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Cascades releases its 2012 third quarter results

November 8, 2012

KINGSEY FALLS, QC, Nov. 8, 2012 /PRNewswire/ – Cascades Inc. (TSX: CAS),
a leader in the recovery and manufacturing of green packaging and
tissue paper products, announces its financial results for the
three-month period ended September 30, 2012.

Q3-2012 Financial Highlights

        --  Sales of $906 million
            (compared to $944 million in Q2-2012 (-4%) and $947 million in
            Q3-2011 (-4%))
        --  Excluding specific items
      o EBITDA of $78 million
        (compared to $84 million in Q2-2012 (-7%) and $79 million in
        Q3-2011 (-1%))

      o Net earnings per share of $0.07
        (compared to net earnings of $0.08 in Q2-2012 and a net loss of
        $0.02 in Q3-2011)
        --  Including specific items
      o EBITDA of $83 million
        (compared to $77 million in Q2-2012 (+8%) and $53 million in
        Q3-2011 (+57%))

      o Net earnings per share of $0.05
        (compared to net earnings of $0.08 in Q2-2012 and a net loss of
        $0.21 in Q3-2011)
        --  Net debt of $1,542 million (compared to $1,585 million as at
            June 30, 2012), including $147 million of non-recourse debt
        --  Price increase announcement in our containerboard sector

Strategic and Financial Initiatives

        --  Major investments in several of our folding carton and
            microlithography plants and announcement of the closure of the
            Lachute (Québec) folding carton plant
        --  Permanent closure of the napkin plant located on McNicoll
            Street in Toronto
        --  Greenpac project machine installation proceeding as planned
            with expected start-up in July 2013
        --  Extension and amendment of existing revolving credit facility
            resulting in lower interest costs
        --  Establishment of a Small Shareholder Program for registered
            shareholders

——————————

Mr. Alain Lemaire, President and Chief Executive Officer, had the
following comments on the third quarter results and near-term outlook:

“The results for our third quarter did not meet our expectations due to
a strong Canadian dollar, operational issues, higher recycled office
paper costs and a stronger seasonal decline in activity level in
Europe.

Our Tissue Papers Group continued to contribute positively but was
impacted by the increase in the average cost of its raw materials,
namely white grades recycled papers. Our Specialty Products Group
posted stable results. In Europe, shipments decreased significantly. As
previously highlighted, downtimes, which are usual during this period
of the year, have been longer in 2012 due to important investments
undertaken at certain mills and lower order inflows. Financial results
of our Containerboard Group show a sequential increase. However these
results should have been better given the decline in recycled paper
costs. During the last few quarters, operational problems at two of our
manufacturing mills resulted in higher production and external supply
costs. Downtime taken in September to address these problems further
contributed to subpar performance. As a result, we were not able to
fully benefit from the usual seasonality inherent to the third quarter
and from more favorable recycled fiber prices.

In the short term, fundamentals in our sectors are positive. In the
containerboard sector, the recent price hike announcement will
contribute positively to our results during the next quarter with full
implementation in the beginning of 2013. Demand in the tissue papers
segment continues to be robust. The European market remains difficult
but we are satisfied with progress made to improve our production
assets following recent investments. Finally, we do not expect a
significant increase in the level of recycled paper prices in the short
term. For these reasons, prospects for the current quarter are
encouraging despite the inherent seasonality associated with the month
of December.”

Financial Summary


    Selected consolidated information                              

    (in millions of Canadian dollars, except      Q3/2012 Q3/2011 Q2/2012
    amounts per share) (unaudited)

    Sales                                             906     947     944

    Excluding specific items 1                                           

      Operating income before depreciation and         78      79      84
      amortization (OIBD or EBITDA) 

      Operating income                                 33      33      37

      Net earnings (loss)                               7     (2)       7

      per common share                              $0.07 $(0.02)   $0.08

      Cash flow from continuing operations             44      61      40
      (adjusted) 

      Margin (OIBD or EBITDA)                        8.6%    8.3%    8.9%

    As reported                                                    

      Operating income before depreciation and         83      53      77
      amortization (OIBD or EBITDA)

      Operating income                                 36       7      29

      Net earnings (net loss)                           5    (20)       7

      per common share                              $0.05 $(0.21)   $0.08

      Cash flow from continuing operations             42      60      37
      (adjusted)

    Note 1 - see the supplemental information on
    non-IFRS measures.

