BOISE, Idaho, May 5 /PRNewswire-FirstCall/ -- Boise Inc. (NYSE:BZ)
today reported financial results for first quarter 2008, its first
reporting period since completing the acquisition of the packaging
and paper assets of Boise Cascade, L.L.C. (the "Predecessor") on
February 22, 2008. EBITDA(1) EBITDA was $26.3 million for first
quarter 2008. This result was negatively impacted by the estimated
$20.5 million cost of the planned outage and shoe press
installation at the mill in DeRidder, Louisiana, and by the
transaction-related inventory revaluation of $6.5 million. These
results compare with EBITDA for the Predecessor of $53.6 million in
first quarter 2007 and $70.5 million in fourth quarter 2007. Sales
Combined sales of the Predecessor and Boise Inc. were $587.9
million for first quarter 2008, an increase of $9.2 million or 2%
compared with sales of $578.7 million for first quarter 2007. Paper
segment sales increased 8% in first quarter 2008 compared to first
quarter 2007, driven both by higher prices and higher volumes.
Increased sales in the Paper segment were partially offset by an
11% decline in Packaging segment sales in first quarter 2008 as
compared to the first quarter of the prior year. This reduction was
primarily driven by lower sales volumes resulting from the planned
outage at the DeRidder mill. As previously announced, this planned
shutdown, which was associated with a project that increased
production capacity of linerboard by 50,000 tons while reducing
fuel use, resulted in 19 lost days of linerboard production and 12
lost days of newsprint production. The reduction in sales volumes
was offset in part by higher linerboard and corrugated prices.
Price Increases and Input Costs The pricing environment for
uncoated freesheet has been strong. Effective mid-February 2008, we
implemented a $60-per-ton price increase for cut-size copy paper
and a $60-per-ton price increase for most printing and converting
grades, which is still being phased in. Most of our cut-size office
paper is sold to OfficeMax under a contract in which changes in
price for this product lag behind the general market by
approximately 60 days. Newsprint pricing has also significantly
improved in the first quarter 2008. Financial results for the
quarter were negatively impacted by increased per-unit fiber,
energy, and chemical costs. However, these cost increases had
somewhat less impact on financial results for the quarter due to
the planned outage at the DeRidder mill, which reduced the volume
of fiber and energy used. Total fiber costs for the Predecessor and
Boise Inc. combined were $127.3 million compared to $127.1 million
for first quarter 2007. Energy costs were $82.8 million, unchanged
from the same quarter a year ago. The cost of chemicals, net of
by-product sales, increased by $5.8 million in first quarter 2008
compared to the prior year's first quarter. Net Income (Loss) and
Income (Loss) from Operations The presentation of net income (loss)
is affected by the completion of the acquisition during first
quarter 2008. The financial results of the Predecessor are for the
period January 1 through February 21, 2008, the day prior to the
closing of the transaction. The financial results of the acquired
assets for the remainder of the quarter are included in Boise Inc.
first quarter results. Results for the Predecessor periods do not
include interest expense and do not include depreciation for the
assets held for sale during fourth quarter 2007 and the period
January 1 through February 21, 2008. Boise Inc. results reflect
interest expenses associated with the company's debt, depreciation,
and purchase price adjustments associated with the acquisition.
Boise Inc. had a net loss of $16.4 million ($0.26 per basic and
diluted share) for first quarter, and the Predecessor had net
income of $22.8 million for the period January 1 through February
21, 2008. Predecessor net income for first quarter 2007 was $22.0
million. Boise Inc. had a loss from operations of $9.3 million in
the first quarter, while Predecessor income from operations was
$23.1 million for the period January 1 through February 21, 2008.
