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Cascades reports Fourth quarter and Full Year 2011 results

Thursday, February 23, 2012 6:00 AM




KINGSEY FALLS, QC, Feb. 23, 2012 /CNW Telbec/ - 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, 2011.

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

Fiscal Year 2011 Strategic Highlights

  • Modernization measures:
    • Construction kick-off for the new, state-of-the-art, Greenpac containerboard mill located in Niagara Falls (New York).
    • Start-up of a new Atmos tissue machine to produce Premium and Ultra quality tissue papers.
    • Modernization of the equipment at the Kingsey Falls moulded pulp mill, the Breakeyville and Auburn deink pulp mills, and the Winnipeg and Cobourg folding carton plants.
  • Restructuration measures:
    • Divestiture of Dopaco for US$395 million, the Avot-Vallée white-top linerboard plant and the Versailles and Hebron boxboard facilities.
    • Consolidation of corrugated box operations in New England.
    • Closure of the Burnaby containerboard facility, the Leominster and Le Gardeur corrugated box facilities and of the East-Angus pulp mill.
  • Capital optimization measures:
    • Acquisition of Papersource, a leading tissue paper converter.
    • Increase of our interest in Reno De Medici ("RdM") to close to 45%, the second largest European producer of coated recycled boxboard.
    • 2.1 million shares redeemed (2.1% of shares outstanding) at an average price of $5.22.

Fiscal year highlights

  • Total sales increased by 14 % compared to 2010 (including the impact of acquisitions and divestitures).
  • Total shipments up 15 % compared to 2010 (including the impact of acquisitions and divestitures).
  • Net earnings per share including specific items of $1.03 compared to $0.43 in 2010. Net loss per share excluding specific items of $0.14 compared to net earnings of $0.83 in 2010.
  • Operating income before depreciation and amortization (EBITDA) excluding specific items of $229 million compared to $310 million in 2010.
  • Net debt increased by 6% to $1.485 billion, including $156 million of non-recourse debt. Availability of $460 million under our revolving credit facility.
  • Appointment of Mario Plourde as Chief Operating Officer.

Fourth quarter highlights

  • Net earnings per share including specific items of $0.05 compared to a net loss of $0.21 in the previous quarter and a net loss of $0.12 in the corresponding period of last year. Net loss per share excluding specific items of $0.04 compared to a net loss of $0.02 in the previous quarter and net earnings of $0.17 in the same period of last year.
  • EBITDA excluding specific items of $51 million compared to $79 million in Q3 2011 and $72 million in Q4 2010.
  • Net debt increased by $115 million compared to previous quarter.

Financial Summary

Selected consolidated information            
(in millions of Canadian dollars, except amounts per share) 2011 2010   Q4/2011 Q4/2010 Q3/2011
 
Sales 3,625 3,182   913 783 947
Excluding specific items 1
  Operating income before depreciation and amortization (OIBD or EBITDA) 229 310   51 72 79
  Operating income 49 155   - 34 33
  Net earnings (loss) (14) 80   (4) 17 (2)
    per common share $(0.14) $0.83   $(0.04) $0.17 $(0.02)
  Cash flow from operations (adjusted) 133 197   40 41 61
As reported
Operating income before depreciation and amortization (OIBD or EBITDA) 1188 258   37 45 53
Operating income (loss) 8 103   (14) 7 7
Net earnings (loss) 99 41   5 (12) (20)
    per common share $1.03 $0.43   $0.05 $(0.12) $(0.21)
Cash flow from operations (adjusted)  1126 193   35 41 60
Note 1 - see the supplemental information on non-IFRS measures.

Commenting on the annual and fourth quarter results, Mr. Alain Lemaire, President and Chief Executive Officer stated:
"After two quarters of improvements, 2011 has ended on a disappointing note. First, the decline in the cost of recycled fibre witnessed at the end of the year only began to impact results in the second half of the quarter. Then, the important increase of the cost of many of our inputs and the strength of the Canadian dollar had a significant impact on our profit margins and our capacity to generate cash flows. Two other factors also influenced the fourth quarter performance. Seasonality inherent to this quarter and softer demand experienced throughout the industry have resulted in lower shipments. Also, lower operational efficiency at certain of our production units has contributed to higher production costs and lower profitability.

