Exhibit 13.3
            
    
    OIBD excludes certain income tax payments that may represent a reduction in cash available
to us.
    
    OIBD does not reflect our cash expenditures, or future requirements, for capital
expenditures or contractual commitments.
    
    OIBD does not reflect changes in, or cash requirements for, our working capital needs.
    
    OIBD does not reflect the significant interest expense, or the cash requirements necessary
to service interest or principal payments on our debt.
    
    Although depreciation and amortization expenses are non-cash charges, the assets being
depreciated and amortized will often have to be replaced in the future, and OIBD does not
reflect any cash requirements for such replacements.
    
    The specific items excluded from OIBD include mainly charges for impairment of assets,
charges for facility or machine closures, debt restructuring charges, gain or loss on sale of
business units and unrealized gain or loss on financial instruments that do not qualify for
hedge accounting. Although we consider these items to be non-recurring and less relevant to
evaluating our performance, some of these items will continue to take place and will reduce
the cash available to us.
  CASCADES  ANNUAL REPORT 2009
 1




---



##### 



2007
    
    
    
    
    
    
    2008
    
    
    2009Total
    
    
    Q1
    
    
    Q2
    
    
    Q3
    
    
    Q4
    
    
    Total
    
    
    Q1
    
    
    Q2
    
    
    Q3
    
    
    Q4
    
    
    TotalOPERATIONALTotal shipments (in 000 of s.t.)PackagingBoxboard1
    
    
    1,202
    
    
    
    292
    
    
    
    277
    
    
    
    278
    
    
    
    246
    
    
    
    1,093
    
    
    
    249
    
    
    
    255
    
    
    
    252
    
    
    
    268
    
    
    
    1,024Containerboard
    
    
    1,412
    
    
    
    355
    
    
    
    345
    
    
    
    369
    
    
    
    305
    
    
    
    1,374
    
    
    
    280
    
    
    
    304
    
    
    
    324
    
    
    
    307
    
    
    
    1,215Specialty products2
    
    
    450
    
    
    
    116
    
    
    
    115
    
    
    
    118
    
    
    
    109
    
    
    
    458
    
    
    
    106
    
    
    
    110
    
    
    
    116
    
    
    
    112
    
    
    
    4443,064
    
    
    
    763
    
    
    
    737
    
    
    
    765
    
    
    
    660
    
    
    
    2,925
    
    
    
    635
    
    
    
    669
    
    
    
    692
    
    
    
    687
    
    
    
    2,683Tissue Papers3
    
    
    451
    
    
    
    112
    
    
    
    116
    
    
    
    124
    
    
    
    119
    
    
    
    471
    
    
    
    106
    
    
    
    107
    
    
    
    119
    
    
    
    127
    
    
    
    459Total
    
    
    3,515
    
    
    
    875
    
    
    
    853
    
    
    
    889
    
    
    
    779
    
    
    
    3,396
    
    
    
    741
    
    
    
    776
    
    
    
    811
    
    
    
    814
    
    
    
    3,142Integration rate  %PackagingBoxboard (North America)
    
    
    29
    %
    
    
    30
    %
    
    
    32
    %
    
    
    34
    %
    
    
    27
    %
    
    
    31
    %
    
    
    29
    %
    
    
    30
    %
    
    
    34
    %
    
    
    27
    %
    
    
    30
    %Containerboard
(North America)
    
    
    61
    %
    
    
    58
    %
    
    
    62
    %
    
    
    61
    %
    
    
    59
    %
    
    
    60
    %
    
    
    66
    %
    
    
    65
    %
    
    
    63
    %
    
    
    68
    %
    
    
    66
    %Specialty products
(paper only)
    
    
    8
    %
    
    
    9
    %
    
    
    9
    %
    
    
    9
    %
    
    
    7
    %
    
    
    9
    %
    
    
    11
    %
    
    
    10
    %
    
    
    11
    %
    
    
    12
    %
    
    
    11
    %Tissue Papers3
    
    
    56
    %
    
    
    55
    %
    
    
    55
    %
    
    
    52
    %
    
    
    55
    %
    
    
    54
    %
    
    
    60
    %
    
    
    60
    %
    
    
    56
    %
    
    
    54
    %
    
    
    57
    %Total
    
    
    45
    %
    
    
    45
    %
    
    
    47
    %
    
    
    46
    %
    
    
    45
    %
    
    
    46
    %
    
    
    49
    %
    
    
    49
    %
    
    
    48
    %
    
    
    49
    %
    
    
    49
    %Capacity utilization rate4  %PackagingBoxboard5
    
    
    89
    %
    
    
    86
    %
    
    
    79
    %
    
    
    84
    %
    
    
    79
    %
    
    
    82
    %
    
    
    81
    %
    
    
    84
    %
    
    
    83
    %
    
    
    86
    %
    
    
    84
    %Containerboard
    
    
    101
    %
    
    
    97
    %
    
    
    94
    %
    
    
    94
    %
    
    
    82
    %
    
    
    92
    %
    
    
    73
    %
    
    
    82
    %
    
    
    91
    %
    
    
    89
    %
    
    
    84
    %Specialty products
(paper only)
    
    
    86
    %
    
    
    84
    %
    
    
    83
    %
    
    
    85
    %
    
    
    78
    %
    
    
    83
    %
    
    
    78
    %
    
    
    82
    %
    
    
    86
    %
    
    
    81
    %
    
    
    82
    %Tissue Papers6
    
    
    91
    %
    
    
    94
    %
    
    
    92
    %
    
    
    96
    %
    
    
    95
    %
    
    
    94
    %
    
    
    92
    %
    
    
    89
    %
    
    
    92
    %
    
    
    89
    %
    
    
    91
    %Total
    
    
    94
    %
    
    
    91
    %
    
    
    87
    %
    
    
    90
    %
    
    
    82
    %
    
    
    88
    %
    
    
    79
    %
    
    
    84
    %
    
    
    88
    %
    
    
    87
    %
    
    
    85
    %Energy cons.7  GJ/ton
    
    
    10.05
    
    
    
    10.39
    
    
    
    9.54
    
    
    
    9.25
    
    
    
    11.06
    
    
    
    10.09
    
    
    
    10.82
    
    
    
    9.86
    
    
    
    8.76
    
    
    
    9.74
    
    
    
    9.58Work accidents  OSHA frequency rate
    
    
    7.97
    
    
    
    7.11
    
    
    
    6.52
    
    
    
    7.77
    
    
    
    4.52
    
    
    
    6.48
    
    
    
    6.25
    
    
    
    5.10
    
    
    
    5.30
    
    
    
    5.00
    
    
    
    5.41FINANCIALReturn on assets (%)8PackagingBoxboard
    
    
    4
    %
    
    
    4
    %
    
    
    3
    %
    
    
    3
    %
    
    
    3
    %
    
    
    3
    %
    
    
    5
    %
    
    
    7
    %
    
    
    9
    %
    
    
    11
    %
    
    
    11
    %Containerboard
    
    
    12
    %
    
    
    12
    %
    
    
    11
    %
    
    
    10
    %
    
    
    9
    %
    
    
    9
    %
    
    
    9
    %
    
    
    10
    %
    
    
    10
    %
    
    
    10
    %
    
    
    10
    %Specialty products
    
    
    10
    %
    
    
    8
    %
    
    
    9
    %
    
    
    10
    %
    
    
    11
    %
    
    
    11
    %
    
    
    12
    %
    
    
    13
    %
    
    
    13
    %
    
    
    13
    %
    
    
    13
    %Tissue papers
    
    
    12
    %
    
    
    11
    %
    
    
    12
    %
    
    
    13
    %
    
    
    18
    %
    
    
    18
    %
    
    
    22
    %
    
    
    26
    %
    
    
    28
    %
    
    
    27
    %
    
    
    27
    %Consolidated return on assets (%)
    
