Cascades posts significantly improved results in the first quarter



    KINGSEY FALLS, QC, May 14 /CNW Telbec/ -

    
    (All amounts in this press release are in Canadian dollars unless
     otherwise indicated.)

    - Net earnings of $37 million ($0.38 per share) compared to a net loss
      of $4 million in the first quarter of 2008;
    - Operating income before depreciation and amortization (EBITDA)
      excluding specific items of $107 million, highest for a first quarter
      in Cascades' history, an increase of 81 % compared to last year and of
      11 % compared to the previous quarter;
    - Net earnings excluding specific items of $21 million ($0.22 per share)
      compared to a net loss of $9 million in the same period of last year;
    - 169% improvement in cash flow from operations excluding specific items
      to $70 million;
    - $14 million gain on purchase of long-term debt (included in specific
      items);
    - Current cash availability of approximately $300 million;
    - Buy-back of approximately 1.1 million shares at an average cost of
      $2.12 by the Company;
    - Purchase of more than 630,000 shares by insiders during the quarter;
    - Start-up of the new sorting facility in April to support the launch of
      the new blue cart recycling program of the City of Calgary;
    - Cascades named one of Canada's greenest employers by Mediacorp.

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Financial Highlights
    --------------------
    Selected consolidated information
    (in millions of Canadian dollars,              --------------------------
    except amounts per share)                      Q1/2009  Q1/2008  Q4/2008
    ---------------------------------------------  --------------------------
    Sales                                              970      959    1,020
    Excluding specific items (1)
      Operating income before depreciation
       and amortization (OIBD or EBITDA)               107       59       96
      Operating income from continuing
       operations                                       53        8       41
      Net earnings (loss)                               21       (9)      18
        per common share                             $0.22   $(0.09)   $0.18
      Cash flow from operations (adjusted)
       from continuing operations                       70       26       68
        per common share                             $0.71    $0.26    $0.69
    As reported
    Operating income before depreciation and
     amortization (OIBD or EBITDA) (1)                 103       45       52
    Operating income (loss) from continuing
     operations                                         49       (6)      (3)
    Net earnings (loss)                                 37       (4)     (18)
      per common share                               $0.38   $(0.04)  $(0.19)
    Cash flow from operations (adjusted) from
     continuing operations (1)                          68       17       59
      per common share (1)                           $0.69    $0.17    $0.60
    -------------------------------------------------------------------------
    Note 1 - see the supplemental information on non-GAAP measures note.
    Note 2 - the 2008 results were restated following the retrospective
             application of CICA handbook Section 3064

    Cascades Inc. (CAS on the Toronto stock exchange), leader in recovery and
in green packaging and tissue paper products, announces its financial results
for the three months ended March 31, 2009. Operating income before
depreciation (OIBD or EBITDA) and net earnings excluding specific items
increased significantly to respectively $107 million and $21 million ($0.22
per share) in the first quarter of 2009 compared to $59 million and a net loss
of $9 million in the same period in 2008.
    Excluding specific items, EBITDA also improved by $11 million in
comparison to the previous quarter while net earnings increased by $3 million.
This sequential rise constitutes the fourth quarter of consecutive growth in
EBITDA.
    Including specific items, the operating income before depreciation and net
earnings grew respectively to $103 million and $37 million ($0.38 per share)
in the first quarter of 2009 compared to $45 million and a net loss of $4
million for the same quarter in 2008.
    Commenting on the quarterly results, Mr. Alain Lemaire, President and
Chief Executive Officer stated: "During the quarter, we benefited from
restructuring initiatives implemented in the past twelve months, from the
depreciation of the Canadian dollar and a more favourable variable cost
environment. These factors have more than offset the capacity utilization rate
of less than 80% in our packaging sector and our EBITDA margin on sales
increased from 6% in the first quarter of 2008 to 11% in 2009. Our Tissue
Group has continued to perform well and our boxboard operations' EBITDA almost
tripled to $24 million. Since a trough in Q2 2008, this group's EBITDA has in
fact been multiplied by 8."

