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Cascades releases fourth quarter and full year 2012 results

February 21, 2013

KINGSEY FALLS, QC, Feb. 21, 2013 /PRNewswire/ – Cascades Inc. (TSX:
CAS), a leader in the recovery and manufacturing of green packaging and
tissue paper products, announces its unaudited financial results for
the three-month period and the fiscal year ended December 31, 2012.

Annual Highlights

        --  Sales of $3,645 million (compared to $3,625 million in 2011
            (+1%))
        --  Excluding specific items
      o EBITDA of $304 million (compared to $229 million in 2011 (+33%))
      o Net earnings per share of $0.17 (compared to a net loss of $0.14 in
        2011)
        --  Including specific items
      o EBITDA of $274 million (compared to $188 million in 2011 (+46%))
      o Net loss per share of $0.11 (compared to net earnings of $1.03 in
        2011)
        --  Consolidation of our corrugated products sector in Ontario with
            the acquisition of Bird Packaging Limited and concurrent
            investments totaling $30 million
        --  Consolidation of our folding carton and microlithography
            operations with investments totaling $20 million
        --  Equipment upgrades at Cascades' mill in La Rochette and Reno de
            Medici's mill in Villa Santa Lucia in Europe
        --  Construction of the Greenpac project mill with start-up still
            expected in July 2013
        --  Price increase announcement during the fourth quarter in our
            containerboard sector

Q4-2012 Highlights

        --  Sales of $904 million
            (compared to $906 million in Q3-2012 (-%) and $913 million in
            Q4-2011 (-1%))
        --  Excluding specific items
      o EBITDA of $70 million
        (compared to $78 million in Q3-2012 (-10%) and $51 million in
        Q4-2011 (+37%))
      o Net loss per share of $0.02
        (compared to net earnings of $0.07 in Q3-2012 and a net loss of
        $0.04 in Q4-2011)
        --  Including specific items
      o EBITDA of $39 million
        (compared to $83 million in Q3-2012 (-53%) and $37 million in
        Q4-2011 (+5%))
      o Net loss per share of $0.30
        (compared to net earnings of $0.05 in Q3-2012 and net earnings of
        $0.05 in Q4-2011)
        --  Net debt of $1,535 million (compared to $1,542 million as at
            September 30, 2012), including $133 million of non-recourse
            debt

——————————

Mr. Alain Lemaire, President and Chief Executive Officer, had the
following comments on the fourth quarter results:

“We ended 2012 on a better note than last year. Despite a sequential
performance which reflects inherent seasonality associated with the
fourth quarter in North America, the results released today are
encouraging in a number of ways. Our Tissue Papers Group continues to
perform well. The sequential decline in recycled paper costs and the
gradual implementation of price hikes contributed positively to the
results of our Containerboard Group manufacturing activities. The
maintenance downtime period did not allow this segment to achieve the
desired utilization rate but the performance of our flagship operations
is gradually improving. The implementation of price increases in the
corrugated products sector is in line with our expectations but the
product mix negatively impacted the performance of our converting
operations during the fourth quarter. In our Specialty Products Group,
shipments of specialty papers and converted products were lower than
expected, which had a negative impact on financial results. In Europe,
we have been able to capitalize on capacity closures to make the best
of a difficult market environment.”

Financial Summary


    Selected consolidated
    information                                                            

    (in millions of Canadian
    dollars, except amounts per
    share) (unaudited)                 2012    2011 Q4/2012 Q4/2011 Q3/2012

    Sales                             3,645   3,625     904     913     906

    Excluding specific items 1                                             

      Operating income before
      depreciation and amortization
      (OIBD or EBITDA)                  304     229      70      51      78

      Operating income                  118      49      22       -      33

      Net earnings (loss)                16    (14)     (2)     (4)       7

        per common share              $0.17 $(0.14) $(0.02) $(0.04)   $0.07

      Cash flow from continuing
      operations (adjusted)             167     133      35      40      44

