10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-K

(Mark One)

ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2012
	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)	(IRS Employer Identification No.)
601 W. Riverside Avenue, Suite 1100
Spokane, Washington	99201
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (509) 344-5900

Securities registered pursuant to Section 12(b) of the Act:

TITLE OF EACH CLASS	NAME OF EACH EXCHANGE ON WHICH REGISTERED
Common Stock ($0.0001 par value per share)	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    ý Yes    ¨ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    ¨ Yes    ý No

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.    ý Yes    ¨ 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 (§ 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).    ý Yes    ¨ No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    ý

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	x	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 Act).    ¨ Yes    ý No

As of June 30, 2012 (the last business day of the registrant’s most recently completed second quarter), the aggregate market value of the common stock held by non-affiliates of the registrant was $769.9 million. Shares of common stock beneficially held by each officer and director and by each person who owns 5% or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

As of February 11, 2013, 22,987,213 shares of the registrant’s common stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive proxy statement to be filed on or about March 25, 2013, with the Securities and Exchange Commission in connection with the registrant’s 2013 annual meeting of stockholders are incorporated by reference in Part III hereof.

CLEARWATER PAPER CORPORATION

Index to 2012 Form 10-K

		PAGE NUMBER
	PART I
ITEM 1.	Business	2-8
ITEM 1A.	Risk Factors	9-16
ITEM 1B.	Unresolved Staff Comments	16
ITEM 2.	Properties	17
ITEM 3.	Legal Proceedings	18
ITEM 4.	Mine Safety Disclosures	18
	PART II
ITEM 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	19-20
ITEM 6.	Selected Financial Data	20
ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21-37
ITEM 7A.	Quantitative and Qualitative Disclosures About Market Risk	38
ITEM 8.	Financial Statements and Supplementary Data	39-79
ITEM 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	80
ITEM 9A.	Controls and Procedures	80
ITEM 9B.	Other Information	80
	PART III
ITEM 10.	Directors, Executive Officers and Corporate Governance	81
ITEM 11.	Executive Compensation	81
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	82
ITEM 13.	Certain Relationships and Related Transactions, and Director Independence	82
ITEM 14.	Principal Accounting Fees and Services	82
	PART IV
ITEM 15.	Exhibits, Financial Statement Schedules	83
SIGNATURES		84
EXHIBIT INDEX		85-89

Part I

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Our disclosure and analysis in this report and in our Annual Report to Shareholders contain, in addition to historical information, certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our long-term strategy for the company and our operating divisions, the benefits of a broad manufacturing footprint and the location of our manufacturing facilities, increased customer and market opportunities for our consumer products business, cost savings programs, net cost savings from synergies associated with the Cellu Tissue Holdings, Inc. acquisition, cost reductions resulting from our new wood chipping facility, the acceptance of private label products, pulp costs, our use of internally produced pulp, the cost and timing to complete new facilities, tax rates, scheduled downtime at our facilities, future growth opportunities, future revenues, cash flows, capital expenditures, energy costs, chemical costs, transportation costs, wood fiber supply and costs, depreciation and amortization expense, manufacturing output, liquidity, debt service obligations, the payment of dividends, benefit plan funding levels, the effect of recent accounting standards on our financial condition and results of operations and the tax treatment of the alternative fuels and cellulosic biofuels tax credits. Words such as “anticipate,” “expect,” “intend,” “plan,” “target,” “project,” “believe,” “schedule,” “estimate,” “may,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are based on management’s current expectations, estimates, assumptions and projections that are subject to change. Our actual results of operations may differ materially from those expressed or implied by the forward-looking statements contained in this report. Important factors that could cause or contribute to such differences in operating results include those risks discussed in Item 1A of this report, as well as the following:

▪ difficulties with the optimization and realization of the benefits expected from our new through-air-dried paper machine and converting lines in Shelby, North Carolina;

▪ the loss of business from a significant customer;

▪ increased dependence on wood pulp;

▪ changes in the cost and availability of wood fiber and wood pulp;

▪ changes in costs for and availability of packaging supplies, chemicals, energy and maintenance and repairs;

▪ changes in transportation costs and disruptions in transportation services;

▪ competitive pricing pressures for our products, including as a result of increased capacity as additional manufacturing facilities are operated by our competitors;

▪ changes in customer product preferences and competitors' product offerings;

▪ our qualification to retain, or ability to utilize, tax credits associated with alternative fuels or cellulosic biofuels and the tax treatment associated with receipt of such credits;

▪ environmental liabilities or expenditures;

▪ manufacturing or operating disruptions, including equipment malfunction and damage to our manufacturing facilities caused by fire or weather-related events and IT system failures;

▪ changes in the U.S. and international economies and in general economic conditions in the regions and industries in which we operate;

▪ changes in expenses and required contributions associated with our pension plans;

▪ cyclical industry conditions;

▪ reliance on a limited number of third-party suppliers for raw materials;

▪ labor disruptions;

▪ inability to successfully implement our expansion strategies;

▪ inability to fund our debt obligations;

▪ restrictions on our business from debt covenants and terms; and

▪ changes in laws, regulations or industry standards affecting our business.

Forward-looking statements contained in this report present management’s views only as of the date of this report. Except as required under applicable law, we do not intend to issue updates concerning any future revisions of management’s view to reflect events or circumstances occurring after the date of this report. You are advised, however, to consult any further disclosures we make on related subjects in our quarterly reports on Form 10-Q and current reports on Form 8-K filed with the Securities and Exchange Commission, or SEC.

1

ITEM 1.

Business

GENERAL

Clearwater Paper Corporation is a leading North American producer of private label tissue and paperboard products. We manufacture quality consumer tissue, away-from-home tissue, or AFH, parent rolls (non-converted tissue product), machine-glazed tissue, bleached paperboard and pulp at 15 manufacturing locations in the U.S. and Canada. Our private label consumer tissue products - facial and bath tissue, paper towels and napkins - are used primarily at-home and are principally sold to major retailers and wholesale distributors, which include grocery, drug, mass-merchant and discount stores. Our paperboard is sold primarily in the high-end segment of the packaging industry, which demands high-quality construction and print surfaces for graphics. Our products are made primarily from wood fiber pulp.

History

Our company was owned directly or indirectly by Potlatch Corporation, or Potlatch, until our spin-off on December 16, 2008 (spin-off). In the spin-off, Potlatch distributed 100% of the issued and outstanding shares of our common stock to the holders of Potlatch common stock.

Unless the context otherwise requires or otherwise indicates, references in this report to “Clearwater Paper Corporation,” “we,” “our,” “the company” and “us” refer:

▪ for all periods prior to the spin-off, to the consumer products and pulp and paperboard businesses separated from Potlatch in the spin-off; and

▪ for all periods following the spin-off, to Clearwater Paper Corporation and its subsidiaries.

On December 27, 2010, we acquired Cellu Tissue Holdings, Inc., or Cellu Tissue, a tissue manufacturing and converting company whose customers included consumer retailers and AFH distributors of tissue products, vertically integrated manufacturers and third-party converters serving the tissue, foam and machine-glazed tissue sectors. Cellu Tissue sold product as finished cases and parent rolls.

Company Strengths

Leading private label tissue manufacturer with a broad footprint in North America. Our consumer products business is a premier private label tissue manufacturer with production facilities strategically located throughout North America. We have expanded our manufacturing footprint through significant capital investments and the acquisition of Cellu Tissue, from which we realized $31.0 million in net cost saving synergies for the year ended December 31, 2012. We recently completed construction of our through-air-dried, or TAD, paper machine in Shelby, North Carolina, as well as upgrades to our Las Vegas, Nevada TAD paper machine. Additionally, we have a TAD tissue manufacturing facility in Ontario, Canada and converting operations across the U.S. As of December 31, 2012, we believe we were the sixth largest manufacturer in the North American tissue market, based on tissue parent roll capacity. Our broad manufacturing footprint allows us to better and more cost effectively service a diverse customer base, including major grocery store chains and value retailers across the entire U.S.

High quality brand equivalent tissue and other products to meet retailers' private label strategies.    Our consumer products business produces high-quality products that match the quality of the leading national brands. We focus on high value tissue products across a wide variety of categories, retail channels and geographies. We also manufacture a broad range of cost-competitive consumer products, including recycled tissue, tissue parent rolls and machine-glazed paper. In addition to our conventional paper-making capabilities, we produce TAD tissue that we convert into national brand equivalent, ultra-quality paper towels and bath tissue. Our recently expanded TAD tissue offerings are expected to create new opportunities to increase our private label consumer tissue business around our broad manufacturing footprint by allowing us to supply these key products to customers across the U.S.

High quality premium bleached paperboard products. Our pulp and paperboard business produces high-end paperboard products with smooth printing surfaces, superior brightness and cleanliness, excellent strength and forming ability and diverse ranges of thickness. The high quality of our paperboard allows buyers to use our products for packaging where branding and quality is important, such as pharmaceutical packaging, greeting cards and point of purchase displays.

Complementary, long-standing customer relationships.Our consumer products business supplies private label tissue products to several of the largest national grocery chains. Since our December 2010 acquisition of Cellu Tissue, our top 10 consumer products customers on average have accounted for approximately 55% of our total consumer products net sales. The average tenure of our top 10 tissue customers in 2012 was approximately 20 years. In addition to long-standing relationships with our top 10 tissue customers, we have a diverse base of over 200 customers across a broad geographic area. We also have long-standing customer

2

relationships with our paperboard customers. Our top 10 paperboard customers accounted for approximately 40% of our total paperboard net sales in each of the last four years. The average tenure of our top 10 paperboard customers in 2012 was approximately 30 years.

Strategically positioned pulp and paperboard facilities. Our pulp and paperboard mill in Lewiston, Idaho is one of only two solid bleach sulfate, or SBS, paperboard mills, and the only coated SBS paperboard mill, in the Western U.S. This facility's geographic location reduces transportation costs to Asia and allows us to compete on a cost-advantaged basis relative to East Coast competitors. Our Cypress Bend, Arkansas mill is centrally located, which reduces freight costs to the Midwestern and Eastern U.S. and complements the Lewiston mill in shipping to customers nationwide.

Strategy

Our long-term strategy is to grow the size and scope of our consumer products business, optimize the profitability of our paperboard business and continue to build a high performance culture. In the near-term, our focus is on maximizing the strategic and financial benefits from the integration of our existing facilities and our recently constructed TAD paper machine and converting lines in North Carolina. We also plan to optimize the operating efficiencies and cost effectiveness of our premium bleached paperboard production.

▪ Grow Our Consumer Products Business.Our long-term strategy has been to grow within the private label tissue market. As part of this strategy, we expanded our tissue manufacturing footprint through the acquisition of Cellu Tissue in 2010 and the construction of additional converting and papermaking capacity. Most notably, our North Carolina facility has been the cornerstone of our strategy to expand our tissue operations in the Eastern U.S. With our broad manufacturing footprint now in place, we plan to continue to capitalize on our position as one of the largest premium private label tissue producers in North America by taking advantage of the attractive tissue market and the increasing adoption of store brand products by retailers and their customers. We also plan to continue to optimize the strategic and financial benefits of our broad-based manufacturing operations. This operational integration allows us to better serve existing private label grocery customers by providing them the full spectrum of consumer tissue products across the U.S., and provides us with the capability to continue to expand further into private label distribution channels in addition to grocery, including drug stores, mass merchants and discount stores.

▪ Optimize Our Pulp and Paperboard Business.We intend to continue improving our operational efficiency, and product quality and mix of customers to which we sell our paperboard products, as well as controlling our raw material and energy costs. We have implemented cost saving programs that are based primarily on lean manufacturing and cost optimization initiatives. Our cost saving programs include the implementation of an 18 month (versus the previous 12 month) major maintenance cycle at our Lewiston facility, the strengthening of our wood fiber supply chain through the acquisition of a wood chipping facility near Lewiston and a long-term wood fiber supply contract entered into in connection with the sale of our lumber mill.

ORGANIZATION

Our businesses are organized into two operating segments: Consumer Products and Pulp and Paperboard. Additional information relating to the amounts of net sales, operating income, depreciation and amortization, identifiable assets and capital expenditures attributable to each of our operating segments for 2010-2012, as well as geographic information regarding our net sales, is set forth in Note 17 to our consolidated financial statements included in under Part II, Item 8 of this report.

Consumer Products Segment

Our Consumer Products segment manufactures and sells a complete line of at-home tissue products and also manufactures and sells AFH products. Our integrated manufacturing and converting operations and geographic footprint enable us to deliver a broad range of cost-competitive products with brand equivalent quality to our consumer products customers. In 2012, our Consumer Products segment had net sales of $1.1 billion. A listing of our Consumer Products segment facilities is included under Part I, Item 2 of this report.

Tissue Industry Overview

Consumer Tissue Products. The U.S. tissue market can be divided into two market segments: the at-home or consumer retail purchase segment, which represents approximately two-thirds of U.S. tissue sales; and the AFH segment, which represents the remaining one-third of U.S. tissue market sales and includes locations such as airports, restaurants, hotels and office buildings.

The U.S. at-home tissue segment consists of bath, paper towels, facial and napkin products categories. Each category is further distinguished according to quality segments: ultra, premium, value and economy. As a result of process improvements and consumer preferences, the majority of at-home tissue sold in the U.S. is ultra and premium quality.

3

At-home tissue producers are comprised of companies that manufacture branded tissue products, private label tissue products, or both. Branded tissue suppliers manufacture, market and sell tissue products under their own nationally branded labels. Private label tissue producers sell tissue products to retailers to sell as their store brand.

In the U.S., at-home tissue is primarily sold through grocery stores, mass merchants, warehouse clubs, drug stores and discount dollar stores. Tissue has historically been one of the strongest segments of the paper and forest products industry due to its steady demand growth and the absence of severe supply imbalances that occur in a number of other paper segments. In addition to economic and demographic drivers, tissue demand is affected by product innovations and shifts in distribution channels.

Machine-Glazed Tissue. Machine-glazed tissue has a glazed coating and, in some cases, other moisture and grease-resistant coatings. Machine-glazed tissue is converted into products such as fast food and commercial food wrappers, gum wrappers, coffee filters, cigarette pack liner paper, wax paper and butter wraps.

Our Consumer Products Business

In bathroom tissue, the majority of our sales are high quality two-ply ultra and premium products, including TAD tissue products. In paper towels, we produce and sell ultra quality TAD towels as well as premium and value towels. In the facial category, we sell ultra-lotion three-ply and a complete line of two-ply premium products as well as value facial tissue. In napkins, we manufacture ultra two- and three-ply dinner napkins, as well as premium and value one-ply luncheon napkins. Recycled fiber value grade products are also available to customers who wish to further diversify their product portfolio. We compete primarily in the at-home portion of the U.S. tissue market, which made up approximately 69% of our Consumer Products segment sales in 2012.

We manufacture and sell a line of AFH products to customers with commercial and industrial tissue needs. Products include conventional one- and two-ply bath tissue, two-ply paper towels, hard wound towels and dispenser napkins.

Tissue parent rolls that we manufacture but do not convert are sold to third-party converters or brokers, after being manufactured to their requested specifications, for conversion into various end products, including at-home tissue products and absorbent products used to produce liners for diapers, feminine care products, surgical waddings and other medical and sanitary disposable products.

We also manufacture and sell machine-glazed tissue products, including wax paper products for retail food wrappers and machine-glazed tissue parent rolls for third-party converters.

Our consumer products are manufactured on 21 paper machines in our facilities located throughout the U.S. and in Ontario, Canada. Parent rolls from these paper machines are then converted and packaged at our converting facilities located across the U.S. Three of our paper machines, located in Nevada, Ontario, and our recently completed paper machine in North Carolina, produce TAD tissue that we convert into national brand comparable, ultra quality towels and/or bath tissue.

In 2012, we sold approximately 65% of the total private label tissue products sold in grocery stores in the U.S. In the 11 western states, we sold approximately 96% of the total private label tissue products sold in grocery stores in 2012.

We believe that we are the only U.S. consumer tissue manufacturer that solely produces a full line of quality private label tissue products for large retail trade channels. Most U.S. tissue producers manufacture only branded products, or both branded and private label products, or in the case of certain smaller or midsize manufacturers, only produce a limited range of tissue products or quality segments. Branded producers generally manufacture their private label products at a quality grade or two below their branded products so as not to impair sales of the branded products. Because we do not produce and market branded tissue products, we believe we are able to offer products that match the quality of leading national brands, but generally at lower prices. We are committed to maintaining a high level of quality for our products that matches the quality of the leading national brands, and we utilize independent companies to routinely test our product quality.

We sell private label tissue products through our own sales force based on product quality, customer service and price. We deliver customer-focused business solutions by assisting in managing product assortment, category management, and pricing and promotion optimization.

Pulp and Paperboard Segment

Our Pulp and Paperboard segment manufactures and markets bleached paperboard for the high-end segment of the packaging industry and is a leading producer of SBS paperboard. This segment also produces hardwood and softwood pulp, which is primarily used as the basis for our paperboard products, and slush pulp, which it supplies to our Consumer Products segment. In 2012, our Pulp and Paperboard segment had net sales of $739.7 million. A listing of our pulp and paperboard facilities is included under Part I, Item 2 of this report.

Pulp and Paperboard Industry Overview

SBS paperboard is a premium paperboard grade that is most frequently used to produce folding cartons, liquid packaging, cups and plates as well as commercial printing items. SBS paperboard is used to make these products because it is manufactured using virgin fiber produced in a kraft bleaching process, which results in superior cleanliness, brightness and consistency. SBS paperboard

4

is often manufactured with a clay coating to provide superior surface printing qualities. SBS paperboard can also be extrusion coated with a plastic film to provide a moisture barrier for some uses.

In general, the process of making paperboard begins by chemically cooking wood fibers to make pulp. The pulp is bleached to provide a white, bright pulp, which is formed into paperboard. Bleached pulp that is to be used as market pulp is dried and baled on a pulp drying machine, bypassing the paperboard machines. The various grades of paperboard are wound into rolls for shipment to customers for converting to final end uses. Liquid packaging and cup stock grades are often coated with polyethylene, a plastic coating, in a separate operation to create a resistant and durable liquid barrier.

Folding Carton Segment. Folding carton is the largest portion of the SBS category of the U.S. paperboard industry at approximately 41% in 2012. Within the folding carton segment there are varying qualities of SBS paperboard. The high end of the folding carton category in general requires a premium print surface and includes uses such as packaging for pharmaceuticals, cosmetics and other premium retail goods. SBS paperboard is also used in the packaging of frozen foods, beverages and baked goods.

Liquid Packaging and Cup Segment. SBS liquid packaging paperboard is primarily used in the U.S. for the packaging of juices. In Japan and other Asian countries, SBS liquid packaging paperboard is primarily used for the packaging of milk and other liquid items. The cup segment of the market consists primarily of hot and cold drink cups and food packaging. The hot and cold cups are primarily used to serve beverages in quick-service restaurants, while round food containers are often used for packaging premium ice-cream and dry food products.

Commercial Printing Segment. Commercial printing applications use bleached bristols, which are heavyweight paper grades, to produce postcards, signage and sales literature. Bristols can be clay coated on one side or both sides for applications such as brochures, presentation folders and paperback book covers. The customers in this segment are accustomed to high-quality paper grades, which possess superior printability and brightness compared to most paperboard packaging grades. Suppliers to this segment must be able to deliver small volumes, often within 24 hours.

Market Pulp. The majority of the pulp manufactured worldwide is integrated with paper and paperboard production, usually at the same mill. In those cases where a paper mill does not produce its own pulp, it must purchase it on the open market. Market pulp is defined as pulp produced for sale to these customers and it excludes tonnage consumed by the producing mill or shipped to any of its affiliated mills within the same company.

Our Pulp and Paperboard Business

Our Pulp and Paperboard segment operates facilities in Idaho, which has two paperboard machines, and Arkansas, which has one paperboard machine. As of December 31, 2012, we were one of the five largest producers of bleached paperboard in North America with approximately 11% of the available production capacity.

Our overall pulp and paperboard production consists primarily of folding carton, liquid packaging, cup, plate, commercial printing grades and softwood pulp.

Folding carton board used in pharmaceuticals, cosmetics and other premium packaging, such as those that incorporate foil and holographic lamination, accounts for the largest portion of our total paperboard sales. We focus on high-end folding carton applications where the heightened focus on product quality provides for differentiation among suppliers, resulting in margins that are more attractive than less critical packaging applications.

Our liquid packaging paperboard is known for its cleanliness and printability, and is engineered for long-lived performance due to its three-ply, softwood construction. Our reputation for producing liquid packaging meeting the most demanding standards for paperboard quality and cleanliness has resulted in meaningful sales in Japan, where consumers have a particular tendency to associate blemish-free, vibrant packaging with the cleanliness, quality and freshness of the liquids contained inside.

We also sell cup stock and plate stock grades for use in food service products. A majority of our sales in this area consist of premium clay coated cup stock grades used for high-end food packaging, such as premium ice cream.

We have achieved growth in the commercial printing market through investing in print surface quality improvements at both of our paperboard mills and by focusing sales and marketing efforts on distribution partners, printers and paper merchants.

We do not produce converted paperboard end-products, so we are not simultaneously a supplier of and a competitor to our customers. Of the five largest SBS paperboard producers in the U.S., we are the only producer that does not also convert SBS paperboard into end products. We believe our position as a non-integrated supplier has resulted in a diverse group of loyal customers because when there is decreased market supply of paperboard, we do not divert our production to internal uses.

At our Idaho facility we produce bleached softwood pulp primarily for internal use. As a result of the acquisition of Cellu Tissue, which relied entirely on purchased pulp, we significantly decreased external sales of pulp produced by our Pulp and Paperboard segment in 2012 and instead utilized that pulp in our Consumer Products segment. Depending on market factors, we may sell some pulp externally going forward.

5

Our pulp mills are currently capable of producing approximately 856,000 tons of pulp on an annual basis. In 2012, we utilized 77% of our pulp production, or approximately 651,000 tons, to produce approximately 771,000 tons of paperboard. The increase in tonnage from pulp to paperboard production is due to the addition of coatings and other manufacturing processes. We also used 21% of our pulp production, or approximately 174,000 tons, in our Consumer Products segment to produce tissue products. The remaining 2% of our pulp production, or approximately 17,000 tons, was sold externally.

We utilize various methods for the sale and distribution of our paperboard and softwood pulp. The majority of our paperboard is sold to packaging converters domestically through sales offices located throughout the U.S., with a smaller percentage channeled through distribution to commercial printers. The majority of our international paperboard sales are conducted through sales agents and are primarily denominated in U.S. dollars. Our principal methods of competing are product quality, customer service and price.

Until our sale of the Lewiston, Idaho sawmill, in November 2011, our Pulp and Paperboard segment also sold lumber products. These products consisted of appearance grade cedar and dimensional framing lumber products for building products end users. The cedar products included appearance grade boards, siding and trim. The dimensional lumber business included two-inch dimensional framing lumber, industrial timbers and railroad ties. This sawmill also supplied wood fiber to the adjacent pulp and paperboard facility. We have contracted with the purchaser of the sawmill to continue to supply wood fiber to our Lewiston pulp and paperboard manufacturing facilities.

In December 2012, we acquired the assets of a wood chipping facility located in Clarkston, Washington, near our Lewiston, Idaho, facility in an effort to bolster our wood fiber position and obtain short-term and long-term cost savings.

RAW MATERIALS AND INPUT COSTS

For our manufacturing operations, the principal raw material used is wood fiber, which consists of purchased pulp and chips, sawdust and logs. During 2012, our purchased pulp costs were 15.1% of our cost of sales, while chips, sawdust and logs accounted for 10.1%. In 2012, our Consumer Products segment sourced 29% of its total pulp supply from our Pulp and Paperboard segment, with the remainder purchased from external suppliers.

We utilize a significant amount of chemicals in the production of pulp and paper, including caustic, polyethylene, starch, sodium chlorate, latex and specialty process paper chemicals. Many of the chemicals used in our manufacturing processes, particularly in the pulp-making process, are petroleum-based or are impacted by petroleum prices. During 2012, chemical costs accounted for 11.5% of our cost of sales.

Transportation is another significant cost input for our business. Fuel prices impact our transportation costs for delivery of raw materials to our manufacturing facilities and delivery of our finished products to customers. Our total transportation costs were 10.6% of our cost of sales in 2012.

We consume substantial amounts of energy, such as electricity, hog fuel, steam and natural gas. During 2012, energy costs accounted for 6.8% of our cost of sales. We purchase substantial portions of our natural gas and electricity under supply contracts, most of which are between a specific facility and a specific local provider. Under most of these contracts, the providers have agreed to provide us with our requirements for a particular type of energy at a specific facility. Most of these contracts have pricing mechanisms that adjust or set prices based on current market prices. In addition, we have occasionally used firm-price contracts to mitigate price risk for certain of our energy requirements.

Our maintenance and repairs, including major maintenance and repairs, represented 6.1% of our cost of sales for 2012 and are expensed as incurred. We perform routine maintenance on our machines and equipment and periodically replace a variety of parts such as motors, pumps, pipes and electrical parts.

As a significant producer of private label consumer tissue products, we also incur expenses related to packaging supplies used for retail chains, wholesalers and cooperative buying organizations. Our total packaging costs for 2012 were 5.4% of our cost of sales.

We also record depreciation expense associated with our plant and equipment and amortization expense associated with our definite-lived intangible assets. Depreciation and amortization expense was 4.9% of our cost of sales for 2012.

ENVIRONMENTAL

Information regarding environmental matters is included under Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this report, and is incorporated herein by reference.

WEBSITE

Interested parties may access our periodic and current reports filed with the SEC, at no charge, by visiting our website, www.clearwaterpaper.com. In the menu select “Investor Relations,” then select “Financial Information & SEC Filings.” Information on our website is not part of this report.

6

EMPLOYEES

As of December 31, 2012, we had approximately 3,860 employees, of which approximately 2,640 were employed by our Consumer Products segment, approximately 1,090 were employed by our Pulp and Paperboard segment and approximately 130 were corporate administration employees. This workforce consisted of approximately 970 salaried and fixed rate employees and approximately 2,890 hourly employees. As of December 31, 2012, approximately 52% of our workforce was covered under collective bargaining agreements.

Unions represent hourly employees at eight of our manufacturing sites. There were three hourly union labor contracts that expired in 2012, all of which were renegotiated during the year. One union contract has an expiration date in 2013:

CONTRACT EXPIRATION DATE	DIVISION AND LOCATION	UNION	APPROXIMATE NUMBER OF HOURLY EMPLOYEES
June 1, 2013	Consumer Products Division— Neenah, Wisconsin	United Steel Workers (USW)	330

7

EXECUTIVE OFFICERS OF THE REGISTRANT

The following individuals are deemed our “executive officers” under the Securities Exchange Act of 1934 as of December 31, 2012. Executive officers of the company are generally appointed as such at the annual meeting of our board, and each officer holds office until the officer’s successor is duly elected and qualified or until the earlier of the officer’s death, resignation, retirement, removal by the board or as otherwise provided in our bylaws. There are no arrangements or understandings between any of our executive officers and any other persons pursuant to which they were selected as officers. No family relationships exist among any of our executive officers.

Gordon L. Jones (age 63) served as Chief Executive Officer of the company from December 2008 until his retirement on December 31, 2012. Mr. Jones has served as a director since December 2008 and was Chairman of the Board from May 2010 to December 31, 2012. From December 2008 to November 2011, Mr. Jones served as President of the company. From July 2008 to December 2008, Mr. Jones served as a Vice President of Potlatch Corporation, pending completion of the spin-off of Clearwater Paper Corporation. From 2001 to 2010, Mr. Jones served as the President and Managing Member of Jones Investment Group LLC, an investment company. Prior to that, Mr. Jones served from May 1999 to November 2000 as President, Chief Executive Officer, and Director of Blue Ridge Paper Products, Inc., a manufacturer of paperboard and packaging products. From 1983 to 1999, Mr. Jones served in a variety of executive positions with Smurfit-Stone Container Corporation and predecessor companies. Prior to 1983, Mr. Jones served in several management roles at Procter & Gamble.

Linda K. Massman (age 46), who has succeeded Mr. Jones as Chief Executive Officer effective January 1, 2013, served as President and Chief Operating Officer from November 2011 until December 31, 2012. She has served as a director since January 2013. Ms. Massman also served as Chief Financial Officer from December 2008 to April 2012. From May 2011 to November 2011, Ms. Massman served as Senior Vice President, Finance, and as Vice President, Finance from December 2008 to May 2011. From September 2008 to December 2008, Ms. Massman served as a Vice President of Potlatch Corporation, pending completion of the spin-off of Clearwater Paper Corporation. From May 2002 to August 2008, Ms. Massman served as the Group Vice President, Finance and Corporate Planning for SUPERVALU Inc., a grocery retail company. Prior to that, Ms. Massman served from 1999 to 2001 as Vice President, Business Planning and Operations for Viquity Corporation, an enterprise software company.

John D. Hertz (age 46) joined the company in June 2012 as Senior Vice President, and has served as Senior Vice President, Finance and Chief Financial Officer since August 2012. Before joining our company, Mr. Hertz was the Vice President and Chief Financial Officer, of Novellus Systems, Inc., a position he held from June 2010 to June 2012. From October 2007 to June 2010, he served as Novellus' Vice President of Corporate Finance and Principal Accounting Officer and as Vice President and Corporate Controller from June 2007 to October 2007. From 2000 to 2007, Mr. Hertz worked for Intel Corporation where he held a number of positions, including Central Finance Controller of the Digital Enterprise Group, Finance Controller of the Enterprise Platform Services Division and Accounting Policy Controller. Prior to that Mr. Hertz was a Senior Manager with KPMG.

Robert P. DeVleming (age 60) served as Senior Vice President and President of Consumer Products from May 2011 until December 31, 2012, and served as Vice President of Consumer Products from December 2008 to May 2011. Prior to December 2008, he was employed by Potlatch Corporation for 30 years in various positions. Mr. DeVleming served as Vice President, Consumer Products of Potlatch from October 2004 to December 2008. From May 2003 through October 2004, Mr. DeVleming was Vice President, Sales, Consumer Products of Potlatch.

Michael S. Gadd (age 48) has served as Senior Vice President since May 2011 and General Counsel and Corporate Secretary since December 2008. In addition, he served as Vice President from December 2008 to May 2011. From March 2006 to December 2008, Mr. Gadd served as Associate General Counsel of Potlatch Corporation, and served as Corporate Secretary of Potlatch from July 2007 to December 2008. From 2001 to January 2006, Mr. Gadd was an attorney with Perkins Coie, LLP in Portland, Oregon.

Thomas A. Colgrove (age 61), served as Senior Vice President and President of Pulp and Paperboard from May 2011 until December 31, 2012. Effective January 1, 2013, he began serving as Senior Vice President and President of Consumer Products. Mr. Colgrove served as Vice President of Pulp and Paperboard from May 2009 to May 2011. Prior to May 2009, he was employed by Kimberly-Clark Corporation from 1984 to 2009, in various manufacturing management positions. From September 2006 to April 2009, Mr. Colgrove was the Senior Director-North America Product Supply at Kimberly-Clark and was responsible for seven North American tissue facilities. Prior to that, Mr. Colgrove held a series of Plant Manager positions at five facilities across the U.S.

Subsequent to December 31, 2012, Danny G. Johansen (age 62) became the Senior Vice President and President of Pulp and Paperboard effective January 1, 2013. From December 2008 through December 2012, he served as Vice President, Sales and Marketing, for Pulp and Paperboard. Prior to December 2008, Mr. Johansen was employed by Potlatch Corporation for nearly 36 years. From 2002 to December 2008, he served as the Director of Sales, Idaho Pulp and Paperboard division, for Potlatch.

8

ITEM 1A.

Risk Factors

Our business, financial condition, results of operations and liquidity are subject to various risks and uncertainties, including those described below, and as a result, the trading price of our common stock could decline.

The expansion of our TAD tissue offerings may not proceed as anticipated.

In connection with our long-term growth strategy, we recently built a new TAD paper machine and installed four converting lines at our facility in Shelby, North Carolina and upgraded our TAD manufacturing capabilities at our Las Vegas, Nevada facility. As these are recently completed projects, we are still in the process of optimizing the operation of the new and upgraded equipment, the quality of the TAD products being produced at these facilities, the converting and distribution of our TAD and existing tissue products and the sales mix of our new TAD product offerings with existing product lines. We are also working with existing customers as well as new customers to develop marketing and sales programs in connection with the new TAD products. These ongoing efforts entail numerous risks, including potential mechanical and other operational problems in the start-up phase of operations of this complex manufacturing equipment, difficulties in integrating the new TAD products with existing products, difficulties in integrating the new operations and personnel with our other tissue operations and market acceptance of the new TAD products. Any of these risks, if realized, could have a material adverse effect on our business, financial condition, results of operations and liquidity. In addition, such events could also divert management's attention from other business concerns.

Additionally, over the past few years, several new or refurbished TAD paper machines have been completed or announced by our competitors, including private label competitors, that will result in a substantial increase in the supply of TAD tissue in the North American market. This increase in supply of TAD products, as well as the effects of that increased supply in displacing existing conventional tissue product sales, could have a material adverse effect on the price of TAD tissue products and on the market demand for conventional tissue products, which will continue to represent a majority of our total production for the foreseeable future.

The loss of, or a significant reduction in, orders from, or changes in prices in regards to, any of our large customers could adversely affect our operating results and financial condition.

In 2012, our Consumer Products segment derived approximately 32% of its net sales and we derived approximately 19% of our total net sales from three customers. If we lose any of these customers or if the terms of our relationship with them becomes less favorable to us, our net sales would decline, which would harm our business, results of operations and financial condition. We have experienced increased price and promotion competition for our consumer products customers, which can decrease our gross margins and adversely affect our financial condition. Some of our customers have the capability to produce the parent rolls or products themselves that they purchase from us. Our Pulp and Paperboard segment sells its products to a large number of customers, although certain customers have historically purchased a significant amount of our pulp or paperboard products.

We do not have long-term contracts with any of our customers, including our largest customers, that ensure a continuing level of business from them. In addition, our agreements with our customers are not exclusive and generally do not contain minimum volume purchase commitments. Our relationship with our large customers will depend on our ability to continue to meet their needs for quality products and services at competitive prices. If we lose one or more of these customers or if we experience a significant decline in the level of purchases by any of them, we may not be able to quickly replace the lost business volume and our operating results and business could be harmed. In addition, our focus on these large accounts could affect our ability to serve our smaller accounts, particularly when product supply is tight and we are not able to fully satisfy orders for these smaller accounts.

We have increased our dependence on external sources of wood pulp, which subjects our business and results of operations to potentially significant fluctuations in the price of market pulp.

In 2010, our Consumer Products segment sourced approximately 65% of its annual pulp supply from our Pulp and Paperboard segment, while the Cellu Tissue operations we acquired historically relied entirely on external suppliers for wood pulp. Consequently, due to the integration of the Cellu Tissue operations at the end of 2010, our Consumer Products segment sourced approximately 71% of its pulp requirements externally during 2012. The increased dependence on external sources of wood pulp increases our exposure to fluctuations in prices for wood pulp, which in turn could have a material adverse effect on our financial results, operations and cash flows.

Pulp prices can, and have, changed significantly from one period to the next. For example, our external pulp costs decreased 17% from 2011 to 2012. The volatility of pulp prices can adversely affect our earnings if we are unable to pass cost increases on to our customers or if the timing of any price increases for our products significantly trails the increases in pulp prices. We have not hedged these risks.

9

Changes in the cost and availability of wood fiber used in production of our products may adversely affect our results of operations and cash flow.

Wood fiber is the principal raw material used to create wood pulp, which in turn is used to manufacture our pulp and paperboard products and consumer products. In 2012, our wood fiber costs were 10.1% of our cost of sales. Much of the wood fiber we use in our pulp manufacturing process in Lewiston, Idaho, is the by-product of sawmill operations. As a result, the price of these residual wood fibers is affected by operating levels in the lumber industry. The significant reduction in home building over the past four years resulted in the closure or curtailment of operations at many sawmills. The price of wood fiber is expected to remain volatile until the housing market recovers and sawmill operations increase. Additionally, the supply and price of wood fiber can be negatively affected by weather and other events.

The effects on market prices for wood fiber resulting from various governmental programs involving tax credits or payments related to biomass and other renewable energy projects are uncertain and could result in a reduction in the supply of wood fiber available for our pulp and paperboard manufacturing operations. If we and our pulp suppliers are unable to obtain wood fiber at favorable prices or at all, our costs will increase and financial results, operations and cash flows may be materially adversely affected.

The cost of chemicals and energy needed for our manufacturing processes significantly affects our business.

We use a variety of chemicals in our manufacturing processes, including latex and polyethylene, many of which are petroleum-based chemicals. In 2012, our chemical costs were 11.5% of our cost of sales. Prices for these chemicals have been and are expected to remain volatile. In addition, chemical suppliers that use petroleum-based products in the manufacture of their chemicals may, due to supply shortages and cost increases, ration the amount of chemicals available to us, and therefore we may not be able to obtain at favorable prices the chemicals we need to operate our business, if we are able to obtain them at all.

Our manufacturing operations utilize large amounts of electricity and natural gas and our energy requirements, particularly natural gas, will increase significantly as a result of operations at our North Carolina facility. In 2012, our energy costs were 6.8% of our cost of sales. Energy prices have fluctuated widely over the past decade, which in turn affects our cost of sales. We purchase on the open market a substantial portion of the natural gas necessary to produce our products, and, as a result, the price and other terms of those purchases are subject to change based on factors such as worldwide supply and demand, geopolitical events, government regulation, and natural disasters. Our energy costs in future periods will depend principally on our ability to produce a substantial portion of our electricity needs internally, on changes in market prices for natural gas and on reducing energy usage.

Any significant energy shortage or significant increase in our energy costs in circumstances where we cannot raise the price of our products could have a material adverse effect on our business, financial condition, results of operations and cash flows. Any disruption in the supply of energy could also affect our ability to meet customer demand in a timely manner and could harm our reputation.

Increases in our transportation costs or disruptions in our transportation services could have a material adverse effect on our business.

Our business, particularly our Consumer Products business, is dependent on transportation services to deliver our products to our customers and to deliver raw materials to us. In 2012, our transportation costs were 10.6% of our cost of sales. The costs of these transportation services are primarily determined by fuel prices, which have steadily increased since 2008 and are affected by geopolitical and economic events. We have not been in the past, and may not be in the future, able to pass along part or all of any fuel price increases to customers. If we are unable to increase our prices as a result of increased fuel costs charged to us by transportation providers, our gross margins may be materially adversely affected.

If any transportation providers fail to deliver raw materials to us in a timely manner, we may be unable to manufacture products on a timely basis. Shipments of products and raw materials may be delayed due to weather conditions, labor strikes or other events. Any failure of a third-party transportation provider to deliver raw materials or products in a timely manner could harm our reputation, negatively affect our customer relationships and have a material adverse effect on our business, financial condition, results of operations and cash flows.

Larger competitors have operational and other advantages over our operations.

The markets for our products are highly competitive, and companies that have substantially greater financial resources compete with us in each market. Some of our competitors have advantages over us, including lower raw material and labor costs and better access to the inputs of our products.

10

Our Consumer Products business faces competition from companies that produce the same type of products that we produce or that produce alternative products that customers may use instead of our products. Our Consumer Products business competes with the branded tissue products producers, such as Procter & Gamble, and branded label producers who manufacture branded and private label products, such as Georgia-Pacific and Kimberly-Clark. These companies are far larger than us, have much greater sales, marketing and research and development resources than we do, and enjoy significant cost advantages due to economies of scale. In addition, because of their size and resources, these companies may foresee market trends more accurately than we do and develop new technologies that render our products less attractive or obsolete.

Our ability to successfully compete in the pulp and paperboard industry is influenced by a number of factors, including manufacturing capacity, general economic conditions and the availability and demand for paperboard substitutes. Our Pulp and Paperboard business competes with International Paper, MeadWestvaco, Georgia-Pacific, RockTenn and international producers, most of whom are much larger than us. Any increase in manufacturing capacity by any of these or other producers could result in overcapacity in the pulp and paperboard industry, which could cause downward pressure on pricing. In addition, customers could choose to use types of paperboard that we do not produce or could rely on alternative materials, such as plastic, for their products. An increased supply of any of these products could cause us to lower our prices or lose sales to competitors, either of which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

The consolidation of paperboard converting businesses, including through the acquisition and integration of such converting business by larger competitors of ours, could result in a loss of customers and sales on the part of our Pulp and Paperboard business, which does not include paperboard converting facilities or capabilities. A loss of paperboard customers or sales as a result of consolidations and integrations could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Changes in demand for certain products could adversely affect our financial results.

Our ability to compete successfully depends on our ability to adjust to increases and decreases in demand. If we are unable to respond to increases in demand, we may need to limit deliveries of some orders for existing customers, which could harm our reputation and our long-term relationships with these customers. Currently, we are unable to meet all of the demand from existing and potential customers for bathroom tissue due to very high demand. Alternatively, if we experience a decrease in demand for certain products, we may incur significant costs in revising our manufacturing plan. If we are not able to respond to changes in demand for our products in a timely manner, our financial position, results of operations and cash flows may be adversely affected.

Competitors' branded products and private label TAD products could have an adverse effect on our financial results.

Our consumer products compete with well-known, branded products, as well as other private label products. Inherent risks in our competitive strategy include whether our products will receive direct and retail customer acceptance, new product offerings by competitors, the effects of consolidation within retailer and distribution channels, and price competition from companies that may have greater financial resources than we do. We have only recently completed new, or upgraded existing, TAD facilities that allow us to produce TAD bathroom tissue. If we are unable to offer our existing customers, or new customers, tissue products comparable to branded products or private label competitive TAD products, and in sufficient quantities, we may lose business or we may not be able to grow our existing business and be forced to sell lower-margin products, all of which could negatively affect our financial condition and results of operations.

Our qualification to retain, or ability to utilize, tax credits associated with alternative fuels or cellulosic biofuels and the tax treatment associated with receipt of such credits are uncertain.

In 2009, we received refundable federal tax credit payments in connection with our use of “black liquor,” a by-product of the pulp manufacturing process, in an alternative fuel mixture to produce energy at our pulp mills. The amount of the refundable tax credit was equal to $0.50 per gallon of alternative fuel mixture used. This tax credit expired on December 31, 2009. In 2009, we recorded pre-tax income of $170.6 million related to the Alternative Fuel Mixture Tax Credit, or AFMTC. We have not recorded any pre-tax income since 2009 relating to the AFMTC.

There is relatively little guidance regarding the AFMTC and the law governing the issue is complex. Accordingly, there remains uncertainty as to our qualification to receive the tax credit in 2009, as well as to whether we will be entitled to retain the amounts we received upon further review by the Internal Revenue Service, or IRS. In addition, while it is our position that payments received or credits taken in relation to the AFMTC should not be subject to corporate income tax, there can be no assurance as to whether or not the amounts we have received will be subject to taxation. As of December 31, 2012 we have recorded accrued taxes on uncertain tax positions related to the AFMTC of $68.3 million. In 2012, the IRS began conducting an audit of our 2008 to 2011 tax years, which is further discussed in Note 8, "Income Taxes," in the notes to the consolidated financial statements.

11

We are also registered with the IRS as a cellulosic biofuel producer, which enables us to claim the $1.01 per gallon Cellulosic Biofuel Producer Credit, or CBPC, in regards to black liquor produced and used as a fuel by us at our pulp mills in 2009. We have changed, and may in the future make additional changes in, our position as to some or all of the credits we claimed under the AFMTC on our 2009 federal income tax form, provided we believe we will have sufficient future federal taxable earnings to enable us to carry forward the credits potentially available under the CBPC. There can be no assurance that we will be able to fully utilize the CBPC. Congress has identified the elimination or modification of the CBPC in connection with black liquor as a possible revenue source. Such legislative action could limit or eliminate our ability to convert AFMTC gallons to CBPC gallons and/or CBPC gallons to AFMTC gallons and, accordingly, limit or eliminate our ability to claim carry forward credits.

We are subject to significant environmental regulation and environmental compliance expenditures, which could increase our costs and subject us to liabilities.

We are subject to various federal, state and foreign environmental laws and regulations concerning, among other things, water discharges, air emissions, hazardous material and waste management and environmental cleanup. Environmental laws and regulations continue to evolve and we may become subject to increasingly stringent environmental standards in the future, particularly under air quality and water quality laws and standards related to climate change issues, such as reporting of greenhouse gas emissions. Increased regulatory activity at the state, federal and international level is possible regarding climate change as well as other emerging environmental issues associated with our manufacturing sites. Compliance with regulations that implement new public policy in these areas might require significant expenditures on our part.

We are required to comply with environmental laws and the terms and conditions of multiple environmental permits. In particular, the pulp and paper industry in the United States is subject to several performance based rules associated with effluent and air emissions as a result of certain of its manufacturing processes. Federal, state and local laws and regulations require us to routinely obtain authorizations from and comply with the evolving standards of the appropriate governmental authorities, which have considerable discretion over the terms of permits. Failure to comply with environmental laws and permit requirements could result in civil or criminal fines or penalties or enforcement actions, including regulatory or judicial orders enjoining or curtailing our operations or requiring us to take corrective measures, install pollution control equipment, or take other remedial actions, such as product recalls or labeling changes. We also may be required to make additional expenditures, which could be significant, relating to environmental matters on an ongoing basis.

In 2012, we were notified that the U.S. Environmental Protection Agency, or EPA, submitted a civil referral to the U.S. Department of Justice, or DOJ, alleging violations of the Clean Air Act stemming from an EPA investigation at our Lewiston, Idaho pulp facility. Prior to the filing of any formal action, we and the DOJ agreed to discuss the resolution of the allegations, and the parties entered into an agreement to toll the statute of limitations. The tolling agreement expires on March 29, 2013, unless further extended by the parties. Discussions with the DOJ and EPA are ongoing. However, this matter could result in civil penalties or enforcement actions, including regulatory or judicial orders enjoining or curtailing our operations or requiring us to take corrective measures, install pollution control equipment, or take other remedial actions.

We own properties, conduct or have conducted operations at properties, and have assumed indemnity obligations in connection with our spin-off in 2008 from Potlatch, for properties or operations where hazardous materials have been or were used for many years, including during periods before careful management of these materials was required or generally believed to be necessary. Consequently, we will continue to be subject to risks under environmental laws that impose liability for historical releases of hazardous substances. There can be no assurance that future environmental permits will be granted or that we will be able to maintain and renew existing permits, and the failure to do so could have a material adverse effect on our results of operations, financial condition and cash flows.

We incur significant expenses to maintain our manufacturing equipment and any interruption in the operations of our facilities may harm our operating performance.

We regularly incur significant expenses to maintain our manufacturing equipment and facilities. The machines and equipment that we use to produce our products are complex, have many parts and some are run on a continuous basis. We must perform routine maintenance on our equipment and will have to periodically replace a variety of parts such as motors, pumps, pipes and electrical parts. In addition, our pulp and paperboard facilities require periodic shutdowns to perform major maintenance. These scheduled shutdowns of facilities result in decreased sales and increased costs in the periods in which a shutdown occurs.

12

Unexpected production disruptions could cause us to shut down or curtail operations at any of our facilities. For example, in 2011 we curtailed operations at our Cypress Bend, Arkansas, pulp and paperboard facility as the result of an electrical malfunction and curtailed operations at our Wiggins, Mississippi, consumer products facility as the result of a fire. Disruptions could occur due to any number of circumstances, including prolonged power outages, mechanical or process failures, shortages of raw materials, natural catastrophes, disruptions in the availability of transportation, labor disputes, terrorism, changes in or non-compliance with environmental or safety laws and the lack of availability of services from any of our facilities' key sole suppliers. Any facility shutdowns may be followed by prolonged startup periods, regardless of the reason for the shutdown. Those startup periods could range from several days to several weeks, depending on the reason for the shutdown and other factors. Any prolonged disruption in operations at any of our facilities could cause significant lost production, which would have a material adverse effect on our business, financial condition, results of operations and cash flows.

We rely on information technology in critical areas of our operations, and a disruption relating to such technology could harm our financial condition.

We use information technology, or IT, systems in various aspects of our operations, including enterprise resource planning, management of inventories and customer sales. Some of these systems have been in place for long periods of time. Additionally, with the acquisition of Cellu Tissue, we have different legacy IT systems which we are continuing to integrate. If one of these systems was to fail, or if we decide to change these systems or hire outside parties to provide these systems, we may suffer disruptions, which could have a material adverse effect on our results of operations and financial condition. In addition, we may underestimate the costs and expenses of developing and implementing new systems.

United States and global economic conditions could have adverse effects on the demand for our products and financial results.

U.S. and global economic conditions have negatively affected and may continue to negatively affect our business and financial results. For example, the away-from-home consumer paper products market has experienced a decline because of the slowdown in the travel and restaurant industries as a result of the ongoing economic downturn. Recessed economic conditions affect our business in a number of ways, including causing: (i) increased pressure for price concessions from customers; (ii) declines in domestic and global demand for paperboard; (iii) shifts in customer purchases that affect the mix of our product sales; (iv) decreased or low housing starts, which increase production costs due to lower wood fiber supplies; and (v) financial distress or insolvency for certain customers which could affect our sales volumes or our ability to collect accounts receivable on a timely basis from those customers.

Our company-sponsored pension plans and one of our multiemployer pension plans are currently underfunded, and over time we will be required to make cash payments to the plans, reducing cash available for our business.

We have company-sponsored pension plans covering certain of our salaried and hourly employees. The significant decline in the securities markets beginning in 2008 and resulting substantial decline in the value of equity and fixed income investments held by these plans, coupled with a low interest rate environment resulting in higher liability valuations, have caused these plans to be underfunded so that the projected benefit obligation exceeds the aggregate fair value of plan assets. At December 31, 2012, our company sponsored pension plans were underfunded in the aggregate by approximately $78.7 million. As a result of underfunding, we are required to make contributions to our qualified pension plans. In 2012, we contributed $20.6 million to these pension plans. We may be required to make increased annual contributions to our pension plans in future years, which would reduce the cash available for business and other needs.

We also contribute to two multiemployer pension plans. The amount of our annual contributions to each of these plans is negotiated with the plan and the bargaining unit representing our employees covered by the plan. In 2012 we contributed approximately $6 million to these plans and in future years we may be required to make increased annual contributions, which would reduce the cash available for business and other needs. In addition, in the event of a partial or complete withdrawal by us from any multiemployer plan that is underfunded, we would be liable for a proportionate share of such multiemployer plan's unfunded vested benefits, referred to as a withdrawal liability. A withdrawal liability is considered a contingent liability. Based on the limited information available from the plan administrator of one of our multiemployer plans, which we cannot independently validate, we believe that our portion of the contingent liability in the case of a full withdrawal from or termination of that plan would likely be material to our financial position and results of operations. In the event that any other contributing employer withdraws from any multiemployer plan that is underfunded, and such employer cannot satisfy its obligations under the multiemployer plan at the time of withdrawal, then we, along with the other remaining contributing employers, would be liable for our proportionate share of such plan's unfunded vested benefits which could result in an increase to our required annual contributions.

13

Our pension and health care costs are subject to numerous factors which could cause these costs to change.

In addition to our pension plans, we provide retiree health care benefits to certain of our current and former U.S. salaried and hourly employees. Our retiree health care costs vary with changes in health care costs generally, which have significantly exceeded general economic inflation rates for many years. Our pension costs are dependent upon numerous factors resulting from actual plan experience and assumptions about future investment returns. Pension plan assets are primarily made up of equity and fixed income investments. Fluctuations in actual equity market returns as well as changes in general interest rates may result in increased pension costs in future periods. Likewise, changes in assumptions regarding current discount rates and expected rates of return on plan assets could also increase pension costs. Significant changes in any of these factors may adversely impact our cash flows, financial condition and results of operations.

Cyclical industry conditions have in the past affected and may continue to adversely affect the operating results and cash flow of our Pulp and Paperboard business.

Our Pulp and Paperboard business is particularly affected by cyclical market conditions. We may be unable to sustain pricing in the face of weaker demand, and weaker demand may in turn cause us to take production downtime. In addition to lost revenue from lower shipment volumes, production downtime causes unabsorbed fixed manufacturing costs due to lower production levels. Our results of operations and cash flows may be materially adversely affected in a period of prolonged and significant market weakness. We are not able to predict market conditions or our ability to sustain pricing and production levels during periods of weak demand.

We rely on a limited number of third-party suppliers for certain raw materials required for the production of our products.

Our dependence on a limited number of third-party suppliers, and the challenges we may face in obtaining adequate supplies of raw materials, involve several risks, including limited control over pricing, availability, quality, and delivery schedules. We cannot be certain that our current suppliers will continue to provide us with the quantities of these raw materials that we require or will continue to satisfy our anticipated specifications and quality requirements. Any supply interruption in limited raw materials could materially harm our ability to manufacture our products until a new source of supply, if any, could be identified and qualified. Although we believe there are other suppliers of these raw materials, we may be unable to find a sufficient alternative supply channel in a reasonable time or on commercially reasonable terms. Any performance failure on the part of our suppliers could interrupt production of our products, which would have a material adverse effect on our business.

Our business and financial performance may be harmed by future labor disruptions.

As of December 31, 2012, 52% of our full-time employees are represented by unions under collective bargaining agreements. As these agreements expire, we may not be able to negotiate extensions or replacement agreements on terms acceptable to us. We currently have no collective bargaining agreements under negotiation. Any failure to reach an agreement with one of the unions may result in strikes, lockouts or other labor actions. Any such labor actions, including work slowdowns in the future or stoppages, could have a material adverse effect on our operations and financial results.

Additional expansion of our business through construction of new facilities or acquisitions may not proceed as anticipated.

In addition to the acquisition of Cellu Tissue and construction of our North Carolina facility, in the future we may build other converting and papermaking facilities, pursue acquisitions of existing facilities, or both. We may be unable to identify future suitable building locations or acquisition targets. In addition, we may be unable to achieve anticipated benefits or cost savings from construction projects or acquisitions in the timeframe we anticipate, or at all. Any inability by us to integrate and manage any new or acquired facilities or businesses in a timely and efficient manner, any inability to achieve anticipated cost savings or other anticipated benefits from these projects or acquisitions in the time frame we anticipate or any unanticipated required increases in promotional or capital spending could adversely affect our business, financial condition, results of operations or liquidity. Large construction projects or acquisitions can result in a decrease in our cash and short-term investments, an increase in our indebtedness, or both, and also may limit our ability to access additional capital when needed and divert management's attention from other business concerns.

14

The indentures for our outstanding notes that we issued in 2010 and 2013, and the credit agreement governing our senior secured revolving credit facility, contain various covenants that limit our discretion in the operation of our business.

The indentures governing our outstanding notes that we issued in 2010 and 2013, and the credit agreement governing our senior secured revolving credit facility, contain various provisions that limit our discretion in the operation of our business by restricting our ability to:

▪ undergo a change in control;

▪ sell assets;

▪ pay dividends and make other distributions;

▪ make investments and other restricted payments;

▪ redeem or repurchase our capital stock;

▪ incur additional debt and issue preferred stock;

▪ create liens;

▪ consolidate, merge, or sell substantially all of our assets;

▪ enter into certain transactions with our affiliates;

▪ engage in new lines of business; and

▪ enter into sale and lease-back transactions.

These restrictions on our ability to operate our business in our discretion could seriously harm our business by, among other things, limiting our ability to take advantage of financing, merger and acquisition and other corporate opportunities. In addition, our senior secured revolving credit facility requires, among other things, that we maintain a minimum fixed charge coverage ratio of at least 1.0-to-1.0 when availability falls below $50 million or an event of default exists. Events beyond our control could affect our ability to meet this financial test, and we cannot assure you that we will meet it.

Our failure to comply with the covenants contained in our senior secured revolving credit facility or the indentures governing our outstanding notes, including as a result of events beyond our control, could result in an event of default that could cause repayment of the debt to be accelerated.

If we are not able to comply with the covenants and other requirements contained in the indentures governing our outstanding notes, our senior secured revolving credit facility or our other debt instruments, an event of default under the relevant debt instrument could occur. If an event of default does occur, it could trigger a default under our other debt instruments, prohibit us from accessing additional borrowings, and permit the holders of the defaulted debt to declare amounts outstanding with respect to that debt to be immediately due and payable. Our assets and cash flow may not be sufficient to fully repay borrowings under our outstanding debt instruments. In addition, we may not be able to refinance or restructure the payments on the applicable debt. Even if we were able to secure additional financing, it may not be available on favorable terms.

To service our indebtedness, we must generate significant cash flows. Our ability to generate cash depends on many factors beyond our control.

Our ability to make payments on and to refinance our indebtedness, including our outstanding notes, and to fund planned capital expenditures, will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us under our senior secured revolving credit facility in an amount sufficient to enable us to pay our indebtedness, including the notes, or to fund our other liquidity needs. We cannot assure you that we will be able to refinance any of our indebtedness, including our senior secured revolving credit facility and our existing notes, on commercially reasonable terms or at all.

15

Certain provisions of our certificate of incorporation and bylaws and Delaware law may make it difficult for stockholders to change the composition of our Board of Directors and may discourage hostile takeover attempts that some of our stockholders may consider to be beneficial.

Certain provisions of our certificate of incorporation and bylaws and Delaware law may have the effect of delaying or preventing changes in control if our Board of Directors determines that such changes in control are not in the best interests of the company and our stockholders. The provisions in our certificate of incorporation and bylaws include, among other things, the following:

▪ a classified Board of Directors with three-year staggered terms;

▪ the ability of our Board of Directors to issue shares of preferred stock and to determine the price and other terms, including preferences and voting rights, of those shares without stockholder approval;

▪ stockholder action can only be taken at a special or regular meeting and not by written consent;

▪ advance notice procedures for nominating candidates to our Board of Directors or presenting matters at stockholder meetings;

▪ removal of directors only for cause;

▪ allowing only our Board of Directors to fill vacancies on our Board of Directors; and

▪ supermajority voting requirements to amend our bylaws and certain provisions of our certificate of incorporation.

While these provisions have the effect of encouraging persons seeking to acquire control of the company to negotiate with our Board of Directors, they could enable the Board of Directors to hinder or frustrate a transaction that some, or a majority, of the stockholders might believe to be in their best interests and, in that case, may prevent or discourage attempts to remove and replace incumbent directors. We are also subject to Delaware laws that could have similar effects. One of these laws prohibits us from engaging in a business combination with a significant stockholder unless specific conditions are met.

ITEM 1B.

Unresolved Staff Comments

None.

16

ITEM 2.

Properties

FACILITIES

We own and operate facilities located throughout the United States and one in Canada. The following table lists each of our facilities and its location, use, capacity and production:

	USE	LEASED OR OWNED	CAPACITY		PRODUCTION1
CONSUMER PRODUCTS
Tissue manufacturing facilities:
East Hartford, Connecticut	Tissue	Owned	36,000	tons	34,000	tons
Gouverneur, New York	Tissue	Owned	39,000	tons	39,000	tons
Ladysmith, Wisconsin	Tissue	Owned	56,000	tons	53,000	tons
Las Vegas, Nevada	TAD tissue	Owned/Leased	38,000	tons	38,000	tons
Lewiston, Idaho	Tissue	Owned	190,000	tons	190,000	tons
Menominee, Michigan	Machine-glazed tissue	Owned	36,000	tons	34,000	tons
Neenah, Wisconsin	Tissue	Owned	84,000	tons	84,000	tons
Shelby, North Carolina3	TAD tissue	Owned/Leased	70,000	tons	2,000	tons
St. Catharines, Ontario	TAD tissue	Owned	26,000	tons	26,000	tons
	Machine-glazed tissue		23,000	tons	23,000	tons
Wiggins, Mississippi	Tissue	Owned	29,000	tons	29,000	tons
	Machine-glazed tissue		33,000	tons	33,000	tons
			660,000	tons	585,000	tons
Tissue converting facilities:
Central Islip, New York2	Tissue converting	Leased	38,000	tons	26,000	tons
Elwood, Illinois2	Tissue converting	Leased	68,000	tons	63,000	tons
Las Vegas, Nevada	Tissue converting	Owned/Leased	57,000	tons	49,000	tons
Lewiston, Idaho	Tissue converting	Owned	95,000	tons	80,000	tons
Menominee, Michigan	Machine-glazed tissue converting	Owned	27,000	tons	6,000	tons
Neenah, Wisconsin	Tissue converting	Owned	99,000	tons	57,000	tons
Oklahoma City, Oklahoma2	Tissue converting	Leased	14,000	tons	11,000	tons
Shelby, North Carolina3	Tissue converting	Owned/Leased	41,000	tons	23,000	tons
Thomaston, Georgia2	Tissue converting	Leased	38,000	tons	18,000	tons
			477,000	tons	333,000	tons
PULP AND PAPERBOARD
Pulp Mills:
Cypress Bend, Arkansas	Pulp	Owned	316,000	tons	309,000	tons
Lewiston, Idaho	Pulp	Owned	540,000	tons	533,000	tons
			856,000	tons	842,000	tons
Bleached Paperboard Mills:
Cypress Bend, Arkansas	Paperboard	Owned	348,000	tons	338,000	tons
Lewiston, Idaho	Paperboard	Owned	445,000	tons	433,000	tons
			793,000	tons	771,000	tons
CORPORATE
Alpharetta, Georgia	Operations and administration	Owned/Leased		N/A		N/A
Spokane, Washington	Corporate headquarters	Leased		N/A		N/A

¹ Production amounts are approximations for full year 2012.

²  The buildings located at these facilities are leased by Clearwater Paper or a subsidiary, and the operating equipment located within the building is owned by Clearwater Paper or a subsidiary.

³ In December 2012, our new TAD tissue machine in North Carolina began producing tissue. In addition to two converting lines installed in 2011 at our North Carolina location, two more tissue converting lines at that site became operational during the fourth quarter of 2012.

17

ITEM 3.

Legal Proceedings

On August 13, 2012, we were notified that the U.S. Environmental Protection Agency, or EPA, submitted a civil referral to the U.S. Department of Justice, or DOJ, alleging violations of the Clean Air Act stemming from an EPA investigation that included an inspection of our Lewiston, Idaho pulp facility in July 2009 and a subsequent information request dated February 24, 2011. Prior to the filing of any formal action, we and the DOJ agreed to discuss the resolution of the allegations. On September 14, 2012, the parties entered into an agreement to toll the statute of limitations. The tolling agreement expires on March 29, 2013, unless further extended by the parties. Discussions with the DOJ and EPA are ongoing.

In addition to the matters discussed above, we may from time to time be involved in claims, proceedings and litigation arising from our business and property ownership. We believe, based on currently available information, that the results of such proceedings, in the aggregate, will not have a material adverse effect on our financial condition.

ITEM 4.

Mine Safety Disclosures

Not applicable

18

Part II

ITEM 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

MARKET FOR OUR COMMON STOCK

Our common stock is traded on the New York Stock Exchange. The following table sets forth, for each period indicated, the high and low sales prices of our common stock during our two most recent years. Prices have been retroactively adjusted to reflect our two-for-one stock split effected in the form of a stock dividend, effective August 26, 2011.

	Common Stock Price
	High		Low
Year Ended December 31, 2012:
Fourth Quarter	$	42.79	$	37.33
Third Quarter	41.98		33.37
Second Quarter	34.79		29.84
First Quarter	40.19		32.51
Year Ended December 31, 2011:
Fourth Quarter	$	37.54	$	31.50
Third Quarter	38.86		32.83
Second Quarter	41.15		30.44
First Quarter	41.74		36.82

HOLDERS

On February 11, 2013, the last reported sale price for our common stock on the New York Stock Exchange was $46.12 per share. As of February 11, 2013, there were approximately 1,050 registered holders of our common stock.

DIVIDENDS

We have not paid any cash dividends and do not anticipate paying a cash dividend in 2013. We will continue to review whether payment of a cash dividend on our common stock in the future best serves the company and our stockholders. The declaration and amount of any dividends, however, will be determined by our Board of Directors and will depend on our earnings, our compliance with the terms of our notes and revolving credit facility that contain certain restrictions on our ability to pay dividends, and any other factors that our Board of Directors believes are relevant.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

Please see Part III, Item 12 of this report for information relating to our equity compensation plans.

ISSUER PURCHASES OF EQUITY SECURITIES

On July 28, 2011, we announced that our Board of Directors had authorized the repurchase of up to $30 million of our common stock. Under the stock repurchase program, we were authorized to repurchase shares in the open market or as otherwise determined by management, subject to market conditions, business opportunities and other factors. During 2012, we repurchased 520,170 shares of outstanding common stock at a total cost of $18.7 million, representing an average price of $35.85 per share. We completed this repurchase program in the fourth quarter of 2012. The total number of shares repurchased under this program was 853,470 at an aggregate cost of $30 million and an average price of $35.15 per share.

On January 21, 2013, in an event subsequent to the close of our 2012 fiscal year, and in conjunction with the sale of $275 million aggregate principal amount of senior notes, we announced that our Board of Directors approved a new stock repurchase program authorizing the repurchase of $100 million of our common stock. We intend to complete this share repurchase program during 2013 through open market purchases, negotiated transactions or other means.

19

The following table provides information about share repurchases that we made during the three months ended December 31, 2012 (in thousands, except share and per share amounts):

Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
October 1, 2012 to October 31, 2012	31,400	$	39.63	31,400	$	8,051
November 1, 2012 to November 30, 2012	199,988	$	40.26	199,988	$	—
December 1, 2012 to December 31, 2012	—	$	—	—	$	—
Total	231,388	$	40.18	231,388

ITEM 6.

Selected Financial Data

Prior to our spin-off from Potlatch Corporation, or Potlatch, on December 16, 2008, we were a wholly-owned subsidiary of Potlatch. On December 16, 2008, Potlatch distributed 100% of the issued and outstanding shares of our common stock to the holders of Potlatch common stock.

During the period from December 16, 2008 through December 31, 2012, we operated as and were accounted for as a separate public company. Our results of operations and financial condition reflected in the table below cover the period from January 1, 2008 until the spin-off and related transactions. The historical financial and other data for this period prior to the spin-off was prepared on a combined basis from Potlatch’s consolidated financial statements using the historical results of operations and basis of the assets and liabilities of Potlatch’s consumer products and pulp and paperboard businesses and its wood products operation at Lewiston, Idaho, and give effect to allocations of expenses from Potlatch. All other data has been derived from our audited financial statements. Our historical financial and other data is not necessarily indicative of our future performance nor do they necessarily reflect what our financial position and results of operations would have been had we operated as a separate, stand-alone entity prior to December 16, 2008. In addition, all amounts below for 2010 reflect the acquisition of Cellu Tissue on December 27, 2010, including four days of Cellu Tissue’s operating results and incurrence of acquisition related expenses. Amounts for 2011 forward, are reflective of the sale of our Lewiston, Idaho sawmill in November 2011.

