Cascades reports results for 2007



    KINGSEY FALLS, QC, Feb. 27 /CNW Telbec/ - For the fiscal year ended
December 31, 2007, Cascades Inc. (Symbol: CAS-TSX) reports unaudited net
earnings of $95 million ($0.95 per share) compared to net earnings of
$3 million ($0.04 per share) for the same period in 2006. When excluding
specific items(1), net earnings amount to $22 million ($0.22 per share)
compared to net earnings of $52 million ($0.64 per share) in 2006.
    For the fourth quarter ended December 31, 2007, net earnings amounted to
$12 million ($0.12 per share) compared to a net loss of $46 million ($0.56 per
share) for the fourth quarter ended December 31, 2006. When excluding specific
items(1), net earnings for the fourth quarter of 2007 amounted to $1 million
($0.01 per share) compared to net earnings of $13 million ($0.16 per share)
for the same quarter in 2006.

    
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    Financial Highlights

    Selected consolidated information(2)
    (in millions of
     Canadian dollars, except ----------------- -----------------------------
     amounts per share)         2007      2006   Q4/2007   Q4/2006   Q3/2007
    ------------------------------------------- -----------------------------

    Sales                      3,929     3,278       937       843       984
    Operating income before
     depreciation and
     amortization (OIBD)(1)      352       257        68        23        93
    Operating income (loss)
     from continuing operations  144        96        19       (17)       38
    Net earnings (loss)           95         3        12       (46)       16
      per common share         $0.95     $0.04     $0.12    $(0.56)    $0.16
    Cash flow from operations
     from continuing
     operations(1)               178       183        36        32        55
      per common share(1)      $1.79     $2.26     $0.36     $0.39     $0.56

    Excluding specific items(1)
      Operating income before
       depreciation and
       amortization  (OIBD)      350       315        82        77        95
      Operating income from
       continuing operations     142       154        33        37        40
      Net earnings                22        52         1        13         9
        per common share       $0.22     $0.64     $0.01     $0.16     $0.09
      Cash flow from
       operations from
       continuing operations     202       196        49        40        56
        per common share       $2.03     $2.42     $0.49     $0.49     $0.57
    ------------------------------------------- -----------------------------

    Note 1 - see the supplemental information on non-GAAP measures note.
    Note 2 - unaudited and restated to exclude discontinued operations.

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    2007 Business highlights

    - Improved operating results compared to 2006 due for the most part to
      the strategic acquisition of the remaining 50% of Norampac and
      generally higher prices, which more than offset the negative impact of
      approximately $150 million resulting from higher recycled fibre and
      pulp costs as well as the appreciation of the $CAN.

    - Cascades fixed the remaining portion of its $US denominated debt to
      secure its foreign exchange gain.

    - Cascades continues to deliver on its action plan:
        - Divestiture of two indefinitely shut facilities, one non-core mill
          and one non-core joint venture;
        - Recently approved merger of its European recycled boxboard
          operations with those of Reno de Medici S.p.A. which will be
          effective March 1, 2008

    - Strong demand for our Cascades' recycled tissue paper retail brand and
      our 100-per-cent recycled fine paper with respective annual sales
      increases of 60% and 228%.

    - Cascades' shares reclassified to the Containers & Packaging industry
      from the Paper & Forest Products industry within the S&P/TSX Composite
      index.
    -------------------------------------------------------------------------
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     Commenting on the yearly results, Mr. Alain Lemaire, President and Chief
Executive Officer stated: "Given the rapid appreciation of the Canadian dollar
and rising fiber costs, 2007 was definitely a challenging year for Cascades.
However, in spite of these significant headwinds, we remain focused on
delivering on our strategic plan. In the past twelve months, we continued to
streamline our portfolio of assets, to implement restructuring initiatives,
and we announced the merger with Reno de Medici in Europe. With the
acquisition of Norampac at the end of 2006, Cascades is now in a stronger
operational and financial position to continue its turnaround."

