Cascades posts strong annual results

www.cascades.com

KINGSEY FALLS, QC, Feb. 26 /CNW Telbec/ - Cascades Inc. (CAS on the Toronto stock exchange), a leader in recovery and the manufacturing of green packaging and tissue paper products, announces its unaudited financial results for the three months and the fiscal year ended December 31, 2009.

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

    
    Fiscal year highlights
    ----------------------

    - Net earnings excluding specific items of $1.13 per share ($110 million)
      compared to net earnings of $0.04 per share ($4 million) in 2008. Net
      earnings including specific items of $0.60 per share ($61 million)
      compared to a net loss of $0.55 per share ($54 million) in 2008;

    - Operating income before depreciation and amortization (EBITDA)
      excluding specific items up 152% to $465 million, the highest annual
      EBITDA in the Company's history;

    - Cash flow from operations (adjusted) of $305 million ($3.12 per share)
      and positive free cash flow of $149 million in 2009 compared to
      negative free cash flow of $79 million in 2008;

    - Net debt down $268 million compared to December 31, 2008.

    Fourth quarter highlights
    -------------------------

    - Net earnings excluding specific items of $0.27 per share ($26 million)
      compared to net earnings of $0.18 per share ($18 million) in the same
      period of last year. Net loss including specific items of $0.42 per
      share ($41 million) compared to a net loss of $0.19 per share
      ($18 million) in Q4 2008;

    - Operating income before depreciation and amortization (EBITDA)
      excluding specific items of $110 million, up 15% in comparison to the
      fourth of 2008;

    - Offerings of senior notes at an average yield of 8% due 2016, 2017,
      2020 for a total of approximately $1 billion to refinance senior notes
      maturing in 2013.

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


    Financial Summary
    -----------------

    Selected consolidated
     information (unaudited)
    (in millions of
     Canadian dollars,
     except amounts         -------------------  ----------------------------
     per share)                 2009      2008   Q4/2009   Q4/2008   Q3/2009
    -------------------------------------------  ----------------------------
                                        Note 2              Note 2

    Sales                      3,877     4,017       952     1,020       974
    Excluding specific
     items(1)
      Operating income
       before depreciation
       and amortization
       (OIBD or EBITDA)          465       306       110        96       127
      Operating income from
       continuing operations     247        93        54        41        74
      Net earnings               110         4        26        18        35
        per common share       $1.13     $0.04     $0.27     $0.18     $0.36
      Cash flow from
       operations (adjusted)
       from continuing
       operations                327       183        77        68        95
        per common share       $3.35     $1.85     $0.80     $0.69     $0.97
    As reported
    Operating income before
     depreciation and
     amortization (OIBD or
     EBITDA)(1)                  432       229        70        52       129
    Operating income (loss)
     from continuing operations  214        16        14        (3)       76
    Net earnings (loss)           60       (54)      (41)      (18)       34
      per common share         $0.61    $(0.55)   $(0.42)   $(0.19)    $0.35
    Cash flow from
     operations (adjusted)
     from continuing
     operations(1)               305       155        62        59        94
      per common share(1)      $3.12     $1.57     $0.64     $0.60     $0.96
    -------------------------------------------  ----------------------------
    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
    

Commenting on the annual results, Mr. Alain Lemaire, President and Chief Executive Officer stated: "2009 was an outstanding year for Cascades. Despite a challenging economic environment which led to a drop in our total shipments and an erosion of our selling prices, our results continuously improved and we posted the highest annual EBITDA in the Company's history. The depreciation of the Canadian dollar and lower variable costs in the first half of the year partly explain those results, along with the turnaround of our boxboard assets, the rapid growth in demand for our green products and improved cost control.

Moreover, I am pleased with the sizeable reduction in working capital. Combined with our strong cash flow from operations, this provided us with the necessary free cash flow to pay down debt and complete strategic acquisitions. Not only do we have less debt compared to last year, we also significantly lowered our financial risk profile as we refinanced our long-term debt at favourable interest rates. All in all, Cascades is now well positioned to pursue its development and is committed to maintaining a healthy balance sheet."

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

In comparison with the same period last year, sales decreased by 7% to $952 million reflecting a significant drop of most of our selling prices and the appreciation of the Canadian dollar partly offset by a 4.5% increase in shipments.

