CASCADES INC. Review of Q4 212 financial results
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 Corporation 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 may also include 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 management of the Corporation. The financial information included in this presentation also contains certain data that are not measures of performance under IFRS ( non-ifrs measures ). For example, the Corporation 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 Corporation s operating segments. Such information is reconciled to the most directly comparable financial measures, as set forth in the Supplemental Information on Non-IFRS 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, accelerated depreciation of assets due to restructuring measures, 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
OPENING REMARKS
SUMMARY OF FINANCIAL RESULTS (M CAN$) 1 75 5 37 25 62 79 EBITDA 51 72 84 78 (% of sales) 1.% 7 8.5% 7.% 5.5% Cash flow from operations (adjusted) (M CAN$) (% of sales) 8 1.% 61 6 7.5% 48 4 4 44 4 35 5.% 2 15 17 2.5% 4.% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 211 211 211 211 212 212 212 212 211 211 211 211 212 212 212 212.% 211 212 (In millions of CAN$, except amount per share) Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 YTD Financial results Sales 774 991 947 913 3,625 891 944 96 94 3,645 Excluding specific items EBITDA 37 62 79 51 229 72 84 78 7 34 Net earnings (loss) 1 (9) (2) (4) (14) 4 7 7 (2) 16 Net earnings (loss) per share.1 (.9) (.2) (.4) (.14).4.8.7 (.2).17 Cash flow from operations (adjusted) 15 17 61 4 133 48 4 44 35 167 EBITDA, net earnings and cash flow from operations (adjusted) excluding specific items. 33% EBITDA improvement year over year despite stable revenues 4
HISTORICAL SEGMENTED EBITDA Boxboard Europe (M CAN$) 2 15 1 5 Boxboard Europe 17 13 1 1 11 5 7 11 (% of sales) 12.% 9.% 6.% 3.% Containerboard (M CAN$) 3 25 2 15 Containerboard 27 23 21 19 2 19 26 25 (% of sales) 12.% 9.% 6.% 3.% Q1 211 Q2 211 Q3 211 Q4 211 Q1 212 Q2 212 Q3 212 Q4 212.% 1 Q1 211 Q2 211 Q3 211 Q4 211 Q1 212 Q2 212 Q3 212 Q4 212.% Specialty Products (M CAN$) 2 15 1 5 Specialty Products 15 15 12 13 11 7 2 (% of sales) 8 12.% 9.% 6.% 3.% Tissue Papers (M CAN$) 4 3 2 1 16 1 Tissue Papers 33 28 18 39 35 31 (% of sales) 2.% 15.% 1.% 5.%.%.% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 211 211 211 211 212 212 212 212 211 211 211 211 212 212 212 212 EBITDA excluding specific items. 5
SEGMENTED EBITDA WATERFALLS Boxboard Europe Containerboard (M CAN$) Q3-212 Raw Material $ CAN Other Costs Acqu. and Divest. Volume Energy Prices & Mix Q4-212 (M CAN$) Q3-212 Raw Material $ CAN Other Costs Acqu. and Divest. Volume Energy Prices & Mix Q4-212 17 15 13 11 9 7 7 7 2 (1) (4) 11 38 35 32 29 26 23 1 1 1 6 26 25 (1) 5 Specialty Products Maintenance and impact of increase shipments on fixed and variable costs 2 Tissue Papers Higher parent roll shipments, unfavorable boxes product mix and lower boxboard prices offset corrugated boxes prices increase (M CAN$) Q3-212 Raw Material $ CAN Other Costs Acqu. and Divest. Volume Energy Prices & Mix Q4-212 (M CAN$) Q3-212 Raw Material $ CAN Other Costs Acqu. and Divest. Volume Energy Prices & Mix Q4-212 18 15 12 9 6 15 1 1 (4) (2) (1) (2) 8 4 37 34 31 28 35 3 (3) (3) (1) 31 3 25 22 Pension expense and 4 th quarter slower in 6 EBITDA excluding specific items. inventory depreciation tissue industry