    Three-month period ended December 31, 2007
    ------------------------------------------

    Sales increased by 11% during the fourth quarter of 2007, amounting to
$937 million compared with $843 million for the same period last year.
Operating income amounted to $19 million for the period compared to operating
losses of $17 million for the same quarter last year.
    Operating income from continuing operations excluding specific items
amounted to $33 million. Specific items include, amongst others, a loss of
$10 million on the sale of the Red Rock linerboard mill (Containerboard
group), $3 million of restructuring and closure costs in regards to the Red
Rock mill and the St-Jérôme fine papers mill (Specialty Products group), as
well as a $3 million gain from the sale of a non-core participation. This
compares to operating income from continuing operations excluding specific
elements of $37  million realized last year. Net earnings for the fourth
quarter include an after-tax loss of $3 million on the sale of the Thunder Bay
fine papers mill (discontinued operations), an after-tax $14 million foreign
exchange gain on $U.S. denominated debt, as well as $10 million in positive
adjustment to future tax following reduction of the federal tax rate in
Canada.

    Fiscal year ended December 31, 2007
    -----------------------------------

    Sales increased 20% in 2007 to $3.9 billion as a result of business
acquisitions and better selling prices. Operating income from continued
operations amounted to $144 million compared to $96 million achieved last
year.
    Operating income from continuing operations excluding specific items
amounted to $142 million compared to $154 million last year. Specific items
include, amongst others, a gain of $25 million on the sale of our
joint-venture interest in GSD Packaging (Boxboard), a loss of $10 million on
the sale of the Red Rock mill, and $6 million in restructuring and closure
costs associated with the Red Rock and the St-Jérôme mills. Net earnings for
the fiscal year ended December 31, 2007 include $6 million in after-tax
impairment loss and closure costs for the Scierie Lemay (discontinued
operations), a $15 million dilution gain reflecting the adjustment of our
equity investment in Boralex, $49 million in after-tax foreign exchange gains
on $U.S. denominated debt, as well as $16 million in positive adjustment to
future tax following the reduction of the tax rate in Canada and in Germany.

    Outlook
    -------

    Mr. Alain Lemaire, President and Chief Executive Officer added: "We expect
business conditions will continue to be challenging in the first half of the
year as a result of high fiber costs and the uncertain economic environment.
We will however maintain and strengthen initiatives aimed at improving
profitability through increased operational efficiency and enhanced product
offering. Also, we will continue to focus on less performing assets with the
goal of reaching an acceptable level of profitability within a reasonable time
frame. As we have done in the last three years, we will continue to act
proactively."

    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 March 21, 2008 to shareholders of record at the close of business on
March 7, 2008. 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 fourth quarter
132,200 of its common shares at an average price of $8.47 for a total of
492,700 shares purchased for the fiscal year.

    Discontinued operations
    -----------------------

    The activities of the Company's Greenfield SAS pulp mill located in France
and Scierie Lemay sawmill located in Quebec were reclassified as discontinued
operations during the fourth quarter of 2007. Consequently, the comparative
financial information of 2006 and 2007 have been restated to reflect this
change.

    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, operating income excluding
specific items and operating income before depreciation and amortization
excluding specific items :


    (in millions of           ----------------- -----------------------------
     Canadian dollars)          2007      2006   Q4/2007   Q4/2006   Q3/2007
    ------------------------------------------- -----------------------------

    Net earnings (loss)           95         3        12       (46)       16
    Net loss from discontinued
     operations                   19        16        11         9         6
    Non-controlling interest       3         -         1         -         1
    Share of results of
     significantly influenced
     companies                   (27)       (8)       (4)       (2)       (2)
    Provision (recovery) for
     income taxes                 11         6        (9)      (10)        5
    Foreign exchange loss
     (gain) on long-term debt    (59)        -       (16)       14       (14)
    Interest expense             102        79        24        18        26
                              ----------------- -----------------------------

    Operating income (loss)      144        96        19       (17)       38
    Specific items :
    Inventory adjustment
     resulting from the
     Norampac acquisition          6         -         -         -         -
    Loss (gain) on disposals
     and other                   (17)       (4)        7         -         -
    Impairment loss on
     property, plant and
     equipment                     3        47         2        40         -
    Closure and restructuring
     costs                         6        20         3        12         1
    Unrealized loss (gain) on
     financial instruments         -        (5)        2         2         1
                              ----------------- -----------------------------
                                  (2)       58        14        54         2
                              ----------------- -----------------------------

