BZ Boise Inc.

BOISE, Idaho - Boise Inc. (NYSE: BZ) today reported a net loss of $(1.2) million, or $(0.01) per diluted share, for first quarter 2013, compared with net income of $21.3 million, or $0.21 per diluted share, for the same period in 2012. EBITDA (1) was $56.2 million for first quarter 2013, compared with $87.4 million for first quarter 2012. The pre-tax maintenance cold outage costs at our mill in DeRidder, Louisiana, which occur once every five years, reduced our first quarter results by $22.4 million. In addition, incremental depreciation expense related to shortening the useful lives of some of our assets, primarily at our mill in International Falls, Minnesota, reduced our results by $5.3 million.

Financial Highlights
(in millions, except per-share data)

(1) For reconciliations of non-GAAP measures, see "Summary Notes to Consolidated Financial Statements and Segment Information."

"We completed the DeRidder outage safely and on budget. Nevertheless, our first quarter results fell short of our expectations," said Alexander Toeldte, president and chief executive officer. "We experienced unfavorable mix changes in our Packaging segment that partially offset the benefits of the fall 2012 linerboard price increase. In addition, decreasing prices for uncoated freesheet negatively affected our results in Paper."

"In pursuit of our long-term strategic objectives, we are pleased to announce our decision to invest between $110 and $120 million in the conversion of our idled newsprint machine at DeRidder to produce lightweight linerboard and corrugating medium. We will also install an OCC pulping facility at the mill as part of the project. The investment adds approximately 270,000 tons of lightweight containerboard capacity to our system and allows us to optimize the product mix on our current linerboard machine, increasing the mill's overall containerboard output by approximately 300,000 tons. We are targeting a mid-2014 start-up for the completed project, which we expect will create about 50 jobs."

"To improve the cost competitiveness of our Paper business, where we operate against the background of secularly declining demand for our products, we have made the difficult decision to close two paper machines and an off-machine coater at our International Falls mill. These closures, which we expect to occur no later than fourth quarter 2013, will reduce our annual uncoated freesheet capacity by approximately 115,000 tons, or 9%, and allow us to focus our efforts on key products and machines that drive our profitability, improve our cash flow, and enhance the overall competitiveness of our International Falls mill and our Paper business. This decision will result in the loss of approximately 300 jobs. We understand the impact this decision has on our dedicated employees, as well as the community of International Falls. We appreciate their efforts and support over the years."

Packaging Segment

Packaging segment sales for first quarter 2013 were $287.0 million, an increase of $14.8 million, or 5%, compared with first quarter 2012. The increase was related primarily to 5% sales volume growth in our network of box plants and the benefit from implementation of the 2012 fall linerboard price increase, offset partially by unfavorable mix changes in our corrugated products and decreases in sales prices and volumes of newsprint. Prices for our corrugated containers and sheets increased $2 per msf or 3% in first quarter 2013, compared with first quarter 2012. Unfavorable mix changes in our corrugated products include the effect of lower prices due to competitive pressures in some of the markets we serve.

Packaging segment EBITDA was $17.2 million for first quarter 2013, a decrease compared with $37.9 million for the same period last year. The decrease resulted from maintenance cold outage costs at DeRidder of approximately $22.4 million in first quarter 2013, compared with $1.8 million of outage costs in the prior-year quarter. These costs include both maintenance costs and lost sales volume resulting from the downtime. The benefit from the implementation of the 2012 fall linerboard price increase was offset partially by unfavorable mix changes in our corrugated products, higher medium costs, and decreases in sales prices and volumes of newsprint. We expect the combination of announced price increases, business improvements, and lower maintenance outage costs to improve our results for the rest of the year.

Paper Segment

Lower uncoated freesheet net sales prices affected our first quarter 2013 sales, compared with first quarter and fourth quarter 2012. Paper segment sales for first quarter 2013 were $332.7 million, a decrease of $49.7 million, or 13%, compared with first quarter 2012. Our average net sales price for uncoated freesheet declined from $976 per short ton in first quarter 2012 to $929 in first quarter 2013, or 5%. Total uncoated freesheet sales volumes decreased 8% versus the prior-year period, and 1% compared with fourth quarter 2012. Sales volumes and prices in first quarter were also lower due to our decision to cease paper production at our St. Helens, Oregon, mill in 2012, which represented approximately 5% of our annual paper capacity. Excluding St. Helens, our volumes declined 5% and our prices declined $43 per short ton, or 4%.

In first quarter 2013, Paper segment EBITDA was $45.6 million, a decrease of $9.5 million, or 17% compared with first quarter 2012. The decrease was due primarily to lower net sales prices of uncoated freesheet papers.

Webcast and Conference Call

Boise Inc. will host a webcast and conference call on Thursday, May 2, 2013, at 11:00 a.m. ET, at which time we will review the company's recent performance and long-term strategic objectives. 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 four weeks following the call. Go to www.BoiseInc.com and click on About Boise Inc. to reach the link to the webcast under Webcasts & Presentations on the Investors menu.

A replay of the conference call will be available in Webcasts & Presentations from May 2, 2013, at 2:00 p.m. ET through June 2, 2012, at 11:45 p.m. ET. Playback numbers are 855-859-2056 for U.S. callers and 404-537-3406 for international callers. The passcode is 33461765.

About Boise Inc.