Predecessor income from operations was $22.8 million for first
quarter 2007. As noted previously, Boise Inc.'s operating results
for first quarter 2008 were negatively affected by $20.5 million
due to the planned outage at the DeRidder mill. This impact was
primarily attributable to lost contribution as the result of
downtime and higher maintenance costs. The quarterly operating
results were also negatively impacted by the previously mentioned
purchase price adjustments. FINANCIAL HIGHLIGHTS ($ in millions)
Combined Boise Inc. Predecessor 1Q 2008 1Q 2008 4Q 2007 1Q 2008(a)
1Q 2007 4Q 2007 Sales $587.9 $228.0 $- $359.9 $578.7 $587.6 Income
(loss) from operations $(9.3) $(0.2) $23.1 $22.8 $70.4 Net income
(loss) $(16.4) $2.4 $22.8 $22.0 $70.8 EBITDA (b) $26.3 $2.6 $(0.2)
$23.7 $53.6 $70.5 Net income (loss) per share basic and diluted
$(0.26) $0.05 $- $- $- Interest expense $(11.4) $- $- $- $-
Inventory revaluation expense (c) $(6.5) $(6.5) $- $- $- $- Impact
of DeRidder outage (d) $(20.5) $(20.5) $- $- $- $- Depreciation and
amortization (e) $12.7 $- $0.5 $30.8 $0.1 (a) For the period
January 1 - February 21, 2008. (b) For reconciliation of net income
(loss) to EBITDA, see "Segment Information" in the financial
section. (c) Impact of inventory purchase accounting adjustments to
materials, labor, and other operating expenses associated with
transaction. (d) Includes $9.1 million in estimated lost
contribution from lower production with the balance due primarily
to higher costs of maintenance and energy during outage and
startup. (e) Depreciation for certain Predecessor periods was
suspended due to assets held for sale. CEO Comment "Our first
quarter, which included costs associated with the closing of the
transaction, held significant successes along with some unexpected
challenges," said Alexander Toeldte, President and Chief Executive
Officer of Boise Inc. "We completed the transition of the business
to public ownership and strengthened our competitive position by
successfully executing the outage and linerboard capacity expansion
at our DeRidder mill. While we began to experience rapidly
escalating input costs during the quarter, we benefitted from
higher sales prices for many of our products. We look forward to
getting the full financial benefit of those price increases by the
end of the second quarter. We are confident that the DeRidder
expansion and our investment in label and release specialty papers
will be key milestones in our strategy to shift capacity to
packaging-driven grades." About Boise Inc. Headquartered in Boise,
Idaho, Boise Inc. (NYSE:BZ) manufactures packaging products and
papers including corrugated containers, containerboard, label and
release and flexible packaging papers, imaging papers for the
office and home, printing and converting papers, newsprint, and
market pulp. Our entire team of more than 4,600 employees is
committed to delivering excellent value while managing our
businesses to sustain environmental resources for future
generations. Visit our website at http://www.boiseinc.com/. Webcast
and Conference Call Boise Inc. will host a webcast and conference
call on Monday, May 5, 2008, at 11:00 a.m. Eastern, at which time
we will review the company's recent performance. To participate in
the conference call, dial 866-841-1001 (international callers
should dial 832-445-1689). The webcast may be accessed through
Boise's Internet site and will be archived for one year following
the call. Go to http://www.boiseinc.com/ and click on the link to
the webcast under Webcasts & Presentations on the Investors
drop-down menu. A replay of the conference call will be available
in Webcasts & Presentations from May 5 at 12:00 p.m. Eastern
through June 5 at 11:59 p.m. Eastern. Playback numbers are
800-642-1687 for U.S. callers and 706-645-9291 for international
callers. The passcode is 44212564. Basis of Presentation On
February 22, 2008, we completed the acquisition of Boise Cascade,
L.L.C.'s packaging and paper manufacturing businesses (the
Acquisition). The Acquisition was accounted for in accordance with
SFAS No. 141, Business Combinations, resulting in a new basis of
accounting from those previously reported by the Predecessor.
However, sales and most operating cost items are substantially
consistent with those reflected by the Predecessor. Finished goods
inventory was revalued to estimated selling prices less costs of
disposal and a reasonable profit on the disposal. Depreciation
changed as a result of adjustments to the fair values of property
and equipment due to our preliminary purchase price allocation.