    Results analysis for the three-month period ended March 31, 2009
    ----------------------------------------------------------------

    In comparison with the same period last year, sales increased 1% to $970
million reflecting the increase in selling prices and the depreciation of the
Canadian dollar which have more than offset the 12% drop in shipments.
    The operating income from continuing operations amounted to $49 million
compared to an operating loss of $6 million last year. When excluding specific
items, operating income from continuing operations increased $45 million to
$53 million. Despite lower sales volumes, operating results improved mainly
due to higher selling prices, lower raw material and energy costs and the
depreciation of the Canadian dollar.
    The specific items that impacted the operating income in the first quarter
of 2009 include a $3 million impairment loss following the announcement of the
closure of the Quebec City corrugated box plant and $2 million in other
closure and restructuring costs.
    Net earnings of $37 million reflect a $14 million gain on purchase of
long-term debt at 56% of their nominal value and $6 million in positive income
tax adjustment following the change of the Quebec provincial tax rate for
investment income.
    The net debt remained relatively stable despite a $33 million negative
impact of the depreciation of the Canadian dollar on long-term debt. The ratio
of net debt to EBITDA excluding specific items in the last twelve months
decreased from 5.9x in the fourth quarter of 2008 to 5.1x in the first quarter
of 2009.

    Near term outlook
    -----------------

    Mr. Alain Lemaire, President and Chief Executive Officer added: "We expect
to benefit from the seasonal pickup in demand in the second quarter and we
anticipate that our two main variable costs, recycled fibre and energy, should
stay relatively stable. However, we remain cautious in regards to short term
business conditions considering the decrease in selling prices for certain of
our products in recent months and the potential appreciation of the Canadian
dollar."

    Dividend on Common Shares and normal course issuer bid
    ------------------------------------------------------

    The Board of Cascades declared a quarterly dividend of $0.04 per share to
be paid June 12, 2009 to shareholders of record at the close of business on
May 29, 2009. This dividend paid by Cascades is an "eligible dividend" as per
the Income Tax Act (Bill C-28, Canada). In addition, in the first quarter of
2009, in accordance with its normal course issuer bid, Cascades has purchased
for cancellation 1,081,200 common shares at an average price of $2.12 per
share representing an aggregate amount of approximately $2.3 million.

    Supplemental information on non-GAAP measures

    Operating income before depreciation and amortization, earnings before
interests, taxes, depreciation and amortization, operating income, cash flow
from operations and cash flow from operations per share are not measures of
performance under Canadian GAAP. The Company includes operating income before
depreciation and amortization, earnings before interests, taxes, depreciation
and amortization, operating income, cash flow from operations and cash flow
from operations per share because they are measures used by management to
assess the operating and financial performance of the Company's operating
segments. Additionally, the Company believes that these items provide
additional measures often used by investors to assess a company's operating
performance and its ability to meet debt service requirements. However,
operating income before depreciation and amortization, earnings before
interests, taxes, depreciation and amortization, operating income, cash flow
from operations and cash flow from operations per share does not represent,
and should not be used as a substitute for net earnings or cash flows from
operating activities as determined in accordance with Canadian GAAP, and they
are not necessarily an indication of whether cash flow will be sufficient to
fund our cash requirements. In addition, our definition of operating income
before depreciation and amortization, earnings before interests, taxes,
depreciation and amortization, operating income, cash flow from operations and
cash flow from operations per share may differ from those of other companies.
Cash flow from operations is defined as cash flow from operating activities as
determined in accordance with Canadian GAAP excluding the change in working
capital components and cash flow from operations per share is determined by
dividing cash flow from operations by the weighted average number of common
shares of the period.
    Operating income before depreciation and amortization excluding specific
items, earnings before interests, taxes, depreciation and amortization
excluding specific items, operating income excluding specific items, net
earnings excluding specific items, net earnings per common share excluding
specific items, cash flow from operations excluding specific items and cash
flow from operations per share excluding specific items are non-GAAP measures.
The Company believes that it is useful for investors to be aware of specific
items that have adversely or positively affected its GAAP measures, and that
the above mentioned non-GAAP measures provide investors with a measure of
performance with which to compare its results between periods without regard
to these specific items. The Company's measures excluding specific items have
no standardized meaning prescribed by GAAP and are not necessarily comparable
to similar measures presented by other companies and therefore should not be
considered in isolation.
    Specific items are defined to include charges for impairment of assets,
charges for facility or machine closures, debt restructuring charges, gains or
losses on sale of business unit, unrealized gains or losses on derivative
financial instruments that do not qualify for hedge accounting, foreign
exchange gains or losses on long-term debt and other significant items of an
unusual or non-recurring nature.
    Net earnings (loss), which is a performance measure defined by Canadian
GAAP is reconciled below to operating income (loss), operating income
excluding specific items and operating income before depreciation excluding
specific items or earnings before interests, taxes, depreciation and
amortization excluding specific items:


                                                   --------------------------
    (in millions of Canadian dollars)              Q1/2009  Q1/2008  Q4/2008
    -------------------------------------------------------------------------
                                                             Note 2   Note 2

    Net earnings (loss)                                 37       (4)     (18)
    Net earnings from discontinued operations            -      (19)       -
    Non-controlling interest                            (1)       1        -
    Share of results of significantly influenced
     companies                                          (5)      (4)      (2)
    Provision for (recovery of) income taxes             5       (9)     (12)
    Foreign exchange loss on long-term debt              -        5        4
    Gain on purchases of senior notes                  (14)       -        -
    Interest expense                                    27       24       25
                                                   --------------------------

    Operating income (loss)                             49       (6)      (3)
    Specific items :
    Inventory adjustment resulting from business
     acquisition                                         -        1        -
    Loss on disposal                                     -        5        -
    Impairment loss                                      3        -       13
    Closure and restructuring costs                      2        8       10
    Unrealized loss (gain) on financial
     instruments                                        (1)       -       21
                                                   --------------------------
                                                         4       14       44
                                                   --------------------------

    Operating income - excluding specific
     items                                              53        8       41

    Depreciation and amortization                       54       51       55
                                                   --------------------------

    Operating income before depreciation and
     amortization (OIBD) - excluding specific
     items(1)                                          107       59       96
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Note 1 - also refers to earnings before interests, taxes, depreciation
             and amortization (EBITDA).
    Note 2 - the 2008 results were restated following the retrospective
             application of CICA handbook Section 3064


    The following table reconciles net earnings and net earnings per share to
net earnings excluding specific items and net earnings per share excluding
specific items:

    (in millions of Canadian ---------------------  -------------------------
     dollars, except amounts                            Net earnings (loss)
     per share)               Net earnings (loss)          per share (1)
    ----------------------------------------------  -------------------------
                               Q1/     Q1/    Q4/       Q1/      Q1/      Q4
                             2009    2008   2008      2009     2008     2008
                             ---------------------  -------------------------
                                   Note 2 Note 2             Note 2   Note 2

    As per GAAP                37      (4)   (18)    $0.38   $(0.04)  $(0.19)
    Specific items :
    Inventory adjustment
     resulting from
     business acquisition       -       1      -    $    -   $ 0.01    $   -
    Loss on disposal            -       5      -    $    -   $ 0.05    $   -
    Impairment loss             3       -     13    $ 0.02   $    -    $0.11
    Closure and
     restructuring costs        2       8     10    $ 0.02   $ 0.05    $0.07
    Unrealized loss (gain)
     on financial instruments  (1)      -     21    $(0.01)  $    -    $0.15
    Gain on purchase
     of senior notes          (14)      -      -    $(0.13)  $    -    $   -
    Foreign exchange loss
     on long-term debt          -       5      4    $    -   $ 0.04    $0.04
    Gain included in
     discontinued operations    -     (24)     -    $    -   $(0.20)   $   -
    Adjustment of statutory
     tax rate                  (6)      -      -    $(0.06)  $    -    $   -
    Tax effect on specific
     items                      -       -    (12)
                             ---------------------  -------------------------
                              (16)     (5)    36    $(0.16)  $(0.05)   $0.37
                             ---------------------   ------------------------
    Excluding specific items   21      (9)    18     $0.22   $(0.09)   $0.18
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Note 1 - specific amounts per share are calculated on an after-tax basis.
    Note 2 - the 2008 results were restated following the retrospective
             application of CICA handbook Section 3064


