NOTE 19 Supplemental Guarantor Financial Information

All of our directly and indirectly owned, domestic subsidiaries guarantee the 2013 Notes and the 2010 Notes on a joint and several basis. As of December 31, 2013, the 2013 Notes and 2010 Notes were not guaranteed by Interlake Acquisition Corporation Limited, a foreign subsidiary. There are no significant restrictions on the ability of the guarantor subsidiaries to make distributions to Clearwater Paper, the issuer of the 2013 Notes and 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

Consolidating Statement of Operations and Comprehensive Income (Loss)

Twelve Months Ended December 31, 2013



				Guarantor			Non-Guarantor
(In thousands)	Issuer			Subsidiaries			Subsidiaries			Eliminations			Total
Net sales	$	1,408,941		$	480,599		$	29,494		$	(29,204	)	$	1,889,830
Cost and expenses:
Cost of sales	(1,203,945		)	(467,822		)	(28,808		)	29,204			(1,671,371		)
Selling, general and administrative expenses	(94,861		)	(22,918		)	(1,352		)	—			(119,131		)
Total operating costs and expenses	(1,298,806		)	(490,740		)	(30,160		)	29,204			(1,790,502		)
Income (loss) from operations	110,135			(10,141		)	(666		)	—			99,328
Interest expense, net	(44,031		)	(5		)	—			—			(44,036		)
Debt retirement costs	(17,058		)	—			—			—			(17,058		)
Earnings (loss) before income taxes	49,046			(10,146		)	(666		)	—			38,234
Income tax benefit (provision)	61,778			(4,420		)	(138		)	11,501			68,721
Equity in income of subsidiary	(15,370		)	(804		)	—			16,174			—
Net earnings (loss)	$	95,454		$	(15,370	)	$	(804	)	$	27,675		$	106,955
Other comprehensive income, net of tax	57,600			—			—			—			57,600
Comprehensive income (loss)	$	153,054		$	(15,370	)	$	(804	)	$	27,675		$	164,555

Clearwater Paper Corporation

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		$	492,074		$	26,478		$	(19,980	)	$	1,874,304
Cost and expenses:
Cost of sales	(1,149,413		)	(454,383		)	(24,056		)	19,980			(1,607,872		)
Selling, general and administrative expenses	(96,668		)	(22,268		)	(2,109		)	—			(121,045		)
Total operating costs and expenses	(1,246,081		)	(476,651		)	(26,165		)	19,980			(1,728,917		)
Income from operations	129,651			15,423			313			—			145,387
Interest expense, net	(33,796		)	—			—			—			(33,796		)
Earnings before income taxes	95,855			15,423			313			—			111,591
Income tax provision	(42,440		)	(14,362		)	(35		)	9,377			(47,460		)
Equity in income of subsidiary	1,339			278			—			(1,617		)	—
Net earnings	$	54,754		$	1,339		$	278		$	7,760		$	64,131
Other comprehensive loss, net of tax	(428		)	—			—			—			(428		)
Comprehensive income	$	54,326		$	1,339		$	278		$	7,760		$	63,703

Clearwater Paper Corporation

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	$	1,464,570		$	508,341		$	32,977		$	(77,915	)	$	1,927,973
Cost and expenses:
Cost of sales	(1,256,507		)	(493,338		)	(30,600		)	77,915			(1,702,530		)
Selling, general and administrative expenses	(61,794		)	(44,481		)	(3,723		)	—			(109,998		)
Total operating costs and expenses	(1,318,301		)	(537,819		)	(34,323		)	77,915			(1,812,528		)
Income (loss) from operations	146,269			(29,478		)	(1,346		)	—			115,445
Interest expense, net	(44,187		)	(622		)	—			—			(44,809		)
Other, net	(215		)	388			111			—			284
Earnings (loss) before income taxes	101,867			(29,712		)	(1,235		)	—			70,920
Income tax (provision) benefit	(34,018		)	1,857			(2,452		)	3,367			(31,246		)
Equity in income of subsidiary	(31,542		)	(3,687		)	—			35,229			—
Net earnings	$	36,307		$	(31,542	)	$	(3,687	)	$	38,596		$	39,674
Other comprehensive loss, net of tax	(16,913		)	—			—			—			(16,913		)
Comprehensive income	$	19,394		$	(31,542	)	$	(3,687	)	$	38,596		$	22,761