    
    9.1
    %
    
    
    8.4
    %
    
    
    7.7
    %
    
    
    7.5
    %
    
    
    7.8
    %
    
    
    7.8
    %
    
    
    8.9
    %
    
    
    10.4
    %
    
    
    11.4
    %
    
    
    11.9
    %
    
    
    11.9
    %Working capital9In millions of $, at end of period
    
    
    604
    
    
    
    639
    
    
    
    642
    
    
    
    665
    
    
    
    664
    
    
    
    664
    
    
    
    662
    
    
    
    645
    
    
    
    593
    
    
    
    552
    
    
    
    552% of sales10
    
    
    15.4
    %
    
    
    16.4
    %
    
    
    16.6
    %
    
    
    16.9
    %
    
    
    16.5
    %
    
    
    16.5
    %
    
    
    16.4
    %
    
    
    16.1
    %
    
    
    15.0
    %
    
    
    14.2
    %
    
    
    14.2
    %
 CASCADES  ANNUAL REPORT 2009
 2




---



##### 



1
    
    Starting in Q1 2008, numbers take into account the merger of our European recycled boxboard assets with Reno De Medici, S.p.A. (RdM).2
    
    Kraft paper, uncoated board, specialty board, fine papers and papermill packaging shipments.3
    
    Starting in Q3 2009, shipments take into account the acquisition of Atlantic Packaging Products Ltd.4
    
    Defined as: Shipments/Practical capacity. Paper manufacturing only.5
    
    Starting in Q1 2008, capacity numbers were adjusted to take into account the merger of our European recycled boxboard assets with RdM.6
    
    Defined as: Manufacturing internal and external shipments/Practical capacity. Tissue
practical capacity represents 85% of its theoretical capacity. During the second quarter of
2009, the theoretical capacity had been reviewed and revised upward. Prior to the review, the
practical capacity was 80% of the theoretical capacity. Since August 31, 2009, includes the
new capacity resulting from the acquisition of Atlantic Packaging tissue assets.7
    
    Average energy consumption for manufacturing mills only.8
    
    Return on assets is a non-GAAP measure and is defined as the last twelve months (LTM) OIBD
excluding specific items/LTM Average of total assets.9
    
    Working capital includes accounts receivable plus inventories less accounts payable. This
number excludes an unpaid provision for closure and restructuring costs in the amount of $13
million as at December 31, 2009
and $22 million as at December 31, 2008. It also excludes the current portion
of derivative financial instrument assets in the amount of $9 million
(liability of $30 million in 2008), $2 million of other liabilities in 2009
and 2008, the net income taxes receivable in the amount of $12 million ($31
million in 2008) and the current portion of future tax liabilities in the
amount of $- million (assets of $10 million in 2008).10
    
    %of sales = Working capital end of period/LTM sales.
 CASCADES  ANNUAL REPORT 2009
 3




---



##### 



2007
    
    
    2008
    
    
    2009(In millions of Canadian dollars,unless otherwise noted)
    
    Total
    
    
    Q1
    
    
    Q2
    
    
    Q3
    
    
    Q4
    
    
    Total
    
    
    Q1
    
    
    Q2
    
    
    Q3
    
    
    Q4
    
    
    TotalSalesPackagingBoxboard1
    
    
    1,343
    
    
    
    329
    
    
    
    331
    
    
    
    332
    
    
    
    331
    
    
    
    1,323
    
    
    
    336
    
    
    
    336
    
    
    
    321
    
    
    
    320
    
    
    
    1,313Containerboard
    
    
    1,193
    
    
    
    291
    
    
    
    301
    
    
    
    318
    
    
    
    293
    
    
    
    1,203
    
    
    
    263
    
    
    
    275
    
    
    
    272
    
    
    
    252
    
    
    
    1,062Specialty products
    
    
    834
    
    
    
    209
    
    
    
    218
    
    
    
    224
    
    
    
    209
    
    
    
    860
    
    
    
    186
    
    
    
    188
    
    
    
    195
    
    
    
    200
    
    
    
    769Inter-segment sales
    
    
    (108
    )
    
    
    (28
    )
    
    
    (25
    )
    
    
    (28
    )
    
    
    (19
    )
    
    
    (100
    )
    
    
    (13
    )
    
    
    (15
    )
    
    
    (17
    )
    
    
    (22
    )
    
    
    (67
    )3,262
    
    
    
    801
    
    
    
    825
    
    
    
    846
    
    
    
    814
    
    
    
    3,286
    
    
    
    772
    
    
    
    784
    
    
    
    771
    
    
    
    750
    
    
    
    3,077Tissue Papers
    
    
    713
    
    
    
    170
    
    
    
    184
    
    
    
    205
    
    
    
    228
    
    
    
    787
    
    
    
    211
    
    
    
    207
    
    
    
    210
    
    
    
    212
    
    
    
    840Inter-segment sales and Corporate activities
    
    
    (46
    )
    
    
    (12
    )
    
    
    (10
    )
    
    
    (12
    )
    
    
    (22
    )
    
    
    (56
    )
    
    
    (13
    )
    
    
    (10
    )
    
    
    (7
    )
    
    
    (10
    )
    
    
    (40
    )3,929
    
    
    
    959
    
    
    
    999
    
    
    
    1,039
    
    
    
    1,020
    
    
    
    4,017
    
    
    
    970
    
    
    
    981
    
    
    
    974
    
    
    
    952
    
    
    
    3,877Operating income (loss) from continuing
operationsPackagingBoxboard1
    
    
    2
    
    
    
    (17
    )
    
    
    (19
    )
    
    
    (12
    )
    
    
    (27
    )
    
    
    (75
    )
    
    
    3
    
    
    
    10
    
    
    
    3
    
    
    
    (24
    )
    
    
    (8
    )Containerboard
    
    
    84
    
    
    
    18
    
    
    
    12
    
    
    
    7
    
    
    
    3
    
    
    
    40
    
    
    
    19
    
    
    
    23
    
    
    
    26
    
    
    
    14
    
    
    
    82Specialty products
    
    
    28
    
    
    
    1
    
    
    
    6
    
    
    
    12
    
    
    
    12
    
    
    
    31
    
    
    
    5
    
    
    
    13
    
    
    
    13
    
    
    
    9
    
    
    
    40114
    
    
    
    2
    
    
    
    (1
    )
    
    
    7
    
    
    
    (12
    )
    
    
    (4
    )
    
    
    27
    
    
    
    46
    
    
    
    42
    
    
    
    (1
    )
    
    
    114Tissue Papers
    
    
    31
    
    
    
    4
    
    
    
    5
    
    
    
    13
    
    
    
    32
    
    
    
    54
    
    
    
    30
    
    
    
    33
    
    
    
    29
    
    
    
    24
    
    
    
    116Corporate activities
    
    
    
    
    
    
    (12
    )
    
    
    4
    
    
    
    (3
    )
    
    
    (23
    )
    
    
    (34
    )
    
    
    (8
    )
    
    
    (4
    )
    
    
    5
    
    
    
    (9
    )
    
    
    (16
    )145
    
    
    
    (6
    )
    
    
    8
    
    
    
    17
    
    
    
    (3
    )
    
    
    16
    
    
    
    49
    
    
    
    75
    
    
    
    76
    
    
    
    14
    
    
    
    214OIBD excluding specific items2PackagingBoxboard1
    
    
    44
    
    
    
    9
    
    
    
    3
    
    
    
    10
    
    
    
    11
    
    
    
    33
    
    
    
    24
    
    
    
    32
    
    
    
    26
    
    
    
    33
    
    
    
    115Containerboard
    
    
    176
    
    
    
    37
    
    
    
