Cascades posts significantly improved results in the second quarter



    KINGSEY FALLS, QC, Aug. 11 /CNW Telbec/ - Cascades Inc. (CAS on the
Toronto stock exchange), a leader in recovery and in green packaging and
tissue paper products, announces its financial results for the three months
ended June 30, 2009.

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

    
    - Net earnings of $30 million ($0.30 per share) compared to a net loss of
      $25 million ($0.25 per share) in the second quarter of 2008. Excluding
      specific items, net earnings of $28 million ($0.28 per share) compared
      to a net loss of $11 million ($0.11 per share) in the same period of
      last year;

    - Operating income before depreciation and amortization (EBITDA)
      excluding specific items of $121 million, the highest in the Company's
      history, an increase of 13 % compared to the previous quarter;

    - Cash flow from operations excluding specific items more than doubled
      compared to Q2 2008 to $85 million;

    - Net debt down by almost $150 million in comparison to the previous
      quarter;

    - Current cash availability of approximately $375 million, an increase of
      $75 million over the past three months;

    - Announcement of the acquisition of the tissue paper assets of Atlantic
      Packaging Products Ltd. in June. We received the approval from the
      Competition Bureau last week and we expect the closing of the
      transaction by the end of the quarter;

    - Cascades recognized as the 15th best corporate citizen in Canada by
      Corporate Knights magazine.

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

    Financial Highlights
    --------------------

    Selected consolidated information
    (in millions of Canadian dollars, except      ---------------------------
     amounts per share)                            Q2/2009  Q2/2008  Q1/2009
    --------------------------------------------  ---------------------------
                                                             Note 2   Note 2

    Sales                                              981      999      970
    Excluding specific items (1)
      Operating income before depreciation and
       amortization (OIBD or EBITDA)                   121       63      107
      Operating income from continuing operations       66       10       53
      Net earnings (loss)                               28      (11)      21
        per common share                             $0.28   $(0.11)   $0.22
      Cash flow from operations (adjusted) from
       continuing operations                            85       42       70
        per common share                             $0.87    $0.43    $0.71
    As reported
    Operating income before depreciation and
     amortization (OIBD or EBITDA) (1)                 130       61      103
    Operating income (loss) from continuing
     operations                                         75        8       49
    Net earnings (loss)                                 30      (25)      37
      per common share                               $0.30   $(0.25)   $0.38
    Cash flow from operations (adjusted) from
     continuing operations (1)                          81       36       68
      per common share (1)                           $0.83    $0.37    $0.69
    -------------------------------------------------------------------------
    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
    

    Operating income before depreciation (OIBD or EBITDA) and net earnings
excluding specific items increased significantly to respectively $121 million
and $28 million ($0.28 per share) in the second quarter of 2009 compared to
$63 million and a net loss of $11 million ($0.11 per share) in the same period
in 2008.
    Excluding specific items, EBITDA also improved by $14 million in
comparison to the previous quarter while net earnings increased by $7 million.
This sequential rise constitutes the fifth quarter of consecutive growth in
EBITDA.
    Including specific items, the operating income before depreciation and
net earnings also grew substantially to reach respectively $130 million and
$30 million ($0.30 per share) in the second quarter of 2009 compared to $61
million and a net loss of $25 million ($0.25 per share) for the same quarter
in 2008.
    Commenting on the quarterly results, Mr. Alain Lemaire, President and
Chief Executive Officer stated:"Our results have shown significant progress
since the trough experienced in the first half of 2008. Today, we are very
pleased to announce the highest quarterly EBITDA in Cascades' history. Results
improved in all our sectors as we benefited from a favourable variable cost
environment. These higher results also underscore the different cost reduction
measures implemented in the past quarters, our initiatives in the field of
innovation, as well as our efforts in sales and marketing.
    The operating income of our Tissue Group reached a new all-time high and
our restructuring efforts in Europe and North America continued as the EBITDA
of our boxboard operations increased from $3 million in Q2 2008 to $32 million
in the second quarter of 2009. Finally, while our shipments grew by 5%
compared to the previous quarter, we continued to take costly market downtime
in our packaging sector."