Earnings per share and common shares outstanding data have been retroactively adjusted to reflect our two-for-one stock split that was effected in the form of a stock dividend distributed on August 26, 2011 to shareholders of record on August 12, 2011.

(In thousands, except earnings per share amounts)	2012		2011		2010		2009		2008
Net sales	$	1,874,304	$	1,927,973	$	1,372,965	$	1,250,069	$	1,255,309
Income from operations	145,387		115,445		98,767		297,440		28,484
Net earnings1	64,131		39,674		73,800		182,464		9,743
Working capital2	293,733		390,839		394,346		452,583		14,022
Note payable to Potlatch	—		—		—		—		100,000
Long-term debt, net of current portion	523,933		523,694		538,314		148,285		—
Stockholders’ equity	540,894		484,904		468,349		363,736		180,989
Capital expenditures3	207,115		137,743		47,033		19,328		21,306
Property, plant and equipment, net	877,377		735,566		654,456		364,024		389,867
Total assets	1,633,456		1,571,318		1,545,336		947,463		683,266
Basic net earnings per common share	$	2.75	$	1.73	$	3.22	$	8.03	$	0.43
Basic average common shares outstanding	23,299		22,914		22,947		22,721		22,710
Diluted net earnings per common share	$	2.72	$	1.66	$	3.12	$	7.75	$	0.43
Diluted average common shares outstanding	23,614		23,952		23,670		23,540		22,710

¹  Income from operations for the year ended December 31, 2009, included $170.6 million associated with the Alternative Fuel Mixture Tax Credit.

²  Working capital is defined as our current assets less our current liabilities as presented on our Consolidated Balance Sheets.

³  Capital expenditures in 2012, 2011 and 2010 primarily include expenditures related to our through-air-dried tissue expansion project at our Shelby, North Carolina, and Las Vegas, Nevada, manufacturing and converting facilities.

20

ITEM 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with our audited consolidated financial statements and notes thereto that appear elsewhere in this report. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. Actual results may differ materially from those discussed in these forward-looking statements due to a number of factors, including those set forth in the section entitled “Risk Factors” and elsewhere in this report.

Unless the context otherwise requires or unless otherwise indicates, references in this report to “Clearwater Paper Corporation,” “we,” “our,” “the company” and “us” refer to Clearwater Paper Corporation and its subsidiaries. On December 27, 2010, we acquired Cellu Tissue Holdings, Inc., or Cellu Tissue. The results discussed below include Cellu Tissue operating results for the period December 28, 2010 forward.

OVERVIEW

2012 Highlights

Consumer Products Expansion

In December 2012, we announced the start-up of our new through-air-dried, or TAD, paper machine and the completion of two additional converting lines that became operational in the fourth quarter of 2012. The completion of the TAD paper machine and a total of four converting lines in Shelby, North Carolina, along with another converting line we expect to install in 2013, is expected to increase our ultra and premium offerings to existing and new customers. Also in the fourth quarter, we completed upgrades to our TAD tissue manufacturing facility in Las Vegas, Nevada.

Overall, our TAD tissue expansion project, or TAD project, will allow us to supply a full range of TAD products, including paper towels and bath tissue, to customers across the U.S., while reducing transportation costs. We believe this project, along with our existing manufacturing capabilities, establishes us as the only private label tissue products company in the U.S. to offer a full line of tissue products to customers.

We estimate the TAD project will cost approximately $270 million, excluding capitalized interest. As of December 31, 2012, we have incurred a total of $253.8 million in TAD project costs, of which $144.5 million was incurred in 2012. We expect the remaining balance of approximately $16 million to be spent in 2013. In addition, we capitalized a total of $16.8 million of interest related to the TAD project, of which $12.6 million was capitalized in 2012.

In August 2011, First Quality Tissue SE, LLC, or First Quality, filed a lawsuit against Metso Paper, the company we contracted with to supply the TAD paper machine to our North Carolina facility, seeking to enjoin Metso Paper from delivering the TAD paper machine based on First Quality’s agreement with Metso Paper. On June 20, 2012, the United States District Court for the District of South Carolina ruled in favor of Clearwater Paper and Metso Paper and denied First Quality’s claim to enjoin Metso Paper from delivering the TAD paper machine to us.

Integration of Cellu Tissue Holdings, Inc.

On December 27, 2010, we acquired Cellu Tissue, which included nine tissue manufacturing facilities located in the Southern, Midwestern and Eastern United States and one facility in Eastern Canada. These facilities have allowed us to better serve existing private label grocery customers by creating a broad manufacturing footprint geographically and have enabled us to expand into new private label and other tissue channels. We recognized $10.4 million and $31.0 million of net cost savings from synergies relating to the acquisition during the three and twelve months ended December 31, 2012, respectively, and expect to achieve $35 to $40 million annually in net cost savings from synergies beginning in 2013.

Capital Allocation

On July 28, 2011, we announced that our Board of Directors had authorized the repurchase of up to $30 million of our common stock. Under the stock repurchase program, we were authorized to repurchase shares in the open market or as otherwise determined by management, subject to market conditions, business opportunities and other factors. During 2012, we repurchased 520,170 shares of outstanding common stock at a total cost of $18.7 million, representing an average price of $35.85 per share. We completed this repurchase program in the fourth quarter of 2012. The total number of shares repurchased under this program was 853,470 at an aggregate cost of $30 million and an average price of $35.15 per share.

21

On February 22, 2013, in an event subsequent to the close of our 2012 fiscal year, and in conjunction with the issuance of $275 million of 4.5% aggregate principal senior notes due 2023, which we refer to as the 2013 Notes, we redeemed $150 million in aggregate principal amount of 10.625% senior notes issued in 2009. In addition, through the same subsequent event, we announced that our Board of Directors approved a new common stock repurchase program authorizing the repurchase of $100 million of our common stock, to be funded by a portion of the proceeds from the 2013 Notes. We intend to complete this share repurchase program during 2013 through open market purchases, negotiated transactions or other means.

Business

We are a leading producer of private label tissue and premium bleached paperboard products. Our products are primarily wood pulp-based and predominately manufactured in the U.S.

Our business is organized into two reporting segments:

• Our Consumer Products segment manufactures and sells a complete line of at-home tissue products in each tissue category, including bathroom tissue, paper towels, napkins and facial tissue. We also manufacture away-from-home tissue, or AFH, machine-glazed tissue and parent rolls for external sales. Our integrated manufacturing and converting operations and geographic footprint enable us to deliver a broad range of cost-competitive products with brand equivalent quality to our consumer products customers. In 2012, our Consumer Products segment had net sales of $1.1 billion, representing approximately 61% of our total net sales.

• Our Pulp and Paperboard segment manufactures and markets bleached paperboard for the high-end segment of the packaging industry and is a leading producer of solid bleach sulfate paperboard. This segment also produces hardwood and softwood pulp, which is primarily used as the basis for our paperboard products, and slush pulp, which it supplies to our Consumer Products segment. In 2012, our Pulp and Paperboard segment had net sales of $739.7 million, representing approximately 39% of our total net sales.

Developments and Trends in our Business

Net Sales

Prices for our consumer tissue products are affected by competitive conditions and the prices of branded tissue products. Tissue has historically been one of the strongest segments of the paper and forest products industry due to its steady demand growth and the absence of severe supply imbalances that occur in a number of other paper segments. Our Consumer Products segment competes based on product quality, customer service and price. We deliver customer-focused business solutions by assisting in managing product assortment, category management, and pricing and promotion optimization.

Demand and pricing for our pulp and paperboard products are largely determined by macro-economic conditions around the world. Paperboard prices softened modestly in 2012 compared to 2011.

Our pulp and paperboard business experiences cyclical market conditions and, as a result, historical prices for our products and sales volumes have been volatile. Product pricing is significantly affected by the relationship between supply and demand for our products. Product supply in the industry is influenced primarily by fluctuations in available manufacturing production, which tends to increase during periods when prices remain strong. In addition, currency exchange rates affect U.S. supplies of paperboard, as non-U.S. manufacturers are attracted to the U.S. market when the dollar is relatively strong. Our paperboard business, through exports denominated in U.S. dollars, has benefited significantly from general weakness in the U.S. dollar over the past few years.

The markets for our products are highly competitive and companies that have substantially greater financial resources than we do compete with us in each of our markets. In addition, our businesses are capital intensive, which leads to high fixed costs, large capital outlays and generally results in continued production as long as prices are sufficient to cover variable costs. These conditions have contributed to substantial price competition, particularly during periods of reduced demand. Some of our competitors have lower production costs and greater buying power and, as a result, may be less adversely affected than we are by price decreases.

Net sales consist of sales of consumer tissue and pulp and paperboard, net of discounts, returns and allowances and any sales taxes collected.

22

Operating Costs

Prices for our principal operating cost items are variable and directly affect our results of operations. For example, as economic conditions improve, we normally would expect at least some upward pressure on these operating costs. Competitive market conditions can limit our ability to pass cost increases through to our customers.

	Year Ended December 31,
	2012				2011				2010
(Dollars in thousands)	Cost		Percentage of Cost of Sales		Cost		Percentage of Cost of Sales		Cost		Percentage of Cost of Sales
Purchased pulp	$	242,921	15.1	%	$	291,595	17.1	%	$	175,519	15.0	%
Chemicals	183,606		11.5		174,660		10.3		132,263		11.3
Transportation1	171,114		10.6		185,329		10.9		136,731		11.6
Chips, sawdust and logs	162,904		10.1		196,017		11.5		128,934		11.0
Energy	109,592		6.8		130,179		7.6		91,977		7.8
Maintenance and repairs2	98,217		6.1		99,775		5.9		82,368		7.0
Packaging supplies	86,282		5.4		94,926		5.6		45,263		3.9
Depreciation and amortization	79,333		4.9		76,933		4.5		47,728		4.0
	$	1,133,969	70.5	%	$	1,249,414	73.4	%	$	840,783	71.6	%

¹ Includes internal and external transportation costs.

²  Excluding related labor costs.

Purchased pulp. We purchase a significant amount of the pulp from external suppliers to supply our consumer products, and, to a lesser extent, our pulp and paperboard manufacturing facilities. For 2012, total purchased pulp costs were 15.1% of our cost of sales, representing a decrease of 2.0 percentage points compared to 2011. This decrease in purchased pulp costs was primarily due to lower average external pulp prices in 2012, which were at record highs in 2011, and our continued focus on using our internally produced pulp at our consumer products facilities. In 2013 we expect to continue using our lower cost internally produced pulp at our consumer products facilities to help defray our pulp costs.

Chemicals. We consume a substantial amount of chemicals in the production of pulp and paperboard. The chemicals we generally use include polyethylene, caustic, starch, sodium chlorate, latex and specialty paper process chemicals. A large portion of the chemicals used in our manufacturing processes, particularly in the pulp-making process, are petroleum-based and are impacted by petroleum prices. Chemical costs for 2012 increased $8.9 million, or 1.2 percentage points, over 2011 costs, primarily as a result of increased production volumes and, to a lesser degree, higher starch and caustic pricing.

Transportation. Fuel prices significantly impact transportation costs for delivery of raw materials to our manufacturing facilities, internal inventory transfers and delivery of our finished products to customers. Changing fuel prices particularly affect our margins for consumer products because we supply customers throughout the U.S. and transport significant numbers of unconverted parent rolls from our tissue mills to our geographically dispersed tissue converting facilities. Our transportation costs for 2012, compared to 2011, decreased as less fuel was needed because of continuing optimization of shipping to and from our expanded converting facilities resulting from the Cellu Tissue acquisition. Because of our expanded size, we were also able to continue negotiating better fuel rates and surcharges. In addition, as a result of the sale of our Lewiston, Idaho sawmill in November 2011, overall transportation costs were lower for 2012 compared to 2011.

Chips, sawdust and logs. We purchase chips, sawdust and logs used to manufacture pulp. Overall costs for chips, sawdust and logs for 2012 decreased compared to 2011, both in dollars and as a percentage of cost of sales, primarily due to the sale of our Lewiston, Idaho sawmill in November 2011. Excluding the effects of our former sawmill, the cost of chips, sawdust and logs decreased slightly when compared to the prior year period primarily due to lower hardwood usage,which was attributable to the use of a higher proportion of lower-priced sawdust, and lower overall pricing at our Lewiston, Idaho, pulp and paperboard mill.In 2013, as a result of our acquisition of a wood chipping facility at the end of 2012, we expect to be less exposed to market costs for chips, sawdust and logs.

23

Energy. We use energy in the form of electricity, hog fuel, steam and natural gas to operate our mills. Energy prices have fluctuated widely over the past decade. We have taken steps, and intend to continue to take steps, to reduce our exposure to volatile energy prices through conservation. In addition, cogeneration facilities that produce steam and electricity at our East Hartford, Connecticut, Lewiston, Idaho and Menominee, Michigan manufacturing sites help to lower our energy costs. However, TAD tissue production involves greater natural gas usage than conventional tissue manufacturing and, as a result, we expect our natural gas requirements will increase due to the start up of our North Carolina TAD paper machine. To help mitigate our exposure to changes in natural gas prices, from time to time we have used firm-price contracts to supply a portion of our natural gas requirements. As of December 31, 2012, these contracts covered approximately 4% of our expected natural gas requirements for our manufacturing facilities for 2013. Energy costs for 2012 were lower than those in 2011 due to lower usage as a result of the sale of our Lewiston, Idaho, sawmill and lower natural gas and electricity prices. Our energy costs in future periods will continue to depend principally on our ability to produce a substantial portion of our electricity needs internally, on changes in market prices for natural gas and on our ability to reduce our energy usage.

Maintenance and repairs. We incur significant costs to maintain our manufacturing equipment. We perform routine maintenance on our machines and periodically replace a variety of parts such as motors, pumps, pipes and electrical parts. Maintenance and repair costs, including major maintenance and repairs, are expensed as incurred.

Major equipment maintenance and repairs in our Pulp and Paperboard segment also require maintenance shutdowns annually at our Idaho facility, historically, and approximately every 18 months at our Arkansas facility, which increases costs and may reduce net sales in the quarters in which the major maintenance shutdowns occur. We have optimized the major maintenance process at our Idaho facility and expect that facility to also be on an 18 month schedule going forward. In the first quarter of 2012, we had 17 combined days of scheduled machine downtime for the two paperboard machines at our Idaho pulp and paperboard mill and incurred approximately $15.5 million in major maintenance costs, excluding labor, compared to major maintenance costs of $11.4 million and $3.1 million, respectively, at the same mill in the first and third quarters of 2011. There was no major maintenance in the second and third quarters of 2012. As a result of a decision to defer a portion of our expected major maintenance costs at our Arkansas facility of $4.3 million originally planned for the fourth quarter of 2012 we spent $2.0 million in the fourth quarter of 2012, and expect to incur the remainder in the first quarter of 2013. In 2013, we expect to spend a total of approximately $14 million for planned major maintenance, which consists of an estimated $3 million at our Arkansas facility during the first quarter and an estimated $11 million at our Idaho facility, which is largely expected to be incurred during the third quarter.

In addition to ongoing maintenance and repair costs, we make capital expenditures to increase our operating capacity and efficiency, to improve safety at our facilities and to comply with environmental laws. Excluding $144.5 million of expenditures for our TAD project, we spent $50.0 million on capital expenditures during 2012, compared to $47.3 million in 2011. Capital expenditures for 2013 are expected to be approximately $91 million, which includes an estimated $16 million associated with the completion of our TAD project.

Packaging supplies. As a significant producer of private label consumer tissue products, we package to order for retail chains, wholesalers and cooperative buying organizations. In connection with sales to these customers, we incur expenses related to the unique packaging of our products for direct retail sale to consumers. For the year ended December 31, 2012, packaging costs were lower than those in 2011 primarily due to procurement synergies resulting from the Cellu Tissue acquisition.

Depreciation and amortization. We record depreciation expense associated with our plant and equipment and amortization expense associated with our definite-lived intangible assets. Depreciation and amortization expense for 2012 was higher than 2011 due primarily to additional depreciation associated with our TAD project. We anticipate a further increase in 2013 due primarily to a full year of depreciation associated with our North Carolina TAD paper machine, which started up in December 2012.

Other. Other costs not mentioned in the above table primarily consist of wage and benefit expenses and miscellaneous operating costs. Although period cut-offs and inventory levels can impact cost of sales, we would expect this impact to be relatively steady as a percentage of cost of sales on a year-over-year basis.

Selling, general and administrative expenses

Selling, general and administrative expenses primarily consist of compensation and associated costs for sales and administrative personnel, as well as commission expenses related to sales of our products. Our total selling, general and administrative costs were $121.0 million in 2012 compared to $110.0 million in 2011, with the increase primarily a result of higher wage and benefits expense, partially associated with the completion of our North Carolina facility, as well as increased incentive compensation expense, expense related to the First Quality/Metso Paper litigation and additional expenses associated with the integration of Cellu Tissue and achieving net cost saving synergies.

24

Interest expense

Interest expense in 2012 was mostly comprised of interest on our $375 million aggregate principal amount 7.125% senior notes due 2018 issued in October 2010, which we refer to as the 2010 Notes, and our $150 million aggregate principal amount 10.625% senior notes due 2016 issued in June 2009, which we refer to as the 2009 Notes.

Interest expense also includes amortization of deferred finance costs associated with all of our notes and our revolving credit facility. Interest expense in 2012 was partially offset by our capitalization of interest for our TAD project. Interest expense before reductions for capitalized interest in 2012 decreased slightly compared to 2011 primarily as a result of the third quarter 2011 redemption of our industrial revenue bonds.

In January 2013, we issued the 2013 Notes. A portion of the proceeds from the 2013 Notes were used to redeem the 2009 Notes in February 2013. As a result of the issuance of the 2013 Notes at an interest rate significantly lower than the 2009 Notes, our interest expense is expected to decrease by approximately $3.6 million on an annual basis. However, this favorable change in interest expense associated with our notes will be more than offset by a decrease in capitalized interest, as no capitalized interest is expected in 2013 compared to $12.6 million recorded in 2012.

Income taxes

Income taxes are based on reported earnings and tax rates in jurisdictions in which our operations occur and offices are located, adjusted for available credits, changes in valuation allowances and differences in reported earnings and taxable income using current law and enacted tax rates. The annual rates, including discrete items, for the years ended December 31, 2012, 2011 and 2010 were 42.5%, 44.1% and 3.1%, respectively. The reasons for the change in the tax rate from 2012 compared to 2011 was primarily due to four items.  The first was a decrease in the rate attributable to state tax credits.  The second was a decrease due to a remeasurement of state deferred tax assets and liabilities using anticipated future tax rates that will be in effect when the underlying assets and liabilities reverse.  The third was a reduction of the valuation allowance relating to foreign tax credits. Lastly, the decision in the first quarter of 2012 to convert certain gallons of alternative fuel originally claimed in 2009 under the Alternative Fuel Mixture Tax Credit, or AFMTC, which had been converted by us in 2010 to the Cellulosic Biofuel Producer Credit, or CBPC, back to gallons under the AFMTC and associated uncertain tax position. The low annual rate in 2010 was primarily due to benefits from the CBPC and reductions in our provision for uncertain tax positions relating to the AFMTC. 

The estimated annual effective tax rate for 2013 is expected to be approximately 40%.

25

RESULTS OF OPERATIONS

Our financial and other data are not necessarily indicative of our future performance. The results discussed below include Cellu Tissue operating results from December 28, 2010 forward.

Our business is organized into two reporting segments: Consumer Products and Pulp and Paperboard. Intersegment costs for pulp transferred from our Pulp and Paperboard segment to our Consumer Products segment are recorded at cost, and thus no intersegment sales or cost of sales for these transfers are included in our segments' results.

YEAR ENDED DECEMBER 31, 2012 COMPARED TO YEAR ENDED DECEMBER 31, 2011

The following table sets forth data included in our Consolidated Statements of Operations as a percentage of net sales.

	Years Ended December 31,
(Dollars in thousands)	2012					2011
Net sales	$	1,874,304		100.0	%	$	1,927,973		100.0	%
Costs and expenses:
Cost of sales	(1,607,872		)	85.8		(1,702,530		)	88.3
Selling, general and administrative expenses	(121,045		)	6.5		(109,998		)	5.7
Total operating costs and expenses	(1,728,917		)	92.2		(1,812,528		)	94.0
Income from operations	145,387			7.8		115,445			6.0
Interest expense, net	(33,796		)	1.8		(44,809		)	2.3
Other, net	—			—		284			—
Earnings before income taxes	111,591			6.0		70,920			3.7
Income tax provision	(47,460		)	2.5		(31,246		)	1.6
Net earnings	$	64,131		3.4		$	39,674		2.1

Net sales—Net sales for 2012 decreased by $53.7 million, or 2.8%, compared to 2011, due to the sale of our Lewiston, Idaho sawmill in November 2011, which accounted for $80.3 million of net sales in 2011. Excluding the impact of net sales from the sawmill in 2011, overall net sales were higher in 2012 due to increased shipments and higher net selling prices for our consumer products as well as increased paperboard shipments. These favorable comparisons were partially offset by lower external pulp shipments, due to increased internal usage of pulp we produce, and lower pulp and paperboard net selling prices. These items are discussed further below under “Discussion of Business Segments.”

Cost of sales—Cost of sales decreased 2.5 percentage points in 2012 to 85.8% of net sales, compared to 88.3% of net sales in 2011. The favorable change in cost of sales was due primarily to lower costs for purchased pulp, chips, sawdust and logs, energy, and transportation, partially offset by higher chemical costs.

Selling, general and administrative expenses—Selling, general and administrative expenses increased $11.0 million, or 10.0%, during 2012 compared to 2011. The increase was primarily a result of higher wage and benefits expense, increased incentive compensation expense, expense related to the First Quality/Metso Paper litigation and additional expenses associated with the integration of Cellu Tissue and achieving net cost saving synergies.

26

DISCUSSION OF BUSINESS SEGMENTS

Consumer Products

	Years Ended December 31,
(Dollars in thousands - except per-ton amounts)	2012			2011
Net sales	$	1,134,556		$	1,092,133
Operating income	93,347			42,806
Percent of net sales	8.2		%	3.9		%
Tissue shipments (short tons)	531,327			515,519
Tissue sales price (per short ton)	$	2,135		$	2,119

Net sales for our Consumer Products segment in 2012 increased $42.4 million, or 3.9%, compared to 2011 due to increased shipments and higher average net selling prices. Shipments increased 3.1% due to increased case sales of retail tissue products, which were largely attributable to an increase in shipments from our North Carolina converting facility, and higher non-retail shipments in 2012. The increase in net selling prices was primarily due to a price increase for our retail tissue products implemented in the fourth quarter of 2011 and the first quarter of 2012, partially offset by lower non-retail pricing.

Operating income, which more than doubled during 2012 with an increase of $50.5 million, outpaced the growth of net sales due to lower purchased pulp and energy costs, as well as lower overall transportation and packaging costs primarily attributable to net cost saving synergies from the integration of Cellu Tissue. These improvements were partially offset by increased staffing, training and startup costs associated with our North Carolina paper making and converting facilities, higher incentive compensation expense, increased commission expense and a loss on the sale of legacy Cellu Tissue foam manufacturing assets.

Pulp and Paperboard

	Years Ended December 31,
(Dollars in thousands - except per-ton amounts)	2012			2011
Net sales	$	739,748		$	835,840
Operating income	103,910			92,827
Percent of net sales	14.0		%	11.1		%
Shipments (short tons)
Paperboard	760,919			743,845
Pulp	17,238			42,201
Sales price (per short ton)
Paperboard	$	956		$	976
Pulp	520			694

Net sales for our Pulp and Paperboard segment were down $96.1 million, or 11.5%, during 2012 compared to 2011. The decrease was primarily attributable to the sale of our Lewiston, Idaho sawmill in November 2011, which accounted for $80.3 million of the segment's net sales in 2011. Paperboard net sales increased slightly in 2012 due to a 2.3% increase in shipments that was partially offset by a 2.0% decrease in net selling prices resulting primarily from market pressure. The higher overall paperboard net sales in 2012 were more than offset by a decrease in net sales of external pulp, which was largely the result of increased internal usage by our Consumer Products segment of pulp that we produced.

Operating income in 2012 increased by 11.9% compared to 2011, primarily due to lower costs of energy and purchased pulp, as well as benefits from the sale of our Lewiston, Idaho sawmill. These favorable comparisons were partially offset by higher chemical, wage and benefit and transportation costs compared to 2011. Operating income for 2012 was also negatively impacted by $0.9 million related to deferred revenue as part of our tax planning strategy.

27

YEAR ENDED DECEMBER 31, 2011 COMPARED TO YEAR ENDED DECEMBER 31, 2010

The following table sets forth data included in our Consolidated Statements of Operations as a percentage of net sales.

	Years Ended December 31,
(Dollars in thousands)	2011					2010
Net sales	$	1,927,973		100.0	%	$	1,372,965		100.0	%
Costs and expenses:
Cost of sales	(1,702,530		)	88.3		(1,173,804		)	85.5
Selling, general and administrative expenses	(109,998		)	5.7		(100,394		)	7.3
Total operating costs and expenses	(1,812,528		)	94.0		(1,274,198		)	92.8
Income from operations	115,445			6.0		98,767			7.2
Interest expense, net	(44,809		)	2.3		(22,571		)	1.6
Debt retirement costs	284			—		—			—
Earnings before income taxes	70,920			3.7		76,196			5.5
Income tax provision	(31,246		)	1.6		(2,396		)	0.2
Net earnings	$	39,674		2.1		$	73,800		5.4

Net sales—We experienced significantly higher shipments in 2011 in our Consumer Products segment, due primarily to the acquired Cellu Tissue operations, resulting in an increase in total company net sales of $555.0 million, a 40.4% increase compared to 2010. We also realized higher net selling prices for our paperboard in 2011 compared to 2010. These increases were partially offset by lower net selling prices year-over-year due to our broader mix of tissue products in 2011. These items are discussed further below under "Discussion of Business Segments."

Cost of sales—Cost of sales was 88.3% of net sales for 2011, compared to 85.5% for 2010. The $528.7 million increase in 2011 was primarily due to higher overall costs related to the inclusion of Cellu Tissue’s operations, as well as integration costs associated with those operations. Other factors that contributed to higher cost of sales in 2011 included wage and benefit costs associated with our North Carolina expansion, higher costs for packaging supplies and chemicals, higher transportation costs due to higher fuel prices and increased shipments, and retroactive pay related to labor contracts.

Selling, general and administrative expenses—Selling, general and administrative expenses decreased as a percentage of sales for 2011 compared to 2010 as a result of economies of scale relating to the significantly higher sales. The $9.6 million increase in expense for 2011 compared to 2010 was primarily due to integration and startup costs related to Cellu Tissue and our North Carolina facilities.

28

DISCUSSION OF BUSINESS SEGMENTS

Consumer Products

	Years Ended December 31,
(Dollars in thousands - except per-ton amounts)	2011			2010
Net sales	$	1,092,133		$	570,047
Operating income	42,806			80,791
Percent of net sales	3.9		%	14.2		%
Tissue shipments (short tons)	515,519			218,653
Tissue sales price (per short ton)	$	2,119		$	2,607

The Consumer Products segment reported a $522.1 million, or 91.6%, increase in net sales and a $38.0 million decrease in operating income for 2011 compared to 2010. The increase in net sales was primarily due to the addition of sales from the Cellu Tissue operations, which contributed to a 135.8% increase in shipment volumes, partially offset by 18.7% lower net selling prices. The decrease in net selling prices is a result of the addition of Cellu Tissue products and the resulting change in the mix of tissue grades sold. The Cellu Tissue facilities produce a broad range of products and some tissue grades that sell at lower price points than the tissue products produced by the Consumer Products segment historically.

The decrease in operating income was primarily due to higher wage and benefit costs associated with the startup of our North Carolina facilities, relocation and severance costs associated with the acquisition of Cellu Tissue, and retroactive pay related to labor contracts. In addition, costs were higher for packaging supplies, transportation costs associated with higher fuel prices and additional shipments, depreciation and amortization resulting from the Cellu Tissue acquisition and repair and maintenance expenses associated with the Cellu Tissue facilities. Lower pulp costs, due to decreasing costs in the second half of 2011, partially offset the unfavorable comparisons.

Pulp and Paperboard

	Years Ended December 31,
(Dollars in thousands - except per-ton amounts)	2011			2010
Net sales	$	835,840		$	802,918
Operating income	92,827			64,869
Percent of net sales	11.1		%	8.1		%
Shipments (short tons)
Paperboard	743,845			739,380
Pulp	42,201			60,748
Sales price (per short ton)
Paperboard	$	976		$	915
Pulp	694			691

Net sales for the Pulp and Paperboard segment were $32.9 million, or 4.1%, higher in 2011 compared to 2010. The increase in net sales over 2010 was largely due to an increase of 6.7% in paperboard prices and slightly higher paperboard shipments. These increases were partially offset by a 30.5% decrease in external pulp shipments due primarily to increased internal usage.

Operating income increased $28.0 million in 2011 compared to the same period in 2010. The increase was largely attributable to higher net selling prices for paperboard and lower maintenance, purchased paper and wood fiber costs, all of which were partially offset by higher chemical costs.

29

EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTIZATION (EBITDA) AND ADJUSTED EBITDA

We use earnings before interest, tax, depreciation and amortization, or EBITDA, and EBITDA adjusted for certain items, or Adjusted EBITDA, as supplemental performance measures, that are not required by, or presented in accordance with generally accepted accounting principles, or GAAP. EBITDA and Adjusted EBITDA should not be considered as alternatives to net earnings, operating income or any other performance measure derived in accordance with GAAP, or as alternatives to cash flows from operating activities or a measure of our liquidity or profitability. In addition, our calculation of EBITDA and Adjusted EBITDA may or may not be comparable to similarly titled measures of other companies.

EBITDA and Adjusted EBITDA have important limitations as analytical tools, and should not be considered in isolation, or as a substitute for any of our results as reported under GAAP. Some of these limitations are:

▪ EBITDA and Adjusted EBITDA do not reflect our cash expenditures for capital assets;

▪ EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital requirements;

▪ EBITDA and Adjusted EBITDA do not include cash pension payments;

▪ EBITDA and Adjusted EBITDA exclude certain tax payments that may represent a reduction in cash available to us;

▪ EBITDA and Adjusted EBITDA do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments on our debt;

▪ although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect cash requirements for such replacements; and

▪ other companies, including other companies in our industry, may calculate these measures differently than we do, limiting their usefulness as a comparative measure.

We present EBITDA and Adjusted EBITDA because we believe they assist investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. In addition, we use EBITDA and Adjusted EBITDA: (i) as factors in evaluating management’s performance when determining incentive compensation, (ii) to evaluate the effectiveness of our business strategies and (iii) because our credit agreement and the indentures governing the 2009 Notes, 2010 Notes and 2013 Notes use measures similar to EBITDA to measure our compliance with certain covenants.

The following table provides our EBITDA and Adjusted EBITDA for the periods presented, as well as a reconciliation to net earnings:

	Years Ended December 31,
(In thousands)	2012		2011		2010
Net earnings	$	64,131	$	39,674	$	73,800
Interest expense, net of interest income	33,796		44,809		22,571
Income tax provision	47,460		31,246		2,396
Depreciation and amortization expense	79,333		76,933		47,728
EBITDA	$	224,720	$	192,662	$	146,495
Loss on sale of foam assets	1,014		—		—
Expense associated with Metso litigation	2,019		—		—
Lewiston, Idaho sawmill sale related adjustments1	—		2,883		—
Cellu Tissue acquisition related expenses	—		—		20,354
Adjusted EBITDA	$	227,753	$	195,545	$	166,849

¹  The total impact of the sawmill sale and related adjustments on the Pulp and Paperboard segment was $15.4 million of expense. The net impact to the company was $2.9 million of net expense in 2011 primarily due to offsetting LIFO inventory liquidation and other adjustments recorded at the corporate level.  

30

LIQUIDITY AND CAPITAL RESOURCES

The following table presents information regarding our cash flows for the years ended December 31, 2012, 2011 and 2010.

Cash Flows Summary

	Years Ended December 31,
(In thousands)	2012			2011			2010
Net cash provided by operating activities	$	198,693		$	68,395		$	185,591
Net cash used for investing activities	(177,004		)	(50,149		)	(227,938		)
Net cash (used for) provided by financing activities	(17,549		)	(29,096		)	58,451

Operating Activities—Net cash provided by operating activities for 2012 significantly increased compared to 2011 due primarily to cash generated from working capital, compared to cash used for working capital in 2011, as well as higher earnings, after adjusting for noncash items. These increases were partially offset by a $15.8 million excess tax benefit from equity-based compensation arrangements in 2012, a $10.8 million increase in taxes receivable in 2012 compared to a slight decrease in 2011, and an $8.1 million increase in contributions to our qualified pension plans in 2012 compared to 2011.

For 2011, net cash provided by operating activities decreased $117.2 million, or 63.1%, compared to 2010. The decrease was primarily attributable to the cash receipt of $101.3 million during 2010 from the Federal Government primarily related to the AFMTC claimed in 2009. Working capital increased $80.7 million in 2011 due to increased receivables and inventories from increased sales and our North Carolina expansion, as well as a reduction in our accounts payable. These changes were partially offset by higher earnings in 2011, after adjusting for noncash items.

Investing Activities—Cash flows used in investing activities increased $126.9 million in 2012, compared to 2011. The increase was largely due to increased capital spending for plant and equipment in 2012, primarily associated with our TAD project, as well as a $36.1 million reduction in the amount of cash provided from the conversion of short-term investments into cash in 2012 compared to 2011.

Net cash used for investing activities decreased by $177.8 million in 2011 compared to 2010. This was largely due to our acquisition of Cellu Tissue in 2010 for $247.0 million, offset by cash acquired of $3.2 million. This was partially offset by an increase of $88.0 million in capital expenditures in 2011, primarily related to the cash outlays associated with our new converting and manufacturing facilities in North Carolina and capital improvement projects at Cellu Tissue facilities.

Financing Activities—Net cash used for financing activities was $17.5 million in 2012, compared with $29.1 million in 2011. Cash used for financing activities in 2012 consisted of payments totaling $13.2 million for minimum tax withholdings associated with settlement and distribution of equity-based awards and $18.7 million for treasury stock purchases, partially offset by an excess tax benefit of $15.8 million associated with the equity-based awards settled and distributed in 2012.

Net cash used for financing activities was $29.1 million for 2011, compared to cash provided by financing activities of $58.5 million in 2010. The use of cash in 2011 primarily consisted of $11.3 million used to repurchase shares of our common stock pursuant to our $30 million stock repurchase program and $15.6 million used in the redemption of the remaining principal amount on our outstanding IRBs and associated costs. The cash provided by financing activities in 2010 was primarily attributable to financing related to the Cellu Tissue acquisition, as discussed below.

Capital Resources

Due to the competitive and cyclical nature of the markets in which we operate, as well as an uncertain economic environment, there is uncertainty regarding the amount of cash flows we will generate during the next twelve months. However, we believe that our cash flows from operations, cash on hand, short-term investments and available borrowing capacity under our credit facility will be adequate to fund debt service requirements and provide cash required to support our ongoing operations, capital expenditures, and working capital needs for the next twelve months.

We may choose to refinance all or a portion of our indebtedness on or before maturity. We cannot be certain that we will be able to refinance any of our indebtedness on commercially reasonable terms or at all. As of December 31, 2012, our short-term investments were not restricted and were largely invested in demand deposits.

At December 31, 2012, our financial position included debt of $523.9 million, compared to the balance of $523.7 million at December 31, 2011. Stockholders’ equity at December 31, 2012 was $540.9 million, compared to the December 31, 2011 balance of $484.9 million. Our total debt to total capitalization, excluding accumulated other comprehensive loss, was 44.4% at December 31, 2012, compared to 46.6% at December 31, 2011.

31

Subsequent to our year end, we issued the 2013 Notes, of which we received net proceeds of $271.2 million, after deducting discounts and estimated offering expenses. We used approximately $165.8 million of the net proceeds to redeem all of our outstanding 2009 Notes, and intend to use approximately $100 million of the remaining net proceeds to purchase shares of the company's common stock pursuant to our $100 million stock repurchase program authorized in January 2013.

Debt Arrangements

2010 Notes

Our 2010 Notes mature on November 1, 2018, have an interest rate of 7.125% and were issued at their face value. The issuance of these notes generated net proceeds of $367.5 million after deducting offering expenses. The net proceeds from the issuance of the 2010 Notes were used to finance in part our acquisition of Cellu Tissue, to refinance certain existing indebtedness of Cellu Tissue, and to pay fees and expenses incurred as part of the 2010 Note offering, acquisition of Cellu Tissue and related transactions.

The 2010 Notes are guaranteed by certain of our existing and future direct and indirect domestic subsidiaries. The 2010 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 2010 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 2010 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 assets.

Prior to November 1, 2013, we may redeem up to 35% of the 2010 Notes at a redemption price equal to 107.125% of the principal amount plus accrued and unpaid interest with the proceeds from one or more qualified equity offerings. We have the option to redeem all or a portion of the 2010 Notes at any time before November 1, 2014 at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest and a “make whole” premium. On or after November 1, 2014, we may redeem all or a portion of the 2010 Notes at specified redemption prices plus accrued and unpaid interest. In addition, we may be required to make an offer to purchase the 2010 Notes upon the sale of certain assets and upon a change of control.

Our 2013 expected debt service obligation related to the 2010 Notes, consisting of cash payments for interest, is $26.7 million.

Redemption of $150 million senior notes due 2016 and issuance of $275 million senior notes due 2023

In June 2009, we issued senior unsecured notes, which we refer to as the 2009 Notes, in the aggregate principal amount of $150 million. The 2009 Notes, which were due on June 15, 2016 and had an interest rate of 10.625%, were issued at a price equal to 98.792% of their face value.

On February 22, 2013, in an event occurring subsequent to the close of our 2012 fiscal year end, we exercised our option to redeem all of the 2009 Notes at a redemption price equal to approximately $166 million, which consisted of 100% of the principal amount, plus an approximate $13 million “make whole” premium and accrued and unpaid interest of approximately $3 million. Proceeds to fund the redemption of our 2009 Notes were made available through the sale of $275 million aggregate principal amount senior notes on January 23, 2013, 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 our existing and future direct and indirect domestic subsidiaries, 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 2013 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 2013 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 assets.

Prior to February 1, 2016, we may redeem up to 35% of the 2013 Notes at a redemption price equal to 104.5% of the principal amount plus accrued and unpaid interest with the proceeds from one or more qualified equity offerings. We have the option to redeem all or a portion of the 2013 Notes at any time before February 1, 2018 at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest and a “make whole” premium. On or after February 1, 2018 we may redeem all or a portion of the 2013 Notes at specified redemption prices plus accrued and unpaid interest. In addition, we may be required to make an offer to purchase the 2013 Notes upon the sale of certain assets and upon a change of control.

Semi-annual interest payments of $6.2 million under the 2013 Notes are payable on February 1 and August 1 each year. In 2013, we will only make one such semi-annual payment of approximately $6.5 million in August, which represents interest accrued from January 23 to August 1, 2013.

32

CityForest Industrial Bonds

Prior to our acquisition of Cellu Tissue, Cellu Tissue CityForest LLC, or CityForest, a wholly-owned subsidiary of Cellu Tissue, was party to a loan agreement, dated as of March 1, 1998, with the City of Ladysmith, Wisconsin. Pursuant to this agreement, the City of Ladysmith loaned the proceeds of its Variable Rate Demand Solid Waste Disposal Facility Revenue Bonds, Series 1998, or IRBs, to CityForest to finance the construction by CityForest of a solid waste disposal facility. As a result of our acquisition of Cellu Tissue, we assumed the IRBs. During the third quarter of 2011, we redeemed the remaining $15.2 million principal amount of outstanding IRBs.

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 term of our revolving credit facility ends on September 30, 2016.

As of December 31, 2012, there were no borrowings outstanding under the credit facility, but approximately $5.9 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 greatest 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 1.0%, plus between 0.25% and 0.75%. The percentage margin on all loans is based on our fixed charge coverage ratio for the most recent four quarters. As of December 31, 2012, we would have been permitted to draw approximately $119.1 million under the credit facility at LIBOR plus 1.75% or base rate plus 0.25%.

A minimum fixed charge coverage ratio is the only financial maintenance covenant 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 December 31, 2012, the fixed charge coverage ratio for the most recent four quarters was 3.6-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.

33

CONTRACTUAL OBLIGATIONS

The following table summarizes our contractual obligations as of December 31, 2012. Portions of the amounts shown are reflected in our financial statements and accompanying notes, as required by GAAP. See the footnotes following the table for information regarding the amounts presented and for references to relevant financial statement notes that include a detailed discussion of the item.

	Payments Due by Period
(In thousands)	Total		Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years
Long-term debt1	$	525,000	$	—	$	—	$	150,000	$	375,000
Interest on long-term debt1	216,096		42,657		85,313		61,407		26,719
Capital leases2	49,465		2,330		4,795		4,979		37,361
Operating leases2	44,947		14,966		16,715		9,307		3,959
Purchase obligations3	534,053		314,926		211,827		7,300		—
Other obligations4,5	307,583		118,184		55,858		35,979		97,562
Total	$	1,677,144	$	493,063	$	374,508	$	268,972	$	540,601

¹ Included above are the principal and interest payments that were due on our 2009 and 2010 Notes, which were outstanding as of December 31, 2012. Subsequent to December 31, 2012, we issued the $275 million 2013 Notes, which mature in 2023. A portion of the funds from these notes were used in the redemption of our 2009 Notes. For more information regarding specific terms of our long-term debt, see the discussion under the heading “Debt Arrangements,” and Note 10, “Debt,” in the notes to the consolidated financial statements.

² These amounts represent our minimum capital lease payments, including amounts representing interest, and our minimum operating lease payments. See Note 16, “Commitments and Contingencies,” in the notes to the consolidated financial statements.

³ Purchase obligations consist primarily of contracts for the purchase of raw materials (primarily pulp) from third parties, trade accounts payable as of December 31, 2012, contracts for outside wood chipping, contracts with railroads and contracts with natural gas and electricity providers.

⁴ Included in other obligations are accrued liabilities and accounts payable (other than trade accounts payable) as of December 31, 2012, liabilities associated with supplemental pension and deferred compensation arrangements, and estimated payments on qualified pension and postretirement employee benefit plans. Since pension contributions are determined by factors that are subject to change each year, estimated payments on qualified pension plans included above are only for years 1-5 and are based on current estimates of minimum required contributions.

⁵ Total excludes $78.7 million of unrecognized tax benefits due to the uncertainty of timing of payment. See Note 8, “Income Taxes,” in the notes to the consolidated financial statements.

OFF-BALANCE SHEET ARRANGEMENTS

We have no off-balance sheet arrangements that have had, or are reasonably likely to have, a material current or future effect on our financial conditions or consolidated financial statements.

ENVIRONMENTAL

Our operating facilities are subject to rigorous federal and state environmental regulation governing air emissions, wastewater discharges, and solid and hazardous waste management. Our goal is continuous compliance with all environmental regulations and we regularly monitor our activities to ensure compliance with all pertinent rules and requirements. Compliance with environmental regulations is a significant factor in our business and requires periodic capital expenditures as well as additional operating costs as rules change.

Of our 15 manufacturing sites, two were audited for environmental compliance by outside auditors in 2012. No material issues were identified during these audits. In 2013, we will have eight outside audits conducted. Our goal is that each of our manufacturing facilities will undergo a detailed environmental audit by an outside party at least once every three years.

Our tissue manufacturing and converting facility in Neenah, Wisconsin, received a drafted National Pollutant Discharge Elimination System discharge permit, or NPDES, with proposed interim limit on Total Maximum Daily Loads, or TMDL. When the new permit is issued, we expect the initial requirements to be well within the capabilities of the current waste water treatment system, although some upgrades may be required between 2015 and 2016. No compliance issues are expected and the level of capital upgrades is expected to be minor.

The new federal standard for hazardous air pollutants from boiler and process heaters were finalized by the U.S. Environmental Protection Agency, or EPA, in late 2012. Our sites at Lewiston, Idaho, Menominee, Michigan, and Cypress Bend, Arkansas, will be affected by this new rule, although the specific requirements are uncertain at this time. Any capital projects will be executed between 2014 and 2016. Preliminary total cost estimates for all required projects are expected to be between $5 and $10 million.

The EPA is also currently reviewing the risks associated with hazardous air pollutants from Kraft paper mills. Any changes to these rules would impact our Lewiston and Cypress Bend operations.

34

Concern over climate change, including the impact of global warming, may lead to future regulations. We believe there are no U.S. or Canadian proposed rules that would have a material impact on our operations.

In 2012 we received notification of alleged Clean Air Act violations at our Lewiston facility. We have entered into a tolling agreement and are negotiating with the U.S. Department of Justice and EPA to resolve these alleged violations. We expect these negotiations to continue through 2013.

Our facilities are currently in substantial compliance with applicable environmental laws and regulations. We cannot be certain, however, that situations that may give rise to material environmental liabilities will not be discovered or that the enactment of new environmental laws or regulations or changes in existing laws or regulations will not require significant expenditures by us.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in accordance with GAAP requires our management to select and apply accounting policies that best provide the framework to report the results of operations and financial position. The selection and application of those policies requires management to make difficult, subjective and complex judgments concerning reported amounts of revenue and expenses during the reporting period and the reported amounts of assets and liabilities at the date of the financial statements. As a result, it is possible that materially different amounts would be reported under different conditions or using different assumptions.

See Note 3, “Recently Adopted and Prospective Accounting Standards” to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for additional information regarding recently adopted and new accounting pronouncements.

Goodwill and intangibles. Our acquisitions are accounted for using the purchase method of accounting as prescribed by applicable accounting guidance. In accordance with the accounting guidance, we revalued the assets and liabilities acquired at their respective fair values on the acquisition date. Changes in assumptions and estimates during the allocation period affecting the acquisition date fair value of acquired assets and liabilities would result in changes to the recorded values, resulting in an offsetting change to the goodwill balance associated with the business acquired. Significant changes in assumptions and estimates subsequent to completing the allocation of purchase price to the assets and liabilities acquired, as well as differences in actual results versus estimates, could have a material impact on our earnings.

Goodwill from an acquisition represents the excess of the cost of a business acquired over the net of the amounts assigned to assets acquired, including identifiable intangible assets and liabilities assumed. As a result of our Cellu Tissue acquisition, we recorded $229.5 million of goodwill on our Consolidated Balance Sheet as of December 31, 2010, which has not been subsequently adjusted through December 31, 2012. Goodwill is not amortized but tested for impairment annually and at any time when events suggest impairment may have occurred. When required, our goodwill impairment test will be performed by comparing the fair value of the Consumer Products reporting unit to its carrying value. We incorporate assumptions involving future growth rates, discount rates and tax rates in projecting the future cash flows. In the event the carrying value exceeds the fair value of the reporting unit, an impairment loss would be recognized to the extent the carrying amount of the reporting unit’s goodwill exceeds its implied fair value.

Long-lived assets. A significant portion of our total assets are invested in our manufacturing facilities. Also, the cyclical patterns of our businesses cause cash flows to fluctuate by varying degrees from period to period. As a result, long-lived assets are a material component of our financial position with the potential for material change in valuation if assets are determined to be impaired. Accounting guidance requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable, as measured by its undiscounted estimated future cash flows.

We use our operational budgets to estimate future cash flows. Budgets are inherently uncertain estimates of future performance due to the fact that all inputs, including net sales, costs and capital spending, are subject to frequent change for many different reasons. Because of the number of variables involved, the interrelationship between the variables and the long-term nature of the impairment measurement, sensitivity analysis of individual variables is not practical. Budget estimates are adjusted periodically to reflect changing business conditions, and operations are reviewed, as appropriate, for impairment using the most current data available.

We believe we have adequate support for the carrying value of all of our long-lived assets based on anticipated cash flows that will result from our estimates of future demand, pricing, and production costs, assuming certain levels of capital expenditures.

35

Pension and postretirement employee benefits. The determination of pension plan expense and the requirements for funding our pension plans are based on a number of actuarial assumptions. Two critical assumptions are the discount rate applied to pension plan obligations and the rate of return on plan assets. For other postretirement employee benefit, or OPEB, plans, which provide certain health care and life insurance benefits to qualified retired employees, critical assumptions in determining OPEB expense are the discount rate applied to benefit obligations and the assumed health care cost trend rates used in the calculation of benefit obligations.

Note 12, "Savings, Pension and Other Postretirement Employee Benefit Plans," to our consolidated financial statements includes information for the three years ended December 31, 2012, 2011 and 2010, on the components of pension and OPEB expense and the underlying actuarial assumptions used to calculate periodic expense, as well as the funded status for our pension and OPEB plans as of December 31, 2012 and 2011.

The discount rate used in the determination of pension benefit obligations and pension expense is determined based on a review of long-term high-grade bonds and management’s expectations. At December 31, 2012, we calculated obligations using a 4.15% discount rate. The discount rates used at December 31, 2011 and 2010 were 4.90% and 5.70%, respectively. To determine the expected long-term rate of return on pension assets, we employ a process that analyzes historical long-term returns for various investment categories, as measured by appropriate indices. These indices are weighted based upon the extent to which plan assets are invested in the particular categories in arriving at our determination of a composite expected return. The long-term rates of return used for the years ended December 31, 2012, 2011 and 2010 were 8.00%, 8.00% and 8.50%, respectively.

Total periodic pension plan expense in 2012 was $10.7 million. An increase in the discount rate or the rate of expected return on plan assets, all other assumptions remaining the same, would decrease pension plan expense, and conversely, a decrease in either of these measures would increase plan expense. As an indication of the sensitivity that pension expense has to the discount rate assumption, a 25 basis point change in the discount rate would affect annual plan expense by approximately $0.6 million. A 25 basis point change in the assumption for expected return on plan assets would affect annual plan expense by approximately $0.6 million. The actual rates of return on plan assets may vary significantly from the assumptions used because of unanticipated changes in financial markets.

Our company-sponsored pension plans were underfunded by $78.7 million at December 31, 2012 and $89.1 million at December 31, 2011. As a result of being underfunded, we are required to make contributions to our qualified pension plans. In 2012, we contributed $20.6 million to these pension plans. We also contributed $0.2 million to our non-qualified pension plan in 2012. Our cash contributions in 2013 are estimated to be approximately $20 million.

For our OPEB plans, expense for 2012 was $3.8 million. We do not anticipate funding our OPEB plans in 2013 except to pay benefit costs as incurred during the year by plan participants. The discount rate used to calculate OPEB obligations, which was determined using the same methodology we used for our pension plans, was 4.05%, 4.95% and 5.60% at December 31, 2012, 2011 and 2010, respectively. The assumed health care cost trend rates used to calculate OPEB obligations and expense were 7.00% and 7.50%, respectively, in 2012, with both grading to 4.70% over approximately 60 years.

As an indication of the sensitivity that OPEB expense has to the discount rate assumption, a 25 basis point change in the discount rate would affect plan expense by approximately $0.4 million. A 1% change in the assumption for health care cost trend rates would have affected 2012 plan expense by approximately $0.5 million to $0.6 million and the total postretirement employee obligation by approximately $10.7 million to $12.5 million. The actual rates of health care cost increases may vary significantly from the assumption used because of unanticipated changes in health care costs.

Periodic pension and OPEB expenses are included in “Cost of sales” and “Selling, general and administrative expenses” in the Consolidated Statements of Operations. The expense is allocated to all business segments. In accordance with current accounting guidance governing defined benefit pension and other postretirement plans, at December 31, 2012 and 2011, long-term assets are recorded for overfunded plans and liabilities are recorded for underfunded plans. The funded status of a benefit plan is measured as the difference between plan assets at fair value and the projected benefit obligation. For underfunded plans, the estimated liability to be payable in the next twelve months is recorded as a current liability, with the remaining portion recorded as a long-term liability.

Effective December 15, 2010, the salaried pension plan was closed to new entrants and after December 31, 2011, it was frozen and ceased accruing further benefits. In 2010, we recorded a loss of $0.2 million related to the closing of the salaried pension plan. In addition, we recorded a $14.2 million decrease in our pension liability.

Income taxes. The conclusion that deferred tax assets are realizable is subject to certain assessments, projections and judgments made by management. In assessing whether deferred tax assets are realizable, the standard we use is whether it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which those temporary differences are deductible. We consider the scheduled reversal of deferred tax liabilities (including the impact of available carry forward periods), projected taxable income, and amounts of taxable income we would have generated historically if we had been a stand-alone company in making this

36

assessment. In order to fully realize the deferred tax asset, we will need to generate future taxable income before the expiration of the deferred tax assets governed by the tax code.

Based on existing deferred tax liabilities and projected taxable income over the periods for which the deferred tax assets are deductible, we believe that it is more likely than not that we will realize the benefits of these future deductible differences, excluding items for which we have already recorded a valuation allowance. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced.

We have tax jurisdictions located in many areas of the United States and Canada and are subject to audit in these jurisdictions. Tax audits by their nature are often complex and can require several years to resolve. In the preparation of our consolidated financial statements, management exercises judgment in estimating the potential exposure to unresolved tax matters and applies the guidance pursuant to uncertain tax positions which employs a more likely than not criteria approach for recording tax benefits related to uncertain tax positions. While actual results could vary, in management's judgment, we have adequate tax accruals with respect to the ultimate outcome of such unresolved tax matters.

37

ITEM 7A.

Quantitative and Qualitative Disclosures About Market Risks

Interest Rate Risk

Our exposure to market risks on financial instruments includes interest rate risk on our secured revolving credit facility. As of December 31, 2012, there were no borrowings outstanding under our revolving credit facility. The interest rates applied to borrowings under the credit facility are adjusted often and therefore react quickly to any movement in the general trend of market interest rates. For example, a one percentage point increase or decrease in interest rates, based on assumed outstanding credit facility borrowings of $10.0 million, would have a $0.1 million annual effect on interest expense. We currently do not attempt to mitigate the effects of short-term interest rate fluctuations on our credit facility borrowings through the use of derivative financial instruments.

Commodity Risk

We are exposed to market risk for changes in natural gas commodity pricing, which we have, from time-to-time, partially mitigated through the use of firm price contracts for a portion of our natural gas requirements for our manufacturing facilities. As of December 31, 2012, we had firm-price contracts for natural gas covering approximately 4% of the expected average monthly requirements for 2013.

Foreign Currency Risk

We have minimal foreign currency exchange risk. Virtually all of our international sales are denominated in U.S. dollars.

Quantitative Information about Market Risks

	Expected Maturity Date
(Dollars in thousands)	2013			2014			2015			2016			2017			Thereafter			Total
Long-term debt1:
Fixed rate	$	—		$	—		$	—		$	150,000		$	—		$	375,000		$	525,000
Average interest   rate	—		%	—		%	—		%	10.625		%	—		%	7.125		%	8.125		%
Fair value at December 31, 2012																			$	572,625

¹ On January 23, 2013, we exercised our option to redeemed all of the $150 million 2009 Notes maturing in 2016. Proceeds to fund the redemption of our 2009 Notes were made available through the issuance of the 2013 Notes. See Item 7, under the heading "Debt Arrangements," for more information.

38

ITEM 8.

Financial Statements and Supplementary Data

Index to Consolidated Financial Statements

	PAGE NUMBER
Consolidated Statements of Operations for the years ended December 31, 2012, 2011 and 2010	40
Consolidated Statements of Comprehensive Income for the years ended December 31, 2012, 2011 and 2010	41
Consolidated Balance Sheets at December 31, 2012 and 2011	42
Consolidated Statements of Cash Flows for the years ended December 31, 2012, 2011 and 2010	43
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2012, 2011 and 2010	44-45
Notes to Consolidated Financial Statements	46-77
Reports of Independent Registered Public Accounting Firm	78-79
Financial Statement Schedules:
All schedules have been omitted because the required information is not present or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements, including the notes thereto.

39

CLEARWATER PAPER CORPORATION

Consolidated Statements of Operations

(Dollars in thousands – except per-share amounts)

	FOR THE YEARS ENDED DECEMBER 31,
	2012			2011			2010
Net sales	$	1,874,304		$	1,927,973		$	1,372,965
Costs and expenses:
Cost of sales	(1,607,872		)	(1,702,530		)	(1,173,804		)
Selling, general and administrative expenses	(121,045		)	(109,998		)	(100,394		)
Total operating costs and expenses	(1,728,917		)	(1,812,528		)	(1,274,198		)
Income from operations	145,387			115,445			98,767
Interest expense, net	(33,796		)	(44,809		)	(22,571		)
Other, net	—			284			—
Earnings before income taxes	111,591			70,920			76,196
Income tax provision	(47,460		)	(31,246		)	(2,396		)
Net earnings	$	64,131		$	39,674		$	73,800
Net earnings per common share:
Basic	$	2.75		$	1.73		$	3.22
Diluted	2.72			1.66			3.12

All per common share amounts have been adjusted for the two-for-one stock split effected in the form of a stock dividend distributed on August 26, 2011.

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

40

CLEARWATER PAPER CORPORATION

Consolidated Statements of Comprehensive Income

(In thousands)

	FOR THE YEARS ENDED DECEMBER 31,
	2012			2011			2010
Net earnings	$	64,131		$	39,674		$	73,800
Other comprehensive (loss) income, net of tax:
Defined benefit pension and other postretirement employee   benefits:
Net (loss) gain arising during the period, net of tax benefit   (expense) of $6,359, $15,830, and $(11,188)	(9,780		)	(21,942		)	17,499
Prior service credit arising during the period, net of tax   expense of $(2,267), $(1,163) and $(71)	3,488			1,613			112
Amortization of actuarial loss included in net periodic cost,   net of tax expense of $(4,761), $(3,513) and $(4,194)	7,324			4,869			6,560
Amortization of prior service credit included in net   periodic cost, net of tax benefit of $806, $252 and $230	(1,240		)	(350		)	(360		)
Foreign currency translation adjustment	—			(874		)	—
(Amortization) recognition of deferred taxes related to   actuarial gain on other postretirement employee benefit   obligations	(220		)	(229		)	4,799
Other comprehensive (loss) income, net of tax	(428		)	(16,913		)	28,610
Comprehensive income	$	63,703		$	22,761		$	102,410

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

41

CLEARWATER PAPER CORPORATION

Consolidated Balance Sheets

(Dollars in thousands – except share data)

	AT DECEMBER 31,
	2012			2011
ASSETS
Current assets:
Cash	$	12,579		$	8,439
Short-term investments	20,000			55,001
Restricted cash	—			769
Receivables, net	154,143			176,189
Taxes receivable	20,828			10,000
Inventories	231,466			244,071
Deferred tax assets	17,136			39,466
Prepaid expenses	12,314			11,396
Total current assets	468,466			545,331
Property, plant and equipment, net	877,377			735,566
Goodwill	229,533			229,533
Intangible assets, net	47,753			49,748
Other assets, net	10,327			11,140
TOTAL ASSETS	$	1,633,456		$	1,571,318
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	165,596		$	144,631
Current liability for pensions and other postretirement employee benefits	9,137			9,861
Total current liabilities	174,733			154,492
Long-term debt	523,933			523,694
Liability for pensions and other postretirement employee benefits	204,163			215,932
Other long-term obligations	50,910			48,474
Accrued taxes	78,699			74,464
Deferred tax liabilities	60,124			69,358
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,   23,840,683 and 23,101,710 shares issued	2			2
Additional paid-in capital	326,901			315,964
Retained earnings	359,684			295,553
Treasury stock, at cost, common shares–853,470 and 333,300 shares   repurchased	(30,000		)	(11,350		)
Accumulated other comprehensive loss, net of tax	(115,693		)	(115,265		)
Total stockholders’ equity	540,894			484,904
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,633,456		$	1,571,318

All per common share amounts have been adjusted for the two-for-one stock split effected in the form of a stock dividend distributed on August 26, 2011.

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

42

CLEARWATER PAPER CORPORATION

Consolidated Statements of Cash Flows

(In thousands)

	FOR THE YEARS ENDED DECEMBER 31,
	2012			2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings	$	64,131		$	39,674		$	73,800
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	79,333			76,933			47,728
Deferred tax expense	12,870			14,777			(14,991		)
Equity-based compensation expense	9,703			8,134			8,518
Employee benefit plans	9,366			16,897			15,011
Changes in working capital, net	61,281			(86,012		)	(5,304		)
Change in taxes receivable, net	(10,828		)	354			93,754
Excess tax benefits from equity-based payment arrangements	(15,837		)	(885		)	(855		)
Change in non-current accrued taxes	4,235			2,453			(4,271		)
Funding of qualified pension plans	(20,627		)	(12,498		)	(25,100		)
Change in restricted cash	769			4,160			(3,637		)
Other, net	4,297			4,408			938
Net cash provided by operating activities	198,693			68,395			185,591
CASH FLOWS FROM INVESTING ACTIVITIES
Change in short-term investments, net	35,001			71,094			61,926
Additions to plant and equipment	(203,776		)	(134,069		)	(46,086		)
Cash paid for acquisitions, net of cash acquired	(9,264		)	—			(243,778		)
Proceeds from sale of assets	1,035			12,826			—
Net cash used for investing activities	(177,004		)	(50,149		)	(227,938		)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from long-term debt	—			—			367,500
Repayment of Cellu Tissue debt	—			(15,595		)	(304,667		)
Purchase of treasury stock	(18,650		)	(11,350		)	—
Excess tax benefits from equity-based payment arrangements	15,837			885			855
Payment of tax withholdings on equity-based payment arrangements	(13,234		)	(2,400		)	(3,470		)
Other, net	(1,502		)	(636		)	(1,767		)
Net cash (used for) provided by financing activities	(17,549		)	(29,096		)	58,451
Effect of exchange rate changes	—			361			—
Increase (decrease) in cash	4,140			(10,489		)	16,104
Cash at beginning of period	8,439			18,928			2,824
Cash at end of period	$	12,579		$	8,439		$	18,928
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest, net of amounts capitalized	$	30,086		$	43,595		$	15,938
Cash paid for income taxes	18,719			43,085			28,596
Cash received from income tax refunds	2,220			33,808			101,393
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING ACTIVITIES:
Increase in accrued plant and equipment	$	3,339		$	3,674		$	1,397
Property acquired under capital lease	—			12,687			11,404

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

43

CLEARWATER PAPER CORPORATION

Consolidated Statements of Stockholders’ Equity

(In thousands)

	COMMON STOCK			ADDITIONAL PAID-IN CAPITAL		RETAINED EARNINGS		TREASURY STOCK					ACCUMULATED OTHER COMPREHENSIVE (LOSS) GAIN			TOTAL STOCKHOLDERS’ EQUITY
	SHARES	AMOUNT						SHARES		AMOUNT
Balance, December 31, 2009	22,732	$	2	$	308,617	$	182,079	—		$	—		$	(126,962	)	$	363,736
Net earnings	—	—		—		73,800		—		—			—			73,800
Performance   share and   restricted   stock unit   awards	226	—		2,203		—		—		—			—			2,203
Pension and   OPEB, net   of tax of   $15,223	—	—		—		—		—		—			23,811			23,811
Recognition   of deferred   taxes   related to   actuarial gain   on other   postretirement   employee   benefit   obligations	—	—		—		—		—		—			4,799			4,799
Balance, December 31, 2010	22,958	$	2	$	310,820	$	255,879	—		$	—		$	(98,352	)	$	468,349
Net earnings	—	—		—		39,674		—		—			—			39,674
Performance   share and   restricted   stock unit   awards	144	—		5,144		—		—		—			—			5,144
Pension and   OPEB, net   of tax of   $(11,406)	—	—		—		—		—		—			(15,810		)	(15,810		)
Amortization   of deferred   taxes   related to   actuarial gain   on other   postretirement   employee   benefit   obligations	—	—		—		—		—		—			(229		)	(229		)
Foreign   currency   translation   adjustment	—	$	—	$	—	$	—	—		$	—		$	(874	)	$	(874	)
Purchase of   treasury stock	—	$	—	$	—	$	—	(333	)	$	(11,350	)	$	—		$	(11,350	)
Balance, December 31, 2011	23,102	$	2	$	315,964	$	295,553	(333	)	$	(11,350	)	$	(115,265	)	$	484,904

44

	COMMON STOCK			ADDITIONAL PAID-IN CAPITAL		RETAINED EARNINGS		TREASURY STOCK					ACCUMULATED OTHER COMPREHENSIVE (LOSS) GAIN			TOTAL STOCKHOLDERS’ EQUITY
	SHARES	AMOUNT						SHARES		AMOUNT
Net earnings	—	—		—		64,131		—		—			—			64,131
Performance   share and   restricted   stock unit   awards	739	—		10,937		—		—		—			—			10,937
Pension and   OPEB, net   of tax of   $(137)	—	—		—		—		—		—			(208		)	(208		)
Amortization   of deferred   taxes   related to   actuarial gain   on other   postretirement   employee   benefit   obligations	—	—		—		—		—		—			(220		)	(220		)
Purchase of   treasury stock	—	—		—		—		(520	)	(18,650		)	—			(18,650		)
Balance, December 31, 2012	23,841	$	2	$	326,901	$	359,684	(853	)	$	(30,000	)	$	(115,693	)	$	540,894

All common stock share numbers have been adjusted for the two-for-one stock split effected in the form of a stock dividend distributed on August 26, 2011.

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

45

CLEARWATER PAPER CORPORATION

Notes to Consolidated Financial Statements

NOTE 1 Nature of Operations and Basis of Presentation

On December 16, 2008, Potlatch Corporation, which we refer to in this report as Potlatch, distributed 100% of the issued and outstanding shares of our common stock to the holders of record of Potlatch common stock in a tax-free spin-off. Unless the context otherwise requires or unless otherwise indicates, references in this report to “Clearwater Paper Corporation,” “we,” “our,” “the company” and “us” refer:

▪ for all periods prior to the spin-off, to the consumer products and pulp and paperboard businesses separated from Potlatch in the spin-off; and

▪ for all periods following the spin-off, to Clearwater Paper Corporation and its subsidiaries.

On December 27, 2010, we acquired Cellu Tissue Holdings, Inc., or Cellu Tissue, and consolidated the acquisition in our financial statements as of that date.

On November 28, 2011, we sold our Lewiston, Idaho, sawmill to Idaho Forest Group of Coeur d’Alene, Idaho. The transaction included the sale of our sawmill, planer mill, dry kilns and related assets along with log and finished goods inventories and timber under contract, in the aggregate amount of approximately $30 million. This sawmill was our only wood products facility.

These consolidated financial statements include the financial condition and results of operations of Clearwater Paper Corporation and its wholly-owned subsidiaries. All intercompany transactions and balances between operations within the company have been eliminated.