    The following table reconciles cash flow from operations and cash flow
from operations per share to cash flow from operations excluding specific
items and cash flow from operations per share excluding specific items:


    ----------------------------------------------  -------------------------
                                  Cash flow               Cash flow from
                               from operations         operations per share
    (in millions of Canadian ---------------------  -------------------------
     dollars, except amounts   Q1/     Q1/    Q4/       Q1/      Q1/      Q4/
     per share)              2009    2008   2008      2009     2008     2008
    ----------------------------------------------  -------------------------

    Cash flow provided by
     operating activities      67     (31)    85
    Changes in non-cash
     working capital
     components                 1      48    (26)
                             ---------------------  -------------------------
    Cash flow (adjusted)
     from operations           68      17     59     $0.69    $0.17    $0.60
    Specific items :
    Inventory adjustment
     resulting from
     business acquisition       -       1      -         -    $0.01        -
    Closure and restructuring
     costs, net of current
     income tax                 2       8      9     $0.02    $0.08    $0.09
                             ---------------------  -------------------------

    Excluding specific items   70      26     68     $0.71    $0.26    $0.69
    ----------------------------------------------  -------------------------
    ----------------------------------------------  -------------------------


    Founded in 1964, Cascades produces, converts and markets packaging and
tissue products composed mainly of recycled fibres. Cascades employs close to
13,000 employees who work in more than 100 modern and flexible production
units located in North America and Europe. Cascades' management philosophy,
its 45 years of experience in recycling, its continued efforts in research and
development are strengths which enable the company to create new products for
its customers. The Cascades' shares trade on the Toronto stock exchange under
the ticker symbol CAS.
    Certain statements in this release, including statements regarding future
results and performance, are forward-looking statements (as such term is
defined under the Private Securities Litigation Reform Act of 1995) based on
current expectations. The accuracy of such statements is subject to a number
of risks, uncertainties and assumptions that may cause actual results to
differ materially from those projected, including, but not limited to, the
effect of general economic conditions, decreases in demand for the Company's
products, increases in raw material costs, fluctuations in selling prices and
adverse changes in general market and industry conditions and other factors
listed in the Company's Securities and Exchange Commission filings.


    Consolidated Balance Sheets
    (in millions of Canadian dollars)


                                                           As at       As at
                                                           March    December
                                                              31,         31,
                                                            2009        2008
                                            ---------------------------------
    Assets                                            (unaudited)  (restated)

    Current assets
    Cash and cash equivalents                                 13          11
    Accounts receivable                                      639         657
    Inventories                                              577         580
    -------------------------------------------------------------------------
                                                           1,229       1,248
    Property, plant and equipment                          2,028       2,030
    Intangible assets                                        139         142
    Other assets                                             318         289
    Goodwill                                                 327         321
    -------------------------------------------------------------------------
                                                           4,041       4,030
                                            ---------------------------------
                                            ---------------------------------
    Liabilities and Shareholders' Equity

    Current liabilities
    Bank loans and advances                                   72         104
    Accounts payable and accrued liabilities                 569         586
    Current portion of long-term debt                         39          36
    -------------------------------------------------------------------------
                                                             680         726
    Long-term debt                                         1,707       1,672
    Other liabilities                                        365         377
                                            ---------------------------------
                                                           2,752       2,775
    -------------------------------------------------------------------------

