**Exhibit 13.1**

** **

 

 

# ANNUAL INFORMATION FORM

#  

For the yearended December 31, 2007

 

 

March 27,2008

 

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**Table of contents**

 

Annual Information Form forthe year ended December 31, 2007

 
| ** **                                                                       | **Page** |
|----------------------------------------------------------------------------------|----------|
| Documents incorporated by  reference                                             |     |
| Forward Looking Statements                                                       |     |
|                                                                             |     |
| Item 1 - Date of the Annual  Information Form                                    | 1        |
|                                                                             |     |
| Item 2 - Corporate Structure                                                     | 1        |
| 2.1  Name and Incorporation of the Company                                       | 1        |
| 2.2  Intercorporate Relationships                                                | 1        |
|                                                                             |     |
| Item 3 - General Development  of the Business                                    | 1        |
| 3.1  Three Year History                                                          | 1        |
| 3.2  Significant Acquisitions                                                    | 3        |
|                                                                             |     |
| Item 4 - Description of the  Business                                            | 4        |
| 4.1  General                                                                     | 4        |
| 4.2  Industry sector information                                                 | 4        |
| 4.2.1  Packaging Products Sector                                                 | 4        |
| 4.2.1.1  Boxboard Group                                                          | 4        |
| 4.2.1.2  Containerboard Group - Norampac                                         | 5        |
| 4.2.1.3  Specialty Products Group                                                | 7        |
| 4.2.2  Tissue Papers Sector                                                      | 10       |
| 4.3  Research and development                                                    | 12       |
| 4.4  Competitive conditions                                                      | 12       |
| 4.5  Cycle components                                                            | 12       |
| 4.6  Environment                                                                 | 13       |
| 4.7  Reorganizations                                                             | 13       |
| 4.8  Social policies                                                             | 13       |
| 4.9  Business Risks                                                              | 13       |
|                                                                             |     |
| Item 5 - Dividends                                                               | 13       |
|                                                                             |     |
| Item 6 - Capital Structure                                                       | 13       |
| 6.1  General description of capital structure                                    | 13       |
| 6.2  Ratings                                                                     | 14       |
|                                                                             |     |
| Item 7 - Market for Securities                                                   | 14       |
| 7.1 Trading price and  volume                                                    | 14       |
|                                                                             |     |
| Item 8 - Directors and  Officers                                                 | 15       |
| 8.1  Information concerning Directors                                            | 15       |
| 8.2  Cease trade orders, bankruptcies, penalties or sanctions                    | 16       |
| 8.3  Information concerning Executive Officers                                   | 17       |
|                                                                             |     |
| Item 9 - Legal Proceedings                                                       | 17       |
|                                                                             |     |
| Item 10 - Transfer Agent and  Registrar                                          | 18       |
|                                                                             |     |
| Item 11 - Material Contracts                                                     | 18       |
|                                                                             |     |
| Item 12 - Interests of Experts                                                   | 19       |
|                                                                             |     |
| Item 13 - Audit Committee                                                        | 19       |
| 13.1 Composition and  mandate                                                    | 19       |
| 13.2  Relevant education and experience of the members                           | 19       |
| 13.3  External auditors services fees                                            | 19       |
| 13.4  Policies and procedures for the engagement of audit and non-audit services | 20       |
|                                                                             |     |
| Item 14 - Additional  Information                                                | 20       |
|                                                                             |     |
| Schedule A – Charter of the  Audit Committee                                |     |

 

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**In this AnnualInformation Form, the terms “We”, “Us”, “Our”, and “Cascades” refer to CascadesInc., its subsidiaries, divisions and its interests in joint ventures. Exceptas otherwise indicated, all dollar amounts are expressed in Canadian dollars.The information in this Annual Information Form is stated as at December 31,2007, except as otherwise indicated, and except for information in documentsincorporated by reference that have a different date.**

 

**DOCUMENTS INCORPORATED BY REFERENCE**

 

The documents in thetable below contain information that is incorporated by reference into thisannual information form.

 
| **Documents**                                                                                                                                                          | ** ** | **Where they are incorporated in this Annual Information Form** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------|
| Cascades Inc.’s 2007 Annual  Report – Management’s discussion and analysis of financial position and  operating results, Risk management, page 37. |       | Item 4.9                                                                                                |

 

**FORWARD-LOOKING STATEMENTS**

 

**Certain statementsin this Annual Information Form or in documents incorporated by referenceare forward-looking statements within the meaning of the “safe Harbour”provision of the United States Private Securities Litigation Reform Act of 1995based on current expectations. The accuracy of such statements is subject to anumber of risks, uncertainties and assumptions that may cause actual results todiffer materially from those projected, including, but not limited to, theeffect of general economic conditions, decreases in demand for the Company’sproducts, increases in raw material costs, changes in the relative values ofcertain currencies, fluctuations in selling prices, adverse changes in generalmarket and industry conditions. (See heading Business risks).**

 

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** **
|  | *** *** | ***Annual Information Form   *** |
|--|--------------|-------------------------------------------------|

#  

# **ITEM 1 – DATE OF THE ANNUALINFORMATION FORM**

#  

This Annual Information Form (the “AIF)is dated as at March 27, 2008. Except as otherwise indicated, the information contained in this AIF isstated as at December 31, 2007.

 

# **ITEM 2 - CORPORATESTRUCTURE**

#  

## **2.1**          NAME ANDINCORPORATION OF THE COMPANY

## ** **

Cascades Inc. (hereinafter referred to as “Cascades” or the “Company”)was incorporated under the name Paper Cascades Inc./Cascades Paper Inc. underthe laws of the Province of Québec by letters patent issued on March 26,1964.  Supplementary letters patent wereissued on March 11, 1968, July 4, 1979 and October 19, 1979 toamend the authorized capital stock and the restrictions and privileges attachedto certain classes of shares of the Company.

 

Cascades was continued under thename Cascades Inc. under Part 1A of the *CompaniesAct* (Quebec) by Certificate of Continuance dated October 26,1982.  Certificates of Amendment wereissued on July 5, 1984, September 16, 1985 and May 13, 1986 topermit the subdivision of the Company’s Common Shares, as well as on July 15,1992, July 24, 1992, December 17, 1992 and July 20, 1993 inorder to modify the authorized share-capital and the restrictions andprivileges of certain classes of shares of the Company.

 

On December 30, 2003, inaccordance with Article 123.129 of the *CompaniesAct*(Québec), Cascades, by simplified amalgamation, merged with9135-2591 Québec Inc., a wholly owned subsidiary of the Company.  The articles of amalgamation and schedules aswell as the composition of the Board of Directors of the new company followingthe amalgamation are exactly the same as those of Cascades Inc. prior to theamalgamation.

 

The head office and corporateoffices of Cascades are located at 404 Marie-Victorin Blvd., KingseyFalls, Québec, J0A 1B0. Cascades also has administrative offices locatedat 772 Sherbrooke Street West, Suite 100, Montréal, Québec, H3A 1G1.

 

## **2.2**          INTERCORPORATERELATIONSHIPS

## ** **

The following list sets out the principal wholly-owned subsidiaries ofCascades and their respective jurisdiction of incorporation as at December 31,2007:

 
| ** **                                       | ** ** | **Jurisdiction of** |
|--------------------------------------------------|------------|--------------------------|
| **Corporate Name**                          | ** ** | **Incorporation**        |
|                                             |       |                     |
| Cascades Arnsberg GmbH                           |       | Germany                  |
| Cascades Canada Inc.                             |       | Canada                   |
| Cascades Fine Papers Group Inc.                  |       | Canada                   |
| Cascades S.A.                                    |       | France                   |
| Cascades Tissue Group – North Carolina Inc. |       | North Carolina           |
| Cascades USA Inc.                                |       | Delaware                 |
| Conference Cup Ltd.                              |       | Ontario, Canada          |
| Dopaco, Inc.                                |       | Pennsylvania             |
| Metro Waste Paper Recovery Inc.                  |       | Canada                   |
| Norampac Holding US Inc.                         |       | Delaware                 |
| Norampac Industries Inc.                         |       | New York                 |

 

# **ITEM 3 - GENERALDEVELOPMENT OF THE BUSINESS**

#  

**3.1****         ****THREE YEAR HISTORY**

 

On October 31, 2005, Cascades completedthe refinancing of its $500 million revolving credit facility originally put inplace in February 2003. This new $550 million credit facility included a$450 million five-year revolving facility maturing in 2010 and a seven-year$100 million term facility maturing in 2012, reimbursable without penalty, atthe Company’s option any time prior to maturity. On December 29, 2006, inconnection with the acquisition of the remaining outstanding shares (50%) fromDomtar Inc. (“Domtar”) in Norampac Inc. (“Norampac”), the Company completed therefinancing of its $550 million credit facility originally put in place in 2005to provide for new $875 million (including $325 million of Norampac) creditfacilities consisting of a $650 million five-year secured revolving creditfacility maturing in December 2011, a $100 million secured termfacility maturing in October 2012 and a six-month $100 million seniorunsecured revolving credit facility which should be converted into the securedrevolving facility in 2007. Subject to certain conditions, the Company also hasthe option to request an increase of the secured revolving credit facility byan additional amount of up to $150 million. The six-year term facility can bereimbursed without penalty at the Company’s option any time prior to maturity.Its obligations under this new revolving credit facility are secured by allinventory and receivables of the Company and its North American subsidiariesand by the property, plant, and equipment of three of its mills. On June 27,2007, the Company amended its credit agreement to add a new twelve month unsecuredrevolving credit facility in the amount of $100 million to allow for additionalavailability of funds.

 

On December 5, 2006, Cascades announced that it had reached anagreement in principle with Domtar to purchase Domtar’s 50% interest inNorampac, for a cash consideration of $560 million. The Company also announcedthat it had secured commitments for the financing necessary to complete thetransaction, namely a renewed credit facility the terms of which are describedhereinabove. Concurrently, the Company announced that it had launched a $150million Subscription Receipt offering through a syndicate of underwriters to beissued to the public pursuant to a short form prospectus to be filed withsecurities regulators in each province of Canada with closing to occur on orabout

 

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December 20, 2006. Eachsubscription receipt gives the right to its holder to receive one Common Shareon closing of the transaction. The aggregate gross proceeds of the public offeringtogether with the proceeds from the $50 million private placement at the publicissue price to be used to finance the acquisition.

 

On December 20, 2006,Cascades closed it’s a public offering of 15,095,000 SubscriptionReceipts at a unit price of $13.25, for a total consideration of $200,008,750held in escrow pending closing of the acquisition of the outstanding shares(50%) held by Domtar in Norampac.  Thecompletion of this transaction occurred on December 29, 2006, following asatisfactory response from the Competition Bureau on December 14, 2006.Concurrently, the Company also closed a $50 million private placement of3,773,585 Subscription Receipts at a price of $13.25 each. Each SubscriptionReceipt was converted into an equivalent number of Common Shares of theCompany, concurrently with the closing of the acquisition of the remaining 50%interest in Norampac, on December 29, 2006.

 

On June 20, 2007, Cascades together with Reno deMedici S.p.A. (“RdM”) announced the signing of a Letter of Intent for thenegotiation, on an exclusive basis, of the terms and conditions of a possiblecombination of RdM and the European recycled cartonboard business of CascadesSA. Before the approval of the proposed merger by the shareholders of RdM, itis expected that Cascades S.A., and a group of current shareholders of RdM enterinto a three year shareholders agreement instrumental to the Merger and the pursuit ofthe business objectives underlying the whole transaction covering mattersrelating to corporate governance where Cascades S.A., on the one hand, and agroup of current shareholders on the other hand, would be equally representedon the Board of Directors of RdM. The agreement also provides for an 18-month lock-upand thereafter reciprocal first refusal and tag-along rights.

 

On September 14,2007, Cascades announced the signing ofthe definitive agreements for the combination of RdM and Cascades S.A.’s recycledboxboard business, the whole as announced in the press release issued on June 20,2007. The combination remained subject to the approval of regulatoryauthorities as well as approval of RdM’s shareholders. On October 29,2007, the shareholders of RdM approved the proposed merger of CascadesS.A.’s recycled boxboard business with their recycled boxboard activities at anextraordinary general meeting of shareholders. On February 7, 2008, thecompetition authorities approved the merger which was signed on February 26,2008 to take effect on March 1, 2008.

 

***BoxboardGroup***

 

On January 14, 2005, theCompany acquired certain assets of the packaging division of Dover IndustriesLimited, located in Burlington (Ontario) for a cash consideration of$8 million.  The closing of thetransaction occurred on January 27, 2005 and on October 14, 2005, theCompany paid $6 million to acquire certain assets of the paperboard division ofFraser Papers Inc., located in Edmunston (New Brunswick). Both units are partof the converting sector of the Boxboard Group.

 

On December 13, 2005, Cascades announced arestructuring of its folding carton facility situated in Montréal (Québec),essentially closing one of two production lines and on December 11, 2006, as part of the ongoing reorganization andoptimization of its converting activities, Cascades announcedthat it would definitely cease operations at this plant, which occurred by theend of the first quarter of 2007. Approximately 118 employees have beenaffected by this closure.

 

On April 21, 2006, Cascades announced thatit had reached an agreement with Caraustar Industries, Inc., to acquirethe assets of its coated recycled board mill located in Sprague (Connecticut)for an amount of US$14.5 million, subject to the approval of the environmentalauthorities of the State of Connecticut. The annual production capacity of thismill is approximately 180,000 short tons, which represents an estimated 7% ofthe North American coated recycled boxboard manufacturing capacity.