    Operating income - excluding
     specific items              142       154        33        37        40

    Depreciation and
     amortization                208       161        49        40        55
                              ----------------- -----------------------------

    Operating income before
     depreciation and
     amortization - excluding
     specific items              350       315        82        77        95
    ------------------------------------------- -----------------------------
    ------------------------------------------- -----------------------------


    The following table reconciles net earnings (loss) and net earnings (loss)
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)
    -------------------------------------------------------------------------
                                2007      2006   Q4/2007   Q4/2006   Q3/2007
                              ----------------- -----------------------------

    As per GAAP                   95         3        12       (46)       16
    Specific items :
    Inventory adjustment
     resulting from the
     Norampac acquisition          -         -         -         -         -
    Loss (gain) on disposals
     and other                   (17)       (4)       (7)        -         -
    Impairment loss on
     property, plant and
     equipment                     3        47         2        40         -
    Closure and restructuring
     costs                         6        20         3        12         1
    Unrealized loss (gain) on
     financial instruments         -        (5)        2         2         1
    Foreign exchange loss
     (gain) on long-term
     debt                        (59)        -       (16)       14       (14)
    Share of results of
     significantly influenced
     companies                   (15)        -         -         -         -
    Included in discontinued
     operations                    9        18         7        15         6
    Adjustment of statutory
     tax rate                    (16)       (5)      (10)        -        (3)
    Tax effect on specific
     items                        10       (22)       (6)      (24)        2
                              ----------------- -----------------------------
                                 (73)       49       (11)       59        (7)
                              ----------------- -----------------------------

    Excluding specific items      22        52         1        13         9
    ------------------------------------------- -----------------------------
    ------------------------------------------- -----------------------------

                              -----------------------------------------------
    (in millions of
     Canadian dollars, except
     amounts per share)               Net earnings (loss) per share(1)
    ------------------------- -----------------------------------------------
                                2007      2006   Q4/2007   Q4/2006   Q3/2007
                              ----------------- -----------------------------

    As per GAAP                $0.95     $0.04     $0.12    $(0.56)    $0.16
    Specific items :
    Inventory adjustment
     resulting from the
     Norampac acquisition      $0.04       $ -       $ -       $ -       $ -
    Loss (gain) on disposals
     and other                $(0.09)   $(0.02)   $(0.05)      $ -       $ -
    Impairment loss on
     property, plant and
     equipment                 $0.02     $0.42     $0.01     $0.34       $ -
    Closure and restructuring
     costs                     $0.04     $0.18     $0.02     $0.11     $0.01
    Unrealized loss (gain) on
     financial instruments       $ -    $(0.05)    $0.01     $0.01     $0.01
    Foreign exchange loss
     (gain) on long-term
     debt                     $(0.49)   $(0.02)   $(0.14)    $0.14    $(0.11)
    Share of results of
     significantly influenced
     companies                $(0.15)      $ -       $ -       $ -       $ -
    Included in discontinued
     operations                $0.06     $0.15     $0.04     $0.12     $0.05
    Adjustment of statutory
     tax rate                 $(0.16)   $(0.06)   $(0.10)      $ -    $(0.03)
    Tax effect on specific
     items
                              ----------------- -----------------------------
                              $(0.73)    $0.60    $(0.11)    $0.72    $(0.07)
                              ----------------- -----------------------------

    Excluding specific items   $0.22     $0.64     $0.01     $0.16     $0.09
    ------------------------- ----------------- -----------------------------
    ------------------------- ----------------- -----------------------------
    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:

    -------------------------------------------------------------------------
                                          Cash flow from operations
                              ----------------- -----------------------------
    (in millions of
     dollars, except
     amounts per share)         2007      2006   Q4/2007   Q4/2006   Q3/2007
    ------------------------------------------- -----------------------------

    Cash flow provided by
     operating activities         89       216        98       101        24
    Changes in non-cash
     working capital components   89       (33)      (62)      (69)       31
                              ----------------- -----------------------------
    Cash flow from operations    178       183        36        32        55
    Specific items :
    Inventory adjustment
     resulting from the
     Norampac acquisition          6         -         -         -         -
    Loss (gain) on disposals
     and other                    12         -        10         -         -
    Closure and restructuring
     costs, net of current
     income tax                    6        13         3         8         1
                              ----------------- -----------------------------

