Exhibit 13.2
 
             Alain Lemaire
    
    Christian DubéPresident and Chief Executive Officer
    
    Vice-President and Chief Financial OfficerKingsey Falls, Canada
    
    Kingsey Falls, Canada
 CASCADES  ANNUAL REPORT 2009




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##### 



Cascades Inc.
   1
  
 1.
    
    Chartered accountant auditor permit No. 19653 CASCADES  ANNUAL REPORT 2009




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##### 



Comments by Auditors for U.S. Readers
on Canada-U.S. Reporting Differences
   
 Chartered Accountants




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##### 



As at December 31, 2009 and 2008(in millions of Canadian dollars)
    
    Note
    
    
    2009
    
    
    2008AssetsCurrent assetsCash and cash equivalents
    
    
    
    
    
    
    19
    
    
    
    11Accounts receivable
    
    
    
    
    
    
    543
    
    
    
    657Inventories
    
    
    6
    
    
    
    520
    
    
    
    5801,082
    
    
    
    1,248Property, plant and equipment
    
    
    7
    
    
    
    1,912
    
    
    
    2,030Intangible assets
    
    
    8
    (a)
    
    
    165
    
    
    
    149Other assets
    
    
    8
    (a)
    
    
    317
    
    
    
    283Goodwill
    
    
    8
    (b)
    
    
    316
    
    
    
    3213,792
    
    
    
    4,031Liabilities and Shareholders equityCurrent liabilitiesBank loans and advances
    
    
    
    
    
    
    83
    
    
    
    104Accounts payable and accrued liabilities
    
    
    
    
    
    
    505
    
    
    
    586Current portion of long-term debt
    
    
    9
    
    
    
    10
    
    
    
    36598
    
    
    
    726Long-term debt
    
    
    9
    
    
    
    1,459
    
    
    
    1,672Other liabilities
    
    
    10
    
    
    
    431
    
    
    
    3772,488
    
    
    
    2,775Commitment and contingencies
    
    
    17Shareholders equityCapital stock
    
    
    11
    (b)
    
    
    499
    
    
    
    506Contributed surplus
    
    
    
    
    
    
    14
    
    
    
    9Retained earnings
    
    
    
    
    
    
    700
    
    
    
    656Accumulated other comprehensive income
    
    
    19
    
    
    
    91
    
    
    
    851,304
    
    
    
    1,2563,792
    
    
    
    4,031
   (Signature)
    
    (Signature)Alain Lemaire
    
    Robert ChevrierDirector
    
    Director
 CASCADES  ANNUAL REPORT 2009




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##### 



For the three-year period ended December 31, 2009(in millions of Canadian dollars, except per share amounts)
    
    Note
    
    
    2009
    
    
    2008
    
    
    2007Sales
    
    
    
    
    
    
    3,877
    
    
    
    4,017
    
    
    
    3,929Cost of sales and expensesCost of sales (excluding depreciation and amortization)
    
    
    
    
    
    
    2,991
    
    
    
    3,323
    
    
    
    3,201Depreciation and amortization
    
    
    
    
    
    
    218
    
    
    
    213
    
    
    
    207Selling and administrative expenses
    
    
    
    
    
    
    413
    
    
    
    389
    
    
    
    390Losses (gains) on disposal and other
    
    
    12
    
    
    
    1
    
    
    
    5
    
    
    
    (17
    )Impairment and other restructuring costs
    
    
    13
    (a)
    
    
    58
    
    
    
    43
    
    
    
    9Loss (gain) on financial instruments
    
    
    18
    (a)
    
    
    (18
    )
    
    
    28
    
    
    
    (6
    )3,663
    
    
    
    4,001
    
    
    
    3,784Operating income
    
    
    
    
    
    
    214
    
    
    
    16
    
    
    
    145Financing expense
    
    
    15
    (c)
    
    
    101
    
    
    
    102
    
    
    
    102Loss on refinancing of long-term debt
    
    
    
    
    
    
    17
    
    
    
    
    
    
    
    Gain on purchase of senior notes
    
    
    
    
    
    
    (14
    )
    
    
    (2
    )
    
    
    Foreign exchange loss (gain) on long-term debt and financial instruments
    
    
    
    
    
    
    45
    
    
    
    26
    
    
    
    (59
    )65
    
    
    
    (110
    )
    
    
    102Provision for (recovery of) income taxes
    
    
    14
    
    
    
    23
    
    
    
    (32
    )
    
    
    11Share of results of significantly influenced companies and dilution gain
    
    
    
    
    
    
    (17
    )
    
    
    (8
    )
    
    
    (27
    )Non-controlling interest
    
    
    
    
    
    
    (1
    )
    
    
    2
    
    
    
    3Net earnings (loss) from continuing operations
    
    
    
    
    
    
    60
    
    
    
    (72
    )
    
    
    115Net earnings (loss) from discontinued operations
    
    
    4
    
    
    
    
    
    
    
    18
    
    
    
    (19
    )Net earnings (loss) for the year
    
    
    
    
    
    
    60
    
    
    
    (54
    )
    
    
    96Net earnings (loss) from continuing operations per common shareBasic
    
    
    
    
    
    
    0.61
    
    
    
    (0.73
    )
    
    
    1.16Diluted
    
    
    
    
    
    
    0.60
    
    
    
    (0.73
    )
    
    
    1.16Net earnings (loss) per common shareBasic
    
    
    11
    (g)
    
    
    0.61
    
    
    
    (0.55
    )
    
    
    0.96Diluted
    
    
    
    
    
    
    0.60
    
    
    
    (0.55
    )
    
    
    0.96Weighted average number of common shares outstanding during the year
    
    
    
    
    
    
    97,656,412
    
    
    
    98,804,536
    
    
    
    99,329,472
  CASCADES  ANNUAL REPORT 2009




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##### 



For the three-year period ended December 31, 2009(in millions of Canadian dollars)
    
    2009
    
    
    2008
    
    
    2007Net earnings (loss) for the year
    
    
    60
    
    
    
    (54
    )
    
    
    96Other comprehensive Income (loss)Translation adjustmentsChange in foreign currency translation of self-sustaining foreign subsidiaries
    
    
    (128
    )
    
    
    176
    
    
    
    (140
    )Change in foreign currency translation related to hedging activities
    
    
    87
    
    
    
    17
    
    
    
    119Income taxes
    
    
    (12
    )
    
    
    (3
    )
    
    
    (20
    )Cash flow hedgesChange in fair value of foreign exchange forward contracts
    
    
    87
    
    
    
    (88
    )
    
    
    6Change in fair value of interest rate swap agreements
    
    
    
    
    
    
    (1
    )
    
    
    Change in fair value of commodity derivative financial instruments
    
    
    (2
    )
    
    
    3
    
    
    
    3Income taxes
    
    
    (26
    )
    
    
    24
    
    
    
    (3
    )6
    
    
    
    128
    
    
    
    (35
    )Comprehensive income for the year
    
    
    66
    
    
    
    74
    
    
    
    61
  CASCADES  ANNUAL REPORT 2009




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##### 



2009AccumulatedotherFor the three-year period ended December 31, 2009
    
    
    
    
    
    Capital
    
    
    Contributed
    
    
    Retained
    
    
    comprehensive
    
    
    Shareholders(in millions of Canadian dollars)
    
    Note
    
    
    stock
    
    
    surplus
    
    
    earnings
    
    
    income (loss)
    
    
    equityBalanceBeginning of year
    
    
    
    
    
    
    506
    
    
    
    9
    
    
    
    656
    
    
    
    85
    
    
    
    1,256Comprehensive income:Net earnings for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60
    
    
    
    
    
    
    
    60Change in other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    6Comprehensive income for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16
    )
    
    
    
    
    
    
    (16
    )Stock options
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    2Redemption of common shares
    
    
    11
    (c)
    
    
    (7
    )
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    (4
    )BalanceEnd of year
    
    
    
    
    
    
    499
    
    
    
    14
    
    
    
    700
    
    
    
    91
    
    
    
    1,3042008BalanceBeginning of year
    
    
    
    
    
    
    509
    
    
    
    8
    
    
    
    724
    
    
    
    (43
    )
    
    
    1,198Cumulative impact of accounting changes
    
    
    2
    (c)
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    3Balancebeginning of year
    
    
    
    
    
    
    509
    
    
    
    8
    
    
    
    727
    
    
    
    (43
    )
    
    
    1,201Comprehensive income:Net loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (54
    )
    
    
    
    
    
    
    (54
    )Change in other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    128
    
    
    
    128Comprehensive income for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    74Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16
    )
    
    
    
    
    
    
    (16
    )Stock options
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1Redemption of common shares
    
    
    11
    (c)
    
    
    (3
    )
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (4
    )BalanceEnd of year
    
    
    
    
    
    
    506
    
    
    
    9
    
    
    
    656
    
    
    
    85
    
    
    
    1,2562007BalanceBeginning of year
    
    
    
    
    
    
    510
    
    
    
    7
    
    
    
    647
    
    
    
    (8
    )
    
    
    1,156Comprehensive income:Net earnings for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    96
    
    
    
    
    
    
    
    96Change in other comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (35
    )
    
    
    (35
    )Comprehensive income for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    61Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16
    )
    
    
    
    
    
    
    (16
    )Stock options
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    2Redemption of common shares
    
    
    11
    (c)
    
    
    (2
    )
    
    
    
    
    
    
    (3
    )
    
    
    
    
    
    
    (5
    )BalanceEnd of year
    
    
    
    
    
    
    509
    
    
    
    8
    
    
    
    724
    
    
    
    (43
    )
    
    
    1,198
  CASCADES  ANNUAL REPORT 2009




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##### 



For the three-year period ended December 31, 2009(in millions of Canadian dollars)
    
    Note
    
    
    2009
    
    
    2008
    
    
    2007Operating activities from continuing operationsNet earnings (loss) for the year
    
    
    
    
    
    
    60
    
    
    
    (54
    )
    
    
    96Net earnings (loss) from discontinued operations
    
    
    
    
    
    
    
    
    
    
    (18
    )
    
    
    19Net earnings (loss) from continuing operations
    
    
    
    
    
    
    60
    
    
    
    (72
    )
    
    
    115Adjustments forDepreciation and amortization
    
    
    
    
    
    
    218
    
    
    
    213
    
    
    
    207Losses (gains) on disposal and other
    
    
    
    
    
    
    1
    
    
    
    5
    
    
    
    (29
    )Impairment and other restructuring costs
    
    
    
    
    
    
    50
    
    
    
    16
    
    
    
    3Unrealized loss (gain) on financial instruments
    
    
    
    
    
    
    (26
    )
    
    
    27
    
    
    
    Loss on refinancing of long-term debt
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    Gain on purchase of senior notes
    
    
    
    
    
    
    (14
    )
    
    
    (2
    )
    
    
    Foreign exchange loss (gain) on long-term debt andfinancial instruments
    
    
    
    
    
    
    45
    
    
    
    26
    
    
    
    (59
    )Future income taxes
    
    
    
    
    
    
    (7
    )
    
    
    (52
    )
    
    
    (22
    )Share of results of significantly influenced companies and dilution gain
    
    
    
    
    
    
    (17
    )
    
    
    (8
    )
    
    
    (27
    )Non-controlling interest
    
    
    
    
    
    
    (1
    )
    
    
    2
    
    
    
    3Early settlement of natural gas contracts
    
    
    
    
    
    
    
    
    
    
    11
    
    
    
    Others
    
    
    
    
    
    
    (8
    )
    
    
    (11
    )
    
    
    (13
    )305
    
    
    
    155
    
    
    
    178Changes in non-cash working capital components
    
    
    15
    (a)
    
    
    52
    
    
    
    (31
    )
    
    
    (89
    )357
    
    
    
    124
    
    
    
    89Investing activities from continuing operationsPurchases of property, plant and equipment
    
    
    
    
    
    
    (173
    )
    
    
    (184
    )
    
    
    (167
    )Proceeds from disposal of property, plant and equipment
    
    
    
    
    
    
    2
    
    
    
    5
    
    
    
    7Increase in other assets
    
    
    
    
    
    
    (17
    )
    
    
    (4
    )
    
    
    (3
    )Business acquisitions and joint venture disclosure
    
    
    5
    
    
    
    (69
    )
    
    
    5
    
    
    
    (10
    )Business disposals, net of cash disposed
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    37(257
    )
    
    
    (178
    )
    
    
    (136
    )Financing activities from continuing operationsBank loans and advances
    
    
    
    
    
    
    (18
    )
    
    
    20
    
    
    
    7Change in revolving credit facilities
    
    
    
    
    
    
    (250
    )
    
    
    (149
    )
    
    
    100Issuance of senior notes, net of related expenses
    
    
    
    
    
    
    955
    
    
    
    
    
    
    
    Purchase of senior notes
    
    
    
    
    
    
    (779
    )
    
    
    (2
    )
    
    
    Increase in other long-term debt
    
    
    
    
    
    
    27
    
    
    
    2
    
    
    
    Payments of other long-term debt
    
    
    
    
    
    
    (12
    )
    
    
    (5
    )
    
    
    (8
    )Early settlement of foreign exchange contracts
    
    
    
    
    
    
    8
    
    
    
    150
    
    
    
    Net proceeds from issuances of common shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Dividend paid to a non-controlling interest
    
    
    
    
    
    
    
    
    
    
    (5
    )
    
    
    Redemption of common shares
    
    
    11
    (c)
    
    
    (4
    )
    
    
    (4
    )
    
    
    (5
    )Dividends
    
    
    
    
    
    
    (16
    )
    
    
    (16
    )
    
    
    (16
    )(89
    )
    
    
    (9
    )
    
    
    79Change in cash and cash equivalents during the year from continuing operations
    
    
    
    
    
    
    11
    
    
    
    (63
    )
    
    
    32Change in cash and cash equivalents from discontinued operations, including
proceeds on disposal
    
    
    4
    
    
    
    (3
    )
    
    
    50
    
    
    
    (40
    )Net change in cash and cash equivalents during the year
    
    
    
    
    
    
    8
    
    
    
    (13
    )
    
    
    (8
    )Translation adjustments on cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    (1
    )Cash and cash equivalentsBeginning of year
    
    
    
    
    
    
    11
    
    
    
    25
    
    
    
    34Cash and cash equivalentsEnd of year
    
    
    
    
    
    
    19
    
    
    
    11
    
    
    
    25
  CASCADES  ANNUAL REPORT 2009




---



##### 



For the three-year period ended December 31, 2009
    
    SALES(in millions of Canadian dollars)
    
    2009
    
    
    2008
    
    
    2007Packaging productsBoxboardManufacturing
    
    
    706
    
    
    
    743
    
    
    
    780Converting
    
    
    692
    
    
    
    677
    
    
    
    691Intersegment sales
    
    
    (85
    )
    
    
    (97
    )
    
    
    (128
    )1,313
    
    
    
    1,323
    
    
    
    1,343ContainerboardManufacturing
    
    
    517
    
    
    
    615
    
    
    
    599Converting
    
    
    887
    
    
    
    962
    
    
    
    984Intersegment sales
    
    
    (342
    )
    
    
    (374
    )
    
    
    (390
    )1,062
    
    
    
    1,203
    
    
    
    1,193Specialty productsManufacturing
    
    
    332
    
    
    
    315
    
    
    
    318Converting
    
    
    243
    
    
    
    267
    
    
    
    232Recovery and deinked pulp
    
    
    270
    
    
    
    376
    
    
    
    374Intersegment sales
    
    
    (76
    )
    
    
    (98
    )
    
    
    (90
    )769
    
    
    
    860
    
    
    
    834Intersegment sales
    
    
    (67
    )
    
    
    (100
    )
    
    
    (108
    )3,077
    
    
    
    3,286
    
    
    
    3,262Tissue papersManufacturing and converting
    
    
    840
    
    
    
    787
    
    
    
    713Intersegment sales
    
    
    (40
    )
    
    
    (56
    )
    
    
    (46
    )Total
    
    
    3,877
    
    
    
    4,017
    
    
    
    3,929
 CASCADES  ANNUAL REPORT 2009




---



##### 



OPERATING INCOME (LOSS) BEFOREFor the three-year period ended December 31, 2009
    
    DEPRECIATION AND AMORTIZATION(in millions of Canadian dollars)
    
    2009
    
    
    2008
    
    
    2007Packaging productsBoxboardManufacturing
    
    
    48
    
    
    
    (40
    )
    
    
    (3
    )Converting
    
    
    59
    
    
    
    50
    
    
    
    76Others
    
    
    (40
    )
    
    
    (13
    )
    
    
    (4
    )67
    
    
    
    (3
    )
    
    
    69ContainerboardManufacturing
    
    
    91
    
    
    
    57
    
    
    
    59Converting
    
    
    56
    
    
    
    53
    
    
    
    76Others
    
    
    (2
    )
    
    
    (7
    )
    
    
    17145
    
    
    
    103
    
    
    
    152Specialty productsManufacturing
    
    
    34
    
    
    
    10
    
    
    
    6Converting
    
    
    25
    
    
    
    30
    
    
    
    26Recovery and deinked pulp
    
    
    15
    
    
    
    24
    
    
    
    25Others
    
    
    
    
    
    
    
    
    
    
    274
    
    
    
    64
    
    
    
    59286
    
    
    
    164
    
    
    
    280Tissue papersManufacturing and converting
    
    
    153
    
    
    
    89
    
    
    
    66Corporate
    
    
    (7
    )
    
    
    (24
    )
    
    
    6Operating income before depreciation and amortization
    
    
    432
    
    
    
    229
    
    
    
    352Depreciation and amortizationBoxboard
    
    
    (75
    )
    
    
    (72
    )
    
    
    (67
    )Containerboard
    
    
    (63
    )
    
    
    (63
    )
    
    
    (68
    )Specialty products
    
    
    (34
    )
    
    
    (33
    )
    
    
    (31
    )Tissue papers
    
    
    (37
    )
    
    
    (35
    )
    
    
    (35
    )Corporate and eliminations
    
    
    (9
    )
    
    
    (10
    )
    
    
    (6
    )(218
    )
    
    
    (213
    )
    
    
    (207
    )Operating income
    
    
    214
    
    
    
    16
    
    
    
    145
 CASCADES  ANNUAL REPORT 2009




---



##### 



For the three-year period ended December 31, 2009
    
    PURCHASES OF PROPERTY, PLANT AND EQUIPMENT(in millions of Canadian dollars)
    
    2009
    
    
    2008
    
    
    2007Packaging productsBoxboardManufacturing
    
    
    30
    
    
    
    21
    
    
    
    23Converting
    
    
    28
    
    
    
    36
    
    
    
    3658
    
    
    
    57
    
    
    
    59ContainerboardManufacturing
    
    
    15
    
    
    
    17
    
    
    
    16Converting
    
    
    16
    
    
    
    21
    
    
    
    1431
    
    
    
    38
    
    
    
    30Specialty productsManufacturing
    
    
    7
    
    
    
    9
    
    
    
    9Converting
    
    
    7
    
    
    
    4
    
    
    
    10Recovery, deinked pulp and others
    
    
    18
    
    
    
    28
    
    
    
    732
    
    
    
    41
    
    
    
    26121
    
    
    
    136
    
    
    
    115Tissue papersManufacturing and converting
    
    
    31
    
    
    
    37
    
    
    
    52Corporate
    
    
    20
    
    
    
    8
    
    
    
    7Total
    
    
    172
    
    
    
    181
    
    
    
    174Purchases of property, plant and equipment included in accounts payableBeginning of year
    
    
    14
    
    
    
    17
    
    
    
    10End of year
    
    
    (13
    )
    
    
    (14
    )
    
    
    (17
    )Total investing activities
    
    
    173
    
    
    
    184
    
    
    
    167
  As at December 31, 2009 and 2008
    
    IDENTIFIABLE ASSETS(in millions of Canadian dollars)
    
    2009
    
    
    2008Packaging productsBoxboard
    
    
    932
    
    
    
    1,123Containerboard
    
    
    1,343
    
    
    
    1,446Specialty products
    
    
    584
    
    
    
    5782,859
    
    
    
    3,147Tissue papers
    
    
    619
    
    
    
    579Corporate
    
    
    167
    
    
    
    280Intersegment eliminations
    
    
    (20
    )
    
    
    (135
    )3,625
    
    
    
    3,871Investments1
    
    
    167
    
    
    
    160Total
    
    
    3,792
    
    
    
    4,031
 
 1
    
    Investments include investments in significantly influenced companies, notes receivable,
other investments, investments in shares and held for trading. CASCADES  ANNUAL REPORT 2009




---



##### 



For three-year period ended December 31, 2009(in millions of Canadian dollars)
    
    2009
    
    
    2008
    
    
    2007SalesOperations located in CanadaWithin Canada
    
    
    1,454
    
    
    
    1,479
    
    
    
    1,476To the United States
    
    
    493
    
    
    
    552
    
    
    
    559Offshore
    
    
    40
    
    
    
    60
    
    
    
    381,987
    
    
    
    2,091
    
    
    
    2,073Operations located in the United StatesWithin the United States
    
    
    1,283
    
    
    
    1,260
    
    
    
