
      equivalents    ($)        (513) (432) (191)      (315) (276) (593) (661)     
 (=) Net debt       ($)          612   679   923        656   702   625   564     
 (+) Shareholders'
      equity         ($)        2,842 2,652 2,681      3,009 2,948 3,004 2,877     
 (=) Total
      capitalization ($)        3,454 3,331 3,604      3,665 3,650 3,629 3,441     
    Net debt       ($)          612   679   923        656   702   625   564     
 (/) Total
      capitalization ($)        3,454 3,331 3,604      3,665 3,650 3,629 3,441     
 (=) Net
      debt-to-total
      capitalization (%)          18%   20%   26%        18%   19%   17%   16%     

"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 2013
(In millions of dollars, unless otherwise noted)              
        

The following table sets forth certain non-U.S. generally accepted accounting
principles ("GAAP"), financial metrics identified in bold as "Operating income
(loss) before items", "EBITDA before items" and "EBITDA margin before items"
by reportable segment.
Management believes that the financial metrics presented are frequently used
by investors and are useful to measure the operating performance and benchmark
with peers within the industry.
These metrics are presented as a complement to enhance the understanding of
operating results but not in substitution for GAAP results.

The Company calculates the segmented "Operating income (loss) before items" by
excluding the pre-tax effect of items considered by management as not
reflecting our ongoing operations.
Management uses these measures to focus on ongoing operations and believes
that it is useful to investors because it enables them to perform meaningful
comparisons between periods.
Domtar believes that using this information along with Operating income (loss)
provides for a more complete analysis of the results of operations. Operating
income (loss) by segment is the most directly comparable GAAP measure.

                                                                                                                
                         Pulp and Paper ^(1)          Personal Care ^(2)               Corporate                       Total
                    Q1'13 Q2'13 Q3'13 Q4'13  YTD  Q1'13 Q2'13 Q3'13 Q4'13 YTD Q1'13 Q2'13 Q3'13 Q4'13 YTD  Q1'13 Q2'13 Q3'13 Q4'13  YTD
Reconciliation of    
Operating income
(loss) to
"Operating income
(loss) before
items"                                                                                                                  
     Operating
     income (loss) ($)    38    16    42    -    96    13    10    11    -  34   (2)  (56)   (4)    - (62)    49  (30)    49    -    68
  (+) Impairment
      and
      write-down of
      property,
      plant and
     equipment     ($)    10     5    -    -    15    -    -    -    -   -    -    -    -    -   -    10     5    -    -    15
  (-) Net (gain)
      loss on
      disposal of
      property,
      plant and
      equipment and
     business      ($)  (10)    -    19    -     9    -    -    -    -  -    -    -    -    -    -  (10)    -    19    -     9
  (+) Reversal of
      alternative
      fuel tax
     credits       ($)    26    -    -    -    26    -    -    -    -   -    -    -    -    -    -    26    -    -    -    26
  (+) Weston
      litigation
     settlement    ($)    -    -    -    -     -    -    -    -    -   -    -    49    -    -   49    -    49    -    -    49
  (+) Closure and
      restructuring
     costs         ($)    -    10    -    -    10    -     2    -    -   2    -     6    -    -    6    -    18    -    -    18
  (+) Impact of
      purchase
     accounting    ($)    -    -    -    -     -    -    -     2    -   2    -    -    -    -    -    -    -     2    -     2
  (=) Operating
      income (loss)
     before items  ($)    64    31    61    -   156    13    12    13    -  38   (2)   (1)   (4)    -  (7)    75    42    70    -   187
                                                                                                                    
Reconciliation of    
"Operating income
(loss) before
items" to "EBITDA
before items"                                                                                                           
     Operating
      income (loss)
     before items  ($)    64    31    61    -   156    13    12    13    -  38   (2)   (1)   (4)    -  (7)    75    42    70    -   187
  (+) Depreciation
      and
     amortization  ($)    89    87    84    -   260     6     6     9    -  21    -    -    -    -   -    95    93    93    -   281
                                                                                                                    