Management believes this combined three months ended March 31,
2008, presentation of Boise Inc. and the Predecessor statement of
operations is the most useful comparison between periods. We
present our consolidated financial statements in accordance with
generally accepted accounting principles (GAAP). Our earnings
release also supplements the GAAP presentations by reflecting
EBITDA. EBITDA represents income (loss) before interest, income tax
provision (benefit), and depreciation, amortization, and depletion.
EBITDA is the primary measure used by our chief operating decision
makers to evaluate segment operating performance and to decide how
to allocate resources to segments. We believe EBITDA is useful to
investors because it provides a means to evaluate the operating
performance of our segments and our company on an ongoing basis
using criteria that are used by our internal decision makers and
because it is frequently used by investors and other interested
parties in the evaluation of companies with substantial financial
leverage. We believe EBITDA is a meaningful measure because it
presents a transparent view of our recurring operating performance
and allows management to readily view operating trends, perform
analytical comparisons, and identify strategies to improve
operating performance. For example, we believe that the inclusion
of items such as taxes, interest expense, and interest income
distorts management's ability to assess and view the core operating
trends in our segments. EBITDA, however, is not a measure of our
liquidity or financial performance under GAAP and should not be
considered as an alternative to net income (loss), income (loss)
from operations, or any other performance measure derived in
accordance with GAAP or as an alternative to cash flow from
operating activities as a measure of our liquidity. The use of
EBITDA instead of net income (loss) or segment income (loss) has
limitations as an analytical tool, including the inability to
determine profitability; the exclusion of interest and associated
significant cash requirements; and the exclusion of depreciation,
amortization, and depletion, which represent significant and
unavoidable operating costs, given the level of our indebtedness
and the capital expenditures needed to maintain our businesses.
Management compensates for these limitations by relying on our GAAP
results. Our measures of EBITDA are not necessarily comparable to
other similarly titled captions of other companies due to potential
inconsistencies in the methods of calculation. Forward-Looking
Statements This news release may contain statements that are
"forward looking" as defined by the Private Securities Litigation
Reform Act of 1995. Forward- looking statements include, without
limitation, any statement that may predict, forecast, indicate, or
imply future results, performance, or achievements. Forward-looking
statements involve risks and uncertainties, including but not
limited to economic, competitive, and technological factors outside
our control that may cause our business, strategy, or actual
results to differ materially from the forward-looking statements.
Factors that could cause actual results to differ materially from
the forward-looking statements include, among others, our ability
to realize the anticipated benefits of the DeRidder linerboard
expansion and the Wallula Label and Release project; our
substantial level of indebtedness; changes in the supply of, demand
for, or prices of our products; the activities of competitors;
changes in significant operating expenses, including raw material
and energy costs; changes in currency exchange rates; changes in
the availability of capital; general economic and business
conditions in the United States and elsewhere; changes in the
regulatory environment, including requirements for enhanced
environmental compliance; and other risks and uncertainties that
are detailed in our filings with the Securities and Exchange
Commission. The Company does not intend, and undertakes no