NOTE 2 Summary of Significant Accounting Policies

SIGNIFICANT ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S., which we refer to in this report as 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 period. Significant areas requiring the use of estimates and measurement of uncertainty include determination of net realizable value for deferred tax assets, uncertain income tax positions, assessment of impairment of long-lived assets and goodwill, assessment of environmental matters, allocation of purchase price and fair value estimates for business combinations, 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” on our Consolidated Balance Sheet. As of December 31, 2012, all restricted cash, totaling $1.5 million, was included in "Other assets." As of December 31, 2011, all restricted cash, totaling $0.8 million, was classified as current and included in “Restricted cash” on our Consolidated Balance Sheet.

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 December 31, 2012 and 2011, we had allowances for doubtful accounts of $1.6 million and $1.7 million, respectively. Bad debt expense, net, charged to selling, general and administrative expenses during 2012, 2011 and 2010 was $0.2 million, $1.0 million and $0.1 million, respectively. All other activity impacting the allowance for doubtful accounts was immaterial for all periods.

INVENTORIES

At December 31, 2012, our inventories are stated at the lower of market or current average cost using the average cost method. Prior to the November 2011 sale of our Lewiston, Idaho, sawmill, we used the last-in, first-out, or LIFO, method to determine cost for our logs, wood fiber and the majority of our lumber.

46

PROPERTIES, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost, including assets acquired under capital lease obligations and any interest costs capitalized, less accumulated depreciation. Depreciation of buildings, equipment and other depreciable assets is determined using the straight-line method. Estimated useful lives generally range from 10 to 40 years for land improvements; 10 to 40 years for buildings and improvements; 5 to 25 years for machinery and equipment; and 2 to 15 years for office and other equipment. Assets we acquire through business combinations have estimated lives that are typically shorter than the assets we construct or buy new.

LONG-LIVED ASSETS

Our long-lived assets include property, plant and equipment and amortizable intangible assets. We review the carrying value of long-lived assets for impairment annually and when events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. An impairment of long-lived assets exists when the carrying value is not considered to be recoverable through future undiscounted cash flows from operations and the carrying value of the asset or asset group exceeds the estimated fair value.

GOODWILL AND INTANGIBLES

Goodwill from an acquisition represents the excess of the cost of a business acquired over the net of the amounts assigned to assets acquired, including identifiable intangible assets and liabilities assumed. Goodwill and intangible assets resulted from our acquisition of Cellu Tissue in 2010. Intangible assets also resulted from our December 2012 acquisition of a wood chipping facility. See Note 4, "Business Combinations." We used estimates in determining and assigning the fair value of goodwill and intangible assets, including estimates of useful lives of intangible assets, the amount and timing of related future cash flows and fair values of the related operations. Our intangible assets have definite lives and are amortized over their estimated useful lives. We assess our intangibles for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.

As a result of our acquisition of Cellu Tissue in December 2010, we recorded $229.5 million of goodwill as included on our Consolidated Balance Sheets as of December 31, 2012 and 2011. All of the recorded goodwill was assigned to our Consumer Products segment and reporting unit. Goodwill is not amortized but is tested for impairment annually as of November 1, as well as any time when events suggest impairment may have occurred. In the event the carrying value of our consumer products reporting unit, including goodwill, exceeds the estimated fair value of the reporting unit, an impairment loss would be recognized to the extent the carrying amount of the reporting unit’s goodwill exceeds its implied fair value.

PENSION AND OTHER POSTRETIREMENT EMPLOYEE BENEFITS

The determination of pension plan expense and the requirements for funding our pension plans are based on a number of actuarial assumptions. Two critical assumptions are the discount rate applied to pension plan obligations and the rate of return on plan assets. For other postretirement employee benefit, or OPEB, plans, which provide certain health care and life insurance benefits to qualified retired employees, critical assumptions in determining OPEB expense are the discount rate applied to benefit obligations and the assumed health care cost trend rates used in the calculation of benefit obligations.   We also participate in multiemployer defined benefit pension plans.  We make contributions to these multiemployer plans, as well as make contributions to a trust fund established to provide retiree medical benefits for a portion of these employees.

The discount rate used in the determination of pension benefit obligations and pension expense is determined based on a review of long-term high-grade bonds and management's expectations.  To determine the expected long-term rate of return on pension assets, we employ a process that analyzes historical long-term returns for various investment categories, as measured by appropriate indices. These indices are weighted based upon the extent to which plan assets are invested in the particular categories in arriving at our determination of a composite expected return.

An increase in the discount rate or the rate of expected return on plan assets, all other assumptions remaining the same, would decrease pension plan expense, and conversely, a decrease in either of these measures would increase plan expense. The actual rates of return on plan assets may vary significantly from the assumptions used because of unanticipated changes in financial markets.

The estimated net loss and prior service cost (credit) for the defined benefit pension and OPEB plans is amortized from accumulated other comprehensive loss into net periodic cost (benefit) in accordance with current accounting guidance.

Periodic pension and OPEB expenses are included in “Cost of sales” and “Selling, general and administrative expenses” in the Consolidated Statements of Operations. The expense is allocated to all business segments. In accordance with current accounting guidance governing defined benefit pension and other postretirement plans, at December 31, 2012 and 2011, long-term assets are recorded for overfunded plans and liabilities are recorded for underfunded single-employer plans. The funded status of a benefit plan is measured as the difference between plan assets at fair value and the projected benefit obligation. For underfunded single-employer plans, the estimated liability to be payable in the next twelve months is recorded as a current liability, with the remaining portion recorded as a long-term liability.

47

INCOME TAXES

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The determination of our provision for income taxes requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items and the probability of sustaining uncertain tax positions. The benefits of uncertain tax positions are recorded in our consolidated financial statements only after determining a more-likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from tax authorities. When facts and circumstances change, we reassess these probabilities and record any changes in the consolidated financial statements as appropriate.

REVENUE RECOGNITION

We recognize revenue when there is persuasive evidence of a sales agreement, the price to the customer is fixed and determinable, collection is reasonably assured, and title and the risk of loss passes to the customer. Shipping terms generally indicate when title and the risk of loss have passed. Revenue is recognized at shipment for sales when shipping terms are FOB (free on board) shipping point. For sales where shipping terms are FOB destination, revenue is recognized when the goods are received by the customer. Revenue from both domestic and foreign sales of our products can involve shipping terms of either FOB shipping point or FOB destination or other shipping terms, depending upon the sales agreement with the customer.

In 2012 and 2011, we did not have any single customer that accounted for 10% or more of our total net sales. However, in 2010, we had a single customer in the Consumer Products segment, the Kroger Company, that accounted for approximately $153.7 million, or 11%, of our total company net sales.

We provide for trade promotions, customer cash discounts, customer returns and other deductions as reductions to net sales in the same period as the related revenues are recognized. Provisions for these items are determined based on historical experience or specific customer arrangements.

Revenue is recognized net of any sales taxes collected. Sales taxes, when collected, are recorded as a current liability and remitted to the appropriate governmental entities.

ENVIRONMENTAL

As part of our corporate policy, we have an ongoing process to monitor, report on and comply with environmental requirements. Based on this ongoing process, accruals for environmental liabilities that are not within the scope of specific authoritative guidance related to accounting for asset retirement obligations or conditional asset retirement obligations are established in accordance with guidance related to accounting for contingencies. We estimate our environmental liabilities based on various assumptions and judgments, the specific nature of which varies in light of the particular facts and circumstances surrounding each environmental liability. These estimates typically reflect assumptions and judgments as to the probable nature, magnitude and timing of required investigation, remediation and monitoring activities and the probable cost of these activities. Currently, we are not aware of any material environmental liabilities and have accrued for only specific environmental remediation costs that we have determined are probable and for which an amount can be reasonably estimated. Fees for professional services associated with environmental and legal issues are expensed as incurred.

STOCKHOLDERS’ EQUITY

On July 28, 2011, we announced that our Board of Directors had declared a two-for-one stock split of our outstanding shares of common stock, which was effected in the form of a stock dividend distributed on August 26, 2011 to shareholders of record on August 12, 2011. On the August 26, 2011 distribution date, there were 11,373,460 shares of common stock outstanding. Immediately following the distribution date, there were 22,746,920 outstanding shares of common stock. All common share and per share amounts have been adjusted for the stock split effected in the form of a stock dividend.

In addition, on July 28, 2011, we announced that our Board of Directors had authorized the repurchase of up to $30 million of our common stock. Under the stock repurchase program, we were authorized to repurchase shares in the open market or as otherwise determined by management, subject to market conditions, business opportunities and other factors. During 2012, we repurchased 520,170 shares of outstanding common stock at a total cost of $18.7 million, representing an average price of $35.85 per share. We completed this repurchase program in the fourth quarter of 2012. The total number of shares repurchased under this program was 853,470 at an aggregate cost of $30 million and an average price of $35.15 per share.

48

On January 21, 2013, in an event subsequent to the close of our 2012 fiscal year, and in conjunction with the sale of $275 million aggregate principal amount of senior notes (the 2013 Notes; see Note 10, "Debt"), we announced that our Board of Directors approved a new stock repurchase program authorizing the repurchase of $100 million of our common stock. We intend to complete this share repurchase program during 2013 through open market purchases, negotiated transactions or other means.

DERIVATIVES

We had no activity during the years ended December 31, 2012, 2011 and 2010 that required hedge or derivative accounting treatment. However, to partially 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 December 31, 2012, these contracts covered approximately 4% of the expected average monthly requirements for 2013. For the years ended December 31, 2012, 2011 and 2010, approximately 29%, 2% and 24%, respectively, of our natural gas volumes were supplied through firm price contracts. These contracts qualify for treatment as “normal purchases or normal sales” under authoritative guidance and thus require no mark-to-market adjustment.

NOTE 3 Recently Adopted and Prospective Accounting Standards

We reviewed all new accounting pronouncements issued during the year ended December 31, 2012 and concluded that there are none that we believe will have a significant or material impact to our current or future consolidated financial statements, financial positions, results of operations, liquidity or disclosures.

NOTE 4 Business Combinations

WOOD CHIPPING FACILITY ACQUISITION

On December 28, 2012, we acquired the assets of a wood chipping facility located in Clarkston, Washington, near our Lewiston, Idaho facility, in an effort to bolster our wood fiber position and obtain short-term and long-term cost savings. The total consideration associated with the acquisition was approximately $11 million, which includes contingent consideration over an 18 month period of up to $1.5 million in cash to be paid by the company, based on certain performance and indemnity guarantees. At December 31, 2012, this $1.5 million is considered non-current restricted cash and is reflected as a change in cash flow used for financing activities in our Consolidated Statement of Cash flows. We allocated the purchase price to the tangible and amortizable intangible assets acquired based on their estimated fair values at the date of acquisition, resulting in the recognition of approximately $6 million in equipment, $4 million in intangible assets for customer relationships and a $1 million intangible asset for a non-compete agreement with the former owners. No goodwill was recorded.

No supplemental pro-forma information is presented for the acquisition due to the immaterial pro-forma effect of the acquisition on our results of operations for all years presented.

CELLU TISSUE ACQUISITON

On December 27, 2010, we acquired Cellu Tissue for total consideration paid of $247.0 million. The purchase price included a $242.2 million cash payment for 100% of the issued and outstanding common stock of Cellu Tissue, and a $4.8 million cash payment to the holders of Cellu Tissue stock options and restricted stock, which represented $12 per share, less each option’s exercise price. The acquisition was financed with existing cash and proceeds from the issuance of $375 million of 7.125% Senior Notes due 2018 (the 2010 Notes; see Note 10, "Debt"). The acquisition resulted in the recognition of $229.5 million of goodwill, which is not deductible for tax purposes. For fiscal year 2010, we included in our Consolidated Statements of Operations and Cash Flows $7.3 million of net sales and $6.3 million of operating losses from the Cellu Tissue operations after the December 27, 2010 acquisition date. Included in these losses were approximately $6.1 million of pre-tax employee severance expenses. Cellu Tissue’s consolidated results of operations from December 28, 2010 forward are included in our Consumer Products segment.

49

We allocated the purchase price to the net assets of Cellu Tissue acquired in the acquisition based on our estimates of the fair value of assets and liabilities as follows:

(In thousands)	Amount
Current assets	$	128,079
Property, plant and equipment	276,499
Goodwill	229,533
Intangibles	56,400
Other assets	1,500
Assets acquired	692,011
Current liabilities	97,071
Long-term debt, less current portion	287,002
Deferred income taxes	60,221
Other liabilities	732
Liabilities assumed	445,026
Net assets acquired	$	246,985

We estimated the fair value of the assets and liabilities of Cellu Tissue utilizing information available at the time of acquisition. We considered outside third-party appraisals of the tangible and intangible assets to determine the applicable fair market values.

Long-term debt included the fair value of Cellu Tissue’s senior subordinated notes as of December 27, 2010, which were retired concurrently with the acquisition. We also repaid Cellu Tissue’s credit facility of $32.5 million. We assumed Cellu Tissue’s industrial revenue bonds of $15.6 million, which were subsequently redeemed in 2011 (see Note 10, "Debt").

All costs associated with advisory, legal and other due diligence-related services performed in connection with acquisition-related activity are expensed as incurred. These costs were $20.4 million for 2010 and were recorded as selling, general and administrative expenses on the Consolidated Statements of Operations.

The following unaudited pro forma financial information presents the combined results of operations as if Cellu Tissue had been combined with us as of the beginning of 2010. The pro forma financial information includes the accounting effects of the business combination, including the adjustment of amortization of intangible assets, depreciation of property, plant and equipment, interest expense and elimination of intercompany sales, as if Cellu Tissue were actually combined with us as of the beginning of 2010. However, the information does not reflect the costs of any integration activities. The pro forma results include estimates and assumptions, which management believes are reasonable. The unaudited pro forma financial information below is not necessarily indicative of either future results of operations or results that might have been achieved had Cellu Tissue been combined with us as of the beginning of 2010.

(In thousands; Unaudited)	2010
Pro forma net sales	$	1,902,579
Pro forma net earnings	88,713

NOTE 5 Inventories

(In thousands)	2012		2011
Pulp, paperboard and tissue products	$	147,627	$	162,426
Materials and supplies	67,889		62,376
Logs, pulpwood, chips and sawdust	15,950		17,713
Lumber	—		1,556
	$	231,466	$	244,071

At December 31, 2011, approximately $0.6 million of our remaining lumber inventories were valued on a LIFO basis. During the three months ended March 31, 2012, the remaining lumber inventory from the sawmill was sold. The sale of this inventory, which was valued at costs prevailing in prior years under the LIFO method, had the effect of increasing earnings before income taxes in the period ended March 31, 2012 by an immaterial amount. The fluctuations of LIFO inventories increased earnings before income taxes by approximately $10.6 million million in 2011, and had no impact in 2010.

50

NOTE 6 Property, Plant and Equipment

(In thousands)	2012			2011
Machinery and equipment	$	1,866,263		$	1,660,636
Buildings and improvements	299,642			249,801
Land improvements	52,929			51,703
Land	11,827			11,804
Office and other equipment	10,946			6,058
Construction in progress	37,160			98,258
	$	2,278,767		$	2,078,260
Less accumulated depreciation and amortization	(1,401,390		)	(1,342,694		)
	$	877,377		$	735,566

The December 31, 2012 and 2011 buildings and improvements and machinery and equipment combined balances each include $23.1 million associated with capital leases.

Depreciation and amortization expense, including amounts associated with capital leases, totaled $74.6 million, $70.6 million and $46.2 million in 2012, 2011 and 2010, respectively. For 2012, 2011 and 2010, we capitalized $12.6 million, $3.7 million and $0.5 million of interest expense, respectively, associated with our TAD tissue expansion project, which includes the construction of our new tissue manufacturing and converting facilities in Shelby, North Carolina, and upgrades to our tissue manufacturing facility in Las Vegas, Nevada.

NOTE 7 Goodwill and Intangible Assets

The carrying amount of goodwill is reviewed at least annually for impairment as of November 1. The first step of the goodwill impairment test, used to identify potential impairment, compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit is greater than zero and its estimated fair value exceeds its carrying amount, goodwill of the reporting unit is not considered impaired. For the purpose of goodwill impairment testing we identify two reporting units, Consumer Products and Pulp and Paperboard, the same as our two reportable operating segments (see Note 17, "Segment Information"). All of the recorded goodwill is assigned to our Consumer Products reporting unit.

As of November 1, 2012 and 2011, we performed calculations of both a discounted cash flow and market-based valuation model for our Consumer Products reporting unit. The assumptions used in these models allowed us to evaluate the estimated fair value of our reporting unit. The determination of these assumptions required significant estimates on our part. Due to the inherent uncertainty involved in making such estimates, actual results could differ from those assumptions. However, we evaluated the merits of each significant assumption, both individually and in the aggregate, used to determine the estimated fair value of our reporting unit for reasonableness. Upon completion of this exercise, we concluded that the estimated fair value of the Consumer Products reporting unit exceeded its carrying amount. We determined that no further testing was necessary and did not record any impairment loss on our goodwill for the years ended December 31, 2012 and 2011.

Intangible asset amounts represent the acquisition date fair values of identifiable intangible assets acquired. The fair values of the intangible assets were determined by using the income approach, discounting projected future cash flows based on management’s expectations of the current and future operating environment. The rates used to discount projected future cash flows reflected a weighted average cost of capital based on our industry, capital structure and risk premiums including those reflected in the current market capitalization. Definite-lived intangible assets are amortized over their useful lives, which range from 2.5 to 10 years. Authoritative guidance requires that the carrying amount of a long-lived asset with a definite life that is held-for-use be evaluated for recoverability whenever events or changes in circumstances indicate that the entity may be unable to recover the asset’s carrying amount. There were no such events or changes in circumstances that required us to test our definite-lived intangible assets for impairment for the years ended December 31, 2012 and 2011. We do not have any indefinite-lived intangible assets recorded from acquisitions.

51

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

	December 31, 2012
(Dollars in thousands, lives in years)	Useful Life	Historical Cost		Accumulated Amortization			Net Balance
Customer relationships	9.0	$	53,957	$	(11,237	)	$	42,720
Trade names and trademarks	10.0	5,300		(1,060		)	4,240
Non-compete agreements	2.5 - 5.0	1,674		(881		)	793
Total intangible assets		$	60,931	$	(13,178	)	$	47,753

	December 31, 2011
(Dollars in thousands, lives in years)	Useful Life	Historical Cost		Accumulated Amortization			Net Balance
Customer relationships	9.0	$	50,000	$	(5,682	)	$	44,318
Trade names and trademarks	10.0	5,300		(530		)	4,770
Non-compete agreements	2.5	1,100		(440		)	660
Total intangible assets		$	56,400	$	(6,652	)	$	49,748

As of December 31, 2012, estimated future amortization expense related to intangible assets is as follows (in thousands):

Years ending December 31,	Amount
2013	$	6,975
2014	6,663
2015	6,608
2016	6,587
2017	6,587
Thereafter	14,333
Total	$	47,753

NOTE 8 Income Taxes

Earnings (loss) before income taxes is comprised of the following amounts in each tax jurisdiction:

(In thousands)	2012		2011			2010
United States	$	111,278	$	72,156		$	76,196
Canada	313		(1,236		)	—
Earnings before income taxes	$	111,591	$	70,920		$	76,196

The income tax provision is comprised of the following:

(In thousands)	2012			2011			2010
Current
Federal	$	27,724		$	9,619		$	12,331
State	6,637			6,880			5,056
Foreign	229			(30		)	—
	34,590			16,469			17,387
Deferred
Federal	16,243			12,865			(16,371		)
State	(3,180		)	1,931			1,380
Foreign	(193		)	(19		)	—
	12,870			14,777			(14,991		)
Income tax provision	$	47,460		$	31,246		$	2,396

52

The income tax provision differs from the amount computed by applying the statutory federal income tax rate of 35.0% to earnings before income taxes due to the following:

(In thousands)	2012			2011			2010
Computed expected tax provision	$	39,063		$	24,822		$	26,668
State and local taxes, net of federal income tax impact	4,398			1,482			4,157
Adjustment for state deferred tax rate	(742		)	2,916			—
State investment tax credits	(9,077		)	—			(1,649		)
Federal credits and net operating losses	4,121			(412		)	(25,153		)
Federal manufacturing deduction	(3,288		)	(2,443		)	(2,993		)
Uncertain tax positions	4,801			2,610			(3,796		)
Patient Protection and Affordable Care Act	—			—			3,290
Non-deductible acquisition costs	—			(1,215		)	1,263
Change in valuation allowances	6,932			2,796			—
U.S. tax provision on foreign operations	(33		)	365			—
Other	1,285			325			609
Income tax provision	$	47,460		$	31,246		$	2,396
Effective tax rate	42.5		%	44.1		%	3.1		%

We have tax benefits relating to equity-based compensation that are being utilized to reduce our U.S. taxable income. Our Consolidated Balance Sheet reflects net operating losses and tax credit carryforwards excluding amounts resulting from equity-based compensation. We have made an accounting policy election to follow the “with-and-without” or “incremental” method for ordering tax benefits derived from employee equity-based compensation awards. As a result of this method, net operating loss carryforwards not generated from equity-based compensation and which were in excess of equity-based compensation expense are utilized before the current period's equity-based tax deduction (excess tax benefits from equity-based compensation awards are recognized last). Excess tax benefits from equity-based compensation awards that are determined to reduce U.S. taxable income following this method are recognized when realized as increases to additional paid-in capital as a component of stockholders' equity. As of December 31, 2011, we had a total amount of excess tax benefits that were not recognized on our Consolidated Balance Sheet of approximately $3.2 million. During the year ended December 31, 2012, we generated additional excess tax benefits of $14.0 million relating primarily to the settlement of vested performance share awards to employees. Based on the incremental method, our excess tax benefits associated with equity-based compensation plans were allocated directly to additional paid-in capital as a component of stockholders’ equity, reducing income taxes payable, in the amount of $15,837, $885 and $855, in the years ended December 31, 2012, 2011, and 2010, respectively. As of December 31, 2012, we have a total amount of excess tax benefits that are not recognized on our Consolidated Balance Sheet of approximately $1.4 million.

53

(In thousands)	2012			2011
Deferred tax assets:
Employee benefits	$	8,630		$	7,930
Postretirement employee benefits	52,751			53,862
Incentive compensation	9,130			7,949
Pensions	31,140			28,081
Federal and state credit carryforwards	20,447			30,809
Net operating losses	7,649			16,749
Federal benefit from state taxes resulting from uncertain tax positions	5,595			5,595
Other	5,757			6,492
Total deferred tax assets	$	141,099		$	157,467
Valuation allowance	(14,957		)	(8,025		)
Deferred tax assets, net of valuation allowance	$	126,142		$	149,442
Deferred tax liabilities:
Plant and equipment	$	(157,973	)	$	(166,885	)
Intangible assets	(10,843		)	(10,879		)
Inventories	(314		)	(1,570		)
Total deferred tax liabilities	(169,130		)	(179,334		)
Net deferred tax liabilities	$	(42,988	)	$	(29,892	)

Net deferred tax assets (liabilities) consist of:

(In thousands)	2012			2011
Current deferred tax assets	$	20,473		$	41,237
Current deferred tax liabilities	(3,337		)	(1,771		)
Net current deferred tax assets	17,136			39,466
Non-current deferred tax assets	110,762			108,205
Non-current deferred tax liabilities	(170,886		)	(177,563		)
Net non-current deferred tax liabilities	(60,124		)	(69,358		)
Net deferred tax liabilities	$	(42,988	)	$	(29,892	)

We are registered with the Internal Revenue Service, or IRS, as both an alternative fuel mixer and a producer of cellulosic biofuel. During 2009 we received refundable tax credit payments in connection with our use of “black liquor,” a by-product of the kraft pulp manufacturing process, in an alternative fuel mixture to produce energy at our pulp mills. The amount of the refundable tax credit is equal to $0.50 per gallon of alternative fuel mixture used. The Alternative Fuel Mixture Tax Credit, or AFMTC, expired on December 31, 2009. The Cellulosic Biofuel Producer Credit, or CBPC, enables us to claim $1.01 per gallon in regards to black liquor produced and used as a fuel by us at our pulp mills in 2009. During 2010, the IRS clarified the ability to convert previously claimed gallons from the AFMTC to the CBPC. We are eligible to convert gallons previously claimed under the AFMTC to the CBPC; however, due to CBPC carryovers from 2010, we did not convert additional gallons during 2011. Under current federal tax law, we have the ability to convert additional gallons to CPBC through March 2013.

During the year ended December 31, 2010 we amended our 2009 corporate income tax return and claimed approximately 25.3 million gallons of fuel under the CBPC for that portion of black liquor produced in 2009 for which we did not claim the AFMTC. This equated to an additional federal income tax credit of $25.5 million, which was recognized as a benefit to our tax provision in the fourth quarter of 2010. Additionally, we further amended our 2009 corporate income tax return to convert approximately 39.8 million gallons of fuel under the AFMTC to the CBPC. This equated to an additional federal income tax credit of $20.3 million, which was recognized as a benefit to our tax provision in 2010. The CBPC is a non-refundable income tax credit which is deemed to be taxable income in the year the benefit is received. Thus, the CBPC benefit was reduced by the related corporate income tax obligation, resulting in a net income tax benefit of $27.1 million in 2010.

There was a net increase to our income tax expense for the year ended December 31, 2012 resulting from $6.2 million in tax expense related to our decision to further amend our 2009 corporate income tax return to convert certain gallons claimed under the CPBC back to gallons under the AFMTC. The tax expense attributable to the AFMTC conversion was comprised of $3.4 million relating to the conversion back to the AFMTC and a resulting additional $2.8 million increase in our liabilities for uncertain tax positions.

54

During 2012 and 2011, we recorded a $0.7 million tax benefit and $2.9 million tax expense, respectively, reflecting a remeasurement of state deferred tax assets and liabilities using anticipated tax rates which will be in effect when the underlying assets and liabilities will reverse. The 2011 change in state tax rate is primarily attributable to the change in our tissue business operations after the acquisition of Cellu Tissue on December 27, 2010.

As of December 31, 2012, we had deferred tax assets arising from deductible temporary differences, tax losses and tax credits of $141.1 million before the offset of certain deferred tax liabilities. With the exception of certain deferred tax assets related to federal foreign tax credits, state tax losses and state tax credits, management believes it is more likely than not that forecasted income, together with the tax effect of the deferred tax liabilities, will be sufficient to fully recover the remaining deferred tax assets.

During 2012, the valuation allowance for deferred tax assets increased by a net $6.9 million. We decreased the valuation allowances for state tax losses incurred by $0.5 million and increased the valuation allowances for state tax credits by $8.2 million. Both of these items were recorded as current period deferred tax expense or benefit. We also reduced the valuation allowance relating to foreign tax credits by $0.8 million, which was recorded as a deferred tax benefit to the income tax provision. The reduction is based upon tax planning strategies that we believe will more likely than not allow us to utilize a portion of the foreign tax credits before they expire. During 2011, the valuation allowance for deferred tax assets increased by a net $2.8 million. We increased the valuation allowances for state tax losses incurred by certain subsidiaries and state tax credits by $2.5 million and $2.2 million, respectively. Both of these items were recorded as current period deferred tax expense. We also reduced the valuation allowance relating to foreign tax credits by $1.9 million, which was recorded as a deferred tax benefit to the income tax provision. The reduction is based upon tax planning strategies that we believe will more likely than not allow us to utilize a portion of the foreign tax credits before they expire. The valuation allowance did not change in 2010.

During the fourth quarter of 2012, the IRS commenced an audit of our tax returns for the tax years ending December 31, 2008 through December 31, 2011.

Tax years subject to examination by major taxing jurisdictions are as follows:

Jurisdiction	Years
United States	2008 - 2012
Canada	2008 - 2012
Arkansas	2009 - 2012
California	2008 - 2012
Georgia	2009 - 2012
Idaho	2008 - 2012
Illinois	2009 - 2012
Wisconsin	2008 - 2012

Tax credits and losses subject to expiration by major taxing jurisdictions are as follows (in thousands):

Jurisdiction	Gross Values		Years
United States
Net operating losses	$	7,143	2030
Foreign tax credits	3,832		2016 - 2019
Other federal tax credits	644		2026 - 2030
Connecticut tax losses	59,681		2018 - 2031
Georgia tax losses	9,130		2028 - 2031
Idaho tax credits	4,954		2013 - 2026
North Carolina tax credits	16,142		2015 - 2016
Oklahoma tax losses	9,403		2030 -2032

As of December 31, 2012 there were no undistributed earnings relating to our Canadian subsidiary, Interlake Acquisition Corporation, as all historical earnings were repatriated under Cellu Tissue ownership. Management’s intent is to reinvest future earnings indefinitely.

A review of our uncertain income tax positions at December 31, 2012 and 2011 indicates that liabilities are required to be recorded for gross unrecognized tax benefits following authoritative accounting guidance. The following presents a roll forward of our unrecognized tax benefits and associated interest and penalties, as included in the Accrued Taxes line item in non-current liabilities in our Consolidated Balance Sheets.

55

(In thousands)	Gross Unrecognized Tax Benefits, Excluding Interest and Penalties			Interest and Penalties		Total Gross Unrecognized Tax Benefits
Balance at January 1, 2011	$	69,633		$	2,378	$	72,011
(Decrease) increase in prior year tax positions	(174		)	2,435		2,261
Increase in current year tax positions	222			—		222
Reductions as a result of a lapse of the applicable statute of   limitations	(30		)	—		(30		)
Balance at December 31, 2011	$	69,651		$	4,813	$	74,464
(Decrease) increase in prior year tax positions	(731		)	1,882		1,151
Increase in current year tax positions	154			—		154
Increase in prior year tax positions	3,275			—		3,275
Reductions as a result of a lapse of the applicable statute of   limitations	(345		)	—		(345		)
Balance at December 31, 2012	$	72,004		$	6,695	$	78,699

Unrecognized tax benefits net of related deferred tax assets at December 31, 2012, if recognized, would favorably impact our effective tax rate by decreasing our tax provision by $73.1 million.

We reflect accrued interest related to tax obligations, as well as penalties, in our provision for income tax. For the years ended December 31, 2012, 2011 and 2010, we accrued interest and no penalties of $1.9 million, $2.4 million and $2.4 million, respectively, in our income tax provision.

We entered into a tax sharing agreement with Potlatch upon the December 2008 spin-off that will generally govern each party's rights, responsibilities and obligations with respect to taxes, including ordinary course of business taxes and taxes, if any, incurred as a result of any failure of the spin-off to be tax free. Under the tax sharing agreement, we expect that, with certain exceptions, we will be responsible for the payment of all income and non-income taxes attributable to our operations. The tax sharing agreement also sets forth our rights and responsibilities for tax obligations and refunds attributable to tax periods prior to the spin-off date.

Under the tax sharing agreement, we will be responsible for any taxes imposed on Potlatch that arise from the failure of the spin-off, together with certain related transactions, to qualify as a tax-free distribution for U.S. federal income tax purposes, including any tax that would result if Potlatch were to fail to qualify as a REIT as a result of income recognized by Potlatch if the spin-off were determined to be taxable, to the extent such failure to qualify is attributable to actions, events or transactions relating to our stock, assets or business, or a breach of the relevant representations or covenants we made in the tax sharing agreement. The tax sharing agreement imposes restrictions on our and Potlatch's ability to engage in certain actions following the spin-off and sets forth the respective obligations of each party with respect to the filing of tax returns, the administration of tax contests, assistance and cooperation and other matters.

NOTE 9 Accounts Payable and Accrued Liabilities

(In thousands)	2012		2011
Trade accounts payable	$	75,949	$	65,040
Accrued wages, salaries and employee benefits	42,491		37,430
Accrued taxes on income	9,428		2,204
Accrued utilities	8,205		7,265
Accrued taxes other than income taxes payable	6,993		11,257
Accrued interest	5,242		5,245
Accrued discounts and allowances	4,785		5,588
Accrued transportation	4,417		3,801
Other	8,086		6,801
	$	165,596	$	144,631

56

NOTE 10 Debt

$375 MILLION SENIOR NOTES DUE 2018

On October 22, 2010, we sold $375 million aggregate principal amount of senior notes, which we refer to as the 2010 Notes. The 2010 Notes mature on November 1, 2018, have an interest rate of 7.125% and were issued at their face value. The issuance of these notes generated net proceeds of $367.5 million after deducting offering expenses. The net proceeds from the issuance of the 2010 Notes were used to finance in part our acquisition of Cellu Tissue, to refinance certain existing indebtedness of Cellu Tissue, and to pay fees and expenses incurred as part of the 2010 Note offering, acquisition of Cellu Tissue and related transactions.

The 2010 Notes are guaranteed by certain of our existing and future direct and indirect domestic subsidiaries. The 2010 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 2010 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 2010 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 assets.

Prior to November 1, 2013, we may redeem up to 35% of the 2010 Notes at a redemption price equal to 107.125% of the principal amount plus accrued and unpaid interest with the proceeds from one or more qualified equity offerings. We have the option to redeem all or a portion of the 2010 Notes at any time before November 1, 2014 at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest and a “make whole” premium. On or after November 1, 2014, we may redeem all or a portion of the 2010 Notes at specified redemption prices plus accrued and unpaid interest. In addition, we may be required to make an offer to purchase the 2010 Notes upon the sale of certain assets and upon a change of control.

REDEMPTION OF $150 MILLION SENIOR NOTES DUE 2016 AND ISSUANCE OF $275 MILLION SENIOR NOTES DUE 2023

In June 2009, we issued senior unsecured notes, which we refer to as the 2009 Notes, in the aggregate principal amount of $150 million. The 2009 Notes, which were due on June 15, 2016 and had an interest rate of 10.625%, were issued at a price equal to 98.792% of their face value.

The 2009 Notes are guaranteed by each of our existing and future direct and indirect domestic subsidiaries. The 2009 Notes are general unsecured obligations and are therefore not secured by our assets and 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 2009 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 assets.

We have the option to redeem all or a portion of the 2009 Notes at any time prior to June 15, 2013 at a redemption price equal to 100% of the principal amount thereof plus a “make whole” premium and accrued and unpaid interest. On or after June 15, 2013, we may redeem all or a portion of the 2009 Notes at specified redemption prices plus accrued and unpaid interest. In addition, we may be required to make an offer to purchase the 2009 Notes upon the sale of certain assets and upon a change of control.

On February 22, 2013, in an event occurring subsequent to the close of our 2012 fiscal year end, we exercised our option to redeem all of the 2009 Notes at a redemption price equal to approximately $166 million, which consisted of 100% of the principal amount, plus an approximate $13 million “make whole” premium and accrued and unpaid interest of approximately $3 million. We will record the make whole premium and a portion of the unpaid interest as components of debt retirement costs in the first quarter of 2013. Proceeds to fund the redemption of our 2009 Notes were made available through the sale of $275 million aggregate principal amount senior notes on January 23, 2013, 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 our existing and future direct and indirect domestic subsidiaries. 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. The 2013 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 2013 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 assets.

57

Prior to February 1, 2016 we may redeem up to 35% of the 2013 Notes at a redemption price equal to 104.5% of the principal amount plus accrued and unpaid interest with the proceeds from one or more qualified equity offerings. We have the option to redeem all or a portion of the 2013 Notes at any time before February 1, 2018 at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest and a “make whole” premium. On or after February 1, 2018 we may redeem all or a portion of the 2013 Notes at specified redemption prices plus accrued and unpaid interest. In addition, we may be required to make an offer to purchase the 2013 Notes upon the sale of certain assets and upon a change of control.

CITYFOREST INDUSTRIAL BONDS

Prior to our acquisition of Cellu Tissue, Cellu Tissue CityForest LLC, or CityForest, a wholly-owned subsidiary of Cellu Tissue, was party to a loan agreement, dated as of March 1, 1998, with the City of Ladysmith, Wisconsin. Pursuant to this agreement, the City of Ladysmith loaned the proceeds of its Variable Rate Demand Solid Waste Disposal Facility Revenue Bonds, Series 1998, or IRBs, to CityForest to finance the construction by CityForest of a solid waste disposal facility. As a result of our acquisition of Cellu Tissue, we assumed the IRBs. During the third quarter of 2011, we redeemed the remaining $15.2 million principal amount of outstanding IRBs.

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 its current term ends on September 30, 2016.

As of December 31, 2012, there were no borrowings outstanding under the credit facility, but approximately $5.9 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 greatest 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 1.0%, plus between 0.25% and 0.75%. The percentage margin on all loans is based on our fixed charge coverage ratio for the most recent four quarters. As of December 31, 2012, we would have been permitted to draw approximately $119.1 million under the credit facility at LIBOR plus 1.75% or base rate plus 0.25%.

A minimum fixed charge coverage ratio is the only financial maintenance covenant 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 December 31, 2012, the fixed charge coverage ratio for the most recent four quarters was 3.6-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 11 Other Long-Term Obligations

(In thousands)	2012		2011
Long-term lease obligations, net of current portion	$	25,240	$	25,546
Deferred proceeds	11,668		13,040
Deferred compensation	9,939		8,100
Other	4,063		1,788
	$	50,910	$	48,474

58

NOTE 12 Savings, Pension and Other Postretirement Employee Benefit Plans

Certain of our employees are eligible to participate in defined contribution savings and defined benefit postretirement plans. These include 401(k) savings plans, defined benefit pension plans including company-sponsored and multiemployer plans, and Other Postretirement Employee Benefit, or OPEB, plans, each of which is discussed below.

401(k) Savings Plans

Substantially all of our employees are eligible to participate in 401(k) savings plans, which include a company match component. In 2012, 2011 and 2010, we made matching 401(k) contributions on behalf of employees of $14.9 million, $8.1 million and $5.7 million, respectively. The increase in 2012 is the result of an increase in the company contribution to the Clearwater Paper Corporation 401(k) Plan in order to compensate for the December 15, 2010 closure to new participants and December 31, 2011 freezing of benefits to existing participants of the salaried pension plan.

Company-Sponsored Defined Benefit Pension Plans

A majority of our salaried employees and a portion of our hourly employees are covered by company-sponsored noncontributory defined benefit pension plans.

In the fourth quarter of 2012, we recorded a curtailment loss of $0.5 million in net periodic cost, and a corresponding decrease in Other Comprehensive Income, as a result of certain hourly employees at our Cypress Bend, Arkansas pulp and paperboard facility electing to cease accruing further pension benefits effective December 31, 2012. In exchange, beginning January 1, 2013 and lasting for a certain number of years, these employees began receiving an enhanced employer contribution to one of our existing 401(k) savings plan in which they participate. In the fourth quarter of 2011, we recorded a curtailment loss of $2.8 million in net periodic cost, and a corresponding decrease in Other Comprehensive Income, as a result of the sale of our sawmill. In addition, we recorded a $0.4 million decrease in our pension liability with a corresponding decrease in Accumulated Other Comprehensive Loss. Effective December 15, 2010, the salaried pension plan was closed to new entrants, and effective December 31, 2011, the salaried pension plan was frozen and ceased accruing further benefits. As a result of these changes to the salaried pension plan, both announced in the fourth quarter of 2010, we recorded a loss of $0.2 million.

Company-Sponsored OPEB Plans

We also provide benefits under company-sponsored defined benefit retiree health care and life insurance plans, which cover certain salaried and hourly employees. Most of the retiree health care plans require retiree contributions and contain other cost-sharing features. The retiree life insurance plans are primarily noncontributory.

Funded Status of Company-Sponsored Plans

As required by current standards governing the accounting for defined benefit pension and other postretirement plans, we recognized the funded status of our company-sponsored plans on our Consolidated Balance Sheets at December 31, 2012 and 2011. The funded status is measured as the difference between plan assets at fair value (with limited exceptions) and the benefit obligation. For a pension plan, the benefit obligation is the projected benefit obligation; for any other postretirement employee benefit plan, such as a retiree health care plan, the benefit obligation is the accumulated postretirement employee benefit obligation.

We use a December 31 measurement date for our benefit plans.

59

The changes in benefit obligation, plan assets and funded status for company-sponsored benefit plans as of December 31 are as follows:

	Pension Benefit Plans						Other Postretirement Employee Benefit Plans
(In thousands)	2012			2011			2012			2011
Benefit obligation at beginning of year	$	307,658		$	272,012		$	136,710		$	141,519
Service cost	2,485			7,725			693			702
Interest cost	14,693			15,092			5,815			6,857
Plan changes	—			—			(5,278		)	—
Mergers, sales, closures, special term benefits	—			(422		)	—			—
Actuarial losses (gains)	30,612			28,552			3,151			(5,433		)
Medicare Part D subsidies received	—			—			569			355
Benefits paid	(22,191		)	(15,301		)	(7,042		)	(7,290		)
Benefit obligation at end of year	333,257			307,658			134,618			136,710
Fair value of plan assets at beginning of year	218,557			216,650			18			16
Actual return on plan assets	37,308			4,456			1			2
Employer contribution	20,882			12,752			—			—
Benefits paid	(22,191		)	(15,301		)	—			—
Fair value of plan assets at end of year	254,556			218,557			19			18
Funded status at end of year	$	(78,701	)	$	(89,101	)	$	(134,599	)	$	(136,692	)

Amounts recognized in the Consolidated Balance Sheets:

	Pension Benefit Plans						Other Postretirement Employee Benefit Plans
(In thousands)	2012			2011			2012			2011
Current liabilities	$	(281	)	$	(264	)	$	(8,856	)	$	(9,597	)
Noncurrent liabilities	(78,420		)	(88,837		)	(125,743		)	(127,095		)
Net amount recognized	$	(78,701	)	$	(89,101	)	$	(134,599	)	$	(136,692	)

Amounts recognized (pre-tax) in Accumulated Other Comprehensive Loss as of December 31 consist of:

	Pension Benefit Plans				Other Postretirement Employee Benefit Plans
(In thousands)	2012		2011		2012			2011
Net loss	$	177,343	$	176,439	$	24,408		$	21,258
Prior service cost (credit)	1,414		2,525		(6,504		)	(3,906		)
Net amount recognized	$	178,757	$	178,964	$	17,904		$	17,352

Information as of December 31 for certain pension plans included above with accumulated benefit obligations in excess of plan assets were as follows:

(In thousands)	2012		2011
Projected benefit obligation	$	333,257	$	307,658
Accumulated benefit obligation	333,257		307,658
Fair value of plan assets	254,556		218,557

Pre-tax components of Net Periodic Cost and other amounts recognized in Other Comprehensive Income (Loss) for the years ended December 31 were as follows:

60

Net Periodic Cost (Benefit):

	Pension Benefit Plans									Other Postretirement Employee Benefit Plans
(In thousands)	2012			2011			2010			2012			2011			2010
Service cost	$	2,485		$	7,725		$	8,018		$	693		$	702		$	995
Interest cost	14,693			15,092			15,375			5,815			6,857			7,712
Expected return on plan assets	(19,685		)	(19,532		)	(19,391		)	—			—			—
Amortization of prior service cost (credit)	634			1,193			1,205			(2,680		)	(1,795		)	(1,795		)
Amortization of actuarial loss	12,085			8,382			8,671			—			—			2,083
Curtailments	477			2,776			183			—			—			—
Net periodic cost	$	10,689		$	15,636		$	14,061		$	3,828		$	5,764		$	8,995

Other amounts recognized in Other Comprehensive Income (Loss):

	Pension Benefit Plans									Other Postretirement Employee Benefit Plans
(In thousands)	2012			2011			2010			2012			2011			2010
Net loss (gain)	$	12,989		$	43,207		$	(19,216	)	$	3,150		$	(5,435	)	$	(9,471	)
Prior service credit	(477		)	(2,776		)	(183		)	(5,278		)	—			—
Amortization of prior service (cost) credit	(634		)	(1,193		)	(1,205		)	2,680			1,795			1,795
Amortization of actuarial loss	(12,085		)	(8,382		)	(8,671		)	—			—			(2,083		)
Total recognized in other comprehensive loss   (income)	$	(207	)	$	30,856		$	(29,275	)	$	552		$	(3,640	)	$	(9,759	)
Total recognized in net periodic cost (benefit)   and other comprehensive loss (income)	$	10,482		$	46,492		$	(15,214	)	$	4,380		$	2,124		$	(764	)

The estimated net loss and prior service cost for the defined benefit pension plans that will be amortized from accumulated other comprehensive loss into net periodic cost (benefit) over the next fiscal year are $15.5 million and $0.4 million, respectively. The estimated prior service credit for the OPEB plans that will be amortized from accumulated other comprehensive loss into net periodic cost (benefit) over the next fiscal year is $2.7 million.

The Medicare Prescription Drug Improvement and Modernization Act of 2003 introduced a drug benefit under Medicare Part D and a federal subsidy to sponsors of retiree health care benefit plans that provide an equivalent benefit. Our actuaries determined that certain benefits provided under our plans are actuarially equivalent to the Medicare Part D standard plan and are eligible for the employer subsidy. During 2012 and 2011, we received subsidy payments totaling $0.6 million and $0.4 million for each respective year.

Weighted average assumptions used to determine the benefit obligation as of December 31 were:

	Pension Benefit Plans						Other Postretirement Employee Benefit Plans
	2012		2011		2010		2012		2011		2010
Discount rate	4.15	%	4.90	%	5.70	%	4.05	%	4.95	%	5.60	%
Rate of salaried compensation increase	—		—		4.00		—		—		—

Weighted average assumptions used to determine the net periodic cost (benefit) for the years ended December 31 were:

	Pension Benefit Plans						Other Postretirement Employee Benefit Plans
	2012		2011		2010		2012		2011		2010
Discount rate	4.90	%	5.70	%	5.75	%	4.95	%	5.60	%	5.75	%
Expected return on plan assets	8.00		8.00		8.50		—		—		—
Rate of salaried compensation increase	—		4.00		4.00		—		—		—

61

The discount rate used in the determination of pension benefit obligations and pension expense was determined based on a review of long-term high-grade bonds as well as management’s expectations. The discount rate used to calculate OPEB obligations was determined using the same methodology we used for our pension plans.

The expected return on plan assets assumption is based upon an analysis of historical long-term returns for various investment categories, as measured by appropriate indices. These indices are weighted based upon the extent to which plan assets are invested in the particular categories in arriving at our determination of a composite expected return.

The assumed health care cost trend rate used to calculate OPEB obligations in 2012 was 7.0%, and the rate used to calculate OPEB expense in 2012 was 7.5%, with both rates grading to 4.7% over approximately 60 years. This assumption has a significant effect on the amounts reported. A one percentage point change in the health care cost trend rates would have the following effects:

(In thousands)	1% Increase		1% Decrease
Effect on total of service and interest cost components	$	644	$	(544	)
Effect on postretirement employee benefit obligation	12,450		(10,707		)

The investments of our defined benefit pension plans are held in a Master Trust. The assets of our OPEB plans are held within an Internal Revenue Code section 401(h) account for the payment of retiree medical benefits within the Master Trust.

The Master Trust has a securities lending agreement. The agreement authorizes the lending agent to loan securities owned by the Master Trust to an approved list of borrowers. Under the agreement, the lending agent is responsible for negotiating each loan for an unspecified term while retaining the power to terminate the loan at any time. At the time each loan is made, the lending agent requires collateral equal to, but not less than, 102% of the market value of the loaned securities and accrued interest. The Master Trust directs the agent as to the type of investment pool in which to invest the borrower’s collateral based on established policy with specific limits; accordingly, the right to receive the collateral and obligation to return it are disclosed as a component of Master Trust investments. While the securities are loaned, the Master Trust retains all rights of ownership, except it waives its right to vote such securities. Securities loaned subject to this securities lending agreement totaled $3.3 million at December 31, 2012. These securities are principally corporate common stocks.

Current accounting rules governing fair value measurement establish a framework for measuring fair value, which provides a fair value 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 (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are described below:

Level 1	Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the plans have the ability to access.
Level 2	Inputs to the valuation methodology include:
	▪   Quoted prices for similar assets or liabilities in active markets; ▪   Quoted prices for identical or similar assets or liabilities in inactive markets; ▪   Inputs other than quoted prices that are observable for the asset or liability; and ▪   Inputs that are derived principally from or corroborated by observable market data by correlation or other means
	If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.
Level 3	Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

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 need to maximize the use of observable inputs and minimize the use of unobservable inputs.

62

Securities in the Master Trust are stated at fair value. Fair value is based upon quotations obtained from national securities exchanges, if available. Where securities do not have a quoted market price, the recorded amount represents estimated fair value. Many factors are considered in arriving at that fair market value. Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used during 2012.

▪ Corporate common stock and mutual funds: Investments are valued at quoted market prices.

▪ Common and collective trust: The investment in common and collective trusts is based on the fair value of the underlying assets and is expressed in units.

▪ Corporate debt securities: In general, corporate bonds are valued based on yields currently available on comparable securities of issuers with similar credit ratings.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while management believes the valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The following tables set forth by level, within the fair value hierarchy, the investments at fair value for our company-sponsored pension benefit plans:

	December 31, 2012
(In thousands)	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	3,786	$	—	$	—	$	3,786
Common and collective trusts:
International small cap	—		12,725		—		12,725
Global/International equity	—		16,656		—		16,656
Domestic equity – small/mid cap	—		17,339		—		17,339
International equity emerging markets	—		17,672		—		17,672
Common stocks:
Industrials	9,475		—		—		9,475
Energy	1,966		—		—		1,966
Consumer	8,270		—		—		8,270
Healthcare	7,386		—		—		7,386
Finance	13,000		—		—		13,000
Utilities	2,305		—		—		2,305
Information technology	6,828		—		—		6,828
Foreign	6,078		—		—		6,078
Mutual funds:
Foreign large blend	18,907		—		—		18,907
Long-term bond fund	114,557		—		—		114,557
Corporate debt securities	—		1,073		—		1,073
Subtotal	$	192,558	$	65,465	$	—	$	258,023
Payable held under securities lending agreement							(3,467		)
Total investments at fair value							$	254,556

63

	December 31, 2011
(In thousands)	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	9,843	$	—	$	—	$	9,843
Common and collective trusts:
International small cap	—		10,588		—		10,588
Global/International equity	—		13,748		—		13,748
Domestic equity – small/mid cap	—		15,939		—		15,939
International equity emerging markets	—		14,602		—		14,602
Common stocks:
Industrials	5,545		—		—		5,545
Energy	2,595		—		—		2,595
Consumer	9,714		—		—		9,714
Healthcare	4,321		—		—		4,321
Finance	10,235		—		—		10,235
Utilities	4,234		—		—		4,234
Information technology	4,847		—		—		4,847
Foreign	5,000		—		—		5,000
Mutual funds:
Foreign large blend	15,048		—		—		15,048
Long-term bond fund	99,728		—		—		99,728
Corporate debt securities	—		1,045		—		1,045
Subtotal	$	171,110	$	55,922	$	—	$	227,032
Payable held under securities lending agreement							(8,475		)
Total investments at fair value							$	218,557

Our OPEB plan had approximately $19,000 held in cash and equivalents at December 31, 2012, which were categorized as level 1.

In 2010, we established our own formal investment policy guidelines for our company-sponsored plans. These guidelines were set by our benefits committee, which is comprised of members of our management and has been assigned its fiduciary authority over management of the plan assets by our Board of Directors. The committee’s duties include periodically reviewing and modifying those investment policy guidelines as necessary and insuring that the policy is adhered to and the investment objectives are met.

The investment policy includes specific guidelines for specific categories of fixed income and convertible securities. Assets are managed by professional investment managers who are expected to achieve a reasonable rate of return over a market cycle. Long-term performance is a fundamental tenet of the policy.

The general policy states that plan assets would be invested to seek the greatest return consistent with the fiduciary character of the pension funds and to allow the plans to meet the need for timely pension benefit payments. The specific investment guidelines stipulate that management is to maintain adequate liquidity for meeting expected benefit payments by reviewing, on a timely basis, contribution and benefit payment levels and appropriately revising long-term and short-term asset allocations. Management takes reasonable and prudent steps to preserve the value of pension fund assets and to avoid the risk of large losses. Major steps taken to provide this protection included:

▪ Assets are diversified among various asset classes, such as domestic equities, international equities, fixed income and convertible liquid reserves. The long-term asset allocation ranges are as follows:

Domestic equities	10%-32%
International equities, including emerging markets	10%-32%
Corporate bonds	38%-80%
Liquid reserves	0%-1%

64

Periodically, reviews of allocations within these ranges are made to determine what adjustments should be made based on changing economic and market conditions and specific liquidity requirements.

▪ Assets were managed by professional investment managers and could be invested in separately managed accounts or commingled funds.

▪ Assets were not invested in securities rated below BBB- by S&P or Baa3 by Moody’s.

The investment guidelines also required that the individual investment managers were expected to achieve a reasonable rate of return over a market cycle. Emphasis was placed on long-term performance versus short-term market aberrations. Factors considered in determining reasonable rates of return included performance achieved by a diverse cross section of other investment managers, performance of commonly used benchmarks (e.g., Russell 3000 Index, MSCI World ex-U.S. Index, Barclays Capital Long Credit Index), actuarial assumptions for return on plan investments and specific performance guidelines given to individual investment managers.

At December 31, 2012, eleven active investment managers managed substantially all of the pension funds, each of whom had responsibility for managing a specific portion of these assets. Plan assets were diversified among the various asset classes within the allocation ranges approved by the benefits committee.

Our company-sponsored pension plans were underfunded by $78.7 million at December 31, 2012 and $89.1 million at December 31, 2011. As a result of being underfunded, we are required to make contributions to our qualified pension plans. In 2012 we contributed $20.6 million to these pension plans. We also contributed $0.2 million to our non-qualified pension plan in 2012. Our cash contributions in 2013 are estimated to be approximately $20 million. We do not anticipate funding our OPEB plans in 2013 except to pay benefit costs as incurred during the year by plan participants.

Estimated future benefit payments, which reflect expected future service and expected Medicare prescription subsidy receipts, are as follows for the years indicated:

(In thousands)	Pension Benefit Plans		Other Postretirement Employee Benefit Plans		Expected Medicare Subsidy
2013	$	17,144	$	9,565	$	690
2014	17,606		9,895		723
2015	18,413		10,138		752
2016	19,037		10,515		778
2017	19,629		10,431		808
2018-2022	103,890		47,754		4,460

Multiemployer Defined Benefit Pension Plans

Hourly employees at two of our manufacturing facilities participate in multiemployer defined benefit pension plans: the PACE Industry Union Management Pension Fund, which is managed by United Steelworkers, or USW, Benefits; and the International Association of Machinist & Aerospace Workers National Pension Fund, or IAM. We make contributions to these plans, as well as make contributions to a trust fund established to provide retiree medical benefits for a portion of these employees, which is also managed by USW Benefits. The risks of participating in these multiemployer plans are different from single-employer plans in the following respects:

▪ Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.

▪ If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.

▪ If we choose to stop participating in any of our multiemployer plans, we may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a "withdrawal liability." Due to the current unknown impact of future plan performance or the success of current and future funding improvement or rehabilitation plans to restore solvency to the plans, we are unable to determine whether or not we would ever choose to stop participating in any multiemployer plan, and if so, the amount and timing of any future withdrawal liability, changes in future funding obligations, or the impact of increased contributions, including those that could be triggered by a mass withdrawal of other employers from a multiemployer plan. Future funding obligations or future withdrawal liabilities would likely be material to our results of operations, financial condition or cash flows. A withdrawal liability is recorded for accounting purposes when withdrawal is probable and the amount of the withdrawal obligation is reasonably estimable.

65

Our participation in these plans for the annual period ended December 31, 2012, is outlined in the table below. The “EIN" and "Plan Number” columns provide the Employee Identification Number, or EIN, and the three-digit plan number. The most recent Pension Protection Act, or PPA, zone status available in 2012 and 2011 is for a plan’s year-end as of December 31, 2011, and December 31, 2010, respectively. The zone status is based on information we received from the plans and is certified by each plans’ actuary. Among other factors, plans in the red zone are generally less than 65 percent funded, plans in the yellow zone are less than 80 percent but more than 65 percent funded, and plans in the green zone are at least 80 percent funded. The “FIP/RP Status Pending/Implemented” column indicates plans for which a financial improvement plan, or FIP, or a rehabilitation plan, or RP, is either pending or has been implemented as required by the PPA as a measure to correct its underfunded status. The last column lists the expiration date(s) of the collective-bargaining agreement(s) to which the plans are subject.

In 2012, the contribution rates for the IAM plan increased to $3.25 an hour, up from $3.00 an hour in 2011 and $2.75 an hour in 2010, affecting the comparability of the contributions year over year. Similarly, in November of 2011, the USW plan’s contribution rates increased from $2.4285 an hour to $2.6714 an hour. The USW plan's rate increase was implemented as part of the RP in lieu of the legally required surcharge, paid by the employers, to assist the fund’s financial status. As such, the USW contribution rate changes affect comparability of the contributions year over year. We were listed in the USW Plan’s Form 5500 report as providing more than five percent of the total contributions for the years 2011 and 2010. At the date of issuance of our consolidated financial statements, Form 5500 reports for these plans were not available for the 2012 plan year.

Pension Fund	EIN	Plan Number	PPA Zone Status			FIP/RP Status Pending/ Implemented	Contributions (in thousands)						Surcharge Imposed	Expiration Date of Collective Bargaining Agreement
			2012	2011			2012		2011		2010
IAM	51-6031295	002	Green	Green		N/A	$	288	$	269	$	244	No	5/31/2016
USW	11-6166763	001	Red	Red		Implemented	5,673		5,648		5,218		No	8/31/2014
					Total Contributions:		$	5,961	$	5,917	$	5,462

NOTE 13 Earnings Per Share

Basic and diluted earnings per common share are computed by dividing net earnings by the weighted average number of common shares outstanding and by the weighted average number of dilutive potential common shares, in accordance with accounting guidance related to earnings per share. The following table reconciles the number of common shares used in calculating the basic and diluted net earnings per share:

	2012		2011		2010
Basic average common shares outstanding1	23,298,663		22,913,881		22,947,400
Incremental shares due to:
Restricted stock units	24,086		220,457		356,048
Performance shares	291,036		817,946		366,504
Diluted average common shares outstanding	23,613,785		23,952,284		23,669,952
Basic net earnings per common share	$	2.75	$	1.73	$	3.22
Diluted net earnings per common share	2.72		1.66		3.12
Anti-dilutive shares excluded from calculation	9,992		88,674		—

¹   Basic average common shares outstanding include restricted stock awards that are fully vested, but are deferred for future issuance. See Note 14, "Equity-Based Compensation Plans" for further discussion.

NOTE 14 Equity-Based Compensation Plans

The Clearwater Paper Corporation 2008 Stock Incentive Plan, or Stock Plan, which has been approved by our stockholders, provides for equity-based awards in the form of restricted shares, restricted stock units, or RSUs, performance shares, stock options, or stock appreciation rights to selected employees, outside directors, and consultants of the company. The Stock Plan became effective on December 16, 2008. Under the Stock Plan, as amended, we are authorized to issue up to approximately 4.1 million shares, which includes approximately 0.7 million additional shares authorized in connection with our acquisition of Cellu Tissue that are available for issuance as equity-based awards only to any employees, outside directors, or consultants who were not employed on December 26, 2010 by Clearwater Paper Corporation or any of its subsidiaries. At December 31, 2012, approximately 1.9 million shares were available for future issuance under the Stock Plan.

We recognize equity-based compensation expense for all equity-based payment awards made to employees and directors, including RSUs and performance shares, based on estimated fair values and net of estimates of future forfeitures. Expense is classified in

66

selling, general and administrative expense in our Consolidated Statements of Operations and is recognized on a straight-line basis over the requisite service periods of each award. Based on the terms of the Stock Plan, retirement-eligible employees become fully vested in outstanding awards on the later of that date they reach retirement eligibility or at the end of the first calendar year of each respective grant. We account for this feature when determining the service period over which to recognize expense for each grant of RSUs and performance shares.

Employee equity-based compensation expense was recognized as follows:

(In thousands)	2012		2011		2010
Restricted stock units	$	970	$	1,212	$	1,544
Performance shares	7,364		5,446		3,275
Total employee equity-based compensation	$	8,334	$	6,658	$	4,819
Related tax benefit	$	2,886	$	2,290	$	1,582

RESTRICTED STOCK UNITS

RSUs granted under our Stock Plan are generally subject to a vesting period of one to three years. RSU awards will accrue dividend equivalents based on dividends paid, if any, during the RSU vesting period. The dividend equivalents will be converted into additional RSUs that will vest in the same manner as the underlying RSUs to which they relate. RSUs granted under our Stock Plan do not represent common stock, and therefore the holders do not have voting rights unless and until shares are issued upon settlement.

A summary of the status of outstanding unvested RSU awards as of December 31, 2012, 2011 and 2010, and changes during those years, is presented below:

	2012				2011				2010
	Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Unvested shares outstanding at
January 1	169,344		$	11.33	437,272		$	6.96	849,512		$	7.04
Granted	52,294		34.59		23,138		38.42		32,428		24.23
Vested	(155,177	)	8.82		(286,486	)	6.88		(425,556	)	8.42
Forfeited	(2,734	)	34.07		(4,580	)	8.64		(19,112	)	7.14
Unvested shares outstanding at   December 31	63,727		35.57		169,344		11.33		437,272		6.96
Aggregate intrinsic value (in   thousands)			$	2,496			$	6,030			$	17,119

During 2012, 288,336 shares of RSUs were settled, of which 112,682 shares were settled and distributed. The remaining 175,654 shares, which would have resulted in certain executive compensation being above the Internal Revenue Code section 162(m) threshold, were deferred to preserve tax deductibility for the company. Included in the total shares settled during 2012 were RSUs of which a portion vested each year over a three year period ending in January 2012. After adjusting for minimum tax withholdings and deferred shares, a net 78,029 shares were issued during 2012. The minimum tax withholdings payment made in 2012 in connection with issued shares was $1.3 million.

The fair value of each RSU share award granted during 2012 was estimated on the date of grant using the grant date market price of our common stock. The total fair value of share awards that vested during 2012 was $1.4 million.

As of December 31, 2012, there was $1.2 million of total unrecognized compensation cost related to outstanding RSU awards. The cost is expected to be recognized over a weighted average period of 2.2 years.

67

PERFORMANCE SHARES

Performance share awards granted under our Stock Plan have a three-year performance period, with generally the same service period, and shares are issued after the end of the period if the employee provides the requisite service and the performance measure is met. The performance measure is a comparison of the percentile ranking of our total stockholder return compared to the total stockholder return performance of a selected peer group. The performance measure is considered to represent a “market condition” under authoritative accounting guidance, and thus, the market condition is considered when determining the estimate of the fair value of the performance share awards. The number of shares actually issued, as a percentage of the amount subject to the performance share award, could range from 0%-200%.

Performance share awards granted under our Stock Plan do not represent common stock, and therefore the holders do not have voting rights unless and until shares are issued upon settlement. During the performance period, dividend equivalents accrue based on dividends paid, if any, and are converted into additional performance shares, which vest or are forfeited in the same manner as the underlying performance shares to which they relate. Generally, if an employee terminates prior to completing the requisite service period, all or a portion of their awards are forfeited and the previously recognized compensation cost is reversed. If an employee provides the requisite service through the end of the performance period, but the performance measure is not met, following authoritative guidance for awards with a market condition, previously recognized compensation cost is not reversed.

The fair value of performance share awards is estimated using a Monte Carlo simulation model. For performance shares granted in 2012, the following assumptions were used in our Monte Carlo model:

Closing price of stock on date of grant	$	35.30
Risk free rate	0.39		%
Measurement period	3 years
Volatility	46		%

In addition to the above assumptions, the dividend yields for all companies were assumed to be zero since dividends are included in the definition of total shareholder return.

A summary of the status of outstanding performance share awards as of December 31, 2012, 2011 and 2010, and changes during those years, is presented below:

	2012				2011			2010
	Shares		Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Outstanding share awards at   January 1	749,538		$	19.52	638,870	$	13.00	524,588		$	5.64
Granted	150,865		40.24		110,668	57.18		141,522		39.36
Settled	(499,680	)	5.65		—	—		—		—
Forfeited	(8,068	)	42.15		—	—		(27,240	)	8.14
Outstanding share awards at   December 31	392,655		44.67		749,538	19.52		638,870		13.00
Aggregate intrinsic value (in   thousands)			$	15,376		$	26,691			$	25,012

The service and performance period for 499,680 outstanding performance shares granted in 2009 ended on December 31, 2011. Those performance shares were settled and distributed during the first quarter of 2012. The number of shares actually distributed, as a percentage of the performance shares granted, was 200%. After adjusting for the related minimum tax withholdings, a net 660,944 shares were issued in the first quarter of 2012. The related minimum tax withholdings payment made in the first quarter of 2012 in connection with issued shares was $11.9 million. On December 31, 2012, the performance period for performance shares granted in 2010 ended, and those performance shares will be settled and distributed, at a range of 0%-200% of shares granted, in the first quarter of 2013.

As of December 31, 2012, there was $3.4 million of unrecognized compensation cost related to outstanding performance share awards. The cost is expected to be recognized over a weighted average period of 1.5 years.

68

DIRECTOR AWARDS

In connection with joining our Board of Directors, in January 2009 our outside directors were granted an award of phantom common stock units, which were credited to an account established on behalf of each director and vested ratably over a three-year period with the final vesting in January 2012. Subsequent equity awards have been granted annually in May, or on a pro-rata basis as applicable, to our outside directors in the form of phantom common stock units as part of their annual compensation, which are credited to their accounts. These awards vest ratably over a one-year period. These accounts will be credited with additional phantom common stock units equal in value to dividends paid, if any, on the same amount of common stock. Upon separation from service as a director, the vested portion of the phantom common stock units held by the director in a stock unit account are converted to cash based upon the then market price of the common stock and paid to the director. Due to its cash-settlement feature, we account for these awards as liabilities rather than equity and recognize the equity-based compensation expense or income at the end of each reporting period based on the portion of the award that is vested and the increase or decrease in the value of our common stock. We recorded director equity-based compensation expense totaling $1.4 million, $1.5 million and $3.7 million for the years ended December 31, 2012, 2011 and 2010, respectively. At December 31, 2012 and 2011, the liability amounts associated with director equity-based compensation included in "Other long-term obligations" on our Consolidated Balance Sheets were $9.1 million and $7.7 million, respectively.

NOTE 15 Fair Value Measurements

The estimated fair values of our financial instruments as of our balance sheet dates are presented below:

	2012				2011
(In thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Cash, short-term investments and restricted cash (Level 1)	$	34,079	$	34,079	$	64,209	$	64,209
Long-term debt (Level 1)	523,933		572,625		523,694		556,313

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.

Cash, short-term investments, restricted cash and long-term debt are the only items measured at fair value on a recurring basis. The carrying amount of our short-term investments approximates fair value due to their very short maturity periods, and such investments are at or near market yields.

We do not have any financial assets measured at fair value on a nonrecurring basis. Nonfinancial assets measured at fair value on a nonrecurring basis include items such as long-lived assets held and used that are measured at fair value resulting from impairment, if deemed necessary.