    Excluding specific items     202       196        49        40        56
    ------------------------------------------- -----------------------------
    ------------------------------------------- -----------------------------

    -------------------------------------------------------------------------
                                     Cash flow from operations per share
                              ----------------- -----------------------------
    (in millions of
     dollars, except
     amounts per share)         2007      2006   Q4/2007   Q4/2006   Q3/2007
    ------------------------- ----------------- -----------------------------

    Cash flow provided by
     operating activities
    Changes in non-cash
     working capital components
                              ----------------- -----------------------------
    Cash flow from operations  $1.79     $2.26     $0.36     $0.39     $0.56
    Specific items :
    Inventory adjustment
     resulting from the
     Norampac acquisition      $0.06         -         -         -         -
    Loss (gain) on disposals
     and other                 $0.12         -      0.10         -         -
    Closure and restructuring
     costs, net of current
     income tax                $0.06     $0.16     $0.03     $0.10     $0.01
                              ----------------- -----------------------------

    Excluding specific items   $2.03     $2.42     $0.49     $0.49     $0.57
    ------------------------- ----------------- -----------------------------
    ------------------------- ----------------- -----------------------------


    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
                                                   December 31,  December 31,
                                                          2007          2006
                                                  ---------------------------
    Assets                                          (unaudited)

    Current assets
    Cash and cash equivalents                               25            34
    Accounts receivable                                    624           650
    Inventories                                            555           548
    -------------------------------------------------------------------------
                                                         1,204         1,232
    Property, plant and equipment                        1,886         2,063
    Intangible assets                                      130            91
    Other assets                                           237           212
    Goodwill                                               312           313
    -------------------------------------------------------------------------
                                                         3,769         3,911
                                                  ---------------------------
                                                  ---------------------------

    Liabilities and shareholders' equity

    Current liabilities
    Bank loans and advances                                 47            42
    Accounts payable and accrued liabilities               572           607
    Current portion of long-term debt                        4             9
    -------------------------------------------------------------------------
                                                           623           658
    Long-term debt                                       1,570         1,657
    Other liabilities                                      377           439
                                                  ---------------------------
                                                         2,570         2,754

    Shareholders' equity
    Capital stock                                          517           517
    Retained earnings                                      725           649
    Accumulated other comprehensive income (loss)          (43)           (9)
                                                  ---------------------------
                                                         1,199         1,157
    -------------------------------------------------------------------------
                                                         3,769         3,911
                                                  ---------------------------
                                                  ---------------------------


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

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

                                    2007        2006        2007        2006
                          ---------------------------------------------------
                                       (restated)              (restated)

    Sales                            937         843       3,929       3,278
    Cost of sales and expenses
    Cost of sales (exclusive
     of depreciation and
     amortization shown below)       764         688       3,201       2,657
    Depreciation and
     amortization                     49          40         208         161
    Selling and administrative
     expenses                         92          78         390         304
    Losses (gains) on disposals
     and other                         7           -         (17)         (4)
    Impairment loss on
     property, plant and
     equipment                         2          40           3          47
    Closure and restructuring
     costs                             3          12           6          20
    Loss (gain) on financial
     instruments                       1           2          (6)         (3)
    -------------------------------------------------------------------------
                                     918         860       3,785       3,182
    -------------------------------------------------------------------------
    Operating income (loss)
     from continuing
     operations                       19         (17)        144          96

    Interest expense                  24          18         102          79
    Foreign exchange loss
     (gain) on long-term debt        (16)         14         (59)          -
    -------------------------------------------------------------------------
                                      11         (49)        101          17
    Provision for (recovery
     of) income taxes                 (9)        (10)         11           6
    Share of results of
     significantly influenced
     companies and dilution
     gain                             (4)         (2)        (27)         (8)
    Non-controlling interest           1           -           3           -
    -------------------------------------------------------------------------
    Net earnings (loss) from
     continuing operations            23         (37)        114          19
    Net loss from discontinued
     operations                      (11)         (9)        (19)        (16)
    -------------------------------------------------------------------------
    Net earnings (loss) for
     the period                       12         (46)         95           3
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic and diluted net
     earnings (loss) from
     continuing operations
     per common share              $0.23      ($0.45)      $1.14       $0.23
                          ---------------------------------------------------
                          ---------------------------------------------------
    Basic and diluted net
     earnings (loss) per
     common share                  $0.12      ($0.56)      $0.95       $0.04
                          ---------------------------------------------------
                          ---------------------------------------------------
    Weighted average number
     of common shares
     outstanding              99,231,665  81,358,735  99,329,472  80,941,603
                          ---------------------------------------------------
                          ---------------------------------------------------