    1,229To Canada
    
    
    58
    
    
    
    77
    
    
    
    53Offshore
    
    
    2
    
    
    
    2
    
    
    
    11,343
    
    
    
    1,339
    
    
    
    1,283Operations located in other countriesWithin Europe
    
    
    497
    
    
    
    537
    
    
    
    536Other countries
    
    
    50
    
    
    
    50
    
    
    
    37547
    
    
    
    587
    
    
    
    573Total
    
    
    3,877
    
    
    
    4,017
    
    
    
    3,929
 As at December 31, 2009 and 2008(in millions of Canadian dollars)
    
    2009
    
    
    2008Property, plant and equipmentCanada
    
    
    1,198
    
    
    
    1,208United States
    
    
    499
    
    
    
    591Other countries
    
    
    215
    
    
    
    231Total
    
    
    1,912
    
    
    
    2,030
 As at December 31, 2009 and 2008(in millions of Canadian dollars)
    
    2009
    
    
    2008Goodwill, customer relationships and client lists and other finite-life intangible assetsCanada
    
    
    364
    
    
    
    332United States
    
    
    97
    
    
    
    115Other countries
    
    
    20
    
    
    
    23Total
    
    
    481
    
    
    
    470
 CASCADES  ANNUAL REPORT 2009




---



##### 



Note 1
            Held for trading
  CASCADES  ANNUAL REPORT 2009




---



##### 



Held to maturity
  Available for sale
  Loans and receivables
  Other liabilities
  Derivatives
   Embedded derivatives
  Transaction costs
  Determination of fair value
  Hedging
      CASCADES  ANNUAL REPORT 2009




---



##### 



CASCADES  ANNUAL REPORT 2009




---



##### 



CASCADES  ANNUAL REPORT 2009




---



##### 



Note 2
   a) Credit risk and the fair value of financial assets and financial liabilities
  b) Financial instrumentsdisclosures
   c) Inventories
  d) Going concern
  e) Goodwill and intangible assets
   f) Business combinations
  g) Consolidated financial statements and non-controlling interests
  h) Accounting changes
  CASCADES  ANNUAL REPORT 2009




---



##### 



i) Financial instrumentsrecognition and measurement
  Note 3
 a) Goodwill
     b) Property, plant and equipment and intangible assets
     c) Income taxes
  CASCADES  ANNUAL REPORT 2009




---



##### 



Note 4
   Note
    
    
    2008
    
    
    2007Condensed balance sheetCurrent assets
    
    
    
    
    
    
    
    
    
    
    37Long-term assets
    
    
    
    
    
    
    
    
    
    
    14Current liabilities
    
    
    
    
    
    
    
    
    
    
    19Condensed statement of earnings (loss)Sales
    
    
    
    
    
    
    8
    
    
    
    104Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    1Operating income (loss)1
    
    
    
    
    
    
    22
    
    
    
    (20
    )Financing expense
    
    
    
    
    
    
    1
    
    
    
    4Provision for (recovery of) income taxes
    
    
    
    
    
    
    3
    
    
    
    (5
    )Net earnings (loss) from discontinued operations
    
    
    
    
    
    
    18
    
    
    
    (19
    )Net earnings (loss) per share from discontinued operations
    
    
    
    
    
    
    0.18
    
    
    
    (0.20
    )Condensed statement of cash flowsOperating activities
    
    
    
    
    
    
    2
    
    
    
    (36
    )Investing activities
    
    
    (a
    )
    
    
    47
    
    
    
    (2
    )Financing activities
    
    
    
    
    
    
    1
    
    
    
    (2
    )50
    
    
    
    (40
    )
 
 1
    
    Operating income (loss) includes in particular the following items: Note
    
    
    2008
    
    
    2007Gain on disposal of assets of Greenfield SAS
    
    
    (a
    )
    
    
    24
    
    
    
    Closure and restructuring costs
    
    
    (b
    )
    
    
    (1
    )
    
    
    1Impairment of property, plant and equipment
    
    
    (b
    )
    
    
    
    
    
    
    (4
    )Legal settlement
    
    
    (c
    )
    
    
    
    
    
    
    (1
    )Loss on disposal of Thunder Bay assets
    
    
    (d
    )
    
    
    
    
    
    
    (5
    )23
    
    
    
    (9
    )
 
 a)
    
    In 2008, the Company sold its Greenfield SAS pulp mill located in France for $41 million
(28 million). This transaction resulted in a gain of $24 million before related income taxes
of $4 million. The Company also sold the assets of its Scierie Lemay sawmill for a cash
consideration of $6 million and a contingent consideration of $2 million. No gain or loss
resulted from this transaction.b)
    
    In 2007, the Company recorded a gain of $6 million related to the settlement of the pension
plan of the Thunder Bay coated fine paper mill, closed in January 2006. The Company also
recorded an impairment charge of $4 million in 2007 on property, plant and equipment and other
assets, and severance and inventory writedown provisions of $1 million in 2008
(2007$5 million) related to its Scierie Lemay sawmill temporarily closed in 2006.c)
    
    In 2003, the Company was informed that Cascades Resources was the subject of an enquiry by
the Canadian Commissioner of Competition as to whether this division and its competitors had
colluded to unduly reduce market competition among paper merchants in Canada. On January 9,
2006, the Company entered a guilty plea in Ontario Superior Court relating to sales of
carbonless sheet paper in Ontario and Québec. Pursuant to the plea, the Company has agreed to
pay a total of $12.5 million in equal installments over a period of six and a half years. In
2007, the Company recorded a provision of $1 million related to the settlement of the class
actions filed following the infraction.d)
    
    In 2007, the Company sold its coated fine paper mill located in Thunder Bay, Ontario, which
resulted in a disbursement of $5 million. Note 5
 a) 2009 Acquisitions
    CASCADES  ANNUAL REPORT 2009




---



##### 



b) 2007 Acquisitions
    2009AtlanticACQUIRED COMPANY
    
    
    Others
    
    
    PackagingSpecialty
    
    
    TissueBUSINESS SEGMENT
    
    
    Products
    
    
    Papers
    
    
    TotalAccounts receivable
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    1Inventories
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    5Property, plant and equipment
    
    
    
    
    
    
    3
    
    
    
    44
    
    
    
    47Other assets
    
    
    
    
    
    
    
    
    
    
    29
    
    
    
    29Customer relationships and client lists
    
    
    
    
    
    
    5
    
    
    
    1
    
    
    
    69
    
    
    
    79
    
    
    
    88Accounts payable and accrued liabilities
    
    
    
    
    
    
    (1
    )
    
    
    (2
    )
    
    
    (3
    )Other liabilities
    
    
    
    
    
    
    
    
    
    
    (11
    )
    
    
    (11
    )8
    
    
    
    66
    
    
    
    74Less: Balance of purchase price
    
    
    
    
    
    
    
    
    
    
    (5
    )
    
    
    (5
    )Total consideration paid
    
    
    
    
    
    
    8
    
    
    
    61
    
    
    
    69
 2007ACQUIRED COMPANY
    
    
    HPM
    
    
    NorampacSpecialtyBUSINESS SEGMENT
    
    
    Products
    
    
    Containerboard
    
    
    TotalAccounts receivable
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    1Inventories
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    1Property, plant and equipment
    
    
    
    
    
    
    2
    
    
    
    (57
    )
    
    
    (55
    )Customer relationships and client lists
    
    
    
    
    
    
    5
    
    
    
    45
    
    
    
    50Goodwill
    
    
    
    
    
    
    2
    
    
    
    14
    
    
    
    1611
    
    
    
    2
    
    
    
    13Accounts payable and accrued liabilities
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    (1
    )Other liabilities
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    2Non-controlling interest
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    (3
    )11
    
    
    
    
    
    
    
    11Less: Balance of purchase price
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )Total consideration paid
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    10
 c) 2007 Disposals
  BUSINESS SEGMENT
    
    
    BoxboardAccounts receivable
    
    
    
    
    
    
    2Inventories
    
    
    
    
    
    
    4Property, plant and equipment
    
    
    
    
    
    
    2Goodwill
    
    
    
    
    
    
    614Accounts payable and accrued liabilities
    
    
    
    
    
    
    (2
    )12Gain on disposal
    
    
    
    
    
    
    25Total consideration received, net of cash disposed
    
    
    
    
    
    
    37
 CASCADES  ANNUAL REPORT 2009




---



##### 



Note 6
 2009
    
    
    2008Finished goods
    
    
    244
    
    
    
    261Raw materials
    
    
    124
    
    
    
    150Supplies
    
    
    152
    
    
    
    169520
    
    
    
    580
   Note 7
 2009
    
    
    2008Accumulated
    
    
    
    
    
    
    
    
    
    
    AccumulatedCost
    
    
    depreciation
    
    
    Net
    
    
    Cost
    
    
    depreciation
    
    
    NetLands
    
    
    96
    
    
    
    
    
    
    
    96
    
    
    
    87
    
    
    
    
    
    
    
    87Buildings
    
    
    555
    
    
    
    179
    
    
    
    376
    
    
    
    538
    
    
    
    170
    
    
    
    368Machinery and equipment
    
    
    2,743
    
    
    
    1,447
    
    
    
    1,296
    
    
    
    2,740
    
    
    
    1,380
    
    
    
    1,360Automotive equipment
    
    
    64
    
    
    
    48
    
    
    
    16
    
    
    
    66
    
    
    
    48
    
    
    
    18Spare parts
    
    
    9
    
    
    
    2
    
    
    
    7
    
    
    
    9
    
    
    
    2
    
    
    
    7Others
    
    
    282
    
    
    
    161
    
    
    
    121
    
    
    
    385
    
    
    
    195
    
    
    
    1903,749
    
    
    
    1,837
    
    
    
    1,912
    
    
    
    3,825
    
    
    
    1,795
    
    
    
    2,030
   CASCADES  ANNUAL REPORT 2009




---



##### 



Note 8
 a)
    
    Intangible and other assets are detailed as follows:
 2009
    
    
    2008Accumulated
    
    
    
    
    
    
    
    
    
    
    AccumulatedCost
    
    
    amortization
    
    
    Net
    
    
    Cost
    
    
    amortization
    
    
    NetIntangible assetsCustomer relationships and client lists
    
    
    160
    
    
    
    36
    
    
    
    124
    
    
    
    162
    
    
    
    26
    
    
    
    136Other finite-life intangible assets
    
    
    49
    
    
    
    8
    
    
    
    41
    
    
    
    16
    
    
    
    3
    
    
    
    13209
    
    
    
    44
    
    
    
    165
    
    
    
    178
    
    
    
    29
    
    
    
    149
 Note
    
    
    2009
    
    
    2008Investments in significantly influenced companies 1
    
    
    
    
    
    
    148
    
    
    
    147Notes receivable
    
    
    
    
    
    
    9
    
    
    
    8Other investments
    
    
    
    
    
    
    7
    
    
    
    3Investment in shares held for trading
    
    
    
    
    
    
    3
    
    
    
    2Deferred financing costs
    
    
    
    
    
    
    7
    
    
    
    5Tax benefit related to investment tax credit
    
    
    
    
    
    
    29
    
    
    
    Employee future benefits
    
    
    16
    (b)
    
    
    97
    
    
    
    97Fair value of derivative financial assets
    
    
    
    
    
    
    19
    
    
    
    13Other
    
    
    
    
    
    
    12
    
    
    
    9331
    
    
    
    284Less: Current portion, included in accounts receivable
    
    
    
    
    
    
    14
    
    
    
    1Total other assets
    
    
    
    
    
    
    317
    
    
    
    283
 
 1
    
    Investments in significantly influenced companies include a 34% interest in Boralex Inc.
for a net book value of $114 million and a market value of $125 million (2008$121 million
and $97 million respectively). In 2009, the Companys share of results of Boralex includes a
net dilution gain of $4 million and a net impairment charge of $1 million (2008 nil and nil,
respectively; 2007$15 million and nil respectively). b)
    
    Goodwill fluctuated as follows:
 2009Packaging Products
    
    
    Tissue PapersSpecialtyBoxboard
    
    
    Containerboard
    
    
    Products
    
    
    Sub-total
    
    
    
    
    
    
    TotalCarrying value of goodwillBeginning of year
    
    
    25
    
    
    
    270
    
    
    
    16
    
    
    
    311
    
    
    
    10
    
    
    
    321Foreign currency translation and others
    
    
    (3
    )
    
    
    (2
    )
    
    
    
    
    
    
    (5
    )
    
    
    
    
    
    
    (5
    )Carrying value of goodwillEnd of year
    
    
    22
    
    
    
    268
    
    
    
    16
    
    
    
    306
    
    
    
    10
    
    
    
    316
 2008Packaging Products
    
    
    Tissue PapersSpecialtyBoxboard
    
    
    Containerboard
    
    
    Products
    
    
    Sub-total
    
    
    
    
    
    
    TotalCarrying value of goodwillBeginning of year
    
    
    27
    
    
    
    260
    
    
    
    15
    
    
    
    302
    
    
    
    10
    
    
    
    312Impairment
    
    
    (8
    )
    
    
    
    
    
    
    
    
    
    
    (8
    )
    
    
    
    
    
    
    (8
    )Foreign currency translation
    
    
    6
    
    
    
    10
    
    
    
    1
    
    
    
    17
    
    
    
    
    
    
    
    17Carrying value of goodwillEnd of year
    
    
    25
    
    
    
    270
    
    
    
    16
    
    
    
    311
    
    
    
    10
    
    
    
    321
 c)
    
    Amortization of intangible and other assets, including amortization of deferred financing
costs, amounted to $19 million for the year ended December 31, 2009 (2008$14 million;
2007$12 million). Amortization of deferred financing costs is presented in financing expense.The weighted average amortization period is as follows (in number of years):
 Intangible assetsCustomer relationships and client lists
    
    
    16Other finite-life intangible assets
    
    
    8Deferred financing costs
    
    
    4Other
    
    
    6
 CASCADES  ANNUAL REPORT 2009




---



##### 



The estimated aggregate amount of amortization expense for other intangible assets and
other assets in each of the next five years is as follows:
 Years ending December 31,2010
    
    
    262011
    
    
    252012
    
    
    192013
    
    
    152014
    
    
    14
 Note 9
 Maturity
    
    
    Note
    
    
    2009
    
    
    2008Revolving credit facility, weighted average rate of 3.39% as at December 31, 2009
    
    
    2011
    
    
    
    (a
    )
    
    
    159
    
    
    
    427Term credit facility, bearing interest at 3.35% as at December 31, 2009
    
    
    2012
    
    
    
    (a
    )
    
    
    100
    
    
    
    1007.25% Unsecured senior notes of US$116 million (2008US$672 million)
    
    
    2013
    
    
    
    (b
    )
    
    
    122
    
    
    
    8236.75% Unsecured senior notes of US$61 million (2008US$250 million)
    
    
    2013
    
    
    
    (c
    )
    
    
    63
    
    
    
    3067.75% Unsecured senior notes of $200 million
    
    
    2016
    
    
    
    (c
    )
    
    
    197
    
    
    
    7.75% Unsecured senior notes of US$500 million
    
    
    2017
    
    
    
    (c
    )
    
    
    516
    
    
    
    7.875% Unsecured senior notes of US$250 million
    
    
    2020
    
    
    
    (c
    )
    
    
    257
    
    
    
    Other debts of subsidiaries
    
    
    
    
    
    
    (g
    )
    
    
    33
    
    
    
    16Other debts without recourse to the Company
    
    
    
    
    
    
    
    
    
    
    42
    
    
    
    471,489
    
    
    
    1,719Less: Unamortized financing costs
    
    
    
    
    
    
    
    
    
    
    20
    
    
    
    11Total long-term debt
    
    
    
    
    
    
    
    
    
    
    1,469
    
    
    
    1,708Less:Current portion of debts of subsidiaries
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    2Current portion of debts without recourse to the Company
    
    
    
    
    
    
    (f
    )
    
    
    4
    
    
    
    3410
    
    
    
    361,459
    
    
    
    1,672
 
 a)
    
    On February 13, 2009, the Company entered into an agreement to amend its existing bank
credit agreement. Under the terms of the amendment, the existing financial covenants, namely
the maximum funded debt to capitalization ratio of 65% and the minimum interest coverage of
2.25x, will remain unchanged until maturity. As a result of the amendment, the interest rate
applicable to borrowings outstanding was increased. The amendment also cancels the unsecured
revolving credit facility in the amount of $100 million which was originally scheduled to
terminate in June 2009.As at December 31, 2009, accounts receivable and inventories totaling approximately $729 million
(2008$825 million) as well as property, plant and equipment totaling approximately $197 million
(2008$208 million) were pledged as collateral for the Companys revolving credit facility.b)
    
    In 2009, the Company purchased US$26 million (2008US$3 million) of nominal value of its
7.25% unsecured senior notes for an amount of US$15 million (2008US$2 million). These notes
were not cancelled. The gain resulting from the difference between the nominal value and the
amount paid has been recorded in earnings.c)
    
    On November 19, 2009, the Company issued US$500 million aggregate principal amount of 7.75%
senior notes due 2017 and CAN$200 million aggregate principal amount of 7.75% senior notes due
2016. The US dollar Notes were issued at a price of 98.534% of their principal amount and the
Canadian dollar Notes were issued at a price of 98.670% of their principal amount, both
resulting in an effective yield of 8%. On December 9, 2009, the Company also completed a
US$250 million aggregate principal amount of 7.875% senior notes due 2020. These Notes were
issued at a price of 98.293% of their principal amount to yield 8.125%.The Company used the gross proceeds from these offerings of Notes to fund the purchase pursuant
to its tender offer its outstanding senior notes maturing in 2013 which were cancelled. The
Company used the remaining proceeds of the offerings to pay fees and expenses in connection with
the offerings and the tender offer and to reduce indebtedness outstanding under the revolving
portion of its credit facility.As of December 31, 2009, the Company has purchased, for a total consideration of US$732 million
including a premium of US$13 million, a total of US$530 million aggregate principal amount of
7.25% Notes and US$189 million aggregate principal amount of 6.75% Notes due 2013, leaving
outstanding approximately US$116 million aggregate principal amount of 7.25% Notes and
US$61 million aggregate principal amount of 6.75% Notes.As of March 15, 2010, the Company has purchased, for a total consideration of US$158 million,
including a premium of US$3 million, a total of US$106 million aggregate principal amount of
7.25% Notes and US$49 million aggregate principal amount of 6.75% Notes due 2013. Approximately
US$10 million aggregate principal amount of 7.25% Notes and approximately US$12 million aggregate
principal amount of 6.75% Notes remain outstanding.d)
    
    As at December 31, 2009, the long-term debt included amounts denominated in foreign
currencies of US$974 million and 55 million (December 31, 2008US$1,035 million and
75 million). CASCADES  ANNUAL REPORT 2009




---



##### 



e)
    
    The estimated aggregate amounts of repayments on long-term debt in each of the next five
years are as follows: Years ending December 31,2010
    
    
    102011
    
    
    1732012
    
    
    1212013
    
    
    1932014
    
    
    8Thereafter
    
    
    984
 
 f)
    
    As at December 31, 2008, Reno De Medici S.p.A. (RdM) was not in compliance with certain
contractual obligations under two loans signed in 2006 with its lenders. As a result, the
long-term debt in the amount of $32 million (19 million) is presented in the current portion.
In 2009, RdM resolved this matter with its lenders.g)
    
    In 2009 a 73% -owned subsidiary of the Company (Metro Waste) completed a long-term financing
for its activities and repaid the temporary loan that had been provided in 2008. During the
second quarter of 2009, the Company provided a limited quarantee for this financing, for a
maximum amount of $10 millions. Note 10
 Note
    
    
    2009
    
    
    2008Employee future benefits
    
    
    16
    (b)
    
    
    121
    
    
    
    124Future income taxes
    
    
    14
    (c)
    
    
    209
    
    
    
    199Fair value of derivative financial liabilities
    
    
    18.3
    
    
    
    60
    
    
    
    43Non-controlling interest
    
    
    
    
    
    
    21
    
    
    
    22Other
    
    
    
    
    
    
    34
    
    
    
    25445
    
    
    
    413Less: Current portion, included in accounts payable and accrued liabilities
    
    
    
    
    
    
    14
    
    
    
    36Total other liabilities
    
    
    
    
    
    
    431
    
    
    
    377
 Note 11
 a) Capital risk management
  2009
    
    
    2008Cash and cash equivalents
    
    
    (19
    )
    
    
    (11
    )Bank loans and advances
    
    
    83
    
    
    
    104Long-term debt, including current portion
    
    
    1,469
    
    
    
    1,7081,533
    
    
    
    1,801Shareholders equity
    
    
    1,304
    
    
    
    1,256Total capital
    
    
    2,837
    
    
    
    3,057
  
    
    to safeguard its ability to continue as a going concern in order to provide returns
to shareholders;
    
    to maintain an optimal capital structure and reduce the cost of capital;
    
    to make proper capital investments that are significant to ensure the Company
remains competitive;
    
    to redeem common shares based on an annual redemption program.
   CASCADES  ANNUAL REPORT 2009




---



##### 



b) Issued and outstanding
  2009
    
    
    2008Number
    
    
    