    Commitment and Contingencies
    Shareholders' Equity
    Capital stock                                            510         515
    Retained earnings                                        691         655
    Accumulated other comprehensive income                    88          85
                                            ---------------------------------
                                                           1,289       1,255
    -------------------------------------------------------------------------
                                                           4,041       4,030
                                            ---------------------------------
                                            ---------------------------------


    Consolidated Statements of Earnings (Loss)
    (in millions of Canadian dollars, except per share amounts)
    (unaudited)

                                                     For the 3-month periods
                                                              ended March 31,
                                                            2009        2008
                                            ---------------------------------
                                                                   (restated)

    Sales                                                    970         959
    Cost of sales and expenses
    Cost of sales (excluding depreciation
     and amortization)                                       752         805
    Depreciation and amortization                             54          51
    Selling and administrative expenses                      108          97
    Losses on disposal                                         -           5
    Impairment and other restructuring
     costs                                                     5           8
    Loss (gain) on financial instruments                       2          (1)
    -------------------------------------------------------------------------
                                                             921         965
    -------------------------------------------------------------------------
    Operating income (loss) from continuing
     operations                                               49          (6)

    Interest expense                                          27          24
    Gain on purchases of senior notes                        (14)          -
    Foreign exchange loss on long-term debt                    -           5
    -------------------------------------------------------------------------
                                                              36         (35)
    Provision for (recovery of) income taxes                   5          (9)
    Share of results of significantly influenced
     companies                                                (5)         (4)
    Non-controlling interest                                  (1)          1
    -------------------------------------------------------------------------
    Net earnings (loss) from continuing operations            37         (23)

    Net earnings from discontinued operations                  -          19
    -------------------------------------------------------------------------

    Net earnings (loss) for the period                        37          (4)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted net earnings (loss) from
     continuing operations per common share                $0.38      ($0.23)
                                            ---------------------------------
                                            ---------------------------------
    Basic and diluted net earnings (loss)
     per common share                                      $0.38      ($0.04)
                                            ---------------------------------
    Weighted average number of common shares
     outstanding                                      98,458,747  99,041,800
                                            ---------------------------------
                                            ---------------------------------


    Consolidated Statements of Shareholders' Equity
    (in millions of Canadian dollars)
    (unaudited)                        For the 3-month period ended March 31,
                                                                        2009
                                 --------------------------------------------
                                                     Accumulated
                                                           other
                                                          compre-      Share-
                                 Capital    Retained     hensive     holders'
                                   stock    earnings      income       Equity
                                 --------------------------------------------
    Balance - Beginning of period    515         656          85       1,256
    Cumulative impact of
     accounting changes                -          (1)          -          (1)
                                     ----------------------------------------
    Restated balance - Beginning
     of period                       515         655          85       1,255
    Comprehensive income:
      Net earnings for the
       period                          -          37           -          37
      Change in foreign
       currency translation
       of self-sustaining
       foreign subsidiaries,
       net of related hedging
       activities                      -           -           5           5
      Change in fair value
       of foreign exchange
       forward contracts
       designated as cash
       flow hedges                     -           -           1           1
      Change in fair value
       of commodity derivative
       financial instruments
       designated as cash flow
       hedges                          -           -          (3)         (3)
                                                                 ------------
    Comprehensive income for
     the period                                                           40
                                                                 ------------
    Dividends                          -          (4)          -          (4)
    Redemption of common
     shares                           (5)          3           -          (2)
                                     ----------------------------------------
    Balance - End of period          510         691          88       1,289
                                     ----------------------------------------
                                     ----------------------------------------


                                       For the 3-month period ended March 31,
                                                                        2008
                                     ----------------------------------------
                                                               (restated)

                                 --------------------------------------------
                                                     Accumulated
                                                           other
                                                          compre-
                                                         hensive       Share-
                                 Capital    Retained      income     holders'
                                   stock    earnings      (loss)      Equity
                                 --------------------------------------------