NOTE 16 Commitments and Contingencies

LEASE COMMITMENTS

Our operating leases cover manufacturing, office, warehouse and distribution space, equipment and vehicles, which expire at various dates through 2018, as well as capital leases related to our North Carolina converting and manufacturing facilities. As leases expire, it can be expected that, in the normal course of business, certain leases will be renewed or replaced.

69

As of December 31, 2012, under current operating and capital lease contracts, we had future minimum lease payments as follows:

(In thousands)	Capital			Operating
2013	$	2,330		$	14,966
2014	2,375			10,102
2015	2,420			6,613
2016	2,466			5,142
2017	2,513			4,165
Thereafter	37,361			3,959
Total future minimum lease payments	$	49,465		$	44,947
Less interest portion	(27,177		)
Present value of future minimum lease payments	$	22,288

Rent expense for operating leases was $16.6 million, $16.1 million and $10.0 million for the years ended December 31, 2012, 2011 and 2010, respectively.

70

NOTE 17 Segment Information

We are organized in two reportable operating segments: Consumer Products and Pulp and Paperboard. Intersegment pulp transfers from our Pulp and Paperboard segment to our Consumer Products segment are transferred at cost. As a result, there are no eliminations required to reconcile our total consolidated net sales to the segments' total net sales.

Following is a tabular presentation of business segment information for each of the past three years. Corporate information is included to reconcile segment data to the financial statements.

(In thousands)	2012			2011			2010
Segment net sales:
Consumer Products	$	1,134,556		$	1,092,133		$	570,047
Pulp and Paperboard	739,748			835,840			802,918
Total segment net sales	$	1,874,304		$	1,927,973		$	1,372,965
Operating income:
Consumer Products	$	93,347		$	42,806		$	80,791
Pulp and Paperboard1	103,910			92,827			64,869
	197,257			135,633			145,660
Corporate and eliminations1	(51,870		)	(20,188		)	(46,893		)
Income from operations	$	145,387		$	115,445		$	98,767
Depreciation and amortization:
Consumer Products	$	54,547		$	50,391		$	16,994
Pulp and Paperboard	23,113			26,073			28,658
Corporate	1,673			469			2,076
Total depreciation and amortization	$	79,333		$	76,933		$	47,728
Assets:
Consumer Products	$	1,178,438		$	1,081,988		$	969,450
Pulp and Paperboard	344,614			355,886			377,674
	1,523,052			1,437,874			1,347,124
Corporate	110,404			133,444			198,212
Total Assets	$	1,633,456		$	1,571,318		$	1,545,336
Capital expenditures:
Consumer Products	$	183,330		$	117,059		$	33,902
Pulp and Paperboard	19,954			15,355			10,208
	203,284			132,414			44,110
Corporate	3,831			5,329			2,923
Total capital expenditures	$	207,115		$	137,743		$	47,033

¹  Results for Pulp and Paperboard for 2011 included additional expenses associated with the sale of the Lewiston, Idaho sawmill, which were partially offset by LIFO inventory liquidation and other adjustments recorded at the corporate level.

71

Our manufacturing facilities and all other assets are located within the continental United States, except for one production facility in St. Catharines, Ontario, Canada. We sell and ship our products to customers in many foreign countries. Geographic information regarding our net sales is summarized as follows:

(In thousands)	2012		2011		2010
United States	$	1,726,561	$	1,751,482	$	1,236,400
Japan	63,368		63,584		53,390
Canada	29,557		31,256		15,060
Taiwan	11,061		16,205		12,257
Korea	9,655		5,426		6,258
Australia	7,786		6,246		6,173
Mexico	6,102		13,619		9,843
China	3,488		15,081		9,128
Germany	2,500		3,042		2,729
Netherlands	14		3,163		4,181
Other foreign countries	14,212		18,869		17,546
Total Net Sales	$	1,874,304	$	1,927,973	$	1,372,965

NOTE 18 Financial Results by Quarter (Unaudited)

	Three Months Ended
	March 31						June 30						September 30						December 31
(In thousands— except per-share amounts)	2012			2011			2012			2011			2012			2011			2012			2011
Net Sales	$	457,798		$	465,830		$	473,572		$	494,627		$	480,233		$	501,125		$	462,701		$	466,391
Costs and expenses:
Cost of sales	(403,076		)	(414,920		)	(398,546		)	(433,358		)	(409,822		)	(448,927		)	(396,428		)	(405,325		)
Selling, general and   administrative   expenses	(29,074		)	(27,364		)	(30,529		)	(27,476		)	(30,649		)	(26,815		)	(30,793		)	(28,343		)
Total operating   costs and expenses	(432,150		)	(442,284		)	(429,075		)	(460,834		)	(440,471		)	(475,742		)	(427,221		)	(433,668		)
Income from   operations	25,648			23,546			44,497			33,793			39,762			25,383			35,480			32,723
Net earnings	$	3,726		$	5,604		$	21,489		$	13,923		$	19,064		$	8,645		$	19,852		$	11,502
Net earnings per   common share
Basic	$	0.16		$	0.25		$	0.92		$	0.60		$	0.82		$	0.38		$	0.86		$	0.51
Diluted	0.16			0.24			0.91			0.59			0.80			0.37			0.84			0.48

72

NOTE 19 Supplemental Guarantor Financial Information

On October 22, 2010 we issued the 2010 Notes. Certain of our 100% owned, domestic subsidiaries guarantee the 2010 Notes on a joint and several basis. As of December 31, 2012, the 2010 Notes were not guaranteed by Interlake Acquisition Corporation Limited or Cellu Tissue-CityForest, LLC. There are no significant restrictions on the ability of the guarantor subsidiaries to make distributions to Clearwater Paper, the issuer of the 2010 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

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Twelve Months Ended December 31, 2012

				Guarantor			Non-Guarantor
(In thousands)	Issuer			Subsidiaries			Subsidiaries			Eliminations			Total
Net sales	$	1,375,732		$	459,328		$	65,468		$	(26,224	)	$	1,874,304
Cost and expenses:
Cost of sales	(1,149,413		)	(438,106		)	(46,577		)	26,224			(1,607,872		)
Selling, general and administrative expenses	(96,816		)	(19,187		)	(5,042		)	—			(121,045		)
Total operating costs and expenses	(1,246,229		)	(457,293		)	(51,619		)	26,224			(1,728,917		)
Income from operations	129,503			2,035			13,849			—			145,387
Interest expense, net	(33,796		)	—			—			—			(33,796		)
Earnings before income taxes	95,707			2,035			13,849			—			111,591
Income tax provision	(42,440		)	(9,385		)	(5,012		)	9,377			(47,460		)
Equity in income of subsidiary	1,487			8,837			—			(10,324		)	—
Net earnings	$	54,754		$	1,487		$	8,837		$	(947	)	$	64,131
Other comprehensive loss, net of tax	(428		)	—			—			—			(428		)
Comprehensive income	$	54,326		$	1,487		$	8,837		$	(947	)	$	63,703

Clearwater Paper Corporation

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Twelve Months Ended December 31, 2011

				Guarantor			Non-Guarantor
(In thousands)	Issuer			Subsidiaries			Subsidiaries			Eliminations			Total
Net sales	$	1,403,865		$	460,689		$	63,419		$	—		$	1,927,973
Cost and expenses:
Cost of sales	(1,198,955		)	(444,232		)	(59,343		)	—			(1,702,530		)
Selling, general and administrative expenses	(89,019		)	(17,913		)	(3,066		)	—			(109,998		)
Total operating costs and expenses	(1,287,974		)	(462,145		)	(62,409		)	—			(1,812,528		)
Income (loss) from operations	115,891			(1,456		)	1,010			—			115,445
Interest expense, net	(44,187		)	(92		)	(530		)	—			(44,809		)
Other, net	—			—			284			—			284
Earnings before income taxes	71,704			(1,548		)	764			—			70,920
Income tax provision	(34,018		)	3,525			1,297			(2,050		)	(31,246		)
Equity in income of subsidiary	4,038			2,061			—			(6,099		)	—
Net earnings	$	41,724		$	4,038		$	2,061		$	(8,149	)	$	39,674
Other comprehensive loss, net of tax	(16,913		)	—			—			—			(16,913		)
Comprehensive income	$	24,811		$	4,038		$	2,061		$	(8,149	)	$	22,761

73

Clearwater Paper Corporation

Condensed Consolidating Balance Sheet

At December 31, 2012

(In thousands)	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Total
ASSETS
Current assets:
Cash	$	11,105		$	5		$	1,469	$	—		$	12,579
Short-term investments	20,000			—			—		—			20,000
Restricted cash	—			—			—		—			—
Receivables, net	109,129			38,167			8,876		(2,029		)	154,143
Taxes receivable	20,712			116			—		—			20,828
Inventories	171,333			53,648			6,485		—			231,466
Deferred tax assets	11,750			4,400			195		791			17,136
Prepaid expenses	11,441			705			168		—			12,314
Total current assets	355,470			97,041			17,193		(1,238		)	468,466
Property, plant and equipment, net	624,019			205,017			48,341		—			877,377
Goodwill	229,533			—			—		—			229,533
Intangible assets, net	4,531			37,222			6,000		—			47,753
Intercompany receivable (payable)	41,663			(91,343		)	50,471		(791		)	—
Investment in subsidiary	259,466			98,555			—		(358,021		)	—
Other assets, net	9,948			379			—		—			10,327
TOTAL ASSETS	$	1,524,630		$	346,871		$	122,005	$	(360,050	)	$	1,633,456
LIABILITIES AND STOCKHOLDERS’   EQUITY
Current liabilities:
Accounts payable and accrued   liabilities	$	132,413		$	27,645		$	7,567	$	(2,029	)	$	165,596
Current liability for pensions and   other postretirement employee   benefits	9,137			—			—		—			9,137
Total current liabilities	141,550			27,645			7,567		(2,029		)	174,733
Long-term debt	523,933			—			—		—			523,933
Liability for pensions and other   postretirement employee benefits	204,163			—			—		—			204,163
Other long-term obligations	50,602			308			—		—			50,910
Accrued taxes	76,617			1,771			311		—			78,699
Deferred tax liabilities (assets)	(13,129		)	57,681			15,572		—			60,124
Accumulated other comprehensive loss,   net of tax	(115,693		)	—			—		—			(115,693		)
Stockholders’ equity excluding   accumulated other comprehensive loss	656,587			259,466			98,555		(358,021		)	656,587
TOTAL LIABILITIES AND   STOCKHOLDERS’ EQUITY	$	1,524,630		$	346,871		$	122,005	$	(360,050	)	$	1,633,456

74

Clearwater Paper Corporation

Condensed Consolidating Balance Sheet

At December 31, 2011

(In thousands)	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Total
ASSETS
Current assets:
Cash	$	2,146		$	901		$	5,392	$	—		$	8,439
Short-term investments	55,001			—			—		—			55,001
Restricted cash	769			—			—		—			769
Receivables, net	100,600			66,580			9,009		—			176,189
Taxes receivable	8,957			709			334		—			10,000
Inventories	175,446			62,234			6,391		—			244,071
Deferred tax assets	27,801			2,950			194		8,521			39,466
Prepaid expenses	9,756			1,437			203		—			11,396
Total current assets	380,476			134,811			21,523		8,521			545,331
Property, plant and equipment, net	468,372			217,235			49,959		—			735,566
Goodwill	229,533			—			—		—			229,533
Intangible assets, net	—			42,873			6,875		—			49,748
Intercompany receivable (payable)	120,061			(155,395		)	35,334		—			—
Investment in subsidiary	249,142			89,718			—		(338,860		)	—
Other assets, net	10,815			325			—		—			11,140
TOTAL ASSETS	$	1,458,399		$	329,567		$	113,691	$	(330,339	)	$	1,571,318
LIABILITIES AND STOCKHOLDERS’   EQUITY
Current liabilities:
Accounts payable and accrued   liabilities	$	109,549		$	28,838		$	6,244	$	—		$	144,631
Current liability for pensions and   other postretirement employee   benefits	9,861			—			—		—			9,861
Total current liabilities	119,410			28,838			6,244		—			154,492
Long-term debt	523,694			—			—		—			523,694
Liability for pensions and other   postretirement employee benefits	215,932			—			—		—			215,932
Other long-term obligations	48,009			465			—		—			48,474
Accrued taxes	73,594			—			870		—			74,464
Deferred tax liabilities (assets)	(7,144		)	51,122			16,859		8,521			69,358
Accumulated other comprehensive loss,   net of tax	(115,265		)	—			—		—			(115,265		)
Stockholders’ equity excluding   accumulated other comprehensive loss	600,169			249,142			89,718		(338,860		)	600,169
TOTAL LIABILITIES AND   STOCKHOLDERS’ EQUITY	$	1,458,399		$	329,567		$	113,691	$	(330,339	)	$	1,571,318

75

Clearwater Paper Corporation

Condensed Consolidating Statement of Cash Flows

Twelve Months Ended December 31, 2012

(In thousands)	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
CASH FLOWS FROM OPERATING   ACTIVITIES
Net earnings	$	54,754		$	1,487		$	8,837		$	(947	)	$	64,131
Adjustments to reconcile net earnings (loss)   to net cash provided by operating activities:
Depreciation and amortization	48,191			25,578			5,564			—			79,333
Deferred tax expense (benefit)	9,840			5,109			(1,288		)	(791		)	12,870
Equity-based compensation expense	9,703			—			—			—			9,703
Employee benefit plans	9,366			—			—			—			9,366
Changes in working capital, net	25,252			35,234			795			—			61,281
Change in taxes receivable, net	(11,755		)	593			334			—			(10,828		)
Excess tax benefits from equity-based   payment arrangements	(15,837		)	—			—			—			(15,837		)
Change in non-current accrued taxes	3,023			1,771			(559		)	—			4,235
Funding of qualified pension plans	(20,627		)	—			—			—			(20,627		)
Change in restricted cash	769			—			—			—			769
Other, net	3,180			1,117			—			—			4,297
Net cash provided by operating   activities	115,859			70,889			13,683			(1,738		)	198,693
CASH FLOWS FROM INVESTING   ACTIVITIES
Change in short-term investments, net	35,001			—			—			—			35,001
Additions to plant and equipment	(190,296		)	(11,011		)	(2,469		)	—			(203,776		)
Cash paid for acquisitions, net of cash acquired	(9,264		)	—			—			—			(9,264		)
Proceeds from the sale of assets	—			1,035			—			—			1,035
Net cash used for investing activities	(164,559		)	(9,976		)	(2,469		)	—			(177,004		)
CASH FLOWS FROM FINANCING   ACTIVITIES
Purchase of treasury stock	(18,650		)	—			—			—			(18,650		)
Investment from (to) parent	75,208			(61,809		)	(15,137		)	1,738			—
Excess tax benefits from equity-based   payment arrangements	15,837			—			—			—			15,837
Payment of tax withholdings on equity-   based payment arrangements	(13,234		)	—			—			—			(13,234		)
Other, net	(1,502		)	—			—			—			(1,502		)
Net cash provided by (used for) financing   activities	57,659			(61,809		)	(15,137		)	1,738			(17,549		)
Increase (decrease) in cash	8,959			(896		)	(3,923		)	—			4,140
Cash at beginning of period	2,146			901			5,392			—			8,439
Cash at end of period	$	11,105		$	5		$	1,469		$	—		$	12,579

76

Clearwater Paper Corporation

Condensed Consolidating Statement of Cash Flows

Twelve Months Ended December 31, 2011

(In thousands)	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
CASH FLOWS FROM OPERATING   ACTIVITIES
Net earnings	$	41,724		$	4,038		$	2,061		$	(8,149	)	$	39,674
Adjustments to reconcile net earnings to net   cash provided by (used in) operating   activities:
Depreciation and amortization	45,439			25,956			5,538			—			76,933
Deferred tax expense	7,264			5,473			2,040			—			14,777
Equity-based compensation expense	8,134			—			—			—			8,134
Employee benefit plans	16,897			—			—			—			16,897
Changes in working capital, net	(133,142		)	23,959			23,171			—			(86,012		)
Change in taxes receivable, net	(1,368		)	1,939			(217		)	—			354
Excess tax benefits from equity-based payment arrangements	(885		)	—			—			—			(885		)
Change in non-current accrued taxes	2,453			—			—			—			2,453
Funding of qualified pension plans	(12,498		)	—			—			—			(12,498		)
Change in restricted cash	4,160			—			—			—			4,160
Other, net	3,734			672			2			—			4,408
Net cash (used in) provided by operating   activities	(18,088		)	62,037			32,595			(8,149		)	68,395
CASH FLOWS FROM INVESTING   ACTIVITIES
Change in short-term investments, net	71,094			—			—			—			71,094
Additions to plant and equipment	(117,525		)	(15,654		)	(890		)	—			(134,069		)
Proceeds from the sale of assets	12,826			—			—			—			12,826
Net cash used for investing activities	(33,605		)	(15,654		)	(890		)	—			(50,149		)
CASH FLOWS FROM FINANCING   ACTIVITIES
Repayment of Cellu Tissue debt	—			—			(15,595		)	—			(15,595		)
Purchase of treasury stock	(11,350		)	—			—			—			(11,350		)
Investment from (to) parent	51,621			(47,210		)	(12,560		)	8,149			—
Excess tax benefits from equity-based payment arrangements	885			—			—			—			885
Payment of tax withholdings on equity-based   payment arrangements	(2,400		)	—			—			—			(2,400		)
Other, net	(636		)	—			—			—			(636		)
Net cash provided by (used for) financing activities	38,120			(47,210		)	(28,155		)	8,149			(29,096		)
Effect of exchange rate changes	—			—			361			—			361
(Decrease) increase in cash	(13,573		)	(827		)	3,911			—			(10,489		)
Cash at beginning of period	15,719			1,728			1,481			—			18,928
Cash at end of period	$	2,146		$	901		$	5,392		$	—		$	8,439

77

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

Clearwater Paper Corporation:

We have audited the accompanying consolidated balance sheets of Clearwater Paper Corporation and subsidiaries as of December 31, 2012 and 2011, and the related consolidated statements of operations, comprehensive income, cash flows, and stockholders' equity for each of the years in the three-year period ended December 31, 2012. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Clearwater Paper Corporation and subsidiaries as of December 31, 2012 and 2011, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2012, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Clearwater Paper Corporation's internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 22, 2013 expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

/s/ KPMG LLP

Seattle, Washington

February 22, 2013

78

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

Clearwater Paper Corporation:

We have audited Clearwater Paper Corporation's internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Clearwater Paper Corporation's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Report on Internal Control Over Financial Reporting in Item 9A. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Clearwater Paper Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Clearwater Paper Corporation and subsidiaries as of December 31, 2012 and 2011, and the related consolidated statements of operations, comprehensive income, cash flows, and stockholders' equity for each of the years in the three-year period ended December 31, 2012, and our report dated February 22, 2013 expressed an unqualified opinion on those consolidated financial statements.

/s/ KPMG LLP

Seattle, Washington

February 22, 2013

79

ITEM 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

ITEM 9A.

Controls and Procedures

Evaluation of Controls and Procedures

We maintain "disclosure controls and procedures," as such term is defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934, or the Exchange Act, that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer, or CEO, and Chief Financial Officer, or CFO, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of disclosure controls and procedures is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Subject to the limitations noted above, our management, with the participation of our CEO and CFO, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the fiscal year covered by this annual report on Form 10-K. Based on that evaluation, the CEO and CFO have concluded that, as of such date, our disclosure controls and procedures are effective to meet the objective for which they were designed and operate at the reasonable assurance level.

Changes in Internal Controls

There was no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Management Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) of the Exchange Act).

Under the supervision of and with the participation of our CEO and our CFO, our management conducted an assessment of the effectiveness of our internal control over financial reporting based on the framework and criteria established in Internal Control — Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, our management has concluded that as of December 31, 2012 our internal control over financial reporting was effective. The effectiveness of our internal control over financial reporting as of December 31, 2012 has been audited by KPMG LLP, our independent registered public accounting firm, as stated in its report which is included in this Annual Report on Form 10-K.

ITEM 9B.

Other Information

None.

80

Part III

ITEM 10.

Directors, Executive Officers and Corporate Governance

Information regarding our directors is set forth under the heading “Board of Directors” in our definitive proxy statement, to be filed on or about March 25, 2013, for the 2013 annual meeting of stockholders, referred to in this report as the 2013 Proxy Statement, which information is incorporated herein by reference. Information concerning Executive Officers is included in Part I of this report in Item 1. Information regarding reporting compliance with Section 16(a) for directors, officers or other parties is set forth under the heading “Section 16(a) Beneficial Ownership Reporting Compliance” in the 2013 Proxy Statement and is incorporated herein by reference.

We have adopted a Code of Business Conduct and Ethics that applies to all directors and employees and a Code of Ethics for Senior Financial Officers that applies to our CEO, CFO, COO, the President, the Controller and other Senior Financial Officers identified by our Board of Directors. You can find each code on our website by going to the following address: www.clearwaterpaper.com, selecting “Investor Relations” and “Corporate Governance,” then selecting the link for “Code of Business Conduct and Ethics" or "Code of Ethics for Senior Financial Officers.” We will post any amendments, as well as any waivers that are required to be disclosed by the rules of either the SEC or the New York Stock Exchange, on our website. To date, no waivers of the Code of Business Conduct and Ethics or the Code of Ethics for Senior Financial Officers have been considered or granted.

Our Board of Directors has adopted corporate governance guidelines and charters for the Board of Directors’ Audit Committee, Compensation Committee, and Nominating and Governance Committee. You can find these documents on our website by going to the following address: www.clearwaterpaper.com, selecting “Investor Relations” and “Corporate Governance,” then selecting the appropriate link.

The Audit Committee of our Board of Directors is an “audit committee” for purposes of Section 3(a)(58) of the Exchange Act. As of December 31, 2012, the members of that committee were Boh A. Dickey (Chair), William D. Larsson and William T. Weyerhaeuser. On January 7, 2013, our board of Directors appointed Beth E. Ford to the Audit Committee. The Board of Directors has determined that Messrs, Dickey and Larsson are each an “audit committee financial expert” and that all of the members of the Audit Committee are “independent” as defined under the applicable rules and regulations of the SEC and the listing standards of the New York Stock Exchange.

ITEM 11.

Executive Compensation

Information required by Item 11 of Part III is included under the heading “Executive Compensation Discussion and Analysis” in our 2013 Proxy Statement, to be filed on or about March 25, 2013, relating to our 2013 Annual Meeting of Shareholders and is incorporated herein by reference.

81

ITEM 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information required by Item 12 of Part III is included in our 2013 Proxy Statement, to be filed on or about March 25, 2013, relating to our 2013 Annual Meeting of Shareholders and is incorporated herein by reference.

The following table provides certain information as of December 31, 2012, with respect to our equity compensation plans:

PLAN CATEGORY	NUMBER OF SECURITIES TO BE ISSUED UPON EXERCISE OF OUTSTANDING OPTIONS, WARRANTS AND RIGHTS1	WEIGHTED AVERAGE EXERCISE PRICE OF OUTSTANDING OPTIONS, WARRANTS AND RIGHTS2	NUMBER OF SECURITIES REMAINING AVAILABLE FOR FUTURE ISSUANCE UNDER EQUITY COMPENSATION PLANS
Equity compensation plans approved by security holders	858,376	—	1,944,127
Equity compensation plans not approved by security holders	—	—	—
Total	858,376	—	1,944,127

¹ Includes 785,310 performance shares and 73,066 restricted stock units, or RSUs, which are the maximum number of shares that could be awarded under the performance share and RSU programs, not including future dividend equivalents, if any are paid.

² Performance shares and RSUs do not have exercise prices and therefore are not included in the weighted average exercise price calculation.

ITEM 13.

Certain Relationships and Related Transactions, and Director Independence

Information required by Item 13 of Part III is included under the heading “Transactions with Related Persons” in our 2013 Proxy Statement, to be filed on or about March 25, 2013, relating to our 2013 Annual Meeting of Shareholders and is incorporated herein by reference.

ITEM 14.

Principal Accounting Fees and Services

Information required by Item 14 of Part III is included under the heading “Fees Paid to Independent Registered Public Accounting Firm” in our 2013 Proxy Statement relating, to be filed on or about March 25, 2013, to our 2013 Annual Meeting of Shareholders and is incorporated herein by reference.

82

PART IV

ITEM 15.

Exhibits, Financial Statement Schedules

FINANCIAL STATEMENTS

Our consolidated financial statements are listed in the Index to Consolidated Financial Statements on page 39 of this report.

FINANCIAL STATEMENT SCHEDULES

All schedules have been omitted because the required information is not present or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements, including the notes thereto.

EXHIBITS

Exhibits are listed in the Exhibit Index on pages 85-89 of this report.

83

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CLEARWATER PAPER CORPORATION
	(Registrant)
By	/S/    Linda K. Massman
	Linda K. Massman President, Chief Executive Officer and Director (Principal Executive Officer)

Date: February 22, 2013

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

			Date
By	/S/    Linda K. Massman	President, Chief Executive Officer and Director (Principal Executive Officer)	February 22, 2013
	Linda K. Massman
By	/S/    John D. Hertz	Senior Vice President, Finance and Chief Financial Officer (Duly Authorized Officer; Principal Financial Officer)	February 22, 2013
	John D. Hertz
By	/S/    Johnathan D. Hunter	Vice President, Corporate Controller (Duly Authorized Officer; Principal Accounting Officer)	February 22, 2013
	Johnathan D. Hunter
	* Boh A. Dickey	Director and Chair of the Board	February 22, 2013
	* Frederic W. Corrigan	Director	February 22, 2013
	* Beth E. Ford	Director	February 22, 2013
	* Kevin J. Hunt	Director	February 22, 2013
	* Gordon L. Jones	Director	February 22, 2013
	* William D. Larsson	Director	February 22, 2013
	* Michael T. Riordan	Director	February 22, 2013
	* Dr. William T. Weyerhaeuser	Director	February 22, 2013

*By	/S/    Michael S. Gadd
	Michael S. Gadd (Attorney-in-fact)

84

Exhibit Index

EXHIBIT NUMBER	DESCRIPTION
2.1*	Separation and Distribution Agreement, dated December 15, 2008, between Clearwater Paper Corporation (the “Company”) and Potlatch Corporation (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission (the “Commission”) on December 18, 2008).
2.2*	Agreement and Plan of Merger, dated as of September 15, 2010, by and among the Company, Cellu Tissue Holdings, Inc., and Sand Dollar Acquisition Corporation (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the Commission on September 21, 2010).
3.1*	Restated Certificate of Incorporation of the Company, effective as of December 16, 2008, as filed with the Secretary of State of the State of Delaware (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on December 18, 2008).
3.2*	Amended and Restated Bylaws of the Company, effective as of December 16, 2008 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the Commission on December 18, 2008).
4.1*	Indenture, dated as of June 11, 2009, between the Company and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed by the Company with the Commission on June 12, 2009).
4.2*	Form of 10 5/8% Senior Notes due 2016 (incorporated by reference to Exhibit A to the Indenture filed as Exhibit 4.2 to the Current Report on Form 8-K filed by the Company with the Commission on June 12, 2009).
4.3*	Indenture, dated as of October 22, 2010, between the Company and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed by the Company with the Commission on October 27, 2010).
4.4*	Form of 7 1/8% Senior Notes due 2018 (incorporated by reference to Exhibit A to the Indenture filed as Exhibit 4.1 to the Current Report on Form 8-K filed by the Company with the Commission on October 27, 2010).
10.1*	Employee Matters Agreement, dated December 15, 2008, between the Company and Potlatch Corporation (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q filed for the quarter ended September 30, 2010).
10.2*	Tax Sharing Agreement, dated December 15, 2008, among the Company, Potlatch Corporation, Potlatch Forest Holdings, Inc. and Potlatch Land & Lumber, LLC (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the Commission on December 18, 2008).
10.3*	Loan and Security Agreement, dated as of November 26, 2008, by and among the Company and Bank of America, N.A., as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on December 3, 2008).

85

10.3(i)*	First Amendment to Loan and Security Agreement, dated as of September 15, 2010, by and among the financial institutions signatory thereto, Bank of America, N.A. and the Company (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the Commission on September 21, 2010).
10.3(ii)*	Second Amendment to Loan and Security Agreement, dated as of October 22, 2010, by and among the financial institutions signatory thereto, Bank of America, N.A. and the Company (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on October 27, 2010).
10.3(iii)*	Third Amendment to Loan and Security Agreement, dated as of February 7, 2011, by and among the financial institutions signatory thereto, Bank of America, N.A. and the Company (incorporated by reference to Exhibit 10.3(iii) to the Company’s Annual Report on Form 10-K filed with the Commission on March 11, 2011).
10.3(iv)*	Fourth Amendment to Loan and Security Agreement, dated as of March 2, 2011, by and among the financial institutions signatory thereto, Bank of America, N.A. and the Company (incorporated by reference to Exhibit 10.3(iv) to the Company’s Annual Report on Form 10-K filed with the Commission on March 11, 2011).
10.3(v)*	Fifth Amendment to Loan and Security Agreement, dated as of August 17, 2011, by and among the financial institutions signatory thereto, Bank of America, N.A. and the Company (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed for the quarter ended September 30, 2011).
10.3(vi)*	Sixth Amendment to Loan and Security Agreement, dated as of September 28, 2011, by and among the financial institutions signatory thereto, Bank of America, N.A. and the Company (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on September 30, 2011).
10.3(vii)	Seventh Amendment to Loan and Security Agreement, dated as of September 27, 2012, by and among the financial institutions signatory thereto, Bank of America, N.A. and the Company.
10.3(viii)*	Eighth Amendment to Loan and Security Agreement, dated as of January 17, 2013, by and among the financial institutions signatory thereto, Bank of America, N.A. and the Company (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on January 24, 2013).
10.4*1	Form of Indemnification Agreement entered into between the Company and each of its directors and executive officers (incorporated by reference to Exhibit 10.15 to Amendment No. 4 to the Company’s Registration Statement on Form 10 filed with the Commission on November 19, 2008).
10.5*1	Employment Agreement between Gordon L. Jones and the Company dated effective December 16, 2011 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on December 14, 2011).
10.5(i)*1	Amendment to Employment Agreement Between Gordon L. Jones and the Company dated effective October 4, 2012 (incorporated by reference to Exhibit 10.5(i) to the Company's Quarterly Report on Form 10-Q filed for the quarter ended September 30, 2012).
10.6*1	Employment Agreement between Linda K. Massman and the Company dated effective November 1, 2011 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Commission on December 14, 2011).
10.6(i)*1	Amendment to Employment Agreement between Linda K. Massman and the Company dated effective January 1, 2012 (incorporated by reference to Exhibit 10.6(i) to the Company's quarterly Report on Form 10-Q filed for the quarter ended March 31, 2012).

86

10.71	Employment Agreement between Linda K. Massman and the Company, dated effective January 1, 2013.
10.7(i)1	Clearwater Paper Corporation 2008 Stock Incentive Plan-Restricted Stock Unit Agreement, dated as of January 1, 2013, with Linda K. Massman.
10.8*1	Clearwater Paper Corporation 2008 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on December 19, 2008).
10.8(i)*1	Amendment No. 1 to Clearwater Paper Corporation 2008 Stock Incentive Plan (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the Commission on December 28, 2010).
10.8(ii)*1	Amendment No. 2 to Clearwater Paper Corporation 2008 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed for the quarter ended September 30, 2011).
10.9*1	Clearwater Paper Corporation 2008 Stock Incentive Plan—Form of Performance Share Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Commission on December 19, 2008).
10.9(i)*1	Clearwater Paper Corporation 2008 Stock Incentive Plan—Form of Amendment to Performance Share Agreement, effective March 2, 2009 (incorporated by reference to Exhibit 10.11(i) to the Company’s Quarterly Report on Form 10-Q filed for the quarter ended June 30, 2009).
10.9(ii)*1	Clearwater Paper Corporation 2008 Stock Incentive Plan—Form of Performance Share Agreement, as amended and restated May 12, 2009, to be used for performance share awards approved subsequent to May 12, 2009, (incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q filed for the quarter ended September 30, 2010).
10.9(iii)*1	Clearwater Paper Corporation 2008 Stock Incentive Plan—Form of Performance Share Agreement, as amended and restated December 1, 2009, to be used for annual performance share awards approved subsequent to December 31, 2009 (incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q filed for the quarter ended September 30, 2010).
10.9(iv)*1	Clearwater Paper Corporation 2008 Stock Incentive Plan—Form of Performance Share Agreement, to be used for annual restricted stock unit awards approved subsequent to December 31, 2011 (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed December 14, 2011).
10.10*1	Clearwater Paper Corporation 2008 Stock Incentive Plan—Form of Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the Commission on December 19, 2008).
10.10(i)*1	Clearwater Paper Corporation 2008 Stock Incentive Plan—Form of Restricted Stock Unit Agreement, as amended and restated May 12, 2009, to be used for restricted stock unit awards approved subsequent to May 12, 2009 (incorporated by reference to Exhibit 10.12(i) to the Company’s Quarterly Report on Form 10-Q filed for the quarter ended June 30, 2009).
10.10(ii)*1	Clearwater Paper Corporation 2008 Stock Incentive Plan—Form of Restricted Stock Unit Agreement, as amended and restated December 1, 2009, to be used for annual restricted stock unit awards approved subsequent to December 31, 2009, (incorporated by reference to Exhibit 10.12(ii) to the Current Report on Form 8-K filed by the Registrant on December 4, 2009).

87

10.10(iii)*1	Clearwater Paper Corporation 2008 Stock Incentive Plan—Form of RSU Deferral Agreement for Annual LTIP and Founders Grant RSUs (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed December 14, 2011).
10.10(iv)*1	Clearwater Paper Corporation 2008 Stock Incentive Plan—Form of RSU Deferral Agreement for Founders Grant RSUs (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed December 14, 2011).
10.10(v)*1	Clearwater Paper Corporation 2008 Stock Incentive Plan—Form of Restricted Stock Unit Award, to be used for annual restricted stock unit awards approved subsequent to December 31, 2011 (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed December 14, 2011).
10.10(vi)*1	Clearwater Paper Corporation 2008 Stock Incentive Plan-Form of Restricted Stock Unit Award, to be used for special restricted stock unit awards (incorporated by reference to Exhibit 10.10(vii) to the Company's Quarterly Report on Form 10-Q filed for the quarter ended September 30, 2012).
10.10(vii)*1	Clearwater Paper Corporation 2008 Stock Incentive Plan-Form of RSU Deferral Agreement for Annual LTIP RSUs (incorporated by reference to Exhibit 10.10(viii) to the Company's Quarterly Report on Form 10-Q filed for the quarter ended September 30, 2012).
10.11*1	Clearwater Paper Corporation 2008 Stock Incentive Plan—Form of Stock Option Agreement (incorporated by reference to Exhibit 10.13(i) to the Company’s Quarterly Report on Form 10-Q filed for the quarter ended June 30, 2009).
10.12*1	Clearwater Paper Corporation Annual Incentive Plan (incorporated by reference to Exhibit 10.14(i) to the Company’s Current Report on Form 8-K filed with the Commission on May 14, 2010).
10.13*1	Clearwater Paper Corporation Management Deferred Compensation Plan (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed with the Commission on December 19, 2008).
10.13(i)*1	Amendment to Clearwater Paper Corporation Management Deferred Compensation Plan, dated April 27, 2010 (incorporated by reference to Exhibit 10.15(i) to the Company’s Quarterly Report on Form 10-Q filed for the quarter ended March 31, 2010).
10.14*1	Clearwater Paper Executive Severance Plan (incorporated by reference to Exhibit 10(i) to the Company's Current Report on Form 8-K filed with the Commission on December 17, 2012).
10.15*1	Amended and Restated Clearwater Paper Corporation Salaried Supplemental Benefit Plan (incorporated by reference to Exhibit 10.15 to the Company's Annual Report on Form 10-K filed for the year ended December 31, 2011).
10.16*1	Clearwater Paper Corporation Benefits Protection Trust Agreement (incorporated by reference to Exhibit 10.18 to the Company’s Annual Report on Form 10-K filed for the year ended December 31, 2008).
10.17*1	Clearwater Paper Corporation Deferred Compensation Plan for Directors (incorporated by reference to Exhibit 10.10 to the Company’s Current Report on Form 8-K filed with the Commission on December 19, 2008).
10.18*1	Clearwater Paper Change of Control Plan (incorporated by reference to Exhibit 10(ii) to the Company's Current Report on Form 8-K filed with the Commission on December 17, 2012).

88

10.19*1	Offer Letter, dated June 25, 2012, with John D. Hertz, (incorporated by reference to Exhibit 10.10(vi) to the Company's Quarterly Report on Form 10-Q filed for the quarter ended June 30, 2012).
10.20*1	Clearwater Paper Corporation 2008 Stock Incentive Plan-Restricted Stock Unit Award, dated July 3, 2012, with John D. Hertz (incorporated by reference to Exhibit 10.18 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012).
10.211	Letter Agreement between Robert P. DeVleming and the Company, dated January 21, 2013.
(12)	Computation of Ratio of Earnings to Fixed Charges.
(21)	Clearwater Paper Corporation Subsidiaries.
(23)	Consent of Independent Registered Public Accounting Firm.
(24)	Powers of Attorney.
(31)	Rule 13a-14(a)/15d-14(a) Certifications.
(32)	Furnished statements of the Chief Executive Officer and Chief Financial Officer under 18 U.S.C. Section 1350.
101	Pursuant to Rule 405 of Regulation S-T, the following financial information from the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2012, is formatted in XBRL interactive data files: (i) Consolidated Statements of Operations for the years ended December 31, 2012, 2011 and 2010; (ii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2012, 2011 and 2010; (iii) Consolidated Balance Sheets at December 31, 2012 and 2011, (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2012, 2011 and 2010, (v) Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2012, 2011 and 2010 and (vi) Notes to Consolidated Financial Statements.

* Incorporated by reference.

1 Management contract or compensatory plan, contract or arrangement.

89

EX-10.7

Exhibit 10.7

[COMPANY LETTERHEAD]

February 14, 2013

Ms. Linda K. Massman

Dear Linda:

The purpose of this letter agreement (this “Agreement”) is to confirm important terms and conditions pertaining to your employment as President and Chief Executive Officer of Clearwater Paper Corporation (the “Company”) and supersedes in its entirety that prior agreement dated December 9, 2011 between you and the Company.

1.Term of Agreement: This Agreement shall be effective as of January 1, 2013 (the “Effective Date”), and, unless terminated earlier in accordance with its terms, shall remain in effect for three (3) years following the Effective Date (the “Agreement Term”).

2.    Position: You will be employed with the Company as its President and Chief Executive Officer. In addition, effective the Effective Date,you will be appointed to the Company’s Board of Directors (the “Board”) and, in the future upon the expiration of each term as a Board member, the Board shall use its best efforts to secure your re-election to the Board.

3.    Base Salary: Your base salary as of the Effective Date is $700,000 on an annualized basis, payable in accordance with the Company’s regular payroll practices, as established from time to time. Beginning in February 2013 and continuing thereafter during the Agreement Term, your salary shall be reviewed on at least an annual basis by, and may be increased but not decreased at the discretion of the appropriate committee of the Board. Except as otherwise provided in this Section 3, the review of your base salary will occur at the same time as the review for other senior executives of the Company.

4.    Annual Incentive Award Opportunity: You will be eligible to participate in the Company’s annual bonus plan for similarly situated executives. As of the Effective Date, your target annual bonus is 100% of your base salary. All awards shall be governed by the terms of, and subject to any conditions established by, the Company’s then-current annual bonus plan.

5.    Long-Term Incentive Awards: You will be eligible to participate in the Company’s Long-Term Incentive Plan (“LTIP”), subject to the terms and conditions of the then current LTIP and on a basis at least as favorable as generally applicable to the other senior executives of the Company. Under the current LTIP, beginning with the award granted in 2013 (and for subsequent years), the target value of your LTIP award shall be 200% of the mid-point of the range for your salary grade, as determined by the Board's Compensation Committee in consultation with its independent compensation consultant. Beginning with the award granted in 2013 and until changed for future awards, all your LTIP awards will be granted in the form of performance shares.

6.    Restricted Stock Unit Award: Prior to or as soon as practicable after the Effective Date, you will be granted an award of restricted stock units with an approximate value of $1,400,000, in the form of award provided to you (the “RSU Award”). Subject to your continued employment in good standing with the Company during the vesting period (except as otherwise provided herein), the RSU Award will vest in full on December 31, 2015. Subject to the terms specified in this Agreement, the RSU Award will be governed by the terms of the Company’s 2008 Stock Incentive Plan and the applicable Restricted Stock Unit Award Agreement and appended Addendum entered into between you and the Company.

7.    Employee Benefits:

(a)    Subject to Section 8, you will be eligible to participate in Company’s employee welfare, benefit, and retirement plans and programs, including retirement and supplemental retirement plans, on the same basis as generally applicable to the other senior executives of the Company. Further, you will be eligible for all fringe benefits

and perquisites generally available to the other senior executives of the Company on at least as favorable a basis as such other senior executives, and you will be reimbursed for reasonable business expenses per Company policy.

(b)    The Company will pay, or reimburse you for, the reasonable professional fees and related expenses you incur for legal advice in connection with the preparation and execution of this Agreement.

8.    Termination of Employment: This Agreement and your employment with the Company may be terminated at any time during its term by either you or the Company, provided, however, that the parties’ rights and obligations upon such termination during the Agreement Term shall be governed by the following provisions of this Agreement and applicable provisions of any other documents referenced in Section 10 below. If your employment terminates during the Agreement Term for any reason you shall promptly offer to resign from the Board. The Nominating and Governance Committee shall consider the appropriateness of continued Board service and will recommend to the Board whether the resignation should be accepted. In addition, termination of your employment for any reason shall constitute your resignation as an officer of the Company, its subsidiaries, and its affiliates. Upon termination for any reason, you shall be paid for all earned but unpaid base salary through the Date of Termination, any bonus earned under the terms of the governing plan but remaining unpaid for any previously completed performance cycle, and any earned but unused vacation and will be provided any employee benefits earned but not yet provided under the terms of any applicable plan or program (the “Accrued Obligations”). You may be eligible for severance as provided below, but there will be no duplication of benefits and severance provided hereunder is in lieu of any severance pay or benefits for which you might otherwise have been eligible under any plan, program, or practice of the Company, including the Severance Program for Executive Employees, as amended from time to time, or any successor program (the “Severance Program”).

(a)    Termination by the Company Without Cause or Your Resignation for Good Reason Prior to, or more than 24 months after, a Change in Control: If, during the Agreement Term and either prior to (and not in connection with) or more than twenty-four (24) months after a “Change in Control” your employment is involuntarily terminated by the Company without “Cause” (and for reasons other than your death or “Disability”) or you resign for “Good Reason,” all as defined below, you shall be eligible for the following severance benefits subject to and contingent upon your timely execution, without subsequent revocation, of a release of claims in a form reasonably satisfactory to the Company (not requiring your to waive your rights pursuant to Section 21 below and not imposing any restrictive covenant on your conduct post-termination that you had not agreed to prior to your termination in this Agreement or otherwise), as described in more detail in Section 8(j) (the “Release”):

(i)    a prorated bonus under the applicable annual bonus plan for the year in which your termination occurs, which will be paid at the same time payments are made to other participants and calculated by taking the product of (x) your annual bonus that would have been payable with respect to the fiscal year in which the Date of Termination occurs (determined in accordance with the terms of the governing plan based on actual corporate performance and provided that such annual bonus shall not be adjusted downward for individual performance) and (y) a fraction, the numerator of which is the number of days in the fiscal year through the Date of Termination and the denominator of which is 365; provided, however, that if the period during which you can consider and revoke your Release begins in one calendar year and ends in the subsequent calendar year, then payment under this Section 8(a)(i) shall be made on the latest of (A) the date on which payments are made to other participants, (B) January 15 of such subsequent calendar year and (C) the seventh (7th) day following the date when your Release becomes effective;

(ii)    a lump sum payment in the amount equal, before applicable taxes and deductions, to one (1) times your base salary in effect as of the Date of Termination (or, in the case of resignation for Good Reason, within the meaning of Section 8(i)(ii), immediately prior to the reduction thereof giving rise to the Good Reason) plus $250,000, which payment shall be made as soon as practicable (and within seven (7) days) following the date your Release becomes effective, but no later than sixty-one (61) days following your Date of Termination; provided, however, that if the period during which you can consider and revoke your Release begins in one calendar year and ends in the subsequent calendar year, then payment under this Section 8(a)(ii) shall be made on the later of (A) January 15 of such subsequent calendar year and (B) the seventh (7th) day following the date when your Release becomes effective;

2

(iii)    for one (1) year after your Date of Termination, the Company shall continue benefits to you and/or your eligible dependents at least equal to those which would have been provided to them in accordance with the Company’s health plans if your employment had not been terminated or, if more favorable to you, as in effect generally at any time thereafter with respect to other senior executives of the Company and their eligible dependents;provided, however, that you must pay the entire cost of such benefits and the Company will reimburse you an amount equal to the amount it pays toward the cost of such coverage for active senior executives of the Company (this benefit will cease to be provided if you fail to timely pay the entire cost of such benefits); if you become employed with another employer and are eligible to receive medical benefits under another employer-provided plan, the health benefit coverage described herein shall cease; and the Company may unilaterally amend this Section 8(a)(iii) or eliminate the benefit provided hereunder to the extent it deems necessary to avoid the imposition of excise taxes, penalties or similar charges on the Company or its subsidiaries or affiliates, including, without limitation, under Section 4980D of the Internal Revenue Code of 1986, as amended (the “Code”); and

(iv)    prorated vesting of the RSU Award, calculated by taking the product of (x) the total number of shares subject to the RSU Award and (y) a fraction, the numerator of which is the number of consecutive days beginning on January 1, 2013 and ends on the Date of Termination and the denominator of which is 1095 (the “Prorated RSU Award”).

(b)    Termination by the Company Without Cause or Your Resignation for Good Reason Following a Change in Control: If, during the Agreement Term, and in connection with or on or within twenty-four (24) months of a Change in Control occurring during the Agreement Term (and without regard to any expiration of the Agreement Term during such 24-month period), your employment is involuntarily terminated by the Company without Cause (and for reasons other than your death or Disability) or you resign for Good Reason, you shall be eligible for the following severance benefits subject to and contingent upon your timely execution, without subsequent revocation, of the Release:

(i)    a lump sum payment in the amount equal, before taxes and deductions, to the product of (x) the target amount of your annual bonus that would have been payable with respect to the fiscal year in which the Date of Termination occurs and (y) a fraction, the numerator of which is the number of days in the fiscal year through the Date of Termination and the denominator of which is 365, which payment shall be made as soon as practicable (and within seven (7) days) following the date your Release becomes effective, but no later than sixty-one (61) days following your Date of Termination; provided, however, that if the period during which you can consider and revoke your Release begins in one calendar year and ends in the subsequent calendar year, then payment shall be made on the later of (A) January 15 of such subsequent calendar year and (B) the seventh (7th) day following the date when your Release becomes effective;

(ii)    a lump sum payment in the amount equal, before applicable taxes and deductions, to two and one-half (2.5) times the sum of (A) your base salary plus (B) the target amount of your annual bonus, in effect as of the Date of Termination (or, in the case of resignation for Good Reason, within the meaning of Section 8(i)(ii), immediately prior to the reduction thereof giving rise to the Good Reason), which payment shall be made as soon as practicable (and within seven (7) days) following the date your Release becomes effective, but no later than sixty-one (61) days following your Date of Termination; provided, however, that if the period during which you can consider and revoke your Release begins in one calendar year and ends in the subsequent calendar year, then payment under this Section 8(b)(ii) shall be made on the later of (A) January 15 of such subsequent calendar year and (B) the seventh (7th) day following the date when your Release becomes effective;

(iii)    for two and one-half (2.5) years after your Date of Termination, the Company shall continue benefits to you and/or your eligible dependents at least equal to those which would have been provided to them in accordance with the Company’s health plans if your employment had not been terminated or, if more favorable to you, as in effect generally at any time thereafter with respect to other senior executives of the Company and their eligible dependents;provided, however, that you must pay the entire cost of such benefits and the Company will reimburse you an amount equal to the amount it pays toward the cost of such coverage

3

for active senior executives of the Company (this benefit will cease to be provided if you fail to timely pay the entire cost of such benefits); if you become employed with another employer and are eligible to receive medical benefits under another employer-provided plan, the health benefit coverage described herein shall cease; and the Company may unilaterally amend this Section 8(b)(iii) or eliminate the benefit provided hereunder to the extent it deems necessary to avoid the imposition of excise taxes, penalties or similar charges on the Company or any of its subsidiaries or affiliates, including, without limitation, under Code Section 4980D; and

(iv)    100% vesting of the RSU Award.

(c)    Termination by the Company For Cause or Your Resignation Without Good Reason: If, during the Agreement Term, your employment is involuntarily terminated by the Company for Cause or you resign without Good Reason (and not as a result of death or Disability), this Agreement shall terminate without further obligations to you, other than payment of the Accrued Obligations and as provided at Section 21 below.

(d)    Termination Due to Death or Disability.

(i)    Your employment status shall terminate automatically upon your death during the Agreement Term. Further, if you incur a Disability (as defined below) during the Agreement Term, the Company may give you written notice of its intention to terminate your employment. In such event, your employment with the Company shall terminate effective on the 30th day after your receipt of such written notice (the “Disability Effective Date”), provided that, within the 30 days after such receipt, you shall not have returned to full-time performance of your duties. For purposes of this Agreement, “Disability” shall have the meaning set forth in Code Section 409A(a)(2)(C).

(ii)    If your employment is terminated by reason of your death or Disability during the Agreement Term, this Agreement shall terminate without further obligations to you or your estate, beneficiaries or legal representatives under this Agreement, other than for payment of the Accrued Obligations, the Prorated RSU Award and a prorated bonus under the applicable annual bonus plan for the year in which your termination occurs, which will be paid at the same time payments are made to other participants and calculated by taking the product of (x) your annual bonus that would have been payable with respect to the fiscal year in which the Date of Termination occurs (determined at the end of such year based on actual performance results through the end of such year and provided that such annual bonus shall not be adjusted downward for individual performance) and (y) a fraction, the numerator of which is the number of days in the current fiscal year through the Date of Termination and the denominator of which is 365.

(e)    Notice of Termination. Any termination by the Company for Cause, or by you for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with this Agreement. For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated and (iii) specifies the termination date. The failure by you or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of you or the Company, respectively, hereunder or preclude you or the Company, respectively, from asserting such fact or circumstance in enforcing your or the Company’s rights hereunder.

(f)    Definition of Cause: For purposes of this Agreement, “Cause” shall mean: the occurrence of any one or more of the following:

(i)    your conviction of any felony or any crime involving fraud, dishonesty or moral turpitude;

(ii)    your participation in a fraud or act of dishonesty against the Company, its subsidiaries or affiliates or any successor to the Company that results in material harm to the business of the Company, its subsidiaries or affiliates or any successor to the Company;

4

(iii)    your willful, material violation of any contract between you and the Company, its subsidiaries or affiliates or any successor to the Company, or any statutory duty you owe the Company, its subsidiaries or affiliates or any successor to the Company, in either case that you do not correct within thirty (30) days after written notice thereof has been provided to you (and for which purpose no act or omission to act shall be “willful” if conducted in good faith and with a reasonable belief that such act or omission was in the best interests of the Company, its subsidiaries or affiliates or any successor to the Company);

(iv)    the commission of an act by you (either alone or with other acts) of harassment or discrimination on the basis of gender, race, age, religion, sexual orientation or other protected category; or

(v)    the commission by you of an alcohol or drug offense in violation of the Company’s Substance Abuse Policy for salaried employees.

Your termination shall not be deemed to be for Cause unless and until there shall have been delivered to you a copy of a resolution duly adopted in good faith by the affirmative vote of not less than a majority of the entire membership of the Board (excluding you, if you are a member of the Board), stating that you have engaged in the conduct described above constituting “Cause”, and specifying the particulars thereof in detail. Such finding shall be effective to terminate your employment for Cause only if you were provided reasonable notice of the proposed action and were given an opportunity, together with counsel, to be heard by the Board.

(g)    Definition of Change in Control: For the purposes of this Agreement, “Change in Control” shall mean the occurrence of any of the following events:

(i)    Upon consummation of a merger or consolidation of the Company (a "Business Combination") unless, following such Business Combination,

(A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the outstanding common stock of the Company (the “Outstanding Coming Stock”) and the outstanding voting securities of the Company entitled to vote generally in the election of members of the Board (the “Outstanding Voting Securities”) immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock (or common equity) and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation or other entity resulting from such Business Combination (including a corporation or other entity which as a result of such transaction owns the Company either directly or through one or more subsidiaries),

(B) no individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (a “Person”) (excluding any corporation or other entity resulting from such Business Combination or any employee benefit plan (or related trust) sponsored or maintained by the Company or a subsidiary or such other corporation or other entity resulting from such Business Combination) beneficially owns, directly or indirectly, 30% or more of, respectively, the then outstanding shares of common stock (or common equity) of the corporation or other entity resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation or other entity except to the extent that such ownership is based on the beneficial ownership, directly or indirectly, of Outstanding Common Stock or Outstanding Voting Securities immediately prior to the Business Combination, and

(C) at least a majority of the members of the board of directors (or similar governing body) of the corporation or other entity resulting from such Business Combination were members of the Board of Directors at the time of the execution of the initial agreement, or of the action of the Board of Directors, providing for such Business Combination; or

(ii)    Upon the consummation of the sale, lease or exchange of all or substantially all of the assets of the Company; or

5

(iii)    On the date that individuals who constitute the “Incumbent Board” (the individuals who constituted the Board as of the Effective Date cease for any reason to constitute at least a majority of the Board; provided, however, that any individual who becomes a member of the Board on or subsequent to the day immediately following the Effective Date whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the members of the Board then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for purposes of this proviso, any such individual whose appointment to the Board occurs as a result of an actual or threatened election contest with respect to the election or removal of a member or members of the Board, an actual or threatened solicitation of proxies or consents or any other actual or threatened action by, or on behalf of any Person other than the Incumbent Board; or

(iv)    Upon the acquisition on or after the Effective Date by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934) of 30% or more of either:

(A) the then Outstanding Common Stock, or

(B) the combined voting power of the Outstanding Voting Securities; provided, however, that the following acquisitions shall not be deemed to be covered by this subparagraph (iv):

(x) any acquisition of Outstanding Common Stock or Outstanding Voting Securities by or at the direction of the Company or any Subsidiary,

(y) any acquisition of Outstanding Common Stock or Outstanding Voting Securities by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary, or

(z) any acquisition of Outstanding Common Stock or Outstanding Voting Securities by any Person pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (i) of this definition; or

(v)    (v) Upon the approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

(h)    Definition of Date of Termination: For purposes of this Agreement, “Date of Termination” means (i) if your employment is terminated by the Company for Cause, the Date of Termination shall be the later of (A) the date of receipt of the Notice of Termination or (B) the date specified in the Notice of Termination, provided such date is within thirty (30) days after receipt of the Notice of Termination, (ii) subject to Section 8(i), if your employment is terminated by you for Good Reason, the Date of Termination shall be the later of (A) the date of receipt of the Notice of Termination or (B) the date specified in the Notice of Termination, provided such date is within sixty (60) days after the end of the “Cure Period,” as defined below, (iii) if your employment is terminated by the Company other than for Cause or Disability, the Date of Termination shall be the later of (A) the date on which you receive the Company’s Notice of Termination or (B) the date specified in the Notice of Termination, provided such date is within sixty (60) days after receipt of the Notice of Termination, (iv) if your employment is terminated by reason of death or Disability, the Date of Termination shall be the date of your death of or the Disability Effective Date, as the case may be, and (v) if your employment is terminated by you without Good Reason, the Date of Termination shall be no fewer than sixty (60) days following the Company’s receipt of the Notice of Termination (during which notice period you shall continue to diligently work full time on behalf of the Company, provided that the Board may, in its sole discretion, place you on administrative leave but shall continue your employment with all compensation, benefits and service credit towards benefit accrual and vesting provided under this Agreement).

(i)    Definition of Good Reason. For purposes of this Agreement, “Good Reason” shall mean the occurrence of any one or more of the following events without your written consent:

6

(i)    the Company’s assignment to you of any duties inconsistent in any material negative respect with your position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as in effect on the date you commence your role as Chief Executive Officer, or any other action by the Company which results in a material diminution in such authority, duties or responsibilities or as a result of which you no longer have a position substantially equivalent to (or better than) your position on the date you commence your role as Chief Executive Officer;

(ii)    a 10% reduction by the Company, other than in connection with an across-the-board reduction applicable to other senior executives of the Company, in your base salary, your target bonus opportunity and/or your target long-term incentive opportunity, all as in effect on the Effective Date (and as may have been increased after the Effective Date);

(iii)    a requirement by the Company that you be based at any office or location more than fifty (50) miles from the Company’s principal office on the Effective Date in Spokane; or

(iv)    the material breach by the Company of this Agreement.

Good Reason shall not include death or Disability; provided that your mental or physical incapacity following the occurrence of an event described in clauses (i)-(iv) above shall not affect your ability to terminate for Good Reason. You shall not be deemed to have resigned for Good Reason unless (A) you notify the Company in writing of the event which you believe constitutes Good Reason within ninety (90) days of the occurrence thereof (which notice specifically identifies such event and the details regarding its occurrence and existence), (B) the Company fails to cure such event within thirty (30) days after the date on which it receives such notice (the “Cure Period”), and (C) you terminate your employment with the Company (and its subsidiaries and affiliates) within sixty (60) days after the end of the Cure Period. The notice required under the immediately preceding sentence may be included in your Notice of Termination, as prescribed below, provided that your Date of Termination, as set forth in such Notice of Termination, is not less than thirty-one (31) days and not more than ninety (90) days after the date on which the Company receives such Notice of Termination.

(j)    Release. Your right to the benefits described in this Section 8, other than the Accrued Obligations, is subject to and contingent upon your timely execution, without subsequent revocation, of a Release. To be timely, your Release must become effective (i.e., you must sign it and any revocation period must expire) within sixty (60) days, or such shorter period specified in the Release, after your Date of Termination. If your Release does not become effective within such time period, then you shall not be entitled to any of the benefits described in this Section 8, other than the Accrued Obligations.

9.    Excise Taxes:

(a)    Notwithstanding any other provision of this Agreement, in the event that you become entitled to receive or receive any payments, options, awards or benefits (including, without limitation, the monetary value of any non-cash benefits and the accelerated vesting of stock awards) under this Agreement, the Severance Program or under any other plan, agreement or arrangement with the Company, any person whose actions result in a “Change of Control” (as that term is defined in the Severance Program) or any person affiliated with the Company or such person (collectively, the “Payments”), that may separately or in the aggregate constitute “parachute payments” within the meaning of Code Section 280G and the Treasury regulations promulgated thereunder (“Section280G”) and it is determined that, but for this Section 9(a), any of the Payments will be subject to any excise tax pursuant to Code Section 4999 or any similar or successor provision (the “Excise Tax”), the Company shall pay to you either (i) the full amount of the Payments or (ii) an amount equal to the Payments reduced by the minimum amount necessary to prevent any portion of the Payments from being an “excess parachute payment” (within the meaning of Section 280G) (the “CappedPayments”), whichever of the foregoing amounts results in the receipt by you, on an after-tax basis (with consideration of all taxes incurred in connection with the Payments, including the Excise Tax), of the greatest amount of Payments notwithstanding that all or some portion of the Payments may be subject to the Excise Tax.  For purposes of determining whether you would receive a greater after-tax benefit from the Capped Payments than from receipt of

7

the full amount of the Payments and for purposes of Section 9(c) (if applicable), you shall be deemed to pay federal, state and local taxes at the highest marginal rate of taxation for the applicable calendar year.

(b)    All computations and determinations called for by Sections 9(a) and 9(c) shall be made and reported in writing to the Company and you by a third-party service provider selected by the Company (the “Tax Advisor”), and all such computations and determinations shall be conclusive and binding on the Company and you. For purposes of such calculations and determinations, the Tax Advisor may rely on reasonable, good faith interpretations concerning the application of Code Sections 280G and 4999. The Company and you shall furnish to the Tax Advisor such information and documents as the Tax Advisor may reasonably request in order to make their required calculations and determinations. The Company shall bear all fees and expenses charged by the Tax Advisor in connection with its services.

(c)    In the event that Section 9(a) applies and a reduction is required to be applied to the Payments thereunder, the Payments shall be reduced by the Company in a manner and order of priority that provides you with the largest net after-tax value; provided that payments of equal after-tax present value shall be reduced in the reverse order of payment. Notwithstanding anything to the contrary herein, any such reduction shall be structured in a manner intended to comply with Code Section 409A.

10.    Covenants:

You also acknowledge that your obligations under the Inventions, Trade Secrets and Confidentiality Agreement previously executed by you, which is incorporated into this Agreement by reference, will survive the termination of your employment for any reason. You also acknowledge and agree that you will have access to confidential and proprietary information of the Company and third parties in the course of performing your responsibilities for the Company, that such access is necessary to your ability to perform those responsibilities, that such Company confidential and proprietary information is a valuable asset of the Company, and that the Company has developed and will develop goodwill that is a valuable asset of the Company. In view of the foregoing and in consideration of the compensation and benefits as provided under this Agreement, you further agree that:

(a)    during the time you are employed and for a period of one (1) year following your termination from employment with the Company for reasons described in Section 8(a) and for a period of two (2) years following your termination from employment with the Company for any other reason, you will not, without the prior written consent of the Company, directly or indirectly, engage in, whether as an owner, consultant, employee, or otherwise, activities competitive with that of the Company in any state, province or like geography where the Company does business;

(b)    during the time you are employed and for a period of one (1) year following your termination from employment with the Company for reasons described in Section 8(a) and for a period of two (2) years following your termination from employment with the Company for any other reason, you will not, without the prior written consent of the Company, directly or indirectly, solicit for employment, offer, or cause to be offered employment, either on a full time, part-time or consulting basis, to any person who was employed by the Company or its affiliates on the date your employment terminated and with whom you had regular contact during the course of your employment by the Company; and

(c)    during the time you are employed and for a period of one (1) year following your termination from employment with the Company for reasons described in Section 8(a) and for a period of two (2) years following your termination from employment with the Company for any other reason, you will not, without the prior written consent of the Company, directly or indirectly, (A) solicit, divert, appropriate to or accept on behalf of any competitor of the Company, or (B) attempt to solicit, divert, appropriate to or accept on behalf of any competitor of the Company, any business from any customer or actively sought prospective customer of the Company with whom you have dealt, whose dealings with the Company have been supervised by you or about whom you have acquired confidential information in the course of your employment.

8

You agree that the foregoing restrictions are reasonable, will not preclude you from finding gainful employment, and are necessary to protect the goodwill, confidential information, and other protectable business interests of the Company. You further agree that the Company would suffer irreparable harm should you violate these restrictions and agree that injunctive relief, in addition to any other damages or relief available to the Company, is appropriate and necessary to protect the Company’s interests.

11.    Representation and Warranties: You represent and warrant that you are not a party to, or otherwise subject to, any covenant not to compete, or other agreement that would restrict or limit your ability to perform your responsibilities under this Agreement, with any person or entity and that your performance of your obligations under this Agreement will not violate the terms and conditions of any contract or obligation, written or oral, between you and any other person or entity.

12.    Recoupment:Notwithstanding any other provisions in this Agreement to the contrary, you acknowledge that you will be subject to recoupment policies adopted by the Company pursuant to the requirements of Dodd-Frank Wall Street Reform and Consumer Protection Act or other law or the listing requirements of any national securities exchange on which the common stock of the Company is listed.

13.    Assignment and Successors: This Agreement is personal to you and, without the prior written consent of the Company, shall not be assignable by you. The Company may assign this Agreement (a) to any corporation resulting from any merger, consolidation or other reorganization to which the Company is a party; (b) any corporation, partnership, association or other person to which the Company may transfer all or substantially all of the assets and business of the Company existing at such time; or (c) any subsidiary, parent or other affiliate of the Company. This Agreement shall inure to the benefit of and be enforceable by the Company and its successors and assigns.

14.    Withholding: The Company may withhold from any payment that is required to be made under this Agreement amounts sufficient to satisfy applicable withholding requirements under any federal, state, or local law and all payments hereunder shall be subject to applicable deductions.

15.    Controlling Law: Except where otherwise provided for herein, this Agreement shall be governed in all respects by the laws of the State of Washington, excluding any conflict-of-law rule that might refer the construction of the Agreement to the laws of another state or country. You consent to the exclusive jurisdiction of the state and federal courts located in Spokane County, Washington, for any action relating to this Agreement. You will not bring any action relating to this Agreement in any other court.

16.    Notices: Any notices under this Agreement that are required to be given to the Company shall be addressed to the Corporate Secretary of the Company, and any notices required to be given to you shall be sent to your address as shown in the Company’s records, which you are responsible for keeping up-to-date.

17.    Separability and Construction: If any provision of this Agreement is determined to be invalid, unenforceable, or unlawful by a court of competent jurisdiction, the other provisions of this Agreement shall remain in full force and effect, and the provisions that are determined to be invalid, unenforceable, or unlawful will either be limited or reformed so that they will remain in effect to the fullest extent allowed by law.

18.    Waiver of Breach: Except as otherwise specifically provided for herein, no failure by any party to give notice of any breach of, or to require compliance with, any condition or provision of this Agreement shall be deemed a waiver or relinquishment of that party’s rights, and no waiver or relinquishment of rights by any party at any one or more times will be deemed to be a waiver or relinquishment of such right or power at any other time or times.

19.    Entire Agreement/Modification in Writing: This Agreement together with the Inventions, Trade Secrets and Confidentiality Agreement, plan documents, grant notices, and governing policies of the Company (each as it may be amended from time to time) constitute the entire understanding relating to the matters addressed herein and supersede any other prior agreement, whether written or oral. No addition to, or modification of, this Agreement shall be effective unless in writing and signed by both you and an authorized representative of the Company.