Despite these unfavourable conditions, we continue to focus on what we can influence and have achieved great successes in 2011 such as the orderly progression of our Greenpac project, the start-up of the new Atmos machine in Candiac, the progressive implementation of our ERP system and performance improvements achieved at certain of our facilities without major investments. The past year was the opportunity to fine tune the execution of our strategic plan. We have demonstrated in the recent past that we can make difficult decisions to improve our operational and financial performance and we will continue to do so in order to fully profit from the impacts of more favourable market conditions when they occur."

Results analysis for the three-month period ended December 31, 2011 (compared to the previous year)

In comparison with the same period last year, sales rose by 17% to $913 million resulting from higher selling prices, the net contribution of business acquisitions over divestitures and the full consolidation of the results of RdM since Q2 2011.

The operating income excluding specific items was nil compared to $34 million in Q4 2010. Higher selling prices and the contribution of business acquisitions were more than offset by the negative impacts of lower shipments and higher raw material costs. On a segmented basis, our tissue and European boxboard segments posted better results while our containerboard and specialty products segments experienced weaker profitability. When including specific items, the operating loss amounted to $14 million in comparison to an operating income of $7 million in the same period of last year.

In the fourth quarter of 2011, these specific items impacted our operating income and/or net earnings (before tax):

  • A reduction of net asset value of $44 million (operating income and net earnings);
  • Closure and restructuration costs of $3 million (operating income and net earnings);
  • Unrealized loss of $1 million on financial instruments (operating income and net earnings);
  • Net gain of $34 million mainly related to the Papersource transaction (operating income and net earnings);
  • Foreign exchange gain on long-term debt and financial instruments of $9 million (net earnings);
  • Other specific items increasing net earnings by $3 million.

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

Net loss excluding specific items amounted to $4 million ($0.04 per share) in the fourth quarter of 2011 compared to net earnings of $17 million ($0.17 per share) for the same period of last year. Financing expenses were slightly lower than in Q4 2010 while the recovery of income taxes was significantly higher. Including specific items, net earnings were $5 million ($0.05 per share) compared to a net loss of $12 million ($0.12 per share) for the same quarter in 2010.

Results analysis for the three-month period ended December 31, 2011 (compared to the previous quarter)

In comparison to the previous quarter, sales decreased by 3.5% due to a 6% decrease in shipments. The favourable impacts of lower raw material prices have been offset by lower shipments.

We incurred important F/X gains on working capital items and cash flow management related to the sale of Dopaco during the third quarter of 2011 which explains the $21 million variance in EBITDA with the current quarter.

Results analysis for the fiscal year ended December 31, 2011

In comparison to last year, sales increased by 14% to $3.6 billion reflecting higher selling prices, the net contribution of business acquisitions over divestitures and the full consolidation of the results of RdM since Q2 2011. These factors were partly offset by the negative impact of a stronger Canadian dollar.

Despite higher selling prices in most of our business segments and the net contribution from acquisitions, the operating income from continuing operations excluding specific items decreased to $49 million compared to $155 million last year mainly as a result of the higher cost for raw material, energy, chemical products and transportation as well as by lower shipments. In addition, profitability suffered from lower selling prices in Canadian dollar and a 17-day business interruption at one of our tissue mill due to a flood which resulted in a $4 million financial impact. Operating income from continuing operations including specific items decreased by $95 million to $8 million.

In 2011, the net loss excluding specific items amounted to $14 million ($0.14 per share) compared to net earnings of $80 million ($0.83 per share) last year. Including specific items, net earnings reached $99 million ($1.03 per share) compared to $41 million ($0.43 per share) in 2010.

Near-term outlook

Mr. Alain Lemaire added: "Entering 2012, economic indicators are positive in North America and point to an unstable environment in Europe. Demand for our products remains volatile but we should improve our performance in comparison to the same period last year. In particular, we should benefit from the full consolidation of Reno de Medici and Papersource during the first quarter of 2012.