    30
    
    
    
    32
    
    
    
    31
    
    
    
    130
    
    
    
    36
    
    
    
    38
    
    
    
    41
    
    
    
    30
    
    
    
    145Specialty products
    
    
    60
    
    
    
    9
    
    
    
    15
    
    
    
    21
    
    
    
    22
    
    
    
    67
    
    
    
    13
    
    
    
    20
    
    
    
    22
    
    
    
    19
    
    
    
    74280
    
    
    
    55
    
    
    
    48
    
    
    
    63
    
    
    
    64
    
    
    
    230
    
    
    
    73
    
    
    
    90
    
    
    
    89
    
    
    
    82
    
    
    
    334Tissue Papers
    
    
    65
    
    
    
    12
    
    
    
    15
    
    
    
    22
    
    
    
    41
    
    
    
    90
    
    
    
    39
    
    
    
    42
    
    
    
    38
    
    
    
    35
    
    
    
    154Corporate activities
    
    
    5
    
    
    
    (8
    )
    
    
    
    
    
    
    3
    
    
    
    (9
    )
    
    
    (14
    )
    
    
    (5
    )
    
    
    (11
    )
    
    
    
    
    
    
    (7
    )
    
    
    (23
    )350
    
    
    
    59
    
    
    
    63
    
    
    
    88
    
    
    
    96
    
    
    
    306
    
    
    
    107
    
    
    
    121
    
    
    
    127
    
    
    
    110
    
    
    
    465Net earnings (loss)
    
    
    96
    
    
    
    (4
    )
    
    
    (25
    )
    
    
    (7
    )
    
    
    (18
    )
    
    
    (54
    )
    
    
    37
    
    
    
    30
    
    
    
    34
    
    
    
    (41
    )
    
    
    60Excluding specific items2
    
    
    23
    
    
    
    (9
    )
    
    
    (11
    )
    
    
    6
    
    
    
    18
    
    
    
    4
    
    
    
    21
    
    
    
    28
    
    
    
    35
    
    
    
    26
    
    
    
    110Net earnings (loss) per share (in dollars)Basic
    
    $
    0.96
    
    
    $
    (0.04
    )
    
    $
    (0.25
    )
    
    $
    (0.07
    )
    
    $
    (0.19
    )
    
    $
    (0.55
    )
    
    $
    0.38
    
    
    $
    0.30
    
    
    $
    0.35
    
    
    $
    (0.42
    )
    
    $
    0.61Basic, excluding specific items2
    
    $
    0.23
    
    
    $
    (0.09
    )
    
    $
    (0.11
    )
    
    $
    0.06
    
    
    $
    0.18
    
    
    $
    0.04
    
    
    $
    0.22
    
    
    $
    0.28
    
    
    $
    0.36
    
    
    $
    0.27
    
    
    $
    1.13Cash flow from operations (adjusted)2
    
    
    178
    
    
    
    17
    
    
    
    36
    
    
    
    43
    
    
    
    59
    
    
    
    155
    
    
    
    68
    
    
    
    81
    
    
    
    94
    
    
    
    62
    
    
    
    305Excluding specific items
    
    
    202
    
    
    
    26
    
    
    
    42
    
    
    
    47
    
    
    
    68
    
    
    
    183
    
    
    
    70
    
    
    
    85
    
    
    
    95
    
    
    
    77
    
    
    
    327Cascades North American US$ selling price index
(2002 index = 1,000)3
    
    
    1,386
    
    
    
    1,442
    
    
    
    1,460
    
    
    
    1,552
    
    
    
    1,547
    
    
    
    1,500
    
    
    
    1,487
    
    
    
    1,427
    
    
    
    1,412
    
    
    
    1,417
    
    
    
    1,436Cascades North American US$ raw materials index
(2002 index = 300)4
    
    
    480
    
    
    
    542
    
    
    
    536
    
    
    
    524
    
    
    
    366
    
    
    
    492
    
    
    
    268
    
    
    
    286
    
    
    
    364
    
    
    
    420
    
    
    
    334US$/CAN$
    
    $
    0.93
    
    
    $
    1.00
    
    
    $
    0.99
    
    
    $
    0.96
    
    
    $
    0.82
    
    
    $
    0.94
    
    
    $
    0.80
    
    
    $
    0.86
    
    
    $
    0.91
    
    
    $
    0.95
    
    
    $
    0.88Natural Gas Henry Hub  US$/mmBtu
    
    $
    6.86
    
    
    $
    8.03
    
    
    $
    10.92
    
    
    $
    10.24
    
    
    $
    6.94
    
    
    $
    9.03
    
    
    $
    4.89
    
    
    $
    3.50
    
    
    $
    3.39
    
    
    $
    4.17
    
    
    $
    3.99Return on assets (%)5
    
    
    9.1
    %
    
    
    8.4
    %
    
    
    7.7
    %
    
    
    7.5
    %
    
    
    7.8
    %
    
    
    7.8
    %
    
    
    8.9
    %
    
    
    10.4
    %
    
    
    11.4
    %
    
    
    11.9
    %
    
    
    11.9
    %
 Source: Pulp & Paper Week, PPI, EUWID, Random Lengths and Cascades1
    
    The 2008 figures take into account the merger of our European boxboard assets with RdM.2
    
    See Supplemental Information on Non-GAAP Measures.3
    
    The Cascades North American selling prices index represents an approximation of the Companys
manufacturing (excluding converted products) selling prices in North America. It is weighted
according to shipments and includes some of the main Cascades products for which prices are
available in Pulp & Paper Week magazine and the Cascades Tissue Index. This index should only
be used as a trend indicator, as it may differ from our actual selling prices and our product
mix. The only non-
 CASCADES  ANNUAL REPORT 2009
 4




---



##### 



manufacturing prices reflected in the index are those for tissue. In fact, the tissue pricing
indicator, which is blended into the Cascades North American selling prices index, is the
Cascades tissue paper selling prices index, which represents a mix of primary and converted
products.4
    
    The Cascades North American raw materials index represents the average weighted cost paid for
some of our manufacturing raw materials, namely recycled fibre, virgin pulp and woodchips, in
North America. It is weighted according to purchase volume (in tons). This index should only
be used as a trend indicator and may differ from actual manufacturing purchasing costs and our
purchase mix.5
    
    Return on assets is a non-GAAP measure, defined as LTM OIBD excluding specific items/LTM
average of total assets.
 CASCADES  ANNUAL REPORT 2009
 5




---



##### 



1
    
    The impacts of these estimated costs are based on production costs per unit, which are
affected by yield, product mix changes and purchase and transfer prices. In addition to market
pulp and recycled fibre, they include purchases of external boards and parent rolls for the
converting sector, and other raw materials such as plastics and woodchips.2
    
    The estimated impact of the exchange rate is based only on the Companys export sales less
purchases that are impacted by the exchange rate fluctuations, mainly the CAN$/US$ variation.
It also includes the impact of the exchange rate on the Companys working capital items and
cash position.3
    
    Other cost improvements include the Impact of variable costs based on production costs per
unit, which are affected by downtimes, efficiencies and product mix changes. It also includes
all other costs, such as repair and maintenance, selling and administration, profit-sharing
and change in operating income for operating units that are not in the manufacturing and
converting sectors. Operating income of businesses acquired or disposed are also included.4
    
    Excluding specific items.
  CASCADES  ANNUAL REPORT 2009
 6




---



##### 



2009For the year ended December 31
    
    
    
    
    
    
    
    
    
    Specialty
    
    
    
    
    
    
    Corporate(in millions of Canadian dollars)
    
    Boxboard
    
    
    Containerboard
    
    
    Products
    
    
    Tissue Papers
    
    
    Activities
    
    
    ConsolidatedOperating income (loss)
    
    
    (8
    )
    