      Margin (OIBD or EBITDA)          8.3%    6.3%    7.7%    5.6%    8.6%

    As reported                                                            

      Operating income before
      depreciation and amortization
      (OIBD or EBITDA)                  274     188      39      37      83

      Operating income (loss)            75       8    (19)    (14)      36

      Net earnings (net loss)          (11)      99    (29)       5       5

        per common share            $(0.11)   $1.03 $(0.30)   $0.05   $0.05

      Cash flow from continuing
      operations (adjusted)             161     126      34      35      42

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

    Segmented OIBD excluding
    specific items                                                         

    (in millions of Canadian
    dollars) (unaudited)               2012    2011 Q4/2012 Q4/2011 Q3/2012

    Packaging Products                                                     

      Containerboard                     95      85      25      19      26

      Boxboard Europe                    42      42      11      10       7

      Specialty Products                 49      34       8       2      15

    Tissue Papers                       138      72      31      28      35

    Corporate Activities               (20)     (4)     (5)     (8)     (5)

    OIBD excluding specific items       304     229      70      51      78

 

Results analysis for the three-month period ended December 31, 2012
(compared to the same period last year)

In comparison with the same period last year, sales decreased by 1% to
$904 million as of result of 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 as well
as lower shipments.

Despite the above-mentioned factors, operating income, excluding
specific items, increased from nil during Q4-2011 to $22 million for
the last quarter of 2012 mainly as a result of lower raw material and
production costs as well as higher volumes. These factors were offset
by lower average selling prices in all our sectors, including the
impact of unfavorable product mixes. On a segmented basis, our four
sectors surpassed their 2011 fourth quarter’s results. When including
specific items, the operating loss amounted to $19 million in
comparison to $14 million for the same period of last year. In the
fourth quarter of 2012, the following specific items impacted our
operating income and/or net earnings (before tax):

        --  a $27 million loss resulting from impairment charges on assets
            (impact on operating income and net earnings);
        --  a $10 million expense related to accelerated depreciation of
            assets due to restructuring measures (operating income and net
            earnings);
        --  $3 million of closure and restructuring costs (operating income
            and net earnings);
        --  a $1 million unrealized loss on financial instruments
            (operating income and net earnings);
        --  a $6 million foreign exchange gain on long-term debt and
            financial instruments (net earnings).

The net loss excluding specific items amounted to $2 million ($0.02 per
share) in the fourth quarter of 2012 compared to a net loss of $4
million ($0.04 per share) for the same period in 2011. Including
specific items, the net loss amounted to $29 million ($0.30 per share)
compared to net earnings of $5 million ($0.05 per share) for the same
quarter in 2011.

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

Results analysis for the three-month period ended December 31, 2012
(compared to the previous quarter)

In comparison to the previous quarter, sales remained stable. A
favorable foreign exchange rate and higher external shipments partially
counterbalanced the lower average selling prices. Excluding specific
items, operating income decreased by $11 million to reach $22 million
primarily due to an increased depreciation expense and lower selling
prices that more than offset a decrease in raw material costs. Net
earnings for the quarter decreased by $9 million resulting in a net
loss of $2 million.

Net debt decreased by $7 million to $1,535 million due to free cash
flows generated, primarily in the management of our working capital.

Results analysis for the fiscal year ended December 31, 2012

In comparison to last year, sales increased by 1% to $3.6 billion
reflecting the net contribution of business acquisitions over
divestitures and the full consolidation of the results of Reno de
Medici since Q2 2011. These factors were offset by the negative impact
of a stronger Canadian dollar as well as lower shipments and average
selling prices.

In addition to the above-mentioned factors, the lower cost for raw
materials contributed to increase the operating income excluding
specific items to $118 million compared to $49 million last year.
Operating income including specific items increased by $67 million to
reach $75 million.