Net earnings excluding specific items amounted to $26 million ($0.27 per share) in the fourth quarter of 2009 compared to $18 million ($0.18 per share) for the same period of last year. Including specific items, the net loss increased to $41 million ($0.42 per share) compared to $18 million ($0.19 per share) for the same quarter in 2008.

Operating results improved despite lower sales. In fact, the operating income from continuing operations excluding specific items increased to $54 million compared to $41 million in Q4 2008 due mainly to lower energy costs, improved results form our recovery and boxboard operations as well as better control of our costs. When including specific items, despite a more significant impairment loss in Q4 2009, operating income from continuing operations increased by $17 million to $14 million.

Specific items that have impacted Q4 2009 operating income are as follows:

    
    - $42 million impairment loss ($37 million related to our Fjordcell pulp
      mill);
    - $4 million unrealized gain on financial instruments;
    - $2 million in closure and restructuring costs.
    

In addition to these previous items (total loss of $40 million), the Q4 2009 net loss was also impacted by these specific items (before tax):

    
    - $37 million foreign exchange loss on long-term debt and financial
      instruments ($33 million related to our long-term debt refinancing);
    - $17 million loss on long-term debt refinancing;
    - $3 million gain included in the share of results of significantly
      influenced companies;
    - $2 million gain from the adjustment of statutory tax rate.
    

See the two following tables for more details on GAAP and non-GAAP measures reconciliation.

    
    Results analysis for the fiscal year ended December 31, 2009
    ------------------------------------------------------------
    

In comparison to last year, sales decreased by 3% to $3.9 billion reflecting a drop of most of our selling prices as well as a 7.5% decline of shipments which more than offset the positive impact of a lower Canadian dollar on average in 2009.

The operating income from continuing operations excluding specific items increased to $247 million compared to $93 million last year mainly as a result of lower raw material and energy costs, the turnaround of our boxboard and other non-performing assets, the depreciation of the Canadian dollar as well as improved cost efficiency. When including specific items, operating income from continuing operations increased by $198 million to $214 million.

For the fiscal year ended December 31, 2009, net earnings excluding specific items amounted to $110 million ($1.13 per share) compared to net earnings of $4 million ($0.04 per share) last year. Including specific items, net earnings reached $60 million ($0.61 per share) compared to a net loss of $54 million ($0.55 per share) in 2008.

Net debt decreased by $268 million compared to December 31st 2009 and 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 3.3x in the fourth quarter of 2009.

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

Mr. Alain Lemaire, President and Chief Executive Officer added: "Looking ahead to the first quarter of 2010, we expect to benefit from the continuous improvement of demand and from the current implementation of selling price increases in most of our sectors. We however anticipate some short-term pressure on profitability due to the significant rise of recycled fibre costs.

On the financial front, notwithstanding our improved flexibility and ratios in 2009, we will maintain our objective of reducing our working capital in line with sales and a cautious approach with regards to capital investments in 2010 aiming at generating approximately $100 million of free cash flow annually. We will also continue our efforts to divest non-strategic or non-performing assets."

    
    Dividend on common shares and normal course issuer bid
    ------------------------------------------------------
    

The Board of Directors of Cascades declared a quarterly dividend of $0.04 per share to be paid March 23, 2010 to shareholders of record at the close of business on March 10, 2010. This dividend paid by Cascades is an "eligible dividend" as per the Income Tax Act (Bill C-28, Canada). In addition, in the fourth quarter of 2009, in accordance with its normal course issuer bid program, Cascades purchased 138,300 shares at an average price of $7.93. In 2009 Cascades purchased for cancellation 1,340,318 common shares at an average price of $3.04 per share representing an aggregate amount of approximately $4.1 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)          2009      2008   Q4/2009   Q4/2008   Q3/2009
    -------------------------------------------  ----------------------------
                                        Note 2              Note 2

    Net earnings (loss)           60       (54)      (41)      (18)       34
    Net earnings from
     discontinued operations       -       (18)        -         -         -
    Non-controlling interest      (1)        2         -         -         -
    Share of results of
     significantly influenced
     companies                   (17)       (8)       (7)       (2)       (3)
    Provision for (recovery of)
     income taxes                 23       (32)      (16)      (12)       17
    Foreign exchange loss
     on long-term debt and
     financial instruments        45        26        37         6         3
    Gain on purchase of
     senior notes                (14)       (2)        -        (2)        -
    Loss on long-term debt
     refinancing                  17         -        17         -         -
    Interest expense             101       102        24        25        25
                            -------------------  ----------------------------