9

20.    Section 409A: The parties intend that this Agreement and the payments and benefits provided hereunder, including, without limitation, those provided pursuant to Section 8 hereof, be exempt from the requirements of Code Section 409A to the maximum extent possible, whether pursuant to the short-term deferral exception described in Treas. Reg. Section 1.409A-1(b)(4), the involuntary separation pay plan exception described in Treas. Reg. Section 1.409A-1(b)(9)(iii), or otherwise. To the extent Code Section 409A is applicable to this Agreement, the parties intend that this Agreement and any payments and benefits thereunder comply with the deferral, payout and other limitations and restrictions imposed under Code Section 409A. Notwithstanding anything herein to the contrary, this Agreement shall be interpreted, operated and administered in a manner consistent with such intentions; provided, however that in no event shall the Company or its agents, parents, subsidiaries, affiliates or successors be liable for any additional tax, interest or penalty that may be imposed on you pursuant to Code Section 409A or for any damages incurred by you as a result of this Agreement (or the payments or benefits hereunder) failing to comply with, or be exempt from, Code Section 409A. Without limiting the generality of the foregoing, and notwithstanding any other provision of this Agreement to the contrary:

(a)    To the extent Code Section 409A is applicable to this Agreement, a termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service,” as defined in Treas. Reg. Section 1.409A-1(h), after giving effect to the presumptions contained therein (and without regard to the optional alternative definitions available therein), and, for purposes of any such provision of this Agreement, references to “terminate,” “termination,” “termination of employment,” “resignation” and like terms shall mean “separation from service”;

(b)    If at the time your employment hereunder terminates, you are a “specified employee,” as defined in Treasury Regulation Section 1.409A-1(i) and determined using the identification methodology selected by the Company from time to time, or if none, the default methodology, then to the extent necessary to avoid subjecting you to an additional tax or interest under Code Section 409A, any and all amounts payable under this Agreement on account of such termination of employment that would (but for this provision) be payable within six (6) months following the date of termination, shall instead be paid in a lump sum on the first day of the seventh month following the date on which your employment terminates or, if earlier, upon your death, except (i) to the extent of amounts that do not constitute a deferral of compensation within the meaning of Treas. Reg. Section 1.409A-1(b) (including without limitation by reason of the safe harbor set forth in Treas. Reg. Section 1.409A-1(b)(9)(iii), as determined by the Company in its reasonable good faith discretion), (ii) benefits which qualify as excepted welfare benefits pursuant to Treas. Reg. Section 1.409A‑1(a)(5), and (iii) other amounts or benefits that are not subject to the requirements of Code Section 409A;

(c)    Each payment made under this Agreement shall be treated as a separate payment and the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments; and

(d)    With regard to any provision in this Agreement, including, without limitation, Section 8, that provides for reimbursement of expenses or in-kind benefits, except for any expense, reimbursement or in-kind benefit provided pursuant to this Agreement that does not constitute a “deferral of compensation,” within the meaning of Treasury Regulation Section 1.409A-1(b), (A) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during any calendar year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year, (B) such payments shall be made on or before the last day of the calendar year following the calendar year in which the expense was incurred, and (C) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.

21.    Indemnification; Insurance: The Company shall at all times indemnify you and hold you harmless to the fullest extent permitted by the certificate of incorporation and by-laws of the Company and applicable law. You shall be an insured, during your employment and service as a member of the Board and at all times thereafter during which you may be subject to any liability for which you may be indemnified above, under any contract of officers and directors liability insurance of the Company that insures members of the Board.

10

22.    Construction: Each party and his, her, or its counsel have reviewed this Agreement and have been provided the opportunity to revise this Agreement, and, accordingly, the normal rule of construction providing for any ambiguities to be resolved against the drafting party shall not be employed in the interpretation of this Agreement. Instead, the language of all parts of this Agreement shall be construed as a whole and according to its fair meaning, not strictly for or against either party. Nothing in this Agreement is intended to or constitutes a guarantee of employment for a fixed or specific term, and the Company reserves the right to adopt, amend, discontinue, or otherwise alter its compensation, benefit, and human resources practices, policies, and programs at its discretion.

23.    Survival: The provisions of Sections 8-12 and 14-21 of this Agreement shall survive the termination of this Agreement and any termination of your employment hereunder.

[Remainder of page intentionally left blank.]

11

Linda, I hope this Agreement provides you with the level of security and incentive that will allow you to continue to contribute substantially to the success of the Company. Please sign below and return an executed original to me to indicate your acceptance of these terms. Again, we are pleased to have you as a continuing member of the team.

Sincerely,

/s/ Boh A. Dickey

Boh A. Dickey
Chair of the Board of Directors

I, Linda K. Massman, have read, understand, accept and agree to the terms of the letter/agreement.

/s/ Linda K. Massman

Linda K. Massman

Date    2/18/13

12

EX-10.21

Exhibit 10.21

[COMPANY LETTERHEAD]

January 21, 2013

Dear Bob:

The purpose of this letter agreement (this “Agreement”) is to confirm important terms and conditions pertaining to your retirement, severance and transition services in regards to Clearwater Paper Corporation (the “Company”).

1.Transition Services: You will provide direct transition services to the Company through your last active day of employment including any vacation time (“Final Employment Day”), which will be on or about June 30, 2013, and thereafter as reasonably requested by the Company through the Severance Pay Period (defined below).

2.    Base Compensation and Benefits: Your base salary, Long-Term Incentive Plan target percentage and Annual Incentive Plan target percentage as of December 31, 2012, shall remain in effect through your Final Employment Day. During this time, you will remain a participant in the Company’s employee welfare, benefit, and retirement plans and programs, including retirement and supplemental retirement plans, on the same basis as generally applicable to the other senior executives of the Company.

3.    Company Consideration:

(a)    In consideration and as material inducement to your signing of this Agreement, and in lieu of the “Severance Payments” as described in the Company’s Executive Severance Plan (the “Plan”), the Company will pay you cash severance payments equal to two (2) years of pay at your most recent base rate of pay, said amount to be paid in installments over two (2) years following your Final Employment Day (the “Severance Pay Period”) at regular intervals (no less frequently than monthly).

(b)    By signing this Agreement, you waive all rights to the Severance Payments under the Plan in exchange for the consideration to be paid pursuant to Section 3(a) above. Subject to the foregoing sentence, this Agreement shall not affect your rights or obligations under the Plan.

4.    Covenants: In full consideration and as material inducement to the Company’s signing of this Agreement, you agree as follows:

(a)    Confidential Information

(i)    You agree that, both during and after your employment, you will refrain from any unauthorized use or disclosure of any Confidential Information belonging to the Company; provided, however, that two (2) years after your Final Employment Day the restrictions set forth in this Section 4(a) shall not apply to any information or materials that do not constitute or embody a trade secret under the law of the State of Washington.

(ii)    You agree that, as used in this Agreement, the term “Confidential Information” means any information (whether in written, electronic, or other form) relating to the Company’s business (including, but not limited to, information relating to the Company’s designs, business plans or strategies, business opportunities, finances, gross or net profit margins, product development, manufacturing techniques, and customer vendor information) which: (i) is or has been disclosed to you (or of which you became aware) as a consequence of or through your relationship with the Company, (ii) has value to the Company or would be of value (actual or potential) to a competitor of the Company, and (iii) is not generally known, or readily available by lawful means, to the Company’s competitors. Confidential information shall not include any information that has been voluntarily disclosed to the public by the Company (except

where such public disclosure has been made by you without authorization) or that has been independently developed or disclosed by others, or that has entered the public domain through lawful means.

(b)    Noncompetition

    You agree that during the Severance Pay Period, you will not, without the prior written consent of the Company, directly or indirectly, engage in, whether as an owner, consultant, employee, or otherwise, activities competitive with that of the Company in any state, province or like geography where the Company does business on your Final Employment Day.

(c)    Nonsolicitation

(i)    You agree that during the Severance Pay Period, you will not, without the prior written consent of the Company, directly or indirectly, solicit for employment, offer, or cause to be offered employment, either on a full time, part-time or consulting basis, to any person who was employed by the Company on your Final Employment Day and with whom you had regular contact during the course of your employment by the Company.

(ii)    You agree that during the Severance Pay Period, you will not, without the prior written consent of the Company, directly or indirectly, (A) solicit or divert on behalf of, or appropriate to, any competitor of the Company, or (B) attempt to solicit or divert on behalf of, or appropriate to, any competitor of the Company, any business from any customer or actively sought prospective customer of the Company with whom you have dealt, whose dealings with the Company have been supervised by you or about whom you have had confidential information in the course of your employment.

(d)    Injunctive Relief

You agree that the foregoing restrictions listed in this Section 4 are reasonable, will not preclude you from finding gainful employment, and are necessary to protect the goodwill, Confidential Information, and other protectable business interests of the Company. You acknowledge that a material breach by you of any provision of this Section 4 will cause the Company irreparable injury that cannot be adequately remedied by monetary damages. Accordingly, you agree that in the event of a breach or threatened breach of this Section 4, the Company shall be entitled, in addition to any other right or remedy, to a temporary, preliminary and permanent injunction without the necessity of posting bond or proving the inadequacy of monetary damages.

5.    Complete and Full General Release of All Claims: In consideration for the benefits set out herein, you, for yourself and your heirs, successors and assigns, hereby unconditionally and forever release and discharge the Company, its parent, subsidiaries, and affiliated companies, their respective predecessors, successors, assigns, affiliates, parents, and subsidiaries, and their respective past and present directors, officers, managers, employees, agents, and representatives (the “Released Parties”), from any and all claims, whether known or not, including but not limited to, claims, rights, or amounts for attorneys’ fees, wages, debts or damages of any kind arising out of, but not limited to, your hiring by, employment with, treatment by or planned separation of employment with the Company. This Agreement and General Release applies to all claims and causes of action including, but not limited to, claims arising under the Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 1981, the Employee Retirement Income Security Act, the Americans With Disabilities Act of 1990, the Age Discrimination in Employment Act of 1967, the Older Workers’ Benefits Protection Act, the Family and Medical Leave Act of 1993, and any other federal, state or local law or regulation of whatever kind, or any theory of contract or tort based on events occurring prior to the execution of this Agreement. Notwithstanding the foregoing, this Section 5 expressly does not include a release of any claims that cannot be released hereunder by law.

You further acknowledge that you have reported any and all work-related injuries or illnesses that you have incurred or suffered to date.

2

6.    Recoupment: Notwithstanding any other provisions in this Agreement to the contrary, you acknowledge and agree that you will be subject to recoupment policies adopted by the Company pursuant to the requirements of Dodd-Frank Wall Street Reform and Consumer Protection Act or other law or the listing requirements of any national securities exchange on which the common stock of the Company is listed.

7.    Assignment and Successors: This Agreement is personal to you and, without the prior written consent of the Company, shall not be assignable by you. The Company may assign this Agreement (a) to any corporation resulting from any merger, consolidation or other reorganization to which the Company is a party; (b) any corporation, partnership, association or other person to which the Company may transfer all or substantially all of the assets and business of the Company existing at such time; or (c) any subsidiary, parent or other affiliate of the Company. This Agreement shall inure to the benefit of and be enforceable by the Company and its successors and assigns.

8.    Withholding: The Company may withhold from any payment that is required to be made under this Agreement amounts sufficient to satisfy applicable withholding requirements under any federal, state, or local law and all payments hereunder shall be subject to applicable deductions.

9.    Revocation: You acknowledge that for a period of seven (7) days following the date on which you sign this Agreement, you may revoke this Agreement and that this Agreement will not become effective or enforceable until the seven‑day revocation period has expired without your revoking it. Revocation may only be effected by delivering a written notice of revocation to:    

David Douglas

Clearwater Paper Corporation

601 W. Riverside Avenue

Suite 1100

Spokane, WA, 99201

To be effective, the revocation must be received by the Company no later than the seventh (7th) day after you sign this Agreement. You acknowledge that if you revoke this Agreement, it shall not be effective or enforceable, and you shall not be entitled to any of the payments or other benefits to be paid or provided pursuant to this Agreement.

10.    Controlling Law: This Agreement shall be governed in all respects by the laws of the State of Washington, excluding any conflict-of-law rule that might refer the construction of the Agreement to the laws of another state or country. You consent to the exclusive jurisdiction of the state and federal courts located in Spokane County, Washington, for any action relating to this Agreement. You will not bring any action relating to this Agreement in any other court.

11.    Separability and Construction: If any provision of this Agreement is determined to be invalid, unenforceable, or unlawful by a court of competent jurisdiction, the other provisions of this Agreement shall remain in full force and effect, and the provisions that are determined to be invalid, unenforceable, or unlawful will either be limited or reformed so that they will remain in effect to the fullest extent allowed by law.

12.    Waiver of Breach: No failure by any party to give notice of any breach of, or to require compliance with, any condition or provision of this Agreement shall be deemed a waiver or relinquishment of that party’s rights, and no waiver or relinquishment of rights by any party at any one or more times will be deemed to be a waiver or relinquishment of such right or power at any other time or times.

13.    Entire Agreement/Modification in Writing: This Agreement together with the governing policies of the Company (each as it may be amended from time to time) constitute the entire understanding relating to the subject matter addressed herein and supersede any other prior agreement, whether written or oral. No addition to, or modification of, this Agreement shall be effective unless in writing and signed by both you and an authorized representative of the Company.

3

14.    Construction: Each party has reviewed, and has had the opportunity to have his or its counsel review, this Agreement and have been provided the opportunity to revise this Agreement, and, accordingly, the normal rule of construction providing for any ambiguities to be resolved against the drafting party shall not be employed in the interpretation of this Agreement. Instead, the language of all parts of this Agreement shall be construed as a whole and according to its fair meaning, not strictly for or against either party. Nothing in this Agreement is intended to or constitutes a guarantee of employment for a fixed or specific term, and the Company reserves the right to adopt, amend, discontinue, or otherwise alter its compensation, benefit, and human resources practices, policies, and programs at its discretion.

15.    Section 409A: To the fullest extent possible, amounts payable under this Agreement are intended to be exempt from the definition of “nonqualified deferred compensation” under Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”) including, but not limited to, being exempt from Section 409A:

• as short-term deferrals under Treasury Regulation Section 1.409A-1(b)(4) (in general, a short-term deferral is an amount that is payable no later than March 15 of the year following the year in which the amount becomes due and payable); and

• as payments not qualifying as short-term deferrals, to the extent that the payments do not exceed two times the lesser of (1) your annualized rate of pay for 2012 or (2) $255,000, and such payments are made no later than December 31 of the second calendar year following the year of your Separation from Service.

For purposes of complying with these exemptions (and for purposes of complying with Section 409A if and to the extent such compliance is required), each installment of the payments described in Section 3(a) of this Agreement shall be deemed a separate payment.

If and to the extent that any payments under this Agreement do not qualify for an exemption from Section 409A, this Agreement shall be administered to comply with the applicable requirements of Section 409A with respect to such amounts.

16.    Acknowledgments:

(a)    You represent and acknowledge that you have been advised hereby in writing to consult with an attorney before signing this Agreement, and that you have had an opportunity to have an attorney review this Agreement prior to signing it.

(b)    You further acknowledge that you have been provided with a period of at least twenty-one (21) days within which to consider the Agreement, and that if you have executed this Agreement in less than twenty-one (21) days, it is because you have freely chosen to do so after carefully considering the terms of the Agreement and consulting with legal counsel. You understand and acknowledge that you must execute and deliver this Agreement to the Company by no later than February 13, 2013, and the revocation period described in Section 16(c) below must expire, before you are entitled to receive any of the payments or benefits described in Section 3 of this Agreement.

(c)    You represent and acknowledge that you have a period of at least seven (7) days following the execution of this Agreement in which to revoke this Agreement, and both you and the Company acknowledge and agree that this Agreement shall not become effective or enforceable until the seven (7) day revocation period has expired without you revoking it.

(d)    You represent and acknowledge that you have read this Agreement in its entirety, fully understands its content and effect, and without duress or coercion, knowingly and voluntarily agrees to its terms and conditions. You also acknowledge and represent that, in exchange for this Agreement, you will be provided consideration that is valuable to you and is not anything to which you are already entitled.

[Remainder of page intentionally left blank.]

4

Bob, I hope this Agreement provides you with the level of security and incentive that will allow you to continue to contribute substantially to the success of the Company. Please sign below and return an executed original to me to indicate your acceptance of these terms. Again, we are pleased to have you as a continuing member of the team.

Sincerely,

/s/ Linda K. Massman

Linda K. Massman
President and Chief Executive Officer

I, Robert P. DeVleming, have read, understand, accept and agree to the terms of this Agreement.

Signature: /s/ Robert P. DeVleming            Date:_2/12/13__________

5

EX-10.3(VII)

Exhibit 10.3 (vii)

SEVENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

THIS SEVENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”), dated as of September 27, 2012 is entered into by and among the financial institutions signatory hereto (each a “Lender” and collectively the “Lenders”), BANK OF AMERICA, N.A., as Agent for the Lenders (in such capacity, “Agent”) and CLEARWATER PAPER CORPORATION,a Delaware corporation (“Borrower”).

RECITALS

A.    Borrower, Agent and the Lenders have previously entered into that certain Loan and Security Agreement dated as of November 26, 2008 (as amended, supplemented, restated and modified from time to time, the “Loan Agreement”), pursuant to which the Lenders have made certain loans and financial accommodations available to Borrower. Terms used herein without definition shall have the meanings ascribed to them in the Loan Agreement.

B.    Borrower has requested that Agent and the Lenders amend the Loan Agreement, which Agent and the Lenders are willing to do pursuant to the terms and conditions set forth herein.

C.    Borrower is entering into this Amendment with the understanding and agreement that, except as specifically provided herein, none of Agent’s or any Lender’s rights or remedies as set forth in the Loan Agreement is being waived or modified by the terms of this Amendment.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1.Amendments to Loan Agreement.

(a)    Section 10.2.3 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

“10.2.3 Capital Expenditures. Make Capital Expenditures in excess of the greater of, for a Fiscal Year: (a) (i) $25,000,000 in the aggregate during the 2008 Fiscal Year, (ii) $35,000,000 in the aggregate during the 2009 Fiscal Year, (iii) $35,000,000 in the aggregate during the 2010 Fiscal Year, (iv) $180,000,000 in the aggregate during the 2011 Fiscal Year, (v) $225,000,000 in the aggregate during the 2012 Fiscal Year, (vi) $100,000,000 in each Fiscal Year thereafter, or (b) the depreciation Borrowers record on their books and records for such Fiscal Year; provided, however, that (x) if the amount of Capital Expenditures permitted to be made in any Fiscal Year exceeds the amount actually made, up to $5,000,000 of such excess may be carried forward to the next Fiscal Year, and (y) in addition to the foregoing permitted Capital Expenditures, an additional $30,000,000 of Capital Expenditures shall be permitted to the extent made in connection with the Borrower’s expansion of its pulp making capacity in its Cypress Bend, Arkansas, manufacturing facility and any renovations related thereto.”

2.    Effectiveness of this Amendment. The following shall have occurred before this Amendment is effective:

(a)    Amendment. Agent shall have received this Amendment fully executed in a sufficient number of counterparts for distribution to all parties.

(b)    Representations and Warranties. The representations and warranties set forth herein must be true and correct.

(c)    No Default. No event has occurred and is continuing that constitutes an Event of Default.

(d)    Other Required Documentation. All other documents and legal matters in connection with the transactions contemplated by this Amendment shall have been delivered or executed or recorded and shall be in form and substance satisfactory to Agent.

3.    Representations and Warranties. Borrower represents and warrants as follows:

(a)    Authority. Borrower has the requisite corporate power and authority to execute and deliver this Amendment, and to perform its obligations hereunder and under the Loan Documents (as amended or modified hereby) to which it is a party. The execution, delivery and performance by Borrower of this Amendment have been duly approved by all necessary corporate action and no other corporate proceedings are necessary to consummate such transactions.

(b)    Enforceability. This Amendment has been duly executed and delivered by Borrower. This Amendment and each Loan Document to which Borrower is a party (as amended or modified hereby) is the legal, valid and binding obligation of Borrower, enforceable against Borrower in accordance with its terms, and is in full force and effect.

(c)    Representations and Warranties. The representations and warranties contained in each Loan Document to which Borrower is a party (other than any such representations or warranties that, by their terms, are specifically made as of a date other than the date hereof) are correct on and as of the date hereof as though made on and as of the date hereof.

(d)    Due Execution. The execution, delivery and performance of this Amendment are within the power of Borrower, have been duly authorized by all necessary corporate action, have received all necessary governmental approval, if any, and do not contravene any law or any contractual restrictions binding on Borrower.

(e)    No Default. No event has occurred and is continuing that constitutes an Event of Default.

4.    Choice of Law. The validity of this Amendment, its construction, interpretation and enforcement, the rights of the parties hereunder, shall be determined under, governed by, and construed in accordance with the internal laws of the State of California, without giving effect to any conflict of law principles (but giving effect to Federal laws relating to national banks). The consent to forum and arbitration provisions set forth in Section 14.15 of the Loan Agreement are hereby incorporated in this Amendment by reference.

5.    Counterparts. This Amendment may be executed in any number of counterparts and by different parties and separate counterparts, each of which when so executed and delivered, shall be deemed an original, and all of which, when taken together, shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Amendment by telefacsimile or a substantially similar electronic transmission shall have the same force and effect as the delivery of an original executed counterpart of this Amendment. Any party delivering an executed counterpart of this Amendment by telefacsimile or a substantially similar electronic transmission shall also deliver an original executed counterpart, but the failure to do so shall not affect the validity, enforceability or binding effect of such agreement.

6.    Reference to and Effect on the Loan Documents.

(a)    Upon and after the effectiveness of this Amendment, each reference in the Loan Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Loan Agreement, and each reference in the other Loan Documents to “the Loan Agreement”, “thereof” or words of like import referring to the Loan Agreement, shall mean and be a reference to the Loan Agreement as modified and amended hereby.

(b)    Except as specifically amended above, the Loan Agreement and all other Loan Documents are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed and shall constitute the legal, valid, binding and enforceable obligations of Borrower to Agent and the Lenders.

(c)    The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of Agent or any Lender under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents.

(d)    To the extent that any terms and conditions in any of the Loan Documents shall contradict or be in conflict with any terms or conditions of the Loan Agreement, after giving effect to this Amendment, such terms and conditions are hereby deemed modified or amended accordingly to reflect the terms and conditions of the Loan Agreement as modified or amended hereby.

7.    Ratification. Borrower hereby restates, ratifies and reaffirms each and every term and condition set forth in the Loan Agreement, as amended hereby, and the Loan Documents effective as of the date hereof.

8.    Estoppel. To induce Lenders to enter into this Amendment and to continue to make advances to Borrower under the Loan Agreement, Borrower hereby acknowledges and agrees that, as of the date hereof, there exists no right of offset, defense, counterclaim or objection in favor of Borrower as against Agent or any Lender with respect to the Obligations.

9.    Integration. This Amendment, together with the other Loan Documents, incorporates all negotiations of the parties hereto with respect to the subject matter hereof and is the final expression and agreement of the parties hereto with respect to the subject matter hereof.

10.    Severability. In case any provision in this Amendment shall be invalid, illegal or unenforceable, such provision shall be severable from the remainder of this Amendment and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

[Remainder of Page Left Intentionally Blank]

IN WITNESS WHEREOF, the parties have entered into this Amendment as of the date first above written.

BORROWER

CLEARWATER PAPER CORPORATION,
a Delaware corporation

By: _/s/ John Hertz_________
Name: John Hertz
Title: Chief Financial Officer

EX-10.7(I)

Exhibit 10.7(i)

CLEARWATER PAPER CORPORATION

RESTRICTED STOCK UNIT AGREEMENT

2008 STOCK INCENTIVE PLAN

THIS RESTRICTED STOCK UNIT AGREEMENT (this “Agreement”) is made and entered into on the Grant Date specified in the attached Addendum to this Agreement, by and between Clearwater Paper Corporation, a Delaware corporation (the “Corporation”), and the Employee named in the attached Addendum (the “Employee”).

W I T N E S S E T H:

WHEREAS, the Corporation maintains the Clearwater Paper Corporation 2008 Stock Incentive Plan (the “Plan”), which is incorporated into and forms a part of this Agreement, and the Employee has been selected to receive a grant of Restricted Stock Units under Section 10 of the Plan;

NOW, THEREFORE, for valuable consideration, the parties agree as follows:

1.Definitions. In addition to the terms defined elsewhere in this Agreement, the following terms used in this Agreement shall have the meanings set forth in this Section 1. Capitalized terms not defined in this Agreement shall have the same definitions as in the Plan.

(a)    “Addendum” means the attached Addendum.

(b)    “Cause” means the occurrence of any one or more of the following: (i) the Employee’s conviction of any felony or any crime involving fraud, dishonesty or moral turpitude; (ii) the Employee’s participation in a fraud or act of dishonesty against the Corporation, its Subsidiaries or Affiliates or any successor to the Corporation that results in material harm to the business of the Corporation, its Subsidiaries or Affiliates or any successor to the Corporation; (iii) the Employee’s intentional, material violation of any contract between the Corporation, its Subsidiaries or Affiliates or any successor to the Corporation and the Employee, or any statutory duty the Employee owes the Corporation, its Affiliates or any successor to the Corporation, in either case that the Employee does not correct within 30 days after written notice thereof has been provided to the Employee, (iv) the commission of an act by the Employee that could (either alone or with other acts) be considered harassment or discrimination on the basis of gender, race, age, religion, sexual orientation or other protected category; or (v) the commission by the Employee of an alcohol or drug offense in violation of the Corporation’s, or a Subsidiary’s or an Affiliate’s Substance Abuse Policy for salaried employees.

(c)    “Disability” means the condition of the Employee who is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of at least 12 months.

(d)    “Double Trigger Event” means the Employee’s Service with the Corporation or a Subsidiary or an Affiliate is involuntarily terminated without Cause or voluntarily terminated for Good Reason within one month prior to or 24 months following the effective date of a Change of Control.

(e)    “Good Reason” means that one or more of the following are undertaken by the Corporation, its Subsidiaries or Affiliates or any successor to the Corporation without the Employee’s written consent: (i) the assignment to the Employee of any duties or responsibilities that results in a material diminution in the Employee’s position or function as in effect immediately prior to the effective date of a Change of Control; provided, however, that a change in the Employee’s title or reporting relationships shall not provide the basis for a voluntary termination with Good Reason; (ii) a reduction, without the Employee’s written consent, by the Corporation, its Subsidiaries or Affiliates or any successor to the Corporation in the Employee’s annual base salary, as in effect on the effective date of the Change of Control or as increased thereafter; (iii) any failure by the Corporation, its Subsidiaries or Affiliates or any successor to the Corporation to continue in effect (or substantially replace in the aggregate) any material benefit plan or program

in which the Employee was participating immediately prior to the effective date of the Change of Control (hereinafter referred to as “Benefit Plans”), or the taking of any action by the Corporation, its Subsidiaries or Affiliates or any successor to the Corporation that would adversely affect the Employee’s participation in or reduce the Employee’s benefits under the Benefit Plan; provided, however, that no voluntary termination of Service with Good Reason shall be deemed to have occurred if the Corporation, its Subsidiaries or Affiliates or any successor to the Corporation provide for the Employee’s participation in benefit plans and programs that, taken as a whole, are comparable to the Benefit Plans; (iv) a relocation of the Employee’s business office to a location more than 50 miles from the location at which the Employee performs duties as of the effective date of the Change of Control, except for required travel by the Employee on the Corporation’s, its Subsidiaries’ or Affiliates’ or any successor to the Corporation’s business to an extent substantially consistent with the Employee’s business travel obligations prior to the effective date of the Change of Control; or (v) a material breach by the Corporation, its Subsidiaries or Affiliates or any successor to the Corporation concerning the terms and conditions of the Employee’s employment.

(f)    “Grant Date” means the effective date of the Award of the Restricted Stock Units to the Employee, as specified in the Addendum.

(g)    “Retirement” means (i) the Employee’s early or normal retirement and commencement of benefit payments under the Retirement Plan, or (ii) if the Employee does not have an accrued benefit under the Retirement Plan, the Employee’s termination of Service on or after the earlier of his or her (A) attainment of age 65 or (B) attainment of age 55 and completion of 10 years of Service.

(h)    “Retirement Plan” means the Clearwater Paper Salaried Retirement Plan.

(i)    “Service” shall have the meaning given such term under the Plan, except that as used in this Agreement the term “Service” shall be limited to employment and shall exclude service performed as an Outside Director or as a Consultant.

(j)    “Vesting Period” means the period specified in the Addendum.

2.Award. Subject to the terms of this Agreement and the Addendum, the Employee is hereby awarded a grant of Restricted Stock Units in the number set forth in the attached Addendum (the “Award”). Except as otherwise set forth herein, the number of Shares actually payable to the Employee is contingent on the Employee’s continuous Service for the duration of the Vesting Period. This Award has been granted pursuant to the Plan and is subject to all the terms and provisions thereof, a copy of which is attached and the terms and conditions of which are incorporated by reference into this Agreement.

3.Dividend Equivalents. During the Vesting Period, dividend equivalents shall be converted into additional Restricted Stock Units based on the closing price of the Stock on the New York Stock Exchange on the dividend payment date. Such additional Restricted Stock Units shall vest or be forfeited in the same manner as the underlying Restricted Stock Units to which they relate.

4.Settlement of Awards. Pursuant to Section 5 of this Agreement, the Corporation shall deliver to the Employee one Share for each vested Restricted Stock Unit included in the Award and, as applicable, one share for each vested Restricted Stock Unit that corresponds to an accrued dividend equivalent. Any vested Restricted Stock Units payable to the Employee (including Shares payable pursuant to Section 3 above) shall be paid solely in Shares. Any fractional Share will be rounded to the closest whole Share.

5.Time of Payment. Except for Shares issuable pursuant to Section 8, the Shares issuable for the vested Restricted Stock Units shall be delivered to the Employee (or, in the case of the Employee’s death, to the Employee’s beneficiary or representative) as soon as practicable after the end of the Vesting Period (but in no event late than the 15^th day of the third calendar month following the date on which the Vesting Period ends). With respect to Shares issuable in connection with Restricted Stock Units that become vested pursuant to Section 8, such Shares shall be delivered to the Employee as soon as practicable after (but no later than 60 days after) the date on which the Double Trigger Event occurs; provided however, that if the Employee’s Service with the Corporation, a Subsidiary or an Affiliate

2

is involuntarily terminated without Cause or voluntarily terminated for Good Reason on or prior to the date of the Change of Control to which the Double Trigger Event relates, then such Shares shall be delivered immediately prior to the consummation of such Change of Control.

6.Retirement, Disability, or Death During the Vesting Period. If the Employee’s Service with the Corporation or a Subsidiary or an Affiliate terminates during the Vesting Period because of the Employee’s Retirement, due to his or her Disability or due to his or her death, the Employee (or, in the case of the Employee’s death, the Employee’s beneficiary or representative) will be entitled to any already vested portion of the Restricted Stock Units plus the next tranche of Restricted Stock Units scheduled to vest.

7.Termination of Service During the Vesting Period. If the Employee’s Service terminates during the Vesting Period for any reason other than as described in Section 6 or Section 8, the portion of unvested Restricted Stock Units granted under this Agreement shall be automatically terminated as of the date of such termination of Service.

8.Change of Control. If a Double Trigger Event occurs during the Vesting Period, the Restricted Stock Units shall become immediately vested in full and payable in accordance with Section 4 above.

9.Available Shares. The Corporation agrees that it will at all times during the term of this Agreement reserve and keep available sufficient authorized but unissued or reacquired Shares to satisfy the requirements of this Agreement.

10.Applicable Taxes. In the event the Corporation determines that it is required to withhold state or federal income taxes, Social Security taxes, or any other applicable taxes as a result of the payment of the Shares, the Corporation will satisfy such withholding requirements by withholding of Shares otherwise payable upon the settlement of the Award, which Shares will have a Fair Market Value (determined as of the date when taxes would otherwise be withheld in cash) not in excess of the legally required minimum amount of tax withholding.

11.Relationship to Other Benefits. Restricted Stock Units shall not be taken into account in determining any benefits under any pension, savings, disability, severance, group insurance or any other pay-related plan of the Corporation or its Subsidiaries or Affiliates.

12.Required Deferral. In the event that, as of the end of the Vesting Period, the value of the Shares issuable for the vested Restricted Stock Units exceeds the amount that would be deductible by the Corporation due to the application of Section 162(m) of the Code, the payment of that portion of such Shares having a value in excess of the amount deductible by the Corporation under Section 162(m) of the Code shall be automatically deferred until the first calendar year in which the Corporation reasonably anticipates that deduction of the payment will not be barred by application of Section 162(m) of the Code. Any portion of such Shares so deferred shall be credited with dividend equivalents which shall be paid out as additional Shares at the same time as the underlying Shares with respect to which the dividend equivalents are credited.

13.Stockholder Rights. Neither the Employee nor the Employee’s beneficiary or representative shall have any rights as a stockholder with respect to any Shares subject to this Agreement until such Shares shall have been issued to the Employee or the Employee’s beneficiary or representative.

14.Transfers, Assignments, Pledges. Except as otherwise provided in this Agreement, the rights and privileges conferred by this Agreement shall not be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to sale under execution, attachment or similar process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of the Award, or of any right or privilege conferred by this Agreement, contrary to the provisions of this Section 14, or upon any attempted sale under any execution, attachment or similar process upon the rights and privileges conferred by this Agreement, the Award and the rights and privileges conferred by this Agreement shall immediately become null and void. However, this Section 14 shall not preclude: (i) an Employee from designating a beneficiary to succeed, after the Employee’s death, to any rights of the Employee or benefits distributable to the Employee under this Agreement not distributed at the time of the Employee’s death; or (ii) a transfer of any Award hereunder by will or the laws of descent or distribution. In that

3

regard, any such rights shall be exercisable by the Employee’s beneficiary, and such benefits shall be distributed to the beneficiary, in accordance with the provisions of this Agreement and the Plan. The beneficiary shall be the named beneficiary or beneficiaries designated by the Employee in writing filed with the Corporation in such form and at such time as the Corporation shall require. If a deceased Employee has not designated a beneficiary, or if the designated beneficiary does not survive the Employee, any benefits distributable to the Employee shall be distributed to the legal representative of the estate of the Employee. If a deceased Employee has designated a beneficiary and the designated beneficiary survives the Employee but dies before the complete distribution of benefits to the designated beneficiary under this Agreement, then any benefits distributable to the designated beneficiary shall be distributed to the legal representative of the estate of the designated beneficiary.

15.No Employment Rights. Nothing in this Agreement shall be construed as giving the Employee the right to be retained as an employee or as impairing the rights of the Corporation or a Subsidiary or an Affiliate to terminate his or her employment at any time, with or without cause.

16.Administration. The authority to manage and control the operation and administration of this Agreement shall be vested in the Committee, and the Committee shall have all powers with respect to this Agreement as it has with respect to the Plan. Any interpretation of this Agreement by the Committee and any decision made by it with respect to this Agreement is final and binding.

17.Interpretation/Applicable Law. This Agreement shall be interpreted and construed in a manner consistent with the terms of the Plan and in accordance with the laws of the State of Delaware (without regard to choice of law principles). If there is any discrepancy between the terms and conditions of this Agreement and the terms and conditions of the Plan, the terms and conditions of the Plan shall control.

18.Term of the Agreement. The term of this Agreement shall end upon the earlier of (i) the delivery of all of the Shares or other consideration to be issued in exchange for the Restricted Stock Units (and accrued dividend equivalents) subject to the Award granted to the Employee or (ii) upon the termination of the Employee’s Service for any reason other than retirement under the Retirement Plan, the Employee’s Disability or death or in connection with a Double Trigger Event.

19.Compliance with Section 409A of the Code. The provisions of this Agreement regarding the payments to be provided to the Employee are intended to comply with Section 409A of the Code or an exemption therefrom, and any ambiguity in any such provision shall be resolved in a manner that supports compliance with Section 409A or an exemption therefrom. Without limiting the foregoing,

a. The provisions of Sections 5 and 8 requiring payment after a Double Trigger Event or otherwise upon an Employee’s termination of Service shall be construed to require that the Employee “separate from service” with Clearwater and its Affiliates within the meaning of Treasury Regulation Section 1.409A-1(h) as a condition to the Employee receiving such payment.

b. If the Employee is entitled to receive a payment subject to Section 409A of the Code after a Double Trigger Event or otherwise upon a termination of Service, and the Corporation determines in good faith that the Employee is a “specified employee” as defined in Section 409A as of the date his Service terminates, then such payment shall be deferred and paid 6 months and 1 day following the date of the Employee’s termination of Service (or if earlier, payment shall be made within 60 days after the date of the Employee’s death).

c. Any deferrals of payment required under Section 12 are intended to comply with Section 409A of the Code.

20.Employment Agreement. Notwithstanding anything to the contrary in this Agreement or the Addendum to this Agreement, in the event of any difference between the terms of this Agreement or the Addendum and that certain employment agreement entered into between Employee and the Company dated effective as of January 1, 2013 (the "Employment Agreement"), the terms of the Employment Agreement shall govern.

4

[remainder of page intentionally left blank]

5

IN WITNESS WHEREOF, each party has or has caused this Agreement to be executed as of the respective date set forth below.

CORPORATION:

Clearwater Paper Corporation,

a Delaware corporation

By:    /s/ Michael S. Gadd                

Name:    Michael S. Gadd                

Title:    SVP, General Counsel            

Date:    1/3/13                        

EMPLOYEE:

/s/ Linda K. Massman                    

Linda K. Massman

Date:    1/28/13                    

6

STOCK INCENTIVE PLAN

ADDENDUM TO
RESTRICTED STOCK UNIT AGREEMENT

Name of Employee: Linda K. Massman

1. Date of Grant: January 1, 2013

2. Number of Restricted Stock Units: 35,587

3. The Vesting Schedule for this Restricted Stock Unit Award is:

The Vesting Period of this Restricted Stock Unit Award will end and the Award will fully vest on December 31, 2015, except as provided below.

This Addendum is incorporated by reference into the Restricted Stock Unit Agreement to which it is appended.

For purposes of Section 6 of the Restricted Stock Unit Agreement, vesting to the “next tranche of Restricted Stock Units scheduled to vest” shall mean that this Restricted Stock Unit Award shall become vested in the event of Employee’s death, Disability or Retirement (occurring prior to December 31, 2015) in an amount equal to the fraction the numerator of which is the sum of number of days Employee was employed from January 1, 2013 until the date of such Service termination date plus the number of days until the first succeeding December 31 thereafter and the denominator of which is 1,826.

Employee and the Company entered into that certain employment agreement dated effective as of January 1, 2013 (the "Employment Agreement"). The terms of the Restricted Stock Unit Agreement to the contrary notwithstanding, Section 8(a)(iv) and Section 8(b)(iv) of the Employment Agreement shall apply upon a termination of Employee’s employment covered thereunder. For such purpose, “Cause” and “Good Reason” shall have the respective meanings set forth in the Employment Agreement.

In the event of any difference between the terms of the Restricted Stock Unit Agreement (including this Addendum) and the terms of the Employment Agreement, the terms of the Employment Agreement shall govern.

This RSU Award, along with all additional shares attributable to dividend equivalents, shall be settled following the final vesting date unless Employee elects to defer receipt of the vested RSUs and accrued dividends to a future date in accordance with section 409A of the Internal Revenue Code or as otherwise provided in the Restricted Stock Unit Agreement.

IN WITNESS WHEREOF, the Corporation has caused this Addendum to the Restricted Stock Unit Agreement to be executed on its behalf by its duly authorized representative, and the Employee has executed the same on the date indicated below.

CLEARWATER PAPER CORPORATION

7

Date:    1/3/13                 By:     /s/ Michael S. Gadd                                             Senior Vice President, General Counsel

Date: 1/28/13                  By:     /s/ Linda K. Massman                                         Employee

8

EX-12

Exhibit 12

CLEARWATER PAPER CORPORATION

Computation of Ratio of Earnings to Fixed Charges

(In thousands)

	Years Ended December 31,
	2012			2011			2010			2009		2008
Earnings before income taxes	$	111,591		$	70,920		$	76,196		$	275,685	$	15,337
Add: Fixed charges	53,974			55,706			27,382			20,248		17,648
Subtract: Capitalized interest	(12,570		)	(3,705		)	(480		)	—		—
Earnings available for fixed charges	$	152,995		$	122,921		$	103,098		$	295,933	$	32,985
Fixed charges:
Interest expense	$	33,796		$	44,809		$	22,571		$	15,505	$	13,147
Capitalized interest	12,570			3,705			480			—		—
Rental expense factor 1	7,608			7,192			4,331			4,743		4,501
Total fixed charges	$	53,974		$	55,706		$	27,382		$	20,248	$	17,648
Ratio of earnings to fixed charges	2.8			2.2			3.8			14.6		1.9

¹  “Rental expense factor” is the portion of rental expense estimated to be representative of the interest factor within rental expense.

The ratio of earnings to fixed charges is computed by dividing earnings available for fixed charges by fixed charges. Earnings available for fixed charges represent earnings before income taxes and fixed charges excluding capitalized interest. Fixed charges consist of interest expense, capitalized interest and the rental expense factor discussed above.

EX-21

Exhibit 21

Clearwater Paper Corporation

Subsidiaries

Entity	Jurisdiction of Incorporation or formation	Name Under Which Entity Conducts Business
Cellu Tissue Holdings, Inc.	Delaware	Clearwater Paper Group
Cellu Tissue Corporation – Natural Dam	Delaware	Clearwater Paper – Natural Dam
Cellu Tissue Corporation – Neenah	Delaware	Clearwater Paper – Neenah
Cellu Tissue, LLC	Delaware	Clearwater Paper – East Hartford
Clearwater Paper – Wiggins, LLC	Delaware	None
Menominee Acquisition Corporation	Delaware	Clearwater Paper – Menominee
Cellu Tissue – Thomaston, LLC	Delaware	Clearwater Paper – Thomaston
Cellu Tissue – Long Island, LLC	Delaware	Clearwater Paper – Long Island
Cellu Tissue Corporation – Oklahoma City	Delaware	Clearwater Paper – Oklahoma City
Interlake Acquisition Corporation Limited	Nova Scotia	Clearwater Paper – St. Catharines
Cellu Tissue – CityForest, LLC	Minnesota	Clearwater Paper – Ladysmith
Clearwater Fiber, LLC	Delaware	None

EX-23

Exhibit (23)

Consent of Independent Registered Public Accounting Firm

The Board of Directors
Clearwater Paper Corporation:

We consent to the incorporation by reference in the registration statements (Nos. 333-156131, 333-156133, 333-156136, and 333-172077) on Form S-8, and registration statement (No. 333-173820) on Form S-4 of Clearwater Paper Corporation of our reports dated February 22, 2013, with respect to the consolidated balance sheets of Clearwater Paper Corporation and subsidiaries as of December 31, 2012 and 2011, and the related consolidated statements of operations, comprehensive income, cash flows, and stockholders’ equity for each of the years in the three-year period ended December 31, 2012, and the effectiveness of internal control over financial reporting as of December 31, 2012, which reports appear in the December 31, 2012 annual report on Form 10-K of Clearwater Paper Corporation.

/s/ KPMG LLP

Seattle, Washington
February 22, 2013

EX-24

Exhibit (24)

Power of Attorney

I, the undersigned, appoint Michael S. Gadd or, in his absence or inability to act John D. Hertz or Johnathan D. Hunter, my attorney-in-fact for me and in my name, place and stead to execute for me on my behalf in my capacity as a Director of Clearwater Paper Corporation, the Annual Report on Form 10-K of Clearwater Paper Corporation for the fiscal year ended December 31, 2012, to be filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, and any and all amendments thereto, hereby ratifying, approving and confirming all that any such attorney-in-fact may do by virtue of this Power of Attorney.

IN WITNESS WHEREOF, I have executed this Power of Attorney effective as of February 18, 2013.

    /S/ BOH A. DICKEY    

DIRECTOR

Power of Attorney

I, the undersigned, appoint Michael S. Gadd or, in his absence or inability to act John D. Hertz or Johnathan D. Hunter, my attorney-in-fact for me and in my name, place and stead to execute for me on my behalf in my capacity as a Director of Clearwater Paper Corporation, the Annual Report on Form 10-K of Clearwater Paper Corporation for the fiscal year ended December 31, 2012, to be filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, and any and all amendments thereto, hereby ratifying, approving and confirming all that any such attorney-in-fact may do by virtue of this Power of Attorney.

IN WITNESS WHEREOF, I have executed this Power of Attorney effective as of February 18, 2013.

    /S/ WILLIAM D. LARSSON    

DIRECTOR

Power of Attorney

I, the undersigned, appoint Michael S. Gadd or, in his absence or inability to act John D. Hertz or Johnathan D. Hunter, my attorney-in-fact for me and in my name, place and stead to execute for me on my behalf in my capacity as a Director of Clearwater Paper Corporation, the Annual Report on Form 10-K of Clearwater Paper Corporation for the fiscal year ended December 31, 2012, to be filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, and any and all amendments thereto, hereby ratifying, approving and confirming all that any such attorney-in-fact may do by virtue of this Power of Attorney.

IN WITNESS WHEREOF, I have executed this Power of Attorney effective as of February 18, 2013.

    /S/ FREDERIC W. CORRIGAN    

DIRECTOR

Power of Attorney

I, the undersigned, appoint Michael S. Gadd or, in his absence or inability to act John D. Hertz or Johnathan D. Hunter, my attorney-in-fact for me and in my name, place and stead to execute for me on my behalf in my capacity as a Director of Clearwater Paper Corporation, the Annual Report on Form 10-K of Clearwater Paper Corporation for the fiscal year ended December 31, 2012, to be filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, and any and all amendments thereto, hereby ratifying, approving and confirming all that any such attorney-in-fact may do by virtue of this Power of Attorney.

IN WITNESS WHEREOF, I have executed this Power of Attorney effective as of February 18, 2013.

    /S/ WILLIAM T. WEYERHAEUSER    

DIRECTOR

Power of Attorney

I, the undersigned, appoint Michael S. Gadd or, in his absence or inability to act John D. Hertz or Johnathan D. Hunter, my attorney-in-fact for me and in my name, place and stead to execute for me on my behalf in my capacity as a Director of Clearwater Paper Corporation, the Annual Report on Form 10-K of Clearwater Paper Corporation for the fiscal year ended December 31, 2012, to be filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, and any and all amendments thereto, hereby ratifying, approving and confirming all that any such attorney-in-fact may do by virtue of this Power of Attorney.

IN WITNESS WHEREOF, I have executed this Power of Attorney effective as of February 18, 2013.

    /S/ MICHAEL T. RIORDAN    

DIRECTOR

Power of Attorney

I, the undersigned, appoint Michael S. Gadd or, in his absence or inability to act John D. Hertz or Johnathan D. Hunter, my attorney-in-fact for me and in my name, place and stead to execute for me on my behalf in my capacity as a Director of Clearwater Paper Corporation, the Annual Report on Form 10-K of Clearwater Paper Corporation for the fiscal year ended December 31, 2012, to be filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, and any and all amendments thereto, hereby ratifying, approving and confirming all that any such attorney-in-fact may do by virtue of this Power of Attorney.

IN WITNESS WHEREOF, I have executed this Power of Attorney effective as of February 18, 2013.

     /S/ GORDON L. JONES     

DIRECTOR

Power of Attorney

I, the undersigned, appoint Michael S. Gadd or, in his absence or inability to act John D. Hertz or Johnathan D. Hunter, my attorney-in-fact for me and in my name, place and stead to execute for me on my behalf in my capacity as a Director of Clearwater Paper Corporation, the Annual Report on Form 10-K of Clearwater Paper Corporation for the fiscal year ended December 31, 2012, to be filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, and any and all amendments thereto, hereby ratifying, approving and confirming all that any such attorney-in-fact may do by virtue of this Power of Attorney.

IN WITNESS WHEREOF, I have executed this Power of Attorney effective as of February 18, 2013.

     /S/ BETH E. FORD          

DIRECTOR

Power of Attorney

I, the undersigned, appoint Michael S. Gadd or, in his absence or inability to act John D. Hertz or Johnathan D. Hunter, my attorney-in-fact for me and in my name, place and stead to execute for me on my behalf in my capacity as a Director of Clearwater Paper Corporation, the Annual Report on Form 10-K of Clearwater Paper Corporation for the fiscal year ended December 31, 2012, to be filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, and any and all amendments thereto, hereby ratifying, approving and confirming all that any such attorney-in-fact may do by virtue of this Power of Attorney.

IN WITNESS WHEREOF, I have executed this Power of Attorney effective as of February 18, 2013.

     /S/ KEVIN J. HUNT     

DIRECTOR

EX-31

Exhibit (31)

CERTIFICATION

I, Linda K. Massman, certify that:

1. I have reviewed this report on Form 10-K of Clearwater Paper Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 22, 2013	/S/    LINDA K. MASSMAN
	Linda K. Massman
	President and Chief Executive Officer (Principal Executive Officer)

CERTIFICATION

I, John D. Hertz, certify that:

1. I have reviewed this report on Form 10-K of Clearwater Paper Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 22, 2013	/s/     JOHN D. HERTZ
	John D. Hertz
	Senior Vice President, Finance and Chief Financial Officer

EX-32

Exhibit (32)

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Linda K. Massman, President and Chief Executive Officer of Clearwater Paper Corporation (the “Company”), certify, pursuant to 18 U.S.C. Section1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) the Annual Report of the Company on Form 10-K for the period ended December 31, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/S/    LINDA K. MASSMAN

Linda K. Massman

President and Chief Executive Officer (Principal Executive Officer)

February 22, 2013

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, John D. Hertz, Senior Vice President, Finance and Chief Financial Officer of Clearwater Paper Corporation (the “Company”), certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) the Annual Report of the Company on Form 10-K for the period ended December 31, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/    JOHN D. HERTZ        

John D. Hertz

Senior Vice President, Finance and Chief Financial Officer

February 22, 2013

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2012

Earnings Per Share [Abstract]

Reconciliation of Number of Common Shares Used in Calculating Basic and Diluted Net Earnings per Share

The following table reconciles the number of common shares used in calculating the basic and diluted net earnings per share:

	2012		2011		2010
Basic average common shares outstanding1	23,298,663		22,913,881		22,947,400
Incremental shares due to:
Restricted stock units	24,086		220,457		356,048
Performance shares	291,036		817,946		366,504
Diluted average common shares outstanding	23,613,785		23,952,284		23,669,952
Basic net earnings per common share	$	2.75	$	1.73	$	3.22
Diluted net earnings per common share	2.72		1.66		3.12
Anti-dilutive shares excluded from calculation	9,992		88,674		—

XML

Goodwill and Intangible Assets Additional Information (Details)	12 Months Ended
	Dec. 31, 2011 Trade names and trademarks	Dec. 31, 2012 Minimum Non-compete agreements	Dec. 31, 2012 Maximum Non-compete agreements	Dec. 31, 2012 Maximum Trade names and trademarks
Useful Life	10 years 0 months	2 years 6 months	5 years	10 years 0 months

XML

Business Combinations Additional Information (Details) (USD $)								0 Months Ended		12 Months Ended		1 Months Ended	12 Months Ended	1 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 28, 2012 Chipping Facility Acquisition	Dec. 28, 2012 Chipping Facility Acquisition Equipment [Member]	Dec. 28, 2012 Chipping Facility Acquisition Customer relationships	Dec. 28, 2012 Chipping Facility Acquisition Non-compete agreements	Dec. 28, 2012 Chipping Facility Acquisition Restricted Cash, Non-Current Maximum	Dec. 31, 2010 Cellu Tissue Holdings Inc	Dec. 16, 2008 Cellu Tissue Holdings Inc	Dec. 31, 2010 Cellu Tissue Holdings Inc	Dec. 27, 2010 Cellu Tissue Holdings Inc	Dec. 27, 2010 Cellu Tissue Holdings Inc Senior Notes Due 2018 [Member]	Dec. 31, 2010 Cellu Tissue Holdings Inc Senior Notes Due 2018 [Member]	Dec. 27, 2010 Cellu Tissue Holdings Inc Credit Facility [Member]	Dec. 27, 2010 Cellu Tissue Holdings Inc Bonds	Dec. 27, 2010 Cellu Tissue Holdings Inc Common Stock Outstanding [Member]	Dec. 27, 2010 Cellu Tissue Holdings Inc Stock Options And Restricted Stock Units [Member]
Business Acquisition [Line Items]
Business acquisition cash paid			$ 11,000,000								$ 247,000,000					$ 242,200,000	$ 4,800,000
Business acquisition, contingent consideration, potential cash payment							1,500,000
Business combination, recognized identifiable assets acquired and liabilities assumed, property, plant, and equipment				6,000,000
Business combination, recognized identifiable assets acquired and liabilities assumed, intangibles					4,000,000	1,000,000
Spin off transaction and distribution of common stock percentage									100.00%
Business acquisition cash paid per share																	$ 12
Debt instrument, principal amount												375,000,000
Debt instrument, interest rate												7.125%
Debt instrument, maturity date												Nov. 01, 2018	Nov. 01, 2018
Goodwill	229,533,000	229,533,000									229,500,000
Net sales								7,300,000
Operating losses								(6,300,000)
Pre-tax employee severance expenses								6,100,000
Debt retired and paid														32,500,000
Business acquisition liabilities assumed											445,026,000				15,600,000
Business acquisition costs recorded as selling, general and administrative expenses										$ 20,400,000

XML

Savings, Pension and Other Postretirement Employee Benefit Plans Additional Information (Details) (USD $)	12 Months Ended						1 Months Ended						3 Months Ended	12 Months Ended								12 Months Ended		12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2012 IAM	Dec. 31, 2011 IAM	Dec. 31, 2010 IAM	Nov. 30, 2011 USW	Oct. 31, 2011 USW	Dec. 31, 2012 Maximum Red zone	Dec. 31, 2012 Maximum Yellow zone	Dec. 31, 2012 Minimum Yellow zone	Dec. 31, 2012 Minimum Green zone	Dec. 31, 2011 Pension Benefit Plans	Dec. 31, 2012 Pension Benefit Plans	Dec. 31, 2011 Pension Benefit Plans	Dec. 31, 2010 Pension Benefit Plans	Dec. 31, 2012 Other Postretirement Employee Benefit Plans	Dec. 31, 2011 Other Postretirement Employee Benefit Plans	Dec. 31, 2010 Other Postretirement Employee Benefit Plans	Dec. 31, 2012 Company-Sponsored Pension Plans	Dec. 31, 2011 Company-Sponsored Pension Plans	Dec. 31, 2012 Non Qualified Pension Plans	Dec. 31, 2012 Fair Value, Inputs, Level 1 Other Postretirement Employee Benefit Plans	Dec. 31, 2012 Defined Contribution Pension Plan 401K	Dec. 31, 2011 Defined Contribution Pension Plan 401K	Dec. 31, 2010 Defined Contribution Pension Plan 401K
Defined Benefit Plan Disclosure [Line Items]
Employer contributions																								$ 14,900,000	$ 8,100,000	$ 5,700,000
Curtailments	500,000													477,000	2,776,000	183,000	0	0	0
Loss related to plan changes in Net Periodic Benefit Cost	(7,324,000)	(4,869,000)	(6,560,000)										2,800,000			200,000
Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Adjustment, before Reclassification Adjustments, Net of Tax													400,000
Net loss expected to be recognized as component of net periodic benfit over the next fiscal year														15,500,000
Prior service cost, expected to be recognized as a component of net periodic benefit cost over the next fiscal year															400,000		2,700,000
Medicare Part D subsidies received														0	0		569,000	355,000
Assumed health care cost trend rates used to determine the company's benefit obligations and expense																	7.00%	7.50%
Assumed health care cost trend rates, graded rate																	4.70%
Expected year when trend rate to be reached																	60 years
Securities lending agreement, percentage of market value of loaned securities and accrued interest																	102.00%
Value of corporate common stocks loaned under the lending agreement																	3,300,000
Fair value of plan assets	254,556,000	218,557,000											218,557,000	254,556,000	218,557,000	216,650,000	19,000	18,000	16,000				19,000
Funded status at end of year													89,101,000	78,701,000	89,101,000		134,599,000	136,692,000		78,700,000	89,100,000
Employer contribution														20,882,000	12,752,000		0	0		20,600,000		200,000
Estimated 2013 cash contributions																				$ 20,000,000
Funded percentage of pension protection plan									65.00%	80.00%	65.00%	80.00%
Contribution rates				3.25	3	2.75	2.6714	2.4285

XML

Goodwill and Intangible Assets (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Acquired Finite-Lived Intangible Assets [Line Items]
Historical Cost	$ 60,931	$ 56,400
Accumulated Amortization	(13,178)	(6,652)
Net Balance	47,753	49,748
Customer relationships
Acquired Finite-Lived Intangible Assets [Line Items]
Useful Life	9 years 0 months	9 years 0 months
Historical Cost	53,957	50,000
Accumulated Amortization	(11,237)	(5,682)
Net Balance	42,720	44,318
Trade names and trademarks
Acquired Finite-Lived Intangible Assets [Line Items]
Useful Life		10 years 0 months
Historical Cost	5,300	5,300
Accumulated Amortization	(1,060)	(530)
Net Balance	4,240	4,770
Non-compete agreements
Acquired Finite-Lived Intangible Assets [Line Items]
Historical Cost	1,674	1,100
Accumulated Amortization	(881)	(440)
Net Balance	$ 793	$ 660
Minimum | Non-compete agreements
Acquired Finite-Lived Intangible Assets [Line Items]
Useful Life	2 years 6 months
Maximum | Trade names and trademarks
Acquired Finite-Lived Intangible Assets [Line Items]
Useful Life	10 years 0 months
Maximum | Non-compete agreements
Acquired Finite-Lived Intangible Assets [Line Items]
Useful Life	5 years

XML

One Percentage Point Change in Health Care Cost Trend Rates (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012
One Percentage Point Change in Health Care Cost Trend Rates [Abstract]
Effect of 1% increase on total service and interest cost components	$ 644
Effect of 1% decrease on total service and interest cost components	(544)
Effect of 1% increase on postretirement employee benefit obligation	12,450
Effect of 1% decrease on postretirement employee benefit obligation	$ (10,707)

XML

Nature of Operations and Basis of Presentation - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	1 Months Ended	0 Months Ended
	Nov. 28, 2011	Dec. 16, 2008 Cellu Tissue Holdings Inc
Purchase Commitment, Excluding Long-term Commitment [Line Items]
Spin off transaction and distribution of common stock percentage		100.00%
Aggregate proceed from sale of property	$ 30

XML

Goodwill and Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

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

	December 31, 2012
(Dollars in thousands, lives in years)	Useful Life	Historical Cost		Accumulated Amortization			Net Balance
Customer relationships	9.0	$	53,957	$	(11,237	)	$	42,720
Trade names and trademarks	10.0	5,300		(1,060		)	4,240
Non-compete agreements	2.5 - 5.0	1,674		(881		)	793
Total intangible assets		$	60,931	$	(13,178	)	$	47,753

	December 31, 2011
(Dollars in thousands, lives in years)	Useful Life	Historical Cost		Accumulated Amortization			Net Balance
Customer relationships	9.0	$	50,000	$	(5,682	)	$	44,318
Trade names and trademarks	10.0	5,300		(530		)	4,770
Non-compete agreements	2.5	1,100		(440		)	660
Total intangible assets		$	56,400	$	(6,652	)	$	49,748

Estimated Future Amortization Expense Related to Intangible Assets

As of December 31, 2012, estimated future amortization expense related to intangible assets is as follows (in thousands):

Years ending December 31,	Amount
2013	$	6,975
2014	6,663
2015	6,608
2016	6,587
2017	6,587
Thereafter	14,333
Total	$	47,753

XML

Investments at Fair Value for Company Sponsored Pension Benefit Plans Within Fair Value Hierarchy (Details) (USD $)	Dec. 31, 2012	Dec. 31, 2011
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	$ 254,556,000	$ 218,557,000
Cash and cash equivalents
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	3,786,000	9,843,000
Common and collective trusts | International small cap
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	12,725,000	10,588,000
Common and collective trusts | Global/International equity
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	16,656,000	13,748,000
Common and collective trusts | Domestic equity – small/mid cap
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	17,339,000	15,939,000
Common and collective trusts | International equity emerging markets
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	17,672,000	14,602,000
Common stock | Industrials
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	9,475,000	5,545,000
Common stock | Energy
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	1,966,000	2,595,000
Common stock | Consumer
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	8,270,000	9,714,000
Common stock | Healthcare
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	7,386,000	4,321,000
Common stock | Finance
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	13,000,000	10,235,000
Common stock | Utilities
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	2,305,000	4,234,000
Common stock | Information technology
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	6,828,000	4,847,000
Common stock | Foreign
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	6,078,000	5,000,000
Mutual funds | Foreign
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets
Mutual funds | Foreign large blend
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	18,907,000	15,048,000
Mutual funds | Long-term bond fund
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	114,557,000	99,728,000
Corporate debt securities
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	1,073,000	1,045,000
Investments
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	258,023,000	227,032,000
Payable held under securities lending agreement
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	(3,467,000)	(8,475,000)
Fair Value, Inputs, Level 1 | Cash and cash equivalents
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	3,786,000	9,843,000
Fair Value, Inputs, Level 1 | Common and collective trusts | International small cap
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Fair Value, Inputs, Level 1 | Common and collective trusts | Global/International equity
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Fair Value, Inputs, Level 1 | Common and collective trusts | Domestic equity – small/mid cap
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Fair Value, Inputs, Level 1 | Common and collective trusts | International equity emerging markets
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Fair Value, Inputs, Level 1 | Common stock | Industrials
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	9,475,000	5,545,000
Fair Value, Inputs, Level 1 | Common stock | Energy
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	1,966,000	2,595,000
Fair Value, Inputs, Level 1 | Common stock | Consumer
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	8,270,000	9,714,000
Fair Value, Inputs, Level 1 | Common stock | Healthcare
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	7,386,000	4,321,000
Fair Value, Inputs, Level 1 | Common stock | Finance
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	13,000,000	10,235,000
Fair Value, Inputs, Level 1 | Common stock | Utilities
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	2,305,000	4,234,000
Fair Value, Inputs, Level 1 | Common stock | Information technology
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	6,828,000	4,847,000
Fair Value, Inputs, Level 1 | Common stock | Foreign
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	6,078,000	5,000,000
Fair Value, Inputs, Level 1 | Mutual funds | Foreign large blend
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	18,907,000	15,048,000
Fair Value, Inputs, Level 1 | Mutual funds | Long-term bond fund
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	114,557,000	99,728,000
Fair Value, Inputs, Level 1 | Corporate debt securities
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Fair Value, Inputs, Level 1 | Investments
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	192,558,000	171,110,000
Fair Value, Inputs, Level 2 | Cash and cash equivalents
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Fair Value, Inputs, Level 2 | Common and collective trusts | International small cap
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	12,725,000	10,588,000
Fair Value, Inputs, Level 2 | Common and collective trusts | Global/International equity
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	16,656,000	13,748,000
Fair Value, Inputs, Level 2 | Common and collective trusts | Domestic equity – small/mid cap
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	17,339,000	15,939,000
Fair Value, Inputs, Level 2 | Common and collective trusts | International equity emerging markets
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	17,672,000	14,602,000
Fair Value, Inputs, Level 2 | Common stock | Industrials
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Fair Value, Inputs, Level 2 | Common stock | Energy
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Fair Value, Inputs, Level 2 | Common stock | Consumer
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Fair Value, Inputs, Level 2 | Common stock | Healthcare
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Fair Value, Inputs, Level 2 | Common stock | Finance
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Fair Value, Inputs, Level 2 | Common stock | Utilities
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Fair Value, Inputs, Level 2 | Common stock | Information technology
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Fair Value, Inputs, Level 2 | Common stock | Foreign
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Fair Value, Inputs, Level 2 | Mutual funds | Foreign large blend
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Fair Value, Inputs, Level 2 | Mutual funds | Long-term bond fund
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Fair Value, Inputs, Level 2 | Corporate debt securities
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	1,073,000	1,045,000
Fair Value, Inputs, Level 2 | Investments
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	65,465,000	55,922,000
Fair Value, Inputs, Level 3 | Cash and cash equivalents
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Fair Value, Inputs, Level 3 | Common and collective trusts | International small cap
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Fair Value, Inputs, Level 3 | Common and collective trusts | Global/International equity
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Fair Value, Inputs, Level 3 | Common and collective trusts | Domestic equity – small/mid cap
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Fair Value, Inputs, Level 3 | Common and collective trusts | International equity emerging markets
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Fair Value, Inputs, Level 3 | Common stock | Industrials
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Fair Value, Inputs, Level 3 | Common stock | Energy
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Fair Value, Inputs, Level 3 | Common stock | Consumer
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Fair Value, Inputs, Level 3 | Common stock | Healthcare
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Fair Value, Inputs, Level 3 | Common stock | Finance
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Fair Value, Inputs, Level 3 | Common stock | Utilities
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Fair Value, Inputs, Level 3 | Common stock | Information technology
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Fair Value, Inputs, Level 3 | Common stock | Foreign
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Fair Value, Inputs, Level 3 | Mutual funds | Foreign large blend
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Fair Value, Inputs, Level 3 | Mutual funds | Long-term bond fund
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Fair Value, Inputs, Level 3 | Corporate debt securities
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	0	0
Fair Value, Inputs, Level 3 | Investments
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets	$ 0	$ 0

XML

Certain Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Certain Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets [Abstract]
Projected benefit obligation	$ 333,257	$ 307,658
Accumulated benefit obligation	333,257	307,658
Fair value of plan assets	$ 254,556	$ 218,557

XML

Fair Value Measurements Estimated Fair Values of Financial Instruments (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Carrying Amount
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash, restricted cash, and short-term investments (Level 1)	$ 34,079	$ 64,209
Long-term debt (Level 1)	523,933	523,694
Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash, restricted cash, and short-term investments (Level 1)	34,079	64,209
Long-term debt (Level 1)	$ 572,625	$ 556,313

XML

Intangible Assets (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Finite-Lived Intangible Assets [Line Items]
Historical Cost	$ 60,931	$ 56,400
Accumulated Amortization	(13,178)	(6,652)
Net Balance	47,753	49,748
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Useful Life	9 years 0 months	9 years 0 months
Historical Cost	53,957	50,000
Accumulated Amortization	(11,237)	(5,682)
Net Balance	42,720	44,318
Trade names and trademarks
Finite-Lived Intangible Assets [Line Items]
Useful Life		10 years 0 months
Historical Cost	5,300	5,300
Accumulated Amortization	(1,060)	(530)
Net Balance	4,240	4,770
Non-compete agreements
Finite-Lived Intangible Assets [Line Items]
Historical Cost	1,674	1,100
Accumulated Amortization	(881)	(440)
Net Balance	$ 793	$ 660

XML

Weighted Average Assumptions Used to Determine Benefit Obligation (Details)	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Pension Benefit Plans
Defined Benefit Plan Disclosure [Line Items]
Discount rate	4.15%	4.90%	5.70%
Rate of salaried compensation increase	0.00%	0.00%	4.00%
Other Postretirement Employee Benefit Plans
Defined Benefit Plan Disclosure [Line Items]
Discount rate	4.05%	4.95%	5.60%
Rate of salaried compensation increase	0.00%	0.00%	0.00%

XML

Equity-Based Compensation Plans Equity-Based Compensation Plans Summary of Status of Outstanding RSU Awards (Details) (Restricted stock units, USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Restricted stock units
Number of share
Beginning Balance	169,344	437,272	849,512
Granted	52,294	23,138	32,428
Vested	(155,177)	(286,486)	(425,556)
Forfeited	(2,734)	(4,580)	(19,112)
Ending Balance	63,727	169,344	437,272
Weighted Average Grant Date Fair Value
Beginning Balance	$ 11.33	$ 6.96	$ 7.04
Granted	$ 34.59	$ 38.42	$ 24.23
Vested	$ 8.82	$ 6.88	$ 8.42
Forfeited	$ 34.07	$ 8.64	$ 7.14
Ending Balance	$ 35.57	$ 11.33	$ 6.96
Aggregate intrinsic value
Aggregate intrinsic value	$ 2,496	$ 6,030	$ 17,119

XML

Estimated Future Benefit Payments (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012
Pension Benefit Plans
Defined Benefit Plan Disclosure [Line Items]
2013	$ 17,144
2014	17,606
2015	18,413
2016	19,037
2017	19,629
2018-2022	103,890
Other Postretirement Employee Benefit Plans
Defined Benefit Plan Disclosure [Line Items]
2013	9,565
2014	9,895
2015	10,138
2016	10,515
2017	10,431
2018-2022	47,754
Expected Medicare Subsidy
Defined Benefit Plan Disclosure [Line Items]
2013	690
2014	723
2015	752
2016	778
2017	808
2018-2022	$ 4,460

XML

Equity-Based Compensation Plans Equity-Based Compensation Plans Assumption Used in Monte Carlo Model to Estimate Fair Value of Performance Shares Awards (Details) (Performance shares, USD $)	12 Months Ended
	Dec. 31, 2012
Performance shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Closing price of stock on date of grant	$ 35.30
Risk free rate	0.39%
Measurement period	3 years
Volatility	46.00%

XML

Weighted Average Assumptions Used to Determine Net Periodic Cost (Benefit) (Details)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Pension Benefit Plans
Defined Benefit Plan Disclosure [Line Items]
Discount rate	4.90%	5.70%	5.75%
Expected return on plan assets	8.00%	8.00%	8.50%
Rate of salaried compensation increase	0.00%	4.00%	4.00%
Other Postretirement Employee Benefit Plans
Defined Benefit Plan Disclosure [Line Items]
Discount rate	4.95%	5.60%	5.75%
Expected return on plan assets	0.00%	0.00%	0.00%
Rate of salaried compensation increase	0.00%	0.00%	0.00%

XML

Changes in Benefit Obligation, Plan Assets and Funded Status for Company-Sponsored Benefit Plans (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward]
Fair value of plan assets at end of year	$ 254,556,000	$ 218,557,000
Pension Benefit Plans
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward]
Benefit obligation at beginning of year	307,658,000	272,012,000
Service cost	2,485,000	7,725,000	8,018,000
Interest cost	14,693,000	15,092,000
Plan changes	0	0
Mergers, sales, closures, special term benefits	0	(422,000)
Actuarial losses (gains)	30,612,000	28,552,000
Medicare Part D subsidies received	0	0
Benefits paid	(22,191,000)	(15,301,000)
Benefit obligation at end of year	333,257,000	307,658,000	272,012,000
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward]
Fair value of plan assets at beginning of year	218,557,000	216,650,000
Actual return on plan assets	37,308,000	4,456,000
Employer contribution	20,882,000	12,752,000
Fair value of plan assets at end of year	254,556,000	218,557,000	216,650,000
Funded status at end of year	(78,701,000)	(89,101,000)
Defined Benefit Plan, Amounts Recognized in Balance Sheet [Abstract]
Current liabilities	(281,000)	(264,000)
Noncurrent liabilities	(78,420,000)	(88,837,000)
Net amount recognized	(78,701,000)	(89,101,000)
Other Postretirement Employee Benefit Plans
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward]
Benefit obligation at beginning of year	136,710,000	141,519,000
Service cost	693,000	702,000	995,000
Interest cost	5,815,000	6,857,000
Plan changes	(5,278,000)	0
Mergers, sales, closures, special term benefits	0	0
Actuarial losses (gains)	3,151,000	(5,433,000)
Medicare Part D subsidies received	569,000	355,000
Benefits paid	(7,042,000)	(7,290,000)
Benefit obligation at end of year	134,618,000	136,710,000	141,519,000
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward]
Fair value of plan assets at beginning of year	18,000	16,000
Actual return on plan assets	1,000	2,000
Employer contribution	0	0
Fair value of plan assets at end of year	19,000	18,000	16,000
Funded status at end of year	(134,599,000)	(136,692,000)
Defined Benefit Plan, Amounts Recognized in Balance Sheet [Abstract]
Current liabilities	(8,856,000)	(9,597,000)
Noncurrent liabilities	(125,743,000)	(127,095,000)
Net amount recognized	$ (134,599,000)	$ (136,692,000)

XML

Commitments and Contingencies

12 Months Ended

Dec. 31, 2012

Additional information [Abstract]

Commitments and Contingencies

NOTE 16 Commitments and Contingencies

LEASE COMMITMENTS

Our operating leases cover manufacturing, office, warehouse and distribution space, equipment and vehicles, which expire at various dates through 2018, as well as capital leases related to our North Carolina converting and manufacturing facilities. As leases expire, it can be expected that, in the normal course of business, certain leases will be renewed or replaced.