Clearwater Paper Corporation

Consolidating Balance Sheet

At December 31, 2013



(In thousands)	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
ASSETS
Current assets:
Cash	$	18,273		$	—		$	5,402		$	—		$	23,675
Restricted cash	1,500			—			—			—			1,500
Short-term investments	70,000			—			—			—			70,000
Receivables, net	119,278			38,063			2,700			(1,167		)	158,874
Taxes receivable	3,709			(15,882		)	324			22,352			10,503
Inventories	198,476			65,017			4,295			—			267,788
Deferred tax assets	42,289			6,094			5			(10,850		)	37,538
Prepaid expenses	4,704			695			124			—			5,523
Total current assets	458,229			93,987			12,850			10,335			575,401
Property, plant and equipment, net	636,662			231,225			16,811			—			884,698
Goodwill	229,533			—			—			—			229,533
Intangible assets, net	—			39,619			1,159			—			40,778
Intercompany receivable (payable)	91,865			(63,932		)	(16,431		)	(11,502		)	—
Investment in subsidiary	196,763			5,575			—			(202,338		)	—
Pension assets	4,488			—			—			—			4,488
Other assets, net	8,772			1,155			—			—			9,927
TOTAL ASSETS	$	1,626,312		$	307,629		$	14,389		$	(203,505	)	$	1,744,825
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	140,125		$	45,736		$	5,954		$	(1,167	)	$	190,648
Current liability for pensions and other postretirement employee benefits	8,778			—			—						8,778
Total current liabilities	148,903			45,736			5,954			(1,167		)	199,426
Long-term debt	650,000			—			—			—			650,000
Liability for pensions and other postretirement employee benefits	109,807			—			—			—			109,807
Other long-term obligations	51,740			1,202			—			—			52,942
Accrued taxes	1,430			911			317			—			2,658
Deferred tax liabilities	59,338			63,017			2,543			—			124,898
Accumulated other comprehensive loss, net of tax	(58,093		)	—			—			—			(58,093		)
Stockholders’ equity excluding accumulated other comprehensive loss	663,187			196,763			5,575			(202,338		)	663,187
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,626,312		$	307,629		$	14,389		$	(203,505	)	$	1,744,825

Clearwater Paper Corporation

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
Receivables, net	109,129			41,431			5,612			(2,029		)	154,143
Taxes receivable	20,712			116			—			—			20,828
Inventories	163,422			63,476			4,568			—			231,466
Deferred tax assets	11,750			4,595			—			791			17,136
Prepaid expenses	11,441			708			165			—			12,314
Total current assets	347,559			110,331			11,814			(1,238		)	468,466
Property, plant and equipment, net	618,076			242,818			16,483			—			877,377
Goodwill	229,533			—			—			—			229,533
Intangible assets, net	—			46,379			1,374			—			47,753
Intercompany receivable (payable)	108,530			(91,881		)	(15,858		)	(791		)	—
Investment in subsidiary	209,431			6,204			—			(215,635		)	—
Other assets, net	9,948			379			—			—			10,327
TOTAL ASSETS	$	1,523,077		$	314,230		$	13,813		$	(217,664	)	$	1,633,456
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	132,360		$	30,630		$	4,635		$	(2,029	)	$	165,596
Current liability for pensions and other postretirement employee benefits	9,137			—			—			—			9,137
Total current liabilities	141,497			30,630			4,635			(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	49,102			1,808			—			—			50,910
Accrued taxes	76,617			1,771			311			—			78,699
Deferred tax liabilities (assets)	(13,129		)	70,590			2,663			—			60,124
Accumulated other comprehensive loss, net of tax	(115,693		)	—			—			—			(115,693		)
Stockholders’ equity excluding accumulated other comprehensive loss	656,587			209,431			6,204			(215,635		)	656,587
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,523,077		$	314,230		$	13,813		$	(217,664	)	$	1,633,456

