CASCADES Goldman Sachs 2011 Montreal Paper Conference March 17, 2011
DISCLAIMER Certain statements in this presentation, including statements regarding future results and performance, are forward-looking statements within the meaning of securities legislation based on current expectations. The accuracy of such statements is subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those projected, including, but not limited to, the effect of general economic conditions, decreases in demand for the Company s products, the prices and availability of raw materials, changes in the relative values of certain currencies, fluctuations in selling prices and adverse changes in general market and industry conditions. This presentation also includes price indices as well as variance and sensitivity analyses that are intended to provide the reader with a better understanding of the trends related to our business activities. These items are based on the best estimates available to the Company. The financial information included in this presentation also contains certain data that are not measures of performance under Canadian GAAP ( non-gaap measures ). For example, the Company uses earnings before interest, taxes, depreciation and amortization (EBITDA) because it is the measure used by management to assess the operating and financial performance of the Company s operating segments. Such information is reconciled to the most directly comparable financial measures, as set forth in the Supplemental Information on Non-GAAP Measures section of our most recent quarterly report or annual report. Specific items are defined as items such as charges for impairment of assets, for facility or machine closures, debt restructuring charges, gains or losses on sales of business units, unrealized gains or losses on derivative financial instruments that do not qualify for hedge accounting, foreign exchange gains or losses on long-term debt and other significant items of an unusual or non-recurring nature. All amounts in this presentation are in Canadian dollars unless otherwise indicated. 2
AGENDA 1. Business overview 2. Financial review 3. Current market conditions 4. Recent developments 5. Concluding remarks
BUSINESS REVIEW 4
BALANCED PACKAGING AND TISSUE PLAY ($ in millions) Cascades 2009 Sales: $3,959 2010 EBITDA: $398 Packaging 79% of Sales 79% EBITDA Tissue Papers 21% of Sales 21% EBITDA Boxboard 31% of Sales 24% Adjusted EBITDA Containerboard 27% of Sales 37% Adjusted EBITDA Specialty Products 21% of Sales 18% Adjusted EBITDA Leading North American packaging and tissue manufacturer with substantial recycling capabilities EBITDA excluding specific items. Share of Sales and EBITDA excluding the impact of inter-segment sales and corporate activities.
INTEGRATED 23 units May be sent to recycling centers 34 units 1 66 units One of two North American public companies in packaging & tissue with leading market positions
GREEN Sales of the Cascades Fine Paper Enviro Brand Relative Green House Gas Emissions ($ in millions) 100 80 81 (kg/metric tonne) 300 286 268 60 58 260 40 36 220 20 189 0 180 2007 2008 2009 2007 2008 2009 The right product offering and processes to benefit from the green demand
FINANCIAL REVIEW 8
SUMMARY OF FINANCIAL RESULTS (M CAN$) 4,100 4,000 3,900 3,929 4,017 Sales 3,877 3,959 (M CAN$) 500 400 350 300 306 EBITDA 465 (% of sales) 14.0% 398 12.0% 10.0% 3,800 3,700 3,600 200 100 8.0% 6.0% 3,500 (M CAN$) 300 200 100 0 0 2007 2008 2009 2010 2007 2008 2009 2010 Cash flow from operations (adjusted) (% of sales) (CAN$) Earnings per share 327 11.0% 1.50 260 9.0% 1.25 1.13 202 183 7.0% 1.00 0.75 0.65 5.0% 0.50 3.0% 0.25 0.23 0.04 1.0% 0.00 2007 2008 2009 2010 2007 2008 2009 2010 4.0% Lower results compared to 2009 but significantly better than previous years. EBITDA and cash flow from operations (adjusted) and net earnings excluding specific items. 9