As of December 31, 2012, under current operating and capital lease contracts, we had future minimum lease payments as follows:

(In thousands)	Capital			Operating
2013	$	2,330		$	14,966
2014	2,375			10,102
2015	2,420			6,613
2016	2,466			5,142
2017	2,513			4,165
Thereafter	37,361			3,959
Total future minimum lease payments	$	49,465		$	44,947
Less interest portion	(27,177		)
Present value of future minimum lease payments	$	22,288

Rent expense for operating leases was $16.6 million, $16.1 million and $10.0 million for the years ended December 31, 2012, 2011 and 2010, respectively.

XML

Business Combinations Unaudited Pro Forma Financial Information (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2010
Unaudited Pro Forma Financial Information [Abstract]
Pro forma net sales	$ 1,902,579
Pro forma net earnings	$ 88,713

XML

Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2012

Additional information [Abstract]

Future Minimum Commitments For Capital And Operating Leases

As of December 31, 2012, under current operating and capital lease contracts, we had future minimum lease payments as follows:

(In thousands)	Capital			Operating
2013	$	2,330		$	14,966
2014	2,375			10,102
2015	2,420			6,613
2016	2,466			5,142
2017	2,513			4,165
Thereafter	37,361			3,959
Total future minimum lease payments	$	49,465		$	44,947
Less interest portion	(27,177		)
Present value of future minimum lease payments	$	22,288

XML

Other Amounts Recognized in Other Comprehensive Income (Loss) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Pension Benefit Plans
Defined Benefit Plan Disclosure [Line Items]
Net loss (gain)	$ 12,989	$ 43,207	$ (19,216)
Prior service credit	(477)	(2,776)	(183)
Amortization of prior service (cost) credit	(634)	(1,193)	(1,205)
Amortization of actuarial loss	(12,085)	(8,382)	(8,671)
Total recognized in other comprehensive loss (income)	(207)	30,856	(29,275)
Total recognized in net periodic cost (benefit) and other comprehensive loss (income)	10,482	46,492	(15,214)
Other Postretirement Employee Benefit Plans
Defined Benefit Plan Disclosure [Line Items]
Net loss (gain)	3,150	(5,435)	(9,471)
Prior service credit	(5,278)	0	0
Amortization of prior service (cost) credit	2,680	1,795	1,795
Amortization of actuarial loss	0	0	(2,083)
Total recognized in other comprehensive loss (income)	552	(3,640)	(9,759)
Total recognized in net periodic cost (benefit) and other comprehensive loss (income)	$ 4,380	$ 2,124	$ (764)

XML

Supplemental Guarantor Financial Information Condensed Consolidating Balance Sheet (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Current assets:
Cash	$ 12,579	$ 8,439	$ 18,928	$ 2,824
Short-term investments	20,000	55,001
Restricted cash	0	769
Receivables, net	154,143	176,189
Taxes receivable	20,828	10,000
Inventories	231,466	244,071
Deferred tax assets	17,136	39,466
Prepaid expenses	12,314	11,396
Total current assets	468,466	545,331
Property, plant and equipment, net	877,377	735,566
Goodwill	229,533	229,533
Intangible assets, net	47,753	49,748
Investment in subsidiary	0	0
Other assets, net	10,327	11,140
TOTAL ASSETS	1,633,456	1,571,318	1,545,336
Current liabilities:
Accounts payable and accrued liabilities	165,596	144,631
Current liability for pensions and other postretirement employee benefits	9,137	9,861
Total current liabilities	174,733	154,492
Long-term debt	523,933	523,694
Liability for pensions and other postretirement employee benefits	204,163	215,932
Other long-term obligations	50,910	48,474
Accrued taxes	78,699	74,464
Deferred tax liabilities (assets)	60,124	69,358
Accumulated other comprehensive loss, net of tax	(115,693)	(115,265)
Stockholders' equity excluding accumulated other comprehensive loss	656,587	600,169
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	1,633,456	1,571,318
Issuer
Current assets:
Cash	11,105	2,146	15,719
Short-term investments	20,000	55,001
Restricted cash	0	769
Receivables, net	109,129	100,600
Taxes receivable	20,712	8,957
Inventories	171,333	175,446
Deferred tax assets	11,750	27,801
Prepaid expenses	11,441	9,756
Total current assets	355,470	380,476
Property, plant and equipment, net	624,019	468,372
Goodwill	229,533	229,533
Intangible assets, net	4,531
Intercompany receivable (payable)	41,663	120,061
Investment in subsidiary	259,466	249,142
Other assets, net	9,948	10,815
TOTAL ASSETS	1,524,630	1,458,399
Current liabilities:
Accounts payable and accrued liabilities	132,413	109,549
Current liability for pensions and other postretirement employee benefits	9,137	9,861
Total current liabilities	141,550	119,410
Long-term debt	523,933	523,694
Liability for pensions and other postretirement employee benefits	204,163	215,932
Other long-term obligations	50,602	48,009
Accrued taxes	76,617	73,594
Deferred tax liabilities (assets)	(13,129)	(7,144)
Accumulated other comprehensive loss, net of tax	(115,693)	(115,265)
Stockholders' equity excluding accumulated other comprehensive loss	656,587	600,169
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	1,524,630	1,458,399
Guarantor Subsidiaries
Current assets:
Cash	5	901	1,728
Receivables, net	38,167	66,580
Taxes receivable	116	709
Inventories	53,648	62,234
Deferred tax assets	4,400	2,950
Prepaid expenses	705	1,437
Total current assets	97,041	134,811
Property, plant and equipment, net	205,017	217,235
Intangible assets, net	37,222	42,873
Intercompany receivable (payable)	(91,343)	(155,395)
Investment in subsidiary	98,555	89,718
Other assets, net	379	325
TOTAL ASSETS	346,871	329,567
Current liabilities:
Accounts payable and accrued liabilities	27,645	28,838
Total current liabilities	27,645	28,838
Other long-term obligations	308	465
Accrued taxes	1,771
Deferred tax liabilities (assets)	57,681	51,122
Stockholders' equity excluding accumulated other comprehensive loss	259,466	249,142
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	346,871	329,567
Non-Guarantor Subsidiaries
Current assets:
Cash	1,469	5,392	1,481
Receivables, net	8,876	9,009
Taxes receivable	0	334
Inventories	6,485	6,391
Deferred tax assets	195	194
Prepaid expenses	168	203
Total current assets	17,193	21,523
Property, plant and equipment, net	48,341	49,959
Intangible assets, net	6,000	6,875
Intercompany receivable (payable)	50,471	35,334
TOTAL ASSETS	122,005	113,691
Current liabilities:
Accounts payable and accrued liabilities	7,567	6,244
Total current liabilities	7,567	6,244
Accrued taxes	311	870
Deferred tax liabilities (assets)	15,572	16,859
Stockholders' equity excluding accumulated other comprehensive loss	98,555	89,718
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	122,005	113,691
Eliminations
Current assets:
Cash	0	0	0
Receivables, net	(2,029)
Taxes receivable	0
Deferred tax assets	791	8,521
Total current assets	(1,238)	8,521
Intercompany receivable (payable)	(791)
Investment in subsidiary	(358,021)	(338,860)
TOTAL ASSETS	(360,050)	(330,339)
Current liabilities:
Accounts payable and accrued liabilities	(2,029)
Total current liabilities	(2,029)	0
Deferred tax liabilities (assets)	0	8,521
Stockholders' equity excluding accumulated other comprehensive loss	(358,021)	(338,860)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ (360,050)	$ (330,339)

XML

Other Long-Term Obligations (Tables)

12 Months Ended

Dec. 31, 2012

Disclosure Other Long Term Obligations [Abstract]

Other Long-Term Obligations

(In thousands)	2012		2011
Long-term lease obligations, net of current portion	$	25,240	$	25,546
Deferred proceeds	11,668		13,040
Deferred compensation	9,939		8,100
Other	4,063		1,788
	$	50,910	$	48,474

XML

Property, Plant and Equipment (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Property, Plant and Equipment [Line Items]
Machinery and equipment	$ 1,866,263	$ 1,660,636
Buildings and improvements	299,642	249,801
Land improvements	52,929	51,703
Land	11,827	11,804
Office and other equipment	10,946	6,058
Construction in progress	37,160	98,258
Property, plant and equipment, gross, total	2,278,767	2,078,260
Less accumulated depreciation and amortization	(1,401,390)	(1,342,694)
Property, plant and equipment, net	$ 877,377	$ 735,566

XML

Accounts Payable and Accrued Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Accounts Payable and Accrued Liabilities [Abstract]
Trade accounts payable	$ 75,949	$ 65,040
Accrued wages, salaries and employee benefits	42,491	37,430
Accrued taxes on income	9,428	2,204
Accrued utilities	8,205	7,265
Accrued taxes other than income taxes payable	6,993	11,257
Accrued interest	5,242	5,245
Accrued discounts and allowances	4,785	5,588
Accrued transportation	4,417	3,801
Other	8,086	6,801
Accounts payable and accrued liabilities	$ 165,596	$ 144,631

XML

Income Tax Reconciliation (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Income Tax Disclosure [Abstract]
Computed expected tax provision	$ 39,063	$ 24,822	$ 26,668
State and local taxes, net of federal income tax impact	4,398	1,482	4,157
Adjustment for state deferred tax rate	(742)	2,916	0
State investment tax credits	(9,077)	0	(1,649)
Federal credits and net operating losses	4,121	(412)	(25,153)
Federal manufacturing deduction	(3,288)	(2,443)	(2,993)
Uncertain tax positions	4,801	2,610	(3,796)
Patient Protection and Affordable Care Act	0	0	3,290
Non-deductible acquisition costs	0	(1,215)	1,263
Change in valuation allowances	6,932	2,796	0
U.S. tax provision on foreign operations	(33)	365	0
Other	1,285	325	609
Income tax provision	$ 47,460	$ 31,246	$ 2,396
Effective tax rate	42.50%	44.10%	3.10%

XML

Summary of Significant Accouting Policies Additional Information (Details) (USD $)	1 Months Ended	12 Months Ended			18 Months Ended			0 Months Ended		12 Months Ended
	Jul. 28, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2012	Aug. 27, 2011	Aug. 26, 2011	Jan. 21, 2013 Subsequent Event Common stock	Jan. 21, 2013 Subsequent Event Senior Notes	Dec. 31, 2010 Kroger Company Consumer Products	Dec. 31, 2012 Land Improvements Minimum	Dec. 31, 2012 Land Improvements Maximum	Dec. 31, 2012 Building and Building Improvements Minimum	Dec. 31, 2012 Building and Building Improvements Maximum	Dec. 31, 2012 Machinery and Equipment Minimum	Dec. 31, 2012 Machinery and Equipment Maximum	Dec. 31, 2012 Office And Other Equipment Minimum	Dec. 31, 2012 Office And Other Equipment Maximum	Dec. 31, 2012 Other Assets
Property, Plant and Equipment [Line Items]
Restricted Cash and Cash Equivalents, Noncurrent																			$ 1,500,000
Restricted cash		0	769,000		0
Allowance for doubtful accounts		1,600,000	1,700,000		1,600,000
Provision for doubtful accounts		200,000	1,000,000	100,000
Estimated useful life											10 years	40 years	10 years	40 years	5 years	25 years	2 years	15 years
Goodwill		229,533,000	229,533,000		229,533,000
Revenue from single customer										153,700,000
Percentage of total revenue from single customer										11.00%
Stock split ratio	2
Common stock, shares, outstanding (in shares)						22,746,920	11,373,460
Number of shares repurchased (in shares)		520,170			853,470
Repurchase of common stock		18,700,000			30,000,000
Common stock per share (in dollars per share)		$ 35.85			$ 35.15
Debt instrument, principal amount									275,000,000
Common stock authorized (in shares)								$ 100,000,000
Percentage of expected natural gas requirement covered under contract		4.00%			4.00%
Percentage of natural gas requirement covered under contract		29.00%	2.00%	24.00%

XML

Consolidated Statements of Stockholders' Equity Consolidate Statements of Stockholders' Equity (Parenthetical) (ACCUMULATED OTHER COMPREHENSIVE (LOSS) GAIN, USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
ACCUMULATED OTHER COMPREHENSIVE (LOSS) GAIN
Pension and OPEB, Tax	$ (137)	$ (11,406)	$ 15,223

XML

Tax Effects of Significant Temporary Differences Creating Deferred Tax Assets and Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Deferred tax assets:
Employee benefits	$ 8,630	$ 7,930
Postretirement employee benefits	52,751	53,862
Incentive compensation	9,130	7,949
Pensions	31,140	28,081
Federal and state credit carryforwards	20,447	30,809
Net operating losses	7,649	16,749
Federal benefit from state taxes resulting from uncertain tax positions	5,595	5,595
Other	5,757	6,492
Total deferred tax assets	141,099	157,467
Valuation allowance	(14,957)	(8,025)
Deferred tax assets, net of valuation allowance	126,142	149,442
Deferred tax liabilities:
Plant and equipment	(157,973)	(166,885)
Intangible assets	(10,843)	(10,879)
Inventories	(314)	(1,570)
Total deferred tax liabilities	(169,130)	(179,334)
Net deferred tax liabilities	$ (42,988)	$ (29,892)

XML

Segment Information (Tables)

12 Months Ended

Dec. 31, 2012

Segment Reporting [Abstract]

Reportable Segments Information

Following is a tabular presentation of business segment information for each of the past three years. Corporate information is included to reconcile segment data to the financial statements.

(In thousands)	2012			2011			2010
Segment net sales:
Consumer Products	$	1,134,556		$	1,092,133		$	570,047
Pulp and Paperboard	739,748			835,840			802,918
Total segment net sales	$	1,874,304		$	1,927,973		$	1,372,965
Operating income:
Consumer Products	$	93,347		$	42,806		$	80,791
Pulp and Paperboard1	103,910			92,827			64,869
	197,257			135,633			145,660
Corporate and eliminations1	(51,870		)	(20,188		)	(46,893		)
Income from operations	$	145,387		$	115,445		$	98,767
Depreciation and amortization:
Consumer Products	$	54,547		$	50,391		$	16,994
Pulp and Paperboard	23,113			26,073			28,658
Corporate	1,673			469			2,076
Total depreciation and amortization	$	79,333		$	76,933		$	47,728
Assets:
Consumer Products	$	1,178,438		$	1,081,988		$	969,450
Pulp and Paperboard	344,614			355,886			377,674
	1,523,052			1,437,874			1,347,124
Corporate	110,404			133,444			198,212
Total Assets	$	1,633,456		$	1,571,318		$	1,545,336
Capital expenditures:
Consumer Products	$	183,330		$	117,059		$	33,902
Pulp and Paperboard	19,954			15,355			10,208
	203,284			132,414			44,110
Corporate	3,831			5,329			2,923
Total capital expenditures	$	207,115		$	137,743		$	47,033

¹  Results for Pulp and Paperboard for 2011 included additional expenses associated with the sale of the Lewiston, Idaho sawmill, which were partially offset by LIFO inventory liquidation and other adjustments recorded at the corporate level.

Summary of Geographic Information Regarding Net Sales

Geographic information regarding our net sales is summarized as follows:

(In thousands)	2012		2011		2010
United States	$	1,726,561	$	1,751,482	$	1,236,400
Japan	63,368		63,584		53,390
Canada	29,557		31,256		15,060
Taiwan	11,061		16,205		12,257
Korea	9,655		5,426		6,258
Australia	7,786		6,246		6,173
Mexico	6,102		13,619		9,843
China	3,488		15,081		9,128
Germany	2,500		3,042		2,729
Netherlands	14		3,163		4,181
Other foreign countries	14,212		18,869		17,546
Total Net Sales	$	1,874,304	$	1,927,973	$	1,372,965

XML

Summary of Significant Accouting Policies Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2012

Accounting Policies [Abstract]

SIGNIFICANT ESTIMATES

SIGNIFICANT ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S., which we refer to in this report as 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 period. Significant areas requiring the use of estimates and measurement of uncertainty include determination of net realizable value for deferred tax assets, uncertain income tax positions, assessment of impairment of long-lived assets and goodwill, assessment of environmental matters, allocation of purchase price and fair value estimates for business combinations, equity-based compensation and pension and postretirement obligation assumptions. Actual results could differ from those estimates and assumptions.

SHORT-TERM INVESTMENTS AND RESTRICTED CASH

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” on our Consolidated Balance Sheet. As of December 31, 2012, all restricted cash, totaling $1.5 million, was included in "Other assets." As of December 31, 2011, all restricted cash, totaling $0.8 million, was classified as current and included in “Restricted cash” on our Consolidated Balance Sheet.

TRADE ACCOUNTS RECEIVABLE

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 December 31, 2012 and 2011, we had allowances for doubtful accounts of $1.6 million and $1.7 million, respectively. Bad debt expense, net, charged to selling, general and administrative expenses during 2012, 2011 and 2010 was $0.2 million, $1.0 million and $0.1 million, respectively. All other activity impacting the allowance for doubtful accounts was immaterial for all periods.

INVENTORIES

INVENTORIES

At December 31, 2012, our inventories are stated at the lower of market or current average cost using the average cost method. Prior to the November 2011 sale of our Lewiston, Idaho, sawmill, we used the last-in, first-out, or LIFO, method to determine cost for our logs, wood fiber and the majority of our lumber.

PROPERTY, PLANT AND EQUIPMENT

PROPERTIES, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost, including assets acquired under capital lease obligations and any interest costs capitalized, less accumulated depreciation. Depreciation of buildings, equipment and other depreciable assets is determined using the straight-line method. Estimated useful lives generally range from 10 to 40 years for land improvements; 10 to 40 years for buildings and improvements; 5 to 25 years for machinery and equipment; and 2 to 15 years for office and other equipment. Assets we acquire through business combinations have estimated lives that are typically shorter than the assets we construct or buy new.

LONG-LIVED ASSETS

Our long-lived assets include property, plant and equipment and amortizable intangible assets. We review the carrying value of long-lived assets for impairment annually and when events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. An impairment of long-lived assets exists when the carrying value is not considered to be recoverable through future undiscounted cash flows from operations and the carrying value of the asset or asset group exceeds the estimated fair value.

GOODWILL AND INTANGIBLES

GOODWILL AND INTANGIBLES

Goodwill from an acquisition represents the excess of the cost of a business acquired over the net of the amounts assigned to assets acquired, including identifiable intangible assets and liabilities assumed. Goodwill and intangible assets resulted from our acquisition of Cellu Tissue in 2010. Intangible assets also resulted from our December 2012 acquisition of a wood chipping facility. See Note 4, "Business Combinations." We used estimates in determining and assigning the fair value of goodwill and intangible assets, including estimates of useful lives of intangible assets, the amount and timing of related future cash flows and fair values of the related operations. Our intangible assets have definite lives and are amortized over their estimated useful lives. We assess our intangibles for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.

As a result of our acquisition of Cellu Tissue in December 2010, we recorded $229.5 million of goodwill as included on our Consolidated Balance Sheets as of December 31, 2012 and 2011. All of the recorded goodwill was assigned to our Consumer Products segment and reporting unit. Goodwill is not amortized but is tested for impairment annually as of November 1, as well as any time when events suggest impairment may have occurred. In the event the carrying value of our consumer products reporting unit, including goodwill, exceeds the estimated fair value of the reporting unit, an impairment loss would be recognized to the extent the carrying amount of the reporting unit’s goodwill exceeds its implied fair value.

INCOME TAXES

INCOME TAXES

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The determination of our provision for income taxes requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items and the probability of sustaining uncertain tax positions. The benefits of uncertain tax positions are recorded in our consolidated financial statements only after determining a more-likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from tax authorities. When facts and circumstances change, we reassess these probabilities and record any changes in the consolidated financial statements as appropriate.

REVENUE RECOGNITION

REVENUE RECOGNITION

We recognize revenue when there is persuasive evidence of a sales agreement, the price to the customer is fixed and determinable, collection is reasonably assured, and title and the risk of loss passes to the customer. Shipping terms generally indicate when title and the risk of loss have passed. Revenue is recognized at shipment for sales when shipping terms are FOB (free on board) shipping point. For sales where shipping terms are FOB destination, revenue is recognized when the goods are received by the customer. Revenue from both domestic and foreign sales of our products can involve shipping terms of either FOB shipping point or FOB destination or other shipping terms, depending upon the sales agreement with the customer.

In 2012 and 2011, we did not have any single customer that accounted for 10% or more of our total net sales. However, in 2010, we had a single customer in the Consumer Products segment, the Kroger Company, that accounted for approximately $153.7 million, or 11%, of our total company net sales.

We provide for trade promotions, customer cash discounts, customer returns and other deductions as reductions to net sales in the same period as the related revenues are recognized. Provisions for these items are determined based on historical experience or specific customer arrangements.

Revenue is recognized net of any sales taxes collected. Sales taxes, when collected, are recorded as a current liability and remitted to the appropriate governmental entities.

ENVIRONMENTAL

ENVIRONMENTAL

As part of our corporate policy, we have an ongoing process to monitor, report on and comply with environmental requirements. Based on this ongoing process, accruals for environmental liabilities that are not within the scope of specific authoritative guidance related to accounting for asset retirement obligations or conditional asset retirement obligations are established in accordance with guidance related to accounting for contingencies. We estimate our environmental liabilities based on various assumptions and judgments, the specific nature of which varies in light of the particular facts and circumstances surrounding each environmental liability. These estimates typically reflect assumptions and judgments as to the probable nature, magnitude and timing of required investigation, remediation and monitoring activities and the probable cost of these activities. Currently, we are not aware of any material environmental liabilities and have accrued for only specific environmental remediation costs that we have determined are probable and for which an amount can be reasonably estimated. Fees for professional services associated with environmental and legal issues are expensed as incurred.

STOCKHOLDERS' EQUITY

STOCKHOLDERS’ EQUITY

On July 28, 2011, we announced that our Board of Directors had declared a two-for-one stock split of our outstanding shares of common stock, which was effected in the form of a stock dividend distributed on August 26, 2011 to shareholders of record on August 12, 2011. On the August 26, 2011 distribution date, there were 11,373,460 shares of common stock outstanding. Immediately following the distribution date, there were 22,746,920 outstanding shares of common stock. All common share and per share amounts have been adjusted for the stock split effected in the form of a stock dividend.

In addition, on July 28, 2011, we announced that our Board of Directors had authorized the repurchase of up to $30 million of our common stock. Under the stock repurchase program, we were authorized to repurchase shares in the open market or as otherwise determined by management, subject to market conditions, business opportunities and other factors. During 2012, we repurchased 520,170 shares of outstanding common stock at a total cost of $18.7 million, representing an average price of $35.85 per share. We completed this repurchase program in the fourth quarter of 2012. The total number of shares repurchased under this program was 853,470 at an aggregate cost of $30 million and an average price of $35.15 per share.

On January 21, 2013, in an event subsequent to the close of our 2012 fiscal year, and in conjunction with the sale of $275 million aggregate principal amount of senior notes (the 2013 Notes; see Note 10, "Debt"), we announced that our Board of Directors approved a new stock repurchase program authorizing the repurchase of $100 million of our common stock. We intend to complete this share repurchase program during 2013 through open market purchases, negotiated transactions or other means.

DERIVATIVES

DERIVATIVES

We had no activity during the years ended December 31, 2012, 2011 and 2010 that required hedge or derivative accounting treatment. However, to partially 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 December 31, 2012, these contracts covered approximately 4% of the expected average monthly requirements for 2013. For the years ended December 31, 2012, 2011 and 2010, approximately 29%, 2% and 24%, respectively, of our natural gas volumes were supplied through firm price contracts. These contracts qualify for treatment as “normal purchases or normal sales” under authoritative guidance and thus require no mark-to-market adjustment.

XML

Supplemental Guarantor Financial Information

12 Months Ended

Dec. 31, 2012

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Supplemental Guarantor Financial Information

NOTE 19 Supplemental Guarantor Financial Information

On October 22, 2010 we issued the 2010 Notes. Certain of our 100% owned, domestic subsidiaries guarantee the 2010 Notes on a joint and several basis. As of December 31, 2012, the 2010 Notes were not guaranteed by Interlake Acquisition Corporation Limited or Cellu Tissue-CityForest, LLC. There are no significant restrictions on the ability of the guarantor subsidiaries to make distributions to Clearwater Paper, the issuer of the 2010 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

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Twelve Months Ended December 31, 2012

				Guarantor			Non-Guarantor
(In thousands)	Issuer			Subsidiaries			Subsidiaries			Eliminations			Total
Net sales	$	1,375,732		$	459,328		$	65,468		$	(26,224	)	$	1,874,304
Cost and expenses:
Cost of sales	(1,149,413		)	(438,106		)	(46,577		)	26,224			(1,607,872		)
Selling, general and administrative expenses	(96,816		)	(19,187		)	(5,042		)	—			(121,045		)
Total operating costs and expenses	(1,246,229		)	(457,293		)	(51,619		)	26,224			(1,728,917		)
Income from operations	129,503			2,035			13,849			—			145,387
Interest expense, net	(33,796		)	—			—			—			(33,796		)
Earnings before income taxes	95,707			2,035			13,849			—			111,591
Income tax provision	(42,440		)	(9,385		)	(5,012		)	9,377			(47,460		)
Equity in income of subsidiary	1,487			8,837			—			(10,324		)	—
Net earnings	$	54,754		$	1,487		$	8,837		$	(947	)	$	64,131
Other comprehensive loss, net of tax	(428		)	—			—			—			(428		)
Comprehensive income	$	54,326		$	1,487		$	8,837		$	(947	)	$	63,703

Clearwater Paper Corporation

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Twelve Months Ended December 31, 2011

				Guarantor			Non-Guarantor
(In thousands)	Issuer			Subsidiaries			Subsidiaries			Eliminations			Total
Net sales	$	1,403,865		$	460,689		$	63,419		$	—		$	1,927,973
Cost and expenses:
Cost of sales	(1,198,955		)	(444,232		)	(59,343		)	—			(1,702,530		)
Selling, general and administrative expenses	(89,019		)	(17,913		)	(3,066		)	—			(109,998		)
Total operating costs and expenses	(1,287,974		)	(462,145		)	(62,409		)	—			(1,812,528		)
Income (loss) from operations	115,891			(1,456		)	1,010			—			115,445
Interest expense, net	(44,187		)	(92		)	(530		)	—			(44,809		)
Other, net	—			—			284			—			284
Earnings before income taxes	71,704			(1,548		)	764			—			70,920
Income tax provision	(34,018		)	3,525			1,297			(2,050		)	(31,246		)
Equity in income of subsidiary	4,038			2,061			—			(6,099		)	—
Net earnings	$	41,724		$	4,038		$	2,061		$	(8,149	)	$	39,674
Other comprehensive loss, net of tax	(16,913		)	—			—			—			(16,913		)
Comprehensive income	$	24,811		$	4,038		$	2,061		$	(8,149	)	$	22,761

Clearwater Paper Corporation

Condensed Consolidating Balance Sheet

At December 31, 2012

(In thousands)	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Total
ASSETS
Current assets:
Cash	$	11,105		$	5		$	1,469	$	—		$	12,579
Short-term investments	20,000			—			—		—			20,000
Restricted cash	—			—			—		—			—
Receivables, net	109,129			38,167			8,876		(2,029		)	154,143
Taxes receivable	20,712			116			—		—			20,828
Inventories	171,333			53,648			6,485		—			231,466
Deferred tax assets	11,750			4,400			195		791			17,136
Prepaid expenses	11,441			705			168		—			12,314
Total current assets	355,470			97,041			17,193		(1,238		)	468,466
Property, plant and equipment, net	624,019			205,017			48,341		—			877,377
Goodwill	229,533			—			—		—			229,533
Intangible assets, net	4,531			37,222			6,000		—			47,753
Intercompany receivable (payable)	41,663			(91,343		)	50,471		(791		)	—
Investment in subsidiary	259,466			98,555			—		(358,021		)	—
Other assets, net	9,948			379			—		—			10,327
TOTAL ASSETS	$	1,524,630		$	346,871		$	122,005	$	(360,050	)	$	1,633,456
LIABILITIES AND STOCKHOLDERS’   EQUITY
Current liabilities:
Accounts payable and accrued   liabilities	$	132,413		$	27,645		$	7,567	$	(2,029	)	$	165,596
Current liability for pensions and   other postretirement employee   benefits	9,137			—			—		—			9,137
Total current liabilities	141,550			27,645			7,567		(2,029		)	174,733
Long-term debt	523,933			—			—		—			523,933
Liability for pensions and other   postretirement employee benefits	204,163			—			—		—			204,163
Other long-term obligations	50,602			308			—		—			50,910
Accrued taxes	76,617			1,771			311		—			78,699
Deferred tax liabilities (assets)	(13,129		)	57,681			15,572		—			60,124
Accumulated other comprehensive loss,   net of tax	(115,693		)	—			—		—			(115,693		)
Stockholders’ equity excluding   accumulated other comprehensive loss	656,587			259,466			98,555		(358,021		)	656,587
TOTAL LIABILITIES AND   STOCKHOLDERS’ EQUITY	$	1,524,630		$	346,871		$	122,005	$	(360,050	)	$	1,633,456

Clearwater Paper Corporation

Condensed Consolidating Balance Sheet

At December 31, 2011

(In thousands)	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Total
ASSETS
Current assets:
Cash	$	2,146		$	901		$	5,392	$	—		$	8,439
Short-term investments	55,001			—			—		—			55,001
Restricted cash	769			—			—		—			769
Receivables, net	100,600			66,580			9,009		—			176,189
Taxes receivable	8,957			709			334		—			10,000
Inventories	175,446			62,234			6,391		—			244,071
Deferred tax assets	27,801			2,950			194		8,521			39,466
Prepaid expenses	9,756			1,437			203		—			11,396
Total current assets	380,476			134,811			21,523		8,521			545,331
Property, plant and equipment, net	468,372			217,235			49,959		—			735,566
Goodwill	229,533			—			—		—			229,533
Intangible assets, net	—			42,873			6,875		—			49,748
Intercompany receivable (payable)	120,061			(155,395		)	35,334		—			—
Investment in subsidiary	249,142			89,718			—		(338,860		)	—
Other assets, net	10,815			325			—		—			11,140
TOTAL ASSETS	$	1,458,399		$	329,567		$	113,691	$	(330,339	)	$	1,571,318
LIABILITIES AND STOCKHOLDERS’   EQUITY
Current liabilities:
Accounts payable and accrued   liabilities	$	109,549		$	28,838		$	6,244	$	—		$	144,631
Current liability for pensions and   other postretirement employee   benefits	9,861			—			—		—			9,861
Total current liabilities	119,410			28,838			6,244		—			154,492
Long-term debt	523,694			—			—		—			523,694
Liability for pensions and other   postretirement employee benefits	215,932			—			—		—			215,932
Other long-term obligations	48,009			465			—		—			48,474
Accrued taxes	73,594			—			870		—			74,464
Deferred tax liabilities (assets)	(7,144		)	51,122			16,859		8,521			69,358
Accumulated other comprehensive loss,   net of tax	(115,265		)	—			—		—			(115,265		)
Stockholders’ equity excluding   accumulated other comprehensive loss	600,169			249,142			89,718		(338,860		)	600,169
TOTAL LIABILITIES AND   STOCKHOLDERS’ EQUITY	$	1,458,399		$	329,567		$	113,691	$	(330,339	)	$	1,571,318

Clearwater Paper Corporation

Condensed Consolidating Statement of Cash Flows

Twelve Months Ended December 31, 2012

(In thousands)	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
CASH FLOWS FROM OPERATING   ACTIVITIES
Net earnings	$	54,754		$	1,487		$	8,837		$	(947	)	$	64,131
Adjustments to reconcile net earnings (loss)   to net cash provided by operating activities:
Depreciation and amortization	48,191			25,578			5,564			—			79,333
Deferred tax expense (benefit)	9,840			5,109			(1,288		)	(791		)	12,870
Equity-based compensation expense	9,703			—			—			—			9,703
Employee benefit plans	9,366			—			—			—			9,366
Changes in working capital, net	25,252			35,234			795			—			61,281
Change in taxes receivable, net	(11,755		)	593			334			—			(10,828		)
Excess tax benefits from equity-based   payment arrangements	(15,837		)	—			—			—			(15,837		)
Change in non-current accrued taxes	3,023			1,771			(559		)	—			4,235
Funding of qualified pension plans	(20,627		)	—			—			—			(20,627		)
Change in restricted cash	769			—			—			—			769
Other, net	3,180			1,117			—			—			4,297
Net cash provided by operating   activities	115,859			70,889			13,683			(1,738		)	198,693
CASH FLOWS FROM INVESTING   ACTIVITIES
Change in short-term investments, net	35,001			—			—			—			35,001
Additions to plant and equipment	(190,296		)	(11,011		)	(2,469		)	—			(203,776		)
Cash paid for acquisitions, net of cash acquired	(9,264		)	—			—			—			(9,264		)
Proceeds from the sale of assets	—			1,035			—			—			1,035
Net cash used for investing activities	(164,559		)	(9,976		)	(2,469		)	—			(177,004		)
CASH FLOWS FROM FINANCING   ACTIVITIES
Purchase of treasury stock	(18,650		)	—			—			—			(18,650		)
Investment from (to) parent	75,208			(61,809		)	(15,137		)	1,738			—
Excess tax benefits from equity-based   payment arrangements	15,837			—			—			—			15,837
Payment of tax withholdings on equity-   based payment arrangements	(13,234		)	—			—			—			(13,234		)
Other, net	(1,502		)	—			—			—			(1,502		)
Net cash provided by (used for) financing   activities	57,659			(61,809		)	(15,137		)	1,738			(17,549		)
Increase (decrease) in cash	8,959			(896		)	(3,923		)	—			4,140
Cash at beginning of period	2,146			901			5,392			—			8,439
Cash at end of period	$	11,105		$	5		$	1,469		$	—		$	12,579

Clearwater Paper Corporation

Condensed Consolidating Statement of Cash Flows

Twelve Months Ended December 31, 2011

(In thousands)	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
CASH FLOWS FROM OPERATING   ACTIVITIES
Net earnings	$	41,724		$	4,038		$	2,061		$	(8,149	)	$	39,674
Adjustments to reconcile net earnings to net   cash provided by (used in) operating   activities:
Depreciation and amortization	45,439			25,956			5,538			—			76,933
Deferred tax expense	7,264			5,473			2,040			—			14,777
Equity-based compensation expense	8,134			—			—			—			8,134
Employee benefit plans	16,897			—			—			—			16,897
Changes in working capital, net	(133,142		)	23,959			23,171			—			(86,012		)
Change in taxes receivable, net	(1,368		)	1,939			(217		)	—			354
Excess tax benefits from equity-based payment arrangements	(885		)	—			—			—			(885		)
Change in non-current accrued taxes	2,453			—			—			—			2,453
Funding of qualified pension plans	(12,498		)	—			—			—			(12,498		)
Change in restricted cash	4,160			—			—			—			4,160
Other, net	3,734			672			2			—			4,408
Net cash (used in) provided by operating   activities	(18,088		)	62,037			32,595			(8,149		)	68,395
CASH FLOWS FROM INVESTING   ACTIVITIES
Change in short-term investments, net	71,094			—			—			—			71,094
Additions to plant and equipment	(117,525		)	(15,654		)	(890		)	—			(134,069		)
Proceeds from the sale of assets	12,826			—			—			—			12,826
Net cash used for investing activities	(33,605		)	(15,654		)	(890		)	—			(50,149		)
CASH FLOWS FROM FINANCING   ACTIVITIES
Repayment of Cellu Tissue debt	—			—			(15,595		)	—			(15,595		)
Purchase of treasury stock	(11,350		)	—			—			—			(11,350		)
Investment from (to) parent	51,621			(47,210		)	(12,560		)	8,149			—
Excess tax benefits from equity-based payment arrangements	885			—			—			—			885
Payment of tax withholdings on equity-based   payment arrangements	(2,400		)	—			—			—			(2,400		)
Other, net	(636		)	—			—			—			(636		)
Net cash provided by (used for) financing activities	38,120			(47,210		)	(28,155		)	8,149			(29,096		)
Effect of exchange rate changes	—			—			361			—			361
(Decrease) increase in cash	(13,573		)	(827		)	3,911			—			(10,489		)
Cash at beginning of period	15,719			1,728			1,481			—			18,928
Cash at end of period	$	2,146		$	901		$	5,392		$	—		$	8,439

XML

Goodwill and Intangible Assets Estimated Future Amortization Expense Related to Intangible Assets (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Acquired Finite-Lived Intangible Assets [Line Items]
2013	$ 6,975
2014	6,663
2015	6,608
2016	6,587
2017	6,587
Thereafter	14,333
Net Balance	$ 47,753	$ 49,748

XML

Financial Results by Quarter Financial Results by Quarter (Tables)

12 Months Ended

Dec. 31, 2012

Financial Results By Quarter [Abstract]

Financial Results by Quarter

Financial Results by Quarter (Unaudited)

	Three Months Ended
	March 31						June 30						September 30						December 31
(In thousands— except per-share amounts)	2012			2011			2012			2011			2012			2011			2012			2011
Net Sales	$	457,798		$	465,830		$	473,572		$	494,627		$	480,233		$	501,125		$	462,701		$	466,391
Costs and expenses:
Cost of sales	(403,076		)	(414,920		)	(398,546		)	(433,358		)	(409,822		)	(448,927		)	(396,428		)	(405,325		)
Selling, general and   administrative   expenses	(29,074		)	(27,364		)	(30,529		)	(27,476		)	(30,649		)	(26,815		)	(30,793		)	(28,343		)
Total operating   costs and expenses	(432,150		)	(442,284		)	(429,075		)	(460,834		)	(440,471		)	(475,742		)	(427,221		)	(433,668		)
Income from   operations	25,648			23,546			44,497			33,793			39,762			25,383			35,480			32,723
Net earnings	$	3,726		$	5,604		$	21,489		$	13,923		$	19,064		$	8,645		$	19,852		$	11,502
Net earnings per   common share
Basic	$	0.16		$	0.25		$	0.92		$	0.60		$	0.82		$	0.38		$	0.86		$	0.51
Diluted	0.16			0.24			0.91			0.59			0.80			0.37			0.84			0.48

XML

Business Combinations (Tables)

12 Months Ended

Dec. 31, 2012

Business Combinations [Abstract]

Allocation of Purchase Price to Net Assets of Cellu Tissue Based On Estimates of Fair Value of Assets and Liabilities

We allocated the purchase price to the net assets of Cellu Tissue acquired in the acquisition based on our estimates of the fair value of assets and liabilities as follows:

(In thousands)	Amount
Current assets	$	128,079
Property, plant and equipment	276,499
Goodwill	229,533
Intangibles	56,400
Other assets	1,500
Assets acquired	692,011
Current liabilities	97,071
Long-term debt, less current portion	287,002
Deferred income taxes	60,221
Other liabilities	732
Liabilities assumed	445,026
Net assets acquired	$	246,985

Unaudited Pro Forma Financial Information

(In thousands; Unaudited)	2010
Pro forma net sales	$	1,902,579
Pro forma net earnings	88,713

XML

Inventories (Tables)

12 Months Ended

Dec. 31, 2012

Inventory Disclosure [Abstract]

Inventories

(In thousands)	2012		2011
Pulp, paperboard and tissue products	$	147,627	$	162,426
Materials and supplies	67,889		62,376
Logs, pulpwood, chips and sawdust	15,950		17,713
Lumber	—		1,556
	$	231,466	$	244,071

XML

Consolidated Statements of Stockholders' Equity (USD $) In Thousands, unless otherwise specified	Total	COMMON STOCK	ADDITIONAL PAID-IN CAPITAL	RETAINED EARNINGS	TREASURY STOCK	ACCUMULATED OTHER COMPREHENSIVE (LOSS) GAIN
Beginning Balance at Dec. 31, 2009	$ 363,736	$ 2	$ 308,617	$ 182,079		$ (126,962)
Shares, Outstanding at Dec. 31, 2009		22,732
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings	73,800			73,800
Performance share and restricted stock unit awards (in shares)		226
Performance share and restricted stock unit awards	2,203		2,203
Pension and OPEB, net of tax of $(137) in 2012, $(11,406) in 2011, and $15,223 in 2010	23,811					23,811
Amortization of deferred taxes related to actuarial gain on other postretirement employee benefit obligations	4,799					4,799
Foreign currency translation adjustment	0
Ending Balance at Dec. 31, 2010	468,349	2	310,820	255,879		(98,352)
Shares, Outstanding at Dec. 31, 2010		22,958
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings	39,674			39,674
Performance share and restricted stock unit awards (in shares)		144
Performance share and restricted stock unit awards	5,144		5,144
Pension and OPEB, net of tax of $(137) in 2012, $(11,406) in 2011, and $15,223 in 2010	(15,810)					(15,810)
Amortization of deferred taxes related to actuarial gain on other postretirement employee benefit obligations	(229)					(229)
Foreign currency translation adjustment	(874)					(874)
Purchase of treasury stock (in shares)					(333)
Purchase of treasury stock	(11,350)				(11,350)
Ending Balance at Dec. 31, 2011	484,904	2	315,964	295,553	(11,350)	(115,265)
Shares, Outstanding at Dec. 31, 2011		23,102			(333)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings	64,131			64,131
Performance share and restricted stock unit awards (in shares)		739
Performance share and restricted stock unit awards	10,937		10,937
Pension and OPEB, net of tax of $(137) in 2012, $(11,406) in 2011, and $15,223 in 2010	(208)					(208)
Amortization of deferred taxes related to actuarial gain on other postretirement employee benefit obligations	(220)					(220)
Foreign currency translation adjustment	0
Purchase of treasury stock (in shares)					(520)
Purchase of treasury stock	(18,650)				(18,650)
Ending Balance at Dec. 31, 2012	$ 540,894	$ 2	$ 326,901	$ 359,684	$ (30,000)	$ (115,693)
Shares, Outstanding at Dec. 31, 2012		23,841			(853)

XML

Property, Plant and Equipment (Tables)

12 Months Ended

Dec. 31, 2012

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

(In thousands)	2012			2011
Machinery and equipment	$	1,866,263		$	1,660,636
Buildings and improvements	299,642			249,801
Land improvements	52,929			51,703
Land	11,827			11,804
Office and other equipment	10,946			6,058
Construction in progress	37,160			98,258
	$	2,278,767		$	2,078,260
Less accumulated depreciation and amortization	(1,401,390		)	(1,342,694		)
	$	877,377		$	735,566

XML

Share Reconciliation of Number of Common Shares Used in Calculating Basic and Diluted Net Earnings Per Share (Details) (USD $)	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012		Dec. 31, 2011		Dec. 31, 2010
Earnings Per Share [Abstract]
Basic average common shares outstanding									23,298,663	[1]	22,913,881	[1]	22,947,400	[1]
Incremental shares due to:
Restricted stock units									24,086		220,457		356,048
Performance shares									291,036		817,946		366,504
Diluted average common shares outstanding									23,613,785		23,952,284		23,669,952
Basic net earnings per common share	$ 0.86	$ 0.82	$ 0.92	$ 0.16	$ 0.51	$ 0.38	$ 0.60	$ 0.25	$ 2.75		$ 1.73		$ 3.22
Diluted net earnings per common share	$ 0.84	$ 0.80	$ 0.91	$ 0.16	$ 0.48	$ 0.37	$ 0.59	$ 0.24	$ 2.72		$ 1.66		$ 3.12
Anti-dilutive shares excluded from calculation									9,992		88,674		0

[1] Basic average common shares outstanding include restricted stock awards that are fully vested, but are deferred for future issuance. See Note 14, "Equity-Based Compensation Plans" for further discussion.

XML

Equity-Based Compensation Plans (Tables)

12 Months Ended

Dec. 31, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Employee Equity-Based Compensation Expense

Employee equity-based compensation expense was recognized as follows:

(In thousands)	2012		2011		2010
Restricted stock units	$	970	$	1,212	$	1,544
Performance shares	7,364		5,446		3,275
Total employee equity-based compensation	$	8,334	$	6,658	$	4,819
Related tax benefit	$	2,886	$	2,290	$	1,582

Summary of Status of Outstanding RSU Awards

A summary of the status of outstanding unvested RSU awards as of December 31, 2012, 2011 and 2010, and changes during those years, is presented below:

	2012				2011				2010
	Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Unvested shares outstanding at
January 1	169,344		$	11.33	437,272		$	6.96	849,512		$	7.04
Granted	52,294		34.59		23,138		38.42		32,428		24.23
Vested	(155,177	)	8.82		(286,486	)	6.88		(425,556	)	8.42
Forfeited	(2,734	)	34.07		(4,580	)	8.64		(19,112	)	7.14
Unvested shares outstanding at   December 31	63,727		35.57		169,344		11.33		437,272		6.96
Aggregate intrinsic value (in   thousands)			$	2,496			$	6,030			$	17,119

Assumption Used in Monte Carlo Model to Estimate Fair Value of Performance Shares Awards

The fair value of performance share awards is estimated using a Monte Carlo simulation model. For performance shares granted in 2012, the following assumptions were used in our Monte Carlo model:

Closing price of stock on date of grant	$	35.30
Risk free rate	0.39		%
Measurement period	3 years
Volatility	46		%

Summary of Status of Outstanding Performance Share Awards

A summary of the status of outstanding performance share awards as of December 31, 2012, 2011 and 2010, and changes during those years, is presented below:

	2012				2011			2010
	Shares		Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Outstanding share awards at   January 1	749,538		$	19.52	638,870	$	13.00	524,588		$	5.64
Granted	150,865		40.24		110,668	57.18		141,522		39.36
Settled	(499,680	)	5.65		—	—		—		—
Forfeited	(8,068	)	42.15		—	—		(27,240	)	8.14
Outstanding share awards at   December 31	392,655		44.67		749,538	19.52		638,870		13.00
Aggregate intrinsic value (in   thousands)			$	15,376		$	26,691			$	25,012

XML

Property, Plant and Equipment Additional Information (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Property, Plant and Equipment [Line Items]
Depreciation	$ 74.6	$ 70.6	$ 46.2
Interest expense, capitalized	12.6	3.7	0.5
Machinery and Equipment
Property, Plant and Equipment [Line Items]
Capital leased assets, gross	$ 23.1	$ 23.1

XML

Amounts Recognized (Pre-tax) in Accumulated Other Comprehensive Loss (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Pension Benefit Plans
Defined Benefit Plan Disclosure [Line Items]
Net loss	$ 177,343	$ 176,439
Prior service cost (credit)	1,414	2,525
Net amount recognized	178,757	178,964
Other Postretirement Employee Benefit Plans
Defined Benefit Plan Disclosure [Line Items]
Net loss	24,408	21,258
Prior service cost (credit)	(6,504)	(3,906)
Net amount recognized	$ 17,904	$ 17,352

XML

Condensed Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Income Statement [Abstract]
Net sales	$ 462,701	$ 480,233	$ 473,572	$ 457,798	$ 466,391	$ 501,125	$ 494,627	$ 465,830	$ 1,874,304	$ 1,927,973	$ 1,372,965
Costs and expenses:
Cost of sales	(396,428)	(409,822)	(398,546)	(403,076)	(405,325)	(448,927)	(433,358)	(414,920)	(1,607,872)	(1,702,530)	(1,173,804)
Selling, general and administrative expenses	(30,793)	(30,649)	(30,529)	(29,074)	(28,343)	(26,815)	(27,476)	(27,364)	(121,045)	(109,998)	(100,394)
Total operating costs and expenses	(427,221)	(440,471)	(429,075)	(432,150)	(433,668)	(475,742)	(460,834)	(442,284)	(1,728,917)	(1,812,528)	(1,274,198)
Income from operations	35,480	39,762	44,497	25,648	32,723	25,383	33,793	23,546	145,387	115,445	98,767
Interest expense, net									(33,796)	(44,809)	(22,571)
Other, net									0	284	0
Earnings before income taxes									111,591	70,920	76,196
Income tax provision									(47,460)	(31,246)	(2,396)
Net earnings	$ 19,852	$ 19,064	$ 21,489	$ 3,726	$ 11,502	$ 8,645	$ 13,923	$ 5,604	$ 64,131	$ 39,674	$ 73,800
Net earnings per common share:
Basic (in dollars per share)	$ 0.86	$ 0.82	$ 0.92	$ 0.16	$ 0.51	$ 0.38	$ 0.60	$ 0.25	$ 2.75	$ 1.73	$ 3.22
Diluted (in dollars per share)	$ 0.84	$ 0.80	$ 0.91	$ 0.16	$ 0.48	$ 0.37	$ 0.59	$ 0.24	$ 2.72	$ 1.66	$ 3.12

XML

Supplemental Guarantor Financial Information (Tables)

12 Months Ended

Dec. 31, 2012

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Clearwater Paper Corporation

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Twelve Months Ended December 31, 2012

				Guarantor			Non-Guarantor
(In thousands)	Issuer			Subsidiaries			Subsidiaries			Eliminations			Total
Net sales	$	1,375,732		$	459,328		$	65,468		$	(26,224	)	$	1,874,304
Cost and expenses:
Cost of sales	(1,149,413		)	(438,106		)	(46,577		)	26,224			(1,607,872		)
Selling, general and administrative expenses	(96,816		)	(19,187		)	(5,042		)	—			(121,045		)
Total operating costs and expenses	(1,246,229		)	(457,293		)	(51,619		)	26,224			(1,728,917		)
Income from operations	129,503			2,035			13,849			—			145,387
Interest expense, net	(33,796		)	—			—			—			(33,796		)
Earnings before income taxes	95,707			2,035			13,849			—			111,591
Income tax provision	(42,440		)	(9,385		)	(5,012		)	9,377			(47,460		)
Equity in income of subsidiary	1,487			8,837			—			(10,324		)	—
Net earnings	$	54,754		$	1,487		$	8,837		$	(947	)	$	64,131
Other comprehensive loss, net of tax	(428		)	—			—			—			(428		)
Comprehensive income	$	54,326		$	1,487		$	8,837		$	(947	)	$	63,703

Clearwater Paper Corporation

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Twelve Months Ended December 31, 2011

				Guarantor			Non-Guarantor
(In thousands)	Issuer			Subsidiaries			Subsidiaries			Eliminations			Total
Net sales	$	1,403,865		$	460,689		$	63,419		$	—		$	1,927,973
Cost and expenses:
Cost of sales	(1,198,955		)	(444,232		)	(59,343		)	—			(1,702,530		)
Selling, general and administrative expenses	(89,019		)	(17,913		)	(3,066		)	—			(109,998		)
Total operating costs and expenses	(1,287,974		)	(462,145		)	(62,409		)	—			(1,812,528		)
Income (loss) from operations	115,891			(1,456		)	1,010			—			115,445
Interest expense, net	(44,187		)	(92		)	(530		)	—			(44,809		)
Other, net	—			—			284			—			284
Earnings before income taxes	71,704			(1,548		)	764			—			70,920
Income tax provision	(34,018		)	3,525			1,297			(2,050		)	(31,246		)
Equity in income of subsidiary	4,038			2,061			—			(6,099		)	—
Net earnings	$	41,724		$	4,038		$	2,061		$	(8,149	)	$	39,674
Other comprehensive loss, net of tax	(16,913		)	—			—			—			(16,913		)
Comprehensive income	$	24,811		$	4,038		$	2,061		$	(8,149	)	$	22,761

Condensed Consolidating Balance Sheet

Clearwater Paper Corporation

Condensed Consolidating Balance Sheet

At December 31, 2012

(In thousands)	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Total
ASSETS
Current assets:
Cash	$	11,105		$	5		$	1,469	$	—		$	12,579
Short-term investments	20,000			—			—		—			20,000
Restricted cash	—			—			—		—			—
Receivables, net	109,129			38,167			8,876		(2,029		)	154,143
Taxes receivable	20,712			116			—		—			20,828
Inventories	171,333			53,648			6,485		—			231,466
Deferred tax assets	11,750			4,400			195		791			17,136
Prepaid expenses	11,441			705			168		—			12,314
Total current assets	355,470			97,041			17,193		(1,238		)	468,466
Property, plant and equipment, net	624,019			205,017			48,341		—			877,377
Goodwill	229,533			—			—		—			229,533
Intangible assets, net	4,531			37,222			6,000		—			47,753
Intercompany receivable (payable)	41,663			(91,343		)	50,471		(791		)	—
Investment in subsidiary	259,466			98,555			—		(358,021		)	—
Other assets, net	9,948			379			—		—			10,327
TOTAL ASSETS	$	1,524,630		$	346,871		$	122,005	$	(360,050	)	$	1,633,456
LIABILITIES AND STOCKHOLDERS’   EQUITY
Current liabilities:
Accounts payable and accrued   liabilities	$	132,413		$	27,645		$	7,567	$	(2,029	)	$	165,596
Current liability for pensions and   other postretirement employee   benefits	9,137			—			—		—			9,137
Total current liabilities	141,550			27,645			7,567		(2,029		)	174,733
Long-term debt	523,933			—			—		—			523,933
Liability for pensions and other   postretirement employee benefits	204,163			—			—		—			204,163
Other long-term obligations	50,602			308			—		—			50,910
Accrued taxes	76,617			1,771			311		—			78,699
Deferred tax liabilities (assets)	(13,129		)	57,681			15,572		—			60,124
Accumulated other comprehensive loss,   net of tax	(115,693		)	—			—		—			(115,693		)
Stockholders’ equity excluding   accumulated other comprehensive loss	656,587			259,466			98,555		(358,021		)	656,587
TOTAL LIABILITIES AND   STOCKHOLDERS’ EQUITY	$	1,524,630		$	346,871		$	122,005	$	(360,050	)	$	1,633,456

Clearwater Paper Corporation

Condensed Consolidating Balance Sheet

At December 31, 2011

(In thousands)	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Total
ASSETS
Current assets:
Cash	$	2,146		$	901		$	5,392	$	—		$	8,439
Short-term investments	55,001			—			—		—			55,001
Restricted cash	769			—			—		—			769
Receivables, net	100,600			66,580			9,009		—			176,189
Taxes receivable	8,957			709			334		—			10,000
Inventories	175,446			62,234			6,391		—			244,071
Deferred tax assets	27,801			2,950			194		8,521			39,466
Prepaid expenses	9,756			1,437			203		—			11,396
Total current assets	380,476			134,811			21,523		8,521			545,331
Property, plant and equipment, net	468,372			217,235			49,959		—			735,566
Goodwill	229,533			—			—		—			229,533
Intangible assets, net	—			42,873			6,875		—			49,748
Intercompany receivable (payable)	120,061			(155,395		)	35,334		—			—
Investment in subsidiary	249,142			89,718			—		(338,860		)	—
Other assets, net	10,815			325			—		—			11,140
TOTAL ASSETS	$	1,458,399		$	329,567		$	113,691	$	(330,339	)	$	1,571,318
LIABILITIES AND STOCKHOLDERS’   EQUITY
Current liabilities:
Accounts payable and accrued   liabilities	$	109,549		$	28,838		$	6,244	$	—		$	144,631
Current liability for pensions and   other postretirement employee   benefits	9,861			—			—		—			9,861
Total current liabilities	119,410			28,838			6,244		—			154,492
Long-term debt	523,694			—			—		—			523,694
Liability for pensions and other   postretirement employee benefits	215,932			—			—		—			215,932
Other long-term obligations	48,009			465			—		—			48,474
Accrued taxes	73,594			—			870		—			74,464
Deferred tax liabilities (assets)	(7,144		)	51,122			16,859		8,521			69,358
Accumulated other comprehensive loss,   net of tax	(115,265		)	—			—		—			(115,265		)
Stockholders’ equity excluding   accumulated other comprehensive loss	600,169			249,142			89,718		(338,860		)	600,169
TOTAL LIABILITIES AND   STOCKHOLDERS’ EQUITY	$	1,458,399		$	329,567		$	113,691	$	(330,339	)	$	1,571,318

Condensed Consolidating Statement of Cash Flows

Clearwater Paper Corporation

Condensed Consolidating Statement of Cash Flows

Twelve Months Ended December 31, 2012

(In thousands)	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
CASH FLOWS FROM OPERATING   ACTIVITIES
Net earnings	$	54,754		$	1,487		$	8,837		$	(947	)	$	64,131
Adjustments to reconcile net earnings (loss)   to net cash provided by operating activities:
Depreciation and amortization	48,191			25,578			5,564			—			79,333
Deferred tax expense (benefit)	9,840			5,109			(1,288		)	(791		)	12,870
Equity-based compensation expense	9,703			—			—			—			9,703
Employee benefit plans	9,366			—			—			—			9,366
Changes in working capital, net	25,252			35,234			795			—			61,281
Change in taxes receivable, net	(11,755		)	593			334			—			(10,828		)
Excess tax benefits from equity-based   payment arrangements	(15,837		)	—			—			—			(15,837		)
Change in non-current accrued taxes	3,023			1,771			(559		)	—			4,235
Funding of qualified pension plans	(20,627		)	—			—			—			(20,627		)
Change in restricted cash	769			—			—			—			769
Other, net	3,180			1,117			—			—			4,297
Net cash provided by operating   activities	115,859			70,889			13,683			(1,738		)	198,693
CASH FLOWS FROM INVESTING   ACTIVITIES
Change in short-term investments, net	35,001			—			—			—			35,001
Additions to plant and equipment	(190,296		)	(11,011		)	(2,469		)	—			(203,776		)
Cash paid for acquisitions, net of cash acquired	(9,264		)	—			—			—			(9,264		)
Proceeds from the sale of assets	—			1,035			—			—			1,035
Net cash used for investing activities	(164,559		)	(9,976		)	(2,469		)	—			(177,004		)
CASH FLOWS FROM FINANCING   ACTIVITIES
Purchase of treasury stock	(18,650		)	—			—			—			(18,650		)
Investment from (to) parent	75,208			(61,809		)	(15,137		)	1,738			—
Excess tax benefits from equity-based   payment arrangements	15,837			—			—			—			15,837
Payment of tax withholdings on equity-   based payment arrangements	(13,234		)	—			—			—			(13,234		)
Other, net	(1,502		)	—			—			—			(1,502		)
Net cash provided by (used for) financing   activities	57,659			(61,809		)	(15,137		)	1,738			(17,549		)
Increase (decrease) in cash	8,959			(896		)	(3,923		)	—			4,140
Cash at beginning of period	2,146			901			5,392			—			8,439
Cash at end of period	$	11,105		$	5		$	1,469		$	—		$	12,579

Clearwater Paper Corporation

Condensed Consolidating Statement of Cash Flows

Twelve Months Ended December 31, 2011

(In thousands)	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
CASH FLOWS FROM OPERATING   ACTIVITIES
Net earnings	$	41,724		$	4,038		$	2,061		$	(8,149	)	$	39,674
Adjustments to reconcile net earnings to net   cash provided by (used in) operating   activities:
Depreciation and amortization	45,439			25,956			5,538			—			76,933
Deferred tax expense	7,264			5,473			2,040			—			14,777
Equity-based compensation expense	8,134			—			—			—			8,134
Employee benefit plans	16,897			—			—			—			16,897
Changes in working capital, net	(133,142		)	23,959			23,171			—			(86,012		)
Change in taxes receivable, net	(1,368		)	1,939			(217		)	—			354
Excess tax benefits from equity-based payment arrangements	(885		)	—			—			—			(885		)
Change in non-current accrued taxes	2,453			—			—			—			2,453
Funding of qualified pension plans	(12,498		)	—			—			—			(12,498		)
Change in restricted cash	4,160			—			—			—			4,160
Other, net	3,734			672			2			—			4,408
Net cash (used in) provided by operating   activities	(18,088		)	62,037			32,595			(8,149		)	68,395
CASH FLOWS FROM INVESTING   ACTIVITIES
Change in short-term investments, net	71,094			—			—			—			71,094
Additions to plant and equipment	(117,525		)	(15,654		)	(890		)	—			(134,069		)
Proceeds from the sale of assets	12,826			—			—			—			12,826
Net cash used for investing activities	(33,605		)	(15,654		)	(890		)	—			(50,149		)
CASH FLOWS FROM FINANCING   ACTIVITIES
Repayment of Cellu Tissue debt	—			—			(15,595		)	—			(15,595		)
Purchase of treasury stock	(11,350		)	—			—			—			(11,350		)
Investment from (to) parent	51,621			(47,210		)	(12,560		)	8,149			—
Excess tax benefits from equity-based payment arrangements	885			—			—			—			885
Payment of tax withholdings on equity-based   payment arrangements	(2,400		)	—			—			—			(2,400		)
Other, net	(636		)	—			—			—			(636		)
Net cash provided by (used for) financing activities	38,120			(47,210		)	(28,155		)	8,149			(29,096		)
Effect of exchange rate changes	—			—			361			—			361
(Decrease) increase in cash	(13,573		)	(827		)	3,911			—			(10,489		)
Cash at beginning of period	15,719			1,728			1,481			—			18,928
Cash at end of period	$	2,146		$	901		$	5,392		$	—		$	8,439