Clearwater Paper Corporation

Consolidating Statement of Cash Flows

Twelve Months Ended December 31, 2013



(In thousands)	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss)	$	95,454		$	(15,370	)	$	(804	)	$	27,675		$	106,955
Adjustments to reconcile net earnings (loss) to net cash flows from operating activities:
Depreciation and amortization	54,291			33,712			2,269			—			90,272
Non-cash adjustments to unrecognized taxes	(75,308		)	—			—			—			(75,308		)
Deferred tax provision (benefit)	3,185			(9,072		)	(125		)	11,641			5,629
Equity-based compensation expense	10,960									—			10,960
Employee benefit plans	10,131			—			—			—			10,131
Deferred issuance costs and discounts on long-term debt	4,964			—			—			—			4,964
Disposal of plant and equipment, net	201			1,291			1			—			1,493
Changes in working capital, net	(31,256		)	11,747			4,487			—			(15,022		)
Change in taxes receivable, net	17,003			15,998			(324		)	(22,352		)	10,325
Change in non-current accrued taxes, net	1,423			(860		)	6			—			569
Funding of qualified pension plans	(15,050		)	—			—			—			(15,050		)
Change in restricted cash	—			(32		)	—			—			(32		)
Other, net	(452		)	923			—			—			471
Net cash flows from operating activities	75,546			38,337			5,510			16,964			136,357
CASH FLOWS FROM INVESTING ACTIVITIES
Change in short-term investments, net	(50,000		)	—			—			—			(50,000		)
Additions to plant and equipment	(65,708		)	(22,562		)	(2,323		)	—			(90,593		)
Net cash flows from investing activities	(115,708		)	(22,562		)	(2,323		)	—			(140,593		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt	275,000			—			—			—			275,000
Repayment of long-term debt	(150,000		)	—			—			—			(150,000		)
Purchase of treasury stock	(100,000		)	—			—			—			(100,000		)
Investment from (to) parent	31,998			(15,780		)	746			(16,964		)	—
Payment for long-term debt issuance costs	(4,837		)	—			—			—			(4,837		)
Payment of tax withholdings on equity- based payment arrangements	(4,831		)	—			—			—			(4,831		)
Net cash flows from financing activities	47,330			(15,780		)	746			(16,964		)	15,332
Increase (decrease) in cash	7,168			(5		)	3,933			—			11,096
Cash at beginning of period	11,105			5			1,469			—			12,579
Cash at end of period	$	18,273		$	—		$	5,402		$	—		$	23,675