MARKET DYNAMICS
RAW MATERIAL COSTS (US$/ton) Main Recycled Fiber North Amercian OBM List Prices 3 29 25 2 15 165 175 Current 165 15 1 9 5 White grades (SOP) Brown grades (OCC) Jan 9 Mar 9 May 9 July 9 Sept 9 Nov 9 Jan 1 Mar 1 May 1 July 1 Sept 1 Nov 1 Jan 11 Mar 11 May 11 July 11 Sept 11 Nov 11 Jan 12 Mar 12 May 12 July 12 Sept 12 Nov 12 Dec 12 OBM Average Quarterly List Prices Q4-211 Q3-212 Q4-212 YoY QoQ Brown grades - OCC No. 11 (New England) 14 18 98-3% -9% White grades - SOP No. 37 (New England) 187 182 172-8% -6% No significant price increases expected in the short term Sources: RISI, Bloomberg. 8
ILLUSTRATIVE SUM-OF-THE-PARTS VALUATION ANALYSIS Comparable Companies Illustrative Cascades Selected Illustrative Trading Range LTM EBITDA 8 Multiple Value TEV/LTM EBITDA 7 (M$ rounded, net corp. activities) (conservative) (M$ rounded) Tissue Papers 6.5x - 1.5x 133 7.5x 1, Containerboard 6.x - 8.x 89 6.5x 58 Boxboard Europe 4.x - 8.5x 37 6.x 22 Specialty Products 4.x - 9.x 45 6.x 27 34 6.8x Total Enterprise Value 2,7 Add: JV contribution ($1M EBITDA @ 6.x) 6 Subtract: Net Debt (1,535) Total Equity Value pre-adjustments 595 Add: Boralex stake (at market value) 125 Add: Greenpac investment (at book value) 1 Subtract: Minority interest (estimate 9 ) (65) Total Equity Value post-adjustments 755 Per share 8.4$ Current Market Capitalization 431 Current Market Price (as at February 2, 213) 4.6$ Discount to Sum-of-the-Part Equity Value (given current market price and using trailing EBITDA) 43% Shares trading at significant discount, even using current trough EBITDA and conservative multiples Refer to Notes page included in the Appendix. For illustration purposes only. Values by segment do not necessarily reflect the Corporation s view on their respective value. 9
FINANCIAL REVIEW
Q4-211 Q4-212 SALES RECONCILIATION (M CAN$) 1 95 9 913 45 12 7-1% (28) (45) 94 85 8 Sales Q4-211 Volumes Corporate Elimin. Acqu. & Divest. $CAN Selling Prices & Mix Sales Q4-212 FX and prices more than offset volumes and increased external sales 11
Q4-211 Q4-212 EBITDA VARIANCE ANALYSIS (M CAN$) +37% 125 1 75 5 51 35 2 8 4 (1) (2) (45) 7 25 Q4-211 Raw Materials 1 Volume Other Costs Business Acqu. & Disposals Energy $CAN Selling Prices & Mix Q4-212 (M CAN$) Containerboard 19 12 5 (2) 2 (11) 25 Boxboard Europe 1 8 5 5 (2) (2) (13) 11 Specialty Products 2 9 1 1 (5) 8 Tissue Papers 28 6 9 3 1 1 (1) (16) 31 Corporate (8) 2 1 (5) Total 51 35 2 8 4 (1) (2) (45) 7 Lower raw material costs and higher volume offset lower prices EBITDA excluding specific items. 1 Raw materials include fibre as well as parent rolls used by converting operations. 12
Q3-212 Q4-212 EBITDA VARIANCE ANALYSIS (M CAN$) 12 1 8 6 4 2-11% 1 1 1 1 78 (2) 7 (3) (16) Q3-212 Raw Materials 1 $ CAN Other Costs Acqu. and Divest. Volumes Energy Selling Prices & Mix (M CAN$) Containerboard 26 6 1 1 1 (1) 25 Boxboard Europe 7 7 2 (1) (4) 11 Specialty Products 15 1 1 (4) (2) (1) (2) 8 Tissue Papers 35 3 (3) (3) (1) 31 Corporate (5) (5) Total 78 1 1 1 1 (2) (3) (16) 7 Q4-212 Prices, volumes and energy more than offset a reduction in raw materials EBITDA excluding specific items. 1 Raw materials include fibre as well as parent rolls used by converting operations. 13