XML

Supplemental Guarantor Financial Information Condensed Consolidating Statement of Operations and Comprehensive Income (Loss) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Condensed Financial Statements, Captions [Line Items]
Net sales	$ 462,701	$ 480,233	$ 473,572	$ 457,798	$ 466,391	$ 501,125	$ 494,627	$ 465,830	$ 1,874,304	$ 1,927,973	$ 1,372,965
Cost and expenses:
Cost of sales	(396,428)	(409,822)	(398,546)	(403,076)	(405,325)	(448,927)	(433,358)	(414,920)	(1,607,872)	(1,702,530)	(1,173,804)
Selling, general and administrative expenses	(30,793)	(30,649)	(30,529)	(29,074)	(28,343)	(26,815)	(27,476)	(27,364)	(121,045)	(109,998)	(100,394)
Total operating costs and expenses	(427,221)	(440,471)	(429,075)	(432,150)	(433,668)	(475,742)	(460,834)	(442,284)	(1,728,917)	(1,812,528)	(1,274,198)
Income from operations	35,480	39,762	44,497	25,648	32,723	25,383	33,793	23,546	145,387	115,445	98,767
Interest expense, net									(33,796)	(44,809)	(22,571)
Other, net									0	284	0
Earnings before income taxes									111,591	70,920	76,196
Income tax (provision) benefit									(47,460)	(31,246)	(2,396)
Net earnings	19,852	19,064	21,489	3,726	11,502	8,645	13,923	5,604	64,131	39,674	73,800
Other comprehensive income, net of tax									(428)	(16,913)	28,610
Comprehensive income									63,703	22,761	102,410
Issuer
Condensed Financial Statements, Captions [Line Items]
Net sales									1,375,732	1,403,865
Cost and expenses:
Cost of sales									(1,149,413)	(1,198,955)
Selling, general and administrative expenses									(96,816)	(89,019)
Total operating costs and expenses									(1,246,229)	(1,287,974)
Income from operations									129,503	115,891
Interest expense, net									(33,796)	(44,187)
Equity in income (loss) of subsidiary									1,487	4,038
Earnings before income taxes									95,707	71,704
Income tax (provision) benefit									(42,440)	(34,018)
Net earnings									54,754	41,724
Other comprehensive income, net of tax									(428)	(16,913)
Comprehensive income									54,326	24,811
Guarantor Subsidiaries
Condensed Financial Statements, Captions [Line Items]
Net sales									459,328	460,689
Cost and expenses:
Cost of sales									(438,106)	(444,232)
Selling, general and administrative expenses									(19,187)	(17,913)
Total operating costs and expenses									(457,293)	(462,145)
Income from operations									2,035	(1,456)
Interest expense, net										(92)
Equity in income (loss) of subsidiary									8,837	2,061
Earnings before income taxes									2,035	(1,548)
Income tax (provision) benefit									(9,385)	3,525
Net earnings									1,487	4,038
Comprehensive income									1,487	4,038
Non-Guarantor Subsidiaries
Condensed Financial Statements, Captions [Line Items]
Net sales									65,468	63,419
Cost and expenses:
Cost of sales									(46,577)	(59,343)
Selling, general and administrative expenses									(5,042)	(3,066)
Total operating costs and expenses									(51,619)	(62,409)
Income from operations									13,849	1,010
Interest expense, net										(530)
Other, net										284
Earnings before income taxes									13,849	764
Income tax (provision) benefit									(5,012)	1,297
Net earnings									8,837	2,061
Comprehensive income									8,837	2,061
Eliminations
Condensed Financial Statements, Captions [Line Items]
Net sales									(26,224)
Cost and expenses:
Cost of sales									26,224
Total operating costs and expenses									26,224	0
Income from operations									0	0
Equity in income (loss) of subsidiary									(10,324)	(6,099)
Earnings before income taxes									0	0
Income tax (provision) benefit									9,377	(2,050)
Net earnings									(947)	(8,149)
Comprehensive income									$ (947)	$ (8,149)

XML

Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Dec. 31, 2012	Dec. 31, 2011
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, authorized (in shares)	5,000,000	5,000,000
Preferred stock, shares issued (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.00001	$ 0.00001
Common stock, authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	23,840,683	23,101,710
Treasury stock, shares (in shares)	853,470	333,300

XML

Financial Results by Quarter Financial Results by Quarter (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Net sales	$ 462,701	$ 480,233	$ 473,572	$ 457,798	$ 466,391	$ 501,125	$ 494,627	$ 465,830	$ 1,874,304	$ 1,927,973	$ 1,372,965
Costs and expenses:
Cost of sales	(396,428)	(409,822)	(398,546)	(403,076)	(405,325)	(448,927)	(433,358)	(414,920)	(1,607,872)	(1,702,530)	(1,173,804)
Selling, general and administrative expenses	(30,793)	(30,649)	(30,529)	(29,074)	(28,343)	(26,815)	(27,476)	(27,364)	(121,045)	(109,998)	(100,394)
Total operating costs and expenses	(427,221)	(440,471)	(429,075)	(432,150)	(433,668)	(475,742)	(460,834)	(442,284)	(1,728,917)	(1,812,528)	(1,274,198)
Income from operations	35,480	39,762	44,497	25,648	32,723	25,383	33,793	23,546	145,387	115,445	98,767
Net earnings	$ 19,852	$ 19,064	$ 21,489	$ 3,726	$ 11,502	$ 8,645	$ 13,923	$ 5,604	$ 64,131	$ 39,674	$ 73,800
Net earnings per common share:
Basic (in dollars per share)	$ 0.86	$ 0.82	$ 0.92	$ 0.16	$ 0.51	$ 0.38	$ 0.60	$ 0.25	$ 2.75	$ 1.73	$ 3.22
Diluted (in dollars per share)	$ 0.84	$ 0.80	$ 0.91	$ 0.16	$ 0.48	$ 0.37	$ 0.59	$ 0.24	$ 2.72	$ 1.66	$ 3.12

XML

Provision (Benefit) for Income Taxes (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Current
Federal	$ 27,724	$ 9,619	$ 12,331
State	6,637	6,880	5,056
Foreign	229	(30)	0
Current Income Tax Expense (Benefit)	34,590	16,469	17,387
Deferred
Federal	16,243	12,865	(16,371)
State	(3,180)	1,931	1,380
Foreign	(193)	(19)	0
Deferred tax expense	12,870	14,777	(14,991)
Income tax provision	$ 47,460	$ 31,246	$ 2,396

XML

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Abstract]

Earnings (Loss) Before Income Taxes Composition in Each Tax Jurisdiction

Earnings (loss) before income taxes is comprised of the following amounts in each tax jurisdiction:

(In thousands)	2012		2011			2010
United States	$	111,278	$	72,156		$	76,196
Canada	313		(1,236		)	—
Earnings before income taxes	$	111,591	$	70,920		$	76,196

Provision (Benefit) for Income Taxes

The income tax provision is comprised of the following:

(In thousands)	2012			2011			2010
Current
Federal	$	27,724		$	9,619		$	12,331
State	6,637			6,880			5,056
Foreign	229			(30		)	—
	34,590			16,469			17,387
Deferred
Federal	16,243			12,865			(16,371		)
State	(3,180		)	1,931			1,380
Foreign	(193		)	(19		)	—
	12,870			14,777			(14,991		)
Income tax provision	$	47,460		$	31,246		$	2,396

Income Tax Reconciliation

The income tax provision differs from the amount computed by applying the statutory federal income tax rate of 35.0% to earnings before income taxes due to the following:

(In thousands)	2012			2011			2010
Computed expected tax provision	$	39,063		$	24,822		$	26,668
State and local taxes, net of federal income tax impact	4,398			1,482			4,157
Adjustment for state deferred tax rate	(742		)	2,916			—
State investment tax credits	(9,077		)	—			(1,649		)
Federal credits and net operating losses	4,121			(412		)	(25,153		)
Federal manufacturing deduction	(3,288		)	(2,443		)	(2,993		)
Uncertain tax positions	4,801			2,610			(3,796		)
Patient Protection and Affordable Care Act	—			—			3,290
Non-deductible acquisition costs	—			(1,215		)	1,263
Change in valuation allowances	6,932			2,796			—
U.S. tax provision on foreign operations	(33		)	365			—
Other	1,285			325			609
Income tax provision	$	47,460		$	31,246		$	2,396
Effective tax rate	42.5		%	44.1		%	3.1		%

Tax Effects of Significant Temporary Differences Creating Deferred Tax Assets and Liabilities

(In thousands)	2012			2011
Deferred tax assets:
Employee benefits	$	8,630		$	7,930
Postretirement employee benefits	52,751			53,862
Incentive compensation	9,130			7,949
Pensions	31,140			28,081
Federal and state credit carryforwards	20,447			30,809
Net operating losses	7,649			16,749
Federal benefit from state taxes resulting from uncertain tax positions	5,595			5,595
Other	5,757			6,492
Total deferred tax assets	$	141,099		$	157,467
Valuation allowance	(14,957		)	(8,025		)
Deferred tax assets, net of valuation allowance	$	126,142		$	149,442
Deferred tax liabilities:
Plant and equipment	$	(157,973	)	$	(166,885	)
Intangible assets	(10,843		)	(10,879		)
Inventories	(314		)	(1,570		)
Total deferred tax liabilities	(169,130		)	(179,334		)
Net deferred tax liabilities	$	(42,988	)	$	(29,892	)

Net Deferred Tax Assets (Liabilities)

Net deferred tax assets (liabilities) consist of:

(In thousands)	2012			2011
Current deferred tax assets	$	20,473		$	41,237
Current deferred tax liabilities	(3,337		)	(1,771		)
Net current deferred tax assets	17,136			39,466
Non-current deferred tax assets	110,762			108,205
Non-current deferred tax liabilities	(170,886		)	(177,563		)
Net non-current deferred tax liabilities	(60,124		)	(69,358		)
Net deferred tax liabilities	$	(42,988	)	$	(29,892	)

Tax Years Subject to Examination by Major Taxing Jurisdictions

Tax years subject to examination by major taxing jurisdictions are as follows:

Jurisdiction	Years
United States	2008 - 2012
Canada	2008 - 2012
Arkansas	2009 - 2012
California	2008 - 2012
Georgia	2009 - 2012
Idaho	2008 - 2012
Illinois	2009 - 2012
Wisconsin	2008 - 2012

Tax Credits and Losses Subject to Expiration by Major Taxing Jurisdictions

Tax credits and losses subject to expiration by major taxing jurisdictions are as follows (in thousands):

Jurisdiction	Gross Values		Years
United States
Net operating losses	$	7,143	2030
Foreign tax credits	3,832		2016 - 2019
Other federal tax credits	644		2026 - 2030
Connecticut tax losses	59,681		2018 - 2031
Georgia tax losses	9,130		2028 - 2031
Idaho tax credits	4,954		2013 - 2026
North Carolina tax credits	16,142		2015 - 2016
Oklahoma tax losses	9,403		2030 -2032

Roll Forward of Unrecognized Tax Benefits and Associated Interest and Penalties Included in the Accrued Taxes line item in non-current liabilities

The following presents a roll forward of our unrecognized tax benefits and associated interest and penalties, as included in the Accrued Taxes line item in non-current liabilities in our Consolidated Balance Sheets.

(In thousands)	Gross Unrecognized Tax Benefits, Excluding Interest and Penalties			Interest and Penalties		Total Gross Unrecognized Tax Benefits
Balance at January 1, 2011	$	69,633		$	2,378	$	72,011
(Decrease) increase in prior year tax positions	(174		)	2,435		2,261
Increase in current year tax positions	222			—		222
Reductions as a result of a lapse of the applicable statute of   limitations	(30		)	—		(30		)
Balance at December 31, 2011	$	69,651		$	4,813	$	74,464
(Decrease) increase in prior year tax positions	(731		)	1,882		1,151
Increase in current year tax positions	154			—		154
Increase in prior year tax positions	3,275			—		3,275
Reductions as a result of a lapse of the applicable statute of   limitations	(345		)	—		(345		)
Balance at December 31, 2012	$	72,004		$	6,695	$	78,699

XML

Tax Credits and Losses Subject to Expiration by Major Jurisdictions (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012
Connecticut tax losses
Tax Credit Carryforward [Line Items]
Operating loss and tax credit carryforwards	59,681
Connecticut tax losses | Maximum
Tax Credit Carryforward [Line Items]
Tax credit carryforward, expiration date	2031
Connecticut tax losses | Minimum
Tax Credit Carryforward [Line Items]
Tax credit carryforward, expiration date	2018
Georgia tax losses
Tax Credit Carryforward [Line Items]
Operating loss and tax credit carryforwards	9,130
Georgia tax losses | Maximum
Tax Credit Carryforward [Line Items]
Tax credit carryforward, expiration date	2031
Georgia tax losses | Minimum
Tax Credit Carryforward [Line Items]
Tax credit carryforward, expiration date	2028
Idaho tax credits
Tax Credit Carryforward [Line Items]
Operating loss and tax credit carryforwards	4,954
Idaho tax credits | Maximum
Tax Credit Carryforward [Line Items]
Tax credit carryforward, expiration date	2026
Idaho tax credits | Minimum
Tax Credit Carryforward [Line Items]
Tax credit carryforward, expiration date	2013
North Carolina tax credits
Tax Credit Carryforward [Line Items]
Operating loss and tax credit carryforwards	16,142
North Carolina tax credits | Maximum
Tax Credit Carryforward [Line Items]
Tax credit carryforward, expiration date	2016
North Carolina tax credits | Minimum
Tax Credit Carryforward [Line Items]
Tax credit carryforward, expiration date	2015
Oklahoma tax losses
Tax Credit Carryforward [Line Items]
Operating loss and tax credit carryforwards	9,403
Oklahoma tax losses | Maximum
Tax Credit Carryforward [Line Items]
Tax credit carryforward, expiration date	2032
Oklahoma tax losses | Minimum
Tax Credit Carryforward [Line Items]
Tax credit carryforward, expiration date	2030
Net operating losses | Internal Revenue Service (IRS)
Tax Credit Carryforward [Line Items]
Operating loss and tax credit carryforwards	7,143
Net operating losses | Internal Revenue Service (IRS) | Maximum
Tax Credit Carryforward [Line Items]
Tax credit carryforward, expiration date	2030
Foreign tax credits | Internal Revenue Service (IRS)
Tax Credit Carryforward [Line Items]
Operating loss and tax credit carryforwards	3,832
Foreign tax credits | Internal Revenue Service (IRS) | Maximum
Tax Credit Carryforward [Line Items]
Tax credit carryforward, expiration date	2019
Foreign tax credits | Internal Revenue Service (IRS) | Minimum
Tax Credit Carryforward [Line Items]
Tax credit carryforward, expiration date	2016
Other federal tax credits | Internal Revenue Service (IRS)
Tax Credit Carryforward [Line Items]
Operating loss and tax credit carryforwards	644
Other federal tax credits | Internal Revenue Service (IRS) | Maximum
Tax Credit Carryforward [Line Items]
Tax credit carryforward, expiration date	2030
Other federal tax credits | Internal Revenue Service (IRS) | Minimum
Tax Credit Carryforward [Line Items]
Tax credit carryforward, expiration date	2026

XML

Earnings Per Share

12 Months Ended

Dec. 31, 2012

Earnings Per Share [Abstract]

Earnings Per Share

NOTE 13 Earnings Per Share

Basic and diluted earnings per common share are computed by dividing net earnings by the weighted average number of common shares outstanding and by the weighted average number of dilutive potential common shares, in accordance with accounting guidance related to earnings per share. The following table reconciles the number of common shares used in calculating the basic and diluted net earnings per share:

	2012		2011		2010
Basic average common shares outstanding1	23,298,663		22,913,881		22,947,400
Incremental shares due to:
Restricted stock units	24,086		220,457		356,048
Performance shares	291,036		817,946		366,504
Diluted average common shares outstanding	23,613,785		23,952,284		23,669,952
Basic net earnings per common share	$	2.75	$	1.73	$	3.22
Diluted net earnings per common share	2.72		1.66		3.12
Anti-dilutive shares excluded from calculation	9,992		88,674		—

¹   Basic average common shares outstanding include restricted stock awards that are fully vested, but are deferred for future issuance. See Note 14, "Equity-Based Compensation Plans" for further discussion.

XML

Accounts Payable and Accrued Liabilities (Tables)

12 Months Ended

Dec. 31, 2012

Accounts Payable and Accrued Liabilities [Abstract]

Accounts Payable and Accrued Liabilities

Accounts Payable and Accrued Liabilities

(In thousands)	2012		2011
Trade accounts payable	$	75,949	$	65,040
Accrued wages, salaries and employee benefits	42,491		37,430
Accrued taxes on income	9,428		2,204
Accrued utilities	8,205		7,265
Accrued taxes other than income taxes payable	6,993		11,257
Accrued interest	5,242		5,245
Accrued discounts and allowances	4,785		5,588
Accrued transportation	4,417		3,801
Other	8,086		6,801
	$	165,596	$	144,631

XML

Supplemental Guarantor Financial Information Condensed Consolidating Statement of Cash Flows (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss)	$ 64,131	$ 39,674	$ 73,800
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Depreciation and amortization	79,333	76,933	47,728
Deferred tax expense (benefit)	12,870	14,777	(14,991)
Equity-based compensation expense	9,703	8,134	8,518
Employee benefit plans	9,366	16,897	15,011
Changes in working capital, net	61,281	(86,012)	(5,304)
Change in taxes receivable, net	(10,828)	354	93,754
Excess tax benefits from equity-based payment arrangements	(15,837)	(885)	(855)
Change in non-current accrued taxes	4,235	2,453	(4,271)
Funding of qualified pension plans	(20,627)	(12,498)	(25,100)
Change in restricted cash	769	4,160	(3,637)
Other, net	4,297	4,408	938
Net cash provided by operating activities	198,693	68,395	185,591
CASH FLOWS FROM INVESTING ACTIVITIES
Change in short-term investments, net	35,001	71,094	61,926
Additions to plant and equipment	(203,776)	(134,069)	(46,086)
Cash paid for acquisitions, net of cash acquired	(9,264)	0	(243,778)
Proceeds from the sale of assets	1,035	12,826
Net cash used for investing activities	(177,004)	(50,149)	(227,938)
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of treasury stock	(18,650)	(11,350)	0
Repayment of Cellu Tissue debt	0	(15,595)	(304,667)
Investment (to) from Parent	0	0
Excess tax benefits from equity-based payment arrangements	15,837	885	855
Payment of tax withholdings on equity-based payment arrangements	(13,234)	(2,400)	(3,470)
Other, net	(1,502)	(636)	(1,767)
Net cash (used for) provided by financing activities	(17,549)	(29,096)	58,451
Effect of exchange rate changes	0	361	0
Increase (decrease) in cash	4,140	(10,489)	16,104
Cash at beginning of period	8,439	18,928	2,824
Cash at end of period	12,579	8,439	18,928
Issuer
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss)	54,754	41,724
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Depreciation and amortization	48,191	45,439
Deferred tax expense (benefit)	9,840	7,264
Equity-based compensation expense	9,703	8,134
Employee benefit plans	9,366	16,897
Changes in working capital, net	25,252	(133,142)
Change in taxes receivable, net	(11,755)	(1,368)
Excess tax benefits from equity-based payment arrangements	(15,837)	(885)
Change in non-current accrued taxes	3,023	2,453
Funding of qualified pension plans	(20,627)	(12,498)
Change in restricted cash	769	4,160
Other, net	3,180	3,734
Net cash provided by operating activities	115,859	(18,088)
CASH FLOWS FROM INVESTING ACTIVITIES
Change in short-term investments, net	35,001	71,094
Additions to plant and equipment	(190,296)	(117,525)
Cash paid for acquisitions, net of cash acquired	(9,264)
Proceeds from the sale of assets	0	12,826
Net cash used for investing activities	(164,559)	(33,605)
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of treasury stock	(18,650)	(11,350)
Repayment of Cellu Tissue debt		0
Investment (to) from Parent	75,208	51,621
Excess tax benefits from equity-based payment arrangements	15,837	885
Payment of tax withholdings on equity-based payment arrangements	(13,234)	(2,400)
Other, net	(1,502)	(636)
Net cash (used for) provided by financing activities	57,659	38,120
Effect of exchange rate changes		0
Increase (decrease) in cash	8,959	(13,573)
Cash at beginning of period	2,146	15,719
Cash at end of period	11,105	2,146
Guarantor Subsidiaries
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss)	1,487	4,038
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Depreciation and amortization	25,578	25,956
Deferred tax expense (benefit)	5,109	5,473
Equity-based compensation expense	0	0
Employee benefit plans	0	0
Changes in working capital, net	35,234	23,959
Change in taxes receivable, net	593	1,939
Excess tax benefits from equity-based payment arrangements	0	0
Change in non-current accrued taxes	1,771	0
Funding of qualified pension plans	0	0
Change in restricted cash	0	0
Other, net	1,117	672
Net cash provided by operating activities	70,889	62,037
CASH FLOWS FROM INVESTING ACTIVITIES
Change in short-term investments, net	0	0
Additions to plant and equipment	(11,011)	(15,654)
Cash paid for acquisitions, net of cash acquired	0
Proceeds from the sale of assets	1,035	0
Net cash used for investing activities	(9,976)	(15,654)
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of treasury stock	0	0
Repayment of Cellu Tissue debt		0
Investment (to) from Parent	(61,809)	(47,210)
Excess tax benefits from equity-based payment arrangements	0	0
Payment of tax withholdings on equity-based payment arrangements	0	0
Other, net	0	0
Net cash (used for) provided by financing activities	(61,809)	(47,210)
Effect of exchange rate changes		0
Increase (decrease) in cash	(896)	(827)
Cash at beginning of period	901	1,728
Cash at end of period	5	901
Non-Guarantor Subsidiaries
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss)	8,837	2,061
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Depreciation and amortization	5,564	5,538
Deferred tax expense (benefit)	(1,288)	2,040
Equity-based compensation expense	0	0
Employee benefit plans	0	0
Changes in working capital, net	795	23,171
Change in taxes receivable, net	334	(217)
Excess tax benefits from equity-based payment arrangements	0	0
Change in non-current accrued taxes	(559)	0
Funding of qualified pension plans	0	0
Change in restricted cash	0	0
Other, net	0	2
Net cash provided by operating activities	13,683	32,595
CASH FLOWS FROM INVESTING ACTIVITIES
Change in short-term investments, net	0	0
Additions to plant and equipment	(2,469)	(890)
Cash paid for acquisitions, net of cash acquired	0
Proceeds from the sale of assets	0	0
Net cash used for investing activities	(2,469)	(890)
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of treasury stock	0	0
Repayment of Cellu Tissue debt		(15,595)
Investment (to) from Parent	(15,137)	(12,560)
Excess tax benefits from equity-based payment arrangements	0	0
Payment of tax withholdings on equity-based payment arrangements	0	0
Other, net	0	0
Net cash (used for) provided by financing activities	(15,137)	(28,155)
Effect of exchange rate changes		361
Increase (decrease) in cash	(3,923)	3,911
Cash at beginning of period	5,392	1,481
Cash at end of period	1,469	5,392
Eliminations
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss)	(947)	(8,149)
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Depreciation and amortization	0	0
Deferred tax expense (benefit)	(791)	0
Equity-based compensation expense	0	0
Employee benefit plans	0	0
Changes in working capital, net	0	0
Change in taxes receivable, net	0	0
Excess tax benefits from equity-based payment arrangements	0	0
Change in non-current accrued taxes	0	0
Funding of qualified pension plans	0	0
Change in restricted cash	0	0
Other, net	0	0
Net cash provided by operating activities	(1,738)	(8,149)
CASH FLOWS FROM INVESTING ACTIVITIES
Change in short-term investments, net	0	0
Additions to plant and equipment	0	0
Cash paid for acquisitions, net of cash acquired	0
Proceeds from the sale of assets	0	0
Net cash used for investing activities	0	0
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of treasury stock	0	0
Repayment of Cellu Tissue debt		0
Investment (to) from Parent	1,738	8,149
Excess tax benefits from equity-based payment arrangements	0	0
Payment of tax withholdings on equity-based payment arrangements	0	0
Other, net	0	0
Net cash (used for) provided by financing activities	1,738	8,149
Effect of exchange rate changes		0
Increase (decrease) in cash	0	0
Cash at beginning of period	0	0
Cash at end of period	$ 0	$ 0

XML

Fair Value Measurements

12 Months Ended

Dec. 31, 2012

Fair Value Disclosures [Abstract]

Fair Value Measurements

NOTE 15 Fair Value Measurements

The estimated fair values of our financial instruments as of our balance sheet dates are presented below:

	2012				2011
(In thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Cash, short-term investments and restricted cash (Level 1)	$	34,079	$	34,079	$	64,209	$	64,209
Long-term debt (Level 1)	523,933		572,625		523,694		556,313

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.

Cash, short-term investments, restricted cash and long-term debt are the only items measured at fair value on a recurring basis. The carrying amount of our short-term investments approximates fair value due to their very short maturity periods, and such investments are at or near market yields.

We do not have any financial assets measured at fair value on a nonrecurring basis. Nonfinancial assets measured at fair value on a nonrecurring basis include items such as long-lived assets held and used that are measured at fair value resulting from impairment, if deemed necessary.

XML

Debt - Additional Information (Details) (USD $)	12 Months Ended			2 Months Ended			0 Months Ended			0 Months Ended	12 Months Ended			12 Months Ended				1 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Feb. 22, 2013 Senior Notes Subsequent Event	Jan. 21, 2013 Senior Notes Subsequent Event	Feb. 01, 2012 Senior Notes Subsequent Event	Jan. 23, 2013 Senior Notes Prior to February 1, 2016 Subsequent Event	Jan. 21, 2013 Senior Notes Prior to February 1, 2016 Subsequent Event	Jan. 21, 2013 Senior Notes Before February First, 2018 Subsequent Event	Oct. 22, 2010 Senior Notes Due 2018	Dec. 31, 2010 Senior Notes Due 2018 Senior Notes Prior to November 1, 2013	Oct. 22, 2010 Senior Notes Due 2018 Senior Notes Prior to November 1, 2013	Oct. 22, 2010 Senior Notes Due 2018 Senior Notes Before November 1, 2014	Dec. 31, 2009 Senior Notes Due 2016	Jun. 30, 2009 Senior Notes Due 2016	Dec. 31, 2009 Senior Notes Due 2016 Senior Notes Prior to June 15, 2013	Sep. 30, 2011 Bonds Cellu Tissue Holdings Inc	Nov. 26, 2008 Revolving Credit Facility	Dec. 31, 2012 Revolving Credit Facility	Dec. 31, 2012 Revolving Credit Facility LIBOR	Dec. 31, 2012 Revolving Credit Facility LIBOR Minimum	Dec. 31, 2012 Revolving Credit Facility LIBOR Maximum	Dec. 31, 2012 Revolving Credit Facility Federal funds rate Maximum	Dec. 31, 2012 Revolving Credit Facility LIBOR for a 30-day interest period Maximum	Dec. 31, 2012 Revolving Credit Facility Base Rate Minimum	Dec. 31, 2012 Revolving Credit Facility Base Rate Maximum
Debt Instrument [Line Items]
Debt instrument, principal amount					$ 275,000,000					$ 375,000,000					$ 150,000,000
Debt instrument, maturity date										Nov. 01, 2018				Jun. 15, 2016
Debt instrument, interest rate						4.50%				7.125%					10.625%
Net proceeds from long-term debt	0	0	367,500,000							367,500,000
Percentage of the Notes that may be redeemed							35.00%				35.00%
Redemption Price				100.00%				104.50%	100.00%			107.125%	100.00%			100.00%
Debt instrument, price															98.792%
Debt instrument principal amount redeemed				165,800,000													15,200,000
Loss on extinguishment of debt				12,700,000
Accrued interest	5,242,000	5,245,000		3,100,000
Credit facility, maximum borrowing capacity																		125,000,000	125,000,000
Amount available as percentage of eligible accounts receivable																			85.00%
Amount available as percentage of eligible inventories																			65.00%
Earliest extended term of revolving loan																		Sep. 30, 2016
Outstanding stand by letters of credit																			5,900,000
Interest rate spread																				1.75%	1.75%	2.25%	0.50%	1.00%	0.25%	0.75%
Credit facility available to draw																			$ 119,100,000
Percentage of availability triggers covenant requirement under credit facility																			12.50%
Debt covenant, fixed charge ratio																			1
Debt covenant, actual fixed charge ratio																			3.6

XML

Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings	$ 64,131	$ 39,674	$ 73,800
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	79,333	76,933	47,728
Deferred tax expense	12,870	14,777	(14,991)
Equity-based compensation expense	9,703	8,134	8,518
Employee benefit plans	9,366	16,897	15,011
Changes in working capital, net	61,281	(86,012)	(5,304)
Change in taxes receivable, net	(10,828)	354	93,754
Excess tax benefits from equity-based payment arrangements	(15,837)	(885)	(855)
Change in non-current accrued taxes	4,235	2,453	(4,271)
Funding of qualified pension plans	(20,627)	(12,498)	(25,100)
Change in restricted cash	769	4,160	(3,637)
Other, net	4,297	4,408	938
Net cash provided by operating activities	198,693	68,395	185,591
CASH FLOWS FROM INVESTING ACTIVITIES
Change in short-term investments, net	35,001	71,094	61,926
Additions to plant and equipment	(203,776)	(134,069)	(46,086)
Cash paid for acquisitions, net of cash acquired	(9,264)	0	(243,778)
Proceeds from sale of assets	1,035	12,826	0
Net cash used for investing activities	(177,004)	(50,149)	(227,938)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from long-term debt	0	0	367,500
Repayment of Cellu Tissue debt	0	(15,595)	(304,667)
Purchase of treasury stock	(18,650)	(11,350)	0
Excess tax benefits from equity-based payment arrangements	15,837	885	855
Payment of tax withholdings on equity-based payment arrangements	(13,234)	(2,400)	(3,470)
Other, net	(1,502)	(636)	(1,767)
Net cash (used for) provided by financing activities	(17,549)	(29,096)	58,451
Effect of exchange rate changes	0	361	0
Increase (decrease) in cash	4,140	(10,489)	16,104
Cash at beginning of period	8,439	18,928	2,824
Cash at end of period	12,579	8,439	18,928
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest, net of amounts capitalized	30,086	43,595	15,938
Cash paid for income taxes	18,719	43,085	28,596
Cash received from income tax refunds	2,220	33,808	101,393
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING ACTIVITIES:
Increase in accrued plant and equipment	3,339	3,674	1,397
Property acquired under capital lease	$ 0	$ 12,687	$ 11,404

XML

Condensed Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Net earnings	$ 64,131	$ 39,674	$ 73,800
Defined benefit pension and other postretirement employee benefits:
Net (loss) gain arising during the period, net of tax benefit (expense) of $6,359, $15,830, and $(11,188)	(9,780)	(21,942)	17,499
Prior service credit arising during the period, net of tax expense of $(2,267), $(1,163) and $(71)	3,488	1,613	112
Amortization of actuarial loss included in net periodic cost, net of tax expense of $(4,761), $(3,513) and $(4,194)	7,324	4,869	6,560
Amortization of prior service credit included in net periodic cost, net of tax benefit of $806, $252 and $230	(1,240)	(350)	(360)
Foreign currency translation adjustment	0	(874)	0
(Amortization) recognition of deferred taxes related to actuarial gain on other postretirement employee benefit obligations	(220)	(229)	4,799
Other comprehensive (loss) income, net of tax	(428)	(16,913)	28,610
Comprehensive income	$ 63,703	$ 22,761	$ 102,410

XML

Income Taxes

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 8 Income Taxes

Earnings (loss) before income taxes is comprised of the following amounts in each tax jurisdiction:

(In thousands)	2012		2011			2010
United States	$	111,278	$	72,156		$	76,196
Canada	313		(1,236		)	—
Earnings before income taxes	$	111,591	$	70,920		$	76,196

The income tax provision is comprised of the following:

(In thousands)	2012			2011			2010
Current
Federal	$	27,724		$	9,619		$	12,331
State	6,637			6,880			5,056
Foreign	229			(30		)	—
	34,590			16,469			17,387
Deferred
Federal	16,243			12,865			(16,371		)
State	(3,180		)	1,931			1,380
Foreign	(193		)	(19		)	—
	12,870			14,777			(14,991		)
Income tax provision	$	47,460		$	31,246		$	2,396

The income tax provision differs from the amount computed by applying the statutory federal income tax rate of 35.0% to earnings before income taxes due to the following:

(In thousands)	2012			2011			2010
Computed expected tax provision	$	39,063		$	24,822		$	26,668
State and local taxes, net of federal income tax impact	4,398			1,482			4,157
Adjustment for state deferred tax rate	(742		)	2,916			—
State investment tax credits	(9,077		)	—			(1,649		)
Federal credits and net operating losses	4,121			(412		)	(25,153		)
Federal manufacturing deduction	(3,288		)	(2,443		)	(2,993		)
Uncertain tax positions	4,801			2,610			(3,796		)
Patient Protection and Affordable Care Act	—			—			3,290
Non-deductible acquisition costs	—			(1,215		)	1,263
Change in valuation allowances	6,932			2,796			—
U.S. tax provision on foreign operations	(33		)	365			—
Other	1,285			325			609
Income tax provision	$	47,460		$	31,246		$	2,396
Effective tax rate	42.5		%	44.1		%	3.1		%

We have tax benefits relating to equity-based compensation that are being utilized to reduce our U.S. taxable income. Our Consolidated Balance Sheet reflects net operating losses and tax credit carryforwards excluding amounts resulting from equity-based compensation. We have made an accounting policy election to follow the “with-and-without” or “incremental” method for ordering tax benefits derived from employee equity-based compensation awards. As a result of this method, net operating loss carryforwards not generated from equity-based compensation and which were in excess of equity-based compensation expense are utilized before the current period's equity-based tax deduction (excess tax benefits from equity-based compensation awards are recognized last). Excess tax benefits from equity-based compensation awards that are determined to reduce U.S. taxable income following this method are recognized when realized as increases to additional paid-in capital as a component of stockholders' equity. As of December 31, 2011, we had a total amount of excess tax benefits that were not recognized on our Consolidated Balance Sheet of approximately $3.2 million. During the year ended December 31, 2012, we generated additional excess tax benefits of $14.0 million relating primarily to the settlement of vested performance share awards to employees. Based on the incremental method, our excess tax benefits associated with equity-based compensation plans were allocated directly to additional paid-in capital as a component of stockholders’ equity, reducing income taxes payable, in the amount of $15,837, $885 and $855, in the years ended December 31, 2012, 2011, and 2010, respectively. As of December 31, 2012, we have a total amount of excess tax benefits that are not recognized on our Consolidated Balance Sheet of approximately $1.4 million.

(In thousands)	2012			2011
Deferred tax assets:
Employee benefits	$	8,630		$	7,930
Postretirement employee benefits	52,751			53,862
Incentive compensation	9,130			7,949
Pensions	31,140			28,081
Federal and state credit carryforwards	20,447			30,809
Net operating losses	7,649			16,749
Federal benefit from state taxes resulting from uncertain tax positions	5,595			5,595
Other	5,757			6,492
Total deferred tax assets	$	141,099		$	157,467
Valuation allowance	(14,957		)	(8,025		)
Deferred tax assets, net of valuation allowance	$	126,142		$	149,442
Deferred tax liabilities:
Plant and equipment	$	(157,973	)	$	(166,885	)
Intangible assets	(10,843		)	(10,879		)
Inventories	(314		)	(1,570		)
Total deferred tax liabilities	(169,130		)	(179,334		)
Net deferred tax liabilities	$	(42,988	)	$	(29,892	)

Net deferred tax assets (liabilities) consist of:

(In thousands)	2012			2011
Current deferred tax assets	$	20,473		$	41,237
Current deferred tax liabilities	(3,337		)	(1,771		)
Net current deferred tax assets	17,136			39,466
Non-current deferred tax assets	110,762			108,205
Non-current deferred tax liabilities	(170,886		)	(177,563		)
Net non-current deferred tax liabilities	(60,124		)	(69,358		)
Net deferred tax liabilities	$	(42,988	)	$	(29,892	)

We are registered with the Internal Revenue Service, or IRS, as both an alternative fuel mixer and a producer of cellulosic biofuel. During 2009 we received refundable tax credit payments in connection with our use of “black liquor,” a by-product of the kraft pulp manufacturing process, in an alternative fuel mixture to produce energy at our pulp mills. The amount of the refundable tax credit is equal to $0.50 per gallon of alternative fuel mixture used. The Alternative Fuel Mixture Tax Credit, or AFMTC, expired on December 31, 2009. The Cellulosic Biofuel Producer Credit, or CBPC, enables us to claim $1.01 per gallon in regards to black liquor produced and used as a fuel by us at our pulp mills in 2009. During 2010, the IRS clarified the ability to convert previously claimed gallons from the AFMTC to the CBPC. We are eligible to convert gallons previously claimed under the AFMTC to the CBPC; however, due to CBPC carryovers from 2010, we did not convert additional gallons during 2011. Under current federal tax law, we have the ability to convert additional gallons to CPBC through March 2013.

During the year ended December 31, 2010 we amended our 2009 corporate income tax return and claimed approximately 25.3 million gallons of fuel under the CBPC for that portion of black liquor produced in 2009 for which we did not claim the AFMTC. This equated to an additional federal income tax credit of $25.5 million, which was recognized as a benefit to our tax provision in the fourth quarter of 2010. Additionally, we further amended our 2009 corporate income tax return to convert approximately 39.8 million gallons of fuel under the AFMTC to the CBPC. This equated to an additional federal income tax credit of $20.3 million, which was recognized as a benefit to our tax provision in 2010. The CBPC is a non-refundable income tax credit which is deemed to be taxable income in the year the benefit is received. Thus, the CBPC benefit was reduced by the related corporate income tax obligation, resulting in a net income tax benefit of $27.1 million in 2010.

There was a net increase to our income tax expense for the year ended December 31, 2012 resulting from $6.2 million in tax expense related to our decision to further amend our 2009 corporate income tax return to convert certain gallons claimed under the CPBC back to gallons under the AFMTC. The tax expense attributable to the AFMTC conversion was comprised of $3.4 million relating to the conversion back to the AFMTC and a resulting additional $2.8 million increase in our liabilities for uncertain tax positions.

During 2012 and 2011, we recorded a $0.7 million tax benefit and $2.9 million tax expense, respectively, reflecting a remeasurement of state deferred tax assets and liabilities using anticipated tax rates which will be in effect when the underlying assets and liabilities will reverse. The 2011 change in state tax rate is primarily attributable to the change in our tissue business operations after the acquisition of Cellu Tissue on December 27, 2010.

As of December 31, 2012, we had deferred tax assets arising from deductible temporary differences, tax losses and tax credits of $141.1 million before the offset of certain deferred tax liabilities. With the exception of certain deferred tax assets related to federal foreign tax credits, state tax losses and state tax credits, management believes it is more likely than not that forecasted income, together with the tax effect of the deferred tax liabilities, will be sufficient to fully recover the remaining deferred tax assets.

During 2012, the valuation allowance for deferred tax assets increased by a net $6.9 million. We decreased the valuation allowances for state tax losses incurred by $0.5 million and increased the valuation allowances for state tax credits by $8.2 million. Both of these items were recorded as current period deferred tax expense or benefit. We also reduced the valuation allowance relating to foreign tax credits by $0.8 million, which was recorded as a deferred tax benefit to the income tax provision. The reduction is based upon tax planning strategies that we believe will more likely than not allow us to utilize a portion of the foreign tax credits before they expire. During 2011, the valuation allowance for deferred tax assets increased by a net $2.8 million. We increased the valuation allowances for state tax losses incurred by certain subsidiaries and state tax credits by $2.5 million and $2.2 million, respectively. Both of these items were recorded as current period deferred tax expense. We also reduced the valuation allowance relating to foreign tax credits by $1.9 million, which was recorded as a deferred tax benefit to the income tax provision. The reduction is based upon tax planning strategies that we believe will more likely than not allow us to utilize a portion of the foreign tax credits before they expire. The valuation allowance did not change in 2010.

During the fourth quarter of 2012, the IRS commenced an audit of our tax returns for the tax years ending December 31, 2008 through December 31, 2011.

Tax years subject to examination by major taxing jurisdictions are as follows:

Jurisdiction	Years
United States	2008 - 2012
Canada	2008 - 2012
Arkansas	2009 - 2012
California	2008 - 2012
Georgia	2009 - 2012
Idaho	2008 - 2012
Illinois	2009 - 2012
Wisconsin	2008 - 2012

Tax credits and losses subject to expiration by major taxing jurisdictions are as follows (in thousands):

Jurisdiction	Gross Values		Years
United States
Net operating losses	$	7,143	2030
Foreign tax credits	3,832		2016 - 2019
Other federal tax credits	644		2026 - 2030
Connecticut tax losses	59,681		2018 - 2031
Georgia tax losses	9,130		2028 - 2031
Idaho tax credits	4,954		2013 - 2026
North Carolina tax credits	16,142		2015 - 2016
Oklahoma tax losses	9,403		2030 -2032

As of December 31, 2012 there were no undistributed earnings relating to our Canadian subsidiary, Interlake Acquisition Corporation, as all historical earnings were repatriated under Cellu Tissue ownership. Management’s intent is to reinvest future earnings indefinitely.

A review of our uncertain income tax positions at December 31, 2012 and 2011 indicates that liabilities are required to be recorded for gross unrecognized tax benefits following authoritative accounting guidance. The following presents a roll forward of our unrecognized tax benefits and associated interest and penalties, as included in the Accrued Taxes line item in non-current liabilities in our Consolidated Balance Sheets.

(In thousands)	Gross Unrecognized Tax Benefits, Excluding Interest and Penalties			Interest and Penalties		Total Gross Unrecognized Tax Benefits
Balance at January 1, 2011	$	69,633		$	2,378	$	72,011
(Decrease) increase in prior year tax positions	(174		)	2,435		2,261
Increase in current year tax positions	222			—		222
Reductions as a result of a lapse of the applicable statute of   limitations	(30		)	—		(30		)
Balance at December 31, 2011	$	69,651		$	4,813	$	74,464
(Decrease) increase in prior year tax positions	(731		)	1,882		1,151
Increase in current year tax positions	154			—		154
Increase in prior year tax positions	3,275			—		3,275
Reductions as a result of a lapse of the applicable statute of   limitations	(345		)	—		(345		)
Balance at December 31, 2012	$	72,004		$	6,695	$	78,699

Unrecognized tax benefits net of related deferred tax assets at December 31, 2012, if recognized, would favorably impact our effective tax rate by decreasing our tax provision by $73.1 million.

We reflect accrued interest related to tax obligations, as well as penalties, in our provision for income tax. For the years ended December 31, 2012, 2011 and 2010, we accrued interest and no penalties of $1.9 million, $2.4 million and $2.4 million, respectively, in our income tax provision.

We entered into a tax sharing agreement with Potlatch upon the December 2008 spin-off that will generally govern each party's rights, responsibilities and obligations with respect to taxes, including ordinary course of business taxes and taxes, if any, incurred as a result of any failure of the spin-off to be tax free. Under the tax sharing agreement, we expect that, with certain exceptions, we will be responsible for the payment of all income and non-income taxes attributable to our operations. The tax sharing agreement also sets forth our rights and responsibilities for tax obligations and refunds attributable to tax periods prior to the spin-off date.

Under the tax sharing agreement, we will be responsible for any taxes imposed on Potlatch that arise from the failure of the spin-off, together with certain related transactions, to qualify as a tax-free distribution for U.S. federal income tax purposes, including any tax that would result if Potlatch were to fail to qualify as a REIT as a result of income recognized by Potlatch if the spin-off were determined to be taxable, to the extent such failure to qualify is attributable to actions, events or transactions relating to our stock, assets or business, or a breach of the relevant representations or covenants we made in the tax sharing agreement. The tax sharing agreement imposes restrictions on our and Potlatch's ability to engage in certain actions following the spin-off and sets forth the respective obligations of each party with respect to the filing of tax returns, the administration of tax contests, assistance and cooperation and other matters.

XML

Segment Information Segment Information Summary of Geographic Information Regarding Net Sales (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012 Facilities	Dec. 31, 2011	Dec. 31, 2010
Revenues from External Customers and Long-Lived Assets [Line Items]
Number of production facilities within the united states									1
Net sales	$ 462,701	$ 480,233	$ 473,572	$ 457,798	$ 466,391	$ 501,125	$ 494,627	$ 465,830	$ 1,874,304	$ 1,927,973	$ 1,372,965
United States
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales									1,726,561	1,751,482	1,236,400
Japan
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales									63,368	63,584	53,390
Canada
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales									29,557	31,256	15,060
Taiwan
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales									11,061	16,205	12,257
Korea
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales									9,655	5,426	6,258
Australia
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales									7,786	6,246	6,173
Mexico
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales									6,102	13,619	9,843
China
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales									3,488	15,081	9,128
Germany
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales									2,500	3,042	2,729
Netherlands
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales									14	3,163	4,181
Other foreign countries
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales									$ 14,212	$ 18,869	$ 17,546

XML

Commitments and Contingencies Commitments and Contingencies Future Minimum Lease Payments (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012
Capital Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
2013	$ 2,330
2014	2,375
2015	2,420
2016	2,466
2017	2,513
Thereafter	37,361
Total future minimum lease payments	49,465
Less interest portion	(27,177)
Present value of future minimum lease payments	22,288
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
2013	14,966
2014	10,102
2015	6,613
2016	5,142
2017	4,165
Thereafter	3,959
Total future minimum lease payments	$ 44,947

XML

Document and Entity Information (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Feb. 11, 2013	Jun. 30, 2012
Document Documentand Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	FY
Trading Symbol	CLW
Entity Registrant Name	CLEARWATER PAPER CORP
Entity Central Index Key	0001441236
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		22,987,213
Entity Public Float			$ 769.9

XML

Accounts Payable and Accrued Liabilities

12 Months Ended

Dec. 31, 2012

Accounts Payable and Accrued Liabilities [Abstract]

Accounts Payable and Accrued Liabilities

NOTE 9 Accounts Payable and Accrued Liabilities

(In thousands)	2012		2011
Trade accounts payable	$	75,949	$	65,040
Accrued wages, salaries and employee benefits	42,491		37,430
Accrued taxes on income	9,428		2,204
Accrued utilities	8,205		7,265
Accrued taxes other than income taxes payable	6,993		11,257
Accrued interest	5,242		5,245
Accrued discounts and allowances	4,785		5,588
Accrued transportation	4,417		3,801
Other	8,086		6,801
	$	165,596	$	144,631

XML

Long Term Asset Allocation Ranges (Details)	12 Months Ended
	Dec. 31, 2012
Domestic equities
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, long-term assets, minimum	10.00%
Defined benefit plan, long-term assets, maximum	32.00%
International equities, including emerging markets
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, long-term assets, minimum	10.00%
Defined benefit plan, long-term assets, maximum	32.00%
Corporate bonds
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, long-term assets, minimum	38.00%
Defined benefit plan, long-term assets, maximum	80.00%
Liquid reserves
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, long-term assets, minimum	0.00%
Defined benefit plan, long-term assets, maximum	1.00%

XML

Commitments and Contingencies Commitments and Contingencies Additional Information (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Leases Disclosure [Line Items]
Rent expense	$ 16.6	$ 16.1	$ 10.0

XML

Condensed Consolidated Statements of Comprehensive Income (Parenthetical) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Net (loss) gain arising during the period, tax benefit (provision)	$ 6,359	$ 15,830	$ (11,188)
Prior service credit arising during the period, tax provision	(2,267)	(1,163)	(71)
Amortization of actuarial loss included in net periodic cost, tax expense	(4,761)	(3,513)	(4,194)
Amortization of prior service credit included in net periodic cost, tax benefit	$ 806	$ 252	$ 230

XML

Recently Adopted and New Accounting Standards

12 Months Ended

Dec. 31, 2012

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Recently Adopted and Prospective Accounting Standards

NOTE 3 Recently Adopted and Prospective Accounting Standards

We reviewed all new accounting pronouncements issued during the year ended December 31, 2012 and concluded that there are none that we believe will have a significant or material impact to our current or future consolidated financial statements, financial positions, results of operations, liquidity or disclosures.

XML

Summary of Significant Accouting Policies

12 Months Ended

Dec. 31, 2012

Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

NOTE 2 Summary of Significant Accounting Policies

SIGNIFICANT ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S., which we refer to in this report as 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 period. Significant areas requiring the use of estimates and measurement of uncertainty include determination of net realizable value for deferred tax assets, uncertain income tax positions, assessment of impairment of long-lived assets and goodwill, assessment of environmental matters, allocation of purchase price and fair value estimates for business combinations, 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” on our Consolidated Balance Sheet. As of December 31, 2012, all restricted cash, totaling $1.5 million, was included in "Other assets." As of December 31, 2011, all restricted cash, totaling $0.8 million, was classified as current and included in “Restricted cash” on our Consolidated Balance Sheet.

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 December 31, 2012 and 2011, we had allowances for doubtful accounts of $1.6 million and $1.7 million, respectively. Bad debt expense, net, charged to selling, general and administrative expenses during 2012, 2011 and 2010 was $0.2 million, $1.0 million and $0.1 million, respectively. All other activity impacting the allowance for doubtful accounts was immaterial for all periods.

INVENTORIES

At December 31, 2012, our inventories are stated at the lower of market or current average cost using the average cost method. Prior to the November 2011 sale of our Lewiston, Idaho, sawmill, we used the last-in, first-out, or LIFO, method to determine cost for our logs, wood fiber and the majority of our lumber.

PROPERTIES, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost, including assets acquired under capital lease obligations and any interest costs capitalized, less accumulated depreciation. Depreciation of buildings, equipment and other depreciable assets is determined using the straight-line method. Estimated useful lives generally range from 10 to 40 years for land improvements; 10 to 40 years for buildings and improvements; 5 to 25 years for machinery and equipment; and 2 to 15 years for office and other equipment. Assets we acquire through business combinations have estimated lives that are typically shorter than the assets we construct or buy new.

LONG-LIVED ASSETS

Our long-lived assets include property, plant and equipment and amortizable intangible assets. We review the carrying value of long-lived assets for impairment annually and when events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. An impairment of long-lived assets exists when the carrying value is not considered to be recoverable through future undiscounted cash flows from operations and the carrying value of the asset or asset group exceeds the estimated fair value.

GOODWILL AND INTANGIBLES

Goodwill from an acquisition represents the excess of the cost of a business acquired over the net of the amounts assigned to assets acquired, including identifiable intangible assets and liabilities assumed. Goodwill and intangible assets resulted from our acquisition of Cellu Tissue in 2010. Intangible assets also resulted from our December 2012 acquisition of a wood chipping facility. See Note 4, "Business Combinations." We used estimates in determining and assigning the fair value of goodwill and intangible assets, including estimates of useful lives of intangible assets, the amount and timing of related future cash flows and fair values of the related operations. Our intangible assets have definite lives and are amortized over their estimated useful lives. We assess our intangibles for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.

As a result of our acquisition of Cellu Tissue in December 2010, we recorded $229.5 million of goodwill as included on our Consolidated Balance Sheets as of December 31, 2012 and 2011. All of the recorded goodwill was assigned to our Consumer Products segment and reporting unit. Goodwill is not amortized but is tested for impairment annually as of November 1, as well as any time when events suggest impairment may have occurred. In the event the carrying value of our consumer products reporting unit, including goodwill, exceeds the estimated fair value of the reporting unit, an impairment loss would be recognized to the extent the carrying amount of the reporting unit’s goodwill exceeds its implied fair value.

PENSION AND OTHER POSTRETIREMENT EMPLOYEE BENEFITS

The determination of pension plan expense and the requirements for funding our pension plans are based on a number of actuarial assumptions. Two critical assumptions are the discount rate applied to pension plan obligations and the rate of return on plan assets. For other postretirement employee benefit, or OPEB, plans, which provide certain health care and life insurance benefits to qualified retired employees, critical assumptions in determining OPEB expense are the discount rate applied to benefit obligations and the assumed health care cost trend rates used in the calculation of benefit obligations.   We also participate in multiemployer defined benefit pension plans.  We make contributions to these multiemployer plans, as well as make contributions to a trust fund established to provide retiree medical benefits for a portion of these employees.

The discount rate used in the determination of pension benefit obligations and pension expense is determined based on a review of long-term high-grade bonds and management's expectations.  To determine the expected long-term rate of return on pension assets, we employ a process that analyzes historical long-term returns for various investment categories, as measured by appropriate indices. These indices are weighted based upon the extent to which plan assets are invested in the particular categories in arriving at our determination of a composite expected return.

An increase in the discount rate or the rate of expected return on plan assets, all other assumptions remaining the same, would decrease pension plan expense, and conversely, a decrease in either of these measures would increase plan expense. The actual rates of return on plan assets may vary significantly from the assumptions used because of unanticipated changes in financial markets.

The estimated net loss and prior service cost (credit) for the defined benefit pension and OPEB plans is amortized from accumulated other comprehensive loss into net periodic cost (benefit) in accordance with current accounting guidance.

Periodic pension and OPEB expenses are included in “Cost of sales” and “Selling, general and administrative expenses” in the Consolidated Statements of Operations. The expense is allocated to all business segments. In accordance with current accounting guidance governing defined benefit pension and other postretirement plans, at December 31, 2012 and 2011, long-term assets are recorded for overfunded plans and liabilities are recorded for underfunded single-employer plans. The funded status of a benefit plan is measured as the difference between plan assets at fair value and the projected benefit obligation. For underfunded single-employer plans, the estimated liability to be payable in the next twelve months is recorded as a current liability, with the remaining portion recorded as a long-term liability.

INCOME TAXES

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The determination of our provision for income taxes requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items and the probability of sustaining uncertain tax positions. The benefits of uncertain tax positions are recorded in our consolidated financial statements only after determining a more-likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from tax authorities. When facts and circumstances change, we reassess these probabilities and record any changes in the consolidated financial statements as appropriate.

REVENUE RECOGNITION

We recognize revenue when there is persuasive evidence of a sales agreement, the price to the customer is fixed and determinable, collection is reasonably assured, and title and the risk of loss passes to the customer. Shipping terms generally indicate when title and the risk of loss have passed. Revenue is recognized at shipment for sales when shipping terms are FOB (free on board) shipping point. For sales where shipping terms are FOB destination, revenue is recognized when the goods are received by the customer. Revenue from both domestic and foreign sales of our products can involve shipping terms of either FOB shipping point or FOB destination or other shipping terms, depending upon the sales agreement with the customer.

In 2012 and 2011, we did not have any single customer that accounted for 10% or more of our total net sales. However, in 2010, we had a single customer in the Consumer Products segment, the Kroger Company, that accounted for approximately $153.7 million, or 11%, of our total company net sales.

We provide for trade promotions, customer cash discounts, customer returns and other deductions as reductions to net sales in the same period as the related revenues are recognized. Provisions for these items are determined based on historical experience or specific customer arrangements.

Revenue is recognized net of any sales taxes collected. Sales taxes, when collected, are recorded as a current liability and remitted to the appropriate governmental entities.

ENVIRONMENTAL

As part of our corporate policy, we have an ongoing process to monitor, report on and comply with environmental requirements. Based on this ongoing process, accruals for environmental liabilities that are not within the scope of specific authoritative guidance related to accounting for asset retirement obligations or conditional asset retirement obligations are established in accordance with guidance related to accounting for contingencies. We estimate our environmental liabilities based on various assumptions and judgments, the specific nature of which varies in light of the particular facts and circumstances surrounding each environmental liability. These estimates typically reflect assumptions and judgments as to the probable nature, magnitude and timing of required investigation, remediation and monitoring activities and the probable cost of these activities. Currently, we are not aware of any material environmental liabilities and have accrued for only specific environmental remediation costs that we have determined are probable and for which an amount can be reasonably estimated. Fees for professional services associated with environmental and legal issues are expensed as incurred.

STOCKHOLDERS’ EQUITY

On July 28, 2011, we announced that our Board of Directors had declared a two-for-one stock split of our outstanding shares of common stock, which was effected in the form of a stock dividend distributed on August 26, 2011 to shareholders of record on August 12, 2011. On the August 26, 2011 distribution date, there were 11,373,460 shares of common stock outstanding. Immediately following the distribution date, there were 22,746,920 outstanding shares of common stock. All common share and per share amounts have been adjusted for the stock split effected in the form of a stock dividend.

In addition, on July 28, 2011, we announced that our Board of Directors had authorized the repurchase of up to $30 million of our common stock. Under the stock repurchase program, we were authorized to repurchase shares in the open market or as otherwise determined by management, subject to market conditions, business opportunities and other factors. During 2012, we repurchased 520,170 shares of outstanding common stock at a total cost of $18.7 million, representing an average price of $35.85 per share. We completed this repurchase program in the fourth quarter of 2012. The total number of shares repurchased under this program was 853,470 at an aggregate cost of $30 million and an average price of $35.15 per share.

On January 21, 2013, in an event subsequent to the close of our 2012 fiscal year, and in conjunction with the sale of $275 million aggregate principal amount of senior notes (the 2013 Notes; see Note 10, "Debt"), we announced that our Board of Directors approved a new stock repurchase program authorizing the repurchase of $100 million of our common stock. We intend to complete this share repurchase program during 2013 through open market purchases, negotiated transactions or other means.

DERIVATIVES

We had no activity during the years ended December 31, 2012, 2011 and 2010 that required hedge or derivative accounting treatment. However, to partially 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 December 31, 2012, these contracts covered approximately 4% of the expected average monthly requirements for 2013. For the years ended December 31, 2012, 2011 and 2010, approximately 29%, 2% and 24%, respectively, of our natural gas volumes were supplied through firm price contracts. These contracts qualify for treatment as “normal purchases or normal sales” under authoritative guidance and thus require no mark-to-market adjustment.

XML

Equity-Based Compensation Plans

12 Months Ended

Dec. 31, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Equity-Based Compensation Plans

NOTE 14 Equity-Based Compensation Plans

The Clearwater Paper Corporation 2008 Stock Incentive Plan, or Stock Plan, which has been approved by our stockholders, provides for equity-based awards in the form of restricted shares, restricted stock units, or RSUs, performance shares, stock options, or stock appreciation rights to selected employees, outside directors, and consultants of the company. The Stock Plan became effective on December 16, 2008. Under the Stock Plan, as amended, we are authorized to issue up to approximately 4.1 million shares, which includes approximately 0.7 million additional shares authorized in connection with our acquisition of Cellu Tissue that are available for issuance as equity-based awards only to any employees, outside directors, or consultants who were not employed on December 26, 2010 by Clearwater Paper Corporation or any of its subsidiaries. At December 31, 2012, approximately 1.9 million shares were available for future issuance under the Stock Plan.

We recognize equity-based compensation expense for all equity-based payment awards made to employees and directors, including RSUs and performance shares, based on estimated fair values and net of estimates of future forfeitures. Expense is classified in selling, general and administrative expense in our Consolidated Statements of Operations and is recognized on a straight-line basis over the requisite service periods of each award. Based on the terms of the Stock Plan, retirement-eligible employees become fully vested in outstanding awards on the later of that date they reach retirement eligibility or at the end of the first calendar year of each respective grant. We account for this feature when determining the service period over which to recognize expense for each grant of RSUs and performance shares.

Employee equity-based compensation expense was recognized as follows:

(In thousands)	2012		2011		2010
Restricted stock units	$	970	$	1,212	$	1,544
Performance shares	7,364		5,446		3,275
Total employee equity-based compensation	$	8,334	$	6,658	$	4,819
Related tax benefit	$	2,886	$	2,290	$	1,582

RESTRICTED STOCK UNITS

RSUs granted under our Stock Plan are generally subject to a vesting period of one to three years. RSU awards will accrue dividend equivalents based on dividends paid, if any, during the RSU vesting period. The dividend equivalents will be converted into additional RSUs that will vest in the same manner as the underlying RSUs to which they relate. RSUs granted under our Stock Plan do not represent common stock, and therefore the holders do not have voting rights unless and until shares are issued upon settlement.

A summary of the status of outstanding unvested RSU awards as of December 31, 2012, 2011 and 2010, and changes during those years, is presented below:

	2012				2011				2010
	Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Unvested shares outstanding at
January 1	169,344		$	11.33	437,272		$	6.96	849,512		$	7.04
Granted	52,294		34.59		23,138		38.42		32,428		24.23
Vested	(155,177	)	8.82		(286,486	)	6.88		(425,556	)	8.42
Forfeited	(2,734	)	34.07		(4,580	)	8.64		(19,112	)	7.14
Unvested shares outstanding at   December 31	63,727		35.57		169,344		11.33		437,272		6.96
Aggregate intrinsic value (in   thousands)			$	2,496			$	6,030			$	17,119

During 2012, 288,336 shares of RSUs were settled, of which 112,682 shares were settled and distributed. The remaining 175,654 shares, which would have resulted in certain executive compensation being above the Internal Revenue Code section 162(m) threshold, were deferred to preserve tax deductibility for the company. Included in the total shares settled during 2012 were RSUs of which a portion vested each year over a three year period ending in January 2012. After adjusting for minimum tax withholdings and deferred shares, a net 78,029 shares were issued during 2012. The minimum tax withholdings payment made in 2012 in connection with issued shares was $1.3 million.

The fair value of each RSU share award granted during 2012 was estimated on the date of grant using the grant date market price of our common stock. The total fair value of share awards that vested during 2012 was $1.4 million.

As of December 31, 2012, there was $1.2 million of total unrecognized compensation cost related to outstanding RSU awards. The cost is expected to be recognized over a weighted average period of 2.2 years.

PERFORMANCE SHARES

Performance share awards granted under our Stock Plan have a three-year performance period, with generally the same service period, and shares are issued after the end of the period if the employee provides the requisite service and the performance measure is met. The performance measure is a comparison of the percentile ranking of our total stockholder return compared to the total stockholder return performance of a selected peer group. The performance measure is considered to represent a “market condition” under authoritative accounting guidance, and thus, the market condition is considered when determining the estimate of the fair value of the performance share awards. The number of shares actually issued, as a percentage of the amount subject to the performance share award, could range from 0%-200%.

Performance share awards granted under our Stock Plan do not represent common stock, and therefore the holders do not have voting rights unless and until shares are issued upon settlement. During the performance period, dividend equivalents accrue based on dividends paid, if any, and are converted into additional performance shares, which vest or are forfeited in the same manner as the underlying performance shares to which they relate. Generally, if an employee terminates prior to completing the requisite service period, all or a portion of their awards are forfeited and the previously recognized compensation cost is reversed. If an employee provides the requisite service through the end of the performance period, but the performance measure is not met, following authoritative guidance for awards with a market condition, previously recognized compensation cost is not reversed.

The fair value of performance share awards is estimated using a Monte Carlo simulation model. For performance shares granted in 2012, the following assumptions were used in our Monte Carlo model:

Closing price of stock on date of grant	$	35.30
Risk free rate	0.39		%
Measurement period	3 years
Volatility	46		%

In addition to the above assumptions, the dividend yields for all companies were assumed to be zero since dividends are included in the definition of total shareholder return.

A summary of the status of outstanding performance share awards as of December 31, 2012, 2011 and 2010, and changes during those years, is presented below:

	2012				2011			2010
	Shares		Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Outstanding share awards at   January 1	749,538		$	19.52	638,870	$	13.00	524,588		$	5.64
Granted	150,865		40.24		110,668	57.18		141,522		39.36
Settled	(499,680	)	5.65		—	—		—		—
Forfeited	(8,068	)	42.15		—	—		(27,240	)	8.14
Outstanding share awards at   December 31	392,655		44.67		749,538	19.52		638,870		13.00
Aggregate intrinsic value (in   thousands)			$	15,376		$	26,691			$	25,012

The service and performance period for 499,680 outstanding performance shares granted in 2009 ended on December 31, 2011. Those performance shares were settled and distributed during the first quarter of 2012. The number of shares actually distributed, as a percentage of the performance shares granted, was 200%. After adjusting for the related minimum tax withholdings, a net 660,944 shares were issued in the first quarter of 2012. The related minimum tax withholdings payment made in the first quarter of 2012 in connection with issued shares was $11.9 million. On December 31, 2012, the performance period for performance shares granted in 2010 ended, and those performance shares will be settled and distributed, at a range of 0%-200% of shares granted, in the first quarter of 2013.

As of December 31, 2012, there was $3.4 million of unrecognized compensation cost related to outstanding performance share awards. The cost is expected to be recognized over a weighted average period of 1.5 years.

DIRECTOR AWARDS

In connection with joining our Board of Directors, in January 2009 our outside directors were granted an award of phantom common stock units, which were credited to an account established on behalf of each director and vested ratably over a three-year period with the final vesting in January 2012. Subsequent equity awards have been granted annually in May, or on a pro-rata basis as applicable, to our outside directors in the form of phantom common stock units as part of their annual compensation, which are credited to their accounts. These awards vest ratably over a one-year period. These accounts will be credited with additional phantom common stock units equal in value to dividends paid, if any, on the same amount of common stock. Upon separation from service as a director, the vested portion of the phantom common stock units held by the director in a stock unit account are converted to cash based upon the then market price of the common stock and paid to the director. Due to its cash-settlement feature, we account for these awards as liabilities rather than equity and recognize the equity-based compensation expense or income at the end of each reporting period based on the portion of the award that is vested and the increase or decrease in the value of our common stock. We recorded director equity-based compensation expense totaling $1.4 million, $1.5 million and $3.7 million for the years ended December 31, 2012, 2011 and 2010, respectively. At December 31, 2012 and 2011, the liability amounts associated with director equity-based compensation included in "Other long-term obligations" on our Consolidated Balance Sheets were $9.1 million and $7.7 million, respectively.

XML

Debt

12 Months Ended

Dec. 31, 2012

Debt Disclosure [Abstract]

Debt

NOTE 10 Debt

$375 MILLION SENIOR NOTES DUE 2018

On October 22, 2010, we sold $375 million aggregate principal amount of senior notes, which we refer to as the 2010 Notes. The 2010 Notes mature on November 1, 2018, have an interest rate of 7.125% and were issued at their face value. The issuance of these notes generated net proceeds of $367.5 million after deducting offering expenses. The net proceeds from the issuance of the 2010 Notes were used to finance in part our acquisition of Cellu Tissue, to refinance certain existing indebtedness of Cellu Tissue, and to pay fees and expenses incurred as part of the 2010 Note offering, acquisition of Cellu Tissue and related transactions.

The 2010 Notes are guaranteed by certain of our existing and future direct and indirect domestic subsidiaries. The 2010 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 2010 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 2010 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 assets.

Prior to November 1, 2013, we may redeem up to 35% of the 2010 Notes at a redemption price equal to 107.125% of the principal amount plus accrued and unpaid interest with the proceeds from one or more qualified equity offerings. We have the option to redeem all or a portion of the 2010 Notes at any time before November 1, 2014 at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest and a “make whole” premium. On or after November 1, 2014, we may redeem all or a portion of the 2010 Notes at specified redemption prices plus accrued and unpaid interest. In addition, we may be required to make an offer to purchase the 2010 Notes upon the sale of certain assets and upon a change of control.

REDEMPTION OF $150 MILLION SENIOR NOTES DUE 2016 AND ISSUANCE OF $275 MILLION SENIOR NOTES DUE 2023

In June 2009, we issued senior unsecured notes, which we refer to as the 2009 Notes, in the aggregate principal amount of $150 million. The 2009 Notes, which were due on June 15, 2016 and had an interest rate of 10.625%, were issued at a price equal to 98.792% of their face value.

The 2009 Notes are guaranteed by each of our existing and future direct and indirect domestic subsidiaries. The 2009 Notes are general unsecured obligations and are therefore not secured by our assets and 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 2009 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 assets.