    
    Results analysis for the three-month period ended June 30, 2009
    ---------------------------------------------------------------
    

    In comparison with the same period last year, sales decreased by 2% to
$981 million reflecting a slight drop in selling prices and a 9% fall in
shipments, and the depreciation of the Canadian dollar.
    The operating income from continuing operations amounted to $75 million
compared to $8 million last year. When excluding specific items, operating
income from continuing operations increased by $56 million to $66 million.
Despite lower sales volumes and selling prices, operating results mainly
improved due to lower raw material and energy costs and the depreciation of
the Canadian dollar. The operating income of the second quarter includes a
charge of $3 million related to the loss of certain products as a result of a
fire in an external warehouse in June.
    The specific items that impacted the operating income in the second
quarter of 2009 include $4 million in closure and restructuring costs and
other elements, as well as a $13 million unrealized gain on commodity
financial instruments. In addition to these specific items, the $30 million in
net earnings also reflects a $2 million loss on derivative financial
instruments and a $3 million foreign exchange loss on long-term debt.
    Net debt decreased by $148 million compared to March 31st 2009 and the
ratio of net debt to EBITDA excluding specific items in the last twelve months
decreased from 5.0x in the first quarter of 2009 to 4.0x in the second quarter
of 2009.

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

    Mr. Alain Lemaire, President and Chief Executive Officer added: "The
seasonality associated with the third quarter leads us to anticipate a
continuous recovery in demand. Also, we are encouraged by the recent stability
of selling prices in certain of our sectors and the low cost of energy.
However, we remain very cautious in regards to short term business conditions
given the steady increase in the cost of recycled fibres since the beginning
of the year, the significant volatility of the Canadian dollar, as well as the
scheduled downtime for maintenance or to keep the right level of inventories."

    
    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 September 18, 2009 to shareholders of record at the close of business
on September 4, 2009. This dividend paid by Cascades is an "eligible dividend"
as per the Income Tax Act (Bill C-28, Canada). In addition, in the second
quarter of 2009, in accordance with its normal course issuer bid program,
Cascades did not purchase any share. Since the beginning, 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)              Q2/2009  Q2/2008  Q1/2009
    -------------------------------------------------------------------------
                                                             Note 2   Note 2

    Net earnings (loss)                                 30      (25)      37
    Net earnings from discontinued operations            -        1        -
    Non-controlling interest                             -        -       (1)
    Share of results of significantly influenced
     companies                                          (3)       -       (5)
    Provision for (recovery of) income taxes            18       (9)       5
    Loss (gain) on derivative financial
     instruments on long-term debt                       2        -       (2)
    Foreign exchange loss on long-term debt              3       15        2
    Gain on purchases of senior notes                    -        -      (14)
    Interest expense                                    25       26       27
                                                  ---------------------------

    Operating income                                    75        8       49
    Specific items :
    Inventory adjustment resulting from business
     acquisition                                         -        1        -
    Loss on disposal and others                          1        -        -
    Impairment loss                                      -        3        3
    Closure and restructuring costs                      3        5        2
    Unrealized gain on financial instruments           (13)      (7)      (1)
                                                  ---------------------------
                                                        (9)       2        4
                                                  ---------------------------

    Operating income - excluding specific items         66       10       53

    Depreciation and amortization                       55       53       54
                                                  ---------------------------

    Operating income before depreciation and
     amortization (OIBD) - excluding specific
     items (1)                                         121       63      107
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    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


    Supplemental information on non-GAAP measures (cont'd)

    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
     per share)                Net earnings (loss)          share (1)
    -----------------------------------------------  ------------------------
     	                      Q2/     Q2/     Q1/       Q2/     Q2/     Q1/
                              2009    2008    2009      2009    2008    2009
                             ----------------------  ------------------------
                                    Note 2  Note 2            Note 2  Note 2