KEY PERFORMANCE INDICATORS (KPIs) ('000 s.t.) Total Shipments Capacity utilization rate 3,600 3,500 3,400 3,300 3,200 3,100 3,515 3,396 3,082 3,330 96% 94% 92% 90% 88% 86% 84% 94% 88% 86% 93% 3,000 2007 2008 2009 2010 82% 2007 2008 2009 2010 Return on assets Working capital (% of sales) 13.0% 12.0% 11.0% 10.0% 9.0% 8.0% 7.0% 9.1% 7.8% 11.9% 10.5% 18.0% 16.0% 14.0% 12.0% 15.4% 16.5% 14.2% 13.6% 6.0% 10.0% 2007 2008 2009 2010 2007 2008 2009 2010 Rebound in demand and operating rate. Working capital as a % sales at its lowest level in 5 years. See notes page 44. 10
BUSINESS CONDITIONS Selling prices 1 250 1 150 Cascades North American manufacturing selling price and raw material cost indices (US$) Raw material costs 700 600 500 1 050 400 950 300 200 850 100 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Selling prices index (US$) Raw materials index (US$); 2007 2008 2009 2010 US$/CAN$ $0.93 $0.94 $0.88 $0.97 Natural Gas Henry Hub - US$/mmBtu $6.86 $9.03 $3.99 $4.39 Less favourable business conditions compared to 2009 as $CAN appreciated and implementation of price increases lagged cost inflation. See notes page 44. Source: Bloomberg. 11
SEGMENTED EBITDA (M CAN$) 150 125 100 Boxboard 115 101 (% of sales) (M CAN$) Containerboard 14.0% 200 176 12.0% 150 145 130 10.0% 154 (% of sales) 16.0% 14.0% 75 50 25 44 33 8.0% 6.0% 4.0% 100 50 12.0% 0 2007 2008 2009 2010 2.0% 0 2007 2008 2009 2010 10.0% (M CAN$) 100 75 50 25 60 67 Specialty products 74 75 (% of sales) 12.0% 10.0% 8.0% 6.0% 4.0% (M CAN$) 200 150 100 50 65 90 Tissue papers 154 90 (% of sales) 22.0% 19.0% 16.0% 13.0% 10.0% 7.0% 0 2.0% 0 2007 2008 2009 2010 2007 2008 2009 2010 Stable results in packaging vs. last year. Significant turnaround in boxboard compared to 2007 and 2008. 4.0% See notes page 44. 12
2010 EBITDA VARIANCE ANALYSIS (M CAN$) 700 46 4 600 54 74 50 500 465 400 195 398 300 2009 Shipments Cost improvements & other items Selling prices & mix Energy costs Variation of the CAN$ Raw material costs & mix (M CAN$) Containerboard 145 31 19 22 4 (10) (57) 154 Boxboard 115 22 19 13 2 (20) (50) 101 Specialty products 74-12 21 - (14) (18) 75 Tissue papers 154 21 3 (10) (2) (6) (70) 90 Corporate (23) - 1 - - - - (22) Total 465 74 54 46 4 (50) (195) 398 2010 Tissue s s spread has significantly tighten in 2010. EBITDA excluding specific items. 13
2010 VS. 2008 COMPARISON 2008 2010 Change US$/CAN$ $0.94 $0.97 4% Selling price index/raw material cost index spread (in US$) 819 765 (7%) Natural gas costs (CAN$/GJ) $7.26 $5.09 (30%) Capacity utilization rate 88% 93% 5% Sales (M$) 4,017 3,959 (1%) EBITDA (M$) 306 398 30% Free cash flow (M$) (78) 72 +150 M$ EPS $0.04 $0.65 1,525% ROA 7.8% 10.5% 2.7% Net debt (M$) 1,800 1,449 (20%) Compared to 2008, despite stable sales, Cascades profitability significantly improved as the turnaround of assets, s, cost reduction and better efficiency more than offset the appreciation n of the CAN$ and the reduction of the spread. EBITDA and EPS excluding specific items. See notes page 46. 14
NET DEBT RECONCILIATION (M CAN$) 1,800 1,700 131 37 35 17 (55) 1,600 1,500 1,400 1,533 (249) 1,449* 1,300 Net debt Dec 31, 2009 CAPEX Other Dividend, assets and stock investments buyback & others Variation of working capital F/X change Cash flow from operations Net debt Dec. 31, 2010 Net debt down 84 M$ due to good cash flow and appreciation of CAN$. Debt at its lowest level since the acquisition of the 50% of Norampac (Q3 2006). * Includes $82 M of net debt from unrestricted subsidiaries and joint ventures. 15
RENEWAL OF CREDIT AGREEMENT Structure Maturity Interest rate Standby fees Covenants Before $750 M revolving credit facility $100 M term loan Credit facility: December 2011 Term loan: February 2012 Credit facility: LIBOR + 275 bps Term loan: LIBOR + 287.5 bps 70 bps Funded Debt to Capitalization Ratio 65% Interest Coverage Ratio 2.25x After $750 M revolving credit facility February 2015 LIBOR + 212.5 bps 22.5% x (spread over LIBOR) = 48 bps Funded Debt to Capitalization Ratio 65% Interest Coverage Ratio 2.25x Addressing upcoming maturities while reducing costs of borrowing and improving flexibility. 16