    
    82
    
    
    
    40
    
    
    
    116
    
    
    
    (16
    )
    
    
    214Depreciation and amortization
    
    
    75
    
    
    
    63
    
    
    
    34
    
    
    
    37
    
    
    
    9
    
    
    
    218Operating income (loss) before depreciation
and amortization
    
    
    67
    
    
    
    145
    
    
    
    74
    
    
    
    153
    
    
    
    (7
    )
    
    
    432Specific items:Losses (gains) on disposal and others
    
    
    3
    
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    1Impairment loss
    
    
    39
    
    
    
    4
    
    
    
    2
    
    
    
    1
    
    
    
    
    
    
    
    46Closure and restructuring costs
    
    
    6
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12Unrealized loss (gain) on financial instruments
    
    
    
    
    
    
    (10
    )
    
    
    
    
    
    
    
    
    
    
    (16
    )
    
    
    (26
    )48
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    (16
    )
    
    
    33Operating income (loss) before depreciation and
amortization  excluding specific items
    
    
    115
    
    
    
    145
    
    
    
    74
    
    
    
    154
    
    
    
    (23
    )
    
    
    465Operating income (loss)  excluding specific items
    
    
    40
    
    
    
    82
    
    
    
    40
    
    
    
    117
    
    
    
    (32
    )
    
    
    247
 2008For the year ended December 31
    
    
    
    
    
    
    
    
    
    Specialty
    
    
    
    
    
    
    Corporate(in millions of Canadian dollars)
    
    Boxboard
    
    
    Containerboard
    
    
    Products
    
    
    Tissue Papers
    
    
    Activities
    
    
    ConsolidatedOperating income (loss)
    
    
    (75
    )
    
    
    40
    
    
    
    31
    
    
    
    54
    
    
    
    (34
    )
    
    
    16Depreciation and amortization
    
    
    72
    
    
    
    63
    
    
    
    33
    
    
    
    35
    
    
    
    10
    
    
    
    213Operating income (loss) before depreciation and amortization
    
    
    (3
    )
    
    
    103
    
    
    
    64
    
    
    
    89
    
    
    
    (24
    )
    
    
    229Specific items:Inventory adjustment resulting from business acquisition
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Losses on disposal and others
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5Impairment loss
    
    
    9
    
    
    
    5
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    16Closure and restructuring costs
    
    
    19
    
    
    
    6
    
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    27Unrealized loss on financial instruments
    
    
    1
    
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    2736
    
    
    
    27
    
    
    
    3
    
    
    
    1
    
    
    
    10
    
    
    
    77Operating income (loss) before depreciation and
amortization  excluding specific items
    
    
    33
    
    
    
    130
    
    
    
    67
    
    
    
    90
    
    
    
    (14
    )
    
    
    306Operating income (loss)  excluding specific items
    
    
    (39
    )
    
    
    67
    
    
    
    34
    
    
    
    55
    
    
    
    (24
    )
    
    
    93
 CASCADES  ANNUAL REPORT 2009
 7




---



##### 



2009
    
    
    2008Pension plan  partial curtailment
    
    
    3
    
    
    
    Gain on disposal of property, plant and equipment
    
    
    (2
    )
    
    
    Loss on contribution to a joint venture
    
    
    
    
    
    
    51
    
    
    
    5
 
    
    During the second quarter of 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.
The Company also 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.
    
    In the first quarter of 2008, following the transaction with RdM, the Company recorded a
loss of $5 million since the value of the shares received as a consideration were lower than
the contributed book value of the assets transferred as at March 1, 2008.
   2009
    
    
    2008Closure and
    
    
    
    
    
    
    Closure andImpairment
    
    
    restructuring
    
    
    Impairment
    
    
    restructuring(in millions of Canadian dollars)
    
    Charges
    
    
    costs
    
    
    Charges
    
    
    costsBoxboard  Toronto mill
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    6Boxboard  Dopaco (Bakersfield)
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    3Boxboard  Europe (La Rochette)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Boxboard  RdM (Blendecques)
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    3Boxboard  Manufacturing Goodwill
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    Boxboard  Fjordcell
    
    
    37
    
    
    
    
    
    
    
    
    
    
    
    Boxboard  Converting and Corporate
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    6Containerboard  Red Rock
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    5Containerboard  Converting
    
    
    4
    
    
    
    6
    
    
    
    1
    
    
    
    1Specialty Products
    
    
    2
    
    
    
    
    
    
    
    2
    
    
    
    1Tissue
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    146
    
    
    
    12
    
    
    
    16
    
    
    
    27
  
    
    The Company recorded a charge of $1 million to terminate the lease of the building
used for the Bakersfield operation, which had been closed in 2008. The Company also recorded
additional charges of $5 million in 2009 following the closure of its Toronto recycled
boxboard mill in 2008.
    
    On April 2, 2009, the Company announced the closure of its Québec City-based corrugated
products plant. Sales and distribution services at the Québec City plant remained intact and
production has been gradually redirected to other Québec-based corrugated products plants. The
Company recorded an impairment charge of $3 million on property, plant and equipment, as well
as on inventories, and a charge for severance costs of $4 million in 2009.
    
    The Company reviewed the status of the Fjordcell pulp mill that was temporarily closed in
2006. Since the closure of the mill, the Company has considered different options for its
reopening together with new project development in the adjacent boxboard mill in Jonquière,
Québec. The Company concluded that the reopening was unlikely to occur due to different risk
factors and thus recorded an impairment charge on the assets of $37 million.
    
    The Company also incurred impairment and restructuring charges totaling $2 million in the
Boxboard sector and $3 million in the Containerboard converting sector. Finally, the Company
recorded an impairment charge of $3 million on certain equipment in the Specialty Products and
Tissue sectors. Restructuring action plans and assets put out of service led to these charges.
 CASCADES  ANNUAL REPORT 2009
 8




---



##### 




    
    The Company ceased operations at its Dopaco converting plant located in Bakersfield,
California and transferred its production to its Stockton, California, plant. The Company
recorded a charge of $3 million.
    
    In the first quarter of 2008, the Company announced the reorganization of its North
American boxboard operations with its containerboard operations. As a result of this change,
the Company recorded a restructuring provision of $6 million. In the third quarter of 2008,
the Company closed its Toronto recycled boxboard mill for an indefinite period and recorded a
provision of $6 million.
    
    The Company also incurred restructuring costs in the amount of $3 million after
implementing several cost control measures in its Tissue and Specialty Product groups as well
as in its La Rochette boxboard mill in France. The Company also recorded an impairment charge
of $2 million on the property, plant and equipment of a wastepaper recovery centre that had
ceased operations and other assets of its Specialty Products group.
    
    The Company recorded an additional provision of $5 million related to the pension plan
settlement and other closure costs of its Red Rock containerboard mill, which was closed in
2006, as well as an impairment charge of $4 million on the remaining value of the property,
plant and equipment of this mill. The Containerboard group also recorded an impairment charge
of $1 million on equipment from the converting sector and a $1 million restructuring cost in
2008.
    
    In the fourth quarter of 2008, RdM announced the definite closure of one machine at its
Blendecques boxboard mill in France. This decision resulted in a closure and restructuring
charge of $3 million and an impairment charge of $1 million. These amounts represent the
Companys share of RdMs results.
    