    Balance - Beginning of period    517         728         (43)      1,202
    Cumulative impact of
     accounting changes                -          (1)          -          (1)
                                 --------------------------------------------
    Restated balance - Beginning
     of period                       517         727         (43)      1,201
    Comprehensive income:
      Net loss for the period          -          (4)          -          (4)
      Change in foreign
       currency translation
       of self-sustaining
       foreign subsidiaries,
       net of related hedging
       activities                      -           -          53          53
      Change in fair value of
       foreign exchange forward
       contracts designated as
       cash flow hedges                -           -          (2)         (2)
      Change in fair value of
       interest rate swap
       agreements designated
       as cash flow hedges             -           -          (1)         (1)
      Change in fair value of
       commodity derivative
       financial instruments
       designated as cash flow
       hedges                          -           -           4           4
                                                                 ------------
    Comprehensive income for
     the period                                                           50
                                                                 ------------
    Dividends                          -          (4)          -          (4)
    Redemption of common shares       (1)         (1)          -          (2)
                                 --------------------------------------------
    Balance - End of period          516         718          11       1,245
                                 --------------------------------------------
                                 --------------------------------------------


    Consolidated Statements of Cash Flows
    (in millions of Canadian dollars)
    (unaudited)                                      For the 3-month periods
                                                              ended March 31,
                                                            2009        2008
                                                     ------------------------
                                                                   (restated)
    OPERATING ACTIVITIES FROM CONTINUING OPERATIONS
    Net earnings (loss) for the period                        37          (4)
    Net earnings from discontinued operations                  -         (19)
    -------------------------------------------------------------------------
    Net earnings (loss) from continuing operations            37         (23)
    Adjustments for
      Depreciation and amortization                           54          51
      Losses on disposal                                       -           5
      Impairment and other restructuring costs                 3           -
      Unrealized gain on financial instruments                (1)          -
      Foreign exchange loss on long-term debt                  -           5
      Gain on purchases of senior notes                      (14)          -
      Future income taxes                                     (3)        (20)
      Share of results of significantly influenced
       companies                                              (5)         (4)
      Non-controlling interest                                (1)          1
      Others                                                  (2)          2
    -------------------------------------------------------------------------
                                                              68          17
    Change in non-cash working capital components             (1)        (48)
    -------------------------------------------------------------------------
                                                              67         (31)
    -------------------------------------------------------------------------
    INVESTING ACTIVITIES FROM CONTINUING OPERATIONS
    Purchases of property, plant and equipment               (40)        (41)
    Increase in other assets                                  (3)         (1)
    Cash of a joint venture and business acquisitions          -           6
    -------------------------------------------------------------------------
                                                             (43)        (36)
    -------------------------------------------------------------------------
    FINANCING ACTIVITIES FROM CONTINUING OPERATIONS
    Bank loans and advances                                  (32)         15
    Change in revolving credit facilities                     12          11
    Purchases of senior notes                                (14)          -
    Increase in other long-term debt                          22           -
    Payments of other long-term debt                          (1)         (1)
    Redemption of common shares                               (2)         (2)
    Dividends                                                 (4)         (4)
    -------------------------------------------------------------------------
                                                             (19)         19
    -------------------------------------------------------------------------
    Change in cash and cash equivalents during the
     period from continuing operations                         5         (48)

    Change in cash and cash equivalents from
     discontinued operations, including proceeds on
     disposal                                                 (3)         35
    -------------------------------------------------------------------------

    Net change in cash and cash equivalents during
     the period                                                2         (13)
    Translation adjustments on cash and cash
     equivalents                                               -           6
    Cash and cash equivalents - Beginning of period           11          25
    -------------------------------------------------------------------------
    Cash and cash equivalents - End of period                 13          18
                                                     ------------------------
                                                     ------------------------


    Selected Segmented Information
    (in millions of Canadian dollars)
    (unaudited)