    
    
    
    NumberNote
    
    
    of shares
    
    
    $
    
    
    of shares
    
    
    $BalanceBeginning of year
    
    
    
    
    
    
    98,548,851
    
    
    
    506
    
    
    
    99,144,351
    
    
    
    509Redemption of common shares
    
    
    (c
    )
    
    
    (1,340,318
    )
    
    
    (7
    )
    
    
    (595,500
    )
    
    
    (3
    )BalanceEnd of year
    
    
    
    
    
    
    97,208,533
    
    
    
    499
    
    
    
    98,548,851
    
    
    
    506
 c) Redemption of common shares
  d) Employee stock options
   2009
    
    
    2008
    
    
    2007Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    
    average
    
    
    
    
    
    
    averageNumber
    
    
    exercise price
    
    
    Number
    
    
    exercise price
    
    
    Number
    
    
    exercise priceof options
    
    
    $
    
    
    of options
    
    
    $
    
    
    of options
    
    
    $Beginning of year
    
    
    2,903,506
    
    
    
    10.61
    
    
    
    2,459,056
    
    
    
    11.28
    
    
    
    2,315,391
    
    
    
    11.14Granted
    
    
    2,168,095
    
    
    
    2.65
    
    
    
    539,384
    
    
    
    7.81
    
    
    
    422,068
    
    
    
    11.83Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (103,397
    )
    
    
    7.76Forfeited
    
    
    (188,398
    )
    
    
    12.12
    
    
    
    (94,934
    )
    
    
    12.00
    
    
    
    (175,006
    )
    
    
    12.78Expired
    
    
    (279,608
    )
    
    
    8.22
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    End of year
    
    
    4,603,595
    
    
    
    6.93
    
    
    
    2,903,506
    
    
    
    10.61
    
    
    
    2,459,056
    
    
    
    11.28Options exercisableEnd of year
    
    
    1,907,130
    
    
    
    11.03
    
    
    
    31,496
    
    
    
    8.29
    
    
    
    31,496
    
    
    
    8.29
 CASCADES  ANNUAL REPORT 2009




---



##### 



Options outstanding
    
    
    Options exercisableWeighted
    
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    
    averageNumber
    
    
    exercise price
    
    
    Number
    
    
    exercise price
    
    
    ExpirationYear granted
    
    of options
    
    
    $
    
    
    of options
    
    
    $
    
    
    date2000
    
    
    29,726
    
    
    
    8.05
    
    
    
    29,726
    
    
    
    8.05
    
    
    
    20102001
    
    
    263,550
    
    
    
    6.82
    
    
    
    263,550
    
    
    
    6.82
    
    
    
    20112002
    
    
    160,515
    
    
    
    13.24
    
    
    
    160,515
    
    
    
    13.24
    
    
    
    20122003
    
    
    180,532
    
    
    
    13.04
    
    
    
    180,532
    
    
    
    13.04
    
    
    
    20132004
    
    
    288,891
    
    
    
    13.01
    
    
    
    288,891
    
    
    
    13.01
    
    
    
    20142005
    
    
    280,999
    
    
    
    12.73
    
    
    
    280,999
    
    
    
    12.73
    
    
    
    20152006
    
    
    336,315
    
    
    
    11.49
    
    
    
    252,225
    
    
    
    11.49
    
    
    
    20162007
    
    
    362,579
    
    
    
    11.83
    
    
    
    181,282
    
    
    
    11.83
    
    
    
    20172008
    
    
    532,393
    
    
    
    7.81
    
    
    
    133,100
    
    
    
    7.81
    
    
    
    20182009
    
    
    2,031,785
    
    
    
    2.28
    
    
    
    
    
    
    
    
    
    
    
    20192009
    
    
    136,310
    
    
    
    8.14
    
    
    
    136,310
    
    
    
    8.14
    
    
    
    20124,603,595
    
    
    
    
    
    
    
    1,907,130
  2009
    
    
    2008
    
    
    2007Risk-free interest rate
    
    
    2.2
    %
    
    
    4.1
    %
    
    
    4.2
    %Expected dividend yield
    
    
    4.31
    %
    
    
    2.14
    %
    
    
    1.37
    %Expected life of options
    
    7 years
    
    6 years
    
    6 yearsExpected volatility
    
    
    41
    %
    
    
    24
    %
    
    
    24
    %Weighted average fair value of issued options
    
    $
    1.39
    
    
    $
    1.73
    
    
    $
    3.22
 e) Share purchase plan
   f) Deferred share unit plan
   g) Earning per share
  2009
    
    
    2008
    
    
    2007Net earnings (loss) available to common shareholders
    
    
    60
    
    
    
    (54
    )
    
    
    96Weighted average number of common shares
    
    
    97.7
    
    
    
    98.8
    
    
    
    99.3Dilution effect of stock options
    
    
    1.2
    
    
    
    
    
    
    
    Adjusted weighted average number of common shares
    
    
    98.9
    
    
    
    98.8
    
    
    
    99.3Basic net earnings (loss) per common share
    
    
    0.61
    
    
    
    (0.55
    )
    
    
    0.96Diluted net earnings (loss) per common share
    
    
    0.60
    
    
    
    (0.55
    )
    
    
    0.96
  CASCADES  ANNUAL REPORT 2009




---



##### 



Note 12
 a)
    
    Other gains and losses are detailed as follows:
 Note
    
    
    2009
    
    
    2008
    
    
    2007Loss on a contribution to a joint venture
    
    
    (d
    )
    
    
    
    
    
    
    5
    
    
    
    Losses (gains) on disposal of property, plant and equipment and other assets
    
    
    (b), (e), (f), (g
    )
    
    
    (2
    )
    
    
    
    
    
    
    6Legal settlement
    
    
    (h
    )
    
    
    
    
    
    
    
    
    
    
    2Gain on business disposal
    
    
    5 (c
    )
    
    
    
    
    
    
    
    
    
    
    (25
    )Pension planpartial curtailment
    
    
    (c
    )
    
    
    3
    
    
    
    
    
    
    
    1
    
    
    
    5
    
    
    
    (17
    )
 
 b)
    
    In 2009, the Company recorded a gain of $2 million on disposal of assets in the Specialty
Products group for a mill in Europe that had been closed in 2006.c)
    
    In 2009, the Company recorded a $3 million charge that was incurred to settle a partial
curtailment of one of its employee future benefit pension plans.d)
    
    In 2008, the Company recorded a loss of $5 million upon the formation of its interest
venture RdM.e)
    
    On May 1, 2007, the Company sold the building of its Toronto (Pickering) tissue converting
facility, closed in 2005, for an amount of $7 million. The Company realized a gain of
$1 million.f)
    
    In 2007, the Company completed the sale of its Red Rock linerboard mill located in Ontario
which had been indefinitely shut down. The agreement resulted in the Company paying the
purchaser $10 million. An amount of $5 million was paid in 2007. The remaining $5 million will
be paid when the purchaser will perform work on environmental issues identified at the time
of sale.g)
    
    In 2007, the Company sold an investment in a privately held company affiliated to a related
director for a cash consideration and a gain of $3 million.h)
    
    In 2007, the Company recorded a provision of $2 million as a settlement related to the action
filed by ServiceCore, Inc. Note 13
             CASCADES  ANNUAL REPORT 2009




---



##### 



2009
    
    
    2008
    
    
    2007Closure and
    
    
    
    
    
    
    Closure and
    
    
    
    
    
    
    Closure andrestructuring
    
    
    
    
    
    
    restructuring
    
    
    
    
    
    
    restructuringImpairment
    
    
    costs
    
    
    Impairment
    
    
    costs
    
    
    Impairment
    
    
    costsBoxboardToronto
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    6
    
    
    
    
    
    
    
    BoxboardCorporate
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    
    
    
    
    BoxboardFjordcell
    
    
    37
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    BoxboardDopaco (Bakersfield)
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    BoxboardEurope (La Rochette)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    BoxboardRdM (Blendecques)
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    3
    
    
    
    
    
    
    
    BoxboardGoodwill (manufacturing)
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    ContainerboardRed Rock and others
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    6
    
    
    
    3
    
    
    
    5ContainerboardConverting
    
    
    4
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Specialty products
    
    
    2
    
    
    
    
    
    
    
    2
    
    
    
    1
    
    
    
    
    
    
    
    1Tissue
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    46
    
    
    
    12
    
    
    
    16
    
    
    
    27
    
    
    
    3
    
    
    
    6
  2009
    
    
    2008
    
    
    2007BalanceBeginning of year
    
    
    22
    
    
    
    19
    
    
    
    47Additional provisionsSeverance and pension liability
    
    
    11
    
    
    
    26
    
    
    
    7Writedown of inventories
    
    
    
    
    
    
    
    
    
    
    4Others
    
    
    1
    
    
    
    1
    
    
    
    16Non-monetary itemsWritedown of inventories
    
    
    
    
    
    
    
    
    
    
    (4
    )Pension liability adjustments and others
    
    
    (5
    )
    
    
    
    
    
    
    (7
    )Closure and restructuring cost payments
    
    
    (16
    )
    
    
    (24
    )
    
    
    (44
    )BalanceEnd of year
    
    
    13
    
    
    
    22
    
    
    
    19
 Note 14
 a)
    
    The provision for (recovery of) income taxes is as follows:
 2009
    
    
    2008
    
    
    2007Current
    
    
    30
    
    
    
    20
    
    
    
    33Future
    
    
    (7
    )
    
    
    (52
    )
    
    
    (22
    )23
    
    
    
    (32
    )
    
    
    11
 CASCADES  ANNUAL REPORT 2009




---



##### 



b)
    
    The provision for income taxes based on the effective income tax rate differs from the
provision for income taxes based on the combined basic rate for the following reasons:
 2009
    
    
    2008
    
    
    2007Provision for (recovery of) income taxes based on the combined basic Canadian and provincial income tax rate
    
    
    20
    
    
    
    (35
    )
    
    
    34Adjustment for income taxes arising from the following:Difference in statutory income tax rate of foreign operations
    
    
    4
    
    
    
    (2
    )
    
    
    (9
    )Unrecognized tax benefit arising from current losses
    
    
    1
    
    
    
    10
    
    
    
    9Non-taxable portion of foreign exchange gain (loss) on long-term debt
    
    
    (12
    )
    
    
    38
    
    
    
    (10
    )Permanent differences1
    
    
    16
    
    
    
    (32
    )
    
    
    (1
    )Permanent differencesothers
    
    
    
    
    
    
    (4
    )
    
    
    Decrease in future income taxes resulting from a substantively enacted change in tax rates
    
    
    (5
    )
    
    
    
    
    
    
    (16
    )Others
    
    
    (1
    )
    
    
    (7
    )
    
    
    43
    
    
    
    3
    
    
    
    (23
    )Provision for (recovery of) income taxes
    
    
    23
    
    
    
    (32
    )
    
    
    11
 
 1
    
    The amount of $16 million for the year ended December 31, 2009 (2008$(32) million;
2007$(1) million) represents the non-taxable portion of the gain realized on various
transactions in 2008 with respect mainly to foreign exchange derivative contracts (see
note 18). c)
    
    Future income taxes include the following items:
 2009
    
    
    2008Future income tax assetsTax benefit arising from income tax losses
    
    
    165
    
    
    
    206Employee future benefits
    
    
    29
    
    
    
    28Unused tax credits and expenses on research not deducted
    
    
    31
    
    
    
    27Valuation allowance
    
    
    (64
    )
    
    
    (84
    )Others
    
    
    20
    
    
    
    25181
    
    
    
    202Future income tax liabilitiesProperty, plant and equipment
    
    
    251
    
    
    
    274Foreign exchange gain on long-term debt
    
    
    48
    
    
    
    30Employee future benefits
    
    
    22
    
    
    
    20Other assets
    
    
    31
    
    
    
    39Others
    
    
    32
    
    
    
    26384
    
    
    
    389Future income taxes
    
    
    (203
    )
    
    
    (187
    )Future income taxes included in Accounts receivable
    
    
    6
    
    
    
    12Future income taxes included in Other liabilities
    
    
    (209
    )
    
    
    (199
    )(203
    )
    
    
    (187
    )
 CASCADES  ANNUAL REPORT 2009




---



##### 



d)
    
    The Company has accumulated losses for income tax purposes amounting to approximately
$492 million which may be carried forward to reduce taxable income in future years. The future
tax benefit resulting from the deferral of $324 million of these losses has been recognized in
the accounts as a future income tax asset. Income tax losses as at December 31, 2009 are
detailed as follows:
 Unrecognized
    
    
    Recognizedtax losses
    
    
    tax losses
    
    
    Total tax losses
    
    
    MaturityCanada
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2010
    
    
    
    18
    
    
    
    18
    
    
    
    2014
    
    
    
    42
    
    
    
    42
    
    
    
    2015
    
    
    
    17
    
    
    
    17
    
    
    
    2026
    
    
    
    29
    
    
    
    29
    
    
    
    2027
    
    
    
    5
    
    
    
    5
    
    
    
    2028
    
    
    
    40
    
    
    
    40
    
    
    
    2029United States
    
    
    2
    
    
    
    
    
    
    
    2
    
    
    
    20122
    
    
    
    4
    
    
    
    6
    
    
    
    20181
    
    
    
    13
    
    
    
    14
    
    
    
    20193
    
    
    
    5
    
    
    
    8
    
    
    
    2020
    
    
    
    7
    
    
    
    7
    
    
    
    2021
    
    
    
    5
    
    
    
    5
    
    
    
    2022
    
    
    
    7
    
    
    
    7
    
    
    
    2023Europe
    
    
    160
    
    
    
    132
    
    
    
    292
    
    
    Indefinitely168
    
    
    
    324
    
    
    
    492
 Note 15
 a)
    
    Changes in non-cash working capital components are detailed as follows:
 2009
    
    
    2008
    
    
    2007Accounts receivable
    
    
    43
    
    
    
    14
    
    
    
    (47
    )Inventories
    
    
    21
    
    
    
    10
    
    
    
    (47
    )Accounts payable and accrued liabilities
    
    
    (12
    )
    
    
    (55
    )
    
    
    552
    
    
    
    (31
    )
    
    
    (89
    )
 b)
    
    Additional information
 2009
    
    
    2008
    
    
    2007Interest paid
    
    
    110
    
    
    
    97
    
    
    
    108Income taxes paid
    
    
    30
    
    
    
    22
    
    
    
    21
 c)
    
    Financing expenses
 2009
    
    
    2008
    
    
    2007Interest on long-term debt, net of the impact of interest rate swaps
    
    
    95
    
    
    
    100
    
    
    
    99Interest income
    
    
    (1
    )
    
    
    (2
    )
    
    
    (3
    )Amortization of financing costs
    
    
    4
    
    
    
    4
    
    
    
    3Other interest and banking fees
    
    
    3
    
    
    
    
    
    
    
    3101
    
    
    
    102
    
    
    
    102
 CASCADES  ANNUAL REPORT 2009




---



##### 



Note 16
 a)
    
    The expense for employee future benefits as at December 31 is as follows:
 2009
    
    
    2008Pension plans
    
    
    Other plans
    
    
    Pension plans
    
    
    Other plansCurrent service costs
    
    
    9
    
    
    
    2
    
    
    
    13
    
    
    
    3Interest cost
    
    
    35
    
    
    
    6
    
    
    
    34
    
    
    
    5Past service costs
    
    
    1
    
    
    
    
    
    
    
    2
    
    
    
    Actual return on plan assets
    
    
    (86
    )
    
    
    
    
    
    
    91
    
    
    
    Actuarial gains (losses) on accrued benefit obligation
    
    
    84
    
    
    
    13
    
    
    
    (100
    )
    
    
    (18
    )Curtailment and settlement
    
    
    4
    
    
    
    
    
    
    
    6
    
    
    
    (3
    )Others
    
    
    (2
    )
    
    
    (2
    )
    
    
    4
    
    
    
    3Benefit costs before adjustments to recognize long-term nature of employee future benefit costs
    
    
    45
    
    
    
    19
    
    
    
    50
    
    
    
    (10
    )Difference between expected return and actual return on plan assets for the year
    
    
    53
    
    
    
    
    
    
    
    (133
    )
    
    
    Difference between actuarial loss for the year and actuarial loss or gain on accrued benefit
obligation for the year
    
    
    (81
    )
    
    
    (13
    )
    
    
    101
    
    
    
    17Difference between amortization of past service costs and actual plan amendments for the year
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    Others
    
    
    5
    
    
    
    4
    
    
    
    (4
    )
    
    
    (3
    )Adjustments to recognize long-term nature of employee future benefit costs
    
    
    (22
    )
    
    
    (9
    )
    
    
    (36
    )
    
    
    14Recognized costs for defined benefit pension plans
    
    
    23
    
    
    
    10
    
    
    
    14
    
    
    
    4Recognized costs for defined contribution pension plans
    
    
    20
    
    
    
    
    
    
    
    21
    
    
    
    Total expense for employee future benefits
    
    
    43
    
    
    
    10
    
    
    
    35
    
    
    
    4
  CASCADES  ANNUAL REPORT 2009




---



##### 



2009
    
    
    2008Pension plans
    
    
    Other plans
    
    
    Pension plans
    
    
    Other plansAccrued benefit obligationBeginning of year
    
    
    493
    
    
    
    92
    
    
    
    629
    
    
    
    110Current service costs
    
    
    9
    
    
    
    2
    
    
    
    13
    
    
    
    3Interest cost
    
    
    35
    
    
    
    6
    
    
    
    34
    
    
    
    5Employees contributions
    
    
    4
    
    
    
    
    
    
    
    4
    
    
    
    Actuarial gains (losses)
    
    
    84
    
    
    
    13
    
    
    
    (100
    )
    
    
    (18
    )Benefits paid
    
    
    (57
    )
    
    
    (6
    )
    
    
    (40
    )
    
    
    (7
    )Business acquisitions, disposals and closures
    
    
    
    
    
    
    
    
    
    
    (56
    )
    
    
    (4
    )Past service costs
    
    
    1
    
    
    
    
    
    
    
    2
    
    
    
    Others
    
    
    (5
    )
    
    
    (2
    )
    
    
    7
    
    
    
    3End of year
    
    
    564
    
    
    
    105
    
    
    
    493
    
    
    
    92Plan assetsBeginning of year
    
    
    476
    
    
    
    
    
    
    
    626
    
    
    
    Actual return on plan assets
    
    
    86
    
    
    
    
    
    
    
    (91
    )
    
    
    Employers contributions
    
    
    28
    
    
    
    6
    
    
    
    31
    
    
    
    7Employees contributions
    
    
    4
    
    
    
    
    
    
    
    4
    
    
    
    Benefits paid
    
    
    (57
    )
    
    
    (6
    )
    
    
    (40
    )
    
    
    (7
    )Business acquisitions, disposals and closures
    
    
    (4
    )
    
    
    
    
    
    
    (57
    )
    
    
    Others
    
    
    (2
    )
    
    
    
    
    
    
    3
    
    
    
    End of year
    
    
    531
    
    
    
    
    
    
    
    476
    
    
    
    Reconciliation of funded statusFair value of plan assets
    
    
    531
    
    
    
    
    
    
    
    476
    
    
    
    Accrued benefit obligation
    
    
    564
    
    
    
    105
    
    
    
    493
    
    
    
    92Funded status of plandeficit
    
    
    (33
    )
    
    
    (105
    )
    
    
    (17
    )
    
    
    (92
    )Unrecognized net actuarial gains (losses)
    
    
    103
    
    
    
    (2
    )
    
    
    81
    
    
    
    (14
    )Unamortized transitional balance
    
    
    (2
    )
    
    
    (1
    )
    
    
    (2
    )
    
    
    (1
    )Unamortized past service costs
    
    
    19
    
    
    
    3
    
    
    
    20
    
    
    
    4Others
    
    
    (4
    )
    
    
    (2
    )
    
    
    (5
    )
    
    
    (1
    )Accrued benefit asset (liability)End of year
    
    
    83
    
    
    
    (107
    )
    
    
    77
    
    
    
    (104
    )
  2009
    
    
    2008Pension plans
    
    
    Other plans
    
    
    Total
    
    
    Pension plans
    
    
    Other plans
    
    
    TotalEmployee future
benefit asset,
included in
Other assets
    
    
    97
    
    
    
    
    
    
    
    97
    
    
    
    97
    
    
    
    
    
    
    
    97Employee future
benefit liability,
included in
Other liabilities
    
    
    (14
    )
    
    
    (107
    )
    
    
    (121
    )
    
    
    (20
    )
    
    
    (104
    )
    
    
    (124
    )83
    
    
    
    (107
    )
    
    
    (24
    )
    
    
    77
    
    
    
    (104
    )
    
    
    (27
    )
 c)
    
    The following amounts relate to plans that are not fully funded as at December 31:
 2009
    
    
    2008Pension plans
    
    
    Other plans
    
    
    Pension plans
    
    
    Other plansFair value of plan assets
    
    
    144
    
    
    
    
    
    
    
    217
    
    
    
    Accrued benefit obligation
    
    
    (202
    )
    
    
    (105
    )
    