Q4-212 EBITDA TO OPERATING INCOME RECONCILIATION (M CAN$) 8 6 7 4 2 (48) 22-2 (27) (1) (3) (1) (19) -4 EBITDA excluding spec. items Depr. & amort., excl. spec. items Op. income excluding spec. items Impairment charges Acc. depr. due to restr. measures Restructuring measures Unrealized loss on fin. instr. Operating income Container- Boxboard Specialty Tissue Corporate (M CAN$) board Europe Products Papers Activities Total Operating income (loss) (29) (2) 2 21 (11) (19) Specific items: Restructuing costs 2 1 - - - 3 Impairment charges 23 3 - - 1 27 Accelerated depreciation due to restructuring measures 1 - - - - 1 Unrealized loss (gain) on financial instruments 1 (1) - (1) 2 1 Total specific items 36 3 - (1) 3 41 Operating income (loss) excluding specific items 7 1 2 2 (8) 22 Depreciation, excluding specific items 18 1 6 11 3 48 EBITDA excluding specific items 25 11 8 31 (5) 7 14
CASH FLOW OVERVIEW (M CAN$) 6 Cash flow from operations, including specific items (M CAN$) Free cash flow 45 48 37 42 34 2 5 13 3 (1) (5) (3) 15 Q1 212 Q2 212 Q3 212 Q4 212 (25) (4) (28) Q1 212 Q2 212 Q3 212 Q4 212 211 (in millions of CAN$) Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year 212 Cash flow from operations, including disc. operations 15 16 6 35 126 48 37 42 34 161 Capital expenditures & other assets 1 (37) (24) (31) (35) (127) (47) (36) (25) (57) (165) Dividend & share buyback (5) (6) (8) (7) (26) (6) (4) (4) (4) (18) Free cash flow (27) (14) 21 (7) (27) (5) (3) 13 (27) (22) Free cash flow per share $(.28) $(.15) $.22 $(.7) $(.28) $(.5) $(.3) $.14 $(.29) $(.23) Capex under our modernization plan impacted free cash flows in Q4 1 Excluding increase in investments. 15
KEY PERFORMANCE INDICATORS (KPIs) (' s.t.) Total Shipments Capacity Utilization Rate 1 875 75 661 92 822 774 88 826 84 89 92% 89% 86% 9% 9% 87% 86% 89% 9% 87% 88% 625 83% 5 Q1 211 Q2 211 Q3 211 Q4 211 Q1 212 Q2 212 Q3 212 Q4 212 8% Q1 211 Q2 211 Q3 211 Q4 211 Q1 212 Q2 212 Q3 212 Q4 212 1% 9% 8% 7% 9.9% 8.7% LTM Return on Assets 7.4% 7.6% 7.5% 7.1% 6.5% 8.1% 16% 14% 12% 1% Working Capital (% of Sales) 14.5% 14.4% 14.5% 14.2% 14.7% 14.3% 13.2% 12.4% 6% Q1 211 Q2 211 Q3 211 Q4 211 Q1 212 Q2 212 Q3 212 Q4 212 8% Q1 211 Q2 211 Q3 211 Q4 211 Q1 212 Q2 212 Q3 212 Q4 212 Improvement of all KPIs, particularly working capital Refer to Notes page included in the Appendix. 16
NET DEBT RECONCILIATION (M CAN$) 1,7 1,6 1,5 1 8 4 47 16 1,542 (34) 1,535 (58) 1,4 1,3 Net Debt Q3-212 Capex, net of disposals Variation of CAN$ Other assets Capital Leases & Others Dividends & Buy-backs CF from Operations Var. of Working Capital Net Debt Q4-212 Net debt down due to cash flow from operations and working capital management Q4 212 net debt includes $133 million of non-recourse net debt of Reno De Medici and other unrestricted subsidiaries. 17
CONSOLIDATED FINANCIAL RATIOS & DEBT MATURITIES Net debt / LTM EBITDA Interest Coverage Ratio 7.x 5.x 4.6x 6.x 5.x 4.6x 5.9x 4.5x 5.8x 5.x 4.x 3.x 3.4x 3.x 2.9x 2.5x 3.1x 4.x 3.3x 2.x 3.x 27 28 29 21 211 212 1.x 27 28 29 21 211 212 65% 6% 57% Debt / Debt + Equity 59% 59% 57% 61% Long-term Debt Maturities Distribution 217 33% 22 17% 55% 5% 45% 54% 27 28 29 21 211 212 216 41% Before 216 9% Leverage ratio improvement due to increased profitability Note: EBITDA excluding specific items. Starting in Q2 211, LTM EBITDA / Interest includes 1% of RDM. Starting in Q4 211, also includes 1% of Papersource. Cascades bank debt financial covenant ratios: Net funded debt to capitalization < 65% (currently at 55%),interest coverage ratio > 2.25x (currently at 3.1x). 18
SEGMENTED REVIEW