    Segmented OIBD excluding specific items                        

    (in millions of Canadian dollars) (unaudited) Q3/2012 Q3/2011 Q2/2012

    Packaging Products                                                   

      Containerboard                                   26      27      23

      Boxboard Europe                                   7      10      11

      Specialty Products                               15      13      15

                                                       48      50      49

    Tissue Papers                                      35      18      39

    Corporate Activities                              (5)      11     (4)

    OIBD excluding specific items                      78      79     84 

 

Results analysis for the three-month period ended September 30, 2012
(compared to the previous year)

In comparison with the same period last year, sales decreased by 4% to
$906 million as of result of lower volumes, lower average selling
prices and an unfavorable CAD/Euro exchange rate which more than offset
the net impact of business acquisitions over divestitures and closures.

Operating income, excluding specific items, remained stable compared to
Q3-2011 at $33 million as the above-mentioned factors were
counterbalanced by lower raw material costs. On a segmented basis, our
three sectors in North America surpassed their 2011 third quarter’s
results. The third quarter is often softer in Europe and our Boxboard
sector recorded lower operating income due to longer downtimes this
year. When including specific items, the operating income amounted to
$36 million in comparison to $7 million for the same period of last
year. During the third quarter of 2011, foreign exchange gain on
working capital items following the rapid depreciation of the Canadian
dollar at the end of the quarter, combined with foreign exchange gain
of approximately $14 million on the consideration received from the
sale of Dopaco, had a significant impact on our operating income.

In the third quarter of 2012, these specific items impacted our
operating income and/or net earnings (before tax):

        --  a $6 million unrealized gain on financial instruments (impact
            on operating income and net earnings);
        --  a $1 million loss resulting from impairment charges (operating
            income and net earnings);
        --  a $2 million expense related to accelerated depreciation of
            assets due to restructuring measures (operating income and net
            earnings);
        --  a $5 million foreign exchange loss on long-term debt and
            financial instruments (net earnings).

For further details, see the following tables on IFRS and non-IFRS
measures reconciliation included herewith.

Net earnings excluding specific items amounted to $7 million ($0.07 per
share) in the third quarter of 2012 compared to a net loss of $2
million ($0.02 per share) for the same period in 2011. Including
specific items, net earnings amounted to $5 million ($0.05 per share)
compared to a net loss of $20 million ($0.21 per share) for the same
quarter in 2011.

Results analysis for the three-month period ended September 30, 2012
(compared to the previous quarter)

In comparison to the previous quarter, sales decreased by 4% mostly due
to the impact of lower volumes, lower average selling price,
unfavorable foreign exchange rates and the impact of mill closures.
Excluding specific items, operating income decreased by $4 million to
reach $33 million primarily due to the above-mentioned factors that
more than offset a decrease in raw material costs. Net earnings for the
quarter remained stable at $7 million.

Net debt decreased by $43 million to $1,542 million due to a favorable
exchange rate with regard to our debt and free cash flows generated.

Dividend on common shares and normal course issuer bid

The Board of Directors of Cascades declared a quarterly dividend of
$0.04 per share to be paid December 13, 2012 to shareholders of record
at the close of business on November 30, 2012. This dividend paid by
Cascades is an “eligible dividend” as per the Income Tax Act (Bill
C-28, Canada).

In the third quarter of 2012, Cascades purchased for cancellation 75,500
shares at an average price of $4.76 representing an aggregate amount of
approximately $0.4 million.

Conference call and additional information

Management will comment the 2012 third quarter financial results during
a conference call to be held today, November 8, 2012, at 10:00am ET.

Financial analysts, investors, media and other interested individuals
are invited to listen to the conference call by dialing 1-866-865-3087.
The conference call, including the investor presentation, will also be
broadcast live on the Cascades corporate website (www.cascades.com, tab Investors of the Home page). The broadcast replay will be
available on the Cascades corporate website and by phone until November
16, 2012 by dialing 1-855-859-2056 and by using access code 34725598#.

