Domtar Corporation reports preliminary fourth quarter and fiscal year 2013 financial results

  Domtar Corporation reports preliminary fourth quarter and fiscal year 2013                               financial results  PR Newswire  MONTREAL, Feb. 7, 2014  Acquired Laboratorios Indas, Spanish market leader in adult incontinence - a key milestone in the development of Domtar's Personal Care business (All financial information is in U.S. dollars, and all earnings per share results are diluted, unless otherwise noted.)    *Fourth quarter 2013 net earnings of $2.00 per share, earnings before     items^1 of $2.09 per share   *Announced and completed on January 2, 2014, the acquisition of     Laboratorios Indas, Spain's largest manufacturer and marketer of adult     incontinence products   *Completed a long-term financing with the successful issuance of 30-year     senior notes  TICKER SYMBOL (NYSE: UFS) (TSX: UFS)  MONTREAL, Feb. 7,  2014 /PRNewswire/  - Domtar Corporation  (NYSE: UFS)  (TSX:  UFS) today reported  net earnings  of $65million  ($2.00 per  share) for  the  fourth quarter of  2013 compared  to net  earnings of  $27million ($0.82  per  share) for  the  third  quarter  of  2013  and  net  earnings  of  $19million  ($0.54per share) for the fourth quarter of 2012. Sales for the fourth quarter of 2013 were $1,359million.  Excluding items listed below, the Company  had earnings before items^1 of  $68  million ($2.09 per share) for the fourth quarter of 2013 compared to  earnings  before items^1 of $41 million ($1.25 per share) for the third quarter of  2013  and earnings before items^1  of $46million ($1.31 per  share) for the  fourth  quarter of 2012.  Fourth quarter 2013 items:    *Net gain on sale of property, plant and equipment and business for $5     million ($4 million after tax); and   *Charge of $7 million ($7 million after tax) for impairment of property,     plant and equipment.  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).  Fourth quarter 2012 items:    *Closure and restructuring costs of $27 million ($18 million after tax),   *Charge of $12 million ($8 million after tax) related to the impairment and     write-down of property, plant and equipment and intangible assets; and   *Net losses on the sale of property, plant and equipment of $2 million ($1     million after tax).  Commenting on  the fourth  quarter results,  John D.  Williams, President  and  Chief Executive Officer, said, "Our solid  results in the fourth quarter  were  mostly in line with our expectations  in all of our businesses. Lower  planned  maintenance shutdowns and the continued momentum in pulp markets drove quarter over quarter earnings improvement."  FISCAL YEAR 2013 HIGHLIGHTS  For fiscal year 2013, net earnings  amounted to $91 million ($2.72 per  share)  compared to net  earnings of $172  million ($4.76 per  share) for fiscal  year  2012. The  Company had  earnings before  items^1 of  $158 million  ($4.73  per  share) for fiscal  2013 compared to  earnings before items^1  of $233  million  ($6.45 per share) for fiscal 2012.  Sales amounted to $5.4 billion for  fiscal  year 2013.  "In 2013,  we continued  to  transform the  earnings  profile of  our  company  through further acquisitions  in personal care,  strategic investments in  the  pulp and  paper business  and  the disposal  of  non-core assets.  The  recent  acquisition of  Indas  represents  a  significant step  in  building  out  our  personal care business, and will further help us achieve our goal of $300-$500 million of  EBITDA from  growing business  by 2017.  We have  made  meaningful  progress towards this goal and the businesses we have acquired so far bring us closer to the lower end of our target. The continued execution of our strategy will drive  earnings and  cash flow  growth  in 2014  and beyond,"  added  Mr.  Williams.  QUARTERLY REVIEW  Operating income before items^1 was $95million in the fourth quarter of  2013  compared to an  operating income before  items^1 of $70million  in the  third  quarter of  2013. Depreciation  and amortization  totaled $95  million in  the  fourth quarter of 2013.  (In millions of dollars)         4Q 2013  3Q 2013 Sales                             $1,359   $1,375 Operating income (loss)                              Pulp and Paper segment          75       42      Personal Care segment            9       11      Corporate                        9      (4)      Total                           93       49 Operating income before items^1       95       70 Depreciation and amortization         95       93  The increase in operating income before items^1 in the fourth quarter of  2013  was the result of lower costs  for maintenance, higher average selling  prices  for paper and pulp, favorable exchange rates, higher productivity in pulp, and higher paper  shipments. These  factors were  partially offset  by higher  raw  material costs and an unfavorable mix of paper sold.  When compared  to the  third  quarter of  2013, manufactured  paper  shipments  increased 0.4% and pulp shipments increased 7.1%. The  shipments-to-production  ratio for paper was 100% in the fourth quarter of 2013, compared to 98% in the third quarter of 2013.  Lack-of-order downtime and  machine slowdowns in  pulp  and paper  totaled 20,000  short tons  in the  fourth quarter  of 2013.  Paper  inventories remained unchanged when compared to the end of September.  LIQUIDITY AND CAPITAL  In 2013, cash flow provided from operating activities amounted to $411 million and capital expenditures were $242 million,  resulting in free cash flow^1  of  $169 million  for  fiscal  2013.  Domtar's  net  debt-to-total  capitalization  ratio^1 stood at  24% at December  31, 2013  compared to 16%  at December  31,  2012.  Domtar returned  a  total  of  $250 million  to  its  shareholders  through  a  combination of dividends and share buybacks in fiscal 2013. Domtar repurchased a total of 11,170,506  shares of common  stock at an  average price of  $78.48  since the implementation of its stock  repurchase program in May 2010. At  the  end of the  fourth quarter of  2013, Domtar had  $121 million remaining  under  this program.  OUTLOOK  In 2014, we expect our paper shipments to be in-line with 2013 while we expect the market demand for  uncoated free sheet to  decline with long-term  secular  trends. Our  paper prices  will benefit  from the  implementation of  recently  announced price  increases.  