    As a result of the impairment test performed on its goodwill (see Note 3 of the
consolidated financial statements), the Company recorded an impairment charge of $8 million
related to the goodwill of the Boxboard manufacturing units.
  (in millions of Canadian dollars)
    
    2009
    
    
    2008Balance  Beginning of year
    
    
    22
    
    
    
    19Additional provisionsSeverance and pension liability
    
    
    11
    
    
    
    26Others
    
    
    1
    
    
    
    1Non-monetary itemsPension liability adjustments and others
    
    
    (5
    )
    
    
    Payments
    
    
    (16
    )
    
    
    (24
    )Balance  End of year
    
    
    13
    
    
    
    22
       CASCADES  ANNUAL REPORT 2009
 9




---



##### 



CASCADES  ANNUAL REPORT 2009
 10




---



##### 



Operating
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Average sellingSales
    
    
    income (loss)
    
    
    OIBD
    
    
    Shipments1
    
    
    Average selling price
    
    
    price(in millions of
    
    
    (in millions of
    
    
    (in millions of
    
    
    (in thousands of
    
    
    (in Canadian
    
    
    (in U.S. dollars ordollars)
    
    
    dollars)
    
    
    dollars)
    
    
    short tons)
    
    
    dollars/unit)
    
    
    euros/unit)2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008BoxboardManufacturing 
North America
    
    
    249
    
    
    
    267
    
    
    
    9
    
    
    
    (50
    )
    
    
    24
    
    
    
    (34
    )
    
    
    331
    
    
    
    383
    
    
    
    750
    
    
    
    705
    
    
    
    657
    
    
    
    660Manufacturing  Europe2
    
    
    457
    
    
    
    476
    
    
    
    2
    
    
    
    (25
    )
    
    
    24
    
    
    
    (6
    )
    
    
    525
    
    
    
    544
    
    
    
    870
    
    
    
    877
    
    
    
    549
    
    
    
    562Converting
    
    
    692
    
    
    
    677
    
    
    
    25
    
    
    
    16
    
    
    
    59
    
    
    
    50
    
    
    
    267
    
    
    
    285
    
    
    
    2,593
    
    
    
    2,363
    
    
    
    2,274
    
    
    
    2,217Others and eliminations
    
    
    (85
    )
    
    
    (97
    )
    
    
    (44
    )
    
    
    (16
    )
    
    
    (40
    )
    
    
    (13
    )
    
    
    (99
    )
    
    
    (119
    )1,313
    
    
    
    1,323
    
    
    
    (8
    )
    
    
    (75
    )
    
    
    67
    
    
    
    (3
    )
    
    
    1,024
    
    
    
    1,093Specific items
    
    
    
    
    
    
    
    
    
    
    48
    
    
    
    36
    
    
    
    48
    
    
    
    36Excluding specific items
    
    
    
    
    
    
    
    
    
    
    40
    
    
    
    (39
    )
    
    
    115
    
    
    
    33
 1
    
    Total shipments do not take into account the elimination of business sector intercompany
shipments.2
    
    Includes the Companys share of RdM, since March 1, 2008.
 
 CASCADES  ANNUAL REPORT 2009
 11




---



##### 



CASCADES  ANNUAL REPORT 2009
 12




---



##### 



CASCADES  ANNUAL REPORT 2009
 13




---



##### 



OperatingSales
    
    
    income (loss)
    
    
    OIBD
    
    
    Shipments1
    
    
    Average selling price
    
    
    Average selling price(in millions of
    
    
    (in millions of
    
    
    (in millions of
    
    
    (in thousands of
    
    
    (in Canadian
    
    
    (in U.S.dollars)
    
    
    dollars)
    
    
    dollars)
    
    
    short tons)
    
    
    dollars/unit)
    
    
    dollars/unit)2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008ContainerboardManufacturing
    
    
    517
    
    
    
    615
    
    
    
    67
    
    
    
    35
    
    
    
    91
    
    
    
    57
    
    
    
    1,067
    
    
    
    1,172
    
    
    
    485
    
    
    
    527
    
    
    
    426
    
    
    
    494Converting
    
    
    887
    
    
    
    962
    
    
    
    30
    
    
    
    27
    
    
    
    56
    
    
    
    53
    
    
    
    747
    2
    
    
    819
    2
    
    
    1,202
    
    
    
    1,154
    
    
    
    1,057
    2
    
    
    1,090
    2Others and eliminations
    
    
    (342
    )
    
    
    (374
    )
    
    
    (15
    )
    
    
    (22
    )
    
    
    (2
    )
    
    
    (7
    )
    
    
    (599
    )
    
    
    (617
    )1,062
    
    
    
    1,203
    
    
    
    82
    
    
    
    40
    
    
    
    145
    
    
    
    103
    
    
    
    1,215
    
    
    
    1,374Specific items
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27
    
    
    
    
    
    
    
    27Excluding specific items
    
    
    
    
    
    
    
    
    
    
    82
    
    
    
    67
    
    
    
    145
    
    
    
    130
 1
    
    Total shipments do not take into account the elimination of business sector intercompany
shipments.2
    
    Equal to 11,729 million square feet (msf), CAN$76/msf, US$66/msf in 2009, and to 12,998 msf,
CAN$74/msf, US$70/msf in 2008.
 
 CASCADES  ANNUAL REPORT 2009
 14




---



##### 



CASCADES  ANNUAL REPORT 2009
 15




---



##### 



Operating
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Average selling
    
    
    Average sellingSales
    
    
    income (loss)
    
    
    OIBD
    
    
    Shipments1
    
    
    price
    
    
    price(in millions of
    
    
    (in millions of
    
    
    (in millions of
    
    
    (in thousands of
    
    
    (in Canadian
    
    
    (in U.S.dollars)
    
    
    dollars)
    
    
    dollars)
    
    
    short tons)
    
    
    dollars/unit)
    
    
    dollars/unit)2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Specialty productsManufacturing
    
    
    332
    
    
    
    315
    
    
    
    21
    
    
    
    (3
    )
    
    
    34
    
    
    
    10
    
    
    
    347
    
    
    
    344
    
    
    
    957
    
    
    
    920
    
    
    
    840
    
    
    
    863Converting
    
    
    243
    
    
    
    267
    
    
    
    16
    
    
    
    21
    
    
    
    25
    
    
    
    30
    
    
    
    116
    
    
    
    129Recovery and deinked
    
    
    270
    
    
    
    376
    
    
    
    3
    
    
    
    13
    
    
    
    15
    
    
    
    24
    
    
    
    n/a
    
    
    
    n/aOthers and eliminations
    
    
    (76
    )
    
    
    (98
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19
    )
    
    
    (15
    )769
    
    
    
    860
    
    
    
    40
    
    
    
    31
    
    
    
    74
    
    
    
    64
    
    
    
    444
    
    
    
    458Specific items
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    3Excluding specific items
    
    
    
    
    
    
    
    
    
    
    40
    
    
    
    34
    
    
    
    74
    
    
    
    67
 1
    
    Total shipments do not take into account the elimination of business sector intercompany
shipments.
 
 CASCADES  ANNUAL REPORT 2009
 16




---



##### 



CASCADES  ANNUAL REPORT 2009
 17




---



##### 



Operating
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Average selling
    
    
    Average sellingSales
    
    
    income (loss)
    
    
    OIBD
    
    
    Shipments1
    
    
    price
    
    
    price(in millions of
    
    
    (in millions of
    
    
    (in millions of
    
    
    (in thousands of
    
    
    (in Canadian
    
    
    (in U.S.dollars)
    
    
    dollars)
    
    
    dollars)
    
    
    short tons)
    
    
    dollars/unit)
    
    
    dollars/unit)2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Tissue PapersManufacturing and converting
    
    
    840
    
    
    
    787
    
    
    
    116
    
    
    
    54
    
    
    
    153
    
    
    
    89
    
    
    
    459
    
    
    
    471
    
    
    
    1,785
    
    
    
    1,643
    
    
    
    1,568
    
    
    
    1,499Specific items
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    1
    
    
    
    1Excluding specific items
    
    
    
    
    
    
    
    
    
    
    117
    
    
    
    55
    
    
    
    154
    
    
    
    90
 1
    
    Total shipments do not take into account reflect the elimination of business sector
intercompany shipments.(GRAPHICS)
 CASCADES  ANNUAL REPORT 2009
 18




---



##### 



CASCADES  ANNUAL REPORT 2009
 19




---



##### 



CAN $200 million
            CASCADES  ANNUAL REPORT 2009
 20




---



##### 



CASCADES  ANNUAL REPORT 2009
 21




---



##### 



Boxboard ($58 million)
 
    
    $9 million for production process optimization in the La Rochette, France mill.
    