 

On April 25, 2006, Cascades announced that it had acquired certainof the assets of the paperboard division of Simkins Industries located inRidgefield (New Jersey) and in New Haven (Connecticut), in an amount of$14 million (US$12.5 million). These two mills were shut down by Simkins Industries.

 

On June 29, 2006, Cascades announced the shut down of itsFjordCell pulp mill for an indefinite period of time. The mill, whichspecializes in the production of bleached softwood kraft pulp, is located inJonquière (Québec). The closure affected approximately 70 employees.  The mill produced annually 82,000 tons ofkraft pulp and sold all of its production to other Cascades facilities, namely,Cascades Boxboard Group – Jonquière (Québec), and the Rolland Division of theCascades Fine Papers Group Inc. (Québec).

 

On July 19 and August 7, 2006, Cascades completedthe acquisition of the assets of two Caraustar Industries, Inc.’s coatedrecycled boxboard mills located in Sprague (Connecticut) and in Rittman (Ohio),for a purchase price of $18 million (US$15 million). Since theacquisition, the Sprague mill operates under the name Cascades BoxboardGroup-Connecticut LLC, Versailles Mill. Caraustar closed the Rittman plant.

 

On October 6, 2006, Cascades announcedthe temporary shut down of the Scierie Lemay Inc. sawmill, including itsfacilities, in L’Ascension (Québec) as well as those of its subsidiary RabotageLemay Inc. in Saint-François-de-Sales (Québec). The shutdown affected 200workers.

 

On January 25, 2007, Cascades announced thesale of its 40% interest in GSD Packaging, LLC, a U.S. food pail manufacturingcompany to Rock-Tenn Company. The proceeds of this transaction, which amount to$38 million ($US 32 million), will be used to reduce Cascades’debt.

 

***Containerboard Group- Norampac***

 

On May 12, 2005, Norampac announced its intention to close itscorrugated products plant located on Molson Street, in Montréal (Québec) duringthe second quarter of 2006. This closure was part of a global reorganizationplan of Norampac’s Québec activities, which included an investment plantotalling close to $30 million.  Theclosure of this division which occurred in December 2005, affected some215 employees and had become necessary in an effort to adjust to the reality ofthe Québec marketplace.

 

2

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On July 19, 2005, Norampac’s management announced its decision toclose its corrugated products plant located in Buffalo (New York), in August 2005.  All plant operations were transferred to the Lancaster(New York) plant, which was acquired by Norampac in 2004.  This reorganization enabled the Company toinvest in the Lancaster Division in order to offer to its customers betterquality service and products.

 

On September 21, 2005, Norampac announced the permanent closure ofpaper machine no. 1 at its linerboard mill located in Red Rock (Ontario). Thismill had two paper machines.  Machine no.1 was used to manufacture kraft linerboard and was producing approximately150,000 short tons yearly. On August 30, 2006, Norampac announced the shutdown of its Red Rockmill, for an indefinite period of time due to unfavorable economicfactors.  Close to 300 employees wereaffected by this closure.  The Red Rockmill manufactured unbleached kraft linerboard and produced 300,000 short tonsannually. On September 7, 2007, Norampac announced the signing of a Letterof intent for the sale of the assets of its mill and agreed to pay an amount of$10 million to the purchaser, North American Logistic Services, Inc.,in order to encourage the start-up of a new line of production at the facility.

 

On October 11, 2005, Norampac announced that it had completed theacquisition of three corrugated products converting plants from SPB CanadaInc., located in Montréal (Québec), Le Gardeur (Québec) and Belleville(Ontario), for an approximate consideration of $38 million. In 2006, theCompany finalized the allocation of the purchase price relating to theacquisition of these three plants, which resulted in a reduction of the purchaseprice by $3 million.  These threeplants have a combined annual production capacity of approximately 2 billionsquare feet.  This acquisition hasallowed Norampac to broaden the scope of its specialised products, benefit fromeconomies of scale while optimizing its equipment use.

 

***SpecialtyProducts Group***

 

On November 17, 2005, the Companyreached an agreement for the sale of its paper merchant division known asCascades Resources, a Division of Cascades Fine Papers Group Inc., to CoastPaper Limited, now known as Spicers, a division of PaperlinX Canada Limited. OnFebruary 28, 2006, the Company completed the transaction for anapproximate amount of $86 million.

 

On November 22, 2005,Cascades announced a rationalization plan for its fine papers sector with thepermanent shut down of the operations of its Cascades Fine Papers Group Inc.,Thunder Bay Division (Ontario) plant which specialized in the manufacturing ofcoated papers. Approximately 375 employees were affected by this closing, whichoccurred on January 21, 2006.  On December 21,2007, Cascades concluded the sale of the assets of its mill and paid an amountof $4,5 million to the purchaser, Thunder Bay Fine Papers Inc., in orderto support the start-up of the plant.

 

On December 8, 2005, Cascadesannounced the last stage of its strategic recovery plan for its Fine PapersGroup plant located in Saint-Jérôme (Québec), involving a restructuring ofoperations, and the closure of the smallest of the four paper machines, whichproduced 8,000 short tons per year, an amount equivalent to 5%of the plant’s annual capacity.  Therestructuring affected nearly 100 employees.

 

On August 24, 2006, Cascades announcedthe definitive closure of one of its two mills, which produced backing forvinyl flooring located in Boissy le Châtel (France) at the end of October 2006.The mill, which operated under the name Cascades Ste-Marie S.A.S., was acquiredin 1999 and employed 34 people.

 

On August 2, 2007, Cascades announced thatit had entered into an agreement with Honeycomb Products of Michigan (HPM) toacquire certain assets of HPM’s honeycomb board mill located in Grand Rapids,(Michigan) for a counterpart of $11 million ($US10.4 million).

 

On January 7, 2008, Cascades proceeded tothe sale of its Greenfield S.A.S. French deinking mill to Argowiggins, asubsidiary of Sequana Capital, for a counterpart of $40 million(Euro 28 million).

 

***TissueGroup***

 

On March 31, 2005, Cascadessold the sanitation products distribution and the chemical productsmanufacturing assets of its Wood Wyant Inc. subsidiary to a subsidiary ofGroupe Sani-Marc, located in Victoriaville (Québec), for a total netconsideration of $15.7 million, in order to focus operations on its coresectors namely the manufacturing and the processing of tissue paper andpackaging products.  The Wood Wyant inc.assets related to the manufacturing of tissue paper finished products, locatedin Pickering (Ontario), were excluded from the transaction.

 

On March 9, 2006, as part of the ongoing rationalization process ofits activities and in an effort to optimize its effectiveness andprofitability, Cascades decided to permanently close its tissue conversionplant in Pickering (Ontario). Approximately 66 employees were affected by thisclosure. The equipment was redeployed in different Cascades Tissue Group plantsand mills in the United States and Canada.

 

On February 22, 2007, Cascades announced aninvestment of 17.4 millions $ ($15 million US) to equip itstissue mill in Memphis (Tennessee) with a deinking unit. This deinking unitwill enable the plant to be highly competitive.

 

**3.2****         ****SIGNIFICANT ACQUISITIONS**

 

On December 29, 2006, Cascades completedthe purchase of the outstanding Common Shares of Norampac that the Company didnot already own, representing 50% of the outstanding Common Shares, for a cashconsideration of $560 million (excluding the transaction costs of$1 million) (the “Acquisition”). Norampac is among the top ten manufacturers of containerboard in NorthAmerica and the largest in Canada. Norampac is also an industry leader incorrugated products in North America and one of the largest producers ofcorrugated products in Canada in terms of capacity. Norampac has 34 productionfacilities in Canada, the United States and France. As part of the transactionsundertaken in connection with the Acquisition, Cascades, as sole shareholder ofNorampac, wound up and will dissolve Norampac, such that all of the assets andliabilities previously belonging to Norampac, including Norampac’s 6.75% seniornotes, maturing in 2013 and its credit facility will be assumed by Cascades whowill hold all of the shares of Norampac’s subsidiaries directly. On December 29,2006, the Company filed on SEDAR, form 51-102F4, namely, the BusinessAcquisition Report in accordance with National Instrument 51-102 of theCanadian Securities Administrators.

 

3

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#  

# **ITEM 4 - DESCRIPTION OF THEBUSINESS**

#  

## **4.1**          GENERAL

## ** **

Established in 1964, Cascades is the parentcompany of a North American and European group of companies involved in theproduction, conversion and marketing of packaging products and tissue papersprincipally composed of recycled fibre. Cascades conducts its businessprincipally through two operating sectors, namely:

 

1) The **PackagingProducts**sector which includes:

 

i)       The *Boxboard Group*, a manufacturer of premiumcoated boxboard and folding cartons;

ii)      The *Containerboard Group - Norampac*,a manufacturer of containerboard and leading converter of corrugated products;and

iii)     The *Specialty Products Group*, whichmanufactures specialty papers, industrial packaging and consumer productpackaging and is also involved in recovery and recycling.

 

2) The **Tissue****Papers**sector operates units that manufacture and convert tissue paper forthe commercial and institutional, and retail markets.

 

Thesetwo sectors include over 100 operating units located in Canada, the UnitedStates, France, England, Germany and Sweden, and employ over 14,000 people.This structure decentralizes authority while allowing continuous exchangesbetween sectors and a better coordination of all of the operations.  Cascades sets strategic guidelines andensures that corporate policies concerning acquisition and financingstrategies, legal affairs, human resources management and environmentalprotection are applied by the subsidiaries, divisions and affiliated companies.

 

**4.2****         ****INDUSTRY SECTOR INFORMATION**

 

### **4.2.1**       PACKAGING PRODUCTS SECTOR

### ** **

The packaging products sector isdivided into three groups of activities: the Boxboard Group, the ContainerboardGroup – Norampac, and the Specialty Products Group.

 

#### **4.2.1.1**   BOXBOARD GROUP

#### ** **

The Boxboard Group operateseight mills that produce coated boxboard for conversion into folding cartonsand micro-flute packaging, with a total annual production capacity of 1,055,000metric tons.  Three of these mills arelocated in Canada, one in the United States, two in France, one in Sweden, andone in Germany.

 

Approximately 67% of theBoxboard Group’s production of boxboard is made of entirely recycled fibre, and15% of its output is produced with a high content of recycled fibre and thebalance of virgin fibre. Vertically integrated upstream, the Boxboard Groupobtains its supply of wastepaper through its own recovery networks, jointventures and affiliates, as well as through long-term agreements withindependent suppliers.  To secure itssupply of virgin fibre, the Boxboard Group operates three mechanical pulp millsin Québec, France and Sweden. It also operated one chemical pulp mill inJonquière (Québec), Cascades FjordCell, as well as a sawmill, Scierie LemayInc., the operations of which ceased in 2006, for an indefinite period of timeas described in heading 3.1 “Three Year History”.

 

In North America, the BoxboardGroup is also vertically integrated downstream via its Folding Carton Division.The division’s five plants, one in Québec, two in Ontario, one in Manitoba andone in Kentucky in the United States annually convert some 110,000 metric tonsof boxboard or 3 billion boxes per year, supplied mainly by its Canadianboxboard mills. These plants design, develop and produce packaging solutionsthat meet the specific needs of companies operating mainly in the food, fastfood, cosmetics, pharmaceutical and distillation industries. Dopaco, Inc.operates seven plants (two in Ontario and five in the United States) convertingsome 200,000 tons of boxboard a year, which mostly comes from the Canadianboxboard mills, into folding cartons and cups. It also has interests in two joint ventures in the United States, havingsold its 40% interest in GSD Packaging, LLC at the beginning of the year 2007,as described in the heading 3.1 “Three Year History”.

 

In 2007 and 2006, the BoxboardGroup had sales of $1.3 billion. The sales of cartonboard geographically were as follows: i) for themills outside of North Armerica : 93% in European countries and 7% elsewhere;ii) for the North American mills: 41% in Canada and 59% in the UnitedStates.  Globally in 2007, 34%, 29%, 36%and 1%  of the sales of this Group weregenerated in Europe, Canada, the United States and other countries.

 

As at December 31, 2007,the Boxboard Group employed more than 4,250 people in 22 facilities and 10sales offices throughout the world.