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

                                              For the year ended December 31,
                                                                        2007
                          ---------------------------------------------------
                                                      Accumulated
                                                          other
                                                       comprehen-     Share-
                                            Retained  sive income    holders'
                           Capital stock    earnings       (loss)     equity
                          ---------------------------------------------------

    Balance - beginning
     of period                       517         649          (9)      1,157
    Cumulative impact of
     accounting changes                -           -           1           1
                          ---------------------------------------------------
    Restated balance -
     beginning of period             517         649          (8)      1,158
    Comprehensive income:
      Net earnings for
       the period                      -          95           -          95
      Change in foreign
       currency translation
       of self-sustaining
       foreign subsidiaries,
       net of related hedging
       activities                      -           -         (41)        (41)
      Change in fair value
       of foreign exchange
       forward contracts
       designated as cash
       flow hedges, net of
       related income taxes
       and reclassification
       adjustments                     -           -           4           4
      Change in fair value
       of commodity derivative
       financial instruments
       designated as cash
       flow hedges, net of
       related income taxes
       and reclassification
       adjustments                     -           -           2           2
                                                                  -----------
    Comprehensive income for
     the period                                                           60
                                                                  -----------

    Dividends                          -         (16)          -         (16)
    Adjustment related to
     stock options                     2           -           -           2
    Redemption of common shares       (2)         (3)          -          (5)

                          ---------------------------------------------------
    Balance - end of period          517         725         (43)      1,199
                          ---------------------------------------------------
                          ---------------------------------------------------


                                              For the year ended December 31,
                                                                        2006
                          ---------------------------------------------------
                                                      Accumulated
                                                            other
                                                       comprehen-     Share-
                                            Retained  sive income    holders'
                           Capital stock    earnings       (loss)     equity
                          ---------------------------------------------------

    Balance - beginning
     of period                       264         669         (36)        897
    Comprehensive income:
      Net earnings for
       the period                      -           3           -           3
      Change in foreign
       currency translation
       of self-sustaining
       foreign subsidiaries,
       net of related hedging
       activities                      -           -          27          27
                                                                  -----------
    Comprehensive income for
     the period                                                           30
                                                                  -----------

    Dividends                          -         (13)          -         (13)
    Net proceeds from issuance
     of common shares                250          (7)          -         243
    Adjustment related to
     stock options                     4           -           -           4
    Redemption of common
     shares                           (1)         (3)          -          (4)
                          ---------------------------------------------------
    Balance - end of period          517         649          (9)      1,157
                          ---------------------------------------------------
                          ---------------------------------------------------