                                                     For the 3-month periods
                                                              ended March 31,
                                                            2009        2008
                                                     ------------------------
    Sales
    Packaging products
      Boxboard
        Manufacturing                                        180         195
        Converting                                           181         161
        Intersegment sales                                   (25)        (27)
                                                     ------------------------
                                                             336         329
                                                     ------------------------
      Containerboard
        Manufacturing                                        131         154
        Converting                                           217         227
        Intersegment sales                                   (85)        (90)
                                                     ------------------------
                                                             263         291
                                                     ------------------------
      Specialty products
        Manufacturing                                         86          76
        Converting                                            61          63
        Recovery and deinked pulp                             59          93
        Intersegment sales                                   (20)        (23)
                                                     ------------------------
                                                             186         209

      Intersegment sales                                     (13)        (28)
                                                     ------------------------
                                                             772         801
    Tissue papers
      Manufacturing and converting                           211         170

    Intersegment sales                                       (13)        (12)
    -------------------------------------------------------------------------
    Total                                                    970         959
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Selected Segmented Information
    (in millions of Canadian dollars)
    (unaudited)

                                                     For the 3-month periods
                                                              ended March 31,
                                                            2009        2008
                                                     ------------------------
    Operating income (loss) before depreciation
     and amortization from continuing operations
    Packaging products
      Boxboard
        Manufacturing                                         12          (6)
        Converting                                            12          12
        Others                                                (2)         (7)
                                                     ------------------------
                                                              22          (1)

      Containerboard
        Manufacturing                                         35          17
        Converting                                             7          14
        Others                                                (7)          3
                                                     ------------------------
                                                              35          34

    Specialty products
      Manufacturing                                            9          (1)
      Converting                                               5           5
      Recovery and deinked pulp                                -           5
      Others                                                  (1)          -
                                                     ------------------------
                                                              13           9

                                                     ------------------------
                                                              70          42

    Tissue papers
      Manufacturing and converting                            39          12

      Corporate                                               (6)         (9)
    -------------------------------------------------------------------------
    Operating income before depreciation and
     amortization from continuing operations                 103          45
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                                                                -------------
    Depreciation and amortization                                (restated)
      Boxboard                                               (19)        (16)
      Containerboard                                         (16)        (16)
      Specialty products                                      (8)         (8)
      Tissue papers                                           (9)         (8)
      Corporate and eliminations                              (2)         (3)
                                                     -----------------------
                                                             (54)        (51)
                                                     ------------------------
    Operating income (loss) from continuing
     operations                                               49          (6)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Selected Segmented Information
    (in millions of Canadian dollars)
    (unaudited)

                                                     For the 3-month periods
                                                              ended March 31,

                                                            2009        2008
                                                     ------------------------

    Purchases of property, plant and equipment
    Packaging products
      Boxboard
        Manufacturing                                          4           4
        Converting                                             8           9
                                                     ------------------------
                                                              12          13

      Containerboard
        Manufacturing                                          3           2
        Converting                                             2           4
                                                     ------------------------
                                                               5           6

      Specialty products
        Manufacturing                                          1           1
        Converting                                             1           1
        Recovery and deinked pulp                              8           1
                                                     ------------------------
                                                              10           3

                                                     ------------------------
                                                              27          22

    Tissue papers
      Manufacturing and converting                             7          10


    Corporate                                                  1           2
    -------------------------------------------------------------------------
    Total                                                     35          34
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Purchases of property, plant and equipment
     included in accounts payable
      Beginning of period                                     14          17
      End of period                                           (9)        (10)
    -------------------------------------------------------------------------
    Total investing activities                                40          41
    -------------------------------------------------------------------------
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For further information:

For further information: Media: Hubert Bolduc, Vice-President,
Communications and Public Affairs, (514) 912-3790; Investors: Didier Filion,
Director, Investor relations, (514) 282-2697; Source: Christian Dubé,
Vice-President and Chief Financial Officer


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