Founded in 1964, Cascades produces, converts and markets packaging and
tissue products that are composed mainly of recycled fibres. The
Corporation employs more than 12,000 employees, who work in more than
100 units located in North America and Europe. With its management
philosophy, half a century of experience in recycling, and continuous
efforts in research and development as driving forces, Cascades
continues to serve its clients with innovative products. 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 Corporation’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 Corporation’s Securities and Exchange Commission
filings.

CONSOLIDATED BALANCE SHEETS


    (in millions of Canadian dollars)            September 30, December 31,
    (unaudited)                                           2012         2011

    Assets                                                                 

    Current assets                                                         

    Cash and cash equivalents                               16           12

    Accounts receivable                                    570          535

    Current income tax assets                               22           24

    Inventories                                            494          516

    Financial assets                                        28            6

    Assets held for sale                                     -           12

                                                         1,130        1,105

    Long-term assets                                                       

    Investments in associates and joint ventures           228          219

    Property, plant and equipment                        1,655        1,703

    Intangible assets                                      196          185

    Financial assets                                        11           25

    Other assets                                            57           44

    Deferred income tax assets                             142          119

    Goodwill and others                                    336          328

                                                         3,755        3,728

    Liabilities and Equity                                                 

    Current liabilities                                                    

    Bank loans and advances                                 96           90

    Trade and other payables                               533          539

    Current income tax liabilities                           3            2

    Current portion of provisions for                        5            5
    contingencies and charges

    Current portion of financial liabilities and            92           20
    other liabilities

    Current portion of long-term debt                       65           49

                                                           794          705

    Long-term liabilities                                                  

    Long-term debt                                       1,397        1,358

    Provisions for contingencies and charges                32           33

    Financial liabilities                                   43          111

    Other liabilities                                      288          249

    Deferred income tax liabilities                         90          107

                                                         2,644        2,563

    Equity attributable to Shareholders                                    

    Capital stock                                          482          486

    Contributed surplus                                     16           14

    Retained earnings                                      581          615

    Accumulated other comprehensive loss                  (91)         (86)

                                                           988        1,029

    Non-controlling interest                               123          136

    Total equity                                         1,111        1,165

                                                         3,755        3,728

CONSOLIDATED STATEMENT OF EARNINGS


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

    (in millions of
    Canadian
    dollars, except
    per share
    amounts and
    number of
    shares)
    (unaudited)                 2012             2011       2012       2011

    Sales                        906              947      2,741      2,712

    Cost of sales
    and expenses                                                           

    Cost of sales
    (including
    depreciation
    and
    amortization of
    $47 million for
    the 3-month
    period
    (2011-$46
    million)
    and $141
    million for the
    9-month period
    (2011-$129
    million))                    781              848      2,361      2,428

    Selling and
    administrative
    expenses                      92               91        286        266

    Gain on
    disposals and
    others                         -                -        (1)       (10)

    Impairment
    charges and
    restructuring
    costs                          1               15          6         20

    Foreign
    exchange loss
    (gain)                         2             (22)          2       (21)

    Loss (gain) on
    derivative
    financial
    instruments                  (6)                8        (7)          7

                                 870              940      2,647      2,690

    Operating
    income                        36                7         94         22

    Financing
    expense                       25               24         75         75

    Foreign
    exchange loss
    (gain) on
    long-term debt
    and financial
    instruments                    5              (5)        (2)          5

    Share of loss
    (earnings) of
    associates and
    joint ventures                 1              (1)        (3)       (11)

    Profit (loss)
    before income
    taxes                          5             (11)         24       (47)

    Provision for
    (recovery of)
    income taxes                   1               10          7       (25)

    Net earnings
    (loss) from
    continuing
    operations
    including
    non-controlling
    interest for
    the period                     4             (21)         17       (22)

    Net earnings
    (loss) from
    discontinued
    operations for
    the period                     -              (2)        (2)        113

    Net earnings
    (loss)
    including
    non-controlling
    interest for
    the period                     4             (23)         15         91

    Net loss
    attributable to
    non-controlling
    interest                     (1)              (3)        (3)        (3)

    Net earnings
    (loss)
    attributable to
    Shareholders
    for the period                 5             (20)         18         94