    
    (268
    )
    
    
    (92
    )Funded deficit
    
    
    (58
    )
    
    
    (105
    )
    
    
    (51
    )
    
    
    (92
    )
 CASCADES  ANNUAL REPORT 2009




---



##### 



d)
    
    The main actuarial assumptions adopted in measuring the accrued benefit obligation and
expenses as at December 31 are as follows:
 2009
    
    
    2008Pension plans
    
    
    Other plans
    
    
    Pension plans
    
    
    Other plansAccrued benefit obligation as at December 31Discount rate
    
    
    6.00
    %
    
    
    6.00
    %
    
    
    7.50
    %
    
    
    7.50
    %Rate of compensation increase
    
    3.00% to 3.75%
    
    2.25% to 3.50%
    
    2.50% to 3.75%
    
    2.25% to 3.90%Benefit costs for years ended December 31Discount rate
    
    
    7.50
    %
    
    
    7.50
    %
    
    
    5.50
    %
    
    
    5.50
    %Expected long-term return on assets
    
    
    7.00
    %
    
    
    
    
    
    
    7.00
    %
    
    
    Rate of compensation increase
    
    2.50%  to 3.75%
    
    2.25% to 3.90%
    
    2.00  to 3.75%
    
    2.00  to 3.75%Assumed health care cost trend rates at December 31Rate increase in health care costs
    
    
    
    
    
    9.00% to 9.50%
    
    
    
    
    
    9.20% to 10.00%Cost trend rates decline to
    
    
    
    
    
    
    5.00
    %
    
    
    
    
    
    
    5.00
    %Year the rate should stabilize
    
    
    
    
    
    
    2018
    
    
    
    
    
    
    
    2018
 e)
    
    Assumed rate increases in health care costs have a significant effect on the amounts
reported for the health care plans. A 1% change in assumed health care cost trend rates would
have the following effects for 2009:
 Increase of 1%
    
    
    Decrease of 1%Current service costs and interest cost
    
    
    
    
    
    
    Accrued benefit obligationEnd of year
    
    
    3
    
    
    
    (3
    )
 f)
    
    The plan assets allocation and investment target allocation as at December 31 are detailed
as follows:
 2009
    
    
    2008Plan assets allocationMoney market
    
    
    
    
    
    
    3
    %Debt securities
    
    
    40
    %
    
    
    39
    %Equity securities
    
    
    60
    %
    
    
    58
    %Total
    
    
    100
    %
    
    
    100
    %
  2009
    
    
    2008Investment target allocationMoney market or others
    
    
    4
    %
    
    
    6
    %Debt securities
    
    
    34
    %
    
    
    43
    %Equity securities
    
    
    62
    %
    
    
    51
    %Total
    
    
    100
    %
    
    
    100
    %
    CASCADES  ANNUAL REPORT 2009




---



##### 



g)
    
    Estimated future benefit payments
  Pension plans
    
    
    Other plansYears ending December 31,2010
    
    
    49
    
    
    
    62011
    
    
    37
    
    
    
    72012
    
    
    38
    
    
    
    72013
    
    
    39
    
    
    
    72014
    
    
    69
    
    
    
    82015-2019
    
    
    205
    
    
    
    45
 Note 17
 a)
    
    Future minimum payments under operating leases and other commercial commitments (mainly
composed of raw materials, natural gas, steam and electricity) are as follows:
 Operating
    
    
    Other commercialleases
    
    
    commitmentsYears ending December 31,2010
    
    
    39
    
    
    
    1432011
    
    
    29
    
    
    
    822012
    
    
    24
    
    
    
    512013
    
    
    18
    
    
    
    412014
    
    
    14
    
    
    
    32Thereafter
    
    
    39
    
    
    
    88
 b)
    
    In the normal course of operations, the Company is party to various legal actions and
contingencies, mostly related to contract disputes, environmental and product warranty claims,
and labour issues. While the final outcome with respect to legal actions outstanding or
pending as at December 31, 2009 cannot be predicted with certainty, it is managements opinion
that the outcome will not have a material adverse effect on the Companys consolidated
financial position, results of its operations or its cash flows.c)
    
    The Company is currently working with representatives of the Ontario Ministry of the
environment (MOE)-Northern Region, regarding its potential responsibility for an environmental
impact identified at its former Thunder Bay facility (the Mill). The MOE has requested that
the Company look into a management site plan relating to the sediment quality adjacent to the
Mills lagoon. Several meetings have been held during the year with the MOE and AbitibiBowater
Inc., a former owner of the facility who has recently filed for court protection in Canada and
the United States. A study on the sediment quality and potential remediation options has
commenced. Although a loss is probable, it is not possible at this time to estimate the
Companys obligation because of the uncertainty surrounding the extent of the environmental
impact, the potential remediation alternatives, the concurrence of the MOE and AbitibiBowater
Inc.s capacity to assume its proportionate share of responsibility.
 CASCADES  ANNUAL REPORT 2009




---



##### 



Note 18
   2009
    
    
    2008Carrying amount
    
    
    Fair value
    
    
    Carrying amount
    
    
    Fair valueFinancial assets held for tradingCash and cash equivalents (i)
    
    
    19
    
    
    
    19
    
    
    
    11
    
    
    
    11Derivatives (note 18.4)
    
    
    5
    
    
    
    5
    
    
    
    
    
    
    
    Financial assets available for saleOther investments
    
    
    7
    
    
    
    7
    
    
    
    3
    
    
    
    3Investment in share held for trading (ii)
    
    
    3
    
    
    
    3
    
    
    
    2
    
    
    
    2Loans and receivablesAccounts receivable (i)
    
    
    543
    
    
    
    543
    
    
    
    657
    
    
    
    657Notes receivables (i)
    
    
    9
    
    
    
    9
    
    
    
    8
    
    
    
    8Financial liabilities held for tradingDerivatives (note 18.4)
    
    
    33
    
    
    
    33
    
    
    
    26
    
    
    
    26Other financial liabilitiesBank loans and advances (i)
    
    
    83
    
    
    
    83
    
    
    
    104
    
    
    
    104Accounts payable and accrued liabilities (i)
    
    
    505
    
    
    
    505
    
    
    
    586
    
    
    
    586Long-term debt (iii)
    
    
    1,469
    
    
    
    1,483
    
    
    
    1,708
    
    
    
    1,150Derivatives designated as hedgeAsset derivatives
    
    
    14
    
    
    
    14
    
    
    
    15
    
    
    
    15Liability derivatives
    
    
    27
    
    
    
    27
    
    
    
    19
    
    
    
    19
   (i)
    
    The fair values of cash and cash equivalents, accounts receivable, notes receivable, bank
loans and advances, accounts payable and accrued liabilities approximate their carrying
amounts due to their relative short maturities.(ii)
    
    The fair value of other investments is based on observable market data and mainly represents
the Companys investment in Junex Inc. which is quoted on the canadian stock exchange.(iii)
    
    The fair value of long-term debt is based on observable market data and on the calculation
of discounted cash flows. Discount rates were determined based on local government bond yields
adjusted for the risks specific to each of the borrowings and for the credit market
liquidity conditions.
 CASCADES  ANNUAL REPORT 2009




---



##### 




    
    Level 1Quoted prices in active markets for identical assets or liabilities.
    
    Level 2Observable inputs other than quoted prices in active markets for identical assets and
liabilities, quoted prices for identical or similar assets or liabilities in inactive markets,
or other inputs that are observable or can be corroborated by observable market data for
substantially the full term of the assets or liabilities.
    
    Level 3Inputs that are generally unobservable and typically reflect managements estimates
of assumptions that market participants would use in pricing the asset or liability.
 Quoted pricesin active
    
    
    Significant
    
    
    Significantmarkets for
    
    
    observable
    
    
    unobservableDecember 31,
    
    
    identical assets
    
    
    inputs
    
    
    inputs2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Financial assetsCash and cash equivalents
    
    
    19
    
    
    
    19Other investments
    
    
    7
    
    
    
    7Investments in share held for trading
    
    
    3
    
    
    
    3Derivative financial assets
    
    
    19
    
    
    
    
    
    
    
    19
    
    
    
    Total
    
    
    48
    
    
    
    29
    
    
    
    19
    
    
    
    Financial liabilitiesDerivative financial liabilities
    
    
    60
    
    
    
    
    
    
    
    60
    
    
    
    Total
    
    
    60
    
    
    
    
    
    
    
    60
    
    
    
    
 Quoted pricesin active
    
    
    Significant
    
    
    Significantmarkets for
    
    
    observable
    
    
    unobservableDecember 31,
    
    
    identical assets
    
    
    inputs
    
    
    inputs2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Financial assetsCash and cash equivalents
    
    
    11
    
    
    
    11Other investments
    
    
    3
    
    
    
    3Investments in share held for trading
    
    
    2
    
    
    
    2Derivative financial assets
    
    
    15
    
    
    
    
    
    
    
    15
    
    
    
    Total
    
    
    31
    
    
    
    16
    
    
    
    15
    
    
    
    Financial liabilitiesDerivative financial liabilities
    
    
    43
    
    
    
    
    
    
    
    43
    
    
    
    Total
    
    
    43
    
    
    
    
    
    
    
    43
    
    
    
    
    a) Market risk
     CASCADES  ANNUAL REPORT 2009




---



##### 



2009Notional amount
    
    
    Fair valueExchange rate
    
    
    Maturity

    
    (in millions)
    
    
    (in millions)Repayment of long-term debt1Derivatives designated as cash flow hedges and reclassified into
Income in Foreign exchange loss (gain) on long-term debt (effective portion):Foreign exchange forward contracts (US$ for CAN$)
    
    
    1.1764
    
    
    February 2013
    
    US$
    110.0
    
    
    
    (12.0
    )Foreign exchange forward contracts (US$ for CAN$)
    
    
    1.1945
    
    
    May 2013
    
    US$
    50.0
    
    
    
    (6.2
    )Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18.2
    )Derivatives designated as held for trading and reclassified into
Income in Foreign exchange loss (gain) on long-term debt (effective portion):Foreign exchange forward contracts (US$ for CAN$)
    
    
    1.2018
    
    
    February 2013
    
    US$
    200
    
    
    
    (26.4
    )Currency
option sold to buy US$ (US$ for CAN$)
    
    
    1.0113
    
    
    February 2013
    
    US$
    37.5
    
    
    
    (3.0
    )Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (29.4
    )Gain (loss) on derivative financial instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (47.6
    )Forecasted salesDerivatives designated as cash flow hedges and reclassified into
Income in Sales (effective portion):Foreign exchange forward contracts (US$ for CAN$)
    
    
    1.0505
    
    
    January 2010
    
    US$
    165
    
    
    
    0.1Foreign exchange forward contracts (US$ for CAN$)
    
    
    1.1925
    
    
    0 to 12 months
    
    US$
    51.5
    
    
    
    7.1Foreign exchange forward contracts (US$ for CAN$)
    
    
    1.1596
    
    
    13 to 24 months
    
    US$
    40.0
    
    
    
    4.1Foreign exchange forward contracts ( for US$)
    
    
    1.4457
    
    
    0 to 12 months
    
    US$
    1.8
    
    
    
    Foreign exchange forward contracts (GBP for SEK)
    
    
    11.3533
    
    
    0 to 12 months
    
    GBP
    2.2
    
    
    
    Foreign exchange forward contracts ( for SEK)
    
    
    10.3926
    
    
    0 to 12 months
    
    
    9.6
    
    
    
    0.2Foreign exchange forward contracts (GBP for )
    
    
    1.1124
    
    
    0 to 12 months
    
    GBP
    1.0
    
    
    
    Currency option instruments (GBP for )
    
    
    1.1000
    
    
    0 to 12 months
    
    GBP
    0.9
    
    
    
    Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11.5Derivatives designated as held for trading and reclassified into
Income in Sales (effective portion):Currency option instruments (US$ for CAN$)
    
    
    1.2397
    
    
    0 to 12 months
    
    US$
    30.0
    
    
    
    5.5Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.5Forecasted purchasesHedge of forecasted purchases designated as cash flow hedges and
reclassified into Income in Cost of sales (effective portion):Foreign exchange forward contracts (US$ for CAN$)
    
    
    1.2237
    
    
    0 to 12 months
    
    US$
    3.6
    
    
    
    (0.6
    )Foreign exchange forward contracts (US$ for CAN$)
    
    
    1.1640
    
    
    13 to 24 months
    
    US$
    3.9
    
    
    
    (0.4
    )Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1.0
    )
 1
    
    On July 1, 2008, the Company designated as cash flow hedges of repayment of long-term denominated in U.S. dollars foreign exchange forward contracts amounting to US$850 million.In October 2008, the Company terminated, prior to maturity, foreign exchange forward contracts amounting to US$837.5 million for net cash proceeds of approximately
$150 million. As these contracts were designated, as cash flow hedges, their fair value increment is recorded under Accumulated Other Comprehensive Income and will be
recognized in earnings mostly in 2013. Concurrently with the termination of these instruments, the Company entered into new foreign exchange forward contracts for notional
amount of US$510 million.As a result of the repurchase of the 2013 unsecured senior noted in November and December 2009, described in note 9, the Company dedesignated and reclassified from Accumulated
other comprehensive income to Foreign exchange loss (gain) on long-term debt an amount of $33 million since the hedged item ceased to exist.
 CASCADES  ANNUAL REPORT 2009




---



##### 



2008Notional amount
    
    
    Fair valueExchange rate
    
    
    Maturity
    
    (in millions)
    
    
    (in millions)Repayment of long-term debtDerivatives designated as cash flow hedges and
reclassified into Income in Foreign exchange loss
(gain) on long-term debt (effective portion):Foreign exchange forward contracts (US$ for CAN$)
    
    
    1.1740
    
    
    February 2013
    
    US$
    385
    
    
    
    4.6Foreign exchange forward contracts (US$ for CAN$)
    
    
    1.1340
    
    
    May 2013
    
    US$
    125
    
    
    
    5.8Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10.4Derivatives designated as held for trading and
reclassified into Income in Foreign exchange loss
(gain) on long-term debt (effective portion):Currency
options bought to buy US$ (US$ for CAN$)
    
    
    1.0110
    
    
    February 2013
    
    US$
    12.5
    
    
    
    2.2Currency
options sold to buy US$ (US$ for CAN$)
    
    
    1.0115
    
    
    February 2013
    
    US$
    25
    
    
    
    (2.4
    )Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.2
    )Gain (loss) on derivative financial instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10.2Forecasted salesDerivatives designated as cash flow hedges and
reclassified into Income in Sales (effective
portion):Foreign exchange forward contracts (US$ for CAN$)
    
    
    1.1474
    
    
    
    0 to 12 months
    
    
    US$
    78
    
    
    
    (5.1
    )Foreign exchange forward contracts (US$ for CAN$)
    
    
    1.1027
    
    
    
    0 to 12 months
    
    
    US$
    2.4
    
    
    
    0.4Foreign exchange forward contracts (US$ for CAN$)
    
    
    1.2433
    
    
    
    13 to 24 months
    
    
    US$
    13
    
    
    
    0.4Foreign exchange forward contracts (US$ for )
    
    
    0.7613
    
    
    
    0 to 12 months
    
    
    US$
    0.2
    
    
    
    Foreign exchange forward contracts (GBP for SEK)
    
    
    12.5354
    
    
    

    0 to 12 months
    
    
    GBP
    2.3
    
    
    
    0.4Foreign exchange forward contracts ( for SEK)
    
    
    9.8164
    
    
    
    0 to 12 months
    
    
    
    6.6
    
    
    
    (1.2
    )Foreign exchange forward contracts (GBP for )
    
    
    1.1285
    
    
    
    0 to 12 months
    
    
    GBP
    1.2
    
    
    
    0.2Foreign exchange forward contracts ( for CAN$)
    
    
    1.6202
    
    
    
    0 to 12 months
    
    
    
    0.5
    
    
    
    Currency option instruments (US$ for )
    
    
    0.7171
    
    
    
    0 to 12 months
    
    
    US$
    0.9
    
    
    
    Currency option instruments (GBP for )
    
    
    1.1165
    
    
    
    0 to 12 months
    
    
    GBP
    0.1
    
    
    
    Currency option instruments (US$ for CAN$)
    
    
    1.0767
    
    
    
    0 to 12 months
    
    
    US$
    9
    
    
    
    (1.5
    )Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6.4
    )Derivatives designated as held for trading and
reclassified into Income in Sales (effective
portion):Currency option instruments (US$ for CAN$)
    
    
    1.0785
    
    
    
    0 to 12 months
    
    
    US$
    36.0
    
    
    
    (10.0
    )Currency option instruments (US$ for CAN$)
    
    
    1.2585
    
    
    
    13 to 24 months
    
    
    US$
    20
    
    
    
    (0.3
    )Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10.3
    )Forecasted purchasesHedge of forecasted purchases designated as cash
flow hedges and reclassified into Income in Cost of
sales (effective portion):Foreign exchange forward contracts (US$ for CAN$)
    
    
    1.2278
    
    
    
    0 to 12 months
    
    
    US$
    1.9
    
    
    
    Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Currency risk on translation of self-sustaining foreign subsidiaries
  CASCADES  ANNUAL REPORT 2009




---



##### 



2009
    
    
    2008(in millions of Canadian dollars)
    
    Before hedges
    
    
    Hedges
    
    
    Net impact
    
    
    Before hedges
    
    
    Hedges
    
    
    Net impact10% change in the CAN/U.S. rate
    
    
    62
    
    
    
    56
    
    
    
    6
    
    
    
    67
    
    
    
    50
    
    
    
    1710% change in the CAN/euro rate
    
    
    20
    
    
    
    
    
    
    
    20
    
    
    
    19
    
    
    
    
    
    
    
    19
    2009Forecasted purchases
    
    Quantity
    
    
    Maturity
    
    
    Fair valueDerivatives designated as held for trading and reclassified in cost of salesOld corrugated containers
    
    
    87,000 s.t.
    
    
    2010 to 2011
    
    
    
    (2.8
    )Sorted office papers
    
    
    3,600 s.t.
    
    
    
    2010
    
    
    
    Derivatives designated as cash flow hedges and reclassified in cost of sales (effective portion)Electricity
    
    332,880 MWh
    
    
    2010 to 2012
    
    
    
    (0.1
    )Oil Gulf cost
    
    143,100 baril
    
    
    2010 to 2011
    
    
    
    3.2Natural gas:Canadian portfolio
    
    4,250,200 GJ
    
    
    2010 to 2014
    
    
    
    (2.4
    )U.S. porfolio
    
    5,374,780 mmBtu
    
    
    2010 to 2013
    
    
    
    (6.1
    )
 2008Forecasted purchases
    
    Quantity
    
    
    Maturity
    
    
    Fair valueDerivatives designated as held for trading and reclassified in cost of salesOld corrugated containers
    
    
    141,000 s.t.
    
    
    
    2009 to 2011
    
    
    
    (10.8
    )Sorted office papers
    
    
    10,800 s.t.
    
