CLW-2015.06.30-10Q


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
ý
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2015
or
¨
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from                      to                     
Commission File Number: 001-34146
CLEARWATER PAPER CORPORATION
(Exact name of registrant as specified in its charter)
 
 
 
 
Delaware
 
20-3594554
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
601 West Riverside, Suite 1100
Spokane, Washington
 
99201
(Address of principal executive offices)
 
(Zip Code)
(509) 344-5900
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  ý     No  ¨    
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 
ý
  
Accelerated filer
 
¨
Non-accelerated filer
 
¨  (Do not check if a smaller reporting company)
  
Smaller reporting company
 
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ¨    No  ý    
The number of shares of common stock of the registrant outstanding as of July 31, 2015 was 19,056,095.




CLEARWATER PAPER CORPORATION
Index to Form 10-Q
 
 
 
 
 
 
Page Number
 
 
 
PART I.
 
 
 
 
ITEM 1.
 
 
 
 
 
 
 
 
 
 
 
6 - 21
 
 
 
ITEM 2.
22 - 34
 
 
 
ITEM 3.
 
 
 
ITEM 4.
 
 
 
PART II.
 
 
 
 
ITEM 1.
 
 
 
ITEM 1A.
 
 
 
ITEM 6.
 
 
 
 




Part I
ITEM 1.
 
Consolidated Financial Statements
Clearwater Paper Corporation
Consolidated Statements of Operations
Unaudited (Dollars in thousands - except per-share amounts)
 
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2015
 
2014
 
2015
 
2014
Net sales
$
444,558

 
$
498,759

 
$
878,584

 
$
983,679

Costs and expenses:
 
 
 
 
 
 
 
Cost of sales
(384,347
)
 
(434,111
)
 
(774,179
)
 
(860,740
)
Selling, general and administrative expenses
(28,138
)
 
(31,565
)
 
(57,095
)
 
(65,079
)
Impairment of assets

 

 

 
(4,259
)
Total operating costs and expenses
(412,485
)
 
(465,676
)
 
(831,274
)
 
(930,078
)
Income from operations
32,073

 
33,083

 
47,310

 
53,601

Interest expense, net
(7,774
)
 
(10,688
)
 
(15,556
)
 
(21,422
)
Earnings before income taxes
24,299

 
22,395

 
31,754

 
32,179

Income tax provision
(8,702
)
 
(9,942
)
 
(10,400
)
 
(13,500
)
Net earnings
$
15,597

 
$
12,453

 
$
21,354

 
$
18,679

Net earnings per common share:
 
 
 
 
 
 
 
Basic
$
0.82

 
$
0.61

 
$
1.11

 
$
0.91

Diluted
0.81

 
0.61

 
1.10

 
0.90

The accompanying condensed notes are an integral part of these consolidated financial statements.

2



Clearwater Paper Corporation
Consolidated Statements of Comprehensive Income
Unaudited (Dollars in thousands)
 
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2015
 
2014
 
2015
 
2014
Net earnings
$
15,597

 
$
12,453

 
$
21,354

 
$
18,679

Other comprehensive income:
 
 
 
 
 
 
 
Defined benefit pension and other postretirement employee benefits:
 
 
 
 
 
 
 
Amortization of actuarial loss included in net periodic
  cost, net of tax of $1,261, $934, $2,467 and $1,899
1,965

 
1,479

 
3,842

 
3,008

Amortization of prior service credit included in net periodic
  cost, net of tax of $(204), $(353), $(411) and $(382)
(321
)
 
(559
)
 
(641
)
 
(604
)
Other comprehensive income, net of tax
1,644

 
920

 
3,201

 
2,404

Comprehensive income
$
17,241

 
$
13,373

 
$
24,555

 
$
21,083

The accompanying condensed notes are an integral part of these consolidated financial statements.


3



Clearwater Paper Corporation
Consolidated Balance Sheets
Unaudited (Dollars in thousands – except per-share amounts)
 
 
June 30,
2015
 
December 31,
2014
ASSETS
 
 
 
Current assets:
 
 
 
Cash
$
11,465

 
$
27,331

Restricted cash
2,270

 
1,500

Short-term investments
60,000

 
50,000

Receivables, net
141,090

 
133,914

Taxes receivable

 
1,255

Inventories
248,280

 
286,626

Deferred tax assets
20,839

 
21,760

Prepaid expenses
7,869

 
4,191

Total current assets
491,813

 
526,577

Property, plant and equipment, net
823,672

 
810,987

Goodwill
209,087

 
209,087

Intangible assets, net
22,473

 
24,956

Pension assets
8,098

 
4,738

Other assets, net
7,394

 
9,583

TOTAL ASSETS
$
1,562,537

 
$
1,585,928

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable and accrued liabilities
$
214,701

 
$
215,826

Current liability for pensions and other postretirement employee benefits
7,915

 
7,915

Total current liabilities
222,616

 
223,741

Long-term debt
575,000

 
575,000

Liability for pensions and other postretirement employee benefits
114,835

 
118,464

Other long-term obligations
50,779

 
56,856

Accrued taxes
1,717

 
2,696

Deferred tax liabilities
110,289

 
111,634

Stockholders’ equity:
 
 
 
Preferred stock, par value $0.0001 per share, 5,000,000 authorized shares, no shares
  issued

 

Common stock, par value $0.0001 per share, 100,000,000 authorized
  shares-24,153,978 and 24,056,057 shares issued
2

 
2

Additional paid-in capital
336,431

 
334,074

Retained earnings
485,678

 
464,324

Treasury stock, at cost, common shares-5,097,883 and 4,498,388 shares repurchased
(267,148
)
 
(230,000
)
Accumulated other comprehensive loss, net of tax
(67,662
)
 
(70,863
)
Total stockholders’ equity
487,301

 
497,537

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
1,562,537

 
$
1,585,928

The accompanying condensed notes are an integral part of these consolidated financial statements.