    Net earnings
    (loss) from
    continuing
    operations per
    common share                                                           

      Basic                    $0.05          $(0.19)      $0.21    $(0.20)

      Diluted                  $0.05          $(0.19)      $0.21    $(0.20)

    Net earnings
    (loss) per
    common share                                                           

      Basic                    $0.05          $(0.21)      $0.19      $0.98

      Diluted                  $0.05          $(0.21)      $0.19      $0.96

    Weighted
    average basic
    number of
    common shares
    outstanding           94,056,848       95,986,989 94,223,991 96,317,941

    Net earnings
    (loss)
    attributable to
    Shareholders:                                                          

      Continuing                                                       (19)
      operations                   5             (18)         20

      Discontinued                                                      113
      operations                   -              (2)        (2)

    Net earnings
    (loss)                         5             (20)         18         94

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)


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

    (in millions of         2012               2011 2012               2011
    Canadian dollars)
    (unaudited)

    Net earnings (loss)        4               (23)   15                 91
    including
    non-controlling
    interest for the period

    Other comprehensive
    income (loss)

      Translation
      adjustments

        Change in foreign   (13)                 31 (18)                  7
        currency
        translation of
        self-sustaining
        foreign
        subsidiaries

        Change in foreign     15               (33)   14               (14)
        currency
        translation related
        to net investment
        hedging  activities

        Income taxes         (2)                  5  (2)                  2

      Cash flow hedges                                                     

        Change in fair      (10)                (9)  (7)                (5)
        value of foreign
        exchange forward
        contracts

        Change in fair        10                (7)    6                (8)
        value of interest
        rate swaps

        Change in fair       (4)                  4  (3)                (1)
        value of commodity
        derivative
        financial
        instruments

        Income taxes           -                  3    -                  2

      Actuarial loss on     (36)               (53) (61)               (53)
      post-employment
      benefit obligations

        Income taxes          10                 14   17                 14

    Other comprehensive     (30)               (45) (54)               (56)
    loss

    Comprehensive income    (26)               (68) (39)                 35
    (loss) including
    non-controlling
    interest for the period

    Comprehensive income
    (loss) attributable to
    non-controlling
    interest for the period  (4)                  -  (8)                (2)

    Comprehensive income    (22)               (68) (31)                 37
    (loss) attributable to
    Shareholders for the
    period

    Comprehensive income
    (loss) attributable to
    Shareholders:

        Continuing          (22)               (66) (29)               (76)
        operations

        Discontinued           -                (2)  (2)                113
        operations

    Comprehensive income    (22)               (68) (31)                 37
    (loss)

CONSOLIDATED STATEMENTS OF EQUITY


                                                       For the 9-month period ended September 30, 2012

                                                           Accumulated Total equity
    (in millions of                                              other attributable        Non-
    Canadian dollars)       Capital Contributed Retained comprehensive           to controlling  Total
    (unaudited)               stock     surplus earnings          loss Shareholders    interest equity

    Balance--Beginning
    of period                   486          14      615          (86)        1,029         136  1,165

      Comprehensive income
      (loss)                                                                                          

        Net earnings (loss)       -           -       18             -           18         (3)     15

        Other comprehensive
        loss                      -           -     (44)           (5)         (49)         (5)   (54)

                                  -           -     (26)           (5)         (31)         (8)   (39)

      Dividends                   -           -     (11)             -         (11)           -   (11)

      Stock options               -           1        -             -            1           -      1

      Redemption of common
      shares                    (4)           1        -             -          (3)           -    (3)

      Acquisition of
      non-controlling
      interest                    -           -        3             -            3         (5)    (2)

    Balance--End of
    period                      482          16      581          (91)          988         123  1,111

                                                       For the 9-month period ended September 30, 2011

                                                           Accumulated Total equity
    (in millions of                                              other attributable        Non-
    Canadian dollars)       Capital Contributed Retained comprehensive           to controlling  Total
    (unaudited)               stock     surplus earnings          loss Shareholders    interest equity

    Balance--Beginning
    of period                   496          14      576          (37)        1,049          23  1,072

      Comprehensive income
      (loss)                                                                                          

        Net earnings (loss)       -           -       94             -           94         (3)     91