We have the option to redeem all or a portion of the 2009 Notes at any time prior to June 15, 2013 at a redemption price equal to 100% of the principal amount thereof plus a “make whole” premium and accrued and unpaid interest. On or after June 15, 2013, we may redeem all or a portion of the 2009 Notes at specified redemption prices plus accrued and unpaid interest. In addition, we may be required to make an offer to purchase the 2009 Notes upon the sale of certain assets and upon a change of control.

On February 22, 2013, in an event occurring subsequent to the close of our 2012 fiscal year end, we exercised our option to redeem all of the 2009 Notes at a redemption price equal to approximately $166 million, which consisted of 100% of the principal amount, plus an approximate $13 million “make whole” premium and accrued and unpaid interest of approximately $3 million. We will record the make whole premium and a portion of the unpaid interest as components of debt retirement costs in the first quarter of 2013. Proceeds to fund the redemption of our 2009 Notes were made available through the sale of $275 million aggregate principal amount senior notes on January 23, 2013, 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 our existing and future direct and indirect domestic subsidiaries. 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. The 2013 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 2013 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 assets.

Prior to February 1, 2016 we may redeem up to 35% of the 2013 Notes at a redemption price equal to 104.5% of the principal amount plus accrued and unpaid interest with the proceeds from one or more qualified equity offerings. We have the option to redeem all or a portion of the 2013 Notes at any time before February 1, 2018 at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest and a “make whole” premium. On or after February 1, 2018 we may redeem all or a portion of the 2013 Notes at specified redemption prices plus accrued and unpaid interest. In addition, we may be required to make an offer to purchase the 2013 Notes upon the sale of certain assets and upon a change of control.

CITYFOREST INDUSTRIAL BONDS

Prior to our acquisition of Cellu Tissue, Cellu Tissue CityForest LLC, or CityForest, a wholly-owned subsidiary of Cellu Tissue, was party to a loan agreement, dated as of March 1, 1998, with the City of Ladysmith, Wisconsin. Pursuant to this agreement, the City of Ladysmith loaned the proceeds of its Variable Rate Demand Solid Waste Disposal Facility Revenue Bonds, Series 1998, or IRBs, to CityForest to finance the construction by CityForest of a solid waste disposal facility. As a result of our acquisition of Cellu Tissue, we assumed the IRBs. During the third quarter of 2011, we redeemed the remaining $15.2 million principal amount of outstanding IRBs.

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 its current term ends on September 30, 2016.

As of December 31, 2012, there were no borrowings outstanding under the credit facility, but approximately $5.9 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 greatest 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 1.0%, plus between 0.25% and 0.75%. The percentage margin on all loans is based on our fixed charge coverage ratio for the most recent four quarters. As of December 31, 2012, we would have been permitted to draw approximately $119.1 million under the credit facility at LIBOR plus 1.75% or base rate plus 0.25%.

A minimum fixed charge coverage ratio is the only financial maintenance covenant 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 December 31, 2012, the fixed charge coverage ratio for the most recent four quarters was 3.6-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.

XML

Equity-Based Compensation Plans - Additional Information (Details) (USD $)	3 Months Ended	12 Months Ended			3 Months Ended		12 Months Ended					3 Months Ended	12 Months Ended					12 Months Ended			37 Months Ended
	Mar. 31, 2012	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Mar. 31, 2012 Performance shares	Mar. 31, 2012 Restricted Stock Units (RSUs)	Dec. 31, 2012 Restricted Stock Units (RSUs)	Dec. 31, 2011 Restricted Stock Units (RSUs)	Dec. 31, 2010 Restricted Stock Units (RSUs)	Dec. 31, 2012 Restricted Stock Units (RSUs) Minimum	Dec. 31, 2012 Restricted Stock Units (RSUs) Maximum	Mar. 31, 2012 Performance shares	Dec. 31, 2012 Performance shares	Dec. 31, 2011 Performance shares	Dec. 31, 2010 Performance shares	Dec. 31, 2012 Performance shares Minimum	Dec. 31, 2012 Performance shares Maximum	Dec. 31, 2012 Director	Dec. 31, 2011 Director	Dec. 31, 2010 Director	Jan. 31, 2012 Director	Dec. 31, 2012 Cellu Tissue Holdings Inc
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock Plan, effective date		Dec. 16, 2008
Stock Plan, shares authorized		4,100,000																				700,000
Shares deferred for future issuance (in shares)		1,900,000				175,654
Total fair value of share awards vested							$ 1,400,000
Unrecognized compensation costs							1,200,000						3,400,000
Unrecognized compensation costs, expected weighted-average period to be recognized (in years)							2 years 2 months 12 days						1 year 6 months
Percentage of amount subject to performance share award of number of shares actually issued																0.00%	200.00%
Settlement and distribution of shares issued (in shares)					499,680	112,682
Number of shares settled as percentage of outstanding amount					200.00%
Shares vested (in shares)						288,336	155,177	286,486	425,556				499,680	0	0
Share based compensation awards vesting period										1 year	3 years		3 years					1 year			3 years
Shares issued (in shares)	78,029											660,944
Cash paid for minimum tax withholdings		13,234,000	2,400,000	3,470,000			1,300,000					11,900,000
Share based compensation expense		8,334,000	6,658,000	4,819,000			970,000	1,212,000	1,544,000				7,364,000	5,446,000	3,275,000			1,400,000	1,500,000	3,700,000
Deferred compensation share-based arrangements, liability, classified, noncurrent																		$ 9,100,000	$ 7,700,000

XML

Property, Plant and Equipment

12 Months Ended

Dec. 31, 2012

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

NOTE 6 Property, Plant and Equipment

(In thousands)	2012			2011
Machinery and equipment	$	1,866,263		$	1,660,636
Buildings and improvements	299,642			249,801
Land improvements	52,929			51,703
Land	11,827			11,804
Office and other equipment	10,946			6,058
Construction in progress	37,160			98,258
	$	2,278,767		$	2,078,260
Less accumulated depreciation and amortization	(1,401,390		)	(1,342,694		)
	$	877,377		$	735,566

The December 31, 2012 and 2011 buildings and improvements and machinery and equipment combined balances each include $23.1 million associated with capital leases.

Depreciation and amortization expense, including amounts associated with capital leases, totaled $74.6 million, $70.6 million and $46.2 million in 2012, 2011 and 2010, respectively. For 2012, 2011 and 2010, we capitalized $12.6 million, $3.7 million and $0.5 million of interest expense, respectively, associated with our TAD tissue expansion project, which includes the construction of our new tissue manufacturing and converting facilities in Shelby, North Carolina, and upgrades to our tissue manufacturing facility in Las Vegas, Nevada.

XML

Income Taxes - Additional Information (Detail) (USD $)	3 Months Ended	12 Months Ended
	Dec. 31, 2010 gal	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010 gal	Dec. 31, 2009
Income Taxes [Line Items]
Statutory federal income tax rate		35.00%
Excess tax benefit from stock based payment arrangements		$ 14,000,000
Excess tax benefits relating primarily to the release of vested performance share awards to employees allocated to additional paid-in capital		15,837,000	885,000	855,000
Unrecognized tax benefits, additional paid in capital		1,400,000	3,200,000
Tax expense, reflecting remeasurement of state deferred tax assets and liabilities		700,000
Refundable tax credit per gallon of alternative fuel mixture used					0.50
Cellulosic biofuel producer credit per unit		1.01
Cellulosic biofuel producer credit, quantity	25,300,000			25,300,000
Alternative fuel mixture tax credit converted into cellulosic biofuel producer credit, amount	25,500,000			20,300,000
Alternative fuel mixture tax credit converted into cellulosic biofuel producer credit, quantity	39,800,000			39,800,000
Alternative fuel mixture tax credit converted into cellulosic biofuel producer credit, net tax benefit amount				27,100,000
Alternative fuel mixture tax credit, net conversion amount		(6,200,000)
Alternative fuel mixture tax credit, conversion amount		3,400,000
Increase in liabilities for uncertain tax positions		2,800,000
Deferred tax assets, gross		141,099,000	157,467,000
Change in valuation allowance		6,900,000	2,800,000
Unrecognized tax benefits , if recognized, would favorably impact effective tax rate		73,100,000
Accrued interest related to tax obligations	2,400,000	1,900,000	2,400,000	2,400,000
State and Local Jurisdiction [Member]
Income Taxes [Line Items]
Income tax reconciliation, change in enacted tax rate			2,900,000
State and Local Jurisdiction [Member] | State Tax Credits
Income Taxes [Line Items]
Change in valuation allowance			2,200,000
Subsidiaries | State Net Operating Losses
Income Taxes [Line Items]
Change in valuation allowance		2,500,000
Foreign Tax Authority | Foreign Tax Credit
Income Taxes [Line Items]
Change in valuation allowance		(1,900,000)
Valuation Allowance Of Deferred Tax Foreign
Income Taxes [Line Items]
Change in valuation allowance		800,000
State Taxes And Others
Income Taxes [Line Items]
Change in valuation allowance		500,000
Valuation Allowance Of Deferred Tax State
Income Taxes [Line Items]
Change in valuation allowance		$ 8,200,000

XML

Business Combinations

12 Months Ended

Dec. 31, 2012

Business Combinations [Abstract]

Business Combinations

NOTE 4 Business Combinations

WOOD CHIPPING FACILITY ACQUISITION

On December 28, 2012, we acquired the assets of a wood chipping facility located in Clarkston, Washington, near our Lewiston, Idaho facility, in an effort to bolster our wood fiber position and obtain short-term and long-term cost savings. The total consideration associated with the acquisition was approximately $11 million, which includes contingent consideration over an 18 month period of up to $1.5 million in cash to be paid by the company, based on certain performance and indemnity guarantees. At December 31, 2012, this $1.5 million is considered non-current restricted cash and is reflected as a change in cash flow used for financing activities in our Consolidated Statement of Cash flows. We allocated the purchase price to the tangible and amortizable intangible assets acquired based on their estimated fair values at the date of acquisition, resulting in the recognition of approximately $6 million in equipment, $4 million in intangible assets for customer relationships and a $1 million intangible asset for a non-compete agreement with the former owners. No goodwill was recorded.

No supplemental pro-forma information is presented for the acquisition due to the immaterial pro-forma effect of the acquisition on our results of operations for all years presented.

CELLU TISSUE ACQUISITON

On December 27, 2010, we acquired Cellu Tissue for total consideration paid of $247.0 million. The purchase price included a $242.2 million cash payment for 100% of the issued and outstanding common stock of Cellu Tissue, and a $4.8 million cash payment to the holders of Cellu Tissue stock options and restricted stock, which represented $12 per share, less each option’s exercise price. The acquisition was financed with existing cash and proceeds from the issuance of $375 million of 7.125% Senior Notes due 2018 (the 2010 Notes; see Note 10, "Debt"). The acquisition resulted in the recognition of $229.5 million of goodwill, which is not deductible for tax purposes. For fiscal year 2010, we included in our Consolidated Statements of Operations and Cash Flows $7.3 million of net sales and $6.3 million of operating losses from the Cellu Tissue operations after the December 27, 2010 acquisition date. Included in these losses were approximately $6.1 million of pre-tax employee severance expenses. Cellu Tissue’s consolidated results of operations from December 28, 2010 forward are included in our Consumer Products segment.

We allocated the purchase price to the net assets of Cellu Tissue acquired in the acquisition based on our estimates of the fair value of assets and liabilities as follows:

(In thousands)	Amount
Current assets	$	128,079
Property, plant and equipment	276,499
Goodwill	229,533
Intangibles	56,400
Other assets	1,500
Assets acquired	692,011
Current liabilities	97,071
Long-term debt, less current portion	287,002
Deferred income taxes	60,221
Other liabilities	732
Liabilities assumed	445,026
Net assets acquired	$	246,985

We estimated the fair value of the assets and liabilities of Cellu Tissue utilizing information available at the time of acquisition. We considered outside third-party appraisals of the tangible and intangible assets to determine the applicable fair market values.

Long-term debt included the fair value of Cellu Tissue’s senior subordinated notes as of December 27, 2010, which were retired concurrently with the acquisition. We also repaid Cellu Tissue’s credit facility of $32.5 million. We assumed Cellu Tissue’s industrial revenue bonds of $15.6 million, which were subsequently redeemed in 2011 (see Note 10, "Debt").

All costs associated with advisory, legal and other due diligence-related services performed in connection with acquisition-related activity are expensed as incurred. These costs were $20.4 million for 2010 and were recorded as selling, general and administrative expenses on the Consolidated Statements of Operations.

The following unaudited pro forma financial information presents the combined results of operations as if Cellu Tissue had been combined with us as of the beginning of 2010. The pro forma financial information includes the accounting effects of the business combination, including the adjustment of amortization of intangible assets, depreciation of property, plant and equipment, interest expense and elimination of intercompany sales, as if Cellu Tissue were actually combined with us as of the beginning of 2010. However, the information does not reflect the costs of any integration activities. The pro forma results include estimates and assumptions, which management believes are reasonable. The unaudited pro forma financial information below is not necessarily indicative of either future results of operations or results that might have been achieved had Cellu Tissue been combined with us as of the beginning of 2010.

(In thousands; Unaudited)	2010
Pro forma net sales	$	1,902,579
Pro forma net earnings	88,713

XML

Inventories

12 Months Ended

Dec. 31, 2012

Inventory Disclosure [Abstract]

Inventories

NOTE 5 Inventories

(In thousands)	2012		2011
Pulp, paperboard and tissue products	$	147,627	$	162,426
Materials and supplies	67,889		62,376
Logs, pulpwood, chips and sawdust	15,950		17,713
Lumber	—		1,556
	$	231,466	$	244,071

At December 31, 2011, approximately $0.6 million of our remaining lumber inventories were valued on a LIFO basis. During the three months ended March 31, 2012, the remaining lumber inventory from the sawmill was sold. The sale of this inventory, which was valued at costs prevailing in prior years under the LIFO method, had the effect of increasing earnings before income taxes in the period ended March 31, 2012 by an immaterial amount. The fluctuations of LIFO inventories increased earnings before income taxes by approximately $10.6 million million in 2011, and had no impact in 2010.

XML

Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

NOTE 7 Goodwill and Intangible Assets

The carrying amount of goodwill is reviewed at least annually for impairment as of November 1. The first step of the goodwill impairment test, used to identify potential impairment, compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit is greater than zero and its estimated fair value exceeds its carrying amount, goodwill of the reporting unit is not considered impaired. For the purpose of goodwill impairment testing we identify two reporting units, Consumer Products and Pulp and Paperboard, the same as our two reportable operating segments (see Note 17, "Segment Information"). All of the recorded goodwill is assigned to our Consumer Products reporting unit.

As of November 1, 2012 and 2011, we performed calculations of both a discounted cash flow and market-based valuation model for our Consumer Products reporting unit. The assumptions used in these models allowed us to evaluate the estimated fair value of our reporting unit. The determination of these assumptions required significant estimates on our part. Due to the inherent uncertainty involved in making such estimates, actual results could differ from those assumptions. However, we evaluated the merits of each significant assumption, both individually and in the aggregate, used to determine the estimated fair value of our reporting unit for reasonableness. Upon completion of this exercise, we concluded that the estimated fair value of the Consumer Products reporting unit exceeded its carrying amount. We determined that no further testing was necessary and did not record any impairment loss on our goodwill for the years ended December 31, 2012 and 2011.

Intangible asset amounts represent the acquisition date fair values of identifiable intangible assets acquired. The fair values of the intangible assets were determined by using the income approach, discounting projected future cash flows based on management’s expectations of the current and future operating environment. The rates used to discount projected future cash flows reflected a weighted average cost of capital based on our industry, capital structure and risk premiums including those reflected in the current market capitalization. Definite-lived intangible assets are amortized over their useful lives, which range from 2.5 to 10 years. Authoritative guidance requires that the carrying amount of a long-lived asset with a definite life that is held-for-use be evaluated for recoverability whenever events or changes in circumstances indicate that the entity may be unable to recover the asset’s carrying amount. There were no such events or changes in circumstances that required us to test our definite-lived intangible assets for impairment for the years ended December 31, 2012 and 2011. We do not have any indefinite-lived intangible assets recorded from acquisitions.

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

	December 31, 2012
(Dollars in thousands, lives in years)	Useful Life	Historical Cost		Accumulated Amortization			Net Balance
Customer relationships	9.0	$	53,957	$	(11,237	)	$	42,720
Trade names and trademarks	10.0	5,300		(1,060		)	4,240
Non-compete agreements	2.5 - 5.0	1,674		(881		)	793
Total intangible assets		$	60,931	$	(13,178	)	$	47,753

	December 31, 2011
(Dollars in thousands, lives in years)	Useful Life	Historical Cost		Accumulated Amortization			Net Balance
Customer relationships	9.0	$	50,000	$	(5,682	)	$	44,318
Trade names and trademarks	10.0	5,300		(530		)	4,770
Non-compete agreements	2.5	1,100		(440		)	660
Total intangible assets		$	56,400	$	(6,652	)	$	49,748

As of December 31, 2012, estimated future amortization expense related to intangible assets is as follows (in thousands):

Years ending December 31,	Amount
2013	$	6,975
2014	6,663
2015	6,608
2016	6,587
2017	6,587
Thereafter	14,333
Total	$	47,753

XML

Tax Years Subject to Examination by Major Taxing Jurisdictions (Details)	12 Months Ended
	Dec. 31, 2012
United States | Minimum
Income Tax Examination [Line Items]
Income tax examination, year under examination	2008
United States | Maximum
Income Tax Examination [Line Items]
Income tax examination, year under examination	2011
Canada | Minimum
Income Tax Examination [Line Items]
Income tax examination, year under examination	2008
Canada | Maximum
Income Tax Examination [Line Items]
Income tax examination, year under examination	2011
Arkansas | Minimum
Income Tax Examination [Line Items]
Income tax examination, year under examination	2008
Arkansas | Maximum
Income Tax Examination [Line Items]
Income tax examination, year under examination	2011
California | Minimum
Income Tax Examination [Line Items]
Income tax examination, year under examination	2007
California | Maximum
Income Tax Examination [Line Items]
Income tax examination, year under examination	2011
Georgia | Minimum
Income Tax Examination [Line Items]
Income tax examination, year under examination	2008
Georgia | Maximum
Income Tax Examination [Line Items]
Income tax examination, year under examination	2011
Idaho | Minimum
Income Tax Examination [Line Items]
Income tax examination, year under examination	2008
Idaho | Maximum
Income Tax Examination [Line Items]
Income tax examination, year under examination	2011
Illinois | Minimum
Income Tax Examination [Line Items]
Income tax examination, year under examination	2008
Illinois | Maximum
Income Tax Examination [Line Items]
Income tax examination, year under examination	2011
Wisconsin | Minimum
Income Tax Examination [Line Items]
Income tax examination, year under examination	2007
Wisconsin | Maximum
Income Tax Examination [Line Items]
Income tax examination, year under examination	2011

XML

Equity-Based Compensation Plans Employee Plans Equity Based Compensation Expense (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee equity-based compensation	$ 8,334	$ 6,658	$ 4,819
Related tax benefit	2,886	2,290	1,582
Restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee equity-based compensation	970	1,212	1,544
Performance shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee equity-based compensation	$ 7,364	$ 5,446	$ 3,275

XML

Roll Forward of Unrecognized Tax Benefits and Associated Interest and Penalties Included in Balance Sheet (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items]
Balance	$ 74,464	$ 72,011
(Decrease) increase in prior year tax positions	1,151	2,261
Increase in current year tax positions	154	222
Increase in prior year tax positions	3,275
Reductions as a result of a lapse of the applicable statute of limitations	(345)	(30)
Balance	78,699	74,464
Gross Unrecognized Tax Benefits, Excluding Interest and Penalties
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items]
Balance	69,651	69,633
(Decrease) increase in prior year tax positions	(731)	(174)
Increase in current year tax positions	154	222
Increase in prior year tax positions	3,275
Reductions as a result of a lapse of the applicable statute of limitations	(345)	(30)
Balance	72,004	69,651
Interest and Penalties
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items]
Balance	4,813	2,378
(Decrease) increase in prior year tax positions	1,882	2,435
Increase in current year tax positions	0	0
Increase in prior year tax positions	0
Reductions as a result of a lapse of the applicable statute of limitations	0	0
Balance	$ 6,695	$ 4,813

XML

Net Deferred Tax Assets (Liabilities) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Disclosure Net Deferred Tax Assets Liabilities [Abstract]
Current deferred tax assets	$ 20,473	$ 41,237
Current deferred tax liabilities	(3,337)	(1,771)
Net current deferred tax assets	17,136	39,466
Non-current deferred tax assets	110,762	108,205
Non-current deferred tax liabilities	(170,886)	(177,563)
Net non-current deferred tax liabilities	(60,124)	(69,358)
Net deferred tax liabilities	$ (42,988)	$ (29,892)

XML

Segment Information Reportable Segments Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012		Dec. 31, 2011		Dec. 31, 2010
Segment Reporting Information [Line Items]
Net sales	$ 462,701	$ 480,233	$ 473,572	$ 457,798	$ 466,391	$ 501,125	$ 494,627	$ 465,830	$ 1,874,304		$ 1,927,973		$ 1,372,965
Income from operations	35,480	39,762	44,497	25,648	32,723	25,383	33,793	23,546	145,387		115,445		98,767
Depreciation and amortization									79,333		76,933		47,728
Assets	1,633,456				1,571,318				1,633,456		1,571,318		1,545,336
Capital expenditures									207,115		137,743		47,033
Consumer Products
Segment Reporting Information [Line Items]
Net sales									1,134,556		1,092,133		570,047
Income from operations									93,347		42,806		80,791
Depreciation and amortization									54,547		50,391		16,994
Assets	1,178,438				1,081,988				1,178,438		1,081,988		969,450
Capital expenditures									183,330		117,059		33,902
Pulp and Paperboard
Segment Reporting Information [Line Items]
Net sales									739,748		835,840		802,918
Income from operations									103,910	[1]	92,827	[1]	64,869	[1]
Depreciation and amortization									23,113		26,073		28,658
Assets	344,614				355,886				344,614		355,886		377,674
Capital expenditures									19,954		15,355		10,208
Operating Segments
Segment Reporting Information [Line Items]
Income from operations									197,257		135,633		145,660
Assets	1,523,052				1,437,874				1,523,052		1,437,874		1,347,124
Capital expenditures									203,284		132,414		44,110
Corporate and eliminations
Segment Reporting Information [Line Items]
Income from operations									(51,870)	[1]	(20,188)	[1]	(46,893)	[1]
Corporate
Segment Reporting Information [Line Items]
Depreciation and amortization									1,673		469		2,076
Assets	110,404				133,444				110,404		133,444		198,212
Capital expenditures									$ 3,831		$ 5,329		$ 2,923

[1] Results for Pulp and Paperboard for 2011 included additional expenses associated with the sale of the Lewiston, Idaho sawmill, which were partially offset by LIFO inventory liquidation and other adjustments recorded at the corporate level.

XML

Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2012

Finite-Lived Intangible Assets, Net [Abstract]

Intangible Assets

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

	December 31, 2012
(Dollars in thousands, lives in years)	Useful Life	Historical Cost		Accumulated Amortization			Net Balance
Customer relationships	9.0	$	53,957	$	(11,237	)	$	42,720
Trade names and trademarks	10.0	5,300		(1,060		)	4,240
Non-compete agreements	2.5 - 5.0	1,674		(881		)	793
Total intangible assets		$	60,931	$	(13,178	)	$	47,753

	December 31, 2011
(Dollars in thousands, lives in years)	Useful Life	Historical Cost		Accumulated Amortization			Net Balance
Customer relationships	9.0	$	50,000	$	(5,682	)	$	44,318
Trade names and trademarks	10.0	5,300		(530		)	4,770
Non-compete agreements	2.5	1,100		(440		)	660
Total intangible assets		$	56,400	$	(6,652	)	$	49,748

XML

Inventories (Detail) (USD $)	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2012
Inventory Disclosure [Abstract]
Pulp, paperboard and tissue products	$ 162,426,000	$ 147,627,000
Materials and supplies	62,376,000	67,889,000
Logs, pulpwood, chips and sawdust	17,713,000	15,950,000
Lumber	1,556,000	0
Inventories	244,071,000	231,466,000
LIFO inventory amount	600,000
Effect of LIFO inventory liquidation on income	$ 10,600,000

XML

Savings, Pension and Other Postretirement Employee Benefit Plans

12 Months Ended

Dec. 31, 2012

Compensation and Retirement Disclosure [Abstract]

Savings, Pension and Other Postretirement Employee Benefit Plans

NOTE 12 Savings, Pension and Other Postretirement Employee Benefit Plans

Certain of our employees are eligible to participate in defined contribution savings and defined benefit postretirement plans. These include 401(k) savings plans, defined benefit pension plans including company-sponsored and multiemployer plans, and Other Postretirement Employee Benefit, or OPEB, plans, each of which is discussed below.

401(k) Savings Plans

Substantially all of our employees are eligible to participate in 401(k) savings plans, which include a company match component. In 2012, 2011 and 2010, we made matching 401(k) contributions on behalf of employees of $14.9 million, $8.1 million and $5.7 million, respectively. The increase in 2012 is the result of an increase in the company contribution to the Clearwater Paper Corporation 401(k) Plan in order to compensate for the December 15, 2010 closure to new participants and December 31, 2011 freezing of benefits to existing participants of the salaried pension plan.

Company-Sponsored Defined Benefit Pension Plans

A majority of our salaried employees and a portion of our hourly employees are covered by company-sponsored noncontributory defined benefit pension plans.

In the fourth quarter of 2012, we recorded a curtailment loss of $0.5 million in net periodic cost, and a corresponding decrease in Other Comprehensive Income, as a result of certain hourly employees at our Cypress Bend, Arkansas pulp and paperboard facility electing to cease accruing further pension benefits effective December 31, 2012. In exchange, beginning January 1, 2013 and lasting for a certain number of years, these employees began receiving an enhanced employer contribution to one of our existing 401(k) savings plan in which they participate. In the fourth quarter of 2011, we recorded a curtailment loss of $2.8 million in net periodic cost, and a corresponding decrease in Other Comprehensive Income, as a result of the sale of our sawmill. In addition, we recorded a $0.4 million decrease in our pension liability with a corresponding decrease in Accumulated Other Comprehensive Loss. Effective December 15, 2010, the salaried pension plan was closed to new entrants, and effective December 31, 2011, the salaried pension plan was frozen and ceased accruing further benefits. As a result of these changes to the salaried pension plan, both announced in the fourth quarter of 2010, we recorded a loss of $0.2 million.

Company-Sponsored OPEB Plans

We also provide benefits under company-sponsored defined benefit retiree health care and life insurance plans, which cover certain salaried and hourly employees. Most of the retiree health care plans require retiree contributions and contain other cost-sharing features. The retiree life insurance plans are primarily noncontributory.

Funded Status of Company-Sponsored Plans

As required by current standards governing the accounting for defined benefit pension and other postretirement plans, we recognized the funded status of our company-sponsored plans on our Consolidated Balance Sheets at December 31, 2012 and 2011. The funded status is measured as the difference between plan assets at fair value (with limited exceptions) and the benefit obligation. For a pension plan, the benefit obligation is the projected benefit obligation; for any other postretirement employee benefit plan, such as a retiree health care plan, the benefit obligation is the accumulated postretirement employee benefit obligation.

We use a December 31 measurement date for our benefit plans.

The changes in benefit obligation, plan assets and funded status for company-sponsored benefit plans as of December 31 are as follows:

	Pension Benefit Plans						Other Postretirement Employee Benefit Plans
(In thousands)	2012			2011			2012			2011
Benefit obligation at beginning of year	$	307,658		$	272,012		$	136,710		$	141,519
Service cost	2,485			7,725			693			702
Interest cost	14,693			15,092			5,815			6,857
Plan changes	—			—			(5,278		)	—
Mergers, sales, closures, special term benefits	—			(422		)	—			—
Actuarial losses (gains)	30,612			28,552			3,151			(5,433		)
Medicare Part D subsidies received	—			—			569			355
Benefits paid	(22,191		)	(15,301		)	(7,042		)	(7,290		)
Benefit obligation at end of year	333,257			307,658			134,618			136,710
Fair value of plan assets at beginning of year	218,557			216,650			18			16
Actual return on plan assets	37,308			4,456			1			2
Employer contribution	20,882			12,752			—			—
Benefits paid	(22,191		)	(15,301		)	—			—
Fair value of plan assets at end of year	254,556			218,557			19			18
Funded status at end of year	$	(78,701	)	$	(89,101	)	$	(134,599	)	$	(136,692	)

Amounts recognized in the Consolidated Balance Sheets:

	Pension Benefit Plans						Other Postretirement Employee Benefit Plans
(In thousands)	2012			2011			2012			2011
Current liabilities	$	(281	)	$	(264	)	$	(8,856	)	$	(9,597	)
Noncurrent liabilities	(78,420		)	(88,837		)	(125,743		)	(127,095		)
Net amount recognized	$	(78,701	)	$	(89,101	)	$	(134,599	)	$	(136,692	)

Amounts recognized (pre-tax) in Accumulated Other Comprehensive Loss as of December 31 consist of:

	Pension Benefit Plans				Other Postretirement Employee Benefit Plans
(In thousands)	2012		2011		2012			2011
Net loss	$	177,343	$	176,439	$	24,408		$	21,258
Prior service cost (credit)	1,414		2,525		(6,504		)	(3,906		)
Net amount recognized	$	178,757	$	178,964	$	17,904		$	17,352

Information as of December 31 for certain pension plans included above with accumulated benefit obligations in excess of plan assets were as follows:

(In thousands)	2012		2011
Projected benefit obligation	$	333,257	$	307,658
Accumulated benefit obligation	333,257		307,658
Fair value of plan assets	254,556		218,557

Pre-tax components of Net Periodic Cost and other amounts recognized in Other Comprehensive Income (Loss) for the years ended December 31 were as follows:

Net Periodic Cost (Benefit):

	Pension Benefit Plans									Other Postretirement Employee Benefit Plans
(In thousands)	2012			2011			2010			2012			2011			2010
Service cost	$	2,485		$	7,725		$	8,018		$	693		$	702		$	995
Interest cost	14,693			15,092			15,375			5,815			6,857			7,712
Expected return on plan assets	(19,685		)	(19,532		)	(19,391		)	—			—			—
Amortization of prior service cost (credit)	634			1,193			1,205			(2,680		)	(1,795		)	(1,795		)
Amortization of actuarial loss	12,085			8,382			8,671			—			—			2,083
Curtailments	477			2,776			183			—			—			—
Net periodic cost	$	10,689		$	15,636		$	14,061		$	3,828		$	5,764		$	8,995

Other amounts recognized in Other Comprehensive Income (Loss):

	Pension Benefit Plans									Other Postretirement Employee Benefit Plans
(In thousands)	2012			2011			2010			2012			2011			2010
Net loss (gain)	$	12,989		$	43,207		$	(19,216	)	$	3,150		$	(5,435	)	$	(9,471	)
Prior service credit	(477		)	(2,776		)	(183		)	(5,278		)	—			—
Amortization of prior service (cost) credit	(634		)	(1,193		)	(1,205		)	2,680			1,795			1,795
Amortization of actuarial loss	(12,085		)	(8,382		)	(8,671		)	—			—			(2,083		)
Total recognized in other comprehensive loss   (income)	$	(207	)	$	30,856		$	(29,275	)	$	552		$	(3,640	)	$	(9,759	)
Total recognized in net periodic cost (benefit)   and other comprehensive loss (income)	$	10,482		$	46,492		$	(15,214	)	$	4,380		$	2,124		$	(764	)

The estimated net loss and prior service cost for the defined benefit pension plans that will be amortized from accumulated other comprehensive loss into net periodic cost (benefit) over the next fiscal year are $15.5 million and $0.4 million, respectively. The estimated prior service credit for the OPEB plans that will be amortized from accumulated other comprehensive loss into net periodic cost (benefit) over the next fiscal year is $2.7 million.

The Medicare Prescription Drug Improvement and Modernization Act of 2003 introduced a drug benefit under Medicare Part D and a federal subsidy to sponsors of retiree health care benefit plans that provide an equivalent benefit. Our actuaries determined that certain benefits provided under our plans are actuarially equivalent to the Medicare Part D standard plan and are eligible for the employer subsidy. During 2012 and 2011, we received subsidy payments totaling $0.6 million and $0.4 million for each respective year.

Weighted average assumptions used to determine the benefit obligation as of December 31 were:

	Pension Benefit Plans						Other Postretirement Employee Benefit Plans
	2012		2011		2010		2012		2011		2010
Discount rate	4.15	%	4.90	%	5.70	%	4.05	%	4.95	%	5.60	%
Rate of salaried compensation increase	—		—		4.00		—		—		—

Weighted average assumptions used to determine the net periodic cost (benefit) for the years ended December 31 were:

	Pension Benefit Plans						Other Postretirement Employee Benefit Plans
	2012		2011		2010		2012		2011		2010
Discount rate	4.90	%	5.70	%	5.75	%	4.95	%	5.60	%	5.75	%
Expected return on plan assets	8.00		8.00		8.50		—		—		—
Rate of salaried compensation increase	—		4.00		4.00		—		—		—

The discount rate used in the determination of pension benefit obligations and pension expense was determined based on a review of long-term high-grade bonds as well as management’s expectations. The discount rate used to calculate OPEB obligations was determined using the same methodology we used for our pension plans.

The expected return on plan assets assumption is based upon an analysis of historical long-term returns for various investment categories, as measured by appropriate indices. These indices are weighted based upon the extent to which plan assets are invested in the particular categories in arriving at our determination of a composite expected return.

The assumed health care cost trend rate used to calculate OPEB obligations in 2012 was 7.0%, and the rate used to calculate OPEB expense in 2012 was 7.5%, with both rates grading to 4.7% over approximately 60 years. This assumption has a significant effect on the amounts reported. A one percentage point change in the health care cost trend rates would have the following effects:

(In thousands)	1% Increase		1% Decrease
Effect on total of service and interest cost components	$	644	$	(544	)
Effect on postretirement employee benefit obligation	12,450		(10,707		)

The investments of our defined benefit pension plans are held in a Master Trust. The assets of our OPEB plans are held within an Internal Revenue Code section 401(h) account for the payment of retiree medical benefits within the Master Trust.

The Master Trust has a securities lending agreement. The agreement authorizes the lending agent to loan securities owned by the Master Trust to an approved list of borrowers. Under the agreement, the lending agent is responsible for negotiating each loan for an unspecified term while retaining the power to terminate the loan at any time. At the time each loan is made, the lending agent requires collateral equal to, but not less than, 102% of the market value of the loaned securities and accrued interest. The Master Trust directs the agent as to the type of investment pool in which to invest the borrower’s collateral based on established policy with specific limits; accordingly, the right to receive the collateral and obligation to return it are disclosed as a component of Master Trust investments. While the securities are loaned, the Master Trust retains all rights of ownership, except it waives its right to vote such securities. Securities loaned subject to this securities lending agreement totaled $3.3 million at December 31, 2012. These securities are principally corporate common stocks.

Current accounting rules governing fair value measurement establish a framework for measuring fair value, which provides a fair value 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 (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are described below:

Level 1	Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the plans have the ability to access.
Level 2	Inputs to the valuation methodology include:
	▪   Quoted prices for similar assets or liabilities in active markets; ▪   Quoted prices for identical or similar assets or liabilities in inactive markets; ▪   Inputs other than quoted prices that are observable for the asset or liability; and ▪   Inputs that are derived principally from or corroborated by observable market data by correlation or other means
	If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.
Level 3	Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

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 need to maximize the use of observable inputs and minimize the use of unobservable inputs.

Securities in the Master Trust are stated at fair value. Fair value is based upon quotations obtained from national securities exchanges, if available. Where securities do not have a quoted market price, the recorded amount represents estimated fair value. Many factors are considered in arriving at that fair market value. Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used during 2012.

▪ Corporate common stock and mutual funds: Investments are valued at quoted market prices.

▪ Common and collective trust: The investment in common and collective trusts is based on the fair value of the underlying assets and is expressed in units.

▪ Corporate debt securities: In general, corporate bonds are valued based on yields currently available on comparable securities of issuers with similar credit ratings.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while management believes the valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The following tables set forth by level, within the fair value hierarchy, the investments at fair value for our company-sponsored pension benefit plans:

	December 31, 2012
(In thousands)	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	3,786	$	—	$	—	$	3,786
Common and collective trusts:
International small cap	—		12,725		—		12,725
Global/International equity	—		16,656		—		16,656
Domestic equity – small/mid cap	—		17,339		—		17,339
International equity emerging markets	—		17,672		—		17,672
Common stocks:
Industrials	9,475		—		—		9,475
Energy	1,966		—		—		1,966
Consumer	8,270		—		—		8,270
Healthcare	7,386		—		—		7,386
Finance	13,000		—		—		13,000
Utilities	2,305		—		—		2,305
Information technology	6,828		—		—		6,828
Foreign	6,078		—		—		6,078
Mutual funds:
Foreign large blend	18,907		—		—		18,907
Long-term bond fund	114,557		—		—		114,557
Corporate debt securities	—		1,073		—		1,073
Subtotal	$	192,558	$	65,465	$	—	$	258,023
Payable held under securities lending agreement							(3,467		)
Total investments at fair value							$	254,556

	December 31, 2011
(In thousands)	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	9,843	$	—	$	—	$	9,843
Common and collective trusts:
International small cap	—		10,588		—		10,588
Global/International equity	—		13,748		—		13,748
Domestic equity – small/mid cap	—		15,939		—		15,939
International equity emerging markets	—		14,602		—		14,602
Common stocks:
Industrials	5,545		—		—		5,545
Energy	2,595		—		—		2,595
Consumer	9,714		—		—		9,714
Healthcare	4,321		—		—		4,321
Finance	10,235		—		—		10,235
Utilities	4,234		—		—		4,234
Information technology	4,847		—		—		4,847
Foreign	5,000		—		—		5,000
Mutual funds:
Foreign large blend	15,048		—		—		15,048
Long-term bond fund	99,728		—		—		99,728
Corporate debt securities	—		1,045		—		1,045
Subtotal	$	171,110	$	55,922	$	—	$	227,032
Payable held under securities lending agreement							(8,475		)
Total investments at fair value							$	218,557

Our OPEB plan had approximately $19,000 held in cash and equivalents at December 31, 2012, which were categorized as level 1.

In 2010, we established our own formal investment policy guidelines for our company-sponsored plans. These guidelines were set by our benefits committee, which is comprised of members of our management and has been assigned its fiduciary authority over management of the plan assets by our Board of Directors. The committee’s duties include periodically reviewing and modifying those investment policy guidelines as necessary and insuring that the policy is adhered to and the investment objectives are met.

The investment policy includes specific guidelines for specific categories of fixed income and convertible securities. Assets are managed by professional investment managers who are expected to achieve a reasonable rate of return over a market cycle. Long-term performance is a fundamental tenet of the policy.

The general policy states that plan assets would be invested to seek the greatest return consistent with the fiduciary character of the pension funds and to allow the plans to meet the need for timely pension benefit payments. The specific investment guidelines stipulate that management is to maintain adequate liquidity for meeting expected benefit payments by reviewing, on a timely basis, contribution and benefit payment levels and appropriately revising long-term and short-term asset allocations. Management takes reasonable and prudent steps to preserve the value of pension fund assets and to avoid the risk of large losses. Major steps taken to provide this protection included:

▪ Assets are diversified among various asset classes, such as domestic equities, international equities, fixed income and convertible liquid reserves. The long-term asset allocation ranges are as follows:

Domestic equities	10%-32%
International equities, including emerging markets	10%-32%
Corporate bonds	38%-80%
Liquid reserves	0%-1%

Periodically, reviews of allocations within these ranges are made to determine what adjustments should be made based on changing economic and market conditions and specific liquidity requirements.

▪ Assets were managed by professional investment managers and could be invested in separately managed accounts or commingled funds.

▪ Assets were not invested in securities rated below BBB- by S&P or Baa3 by Moody’s.

The investment guidelines also required that the individual investment managers were expected to achieve a reasonable rate of return over a market cycle. Emphasis was placed on long-term performance versus short-term market aberrations. Factors considered in determining reasonable rates of return included performance achieved by a diverse cross section of other investment managers, performance of commonly used benchmarks (e.g., Russell 3000 Index, MSCI World ex-U.S. Index, Barclays Capital Long Credit Index), actuarial assumptions for return on plan investments and specific performance guidelines given to individual investment managers.

At December 31, 2012, eleven active investment managers managed substantially all of the pension funds, each of whom had responsibility for managing a specific portion of these assets. Plan assets were diversified among the various asset classes within the allocation ranges approved by the benefits committee.

Our company-sponsored pension plans were underfunded by $78.7 million at December 31, 2012 and $89.1 million at December 31, 2011. As a result of being underfunded, we are required to make contributions to our qualified pension plans. In 2012 we contributed $20.6 million to these pension plans. We also contributed $0.2 million to our non-qualified pension plan in 2012. Our cash contributions in 2013 are estimated to be approximately $20 million. We do not anticipate funding our OPEB plans in 2013 except to pay benefit costs as incurred during the year by plan participants.

Estimated future benefit payments, which reflect expected future service and expected Medicare prescription subsidy receipts, are as follows for the years indicated:

(In thousands)	Pension Benefit Plans		Other Postretirement Employee Benefit Plans		Expected Medicare Subsidy
2013	$	17,144	$	9,565	$	690
2014	17,606		9,895		723
2015	18,413		10,138		752
2016	19,037		10,515		778
2017	19,629		10,431		808
2018-2022	103,890		47,754		4,460

Multiemployer Defined Benefit Pension Plans

Hourly employees at two of our manufacturing facilities participate in multiemployer defined benefit pension plans: the PACE Industry Union Management Pension Fund, which is managed by United Steelworkers, or USW, Benefits; and the International Association of Machinist & Aerospace Workers National Pension Fund, or IAM. We make contributions to these plans, as well as make contributions to a trust fund established to provide retiree medical benefits for a portion of these employees, which is also managed by USW Benefits. The risks of participating in these multiemployer plans are different from single-employer plans in the following respects:

▪ Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.

▪ If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.

▪ If we choose to stop participating in any of our multiemployer plans, we may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a "withdrawal liability." Due to the current unknown impact of future plan performance or the success of current and future funding improvement or rehabilitation plans to restore solvency to the plans, we are unable to determine whether or not we would ever choose to stop participating in any multiemployer plan, and if so, the amount and timing of any future withdrawal liability, changes in future funding obligations, or the impact of increased contributions, including those that could be triggered by a mass withdrawal of other employers from a multiemployer plan. Future funding obligations or future withdrawal liabilities would likely be material to our results of operations, financial condition or cash flows. A withdrawal liability is recorded for accounting purposes when withdrawal is probable and the amount of the withdrawal obligation is reasonably estimable.

Our participation in these plans for the annual period ended December 31, 2012, is outlined in the table below. The “EIN" and "Plan Number” columns provide the Employee Identification Number, or EIN, and the three-digit plan number. The most recent Pension Protection Act, or PPA, zone status available in 2012 and 2011 is for a plan’s year-end as of December 31, 2011, and December 31, 2010, respectively. The zone status is based on information we received from the plans and is certified by each plans’ actuary. Among other factors, plans in the red zone are generally less than 65 percent funded, plans in the yellow zone are less than 80 percent but more than 65 percent funded, and plans in the green zone are at least 80 percent funded. The “FIP/RP Status Pending/Implemented” column indicates plans for which a financial improvement plan, or FIP, or a rehabilitation plan, or RP, is either pending or has been implemented as required by the PPA as a measure to correct its underfunded status. The last column lists the expiration date(s) of the collective-bargaining agreement(s) to which the plans are subject.

In 2012, the contribution rates for the IAM plan increased to $3.25 an hour, up from $3.00 an hour in 2011 and $2.75 an hour in 2010, affecting the comparability of the contributions year over year. Similarly, in November of 2011, the USW plan’s contribution rates increased from $2.4285 an hour to $2.6714 an hour. The USW plan's rate increase was implemented as part of the RP in lieu of the legally required surcharge, paid by the employers, to assist the fund’s financial status. As such, the USW contribution rate changes affect comparability of the contributions year over year. We were listed in the USW Plan’s Form 5500 report as providing more than five percent of the total contributions for the years 2011 and 2010. At the date of issuance of our consolidated financial statements, Form 5500 reports for these plans were not available for the 2012 plan year.

Pension Fund	EIN	Plan Number	PPA Zone Status			FIP/RP Status Pending/ Implemented	Contributions (in thousands)						Surcharge Imposed	Expiration Date of Collective Bargaining Agreement
			2012	2011			2012		2011		2010
IAM	51-6031295	002	Green	Green		N/A	$	288	$	269	$	244	No	5/31/2016
USW	11-6166763	001	Red	Red		Implemented	5,673		5,648		5,218		No	8/31/2014
					Total Contributions:		$	5,961	$	5,917	$	5,462

XML

Segment Information

12 Months Ended

Dec. 31, 2012

Segment Reporting [Abstract]

Segment Information

NOTE 17 Segment Information

We are organized in two reportable operating segments: Consumer Products and Pulp and Paperboard. Intersegment pulp transfers from our Pulp and Paperboard segment to our Consumer Products segment are transferred at cost. As a result, there are no eliminations required to reconcile our total consolidated net sales to the segments' total net sales.

Following is a tabular presentation of business segment information for each of the past three years. Corporate information is included to reconcile segment data to the financial statements.

(In thousands)	2012			2011			2010
Segment net sales:
Consumer Products	$	1,134,556		$	1,092,133		$	570,047
Pulp and Paperboard	739,748			835,840			802,918
Total segment net sales	$	1,874,304		$	1,927,973		$	1,372,965
Operating income:
Consumer Products	$	93,347		$	42,806		$	80,791
Pulp and Paperboard1	103,910			92,827			64,869
	197,257			135,633			145,660
Corporate and eliminations1	(51,870		)	(20,188		)	(46,893		)
Income from operations	$	145,387		$	115,445		$	98,767
Depreciation and amortization:
Consumer Products	$	54,547		$	50,391		$	16,994
Pulp and Paperboard	23,113			26,073			28,658
Corporate	1,673			469			2,076
Total depreciation and amortization	$	79,333		$	76,933		$	47,728
Assets:
Consumer Products	$	1,178,438		$	1,081,988		$	969,450
Pulp and Paperboard	344,614			355,886			377,674
	1,523,052			1,437,874			1,347,124
Corporate	110,404			133,444			198,212
Total Assets	$	1,633,456		$	1,571,318		$	1,545,336
Capital expenditures:
Consumer Products	$	183,330		$	117,059		$	33,902
Pulp and Paperboard	19,954			15,355			10,208
	203,284			132,414			44,110
Corporate	3,831			5,329			2,923
Total capital expenditures	$	207,115		$	137,743		$	47,033

¹  Results for Pulp and Paperboard for 2011 included additional expenses associated with the sale of the Lewiston, Idaho sawmill, which were partially offset by LIFO inventory liquidation and other adjustments recorded at the corporate level.

Our manufacturing facilities and all other assets are located within the continental United States, except for one production facility in St. Catharines, Ontario, Canada. We sell and ship our products to customers in many foreign countries. Geographic information regarding our net sales is summarized as follows:

(In thousands)	2012		2011		2010
United States	$	1,726,561	$	1,751,482	$	1,236,400
Japan	63,368		63,584		53,390
Canada	29,557		31,256		15,060
Taiwan	11,061		16,205		12,257
Korea	9,655		5,426		6,258
Australia	7,786		6,246		6,173
Mexico	6,102		13,619		9,843
China	3,488		15,081		9,128
Germany	2,500		3,042		2,729
Netherlands	14		3,163		4,181
Other foreign countries	14,212		18,869		17,546
Total Net Sales	$	1,874,304	$	1,927,973	$	1,372,965

XML

Supplemental Guarantor Financial Information - Additional Information (Details)	12 Months Ended
	Dec. 31, 2010
Condensed Financial Information of Parent Company Only Disclosure [Abstract]
Percentage of ownership of certain subsidiaries	100.00%

XML

Business Combinations Allocation of Purchase Price to Net Assets of Cellu Tissue Based On Estimates of Fair Value of Assets and Liabilities (Details) (Cellu Tissue Holdings Inc, USD $) In Thousands, unless otherwise specified	Dec. 27, 2010
Cellu Tissue Holdings Inc
Business Acquisition [Line Items]
Current assets	$ 128,079
Property, plant and equipment	276,499
Goodwill	229,533
Intangibles	56,400
Other assets	1,500
Assets acquired	692,011
Current liabilities	97,071
Long-term debt, less current portion	287,002
Deferred income taxes	60,221
Other liabilities	732
Liabilities assumed	445,026
Net assets acquired	$ 246,985

XML

Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2012

Fair Value Disclosures [Abstract]

Estimated Fair Values of Financial Instruments

The estimated fair values of our financial instruments as of our balance sheet dates are presented below:

	2012				2011
(In thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Cash, short-term investments and restricted cash (Level 1)	$	34,079	$	34,079	$	64,209	$	64,209
Long-term debt (Level 1)	523,933		572,625		523,694		556,313

XML

Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Current assets:
Cash	$ 12,579	$ 8,439
Short-term investments	20,000	55,001
Restricted cash	0	769
Receivables, net	154,143	176,189
Taxes receivable	20,828	10,000
Inventories	231,466	244,071
Deferred tax assets	17,136	39,466
Prepaid expenses	12,314	11,396
Total current assets	468,466	545,331
Property, plant and equipment, net	877,377	735,566
Goodwill	229,533	229,533
Intangible assets, net	47,753	49,748
Other assets, net	10,327	11,140
TOTAL ASSETS	1,633,456	1,571,318
Current liabilities:
Accounts payable and accrued liabilities	165,596	144,631
Current liability for pensions and other postretirement employee benefits	9,137	9,861
Total current liabilities	174,733	154,492
Long-term debt	523,933	523,694
Liability for pensions and other postretirement employee benefits	204,163	215,932
Other long-term obligations	50,910	48,474
Accrued taxes	78,699	74,464
Deferred tax liabilities	60,124	69,358
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, 23,840,683 and 23,101,710 shares issued	2	2
Additional paid-in capital	326,901	315,964
Retained earnings	359,684	295,553
Treasury stock, at cost, common shares–853,470 and 333,300 shares repurchased	(30,000)	(11,350)
Accumulated other comprehensive loss, net of tax	(115,693)	(115,265)
Total stockholders’ equity	540,894	484,904
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 1,633,456	$ 1,571,318

XML

Equity-Based Compensation Plans Equity-Based Compensation Plans Summary of Status of Outstanding Performance Share Awards (Details) (Performance shares, USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Performance shares
Number of share
Beginning Balance	749,538	638,870	524,588
Granted	150,865	110,668	141,522
Settled	(499,680)	0	0
Forfeited	(8,068)	0	(27,240)
Ending Balance	392,655	749,538	638,870
Weighted Average Grant Date Fair Value
Beginning Balance	$ 19.52	$ 13.00	$ 5.64
Granted	$ 40.24	$ 57.18	$ 39.36
Settled	$ 5.65	$ 0.00	$ 0.00
Forfeited	$ 42.15	$ 0.00	$ 8.14
Ending Balance	$ 44.67	$ 19.52	$ 13.00
Aggregate intrinsic value
Aggregate intrinsic value	$ 15,376	$ 26,691	$ 25,012

XML

Nature of Operations and Basis of Presentation

12 Months Ended

Dec. 31, 2012

Disclosure Nature Of Operations And Basis Of Presentation Additional Information [Abstract]

Nature of Operations and Basis of Presentation

NOTE 1 Nature of Operations and Basis of Presentation

On December 16, 2008, Potlatch Corporation, which we refer to in this report as Potlatch, distributed 100% of the issued and outstanding shares of our common stock to the holders of record of Potlatch common stock in a tax-free spin-off. Unless the context otherwise requires or unless otherwise indicates, references in this report to “Clearwater Paper Corporation,” “we,” “our,” “the company” and “us” refer:

▪ for all periods prior to the spin-off, to the consumer products and pulp and paperboard businesses separated from Potlatch in the spin-off; and

▪ for all periods following the spin-off, to Clearwater Paper Corporation and its subsidiaries.

On December 27, 2010, we acquired Cellu Tissue Holdings, Inc., or Cellu Tissue, and consolidated the acquisition in our financial statements as of that date.

On November 28, 2011, we sold our Lewiston, Idaho, sawmill to Idaho Forest Group of Coeur d’Alene, Idaho. The transaction included the sale of our sawmill, planer mill, dry kilns and related assets along with log and finished goods inventories and timber under contract, in the aggregate amount of approximately $30 million. This sawmill was our only wood products facility.

These consolidated financial statements include the financial condition and results of operations of Clearwater Paper Corporation and its wholly-owned subsidiaries. All intercompany transactions and balances between operations within the company have been eliminated.

XML

Earnings (Loss) Before Income Taxes Composition in Each Tax Jurisdiction (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Earnings (Loss) Before Income Taxes Composition in Each Tax Jurisdiction [Abstract]
United States	$ 111,278	$ 72,156	$ 76,196
Canada	313	(1,236)	0
Earnings before income taxes	$ 111,591	$ 70,920	$ 76,196

XML

Savings, Pension and Other Postretirement Employee Benefit Plans Multiemployer Defined Benefit Plans (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Defined Benefit Plan Disclosure [Line Items]
Contributions (in thousands)	$ 5,961	$ 5,917	$ 5,462
IAM
Defined Benefit Plan Disclosure [Line Items]
EIN	516031295
Plan Number	002
PPA Zone Status	Green	Green
Contributions (in thousands)	288	269	244
Surcharge Imposed	No
Expiration Date of Collective Bargaining Agreement	May 31, 2016
USW
Defined Benefit Plan Disclosure [Line Items]
EIN	116166763
Plan Number	001
PPA Zone Status	Red	Red
Contributions (in thousands)	$ 5,673	$ 5,648	$ 5,218
Surcharge Imposed	No
Expiration Date of Collective Bargaining Agreement	Aug. 31, 2014

XML

Other Long-Term Obligations (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Disclosure Other Long Term Obligations [Abstract]
Long-term lease obligations, net of current portion	$ 25,240	$ 25,546
Deferred proceeds	11,668	13,040
Deferred compensation	9,939	8,100
Other	4,063	1,788
Other long-term obligations	$ 50,910	$ 48,474

XML

Financial Results by Quarter

12 Months Ended

Dec. 31, 2012

Financial Results By Quarter [Abstract]

Financial Results by Quarter

NOTE 18 Financial Results by Quarter (Unaudited)

	Three Months Ended
	March 31						June 30						September 30						December 31
(In thousands— except per-share amounts)	2012			2011			2012			2011			2012			2011			2012			2011
Net Sales	$	457,798		$	465,830		$	473,572		$	494,627		$	480,233		$	501,125		$	462,701		$	466,391
Costs and expenses:
Cost of sales	(403,076		)	(414,920		)	(398,546		)	(433,358		)	(409,822		)	(448,927		)	(396,428		)	(405,325		)
Selling, general and   administrative   expenses	(29,074		)	(27,364		)	(30,529		)	(27,476		)	(30,649		)	(26,815		)	(30,793		)	(28,343		)
Total operating   costs and expenses	(432,150		)	(442,284		)	(429,075		)	(460,834		)	(440,471		)	(475,742		)	(427,221		)	(433,668		)
Income from   operations	25,648			23,546			44,497			33,793			39,762			25,383			35,480			32,723
Net earnings	$	3,726		$	5,604		$	21,489		$	13,923		$	19,064		$	8,645		$	19,852		$	11,502
Net earnings per   common share
Basic	$	0.16		$	0.25		$	0.92		$	0.60		$	0.82		$	0.38		$	0.86		$	0.51
Diluted	0.16			0.24			0.91			0.59			0.80			0.37			0.84			0.48

XML

Pre-tax Components of Net Periodic Cost (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Defined Benefit Plan Disclosure [Line Items]
Curtailments	$ 500
Pension Benefit Plans
Defined Benefit Plan Disclosure [Line Items]
Service cost	2,485	7,725	8,018
Interest cost	14,693	15,092	15,375
Expected return on plan assets	(19,685)	(19,532)	(19,391)
Amortization of prior service cost (credit)	634	1,193	1,205
Amortization of actuarial loss	12,085	8,382	8,671
Curtailments	477	2,776	183
Net periodic cost	10,689	15,636	14,061
Other Postretirement Employee Benefit Plans
Defined Benefit Plan Disclosure [Line Items]
Service cost	693	702	995
Interest cost	5,815	6,857	7,712
Expected return on plan assets	0	0	0
Amortization of prior service cost (credit)	(2,680)	(1,795)	(1,795)
Amortization of actuarial loss	0	0	2,083
Curtailments	0	0	0
Net periodic cost	$ 3,828	$ 5,764	$ 8,995

XML

Savings, Pension and Other Postretirement Employee Benefit Plans (Tables)

12 Months Ended

Dec. 31, 2012

Compensation and Retirement Disclosure [Abstract]

Changes in Benefit Obligation, Plan Assets and Funded Status for Company-Sponsored Benefit Plans

The changes in benefit obligation, plan assets and funded status for company-sponsored benefit plans as of December 31 are as follows:

	Pension Benefit Plans						Other Postretirement Employee Benefit Plans
(In thousands)	2012			2011			2012			2011
Benefit obligation at beginning of year	$	307,658		$	272,012		$	136,710		$	141,519
Service cost	2,485			7,725			693			702
Interest cost	14,693			15,092			5,815			6,857
Plan changes	—			—			(5,278		)	—
Mergers, sales, closures, special term benefits	—			(422		)	—			—
Actuarial losses (gains)	30,612			28,552			3,151			(5,433		)
Medicare Part D subsidies received	—			—			569			355
Benefits paid	(22,191		)	(15,301		)	(7,042		)	(7,290		)
Benefit obligation at end of year	333,257			307,658			134,618			136,710
Fair value of plan assets at beginning of year	218,557			216,650			18			16
Actual return on plan assets	37,308			4,456			1			2
Employer contribution	20,882			12,752			—			—
Benefits paid	(22,191		)	(15,301		)	—			—
Fair value of plan assets at end of year	254,556			218,557			19			18
Funded status at end of year	$	(78,701	)	$	(89,101	)	$	(134,599	)	$	(136,692	)

Schedule of Amounts Recognized in Balance Sheet

Amounts recognized in the Consolidated Balance Sheets:

	Pension Benefit Plans						Other Postretirement Employee Benefit Plans
(In thousands)	2012			2011			2012			2011
Current liabilities	$	(281	)	$	(264	)	$	(8,856	)	$	(9,597	)
Noncurrent liabilities	(78,420		)	(88,837		)	(125,743		)	(127,095		)
Net amount recognized	$	(78,701	)	$	(89,101	)	$	(134,599	)	$	(136,692	)

Amounts Recognized (Pre-tax) in Accumulated Other Comprehensive Loss

Amounts recognized (pre-tax) in Accumulated Other Comprehensive Loss as of December 31 consist of:

	Pension Benefit Plans				Other Postretirement Employee Benefit Plans
(In thousands)	2012		2011		2012			2011
Net loss	$	177,343	$	176,439	$	24,408		$	21,258
Prior service cost (credit)	1,414		2,525		(6,504		)	(3,906		)
Net amount recognized	$	178,757	$	178,964	$	17,904		$	17,352

Certain Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets

Information as of December 31 for certain pension plans included above with accumulated benefit obligations in excess of plan assets were as follows:

(In thousands)	2012		2011
Projected benefit obligation	$	333,257	$	307,658
Accumulated benefit obligation	333,257		307,658
Fair value of plan assets	254,556		218,557

Pre-tax Components of Net Periodic Cost

Pre-tax components of Net Periodic Cost and other amounts recognized in Other Comprehensive Income (Loss) for the years ended December 31 were as follows:

Net Periodic Cost (Benefit):

	Pension Benefit Plans									Other Postretirement Employee Benefit Plans
(In thousands)	2012			2011			2010			2012			2011			2010
Service cost	$	2,485		$	7,725		$	8,018		$	693		$	702		$	995
Interest cost	14,693			15,092			15,375			5,815			6,857			7,712
Expected return on plan assets	(19,685		)	(19,532		)	(19,391		)	—			—			—
Amortization of prior service cost (credit)	634			1,193			1,205			(2,680		)	(1,795		)	(1,795		)
Amortization of actuarial loss	12,085			8,382			8,671			—			—			2,083
Curtailments	477			2,776			183			—			—			—
Net periodic cost	$	10,689		$	15,636		$	14,061		$	3,828		$	5,764		$	8,995

Other Amounts Recognized in Other Comprehensive Income (Loss)

Other amounts recognized in Other Comprehensive Income (Loss):

	Pension Benefit Plans									Other Postretirement Employee Benefit Plans
(In thousands)	2012			2011			2010			2012			2011			2010
Net loss (gain)	$	12,989		$	43,207		$	(19,216	)	$	3,150		$	(5,435	)	$	(9,471	)
Prior service credit	(477		)	(2,776		)	(183		)	(5,278		)	—			—
Amortization of prior service (cost) credit	(634		)	(1,193		)	(1,205		)	2,680			1,795			1,795
Amortization of actuarial loss	(12,085		)	(8,382		)	(8,671		)	—			—			(2,083		)
Total recognized in other comprehensive loss   (income)	$	(207	)	$	30,856		$	(29,275	)	$	552		$	(3,640	)	$	(9,759	)
Total recognized in net periodic cost (benefit)   and other comprehensive loss (income)	$	10,482		$	46,492		$	(15,214	)	$	4,380		$	2,124		$	(764	)

Weighted Average Assumptions Used to Determine Benefit Obligation

Weighted average assumptions used to determine the benefit obligation as of December 31 were:

	Pension Benefit Plans						Other Postretirement Employee Benefit Plans
	2012		2011		2010		2012		2011		2010
Discount rate	4.15	%	4.90	%	5.70	%	4.05	%	4.95	%	5.60	%
Rate of salaried compensation increase	—		—		4.00		—		—		—

Weighted Average Assumptions Used to Determine Net Periodic Cost (Benefit)

Weighted average assumptions used to determine the net periodic cost (benefit) for the years ended December 31 were:

	Pension Benefit Plans						Other Postretirement Employee Benefit Plans
	2012		2011		2010		2012		2011		2010
Discount rate	4.90	%	5.70	%	5.75	%	4.95	%	5.60	%	5.75	%
Expected return on plan assets	8.00		8.00		8.50		—		—		—
Rate of salaried compensation increase	—		4.00		4.00		—		—		—

One Percentage Point Change in Health Care Cost Trend Rates

A one percentage point change in the health care cost trend rates would have the following effects:

(In thousands)	1% Increase		1% Decrease
Effect on total of service and interest cost components	$	644	$	(544	)
Effect on postretirement employee benefit obligation	12,450		(10,707		)

Investments at Fair Value for Company Sponsored Pension Benefit Plans within Fair Value Hierarchy

The following tables set forth by level, within the fair value hierarchy, the investments at fair value for our company-sponsored pension benefit plans:

	December 31, 2012
(In thousands)	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	3,786	$	—	$	—	$	3,786
Common and collective trusts:
International small cap	—		12,725		—		12,725
Global/International equity	—		16,656		—		16,656
Domestic equity – small/mid cap	—		17,339		—		17,339
International equity emerging markets	—		17,672		—		17,672
Common stocks:
Industrials	9,475		—		—		9,475
Energy	1,966		—		—		1,966
Consumer	8,270		—		—		8,270
Healthcare	7,386		—		—		7,386
Finance	13,000		—		—		13,000
Utilities	2,305		—		—		2,305
Information technology	6,828		—		—		6,828
Foreign	6,078		—		—		6,078
Mutual funds:
Foreign large blend	18,907		—		—		18,907
Long-term bond fund	114,557		—		—		114,557
Corporate debt securities	—		1,073		—		1,073
Subtotal	$	192,558	$	65,465	$	—	$	258,023
Payable held under securities lending agreement							(3,467		)
Total investments at fair value							$	254,556

	December 31, 2011
(In thousands)	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	9,843	$	—	$	—	$	9,843
Common and collective trusts:
International small cap	—		10,588		—		10,588
Global/International equity	—		13,748		—		13,748
Domestic equity – small/mid cap	—		15,939		—		15,939
International equity emerging markets	—		14,602		—		14,602
Common stocks:
Industrials	5,545		—		—		5,545
Energy	2,595		—		—		2,595
Consumer	9,714		—		—		9,714
Healthcare	4,321		—		—		4,321
Finance	10,235		—		—		10,235
Utilities	4,234		—		—		4,234
Information technology	4,847		—		—		4,847
Foreign	5,000		—		—		5,000
Mutual funds:
Foreign large blend	15,048		—		—		15,048
Long-term bond fund	99,728		—		—		99,728
Corporate debt securities	—		1,045		—		1,045
Subtotal	$	171,110	$	55,922	$	—	$	227,032
Payable held under securities lending agreement							(8,475		)
Total investments at fair value							$	218,557

Long Term Asset Allocation Ranges

Assets are diversified among various asset classes, such as domestic equities, international equities, fixed income and convertible liquid reserves. The long-term asset allocation ranges are as follows:

Domestic equities	10%-32%
International equities, including emerging markets	10%-32%
Corporate bonds	38%-80%
Liquid reserves	0%-1%

Schedule of Expected Benefit Payments

Estimated future benefit payments, which reflect expected future service and expected Medicare prescription subsidy receipts, are as follows for the years indicated:

(In thousands)	Pension Benefit Plans		Other Postretirement Employee Benefit Plans		Expected Medicare Subsidy
2013	$	17,144	$	9,565	$	690
2014	17,606		9,895		723
2015	18,413		10,138		752
2016	19,037		10,515		778
2017	19,629		10,431		808
2018-2022	103,890		47,754		4,460

Multiemployer Defined Benefit Plans

Pension Fund	EIN	Plan Number	PPA Zone Status			FIP/RP Status Pending/ Implemented	Contributions (in thousands)						Surcharge Imposed	Expiration Date of Collective Bargaining Agreement
			2012	2011			2012		2011		2010
IAM	51-6031295	002	Green	Green		N/A	$	288	$	269	$	244	No	5/31/2016
USW	11-6166763	001	Red	Red		Implemented	5,673		5,648		5,218		No	8/31/2014
					Total Contributions:		$	5,961	$	5,917	$	5,462

XML

Other Long-Term Obligations

12 Months Ended

Dec. 31, 2012

Disclosure Other Long Term Obligations [Abstract]

Other Long-Term Obligations

NOTE 11 Other Long-Term Obligations

(In thousands)	2012		2011
Long-term lease obligations, net of current portion	$	25,240	$	25,546
Deferred proceeds	11,668		13,040
Deferred compensation	9,939		8,100
Other	4,063		1,788
	$	50,910	$	48,474