4



Clearwater Paper Corporation
Consolidated Statements of Cash Flows
Unaudited (Dollars in thousands)
 
 
Six Months Ended
 
June 30,
 
2015
 
2014
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
Net earnings
$
21,354

 
$
18,679

Adjustments to reconcile net earnings to net cash flows from operating activities:
 
 
 
Depreciation and amortization
41,640

 
44,246

Equity-based compensation expense
2,019

 
6,910

Impairment of assets

 
4,259

Deferred tax (benefit) provision
(2,480
)
 
9,857

Employee benefit plans
1,438

 
979

Deferred issuance costs and discounts on long-term debt
446

 
949

Disposal of plant and equipment, net
272

 
422

Non-cash adjustments to unrecognized taxes
(979
)
 

Changes in working capital, net
29,309

 
14,818

Changes in taxes receivable, net
1,255

 
3,663

Excess tax benefits from equity-based payment arrangements
(1,459
)
 

Funding of qualified pension plans
(3,179
)
 
(8,889
)
Other, net
(1,726
)
 
(980
)
Net cash flows from operating activities
87,910

 
94,913

CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
Changes in short-term investments, net
(10,000
)
 
11,000

Additions to plant and equipment
(55,538
)
 
(32,612
)
Proceeds from sale of assets
507

 
619

Net cash flows from investing activities
(65,031
)
 
(20,993
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
Purchase of treasury stock
(37,148
)
 
(74,322
)
Payment of tax withholdings on equity-based payment arrangements
(3,048
)
 
(792
)
Excess tax benefits from equity-based payment arrangements
1,459

 

Other, net
(8
)
 

Net cash flows from financing activities
(38,745
)
 
(75,114
)
Decrease in cash
(15,866
)
 
(1,194
)
Cash at beginning of period
27,331

 
23,675

Cash at end of period
$
11,465

 
$
22,481

 
 
 
 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
 
 
 
Cash paid for interest, net of amounts capitalized
$
14,280

 
$
19,547

Cash paid for income taxes
8,030

 
4,211

Cash received from income tax refunds
2,029

 
4,170

SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING ACTIVITIES
 
 
 
Changes in accrued plant and equipment
$
(5,187
)
 
$
(912
)
The accompanying condensed notes are an integral part of these consolidated financial statements.

5



Clearwater Paper Corporation
Condensed Notes to Consolidated Financial Statements
Unaudited
NOTE 1 Nature of Operations and Basis of Presentation
GENERAL
Clearwater Paper manufactures quality consumer tissue, away-from-home tissue, parent roll tissue, bleached paperboard and pulp at manufacturing facilities across the nation. The company is a premier supplier of private label tissue to major retailers and wholesale distributors, including grocery, drug, mass merchants and discount stores. In addition, the company produces bleached paperboard used by quality-conscious printers and packaging converters.
On December 30, 2014, we sold our specialty business and mills to a private buyer for $108 million in cash, net of sale related expenses and adjustments. The specialty business and mills' production consisted predominantly of machine-glazed tissue and also included parent rolls and other specialty tissue products such as absorbent materials and dark-hued napkins. The sale included five of our former subsidiaries with facilities located at East Hartford, Connecticut; Menominee, Michigan; Gouverneur, New York; St. Catharines, Ontario; and Wiggins, Mississippi. Included in the sale related expenses and adjustments was the impact of certain indemnity and working capital escrow clauses in the sales agreement. These escrowed amounts totaled $3.8 million of restricted cash on our December 31, 2014 Consolidated Balance Sheet. During the second quarter of 2015, the working capital escrow account established in connection with the sale of the specialty business and mills was settled, resulting in the release of $1.5 million from the restricted cash escrow account and the recognition of a corresponding gain recorded in "Selling, general and administrative expenses" within our Consolidated Statement of Operations.
On February 17, 2014, we announced the permanent and immediate closure of our Long Island, New York, tissue converting and distribution facility. As of June 30, 2015, we have incurred $20.1 million of costs associated with the closure, of which $0.7 million and $1.3 million, respectively, were incurred during the three and six month periods ended June 30, 2015.
FINANCIAL STATEMENT PREPARATION AND PRESENTATION
The accompanying Consolidated Balance Sheets at June 30, 2015 and December 31, 2014, the related Consolidated Statements of Operations and Comprehensive Income for the three and six months ended June 30, 2015 and 2014, and the Consolidated Statements of Cash Flows for the six months ended June 30, 2015 and 2014, have been prepared in conformity with accounting principles generally accepted in the United States of America, or GAAP. We believe that all adjustments necessary for a fair statement of the results of the interim periods presented have been included. The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for the full year.
This Quarterly Report on Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2014, as filed with the Securities and Exchange Commission, or SEC, on February 26, 2015.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ESTIMATES
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses during the reporting periods. Significant areas requiring the use of estimates and measurement of uncertainty include determination of net realizable value for deferred tax assets, uncertain tax positions, assessment of impairment of long-lived assets, goodwill and intangibles, assessment of environmental matters, equity-based compensation and pension and postretirement obligation assumptions. Actual results could differ from those estimates and assumptions.
SHORT-TERM INVESTMENTS AND RESTRICTED CASH
Our short-term investments are invested primarily in demand deposits, which have very short maturity periods, and therefore earn an interest rate commensurate with low-risk instruments. We do not attempt to hedge our exposure to interest rate risk for our short-term investments. Our restricted cash in which the underlying instrument has a term of greater than twelve months from the balance sheet date is classified as non-current and is included in “Other assets, net” on our Consolidated Balance Sheet. As of June 30, 2015, we had $2.3 million classified as current on our Consolidated Balance Sheet. As of December 31, 2014, we had$1.5 million of restricted cash classified as current and $2.3 million of restricted cash classified as non-current and included in "Other assets, net" on our Consolidated Balance Sheets.