We expect to continue to face challenges as it relates to the volatility of raw material costs and the value of the Canadian dollar but we believe there are reasons for optimism for 2012 and future years. Indeed, since the later part of 2011, we have witnessed more favourable market conditions. From a strategic perspective, our plan still stands: modernize, restructure, optimize and innovate. We expect to begin benefiting from decisions taken as part of our strategic plan since the beginning of the year, particularly with respect to the acquisition of Papersource and the consolidation of some of our operational centers.

To execute our strategy, we plan to invest to improve our operational performance. However we will deploy our capital in a prudent and gradual way to equip Cascades with a portfolio of assets that are competitive from a manufacturing cost and product offering perspective while maintaining an acceptable level of debt. We wish to maintain our financial flexibility and expect to increase it from return generated on capital invested, working capital reduction efforts and supply chain optimization. This will allow us to pursue our growth initiatives and return value to our shareholders, as we did in the past."

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 on March 23, 2012 to shareholders of record at the close of business on March 9, 2012. This dividend paid by Cascades is an "eligible dividend" as per the Income Tax Act (Bill C-28, Canada).

In 2011, Cascades purchased for cancellation 2,057,563 shares at an average price of $5.22 representing an aggregate amount of approximately $10.8 million.

Transition toInternational Financial Reporting Standards (IFRS)

All financial information, including comparative figures pertaining to Cascades' 2010 results, has been prepared in accordance with International Financial Reporting Standards (IFRS). Until December 31, 2010, the Corporation prepared its consolidated financial statements and interim financial statements in accordance with Canadian generally accepted accounting principles (GAAP). Comparative figures presented pertaining to Cascades' 2010 results have been restated to be in accordance with IFRS. A reconciliation of certain comparative figures from previous GAAP to IFRS is provided in the Fourth Quarter results investor presentation. For further details, please refer to the investor presentation on the impact of adoption of IFRS, the fourth quarter 2011 report and the 2010 annual report. These documents are available at www.cascades.com/investors.

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 corporation'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, debt restructuring charges, gains or losses on sale of business unit, unrealized gains or losses on derivative financial instruments that do not qualify for hedge accounting, foreign exchange gains or losses on long-term debt and other significant items of an unusual or non-recurring nature.

Net earnings (loss), which is a performance measure defined by IFRS is reconciled below to operating income, 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) 2011 2010   Q4/2011 Q4/2010 Q3/2011
 
Net earnings (loss)99 41  5 (12) (20)
Net loss (earnings) from discontinued operations (114) (21)   (1) (1) 2
Non-controlling interest (3) 2   - 1 (3)
Share of results of associates and joint ventures (14) (27)   (3) (4) (1)
Provision for (recovery of) income taxes (56) (6)   (31) (8) 10
Foreign exchange loss (gain) on long-term debt and financial instruments (4) 4   (9) 5 (5)
Loss on long-term debt refinancing - 3   - - -
Financing expense 100 107   25 26 24
 
Operating income (loss)8 103  (14) 7 7
Specific items :            
Loss (gain) on disposal and others (48) 15   (38) - -
Inventory adjustment resulting from business acquisition 10 -   4 - -
Net impairment loss 59 29   44 28 14
Closure and restructuring costs 8 1   3 - 1
Unrealized loss (gain) on financial instruments 12 7   1 (1) 11
  41 52   14 27 26
 
Operating income - excluding specific items49 155  - 34 33
Depreciation and amortization 180 155   51 38 46
Operating income before depreciation and amortization - excluding specific items229 310  51 72 79

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

       
(in millions of Canadian dollars, except amounts per share) Net earnings (loss) Net earnings (loss) per share1
  2011 2010   Q4/2011 Q4/2010 Q3/2011  2011 2010  Q4/2011 Q4/2010 Q3/2011
 
