8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

August 3, 2011

Date of Report (Date of earliest event reported)

KapStone Paper and Packaging Corporation

(Exact Name of Registrant as Specified in its Charter)

Delaware	001-33494	20-2699372
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1101 Skokie Boulevard, Suite 300
Northbrook, Illinois 60062

(Address of principal executive offices)

(847) 239-8800

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On August 3, 2011, KapStone Paper and Packaging Corporation (“KapStone”) issued a press release reporting earnings for the second quarter ended June 30, 2011.

Item 7.01 Regulation FD Disclosure

On August 4, 2011, the management of KapStone will participate in a conference call discussing KapStone’s earnings for the second quarter ended June 30, 2011. A copy of the presentation materials used in the call is furnished as exhibit 99.2 of this report.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit 99.1	Second quarter 2011 Earnings Press Release dated August 3, 2011
Exhibit 99.2	Slides of KapStone Paper and Packaging Corporation dated August 3, 2011

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SIGNATURE

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:  August 3, 2011
	KAPSTONE PAPER AND PACKAGING CORPORATION
	By:	/s/ Andrea K. Tarbox
	Name:	Andrea K. Tarbox
	Title:	Vice President and Chief Financial Officer

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EX-99.1

Exhibit 99.1

FOR FURTHER INFORMATION:	FOR IMMEDIATE RELEASE
Andrea K. Tarbox	Wednesday, August 3, 2011
Vice President and Chief Financial Officer
847.239.8812

KAPSTONE MORE THAN DOUBLES YEAR OVER YEAR EARNINGS ON REVENUE GROWTH AND IMPROVED OPERATIONS

NORTHBROOK, IL — August 3, 2011 — KapStone Paper and Packaging Corporation (NYSE: KS) today reported record results for the second quarter ended June 30, 2011.

·Net sales of $215 million, up $16 million or 8 percent, versus 2010

·Average revenue per ton of $633, up $48 or 8 percent, versus 2010

·Diluted EPS of $0.38,  up $0.23 or 153 percent, versus 2010

·Adjusted EBITDA of $44 million, up $19 million or 76 percent, versus Q2 2010

Roger W. Stone, Chairman and Chief Executive Officer, stated, “Record net sales of $215 million and record adjusted EBITDA of $44 million demonstrate the growing success of KapStone.  Sales benefited from price increases on two product lines partially implemented in the second quarter that should be fully realized in the third quarter. Our mills had an excellent quarter and achieved a new average daily production record of 3,600 tons.  Increased productivity coupled with cost savings initiatives reduced our cost per ton by $15 compared to a year ago.”

Second Quarter Operating Highlights

Record net sales for the quarter ended June 30, 2011 of $214.8 million were up $15.7 million over the same period a year ago.  The increase in net sales was driven by $15.8 million of higher average selling prices, $2.0 million from increased volume, and $1.9 million from favorable exchange rates. A less favorable product mix reduced sales by $1.9 million reflecting lower percentages of DuraSorb® and kraft paper sales.

Operating income of $30.6 million for the 2011 quarter increased by $18.1 million compared to the 2010 quarter primarily on $15.8 million of higher average selling prices, $4.8 million of productivity gains, $1.9 million due to favorable exchange rates and $0.8 million of lower stock compensation expenses.  Higher depreciation and amortization of $1.7 million, less favorable

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product mix of $1.3 million and inflation of $0.9 million, primarily on freight and chemical costs, partially offset the gains.

Interest expense of $0.6 million for the second quarter of 2011 decreased by $0.2 million over the comparable quarter in 2010 and reflected lower debt levels. At June 30, 2011, the interest rate on the majority of the Company’s debt is 1.69 percent.

The effective tax rate for the 2011 second quarter was 38.6 percent compared to 33.7 percent for the 2010 second quarter. The 2011 effective tax rate is higher due to a lower expected benefit from the domestic manufacturing deduction. The 2010 effective tax rate included a benefit from a discrete adjustment related to a refundable tax credit from the inorganic content of black liquor.