    Operating income             214        16        14        (3)       76
    Specific items :
    Inventory adjustment
     resulting from
     business acquisition          -         2         -         -         -
    Loss on disposal and
     others                        1         5         -         -         -
    Impairment loss               46        16        42        13         1
    Closure and
     restructuring costs          12        27         2        10         5
    Unrealized loss (gain)
     on financial instruments    (26)       27        (4)       21        (8)
                            -------------------  ----------------------------
                                  33        77        40        44        (2)
                            -------------------  ----------------------------
    Operating income -
     excluding specific
     items                       247        93        54        41        74

    Depreciation and
     amortization                218       213        56        55        53
                            -------------------  ----------------------------
    Operating income before
     depreciation and
     amortization (OIBD) -
     excluding specific
     items(1)                    465       306       110        96       127
    -------------------------------------------  ----------------------------
    -------------------------------------------  ----------------------------
    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        --------------------------------------------------
     per share)                          Net earnings (loss)
    -------------------------------------------  ----------------------------
                                2009      2008   Q4/2009   Q4/2008   Q3/2009
                           --------------------  ----------------------------
                                        Note 2              Note 2

    As per GAAP                   60       (54)      (41)      (18)       34
    Specific items :
    Inventory adjustment
     resulting from business
     acquisition                   -         2         -         -         -
    Loss on disposal and
     others                        1         5         -         -         -
    Impairment loss               46        16        42        13         1
    Closure and
     restructuring costs          12        27         2        10         5
    Unrealized loss (gain)
     financial instruments       (26)       27        (4)       21        (8)
    Loss on long-term debt
     refinancing                  17         -        17         -         -
    Gain on purchase of
     senior notes                (14)       (2)        -        (2)        -
    Foreign exchange loss
     on long-term debt and
     financial instruments        45        26        37         6         3
    Share of results of
     significantly influenced
     companies                    (5)        -        (3)        -         -
    Gain included in
     discontinued operations       -       (23)        -         -         -
    Adjustment of statutory
     tax rate                     (6)        -        (2)        -         -
    Tax effect on specific
     items                       (20)      (20)      (22)      (12)        -
                             ------------------  ----------------------------
                                  50        58        67        36         1
                             ------------------  ----------------------------

    Excluding specific items     110         4        26        18        35
    -------------------------------------------  ----------------------------
    -------------------------------------------  ----------------------------

    (in millions of
     Canadian dollars,
     except amounts        --------------------------------------------------
     per share)                        Net earnings (loss) per share(1)
    -------------------------------------------  ----------------------------
                                2009      2008   Q4/2009   Q4/2008   Q3/2009
                           --------------------  ----------------------------
                                        Note 2              Note 2

    As per GAAP                $0.61    $(0.55)   $(0.42)   $(0.19)    $0.35
    Specific items :
    Inventory adjustment
     resulting from business
     acquisition                 $ -     $0.01       $ -       $ -       $ -
    Loss on disposal and
     others                      $ -     $0.05       $ -       $ -       $ -
    Impairment loss            $0.35     $0.13     $0.32     $0.11     $0.01
    Closure and
     restructuring costs       $0.09     $0.19     $0.02     $0.07     $0.03
    Unrealized loss (gain)
     financial instruments    $(0.19)    $0.19    $(0.03)    $0.15    $(0.06)
    Loss on long-term debt
     refinancing               $0.11       $ -     $0.11       $ -       $ -
    Gain on purchase of
     senior notes             $(0.13)   $(0.01)      $ -    $(0.01)       $ -
    Foreign exchange loss
     on long-term debt and
     financial instruments     $0.40     $0.22     $0.32     $0.05     $0.03
    Share of results of
     significantly influenced
     companies                $(0.05)      $ -    $(0.03)      $ -       $ -
    Gain included in
     discontinued operations     $ -    $(0.19)      $ -       $ -       $ -
    Adjustment of statutory
     tax rate                 $(0.06)      $ -    $(0.02)      $ -       $ -
    Tax effect on specific
     items
                             ------------------  ----------------------------
                               $0.52     $0.59     $0.69     $0.37     $0.01
                             ------------------  ----------------------------
    Excluding specific items   $1.13     $0.04     $0.27     $0.18     $0.36
    -------------------------------------------  ----------------------------
    -------------------------------------------  ----------------------------
    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 from operations
                           --------------------------------------------------
    (in millions of
     Canadian dollars,
     except amounts
     per share)                 2009      2008   Q4/2009   Q4/2008   Q3/2009
    -------------------------------------------  ----------------------------
    Cash flow provided by
     operating activities        357       124        91        85       117
    Changes in non-cash
     working capital
     components                  (52)       31       (29)      (26)      (23)
                           --------------------  ----------------------------
    Cash flow (adjusted)
     from operations             305       155        62        59        94
    Specific items :
    Inventory adjustment
     resulting from
     business acquisition          -         2         -         -         -
    Gains or losses on
     disposals and others          1         -         -         -         -
    Loss on long-term debt
     refinancing                  13         -        13         -         -
    Closure and
     restructuring costs,
     net of current
     income tax                    8        26         2         9         1
                           --------------------  ----------------------------
    Excluding specific
     items                       327       183        77        68        95
    -------------------------------------------  ----------------------------
    -------------------------------------------  ----------------------------