6



TRADE ACCOUNTS RECEIVABLE
Trade accounts receivable are stated at the amount we expect to collect. Trade accounts receivable do not bear interest. The allowance for doubtful accounts is our best estimate of the losses we expect will result from the inability of our customers to make required payments. We generally determine the allowance based on a combination of actual historical write-off experience and an analysis of specific customer accounts. As of both June 30, 2015 and December 31, 2014, we had allowances for doubtful accounts of $1.4 million.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost, including any interest costs capitalized, less accumulated depreciation. Depreciation of buildings, equipment and other depreciable assets is determined using the straight-line method. Assets we acquire through business combinations have estimated lives that are typically shorter than the assets we construct or buy new. Accumulated depreciation totaled $1,485.3 million and $1,450.1 million at June 30, 2015 and December 31, 2014, respectively.
Consistent with authoritative guidance, we assess the carrying amount of long-lived assets with definite lives that are held-for-use and evaluate them for recoverability whenever events or changes in circumstances indicate that we may be unable to recover the carrying amount of the assets. During the first quarter of 2014, we permanently closed our Long Island tissue converting and distribution facility. As a result of this closure, we considered an outside third party's appraisal in assessing the recoverability of the facility's long-lived plant and equipment based on available market data for comparable assets sold through private party transactions. Based on this assessment, we determined the carrying amounts of certain long-lived plant and equipment related to the Long Island facility exceeded their fair value. As a result, we recorded a $3.0 million non-cash impairment charge to our accompanying Consolidated Statement of Operations for the six months ended June 30, 2014. There were no other such events or changes in circumstances that impacted our remaining long-lived assets.
STOCKHOLDERS’ EQUITY
On December 15, 2014, we announced that our Board of Directors had approved a new stock repurchase program authorizing the repurchase of up to $100 million of our common stock. The repurchase program authorizes purchases of our common stock from time to time through open market purchases, negotiated transactions or other means, including accelerated stock repurchases and 10b5-1 trading plans in accordance with applicable securities laws and other restrictions. We have no obligation to repurchase stock under this program and may suspend or terminate the program at any time. We have repurchased 599,495 shares of our outstanding common stock at an average price of $61.97 per share under this program. As of June 30, 2015, we had up to $62.9 million of authorization remaining pursuant to this stock repurchase program.
On February 5, 2014, we announced that our Board of Directors had approved a stock repurchase program authorizing the repurchase of up to $100 million of our common stock. We completed that program during the third quarter of 2014. In total, we repurchased 1,574,748 shares of our outstanding common stock at an average price of $63.50 per share under that program.
DERIVATIVES
We had no activity during the six months ended June 30, 2015 and 2014 that required hedge or derivative accounting treatment. However, to help mitigate our exposure to market risk for changes in utility commodity pricing, we use firm price contracts to supply a portion of the natural gas requirements for our manufacturing facilities. As of June 30, 2015, these contracts covered approximately 58% of our expected average monthly natural gas requirements for the remainder of 2015. Historically, these contracts have qualified for treatment as “normal purchases or normal sales” under authoritative guidance and thus required no mark-to-market adjustment.
EMPLOYEES
Unions represent hourly employees at six of our manufacturing sites. There are no collective bargaining agreements due to expire in 2015. The hourly union labor contracts that had expired as set forth on page 6 of our Annual Report on Form 10-K for the year ended December 31, 2014 were ratified during the first quarter of 2015.

7



NOTE 2 Recently Adopted and New Accounting Standards
In July 2015, the Financial Accounting Standards Board, or FASB, issued Accounting Standard Update, or ASU, 2015-11, Simplifying the Measurement of Inventory. This standard is part of the FASB’s simplification initiative and applies to entities that measure inventory using a method other than last-in, first-out (LIFO) or the retail inventory method (e.g., first-in, first-out (FIFO), average cost). Under this ASU, entities that utilize FIFO and average cost must switch from the lower of cost or market to the lower of cost and net realizable value. This ASU requires prospective adoption for inventory measurements for fiscal years beginning after December 15, 2016, and interim periods within those years for public business entities. Early adoption is permitted. We are currently evaluating the impact this guidance will have on our consolidated financial statements.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. The core principle of the new standard is for companies to recognize revenue in a manner that depicts the transfer of goods or services to customers in amounts that reflect the consideration, or payment, to which the company expects to be entitled in exchange for those goods or services. The standard will also result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively, such as service revenue and contract modifications, and clarify guidance for multiple-element arrangements. This standard was originally issued as effective for fiscal years and interim periods within those years beginning after December 15, 2016, with early adoption prohibited. However, in July 2015, the FASB approved deferring the effective date by one year to December 15, 2017 for annual reporting periods beginning after that date. In its approval, the FASB also permitted the early adoption of the standard, but not before the original effective date of fiscal years beginning after December 15, 2016. The standard may be applied under either a retrospective or cumulative effect adoption method. We plan on adopting the standard under the deferred effective date and are currently evaluating the impact this guidance will have on our consolidated financial statements.
In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. This standard amends existing guidance to require the presentation of debt issuance costs in the balance sheet as a deduction from the carrying amount of the related debt liability instead of a deferred asset. It is effective for annual reporting periods beginning after December 15, 2015, with early adoption permitted. The adoption of this guidance is not expected to have a significant effect on our consolidated financial statements.
We reviewed all other new accounting pronouncements issued in the period and concluded that they are not applicable to our business.
NOTE 3 Inventories
Inventories at the balance sheet dates consist of:

(In thousands)
June 30, 2015
 
December 31, 2014
Pulp, paperboard and tissue products
$
161,304

 
$
188,760

Materials and supplies
74,439

 
74,916

Logs, pulpwood, chips and sawdust
12,537

 
22,950

 
$
248,280

 
$
286,626


8



NOTE 4 Intangible Assets
Intangible assets at the balance sheet dates are comprised of the following:

 
June 30, 2015
(Dollars in thousands, lives in years)
Useful
Life
 
Historical
Cost
 
Accumulated
Amortization
 
Net
Balance
Customer relationships
9.0
 
$
41,001

 
$
(20,500
)
 
$
20,501

Trade names and trademarks
10.0
 
3,286

 
(1,479
)
 
1,807

Non-compete agreements
5.0
 
574

 
(409
)
 
165

 
 
 
$
44,861

 
$
(22,388
)
 
$
22,473

 
 
 
 
 
 
 
 
  
December 31, 2014
(Dollars in thousands, lives in years)
Useful
Life
 
Historical
Cost
 
Accumulated
Amortization
 
Net
Balance
Customer relationships
9.0
 
$
41,001

 
$
(18,223
)
 
$
22,778

Trade names and trademarks
10.0
 
3,286

 
(1,314
)
 
1,972

Non-compete agreements
5.0
 
1,189

 
(983
)
 
206

 
 
 
$
45,476

 
$
(20,520
)
 