In 2012, net earnings excluding specific items amounted to $16 million
($0.17 per share) compared to a net loss of $14 million ($0.14 per
share) last year. Including specific items, the net loss reached $11
million ($0.11 per share) compared to net earnings of $99 million
($1.03 per share) in 2011. Impairment charges and restructuring
measures impacted net earnings during the last two years. In 2011,
specific items included the gain from the sale of Dopaco.

Near-term outlook

In commenting on the near term outlook, Mr. Lemaire added: “2013 will be
an important year for Cascades. In addition to the start-up of
Cascades’ largest project to date, Greenpac, we will benefit from other
strategic initiatives we undertook over the last two years. In North
America, industry fundamentals remain positive for our two core
sectors. Demand in the tissue papers sector continues to be robust
despite ongoing capacity additions. In the containerboard sector, the
corrugated box price increase is gradually being implemented and is
expected to be fully effective during the second quarter. In North
America, we do not expect a significant move in the price of recovered
papers in the beginning of the year. The situation is different in
Europe and presents significant uncertainty in relation to costs and
market conditions.”

Dividend on common shares and normal course issuer bid

The Board of Directors of Cascades declared a quarterly dividend of
$0.04 per share to be paid March 14, 2013 to shareholders of record at
the close of business on March 4, 2013. This dividend paid by Cascades
is an “eligible dividend” as per the Income Tax Act (Bill C-28,
Canada).

In the fourth quarter of 2012, Cascades purchased for cancellation
123,786 shares at an average price of $4.40 representing an aggregate
amount of approximately $0.5 million.

Conference call information

Management will comment the 2012 fourth quarter and annual financial
results during a conference call to be held today at 10:00am.

Financial analysts, investors, media and other interested individuals
are invited to listen to the conference call by dialing 1-888-231-8191.
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 March 1,
2013 by dialing 1-855-859-2056 and by using access code 868625993#.

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


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

    Assets                                                                 

    Current assets                                                         

    Cash and cash equivalents                               20           12

    Accounts receivable                                    513          535

    Current income tax assets                               22           24

    Inventories                                            497          516

    Financial assets                                        15            6

    Assets held for sale                                     -           12

                                                         1,067        1,105

    Long-term assets                                                       

    Investments in associates and joint ventures           222          219

    Property, plant and equipment                        1,659        1,703

    Intangible assets                                      200          185

    Financial assets                                        13           25

    Other assets                                            70           44

    Deferred income tax assets                             128          119

    Goodwill and others                                    335          328

                                                         3,694        3,728

    Liabilities and Equity                                                 

    Current liabilities                                                    

    Bank loans and advances                                 80           90

    Trade and other payables                               551          539

    Current income tax liabilities                           1            2

    Current portion of provisions for                        6            5
    contingencies and charges

    Current portion of financial liabilities and            74           20
    other liabilities

    Current portion of long-term debt                       60           49

                                                           772          705

    Long-term liabilities                                                  

    Long-term debt                                       1,415        1,358

    Provisions for contingencies and charges                33           33

    Financial liabilities                                   36          111

    Other liabilities                                      264          249

    Deferred income tax liabilities                         80          107

                                                         2,600        2,563

    Equity attributable to Shareholders                                    

    Capital stock                                          482          486

    Contributed surplus                                     16           14

    Retained earnings                                      567          615

    Accumulated other comprehensive loss                  (87)         (86)

                                                           978        1,029

    Non-controlling interest                               116          136

    Total equity                                         1,094        1,165

                                                         3,694        3,728

CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)


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

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

    Sales                            904          913      3,645      3,625

    Cost of sales and
    expenses                                                               

    Cost of sales (including
    depreciation and
    amortization of $58
    million for the 3-month
    period (2011-$51 million)
    and $199 million for the
    year (2011-$180 million))        796          819      3,157      3,247

    Selling and
    administrative expenses           96           96        382        362

    Gain on disposals and
    others                             -         (38)        (1)       (48)

    Impairment charges and
    restructuring costs               30           47         36         67

    Foreign exchange loss
    (gain)                             -            2          2       (19)