    
    
    2009 to 2010
    
    
    
    (0.2
    )Derivatives designated as cash flow hedges and reclassified in cost of sales (effective portion)Electricity
    
    209,364 MWh
    
    
    
    2009 to 2011
    
    
    
    (3.4
    )Oil Gulf cost
    
    48,000 baril
    
    
    
    2009
    
    
    
    (0.3
    )Natural gas:Canadian portfolio
    
    2,507,000 GJ
    
    
    
    2009 to 2012
    
    
    
    0.7U.S. porfolio
    
    3,710,500 mmBtu
    
    
    
    2009 to 2013
    
    
    
    (8.3
    )
    CASCADES  ANNUAL REPORT 2009




---



##### 



2009
    
    
    2008(in millions of Canadian dollars1)
    
    Before hedges
    
    
    Hedges
    
    
    Net impact
    
    
    Before hedges
    
    
    Hedges
    
    
    Net impactUS $15/s.t. change in recycled paper price
    
    
    43
    
    
    
    2
    
    
    
    41
    
    
    
    41
    
    
    
    3
    
    
    
    38US $30/s.t. change in commercial pulp price
    
    
    10
    
    
    
    
    
    
    
    10
    
    
    
    7
    
    
    
    
    
    
    
    7US $1/mmBTU. change in natural gas price
    
    
    14
    
    
    
    11
    
    
    
    3
    
    
    
    13
    
    
    
    8
    
    
    
    5US $1/MWh change in electricity
    
    
    3
    
    
    
    1
    
    
    
    2
    
    
    
    3
    
    
    
    
    
    
    
    3
 
 1
    
    Sensitivity calculated with an exchange rate of CAN$/US $1.25 for 2008 and 2009
        2009
    
    
    2008
    
    
    2007Unrealized loss (gain) on derivative financial instruments
    
    
    (26
    )
    
    
    27
    
    
    
    Realized loss (gain) on derivative financial instruments
    
    
    8
    
    
    
    1
    
    
    
    (6
    )(18
    )
    
    
    28
    
    
    
    (6
    )
 b) Credit risk
      CASCADES  ANNUAL REPORT 2009




---



##### 



c) Liquidity risk
  2009Carrying
    
    
    Contractual
    
    
    Less than
    
    
    Between one
    
    
    Between two
    
    
    More thanamount
    
    
    cash flows
    
    
    one year
    
    
    and two years
    
    
    and five years
    
    
    five years$
    
    
    $
    
    
    $
    
    
    $
    
    
    $
    
    
    $Non-derivative financial liabilities:Bank loans and advances
    
    
    83
    
    
    
    83
    
    
    
    83
    
    
    
    
    
    
    
    
    
    
    
    Accounts payable and accrued liabilities
    
    
    505
    
    
    
    505
    
    
    
    505
    
    
    
    
    
    
    
    
    
    
    
    Revolving credit facility
    
    
    159
    
    
    
    169
    
    
    
    5
    
    
    
    164
    
    
    
    
    
    
    
    Term credit facility
    
    
    100
    
    
    
    109
    
    
    
    3
    
    
    
    3
    
    
    
    103
    
    
    
    Unsecured senior notes
    
    
    1,155
    
    
    
    1,862
    
    
    
    91
    
    
    
    91
    
    
    
    435
    
    
    
    1,245Other debts of subsidiaries
    
    
    33
    
    
    
    33
    
    
    
    6
    
    
    
    6
    
    
    
    17
    
    
    
    4Other debts without recourse to the Company
    
    
    42
    
    
    
    42
    
    
    
    4
    
    
    
    8
    
    
    
    20
    
    
    
    10Legal settlement
    
    
    7
    
    
    
    7
    
    
    
    3
    
    
    
    3
    
    
    
    1
    
    
    
    Derivative instrument financial liabilities
    
    
    60
    
    
    
    60
    
    
    
    5
    
    
    
    4
    
    
    
    51
    
    
    
    2,144
    
    
    
    2,870
    
    
    
    705
    
    
    
    279
    
    
    
    627
    
    
    
    1,259
  2008Carrying
    
    
    Contractual
    
    
    Less than
    
    
    Between one
    
    
    Between two
    
    
    More thanamount
    
    
    cash flows
    
    
    one year
    
    
    and two years
    
    
    and five years
    
    
    five years$
    
    
    $
    
    
    $
    
    
    $
    
    
    $
    
    
    $Non-derivative financial liabilities:Bank loans and advances
    
    
    104
    
    
    
    104
    
    
    
    104
    
    
    
    
    
    
    
    
    
    
    
    Accounts payable andaccrued liabilities
    
    
    586
    
    
    
    586
    
    
    
    586
    
    
    
    
    
    
    
    
    
    
    
    Revolving credit facility
    
    
    427
    
    
    
    484
    
    
    
    19
    
    
    
    19
    
    
    
    446
    
    
    
    Term credit facility
    
    
    100
    
    
    
    118
    
    
    
    5
    
    
    
    5
    
    
    
    108
    
    
    
    Unsecured senior notes
    
    
    1,129
    
    
    
    1,468
    
    
    
    81
    
    
    
    81
    
    
    
    1,306
    
    
    
    Other debts of subsidiaries
    
    
    16
    
    
    
    10
    
    
    
    3
    
    
    
    1
    
    
    
    2
    
    
    
    4Other debts without recourse to the Company
    
    
    47
    
    
    
    47
    
    
    
    34
    
    
    
    4
    
    
    
    9
    
    
    
    Legal settlement
    
    
    9
    
    
    
    9
    
    
    
    3
    
    
    
    3
    
    
    
    3
    
    
    
    Derivative instrument financial liabilities
    
    
    43
    
    
    
    43
    
    
    
    31
    
    
    
    9
    
    
    
    3
    
    
    
    2,461
    
    
    
    2,869
    
    
    
    866
    
    
    
    122
    
    
    
    1,877
    
    
    
    4
   CASCADES  ANNUAL REPORT 2009




---



##### 



Note 19
  2009
    
    
    2008
    
    
    2007Foreign currency translation of
self-sustaining foreign subsidiaries, net
of hedging activities and related income
tax of $54 million (2008$42 million)
    
    
    88
    
    
    
    141
    
    
    
    (49
    )Unrealized gains (losses) arising from
foreign exchange forward contracts
designated as cash flow hedges, net of
related income taxes of $(1) million
(2008$25 million)
    
    
    4
    
    
    
    (57
    )
    
    
    4Unrealized losses arising from interest
rate swap agreements designated as cash
flow hedges net of related income tax of
$1 million (2008$1.5 million)
    
    
    (2
    )
    
    
    (2
    )
    
    
    Unrealized gains arising from commodity
derivative financial instruments
designated as cash flow hedges, net of
related income taxes of $(3) million
(2008$(3) million)
    
    
    1
    
    
    
    3
    
    
    
    291
    
    
    
    85
    
    
    
    (43
    )
 b)
    
    Change in foreign currency translation of self-sustaining foreign subsidiaries is
as follows:
 2009
    
    
    2008
    
    
    2007BalanceBeginning of year
    
    
    141
    
    
    
    (49
    )
    
    
    (8
    )Effect of changes in exchange rates during the year:On net investment in self-sustaining foreign subsidiaries
    
    
    (128
    )
    
    
    176
    
    
    
    (140
    )On certain long-term debt denominated in foreign
currencies designated as a hedge of net investments in
self-sustaining foreign subsidiaries
    
    
    87
    
    
    
    17
    
    
    
    119Future income taxes on designated long-term debt
    
    
    (12
    )
    
    
    (3
    )
    
    
    (20
    )BalanceEnd of year
    
    
    88
    
    
    
    141
    
    
    
    (49
    )
 Note 20
  2009
    
    
    2008
    
    
    2007Joint ventures1Sales
    
    
    33
    
    
    
    30
    
    
    
    23Revenue from services
    
    
    4
    
    
    
    5
    
    
    
    4Purchases
    
    
    6
    
    
    
    7
    
    
    
    2Significantly influenced companiesSales
    
    
    87
    
    
    
    74
    
    
    
    62Purchases
    
    
    53
    
    
    
    45
    
    
    
    38Entity controlled by a related director of the Company 2Purchases
    
    
    
    
    
    
    
    
    
    
    5
 
 1
    
    Represent the portion of transactions or balances not eliminated upon proportionate
consolidation of the joint ventures.2
    
    Since November 2007, this entity is no longer controlled by a related director of
the Company.
 CASCADES  ANNUAL REPORT 2009




---



##### 



2009
    
    
    2008Joint ventures3Accounts receivable
    
    
    6
    
    
    
    6Accounts payable
    
    
    1
    
    
    
    2Significantly influenced companiesAccounts receivable
    
    
    8
    
    
    
    5Accounts payable
    
    
    5
    
    
    
    3
 
 3
    
    Represent the portion of transactions or balances not eliminated upon proportionate
consolidation of the joint ventures.
 Note 21
 a)
    
    The major components of the interests in joint ventures in the consolidated financial
statements including the transaction concluded on March 1, 2008 and relating to the
combination of Reno De Medici S.p.A. (RdM) and the Companys European recycled cartonboard
business of Cascades S.A. are as follows:
 2009
    
    
    2008
    
    
    2007Consolidated balance sheetsCurrent assets
    
    
    124
    
    
    
    148
    
    
    
    25Long-term assets
    
    
    153
    
    
    
    169
    
    
    
    27Current liabilities
    
    
    72
    
    
    
    144
    
    
    
    10Long-term debt, net
    
    
    35
    
    
    
    12
    
    
    
    1Cash and cash equivalents at end of year
    
    
    10
    
    
    
    5
    
    
    
    3Total assets
    
    
    277
    
    
    
    317
    
    
    
    52Total debt 1
    
    
    100
    
    
    
    85
    
    
    
    4Consolidated statements of earningsSales
    
    
    322
    
    
    
    308
    
    
    
    86Depreciation and amortization
    
    
    15
    
    
    
    12
    
    
    
    3Operating income
    
    
    10
    
    
    
    7
    
    
    
    11Financing expenses
    
    
    4
    
    
    
    4
    
    
    
    Net earnings (loss)
    
    
    1
    
    
    
    (9
    )
    
    
    9Consolidated statements of cash flowsOperating activities
    
    
    30
    
    
    
    (3
    )
    
    
    4Investing activities
    
    
    32
    
    
    
    2
    
    
    
    (6
    )Financing activities
    
    
    (57
    )
    
    
    2
    
    
    
    Additional informationDividends received by the Company from joint ventures
    
    
    4
    
    
    
    5
    
    
    
    5
 
 1
    
    Includes bank loans and advances, current portion of long-term debt, and long-term debt.
 CASCADES  ANNUAL REPORT 2009




---



##### 



Note 22
  1 U.S. GAAP Accounting Pronouncements
 1.1
    
    In February 2007, the FASB published ASC 825, Financial Instruments. This standard permits
entities to choose to measure many financial instruments and certain other assets and
liabilities at fair value on an instrument-by-instrument basis under a fair value option. This
new standard will be effective for fiscal years beginning after November 15, 2007. The Company
chose not to make this fair value accounting election for any of its financial assets and
liabilities. Accordingly, any financial assets and liabilities within the scope of ASC 825
will continue to be carried at their historical amortized cost basis, adjusted for other than
temporary impairments in value. As a result, the adoption of ASC 825, effective as of January
1, 2008, did not have an impact on the Companys results of operations or financial position.1.2
    
    In December 2007, the FASB issued ASC 805, Business Combinations, which changed the
accounting for business acquisitions. ASC 805, as amended by FSP No. FAS 141-1, Accounting
for Assets Acquired and Liabilities Assumed in a Business Combination that Arise from
Contingencies, issued in April 2009, requires the acquiring entity in a business combination
to recognize all (and only) the assets acquired and liabilities assumed in the transaction and
establishes the acquisition-date fair value as the measurement objective for all assets
acquired and liabilities assumed in a business combination. Certain provisions of this
standard impact the determination of acquisition-date fair value of consideration paid in a
business combination (including contingent consideration), exclude transaction costs from
acquisition accounting and change accounting practices for acquisition-related restructuring
costs, in-process research and development, indemnification assets and tax benefits. ASC 805,
as amended, was effective for business combinations and adjustments to an acquired entitys
deferred tax asset and liability balances occurring after December 31, 2008. This standard had
no immediate impact upon adoption, and was applied to business combinations completed
post-2008 and to applicable adjustments to acquired entity deferred tax items occurring after
December 31, 2008.1.3
    
    In December 2007, the Financial Accounting Standards Board (FASB) issued ASC 810-10,
Consolidation. ASC 810-10 established new guidance governing the accounting for and
reporting of noncontrolling interests (NCIs) in partially owned consolidated subsidiaries
and the loss of control of subsidiaries. Certain provisions of this standard indicate, among
other things, that NCIs (previously referred to as minority interests) be treated as a
separate component of equity, not as a liability (as was previously the case), that increases
and decreases in the parents ownership interest that leave control intact be treated as
equity transactions, rather than as step acquisitions or dilution gains or losses, and that
losses of a partially owned consolidated subsidiary be allocated to the NCI even when such
allocation might result in a deficit balance. This standard also required changes to certain
presentation and disclosure requirements. The Company adopted ASC 810-10 effective as of
January 1, 2009. The provisions of the standard were applied to all NCIs prospectively, except
for the presentation and disclosure requirements, which were applied retrospectively to all
periods presented. As a result, upon adoption, we retroactively reclassified the Minority
interests in subsidiaries balance previously included in other liabilities to a new component
of equity with respect to NCIs in consolidated subsidiaries. The adoption also impacted
certain captions previously used in our Consolidated Statements of Earnings (loss), largely
identifying net loss including NCI and net loss attributable to the Company. Additional
disclosures required by this standard are also reflected in our Consolidated Statement of
shareholders equity. As at January 1st, 2009, the Company adopted the provisions of ASC
810-10 and as a result noncontrolling interest are adequately reflected in the consolidated
financial statements.1.4
    
    In June 2008, the FASB issued ASC 260-10, Earnings per Share. This Staff Position states
that unvested share-based payment awards that contain non-forfeitable rights to dividends or
dividend equivalents (whether paid or unpaid) are participating securities and shall be
included in the computation of earnings per share pursuant to the two-class method. ASC 260-10
is effective for financial statements issued for fiscal years beginning after December 15,
2008, and interim periods within those years. All prior-period earnings per share (EPS) data
presented shall be adjusted retrospectively (including interim financial statements, summaries
of earnings and selected financial data) to conform with the provisions of this Staff
Position. The adoption of this accounting guidance did not impact our results of operations or
financial position.1.5
    
    In December 2008, the FASB issued ASC 715, which amends Statement 132(R) to require more
detailed disclosures about employers plan assets, including employers investment strategies,
major categories of plan assets, concentrations of risk within plan assets, and valuation
techniques used to measure the fair value of plan assets. The disclosures required by this FSP
must be provided in the financial statements for fiscal years ending after December 15, 2009.
The required disclosures have been added in these consolidated financial statements in the
present note.1.6
    
    In February 2008, the FASB issued ASC 820, Fair Value Measurements and Disclosures, which
delayed the effective date of ASC 820 for all nonrecurring fair value measurements of
nonfinancial assets and liabilities until fiscal years beginning after November 15, 2008. The
Company adopted the provisions of this statement with respect to its financial assets and
liabilities that are measured at fair value effective January 1, 2008. The Company adopted the
provisions of ASC 820 in respect of its non-financial assets and liabilities effective January
1, 2009 in the preparation of the accompanying unaudited interim consolidated financial
statements. The adoption of this ASC had no impact on the Companys financial position and
results of operations.
 CASCADES  ANNUAL REPORT 2009




---



##### 



In October 2008, the FASB issued ASC 820 Fair Value Measurements and Disclosures, which
clarifies the application of SFAS No. 157 in cases where the market for the asset is not
active. ASC 820 is effective upon issuance. The Company considered the guidance provided by
the ASC in the preparation of the accompanying unaudited interim consolidated financial
statements. The adoption of this FSP had no impact on the Companys financial position and
results of operations.In April 2009, the FASB issued ASC 820 Fair Value Measurements and Disclosures. This ASC
emphasizes that even if there has been a significant decrease in the volume and level of
activity for the asset or liability and regardless of the valuation technique(s) used, the
objective of a fair value measurement remains the same. Fair value is the price that would
be received to sell an asset or paid to transfer a liability in an orderly transaction (that
is, not a forced liquidation or distressed sale) between market participants at the
measurement date under current market conditions. The ASC also provides guidance on
indentifying transactions that are not orderly by assessing certain factors among which are:
an adequate marketing period for the asset or liability, whether the seller is in a
distressed state and whether the transaction price is an outlier compared with recent
transactions. The ASC finally amends the disclosure provisions of SFAS No. 157 to require
entities to disclose in interim and annual periods the inputs and valuation technique(s)
used to measure fair value. The adoption of this ASC had no impact on the Companys
financial position and results of operations.1.7
    
    On January 1, 2009, the Company adopted ASC 350, General Intangibles Other than Goodwill.
This ASC amends the factors that should be considered in developing renewal or extension
assumptions used to determine the useful life of a recognized intangible asset under SFAS No.
142, Goodwill and Other Intangible Assets (SFAS 142). This new guidance also provides
additional disclosure requirements related to recognized intangible assets. The adoption of
this accounting guidance did not impact our results of operations or financial position.1.8
    
    On January 1, 2009, the Company adopted ASC 815, Derivatives and Hedging. This ASC changes
the disclosure requirements for derivative instruments and hedging activities, requiring us to
provide enhanced disclosures about (a) how and why we use derivative instruments, (b) how
derivative instruments and related hedged items are accounted for under ASC 815-15 Embedded
Derivatives and ASC 815-20 Hedging and (c) how derivative instruments and related hedged
items affect our financial position, financial performance and cash flows. Also, this ASC
addresses the determination of whether an instrument (or an embedded feature) is indexed to an
entitys own stock, which is the first part of the scope exception in paragraph 11(a) of ASC
815. The adoption of this accounting guidance did not have an impact on our results of
operations or financial position.1.9
    
    On January 1, 2009, the Company adopted ASC 840, Leases. This ASC addresses the accounting
for nonrefundable maintenance deposits paid by the lessee to the lessor. The adoption of this
accounting guidance did not impact our results of operations or financial position.1.10
    
    On January 1, 2009, the Company adopted ASC 323, Investments  Equity Method and Joint
Ventures. This ASC clarifies the accounting for certain transactions and impairment
considerations involving equity method investments. The adoption of this accounting guidance
did not impact our results of operations or financial position.1.11
    
    In June 2009, the FASB issued ASC 105, Generally Accepted Accounting Principles, a
replacement of FASB Statement No. 162 (SFAS 162), included in FASB ASC 105, Generally
Accepted Accounting Principles. ASC 105 defines the new hierarchy for U.S. GAAP and explains
how the FASB will use its ASC as the sole source for all authoritative guidance and replaces
SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles, which was issued in
May 2008. ASC 105 becomes effective for us beginning with our unaudited interim consolidated
financial statements for the quarter ended September 30, 2009. Since ASC 105 relates to
disclosures only, the adoption of this accounting guidance has not impacted our results of
operations or financial position. However, because the codification completely replaces
existing standards, the consolidated financial statements reflect these changes.1.12
    
    SEC SAB 112 amends or rescinds portions of the interpretive guidance included in the Staff
Accounting Bulletin Series in order to make consistent with current authoritative accounting
and auditing guidance and Securities and Exchange Commission rules and regulations.
Specifically, the staff is updating the Series in order to bring existing guidance into
conformity with recent pronouncements by the FASB, namely, FAS 141R, Business Combinations,
and FAS 160, Non-controlling Interests in Consolidated Financial Statement. Effective upon
publication in the Federal Register. The adoption of those standards did not have a material
impact on the Companys consolidated financial statements.
 2 Recent accounting pronouncements under U.S. GAAP not yet adopted
 2.1
    
    In October 2009, the FASB issued ASC 605-25, Multiple-Element Arrangements for arrangements
with multiple deliverables under which a company is required to use its best estimate of
selling price for the deliverables in an arrangement when vendor specific objective evidence
or third party evidence of the selling price is not available. In addition, the residual
method of allocating arrangement consideration will no longer be permitted. Under the new
guidance, non-software components of tangible products and certain software components of
tangible products have been removed from the scope of existing software revenue recognition
guidance. Revenue for those products will be recognized in a manner similar to revenue for
other tangible products. The new guidance, including the requirement for expanded qualitative
and quantitative disclosures, is effective prospectively for fiscal years beginning on or
after June 15, 2010, which for the Company is January 1, 2011. The Company is assessing the
impact of this ASC on its consolidated financial statements.2.2
    
    In June 2009, the FASB issued ASC 860, Transfers and Servicing, which amends the
derecognition guidance in SFAS No. 140, Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities. Some of the major changes undertaken by ASC 860
include:
 CASCADES  ANNUAL REPORT 2009




---



##### 




    
    require that all arrangements made in connection with a transfer of financial assets be
considered in the derecognition analysis,
    
    clarify when a transferred asset is considered legally isolated from the transferor,
    
    modify the requirements related to a transferees ability to freely pledge or exchange
transferred financial assets, and
    
    provide guidance on when a portion of a financial asset can be derecognized, thereby
restricting the circumstances when sale accounting can be achieved to the following cases:
    
    transfers of individual or groups of financial assets in their entirety and
    
    transfers of participating interests
 ASC 860 is effective prospectively for financial asset transfers occurring after the beginning
of an entitys first fiscal year that begins after November 15, 2009, which for the Company is
January 1, 2010. Earlier application is prohibited. The Company is assessing the impact of
adopting this Statement on its consolidated financial statements.2.3
    
    In June 2009, the FASB issued ASC 810, Consolidation. ASC 810 changes how a company
determines when an entity that is insufficiently capitalized or is not controlled through
voting (or similar rights) should be consolidated. Qualified special-purpose entities
(QSPEs) will no longer be excepted from the FIN 46(R) guidance. The determination of whether
a company is required to consolidate an entity is based on, among other things, an entitys
purpose and design and a companys ability to direct the activities of the entity that most
significantly impact the entitys economic performance. ASC 810 becomes effective for us on
January 1, 2010. The Company is assessing the impact of adopting this Statement on its
consolidated financial statements.
 3 Reconciliation to United States generally accepted accounting principles (U.S. GAAP)
   Note
    
    
    2009
    
    
    2008
    
    
    2007Net earnings (loss) under Canadian GAAP
    
    
    
    
    
    
    60
    
    
    
    (54
    )
    
    
    96U.S. GAAP adjustments:Investment tax credit
    
    
    (a
    )
    
    
    
    
    
    
    (1
    )
    
    
    Gain realized on formation of Norampac
    
    
    (b
    )
    
    
    
    
    
    
    
    
    
    
    (4
    )Change in fair value arising from commodity derivative financial
instruments
    
    
    (c
    )
    
    
    
    
    
    
    1
    
    
    
    Gain on dilution
    
    
    (l
    )
    
    
    (5
    )
    
    
    
    
    
    
    Inventory costs
    
    
    (d
    )
    
    
    
    
    
    
    (1
    )
    
    
    6Employee future benefits
    
    
    (e
    )
    
    
    3
    
    
    
    (1
    )
    