                           --------------------------------------------------
                                     Cash flow from operations per share
                           --------------------------------------------------
    (in millions of
     Canadian dollars,
     except amounts
     per share)                 2009      2008   Q4/2009   Q4/2008   Q3/2009
    -------------------------------------------  ----------------------------
    Cash flow provided by
     operating activities
    Changes in non-cash
     working capital
     components
                           --------------------  ----------------------------
    Cash flow (adjusted)
     from operations           $3.12     $1.57     $0.64     $0.60     $0.96
    Specific items :
    Inventory adjustment
     resulting from
     business acquisition          -     $0.02         -         -         -
    Gains or losses on
     disposals and others          -         -         -         -         -
    Loss on long-term debt
     refinancing               $0.14         -     $0.14         -         -
    Closure and
     restructuring costs,
     net of current
     income tax                $0.09     $0.26     $0.02     $0.09     $0.01
                           --------------------  ----------------------------
    Excluding specific
     items                     $3.35     $1.85     $0.80     $0.69     $0.97
    -------------------------------------------  ----------------------------
    -------------------------------------------  ----------------------------
    

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

    Current assets
    Cash and cash equivalents                         19                  11
    Accounts receivable                              543                 657
    Inventories                                      520                 580
    -------------------------------------------------------------------------
                                                   1,082               1,248
    Property, plant and equipment                  1,912               2,030
    Intangible assets                                165                 149
    Other assets                                     317                 283
    Goodwill                                         316                 321
    -------------------------------------------------------------------------
                                                   3,792               4,031
                                     ----------------------------------------
                                     ----------------------------------------

    Liabilities and Shareholders' Equity

    Current liabilities
    Bank loans and advances                           83                 104
    Accounts payable and accrued liabilities         505                 586
    Current portion of long-term debt                 10                  36
    -------------------------------------------------------------------------
                                                     598                 726
    Long-term debt                                 1,459               1,672
    Other liabilities                                431                 377
                                     ----------------------------------------
                                                   2,488               2,775
    -------------------------------------------------------------------------

    Commitments and Contingencies
    Shareholders' Equity
    Capital stock                                    499                 506
    Retained earnings                                700                 656
    Contributed surplus                               14                   9
    Accumulated other comprehensive income            91                  85
                                     ----------------------------------------
                                                   1,304               1,256
    -------------------------------------------------------------------------
                                                   3,792               4,031
                                     ----------------------------------------
                                     ----------------------------------------



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

                             For the 3-month periods           For the years
                                   ended December 31,      ended December 31,
                                    2009        2008        2009        2008
                              -----------------------------------------------

    Sales                            952       1,020       3,877       4,017
    Cost of sales and expenses
    Cost of sales (excluding
     depreciation and
     amortization)                   737         821       2,991       3,323
    Depreciation and amortization     56          55         218         213
    Selling and administrative
     expenses                        104         102         413         389
    Losses on disposal and others      -           -           1           5
    Impairment and other
     restructuring costs              44          23          58          43
    Loss (gain) on financial
     instruments                      (3)         22         (18)         28
    -------------------------------------------------------------------------
                                     938       1,023       3,663       4,001
    -------------------------------------------------------------------------
    Operating income (loss)from
     continuing operations            14          (3)        214          16