As per IFRS99 41  5 (12) (20)   $1.03 $0.43   $0.05 $(0.12) $(0.21)
Specific items :  
Inventory adjustment resulting from business acquisition 10 -   4 - -   $0.08 $ -   $0.04 $ - $ -
Loss (gain) on disposal and others (48) 15   (38) - -   $(0.55) $0.12   $(0.40) $ - $ -
Net impairment loss  59 29   44 28 14   $0.45 $0.20   $0.34 $0.19 $0.10
Closure and restructuring costs 8 1   3 - 1   $0.06 $0.01   $0.02 $ - $0.01
Unrealized loss (gain) on financial instruments 12 7   1 (1) 11   $0.11 $0.07   $0.01 $(0.01) $0.10
Loss on long-term debt refinancing - 3   - - -   $ - $0.02   $ - $ - $ -
Foreign exchange loss (gain) on long-term debt and financial instruments (4) 4   (9) 5 (5)   $(0.04) $0.03   $(0.08) $0.04 $(0.05)
Share of results of significantly influenced companies and non-controlling interest (3) (10)   (2) 1 1   $(0.03) $(0.11)   $(0.02) $0.01 $0.01
Included in discontinued operations, net of tax (108) 8   (1) 8 2   $(1.13) $0.06   $ - $0.06 $0.02
Tax effect on specific items and other tax adjustments¹ (39) (18)   (11) (12) (6)   $(0.12) $ -   $ - $ - $ -
  (113) 39   (9) 29 18   $(1.17) $0.40   $(0.09) $0.29 $0.19
Excluding specific items(14) 80  (4) 17 (2)   $(0.14) $0.83   $(0.04) $0.17 $(0.02)

¹ Specifc 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 includes the effect of tax adjustments.

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

   
  Cash flow from operations
(in millions of Canadian dollars) 2011 2010   Q4/2011 Q4/2010 Q3/2011
 
Cash flow provided by (used from) operating activities104 170  102 88 41
Changes in non-cash working capital components 22 23   (67) (47) 19
Cash flow (adjusted) from operations126 193  35 41 60
Specific items, net of current income taxes :      
Loss on long-term debt refinancing - 3   - - -
Closure and restructuring costs 7 1   5 - 1
Excluding specific items133 197  40 41 61

Founded in 1964, Cascades produces, converts and markets packaging and tissue products composed mainly of recycled fibres. The Company employs close to 11,000 men and women in close to a 100 units located in North America and Europe. Its management philosophy, its more than 45 years of experience in recycling and its continued efforts in research and development are strengths which enable Cascades to create new products for its customers. Cascades' shares trade on the Toronto Stock Exchange, under the ticker symbol CAS.

Certain statements in this release, including statements regarding future results and performance, are forward-looking statements (as such term is defined under the Private Securities Litigation Reform Act of 1995) based on current expectations. The accuracy of such statements is subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those projected, including, but not limited to, the effect of general economic conditions, decreases in demand for the Company's products, increases in raw material costs, fluctuations in selling prices and adverse changes in general market and industry conditions and other factors listed in the Company's Securities and Exchange Commission filings.


Consolidated Balance Sheets

(unaudited)  
(in millions of Canadian dollars) December 31,
2011
December 31,
2010
January 1,
2010
Assets  
Current assets  
Cash and cash equivalents 12 6 8
Accounts receivable 556 490 456
Current income tax assets 24 21 13
Inventories 516 476 467
Financial assets 6 12 14
Assets of disposal group held for sale 12 - -
  1,126 1,005 958
Long-term assets  
Investments in associates and joint ventures 221 262 260
Property, plant and equipment 1,703 1,553 1,637
Intangible assets 189 126 137
Financial assets 25 4 7
Other assets 86 92 73
Deferred income tax assets 57 82 74
Goodwill and other intangible assets with infinite useful life 324 313 315
  3,731 3,437 3,461
Liabilities and Shareholders' Equity  
Current liabilities  
Bank loans and advances 90 42 50
Accounts payable and accrued liabilities 539 440 395
Current income tax liabilities 2 2 1
Provisions for contingencies and charges 26 23 24
Current portion of financial liabilities and other liabilities 20 14 7
Current portion of long-term debt 49 7 6
Revolving credit facility, renewed in 2011 - 394 -
  726 922 483
Long-term liabilities  
Long-term debt 1,358 960 1,423
Provisions for contingencies and charges 33 37 31
Financial liabilities 111 83 54
Other liabilities 249 196 166
Deferred income tax liabilities 89 167 192
  2,566 2,365 2,349
   
