Cascades Finishes the Year with Improving Results; Part 1 of 2 - More Financial Tables to Follow.MONTREAL--(BUSINESS WIRE)--Jan. 29, 1998--CASCADES (ME:CAS.)(TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :CAS.) Cascades Inc. announced net earnings before extraordinary items of $15.0 M or $0.23 per share for the last quarter of 1997, a 41 percent increase over net earnings of $10.7 M or $0.15 per share in the preceeding quarter. This increase is mainly attributable to the improved performance of our containerboard con·tain·er·board n. A corrugated or solid cardboard used to make containers. group which benefited from a containerboard price increase combined with a decrease in recycled fiber cost. For the year ended December December: see month. 31, 1997, net earnings were $58.8 M or $0.85 per share compared with $85.2 M or $1.37 per share for the corresponding period in 1996. For the quarter ended December 31, 1997, net earnings were $36.0 M or $0.55 compared with $12.6 M or $0.19 per share for the same period in 1996. For the year ended December 31, 1997, the company recorded unusual items after income taxes and non-controlling interests of $19.0 M or $0.29 per share. Net earnings before these unusual items were $39.8 M or $0.56 per share compared to $72.0 M or $1.14 per share for the corresponding period in 1996. The results for year ended December 31, 1997 were affected by the following unusual items : - A $32.0 M gain realized in the fourth quarter following the sale of assets to Norampac Inc., the new entity resulting from the merger of Cascades' and Domtar's containerboard assets. - A $11.1 M loss (net of income taxes and non-controlling interests of $12.8 M) incurred as a result of the debt refinancing Refinancing An extension and/or increase in amount of existing debt. of our subsidiary, Paperboard paperboard, material similiar in shape and composition to paper, but generally thicker, stronger, and more rigid. Paper machines, e.g., Fourdrinier machines, are used to make sheets of paperboard. Industries International Inc. completed on September September: see month. 25, 1997. - Various unusual items for a total loss of $1.9 M (net of income taxes and non-controlling interests of $2.4 M). In comment on these results, M. Laurent Laurent may refer to: Geography
named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. pulp and paper industry The global pulp and paper industry is dominated by North American (United States, Canada), northern European (Finland, Sweden) and East Asian countries (such as Japan). Australasia and Latin America also have significant pulp and paper industries. . Rather than building new plants and adding excess production capacity for no reason, many producers decided to merge with or acquire competitors in order to expand their presence in markets where they have proven expertise, thus creating increased synergy The enhanced result of two or more people, groups or organizations working together. In other words, one and one equals three! It comes from the Greek "synergia," which means joint work and cooperative action. . As planned, Cascades actively participated in this trend toward consolidation by making three acquisitions and a major merger during the year. We thus reached the strategic objective we had set ourselves at the beginning of the year: to increase the size of our operating groups. We are very proud of our results in 1997, as all of our groups continued to perform with difficult market conditions. Revenues The Corporation's consolidated revenues increased by 5 percent, going from $2.1 billion for the year ended December 31, 1996 to $2.2 billion for the corresponding period in 1997. This increase resulted mainly from the fine papers group whose revenues increased by 41 percent following the integration of Provincial Papers Inc. and the opening of new distribution centers. The acquisitions completed in 1997, have more than compensated the decrease in revenues attributable to lower prices in certain operating groups and the sale of assets completed in 1996. Cash flow and financial position For the year ending December 31, 1997, Cascades generated cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses of $162.4 M or $2.45 per share, compared with $196.8 M or $3.28 per share in 1996. During the year, 1,521,374 common shares were issued at $10 per share for a total amount of $15.2 M following the exercise of warrants expiring ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. on September 2, 1997. Moreover, 89,200 common shares were redeemed re·deem tr.v. re·deemed, re·deem·ing, re·deems 1. To recover ownership of by paying a specified sum. 2. To pay off (a promissory note, for example). 