 

The following table lists theplants owned by the Boxboard Group, the approximate annual production capacityof the facilities and the products manufactured or the operations carried outtherein, as the case may be, in 2007:

 
| **Facilities**               | ** ** | **Products / Services**                                           | ** ** | **Annual capacity in********metric tons** | ** ** |
|------------------------------|------------|-----------------------------------------------------------------------------|------------|----------------------------------------------------------|------------|
| **Manufacturing**            |       |                                                                        |       |                                                     |       |
| Toronto (Ontario)            |       | 100% recycled coated boxboard                                               |       | 165,000                                                  |       |
| Jonquière (Québec) |       | Coated (from 100% virgin to 100% recycled)  boxboardThermo  mechanical pulp |       | 140,00060,000                                            |       |
| East Angus (Québec)     |       | 100% recycled coated boxboardDe-inked pulp                                  |       | 65,00010,000                                             |       |

 

4

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| Versailles (Connecticut)                                                            |   | 100% recycled coated boxboard                                              |   | 165,000       |    |
|-------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------|--------|---------------|---------|
| Cascades LaRochette (France)                                                        |   | Coated grease resistant boxboard, virgin  fibreThermo mechanical pulp      |   | 130,00080,000 |    |
| Cascades Blendecques (France)                                                       |   | Coated, non coated grease resistant  boxboard, recycled fibreDe-inked pulp |   | 145,00060,000 |    |
| Cascades Djupafors A.B. (Sweden)                                                    |   | Light-weight coated boxboard, virgin fibreThermo mechanical pulp           |   | 60,00050,000  |    |
| Cascades Arnsberg GmbH (Germany)                                                    |   | Coated boxboard, recycled fibre                                            |   | 185,000       |    |
| Cascades FjordCellJonquière  (Québec)                                     |   | Bleached softwood kraft pulp                                               |   | 82,000        | **(1)** |
| Scierie Lemay Inc.  Ascension (Québec)                                         |   | Sawmill                                                                    |   | N/A           | **(2)** |
| Rabotage Lemay Inc.Saint-François-de-Sales  (Québec)                      |   | Planing                                                                    |   | N/A           | (2)     |
| **Converting**                                                                      |   |                                                                       |   |          |    |
| Mississauga (Ontario)                                                               |   | Processing and printing of boxboard for  folding cartons                   |   | 40,000        |    |
| Cobourg (Ontario)                                                                   |   | Processing and printing of boxboard for  folding cartons                   |   | 30,000        |    |
| Winnipeg (Manitoba)                                                                 |   | Processing and printing of boxboard for  folding cartons                   |   | 30,000        |    |
| Lachute (Québec)                                                               |   | Processing and printing of  boxboard for folding cartons                   |   | 30,000        |    |
| Hebron (Kentucky)                                                                   |   | Processing and printing of  boxboard for folding cartons                   |   | 40,000        |    |
| Dopaco, Inc.  (Pennsylvania, California, North Carolina, Illinois and Ontario) |   | Packaging products for the quick-service  restaurant industry              |   | 200,000       |    |
| **Distribution**                                                                    |   |                                                                       |   |          |    |
| Cascades Cartonboard UK Ltd(Great Britain)                                          |   | Sheeting, distribution and  resale services                                |   | N/A           |    |

## ** **

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## **(1) Shut down in June 2006 for an indefinite period of time.**

## **(2) Shut down in October 2006 for an indefinite period of time.**

## ** **

#### **4.2.1.2**   CONTAINERBOARD GROUP – NORAMPAC

#### ** **

Norampac employs more than 4,600people in its 34 containerboard mills and corrugated products converting plantsin Canada, the United States and France.

 

Norampac has seven linerboardand corrugated medium mills in Canada, the United States and France.  These facilities have a combined annualproduction capacity of 1.28 million short tons, dedicated to specialty paperssuch as white-top or colored-top linerboard. The products manufactured by theseven manufacturing mills consist of 35% linerboard and 65% corrugating medium.Approximately 65% of their North American output is converted by Norampac’s 26corrugated products plants, strategically located across Canada and the UnitedStates.

 

In 2007, consolidated sales ofthis group amounted to $1.2 billion, mainly allocated as follows: 61% inCanada, 31% in the United States and 8% outside of North America. Its own salesforce carries out the sales of this group together with sales agents for exportpurposes.

 

The Containerboard Grouppurchases all of its needs in virgin fibre in Québec and Ontario, and purchasesits recycled fibre equally in the United States and in Canada.  The corrugated products group purchasesnearly all of its raw material needs directly from the Containerboard Group’smills.

 

5

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The following table lists themills and converting plants of the Containerboard and Corrugated Products Groupand the approximate annual production capacity or shipments of each facility aswell as the products manufactured or, where applicable, their activities in2007

 
| **Facilities**                          | ** ** | **Products / Services**                  | ** ** | **Annual capacity or********Shipments** | ** ** |
|-----------------------------------------|------------|----------------------------------------------------|------------|---------------------------------------------------|------------|
| ** **                              | ** ** | ** **                                         | ** ** | **Capacity in  short tons**                       | ** ** |
| **Containerboard**                      |       |                                               |       |                                              |       |
| Niagara Falls (New York)                |       | 100% recycled corrugating  medium                  |       | 271,000                                           |       |
| Norampac Avot Vallée SAS  (France) |       | 100% recycled corrugating  medium and linerboard   |       | 152,000                                           |       |
| Kingsey Falls (Québec)             |       | 100% recycled linerboard                           |       | 105,000                                           |       |
| Cabano (Québec)                    |       | Corrugating medium                                 |       | 245,000                                           |       |
| Trenton (Ontario)                       |       | Corrugating medium in various  basis weights       |       | 200,000                                           |       |
| Mississauga (Ontario)                   |       | 100% recycled linerboard                           |       | 177,000                                           |       |
| Burnaby (British Columbia)              |       | 100% recycled corrugating  medium and gypsum paper |       | 131,000                                           |       |

 
| **Corrugated Products**                                |   |                                                        |   | **Shipments in********Square feet** | ** ** |
|--------------------------------------------------------|--------|-------------------------------------------------------------|--------|-----------------------------------------------|------------|
| Newfoundland Containers  St-John’s (Newfoundland) |   | Corrugated sheets and products                              |   | 469,000,000                                   |       |
| Moncton (New Brunswick)                                |   | Corrugated packaging                                        |   | 506,000,000                                   |       |
| Québec (Québec)                              |   | Variety of  corrugated packaging containers                 |   | 768,000,000                                   |       |
| Drummondville (Québec)                            |   | Corrugated packaging  containers for medium or heavy volume |   | 370,000,000                                   |       |
| Victoriaville (Québec)                            |   | Corrugated packaging of all  sizes                          |   | 874,000,000                                   |       |
| Vaudreuil (Québec)                                |   | Variety of corrugated  packaging containers                 |   | 814,000,000                                   |       |
| SPB, Montréal (Québec)                       |   | Variety of corrugated  packaging containers                 |   | 59,000,000                                    |       |
| Le Gardeur (Québec)                               |   | Corrugated sheets, packaging  and pallets                   |   | 469,000,000                                   |       |
| Dispac (Québec)                                   |   | Corrugated packaging  containers for light volume           |   | 93,000,000                                    |       |
| Belleville  (Ontario)                                  |   | Variety of  corrugated packaging containers                 |   | 277,000,000                                   |       |
| Etobicoke (Ontario)                                    |   | Variety of corrugated  packaging containers                 |   | 522,000,000                                   |       |
| Jellco, Barrie (Ontario)                               |   | Variety of corrugated  packaging containers                 |   | 99,000,000                                    |       |
| Peterborough (Ontario)                                 |   | Corrugated sheets, packaging  and pallets                   |   | 82,000,000                                    |       |
| St-Mary’s (Ontario)                               |   | Corrugated packaging                                        |   | 874,000,000                                   |       |
| OCD, Mississauga (Ontario)                             |   | Corrugated packaging                                        |   | 951,000,000                                   |       |
| Vaughan (Ontario)                                      |   | Corrugated sheets                                           |   | 1,935,000,000                                 |       |
| North York (Ontario)                                   |   | Single face sheets,  co-packaging and display operations    |   | 43,000,000                                    |       |
| Lithotech, Scarborough  (Ontario)                      |   | Single face laminate                                        |   | 197,000,000                                   |       |
| Winnipeg (Manitoba)                                    |   | Waxed corrugated containers                                 |   | 473,000,000                                   |       |
| Saskatoon (Saskatchewan)                               |   | Corrugated product packaging                                |   | 21,000,000                                    |       |
| Calgary (Alberta)                                      |   | Die cut boxes                                               |   | 638,000,000                                   |       |
| Richmond (British Columbia)                            |   | Corrugated packaging                                        |   | 452,000,000                                   |       |

 

6

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| Norampac New York City Inc.(New York)    |   | Graphic packaging and  industrial box mix   |   | 969,000,000              |   |
|------------------------------------------|--------|---------------------------------------------|--------|--------------------------|--------|
| Norampac Leominster Inc.(Massachusetts)  |   | Industrial box mix                          |   | 584,000,000              |   |
| Norampac Schenectady Inc.(New York)      |   | Variety of corrugated  packaging containers |   | 638,000,000              |   |
| Lancaster (New York)                     |   | Variety of corrugated packaging  containers |   | 405,000,000              |   |
| Norampac Thompson Inc.(Connecticut)      |   | Variety of corrugated  packaging containers |   | 189,000,000              |   |
| Montcorr Packaging Ltd. (Québec)    |   | Corrugated sheets                           |   | 151,000,000              | (1)    |
| **Services**                             |   |                                        |   |                     |   |
| Art & Die, Etobicoke  (Ontario) |   | Graphic art and printing  plates            |   | 4,285,000  square inches |   |

 

----

(1) The annual shipments indicated arecalculated according to Norampac’s manufactured volume at year-end.

 

#### **4.2.1.3**   SPECIALTY PRODUCTS GROUP

#### ** **

The Specialty Products Group operates in fourmain sectors of activity, namely : industrial packaging, consumer productpackaging, specialty papers, as well as in recovery and recycling.  The group has 46 units located in NorthAmerica and Europe and employs more than 2,600 people.  In 2007, sales of this group amounted to $834million, compared with $691 million in 2006.

 

##### ***a)****           **IndustrialPackaging Products*

##### ** **

CascadesConversion Inc., Converdis Inc. and Cascades Sonoco Inc., convert uncoatedboard, obtained in part within the Cascades network, into industrial packagingmaterials for the pulp and paper industry, such as roll headers and paperboardpackaging from rolls of newspaper. Cascades Conversion Inc. manufactures as well a unique model of heatplate for sealing roll edges. This sector of the Specialty Products Group isthe leader in the North American market. The sales for these mills are made by their own sales force.  In 2007, one customer accounted for 17% ofsales and the principal geographic market is the United States with 57%,followed by the province of Québec at 34% and by other Canadian provinces at9%.

 

CascadesRollpack S.A.S., a wholly owned subsidiary of the Company, operates two plantsin France at Saulcy-sur-Meurthe and Châtenois, which manufacture roll headersmade of linerboard and uncoated paperboard obtained from within Europeanpapermills.  The sales of these mills aremade through their own sales force.  In2007, one customer accounted for 14% of the products sold and the principalgeographic market is Europe with France at 39%, Germany at 25%, Sweden at 11% and other various countries at 25%.

 

CascadesMulti-Pro, located in Drummondville (Québec) manufactures laminated boards usedin many industrial sectors as well as honeycomb paperboard. The CascadesEnviropac Berthierville (Québec) and Toronto (Ontario) plants as well asCascades Enviropac HPM LLC in Grand Rapids (Michigan) manufacture honeycombpaperboard used as industrial packaging in general.  The sales for these mills are made by theirown sales force.  In 2007, their mostimportant customer accounted for 5.8% of sales and the principal geographicmarket is the province of Ontario with 39%, followed by the United States at37%, Québec at 22%, and by other Canadian provinces with 2%. The supply ofuncoated board is principally obtained within the Cascades network.

 

CascadesPapier Kingsey Falls (Québec) produces uncoated board using 100% recycledfibre. This board is used mainly by converters specializing in commercial andindustrial packaging such as headers and wrappers for the paper industry aswell as spacers and partitions used to package products. This division producesapproximately 92,000 metric tons of which 36% is sold to affiliated companieswhile the balance is sold to third parties of which three representrespectively 35%, 5% and 4% of sales. 75% of total sales are made to customerslocated in Québec.  Raw material issourced principally in Québec (72%),as well as in Ontario (22%) and in theUnited States (6%).  Products aredelivered principally by, in order of importance: by truck, rail, and ships.

 

The followingtable lists the main mills of the industrial packaging products sector and theapproximate annual production capacity of each facility as well as the productsmanufactured or, where applicable, their activities in 2007:

 
| **Facilities**                                       | ** ** | **Products**                         | ** ** | **Annual capacity in metric  tons or square feet** | ** ** |
|------------------------------------------------------|------------|--------------------------------------|------------|----------------------------------------------------------------------------------|------------|
| Cascades Conversion Inc.Kingsey Falls  (Québec) |       | Roll headers and packaging  products |       | 60,000                                                                           |       |
| Converdis inc.Berthierville  (Québec)           |       | Packaging products                   |       | 55,000                                                                           |       |
| Cascades Sonoco Inc., Birmingham (Alabama)           |       | Roll headers and packaging  products |       | 44,000                                                                           |       |

 

7

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| Cascades Sonoco Inc., Tacoma (Washington)                                 |   | Roll headers and packaging  products                                 |   | 30,000 |   |
|---------------------------------------------------------------------------|--------|----------------------------------------------------------------------|--------|--------|--------|
| Cascades Rollpack S.A.S.,  Saucy-sur- Meurthe and Châtenois (France) |   | Roll headers and packaging  reams                                    |   | 30,000 |   |
| Cascades Multi-ProDrummondville  (Québec)                            |   | Sheeting, dividers, laminated  board and honeycombpackaging products |   | 25,620 |   |
| Cascades Enviropac,  Berthierville(Québec)                           |   | Honeycomb packaging products                                         |   | 8,000  |   |
| Cascades Enviropac – Toronto(Ontario)                                |   | Honeycomb packaging products                                         |   | 6,000  |   |
| Cascades Enviropac HPM LLC,  Grand Rapids (Michigan)                      |   | Honeycomb packaging products  and other packaging products           |   | 6,000  |   |
| Cascades Papiers Kingsey Falls(Québec)                               |   | Uncoated board                                                       |   | 92,000 |   |

 

##### ***b)****           **Consumerproduct packaging*

##### ** **

Cascades Forma-Pak in KingseyFalls (Québec), Cascades Moulded Pulp, Inc., in North Carolina (UnitedStates) and Cascades Moulded Pulp-Brantford (Ontario), manufacture moulded pulpproducts of 100% recycled material, primarily destined for poultry farms andthe quick-service restaurant business in Canada (40%) and the United States(60%).  This sector of the SpecialtyProducts Group produces mainly filler flats designed for egg processors, traysand specialty packaging products.  Salesrepresentatives and a network of sales agents serve customers; five of thempurchase 60% of sales.  Raw material forthese moulded pulp products is composed of 100% recycled material.  Competition comes principally from Canada andthe United States.