    As per GAAP                 30     (25)     37    $ 0.30  $(0.25) $ 0.38
    Specific items :
    Inventory adjustment
     resulting from business
     acquisition                 -       1       -    $    -  $    -  $    -
    Loss on disposal and others  1       -       -    $    -  $    -  $    -
    Impairment loss              -       3       3    $    -  $ 0.02  $ 0.02
    Closure and restructuring
     costs                       3       5       2    $ 0.02  $ 0.04  $ 0.02
    Unrealized gain financial
     instruments               (13)     (7)     (1)   $(0.09) $(0.06) $(0.01)
    Gain on purchase of senior
     notes                       -       -     (14)   $    -  $    -  $(0.13)
    Loss (gain) on derivative
     financial instruments on
     long-term debt              2       -      (2)   $ 0.02  $    -  $(0.02)
    Foreign exchange loss on
     long-term debt              3      15       2    $ 0.03  $ 0.13  $ 0.02
    Gain included in discont-
     inued operations            -       1       -    $    -  $ 0.01  $    -
    Adjustment of statutory
     tax rate                    -       -      (6)   $    -  $    -  $(0.06)
    Tax effect on specific
     items                       2      (4)      -
                             ----------------------  ------------------------
                                (2)     14     (16)   $(0.02) $ 0.14  $(0.16)
                             ----------------------  ------------------------

    Excluding specific items    28     (11)     21    $ 0.28  $(0.11) $ 0.22
    -----------------------------------------------  ------------------------
    -----------------------------------------------  ------------------------
    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    Q2/     Q2/     Q1/       Q2/     Q2/     Q1/
     per share)               2009    2008    2009      2009    2008    2009
    -----------------------------------------------  ------------------------
    Cash flow provided by
     operating activities       82      48      67
    Changes in non-cash
     working capital
     components                 (1)    (12)      1
                             ----------------------  ------------------------
    Cash flow (adjusted)
     from operations            81      36      68    $ 0.83  $ 0.37  $ 0.69
    Specific items :
    Inventory adjustment
     resulting from business
     acquisition                 -       1       -         -  $ 0.01       -
    Loss on disposals and
     others                      1       -       -         -       -       -
    Closure and restructuring
     costs, net of current
     income tax                  3       5       2    $ 0.04  $ 0.05  $ 0.02
                             ----------------------  ------------------------

    Excluding specific items    85      42      70    $ 0.87  $ 0.43  $ 0.71
    -----------------------------------------------  ------------------------
    -----------------------------------------------  ------------------------
    

    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 June 30,   December
                                                            2009    31, 2008
                                                  ---------------------------
    Assets                                            (unaudited)  (restated)
    Current assets
    Cash and cash equivalents                                 12          11
    Accounts receivable                                      625         657
    Inventories                                              551         580
    -------------------------------------------------------------------------
                                                           1,188       1,248
    Property, plant and equipment                          1,959       2,030
    Intangible assets                                        132         142
    Other assets                                             286         289
    Goodwill                                                 321         321
    -------------------------------------------------------------------------
                                                           3,886       4,030
                                                  ---------------------------
                                                  ---------------------------
    Liabilities and Shareholders' Equity

    Current liabilities
    Bank loans and advances                                   83         104
    Accounts payable and accrued liabilities                 534         586
    Current portion of long-term debt                         38          36
    -------------------------------------------------------------------------
                                                             655         726
    Long-term debt                                         1,549       1,672
    Other liabilities                                        373         377
                                                  ---------------------------
                                                           2,577       2,775
    -------------------------------------------------------------------------

    Commitments and Contingencies
    Shareholders' Equity
    Capital stock                                            510         515
    Retained earnings                                        717         655
    Accumulated other comprehensive income                    82          85
                                                  ---------------------------
                                                           1,309       1,255
    -------------------------------------------------------------------------
                                                           3,886       4,030
                                                  ---------------------------
                                                  ---------------------------


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

                                     For the 3-month        For the 6-month
                                      periods ended          periods ended
                                         June 30,               June 30,
                                    2009        2008        2009        2008
                             ------------------------------------------------
                                           (restated)              (restated)