obligation, to update any forward-looking statements. (1) For
reconciliation of net income (loss) to EBITDA, see "Summary Notes"
in the financial section. Boise Inc. (Formerly Aldabra 2
Acquisition Corp., a Corporation in the Development Stage)
Consolidated Statements of Income (Loss) (unaudited, in thousands,
except for share data) Boise Inc. Three February 1 Three Months
(Inception) Months Ended through Ended March 31, March 31, December
31, 2008 2007 2007 Sales Trade 226,044 $- $- Related parties 1,944
- - 227,988 - - Costs and expenses Materials, labor, and other
operating expenses 195,429 - - Fiber costs from related parties
18,629 - - Depreciation, amortization, and depletion 12,747 - -
Selling and distribution expenses 5,943 - - General and
administrative expenses 4,549 1 181 Other (income) expense, net
(28) - - 237,269 1 181 Income (loss) from operations (9,281) (1)
(181) Foreign exchange gain (loss) (853) - - Interest expense
(11,435) - (3) Interest income 1,821 - 4,652 (10,467) - 4,649
Income (loss) before income taxes (19,748) (1) 4,468 Income tax
(provision) benefit 3,377 - (2,035) Net income (loss) $(16,371)
$(1) $2,433 Weighted average common shares outstanding: Basic and
diluted 62,682,834 10,350,000 51,750,000 Net income (loss) per
common share: Basic and diluted $(0.26) $- $0.05 Predecessor Three
Three January 1 Months Months through Ended Ended February 21,
March 31, December 31, 2008 2007 2007 Sales Trade $258,430 $402,912
$420,828 Related parties 101,490 175,789 166,722 359,920 578,701
587,550 Costs and expenses Materials, labor, and other operating
expenses 313,931 487,954 483,946 Fiber costs from related parties
7,662 11,027 8,518 Depreciation, amortization, and depletion 477
30,771 113 Selling and distribution expenses 9,097 14,322 15,901
General and administrative expenses 6,606 9,450 12,214 Other
(income) expense, net (989) 2,408 (3,575) 336,784 555,932 517,117
Income (loss) from operations 23,136 22,769 70,433 Foreign exchange
gain (loss) 54 72 (23) Interest expense (2) - - Interest income 161
128 221 213 200 198 Income (loss) before income taxes 23,349 22,969
70,631 Income tax (provision) benefit (563) (978) 216 Net income
(loss) $22,786 $21,991 $70,847 Weighted average common shares
outstanding: Basic and diluted - - - Net income (loss) per common
share: Basic and diluted $- $- $- Segment Information (unaudited,
in thousands) Boise Inc. Predecessor Three February 1 Three Three
Three Months (Inception) Months January 1 Months Months Ended
through Ended through Ended Ended March 31, March 31, Dec. 31, Feb.
21, March 31, Dec. 31, 2008 2007 2007 2008 2007 2007 Segment sales
Paper $172,203 $- $- $253,508 $395,033 $397,949 Packaging 59,885 -
- 113,485 193,972 203,178 Intersegment eliminations and other
(4,100) - - (7,073) (10,304) (13,577) $227,988 $- $- $359,920
$578,701 $587,550 Segment income (loss) Paper $11,849 $- $- $20,718
$18,095 $51,585 Packaging (19,761) - - 5,685 8,083 25,471 Corporate
and Other (2,222) (1) (181) (3,213) (3,337) (6,646) (10,134) (1)
(181) 23,190 22,841 70,410 Interest expense (11,435) - (3) (2) - -
Interest income 1,821 - 4,652 161 128 221 Income (loss) before
income taxes $(19,748) $(1) $4,468 $23,349 $22,969 $70,631 EBITDA
(a) Paper $18,969 $- $- $21,066 $34,668 $51,834 Packaging (14,548)
- - 5,738 21,495 25,556 Corporate and Other (1,808) (1) (181)
(3,137) (2,551) (6,867) $2,613 $(1) $(181) $23,667 $53,612 $70,523
Boise Inc. (Formerly Aldabra 2 Acquisition Corp., a Corporation in
the Development Stage) Consolidated Balance Sheets (unaudited, in
thousands) Boise Inc. Predecessor March 31, December 31, December
31, 2008 2007 2007 ASSETS Current Cash and cash equivalents $24,961
$186 $8 Cash held in trust - 403,989 - Receivables Trade, less
allowances of $786, $0, and $1,063 205,574 - 181,799 Related
parties 11,038 - 36,452 Other 12,215 - 10,224 Inventories 338,403 -
324,679 Other 14,612 144 6,936 606,803 404,319 560,098 Property
Property and equipment, net 1,293,258 - 1,192,344 Fiber farms and
timber deposits 11,383 - 17,843 1,304,641 - 1,210,187 Deferred
