EX-1 4 pr2002-3.htm PRESS RELEASE PRESS RELEASE

Norampac Improves its Results

Montreal, Quebec, October 22, 2002 - Norampac Inc. ("Norampac") reports net earnings of $15 million for the third quarter of 2002, compared to restated net earnings of $14 million ($23 million before restatement) for the same quarter in 2001. The 2001 results were restated by $9 million to apply the new CICA guideline on foreign currency translation, which eliminates the deferral and amortization for unrealized exchange gains or losses.

Net sales for the third quarter were $318 million, compared to $288 million for the same quarter in 2001. The increase is mainly a result of higher volume for our corrugated products. Shipments of corrugated containers without Leominster MA and Maspeth NY went up 4.9% this quarter compared to the same quarter in 2001. Containerboard shipments went up 3.9% this quarter.

Earnings before financial expenses, taxes, depreciation and amortization (EBITDA) amounted to $55 million in the third quarter, compared to $64 million for the corresponding quarter in 2001. The reduction is mainly attributable to an increase in recycled fiber cost and a reduction of the net selling price of containerboard and corrugated products.

During the quarter, market related downtime amounted to 15,600 short tons or 4.2% of the Company's North American primary mill capacity.

Commenting on the quarterly results, Mr. Alain Lemaire, President and Chief Executive Officer, said: "Corrugated container shipments were good for the third quarter, which helped increase the profitability compared to last year. Primary mills shipments went up 3.9% as a result of higher corrugated shipments."

 


Highlights

  • 36% increase in fiber cost compared to the third quarter of 2001;
  • 5% reduction in net selling price for both containerboard and corrugated products compared to the third quarter of 2001;
  • Market related downtime of 15,600 short tons during the third quarter, compared to 17,000 short tons in 2001;
  • EBITDA increased from $53 million in the second quarter of 2002 to $55 million in the third quarter of 2002.

 Commenting on the outlook for the remainder of 2002, Mr. Lemaire said: "I remain confident that we should see an improvement in the overall economy; however, the fourth quarter is seasonally slower and should be offset by the full benefit of the price increases experienced in this quarter. Recycled fiber costs should also decrease, which would reduce our primary mill manufacturing costs."

-------------------

Norampac owns eight containerboard mills and twenty-five corrugated products plants in the United States, Canada, Mexico and France. With an annual production capacity of more than 1.6 million short tons, Norampac is the largest containerboard producer in Canada and the 7th largest in North America. Norampac, which is also a major Canadian manufacturer of corrugated products, is a joint venture company owned by Domtar Inc. (symbol: DTC-TSX) and Cascades Inc. (symbol: CAS-TSX).

Certain statements in this release, including statements regarding future results and performance, are forward-looking statements (as such term is defined under the Private Securities Litigation Reform Act of 1995) 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, increases in raw material costs, fluctuations in selling prices and adverse changes in general market and industry conditions and other factors listed in the Company's Securities and Exchange Commission Filings, including but not limited to its Annual Report in Form 20-F for the year ended December 31, 2001.

 

-30-

For further information:

 

Marc-André Dépin

Executive Vice-President

Norampac Inc.

(514) 282-2607

marc_andre_depin@norampac.com

  

 

 

 

Mr. Luciano Ciarciello

Corporate Controller

Norampac Inc.

(514) 282-2687

luciano_ciarciello@norampac.com

 

Consolidated Balance Sheets
(in thousands of Canadian dollars)

As at
September 30,
2002

As at December 31, 2001

(unaudited)

Restated
(see note 2)
Assets
Current Assets
Cash and cash equivalents

30,316

12,146

Accounts receivable and prepaid expenses

230,728

183,156

Inventories

125,741

122,348

386,785

317,650

Property, plant and equipment

912,756

913,658

Goodwill (note 3)

201,930

168,161

Other assets

25,093

35,585

1,526,564

1,435,054

Liabilities and shareholders' equity
Current liabilities
Excess of outstanding cheques over bank
balances