    Sales                            981         999       1,951       1,958
    Cost of sales and expenses
    Cost of sales (excluding
     depreciation and
     amortization)                   750         843       1,502       1,648
    Depreciation and amortization     55          53         109         104
    Selling and administrative
     expenses                        108          94         216         191
    Gains or Losses on disposal
     and others                        1           -           1           5
    Impairment and other
     restructuring costs               3           8           8          16
    Gain on financial instruments    (11)         (7)         (9)         (8)
    -------------------------------------------------------------------------
                                     906         991       1,827       1,956
    -------------------------------------------------------------------------
    Operating income from
     continuing operations            75           8         124           2

    Interest expense                  25          26          52          50
    Gain on purchases of senior
     notes                             -           -         (14)          -
    Loss on derivative
     financial instruments on
     long-term debt                    2           -           -           -
    Foreign exchange loss on
     long-term debt                    3          15           5          20
    -------------------------------------------------------------------------
                                      45         (33)         81         (68)
    Provision for (recovery of)
     income taxes                     17          (9)         22         (18)
    Share of results of
     significantly influenced
     companies                        (2)          -          (7)         (4)
    Non-controlling interest           -           -          (1)          1
    -------------------------------------------------------------------------
    Net earnings (loss) from
     continuing operations            30         (24)         67         (47)

    Net earnings (loss) from
     discontinued operations           -          (1)          -          18
    -------------------------------------------------------------------------

    Net earnings (loss) for the
     period                           30         (25)         67         (29)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic and diluted net
     earnings (loss) from
     continuing operations
      per common share             $0.30      ($0.24)      $0.68      ($0.47)
                             ------------------------------------------------
                             ------------------------------------------------
    Basic and diluted net
     earnings (loss) per
     common share                  $0.30      ($0.25)      $0.68      ($0.29)
                             ------------------------------------------------
                             ------------------------------------------------
    Weighted average number
     common shares
     outstanding              97,467,651  98,851,585  97,960,461  98,946,693
                             ------------------------------------------------
                             ------------------------------------------------


    Consolidated Statements of Shareholders' Equity
    (in millions of Canadian dollars)
    (unaudited)
                                        For the 6-month period ended June 30,
                                                                        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      -          67           -          67
      Change in other comprehensive
       income (loss)                   -           -          (3)         (3)
                                                                  -----------
    Comprehensive income for the
     period                                                               64
                                                                  -----------

    Dividends                          -          (8)          -          (8)
    Redemption of common shares       (5)          3           -          (2)
                             ------------------------------------------------
    Balance - End of period          510         717          82       1,309
                             ------------------------------------------------
                             ------------------------------------------------


                                        For the 6-month period ended June 30,
                                                                        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          -         (29)          -         (29)
      Change in other
       comprehensive income (loss)     -           -          48          48
                                                                  -----------
    Comprehensive income for the
     period                                                               19
                                                                  -----------

    Dividends                          -          (8)          -          (8)
    Redemption of common shares       (1)         (1)          -          (2)
                             ------------------------------------------------
    Balance - End of period          516         689           5       1,210
                             ------------------------------------------------
                             ------------------------------------------------


    Consolidated Statements of Comprehensive Income (Loss)
    (in millions of Canadian dollars)
    (unaudited)

                                     For the 3-month        For the 6-month
                                      periods ended          periods ended
                                         June 30,                June 30,
                                    2009        2008        2009        2008
                             ------------------------------------------------
    Net earnings (loss) for
     the period                       30         (25)         67         (29)
                             ------------------------------------------------

    Other comphrensive income (loss)
      TRANSLATION ADJUSTMENTS
      Change in foreign
       currency translation of
       self-sustaining foreign
       subsidiaries                  (61)        (10)        (44)         43
      Change in foreign
       currency translation
       related to hedging
       activities                     39           -          25           -
      Income taxes                    (5)          -          (3)          -
      CASH FLOW HEDGES
      Change in fair value of
       foreign exchange forward
       contracts designated as
       cash flow hedges               28           -          29          (3)
      Change in fair value of
       interest rate swap
       agreements designated
       as cash flow hedges             -           1           -           -
      Change in fair value of
       commodity derivative
       financial instruments
       designated as cash flow
       hedges                          3           5          (1)         11
      Income taxes                   (10)         (2)         (9)         (3)
                             ------------------------------------------------
                                      (6)         (6)         (3)         48
                             ------------------------------------------------
    Comprehensive income
     (loss) for the period            24         (31)         64          19
                             ------------------------------------------------


