Cascades reports improved third quarter results



    KINGSEY FALLS, QC, Nov. 8 /CNW Telbec/ - Cascades Inc. ("Cascades")
(Symbol: CAS-TSX) reports net earnings of $16 million ($0.16 per share) for
the quarter ended September 30, 2007. This compares with net earnings of
$10 million ($0.12 per share) for the same period in 2006. When excluding
specific items(1), net earnings for the third quarter of 2007 amounted to
$9 million ($0.09 per share) compared to net earnings of $17 million ($0.21
per share) for the same quarter in 2006.

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

    Financial Highlights

    Selected consolidated information
    (in millions of Canadian dollars,     -----------------------------------
    except amounts per share)              Q3/2007      Q3/2006      Q2/2007
    -------------------------------------------------------------------------
    Sales                                    1,043          868        1,041
    Operating income before
     depreciation and
     amortization (OIBD)(1)                     85           75           79
    Operating income from continuing
     operations                                 30           34           27
    Net earnings                                16           10           45
      per common share                       $0.16        $0.12        $0.45
    Cash flow from operations from
     continuing operations(1)                   52           53           43
      per common share (1)                   $0.53        $0.66        $0.43

    Excluding specific items(1)
      Operating income before
       depreciation and amortization
       (OIBD)                                   94           82           85
      Operating income from
       continuing operations                    39           41           33
      Net earnings                               9           17            7
        per common share                     $0.09        $0.21        $0.07
      Cash flow from operations from
       continuing operations                    54           57           45
        per common share                     $0.55        $0.71        $0.45
    -------------------------------------------------------------------------
    Note 1 - see the supplemental information on non-GAAP measures note.
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Additional highlights

    - Improved operating income and net earnings compared to Q2 2007
      explained by higher average selling prices offsetting fibre cost
      increases and the 5% appreciation of the $CA over the period.;

    - The shareholders of Reno de Medici S.p.A recently approved the merger
      with Cascades' European boxboard operations. This transaction, subject
      to the  approval of local competition authorities, will reinforce
      Cascades' packaging segment and is expected to be completed during the
      first quarter of 2008.; and

    - After quarter-end, Cascades fixed the remaining portion of its $US
      denominated debt to secure a cumulative foreign exchange gain of
      approximately $CA 400 million. A portion of this gain has  been already
      recognized in prior years as an unrealized foreign exchange gain on its
      long-term debt.
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Commenting on the quarterly results, Mr. Alain Lemaire, President and
Chief Executive Officer stated: "We are pleased with these results, achieved
in the midst of very challenging business conditions. Despite being
continuously confronted by increased competition, extreme currency volatility
and high fibre costs, we continue to execute well and to deliver specific
milestones our strategic plan. With the ongoing support of our employees and
quality assets in our packaging and tissue groups, we intend to continue in
this direction, making the necessary strategic and operational adjustments
that will make us a stronger company going forward."

    Three-month period ended September 30, 2007
    -------------------------------------------

    Sales increased 20% during the third quarter of 2007 amounting to
$1.04 billion as a result of acquisitions realized in 2006. Operating income
from continuing operations amounted to $30 million compared to $34 million
achieved for the same period last year.
    Operating income from continuing operations excluding specific elements
amounted to $39 million. Specific items include a $6 million impairment of the
Scierie Lemay assets (Boxboard group) as well as $2 million of severance and
other closure costs in regards to Scierie Lemay and the Red Rock linerboard
mill (Containerboard group). This compares to operating income from continuing
operations excluding specific elements of $41 million realized last year. Net
earnings for the third quarter include an after-tax $11 million foreign
exchange gain on $U.S. denominated debt.

    Nine-month period ended September 30, 2007
    ------------------------------------------

    Sales increased 23% during the first nine months of 2007 amounting to $3.1
billion as a result of acquisitions realized in 2006. Operating income from
continued operations amounted to $112 million compared to $109 million
achieved for the same period last year.
    Operating income from continuing operations excluding specific items
amounted to $103 million compared to $113 million last year. Specific items
include a gain of $25 million on the sale, in the first quarter of 2007, of
our joint-venture interest in GSD Packaging (Boxboard), the $6 million
impairment of assets associated with Scierie Lemay (Boxboard) and a charge of
$5 million of severance and other closure costs recorded in the third quarter
(Boxboard and Containerboard). In addition, other specific items amounted to a
loss of $5 million.

    Outlook
    -------

    Mr. Alain Lemaire, President and Chief Executive Officer added: "We expect
business conditions will continue to be very challenging going forward as a
result of high fiber costs, the continuing appreciation of the $CA and the
level of demand in an uncertain economic environment. In addition, fourth
quarter results will be impacted by the normal seasonal patterns and the usual
downtime for normal maintenance."

    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 December 17, 2007 to shareholders of record at the close of business
on December 3, 2007. This dividend paid by Cascades is an "eligible dividend"
as per the proposed changes to the Income Tax Act (Bill C-28, Canada).
Pursuant to its normal course issuer bid, the Company purchased during the
third quarter 65,100 of its common shares at an average price of $9.64 for a
total of 360,500 shares purchased for the first nine months of the year.