21,776

19,929

Trade accounts payable and accrued liabilities

169,430

161,109

Income and other taxes payable

5,885

18,844

Current portion of long-term debt

1,897

1,529

198,988

201,411

Long-term debt

435,251

374,853

Future income taxes

142,602

133,800

Other liabilities

36,209

33,507

Shareholders' equity
Capital stock

560,000

560,000

Retained earnings

146,520

127,045

Cumulative translation adjustments

6,994

4,438

713,514

691,483

1,526,564

1,435,054

The accompanying notes are an integral part of the financial statements.

 

 

Consolidated Statements of Earnings
(in thousands of Canadian dollars)
(unaudited)

For the three month period

For the nine month period

ended September 30,

ended September 30,

2002

2001

2002

2001

Restated
(see note 2)

Restated
(see note 2)
Sales

345,510

311,647

993,106

892,504

Cost of delivery

27,176

23,740

75,557

65,309

Net sales

318,334

287,907

917,549

827,195

Cost of goods sold and expenses
Cost of goods sold

223,825

192,438

647,791

563,463

Selling and administrative expenses

39,338

31,316

112,215

92,261

Depreciation and amortization

18,033

17,544

53,413

51,858

281,196

241,298

813,419

707,582

Operating income

37,138

46,609

104,130

119,613

Financial expenses
Interests

9,415

8,560

27,091

22,801

Amortization of financing costs

322

322

967

967

Unrealized exchange (gain) loss
on long term debt (note 2)

3,355

9,195

(340)

11,820

13,092

18,077

27,718

35,588

24,046

28,532

76,412

84,025

Income tax expense

8,888

14,176

24,937

27,945

15,158

14,356

51,475

56,080

Share of income of equity-
accounted investments (note 4)

-

102

-

570

Net income for the period

15,158

14,458

51,475

56,650

The accompanying notes are an integral part of the financial statements.

Consolidated Statements of Retained Earnings
(in thousands of Canadian dollars)
(unaudited)

For the nine month period

ended September 30,

2002

2001

Restated
(see note 2)
Balance, at beginning of period

127,045

103,210

Cumulative effect of a change in an accounting policy- Foreign Currency Translation (note 2)


-

(5,764)
Net income for the period

51,475

56,650

Dividend paid during the period

(32,000)

(40,000)
Balance, at end of period

146,520

114,096

The accompanying notes are an integral part of the financial statements.

 

Consolidated Statements of Cash Flow
(in thousands of Canadian dollars)
(unaudited)

For the three month period

For the nine month period

ended September 30,

ended September 30,

2002

2001

2002

2001

Restated
(see note 2)

Restated
(see note 2)
Cash flows from:
Operating activities
Net income for the period

15,158

14,458

51,475

56,650

Adjustments for:
Depreciation and amortization

18,033

17,544

53,413

51,858

Future income taxes

2,268

7,305

5,461

5,819

Loss (gain) on disposal of property,
plant & equipment

(400)

(208)

649

931

Unrealized exchange loss (gain)
on long-term debt (note 2)

3,355

9,195

(340)

11,820

Share of income of equity-accounted
investments

-

(102)

-

(570)
Other

1,948

558

3,812

1,112

Cash flow from operating activities

40,362

48,750

114,470

127,620

Changes in non-cash working capital
components

(9,897)

(16,175)

(45,973)

(37,584)

30,465

32,575

68,497

90,036

Financing activities
Change in revolving bank credit facility

(11,280)

30,374

58,434

33,243

Increase in long-term debt

-

-

889

-

Repayments of long-term debt

(948)

(86)

(1,247)

(255)
Change in excess of outstanding cheques over
bank balances

2,404

7,063

1,847

6,712

Dividend paid

-

(40,000)

(32,000)

(40,000)

(9,824)

(2,649)

27,923

(300)
Investing activities
Additions to property, plant and equipment, net

(6,821)