    Loss (gain) on derivative
    financial instruments              1            1        (6)          8

                                     923          927      3,570      3,617

    Operating income (loss)         (19)         (14)         75          8

    Financing expense                 25           25        100        100

    Foreign exchange gain on
    long-term debt and
    financial instruments            (6)          (9)        (8)        (4)

    Share of loss (earnings)
    of associates and joint
    ventures                           1          (3)        (2)       (14)

    Loss before income taxes        (39)         (27)       (15)       (74)

    Recovery of income taxes         (9)         (31)        (2)       (56)

    Net earnings (loss) from
    continuing operations
    including non-controlling
    interest for the period         (30)            4       (13)       (18)

    Net earnings (loss) from
    discontinued operations
    for the period                   (3)            1        (5)        114

    Net earnings (loss)
    including non-controlling
    interest for the period         (33)            5       (18)         96

    Net loss attributable to
    non-controlling interest         (4)            -        (7)        (3)

    Net earnings (loss)
    attributable to
    Shareholders for the
    period                          (29)            5       (11)         99

    Net earnings (loss) from
    continuing operations per
    common share                                                           

      Basic                      $(0.27)        $0.04    $(0.06)    $(0.16)

      Diluted                    $(0.27)        $0.04    $(0.06)    $(0.16)

    Net earnings (loss) per
    common share                                                           

      Basic                      $(0.30)        $0.05    $(0.11)      $1.03

      Diluted                    $(0.30)        $0.05    $(0.11)      $1.02

    Weighted average basic
    number of common shares
    outstanding               93,960,372   95,108,891 94,157,726 96,013,220

    Net earnings (loss)
    attributable to
    Shareholders:                                                          

      Continuing operations         (26)            4        (6)       (15)

      Discontinued operations        (3)            1        (5)        114

    Net earnings (loss)             (29)            5       (11)         99

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)


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

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

    Net earnings (loss)
    including non-controlling
    interest for the period     (33)                  5 (18)             96

    Other comprehensive income
    (loss)                                                                 

      Translation adjustments                                              

        Change in foreign
        currency translation of
        self-sustaining foreign
        subsidiaries              13               (25) (13)           (18)

        Change in foreign
        currency translation
        related to net
        investment hedging
        activities               (5)                  8    9            (6)

        Income taxes               1                (1)  (1)              1

      Cash flow hedges                                                     

        Change in fair value of
        foreign exchange
        forward contracts        (1)                (6)    6           (11)

        Change in fair value of
        interest rate swaps      (1)               (15)  (7)           (23)

        Change in fair value of
        commodity derivative
        financial instruments      1               (10)    4           (11)

        Income taxes               -                 12    -             14

      Actuarial loss on
      post-employment benefit
      obligations                 19               (13) (42)           (66)

        Income taxes             (6)                  3   11             17

    Other comprehensive income
    (loss)                        21               (47) (33)          (103)

    Comprehensive loss
    including non-controlling
    interest for the period     (12)               (42) (51)            (7)

    Comprehensive income (loss)
    attributable to
    non-controlling interest
    for the period               (4)                (6) (12)            (8)

    Comprehensive income (loss)
    attributable to
    Shareholders for the period  (8)               (36) (39)              1

    Comprehensive income (loss)
    attributable to
    Shareholders:                                                          

        Continuing operations    (5)               (37) (34)          (113)

        Discontinued operations  (3)                  1  (5)            114

    Comprehensive income (loss)  (8)               (36) (39)              1

CONSOLIDATED STATEMENTS OF EQUITY


                                                                      For the year ended December 31, 2012

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

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

      Comprehensive loss                                                                                  

        Net loss                  -           -     (11)             -         (11)             (7)   (18)

        Other comprehensive
        loss                      -           -     (27)           (1)         (28)             (5)   (33)

                                  -           -     (38)           (1)         (39)            (12)   (51)

      Dividends                   -           -     (15)             -         (15)               -   (15)

      Stock options               -           1        -             -            1               -      1