For income tax purposes, the Company has taken the position that the alternative fuel mixture tax credit is not taxable as it is similar to an excise tax refund. Since the Internal Revenue Service (“IRS”) has issued no specific guidance in this area, the Company has recorded a $68 million liability for an unrecognized tax benefit. The IRS’s examination of the Company’s 2007-2009 tax returns is ongoing.

Cash Flow and Working Capital

Cash and cash equivalents increased by $27.3 million to $49.8 million as of June 30, 2011, reflecting $40.6 million provided by operating activities offset by $8.2 million used in investing activities and $5.1 million used in financing activities.

Total debt outstanding as of June 30, 2011, was $106.5 million and was reduced by $5.3 million during the second quarter of 2011.

At June 30, 2011, the Company had approximately $110.6 million of working capital and $88.6 million of revolver borrowing capacity.

Conclusion

In summary, Stone commented, “As we enter the second half of the year, we believe that KapStone will benefit from the realizations of our announced price increases.  We will continue to pursue operational excellence.  Our backlogs remain at healthy levels.”

Conference Call

KapStone will host a conference call at 11 a.m. ET, Thursday, August 4, 2011, to discuss the Company’s financial results for the 2011 second quarter.  All interested parties are invited to listen and may do so by either accessing a simultaneous broadcast webcast on KapStone’s website, http://www.kapstonepaper.com, or for those unable to access the webcast, the following dial-in numbers are available:

Domestic: 800.299.0148

International: 617.801.9711

Participant Passcode: 39430804

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A presentation to be viewed in conjunction with the call will also be available on our website, http://www.kapstonepaper.com, in the “Investors” section.

The webcast is also being distributed through the Thomson StreetEvents Network.  Individual investors can listen to the call at http://earnings.com, Thomson’s individual investor portal, powered by StreetEvents.  Institutional investors can access the call via Thomson StreetEvents (http://streetevents.com) a password-protected event management site.

Replay of the webcast will be available for 30 days on the Company’s website following the call.

About the Company

Headquartered in Northbrook, IL, KapStone Paper and Packaging Corporation is a leading North American producer of unbleached kraft paper products and linerboard.   The Company is the parent company of KapStone Kraft Paper Corporation which includes paper mills in Roanoke Rapids, NC and North Charleston, SC, a lumber mill in Summerville, SC, and five chip mills in South Carolina.  The business employs approximately 1,600 people.

Non-GAAP Financial Measures

In addition to our audited consolidated financial statements presented in accordance with U.S. GAAP, management uses certain non-GAAP measures, including “EBITDA”, “Adjusted EBITDA”, “Adjusted Net Income”, and “Adjusted Diluted EPS” to measure our operating performance.  Investors are cautioned that EBITDA, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS are not financial measures under U.S. GAAP.  Management uses these measures to focus on the on-going operations, and believes that they are useful to investors because they enable them to perform meaningful comparisons of past and present operating results. The Company believes that these non-GAAP measures provide useful information to investors because they improve the comparability of the financial results between periods and provide for greater transparency to key measures used to evaluate the performance and liquidity of the Company.  Management uses EBITDA for evaluating the Company’s performance against competitors and as a primary measure for employees’ incentive programs.  Reconciliations of net income to EBITDA, EBITDA to Adjusted EBITDA, net income to Adjusted Net Income, and diluted EPS to Adjusted Diluted EPS are included in the financial schedules contained in this press release.  In addition, these measures should not be construed as alternatives to any other measures of performance determined in accordance with GAAP.

Forward-Looking Statements

Statements in this news release that are not historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can often be identified by words such as “may,” “will,” “should,” “would,’ “expect,” “project,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “potential,” “outlook,” or “continue,” the negative of these terms or other similar expressions.   These statements reflect management’s current views and are subject to risks, uncertainties and assumptions, many of which are beyond the Company’s control that could cause actual results to differ materially from those expressed or

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implied in these statements. Factors that could cause actual results to differ materially include, but are not limited to: (1) industry conditions, including changes in cost, competition, changes in the Company’s product mix and demand and pricing for the Company’s products; (2) market and economic factors, including changes in raw material and healthcare costs, exchange rates and interest rates; (3) results of legal proceedings and compliance costs, including unanticipated expenditures related to the cost of compliance with environmental and other governmental regulations; (4) the ability to achieve and effectively manage growth; (5) the ability to pay the Company’s debt obligations; and (6) the ability to carry out the Company’s strategic initiatives and manage associated costs.  Further information on these and other risks and uncertainties is provided under Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 and elsewhere in reports that the Company files or furnishes with the SEC. These filings can be found on KapStone’s Web site at www.kapstonepaper.com and the SEC’s Web site at www.sec.gov. Forward-looking statements included herein speak only as of the date hereof and the Company disclaims any obligation to revise or update such statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events or circumstances.