Equity attributable to Shareholders  
Capital stock 486 496 499
Contributed surplus 14 14 14
Retained earnings 615 576 575
Accumulated other comprehensive income (loss) (86) (37) 3
  1,029 1,049 1,091
Non-controlling interest 136 23 21
Total equity1,165 1,072 1,112
  3,731 3,437 3,461


Consolidated Statements of Earnings

(unaudited)    
     For the 3-month periods
ended December 31
For the years ended
December 31
(in millions of Canadian dollars, except per share amounts and number of shares) 2011 2010 2011 2010
Sales913 783 3,625 3,182
Cost of sales and expenses        
Cost of sales (including depreciation and amortization of $51 million; $38 million; $180 million and $155 million) 819 673 3,247 2,702
Selling and administrative expenses 96 79 362 325
Loss (gain) on disposal and others (38) - (48) 15
Net impairment loss and other restructuring costs 47 29 67 31
Foreign exchange loss (gain) 2 3 (19) 7
Loss (gain) on financial instruments 1 (8) 8 (1)
  927 776 3,617 3,079
Operating income (loss)(14) 7 8 103
Financing expense 25 26 100 107
Loss on refinancing of long-term debt - - - 3
Foreign exchange loss (gain) on long-term debt and financial instruments (9) 5 (4) 4
Loss before income taxes(30) (24) (88) (11)
Recovery of income taxes(31) (8) (56) (6)
Share of results of associates and joint ventures(3) (4) (14) (27)
Net earnings (loss) from continuing operations including non-controlling interest4 (12) (18) 22
Net earnings from discontinued operations1 1 114 21
Net earnings (loss) including non-controlling interest5 (11) 96 43
Less: non-controlling interest- 1 (3) 2
Net earnings (loss) attributable to Shareholders5 (12) 99 41
         
Net earnings (loss) from continuing operations per common share        
  Basic 0.04 (0.14) ($0.16) $0.21
  Diluted 0.04 (0.14) ($0.16) $0.21
Net earnings (loss) per common share        
  Basic 0.05 (0.12) $1.03 $0.43
  Diluted 0.05 (0.12) $1.02 $0.42
Weighted average basic number of common shares outstanding95,108,991 96,608,106 96,013,220 96,807,032
         
Net earnings (loss) attributable to Shareholders:        
         
  Continuing operations4 (13) (15) 20
  Discontinued operations1 1 114 21
Net earnings (loss)5 (12) 99 41


Consolidated Statements of Comprehensive Income (Loss)

(unaudited)    
  For the 3-month periods
ended December 31
For the years ended
December 31
(in millions of Canadian dollars) 2011 2010 2011 2010
Net earnings (loss) including non-controlling interest for the period5 (11) 96 43
Other comprehensive income (loss)  
  Translation adjustments  
    Change in foreign currency translation of foreign subsidiaries (35) (31) (28) (49)
    Change in foreign currency translation related to net investment hedging activities 20 19 6 28
    Income taxes (3) (2) (1) (4)
  Cash flow hedges        
    Change in fair value of foreign exchange forward contracts (6) - (11) 1
    Change in fair value of interest rate swap agreements (15) 3 (23) -
    Change in fair value of commodity derivative financial instruments (10) (2) (11) (23)
    Income taxes 12 1 14 8
  Actuarial loss on post-employment benefit obligations




    Change in fair value (13) (34) (66) (34)
    Income taxes 3 10 17 10
  Available-for-sale financial assets  
 
Change in fair value
-
(1)
-
(1)
      (47) (37) (103) (64)
Comprehensive income (loss) including non-controlling interest for the period(42) (48) (7) (21)
Less: Comprehensive income (loss) attributable to non-controlling interest for the period(5) 1 (8) 2
Comprehensive income (loss) attributable to Shareholders for the period(37) (49) 1 (23)
         