DEBT SCHEDULE (M CAN$) 600 500 400 300 200 Long-term debt repayment schedule (Dec. 31, 2010) 7.75% L + 212.5 bps 7.75% 7.875% 100 0 6.75% / 7.25% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Senior unsecured notes (US$ 18M) Revolver (CAN$ 750M) Senior unsecured notes (CAN$ 200M) Senior unsecured notes (US$ 500M) Senior unsecured notes (US$ 250M) With refinancing of revolver, all short term maturities are now addressed. 17
CURRENT MARKET CONDITIONS 18
CONTAINERBOARD MARKET 15% 10% 5% 0% -5% -10% -15% U.S. Corrugated box industry shipments and ISM correlation 70 65 60 55 50 45 40 35 30 (M s.t.) 2.8 2.6 2.4 2.2 2.0 1.8 U.S. containerboard inventories at box plants and mills (weeks) 5.5 5.0 4.5 4.0 3.5 3.0 Jan 07 Apr 07 July Oct Jan 07 07 08 Apr July Oct Jan 08 08 08 09 AprJuly Oct Jan 09 09 09 10 AprJuly Oct Jan 10 10 10 11 Jan 07 Apr July Oct Jan 07 07 07 08 Apr July Oct 08 08 08 Jan 09 Apr July Oct Jan 09 09 09 10 Apr July Oct Jan 10 10 10 11 Shipments ISM Manufacturing Index Millions short tons Weeks of supply Corrugated box shipments Containerboard inventories Annual change 2010 3 % YoY change Jan. 2011 4 % Weeks of supply 4.4 YoY change Jan. 2011 (weeks) 0.4 Pick up in manufacturing activity should continue to benefit box demand Source: RISI. 19
CONTAINERBOARD MARKET (k s.t.) 400 350 300 250 200 150 Jan 07 Apr 07 July Oct Jan 07 07 08 U.S. linerboard exports Apr July Oct Jan 08 08 08 09 Linerboard export shipments Apr 09 July Oct Jan 09 09 10 Apr July Oct 10 10 10 Annual change 100% 75% 50% 25% 0% -25% -50% ('000 s.t.) 3,250 3,000 2,750 2,500 2,250 2,000 1,750 Jan 07 Apr 07 U.S. containerboard industry production and capacity utilization rate July 07 Oct 07 Jan 08 Apr 08 July 08 Total Production Oct 08 Jan 09 Apr 09 July 09 Oct 09 Jan 10 Apr 10 July 10 Capacity utilization rate Oct Jan 10 11 110% 100% 90% 80% 70% Linerboard exports Containerboard production Annual change 2010 (7 %) YoY change Jan.2011 (5 %) Annual change 2010 7 % YoY change January 2011 5 % Capacity utilization rate Jan. 2011 96 % Strong domestic demand negatively impacting export shipments. Source: RISI. 20
BOXBOARD MARKETS ('000 s.t.) 190 180 170 160 150 140 130 120 Jan 07 U.S. folding coated recycled boxboard industry production and capacity utilization rate Apr July Oct Jan 07 07 07 08 Total Production Apr July Oct Jan 08 08 08 09 Apr July Oct Jan 09 09 09 10 Apr July Oct 10 10 10 Capacity utilization rate 105% 100% 95% 90% 85% 80% 75% 70% (m.t.) 70,000 60,000 50,000 40,000 30,000 20,000 Coated recycled boxboard order inflow (WLC) 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 2008 2009 2010 2011 (weeks) U.S. coated recycled boxboard production Annual change 2010 2 % Capacity utilization rate 2010 96 % European coated recycled boxboard demand Annual change 2010 13 % YoY change YTD Week 8 2011 1 % Steady demand for coated recycled boxboard. Sources: RIS, CEPI. 5-week weekly moving average for European data. 21
TISSUE MARKET Retail ('000 s.t.) 500 475 450 425 400 375 350 325 300 Jan 07 AprJuly Oct Jan 07 07 07 08 U.S. tissue paper industry converted product shipments Apr 08 For the retail market July Oct Jan 08 08 09 AprJuly Oct Jan 09 09 09 10 Apr 10 July Oct Jan 10 10 11 For the away-from-home market Away-f-home ('000 s.t.) 350 325 300 275 250 225 200 175 150 ('000 s.t.) 700 675 650 625 600 575 550 Jan 07 Apr 07 U.S. tissue paper industry production (parent rolls) and capacity utilization rate July Oct Jan 07 07 08 Apr 08 July Oct Jan 08 08 09 Total parent roll production AprJuly Oct Jan 09 09 09 10 Apr 10 July Oct Jan 10 10 11 Capacity utilization rate 98% 96% 94% 92% 90% 88% 86% 84% Tissue paper converted product shipments Annual change (retail & AfH) 2010 2 % YoY change (retail & AfH) Jan. 2011 2 % Tissue paper production Annual change 2010 2 % YoY change January 2011 2 % Capacity utilization rate Jan. 2011 94 % Overall demand continues to increase but market conditions remain n competitive. Source: RISI. 22