financing costs 81,091 - - Goodwill - - 42,218 Intangible assets,
net 22,839 - 23,967 Other assets 7,209 3,293 9,242 Total assets
$2,022,583 $407,612 $1,845,712 Boise Inc. (Formerly Aldabra 2
Acquisition Corp., a Corporation in the Development Stage)
Consolidated Balance Sheets (continued) (unaudited, in thousands,
except for share data) Boise Inc. Predecessor March 31, December
31, December 31, 2008 2007 2007 LIABILITIES AND STOCKHOLDERS'
EQUITY Current Current portion of long-term debt $11,000 $- $-
Income taxes payable 172 1,280 306 Accounts payable Trade 212,495 -
178,686 Related parties 12,954 - 299 Accrued liabilities
Compensation and benefits 39,380 - 53,573 Interest payable 1,132 -
- Deferred underwriting fee - 12,420 - Other 17,594 1,015 16,716
294,727 14,715 249,580 Debt Long-term debt, less current portion
1,019,700 - - Note payable to related party 58,793 - - 1,078,493 -
- Other Deferred income taxes 235 - 896 Compensation and benefits
58,971 - 6,030 Other long-term liabilities 28,974 - 29,427 88,180 -
36,353 Common stock subject to possible conversion (16,555,860
shares at conversion value at December 31, 2007) - 159,760 -
Commitments and contingent liabilities Stockholders' Equity
Business unit equity - - 1,559,779 Preferred stock, $.0001 par
value per share: - - - 1,000,000 shares authorized; none issued
Common stock, $.0001 par value per share: 8 5 - 250,000,000 shares
authorized: 77,259,947 shares and 51,750,000 shares issued and
outstanding (which included 16,555,860 shares subject to possible
conversion at December 31, 2007) Additional paid-in capital 572,054
227,640 - Income accumulated during development stage - 5,492 -
Accumulated deficit (10,879) - - Total stockholders' equity 561,183
233,137 1,559,779 Total liabilities and stockholders' equity
$2,022,583 $407,612 $1,845,712 Boise Inc. (Formerly Aldabra 2
Acquisition Corp. a Corporation in the Development Stage)
Consolidated Statements of Cash Flows (unaudited, in thousands)
Boise Inc. Predecessor Three February 1 Three Months (Inception)
January 1 Months Ended through through Ended March 31, March 31,
Feb. 21, March 31, 2008 2007 2008 2007 Cash provided by (used for)
operations Net income (loss) $(16,371) $(1) $22,786 $21,991 Items
in net income (loss) not using (providing) cash Depreciation,
amortization, and depletion of deferred financing costs and other
13,554 - 477 30,771 Related-party interest expense 986 - - -
Pension and other postretirement benefit expense 1,237 - 1,826
3,163 Deferred income taxes (3,377) - 11 21 (Gain) loss on sales of
assets, net (3) - (943) 1,026 Other 649 - (91) 349 Decrease
(increase) in working capital, net of acquisitions Receivables
23,485 - (23,522) (6,515) Inventories (5,158) - 5,343 (14,429)
Prepaid expense (7,451) - 875 1,614 Accounts payable and accrued
liabilities 23,654 1 (10,718) (11,125) Current and deferred income
taxes 1,806 - 335 888 Pension and other postretirement benefit
payments (47) - (1,826) (3,163) Other (1,155) - 2,326 3,197 Cash
provided by (used for) operations 31,809 - (3,121) 27,788 Cash
provided by (used for) investment Acquisitions of businesses and
facilities (1,219,421) - - - Cash released from trust 403,989 - - -
Expenditures for property and equipment (10,224) - (10,168)
(32,966) Sales of assets - - 17,662 3,284 Other 2,410 - 863 242
Cash provided by (used for) investment (823,246) - 8,357 (29,440)
Cash provided by (used for) financing Issuances of long-term debt
1,065,700 - - - Payments of long-term debt (35,000) - - - Issuances
of short-term debt - 100 - - Payments to stockholders for exercise
of conversion rights (120,170) - - - Payments of deferred financing
fees (81,898) - - - Payments of deferred underwriters fees (12,420)
- - - Proceeds from sale of shares of common stock to initial
stockholders - 25 - - Net equity transactions with related parties
- - (5,237) 1,652 Other - (97) - - Cash provided by (used for)
financing 816,212 28 (5,237) 1,652 Increase (decrease) in cash and
cash equivalents 24,775 28 (1) - Balance at beginning of the period