3. during the year under the Corporation's redemption plan at an average cost of $10.14. These two transactions combined with the conversion of convertible debentures Convertible Debenture Any type of debenture that can be converted into some other security. Notes: For example, a convertible bond can be converted into stock. into 8,452,754 common shares increased the number of common shares issued and outstanding as of December 31, 1997 at 66,418,360. The net bank indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. of the Corporation, which was $74.5 M at the beginning of the fourth quarter of 1997, was completely reimbursed during the quarter. As at December 31, 1997, the Corporation had a net cash position of $6.4 M. The long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. indebtedness of the Corporation has increased $386.1 M compared to the beginning of the year due to the following factors: - Acquisition of Provincial Papers Inc. for a total consideration of $26.0 M. - Acquisition of a boxboard box·board n. A firm cardboard used for making boxes. mill located in Arnsberg Arns·berg A city of west-central Germany south-southeast of Münster. It was founded in 1077 and received a municipal charter in 1237. Population: 77,100. , Germany for a total consideration of $57.0 M. - Acquisition of a 20 percent interest in Dopaco, Inc. for $42.8 M. - Redemption of $27.6 of convertible debentures bearing interest at 7.25 percent for a total amount of $41.3 M (including the premium paid for the reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. ) thereby avoiding the dilution Dilution A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities. Notes: Adding to the number of shares outstanding reduces the value of holdings of existing shareholders. of 4,239,554 common shares. - Redemption of $50.8 M of Class A Preferred Shares Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. with a dividend of 7.5 percent. - Debt refinancing of $473.6 M for our subsidiary Paperboard Industries International Inc., allowing it to repay loans with restrictive covenants Restrictive covenants Provisions that place constraints on the operations of borrowers, such as restrictions on working capital, fixed assets, future borrowing, and payment of dividends. and providing greater flexibility while extending the average maturity of its debt. - New $625 M financing for Norampac Inc. As at December 31, 1997, Cascades consolidated its portion of this debt (50 percent). Creation of Norampac On December 19, 1997, Cascades Inc. and Domtar Inc. announced the name of the new entity created by the merger of the two companies' containerboard assets. The new Corporation, called Norampac Inc., started its operations on December 30, 1997. With an annual production capacity of more than 1.1 million metric tonnes, Norampac is the largest containerboard producer in Canada and the 10th largest in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . Concurrently with the creation of Norampac Inc. credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities totalling $325 M were put in place as well as a $300 M bridge loan, the proceeds of which were used to pay Cascades Inc., Domtar Inc. and Paperboard Industries International Inc. the cash portion of the purchase price of the assets sold to the new company which amounted to $437 M. The balance of $188 M will be used for the purposes of working capital and further investments of Norampac. The $300 M bridge finance has been refinanced on January 28, 1998, with the issue of US$150 M and CAN$100 M Senior Notes due in 2008. Outlook Cascades will continue to invest carefully and maintain its capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. below the level of cash flow from operations. As well, most of the investment projects planned for 1998 are independent and flexible. Among the main projects are reopening Reopening Treasury offerings of additional amounts of outstanding issues, rather than an entirely new issue. A reopened issue will always have the same maturity date, CUSIP number, and interest rate as the original issue. the kraft pulp plant in Jonquiere, opening of a sheeting and distribution plant in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , installation of a new press for the conversion of folding cartons The folding carton created the packaging industry as it is known today, beginning in the late 19th century. Basically, a folding carton is made of paperboard, and is cut, folded, laminated and printed for transport to manufacturers. , continuing with the investment program in Perkins Papers Ltd., opening a conversion centre for fine papers in St-Jerome, and the installation of a de-inking unit at the Avot- Vallee containerboard mill in France. On the subject of selling prices, increases were implemented as of January in the coated fine papers industry. In the containerboard industry, recent price increases are sticking, and an increase has been announced by a number of producers for March 1998. Price increases have also been announced for tissue paper by some American producers. Prices for boxboard should remain stable or slightly increase. The prices for our main raw material, recycled paper, have remained stable and no increase is foreseen fore·see tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees To see or know beforehand: foresaw the rapid increase in unemployment. . M. Lemaire added : "In a context where each of our operating groups is currently working in a favourable market, we will take full advantage in coming quarters of the acquisitions, merger, and investments made in 1997, which have significantly increased our annual production capacity as well as the quality and diversity of the products we offer. We thus anticipate appreciable ap·pre·cia·ble adj. Possible to estimate, measure, or perceive: appreciable changes in temperature. See Synonyms at perceptible. growth in profitability for 1998."