    $25 million to add converting equipment for the QSR business.
 Containerboard ($31 million)
 
    
    $7 million for a bark boiler in the Trenton mill.
    
    $8 million for various projects in the papermill manufacturing units.
    
    $5 million for a new press in one converting facility in Québec.
 Specialty Products ($32 million)
 
    
    $10 million to complete the new sorting facility in Calgary, for our paper recycling
activities.
    
    $4 million for a landfill site in Québec.
    
    $3 million for new equipment on a paper machine in our fine paper mill in St-Jérôme.
    
    $1 million for a new line in our Kingsey Falls moulded pulp plant.
 Tissue ($31 million)
 
    
    $11 million for expansion and installation of converting equipment at the Lachute unit.
    
    $11 million for new converting equipment in North Carolina, Pennsylvania, Wisconsin,
Arizona, Waterford, Candiac and Laval.
    
    $2 million for adding onto converting equipment, and lease improvements in a joint venture
based in North Carolina.
    
    $1 million for improvement on a building used for a paper machine in Pennsylvania.
 Corporate activities ($20 million)
 
    
    $10 million for the acquisition of a warehouse.
    
    Investments aimed at reducing energy consumption.
     Business acquisitions ($69 million)
    Revolving and term facilities
    Unsecured senior notes
   CASCADES  ANNUAL REPORT 2009
 22




---



##### 



CASCADES  ANNUAL REPORT 2009
 23




---



##### 



(in millions of Canadian dollars, unless otherwise noted)
    
    2009
    
    
    2008Working capital1
    
    
    552
    
    
    
    694% of sales2
    
    
    14.2
    %
    
    
    16.5
    %Bank loan and advances
    
    
    83
    
    
    
    104Current portion of long-term debt
    
    
    10
    
    
    
    36Long-term debt
    
    
    1,459
    
    
    
    1,672Total debt
    
    
    1,552
    
    
    
    1,812Shareholders equity
    
    
    1,304
    
    
    
    1,256Total equity and debt
    
    
    2,856
    
    
    
    3,068Ratio of debt/total equity and debt
    
    
    54.3
    %
    
    
    59.1
    %Shareholders equity per share (in dollars)
    
    $
    13.41
    
    
    $
    12.74
 
 1
    
    Working capital includes accounts receivable plus inventories less accounts payable. It
excludes the unpaid provision for closure and restructuring costs in the amount of $13 million
as at December 31, 2009 and $22 million as at December 31, 2008. It also excludes the current
portion of derivative financial instrument assets in the amount of $9 million as at December
31, 2009 (liabilities of $30 million in 2008), $2 million of other liabilities in 2009 and
2008, the net income taxes receivable in the amount of $12 million ($31 million in 2008) and
the current portion of future tax liabilities in the amount of $- million as at December 31,
2009 (assets of $10 million in 2008).2
    
    % of sales = LTM Working Capital/LTM Sales.        CASCADES  ANNUAL REPORT 2009
 24




---



##### 



2009For the three-month period ended December 31
    
    
    
    
    
    
    
    
    
    Specialty
    
    
    Tissue
    
    
    Corporate(in millions of Canadian dollars)
    
    Boxboard
    
    
    Containerboard
    
    
    Poducts
    
    
    Papers
    
    
    Activities
    
    
    ConsolidatedOperating income (loss)
    
    
    (24
    )
    
    
    14
    
    
    
    9
    
    
    
    24
    
    
    
    (9
    )
    
    
    14Depreciation and amortization
    
    
    18
    
    
    
    15
    
    
    
    9
    
    
    
    10
    
    
    
    4
    
    
    
    56Operating income (loss) before depreciation and amortization
    
    
    (6
    )
    
    
    29
    
    
    
    18
    
    
    
    34
    
    
    
    (5
    )
    
    
    70Specific items:Impairment loss
    
    
    39
    
    
    
    1
    
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    42Closure and restructuring costs
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Gain on financial instruments
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    (4
    )39
    
    
    
    1
    
    
    
    1
    
    
    
    1
    
    
    
    (2
    )
    
    
    40Operating income (loss) before depreciation and
amortization  excluding specific items
    
    
    33
    
    
    
    30
    
    
    
    19
    
    
    
    35
    
    
    
    (7
    )
    
    
    110Operating income (loss)  excluding specific items
    
    
    15
    
    
    
    15
    
    
    
    10
    
    
    
    25
    
    
    
    (11
    )
    
    
    54
 2008For the three-month period ended December 31
    
    
    
    
    
    
    
    
    
    Specialty
    
    
    Tissue
    
    
    Corporate(in millions of Canadian dollars)
    
    Boxboard
    
    
    Containerboard
    
    
    Poducts
    
    
    Papers
    
    
    Activities
    
    
    ConsolidatedOperating income (loss)
    
    
    (27
    )
    
    
    3
    
    
    
    12
    
    
    
    32
    
    
    
    (23
    )
    
    
    (3
    )Depreciation and amortization
    
    
    20
    
    
    
    16
    
    
    
    8
    
    
    
    9
    
    
    
    2
    
    
    
    55Operating income (loss) before depreciation and amortization
    
    
    (7
    )
    
    
    19
    
    
    
    20
    
    
    
    41
    
    
    
    (21
    )
    
    
    52Specific items:Impairment loss
    
    
    9
    
    
    
    3
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    13Closure and restructuring costs
    
    
    8
    
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    10Gain on financial instruments
    
    
    1
    
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    2118
    
    
    
    12
    
    
    
    2
    
    
    
    
    
    
    
    12
    
    
    
    44Operating income (loss) before depreciation and
amortization  excluding specific items
    
    
    11
    
    
    
    31
    
    
    
    22
    
    
    
    41
    
    
    
    (9
    )
    
    
    96Operating income (loss)  excluding specific items
    
    
    (9
    )
    
    
    15
    
    
    
    14
    
    
    
    32
    
    
    
    (11
    )
    
    
    41
  
 CASCADES  ANNUAL REPORT 2009
 25




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##### 



CASCADES  ANNUAL REPORT 2009
 26




---



##### 



Payment due by period
    
    
    
    
    
    
    
    
    
    Years 2011
    
    
    Years 2013(in millions of dollars)
    
    Total
    
    
    Year 2010
    
    
    and 2012
    
    
    and 2014
    
    
    ThereafterLong-term debt, including capital and interests
    
    
    2,215
    
    
    
    109
    
    
    
    487
    
    
    
    360
    
    
    
    1,259Operating lease
    
    
    163
    
    
    
    39
    
    
    
    53
    
    
    
    32
    
    
    
    39Purchase obligations
    
    
    437
    
    
    
    143
    
    
    
    133
    
    
    
    73
    
    
    
    88Legal settlement
    
    
    7
    
    
    
    3
    
    
    
    3
    
    
    
    1
    
    
    
    Pension plans and other post-employement benefits
    
    
    517
    
    
    
    55
    
    
    
    89
    
    
    
    123
    
    
    
    250Total contractual obligations
    
    
    3,339
    
    
    
    349
    
    
    
    765
    
    
    
    589
    
    
    