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KapStone Paper and Packaging Corporation

Consolidated Statements of Income

(In thousands, except share and per share amounts)

(unaudited)

							Fav / (Unfav)								Fav / (Unfav)
	Quarter Ended June 30,						Variance		Six Months Ended June 30,						Variance
	2011			2010			%		2011			2010			%
Net sales	$	214,786		$	199,119		7.9	%	$	421,524		$	375,618		12.2	%
Cost and expenses:
Cost of sales, excluding depreciation and amortization		143,143			146,684		2.4	%		285,794			276,985		-3.2	%
Freight and distribution expenses		19,681			20,048		1.8	%		37,510			36,118		-3.9	%
Selling, general and administrative expenses		8,866			8,942		0.8	%		18,172			16,041		-13.3	%
Depreciation and amortization		12,778			11,149		-14.6	%		24,569			22,495		-9.2	%
Other operating income		290			227		27.8	%		578			510		13.3	%
Operating income		30,608			12,523		144.4	%		56,057			24,489		128.9	%
Foreign exchange gain / (loss)		45			(532	)	108.5	%		335			(898	)	137.3	%
Interest income		9			9		0.0	%		9			18		-50.0	%
Interest expense		649			818		20.7	%		1,336			1,679		20.4	%
Amortization of debt issuance costs		437			483		9.5	%		847			1,259		32.7	%
Income before provision for income taxes		29,576			10,699		176.4	%		54,218			20,671		162.3	%
Provision for income taxes		11,417			3,606		-216.6	%		20,928			7,187		-191.2	%
Net income	$	18,159		$	7,093		156.0	%	$	33,290		$	13,484		146.9	%
Net income per share:
Basic	$	0.39		$	0.15				$	0.72		$	0.30
Diluted	$	0.38		$	0.15				$	0.70		$	0.29
Weighted-average number of shares outstanding:
Basic	46,250,362			45,917,254					46,172,108			45,700,323
Diluted	47,416,400			47,004,892					47,435,487			46,813,744
Effective tax rate	38.6		%		33.7	%				38.6	%		34.8	%

KapStone Paper and Packaging Corporation

Consolidated Balance Sheets

(In thousands)

	June 30,			December 31,
	2011			2010
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	49,822		$	67,358
Trade accounts receivable, net of allowances		81,402			66,640
Other receivables		3,027			2,780
Inventories		75,484			73,324
Prepaid income taxes		—			348
Prepaid expenses and other current assets		3,426			2,403
Deferred income taxes		6,907			9,394
Total current assets		220,068			222,247
Plant, property and equipment, net		455,970			466,019
Other assets		3,984			3,996
Intangible assets, net		20,865			22,654
Goodwill		54,511			4,811
Total assets	$	755,398		$	719,727
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of long-term debt	$	18,835		$	18,835
Other current borrowings		1,038			—
Accounts payable		52,413			55,504
Accrued expenses		18,857			22,986
Accrued compensation costs		15,941			18,229
Accrued income taxes		2,372			—
Total current liabilities		109,456			115,554
Long-term debt, net of current portion		84,030			92,857
Accrued pension and post-retirement benefits		6,235			6,454
Deferred income taxes		29,833			17,917
Other liabilities		70,587			68,311
Total other liabilities		190,685			185,539
Stockholders’ equity:
Common stock $.0001 par value		5			5
Additional paid-in capital		227,974			224,844
Retained earnings		227,377			194,087
Accumulated other comprehensive loss		(99	)		(302	)
Total stockholders’ equity		455,257			418,634
Total liabilities and stockholders’ equity	$	755,398		$	719,727