        Other comprehensive
        income (loss)             -           -     (39)          (18)         (57)           1   (56)

                                  -           -       55          (18)           37         (2)     35

      Dividends                   -           -     (12)             -         (12)           -   (12)

      Stock options               -         (1)        -             -          (1)           -    (1)

      Redemption of common
      shares                    (7)           -        -             -          (7)           -    (7)

      Business acquisitions       -           -        -             -            -         129    129

      Acquisition of
      non-controlling
      interest                    -           -        1             -            1         (2)    (1)

      Dividends paid to
      non-controlling
      interest                    -           -        -             -            -         (1)    (1)

    Balance--End of
    period                      489          13      620          (55)        1,067         147  1,214

CONSOLIDATED STATEMENTS OF CASH FLOWS


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

    (in millions of Canadian    2012       2011  2012              2011
    dollars) (unaudited)

    Operating activities from
    continuing operations

    Net earnings (loss)            5       (20)    18                94
    attributable to
    Shareholders for the period

    Net loss (earnings) from       -          2     2             (113)
    discontinued operations for
    the period

    Net earnings (loss) from       5       (18)    20              (19)
    continuing operations

    Adjustments for                                                    

      Financing expense           25         24    75                75

      Depreciation and            47         46   141               129
      amortization

      Gain on disposals and        -          -   (1)              (10)
      others

      Impairment charges and     (1)         14     1                18
      restructuring costs

      Loss (gain) on derivative  (6)         11   (6)                11
      financial instruments

      Foreign exchange loss        5        (5)   (2)                 5
      (gain) on long-term debt
      and financial instruments

      Provision for (recovery      1         10     7              (25)
      of) income taxes

      Share of loss (earnings)     1        (1)   (3)              (11)
      of associates and joint
      ventures

      Net loss attributable to   (1)        (3)   (3)               (3)
      non-controlling interest

      Net financing expense     (15)       (14)  (65)              (65)
      paid

      Income taxes paid         (10)        (4)  (20)              (13)

      Dividends received           5          -     5                 -

      Others                    (14)          -  (22)               (1)

                                  42         60   127                91

    Changes in non-cash working   12       (19)  (16)              (89)
    capital components

                                  54         41   111                 2

    Investing activities from
    continuing operations

    Investments in associates      -       (45)  (19)              (47)
    and joint ventures

    Purchases of property,      (33)       (31) (114)              (90)
    plant and equipment

    Proceeds on disposal of       10          8    20                10
    property, plant and
    equipment

    Change in other assets       (2)         40  (29)                 9

    Business acquisitions, net     -        (3)  (14)               (4)
    of cash acquired

    Proceeds on disposals of       -          -     -                 6
    business, net of cash
    disposed

                                (25)       (31) (156)             (116)

    Financing activities from
    continuing operations

    Bank loans and advances        8          6     7                29

    Change in revolving credit  (38)        (9)   104             (266)
    facilities

    Purchase of senior notes       -          -   (3)                 -

    Payments of other long-term  (5)        (4)  (43)              (13)
    debt

    Increase in other long-term    1          -     2                 1
    debt

    Redemption of common shares  (1)        (4)   (3)               (8)

    Partial disposal of a          -          -     3                 -
    subsidiary to
    non-controlling interest

    Acquisition of               (1)        (2)   (2)               (2)
    non-controlling interest

    Dividends paid to the        (3)        (4)  (11)              (12)
    Corporation's Shareholders

                                (39)       (17)    54             (271)

    Change in cash and cash     (10)        (7)     9             (385)
    equivalents during the
    period from continuing
    operations

    Change in cash and cash
    equivalents from
    discontinued operations,
    including
    proceeds on disposal during
    the period                   (3)          -   (5)               390

    Net change in cash and cash (13)        (7)     4                 5
    equivalents during the
    period

    Cash and cash                 29         18    12                 6
    equivalents--Beginning
    of period

    Cash and cash                 16         11    16                11
    equivalents--End of
    period

SEGMENTED INFORMATION

In 2012, the Corporation changed the structure of its internal
organization in a manner that caused the composition of its reportable
segment to change. As a result, the Corporation modified its segmented
information disclosure for the current period and restated prior
periods. Containerboard and Boxboard North America manufacturing and
converting activities are now presented within one segment. Boxboard
European activities are reported as a separate segment.