  (=) EBITDA before
     items         ($)   153   118   145    -   416    19    18    22    -  59   (2)   (1)   (4)    -  (7)   170   135   163    -   468
 (/) Sales         ($) 1,238 1,208 1,204    - 3,650   111   108   175    - 394    -    -    -    -    - 1,349 1,316 1,379    - 4,044
  (=) EBITDA margin
     before items  (%)   12%   10%   12%    -   11%   17%   17%   13%    - 15%    -    -    -    -    -   13%   10%   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 May 31, 2013, the Company acquired Xerox's paper print and media
product's assets in the United States and Canada.
^(2) On July 1, 2013, the Company acquired 100% of the shares of Associated
Hygiene Products LLC.

Domtar Corporation
Quarterly Reconciliation of Non-GAAP Financial Measures - By Segment 2012
(In millions of dollars, unless otherwise noted)

The following table sets forth certain non-U.S. generally accepted accounting
principles ("GAAP"), financial metrics identified in bold as "Operating income
(loss) before items", "EBITDA before items" and "EBITDA margin before items"
by reportable segment.
Management believes that the financial metrics presented are frequently used
by investors and are useful to measure the operating performance and benchmark
with peers within the industry.
These metrics are presented as a complement to enhance the understanding of
operating results but not in substitution for GAAP results.

The Company calculates the segmented "Operating income (loss) before items" by
excluding the pre-tax effect of items considered by management as not
reflecting our ongoing operations.
Management uses these measures to focus on ongoing operations and believes
that it is useful to investors because it enables them to perform meaningful
comparisons between periods.
Domtar believes that using this information along with Operating income (loss)
provides for a more complete analysis of the results of operations. Operating
income (loss) by segment is the most directly comparable GAAP measure.

                                                                                                                            
                           Pulp and Paper             Personal Care ^(1)               Corporate                      Total
                    Q1'12 Q2'12 Q3'12 Q4'12  YTD  Q1'12 Q2'12 Q3'12 Q4'12 YTD Q1'12 Q2'12 Q3'12 Q4'12 YTD Q1'12 Q2'12 Q3'12 Q4'12  YTD
Reconciliation of      
Operating income
(loss) to
"Operating income
(loss) before
items"                                                                                                                  
     Operating
     income (loss) ($)   106    94    98    32   330     8    12    12    13  45   (5)    -   (1)   (2) (8)   109   106   109    43   367
  (+) Impairment
      and
      write-down of
      property,
      plant and
      equipment and
      intangible
     assets        ($)     2    -    -    12    14    -    -    -    -   -    -    -    -    -   -     2    -    -    12    14
  (+) Closure and
      restructuring
     costs         ($)     1    -     1    27    29    -    -     1    -   1    -    -    -    -   -     1    -     2    27    30
  (-) Net losses on
      disposals of
      property,
      plant and
     equipment     ($)    -    -    -     2     2    -    -    -    -   -    -    -    -    -   -    -    -    -     2     2
  (+) Impact of
      purchase
     accounting    ($)    -    -    -    -     -     1    -    -    -   1    -    -    -    -   -     1    -    -    -     1
                                                                                                                   
  (=) Operating
      income (loss)
     before items  ($)   109    94    99    73   375     9    12    13    13  47   (5)    -   (1)   (2) (8)   113   106   111    84   414
                                                                                                                   
Reconciliation of      
"Operating income
(loss) before
items" to "EBITDA
before items"                                                                                                           
     Operating
      income (loss)
     before items  ($)   109    94    99    73   375     9    12    13    13  47   (5)    -   (1)   (2) (8)   113   106   111    84   414
  (+) Depreciation
      and
     amortization  ($)    94    90    90    91   365     3     6     6     5  20    -    -    -    -  -    97    96    96    96   385
                                                                                                                   
  (=) EBITDA before
     items         ($)   203   184   189   164   740    12    18    19    18  67   (5)    -   (1)   (2) (8)   210   202   207   180   799
 (/) Sales         ($) 1,329 1,261 1,280 1,218 5,088    70   107   111   111 399    -    -    -    -  - 1,399 1,368 1,391 1,329 5,487
  (=) EBITDA margin
     before items  (%)   15%   15%   15%   13%   15%   17%   17%   17%   16% 17%    -    -    -    -  -   15%   15%   15%   14%   15%
                                                                                                                   

"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 March 1, 2012, the Company acquired 100% of the shares of Attends
     Healthcare Limited.
    On May 1, 2012, the Company acquired 100% of the shares of EAM
     Corporation.