TISSUE PAPERS Results Change vs. Q4 212 Q3 212 Q4 211 Shipments (' s.t.) 141-4% 13% Comments on sequential performance Lower shipments in our Canadian retail and away-from-home activities due to seasonality More than offset higher shipments in the away-from-home business in the US Shipments of parent rolls also lower Average selling price (CAN$/unit) 1,715 (US$/unit) 1,73 % -7% % -4% Stable average selling prices for both converted products and parent rolls Integration rate slightly higher due to positive product mix comprising more converted products Sales (M$) 242-4% 4% EBITDA (M$) 31 % of sales 13% EBITDA excluding specific items -11% 11% Lower raw material costs positively impacted EBITDA by $3M In addition to lower shipments, an increase in expenditures for supplies, energy costs and repairs and maintenance contributed to lower EBITDA 2 2
PACKAGING/ CONTAINERBOARD Results Change vs. Q4 212 Q3 212 Q4 211 Comments on sequential performance Shipments (' s.t.) 297 Average selling price (CAN$/unit) 539 (US$/unit) 544 % -4% 2% -3% 3% % External shipments of our manufacturing activities increased by 6% Good performance by our corrugated containers units with a 1% decrease in shipments compared to respective declines of 3.9% and 2.5% for the Canadian and American industries Average selling prices increase due to gradual implementation of $5/st for containerboard manufacturing mills during the quarter (average weighted impact of $33/st during the quarter with 1% implemented as of December 31) Prices of corrugated boxes increase by 2.5% or $27/st for the quarter. However, product mix resulted in a slight decline of average selling prices compared to the previous quarter Reduction of 1.7% of our integration rate led to unfavorable price/mix impact in the fourth quarter ($6M) Sales (M$) 36 2% 2% EBITDA (M$) 25 % of sales 8% EBITDA excluding specific items -4% 32% EBITDA decrease due to a change in the corrugated boxes product mix ($7M) and an average selling price decline for our boxboard mills and folding carton facilities ($5M) Partially offset by average selling prices increase in the containerboard sub-segment ($7M) and lower recycled fibre prices ($6M) 21 21
PACKAGING/ BOXBOARD EUROPE Results Change vs. Q4 212 Q3 212 Q4 211 Shipments (' s.t.) 28 8% 11% Comments on sequential performance Sequentially, higher shipments in all of our markets due to downtimes taken during the previous quarter Order backlog in better shape than in the previous quarter for both recycled and virgin grades Average selling price (CAN$/unit) 75 (Euros/unit) 548 1% -13% -2% -7% Slight average price decrease in Euros, in line with the decline of reference prices In Canadian dollar, sequential prices increase caused by the strengthening of the Euro Sales (M$) 198 EBITDA (M$) 11 % of sales 6% EBITDA excluding specific items 9% -4% 57% 1% Higher shipments and positive contribution from new equipments contributed to significantly increase EBITDA More than offset the negative impact of lower prices and higher energy costs in Italy Stable raw material costs compared to previous quarter Important maintenance expenditures incurred during the previous quarter 22 22