Comprehensive income (loss) attributable to Shareholders:        
         
  Continuing operations(38) (50) (113) (44)
  Discontinued operations1 1 114 21
Comprehensive income (loss)(37) (49) 1 (23)


Consolidated Statements of Equity 

   
(unaudited) For the year ended December 31, 2011
(in millions of Canadian dollars) Capital
stock
Contributed
surplus
Retained
earnings
Accumulated
other
comprehensive
income (loss)
Total equity
attributable to
Shareholders
Non-
controlling
interest
Total
equity
Balance - Beginning of year49614576(37)1,049231,072
  Net earnings for the year --99-99(3)96
  Business acquisitions -----129129
  Other comprehensive loss --(49)(49)(98)(5)(103)
  Dividends --(15)-(15)-(15)
  Stock options 1---1-1
  Redemption of common shares (11)---(11)-(11)
  Acquisition of non-controlling interest --4-4(7)(3)
  Dividend paid to non-controlling interest -----(1)(1)
Balance - End of year48614615(86)1,0291361,165
   
  For the year ended December 31, 2010
(in millions of Canadian dollars) Capital
stock
Contributed
surplus
Retained
earnings
Accumulated
other
comprehensive
income (loss)
Total equity
attributable to
Shareholders
Non-
controlling
interest
Total
equity
Balance - Beginning of year 499 14 575 3 1,091 21 1,112
  Net earnings for the year - - 41 - 41 2 43
  Other comprehensive loss - - (24) (40) (64) - (64)
  Dividends - - (16) - (16) - (16)
  Stock options - 1 - - 1 - 1
  Redemption of common shares (3) (1) - - (4) - (4)
Balance - End of year 496 14 576 (37) 1,049 23 1,072


Consolidated Statements of Cash Flows 

(unaudited)    
(in millions of Canadian dollars) For the 3-month periods
endedDecember 31
For the years ended
December 31
  2011 2010 2011 2010
Operating activities from continuing operations        
Net earnings (loss) attributable to Shareholders for the year 5 (12) 99 41
Net earnings from discontinued operations for the year (1) (1) (114) (21)
Net earnings (loss) from continuing operations 4 (13) (15) 20
Adjustments for        
  Financing expense 25 26 100 107
  Depreciation and amortization 51 38 180 155
  Loss (gain) on disposal and others (37) (29) (48) (14)
  Net impairment loss and other restructuring costs 42 44 60 45
  Unrealized loss (gain) on financial instruments 1 (1) 12 7
  Foreign exchange loss (gain) on long-term debt and financial instruments (9) 5 (4) 4
  Recovery of income taxes (31) (8) (56) (6)
  Share of results of associates and joint ventures (3) (4) (14) (27)
  Non-controlling interest - 1 (3) 2
  Net financing expense paid (33) (32) (97) (94)
  Income tax paid 11 (6) (2) (16)
  Dividend received 16 16 16 16
  Others (2) 4 (3) (6)
  35 41 126 193
Changes in non-cash working capital components 67 47 (22) (23)
  102 88 104 170
Investing activities from continuing operations        
Purchase of investment in associates and joint ventures (20) (2) (65) (8)
Purchases of property, plant and equipment (51) (42) (141) (118)
Disposals of property, plant and equipment 22 - 32 7
Change in other assets (6) (8) 1 (29)
Business acquisitions, net of cash acquired (56) - (60) (3)
Proceeds on disposal of business, net of cash disposed (2) - 4 -
  (113) (52) (229) (151)
Financing activities from continuing operations        
Bank loans and advances (25) (12) 4 (7)
Change in revolving credit facilities 146 68 (120) 243
Purchase of senior notes - - - (165)
Increase in other long-term debt 2 1 3 1
Payments of other long-term debt (13) (102) (26) (107)
Redemption of common shares (3) - (11) (4)
Acquisition and dividend paid to non-controlling interest (2) - (4) -
Dividend paid to Corporation's Shareholders (3) (4) (15) (16)
  102 (49) (169) (55)
Change in cash and cash equivalents during the period from continuing operations91 (13) (294) (36)
Change in cash and cash equivalents from discontinued operations, including proceeds on disposal during the period(92) 5 298 35
Net change in cash and cash equivalents during the period(1) (8) 4 (1)
Currency translation on cash and cash equivalent2 (1) 2 (1)
Cash and cash equivalents—Beginning of period11 15 6 8
Cash and cash equivalents—End of period12 6 12 6