    Interest expense                  24          25         101         102
    Loss on refinancing of long
     term debt                        17           -          17           -
    Gain on purchases of
     senior notes                      -          (2)        (14)         (2)
    Foreign exchange loss
     on long-term debt and
     financial instruments            37           6          45          26
    -------------------------------------------------------------------------
                                     (64)        (32)         65        (110)
    Provision for (recovery of)
     income taxes                    (16)        (12)         23         (32)
    Share of results of
     significantly influenced
     companies                        (7)         (2)        (17)         (8)
    Non-controlling interest           -           -          (1)          2
    -------------------------------------------------------------------------
    Net earnings (loss) from
     continuing operations           (41)        (18)         60         (72)

    Net earnings from
     discontinued operations           -           -           -          18
    -------------------------------------------------------------------------
    Net earnings (loss) for
     the period                      (41)        (18)         60         (54)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net earnings (loss) from
     continuing operations per
     common share
    Basic                         ($0.42)     ($0.19)      $0.61      ($0.73)
                              -----------------------------------------------
                              -----------------------------------------------
    Diluted                       ($0.42)     ($0.19)      $0.60      ($0.73)
                              -----------------------------------------------
                              -----------------------------------------------
    Net earnings (loss) per
     common share
    Basic                         ($0.42)     ($0.19)      $0.61      ($0.55)
                              -----------------------------------------------
                              -----------------------------------------------
    Diluted                       ($0.42)     ($0.19)      $0.60      ($0.55)
                              -----------------------------------------------
                              -----------------------------------------------
    Weighted average basic
     number of common shares
     outstanding              97,283,958  98,600,556  97,656,412  98,804,536
                              -----------------------------------------------


    Consolidated Statements of Shareholders' Equity
    (in millions of Canadian dollars)
    (unaudited)
                                              For the year ended December 31,
                                                                        2009
                           --------------------------------------------------
                                                            Accumu-
                                                             lated
                                                             other
                                                  Contri-   compre-    Share-
                             Capital  Retained     buted   hensive   holders'
                               stock  earnings   surplus    income    Equity
                           --------------------------------------------------
    Balance - Beginning
     of year                     506       656         9        85     1,256
    Comprehensive income:
      Net earnings for
       the year                    -        60         -         -        60
      Change in other
       comprehensive
       income (loss)               -         -         -         6         6
                                                                    ---------
    Comprehensive income
     for the year                                                         66
                                                                    ---------

    Dividends                      -       (16)        -         -       (16)
    Adjustment related to
     stock options                 -         -         2         -         2
    Redemption of common
     shares                       (7)        -         3         -        (4)
                           --------------------------------------------------
    Balance - End of year        499       700        14        91     1,304
                           --------------------------------------------------
                           --------------------------------------------------


                                              For the year ended December 31,
                                                                        2008
                           --------------------------------------------------
                                                            Accumu-
                                                             lated
                                                             other
                                                            compre-
                                                  Contri-  hensive    Share-
                             Capital  Retained     buted    income   holders'
                               stock  earnings   surplus    (loss)    Equity
                           --------------------------------------------------
    Balance - Beginning
     of year                     509       727         8       (43)    1,201
    Comprehensive income:
      Net loss for
       the year                    -       (54)        -         -       (54)
      Change in other
       comprehensive
       income                      -         -         -       128       128
                                                                    ---------
    Comprehensive income
     for the year                                                         74
                                                                    ---------

    Dividends                      -       (16)        -         -       (16)
    Adjustment related to
     stock options                 -         -         1         -         1
    Redemption of common
     shares                       (3)       (1)        -         -        (4)
                           --------------------------------------------------
    Balance - End of year        506       656         9        85     1,256
                           --------------------------------------------------
                           --------------------------------------------------