PACKAGING/ SPECIALTY PRODUCTS Results Change vs. Q4 212 Q3 212 Q4 211 Comments on sequential performance Shipments (' s.t.) 1 91 Average selling price (CAN$/unit) 91 (US$/unit) 99-8% 5% 1% -5% 1% -2% Sequentially, lower shipments due to reduced volumes in the Specialty Papers segment Reduced volumes in the Industrial Packaging and Consumer Product segments offset by higher shipments in the Recovery segment Sequential increase of average selling prices in the Specialty Papers segment explained by product mix Product mix resulted in a decline of the average selling prices in the case of the Industrial Packaging and Consumer Product Packaging segments Sales (M$) 183-7% -11% Positive contribution from the Recovery segment insufficient to offset lower shipments and average selling prices caused by the above-mentioned product mix considerations EBITDA (M$) 8 % of sales 4% -47% 3% EBITDA excluding specific items 1 Shipments and average selling price are for papers only EBITDA negatively impacted by downtimes and pension plan expenses in the Specialty Papers segment Inventory depreciation in the Industrial Packaging segment and higher administrative expenses in the Recovery segments also contributed to EBITDA reduction Positive impact from the recycled paper price variation in the Specialty Papers segment 23
Q&A AND CONCLUDING REMARKS
NEAR TERM OUTLOOK + Stable raw material costs Price increase in corrugated box sector Impacts of restructuring and optimization measures Potential to improve utilization rate Additional contribution following investments in Containerboard in Ontario and North American boxboard operations I Possible increase in Asian demand for recycled fibre this spring New capacity in tissue sector Economic uncertainty in Europe Impact of mechanical incident at one of our tissue paper manufacturing mill in January Impact of a one week shutdown at La Rochette mill in France Boxboard Europe Containerboard Specialty Products Tissue Papers Volume Slight increase Slight increase Slight increase Slight increase Selling prices Stable Increase Stable Slight decrease Raw material costs Stable Slight increase Stable Stable CDN $ vs other currency Slight decrease Stable Energy costs Stable Stable 25
STRATEGIC ACTION PLAN ACTION PLAN PRIORITIES 1 Focused investing for modernization of core operations (and IT) 2 3 Optimizing capital allocation & reducing working capital Restructuring of under-performing units 4 Innovation TOOL OR PROCESS ERP Working Capital Initiative MEDIUM TERM OBJECTIVES Improve our ROCE to exceed our cost of capital Reach industry comparable leverage ratios Improving our profitability and financial situation through our Action Plan 26
APPENDIX
ENERGY PRICES Natural gas (US$) Energy prices Crude oil (US$) Hedging Program Natural gas 7. 6. 5. 4. 3. 2. 1.. Q1-1 1 Q2-1 1 Q3-1 1 Q4-1 1 Natural gas (US$/mmBtu) -11 Q1- -11 Q2- -11 Q3- -11 Q4- Q1-1 12 Q2-1 12 Q3-1 12 Q4-1 12 Crude oil (US$/barrel) 11 1 9 8 7 6 5 4 Canada: 213: 7% at 5.48 CAN$/GJ 214: 65% at 5.35 CAN$/GJ U.S.: 213: 53% at 5.78 US$/mmBtu 214: 44% at 5.436 US$/mmBtu Source: Bloomberg 21 211 212 Averages Year Year Q1 Q2 Q3 Q4 Year Energy prices Q4 212 Q4 211 Change Q4 212 Q3 212 Natural gas Henry Hub (US$/mmBtu) 4.39 4.4 2.74 2.22 2.81 3.4 2.79-4% 21% Crude oil WTI (US$/barrel) 77.32 94.1 1.51 1.11 89.97 89.9 94.92-1% -1% 28
FOREIGN EXCHANGE US$/CAN$ 1.1 1.5 1..95.9.85.8 Q1-1 1 Q2-1 1 Q3-1 1 Exchange rates Q4-1 1 Q1-1 11 Q2-1 11 US$/CAN$ Q3-1 11 Q4-1 11 Q1-1 12 Q2-1 12 Euro/CAN$ Q3-1 12 Q4-1 12 EURO/CAN$ 1..95.9.85.8.75.7.65.6 Hedging Program USD Cash flows 213 24 to 43% of exposure hedged at an average rate of 1.282CAN$/US$ to 1.781CAN$/US$ 214 8 to 11% of exposure hedged at an average rate of 1.159CAN$/US$ to 1.59CAN$/US$ Source: Bloomberg 21 211 212 Averages Year Year Q1 Q2 Q3 Q4 Year Foreign exchange rates Q4 212 Q4 211 Change Q4 212 Q3 212 US$/CAN$.971 1.11.999.99 1.5 1.9 1.1 3% % EURO/CAN$.733.727.762.772.83.778.779 7% -3% 29