    Supplemental information on non-GAAP measures

    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, 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,
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, 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 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:
                                          -----------------------------------
    (in millions of Canadian dollars)      Q3/2007      Q3/2006      Q2/2007
    -------------------------------------------------------------------------
    Net earnings                                16           10           45
    Net earnings from discontinued
     operations                                  -            -           (3)
    Non-controlling interest                     1            -            -
    Share of results of significantly
     influenced companies                       (2)          (2)         (17)
    Provision for income taxes                   2            5            -
    Foreign exchange gain on
     long-term debt                            (14)           -          (25)
    Interest expense                            27           21           27
                                          -----------------------------------

    Operating income                            30           34           27
    Specific items :
    Unusual losses (gains)                       -           (4)           1
    Impairment loss on property, plant
     and equipment                               6            7            -
    Closure and restructuring costs              2            4            1
    Unrealized loss on commodity
     derivative financial instruments            1            -            4
                                          -----------------------------------
                                                 9            7            6
                                          -----------------------------------
    Operating income - excluding
     specific items                             39           41           33

    Depreciation and amortization               55           41           52
                                          -----------------------------------
    Operating income before depreciation
     and amortization - excluding
     specific items                             94           82           85
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

     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           Net earnings per share 1
    --------------------------------------------   --------------------------
                      Q3/2007  Q3/2006  Q2/2007    Q3/2007  Q3/2006  Q2/2007
                      -------------------------    --------------------------
    As per GAAP            16       10       45      $0.16    $0.12    $0.45
    Specific items:
    Unusual losses
    (gains)                 -       (4)       1        $ -   $(0.02)     $ -
    Impairment loss
     on property,
     plant and
     equipment              6        7        -      $0.04    $0.08      $ -
    Closure and
     restructuring
     costs                  2        4        1      $0.02    $0.04    $0.01
    Unrealized loss
     on commodity
     derivative
     financial
     instruments            1        -        4      $0.01      $ -    $0.03
    Foreign exchange
     gain on long-term
     debt                 (14)       -      (25)    $(0.11)  $(0.01)  $(0.21)
    Share of results
     of significantly
     influenced
     companies              -        -      (15)       $ -      $ -   $(0.15)
    Included in
     discontinued
     operations             -        -       (3)       $ -      $ -   $(0.03)
    Adjustment of
     statutory tax
     rate                  (3)       -       (3)    $(0.03)     $ -   $(0.03)
    Tax effect on
     specific items         1        -        2
                      -------------------------    --------------------------
                           (7)       7      (38)    $(0.07)   $0.09   $(0.38)
                      -------------------------    --------------------------
      Excluding
       specific items       9       17        7      $0.09    $0.21    $0.07
    -------------------------------------------    --------------------------
    -------------------------------------------    --------------------------
    Note 1 - specific amounts per share are calculated on an after-tax basis.

    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:

    (in millions
     of dollars,                                           Cash flow from
     except amounts         Cash flow from                  operations
     per share)               operations                     per share
    --------------------------------------------   --------------------------
                       Q3/2007  Q3/2006  Q2/2007    Q3/2007  Q3/2006  Q2/2007
                       -------------------------   --------------------------
    Cash flow
     provided by
     (used for)
     operating
     activities            25       67       (4)
    Changes in non-
     cash working
     capital
     components            27      (14)      47
                      -------------------------    --------------------------
    Cash flow from
     operations            52       53       43      $0.53    $0.66    $0.43
    Specific items :
    Unusual loss            -        -        2          -        -    $0.02
    Closure and
     restructuring
     costs, net of
     current income
     tax                    2        4        -      $0.02    $0.05        -
                      -------------------------    --------------------------
    Excluding specific
     items                 54       57       45      $0.55    $0.71    $0.45
    -------------------------------------------    --------------------------

    Founded in 1964, Cascades produces, transforms and markets packaging and
tissue products composed mainly of recycled fibres. Cascades employs close to
14 000 employees who work in more than 100 modern and flexible production
units located in North-America and Europe. Cascades' management philosophy,
its more than 40 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
                                                   September 30, December 31,
                                              Note         2007         2006
                                                   --------------------------
    Assets                                           (unaudited)
    Current assets
    Cash and cash equivalents                                26           34
    Accounts receivable                                     703          650
    Inventories                                             563          548
    -------------------------------------------------------------------------
                                                          1,292        1,232
    Property, plant and equipment                         1,924        2,063
    Other assets                                 7          292          303
    Goodwill                                                304          313
    -------------------------------------------------------------------------
                                                          3,812        3,911
                                                  ---------------------------
                                                  ---------------------------
    Liabilities and shareholders' equity

    Current liabilities
    Bank loans and advances                                  52           42
    Accounts payable and accrued
     liabilities                                            550          607
    Current portion of long-term debt            8            5            9
    -------------------------------------------------------------------------
                                                            607          658
    Long-term debt                               8        1,602        1,657
    Other liabilities                            9          424          439
    -------------------------------------------------------------------------
                                                          2,633        2,754


    Shareholders' equity
    Capital stock                               11          517          517
    Retained earnings                                       718          649
    Accumulated other comprehensive income      12          (56)          (9)
                                                  ---------------------------
                                                          1,179        1,157
    -------------------------------------------------------------------------
                                                          3,812        3,911
                                                  ---------------------------
                                                  ---------------------------

    The accompanying notes are an integral part of these unaudited interim
    consolidated financial statements.


    Consolidated Statements of Earnings
    (in millions of Canadian dollars, except per share amounts)
    (unaudited)
                                   For the 3-month         For the 9-month
                                       periods                periods
                                 ended September 30,      ended September 30,
                        Note        2007        2006        2007        2006
                            -------------------------------------------------
    Sales                          1,043         868       3,111       2,527
    Cost of sales
     and expenses
     Cost of sales
     (exclusive of
     depreciation
     and amorti-
     zation shown
     below)               10         850         708       2,562       2,061
    Depreciation and
     amortization                     55          41         160         122
    Selling and
     administrative
     expenses                        100          78         297         229
    Unusual gains      5,6(b)          -          (4)        (24)         (4)
    Impairment loss
     on property,
     plant and
     equipement            2           6           7           6           7
    Closure and
     restructuring
     costs                 3           2           4           5           8
    Gain on commodity
     derivatives
     financial
     instruments           4           -           -          (7)         (5)
    -------------------------------------------------------------------------
                                   1,013         834       2,999       2,418
    -------------------------------------------------------------------------

    Operating income
     from continuing
     operations                       30          34        112          109