 

PlastiquesCascades, located in Kingsey Falls (Québec), and Cascades Plastics Inc.,located in Warrenton (Missouri), specialize in the food industry,notably, packaging for the quick-service restaurant business and specialized packagingfor the meat processing industry.  Theprincipal raw material used is polystyrene. In 2007, BioxoMC was launched, a product line of containers made fromoxo-degradable polystyrene foam, specifically designed to decompose withinthree years.  Sales representatives and anetwork of sales agents serve Canada and the United States.

 

PlastiquesCascades - Re-Plast, located in Notre-Dame-Du-Bon-Conseil (Québec),recycles waste plastic generated by selective collection and industrial waste.The principal products are building constructionboards, 100% recycled plastic or wood-plastic composite commercialized under the name Permadeck®,manufactured from post-consumer and post-industrial recycled plastic and woodresidue.  A variety of outdoorfurnishings for outdoor use, commercialized under the name Urbain Design®,completes this list.  Products are soldthrough sales agents, manufacturing agents and distributors.  Competition comes mainly from the UnitedStates and Ontario.

 

Cascades Inopak located in Drummondville(Québec), specializes in the thermo moulding of rigid sheets of plastic andmoulding by injection. Its principle products are wrappers for packaging coinssold under the trade name Plastichange® and a complete line of multi-usecontainers known under the trade marks BenpacTM and VuPackTM for the retail saleand packaging of food and industrial products such as products under the trademark Frig-O-Seal®.  Products are soldthrough distributors and agents.  Theprincipal raw materials used are P.E.T., polypropylene, clear polystyrene, PVCand the compostable plastic P.L.A. Competitively, five principal players in the United States and Canadashare in a highly consolidated market while pressure is being felt from Asia.

 

Sales for these plastic units areallocated as follows:

 
| **Territory**       | ** ** | **2006** | ** ** | **2007** | ** ** |
|---------------------|------------|----------|------------|----------|------------|
| Québec         |       | 44       | %          | 42       | %          |
| Ontario             |       | 17       | %          | 19       | %          |
| The rest of  Canada |       | 4        | %          | 5        | %          |
| United  States      |       | 35       | %          | 34       | %          |

 

The followingtable lists the mills in the consumer product packaging sector and theapproximate annual production capacity of each facility as well as the productsmanufactured or, where applicable, their activities in 2007:

 
| **Facilities**                                   | ** ** | **Products**                | ** ** | **Annual capacity********in kilograms** | ** ** |
|--------------------------------------------------|------------|-----------------------------|------------|---------------------------------------------------|------------|
| Plastiques CascadesKingsey  Falls  (Québec) |       | Polystyrene foam containers |       | 9,500,000                                         |       |
| Cascades Plastics Inc.Warrenton  (Missouri)      |       | Polystyrene foam containers |       | 5,000,000                                         |       |

 

8

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| Plastiques Cascades – Re-PlastNotre-Dame-du-Bon-Conseil  (Québec) |   | Park furniture, patio and  balcony planks, plastic lumber |   | 6,000,000  |   |
|-----------------------------------------------------------------------------|--------|-----------------------------------------------------------|--------|------------|--------|
| Cascades InopakDrummondville  (Québec)                                 |   | Coin wrappers, multi-use  packaging                       |   | 5,000,000  |   |
| Cascades Forma-PakKingsey Falls,  (Québec)                             |   | Filler flats, trays, specialty  packaging products        |   | 11,000,000 |   |
| Cascades Moulded  Pulp, Inc.,Rockingham (North Carolina)               |   | Filler flats, trays and  specialty packaging products     |   | 5,000,000  |   |
| Cascades Moulded Pulp –  Brantford(Ontario)                            |   | Trays                                                     |   | 2,500,000  |   |

##### ** **

##### ***c)****           **S**pecialty paper*

##### ** **

Cascades Lupel, located inTrois-Rivières (Québec) manufactures backing for vinyl flooring sold under thetrademarks EndorexTM, AbsorbakTM and GuardfloTM. Sales for these units were made primarily in the United States (57%)Canada (40%) and in Mexico and Europe (3 %).  The products are delivered principally bytruck and rail.  The mill’s annual productioncapacity is 55,000 metric tons.  The rawmaterials are easily available and the mill sources 85% of its needs from theUnited States, the remainder is sourced in Canada.

 

The CascadesEast Angus (Québec) mill manufactures many types of specialized kraft papersuch as butcher paper, paper for envelopes, paper for asphalt coating,antifungal paper and many others, such as paper, which withstands grease ormoisture.  These types of specialty paperallow the unit to maintain a competitive share within the kraft papermarket.  The annual capacity of this millis 95,000 metric tons.  The majority ofits sales are in the United States (70% in 2007). Products are delivered principallyby truck and rail. Its most important customer accounts for almost 10% ofsales. Its products may contain 0% to 100% of recycled fibre depending oncustomer requirements.  The supply oftreated and recycled fibres, which is stable, comes from Québec (31%) and theUnited States (69%).  Most of the naturalfibre comes from Québec’s private forests. By increasing its bark steam production (54%), this mill substantiallyreduces its costs, compared to natural gas and oil production users.

 

CascadesAuburn Fiber Inc. (Maine), with an annual capacity of 70,000 metric tons,manufactures from waste paper material a high-gloss de-inked pulp used for theproduction of tissue and fine paper.  63%of sales are made in the United States and 37% are made in Canada.  The three most important customers accountfor 23%, 15 %, and 8% of sales respectively.

 

Greenfield’splant, located at Château-Thierry, in France, manufactured from waste papermaterial a high gloss de-inked pulp used for the production of fine paper andtissue.  This plant with an annualcapacity of 140,000 metric tons was sold on January 7, 2008, as described in the heading 3.1 “Three YearHistory”.

 

Cascades Fine Papers Group Inc.,Rolland Division operates a plant in Saint-Jérôme (Québec) and manufacturesover 100 types of uncoated fine paper. Aside from paper destined for copying, business forms and envelopes,this division is increasingly involved in the niche markets for high-endrecycled paper and specialty paper for commercial and security printing. TheRolland Division paper products are made from virgin fibre (53 %) and recycledfibre (47 %). The products are sold under such names as Rolland Enviro100TM, Rolland Opaque30TM, Rolland ST30TM,Rolland Hitech30TM, ReproPlusBrite®,Rockland®, Superfine Linen RecordTM and Colonial BondTM.  TheRolland Division sells 57% of its products in Canada through salesrepresentatives located in Saint-Jérôme (Québec) and Toronto (Ontario),  38% in the American northeast throughCascades Fine Papers Group (Sales) Inc., and 5% in South America.  This division restructured its operationswith the closing of oneof its paper machines, as described in heading 3.1 “Three Year History”.

 

The Breakey Fibres Division,located in Sainte-Hélène-de-Breakey (Québec) operates a mill specializing inthe production of high-end de-inked kraft pulp, a product that meets anincreasing demand for uncoated fine papers containing recycled fibre. TheBreakey Fibres Division is supplied with waste paper coming from Eastern Canadaand from the United States.  In 2007,almost 70% of the output of this facility was used at the Saint-Jérôme mill and18% by companies within the Cascades Group. The remaining production is sold onthe open market.

 

The ConvertingCentre Division, located in Saint-Jérôme (Québec), owns and operates a sheetingcentre with an annual capacity of 110,000 short tons.  The Centre offers warehousing services with acapacity of 7,000 short tons.  It offerssheeting, warehousing and distribution services to the other divisions of thefine papers sector as well as outside customers.

 

In light of European and Asian imports, theCanadian and American markets for fine papers products are extremelycompetitive.  The uncoated fine paperssegment experienced sales prices (in US$) in 2007 clearly above the last tenyear average.   However,  the strength of the Canadian dollar cancelledin part the increase in sale prices. In 2007, fibre represented approximately49% of total operating costs in its plants. The fine papers sector is fully integrated for recycled pulp.  Its primary source for softwood and hardwoodkraft pulp needs is Canada.The pulp and paper industry is recognized forits cyclical character.  The coated anduncoated fine papers segment is no exception.

 

9

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The followingtable lists the mills of the specialized papers sector and the approximateannual production capacity of each facility as well as the productsmanufactured or, where applicable, their activities in 2007:

 
| **Facilities**                                                                                               | ** ** | **P****roducts**                 | ** ** | **Annual capacity** | ** ** |
|--------------------------------------------------------------------------------------------------------------|------------|----------------------------------|------------|--------------------------|------------|
| Cascades LupelTrois-Rivières  (Québec)                                                             |       | Backing for vinyl flooring       |       | 55,000 (metric tons)     |       |
| Cascades East Angus (Québec)                                                                            |       | Kraft paper                      |       | 95,000 (metric cons)     |       |
| Cascades Auburn Fiber Inc.  (Maine)                                                                          |       | Manufacturing of de-inking  pulp |       | 70,000 (metric tons)     |       |
| Cascades Fine Papers Group  Inc.,   Rolland DivisionSaint-Jérôme  (Québec)                    |       | Uncoated fine paper              |       | 150,000(short tons)      |       |
| Cascades Fine Papers Group  Inc.,   Breakey Fibres DivisionSainte-Hélène-de-Breakey  (Québec) |       | De-inked kraft pulp              |       | 69,000 (metric tons)     |       |
| Cascades Fine Papers Group  Inc.,   Converting Center DivisionSaint-Jérôme  (Québec)          |       | Converting of fine papers        |       | 110,000 (short tons)     |       |

 

*d)            Recovery and recycling*

 

Cascades Recovery, with its recovery centerslocated in Lachine, Sherbrooke and Chelsea (Québec) and its brokeringactivities  handled in 2007 more than210,000 metric tons of waste, of which 200,000 metric tons were fibers.  In this same period, 91% of its sales were inCanada, with 9% in export, principally to the United States and Asia.  Sales were $36.5 million, an increase of 38%compared with 2006.  This more thansubstantial increase is principally due to the increase in the prices of wastepaper on the world market.  Most of itsbusiness is done within the Cascades Group or its partners.  Waste paper supply is obtained fromindustrial, commercial and institutional users as well as curbside collectionin municipalities.

 

Metro WastePaper Recovery Inc., held at 73% by Cascades, offers a complete line ofservices related to recovery and  recyclingof  waste in the provinces of Ontario,Manitoba, Alberta and British Columbia (Canada), as well as in the UnitedStates (New York).  In 2007, these plants  recovered more than 1,400,000 metric tons ofpaper and carton with 50% of sales made in Canada, 40% in the United States and10% in export.  Cascades’ majorityholding in this company was obtained following the acquisition of the shares ofNorampac Inc. in December 2006, as described in heading 3.1 “ Three YearHistory “.

 

### **4.2.2       TISSUEPAPERS SECTOR**

### ** **

The tissue papers sectormanufactures, converts and markets a vast array of products mainly made withrecycled fibre and intended for the commercial and industrial and retailmarkets.  Its lines of bathroom tissue, facialtissue, paper towels, paper hand towels, paper napkins and other relatedproducts are sold under the labels Decor®, Horizon® North River® and WipingSolutions® in the commercial and industrial Canadian and American markets.  In the retail market, products areprincipally marketed under private labels and under the label Cascades® inCanada and Pert®, Best Value® and Nature’s Choice® in the United States.  In 2007, one client accounted for 25 %of sales . In addition, the Tissue Group also sells parent rolls of bathroomtissue, paper towels, paper hand towels and specialty papers to a large numberof converters.  One client accounted for62% of parent roll sales.  In 2007, oneclient accounted for 17% of overall sales in the retail, commercial andindustrial markets, and parent rolls.  Products are sold through salesrepresentatives and trucks deliver the merchandise.

 

The TissueGroup sales for 2007 amounted to $713 million compared to $727 million in2006.  In 2007, Tissue Group’s production was sold asfollows: in the United States, 73% and in Canada, 27%. The Canadian millsgenerated 69% of the total revenue in Canada and 31% in the United States.  The American mills generated 98% of the total revenue in the UnitedStates.  14 manufacturingand converting plants employ more than 1,900 people.

 

The Candiac plant in Québecmanufactures tissue paper made from recycled fibres and converts it intobathroom tissue, paper towels and paper napkins.  These products are mainly sold in the retailmarket as well as the commercial and industrial markets, both in Canada and theUnited States.  The production notconverted at the Candiac mill is transferred to the Laval (Québec) andWaterford (New York) plants or is sold in parent rolls to other converters.

 

The Lachute plant in Québecspecializes in the manufacturing and converting of industrial use paper handtowels.  These products are mainlydestined to the Canadian and American commercial and industrial markets.  The production not converted is transferredto the Rockingham (North Carolina) plant.

 

The Laval plant in Québecspecializes in the converting of tissue paper into paper napkins for theCanadian and American fast food and food industries.

 

The Kingsey Falls plant inQuébec manufactures tissue paper made from recycled fibres and converts it intobathroom tissue, paper towels, paper hand towels and facial tissue. Theseproducts are mainly sold in the retail market as well as the commercial andindustrial markets, both in Canada and the United States.  The production not converted is transferredto the Laval (Québec), Calgary (Alberta) and Waterford (New York) plants or issold in parent rolls to other converters.

 

10

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The Calgary plant in Alberta,which converted tissue papers into bathroom tissue and paper towels, changedits activities this past year to focus on the distribution of bathroom tissueand paper towels for the Canadian retail and commercial and industrial markets.

 

Cascades TissueGroup - North Carolina Inc., with its Rockingham plant, manufacturestissue paper made from recycled fibres and converts it into bathroom tissue,paper towels, paper hand towels, paper napkins and facial tissue.  These products are mainly sold in theAmerican commercial and industrial markets.  The production not converted is sold in parent rolls to otherconverters.