NORTH AMERICAN MANUFACTURING SPREAD 1 3 1 234 1 238 1 272 1 227 1 26 85 75 1 2 1 16 65 55 1 1 1 428 452 471 45 41 384 35 343 25 9 Q1 21 Q2 21 Q3 21 Q4 21 Q1 211 Q2 211 Q3 211 Q4 211 Q1 212 Q2 212 Q3 212 15 Q4 212 North American manufacturing selling prices index ($US/s.t.) North American manufacturing raw material costs index ($US/t.c.) Manufacturing spread in CAN$ in Q4/12: +6% vs Q3/12 and +3% vs Q4/11 Refer to Notes page included in the Appendix. 3 Source: RISI
1 1 1 9 8 7 6 5 4 an-9 Mar-9 ay-9 Jul-9 ep-9 ov-9 an-1 Mar-1 ay-1 Jul-1 ep-1 ov-1 an-11 Mar-11 ay-11 Jul-11 ep-11 ov-11 an-12 Mar-12 ay-12 Jul-12 ep-12 ov-12 Dec-12 SELECTED INDUSTRY REFERENCE PRICES Boxboard Europe - Selected Products Containerboard - Selected Products (Euro/m.t.) ($US/s.t.) 1 2 1 1 1 QoQ: -13 /tm (-1%) 2-pt clay coated news (CRB) Linerboard 42-lb Corrugating medium 26-lb 9 8 7 6 Coated duplex - virgin board (GC2) White-lined chipboard - recycled board (GD2) QoQ: -9 /tm (-1%) 5 QoQ: -7$tc (-1%) QoQ: +33$/tc (+5%) an-9 Mar-9 ay-9 Jul-9 ep-9 ov-9 an-1 Mar-1 ay-1 Jul-1 ep-1 ov-1 an-11 Mar-11 ay-11 Jul-11 ep-11 ov-11 an-12 Mar-12 ay-12 Jul-12 ep-12 Nov-12 Dec-12 Specialty Products - Selected Products ($US/s.t.) 1 2 1 1 1 6 Grocery bag 3-lb Uncoated white, 5-lb offset, rolls 1 5 2-pt bending chip food 1 9 8 7 6 5 Jan-9 Mar-9 May-9 Jul-9 Sep-9 Nov-9 Jan-1 Mar-1 May-1 Jul-1 Sep-1 Nov-1 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Dec-12 Ja Ma Se No Ja Ma Se No Ja Ma Se No Ja Nov-12 Dec-12 Ma Se No QoQ: -13$/tc (-1%) QoQ: -7$/tc (-1%) QoQ: -41$/tc (-3%) 31 Ja Ma Se No Ja Ma Se No Ja Ma Se No Ja Ma Se 1 4 1 3 1 2 1 1 1 9 8 Jan-9 Mar-9 May-9 Jul-9 Sep-9 Nov-9 Jan-1 Mar-1 May-1 Jul-1 Sep-1 Nov-1 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Tissue Papers - Selected Products ($US/s.t.) Virgin parent rolls Recycled parent rolls
MARKET PRICES AND COSTS SUMMARY These indexes should only be used as indicator of trends and they be different than our actual selling prices or purchasing costs. Selling prices (average) 211 212 Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Q4 212 over Q4 211 Q4 212 over Q3 212 (units) (%) (units) (%) Cascades North American US$ index (index 25 = 1,) 1 1,238 1,25 1,267 1,272 1,256 1,271 1,227 1,233 1,26 1,248-11 -1% 27 2% PACKAGING Boxboard North America (US$/ton) Recycled boxboard - 2pt. clay coated news (transaction) 88 917 92 92 99 92 913 887 88 9-4 -4% -7-1% Europe (Euro/tonne) Recycled white-lined chipboard (GD2) index 2 69 716 716 718 71 698 677 677 668 68-5 -7% -9-1% Virgin coated duplex boxboard (GC2) index 3 1,155 1,151 1,152 1,155 1,153 1,141 1,118 1,118 1,15 1,121-5 -4% -13-1% Containerboard (US$/ton) Linerboard 42-lb. unbleached kraft, East U.S. (transaction) 64 64 64 64 64 64 64 657 69 657 5 8% 33 5% Corrugating medium 26-lb. semichemical, East U.S. (transaction) 61 61 61 61 61 61 61 627 66 627 5 8% 33 5% Specialty Products (US$/ton, tonne for deinked pulp) Recycled boxboard - 2pt. bending chip (transaction) 667 675 67 67 67 67 67 657 65 662-2 -3% -7-1% Deinked pulp (f.o.b; U.S. air-dried & wet-lap, post-consumer) 748 768 812 725 763 663 675 713 715 692-1 -1% 2 % Unbleached kraft paper, grocery bag 3-lb. 1,25 1,93 1,11 1,15 1,95 1,11 