KapStone Paper and Packaging Corporation

Consolidated Statements of Cash Flows

(In thousands)

(unaudited)

	Quarter Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Operating activities:
Net income	$	18,159		$	7,093		$	33,290		$	13,484
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	12,778			11,149			24,569			22,495
Stock-based compensation expense	763			1,520			2,521			2,157
Excess tax benefits from stock-based compensation	(692		)	(360		)	(758		)	(388		)
Amortization of debt issuance costs	438			483			848			1,259
Loss on disposal of fixed assets	56			307			182			460
Deferred income taxes	7,156			3,756			14,291			6,655
Changes in operating assets and liabilities	1,980			11,053			(21,851		)	11,874
Net cash provided by operating activities	$	40,638		$	35,001		$	53,092		$	57,996
Investing activities:
KPB acquisition earn-out payment	$	—		$	—		$	(49,700	)	$	—
CKD acquisition	—			—			—			638
Capital expenditures	(8,236		)	(8,256		)	(12,914		)	(15,504		)
Net cash used in investing activities	$	(8,236	)	$	(8,256	)	$	(62,614	)	$	(14,866	)
Financing activities:
Proceeds from revolving credit facility	$	—		$	24,900		$	7,600		$	76,700
Repayments on revolving credit facility	—			(29,400		)	(7,600		)	(84,100		)
Repayments of long-term debt	(4,709		)	(3,845		)	(9,418		)	(17,986		)
Proceeds from other current borrowings	—			—			2,273			2,564
Repayments on other current borrowings	(618		)	(427		)	(1,235		)	(1,279		)
Loan amendment costs	—			—			(244		)	—
Payment of withholding taxes on vested restricted stock awards	(866		)	(624		)	(866		)	(624		)
Proceeds from exercises of stock options	443			217			621			544
Excess tax benefits from stock-based compensation	692			360			758			388
Proceeds from issuance of shares to ESPP	—			—			97			—
Other	—			111			—			111
Net cash used in financing activities	$	(5,058	)	$	(8,708	)	$	(8,014	)	$	(23,682	)
Net increase / (decrease) in cash and cash equivalents	27,344			18,037			(17,536		)	19,448
Cash and cash equivalents-beginning of period	22,478			3,851			67,358			2,440
Cash and cash equivalents-end of period	$	49,822		$	21,888		$	49,822		$	21,888

KapStone Paper and Packaging Corporation

Supplemental Information

GAAP to Non-GAAP Reconciliations

($ in thousands, except share and per share amounts)

(unaudited)

	Quarter Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Net Income (GAAP) to EBITDA (Non-GAAP) to Adjusted EBITDA (Non-GAAP):
Net income (GAAP)	$	18,159		$	7,093		$	33,290		$	13,484
Interest income	(9		)	(9		)	(9		)	(18		)
Interest expense	649			818			1,336			1,679
Amortization of debt issuance costs	437			483			847			1,259
Provision for income taxes	11,417			3,606			20,928			7,187
Depreciation and amortization	12,778			11,149			24,569			22,495
EBITDA (Non-GAAP)	$	43,431		$	23,140		$	80,961		$	46,086
Alternative fuel mixture tax credits	—			(40		)	—			(22,195		)
Stock-based compensation expense	763			1,520			2,521			2,157
Adjusted EBITDA (Non-GAAP)	$	44,194		$	24,620		$	83,482		$	26,048
Net Income (GAAP) to Adjusted Net Income (Non-GAAP):
Net income (GAAP)	$	18,159		$	7,093		$	33,290		$	13,484
Alternative fuel mixture tax credits	—			(27		)	—			(14,478		)
Stock-based compensation expense	468			1,008			1,548			1,407
Adjusted Net Income (Non-GAAP)	$	18,627		$	8,074		$	34,838		$	413
Basic EPS (GAAP) to Adjusted Basic EPS (Non-GAAP):
Basic EPS (GAAP)	$	0.39		$	0.15		$	0.72		$	0.30
Alternative fuel mixture tax credits	—			—			—			(0.32		)
Stock-based compensation expense	0.01			0.02			0.03			0.03
Adjusted Basic EPS (Non-GAAP)	$	0.40		$	0.17		$	0.75		$	0.01
Diluted EPS (GAAP) to Adjusted Diluted EPS (Non-GAAP):
Diluted earnings per share (GAAP)	$	0.38		$	0.15		$	0.70		$	0.29
Alternative fuel mixture tax credits	—			—			—			(0.31		)
Stock-based compensation expense	0.01			0.02			0.03			0.03
Adjusted Diluted EPS (Non-GAAP)	$	0.39		$	0.17		$	0.73		$	0.01