UPWARD SELLING PRICES 200 Price increases (Jan. 2010- Feb. 2011) 187 (19%) 180 160 140 120 110 (21%) 110 (22%) 116 (20%) 120 (16%) 130 (13%) 100 80 75 (9%) 80 (9%) 60 40 20 0 Fine paper Kraft paper Linerboard Medium CRB Europe CRB N.A. C. virgin boxboard N.A. C. virgin boxboard Europe Price increases implemented across the board in packaging in 2010, 0, still moving upward in boxboard. External reference prices. Source: RISI 23
CONTAINERBOARD CONVERSION RISK AbitibiBowater to Permanently Close Paper Production at Coosa Pines, Alabama Operation MONTREAL, Feb. 14 /CNW Telbec/ - AbitibiBowater announced today that it will permanently close its paper machine at its Coosa Pines, Alabama operation and cease its pilot project to manufacture recycled lightweight and ultra lightweight packaging and linerboard grades within the next 30 days. AbitibiBowater remains committed to its fluff pulp assets at the facility. "Coosa Pines has made progress in the production of recycled lightweight and ultra lightweight packaging and linerboard. Upon review, however, the substantial capital investment that would be required at the site to make it low-cost in these grades could not be justified," stated Richard Garneau, President and Chief Executive Officer. Conversion to lightweight containerboard: not as easy as it looks! External reference prices. Source: RISI 24
NORTH AMERICAN TISSUE CAPACITY CHANGE Company Location Notes Furnish Date Tons % of total capacity Fraser Papers Gorham, NH Mill closure R 2010:Q4 (41 000) 0% P&G Box Elder, UT New PM; TAD V 2010:Q4 80,000 1% Irving Tissue Fort Edward, NY New PM; TAD V 2010:Q4 35,000 0% Total 74,000 1% Blue Heron Oregon City, OR Mill shut-down V&R 2011:Q1 (32 000) 0% First Quality Tissue Anderson, SC New greenfield TAD mill; first PM V 2011:Q3 70,000 1% Total 112,000 1% Georgia-Pacific Crossett, AR PM8 rebuild to f-tad quality V 2012:Q2* 25,000* 0% South Georgia Tissue undecided location New PM; parent rolls only V&R 2012:Q2 33,000 0% Clearwater Paper Shelby, NC New greenfield TAD mill V 2012:Q3 70,000 1% First Quality Tissue Anderson, SC New greenfield TAD mill, 2nd PM V 2012:Q3 70,000 1% Georgia-Pacific Port Hudson, LA PM8 rebuild to f-tad quality V 2012:Q4* 35,000* 0% Total 233,000 3% V = Virgin R = Recycled TAD = Through-Air-Dried * = estimated New capacity in line with annual growth rate in the tissue industry Source: RISI 25
RECENT DEVELOPMENTS 26
RECENT DEVELOPMENTS 1. Management team: Appointment of Mario Plourde as Chief Operating Officer (COO). 2. Containerboard: Sale of the Avot-Vallée (FR) white-top linerboard mill. Consolidation of operations in New England. 3. Tissue papers: Investment in new technology to develop high-end product offering 4. Balance sheet: Refinancing of revolving credit facility Sale of Dopaco 27
APPOINTMENT OF MARIO PLOURDE Appointed as COO of Cascades, effective February 23, 2011. Part of the transition process. Mr. Plourde to have the operating responsibility for Cascades North American boxboard, containerboard, specialty products and tissue paper segments. Mr. Plourde to remain President and COO of the Specialty Products Group until the appointment of his successor. Joined Cascades in 1985 as a controller. Was appointed President and COO of the Specialty Products Group in 2000. 28
DOPACO TRANSACTION HIGHLIGHTS 1. Cash consideration of US$400 million Purchase price of 7.0 times 2010 adjusted EBITDA (in US$) and 7.7 times 2008-2010 EBITDA (in US$) average Estimated proceeds of US$337 million net of cash tax payment and transaction fees Net proceeds to be used to pay down debt Subject to customary working capital and net debt adjustments 2. Cascades to continue to provide boxboard to Dopaco through a five year supply agreement 3. Transaction subject to regulatory approvals and customary conditions Not conditional on RGHL obtaining financing 4. Transaction expected to close in the second quarter of 2011 EBITDA excluding specific items.