$
24,956

As a result of the closure of our Long Island tissue converting and distribution facility, we performed an assessment of the recoverability of our intangible assets by utilizing the income approach, which discounts projected future cash flows based on management’s expectations of the current and future operating environment. It was determined that the carrying amounts of certain trade names and trademarks related to the Long Island facility were exceeding their fair value. As a result, in the first quarter of 2014 we recorded a $1.3 million non-cash impairment charge in our accompanying Consolidated Statement of Operations. There were no other such events or changes in circumstances that impacted our remaining definite-lived intangible assets.
NOTE 5 Income Taxes
Consistent with authoritative guidance, our estimated annual effective tax rate is used to allocate our expected annual income tax provision to interim periods. The rate is the ratio of our estimated annual income tax provision to estimated pre-tax ordinary income and excludes "discrete items," which are significant, unusual or infrequent items reported separately, net of their related tax effect. The estimated annual effective tax rate is applied to the current interim period’s ordinary income to determine the income tax provision allocated to the interim period. The income tax effects of discrete items are then determined separately and recognized in the interim period in which the income or expense items arise.
For the three and six months ended June 30, 2015 and 2014, the effective tax rates attributable to continuing operations were as follows:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2015
 
2014
 
2015
 
2014
Statutory federal income tax rate
35.0
 %
 
35.0
 %
 
35.0
 %
 
35.0
 %
State taxes, net of credits
2.2

 
0.9

 
2.2

 
0.9

Change in valuation allowances
0.9

 
1.6

 
0.9

 
2.5

Federal manufacturing deduction
(3.1
)
 
(1.7
)
 
(3.1
)
 
(1.7
)
Change in uncertain tax positions

 

 
(3.1
)
 

Interest accrued on uncertain tax positions

 
0.1

 
0.1

 
0.1

Federal credits and audit adjustments
(0.4
)
 
(0.1
)
 
(0.4
)
 
(1.4
)
State rate adjustments

 
4.6

 

 
3.2

Return to provision adjustments

 
4.1

 
(0.1
)
 
3.1

Other
1.2

 
(0.1
)
 
1.3

 
0.3

Effective tax rate
35.8
 %
 
44.4
 %
 
32.8
 %
 
42.0
 %
Our estimated annual effective tax rate for the second quarter of 2015 and 2014 is approximately 35%.

9



During the quarter ended June 30, 2014, we recognized the effects of enacted New York state law changes. As part of the analysis, we identified that, in prior years, we had not applied the proper apportionment factor when certain New York state net operating loss carryforwards were generated, which resulted in a $2.9 million overstatement that was corrected in the period and is included as a discrete item within state rate adjustments due to immateriality. Additionally, return to provision adjustments, including amended returns, generated expense of 7.4%, which was offset by other state return to provision adjustments benefit of 3.3%.
NOTE 6 Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities at the balance sheet dates consist of:
(In thousands)
June 30, 2015
 
December 31, 2014
Trade accounts payable
$
122,918

 
$
122,856

Accrued wages, salaries and employee benefits
37,842

 
41,880

Accrued interest
11,932

 
12,173

Accrued discounts and allowances
11,510

 
10,026

Accrued utilities
6,417

 
6,959

Accrued taxes other than income taxes payable
5,950

 
5,622

Other
18,132

 
16,310

 
$
214,701

 
$
215,826

NOTE 7 Debt
SENIOR NOTES
On July 29, 2014, we issued $300 million aggregate principal amount of senior notes, which we refer to as the 2014 Notes. The 2014 Notes mature on February 1, 2025, have an interest rate of 5.375% and were issued at their face value.
The 2014 Notes are guaranteed by all of our direct and indirect subsidiaries. The 2014 Notes will also be guaranteed by each of our future direct and indirect subsidiaries that do not constitute an immaterial subsidiary under the indenture governing the 2014 Notes. The 2014 Notes are equal in right of payment with all other existing and future unsecured senior indebtedness and are senior in right of payment to any future subordinated indebtedness. The 2014 Notes are effectively subordinated to all of our existing and future secured indebtedness, including borrowings under our secured revolving credit facility, which is secured by certain of our accounts receivable, inventory and cash. The terms of the 2014 Notes limit our ability and the ability of any restricted subsidiaries to incur certain liens, engage in sale and leaseback transactions and consolidate, merge with, or convey, transfer or lease substantially all of our or their assets to another person.
On January 23, 2013, we issued $275 million aggregate principal amount of senior notes, which we refer to as the 2013 Notes. The 2013 Notes mature on February 1, 2023, have an interest rate of 4.5% and were issued at their face value.
The 2013 Notes are guaranteed by all of our direct and indirect subsidiaries, and will also be guaranteed by each of our future direct and indirect subsidiaries that we do not designate as an unrestricted subsidiary under the indenture governing these notes. The 2013 Notes are equal in right of payment with all other existing and future unsecured senior indebtedness and are senior in right of payment to any future subordinated indebtedness. In addition, they are effectively subordinated to all of our existing and future secured indebtedness, including borrowings under our secured revolving credit facility, which is secured by certain of our accounts receivable, inventory and cash. The terms of the notes limit our ability and the ability of any restricted subsidiaries to borrow money; pay dividends; redeem or repurchase capital stock; make investments; sell assets; create restrictions on the payment of dividends or other amounts to us from any restricted subsidiaries; enter into transactions with affiliates; enter into sale and lease back transactions; create liens; and consolidate, merge or sell all or substantially all of our or their assets.
REVOLVING CREDIT FACILITY
On November 26, 2008, we entered into a $125 million senior secured revolving credit facility with certain financial institutions. The amount available to us under the revolving credit facility is based on the lesser of 85% of our eligible accounts receivable plus approximately 65% of our eligible inventory, or $125 million. The revolving credit facility has been subsequently amended and expires on September 30, 2016.