EX-99.2

Exhibit 99.2

Second Quarter 2011 Financial Highlights Roger W. Stone Chairman and Chief Executive Officer Andrea K. Tarbox Vice President and Chief Financial Officer August 3, 2011

Forward Looking Statements The information in this presentation and statements made during this presentation may contain certain forward-looking statements within the meaning of federal securities laws. These statements reflect management’s expectations regarding future events and operating performance. These forward-looking statements involve a number of risks and uncertainties. A list of the factors that could cause actual results to differ materially from those expressed in, or underlying, any forward-looking statements can be found in the Company’s filings with the Securities and Exchange Commission, such as its annual and quarterly reports. The Company disclaims any obligation to revise or update such statements to reflect the occurrence of events after the date of this presentation. This presentation refers to non-U.S. GAAP financial information. For a reconciliation to U.S. GAAP financial measures, please refer to the appendix. Forward-Looking Statements Non-GAAP Financial Measures Risk Factors 2

3 Revenue per Ton Reduced Costs of Sales per Ton Record Adj. EBITDA Margin and Adj. EBITDA Adj. EBITDA Adj. EBITDA Margin -----See appendix for reconciliations----- $ in Millions Net Sales Record Net Sales and Revenue per Ton $ in Millions Record Sales and Lower Costs Deliver Record Adj. EBITDA Cost of Sales per Ton

Second Quarter Financial Results *Adjusted to exclude alternative fuel mixture tax credit (2010) and non-cash stock compensation (2010 and 2011) **Pre-tax non-cash stock expense for Q2 2011 is $1 million lower than Q2 2010 due to change in timing of the annual grants from Q2 to Q1. -----See appendix for reconciliations----- 4 Second Quarter ($ in millions, except per share data) 2010 2011 Increase Increase Net Sales $ 199 $ 215 $ 16 8% EBITDA $ 23 $ 43 $ 20 87% Adj. EBITDA* $ 25 $ 44 $ 19 76% Income before tax Adj. Net Income* Diluted EPS Adj. Diluted EPS* $ 11 $ 30 $ 19 173% $ 12 $ 30 $ 18 150% $ 7 $ 19 $ 11 157% $ 8 $ 19 $ 11 138% $ 0.17 $ 0.39 $ 0.22 129%

Net Sales Q2 2011 Versus Q2 2010 Q2 2011 net sales up $16 million, or 8%, to $215 million Higher prices - $16 million Up $48 per ton since Q2 2010 Higher volume - $2 million Increased sales by 3,400 tons due to higher production rates Favorable FX impact - $2 million Partially offset by less favorable product mix - $2 million Higher Average Prices, Volume Gains, Less Favorable Product Mix 5 Average Revenue Per Ton Unit Sales by Product Line

Adjusted EBITDA* Q2 2011 Versus Q2 2010 *See appendix for reconciliation of adjusted EBITDA to net income Record adjusted EBITDA of $44 million for Q2 2011 improved $19 million over Q2 2010 Improved pricing on all products Productivity gains Set average daily production record during Q2 2011 of 3,600 tons Produced 327,800 tons in Q2 2011 with operating rates over 100% Decreased cost per ton sold by $15 since Q2 2010 Favorable FX impact Partially offset by inflation on freight and chemicals and less favorable product mix Adjusted EBITDA margin for Q2 2011 was a record 20.6% Price and Productivity Gains Drive 76% Improvement in Adjusted EBITDA* 6 $25 $16 $5 $2 $1 $1 $1 $3 $44 $ in Millions

