News Details

Fourth Quarter Net Sales Increase 9.7% to $345.6 million

SPOKANE, Wash.--(BUSINESS WIRE)-- Clearwater Paper Corporation (NYSE:CLW) today reported financial results for the fourth quarter ended December 31, 2010. Net earnings for the fourth quarter of 2010, were $37.8 million, or $3.19 per diluted common share, compared to net earnings of $47.2 million, or $4.01 per diluted common share, for the fourth quarter of 2009.

Clearwater Paper acquired Cellu Tissue Holdings, Inc. on December 27, 2010. The company's fourth quarter 2010 results included four days of Cellu Tissue's operating results and acquisition related expenses.

Excluding $10.5 million in after-tax charges related to the Cellu Tissue acquisition and a $27.1 million benefit related to a Cellulosic Biofuel Producer Credit, fourth quarter 2010 earnings were $21.2 million or $1.79 per diluted common share. Fourth quarter 2009 results included a $29.7 million benefit, or $2.53 per diluted common share, related to the Alternative Fuel Mixture Tax Credit. Excluding the Alternative Fuel Mixture Tax Credit, fourth quarter 2009 earnings were $17.4 million, or $1.48 per diluted common share.

"We had a solid finish to a year in which we had very strong operational execution while also making significant strides on the strategic front," said Gordon Jones, chairman, president and chief executive officer. "In the last week of the year we closed the Cellu Tissue acquisition, which significantly enhances our ability to supply existing and new customers and provides us a nationwide manufacturing footprint."

"Throughout the year we also made great progress in the construction of our new facility in North Carolina, which will provide more premium products to our customers. We believe these accomplishments put us in a very strong competitive position for the future," concluded Jones.

FOURTH QUARTER 2010 SEGMENT PERFORMANCE

Consumer Products

Net sales in the consumer products segment were $142.9 million for the fourth quarter of 2010, an increase of 3.3% over fourth quarter 2009 net sales of $138.3 million. Operating income for the quarter was $7.3 million, compared with operating income of $28.7 million for the fourth quarter of 2009.

• The slight increase in net sales was primarily a result of the inclusion of Cellu Tissue's operating results for the last four days of the quarter.
• Volume increased by 6.6% in the fourth quarter of 2010 compared to 2009, partially offset by net selling prices that were 3.2% lower in the quarter.
• Operating income for the 2010 fourth quarter was lower primarily due to significantly higher pulp costs and $6.4 million of acquisition related expenses reflected in segment results.

Pulp and Paperboard

Net sales of $222.5 million for the fourth quarter of 2010 were up 16.5% compared to fourth quarter 2009 net sales of $191.1 million. Operating income for the quarter was $33.1 million, compared to operating income of $52.9 million for the fourth quarter of 2009, which included $47.1 million pre-tax associated with the Alternative Fuel Mixture Tax Credit.

• Higher net sales for the quarter were primarily the result of a 9.0% increase in paperboard pricing and a 24.8% increase in pulp prices compared to fourth quarter 2009.
• Pulp shipments were up 81.2% over the 2009 fourth quarter, while paperboard shipments were flat compared to fourth quarter 2009.

Taxes

The company recorded a net benefit of $25.7 million in the fourth quarter of 2010 primarily related to the Cellulosic Biofuel Producer Credit. The effective tax rate for 2010, excluding discrete items, was approximately 33%.

Note Regarding Use of Non-GAAP Financial Measures

In this press release, the company presents its results for the fourth quarter of 2009, excluding income from the Alternative Fuel Mixture Tax Credit, and its results for the fourth quarter of 2010 excluding Cellu Tissue acquisition related expenses, Patient Protection and Affordable Care Act and the Cellulosic Biofuel Producer Credit. These amounts are not in accordance with generally accepted accounting principles (GAAP) and accordingly reconciliations of these amounts to net earnings determined in accordance with GAAP are included at the end of this press release.

CONFERENCE CALL INFORMATION

A live audio Web cast and conference call will be held today, Thursday, March 3, 2011 at 8 a.m. Pacific time (11 a.m. Eastern time). Investors may access the conference call by dialing 877-303-9241 (for U.S./Canada investors) or 760-666-3575 (for international investors). The audio Web cast may be accessed on the company's Web site at http://ir.clearwaterpaper.com/events.cfm. An accompanying presentation will be available for downloading at the same site at 7 a.m. Pacific time (10:00 a.m. Eastern time). The Web cast will be audio only. Investors are recommended to download the accompanying presentation prior to the call.

