Operating income of $30.8 million for the 1Q 2013 increased by $3.3 million, or 12.1%, compared to the 1Q 2012. The improved financial performance primarily reflects benefits from higher prices, partially offset by inflation on input, labor and benefit costs, higher outage costs, increased depreciation charges resulting mainly from the 2012 investment in new information systems and start-up expenses for the Company's new manufacturing plant in Aurora, Illinois. The first quarter's operating income included $2.3 million of stock compensation expense. The company expects total stock compensation expense to approximate $1 million for each of the remaining three quarters of 2013.
Roger W. Stone, Chairman and CEO, stated, "Our operations performed well during the quarter, propelling the Company to record 1Q results. Average mill selling prices of $653 per ton increased by $45 per ton compared to the 1Q 2012. In the 1Q 2013, we realized 2012's domestic containerboard and corrugated price increases, and we benefitted from increasing prices of over $100 per ton on export containerboard sales compared to 2012's 1Q."
The effective income tax rate for the 1Q 2013 was 33.8% compared to 36% for the 1Q 2012. The lower effective income tax rate is due to a higher expected benefit from the domestic manufacturing deduction and lower state income taxes. The 2013 rate also includes a favorable discrete benefit for a 2012 R&D tax credit. For 2013, the Company estimates its full year effective income tax rate to be 34.3% and its cash tax rate to be 10%.
KapStone Paper and Packaging Corporation is a leading North American producer of unbleached kraft paper and corrugated products. The Company is the parent company of KapStone Kraft Paper Corporation and KapStone Container Corporation which includes three paper mills and 15 converting plants across the eastern and midwestern US.