Sequential Quarter Comparison -----See appendix for reconciliations----- *Pre-tax non-cash stock expense for Q2 2011 is $1 million lower than Q1 2011 due to timing of 2011 annual award. 7 ($ in Millions, except per share data) Q1 2011 Q2 2011 Increase Increase Net Sales EBIDA Adj. EBITDA Income before Tax Adj. Income before Tax Net Income Adj. Net Income Diluted EPS Adj. Diluted EPS $ 207 $ 215 $ 8 4% $ 38 $ 43 $ 5 13% $ 25 $ 30 $ 4 15% $ 15 $ 18 $ 3 20% $ 16 $ 19 $ $ 19% $ 0.32 $ 0.38 $ 0.06 19% $ 0.34 $ 0.39 $ 0.05 $15%

Net Sales Q2 2011 Versus Q1 2011 Q2 2011 net sales up $8 million, or 4%, to $215 million Higher volume - $3 million Increased sales by 5,700 tons due to higher production rates and 1 extra calendar day Improved product mix - $2 million Increased DuraSorb® Higher prices - $2 million Up $15 per ton since Q1 2011 Volume Gains, Improved Mix, Higher Average Prices, and Favorable FX 8 Tons Sold (in thousands) Unit Sales by Product Line

Adjusted EBITDA* Q2 2011 Versus Q1 2011 *See appendix for reconciliation of adjusted EBITDA to net income Adjusted EBITDA* Increases to All-Time Record $44 Million Adjusted EBITDA increased $5 million in Q2 2011 to a record $44 million Productivity gains led to record daily production 1 extra production day Higher prices for all products Improved mix with higher DuraSorb® sales Volume gains Adjusted EBITDA was negatively impacted by $2 million in higher maintenance costs 9 $1 $39 $3 $2 $2 $2 $1 $44 1Q 11 Productivity Price Mix Volume Maintenance Other 2Q 11 $ in Millions

10 Capex for 2011 estimated to be $41 million; approximately $25 - $30 million is maintenance related Remainder of Capex spending for strategic or cost reduction projects Net debt decreased $33 million to $57 million at June 30, 2011 Delivers Robust Free Cash Flow Record Adjusted Free Cash Flow was $35 Million for 2Q 2011, or $0.74 Per Share *See appendix for reconciliation of adjusted free cash flow to net income

Income tax provision for Q2 2011 was $11.4 million Based on a full year estimated rate of 38.6% versus 33.7% a year ago. A lower expected benefit from the domestic manufacturing deduction 2010 rate included a benefit related to a refundable tax credit from the inorganic content of black liquor Cash tax rate expected to be less than 2% for 2011 June 30, 2011 balance sheet includes $68 million accrued for taxes and interest on AFTC KS has been advised and doesn’t believe AFTC is taxable as it is similar to an excise tax refund IRS audit of 2009 tax year is expected to be completed in Q3 2011 Tax Notes 11

Summary of Key Assumptions for Q3 2011 Extra day of production (92 days vs. 91 days in Q2) Announced price increases: $50 per ton for kraft paper effective April 15, fully realized in Q3 $40 per ton for Kraftpak® effective May 1, fully realized in Q3 Maintenance expense for Q3 2011 is scheduled to be approximately $4 million higher than Q2 2011 Wood costs should decline YOY, but are expected to be partially offset by rising fuel oil costs Effective tax rate expected to remain same No federal cash taxes due 12

APPENDIX

14 Supplemental Information 2011 2010 2011 2010 Net Income (GAAP) to EBITDA (Non-GAAP) to Adjusted EBITDA (Non-GAAP): Net income (GAAP) 18,159 $ 7,093 $ 33,290 $ 13,484 $ Interest income (9) (9) (9) (18) Interest expense 649 818 1,336 1,679 Amortization of debt issuance costs 437 483 847 1,259 Provision for income taxes 11,417 3,606 20,928 7,187 Depreciation and amortization 12,778 11,149 24,569 22,495 EBITDA (Non-GAAP) 43,431 $ 23,140 $ 80,961 $ 46,086 $ Alternative fuel mixture tax credits – (40) – (22,195) Stock-based compensation expense 763 1,520 2,521 2,157 Adjusted EBITDA (Non-GAAP) 44,194 $ 24,620 $ 83,482 $ 26,048 $ Net Income (GAAP) to Adjusted Net Income (Non-GAAP): Net income (GAAP) 18,159 $ 7,093 $ 33,290 $ 13,484 $ Alternative fuel mixture tax credits – (27) – (14,478) Stock-based compensation expense 468 1,008 1,548 1,407 Adjusted Net Income (Non-GAAP) 18,627 $ 8,074 $ 34,838 $ 413 $ Six Months Ended June 30, GAAP to Non-GAAP Reconciliations ($ in thousands, except share and per share amounts) (unaudited) Quarter Ended June 30,