10



As of June 30, 2015, there were no borrowings outstanding under the credit facility, but $6.2 million of the credit facility was being used to support outstanding standby letters of credit. Loans under the credit facility bear interest (i) for LIBOR loans, LIBOR plus between 1.75% and 2.25% and (ii) for base rate loans, a per annum rate equal to the greater of (a) the prime rate for such day; (b) the federal funds effective rate for such day, plus 0.50%; or (c) LIBOR for a 30-day interest period as determined on such day, plus between 1.25% and 1.75%. The percentage margin on all loans is based on our fixed charge coverage ratio for the most recent four quarters. As of June 30, 2015, we would have been permitted to draw an additional $118.8 million under the credit facility at LIBOR plus 1.75%, or base rate plus 1.25%.
A minimum fixed charge coverage ratio is the only financial covenant requirement under our credit facility and is triggered when there are any commitments or obligations outstanding and availability falls below 12.5% or an event of default exists, at which time the minimum fixed charge coverage ratio must be at least 1.0-to-1.0. As of June 30, 2015, the fixed charge coverage ratio for the most recent four quarters was 1.1-to-1.0.
Our obligations under the revolving credit facility are secured by certain of our accounts receivable, inventory and cash. The terms of the credit facility contain various provisions that limit our discretion in the operations of our business by restricting our ability to, among other things, pay dividends; redeem or repurchase capital stock; create, incur or guarantee certain debt; incur liens on certain properties; make capital expenditures; enter into certain affiliate transactions; enter into certain hedging arrangements; and consolidate with or merge with another entity. The revolving credit facility contains usual and customary affirmative and negative covenants and usual and customary events of default.
NOTE 8 Other Long-Term Obligations
Other long-term obligations at the balance sheet dates consist of:
 
(In thousands)
June 30, 2015
 
December 31, 2014
Long-term lease obligations, net of current portion
$
24,437

 
$
24,805

Deferred compensation
12,888

 
14,609

Deferred proceeds
10,883

 
12,360

Other
2,571

 
5,082

 
$
50,779

 
$
56,856

NOTE 9 Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss, net of tax, is comprised of the following:
(In thousands)
Foreign Currency Translation Adjustments1
 
Pension and Other Post Retirement Employee Benefit Plan Adjustments
 
Total
Balance at December 31, 2014
$

 
$
(70,863
)
 
$
(70,863
)
Other comprehensive income, net of tax2

 
3,201

 
3,201

Balance at June 30, 2015
$

 
$
(67,662
)
 
$
(67,662
)
 
 
 
 
 
 
(In thousands)
Foreign Currency Translation Adjustments1
 
Pension and Other Post Retirement Employee Benefit Plan Adjustments
 
Total
Balance at December 31, 2013
$
(874
)
 
$
(57,219
)
 
$
(58,093
)
Other comprehensive income, net of tax2

 
2,404

 
2,404

Balance at June 30, 2014
$
(874
)
 
$
(54,815
)
 
$
(55,689
)
1 
This balance consists of unrealized foreign currency translation adjustments related to the operations of our Canadian subsidiary before its functional currency was changed from Canadian dollars to U.S. dollars in 2012. As a result of the divestiture of the specialty business and mills, this balance was written off in the fourth quarter of 2014.
2 
For the six months ended June 30, 2015 and 2014, net periodic costs associated with our pension and other postretirement employee benefit, or OPEB, plans included in other comprehensive income and reclassified from accumulated other comprehensive loss included $6.3 million and $4.9 million, respectively, of actuarial loss amortization, as well as $1.1 million and $1.0 million, respectively, of prior service credit amortization, all net of tax totaling $2.1 million and $1.5 million, respectively. These accumulated other comprehensive loss components are included in the computation of net periodic pension and OPEB costs in Note 10, “Pension and Other Postretirement Employee Benefit Plans.”

11



NOTE 10 Pension and Other Postretirement Employee Benefit Plans
The following table details the components of net periodic cost of our company-sponsored pension and OPEB plans for the periods presented:
 
Three Months Ended June 30,
(In thousands)
2015
 
2014
 
2015
 
2014
 
Pension Benefit Plans
 
Other Postretirement
Employee  Benefit Plans
Service cost
$
307

 
$
340

 
$
33

 
$
109

Interest cost
3,475

 
3,724

 
892

 
980

Expected return on plan assets
(5,074
)
 
(5,083
)
 

 

Amortization of prior service cost (credit)
18

 
51

 
(543
)
 
(963
)
Amortization of actuarial loss (gain)
3,226

 
2,555

 

 
(142
)
Net periodic cost (benefit)
$
1,952

 
$
1,587

 
$
382

 
$
(16
)
 
Six Months Ended June 30,
(In thousands)
2015
 
2014
 
2015
 
2014
 
Pension Benefit Plans
 
Other Postretirement
Employee  Benefit Plans
Service cost
$
623

 
$
695

 
$
181

 
$
226

Interest cost
6,965

 
7,412

 
1,940

 
2,282

Expected return on plan assets
(10,058
)
 
(10,098
)
 

 

Amortization of prior service cost (credit)
36

 
103

 
(1,088
)
 
(1,089
)
Amortization of actuarial loss (gain)
6,309

 
5,049

 

 
(142
)
Net periodic cost
$
3,875

 
$
3,161

 
$
1,033

 
$
1,277

During the six months ended June 30, 2015, we contributed $3.2 million to our qualified pension plans. We do not expect to make additional contributions in 2015.
During the six months ended June 30, 2015, we made contributions of $0.2 million to our company-sponsored non-qualified pension plan, and we estimate contributions will total $0.4 million in 2015. We do not anticipate funding our OPEB plans in 2015 except to pay benefit costs as incurred during the year by plan participants.
During the three and six months ended June 30, 2015, $1.6 million and $3.4 million, respectively, of net periodic pension and OPEB costs were charged to "Cost of sales," and $0.7 million and $1.5 million, respectively, were charged to "Selling, general and administrative expenses" in the accompanying Consolidated Statements of Operations. During the three and six months ended June 30, 2014, $1.0 million and $3.3 million, respectively, of net periodic pension and OPEB costs were charged to "Cost of sales," and $0.6 million and $1.1 million, respectively, were charged to "Selling, general and administrative expenses" in the accompanying Consolidated Statements of Operations.