DOPACO TRANSACTION RATIONALE 1. Strengthened financial position and improved financial flexibility Net debt reduction of US$337 million to CAN$1.1 billion Net debt down around CAN$700 million in the last 24 months Net debt/ebitda ratio down 10% from 3.6x to 3.3x Debt/capitalization ratio down from 53.7% to 45.2% Future Capex needs significantly reduced 2. Unlocked value for shareholders Attractive EBITDA multiples Improving Cascades financial risk profile 3. Strategic decision Focus going forward on core tissue, packaging, and recycling activities 4. Limited integration with our boxboard manufacturing operations 46,000 tons shipped to Dopaco in 2010 on total shipments of 365,000 tons Stand-alone management team, very limited synergies with Cascades (1) Assumes US$337 million and CAN$ 335 million of net proceeds used to pay down debt (exchange rate of 0.9946 CAN$/US$ for balance sheet and 1.03011 CAN$/US$ for income statement). EBITDA excluding specific items.
DOPACO TRANSACTION FINANCIAL IMPACT Pre-Transaction Pro Forma (in millions CAN$) As of Dec 31, 2010 For Transaction (1) Balance Sheet Net Debt $1,449 $1,114 Income Statement Revenue $3,959 $3,525 EBITDA $398 $338 Credit Statistics Net Debt / LTM EBITDA 3.6x 3.3x Debt / Capitalization 53.7% 45.2% (1) Assumes US$337 million and CAN$ 335 million of net proceeds used to pay down debt (exchange rate of 0.9946 CAN$/US$ for balance sheet and 1.03011 CAN$/US$ for income statement). EBITDA excluding specific items.
DOPACO TRANSACTION FINANCIAL IMPACT 2,000 1,800 1,600 1,400 1,805 Net Debt (CAN$ in mm) 1,658 1,570 1,5331,508 1,553 1,516 1,449 1,200 1,000 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 1,114 PF Q4 2010 (1) Net debt down almost 40% in 2 years (CAN$700 M) (1) Assumes US$337 million and CAN$ 335 million of net proceeds used to pay down debt (exchange rate of 0.9946 CAN$/US$ for balance sheet and 1.03011 CAN$/US$ for income statement). EBITDA excluding specific items.
DOPACO TRANSACTION FINANCIAL IMPACT Debt / Debt + Equity Net debt / LTM EBITDA 60.0% 58.5% 6.0x 55.0% 56.1% 54.4% 54.3% 54.6% 55.2% 54.0% 53.7% 5.5x 5.0x 5.1x 50.0% 45.0% 45.2% (1) 4.5x 4.0x 3.5x 4.0x 3.5x 3.3x 3.5x 3.7x 3.7x 3.6x (1) 3.3x 40.0% Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 PF Q4 2010 3.0x Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 PF Q4 2010 Net debt/ebitda ratio getting closer to our 3.0x target; debt to cap ratio at its lowest level in more than 10 years (1) Assumes US$337 million and CAN$ 335 million of net proceeds used to pay down debt (exchange rate of 0.9946 CAN$/US$ for balance sheet and 1.03011 CAN$/US$ for income statement). EBITDA excluding specific items.
