This morning's call is posted as an audio webcast on our website at boiseinc.com under Webcasts and Presentations, and a replay will be available shortly after the call.With that introduction, I will now turn the call over to Alexander. Alexander Toeldte Thank you, Greg. Welcome to our second quarter 2012 earnings call. I'll start by summarizing some key second quarter results, and I'll make some remarks about the individual performances of our Packaging and Paper segments before turning the call over to Sam Cotterell, who will give you more detail about our financial results. Boise had a very good second quarter. Our sales, EBITDA and net income were all up over the same quarter last year. Sales were driven by strong volumes in our Packaging segment, and earnings improved due to lower input and maintenance cost, especially in our Paper segment. During the second quarter, we had 3 annual maintenance outages. These were done safely, on time and within budget, and we continue to operate well. We also continue to see benefits from our acquisitions of Tharco and Hexacomb. In particular, the increased integration of linerboard in our own system insulated us from lower-margin export markets. We are now about 80% vertically integrated and expect to be approximately 85% integrated by fourth quarter 2012 with the expectation of being about 90% integrated by year-end 2013. Finally, we continue to grow our sales of Label and Release and Premium Office Papers, and these products made up 33% of our uncoated freesheet sales volumes so far this year. Now let's take a look at our Packaging business. Sales increased over the prior-year quarter due to the acquisition of Hexacomb and due to strong organic growth in sales of our other corrugated products compared to the prior-year quarter, while reported industry volumes were flat year-over-year.
Our second quarter EBITDA was essentially flat compared with the second quarter '11. The benefits of lower energy cost were offset by higher maintenance cost and lower linerboard sales volumes due to lower production as a result of our annual maintenance outage. Last year, as you recall, our maintenance outage at DeRidder occurred mostly in first quarter, while in 2012, the majority of the outage occurred in second quarter. When you look at EBITDA on a half-year basis, our EBITDA for Packaging has grown substantially over the previous year.In July, we announced a $50-per-short-ton price increase on linerboard sales. Due to our increased vertical integration, we expect to recognize most of the benefits of the price increase in the fourth quarter. Turning to our Paper business. In the Paper business, revenue for second quarter 2012 was lower compared with second quarter '11 due to lower volumes for market pulp and lower prices for market pulp. Volumes of uncoated freesheet were flat compared with second quarter 2011. We continue to benefit from increased sales volumes and prices in our Label and Release and Premium Office Papers. In contrast, reported industry shipments of uncoated freesheet declined 3% compared with the first half of 2011, and we were -- and they were down 4% compared with the prior-year quarter. Commodity uncoated freesheet prices declined -- decreased slightly. Lower natural gas and fiber costs, along with lower annual maintenance outage cost, helped increase our Paper EBITDA compared with the second quarter '11. In March, we announced a $60-per-ton price increase across most of our printing and converting products, including offset, forms and envelope papers. In April, we announced a $40-per-ton price increase for our cut-sized papers. We expect to see some benefit from both increases in the second half of the year. Read the rest of this transcript for free on seekingalpha.com