 

Cascades TissueGroup - IFC Disposables Inc.’s plant is located in Brownsville(Tennessee) and specializes in the converting of tissue papers into industrialwiping products as well as the distribution of bathroom tissue, paper towelsand incontinence products.  Theseproducts are sold in the commercial and industrial markets in the UnitedStates.

 

Cascades TissueGroup - Wisconsin Inc.’s plant, in Eau-Claire, manufactures tissuepaper made from recycled fibres and converts it into bathroom tissue, papertowels, facial tissue and paper napkins. These products are mainly sold in the retail market in the UnitedStates.  The non-converted production issold in parent rolls to other converters.

 

Cascades TissueGroup - Pennsylvania Inc., which has plants in Ransom and Pittston,manufactures tissue paper made from recycled fibres and converts it intobathroom tissue, paper towels, facial tissue and paper napkins.  These products are mainly sold in the retailmarket in the United States.  Thenon-converted production is transferred to the Waterford (New York) plant or issold in parent rolls to other converters.

 

Cascades Tissue Group - OregonInc., in St-Helens, produces parent rolls made of 100% virgin fibres.  The production is transferred to the Arizonaplant or is sold to other converters.

 

The Waterford Division of Cascades TissueGroup - New York Inc. specializes in the conversion of tissue paperinto bathroom tissue, paper towels, paper napkins and industrial use paper handtowels.  These products are mainly soldin the retail market as well as the commercial and industrial markets in theUnited States. The Mechanicville (New York) Division produces parent rolls madefrom recycled fibres. The production is transferred to the Waterford Division(New York) or is sold to other converters.

 

Cascades Tissue Group - ArizonaInc. operates a plant in Kingman, and specializes in the conversion of tissuepaper into bathroom tissue, paper towels, paper hand towels and papernapkins.  These products are mainly soldin the retail market in the United States.

 

The Memphis plant of Cascades TissueGroup - Tennessee Inc. produces parent rolls of tissue paper madefrom recycled fibres. The production is sold to other converters.

 

The following table lists theplants and mills of the Tissue Group and the approximate annual productioncapacity of each facility as well as the products manufactured or, whereapplicable, their activities in 2007:

 
| **Facilities**                                                         | ** ** | **Products**                                                                    | ** ** | **Annual capacity**** ****In short tons** | ** ** |
|------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------|------------|---------------------------------------------------------------|------------|
| **Manufacturing /****Converting**                                      | ** ** | ** **                                                                      | ** ** | ** **                                                    | ** ** |
| Candiac (Québec)                                                  |       | Paper towels, bathroom tissue, paper  napkins                                   |       | 73,000                                                        |       |
| Lachute (Québec)                                                  |       | Paper hand towels                                                               |       | 48,000                                                        |       |
| Kingsey Falls (Québec)                                            |       | Paper towels, facial tissue,  bathroom tissue, paper hand towels                |       | 104,000                                                       |       |
| Cascades Tissue Group –North  CarolinaInc. (Rockingham)           |       | Paper towels, facial tissue,  bathroom tissue, paper napkins, paper hand towels |       | 65,000                                                        |       |
| Cascades Tissue Group –  WisconsinInc.  (Eau Claire)              |       | Paper towels, bathroom tissue,  facial tissue and paper napkins                 |       | 56,000                                                        |       |
| Cascades Tissue Group –  Pennsylvania Inc.  (Ransom and Pittston) |       | Paper towels, bathroom tissue,  facial tissue and paper napkins                 |       | 67,000                                                        |       |
| **Manufacturing**                                                      | ** ** | ** **                                                                      | ** ** | ** **                                                    | ** ** |
| Cascades Tissue Group – Oregon  Inc.(St-Helens)                   |       | Parent rolls                                                                    |       | 71,000                                                        |       |
| Cascades Tissue Group –  TennesseeInc.  (Memphis)                 |       | Parent rolls, , bathroom  tissue,                                               |       | 40,000                                                        |       |
| Cascades Tissue Group – New  York Inc.  (Mechanicville)           |       | Parent rolls                                                                    |       | 65,000                                                        |       |

 

11

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| **Converting**                                                              | ** ** | ** **                                                                                  | ** ** | ** ** | ** ** |
|-----------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------|------------|------------|------------|
| Laval (Québec)                                                         |       | Paper napkins                                                                               |       | N/A        |       |
| Cascades Tissue Group –  Arizona Inc.(Kingman)                         |       | Paper towels, bathroom tissue,  paper handtowels, paper napkins                             |       | N/A        |       |
| Cascades Tissue Group – New  York Inc.  (Waterford)                    |       | Paper towels, bathroom tissue,  paper handtowels, paper napkins                             |       | N/A        |       |
| **Converting****Distribution**                                              | ** ** | ** **                                                                                  | ** ** | ** ** | ** ** |
| Cascades Tissue Group – IFCDisposables  Inc., Brownsville  (Tennessee) |       | Industrial wipesDistribution  bathroom tissue, paper hand towels and  incontinence products |       | N/A        |       |
| Cascades Tissue Group -Calgary  (Alberta)                                   |       | Paper towels, bathroom tissue                                                               |       | N/A        |       |

 

**4.3          RESEARCH AND DEVELOPMENT**

 

Cascades has its own researchand development centre («the Centre») located in Kingsey Falls (Québec), with astaff of 40 people.  The Centre providesthe Cascades group with product design and development of products andprocesses in addition to providing technical support for solving productionproblems and improving quality

 

The Information TechnologyCentre develops software in many spheres of activity for the Cascades group suchas accounting, finance, human resources, warehousing logistic, transportmanagement and production management.  Ithas a team of 115 employees.

 

**4.4          COMPETITIVE CONDITIONS**

 

The markets for Cascades’products are highly competitive. In some of the markets in which Cascadescompetes, particularly in boxboard, tissue and specialty products, the Companycompetes with a small number of other producers.  In some businesses, such as in thecontainerboard and fine papers industries, competition tends to be global. Inothers, such as the tissue industry, competition tends to be regional.  In the Company’s packaging products segment,it also faces competition from alternative packaging materials, such as plasticand styrofoam, which can lead to excess capacity, decreased demand and pricingpressures.

 

Competition in Cascades’ marketsis primarily based upon price as well as customer service and the quality,breadth and performance characteristics of its products.  The Company’s ability to compete successfullydepends upon a variety of factors, including: 1) its ability to maintain highplant efficiencies and operating rates and lower manufacturing costs; 2) theavailability, quality and cost of raw materials, particularly recycled andvirgin fibre, and labor; and 3) the cost of energy.

 

Some of the Company’scompetitors may, at times, have lower fibre, energy and labour costs and lessrestrictive environmental and governmental regulations to comply with thanCascades does.  For example, fullyintegrated manufacturers, which are those manufacturers whose requirements forpulp or other fibre are met fully from their internal sources, may have somecompetitive advantages over manufacturers that are not fully integrated, suchas Cascades, in periods of relatively high prices for raw materials, in thatthe former are able to ensure a steady source of these raw materials at coststhat may be lower than prices in the prevailing market.  In contrast, competitors that are lessintegrated than Cascades may have cost advantages in periods of relatively lowpulp or fibre prices because they may be able to purchase pulp or fibre atprices lower than the costs the Company incurs in the production process.  Other competitors may be larger in size orscope than Cascades is, which may allow them to achieve greater economies ofscale on a global basis or allow them to better withstand periods of decliningprices and adverse operating conditions.

 

In addition, there has been anincreasing trend among the Company’s customers towards consolidation. Withfewer customers in the market for the Company’s products, the strength of itsnegotiating position with these customers could be weakened, which could havean adverse effect on pricing, margins and profitability.

 

**4.5          CYCLE COMPONENTS**

 

Cascadesis a diversified producer of packaging products, and tissue paper withoperations in Canada, the United States and Europe. The Company has leadingmarket positions for many of its products in North America and is one of theforemost producers of coated boxboard in Europe.

 

Although the Company believes that its product,integration level, market, and geographical diversification help to mitigatethe adverse effects of industry conditions, the markets for some of itsproducts, notably, containerboard and fine papers are highly cyclical. Thesemarkets are heavily influenced by changes in the North American and globaleconomies, industry capacity and inventory levels maintained by customers, allof which affect selling prices and profitability. The Company is also affectedby the variation of the Canadian dollar against the U.S. dollar and the euro.

 

12

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**4.6          ENVIRONMENT**

 

The Company’sactivities are subject to environmental laws and regulations imposed by variousgovernmental and regulatory authorities in all the countries where itoperates.  The Company is in compliance,in all material respects, with all applicable environmental legislation andregulations.  However, ongoing capitaland operating expenses are expected to be incurred to achieve and maintaincompliance with applicable environmental requirements.

 

In 2007,environmental protection requirements and the application of Cascades’environmental mission required capital expenditures and led to operating costsalmost equal to those incurred in 2006:

 
| **Country**    | ** ** | **Capital Expenses** | ** ** | **Operating Costs** | ** ** |
|----------------|------------|---------------------------|------------|--------------------------|------------|
| Canada         |       | 1,000,000                 |       | 22,500,000               |       |
| United  States |       | 3,500,000                 |       | 43,000,000               |       |
| Europe         |       | 1,500,000                 |       | 25,500,000               |       |
| **Total**      |       | 6,000,000                 |       | 91,000,000               |       |

 

Cascadesconsumes more than 2.7 million short tons of recycled fibre and itsproducts are made of close to 80% of recycled fibre.

 

**4.7          REORGANIZATIONS**

 

On December 29,2006, in the context of the acquisition of the outstanding shares (50%) held byDomtar in Norampac, the Company proceeded, by way of transfer of assets, sharesand through mergers, to a corporate reorganization whereby all of the Canadianactivities of Norampac., were consolidated under a division of Cascades CanadaInc.

 

**4.8          SOCIAL POLICIES**

 

The Companyhas adopted a Code of Ethics (the “Code”), which is meant to provide directors,officers, and employees with general guidelines for acceptable behaviour in allrelationships with each other, customers, suppliers, partners, and thecommunities where the Company operates its activities.  A copy of the Code is available upon writtenrequest to the Corporate Secretary at the following address:

 

**Cascadesinc.**

*Corporate Secretariat*

404, Marie-Victorin Blvd., P.O. Box30

Kingsey Falls (Québec) J0A 1B0

 

The Code andthe corporate policies referred to in the document are also available on theCompany’s website at www.cascades.com.

 

**4.9          BUSINESS RISKS**

 

We refer thereader to Management’s Discussion and Analysis of Financial Position andOperating Results in the 2007 Annual Report, specifically under the heading “Riskmanagement” on page 37 incorporated by reference herein.

 

# **ITEM 5 -DIVIDENDS**

#  

In 2005, 2006 and 2007, Cascadespaid dividends on its Common Shares at the current rate of $0.04 per CommonShare per quarter.  Other than pursuantto the Indentures, which govern its 7.25% senior note indenture and Norampac’s6.75% senior note indenture and the Credit Facilities, there are no materialcontractual restrictions on Cascades’ ability to declare and pay dividends onits Common Shares.

 

Thedividend amount is reviewed annually by the Board of Directors and isdetermined taking into account Cascades’ financial situation, its results fromoperations, its capital requirements and any other factor deemed pertinent bythe Board.

 

# **ITEM 6 -CAPITAL STRUCTURE**

#  

**6.1          GENERAL DESCRIPTION OF CAPITALSTRUCTURE**

 

The share capital of the Company is composedof an unlimited number of Common Shares without par value, an unlimited numberof Class “A” Preferred Shares without par value which may be issued inseries and an unlimited number of Class “B” Preferred Shares without parvalue which may be issued in series.

 

The holders of common shares are entitled tothe right to vote on the basis of one vote per share at any meetings ofshareholders and the right to receive dividends and to share in the remainingassets in the event of a liquidation of the Company.  As at March 9, 2008, 99,401,789 CommonShares were issued and outstanding.

 

The Class “A” and “B” Preferred Sharesare issuable in series and rank equally within their respective classes as todividends and capital.  Registeredholders of any series of Class “A” or Class “B” are entitled toreceive, in each fiscal year of the Company or on any other basis, cumulativeor non-cumulative preferred dividends payable at the time, at the rates and forsuch amounts and at the place or places determined by the directors withrespect to each series prior to the issuance of any Class “A” or Class “B”Preferred Shares.  In the event of theliquidation, winding-up or dissolution of the Company or any other distributionof its assets to its shareholders, the holders of Class “A” and “B”preferred shares are entitled to receive, out of the assets of the Company, theamount paid in consideration of each share held by them.  The holders of Class “A” and “B”preferred shares are not entitled as such to receive notice of or to attend orto vote at any meetings of shareholders. None of the Class “A” or “B” Preferred Shares of the capital stockof the Company are, as of the date hereof, issued and outstanding.

 

13

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**6.2          RATINGS**

 

Credit ratings are intended toprovide investors with an independent measure of credit quality of an issue ofsecurities.  Rating for debt instrumentsare presented in ranges by each of the rating agencies.  The highest qualities of securities are ratedAAA in the case of Standard & Poor’s (“S&P”) or DBRS, or Aaa inthe case of Moody’s Investors Service (“Moody’s”). The lowest quality ofsecurities are rated D in the case of S&P and DBRS, or C in the case ofMoody’s.

 

According to the S&P ratingsystem, notes rated BB, B, CCC, CC, and C are regarded as having from low tosignificant speculative characteristics. A BB rating indicates the least degree of speculation and C the highest.While such notes will likely have some quality and protective characteristics,these may be outweighed by large uncertainties or major exposures to adverseconditions.  Notes rated BBB are lessvulnerable for non-payment than other speculative economic conditions, whichcould lead to the obligor’s inadequate capacity to meet its financialcommitment on the obligation.  Theratings from AAA to B may be modified by the addition of a plus (+) or minus(-) to show relative standing within the major rating categories.