For those unable to participate in the call, an archived recording will be available through the Clearwater Paper Corporation Web site www.clearwaterpaper.com under "Investor Relations" following the conference call.

ABOUT CLEARWATER PAPER

Clearwater Paper manufactures quality consumer tissue, away-from-home tissue, parent roll tissue, machine glazed tissue, bleached paperboard, pulp and wood products at 14 manufacturing locations in the U.S. and Canada. The company is a premier supplier of private label tissue to major retailers and wholesale distributors. This includes grocery, drug, mass merchants and discount stores. The company also produces bleached paperboard used by quality-conscious printers and packaging converters. Clearwater Paper's 3,800 employees build shareholder value by developing strong customer partnerships through quality and service.

FORWARD-LOOKING STATEMENTS

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as amended, including statements regarding our competitive position for the future, the company's expansion and its strategies, and the acquisition of Cellu Tissue and our ability to service existing and new customers. These forward-looking statements are based on current expectations, estimates, assumptions and projections that are subject to change, and actual results may differ materially from the forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, risks and uncertainties arising from difficulties with the integration process or the realization of the benefits expected from the acquisition of Cellu Tissue; the company's ability to complete its new facilities; customers' product preferences; changes in the United States and international economies; changes in raw material and energy costs; cyclical industry conditions; loss of a large customer; changes in the Alternative Fuel Mixture Tax Credit or Cellulosic Biofuel Producer Credit regulations and the company's eligibility for such tax credits; competitive pricing pressure for the company's products; changes in freight costs and disruptions in transportation services; unanticipated manufacturing disruptions; changes in general and industry-specific laws and regulations; unforeseen environmental liabilities or expenditures; labor disruptions; and other risks and uncertainties described from time to time in the company's public filings with the Securities and Exchange Commission. The forward-looking statements are made as of the date of this press release and the company does not undertake to update any forward-looking statements.

For additional information on Clearwater Paper, please visit our Web site at www.clearwaterpaper.com.

Clearwater Paper Corporation
Consolidated Statements of Operations
Unaudited (Dollars in thousands - except per-share amounts)
				Three Months Ended																				Twelve Months Ended
				December 31,																				December 31,
					2010										2009										2010									2009
Net sales				$	345,557				100	%				$	314,980			100	%					$	1,372,965			100	%				$	1,250,069			100	%
Costs and expenses:
Cost of sales					281,883				82	%					256,999			82	%						1,173,804			85	%					1,052,151			84	%
Selling, general and administrative expenses					41,270				12	%					18,470			6	%						100,394			7	%					71,125			6	%
					323,153				94	%					275,469			87	%						1,274,198			93	%					1,123,276			90	%
Alternative fuel mixture tax credit					-										47,137										-									170,647
Earnings before interest, debt retirement costs and income taxes					22,404				6	%					86,648			28	%						98,767			7	%					297,440			24	%
Interest expense, net					10,335										4,234										22,571									15,505
Debt retirement costs					-										-										-									6,250
Earnings before income taxes					12,069				3	%					82,414			26	%						76,196			6	%					275,685			22	%
Income tax provision (benefit)					(25,717	)									35,254										2,396									93,221
Net earnings				$	37,786				11	%				$	47,160			15	%					$	73,800			5	%				$	182,464			15	%
Net earnings per common share:
Basic				$	3.29									$	4.15									$	6.43								$	16.06
Diluted					3.19										4.01										6.24									15.50
Average shares outstanding (in thousands):
Basic					11,479										11,365										11,474									11,360
Diluted					11,846										11,758										11,835									11,770