    Interest expense                  27          21         81           63
    Foreign exchange
     gain on long-term
     debt                            (14)          -        (43)         (14)
    -------------------------------------------------------------------------
                                      17          13         74           60
    Provision for
     income taxes                      2           5         15           13
    Share of results
     of significantly
     influenced
     companies           5(c)         (2)         (2)       (23)          (6)
    Non-controlling
     interest                          1           -          2            -
    -------------------------------------------------------------------------
    Net earnings from
     continuing
     operations                       16          10         80           53
    Net earnings
     (loss) from
      discontinued
      operations           3           -           -          3           (4)
    -------------------------------------------------------------------------
    Net earnings for
     the period                       16          10         83           49
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic and diluted
     net earnings from
     continuing
     operations per
     common share                  $0.16       $0.12      $0.80        $0.65
                            -------------------------------------------------
                            -------------------------------------------------
    Basic and diluted
     net earnings per
     common share                  $0.16       $0.12      $0.83        $0.60
                            -------------------------------------------------
                            -------------------------------------------------
    Weighted average
     number of common
     shares outstanding       99,328,314  80,796,541 99,362,432   80,801,031
                            -------------------------------------------------
                            -------------------------------------------------

    The accompanying notes are an integral part of these unaudited interim
    consolidated financial statements.


    Consolidated Statement of Shareholders' Equity
    (in millions of Canadian dollars)
    (unaudited)

                                   For the 9-month period ended September 30,
                                                                        2007
                                ---------------------------------------------
                                                     Accumulated
                                                           other
                                                         compre-       Share
                                 Capital    Retained     hensive     holders'
                        Note       stock    earnings      income      equity
                                ---------------------------------------------
    Balance - beginning
     of period                       517         649          (9)      1,157
    Cumulative impact
     of accounting
     changes          1(c)(f)          -           -           1           1
                                ---------------------------------------------
    Restated balance,
     beginning of
     period                          517         649          (8)      1,158
    Comprehensive income:
      Net earnings for the
       period                          -          83           -          83
      Change in foreign
       currency trans-
       lation of self-
       sustaining foreign
       subsidiaries, net
       of related hedging
       activities                      -           -         (52)        (52)
      Change in fair
       value of foreign
       exchange forward
       contracts designated
       as cash flow hedges,
       net of related income
       taxes and reclas-
       sification adjustments          -           -           5           5
      Change in fair value
       of commodity deri-
       vative financial
       instruments desig-
       nated as cash flow
       hedges, net of
       related income taxes
       and reclassification
       adjustments                     -           -          (1)         (1)
                                                                  -----------
    Comprehensive income for
     the period                                                           35
                                                                  -----------
    Dividends                          -         (12)          -         (12)
    Adjustment related to
     stock options                     2           -           -           2
    Redemption of common
     shares                           (2)         (2)          -          (4)
                      -------------------------------------------------------
    Balance -
     end of period                   517         718         (56)      1,179
                      -------------------------------------------------------
                      -------------------------------------------------------


                                   For the 9-month period ended September 30,
                                                                        2006
                                ---------------------------------------------
                                                     Accumulated
                                                           other
                                                         compre-       Share
                                 Capital    Retained     hensive     holders'
                                   stock    earnings      income      equity
                                ---------------------------------------------
    Balance -
     beginning of
     period                          264         669         (36)         897
    Comprehensive
     income:
      Net earnings
       for the period                  -          49           -          49
      Change in
       foreign cur-
       rency trans-
       lation of
       self-sustaining
       foreign sub-
       sidiaries, net
       of related
       hedging
       activities                      -           -           3           3
                                                                -------------
    Comprehensive
     income for the
     period                                                               52
                                                                -------------
      Dividends                        -         (10)          -         (10)
      Adjustment
       related to
       stock
       options                         3           -           -           3
      Redemption
       of common
       shares                          -          (1)          -          (1)
                                ---------------------------------------------
    Balance -
     end of
     period                          267         707         (33)        941
                                ---------------------------------------------
                                ---------------------------------------------

    The accompanying notes are an integral part of these unaudited interim
    consolidated financial statements.


    Consolidated Statements of Cash Flows
    (in millions of Canadian dollars)
    (unaudited)

                                   For the 3-month         For the 9-month
                                       periods                periods
                                 ended September 30,      ended September 30,
                        Note        2007        2006        2007        2006
                             ------------------------------------------------
    OPERATING ACTIVITIES
     FROM CONTINUING
     OPERATIONS

    Net earnings from
     continuing
     operations                       16          10          80          53
    Adjustments for:
      Depreciation and
       amortization                   55          41         160         122
      Unusual gains                    -          (4)        (26)         (4)
      Impairment
       loss on pro-
       perty, plant
       and equipement                  6           7           6           7
      Closure and
       restructuring
       costs                           -           -           1           -
      Unrealized loss
       (gain) on
       commodity
       derivative
       financial
       instruments                     1           -          (2)         (7)
      Foreign exchange
       gain on long-
       term debt                     (14)          -         (43)        (14)
      Future income
       taxes                          (9)         (1)        (14)         (9)
      Share of results
       of significantly
       influenced
       companies                      (2)         (2)        (23)         (6)
      Non-controlling
       interest                        1           -           2           -
      Others                          (2)          2          (8)          5
    -------------------------------------------------------------------------
                                      52          53         133         147
    Change in non-cash
     working capital
     components                      (27)         14        (156)       (41)
    -------------------------------------------------------------------------
                                      25          67         (23)        106
    -------------------------------------------------------------------------
    INVESTING ACTIVITIES
     FROM CONTINUING
     OPERATIONS

    Purchases of property,
     plant and equipment             (41)        (31)       (109)        (75)
    Proceed from disposal
     of property, plant
     and equipment          5(a)       -           -           7           -
    Increase in other
     assets                           (3)        (11)         (3)        (10)
    Business acquisitions,
     net of cash acquired   6(d)     (10)        (16)        (10)        (30)
    Business disposal,
     net of cash
     disposed               6(b)       -           8          37           8
    -------------------------------------------------------------------------
                                     (54)        (50)        (78)       (107)
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES FROM CONTINUING OPERATIONS