CASCADES INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands of dollars, except per share amounts)
For the 3 month periods For the years
ended December 31 ended December 31
1997 1996 1997 1996
Sales 599,051 492,780 2,208,257 2,101,106
Cost of sales
and expenses
Cost of sales 445,309 355,093 1,648,725 1,516,933
Selling and
administrative
expenses 85,320 72,413 314,983 302,014
Depreciation and
amortization 24,998 21,289 94,405 86,407
555,627 448,795 2,058,113 1,905,354
Operating income 43,424 43,985 150,144 195,752
Financial expenses
Interest on
long-term debt 11,916 11,711 40,90 48,568
Interest on the
liability component
of the convertible
debentures 188 253 1,005 1,237
Dividends on redeemable
preferred shares 949 949 3,796 3,796
Foreign exchange loss
on long-term debt 128 419 715 1,499
Other interest 2,910 2,341 14,214 13,025
Interest income (1,307) (1,210) (5,152) (5,387)
14,784 14,463 55,478 62,738
28,640 29,522 94,666 133,014
Unusual items 19,075 (502) 3,762 31,586
47,715 29,020 98,428 164,600
Provision for income
taxes 9,379 11,342 31,548 56,922
38,336 17,678 66,880 107,678
Share of results of
significantly
influenced companies 571 (930) 1,047 (930)
Non-controlling
interests (2,887) (4,110) (9,164) (21,566)
(2,316) (5,040) (8,117) (22,496)
Net earnings for
the period 36,020 12,638 58,763 85,182
Net earnings per
common share $0,55 $0,19 $0,85 $1,37
Fully diluted net
earnings per
common share $0,54 $0,17 $0,82 $1,12
-0-
CASCADES INC.
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
(in thousand of dollars, except per share amounts)
For the 3 month periods For the years
ended December 31 ended December 31
1997 1996 1997 1996
OPERATING ACTIVITIES
Net earnings
for the period 36,020 12,638 58,763 85,182
Items not
affecting cash :
Depreciation and
amortization 24,998 21,289 94,405 86,407
Unusual items (26,030) 580 (11,037) (16,096)
Deferred income
taxes 3,314 4,827 10,600 15,939
Non-controlling
interests 2,887 4,110 9,164 21,566
Other (521) 1,142 551 3,814
Cash flow from
operations 40,668 44,586 162,446 196,812
Net change in non-
cash operating
working capital
balances 17,504 (16,046) (41,259) (1,415)
58,172 28,540 121,187 195,397
FINANCING ACTIVITIES
Increase in
long-term debt 102,742 16,588 561,763 71,565
Payments on
long-term debt (52,554) (3,793) (364,161) (88,519)
Interest on
convertible
debentures (598) (1,508) (2,630) (5,998)
Non-controlling
interests (2 793) (14,891) (5,394) (22,926)
Issue of units from
a subsidiary - - 29,487 -
Net proceeds on
issue of shares 138 187 16,028 187
Redemption of common
shares - - (904) (7,509)
Redemption of
preferred shares - - (50,897) -
Redemption of
convertible debentures - - (41,310) -
Dividends on common
shares - - (6,486) (5,740)
Dividends on preferred
shares - (751) (3,580) (5,344)
47,005 (4,168) 131,916 (64,284)
INVESTMENT ACTIVITIES
Purchase of capital
assets (55,131) (37,065) (153,006) (117,905)
Other assets (9,675) (7,254) (44,423) (34,891)
Business acquisitions (27,900) - (113,252) -
Disposal of
operations 67,893 12,669 67,893 83,851
(24,813) (31,650) (242 788) (68,945)
Net change in cash
during the period 80,364 (7,278) 10,315 62,168
Translation adjustments
related to cash 510 (64) 243 128
Cash at beginning
of period (74,502) 3,156 (4,186) (66,482)
Cash at end
of period 6,372 (4,186) 6,372 (4,186)
Cash flow from
operations per
common share $0.61 $0.74 $2.45 $3.28
Fully diluted cash
flow from operations
per common share $0.61 $0.61 $2.36 $2.67
(MORE TO FOLLOW) CONTACT: Cascades Inc. Mr. Andre Belzile, 514/282-2600 abelzile@cascades.com or Cascades Inc. Mr. Stephane Milot, 514/282-2681 smilot@cascades.com |
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