    Consolidated Statements of Comprehensive Income (Loss)
    (in millions of Canadian dollars)
    (unaudited)
                                For the 3-month periods      For the years
                                   ended December 31,      ended December 31,
                                    2009        2008        2009        2008
                              -----------------------------------------------
    Net earnings (loss) for
     the period                      (41)        (18)         60         (54)
                              -----------------------------------------------
    Other comprehensive
     income (loss)
      TRANSLATION ADJUSTMENTS
      Change in foreign
       currency translation
       of self-sustaining
       foreign subsidiaries          (23)        124        (128)        176
      Change in foreign
       currency translation
       related to hedging
       activities                     14          17          87          17
      Income taxes                    (2)         (3)        (12)         (3)
      CASH FLOW HEDGES
      Change in fair value of
       foreign exchange
       forward contracts
       designated as cash
       flow hedges                    35         (75)         87         (88)
      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             -          (8)         (2)          3
      Income taxes                   (10)         24         (26)         24
                              -----------------------------------------------
                                      14          78           6         128
                              -----------------------------------------------
    Comprehensive income
     (loss) for the period           (27)         60          66          74
                              -----------------------------------------------
                              -----------------------------------------------


    Consolidated Statements of Cash Flows
    (in millions of Canadian dollars)
    (unaudited)
                                For the 3-month periods      For the years
                                   ended December 31,      ended December 31,
                                    2009        2008        2009        2008
                              -----------------------------------------------

    OPERATING ACTIVITIES FROM
     CONTINUING OPERATIONS
    Net earnings (loss) for
     the period                      (41)        (18)         60         (54)
    Net earnings from
     discontinued operations           -           -           -         (18)
    -------------------------------------------------------------------------
    Net earnings (loss) from
     continuing operations           (41)        (18)         60         (72)
    Adjustments for
      Depreciation and
       amortization                   56          55         218         213
      Losses on disposal
       and others                      -           -           1           5
      Impairment and other
       restructuring costs            42          13          50          16
      Unrealized loss (gain)
       on financial instruments       (4)         21         (26)         27
      Loss on refinancing of
       long term debt and
       financial instruments           4           -           4           -
      Foreign exchange loss on
       long-term debt                 37           6          45          26
      Gain on purchase of
       senior notes                    -          (2)        (14)         (2)
      Future income taxes            (18)        (10)         (7)        (52)
      Share of results of
       significantly influenced
       companies                      (7)         (2)        (17)         (8)
      Non-controlling interest         -           -          (1)          2
      Early settlement of natural
       gaz contracts                   -          (2)          -          11
      Others                          (7)         (2)         (8)        (11)
    -------------------------------------------------------------------------
                                      62          59         305         155
    Change in non-cash working
     capital components               29          26          52         (31)
    -------------------------------------------------------------------------
                                      91          85         357         124
    -------------------------------------------------------------------------
    INVESTING ACTIVITIES FROM
     CONTINUING OPERATIONS
    Purchase of property, plant
     and equipment                   (49)        (56)       (173)       (184)
    Proceeds from disposal of
     property, plant and
     equipment                         -           -           2           5
    Increase in other assets          (8)         (6)        (17)         (4)
    Cash of a joint venture
     and business acquisitions        (5)          -         (69)          5
    -------------------------------------------------------------------------
                                     (62)        (62)       (257)       (178)
    -------------------------------------------------------------------------
    FINANCING ACTIVITIES FROM
     CONTINUING OPERATIONS
    Bank loans and advances            4           7         (18)         20
    Change in revolving credit
     facilities                     (219)       (171)       (250)       (149)
    Issuance of senior notes,
     net of related expenses         955           -         955           -
    Purchase of senior notes        (761)          -        (779)         (2)
    Increase in other
     long-term debt                    -           1          27           2
    Payments of other
     long-term debt                   (4)          -         (12)         (5)
    Early settlement of
     foreign exchange contracts        -         150           8         150
    Redemption of common shares       (1)         (1)         (4)         (4)
    Dividend paid to a
     non-controlling interest          -          (5)          -          (5)
    Dividends                         (4)         (4)        (16)        (16)
    -------------------------------------------------------------------------
                                     (30)        (23)        (89)         (9)
    -------------------------------------------------------------------------
    Change in cash and cash
     equivalents during the
     period from continuing
     operations                       (1)          -          11         (63)

    Change in cash and cash
     equivalents from
     discontinued operations,
     including proceeds on
     disposal                          -           1          (3)         50
    -------------------------------------------------------------------------
    Net change in cash and cash
     equivalents during the
     period                           (1)          1           8         (13)
    Translation adjustments on
     cash and cash equivalents         -           1           -          (1)
    Cash and cash equivalents
     - Beginning of period            20           9          11          25
    -------------------------------------------------------------------------

    Cash and cash equivalents
     - End of period                  19          11          19          11
                              -----------------------------------------------
                              -----------------------------------------------