12



NOTE 11 Earnings per Common Share
Basic earnings per share are based on the weighted average number of shares of common stock outstanding. Diluted earnings per share are based upon the weighted average number of shares of common stock outstanding plus all potentially dilutive securities that were assumed to be converted into common shares at the beginning of the period under the treasury stock method.
The following table reconciles the number of common shares used in calculating the basic and diluted net earnings per share:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2015
 
2014
 
2015
 
2014
Basic average common shares outstanding1
19,081,848

 
20,256,137

 
19,205,254

 
20,614,305

Incremental shares due to:
 
 
 
 
 
 
 
Restricted stock units
93,459

 
78,508

 
74,324

 
73,692

Performance shares
118,868

 
182,026

 
104,330

 
181,612

Stock options
79

 

 
459

 

Diluted average common shares outstanding
19,294,254

 
20,516,671

 
19,384,367

 
20,869,609

 
 
 
 
 
 
 
 
Basic net earnings per common share
$
0.82

 
$
0.61

 
$
1.11

 
$
0.91

Diluted net earnings per common share
0.81

 
0.61

 
1.10

 
0.90

 
 
 
 
 
 
 
 
Anti-dilutive shares excluded from calculation
265,149

 
210,771

 
326,085

 
248,429

1 
Basic average common shares outstanding include restricted stock awards that are fully vested, but are deferred for future issuance.
NOTE 12 Equity-Based Compensation
We recognize equity-based compensation expense for all equity-based payment awards made to employees and directors, including restricted stock units, or RSUs, performance shares and stock options, based on estimated fair values.
EMPLOYEE AWARDS
Employee equity-based compensation expense was recognized as follows:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(In thousands)
2015
 
2014
 
2015
 
2014
Restricted stock units
$
552

 
$
587

 
$
963

 
$
1,032

Performance shares
1,164

 
1,474

 
2,043

 
2,555

Stock options
592

 
407

 
941

 
543

Total employee equity-based compensation
$
2,308

 
$
2,468

 
$
3,947

 
$
4,130

As provided for in the Clearwater Paper Corporation 2008 Stock Incentive Plan, the performance measure used to determine the number of performance shares ultimately issued is a comparison of the percentile ranking of our total stockholder return compared to the total stockholder return of a selected peer group. The number of shares actually issued, as a percentage of the amount subject to the performance share award, could range from 0%-200%. On December 31, 2014, the service and performance period for 137,775 outstanding performance shares granted in 2012 ended. Those performance shares were settled and distributed in the first quarter of 2015. The number of shares actually settled, as a percentage of the outstanding amount, was 106.9%. After adjusting for the related minimum tax withholdings, a net 97,921 shares were issued in the first quarter of 2015. The related minimum tax withholdings payment made in the first quarter of 2015 in connection with issued shares was $3.0 million. No restricted stock units vested and settled during the first half of 2015.

13



The following table summarizes the number of share-based awards granted under the Clearwater Paper Corporation 2008 Stock Incentive Plan during the six months ended June 30, 2015 and the grant-date fair value of the awards:
 
 
Six Months Ended
 
June 30, 2015
 
Number of
Shares Subject to Award
 
Average Fair Value of
Award Per Share
Restricted stock units
23,148

 
$
62.02

Performance shares
47,513

 
62.05

Stock options
142,542

 
20.82

DIRECTOR AWARDS
Annually, each outside member of our Board of Directors receives deferred equity-based awards that are measured in units of our common stock and ultimately settled in cash at the time of payment. Accordingly, the compensation expense associated with these awards is subject to fluctuations each quarter based on mark-to-market adjustments at each reporting period in line with changes in the market price of our common stock. As a result of the mark-to-market adjustment, we recorded benefits from director equity-based compensation of $1.5 million and less than $0.1 million for the three months ended June 30, 2015 and 2014, respectively. For the six months ended June 30, 2015, we recorded a benefit relating to our director equity-based compensation of $1.9 million, compared to compensation expense of $2.8 million for the same period in 2014.
As of June 30, 2015, the liability amount associated with director equity-based compensation included in "Other long-term obligations" on the accompanying Consolidated Balance Sheet was $11.6 million. At December 31, 2014, liability amounts associated with director equity-based compensation included in "Other long-term obligations" and "Accounts payable and accrued liabilities" totaled $13.5 million and $1.4 million, respectively.
NOTE 13 Fair Value Measurements
The estimated fair values of our financial instruments at the dates presented below are as follows:
 
 
June 30,
 
December 31,
 
2015
 
2014
 
Carrying
 
Fair
 
Carrying
 
Fair
(In thousands)
Amount
 
Value
 
Amount
 
Value
Cash, restricted cash and short-term investments (Level 1)
$
73,735

 
$
73,735

 
$
81,101

 
$
81,101

Long-term debt (Level 1)
575,000

 
558,875

 
575,000

 
558,000

Accounting guidance establishes a framework for measuring the fair value of financial instruments, providing a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities, or “Level 1” measurements, followed by quoted prices of similar assets or observable market data, or “Level 2” measurements, and the lowest priority to unobservable inputs, or “Level 3” measurements.
The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used should seek to maximize the use of observable inputs and minimize the use of unobservable inputs.

14



NOTE 14 Segment Information
The table below presents information about our reportable segments:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(In thousands)
2015
 
2014
 
2015
 
2014
Segment net sales:
 
 
 
 
 
 
 
Consumer Products
$
239,391

 
$
299,130

 
$
474,567

 
$
585,638

Pulp and Paperboard
205,167

 
199,629

 
404,017

 
398,041

Total segment net sales
$
444,558

 
$
498,759

 
$
878,584

 
$
983,679

 
 
 
 
 
 
 
 
Operating income (loss):
 
 
 
 
 
 
 
Consumer Products
$
17,032

 
$
12,705

 
$
29,427

 
$
12,182

Pulp and Paperboard
27,754

 
33,635

 
43,948

 
70,411

 
44,786

 
46,340

 
73,375

 
82,593

Corporate
(12,713
)
 
(13,257
)
 
(26,065
)
 
(28,992
)
Income from operations
$
32,073

 
$
33,083

 
$
47,310

 
$
53,601

 
 
 
 
 
 
 
 
Depreciation and amortization:
 
 
 
 
 
 
 