186 - 8 7 Balance at end of the period $24,961 $28 $7 $7 Summary
Notes to Consolidated Financial Statements and Segment Information
The Consolidated Statements of Income (Loss), Consolidated Balance
Sheets, Consolidated Statements of Cash Flows, and Segment
Information do not include all Notes to Consolidated Financial
Statements and should be read in conjunction with the company's
2007 Annual Report on Form 10-K, Current Report on Form 8-K filed
with the Securities and Exchange Commission (SEC) on February 28,
2008, and the Company's Quarterly Report on Form 10-Q for the
period ended March 31, 2008. Net income (loss) for all periods
presented involved estimates and accruals. Boise Inc. (formerly
Aldabra 2 Acquisition Corp.) or "the Company," "we," "us," or "our"
was a blank check company, created on February 1, 2007 (inception)
and organized for the purpose of effecting a merger, capital stock
exchange, asset acquisition, or other similar business combination
with an operating business. On February 22, 2008, Boise Inc.,
completed the Acquisition of Boise White Paper, L.L.C., Boise
Packaging & Newsprint, L.L.C., Boise Cascade Transportation
Holdings Corp. (collectively, the Paper Group), and other assets
and liabilities related to the operation of the paper, packaging
and newsprint, and transportation businesses of the Paper Group and
part of the headquarters operations of Boise Cascade, L.L.C. (Boise
Cascade). The business we acquired is referred to as the
"Predecessor." The accompanying consolidated statements of income
(loss) and cash flows for the three months ended March 31, 2008,
include the activities of Aldabra 2 Acquisition Corp. prior to the
Acquisition and the operations of the acquired businesses from
February 22, 2008, through March 31, 2008. For the period of
January 1 through February 21, 2008, and for the three months ended
March 31, 2007, and the three months ended December 31, 2007, the
consolidated statements of income and cash flows of the Predecessor
are presented for comparative purposes. The period February 1
(inception) through March 31, 2007, and the three months ended
December 31, 2007, represent the activities of Aldabra 2
Acquisition Corp. Boise Inc. operates its business in three
reportable segments: Paper, Packaging, and Corporate and Other
(support services) and is headquartered in Boise, Idaho. Boise Inc.
manufactures commodity and premium office papers, a range of
packaging products including corrugated containers, containerboard,
label and release papers, and flexible packaging papers. Boise Inc.
also manufactures printing and converting papers, newsprint, and
market pulp. (a) EBITDA represents income (loss) before interest
(interest expense and interest income), income taxes, and
depreciation, amortization, and depletion. The following table
reconciles net income (loss) to EBITDA for Boise Inc. for the three
months ended March 31, 2008, the period of February 1 (inception)
through March 31, 2007, and the three months ended December 31,
2007; for the Predecessor for the period of January 1 through
February 21, 2008, the three months ended March 31, 2007, and the
three months ended December 31, 2007 (in thousands): Boise Inc.
Predecessor Three February 1 Three Three Three Months (Inception)
Months January 1 Months Months Ended through Ended through Ended
Ended March 31, March 31, Dec. 31, Feb. 21, March 31, Dec. 31, 2008
2007 2007 2008 2007 2007 Net income (loss) $(16,371) $(1) $2,433
$22,786 $21,991 $70,847 Interest expense 11,435 - 3 2 - - Interest
income (1,821) - (4,652) (161) (128) (221) Income tax provision
(benefit) (3,377) - 2,035 563 978 (216) Depreciation, amortization,
and depletion 12,747 - - 477 30,771 113 EBITDA $2,613 $(1) $(181)
$23,667 $53,612 $70,523 Combined EBITDA for the three months ended
March 31, 2008: Boise Inc. $2,613 Predecessor 23,667 $26,280
DATASOURCE: Boise Inc. CONTACT: Media, Virginia Aulin,
+1-208-384-7837, or Investors, Jason Bowman, +1-208-384-7456, both
of Boise Inc. Web site: http://www.boiseinc.com/
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