Domtar Corporation
Supplemental Segmented Information
(In millions of dollars, unless otherwise noted)
                                                                  
                               2013                       2012
                       Q1    Q2    Q3    YTD   Q1    Q2    Q3    Q4    YTD
Pulp and Paper                
Segment                                                               
   Sales          ($)   1,238 1,208 1,204 3,650 1,329 1,261 1,280 1,218 5,088
   Operating       ($)
    income                  38    16    42    96   106    94    98    32   330
   Depreciation    ($)
    and
    amortization            89    87    84   260    94    90    90    91   365
   Impairment and  ($)
    write-down of
    propery, plant
    and equipment
    and intangible
    assets                  10     5    -    15     2    -     -    12    14
                                                                   
   Papers                                                          
   Papers          ('000
    Production      ST)     795   837   827 2,459   870   832   788   831 3,321
   Papers          ('000
    Shipments -     ST)
    Manufactured            828   801   814 2,443   870   819   826   805 3,320
    Communication ('000
      Papers        ST)     706   676   694 2,076   756   705   709   684 2,854
    Specialty and ('000
      Packaging     ST)     122   125   120   367   114   114   117   121   466
   Paper Shipments ('000
    - Sourced from  ST)
    3rd parties             83    85    73   241   100    92    91    78   361
   Paper Shipments ('000
    - Total         ST)     911   886   887 2,684   970   911   917   883 3,681
   Pulp                                                             
   Pulp            ('000
    Shipments^(a)   ADMT)   372   344   352 1,068   389   368   415   385 1,557
    Hardwood      (%)
      Kraft Pulp            17%   14%   14%   15%   15%   16%   20%   19%   18%
    Softwood      (%)
      Kraft Pulp            56%   57%   58%   57%   61%   57%   55%   56%   57%
    Fluff Pulp    (%)     27%   29%   27%   28%   24%   27%   25%   25%   25%
                                                                  
                                                                  
Personal Care                 
Segment                                                                 
   Sales          ($)     111   108   175   394    70   107   111   111   399
   Operating       ($)
    income                  13    10    11    34     8    12    12    13    45
   Depreciation    ($)
    and
    amortization             6     6     9    21     3     6     6     5    20
                                                                  
                                                                  
Average Exchange    $US /
Rates               $CAN  1.009 1.023 1.039 1.024 1.001 1.010 0.995 0.991 0.999
                 $CAN
                    / $US 0.991 0.977 0.963 0.977 0.999 0.990 1.006 1.009 1.001
                 €EUR
                    / $US 1.320 1.306 1.325 1.317 1.312 1.283 1.252 1.298 1.286
                                                                  
(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.





SOURCE Domtar Corporation

Image with caption: "Domtar Personal Care manufacturing facility, Delaware,
Ohio (CNW Group/Domtar Corporation)". Image available at:
http://photos.newswire.ca/images/download/20131024_C6141_PHOTO_EN_32492.jpg

Image with caption: "John D. Williams, President and CEO, Domtar Corporation
(CNW Group/Domtar Corporation)". Image available at:
http://photos.newswire.ca/images/download/20131024_C6141_PHOTO_EN_32494.jpg

Image with caption: "Domtar market pulp bales (CNW Group/Domtar Corporation)".
Image available at:
http://photos.newswire.ca/images/download/20131024_C6141_PHOTO_EN_32496.jpg

Contact:

MEDIA AND INVESTOR RELATIONS
Pascal Bossé
Vice-President
Corporate Communications and Investor Relations
Tel.: 514-848-5938
 
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