    
    (2
    )Excess of redemption price of Class B preferred shares on their
paid-up capital
    
    
    (f
    )
    
    
    
    
    
    
    
    
    
    
    (1
    )Tax effect on U.S. GAAP adjustments
    
    
    
    
    
    
    1
    
    
    
    7
    
    
    
    (5
    )Net earnings (loss) under U.S. GAAP
    
    
    
    
    
    
    59
    
    
    
    (49
    )
    
    
    90Net earnings (loss) under U.S. GAAP from continuing operations
    
    
    
    
    
    
    59
    
    
    
    (67
    )
    
    
    109Net earnings (loss) under U.S. GAAP from discontinued operations
    
    
    
    
    
    
    
    
    
    
    18
    
    
    
    (19
    )59
    
    
    
    (49
    )
    
    
    90Basic net earnings (loss) under U.S. GAAP from continuing operations
per common share
    
    
    
    
    
    
    0.60
    
    
    
    (0.67
    )
    
    
    1.10Basic and diluted net earnings (loss) under U.S. GAAP per common share
    
    
    
    
    
    
    0.60
    
    
    
    (0.49
    )
    
    
    0.91Weighted average of common shares outstanding during the year
    
    
    
    
    
    
    97,656,412
    
    
    
    98,804,536
    
    
    
    99,329,472
 CASCADES  ANNUAL REPORT 2009




---



##### 



2009Accumulatedother
    
    
    
    
    
    
    Non
    
    
    TotalCommon
    
    
    Contributed
    
    
    comprehensive
    
    
    Retained
    
    
    controlling
    
    
    shareholdersstock
    
    
    surplus
    
    
    income
    
    
    earnings
    
    
    Interest
    
    
    equityBalance as at December 31, 2008
    
    
    499
    
    
    
    12
    
    
    
    40
    
    
    
    696
    
    
    
    22
    
    
    
    1,269Redemption of common shares
    
    
    (7
    )
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4
    )Dividends paid to Cascades shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16
    )
    
    
    
    
    
    
    (16
    )Net earnings for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    59
    
    
    
    
    
    
    
    59Net changes in amounts attributable to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    (1
    )Stock-based compensation
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Other comprehensive income (net of tax)
    
    
    
    
    
    
    
    
    
    
    (19
    )
    
    
    
    
    
    
    
    
    
    
    (19
    )Balance as at December 31, 2009
    
    
    492
    
    
    
    17
    
    
    
    21
    
    
    
    739
    
    
    
    21
    
    
    
    1,290
 2008Accumulatedother
    
    
    
    
    
    
    Non
    
    
    TotalCommon
    
    
    Contributed
    
    
    comprehensive
    
    
    Retained
    
    
    controlling
    
    
    shareholdersStock
    
    
    surplus
    
    
    income
    
    
    earnings
    
    
    Interest
    
    
    equityBalance as at December 31, 2007
    
    
    502
    
    
    
    11
    
    
    
    (79
    )
    
    
    762
    
    
    
    25
    
    
    
    1,219Redemption of common shares
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (4
    )Dividends paid to Cascades shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16
    )
    
    
    
    
    
    
    (16
    )Net loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (49
    )
    
    
    
    
    
    
    (49
    )Net changes in amounts attributable to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    (3
    )Stock-based compensation
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Other comprehensive income (net of tax)
    
    
    
    
    
    
    
    
    
    
    119
    
    
    
    
    
    
    
    
    
    
    
    119Balance as at December 31, 2008
    
    
    499
    
    
    
    12
    
    
    
    40
    
    
    
    696
    
    
    
    22
    
    
    
    1,269
 CASCADES  ANNUAL REPORT 2009




---



##### 



2007Accumulatedother
    
    
    
    
    
    
    Non
    
    
    TotalCommon
    
    
    Contributed
    
    
    comprehensive
    
    
    Retained
    
    
    controlling
    
    
    shareholdersStock
    
    
    surplus
    
    
    income
    
    
    earnings
    
    
    Interest
    
    
    equityBalance as at December 31, 2006
    
    
    503
    
    
    
    10
    
    
    
    (40
    )
    
    
    691
    
    
    
    19
    
    
    
    1,183Redemption of common shares
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    
    
    
    
    (5
    )Exercise of stock options
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Dividends paid to Cascades shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16
    )
    
    
    
    
    
    
    (16
    )Net earnings for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    90
    
    
    
    
    
    
    
    90Net changes in amounts attributable to
noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    6Stock-based compensation
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Other comprehensive income (net of tax)
    
    
    
    
    
    
    
    
    
    
    (39
    )
    
    
    
    
    
    
    
    
    
    
    (39
    )Balance as at December 31, 2007
    
    
    502
    
    
    
    11
    
    
    
    (79
    )
    
    
    762
    
    
    
    25
    
    
    
    1,221Rounding
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )502
    
    
    
    11
    
    
    
    (79
    )
    
    
    762
    
    
    
    25
    
    
    
    1,219
  Note
    
    
    2009
    
    
    2008Shareholders equity under Canadian GAAP
    
    
    
    
    
    
    1,304
    
    
    
    1,256U.S. GAAP adjustments:Investment tax credit
    
    
    (a
    )
    
    
    5
    
    
    
    5Gain realized on formation of Norampac
    
    
    (b
    )
    
    
    44
    
    
    
    44Employee future benefits
    
    
    (e
    )
    
    
    (11
    )
    
    
    (14
    )Unrecognized actuarial gains and losses and past service costs on defined benefit pension and other benefit plans
    
    
    (e
    )
    
    
    (103
    )
    
    
    (67
    )Gain on dilution
    
    
    (l
    )
    
    
    (5
    )
    
    
    Tax effect on above adjustments
    
    
    
    
    
    
    28
    
    
    
    16Excess of redemption price of Class B preferred shares on their paid-up capital net of related taxes
    
    
    (f
    )
    
    
    7
    
    
    
    7Noncontrolling interests
    
    
    (j
    )
    
    
    21
    
    
    
    22Shareholders equity under U.S. GAAP
    
    
    
    
    
    
    1,290
    
    
    
    1,269
 CASCADES  ANNUAL REPORT 2009




---



##### 



Note
    
    
    
    2009Canadian
    
    
    
    
    
    
    RDM
    
    
    U.S.GAAP
    
    
    Adjustments
    
    
    impact (h)
    
    
    GAAPCurrent assets
    
    
    (d
    )
    
    
    1,082
    
    
    
    
    
    
    
    (106
    )
    
    
    976Property, plant and equipment
    
    (a) (b) and (f)
    
    
    
    1,912
    
    
    
    35
    
    
    
    (110
    )
    
    
    1,837Intangible assets, other assets and goodwill
    
    (b) (c) and (e)
    
    
    
    798
    
    
    
    (42
    )
    
    
    56
    
    
    
    812Total assets
    
    
    
    
    
    
    3,792
    
    
    
    (7
    )
    
    
    (160
    )
    
    
    3,625Current liabilities
    
    
    
    
    
    
    598
    
    
    
    
    
    
    
    (101
    )
    
    
    497Long-term debt
    
    (a) to (d)
    
    
    
    1,459
    
    
    
    20
    
    
    
    (34
    )
    
    
    1,445Other liabilities
    
    (a) (b) (e) (f) and (j)
    
    
    
    431
    
    
    
    (13
    )
    
    
    (25
    )
    
    
    393Total liabilities
    
    
    
    
    
    
    2,488
    
    
    
    7
    
    
    
    (160
    )
    
    
    2,335Shareholders equity
    
    (a) (b) (e) (f) and (j)
    
    
    
    1,304
    
    
    
    (14
    )
    
    
    
    
    
    
    1,290Note
    
    
    
    
    2008Canadian
    
    
    
    
    
    
    RDM impact
    
    
    U.S.GAAP
    
    
    Ajustements
    
    
    (h)
    
    
    GAAPCurrent assets
    
    
    
    
    
    
    1,248
    
    
    
    
    
    
    
    (121
    )
    
    
    1,127Property, plant and equipment
    
    (a) (b) and (f)
    
    
    
    2,030
    
    
    
    33
    
    
    
    (110
    )
    
    
    1,953Intangible assets, other assets and goodwill
    
    (b) (c) and (e)    
    
    
    753
    
    
    
    (40
    )
    
    
    57
    
    
    
    770Total assets
    
    
    
    
    
    
    4,031
    
    
    
    (7
    )
    
    
    (174
    )
    
    
    3,850Current liabilities
    
    
    
    
    
    
    726
    
    
    
    
    
    
    
    (138
    )
    
    
    588Long-term debt
    
    
    (d
    )
    
    
    1,672
    
    
    
    11
    
    
    
    (11
    )
    
    
    1,672Other liabilities
    
    (a) (b) (e) (f) and (j)
    
    
    
    377
    
    
    
    (31
    )
    
    
    (25
    )
    
    
    321Total liabilities
    
    
    
    
    
    
    2,775
    
    
    
    (20
    )
    
    
    (174
    )
    
    
    2,581Shareholders equity
    
    (a) (b) (e) (f) and(j)
    
    
    
    1,256
    
    
    
    13
    
    
    
    
    
    
    
    1,269
 CASCADES  ANNUAL REPORT 2009




---



##### 



Note
    
    
    2009CanadianGAAP
    
    
    Adjustments
    
    
    RDM impact(h)
    
    
    U.S. GAAPSales
    
    
    
    
    
    
    3,877
    
    
    
    
    
    
    
    (224
    )
    
    
    3,653Costs of sales and expenses
    
    (a) (e) and (g)
    
    
    
    3,663
    
    
    
    (2
    )
    
    
    (221
    )
    
    
    3,440Operating income
    
    
    
    
    
    
    214
    
    
    
    2
    
    
    
    (3
    )
    
    
    213Interest expense
    
    
    
    
    
    
    118
    
    
    
    
    
    
    
    (4
    )
    
    
    114Foreign exchange loss on long term debt
    
    
    
    
    
    
    31
    
    
    
    
    
    
    
    
    
    
    
    3165
    
    
    
    2
    
    
    
    1
    
    
    
    68Provision for income tax
    
    (a) (e) and (g)
    
    

    23
    
    
    
    (2
    )
    
    
    (2
    )
    
    
    19Share of results of significant influence companies
    
    
    (l
    )
    
    
    (17
    )
    
    
    5
    
    
    
    3
    
    
    
    (9
    )Net loss including noncontrolling interests
    
    
    
    
    
    
    59
    
    
    
    (1
    )
    
    
    
    
    
    
    58Net loss attributable to noncontrolling interests
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    (1
    )Net loss attributable to Cascades inc.
    
    
    
    
    
    
    60
    
    
    
    (1
    )
    
    
    
    
    
    
    59Note
    
    
    2008Canadian
    
    
    
    
    
    
    RDM
    
    
    U.S.GAAP
    
    
    Adjustments
    
    
    impact (h)
    
    
    GAAPSales
    
    
    
    
    
    
    4,017
    
    
    
    
    
    
    
    (211
    )
    
    
    3,806Costs of sales and expenses
    
    (a) (d) (e) and (g)
    
    
    
    4,001
    
    
    
    7
    
    
    
    (219
    )
    
    
    3,789Operating income from continuing operations
    
    
    
    
    
    
    16
    
    
    
    (7
    )
    
    
    8
    
    
    
    17Interest expense
    
    
    
    
    
    
    102
    
    
    
    
    
    
    
    (4
    )
    
    
    98Foreign exchange loss on long term debt
    
    
    
    
    
    
    24
    
    
    
    
    
    
    
    
    
    
    
    24(110
    )
    
    
    (7
    )
    
    
    12
    
    
    
    (105
    )Provision for income tax
    
    (a) (e) and (g)
    
    
    
    (32
    )
    
    
    (12
    )
    
    
    
    
    
    
    (44
    )Share of results of significant influence companies
    
    
    
    
    
    
    (8
    )
    
    
    
    
    
    
    12
    
    
    
    4Net earnings from discontinued operations
    
    
    
    
    
    
    (18
    )
    
    
    
    
    
    
    
    
    
    
    (18
    )Net loss including noncontrolling interests
    
    
    
    
    
    
    (52
    )
    
    
    5
    
    
    
    
    
    
    
    (47
    )Net loss attributable to noncontrolling interests
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    2Net loss attributable to Cascades inc.
    
    
    
    
    
    
    (54
    )
    
    
    5
    
    
    
    
    
    
    
    (49
    )
 CASCADES  ANNUAL REPORT 2009




---



##### 



Note
    
    
    2007Canadian GAAP
    
    
    Adjustments
    
    
    U.S.GAAPSales
    
    
    
    
    
    
    3,929
    
    
    
    
    
    
    
    3,929Costs of sales and expenses
    
    (a) (b) (e) and (g)
    
    
    
    3,784
    
    
    
    18
    
    
    
    3,802Operating income from continuing operations
    
    
    
    
    
    
    145
    
    
    
    (18
    )
    
    
    127Interest expense
    
    
    
    
    
    
    102
    
    
    
    
    
    
    
    102Foreign exchange gain on long term debt
    
    
    
    
    
    
    (59
    )
    
    
    
    
    
    
    (59
    )102
    
    
    
    (18
    )
    
    
    84Provision for income tax
    
    (a) (e) and (g)
    
    
    
    11
    
    
    
    (12
    )
    
    
    (1
    )Share of results of significant influence companies
    
    
    
    
    
    
    27
    
    
    
    
    
    
    
    27Net loss from discontinued operations
    
    
    
    
    
    
    19
    
    
    
    
    
    
    
    19Net loss including noncontrolling interests
    
    
    
    
    
    
    99
    
    
    
    (6
    )
    
    
    93Net loss attributable to noncontrolling interests
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    3Net loss attributable to Cascades inc.
    
    
    
    
    
    
    96
    
    
    
    (6
    )
    
    
    90
  
 a)
    
    Under U.S. GAAP, investment tax credits are accounted for as a tax recovery. Under Canadian
GAAP, investment tax credits are accounted for as a reduction of the underlying investment.b)
    
    On December 30, 1997, the Company and Domtar Inc. merged their respective containerboard and
corrugated packaging operations to form Norampac Inc., a 50-50 joint venture. Under Canadian
GAAP, a portion of the gain realized on the transaction of an original amount of approximately
$58 million, net of related taxes, was recorded against property, plant and equipment and
goodwill. Under U.S. GAAP, this gain would have been recognized in earnings on December 30,
1997. Therefore, an adjustment is required to adjust amortization expenses recorded under
Canadian GAAP. On December 29, 2006, the Company acquired the remaining outstanding common
shares of Norampac. Therefore since this date, the goodwill is not amortized anymore and the
difference recorded before became a permanent difference. In addition, under U.S. GAAP,
additional liabilities have been included in the allocation of the purchase price at the date
of the transaction with respect to employee future benefits with a corresponding adjustment to
goodwill.c)
    
    In 2007, the Company adopted sections 1530, 3251, 3855 and 3865 (referred to as the
Sections) of the CICA Handbook with respect to measurement and recognition of financial
instruments, hedges, equity and comprehensive income. These Sections essentially harmonized
Canadian GAAP and U.S. GAAP except for the classification of deferred financing costs. Under
Canadian GAAP, those costs are added to the carrying value of the related long-term debt.
Under U.S. GAAP, deferred financing costs are classified in other assets. As of December 31,
2009 the reclassification of those costs amounted to $20 million ($11 million in 2008). With
the exception of the latter, the adjustment resulting from the adoption of these Sections
effective January 1, 2007 under Canadian GAAP had no impact on U.S. GAAP. Under Canadian GAAP,
prior to January 1, 2007, gains and losses were charged to earnings in the same period as the
respective hedged item affected earnings.d)
    
    Prior to January 1, 2008, the cost of inventories under US GAAP included, among other things,
an allocation of the depreciation expense on production equipment as well as other indirect
costs. For the year ended December 31, 2007, the Company recorded an amount of $6 million as
cumulative adjustment relating to the allocation of such costs as a component of inventory.
Starting January 1, 2008, the Company adopted, retroactively without restatements of prior
periods, Section 3031 of the CICA Handbook establishing new measurement requirements which
essentially harmonized Canadian and U.S. GAAP. CASCADES  ANNUAL REPORT 2009




---



##### 



e)
    
    Under U.S. GAAP in accordance with ASC 715, the Company recognizes the overfunded or
underfunded status of its defined benefits plans as an asset or liability with changes in that
funded status recognized through comprehensive income. Prior to the adoption of ASC 715, a
minimum pension liability adjustment was recorded in accumulated other comprehensive income
for plans whose accumulated benefit obligation exceeded the fair value of plan assets. The
excess of its liability over the intangible assets, which can also be recorded for the plan,
was recorded in comprehensive income. This adjustment is not required under Canadian GAAP.
Differences between Canadian and U.S. GAAP remain with respect to the amortization of
actuarial gains and losses arising prior to January 1, 2000.f)
    
    In 2003, the Company redeemed all of the outstanding Class B preferred shares of a subsidiary
for a consideration of $16 million. Under Canadian GAAP, the excess of the redemption price of
$10 million over the recorded capital was included in retained earnings. Under U.S. GAAP, as
these preferred shares represent a non-controlling interest, the excess of $10 million would
have been recorded as an increase of $15 million to property, plant and equipment and an
increase of $5 million in future income tax liabilities. The adjustment of $15 million to
property, plant and equipment is amortized on a straight-line basis over a period of 20 years.
In addition, under U.S. GAAP, the premium paid on redemption would be classified under
investing activities rather than financing activities.g)
    
    Under U.S. GAAP, income tax expense would be reduced by $4 million in 2009 (2008-$8 million;
2007-$13 million) for tax credits relating to research and development expenses, which are
recognized as a reduction of cost of sales under Canadian GAAP.h)
    
    Under Canadian GAAP, investments in joint ventures are accounted for using the proportionate
consolidation method. Under U.S. GAAP, they are accounted for using the equity method. The
different accounting treatments affect only the presentation and classification of financial
statement items and not net earnings or shareholders equity. Rules prescribed by the U.S.
Securities and Exchange Commission (SEC) permit the use of the proportionate consolidation
method in the reconciliation to U.S. GAAP provided the joint venture is an operating entity
and the significant financial operating policies are, by contractual arrangement, jointly
controlled by all parties having an equity interest in the joint venture. As required, the
Company discloses in note 22 the major components of its financial statements resulting from
the use of the proportionate consolidation method to account for its interests in joint
ventures. For RDM, the exemption is not possible, therefore for reconciliation purposes the
joint venture has been accounted for under the equity method. The impacts are disclosed in the
column RDM Impact. For the other joint ventures, the exemption applies and even under US GAAP
they remain consolidated with the proportionate method.i)
    
    Under US GAAP, the consolidated cash flows would not be significantly different from the
presentation under Canadian GAAP, except that RDM would be shown as an equity investment and
not proportionally consolidated. In addition, some total in operating activities under
Canadian GAAP would not be presented under U.S. GAAP.j)
    
    On January 1, 2009, under U.S. GAAP, the Company retroactively adopted the presentation and
disclosure requirements of ASC 810 Consolidation. ASC 810 requires that NCI be presented as
a component of shareholders equity. As a result, NCI were reclassified from other liabilities
to shareholders equity for all periods presented in this U.S. GAAP reconciliation. Under
Canadian GAAP, NCI continues to be presented in other liabilities.k)
    
    Under Canadian GAAP, an investor should present and disclose its proportionate share of
discontinued operations of an investment accounted under the equity method in its financial
statement according to their nature. Under U.S. GAAP, discontinued operation of an investee is
not separately presented in the investors financial statement.l)
    
    In 2009, Boralex inc., a significantly influenced company, recorded a gain on dilution as a
result of a change in ownership in one of its subsidiary, which did not result in a loss of
control. Under CICA 1600 Consolidated financial statements, such gain is recorded in net
earnings for the year. Under US GAAP a gain on dilution which did not result in a loss of
control is accounted for as equity transaction. As a result, the Company reclassified an
amount of $5 million from net earnings for the year to shareholders equity. CASCADES  ANNUAL REPORT 2009




---



##### 



4 Additional disclosures required by US GAAP
       December 31,2009AssetLevel 1
    
    
    Level 2
    
    
    Level 3
    
    
    Total
    
    
    AllocationAssetsShort-term securities
    
    
    24
    
    
    
    
    
    
    
    
    
    
    
    24
    
    
    
    4
    %Common and preferred stocks
    
    
    266
    
    
    
    62
    
    
    
    
    
    
    
    328
    
    
    
    62
    %Bonds
    
    
    138
    
    
    
    41
    
    
    
    
    
    
    
    179
    
    
    
    34
    %428
    
    
    
    103
    
    
    
    
    
    
    
    531
    
    
    
    100
    %
     2009
    
    
    2008
    
    
    2007Prior year service cost
    
    
    (22
    )
    
    
    (24
    )
    
    
    (23
    )Accumulated gain (loss)
    
    
    (81
    )
    
    
    (43
    )
    
    
    (32
    )Accumulated other comprehensive income (loss)
    
    
    (103
    )
    
    
    (67
    )
    