    Bank loans
     and advances                     (1)          4          11           8
    Change in revolving
     credit facilities                58         (14)        125         (66)
    Increase in
     other long-
     term debt                         -           1           -           2
    Payments of other
     long-term debt                   (4)         (2)         (8)         (8)
    Net proceeds
     from issuance
     of common shares                  -           -           1           1
    Redemption of
     common shares        11           -           -          (4)         (1)
    Dividends                         (4)         (3)        (12)        (10)
    -------------------------------------------------------------------------
                                      49         (14)        113         (74)
    -------------------------------------------------------------------------
    Change in cash
     and cash equivalents
     during the period
     from continuing
     operations                       20           3          12         (75)
    Change in cash and
     cash equivalents
     from discontinued
     operations,
     including
     proceeds on
     disposal           10(d)        (16)         (1)        (16)         56
    -------------------------------------------------------------------------
    Change in cash
     and cash
     equivalents
     during the
     period                            4           2          (4)        (19)
    Translation
     adjustments
     on cash and
     cash equi-
     valents                           3           2          (4)         (1)
    Cash and cash
     equivalents-
     Beginning of
     period                           19          19          34          43
    -------------------------------------------------------------------------
    Cash and cash
     equivalents -
     End of period                    26          23          26          23
                                ---------------------------------------------
                                ---------------------------------------------

    The accompanying notes are an integral part of these unaudited interim
    consolidated financial statements.


    Notes to Interim Consolidated Financial Statements
    (tabular amounts in millions of Canadian dollars, except amount per
     share)
    (unaudited)

    NOTE 1 - ACCOUNTING POLICIES

    These unaudited interim consolidated financial statements and the notes
thereto have been prepared in accordance with Canadian generally accepted
accounting principles ("GAAP") with the exception that they do not conform in
all material respects to the requirement of GAAP for annual financial
statements. These financial statements should be read in conjunction with the
most recent annual financial statements of the Company as they have been
prepared using the same accounting policies except for the following:

    a) Comprehensive income

    On January 1, 2007, the Company adopted Section 1530 of the Canadian
Institute of Chartered Accountants ("CICA") Handbook, "Comprehensive Income".
It describes reporting and disclosure recommendations with respect to
comprehensive income and its components. Comprehensive income represents
changes in net assets arising from transactions, events and circumstances not
related to shareholders.

    b) Equity

    On January 1, 2007, the Company adopted Section 3251 of the CICA Handbook,
"Equity" which describes standards for presentation of changes in equity. As a
result of the adoption of Sections 3251 and 1530 described above, the Company
is now presenting a consolidated statement of shareholders' equity, which
includes information about comprehensive income and accumulated other
comprehensive income. The comparative consolidated financial statements were
restated to reclassify an amount of $9 million as at January 1, 2007 ($36
 million as of January 1, 2006 for the purpose of the comparative financial
information) previously recorded in the cumulative translation adjustment to
the accumulated other comprehensive income.

    c) Financial Instruments - Recognition and Measurement

    On January 1, 2007, the Company adopted Section 3855 of the CICA Handbook,
"Financial Instruments - Recognition and Measurement". It describes the
standards for recognizing and measuring financial instruments in the financial
statements. Under this Section, financial assets available for sale, assets
and liabilities held for trading and derivatives financial instruments, when
part of a hedging relationship or not, are measured and accounted for at fair
value. Certain derivatives embedded in other contracts are also measured and
accounted for at fair value. The Company selected January 1, 2003 as its
transition date for embedded derivatives.

    Upon the adoption of this Section, the Company made the following
classifications:

    - Cash and cash equivalents are classified as financial assets held for
      trading and are measured at fair value.  Resulting gains and losses are
      recorded in earnings.
    - Accounts receivable, other investments, bank loans and advances,
      accounts payables and accrued liabilities and long-term debt are
      classified as loans and receivable or other liabilities and are
      initially recorded at fair value.  Subsequently, they are recorded at
      amortized costs using the effective interest rate method.  Under this
      classification, deferred financing costs related to Unsecured Senior
      Notes are now presented as a reduction of the carrying value of the
      respective debt.

    This Section was applied retroactively without restating the comparatives
figures and resulted in the following adjustments as of January 1, 2007:

                                                                           $
        Other assets                                                     (12)
                                                                    ---------

        Long-term debt                                                   (17)
        Other liabilities                                                  3
                                                                    ---------
                                                                         (14)
                                                                    ---------
        Net change                                                         2
                                                                    ---------
                                                                    ---------
        Impact on accumulated other comprehensive income                   1
        Impact on retained earnings                                        1
                                                                    ---------
                                                                           2
                                                                    ---------
                                                                    ---------

    d) Hedges

    On January 1, 2007, the Company adopted Section 3865 of the CICA Handbook,
"Hedges". It expands the guidelines required by Accounting Guideline  13
(AcG-13), "Hedging Relationships". This Section describes when and how hedge
accounting can be applied as well as the disclosure requirements. Hedge
accounting enables the recording of gains, losses, revenues and expenses from
the derivative financial instruments in the same period as for those related
to the hedged item. However, any ineffective portion of a hedging relationship
is recorded directly to earnings. The Company elected to apply hedge
accounting for the following items as of January 1, 2007:

    -------------------------------------------------------------------------
                            Nature of hedging
    Item                    relationship            Implication
    -------------------------------------------------------------------------
    Foreign exchange        Cash flow hedge of      Gains or losses from
    forward contracts       future anticipated      these derivatives
    and currency option     sales, purchases        financial instruments
    instruments.            and interest expenses   are recorded in
                            denominated in foreign  accumulated other
                            currencies.             comprehensive income
                                                    net of related income
                                                    taxes and are
                                                    reclassified to
                                                    earnings as adjustment
                                                    to sales, cost of
                                                    sales or interest
                                                    expense in the same
                                                    period as the respective
                                                    hedged item affects
                                                    earnings.
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Interest rate swap      Fair value hedge on a   Gains or losses from
    agreement of a          portion of the          these derivatives
    notional amount of      Company's 6.75%         financial
    US$50 million,          Unsecured Senior Notes. instruments are
    maturing in 2013.                               recorded to earnings
                                                    as interest expense.
                                                    However, a
                                                    corresponding amount
                                                    is recorded as an
                                                    adjustment to the
                                                    carrying value of
                                                    the 6.75% Unsecured
                                                    Senior Notes and
                                                    interest expense.
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Commodity swap          Cash flow hedges of     Gains or losses from
    agreements on           anticipated             these derivatives
    natural gas and         purchases of natural    financial
    electricity.            gas and electricity.    instruments are
                                                    recorded in
                                                    accumulated other
                                                    comprehensive income
                                                    net of related
                                                    income taxes and are
                                                    reclassified to
                                                    earnings as
                                                    adjustment to cost
                                                    of sales in the same
                                                    period as the
                                                    respective hedged
                                                    item affects
                                                    earnings.
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Long-term debt          Hedge of the net        Gains or losses
    denominated in          investment of the       resulting from the
    foreign currencies.     Company in self-        translation to
                            sustaining foreign      Canadian dollars of
                            subsidiaries.           long-term debt
                                                    denominated in
                                                    foreign currencies
                                                    and designated as
                                                    net investment
                                                    hedges are recorded
                                                    in accumulated other
                                                    comprehensive income
                                                    net of related
                                                    income taxes.
    -------------------------------------------------------------------------

    As in previous years, the Company continued not applying hedge accounting
to certain derivatives financial instruments including interest rate swap
agreements of notional amounts totaling US$5.2 million maturing between 2008
and 2012 and commodity swap agreements on old corrugated containers.
Accordingly, gains and losses from these derivatives financial instruments are
recorded directly to earnings. The adoption of Section 3865 had no impact on
the consolidated financial statements of the Company as at January 1, 2007.
    In 2007, the Company entered into foreign exchange forward contracts and
currency option instruments to fix a notional amount of US$200 million of its
U.S.- denominated debt at an average rate of $0.958 $CAN/$U.S.. The Company
elected not to apply hedge accounting to these instruments and they are
recorded at fair value in earnings against the foreign exchange gains or
losses on long-term debt.

    e) Accounting changes

    As at January 1, 2007, the Company adopted Section 1506 "Accounting
changes". This Section establishes criteria to be met in order to change,
together with the accounting treatment and disclosure required when there is a
change in accounting policies, estimates and correction of errors. The
adoption of this Section had no impact on the consolidated financial position
and results of operations of the Company.

    f) Others

    As at January 1, 2007, Boralex Inc. "Boralex", a significantly influenced
company, changed its depreciation method with respect to some operating units.
This change resulted in a decrease in retained earnings of $1 million (the
Company's share). As at January 1, 2007, Boralex also adopted Sections 1530,
3251, 3855 and 3865 of the CICA Handbook. The impact on the Company following
the adoption of these Sections by Boralex is reflected in notes a), b) and c)
above.

    g) New accounting standards not yet adopted

    Capital disclosures - In December 2006, the CICA published Section 1535,
"Capital Disclosures". This new standard established disclosure requirements
concerning capital such as: qualitative information about its objectives,
policies and processes for managing capital; quantitative data about what it
regards as capital; whether it has complied with any externally imposed
capital requirements and, if not, the consequences of such non-compliance. The
new requirements will be effective starting January 1, 2008. The Company is
presently evaluating the impact of this new standard.
    Financial instruments - disclosures and presentation - In December 2006,
the CICA published two new sections: Section 3862, "Financial Instruments -
Disclosures", and Section 3863, "Financial Instruments - Presentation". These
new standards replace Section 3861, "Financial Instruments - Disclosure and
Presentation", revising and enhancing its disclosure requirements, and
carrying forward unchanged its presentation requirements. These new standards
will be effective starting January 1, 2008. The Company is presently
evaluating the impact of these new standards.
    Inventories - In June 2007, the CICA published Section 3031,
"Inventories". This new standard established measurement and disclosure
requirements concerning inventories. The new requirements will be effective
starting January 1, 2008. The Company is presently evaluating the impact of
this new standard.
    General Standards of financial Statements Presentation - In June 2007, the
CICA amended Section 1400 to include requirements to assess an entity's
ability to continue as a going concern and disclose any material uncertainties
that cast doubt on its ability to continue as a going concern. This new
requirement will be effective for interim period and annual financial
statement starting January 1, 2008. The application of this standard does not
expect to have a material impact on the financial position on results of
operations of the Company.


    NOTE 2 - MEASUREMENT UNCERTAINTY

    The Company evaluates the net book value of its long-lived assets when
events or changes in circumstances indicate that the net book value of the
assets may not be recoverable. To evaluate long-lived assets, the Company
determines if the undiscounted future cash flows from operating activities
exceed the net book value of the assets at the valuation date. Estimates of
future cash flows and fair value are based on judgment and could change.
    Given the sensitivity of certain key assumptions used, such as exchange
rates, selling prices and costs of raw materials and energy, there is a
measurement uncertainty regarding certain operating units because it is
possible that variations in future conditions could require a modification of
the stated amount of long-lived assets.
    During the third quarter of 2007, an impairment charge of $6 million was
recorded to bring the net book value of the property, plant and equipment and
other assets of the Scierie Lemay (Boxboard Group) to its fair value. This
sawmill was temporary shut down in October 2006.


    NOTE 3 - CLOSURE AND RESTRUCTURING COSTS

    In 2005 and 2006, the Company announced the permanent or temporary
shutdown of certains operating units and production equipment. The following
table provides a reconciliation of all closure and restructuring cost
provisions.