    Consolidated Statements of Cash Flows
    (in millions of Canadian dollars)
    (unaudited)
                                     For the 3-month        For the 6-month
                                      periods ended          periods ended
                                         June 30,                June 30,
                                    2009        2008        2009        2008
                             ------------------------------------------------
                                           (restated)              (restated)

    OPERATING ACTIVITIES FROM
     CONTINUING OPERATIONS
    Net earnings (loss) for
     the period                       30         (25)         67         (29)
    Net earnings(loss) from
     discontinued operations           -           1           -         (18)
    -------------------------------------------------------------------------
    Net earnings (loss) from
     continuing operations            30         (24)         67         (47)
    Adjustments for
      Depreciation and
       amortization                   55          53         109         104
      Gains or Losses on
       disposal and others             1           -           1           5
      Impairment and other
       restructuring costs             -           3           3           3
      Unrealized gain on
       financial instruments         (13)         (7)        (14)         (7)
      Unrealized loss on derivative
       financial instruments on
       long-term debt                  2           -           -           -
      Foreign exchange loss on
       long-term debt                  3          15           5          20
      Gain on purchases of
       senior notes                    -           -         (14)          -
      Future income taxes              2         (13)         (1)        (33)
      Share of results of
       significantly influenced
       companies                      (2)          -          (7)         (4)
      Non-controlling interest         -           -          (1)          1
      Others                           3          (6)          1          (4)
      Early settlement of natural
       gaz contracts                   -          15           -          15
    -------------------------------------------------------------------------
                                      81          36         149          53
    Change in non-cash working
     capital components                1          12           -         (36)
    -------------------------------------------------------------------------
                                      82          48         149          17
    -------------------------------------------------------------------------
    INVESTING ACTIVITIES FROM
     CONTINUING OPERATIONS
    Purchases of property, plant
     and equipment                   (32)        (42)        (72)        (83)
    Proceeds from disposal of
     property, plant and equipment     2           5           2           5
    Decrease (increase) in other
     assets                           (8)          3         (11)          2
    Cash of a joint venture and
     business acquisitions             -           -           -           6
    -------------------------------------------------------------------------
                                     (38)        (34)        (81)        (70)
    -------------------------------------------------------------------------
    FINANCING ACTIVITIES FROM
     CONTINUING OPERATIONS
    Bank loans and advances           13         (20)        (19)         (5)
    Change in revolving credit
     facilities                      (57)         11         (45)         22
    Purchases of senior notes         (4)          -         (18)          -
    Increase in other long-term
     debt                              3           -          25           -
    Payments of other long-term
     debt                             (4)         (5)         (5)         (6)
    Early settlement of foreign
     exchange contracts                8           -           8           -
    Redemption of common shares        -           -          (2)         (2)
    Dividends                         (4)         (4)         (8)         (8)
    -------------------------------------------------------------------------
                                     (45)        (18)        (64)          1
    -------------------------------------------------------------------------
    Change in cash and cash
     equivalents during the
     period from continuing
     operations                       (1)         (4)          4         (52)

    Change in cash and cash
     equivalents from discontinued
     operations, including proceeds
     on disposal                       -           8          (3)         43
    -------------------------------------------------------------------------

    Net change in cash and cash
     equivalents during the period    (1)          4           1          (9)
    Translation adjustments on
     cash and cash equivalents         -          (1)          -           5
    Cash and cash equivalents
     - Beginning of period            13          18          11          25
    -------------------------------------------------------------------------

    Cash and cash equivalents
     - End of period                  12          21          12          21
                             ------------------------------------------------
                             ------------------------------------------------


    Selected Segmented Information
    (in millions of Canadian dollars)
    (unaudited)
                                     For the 3-month        For the 6-month
                                      periods ended          periods ended
                                         June 30,                June 30,
                                    2009        2008        2009        2008
                             ------------------------------------------------
    Sales
    Packaging products
      Boxboard
        Manufacturing                178         184         358         379
        Converting                   181         170         362         331
        Intersegment sales           (23)        (23)        (48)        (50)
                             ------------------------------------------------
                                     336         331         672         660