Consumer Products
$
13,438

 
$
15,071

 
$
26,415

 
$
30,561

Pulp and Paperboard
6,737

 
6,019

 
14,048

 
12,289

Corporate
457

 
925

 
1,177

 
1,396

Total depreciation and amortization
$
20,632

 
$
22,015

 
$
41,640

 
$
44,246


15



NOTE 15 Supplemental Guarantor Financial Information
All of our direct and indirect subsidiaries guarantee the 2014 Notes and the 2013 Notes on a joint and several basis. There are no significant restrictions on the ability of the guarantor subsidiaries to make distributions to Clearwater Paper, the issuer of the 2014 Notes and 2013 Notes. The following tables present the results of operations, financial position and cash flows of Clearwater Paper and its subsidiaries, the guarantor and non-guarantor entities, and the eliminations necessary to arrive at the information for Clearwater Paper on a consolidated basis.
Clearwater Paper Corporation
Consolidating Statement of Operations and Comprehensive Income (Loss)
Three Months Ended June 30, 2015
 
 
 
Guarantor
 
Non-Guarantor
 
 
 
 
(In thousands)
Issuer
 
Subsidiaries
 
Subsidiary
 
Eliminations
 
Total
Net sales
$
401,444

 
$
70,271

 
$

 
$
(27,157
)
 
$
444,558

Cost and expenses:
 
 
 
 
 
 
 
 
 
Cost of sales
(342,714
)
 
(68,790
)
 

 
27,157

 
(384,347
)
Selling, general and administrative expenses
(25,431
)
 
(2,707
)
 

 

 
(28,138
)
Total operating costs and expenses
(368,145
)
 
(71,497
)
 

 
27,157

 
(412,485
)
Income (loss) from operations
33,299

 
(1,226
)
 

 

 
32,073

Interest expense, net
(7,715
)
 
(59
)
 

 

 
(7,774
)
Earnings (loss) before income taxes
25,584

 
(1,285
)
 

 

 
24,299

Income tax provision
(9,681
)
 
(841
)
 

 
1,820

 
(8,702
)
Equity in loss of subsidiary
(2,126
)
 

 

 
2,126

 

Net earnings (loss)
$
13,777

 
$
(2,126
)
 
$

 
$
3,946

 
$
15,597

Other comprehensive income, net of tax
1,644

 

 

 

 
1,644

Comprehensive income (loss)
$
15,421

 
$
(2,126
)
 
$

 
$
3,946

 
$
17,241

Clearwater Paper Corporation
Consolidating Statement of Operations and Comprehensive Income (Loss)
Six Months Ended June 30, 2015
 
 
 
Guarantor
 
Non-Guarantor
 
 
 
 
(In thousands)
Issuer
 
Subsidiaries
 
Subsidiaries
 
Eliminations
 
Total
Net sales
$
796,831

 
$
143,599

 
$

 
$
(61,846
)
 
$
878,584

Cost and expenses:
 
 
 
 
 
 
 
 
 
Cost of sales
(693,760
)
 
(142,265
)
 

 
61,846

 
(774,179
)
Selling, general and administrative expenses
(50,219
)
 
(6,876
)
 

 

 
(57,095
)
Total operating costs and expenses
(743,979
)
 
(149,141
)
 

 
61,846

 
(831,274
)
Income (loss) from operations
52,852

 
(5,542
)
 

 

 
47,310

Interest expense, net
(15,482
)
 
(74
)
 

 

 
(15,556
)
Earnings (loss) before income taxes
37,370

 
(5,616
)
 

 

 
31,754

Income tax provision
(12,909
)
 
(1,183
)
 

 
3,692

 
(10,400
)
Equity in loss of subsidiary
(6,799
)
 

 

 
6,799

 

Net earnings (loss)
$
17,662

 
$
(6,799
)
 
$

 
$
10,491

 
$
21,354

Other comprehensive income, net of tax
3,201

 

 

 

 
3,201

Comprehensive income (loss)
$
20,863

 
$
(6,799
)
 
$

 
$
10,491

 
$
24,555


16



Clearwater Paper Corporation
Consolidating Statement of Operations and Comprehensive Income (Loss)
Three Months Ended June 30, 2014
 
 
 
Guarantor
 
Non-Guarantor
 
 
 
 
(In thousands)
Issuer
 
Subsidiaries
 
Subsidiary
 
Eliminations
 
Total
Net sales
$
401,866

 
$
133,972

 
$
14,180

 
$
(51,259
)
 
$
498,759

Cost and expenses:
 
 
 
 
 
 
 
 
 
Cost of sales
(341,902
)
 
(131,114
)
 
(12,354
)
 
51,259

 
(434,111
)
Selling, general and administrative expenses
(25,907
)
 
(5,320
)
 
(338
)
 

 
(31,565
)
Total operating costs and expenses
(367,809
)
 
(136,434
)
 
(12,692
)
 
51,259

 
(465,676
)
Income (loss) from operations
34,057

 
(2,462
)
 
1,488

 

 
33,083

Interest expense, net
(10,681
)
 
(7
)
 

 

 
(10,688
)
Earnings (loss) before income taxes
23,376

 
(2,469
)
 
1,488

 

 
22,395

Income tax provision
(7,272
)
 
(5,675
)
 
(390
)
 
3,395

 
(9,942
)
Equity in (loss) income of subsidiary
(7,046
)
 
1,098

 

 
5,948

 

Net earnings (loss)
$
9,058

 
$
(7,046
)
 
$
1,098

 
$
9,343

 
$
12,453

Other comprehensive income, net of tax
920

 

 

 

 
920

Comprehensive income (loss)
$
9,978

 
$
(7,046
)
 
$
1,098

 
$
9,343

 
$
13,373


Clearwater Paper Corporation
Consolidating Statement of Operations and Comprehensive Income (Loss)
Six Months Ended June 30, 2014
 
 
 
Guarantor
 
Non-Guarantor
 
 
 
 
(In thousands)
Issuer
 
Subsidiaries
 
Subsidiaries
 
Eliminations
 
Total
Net sales
$
786,487

 
$
272,645

 
$
27,064

 
$
(102,517
)
 
$
983,679

Cost and expenses:
 
 
 
 
 
 
 
 
 
Cost of sales
(660,294
)
 
(277,203
)
 
(25,760
)
 
102,517

 
(860,740
)
Selling, general and administrative expenses
(53,566
)
 
(10,837
)
 
(676
)
 

 
(65,079
)
Impairment of assets

 
(4,259
)
 

 

 
(4,259
)
Total operating costs and expenses
(713,860
)
 
(292,299
)
 
(26,436
)
 