                                   For the 3-month         For the 9-month
                                       periods                periods
                                 ended September 30,      ended September 30,
                                    2007        2006        2007        2006
                                ---------------------------------------------
    Balance at beginning of
     period                           28          39          47          55
    Additional (reversal)
     provision - severance
     and pension liability             1           4          (1)         11
    Non-monetary items                 -           -          (1)          -
    Payments                         (15)         (3)        (31)        (26)
    -------------------------------------------------------------------------
    Balance at end of period          14          40          14          40
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    In 2007, the Company recorded additional closure and restructuring
provision relating to the permanent closure of its Red Rock containerboard
mill and Montreal corrugated products converting plant for an amount of
$4 million. The Company, also recorded in the third quarter of 2007, a
severance provision of $1 million related to its Scierie Lemay sawmill
temporary closed in 2006.
    In 2007, the Company recorded a gain of $6 million related to the
settlement of a portion of the pension plan of the Thunder Bay coated fine
paper mill, closed in January 2006. This gain and the provision of $1 million
discussed in note 5b) are recorded in discontinued operation net of related
income taxes of $2 million.


    NOTE 4 - COMMODITY DERIVATIVES FINANCIAL INSTRUMENTS

                                ---------------------------------------------
                                   For the 3-month         For the 9-month
                                       periods                periods
                                 ended September 30,      ended September 30,
                                    2007        2006        2007        2006
                                ---------------------------------------------
    Realized loss (gain) on
     commodity derivatives
     financial instruments           (1)          -          (5)          2
    Unrealized loss (gain) on
     commodity derivatives
     financial instruments            1           -          (2)         (7)
    -------------------------------------------------------------------------
                                      -           -          (7)         (5)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    NOTE 5 - UNUSUAL GAINS AND LOSSES

    a) On May 1, 2007, the Company sold the building of its Toronto
(Pickering) tissue converting facility, closed in 2005, for an amount of
$7 million. The Company realized a gain of $1 million.
    b) In the second quarter of 2007, the Company recorded a provision of
$3 million related to the action filed by ServiceCore, Inc. and to the class
actions filed following the infractions of 2006 under the Competition Act
relating to the sale of carbonless paper sheets by Cascades Fine Papers Group,
Inc. An amount of $1 million of this provision is presented in discontinued
operations.
    c) In the second quarter of 2007, the Company recorded a dilution gain of
$15 million resulting from the decreased of its participation in Boralex from
43% to 34% as a result of a public equity offering of 7.3 million common
shares by Boralex at a price of $15.00. This gain is presented in the share of
results of significantly influenced companies.


    NOTE 6 - BUSINESS ACQUISITIONS AND DISPOSAL

    a) On December 29, 2006, the Company acquired the remaining outstanding
common shares (50%) of Norampac Inc. "Norampac" held by Domtar Inc. for a
total purchase price of $561 million. The balance sheet and results of
Norampac are fully consolidated since that date as they were proportionally
consolidated prior to the acquisition. The purchase price allocations for the
Norampac acquisition have not yet been completed mainly with respect to the
identification and valuation of property, plant and equipment and other
potential intangible assets. The final allocation of the purchase price could
result in significant changes.
    b) On January 25, 2007, the Company sold its 40% interest in GSD
Packaging, LLC, a U.S. food pail manufacturing company of the Boxboard Group,
to Rock-Tenn Company for a cash consideration of $38 million (US $32 million).
The Company realized a gain of $25 million before income tax of $11 million.

    Assets and liabilities at the time of disposal where as follows:

    Business segment                                                Boxboard
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Accounts receivable                                                    2
    Inventories                                                            4
    Property, plant and equipment                                          2
    Goodwill                                                               6
    -------------------------------------------------------------------------
                                                                          14
    Accounts payable and accrued liabilities                              (2)
    -------------------------------------------------------------------------
                                                                          12
    Gain on disposal                                                      25
    -------------------------------------------------------------------------
    Total consideration received, net of cash disposed of $1 million      37
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    c) On June 20, 2007, Reno De Medici S.p.A. ("RdM") and Cascades Inc.
announced the signing of a Letter of Intent for the negotiation of the terms
and conditions of a possible combination of RdM and the european recycled
cartonboard business of Cascades S.A. Concurrently with the proposed merger,
Cascades S.A. and a group of current shareholders of RdM were expected to
enter into a three-year shareholders' agreement covering matters relating to
corporate governance (where Cascades S.A., on the one hand, and a group of
current shareholders of RdM, on the other hand, would be equally represented
in the board of directors of RdM), and providing for an 18-month lock-up and
thereafter reciprocal first refusal and tag-along rights.
    On September 14, 2007, Cascades Inc. announced the signature of the
definitive combination agreement and shareholders agreement. The combination
was subject to certain conditions, including, approval of the appropriate
regulatory authorities as well as the approval by shareholders of RdM at a
special meeting. On October 29, 2007, the combination was approved by the
shareholders of RdM. The transaction is expected to be completed at the
beginning of 2008. The impact on the financial statements of the Company will
be determined upon the final closing of the transaction.
    d) On August, 1 2007, the Company acquired certain assets of Honeycomb
Products of Michigan inc. a Honeycomb board mill located in Grand Rapids,
Michigan for a purchase price of $11 million (US$10.4 million).
    The acquisition have been accounted for using the purchase method and the
accounts and results of operations of that acquisition have been included in
the consolidated financial statements since the date of acquisition. The
purchase price allocation has not yet been completed mainly with respect to
the identification and valuation of other potential intangible assets.The
following preliminary allocation of the purchase price to the identifiable
assets acquired, resulted in a goodwill of $7 million which is tax deductible.
The final allocation of the purchase price could result in significant
changes.