The Corporation’s operations are managed in four segments:
Containerboard, Boxboard Europe, Specialty Products (which consists of
the Packaging Products of the Corporation) and Tissue Papers.


                                                                      SALES

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

    (in millions of                                  2012              2011
    Canadian dollars)
    (unaudited)             2012               2011

    Packaging Products                                                     

      Containerboard         299                317   883               994

      Boxboard Europe        181                221   593               539

      Specialty Products     197                224   608               645

      Intersegment sales    (17)               (27)  (54)              (82)

                             660                735 2,030             2,096

    Tissue Papers            253                221   737               638

    Intersegment sales and                      (9)  (26)              (22)
    others                   (7)

    Total                    906                947 2,741             2,712

                                                    OPERATING INCOME (LOSS)
                                       BEFORE DEPRECIATION AND AMORTIZATION

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

    (in millions of         2012               2011  2012              2011
    Canadian dollars)
    (unaudited)

    Packaging Products                                                     

      Containerboard          24                 17    65                52

      Boxboard Europe          8                  8    30                35

      Specialty Products      15                  9    41                26

                              47                 34   136               113

    Tissue Papers             35                 17   106                43

    Corporate                  1                  2   (7)               (5)

    Operating income before   83                 53   235               151
    depreciation and
    amortization

    Depreciation and        (47)               (46) (141)             (129)
    amortization

    Financing expense       (25)               (24)  (75)              (75)

    Foreign exchange (loss)  (5)                  5     2               (5)
    gain on long-term debt
    and financial
    instruments

    Share of earnings        (1)                  1     3                11
    (loss) of associates
    and joint ventures

    Profit (loss) before       5               (11)    24              (47)
    income taxes

                                                     PURCHASES OF PROPERTY,
                                                        PLANT AND EQUIPMENT

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

    (in millions of         2012               2011  2012              2011
    Canadian dollars)
    (unaudited)

    Packaging Products                                                     

      Containerboard          16                 11    47                30

      Boxboard Europe          9                 10    19                22

      Specialty Products       3                  6    10                15

                              28                 27    76                67

    Tissue Papers              1                  2    13                17

    Corporate                  9                  6    14                 8

    Total purchases           38                 35   103                92

    Proceeds on disposal of (10)                (8)  (20)              (10)
    property, plant and
    equipment

    Capital-lease            (4)                (3)   (4)               (4)
    acquisitions

                              24                 24    79                78

    Purchases of property,
    plant and equipment
    included in trade and
    other payables

     Beginning of period       9                 15    25                18

     End of period          (10)               (16)  (10)              (16)

    Purchases of property,    23                 23    94                80
    plant and equipment net
    of proceeds on disposal

SUPPLEMENTAL INFORMATION ON NON-IFRS MEASURES

Operating income before depreciation and amortization, earnings before
interests, taxes, depreciation and amortization, operating income and
cash flow from operations are not measures of performance under IFRS.
The Corporation includes operating income before depreciation and
amortization, earnings before interests, taxes, depreciation and
amortization, operating income and cash flow from operations because
they are measures used by management to assess the operating and
financial performance of the Corporation’s operating segments.
Additionally, the Corporation believes that these items provide
additional measures often used by investors to assess a company’s
operating performance and its ability to meet debt service
requirements. However, operating income before depreciation and
amortization, earnings before interests, taxes, depreciation and
amortization, operating income and cash flow from operations do not
represent, and should not be used as a substitute for net earnings or
cash flows from operating activities as determined in accordance with
IFRS, and they are not necessarily an indication of whether cash flow
will be sufficient to fund our cash requirements. In addition, our
definition of operating income before depreciation and amortization,
earnings before interests, taxes, depreciation and amortization,
operating income and cash flow from operations may differ from those of
other companies. Cash flow from operations is defined as cash flow from
operating activities as determined in accordance with IFRS excluding
the change in working capital components.