    1,636
     CASCADES  ANNUAL REPORT 2009
 27




---



##### 



CASCADES  ANNUAL REPORT 2009
 28




---



##### 



CASCADES  ANNUAL REPORT 2009
 29




---



##### 



CASCADES  ANNUAL REPORT 2009
 30




---



##### 



Scoping and diagnostics
  Impact analysis, evaluation and design
  Implementation and review
      CASCADES  ANNUAL REPORT 2009
 31




---



##### 



Impairment of Assets
  Business Combinations
  Property, Plant and Equipment
  Financial Instruments
  Provisions and Continge t Liabilities
    Business Combinations
  Employee Benefits
  CASCADES  ANNUAL REPORT 2009
 32




---



##### 



Cumulative Translation Adjustment
  Fair value or Deemed Cost
  Asset retirement Obligations
    Joint Venture
  CASCADES  ANNUAL REPORT 2009
 33




---



##### 



(a) The markets for some of the Companys products tend to be cyclical in nature and prices for
some of its products, as well as raw materials and energy costs, may fluctuate significantly, which
can adversely affect its business, operating results, profitability and financial position.
   CASCADES  ANNUAL REPORT 2009
 34




---



##### 



North American Finished Products and Raw Materials Hedging
 Linerboard/oldcorrugated
    
    
    Old corrugatedcontainers spread
    
    
    containers
    
    
    Sorted office paperQuantity hedge
    
    21,000 st
    
    
    66,000 st
    
    
    3,600 st% of annual consumption hedged
    
    
    2.1
    %1
    
    
    7
    %
    
    
    1
    %Average price
    

    $US510/ST
    
    
    $US134/ST
    
    
    $US145/STFair value as at December 31, 2009
    
    
    (0.3
    )
    
    
    (2.5
    )2
    
    
    
 
 1
    
    Base on old corrugated containers consumption.2
    
    Base on diverse index. North American Electricity Hedging
 United States
    
    
    CanadaElectricity consumption
    
    
    30
    %
    
    
    70
    %Electricity consumption in a regulated market
    
    
    47
    %
    
    
    80
    %% of consumption hedged in a deregulated market
    
    
    15
    %
    
    
    67
    %Average price
    
    US$
    0.085/KWh
    
    
    $0.039/KWhFair value as at December 31, 2009
    
    
    (0.2
    )
    
    
    0.1
 North American Natural Gas Hedging
 United States
    
    
    CanadaNatural gas consumption
    
    
    46
    %
    
    
    54
    %% of consumption hedged
    
    
    56
    %
    
    
    63
    %Average price
    
    US$
    7.39/mmBtu
    
    
    $6.87/GJFair value as at December 31, 2009
    
    
    (6.1
    )
    
    
    (2.4
    )
 (b) Cascades faces significant competition and some of its competitors may have greater cost
advantages or be able to achieve greater economies of scale or be able to better withstand periods
of declining prices and adverse operating conditions, which could negatively affect the Companys
market share and profitability.
  
    
    its ability to maintain high plant efficiencies, operating rates and lower manufacturing
costs;
    
    the availability, quality and cost of raw materials, particularly recycled and virgin
fibre, and labour; and
    
    the cost of energy.
   (c) Because of the Companys international operations, it faces political, social and exchange rate
risks that can negatively affect its business, operating results, profitability and financial
condition.
  CASCADES  ANNUAL REPORT 2009
 35




---



##### 




    
    the effective marketing of its products in other countries;
    
    tariffs and other trade barriers; and
    
    different regulatory schemes and political environments applicable to the Companys
operations, in areas such as environmental and health and safety compliance.
      North American foreign exchange hedging
 Sell contracts and options
    
    2010
    
    
    2011
    
    
    2013Total amount in $US
    
    
    81.5
    
    
    
    40
    
    
    
    397.5Estimated% of sales, net of expenses from Canadian operations
    
    
    48
    %
    
    
    25
    %
    
    
    n/aEstimated % of US$ denominated debt
    
    
    n/a
    
    
    
    n/a
    
    
    
    39
    %Average rate (CAN$)
    
    
    1.2099
    
    
    
    1.1596
    
    
    
    1.1759Fair value as at December 31, 2009
    
    
    12.7
    
    
    
    4.1
    
    
    
    (47.6
    )
 (d) The Companys operations are subject to comprehensive environmental regulation and
involve expenditures that may be material in relation to its operating cash flow.
  
    
    air emissions;
    
    water discharges;
    
    use and handling of hazardous materials;
    
    use, handling and disposal of waste; and
    
    remediation of environmental contamination.
 2 2
  
    
    require site remediation or other costs to maintain compliance or correct violations of
environmental laws and regulations; or
    
    result in governmental or private claims for damage to person, property or the environment.
  CASCADES  ANNUAL REPORT 2009
 36




---



##### 



(e) Cascades may be subject to losses that might not be covered in whole or in part by its
insurance coverage.
   (f) Labour disputes could have a material adverse effect on the Companys cost structure and
ability to run its mills and plants.
  (g) Cascades may make investments in entities that it does not control and may not receive
dividends or returns from those investments in a timely fashion or at all.
  
    
    three 50%-owned joint ventures with Sonoco Products Company, two of which are in Canada and
one in the United States, that produce specialty paper packaging products such as headers,
rolls and wrappers;
    
    a 73%-owned interest in Metro Waste Paper Recovery Inc., a Canadian operator of wastepaper
recovery and recycling operations;
    
    a 34% interest in Boralex Inc., a public Canadian corporation and a major private
electricity producer whose core business is the development and operation of power stations
that generate renewable energy with operations in Canada, the northeastern United States and
France; and
    
    a 36%-owned joint venture interest in Reno de Medici S.p.A., a European manufacturer of
recycled boxboard.
   CASCADES  ANNUAL REPORT 2009
 37




---



##### 



(h) Acquisitions have been and are expected to continue to be a substantial part of the Companys
growth strategy, which could expose the Company to difficulties in integrating the acquired
operation, diversion of management time and resources, and unforeseen liabilities, among other
business risks.
  
    
    difficulty in integrating and managing newly acquired operations, and in improving their
operating efficiency;
    
    difficulty in maintaining uniform standards, controls, procedures and policies across all
of the Companys businesses;
    
    entry into markets in which Cascades has little or no direct prior experience;
    
    the Companys ability to retain key employees of the acquired company;
    
    disruptions to the Companys ongoing business; and
    
    diversion of management time and resources.
   (i) The Company undertakes impairment tests, which could result in a write-down of the value of
assets and, as a result, could have a material adverse effect on the Company.
  (j) Certain Cascades insiders collectively own a substantial percentage of the Companys common
shares.
  
    
    elect all of the Companys directors and, as a result, control matters requiring board
approval;
    
    control matters submitted to a shareholder vote, including mergers, acquisitions and
consolidations with third parties, and the sale of all or substantially all of the Companys
assets; and
    
    otherwise control or influence the Companys business direction and policies.
  (k) If Cascades is not successful in retaining or replacing its key personnel, particularly if the
Lemaires do not stay active in the Companys business, its business, financial condition or
operating results could be adversely affected.
  CASCADES  ANNUAL REPORT 2009
 38




---



##### 



(l) Risks relating to the Companys indebtedness and liquidity
 The significant amount of the Companys debt could adversely affect its financial health and
prevent it from fulfilling the Companys obligations under its outstanding indebtedness.
   Credit Rating (outlook)
    
    Moodys
    
    Standard & Poors2004
    
    Ba1/Ba2/Ba3 (stable)
    
    BBB-/BB+/BB+ (negative)2005/2006
    
    Ba1/Ba2/Ba3 (stable)
    
    BB+/BB/BB- (negative)2007
    
    Baa3/Ba2/Ba3 (stable)
    
    BBB-/BB/BB- (stable)2008
    
    Baa3/Ba2/Ba3 (negative)
    