We  expect  softwood  pulp  markets  to  maintain  positive momentum but new scheduled industry hardwood pulp capacity makes  the  latter part of  the year more  uncertain. Personal care  will continue to  see  earnings growth with the recent acquisition of Indas and with the addition  of  the new production lines towards the end of the year.  EARNINGS CONFERENCE CALL  The Company will hold a  conference call today at  10:00 a.m. (ET) to  discuss  its fourth quarter and fiscal  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 February  21,  2014.                               -------------------  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^®, IncoPack and Indasec^®  brand  names as well as  baby diapers. In  2013, Domtar had  sales of US$5.4  billion  from some 50 countries.  The Company employs  approximately 10,000 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-Qs. 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       Three      Twelve      Twelve                                  months      months      months      months                                   ended       ended       ended       ended                                December 31 December 31 December 31 December 31                                  2013        2012        2013        2012                                                 (Unaudited)                                         $           $           $           $                                                                           Selected Segment Information                                                                                                                         Sales                                                                              Pulp and Paper             1,193       1,218       4,843       5,088         Personal Care                172         111         566         399 Total for reportable segments        1,365       1,329       5,409       5,487          Intersegment sales -          Pulp and Paper               (6)         (2)        (18)         (5) Consolidated sales                   1,359       1,327       5,391       5,482                                                                           Depreciation and amortization and impairment and write-down of property, plant and equipment and intangible assets                                                                             Pulp and Paper                85          91         345        365         Personal Care                 10           5          31          20 Total for reportable segments           95          96         376         385          Impairment and           write-down of           property, plant and           equipment and           intangible assets -          Pulp and Paper                 5          12          20          14          Impairment and           write-down of           property, plant and           equipment - Personal          Care                           2           -           2           - Consolidated depreciation and amortization and impairment and write-down of property, plant and equipment and intangible assets                      102         108         398         399                                                                           Operating income (loss)                                                            Pulp and Paper                75          32         171         330         Personal Care                  9          13          43          45         Corporate                      9         (2)        (53)         (8) Consolidated operating income           93          43         161         367 Interest expense, net                   22          22          89         131 Earnings before income taxes and equity loss                         71          21          72         236 Income tax expense (benefit)             6           1        (20)          58 Equity loss, net of taxes                -           1           1           6 Net earnings                            65          19          91         172                                                                           Per common share (in dollars)                                                   Net earnings                                                                 Basic                       2.01        0.54        2.73        4.78         Diluted                     2.00        0.54        2.72        4.76 Weighted average number of common and exchangeable shares outstanding (millions)                                                             Basic                       32.4        35.1        33.3        36.0         Diluted                     32.5        35.2        33.4        36.1                                                                           Cash flows provided from operating activities                   124         140         411         551 Additions to property, plant and equipment                           62          65         242         236  Domtar Corporation                                                         Consolidated Statements of Earnings                                                                   (In millions of dollars, unless otherwise noted)                                                                                                                                                                                      Twelve      Twelve                             Three months Three months    months      months                                ended        ended        ended        ended                             December 31  December 31  December 31  December 31                                2013         2012         2013        2012                                               (Unaudited)                                       $            $            $           $                                                                           Sales                              1,359        1,327        5,391       5,482 Operating expenses                                                            Cost of sales,     excluding depreciation    and amortization               1,081        1,058        4,361       4,321    Depreciation and    amortization                      95           96          376         385    Selling, general and    administrative                   100           90          381         358    Impairment and     write-down of property,     plant and equipment and    intangible assets                  7           12           22          14    Closure and    restructuring costs                -           27           18          30    Other operating    (income) loss, net              (17)            1           72           