    Business segment                                      Specialty products
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Account receivable                                                     1
    Inventories                                                            1
    Property, plant and equipment                                          2
    Goodwill                                                               7
    -------------------------------------------------------------------------
                                                                          11
    Less : Balance of purchase price                                      (1)
    -------------------------------------------------------------------------
    Total consideration paid                                              10
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    NOTE 7 - OTHER ASSETS
                                                          As at        As at
                                                   September 30, December 31,
                                                           2007         2006
                                                  ---------------------------
    Investments in significantly influenced
     companies                                              117          107
    Other investments                                        14           12
    Deferred charges                                         14           34
    Employee future benefits                                 63           52
    Fair value of derivatives financial instruments           4            7
    Customer relationship and client lists                   68           77
    Other finite-life intangible assets                      12           14
    -------------------------------------------------------------------------
                                                            292          303
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    NOTE 8 - LONG-TERM DEBT
                                                          As at        As at
                                                   September 30, December 31,
                                                           2007         2006
                                                  ---------------------------
    7.25% and 6.75% unsecured senior notes
      (US$925 million, net of deferred
      financing costs)                                      915        1,078
    Revolving and term credit facilities                    677          557
    Other debt from subsidiaries                             13           28
    Other debt from joint ventures                            2            3
    -------------------------------------------------------------------------
                                                          1,607        1,666
    Current portion                                           5            9
    -------------------------------------------------------------------------
                                                          1,602        1,657
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    On June 27, 2007, the Company amended its credit facility to add a new
12-month unsecured revolving credit facilty in the amount of $100 million to
provide additional availability of funds.


    NOTE 9 - OTHER LIABILITIES
                                                          As at        As at
                                                   September 30, December 31,
                                                           2007         2006
                                                  ---------------------------
    Employee future benefits                                108          107
    Future income taxes                                     261          286
    Fair value of derivatives financial
     instruments                                             12            2
    Legal settlement                                          9           11
    Non-controlling interest                                 21           19
    Others                                                   13           14
    -------------------------------------------------------------------------
                                                            424          439
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    NOTE 10 - ADDITIONAL INFORMATION

                                   For the 3-month         For the 9-month
                                       periods                 periods
                                 ended September 30,      ended September 30,
                                    2007        2006        2007        2006
                                ---------------------------------------------
    (a) Cost of sales
        Foreign exchange loss         (4)          -          (1)          -
    (b) Employee future benefits
         expenses
        Defined benefit pension
         plans                         2           3           7           9
        Other employee future
         benefit plans                 2           2           7           6
        Defined contribution
         pension plans                 2           1           4           3
    (c) Supplemental disclosure
        Depreciation of property,
         plant and equipment          53          39         153         117
        Amortization of other
         assets                        2           2           7           5
        Amortization of deferred
         financing cost
         included in interest
         expense                       1           1           3           3
        Interest paid                 37          32          92          72
        Income taxes paid
         (received)                  (12)         (2)         14           2
    (d) Discontinued operations
        Cash and cash
         equivalents provided
         by discontinued
         operations including
         proceeds on disposal        (16)         (1)        (16)         56


    NOTE 11 - CAPITAL STOCK

    As at September 30, 2007, the capital stock issued and outstanding
consisted of 99,276,551 common shares (99,533,654 as at December 31, 2006). As
at September 30, 2007, 2,508,812 stock options were issued and outstanding
(2,315,391 as at December 31, 2006). During the period, 103,397 options were
exercised and 125,250 were forfeited. In addition, the Company issued
422,068 stock options during the period at an exercise price of $11.83.
    In 2007, in the normal course of business, the Company renewed its share
repurchase program of a maximum of 4,970,094 common shares with the Toronto
Stock Exchange which represents approximately 5% of issued and outstanding
common shares. The program is valid from March 13, 2007 to March 12, 2008. As
of September 30, 2007, the Company repurchased 360,500 common shares under
this program for a consideration of approximately $4 million.


    NOTE 12 - ACCUMULATED OTHER COMPREHENSIVE INCOME
                                                          As at        As at
                                                   September 30, December 31,
                                                           2007         2006
                                                  ---------------------------
    Foreign currency translation of self-
     sustaining foreign subsidiaries, net of
     hedging activities                                     (61)          (9)
    Unrealized gains arising from foreign exchange
     forward contracts designated as cash flow
     hedges, net of related income taxes                      5            -
    -------------------------------------------------------------------------
                                                            (56)          (9)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    NOTE 13 - CONTINGENCY AND SUBSEQUENT EVENT

    During the third quarter of 2007, The Company announced the signing of a
letter of intent for the sale of its Red Rock linerboard mill located in
Ontario which is temporarily shutdown. Upon the execution of a final sale
agreement, the Company will pay to the purchaser an amount of $10 million. On
October 31, 2007, the parties completed the transaction of the final sale
agreement. The Company also signed a letter of intent for the sale of its
permanently closed coated fine paper mill located in Thunder Bay, Ontario.
Upon the execution of a final sale agreement, the company will pay to the
purchaser an amount of $4 million. Discussions relating to this sale remain
ongoing and the amounts payable will be recorded to earnings at closing.
    After the closing of the third quarter, the Company entered into foreign
exchange forward contracts and currency option instruments to fix the
remaining portion of its U.S.- denominated debt for a notional amount of
US$725 million at an average exchange rate of $1,036 $US./CAN.