 

According to the Moody’s ratingsystem, notes, which are rated Ba, are judged to have speculative elements;their future cannot be considered as well assured.  Often the protection of interest andprincipal payments may be very moderate, and thereby not well safeguardedduring both good and bad times over the future. Uncertainty of position characterizes bonds in this class. Moody’sapplies numerical modifiers 1, 2, and 3 in each generic rating classificationfrom Aa through Caa.  The modifier 1indicates that the obligation ranks in the higher end of its generic ratingcategory; the modifier 2 indicates a mid-range ranking and the modifier 3indicates a ranking in the lower end of that generic rating category.

 

According to the DBRS ratingsystem, notes rated BBB are of adequate credit quality.  Protection of interest and principal isconsidered acceptable, but the entity is fairly susceptible to adverse changesin financial and economic conditions, or there may be other adverse conditionspresent which reduce the strength of the entity and its rated securities.  Each rating category from AA to C is denotedby the sub-categories high and low.  Theabsence of either a high or low designation indicates the rating is in themiddle of the category.

** **
| ****Credit Risk****                             | **** **** | ****Moody’s***** | **** **** | ****S & P ***** | ** ** | **DBRS** | ** ** |
|------------------------------------------------------|----------------|-----------------------|----------------|------------------------------------|------------|----------|------------|
| Highest  quality                                     |           | Aaa                   |           | AAA                                |       | AAA      |       |
| High quality  (very strong)                          |           | Aa                    |           | AA                                 |       | AA       |       |
| Upper medium  grade (strong)                         |           | A                     |           | A                                  |       | A        |       |
| Medium grade                                         |           | Baa                   |           | BBB                                |       | BBB      |       |
| Lower medium  grade (somewhat speculative)           |           | Ba                    |           | BB                                 |       | BB       |       |
| Low grade  (speculative)                             |           | B                     |           | B                                  |       | B        |       |
| Poor quality  (may default)                          |           | Caa                   |           | CCC                                |       | CCC      |       |
| Most  speculative                                    |           | Ca                    |           | CC                                 |       | CC       |       |
| No interest  being paid or bankruptcy petition filed |           | C                     |           | C                                  |       | C        |       |
| In default                                           |           | C                     |           | D                                  |       | D        |       |

Source:  The Bond MarketAssociation and DBRS

 

Cascades’ outstanding seniornotes had received the following ratings by DBRS, Moody’s and S&P at thedates mentioned below:

 
| **Rating agency** | ** ** | **Rating** | ** ** | **Qualitative** | ** ** | **Most recent update** | ** ** |
|------------------------|------------|------------|------------|-----------------|------------|----------------------------------|------------|
| DBRS                   |       | BB+        |       | Stable outlook  |       | January 10,2008             |       |
| S&P                |       | BB -       |       | Stable outlook  |       | February 27, 2007           |       |
| Moody’s           |       | Ba3        |       | Stable outlook  |       | July 11, 2007               |       |

 

It is to be noted that thecredit ratings accorded to the notes by the rating agencies are notrecommendations to purchase, hold or sell the notes as such, given theseratings do not comment as to market price or suitability for a particularinvestor.  There is no assurance that anyrating will remain in effect for any given period of time or that any ratingwill not be revised or withdrawn entirely by a rating agency in the future ifin its judgement circumstances so warrant. The Company is not responsible forcredit ratings accorded by the rating agencies.

 

# **ITEM 7 -MARKET FOR SECURITIES**

#  

**7.1          TRADING PRICE AND VOLUME**

 

Cascades’ Common Shares aretraded on the Toronto Stock Exchange under the “CAS” symbol.  The following table sets forth the marketprice range, in Canadian dollars, and trading volumes of the Company’s CommonShares on the Toronto Stock Exchange for each month of the most recentlycompleted financial year:

 

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** **

**Toronto StockExchange – Market price range – Year 2007**

 
| **Month** | ** ** | **High** | ** ** | **Low** | ** ** | **Closing Price** | ** ** | **Trading Volumes** | ** ** |
|-----------|------------|----------|------------|---------|------------|------------------------|------------|--------------------------|------------|
| January   |       | 15.80    |       | 13.17   |       | 14.85                  |       | 7,506,829                |       |
| February  |       | 15.36    |       | 12.99   |       | 13.09                  |       | 4,867,043                |       |
| March     |       | 13.24    |       | 11.65   |       | 11.65                  |       | 7,071,760                |       |
| April     |       | 12.47    |       | 11.00   |       | 11.93                  |       | 4,798,299                |       |
| May       |       | 13.05    |       | 11.46   |       | 12.56                  |       | 6,311,243                |       |
| June      |       | 12.61    |       | 11.01   |       | 11.39                  |       | 4,815,976                |       |
| July      |       | 12.52    |       | 10.90   |       | 11.18                  |       | 4,719,113                |       |
| August    |       | 11.23    |       | 8.23    |       | 10.07                  |       | 4,469,728                |       |
| September |       | 10.40    |       | 9.53    |       | 9.95                   |       | 2,397,279                |       |
| October   |       | 10.04    |       | 8.19    |       | 8.88                   |       | 2,687,181                |       |
| November  |       | 8.80     |       | 7.46    |       | 8.28                   |       | 6,352,944                |       |
| December  |       | 9.00     |       | 8.01    |       | 8.44                   |       | 2,819,034                |       |

 

In 2006, in the normal course ofbusiness, the Company renewed its redemption program.  Purchases began on March 13, 2006 andcontinued until March 12, 2007.  Thenotice enabled Cascades to acquire up to 4,040,417 Common Shares, representingapproximately 5% of the issued and outstanding shares as at March 9, 2006.On March 12, 2007, the Company had redeemed 468,000 Common Shares for a considerationof $6,312,868.

 

In 2007, in the normal course ofbusiness, the Company renewed its redemption program.  Purchases began on March 13, 2007 andcontinued until March 12, 2008.  Thenotice enabled Cascades to acquire up to 4,970,094 Common Shares, representing approximately 5% of the issued andoutstanding Common Shares as at March 8, 2007. At the end of this normalcourse issuer bid, the Company had redeemed 502,200 Common Shares at an averagecost of $9.01.

 

On March 11, 2008, Cascadesannounced that the Toronto Stock Exchange accepted its notice of intention tobegin a normal course issuer bid in respect of its Common Shares.  Purchases pursuant to the normal courseissuer bid commenced on March 13, 2008 and will cease on March 12,2009.  The Common Shares purchased shallbe cancelled.  The notice will enableCascades to acquire up to 4,946,517 Common Shares, which representsapproximately 5% of the 98,930,351 issued and outstanding Common Shares as at March 7,2008.

 

# **ITEM 8 –DIRECTORS AND OFFICERS**

#  

The Directors of the Company areelected annually to hold office until the next annual general meeting or untila successor is elected or appointed.

 

## **8.1          INFORMATION CONCERNING DIRECTORS**

## ** **

***Mr. BernardLemaire***,Kingsey Falls, Québec (Canada), one of the founders of Cascades, is theChairman of the Company and has been a Director since 1964.  He serves as a member of the AdministrativeCommittee.  He is also Executive Chairmanof the Board of Directors of Boralex Inc., a producer of green and renewableenergy, an affiliate of Cascades.

 

***Mr. LaurentLemaire***,Warwick, Québec (Canada), one of the founders of Cascades, is the ExecutiveVice-Chairman of the Board of the Company and has been a Director since1964.  He was President and ChiefExecutive Officer of the Company from 1992 to 2004.  He serves as a member of the AdministrativeCommittee and is a member of the Board of Directors of Junex Inc. and ScotiaBank.

 

***Mr. AlainLemaire***,Kingsey Falls, Québec (Canada), one of the founders of Cascades, has been a Directorof the Company since 1967 and is the President and Chief ExecutiveOfficer.  He was Executive Vice-Presidentof the Company from 1992 to 2004 and President and Chief Executive Officer ofNorampac Inc. from 1998 to 2004.  Heserves as a member of the Administrative Committee.

 

***Mr. MartinP. Pelletier***,Sillery, Québec (Canada), a chemical engineer, is a pulp and paper consultant,he has been a Director of the Company since 1982.  Mr. Pelletier was Vice-President andChief Operating Officer, Containerboard of Norampac Inc., from 1997 to 2000 andheld the position of President and Chief Executive Officer of Rolland Inc. (nowknown as Cascades Fine Papers Group Inc.) from 2000 to 2002.  He serves as Chairman of the Environmental,Health and Safety Committee. He sits on the Board of Directors of CO2Solution.

 

***Mr. Paul R.Bannerman***, Montreal, Québec (Canada), has been a memberof the Board of Cascades since 1982.  Heis the founder and the Chairman of the Board of Directors of EtcanInternational Inc., a sales agency involved in the sale of finished products ofthe East Angus kraft paper mill as well as the purchase of virgin pulp forseveral other Cascades mills.  Mr. Bannermanis a graduate of McGill University in political science and economics and holdsan MBA from Harvard University.

 

***Mr. André Desaulniers***, Andorre (Europe), has been a Director ofCascades since 1982.  He serves as amember of the Audit Committee and is the Chair of the Corporate Governance andNominating Committee.  His principaloccupation is director of Companies and he acquired his knowledge and expertisewhile acting as Chairman of the Board of Directors of McNeil, Mantha, Inc.,an Investment dealer, for 17 years. He also was a member of several auditcommittees, such as, among others, Chairman of the Audit Committee of theMontréal Stock Exchange.

 

***Mr. LouisGarneau***,St. Augustin-de-Desmaures, Québec (Canada), is President of Louis GarneauSports Inc., a manufacturer and distributor of sports clothing and accessoriesthroughout the world.  He has been aDirector since 1996 and serves as member of the Human Resources Committee. Aninternational cycle racer, Mr. Garneau participated in the 1984 OlympicGames in Los Angeles. He is a Chevalier 

 

15

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de l’OrdreNational of Québec and an Officer of the Order of Canada.  In June 2007, he was awarded an honorarydoctorate by the Faculty of Administration of the University of Ottawa.

 

***Ms. SylvieLemaire***, Otterburn Park, Québec(Canada), is a director of companies and has been a Board member of Cascadessince 1999.  She sits on the board ofdirectors of Fempro Inc., a manufacturer of absorbent products.  She has held production, research anddevelopment and general management positions. She has been co-owner of Dismed Inc., a distributor of medical productsand Fempro Inc., where she was president until 2007.  She serves as a member of the Environmental, Health and SafetyCommittee.  Ms. Lemaire holds thedegree of Bachelor in Industrial Engineering from the Montréal Écolepolytechnique.

 

***Mr. MichelDesbiens***, Beaconsfield, Québec (Canada),a consultant and director of companies, joined the Board of Directors of theCompany in 2001.  He is the Chair of theHuman Resources Committee and serves as a member of the Environmental, Health and SafetyCommittee. He held the positions of President and Chief Executive Officer ofDonohue Inc., and Chairman of the Board of Directors of Abitibi-ConsolidatedInc. He sits on the Board of directors of Catalyst Paper Corporation and RogersSugar Income Fund.

 

***Mr. LaurentVerreault***, Pompano Beach, Florida (UnitedStates), is Chairman of the Board of Directors and Chief Executive Officer ofGLV Inc., a manufacturer of engineered equipment.  He has been a Director of Cascades since 2001and serves as a member of the Audit and of the Human Resources Committees.  Mr. Verreault sits on the Board ofDirectors of TVA Group Inc. and the Montréal Exchange.

 

***Mr. RobertChevrier***, Montreal, Québec (Canada), hasbeen a Director of Cascades since 2003. He is Chairman of the Audit Committee and also acts as leadDirector.  He is President of Société deGestion Roche Inc., a holding and investment company. Mr. Chevrier sits onthe Board of Directors of Groupe CGI Inc., Bank of Montréal, QuincaillerieRichelieu Ltée, Addenda Capital Inc., and of the Saint-Gobain Company.  He is former Chairman of the Board ofDirectors and President and Chief Executive Officer of Rexel Canada Inc.

 

***Mr. DavidMcAusland***, Beaconsfield, Québec (Canada),has been a Director of the Company since 2003. He is a  lawyer and director ofcompanies.  From 1999 to February 2008,he held the position of  Executive Vice-President, CorporateDevelopment, and Chief Legal Officer of Alcan Inc., an aluminum and packagingproducts company.  He serves as a member of the CorporateGovernance and Nominating Committee.  Mr. McAuslandsits on the Board of Directors of Cogeco Inc. and Cogeco Câble Inc.

 

***Mr. James B.C.Doak***, Toronto Ontario (Canada), wasappointed a Director of Cascades in February 2005.  Mr. Doak is President and ManagingDirector of Megantic Asset Management Inc., a Toronto (Ontario) investmentcompany, since 2002.  He was President ofEnterprise Capital Management Inc. from 1997 to 2002.  Mr. Doak serves as a member of the Auditand of the Corporate Governance and Nominating Committees and sits on the Boardof Directors of Khan Resources Inc. and Purepoint Uranium Group Inc.