Headquartered in Boise, Idaho, Boise Inc. (NYSE: BZ) manufactures a wide variety of packaging and paper products. Boise's range of packaging products includes linerboard and corrugating medium, corrugated containers and sheets, and protective packaging products. Boise's paper products include imaging papers for the office and home, printing and converting papers, and papers used in packaging, such as label and release papers. Our employees are committed to delivering excellent value while managing our businesses to sustain environmental resources for future generations. Visit our website at www.BoiseInc.com.

Forward-Looking Statements

This news release contains 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. Statements regarding announced price increases on our products, asset configuration changes, and the benefits we expect to derive from such outcomes and actions are forward looking. Given the risks and uncertainties involved, there can be no assurance we will be able to achieve our stated goals or realize any benefits. For example, changes in the economy and competitive influences may result in our being unable to implement or realize any additional benefit from our announced price increases. Economic and competitive influences, availability of equipment and suppliers, the performance of the equipment once installed, order pattern, customer service requirements, machine product loading, timing of cost reductions, and other factors could cause the outcome of our asset configuration projects, the related costs, the effect on our labor pool, and the timing to differ materially from what we have predicted in this release. For further information about the risks and uncertainties associated with our business, please refer to our filings with the Securities and Exchange Commission. We undertake no obligation to update the forward-looking statements in this release whether as a result of new information, future events, or otherwise.

Boise Inc.
Segment Highlights
(unaudited, dollars in millions)

(a) Includes purchases of corrugating medium from our Paper segment, which are eliminated in consolidation.
(b)  For reconciliations of non-GAAP measures, see "Summary Notes to Consolidated Financial Statements and Segment Information."
(c) Includes cut-size office papers, printing and converting papers, and label and release papers. Excluding St. Helens, our uncoated freesheet sales volumes were 309.5 thousand short tons and 287.9 thousand short tons, respectively, for the three months ended March 31, 2012, and December 31, 2012. Excluding St. Helens, the change in our net sales price of uncoated freesheet was ($43) per short ton and ($12) per short ton, respectively, when comparing the three months ended March 31, 2013, with the three months ended March 31, 2012, and December 31, 2012.
(d) Average net selling prices for our principal products represent sales less freight costs, discounts, and allowances.

Boise Inc.
Consolidated Statements of Operations
(unaudited, dollars and shares in thousands, except per-share data)

For Footnotes, see Summary Notes to Consolidated Financial Statements and Segment Information.

Boise Inc.
Segment Information
(unaudited, dollars in thousands)

For Footnotes, see Summary Notes to Consolidated Financial Statements and Segment Information.

Boise Inc.
Consolidated Balance Sheets
(unaudited, dollars in thousands)

For Footnotes, see Summary Notes to Consolidated Financial Statements and Segment Information.

Boise Inc.
Consolidated Balance Sheets (continued)
(unaudited, dollars and shares in thousands, except per-share data)

For Footnotes, see Summary Notes to Consolidated Financial Statements and Segment Information.

Boise Inc.
Consolidated Statements of Cash Flows
(unaudited, dollars in thousands)

For Footnotes, see Summary Notes to Consolidated Financial Statements and Segment Information.

Summary Notes to Consolidated Financial Statements and Segment Information

The Consolidated Statements of Operations, 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 2012 Annual Report on Form 10-K and the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2013, as well as other reports the Company files with the SEC. Net income (loss) for all periods presented involved estimates and accruals.

1.  During the three months ended March 31, 2013, we recognized $5.3 million of incremental depreciation expense related to shortening the useful lives of some of our assets, primarily at International Falls, Minnesota.

2.  This release contains several financial measures that are not measures under U.S. generally accepted accounting principles (GAAP). These measures include EBITDA, EBITDA excluding special items, net income excluding special items, free cash flow, and other similar measures. Management uses these measures to evaluate ongoing operations and believes they are useful to investors because they enable them to perform meaningful comparisons of past and present operating results. The tables that follow reconcile these non-GAAP measures with the most directly comparable GAAP measures.

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 and EBITDA excluding special items (unaudited, dollars in thousands):

(a) In December 2012, we ceased paper production on our one remaining paper machine at our St. Helens, Oregon paper mill. During the three months ended December 31, 2012, we recorded $0.5 million, of pretax costs primarily related to ceasing operations at the mill. These costs are recorded in our Paper segment in "Materials, labor, and other operating expenses (excluding depreciation)" and "Other (income) expense, net" in our Consolidated Statements of Operations.

The following table reconciles segment income (loss) and EBITDA to EBITDA excluding special items (unaudited, dollars in thousands):

The following table reconciles net income (loss) to net income excluding special items and presents net income per diluted share excluding special items (unaudited, dollars and shares in thousands, except per-share data):

(a) Taxes are applied to special items in the aggregate at the combined federal and state statutory rate in effect for the period.

(b) For the three months ended March 31, 2013, both basic and diluted weighted average common shares outstanding reported in our Consolidated Statements of Operations were 100.2 million, as we reported a net loss. Adjusting for the special items above, diluted weighted average common shares outstanding increased 0.6 million shares to reflect the incremental effect of dilutive common stock equivalents.

The following table reconciles cash provided by operations to free cash flow (unaudited, dollars in thousands):

SOURCE: Boise Inc.

Greg Jones
Director, Investor Relations
208-384-7141

Virginia Aulin
Vice President, Human Resources and Corporate Affairs
208-384-7837

http://www.boiseinc.com/

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