7                                   1,266        1,284        5,230       5,115 Operating income                      93           43          161         367 Interest expense, net                 22           22           89         131 Earnings before income taxes and equity loss                 71           21           72         236 Income tax expense (benefit)                              6            1         (20)          58 Equity loss, net of taxes              -            1            1           6 Net earnings                          65           19           91         172                                                                           Per common share (in dollars)                                                                                                                                   Net earnings                                                     Basic                           2.01         0.54         2.73        4.78   Diluted                         2.00         0.54         2.72        4.76 Weighted average number of common and exchangeable shares outstanding (millions)                                                                   Basic                           32.4         35.1         33.3        36.0   Diluted                         32.5         35.2         33.4        36.1  Domtar Corporation                                                       Consolidated Balance Sheets at                                           (In millions of dollars)                                                                                                                                                                           December 31 December 31                                                      2013        2012                                                         (Unaudited)                                                             $           $                                                               Assets                                                                   Current assets                                                             Cash and cash equivalents                              655         661   Receivables, less allowances of $4 and $4              601         562   Inventories                                            685         675   Prepaid expenses                                        23          24   Income and other taxes receivable                       61          48   Deferred income taxes                                   52          45    Total current assets                               2,077       2,015                                                                         Property, plant and equipment, at cost                 8,883       8,793  Accumulated depreciation                             (5,594)     (5,392)    Net property, plant and equipment                  3,289       3,401 Goodwill                                                   369         263 Intangible assets, net of amortization                     407         309 Other assets                                               136         135     Total assets                                     6,278       6,123                                                               Liabilities and shareholders' equity                                     Current liabilities                                                        Bank indebtedness                                       15          18   Trade and other payables                               673         646   Income and other taxes payable                          17          15   Long-term debt due within one year                       4          79    Total current liabilities                            709         758                                                               Long-term debt                                           1,510       1,128 Deferred income taxes and other                            923         903 Other liabilities and deferred credits                     354         457                                                               Shareholders' equity                                                       Exchangeable shares                                     44          48   Additional paid-in capital                           1,999       2,175   Retained earnings                                      804         782   Accumulated other comprehensive loss                  (65)       (128)    Total shareholders' equity                         2,782       2,877     Total liabilities and shareholders' equity       6,278       6,123  Domtar Corporation                                                           Consolidated Statements of Cash Flows                                        (In millions of dollars)                                                                                                                                                                                 Twelve months  Twelve months                                                  ended December ended December                                                        31             31                                                      2013           2012                                                          (Unaudited)                                                              $              $                                                                             Operating activities                                                         Net earnings                                                 91            172 Adjustments to reconcile net earnings to cash flows from operating activities                                               Depreciation and amortization                             376            385  Deferred income taxes and tax uncertainties               (8)            (1)  Impairment and write-down of property, plant   and equipment and intangible assets                        22             14  Net losses on disposals of property, plant and   equipment and sale of business                              4              2  Stock-based compensation expense                            5              5  Equity loss, net                                            1              6  Other                                                     (2)           (13) Changes in assets and liabilities, excluding the effects of acquisition and sale of businesses                                 Receivables                                              (70)             99  Inventories                                               (8)              5  Prepaid expenses                                            1            (3)  Trade and other payables                                 (11)          (118)  Income and other taxes                                  (26)            (4)  Difference between employer pension and other   post-retirement contributions and pension and   other post-retirement expense                              31           (13)  Other assets and other liabilities                          5             15  Cash flows provided from operating activities             411            551                                                                Investing activities                                                         Additions to property, plant and equipment                (242)          (236) Proceeds from disposals of property, plant and equipment and sale of business                               61             49 Acquisition of businesses, net of cash acquired           (287)          (293) Investment in joint venture                                 (1)            (6)  Cash flows used for investing activities                (469)          (486)                                                                Financing activities                                                         Dividend payments                                          (67)           (58) Net change in bank indebtedness                             (3)             11 Change of revolving bank credit facility                    160              - Issuance of long-term debt                                  249            548 Repayment of long-term debt                               (102)          (192) Stock repurchase                                          (183)          (157)  Cash flows provided from financing activities              54            152                                                                Net (decrease) increase in cash and cash equivalents                                                 (4)            217 Impact of foreign exchange on cash                          (2)              - Cash and cash equivalents at beginning of period            661            444 Cash and cash equivalents at end of period                  655            661                                                                             Supplemental cash flow information                                            Net cash payments for:                                                Interest (including $2 million and $47          million of tender offer premiums in         2013 and 2012, respectively)                        81            116        Income taxes paid                                    5             76  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    Q4    YTD   Q1    Q2    Q3    Q4    YTD Reconciliation of "Earnings before items" to Net earnings (loss)                                                                       Net earnings      (loss)         ($)           45  (46)    27    65    91    28    59    66    19   172      Impairment and       write-down of       property,       plant and       equipment and       intangible   (+) assets         ($)            7     3     -     7    17     1     -     -     8     9      Closure and       restructuring   (+) costs          ($)            -    13     -     -    13     1     -     1    18    20      Net (gains)       losses on       disposals of       property,       plant and       equipment and   (-) business       ($)          (6)     -    12   (4)     2     -     -     -     1     1      Impact of       purchase   (+) accounting     ($)            -     -     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   ($)           33    16    41    68   158    61    59    67    46   233      Weighted avg.       number of       common and       exchangeable       shares       outstanding   (/) (diluted)      (millions)  34.9  33.4  32.8  32.5  33.4  37.0  36.6  35.8  35.2  36.1      Earnings       before items       per diluted   (=) share          ($)         0.95  0.48  1.25  2.09  4.73  1.65  1.61  1.87  1.31  6.45                                                                                 Reconciliation of "EBITDA" and "EBITDA before items" to Net earnings (loss)                                                                       Net earnings      (loss)         ($)           45  (46)    27    65    91    28    59    66    19   172      Equity loss,   (+) net of taxes   ($)            1     -     -     -     1     2     2     1     1     6      Income tax       (benefit)   (+) expense        ($)         (22)   (5)     1     6  (20)     8    27    22     1    58      Interest   (+) expense, net   ($)           25    21    21    22    89    71    18    20    22   131      Operating   (=) income (loss)  ($)           49  (30)    49    93   161   109   106   109    43   367      Depreciation       and   (+) amortization   ($)           95    93    93    95   376    97    96    96    96   385      Impairment and       write-down of       property,       plant and       equipment and       intangible   (+) assets         ($)           10     5     -     7    22     2     -     -    12    14      Net (gains)       losses on       disposals of       property,       plant and       equipment and   (-) business       ($)         (10)     -    19   (5)     4     -     -     -     2     2  (=) EBITDA         ($)          144    68   161   190   563   208   202   205   153   768  (/) Sales          ($)        1,345 1,312 1,375 1,359 5,391 1,398 1,368 1,389 1,327 5,482  (=) EBITDA margin  (%)          11%    5%   12%   14%   10%   15%   15%   15%   12%   14%     EBITDA         ($)          144    68   161   190   563   208   202   205   153   768      Reversal of       alternative       fuel tax   (+) credits        ($)           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   190   658   210   202   207   180   799  (/) Sales          ($)        1,345 1,312 1,375 1,359 5,391 1,398 1,368 1,389 1,327 5,482      EBITDA margin   (=) before items   (%)          13%   10%   12%   14%   12%   15%   15%   15%   14%   15%                                                                                 Reconciliation of "Free cash flow" to Cash flow provided from operating activities                                                                            Cash flow       provided from       operating      activities     ($)           63   120   104   124   411    30   175   206   140   551      Additions to       property,       plant and   (-) equipment      ($)         (56)  (62)  (62)  (62) (242)  (29)  (76)  (66)  (65) (236)  (=) Free cash flow ($)            7    58    42    62   169     1    99   140    75   315                                                                                 "Net debt-to-total capitalization" computation                                                                           Bank      indebtedness   ($)           13     2     6    15         13    22    15    18           Long-term debt       due within one   (+) year           ($)            8     7     6     4          6     6     7    79       (+) Long-term debt ($)        1,104 1,102 1,102 1,510        952   950 1,196 1,128       (=) Debt           ($)        1,125 1,111 1,114 1,529        971   978 1,218 1,225           Cash and cash   (-) equivalents    ($)        (513) (432) (191) (655)      (315) (276) (593) (661)       (=) Net debt       ($)          612   679   923   874        656   702   625   564           Shareholders'   (+) equity         ($)        2,842 2,652 2,681 2,782      3,009 2,948 3,004 2,877           Total   (=) capitalization ($)        3,454 3,331 3,604 3,656      3,665 3,650 3,629 3,441          Net debt       ($)          612   679   923   874        656   702   625   564           Total   (/) capitalization ($)        3,454 3,331 3,604 3,656      3,665 3,650 3,629 3,441           Net       debt-to-total   (=) capitalization (%)          18%   20%   26%   24%        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) ($)    38    16    42    75   171    13    10    11     9  43   (2)  (56)   (4)     9 (53)    49  (30)    49    93   161       Impairment       and       write-down of       property,       plant and       equipment and       intangible  (+) assets        ($)    10     5     -     5    20     -     -     -     2   2     -     -     -     -    -    10     5     -     7    22       Net (gain)       loss on       disposal of       property,       plant and       equipment and  (-) business      ($)  (10)     -    19     1    10     -     -     -     -   -     -     -     -   (6)  (6)  (10)     -    19   (5)     4       Reversal of       alternative       fuel tax  (+) credits       ($)    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    81   237    13    12    13    11  49   (2)   (1)   (4)     3  (4)    75    42    70    95   282                                                                                                                    Reconciliation of "Operating income (loss) before items" to "EBITDA before items"                                                                                                             Operating       income (loss)     before items  ($)    64    31    61    81   237    13    12    13    11  49   (2)   (1)   (4)     3  (4)    75    42    70    95   282       Depreciation       and  (+) amortization  ($)    89    87    84    85   345     6     6     9    10  31     -     -     -     -    -    95    93    93    95   376                                                                                                                        EBITDA before  (=) items         ($)   153   118   145   166   582    19    18    22    21  80   (2)   (1)   (4)     3  (4)   170   135   163   190   658  (/) Sales         ($) 1,238 1,208 1,204 1,193 4,843   111   108   175   172 566     -     -     -     -    - 1,349 1,316 1,379 1,365 5,409       EBITDA margin  (=) before items  (%)   12%   10%   12%   14%   12%   17%   17%   13%   12% 14%     -     -     -     -    -   13%   10%   12%   14%   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    Q4    YTD   Q1    Q2    Q3    Q4    YTD Pulp and Paper Segment                                                     Sales           ($)   1,238 1,208 1,204 1,193 4,843 1,329 1,261 1,280 1,218 5,088  Operating   income          ($)      38    16    42    75   171   106    94    98    32   330  Depreciation   and   amortization    ($)      89    87    84    85   345    94    90    90    91   365  Impairment and   write-down of   property, plant   and equipment,   and intangible   assets          ($)      10     5     -     5    20     2     -     -    12    14                                                                         Papers                                                                  Papers          ('000   Production      ST)     795   837   827   816 3,275   870   832   788   831 3,321  Papers   Shipments -     ('000   Manufactured    ST)     828   801   814   817 3,260   870   819   826   805 3,320    Communication ('000    Papers        ST)     706   676   694   701 2,777   756   705   709   684 2,854    Specialty and ('000    Packaging     ST)     122   125   120   116   483   114   114   117   121   466  Paper Shipments   - Sourced from  ('000   3rd parties     ST)      83    85    73    41   282   100    92    91    78   361  Paper Shipments ('000   - Total         ST)     911   886   887   858 3,542   970   911   917   883 3,681  Pulp                                                                    Pulp            ('000   Shipments^(a)   ADMT)   372   344   352   377 1,445   389   368   415   385 1,557    Hardwood    Kraft Pulp    (%)     17%   14%   14%   14%   15%   15%   16%   20%   19%   18%    Softwood    Kraft Pulp    (%)     56%   57%   58%   57%   57%   61%   57%   55%   56%   57%   Fluff Pulp    (%)     27%   29%   27%   29%   28%   24%   27%   25%   25%   25%                                                                          Personal Care Segment                                                      Sales           ($)     111   108   175   172   566    70   107   111   111   399  Operating   income          ($)      13    10    11     9    43     8    12    12    13    45  Depreciation   and   amortization    ($)       6     6     9    10    31     3     6     6     5    20  Impairment and   write-down of   property, plant   and equipment   ($)       -     -     -     2     2     -     -     -     -     -                                                                   Average Exchange  $US / 1.009 1.023 1.039 1.050 1.030 1.001 1.010 0.995 0.991 0.999 Rates             $CAN                $CAN  0.991 0.977 0.963 0.953 0.971 0.999 0.990 1.006 1.009 1.001                   / $US                €EUR                                                        1.286                   / $US 1.320 1.306 1.325 1.362 1.329 1.312 1.283 1.252 1.298    (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  Contact:  MEDIA AND INVESTOR RELATIONS Pascal Bossé Vice-President Corporate Communications and Investor Relations Tel.: 514-848-5938