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

                                For the 3-month periods      For the years
                                   ended December 31,      ended December 31,
                                    2009        2008        2009        2008
                              -----------------------------------------------

    Sales
    Packaging products
      Boxboard
        Manufacturing                178         175         706         743
        Converting                   160         179         692         677
        Intersegment sales           (18)        (23)        (85)        (97)
                              -----------------------------------------------
                                      320         331       1,313       1,323
      Containerboard
        Manufacturing                124         154         517         615
        Converting                   210         232         887         962
        Intersegment sales           (82)        (93)       (342)       (374)
                              -----------------------------------------------
                                      252         293       1,062       1,203
      Specialty products
        Manufacturing                 78          83         332         315
        Converting                    61          70         243         267
        Recovery and deinked
         pulp                         77          81         270         376
        Intersegment sales           (16)        (25)        (76)        (98)
                              -----------------------------------------------
                                     200         209         769         860

        Intersegment sales           (22)        (19)        (67)       (100)
                              -----------------------------------------------
                                     750         814       3,077       3,286
    Tissue papers
      Manufacturing and
       converting                    212         228         840         787

    Intersegment sales               (10)        (22)        (40)        (56)
    -------------------------------------------------------------------------
    Total                            952       1,020       3,877       4,017
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                             For the 3-month periods           For the years
                                   ended December 31,      ended December 31,
                                    2009        2008        2009        2008
                              -----------------------------------------------

    Operating income (loss)
     before depreciation and
     amortization from
     continuing operations

    Packaging products
      Boxboard
        Manufacturing                 14         (16)         48         (40)
        Converting                    17          11          59          50
        Others                       (37)         (2)        (40)        (13)
                              -----------------------------------------------
                                      (6)         (7)         67          (3)
      Containerboard
        Manufacturing                 10          17          91          57
        Converting                    16           7          56          53
        Others                         3          (5)         (2)         (7)
                              -----------------------------------------------
                                      29          19         145         103

      Specialty products
        Manufacturing                  7           6          34          10
        Converting                     6           9          25          30
        Recovery and deinked
         pulp                          3           6          15          24
        Others                         2          (1)          -           -
                              -----------------------------------------------
                                      18          20          74          64

                              -----------------------------------------------
                                      41          32         286         164
    Tissue papers
      Manufacturing and
       converting                     34          41         153          89

    Corporate                         (5)        (21)         (7)        (24)
    -------------------------------------------------------------------------
    Operating income before
     depreciation and
     amortization from
     continuing operations            70          52         432         229
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Depreciation and
     amortization
      Boxboard                       (18)        (20)       (75)         (72)
      Containerboard                 (15)        (16)       (63)         (63)
      Specialty products              (9)         (8)       (34)         (33)
      Tissue papers                  (10)         (9)       (37)         (35)
      Corporate and
       eliminations                   (4)         (2)        (9)         (10)
                              -----------------------------------------------
                                     (56)        (55)      (218)        (213)
                              -----------------------------------------------
    Operating income (loss)
     from continuing
     operations                       14          (3)       214           16
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                             For the 3-month periods           For the years
                                   ended December 31,      ended December 31,
                                    2009        2008        2009        2008
                              -----------------------------------------------

    Purchase of property,
     plant and equipment
    Packaging products
      Boxboard
        Manufacturing                 10           7          30          21
        Converting                     7          13          28          36
                              -----------------------------------------------
                                      17          20          58          57
      Containerboard
        Manufacturing                  5           7          15          17
        Converting                     9           6          16          21
                              -----------------------------------------------
                                      14          13          31          38
      Specialty products
        Manufacturing                  2           4           7           9
        Converting                     3           1           7           4
        Recovery and deinked
         pulp                          4           9          18          28
                              -----------------------------------------------
                                       9          14          32          41

                              -----------------------------------------------
                                      40          47         121         136
    Tissue papers
      Manufacturing and
       converting                      5          12          31          37

    Corporate                          6           3          20           8
    -------------------------------------------------------------------------
    Total                             51          62         172         181
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Purchase of property,
     plant and equipment
     included in accounts
     payable
      Beginning of period             11           8          14          17
      End of period                  (13)        (14)        (13)        (14)
    -------------------------------------------------------------------------
    Total investing
     activities                       49          56         173         184
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

SOURCE Cascades Inc.

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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