    BB+/BB-/B+ (negative)2009
    
    Baa3/Ba2/Ba3 (stable)
    
    BB+/BB-/B+ (stable)
    
    
    make it more difficult for the Company to satisfy its obligations with respect to its
indebtedness;
    
    increase the Companys vulnerability to competitive pressures and to general adverse
economic or market conditions and require it to dedicate a substantial portion of its cash
flow from operations to servicing debt, reducing the availability of its cash flow to fund
working capital, capital expenditures, acquisitions and other general corporate purposes;
    
    limit its flexibility in planning for, or reacting to, changes in its business and
industry; and
    
    limit its ability to obtain additional sources of financing.
 Cascades may incur additional debt in the future, which would intensify the risks it now faces as a
result of its leverage as described above.
 The Companys operations are substantially restricted by the terms of its debt, which could limit
its ability to plan for or react to market conditions, or to meet its capital needs.
  
    
    borrow money;
    
    pay dividends on stock or redeem stock or subordinated debt;
    
    make investments;
    
    sell capital stock in subsidiaries;
    
    guarantee other indebtedness;
    
    enter into agreements that restrict dividends or other distributions from restricted
subsidiaries;
    
    enter into transactions with affiliates;
    
    create or assume liens;
    
    enter into sale and leaseback transactions;
    
    engage in mergers or consolidations; and
    
    enter into a sale of all or substantially all of our assets.
   The Companys failure to comply with the covenants contained in its credit facility or its
senior note indenture, including as a result of events beyond its control or due to other
factors, could result in an event of default that could cause accelerated repayment of the debt.
 CASCADES  ANNUAL REPORT 2009
 
 39




---



##### 



(m) Cascades is a holding company and depends on its subsidiaries to generate sufficient cash flow to meet its debt service obligations.
  (n) Risks related to the common shares
 The market price of the common shares may fluctuate and purchasers may not be able to resell the
common shares at or above the offering price.
  (o) Cash-flow and fair-value interest rate risks
   (p) Credit risk
   (q) Our obligation to adopt International Financial Reporting Standards (IFRS) effective January 1, 2011, may impact the calculation of certain defined terms and
covenants under the indentures governing the Notes and our existing notes.
  CASCADES  ANNUAL REPORT 2009
 40




---



##### 



For the years ended December 31(in millions of Canadian dollars)
    
    2009
    
    
    2008Net earnings (loss)
    
    
    60
    
    
    
    (54
    )Net earnings (loss) from discontinued operations
    
    
    
    
    
    
    (18
    )Non-controlling interest
    
    
    (1
    )
    
    
    2Share of results of significantly influenced companies
    
    
    (17
    )
    
    
    (8
    )Provision for (recovery of) income taxes
    
    
    23
    
    
    
    (32
    )Foreign exchange loss on long-term debt and financial instruments
    
    
    45
    
    
    
    26Gain on purchases of senior notes
    
    
    (14
    )
    
    
    (2
    )Loss on long-term debt refinancing
    
    
    17
    
    
    
    Financing expense
    
    
    101
    
    
    
    102Operating income
    
    
    214
    
    
    
    16Specific items:Inventory adjustment resulting from business acquisition
    
    
    
    
    
    
    2Losses on disposal and others
    
    
    1
    
    
    
    5Impairment loss
    
    
    46
    
    
    
    16Closure and restructuring costs
    
    
    12
    
    
    
    27Loss (gain) on financial instruments
    
    
    (26
    )
    
    
    2733
    
    
    
    77Operating incomeexcluding specific items
    
    
    247
    
    
    
    93Depreciation and amortization
    
    
    218
    
    
    
    213Operating income before depreciation and amortizationexcluding specific items
    
    
    465
    
    
    
    306
 CASCADES  ANNUAL REPORT 2009
 41




---



##### 



For the years ended December 31
    
    Net earnings (loss)
    
    
    Net earnings (loss) per share1(in millions of Canadian dollars, except amount per share)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008As per GAAP
    
    
    60
    
    
    
    (54
    )
    
    $
    0.61
    
    
    $
    (0.55
    )Specific items:Inventory adjustment resulting from business acquisition
    
    
    
    
    
    
    2
    
    
    
    
    
    
    $
    0.01Loss on disposal and others
    
    
    1
    
    
    
    5
    
    
    
    
    
    
    $
    0.05Impairment loss
    
    
    46
    
    
    
    16
    
    
    $
    0.35
    
    
    $
    0.13Closure and restructuring costs
    
    
    12
    
    
    
    27
    
    
    $
    0.09
    
    
    $
    0.19Unrealized loss (gain) on financial instruments
    
    
    (26
    )
    
    
    27
    
    
    $
    (0.19
    )
    
    $
    0.19Loss on long-term debt refinancing
    
    
    17
    
    
    
    
    
    
    $
    0.11
    
    
    
    Gain on purchase of senior notes
    
    
    (14
    )
    
    
    (2
    )
    
    $
    (0.13
    )
    
    $
    (0.01
    )Foreign exchange loss on long-term debt and financial instruments
    
    
    45
    
    
    
    26
    
    
    $
    0.40
    
    
    $
    0.22Share of results of significantly influenced companies
    
    
    (5
    )
    
    
    
    
    
    $
    (0.05
    )
    
    
    Gain included in discontinued operations
    
    
    
    
    
    
    (23
    )
    
    
    
    
    
    $
    (0.19
    )Adjustment of statutory tax rate
    
    
    (6
    )
    
    
    
    
    
    $
    (0.06
    )
    
    
    Tax effect on specific items
    
    
    (20
    )
    
    
    (20
    )50
    
    
    
    58
    
    
    $
    0.52
    
    
    $
    0.59Excluding specific items
    
    
    110
    
    
    
    4
    
    
    $
    1.13
    
    
    $
    0.04
 
 1
    
    Specific amounts per share are calculated on an after-tax basis.  Cash flow fromFor the years ended December 31
    
    operations (adjusted)(in millions of dollars)
    
    2009
    
    
    2008Cash flow provided by operating activities
    
    
    357
    
    
    
    124Changes in non-cash working capital components
    
    
    (52
    )
    
    
    31Cash flow (adjusted) from operations
    
    
    305
    
    
    
    155Specific items:Inventory adjustment resulting from business acquisition
    
    
    
    
    
    
    2Losses on disposals and others
    
    
    1
    
    
    
    Loss on long-term debt refinancing
    
    
    13
    
    
    
    Closure and restructuring costs, net of current income tax
    
    
    8
    
    
    
    26Excluding specific items
    
    
    327
    
    
    
    183
 CASCADES  ANNUAL REPORT 2009
 42




---



##### 



For the years ended December 31(in millions of dollars)
    
    2009
    
    
    2008Cash flow provided by operating activities
    
    
    357
    
    
    
    124Changes in non-cash working capital components
    
    
    (52
    )
    
    
    31Depreciation and amortization
    
    
    (218
    )
    
    
    (213
    )Current income taxes
    
    
    30
    
    
    
    20Financing expense
    
    
    101
    
    
    
    102Loss on long-term debt refinancing
    
    
    13
    
    
    
    Losses on disposal and others
    
    
    (1
    )
    
    
    (5
    )Impairment loss and other restructuring costs
    
    
    (50
    )
    
    
    (16
    )Unrealized gain (loss) financial instruments
    
    
    26
    
    
    
    (27
    )Early retirement of natural gas contracts
    
    
    
    
    
    
    (11
    )Other non-cash adjustments
    
    
    8
    
    
    
    11Operating income from continuing operations
    
    
    214
    
    
    
    16Depreciation and amortization
    
    
    218
    
    
    
    213Operating income before depreciation and amortization
    
    
    432
    
    
    
    229
 CASCADES  ANNUAL REPORT 2009
 43