    
    (55
    )
 CASCADES  ANNUAL REPORT 2009




---



##### 



2009
    
    
    2008
    
    
    2007Prior year service cost
    
    
    (1
    )
    
    
    (2
    )
    
    
    (3
    )Amortization of prior year service cost
    
    
    2
    
    
    
    2
    
    
    
    2Net gain (loss)
    
    
    (38
    )
    
    
    (14
    )
    
    
    (9
    )Amortization of net actuarial loss
    
    
    1
    
    
    
    2
    
    
    
    2Net amount recognized in other comprehensive income (pre-tax)
    
    
    (36
    )
    
    
    (12
    )
    
    
    (8
    )
     2009OtherCanada
    
    countries
    
    TotalNet earnings from
continuing operations
before provision for
income taxes, share of
results of significantly
influenced companies and
share of earnings
attributed to
non-controlling interests
    
    
    (57
    )
    
    
    122
    
    
    
    65Provision for income taxesCurrent
    
    
    (1
    )
    
    
    31
    
    
    
    30Future
    
    
    (12
    )
    
    
    5
    
    
    
    (7
    )Net earnings from
continuing operations
before share of results
of significantly
influenced companies and
share of earnings
attributed to
non-controlling interests
    
    
    (44
    )
    
    
    86
    
    
    
    42
 2008OtherCanada
    
    countries
    
    TotalNet earnings from continuing
operations before provision for
income taxes, share of results of
significantly influenced companies
and share of earnings attributed to
non-controlling interests
    
    
    (136
    )
    
    
    26
    
    
    
    (110
    )Provision for income taxesCurrent
    
    
    7
    
    
    
    13
    
    
    
    20Future
    
    
    (47
    )
    
    
    (5
    )
    
    
    (52
    )Net earnings from continuing
operations before share of results
of significantly influenced
companies and share of earnings
attributed to non-controlling
interests
    
    
    (96
    )
    
    
    18
    
    
    
    (78
    )
 CASCADES  ANNUAL REPORT 2009




---



##### 



2007OtherCanada
    
    countries
    
    TotalNet earnings (loss) from continuing operations before provision for income taxes, share of
results of significantly influenced companies and share of earnings attributed to
non-controlling interests
    
    
    13
    
    
    
    89
    
    
    
    102Provision for income taxesCurrent
    
    
    6
    
    
    
    27
    
    
    
    33Future
    
    
    (4
    )
    
    
    (2
    )
    
    
    (6
    )Decrease in future income taxes resulting from a substantively charted change in tax rates
    
    
    (16
    )
    
    
    
    
    
    
    (16
    )Net earnings from continuing operations before share of results of significantly influenced
companies and share of earnings attributed to non-controlling interests
    
    
    27
    
    
    
    64
    
    
    
    91
  2009
    
    
    2008Accounts receivable
    
    
    459
    
    
    
    565Provision for doubtful accounts
    
    
    (16
    )
    
    
    (30
    )Accounts receivable from related companies
    
    
    7
    
    
    
    7Other accounts receivable
    
    
    43
    
    
    
    52Future income tax asset
    
    
    13
    
    
    
    12Income tax receivable
    
    
    6
    
    
    
    32Prepaid expenses
    
    
    17
    
    
    
    18Other
    
    
    14
    
    
    
    1543
    
    
    
    657
  2009
    
    
    2008Accounts payable
    
    
    366
    
    
    
    425Accounts payable to related companies
    
    
    2
    
    
    
    3Salaries and benefits payable
    
    
    83
    
    
    
    81Interest payable
    
    
    26
    
    
    
    25Income taxes payable on benefit
    
    
    1
    
    
    
    2Capital expenses included in accounts payable
    
    
    13
    
    
    
    14Other
    
    
    14
    
    
    
    36505
    
    
    
    586
  2009
    
    
    2008
    
    
    2007Payment on operating lease, including rent of building
    
    
    39
    
    
    
    37
    
    
    
    45Payment on capital lease
    
    
    1
    
    
    
    2
    
    
    
    5Loss (gain) on foreign currencyRealized
    
    
    10
    
    
    
    (11
    )
    
    
    15Unrealized
    
    
    
    
    
    
    (1
    )
    
    
    (11
    )
 CASCADES  ANNUAL REPORT 2009




---



##### 



2009Balanceat the
    
    
    Additions
    
    
    
    
    
    
    Balancebeginning
    
    
    Charged
    
    
    
    
    
    
    at the endof the period
    
    
    To expenses
    
    
    Deductions
    
    
    of the periodProvision for doubtful accounts
    
    
    30
    
    
    
    7
    
    
    
    (21
    )
    
    
    16Provision for obsolete inventory
    
    
    12
    
    
    
    
    
    
    
    (4
    )
    
    
    8Valuation allowance for tax purposes(1)
    
    
    84
    
    
    
    
    
    
    
    (20
    )
    
    
    64
 2008Balance
    
    
    Additionsat the
    
    
    Charged
    
    
    
    
    
    
    Balancebeginning
    
    
    to
    
    
    
    
    
    
    at the endof the period
    
    
    expenses
    
    
    Deductions
    
    
    of the periodProvision for doubtful accounts
    
    
    16
    
    
    
    17
    
    
    
    (3
    )
    
    
    30Provision for obsolete inventory
    
    
    16
    
    
    
    
    
    
    
    (4
    )
    
    
    12Valuation allowance for tax purposes(1)
    
    
    44
    
    
    
    40
    
    
    
    
    
    
    
    84
 2007Balanceat the
    
    
    Additions
    
    
    
    
    
    
    Balancebeginning
    
    
    Charged
    
    
    
    
    
    
    at the endof the period
    
    
    to expenses
    
    
    Deductions
    
    
    of the periodProvision for doubtful accounts
    
    
    13
    
    
    
    8
    
    
    
    (5
    )
    
    
    16Provision for obsolete inventory
    
    
    10
    
    
    
    6
    
    
    
    
    
    
    
    16Valuation allowance for tax purposes(1)
    
    
    21
    
    
    
    23
    
    
    
    
    
    
    
    44
 
 (1)
    
    The deductions in the valuation allowance for tax purposes.  Shipping and handling costs
  Planned major maintenance
  CASCADES  ANNUAL REPORT 2009




---



##### 



Derivatives and hedging activities and fair value measurement
  Gain (Loss) Recognized in
    
    Gain (Loss) Reclassified fromAccumulated Other
    
    Accumulated OtherComprehensive Loss on
    
    Comprehensive Loss intoDerivatives (Effective Portion)
    
    Income (Effective Portion)For the year
    
    For the year
    
    For the year
    
    For the yearended
    
    ended
    
    ended
    
    endedDecember 31,
    
    December 31,
    
    December 31,
    
    December 31,2009
    
    2008
    
    2009
    
    2008Derivatives designated as cash flow hedging instruments:Currency contracts
    
    
    87
    
    
    
    (88
    )
    
    
    (118
    )
    
    
    195Commodity contracts
    
    
    (2
    )
    
    
    3
    
    
    
    (14
    )
    
    
    Interest rate swap contracts
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    1Net investment in foreign operations
    
    
    87
    
    
    
    17
    
    
    
    (87
    )
    
    
    (17
    )Income taxes
    
    
    (38
    )
    
    
    21
    
    
    
    29
    
    
    
    (24
    )Total
    
    
    134
    
    
    
    (48
    )
    
    
    (190
    )
    
    
    155
 5 Supplemental condensed consolidating financial information
  CASCADES  ANNUAL REPORT 2009




---



##### 



2009Non-Parent
    
    
    Subsidiary
    
    
    guarantor
    
    
    EliminationCompany
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    adjustments
    
    
    Consolidated$
    
    
    $
    
    
    $
    
    
    $
    
    
    $AssetsCurrent assetsCash and cash equivalents
    
    
    
    
    
    
    4
    
    
    
    15
    
    
    
    
    
    
    
    19Accounts receivable
    
    
    20
    
    
    
    382
    
    
    
    180
    
    
    
    (39
    )
    
    
    543Inventories
    
    
    
    
    
    
    414
    
    
    
    107
    
    
    
    (1
    )
    
    
    52020
    
    
    
    800
    
    
    
    302
    
    
    
    (40
    )
    
    
    1,082Property, plant and equipment
    
    
    
    
    
    
    1,604
    
    
    
    303
    
    
    
    5
    
    
    
    1,912Intangible assets
    
    
    
    
    
    
    127
    
    
    
    27
    
    
    
    11
    
    
    
    165Other assets
    
    
    2,721
    
    
    
    358
    
    
    
    274
    
    
    
    (3,036
    )
    
    
    317Goodwill
    
    
    
    
    
    
    304
    
    
    
    6
    
    
    
    6
    
    
    
    3162,741
    
    
    
    3,193
    
    
    
    912
    
    
    
    (3,054
    )
    
    
    3,792Liabilities and Shareholders EquityCurrent liabilitiesBank loans and advances
    
    
    
    
    
    
    41
    
    
    
    42
    
    
    
    
    
    
    
    83Accounts payable and accrued liabilities
    
    
    32
    
    
    
    330
    
    
    
    170
    
    
    
    (27
    )
    
    
    505Current portion of long-term debt
    
    
    
    
    
    
    2
    
    
    
    8
    
    
    
    
    
    
    
    1032
    
    
    
    373
    
    
    
    220
    
    
    
    (27
    )
    
    
    598Long-term debt
    
    
    1,351
    
    
    
    604
    
    
    
    262
    
    
    
    (758
    )
    
    
    1,459Other liabilities
    
    
    54
    
    
    
    314
    
    
    
    18
    
    
    
    45
    
    
    
    4311,437
    
    
    
    1,291
    
    
    
    500
    
    
    
    (740
    )
    
    
    2,488Shareholders equityCapital stock
    
    
    499
    
    
    
    1,874
    
    
    
    150
    
    
    
    (2,024
    )
    
    
    499Contributed surplus
    
    
    14
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14Retained earnings
    
    
    700
    
    
    
    158
    
    
    
    281
    
    
    
    (439
    )
    
    
    700Accumulated other comprehensive income (loss)
    
    
    91
    
    
    
    (130
    )
    
    
    (19
    )
    
    
    149
    
    
    
    911,304
    
    
    
    1,902
    
    
    
    412
    
    
    
    (2,314
    )
    
    
    1,3042,741
    
    
    
    3,193
    
    
    
    912
    
    
    
    (3,054
    )
    
    
    3,792
 CASCADES  ANNUAL REPORT 2009




---



##### 



2008Non-Parent
    
    
    Subsidiary
    
    
    guarantor
    
    
    EliminationCompany
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    adjustments
    
    
    Consolidated$
    
    
    $
    
    
    $
    
    
    $
    
    
    $AssetsCurrent assetsCash and cash equivalents
    
    
    
    
    
    
    3
    
    
    
    8
    
    
    
    
    
    
    
    11Accounts receivable
    
    
    101
    
    
    
    485
    
    
    
    210
    
    
    
    (139
    )
    
    
    657Inventories
    
    
    
    
    
    
    459
    
    
    
    122
    
    
    
    (1
    )
    
    
    580101
    
    
    
    947
    
    
    
    340
    
    
    
    (140
    )
    
    
    1,248Property, plant and equipment
    
    
    
    
    
    
    1,711
    
    
    
    314
    
    
    
    5
    
    
    
    2,030Intangible assets
    
    
    
    
    
    
    121
    
    
    
    28
    
    
    
    
    
    
    
    149Other assets
    
    
    2,973
    
    
    
    659
    
    
    
    248
    
    
    
    (3,597
    )
    
    
    283Goodwill
    
    
    
    
    
    
    309
    
    
    
    6
    
    
    
    6
    
    
    
    3213,074
    
    
    
    3,747
    
    
    
    936
    
    
    
    (3,726
    )
    
    
    4,031Liabilities and Shareholders EquityCurrent liabilitiesBank loans and advances
    
    
    
    
    
    
    44
    
    
    
    60
    
    
    
    
    
    
    
    104Accounts payable and accrued liabilities
    
    
    29
    
    
    
    511
    
    
    
    183
    
    
    
    (137
    )
    
    
    586Current portion of long-term debt
    
    
    
    
    
    
    2
    
    
    
    34
    
    
    
    
    
    
    
    3629
    
    
    
    557
    
    
    
    277
    
    
    
    (137
    )
    
    
    726Long-term debt
    
    
    1,745
    
    
    
    1,799
    
    
    
    319
    
    
    
    (2,191
    )
    
    
    1,672Other liabilities
    
    
    44
    
    
    
    263
    
    
    
    21
    
    
    
    49
    
    
    
    3771,818
    
    
    
    2,619
    
    
    
    617
    
    
    
    (2,279
    )
    
    
    2,775Shareholders equityCapital stock
    
    
    506
    
    
    
    1,049
    
    
    
    129
    
    
    
    (1,178
    )
    
    
    506Contributed surplus
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9Retained earnings
    
    
    656
    
    
    
    16
    
    
    
    182
    
    
    
    (198
    )
    
    
    656Accumulated other comprehensive income (loss)
    
    
    85
    
    
    
    63
    
    
    
    8
    
    
    
    (71
    )
    
    
    851,256
    
    
    
    1,128
    
    
    
    319
    
    
    
    (1,447
    )
    
    
    1,2563,074
    
    
    
    3,747
    
    
    
    936
    
    
    
    (3,726
    )
    
    
    4,031
 CASCADES  ANNUAL REPORT 2009




---



##### 



2009Non-Parent
    
    
    Subsidiary
    
    
    guarantor
    
    
    EliminationCompany
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    adjustments
    
    
    Consolidated$
    
    
    $
    
    
    $
    
    
    $
    
    
    $Sales
    
    
    
    
    
    
    3,108
    
    
    
    840
    
    
    
    (71
    )
    
    
    3,877Cost of sales and expensesCost of sales (excluding depreciation and amortization)
    
    
    (3
    )
    
    
    2,353
    
    
    
    720
    
    
    
    (79
    )
    
    
    2,991Depreciation and amortization
    
    
    
    
    
    
    182
    
    
    
    35
    
    
    
    1
    
    
    
    218Selling and administrative expenses
    
    
    8
    
    
    
    324
    
    
    
    76
    
    
    
    5
    
    
    
    413Loss on disposal and other
    
    
    
    
    
    
    3
    
    
    
    (2
    )
    
    
    
    
    
    
    1Impairment and other restructuring costs
    
    
    
    
    
    
    57
    
    
    
    1
    
    
    
    
    
    
    
    58Loss on financial instruments
    
    
    (2
    )
    
    
    (16
    )
    
    
    
    
    
    
    
    
    
    
    (18
    )3
    
    
    
    2,903
    
    
    
    830
    
    
    
    (73
    )
    
    
    3,663Operating income from continuing operations
    
    
    (3
    )
    
    
    205
    
    
    
    10
    
    
    
    2
    
    
    
    214Financing expense
    
    
    (1
    )
    
    
    114
    
    
    
    (12
    )
    
    
    
    
    
    
    101Loss on refinancing of long term debt
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17Gain on purchases of senior notes
    
    
    (14
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14
    )Foreign exchange loss on long-term debt
    
    
    45
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45(50
    )
    
    
    91
    
    
    
    22
    
    
    
    2
    
    
    
    65Provision for (recovery of) income taxes
    
    
    (14
    )
    
    
    34
    
    
    
    2
    
    
    
    1
    
    
    
    23Share of results of significantly influenced companies and dilution gain
    
    
    (96
    )
    
    
    (20
    )
    
    
    
    
    
    
    99
    
    
    
    (17
    )Non controlling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    (1
    )Net earnings (loss) from continuing operations
    
    
    60
    
    
    
    77
    
    
    
    20
    
    
    
    (97
    )
    
    
    60Net earnings from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net earnings (loss) for the year
    
    
    60
    
    
    
    77
    
    
    
    20
    
    
    
    (97
    )
    
    
    60
 CASCADES  ANNUAL REPORT 2009




---



##### 



2008Parent
    
    Subsidiary
    
    Non-guarantor
    
    EliminationCompany
    
    Guarantors
    
    Subsidiaries
    
    adjustments
    
    Consolidated$
    


    $
    
    

    $
    
    

    $
    
    

    $Sales
    
    
    
    
    
    
    3,166
    
    
    
    967
    
    
    
    (116
    )
    
    
    4,017Cost of sales and expensesCost of sales (excluding depreciation and amortization)
    
    
    7
    
    
    
    2,586
    
    
    
    849
    
    
    
    (119
    )
    
    
    3,323Depreciation and amortization
    
    
    
    
    
    
    181
    
    
    
    32
    
    
    
    
    
    
    
    213Selling and administrative expenses
    
    
    2
    
    
    
    314
    
    
    
    73
    
    
    
    
    
    
    
    389Loss on disposal and other
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    5Impairment and other restructuring costs
    
    
    
    
    
    
    37
    
    
    
    6
    
    
    
    
    
    
    
    43Loss on financial instruments
    
    
    
    
    
    
    28
    
    
    
    
    
    
    
    
    
    
    
    289
    
    
    
    3,146
    
    
    
    965
    
    
    
    (119
    )
    
    
    4,001Operating income from continuing operations
    
    
    (9
    )
    
    
    20
    
    
    
    2
    
    
    
    3
    
    
    
    16Financing expense
    
    
    (19
    )
    
    
    132
    
    
    
    (11
    )
    
    
    
    
    
    
    102Gain on purchases of senior notes
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )Foreign exchange loss on long-term debt
    
    
    26
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26(14
    )
    
    
    (112
    )
    
    
    13
    
    
    
    3
    
    
    
    (110
    )Provision for (recovery of) income taxes
    
    
    (40
    )
    
    
    (29
    )
    
    
    8
    
    
    
    29
    
    
    
    (32
    )Share of results of significantly influenced companies and dilution gain
    
    
    98
    
    
    
    
    
    
    
    1
    
    
    
    (107
    )
    
    
    (8
    )Non controlling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    2Net earnings (loss) from continuing operations
    
    
    (72
    )
    
    
    (83
    )
    
    
    4
    
    
    
    79
    
    
    
    (72
    )Net earnings from discontinued operations
    
    
    18
    
    
    
    18
    
    
    
    20
    
    
    
    (38
    )
    
    
    18Net earnings (loss) for the year
    
    
    (54
    )
    
    
    (65
    )
    
    
    24
    
    
    
    41
    
    
    
    (54
    )
 CASCADES  ANNUAL REPORT 2009




---



##### 



2007Parent
    
    Subsidiary
    
    Non-guarantor
    
    EliminationCompany
    
    Guarantors
    
    Subsidiaries
    
    adjustments
    
    Consolidated$
    
    $
    
    $
    
    $
    
    $Sales
    
    
    
    
    
    
    3,127
    
    
    
    933
    
    
    
    (131
    )
    
    
    3,929Cost of sales and expensesCost of sales (excluding depreciation and amortization)
    
    
    6
    
    
    
    2,554
    
    
    
    772
    
    
    
    (131
    )
    
    
    3,201Depreciation and amortization
    
    
    
    
    
    
    181
    
    
    
    26
    
    
    
    
    
    
    
    207Selling and administrative expenses
    
    
    3
    
    
    
    317
    
    
    
    70
    
    
    
    
    
    
    
    390Gains on disposal and other
    
    
    (1
    )
    
    
    (17
    )
    
    
    
    
    
    
    1
    
    
    
    (17
    )Impairment and other restructuring costs
    
    
    
    
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    9Gain on financial instruments
    
    
    
    
    
    
    (6
    )
    
    
    
    
    
    
    
    
    
    
    (6
    )8
    
    
    
    3,038
    
    
    
    868
    
    
    
    (130
    )
    
    
    3,784Operating income from continuing operations
    
    
    (8
    )
    
    
    89
    
    
    
    65
    
    
    
    (1
    )
    
    
    145Financing expense
    
    
    (12
    )
    
    
    135
    
    
    
    (21
    )
    
    
    
    
    
    
    102Foreign exchange gain on long-term debt
    
    
    (59
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (59
    )63
    
    
    
    (46
    )
    
    
    86
    
    
    
    (1
    )
    
    
    102Provision for (recovery of) income taxes
    
    
    9
    
    
    
    (13
    )
    
    
    13
    
    
    
    2
    
    
    
    11Share of results of significantly influenced companies and dilution gain
    
    
    (61
    )
    
    
    (58
    )
    
    
    
    
    
    
    92
    
    
    
    (27
    )Non controlling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    3Net earnings from continuing operations
    
    
    115
    
    
    
    25
    
    
    
    73
    
    
    
    (98
    )
    
    
    115Net loss from discontinued operations
    
    
    (19
    )
    
    
    (15
    )
    
    
    (4
    )
    
    
    19
    
    
    
    (19
    )Net earnings (loss) for the year
    
    
    96
    
    
    
    10
    
    
    
    69
    
    
    
    (79
    )
    
    
    96
 CASCADES  ANNUAL REPORT 2009




---



##### 



2009Non-Parent
    
    
    Subsidiary
    
    
    guarantor
    
    
    EliminationCompany
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    adjustments
    
    
    Consolidated$
    
    
    $
    
    
    $
    
    
    $
    
    
    $Operating activities from continuing operationsNet earnings (loss) for the year
    
    
    60
    
    
    