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

      Acquisition of
      non-controlling
      interest                    -           -        5             -            5             (8)    (3)

    Balance--End of
    period                      482          16      567          (87)          978             116  1,094

                                                                      For the year ended December 31, 2011

    (in millions of                                        Accumulated Total equity
    Canadian dollars)                                            other attributable
    (unaudited)             Capital Contributed Retained comprehensive           to Non-controlling  Total
                              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)       -           -       99             -           99             (3)     96

        Other comprehensive
        income (loss)             -           -     (49)          (49)         (98)             (5)  (103)

                                  -           -       50          (49)            1             (8)    (7)

      Dividends                   -           -     (15)             -         (15)               -   (15)

      Stock options               1           -        -             -            1               -      1

      Redemption of common
      shares                   (11)           -        -             -         (11)               -   (11)

      Business acquisitions       -           -        -             -            -             129    129

      Acquisition of
      non-controlling
      interest                    -           -        4             -            4             (7)    (3)

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

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

CONSOLIDATED STATEMENTS OF CASH FLOWS


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

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

    Operating activities from
    continuing operations                                                  

    Net earnings (loss)
    attributable to
    Shareholders for the period (29)                  5  (11)            99

    Net loss (earnings) from
    discontinued operations for
    the period                     3                (1)     5         (114)

    Net earnings (loss) from
    continuing operations       (26)                  4   (6)          (15)

    Adjustments for                                                        

      Financing expense           25                 25   100           100

      Depreciation and
      amortization                58                 51   199           180

      Gain on disposals and
      others                       -               (38)   (1)          (48)

      Impairment charges and
      restructuring costs         29                 42    30            60

      Loss (gain) on derivative
      financial instruments        1                  1   (5)            12

      Foreign exchange gain on
      long-term debt and
      financial instruments      (6)                (9)   (8)           (4)

      Recovery of income taxes   (9)               (31)   (2)          (56)

      Share of loss (earnings)
      of associates and joint
      ventures                     1                (3)   (2)          (14)

      Net loss attributable to
      non-controlling interest   (4)                  -   (7)           (3)

      Net financing expense
      paid                      (34)               (32)  (99)          (97)

      Income taxes received
      (paid)                       3                 11  (17)           (2)

      Dividend received            5                 16    10            16

      Employee future benefits
      and others                 (9)                (2)  (31)           (3)

                                  34                 35   161           126

    Changes in non-cash working
    capital components            58                 67    42          (22)

                                  92                102   203           104

    Investing activities from
    continuing operations                                                  

    Investments in associates
    and joint ventures             -               (18)  (19)          (65)

    Purchase of property, plant
    and equipment               (47)               (51) (161)         (141)

    Proceeds on disposal of
    property, plant and
    equipment                      -                 22    20            32

    Change in other assets      (10)                (8)  (39)             1

    Business acquisitions, net
    of cash acquired               -               (56)  (14)          (60)

    Proceeds on disposals of
    business, net of cash
    disposed                       -                (2)     -             4

                                (57)              (113) (213)         (229)

    Financing activities from
    continuing operations                                                  

    Bank loans and advances     (18)               (25)  (11)             4

    Change in revolving credit
    facilities                    13                146   117         (120)

    Purchase of senior notes     (5)                  -   (8)             -

    Payments of other long-term
    debt                        (20)               (13)  (63)          (26)

    Increase in other long-term
    debt                           3                  2     8             3

    Redemption of common shares    -                (3)   (3)          (11)

    Acquisition of
    non-controlling interest
    including dividend paid      (1)                (2)   (3)           (4)

    Dividends paid to the
    Corporation's Shareholders   (4)                (3)  (15)          (15)

                                (32)                102    22         (169)

    Change in cash and cash
    equivalents during the
    period from continuing
    operations                     3                 91    12         (294)

    Change in cash and cash
    equivalents from
    discontinued operations,
    including proceeds on
    disposal during the period     1               (92)   (4)           298