102,517

 
(930,078
)
Income (loss) from operations
72,627

 
(19,654
)
 
628

 

 
53,601

Interest expense, net
(21,404
)
 
(18
)
 

 

 
(21,422
)
Earnings (loss) before income taxes
51,223

 
(19,672
)
 
628

 

 
32,179

Income tax (provision) benefit
(20,749
)
 
3,697

 
(184
)
 
3,736

 
(13,500
)
Equity in (loss) earnings of subsidiary
(15,531
)
 
444

 

 
15,087

 

Net earnings (loss)
$
14,943

 
$
(15,531
)
 
$
444

 
$
18,823

 
$
18,679

Other comprehensive income, net of tax
2,404

 

 

 

 
2,404

Comprehensive income (loss)
$
17,347

 
$
(15,531
)
 
$
444

 
$
18,823

 
$
21,083


17



Clearwater Paper Corporation
Consolidating Balance Sheet
At June 30, 2015
 
(In thousands)
Issuer
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiary
 
Eliminations
 
Total
ASSETS
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash
$
11,465

 
$

 
$

 
$

 
$
11,465

Restricted cash
2,270

 

 

 

 
2,270

Short-term investments
60,000

 

 

 

 
60,000

Receivables, net
124,051

 
17,444

 

 
(405
)
 
141,090

Inventories
212,773

 
35,507

 

 

 
248,280

Deferred tax assets
18,273

 
2,720

 

 
(154
)
 
20,839

Prepaid expenses
7,397

 
472

 

 

 
7,869

Total current assets
436,229

 
56,143

 

 
(559
)
 
491,813

Property, plant and equipment, net
675,758

 
147,914

 

 

 
823,672

Goodwill
209,087

 

 

 

 
209,087

Intangible assets, net
4,702

 
17,771

 

 

 
22,473

Intercompany receivable (payable)
31,877

 
(32,031
)
 

 
154

 

Investment in subsidiary
130,483

 

 

 
(130,483
)
 

Pension assets
8,098

 

 

 

 
8,098

Other assets, net
6,352

 
1,042

 

 

 
7,394

TOTAL ASSETS
$
1,502,586

 
$
190,839

 
$

 
$
(130,888
)
 
$
1,562,537

LIABILITIES AND STOCKHOLDERS’
  EQUITY
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Accounts payable and accrued
  liabilities
$
191,723

 
$
23,383

 
$

 
$
(405
)
 
$
214,701

Current liability for pensions and
  other postretirement employee
  benefits
7,915

 

 

 

 
7,915

Total current liabilities
199,638

 
23,383

 

 
(405
)
 
222,616

Long-term debt
575,000

 

 

 

 
575,000

Liability for pensions and other
  postretirement employee benefits
114,835

 

 

 

 
114,835

Other long-term obligations
50,078

 
701

 

 

 
50,779

Accrued taxes
925

 
792

 

 

 
1,717

Deferred tax liabilities
74,809

 
35,480

 

 

 
110,289

Accumulated other comprehensive loss,
  net of tax
(67,662
)
 

 

 

 
(67,662
)
Stockholders’ equity excluding
  accumulated other comprehensive loss
554,963

 
130,483

 

 
(130,483
)
 
554,963

TOTAL LIABILITIES AND
  STOCKHOLDERS’ EQUITY
$
1,502,586

 
$
190,839

 
$

 
$
(130,888
)
 
$
1,562,537



18



Clearwater Paper Corporation
Consolidating Balance Sheet
At December 31, 2014
 
(In thousands)
Issuer
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiary
 
Eliminations
 
Total
ASSETS
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash
$
27,331

 
$

 
$

 
$

 
$
27,331

Restricted cash
1,500

 

 

 

 
1,500

Short-term investments
50,000

 

 

 

 
50,000

Receivables, net
117,970

 
16,557

 

 
(613
)
 
133,914

Taxes receivable
6,760

 
(15,758
)
 

 
10,253

 
1,255

Inventories
246,210

 
40,416

 

 

 
286,626

Deferred tax assets
14,733

 
5,206

 

 
1,821

 
21,760

Prepaid expenses
3,734

 
457

 

 

 
4,191

Total current assets
468,238

 
46,878

 

 
11,461

 
526,577

Property, plant and equipment, net
657,369

 
153,618

 

 

 
810,987

Goodwill
209,087

 

 

 

 
209,087

Intangible assets, net
5,224

 
19,732

 

 

 
24,956

Intercompany receivable (payable)
33,703

 
(21,629
)
 

 
(12,074
)
 

Investment in subsidiary
137,282

 

 

 
(137,282
)
 

Pension assets
4,738

 

 

 

 
4,738

Other assets, net
8,496

 
1,087

 

 

 
9,583

TOTAL ASSETS
$
1,524,137

 
$
199,686

 
$

 
$
(137,895
)
 
$
1,585,928

LIABILITIES AND STOCKHOLDERS’
  EQUITY
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Accounts payable and accrued
  liabilities
$
193,326

 
$
23,113

 
$

 
$
(613
)
 
$
215,826

Current liability for pensions and
  other postretirement employee
  benefits
7,915

 

 

 

 
7,915

Total current liabilities
201,241

 
23,113

 

 
(613
)
 
223,741

Long-term debt
575,000

 

 

 

 
575,000

Liability for pensions and other
  postretirement employee benefits
118,464

 

 

 

 
118,464

Other long-term obligations
56,029

 
827

 

 

 
56,856

Accrued taxes
1,902

 
794

 

 

 
2,696

Deferred tax liabilities
73,964

 
37,670

 

 

 
111,634

Accumulated other comprehensive loss,
  net of tax
(70,863
)
 

 

 

 
(70,863
)
Stockholders’ equity excluding
  accumulated other comprehensive loss
568,400

 
137,282

 

 
(137,282
)
 
568,400

TOTAL LIABILITIES AND
  STOCKHOLDERS’ EQUITY
$
1,524,137

 
$
199,686

 
$

 
$
(137,895
)
 
$
1,585,928



19



Clearwater Paper Corporation
Consolidating Statement of Cash Flows
Six Months Ended June 30, 2015
 
(In thousands)
Issuer
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiary
 
Eliminations
 
Total
CASH FLOWS FROM OPERATING
  ACTIVITIES