CONCLUDING REMARKS 34
NEAR TERM OUTLOOK Boxboard North America Containerboard Specialty products Tissue papers Boxboard Europe Volume Slight Increase Slight Increase Slight Increase Slight Increase Slight Increase Selling prices Slight Increase Stable Stable Slight Increase Increase Raw material costs Slight Increase Slight Increase Stable Slight Increase Slight Increase CAN$ Slight Increase N/A Energy Costs Slight Increase Slight Increase Demand and inventory levels continue to be healthy in all sectors but elevated raw material costs and the strong CAN$ will negatively ely impact results in Q1. 35
CONCLUDING REMARKS 1. Proactively addressing issues 2. Cascades to maintain strong focus on financial ratios, profitability and free cash flow 3. Future development of Cascades to come through strategic investments (Capex and acquisitions) in core operations To position our asset base amongst the best in the industry in terms of productivity and profitability To improve product offering and customer service To reduce financial and operational risk
APPENDICES 37
LESS CYCLICAL U.S. Corrugated Box Shipments Industry Breakdown U.S. Folding Carton Industry Breakdown Durable goods & freight; 14% Other non durable; 42% Food products; 44% Others; 14% Durable goods; 4% Health, beauty & other non durable; 19% U.S. Tissue Paper Products Shipments Industry Breakdown Food & beverages; 63% Away-fromhome 31% Retail (at home) 69% Similar to industry, Cascades sales are mostly exposed to relatively stable and less cyclical end-use markets
LEADERSHIP POSITIONS RECOVERY #1 Canadian recycled paper collector PACKAGING #1 Canadian containerboard producer (Norampac) #1 North American Quick-service-restaurant carton and cup producer (Dopaco) #2 European in coated recycled boxboard #3 North American coated recycled boxboard TISSUE #1 green tissue papers retail brand in Canada #2 Canadian producer and #4 in North America One of two North American public companies in packaging & tissue with leading market positions
APPOINTMENT OF MARIO PLOURDE 1. Cascades has agreed to sell Dopaco to Reynolds Group Holdings Limited ( RGHL ). 2. Dopaco, a wholly owned subsidiary of Cascades, is a leading producer of cups and folding cartons for the quick service restaurants and food distribution service industries in North America Headquartered in Exton, PA, Dopaco operates six plants that convert approximately 165,000 tonnes of boxboard annually. London, Ontario Brampton, Ontario Stockton, CA Downingtown, PA St. Charles, IL Kinston, NC 3. RGHL is a global manufacturer and supplier of consumer food and beverage packaging and storage products.
DOPACO TRANSACTION FINANCIAL IMPACT Revenue breakdown (2010) Revenue breakdown (2010 pro forma) Tissue Papers 21% Boxboard 32% Tissue Papers 23% Boxboard 23% Specialty Products 21% Containerboard 26% Specialty Products 24% Containerboard 30% Tissue Papers 21% EBITDA breakdown (2010) Boxboard 24% EBITDA breakdown (2010 pro forma) Tissue Papers 25% Boxboard 11% Specialty Products 18% Containerboard 37% Specialty Products 21% Containerboard 43%
MARKET PRICES AND COSTS SUMMARY These indexes should only be used as indicator of trends and they 2008 2009 2010 Average Average Average Average Average Average Average Average Average Average Average Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 be different than our actual selling prices or purchasing costs. (unit) (%) Selling prices Cascades North American US$ index (index 2005 = 1,000) 1,198 1,166 1,121 1,080 1,070 1,109 1,106 1,180 1,223 1,234 1,186 77 7% PACKAGING Boxboard North America (US$/ton) Recycled boxboard - 20pt. Clay coated news (transaction) 764 768 745 743 759 754 790 825 843 855 828 74 10% Europe (Euro/tonne) Recycled white-lined chipboard (GD2) index 640 621 591 580 575 592 580 631 656 690 639 47 8% Virgin coated duplex boxboard (GC2) index 1,010 1,012 988 972 969 985 976 1,025 1,063 1,155 1,055 70 7% Containerboard (US$/ton) Linerboard 42-lb. unbleached kraft, East US (transaction) 582 578 543 537 530 547 580 640 640 640 625 78 14% Corrugating medium 26-lb. Semichemical, East U.S. (transaction) 