    Net change in cash and cash
    equivalents during the
    period                         4                (1)     8             4

    Currency translation on
    cash and cash equivalent       -                  2     -             2

    Cash and cash
    equivalents--Beginning
    of period                     16                 11    12             6

    Cash and cash
    equivalents--End of
    period                        20                 12    20            12

SEGMENTED INFORMATION

The Corporation analyzes the performance of its operating segments based
on their operating income before depreciation and amortization, which
is not a measure of performance under International Financial Reporting
Standards (“IFRS”); however, the chief operating decision-maker
(“CODM”) uses this performance measure for assessing the operating
performance of each reportable segment. Earnings for each segment are
prepared on the same basis as those of the Corporation. Intersegment
operations are recorded on the same basis as sales to third parties,
which are at fair market value. The accounting policies of the
reportable segments are the same as the Corporation’s accounting
policies described in its most recent audited consolidated financial
statements for the year ended December 31, 2011.

The Corporation’s operating segments are reported in a manner consistent
with the internal reporting provided to the CODM. The Chief Executive
Officer has authority for resource allocation and assessment of the
Corporation’s performance and is therefore the CODM.

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, starting January 1, 2012, the
Corporation modified its segmented information disclosure and restated
prior periods. Containerboard and Boxboard North American 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 constitutes
the Packaging Products of the Corporation) and Tissue Papers.


                                                                    Sales

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

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

    Packaging Products                                                   

      Containerboard           306                299 1,189         1,293

      Boxboard Europe          198                206   791           745

      Specialty Products       183                206   791           851

      Intersegment sales      (14)               (22)  (68)         (104)

                               673                689 2,703         2,785

    Tissue Papers              242                233   979           871

    Intersegment sales and
    others                    (11)                (9)  (37)          (31)

    Total                      904                913 3,645         3,625

                              Operating income (loss) before depreciation
                              and amortization

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

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

    Packaging Products                                                   

      Containerboard           (1)                (7)    64            45

      Boxboard Europe            8                  7    38            42

      Specialty Products         8               (10)    49            16

                                15               (10)   151           103

    Tissue Papers               32                 50   138            93

    Corporate                  (8)                (3)  (15)           (8)

    Operating income before
    depreciation and
    amortization                39                 37   274           188

    Depreciation and
    amortization              (58)               (51) (199)         (180)

    Financing expense         (25)               (25) (100)         (100)

    Foreign exchange gain on
    long-term debt and
    financial instruments        6                  9     8             4

    Share of earnings (loss)
    of associates and joint
    ventures                   (1)                  3     2            14

    Loss before income taxes  (39)               (27)  (15)          (74)

                               Purchases of property, plant and equipment

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

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

    Packaging Products                                                   

      Containerboard            25                 24    72            54

      Boxboard Europe           10                  8    29            30

      Specialty Products         5                 11    15            26

                                40                 43   116           110

    Tissue Papers               21                 14    34            31

    Corporate                    5                  6    19            14

    Total purchases             66                 63   169           155

    Proceeds on disposal of
    property, plant and
    equipment                    -               (22)  (20)          (32)

    Capital-lease acquisition  (1)                (3)   (5)           (7)

                                65                 38   144           116

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

      Beginning of period       10                 16    25            18

      End of period           (28)               (25)  (28)          (25)

    Purchases of property,
    plant and equipment net
    of proceeds on disposal     47                 29   141           109

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)
    (unaudited)                        Net earnings (loss)                   Net earnings (loss) per share 1

                      2012    2011   Q4/2012   Q4/2011   Q3/2012     2012     2011   Q4/2012   Q4/2011   Q3/2012

                                                                        $
    As per IFRS       (11)      99      (29)         5         5   (0.11)    $1.03   $(0.30)     $0.05     $0.05

    Specific items
    :                                                                                                           

    Inventory
    adjustment
    resulting from
    business
    acquisition          -      10         -         4         -      $ -    $0.08       $ -     $0.04       $ -