1,11 1,11 1,11 1,11-4 -3% % Uncoated white 5-lb. offset, rolls 93 955 947 93 94 923 92 92 97 918-23 -3% -13-1% TISSUE PAPERS Cascades Tissue Papers (index 1999 = 1,) 4 1,631 1,662 1,718 1,664 1,669 1,654 1,647 1,651 1,642 1,649-22 -1% -9-1% Raw materials (average) Cascades North American US$ index (index 25 = 3) 5 471 494 512 41 472 387 384 368 343 371-68 -17% -26-7% RECYCLED PAPER North America (US$/ton) Corrugated containers, no. 11 (New England) 182 178 179 155 174 152 151 125 116 136-4 -25% -9-7% Special news, no. 8 (ONP - Chicago & NY average) 128 139 135 13 126 85 9 7 6 76-43 -42% -1-14% Sorted office papers, no. 37 (SOP - Chicago & NY average) 223 263 283 164 233 145 151 17 151 154-13 -8% -2-11% Europe (Euro/tonne) Recovered paper index 6 146 158 147 17 14 113 118 12 111 111 4 4% 9 9% VIRGIN PULP (US$/tonne) Bleached softwood kraft Northern, East U.S. 97 1,27 993 92 978 873 9 853 863 873-57 -6% 1 1% Bleached hardwood kraft Northern mixed, East U.S. 82 85 823 738 88 714 778 763 744 75 6 1% -18-2% WOODCHIPS Conifer Eastern Canada (US$/odmt) 123 125 125 134 127 13 121 12 12 123-14 -1% % Source: RISI, Random Lengths, Dow Jones and Cascades. 32
NOTES 1. The Cascades North American selling prices index represents an approximation of the Corporation's manufacturing selling prices in North America (excluding converting). It is weighted according to shipments and is based on the average selling price of our North American manufacturing operations of boxboard, containerboard, speciality 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 recycled white-lined chipboard selling prices index represents an approximation of Cascades recycled grades selling prices in Europe. It is weighted by country. 3. 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. 4. The Cascades Tissue Papers selling prices index represents a mix of primary and converted products, and is based on the product mix at the end of 26. 5. The Cascades North American raw materials index is based on publication prices and the average weighted cost paid for some of our manufacturing raw materials, namely recycled fibre, virgin pulp and woodchips, in North America. It is weighted according to purchase volume. This index should only be used as a trend indicator, as it may differ from our actual manufacturing purchasing costs and our purchase mix. 6. 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 29. 7. Comparable companies include: - Graphic Packaging, Greif, IP, Meadwestvaco, Packaging Corp., Rock Tenn for Containerboard. - CP Tissue, Clearwater Paper, Kimberly-Clark and Orchids Paper for Tissue Papers. Wausau Papers trailing multiple not considered. - Reno de Medici s current market multiple for Boxboard Europe. - Boise, Domtar, Kapstone, Sealed Air and Sonoco for Specialty Products. 8. EBITDA adjusted for corporate activities which have been distributed according to sales for illustration purposes. 9. Minority interest adjustments estimated for Reno (assuming 57% ownership) and Cascades Recovery (73% ownership). The capacity utilization rate is defined as: Shipments/Practical capacity. Paper manufacturing only. Return on assets is a non-ifrs measure and is defined as: LTM EBITDA excluding specific items/ LTM Average of total quarterly assets. It includes discontinued operations. Working capital includes accounts receivable (excluding the short term portion of other assets) plus inventories less accounts payable. 33