 

**8.2          CEASE TRADE ORDERS,BANKRUPTCIES, PENALTIES OR SANCTIONS**

 

Tothe Company’s knowledge, no director or executive officer of the Company and noshareholder holding a sufficient number of securities of the Company to affectmaterially the control of the Company:

 

a)     is or has been in the past ten years beforethe date of this Annual Information Form a director or executive officerof any other company that, while that person was acting in that capacity,

 

                                                i) was the subject ofa cease trade or similar order, or an order that denied the other issuer accessto any exemption under securities legislation for a period or more than 30consecutive days;

ii) was subject to an event that resulted, after thedirector or executive officer ceased to be a director or executive officer, inthe company being the subject of a cease trade or similar order or an orderthat denied the other issuer access to any exemption under securitieslegislation for a period of more than 30 consecutive days; or

iii) within a year of that person ceasing to act inthat capacity, became bankrupt, made a proposal under any legislation relatingto bankruptcy or insolvency, or was subject to or instituted any proceedings,arrangements or compromise with creditors, or had a receiver, receiver manageror trustee appointed to hold its assets;

 

b)    was subject to court-imposed penalties or sanctionsrelating to securities legislation or by a securities regulatory authority, orentered into a settlement agreement with such authority; or

 

c)     was subject to any other penalties orsanctions imposed by a court or regulatory body that would likely be consideredimportant to a reasonable investor in making an investment decision.

 

Tothe Company’s knowledge, no director or officer of the Company and noshareholder holding a sufficient number of securities of the Company to affectmaterially the control of the Company, or a personal holding company of anysuch persons, has within the 10 years before the date of this AnnualInformation Form, become bankrupt, made a proposal under any legislationrelating to bankruptcy or insolvency, or been subject to or instituted anyproceedings, arrangement or compromise with creditors, or had a receiver,receiver manager or trustee appointed to hold his or its assets.

 

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**8.3          INFORMATION CONCERNING EXECUTIVEOFFICERS**

 
| **Executive Officers** | ** ** | **Occupation in the Company**                                      |
|-----------------------------|------------|-----------------------------------------------------------------------------------|
| Bernard Lemaire             |       | Chairman of the Board of  Directors                                               |
| Laurent Lemaire             |       | Executive Vice-Chairman of the  Board of Directors                                |
| Alain Lemaire               |       | President and Chief Executive  Officer                                            |
| Alain Ducharme              |       | Corporate Vice-President                                                          |
| Christian Dubé         |       | Vice-President and Chief  Financial Officer                                       |
| Maryse Fernet               |       | Vice-President, Human  Resources                                                  |
| Claude Cossette             |       | Vice-President, Organizational  Development                                       |
| Norman Boisvert             |       | Vice-President, Administration                                                    |
| Jean-Luc Bellemare          |       | Vice-President, Information  Technologies and Purchasing                          |
| Hubert Bolduc               |       | Vice-President, Communications  and Public Affairs                                |
| Léon Marineau          |       | Vice-President, Environment                                                       |
| Robert F. Hall              |       | Vice-President, Legal Affairs  and Corporate Secretary                            |
| Allan Hogg                  |       | Director of Finance and  Treasurer                                                |
| Suzanne Blanchet            |       | President and Chief Executive  Officer, Cascades Tissue Group                     |
| Eric Laflamme               |       | President and Chief Operating  Officer, North America, Cascades Boxboard Group    |
| Mario Plourde               |       | President and Chief Operating  Officer, Cascades Specialty Products Group         |
| Marc-André Dépin  |       | President and Chief Executive  Officer, Norampac                                  |
| Stéphane Thiollier     |       | Vice-President and Managing  Director, Cascades S.A., Boxboard Group –Europe |

 

All the Executive Officers ofthe Company are Canadian residents and domiciled in the province of Québec(Canada), except for Stéphane Thiollier who is a resident of France, domiciledin Paris.

 

During the past five years,each of the Executive Officers of the Company have been engaged in theirpresent principal occupations or in other executive capacities for the Companyor with related or affiliated companies indicated opposite their name, exceptfor the following senior officers:

 

Mr. Christian Dubé isVice-President and Chief Financial Officer since May 17, 2004.  He was Vice-President and Chief FinancialOfficer of Domtar inc. and a Director of Norampac Inc.

 

Mr. Hubert Bolduc holds theposition opposite his name since October 25, 2004.  He was Press Secretary, Office of the DeputyMinister and Minister for State for the Economy and Finance and Press Secretaryfor the Premier of Québec.

 

As at December 31, 2007,the Directors and Executive Officers of the Company beneficially owned as agroup, or exercised control or direction over, directly or indirectly,30,864,207 Common Shares representing 31% of the Common Shares issued andoutstanding.

 

# **ITEM 9 –LEGAL PROCEEDINGS**

#  

In 2003, the Company was informed that one of its divisions, CascadesResources, was the subject of an inquiry by the Canadian Commissioner ofCompetition as to whether Cascades Resources and its competitors had colludedto unduly reduce market competition between paper merchants in Canada.  On January 9, 2006, the Company entereda guilty plea to two infractions (the “Infractions”) under the Competition Actin Ontario Superior Court in relation to sales in Ontario and Québec ofcarbonless sheet paper by its paper merchant division, Cascades Resources.  Pursuant to the plea, the Company has agreedto pay a total of $12.5 million, payable in equal instalments over a period ofsix and a half years.  The first paymentwill be due in January 2008.

 

On January 10,2006, the Company was informed that a class action based on the Infractions hadbeen filed against Cascades Fine Papers Group Inc., Domtar Inc. and UnisourceCanada Inc. before the Québec Superior Court claiming damages totalling$10 million.  On January 12,2006, the Company was informed that a second class action had been filed inQuébec Superior Court against the same defendants

 

17

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based on theInfractions claiming damages for an undetermined amount.  On February 6, 2006, the Company wasinformed that a third class action based on the Infractions was filed againstthe same defendants as well as Coast Paper Ltd. in Ontario Superior Court fordamages totalling $25 million. Cascades Fine Papers Group Inc. intends to vigorously defend itselfagainst these claims.  The Company isunable to predict the outcome of these claims at this time.

 

An action was filed against theCompany on October 4, 2004, in the Supreme Court of the State of New York,Niagara County, by ServiceCore, Inc., alleging that the Company breached aFinder Agreement in respect of gypsum board dated April 1999**and seeking damages in excess ofUS$9 million.  The Company removedthe action to the United States District Court for the Western District of NewYork and filed an answer denying the allegations of breach of the Finder’sAgreement.  The Company entered into anagreement on May 15, 2007, for an amount significantly below the amountsought in the initial suit.

 

# **ITEM 10 – TRANSFER AGENTAND REGISTRAR**

#  

Cascades’ transfer agent andregistrar is Computershare Investor Services Inc. (“Computershare”),having its place of business in Montréal, Québec, Canada at 1500 UniversityStreet, 7th Floor.  Theregister of transfers of the Common Shares of the Company maintained byComputershare is located in the same office.

 

# **ITEM 11 – MATERIALCONTRACTS**

#  

The only material contractsentered into during the year ended December 31, 2007 or in prior yearsthat are still in effect and filed on SEDAR are:

 

On February 5,2003, the Company completed a series of transactions to refinance substantiallyall of its existing credit facilities, except those of its joint ventures. On October 31, 2005, Cascades completed the refinancing of its$500 million revolving credit facility originally put in place in February 2003.This new $550 million credit facility included a $ 450 million five-yearrevolving facility maturing in 2010 and a seven-year $100 million term facilitymaturing in 2012, reimbursable without penalty, at the Company’s option anytime prior to maturity. On December 29, 2006, in connection with theacquisition of the remaining outstanding shares (50%) from Domtar in Norampac,the Company completed the refinancing of its $550 million credit facilityoriginally put in place in 2005 to provide for new $850 million creditfacilities (including $325 million of Norampac) consisting of a $650 millionfive year secured revolving credit facility maturing in December 2011, a$100 million secured term facility maturing in October 2012 and asix-month $100 million senior unsecured revolving credit facility which shouldbe converted into the secured revolving facility in 2007. Subject to certainconditions, the Company also has the option to request an increase of thesecured revolving credit facility by an additional amount of up to $150million. The six-year term facility can be reimbursed without penalty at theCompany’s option at any time prior to maturity. Its obligations under this newrevolving credit facility are secured by all inventory and receivables of theCompany and its North American subsidiaries and by the property, plant, andequipment of three of its mills.  On June 27,2007, the Company amended its credit agreement to add a new twelve month unsecured revolvingcredit facility in the amount of $100 million to allow for additionalavailability of funds.

 

In addition, on February 5,2003, the Company issued new unsecured 7.25% senior notes, maturing in 2013,for an aggregate amount of US$450 million which were subsequentlyregistered with the Securities and Exchange Commission of the United States andredeemable as of February 2008, all or in part at the option of theCompany under certain conditions subject to payment of a premium. The aggregateproceeds of these two transactions, combined with its additional cash on hand,were used by the Company to repay substantially all of the existing creditfacilities.

 

On May 28, 2003, Norampacissued new unsecured 6.75% senior notes, maturing in 2013, for an aggregateamount of US$250 million which were subsequently registered with theSecurities and Exchange Commission of the United States and redeemable as of June 2008,all or in part at the option of the Company under certain conditions subject topayment of a premium. The proceeds of this transaction, combined with a newrevolving credit facility, were used to refinance substantially all of itsoutstanding credit facilities and credit lines as well as to redeem its thenoutstanding senior notes.

 

On July 8, 2003, theCompany completed a private placement of US$100 million 7.25% seniornotes, maturing in 2013, at a price of 104.50%, or an effective interest rateof 6.61%. These senior notes are treated as part of the same series of 7.25%senior notes issued in February 2003 and were subsequently registered withthe Securities and Exchange Commission of the United States. The proceeds ofthis financing were used to reduce indebtedness under the revolving creditfacility of the Company.

 

On December 2, 2004, the Company completed a private placement ofUS$125 million of 7.25% senior notes due in 2013, which are treated aspart of the same series of 7.25% senior notes due in 2013 that were issued in February 2003.  These senior notes were subsequently registeredwith the Securities and Exchange Commission of the United States.  The issuance of these senior notes was completed at a price of 105.50%,or an effective interest rate of 6.376%. The net proceeds of $156 million of this financing were used toreduce indebtedness under the Company’s revolving credit facility.

 

On December 28, 2006, the Company entered into a Share PurchaseAgreement with Domtar to acquire the outstanding CommonShares of Norampac that the Company did not already own, representing 50% ofthe outstanding Common Shares, for a cash consideration of $560 million.  The Company entered into a Cost SharingAgreement with respect to Norampac’s mill located in Red Rock (Ontario),pursuant to which, in the event that the Company decides to permanently shutdown the Red Rock mill within two years of the closing of the transaction, andthis closure results in environmental remediation costs, the parties haveagreed that the Company will be responsible for the first $10 million of suchcosts, Domtar and the Company shall be equally responsible for any such costsin excess of $10 million but not greater than $40 million and the Company willbe responsible for any amount in excess of $40 million.  Domtar’s obligation to assume any such costswill apply only to costs engaged prior to the fifth anniversary of the date onwhich it is announced that the mill has been permanently shut down.

 

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# **ITEM 12 –INTERESTS OF EXPERTS**

#  

The Company’s auditors arePricewaterhouseCoopers LLP, Chartered Accountants (“PWC”), who have prepared anauditors’ report dated March 14, 2008 (March 27, 2008 as for note 24)in respect of the Company’s consolidated financial statements with accompanyingnotes as at and for the years ended December 31, 2007 and 2006 and foreach of the periods in the three- year period ended December 31,2007.  PWC has advised that they areindependent with respect to the Company within the meaning of the Rules ofProfessional Conduct of the Institute of Chartered Accountants of Québec.

 

# **ITEM 13 – AUDIT COMMITTEE**

#  

**13.1****              ****COMPOSITION ANDMANDATE**

 

The Companyhas an Audit Committee (the “Committee”), which is composed of Messrs. RobertChevrier (Chairman), André Desaulniers, Laurent Verreault and James B.C.Doak.  The Committee is governed by acharter which is attached to this AIF as Schedule A.  The Company also adopted a Code of Ethics(the “Code”) that applies to all directors, officers and employees. The Code isposted on Cascades’ website at www.cascades.com.  All the members of the Committee areindependent in accordance with the definition provided in section 1.4 ofMultilateral Instrument 52-110 of the Canadian Securities Administrators and havefinancial expertise.