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


                                   For the 3-month         For the 9-month
                                       periods                 periods
                                 ended September 30,      ended September 30,
                                    2007        2006        2007        2006
                                ---------------------------------------------
    Sales
    Packaging products
      Boxboard
        Manufacturing                195         187         602         526
        Converting                   166         186         512         555
        Eliminations and
         others                      (24)        (23)        (76)        (50)
                                ---------------------------------------------
                                     337         350       1,038       1,031
      Containerboard
        Manufacturing                150          87         456         255
        Converting                   252         132         747         383
        Eliminations and others      (92)        (64)       (292)       (184)
                                ---------------------------------------------
                                     310         155         911         454

      Specialty products
        Manufacturing                 78          82         245         252
        Converting                    57          57         174         168
        Recovery, deinked
         pulp and eliminations        92          54         279         157
                                ---------------------------------------------
                                     227         193         698         577

    Eliminations                     (27)        (15)        (84)        (56)
                                ---------------------------------------------
                                     847         683       2,563       2,006

    Tissue papers
      Manufacturing and
       converting                    176         194         542         545


    Eliminations and others           20          (9)          6         (24)
                                ---------------------------------------------
    Consolidated total             1,043         868       3,111       2,527
                                ---------------------------------------------
                                ---------------------------------------------


                                   For the 3-month         For the 9-month
                                       periods                 periods
                                 ended September 30,      ended September 30,
                                    2007        2006        2007        2006
                                ---------------------------------------------

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

    Packaging products
      Boxboard
        Manufacturing                  4          (3)         (1)          1
        Converting                    12          18          63          50
        Others                        (9)         (4)        (12)         (9)
                                ---------------------------------------------
                                       7          11          50          42
      Containerboard
        Manufacturing                 19          12          54          32
        Converting                    22          12          57          35
        Others                         5           4          11           5
                                ---------------------------------------------
                                      46          28         122          72

      Specialty products
        Manufacturing                  3          (7)          6          (4)
        Converting                     6           8          18          22
        Recovery, deinked pulp
         and others                    6           4          18          12
                                ---------------------------------------------
                                      15           5          42          30
                                ---------------------------------------------
                                      68          44         214         144
    Tissue papers
      Manufacturing and
       converting                     16          34          51          92


    Corporate                          1          (3)          7          (5)
    -------------------------------------------------------------------------
    Operating income before
     depreciation and
     amortization from
     continuing operations            85          75         272         231
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Depreciation and amortization
      Boxboard                       (17)        (16)        (51)        (49)
      Containerboard                 (18)         (9)        (50)        (28)
      Specialty products              (8)         (9)        (24)        (23)
      Tissue papers                   (9)         (9)        (27)        (28)
      Corporate and eliminations      (3)          2          (8)          6
    -------------------------------------------------------------------------
                                     (55)        (41)       (160)       (122)
    -------------------------------------------------------------------------

    Operating income from continuing
     operations                       30          34         112         109
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                                   For the 3-month         For the 9-month
                                       periods                periods
                                 ended September 30,      ended September 30,
                                    2007        2006        2007        2006
                                ---------------------------------------------
    Purchases of property, plant
     and equipment
    Packaging products
      Boxboard
        Manufacturing                  6           2          13           4
        Converting                     5           7          23          19
        Others                         3           -           3           1
                                ---------------------------------------------
                                      14           9          39          24

      Containerboard
        Manufacturing                  2           1           7           9
        Converting                     3           2           7           8
        Others                         -           -           -           -
                                ---------------------------------------------
                                       5           3          14          17
      Specialty products
        Manufacturing                  1           3           6           6
        Converting                     2           2           6           4
        Recovery, deinked pulp
         and others                    2           1           4           4
                                ---------------------------------------------
                                       5           6          16          14

                                ---------------------------------------------
                                      24          18          69          55
    Tissue papers
      Manufacturing and
       converting                     16          11          35          16

    Corporate                          1           2           5           4
    -------------------------------------------------------------------------
    Consolidated total                41          31         109          75
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Additional information
    (in millions of Canadian dollars, except shipments and share information)
    (unaudited)

                                   For the 3-month         For the 9-month
                                       periods                periods
                                 ended September 30,      ended September 30,
                                    2007        2006        2007        2006
                                ---------------------------------------------
    Common shares - Toronto
     Stock Exchange
      High                        $12.52      $12.85      $15.80      $12.85
      Low                          $8.23      $11.09       $8.23       $9.66
      Volume                  11,586,000   8,606,000  46,957,000  19,407,000
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Shipments of manufacturing
     and converting products
     (in thousands of
      short tons)
    Packaging products
      Boxboard                       296         311         910         880
      Containerboard                 357         186       1,074         564
      Specialty products             111         113         340         345
    Tissue papers                    115         118         336         336
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplemental information on non-GAAP measure

    Operating income before depreciation and amortization and operating income
are not measures of performance under Canadian GAAP. The Company includes
operating income before depreciation and amortization and operating income
because they are the measures used by management to assess the operating and
financial performance of the Company's operating segments. As well, the
Company believes that operating income before depreciation and amortization
and operating income provides an additional measure 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
and operating income do not represent, and should not be used as a substitute
for net earnings or cash flows from operations as determined in accordance
with Canadian GAAP and operating income before depreciation and amortization
and operating income 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 and operating income
may differ from that of other companies.
    Net earnings, which is a performance measure defined by Canadian GAAP is
reconcilied below to operating income and to operating income before
depreciation and amortization:

                                   For the 3-month         For the 9-month
                                       periods                 periods
                                 ended September 30,      ended September 30,
                                    2007        2006        2007        2006
                                ---------------------------------------------
    Net earnings for the period       16          10          83          49
    Net loss (earnings) from
     discontinued operations           -           -          (3)          4
    Non-controlling interest           1           -           2           -
    Share of results of
     significantly influenced
     companies                        (2)         (2)        (23)         (6)
    Provision for income taxes         2           5          15          13
    Foreign exchange gain on
     long-term debt                  (14)          -         (43)        (14)
    Interest expense                  27          21          81          63
                                ---------------------------------------------

    Operating income from
     continuing operations            30          34         112         109

    Depreciation and
     amortization                     55          41         160         122
                                ---------------------------------------------
    Operating income before
     depreciation and
     amortization                     85          75         272         231
    -------------------------------------------------------------------------
    




For further information:

For further information: M Hubert Bolduc, Vice-president,
Communications, (819) 350-0793; Mr. Marc Jasmin, C.M.A. Director, Investor
relations, Cascades Inc., (514) 282-2681; Source: Mr. Christian Dubé,
Vice-President and Chief Financial Officer, Cascades Inc.


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890