15 Supplemental Information 2011 2010 2011 2010 Basic EPS (GAAP) to Adjusted Basic EPS (Non-GAAP): Basic EPS (GAAP) 0.39 $ 0.15 $ 0.72 $ 0.30 $ Alternative fuel mixture tax credits – - – ( 0.32) Stock-based compensation expense 0.01 0.02 0.03 0.03 Adjusted Basic EPS (Non-GAAP) 0.40 $ 0.17 $ 0.75 $ 0.01 $ Diluted EPS (GAAP) to Adjusted Diluted EPS (Non-GAAP): Diluted earnings per share (GAAP) 0.38 $ 0.15 $ 0.70 $ 0.29 $ Alternative fuel mixture tax credits – - – ( 0.31) Stock-based compensation expense 0.01 0.02 0.03 0.03 Adjusted Diluted EPS (Non-GAAP) 0.39 $ 0.17 $ 0.73 $ 0.01 $ Six Months Ended June 30, GAAP to Non-GAAP Reconciliations ($ in thousands, except share and per share amounts) (unaudited) Quarter Ended June 30,

16 Supplemental Information Calculation of Net Debt 6/30/2011 3/31/2011 12/31/2010 9/30/2010 6/30/2010 Current portion of LT debt 18,835 $ 18,835 $ 18,835 $ 18,835 $ 19,229 $ Other borrowings 1,038 1,656 - 644 1,285 Borrowings on revolving line of credit - - - - - Long term debt, net 84,030 88,331 92,857 97,157 103,570 Unamortized debt issuance costs 2,612 3,020 3,203 3,612 4,112 106,515 111,842 114,895 120,248 128,196 Less cash and cash equivalents (49,822) (22,478) (67,358) (41,617) (21,888) Total Net Debt (non GAAP) 56,693 $ 89,364 $ 47,537 $ 78,631 $ 106,308 $ Decrease (increase) during the quarter 32,671 $ (41,827)* $ 31,094 $ 27,677 $ 26,809 $ Debt to Equity ratio calculation Net debt 56,693 $ 89,364 $ 47,537 $ Equity 455,257 $ 435,967 $ 418,634 $ Ratio 12.5% 20.5% 11.4% Quarter Ended Net Debt and Debt to Equity Ratio (unaudited) (In thousands) * Includes $50 million earn-out payment to IP

17 Supplemental Information 2011 2011 2010 2010 2010 30-Jun 31-Mar 31-Dec 30-Sep 30-Jun EBITDA (non GAAP) 43,431 $ 37,530 $ 29,156 $ 38,040 $ 23,140 $ Plus non-cash stock compensation expense 763 1,758 759 676 1,520 Less alternative fuel tax credit - - - - (40) Adjusted EBITDA (non GAAP) 44,194 $ 39,288 $ 29,915 $ 38,716 $ 24,620 $ Less capital expenditures (8,570) (4,678) (14,489) (8,325) (8,256) Cash income taxes received / (paid) (50) (198) (57) 40 13,098 Less cash interest paid (648) (690) (728) (811) (942) Adjusted free cash flow (non GAAP) 34,926 $ 33,722 $ 14,641 $ 29,620 $ 28,520 $ Average diluted shares outstanding 47,416,400 47,454,574 47,238,832 47,049,933 47,004,892 Adjusted free cash flow per share 0.74 $ 0.71 $ 0.31 $ 0.63 $ 0.61 $ Free Cash Flow and Adjusted Free Cash Flow (In thousands) (unaudited)