Clearwater Paper Corporation
Condensed Consolidated Balance Sheets
Unaudited (Dollars in thousands)
				December 31,						December 31,
					2010						2009
Assets
Current assets:
Cash				$	18,928					$	2,824
Restricted cash					3,637						-
Short-term investments					126,095						187,926
Receivables, net					153,335						94,458
Taxes receivable					10,354						101,343
Inventories					228,321						169,761
Deferred tax assets					37,374						12,926
Prepaid expenses					11,415						3,053
Total current assets					589,459						572,291
Property, plant and equipment, net					654,456						364,024
Goodwill					229,533						-
Intangible assets					56,400						-
Other assets					15,488						11,148
				$	1,545,336					$	947,463
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities				$	184,604					$	109,775
Current portion of long-term debt					760						-
Current liability for pensions and other postretirement employee benefits					9,749						9,933
Total current liabilities					195,113						119,708
Long-term debt					538,314						148,285
Liability for pensions and other postretirement employee benefits					187,116						236,422
Other long-term obligations					23,369						5,825
Accrued taxes					72,011						73,487
Deferred taxes					61,064						-
Accumulated other comprehensive loss					(98,352	)					(126,962	)
Stockholders' equity excluding accumulated other comprehensive loss					566,701						490,698
				$	1,545,336					$	947,463

Clearwater Paper Corporation
Segment Information
Unaudited (Dollars in thousands)
				Three Months Ended																					Twelve Months Ended
				December 31,																					December 31,
					2010										2009											2010										2009
Segment net sales:
Consumer Products				$	142,930				41	%				$	138,342				44	%					$	570,129				42	%				$	554,034				44	%
Pulp and Paperboard					222,513				64	%					191,072				61	%						879,889				64	%					749,544				60	%
					365,443										329,414											1,450,018										1,303,578
Elimination of intersegment net sales					(19,886	)			-6	%					(14,434	)			-5	%						(77,053	)			-6	%					(53,509	)			-4	%
Total net sales				$	345,557				100	%				$	314,980				100	%					$	1,372,965				100	%				$	1,250,069				100	%
Operating income:
Consumer Products				$	7,263				32	%				$	28,719				33	%					$	63,749				65	%				$	122,117				41	%
Pulp and Paperboard (1)					33,060				148	%					52,945				61	%						81,911				83	%					191,894				65	%
					40,323										81,664											145,660										314,011
Corporate and eliminations					(17,919	)			-80	%					4,984				6	%						(46,893	)			-47	%					(16,571	)			-6	%
Earnings before interest, debt retirement costs and income taxes				$	22,404				100	%				$	86,648				100	%					$	98,767				100	%				$	297,440				100	%
(1) Operating income for the three and twelve months ended December 31, 2009, for the Pulp and Paperboard segment included $47.1 million and $170.6 million, respectively, associated with the Alternative Fuel Mixture Tax Credit.

Clearwater Paper Corporation
Reconciliation of Non-GAAP Financial Measures
Unaudited (Dollars in thousands, except per-share amounts)
					Three Months Ended												Twelve Months Ended
					December 31,												December 31,
						2010						2009						2010						2009
GAAP net earnings					$	37,786					$	47,160					$	73,800					$	182,464
Special items, after-tax:
Alternative Fuel Mixture Tax Credit						-						(29,743	)					-						(107,508	)
Cellulosic Biofuel Producer Credit						(27,087	)					-						(27,087	)					-
Patient Protection and Affordable Care Act						(106	)					-						3,099						-
Cellu Tissue acquisition related expenses						10,521						-						12,416						-
Net earnings, excluding special items					$	21,114					$	17,417					$	62,228					$	74,956
GAAP net earnings per diluted share					$	3.19					$	4.01					$	6.24					$	15.50
Special items, after-tax:
Alternative Fuel Mixture Tax Credit						-						(2.53	)					-						(9.13	)
Cellulosic Biofuel Producer Credit						(2.29	)					-						(2.29	)					-
Patient Protection and Affordable Care Act						(0.01	)					-						0.26						-
Cellu Tissue acquisition related expenses						0.89						-						1.05						-
Net earnings per diluted share, excluding special items					$	1.78					$	1.48					$	5.26					$	6.37
Diluted average shares outstanding (in thousands)						11,846						11,758						11,835						11,770

Clearwater Paper Corporation
News media
Matt Van Vleet, 509-344-5912
or
CFO
Linda Massman, 509-344-5905
or
Investors
IR Sense
Sean Butson, 509-344-5906

Source: Clearwater Paper Corporation

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