      Containerboard
        Manufacturing                130         150         261         304
        Converting                   230         246         447         473
        Intersegment sales           (85)        (95)       (170)       (185)
                             ------------------------------------------------
                                     275         301         538         592

      Specialty products
        Manufacturing                 85          76         171         152
        Converting                    61          67         122         130
        Recovery and deinked pulp     64         100         123         193
        Intersegment sales           (22)        (25)        (42)        (48)
                             ------------------------------------------------
                                     188         218         374         427

        Intersegment sales           (15)        (25)        (28)        (53)
                             ------------------------------------------------
                                     784         825       1,556       1,626

    Tissue papers
      Manufacturing and converting   207         184         418         354

    Intersegment sales               (10)        (10)        (23)        (22)
    -------------------------------------------------------------------------
    Total                            981         999       1,951       1,958
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Selected Segmented Information
    (in millions of Canadian dollars)
    (unaudited)
                                     For the 3-month        For the 6-month
                                      periods ended          periods ended
                                         June 30,                June 30,
                                    2009        2008        2009        2008
                             ------------------------------------------------
    Operating income (loss)
     before depreciation and
     amortization from
     continuing operations
    Packaging products
      Boxboard
        Manufacturing                 13         (10)         25         (16)
        Converting                    16          12          28          24
        Others                         -          (3)         (2)        (10)
                             ------------------------------------------------
                                      29          (1)         51          (2)

      Containerboard
        Manufacturing                 26          10          61          27
        Converting                    11          17          18          31
        Others                         2           -          (5)          3
                             ------------------------------------------------
                                      39          27          74          61

      Specialty products
        Manufacturing                 11           -          20          (1)
        Converting                     6           8          11          13
        Recovery and deinked pulp      6           6           6          11
        Others                        (1)          -          (2)          -
                             ------------------------------------------------
                                      22          14          35          23

                             ------------------------------------------------
                                      90          40         160          82
    Tissue papers
      Manufacturing and converting    42          14          81          26

    Corporate                         (2)          7          (8)         (2)
    -------------------------------------------------------------------------
    Operating income before
     depreciation and
     amortization from
     continuing operations
                                     130          61         233         106
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Depreciation and amortization          (restated)              (restated)
      Boxboard                       (19)        (18)        (38)        (34)
      Containerboard                 (16)        (15)        (32)        (31)
      Specialty products              (9)         (8)        (17)        (16)
      Tissue papers                   (9)         (9)        (18)        (17)
      Corporate and eliminations      (2)         (3)         (4)         (6)
                             ------------------------------------------------
                                     (55)        (53)       (109)       (104)
                             ------------------------------------------------
    Operating income from
     continuing operations            75           8         124           2
    -------------------------------------------------------------------------


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


                                     For the 3-month        For the 6-month
                                      periods ended          periods ended
                                         June 30,                June 30,
                                    2009        2008        2009        2008
                             ------------------------------------------------
    Purchases of property, plant
     and equipment
    Packaging products
      Boxboard
        Manufacturing                  7           3          13           7
        Converting                     6           7          12          16
                             ------------------------------------------------
                                      13          10          25          23

      Containerboard
        Manufacturing                  4           2           7           4
        Converting                     2           7           4          11
                             ------------------------------------------------
                                       6           9          11          15

      Specialty products
        Manufacturing                  2           2           3           3
        Converting                     1           2           2           3
        Recovery and deinked pulp      4           9          12          10
                             ------------------------------------------------
                                       7          13          17          16

                             ------------------------------------------------
                                      26          32          53          54

    Tissue papers
      Manufacturing and converting     8           8          15          18

    Corporate                          1           2           2           4
    -------------------------------------------------------------------------
    Total                             35          42          70          76
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Purchases of property, plant
     and equipment included in
     accounts payable
      Beginning of period              9          10          14          17
      End of period                  (12)        (10)        (12)        (10)
    -------------------------------------------------------------------------
    Total investing activities        32          42          72          83
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    




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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