561 548 513 507 500 517 550 610 610 610 595 78 15% Specialty products (US$/ton, tonne for deinked pulp) Recycled boxboard - 20pt. Bending chip (transaction) 601 600 555 548 555 565 575 625 625 650 619 54 10% Deinked pulp (f.o.b; U.S. air-dried & wet-lap, post-consumer) 740 585 570 595 653 601 708 752 755 755 743 142 24% Unbleached kraft paper, Grocery bag 30-lb. 958 937 920 920 927 926 960 1,020 1,047 1,060 1,022 96 10% Uncoated white 50-lb. offset, rolls 914 897 845 822 855 855 868 917 938 933 914 59 7% TISSUE PAPERS Cascades Tissue papers (index 1999 = 1,000) 1,581 1,615 1,628 1,605 1,628 1,617 1,617 1,623 1,615 1,620 1,619 2 0% Raw materials Cascades North American US$ index (index 2005 = 300) 379 206 220 280 324 258 426 409 397 451 421 163 63% RECYCLED PAPER North America (US$/ton) Corrugated containers, no. 11 (New England) 114 43 59 84 88 68 149 146 131 170 149 81 119% Special news, no. 8 (ONP - Chicago & NY average) 115 32 45 65 83 56 90 92 78 95 88 32 57% Sorted office papers, no. 37 (SOP - Chicago & NY average) 188 90 90 125 174 120 225 198 218 216 214 94 79% Europe (Euro/tonne) Recovered paper index 86 43 48 55 66 53 100 120 126 132 120 67 126% VIRGIN PULP (US$/tonne) Bleached softwood kraft Northern, East U.S. 857 677 643 733 820 718 880 993 1000 967 960 242 34% Bleached hardwood kraft Northern mixed, East U.S. 788 595 532 603 706 609 776 908 900 840 856 247 41% WOODCHIPS Conifer eastern Canada (US$/odmt) 132 111 118 124 131 121 125 121 120 124 123 2 1% 2010 2009 Change 2010 2009 Sources: RISI, Dow Jones, Random Lengths and Cascades. See notes p. 32. 42
HEDGING PORTFOLIO 2011 1. Cash flow USD, net exposure including interest ($170 M$): US$ 52.5 M at $1.14 (31% of exposure) 2. Natural gas: Canada: 2011: 75% at around 6.30 CAN$/GJ U.S.: 2011: 75% at around 6.50 US$/mmBtu 43
NOTES 1. The Cascades North American selling prices index represents an approximation of the Company s manufacturing selling prices in North America (excluding Converting products). It is weighted according to shipments and is based on the average selling price of our North American manufacturing operations of boxboard, containerboard, specialty products and tissue paper. It considers the change in the mix of products sold. This index should only be used as a trend indicator. 2. The Cascades North American raw materials index represents the average weighted cost paid for some of our manufacturing raw materials namely, recycled fiber, virgin pulp and woodchips in North America. It is weighted according to the volume of purchase. This index should only be used as an a trend indicator and it may differ from our actual manufacturing purchasing costs and our purchase mix. 3. The capacity utilization rate is defined as: Shipments/Practical capacity. Paper manufacturing only. 4. Return on assets is a non-gaap measure and is defined as: LTM EBITDA excluding specific items/ LTM Average of total quarterly assets. It includes discontinued operations. 5. Working capital includes accounts receivable plus inventories less accounts payable. It excludes an unpaid provision for closure and restructuring costs. It also excludes the current portion of derivatives financial instruments and the current portion of future taxes liability. 6. The Cascades recycled white-lined chipboard selling prices index represents an approximation of Cascades recycled grades selling prices in Europe. It is weighted by country. 7. The Cascades virgin coated duplex boxboard selling prices index represents an approximation of Cascades virgin grades selling prices in Europe. It is weighted by country. 8. The Cascades Tissue paper selling prices index represents a mix of primary and converted products, and is based on the product mix at the end of 2006. 9. The Cascades recovered paper index represents an approximation of Cascades recovered paper purchase prices in Europe. It is weighted by country based on the recycled fibre supply mix of 2009. 44
For more information: www.cascades.com/investors Didier Filion Director, Investor Relations didier_filion@cascades.com 514-282 282-26972697 45 CREDIT: IMAGE ECOterre