    Gain on
    disposals and                                                       $        $
    others             (1)    (48)         -      (38)         -   (0.01)   (0.55)       $ -   $(0.40)       $ -

    Impairment
    charges             29      59        27        44         1    $0.23    $0.45     $0.22     $0.34       $ -

    Restructuring
    costs                7       8         3         3         -    $0.05    $0.06     $0.02     $0.02       $ -

    Unrealized loss
    (gain) on
    financial                                                           $
    instruments        (5)      12         1         1       (6)   (0.04)    $0.11       $ -     $0.01   $(0.04)

    Accelerated
    depreciation
    and
    amortization
    due to
    restructuring
    measures            13       -        10         -         2    $0.10      $ -     $0.08       $ -     $0.01

    Foreign
    exchange loss
    (gain) on
    long-term debt
    and financial                                                       $        $
    instruments        (8)     (4)       (6)       (9)         5   (0.07)   (0.04)   $(0.05)   $(0.08)     $0.05

    Share of
    earnings of
    associates,
    joint ventures
    and
    non-controlling                                                     $        $
    interest           (3)     (3)       (1)       (2)         -   (0.03)   (0.03)   $(0.02)   $(0.02)       $ -

    Included in
    discontinued
    operations, net                                                              $
    of tax               5   (108)         3       (1)         -    $0.05   (1.13)     $0.03       $ -       $ -

    Tax effect on
    specific items
    and other tax                                                                $
    adjustments       (10)    (39)      (10)      (11)         -      $ -   (0.12)       $ -       $ -       $ -

                                                                                 $
                        27   (113)        27       (9)         2    $0.28   (1.17)     $0.28   $(0.09)     $0.02

    Excluding                                                                    $
    specific items      16    (14)       (2)       (4)         7    $0.17   (0.14)   $(0.02)   $(0.04)     $0.07

    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)                          2012  2011 Q4/2012 Q4/2011 Q3/2012

    Net earnings (loss) attributable to
    Shareholders for the period          (11)    99    (29)       5       5

    Net loss (earnings) from
    discontinued operations for the
    period                                  5 (114)       3     (1)       -

    Net loss attributable to
    non-controlling interest              (7)   (3)     (4)       -     (1)

    Share of loss (earnings) of
    associates and joint ventures         (2)  (14)       1     (3)       1

    Provision (recovery) of income taxes  (2)  (56)     (9)    (31)       1

    Foreign exchange loss (gain) on
    long-term debt and financial
    instruments                           (8)   (4)     (6)     (9)       5

    Financing expense                     100   100      25      25      25

    Operating income (loss)                75     8    (19)    (14)      36

    Specific items :                                                       

    Gain on disposals and others          (1)  (48)       -    (38)       -

    Inventory adjustment resulting from
    business acquisition                    -    10       -       4       -

    Impairment charges                     29    59      27      44       1

    Restructuring costs                     7     8       3       3       -

    Unrealized loss (gain) on financial
    instruments                           (5)    12       1       1     (6)

    Accelerated depreciation and
    amortization due to restructuring
    measures                               13     -      10       -       2

                                           43    41      41      14     (3)

    Operating income - excluding
    specific items                        118    49      22       -      33

    Depreciation and amortization,
    excluding specific items              186   180      48      51      45

    Operating income before depreciation
    and amortization (OIBD or EBITDA) -
    excluding specific items              304   229      70      51      78

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)                           2012 2011 Q4/2012 Q4/2011 Q3/2012

    Cash flow provided by (used from)
    operating activities                   203  104      92     102      54

    Changes in non-cash working capital
    components                            (42)   22    (58)    (67)    (12)

    Cash flow (adjusted) from operations   161  126      34      35      42

    Specific items, net of current income
    tax                                                                    

    Restructuring costs                      6    7       1       5       2

    Excluding specific items               167  133      35      40      44

 

 

 

 

SOURCE CASCADES INC.


Source: PR Newswire