Clearwater Paper Corporation

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		$	1,339		$	278		$	7,760		$	64,131
Adjustments to reconcile net earnings to net cash flows from operating activities:
Depreciation and amortization	48,191			29,030			2,112			—			79,333
Non-cash adjustments to unrecognized taxes	3,275			—			—			—			3,275
Deferred tax provision (benefit)	9,840			4,009			(188		)	(791		)	12,870
Equity-based compensation expense	9,703			—			—			—			9,703
Employee benefit plans	9,366			—			—			—			9,366
Deferred issuance costs and discounts on long-term debt	2,010			—			—			—			2,010
Disposal of plant and equipment, net	622			1,381			—			—			2,003
Changes in working capital, net	25,252			36,596			(567		)	—			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, net	(242		)	22			1,180			—			960
Funding of qualified pension plans	(20,627		)	—			—			—			(20,627		)
Change in restricted cash	769			—			—			—			769
Other, net	548			(264		)	—			—			284
Net cash flows from operating activities	115,869			72,706			3,149			6,969			198,693
CASH FLOWS FROM INVESTING ACTIVITIES
Change in short-term investments, net	35,001			—			—			—			35,001
Additions to plant and equipment	(190,296		)	(11,632		)	(1,848		)	—			(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 flows from investing activities	(164,559		)	(10,597		)	(1,848		)	—			(177,004		)
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of treasury stock	(18,650		)	—			—			—			(18,650		)
Investment from (to) parent	75,198			(66,463		)	(1,766		)	(6,969		)	—
Payment for long-term debt issuance costs	(2		)	—			—			—			(2		)
Payment of tax withholdings on equity-based payment arrangements	(13,234		)	—			—			—			(13,234		)
Excess tax benefits from equity-based payment arrangements	15,837			—			—			—			15,837
Other, net	(1,500		)	—			—			—			(1,500		)
Net cash flows from financing activities	57,649			(66,463		)	(1,766		)	(6,969		)	(17,549		)
Increase (decrease) in cash	8,959			(4,354		)	(465		)	—			4,140
Cash at beginning of period	2,146			4,359			1,934			—			8,439
Cash at end of period	$	11,105		$	5		$	1,469		$	—		$	12,579

Clearwater Paper Corporation

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	$	36,307		$	(31,542	)	$	(3,687	)	$	38,596		$	39,674
Adjustments to reconcile net earnings to net cash flows from operating activities:
Depreciation and amortization	45,439			29,364			2,130			—			76,933
Deferred tax provision (benefit)	(2,394		)	24,466			(2,815		)	(4,480		)	14,777
Equity-based compensation expense	8,134			—			—			—			8,134
Employee benefit plans	16,897			—			—			—			16,897
Deferred issuance costs and discounts on long-term debt	215			—			—			—			215
Disposal of plant and equipment, net	324			672			2			—			998
Changes in working capital, net	(133,142		)	45,400			1,730			—			(86,012		)
Change in taxes receivable, net	(4,685		)	1,939			(217		)	3,317			354
Excess tax benefits from equity-based payment arrangements	(885		)	—			—			—			(885		)
Change in non-current accrued taxes, net	2,453			—			—			—			2,453
Funding of qualified pension plans	(12,498		)	—			—			—			(12,498		)
Change in restricted cash	4,160			—			—			—			4,160
Other, net	3,195			—			—			—			3,195
Net cash flows from operating activities	(36,480		)	70,299			(2,857		)	37,433			68,395
CASH FLOWS FROM INVESTING ACTIVITIES
Change in short-term investments, net	71,094			—			—			—			71,094
Additions to plant and equipment	(117,525		)	(16,088		)	(456		)	—			(134,069		)
Proceeds from the sale of assets	12,826			—			—			—			12,826
Net cash flows from investing activities	(33,605		)	(16,088		)	(456		)	—			(50,149		)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of long-term debt	—			(15,595		)	—			—			(15,595		)
Purchase of treasury stock	(11,350		)	—			—			—			(11,350		)
Investment from (to) parent	70,013			(36,432		)	3,852			(37,433		)	—
Payment for long-term debt issuance costs	(638		)	—			—			—			(638		)
Payment of tax withholdings on equity-based payment arrangements	(2,400		)	—			—			—			(2,400		)
Excess tax benefits from equity-based payment arrangements	885			—			—			—			885
Other, net	2			—			—			—			2
Net cash flows from financing activities	56,512			(52,027		)	3,852			(37,433		)	(29,096		)
Effect of exchange rate changes	—			—			361			—			361
Increase (decrease) in cash	(13,573		)	2,184			900			—			(10,489		)
Cash at beginning of period	15,719			2,175			1,034			—			18,928
Cash at end of period	$	2,146		$	4,359		$	1,934		$	—		$	8,439