 

**13.2****              ****RELEVANT EDUCATIONAND EXPERIENCE OF THE MEMBERS**

 

The following is a brief summaryof the education and experience of each member of the Audit Committee that isrelevant to the performance of their responsibilities, including any educationor experience that has provided the member with an understanding of theaccounting principles used by the Company to prepare its annual and interimfinancial statements.

 
| **Name of Committee Member** | ** ** | **Relevant Experience and Education**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|------------------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                   | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| Robert Chevrier              |       | Mr. Chevrier is a Fellow  of the Institute of Chartered Accountants. He sits on the Boards of other  Canadian listed companies and on other Audit Committees. His education and  experience allows him to have a good understanding of the accounting principles  used by the Company and he has the ability to read and understand a set of  financial statements that present a breadth and level of complexity of  accounting issues that are generally comparable to those issues that can  reasonably be expected to be raised by the Company’s financial statements.                                                                  |
|                         |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| Laurent Verreault            |       | As Chairman of the Board of  Directors and Chief Executive Officer of GLV Inc., a manufacturer of  engineered equipment, primarily focused on the production of equipment for  the pulp and paper industry, Mr.Verreault is both financially and  operationally literate and understands the breadth and complexity of  accounting issues that can reasonably be expected to be raised in the course  of reviewing the Company’s financial statements. He is a member of the Board  of Directors of TVA Group Inc. and the Montréal Exchange Inc.                                                                                           |
|                         |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| André Desaulniers       |       | Mr. Desaulniers is a  director of companies and has acquired his knowledge and experience by acting  as Chairman of the Board of Directors of McNeil, Mantha, Inc., an  investment dealer, for 17 years. He also served on several audit committees,  namely as Chairman of the Audit Committee of the Montréal Stock Exchange Inc.                                                                                                                                                                                                                                                                                                    |
|                         |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| James B.C.  Doak             |       | An economist, Mr. Doak is  President  and Managing Director of Megantic Asset Management Inc., a Toronto (Ontario)  investment company. He has more  than 20 years of experience as a chartered financial analyst and is a past  President and Director of the Toronto CFA Society. He has been a Board member  of several public companies, namely, PetroKazahstan Inc., Superior Propane  Inc., and Spar Aerospace Inc. He has held senior positions with ScotiaMcLeod  Inc., First Marathon Securities Ltd. and McLeod Young Weir Ltd., and was the  founder of Enterprise Capital Management Inc., where he served as President  until 2002. |

 

**13.3****              ****EXTERNAL AUDITORSSERVICE FEES**

 

The following table sets out the fees paid toPricewaterhouseCoopers LLP in Canadian dollars in the past two fiscal years forvarious services provided to the Company and its subsidiaries :

 
| ** **              | ** ** | **Fees**                        | ** ** |
|-------------------------|------------|---------------------------------|------------|
| **Services**            | ** ** | **December 31, 2006** | ** ** | **December 31, 2007** | ** ** |
|                    |       |                            |       |   |   |
| Audit Fees  (1)         |       | $                               | 1,527,933  |   | $ | 1,990,418 |   |
| Audit-Related  Fees (2) |       | $                               | 295,392    |   | $ | 793,364 |   |
| Tax Fees (3)            |       | $                               | 313,146    |   | $ | 501,114 |   |
| Other Fees  (4)         |       | N/A                             |       | N/A |   |
| Total                   |       | $                               | 2,136,471  |   | $ | 3,284,896 |   |

 

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(1) Professional services provided in connection with statutoryand regulatory filings and audit of the annual financial statements of theCompany.

(2) Professional services related to consultations on accountingand regulatory matters.

(3) Professional services mainly for tax compliance.

(4) Various other services.

 

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**13.4****              ****POLICIES ANDPROCEDURES FOR THE ENGAGEMENT OF AUDIT AND NON-AUDIT SERVICES**

 

The Company’s Audit Committee(the “Committee”) has adopted a Pre-approval Policy and Procedures for servicesprovided by external auditors, (the “Policy”) which sets forth the proceduresand the conditions pursuant to which permissible services proposed to beperformed by external auditors are pre-approved.  Under the terms of the Policy, services,which involve annual fees of less than $35,000, are pre-approved.  The Committee has delegated to the Chairmanof the Committee pre-approval authority for any services not previouslyapproved by the Committee, which involve the payment of unbudgeted fees inexcess of $35,000 up to a maximum of $50,000. Services, which involve fees of more than $50,000, require pre-approvalof all the members of the Committee.

 

# **ITEM 14 – ADDITIONALINFORMATION**

#  

Additionalinformation, including Directors’ and Senior Officers’ remuneration andindebtedness, principal holders of the securities of Cascades and options topurchase securities, and interests of insiders in material transactions, ifany, is contained in the Management Proxy Circular dated March 7, 2008 forthe annual general shareholders meeting.

 

Also,additional financial information pertaining to the fiscal year ended December 31,2007 including Management’s Discussion and Analysis is presented in the Company’s2007**Annual Report.

 

In addition, the followingdocuments may be obtained, upon written request, from the Company’s CorporateSecretary:

 

(a)                  When Cascades is in the course of adistribution of its securities pursuant to a short form prospectus or has fileda preliminary short form prospectus in respect of a proposed distribution ofits securities:

 

i) onecopy of the latest Annual Information Form of the Company, together withone copy of any document, or the pertinent pages of any document, incorporatedby reference in the Annual Information Form;

 

ii) one copy of the latest Annual Reportof the Company, a copy of the comparative financial statements of the Companyfor its most recently completed financial year for which financial statementshave been filed together with the accompanying Auditors’ report, and theManagement’s Discussion and Analysis of Financial Position and OperatingResults and one copy of any interim financial statements of the Company thathave been filed, if any, for any period after the end of its most recentlycompleted financial year;

 

iii) one copy of the Company’sManagement Proxy Circular  in respect ofits most recent Annual General Meeting of Shareholders that involved theelection of  Directors ; and

 

iv) onecopy of any other documents which are incorporated by reference into thepreliminary short form prospectus or the short form prospectus; or

 

(b)                  at any other time, a copy of thedocuments referred to in a) i) to iii) above, may be obtained from theCorporate Secretary of the Company, at the address indicated below, providedthat the Company may require the payment of a reasonable fee if the request ismade by a person or company who is not a security holder of Cascades.

 

Most of theabove-mentioned information relating to the Company may be found on SEDAR atwww.sedar.com and on the Company’s website at www.cascades.com.

 

**CascadesInc.**

CorporateSecretary

404Marie-Victorin Blvd., P.O. Box 30

Kingsey Falls,Québec  J0A 1B0

Telephone:  (819) 363-5100

Telecopier:  (819) 363-5127

 

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SCHEDULE A

 

**CHARTEROF THE**

**AUDITCOMMITTEE**

 

**OF THEBOARD OF DIRECTORS OF CASCADES INC. ( ****the “ Company »)**

 

### **1.             PURPOSE**

### ** **

The purpose of this charter isto describe the role of the Audit Committee (the « Committee ») aswell as its duties and responsibilities delegated by the Board of Directors(« the Board »).  The main dutyof the Committee is to assist the Board in fulfilling its oversightresponsibilities with respect to the following issues: the quality andintegrity of the Company’s financial statements;

 

·      accountingand financial reporting process;

 

·      systemsof internal accounting and financial controls;

 

·      externalauditors qualifications, independence and performance;

 

·      internalaudit function and process;

 

·      theCompany’s compliance with legal and regulatory requirements;

 

·      fulfillany other responsibilities assigned to it from time to time by the Board.

 

##### **2.             DIVISIONOF RESPONSIBILITIES**

##### ** **

In carrying out the duties ofthe Committee described in this charter, the members of the Committee recognizethat its function is to oversee the Company’s financial reporting process onbehalf of the Board as well as to report its activities regularly to theBoard.  Management of the Company isresponsible for the preparation, the presentation and the integrity of theCompany’s financial statements and for the effectiveness of internal controlover financial reporting.

 

Management and the internalaudit service are responsible for maintaining appropriate accounting andfinancial reporting principles and policies as well as internal controls andprocedures that provide for compliance with accounting standards and applicablelaws and regulations.  The auditors areresponsible for planning and carrying out audits of the Company’s annual andinterim financial statements and annually auditing management’s assessment ofthe effectiveness of internal control over financial reporting and otherauditing procedures.

 

In performing their duties, themembers of the Committee must have open and free discussions with the Board,the external auditors, the internal auditor and management of the Company.

 

**3.             COMPOSITION AND ORGANIZATION**

 

The Committee shall be composedof a minimum of three directors, as appointed by the Board at its first meetingfollowing the annual shareholders meeting. Each member must be an unrelated or independent director.

 

Each Committee member must befinancially literate and at least one member must have accounting or relatedfinancial management expertise, as determined by the Board.

 

The Committee will appoint oneof its members as Chairman and the Secretary or Assistant-Secretary of theCompany or the person designated as Secretary will be secretary for allmeetings of the Committee and will keep minutes of the Committee’sdeliberations.

 

**4.****                                     ****MEETINGS AND RESOURCES**

 

The Committee shall meet at least four timesa year, or more frequently if circumstances so dictate. By virtue of itsmandate to foster open relations, the Committee shall also meet separately and *in camera* for discussions with theinternal auditor, management and with the external auditors, as required.

 

The Committee shallestablish its own rules and procedures (subject to any specific guidelinesfrom the Board) and shall meet at the place and in accordance with the termsprescribed by its rules. A quorum shall not be less than a majority of themembers of the Committee.

 

The Chairperson of the Committeedetermines the agenda for each meeting in consultation with the Vice-Presidentand Chief Financial Officer, the Secretary and the Internal Auditor.  The agenda and supporting documentation aredistributed to the members of the Committee within a reasonable timeframe priorto the meetings.

 

 

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TheChairman of the Committee shall report quarterly and when required to the Boardon the Committee’s activities and will make recommendations concerning allmatters it deems necessary or appropriate.

 

The Committee shallat all times have direct access to management, to the internal auditor and tothe external auditors in order to seek explanations or information on specificquestions.

 

The Committee shall have theresources and the authority appropriate to carry out its duties, including theauthority to retain, as it deems necessary, counsel and other externalconsultants and to set and pay their compensation, without further Boardapproval.

 

In carrying out its duties and to meet itsresponsibilities, the Committee shall examine the books and relevant accountsof the Company, its divisions and its subsidiaries.

 

**5.             DUTIES AND RESPONSIBILITIES**

 

In addition to, the above-mentionedresponsibilities, the Committee shall address the following questions:

 

##### **5.1           Financialreporting**

##### ** **

·                  Monitor the quality and integrity ofthe Company’s accounting and financial reporting system through discussionswith management, the external auditors and the internal auditor;

 

·                  Review with management and theexternal auditors the annual audited financial statements of the Company,including the information contained in management’s discussion and analysis,related press releases and the external auditors report on the annual financialstatements prior to public disclosure and filing with the SecuritiesAdministrators;

 

·                  Review the unaudited interimfinancial statements, including management’s discussion and analysis for eachinterim period of the fiscal year and related press releases prior to publicdisclosure and filing with the Securities Administrators;

 

·                  Review the financial informationcontained in prospectuses, offering memoranda, the annual information form andother reports that include audited or unaudited financial information submittedfor approval by the Board;

 

·                  Review with the external auditorsand management, the quality, appropriateness and disclosure of the Company’saccounting principles and policies, the underlying assumptions and reportingpractices, and any proposed changes thereto;

 

·                  Review financial analyses and otherwritten communications prepared by management, the internal auditor or external auditors, setting forth significantfinancial reporting issues and judgments made in connection with thepreparation of the financial statements, including analyses of the effects ofalternative generally accepted accounting principles methods(« GAAP ») on the financial statements;

 

·                  Verify the compliance of managementcertification of financial reports with applicable legislation;

 

·                  Review important litigation and anyregulatory or accounting initiatives that could have a material effect upon theCompany’s financial situation or operating results and the appropriateness ofthe disclosure thereof in the documents reviewed by the Committee;

 

·                  Review the results of the externalaudit, and any significant problems encountered in the performance of theaudit, and management’s response or action plan related to any managementletter issued by the external auditors.

 

##### **5.2           Riskmanagement and internal control**

##### ** **

·                  Periodically receive management’sreport assessing the adequacy and effectiveness of the Company’s disclosurecontrols and procedures and systems of internal control;

 

·                  Review insurance coverage for theCompany annually and as may otherwise be appropriate;

 

·                  Review the Company’s risk assessmentand risk management policies, including the Company’s policies regardinghedging, investment and credit; review significant capital costs and othermajor expenditures, related party transactions and any other transactions whichcould alter the Company’s financial or corporate structure, 

 

2

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including off-balance sheet items;

 

·                  Assist the Board in carrying out itsresponsibility for ensuring that the Company is compliant with applicable legaland regulatory requirements;

 

·                  While ensuring confidentiality andanonymity, establish procedures for the receipt, retention and treatment ofcomplaints received by the Company regarding accounting, internal accountingcontrols or auditing matters, including employee concerns regarding accountingor auditing matters.

 

Ÿ                  Periodically review with the Board, theexternal and internal auditors, and members of management, the Company’santi-fraud program and practices.

 

##### **5.3           InternalAudit Function**

##### ** **

·                  Review with management, the internalaudit staff qualifications and experience and, if required, recommend theappointment or replacement of the internal auditor;

 

·                  Regularly assess the internal auditfunction’s performance, its responsibilities, its staffing, budget and thecompensation of its members;

 

·                  Annually review the internal auditplan;

 

·                  Undertake private discussions withthe internal auditor to establish internal audit independence, the level ofco-operation received from management, the degree of interaction with theexternal auditors, and any unresolved differences of opinion or disputes.

 

5.4           External Auditors

* *

·                  Recommend to the Board, theappointment of the external auditors and, if appropriate, their removal (inboth cases, subject to shareholder approval), evaluate and compensate them andassess their qualifications, performance and independence;

 

·                  Ensure that as representatives ofthe shareholders, the external auditors report to the Committee and to theBoard;

 

·                  Approve all auditing servicesprovided by the external auditors and determine and approve in advance nonaudit services provided, in compliance with applicable legal and regulatoryrequirements;

 

·                  Discuss with the external auditors the quality and not just theacceptability of the Company’s accounting principles but also the quality ofthose principles, including: i) all critical accounting policies and practicesused ; ii) any alternative treatments of financial information that have beendiscussed with management, the ramification of their use as well as; iii) anyother material written communications between the Company and the externalauditors, including any disagreement or unresolved differences of opinionbetween management and the external auditors that could have an impact on thefinancial statements;

 

·                  Review at least once a year theexternal auditors report stating all relationships the external auditors havewith the Company and confirming their independence, and holding discussionswith the external auditors as to any relationship or services that may impactthe quality of the audit services or their objectivity and independence;

 

·                  Review the Company’s hiring policiesfor employees or former employees of the external auditors.

 

5.5           Performance Evaluation of the Committee

* *

·                  Prepare and review, with the Board,an annual performance evaluation of the Committee and its members and assessonce a year, the adequacy of its mandate and, if required, make recommendationsto the Board.

 

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