Operating income before depreciation and amortization excluding specific
items, earnings before interests, taxes, depreciation and amortization
excluding specific items, operating income excluding specific items,
net earnings excluding specific items, net earnings per common share
excluding specific items and cash flow from operations excluding
specific items are non-IFRS measures. The Corporation believes that it
is useful for investors to be aware of specific items that have
adversely or positively affected its IFRS measures, and that the above
mentioned non-IFRS measures provide investors with a measure of
performance  with which to compare its results between periods without
regard to these specific items. The Corporation’s measures excluding
specific items have no standardized meaning prescribed by IFRS 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, accelerated depreciation of
assets due to restructuring measures, 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.

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


    (in millions of
    Canadian
    dollars, except
    amounts per
    share)                                    Net earnings (loss) per
    (unaudited)       Net earnings (loss)             share1

                    Q3/2012 Q3/2011 Q2/2012   Q3/2012 Q3/2011 Q2/2012

    As per IFRS           5    (20)       7     $0.05 $(0.21)   $0.08

    Specific items
    :                                      

    Impairment                   14               $ -   $0.10   $0.01
    charges               1               1

    Restructuring                 1               $ -   $0.01   $0.03
    costs                 -               4

    Unrealized loss
    (gain) on                    11           $(0.04)   $0.10   $0.01
    financial
    instruments         (6)               2

    Accelerated
    depreciation
    and
    amortization                  -             $0.01     $ -   $0.01
    due to
    restructuring
    measures              2               1

    Foreign
    exchange loss
    (gain) on                   (5)             $0.05 $(0.05) $(0.05)
    long-term debt
    and financial
    instruments           5             (5)

    Share of loss
    (earnings) of
    associates,
    joint ventures                1               $ -   $0.01 $(0.01)
    and
    non-controlling
    interest              -             (2)

    Included in
    discontinued                  2               $ -   $0.02     $ -
    operations, net
    of tax                -               -

    Tax effect on
    specific items              (6)               $ -     $ -     $ -
    and other tax
    adjustments           -             (1)

                          2      18       -     $0.02   $0.19     $ -

    Excluding                   (2)             $0.07 $(0.02)   $0.08
    specific items        7               7

    Note 1 -
    Specific
    amounts per
    share are
    calculated on
    an after-tax
    basis.                                 

    Per share amounts of line item "Tax effect on specific items and
    other tax adjustments" only include the effect of tax adjustments. 

Net earnings (loss), which is a performance measure defined by IFRS is
reconciled below to operating income (loss), operating income excluding
specific items and operating income before depreciation excluding
specific items or earnings before interests, taxes, depreciation and
amortization excluding specific items:


    (in millions of Canadian dollars) (unaudited)   Q3/2012 Q3/2011 Q2/2012

    Net earnings                                          5    (20)       7

    Net loss from discontinued operations for the
    period                                                -       2       -

    Net loss attributable to non-controlling
    interest                                            (1)     (3)     (1)

    Share of loss (earnings) of associates and
    joint ventures                                        1     (1)     (2)

    Provision for income taxes                            1      10       5

    Foreign exchange loss (gain) on long-term debt
    and financial instruments                             5     (5)     (5)

    Financing expense                                    25      24      25

    Operating income                                     36       7      29

    Specific items :                                                       

    Impairment charges                                    1      14       1

    Restructuring costs                                   -       1       4

    Unrealized loss (gain) on financial instruments     (6)      11       2

    Accelerated depreciation and amortization due
    to restructuring measures                             2       -       1

                                                        (3)      26       8

    Operating income - excluding specific items          33      33      37

    Depreciation and amortization, excluding
    specific items                                       45      46      47

    Operating income before depreciation and
    amortization
    (OIBD or EBITDA) - excluding specific items          78      79      84

The following table reconciles cash flow provided by (used from)
operating activities to cash flow (adjusted) from operations excluding
specific items:


                                                  Cash flow from operations

    (in millions of Canadian dollars) (unaudited) Q3/2012 Q3/2011  Q2/2012

    Cash flow provided by (used from) operating        54      41        33
    activities

    Changes in non-cash working capital              (12)      19         4
    components

    Cash flow (adjusted) from operations               42      60        37

    Specific items, net of current income tax                              

    Restructuring costs                                 2       1         3

    Excluding specific items                           44      61        40

 

 

SOURCE CASCADES INC.


Source: PR Newswire