    77
    
    
    
    20
    
    
    
    (97
    )
    
    
    60Adjustments for:Depreciation and amortization
    
    
    
    
    
    
    182
    
    
    
    35
    
    
    
    1
    
    
    
    218Loss on disposal and other
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1Impairment and other restructuring costs
    
    
    
    
    
    
    51
    
    
    
    (1
    )
    
    
    
    
    
    
    50Loss on refinancing of long term debt
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4Unrealized loss on financial instruments
    
    
    (2
    )
    
    
    (26
    )
    
    
    
    
    
    
    2
    
    
    
    (26
    )Foreign exchange loss on long-term debt
    
    
    45
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45Gain on purchases of senior notes
    
    
    (14
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14
    )Future income taxes
    
    
    (14
    )
    
    
    7
    
    
    
    (1
    )
    
    
    1
    
    
    
    (7
    )Share of results of significantly influenced companies and dilution gain
    
    
    (96
    )
    
    
    (20
    )
    
    
    
    
    
    
    99
    
    
    
    (17
    )Non controlling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    (1
    )Others
    
    
    12
    
    
    
    (10
    )
    
    
    (3
    )
    
    
    (7
    )
    
    
    (8
    )(5
    )
    
    
    262
    
    
    
    50
    
    
    
    (2
    )
    
    
    305Changes in non-cash working capital components
    
    
    83
    
    
    
    (52
    )
    
    
    23
    
    
    
    (2
    )
    
    
    5278
    
    
    
    210
    
    
    
    73
    
    
    
    (4
    )
    
    
    357Investing activities from continuing operationsPurchases of property, plant and equipment
    
    
    
    
    
    
    (135
    )
    
    
    (44
    )
    
    
    6
    
    
    
    (173
    )Proceeds from disposal of property, plant and equipment
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    2Decrease (increase) in other assets
    
    
    179
    
    
    
    73
    
    
    
    (6
    )
    
    
    (263
    )
    
    
    (17
    )Business acquisitions and joint venture disclosure
    
    
    
    
    
    
    (65
    )
    
    
    (8
    )
    
    
    4
    
    
    
    (69
    )179
    
    
    
    (127
    )
    
    
    (56
    )
    
    
    (253
    )
    
    
    (257
    )Financing activities from continuing operationsBank loans and advances
    
    
    
    
    
    
    (1
    )
    
    
    (17
    )
    
    
    
    
    
    
    (18
    )Change in revolving credit facilities
    
    
    (410
    )
    
    
    191
    
    
    
    (31
    )
    
    
    
    
    
    
    (250
    )Issuance of senior notes, net of related expenses
    
    
    955
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    955Purchases of senior notes
    
    
    (779
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (779
    )Increase in other long-term debt
    
    
    (1
    )
    
    
    (9
    )
    
    
    37
    
    
    
    
    
    
    
    27Payments of other long-term debt
    
    
    
    
    
    
    (196
    )
    
    
    (30
    )
    
    
    214
    
    
    
    (12
    )Early settlement of foreign exchange contracts
    
    
    (2
    )
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    8Net proceeds from issuances of common shares
    
    
    
    
    
    
    (61
    )
    
    
    36
    
    
    
    25
    
    
    
    Redemption of common shares
    
    
    (4
    )
    
    
    (13
    )
    
    
    
    
    
    
    13
    
    
    
    (4
    )Dividends
    
    
    (16
    )
    
    
    (1
    )
    
    
    (4
    )
    
    
    5
    
    
    
    (16
    )(257
    )
    
    
    (80
    )
    
    
    (9
    )
    
    
    257
    
    
    
    (89
    )Change in cash and cash equivalents during the year from continuing operations
    
    
    
    
    
    
    3
    
    
    
    8
    
    
    
    
    
    
    
    11Change in cash and cash equivalents from discontinued operations, including proceeds on disposal
    
    
    
    
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    (3
    )Net change in cash and cash equivalents during the year
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    8Cash and cash equivalents-Beginning of year
    
    
    
    
    
    
    4
    
    
    
    7
    
    
    
    
    
    
    
    11Cash and cash equivalents-End of year
    
    
    
    
    
    
    4
    
    
    
    15
    
    
    
    
    
    
    
    19
 CASCADES  ANNUAL REPORT 2009




---



##### 



2008Parent
    
    
    Subsidiary
    
    
    Non-guarantor
    
    
    EliminationCompany
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    adjustments
    
    
    Consolidated$
    
    
    $
    
    
    $
    
    
    $
    
    
    $Operating activities from continuing operationsNet earnings (loss) for the year
    
    
    (54
    )
    
    
    (65
    )
    
    
    24
    
    
    
    41
    
    
    
    (54
    )Net earnings from discontinued operations
    
    
    (18
    )
    
    
    (18
    )
    
    
    (20
    )
    
    
    38
    
    
    
    (18
    )Net earnings (loss) from continuing operations
    
    
    (72
    )
    
    
    (83
    )
    
    
    4
    
    
    
    79
    
    
    
    (72
    )Adjustments for:Depreciation and amortization
    
    
    
    
    
    
    181
    
    
    
    32
    
    
    
    
    
    
    
    213Loss on disposal and other
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    5Impairment and other restructuring costs
    
    
    
    
    
    
    17
    
    
    
    1
    
    
    
    (2
    )
    
    
    16Unrealized loss on financial instruments
    
    
    
    
    
    
    26
    
    
    
    1
    
    
    
    
    
    
    
    27Foreign exchange loss on long-term debt
    
    
    26
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26Gain on purchases of senior notes
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )Future income taxes
    
    
    (11
    )
    
    
    (41
    )
    
    
    
    
    
    
    
    
    
    
    (52
    )Share of results of significantly influenced companies and dilution gain
    
    
    98
    
    
    
    
    
    
    
    1
    
    
    
    (107
    )
    
    
    (8
    )Non controlling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    2Others
    
    
    12
    
    
    
    5
    
    
    
    (44
    )
    
    
    16
    
    
    
    (11
    )Early settlement of natural gas contracts
    
    
    
    
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    1151
    
    
    
    116
    
    
    
    
    
    
    
    (12
    )
    
    
    155Changes in non-cash working capital components
    
    
    (101
    )
    
    
    81
    
    
    
    (14
    )
    
    
    3
    
    
    
    (31
    )(50
    )
    
    
    197
    
    
    
    (14
    )
    
    
    (9
    )
    
    
    124Investing activities from continuing operationsPurchases of property, plant and equipment
    
    
    
    
    
    
    (137
    )
    
    
    (49
    )
    
    
    2
    
    
    
    (184
    )Proceeds from disposal of property, plant and equipment
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    (5
    )
    
    
    5Decrease (increase) in other assets
    
    
    (13
    )
    
    
    41
    
    
    
    28
    
    
    
    (60
    )
    
    
    (4
    )Business acquisitions and joint venture disclosure
    
    
    1
    
    
    
    
    
    
    
    5
    
    
    
    (1
    )
    
    
    5(12
    )
    
    
    (86
    )
    
    
    (16
    )
    
    
    (64
    )
    
    
    (178
    )Financing activities from continuing operationsBank loans and advances
    
    
    
    
    
    
    (4
    )
    
    
    26
    
    
    
    (2
    )
    
    
    20Change in revolving credit facilities
    
    
    (66
    )
    
    
    (70
    )
    
    
    22
    
    
    
    (35
    )
    
    
    (149
    )Purchase of senior notes
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )Increase in other long-term debt
    
    
    
    
    
    
    2
    
    
    
    9
    
    
    
    (9
    )
    
    
    2Payments of other long-term debt
    
    
    
    
    
    
    (29
    )
    
    
    (58
    )
    
    
    82
    
    
    
    (5
    )Early settlement of foreign exchange contracts
    
    
    150
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    150Dividend paid to a non controlling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5
    )
    
    
    (5
    )Redemption of common shares
    
    
    (4
    )
    
    
    (16
    )
    
    
    
    
    
    
    16
    
    
    
    (4
    )Dividends
    
    
    (16
    )
    
    
    (1
    )
    
    
    (25
    )
    
    
    26
    
    
    
    (16
    )62
    
    
    
    (118
    )
    
    
    (26
    )
    
    
    73
    
    
    
    (9
    )Change in cash and cash equivalents during the year from continuing operations
    
    
    
    
    
    
    (7
    )
    
    
    (56
    )
    
    
    
    
    
    
    (63
    )Change in cash and cash equivalents from discontinued operations, including proceeds on disposal
    
    
    
    
    
    
    9
    
    
    
    41
    
    
    
    
    
    
    
    50Net change in cash and cash equivalents during the year
    
    
    
    
    
    
    2
    
    
    
    (15
    )
    
    
    
    
    
    
    (13
    )Translation adjustments on cash and cash equivalents
    
    
    
    
    
    
    (6
    )
    
    
    5
    
    
    
    
    
    
    
    (1
    )Cash and cash equivalents-Beginning of year
    
    
    
    
    
    
    7
    
    
    
    18
    
    
    
    
    
    
    
    25Cash and cash equivalents-End of year
    
    
    
    
    
    
    3
    
    
    
    8
    
    
    
    
    
    
    
    11
 CASCADES  ANNUAL REPORT 2009




---



##### 



2007Non-Parent
    
    
    Subsidiary
    
    
    guarantor
    
    
    EliminationCompany
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    adjustments
    
    
    Consolidated$
    
    
    $
    
    
    $
    
    
    $
    
    
    $Operating activities from continuing operationsNet earnings for the year
    
    
    96
    
    
    
    10
    
    
    
    69
    
    
    
    (79
    )
    
    
    96Net loss from discontinued operations
    
    
    19
    
    
    
    15
    
    
    
    4
    
    
    
    (19
    )
    
    
    19Net earnings (loss) from continuing operations
    
    
    115
    
    
    
    25
    
    
    
    73
    
    
    
    (98
    )
    
    
    115Adjustments for:Depreciation and amortization
    
    
    
    
    
    
    181
    
    
    
    26
    
    
    
    
    
    
    
    207Losses (gains) on disposal and other
    
    
    (2
    )
    
    
    (28
    )
    
    
    
    
    
    
    1
    
    
    
    (29
    )Impairment and other restructuring costs
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    3Foreign exchange loss (gain) on long-term debt
    
    
    (59
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (59
    )Future income taxes
    
    
    9
    
    
    
    (31
    )
    
    
    (3
    )
    
    
    3
    
    
    
    (22
    )Share of results of significantly influenced companies and dilution gain
    
    
    (61
    )
    
    
    (58
    )
    
    
    
    
    
    
    92
    
    
    
    (27
    )Non controlling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    3Others
    
    
    17
    
    
    
    (1
    )
    
    
    (35
    )
    
    
    6
    
    
    
    (13
    )19
    
    
    
    91
    
    
    
    61
    
    
    
    7
    
    
    
    178Changes in non-cash working capital components
    
    
    (55
    )
    
    
    (26
    )
    
    
    1
    
    
    
    (9
    )
    
    
    (89
    )(36
    )
    
    
    65
    
    
    
    62
    
    
    
    (2
    )
    
    
    89Investing activities from continuing operationsPurchases of property, plant and equipment
    
    
    
    
    
    
    (143
    )
    
    
    (28
    )
    
    
    4
    
    
    
    (167
    )Proceeds from disposal of property, plant and equipment
    
    
    
    
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    7Decrease (increase) in other assets
    
    
    (47
    )
    
    
    90
    
    
    
    39
    
    
    
    (85
    )
    
    
    (3
    )Business acquisitions and joint venture disclosure
    
    
    
    
    
    
    (10
    )
    
    
    
    
    
    
    
    
    
    
    (10
    )Business disposals, net of cash disposed
    
    
    
    
    
    
    29
    
    
    
    
    
    
    
    8
    
    
    
    37(47
    )
    
    
    (27
    )
    
    
    11
    
    
    
    (73
    )
    
    
    (136
    )Financing activities from continuing operationsBank loans and advances
    
    
    
    
    
    
    5
    
    
    
    2
    
    
    
    
    
    
    
    7Change in revolving credit facilities
    
    
    103
    
    
    
    (52
    )
    
    
    62
    
    
    
    (13
    )
    
    
    100Increase in other long-term debt
    
    
    
    
    
    
    65
    
    
    
    (7
    )
    
    
    (58
    )
    
    
    Payments of other long-term debt
    
    
    
    
    
    
    (3
    )
    
    
    (5
    )
    
    
    
    
    
    
    (8
    )Net proceeds from issuances of common shares
    
    
    1
    
    
    
    (1
    )
    
    
    
    
    
    
    1
    
    
    
    1Redemption of common shares
    
    
    (5
    )
    
    
    (40
    )
    
    
    (88
    )
    
    
    128
    
    
    
    (5
    )Dividends
    
    
    (16
    )
    
    
    (9
    )
    
    
    (5
    )
    
    
    14
    
    
    
    (16
    )83
    
    
    
    (35
    )
    
    
    (41
    )
    
    
    72
    
    
    
    79Change in cash and cash equivalents during the year from continuing operations
    
    
    
    
    
    
    3
    
    
    
    32
    
    
    
    (3
    )
    
    
    32Change in cash and cash equivalents from discontinued operations, including proceeds on disposal
    
    
    
    
    
    
    (29
    )
    
    
    (11
    )
    
    
    
    
    
    
    (40
    )Net change in cash and cash equivalents during the year
    
    
    
    
    
    
    (26
    )
    
    
    21
    
    
    
    (3
    )
    
    
    (8
    )Translation adjustments on cash and cash equivalents
    
    
    
    
    
    
    2
    
    
    
    (6
    )
    
    
    3
    
    
    
    (1
    )Cash and cash equivalents-Beginning of year
    
    
    
    
    
    
    31
    
    
    
    3
    
    
    
    
    
    
    
    34Cash and cash equivalents-End of year
    
    
    
    
    
    
    7
    
    
    
    18
    
    
    
    
    
    
    
    25
 d)
    
    Summary of differences between Canadian and United States generally accepted accounting
principles relating to Subsidiary Guarantors
 CASCADES  ANNUAL REPORT 2009




---



##### 



Note
    
    2009
    
    
    2008
    
    
    2007Net earnings (loss) under Canadian GAAP
    
    
    
    
    77
    
    
    
    (65
    )
    
    
    10U.S. GAAP adjustments:Investment tax credit
    
    (a)
    
    
    
    
    
    
    (1
    )
    
    
    Gain realized on formation of Norampac
    
    (b)
    
    
    
    
    
    
    
    
    
    
    (4
    )Change in fair value arising from commodity derivative financial instruments
    
    (c)
    
    
    
    
    
    
    1
    
    
    
    Inventory costs
    
    (d)
    
    
    
    
    
    
    (1
    )
    
    
    6Employee future benefits
    
    (e)
    
    
    3
    
    
    
    (1
    )
    
    
    (2
    )Excess of redemption price of Class B preferred shares on their paid-up capital
    
    (f)
    
    
    
    
    
    
    
    
    
    
    (1
    )Tax effect on U.S. GAAP adjustments
    
    
    
    
    1
    
    
    
    7
    
    
    
    (5
    )Net earnings (loss) under U.S. GAAP
    
    
    
    
    81
    
    
    
    (60
    )
    
    
    4Net earnings (loss) under U.S. GAAP from continuing operations
    
    
    
    
    81
    
    
    
    (58
    )
    
    
    19Net earnings (loss) under U.S. GAAP from discontinued operations
    
    
    
    
    
    
    
    
    (2
    )
    
    
    (15
    )81
    
    
    
    (60
    )
    
    
    4
  Note
    
    
    
    
    
    
    
    
    
    
    2009Canadian
    
    
    
    
    
    
    U.S.GAAP
    
    
    Adjusments
    
    
    GAAPCurrent assets
    
    
    
    
    
    
    800
    
    
    
    
    
    
    
    800Property, plant and equipment
    
    (a) (b) and (f)
    
    
    
    1,604
    
    
    
    35
    
    
    
    1,639Intangible assets, other assets and goodwill
    
    (b) and (e)
    
    
    
    789
    
    
    
    (67
    )
    
    
    722Total assets
    
    
    
    
    
    
    3,193
    
    
    
    (32
    )
    
    
    3,161Current liabilities
    
    
    
    
    
    
    373
    
    
    
    
    
    
    
    373Long-term debt
    
    
    
    
    
    
    604
    
    
    
    
    
    
    
    604Other liabilities
    
    (a) (b) (e) (f) and (j)
    
    
    
    314
    
    
    
    (34
    )
    
    
    280Total liabilities
    
    
    
    
    
    
    1,291
    
    
    
    (34
    )
    
    
    1,257Shareholders equity
    
    (a) (b) (e) (f) and (j)
    
    
    
    1,902
    
    
    
    2
    
    
    
    1,904
 CASCADES  ANNUAL REPORT 2009




---



##### 



Note
    

    
    
    
    
    
    
    
    
    
    2008Canadian
    
    
    
    
    
    
    U.S.GAAP
    
    
    Adjusments
    
    
    GAAPCurrent assets
    
    
    
    
    
    
    947
    
    
    
    
    
    
    
    947Property, plant and equipment
    
    
    (a) (b) and (f)
    
    
    1,711
    
    
    
    33
    
    
    
    1,744Intangible assets, other assets and goodwill
    
    
    (b) (e)
    
    
    1,089
    
    
    
    (51
    )
    
    
    1,038Total assets
    
    
    
    
    
    
    3,747
    
    
    
    (18
    )
    
    
    3,729Current liabilities
    
    
    
    
    
    
    557
    
    
    
    
    
    
    
    557Long-term debt
    
    
    
    
    
    
    1,799
    
    
    
    
    
    
    
    1,799Other liabilities
    
    (a) (b) (e) (f) and (j)
    
    
    263
    
    
    
    (9
    )
    
    
    254Total liabilities
    
    
    
    
    
    
    2,619
    
    
    
    (9
    )
    
    
    2,610Shareholders equity
    
    (a) (b) (e) (f) and (j)
    
    
    1,128
    
    
    
    (9
    )
    
    
    1,119
  Note
    

    
    
    
    
    
    
    

    2009Canadian
    
    
    
    
    
    
    U.S.GAAP
    
    
    Adjusments
    
    
    GAAPSales
    
    
    
    
    
    
    3,108
    
    
    
    
    
    
    
    3,108Costs of sales and expenses
    
    (a) (e) and (g)
    
    
    2,903
    
    
    
    (2
    )
    
    
    2,901Operating income from continuing operations
    
    
    
    
    
    
    205
    
    
    
    2
    
    
    
    207Interest expense
    
    
    
    
    
    
    114
    
    
    
    
    
    
    
    11491
    
    
    
    2
    
    
    
    93Provision for income tax
    
    (a) (e) and (g)
    
    
    34
    
    
    
    (2
    )
    
    
    32Share of results of significant influence companies
    
    
    
    
    
    
    (20
    )
    
    
    
    
    
    
    (20
    )Net Earnings attributable to Cascades inc.
    
    
    
    
    
    
    77
    
    
    
    4
    
    
    
    81
 CASCADES  ANNUAL REPORT 2009




---



##### 



2008
    

    
    
    
    
    
    2007Canadian
    
    
    
    
    
    
    U.S.
    
    
    Canadian
    
    
    
    
    
    
    U.S.GAAP
    
    
    Adjusments
    
    
    GAAP
    
    
    GAAP
    
    
    Adjusments
    
    
    GAAPSales
    
    
    
    
    
    
    3,166
    
    
    
    
    
    
    
    3,166
    
    
    
    3,127
    
    
    
    
    
    
    
    3,127Costs of sales and expenses
    
    (a) (e) and (g)
    
    
    3,146
    
    
    
    7
    
    
    
    3,153
    
    
    
    3,038
    
    
    
    18
    
    
    
    3,056Operating income from continuing operations
    
    
    
    
    
    
    20
    
    
    
    (7
    )
    
    
    13
    
    
    
    89
    
    
    
    (18
    )
    
    
    71Interest expense
    
    
    
    
    
    
    132
    
    
    
    
    
    
    
    132
    
    
    
    135
    
    
    
    
    
    
    
    135(112
    )
    
    
    (7
    )
    
    
    (119
    )
    
    
    (46
    )
    
    
    (18
    )
    
    
    (64
    )Provision for income tax
    
    (a) (e) and (g)
    
    
    (29
    )
    
    
    (12
    )
    
    
    (41
    )
    
    
    (13
    )
    
    
    (12
    )
    
    
    (25
    )Share of results of significant influence companies
    
    
    
    
    
    
    
    
    
    
    (20
    )
    
    
    (20
    )
    
    
    (58
    )
    
    
    
    
    
    
    (58
    )Discontinued Operations
    
    
    
    
    
    
    (18
    )
    
    
    20
    
    
    
    2
    
    
    
    15
    
    
    
    
    
    
    
    15Net Earnings (Loss) attributable to Cascades inc.
    
    
    
    
    
    
    (65
    )
    
    
    5
    
    
    
    (60
    )
    
    
    10
    
    
    
    (6
    )
    
    
    4
 CASCADES  ANNUAL REPORT 2009