(23,257)

(26,617)

(53,085)
Business acquisitions, net of cash
and cash equivalents (note 4)

(169)

-

(53,370)

(50,934)
Other assets, net

1,473

(219)

1,500

(2,609)

(5,517)

(23,476)

(78,487)

(106,628)
Change in cash and cash equivalents
during the period

15,124

6,450

17,933

(16,892)
Translation adjustment with respect
to cash and cash equivalents

549

113

237

173

Cash and cash equivalents at
beginning of period

14,643

14,776

12,146

38,058

Cash and cash equivalents at
end of period

30,316

21,339

30,316

21,339

Supplemental information
Cash and cash equivalents paid for:
Interest

17,599

15,754

35,252

32,054

Income taxes

2,644

2,700

34,452

6,232

Non cash investing activities
Transfer of assets in exchange of
non monetary assets (note 4)

-

7,190

-

7,190

The accompanying notes are an integral part of the financial statements.

 

Segmented information
(in thousands of Canadian dollars)
(unaudited)

For the three month period

For the nine month period

ended September 30,

ended September 30,

2002

2001

2002

2001
Sales
Containerboard

193,926

195,838

558,496

573,835

Corrugated products

256,936

217,538

739,810

623,690

Total for reportable segments

450,862

413,376

1,298,306

1,197,525

Other activities and unallocated amounts

17,498

9,971

40,800

19,579

Intersegment sales

(122,850)

(111,700)

(346,000)

(324,600)
Consolidated Sales

345,510

311,647

993,106

892,504

Earnings before financial expenses, income
taxes, depreciation and amortization
Containerboard

21,997

42,056

67,814

109,198

Corrugated products

28,033

20,045

78,481

55,495

Total for reportable segments

50,030

62,101

146,295

164,693

Other activities and unallocated amounts

5,141

2,052

11,248

6,778

Consolidated earnings before financial
expenses, income taxes, depreciation
and amortization

55,171

64,153

157,543

171,471

Depreciation and amortization

18,033

17,544

53,413

51,858

Consolidated operating income

37,138

46,609

104,130

119,613

Additions to property, plant and equipment, net
Containerboard

4,962

12,816

17,276

22,865

Corrugated products

2,402

17,395

8,442

36,395

Total for reportable segments

7,364

30,211

25,718

59,260

Other activities and unallocated amounts

(543)

236

899

1,015

Consolidated additions to property,
plant and equipment, net

6,821

30,447

26,617

60,275

Shipments
Containerboard third party (in short tonnes)

168,703

188,461

512,288

534,719

Containerboard intersegment (in short tonnes)

200,092

166,566

577,705

483,973

Corrugated products (in thousands of square feet)

3,341,332

2,683,284

9,673,697

7,836,713

 

 