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; 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 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 2011, the Corporation has modified its segmented information disclosure. Containerboard manufacturing and converting activities are now presented on a consolidated basis. As well, North American manufacturing and converting boxboard activities are also presented consolidated basis while European activities are still reported as a separate sub-sector. The Corporation also changed the presentation for its specialty products, in order to reflect how management analyzes its financial information. The Corporation has reclassified comparative figures to conform to the presentation adopted.

The Corporation's operations are managed in four segments: North American and European boxboard, containerboard, specialty products (which consist of the packaging products of the Corporation) and tissue papers.

Sales of the Corporation by reportable segment are as follows:

 
        SALES
(unaudited)   For the 3-month periods
ended December 31
For the yearsended
December31
(in millions of Canadian dollars)   2011 2010 2011 2010
Packaging products          
  Boxboard          
    North America   67 206 466 846
    Europe   206 56 745 208
    Discontinued operations of North America   - (120) (148) (470)
    273 142 1,063 584
  Containerboard   233 268 979 1,086
  Specialty Products   206 201 851 786
  Intersegment sales   (24) (29) (109) (106)
    688 582 2,784 2,350
Tissue papers   233 212 871 853
Intersegment sales and others   (8) (11) (30) (21)
Total   913 783 3,625 3,182


The operating income (loss) before depreciation and amortization of the Corporation by reportable segment are as follows:

     
    OPERATING INCOME (LOSS)
BEFORE DEPRECIATION
AND AMORTIZATION
(unaudited) For the 3-month periods
ended December 31
For the years ended
December 31
(in millions of Canadian dollars) 2011 2010 2011 2010
Packaging products        
  Boxboard        
    North America (8) 9 (8) 63
    Europe 8 4 46 8
    Discontinued operations of North America - (16) (12) (59)
  - (3) 26 12
  Containerboard     - 22 61 144
  Specialty products(10) 12 16 63
  (10) 31 103 219
  Tissue papers50 17 93 84
Corporate(3) (3) (8) (45)
Operating income before depreciation and amortization 37 45 188 258
         
Depreciation and amortization (51) (38) (180) (155)
Financing expense (25) (26) (100) (107)
Loss on refinancing of long term debt - - - (3)
Foreign exchange gain (loss) on long term debt and financial instruments 9 (5) 4 (4)
         
Loss before income taxes(30) (24) (88) (11)

Purchases of property, plant and equipment by the Corporation by reportable segment are as follows:

       
      PURCHASES OF PROPERTY,
PLANT AND EQUIPMENT
  For the 3-month periods
ended December 31
For the years ended
December 31
(in millions of Canadian dollars) 2011 2010 2011 2010
Packaging products        
  Boxboard        
    North America 5 8 13 21
    Europe 9 2 30 5
    Discontinued operations of North America - (5) (1) (13)
  14 5 42 13
  Containerboard18 9 42 31
  Specialty products9 18 24 30
  41 32 108 74
         
Tissue papers14 14 31 36
Corporate5 2 9 17
Total purchases60 48 148 127
Disposal of property, plant and equipment  (22) - (32) (7)
Acquisition under capital-lease agreement - - - (4)
  38 48 116 116
Purchases of property, plant and equipment included in accounts payable        
  Beginning of year 16 14 18 13
  End of year (25) (20) (25) (18)
Purchases of property, plant and equipment29 42 109 111

 

Media
Hubert Bolduc
Vice-President, Communications and Public Affairs
514 912-3790

Investors
Riko Gaudreault
Director, Investor relations
514 282-2697

Source:
Allan Hogg
Vice-President and Chief Financial Officer

(Source: CNW )
(Source: Quotemedia)

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