    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,
                                    2007        2006        2007        2006
                          ---------------------------------------------------
                                       (restated)              (restated)
    OPERATING ACTIVITIES
     FROM CONTINUING OPERATIONS
    Net earnings (loss) from
     continuing operations            23         (37)        114          19
    Adjustments for:
      Depreciation and
       amortization                   49          40         208         161
      Losses (gains) on
       disposals and other            (3)          -         (29)         (4)
      Impairment loss on
       property, plant and
       equipment                       2          40           3          47
      Closure and restructuring
       costs                           -           3           -           3
      Unrealized loss (gain)
       on financial instruments        2           2           -          (5)
      Foreign exchange loss
       (gain) on long-term debt      (16)         14         (59)          -
      Future income taxes            (13)        (22)        (22)        (28)
      Share of results of
       significantly influenced
       companies and dilution
       gain                           (4)         (2)        (27)         (8)
      Non-controlling interest         1           -           3           -
      Others                          (5)         (6)        (13)         (2)
    -------------------------------------------------------------------------
                                      36          32         178         183
    Change in non-cash working
     capital components               62          71         (89)         35
    -------------------------------------------------------------------------
                                      98         103          89         218
    -------------------------------------------------------------------------
    INVESTING ACTIVITIES FROM
     CONTINUING OPERATIONS
    Purchases of property,
     plant and equipment             (60)        (36)       (167)       (110)
    Proceed from disposal of
     property, plant and equipment     -           -           7           -
    Increase in other assets           -           -          (3)        (10)
    Business acquisitions,
     net of cash acquired              -        (542)        (10)       (572)
    Business disposal, net
     of cash disposed                  -           -          37           8
    -------------------------------------------------------------------------
                                     (60)       (578)       (136)       (684)
    -------------------------------------------------------------------------
    FINANCING ACTIVITIES FROM
     CONTINUING OPERATIONS
    Bank loans and advances           (4)        (12)          7          (4)
    Change in revolving credit
     facilities                      (25)        252         100         186
    Increase in other
     long-term debt                    -           -           -           2
    Payments of other
     long-term debt                   (1)         (2)         (8)         (9)
    Net proceeds from issuance
     of common shares                  -         241           1         242
    Redemption of common shares       (1)         (3)         (5)         (4)
    Dividends                         (4)         (3)        (16)        (13)
    -------------------------------------------------------------------------
                                     (35)        473          79         400
    -------------------------------------------------------------------------
    Change in cash and cash
     equivalents during the
     period from continuing
     operations
                                       3          (2)         32         (66)
    Change in cash and cash
     equivalents from
     discontinued operations,
     including proceeds on
     disposal
                                      (7)         11         (40)         56
    -------------------------------------------------------------------------
    Change in cash and cash
     equivalents during the
     period                           (4)          9          (8)        (10)
    Translation adjustments on
     cash and cash equivalents         3           2          (1)          1
    Cash and cash equivalents
     - Beginning of period            26          23          34          43
    -------------------------------------------------------------------------

    Cash and cash equivalents
     - End of period                  25          34          25          34
                          ---------------------------------------------------
                          ---------------------------------------------------



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

                               For the 3-month periods   For the years ended
                                   ended December 31,         December 31,
                                    2007        2006        2007        2006
                          ---------------------------------------------------
                                       (restated)              (restated)
    Sales
    Packaging products
      Boxboard
        Manufacturing                178         201         780         727
        Converting                   159         193         671         748
        Eliminations and others      (22)        (33)       (108)       (116)
                          ---------------------------------------------------
                                     315         361       1,343       1,359
      Containerboard
        Manufacturing                143          78         599         333
        Converting                   237         123         984         506
        Eliminations and others      (98)        (55)       (390)       (239)
                          ---------------------------------------------------
                                     282         146       1,193         600
      Specialty products
        Manufacturing                 73          81         318         333
        Converting                    58          58         232         226
        Recovery, deinked pulp
         and eliminations             71          35         284         132
                          ---------------------------------------------------
                                     202         174         834         691

      Eliminations                   (26)        (13)       (108)        (68)
                          ---------------------------------------------------
                                     773         668       3,262       2,582
    Tissue papers
      Manufacturing and
       converting                    171         182         713         727

    Eliminations and others           (7)         (7)        (46)        (31)
    -------------------------------------------------------------------------
    Consolidated total               937         843       3,929       3,278
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


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

                               For the 3-month periods   For the years ended
                                   ended December 31,         December 31,
                                    2007        2006        2007        2006
                          ---------------------------------------------------
                                       (restated)              (restated)
    Operating income (loss)
     before depreciation and
     amortization from
     continuing operations
     and operating income from
     continuing operations

    Packaging products
      Boxboard
        Manufacturing                 (2)          -          (3)          1
        Converting                    13          12          76          62
        Others                        (2)         (2)         (4)         (6)
                          ---------------------------------------------------
                                       9          10          69          57
      Containerboard
        Manufacturing                  5         (40)         59          (8)
        Converting                    19          10          76          45
        Others                         6           2          17           7
                          ---------------------------------------------------
                                      30         (28)        152          44

      Specialty products
        Manufacturing                  -           5           6           1
        Converting                     8           8          26          30
        Recovery, deinked
         pulp and others               7           4          27          14
                          ---------------------------------------------------
                                      15          17          59          45