Notes to interim consolidated
financial statements
(in thousands of Canadian dollars)
(unaudited)
Note 1 Basis of Presentation
The accompanying unaudited interim consolidated financial statements are prepared in accordance with
Canadian generally accepted accounting principles and contain all adjustments necessary to present fairly
Norampac Inc.'s (the Company) financial position as at September 30, 2002 and December 31, 2001 as well as
its results of operations and its cash flow for the nine and three month period ended September 30, 2002 and 2001.
The interim consolidated financial statements and notes should be read in conjunction with the Company's
most recent annual consolidated financial statements.
These interim consolidated financial statements follow the same accounting policies as the most recent
annual consolidated financial statements except for the changes described in note 2.
Note 2 Change in accounting policies
Foreign Currency Translation
On November 2001, the CICA amended section 1650 "Foreign Currency Translation" which eliminates the
deferral and amortization method for unrealized gains and losses on non-current monetary assets and
liabilities, thereby removing a GAAP difference between Canada and U.S. The new guideline is
effective for fiscal year 2002 and must be applied retroactively with restatement. Accordingly, net income for
the nine and three month period ending September 30, 2001 has been decreased by $10,558 and $8,706 respectively
and 2001 opening retained earnings has decreased by $5,764.
Goodwill and Other Intangible Assets
In July 2001, the CICA issued Handbook Section 3062 "Goodwill and Other Intangible Assets".
Section 3062 requires the use of a non-amortization approach to account for purchased goodwill and
indefinite-lived intangibles. Under the non-amortization approach, goodwill and indefinite-lived intangibles
will not be amortized, but instead would be reviewed for impairment and written down and charged to
earnings only in the periods in which the recorded value of goodwill and indefinite-lived intangibles exceeds
their fair value. The adoption of Section 3062 requires the Company to use the non-amortization approach
for goodwill related to business combinations initiated prior to July 1, 2001 and will reduce annual goodwill
amortization by approximately $7,477. The Company has adopted the discounted cash flow method as its new
goodwill impairment methodology and has determined that as at January 1, 2002, there is no goodwill impairment.
Designation of hedging
Effective January 1, 2002, the Company designated a portion of the long term debt as a hedge of the net investment
of its self-sustaining operations. As of January 1, 2002, any unrealized gains or losses on the hedged portion is
offset against cumulative translation adjustments.

 

 

Notes to interim consolidated financial statements
(in thousands of Canadian dollars)
Note 3 Goodwill

2002
Carrying value of goodwill at the beginning of the period

168,161
Goodwill acquired from acquisitions (note 4)

33,237
Other

532

Carrying value of goodwill at the end of the period

201,930

For the three month period

For the nine month period

ended September 30,

ended September 30,

2002

2001

2002

2001

Restated

Restated

(see note 2)

(see note 2)
Reported net income for the period (note 2)

15,158

14,458

51,475

56,650

Add back: Goodwill Amortization, net of tax

-

1,852

-

5,556

Adjusted net income

15,158

16,310

51,475

62,206

Note 4 Business Acquisition
On January 2, 2002, the Company transferred the assets of its Paper Recovery Division assets, which were
acquired on April 12, 2001 from Crown Packaging Ltd., to Metro Waste Paper Recovery Inc. ("Metro Waste")
in exchange for an additional 18.5% common shares of Metro Waste. The Company's participation in Metro Waste
increased from 27.5% to 46%.
On January 21, 2002, the Company acquired all the issued and outstanding shares of Star Container
Corp. ("Leominster") a corrugated products converting plant located in Leominster, Massachusetts, near Boston, USA,
for a total consideration of approximately $50,489 (US$ 31,310).
The above transactions have been accounted for using the purchase method and the accounts and results
of operations have been included into the consolidated financial statements since their respective acquisition date.
The allocation of the purchase price for the above acquisitions is as follows:

Metro Waste(1)

Leominster

Other

Total
Net assets acquired (liabilities assumed) :
Working capital

1,361

5,140

1,653

8,154

Property, plant and equipment

8,642

18,771

1,108

28,521

Other assets

-

139

60

199

Goodwill, not deductible for tax

3,153

30,021

63

33,237

Future Income taxes

-

(3,582)

(3)

(3,585)
Other long term liabilities

(365)

-

-

(365)
 Purchase Price

12,791

50,489

2,881

66,161

Less:
Transfer of assets in exchange
of non monetary assets

12,791

-

-

12,791

Cash paid net of cash and cash equivalents acquired 

-

50,489

#

2,881

53,370

(1) The purchase price allocation for Metro Waste has not yet been finalized and is based on the Company's best
estimate. Accordingly, the fair values of assets acquired and liabilities assumed could differ from the
amounts presented in these interim consolidated financial statements. Effective January 2, 2002, the Company's
interest in Metro Waste is accounted for using the proportionate consolidation method. For the nine and three
month period ending September 30, 2002 the Company's consolidated net earnings includes $1,387 and $513
respectively (nine and three month period ending September 30, 2001- $425 and $92) of net earnings from Metro Waste.