                          ---------------------------------------------------
                                      54          (1)        280         146
    Tissue papers
      Manufacturing and
       converting                     15          24          66         116

    Corporate                         (1)          -           6          (5)
    -------------------------------------------------------------------------
    Operating income before
     depreciation and
     amortization from
     continuing operations            68          23         352         257
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Depreciation and amortization
      Boxboard                       (18)        (17)        (68)        (66)
      Containerboard                 (18)        (10)        (68)        (38)
      Specialty products              (7)         (6)        (31)        (28)
      Tissue papers                   (8)         (9)        (35)        (37)
      Corporate and eliminations       2           2          (6)          8
                          ---------------------------------------------------
                                     (49)        (40)       (208)       (161)
                          ---------------------------------------------------

    Operating income (loss)
     from continuing operations       19         (17)        144          96
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


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

                               For the 3-month periods   For the years ended
                                   ended December 31,         December 31,
                                    2007        2006        2007        2006
                          ---------------------------------------------------
                                       (restated)              (restated)
    Purchases of property,
     plant and equipment
    Packaging products
      Boxboard
        Manufacturing                 10           6          23          10
        Converting                    10           5          36          24
                          ---------------------------------------------------
                                      20          11          59          34
      Containerboard
        Manufacturing                  9           4          16          13
        Converting                     7           2          14          10
                          ---------------------------------------------------
                                      16           6          30          23
      Specialty products
        Manufacturing                  3           4           9          10
        Converting                     4           2          10           6
        Recovery, deinked
         pulp and others               5           2           7           5
                          ---------------------------------------------------
                                      12           8          26          21

                          ---------------------------------------------------
                                      48          25         115          78
    Tissue papers
      Manufacturing and
       converting                     17          11          52          27

    Corporate                          2          (1)          7           3
    -------------------------------------------------------------------------
    Consolidated total                67          35         174         108
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The change in purchases of property, plant and equipment included in
    accounts payable increased by $7 million in 2007 and decreased by
    $2 million in 2006.


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

                               For the 3-month periods   For the years ended
                                   ended December 31,         December 31,
                                    2007        2006        2007        2006
                          ---------------------------------------------------

    Common shares -
     Toronto Stock
     Exchange
                       High       $10.04      $14.78      $15.80      $14.78
                        Low        $7.46      $12.14       $7.46       $9.66
                     Volume   11,876,000  12,317,000  63,226,000  31,724,000
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Shipments of manufacturing
     and converting products
     (in thousands of short tons)
    Packaging products
      Boxboard                       292         323       1,202       1,204
      Containerboard                 338         178       1,412         742
      Specialty products             110         112         450         457
    Tissue papers                    115         107         451         443
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    The restated mention refers to the comparative figures which have been
    reclassified due to discontinued operations.

    Supplemental information on non-GAAP measure

    Operating income before depreciation and amortization and operating income
are not measures of performance under Canadian generally accepted accounting
principles ("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 periods   For the years ended
                                   ended December 31,         December 31,
                                    2007        2006        2007        2006
                          ---------------------------------------------------

    Net earnings (loss) for
     the period                       12         (46)         95           3
    Net loss from discontinued
     operations                       11           9          19          16
    Non-controlling interest           1           -           3           -
    Share of results of
     significantly influenced
     companies and dilution
     gain                             (4)         (2)        (27)         (8)
    Provision for (recovery of)
     income taxes                     (9)        (10)         11           6
    Foreign exchange loss (gain)
     on long-term debt               (16)         14         (59)          -
    Interest expense                  24          18         102          79
                          ---------------------------------------------------

    Operating income (loss)
     from continuing operations       19         (17)        144          96

    Depreciation and
     amortization                     49          40         208         161
                          ---------------------------------------------------
    Operating income before
     depreciation and
     amortization                     68          23         352         257
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    




For further information:

For further information: MEDIA: Mr. Hubert Bolduc, Vice-President,
Communications and Public Affairs, (514) 912-3790; INVESTORS: Mr. Marc Jasmin,
C.M.A. Director, Investor relations, (514) 282-2681; Source: Mr. Christian
Dubé, Vice-President and Chief Financial Officer


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